Document:

Exhibit
10.1

    

      
        

      

    

    
      

    

     

    MEMBERSHIP
INTEREST PURCHASE AGREEMENT

    

    By
and Among

    

    SpongeTech
Delivery Systems, Inc.

    

    as
Purchaser,

    

    and

    

    Dicon
Technologies, LLC,

    

    and

    

    Wayne
M. Celia

    Sam
Ginsberg

    Clyde
Williams

    Roy
Geronemus

    John
Scheib

    

    as
Seller(s)

    

    Dated
as of July 9, 2009

     

      
        

      

    

    
      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      
        
          	 
      	
                  PAGE

                
	
                  ARTICLE
      1.  SALE AND PURCHASE OF MEMBERSHIP INTERESTS

                	
                  1

                
	
                  1.1

                	
                  Sale
      and Purchase of Membership Interests

                	
                  1

                
	 
      	 
      	 
      
	
                  ARTICLE
      II.  PURCHASE PRICE; ADDITIONAL FUNDS; RETAINED
      INDEBTEDNESS

                	
                  2

                
	
                  2.1

                	
                  Purchase
      Price

                	
                  2

                
	
                  2.2

                	
                  Additional
      Funds

                	
                  2

                
	
                  2.3

                	
                  Payoff
      of Wachovia Note

                	
                  2

                
	
                  2.4

                	
                  Retained
      Indebtedness

                	
                  2

                
	 
      	 
      	 
      
	
                  ARTICLE
      III.  CLOSING

                	
                  3

                
	
                  3.1

                	
                  Time
      and Place of Closing

                	
                  3

                
	
                  3.2

                	
                  Deliveries
      by the Company and the Sellers

                	
                  3

                
	
                  3.3

                	
                  Deliveries
      by the Purchaser

                	
                  4

                
	 
      	 
      	 
      
	
                  ARTICLE
      IV.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
      SELLERS

                	
                  5

                
	
                  4.1

                	
                  Organization
      and Qualification

                	
                  5

                
	
                  4.2

                	
                  Membership
      Interests; Company Books

                	
                  5

                
	
                  4.3

                	
                  Title
      to Membership Interests

                	
                  5

                
	
                  4.4

                	
                  Binding
      Obligation

                	
                  6

                
	
                  4.5

                	
                  No
      Defaults or Consents

                	
                  6

                
	
                  4.6

                	
                  No
      Company Defaults or Consents

                	
                  6

                
	
                  4.7

                	
                  No
      Proceedings

                	
                  6

                
	
                  4.8

                	
                  Financial
      Statements and Audit Representation

                	
                  7

                
	
                  4.9

                	
                  Absence
      of Undisclosed Liabilities

                	
                  7

                
	
                  4.10

                	
                  Absence
      of Certain Changes or Events

                	
                  7

                
	
                  4.11

                	
                  Real
      Property

                	
                  9

                
	
                  4.12

                	
                  Taxes,
      Tax Returns and Other Reports

                	
                  11

                
	
                  4.13

                	
                  Intangible
      Rights

                	
                  11

                
	
                  4.14

                	
                  Equipment
      and Other Tangible Property

                	
                  12

                
	
                  4.15

                	
                  Books
      of Account

                	
                  12

                
	
                  4.16

                	
                  Litigation

                	
                  12

                
	
                  4.17

                	
                  Commitments

                	
                  13

                
	
                  4.18

                	
                  Insurance

                	
                  14

                
	
                  4.19

                	
                  Compliance
      with Laws; Permits

                	
                  14

                

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            	
                    4.20

                  	
                    Absence
      of Questionable Payments

                  	
                    15

                  
	
                    4.21

                  	
                    Hazardous
      Substances; Hazardous Wastes and Pollutants

                  	
                    15

                  
	
                    4.22

                  	
                    Conditions
      Affecting Business

                  	
                    15

                  
	
                    4.23

                  	
                    Debt
      Instruments

                  	
                    16

                  
	
                    4.24

                  	
                    Suppliers
      and Customers

                  	
                    16

                  
	
                    4.25

                  	
                    Employee
      Benefit Matters

                  	
                    16

                  
	
                    4.26

                  	
                    Bank
      Accounts

                  	
                    19

                  
	
                    4.27

                  	
                    Full
      Disclosure

                  	
                    19

                  
	 
      	 
      	 
      
	
                    ARTICLE
      V.  REPRESENTATIONS AND WARRANTIES OF PURCHASER

                  	
                    19

                  
	
                    5.1

                  	
                    Organization

                  	
                    19

                  
	
                    5.2

                  	
                    Authority

                  	
                    20

                  
	
                    5.3

                  	
                    No
      Violations

                  	
                    20

                  
	 
      	 
      	 
      
	
                    ARTICLE
      VI.  INDEMNIFICATION

                  	
                    20

                  
	
                    6.1

                  	
                    Indemnification
      of the Purchaser

                  	
                    20

                  
	
                    6.2

                  	
                    Indemnification
      of the Sellers

                  	
                    21

                  
	
                    6.3

                  	
                    Procedure
      for Indemnification

                  	
                    21

                  
	
                    6.4

                  	
                    Limitations
      on Losses

                  	
                    22

                  
	
                    6.5

                  	
                    Other
      Rights and Remedies Not Affected

                  	
                    22

                  
	 
      	 
      	 
      
	
                    ARTICLE
      VII.  RESTRICTIVE COVENANTS; COVENANTS

                  	
                    23

                  
	
                    7.1

                  	
                    The
      Purchaser’s Access to Information and Properties

                  	
                    23

                  
	
                    7.2

                  	
                    Company’s
      Conduct of Business and Operations

                  	
                    23

                  
	
                    7.3

                  	
                    General
      Restrictions

                  	
                    23

                  
	
                    7.4

                  	
                    Notice
      Regarding Changes

                  	
                    25

                  
	
                    7.5

                  	
                    Ensure
      Conditions Met

                  	
                    25

                  
	
                    7.6

                  	
                    Maintenance
      of Insurance Policies

                  	
                    26

                  
	
                    7.7

                  	
                    Casualty
      Loss

                  	
                    26

                  
	
                    7.8

                  	
                    Covenant
      Not to Compete

                  	
                    26

                  
	
                    7.9

                  	
                    Covenant
      Not to Interfere With Company's Business

                  	
                    26

                  
	
                    7.10

                  	
                    Covenant
      Not to Disclose Confidential Information

                  	
                    27

                  
	
                    7.11

                  	
                    Remedies

                  	
                    27

                  
	
                    7.12

                  	
                    Bank
      Accounts

                  	
                    27

                  
	 
      	 
      	 
      
	
                    ARTICLE
      VIII.  MISCELLANEOUS

                  	
                    28

                  
	
                    8.1

                  	
                    Survival
      of Representations, Warranties and Other Provisions

                  	
                    28

                  
	
                    8.2

                  	
                    Fees
      and Expenses

                  	
                    28

                  
	
                    8.3

                  	
                    Brokers

                  	
                    28

                  
	
                    8.4

                  	
                    Taxes

                  	
                    28

                  

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                  8.5

                	
                  Publicity

                	
                  28

                
	
                  8.6

                	
                  No
      Waiver

                	
                  28

                
	
                  8.7

                	
                  Entire
      Agreement; Written Modifications

                	
                  29

                
	
                  8.8

                	
                  Binding
      Effect

                	
                  29

                
	
                  8.9

                	
                  No
      Third Party Beneficiaries

                	
                  29

                
	
                  8.10

                	
                  Notices

                	
                  29

                
	
                  8.11

                	
                  Cooperation

                	
                  30

                
	
                  8.12

                	
                  Headings;
      Gender and “Person”

                	
                  30

                
	
                  8.13

                	
                  Schedules
      and Exhibits

                	
                  30

                
	
                  8.14

                	
                  Joint
      and Several Liability

                	
                  30

                
	
                  8.15

                	
                  Severability

                	
                  31

                
	
                  8.16

                	
                  Counterparts

                	
                  31

                
	
                  8.17

                	
                  Governing
      Law

                	
                  31

                
	
                  8.18

                	
                  Consent
      to Jurisdiction

                	
                  31

                
	
                  8.19

                	
                  Construction

                	
                  31

                
	 
      	 
      	 
      
	
                  ARTICLE
      IX.  DEFINITIONS

                	
                  31

                

        

      

    

    

    EXHIBITS

    

    Exhibit A
– Employment Agreement between the Company and Celia

    Exhibit B
– Employment Agreement between the Company and Wayne Celia, Jr.

    Exhibit C
– Employment Agreement between the Company and Michael Derr

    Exhibit D
– Employment Agreement between the Company and Rosalind Nathanial

    Exhibit E
– Employment Agreement between the Company and Harvey Goodman

    Exhibit F
– Employment Agreement between the Company and Scott Lyddon

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      APPENDIX
I

    

    

    
      INDEX
OF DEFINITIONS

    

    

    
      The
following index indicates the Sections (or the recitals) of this Agreement
containing the definitions of certain terms used in this
Agreement:

    

    

    
      
        	
                Affiliate

              	
                9.1

              
	
                Balance
      Sheet

              	
                4.8(a)

              
	
                Benefit
      Program or Agreement

              	
                4.25(a)(ii)

              
	
                Business

              	
                Recitals

              
	
                Closing

              	
                3.1

              
	
                Code

              	
                9.2

              
	
                Consulting
      Agreement

              	
                3.2(c)

              
	
                Contracts

              	
                9.3

              
	
                Environmental
      Laws

              	
                4.21(b)

              
	
                Equipment
      Purchase Funds

              	
                2.2(a)

              
	
                ERISA

              	
                4.25(a)(i)

              
	
                Exhibits

              	
                9.4

              
	
                Financial
      Statements

              	
                4.8(a)

              
	
                GAAP

              	
                9.5

              
	
                Governmental
      Authorities

              	
                9.6

              
	
                H.H.
      Brown License Agreement

              	
                3.2(g)(i)

              
	
                Indemnified
      Party

              	
                6.3(a)

              
	
                Indemnifying
      Party

              	
                6.3(a)

              
	
                Intangible
      Rights

              	
                4.13

              
	
                Inventory

              	
                9.7

              
	
                Knowledge
      of the Company

              	
                9.8

              
	
                Leased
      Premises

              	
                4.11(b)

              
	
                Legal
      Requirements

              	
                9.9

              
	
                Leases

              	
                4.11(b)

              
	
                Lien

              	
                9.10

              
	
                Litigation

              	
                4.16

              
	
                Losses

              	
                6.1(a)

              
	
                Material
      Adverse Effect

              	
                4.10(a)

              
	
                Membership
      Interests

              	
                Recitals

              
	
                Multiemployer
      Plan

              	
                4.25(c)(i)

              
	
                Owned
      Premises

              	
                4.11(a)

              

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        	
                Permits

              	
                4.19(b)

              
	
                Permitted
      Encumbrances

              	
                9.11

              
	
                Person

              	
                9.12

              
	
                Plan

              	
                4.25(a)(i)

              
	
                Properties

              	
                9.13

              
	
                Purchase
      Price

              	
                2.1

              
	
                Purchaser’s
      Indemnification Events

              	
                6.1

              
	
                Retained
      Liabilities

              	
                2.4(a)

              
	
                Retired
      Indebtedness and Obligations

              	
                2.4(b)

              
	
                Seller’s
      Indemnification Events

              	
                6.2

              
	
                Tangible
      Company Properties

              	
                4.14

              
	
                Tax
      Returns

              	
                4.12(a)

              
	
                Taxes

              	
                4.12(a)

              
	
                Third
      Party Claim

              	
                6.3(a)

              
	
                Used

              	
                9.14

              
	
                Wachovia
      Note

              	
                2.3

              
	
                Working
      Capital Line of Credit

              	
                2.2(b)

              

      

    

    
      
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    MEMBERSHIP INTEREST PURCHASE
AGREEMENT

    

    THIS
MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of July 9, 2009 by and among
SPONGETECH DELIVERY SYSTEMS, INC., a Delaware corporation, having its principal
office at 43 West 33rd Street,
Suite 600, New York, New York 10001 (the "Purchaser"), DICON
TECHNOLOGIES, LLC, a New Jersey limited liability company having its principal
office at 100 Dicon Drive, Black Creek, Georgia 31308 (the “Company”), and WAYNE
M. CELIA (“Celia”), having an
address at 242 Purdue Court, Paramus, NJ 07652, SAM GINSBERG (“Ginsberg”) having an
address at 6 Woodsford Bend, Briarcliff Manor, NY 10510, CLYDE WILLIAMS (“Williams”) having an
address at 4726 36th Street
N.W., Washington, DC 20008, ROY GERONEMUS (“Geronemus”) having an
address at 1725 York Avenue, New York, NY 10128, and JOHN SCHEIB (“Scheib”) having an
address at 3024 Waters Road, Amsterdam, NY 12010, (Celia, Ginsberg, Williams,
Geronemus and Scheib are collectively referred to herein as the “Sellers”).

    

    WITNESSETH:

    

    WHEREAS, the Sellers are the record and
beneficial owners of all of the issued and outstanding membership interests (the
“Membership
Interests”) of the Company; and

    

    WHEREAS, the Company is in the business
of developing and manufacturing products derived from “Hydrophilic Urethane
Chemistry” (the “Business”);
and

    

    WHEREAS, the Sellers desire to sell to
the Purchaser, and the Purchaser desires to acquire from the Sellers, all of the
Membership Interests, on the terms and conditions hereinafter set forth;
and

    

    NOW, THEREFORE, in consideration of the
mutual covenants and promises herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

    

    ARTICLE
I

    SALE
AND PURCHASE OF MEMBERSHIP INTERESTS

    

    1.1           Sale and Purchase of
Membership Interests.  Subject to the terms and conditions of
this Agreement and on the basis of and in reliance upon the representations,
warranties, obligations and agreements set forth herein, on the Closing Date,
the Sellers shall sell, assign, transfer, convey and deliver to the Purchaser,
and the Purchaser shall purchase from the Sellers, all of the Membership
Interests for the consideration set forth below.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ARTICLE
II

    PURCHASE
PRICE; ADDITIONAL FUNDS; RETAINED INDEBTEDNESS

    

    2.1           Purchase
Price.  In consideration of the sale, assignment, transfer,
issuance, conveyance and delivery to the Purchaser of the Membership Interests,
the Purchaser shall pay to the Sellers Two Million Three Hundred Fifty Thousand
($2,350,000) Dollars by wire transfer to the Ellis, Painter, Ratterree &
Adams, LLP Escrow Account at the Closing (the "Purchase
Price").

    

    2.2           Additional
Funds.     The Purchaser agrees to provide the
following funding to the Company:

    

    (a)           Equipment Purchase
Amount.    Following the Closing, the Purchaser
agrees to provide to the Company, upon the Company’s written request, up to
$250,000 (the “Equipment Purchase
Funds”) for the Company’s purchase of specifically identified and agreed
upon manufacturing equipment which, when delivered and installed, shall
constitute a second production line dedicated for the manufacturing of
Purchaser’s products.

    

    (b)           Working Capital Line of
Credit.      The Purchaser agrees to
provide to the Company an additional $270,000.00 in the form of an inter-company
credit line (the “Working Capital Line of
Credit”), which shall be used by the Company for its general working
capital needs.

    

    2.3           Payoff of Wachovia
Note.       The Purchaser shall pay by
wire transfer at the Closing to Wachovia Bank the full payment of all
outstanding principal and interest under that certain promissory note dated
December 3, 2008 in the original principal amount of $2,500,000 (the “Wachovia
Note”).

    

    
      	
               
      

            	
              2.4

            	
              Retained
      Indebtedness

            

    

    

    (a)         On
the Closing Date, the only interest bearing and non-interest bearing liabilities
and obligations for borrowed money or other amounts due to the Sellers or other
Affiliates of the Company or to third parties  that the Purchaser will
assume are those set forth on Schedule 2.4 attached
hereto (collectively, the “Retained
Liabilities”).  The Company and the Sellers represent and
warrant to the Purchaser that all Contracts evidencing the previously mentioned
Retained Liabilities are set forth on Schedule 2.4
hereto.

     

    (b)           The
Company shall be responsible for obtaining and/or confirming cancellation on or
prior to the Closing Date of that certain “Officer Loan” dated June 12, 2009,
which has an outstanding amount due of $412,332.42, and all other interest
bearing and non-interest bearing liabilities and obligations for borrowed money
or other amounts due to the Sellers or other Affiliates of the Company or to
third parties and any other liabilities or obligations not specifically set
forth in Section 2.4(a) (collectively, the “Retired Indebtedness and
Obligations”).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    ARTICLE
III

    CLOSING

    

    3.1           Time and Place of
Closing.  The closing (the "Closing") of the sale
and purchase of the Membership Interests shall take place by the Parties making
all deliveries required under this Article III in escrow through their
respective counsel on or before July 9, 2009 (the “Closing
Date”).  For all purposes, the Closing will be deemed to have occurred
at 12:01 a.m., Eastern Standard Time, on the Closing Date.

    

    3.2           Deliveries by the Company
and the Sellers.  On the Closing Date, the Company and the
Sellers shall deliver, or cause to be delivered, the following:

    

    (a)          
Certificates representing the Membership Interests, representing 100% of the
issued and outstanding Membership Interests of the Company, duly endorsed in
blank for transfer, or with appropriate powers in blank attached;

    

    (b)           The
membership interest book, membership interest ledger, minute books, and
corporate seal of the Company;

    

    (c)           An
Employment Agreement between the Company and Celia substantially in the form of
Exhibit A
attached hereto (the “Celia Employment
Agreement”);

    

    (d)           An
Employment Agreement between the Company and each of Wayne Celia, Jr., Michael
Derr, Rosalind Nathanial, Harvey Goodman and Scott Lyddon, substantially in the
forms of Exhibits B,
C, D, E and F, respectively, attached hereto;

    

    (e)           Evidence
satisfactory to the Purchaser that the “Officer Loan” has been
cancelled;

    

    (f)           An
acknowledgement from H.H. Brown Shoe Technologies, LLC (“H.H. Brown”) to the
sale of the Membership Interests to the Purchaser, and an acknowledgement and
confirmation from H.H. Brown that the Intellectual Property License Agreement
effective November 30, 2007 by and between H.H. Brown and the Company (the
“H.H. Brown License
Agreement”) remains in force and effect as of the Closing Date, and that
as of the Closing Date, the Company is not in breach of any of its material
obligations under the H. H. Brown License
Agreement.

    

    (g)           An
incumbency certificate for the Company dated the Closing Date, including
specimen signatures, together with copies, certified by the Secretary or the
Assistant Secretary of the Company, of (i) the Company's articles of
organization, as in effect on the Closing Date; (ii) the Company's operating
agreement, as in effect on the Closing Date; (iii) resolutions of the Company’s
Board of Managers authorizing the execution, delivery and performance by the
Company of this Agreement and the documents, instruments, certificates and other
agreements being executed and delivered by the Company pursuant to the terms
hereof;

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    (h)           A
good standing certificate for the Company, dated not more than 30 days prior to
the Closing Date, issued by the Secretary of State of the State of New Jersey
stating that the Company is validly existing and/or in good standing under the
laws of such jurisdiction;

    

    (i)           Written
consent from the Development Authority of Bryan County, the lessor under that
certain Lease dated as of August 1, 2008, to waive, until September 30, 2009,
the requirement contained in Section 6.13(a) therein to present audited
financial statements of the Company within 180 days after the fiscal year end;
and

    

    (j)           All
other documents, instruments and writings required to be delivered by the
Sellers at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith.

    

    3.3           Deliveries by the
Purchaser.  On the Closing Date, the Purchaser shall deliver,
or cause to be delivered, the following:

    

    (a)           Payment
to the Sellers of the Purchase Price;

    

    (b)           The
Celia Employment Agreement;

    

    (c)           Payment
to Wachovia Bank of the outstanding principal and
interest of the Wachovia Note;

    

    (d)           An
incumbency certificate for the Purchaser dated the Closing Date, including
specimen signatures, together with copies, certified by the Secretary or the
Assistant Secretary of the Purchaser, of (i) the Purchaser's certificate of
incorporation, as in effect on the Closing Date, and (ii) resolutions of the
Purchaser's Board of Directors authorizing the execution, delivery and
performance by the Purchaser of this Agreement and the documents, instruments,
certificates and other agreements being executed and delivered by the Purchaser
pursuant to the terms hereof;

    

    (e)           A
good standing certificate for the Purchaser, dated not more than 30 days prior
to the Closing Date, issued by the Secretary of State of Delaware, stating that
the Purchaser is validly existing and/or in good standing under the laws of such
state; and

    

    (f)           All
other documents, instruments and writings required to be delivered by the
Purchaser at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND THE SELLERS

    

    The Company and the Sellers, jointly
and severally, hereby make the following representations and warranties to the
Purchaser and, with respect to those representations and warranties regarding
the Company, the Sellers hereby acknowledge that they have reviewed all relevant
books and records of the Company, made all necessary inquiries of the officers,
members and management of the Company and performed such other investigations as
the Sellers deemed necessary to be able to so represent and
warrant:

    

    4.1           Organization and
Qualification.  The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
New Jersey with full power and authority to own its properties and to carry on
its business as now conducted.  The Company is duly qualified or
licensed and has all permits necessary to transact business, and is in good
standing in each jurisdiction wherein the nature of the business conducted by
the Company or its ownership, leasing or use of real property requires it to be
so qualified or licensed or to hold such permits.

    

    4.2           Membership Interests;
Company Books.

    

    (a)           The
Membership Interests are the only membership interests in the Company and there
are no other interests, units or securities of the Company which are issued or
outstanding.  There are no outstanding subscriptions, options,
warrants, rights, calls, contracts, commitments, understandings or agreements to
purchase or otherwise acquire, or relating to the issuance of, any interests,
units or other securities of the Company, including, without limitation, any
rights of conversion or exchange under any outstanding securities or
instruments, other than this Agreement.

    

    (b)           The
copies of the articles of organization and operating agreement of the Company,
certified by the Secretary or the Assistant Secretary thereof, which have been
previously delivered to the Purchaser, are true, complete and correct in all
respects.  No manager or officer of the Company has taken any action
on behalf of the Company, nor authorized the Company to take any action, other
than such items which are set forth on the Schedules attached hereto or which
otherwise have been disclosed to the Purchaser prior to the execution
hereof.

    

    4.3           Title to Membership
Interests.  The Sellers are the lawful record and beneficial
owners of the Membership Interests, each having the percentage ownership of the
Company set forth opposite his or her name on Schedule
4.3.  Each of the Sellers has good and marketable title to his
or her Membership Interests, free and clear of all pledges, liens, encumbrances,
claims and other charges thereon of any kind or nature, including, without
limitation, any agreements, subscriptions, options, warrants, calls, commitments
or rights of any character granting to any Person any interest or right to
acquire from the Sellers at any time, or upon the happening of any stated event,
any of the Membership Interests.  The Membership Interests have been
validly issued in full compliance with applicable federal, state and other
securities and other laws in accordance with the Company’s articles of
organization, and without any violation of any preemptive rights, and are fully
paid and non-assessable.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    4.4           Binding Obligation.
This Agreement constitutes the legal, valid and binding obligation of the
Sellers and the Company enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally and to general equitable
principles.

    

    4.5           No Defaults or
Consents.  The execution and delivery of this Agreement and the
Exhibits by the Sellers and the Company and the performance by the Sellers and
the Company of their obligations hereunder and thereunder will not violate any
provision of law or any judgment, award, or decree or any indenture, agreement,
or other instrument to which the Sellers and/or the Company is a party, or by
which the properties or assets of the Sellers or the Company is bound or
affected, or conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, any such indenture, agreement,
or other instrument, in each case except to the extent that such violation,
default, or breach could not reasonably be expected to delay or otherwise
significantly impair the ability of the parties to consummate the transactions
contemplated hereby.

    

    4.6           No Company Defaults or
Consents.  Neither the execution and delivery of this Agreement
nor the carrying out of any of the transactions contemplated hereby
will:

    

    (a)           violate
or conflict with any of the terms, conditions, or provisions of the Certificate
of Organization or Limited Liability Company Agreement of the
Company;

    

    (b)           violate,
conflict with or constitute a default under the terms, conditions or provisions
of the H.H. Brown License Agreement;

    

    (c)           violate
any  material Legal Requirements applicable to the
Company;

    

    (d)           violate,
conflict with, result in a breach of, constitute a default under (whether with
or without notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give any other party the right
to terminate, any  material Contract or Permit binding upon or
applicable to the Company;

    

    (e)           result
in the creation of any Lien on any Properties of the Company; or

    

    (f)           require
either the Sellers or the Company to obtain or make any waiver, consent, action,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority to the extent that the rules, regulations or orders of
such body are binding upon any of the Company or the Sellers or otherwise have
the effect of law.

    

    4.7           No
Proceedings.  No suit, action, or other proceeding is pending
or, to the Knowledge of the Company, threatened before any Governmental
Authority seeking to restrain the Company or the Sellers or prohibit their entry
into this Agreement or prohibit the Closing, or seeking damages against the
Company or its Properties as a result of the consummation of this
Agreement.

     

    
      
        
        

      

      
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    4.8           Financial Statements and
Audit Representation.

    

    (a)           The
Sellers have furnished the Purchaser with the unaudited balance sheets of the
Company as of May 31, 2009, December 31, 2008 and December 31, 2007 (the “Balance Sheet”) and
statements of income and operations for the five months ended May 31, 2009, the
twelve months ended December 31, 2008 and the period from inception to December
31, 2007 (collectively, the “Financial
Statements”), certified by Celia, as the President and the representative
of the Sellers, and by the Controller of the Company, to be true, correct and
complete.  The Financial Statements fairly present the financial
position and results of operations for the Company on the date and for the
period(s) then ended, in accordance with GAAP applied on a consistent basis as
of the end of and for all prior periods since the date of the Company’s
formation, except as set forth on Schedule 4.8 attached
hereto  The assets of the Company reflected on the Balance Sheet are
presented at book value as of the respective dates thereof and have never been
written-up or re-valued.

     

    (b)           The
Company and the Sellers pledge full cooperation with the Purchaser in connection
with an audit of the Financial Statements. To the Knowledge of the Company and
the Sellers, the Financial Statements for the fiscal years ended December 31,
2008 and 2007 as well as the 2009 interim stub periods, all of which may be
required to be audited and included in various filings by the Purchaser in
compliance with rules and regulations of the Securities and Exchange Commission,
are “auditable,” and the Company and the Sellers have no knowledge of any state
of facts or the occurrence of any event which might render the Financial
Statements unauditable.

    

    4.9           Absence of Undisclosed
Liabilities.  The Company has no liabilities or obligations,
except:

    

    (a)           liabilities
or obligations which are reflected, disclosed or reserved against on the Balance
Sheet and not heretofore paid or discharged; or

    

    (b)           liabilities
or obligations specifically disclosed in any Schedule to this
Agreement.

    

    For purposes of this Agreement, the
term "liabilities" or "obligations" shall include, without limitation, all
direct or indirect indebtedness, guaranties, endorsements, claims, losses,
damages, judgments, deficiencies, costs, expenses or responsibilities, known or
unknown, fixed or unfixed, choate or inchoate, whether liquidated or
unliquidated, secured or unsecured or whether accrued, absolute, contingent or
otherwise.

    

    4.10           Absence of Certain Changes
or Events.  Except as otherwise set forth on Schedule 4.10(a)
attached hereto, since the Balance Sheet date, there has not been:

     

    
      
        
        

      

      
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    (a)           any
event, circumstance, or change (other than general economic conditions) that had
or can reasonably be expected to have a material adverse effect on the business,
operations, prospects, Properties, financial condition, or working capital of
the Company, taken as a whole (a “Material Adverse
Effect”);

     

    (i)           any
damage, destruction, or loss (whether or not covered by insurance) that had or
might have a Material Adverse Effect; or

     

    (ii)          any
material adverse change in the Company’s sales patterns, pricing policies,
accounts receivable, or accounts payable.

     

    (b)           Except
as otherwise set forth on Schedule 4.10(b)
attached hereto, since the Balance Sheet date, the Company has not done any of
the following:

     

    (i)           merged
into or with or consolidated with, any other corporation or acquired the
business or assets of any Person;

     

    (ii)          purchased
any securities of any Person not in the ordinary course of its
business;

     

    (iii)         created,
incurred, assumed, guaranteed, or otherwise become liable or obligated with
respect to any indebtedness, or made any loan or advance to, or any investment
in, any Person, except in each case in the ordinary course of
business;

     

    (iv)         made
any change in any existing election, or made any new election, with respect to
any tax law in any jurisdiction which election could have an effect on the tax
treatment of the Company or the Company’s business operations;

     

    (v)          entered
into, amended, or terminated any material agreement, including, without
limitation, any clearing or custody agreement;

     

    (vi)         sold,
transferred, leased, mortgaged, encumbered, or otherwise disposed of, or agreed
to sell, transfer, lease, mortgage, encumber, or otherwise dispose of, any
Properties except (1) in the ordinary course of business, or (2) pursuant to any
agreement specified in Schedule 4.17
attached hereto;

     

    (vii)        settled
any claim or litigation, or filed any motions, orders, briefs, or settlement
agreements in any proceeding before any Governmental Authority or any
arbitrator;

     

    (viii)       incurred
or approved, or entered into any agreement or commitment to make, any
expenditures in excess of $25,000 (other than those arising in the ordinary
course of business or those required pursuant to any agreement specified in
Schedule 4.13
attached hereto);

     

    (ix)          maintained
its books of account other than in the usual, regular, and ordinary manner in
accordance with GAAP and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required to
be disclosed under GAAP;

     

    
      
        
        

      

      
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    (x)           adopted
any Plan or Benefit Program or Agreement, or granted any increase in the
compensation payable or to become payable to managers, directors, officers, or
employees (including, without limitation, any such increase pursuant to any
bonus, profit-sharing, or other plan or commitment), other than merit increases
to non-officer employees in the ordinary course of business and consistent with
past practice;

     

    (xi)          suffered
any extraordinary losses or waived any rights of material value;

     

    (xii)         been
notified on any default under the H.H. Brown License Agreement;

     

    (xiii)        made
any payment to any Affiliate or forgiven any indebtedness due or owing from any
Affiliate to the Company;

     

    (xiv)        (1)
accelerated receivables, (2) delayed payables, or (3) changed in any material
respect the Company’s practices in connection with the payment of payables
and/or the collection of receivables;

     

    (xv)         engaged
in any one or more activities or transactions with an Affiliate or outside the
ordinary course of business;

     

    (xvi)        declared,
set aside, or made any distributions or other payments in respect of its equity
securities, or repurchased, redeemed, or otherwise acquired any such
securities;

     

    (xvii)       amended
its Certificate of Organization or Limited Liability Company
Agreement;

     

    (xviii)      issued
any Membership Interests or other securities, or granted, or entered into any
agreement to grant, any options, convertible rights, other rights, warrants,
calls, or agreements relating to its Membership Interests; or

     

    (xix)         committed
to do any of the foregoing.

    

    4.11         Real
Property.

    

    (a)           Schedule 4.11(a) sets
forth a list of all real property or any interest therein (including without
limitation, any option or other right or obligation to purchase any real
property or any interest therein) currently owned, or owned since the Company’s
inception, by the Company, in each case setting forth the street address and
legal description of each property covered thereby (the “Owned
Premises”).

     

    
      
        
        

      

      
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    (b)           Schedule 4.11(b) sets
forth a list of all current leases, licenses, or similar agreements relating to
the Company’s use or occupancy of real estate owned by a third party (“Leases”), true,
correct, and complete copies of which have previously been furnished to
Purchaser, in each case setting forth (i) the lessor and lessee thereof and the
commencement date, term, and renewal rights under each of the Leases, and (ii)
the street address and legal description of each property covered thereby (the
“Leased
Premises”).  The Leases and all guaranties with respect
thereto, are in full force and effect and have not been amended in writing or
otherwise, and no party thereto is in default or breach under any such
Lease.  To the Knowledge of the Company, no event has occurred which,
with the passage of time or the giving of notice or both, would cause a material
breach of or default under any of such Leases by the Company.  Other
than ordinary annual adjustments for taxes and expenses, neither the Company nor
its agents or employees have received written notice of any claimed abatements,
offsets, defenses, or other bases for relief or adjustment under any
Lease.

     

    (c)           With
respect to each Owned Premises and Leased Premises, as
applicable:  (i) the Company has good, marketable, and insurable fee
simple interest in the Owned Premises and a valid leasehold interest in the
Leased Premises, free and clear of any Liens, covenants, easements, or title
defects other than Permitted Encumbrances that have had or could reasonably be
expected to have a Material Adverse Effect on the Company’s use and occupancy of
the Owned Premises and the Leased Premises; (ii) the portions of the buildings
located on the Owned Premises and the Leased Premises that are used in the
business of the Company are each in reasonable repair and condition, normal wear
and tear excepted, and are in the aggregate sufficient to satisfy the Company’s
current and reasonably anticipated normal business activities as conducted
thereon, and, to the Knowledge of the Company, there is no latent material
defect in the improvements on any Owned Premises, structural elements thereof,
the mechanical systems (including, without limitation, all heating, ventilating,
air conditioning, plumbing, electrical, utility, and sprinkler systems) therein,
the utility system servicing each Owned Premises and the roofs which have not
been disclosed to the Purchaser in writing prior to the date of this Agreement;
(iii) each of the Owned Premises and the Leased Premises (1) has direct access
to public roads or access to public roads by means of a perpetual access
easement, such access being sufficient to satisfy the current transportation
requirements of the business presently conducted at such parcel; and (2) is
served by all utilities in such quantity and quality as are necessary and
sufficient to satisfy the current normal business activities conducted at such
parcel; and (iv) the Company has not received notice of (1) any condemnation,
eminent domain, or similar proceeding affecting any portion of the Owned
Premises or the Leased Premises or any access thereto, and, to the Knowledge of
the Company, no such proceedings are contemplated, (2) any special assessment or
pending improvement liens to be made by any Governmental Authority which may
affect any of the Owned Premises or the Leased Premises, or (3) any violations
of building codes and/or zoning ordinances or other governmental regulations
with respect to the Owned Premises or the Leased Premises.

     

    
      
        
        

      

      
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    4.12         Taxes, Tax Returns and Other
Reports.

    

    (a)           All
federal, state and local tax returns, reports and statements (including all
income tax, unemployment compensation, social security and hospital insurance
(Medicare), payroll, sales and use, excise, privilege, property, ad valorem,
franchise, license, school and any other tax under the laws of the United States
or any state or municipal or political subdivision thereof) required to be filed
by the Company (collectively, the "Tax Returns") have
been filed with the appropriate governmental agencies in all jurisdictions in
which the Tax Returns are required to be filed, and all of the Tax Returns are
complete and correct in all material respects and properly reflect the tax
liabilities of the Company for the periods, properties or events covered
thereby.  All federal, state and local taxes, assessments, interest,
deficiencies, fees and other governmental charges or impositions which are
called for by the Tax Returns, or claimed to be due by a taxing authority from
the Company, or upon or required by any of the respective properties, assets or
income owned or used by the Company (collectively, the "Taxes") have been
properly accrued or paid.  The accruals for Taxes, if any, contained
in the Company Financial Statements are adequate to cover the tax liabilities of
the Company as of the dates thereof.  The Sellers have not received
any notice of assessment or proposed assessment and there are no tax claims
asserted against the Company or any of its assets or
properties.  There are no tax liens on any of the assets or properties
owned or used by the Company.  The Sellers have no knowledge of any
basis for any additional assessment of any Taxes against the Company and the
Company is not subject to any extension of a period for the assessment of any
Taxes.  All Taxes which the Company is required by law to withhold or
collect have been duly withheld or collected and have been timely paid over to
the proper authorities.  There are no outstanding agreements or
waivers extending the statute of limitations with respect to, and the Company is
not now subject to any extension of a period for the assessment of, any federal,
state or local income tax or other Taxes.

    

    (b)           There
is not currently, and there has never been, an audit or other examination of
Taxes by federal, state or local tax authorities.

    4.13         Intangible
Rights.  Set forth on Schedule 4.13
attached hereto is a list and description of all material foreign and domestic
patents, patent rights, trademarks, service marks, trade names, brands, and
copyrights (whether or not registered and, if applicable, including pending
applications for registration) owned, Used, licensed, or controlled by the
Company and all goodwill associated therewith.  The Company owns or
has the right to use and shall as of the Closing Date own or have the right to
use any and all information, know-how, trade secrets, patents, copyrights,
trademarks, trade names, software, formulae, methods, processes, and other
intangible properties that are necessary or customarily Used by the Company for
the ownership, management, or operation of its Properties (“Intangible Rights”)
including, but not limited to, the Intangible Rights listed on Schedule
4.13.  Except as set forth on Schedule 4.13, (i)
the Company is the sole and exclusive owner of all right, title, and interest in
and to all of the Intangible Rights, and has the exclusive right to use and
license the same, free and clear of any claim or conflict with the Intangible
Rights of others; (ii) no royalties, honorariums, or fees are payable by the
Company to any person by reason of the ownership or use of any of the Intangible
Rights; (iii) there have been no claims made against the Company asserting the
invalidity, abuse, misuse, or unenforceability of any of the Intangible Rights
and no grounds for any such claims exist; (iv) the Company has not made any
claim of any violation or infringement by others of any of its Intangible Rights
or interests therein, and, to the Knowledge of the Company, no grounds for any
such claims exist; (v) the Company has not received any notice that it is in
conflict with or infringing upon the asserted intellectual property rights of
others in connection with the Intangible Rights, and neither the use of the
Intangible Rights nor the operation of the Company’s businesses is infringing or
has infringed upon any intellectual property rights of others; (vi) the
Intangible Rights are sufficient and include all intellectual property rights
necessary for the Company to lawfully conduct its business as presently being
conducted; (vii) no interest in any of the Company’s Intangible Rights has been
assigned, transferred, licensed, or sublicensed by the Company to any person
other than the Purchaser pursuant to this Agreement; (viii) to the extent that
any item constituting part of the Intangible Rights has been registered with,
filed in or issued by, any Governmental Authority, such registrations, filings,
or issuances are listed on Schedule 4.13 and
were duly made and remain in full force and effect; (ix) to the Knowledge of the
Company, there has not been any act or failure to act by the Company or any of
its managers, officers, employees, attorneys, or agents during the prosecution
or registration of, or any other proceeding relating to, any of the Intangible
Rights or of any other fact which could render invalid or unenforceable, or
negate the right to issuance of any of the Intangible Rights; (x) to the extent
any of the Intangible Rights constitutes proprietary or confidential
information, the Company has reasonably safeguarded such information from
disclosure; and (xi) all of the Company’s current Intangible Rights will remain
in full force and effect following the Closing without alteration or
impairment.

     

    
      
        
        

      

      
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    4.14         Equipment and Other Tangible
Property.  Except as otherwise set forth on Schedule 4.14
attached hereto, the Company’s equipment, furniture, machinery, vehicles,
structures, fixtures, and other tangible property included in the Properties
(the “Tangible Company
Properties”), other than Inventory, is suitable for the purposes for
which intended and in operating condition and repair consistent with normal
industry standards, except for ordinary wear and tear, and except for such
Tangible Company Properties as shall have been taken out of service on a
temporary basis for repairs or replacement consistent with the Company’s prior
practices and normal industry standards.  To the Knowledge of the
Company, the Tangible Company Properties are free of any known structural or
engineering defects, and since the Company’s inception, there has not been any
significant interruption of the Company’s business due to inadequate maintenance
or obsolescence of the Tangible Company Properties.

    

    4.15         Books of Account.
Except as set forth on Schedule 4.8, the
books of account of the Company reflect all of its items of income and expense,
together with its assets, liabilities and accruals required to be reflected
therein, all in accordance with GAAP.  None of the Company's records,
systems, controls, data or information is recorded, stored, maintained, operated
or otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company.

    

    4.16         Litigation.  There
are no actions, suits or legal, administrative, arbitration or other proceedings
or governmental investigations (collectively, the "Litigation") pending
or, to the knowledge of the Sellers, threatened against the Company before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign and no basis
exists for any such action.  The Company is not a party to or subject
to the provisions of any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or
authority.  Neither the Sellers nor the Company is engaged in, a party
to or, to the knowledge of the Sellers, threatened with any suit, action or
legal, administrative, arbitration or other proceeding or governmental
investigation which, if adversely determined, would adversely affect or impede
the purchase of the Membership Interests by the Purchaser or the transactions
contemplated by this Agreement or would have a Material Adverse
Effect.

     

    
      
        
        

      

      
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    4.17         Commitments.

    

    (a)           Except
as otherwise set forth on Schedule 4.17
attached hereto, the Company is not a party to or bound by any of the following,
whether written or oral:

     

    (i)           any
Contract that cannot by its terms be terminated by the Company with 30 days’ or
less notice without penalty or whose term continues beyond one year after the
date of this Agreement;

     

    (ii)          Contract
or commitment for capital expenditures by the Company in excess of $5,000 per
calendar quarter in the aggregate;

     

    (iii)         lease
or license with respect to any Properties, real or personal, whether as
landlord, tenant, licensor, or licensee;

     

    (iv)         Contract,
indenture, or other instrument relating to the borrowing of money or the
guarantee of any obligation or the deferred payment of the purchase price of any
Properties;

     

    (v)          partnership
agreement, joint venture agreement, or limited liability company
agreement;

     

    (vi)         Contract
with any Affiliate of the Company (including the Sellers) relating to the
provision of goods or services by or to the Company;

     

    (vii)        Contract
for the sale of any assets that in the aggregate have a net book value on the
Company’s books of greater than $25,000;

     

    (viii)       Contract
that purports to limit the Company’s freedom to compete freely in any line of
business or in any geographic area;

     

    (ix)          preferential
purchase right, right of first refusal, or similar Contract;

     

    (x)           Contract
or commitment that impacts or is likely to impact the calculation of the
Company’s net capital; or

     

    (xi)          other
Contract that is material to the business of the Company.

     

    (b)           All
of the Contracts listed or required to be listed on Schedule 4.17 are
valid, binding, and in full force and effect, and the Company has not been
notified or advised by any party thereto of such party’s intention or desire to
terminate or modify any such Contract in any respect, except as disclosed on
Schedule
4.17.  Neither the Company nor, to the Knowledge of the
Company, any other party is in breach of any of the terms or covenants of any
Contract listed or required to be listed on Schedule
4.17.  Following the Closing, the Company will continue to be
entitled to all of the benefits currently held by the Company under each
Contract listed or required to be listed on Schedule
4.17.

     

    
      
        
        

      

      
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    (c)           Except
as otherwise set forth on Schedule 4.17(c)
attached hereto, the Company is not a party to or bound by any Contract or
Contracts the terms of which were arrived at by or otherwise reflect
less-than-arm’s-length negotiations or bargaining.

     

    4.18         Insurance.  Schedule 4.18
attached hereto is a list of all insurance policies (including, without
limitation, fire, liability, product liability, workers’ compensation, and
vehicular) presently in effect that relate to the Company or its Properties,
including the amounts of such insurance and annual premiums with respect
thereto, all of which have been in full force and effect from and after the
date(s) set forth on Schedule
4.18.  Such policies are sufficient for compliance by the
Company with all applicable Legal Requirements and all material
Contracts.  None of the insurance carriers has indicated to the
Company an intention to cancel any such policy or to materially increase any
insurance premiums (including, without limitation, workers’ compensation
premiums), or that any insurance required to be listed on Schedule 4.18 will
not be available in the future on substantially the same terms as currently in
effect.  The Company has no claim pending or anticipated against any
of its insurance carriers under any of such policies, and, to the Knowledge of
the Company, there has been no actual or alleged occurrence of any kind which
could reasonably be expected to give rise to any such claim.  Since
the Company’s inception, all notices required to have been given by the Company
or the Sellers to any insurance company have been timely and duly given, and no
insurance company has asserted that any claim is not covered by the applicable
policy relating to such claim.

     

    4.19         Compliance with Laws;
Permits.

    

    (a)           The
Company has received no notice of, and the Sellers have no knowledge of any
state of facts or the occurrence of any event which reasonably might form the
basis for alleging, any violation by the Company of any federal, state or local
law, statute, rule or regulation applicable to the Company, its assets or
properties or its business as now conducted or any of the Permits which would
have a Material Adverse Effect.  The Company has complied with each
and every, and is not in violation of any, judgment, order, writ, injunction or
decree of any governmental authority, court or administrative authority having
jurisdiction over the Company, its assets or properties or applicable to its
business as now or heretofore conducted.

    

    (b)           The
Company has all permits, rights,
approvals, licenses, authorizations, legal status, orders, certificates
of occupancy or
Contracts under any Legal Requirement or otherwise granted by any Governmental
Authority (collectively, the "Permits") which are
necessary to enable it to conduct the Business as now conducted and has not
failed to adhere to the requirements thereof.  The Company has taken
all steps necessary to maintain all of the Permits, all of which are valid, in
good standing and in full force and effect.  A complete and correct
list of all Permits is attached hereto as Schedule 4.19(b) and
true and correct copies thereof have been delivered to the
Purchaser.

     

    
      
        
        

      

      
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    (c)           No
notice to, filing with or consent from any governmental body, authority or
agency is required as a result of the change in ownership of the Membership
Interests contemplated by this Agreement, nor will any Permit otherwise be
terminated, modified, or impaired or rendered invalid by reason of such change
of ownership.

    

    4.20         Absence of Questionable
Payments.  Neither the Company nor any manager, officer,
employee or agent of, nor any consultant to, the Company has unlawfully offered,
paid, or agreed to pay, directly or indirectly, any money or anything of value
to, or for the benefit of, or unlawfully received or agreed to receive, directly
or indirectly, any money or anything of value from, or on behalf of, any vendor,
supplier, wholesaler, contractor, distributor or manufacturer or any other
Person, or any officer or employee thereof or any individual who is or was a
candidate for public office, or any public official or employee of any
governmental or regulatory body or authority.  No payments have been
made by or on behalf of the Company which could give rise to a civil cause of
action to void any customer Contracts, material Commitments or Permits of the
Company as having been illegally obtained.

    

    4.21         Hazardous Substances;
Hazardous Wastes and Pollutants.

    

    (a)           The
Company, to the knowledge of the Sellers, has complied with each and every, and
is not in material violation of any, federal, state or local ordinance, rule,
regulation and statute governing or in any way applicable to the generation,
transport, storage, treatment, handling, release, emission, discharge and
disposal of solid or hazardous wastes, hazardous substances or
pollutants.  The Company has not received any notice, report or other
information regarding any actual or alleged violation of Environmental Laws, or
any liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, relating to the Company or their respective facilities arising
under Environmental Laws.

    (b)           For
purposes of this Agreement, “Environmental Laws”
shall mean all federal, state or local laws, ordinances, rules, regulations,
orders or directives or under common law relating to the environment, health or
safety, including, without limitation, claims arising under (i) the
Comprehensive Environmental Response, Compensation and Liability Act and all
rules and regulations promulgated thereunder, or any similar federal, state or
local law, rule or regulation, (ii) the Resource Conservation and Recovery Act
and all rules and regulations promulgated thereunder, or any similar federal,
state or local law, rule or regulation, (iii) the Clean Air Act and all rules
and regulations promulgated thereunder, or any similar federal, state or local
law, rule or regulations, (iv) the Toxic Substance Control Act and all rules and
regulations promulgated thereunder or (vi) any other federal, state or local
law, rule or regulation relating to the emission or discharge of any material
into the environment or at common law, all as presently in effect and as the
same may hereafter be amended.

    

    4.22         Conditions Affecting
Business.  Except for normal competitive pressures, there are
no conditions existing with respect to the Company's markets, products,
services, clients, customers, facilities, personnel or suppliers which are known
to the Sellers, which would be expected to result in a Material Adverse
Effect.

     

    
      
        
        

      

      
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    4.23         Debt
Instruments.  Except for the Retained Liabilities, the Company
has no liabilities or debts.

    

    4.24         Suppliers and
Customers.  Schedule 4.24 sets
forth (i) the ten principal suppliers of the Company during each of the fiscal
years ended December 31 since the Company’s inception, together with the dollar
amount of goods purchased by the Company from each such supplier during each
such period, and (ii) the ten principal customers of the Company during each of
the fiscal years ended December 31since the Company’s inception, together with
the dollar amount of goods and/or services sold by the Company to each such
customer during each such period.  Except as otherwise set forth on
Schedule 4.24
attached hereto, the Company maintains good relations with all suppliers and
customers listed or required to be listed in Schedule 4.24 as well
as with governments, partners, financing sources, and other parties with whom
the failure to maintain good relations could have a Material Adverse Effect and
no such party has canceled, terminated, or made any threat to the Company to
cancel or otherwise terminate its relationship with the Company or to materially
decrease its services or supplies to the Company or its direct or indirect
purchase or usage of the products or services of the Company.

    

    4.25         Employee Benefit
Matters.

    

    (a)           Schedule 4.25(a)
provides a description of each of the following, if any, which is sponsored,
maintained, or contributed to by the Company for the benefit of the employees or
agents of the Company, which has been so sponsored, maintained, or contributed
to with respect to which the Company has or may have any actual or contingent
liability:

     

    (i)           every
“employee benefit plan,” as such term is defined in Section 3(3) of ERISA,
including, but not limited to, employee benefit plans, such as foreign plans,
which are not subject to the provisions of the Employment Retirement Income
Security Act of 1974, and the rules and regulations promulgated thereunder
(collectively, “ERISA”) (each, a
“Plan”);
and,

     

    (ii)           each
personnel policy, employee manual, or other written statements of rules or
policies concerning employment, stock option plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation and sick leave policy, severance pay policy or agreement, deferred
compensation agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement, program, practice,
or understanding which is not described in Section 4.25(a)(i) (each, a “Benefit Program or
Agreement”).

     

    (b)  True,
correct, and complete copies of the Plans (if any), and related trusts, if
applicable, including all amendments thereto, have been furnished to the
Purchaser.  There has also been furnished to the Purchaser, with
respect to each Plan required to file such report and description, the three
most recent reports on Form 5500 and the summary plan
description.  True, correct, and complete copies or descriptions of
all Benefit Programs or Agreements have also been furnished to
Purchaser.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (c)  Except
as otherwise set forth on Schedule 4.25(c)
attached hereto:

     

    (i)           Neither
the Sellers nor the Company contributes to or has an obligation to contribute
to, and neither the Sellers nor the Company has at any time since the inception
of the Company contributed to or had an obligation to contribute to, and do not
have any actual or contingent liability under a multiemployer plan within the
meaning of Section 3(37) of ERISA (“Multiemployer Plan”)
or a multiple employer plan within the meaning of Section 413(b) and (c) of the
Code.

     

    (ii)          Each
of the Sellers and the Company has substantially performed all obligations,
whether arising by operation of law or by contract, required to be performed by
it in connection with all the Plans and Benefit Programs and Agreements to which
it is a Party or otherwise bound, and, to the Knowledge of the Company, there
have been no defaults or violations by any other party to any Plans or Benefit
Programs or Agreements;

     

    (iii)         All
material reports and disclosures relating to the Plans required to be filed with
or furnished to the applicable Governmental Authority, Plan participants, or
Plan beneficiaries have been filed or furnished in accordance with applicable
law in a timely manner, and each Plan and each Benefit Program or Agreement has
been administered in substantial compliance with its governing
documents;

     

    (iv)         Each
of the Plans intended to be qualified under Section 401 of the Code satisfies
the requirements of such section and has received a favorable determination
letter from the Internal Revenue Service regarding such qualified status and has
not, since receipt of the most recent favorable determination letter, been
amended or operated in a way which could adversely affect such qualified
status;

     

    (v)          There
are no actions, suits, or claims pending (other than routine claims for
benefits) or, to the Knowledge of the Company, threatened against, or with
respect to, any of the Plans, Benefit Programs, or Agreements, or their
assets;

     

    (vi)         All
contributions required to be made to the Plans pursuant to their terms and
provisions and applicable law have been made timely;

     

    (vii)        The
Company does not maintain any Plan subject to Title IV of ERISA;

     

    (viii)       Neither
any of the Plans nor any trust created thereunder or with respect thereto has
engaged in any “prohibited transaction” or “party-in-interest transaction” as
such terms are defined in Section 4975 of the Code and Section 406 of ERISA
which could subject any Plan, the Sellers, or any officer, manager, director, or
employee thereof to a tax or penalty on prohibited transactions or
party-in-interest transactions pursuant to Section 4975 of the Code or Section
502(i) of ERISA;

     

    (ix)          To
the knowledge of the Sellers, there is no matter pending (other than routine
qualification determination filings) with respect to any of the Plans or Benefit
Programs or Agreements before the Internal Revenue Service, the Department of
Labor, or the PBGC;

     

    
      
        
        

      

      
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    (x)           Each
trust funding a Plan, which is intended to be exempt from federal income
taxation pursuant to Section 501(c)(9) of the Code, satisfies the requirements
of such section and has received a favorable determination letter from the
Internal Revenue Service regarding such exempt status and has not, since receipt
of the most recent favorable determination letter, been amended or operated in a
way which would adversely affect such exempt status.

     

    (xi)          The
Company does not have any obligation to provide health benefits or death
benefits to former employees, except as specifically required by
law;

     

    (xii)           Neither
the execution and delivery of this Agreement by the Company or by the Sellers
nor the consummation of any or all of the transactions contemplated hereby will:
(1) entitle any current or former employee of the Company to severance pay,
unemployment compensation, or any similar payment, (2) accelerate the time of
payment or vesting or increase the amount of any compensation due to any such
employee or former employee, or (3) directly or indirectly result in any payment
made to or on behalf of any person to constitute a “parachute payment” within
the meaning of Section 280G of the Code;

     

    (xiii)        Neither
the Sellers nor the Company has incurred any liability or taken any action, and,
to the Knowledge of the Company, no action or event has occurred, that could
cause the Company to incur any liability (1) under Section 412 of the Code or
Title IV of ERISA with respect to any “single-employer plan” within the meaning
of Section 4001(a)(15) of ERISA that is not a Plan, or (2) to any Multiemployer
Plan, including without limitation an account of a partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA.

    

     

    (xiv)        Since
the Company’s inception, other than ordinary course grievances, and disputes,
none of which had a material impact on the Company, there have not been any (1)
work stoppages, labor disputes, or other significant controversies between the
Company and its employees, (2) labor union grievances or organizational efforts,
or (3) unfair labor practice or labor arbitration proceedings pending or
threatened.

     

    (xv)         Except
as set forth on Schedule 4.25(d)
attached hereto, the Company is not a party to any agreement, and has not
established any policy or practice, requiring the Company to make a payment or
provide any other form or compensation or benefit to any person performing
services for the Company upon termination of such services which would not be
payable or provided in the absence of the consummation of the transactions
contemplated by this Agreement.

    
      
         

      

      
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    (d)  Schedule 4.25(d) sets
forth by number and employment classification of employees employed by the
Company as of the date of this Agreement, and, except as set forth therein, none
of said employees are subject to union or collective bargaining agreements with
the Company.  Schedule 4.25(d) also
sets forth for each such employee and independent registered representative, his
current compensation, his deferred compensation, and his payout and expense
charge backs, advances, and amounts due to each such employee or independent
registered representative, as applicable, as of the end of the month preceding
the date of this Agreement and as of the Closing Date.  The Sellers
shall have no liability on or after the Closing Date for any obligation of the
Company accruing prior to the Closing Date for the payment of compensation or
the provision of benefits to any employee or independent registered
representative under any Plan, Benefit Program, or Agreement.  It is
understood, that the Company shall be responsible for paying all accrued but
unpaid compensation and benefits arising prior to the Closing Date.

     

    (e)   There
has been no material violation by any sponsor, trustee, or administrator of any
Plan of any provision of ERISA or the Code in connection with the establishment,
operation, or administration of any Plan.

     

    (f)    All
of the Company’s employees and independent contractors have been appropriately
classified for federal and state labor law purposes and federal and state income
and employment tax purposes and the Company has withheld and timely paid all
necessary taxes with respect to each of its employees and independent
contractors.  In this regard, all independent registered
representatives have been classified as independent contractors and not
employees and the Company has not received any notice from any Governmental
Authority concerning such classification.

     

    4.26       
Bank
Accounts.  Schedule 4.26 sets
forth (a) the name of each bank or financial institution in which the Company
has or maintains an account (whether checking, savings or otherwise), lock box
or safe deposit box, the numbers (or other means of identification) of all such
accounts, lock boxes or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto, and (b) the names of all
persons holding powers of attorney from the Company, together with true, correct
and complete copies of such powers of attorney.

    

    4.27       
Full
Disclosure.  The representations and warranties of the Company
and the Sellers in this Agreement are on the date hereof, and will be on the
Closing Date, true, correct and complete in all material respects.  No
representation or warranty by the Sellers or the Company in this Agreement or in
any statement, list, certificate or instrument furnished or to be furnished
pursuant hereto or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any fact necessary to make any statement
herein or therein not misleading.

    

    ARTICLE
V

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

    

    The Purchaser hereby represents and
warrants to the Sellers as follows:

    

    5.1          Organization.  The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to own its properties and to carry on its business as now
conducted.

    
      
         

      

      
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    5.2          Authority.  The
Purchaser has all requisite power and authority to execute, deliver and perform
this Agreement and the transactions contemplated herein.  The
Purchaser's execution, delivery and performance of this Agreement, and the
transactions contemplated herein, have been duly authorized by its Board of
Directors and no other action is required for such execution, delivery and
performance by law, the Purchaser's certificate of incorporation or bylaws or
otherwise.  This Agreement constitutes the legal, valid and binding
obligation of, and is enforceable against, the Purchaser in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally and to general equitable
principles.

    

    5.3          No
Violations.  The authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated herein by the
Purchaser do not and will not, with or without the giving of notice or passage
of time or both, (a) violate, result in the breach of any term or provision of,
or require any notice, filing or consent under (i) the certificate of formation
or operating agreement of the Purchaser, (ii) any statutes, laws, rules,
regulations, ordinances, licenses or permits of any governmental body, authority
or agency applicable to the Purchaser or (iii) any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental body,
authority or agency binding upon the Purchaser or any of its properties or
assets; (b) result in the breach of any term or provision of, require any notice
or consent under, give rise to a right of termination of, constitute a default
under, result in the acceleration of, or give rise to a right to accelerate any
obligation under any loan agreement, mortgage, indenture, financing agreement,
lease or any other agreement or instrument to which the Purchaser is a party or
by which its properties or assets are bound; or (c) result in any lien, claim,
encumbrance or restriction on any of the properties or assets of the
Purchaser.

    

    ARTICLE
VI

    INDEMNIFICATION

    

    6.1          Indemnification of the
Purchaser.  From and after the Closing, (i) the Sellers shall,
jointly and severally, reimburse, indemnify and hold harmless the Purchaser and
its Affiliates, stockholders, members, officers, directors, managers, employees,
agents, representatives, successors and assigns from and against and in respect
of each of the following (collectively, the "Purchaser's Indemnification
Events"):

    

    (a)           any
and all damages, losses, deficiencies, liabilities, claims, demands, charges,
costs and expenses of every nature and character whatsoever, including, without
limitation, reasonable attorneys’ fees and costs (collectively, the "Losses") that result
from, relate to or arise out of any misrepresentation or breach of warranty,
covenant or agreement of the Sellers in this Agreement or any omission from any
agreement, document, statement, list, certificate or instrument furnished by or
on behalf of the Sellers or Company in connection with the negotiation,
execution or performance of this Agreement and the transactions contemplated
herein;

    

    (b)           any
and all Losses that result from, relate to or arise out of the conduct of the
Business or the acts or omissions of the prior to the Closing Date;
and

    
      
         

      

      
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    (c)           any
and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the successful enforcement of this Section.

    

    6.2          Indemnification of the
Sellers.  From and after the Closing, the Purchaser shall
reimburse, indemnify and hold harmless the Sellers and their agents,
representatives, heirs, legal representatives, successors and assigns from and
against and in respect of each of the following (collectively, the "Sellers’ Indemnification
Events"):

    

    (a)           any
and all Losses that result from, relate to or arise out of any misrepresentation
or breach of warranty, covenant or agreement of the Purchaser in this Agreement
or any omission from any agreement, document, statement, list, certificate or
instrument furnished by or on behalf of the Purchaser in connection with the
negotiation, execution or performance of this Agreement and the transactions
contemplated herein;

    

    (b)           any
and all Losses that result from, relate to or arise out of the conduct of the
Business or the acts or omissions of the Company after the Closing Date;
and

    

    (c)           any
and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses and costs of any
environmental investigation or response) incident to any of the foregoing or to
the successful enforcement of this Section.

    

    6.3          Procedure for
Indemnification.

    

    (a)           Promptly
after receipt by a party (an "Indemnified Party")
of notice of the assertion of any claim by a person not a party to this
Agreement (a "Third
Party Claim") with respect to which such Indemnified Party expects to
make a request for indemnification hereunder, such party shall give the party
who may become obligated to provide indemnification hereunder (the "Indemnifying Party")
written notice describing such claim or fact in reasonable
detail.  Upon receipt of such notice, the Indemnifying Party may, at
its option, assume the defense of the Indemnified Party against such claim
(including the employment of counsel, who shall be reasonably satisfactory to
the Indemnified Party, and the payment of expenses).  The Indemnified
Party shall have the right to employ separate counsel in any such action or
claim and to participate in the defense thereof, but the fees and expenses of
such counsel shall not be at the expense of the Indemnifying Party, unless (i)
the Indemnifying Party shall have failed, within a reasonable time after having
been notified by the Indemnified Party of the existence of such claim as
provided in the preceding sentence, to assume the defense of such claim, (ii)
the employment of such counsel has been specifically authorized in writing by
the Indemnifying Party, which authorization shall not be unreasonably withheld,
or (iii) the named parties to any such action (including impleaded parties)
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have been advised in writing by such counsel that there
may be one or more legal defenses available to the Indemnifying Party which are
not available to, or the assertion of which would be adverse to the interests
of, the Indemnified Party.  The Indemnifying Party shall not settle or
compromise any such claim without the Indemnified Party's prior written consent,
unless the terms of such settlement or compromise release the Indemnified Party
from any and all liabilities with respect to such Third Party
Claim.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    (b)           Any
indemnifiable claim that is not a Third Party Claim shall be asserted by written
notice to the Indemnifying Party.  If the Indemnifying Party does not
respond to such notice within 60 days, it shall have no further right to contest
the validity of such claim.  In the event that a dispute arises
between the Indemnifying Party and the Indemnified Party as a result of any such
claim, the Indemnifying Party and the Indemnified Party shall attempt in good
faith to negotiate a resolution thereof; provided, that the foregoing shall not
preclude the assertion by the Indemnified Party of any right (whether hereunder
or otherwise) or the seeking of any and all remedies against the Indemnifying
Party for any such claim.

    

    6.4          Limitations on
Losses.

    

    (a)           No
amounts of indemnity shall be payable in the case of a claim or claims by an
Indemnified Party under this Article VI unless such Indemnified Party has
suffered, incurred, sustained or become subject to losses in excess of $35,000
in the aggregate (the “Threshold”), in which
event such Indemnified Party shall be entitled to claim indemnity for the full
amount of its losses; provided, however, that the
Threshold shall not apply and need not be surpassed for any claims with respect
to matters covered by Sections 4.3 and
4.12.

    

    (b)           In
case any event shall occur that would otherwise entitle any party to assert a
claim for indemnification hereunder, no Losses shall be deemed to have sustained
by such party to the extent of (i) any actual tax savings realized by such party
with respect thereto or (ii) any proceeds (net of taxes and collection costs)
received by such party from any property insurance policies maintained by or on
behalf of such party with respect to losses to such party’s
property.  The parties agree to submit a claim under such property
insurance policies prior to making a request for indemnification
hereunder.

    

    (c)           Except
as otherwise set forth below, the Purchaser may not seek indemnification from
the Sellers for the Purchaser’s Indemnification Events, and the Sellers may not
seek indemnification from the Purchaser for the Seller’s Indemnification Events,
after two (2) years from the Closing Date.  For Third Party Claims
relating to Taxes, the foregoing limitation shall not apply and an Indemnified
Party may seek indemnification from an Indemnifying Party through and until the
expiration of the statutory limitations period.

    

    6.5          Other Rights and Remedies
Not Affected.  The indemnification rights of the parties hereto
under this Agreement are independent of and in addition to such rights and
remedies as the parties may have at law or in equity for any fraud,
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation, the right to seek specific performance, rescission or restitution,
none of which rights or remedies shall be affected or diminished hereby;
provided, however, that in the absence of fraud, the Sellers liability under any
recovery obtained by the Purchaser shall be limited by the provisions of Section
6.4 of this Agreement.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    ARTICLE
VII

    RESTRICTIVE
COVENANTS; COVENANTS

    

    The
Parties hereto do hereby covenant and agree, as follows:

     

    7.1          The Purchaser’s Access to
Information and Properties.  The Company shall permit the
Purchaser and its authorized employees, agents, accountants, legal counsel, and
other representatives to have access to the books, records, employees,
independent registered representatives, counsel, accountants, engineers, and
other representatives of the Company during normal working hours and without
unreasonable interruption to the Company’s operations for the purpose of
conducting an investigation of the Company’s financial condition, corporate
status, operations, prospects, business, and Properties.  The Company
shall make available to the Purhcaser for examination and reproduction all
documents and data of every kind and character relating to the Company in
possession or control of, or subject to reasonable access by, the Company and/or
the Sellers, including, without limitation, all files, records, data, and
information relating to the Properties (whether stored in paper, magnetic or
other storage media) and all agreements, instruments, contracts, assignments,
certificates, orders, and amendments thereto.  Also, the Company shall
allow the Purchaser access to, and the right to inspect, the Properties, except
to the extent that such Properties are operated by a third-party operator, in
which case the Company shall use its best efforts to cause the operator of such
Properties to allow the Purchaser access to, and the right to inspect, such
Properties.

     

    7.2          Company’s Conduct of
Business and Operations.  The Company shall keep the Purchaser
advised as to all material operations and proposed material operations relating
to the Company.  The Company shall (a) conduct its business in the
ordinary course, (b) endeavor  to keep available the services of
present employees and independent registered representatives, (c) maintain and
operate its Properties in a good and workmanlike manner, (d) pay or cause to be
paid all costs and expenses (including but not limited to insurance premiums)
incurred in connection therewith in a timely manner, (e) use reasonable efforts
to keep all Contracts listed or required to be listed on Schedule 4.17 in full
force and effect, (f) comply with all of the covenants contained in all such
material Contracts, (g) maintain in force until the Closing Date insurance
policies (subject to the provisions of Section 4.25)
equivalent to those in effect on the date hereof, and (h) comply in all material
respects with all applicable Legal Requirements.  Except as otherwise
contemplated in this Agreement, the Company will use commercially reasonable
efforts to preserve the present relationships of the Company with persons having
significant business relations therewith.

     

    7.3          General
Restrictions.  Except as otherwise expressly permitted in this
Agreement, between the date of this Agreement and the Closing Date, without the
prior written consent of Purchaser, which consent shall not be unreasonably
withheld, the Company shall not:

     

    (a)           declare,
set aside, or make any distributions or other payments in respect of its equity
securities, or repurchase, redeem, or otherwise acquire any such
securities;

    
      
         

      

      
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    (b)           merge
into or with or consolidate with, any other corporation or acquire the business
or assets of any Person;

     

    (c)           purchase
any securities of any Person, not in the ordinary course of
business;

     

    (d)           amend
its Certificate of Organization or Limited Liability Company
Agreement;

     

    (e)           issue
any Membership Interests or other securities, or grant, or enter into any
agreement to grant, any options, convertibility rights, other rights, warrants,
calls, or agreements relating to its securities;

     

    (f)           create,
incur, assume, guarantee, or otherwise become liable or obligated with respect
to any indebtedness, or make any loan or advance to, or any investment in, any
Person, except in each case in the ordinary course of business;

     

    (g)           make
any change in any existing election, or make any new election, with respect to
any tax law in any jurisdiction which election could have an effect on the tax
treatment of the Company or the Company’s business operations;

     

    (h)           enter
into, amend, or terminate any material Contract;

     

    (i)           
sell, transfer, lease, mortgage, encumber, or otherwise dispose of, or agree to
sell, transfer, lease, mortgage, encumber, or otherwise dispose of, any
Properties except (1) in the ordinary course of business, or (2) pursuant to any
Contract specified in Schedule
4.17;

     

    (j)           settle
any material claim or litigation, or file any material motions, orders, briefs,
or settlement agreements in any proceeding before any Governmental Authority or
any arbitrator;

     

    (k)           other
than in the ordinary course of business consistent with past practices, incur or
approve, or enter into any agreement or commitment to make, any expenditures in
excess of $25,000 (other than those required pursuant to any Contract specified
in Schedule
4.17);

     

    (l)         
  maintain its books of account other than in the usual, regular, and
ordinary manner in accordance with GAAP and on a basis consistent with prior
periods or make any change in any of its accounting methods or
practices;

     

    (m)           make
any material change, whether written or oral, to any Contract with any of the
suppliers or customers listed or required to be listed on Schedule
4.24;

     

    (n)           accelerate
or delay collection of any notes or accounts receivable in advance of or beyond
their regular due dates or the dates when they would have been collected in the
ordinary course of business consistent with past practices;

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    (o)           delay
or accelerate payment of any accrued expense, trade payable, or other liability
beyond or in advance of its due date or the date when such liability would have
been paid in the ordinary course of business consistent with past
practices;

     

    (p)          
adopt any Plan, Benefit Program, or Agreement or increase the compensation
payable to any employee or independent registered representative (including,
without limitation, any increase pursuant to any bonus, profit-sharing, or other
incentive plan or commitment);

     

    (q)           become
a party to or bound by any of the Contracts described in Section 4.17(a),
whether written or oral;

     

    (r)     
      engage in any one or more activities or
transactions outside the ordinary course of business;

     

    (s)           enter
into any transaction or make any commitment which could result in any of the
representations, warranties, or covenants of the Company and/or the Sellers
contained in this Agreement not being true and correct after the occurrence of
such transaction or event;

     

    (t)        
   terminate any employee at a supervisory level or
above;

     

    (u)           engage
in any transactions with any of the Sellers or any Affiliate of the Company or
the Sellers other than on an arm's-length basis;

     

    (v)           commit
to do any of the foregoing.

     

    7.4          Notice Regarding
Changes.  The Company and the Sellers shall promptly inform the
Purchaser in writing of any change in facts and circumstances that could render
any of the representations and warranties made herein by the Company and/or the
Sellers inaccurate or misleading if such representations and warranties had been
made upon the occurrence of the fact or circumstance in question.  The
Purchaser shall promptly inform the Sellers in writing of any change in facts
and circumstances that could render any of the representations and warranties
made herein by it inaccurate or misleading if such representations and
warranties had been made upon the occurrence of the fact or circumstance in
question.

     

    7.5          Ensure Conditions
Met.  Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use all reasonable commercial efforts to take
or cause to be taken all actions and do or cause to be done all things required
under applicable Legal Requirements in order to consummate the transactions
contemplated hereby, including, without limitation, (i) obtaining all Permits,
authorizations, consents and approvals of any Governmental Authority or other
person which are required for or in connection with the consummation of the
transactions contemplated hereby and by the Exhibits, (ii) taking any and all
reasonable actions necessary to satisfy all of the conditions to each party’s
obligations hereunder, and (iii) executing and delivering all agreements and
documents required by the terms hereof to be executed and delivered by such
party on or prior to the Closing.

    
      
         

      

      
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    7.6          Maintenance of Insurance
Policies.  The Company shall take all actions necessary or
appropriate to cause any and all insurance coverage currently carried by or for
the benefit of the Company as set forth on Schedule 4.18 to
remain in full force and effect.

     

    7.7          Casualty
Loss.  If, between the date of this Agreement and the Closing,
any material portion of the Properties of the Company shall be destroyed or
damaged in whole or in part by fire, earthquake, flood, other casualty, or any
other cause, then the Company shall, at the Purchaser’s election, (i) cause such
Properties to be repaired or replaced prior to the Closing with Properties of
substantially the same condition and function, (ii) deposit in a separate
account an amount sufficient to cause such Properties to be so repaired or
replaced, or (iii) enter into contractual arrangements satisfactory to the
Purchaser so that the Company will have at the Closing the same economic value
as if such casualty had not occurred.

     

    7.8         
Covenant Not to
Compete.

    

    (a)           During
the period commencing on the Closing Date and ending five (5) years after the
date thereof (the “Restricted Period”),
each of Ginsberg, Williams, Geronemus and Scheib will not directly or indirectly
own, manage, operate, control, invest in, lend to or acquire an interest in, or
otherwise engage or participate in (whether as a proprietor, general or limited
partner, member, shareholder, joint venturer, investor, employee, consultant or
other participant), or use or permit their names to be used in, any Prohibited
Activities or any business, entity or venture which engages in Prohibited
Activities in the United States of America.  For purposes of this
Agreement, “Prohibited Activities” shall mean entering into any agreements,
whether direct or indirect, written, oral or otherwise, with any Person to
develop, manufacture, distribute or sell products which are competitive with the
Business as conducted on the Closing Date.

    

    (b)           Celia
shall not be subject to this Section 7.8, but instead shall be governed by the
covenant not to compete contained in the Celia Employment
Agreement.

    

    7.9          Covenant Not to Interfere
With Company's Business.

    

    (a)           During
the Restricted Period, the Sellers will not, directly or indirectly, solicit,
induce or influence any customer, supplier, lender, lessor or any other person
which has, after giving effect to the transactions contemplated hereby, a
business relationship with the Company to discontinue or reduce the extent of
such relationship with the Company.

    

    (b)           During
the Restricted Period, the Sellers will not, directly or indirectly (i) recruit,
solicit or otherwise induce or influence any person employed by the Company or
any future Affiliate thereof in any management, executive, supervisory,
marketing or sales capacity (a “Key Employee”) to
discontinue or terminate his or her employment relationship with the Company or
(ii) employ or seek to employ, or cause any other entity whose business would be
competitive with any aspect of the Company's business to employ or seek to
employ, any Key Employee.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

    7.10        Covenant Not to Disclose
Confidential Information.  From and after the Closing Date, the
Sellers hereby agree that they will not at any time, directly or indirectly,
disclose to anyone, use or otherwise exploit any Confidential Information (as
hereinafter defined) for their own benefit or for the benefit of any party other
than the Company.  For purposes of this Agreement, “Confidential
Information” shall mean, after giving effect to the transactions contemplated
hereby, any of the Company's or any of its future Affiliates' customer lists,
prospect lists, supplier lists, pricing information, product information,
information regarding the Company's or such Affiliates' manufacturing or other
processes, business plans, marketing plans, financial information or other
information which is material to the Company or any of its future Affiliates and
is not generally known by or disclosed to the public.

    

    7.11        Remedies.

    

    (a)           The
Sellers expressly agree that any breach by the Sellers of any provision of
Sections 7.8 through 7.10 hereof will result in irreparable injury to the
Purchaser and the Company, that the remedy at law for any breach will be
inadequate and that, in the event of any such breach or if any such breach is
threatened or anticipated, the Purchaser and/or the Company, in addition to any
other relief available to them, shall be entitled to temporary and permanent
injunctive relief without the necessity of posting a bond or proving actual
damages.  The Sellers further acknowledge and agree that the Purchaser
and the Company shall be entitled to an equitable accounting of all earnings,
profits and other benefits realized directly or indirectly by the Sellers as the
result of any such breach, and further agree to pay the reasonable legal fees
and expenses incurred by the Purchaser and the Company in enforcing the
provisions contained herein.

    

    (b)           The
Sellers acknowledge and agree that the provisions contained herein are
reasonable limitations as to time and scope of activity, and such restrictions
do not impose a greater restraint than is necessary to protect the goodwill or
other business interests of the Purchaser and the Company.  In the
event, however, that the provisions contained herein are determined to exceed
the restrictions permitted by law, then the provisions contained herein shall be
deemed to be reformed so as to contain the maximum restrictions permitted by
law.

     

    7.12        Bank
Accounts.          As
soon as practicable following the Closing, the Company shall (i) authorize
Steven Moskowitz as a person authorized to draw from each of the Company’s
accounts listed on Schedule 4.26 or to
have access thereto, and (iii) instruct each bank or financial institution
listed on Schedule
4.26 hereto that Steven Moskowitz shall be a required co-signatory for
any draw, check or wire transfer from any such accounts in amounts of fifty
thousand dollars ($50,000) or more.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    ARTICLE
VIII

    MISCELLANEOUS

    

    8.1          Survival of Representations,
Warranties and Other Provisions.

    

    (a)      All
representations, warranties and agreements made by the parties in this Agreement
or in any agreement, document, statement, list, certificate or instrument
furnished hereunder or in connection with the negotiation, execution, and
performance of this Agreement shall survive the Closing for a period of two (2)
years following the Closing Date.  Notwithstanding any investigation
or audit conducted before or after the date hereof or the decision of any party
to complete the transactions contemplated herein, each party shall be entitled
to rely upon the representations, warranties and agreements set forth herein and
therein.

    

    (b)           All
other rights and obligations of the parties under this Agreement, including,
without limitation, the rights and obligations contained in Article VI hereof,
which by their nature or the express terms hereof are intended to survive, shall
survive the Closing, but shall be subject to the limitations provided for in
Article VI hereof.

    

    8.2           Fees and
Expenses.  Except as otherwise provided in Section 6.4 hereof,
all legal, accounting and other costs and expenses incurred in connection with
this Agreement and the transactions contemplated herein shall be paid by the
party incurring such expenses.

    

    8.3           Brokers.  Each
party hereto represents and warrants to the other that Cresta Capital
Strategies, LLC (“Cresta”) was the sole
broker or finder that consulted with the parties with regard to the transactions
contemplated by this Agreement. Any fees required to be paid to Cresta in
connection therewith shall be paid by the Purchasers.

    

    8.4           Taxes.  The
Sellers shall be liable for all federal, state and local taxes on capital gains,
transfer, intangible, documentary, stamp and other similar taxes which may be
due or payable in connection with the sale and transfer of the Membership
Interests to the Purchaser.

    

    8.5           Publicity.  The
Parties hereto agree that prior to the Closing Date, none of them will make or
engage in any press release, publicity or other public disclosure of the matters
which are the subject of this Agreement without the prior written consent of
Purchaser and the Company, unless such party believes in good faith upon
consultation with counsel that such press release, publicity or other public
disclosure is required by law or legal process, in which event such party will
give Purchaser and the Company as much advance notice thereof as is practicable
under the circumstances and will give good faith consideration to any comments
made with respect thereto by the other Parties hereto prior to the time when
such press release, publicity or other public disclosure is made

    

    8.6           No
Waiver.  No failure on the part of any party hereto at any time
to require the performance by any other party of any term of this Agreement
shall be taken or held to be a waiver of such term or in any way affect such
party's right to enforce such term, and no waiver on the part of any party
hereto of any term of this Agreement shall be taken or held to be a waiver of
any other term hereof or the breach thereof.  Any waiver hereunder
shall only be effective if in writing and signed by the party sought to be
charged therewith, and such waiver shall only be effective for the instance and
express purpose for which it was given.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    

    8.7           Entire Agreement; Written
Modifications.  This Agreement, together with the other
documents and instruments to be executed and delivered pursuant hereto, contains
the entire agreement between the parties hereto with respect to the subject
matter hereof; all representations, promises and prior or contemporaneous
understandings among the parties with respect to the subject matter hereof are
merged into and expressed herein; and any and all prior agreements among the
parties with respect to the subject matter hereof are hereby
canceled.  This Agreement shall not be amended, modified or
supplemented without the written agreement of the parties hereto at the time of
such amendment, modification or supplement.

    

    8.8           Binding
Effect.  All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and assigns or the estate, heirs and legal representatives of each of
the parties hereto.  This Agreement may not be assigned by either of
the parties hereto, except that the Purchaser may assign its rights hereunder to
any of its Affiliates, provided that the Purchaser shall remain liable in all
respects for the performance of this Agreement.

    

    8.9           No Third Party
Beneficiaries.  This Agreement is solely for the benefit of the
parties hereto and their respective successors and permitted assigns, and no
other person or entity shall have any right, benefit, priority or interest in,
under or because of the existence of, this Agreement.

    

    8.10         Notices.  Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be sent by hand
delivery, by reputable overnight courier providing a receipt against delivery,
by registered or certified mail, by electronic mail or facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party) and shall be deemed given when received at the addresses
set forth below:

    

    
      
        	
                If
      to the Purchaser:

              	
                Spongetech
      Delivery Systems, Inc.

              
	 
      	
                43
      West 33rd
      Street, Suite 500

              
	 
      	
                New
      York, NY  10022

              
	 
      	
                Attn:
      Steven Y. Moskowitz

              
	 
      	
                Fax
      No: (212) 594-4172

              
	 
      	
                Email:
      steven@spongetech.com

              
	 
      	 
      
	
                With
      a copy to:

              	
                Gersten
      Savage LLP

              
	 
      	
                600
      Lexington Avenue, 9th
      Floor

              
	 
      	
                New
      York, NY  10022

              
	 
      	
                Attn:  Arthur
      S. Marcus, Esq.

              
	 
      	
                Fax
      No.:  (212) 752-9700

              
	 
      	
                Email:
      amarcus@gerstensavage.com

              

      

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    

    
      
        	
                If
      to the Company:

              	
                Dicon
      Technologies, LLC

              
	 
      	
                100
      Dicon Drive

              
	 
      	
                Black
      Creek, Georgia

              
	 
      	
                Fax
      No.:  (912) 851-1505

              
	 
      	
                Email:
      Wayne@Dicontech.com

              
	 
      	 
      
	
                If
      to the Sellers:

              	
                Wayne
      Celia

              
	 
      	
                242
      Purdue Court

              
	 
      	
                Paramus,
      NY 07652

              
	 
      	
                Fax
      No.:  (912) 851-1505

              
	 
      	
                Email:
      Wayne@Dicontech.com

              
	 
      	 
      
	
                With
      a copy to:

              	
                Ellis,
      Painter, Ratterree & Adams, LLP

              
	 
      	
                2
      East Bryan Street

              
	 
      	
                Savannah,
      Georgia 31401

              
	 
      	
                Attn:  J.
      Wiley Ellis, Esq.

              
	 
      	
                Fax
      No. (912) 233-8608

              
	 
      	
                Email:
      www.wellis@epra-law.com

              

      

    

    

    or such
other party or address as may be expressly designated by either party by notice
given in accordance with the foregoing provisions.

    

    8.11         Cooperation.  Subject
to the terms and conditions herein provided, the parties hereto shall use
commercially reasonable efforts both prior to and subsequent to the Closing Date
to take, or cause to be taken, such actions and to execute and deliver, or cause
to be executed and delivered, such additional documents and instruments and to
do, or cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and make
effective the transactions contemplated by this Agreement.

    

    8.12         Headings, Gender and
"Person”.  All section headings contained in this Agreement are
for convenience of reference only, do not form a part of this Agreement and
shall not affect in any way the meaning or interpretation of this
Agreement.  Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as the
context requires.  Any reference to a "person" herein shall include an
individual, firm, partnership, trust, governmental authority or body,
association, unincorporated organization or any other entity.

    

    8.13         Schedules and
Exhibits.  All Schedules and Exhibits referred to herein are
intended to be and hereby are specifically made a part of this
Agreement.

    

    8.14         Joint and Several
Liability.  All agreements, promises, undertakings,
representations and warranties of the Sellers set forth in this Agreement and in
any document, instrument, agreement or certification executed and delivered by
the Sellers in connection with this Agreement shall be deemed to have been made
and given jointly and severally by each Seller, and each reference herein to the
Sellers shall be deemed to be a reference to each Seller individually and/or
collectively, as the context shall require, for the Purchaser to realize the
full benefit from this Agreement.

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    

    8.15         Severability.  If
any provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party.  Upon such determination
that any provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled.

    

    8.16         Counterparts.  This
Agreement may be executed in any number of counterparts and any party hereto may
execute any such counterpart, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument.  This Agreement shall
become binding when one or more counterparts taken together shall have been
executed and delivered by the parties.  It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.

    

    8.17         Governing
Law.  This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, without
regard to the conflicts of laws principles thereof.

    

    8.18         Consent to
Jurisdiction.  In connection with any litigation arising out of
or relating to the subject matter of this Agreement, each of the parties hereby
irrevocably (a) consents and submits to the exclusive jurisdiction of the state
and federal courts of the State of New York, (b) agrees that service of process
may be effected by sending the same by overnight courier to the addresses
designated in Section 8.10 hereof and (c) waives all defenses based upon any
alleged inconvenience of defending an action instituted in either of the
aforesaid courts.

    

    8.19         Construction.  Each
party hereby acknowledges and agrees that it and its independent counsel have
had an opportunity to review and make changes to this Agreement and that the
normal rule of construction, whereby ambiguities are resolved against the
drafting party, shall be inapplicable to this Agreement and the construction
hereof.

    

    ARTICLE
IX. DEFINITIONS

     

    Capitalized
terms used in this Agreement are used as defined in this Article IX or elsewhere
in this Agreement.

     

    9.1           Affiliate.  The
term “Affiliate” shall mean, with respect to any person, any other person
controlling, controlled by or under common control with such
person.  The term “Control” as used in the preceding sentence means,
with respect to a corporation, the right to exercise, directly or indirectly,
more than 50% of the voting rights attributable to the Membership Interests of
the controlled corporation and, with respect to any person other than a
corporation, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such
person.

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    9.2           Code.  The
term “Code” shall mean the Internal Revenue Code of 1986, as
amended.

     

    9.3           Contracts.  The
term “Contracts,” when described as being those of or applicable to any person,
shall mean any and all contracts, agreements, franchises, understandings,
arrangements, leases, licenses, registrations, authorizations, easements,
servitudes, rights of way, mortgages, bonds, notes, guaranties, liens,
indebtedness, approvals, or other instruments or undertakings to which such
person is a party or to which or by which such person or the property of such
person is subject or bound, excluding any Permits.

     

    9.4           Exhibits.  The
term “Exhibits” shall mean any or all of the exhibits to this Agreement and any
and all other agreements, instruments, or documents required or expressly
provided under this Agreement to be executed and delivered in connection with
the transactions contemplated by this Agreement.

     

    9.5           GAAP.  “GAAP”
means U.S. generally accepted accounting principles.

     

    9.6           Governmental
Authorities.  The term “Governmental Authorities” shall mean
any nation or country (including but not limited to, the United States) and any
commonwealth, territory, or possession thereof and any federal, state or local
government or political subdivision of any of the foregoing, including but not
limited to any judicial, legislative, executive, administrative or regulatory
authority, agency, commission, tribunal or body, or non-governmental regulating
body or other instrumentalities.

     

    9.7           Inventory.  The
term “Inventory” shall mean all goods, merchandise, and other personal property
owned and held for sale, and all raw materials, works-in-process, materials, and
supplies of every nature which contribute to the finished products of the
Company in the ordinary course of its business, specifically excluding, however,
damaged, defective, or otherwise unsaleable items.

     

    9.8           Knowledge of the
Company.  The term “Knowledge of the Company” shall mean the
actual knowledge of the Sellers, or key employees of the Company listed on Schedule 9.8 hereof,
with respect to the matter in question, and such knowledge as the other
managers, officers, managerial personnel, or key employees of the Company
reasonably should have obtained upon diligent investigation and inquiry into the
matter in question.

     

    9.9           Legal
Requirements.  The term “Legal Requirements,” when described as
being applicable to any Person, shall mean any and all laws (statutory,
judicial, or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees, or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person’s business, operations, or properties

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    9.10         Lien.  The
term “Lien” shall mean any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances, other restrictions or limitations, or rights
of any third persons whatsoever other than liens arising from acts of the
Purchaser (collectively, “Liens”)

     

    9.11         Permitted
Encumbrances.  “Permitted Encumbrances” means such of the
following as to which no enforcement, collection, execution, levy, or
foreclosure proceeding shall have been commenced and as to which the Company is
not otherwise subject to civil or criminal liability due to its
existence:  (a) liens for Taxes not yet due and payable (or being
contested in good faith), for which adequate reserves have been maintained and
are reflected in the most recent audited financial statements in accordance with
GAAP; (b) liens imposed by law, such as materialmen’s, mechanics’, carriers,
workmen’s and repairmen’s liens and other similar liens arising in the ordinary
course of business securing obligations that (i) are not in excess of $25,000 in
the case of a single property or $100,000 in the aggregate at any time or (ii)
are being contested in good faith; (c) pledges or deposits to secure obligations
under workers’ compensation laws or similar legislation or to secure public or
statutory obligations; (d) minor survey exceptions, reciprocal easement
agreements, and other customary encumbrances on title to real property that do
not individually or in the aggregate materially adversely affect the value of or
the use of such property for its current and anticipated purposes; (e) liens
evidencing a purchase money security interest or liens on property subject to a
capital lease obligation, provide such liens attach solely to the property being
acquired to leased; and (f) those security interests summarized in Schedule 9.11
attached hereto.

     

    9.12         Person.  The
term “Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust, or other enterprise
or any governmental or political subdivision or any agency, department, or
instrumentality thereof.

     

    9.13         Properties.  The
term “Properties” shall mean any and all properties and assets (real, personal
or mixed, tangible or intangible) owned or Used by the Company.

     

    9.14         Used.  The
term “Used” shall mean, with respect to the Properties, Contracts, or Permits of
the Company, those owned, leased, licensed, or otherwise held by the Company
which were acquired for use or held for use by the Company in connection with
the Company’s business and operations, whether or not reflected on the Company’s
books of account.

     

    [The
balance of this page intentionally left blank.]

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the undersigned
have caused this Membership Interest Purchase Agreement to be executed and
delivered as of the day and year first above written.

    
 

    
      
        
          	 
      	
                  SPONGETECH
      DELIVERY SYSTEMS, INC.

                
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Steven Y. Moskowitz

                	 
      
	 
      	 
      	
                  Name:  
      Steven Y. Moskowitz

                	 
      
	 
      	 
      	
                  Title:    
      Chief Operating Officer

                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  DICON
      TECHNOLOGIES, LLC

                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Wayne Celia

                	 
      
	 
      	 
      	
                  Name:  
      Wayne Celia

                	 
      
	 
      	 
      	
                  Title:    
      President & CEO

                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  /s/ Wayne M. Celia

                	 
      
	 
      	
                  WAYNE
      M. CELIA

                	 
      
	 
      	 
      	 
      
	 
      	
                  /s/ Sam Ginsberg

                	 
      
	 
      	
                  SAM
      GINSBERG

                	 
      
	 
      	 
      	 
      
	 
      	
                  /s/ Clyde Williams

                	 
      
	 
      	
                  CLYDE
      WILLIAMS

                	 
      
	 
      	 
      	 
      
	 
      	
                  /s/ Roy Geronemus

                	 
      
	 
      	
                  ROY
      GERONEMUS

                	 
      
	 
      	 
      	 
      
	 
      	
                  /s/ John Scheib

                	 
      
	 
      	
                  JOHN
      SCHEIB

                	 
      

        

      

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    Exhibit
A

    
      

      SpongeTech
Delivery Systems, Inc.

      43 W33rd
Street, Suite 600

      New York,
NY 10001

      

      July
9, 2009

      

      PERSONAL
& CONFIDENTIAL

      Wayne M.
Celia

      242
Purdue Ct.

      Paramus,
NJ 07652

      

      Dear
Wayne:

      

      This is a
compensation arrangement between Wayne M. Celia,
Dicon Technologies LLC (the “Company”), and SpongeTech Delivery Systems, Inc.,
the Company’s parent company (“SpongeTech”) effective July 1, 2009 and ending
December 31, 2011 (the “Term”).

      

      1.           During the Term, you will be employed as President and CEO for the
Company.   You shall have powers and authority superior to any
other officer or employee of the Company or of any subsidiary of the Company,
including, without limitation, the duties and responsibilities customarily
associated with a chief executive (e.g., control of day-to-day operations,
signing checks, hiring and firing, etc.).  You shall be required to
report solely to, and shall be subject solely to the supervision and direction
of, the Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer of SpongeTech and the Board of Directors of SpongeTech, and no other
person or group shall be given authority to supervise or direct you in the
performance of your duties.  In addition, you shall regularly consult
with the Chief Executive Officer, Chief Financial Officer and the Chief
Operating Officer of SpongeTech with respect to the Company's business and
affairs.  You shall devote substantially all your working time, attention and energies exclusively to
the business and affairs of the Company
(excluding any vacation and sick leave to which you are entitled), render such
services to the best of your ability, and use your reasonable best efforts to
promote the interests of the Company. You
agree to faithfully perform such duties.
You further agree to comply with the
instructions and personnel practices and policies of the Company and SpongeTech, as may be amended from time to
time, all of which you acknowledge have
been received by you and/ or have been made available to you for review in the
Human Resources Department. Your
obligations hereunder shall run only to the Company and SpongeTech, and not to
its affiliates, if any.

      

      2.           Your compensation arrangement during the year
2009-2011 will follow Schedule A of this Agreement and follow Schedule B for incentive compensation. As an employee, you will
be eligible for the various fringe benefits program pursuant to the terms of
such programs available for employees occupying positions of similar status with
the Company.

      

      3.  You agree that unless required by
court order or other legal compulsory process that you will not disclose the
terms of this compensation agreement with anyone except your immediate family,
tax advisor or legal counsel and provided that he/she/they agree not to further
disclose same.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      4.           Termination.

      

      4.1           Termination for Cause.  Notwithstanding
anything contained to the contrary in this Agreement, this Agreement may be
terminated by the Company or SpongeTech for Cause.  As used in this
Agreement, “Cause” shall only mean (i) an act or acts
of personal dishonesty taken by you and intended to result in your substantial
personal enrichment at the expense of the Company or SpongeTech, (ii) subject to the
following sentences, repeated violation by you of your material obligations
under this Agreement which are demonstrably willful and deliberate on your
part  (including, but not limited to, your failure to
follow the instructions of SpongeTech’s Chief
Executive Officer, Chief Financial Officer or Chief Operating Officer) and which
are not remedied in a reasonable period of time after receipt of written notice
from SpongeTech’s or the Company’s Board of Directors, (iii) the willful
engaging by you in illegal conduct, or gross misconduct, that is materially and
demonstrably detrimental to the Company or SpongeTech or the brand or reputation
of the Company or SpongeTech, respectively, monetarily or otherwise; or (iv)
your conviction of, or plea of nolo contendere to, any criminal act which is a
felony.

      

      Upon any reasonable and good faith determination by
SpongeTech’s Board of Directors that Cause exists under clauses (i), (ii) or
(iii) of the preceding sentence (to the extent the violation under said clause
(ii) has not been cured by you), SpongeTech shall cause a special meeting of the
Board to be called and held at a time mutually convenient to the Board and you,
but in no event later than ten (10) business days after Executive's receipt of
the notice contemplated by clauses (i), (ii) or (iii).  You shall have
the right to appear before such special meeting of the Board with legal counsel
of your choosing to refute any determination of Cause specified in such notice,
and any termination of your employment by reason of such Cause determination
shall not be effective until you are afforded such opportunity to
appear.  Any termination for Cause pursuant to clause (i) or (iv) of
the first sentence of this Paragraph 4.1 shall be made in writing to you, which
notice shall set forth in detail all acts or omissions upon which the Company or
SpongeTech is relying for such termination.  Upon any termination
pursuant to this Paragraph 4.1, your shall be entitled to be paid your salary to
the date of termination and the Company and SpongeTech shall have no further
liability hereunder.

      

      4.2           Disability.  Notwithstanding anything
contained in this Agreement to the contrary, the Company or SpongeTech, by
written notice to you, shall at all times have the right to terminate this
Agreement, and your employment hereunder, if you shall, as the result of mental
or physical incapacity, illness or disability, fail to perform his duties and
responsibilities provided for herein for a period of more than one hundred
twenty (120) consecutive days in any 12-month period.  Upon any
termination pursuant to this Paragraph 4.2, you shall be entitled to be paid
any unpaid salary accrued through the
effective date of termination.

      

      4.3           Death.  In the event of your death during the
Term of your employment hereunder, the Company shall pay to your estate an
amount equal to salary for the remaining Term of this
Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      4.4           Termination Without Cause.  At any time, the
Company or SpongeTech shall have the right to terminate your employment
hereunder by written notice to you; provided, however, that the Company shall
(i) pay to you any unpaid salary accrued through the effective date of
termination specified in such notice, and any pro-rata bonus that would be
payable had you completed a full year of employment, and (ii) pay to you in a
lump sum, in cash within 30 days after the
date of employment termination, an amount equal to 100% of your annual salary
then in effect. In addition, the Company
shall continue to pay your health and disability insurance for the longer of a
period of twelve months or the remaining Term of this Agreement. The Company or SpongeTech shall be deemed to have
terminated your employment pursuant to this Paragraph 4.4 if such employment is
terminated (i) by the Company or SpongeTech without Cause, (ii) by you
voluntarily for "Good Reason”, or (iii) as
a result of a Charge in Control.

      

      For purposes of this Agreement, "Good Reason"
means:

      

      (a)           the assignment to you of any duties inconsistent in any
respect with your position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company or SpongeTech which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated,  insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company or SPongeTech
promptly after receipt of notice thereof given by your;

      

      (b)           any failure by the Company to comply with any of the
compensation or benefit provisions of this Agreement,  other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by your;

      

      (c)           any change in the designation of the particular
executive that the you are obligated to report to under Paragraph 1
hereof;

      

      (d)           any purported termination by the Company or SpongeTech
of your employment otherwise than as expressly permitted by this
Agreement;

      

      (f)           any termination by your for any reason during the
three-month period following the effective date of any “Change in Control” of
SpongeTech.

      

      For purposes of this Agreement, a “Change in Control”
shall mean:

      

      (a)           The acquisition (other than by or from SpongeTech), at
any time after the date hereof, by any person, entity or “group”, within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then
outstanding shares of SpongeTech’s common stock or the combined voting power
of SpongeTech’s then outstanding voting securities entitled to vote generally in
the election of directors; or

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      (b)           Steven Moskowitz ceases for any reason to be the
Company’s Chief Operating Officer or comparable
position.

      

      (c)           Approval by the shareholders of SpongeTech of (A) a
reorganization, merger or consolidation with respect to which persons who were
the shareholders of SpongeTech immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 51% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, (B) a liquidation or dissolution of SpongeTech, or (C) the sale of
all or substantially all of the assets of SpongeTech, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned; or

      

       (d)           The approval by the Board of the sale, distribution
and/or other transfer or action (and/or series of sales, distributions and/or
other transfers or actions from time to time or over a period of time), that
results in SpongeTech’s ownership of less than 50% of SpongeTech’s current
assets.

      

      5.           It
is also understood that during your employment with the Company and thereafter,
you will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or SpongeTech to which you have acquired
information during your employment with us. Proprietary; or confidential
information includes but is not limited to, financial and operating data,
customer lists and information relating to our customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company and SpongeTech
shall, in addition to all other remedies available to it, have the right
to injunctive relief, termination of your employment without notice, and any
attorneys’ fees and costs incurred to enforce this provision.

      

      6.           You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and with the Company will
be deemed “work made for hire" such that the Company and SpongeTech will be the joint owners of all rights to and interest in
such Work Product including without limitation all copyrights, patents and trademarks therein. In the event
that the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign
all documents necessary to reflect such assignment.

      

      7.           You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will
not, directly or indirectly, solicit or attempt to solicit any employee of the
Company or SpongeTech to terminate his or
her employment with the Company or Spongetech,
respectively, or otherwise employ or attempt to employ or assist anyone
else to employ any person who is then in the employ of the Company or Spongetech, or who was in the employ of the
Company or Spongetech at any time during
the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, Spongetech or its affiliates, divisions and
related companies or any person or business that was a customer, supplier,
licensor, contractor or employee of these entities on the date your employment
and compensation from the Company ended to the extent permitted by applicable
law.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      8.              You agree that you will not, at any time, during the
Term of this Agreement, and for one (1) year following (a) the termination of
this Agreement or your employment hereunder by the Company or SpongeTech for
Cause, or (b) your termination of this Agreement for Good Reason, either
directly or indirectly, engage in, with or for any enterprise, institution,
whether or not for profit, business, or company, competitive with the “Business”
of the Company or Spongetech as such Business may be conducted on the date
thereof, as a creditor, guarantor, or financial backer, stockholder, director,
officer, consultant, advisor, employee, member, or otherwise of or through any
corporation, partnership, association, sole proprietorship or other entity;
provided, that an investment by you, your spouse or your children is permitted
if such investment is not more than four percent (4%) of the total debt or
equity capital of any such competitive enterprise or business. Spongetech shall
have the right in its sole discretion to waive this covenant not to
non-compete.  As used herein, the Term “Business” shall mean, with
respect to the Company, the development,
manufacture and distribution of products derived from “Hydrophilic Urethane
Chemistry,” and with respect to Spongetech, the development, manufacture, sale
and distribution of hydrophilic
polyurethane and polyurethane sponge cleaning and waxing
products.

      

      9.           This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and, subject to Paragraph 4
herein, will continue until either party gives to the other thirty (30)
days notice in writing of its desire to terminate it. At the end of the thirty
(30) day period this arrangement and your employment will come to an end, except
as to those provisions which specifically survive termination.

      

      10.           You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the Company all books, records or other
written papers or documents entrusted to you or which you have otherwise
acquired pertaining to the company or any of its subsidiaries, affiliates,
divisions or related companies and all other property, including computer data
files, of the Company or SpongeTech that
may be in your possession, custody or control.

      

      11.           You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      12.           Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      13.           This
compensation arrangement, except for the provisions of any 2009-2011 incentive
Bonus plans, shall continue subsequent to the year 2011 until a new compensation
arrangement is entered into or until terminated as provided in paragraphs 4 or 9.

      

      14.           If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      15.           The
provisions of paragraphs 3, 5, 6, 7, 8, 12
and 13 survive termination of this
agreement.

      

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

      

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            Dicon
      Technologies, LLC

                                          	 
      	 
      
	 
      	 
      	 
      	 
      
	
                                            By:

                                          	 
      	 
      	 
      
	
                                            Name:

                                          	 
      	 
      
	
                                            Title:

                                          	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                            ACCEPTED:

                                          
	
                                            Spongetech
      Delivery Systems, Inc.

                                          	 
      	
                                            Wayne
      M. Celia

                                          
	 
      	 
      	 
      	 
      
	
                                            By:

                                          	 
      	 
      	 
      
	
                                            Name: Steven Moskowitz

                                          	 
      	
                                            (Signature)

                                          
	
                                            Title: COO

                                          	 
      	 
      
	 
      	 
      	
                                            (Date)

                                          
	 
      	 
      	
                                             

                                          
	
                                            (Date)

                                          	 
      	 
      

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Schedule
A

      

      Annualized
Salary Schedule

      

      
        
          
            
              	
                      Year

                    	 	
                      Annualized Salary

                    	 	 	
                      Semi-monthly

                    	 
	
                      2009

                    	 	$	265,000	 	 	$	11,042	 
	
                      2010

                    	 	$	274,275	 	 	$	11,428	 
	
                      2011

                    	 	$	283,875	 	 	$	11,828	 

            

          

        

      

      

      Includes
an annual 3.5% COL raise

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    Exhibit
B

    
      

      Dicon
Technologies LLC

      100 Dicon
Drive

      Black
Creek, GA 31308

      

      July 9,
2009

      

      PERSONAL
& CONFIDENTIAL

      Wayne M.
Celia Jr.

      242
Purdue Court

      Paramus,
NJ 07652

      

      Dear
Wayne:

      

      This is a
compensation arrangement between Wayne M. Celia Jr. and Dicon Technologies LLC
(the "Company"), effective July 1, 2009 and ending June 30, 2010.

      

      1. As
Director of Marketing for Dicon Technologies, your Compensation arrangement
during the year 2009-2010 will follow Schedule A of this agreement. As an
employee, you will be eligible for the various fringe benefits program pursuant
to the terms of such programs available for employees occupying positions of
similar status with the Company.

      

      2. You
agree that unless required by court order or other legal compulsory process that
you will not disclose the terms of this compensation agreement with anyone
except your immediate family, tax advisor or legal counsel and provided that
he/she/they agree not to further disclose same.

      

      3. You
agree to faithfully perform for the Company such duties as may be assigned to
you by the Company. You further agree to devote your entire business time,
attention and energies exclusively to such employment and to comply with the
instructions and personnel practices and policies of the Company, as amended,
all of which you  acknowledge have been received by you and/or have
been made available to you for review in the Human Resources
Department.

      

      4. It is
also understood that during your employment with the Company and thereafter, you
will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or of SpongeTech
Delivery Systems, Inc., the Company’s parent company (“SpongeTech”) to which you
have acquired information during your employment with us. Proprietary or
confidential information includes but is not limited to, financial and operating
data, customer lists and information relating to customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company shall, in addition to all other remedies available to it,
have the right to injunctive relief, termination of your employment without
notice, and any attorneys’ fees and costs incurred to enforce this
provision.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5. You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and
with the Company will be deemed “work made for hire" such that the Company and
SpongeTech will be the joint owners of all rights to and interest in such Work
Product including without limitation all copyrights therein. In the event that
the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign all documents necessary to reflect
such assignment.

      

      6. You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will not, directly or indirectly, solicit
or attempt to solicit any employee of the Company or SpongeTech to terminate his
or her employment with the Company or SpongeTech, respectively, or otherwise
employ or attempt to employ or assist anyone else to employ any person who is
then in the employ of the Company or SpongeTech, or who was in the employ of the
Company or SpongeTech at any time during the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, SpongeTech or its
affiliates, divisions and related companies or any person or business that was a
customer, supplier, licensor, contractor or employee of these entities on the
date your employment and compensation from the Company ended to the extent
permitted by applicable law.

      

      7.  You
agree that you will not, at any time, during the term of this Agreement, and for
one (1) year following the termination of this Agreement or your employment
hereunder, either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the “Business” of the Company or SpongeTech as such Business may be conducted on
the date thereof, as a creditor, guarantor, or financial backer, stockholder,
director, officer, consultant, advisor, employee, member, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by you, your spouse or your children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business.
SpongeTech shall have the right in its sole discretion to waive this covenant
not to non-compete.  As used herein, the term “Business” shall mean,
with respect to the Company, the development, manufacture and distribution of
products derived from “Hydrophilic Urethane Chemistry,” and with respect to
SpongeTech, the development, manufacture, sale and distribution of hydrophilic
polyurethane and polyurethane sponge cleaning and waxing
products.

       

      8.  This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and will continue until either party gives to the other thirty
(30) days notice in writing of its desire to terminate it. At the end of the
thirty (30) day period this arrangement and your employment will come to an end,
except as to those provisions which specifically survive termination. This
agreement and your employment may be terminated at any time without notice for
cause, as determined by the Company. Any salary and/or incentive compensation
will be prorated for the period this arrangement was in effect during the
year.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      8a. If
terminated without cause, as determined by the Company, employee will be
entitled to 2 months severance at the compensation level relevant to the current
applicable year.

      

      9. You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the company all books, records or other written papers or documents entrusted
to you or which you have otherwise acquired pertaining to the company or any of
its subsidiaries, affiliates, divisions or related companies and all other
property, including computer data files, of the Company or SpongeTech that may
be in your possession, custody or control.

      

      10. You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      11. Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      

      12. This
compensation arrangement shall continue subsequent to the year 2010 until a new
compensation arrangement is entered into or until terminated as provided in
paragraph 8.

      

      13. If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      14. The
provisions of paragraphs 2, 4, 5, 6, 7, 11 and 12 survive termination of this
agreement.

      

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                
                  	
                          Dicon
      Technologies, LLC

                        	 
      	 
      
	 
      	 
      	 
      
	
                           

                        	 
      	 
      
	
                          Wayne
      Celia

                        	 
      	 
      
	
                          President

                        	 
      	 
      
	 
      	 
      	
                          ACCEPTED:

                        
	 
      	 
      	
                          Wayne
      M. Celia Jr.

                        
	 
      	 
      	 
      
	 
      	 
      	
                           

                        
	 
      	 
      	
                          (Signature)

                        
	 
      	 
      	
                           

                        
	 
      	 
      	
                          (Date)

                        
	 
      	 
      	 
      
	
                           

                        	 
      	 
      
	
                          (Date)

                        	 
      	 
      

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Schedule
A

      

      Annualized Salary
Schedule

      

      
        
          
            
              
                
                  
                    
                      	
                              Year

                            	 	
                              Annualized
      Salary

                            	 	 	
                              Semi-monthly

                            	 
	
                              2009
      - 2010

                            	 	$	60,000.00	 	 	$	2500.00	 

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    Exhibit
C

    
      

      Dicon
Technologies LLC

      100 Dicon
Drive

      Black
Creek, GA 31308

      

      July 9,
2009

      

      PERSONAL
& CONFIDENTIAL

      Michael
Derr

       

      Dear
Michael:

       

      This is a
compensation arrangement between Michael Derr and Dicon Technologies LLC (the
"Company"), effective July 1, 2009 and ending June 30, 2010.

      

      1. As
Vice President of Research and Development for Dicon Technologies, your
Compensation
arrangement during the year 2009-2010 will follow Schedule A of this agreement.
As an employee, you will be eligible for the various fringe benefits program
pursuant to the terms of such programs available for employees occupying
positions of similar status with the Company.

      

      2. You
agree that unless required by court order or other legal compulsory process that
you will not disclose the terms of this compensation agreement with anyone
except your immediate family, tax advisor or legal counsel and provided that
he/she/they agree not to further disclose same.

      

      3. You
agree to faithfully perform for the Company such duties as may be assigned to
you by the Company. You further agree to devote your entire business time,
attention and energies exclusively to such employment and to comply with the
instructions and personnel practices and policies of the Company, as amended,
all of which you acknowledge have been received by you and/or have been made
available to you for review in the Human Resources Department.

      

      4. It is
also understood that during your employment with the Company and thereafter, you
will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or of SpongeTech
Delivery Systems, Inc., the Company’s parent company (“SpongeTech”) to which you
have acquired information during your employment with us. Proprietary or
confidential information includes but is not limited to, financial and operating
data, customer lists and information relating to customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company shall, in addition to all other remedies available to it,
have the right to injunctive relief, termination of your employment without
notice, and any attorneys’ fees and costs incurred to enforce this
provision.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      5. You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and
with the Company will be deemed “work made for hire" such that the Company and
SpongeTech will be the joint owners of all rights to and interest in such Work
Product including without limitation all copyrights therein. In the event that
the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign all documents necessary to reflect
such assignment.

      

      6. You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will not, directly or indirectly, solicit
or attempt to solicit any employee of the Company or SpongeTech to terminate his
or her employment with the Company or SpongeTech, respectively, or otherwise
employ or attempt to employ or assist anyone else to employ any person who is
then in the employ of the Company or SpongeTech, or who was in the employ of the
Company or SpongeTech at any time during the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, SpongeTech or its
affiliates, divisions and related companies or any person or business that was a
customer, supplier, licensor, contractor or employee of these entities on the
date your employment and compensation from the Company ended to the extent
permitted by applicable law.

      

      7.  You
agree that you will not, at any time, during the term of this Agreement, and for
one (1) year following the termination of this Agreement or your employment
hereunder, either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the “Business” of the Company or SpongeTech as such Business may be conducted on
the date thereof, as a creditor, guarantor, or financial backer, stockholder,
director, officer, consultant, advisor, employee, member, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by you, your spouse or your children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business.
SpongeTech shall have the right in its sole discretion to waive this covenant
not to non-compete.  As used herein, the term “Business” shall mean,
with respect to the Company, the development, manufacture and distribution of
products derived from “Hydrophilic Urethane Chemistry,” and with respect to
SpongeTech, the development, manufacture, sale and distribution of hydrophilic
polyurethane and polyurethane sponge cleaning and waxing
products.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      8.  This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and will continue until either party gives to the other thirty
(30) days notice in writing of its desire to terminate it. At the end of the
thirty (30) day period this arrangement and your employment will come to an end,
except as to those provisions which specifically survive termination. This
agreement and your employment may be terminated at any time without notice for
cause, as determined by the Company. Any salary and/or incentive compensation
will be prorated for the period this arrangement was in effect during the
year.

      

      8a. If
terminated without cause, as determined by the Company, employee will be
entitled to 2 months severance at the compensation level relevant to the current
applicable year.

      

      9. You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the company all books, records or other written papers or documents entrusted
to you or which you have otherwise acquired pertaining to the company or any of
its subsidiaries, affiliates, divisions or related companies and all other
property, including computer data files, of the Company or SpongeTech that may
be in your possession, custody or control.

      

      10. You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      11. Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      

      12. This
compensation arrangement shall continue subsequent to the year 2010 until a new
compensation arrangement is entered into or until terminated as provided in
paragraph 8.

      

      13. If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      14. The
provisions of paragraphs 2, 4, 5, 6, 7, 11 and 12 survive termination of this
agreement.

      

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                
                  
                    
                      
                        	
                                Dicon Technologies,
      LLC

                              	 
      	 
      
	 
      	 
      	 
      
	
                                 

                              	 
      	 
      
	
                                Wayne Celia

                              	 
      	 
      
	
                                President

                              	 
      	 
      
	 
      	 
      	
                                ACCEPTED:

                              
	 
      	 
      	
                                Michael
      Derr .

                              
	 
      	 
      	 
      
	 
      	 
      	
                                 

                              
	 
      	 
      	
                                (Signature)

                              
	 
      	 
      	
                                 

                              
	 
      	 
      	
                                (Date)

                              
	 
      	 
      	 
      
	
                                 

                              	 
      	 
      
	
                                (Date)

                              	 
      	 
      

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Schedule
A

       

      Annualized Salary
Schedule

      

      
        
          
            
              
                
                  
                    
                      	
                              Year

                            	 	
                              Annualized
      Salary

                            	 	 	
                              Semi-monthly

                            	 
	
                              2009
      - 2010

                            	 	$	83,200.56	 	 	$	3466.69	 

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    Exhibit
D

    
      
 

      Dicon
Technologies LLC

      100 Dicon
Drive

      Black
Creek, GA 31308

      

      July 9,
2009

      

      PERSONAL
& CONFIDENTIAL

      Rosalind
Nathanial

      

      Dear
Rosalind:

      

      This is a
compensation arrangement between Rosalind Nathanial and Dicon Technologies LLC
(the "Company"), effective July 1, 2009 and ending June 30, 2010.

      

      1. As
Chief Financial Officer for Dicon Technologies, your Compensation arrangement
during the year 2009-2010 will follow Schedule A of this agreement. As an
employee, you will be eligible for the various fringe benefits program pursuant
to the terms of such programs available for employees occupying positions of
similar status with the Company.

      

      2. You
agree that unless required by court order or other legal compulsory process that
you will not disclose the terms of this compensation agreement with anyone
except your immediate family, tax advisor or legal counsel and provided that
he/she/they agree not to further disclose same.

      

      3. You
agree to faithfully perform for the Company such duties as may be assigned to
you by the Company. You further agree to devote your entire business time,
attention and energies exclusively to such employment and to comply with the
instructions and personnel practices and policies of the Company, as amended,
all of which you acknowledge have been received by you and/or have been made
available to you for review in the Human Resources Department.

      

      4. It is
also understood that during your employment with the Company and thereafter, you
will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or of SpongeTech
Delivery Systems, Inc., the Company’s parent company (“SpongeTech”) to which you
have acquired information during your employment with us. Proprietary or
confidential information includes but is not limited to, financial and operating
data, customer lists and information relating to customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company shall, in addition to all other remedies available to it,
have the right to injunctive relief, termination of your employment without
notice, and any attorneys’ fees and costs incurred to enforce this
provision.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      5. You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and
with the Company will be deemed “work made for hire" such that the Company and
SpongeTech will be the joint owners of all rights to and interest in such Work
Product including without limitation all copyrights therein. In the event that
the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign all documents necessary to reflect
such assignment.

      

      6. You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will not, directly or indirectly, solicit
or attempt to solicit any employee of the Company or SpongeTech to terminate his
or her employment with the Company or SpongeTech, respectively, or otherwise
employ or attempt to employ or assist anyone else to employ any person who is
then in the employ of the Company or SpongeTech, or who was in the employ of the
Company or SpongeTech at any time during the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, SpongeTech or its
affiliates, divisions and related companies or any person or business that was a
customer, supplier, licensor, contractor or employee of these entities on the
date your employment and compensation from the Company ended to the extent
permitted by applicable law.

      

      7.  You
agree that you will not, at any time, during the term of this Agreement, and for
one (1) year following the termination of this Agreement or your employment
hereunder, either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the “Business” of the Company or SpongeTech as such Business may be conducted on
the date thereof, as a creditor, guarantor, or financial backer, stockholder,
director, officer, consultant, advisor, employee, member, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by you, your spouse or your children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business.
SpongeTech shall have the right in its sole discretion to waive this covenant
not to non-compete.  As used herein, the term “Business” shall mean,
with respect to the Company, the development, manufacture and distribution of
products derived from “Hydrophilic Urethane Chemistry,” and with respect to
SpongeTech, the development, manufacture, sale and distribution of hydrophilic
polyurethane and polyurethane sponge cleaning and waxing
products.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      8. This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and will continue until either party gives to the other thirty
(30) days notice in writing of its desire to terminate it. At the end of the
thirty (30) day period this arrangement and your employment will come to an end,
except as to those provisions which specifically survive  termination.
This agreement and your employment may be terminated at any time without notice
for cause, as determined by the Company. Any salary and/or incentive
compensation will be prorated for the period this arrangement was in effect
during the year.

      

      8a. If
terminated without cause, as determined by the Company, employee will be
entitled to 2 months severance at the compensation level relevant to the current
applicable year.

      

      9. You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the company all books, records or other written papers or documents entrusted
to you or which you have otherwise acquired pertaining to the company or any of
its subsidiaries, affiliates, divisions or related companies and all other
property, including computer data files, of the Company or SpongeTech that may
be in your possession, custody or control.

      

      10. You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      11. Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      

      12. This
compensation arrangement shall continue subsequent to the year 2010 until a new
compensation arrangement is entered into or until terminated as provided in
paragraph 8.

      

      13. If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      14. The
provisions of paragraphs 2, 4, 5, 6, 7, 11 and 12 survive termination of this
agreement.

       

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                	
                        Dicon
      Technologies, LLC

                      	 
      	 
      
	 
      	 
      	 
      
	
                         

                      	 
      	 
      
	
                        Wayne
      Celia

                      	 
      	 
      
	
                        President

                      	 
      	 
      
	 
      	 
      	
                        ACCEPTED:

                      
	 
      	 
      	
                        Rosalind
      Nathanial

                      
	 
      	 
      	 
      
	 
      	 
      	
                         

                      
	 
      	 
      	
                        (Signature)

                      
	 
      	 
      	
                         

                      
	 
      	 
      	
                        (Date)

                      
	 
      	 
      	 
      
	
                         

                      	 
      	 
      
	
                        (Date)

                      	 
      	 
      

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Schedule
A

      

      Annualized Salary
Schedule

      

      
        
          
            
              
                
                  	
                          Year

                        	 	
                          Annualized
      Salary

                        	 	 	
                          Semi-monthly

                        	 
	
                          2009
      - 2010

                        	 	$	70,000.00	 	 	$	2916.67	 

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    Exhibit
E

     

    
      Dicon
Technologies LLC

      100 Dicon
Drive

      Black
Creek, GA 31308

      

      July 9,
2009

      

      PERSONAL
& CONFIDENTIAL

      Harvey
Goodman

      2817
Westridge Road

      Minnetonka,
MN 55305

      

      Dear
Harvey:

      

      This is a
compensation arrangement between Harvey Goodman and Dicon Technologies LLC (the
"Company"), effective July 1, 2009 and ending June 30, 2010.

      

      1. As VP
of Sales for Dicon Technologies, your Compensation arrangement during the year
2009-2010 will follow Schedule A of this agreement. As an employee, you will be
eligible for the various fringe benefits program pursuant to the terms of such
programs available for employees occupying positions of similar status with the
Company.

      

      2. You
agree that unless required by court order or other legal compulsory process that
you will not disclose the terms of this compensation agreement with anyone
except your immediate family, tax advisor or legal counsel and provided that
he/she/they agree not to further disclose same.

      

      3. You
agree to faithfully perform for the Company such duties as may be assigned to
you by the Company. You further agree to devote your entire business time,
attention and energies exclusively to such employment and to comply with the
instructions and personnel practices and policies of the Company, as amended,
all of which you acknowledge have been received by you and/ or have been made
available to you for review in the Human Resources Department.

      

      4. It is
also understood that during your employment with the Company and thereafter, you
will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or of SpongeTech
Delivery Systems, Inc., the Company’s parent company (“SpongeTech”) to which you
have acquired information during your employment with us. Proprietary or
confidential information includes but is not limited to, financial and operating
data, customer lists and information relating to customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company shall, in addition to all other remedies available to it,
have the right to injunctive relief, termination of your employment without
notice, and any attorneys’ fees and costs incurred to enforce this
provision.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      5. You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and
with the Company will be deemed “work made for hire" such that the Company and
SpongeTech will be the joint owners of all rights to and interest in such Work
Product including without limitation all copyrights therein. In the event that
the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign all documents necessary to reflect
such assignment.

      

      6. You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will not, directly or indirectly, solicit
or attempt to solicit any employee of the Company or SpongeTech to terminate his
or her employment with the Company or SpongeTech, respectively, or otherwise
employ or attempt to employ or assist anyone else to employ any person who is
then in the employ of the Company or SpongeTech, or who was in the employ of the
Company or SpongeTech at any time during the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, SpongeTech or its
affiliates, divisions and related companies or any person or business that was a
customer, supplier, licensor, contractor or employee of these entities on the
date your employment and compensation from the Company ended to the extent
permitted by applicable law.

      

      7.  You
agree that you will not, at any time, during the term of this Agreement, and for
one (1) year following the termination of this Agreement or your employment
hereunder, either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the “Business” of the Company or SpongeTech as such Business may be conducted on
the date thereof, as a creditor, guarantor, or financial backer, stockholder,
director, officer, consultant, advisor, employee, member, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by you, your spouse or your children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business.
SpongeTech shall have the right in its sole discretion to waive this covenant
not to non-compete.  As used herein, the term “Business” shall mean,
with respect to the Company, the development, manufacture and distribution of
products derived from “Hydrophilic Urethane Chemistry,” and with respect to
SpongeTech, the development, manufacture, sale and distribution of hydrophilic
polyurethane and polyurethane sponge cleaning and waxing
products.

      

      8.  This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and will continue until either party gives to the other thirty
(30) days notice in writing of its desire to terminate it. At the end of the
thirty (30) day period this arrangement and your employment will come to an end,
except as to those provisions which specifically survive termination. This
agreement and your employment may be terminated at any time without notice for
cause, as determined by the Company. Any salary and/or incentive compensation
will be prorated for the period this arrangement was in effect during the
year.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      8a. If
terminated without cause, as determined by the Company, employee will be
entitled to 2 months severance at the compensation level relevant to the current
applicable year.

      

      9. You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the company all books, records or other written papers or documents entrusted
to you or which you have otherwise acquired pertaining to the company or any of
its subsidiaries, affiliates, divisions or related companies and all other
property, including computer data files, of the Company or SpongeTech that may
be in your possession, custody or control.

      

      10. You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      11. Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      

      12. This
compensation arrangement shall continue subsequent to the year 2010 until a new
compensation arrangement is entered into or until terminated as provided in
paragraph 8.

      

      13. If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      14. The
provisions of paragraphs 2, 4, 5, 6, 7, 11 and 12 survive termination of this
agreement.

      

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	
                                                        Dicon Technologies, LLC

                                                      	 
      	 
      
	 	 	 
	
                                                         

                                                      	 
      	 
      
	
                                                        Wayne Celia

                                                      	 
      	 
      
	
                                                        President

                                                      	 
      	 
      
	 
      	 
      	
                                                        ACCEPTED:

                                                      
	 
      	 
      	
                                                        Harvey.
      Goodman

                                                      
	 	 	 
	 
      	 
      	
                                                         

                                                      
	 
      	 
      	
                                                        (Signature)

                                                      
	 
      	 
      	
                                                         

                                                      
	 
      	 
      	
                                                        (Date)

                                                      
	 
      	 
      	 
      
	
                                                        (Date)

                                                      	 
      	 
      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Schedule
A

       

      Annualized Salary
Schedule

      

      
        
          
            
              	
                      Year

                    	 	
                      Annualized Salary

                    	 	 	
                      Semi-monthly

                    	 
	
                      2009
      - 2010  Current

                    	 	$	169,700	 	 	$	7070.83	 

            

          

        

      

      

      Dicon
will pay up to $25,000 for moving expense to the metro area.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    Exhibit
F

    
      
 

      Dicon
Technologies LLC

      100 Dicon
Drive

      Black
Creek, GA 31308

      

      July 9,
2009

      

      PERSONAL
& CONFIDENTIAL

      Scott G.
Lyddon

      

      Dear
Scott:

      

      This is a
compensation arrangement between Scott Lyddon and Dicon Technologies LLC (the
“Company”), effective July 1, 2009 and ending June 30, 2010.

      

      1. As
Operations Manager for Dicon Technologies, your Compensation arrangement during
the year 2009-2010 will follow Schedule A of this agreement. As an employee, you
will be eligible for the various fringe benefits program pursuant to the terms
of such programs available for employees occupying positions of similar status
with the Company.

      

      2. You
agree that unless required by court order or other legal compulsory process that
you will not disclose the terms of this compensation agreement with anyone
except your immediate family, tax advisor or legal counsel and provided that
he/she/they agree not to further disclose same.

      

      3. You
agree to faithfully perform for the Company such duties as may be assigned to
you by the Company. You further agree to devote your entire business time,
attention and energies exclusively to such employment and to comply with the
instructions and personnel practices and policies of the Company, as amended,
all of which you acknowledge have been received by you and/or have been made
available to you for review in the Human Resources Department.

      

      4. It is
also understood that during your employment with the Company and thereafter, you
will not reveal to anyone outside the Company confidential information,
proprietary information or trade secrets of the Company or of SpongeTech
Delivery Systems, Inc., the Company’s parent company (“SpongeTech”) to which you
have acquired information during your employment with us. Proprietary or
confidential information includes but is not limited to, financial and operating
data, customer lists and information relating to customers, business plans,
products, technology and know-how. In the event of a violation of this
paragraph, the Company shall, in addition to all other remedies available to it,
have the right to injunctive relief, termination of your employment without
notice, and any attorneys’ fees and costs incurred to enforce this
provision.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      5. You
understand and agree that all designs, concepts, graphics, drawings, inventions,
text and copy, illustrations, memoranda, software, charts, renderings,
specifications, engineering designs and specifications, presentations and other
materials prepared by you in the course of your work (“Work Product”) for and
with the Company will be deemed “work made for hire" such that the Company and
SpongeTech will be the joint owners of all rights to and interest in such Work
Product including without limitation all copyrights therein. In the event that
the Work Product or any portion thereof does not qualify as "work made for
hire”, then you hereby assign all rights, title and interest in the Work Product
to the Company and SpongeTech and will sign all documents necessary to reflect
such assignment.

      

      6. You
agree that if you leave our employment, either voluntarily or otherwise, and for
a period of two years thereafter, you will not, directly or indirectly, solicit
or attempt to solicit any employee of the Company or SpongeTech to terminate his
or her employment with the Company or SpongeTech, respectively, or otherwise
employ or attempt to employ or assist anyone else to employ any person who is
then in the employ of the Company or SpongeTech, or who was in the employ of the
Company or SpongeTech at any time during the then preceding two-year period. You
further agree that during this period you will not otherwise interfere with or
attempt to disrupt the relationship between the Company, SpongeTech or its
affiliates, divisions and related companies or any person or business that was a
customer, supplier, licensor, contractor or employee of these entities on the
date your employment and compensation from the Company ended to the extent
permitted by applicable law.

      

      7.  You
agree that you will not, at any time, during the term of this Agreement, and for
one (1) year following the termination of this Agreement or your employment
hereunder, either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the “Business” of the Company or SpongeTech as such Business may be conducted on
the date thereof, as a creditor, guarantor, or financial backer, stockholder,
director, officer, consultant, advisor, employee, member, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by you, your spouse or your children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business.
SpongeTech shall have the right in its sole discretion to waive this covenant
not to non-compete. As used herein, the term “Business” shall mean, with respect
to the Company, the development, manufacture and distribution of products
derived from “Hydrophilic Urethane Chemistry,” and with respect to SpongeTech,
the development, manufacture, sale and distribution of hydrophilic polyurethane
and polyurethane sponge cleaning and waxing products.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      8. This
compensation arrangement supersedes any prior compensation arrangement, whether
written or oral, and will continue until either party gives to the other thirty
(30) days notice in writing of its desire to terminate it. At the end of the
thirty (30) day period this arrangement and your employment will come to an end,
except as to those provisions which specifically survive termination. This
agreement and your employment may be terminated at any time without notice for
cause, as determined by the Company. Any salary and/or incentive compensation
will be prorated for the period this arrangement was in effect during the
year.

      

      8a. If
terminated without cause, as determined by the Company, employee will be
entitled to 2 months severance at the compensation level relevant to the current
applicable year.

      

      9. You
agree that in the event you leave your employment with the Company, irrespective
of the time, manner or cause of such termination, you will immediately surrender
to the company all books, records or other written papers or documents entrusted
to you or which you have otherwise acquired pertaining to the company or any of
its subsidiaries, affiliates, divisions or related companies and all other
property, including computer data files, of the Company or SpongeTech that may
be in your possession, custody or control.

      

      10. You
agree that this arrangement has been entered into in the State of New Jersey and
shall be governed and construed by the laws of the state of New Jersey without
giving effect to the conflict of law provisions thereof.

      

      11. Any
controversy involving this agreement or breach thereof, your employment or the
termination thereof, including any claims under any. employment discrimination
or wage payment statute, to the extent legally permissible, shall be settled by
final and binding arbitration pursuant to the provisions of the Employment
Dispute Resolution Rules of the American Arbitration Association then in effect,
and provided that arbitration hearings, if any, shall be held in Allendale, NJ.
Judgment on the award rendered by the arbitrator is enforceable in any court
having jurisdiction thereof.

      

      12. This
compensation arrangement shall continue subsequent to the year 2010 until a new
compensation arrangement is entered into or until terminated as provided in
paragraph 8.

      

      13. If
any provision of this agreement is held by a court of competent jurisdiction to
be invalid, illegal or unenforceable, such determination shall not affect the
remaining provisions of this agreement or render any other provision of this
agreement invalid, illegal or unenforceable.

      

      14. The
provisions of paragraphs 2, 4, 5, 6, 7, 11 and 12 survive termination of this
agreement.

      

      Please
sign the original of this agreement, initial each page and return it to my
attention. You may keep a copy for your own records.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      I wish
you success with the Company.

      

      Sincerely
yours,

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Dicon Technologies, LLC

                                        	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                          Wayne Celia

                                        	 
      	 
      
	
                                          President

                                        	 
      	 
      
	 
      	 
      	
                                          ACCEPTED:

                                        
	 
      	 
      	
                                          Scott
      G. Lyddon

                                        
	 	 	 
	 
      	 
      	 
      
	 
      	 
      	
                                          (Signature)

                                        
	 
      	 
      	 
      
	 
      	 
      	
                                          (Date)

                                        
	 
      	 
      	 
      
	
                                          (Date)

                                        	 
      	 
      

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Schedule
A

      

      Annualized Salary
Schedule

      

      
        
          
            
              
                	
                        Year

                      	 	
                        Annualized Salary

                      	 	 	
                        Semi-monthly

                      	 
	
                        2009
      - 2010 (current)

                      	 	$	75,470.16	 	 	$	3144.59	 
	
                        2009
      – 2010 (after move to GA)

                      	 	$	82,500.00	 	 	$	3312.50	 

              

            

          

        

      

      

      Dicon
will pay moving expenses to relocate employee to the Savanna
area.20-F

Exhibit 10.1  

CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM  

We hereby consent to the
incorporation by reference in the Registration Statements of Elbit Vision Systems Ltd.
(the “Company”) on Form F-1 (File No’s 333-115095 and 333-145005), Form F-3
(File No’s 333-134591 and 333-114153) and on Form S-8 (File No.333-12456) of our
report dated July 15, 2009, which report expresses an unqualified opinion and includes an
explanatory paragraph regarding going concern uncertainty, relating to the consolidated
financial statements of the Company included in this Annual Report on Form 20-F for the
year ended December 31, 2008.

Brightman Almagor Zohar & Co.

Certified Public Accountants

A Member of Deloitte Touche Tohmatsu

Tel-Aviv, Israel

July 15, 2009

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