Document:

Asset Purchase Agreement dated May 19, 2006

    EXHIBIT
      10.1

    

    

    

    

    ASSET
      PURCHASE AGREEMENT

     

    AMONG
      

     

    VitalStream
      Holdings, Inc.,

     

    VitalStream
      Advertising Solutions, Inc.

     

    AND

     

    EON
      Streams, Inc. 

     

    

     

    May
      19, 2006

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE
      OF CONTENTS

    

     

    
      	
              1.

            	
              DEFINITIONS

            	
              1

            
	 	 	 
	
              2.

            	
              BASIC
                TRANSACTION

            	
              8

            
	 	 	 
	 	
              Purchase
                and Sale of Assets

            	
              8

            
	 	
              Assumption/Exclusion
                of
                Liabilities

            	
              8

            
	 	
              Consideration
                Provided by Buyer for Acquired
                Assets

            	
              10

            
	 	
              Post-Closing
                Adjustments to the Purchase
                Price

            	
              11

            
	 	
              The
                Closing

            	
              12

            
	 	
              Deliveries
                at the Closing

            	
              12

            
	 	
              Legends

            	
              12

            
	 	Tax
              Free Reorganization 	
              13

            
	 	 	 
	
              3.

            	
              INVESTMENT
                REPRESENTATIONS OF
                SELLER

            	
              13

            
	 	 	 
	 	
              Experience

            	
              13

            
	 	
              Investment

            	
              13

            
	 	
              Rule
                144

            	
              14

            
	 	
              Access
                to Data/Representations

            	
              14

            
	 	
              Legends

            	
              14

            
	 	
              Place
                of Business/Residence

            	
              14

            
	 	 	 
	
              4.

            	
              REPRESENTATIONS
                AND WARRANTIES OF
                SELLER

            	
              15

            
	 	 	 
	 	
              Organization
                of Seller

            	
              15

            
	 	
              Authorization
                of Transaction

            	
              15

            
	 	
              Noncontravention

            	
              16

            
	 	
              Brokers’
Fees

            	
              16

            
	 	
              Title
                to Assets; Sufficiency of Assets

            	
              16

            
	 	
              Capitalization
                and
                Subsidiaries

            	
              17

            
	 	
              Financial
                Statements

            	
              18

            
	 	
              Events
                Subsequent to Most Recent Fiscal Month
                End

            	
              18

            
	 	
              Undisclosed
                Liabilities; Limited
                Liabilities

            	
              20

            
	 	
              Legal
                Compliance

            	
              20

            
	 	
              Tax
                Matters

            	
              21

            
	 	
              Real
                Property

            	
              22

            
	 	
              Intellectual
                Property

            	
              23

            
	 	
              Tangible
                Assets

            	
              26

            
	 	
              Contracts

            	
              26

            
	 	
              Notes
                and Accounts Receivable/Payable

            	
              28

            
	 	
              Powers
                of Attorney

            	
              29

            
	 	
              Insurance

            	
              29

            
	 	
              Litigation

            	
              30

            
	 	
              Product
                and Services Warranty

            	
              30

            
	 	
              Employees

            	
              30

            

    

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    

    
      	 	
              Employee
                Benefits

            	
              31

            
	 	
              Guaranties

            	
              32

            
	 	
              Environmental,
                Health, and Safety
                Matters

            	
              32

            
	 	
              Certain
                Business Relationships With Seller and Its
                Subsidiaries

            	
              34

            
	 	
              Disclosure

            	
              34

            
	 	
              Customers
                and Suppliers

            	
              34

            
	 	
              No
                Other Agreement to Sell Assets

            	
              35

            
	 	
              Personal
                Guarantees and Indebtedness

            	
              35

            
	 	 	 
	
              5.

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE BUYING
                PARTIES

            	
              35

            
	 	 	 
	 	
              Organization
                of the Buyer

            	
              35

            
	 	
              Authorization
                of Transaction

            	
              35

            
	 	
              Noncontravention

            	
              36

            
	 	
              Brokers’
Fees

            	
              36

            
	 	
              Capitalization

            	
              36

            
	 	
              SEC
                Filings

            	
              37

            
	 	
              Valid
                Issuance

            	
              37

            
	 	
              Litigation

            	
              37

            
	 	
              Compliance
                With Laws

            	
              37

            
	 	
              Voting
                Rights

            	
              37

            
	 	 	 
	
              6.

            	
              PRE-CLOSING
                COVENANTS

            	
              37

            
	 	 	 
	 	
              General

            	
              37

            
	 	
              Notices
                and Consents

            	
              38

            
	 	
              Operation
                of Business

            	
              38

            
	 	
              Preservation
                of Business; Transfer of Employment
                Relationships

            	
              38

            
	 	
              Full
                Access

            	
              38

            
	 	
              Notice
                of Developments

            	
              39

            
	 	
              Exclusivity

            	
              39

            
	 	
              Supplements
                to Schedules

            	
              39

            
	 	 	 
	
              7.

            	
              OBLIGATION
                TO CLOSE

            	
              40

            
	 	 	 
	 	
              Conditions
                to Obligation of the Buying
                Parties

            	
              40

            
	 	
              Conditions
                to Obligation of
                Seller

            	
              42

            
	 	 	 
	
              8.

            	
              TERMINATION

            	
              43

            
	 	 	 
	 	
              Termination
                of Agreement

            	
              43

            
	 	
              Effect
                of Termination

            	
              44

            

    

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    

    
      	
              9.

            	
              POST-CLOSING
                COVENANTS

            	
              44

            
	 	 	 
	 	
              General

            	
              44

            
	 	
              Litigation
                Support

            	
              44

            
	 	
              Transition

            	
              44

            
	 	
              Confidentiality

            	
              45

            
	 	
              Limits
                on Distribution or
                Liquidation

            	
              46

            
	 	
              Covenants
                Not to Compete

            	
              46

            
	 	
              Name
                Change

            	
              47

            
	 	
              Accounting
                Support

            	
              48

            
	 	
              Unassigned
                Assets

            	
              48

            
	 	 	 
	
              10.

            	
              REMEDIES
                FOR BREACHES OF THIS
                AGREEMENT

            	
              48

            
	 	 	 
	 	
              Survival
                of Representations and
                Warranties

            	
              48

            
	 	
              Indemnification
                Provisions for Benefit of the
                Buying Parties, Seller and the Principal Stockholders

            	
              49

            
	 	
              Matters
                Involving Third Parties

            	
              49

            
	 	
              Characterization
                of
                Payments

            	
              50

            
	 	
              Limitations;
                Escrow Shares

            	
              51

            
	 	 	 
	
              11.

            	
              MISCELLANEOUS

            	
              51

            
	 	 	 
	 	
              Press
                Releases and Public
                Announcements

            	
              51

            
	 	
              No
                Third-Party Beneficiaries

            	
              52

            
	 	
              Entire
                Agreement

            	
              52

            
	 	
              Succession
                and Assignment

            	
              52

            
	 	
              Counterparts

            	
              52

            
	 	
              Headings

            	
              52

            
	 	
              Notices

            	
              52

            
	 	
              Governing
                Law

            	
              53

            
	 	
              Amendments
                and Waivers

            	
              53

            
	 	
              Severability

            	
              54

            
	 	
              Expenses

            	
              54

            
	 	
              Construction

            	
              54

            
	 	
              Incorporation
                of Exhibits and
                Schedules

            	
              54

            
	 	
              Specific
                Performance

            	
              54

            
	 	
              Submission
                to Jurisdiction

            	
              54

            
	 	
              Waiver
                of Trail By Jury

            	
              55

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    ASSET
      PURCHASE AGREEMENT

     

    This
      Asset Purchase Agreement (this “Agreement”) is entered into
      as
      of
      May ___,
      2006,
      by
      and
      among VitalStream
      Holdings, Inc., a Nevada corporation (“Holdings”), VitalStream Advertising
      Solutions, Inc., a Nevada corporation
      (the “Buyer”; collectively with Holdings, the “Buying Parties’), EON Streams,
      Inc., a Tennessee corporation (“Seller”) and Thomas Skelton, an individual,
      Stephen Newman, an individual and Susan Seagraves, an individual (Messrs.
      Skelton and Newman and Ms. Seagraves, the “Principal Stockholders”). The Buying
      Parties, the Seller
      and the
      Principal Stockholders are referred to collectively herein as the “Parties” and
      individually as a “Party”

    

    RECITALS

    

    A. Seller
      is
      in the business of providing Internet streaming, support and related services
      (the “Business”).

    

    B. Seller
      desires to sell substantially all of the assets and certain liabilities related
      to the Business to Buyer, and Buyer desires to purchase such assets and assume
      such liabilities from Seller, in exchange for consideration set forth herein,
      all upon the terms and subject to the conditions of this Agreement.

    

    C. Seller
      and the Buying Parties are willing to make certain representations, warranties,
      covenants and agreements in connection with such sale and purchase.

     

    AGREEMENT

    

    Now,
      therefore, in consideration of the premises and the mutual promises herein
      made,
      and in consideration of the representations, warranties, and covenants herein
      contained, the Parties agree as follows:

    

    1. Definitions.
      For purposes of this Agreement, the following terms have the
      meanings set forth below: 

     

    “Accrued
      Liabilities” has the meaning set forth in Section
      2(b)(i)(A)
      below.

     

    “Acquired
      Assets” means all right, title, and interest in and to all
      of
      the assets owned or used by Seller
      other
      than an Unassigned Asset, including, without limitation, all of its (a) real
      property, leaseholds and subleaseholds therein, improvements, fixtures, and
      fittings thereon, and easements, rights-of-way, and other appurtenants thereto
      (such as appurtenant rights in and to public streets), (b) tangible
      personal
      property (such as computers, servers, racks, machinery, equipment, inventories
      of raw materials and supplies, manufactured and purchased parts, goods in
      process and finished goods,
      furniture, automobiles, trucks, tractors, trailers, tools,
      and replacement parts), (c) Intellectual Property (including without limitation
      that names “EON Streams” and “EONStreams” and associated marks), goodwill
      associated therewith, licenses and sublicenses granted and obtained with respect
      thereto, and rights thereunder, remedies against infringements thereof, and
      rights to protection of interests therein under the laws of all jurisdictions,
      (d) rights and benefits under leases, subleases, and rights thereunder,

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (e)
      rights and benefits under Acquired Contracts, agreements, contracts, indentures,
      mortgages, instruments, Encumbrances,
      guaranties, other similar arrangements, and rights thereunder, (f) accounts
      receivable, notes under which Seller is the payee, and other receivables, (g)
      securities (such as the capital stock in
      its
      Subsidiaries), (h) claims, deposits, prepayments, refunds, causes of action,
      choses in action, rights of recovery, rights of set off, and rights of
      recoupment (including any such item relating to the payment of Taxes), (i)
      franchises, approvals, permits, licenses, orders, registrations, certificates,
      variances, and similar rights obtained from governments and governmental
      agencies, and (j) books, records, ledgers, files, documents, correspondence,
      lists, plats, plans, drawings, and specifications, creative materials,
      advertising and promotional materials, studies, reports, and other printed
      or
      written materials; provided, however, that the Acquired Assets shall not include
      any of the foregoing to the extent expressly included in the Excluded Assets.
      

     

    "Acquired
      Contracts" means all rights and benefits under all contracts, leases, accounts
      receivable, licenses and other agreements or arrangements of Seller
      other
      than any aspect of the foregoing included as part of the Excluded Assets or
      the
      Excluded Liabilities; notwithstanding the foregoing, Acquired Contracts shall
      not include any contracts, leases, accounts receivable, licenses, instruments
      and other agreements or arrangements that are not listed on Section
      4(o)
      of
      Seller Disclosure Schedule and identified as Acquired Contracts unless such
      contracts, leases, accounts receivable, licenses, instruments and other
      agreements
      or
      arrangements were required to be listed on Section 4(o)
      of
      Seller
      Disclosure
      Schedule
      and the Buyer delivers, in its discretion, written notice to Seller
      stating
      that such contract, lease, accounts receivable, license, instrument or other
      agreement or arrangement shall be included among the Acquired Contracts.

     

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

     

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

     

    “Affiliated
      Group” means any affiliated group within the meaning of Code Section 1504(a) or
      any similar group defined under a similar provision of state, local, or foreign
      law.

     

    “Agreement”
      has the meaning set forth in the preface above.

     

    “Assumed
      Liabilities” has the meaning set forth in Section 2(b)(i). 

     

    “Authorized
      Buyer Party” shall mean any of Jack Waterman, CEO of Holdings,
      Philip
      N.
      Kaplan,
      Chief
      Operating Officer,
      President
      of
      Holdings, Mark
      Z.
      Belzowski, Chief Financial Officer and Treasurer of Holdings,
      or
Arturo
      Sida, Chief Legal Officer and Secretary of Holdings.

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Business”
      has the meaning set forth in the recitals above.

     

    “Business
      Day” has the meaning set forth in Section 11(g).

     

    “Buyer”
      has the meaning set forth in the preface above.

     

    “Buying
      Parties” has the meaning set forth in the preface above.

     

    “Buying
      Parties Group” has
      the
      meaning set forth in Section 10(b).

     

    “Cancellation
      and Service Credit Obligations” has
      the
      meaning set for in Section 2(b)(i)(D) below. 

     

    “Cash”
      means cash and cash equivalents (including marketable securities and short-term
      investments) calculated in accordance with GAAP applied on a basis consistent
      with the preparation of the Financial Statements.

     

    “Clear
      Channel Claim” shall mean any claims based upon, related to or arising in
      connection with the facts or circumstances as reflected in a case styled “Eon
      Streams, Inc. v. Clear Channel Communications, Inc.” pending in the United
      States District Court, Eastern District of Tennessee in Knoxville, Tennessee
      (Civil Action No. 3:05-CV-578). 

    

    “Closing”
      has the meaning set forth in Section 2(e) below.

     

    “Closing
      Date
      Balance Sheet”
has
      the
      meaning set forth in Section 2(b)(i)(B)
      below.

     

    “Closing
      Date” has the meaning set forth in Section 2(e)
      below.

     

    “COBRA”
      means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code
      Section 4980B, and the requirements of any analogous state health care
      continuation laws.

     

    “Code”
      means the Internal Revenue Code of 1986, as amended.

     

    “Confidential
      Information” means any information regarding the business and affairs of
      Seller and
      its
      Subsidiaries or Holdings and its Subsidiaries that is not generally available
      to
      the public on the date in question and that derives independent economic value,
      actual or potential, from not being generally known to, and not being readily
      ascertainable by proper means by, any Person. Information that may be included
      in Confidential Information includes matters of a technical nature (including
      Intellectual Property, know-how, computer programs, software, patented as
      unpatented technology, source-code, accounting methods, and documentation),
      matters of a business nature (such as information about contract forms, costs,
      profits, employees, promotional methods, markets, market or marketing plans,
      sales, and client accounts), plans for further development, and any other
      information meeting the definition of Confidential Information set forth above.
      

     

    “Controlled
      Group” has the meaning set forth in Code Section 1563.

     

    “Disclosure
      Document” has
      the
      meaning set forth in Section 3(d)(i).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Employment
      Agreements” has the meaning set forth in Section 7(a)(viii).

     

    “Employee
      Benefit Plan” means any (a) nonqualified deferred compensation or retirement
      plan or arrangement, (b) qualified defined contribution retirement plan or
      arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
      benefit retirement plan or arrangement which is an Employee Pension Benefit
      Plan
      (including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
      material fringe benefit or other retirement, bonus, or incentive plan or
      program.

     

    “Employee
      Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).

     

    “Employee
      Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

     

    “Encumbrance”
      shall mean any mortgage, pledge, assessment, security interest, deed of trust,
      lease, lien, adverse claim, levy, charge or other encumbrance of any kind,
      or
      any conditional sale or title retention agreement or other agreement to give
      any
      of the foregoing in the future.

     

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

     

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

     

    “ERISA
      Affiliate” means each entity which is treated as a single employer with
      Seller
      for
      purposes of Code Section 414.

     

    "Escrow
      Agent" has the meaning set forth in the Escrow Agreement.

     

    "Escrow
      Agreement" means the Escrow Agreement, dated as of the Closing Date, by and
      among Holdings, the Buyer, Seller
      and the
      Escrow Agent in the form of Exhibit
      A
      attached
      hereto, as amended, modified, restated, superseded or replaced from time to
      time. 

     

    “Escrow
      Shares”
      has the meaning set forth in Section 2(c)(iii).

     

    “Excluded
      Assets” means (i) the corporate
      charter,
      qualifications to conduct business as a foreign corporation, arrangements with
      registered agents relating to foreign qualifications, taxpayer and other
      identification numbers, seals, minute books, stock transfer books, blank stock
      certificates and other
      documents relating to the organization, maintenance, and existence of
      Seller
      as a
      corporation,
      (ii)
      any of the rights of Seller
      under
      this Agreement,
      any
      Transaction Document,
      any
      side
      agreement between Seller
      on the
      one hand and the Buyer on the other hand entered into on or after the date
      of
      this Agreement,
      (iii)
      the Clear Channel Claim, (v) Cash and (vi) the assets listed on Exhibit
      B
      attached
      hereto.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Excluded
      Liabilities” shall have
      the
      meaning set forth in Section 2(b)(ii).

     

    “Fiduciary”
      has the meaning set forth in ERISA Section 3(21).

     

    “Financial
      Statements” has the meaning set forth in Section 4(g)
      below.

     

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

     

    “Holdings
      Common Stock” means the
      common
      stock, $.001 par value, of Holdings. 

     

    “Holdings”
      has the meaning set forth in the preface above.

     

    “Holdings’
      knowledge” is applicable to certain of those warranties and representations set
      forth in Section 5 of this Agreement or elsewhere in this Agreement, which
      are
      subject to the qualification “to Holdings’ knowledge” or “to the knowledge of
      Holdings,” or otherwise limited to matters “known” to Holdings. Holdings will be
      deemed to have "knowledge" of a matter if
      any
      Authorized Officer
      has
      actual knowledge of the matter after making reasonable inquiry and reasonable
      diligence with respect to the matter in question. 

     

    “Holdings
      Material Adverse Effect” shall mean an effect or effects which, individually or
      in the aggregate is materially adverse to the business, financial condition,
      assets, or operations of Holdings and its Subsidiaries, taken as a
      whole.  

     

    “Indemnified
      Party” has the meaning set forth in Section 10(c) below.

     

    “Indemnifying
      Party” has the meaning set forth in Section 10(c) below.

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Limited
      Accounts” shall mean Accrued Liabilities, Cancellation and Service Credit
      Obligations, and Prepaid Accounts. 

     

    “Market
      Price” means, with respect to the Holdings Common Stock, the average of the
      closing price, as reported by the principal United States market for the
      Holdings Common Stock, of the Holdings Common Stock on the twenty
      (20)
      trading
      days preceding the date of determination. 

     

    “Most
      Recent Balance Sheet” means the balance sheet contained within the Most Recent
      Financial Statements.

     

    “Most
      Recent Financial Statements” has the meaning set forth in Section 4(g)
      below.

     

    “Most
      Recent Fiscal Month End” has the meaning set forth in Section 4(g)
      below.

     

    “Most
      Recent Fiscal Year End” has the meaning set forth in Section 4(g)
      below.

     

    “Most
      Recent Form 10-K” has the meaning set forth in Section 3(d)(i)
      below.

     

    “Multiemployer
      Plan” has the meaning set forth in ERISA Section 3(37).

     

    “Open
      Source Materials” has the meaning set forth in Section 4(m)
      below.

     

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

     

    “Party”
      and “Parties” have the respective meanings set forth in the preface
      above.

     

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

     

    “Permitted
      Encumbrances” means (a) liens of current taxes and assessments not yet
      delinquent, and (b) liens imposed by law and incurred in the ordinary course
      of
      business for obligations not yet due to materialmen, warehousemen, landlords
      and
      the like.

     

    “Prepaid
      Accounts” shall
      have
      the
      meaning set forth in Section 2(b)(i)(E)
      below.

     

    “Prepaid
      Accounts Cap” has the meaning set forth in Section (2)(c)(iv)
      below.

     

    “Principal
      Stockholders” has the meaning set forth in the preamble of this
      Agreement.

     

    “Prohibited
      Transaction” has the meaning set forth in ERISA Section 406 and Code Section
      4975.

     

    “Projected
      Balance Sheet” has
      the
      meaning set forth in Section 2(d).

     

    “Purchase
      Price” has the meaning set forth in Section 2(c) below. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Purchase
      Shares” has the meaning set forth in Section 2(c)
      below.

     

    “Quest
      and Clear Channel Liabilities” means all Liabilities of any kind related to the
      Quest Claim or the Clear Channel Claim, including, without limitation, any
      attorneys fees, costs or other expenses incurred with respect to the period
      preceding Closing. 

     

    “Quest
      Claim” shall mean shall
      mean any claims based upon, related to or arising in connection with the facts
      or circumstances that caused the entry to be made of the
      liability identified on the Closing Date Balance Sheet as the “Old
      BellSouth/Quest Payable” and is reflected in the case styled “Quest
      Communications Corporation, Inc. v. EON Streams, Inc. pending in Chancery Court,
      Knox County, Tennessee (Docket Number 160386-2).

     

    “Reviewed
      Closing Date Balance Sheet” has the meaning set forth in Section
      2(d)(i)

     

    “SEC
      Filings” has the meaning set forth in Section 3(d)(i). 

     

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

     

    “Seller”
      has the meaning set forth in the preamble of this Agreement; however, unless
      otherwise required by the context, “Seller” shall include Seller and its
      Subsidiaries.

     

    “Seller
      Disclosure Schedule” has the meaning set forth in Section 4 below.

     

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

     

    “Seller
      Material Adverse Effect” shall mean an effect or effects which, individually or
      in the aggregate is materially adverse to the business, financial condition,
      assets, or operations of Seller and its Subsidiaries, taken as a
      whole.

     

    “Seller’s
      knowledge” is applicable to certain of those warranties and representations set
      forth in Section 4 of this Agreement or elsewhere in this Agreement, which
      are
      subject to the qualification “to Seller’s knowledge” or “to the knowledge of
      Seller,” or otherwise limited to matters “known” to Seller. Seller will be
      deemed to have "knowledge" of a matter if any officer of Seller, including
      without limitation, Stephen W. Newman and Kevin Woods, has actual knowledge
      of
      the matter after making reasonable inquiry and reasonable diligence with respect
      to the matter in question.

     

    “Seller
      Long-Term Debt” has the meaning set forth in Section 2(b)(i)(B).

     

    “Seller’s
      Representative” means Thomas Skelton. 

     

    “Selling
      Parties Group” has the meaning set forth in Section 10(b)(ii).

     

    “Subsidiary”
      means any Person
      with
      respect to which a specified Person (or a Subsidiary thereof) previously
      owned,
      or
      currently owns,
      or
      subsequently acquires
      a
      majority of the equity interest or previously had,
      or
      currently has,
      or
      subsequently acquires
      the
      power to vote or direct the voting of sufficient securities to elect
a
      majority of the directors or, with respect to an entity other than a
      corporation, the governing body most similar to a board of
      directors.

     

    “Service
      Level Agreements” means those agreements between Seller or its Subsidiaries and
      its customers governing such customer relationship.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Tax”
      means any federal, state, local, or foreign income, gross receipts, license,
      payroll, employment, excise, severance, stamp, occupation, premium, windfall
      profits, environmental (including taxes under Code Section 59A), customs duties,
      capital stock, franchise, profits, withholding, social security (or similar),
      unemployment, disability, real property, personal property, sales, use,
      transfer, registration, value added, alternative or add-on minimum, estimated,
      or other tax of any kind whatsoever, including any interest, penalty, or
      addition thereto, whether disputed or not.

     

    “Tax
      Return” means any return, declaration, report, claim for refund, or information
      return or statement relating
      to
      Taxes, including any schedule or attachment thereto, and including any amendment
      thereof,
      any
      report on Schedule K-1 (Form 1041) and similar state or local reports of equity
      owner’s shares of income, deductions, etc.

     

    “Third
      Party Claim” has the meaning set forth in Section 10(c)(i) below.

     

    “Transaction
      Documents” means this Agreement, the Escrow
      Agreement, the Employment Agreements, the Bill of Sale, the Assignment and
      Assumption of Acquired Contracts, the Assignment of Intellectual Property,
      Assignment of Patents and any other document, schedule, letter, certificate
      or
      agreement attached hereto as an Exhibit or delivered pursuant to this Agreement
      or in connection with the transactions described herein.  

     

    “Unassigned
      Asset” means anything that would be an Acquired Contract or other Acquired Asset
      (including any claim, contract, commitment, sales order or purchase order or
      any
      right or any benefit arising thereunder or resulting therefrom) except for
      the
      fact that an attempted transfer or assignment thereof without the consent of
      any
      other Person would constitute a breach of such Acquired Contract (or the
      agreement governing use of such Acquired Asset) or adversely affect the rights
      to be transferred or assigned; provided however, at the time the required
      consent of the other Person is obtained, such Unassigned Asset shall immediately
      and automatically become, as applicable, an Acquired Asset and/or Acquired
      Contract. 

     

    “VitalStream
      Disclosure Schedule” has the meaning set forth in Section 5 below. 

     

    “WARN
      Act” means the Worker Adjustment and Retraining Notification Act (WARN), as
      amended. 

     

    2. Basic
      Transaction.

     

    (a) Purchase
      and Sale of Assets.
      On and
      subject to the terms and conditions of this Agreement, the Buyer agrees to
      purchase from Seller,
      and
Seller
      agrees
      to sell, transfer, convey, and deliver to the Buyer, all of the Acquired Assets
      at the Closing for the consideration specified below in this Section
      2.

     

    (b) Assumption/Exclusion
      of Liabilities.
      

     

    (i) Assumed
      Liabilities.
      Subject
      to the conditions specified in this Agreement, on the Closing Date, the Buyer
      will assume and agree to pay, defend, discharge and perform as and when due
      the
      following liabilities and obligations of Seller
      (the
“Assumed Liabilities”):

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (A) all
      trade
      payables and other current liabilities listed in Section 4(q)(ii) of the Seller
      Disclosure Schedule, excluding any Quest and Clear Channel Liabilities (the
      “Accrued Liabilities”), but in no case shall the amounts assumed exceed the
      amounts listed thereon for each individual account nor the aggregate amount
      listed thereon for all such liabilities and obligations; 

     

    (B) all
      long-term debt reflected on the balance of the Company dated as of the date
      hereof (the “Closing Date Balance Sheet”) delivered to the Buying Parties on the
      date hereof and included in Section 2(b)(i) of the Seller Disclosure Schedule,
      excluding any Quest and Clear Channel Liabilities (the “Seller Long-Term Debt”),
      but in no case shall the amount of the Seller Long-Term Debt exceed the amount
      of long-term debt identified as an Assumed Liability on the Closing Date Balance
      Sheet for each individual item nor the aggregate amount identified thereon
      for
      all such liabilities and obligations; 

     

    (C) the
      liabilities and obligations under the Acquired Contracts arising or accruing
      after the Closing Date but only to the extent that Seller’s
      rights
      and benefits under such Acquired Contracts have been or will be validly assigned
      to Buyer pursuant to this Agreement;

     

    (D) the
      obligations to provide cash or future services to past or current customers
      on
      account of such customers having cancelled service or otherwise being entitled
      to a service credit that are listed on Schedule 4(p)(iii)
      (the “Cancellation and Service Credit Obligations”); and

     

    (E) the
      obligations to provide services for which customers have prepaid in the amount
      and of the type that are listed on Schedule 4(p)
      (iv)
      of Seller
      Disclosure
      Schedule
      (the “Prepaid Accounts”).

     

    (ii) Excluded
      Liabilities.
      Notwithstanding anything to the contrary contained in this Agreement, Buyer
      will
      not assume or be liable for any of the following liabilities or obligations
      of
Seller
      (the
“Excluded Liabilities”), and none of the following liabilities or obligations
      will be Assumed Liabilities for purposes of this Agreement:

     

    (A) any
      of
Seller’s
      Liabilities or obligations under this Agreement or any other Transaction
      Document;

     

    (B) any
      of
Seller’s
      Liabilities or obligations for expenses, income taxes or fees incident to or
      arising out of the negotiation, preparation, approval or authorization
of
      this
      Agreement or the consummation (or preparation for the consummation) of the
      transactions contemplated hereby (including, without limitation, all
      attorneys’,
      accountants’ and brokers’ fees;

     

    (C) any
      of
Seller’s
      Liabilities or obligations arising by reason of any violation or alleged
      violation by Seller,
      its
      agents or affiliates of any federal, state, local or foreign law or any
      requirement of any governmental authority or by reason of any breach or alleged
      breach by Seller,
      its
      agents or affiliates of any agreement, contract, lease, commitment, instrument,
      judgment, order or decree (regardless of when any such violation or breach
      is
      asserted or alleged to have occurred);

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (D) any
      Liabilities and obligations of Seller
      for
      product liability claims (including, without limitation, claims for destruction
      of property, personal injury or death), negligent or nonconforming service
      claims and related lawsuits (i) arising on or prior to the Closing Date or
      (ii)
      arising after the Closing Date with respect to products that became finished
      goods prior to the Closing Date or with respect to services rendered prior
      to
      the Closing Date (without regard to the date of any alleged
      accident);

     

    (E) any
      Liability or obligation against which Seller
      is
      insured or otherwise indemnified;

     

    (F) any
      Liability or obligation of Seller
      for the
      payment of dividends or the repurchase or other acquisition of any shares of
      its
      capital stock;

     

    (G) any
      Liability or obligation of Seller
      to any
      Affiliate or former Affiliate of Seller;
      

     

    (H) any
      Quest
      and Clear Channel Liability; 

     

    (I) any
      Liability or obligation of Seller
      under
      any Acquired Contract arising on or before the Closing Date; 

     

    (J) the
      $30,000 retention bonus agreed to by Seller; 

     

    (K) 
      except
      to the extent that the Buyer receives, pursuant to Section 9(h) below all
      benefits with respect with an Unassigned Asset, any Liability arising out of
      or
      with respect to such Unassigned Asset; and 

     

    (L) any
      other
      Liability or obligation of Seller
      not
      expressly assumed by Buyer under Section 2(b) (i) above.

     

    (iii) On
      and
      subject to the terms and conditions of this Agreement, the Buyer agrees to
      assume and become responsible for all of the Assumed Liabilities at the Closing.
      The Buyer will not assume or have any responsibility, however, with respect
      to
      any other obligation or Liability not included within the definition of Assumed
      Liabilities.

     

    (c)
      Consideration
      Provided by Buyer for Acquired
      Assets.
      Subject
      to the terms and conditions of this Agreement, as total consideration for the
      Acquired Assets (the “Purchase Price”), at the Closing:

     

    (i) Holdings
      agrees to issue to Seller, and deliver to Seller, or the Escrow Agent as
      provided in Section 2(c)(ii) below, with such legends and other restrictions
      as
      are described in Section 2(g), at the Closing, One Million Seven Hundred
      Forty-Seven Thousand Three Hundred Twelve (1,747,312) shares of Holdings Common
      Stock (the “Purchase Shares”) (which number of shares was calculated based on a
      purchase price of $17,001,345
      divided by a price per share of $9.73). 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (ii) Holdings
      agrees that if the closing price per share of Holdings Common Stock on the
      last
      trading day before the Closing Date is below $9.73 per share, the amount of
      the
      Purchase Price (and the number of Purchase Shares) shall be adjusted at Closing
      such that Holdings will issue to Seller such additional amount of shares equal
      to 50% of the amount derived from dividing the amount of the diminution in
      value
      of the Purchase Shares by the trading price per share that is below $9.73,
      represented by the following formula:

     

    X
      =
      (1,747,312) ($9.73 - Y) ÷
      Y
•1⁄2
      

     

    
      	
              Based
                on the variables below:

               

            	 	 
	
              Original
                Number of Shares

               

            	
              =

               

            	
              1,747,312

               

            
	
              Original
                Price P/Share

               

            	
              =

               

            	
              $9.73

               

            
	
              Trading
                Price P/Share below $9.73

               

            	
              =

               

            	
              Y

               

            
	
              Additional
                Number of Shares

               

            	
              =

               

            	
              X

               

            

    

    (iii) Holdings
      agrees to transmit to the Escrow Agent, to be held subject to the terms and
      conditions of the Escrow Agreement, Two Hundred Sixty-Two Thousand Ninety-Seven
      (262,097) of the Purchase Shares (the “Escrow Shares”). The Escrow Shares shall
      be available to satisfy any amounts owed by Seller or the Principal Stockholders
      to the Buying Parties pursuant to Section 10 of this Agreement or Section 2(d)
      below, subject to the terms of this Agreement and the Escrow Agreement. Any
      portion of the Escrow Shares not used to offset Adverse Consequences as
      specified in Section 10 below or post-Closing adjustments as specified in
      Section 2(d) below (or reserved with respect to claimed losses related to
      litigation pending or threatened in writing) shall be released by the Escrow
      Agent to Seller as provided in the Escrow Agreement. 

     

    (d) Post-Closing
      Adjustments to the Purchase Price.
      

     

    (i) Attached
      hereto as Exhibit
      K
      is a
      balance sheet which represents Seller’s good faith estimate of its assets,
      liabilities and stockholders equity as of the Closing Date (the “Projected
      Balance Sheet”), which Projected Balance Sheet is marked (A) to distinguish
      assets that Seller acknowledges are Acquired Assets from assets that Seller
      believes are not Acquired Assets, and (B) to distinguish liabilities that Seller
      believes are Assumed Liabilities from liabilities that Sellers acknowledges
      are
      not Assumed Liabilities. During the sixty-day (60-day) period following the
      Closing, Buyer shall modify the Projected Balance Sheet to produce a balance
      sheet dated as of the Closing Date (the “Reviewed Closing Date Balance Sheet”)
      reflecting all changes required by GAAP and by information obtained by it
      subsequent to the Closing, which Closing Date Balance Sheet shall, at the
      Buyer’s expense, at a minimum be reviewed by Rose Snyder & Jacobs.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (ii) To
      the
      extent that (A) the difference between the book value of the current assets
      included in the Acquired Assets, less the book value of the Assumed Liabilities,
      in each case as reflected on the Projected Balance Sheet, exceeds (B) the
      difference between the book value of the current assets included in the Acquired
      Assets, less the book value of the Assumed Liabilities, in each case as
      reflected on the Reviewed Closing Date Balance Sheet, the Purchase Price shall
      be reduced by the amount of such excess. For purposes of this subsection (ii),
      (A) will be deemed to exceed (B) if: (X) the difference calculated in (A) is
      a
      smaller negative number than the difference calculated in (B), (Y) the
      difference calculated in (A) is a larger positive number than the difference
      calculated in (B), or (Z) the difference calculated in (A) is a positive number
      and the difference calculated in (B) is a negative number. Any reductions to
      the
      Purchase Price pursuant to this Section 2(d)(ii) shall be payable out of the
      Escrow Shares using the Market Price as of the Closing Date. 

     

    (iii) Seller
      and the Buyer shall use their reasonable best efforts to mutually agree upon
      the
      amount of any adjustment under Section 2(d)(ii) not later than the later to
      occur of the date that is (a) sixty (60) days following the Closing, or (b)
      thirty (30) days following Buyer’s delivery to Seller of the Reviewed Closing
      Date Balance Sheet, after which date, if agreement has not been reached, either
      may initiate a legal action in order to have a court determine the amount of
      the
      adjustment.

     

    (e) The
      Closing.
      The
      closing of the transactions contemplated by this Agreement (the “Closing”) shall
      take place at the offices of Holdings in Irvine, California commencing at 9:00
      a.m. local time on the second Business Day following the satisfaction or waiver
      of all conditions to the obligations of the Parties to consummate the
      transactions contemplated hereby (other than conditions with respect to actions
      the respective Parties will take at the Closing itself) or such other date
      and
      time as the Parties may mutually determine (the “Closing Date”). The parties
      shall use commercially reasonable efforts to cause the Closing to occur on
      the
      date hereof. 

     

    (f) Deliveries
      at the Closing.
      At the
      Closing, (i) Seller will deliver to the Buyer (or cause its Affiliates to
      deliver to Buyer) the various certificates, instruments, and documents referred
      to in Section 7(a) below; (ii) the Buyer will deliver to Seller the various
      certificates, instruments, and documents referred to in Section 7(b) below;
      and (iii); the Buyer will deliver to Seller and/or the Escrow Agent the
      consideration specified in Section 2(c) above. 

     

    (g) Legends.
      Each
      Purchase Share will be imprinted with a legend substantially in the following
      form:

     

    "THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE SECURITIES
      REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
      BE
      OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN
      A
      FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
      UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
      TO
      RULE 144 UNDER SAID ACT."

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    In
      the
      absence of a registration statement covering the transfer of a Purchase Share,
      Holdings must be furnished with a written opinion reasonably satisfactory to
      Holdings in form and substance from counsel reasonably satisfactory to Holdings
      to the effect that the holder may transfer the Purchase Share as desired without
      registration under the Securities Act. VitalStream agrees to permit its counsel
      to deliver such opinions in accordance with its then-current policy on Rule
      144
      opinions, subject to receipt of its standard reimbursement for such any opinion
      (currently $500 per opinion). The foregoing notwithstanding, the Purchase Shares
      and Seller’s rights to receive distributions of Escrow Shares under the Escrow
      Agreement may be transferred, to the extent permitted by Section 9(e), to
      Seller’s stockholders or a trust or other entity established for the benefit of
      such shareholders upon presentation of documentation showing that the transfer
      represents a distribution in accordance with equity interests and not for
      consideration. 

     

    (h) Tax
      Free Reorganization.
      The
      transactions contemplated by this Agreement are being undertaken as part of
      a
“plan of reorganization” within the meaning of Treasury Regulation Section
      1.368-1(c) pursuant to which Seller will (i) transfer substantially all of
      its
      assets solely in exchange for the Purchase Shares and assumption by Buyer of
      certain Seller liabilities; and (ii) distribute the Purchase Shares to Seller’s
      shareholders. As such, the transactions contemplated hereunder are intended
      to
      qualify as a “reorganization” within the meaning of Section 368(a)(1)(C) of the
      Code. Neither Holdings nor Buyer, however, makes any representation or warranty
      that the subject transactions will so qualify.

     

    3. Investment
      Representations of Seller.
      Seller
      represents and warrants to the Buying Parties that the statements contained
      in
      this Section 3 are correct and complete as of the date of this Agreement and
      will be correct and complete as of the Closing Date (as though made then and
      as
      though the Closing Date were substituted for the date of this Agreement).
 

     

    (a) Experience
      and Status.
      Seller
      is an “accredited investor,” as defined in Rule 501(a) under the Securities Act,
      for the reason that all of its stockholders are individually “accredited
      investors,” as defined in Rule 501(a) under the Securities Act. Seller an is
      sophisticated and experienced in evaluating technology companies such as
      Holdings, is able (alone or with its advisors) to fend for itself in
      transactions such as the one contemplated by this Agreement, has such knowledge
      and experience in financial and business matters that it is capable of
      evaluating the merits and risks of his prospective investment in Holdings,
      and
      has the ability to bear the economic risks of the investment.

     

    (b) Investment.
      Seller
      is acquiring the Purchase Shares for investment for its own account and not
      with
      the view to, or for resale in connection with, any distribution thereof (other
      than a distribution to its shareholders in accordance with Section 2(c) hereof).
      Seller understands that the Purchase Shares have not been registered under
      the
      Securities Act by reason of a specific exemption from the registration
      provisions of the Securities Act which depends upon, among other things, the
      bona fide nature of the investment intent as expressed herein. Seller further
      represents that it does not have any contract, undertaking, agreement or
      arrangement with any person to sell, transfer or grant participation to any
      third person with respect to any of the Purchase Shares. Seller understands
      and
      acknowledges that the offering of the Purchase Shares pursuant to this Agreement
      will not be registered under the Securities Act on the grounds that the sale
      provided for in this Agreement and the issuance of securities hereunder is
      exempt from the registration requirements of the Securities Act. 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (c)
      Rule
      144.
      Seller
      acknowledges that the Purchase Shares must be held indefinitely unless
      subsequently registered under the Securities Act or an exemption from such
      registration is available. Seller is aware of the provisions of Rule 144
      promulgated under the Securities Act which permit limited resale of shares
      purchased in a private placement subject to the satisfaction of certain
      conditions. Seller covenants that, in the absence of an effective registration
      statement covering the stock in question, Seller will sell, transfer, or
      otherwise dispose of the Purchase Shares only in a manner consistent with
      Section 2(g).

     

    (d)
      Access
      to Data/Representations.
      

     

    (i) Seller
      acknowledges and represents that in making the decision to acquire the Purchase
      Shares, it has relied solely upon (A) representations and warranties of the
      Buying Parties contained in this Agreement and the other Transaction Documents,
      (B) written information provided by Holdings or Buyer directly to Seller, (C)
      information contained in the Annual Report on Form 10-K for the year ended
      December 31, 2005 filed by Holdings with the Securities and Exchange Commission
      and all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed
      by
      Holdings since January 1, 2006 with the Securities and Exchange Commission
      (collectively, the “SEC Filings”), and (D) information regarding the Buying
      Parties set forth in, or incorporated by reference into, the Disclosure Document
      / Information Statement for Asset Purchase Agreement delivered by Holdings
      to
      Seller and the stockholders of Seller (the “Disclosure Document”). 

     

    (ii) Seller
      represents and affirms that none of the following information has ever been
      represented, guaranteed or warranted to it or any of its officers, employees
      or
      agents, expressly or by implication, by any Person: (i) the approximate or
      exact
      length of time that it will be required to remain a security holder of Holdings;
      (ii) the percentage of profit and/or amount of or type of consideration, profit
      or loss to be realized, if any, as a result of an investment in Holdings; or
      (iii) the possibility that the past performance or experience on the part of
      Holdings or any affiliate, or any officer, director, employee or agent of the
      foregoing, might in any way indicate or predict the results of ownership of
      any
      of the Purchase Shares or the potential success of Holdings’
operations.

     

    (e)
      Legends.
      Seller
      understands that the certificates evidencing the Purchase Shares will bear
      a
      legend substantially in the form set forth in Section 2(g), together with any
      other legends required by applicable state securities laws, and will be subject
      to the restrictions set forth in Section 2(g).

     

    (f)
      Place
      of Business/Residence.
      Seller’s principal office is located in the State of Tennessee, and Seller has
      received all offers, copies of the Transaction Documents and other materials
      regarding the Buying Parties in the State of Tennessee. Section 3(f) of the
      Seller Disclosure Schedule contains a true, correct and complete list of all
      stockholders of Seller and includes the address(es) for each stockholder to
      which the Disclosure Document and all other information regarding the
      transactions contemplated by this Agreement were delivered. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    4. Representations
      and Warranties of Seller.
      Seller
      and each of the Principal Stockholders represent and warrant to the Buying
      Parties that the statements contained in this Section are correct and complete
      as of the date of this Agreement and will be correct and complete as of the
      Closing Date (as though made then and as though the Closing Date were
      substituted for the date of this Agreement throughout this Section), except
      as
      set forth in the disclosure schedule delivered by Seller in connection with
      the
      Agreement (the “Seller Disclosure Schedule”). Seller Disclosure Schedule will be
      arranged in paragraphs corresponding to the lettered and numbered paragraphs
      and
      subparagraphs contained in this Section 4. Without limiting the generality
      of the foregoing, the mere listing (or inclusion of a copy) of a document or
      other item shall not be deemed adequate to disclose an exception to a
      representation or warranty made herein (unless the representation or warranty
      has to do with the existence of the document or other item itself).
      The
      Parties intend that each representation, warranty, and covenant contained herein
      shall have independent significance. If any Party has breached any
      representation, warranty, or covenant contained herein in any respect, the
      fact
      that there exists another representation, warranty, or covenant relating to
      the
      same subject matter (regardless of the relative levels of specificity) which
      the
      Party has not breached shall not detract from or mitigate the fact that the
      Party is in breach of the first representation, warranty, or
      covenant. 

     

    (a)
      Organization
      of Seller.
      Seller
      is a corporation, duly organized,
      validly
      existing
      and in
      good standing under
      the
      laws of the State of Tennessee.
      Seller is duly
      qualified as a foreign corporation and is in good standing in the states and
      provinces listed on Section 4(a) of Seller Disclosure Schedule, which are the
      only jurisdictions in which such qualification is necessary or required under
      applicable law as a result of the conduct of Seller’s business or the ownership
      of its properties. Prior to the execution of this Agreement, Seller has
      delivered to Holdings true and complete copies of its Certificate of
      Incorporation and Bylaws as currently in effect on the date hereof.

     

    (b)
      Authorization
      of Transaction.
      Seller
      has full
      power and authority (including full
      corporate
      power
      and authority) to execute and deliver this Agreement and other Transaction
      Documents to which Seller
      is a
      party and to perform its obligations hereunder and thereunder. Without limiting
      the generality of the foregoing, the board of directors of Seller
      have
      duly authorized the execution, delivery, and performance of this Agreement
      and
      the other Transaction Documents to which Seller
      is a
      party by Seller.
      This
      Agreement and the other Transaction Documents to which Seller is a
      party,
      assuming
      the due authorization, execution and delivery hereof and thereof by the Buying
      Parties party hereto and thereto,
      constitute the valid and legally binding obligations of Seller,
      enforceable in accordance with their terms and conditions,
      except
      as enforceability may be limited by applicable bankruptcy, insolvency or similar
      laws affecting or relating to the enforcement of creditors’ rights generally or
      by equitable principles relating to enforceability.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (c)
      Noncontravention.
      Neither
      the execution and the delivery of this Agreement nor any of the other
      Transaction Documents to which Seller
      is a
      party,
      nor the
      consummation of the transactions contemplated hereby
      (including the assignments and assumptions referred to in Section 2
      above),
      will
      (i) violate any constitution, statute, regulation, rule, injunction, judgment,
      order, decree, ruling, charge, or other restriction of any
      government,
      governmental agency, or court to which any of Seller
      and its
      Subsidiaries is subject or any provision of the charter or bylaws of any of
      Seller
      and its
      Subsidiaries or (ii) conflict with, result in a breach of, constitute a default
      under, result in the acceleration of, create in any party the right to
      accelerate, terminate, modify, or cancel, or require any notice under any
      agreement, contract, lease, license, instrument, or other arrangement to which
      any of Seller
      and its
      Subsidiaries
      is a party or by which it is bound or to which any of its assets is subject,
      including
      any Acquired Contract (or
      result
      in the imposition of any Encumbrance
      upon any
      of its assets).
      None of
      Seller
      and its
      Subsidiaries needs to give any notice to, make any filing with, or obtain any
      authorization, consent, or approval of any government or governmental agency
      in
      order for the Parties to consummate the transactions contemplated by this
      Agreement or any other Transaction Documents to which Seller
      is a
      party
      (including the assignments and assumptions referred to in Section 2
      above). Except
      as
      set forth in Section 4(c) of the Disclosure Schedule (as delivered at Closing),
      there will be no Unassigned Assets immediately following Closing. 

     

    (d)
      Brokers’
Fees.
      Seller
      has
      no
      Liability or obligation to pay any fees or commissions to any broker, finder,
      or
      agent with respect to the transactions contemplated by this
      Agreement.
      None of
      the Subsidiaries of Seller
      has any
      Liability or obligation to pay any fees or commissions to any broker, finder,
      or
      agent with respect to the transactions contemplated by this
      Agreement.

     

    (e)
      Title
      to Assets; Sufficiency of Assets.
      Seller
      and its
      Subsidiaries have good and marketable title to, or a valid leasehold interest
      in, the properties
      and assets used by them, located on their premises,
      or
      shown on the Most Recent Balance Sheet or acquired after the date thereof,
      free
      and clear of all Encumbrances
      (other than Permitted Encumbrances),
      except
      for properties and assets disposed of in the Ordinary Course of Business since
      the date of the Most Recent Balance Sheet. Without
      limiting the generality of the foregoing, Seller
      has good
      and marketable title to all of the Acquired Assets, free and clear of any
Encumbrance
      or
      restriction on transfer, and, at the Closing, will convey to the Buyer good
      and
      marketable title to all of the Acquired Assets, free and clear of any
Encumbrance
      or
      restriction on transfer. The Acquired Assets include all properties and assets
      (tangible and intangible) relating to, used in connection with, or necessary
      or
      useful in, the operation or conduct by Seller
      of
      its Business
      as presently conducted
      and as
      presently proposed to be conducted.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (f)
      Capitalization
      and Subsidiaries.
      

     

    (i) Capitalization.
      The
      authorized capital stock of Seller consists of 50,000,000 shares of no par
      value
      common stock and 1,043,922 shares of no par value preferred stock. There are
      issued and outstanding 8,163,001 shares of common stock of Seller and 1,043,922
      issued and outstanding shares of preferred stock of Seller, which shares of
      stock have been issued to, and are held beneficially and of record by, the
      Persons and in the amounts listed Section 4(f)(i) of Seller Disclosure Schedule.
      Except for the foregoing, there are no shares of capital stock outstanding.
      All
      of the issued and outstanding shares of capital stock of Seller have been duly
      authorized and are validly issued, fully paid, and nonassessable and not subject
      to any restriction or purchase right or forfeiture provision (other than arising
      under governing securities laws). Except for the stock options listed in Section
      4(f)(i) of the Seller Disclosure Schedule, there are no outstanding or
      authorized options, warrants, purchase rights, subscription rights, preemptive
      rights conversion rights, exchange rights, or other contracts or commitments
      to
      which Seller is a party or by which it is bound that could require Seller to
      sell, transfer, or otherwise dispose of any shares of capital stock. There
      are
      no outstanding stock appreciation, phantom stock, profit participation, or
      similar rights with respect to Seller. There are no voting trusts, proxies,
      or
      other agreements or understandings with respect to the voting of any capital
      stock of Seller. The minute books and other records books of Seller are correct
      and complete. Seller is not in default under or in violation of any provision
      of
      its organizational documents.  

     

    (ii) Subsidiaries.
      Section
      4(f)(ii)
      of
      Seller
      Disclosure
      Schedule
      sets forth for each Subsidiary of Seller
      (i) its
      name and jurisdiction of incorporation, (ii) the number of shares of authorized
      capital stock of each class of its capital stock, (iii) the number of issued
      and
      outstanding shares of each class of its capital stock, the names of the holders
      thereof, and the number of shares held by each such holder, (iv) the number
      of
      shares of its capital stock held in treasury, and (v) its directors and
      officers. Each Subsidiary of Seller
      is a
      corporation duly organized, validly existing, and in good standing
      under
      the laws of the jurisdiction of its incorporation. Each Subsidiary of
Seller
      is duly
      authorized to conduct business and is in good standing under the laws of each
      jurisdiction where such qualification is required. Each Subsidiary of
Seller
      has full
      corporate power and authority and all licenses, permits, and authorizations
      necessary to carry on the businesses in which it is engaged and to own and
      use
      the properties owned and used by it.
      Seller
      has
      delivered to the Buyer correct and complete copies of the charter and bylaws
      of
      each Subsidiary of Seller
      (as
      amended to date). All of the issued and outstanding shares of capital stock
      of
      each Subsidiary of Seller
      have
      been duly authorized and are validly issued, fully paid, and nonassessable.
      Seller
      holds of
      record and owns beneficially all of the outstanding shares of each Subsidiary
      of
Seller,
      free
      and clear of any restrictions on transfer (other than restrictions under the
      Securities Act and state securities laws), Taxes, Encumbrances,
      options,
      warrants, purchase rights, contracts, commitments, equities, claims, and
      demands. There are no outstanding or authorized options, warrants, purchase
      rights, subscription rights, conversion rights, exchange rights, or other
      contracts or commitments that could require any of Seller
      and its
      Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of
      any
      of its Subsidiaries or that could require any Subsidiary of Seller
      to
      issue, sell, or otherwise cause to become outstanding any of its own capital
      stock (other than this Agreement). There are no outstanding stock appreciation,
      phantom stock, profit participation, or similar rights with respect to any
      Subsidiary of Seller.
      There
      are no voting trusts, proxies, or other agreements or understandings with
      respect to the voting of any capital stock of any Subsidiary of Seller.
      The
      minute books (containing the records of meetings of the stockholders, the board
      of directors, and any committees of the board of directors), the stock
      certificate books, and the stock record books of each Subsidiary of Seller
      are
      correct and complete. None of the Subsidiaries of Seller
      is in
      default under or in violation of any provision of its charter or bylaws. None
      of
Seller
      or its
      Subsidiaries controls directly or indirectly or has any direct or indirect
      equity participation in any corporation, partnership, trust, or other business
      association which is not a Subsidiary of Seller.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (g) Financial
      Statements.
      Attached
      hereto as Exhibit
      C
      are the
      following financial statements (collectively the “Financial Statements”): (i)
      audited consolidated balance sheets and statements of income, changes in
      stockholders’ equity,
      and cash flow as of and for the fiscal years ended December 31, 2005
      (the
“Most Recent Fiscal Year End”) and December 31, 2004 for Seller
      and its
      Subsidiaries; and (ii) unaudited consolidated and consolidating balance sheets
      and statements of income, changes in stockholders’ equity,
      and cash flow (the “Most Recent Financial Statements”) as of and for the three
      months ended March
      31,
      2006
      (the
“Most Recent Fiscal Month End”) for Seller
      and its
      Subsidiaries. The Financial Statements (including the notes thereto) have been
      prepared in accordance with GAAP applied on a consistent basis throughout the
      periods covered thereby, present fairly the financial condition of Seller
      and its
      Subsidiaries as of such dates and the results of operations of Seller
      and its
      Subsidiaries for such periods, are correct and complete, and are consistent
      with
      the books and records of Seller
      and its
      Subsidiaries (which books and records are correct and complete); provided,
      however, that the Most Recent Financial Statements are subject to normal
      year-end adjustments (which will not be material individually or in the
      aggregate) and lack footnotes and other presentation items. All services or
      amounts owed with respect to the Limited Accounts and the Seller Long-Term
      Debt
      were incurred in the Ordinary Course of Business, and none of the parties other
      than Seller owed/owing with respect to the Limited Accounts are Affiliates
      of
      Seller. 

     

    (h) Events
      Subsequent to Most Recent Fiscal Month
      End.
      Since
      the Most Recent Fiscal Month
      End,
      there has not been any adverse
      change in the business, financial condition, operations, results of operations,
      or future prospects of any of Seller
      and its
      Subsidiaries. Without limiting the generality of the foregoing, since that
      date: 

     

    (i) none
      of
Seller
      and its
      Subsidiaries has sold, leased, transferred, or assigned any of its assets,
      tangible or intangible, other than for a fair consideration in the Ordinary
      Course of Business;

     

    (ii) none
      of
Seller
      and its
      Subsidiaries has entered into any agreement, contract, lease, or license (or
      series of related agreements, contracts, leases, and licenses) either involving
      more than $20,000
      in the
      aggregate throughout its term or outside the Ordinary Course of
      Business;

     

    (iii) no
      party
      (including any of Seller
      and its
      Subsidiaries) has accelerated, terminated, modified, or cancelled any agreement,
      contract, lease, or license (or series of related agreements, contracts, leases,
      and licenses) involving more than $20,000
      in the
      aggregate throughout its term to which any of Seller
      and its
      Subsidiaries is a party or by which any of them is bound;

     

    (iv) none
      of
Seller
      and its
      Subsidiaries has imposed, or permitted the imposition of, any
      Encumbrance
      upon any
      of its assets, tangible or intangible;

     

    (v) none
      of
Seller
      and its
      Subsidiaries has made any capital expenditure (or series of related capital
      expenditures) either involving more than $20,000
      or
      outside the Ordinary Course of Business;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (vi) none
      of
Seller
      and its
      Subsidiaries has made any capital investment in, any loan to, or any acquisition
      of the securities or assets of, any other Person (or series of related capital
      investments, loans, and acquisitions) either involving more than $20,000
      or
      outside the Ordinary Course of Business;

     

    (vii) none
      of
Seller
      and its
      Subsidiaries has issued any note, bond, or other debt security or created,
      incurred, assumed, or guaranteed any indebtedness for borrowed money or
      capitalized lease obligation either involving more than $20,000
      singly
      or
      in the
      aggregate;

     

    (viii) none
      of
Seller
      and its
      Subsidiaries has delayed or postponed the payment of accounts payable and other
      Liabilities outside the Ordinary Course of Business; 

     

    (ix) none
      of
Seller
      and its
      Subsidiaries has cancelled, compromised, waived, or released any right or claim
      (or series of related rights and claims) either involving more than
      $10,000
      or
      outside the Ordinary Course of Business;

     

    (x) none
      of
Seller
      and its
      Subsidiaries has granted any license or sublicense of any rights under or with
      respect to any Intellectual Property;

     

    (xi) there
      has
      been no change made or authorized in the charter or bylaws
      of any
      of Seller
      and its
      Subsidiaries;

     

    (xii) none
      of
Seller
      and its
      Subsidiaries has issued, sold, or otherwise disposed of any of its capital
      stock,
      or
      granted any options, warrants, or other rights to purchase or obtain (including
      upon conversion, exchange, or exercise) any of its capital stock;

     

    (xiii) none
      of
Seller
      and its
      Subsidiaries has declared, set aside, or paid any dividend or made any
      distribution with respect to its capital stock
      (whether
      in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
      capital stock;
       

     

    (xiv) none
      of
Seller
      and its
      Subsidiaries has experienced any damage, destruction, or loss (whether or not
      covered by insurance) to its property;

     

    (xv) none
      of
      Seller and its Subsidiaries has experienced any loss as a result of fraud,
      theft, conversion, embezzlement or other crime pertaining to the unlawful use
      or
      possession of another’s property;

     

    (xvi) none
      of
Seller
      and its
      Subsidiaries has made any loan to, or entered into any other transaction with,
      any of its directors,
      officers,
      or
employees
      (other
      than the payment of salary in
      the
      Ordinary Course of Business);

     

    (xvii) except
      for Seller’s agreement to pay a retention bonus in the amount of $30,000 to one
      of Seller’s employee’s, none of Seller
      and its
      Subsidiaries has entered into any employment contract or collective bargaining
      agreement, written or oral, or modified the terms of any such existing contract
      or agreement;

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (xviii) none
      of
Seller
      and its
      Subsidiaries has granted any increase in the base compensation of any of its
      directors,
      officers
      and
      employees;

     

    (xix) none
      of
Seller
      and its
      Subsidiaries has adopted, amended, modified, or terminated any bonus,
      profit-sharing, incentive, severance, or other plan, contract, or commitment
      for
      the benefit of any of its directors, officers, and employees (or taken any
      such
      action with respect to any other Employee Benefit Plan);

     

    (xx) none
      of
Seller
      and its
      Subsidiaries has made any other change in employment terms for any of its
      directors,
      officers
      and
      employees outside the Ordinary Course of Business;

     

    (xxi) none
      of
Seller
      and its
      Subsidiaries has made or pledged to make any charitable or other capital
      contribution outside
      the Ordinary Course of Business;

     

    (xxii) none
      of
      Seller and its Subsidiaries has paid any amount to any third party with respect
      to any Liability or obligation (including any costs and expenses Seller has
      incurred or may incur in connection with this Agreement and the transactions
      contemplated hereby) which would not constitute an Assumed Liability if in
      existence as of the Closing;

     

    (xxiii) there
      has
      not been any other occurrence, event, incident, action, failure to act, or
      transaction outside the Ordinary Course of Business involving any of
Seller
      and its
      Subsidiaries;

     

    (xxiv) any
      material change in contingent obligations of Seller or any of its Subsidiaries
      by way of guaranty, endorsement, indemnity, warranty or otherwise;
      and

     

    (xxv) none
      of
Seller
      and its
      Subsidiaries has committed to any of the foregoing.

     

    (i) Undisclosed
      Liabilities; Limited
      Liabilities.
      None
      of
      Seller and its Subsidiaries has any Liability
      (and
      there is no Basis for any present or future action, suit, proceeding, hearing,
      investigation, charge, complaint, claim, or demand against any of them giving
      rise to any Liability),
      except
      for (A) Liabilities set forth on the face of the Most Recent Balance Sheet
      (rather than in any notes thereto) and (B) Liabilities which do not exceed
      $25,000
      in the
      aggregate and have arisen after the Most Recent Fiscal Month End in the Ordinary
      Course of Business (none of which results from, arises out of, relates to,
      is
      in the
      nature of, or
      was
      caused
      by
      any breach of contract, breach of warranty, tort, infringement, or violation
      of
      law).
      The
      aggregate value of the Limited Accounts does not exceed the amount(s) set forth
      in the Seller Disclosure Schedule. 

     

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

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (k) Tax
      Matters.

     

    (i) Each
      of
Seller
      and its
      Subsidiaries has filed all Tax Returns that it was required to file.
All
      such
      Tax Returns were correct and complete in all respects. All Taxes owed by any
      of
Seller
      and its
      Subsidiaries (whether or not shown on any Tax Return) have been paid. Except
      as
      set forth in Section 4(k) of the Seller Disclosure Schedule, none of
Seller
      and its
      Subsidiaries currently is the beneficiary of any extension of time within which
      to file any Tax Return. No claim has ever been made by an authority in a
      jurisdiction where any of Seller
      and its
      Subsidiaries does not file Tax Returns that it is or may be subject to taxation
      by that jurisdiction. There are no Encumbrances
      (other
      than Permitted Encumbrances)
      on any
      of the assets of any of Seller
      and its
      Subsidiaries that arose in connection with any failure (or alleged failure)
      to
      pay any Tax.

     

    (ii) Each
      of
Seller
      and its
      Subsidiaries has withheld and paid 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.

     

    (iii) No
      Principal Stockholder, director,
      or
      officer (or employee responsible for Tax matters) of any of Seller
      and its
      Subsidiaries expects any authority to assess any additional Taxes for any period
      for which Tax Returns have been filed. There is no dispute or claim concerning
      any Tax Liability of any of Seller
      and its
      Subsidiaries either (A) claimed or raised by any
      authority in writing or (B) as to which any
      of
      the Principal Stockholders and the directors and officers (and employees
      responsible for Tax matters) of Seller and its Subsidiaries
      has
      Knowledge based upon personal contact with any agent of such authority.
Section
      3(k) of Seller
      Disclosure Schedule lists all
      federal, state, local, and foreign income Tax Returns filed with respect to
      any
      of Seller and its Subsidiaries for taxable periods ended on or after December
      31, 2001, indicates those Tax Returns that have been audited, and indicates
      those Tax Returns that currently are the subject of audit. Seller has delivered
      to the Buyer correct and complete copies of all federal income Tax Returns,
      examination reports, and statements of deficiencies assessed against or agreed
      to by any of Seller and its Subsidiaries since December 31, 2001.

     

    (iv) None
      of
Seller
      and its
      Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
      to any extension of time with respect to a Tax assessment or
      deficiency.

     

    (v) The
      unpaid Taxes of Seller
      and its
      Subsidiaries (A) did not, as of the Most Recent Fiscal Month End, exceed the
      reserve for Tax Liability (rather than any reserve for deferred Taxes
      established to reflect timing differences between book and Tax income) set
      forth
      on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
      and (B) do not exceed that reserve as adjusted for the passage of time through
      the Closing Date in accordance with the past custom and practice of Seller
      and its
      Subsidiaries in filing their Tax Returns.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (vi) None
      of
      Seller and its Subsidiaries has filed a consent under Code Section 341(f)
      concerning collapsible corporations. None of Seller and its Subsidiaries has
      made any payments, is obligated to make any payments, or is a party to any
      agreement that under certain circumstances could obligate it to make any
      payments that will not be deductible under Code Section 280G. None of Seller
      and
      its Subsidiaries has been a United States real property holding corporation
      within the meaning of Code Section 897(c)(2) during the applicable period
      specified in Code Section 897(c)(1)(A)(ii). Each of Seller and its Subsidiaries
      has disclosed on its federal income Tax Returns all positions taken therein
      that
      could give rise to a substantial understatement of federal income Tax within
      the
      meaning of Code Section 6662. None of Seller and its Subsidiaries is a party
      to
      any Tax allocation or sharing agreement. None of Seller and its Subsidiaries
      (A)
      has been a member of an Affiliated Group filing a consolidated federal income
      Tax Return or a group of affiliated or related corporations filing consolidated,
      combined or unitary state, local or foreign income Tax Returns (other than
      a
      group the common parent of which was Seller) or (B) has any Liability for the
      Taxes of any Person (other than any of Seller and its Subsidiaries) under Reg.
      Section 1.1502-6 (or any similar provision of state, local, or foreign law),
      as
      a transferee or successor, by contract, or otherwise. 

     

    (vi) Seller
      does not own, and since January 1, 2001 has not owned any equity interest in
      any
      partnership, limited partnership, limited liability company, trust, or other
      entity (excluding the Subsidiaries) the taxable income of which is allocable
      to
      or otherwise reportable on the income Tax Returns of Seller in whole or in
      part.

     

    (l) Real
      Property.

     

    (i) Neither
      Seller
      nor any
      of its Subsidiaries owns any real property.  

     

    (ii) Section
      4(l)(ii)
      of Seller
      Disclosure
      Schedule
      lists and describes briefly all real property leased or subleased to any of
      Seller
      and its
      Subsidiaries. Seller
      has
      delivered to the Buyer correct and complete copies of the leases and subleases
      listed in Section 4(l)(ii)
      of Seller
      Disclosure
      Schedule
      (as amended to date). With respect to each lease and sublease listed in Section
      4(l)(ii)
      of Seller
      Disclosure
      Schedule:

     

    (A) the
      lease
      or sublease is legal, valid, binding, enforceable, and in full force and
      effect;

     

    (B) the
      lease
      or sublease will continue to be legal, valid, binding, enforceable, and in
      full
      force and effect on identical terms following the consummation of the
      transactions contemplated hereby and by all of the Transaction
      Documents
      (including the assignments and assumptions referred to in Section 2
      above);

     

    (C) no
      party
      to the lease or sublease is in breach or default, and no event has occurred
      which, with notice or lapse of time, would constitute a breach or default or
      permit termination, modification, or acceleration thereunder;

     

    (D) no
      party
      to the lease or sublease has repudiated any provision thereof;

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (E) there
      are
      no disputes, oral agreements, or forbearance programs in effect as to the lease
      or sublease;

     

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

     

    (G)  none
      of
Seller
      and its
      Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust,
      or
      encumbered any interest in the leasehold or subleasehold;

     

    (H)  all
      facilities leased or subleased thereunder have received all approvals of
      governmental authorities (including licenses and permits) required in connection
      with the operation thereof and have been operated and maintained in accordance
      with applicable laws, rules, and regulations;

     

    (I) all
      facilities
      leased
      or subleased thereunder are supplied with utilities and other services necessary
      for the operation of said facilities;
      and

     

    (J) no
      obligation to pay money, absolute or contingent, other than the obligation
      to
      pay rent pursuant to the written terms thereof, could arise under these leases
      and subleases.

     

    (m)  Intellectual
      Property.

     

    (i) Seller
      and its
      Subsidiaries own, or have the right to use pursuant to license, sublicense,
      agreement, or permission,
      and the
      Acquired Assets include,
      all
      Intellectual Property used by Seller and its Subsidiaries or necessary or
      desirable
      for the
      operation of the businesses of Seller
      and its
      Subsidiaries as presently conducted. 
      Each
      item of Intellectual Property owned or used by any of Seller and its
      Subsidiaries immediately prior to the Closing hereunder will be owned or
      available for use by the Buyer on identical terms and conditions immediately
      subsequent to the Closing hereunder. Each
      of
      Seller and
      its
      Subsidiaries has taken all necessary
      action
      to maintain and protect their
      respective rights in each
      item
      of Intellectual Property that
      each of
      them owns or uses, and the confidentiality of each such item to the extent
      they
      own such item, or to the extent they do not own such item, to the extent they
      are obligated to protect such item’s confidentiality or other rights they may
      have in such Intellectual Property. Seller has sourced and archived all of
      the
      development tools used in the creation and development of the Intellectual
      Property developed and owned by Seller.

     

    (ii) None
      of
      Seller
      and its
      Subsidiaries has interfered
      with, infringed
      upon, misappropriated, or otherwise come
      into
      conflict with
      any
      Intellectual Property rights of third parties, and none of the Principal
      Stockholders and the directors and officers
      (and employees with responsibility for Intellectual Property matters) of
      Seller
      and its
      Subsidiaries has ever received any charge, complaint, claim, demand, or notice
      alleging any such interference,
      infringement,
      misappropriation, or violation (including
      any claim that any of Seller
      and its
      Subsidiaries must license or refrain from using any Intellectual Property rights
      of any third party). To the
      Knowledge of any of the Principal Stockholders and the directors and officers
      (and employees with responsibility for Intellectual Property matters) of Seller
      and its Subsidiaries, no third party has interfered with, infringed upon,
      misappropriated, or otherwise come into conflict with
      any
      Intellectual Property rights of any of Seller
      and its
      Subsidiaries.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (iii) Section
      4(m)(iii)
      of Seller
      Disclosure
      Schedule
      identifies each patent,
      copyright, trademark, service mark or other
      registration which has been issued to any of Seller
      and its
      Subsidiaries with respect to any of its Intellectual Property, identifies each
      pending patent
      application or application
      for a
      patent,
      copyright, trademark, service mark or other registration
      which any of Seller
      and its
      Subsidiaries has made with respect to any of its Intellectual Property, and
      identifies each license, agreement, or other permission which any of
      Seller
      and its
      Subsidiaries has granted to any third party with respect to any of its
      Intellectual Property (together with any exceptions). Seller
      has
      delivered to the Buyer correct and complete copies of all such patents,
copyrights,
      trademarks, service marks, registrations,
      applications, licenses, agreements, and permissions (as amended to date) and
      has
      made available to the Buyer correct and complete copies of all other written
      documentation evidencing ownership and prosecution
      (if applicable) of each such item. Section 4(m)(iii)
      of Seller
      Disclosure
      Schedule
      also identifies each trade name or unregistered trademark used by any of
Seller
      and its
      Subsidiaries in connection with any of its businesses. With respect to each
      item
      of Intellectual Property required to be identified in Section 4(m)(iii)
      of Seller
      Disclosure
      Schedule:

     

    (A) Seller
      and
      its
      Subsidiaries possess all right, title, and interest in and to the item, free
      and
      clear of any Encumbrance,
      license, other
      restriction,
      or
      viable claims of ownership by any Person;

     

    (B) the
      item
      is not subject to any outstanding injunction, judgment, order, decree, or
      other
      ruling;

     

    (C) no
      action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or
      demand is
      pending or, to the Knowledge of any of the Principal Stockholders and the
      directors and officers (and employees with responsibility for Intellectual
      Property matters) of Seller is
      threatened which challenges the legality, validity, enforceability, use, or
      ownership of the item; and

     

    (D) none
      of
Seller
      and its
      Subsidiaries has ever
      agreed
      to
      indemnify any Person for or against any interference,
      infringement,
      misappropriation, or other conflict
      with
      respect to the
      item.

     

    (iv) Section
      4(m)(iv)
      of Seller
      Disclosure
      Schedule
      identifies each item of Intellectual Property that any third party owns and
      that
      any of Seller
      and its
      Subsidiaries uses pursuant to license, sublicense, agreement, or
      permission
      (other
      than pursuant to a “shrink-wrap” license with an aggregate cost of less than
      $1,000). Seller
      has
      delivered to the Buyer correct and complete copies of all such licenses,
      sublicenses, agreements, and permissions (as amended to date). With respect
      to
      each item of Intellectual Property required to be identified in Section
4(m)(iv)
      of Seller
      Disclosure
      Schedule;:

     

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

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (B) the
      license,
      sublicense, agreement, or permission will continue to be legal, valid, binding,
      enforceable, and
      in full
      force and effect on identical terms
      following the consummation
      of the transactions contemplated hereby and by
      the
      Parties’ performance as required under
      the
      other Transaction Documents (including
      the assignments and assumptions referred to in Section 2 above);

     

    (C) no
      party
      to the license, sublicense, agreement, or permission is in breach or default,
      and no event has occurred which with notice or lapse of time would constitute
      a
      breach or default or permit termination, modification, or acceleration
      thereunder;

     

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

     

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

     

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

     

    (G) no
      action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or
      demand is
      pending or,
      to
      the Knowledge of any of the Principal Stockholders and the directors and
      officers (and employees with responsibility for Intellectual Property matters)
      of Seller and its Subsidiaries, is threatened,
      which
      challenges the legality, validity, or enforceability of the underlying item
      of
      Intellectual Property; and

     

    (H) none
      of
Seller
      and its
      Subsidiaries has granted any sublicense or similar right with respect to the
      license, sublicense, agreement, or permission.

     

    (v) None
      of
Seller
      and its
      Subsidiaries will
      interfere with, infringe
      upon, misappropriate, or otherwise come into conflict with any
      Intellectual Property rights of third parties as a result of the continued
      operation of its businesses as presently conducted and as presently proposed
      to
      be conducted.

     

    (vi) None
      of
      the Principal Stockholders and the directors and officers (and employees with
      responsibility for Intellectual Property matters) of Seller and its Subsidiaries
      has any Knowledge of any new products, inventions, procedures, or methods of
      manufacturing or processing that any competitors or other third parties have
      developed which reasonably could be expected to supersede or make obsolete
      any
      product or process of any of Seller and its Subsidiaries.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (vii) Section
      4(m)(vii)
      of
      Seller Disclosure Schedule lists all software or
      other
      material that is distributed as “free software,” “open source software” or under
      a similar licensing or distribution model
      (including but not limited to the GNU General Public License (GPL), GNU Lesser
      General Public License (LGPL), Mozilla Public License (MPL), BSD
      licenses, the
      Artistic License, the Netscape Public License, the Sun Community Source License
      (SCSL), the
      Sun
      Industry Standards License (SISL)
      and the
      Apache License)
      (“Open
      Source Materials”) material
      to the business and operation of Seller
      and its
      Subsidiaries, and describes the manner in which such Open Source Materials
      are
      or were used
      (such
      description shall include, without limitation, whether (and, if so, how) the
      Open Source Materials were modified or distributed by Seller
      and its
      Subsidiaries).
      Neither
      Seller
      nor any
      of its Subsidiaries has (A)
      incorporated Open Source Materials into, or combined Open Source Materials
      with,
      the Intellectual Property of Seller
      or any
      of its Subsidiaries or any of their products, (B)
      distributed Open
      Source Materials in conjunction with any
      of
      the Intellectual Property or products of Seller
      or
      its Subsidiaries, or (C) used Open Source Materials that create, or purport
      to
      create, obligations for Seller and its Subsidiaries with respect to the
      Intellectual Property of Seller and its Subsidiaries or any of its products
      to
      grant, or purport to grant, to any third party, any rights or immunities under
      the Intellectual Property of Seller and its Subsidiaries (including, but not
      limited to, using any Open Source Materials that require, as a condition of
      use,
      modification or distribution of such Open Source Materials that other software
      incorporated into, derived from or
      distributed with such Open
      Source Materials be (X)
      disclosed or distributed in source code form, (Y)
      be
      licensed
      for the
      purpose of making derivative
      works, or (Z) be redistributable at no charge).
      

     

    (viii) Section
      4(m)(viii) of Seller Disclosure Schedule lists the employees of Seller and
      its
      Subsidiaries that have entered into invention assignment and confidentiality
      agreements under which such employees have assigned to Seller all Intellectual
      Property conceived or reduced to practice in connection with their employment
      at
      Seller and agreed not to use or disclose, other than for the benefit of Seller,
      all confidential information of Seller. 

     

    (n) Tangible
      Assets.
      Seller
      and its
      Subsidiaries own or have a valid leasehold in, and
      the
      Acquired Assets include, all
      buildings and related heating, ventilation and air conditioning systems,
      machinery, equipment, and other tangible assets
      used in
      the conduct of their business or necessary for the conduct of their businesses
      as presently conducted. Each such tangible asset is free from defects (patent
      and latent), has been maintained in accordance with normal industry practice,
      is
      in good operating condition and repair (subject to normal wear and tear), and
      is
      suitable for the purposes for which it presently is used and presently is
      proposed to be used.

     

    (o) Contracts.
      

     

    (i) Section
      4(o)
      of
      Seller
      Disclosure
      Schedule
      lists the following contracts and other agreements to which any of Seller
      and its
      Subsidiaries is a party:

     

    (A) any
      agreement (or group of related agreements) for the lease of personal property
      to
      or from any Person;

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (B) any
      agreement (or group of related agreements) for the purchase or sale of raw
      materials, commodities, supplies, products, or other personal property, or
      for
      the furnishing or receipt of services, the
      performance of which will extend over a period of more than one year,
      result
      in a loss to any of Seller and its Subsidiaries, or
      involve consideration in excess of $10,000;

     

    (C) any
      agreement concerning a partnership or joint venture;

     

    (D) any
      agreement (or group of related agreements) under which it has created, incurred,
      assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
      lease obligation, under which it has imposed an
      Encumbrance
      on any
      of its assets, tangible or intangible;

     

    (E) any
      agreement concerning confidentiality or noncompetition;

     

    (F) any
      agreement involving any of the Principal Stockholders
      and
      their Affiliates (other than Seller and its Subsidiaries)
      or any
      officers or directors of Seller;

     

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

     

    (H) any
      collective bargaining agreement;

     

    (I) any
      agreement for the employment of any individual on a full-time, part-time,
      consulting, or other basis or providing severance benefits;

     

    (J) any
      agreement under which it has advanced or loaned any amount to any of its current
      or former directors, officers, and employees;

     

    (K) any
      supply or vendor agreement under which Seller receives any services, goods,
      or
      other items (including Internet bandwidth) the performance of which involves
      consideration in excess of $10,000;

     

    (L) any
      agreement under which the consequences of a default or termination could cause
      Seller Material Adverse Effect;

     

    (M) any
      other
      agreement (or group of related agreements) the performance of which involves
      consideration in excess of $10,000
      in the
      aggregate over the term of the Agreement; 

     

    (N) any
      other
      contract, lease, license or other agreements or arrangements that is used in
      the
      operation by Seller
      of its
      business; and

     

    (O) any
      agreement imposing any material restriction on the right of Seller or any of
      its
      Subsidiaries to compete with any other Person.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (ii) The
      documents listed on Section 4(o) of Seller Disclosure Schedule and identified
      as
      Acquired Contracts constitute all of the contracts, leases, accounts receivable,
      licenses, instruments and other agreements or arrangements used by Seller and
      its Subsidiaries in the operation of its business other than Excluded
      Assets.

     

    (iii) Seller
      has
      delivered to the Buyer a correct and complete copy of each written agreement
      listed in Section 4(o)
      of
      Seller
      Disclosure
      Schedule
      (as amended to date) and a written summary setting forth the terms and
      conditions of each oral agreement referred to in Section 4(o)
      of
      Seller
      Disclosure
      Schedule. With respect to each such agreement: (A) the agreement is legal,
      valid, binding, enforceable, and in full force and effect; (B) the agreement
      will continue to be legal, valid, binding, enforceable, and in full force and
      effect on identical terms following the consummation of the transactions
      contemplated hereby (including
      the assignments and assumptions referred to in Section 2 above); (C)
      no party
      is in
      breach
      or default, and no event has occurred which with notice or lapse of time would
      constitute a breach or default, or permit termination, modification, or
      acceleration, under the agreement; and (D) no
      party
      has repudiated any provision of the agreement.

     

    (p) Notes
      and Accounts Receivable/Payable.
      

     

    (i) All
      notes
      and accounts receivable of Seller
      and its
      Subsidiaries are reflected properly on its Most Recent Balance Sheet and in
      its
      books and records, are valid receivables arising from bona fide transactions
      in
      the Ordinary Course of Business subject to no setoffs, claims or refusals to
      pay, are current and collectible,
      and
      will be collected
      in
      accordance with their terms at their recorded amounts, subject only to the
      reserve for bad debts set forth on the face of the Most Recent Balance Sheet
      (rather than in any notes thereto) as adjusted for the passage of time through
      the Closing Date in accordance with the past custom and practice of Seller
      and its
      Subsidiaries.
      Section 4(p)(i)
      of
      Seller Disclosure Schedule contains a listing of all of the accounts
      receivable,
      including the amount thereof,
      of each
      of Seller
      and its
      Subsidiaries as of the date
      hereof and as of the Closing
      Date. Except as set forth in Section 4(p)(i)
      of
      Seller Disclosure Schedule, as of the date hereof and as of the Closing Date,
      (a) no account or note debtor of Seller
      and its
      Subsidiaries is delinquent in payment by more than sixty
      (60)
      days
      and
      (b) the aging schedule of the accounts receivable and notes receivable of
Seller
      and its
      Subsidiaries included in Section 4(p)(i)
      of
      Seller
      Disclosure
      Schedule
      attached hereto is complete and accurate. 

     

    (ii) Section
      4(p)(ii)
      of Seller
      Disclosure
      Schedule
      contains a listing of all accounts payable and notes payable (which shall
      include any service level agreement credits, services or goods that have been
      paid for but not provided or delivered, and similar items) that Seller
      and its
      Subsidiaries owe (or have any Liability with respect to) as of the date
      hereof and as of the Closing
      Date.
      Except as set forth in Section 4(p)(ii)
      of Seller
      Disclosure
      Schedule, as of the date hereof and as of the Closing Date, all such accounts
      payable and notes payable arose from bona fide transactions in the Ordinary
      Course of Business and, no such account payable or note payable is delinquent
      by
      more than sixty (60) days in its payment. 

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (iii) Section
      4(p)(iii)
      of Seller
      Disclosure
      Schedule
      contains a listing of all Cancellation and Service Credit Obligations and other
      obligations of Seller
      to
      provide cash or future services to past or current customers on account of
      such
      customer having cancelled service or otherwise being entitled to a service
      credit, as of the date hereof and as of the Closing Date.

     

    (iv) Section
      4(p)(iv)
      of Seller
      Disclosure
      Schedule
      contains a listing of all Prepaid Accounts and other accounts for which
      customers have prepaid for
      services to be provided by Seller
      and its
      Subsidiaries, including the name of the customer,
      the
      date the obligation to provide services was incurred, the date the obligation
      to
      provide services ends, the
      services
      to be provided
      and the
      amount prepaid by such customer,
      as of
      the date hereof and
      as of
      the
      Closing
      Date.

     

    (q) Powers
      of Attorney.
      There
      are no outstanding powers of attorney executed on behalf of any of Seller
      and its
      Subsidiaries.

     

    (r) Insurance.
      Section
      4(r)
      of
      Seller
      Disclosure
      Schedule
      sets forth the following information with respect to each insurance policy,
      (including policies providing property, casualty, liability, and workers’
compensation coverage and bond and surety arrangements) to which any of
Seller
      and its
      Subsidiaries has been a party, a named insured, or otherwise the beneficiary
      of
      coverage at any time within the past two
      years:

     

    (i) the
      name,
      address, and telephone number of the agent;

     

    (ii) the
      name
      of the insurer, the name of the policyholder, and the name of each covered
      insured;

     

    (iii) the
      policy number and the period of coverage;

     

    (iv) the
      scope
      (including an indication of whether the coverage was on a claims made,
      occurrence, or other basis) and amount (including a description of how
      deductibles and ceilings are calculated and operate) of coverage;
      and

     

    (v) a
      description of any retroactive premium adjustments or other loss-sharing
      arrangements.

     

    With
      respect to each such insurance policy: (A) the policy is legal, valid, binding,
      enforceable, and in full force and effect; (B) the policy will continue to
      be
      legal, valid, binding, enforceable, and in full force and effect on identical
      terms immediately
      following the consummation of the transactions contemplated hereby and by the
      other Transaction Documents
      (including the assignments and assumptions referred to in Section 2
      above);
      (C)
      neither any of Seller
      and its
      Subsidiaries nor any other party to the policy is in breach or default
      (including with respect to the payment of premiums or the giving of notices),
      and no event has occurred which, with notice or the lapse of time, would
      constitute such a breach or default, or permit termination, modification, or
      acceleration, under the policy; and (D) no
      party
      to the policy has repudiated any provision thereof. Each of Seller
      and its
      Subsidiaries has been covered since inception by insurance in scope and amount
      customary and reasonable for the businesses in which it has engaged during
      the
      aforementioned period and has never been denied coverage. Section 4(s)
      of
      Seller
      Disclosure
      Schedule
      describes any self-insurance arrangements affecting any of Seller
      and its
      Subsidiaries.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (s) Litigation.
      Section
4(s)
      of
      Seller
      Disclosure
      Schedule
      sets forth each instance in which any of Seller
      and its
      Subsidiaries (i) is subject to any outstanding injunction, judgment, order,
      decree, ruling, or charge or (ii) is a party or, to the Knowledge of any of
      the
      Principal Stockholders and the directors and officers (and employees with
      responsibility for litigation matters) of Seller and its Subsidiaries, is
      threatened to be made a party to any action, suit, proceeding, hearing, or
      investigation of, in, or before any court or quasi-judicial or administrative
      agency of any federal, state, local, or foreign jurisdiction or before any
      arbitrator. Except for the Quest Claim, none of the actions, suits, proceedings,
      hearings, and investigations set forth in Section 4(s)
      of
      Seller
      Disclosure
      Schedule
      could reasonably be expected to result in a Seller Material Adverse
      Effect.
      None of
      the Principal Stockholders and the directors and officers (and employees with
      responsibility for litigation matters) of Seller and its Subsidiaries has any
      reason to believe that any such action, suit, proceeding, hearing, or
      investigation may be brought or threatened against any of Seller and its
      Subsidiaries. 

     

    (t) Product
      and Services Warranty.
      Each
      product
      or service
      manufactured,
      sold, leased, provided,
      or
      delivered by any of Seller
      and its
      Subsidiaries has been in conformity with all applicable contractual commitments
      and all express and implied warranties,
      and
      none of Seller
      and its
      Subsidiaries has any Liability (and
      there is no Basis for any present or future action, suit, proceeding, hearing,
      investigation, charge, complaint, claim, or demand against any of them giving
      rise to any Liability) for replacement or repair thereof or for
      service level credits, claims for reimbursement,
      consequential or other damages or
      remuneration in
      connection therewith, subject only to the reserve for product
      warranty
      claims set forth on the face of the Most Recent Balance Sheet (rather than
      in
      any notes thereto) as adjusted for the passage of time through the Closing
      Date
      in accordance with the past custom and practice of Seller
      and its
      Subsidiaries. No product or
      service
manufactured,
      sold, leased, provided
      or
      delivered by any of Seller
      and its
      Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond
      the
      applicable terms
      and
      conditions set forth in governing agreements. Section 4(t)
      of
      Seller Disclosure Schedule includes copies of the standard terms and conditions
      of sale, lease, or service for each of Seller
      and its
      Subsidiaries (containing applicable guaranty, warranty, and indemnity
      provisions),
      including copies of the Service Level Agreements for each of the Prepaid
      Accounts. Section 4(t) of Seller Disclosure Schedule also contains a detailed
      schedule of all outstanding credits for future services resulting from product
      or service warranty claims. 

     

    (u) Employees.
      

     

    (i) To
      the
      Knowledge of any of the Principal Stockholders and the directors and officers
      (and employees with responsibility for employment matters) of Seller and its
      Subsidiaries,
      no
      executive, key employee, or group of employees has any plans to terminate
      employment with any of Seller
      and its
      Subsidiaries
      and,
      except as listed in Section 4(u) of Seller Disclosure Schedule, the employment
      relationship with each and every employee of Seller
      and its
      Subsidiaries is terminable at will by Seller or its Subsidiaries
      without
      continuing obligation or liability to Seller. Section
      4(u) of Seller
      Disclosure
      Schedule
      lists each
      employee of Seller or its Subsidiaries whose employment has been terminated
      within the last six months. None of Seller
      and its
      Subsidiaries is a party to or bound by any collective bargaining agreement,
      nor
      has any of them experienced any strikes, grievances, claims of unfair labor
      practices, or other collective bargaining disputes. None of Seller
      and its
      Subsidiaries has committed any unfair labor practice. None
      of
      the Principal Stockholders and the directors and officers (and employees with
      responsibility for employment matters) of Seller and its Subsidiaries has any
      Knowledge of any
      organizational effort is
      presently
      being made or threatened by or on behalf of any labor union with respect to
      employees of any of Seller
      and its
      Subsidiaries

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    (ii) In
      connection with the transactions contemplated by this Agreement, no plant
      closing or mass layoff of employees has been implemented that could implicate
      the WARN Act. 

     

    (iii) Section
      4(u)(iii)
      of
      Seller
      Disclosure
      Schedule
      attached hereto sets forth the name of each employee of Seller,
      and
      separately sets forth each such individual (A) his or her total compensation
      (annualized with base compensation and bonuses separated) for 2005 and, as
      of
      the date hereof and the Closing Date, (B) his or her current compensation rate
      (per hour or annualized, as applicable), accrued paid time off (in dollar
      value), holiday time, and sick pay, and (C) the terms of any plan or agreement
      under which he or she may be eligible to receive a bonus or other additional
      compensation.

     

    (v) Employee
      Benefits. 

     

    (i) Section
      4(v)
      of
      Seller
      Disclosure
      Schedule
      lists each Employee Benefit Plan that any of Seller
      and its
      Subsidiaries maintains or to which any of Seller
      and its
      Subsidiaries contributes or has any obligation to contribute.

     

    (A) Each
      Employee Benefit Plan (and each related trust, insurance contract, or fund)
      complies in form and in operation in all respects with the applicable
      requirements of ERISA, the Code, and other applicable laws.

     

    (B) All
      required reports and descriptions
      (including
      Form 5500 Annual Reports, summary annual reports and summary plan descriptions)
      have
      been
      timely filed and distributed appropriately with respect
      to
      each Employee Benefit Plan. The requirements of COBRA have been met with respect
      to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan
      subject to COBRA.

     

    (C) All
      contributions (including all employer contributions and employee salary
      reduction contributions) which are due have been paid to each Employee Benefit
      Plan which is an Employee Pension Benefit Plan, and all contributions for any
      period ending on or before the Closing Date which are not yet due have been
      paid
      to each Employee Pension Benefit Plan or accrued in accordance with the past
      custom and practice of Seller
      and its
      Subsidiaries. All premiums or other payments for all periods ending on or before
      the Closing Date have been paid with respect to each Employee Benefit Plan
      which
      is an Employee Welfare Benefit Plan.

     

    (D) Each
      Employee Benefit Plan which is an Employee Pension Benefit Plan, and all related
      trusts, meet and have continuously since their adoption met all requirements
      of
      a “qualified plan” under Code Sections 401(a) and 501(a), in both form and
      operation, and Seller is not aware of any facts or circumstances that could
      result in the revocation of such tax-qualified status.

     

    (E) 
      Seller
      has
      delivered to the Buyer correct and complete copies of the plan documents and
      summary plan
      descriptions,
      the
      most recent determination letter, if any, received from the Internal Revenue
      Service, the most recent Form 5500 Annual Report,
      and all
      related trust agreements,
      insurance contracts, and other funding agreements which implement each Employee
      Benefit Plan.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (F) Neither
      Seller, any of its Subsidiaries, nor any ERISA Affiliate of Seller maintains,
      has maintained, contributes to, has previously contributed to, or has any
      obligation or liability under any Employee Pension Benefit Plan that is (A)
      subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA,
      or (B) any
      Multiemployer Plan. 

     

    (ii) There
      have been no Prohibited Transactions with respect to any such Employee Benefit
      Plan. No Fiduciary has any Liability for breach of fiduciary duty or any other
      failure to act or comply in connection with the administration or investment
      of
      the assets of any such Employee Benefit Plan. No action, suit, proceeding,
      hearing, or investigation with respect to the administration or the investment
      of the assets of any such Employee Benefit Plan (other than routine claims
      for
      benefits) is pending or, to the Knowledge of any of the Principal Stockholders
      and the directors and officers (and employees with responsibility for employee
      benefits matters) of Seller and its Subsidiaries, threatened. None of the
      Principal Stockholders and the directors and officers (and employees with
      responsibility for employee benefits matters) of Seller and its Subsidiaries
      has
      any Knowledge of any Basis for any such action, suit, proceeding, hearing,
      or
      investigation.

     

    (iii) None
      of
Seller
      and its
      Subsidiaries maintains or ever has maintained or contributes, ever has
      contributed, or ever has been required to contribute to any Employee Welfare
      Benefit Plan providing medical, health, or life insurance or other welfare-type
      benefits for current or future retired or terminated employees, their spouses,
      or their dependents (other than in accordance with COBRA). 

     

    (iv) Consummation
      of the transactions contemplated hereunder will not result in Buyer or Holdings
      having any obligation for severance payments, change in control payments or
      other similar benefits to the former employees of Seller. 

     

    (w) Guaranties.
      None of
Seller
      and its
      Subsidiaries is a guarantor or otherwise is liable for any Liability or
      obligation (including indebtedness) of any other Person.

     

    (x) Environmental,
      Health, and Safety
      Matters.

     

    (i) Each
      of
Seller,
      its
      Subsidiaries, and their respective predecessors and Affiliates has complied
      and
      is in compliance
      with all Environmental, Health, and Safety Requirements.

     

    (ii) Without
      limiting the generality of the foregoing, each of Seller,
      its
      Subsidiaries and their respective Affiliates has obtained and complied with,
      and
      is in compliance with, all permits, licenses and other authorizations that
      are
      required pursuant to Environmental, Health, and Safety Requirements for the
      occupation of its facilities and the operation of its business; a list of all
      such permits, licenses and other authorizations is set forth in Section
4(x)(ii)
      of Seller
      Disclosure
      Schedule.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

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

     

    (iv) None
      of
      the following exists at any property or facility owned or operated by
Seller
      or its
      Subsidiaries: (1) underground storage tanks, (2) asbestos-containing material
      in
      any form or condition, (3) materials or equipment containing polychlorinated
      biphenyls, or (4) landfills, surface impoundments, or disposal
      areas.

     

    (v) None
      of
Seller,
      its
      Subsidiaries, or their respective predecessors or Affiliates has treated,
      stored, disposed of, arranged for or permitted the disposal of, transported,
      handled, or released any substance, including without limitation any hazardous
      substance, or owned or operated any property or facility (and no such property
      or facility is contaminated by any such substance) in a manner that has given
      or
      would give rise to liabilities, including any liability for response costs,
      corrective action costs, personal injury, property damage, natural resources
      damages or attorney fees, pursuant to the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980, as amended,
      the
      Solid Waste Disposal Act, as amended or
      any
      other Environmental, Health, and Safety Requirements. 

     

    (vi) Neither
      this Agreement nor the consummation of the transactions
      that are the
      subject of this Agreement will result in any obligations for site investigation
      or cleanup, or notification to or consent of government agencies or third
      parties, pursuant to any of the so-called “transaction-triggered” or
“responsible property transfer” Environmental, Health, and Safety
      Requirements.

     

    (vii) Neither
      Seller,
      its
      Subsidiaries, nor any of their respective predecessors or Affiliates has, either
      expressly or by operation of law, assumed or undertaken any liability, including
      without limitation any obligation for corrective or remedial action, of any
      other Person relating to Environmental, Health, and Safety Requirements.

     

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

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (y)
      Certain
      Business Relationships With Seller
      and
      Its Subsidiaries.
      No
      former
      or current officer, director,
      employee,
      stockholder,
      or
      other Affiliate of Seller
      or any
      individual related by blood, marriage or adoption to any such individual or
      any
      entity in which any such Person or individual owns any beneficial interest,
      is a
      party to any agreement, contract, commitment or transaction with Seller
      or any
      of its Subsidiaries or owns (or has a direct interest in) any asset, tangible
      or
      intangible, which is used in the business of any of Seller
      and its
      Subsidiaries.

     

    (z)
      Disclosure.
      The
      representations and warranties contained in this Section 4,
      including Seller Disclosure Schedule, do
      not
      contain any untrue statement of a material fact or omit to state any material
      fact necessary in order to make the statements and information contained in
      this
      Section 4
      not
      misleading.

     

    (aa)
      Customers
      and Suppliers.

     

    (i) During
      the twelve (12) month period ending on the date hereof, there has not been
      any
      material interruption or outage (other than as requested by a
      customer
      of
      Seller)
      in the
      provision by Seller
      or its
      Subsidiaries of services
      to
      customers. 

     

    (ii) No
      customer of Seller or its Subsidiaries
      which
      generated average monthly revenues in the three (3)
      month
      period ended March 31, 2006
      that
      accounted for in excess of $5,000 of
      the
      monthly revenues of the business
      of Seller
      and its
      Subsidiaries,
      has
      terminated or threatened in writing to terminate its relationship, or any
      agreement, with Seller
      or its
      Subsidiaries or
      given
      notice of its intention not to renew its relationship or agreement with
Seller
      or its
      Subsidiaries.
      

     

    (iii) Section
      4(aa)(iii)
      of
      Seller
      Disclosure
      Schedule
      sets forth (A) a complete and accurate list of the name of each customer of
      Seller and its Subsidiaries,
      together with the amount of revenue generated by such customer during the one
      year period ended March 31, 2006,
      and (B)
      a list of the contact information of each such customer,
      and (C)
      a description of any agreement or arrangement with any customer that deviates
      from the standard customer agreement provided by Seller to Holdings.

     

    (iv) Section
      4(aa)(iv)
      of
      Seller
      Disclosure
      Schedule
      contains a listing of all suppliers and vendors of Seller
      and its
      Subsidiaries,
      together
      with complete contact information and the amount of expense incurred to such
      vendor or supplier during the three month period ended March 31,
      2006.
      

     

    (v) Section
      4(aa)(v)
      of
      Seller
      Disclosure
      Schedule
      contains a listing of all
      joint
      marketers,
      resellers and referral sources
      of the
Business
      of Seller,
      together with complete contact information for each such
      reseller
      or
      joint
      marketer.

     

    (vi) Monthly
      revenue of Seller’s Business for any month in the three-month period ended March
      31, 2006 has not decreased by more than $6,000 from the previous month’s revenue
      on account of customers canceling their relationships or agreements with
      Seller.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (bb) No
      Other Agreement to Sell Assets.
      Except
      as
      set forth in Section 4(bb) of the Seller Disclosure Schedule, neither
      Seller nor any officer, director of stockholder of Seller or
      any of
      its Subsidiaries has, since March 16, 2006,
      (i)
      solicited, initiated, or encouraged the submission of, or agreed to any proposal
      or offer from any Person relating to the acquisition of any capital
      stock
      or other
      voting securities, or any substantial portion of the assets, of any of
Seller
      and its
      Subsidiaries (including any acquisition structured as a merger, consolidation,
      or share exchange) or (ii) participated in any discussions or negotiations
      regarding, furnished any information with respect to, assisted or participated
      in, or facilitated in any other manner any effort or attempt by any Person
      to do
      or seek any of the foregoing. 

     

    (cc) Personal
      Guarantees and Indebtedness.
      Section
      4(cc) of Seller Disclosure Schedule sets forth: (i) any and all personal
      guarantees and collateral pledged by the stockholders, directors or officers
      of
      Seller related to any indebtedness other of Liability of Seller, and (ii) the
      amount of such indebtedness or other Liability as of a date within one week
      prior to the Closing Date along with a per diem accrual for each day thereafter,
      and (iii) the identity of the Person to which such indebtedness or other
      Liability is owed.

     

    5. Representations
      and Warranties of the Buying Parties.
      The
      Buying Parties represent and warrant to Seller that the statements contained
      in
      this Section 5 are correct and complete as of the date of this Agreement
      and will be correct and complete as of the Closing Date (as though made then
      and
      as though the Closing Date were substituted for the date of this Agreement
      throughout this Section 5), except as set forth in the disclosure schedule
      delivered by the Buying Parties in connection with the Agreement (the
“VitalStream Disclosure Schedule”). The VitalStream Disclosure Schedule will be
      arranged in paragraphs corresponding to the lettered and numbered paragraphs
      and
      subparagraphs contained in this Section 5. Without limiting the generality
      of the foregoing, the mere listing (or inclusion of a copy) of a document or
      other item shall not be deemed adequate to disclose an exception to a
      representation or warranty made herein (unless the representation or warranty
      has to do with the existence of the document or other item itself).

     

    (a) Organization
      of the Buyer.
      Each of
      Holdings and the Buyer is a corporation duly organized, validly existing, and
      in
      good standing under the laws of the jurisdiction of its
      incorporation.

     

    (b) Authorization
      of Transaction.
      Each of
      Holdings and the Buyer has full power and authority (including full corporate
      power
      and authority) to execute and deliver this Agreement and the other Transaction
      Documents to which it is a party and to perform its obligations
      hereunder and thereunder. This Agreement and the other Transaction Documents
      to
either
      of
      Holdings and the Buyer is a party, assuming the due authorization, execution
      and
      delivery hereof and thereof by the other parties hereto and thereto,
      constitute the valid and legally binding obligation of each of the respective
      Buying
      Party,
      enforceable in accordance with their terms and conditions,
      except
      as enforceability may be limited by applicable bankruptcy, insolvency or similar
      laws affecting or relating to the enforcement of creditors’ rights generally or
      by equitable principles relating to enforceability.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    (c) Noncontravention.
      Neither
      the execution and the delivery of this Agreement or the other Transaction
      Documents to which Holdings or the Buyer is a party, nor the consummation of
      the
      transactions contemplated hereby and thereby (including
      the assignments and assumptions referred to in Section 2 above),
      will
      (i) violate any constitution, statute, regulation, rule, injunction, judgment,
      order, decree, ruling,
      charge,
      or other restriction of any government, governmental agency, or court to which
      the Buyer or Holdings is
      subject or any provision of their
      respective charters or
      bylaws
      or (ii) conflict with, result in a breach of, constitute a default under, result
      in the acceleration of, create in any party the right to accelerate, terminate,
      modify, or cancel, or require any notice under any agreement, contract, lease,
      license, instrument, or other arrangement to which the Buyer or Holdings
is
      a
      party or by which it is bound or to which any of their assets is
      subject,
      or
      result
      in the imposition of any Encumbrance upon any of their respective assets (other
      than Permitted Encumbrances).
      Neither
      the Buyer nor Holdings needs to give any notice to, make any filing with, or
      obtain any authorization, consent, or approval of any government or governmental
      agency in order for the Parties to consummate the transactions contemplated
      by
      this Agreement (including
      the assignments and assumptions referred to in Section 2 above)
      or any
      other Transaction Documents to which Buyer or Holdings is a party (other than
      notice filings under applicable securities laws).

     

    (d) Brokers’
Fees.
      Neither
      Holdings nor the Buyer has created any Liability or obligation 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.

     

    (e) Capitalization.
      There
      are authorized 290,000,000 shares of Holdings Common Stock, of which 21,057,985
      are issued and outstanding on May 15, 2006, and 10,000,000 shares of preferred
      stock, $.01 par value, of which none are issued and outstanding. Holdings has
      delivered to the Buyer correct and complete copies of its charter and bylaws
      (as
      amended to date). All of the issued and outstanding shares of common stock
      of
      Holdings have been duly authorized and are validly issued, fully paid, and
      nonassessable and free of pre-emptive rights, and any shares issued after April
      23, 2002 were issued in full compliance with applicable state and federal
      securities laws and any rights of third parties. Other than as set forth in
      Section 5(e) of the VitalStream Disclosure Schedule, there are no outstanding
      or
      authorized options, warrants, purchase rights, subscription rights, conversion
      rights, exchange rights, or other contracts or commitments to which Holdings
      or
      any of its Subsidiaries is a party or by which it is bound that could require
      Holdings or any of its Subsidiaries to issue, sell, transfer, or otherwise
      dispose of any Holdings capital stock. There are no outstanding stock
      appreciation, phantom stock, profit participation, or similar rights with
      respect to Holdings. Other than as set forth in Section 5(e) of the VitalStream
      Disclosure Schedule, there are no voting trusts, proxies, or other agreements
      or
      understandings with respect to the voting of any outstanding shares of capital
      stock of Holdings to which Holdings or any of its Subsidiaries is a party or
      by
      which Holdings or any of its Subsidiaries is bound. No Person is entitled to
      pre-emptive or similar statutory or contractual rights with respect to any
      securities of Holdings. Other than as set forth in Section 5(e) of the
      VitalStream Disclosure Schedule, no Person has the right to require Holdings
      to
      register any securities of Holdings under the Securities Act, whether on a
      demand basis or in connection with the registration of securities of Holdings
      for its own account or for the account of any other Person. The issuance of
      the
      Purchase Shares hereunder will not obligate Holdings to issue any of its
      securities to any other Person and will not result in the adjustment of the
      exercise, conversion, exchange or reset price of any outstanding security.
      Holdings does not have outstanding stockholder purchase rights or a "poison
      pill" or any similar arrangement in effect giving any Person the right to
      purchase any equity interest in Holdings upon the occurrence of an acquisition,
      or announced or attempted acquisition, by a Person of a specified percentage
      of
      the outstanding capital stock of Holdings.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    (f) SEC
      Filings.
      Holdings has made available through the EDGAR system true and complete copies
      of
      the SEC Filings. The SEC Filings are the only filings required of Holdings
      pursuant to Sections 13 and 15 of the Securities Exchange Act since January
      1,
      2006. Holdings and its Subsidiaries are engaged in all material respects only
      in
      the business described in the SEC Filings and, to the extent required by rules
      governing the content of the SEC Filings, the SEC Filings contain a complete
      and
      accurate description in all material respects of the business of the Company
      and
      its Subsidiaries, taken as a whole.

     

    (g) Valid
      Issuance.
      Upon
      issuance pursuant to this Agreement, the Purchase Shares will be validly issued,
      fully paid and nonassessable, and shall be free and clear of all Encumbrances
      arising by, through or under Holdings or any of its Subsidiaries, except for
      restrictions on transfer imposed by applicable securities laws and the
      Transaction Documents. 

     

    (h) Litigation.
      There
      are no pending
      actions,
      suits or proceedings against Holdings, its Subsidiaries or any of its or their
      properties that could reasonably be expected to have a Holdings Material Adverse
      Effect; and to Holdings’ knowledge, no such actions, suits or proceedings are
      threatened or contemplated.

     

    (i)
      Compliance
      With Laws.
      The
      Buying Parties and their Subsidiaries have complied with all applicable laws
      (including rules, regulations, codes, plans, injunctions, judgments, orders,
      decrees, rulings and charges thereunder) of federal, state, local and foreign
      governments (and all agencies thereof), and no action, suit, preceding, hearing,
      investigation, charge, complaint, claim, demand or notice has been filed or
      commenced against any of them alleging any failure to so comply, and no
      Authorized Buyer Party has any Knowledge of any Basis for the assertion or
      commencement of any such action, suit, preceding, hearing, investigation,
      charge, complaint, claim, demand or notice against any of them alleging any
      failure so to comply. 

     

    (j)
      Voting
      Rights.
      The
      Purchase Shares are voting shares, and each Purchase Share will have the same
      voting rights as the other issued and outstanding shares of Holdings Common
      Stock. 

     

    6. Pre-Closing
      Covenants.
      The
      Parties agree as follows with respect to the period between the execution of
      this Agreement and the Closing.

     

    (a)
      General.
      Each of
      the Parties will use its best efforts to take all action and to do all things
      necessary, proper, or advisable in order to consummate and make effective the
      transactions contemplated by this Agreement and the other Transaction Documents
      (including satisfaction, but not waiver, of the closing conditions set forth
      in
      Section 7
      below).

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (b)
      Notices
      and Consents.
      Seller
      will
      give (and will cause each of its Subsidiaries to give) any notices to third
      parties, and Seller
      will use
      its best
      efforts (and will cause each of its Subsidiaries to use its best
      efforts) to obtain any third party consents, that the Buying Parties reasonably
      may request in connection with the matters referred to in Section
      4(c) above.
      Holdings will give (and will cause each of its Subsidiaries to give) any notices
      to third parties, and Holdings will use its reasonable best efforts (and will
      cause each of its Subsidiaries to use its reasonable best efforts) to obtain
      any
      third party consents, that Seller reasonably may request in connection with
      the
      matters referred to in Section 5(c)
      above.
      Each of the Parties will (and each
      will
      cause each of its Subsidiaries to) give any notices to, make any filings with,
      and use its reasonable best efforts to obtain any authorizations, consents,
      and
      approvals of governments and governmental agencies in connection with the
      matters referred to in Section 4(c)
      and
      Section 5(c)
      above. 

     

    (c)
      Operation
      of Business.
      Seller
      will not
      (and will not cause or permit any of its Subsidiaries to) engage in any
      practice, take any action, or enter into any transaction outside the Ordinary
      Course of Business. Without limiting the generality of the foregoing,
Seller
      will not
      (and will not cause or permit any of its Subsidiaries to) (i) incur
      any
      additional obligation to provide services in the future based upon a customer’s
      prepayment for such services, or (ii) otherwise
      engage in any practice, take any action, or enter into any transaction of the
      sort described in Section 4(h)
      above.

     

    (d)
      Preservation
      of Business;
      Transfer of Employment Relationships.
      Seller
      will
      use its
      best efforts to
      keep
      (and will cause each of its Subsidiaries to
      keep)
      its business and properties substantially intact, including its present
      operations, physical facilities, working conditions, and relationships with
      lessors, licensors, suppliers, customers, and employees;
      provided, however, Seller shall terminate, as of the moment immediately prior
      to
      Closing, its employment relationship with all individuals currently engaged
      primarily in the conduct of the Business (except for such individuals that
      Buyer
      has indicated in writing that it does not wish to employ following Closing).
      Seller shall retain all Liabilities arising from or associated with its
      termination of the employment of any of its employees or that arose as a result
      of acts or omissions prior to the termination of the employment of such
      employees. The Buyer shall use good faith efforts to extend to such employees
      offers of employment as the Buyer deems appropriate at a rate of compensation
      comparable to that being paid by Buyer for similar positions within Buyer.
      Such
      offers shall be on an at-will basis, subject to Buyer’s general terms of
      employment and subject to Buyer’s being able to negotiate reasonably
      satisfactory terms. Buyer shall identify to Seller in writing any individuals
      employed by Seller in connection with the Business that Buyer does not wish
      to
      employ following the Closing. 

     

    (e)
      Full
      Access.
      Seller
      will
      permit (and will cause each of its Subsidiaries to permit) representatives
      of
      the Buyer to have full access at all reasonable times, and in a manner so as
      not
      to interfere with the normal business operations of Seller
      and its
      Subsidiaries, to all premises, properties, personnel, books, records (including
      Tax records), contracts, and documents of or pertaining to each of Seller
      and its
      Subsidiaries.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    (f)
      Notice
      of Developments.
      Each
      Party will give prompt written notice to the other Party of any adverse
      development causing a breach or likely to cause a breach through the passage
      of
      time of any of its own representations and warranties in Sections 3, 4 and
      5
      above.
      No disclosure by any Party pursuant to this Section 6(f),
      however, shall be deemed to amend or supplement Seller
      Disclosure
      Schedule
      or the
      VitalStream
      Disclosure Schedule, as applicable, or
      to
      prevent or cure any misrepresentation, breach of warranty, or breach of
      covenant.

     

    (g)
      Exclusivity.
      Seller
      will not (and Seller will
      not
      cause or permit any of its Subsidiaries to)
      (i)
      solicit, initiate, or encourage the submission of any proposal or offer from
      any
      Person relating to the acquisition of any capital stock
      or other
      voting securities, or any substantial portion of the assets, of any
      of
      Seller
      and its
      Subsidiaries (including any acquisition structured as a merger, consolidation,
      or share exchange) or (ii) participate in any discussions or negotiations
      regarding, furnish any information with respect to, assist or participate in,
      or
      facilitate in any other manner any effort or attempt by any Person to do or
      seek
      any of the foregoing.
      The
      remedy for a knowing breach of any of the obligations or covenants under this
      Section 6(g) prior to July 16, 2006 shall be $1,000,000 in cash, due and payable
      to Buyer upon Buyer’s written notice that Seller or any of its officers or
      directors, or their respective representatives, has breached any of the
      obligations of covenants of this Section 6(g). Seller
      will
      notify the Buyer immediately if any Person makes any proposal, offer, inquiry,
      or contact with respect to any of the foregoing. The
      parties agree that damages for a breach of this Section 6(d) would be difficult
      to calculate and accordingly the payment set forth herein is intended to be
      a
      reasonable sum as liquidated damages, and not a penalty.

     

    (h)
      Supplements
      to Schedules. 

     

    (i) From
      time
      to time prior to the Closing, Seller
      and the
      Principal Stockholders will promptly supplement or amend the Seller Disclosure
      Schedule with respect to any matter hereafter arising that, if existing or
      occurring at the date of this Agreement, would have been required to be set
      forth or described in any
      Seller
      Disclosure
      Schedule
      and will promptly notify Buyer of any breach by Seller
      that
      Seller
      discovers of any representation, warranty or covenant contained in this
      Agreement. No supplement or amendment of any Schedule or notice of breach made
      pursuant to this Section will be deemed to cure any breach of any
      representation, warranty or covenant made in this Agreement or to impair any
      right of any the Buying Parties with
      respect thereto unless Holdings specifically agrees thereto in writing.

     

    (ii) From
      time
      to time prior to the Closing, the Buying Parties will promptly supplement or
      amend the VitalStream Disclosure Schedules with respect to any matter hereafter
      arising that, if existing or occurring at the date of this Agreement, would
      have
      been required to be set forth or described in any VitalStream Disclosure
      Schedule and will promptly notify Seller of any breach by either
      of
      them that the
      Buying Parties discover of any representation, warranty or covenant contained
      in
      this Agreement. No supplement or amendment of any Schedule or notice of breach
      made pursuant to this Section will be deemed to cure any breach of any
      representation, warranty or covenant made in this Agreement or to impair any
      right of Seller with respect thereto unless the Seller’s Representative
      specifically agrees thereto in writing.

     

    
      
        
        

      

      
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    7. Obligation
      to Close.

     

    (a) Conditions
      to Obligation of the Buying
      Parties.
      The
      obligation of the Buying Parties to consummate the transactions to be performed
      by them
      in
      connection with the Closing is subject to satisfaction of the following
      conditions:

     

    (i) the
      representations and warranties set forth in Section 3
      and
      Section 4
      above
      shall be true and correct in all material respects at and as of the Closing
      Date;

     

    (ii) Seller
      shall
      have performed and complied with
      all
      of its covenants hereunder that are to be performed prior to Closing;

     

    (iii) no
      action, suit, or proceeding shall be pending or threatened before any court
      or
      quasi-judicial or administrative agency of any federal, state, local, or foreign
      jurisdiction or before any arbitrator wherein an unfavorable injunction,
      judgment, order, decree, ruling, or charge would (A) prevent consummation of
      any
      of the transactions
      contemplated by this Agreement, (B) cause any of the transactions
      contemplated by this Agreement to be rescinded following consummation, (C)
      affect
      adversely the right of the Buyer to own the Acquired Assets,
      or
      operate the business formerly operated by Seller, or (D) affect
      adversely the right of any of Seller’s
      Subsidiaries to own its assets and to operate its businesses (and no such
      injunction, judgment, order, decree, ruling, or charge shall be in effect);
      

     

    (iv) Seller,
      its
      Subsidiaries, and the Buying Parties shall have received all other
      authorizations, consents, and approvals referred to in Section 4(c)
      and
      Section 5(c)
      above;

     

    (v) Rose,
      Snyder and Jacobs shall have completed, and delivered to Seller and Holdings
      an
      unqualified audit report with respect to, an audit of Seller’s full financial
      statements for period ending on the Most Recent Fiscal Year End (including,
      but
      not limited to, the balance Sheet, income statement and statement of cash
      flows);

     

    (vi) Seller
      shall
      have delivered to the Buying Parties
      a
      certificate executed by its principal executive officer
      to the
      effect that each of the conditions specified above in Section 7(a)(i)-(iv)
      is
      satisfied in all respects;

     

    (vii) Seller
      and the other parties thereto, other than the Buying Parties, shall have
      executed and delivered, or be prepared to deliver at Closing,

     

    (A) the
      Escrow Agreement ,

     

    (B) the
      Financial Statement Certificate in the form attached hereto as Exhibit
      D,

     

    (C) Employment
      Agreements in substantially the form attached hereto as Exhibit
      E
      with
      individuals identified by Holdings prior to the Closing, including without
      limitation Stephen W. Newman and Kevin Woods
      (the
“Employment Agreements”),

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    (D) the
      Bill
      of Sale in substantially the form attached hereto as Exhibit
      F,

     

    (E) the
      Assignment and Assumption of Acquired Contracts attached hereto as Exhibit
      G,
      and

     

    (F) the
      Assignment of Intellectual Property attached hereto as Exhibit
      H,

     

    (G) the
      Assignment of Patents attached hereto as Exhibit
      I,
      and

     

    (H) a
      tax
      representation certificate containing representations reasonably requested
      by
      Holdings in order to be able to make the tax-related disclosures in the
      Disclosure Document. 

     

    (viii) the
      Buying Parties shall have received from counsel to Seller
      an
      opinion in form and substance as set forth in Exhibit
      J
      attached
      hereto, addressed to the Buying Parties, and dated as of the Closing
      Date;

     

    (ix) Seller
      shall have terminated its employment relationship with all individuals currently
      engaged primarily in the conduct of the Business (except for such individuals
      that Buyer has indicated in writing that it does not wish to employ following
      closing);

     

    (x) Seller
      shall
      have delivered to the Buying Parties a
      Seller
      Disclosure
      Schedule
      dated as of the Closing Date and such
      Seller
      Disclosure
      Schedule
      shall not contain any disclosures not included in Seller
      Disclosure
      Schedule
      delivered on the date of this Agreement that
      the
      Buying Parties deem, in their discretion, to represent a Seller Material Adverse
      Effect;

     

    (xi) Seller
      shall have delivered to the Buying Parties (A) a certificate of the applicable
      Secretary(ies) of State dated as of a date no more than ten
      (10)
      days prior to the Closing Date, certifying the good standing of the Company,
      (B)
      a certificate from the secretary of Seller containing and certifying (i) a
      true
      and complete copy
      of the
      charter and bylaws of Seller, (ii) a true and complete copy of resolutions
      of
      the board of directors and stockholders of Seller authorizing the execution,
      delivery and performance of the Transaction Documents by Seller and the
      consummation of the transactions contemplated hereby and (iii) incumbency
      matters; 

     

    (xii) all
      actions to be taken by Seller
      in
      connection with consummation of the transactions contemplated hereby and all
      certificates, opinions, instruments, and other documents required to effect
      the
      transactions contemplated hereby will be reasonably satisfactory in form and
      substance to the Buying Parties;
      and

     

    (xiii) no
      material adverse change in the business of Seller or its Subsidiaries shall
      have
      occurred.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    (xiv) Buyer
      shall have determined to its satisfaction
      that the portion of the Acquired Assets consisting of Seller’s proprietary ad
      insertion system has features, functionality and adaptability suitable for
      the
      business purposes contemplated by Buyer for such assets.

    

    (xv) Holdings
      shall have received from each stockholder of Seller an investor questionnaire
      in
      form and substance reasonably satisfactory to Holdings. 

    

    (xvi) Holdings
      shall have determined to its satisfaction
      that the issuance of shares of Common Stock to Seller will not require the
      registration of such shares under violate applicable federal or state securities
      laws or that an appropriate exemption from registration is otherwise available
      under such laws and regulations.

    

    (xvii) Either
      (A) the total number of shares of Holdings Common Stock issuable under this
      Agreement (including the Purchase Shares and the shares issuable pursuant to
      this Section 2(c)(ii) could not exceed 19.99% of the issued and outstanding
      shares of Holdings Common Stock on the date hereof or the proposed Closing
      Date,
      or (B) the transaction contemplated by this Agreement shall have been approved
      by the stockholders of Holdings.

    

    The
      Buying Parties may waive any condition specified in this Section 7(a)
      (other than the condition set forth in Section 7(a)(xvii), which may not be
      waived) if an Authorized Buyer Party executes a writing so stating at or prior
      to the Closing.

     

    (b) Conditions
      to Obligation of Seller.
      The
      obligation of Seller
      to
      consummate the transactions to be performed by it in connection with the Closing
      is subject to satisfaction of the following conditions:

     

    (i) the
      representations and warranties set forth in Section 5
      above
      shall be true and correct in all material respects at and as of the Closing
      Date;

     

    (ii) the
      Buying Parties
      shall
      have performed and complied in all material respects with
      all
      of their covenants
      hereunder that are to be performed prior to Closing;

     

    (iii) no
      action, suit, or proceeding shall be pending or threatened before any court
      or
      quasi-judicial or administrative agency of any federal, state, local, or foreign
      jurisdiction or before any arbitrator wherein an unfavorable injunction,
      judgment, order, decree, ruling, or charge would (A) prevent consummation of
      any
      of the transactions
      contemplated by this Agreement or (B) cause any of the transactions
      contemplated by this Agreement to be rescinded following consummation (and
      no
      such injunction, judgment, order, decree, ruling, or charge shall be in
      effect);

     

    (iv) the
      Buying Parties shall have received all other authorizations, consents, and
      approvals of governments and governmental agencies referred to in Section 5(c)
      above;

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    (v) the
      Buying Parties shall have delivered to Seller a VitalStream Disclosure Schedule
      dated as of the Closing Date and such VitalStream Disclosure Schedule shall
      not
      contain any disclosures not included in the VitalStream Disclosure Schedule
      delivered on the date of this Agreement except such disclosures related to
      Events occurring after the Effective Date as, individually or in the aggregate,
      would not be reasonably likely to represent a Holdings Material Adverse
      Effect;

     

    (vi) the
      applicable Buying Parties shall have executed and delivered, or be prepared
      to
      deliver at Closing, 

     

    (A) the
      Escrow
      Agreement,

     

    (B) the
      Employment Agreements

     

    (C) the
      Assignment and Assumption of Acquired Contracts attached hereto as Exhibit
      G.

     

    (vii) Seller
      shall
      have determined to its satisfaction
      that the closing of the transactions contemplated by this Agreement and
      distribution by Seller to its shareholders of the Purchase Shares shall not
      result in a taxable event to either Seller or its shareholders under the
      applicable provisions of the Code.

     

    Seller
      may
      waive any condition specified in this Section 7(b)
      if it
      executes a writing so stating at or prior to the Closing.

     

    8. Termination.

     

    (a) Termination
      of Agreement.
      Certain
      of the Parties may terminate this Agreement as provided below:

     

    (i) Holdings
      and Seller
      may
      terminate this Agreement by mutual written consent at any time prior to the
      Closing;

     

    (ii) Holdings
      may terminate this Agreement by giving written notice to Seller at
      any
      time prior to the Closing (A) in the event Seller
      has
      breached any material representation, warranty, or covenant contained in this
      Agreement in any material respect, Holdings has notified Seller
      of the
      breach, and the breach has continued without cure for a period of 20 days after
      the notice of breach or (B) if the Closing shall not have occurred on or before
      June 30, 2006,
      by
      reason
      of the failure of any condition precedent under Section 7(a)
      hereof (unless the failure results primarily from the Buyer or Holdings
      breaching any representation, warranty, or covenant contained in this
      Agreement); and

     

    (iii) Seller
      may
      terminate this Agreement by giving written notice at any time prior to the
      Closing (A) in the event the Buyer or Holdings has breached any material
      representation, warranty, or covenant contained in this Agreement in any
      material respect, Seller
      has
      notified Holdings of the breach, and the breach has continued without cure
      for a
      period of 20 days after the notice of breach or (B) if the Closing shall not
      have occurred on or before June 30, 2006, by
      reason
      of the failure of any condition precedent under Section 7(b)
      hereof (unless the failure results primarily from Seller breaching
      any representation, warranty, or covenant contained in this
      Agreement).

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    (b)
      Effect
      of Termination.
      If any
      Party terminates this Agreement pursuant to Section 8(a)
      above, all rights and obligations of the Parties hereunder shall terminate
      without any Liability of any Party to any other Party (except for any Liability
      of any Party then in breach). Notwithstanding
      the foregoing, the Parties’ obligations under this Agreement regarding
      confidentiality shall survive for a period of three (3) years from the date
      of
      termination of the Agreement. 

     

    9. Post-Closing
      Covenants.
      The
      Parties agree as follows with respect to the period following the
      Closing.

     

    (a) General.
      In case
      at any time after the Closing any further action is necessary or desirable
      to
      carry out the purposes of the Agreement, each of the Parties will take such
      further action (including the execution and delivery of such further instruments
      and documents) as any other Party reasonably may request, all at the sole cost
      and expense of the requesting Party (unless the requesting Party is entitled
      to
      indemnification therefore under Section 10 below). Seller acknowledges and
      agrees that from and after the Closing, Holdings and the Buyer will be entitled
      to copies of all documents, books, records (including Tax records), agreements,
      and financial data of any sort relating to Seller and its
      Subsidiaries.

     

    (b) Litigation
      Support.
      In the
      event and for so long as any Party or assignee or distributee of a party
      actively is contesting or defending against any action, suit, proceeding,
      hearing, investigation, charge, complaint, claim, or demand in connection with
      (i) any transaction contemplated under the Transaction Documents or (ii) any
      fact, situation, circumstance, status, condition, activity, practice, plan,
      occurrence, event, incident, action, failure to act, or transaction on or prior
      to the Closing Date related to Seller, the Acquired Assets, the Excluded
      Liabilities or the Assumed Liabilities and each of their Subsidiaries, each
      of
      the other Parties will reasonably cooperate with the contesting or defending
      Party and his or its counsel in the contest or defense, make available his
      or
      its personnel, and provide such testimony and access to his or its books and
      records as shall be necessary in connection with the contest or defense, all
      at
      the sole cost and expense of the contesting or defending Party.

     

    (c) Transition.
      Neither
      Seller nor any Principal Stockholder will take any action that is designed
      or
      intended to have the effect of discouraging any lessor, licensor, customer,
      supplier, or other business associate of any of Buyer and its Subsidiaries
      from
      maintaining the same business relationships with Buyer and its Subsidiaries
      after the Closing as it maintained with Seller and its Subsidiaries prior to
      the
      Closing.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    (d) Confidentiality.
      

     

    (i) Seller
      shall cause its directors, officers and employees to treat and hold as such
      all
      of the Confidential Information, refrain from using any of the Confidential
      Information except in connection with this Agreement, and deliver promptly
      to
      the Buyer or destroy, at the request and option of the Buyer, all embodiments
      and copies (in whatever form or medium) of the Confidential Information which
      are in his or its possession. In the event that any such Person is requested
      or
      required (by oral question or request for information or documents in any legal
      proceeding, interrogatory, subpoena, civil investigative demand, or similar
      process) to disclose any Confidential Information, that Person will notify
      the
      Buyer and Holdings promptly of the request or requirement so that the Buyer
      and
      Holdings may seek an appropriate protective order or waive compliance with
      the
      provisions of this Section 9(d)(i). If, in the absence of a protective
      order or the receipt of a waiver hereunder, any such Person is, on the advice
      of
      counsel, compelled to disclose any Confidential Information to any tribunal
      or
      else stand liable for contempt, that Person may disclose the Confidential
      Information to the tribunal; provided, however, that the disclosing Person
      shall
      use his or its reasonable best efforts to obtain, at the reasonable request
      of
      the Buyer or Holdings, an order or other assurance that confidential treatment
      will be accorded to such portion of the Confidential Information required to
      be
      disclosed as the Buyer or Holdings shall designate. Without limiting the
      generality of the foregoing, any financial information Seller, or its directors,
      officers and employees, receives from the Buyer with respect to periods after
      December 31, 2006 will be kept confidential (and Persons that received such
      information will not purchase or sell securities of Holdings) until the date
      that is three Business Days after the filing of Holdings’ quarterly report on
      Form 10-Q for the period ended June 30, 2006. 

     

    (ii) If
      Closing does not occur, Holdings and the Buyer shall cause its officers,
      directors and employees to treat and hold as such all of the Confidential
      Information of Seller, refrain from using any of the Confidential Information
      of
      Seller except in connection with this Agreement, and deliver promptly to Seller
      or destroy, at the request and option of Seller, all embodiments and copies
      (in
      whatever form or medium) of the Confidential Information of Seller which are
      in
      his or its possession. In the event that any such Person is requested or
      required (by oral question or request for information or documents in any legal
      proceeding, interrogatory, subpoena, civil investigative demand, or similar
      process) to disclose any Confidential Information of Seller, that Person will
      notify Seller promptly of the request or requirement so that Seller may seek
      an
      appropriate protective order or waive compliance with the provisions of this
      Section 9(d)(ii). If, in the absence of a protective order or the receipt
      of a waiver hereunder, any such Person is, on the advice of counsel, compelled
      to disclose any Confidential Information of Seller to any tribunal or else
      stand
      liable for contempt, that Person may disclose the Confidential Information
      of
      Seller to the tribunal; provided, however, that the disclosing Person shall
      use
      his or its reasonable best efforts to obtain, at the reasonable request of
      Seller, an order or other assurance that confidential treatment will be accorded
      to such portion of the Confidential Information required to be disclosed as
      Seller shall designate. 

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    (e)
      Limits
      on Distribution or Liquidation.
      Except
      or otherwise expressly provided in this Section 9(e), Seller shall not, during
      the period between the Closing Date and the date that is eleven and one-half
      (111⁄2)
      months
      following the Closing Date (i) distribute or otherwise purport to transfer
      any
      Purchase Share to its equity holders or any other Person, (ii) pledge, or create
      any Encumbrance (other than arising under any Transaction Document) with respect
      to, any Purchase Share, or (iii) effect any dissolution or liquidation of
      Seller. Notwithstanding the foregoing, with the consent of Holdings, which
      shall
      not be unreasonably withheld, the Purchase Shares may be distributed to a
      liquidating trust or similar entity during such time period, provided that
      such
      liquidating trust or similar entity assumes and becomes subject to (in addition
      to Seller) all obligations and restrictions of Seller under this Agreement
      and
      all other Transaction Documents. 

     

    (f) Covenants
      Not to Compete.
      Seller
      and the Principal Stockholders each acknowledge that (A) a principal business
      of
      Seller is the Business of Seller; (B) Seller is among a limited number of
      Persons who have developed a Business; (C) the Business of Seller is, in part,
      national and international in scope; (D) the agreements and covenants of Seller
      contained in this Section 9(f) are essential to the business and goodwill of
      the
      Business of Seller and the use by the Buying Parties of the Acquired Assets
      and
      the conduct by the Buying Parties; and (E) the Buying Parties would not have
      entered into the Asset Purchase Agreement or this Agreement and would not have
      purchased the Acquired Assets but for the covenants and agreements set forth
      in
      this Section 9(f). Accordingly, Seller and each of the Principal Stockholders
      covenants and agrees that:

     

    (i) During
      the period commencing on the Closing Date and ending five (5) years following
      the Closing Date (the "Restricted Period"), neither Seller nor such Principal
      Stockholder shall directly or indirectly, own (other than the ownership of
      less
      than 5% of a publicly traded company), operate, manage, control, participate
      in,
      consult with, advise, permit its name to be used by, provide services for,
      lease, or in any manner engage in any business that manufactures or sells any
      products or provides any services which are in competition with any products
      or
      services of the Business of Seller, Buyer, Holdings or their Subsidiaries
      anywhere in the United States, as such business exists as of the Closing Date
      (collectively, "Covered Activities").

     

    (ii) During
      the Restricted Period, neither Seller nor such Principal Stockholder shall,
      without the prior written consent of the Buying Parties, directly or indirectly,
      (i) induce or attempt to induce any employee of any Buying Party to leave the
      employ of any Buying Party, (ii) employ any employee of any Buying Party when
      employed by any Buying Party, (iii) in any other way interfere with the
      relationship between any Buying Party and any employee of any Buying Party,
      (iv)
      employ during the period commencing from the date hereof and ending two (2)
      years following the Closing Date any Person who is employed by any Buying Party
      during such period, or (v) induce or attempt to induce any customer, supplier,
      licensee, licensor, reseller, partner or franchisee of any Buying Party
      (including any customer of Seller’s Business) to cease doing business with any
      Buying Party, or in any way interfere with the relationship between any such
      customer, supplier, licensee, licensor, reseller, partner or franchisee or
      business relation and any Buying Party.

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    (iii) Neither
      Seller nor any Principal Stockholder shall, at any time, directly or indirectly,
      verbally or in writing, publicly or in private, disparage, slander, denigrate
      or
      criticize the business, operations, properties, assets, activities, management,
      shareholders or performance of the Buying Parties or their Subsidiaries or
      Seller and shall refrain from all communications which have as their effect,
      whether intended or unintended, the denigration, disparagement or deprecation
      of
      the Buying Parties or their Subsidiaries or Seller or their respective business,
      operations, properties, assets, activities, management, shareholders or
      performance.

     

    (iv) Seller
      and each of the Principal Stockholders further acknowledges and agrees
      that:

     

    (A) the
      covenants set forth in Section 9(f) of this Agreement are reasonable in
      geographical and temporal scope and in all other respects,

     

    (B) the
      Buying Parties would not have entered into this Agreement but for the covenants
      contained herein, and

     

    (C) the
      covenants contained herein have been made in order to induce the Buying Parties
      to enter into the Asset Purchase Agreement and purchase the Acquired Assets
      from
      which the Principal Stockholders will receive substantial benefit.

     

    (D) If,
      at
      the time of enforcement of the covenants contained in Section 9(f) of this
      Agreement, a court shall hold that the duration, scope or geographic
      restrictions stated therein are unreasonable under circumstances then existing,
      the Parties agree that the maximum duration, scope or geographic area reasonable
      under such circumstances shall be substituted for the stated duration, scope
      or
      geographic area (and any court or other adjudicator interpreting these provision
      is hereby authorized to so amend this Agreement).

     

    (v) For
      the
      sole purpose of enforcement of the Buying Parties’ rights under this Section
      9(f), the Parties intend to and hereby confer jurisdiction to enforce the
      restrictions set forth in this 9(f) (the “Restrictions”) upon the courts of any
      jurisdiction within the geographical scope of the Restrictions. If the courts
      of
      any one or more of such jurisdictions hold the Restrictions unenforceable by
      reason of the breadth of such scope or otherwise, it is the intention of the
      Parties that such determination not bar or in any way affect any Company’s
      rights to the relief provided above in the courts of any other jurisdiction
      within the geographical scope of the Restrictions, as to breaches of such
      covenants in such other respective jurisdictions, such covenants as they relate
      to each jurisdiction being, for this purpose, severable into diverse and
      independent covenants. In the event of any litigation among the Parties under
      this Section 9(f), the court shall award reasonable attorneys fees to the
      prevailing Party.

     

    (f) Name
      Change.
      Seller
      agrees to changes its name to a name that does not include the words “EON,”
“EONStreams” or any similar words within thirty days of the Closing Date.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    (g) Accounting
      Support.
      During
      the three-month period following the Closing Date, Seller shall provide to
      the
      Buying Parties, the services of Susan Seagraves for approximately 24 hours
      a
      week, plus or minus 10 hours a week, consistent with her current commitment
      depending on workload demands during that period, to assist the Buying Parties
      with accounting and other financial issues associated with the initial
      maintenance and subsequent integration of the Acquired Assets into the Buying
      Parties’ business, internal controls and accounting procedures.  The Buying
      Parties shall reimburse Seller for the costs of such provided services, up
      to an
      amount equal to the current monthly salary of Susan Seagraves.

     

    (h) Unassigned
      Assets. With
      respect to any Unassigned Asset, until
      all
      consents necessary to cause such asset or agreement to become an Acquired Asset
      are obtained, (i) Seller shall use its best efforts in order to obtain the
      consents necessary to cause such asset to become an Acquired Asset, and (ii)
      Seller on the one hand, and the Buyer, on the other hand, will cooperate in
      a
      reasonable
      arrangement designed to provide for the Buyer the benefits of Seller under
      the
      Unassiged Asset, to the extent of the Buyer’s performance of Seller’s
      obligations on behalf of Seller, with respect to such Unassigned Asset,
including,
      to the extent any Unassigned Asset is an agreement or lease, or used pursuant
      to
      an agreement or lease, enforcement at the request and expense of the Buyer
      for
      the benefit of the Buyer of any and all rights of Seller against any Person
      under the respective agreement or lease or arising out of the breach or
      cancellation of the respective agreement or lease. In connection with the
      foregoing, Seller
      may take such action as Seller deems appropriate to satisfy the obligations
      with
      respect to any Unassigned Asset, including, without limitation, assigning any
      Unassigned Asset that is a contract or lease to a third party or arranging
      for a
      third party to perform the obligations thereunder, and the Buyer shall not
      be
      liable for any damages incurred by Seller in connection therewith. 

     

    10. Remedies
      for Breaches of this Agreement.

     

    (a) Survival
      of Representations and Warranties.
      All of
      the representations and warranties of Seller and the Principal Stockholders
      contained in Sections 3 and 4 of this Agreement shall survive the Closing
      (even if the Buying Parties knew or had reason to know of any misrepresentation
      or breach of warranty at the time of Closing) and continue in full force and
      effect for a period of one year thereafter; except that the representations
      and
      warranties of Seller and the Principal Stockholders contained in Sections 4(a),
      4(b), 4(e) and 4(z) of this Agreement shall survive the Closing (even if the
      Buying Parties knew or had reason to know of any misrepresentation or breach
      of
      warranty at the time of Closing) and continue in full force and effect until
      the
      applicable statute of limitations has run and that the representations and
      warranties of Seller and the Principal Stockholders contained in Section 4(k)
      of
      this Agreement shall survive the Closing (even if the Buying Parties knew or
      had
      reason to know of any misrepresentation or breach of warranty at the time of
      Closing) and continue in full force and effect for a period of three years
      thereafter. All of the representations and warranties of the Buying Parties
      contained in Section 5 of this Agreement shall survive the Closing (even if
      Seller knew or had reason to know of any misrepresentation or breach of warranty
      at the time of Closing) and continue in full force and effect for a period
      of
      one year thereafter.

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    (b) Indemnification
      Provisions for Benefit of the Buying
      Parties, Seller and the Principal Stockholders.

     

    (i) Seller
      and the Principal Stockholders, jointly and severally, shall indemnify, defend
      and hold harmless the Buying Parties, and each of their officers, directors,
      employees, agents, successors and assigns (collectively the “Buying Parties
      Group”) from and against any and all Adverse Consequences (including any Adverse
      Consequences any member of the Buying Parties Group may suffer after the end
      of
      any applicable survival period) incurred in connection with, arising out of,
      resulting from or incident to (i) any breach of any covenant, representation,
      warranty or agreement or the inaccuracy of any representation made by Seller
      or
      any Principal Stockholder pursuant to any Transaction Document, (ii) Seller’s
      failure to timely and completely satisfy all Liabilities retained by Seller,
      including all Excluded Liabilities (and specifically including all Liabilities
      and Adverse Consequences associated with any Quest and Clear Channel
      Liabilities), or (iii) the existence of the Unassigned Assets immediately
      following the Closing and the failure of Seller to cause all Unassigned Assets
      to become Acquired Assets within 30 days of the Closing; provided, however,
      if a
      claim for indemnification arises as a result of an alleged inaccuracy in or
      breach of any representation or warranty of Seller or any Principal Stockholder
      and if there is an applicable survival period pursuant to Section 10(a)
      above with respect to such representation or warranty, the claim shall be
      time-barred unless a Buying Party makes a written claim for indemnification
      against Seller or the Principal Stockholders pursuant to Section 10(c)
      below within such survival period. 

     

    (ii) Holdings
      shall indemnify, defend and hold harmless Seller and the Principal Stockholder,
      and each of their officers, directors, employees, agents, successors and assigns
      (collectively the “Selling Parties Group”) from and against any and all Adverse
      Consequences (including any Adverse Consequences any member of the Buying
      Parties Group may suffer after the end of any applicable survival
      period)incurred in connection with, arising out of, resulting from or incident
      to (i) any breach of any covenant, representation, warranty or agreement or
      the
      inaccuracy of any representation, made by any Buying Party pursuant to any
      Transaction Document, or (ii) the Buyer’s failure to timely and completely
      satisfy all Assumed Liabilities; provided, however, if a claim for
      indemnification arises as a result of an alleged inaccuracy in or breach of
      any
      representation or warranty of any Buying Party and if there is an applicable
      survival period pursuant to Section 10(a) above with respect to such
      representation or warranty, the claim shall be time-barred unless Seller makes
      a
      written claim for indemnification against the Buying Parties pursuant to
      Section 10(c) below within such survival period. 

     

    (c) Matters
      Involving Third Parties.

     

    (i) If
      any
      third party shall notify any Party (the “Indemnified Party”) with respect to any
      matter (a “Third Party Claim”) which may give rise to a claim for
      indemnification against any other Party (the “Indemnifying Party”) under this
      Section 10, then the Indemnified Party shall promptly notify each
      Indemnifying Party thereof in writing; provided, however, that no delay on
      the
      part of the Indemnified Party in notifying any Indemnifying Party shall relieve
      the Indemnifying Party from any obligation hereunder unless (and then solely
      to
      the extent) the Indemnifying Party thereby is prejudiced.

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    (ii) Any
      Indemnifying Party will have the right to defend the Indemnified Party against
      the Third Party Claim with counsel of its choice reasonably satisfactory to
      the
      Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
      Party in writing within 15 days after the Indemnified Party has given
      notice of the Third Party Claim that the Indemnifying Party will indemnify
      the
      Indemnified Party from and against the entirety of any Adverse Consequences
      the
      Indemnified Party may suffer resulting from, arising out of, relating to, or
      caused by the Third Party Claim, (B) the Indemnifying Party provides the
      Indemnified Party with evidence reasonably acceptable to the Indemnified Party
      that the Indemnifying Party will have the financial resources to defend against
      the Third Party Claim and fulfill its indemnification obligations hereunder
      (including the payment in cash of all fees and costs associated with such
      defense), (C) the Third Party Claim involves only money damages and does not
      seek an injunction or other equitable relief, (D) settlement of, or an adverse
      judgment with respect to, the Third Party Claim is not, in the good faith
      judgment of the Indemnified Party, likely to establish a precedential custom
      or
      practice materially adverse to the continuing business interests of the
      Indemnified Party, and (E) the Indemnifying Party conducts the defense of the
      Third Party Claim actively and diligently. 

     

    (iii) So
      long
      as the Indemnifying Party is conducting the defense of the Third Party Claim
      in
      accordance with Section 10(c)(ii) above, (A) the Indemnified Party may
      retain separate co-counsel at its sole cost and expense and participate in
      the
      defense of the Third Party Claim, (B) the Indemnified Party will not consent
      to
      the entry of any judgment or enter into any settlement with respect to the
      Third
      Party Claim without the prior written consent of the Indemnifying Party (not
      to
      be withheld unreasonably), and (C) the Indemnifying Party will not consent
      to
      the entry of any judgment or enter into any settlement with respect to the
      Third
      Party Claim without the prior written consent of the Indemnified Party (not
      to
      be withheld unreasonably), unless the following shall apply (in which case
      the
      Indemnifying Party may settle and compromise such Third Party Claim without
      the
      prior written consent of the Indemnified Party): (x) there is no finding or
      admission of any violation of law or any violation of the rights of any person
      and no affect on any other claims that may be made against the Indemnified
      Party; and (y) the sole relief provided is monetary damages that are paid in
      full in cash by the Indemnifying Party. 

     

    (iv) In
      the
      event any of the conditions in Section 10(c)(ii) above is or becomes
      unsatisfied, however, (A) the Indemnified Party may defend against, and consent
      to the entry of any judgment or enter into any settlement with respect to,
      the
      Third Party Claim in any manner it reasonably may deem appropriate (and the
      Indemnified Party need not consult with, or obtain any consent from, any
      Indemnifying Party in connection therewith), (B) the Indemnifying Party will
      reimburse the Indemnified Party (with cash) promptly and periodically for the
      costs of defending against the Third Party Claim (including reasonable
      attorneys’ fees and expenses), and (C) the Indemnifying Party will remain
      responsible for any Adverse Consequences the Indemnified Party may suffer
      resulting from, arising out of, relating to, or caused by the Third Party Claim
      to the fullest extent provided in this Section 10.

     

    (d) Characterization
      of Payments.
      All
      indemnification payments under this Section 10 shall be deemed adjustments
      to the Purchase Price.

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    (e) Limitations;
      Escrow Shares.
       

     

    (vi) The
      exclusive recourse of the Buying Parties Group for Adverse Consequences pursuant
      to this Agreement, other than for fraud, shall be against the Purchase Shares
      and the additional shares issuable to Seller pursuant to Section 2(c) (ii)
      (subject to the right of the indemnifying Seller or Principal Stockholder to
      pay
      any indemnity in cash). The aggregate liability of Seller and the Principal
      Stockholders, other than for fraud, shall in no event exceed $17,001,345, which
      shall (unless otherwise elected by the paying indemnifying party) come
      exclusively from the Purchase Shares and the additional shares issuable to
      Seller pursuant to Section 2(c)(ii), valued at the Market Price as of the
      Closing Date. For purposes of clarity, it is the intent of the Parties that
      (A)
      for claims made during the 111⁄2
      months
      during which Seller is required to retain the Purchase Shares, the recourse
      of
      the Buying Parties Group for Adverse Consequences shall be against the Purchase
      Shares held by Seller (and shall be satisfied by return of such shares), and
      (B)
      for claims made during the period following a permitted distribution of the
      Purchase Shares by Seller to its stockholders, the recourse of the Buying
      Parties Group for Adverse Consequences shall be against the Purchase Shares
      distributed to the Principal Stockholders (and shall be satisfied by return
      of
      such shares and, for each Principal Stockholder, limited to the amount of
      distributed Purchase Shares); provided, however, for purposes of the foregoing
      (X) each Principal Stockholder shall be deemed to have been distributed a number
      of Purchase Shares equal to such Principal Stockholder’s pro rata distribution
      right with respect to the Purchase Shares as of the Closing under the charter
      of
      Seller, (Y) to the extent any Purchase Shares are transferred by Seller or
      a
      Principal Stockholder (other than through a pro rata distribution by Seller
      to
      its stockholders), the Buying Parties Group’s recourse shall be to not only
      against the Purchase Shares actually held at the time of the claim, but against
      a number of shares of Holdings Common Stock equal to those so transferred;
      and
      (Z) to the extent the amount of a timely claim for which the Buying Parties
      Group assert entitlement to indemnification exceeds the value of the Escrow
      Shares, using the Market Price of Holdings Common Stock as of the Closing Date,
      Seller shall either retain a number of Purchase Shares sufficient (together
      with
      the Escrow Shares) to cover the claim or shall cause its distributees to sign
      an
      agreement, in form reasonably satisfactory to Holdings, assuming the
      indemnification obligations of Seller with respect to a number of Purchase
      Shares sufficient (together with the Escrow Shares) to cover the claim.

     

    (ii) The
      aggregate liability of the Buying Parties, other than for fraud, shall in no
      event exceed $17,001,345, which shall, at the election of the Buying Parties
      be
      paid (A) exclusively in cash, or (B) be paid 50% in cash and 50% in shares
      of
      Holdings Common Stock, valued at the Market Price as of the date of payment.
      

     

    11. Miscellaneous.

     

    (a) Press
      Releases and Public Announcements.
      No
      Party shall issue any press release or make any public announcement relating
      to
      the subject matter of this Agreement without the prior written approval of
      the
      other Party; provided, however, that any Party may make any public disclosure
      it
      believes in good faith is required by applicable law or any listing or trading
      agreement concerning its publicly-traded securities (in which case the
      disclosing Party will use its reasonable best efforts to advise Holdings and
      Seller prior to making the disclosure).

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    (b) No
      Third-Party Beneficiaries.
      This
      Agreement shall not confer any rights or remedies upon any Person other than
      the
      Parties and their respective successors and permitted assigns with respect
      to
      all rights and obligations of such Parties hereunder.

     

    (c) Entire
      Agreement.
      This
      Agreement (including the Exhibits hereto and the documents and certificates
      required to be delivered hereby) constitutes the entire agreement between the
      Parties and supersedes any prior understandings, agreements, or representations
      by or between the Parties, written or oral, to the extent they related in any
      way to the subject matter hereof.

     

    (d) Succession
      and Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of the Parties named
      herein and their respective successors and permitted assigns. No Party may
      assign either this Agreement or any of its rights, interests, or obligations
      hereunder without the prior written approval of Holdings and Seller; provided,
      however, that the Buyer may (i) assign any or all of its rights and interests
      hereunder to one or more of its Affiliates and (ii) designate one or more of
      its
      Affiliates to perform its obligations hereunder (in any or all of which cases
      the Buyer nonetheless shall remain responsible for the performance of all of
      its
      and such assignee's obligations hereunder).

     

    (e)  Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together will constitute one and the same
      instrument. A facsimile copy of this Agreement or any counterpart hereto shall
      be valid as an original.

     

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

     

    (g)  Notices.
      All
      notices, demands or other communications to be given or delivered under or
      by
      reason of the provisions of this Agreement shall be in writing and shall be
      deemed to have been given when delivered personally to the recipient or when
      sent by facsimile followed by delivery by reputable overnight courier service
      (charges prepaid), one day after being sent to the recipient by reputable
      overnight courier service (charges prepaid) or five days after being mailed
      to
      the recipient by certified or registered mail, return receipt requested and
      postage prepaid. Any notice, demand or other communication hereunder may be
      given by any other means (including telecopy or electronic mail), but shall
      not
      be deemed to have been duly given unless and until it is actually received
      by
      the intended recipient. Such notices, demands and other communications shall
      be
      sent to the addresses indicated below:

     

    If
      to
      Seller: 

     

    EON
      Streams, Inc.

    Skelton
      & Associates, Inc.

    5313
      Enderbury

    Raleigh,
      NC 27615

    Facsimile:
      (919) 676-2832

    Attention:
      Thomas
      A.
      Skelton 

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    with
      a
      copy (which shall not constitute notice to Seller) to:

    

    Wagner,
      Myers & Sanger, P.C.

    P.O.
      Box
      1308

    Knoxville,
      TN 37901

    (865)291-0419
      (fax)

    Attn:
      Robert E. Hyde

    

    If
      to
      Holdings or the Buyer:

     

    One
      Jenner, Suite 100

    Irvine,
      California 92618

    Facsimile:
      949-453-8686

    Attention:
      President & COO

     

    with
      a
      copy (which shall not constitute notice to Holdings or the Buyer)
      to:

    

    Parr
      Waddoups Brown Gee & Loveless

    185
      South
      State Street, Suite 1300

    Salt
      Lake
      City, Utah 84111

    Facsimile:
      801-532-7750

    Attention:
      Bryan T. Allen, Esq.

     

    or
      to
      such other address, to the attention of such other Person and/or with such
      other
      copy or copies as the recipient party has specified by prior written notice
      to
      the sending party. If any time period for giving notice or taking action expires
      on a day which is a Saturday, Sunday or legal holiday in the State of California
      (any other day being a "Business Day"), such time period shall automatically
      be
      extended to, the next Business Day immediately following such Saturday, Sunday
      or legal holiday.

     

    (h) Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the state of California without giving effect to any choice or conflict
      of law provision or rule (whether of the state of California or any other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the state of California.

     

    (i) Amendments
      and Waivers.
      Any
      term of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), by, and only by, the written consent of
      Holdings and Seller. No waiver by any Party of any default, misrepresentation,
      or breach of warranty or covenant hereunder, whether intentional or not, shall
      be valid unless the same shall be in writing and signed by an Authorized Buyer
      Party on behalf of the Buying Parties or Seller’s Representative on behalf of
      Seller, nor shall any such waiver be deemed to extend to any prior or subsequent
      default, misrepresentation, or breach of warranty or covenant hereunder or
      affect in any way any rights arising by virtue of any prior or subsequent such
      occurrence.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

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

     

    (k) Expenses
      and Transfer Taxes.
      Each of
      Holdings, the Buyer, Seller, and its Subsidiaries will bear his or its own
      costs
      and expenses (including legal fees and expenses) incurred in connection with
      this Agreement and the transactions contemplated hereby. Seller agrees that
      none
      of its Subsidiaries has borne or will bear any of the costs and expenses of
      Seller or the Principal Stockholders (including any of its legal fees and
      expenses) in connection with this Agreement or any of the transactions
      contemplated hereby.  Any
      provision herein to the contrary notwithstanding, Seller shall bear and pay
      when
      due all sales Taxes, recording, registration and conveyance Taxes and fees,
      and
      similar transfer Taxes resulting from or associated with the transactions
      contemplated hereunder.

     

    (l) Construction.
      The
      Parties have participated jointly in the negotiation and drafting of this
      Agreement. In the event an ambiguity or question of intent or interpretation
      arises, this Agreement shall be construed as if drafted jointly by the Parties,
      and no presumption or burden of proof shall arise favoring or disfavoring any
      Party by virtue of the authorship of any of the provisions of this Agreement.
      Any reference to any federal, state, local, or foreign statute or law shall
      be
      deemed also to refer to all rules and regulations promulgated thereunder, unless
      the context requires otherwise. The word “including” shall mean including
      without limitation. 

     

    (m) Incorporation
      of Exhibits and Schedules.
      The
      Exhibits and Schedules identified in this Agreement are incorporated herein
      by
      reference and made a part hereof.

     

    (n) Specific
      Performance.
      Each of
      the Parties acknowledges and agrees that the other Party would be damaged
      irreparably in the event any of the provisions of this Agreement are not
      performed in accordance with their specific terms or otherwise are breached.
      Accordingly, each of the Parties agrees that the other Parties shall be entitled
      to an injunction or injunctions to prevent breaches of the provisions of this
      Agreement and to enforce specifically this Agreement and the terms and
      provisions hereof in any action instituted in any court of the United States
      or
      any state thereof having jurisdiction over the Parties and the matter (subject
      to the provisions set forth in Section 11(o) below), in addition to any
      other remedy to which it may be entitled, at law or in equity.

     

    (o) Submission
      to Jurisdiction.
      Except
      as set forth in Section 9(f), each of the Parties submits to the exclusive
      jurisdiction of any state or federal court sitting in Orange County, California
      in any action or proceeding arising out of or relating to this Agreement and
      agrees that all claims in respect of the action or proceeding may be heard
      and
      determined in any such court. Each Party also agrees not to bring or seek
      removal of any action or proceeding arising out of or relating to this Agreement
      in or to any other court. Each of the Parties waives any defense of inconvenient
      forum to the maintenance of any action or proceeding so brought and waives
      any
      bond, surety, or other security that might be required of any other Party with
      respect thereto. Each Party agrees that a final judgment in any action or
      proceeding so brought shall be conclusive and may be enforced by suit on the
      judgment or in any other manner provided by law or in equity.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    (p) Waiver
      of Trail By Jury.
      EACH
      PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY
      IN
      ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING
      OUT
      OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE VALIDITY,
      PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR THEREOF. EACH
      PARTY AGREES THAT THIS SECTION 11(p) IS A SPECIFIC AND MATERIAL ASPECT OF THIS
      AGREEMENT AND EACH OF THE OTHER TRANSACTION DOCUMENTS AND ACKNOWLEDGES THAT
      THE
      OTHER PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT AND CONSUMMATED THE
      TRANSACTIONS CONTEMPLATED HEREBY IF THIS SECTION 11(p) WERE NOT PART OF THIS
      AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

     

    *****

    

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

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

     

    

    
      	 	 	 
	 	VITALSTREAM
              HOLDINGS, INC.
	 
 	 
 	 
 
	
               

            	
              By:  

            	 /s/
              Jack
              Waterman                                                                       
	 	Jack Waterman, Chief Executive
              Officer

    

     

    
      

      
        	 	 	 
	 	VITALSTREAM
                ADVERTISING SOLUTIONS, INC. 
	 
 	 
 	 
 
	
                 

              	
                By:  

              	/s/
                Philip
                Kaplan                                                                            
	 	Philip Kaplan,
                President

      

       

      
        
          

          
            	 	 	 
	 	EON
                    STREAMS, INC. 
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	/s/ Thomas
                    Skelton
                                                                                           
	 	Thomas Skelton,
                    President

          

           

          
            
              

              
                	 	 	 
	 	PRINCIPAL
                        STOCKHOLDERS 
	 
 	 
 	 
 
	
                         

                      	
                        By:  

                      	/s/ Thomas
                        Skelton                                                                       
	 	Thomas Skelton, an
                        individual

              

               

              
                
                  
                    	 	 	 
	 	 
	
                             

                          	
                            By:  

                          	/s/
                            Stephen Newman   
                                                                                              
	 	Stephen Newman, an
                            individual

                  

                

              

            

          

        

      

    

    
       

      
        
          
            	 	 	 
	 	 
	
                     

                  	
                    By:  

                  	/s/
                    Susan Seagraves     
                                                                                     
	 	Susan Seagraves, an
                    individual

          

        

      

       

    

     

    Signature
      Page to Asset Purchase Agreement

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    ESCROW
      AGREEMENT

     

     

    [See
      attached]

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    
      ESCROW
        AGREEMENT

      

       

      THIS
        ESCROW AGREEMENT (this “Agreement”) dated May 19, 2006, is entered into by and
        among VitalStream Holdings, Inc., a Nevada corporation (“Holdings”), VitalStream
        Advertising Solution, Inc., a Nevada corporation (together with Holdings,
        the
“Buying Parties”), EON Streams, Inc., a Tennessee corporation (the “Seller”),
        and Wagner, Myers & Sanger, P.C., a Tennessee professional corporation, in
        its capacity as escrow agent (the “Escrow Agent”, which term shall also include
        any successor escrow agent appointed in accordance with Section 7(b)
        hereof).

      

      Reference
        is made to the Asset Purchase Agreement dated as of May 19, 2006, (the “Purchase
        Agreement”), to which the Buying Parties and Seller are each a party. This
        Agreement is the Escrow Agreement described in the Purchase Agreement.

      

      NOW,
        THEREFORE, to induce the Buying Parties to enter into, and in consideration
        of
        Buying Parties entering into, the Purchase Agreement, and in consideration
        of
        the premises and the representations and warranties and agreements contained
        herein, the parties hereto agree as follows:

      

      1. Certain
        Defined Terms.
        The
        following capitalized terms shall have the following meanings in this Agreement.
        Additional terms are defined elsewhere in this Agreement.

       

      “Closing”
        means the closing of the purchase and sale transaction contemplated by the
        Purchase Agreement , which occurred on the date first set forth above.

       

      “Common
        Stock” means the common stock, $.001 par value, of Holdings. 

       

      “Escrow
        Shares” means the 262,097 Purchase Shares identified as “Escrow Shares” in the
        Purchase Agreement and deliverable to the Escrow Agent by Holdings subject
        to
        the terms and conditions of this Agreement. 

       

      “Market
        Value” means $11.41, which is the average of the closing price, as reported by
        the principal United States market for the Common Stock, of the Common Stock
        for
        the twenty (20) trading days preceding the Closing Date (subject to adjustments
        for any stock splits, reverse splits, or similar reclassifications of the
        Common
        Stock). 

       

      “Purchase
        Shares” means the shares of Common Stock payable by Holdings to the Seller
        pursuant to Section 2(c)(i) and Section 2(c)(ii) of the Purchase Agreement.
        

       

      “Release
        Date” means the date that is two years after the date first set forth
        above.

       

      2. Appointment
        of Escrow Agent.
        The
        Escrow Agent is hereby appointed to act as escrow agent hereunder, and the
        Escrow Agent agrees to act as such.

       

      3. Resolution
        of Indemnification Claims.
        

      

      (a) Release
        and Indemnification Obligations.
        The
        Escrow Shares shall serve as security for the indemnification obligations
        of
        Seller under Section 10 of the Purchase Agreement, for the post-Closing
        adjustments to the purchase price pursuant to Section 2(d) of the Purchase
        Agreement and for satisfying any award of reasonable attorneys’ fees and charges
        and/or costs of mediation in accordance with the terms of any resolution
        through
        mediation (a “Prevailing Party Award”) in favor of the Buying Parties pursuant
        to Section 3(c) hereof. Payment for any amount determined as provided below
        to
        be owing to the Buying Parties under such indemnity obligations and any
        Prevailing Party Award shall be made by a release of that portion of the
        Escrow
        Shares to Holdings with a Market Value equal to such aggregate amount. The
        releases of Escrow Shares as described in this Section 3(a) are referred to
        as the “Escrow Adjustments.” 

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      (b) Notice
        of Claims.
        Following the receipt by the Buying Parties of written notice or good faith
        discovery of any claim, damage, or legal action or proceeding giving rise
        to
        indemnification rights under Section 10 of the Purchase Agreement or a
        post-Closing adjustment to the purchase price under Section 2(d) of the Purchase
        Agreement (a “Claim”), Holdings shall promptly give Seller written notice of
        such Claim (provided that no delay on the part of Holdings to promptly provide
        such notice shall relieve Seller from its obligations under the Purchase
        Agreement unless (and then solely to the extent) Seller thereby is prejudiced),
        specifying in reasonable detail the nature of the Claim and the computation
        of
        the proposed Escrow Adjustment (the “Notice of Claim”), and shall provide a copy
        of such notice to the Escrow Agent. 

      

      (c) Resolution
        of Claims.
        Any
        Notice of Claim received by Seller and the Escrow Agent pursuant to
        Section 3(b) above shall be resolved as follows:

      

      (i) Uncontested
        Claims.
        In the
        event that Seller does not contest a Notice of Claim in writing within twenty
        (20) calendar days after receipt of such notice, as provided below in
        Section 3(c)(ii), then Escrow Agent shall promptly release Escrow Shares to
        Holdings in an amount equal to the Escrow Adjustment proposed in such Notice
        of
        Claim.

       

      (ii) Contested
        Claims.
        In the
        event that Seller gives written notice to Holdings and the Escrow Agent
        contesting all or a portion of a Notice of Claim (a “Contested Claim”) within
        the twenty (20) day period provided above, matters that are subject to third
        party claims brought against any Buying Party or Seller in a litigation or
        arbitration shall await the final decision, award, or settlement of such
        litigation or arbitration. With respect to matters that arise between a Buying
        Party on the one hand and Seller on the other hand, including any disputes
        regarding performance or nonperformance of a Party’s obligations under this
        Agreement, such Buying Party and Seller shall use their reasonable best efforts
        to resolve the matter within sixty (60) days through mediation with a mutually
        acceptable mediator in accordance with the then existing Commercial
        Arbitration Rules and Mediation Procedures published by the American Arbitration
        Association or as otherwise agreed by the parties.
        In the
        event that the matter is not resolved through mediation within such sixty
        (60)
        day period, the parties may continue with mediation, or any party may initiate
        litigation in accordance with the Purchase Agreement. If any portion of a
        Notice
        of Claim is not contested or is subsequently settled, Escrow Agent shall
        promptly release a prorated amount of Escrow Shares to Holdings based on
        the
        amount of such uncontested portion and corresponding Escrow Adjustment. If
        notice is received by the Escrow Agent that a Notice of Claim is contested
        by
        Seller, then the Escrow Agent shall hold in escrow, after what would otherwise
        be the Release Date, the amount of Escrow Shares as specified in the Notice
        of
        Claim, until authorized to distribute the Escrow Shares in accordance with
        Section 6 hereof. 

       

      4. Escrow.
        On the
        date hereof, Holdings shall deliver the Escrow Shares, and the Escrow Agent
        shall accept the Escrow Shares for deposit in escrow pursuant to the provisions
        of this Agreement. The Escrow Agent shall hold the Escrow Shares at its office
        located at its address set forth in Section 9(a).

      

      5. Rights
        to Escrow Shares.
        The
        Escrow Shares shall be for the exclusive benefit of the Seller and the Buying
        Parties, and no other person or entity shall have any right, title or interest
        therein. Any claim of any person to the Escrow Shares, or any part thereof,
        shall be subject and subordinate to the prior right thereto of the Buying
        Parties, the Seller and the Escrow Agent, as contemplated by this
        Section 5. All Escrow Shares delivered to Buying Parties hereunder shall be
        considered a return of Purchase Price paid pursuant to the Purchase
        Agreement.

      

      6. Distribution
        of the Escrow Shares.
        Except
        as set forth in Section 3 above, the Escrow Agent shall continue to hold
        the
        Escrow Shares in its possession until authorized hereunder to distribute
        the
        Escrow Shares as follows:

      

      
        	 	
                a.

              	
                pursuant
                  to the joint
                  written instructions of Holdings and the Seller substantially in
                  the form
                  set forth in Exhibit A hereto;

              

      

      

      
        	 	
                b.

              	
                as
                  determined by the final order, decree or judgment of a court of
                  competent
                  jurisdiction in the United States of America (the time for appeal
                  having expired with no appeal having been taken) in a proceeding
                  to which
                  the Buying Parties and the Seller are parties (a “Final Decree”) upon
                  receipt from Holdings or the Seller of written notice substantially
                  in the
                  form of Exhibit B hereto accompanied by a certified copy of such
                  Final Decree; or

              

      

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

      
        	 	
                c.

              	
                Notwithstanding
                  any other provision of this Section 6, the Escrow Agent may elect,
                  in its
                  sole discretion, to commence an interpleader action or seek other
                  judicial
                  relief or orders as it may deem, in its sole discretion, necessary.
                  The
                  costs and expenses (including reasonable attorneys’ fees and expenses)
                  incurred in connection with such proceeding shall be paid one half
                  by each
                  of, and shall be deemed a joint and several obligation of, the
                  Buying
                  Parties and the Seller.

              

      

      

      7. Termination;
        Periodic Distributions.
        This
        Agreement shall terminate upon the delivery by the Escrow Agent of all of
        the
        Escrow Shares in accordance with this Agreement. If upon, or any time after,
        the
        Release Date, there shall be no Claims for indemnity against Seller under
        this
        Agreement, the Buying Parties and Seller shall jointly direct the Escrow
        Agent
        in writing to deliver the Escrow Shares to Seller. If upon the Release Date,
        there shall be one or more Claim(s) for indemnity (whether pending or threatened
        in writing) against Seller under this Agreement, the Buying Parties and the
        Seller shall jointly direct the Escrow Agent in writing to deliver to Seller
        the
        number of Escrow Shares having a Market Value equal to the amount by which
        the
        Market Value of all the Escrow Shares as of the date of delivery exceeds
        the
        aggregate of all such Claims pending or threatened at such time. Except as
        provided in the Purchase Agreement, the termination of this Agreement or
        the
        disbursement of any Escrow Shares hereunder is not intended and shall not
        constitute a termination or limitation of any amount that may be due to the
        Buying Parties (or their affiliates) or any claim for indemnification that
        may
        be made by the Buying Parties (or their affiliates) pursuant to the Purchase
        Agreement. Notwithstanding any termination of this Agreement, the provisions
        of
        Sections 8(c) and 8(d) hereof shall survive such termination and remain in
        full force and effect.

      

      8. Escrow
        Agent.

      

      
        	 	
                a.

              	
                Obligations

              

      

      

      
        	 	
                i.

              	
                The
                  obligations of the Escrow Agent are those specifically provided
                  in this
                  Agreement and no other, and the Escrow Agent shall have no liability
                  under, or duty to inquire into the terms and provisions
                  of, any agreement between the parties hereto. The duties of the
                  Escrow
                  Agent are purely ministerial in nature, and it shall not incur
                  any
                  liability whatsoever, except for willful misconduct or gross negligence.
                  The Escrow Agent may consult with counsel of its choice and shall
                  not be
                  liable for reasonably following the advice of such
                  counsel.

              

      

      

      
        	 	
                ii.

              	
                The
                  Escrow Agent shall not have any responsibility for the genuineness
                  or
                  validity of any document or other item deposited with it or of
                  any
                  signature thereon and shall not have any liability for acting in
                  accordance with any written instructions or certificates given
                  to it
                  hereunder and believed by it to be signed by the proper
                  parties.

              

      

      

      
        	 	
                iii.

              	
                The
                  Escrow Agent shall not be required to expend or risk any of its
                  own funds
                  or otherwise incur and financial or other liability in the performance
                  of
                  any of its duties hereunder.

              

      

      

      
        	 	
                iv.

              	
                The
                  Escrow Agent shall not be under any duty to give the Escrow Shares
                  held by
                  it hereunder any greater degree of care than it gives its own similar
                  property.

              

      

      

      b. Resignation
        and Removal.
        The
        Escrow Agent may resign and be discharged from its duties hereunder at any
        time
        by giving at least 30 days’ notice of such resignation to the Buying Parties and
        the Seller, specifying a date upon which such resignation shall take effect
        (the
“Resignation Notice”); provided,
        however,
        that
        the Escrow Agent shall continue to serve until its successor accepts the
        Escrow
        Shares. Upon receipt of any Resignation Notice, a successor Escrow Agent
        shall
        be appointed by the Buying Parties and the Seller, such successor Escrow
        Agent
        to become the Escrow Agent hereunder on the later of the date set forth in
        the
        Resignation Notice and the date on which the successor Escrow Agent accepts
        the
        Escrow Shares. If an instrument of acceptance by a successor Escrow Agent
        shall
        not have been delivered to the resigning Escrow Agent within 40 days after
        delivery of the Resignation Notice, the resigning Escrow Agent may petition
        any
        court of competent jurisdiction for the appointment of a successor Escrow
        Agent.
        The expenses relating to such petition shall be paid one-half by the Buying
        Parties and one-half by Seller. The Buying Parties and Seller, acting jointly,
        may at any time substitute a new Escrow Agent by giving 10 days’ notice thereof
        to the current Escrow Agent and paying all fees and expenses of the current
        Escrow Agent as provided in Section 8(d) hereof.

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

      c. Waiver
        and Indemnification.
        

      

      (i) The
        Buying Parties and Seller agree to and hereby do waive any suit, claim, demand,
        or cause of action of any kind that they may have or may assert against the
        Escrow Agent arising out of or relating to the execution, administration,
        or
        performance by the Escrow Agent of this Agreement, unless such suit, claim,
        demand, or cause of action is based upon the willful misconduct or gross
        negligence of the Escrow Agent each as finally determined by a court of
        competent jurisdiction; provided, however, that notwithstanding anything
        in this
        Agreement to the contrary, the Escrow Agent shall not be liable in any event
        for
        special, punitive, indirect, incidental, or consequential losses or damages
        of
        any kind whatsoever (including but not limited to lost profits), even if
        the
        Escrow Agent has been advised of the likelihood of such loss or damage and
        regardless of the form of action. The Buying Parties and Seller further agree
        to
        jointly and severally indemnify the Escrow Agent, and to defend and to hold
        the
        Escrow Agent harmless against and from any and all claims, demands, costs,
        liabilities, and expenses, including reasonable attorneys’ fees, which may be
        asserted against it or to which it may be exposed or which it may incur for
        any
        action taken, suffered, or omitted to be taken, by reason of its execution,
        administration, or performance of this Agreement, except to the extent
        attributable to its willful misconduct or gross negligence. Such agreement
        to
        indemnify shall survive the termination of this Agreement until extinguished
        by
        any applicable statute of limitations.

       

      (ii) In
        case
        any litigation is brought against the Escrow Agent in respect of which
        indemnification may be sought hereunder, the Escrow Agent shall give prompt
        notice of that litigation to the parties hereto, and the parties upon receipt
        of
        that notice shall have the obligation and the right to assume the defense
        of
        such litigation, provided that failure of the Escrow Agent to give that notice
        shall not relieve the parties hereto from any of their obligations under
        this
        Section 8(c)(ii) except to the extent that such failure materially
        prejudices the defense of such litigation by said parties and only to the
        extent
        of such prejudice. At its own expense, the Escrow Agent may employ separate
        counsel and participate in the defense of any litigation so assumed by the
        parties hereto; provided that if the Escrow Agent is advised by its own counsel
        that there are material legal defenses available to it that are different
        from
        or additional to those available to any or all of the parties hereto, or
        a
        conflict of interest exists between any of the parties and the Escrow Agent,
        the
        Escrow Agent will be entitled to obtain its own separate attorney whereby
        the
        parties hereto will pay the reasonable attorneys’ fees and expenses for such
        attorney. The parties hereto shall not be liable for any settlement without
        their respective consents.

       

      d. Fees
        and Expenses of Escrow Agent.

      

      i. The
        Escrow Agent shall not receive any fees for its services hereunder. However,
        except as otherwise provided in Section 8(d)(ii) hereof, the Escrow Agent
        shall be reimbursed for all reasonable expenses, disbursements and advances,
        including reasonable attorneys’ fees, incurred by the Escrow Agent in connection
        with carrying
        out its ordinary duties to maintain the Escrow Shares and deliver such Escrow
        Shares pursuant to this Agreement. The amount of such reimbursement shall
        be
        paid one half (1⁄2) by Seller and one half (1⁄2) by the Buying Parties. The Escrow
        Agent shall periodically bill Seller for such fees and expenses in accordance
        with its customary billing practices.

      

      ii. Seller,
        on the one hand, and the Buying Parties, on the other hand, agree that if
        the
        Escrow Agent shall incur or suffer any other reasonable costs, charges, damages
        or attorneys’ fees on account of being the Escrow Agent or on account of having
        received the Escrow Shares hereunder (including, without limitation, costs,
        charges, damages and reasonable attorneys’ fees as a result of litigation
        involving this Agreement or the Escrow Shares other than by reason of the
        gross
        negligence or willful misconduct of the Escrow Agent), then such costs, charges,
        damages or fees (including, without limitation, reasonable attorneys’ fees
        incurred by the Escrow Agent in connection with any such litigation) shall
        be
        paid one-half by the Buying Parties and one-half by the Seller, or, in the
        case
        of any cost, charge, damage or fee arising as a result of litigation, in
        such
        manner as the court in which such litigation occurs may direct.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

      9. Miscellaneous.

      

      a. Notices.
        All
        notices, demands or other communications to be given or delivered under or
        by
        reason of the provisions of this Agreement shall be in writing and shall
        be
        deemed to have been given when delivered personally to the recipient or when
        sent by facsimile followed by delivery by reputable overnight courier service
        (charges prepaid), one day after being sent to the recipient by reputable
        overnight courier service (charges prepaid) or five days after being mailed
        to
        the recipient by certified or registered mail, return receipt requested and
        postage prepaid. Any notice, demand or other communication hereunder may
        be
        given by any other means (including telecopy or electronic mail), but shall
        not
        be deemed to have been duly given unless and until it is actually received
        by
        the intended recipient. Such notices, demands and other communications shall
        be
        sent to the addresses indicated below:

      

      if
        to the
        Seller, to:

      

      EON
        Streams, Inc.

      c/o
        Skelton
& Associates, Inc.

      5313
        Enderbury

      Raleigh,
        NC  27615

      Facsimile: 919-676-2832

      Attention:
         Thomas
        A.
        Skelton

      

      if
        to the
        Buying Parties, to:

      

      One
        Jenner, Suite 100

      Irvine,
        California 92618

      Facsimile:
         949-453-8686

      Attention: ________________,
        __________

       

      with
        a
        copy (which shall not constitute notice to the Buying Parties) to:

      

      Parr
        Waddoups Brown Gee & Loveless

      185
        South
        State Street, Suite 1300

      Salt
        Lake
        City, Utah 84111

      Facsimile:
         801-537-7750

      Attention:
         Bryan
        T.
        Allen, Esq.

       

      if
        to the
        Escrow Agent, to:

      

      Wagner,
        Myers & Sanger, P.C.

      1801
        First Tennessee Plaza

      800
        South
        Gay Street

      Knoxville,
        TN 37929

      Facsimile: (865)
        524-5731

      Attention:
         Herbert
        S. Sanger, Jr.

      

      or
        to
        such other address, to the attention of such other person and/or with such
        other
        copy or copies as the recipient party has specified by prior written notice
        to
        the sending party. If any time period for giving notice or taking action
        expires
        on a day which is a Saturday, Sunday or legal holiday in the State of California
        (any other day being a "business day"), such time period shall automatically
        be
        extended to, the next business day immediately following such Saturday, Sunday
        or legal holiday.

       

      b. Counterparts.
        This Agreement may be executed in any number of counterparts and by facsimile,
        and each such counterpart shall be deemed to be an original instrument, but
        all
        such counterparts together shall constitute one agreement.

      

      c. Governing
        Law.
        This
        Agreement shall be governed by and construed in accordance with the domestic
        laws of the state of California without giving effect to any choice or conflict
        of law provision or rule (whether of the state of California or any other
        jurisdiction) that would cause the application of the laws of any jurisdiction
        other than the state of California.

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

      d. Benefits
        of Agreement.
        This
        Agreement shall be binding upon inure to the benefit of and be enforceable
        by
        the parties hereto and their respective successors and assigns. Anything
        contained in the preceding sentence to the contrary notwithstanding, neither
        this Agreement nor any of the rights, interests or obligations herein or
        hereunder shall be assignable by any party hereto without the consent of
        the
        other parties hereto. 

      

      e. Modifications.
        This
        Agreement shall not be altered or otherwise amended except pursuant to an
        instrument in writing signed by each of the parties hereto.

      

      f. Descriptive
        Headings.
        The
        descriptive headings in this Agreement are for convenience only and shall
        not
        control or affect the meaning or construction of any provision of this
        Agreement.

       

      g. Representations
        and Warranties.
        Each of
        the Buying Parties and the Seller hereby represents and warrants (i) that
        this
        Agreement has been duly authorized, executed and delivered on its behalf
        and
        constitutes its legal, valid and binding obligation and (ii) that the execution,
        delivery and performance of this Agreement by the Buying Parties and the
        Seller
        does not and will not violate any applicable law regulation.

       

      h. No
        Third-party Beneficiaries.
        This
        Agreement shall not confer any rights or remedies upon any person other than
        the
        parties hereto and their respective successors and permitted assigns with
        respect to all rights and obligations of such parties hereunder.

       

      i. Entire
        Agreement.
        This
        Agreement (including the Exhibits hereto and the documents and certificates
        required to be delivered hereby) constitutes the entire agreement among the
        parties and supersedes any prior understandings, agreements, or representations
        by or among the parties, written or oral, to the extent they related in any
        way
        to the subject matter hereof.

       

      j. Specific
        Performance.
        Each of
        the parties acknowledges and agrees that the other party would be damaged
        irreparably in the event any of the provisions of this Agreement are not
        performed in accordance with their specific terms or otherwise are breached.
        Accordingly, each of the parties agrees that the other parties shall be entitled
        to an injunction or injunctions to prevent breaches of the provisions of
        this
        Agreement and to enforce specifically this Agreement and the terms and
        provisions hereof in any action instituted in any court of the United States
        or
        any state thereof having jurisdiction over the parties and the matter (subject
        to the provisions set forth in Section 9(l) below), in addition to any
        other remedy to which it may be entitled, at law or in equity.

       

      k. Submission
        to Jurisdiction.
        Each of
        the parties submits to the exclusive jurisdiction of any state or federal
        court
        sitting in Orange County, California in any action or proceeding arising
        out of
        or relating to this Agreement and agrees that all claims in respect of the
        action or proceeding may be heard and determined in any such court. Each
        party
        also agrees not to bring or seek removal of any action or proceeding arising
        out
        of or relating to this Agreement in or to any other court. Each of the parties
        waives any defense of inconvenient forum to the maintenance of any action
        or
        proceeding so brought and waives any bond, surety, or other security that
        might
        be required of any other party with respect thereto. Each party agrees that
        a
        final judgment in any action or proceeding so brought shall be conclusive
        and
        may be enforced by suit on the judgment or in any other manner provided by
        law
        or in equity.

       

      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

      l. Waiver
        of Trial By Jury.
        EACH
        PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY
        JURY IN
        ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING
        OUT
        OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE VALIDITY,
        PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR THEREOF.
        EACH
        PARTY AGREES THAT THIS SECTION 9(l) IS A SPECIFIC AND MATERIAL ASPECT OF
        THIS
        AGREEMENT AND EACH OF THE OTHER TRANSACTION DOCUMENTS AND ACKNOWLEDGES THAT
        THE
        OTHER PARTIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT AND CONSUMMATED
        THE
        TRANSACTIONS CONTEMPLATED HEREBY IF THIS SECTION 9(l) WERE NOT PART OF THIS
        AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

       

      

       

      [SIGNATURE
        PAGE FOLLOWS]

      

      

      

      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
        be
        executed and delivered on the date first above written.

       

      
        
          	 	 	 
	 	VITALSTREAM
                  HOLDINGS, INC.
	 
 	 
 	 
 
	
                   

                	
                  By:  

                	 /s/
                  Jack
                  Waterman                                                                       
	 	Jack Waterman, Chief Executive
                  Officer

        

      

       

       

      
        
          	 	 	 
	 	EON
                  STREAMS, INC.
	 
 	 
 	 
 
	
                   

                	
                  By:  

                	 /s/ Stephen
                  Newman
                                                                                     
	 	Stephen Newman,
                  President

        

        
           

           

          
            
              	 	 	 
	 	THE
                      ESCROW
                      AGENT:
	 	 
	 	
                      WAGNER,
                        MYERS & SANGER, P.C. 

                    
	 
 	 
 	 
 
	
                       

                    	
                      By:  

                    	                                                                                                          
	 	Name
	 	Title: 

            

             

             

          

        

      

    

    
      
        
          Signature
            Page to Escrow Agreement

           

        

      

      
        A-9

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        A

      

      

      [ADDRESS]

      

      [Date]

      

      

      Joint
        Written Instructions

      

      Ladies
        and Gentlemen:

      

      Reference
        is made to the Escrow Agreement dated ______ __, 2006 (the “Escrow Agreement),
        among VitalStream Holdings, Inc., a Nevada corporation (“Holdings”), ________,
        Inc., a Nevada corporation (together with Holdings, the “Buying Parties”), EON
        Streams, Inc., a Tennessee corporation (the “Seller”), and you. Capitalized
        terms used, but not defined herein shall have the meaning set forth in the
        Escrow Agreement.

      

      Pursuant
        to Section 6(a) of the Escrow Agreement, the undersigned hereby instruct
        you to deliver Escrow Shares to [Seller / Holdings].

      
         

        
          
            	 	 	 
	 	VITALSTREAM
                    HOLDINGS, INC.
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	                                                                                                          
	 	Name:
	 	Title: 

          

           

        

      

      
        
          
            
              	 	 	 
	 	EON
                      STREAMS, INC. 
	 
 	 
 	 
 
	
                       

                    	
                      By:  

                    	                                                                                                          
	 	Name:
	 	Title: 

            

          

        

      

       

       

      
        
          
          

        

        
          A-10

          
            

          

        

        
          
          

        

      

      EXHIBIT B

      

      [ADDRESS]

      

      

      [Date]

      

      

      Notice
        of Final Decree

      

      Ladies
        and Gentlemen:

      

      Reference
        is made to the Escrow Agreement dated _____ __, 2006 (the “Escrow Agreement),
        among VitalStream Holdings, Inc., a Nevada corporation (“Holdings”), ________,
        Inc., a Nevada corporation (together with Holdings, the “Buying Parties”), EON
        Streams, Inc., a Tennessee corporation (the “Seller”), and you. Capitalized
        terms used, but not defined herein shall have the meaning set forth in the
        Escrow Agreement.

      

      Pursuant
        to Sections 6(b) of the Escrow Agreement, the undersigned hereby instructs
        you to deliver Escrow Shares with a Market Value equal to $______ in accordance
        with the Final Decree (as defined in the Escrow Agreement), a certified copy
        of
        which is attached hereto.

      
        
           

          
            
              	 	 	 
	 	VITALSTREAM
                      HOLDINGS, INC.
	 
 	 
 	 
 
	
                       

                    	
                      By:  

                    	                                                                                                          
	 	Name:
	 	Title: 

            

             

          

        

        
          
            
              
                	 	 	 
	 	EON
                        STREAMS, INC. 
	 
 	 
 	 
 
	
                         

                      	
                        By:  

                      	                                                                                                          
	 	Name:
	 	Title: 

              

            

          

        

         

         

      

      

      [Attach
        certified copy of Final Decree]

       

      
        
          
          

        

        
          A-11

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        B

    

     

    EXLUDED
      ASSETS

     

     

    

      None

       

    

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    SELLER
      FINANCIAL STATEMENTS

     

     

    [See
      attached]

     

     

     

    

    [to
      be
      filed in Form 8-K/A amendment]

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    FINANCIAL
      STATEMENT CERTIFICATE

     

     

    [See
      attached]

     

     

    
      
        
        

      

      
        D-1

        
          

        

      

      
        
        

      

    

     

    EON
      STREAMS, INC.

     

    FINANCIAL
      STATEMENT CERTIFICATE

     

    I,
Susan
      Seagraves,
      in my
      capacity as Chief
      Financial Officer of EON Streams, Inc., a California
      corporation
      (the
“Seller”),
      pursuant to Section 7(a)
      of that
      certain Asset Purchase Agreement dated as of May 19, 2006
      (the
      "Agreement"),
      by
      and among Seller,
      VitalStream Holdings, Inc.
      and
      VitalStream Advertising Solutions, Inc.,
      do
      hereby
      certify in the name of and on behalf of Seller
      that:

     

    
      	 	
              1.

            	
              Attached
                hereto are the following financial statements (collectively the
                “Final
                Financial Statements”):
                (i) audited consolidated and unaudited consolidating balance sheets
                and
                statements of income, changes in stockholders’ equity, and cash flow as of
                and for the fiscal year ended December 31, 2005
                for Seller
                and its Subsidiaries; and (ii) unaudited
                consolidated
                and consolidating balance sheets and statements of income, changes
                in
                stockholders’ equity, and cash flow as of and for the three months
                ended
                March 31, 2006
                for Seller
                and its Subsidiaries. 

            

    

     

    
      	 	
              2.

            	
              The
                Final Financial Statements (including the notes thereto) have been
                prepared in accordance with GAAP applied on a consistent basis throughout
                the periods covered thereby, present fairly the financial condition
                of
                Seller
                and its Subsidiaries as of such dates and the results of operations
                of
                Seller
                and its Subsidiaries for such periods, are correct and complete,
                and are
                consistent with the books and records of Seller
                and its Subsidiaries (which books and records are correct and complete).
                

            

    

     

    
      	 	
              3.

            	
              The
                Final Financial Statements fairly present in all material respects
                the
                financial condition, results of operations and cash flows of the
                registrant as of, and for, the periods presented in the Final Financial
                Statements. 

            

    

     

    
      	 	
              4.

            	
              The
                Final Financial Statements, and this Certificate, are hereby incorporated
                by reference into the Agreement
                and shall be considered, for all purposes,
                to be representations and warranties of
                Seller
                and the Principal Stockholders
                under Section 4
                of
                the
                Agreement.

            

    

     

    Capitalized
      terms used herein and not otherwise defined herein shall have the meanings
      assigned to such terms in the Agreement.

     

     

    *
      * * *
      *

     

    
      
        
        

      

      
        D-2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, I have signed this Financial Statement Certificate
      this 19thday
      of
      May, 2006.

     

    
      
        	 	 	 
	 	EON
                STREAMS, INC. 
	 
 	 
 	 
 
	
                 

              	
                By:  

              	/s/
                Susan
                Seagraves                                                                     
	 	
                Susan
                  Seagraves, Chief Financial
                  Officer 

              

      

    

     

     

    
      
        
        

      

      
        D-3

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

     

    FORM
      OF EMPLOYMENT
      AGREEMENT 

     

     

    [See
      attached]

     

     

    
      
        
        

      

      
        E-1

        
          

        

      

      
        
        

      

    

     

    
      EMPLOYMENT
        AGREEMENT

      

      THIS
        EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of May 19, 2006 (the
“Effective Date”), by and between VitalStream Advertising Solutions, Inc., a
        Nevada corporation (the “Company”), VitalStream Holdings, Inc. (“Parent”;
        together with the Company and all direct and indirect subsidiaries of Parent,
        the “Consolidated Company”) and Kevin Woods (the “Employee”). 

      

      RECITALS

      

      A. The
        Company, Parent and EON Streams, Inc. (“EON”) are parties to that certain Asset
        Purchase Agreement dated May 19, 2006 (the “Purchase Agreement”), pursuant to
        which the Company is purchasing from EON substantially all of the assets
        of EON
        for the consideration set forth therein (the “Purchase”). Employee is a
        shareholder of EON and will be receiving a substantial economic benefit from
        the
        Purchase. 

      

      B. The
        going
        concern value of the assets being acquired by the Company in the Purchase
        would
        be diminished substantially if Employee were to compete with the Company
        or its
        affiliates. 

      

      C. The
        Company desires to hire Employee as an employee of the Company following
        the
        Purchase, and Employee desires to become an employee of the Company, all
        on the
        terms of this Agreement. 

      

      AGREEMENT

      

      NOW,
        THEREFORE, in consideration of this Agreement and of the covenants and
        conditions contained in this Agreement in the Purchase Agreement, the parties
        hereto agree as follows:

      

      1. Employment;
        Location.
        The
        Company hereby agrees to employ Employee during the Term, and Employee hereby
        agrees to be employed by the Company during the Term, in Knox County in the
        State of Tennessee or in such other location as may be mutually agreed between
        Employee and the Company. 

      

      2. Term.
        The
        term (the “Term”) shall commence on the date first set forth above and shall
        continue, unless earlier terminated as herein provided, for a period of eighteen
        (18) months, subject to the option of the Company to unilaterally extend
        the
        Term for up to three (3) separate six-month (6-month) periods, with each
        such
        option to be exercised in writing within sixty (60) days of the expiration
        of
        the then-expiring period. If Employee’s employment with the Company continues
        beyond the Term, the terms of this Agreement, other than provisions that
        by
        their terms apply only during the Term, will continue to govern Employee’s
        employment with the Company. The “Term” shall terminate upon the termination of
        Employee’s employment with the Company in a manner permitted by this Agreement,
        provided that all covenants that by their terms survive termination of this
        Agreement, including the covenants set forth in Sections 7, 8 and 9 of this
        Agreement, shall survive termination of this Agreement indefinitely, unless
        an
        early termination provision is set forth therein.

       

      
        
          
          

        

        
          E-2

          
            

          

        

        
          
          

        

      

      3. Duties.
        Employee’s title shall be Director of Advertising Products of the Company.
        Employee’s
        duties
        shall include such duties specifically assigned or delegated to Employee
        by the
        Board of Directors of the Company or the Board of Directors of the Parent
        (either such Board of Directors, the “Board”) and such other duties as are
        typically performed by an employee with the same position as Employee. Employee
        acknowledges that the Board may change, increase or decrease Employee’s title,
        position and/or duties from time to time in its discretion without breach
        of
        this Agreement. Employee shall diligently execute his duties and shall devote
        his full time, skills and efforts to such duties during ordinary working
        hours.
        Employee shall faithfully adhere to, execute and fulfill all lawful policies
        established from time to time by the Company.

      

      4. Compensation
        and Benefits.
        The
        Company shall pay Employee, and Employee accepts as full compensation for
        all
        services to be rendered to the Company, the following compensation and
        benefits:

      

      4.1 Base
        Salary.
        During
        the Term, the Company shall pay Employee an annual base salary of One Hundred
        Thousand Dollars ($100,000) per year, payable in equal installments at least
        monthly by the last day of each month or at more frequent intervals in
        accordance with the Company’s
        customary pay schedule. The Company may increase Employee’s base salary during
        the Term but shall retain the discretion to subsequently decrease Employee’s
        base salary to the level set forth herein. Following the Term, the Company
        may
        increase or decrease Employee’s base salary as it seems
        appropriate.

      

      4.2 Stock
        Options.
        Subject
        to the terms and conditions of the VitalStream 2001 Stock Incentive Plan
        (as
        amended to date), the Company will grant to you an option to purchase 20,000
        shares of Parent common stock at a price equal to the closing price of the
        stock
        on the grant date, 1⁄4 of which shares will vest one year from the grant date,
        with 1/16 of the remaining shares vesting at the end of each quarter thereafter
        until fully vested, with an option term of 5 years.

      

      4.3 Additional
        Benefits.
        Employee shall be eligible to participate in the Company’s
        employee benefit plans generally available to all employees, if an when such
        plans may be adopted, including, without limitation, bonus plans, pension
        or
        profit sharing plans, incentive stock plans, and those plans covering life,
        disability, health, and dental insurance in accordance with the rules for
        participation and eligibility established in the discretion of the Board
        for
        individual participation in any such plans as may be in effect from time
        to
        time; provided, nothing contained in this Agreement shall obligate the Company
        to formulate or continue any such plans. 

      

      4.4 Paid
        Time Off and Holidays.
        Employee
        shall be entitled to accrue, use and carryover paid time off in accordance
        with
        the Consolidated Company’s policy for each calendar year at full pay or such
        increased leave as may be allowed by the Board for members of management
        of the
        Company generally. In addition, Employee shall be entitled to other leave
        and
        holidays in accordance with the Consolidated Company's policy and governing
        law.

      

      4.5 Deductions.
        The
        Company shall have the right to deduct from the compensation due to Employee
        hereunder any and all sums required for social security and withholding taxes
        and for any other federal, state or local tax or charge which may be hereafter
        enacted or required by law as a charge on compensation of Employee.

      

      5. Business
        Expenses.
        The
        Company shall reimburse Employee for all approved, reasonable out-of-pocket
        entertainment and business expenses he incurs in fulfilling his duties
        hereunder, in accordance with the general policy of the Consolidated Company
        in
        effect from time to time, provided that Employee furnishes to the Company
        adequate records and other documentary evidence required by the general policy
        of the Company and
        all
        federal and state statutes and regulations issued by the appropriate taxing
        authorities for the substantiation of each such business expense as a deduction
        on the federal or state income tax returns of the Company.

      

      
        
          
          

        

        
          E-3

          
            

          

        

        
          
          

        

      

      6. Termination
        of Employee’s Employment.

      

      6.1 Termination
        by Company.
        Notwithstanding any provision in this Agreement to the contrary, the
        Company may terminate Employee’s employment at any time during or following the
        Term, for any or no reason and with or without Cause (as defined below) or
        advance notice. The Company’s rights under this Section 6.1 may not be changed
        or modified (a) by any oral representation to the contrary, (b) by any practice
        or procedure followed by the Company, or (c) by any policy manual, employee
        handbook, or other document issued by the Company (other than an agreement
        described in the next sentence). Any such change or modification must be
        a
        written agreement signed by both Employee and the President or Chief Executive
        Officer of Parent that specifically revokes the right of the Company to
        terminate Employee’s employment at-will. No other officer or employee of any
        Consolidated Company has the power or authority, either verbally or in writing,
        to alter the termination-at-will relationship except as specifically set
        forth
        in this paragraph.

      

      6.2 Termination
        by Employee.
        During
        the Term, the Employee may resign from employment with the Company or otherwise
        voluntarily terminate Employee’s employment with the Company only for Good
        Reason (as defined below), death or Disability (as defined below). Voluntary
        termination by the Employee of his employment during the Term for any other
        reason shall be a breach of this Agreement, for which the Company shall have
        available any and all remedies provided for in this Agreement or otherwise
        available at law or equity. Following the Term, the Employee may voluntarily
        terminate his Employment with the Company at any time, with or without Good
        Reason or notice. “Good Reason” shall mean (a) Employer's failure to cure,
        within 20 days of receiving written notice thereof, a material breach of
        any of
        the terms of this Agreement; and (b) a material adverse change in Employee's
        position with Employer that materially reduces his responsibilities, without
        Cause and without Employee's written consent. 

      

      6.3 Consequences
        of Termination by Company for Cause or by Employee for Good
        Reason.
        If
        Employee’s employment is terminated by the Company during the Term for Cause, by
        the Employee during the Term for Good Reason or by either party following
        the
        Term, not later than 30 days after the effective date of the termination
        (or
        earlier if required by law), all cash compensation described in this Agreement
        that was due through the effective date of the termination, but unpaid, shall
        be
        computed and paid to Employee by the Company. For
        purposes of this Agreement, the term “Cause” means (a)
        gross
        misconduct; (b) violation of a Consolidated Company policy which is materially
        detrimental to a Consolidated Company, its businesses, customers or employees;
        (c) material breach of this Agreement, including the failure to perform the
        duties as required by this Agreement; (d) material misrepresentation or fraud;
        (e) misappropriation, theft or embezzlement of a Consolidated Company’s property
        or assets; (f) misappropriation of a Consolidated Company’s trade secrets or
        confidential information; (g) conviction of or entry of a plea of nolo
        contendere to any felony or a crime of moral turpitude; (h) the use of illegal
        drugs at any time during the term of Employment or the consumption of alcohol
        to
        an extent which materially impairs Employee’s performance of his duties
        hereunder; (i) Employee’s death; or (j) Employee’s physical or mental disability
        (so that Employee is not able to perform the essential functions of his or
        her
        job position with or without reasonable accommodation) for any consecutive
        period exceeding twenty-six (26) weeks, as documented by a licensed physician.
        

      

      6.4 By
        Company without Cause.
        If
        Employee’s employment is terminated by the Company during the Term without
        Cause, (a) not later than 30 days after the effective date of the termination
        (or earlier if required by law), all cash compensation described in this
        Agreement that was due through the effective date of the termination, but
        unpaid, shall be computed and paid to Employee by the Company; and (b) the
        Company shall, upon receipt of a written release from Employee in form and
        substance reasonably satisfactory to the Company with respect to all liabilities
        arising prior to and in connection with such termination (other than under
        outstanding options to purchase common stock and this Section), continue
        to pay
        in accordance with the Company’s standard payroll policies to or for the benefit
        of Employee or, if applicable, his heirs or estate, as their rights may be,
        an
        amount per-month equal to one hundred percent (100%) of any Employee’s monthly
        base-salary for a period that expires at the later of the end of the initial
        18
        months period of the Term following such termination or the end of any 6
        months
        extension of the Term then in effect at the time of such termination.
 

       

      
        
          
          

        

        
          E-4

          
            

          

        

        
          
          

        

      

      6.5 Return
        of Company Property.
        Upon
        the termination or end of the employment of Employee with the Company, or
        at any
        time upon the request of the Company, Employee shall provide to the Company
        all
        property belonging to the Consolidated Company, including, but not limited
        to,
        keys, card passes, credit cards, electronic equipment, cellular telephones
        and
        any materials containing Confidential Information.

      

      7. Covenant
        Not to Compete.

      

      7.1 Covenant.
        Employee acknowledges that execution and delivery by Employee of this Agreement
        is a condition to closing of the obligations of Parent and the Company under
        the
        Purchase Agreement and that neither Parent nor the Company would have
        consummated the transactions contemplated by the Purchase Agreement but for
        Employee’s execution and delivery of this Agreement. In consideration of the
        Company’s employment of Employee, and the willingness of Parent and the Company
        to consummate the transactions contemplated by the Purchase Agreement, Employee
        hereby agrees that, while he is employed by the Company and during the
        Restrictive Period (as defined hereafter), Employee will not directly or
        indirectly compete (as defined in Section 7.2 below) with the Consolidated
        Company or their affiliates in any geographic area in which the Consolidated
        Company now does business or in which the Consolidated Company does business
        as
        of the effective date of the termination of the Employee’s
        employment. “Restrictive Period” means the period of time between the Effective
        Date and the later of (a) three years from the Effective Date, and (b) one
        year
        from the date of termination of Employee’s employment with the
        Company.

      

      7.2 Direct
        and Indirect Competition.
        As used
        herein, the phrase “directly or indirectly compete” shall include owning,
        managing, operating or controlling, or participating in the ownership,
        management, operation or control of, or being connecting with or having any
        interest in, as a stockholder, director, officer, employee, agent, consultant,
        assistant, advisor, sole proprietor, partner or otherwise, any person or
        entity
        other than the Consolidated Company that is engaged in, or proposes to become
        engaged in, the Internet Streaming Business (as defined hereafter). “Internet
        Streaming Business” means the business of providing any of (a) digital
        broadcasting services over the Internet for any type of streaming media or
        related technology, (b) server management services or related technology,
        (c)
        web hosting services or related technology, (c) services or technology ancillary
        to any of (a), (b) or (c), such as services or technology for advertising
        insertion or trafficking, and (d) consulting services related to any of (a),
        (b)
        or (d). 

      

      7.3 Nonsolicitation.
        Employee hereby agrees that, during the Restrictive Period, he will not,
        directly or indirectly, through an affiliate or otherwise, for his account
        or
        the account of any other person, (a) solicit business substantially similar
        to
        the Internet Streaming Business from any person that at the time of termination
        is or was a customer of the Consolidated Company, whether or not he had personal
        contact with such person during and by reason of employment with the
        Consolidated Company; (b) in any manner induce or attempt to induce any employee
        of the Company to
        terminate his or her employment with the Consolidated Company; or (c) materially
        and adversely interfere with the relationship between the Consolidated Company
        and any employee, contractor, supplier, customer or shareholder of the
        Consolidated Company.

      

      7.4 Non-Disparagement.
        Employee hereby agrees that, during the Restricted Period, he shall not in
        any
        way, either directly or indirectly, disparage the Company or any Consolidated
        Company or any their respective managers, directors, officers, employees
        or
        agents.

      

      7.5 Enforceability.
        If any
        of the provisions of this Section 7 are held unenforceable, the remaining
        provisions shall nevertheless remain enforceable, and the court making such
        determination shall modify, among other things, the scope, duration, or
        geographic area of this Section to preserve the enforceability hereof to
        the
        maximum extent then permitted by law. In addition, the enforceability of
        this
        Section is also subject to the injunctive and other equitable powers of a
        court
        as described in Section 11 below.

      

      
        
          
          

        

        
          E-5

          
            

          

        

        
          
          

        

      

      7.6 Jurisdiction.
        For the
        sole purpose of enforcement of the Company’s rights under this Section 7, the
        Company and Employee intend to and hereby confer jurisdiction to enforce
        the
        restrictions set forth in this Section 7 (the “Restrictions”) upon the courts of
        any jurisdiction within the geographical scope of the Restrictions. If the
        courts of any one or more of such jurisdictions hold the Restrictions
        unenforceable by reason of the breadth of such scope or otherwise, it is
        the
        intention of the Company and Employee that such determination not bar or
        in any
        way affect the Company’s
        rights
        to the relief provided above in the courts of any other jurisdiction within
        the
        geographical scope of the Restrictions, as to breaches of such covenants
        in such
        other respective jurisdictions, such covenants as they relate to each
        jurisdiction being, for this purpose, severable into diverse and independent
        covenants. In the event of any litigation between the parties under this
        Section
        7, the court shall award reasonable attorneys fees to the prevailing
        party.

      

      8. Confidential
        Information.

      

      8.1 Definition.
        The
        term “Confidential Information” shall mean and include any information,
        including a formula, pattern, compilation, program, source code, device,
        method,
        technique, or process, that (a) derives independent economic value, actual
        or
        potential, from not being generally known to, and not being readily
        ascertainable by proper means by, other persons who can obtain economic value
        from its disclosure or use, and (b) that is the subject of efforts that are
        reasonable under the circumstance to maintain its secrecy. Information included
        in Confidential Information includes matters of a technical nature (including
        know-how, computer programs, software, patented and unpatented technology,
        source-code, accounting methods, and documentation), matters of a business
        nature (such as information about contract forms, costs, profits, employees,
        promotional methods, markets, market or marketing plans, sales, and client
        accounts), plans for further development, and any other information meeting
        the
        definition of Confidential Information set forth above. Confidential Information
        includes all proprietary information and know-how of the Company, whether
        or not
        patented, related to the function, development, use, marketing, operation
        or
        modification of any process owned, developed or purchased by the Consolidated
        Company related to the Internet Streaming Business. Confidential Information
        also includes any such information developed by Employee for the Company
        while
        an employee of the Consolidated Company. “Confidential Information” does not
        include information that is
        in the
        public domain and is available at the time of disclosure or which thereafter
        enters the public domain and is available, through no act or omission by
        Employee or other person subject to the duty to keep such information
        confidential.

      

      8.2 Nondisclosure
        and Non-Use of Confidential Information.
        Employee agrees that all files, records (including electronic or digitals
        records), documents, and the like relating to such Confidential Information,
        whether prepared by him or otherwise coming into his possession, shall remain
        the exclusive property of the Consolidated Company, and Employee hereby agrees
        to promptly disclose such Confidential Information to the Consolidated Company
        upon request and hereby assigns to the Company any rights which he may acquire
        in any Confidential Information. Employee further agrees not to disclose
        or use
        any Confidential Information and to use his best efforts to prevent the
        disclosure or use of any Confidential Information either during the term
        of his
        employment or at any time thereafter, except as may be necessary in the ordinary
        course of performing his duties under this Agreement. Upon termination of
        Employee’s
        employment with the Company for any reason, Employee shall promptly deliver
        to
        the Company all materials, documents, data, equipment, and other physical
        property of any nature containing or pertaining to any Confidential Information,
        and Employee shall not take from the Company’s
        premises any such material or equipment or any reproduction thereof without
        the
        written consent of the Company.

      

      9. Inventions.

      

      9.1 Disclosure
        of Inventions.
        Employee hereby agrees that if he conceives, learns, makes or first reduces
        to
        practice, either alone or jointly with others, any “Employment Invention” (as
        defined in Section 9.3 below) during his employment by the Company, either
        as an
        employee or as a consultant, he will promptly disclose such Employment Invention
        to the Company or to any person designated by it.

       

      
        
          
          

        

        
          E-6

          
            

          

        

        
          
          

        

      

      9.2 Ownership,
        Assignment, Assistance, and Power of Attorney.
        All
        Employment Inventions (as defined in Section 9.3 below) shall be the sole
        and
        exclusive property of the Company, and the Company shall have the right to
        use
        and to apply for patents, copyrights, or other statutory or common law
        protection for such Employment Inventions in any country. Employee hereby
        assigns to the Company any rights which he has or may acquire in such Employment
        Inventions. Furthermore, Employee agrees to assist the Company in every
        reasonable way at the Company’s
        expense
        to obtain patents, copyrights, and other statutory common law protections
        for
        such Employment Inventions in any country and to enforce such rights from
        time
        to time. Specifically, at the Company’s expense Employee agrees to execute all
        documents as the Company may reasonably desire for use in applying for and
        in
        obtaining or enforcing such patents, copyrights, and other statutory or common
        law protections together with any assignments thereof to the Company or to
        any
        person designated by the Company. Employee’s
        obligations under this Section 9 shall continue beyond the termination of
        his
        employment under this Agreement, but the Company shall compensate Employee
        at a
        rate agreed upon by Employee and the Company pursuant to negotiations in
        good
        faith after such termination for the time which Employee actually spends
        at the
        Company’s
        request
        in rendering such assistance.

      

      9.3 Employment
        Inventions.
        The
        definition of Employment Invention as used in this Section 9 is as
        follows:

      

      ““Employment
        Invention” means any invention or part thereof conceived, developed, reduced to
        practice, or created by an employee which is or was:

      

      (a) conceived,
        developed, reduced to practice, or created by the employee:

      

      (i) within
        the scope of his employment;

      

      (ii) on
        his
        employer's time; or

      

      (iii) with
        the
        aid, assistance, or use of any of his employer's property, equipment,
        facilities, supplies, resources, or intellectual property;

      

      (b) the
        result of any work, services, or duties performed by an employee for his
        employer;

      

      (c) related
        to the industry or trade of the employer; or

      

      (d) related
        to the current or demonstrably anticipated business, research, or development
        of
        the employer.

      

      9.4 Exclusion
        of Prior Inventions.
        Exhibit
        A
        attached
        hereto is a complete list by Employee of all inventions which Employee has
        conceived, learned, made or first reduced to practice, either alone or jointly
        with others, prior to his employment with the Company or with EON and which
        he
        therefore desires to exclude from the operation of this Agreement, and any
        other
        inventions Employee wishes to exclude from the definition of “Employment
        Invention.” If no inventions are listed on this Exhibit
        A,
        Employee represents that he has made no such inventions at the time of signing
        this Agreement. The Company hereby acknowledges and agrees that, for all
        purposes of this Agreement, none of the inventions listed on Exhibit
        A
        shall be
        treated as Employment Inventions hereunder. 

      

      9.5 Inventions
        of Third Parties.
        Employee shall not disclose to the Company, use in the course of his employment,
        or incorporate into the Consolidated Company’s
        products or processes any confidential or proprietary information or inventions
        that belong to a third party, unless the Consolidated Company has received
        authorization from such third party.

       

      
        
          
          

        

        
          E-7

          
            

          

        

        
          
          

        

      

      10. No
        Conflicts.
        Employee hereby represents that his performance of all the terms of this
        Agreement and his work as an employee of the Company does not breach any
        oral or
        written agreement which he has made prior to his employment with the
        Company.

      

      11. Equitable
        Remedies.
        Employee acknowledges and agrees that the breach or threatened breach by
        him of
        certain provisions of this Agreement, including without limitation Sections
        7,
        8, and 9 above, would cause irreparable harm to the Company for which damages
        at
        law would be an inadequate remedy. Accordingly, Employee hereby agrees that
        in
        any such instance the Company shall be entitled to seek (without prior mediation
        or arbitration) injunctive or other equitable relief in any state or federal
        court within or without the State of Tennessee in addition to any other remedy
        to which it may be entitled. Employee hereby submits to the jurisdiction
        of any
        courts within Knox County in the State of Tennessee and
        agrees not to assert such venue is inconvenient.

      

      12. Assignment.
        This
        Agreement is for the unique personal services of Employee and is not assignable
        or delegable in whole or in part by Employee without the consent of the Board.
        This Agreement may not be assigned or delegated in whole or in part by the
        Company without the written consent of the Employee; provided, however, this
        Agreement may be assigned by the Company without Employee’s prior written
        consent if such assignment is made to an entity acquiring substantially all
        of
        the business or assets of the Consolidated Company or to another subsidiary
        of
        Parent.

      

      13. Waiver
        or Modification.
        Any
        waiver, modification, or amendment of any provision of this Agreement shall
        be
        effective only if in writing in a document that specifically refers to this
        Agreement and such document is signed by the parties hereto.

      

      14. Entire
        Agreement.
        This
        Agreement constitutes the full and complete understanding and agreement of
        the
        parties hereto with respect to the subject matter covered herein and supersedes
        all prior oral or written understandings and agreements with respect
        thereto.

      

      15. Severability.
        If any
        provision of this Agreement is found to be unenforceable by a court of competent
        jurisdiction, the remaining provisions shall nevertheless remain in full
        force
        and effect.

      

      16. Attorneys’
        Fees.
        Should
        either Company or Employee default in any of the covenants contained in this
        Agreement, or in the event a dispute shall arise as to the meaning of any
        term
        of this Agreement, the defaulting or nonprevailing party shall pay all costs
        and
        expenses, including reasonable attorneys’ fees, that may arise or accrue from
        enforcing this Agreement, securing an interpretation of any provision of
        this
        Agreement, or in pursuing any remedy provided by applicable law whether such
        remedy is pursued or interpretation is sought by the filing of a lawsuit,
        an
        appeal, or otherwise.

      

      17. Confidentiality.
        Each of
        the parties acknowledges that Parent is a so-called “public company” obligated
        to file reports under the Securities Exchange Act of 1934, as amended, and
        as a
        result, the Company may be required to, and hereby has authorization to,
        file
        this Agreement or any amendment hereto with the Securities and Exchange
        Commission without requesting confidential treatment for any portion
        hereof.

      

      18. Notices.
        Any
        notice required hereunder to be given by either party shall be in writing
        and
        shall be delivered personally or sent by certified or registered mail, postage
        prepaid, or by private courier, with written verification of delivery, or
        by
        facsimile or other electronic transmission to the other party to the address
        or
        facsimile number set forth below or to such other address or facsimile number
        as
        either party may designate from time to time according to this provision.
        A
        notice delivered personally, by private courier or by facsimile or electronic
        transmission shall be effective upon receipt. A notice delivered by mail
        shall
        be effective on the third day after the day of mailing:

       

      
        
          
          

        

        
          E-8

          
            

          

        

        
          
          

        

      

      (a) If
        to
        Employee, at:          Kevin
        Woods

      ________________  

      ________________

      

       

      (b) If
        to the
        Company, at:        VitalStream
        Holdings, Inc.

      One
        Jenner, Suite 100

      Irvine,
        California 92618

      Facsimile
        No: (949) 453-8686

      Attn:
        President

      

      19. Disputes;
        Governing Law; Arbitration.

      

      (a) Except
        as
        provided in Sections 7.5 and 11, any dispute concerning the interpretation
        or
        construction of this Agreement or Employee’s employment or service with the
        Company, shall be resolved by confidential mediation or binding arbitration
        in
        Knox County State of Tennessee.
        The parties shall first attempt mediation with a neutral mediator agreed
        upon by
        the parties. If mediation is unsuccessful or if the parties are unable to
        agree
        upon a mediator, the dispute shall be submitted to arbitration pursuant to
        the
        procedures of the American Arbitration Association (“AAA”) or other procedures
        agreed to by the parties. All arbitration proceedings shall be conducted
        by a
        neutral arbitrator mutually agreed upon by the parties from a list provided
        by
        AAA. The decision of the arbitrator shall be final and binding on all parties.
        The costs of mediation and arbitration shall be borne equally by the
        parties.

      

      (b) This
        Agreement shall be construed in accordance with and governed by the statutes
        and
        common law of the State of Tennessee. To the extent this Agreement expressly
        permits any dispute to be resolved other than through arbitration or mediation
        and except as otherwise provided in Section 7.5, the exclusive venue for
        any
        such action shall be the state and federal courts located in Knox County,
        State
        of Tennessee, and the parties each hereby submit to the jurisdiction of such
        courts for purposes of this Agreement.

      

      20. Counterparts;
        Facsimile.
        This
        Agreement may be executed in multiple counterparts, all of which taken together
        shall form a single Agreement. A facsimile copy of this Agreement or any
        counterpart thereto shall be valid as an original.

      

      

      [signature
        page follows]

       

      
        
          
          

        

        
          E-9

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, Employee has signed this Employment Agreement personally
        and
        each of Parent and the Company has caused this Agreement to be executed by
        its
        duly authorized representative.

       

      
        
          
            	 	 	 
	 	PARENT: 
	 	 
	 	
                    VITALSTREAM
                      HOLDINGS, INC., 

                    a
                      Nevada corporation 

                  
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	 /s/
                    Jack
                    Waterman                                                                       
	 	Jack Waterman, Chief Executive
                    Officer

          

        

        
           

          
            
              
                	 	 	 
	 	COMPANY:
	 	 
	 	
                        VITALSTREAM
                          ADVERTISING SOLUTIONS, INC.,
                          

                        a
                          Nevada corporation

                      
	 
 	 
 	 
 
	
                         

                      	
                        By:  

                      	 /s/ Philip
                        Kaplan   
                                                                                               
	 	Philip Kaplan,
                        President

              

            

          

        

      

      
        
           

          
            
              
                	 	 	 
	 	EMPLOYEE:
	 
 	 
 	 
 
	
                         

                      	
                        By:  

                      	 /s/ Kevin
                        Woods                                                                          
	 	Kevin Woods, an
                        individual

              

            

          

        

      

       

       

      
        
          
            Signature
              Page to Employment Agreement (Woods)

             

          

        

        
          E-10

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      

      PRIOR
        INVENTIONS

      

      (a)  None

       

      
        
          
          

        

        
          E-11

          
            

          

        

        
          
          

        

      

      

      EMPLOYMENT
        AGREEMENT

      

      THIS
        EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of May __, 2006 (the
“Effective Date”), by and between VitalStream Advertising Solutions, Inc., a
        Nevada corporation (the “Company”), VitalStream Holdings, Inc. (“Parent”;
        together with the Company and all direct and indirect subsidiaries of Parent,
        the “Consolidated Company”) and Stephen Newman (the “Employee”). 

      

      RECITALS

      

      A. The
        Company, Parent and EON Streams, Inc. (“EON”) are parties to that certain Asset
        Purchase Agreement dated May 19, 2006 (the “Purchase Agreement”), pursuant to
        which the Company is purchasing from EON substantially all of the assets
        of EON
        for the consideration set forth therein (the “Purchase”). Employee is a
        shareholder of EON and will be receiving a substantial economic benefit from
        the
        Purchase. 

      

      B. The
        going
        concern value of the assets being acquired by the Company in the Purchase
        would
        be diminished substantially if Employee were to compete with the Company
        or its
        affiliates. 

      

      C. The
        Company desires to hire Employee as an employee of the Company following
        the
        Purchase, and Employee desires to become an employee of the Company, all
        on the
        terms of this Agreement. 

      

      AGREEMENT
        

      

      NOW,
        THEREFORE, in consideration of this Agreement and of the covenants and
        conditions contained in this Agreement in the Purchase Agreement, the parties
        hereto agree as follows:

      

      1. Employment;
        Location.
        The
        Company hereby agrees to employ Employee during the Term, and Employee hereby
        agrees to be employed by the Company during the Term, in Knox County in the
        State of Tennessee or in such other location as may be mutually agreed between
        Employee and the Company. 

      

      2. Term.
        The
        term (the “Term”) shall commence on the date first set forth above and shall
        continue, unless earlier terminated as herein provided, for a period of eighteen
        (18) months, subject to the option of the Company to unilaterally extend
        the
        Term for up to three (3) separate six-month (6-month) periods, with each
        such
        option to be exercised in writing within sixty (60) days of the expiration
        of
        the then-expiring period. If Employee’s employment with the Company continues
        beyond the Term, the terms of this Agreement, other than provisions that
        by
        their terms apply only during the Term, will continue to govern Employee’s
        employment with the Company. The “Term” shall terminate upon the termination of
        Employee’s employment with the Company in a manner permitted by this Agreement,
        provided that all covenants that by their terms survive termination of this
        Agreement, including the covenants set forth in Sections 7, 8 and 9 of this
        Agreement, shall survive termination of this Agreement indefinitely, unless
        an
        early termination provision is set forth therein.

      

      3. Duties.
        Employee’s title shall be Executive Vice President - Advertising of the Company.
        Employee’s
        duties
        shall include such duties specifically assigned or delegated to Employee
        by the
        Board of Directors of the Company or the Board of Directors of the Parent
        (either such Board of Directors, the “Board”) and such other duties as are
        typically performed by an employee with the same position as Employee. Employee
        acknowledges that the Board may change, increase or decrease Employee’s title,
        position and/or duties from time to time in its discretion without breach
        of
        this Agreement. Employee shall diligently execute his duties and shall devote
        his full time, skills and efforts to such duties during ordinary working
        hours.
        Employee shall faithfully adhere to, execute and fulfill all lawful policies
        established from time to time by the Company.

       

      
        
          
          

        

        
          E-12

          
            

          

        

        
          
          

        

      

      4. Compensation
        and Benefits.
        The
        Company shall pay Employee, and Employee accepts as full compensation for
        all
        services to be rendered to the Company, the following compensation and
        benefits:

      

      4.1 Base
        Salary.
        During
        the Term, the Company shall pay Employee an annual base salary of One Hundred
        Seventy-Five Thousand Dollars ($175,000) per year, payable in equal installments
        at least monthly by the last day of each month or at more frequent intervals
        in
        accordance with the Company’s
        customary pay schedule. The Company may increase Employee’s base salary during
        the Term but shall retain the discretion to subsequently decrease Employee’s
        base salary to the level set forth herein. Following the Term, the Company
        may
        increase or decrease Employee’s base salary as it seems
        appropriate.

      

      4.2 Bonus.
        Employee shall be eligible for the Executive Bonus Plan applicable to senior
        management of the Consolidated Company generally, with
        the
        potential to earn an annual bonus that in the aggregate, based on 100%
        achievement of performance objectives, would equal 20% of Employee’s annual
        salary (or a pro rata amount if the performance objectives are set for a
        period
        of less than one year to coincide with the Consolidated Company’s regular cycle
        of paying bonuses after the end of its fiscal year). These objectives will
        include both individual and company performance targets set by the Board
        and
        discussed with you Employee annually. 

      

      4.3 Stock
        Options.
        Subject
        to the terms and conditions of the VitalStream 2001 Stock Incentive Plan
        (as
        amended to date), the company will grant to you an option to purchase 150,000
        shares of Parent common stock at a price equal to the closing price of the
        stock
        on the grant date, 1⁄4 of which shares will vest one year from the grant date,
        with 1/16 of the remaining shares vesting at the end of each quarter thereafter
        until fully vested, with an option term of 5 years.

       

      4.4 Additional
        Benefits.
        Employee shall be eligible to participate in the Company’s
        employee benefit plans generally available to all employees, if an when such
        plans may be adopted, including, without limitation, bonus plans, pension
        or
        profit sharing plans, incentive stock plans, and those plans covering life,
        disability, health, and dental insurance in accordance with the rules for
        participation and eligibility established in the discretion of the Board
        for
        individual participation in any such plans as may be in effect from time
        to
        time; provided, nothing contained in this Agreement shall obligate the Company
        to formulate or continue any such plans. 

      

      4.5 Paid
        Time Off and Holidays.
        Employee
        shall be entitled to accrue, use and carryover paid time off in accordance
        with
        the Consolidated Company’s policy for each calendar year at full pay or such
        increased leave as may be allowed by the Board for members of management
        of the
        Company generally. In addition, Employee shall be entitled to other leave
        and
        holidays in accordance with the Consolidated Company's policy and governing
        law.

      

      4.6 Deductions.
        The
        Company shall have the right to deduct from the compensation due to Employee
        hereunder any and all sums required for social security and withholding taxes
        and for any other federal, state or local tax or charge which may be hereafter
        enacted or required by law as a charge on compensation of Employee.

      

      5. Business
        Expenses.
        The
        Company shall reimburse Employee for all approved, reasonable out-of-pocket
        entertainment and business expenses he incurs in fulfilling his duties
        hereunder, in accordance with the general policy of the Consolidated Company
        in
        effect from time to time, provided that Employee furnishes to the Company
        adequate records and other documentary evidence required by the general policy
        of the Company and
        all
        federal and state statutes and regulations issued by the appropriate taxing
        authorities for the substantiation of each such business expense as a deduction
        on the federal or state income tax returns of the Company.

       

      
        
          
          

        

        
          E-13

          
            

          

        

        
          
          

        

      

      6. Termination
        of Employee’s Employment.

      

      6.1 Termination
        by Company.
        Notwithstanding any provision in this Agreement to the contrary, the
        Company may terminate Employee’s employment at any time during or following the
        Term, for any or no reason and with or without Cause (as defined below) or
        advance notice. The Company’s rights under this Section 6.1 may not be changed
        or modified (a) by any oral representation to the contrary, (b) by any practice
        or procedure followed by the Company, or (c) by any policy manual, employee
        handbook, or other document issued by the Company (other than an agreement
        described in the next sentence). Any such change or modification must be
        a
        written agreement signed by both Employee and the President or Chief Executive
        Officer of Parent that specifically revokes the right of the Company to
        terminate Employee’s employment at-will. No other officer or employee of any
        Consolidated Company has the power or authority, either verbally or in writing,
        to alter the termination-at-will relationship except as specifically set
        forth
        in this paragraph.

      

      6.2 Termination
        by Employee.
        During
        the Term, the Employee may resign from employment with the Company or otherwise
        voluntarily terminate Employee’s employment with the Company only for Good
        Reason (as defined below), death or Disability (as defined below). Voluntary
        termination by the Employee of his employment during the Term for any other
        reason shall be a breach of this Agreement, for which the Company shall have
        available any and all remedies provided for in this Agreement or otherwise
        available at law or equity. Following the Term, the Employee may voluntarily
        terminate his Employment with the Company at any time, with or without Good
        Reason or notice. “Good Reason” shall mean (a) Employer's failure to cure,
        within 20 days of receiving written notice thereof, a material breach of
        any of
        the terms of this Agreement; and (b) a material adverse change in Employee's
        position with Employer that materially reduces his responsibilities, without
        Cause and without Employee's written consent. 

      

      6.3 Consequences
        of Termination by Company for Cause or by Employee for Good
        Reason.
        If
        Employee’s employment is terminated by the Company during the Term for Cause, by
        the Employee during the Term for Good Reason or by either party following
        the
        Term, not later than 30 days after the effective date of the termination
        (or
        earlier if required by law), all cash compensation described in this Agreement
        that was due through the effective date of the termination, but unpaid, shall
        be
        computed and paid to Employee by the Company. For
        purposes of this Agreement, the term “Cause” means (a)
        gross
        misconduct; (b) violation of a Consolidated Company policy which is materially
        detrimental to a Consolidated Company, its businesses, customers or employees;
        (c) material breach of this Agreement, including the failure to perform the
        duties as required by this Agreement; (d) material misrepresentation or fraud;
        (e) misappropriation, theft or embezzlement of a Consolidated Company’s property
        or assets; (f) misappropriation of a Consolidated Company’s trade secrets or
        confidential information; (g) conviction of or entry of a plea of nolo
        contendere to any felony or a crime of moral turpitude; (h) the use of illegal
        drugs at any time during the term of Employment or the consumption of alcohol
        to
        an extent which materially impairs Employee’s performance of his duties
        hereunder; (i) Employee’s death; or (j) Employee’s physical or mental disability
        (so that Employee is not able to perform the essential functions of his or
        her
        job position with or without reasonable accommodation) for any consecutive
        period exceeding twenty-six (26) weeks, as documented by a licensed physician.
        

      

      6.4 By
        Company without Cause.
        If
        Employee’s employment is terminated by the Company during the Term without
        Cause, (a) not later than 30 days after the effective date of the termination
        (or earlier if required by law), all cash compensation described in this
        Agreement that was due through the effective date of the termination, but
        unpaid, shall be computed and paid to Employee by the Company; and (b) the
        Company shall, upon receipt of a written release from Employee in form and
        substance reasonably satisfactory to the Company with respect to all liabilities
        arising prior to and in connection with such termination (other than under
        outstanding options to purchase common stock and this Section), continue
        to pay
        in accordance with the Company’s standard payroll policies to or for the benefit
        of Employee or, if applicable, his heirs or estate, as their rights may be,
        an
        amount per-month equal to one hundred percent (100%) of any Employee’s monthly
        base-salary for a period that expires at the later of the end of the initial
        18
        months period of the Term following such termination or the end of any 6
        months
        extension of the Term then in effect at the time of such termination.
 

      
        
          
          

        

        
          E-14

          
            

          

        

        
          
          

        

      

      6.5 Return
        of Company Property.
        Upon
        the termination or end of the employment of Employee with the Company, or
        at any
        time upon the request of the Company, Employee shall provide to the Company
        all
        property belonging to the Consolidated Company, including, but not limited
        to,
        keys, card passes, credit cards, electronic equipment, cellular telephones
        and
        any materials containing Confidential Information.

      

      7. Covenant
        Not to Compete.

      

      7.1 Covenant.
        Employee acknowledges that execution and delivery by Employee of this Agreement
        is a condition to closing of the obligations of Parent and the Company under
        the
        Purchase Agreement and that neither Parent nor the Company would have
        consummated the transactions contemplated by the Purchase Agreement but for
        Employee’s execution and delivery of this Agreement. In consideration of the
        Company’s employment of Employee, and the willingness of Parent and the Company
        to consummate the transactions contemplated by the Purchase Agreement, Employee
        hereby agrees that, while he is employed by the Company and during the
        Restrictive Period (as defined hereafter), Employee will not directly or
        indirectly compete (as defined in Section 7.2 below) with the Consolidated
        Company or their affiliates in any geographic area in which the Consolidated
        Company now does business or in which the Consolidated Company does business
        as
        of the effective date of the termination of the Employee’s
        employment. “Restrictive Period” means the period of time between the Effective
        Date and the later of (a) three years from the Effective Date, and (b) one
        year
        from the date of termination of Employee’s employment with the
        Company.

      

      7.2 Direct
        and Indirect Competition.
        As used
        herein, the phrase “directly or indirectly compete” shall include owning,
        managing, operating or controlling, or participating in the ownership,
        management, operation or control of, or being connecting with or having any
        interest in, as a stockholder, director, officer, employee, agent, consultant,
        assistant, advisor, sole proprietor, partner or otherwise, any person or
        entity
        other than the Consolidated Company that is engaged in, or proposes to become
        engaged in, the Internet Streaming Business (as defined hereafter). “Internet
        Streaming Business” means the business of providing any of (a) digital
        broadcasting services over the Internet for any type of streaming media or
        related technology, (b) server management services or related technology,
        (c)
        web hosting services or related technology, (c) services or technology ancillary
        to any of (a), (b) or (c), such as services or technology for advertising
        insertion or trafficking, and (d) consulting services related to any of (a),
        (b)
        or (d). 

      

      7.3 Nonsolicitation.
        Employee hereby agrees that, during the Restrictive Period, he will not,
        directly or indirectly, through an affiliate or otherwise, for his account
        or
        the account of any other person, (a) solicit business substantially similar
        to
        the Internet Streaming Business from any person that at the time of termination
        is or was a customer of the Consolidated Company, whether or not he had personal
        contact with such person during and by reason of employment with the
        Consolidated Company; (b) in any manner induce or attempt to induce any employee
        of the Company to
        terminate his or her employment with the Consolidated Company; or (c) materially
        and adversely interfere with the relationship between the Consolidated Company
        and any employee, contractor, supplier, customer or shareholder of the
        Consolidated Company.

      

      7.4 Non-Disparagement.
        Employee hereby agrees that, during the Restricted Period, he shall not in
        any
        way, either directly or indirectly, disparage the Company or any Consolidated
        Company or any their respective managers, directors, officers, employees
        or
        agents.

      

      7.5 Enforceability.
        If any
        of the provisions of this Section 7 are held unenforceable, the remaining
        provisions shall nevertheless remain enforceable, and the court making such
        determination shall modify, among other things, the scope, duration, or
        geographic area of this Section to preserve the enforceability hereof to
        the
        maximum extent then permitted by law. In addition, the enforceability of
        this
        Section is also subject to the injunctive and other equitable powers of a
        court
        as described in Section 11 below.

       

      
        
          
          

        

        
          E-15

          
            

          

        

        
          
          

        

      

      7.6 Jurisdiction.
        For the
        sole purpose of enforcement of the Company’s rights under this Section 7, the
        Company and Employee intend to and hereby confer jurisdiction to enforce
        the
        restrictions set forth in this Section 7 (the “Restrictions”) upon the courts of
        any jurisdiction within the geographical scope of the Restrictions. If the
        courts of any one or more of such jurisdictions hold the Restrictions
        unenforceable by reason of the breadth of such scope or otherwise, it is
        the
        intention of the Company and Employee that such determination not bar or
        in any
        way affect the Company’s
        rights
        to the relief provided above in the courts of any other jurisdiction within
        the
        geographical scope of the Restrictions, as to breaches of such covenants
        in such
        other respective jurisdictions, such covenants as they relate to each
        jurisdiction being, for this purpose, severable into diverse and independent
        covenants. In the event of any litigation between the parties under this
        Section
        7, the court shall award reasonable attorneys fees to the prevailing
        party.

      

      8. Confidential
        Information.

      

      8.1 Definition.
        The
        term “Confidential Information” shall mean and include any information,
        including a formula, pattern, compilation, program, source code, device,
        method,
        technique, or process, that (a) derives independent economic value, actual
        or
        potential, from not being generally known to, and not being readily
        ascertainable by proper means by, other persons who can obtain economic value
        from its disclosure or use, and (b) that is the subject of efforts that are
        reasonable under the circumstance to maintain its secrecy. Information included
        in Confidential Information includes matters of a technical nature (including
        know-how, computer programs, software, patented and unpatented technology,
        source-code, accounting methods, and documentation), matters of a business
        nature (such as information about contract forms, costs, profits, employees,
        promotional methods, markets, market or marketing plans, sales, and client
        accounts), plans for further development, and any other information meeting
        the
        definition of Confidential Information set forth above. Confidential Information
        includes all proprietary information and know-how of the Company, whether
        or not
        patented, related to the function, development, use, marketing, operation
        or
        modification of any process owned, developed or purchased by the Consolidated
        Company related to the Internet Streaming Business. Confidential Information
        also includes any such information developed by Employee for the Company
        while
        an employee of the Consolidated Company. “Confidential Information” does not
        include information that is
        in the
        public domain and is available at the time of disclosure or which thereafter
        enters the public domain and is available, through no act or omission by
        Employee or other person subject to the duty to keep such information
        confidential.

      

      8.2 Nondisclosure
        and Non-Use of Confidential Information.
        Employee agrees that all files, records (including electronic or digitals
        records), documents, and the like relating to such Confidential Information,
        whether prepared by him or otherwise coming into his possession, shall remain
        the exclusive property of the Consolidated Company, and Employee hereby agrees
        to promptly disclose such Confidential Information to the Consolidated Company
        upon request and hereby assigns to the Company any rights which he may acquire
        in any Confidential Information. Employee further agrees not to disclose
        or use
        any Confidential Information and to use his best efforts to prevent the
        disclosure or use of any Confidential Information either during the term
        of his
        employment or at any time thereafter, except as may be necessary in the ordinary
        course of performing his duties under this Agreement. Upon termination of
        Employee’s
        employment with the Company for any reason, Employee shall promptly deliver
        to
        the Company all materials, documents, data, equipment, and other physical
        property of any nature containing or pertaining to any Confidential Information,
        and Employee shall not take from the Company’s
        premises any such material or equipment or any reproduction thereof without
        the
        written consent of the Company.

      

      9. Inventions.

      

      9.1 Disclosure
        of Inventions.
        Employee hereby agrees that if he conceives, learns, makes or first reduces
        to
        practice, either alone or jointly with others, any “Employment Invention” (as
        defined in Section 9.3 below) during his employment by the Company, either
        as an
        employee or as a consultant, he will promptly disclose such Employment Invention
        to the Company or to any person designated by it.

       

      
        
          
          

        

        
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      9.2 Ownership,
        Assignment, Assistance, and Power of Attorney.
        All
        Employment Inventions (as defined in Section 9.3 below) shall be the sole
        and
        exclusive property of the Company, and the Company shall have the right to
        use
        and to apply for patents, copyrights, or other statutory or common law
        protection for such Employment Inventions in any country. Employee hereby
        assigns to the Company any rights which he has or may acquire in such Employment
        Inventions. Furthermore, Employee agrees to assist the Company in every
        reasonable way at the Company’s
        expense
        to obtain patents, copyrights, and other statutory common law protections
        for
        such Employment Inventions in any country and to enforce such rights from
        time
        to time. Specifically, at the Company’s expense Employee agrees to execute all
        documents as the Company may reasonably desire for use in applying for and
        in
        obtaining or enforcing such patents, copyrights, and other statutory or common
        law protections together with any assignments thereof to the Company or to
        any
        person designated by the Company. Employee’s
        obligations under this Section 9 shall continue beyond the termination of
        his
        employment under this Agreement, but the Company shall compensate Employee
        at a
        rate agreed upon by Employee and the Company pursuant to negotiations in
        good
        faith after such termination for the time which Employee actually spends
        at the
        Company’s
        request
        in rendering such assistance.

      

      9.3 Employment
        Inventions.
        The
        definition of Employment Invention as used in this Section 9 is as
        follows:

      

      ““Employment
        Invention” means any invention or part thereof conceived, developed, reduced to
        practice, or created by an employee which is or was:

      

      (a) conceived,
        developed, reduced to practice, or created by the employee:

      

      (i) within
        the scope of his employment;

      

      (ii) on
        his
        employer's time; or

      

      (iii) with
        the
        aid, assistance, or use of any of his employer's property, equipment,
        facilities, supplies, resources, or intellectual property;

      

      (b) the
        result of any work, services, or duties performed by an employee for his
        employer;

      

      (c) related
        to the industry or trade of the employer; or

      

      (d) related
        to the current or demonstrably anticipated business, research, or development
        of
        the employer.

      

      9.4 Exclusion
        of Prior Inventions.
        Exhibit
        A
        attached
        hereto is a complete list by Employee of all inventions which Employee has
        conceived, learned, made or first reduced to practice, either alone or jointly
        with others, prior to his employment with the Company or with EON and which
        he
        therefore desires to exclude from the operation of this Agreement, and any
        other
        inventions Employee wishes to exclude from the definition of “Employment
        Invention.” If no inventions are listed on this Exhibit
        A,
        Employee represents that he has made no such inventions at the time of signing
        this Agreement. The Company hereby acknowledges and agrees that, for all
        purposes of this Agreement, none of the inventions listed on Exhibit
        A
        shall be
        treated as Employment Inventions hereunder. 

      

      9.5 Inventions
        of Third Parties.
        Employee shall not disclose to the Company, use in the course of his employment,
        or incorporate into the Consolidated Company’s
        products or processes any confidential or proprietary information or inventions
        that belong to a third party, unless the Consolidated Company has received
        authorization from such third party.

       

      
        
          
          

        

        
          E-17

          
            

          

        

        
          
          

        

      

      10. No
        Conflicts.
        Employee hereby represents that his performance of all the terms of this
        Agreement and his work as an employee of the Company does not breach any
        oral or
        written agreement which he has made prior to his employment with the
        Company.

      

      11. Equitable
        Remedies.
        Employee acknowledges and agrees that the breach or threatened breach by
        him of
        certain provisions of this Agreement, including without limitation Sections
        7,
        8, and 9 above, would cause irreparable harm to the Company for which damages
        at
        law would be an inadequate remedy. Accordingly, Employee hereby agrees that
        in
        any such instance the Company shall be entitled to seek (without prior mediation
        or arbitration) injunctive or other equitable relief in any state or federal
        court within or without the State of Tennessee in addition to any other remedy
        to which it may be entitled. Employee hereby submits to the jurisdiction
        of any
        courts within Knox County in the State of Tennessee and
        agrees not to assert such venue is inconvenient.

      

      12. Assignment.
        This
        Agreement is for the unique personal services of Employee and is not assignable
        or delegable in whole or in part by Employee without the consent of the Board.
        This Agreement may not be assigned or delegated in whole or in part by the
        Company without the written consent of the Employee; provided, however, this
        Agreement may be assigned by the Company without Employee’s prior written
        consent if such assignment is made to an entity acquiring substantially all
        of
        the business or assets of the Consolidated Company or to another subsidiary
        of
        Parent.

      

      13. Waiver
        or Modification.
        Any
        waiver, modification, or amendment of any provision of this Agreement shall
        be
        effective only if in writing in a document that specifically refers to this
        Agreement and such document is signed by the parties hereto.

      

      14. Entire
        Agreement.
        This
        Agreement constitutes the full and complete understanding and agreement of
        the
        parties hereto with respect to the subject matter covered herein and supersedes
        all prior oral or written understandings and agreements with respect
        thereto.

      

      15. Severability.
        If any
        provision of this Agreement is found to be unenforceable by a court of competent
        jurisdiction, the remaining provisions shall nevertheless remain in full
        force
        and effect.

      

      16. Attorneys’
        Fees.
        Should
        either Company or Employee default in any of the covenants contained in this
        Agreement, or in the event a dispute shall arise as to the meaning of any
        term
        of this Agreement, the defaulting or nonprevailing party shall pay all costs
        and
        expenses, including reasonable attorneys’ fees, that may arise or accrue from
        enforcing this Agreement, securing an interpretation of any provision of
        this
        Agreement, or in pursuing any remedy provided by applicable law whether such
        remedy is pursued or interpretation is sought by the filing of a lawsuit,
        an
        appeal, or otherwise.

      

      17. Confidentiality.
        Each of
        the parties acknowledges that Parent is a so-called “public company” obligated
        to file reports under the Securities Exchange Act of 1934, as amended, and
        as a
        result, the Company may be required to, and hereby has authorization to,
        file
        this Agreement or any amendment hereto with the Securities and Exchange
        Commission without requesting confidential treatment for any portion
        hereof.

      

      18. Notices.
        Any
        notice required hereunder to be given by either party shall be in writing
        and
        shall be delivered personally or sent by certified or registered mail, postage
        prepaid, or by private courier, with written verification of delivery, or
        by
        facsimile or other electronic transmission to the other party to the address
        or
        facsimile number set forth below or to such other address or facsimile number
        as
        either party may designate from time to time according to this provision.
        A
        notice delivered personally, by private courier or by facsimile or electronic
        transmission shall be effective upon receipt. A notice delivered by mail
        shall
        be effective on the third day after the day of mailing:

       

      
        
          
          

        

        
          E-18

          
            

          

        

        
          
          

        

      

      (a) If
        to
        Employee, at:          Stephen
        Newman

      ________________  

      ________________

      

       

      (b) If
        to the
        Company, at:        VitalStream
        Holdings, Inc.

      One
        Jenner, Suite 100

      Irvine,
        California 92618

      Facsimile
        No: (949) 453-8686

      Attn:
        President

      

      19. Disputes;
        Governing Law; Arbitration.

      

      (a) Except
        as
        provided in Sections 7.5 and 11, any dispute concerning the interpretation
        or
        construction of this Agreement or Employee’s employment or service with the
        Company, shall be resolved by confidential mediation or binding arbitration
        in
        Knox County State of Tennessee.
        The parties shall first attempt mediation with a neutral mediator agreed
        upon by
        the parties. If mediation is unsuccessful or if the parties are unable to
        agree
        upon a mediator, the dispute shall be submitted to arbitration pursuant to
        the
        procedures of the American Arbitration Association (“AAA”) or other procedures
        agreed to by the parties. All arbitration proceedings shall be conducted
        by a
        neutral arbitrator mutually agreed upon by the parties from a list provided
        by
        AAA. The decision of the arbitrator shall be final and binding on all parties.
        The costs of mediation and arbitration shall be borne equally by the
        parties.

      

      (b) This
        Agreement shall be construed in accordance with and governed by the statutes
        and
        common law of the State of Tennessee. To the extent this Agreement expressly
        permits any dispute to be resolved other than through arbitration or mediation
        and except as otherwise provided in Section 7.5, the exclusive venue for
        any
        such action shall be the state and federal courts located in Knox County,
        State
        of Tennessee, and the parties each hereby submit to the jurisdiction of such
        courts for purposes of this Agreement.

      

      20. Counterparts;
        Facsimile.
        This
        Agreement may be executed in multiple counterparts, all of which taken together
        shall form a single Agreement. A facsimile copy of this Agreement or any
        counterpart thereto shall be valid as an original.

      

      

      [signature
        page follows]

       

      
        
          
          

        

        
          E-19

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, Employee has signed this Employment Agreement personally
        and
        each of Parent and the Company has caused this Agreement to be executed by
        its
        duly authorized representative.

       

      
         

        
          
            
              	 	 	 
	 	PARENT: 
	 	 
	 	
                      VITALSTREAM
                        HOLDINGS, INC., 

                      a
                        Nevada corporation 

                    
	 
 	 
 	 
 
	
                       

                    	
                      By:  

                    	 /s/
                      Jack
                      Waterman                                                                       
	 	Jack Waterman, Chief Executive
                      Officer

            

          

          
             

            
              
                
                  	 	 	 
	 	COMPANY:
	 	 
	 	
                          VITALSTREAM
                            ADVERTISING SOLUTIONS, INC.,
                            

                          a
                            Nevada corporation

                        
	 
 	 
 	 
 
	
                           

                        	
                          By:  

                        	 /s/ Philip
                          Kaplan   
                                                                                                 
	 	Philip Kaplan,
                          President

                

              

            

          

        

        
          
             

            
              
                
                  	 	 	 
	 	EMPLOYEE:
	 
 	 
 	 
 
	
                           

                        	
                          By:  

                        	 /s/ Steven
                          Newman
                                                                                               
	 	Stephen Newman , an
                          individual

                

              

            

          

        

         

      

       

      

      
        
          
            Signature
              Page to Employment Agreement (Newman)

             

          

        

        
          E-20

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      

      PRIOR
        INVENTIONS

      

      (b)  None

    

     

    
      
        
        

      

      
        E-21

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

     

    BILL
      OF SALE

     

     

    [See
      attached]

     

    
      
        
        

      

      
        F-1

        
          

        

      

      
        
        

      

    

    

      BILL
        OF SALE

      

      THIS
        BILL
        OF SALE (this “Bill
        of Sale”)
        is
        executed as of May 19, 2006 by EON Streams, Inc., a Tennessee corporation
        (“Seller”),
        in
        favor of VitalStream Advertising Solutions, Inc., a Nevada corporation
        (“Buyer”).
        Each
        capitalized term used but not defined herein shall have the meaning ascribed
        thereto under that certain Asset Purchase Agreement dated as of May 19, 2006
        to
        which Buyer and Seller are parties (the “Purchase
        Agreement”).

      

      1. Assignment
        of Assets.
        Seller,
        for and in consideration of Ten and No/100 Dollars ($10.00) and other good
        and
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged by Seller, hereby assigns, transfers, sets over and delivers
        to
        Buyer all right, title and interest in and to the Acquired Assets.

      

      2. Further
        Assurances.
        Seller
        hereby agrees that it will, at the reasonable request and expense of Buyer,
        execute and deliver and will cause to be executed and delivered, such further
        instruments of assignment, transfer and conveyance as may be required to
        more
        effectively assign, transfer, set over, deliver to, and vest in, Buyer, its
        successors and assigns, title to and possession of the Acquired
        Assets.

      

      3. Binding
        Effect.
        This
        Bill of Sale shall be binding upon and inure to the benefit of Seller and
        Buyer
        and their respective heirs, executors, administrators, successors and
        assigns.

      

      4. No
        Modification.
        This
        Bill of Sale is made pursuant to the terms of the Purchase Agreement
        and
        does
        not create any additional obligations, covenants, representations and warranties
        or alter or amend any of the obligations, covenants, representations and
        warranties contained in the Purchase Agreement. The provisions of the Purchase
        Agreement shall survive the execution and delivery of this Bill of Sale.
        In the
        event of any inconsistency between this Bill of Sale and the Purchase Agreement,
        the Purchase Agreement shall control.

      

      5. Construction.
        The
        headings of the sections and subsections of this Bill of Sale are inserted
        as a
        matter of convenience and for reference purposes only and in no respect define,
        limit or describe the scope of this Bill of Sale or the intent of any section
        or
        subsection.

      

      6. Facsimile.
        A
        facsimile copy of this Bill of Sale shall be valid as an original.

      

      7.
         Choice
        of Law.
        This
        Bill of Sale shall be governed by and construed in accordance with the domestic
        laws of the state of California without giving effect to any choice or conflict
        of law provision or rule (whether of the state of California or any other
        jurisdiction) that would cause the application of the laws of any jurisdiction
        other than the state of California.

      

      IN
        WITNESS WHEREOF, the undersigned executes this Bill of Sale as of the date
        first
        written above.

      
         

        
          
            	 	 	 
	 	
                    “SELLER”

                  
	 	 
	 	EON
                    STREAMS, INC.,
                    a
                    Tennessee corporation
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	 /s/ Stephen
                    Newman
                                                                                       
	 	Stephen Newman,
                    President

          

          
             

             

            
              
                
                

              

              
                F-2

                
                  

                

              

              
                
                

              

            

          

        

      

    

     

    EXHIBIT
      G

     

    ASSIGNMENT
      AND ASSUMPTION OF ACQUIRED CONTRACTS

     

     

    [See
      attached]

     

    
      
        
        

      

      
        G-1

        
          

        

      

      
        
        

      

    

    

      ASSIGNMENT
        AND ASSUMPTION OF CONTRACTS

      

      

      THIS
        ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is entered into as of
        the 19th
        day of
        May, 2006, between EON Streams, Inc., a Tennessee corporation (“Assignor”), and
        ________, Inc., a Nevada corporation (“Assignee”). All capitalized terms not
        otherwise specifically defined herein shall have the meanings set forth in
        that
        certain Asset Purchase Agreement dated as of May 19, 2006, to which Assignor
        and
        Assignee are parties (the “Agreement”). 

      

      WHEREAS,
        pursuant to the Agreement, Assignor has agreed to assign to Assignee and
        Assignee has agreed to accept assignment of certain obligations under the
        Acquired Contracts, including without limitation those identified on
Exhibit
        A
        attached
        hereto and incorporated by this reference; and 

      

      WHEREAS,
        Assignor desires to assign all of its right, title and interest in and to
        the
        Acquired Contracts to Assignee, and Assignee desires to assume the obligations
        of Assignor under the Acquired Contracts as set forth below.

      

      NOW,
        THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration,
        the receipt and sufficiency of which are hereby acknowledged, the parties
        hereby
        agree as follows:

      

      1. Assignment.
        Assignor hereby assigns and transfers to Assignee all of its right, title
        and
        interest in, to and under the Acquired Contracts.

      

      2. Acceptance
        of Assignment.
        Assignee hereby accepts the assignment of the Acquired Contracts, and agrees
        to
        assume and perform, to the extent set forth in the Agreement, all liabilities
        and obligations of Assignor under the Acquired Contracts arising on or after
        the
        Closing other than as a result of breach or non-performance of the
        Assignor.

      

      3. Binding
        Effect.
        This
        Assignment shall be binding upon and inure to the benefit of Assignor and
        Assignee and their respective heirs, executors, administrators, successors
        and
        assigns.

      

      4. No
        Modification.
        This
        Assignment is made pursuant to the terms of the Agreement
        and
        does
        not create any additional obligations, covenants, representations and warranties
        or alter or amend any of the obligations, covenants, representations and
        warranties contained in the Agreement. The provisions of the Agreement shall
        survive the execution and delivery of this Assignment. In the event of any
        inconsistency between this Assignment and the Agreement, the Agreement shall
        control.

      

      5. Construction.
        The
        headings of the sections and subsections of this Assignment are inserted
        as a
        matter of convenience and for reference purposes only and in no respect define,
        limit or describe the scope of this Assignment or of the intent of any section
        or subsection.

      

      6. Counterparts.
        This
        Assignment may be executed in one or more counterparts, each of which shall
        be
        deemed an original but all of which together will constitute one and the
        same
        instrument. A facsimile copy of this Assignment or any counterpart hereto
        shall
        be valid as an original.

      

      7.
         Choice
        of Law.
        This
        Assignment shall be governed by and construed in accordance with the domestic
        laws of the state of California without giving effect to any choice or conflict
        of law provision or rule (whether of the state of California or any other
        jurisdiction) that would cause the application of the laws of any jurisdiction
        other than the state of California.

       

      
 

      (signature
        page follows)

       

      
        
          
          

        

        
          G-2

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Assignment and Assumption
        of Contracts as of the date first set forth above.

      
         

        
          
            	 	 	 
	 	
                    “ASSIGNOR”

                  
	 	 
	 	
                    EON
                      Streams, Inc., 

                    a
                      Tennessee corporation

                  
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	 /s/ Stephen
                    Newman
                                                                                       
	 	Stephen Newman,
                    President

          

          
             

          

        

      

       

      
        
          
            
              
                	 	 	 
	 	“ASSIGNEE”
	 	 
	 	
                        VitalStream
                          Advertising Solutions, Inc.,
                          

                        a
                          Nevada corporation

                      
	 
 	 
 	 
 
	
                         

                      	
                        By:  

                      	 /s/ Philip
                        Kaplan   
                                                                                               
	 	Philip Kaplan,
                        President

              

            

          

        

        
          
 

        

      

       

      
        
          
            Signature
              Page to Assignment and Assumption of Contracts

             

          

        

        
          G-3

          
            

          

        

        
          
          

        

      

      Exhibit
        A

      

      Contracts

      

      

      [This
        Exhibit shall be Section 4(p) of the Seller Disclosure
        Schedule.]

      

       

      
        
          
          

        

        
          G-4

          
            

          

        

        
          
          

        

      

       

    

    EXHIBIT
      H

     

    ASSIGNMENT
      OF INTELLECTUAL PROPERTY

     

     

    [See
      attached]

     

    
      
        
        

      

      
        H-1

        
          

        

      

      
        
        

      

    

     

    

    ASSIGNMENT
      OF INTELLECTUAL PROPERTY

     

    THIS
      ASSIGNMENT OF INTELLECTUAL PROPERTY (this “Assignment”) is entered into as of
      the 19th
      day of
      May, 2006, by EON Streams, Inc., a Tennessee corporation (“Assignor”), in favor
      of VitalStream Advertising Solutions, Inc., a Nevada corporation (“Assignee”).
      All capitalized terms not otherwise specifically defined herein shall have
      the
      meanings set forth in that certain Asset Purchase Agreement dated as of the
      19th
      day of May, 2006, to which Assignor and Assignee are parties (the “Purchase
      Agreement”). 

    

    WHEREAS,
      pursuant to the Purchase Agreement, Assignor has agreed to assign to Assignee
      the Intellectual Property of Assignor; and

    

    WHEREAS,
      Assignor desires to assign all right, title and interest in and to the
      Intellectual Property of Assignor to Assignee.

    

    NOW,
      THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
      agrees with Assignee as follows:

    

    1. Assignment.
      Assignor hereby assigns and transfers to Assignee all right, title and interest
      of Assignor in, to and under any Intellectual Property.

    

    2. Binding
      Effect.
      This
      Assignment shall be binding upon and inure to the benefit of Assignor and
      Assignee and their respective heirs, executors, administrators, successors
      and
      assigns.

    

    3. No
      Modification.
      This
      Assignment is made pursuant to the terms of the Purchase
      Agreement and
      does
      not create any additional obligations, covenants, representations and warranties
      or alter or amend any of the obligations, covenants, representations and
      warranties contained in the Purchase Agreement. The provisions of the Purchase
      Agreement shall survive the execution and delivery of this Assignment. In the
      event of any inconsistency between this Assignment and the Purchase Agreement,
      the Purchase Agreement shall control.

    

    4. Construction.
      The
      headings of the sections and subsections of this Assignment are inserted as
      a
      matter of convenience and for reference purposes only and in no respect define,
      limit or describe the scope of this Assignment or of the intent of any section
      or subsection.

    

    5. Choice
      of Law.
      This
      Assignment shall be governed by and construed in accordance with the domestic
      laws of the state of California without giving effect to any choice or conflict
      of law provision or rule (whether of the state of California or any other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than the state of California.

    

    IN
      WITNESS WHEREOF, Assignor has caused this Assignment to be executed as of the
      date first set forth above.

    
      
         

        
          
            	 	 	 
	 	
                    ASSIGNOR:

                  
	 	 
	 	
                    EON
                      Streams, Inc., 

                    a
                      Tennessee corporation

                  
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	 /s/ Stephen
                    Newman
                                                                                       
	 	Stephen Newman,
                    President

          

          
             

          

        

      

    

     

    
      
        
        

      

      
        H-2

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      I

     

    ASSIGNMENT
      OF PATENTS

     

     

    [See
      attached]

     

    
      
        
        

      

      
        I-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      J

     

    OPINION
      OF SELLER’S
      COUNSEL

     

     

    [See
      attached]

     

    
      
        
        

      

      
        J-1

        
          

        

      

      
        
        

      

    

     

    
      PATENT
        ASSIGNMENT

       

      This
        Patent Assignment Agreement (the “Agreement”) is entered into as effective as of
        the 19th
        day of
        May, 2006 (the “Effective Date”). 

       

      In
        consideration of good and valuable consideration paid to the undersigned
        and
        pursuant to the Asset Purchase Agreement by and among VitalStream Holdings,
        Inc., VitalStream Advertising Solutions, Inc., and EON Streams, Inc., dated
        May
        19, 2006 and incorporated herein by reference, EON Streams, Inc. (hereinafter
        referred to as “Assignor”), having a place of business located at 505 Market
        Street, Knoxville, Tennessee 37902, hereby sells and assigns to VitalStreams
        Advertising Solutions, Inc., a Nevada corporation (hereinafter referred to
        as
“Assignee”), having a place of business located at One Jenner, Suite 100,
        Irvine, California 92618, its entire right, title and interest, including
        the
        right to sue for past infringement and to collect for all past, present and
        future damages, in the United States of America (as defined in 35 U.S.C.
        '
        100) and
        throughout the world,

      

      (a)
        in
        the inventions known as: (i) “Method for Scheduling of Broadcast Events” (Patent
        Application Serial #11/193,518) for which an application for a patent in
        the
        United States of America was filed on July 29, 2005, and (ii) “Software and
        Method for Demographic Analysis” (Patent Application Serial #60/671,706) for
        which an application for a patent in the United States of America was filed
        on
        April 15, 2005, in any and all applications thereon, in any and all Letters
        Patent(s) therefor, and 

      

      (b)
        in
        any and all applications that claim the benefit of the patent applications
        listed above in part (a), including non-provisional applications, continuing
        (continuation, divisional, or continuation-in-part) applications, reissues,
        extensions, renewals and reexaminations of the patent application or Letters
        Patent therefor listed above in part (a), to the full extent of the term
        or
        terms for which Letters Patents issue, and 

       

      (c)
        in
        any and all inventions described in the patent applications listed above
        in part
        (a), and in any and all forms of intellectual and industrial property protection
        derivable from such patent applications, and that are derivable from any
        and all
        continuing applications, reissues, extensions, renewals and reexaminations
        of
        such patent applications, including, without limitation, patents, applications,
        utility models, inventor=s
        certificates, and designs together with the right to file applications therefor;
        and including the right to claim the same priority rights from any previously
        filed applications under the International Agreement for the Protection of
        Industrial Property, or any other international agreement, or the domestic
        laws
        of the country in which any such application is filed, as may be applicable;
        

       

      all
        such
        rights, title and interest to be held and enjoyed by the above-named Assignee,
        his successors, legal representatives and assigns to the same extent as all
        such
        rights, title and interest would have been held and enjoyed by the Assignor
        had
        this assignment and sale not been made.

       

      Assignor
        represents and warrants that it holds all right and title to the foregoing
        based
        on assignments to Assignor by the inventors of the above-referenced patent
        applications, Kevin Travis Woods of Knoxville, Tennessee and Matthew Cody
        Lambert of Knoxville, Tennessee, dated May 18, 2006 and incorporated herein
        by
        reference.

       

      The
        undersigned Assignor agrees to execute all papers necessary in connection
        with
        the application(s) and any non-provisional, continuing (continuation,
        divisional, or continuation-in-part), reissue, reexamination or corresponding
        application(s) thereof and also to execute separate assignments in connection
        with such application(s) as the Assignee may deem necessary or
        expedient.

       

      The
        undersigned Assignor hereby represents that it has full right to convey the
        entire interest herein assigned, and that he has not executed, and will not
        execute, any agreement in conflict therewith.

       

      
        
          
          

        

        
          J-2

          
            

          

        

        
          
          

        

      

      The
        undersigned Assignor hereby grants Parr Waddoups Brown Gee & Loveless, 185
        South State Street, Suite 1300, Salt Lake City, Utah 84111, power to insert
        in
        this assignment any further identification that may be necessary or desirable
        in
        order to comply with the rules of the United States Patent and Trademark
        Office
        for recordation of this document.

       

      IN
        WITNESS WHEREOF, executed by the undersigned Assignor on the date opposite
        its
        name.

      
         

        
          
            	 	 	 
	 	EON
                    STREAMS, INC.
	 
 	 
 	 
 
	
                     

                  	
                    By:  

                  	 /s/ Stephen
                    Newman
                                                                                       
	 	Stephen Newman,
                    President

          

          
 

        

      

      State
        of
        _____ )

      :
        ss.

      County
        of
        ________ )

      

      Before
        me
        personally appeared said Stephen Newman, President of EON Streams, Inc.,
        and
        acknowledged the foregoing instrument to be his free act and deed this ___
        day
        of May, 2006.

      

      (Seal)

      

      _____________________________

      Notary
        Public

      My
        commission expires:

      ____________

       

    

     

    
 

    
      
        
        

      

      
        J-3

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      K

     

    PROJECTED
      BALANCE SHEET

     

     

    [See
      attached]

     

     

     

     

     

    K-1Exhibit 4.1

"The securities represented by this certificate (the "Securities"), are
subject to a hold period or hold periods and may not be traded except as
permitted by the Securities legislation in the jurisdiction in which the
Holder, as hereinafter defined, resides.

                   SPECIAL WARRANT CERTIFICATE

                       LIONS PETROLEUM INC.
                 (formerly "Energy Visions Inc.")

THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE WILL EXPIRE IMMEDIATELY
AFTER 5:00 P.M. (VANCOUVER TIME) ON THE EARLIER OF:

      1.  THE DATE OF ISSUANCE OF A RECEIPT BY THE ONTARIO SECURITIES
          COMMISSION FOR A FINAL PROSPECTUS OF PURE ENERGY VISIONS CORPORATION
          RELATING TO THE UNDERLYING SECURITIES TO BE DISTRIBUTED UPON THE
          EXERCISE OF THE SPECIAL WARRANTS REPRESENTED BY THIS CERTIFICATE;
          AND

      2.  THE DATE THAT IS TWENTY-ONE MONTHS FROM THE DATE OF ISSUANCE OF THIS
          SPECIAL WARRANT CERTIFICATE.

(THE "EXPIRY DATE"), UNLESS SPECIFICALLY EXERCISED IN THE MANNER HEREINAFTER
DESCRIBED PRIOR TO THE EXPIRY DATE.

                         SPECIAL WARRANTS

Note: These Special Warrants are non-transferable except as set forth herein.

                       LIONS PETROLEUM INC.
                       (the "Corporation")

(Incorporated pursuant to the laws of the State of Delaware)

SPECIAL WARRANT CERTIFICATE NO. ____

_______Special Warrants

THIS IS TO CERTIFY that, for value received, ______________________ (the
"Holder"), of _____________________________________________________________,
is entitled to acquire, in the manner herein provided and subject to the
restrictions contained herein, at any time and from time to time, on or prior
to 5:00 (Vancouver time), on the earlier of:

     1.  the date of issuance of a receipt by the Ontario Securities
         Commission for a final prospectus of  Pure Energy Visions Corporation
         ("Pure Energy"), relating to the securities  to be distributed upon
         the exercise of the Special Warrants represented by this certificate;
         and

     2.  the date that is twenty-one (21) months from the date of issuance of
         this certificate.

________________ common shares in the capital of Pure Energy owned by the
Corporation (the "Shares"), subject to the adjustments described below, on the
basis of one (1) common share in the capital stock of Pure Energy owned by the
Corporation for each one (1) common share of the Corporation owned by the
Holder, as at the initial issue date of this Special Warrant Certificate.

<PAGE>

In the event the aforementioned final receipt is not issued by the Ontario
Securities Commission, prior to the Expiry Date, this Special Warrant
Certificate will be deemed exercised automatically on the Expiry Date and the
Holder will receive the Shares, as described hereinafter.

The right to acquire the Shares may be exercised as follows:

The Holder may exercise the Special Warrants before the Expiry Date by:

     (a)   duly completing, in the manner indicated, and executing the
           Exercise Form attached hereto; and

     (b)   surrendering this Special Warrant Certificate to the Corporation,
           as hereinafter set forth.

This Special Warrant Certificate will be validly surrendered only upon
delivery thereof or by mailing same to the Corporation at its business office
in the City of Vancouver (at the address specified in the Exercise Form). The
Exercise Form attached hereto will not be deemed to be duly completed unless
the name and mailing address of the Holder appears legibly on such Exercise
Form and such Exercise Form is signed by the Holder.

Any Special Warrants outstanding on the Expiry Date will be deemed exercised
by the Holder on that date. In such case, the Corporation will, in due course,
mail to the Holder share certificates representing the Shares to the Holder's
last known address appearing in the records of the Corporation, without the
Holder being obliged to deliver an Exercise Form or surrender the Special
Warrant Certificate.  Thereafter the Special Warrants so exercised will be
cancelled and will have no further force or effect.

Upon the exercise or deemed exercise of a Special Warrant, within fifteen
business days after such exercise, the Corporation will:

     (a)   mail or cause to be mailed to the person in whose name the Shares
           are to be acquired, as specified in the Exercise Form, at the
           address specified therein; or

     (b)   If no specification as contemplated by (a) is provided, mail or
           cause to be mailed to the person in whose name the Shares are to
           be acquired at the address of such person last appearing on the
           register maintained by the Corporation or as such person may
           otherwise notify the Corporation in writing on or prior to the
           date of exercise, or deemed exercise, of the Special Warrants,
           certificates representing the Shares to which the Holder is
           entitled.

Not later than the fifth business day after the surrender to the Corporation
of the Special Warrant Certificate evidencing any Special Warrant, or the
deemed exercise of a Special Warrant, the Corporation will mail to the Holder,
or to such person as the Holder may otherwise specify by written notice given
to the Corporation prior to such mailing, at the address of the Holder or, if
so specified, of such other person, or, if specified by written notice given
to the Corporation prior to such mailing, will deliver to the Holder or such
other person at the place where such Special Warrant Certificate was
surrendered, certificates representing the number of Shares to which the
Holder is entitled registered in the name of the Holder or, if so specified,
such other person. In the event of non-receipt of any such certificate by the
person to whom it is so sent as aforesaid, or the loss or destruction thereof,
the Corporation will issue and deliver to such person a replacement
certificate of like date and tenor in place of the one lost or destroyed upon
being furnished with such evidence of ownership and non receipt, loss or
destruction. The Holder will bear the cost of the issue of such replacement
certificates.

<PAGE>

In the event the Holder so desires, and upon a request being made by the
Holder to exchange its Special Warrant certificate(s) for Special Warrant
certificates of other denominations, the Corporation will issue and deliver to
the Holder such replacement Special Warrant certificates as requested, upon
the Corporation being furnished with the original Special Warrant Certificate
for cancellation. The Holder will bear the cost of issue of the replacement
Special Warrant certificates.

These Special Warrants have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be
offered or sold to a U.S. Person, as defined in Regulation S of the U.S.
Securities Act, or to a person within the United States, as defined in
Regulation S to the U.S. Securities Act, except pursuant to an exemption from
registration under the U.S. Securities Act or pursuant to the provisions of
Rule 904 of Regulation S thereunder.

Upon due exercise of the Special Warrants as provided herein, the person or
persons in whose name or names the Shares are to be registered will be deemed
for all purposes to be the holder or holders of record of the Shares and the
Corporation covenants that it will cause a certificate or certificates
representing such Shares to be delivered or mailed to such person or persons
at the address or addresses specified in such Exercise Form.

Any Shares acquired upon exercise or deemed exercise of the Special Warrants
will be fully paid and non-assessable and free from all liens, charges and
encumbrances.

In the event there are any changes in the capital structure of Pure Energy
through stock splits, stock dividends, consolidations, mergers, amalgamations,
reclassifications or any other recapitalization, Pure Energy will make such
adjustments in the right to acquire granted hereby as may be required to
ensure that, upon exercise of this Special Warrant Certificate, the Holder
receives the appropriate number of shares of Pure Energy. Notwithstanding the
above, Pure Energy may, during the term of the Special Warrants, issue
additional common and/or preferred shares in its capital, subject to receipt
of appropriate regulatory and corporate approvals.

The holding of the Special Warrants evidenced by this Special Warrant
Certificate will not constitute the holder thereof a shareholder of Pure
Energy or entitle such holder to any right or interest in respect thereof,
except as herein provided.

The Special Warrants evidenced by this Special Warrant Certificate are not
transferable except that a person who furnishes evidence to the reasonable
satisfaction of the Corporation that he is:

     (a)  the executor, administrator, heir or legal representative of the
          heirs of the estate of a deceased registered holder thereof,

     (b)  a guardian, committee, trustee, curator or tutor representing a
          registered holder who is an infant, an incompetent person or
          missing person, or

     (c)  a liquidator of, or a trustee in bankruptcy for, a holder hereof,

may, by surrendering such evidence together with the Special Warrant
Certificate in question to the Corporation and subject to such reasonable
requirements relating to the payment of costs of the transfer by the Holder as
the Corporation may prescribe and all applicable securities legislation and
requirements of regulatory authorities, become noted upon the register of
Holders.

<PAGE>

In the event any of the Shares in respect of which the Special Warrants are
exercised are to be acquired by a person or persons other than the Holder (as
aforesaid), the Holder will pay to the Corporation all requisite stamp
transfer taxes or other governmental charges exigible in connection with the
issue of such Shares to such other person or persons or will establish to the
satisfaction of the Corporation that such taxes and charges are either not
payable or have been paid.

This Special Warrant Certificate will not be valid for any purpose whatsoever
unless and until it has been executed by or on behalf of the Corporation.

Time will be of the essence hereto.

The Special Warrants will be governed by, performed, construed and enforced in
accordance with the laws of the State of Delaware and the laws of Canada
applicable therein and shall be treated in all respects as Delaware contracts.

Pure Energy has covenanted and agreed to use its reasonable best efforts to
promptly finalize and obtain a receipt for a preliminary prospectus and a
(final) prospectus in Ontario within twenty-one months of the date of issuance
of the Special Warrants, qualifying the distribution of the Shares to be
acquired upon the due exercise of the Special Warrants.

In the event Shares to be distributed upon exercise of the Special Warrants
are distributed prior to the issuance, by the Ontario Securities Commission,
of a receipt for a final prospectus of Pure Energy, or in the event such a
receipt is not issued, the Shares will be subject to an indefinite hold period
in Canada, during which they may not be re-sold. Such hold period(s) will
expire, in a particular jurisdiction, 12 months from the date Pure Energy
becomes a reporting issued in that jurisdiction.  Any Shares acquired by
Holders prior to the Expiry Date will be legended to this effect.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") ARE SUBJECT
TO AN INDEFINITE HOLD PERIOD IN CANADA AND MAY NOT BE TRADED UNTIL SUCH TIME
AS PURE ENERGY VISIONS CORPORATION BECOMES A REPORTING ISSUER IN THE
JURISDICTION IN WHICH THE HOLDER RESIDES.

Holders are advised to consult their own legal advisors in this regard.

IN WITNESS WHEREOF the Corporation has caused this Special Warrant Certificate
to be signed by its duly authorized officers as at September 20, 2004 and
amended on March 14, 2006.

LIONS PETROLEUM INC.
per:

/s/ Dale Paulson
_________________________________
Authorized Signatory

/s/ Gordon Wiltse
_________________________________
Authorized Signatory

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