Document:

EXHIBIT 4.1

                                                      Warrant  Certificate No.

NEITHER  THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  NOR THE  SECURITIES
ISSUABLE  UPON THE  EXERCISE  OF THIS  WARRANT  HAVE BEEN  REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),  OR ANY STATE  SECURITIES  LAWS,
AND NEITHER  SUCH  SECURITIES  NOR ANY  INTEREST  THEREIN MAY BE OFFERED,  SOLD,
ASSIGNED OR  OTHERWISE  TRANSFERRED  UNLESS (1) A  REGISTRATION  STATEMENT  WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE  STATE  SECURITIES
LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES
AN  OPINION  OF COUNSEL TO THE  HOLDER OF SUCH  SECURITIES,  WHICH  COUNSEL  AND
OPINION ARE  SATISFACTORY  TO THE COMPANY,  THAT SUCH SECURITIES MAY BE OFFERED,
SOLD,  PLEDGED,  ASSIGNED OR TRANSFERRED IN THE MANNER  CONTEMPLATED  WITHOUT AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT OR APPLICABLE  STATE SECURITIES
LAWS.

Dated: [________,] 2006                            Void After: [________,] 2011

                        ALTERNATIVE ENERGY SOURCES, INC.

                        WARRANT TO PURCHASE COMMON STOCK

      Alternative Energy Sources,  Inc., a Delaware corporation (the "Company"),
for value received on [________],  2006 (the "Effective Date"), hereby issues to
[___________]  (the "Holder") this Warrant (the  "Warrant") to purchase [100% of
the number of shares  purchased  by the  Investor  pursuant to the  Subscription
Agreement]  shares (each such share as from time to time adjusted as hereinafter
provided being a "Warrant Share" and all such shares being the "Warrant Shares")
of the  Company's  Common Stock (as defined  below),  at the Exercise  Price (as
defined below),  as adjusted from time to time as provided herein,  on or before
[________,] 2011 (the "Expiration Date"), all subject to the following terms and
conditions. Unless otherwise defined in this Warrant, terms appearing in initial
capitalized  form  shall  have  the  meaning  ascribed  to them in that  certain
Subscription  Agreement  of  even  date  herewith  among  the  Company  and  the
purchasers  signatory  thereto  pursuant  to which this  Warrant was issued (the
"Subscription Agreement").

<PAGE>

      As used in this  Warrant,  (i)  "Business  Day"  means any day other  than
Saturday,  Sunday or any other day on which  commercial banks in the City of New
York, New York,  are authorized or required by law or executive  order to close;
(ii) "Common Stock" means the common stock of the Company, $0.0001 par value per
share,  including any securities issued or issuable with respect thereto or into
which or for which such shares may be exchanged for, or converted into, pursuant
to  any  stock  dividend,  stock  split,  stock  combination,  recapitalization,
reclassification,  reorganization or other similar event; (iii) "Exercise Price"
means $2.00 per share of Common Stock, subject to adjustment as provided herein;
(iv)  "Trading  Day"  means any day on which the  Common  Stock is traded on the
primary national or regional stock exchange on which the Common Stock is listed,
or, if not listed, on the Nasdaq National Market if quoted thereon, or if not so
listed or quoted,  the NASD OTC Bulletin Board if quoted thereon is open for the
transaction of business;  and (v) "Affiliate" means any Person that, directly or
indirectly,  through one or more intermediaries,  controls, is controlled by, or
is under common control with, a Person,  as such terms are used and construed in
Rule 144 promulgated under the Securities Act of 1933, as amended.

1. DURATION AND EXERCISE OF WARRANTS

      (a) Exercise  Period.  The Holder may exercise this Warrant in whole or in
part on any Business Day on or before 5:00 P.M.,  Eastern  Daylight Time, on the
Expiration  Date,  at which time this Warrant shall become void and of no value.
The Holder shall also  exercise the Warrant  earlier on the  Mandatory  Exercise
Date in accordance  with Section 1(b) if applicable,  at which time this Warrant
shall  entitle  the  Holder  only to the  Warrant  Shares  applicable  upon such
exercise.

      (b) Right of Mandatory Exercise by Company.

                  (i) If at any time from and after the SEC  Effective  Date (as
defined in the Registration  Rights  Agreement),  (i) the closing sales price of
the Common Stock for each Trading Day of any 20  consecutive  Trading Day period
preceding the applicable  Mandatory Exercise  Eligibility Date equals or exceeds
$6.00 per share  (subject  to  equitable  adjustment  for  stock  splits,  stock
dividends,  combinations, and capital reorganizations,  as applicable), (ii) the
Registration  Statement  has been  effective for a period of 45 Trading Days and
remains  effective  or the Holder  would be entitled to sell the Warrant  Shares
upon the exercise of the Warrant pursuant to the Rule 144(k)  promulgated  under
Securities  Act  of  1933,  as  amended  (i.e.,  including  without  any  volume
limitations), (iii) the Common Stock is listed on the New York Stock Exchange or
the Amercan Stock Exchange,  or quoted on the Nasdaq National  Market,  and (iv)
the average  daily trading  volume of the Common Stock over such 20  consecutive
Trading Day period equals or exceeds  4,000,000 shares (the "Mandatory  Exercise
Eligibility  Date"),  the Company  shall have the right to require the Holder to
exercise  this  Warrant in whole or in part,  subject to Sections  1(b)(ii)  and
(iii) below,  as designated in the Mandatory  Exercise Notice (as defined below)
into fully paid,  validly  issued and  nonassessable  shares of Common  Stock in
accordance  with  the  terms of this  Warrant  at the  Exercise  Price as of the
Mandatory Exercise Date (a "Mandatory  Exercise").  The Company may exercise its
right to require exercise under this Section 1(b) by delivering  within not more
than five (5) Trading Days after the end of the Mandatory  Exercise  Eligibility
Date a written notice thereof by facsimile and overnight courier to all, but not
less than all, of the holders of Warrants and the Transfer Agent (the "Mandatory
Exercise  Notice"  and the date  all of the  holders  received  such  notice  by
facsimile is referred to as the "Mandatory Exercise Notice Date"). The Mandatory
Exercise Notice shall be irrevocable.  The Mandatory Exercise Notice shall state
(i) the Trading Day selected for the Mandatory  Exercise in accordance with this
Section  1(b)(i),  which Trading Day shall be at least twenty (20) Business Days
but not more than sixty (60)  Business  Days  following the end of the Mandatory
Exercise Notice Date (the "Mandatory  Exercise Date"), (ii) the aggregate number
of Warrant Shares  subject to Mandatory  Exercise from the Holder and all of the
holders of the  Warrants  pursuant to this  Section 1(b) and (iii) the number of
Warrant Shares to be issued to such Holder on the Mandatory Exercise Date.

                                       2
<PAGE>

                  (ii) If the Company  elects to cause exercise of any amount of
this Warrant pursuant to Section 1(b)(i),  then it must  simultaneously take the
same action in the same  proportion  with respect to all Warrants that contain a
similar  provision.  All amounts  exercised  by the Holder  after the  Mandatory
Exercise  Notice  Date shall  reduce the amount of this  Warrant  required to be
converted on the Mandatory Exercise Date. If the Company has elected a Mandatory
Exercise,  the  mechanics of exercise set forth in Section 1(c) shall apply,  to
the extent  applicable,  as if the Company and the  Transfer  Agent had received
from the Holder on the Mandatory  Exercise Date an Exercise  Notice with respect
to the  amount  of  this  Warrant  being  converted  pursuant  to the  Mandatory
Exercise.

                  (iii)  Notwithstanding  anything to the contrary  contained in
this Section 1(b), the aggregate  number of Warrants that the Company shall have
the right to call at any given  time  under  Section  1(b) shall be limited to a
number of Warrants such that number of Warrant Shares  issuable upon exercise of
the  Warrants  so  called  does not  exceed  the total  aggregate  volume of the
Company's Common Stock traded over the 20 consecutive  Trading Days prior to the
Mandatory  Exercise  Eligibility  Date.  The Company shall not have the right to
deliver more than one Mandatory Exercise Notice in any ninety (90) day period.

      (c) Exercise Procedures.

                  (i) While this Warrant remains  outstanding and exercisable in
accordance  with  Section  1(a),  in addition to the manner set forth in Section
1(c)(ii) below,  the Holder may exercise this Warrant in whole or in part at any
time and from time to time by:

                       (A) surrender of this Warrant, with a duly
executed copy of the Notice of Exercise  attached as Exhibit A, to the Secretary
of the Company at its principal offices or at such other office or agency as the
Company may specify in writing to the Holder; and

                       (B) payment of the then applicable Exercise Price
per share  multiplied  by the  number of Warrant  Shares  being  purchased  upon
exercise of the Warrant (such amount,  the "Aggregate  Exercise  Price") made in
the form of cash,  or by certified  check,  bank draft or money order payable in
lawful  money of the  United  States  of  America  or in the form of a  Cashless
Exercise to the extent permitted in Section 1(c)(ii) below.

                  (ii) At any time when a registration statement required by the
Registration  Rights Agreement  covering the resale of the Warrant Shares by the
Holder is not available  after the first  anniversary of the Effective Date, the
Holder may, in its sole discretion, exercise all or any part of the Warrant in a
"cashless" or "net-issue"  exercise (a "Cashless Exercise") by delivering to the
Company (1) the Notice of Exercise  and (2) the  Warrant,  pursuant to which the
Holder  shall  surrender  the right to receive  upon  exercise of this Warrant a
number of  Warrant  Shares  having a value (as  determined  below)  equal to the
Aggregate  Exercise  Price,  in which case,  the number of Warrant  Shares to be
issued to the Holder upon such exercise shall be calculated  using the following
formula:

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                       X       =       Y * (A - B)
                                       -----------
                                              A

        with:   X =    the number of Warrant Shares to be issued to the Holder

                Y =    the number of Warrant  Shares with respect to which the
                       Warrant is being exercised

                A =    the fair  value per  share of Common  Stock on the date
                       of exercise of this Warrant

                B =    the then-current Exercise Price of the Warrant

      Solely  for  the  purposes  of  this  paragraph,  "fair  value"  shall  be
determined  either (A) reasonably and in good faith by the Board of Directors of
the  Company as of the date which the Notice of  Exercise is deemed to have been
sent to the  Company,  or (B) as the average of the  closing  sales  prices,  as
quoted on the primary  national or regional  stock  exchange on which the Common
Stock is listed,  or, if not  listed,  on the Nasdaq  National  Market if quoted
thereon,  or, if not listed or  quoted,  the NASD OTC  Bulletin  Board if quoted
thereon, on the twenty (20) trading days immediately preceding the date on which
the Notice of Exercise is deemed to have been sent to the Company,  whichever of
(A) or (B) is greater.

                  (iii) Upon the exercise of this Warrant in compliance with the
provisions  of this Section 1(c) or pursuant to a Mandatory  Exercise  Notice in
accordance  with Section 1(b),  the Company shall promptly issue and cause to be
delivered to the Holder a certificate  for the Warrant  Shares  purchased by the
Holder. Each exercise of this Warrant shall be effected immediately prior to the
close of business on the date (the "Date of Exercise")  which (x) the conditions
set forth in Section  1(b) have been  satisfied in  connection  with a Mandatory
Exercise  Notice  or (y) the  conditions  set  forth in  Section  1(c) have been
satisfied, as the case may be. On or before the first Business Day following the
date on which the  Company  has  received  each of the  Exercise  Notice and the
Aggregate  Exercise Price (or notice of a Cashless  Exercise in accordance  with
Section  1(c)(ii))  (the  "Exercise  Delivery  Documents"),  the  Company  shall
transmit  by  facsimile  an  acknowledgment  of  confirmation  of receipt of the
Exercise Delivery  Documents to the Holder and the Company's transfer agent (the
"Transfer  Agent").  On or before the third  Business Day  following the date on
which the Company has  received  all of the  Exercise  Delivery  Documents  (the
"Share Delivery  Date"),  the Company shall (X) provided that the Transfer Agent
is  participating  in  The  Depository  Trust  Company  ("DTC")  Fast  Automated
Securities  Transfer  Program,  upon the  request  of the  Holder,  credit  such
aggregate  number  of shares of  Common  Stock to which the  Holder is  entitled
pursuant to such exercise to the Holder's or its designee's balance account with
DTC  through its  Deposit  Withdrawal  Agent  Commission  system,  or (Y) if the
Transfer  Agent  is not  participating  in the  DTC  Fast  Automated  Securities
Transfer  Program,  issue and  dispatch by  overnight  courier to the address as
specified in the Exercise  Notice,  a  certificate,  registered in the Company's
share  register  in the name of the  Holder or its  designee,  for the number of
shares  of  Common  Stock to which  the  Holder  is  entitled  pursuant  to such
exercise.  Upon  delivery of the Exercise  Notice and Aggregate  Exercise  Price
referred  to in Section  1(c)(i)(A)  above or  notification  to the Company of a
Cashless Exercise  referred to in Section  1(c)(ii),  the Holder shall be deemed
for all  corporate  purposes  to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been  exercised,  irrespective  of
the date of delivery of the certificates evidencing such Warrant Shares. If this
Warrant is submitted in  connection  with any exercise  pursuant to this Section
1(a) and the number of Warrant Shares  represented by this Warrant submitted for
exercise is greater than the actual number of Warrant Shares being acquired upon
such an exercise,  then the Company shall as soon as practicable and in no event
later than three (3)  Business  Days after any  exercise and at its own expense,
issue a new Warrant (in accordance with Section 1(c)) of like tenor representing
the right to purchase the number of Warrant Shares purchasable immediately prior
to such  exercise  under this  Warrant,  less the number of Warrant  Shares with
respect to which this Warrant is exercised. No fractional shares of Common Stock
are to be issued  upon the  exercise of this  Warrant,  but rather the number of
shares of Common  Stock to be issued  shall be rounded up to the  nearest  whole
number.  The  Company  shall pay any and all taxes  which  may be  payable  with
respect to the  issuance and  delivery of Warrant  Shares upon  exercise of this
Warrant.

                                       4
<PAGE>

                  (iv) If the Company shall fail for any reason or for no reason
to issue to the  Holder,  within  three  (3)  Business  Days of  receipt  of the
Exercise  Delivery  Documents,  a certificate for the number of shares of Common
Stock to which the Holder is entitled and  register  such shares of Common Stock
on the Company's  share register or to credit the Holder's  balance account with
DTC for such  number of shares of Common  Stock to which the Holder is  entitled
upon the Holder's exercise of this Warrant, and if on or after such Business Day
the Holder  purchases (in an open market  transaction  or  otherwise)  shares of
Common  Stock to  deliver in  satisfaction  of a sale by the Holder of shares of
Common Stock issuable upon such exercise that the Holder  anticipated  receiving
from the Company (a "Buy-In"), then the Company shall, within three (3) Business
Days after the Holder's request and in the Holder's  discretion,  either (i) pay
cash to the  Holder in an amount  equal to the  Holder's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased  (the "Buy-In  Price"),  at which point the  Company's  obligation  to
deliver  such  certificate  (and to issue  such  shares of Common  Stock)  shall
terminate,  or (ii)  promptly  honor its  obligation  to deliver to the Holder a
certificate  or  certificates  representing  such shares of Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the  product of (A) such  number of shares of Common  Stock,  times (B) the
closing bid price on the date of exercise.

      (c) Partial  Exercise.  This Warrant  shall be  exercisable,  either as an
entirety  or, from time to time,  for part only of the number of Warrant  Shares
referenced  by this Warrant.  If this Warrant is exercised in part,  the Company
shall issue, at its expense,  a new Warrant,  in substantially  the form of this
Warrant,  referencing such reduced number of Warrant Shares which remain subject
to this Warrant.

      (d)  Disputes.  In the case of a dispute  as to the  determination  of the
Exercise Price or the arithmetic  calculation of the Warrant Shares, the Company
shall  promptly  issue to the Holder the number of Warrant  Shares  that are not
disputed and resolve such dispute in accordance with Section 15.

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<PAGE>

2. ISSUANCE OF WARRANT SHARES

      (a) The Company  covenants that all Warrant Shares will,  upon issuance in
accordance with the terms of this Warrant,  be (i) duly  authorized,  fully paid
and  non-assessable,  and  (ii)  free  from  all  liens,  charges  and  security
interests, with the exception of claims arising through the acts or omissions of
any Holder and except as arising from  applicable  Federal and state  securities
laws.

      (b) The Company shall  register this Warrant upon records to be maintained
by the Company for that purpose in the name of the record holder of such Warrant
from time to time. The Company may deem and treat the registered  Holder of this
Warrant as the absolute  owner thereof for the purpose of any exercise  thereof,
any distribution to the Holder thereof and for all other purposes.

      (c)  The  Company   will  not,  by  amendment   of  its   certificate   of
incorporation,  by-laws  or  through  any  reorganization,  transfer  of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company,  but will at all
times in good faith  assist in the carrying  out of all the  provisions  of this
Warrant and in the taking of all the action as may be necessary  or  appropriate
in order to protect  the  rights of the  Holder to  exercise  this  Warrant,  or
against impairment of such rights.

3. ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

      (a) The  Exercise  Price and the  number of  shares  purchasable  upon the
exercise of this Warrant shall be subject to  adjustment  from time to time upon
the occurrence of certain events described in this Section 3(a).

                       (i) Subdivision or Combination of Stock. In case
the Company shall at any time subdivide (whether by way of stock dividend, stock
split or otherwise) its outstanding shares of Common Stock into a greater number
of shares,  the Exercise Price in effect  immediately  prior to such subdivision
shall be proportionately reduced and the Warrant Shares shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock of the
Company shall be combined  (whether by way of stock  combination,  reverse stock
split or  otherwise)  into a smaller  number of shares,  the  Exercise  Price in
effect immediately prior to such combination shall be proportionately  increased
and the  number  of  Warrant  Shares  shall be  proportionately  decreased.  The
Exercise Price and the Warrant  Shares,  as so adjusted,  shall be readjusted in
the same manner upon the happening of any successive even or events described in
this Section 3(a)(i).

                       (ii) Dividends in Stock, Property,
Reclassification.  If at any time,  or from time to time,  the Holders of Common
Stock (or any shares of stock or other  securities at the time  receivable  upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefore:

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<PAGE>

                               (A) any shares of stock or other
securities  which are at any time  directly or  indirectly  convertible  into or
exchangeable  for Common  Stock,  or any rights or  options  to  subscribe  for,
purchase or otherwise  acquire any of the  foregoing by way of dividend or other
distribution, or

                               (B) additional stock or other securities
or property  (including  cash) by way of spin-off,  split-up,  reclassification,
combination of shares or similar corporate rearrangement,  (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3(a)(i) above),  then and in each such case, the
Exercise  Price and the number of Warrant Shares to be obtained upon exercise of
this Warrant  shall be adjusted  proportionately,  and the Holder  hereof shall,
upon the exercise of this  Warrant,  be entitled to receive,  in addition to the
number of shares of Common Stock  receivable  thereupon,  and without payment of
any additional  consideration therefor, the amount of stock and other securities
and  property  (including  cash in the cases  referred  to in clause (ii) above)
which such Holder would hold on the date of such exercise had he been the holder
of record of such Common  Stock as of the date on which  holders of Common Stock
received or became entitled to receive such shares or all other additional stock
and other securities and property. The Exercise Price and the Warrant Shares, as
so adjusted,  shall be  readjusted  in the same manner upon the happening of any
successive even or events described in this Section 3(a)(ii).

                       (iii)   Reorganization,        Reclassification,
Consolidation,  Merger or Sale.  If any  recapitalization,  reclassification  or
reorganization  of the capital  stock of the Company,  or any  consolidation  or
merger  of  the  Company  with  another  corporation,  or  the  sale  of  all or
substantially all of its assets or other transaction shall be effected in such a
way that holders of Common Stock shall be entitled to receive stock, securities,
or other assets or property (an "Organic Change"),  then, as a condition of such
Organic  Change,  lawful and  adequate  provisions  shall be made by the Company
whereby  the Holder  hereof  shall  thereafter  have the right to  purchase  and
receive (in lieu of the shares of the Common  Stock of the  Company  immediately
theretofore   purchasable  and  receivable  upon  the  exercise  of  the  rights
represented by this Warrant) such shares of stock, securities or other assets or
property as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
stock  immediately  theretofore  purchasable  and  receivable  assuming the full
exercise of the rights represented by this Warrant.  In the event of any Organic
Change,  appropriate  provision shall be made by the Company with respect to the
rights  and  interests  of the  Holder  of  this  Warrant  to the end  that  the
provisions hereof (including, without limitation,  provisions for adjustments of
the Exercise Price and of the number of shares  purchasable  and receivable upon
the exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock,  securities or assets thereafter  deliverable upon the exercise
hereof.  The  Company  will not  effect any such  consolidation,  merger or sale
unless, prior to the consummation  thereof, the successor  corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing   such  assets   shall  assume  by  written   instrument   reasonably
satisfactory  in form and  substance  to the  Holders  executed  and  mailed  or
delivered  to the  registered  Holder  hereof at the last address of such Holder
appearing on the books of the Company,  the obligation to deliver to such Holder
such shares of stock,  securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase. In any event, the successor
corporation  (if other than the Company)  resulting from such  consolidation  or
merger or the corporation  purchasing such assets shall be deemed to assume such
obligation to deliver to such Holder such shares of stock,  securities or assets
even in the absence of a written  instrument  assuming  such  obligation  to the
extent such assumption occurs by operation of law.

                                        7
<PAGE>

      (b) Certificate as to Adjustments.  Upon the occurrence of each adjustment
or  readjustment  pursuant to this  Section 3, the Company at its expense  shall
promptly  compute such  adjustment or  readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a  certificate  setting  forth
such adjustment or readjustment  and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall promptly furnish or cause
to be  furnished  to such  Holder a like  certificate  setting  forth:  (i) such
adjustments and readjustments;  and (ii) the number of shares and the amount, if
any, of other  property which at the time would be received upon the exercise of
the Warrant.

      (c) Certain Events.  If any event occurs as to which the other  provisions
of this Section 3 are not  strictly  applicable  but the lack of any  adjustment
would not fairly protect the purchase rights of the Holder under this Warrant in
accordance  with the basic  intent  and  principles  of such  provisions,  or if
strictly  applicable  would not fairly protect the purchase rights of the Holder
under this Warrant in  accordance  with the basic intent and  principles of such
provisions,  then the  Company  shall  make the  adjustments  which the board of
directors described therein.

      (d)  Adjustment of Exercise  Price Upon  Issuance of Additional  Shares of
Common Stock. In the event the Company shall at any time prior to the eighteenth
month anniversary of the Effective Date issue Additional Shares of Common Stock,
as defined below,  without  consideration or for a consideration  per share less
than the  Exercise  Price in effect  immediately  prior to such issue,  then the
Exercise  Price  shall be  reduced,  concurrently  with such  issue,  to a price
(calculated to the nearest cent)  determined by multiplying  such Exercise Price
by a fraction,  (A) the  numerator of which shall be (1) the number of shares of
Common Stock outstanding  immediately prior to such issue plus (2) the number of
shares of Common  Stock  which the  aggregate  consideration  received  or to be
received  by the  Company for the total  number of  Additional  Shares of Common
Stock so issued would purchase at such Exercise  Price;  and (B) the denominator
of which shall be the number of shares of Common Stock  outstanding  immediately
prior to such issue plus the number of such Additional Shares of Common Stock so
issued;  provided  that, (i) for the purpose of this Section 3(d), all shares of
Common Stock  issuable  upon  conversion or exchange of  convertible  securities
outstanding  immediately  prior to such issue shall be deemed to be outstanding,
and (ii) the number of shares of Common Stock deemed issuable upon conversion or
exchange of such outstanding  convertible securities shall be determined without
giving  effect  to any  adjustments  to the  conversion  or  exchange  price  or
conversion or exchange rate of such  convertible  securities  resulting from the
issuance  of  Additional  Shares of Common  Stock  that is the  subject  of this
calculation.  For purposes of this Warrant,  "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the Company  after the Effective
Date  (including  without  limitation  any shares of Common Stock  issuable upon
conversion  or exchange of any  convertible  securities  or upon exercise of any
option or warrant, on an as-converted  basis),  other than: (i) shares of Common
Stock  issued  or  issuable  upon  conversion  or  exchange  of any  convertible
securities or exercise of any options  outstanding on the Effective  Date;  (ii)
shares of Common Stock issued or issuable by reason of a dividend,  stock split,
split-up  or other  distribution  on shares of Common  Stock  that is covered by
Sections  3(a)(i) through  3(a)(iii)  above; or (iii) shares of Common Stock (or
options with respect  thereto)  issued or issuable to employees or directors of,
or consultants  to, the Company or any of its  subsidiaries  pursuant to a plan,
agreement or arrangement  approved by the Board of Directors of the Company. The
provisions  of this  Section  3(d) shall not  operate to increase  the  Exercise
Price.

                                       8
<PAGE>

4. TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

      (a) Registration of Transfers and Exchanges. Subject to Section 4(c), upon
the  Holder's  surrender  of  this  Warrant,  with a duly  executed  copy of the
Assignment  Notice attached as Exhibit B, to the Secretary of the Company at its
principal  offices or at such other  office or agency as the Company may specify
in writing to the Holder,  the Company shall register the transfer of all or any
portion of this Warrant.  Upon such  registration  of transfer the Company shall
issue a new Warrant,  in substantially the form of this Warrant,  evidencing the
acquisition rights  transferred to the transferee and a new Warrant,  in similar
form, evidencing the remaining acquisition rights not transferred, to the Holder
requesting the transfer.

      (b)  Warrant  Exchangeable  for  Different  Denominations.  The Holder may
exchange this Warrant for a new Warrant or Warrants,  in substantially  the form
of this Warrant, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder,  each of such new Warrants
to be dated the date of such  exchange  and to  represent  the right to purchase
such number of Warrant  Shares as shall be designated by the Holder.  The Holder
shall  surrender  this Warrant with duly executed  instructions  regarding  such
re-certification  of  this  Warrant  to  the  Secretary  of the  Company  at its
principal  offices or at such other  office or agency as the Company may specify
in writing to the Holder.

      (c) Restrictions on Transfers.  This Warrant may not be transferred at any
time  without  (i)  registration  under the Act or (ii) an  exemption  from such
registration  and a written  opinion of legal  counsel  addressed to the Company
that the proposed  transfer of the Warrant may be effected without  registration
under  the  Act,  which  opinion  will be in form and  from  counsel  reasonably
satisfactory to the Company.

      (d) Permitted Transfers and Assignments.  Notwithstanding any provision to
the  contrary  in this  Section  4, the  Holder  may  transfer,  with or without
consideration,  this Warrant or any of the Warrant Shares (or a portion thereof)
to the Holder's  Affiliates  without obtaining the opinion from counsel that may
be  required  by Section  4(c)(ii),  provided  that the Holder  delivers  to the
Company  and its  counsel  certification,  documentation,  and other  assurances
reasonably  required by Company's  counsel to enable Company's counsel to render
an opinion to the Company's  Transfer  Agent that such transfer does not violate
applicable securities laws.

                                       9
<PAGE>

5. MUTILATED OR MISSING WARRANT CERTIFICATE

      If this Warrant is mutilated,  lost, stolen or destroyed,  upon request by
the Holder,  the Company will, at its expense,  issue,  in exchange for and upon
cancellation of the mutilated  Warrant,  or in substitution for the lost, stolen
or destroyed Warrant, a new Warrant,  in substantially the form of this Warrant,
representing  the right to acquire  the  equivalent  number of  Warrant  Shares,
provided however, as a prerequisite to the issuance of a substitute Warrant, the
Company may require satisfactory  evidence of loss, theft or destruction as well
as an indemnity from the Holder of a lost, stolen or destroyed Warrant.

6. PAYMENT OF TAXES

      The Company will pay all transfer and stock issuance taxes attributable to
the  preparation,  issuance and delivery of this Warrant and the Warrant  Shares
(and replacement  Warrants) including,  without limitation,  all documentary and
stamp taxes;  provided,  however,  that the Company shall not be required to pay
any tax in respect of the transfer of this Warrant,  or the issuance or delivery
of certificates for Warrant Shares or other securities in respect of the Warrant
Shares to any person or entity other than to the Holder or its transferee.

7. FRACTIONAL WARRANT SHARES

      No  fractional  Warrant  Shares  shall be  issued  upon  exercise  of this
Warrant.  The Company,  in lieu of issuing any fractional  Warrant Share,  shall
round up the number of Warrant Shares issuable to nearest whole share.

8. NO STOCK RIGHTS AND LEGEND

      No holder of this Warrant Certificate,  as such, shall be entitled to vote
or be deemed the holder of any other  securities of the Company which may at any
time be issuable on the exercise hereof,  nor shall anything contained herein be
construed to confer upon the holder of this Warrant  Certificate,  as such,  the
rights of a stockholder  of the Company or the right to vote for the election of
directors or upon any matter  submitted to stockholders at any meeting  thereof,
or give or  withhold  consent to any  corporate  action or to receive  notice of
meetings or other actions affecting stockholders (except as provided herein), or
to receive  dividends or  subscription  rights or  otherwise  (except as provide
herein).

      Each  certificate for Warrant Shares initially issued upon the exercise of
this Warrant Certificate,  and each certificate for Warrant Shares issued to any
subsequent  transferee  of any such  certificate,  shall be stamped or otherwise
imprinted with a legend in substantially the following form:

      "THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "ACT"),  OR ANY  STATE
SECURITIES  LAWS, AND NEITHER SUCH  SECURITIES  NOR ANY INTEREST  THEREIN MAY BE
OFFERED,  SOLD,  PLEDGED,   ASSIGNED  OR  OTHERWISE  TRANSFERRED  UNLESS  (1)  A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAWS, OR (2) AN EXEMPTION FROM SUCH  REGISTRATION
EXISTS  AND THE  COMPANY  RECEIVES  AN  OPINION OF COUNSEL TO THE HOLDER OF SUCH
SECURITIES,  WHICH  COUNSEL  AND  OPINION  ARE  REASONABLY  SATISFACTORY  TO THE
COMPANY,  THAT SUCH  SECURITIES  MAY BE  OFFERED,  SOLD,  PLEDGED,  ASSIGNED  OR
TRANSFERRED  IN  THE  MANNER  CONTEMPLATED  WITHOUT  AN  EFFECTIVE  REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS."

                                       10
<PAGE>

9. REGISTRATION UNDER THE SECURITIES ACT OF 1933

      The Company agrees to register the Warrant Shares for resale under the Act
on the terms and subject to the conditions set forth in the Registration  Rights
Agreement   between  the  Company  and  each  of  the  Investors  party  to  the
Subscription Agreement, pursuant to which this Warrant was issued.

10. NOTICES

      All  notices,  consents,  waivers,  and other  communications  under  this
Warrant  must be in  writing  and  will be  deemed  given  to a party  when  (a)
delivered  to the  appropriate  address  by  hand  or by  nationally  recognized
overnight courier service (costs prepaid);  (b) sent by facsimile or e-mail with
confirmation  of  transmission by the  transmitting  equipment;  (c) received or
rejected by the addressee,  if sent by certified mail, return receipt requested,
if to the registered Holder hereof; or (d) seven days after the placement of the
notice  into the mails  (first  class  postage  prepaid),  to the  Holder at the
address,  facsimile number, or e-mail address furnished by the registered Holder
to the  Company in  accordance  with the  Subscription  Agreement,  or if to the
Company,  to it at 310 West 20th  Street,  2nd Floor,  Kansas,  City,  Missouri,
64108-2005,  Attention: Mark Beemer (or to such other address, facsimile number,
or e-mail  address as the  Holder or the  Company  as a party may  designate  by
notice the other  party)  with a copy to  McGuireWoods  LLP,  1345 Avenue of the
Americas, 7th Floor, New York, New York 10105, Attention Louis W. Zehil.

11. SEVERABILITY

      If a court of competent  jurisdiction  holds any provision of this Warrant
invalid or  unenforceable,  the other  provisions of this Warrant will remain in
full  force  and  effect.   Any  provision  of  this  Warrant  held  invalid  or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

12. BINDING EFFECT

      This  Warrant  shall be binding  upon and inure to the sole and  exclusive
benefit of the Company,  its  successors and assigns,  the registered  Holder or
Holders from time to time of this Warrant and the Warrant Shares.

                                       11
<PAGE>

13. SURVIVAL OF RIGHTS AND DUTIES

      This Warrant  Certificate  shall  terminate and be of no further force and
effect on the earlier of 5:00 P.M.,  Eastern  Daylight  Time, on the  Expiration
Date or the date on which this Warrant has been exercised.

14. GOVERNING LAW

      This Warrant will be governed by and construed under the laws of the State
of New York without  regard to conflicts of laws  principles  that would require
the application of any other law.

15. DISPUTE RESOLUTION

      In the case of a dispute as to the  determination of the Exercise Price or
the arithmetic  calculation of the Warrant Shares,  the Company shall submit the
disputed  determinations  or arithmetic  calculations  via facsimile  within two
Business Days of receipt of the Exercise Notice giving rise to such dispute,  as
the case may be, to the  Holder.  If the  Holder and the  Company  are unable to
agree  upon such  determination  or  calculation  of the  Exercise  Price or the
Warrant  Shares within three  Business Days of such  disputed  determination  or
arithmetic  calculation  being submitted to the Holder,  then the Company shall,
within two Business Days submit via facsimile (a) the disputed  determination of
the Exercise Price to an independent,  reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of
the Warrant Shares to the Company's independent, outside accountant. The Company
shall cause at its expense the investment  bank or the  accountant,  as the case
may be, to perform the determinations or calculations and notify the Company and
the Holder of the results no later than ten (10)  Business Days from the time it
receives the disputed determinations or calculations.  Such investment bank's or
accountant's determination or calculation,  as the case may be, shall be binding
upon all parties absent demonstrable error.

16. NOTICES OF RECORD DATE

      Upon (a) any  establishment by the Company of a record date of the holders
of any class of securities  for the purpose of determining  the holders  thereof
who are  entitled to receive any  dividend  or other  distribution,  or right or
option to acquire  securities  of the Company,  or any other  right,  or (b) any
capital   reorganization,   reclassification,    recapitalization,   merger   or
consolidation of the Company with or into any other corporation, any transfer of
all or  substantially  all  the  assets  of the  Company,  or any  voluntary  or
involuntary dissolution,  liquidation or winding up of the Company, or the sale,
in a single  transaction,  of a majority of the Company's  voting stock (whether
newly issued, or from treasury,  or previously  issued and then outstanding,  or
any combination thereof), the Company shall mail to the Holder at least ten (10)
Business  Days,  or such longer  period as may be required by law,  prior to the
record date specified  therein,  a notice specifying (i) the date established as
the record date for the purpose of such dividend, distribution,  option or right
and a description of such dividend,  option or right, (ii) the date on which any
such  reorganization,   reclassification,   transfer,   consolidation,   merger,
dissolution,  liquidation or winding up, or sale is expected to become effective
and (iii) the date,  if any,  fixed as to when the  holders  or record of Common
Stock shall be entitled to exchange  their shares of Common Stock for securities
or  other  property  deliverable  upon  such  reorganization,  reclassification,
transfer, consolation, merger, dissolution, liquidation or winding up.

                                       12
<PAGE>

17. RESERVATION OF SHARES

      The Company shall reserve and keep  available  out of its  authorized  but
unissued  shares of Common Stock for issuance upon the exercise of this Warrant,
free from  preemptive  rights,  such number of shares of Common  Stock for which
this Warrant shall from time to time be exercisable.

18. NO THIRD PARTY RIGHTS

      This Warrant is not  intended,  and will not be  construed,  to create any
rights in any parties  other than the  Company and the Holder,  and no person or
entity may assert any rights as third-party beneficiary hereunder.

                            [SIGNATURE PAGE FOLLOWS]

                                       13
<PAGE>

      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized as of the date hereof.

                                             Alternative Energy Sources, Inc.

                                             By:
                                                -----------------------------
                                             Name: Louis W. Zehil
                                             Title: Secretary

<PAGE>

                                    EXHIBIT A

                                  EXERCISE FORM

           (To be executed by the Holder of Warrant if such Holder
                         desires to exercise Warrant)

      To Alternative Energy Sources, Inc.:

      The undersigned  hereby irrevocably elects to exercise this Warrant and to
purchase  thereunder,  ___________________  full  shares of  Alternative  Energy
Sources,  Inc.  common stock  issuable upon exercise of the Warrant and delivery
of:

      (1) $_________ (in cash as provided for in the foregoing  Warrant) and any
applicable taxes payable by the undersigned pursuant to such Warrant; and

      (2) __________  shares of Common Stock (pursuant to a Cashless Exercise in
accordance with Section  1(c)(ii) of the Warrant) (check here if the undersigned
desires  to  deliver  an  unspecified  number of  shares to be equal the  number
sufficient to effect a Cashless Exercise [___]).

      The undersigned  requests that  certificates  for such shares be issued in
the name of:

                  -----------------------------------------
     (Please print name, address and social security or federal employer
                    identification number (if applicable))

                  -----------------------------------------

                  -----------------------------------------

      If the shares  issuable  upon this  exercise of the Warrant are not all of
the Warrant  Shares which the Holder is entitled to acquire upon the exercise of
the Warrant,  the undersigned  requests that a new Warrant evidencing the rights
not so exercised be issued in the name of and delivered to:

                  -----------------------------------------
     (Please print name, address and social security or federal employer
                    identification number (if applicable))

                  -----------------------------------------

                  -----------------------------------------

                               Name of Holder (print):
                                                      ------------------------
                               (Signature):
                                           -----------------------------------
                               (By:)
                                    ------------------------------------------
                               (Title:)
                                      ----------------------------------------
                               Dated:
                                     -----------------------------------------

<PAGE>

                                    EXHIBIT B

                               FORM OF ASSIGNMENT

      FOR  VALUE  RECEIVED,  ___________________________________  hereby  sells,
assigns and  transfers to each assignee set forth below all of the rights of the
undersigned  under the  Warrant  (as defined in and  evidenced  by the  attached
Warrant) to acquire the number of Warrant  Shares set  opposite the name of such
assignee  below  and in and  to the  foregoing  Warrant  with  respect  to  said
acquisition rights and the shares of Alternative  Energy Sources,  Inc. issuable
upon exercise of the Warrant:

     Name of Assignee                Address               Number of Shares

      If the  total of the  Warrant  Shares  are not all of the  Warrant  Shares
evidenced by the foregoing Warrant,  the undersigned requests that a new Warrant
evidencing  the right to acquire the Warrant Shares not so assigned be issued in
the name of and delivered to the undersigned.

                               Name of Holder (print):
                                                      ------------------------
                               (Signature):
                                           -----------------------------------
                               (By:)
                                    ------------------------------------------
                               (Title:)
                                      ----------------------------------------
                               Dated:
                                     -----------------------------------------EXHIBIT 10.1

================================================================================

                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

                                      AMONG

                        ALTERNATIVE ENERGY SOURCES, INC.,

                            BEEMER ACQUISITION CORP.

                                       AND

                               BEEMER ENERGY, INC.

                                  June 19, 2006

================================================================================

<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

<S>               <C>                                                                              <C>
ARTICLE I             THE MERGER......................................................................1

         1.1      The Merger..........................................................................1

         1.2      The Closing.........................................................................1

         1.3      Actions at the Closing..............................................................2

         1.4      Additional Actions..................................................................2

         1.5      Conversion of Shares................................................................3

         1.6      Dissenting Shares...................................................................3

         1.7      Fractional Shares...................................................................4

         1.8      Intentionally Omitted...............................................................4

         1.9      Escrow..............................................................................4

         1.10     Certificate of Incorporation and ByLaws.............................................5

         1.11     No Further Rights...................................................................5

         1.12     Closing of Transfer Books...........................................................5

         1.13     PostClosing Adjustment..............................................................5

         1.14     Exemption From Registration.........................................................6

ARTICLE II            REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................6

         2.1      Organization, Qualification and Corporate Power.....................................6

         2.2      Capitalization......................................................................7

         2.3      Authorization of Transaction........................................................7

         2.4      Noncontravention....................................................................8

         2.5      Subsidiaries........................................................................9

         2.6      Financial Statements................................................................9

         2.7      Absence of Certain Changes.........................................................10

         2.8      Undisclosed Liabilities............................................................10

         2.9      Tax Matters........................................................................10

         2.10     Assets.............................................................................12

         2.11     Owned Real Property................................................................12

         2.12     Real Property Leases...............................................................12

         2.13     Contracts..........................................................................13

         2.14     Accounts Receivable................................................................14

         2.15     Powers of Attorney.................................................................14
<PAGE>

         2.16     Insurance..........................................................................14

         2.17     Litigation.........................................................................14

         2.18     Employees..........................................................................15

         2.19     Employee Benefits..................................................................15

         2.20     Environmental Matters..............................................................18

         2.21     Legal Compliance...................................................................19

         2.22     Customers and Suppliers............................................................19

         2.23     Permits............................................................................19

         2.24     Certain Business Relationships With Affiliates.....................................19

         2.25     Brokers' Fees......................................................................19

         2.26     Books and Records..................................................................20

         2.27     Disclosure.........................................................................20

         2.28     Duty to Make Inquiry...............................................................20

         2.29     Board Actions......................................................................20

ARTICLE III           REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE ACQUISITION SUBSIDIARY....20

         3.1      Organization, Qualification and Corporate Power....................................21

         3.2      Capitalization.....................................................................21

         3.3      Authorization of Transaction.......................................................22

         3.4      Noncontravention...................................................................22

         3.5      Subsidiaries.......................................................................22

         3.6      Exchange Act Reports...............................................................23

         3.7      Compliance with Laws...............................................................23

         3.8      Financial Statements...............................................................24

         3.9      Absence of Certain Changes.........................................................24

         3.10     Litigation.........................................................................24

         3.11     Undisclosed Liabilities............................................................25

         3.12     Tax Matters........................................................................25

         3.13     Assets.............................................................................26

         3.14     Owned Real Property................................................................26

         3.15     Real Property Leases...............................................................26

         3.16     Contracts..........................................................................27
<PAGE>

         3.17     Accounts Receivable................................................................28

         3.18     Powers of Attorney.................................................................29

         3.19     Insurance..........................................................................29

         3.20     Warranties.........................................................................29

         3.21     Employees..........................................................................29

         3.22     Employee Benefits..................................................................30

         3.23     Environmental Matters..............................................................32

         3.24     Permits............................................................................32

         3.25     Certain Business Relationships With Affiliates.....................................33

         3.26     TaxFree Reorganization.............................................................33

         3.27     Discontinuance of Operations.......................................................34

         3.28     Brokers' Fees......................................................................34

         3.29     Disclosure.........................................................................34

         3.30     Interested Party Transactions......................................................34

         3.31     Duty to Make Inquiry...............................................................34

         3.32     Accountants........................................................................35

         3.33     Minute Books.......................................................................35

         3.34     Board Action.......................................................................35

ARTICLE IV            COVENANTS......................................................................35

         4.1      Closing Efforts....................................................................35

         4.2      Governmental and Thirty Party Notices and Consents.................................35

         4.3      Current Report.....................................................................36

         4.4      Operation of Business..............................................................36

         4.5      Access to Information..............................................................37

         4.6      Operation of Business..............................................................38

         4.7      Access to Information..............................................................40

         4.8      Expenses...........................................................................40

         4.9      Indemntification...................................................................40

         4.10     Listing of Merger Shares...........................................................41

         4.13     Stock Split........................................................................41

ARTICLE V             CONDITIONS TO CONSUMMATION OF MERGER...........................................41

         5.1      Conditions to Each Party's Obligations.............................................41
<PAGE>

         5.2      Conditions to Obligations of the Parent and the Acquisition Subsidiary.............41

         5.3      Conditions to Obligations of the Company...........................................42

ARTICLE VI            INDEMNIFICATION................................................................44

         6.1      Indemnification by the Company Stockholders........................................44

         6.2      Indemnification by the Parent......................................................44

         6.3      Indemnification Claims by the Parent...............................................45

         6.4      Survival of Representations and Warranties.........................................48

         6.5      Limitations on Parent's Claims for Indemnification.................................48

ARTICLE VII           DEFINITIONS....................................................................49

ARTICLE VIII          TERMINATION....................................................................51

         8.1      Termination by Mutual Agreement....................................................51

         8.2      Termination for Failure to Close...................................................51

         8.3      Termination by Operation of Law....................................................51

         8.4      Termination for Failure to Perform Covenants or Conditions.........................52

         8.5      Effect of Termination or Default; Remedies.........................................52

         8.6      Remedies; Specific Performance.....................................................52

ARTICLE IX            MISCELLANEOUS..................................................................52

         9.1      Press Releases and Announcements...................................................52

         9.2      No Third Party Beneficiaries.......................................................53

         9.3      Entire Agreement...................................................................53

         9.4      Succession and Assignment..........................................................53

         9.5      Counterparts and Facsimile Signature...............................................53

         9.6      Headings...........................................................................53

         9.7      Notices............................................................................53

         9.8      Governing Law......................................................................54

         9.9      Amendments and Waivers.............................................................54

         9.10     Severability.......................................................................55

         9.11     Submission to Jurisdiction.........................................................55

         9.12     Construction.......................................................................55

EXHIBITS
Exhibit A         Form Escrow Agreement
Exhibit B         Opinion of Counsel to the Company
Exhibit C         Opinion of Counsel to the Parent and the Acquisition Subsidiary
<PAGE>
</TABLE>

                 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

         AGREEMENT AND PLAN OF MERGER (this  "Agreement"),  dated as of June 19,
2006, by and among Alternative Energy Sources, Inc., a Delaware corporation (the
"Parent"),  Beemer Acquisition  Corp., a Delaware  corporation (the "Acquisition
Subsidiary")  and Beemer Energy,  Inc., a Delaware  corporation (the "Company").
The Parent,  the  Acquisition  Subsidiary and the Company are each a "Party" and
referred to collectively herein as the "Parties."

         WHEREAS,  this  Agreement  contemplates  a  merger  of the  Acquisition
Subsidiary with and into the Company,  with the Company as the surviving  entity
after the merger (the  "Merger"),  whereby the  stockholders of the Company will
receive  common stock of the Parent in exchange for their  capital  stock of the
Company;

         WHEREAS,  simultaneously  with the  closing of the  Merger,  the Parent
shall  complete a private  placement of up to 10,000,000  units of securities of
the Parent, with the right, in its discretion,  to sell an additional  2,000,000
units (the "Private  Placement  Offering"),  at the purchase  price of $1.00 per
unit (the "PPO Price"), each unit consisting of one share of the Parent's common
stock and a five year warrant to purchase  one share of Parent  common stock for
an exercise price of $2.00 per share; and

         WHEREAS,  Parent,  Acquisition Subsidiary,  and the Company desire that
the Merger qualifies as a "plan of  reorganization"  under Section 368(a) of the
Internal  Revenue  Code of 1986,  as amended  (the  "Code")  and not subject the
holders of equity securities of the Company to tax liability under the Code.

         NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein  contained,  and for other good and valuable  consideration the
receipt, adequacy and sufficiency of which are hereby acknowledged,  the Parties
hereto, intending legally to be bound, agree as follows:

                                   ARTICLE I
                                   THE MERGER

      1.1   The  Merger.  Upon and subject to the terms and  conditions  of this
Agreement,  the Acquisition  Subsidiary shall merge with and into the Company at
the Effective Time (as defined  below).  From and after the Effective  Time, the
separate corporate  existence of the Acquisition  Subsidiary shall cease and the
Company  shall  continue  as  the  surviving  corporation  in  the  Merger  (the
"Surviving  Corporation").  The "Effective  Time" shall be the later to occur of
the time at which a  certificate  of merger (the  "Certificate  of Merger")  and
other appropriate or required documents prepared and executed in accordance with
the Delaware General Corporation Law (the "GCL") are filed with the Secretary of
State of Delaware. The Merger shall have the effects set forth in Section 259 of
the GCL.

      1.2   The Closing.  The closing of the  transactions  contemplated by this
Agreement  (the  "Closing")  shall take place at the  offices  of  Gottbetter  &
Partners,  LLP in New York, New York commencing at 10:00 a.m. local time on June
19, 2006,  or, if all of the  conditions  to the  obligations  of the Parties to
consummate  the  transactions  contemplated  hereby have not been  satisfied  or
waived  by  such  date,  on  such  mutually  agreeable  later  date  as  soon as
practicable  (and in any event not later than three (3) business days) after the
satisfaction  or  waiver  of  all  conditions  (excluding  the  delivery  of any
documents  to be  delivered  at the Closing by any of the  Parties) set forth in
Article V hereof (the "Closing Date").

<PAGE>

      1.3   Actions at the Closing. At the Closing:

            (a)   the Company  shall  deliver to the Parent and the  Acquisition
Subsidiary the various  certificates,  instruments and documents  referred to in
Section 5.2;

            (b)   the Parent and the Acquisition Subsidiary shall deliver to the
Company the  various  certificates,  instruments  and  documents  referred to in
Section 5.3;

            (c)   the  Surviving  Corporation  shall file with the  Secretary of
State of the State of Delaware the Certificate of Merger;

            (d)   each of the stockholders of record of the Company  immediately
prior to the Effective  Time (the "Company  Stockholders")  shall deliver to the
Parent  the  certificate(s)  representing  his,  her or its  Company  Shares (as
defined below);

            (e)   the Parent shall deliver  certificates  for the Initial Shares
(as defined below) to each Company Stockholder in accordance with Section 1.5;

            (f)   the Parent shall  deliver to the Company (i) evidence that the
Parent's board of directors is authorized to consist of five  individuals,  (ii)
the  resignations of all individuals who served as directors  and/or officers of
the  Parent  immediately  prior  to the  Closing  Date,  (iii)  evidence  of the
appointment of five directors to serve  immediately  following the Closing Date,
four of whom shall have been  designated  by the  Company  and one of whom shall
have been designated by the Parent,  and (v) evidence of the appointment of such
executive officers of the Parent to serve immediately following the Closing Date
as shall have been designated by the Company; and

            (g)   the Parent, Mark Beemer (the "Indemnification Representative")
and  Gottbetter & Partners,  LLP (the "Escrow  Agent") shall execute and deliver
the Escrow Agreement in substantially the form attached hereto as Exhibit A (the
"Escrow  Agreement")  and  the  Parent  shall  deliver  to the  Escrow  Agent  a
certificate  for the Escrow Shares (as defined  below) being placed in escrow on
the Closing Date pursuant to Section 1.9.

      1.4   Additional  Actions.  If at any time  after the  Effective  Time the
Surviving  Corporation  shall  consider or be advised  that any deeds,  bills of
sale,  assignments  or  assurances  or any other acts or things  are  necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise,  in
the Surviving  Corporation,  its right, title or interest in, to or under any of
the rights, privileges,  powers, franchises,  properties or assets of either the
Company or Acquisition  Subsidiary or (b) otherwise to carry out the purposes of
this Agreement,  the Surviving Corporation and its proper officers and directors
or their  designees  shall be authorized  (to the fullest  extent  allowed under
applicable law) to execute and deliver,  in the name and on behalf of either the
Company or Acquisition  Subsidiary,  all such deeds, bills of sale,  assignments
and  assurances  and do, in the name and on behalf of the Company or Acquisition
Subsidiary,  all such other acts and things  necessary,  desirable  or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges,  powers, franchises,  properties or assets of the Company or
Acquisition Subsidiary,  as applicable,  and otherwise to carry out the purposes
of this Agreement.

                                      -2-
<PAGE>

      1.5   Conversion of Shares. At the Effective Time, by virtue of the Merger
and  without  any  action on the part of any  Party or the  holder of any of the
following securities:

            (a)   Each share of common stock, $0.001 par value per share, of the
Company  ("Company  Shares")  issued and  outstanding  immediately  prior to the
Effective  Time (other than Company Shares owned  beneficially  by the Parent or
the  Acquisition  Subsidiary and Dissenting  Shares (as defined below)) shall be
converted into and represent the right to receive  (subject to the provisions of
Section 1.9) such number of shares of common stock, $0.0001 par value per share,
of the Parent ("Parent Common Stock") as is equal to the Common Conversion Ratio
(as defined  below).  An aggregate of  12,900,000  shares of Parent Common Stock
shall be  issued to the  stockholders  of the  Company  in  connection  with the
Merger.

            (b)   The "Common  Conversion  Ratio"  shall be obtained by dividing
(i)  12,900,000  shares  of  Parent  Common  Stock by (ii) the  total  number of
outstanding  Company Shares immediately prior to the Effective Time on a diluted
basis  after  giving  effect  to  the  exercise  of  all   outstanding   options
("Options"),  warrants  ("Warrants") and other rights to acquire Company Shares.
Stockholders of record of the Company as of the Closing Date (the  "Indemnifying
Stockholders")  shall be  entitled to receive  immediately  95% of the shares of
Parent Common Stock into which their Company Shares were  converted  pursuant to
this  Section 1.5 (the  "Initial  Shares");  the  remaining  5% of the shares of
Parent Common Stock into which their Company Shares were  converted  pursuant to
this Section 1.5,  rounded to the nearest whole number (with 0.5 shares  rounded
upward to the nearest whole number) (the "Escrow Shares"), shall be deposited in
escrow  pursuant to Section 1.9 and shall be held and disposed of in  accordance
with the terms of the Escrow Agreement. The Initial Shares and the Escrow Shares
shall together be referred to herein as the "Merger Shares."

            (c)   Each issued and outstanding  share of common stock,  par value
$0.001 per share,  of the  Acquisition  Subsidiary  shall be converted  into one
validly  issued,  fully paid and  nonassessable  share of Surviving  Corporation
Common Stock.

      1.6   Dissenting Shares.

            (a)   For  purposes of this  Agreement,  "Dissenting  Shares"  means
Company  Shares held as of the Effective Time by a Company  Stockholder  who has
not voted such Company Shares in favor of the adoption of this Agreement and the
Merger and with  respect to which  appraisal  shall have been duly  demanded and
perfected  in  accordance  with  Section  262 of the  GCL  and  not  effectively
withdrawn or forfeited prior to the Effective Time.  Dissenting Shares shall not
be converted  into or represent the right to receive the Merger  Shares,  unless
such Company  Stockholder's  right to appraisal  shall have ceased in accordance
with  Section 262 of the GCL. If such  Company  Stockholder  has so forfeited or
withdrawn his, her or its right to appraisal of Dissenting Shares,  then, (i) as
of the occurrence of such event, such holder's  Dissenting Shares shall cease to
be  Dissenting  Shares and shall be converted  into and  represent  the right to
receive the Merger Shares issuable in respect of such Company Shares pursuant to
Section 1.5, and (ii)  promptly  following  the  occurrence  of such event,  the
Parent shall deliver to such Company Stockholder a certificate  representing 95%
of the Merger  Shares to which such holder is  entitled  pursuant to Section 1.5
(which  shares  shall be  considered  Initial  Shares for all  purposes  of this
Agreement) and shall deliver to the Escrow Agent a certificate  representing the
remaining 5% of the Merger  Shares to which such holder is entitled  pursuant to
Section 1.5 (which shares shall be considered  Escrow Shares for all purposes of
this Agreement).

                                      -3-
<PAGE>

            (b)   The Company shall give the Parent prompt notice of any written
demands for appraisal of any Company  Shares,  withdrawals of such demands,  and
any other  instruments that relate to such demands received by the Company.  The
Company shall not, except with the prior written consent of the Parent, make any
payment with respect to any demands for appraisal of Company  Shares or offer to
settle or settle any such demands.

      1.7   Fractional Shares. No certificates or scrip representing  fractional
Initial  Shares shall be issued to Company  Stockholders  on the  surrender  for
exchange  of  certificates   that  immediately   prior  to  the  Effective  Time
represented  Company Shares converted into Merger Shares pursuant to Section 1.5
("Certificates")  and such  Company  Stockholders  shall not be  entitled to any
voting rights,  rights to receive any dividends or distributions or other rights
as a stockholder  of the Parent with respect to any  fractional  Initial  Shares
that would have otherwise been issued to such Company  Stockholders.  In lieu of
any fractional Initial Shares that would have otherwise been issued, each former
Company  Stockholder  that would  have been  entitled  to  receive a  fractional
Initial Share shall, on proper surrender of such person's Certificates,  receive
such whole number of Initial Shares as is equal to the precise number of Initial
Shares to which such Company  Stockholder would be entitled,  rounded up or down
to the nearest  whole number (with a  fractional  interest  equal to 0.5 rounded
upward to the nearest whole number); provided that each such Company Stockholder
shall receive at least one Initial Share.

      1.8   Intentionally Omitted.

      1.9   Escrow.  On the Closing Date, the Parent shall deliver to the Escrow
Agent a  certificate  (issued  in the name of the Escrow  Agent or its  nominee)
representing the Escrow Shares,  as described in Section 1.5, for the purpose of
securing the  indemnification  obligations of the Indemnifying  Stockholders set
forth in this  Agreement.  The Escrow  Shares  shall be held by the Escrow Agent
pursuant to the Escrow Agreement, in substantially the form set forth in Exhibit
A attached hereto. The Escrow Shares shall be held as a trust fund and shall not
be  subject  to any lien,  attachment,  trustee  process  or any other  judicial
process of any creditor of any Party, and shall be held and disbursed solely for
the purposes and in accordance with the terms of the Escrow Agreement.

                                      -4-
<PAGE>

      1.10  Certificate of Incorporation and Bylaws.

            (a)   The  certificate  of  incorporation  of the  Company in effect
immediately   prior  to  the  Effective   Time  shall  be  the   certificate  of
incorporation of the Surviving Corporation until duly amended or repealed.

            (b)   The bylaws of the Company in effect  immediately  prior to the
Effective  Time  shall be the  bylaws of the  Surviving  Corporation  until duly
amended or repealed.

      1.11  No Further  Rights.  From and after the  Effective  Time, no Company
Shares  shall be deemed to be  outstanding,  and holders of  Certificates  shall
cease to have any rights with respect  thereto,  except as provided herein or by
law.

      1.12  Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company  shall be closed and no transfer  of Company  Shares  shall
thereafter be made. If, after the Effective Time,  Certificates are presented to
the Parent or the Surviving  Corporation,  they shall be cancelled and exchanged
for Initial Shares in accordance with Section 1.5, subject to Section 1.9 and to
applicable law in the case of Dissenting Shares.

      1.13  Post-Closing  Adjustment.  In the  event  that,  during  the  period
commencing  from the Closing  Date and ending on the second  anniversary  of the
Closing Date, the Company (or its controlling  stockholders immediately prior to
the Merger) incurs any Loss with respect to, in connection with, or arising from
any Parent  Liabilities,  then promptly  following the filing by the Parent with
the  Securities  and  Exchange  Commission  (the  "SEC") of a  quarterly  report
relating to the most recent completed  quarter for which such  determination has
been made,  the Parent  shall issue to the  Company  Stockholders  and/or  their
designees  such  number of shares of Parent  Common  Stock as would  result from
dividing (x) the whole  dollar  amount  representing  such Losses by (y) the PPO
Price.  The limit on the  aggregate  number of  shares  of Parent  Common  Stock
issuable  under this  Section 1.13 shall be  2,000,000  shares.  As used in this
Section 1.13:  (a) "Loss" shall mean any and all costs and  expenses,  including
reasonable  attorneys'  fees,  court costs,  reasonable  accountants'  fees, and
damages and losses, net of any insurance proceeds actually received by the Party
suffering the Loss with respect thereto; (b) "Claims" shall include, but are not
limited to, any claim,  notice, suit, action,  investigation,  other proceedings
(whether  actual or  threatened);  and (c) "Parent  Liabilities"  shall mean all
Claims  against  and  liabilities,  obligations  or  indebtedness  of any nature
whatsoever  of the  Parent,  accruing  on or before the  Closing  Date  (whether
primary, secondary,  direct, indirect,  liquidated,  unliquidated or contingent,
matured  or  unmatured),  including,  but not  limited  to (i) any breach by the
Parent or the Acquisition Subsidiary of any of their respective  representations
or warranties set forth in Article III herein,  (ii) any litigation  threatened,
pending  or for which a basis  exists,  that has  resulted  or may result in the
entry of judgment in damages or otherwise  against the Parent or any Subsidiary;
(iii) any and all outstanding  debts owed by the Parent or any subsidiary of the
parent; (iv) any and all internal or employee related disputes,  arbitrations or
administrative proceedings threatened, pending or otherwise outstanding, (v) any
and all  liens,  foreclosures,  settlements,  or other  threatened,  pending  or
otherwise outstanding  financial,  legal or similar obligations of the Parent or
any  subsidiary  of the  Parent,  and (vi) all fees  and  expenses  incurred  in
connection with effecting the adjustments  contemplated by this Section 1.13, as
such Parent Liabilities are determined by the Parent's independent  auditors, on
a quarterly basis.

                                      -5-
<PAGE>

      1.14  Exemption From Registration.  Parent and the Company intend that the
shares of Parent  Common  Stock to be issued  pursuant  to Section 1.5 hereof or
upon exercise of Parent Options  granted  pursuant to Section 1.8 hereof in each
case in connection  with the Merger will be issued in a transaction  exempt from
registration under the Securities Act of 1933, as amended, ("Securities Act") by
reason of section  4(2) of the  Securities  Act and/or Rule 506 of  Regulation D
promulgated by the SEC thereunder.

                                   ARTICLE II
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company  represents  and  warrants  to the Parent that the  statements
contained in this  Article II are true and  correct,  except as set forth in the
disclosure schedule provided by the Company to the Parent on the date hereof and
accepted in writing by the Parent (the  "Disclosure  Schedule").  The Disclosure
Schedule  shall be arranged in  paragraphs  corresponding  to the  numbered  and
lettered paragraphs  contained in this Article II, and except to the extent that
it is clear from the context  thereof that such  disclosure  also applies to any
other  paragraph,  the  disclosures in any paragraph of the Disclosure  Schedule
shall qualify only the corresponding  paragraph in this Article II. For purposes
of this  Article II, the phrase "to the  knowledge of the Company" or any phrase
of  similar  import  shall be deemed  to refer to the  actual  knowledge  of the
executive  officers of the Company,  as well as any other  knowledge  which such
executive  officers would have possessed had they made  reasonable  inquiry with
respect to the matter in question.

      2.1   Organization,  Qualification  and Corporate  Power. The Company is a
corporation  duly  organized,  validly  existing and in  corporate  and tax good
standing under the laws of the State of Delaware.  The Company is duly qualified
to conduct  business and is in corporate and tax good standing under the laws of
each  jurisdiction  in which the nature of its  businesses  or the  ownership or
leasing of its properties requires such qualification,  except where the failure
to be so qualified or in good standing,  individually  or in the aggregate,  has
not had and would not reasonably be expected to have a Company  Material Adverse
Effect (as defined  below).  The Company has all requisite  corporate  power and
authority to carry on the  businesses  in which it is engaged and to own and use
the properties owned and used by it. The Company has furnished or made available
to the Parent complete and accurate  copies of its certificate of  incorporation
and bylaws. The Company is not in default under or in violation of any provision
of its  certificate  of  incorporation,  as amended to date,  or its bylaws,  as
amended to date.  For  purposes of this  Agreement,  "Company  Material  Adverse
Effect"  means a material  adverse  effect on the  assets,  business,  condition
(financial  or  otherwise),  results of  operations  or future  prospects of the
Company.

                                      -6-
<PAGE>

      2.2   Capitalization. The authorized capital stock of the Company consists
of 10,000  Company  Shares.  As of the date of this  Agreement,  10,000  Company
Shares  were  issued and  outstanding,  and no Company  Shares  were held in the
treasury of the Company.  Section 2.2 of the  Disclosure  Schedule  sets forth a
complete and accurate list of (i) all  stockholders  of the Company,  indicating
the  number  and class of  Company  Shares  held by each  stockholder,  (ii) all
outstanding  Options and Warrants,  indicating (A) the holder  thereof,  (B) the
number of Company  Shares  subject to each Option and Warrant,  (C) the exercise
price,  date of grant,  vesting  schedule and expiration date for each Option or
Warrant,  and (D) any terms regarding the acceleration of vesting, and (iii) all
stock option plans and other stock or equity-related  plans of the Company.  All
of the issued and  outstanding  Company  Shares are, and all Company Shares that
may be issued upon  exercise of Options or  Warrants  will be (upon  issuance in
accordance  with their terms),  duly  authorized,  validly  issued,  fully paid,
nonassessable  and free of all  preemptive  rights.  Other than the  Options and
Warrants  listed  in  Section  2.2  of the  Disclosure  Schedule,  there  are no
outstanding or authorized options,  warrants,  rights, agreements or commitments
to which the Company is a party or which are binding upon the Company  providing
for the  issuance  or  redemption  of any of its  capital  stock.  There  are no
outstanding or authorized  stock  appreciation,  phantom stock or similar rights
with respect to the Company.  There are no  agreements to which the Company is a
party or by which it is bound  with  respect to the  voting  (including  without
limitation voting trusts or proxies),  registration under the Securities Act, or
sale  or  transfer   (including  without  limitation   agreements   relating  to
pre-emptive  rights,  rights of first refusal,  co-sale  rights or  "drag-along"
rights) of any securities of the Company. To the knowledge of the Company, there
are no agreements  among other parties,  to which the Company is not a party and
by  which  it is not  bound,  with  respect  to the  voting  (including  without
limitation  voting  trusts or proxies) or sale or  transfer  (including  without
limitation  agreements  relating to rights of first  refusal,  co-sale rights or
"drag-along"  rights) of any  securities  of the Company.  All of the issued and
outstanding Company Shares were issued in compliance with applicable federal and
state securities laws.

      2.3   Authorization  of  Transaction.  The Company has all requisite power
and  authority  to  execute  and  deliver  this  Agreement  and to  perform  its
obligations  hereunder.  The  execution  and  delivery  by the  Company  of this
Agreement and, subject to the adoption of this Agreement and the approval of the
Merger by a majority of the votes represented by the outstanding  Company Shares
entitled  to vote on this  Agreement  and the  Merger  (the  "Requisite  Company
Stockholder  Approval"),  the  consummation  by the Company of the  transactions
contemplated  hereby  have been duly and  validly  authorized  by all  necessary
corporate action on the part of the Company.  Without limiting the generality of
the  foregoing,  the board of directors of the Company (i)  determined  that the
Merger  is fair  and in the  best  interests  of the  Company  and  the  Company
Stockholders,  (ii) adopted this Agreement in accordance  with the provisions of
the GCL, and (iii)  directed that this  Agreement and the Merger be submitted to
the  Company  Stockholders  for their  adoption  and  approval  and  resolved to
recommend  that the Company  Stockholders  vote in favor of the adoption of this
Agreement  and the  approval of the  Merger.  This  Agreement  has been duly and
validly  executed  and  delivered  by the  Company and  constitutes  a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.

                                      -7-
<PAGE>

      2.4   Noncontravention. Subject to the filing of the Certificate of Merger
as required by the GCL,  neither the  execution  and  delivery by the Company of
this  Agreement,  nor  the  consummation  by the  Company  of  the  transactions
contemplated  hereby,  will (a)  conflict  with or violate any  provision of the
certificate  of  incorporation  or bylaws of the  Company,  as  amended to date,
bylaws or other  organizational  document of any Subsidiary (as defined  below),
(b) require on the part of the Company or any Subsidiary any filing with, or any
permit,  authorization,   consent  or  approval  of,  any  court,  arbitrational
tribunal,   administrative   agency  or  commission  or  other  governmental  or
regulatory  authority  or  agency (a  "Governmental  Entity"),  except  for such
permits,  authorizations,  consents  and  approvals  for  which the  Company  is
obligated  to use its  Reasonable  Best  Efforts to obtain  pursuant  to Section
4.2(a),  (c) conflict with,  result in a breach of,  constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of  obligations  under,  create in any Party the right to  terminate,  modify or
cancel,  or  require  any  notice,  consent or waiver  under,  any  contract  or
instrument  to which the  Company or any  Subsidiary  is a party or by which the
Company or any  Subsidiary  is bound or to which any of their assets is subject,
except  for  (i)  any  conflict,  breach,  default,  acceleration,  termination,
modification  or cancellation in any contract or instrument set forth in Section
2.4 of the  Disclosure  Schedule,  for which the Company is obligated to use its
Reasonable  Best  Efforts to obtain  waiver,  consent or  approval  pursuant  to
Section 4.2(b), (ii) any conflict, breach, default,  acceleration,  termination,
modification or cancellation which, individually or in the aggregate,  would not
have a Company  Material  Adverse  Effect  and would not  adversely  affect  the
consummation  of the  transactions  contemplated  hereby  or (iii)  any  notice,
consent or waiver the absence of which, individually or in the aggregate,  would
not have a Company  Material  Adverse Effect and would not adversely  affect the
consummation  of  the  transactions  contemplated  hereby,  (d)  result  in  the
imposition  of any Security  Interest (as defined  below) upon any assets of the
Company or any Subsidiary or (e) violate any order,  writ,  injunction,  decree,
statute,  rule or regulation applicable to the Company, any Subsidiary or any of
their properties or assets. For purposes of this Agreement:  "Security Interest"
means any mortgage, pledge, security interest, encumbrance, charge or other lien
(whether arising by contract or by operation of law), other than (i) mechanic's,
materialmen's,   and  similar   liens,   (ii)  liens  arising   under   worker's
compensation,  unemployment insurance, social security,  retirement, and similar
legislation,   and  (iii)  liens  on  goods  in  transit  incurred  pursuant  to
documentary  letters of credit,  in each case arising in the Ordinary  Course of
Business (as defined below) of the Company and not material to the Company;  and
"Ordinary  Course of  Business"  means  the  ordinary  course  of the  Company's
business,  consistent  with past custom and practice  (including with respect to
frequency and amount).

                                      -8-
<PAGE>

      2.5   Subsidiaries.

            (a)   Section 2.5 of the  Disclosure  Schedule  sets forth:  (i) the
name of each Company Subsidiary;  (ii) the number and type of outstanding equity
securities  of each  Subsidiary  and a list of the  holders  thereof;  (iii) the
jurisdiction of organization of each Subsidiary;  (iv) the names of the officers
and directors of each Company  Subsidiary;  and (v) the  jurisdictions  in which
each  Company  Subsidiary  is  qualified  or holds  licenses to do business as a
foreign  corporation  or  other  entity.  For  purposes  of  this  Agreement,  a
"Subsidiary"  shall mean any  corporation,  partnership,  joint venture or other
entity  in  which a Party  has,  directly  or  indirectly,  an  equity  interest
representing  50% or more of the  equity  securities  thereof  or  other  equity
interests therein (collectively, the "Subsidiaries")

            (b)   Each Subsidiary is an entity duly organized,  validly existing
and in corporate and tax good standing under the laws of the jurisdiction of its
incorporation.  Each Subsidiary is duly qualified to conduct  business and is in
corporate and tax good standing under the laws of each jurisdiction in which the
nature of its businesses or the ownership or leasing of its properties  requires
qualification to do business,  except where the failure to be so qualified or in
good  standing,  individually  or in the  aggregate,  has not had and  would not
reasonably  be  expected  to  have  a  Company  Material  Adverse  Effect.  Each
Subsidiary  has all requisite  power and authority to carry on the businesses in
which it is engaged and to own and use the properties  owned and used by it. The
Company has  delivered  or made  available  to the Parent  complete and accurate
copies  of the  charter,  bylaws  or  other  organizational  documents  of  each
Subsidiary.  No  Subsidiary is in default under or in violation of any provision
of its charter, bylaws or other organizational  documents. All of the issued and
outstanding  equity  securities of each Subsidiary are duly authorized,  validly
issued,  fully paid,  nonassessable  and free of preemptive  rights.  All equity
securities of each Subsidiary  that are held of record or owned  beneficially by
either  the  Company or any  Subsidiary  are held or owned free and clear of any
restrictions on transfer (other than  restrictions  under the Securities Act and
state securities laws), claims, Security Interests,  options,  warrants, rights,
contracts, calls, commitments, equities and demands. There are no outstanding or
authorized  options,  warrants,  rights,  agreements or commitments to which the
Company  or any  Subsidiary  is a party  or  which  are  binding  on any of them
providing for the issuance,  disposition or acquisition of any equity securities
of any Subsidiary. There are no outstanding stock appreciation, phantom stock or
similar rights with respect to any Subsidiary.  To the knowledge of the Company,
there are no voting trusts,  proxies or other agreements or understandings  with
respect to the voting of any equity securities of any Subsidiary.

            (c)   Except  as set  forth  in  Section  2.5(c)  of the  Disclosure
Schedule, the Company does not control directly or indirectly or have any direct
or  indirect  equity  participation  or  similar  interest  in any  corporation,
partnership,  limited liability company,  joint venture, trust or other business
association which is not a Subsidiary.

      2.6   Financial  Statements.  The Company was  incorporated in Delaware on
May  12,  2006  (the  "Organization  Date"),  and  currently  has no  assets  or
liabilities other than those incurred in connection with its  organization.  The
Company has not prepared any financial statements.

                                      -9-
<PAGE>

      2.7   Absence of Certain Changes.  Since the Organization Date, and except
as set forth in Section 2.7 of the Disclosure  Schedule,  (a) there has occurred
no event or development  which,  individually  or in the aggregate,  has had, or
could  reasonably be expected to have in the future,  a Company Material Adverse
Effect,  and (b) neither the  Company  nor any  Subsidiary  has taken any of the
actions set forth in paragraphs (a) through (m) of Section 4.4.

      2.8   Undisclosed  Liabilities.  None of the Company and its  Subsidiaries
has any liability  (whether  known or unknown,  whether  absolute or contingent,
whether liquidated or unliquidated and whether due or to become due), except for
(a) liabilities  which have arisen since the  Organization  Date in the Ordinary
Course of Business and (b)  contractual  and other  liabilities  incurred in the
Ordinary  Course of Business which are not required by GAAP to be reflected on a
balance sheet.

      2.9   Tax Matters.

            (a)   For purposes of this Agreement, the following terms shall have
the following meanings:

                  (i)   "Taxes" means all taxes, charges,  fees, levies or other
            similar  assessments or liabilities,  including  without  limitation
            income, gross receipts, ad valorem,  premium,  value-added,  excise,
            real property, personal property, sales, use, transfer, withholding,
            employment,   unemployment  insurance,   social  security,  business
            license, business organization, environmental, workers compensation,
            payroll,  profits,  license, lease, service, service use, severance,
            stamp, occupation,  windfall profits, customs, duties, franchise and
            other  taxes  imposed by the United  States of America or any state,
            local  or  foreign  government,  or any  agency  thereof,  or  other
            political  subdivision of the United States or any such  government,
            and any interest, fines, penalties,  assessments or additions to tax
            resulting  from,  attributable to or incurred in connection with any
            tax or any contest or dispute thereof.

                  (ii)  "Tax Returns" means all reports, returns,  declarations,
            statements or other information  required to be supplied to a taxing
            authority in connection with Taxes.

            (b)   Each of the Company and the Subsidiaries has filed on a timely
basis all Tax Returns  that it was  required  to file,  and all such Tax Returns
were complete and accurate in all material respects. Neither the Company nor any
Subsidiary is or has ever been a member of a group of corporations with which it
has filed (or been  required  to file)  consolidated,  combined  or unitary  Tax
Returns,  other than a group of which only the Company and the  Subsidiaries are
or were members.  Each of the Company and the  Subsidiaries has paid on a timely
basis all Taxes that were due and  payable.  The unpaid Taxes of the Company and
the  Subsidiaries  for tax periods  subsequent to the  Organization  Date do not
exceed the accruals and reserves for Taxes (excluding  accruals and reserves for
deferred Taxes  established to reflect timing  differences  between book and Tax
income)  set forth in the  Company's  internal  financial  records.  Neither the
Company nor any  Subsidiary  has any actual or potential  liability  for any Tax
obligation of any taxpayer (including without limitation any affiliated group of
corporations  or other  entities  that  included  the Company or any  Subsidiary
during a prior  period) other than the Company and the  Subsidiaries.  All Taxes
that the  Company or any  Subsidiary  is or was  required  by law to withhold or
collect have been duly withheld or collected and, to the extent  required,  have
been paid to the proper Governmental Entity.

                                      -10-
<PAGE>

            (c)   The  Company has  delivered  or made  available  to the Parent
complete and  accurate  copies of all federal  income Tax  Returns,  examination
reports and  statements  of  deficiencies  assessed  against or agreed to by the
Company or any Subsidiary since the  Organization  Date. No examination or audit
of any Tax Return of the Company or any Subsidiary by any Governmental Entity is
currently  in  progress  or, to the  knowledge  of the  Company,  threatened  or
contemplated.  Neither the Company nor any  Subsidiary  has been informed by any
jurisdiction  that the jurisdiction  believes that the Company or Subsidiary was
required to file any Tax Return that was not filed.  Neither the Company nor any
Subsidiary has waived any statute of limitations with respect to Taxes or agreed
to an extension of time with respect to a Tax assessment or deficiency.

            (d)   Neither the Company nor any  Subsidiary:  (i) is a "consenting
corporation"  within the meaning of Section  341(f) of the Code, and none of the
assets of the  Company or the  Subsidiaries  are  subject to an  election  under
Section 341(f) of the Code; (ii) has been a United States real property  holding
corporation  within  the  meaning of Section  897(c)(2)  of the Code  during the
applicable period specified in Section  897(c)(l)(A)(ii)  of the Code; (iii) has
made any  payments,  is  obligated  to make any  payments,  or is a party to any
agreement  that could obligate it to make any payments that may be treated as an
"excess  parachute  payment" under Section 280G of the Code; (iv) has any actual
or potential  liability  for any Taxes of any person (other than the Company and
its  Subsidiaries)  under Treasury  Regulation  Section 1.1502-6 (or any similar
provision of federal,  state,  local,  or foreign  law),  or as a transferee  or
successor,  by contract, or otherwise;  or (v) is or has been required to make a
basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).

            (e)   None of the assets of the  Company or any  Subsidiary:  (i) is
property  that is  required  to be  treated as being  owned by any other  person
pursuant to the  provisions  of former  Section  168(f)(8) of the Code;  (ii) is
"tax-exempt  use property"  within the meaning of Section 168(h) of the Code; or
(iii)  directly  or  indirectly  secures  any debt the  interest on which is tax
exempt under Section 103(a) of the Code.

            (f)   Neither the Company nor any  Subsidiary has undergone a change
in its method of accounting  resulting in an  adjustment  to its taxable  income
pursuant to Section 481 of the Code.

                                      -11-
<PAGE>

            (g)   No state  or  federal  "net  operating  loss"  of the  Company
determined  as of the Closing Date is subject to  limitation on its use pursuant
to Section 382 of the Code or comparable  provisions of state law as a result of
any  "ownership  change"  within the  meaning  of Section  382(g) of the Code or
comparable provisions of any state law occurring prior to the Closing Date.

      2.10  Assets.  Each of the Company and the Subsidiaries owns or leases all
tangible  assets  necessary  for the  conduct  of its  businesses  as  presently
conducted  and as  presently  proposed to be  conducted.  Except as set forth in
Section 2.10 of the Disclosure  Schedule,  each such tangible asset is free from
material  defects,  has been  maintained  in  accordance  with  normal  industry
practice,  is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used.  No asset
of the Company or any  Subsidiary  (tangible  or  intangible)  is subject to any
Security Interest.

      2.11  Owned Real Property. Neither the Company nor any Subsidiary owns any
real  property,  except as otherwise  listed in Section  2.11 of the  Disclosure
Schedule.

      2.12  Real Property Leases.  Section 2.12 of the Disclosure Schedule lists
all real property leased or subleased to or by the Company or any Subsidiary and
lists the term of such lease, any extension and expansion options,  and the rent
payable  thereunder.  The Company has delivered or made  available to the Parent
complete and accurate copies of the leases and subleases  listed in Section 2.12
of the Disclosure  Schedule.  With respect to each lease and sublease  listed in
Section 2.12 of the Disclosure Schedule:

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

            (b)   the  lease or  sublease  will  continue  to be  legal,  valid,
binding,  enforceable  and in full force and effect  immediately  following  the
Closing in accordance with the terms thereof as in effect  immediately  prior to
the Closing;

            (c)   neither the Company nor any  Subsidiary  nor, to the knowledge
of the Company, any other party, is in breach or violation of, or default under,
any such lease or  sublease,  and no event has  occurred,  is pending or, to the
knowledge of the Company, is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by the Company
or any  Subsidiary  or, to the  knowledge of the Company,  any other party under
such lease or sublease;

            (d)   neither  the  Company  nor  any   Subsidiary   has   assigned,
transferred,  conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold; and

            (e)   to  the  knowledge  of  the  Company,  there  is  no  Security
Interest,  easement,  covenant  or  other  restriction  applicable  to the  real
property  subject to such lease,  except for recorded  easements,  covenants and
other  restrictions  which do not  materially  impair  the  current  uses or the
occupancy by the Company or a Subsidiary of the property subject thereto.

                                      -12-
<PAGE>

      2.13  Contracts.

            (a)   Section 2.13 of the  Disclosure  Schedule  lists the following
agreements  (written or oral) to which the Company or any  Subsidiary is a party
as of the date of this Agreement:

                  (i)   any agreement (or group of related  agreements)  for the
            lease of personal  property from or to third  parties  providing for
            lease  payments in excess of $25,000 per annum or having a remaining
            term longer than 12 months;

                  (ii)  any agreement (or group of related  agreements)  for the
            purchase  or sale of products  or for the  furnishing  or receipt of
            services (A) which calls for performance  over a period of more than
            one year, (B) which involves more than the sum of $25,000, or (C) in
            which  the  Company  or any  Subsidiary  has  granted  manufacturing
            rights,  "most  favored  nation"  pricing  provisions  or  exclusive
            marketing  or  distribution  rights  relating  to  any  products  or
            territory  or has agreed to purchase a minimum  quantity of goods or
            services  or has agreed to purchase  goods or  services  exclusively
            from a certain party;

                  (iii) any  agreement  which,  to the knowledge of the Company,
            establishes a partnership or joint venture;

                  (iv)  any  agreement  (or group of related  agreements)  under
            which  it has  created,  incurred,  assumed  or  guaranteed  (or may
            create,   incur,  assume  or  guarantee)   indebtedness   (including
            capitalized lease obligations)  involving more than $25,000 or under
            which it has imposed  (or may impose) a Security  Interest on any of
            its assets, tangible or intangible;

                  (v)   any    agreement    concerning     confidentiality    or
            noncompetition;

                  (vi)  any employment or consulting agreement;

                  (vii) any  agreement   involving  any  officer,   director  or
            stockholder  of the  Company  or any  affiliate,  as defined in Rule
            12b-2 under the Exchange Act (an "Affiliate"), thereof;

                  (viii) any agreement under which the consequences of a default
            or  termination  would  reasonably  be  expected  to have a  Company
            Material Adverse Effect;

                  (ix)  any agreement  which contains any  provisions  requiring
            the Company or any  Subsidiary  to indemnify any other party thereto
            (excluding  indemnities  contained in  agreements  for the purchase,
            sale or license of products  entered into in the Ordinary  Course of
            Business); and

                                      -13-
<PAGE>

                  (x)   any other  agreement  (or group of  related  agreements)
            either  involving  more  than  $25,000  or not  entered  into in the
            Ordinary Course of Business.

            (b)   The Company has  delivered  or made  available to the Parent a
complete  and  accurate  copy of each  agreement  listed in Section  2.13 of the
Disclosure Schedule. With respect to each agreement so listed, and except as set
forth in Section 2.13 of the  Disclosure  Schedule:  (i) the agreement is legal,
valid,  binding and enforceable and in full force and effect; (ii) the agreement
will continue to be legal, valid,  binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect  immediately  prior to the Closing;  and (iii) neither the Company nor
any  Subsidiary  nor, to the  knowledge of the Company,  any other party,  is in
breach or violation of, or default under,  any such agreement,  and no event has
occurred, is pending or, to the knowledge of the Company, is threatened,  which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Company or any  Subsidiary  or, to the knowledge of the
Company, any other party under such contract.

      2.14  Accounts Receivable. The Company has no accounts receivable.

      2.15  Powers  of  Attorney.  Except as set  forth in  Section  2.15 of the
Disclosure  Schedule,  there are no outstanding  powers of attorney  executed on
behalf of the Company or any Subsidiary.

      2.16  Insurance.  Section  2.16  of the  Disclosure  Schedule  lists  each
insurance policy (including fire, theft,  casualty,  general liability,  workers
compensation,  business  interruption,   environmental,  product  liability  and
automobile  insurance  policies and bond and surety  arrangements)  to which the
Company or any Subsidiary is a party.  Such  insurance  policies are of the type
and in amounts  customarily  carried by organizations  conducting  businesses or
owning assets similar to those of the Company and the Subsidiaries.  There is no
material  claim  pending  under any such  policy as to which  coverage  has been
questioned,  denied or disputed by the underwriter of such policy.  All premiums
due and payable under all such policies have been paid,  neither the Company nor
any Subsidiary may be liable for retroactive  premiums or similar payments,  and
the Company and the  Subsidiaries  are  otherwise in  compliance in all material
respects  with the terms of such  policies.  The Company has no knowledge of any
threatened  termination  of, or material  premium  increase with respect to, any
such policy.  Each such policy will continue to be enforceable and in full force
and effect immediately following the Effective Time in accordance with the terms
thereof as in effect immediately prior to the Effective Time.

      2.17  Litigation.  As of the date of this  Agreement,  there is no action,
suit,  proceeding,  claim,  arbitration or investigation before any Governmental
Entity or before any arbitrator (a "Legal  Proceeding")  which is pending or has
been threatened in writing against the Company or any Subsidiary which (a) seeks
either  damages in excess of $25,000 or  equitable  relief or (b) if  determined
adversely to the Company or such Subsidiary,  could have, individually or in the
aggregate, a Company Material Adverse Effect.

                                      -14-
<PAGE>

      2.18  Employees.

            (a)   Section 2.18 of the Disclosure Schedule contains a list of all
employees of the Company and each  Subsidiary  whose annual rate of compensation
exceeds  $50,000  per year,  along  with the  position  and the  annual  rate of
compensation  of each  such  person.  Section  2.18 of the  Disclosure  Schedule
contains a list of all  employees  of the  Company or any  Subsidiary  who are a
party to a non-competition agreement with the Company or any Subsidiary;  copies
of  such  agreements  have  previously  been  delivered  to the  Parent.  To the
knowledge of the Company, no key employee or group of employees has any plans to
terminate employment with the Company or any Subsidiary.

            (b)   Neither the Company nor any  Subsidiary is a party to or bound
by any collective  bargaining  agreement,  nor has any of them  experienced  any
strikes,  grievances,  claims  of unfair  labor  practices  or other  collective
bargaining disputes.  To the knowledge of the Company, no organizational  effort
has been made or threatened,  either  currently or within the past two years, by
or on behalf of any labor union with  respect to employees of the Company or any
Subsidiary.  To the knowledge of the Company there are no circumstances or facts
which  could  individually  or  collectively  give  rise  to  a  suit  based  on
discrimination of any kind.

      2.19  Employee Benefits.

            (a)   For purposes of this Agreement, the following terms shall have
the following meanings:

                  (i)   "Employee  Benefit  Plan"  means any  "employee  pension
            benefit  plan" (as defined in Section 3(2) of ERISA),  any "employee
            welfare benefit plan" (as defined in Section 3(1) of ERISA), and any
            other  written  or oral plan,  agreement  or  arrangement  involving
            direct  or  indirect  compensation,   including  without  limitation
            insurance  coverage,   severance  benefits,   disability   benefits,
            deferred  compensation,  bonuses,  stock  options,  stock  purchase,
            phantom  stock,  stock  appreciation  or other  forms  of  incentive
            compensation or post-retirement compensation.

                  (ii)  "ERISA" means the Employee  Retirement  Income  Security
            Act of 1974, as amended.

                  (iii) "ERISA  Affiliate"  means any entity which is, or at any
            applicable  time  was,  a  member  of  (1)  a  controlled  group  of
            corporations (as defined in Section 414(b) of the Code), (2) a group
            of trades or businesses  under common control (as defined in Section
            414(c) of the Code), or (3) an affiliated  service group (as defined
            under Section  414(m) of the Code or the  regulations  under Section
            414(o) of the Code),  any of which  includes or included the Company
            or a Subsidiary.

                                      -15-
<PAGE>

            (b)   Section 2.19(b) of the Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans  maintained,  or contributed to,
by the Company,  any  Subsidiary or any ERISA  Affiliate.  Complete and accurate
copies of (i) all  Employee  Benefit  Plans which have been  reduced to writing,
(ii) written  summaries  of all  unwritten  Employee  Benefit  Plans,  (iii) all
related trust agreements, insurance contracts and summary plan descriptions, and
(iv) all  annual  reports  filed on IRS Form  5500,  5500C or 5500R and (for all
funded  plans) all plan  financial  statements  for the last five plan years for
each Employee Benefit Plan, have been delivered or made available to the Parent.
Each Employee  Benefit Plan has been  administered  in all material  respects in
accordance  with its terms and each of the  Company,  the  Subsidiaries  and the
ERISA  Affiliates has in all material  respects met its obligations with respect
to such Employee Benefit Plan and has made all required  contributions  thereto.
The Company,  each  Subsidiary,  each ERISA Affiliate and each Employee  Benefit
Plan are in  compliance in all material  respects with the currently  applicable
provisions  of  ERISA  and the Code and the  regulations  thereunder  (including
without  limitation  Section 4980 B of the Code,  Subtitle K, Chapter 100 of the
Code and Sections 601 through 608 and Section 701 et seq. of ERISA). All filings
and reports as to each Employee  Benefit Plan required to have been submitted to
the Internal  Revenue  Service or to the United States  Department of Labor have
been duly submitted.

            (c)   To  the   knowledge  of  the  Company,   there  are  no  Legal
Proceedings  (except claims for benefits  payable in the normal operation of the
Employee  Benefit  Plans and  proceedings  with  respect to  qualified  domestic
relations  orders)  against or involving any Employee  Benefit Plan or asserting
any rights or claims to benefits under any Employee Benefit Plan that could give
rise to any material liability.

            (d)   All  the  Employee  Benefit  Plans  that  are  intended  to be
qualified under Section 401(a) of the Code have received  determination  letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are  qualified  and the plans and the trusts  related  thereto  are exempt  from
federal  income taxes under  Sections  401(a) and 501(a),  respectively,  of the
Code, no such determination  letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred,  that would adversely affect its  qualification
or materially increase its cost. Each Employee Benefit Plan which is required to
satisfy Section  401(k)(3) or Section  401(m)(2) of the Code has been tested for
compliance  with,  and  satisfies the  requirements  of,  Section  401(k)(3) and
Section  401(m)(2)  of the Code for each plan year  ending  prior to the Closing
Date.

            (e)   Neither the Company,  any Subsidiary,  nor any ERISA Affiliate
has ever maintained an Employee  Benefit Plan subject to Section 412 of the Code
or Title IV of ERISA.

                                      -16-
<PAGE>

            (f)   At no time  has  the  Company,  any  Subsidiary  or any  ERISA
Affiliate been obligated to contribute to any  "multiemployer  plan" (as defined
in Section 4001(a)(3) of ERISA).

            (g)   There are no unfunded  obligations  under any Employee Benefit
Plan providing  benefits after  termination of employment to any employee of the
Company  or any  Subsidiary  (or  to any  beneficiary  of  any  such  employee),
including but not limited to retiree health coverage and deferred  compensation,
but excluding  continuation  of health  coverage  required to be continued under
Section  4980B of the  Code or other  applicable  law and  insurance  conversion
privileges  under state law. The assets of each  Employee  Benefit Plan which is
funded are  reported at their fair market value on the books and records of such
Employee Benefit Plan.

            (h)   No act or omission has  occurred and no condition  exists with
respect to any Employee  Benefit Plan maintained by the Company,  any Subsidiary
or any ERISA  Affiliate  that would subject the Company,  any  Subsidiary or any
ERISA Affiliate to (i) any material fine, penalty,  tax or liability of any kind
imposed  under  ERISA  or the Code or (ii) any  contractual  indemnification  or
contribution  obligation  protecting any fiduciary,  insurer or service provider
with respect to any Employee Benefit Plan.

            (i)   No  Employee  Benefit  Plan is funded by,  associated  with or
related to a "voluntary employee's  beneficiary  association" within the meaning
of Section 501(c)(9) of the Code.

            (j)   Each  Employee   Benefit  Plan  is  amendable  and  terminable
unilaterally  by the Company at any time  without  liability to the Company as a
result thereof and no Employee  Benefit Plan, plan  documentation  or agreement,
summary plan description or other written communication distributed generally to
employees by its terms  prohibits the Company from amending or  terminating  any
such Employee Benefit Plan.

            (k)   Section 2.19(k) of the Disclosure Schedule discloses each: (i)
agreement  with any  stockholder,  director,  executive  officer  or  other  key
employee  of the  Company  or any  Subsidiary  (A) the  benefits  of  which  are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction  involving  the Company or any  Subsidiary of the nature of any of
the  transactions  contemplated  by this  Agreement,  (B)  providing any term of
employment  or  compensation  guarantee or (C) providing  severance  benefits or
other benefits after the  termination of employment of such director,  executive
officer or key employee;  (ii)  agreement,  plan or arrangement  under which any
person may  receive  payments  from the  Company or any  Subsidiary  that may be
subject  to the tax  imposed  by  Section  4999 of the Code or  included  in the
determination  of such person's  "parachute  payment"  under Section 280G of the
Code;  and (iii)  agreement  or plan  binding  the  Company  or any  Subsidiary,
including  without  limitation any stock option plan, stock  appreciation  right
plan,  restricted  stock plan,  stock purchase plan,  severance  benefit plan or
Employee  Benefit Plan,  any of the benefits of which will be increased,  or the
vesting of the benefits of which will be  accelerated,  by the occurrence of any
of the  transactions  contemplated  by this Agreement or the value of any of the
benefits  of which will be  calculated  on the basis of any of the  transactions
contemplated  by  this  Agreement.  The  accruals  for  vacation,  sickness  and
disability  expenses  are  accounted  for on the Company  Balance  Sheet and are
adequate and properly  reflect the expenses  associated  therewith in accordance
with generally accepted accounting principles.

                                      -17-
<PAGE>

      2.20  Environmental Matters.

            (a)   Each of the Company and the Subsidiaries has complied with all
applicable  Environmental  Laws (as defined  below),  except for  violations  of
Environmental  Laws that,  individually  or in the  aggregate,  have not had and
would not  reasonably  be expected to have a Company  Material  Adverse  Effect.
There is no pending or, to the  knowledge  of the Company,  threatened  civil or
criminal  litigation,   written  notice  of  violation,   formal  administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity,  relating  to  any  Environmental  Law  involving  the  Company  or  any
Subsidiary, except for litigation,  notices of violations, formal administrative
proceedings  or   investigations,   inquiries  or  information   requests  that,
individually  or in the  aggregate,  have not had and  would not  reasonably  be
expected  to have a  Company  Material  Adverse  Effect.  For  purposes  of this
Agreement,  "Environmental Law" means any federal,  state or local law, statute,
rule or  regulation  or the common law  relating to the  environment,  including
without  limitation any statute,  regulation,  administrative  decision or order
pertaining to (i) treatment, storage, disposal, generation and transportation of
industrial,  toxic or hazardous  materials or  substances  or solid or hazardous
waste;  (ii)  air,  water  and  noise  pollution;  (iii)  groundwater  and  soil
contamination;  (iv) the release or threatened  release into the  environment of
industrial,  toxic or hazardous  materials or substances,  or solid or hazardous
waste, including without limitation emissions,  discharges,  injections, spills,
escapes or dumping of pollutants,  contaminants or chemicals; (v) the protection
of wild  life,  marine  life and  wetlands,  including  without  limitation  all
endangered and threatened  species;  (vi) storage  tanks,  vessels,  containers,
abandoned or discarded barrels,  and other closed receptacles;  (vii) health and
safety of employees and other  persons;  and (viii)  manufacturing,  processing,
using, distributing,  treating, storing, disposing,  transporting or handling of
materials  regulated  under  any  law  as  pollutants,  contaminants,  toxic  or
hazardous  materials  or  substances  or oil or  petroleum  products or solid or
hazardous waste. As used above, the terms "release" and "environment" shall have
the meaning set forth in the Comprehensive Environmental Response,  Compensation
and Liability Act of 1980, as amended ("CERCLA").

            (b)   Set forth in Section  2.20(b) of the Disclosure  Schedule is a
list of all documents (whether in hard copy or electronic form) that contain any
environmental reports,  investigations and audits relating to premises currently
or  previously  owned  or  operated  by the  Company  or a  Subsidiary  (whether
conducted by or on behalf of the Company or a Subsidiary  or a third party,  and
whether done at the  initiative  of the Company or a Subsidiary or directed by a
Governmental  Entity or other third party) which were issued or conducted during
the past five  years and which the  Company  has  possession  of or access to. A
complete  and  accurate  copy of each such  document  has been  provided  to the
Parent.

                                      -18-
<PAGE>

            (c)   To  the   knowledge  of  the  Company  there  is  no  material
environmental liability with respect to any solid or hazardous waste transporter
or treatment,  storage or disposal facility that has been used by the Company or
any Subsidiary.

      2.21  Legal Compliance. Each of the Company and the Subsidiaries,  and the
conduct and operations of their  respective  businesses,  are in compliance with
each applicable law (including rules and regulations thereunder) of any federal,
state, local or foreign government,  or any Governmental Entity,  except for any
violations or defaults that, individually or in the aggregate,  have not had and
would not reasonably be expected to have a Company Material Adverse Effect.

      2.22  Customers and  Suppliers.  Section 2.22 of the  Disclosure  Schedule
sets  forth a list of each  customer  that  accounted  for  more  than 5% of the
consolidated  revenues of the  Company  during the last full fiscal year and the
amount of revenues  accounted for by such customer  during such period.  No such
customer has  notified the Company in writing  within the past year that it will
stop buying services from the Company or any Subsidiary.

      2.23  Permits.  Section 2.23 of the Disclosure  Schedule sets forth a list
of all permits, licenses, registrations,  certificates, orders or approvals from
any Governmental  Entity (including  without limitation those issued or required
under  Environmental Laws and those relating to the occupancy or use of owned or
leased  real  property)  ("Permits")  issued  to or held by the  Company  or any
Subsidiary.  Such listed  Permits are the only Permits that are required for the
Company and the Subsidiaries to conduct their respective businesses as presently
conducted  except  for  those  the  absence  of  which,  individually  or in the
aggregate,  have not had and would not  reasonably be expected to have a Company
Material  Adverse  Effect.  Each such Permit is in full force and effect and, to
the knowledge of the Company,  no suspension or  cancellation  of such Permit is
threatened  and there is no basis for  believing  that such  Permit  will not be
renewable  upon  expiration.  Each such Permit  will  continue in full force and
effect immediately following the Closing.

      2.24  Certain Business Relationships With Affiliates.  Except as listed in
Section 2.24 of the Disclosure  Schedule,  no Affiliate of the Company or of any
Subsidiary (a) owns any property or right, tangible or intangible, which is used
in the business of the Company or any Subsidiary,  (b) has any claim or cause of
action  against the Company or any  Subsidiary,  or (c) owes any money to, or is
owed any money by, the Company or any Subsidiary. Section 2.24 of the Disclosure
Schedule  describes any transactions  involving the receipt or payment in excess
of  $25,000 in any fiscal  year  between  the  Company or a  Subsidiary  and any
Affiliate thereof which have occurred or existed since the beginning of the time
period covered by the Financial Statements, other than employment agreements.

      2.25  Brokers'  Fees.  Neither  the  Company  nor any  Subsidiary  has any
liability or obligation to pay any fees or commissions to any broker,  finder or
agent with respect to the transactions contemplated by this Agreement, except as
listed in Section 2.25 of the Disclosure Schedule.

                                      -19-
<PAGE>

      2.26  Books and Records. The minute books and other similar records of the
Company and each Subsidiary contain complete and accurate records of all actions
taken at any meetings of the Company's or such Subsidiary's stockholders,  board
of directors or any committees  thereof and of all written consents  executed in
lieu of the holding of any such  meetings.  The books and records of the Company
and each  Subsidiary  accurately  reflect in all  material  respects the assets,
liabilities,  business,  financial  condition  and results of  operations of the
Company or such  Subsidiary  and have been  maintained in  accordance  with good
business and bookkeeping practices.

      2.27  Disclosure.  No  representation or warranty by the Company contained
in this Agreement,  and no statement contained in the Disclosure Schedule or any
other document,  certificate or other instrument delivered or to be delivered by
or on behalf of the Company pursuant to this Agreement, contains or will contain
any  untrue  statement  of a  material  fact or omits or will  omit to state any
material fact  necessary,  in light of the  circumstances  under which it was or
will be made, in order to make the statements  herein or therein not misleading.
The Company has disclosed to the Parent all material information relating to the
business of the Company or any Subsidiary or the  transactions  contemplated  by
this Agreement.

      2.28  Duty to Make Inquiry.  To the extent that any of the representations
or warranties in this Section 2 are  qualified by  "knowledge"  or "belief," the
Company  represents and warrants that it has made due and reasonable inquiry and
investigation   concerning  the  matters  to  which  such   representations  and
warranties  relate,  including,  but not  limited  to,  diligent  inquiry by its
directors, officers and key personnel.

      2.29  Board Actions.  The Company's board of directors (a) has unanimously
determined  that the  Merger is fair and in the best  interests  of the  Company
Stockholders  and is on terms that are fair to the Company  Stockholders and has
recommended  the Merger to the Company  Stockholders,  and (b) shall  submit the
Merger and this  Agreement to the vote and approval of the Company  Stockholders
or the approval of the Company Stockholders by written consent.

                                  ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE PARENT
                         AND THE ACQUISITION SUBSIDIARY

      Each of the Parent and the Acquisition  Subsidiary represents and warrants
to the Company  that the  statements  contained in this Article III are true and
correct,  except as set forth in the Parent Disclosure  Schedule provided by the
Parent and the  Acquisition  Subsidiary  to the  Company on the date  hereof and
accepted in writing by the Parent (the "Parent Disclosure Schedule"). The Parent
Disclosure  Schedule  shall  be  arranged  in  paragraphs  corresponding  to the
numbered  and lettered  paragraphs  contained in this Article III, and except to
the extent that it is clear from the context  thereof that such  disclosure also
applies to any other  paragraph,  the disclosures in any paragraph of the Parent
Disclosure  Schedule  shall  qualify  only the  corresponding  paragraph in this
Article III.  For purposes of this Article III, the phrase "to the  knowledge of
the  Parent"  or any phrase of  similar  import  shall be deemed to refer to the
actual knowledge of the executive  officers of the Parent,  as well as any other
knowledge  which such  executive  officers  would have  possessed  had they made
reasonable inquiry with respect to the matter in question.

                                      -20-
<PAGE>

      3.1   Organization,  Qualification  and Corporate  Power.  The Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and the  Acquisition  Subsidiary is a corporation  duly
organized,  validly existing and in good standing under the laws of the state of
Delaware.  The Parent is duly qualified to conduct  business and is in corporate
and tax good standing under the laws of each jurisdiction in which the nature of
its  businesses  or the  ownership or leasing of its  properties  requires  such
qualification,  except where the failure to be so qualified or in good  standing
would not have a Parent Material  Adverse Effect (as defined below).  The Parent
has all requisite  corporate  power and authority to carry on the  businesses in
which it is engaged and to own and use the properties  owned and used by it. The
Parent has  furnished  or made  available  to the Company  complete and accurate
copies of its  certificate  of  incorporation  and bylaws.  For purposes of this
Agreement,  "Parent  Material Adverse Effect" means a material adverse effect on
the assets, business, condition (financial or otherwise),  results of operations
or future prospects of the Parent and its subsidiaries, taken as a whole.

      3.2   Capitalization.  The authorized capital stock of the Parent consists
of (a) 75,000,000 shares of Parent Common Stock, of which 38,437,500 shares were
issued and outstanding as of the date of this Agreement,  after giving effect to
a 2.5 forward stock split in the form of a 1.5 for 1 stock  dividend (the "Stock
Split") to  shareholders  of record on May 22, 2006.  The Parent Common Stock is
presently  eligible  for  quotation  and  trading  on the NASD  Over-the-Counter
Bulletin Board (the "OTCBB") in all 50 states of the United  States.  All of the
issued  and  outstanding  shares of  Parent  Common  Stock are duly  authorized,
validly issued,  fully paid,  nonassessable  and free of all preemptive  rights.
There are no outstanding or authorized options,  warrants, rights, agreements or
commitments  to which the Parent is a party or which are binding upon the Parent
providing for the issuance or redemption of any of its capital stock.  There are
no outstanding or authorized stock appreciation, phantom stock or similar rights
with  respect to the Parent.  There are no  agreements  to which the Parent is a
party or by which it is bound  with  respect to the  voting  (including  without
limitation voting trusts or proxies),  registration under the Securities Act, or
sale  or  transfer   (including  without  limitation   agreements   relating  to
pre-emptive  rights,  rights of first refusal,  co-sale  rights or  "drag-along"
rights) of any securities of the Parent.  To the knowledge of the Parent,  there
are no agreements among other parties, to which the Parent is not a party and by
which it is not bound, with respect to the voting (including  without limitation
voting  trusts or  proxies) or sale or transfer  (including  without  limitation
agreements  relating to rights of first refusal,  co-sale rights or "drag-along"
rights) of any  securities  of the  Parent.  All of the  issued and  outstanding
shares of Parent Common Stock were issued in compliance with applicable  federal
and state  securities  laws.  The  12,900,000  Merger Shares to be issued at the
Closing pursuant to Section 1.5 hereof,  when issued and delivered in accordance
with the  terms  hereof  and of the  Certificate  of  Merger,  shall be duly and
validly issued,  fully paid and nonassessable and free of all preemptive rights.
Immediately  prior  to the  Effective  Time,  after  giving  effect  to (i)  the
surrender of shares of Parent Common Stock by two former  officers of the Parent
(the "Share  Contribution")  and (ii) the Stock Split, but without giving effect
to the Private  Placement  Offering,  there will be 15,000,002  shares of Parent
Common Stock issued and outstanding.

                                      -21-
<PAGE>

      3.3   Authorization of Transaction. Each of the Parent and the Acquisition
Subsidiary  has all  requisite  power and  authority to execute and deliver this
Agreement  and (in the case of the Parent) the Escrow  Agreement  and to perform
its  obligations  hereunder  and  thereunder.  The execution and delivery by the
Parent and the  Acquisition  Subsidiary of this  Agreement,  and the  agreements
contemplated  hereby  (collectively,  the "Transaction  Documentation")  and the
consummation  by the Parent and the Acquisition  Subsidiary of the  transactions
contemplated  hereby and thereby  have been duly and validly  authorized  by all
necessary corporate action on the part of the Parent and Acquisition Subsidiary,
respectively. This Agreement has been duly and validly executed and delivered by
the Parent and the  Acquisition  Subsidiary and  constitutes a valid and binding
obligation of the Parent and the  Acquisition  Subsidiary,  enforceable  against
them in accordance with its terms.

      3.4   Noncontravention.   Subject  to  compliance   with  the   applicable
requirements of the Securities Act and any applicable state securities laws, the
Exchange Act, the  regulations of the OTCBB and the filing of the Certificate of
Merger as required by the GCL,  neither the execution and delivery by the Parent
or the Acquisition Subsidiary of this Agreement or the Transaction Documentation
, nor the  consummation  by the  Parent  or the  Acquisition  Subsidiary  of the
transactions  contemplated hereby or thereby,  will (a) conflict with or violate
any provision of the certificate of incorporation or bylaws of the Parent or the
Acquisition Subsidiary, (b) require on the part of the Parent or the Acquisition
Subsidiary  any filing with, or permit,  authorization,  consent or approval of,
any  Governmental  Entity,  (c) conflict with,  result in breach of,  constitute
(with or without due notice or lapse of time or both) a default under, result in
the  acceleration  of  obligations  under,  create  in any  Party  any  right to
terminate, modify or cancel, or require any notice, consent or waiver under, any
contract or  instrument to which the Parent or the  Acquisition  Subsidiary is a
party or by which  either is bound or to which any of their  assets are subject,
except  for  (i)  any  conflict,  breach,  default,  acceleration,  termination,
modification or cancellation  which would not adversely  affect the consummation
of the transactions  contemplated  hereby or (ii) any notice,  consent or waiver
the  absence  of which  would  not  adversely  affect  the  consummation  of the
transactions  contemplated  hereby, or (d) violate any order, writ,  injunction,
decree,  statute, rule or regulation applicable to the Parent or the Acquisition
Subsidiary or any of their properties or assets.

      3.5   Subsidiaries.

      (a)   Parent has no Subsidiaries  other than the  Acquisition  Subsidiary.
The Acquisition Subsidiary is a corporation duly organized, validly existing and
in corporate and tax good  standing  under the laws of the  jurisdiction  of its
incorporation.  The  Acquisition  Subsidiary was formed solely to effectuate the
Merger, and it has not conducted any business operations since its organization.
The Parent has delivered or made available to the Company  complete and accurate
copies  of  the  charter,  bylaws  or  other  organizational  documents  of  the
Acquisition Subsidiary. The Acquisition Subsidiary is not in default under or in
violation  of any  provision  of its  charter,  bylaws  or other  organizational
documents.  All of the issued  and  outstanding  shares of capital  stock of the
Acquisition  Subsidiary  are  duly  authorized,   validly  issued,  fully  paid,
nonassessable  and free of  preemptive  rights.  All  shares of the  Acquisition
Subsidiary  are owned by Parent free and clear of any  restrictions  on transfer
(other than  restrictions  under the Securities Act and state securities  laws),
claims,  Security  Interests,   options,  warrants,  rights,  contracts,  calls,
commitments,  equities  and  demands.  There are no  outstanding  or  authorized
options,  warrants, rights, agreements or commitments to which the Parent or the
Acquisition  Subsidiary is a party or which are binding on any of them providing
for the  issuance,  disposition  or  acquisition  of any  capital  stock  of any
Subsidiary.  There  are no  outstanding  stock  appreciation,  phantom  stock or
similar rights with respect to the Acquisition  Subsidiary.  There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of any capital stock of the Acquisition Subsidiary.

                                      -22-
<PAGE>

            (b)   At all  times  from  April  8,  2002,  which  was the  date of
incorporation  of the Parent,  through the date of this Agreement,  the business
and operations of the Parent have been conducted exclusively through Parent.

      3.6   Exchange Act Reports.  The Parent has furnished or made available to
the Company complete and accurate copies, as amended or supplemented, of its (a)
Annual  Report on Form 10-KSB for the fiscal year ended  December 31,  2005,  as
filed with the SEC, (b) Quarterly Report on Form 10-QSB for the quarterly period
ended March 31, 2006 and (c) all other reports filed by the Parent under Section
13 or  subsections  (a) or (c) of  Section 14 of the  Exchange  Act with the SEC
since  September 12, 2003 (such reports are  collectively  referred to herein as
the  "Parent  Reports").  The Parent  Reports  constitute  all of the  documents
required to be filed by the Parent under Section 13 or subsections (a) or (c) of
Section 14 of the  Exchange  Act with the SEC from  October 17, 2001 through the
date of this  Agreement.  The Parent Reports  complied in all material  respects
with  the  requirements  of the  Exchange  Act and  the  rules  and  regulations
thereunder when filed. As of their respective  dates, the Parent Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

      3.7   Compliance  with  Laws.  Each of the  Parent  and its  Subsidiaries:

            (a)   and the conduct and operations of their respective businesses,
are in compliance  with each  applicable  law (including  rules and  regulations
thereunder)  of  any  federal,  state,  local  or  foreign  government,  or  any
Governmental Entity, except for any violations or defaults that, individually or
in the  aggregate,  have not had and would not  reasonably be expected to have a
Parent Material Adverse Effect;

                                      -23-
<PAGE>

            (b)   has complied  with all federal and state  securities  laws and
regulations,  including being current in all of its reporting  obligations under
such federal and state securities laws and regulations;

            (c)   has not,  and the past and  present  officers,  directors  and
Affiliates  of the Parent have not, been the subject of, nor does any officer or
director  of the Parent  have any reason to  believe  that  Parent or any of its
officers,  directors or Affiliates will be the subject of, any civil or criminal
proceeding or  investigation by any federal or state agency alleging a violation
of securities laws;

            (d)   has not been  the  subject  of any  voluntary  or  involuntary
bankruptcy proceeding, nor has it been a party to any material litigation;

            (e)   has not,  and the past and  present  officers,  directors  and
Affiliates  have not,  been the  subject of, nor does any officer or director of
the Parent  have any reason to believe  that the Parent or any of its  officers,
directors  or  affiliates  will  be the  subject  of,  any  civil,  criminal  or
administrative  investigation  or  proceeding  brought  by any  federal or state
agency having regulatory authority over such entity or person;

            (f)   does not and will not on the  Closing,  have any  liabilities,
contingent or otherwise, including but not limited to notes payable and accounts
payable, and is not a party to any executory agreements; and

            (g)   is not a "blank check company" as such term is defined by Rule
419 of the Securities Act.

      3.8   Financial Statements. The audited financial statements and unaudited
interim  financial  statements  of the Parent  included  in the  Parent  Reports
(collectively, the "Parent Financial Statements") (i) complied as to form in all
material respects with applicable  accounting  requirements and, as appropriate,
the published  rules and regulations of the SEC with respect thereto when filed,
(ii) were  prepared  in  accordance  with GAAP  applied  on a  consistent  basis
throughout the periods covered thereby (except as may be indicated therein or in
the  notes  thereto,  and in the  case of  quarterly  financial  statements,  as
permitted  by Form 10-QSB  under the Exchange  Act),  (iii)  fairly  present the
consolidated  financial  condition,  results of operations and cash flows of the
Parent as of the  respective  dates  thereof  and for the  periods  referred  to
therein, and (iv) are consistent with the books and records of the Parent.

      3.9   Absence  of Certain  Changes.  Since the date of the  balance  sheet
contained  in the most  recent  Parent  Report,  there has  occurred no event or
development  which,  individually  or  in  the  aggregate,  has  had,  or  could
reasonably be expected to have in the future, a Parent Material Adverse Effect.

      3.10  Litigation.  Except as  disclosed in the Parent  Reports,  as of the
date of this Agreement, there is no Legal Proceeding which is pending or, to the
Parent's  knowledge,  threatened  against  the Parent or any  subsidiary  of the
Parent which, if determined  adversely to the Parent or such  subsidiary,  could
have,  individually  or in the aggregate,  a Parent  Material  Adverse Effect or
which in any manner challenges or seeks to prevent,  enjoin,  alter or delay the
transactions contemplated by this Agreement.

                                      -24-
<PAGE>

      3.11  Undisclosed Liabilities. None of the Parent and its Subsidiaries has
any liability (whether known or unknown, whether absolute or contingent, whether
liquidated  or  unliquidated  and whether due or to become due),  except for (a)
liabilities  shown on the balance  sheet  contained  in the most  recent  Parent
Report,  (b)  liabilities  which have arisen since the date of the balance sheet
contained in the most recent  Parent  Report in the Ordinary  Course of Business
and (c)  contractual  and other  liabilities  incurred in the Ordinary Course of
Business which are not required by GAAP to be reflected on a balance sheet.

      3.12  Tax Matters.

            (a)   Each of the Parent and the  Subsidiaries has filed on a timely
basis all Tax Returns  that it was  required  to file,  and all such Tax Returns
were complete and accurate in all material respects.  Neither the Parent nor any
Subsidiary is or has ever been a member of a group of corporations with which it
has filed (or been  required  to file)  consolidated,  combined  or unitary  Tax
Returns, other than a group of which only the Parent and the Subsidiaries are or
were members. Each of the Parent and the Subsidiaries has paid on a timely basis
all Taxes  that were due and  payable.  The  unpaid  Taxes of the Parent and the
Subsidiaries  for tax periods through the date of the balance sheet contained in
the most recent  Parent Report do not exceed the accruals and reserves for Taxes
(excluding  accruals  and reserves for  deferred  Taxes  established  to reflect
timing differences between book and Tax income) set forth on such balance sheet.
Neither the Parent nor any Subsidiary has any actual or potential  liability for
any Tax obligation of any taxpayer  (including without limitation any affiliated
group  of  corporations  or other  entities  that  included  the  Parent  or any
Subsidiary  during a prior period)  other than the Parent and the  Subsidiaries.
All  Taxes  that the  Parent  or any  Subsidiary  is or was  required  by law to
withhold  or collect  have been duly  withheld or  collected  and, to the extent
required, have been paid to the proper Governmental Entity.

            (b)   The Parent has  delivered  or made  available  to the  Company
complete and  accurate  copies of all federal  income Tax  Returns,  examination
reports and  statements  of  deficiencies  assessed  against or agreed to by the
Parent or any Subsidiary since December 31, 2002. The federal income Tax Returns
of the Parent and each  Subsidiary  have been  audited by the  Internal  Revenue
Service or are closed by the applicable  statute of limitations  for all taxable
years  through  the  taxable  year  specified  in Section  3.12(b) of the Parent
Disclosure Schedule.  No examination or audit of any Tax Return of the Parent or
any  Subsidiary by any  Governmental  Entity is currently in progress or, to the
knowledge of the Parent, threatened or contemplated.  Neither the Parent nor any
Subsidiary has been informed by any jurisdiction that the jurisdiction  believes
that the Parent or  Subsidiary  was required to file any Tax Return that was not
filed.  Neither  the  Parent  nor any  Subsidiary  has  waived  any  statute  of
limitations with respect to Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency.

                                      -25-
<PAGE>

            (c)   Neither the Parent nor any  Subsidiary:  (i) is a  "consenting
corporation"  within the meaning of Section  341(f) of the Code, and none of the
assets of the  Parent or the  Subsidiaries  are  subject  to an  election  under
Section 341(f) of the Code; (ii) has been a United States real property  holding
corporation  within  the  meaning of Section  897(c)(2)  of the Code  during the
applicable period specified in Section  897(c)(l)(A)(ii)  of the Code; (iii) has
made any  payments,  is  obligated  to make any  payments,  or is a party to any
agreement  that could obligate it to make any payments that may be treated as an
"excess  parachute  payment" under Section 280G of the Code; (iv) has any actual
or potential  liability  for any Taxes of any person  (other than the Parent and
its  Subsidiaries)  under Treasury  Regulation  Section 1.1502-6 (or any similar
provision of federal,  state,  local,  or foreign  law),  or as a transferee  or
successor,  by contract, or otherwise;  or (v) is or has been required to make a
basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).

            (d)   None of the  assets of the  Parent or any  Subsidiary:  (i) is
property  that is  required  to be  treated as being  owned by any other  person
pursuant to the  provisions  of former  Section  168(f)(8) of the Code;  (ii) is
"tax-exempt  use property"  within the meaning of Section 168(h) of the Code; or
(iii)  directly  or  indirectly  secures  any debt the  interest on which is tax
exempt under Section 103(a) of the Code.

            (e)   Neither the Parent nor any  Subsidiary  has undergone a change
in its method of accounting  resulting in an  adjustment  to its taxable  income
pursuant to Section 481 of the Code.

            (f)   No  state  or  federal  "net  operating  loss"  of the  Parent
determined  as of the Closing Date is subject to  limitation on its use pursuant
to Section 382 of the Code or comparable  provisions of state law as a result of
any  "ownership  change"  within the  meaning  of Section  382(g) of the Code or
comparable provisions of any state law occurring prior to the Closing Date.

      3.13  Assets.  Each of the Parent and the Subsidiaries  owns or leases all
tangible  assets  necessary  for the  conduct  of its  businesses  as  presently
conducted and as presently proposed to be conducted. Each such tangible asset is
free from  material  defects,  has been  maintained  in  accordance  with normal
industry practice,  is in good operating condition and repair (subject to normal
wear and tear) and is suitable  for the purposes for which it presently is used.
No asset of the Parent or any Subsidiary  (tangible or intangible) is subject to
any Security Interest.

      3.14  Owned Real Property.  Neither the Parent nor any Subsidiary owns any
real property.

      3.15  Real Property Leases. Section 3.15 of the Parent Disclosure Schedule
lists  all  real  property  leased  or  subleased  to or by  the  Parent  or any
Subsidiary  and  lists  the term of such  lease,  any  extension  and  expansion
options,  and the rent  payable  thereunder.  The Parent has  delivered  or made
available  to the  Company  complete  and  accurate  copies  of the  leases  and
subleases listed in Section 3.15 of the Parent Disclosure Schedule. With respect
to each  lease and  sublease  listed in Section  3.15 of the  Parent  Disclosure
Schedule:

                                      -26-
<PAGE>

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

            (b)   the  lease or  sublease  will  continue  to be  legal,  valid,
binding,  enforceable  and in full force and effect  immediately  following  the
Closing in accordance with the terms thereof as in effect  immediately  prior to
the Closing;

            (c)   neither the Parent nor any Subsidiary nor, to the knowledge of
the Parent, any other party, is in breach or violation of, or default under, any
such  lease or  sublease,  and no event  has  occurred,  is  pending  or, to the
knowledge of the Parent, is threatened,  which, after the giving of notice, with
lapse of time, or otherwise,  would constitute a breach or default by the Parent
or any Subsidiary or, to the knowledge of the Parent, any other party under such
lease or sublease;

            (d)   neither   the  Parent  nor  any   Subsidiary   has   assigned,

transferred,  conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold; and

            (e)   the Parent is not aware of any  Security  Interest,  easement,
covenant or other  restriction  applicable to the real property  subject to such
lease, except for recorded easements,  covenants and other restrictions which do
not  materially  impair the  current  uses or the  occupancy  by the Parent or a
Subsidiary of the property subject thereto.

      3.16  Contracts.

            (a)   Section  3.16 of the  Parent  Disclosure  Schedule  lists  the
following  agreements (written or oral) to which the Parent or any Subsidiary is
a party as of the date of this Agreement:

                  (i)   any agreement (or group of related  agreements)  for the
            lease of personal property from or to third parties;

                  (ii)  any agreement (or group of related  agreements)  for the
            purchase  or sale of products  or for the  furnishing  or receipt of
            services (A) which calls for performance  over a period of more than
            one year, (B) which involves more than the sum of $5,000,  or (C) in
            which the Parent or any Subsidiary has granted manufacturing rights,
            "most favored nation" pricing  provisions or exclusive  marketing or
            distribution  rights  relating to any  products or  territory or has
            agreed to  purchase a minimum  quantity  of goods or services or has
            agreed to  purchase  goods or  services  exclusively  from a certain
            party;

                  (iii) any  agreement   establishing  a  partnership  or  joint
            venture;

                                      -27-
<PAGE>

                  (iv)  any  agreement  (or group of related  agreements)  under
            which  it has  created,  incurred,  assumed  or  guaranteed  (or may
            create,   incur,  assume  or  guarantee)   indebtedness   (including
            capitalized lease  obligations)  involving more than $5,000 or under
            which it has imposed  (or may impose) a Security  Interest on any of
            its assets, tangible or intangible;

                  (v)   any    agreement    concerning     confidentiality    or
            noncompetition;

                  (vi)  any employment or consulting agreement;

                  (vii) any  agreement   involving  any  officer,   director  or
            stockholder of the Parent or any Affiliate thereof;

                  (viii) any agreement under which the consequences of a default
            or  termination  would  reasonably  be  expected  to  have a  Parent
            Material Adverse Effect;

                  (ix)  any agreement  which contains any  provisions  requiring
            the Parent or any  Subsidiary  to indemnify  any other party thereto
            (excluding  indemnities  contained in  agreements  for the purchase,
            sale or license of products  entered into in the Ordinary  Course of
            Business); and

                  (x)   any other  agreement  (or group of  related  agreements)
            either  involving  more  than  $5,000  or not  entered  into  in the
            Ordinary  Course of Business.

            (b)   The Parent has  delivered  or made  available to the Company a
complete  and  accurate  copy of each  agreement  listed in Section  3.16 of the
Parent Disclosure  Schedule.  With respect to each agreement so listed:  (i) the
agreement is legal, valid, binding and enforceable and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding and enforceable and
in full force and effect  immediately  following the Closing in accordance  with
the terms  thereof  as in effect  immediately  prior to the  Closing;  and (iii)
neither the Parent nor any Subsidiary  nor, to the knowledge of the Parent,  any
other party, is in breach or violation of, or default under, any such agreement,
and no event has  occurred,  is pending or, to the  knowledge of the Parent,  is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would  constitute a breach or default by the Parent or any Subsidiary or, to the
knowledge of the Parent, any other party under such contract.

      3.17  Accounts  Receivable.  All accounts receivable of the Parent and the
Subsidiaries  reflected on the Parent Report are valid receivables subject to no
setoffs or counterclaims  and are current and collectible  (within 90 days after
the date on  which  it first  became  due and  payable),  net of the  applicable
reserve for bad debts on the balance  sheet  contained in the most recent Parent
Report. All accounts receivable reflected in the financial or accounting records
of the Parent that have arisen since the date of the balance sheet  contained in
the most recent  Parent  Report are valid  receivables  subject to no setoffs or
counterclaims  and are  collectible  (within  90 days after the date on which it
first  became  due and  payable),  net of a  reserve  for bad debts in an amount
proportionate  to the reserve shown on the balance  sheet  contained in the most
recent Parent Report.

                                      -28-
<PAGE>

      3.18  Powers of  Attorney.  There are no  outstanding  powers of  attorney
executed on behalf of the Parent or any Subsidiary.

      3.19  Insurance. Section 3.19 of the Parent Disclosure Schedule lists each
insurance policy (including fire, theft,  casualty,  general liability,  workers
compensation,  business  interruption,   environmental,  product  liability  and
automobile  insurance  policies and bond and surety  arrangements)  to which the
Parent or any Subsidiary is a party. Such insurance policies are of the type and
in amounts customarily carried by organizations  conducting businesses or owning
assets similar to those of the Parent and the Subsidiaries. There is no material
claim  pending under any such policy as to which  coverage has been  questioned,
denied or disputed by the  underwriter  of such  policy.  All  premiums  due and
payable  under all such  policies  have been  paid,  neither  the Parent nor any
Subsidiary may be liable for retroactive  premiums or similar payments,  and the
Parent and the Subsidiaries are otherwise in compliance in all material respects
with the terms of such  policies.  The Parent has no knowledge of any threatened
termination of, or material  premium  increase with respect to, any such policy.
Each such policy will  continue to be  enforceable  and in full force and effect
immediately  following  the Closing in  accordance  with the terms thereof as in
effect immediately prior to the Closing.

      3.20  Warranties.  No  service  sold or  delivered  by the  Parent  or any
Subsidiary  is  subject  to any  guaranty,  warranty,  right of  credit or other
indemnity other than the applicable standard terms and conditions of sale of the
Parent or the appropriate Subsidiary, which are set forth in Section 3.20 of the
Parent Disclosure Schedule.

      3.21  Employees.

            (a)   Section 3.21 of the Parent Disclosure Schedule contains a list
of all  employees  of the  Parent  and  each  Subsidiary  whose  annual  rate of
compensation  exceeds  $50,000 per year,  along with the position and the annual
rate of compensation  of each such person.  Each current or past employee of the
Parent  or any  Subsidiary  has  entered  into a  confidentiality/assignment  of
inventions agreement with the Parent or such Subsidiary, a copy or form of which
has  previously  been  delivered  to the  Company.  Section  3.21 of the  Parent
Disclosure  Schedule  contains  a list of all  employees  of the  Parent  or any
Subsidiary who are a party to a non-competition agreement with the Parent or any
Subsidiary;  copies of such  agreements  have  previously  been delivered to the
Company.  To the knowledge of the Parent,  no key employee or group of employees
has any plans to terminate employment with the Parent or any Subsidiary.

            (b)   Neither the Parent nor any  Subsidiary  is a party to or bound
by any collective  bargaining  agreement,  nor have any of them  experienced any
strikes,  grievances,  claims  of unfair  labor  practices  or other  collective
bargaining  disputes.  The Parent has no knowledge of any organizational  effort
made or  threatened,  either  currently  or within the past two years,  by or on
behalf of any  labor  union  with  respect  to  employees  of the  Parent or any
Subsidiary.

                                      -29-
<PAGE>

      3.22  Employee Benefits.

            (a)   Section 3.22(a) of the Parent  Disclosure  Schedule contains a
complete  and  accurate  list  of all  Employee  Benefit  Plans  maintained,  or
contributed to, by the Parent,  any Subsidiary or any ERISA Affiliate.  Complete
and accurate copies of (i) all Employee Benefit Plans which have been reduced to
writing,  (ii) written summaries of all unwritten  Employee Benefit Plans, (iii)
all related trust agreements, insurance contracts and summary plan descriptions,
and (iv) all annual reports filed on IRS Form 5500,  5500C or 5500R and (for all
funded  plans) all plan  financial  statements  for the last five plan years for
each Employee Benefit Plan, have been delivered or made available to the Parent.
Each Employee  Benefit Plan has been  administered  in all material  respects in
accordance with its terms and each of the Parent, the Subsidiaries and the ERISA
Affiliates has in all material respects met its obligations with respect to such
Employee  Benefit  Plan and has made all  required  contributions  thereto.  The
Parent, each Subsidiary, each ERISA Affiliate and each Employee Benefit Plan are
in compliance in all material respects with the currently applicable  provisions
of  ERISA  and  the  Code  and the  regulations  thereunder  (including  without
limitation  Section 4980 B of the Code,  Subtitle K, Chapter 100 of the Code and
Sections  601 through  608 and  Section  701 et seq. of ERISA).  All filings and
reports as to each Employee  Benefit Plan required to have been submitted to the
Internal  Revenue Service or to the United States  Department of Labor have been
duly submitted.

            (b)   To the knowledge of the Parent, there are no Legal Proceedings
(except  claims for  benefits  payable in the normal  operation  of the Employee
Benefit  Plans and  proceedings  with  respect to qualified  domestic  relations
orders)  against or involving any Employee  Benefit Plan or asserting any rights
or claims to benefits  under any  Employee  Benefit Plan that could give rise to
any material liability.

            (c)   All  the  Employee  Benefit  Plans  that  are  intended  to be
qualified under Section 401(a) of the Code have received  determination  letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are  qualified  and the plans and the trusts  related  thereto  are exempt  from
federal  income taxes under  Sections  401(a) and 501(a),  respectively,  of the
Code, no such determination  letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred,  that would adversely affect its  qualification
or materially increase its cost. Each Employee Benefit Plan which is required to
satisfy Section  401(k)(3) or Section  401(m)(2) of the Code has been tested for
compliance  with,  and  satisfies the  requirements  of,  Section  401(k)(3) and
Section  401(m)(2)  of the Code for each plan year  ending  prior to the Closing
Date.

                                      -30-
<PAGE>

            (d)   Neither the Parent,  any  Subsidiary,  nor any ERISA Affiliate
has ever maintained an Employee  Benefit Plan subject to Section 412 of the Code
or Title IV of ERISA.

            (e)   At no  time  has  the  Parent,  any  Subsidiary  or any  ERISA
Affiliate been obligated to contribute to any  "multiemployer  plan" (as defined
in Section 4001(a)(3) of ERISA).

            (f)   There are no unfunded  obligations  under any Employee Benefit
Plan providing  benefits after  termination of employment to any employee of the
Parent or any Subsidiary (or to any beneficiary of any such employee), including
but not  limited to retiree  health  coverage  and  deferred  compensation,  but
excluding continuation of health coverage required to be continued under Section
4980B of the Code or other  applicable law and insurance  conversion  privileges
under state law.  The assets of each  Employee  Benefit Plan which is funded are
reported  at their fair market  value on the books and records of such  Employee
Benefit Plan.

            (g)   No act or omission has  occurred and no condition  exists with
respect to any Employee Benefit Plan maintained by the Parent, any Subsidiary or
any ERISA  Affiliate that would subject the Parent,  any Subsidiary or any ERISA
Affiliate  to (i) any  material  fine,  penalty,  tax or  liability  of any kind
imposed  under  ERISA  or the Code or (ii) any  contractual  indemnification  or
contribution  obligation  protecting any fiduciary,  insurer or service provider
with respect to any Employee Benefit Plan.

            (h)   No  Employee  Benefit  Plan is funded by,  associated  with or
related to a "voluntary employee's  beneficiary  association" within the meaning
of Section 501(c)(9) of the Code.

            (i)   Each  Employee   Benefit  Plan  is  amendable  and  terminable
unilaterally  by the  Parent at any time  without  liability  to the Parent as a
result thereof and no Employee  Benefit Plan, plan  documentation  or agreement,
summary plan description or other written communication distributed generally to
employees by its terms  prohibits  the Parent from amending or  terminating  any
such Employee Benefit Plan.

            (j)   Section 3.22(j) of the Parent  Disclosure  Schedule  discloses
each: (i) agreement with any stockholder,  director,  executive officer or other
key  employee  of the Parent or any  Subsidiary  (A) the  benefits  of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Parent or any Subsidiary of the nature of any of the
transactions   contemplated  by  this  Agreement,  (B)  providing  any  term  of
employment  or  compensation  guarantee or (C) providing  severance  benefits or
other benefits after the  termination of employment of such director,  executive
officer or key employee;  (ii)  agreement,  plan or arrangement  under which any
person  may  receive  payments  from the  Parent or any  Subsidiary  that may be
subject  to the tax  imposed  by  Section  4999 of the Code or  included  in the
determination  of such person's  "parachute  payment"  under Section 280G of the
Code;  and  (iii)  agreement  or plan  binding  the  Parent  or any  Subsidiary,
including  without  limitation any stock option plan, stock  appreciation  right
plan,  restricted  stock plan,  stock purchase plan,  severance  benefit plan or
Employee  Benefit Plan,  any of the benefits of which will be increased,  or the
vesting of the benefits of which will be  accelerated,  by the occurrence of any
of the  transactions  contemplated  by this Agreement or the value of any of the
benefits  of which will be  calculated  on the basis of any of the  transactions
contemplated  by  this  Agreement.  The  accruals  for  vacation,  sickness  and
disability  expenses are accounted for on the Most Recent  Balance Sheet and are
adequate and properly  reflect the expenses  associated  therewith in accordance
with generally accepted accounting principles.

                                      -31-
<PAGE>

      3.23  Environmental Matters.

            (a)   Each of the Parent and the  Subsidiaries has complied with all
applicable Environmental Laws, except for violations of Environmental Laws that,
individually  or in the  aggregate,  have not had and  would not  reasonably  be
expected to have a Parent Material  Adverse  Effect.  There is no pending or, to
the knowledge of the Parent,  threatened civil or criminal  litigation,  written
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request by any Governmental Entity, relating to any Environmental
Law involving the Parent or any Subsidiary,  except for  litigation,  notices of
violations,  formal administrative  proceedings or investigations,  inquiries or
information  requests that,  individually or in the aggregate,  have not had and
would not reasonably be expected to have a Parent Material Adverse Effect.

            (b)   Set forth in Section 3.23(b) of the Parent Disclosure Schedule
is a list of all  documents  (whether  in hard  copy or  electronic  form)  that
contain  any  environmental  reports,  investigations  and  audits  relating  to
premises currently or previously owned or operated by the Parent or a Subsidiary
(whether  conducted  by or on behalf of the  Parent or a  Subsidiary  or a third
party,  and whether  done at the  initiative  of the Parent or a  Subsidiary  or
directed by a  Governmental  Entity or other third  party)  which were issued or
conducted  during the past five years and which the Parent has  possession of or
access to. A complete and accurate  copy of each such document has been provided
to the Parent.

            (c)   The  Parent  is  not  aware  of  any  material   environmental
liability of any solid or hazardous waste  transporter or treatment,  storage or
disposal facility that has been used by the Parent or any Subsidiary.

      3.24  Permits. Section 3.24 of the Parent Disclosure Schedule sets forth a
list of all permits, licenses, registrations,  certificates, orders or approvals
from any  Governmental  Entity  (including  without  limitation  those issued or
required under  Environmental Laws and those relating to the occupancy or use of
owned or  leased  real  property)  ("Parent  Permits")  issued to or held by the
Parent or any  Subsidiary.  Such listed Permits are the only Parent Permits that
are required for the Parent and the  Subsidiaries  to conduct  their  respective
businesses  as  presently  conducted  except  for  those the  absence  of which,
individually  or in the  aggregate,  have not had and  would not  reasonably  be
expected to have a Parent Material Adverse Effect. Each such Parent Permit is in
full force and effect and, to the  knowledge  of the Parent,  no  suspension  or
cancellation  of such  Parent  Permit  is  threatened  and there is no basis for
believing  that such Parent Permit will not be renewable upon  expiration.  Each
such Parent Permit will continue in full force and effect immediately  following
the Closing.

                                      -32-
<PAGE>

      3.25  Certain Business Relationships With Affiliates.  No Affiliate of the
Parent  or of any  Subsidiary  (a) owns  any  property  or  right,  tangible  or
intangible,  which is used in the business of the Parent or any Subsidiary,  (b)
has any claim or cause of action  against the Parent or any  Subsidiary,  or (c)
owes any  money  to, or is owed any  money  by,  the  Parent or any  Subsidiary.
Section  3.25 of the  Parent  Disclosure  Schedule  describes  any  transactions
involving  the receipt or payment in excess of $5,000 in any fiscal year between
the Parent or a Subsidiary  and any  Affiliate  thereof  which have  occurred or
existed since the beginning of the time period  covered by the Parent  Financial
Statements, other than employment agreements.

      3.26  Tax-Free Reorganization.

            (a)   The Parent (i) is not an  "investment  company"  as defined in
Section  368(a)(2)(F)(iii)  and (iv) of the Code;  (ii) has no  present  plan or
intention to  liquidate  the  Surviving  Corporation  or to merge the  Surviving
Corporation  with  or  into  any  other  corporation  or  entity,  or to sell or
otherwise  dispose of the stock of the Surviving  Corporation  which Parent will
acquire  in the  Merger,  or to  cause  the  Surviving  Corporation  to  sell or
otherwise  dispose of its assets,  all except in the ordinary course of business
or if such liquidation, merger, disposition is described in Section 368(a)(2)(C)
or Treasury Regulation Section 1.368-2(d)(4) or Section 1368-2(k);  (iii) has no
present plan or intention,  following the Merger, to issue any additional shares
of stock of the Surviving Corporation or to create any new class of stock of the
Surviving Corporation.

            (b)   The Acquisition Subsidiary is a wholly-owned subsidiary of the
Parent,  formed solely for the purpose of engaging in the Merger, and will carry
on no business prior to the Merger.

            (c)   Immediately prior to the Merger, the Parent will be in control
of Acquisition Subsidiary within the meaning of Section 368(c) of the Code.

            (d)   Immediately  following the Merger,  the Surviving  Corporation
will hold at least 90% of the fair  market  value of the net assets and at least
70% of the fair market value of the gross assets held by the Company immediately
prior to the Merger (for  purposes of this  representation,  amounts used by the
Company to pay  reorganization  expenses,  if any, will be included as assets of
the Company held immediately prior to the Merger).

            (e)   The Parent has no present plan or  intention to reacquire  any
of the Merger Shares.

            (f)   The Acquisition Subsidiary will have no liabilities assumed by
the Surviving Corporation and will not transfer to the Surviving Corporation any
assets subject to liabilities in the Merger.

                                      -33-
<PAGE>

            (g)   Following the Merger, the Surviving  Corporation will continue
the Company's  historic  business or use a significant  portion of the Company's
historic  business  assets in a business  as required by Section 368 of the Code
and the Treasury Regulations promulgated thereunder.

      3.27  Discontinuance  of Operations.  As of the Effective Time, the Parent
will have  discontinued all of its business  operations which it conducted prior
to the  Effective  Time.  Upon  such  discontinuance,  the  Parent  will have no
material  liabilities,  contingent  or  otherwise  in  any  way  related  to its
pre-Effective Time business operations.

      3.28  Brokers'  Fees.  Except as set forth on  Section  3.28 of the Parent
Disclosure Schedule,  neither the Parent nor the Acquisition  Subsidiary has any
liability or obligation to pay any fees or commissions to any broker,  finder or
agent with respect to the transactions contemplated by this Agreement.

      3.29  Disclosure. No representation or warranty by the Parent contained in
this  Agreement  or in any of the  Transaction  Documentation,  and no statement
contained in the any document,  certificate or other instrument  delivered or to
be  delivered  by or on behalf  of the  Parent  pursuant  to this  Agreement  or
therein,  contains or will contain any untrue  statement  of a material  fact or
omits  or will  omit to  state  any  material  fact  necessary,  in light of the
circumstances  under  which  it was or will  be  made,  in  order  to  make  the
statements  herein or therein not  misleading.  The Parent has  disclosed to the
Company all material  information  relating to the business of the Parent or any
Subsidiary or the transactions contemplated by this Agreement.

      3.30  Interested Party  Transactions.  To the knowledge of the Parent,  no
officer,  director or stockholder of Parent or any  "affiliate" (as such term is
defined in Rule 12b-2 under the Exchange  Act) or  "associate"  (as such term is
defined in Rule 405 under the Securities Act) of any such person has had, either
directly or  indirectly,  (a) an interest  in any person that (i)  furnishes  or
sells  services or products  that are  furnished  or sold or are  proposed to be
furnished or sold by Parent or any Subsidiary or (ii) purchases from or sells or
furnishes to Parent or any Subsidiary any goods or services, or (b) a beneficial
interest in any contract or agreement  to which  Parent or any  Subsidiary  is a
party or by which it may be bound or affected.  Neither Parent or any Subsidiary
has extended or  maintained  credit,  arranged for the  extension of credit,  or
renewed an  extension  of credit,  in the form of a personal  loan to or for any
director  or  executive  officer  (or  equivalent  thereof) of the Parent or any
Subsidiary.

      3.31  Duty to Make Inquiry.  To the extent that any of the representations

or warranties in this Section 3 are qualified by "knowledge" or "belief," Parent
represents  and  warrants  that it has  made  due  and  reasonable  inquiry  and
investigation   concerning  the  matters  to  which  such   representations  and
warranties  relate,  including,  but not  limited  to,  diligent  inquiry by its
directors, officers and key personnel.

                                      -34-
<PAGE>

      3.32  Accountants.  Stark  Winter  Schenkein  & Co.,  LLP are and has been
throughout  the periods  covered by such  financial  statements (a) a registered
public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act
of 2002,  (b)  "independent"  with  respect  to Parent  within  the  meaning  of
Regulation S-X and (c) in compliance with subsections (g) through (l) of Section
10A of the Exchange Act and the related rules of the  Commission  and the Public
Company Accounting  Oversight Board.  Schedule 3.32 lists all non-audit services
performed by Stark Winter  Schenkein & Co., LLP for Parent and/or any Subsidiary
since January 1, 2003. None of the reports of Stark Winter  Schenkein & Co., LLP
on the  financial  statements  of Parent for either of the past two fiscal years
contained an adverse opinion or a disclaimer of opinion,  or was qualified as to
uncertainty,  audit scope,  or accounting  principles.  During Parent's two most
recent  fiscal  years  and  the  subsequent  interim  periods,   there  were  no
disagreements with Stark Winter Schenkein & Co., LLP on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedures.  None of the  reportable  events  listed  in Item  304(a)(1)(iv)  of
Regulation S-B occurred with respect to Stark Winter Schenkein & Co., LLP.

      3.33  Minute  Books.  The  minute  books,  if  any,  of  Parent  and  each
Subsidiary contain, in all material respects, a complete and accurate summary of
all meetings of directors  and  stockholders  or actions by written  resolutions
since the time of organization of each such corporation through the date of this
Agreement,  and  reflect  all  transactions  referred  to in  such  minutes  and
resolutions accurately,  except for omissions which are not material. Parent has
provided  true and  complete  copies of all such  minute  books,  if any, to the
Company's representatives.

      3.34  Board Action.  The Parent's  Board of Directors (a) has  unanimously
determined  that  the  Merger  is  advisable  and in the best  interests  of the
Parent's  stockholders and is on terms that are fair to such Parent stockholders
and (b) has caused the Parent,  in its capacity as the sole  stockholder  of the
Acquisition   Subsidiary,   and  the  Board  of  Directors  of  the  Acquisition
Subsidiary, to approve the Merger and this Agreement by written consent.

                                   ARTICLE IV
                                    COVENANTS

      4.1   Closing Efforts.  Each of the Parties shall use its best efforts, to
the extent  commercially  reasonable  ("Reasonable  Best Efforts"),  to take all
actions and to do all things  necessary,  proper or advisable to consummate  the
transactions contemplated by this Agreement,  including without limitation using
its  Reasonable  Best  Efforts  to  ensure  that  (i)  its  representations  and
warranties  remain true and correct in all material respects through the Closing
Date and  (ii)  the  conditions  to the  obligations  of the  other  Parties  to
consummate the Merger are satisfied.

                                      -35-
<PAGE>

      4.2   Governmental and Third-Party Notices and Consents.

            (a)   Each Party shall use its Reasonable Best Efforts to obtain, at
its expense, all waivers, permits,  consents,  approvals or other authorizations
from Governmental Entities, and to effect all registrations, filings and notices
with  or to  Governmental  Entities,  as may  be  required  for  such  Party  to
consummate  the  transactions  contemplated  by this  Agreement and to otherwise
comply  with  all  applicable  laws  and  regulations  in  connection  with  the
consummation of the transactions contemplated by this Agreement.

            (b)   The Company shall use its  Reasonable  Best Efforts to obtain,
at its expense, all such waivers,  consents or approvals from third parties, and
to give all such  notices  to third  parties,  as are  required  to be listed in
Section 2.4 of the Disclosure Schedule.

      4.3   Current Report.  As  soon as  reasonably   practicable   after   the
execution of this Agreement,  the Parties shall prepare a current report on Form
8-K relating to this  Agreement and the  transactions  contemplated  hereby (the
"Current  Report").  Each of the  Company  and Parent  shall use its  reasonable
efforts  to cause  the  Current  Report  to be filed  with the SEC  within  four
business  days of the execution of this  Agreement and to otherwise  comply with
all requirements of applicable federal and state securities laws.  Further,  the
Parties shall  prepare and file with the SEC an amendment to the Current  Report
within four business  days after the Closing  Date,  if such Current  Report was
filed before the Closing Date.

      4.4   Operation of Business.  Except as  contemplated  by this  Agreement,
during the period from the date of this  Agreement to the  Effective  Time,  the
Company shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary  Course of Business  and in  compliance  with all  applicable  laws and
regulations  and, to the extent  consistent  therewith,  use its Reasonable Best
Efforts to preserve intact its current business organization,  keep its physical
assets in good working  condition,  keep  available  the services of its current
officers and employees and preserve its relationships with customers,  suppliers
and others  having  business  dealings  with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect. Without limiting
the generality of the foregoing,  prior to the Effective Time, the Company shall
not (and shall cause each Subsidiary not to), without the written consent of the
Parent:

            (a)   issue or sell,  or  redeem or  repurchase,  any stock or other
securities  of the Company or any  Warrants,  Options or other rights to acquire
any  such  stock or other  securities  (except  pursuant  to the  conversion  or
exercise of  convertible  securities or Options or Warrants  outstanding  on the
date hereof),  or amend any of the terms of (including  without  limitation  the
vesting of) any such convertible securities or Options or Warrants;

            (b)   split,  combine or reclassify any shares of its capital stock;
declare,  set aside or pay any dividend or other distribution  (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;

                                      -36-
<PAGE>

            (c)   create,   incur  or   assume   any   indebtedness   (including
obligations  in  respect  of  capital  leases);  assume,  guarantee,  endorse or
otherwise  become  liable or  responsible  (whether  directly,  contingently  or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital  contributions  to, or  investments  in, any other person or
entity;

            (d)   enter into,  adopt or amend any  Employee  Benefit Plan or any
employment or severance agreement or arrangement or (except for normal increases
in the  Ordinary  Course  of  Business  for  employees  who are not  Affiliates)
increase in any manner the  compensation  or fringe  benefits of, or  materially
modify the employment terms of, its directors, officers or employees,  generally
or individually, or pay any bonus or other benefit to its directors, officers or
employees;

            (e)   acquire,  sell,  lease,  license  or  dispose of any assets or
property  (including  without limitation any shares or other equity interests in
or securities of any Subsidiary or any corporation,  partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;

            (f)   mortgage  or pledge any of its  property  or assets or subject
any such property or assets to any Security Interest;

            (g)   discharge  or  satisfy  any  Security   Interest  or  pay  any
obligation or liability other than in the Ordinary Course of Business;

            (h)   amend its charter, by-laws or other organizational documents;

            (i)   change  in  any  material  respect  its  accounting   methods,
principles  or  practices,  except  insofar as may be  required  by a  generally
applicable change in GAAP;

            (j)   enter into, amend, terminate,  take or omit to take any action
that would  constitute  a  violation  of or default  under,  or waive any rights
under, any material contract or agreement;

            (k)   institute or settle any Legal Proceeding;

            (l)   take any action or fail to take any action  permitted  by this
Agreement  with the  knowledge  that such action or failure to take action would
result in (i) any of the representations and warranties of the Company set forth
in this  Agreement  becoming  untrue or (ii) any of the conditions to the Merger
set forth in Article V not being satisfied; or

            (m)   agree in writing  or  otherwise  to take any of the  foregoing
actions.

      4.5   Access to Information.

            (a)   The Company shall (and shall cause each  Subsidiary to) permit
representatives  of the Parent to have full access (at all reasonable times, and
in a manner so as not to interfere  with the normal  business  operations of the
Company  and  the  Subsidiaries)  to all  premises,  properties,  financial  and
accounting records, contracts, other records and documents, and personnel, of or
pertaining to the Company and each Subsidiary.

                                      -37-
<PAGE>

            (b)   Each of the Parent and the  Acquisition  Subsidiary  (i) shall
treat and hold as confidential any Company Confidential  Information (as defined
below), (ii) shall not use any of the Company Confidential Information except in
connection  with this  Agreement,  and (iii) if this Agreement is terminated for
any reason whatsoever, shall return to the Company all tangible embodiments (and
all copies) thereof which are in its possession. For purposes of this Agreement,
"Company  Confidential   Information"  means  any  confidential  or  proprietary
information of the Company or any Subsidiary that is furnished in writing to the
Parent  or the  Acquisition  Subsidiary  by the  Company  or any  Subsidiary  in
connection  with this  Agreement  and is labeled  confidential  or  proprietary;
provided,  however,  that it shall not include any information (A) which, at the
time of disclosure, is available publicly, (B) which, after disclosure,  becomes
available publicly through no fault of the Parent or the Acquisition Subsidiary,
(C) which the Parent or the  Acquisition  Subsidiary knew or to which the Parent
or the Acquisition  Subsidiary had access prior to disclosure,  or (D) which the
Parent or the Acquisition Subsidiary rightfully obtains from a source other than
the Company or a Subsidiary.

      4.6   Operation of Business.  Except as  contemplated  by this  Agreement,
during the period from the date of this  Agreement to the  Effective  Time,  the
Parent shall (and shall cause each  Subsidiary to) conduct its operations in the
Ordinary  Course of Business  and in  compliance  with all  applicable  laws and
regulations  and, to the extent  consistent  therewith,  use its Reasonable Best
Efforts to preserve intact its current business organization,  keep its physical
assets in good working  condition,  keep  available  the services of its current
officers and employees and preserve its relationships with customers,  suppliers
and others  having  business  dealings  with it to the end that its goodwill and
ongoing business shall not be impaired in any material respect. Without limiting
the generality of the foregoing,  prior to the Effective  Time, the Parent shall
not (and shall cause each Subsidiary not to), without the written consent of the
Company:

            (a)   issue or sell,  or  redeem or  repurchase,  any stock or other
securities of the Company or any rights, warrants or options to acquire any such
stock or other  securities,  except as contemplated  by, and in connection with,
the Private Placement Offering;

            (b)   split,  combine or reclassify any shares of its capital stock;
declare,  set aside or pay any dividend or other distribution  (whether in cash,
stock or property or any  combination  thereof) in respect of its capital stock,
except as contemplated by, and in connection with, the Stock Split;

            (c)   create,   incur  or   assume   any   indebtedness   (including
obligations  in  respect  of  capital  leases);  assume,  guarantee,  endorse or
otherwise  become  liable or  responsible  (whether  directly,  contingently  or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital  contributions  to, or  investments  in, any other person or
entity;

                                      -38-
<PAGE>

            (d)   enter into,  adopt or amend any  Employee  Benefit Plan or any
employment or severance agreement or arrangement or (except for normal increases
in the  Ordinary  Course  of  Business  for  employees  who are not  Affiliates)
increase in any manner the  compensation  or fringe  benefits of, or  materially
modify the employment terms of, its directors, officers or employees,  generally
or individually, or pay any bonus or other benefit to its directors, officers or
employees,  except for the  adoption of Parent  Option Plan  covering  4,000,000
shares of Parent Common Stock in connection with the Merger;

            (e)   acquire,  sell,  lease,  license  or  dispose of any assets or
property  (including  without limitation any shares or other equity interests in
or securities of any Subsidiary or any corporation,  partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;

            (f)   mortgage  or pledge any of its  property  or assets or subject
any such property or assets to any Security Interest;

            (g)   discharge  or  satisfy  any  Security   Interest  or  pay  any
obligation or liability other than in the Ordinary Course of Business;

            (h)   amend its charter, by-laws or other organizational documents;

            (i)   change  in  any  material  respect  its  accounting   methods,
principles  or  practices,  except  insofar as may be  required  by a  generally
applicable change in GAAP;

            (j)   enter into, amend, terminate,  take or omit to take any action
that would  constitute  a  violation  of or default  under,  or waive any rights
under, any material contract or agreement;

            (k)   institute or settle any Legal Proceeding;

            (l)   take any action or fail to take any action  permitted  by this
Agreement  with the  knowledge  that such action or failure to take action would
result in (i) any of the representations and warranties of the Parent and/or the
Acquisition  Subsidiary set forth in this Agreement  becoming untrue or (ii) any
of the conditions to the Merger set forth in Article V not being satisfied; or

            (m)   agree in writing  or  otherwise  to take any of the  foregoing
actions.

                                      -39-
<PAGE>

      4.7   Access to Information.

            (a)   The Parent shall (and shall cause the  Acquisition  Subsidiary
to) permit representatives of the Company to have full access (at all reasonable
times,  and  in a  manner  so as not  to  interfere  with  the  normal  business
operations  of the  Parent  and the  Acquisition  Subsidiary)  to all  premises,
properties,  financial  and  accounting  records,  contracts,  other records and
documents,  and  personnel,  of or pertaining to the Parent and the  Acquisition
Subsidiary.

            (b)   The  Company  (i)  shall  treat and hold as  confidential  any
Parent  Confidential  Information (as defined below),  (ii) shall not use any of
the Parent  Confidential  Information  except in connection with this Agreement,
and (iii) if this  Agreement  is  terminated  for any reason  whatsoever,  shall
return to the Parent all tangible embodiments (and all copies) thereof which are
in  its  possession.  For  purposes  of  this  Agreement,  "Parent  Confidential
Information" means any confidential or proprietary  information of the Parent or
any Subsidiary  that is furnished in writing to the Company by the Parent or the
Acquisition  Subsidiary  in  connection  with  this  Agreement  and  is  labeled
confidential or proprietary;  provided,  however,  that it shall not include any
information (A) which,  at the time of disclosure,  is available  publicly,  (B)
which,  after  disclosure,  becomes  available  publicly through no fault of the
Company,  (C) which the Company knew or to which the Company had access prior to
disclosure or (D) which the Company  rightfully obtains from a source other than
the Parent or the Acquisition Subsidiary.

      4.8   Expenses.  The costs and expenses (including legal fees and expenses
of Parent and the Company)  incurred in connection  with this  Agreement and the
transactions  contemplated  hereby shall be payable at Closing from the proceeds
of the Private Placement Offering.

      4.9   Indemnification.

            (a)   The Parent  shall not,  for a period of three  years after the
Effective  Time,  take  any  action  to  alter  or  impair  any  exculpatory  or
indemnification  provisions now existing in the certificate of  incorporation or
bylaws of the Company for the benefit of any individual who served as a director
or officer of the Company at any time prior to the  Effective  Time,  except for
any changes which may be required to conform with changes in applicable  law and
any changes which do not affect the  application  of such  provisions to acts or
omissions of such individuals prior to the Effective Time.

            (b)   From and after the Effective  Time,  the Parent agrees that it
will, and will cause the Surviving  Corporation to,  indemnify and hold harmless
each present and former  director  and officer of the Company (the  "Indemnified
Executives")  against  any  costs  or  expenses  (including   attorneys'  fees),
judgments,  fines,  losses,  claims,  damages,  liabilities  or amounts  paid in
settlement incurred in connection with any claim,  action,  suit,  proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or  pertaining  to  matters  existing  or  occurring  at or  prior to the
Effective Time,  whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under Delaware law (and the Parent and the
Surviving  Corporation  shall also  advance  expenses as incurred to the fullest
extent permitted under Delaware law, provided the Indemnified  Executive to whom
expenses are advanced  provides an  undertaking  to repay such advances if it is
ultimately  determined  that  such  Indemnified  Executive  is not  entitled  to
indemnification).

                                      -40-
<PAGE>

      4.10  Listing of Merger  Shares.  The Parent shall take whatever steps are
necessary to cause the Merger  Shares to be eligible for quotation on the NASD's
OTC Bulletin Board.

      4.11  Stock Split.  The Parent shall take whatever  steps are necessary to
enable it to effect the Stock Split prior to or as of the Effective Time.

      4.12  Stock Option Plan.  The Board of Directors of Parent shall adopt the
Parent  Option Plan  reserving  for issuance  4,000,000  shares of Parent Common
Stock,  subject to  ratification  of Parent's  shareholders  after the Effective
Time.

                                   ARTICLE V
                      CONDITIONS TO CONSUMMATION OF MERGER

      5.1   Conditions to Each Party's Obligations.  The respective  obligations
of each Party to consummate  the Merger are subject to the  satisfaction  of the
following conditions:

            (a)   this   Agreement  and  the  Merger  shall  have  received  the
Requisite Company Stockholder Approval;

            (b)   the completion of the offer and sale of the Private  Placement
Offering; and

            (c)   satisfactory completion by Parent and Company of all necessary
legal due diligence.

      5.2   Conditions  to  Obligations  of  the  Parent  and  the   Acquisition
Subsidiary.  The obligation of each of the Parent and the Acquisition Subsidiary
to  consummate  the  Merger is  subject  to the  satisfaction  (or waiver by the
Parent) of the following additional conditions:

            (a)   the number of  Dissenting  Shares  shall not exceed 10% of the
number of outstanding Company Shares as of the Effective Time;

            (b)   the  Company and its  Subsidiaries  shall have  obtained  (and
shall have provided  copies thereof to the Parent) all of the waivers,  permits,
consents,   approvals  or  other   authorizations,   and  effected  all  of  the
registrations,  filings  and  notices,  referred  to in  Section  4.2  which are
required  on the part of the  Company  or the  Subsidiaries,  except for any the
failure  of  which  to  obtain  or  effect  would  not,  individually  or in the
aggregate,  have a Company  Material Adverse Effect or a material adverse effect
on the ability of the Parties to consummate  the  transactions  contemplated  by
this Agreement;

                                      -41-
<PAGE>

            (c)   the representations and warranties of the Company set forth in
this  Agreement  shall be true and correct as of the date of this  Agreement and
shall be true and  correct  as of the  Effective  Time as though  made as of the
Effective  Time,   except  to  the  extent  that  the  inaccuracy  of  any  such
representation  or warranty is the result of events or  circumstances  occurring
subsequent to the date of this Agreement and any such inaccuracies, individually
or in the  aggregate,  would not have a  Company  Material  Adverse  Effect or a
material  adverse  effect  on the  ability  of the  Parties  to  consummate  the
transactions   contemplated   by  this  Agreement  (it  being  agreed  that  any
materiality qualifications in particular representations and warranties shall be
disregarded in determining  whether any such  inaccuracies  would have a Company
Material Adverse Effect for purposes of this Section 5.2(c));

            (d)   the Company  shall have  performed or complied in all material
respects with its agreements and covenants  required to be performed or complied
with under this Agreement as of or prior to the Effective Time;

            (e)   no Legal  Proceeding  shall be pending  wherein an unfavorable
judgment,   order,   decree,   stipulation  or  injunction   would  (i)  prevent
consummation of any of the  transactions  contemplated  by this Agreement,  (ii)
cause any of the  transactions  contemplated  by this  Agreement to be rescinded
following  consummation  or (iii)  have,  individually  or in the  aggregate,  a
Company  Material  Adverse  Effect,  and  no  such  judgment,   order,   decree,
stipulation or injunction shall be in effect;

            (f)   the  Company  shall  have  delivered  to the  Parent  and  the
Acquisition  Subsidiary a certificate (the "Company  Certificate") to the effect
that each of the conditions  specified in clauses (a) and (c) of Section 5.1 and
clauses  (a) through  (e)  (insofar  as clause (e) relates to Legal  Proceedings
involving the Company or a  Subsidiary)  of this Section 5.2 is satisfied in all
respects; and

            (g)   the Parent shall have received from  McGuireWoods LLP, counsel
to the  Company,  an opinion  with respect to the matters set forth in Exhibit B
attached hereto, addressed to the Parent and dated as of the Closing Date.

      5.3   Conditions  to  Obligations  of the Company.  The  obligation of the
Company to consummate the Merger is subject to the satisfaction of the following
additional conditions:

            (a)   the Parent shall have obtained (and shall have provided copies
thereof  to the  Company  and its  Subsidiaries)  all of the  waivers,  permits,
consents,   approvals  or  other   authorizations,   and  effected  all  of  the
registrations,  filings  and  notices,  referred  to in  Section  4.2  which are
required  on the part of the  Parent,  except  for any the  failure  of which to
obtain or effect  would not,  individually  or in the  aggregate,  have a Parent
Material  Adverse  Effect or a  material  adverse  effect on the  ability of the
Parties to consummate the transactions contemplated by this Agreement;

                                      -42-
<PAGE>

            (b)   the  representations and warranties of the Parent set forth in
this  Agreement  shall be true and correct as of the date of this  Agreement and
shall be true and  correct  as of the  Effective  Time as though  made as of the
Effective  Time,   except  to  the  extent  that  the  inaccuracy  of  any  such
representation  or warranty is the result of events or  circumstances  occurring
subsequent to the date of this Agreement and any such inaccuracies, individually
or in the  aggregate,  would  not have a Parent  Material  Adverse  Effect  or a
material  adverse  effect  on the  ability  of the  Parties  to  consummate  the
transactions   contemplated   by  this  Agreement  (it  being  agreed  that  any
materiality qualifications in particular representations and warranties shall be
disregarded in  determining  whether any such  inaccuracies  would have a Parent
Material Adverse Effect for purposes of this Section 5.3(b));

            (c)   each of the Parent and the Acquisition  Subsidiary  shall have
performed or complied with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective Time;

            (d)   no Legal  Proceeding  shall be pending  wherein an unfavorable
judgment,   order,   decree,   stipulation  or  injunction   would  (i)  prevent
consummation of any of the  transactions  contemplated  by this Agreement,  (ii)
cause any of the  transactions  contemplated  by this  Agreement to be rescinded
following consummation or (iii) have, individually or in the aggregate, a Parent
Material Adverse Effect,  and no such judgment,  order,  decree,  stipulation or
injunction shall be in effect;

            (e)   the Parent shall have  delivered to the Company a  certificate
(the "Parent  Certificate") to the effect that each of the conditions  specified
in clauses (a) through (d)  (insofar as clause (d) relates to Legal  Proceedings
involving the Parent) of this Section 5.3 is satisfied in all respects;

            (f)   the Company shall have  received  from  Gottbetter & Partners,
LLP,  counsel to the  Parent and the  Acquisition  Subsidiary,  an opinion  with
respect to the matters set forth in Exhibit C attached hereto,  addressed to the
Company and dated as of the Closing Date;

            (g)   the total  number of shares of Parent  Common Stock issued and
outstanding  immediately  prior to the  Effective  Time shall  equal  15,000,002
shares,  after giving effect to the Stock Split and the Share Contribution,  but
excluding  (i) the  shares of  Parent  Common  Stock to be issued to  accredited
investors in the Private  Placement  Offering and (ii) 600,000  shares of Parent
Common Stock to be issued to financial  advisors in connection  with the Private
Placement Offering;

            (h)   each of Mark  Beemer  and Lee Blank  shall  have  executed  an
employment  agreement  reasonably  satisfactory to Mark Beemer and Lee Blank, as
the case may be, and Parent and the Company  related to the  employment  of Mark
Beemer and Lee Blank by the Surviving Corporation;

            (i)   the Parent shall have adopted the Parent Option Plan;

                                      -43-
<PAGE>

            (j)   the  Company  shall have  received a  certificate  of Parent's
transfer  agent and registrar  certifying  that as of the Closing Date there are
38,437,500 shares of Parent Common Stock issued and outstanding  (without giving
effect  to the  23,437,500  shares  of  Parent  Common  Stock to be  retired  in
connection with the Share  Contribution and the shares of Parent Common Stock to
be issued in the Private Placement Offering).

                                   ARTICLE VI
                                 INDEMNIFICATION

      6.1   Indemnification  by  the  Company  Stockholders.   The  Indemnifying
Stockholders receiving the Merger Shares pursuant to Section 1.5 shall indemnify
the  Parent in  respect  of, and hold it  harmless  against,  any and all debts,
obligations and other liabilities (whether absolute, accrued,  contingent, fixed
or  otherwise,  or  whether  known  or  unknown,  or  due  or to  become  due or
otherwise),  monetary damages,  fines, fees,  penalties,  interest  obligations,
deficiencies,  losses and expenses (including without limitation amounts paid in
settlement, interest, court costs, costs of investigators,  fees and expenses of
attorneys, accountants, financial advisors and other experts, and other expenses
of litigation)  ("Damages") incurred or suffered by the Surviving Corporation or
the Parent or any Affiliate thereof resulting from, relating to or constituting:

      (a)   any misrepresentation,  breach of warranty or failure to perform any
covenant or agreement of the Company  contained in this Agreement or the Company
Certificate;

      (b)   any  failure of any  Company  Stockholder  to have  good,  valid and
marketable title to the issued and outstanding Company Shares issued in the name
of such Company Stockholder, free and clear of all Security Interests; or

      (c)   any claim by a stockholder or former stockholder of the Company,  or
any other person or entity,  seeking to assert,  or based upon: (i) ownership or
rights to ownership of any shares of stock of the Company;  (ii) any rights of a
stockholder  (other than the right to receive the Merger Shares pursuant to this
Agreement  or  appraisal  rights under the  applicable  provisions  of the GCL),
including any option,  preemptive  rights or rights to notice or to vote;  (iii)
any rights under the certificate of incorporation  or bylaws of the Company;  or
(iv) any claim that his, her or its shares were  wrongfully  repurchased  by the
Company.

      6.2   Indemnification by the Parent.

            (a)   The Parent shall  indemnify the  Indemnifying  Stockholders in
respect of, and hold them  harmless  against,  any and all  Damages  incurred or
suffered  by  the  Indemnifying  Stockholders  resulting  from,  relating  to or
constituting any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of the Parent or the Acquisition  Subsidiary  contained in
this Agreement or the Parent Certificate.

            (b)   The  post-Closing  adjustment  mechanism  set forth in Section
1.13 is intended to secure the  indemnification  obligations of the Parent under
this  Agreement  and  shall  be  the  exclusive   means  for  the   Indemnifying
Stockholders   to  collect  any   Damages   for  which  they  are   entitled  to
indemnification under this Article VI.

                                      -44-
<PAGE>

      6.3   Indemnification Claims by the Parent.

            (a)   In the  event  the  Parent  is  entitled,  or seeks to  assert
rights,  to  indemnification  under  Section  6.1,  Parent  shall  give  written
notification to the Indemnifying Stockholders of the commencement of any suit or
proceeding relating to a third party claim for which indemnification pursuant to
this  Article  VI may be  sought.  Such  notification  shall be given  within 20
business days after receipt by the Parent of notice of such suit or  proceeding,
and shall describe in reasonable  detail (to the extent known by the Parent) the
facts  constituting  the basis for such suit or proceeding and the amount of the
claimed damages;  provided,  however, that no delay on the part of the Parent in
notifying  the   Indemnifying   Stockholders   shall  relieve  the  Indemnifying
Stockholders  of any liability or obligation  hereunder  except to the extent of
any damage or liability caused by or arising out of such failure. Within 20 days
after delivery of such  notification,  the Indemnifying  Stockholders  may, upon
written notice thereof to the Parent, assume control of the defense of such suit
or proceeding with counsel reasonably  satisfactory to the Parent; provided that
(i) the Indemnifying Stockholders may only assume control of such defense if (A)
it acknowledges in writing to the Parent that any damages, fines, costs or other
liabilities that may be assessed against the Parent in connection with such suit
or  proceeding  constitute  Damages  for which the Parent  shall be  indemnified
pursuant  to this  Article VI and (B) the ad damnum is less than or equal to the
amount of Damages for which the Indemnifying  Stockholders are liable under this
Article VI and (ii) the Indemnifying  Stockholders may not assume control of the
defense  of a suit  or  proceeding  involving  criminal  liability  or in  which
equitable relief is sought against the Parent. If the Indemnifying  Stockholders
do not so assume control of such defense, the Parent shall control such defense.
The party  not  controlling  such  defense  (the  "Non-Controlling  Party")  may
participate  therein  at its own  expense;  provided  that  if the  Indemnifying
Stockholders assume control of such defense and the Parent reasonably  concludes
that the Indemnifying  Stockholders and the Parent have conflicting interests or
different  defenses  available  with  respect  to such suit or  proceeding,  the
reasonable  fees and  expenses  of  counsel to the  Parent  shall be  considered
"Damages" for purposes of this  Agreement.  The party  controlling  such defense
(the "Controlling  Party") shall keep the  Non-Controlling  Party advised of the
status of such suit or proceeding and the defense  thereof and shall consider in
good  faith  recommendations  made by the  Non-Controlling  Party  with  respect
thereto. The Non-Controlling Party shall furnish the Controlling Party with such
information  as it may have with respect to such suit or  proceeding  (including
copies of any summons, complaint or other pleading which may have been served on
such party and any written  claim,  demand,  invoice,  billing or other document
evidencing or asserting the same) and shall otherwise  cooperate with and assist
the  Controlling  Party  in  the  defense  of  such  suit  or  proceeding.   The
Indemnifying  Stockholders shall not agree to any settlement of, or the entry of
any judgment arising from, any such suit or proceeding without the prior written
consent of the  Parent,  which  shall not be  unreasonably  withheld or delayed;
provided  that  the  consent  of  the  Parent  shall  not  be  required  if  the
Indemnifying  Stockholders  agree in writing to pay any amounts payable pursuant
to such  settlement  or judgment  and such  settlement  or  judgment  includes a
complete  release of the Parent from further  liability and has no other adverse
effect on the Parent.  The Parent shall not agree to any  settlement  of, or the
entry of any judgment  arising  from,  any such suit or  proceeding  without the
prior  written  consent of the  Indemnifying  Stockholders,  which  shall not be
unreasonably withheld or delayed.

                                      -45-
<PAGE>

            (b)   In order to seek indemnification under this Article VI, Parent
shall  give  written   notification  (a  "Claim  Notice")  to  the  Indemnifying
Stockholders  which  contains  (i) a  description  and the amount (the  "Claimed
Amount") of any Damages  incurred or  reasonably  expected to be incurred by the
Parent,  (ii) a statement that the Parent is entitled to  indemnification  under
this  Article VI for such  Damages  and a  reasonable  explanation  of the basis
therefor,  and (iii) a demand for payment (in the manner  provided in  paragraph
(c) below) in the amount of such Damages.  The Indemnifying  Stockholders  shall
deliver a copy of the Claim Notice to the Escrow Agent.

            (c)   Within  20  days  after  delivery  of  a  Claim  Notice,   the
Indemnifying  Stockholders  shall deliver to the Parent a written  response (the
"Response") in which the  Indemnifying  Stockholders  shall:  (i) agree that the
Parent is  entitled  to  receive  all of the  Claimed  Amount (in which case the
Indemnifying  Stockholders  and the Parent  shall  deliver to the Escrow  Agent,
within three days  following  the  delivery of the  Response,  a written  notice
executed by both  parties  instructing  the Escrow  Agent to  distribute  to the
Parent  such  number of Escrow  Shares as have an  aggregate  Value (as  defined
below) equal to the Claimed  Amount),  (ii) agree that the Parent is entitled to
receive part, but not all, of the Claimed Amount (the "Agreed Amount") (in which
case the  Indemnifying  Stockholders  and the Parent shall deliver to the Escrow
Agent,  within  three days  following  the delivery of the  Response,  a written
notice  executed by both parties  instructing  the Escrow Agent to distribute to
the Parent such number of Escrow  Shares as have an aggregate  Value (as defined
below) equal to the Agreed  Amount) or (iii) dispute that the Parent is entitled
to receive any of the Claimed Amount.  If the  Indemnifying  Stockholders in the
Response  disputes  its  liability  for all or part of the Claimed  Amount,  the
Indemnifying  Stockholders  and the Parent shall follow the procedures set forth
in Section 6.3(d) for the resolution of such dispute (a "Dispute"). For purposes
of this Article VI, the "Value" of any Escrow Shares  delivered in  satisfaction
of an  indemnity  claim shall be $1.00 per Escrow  Share  (subject to  equitable
adjustment in the event of any stock split, stock dividend,  reverse stock split
or similar  event  affecting  the Parent  Common Stock since the Closing  Date),
multiplied by the number of such Escrow Shares.

            (d)   During the 60-day period  following the delivery of a Response
that reflects a Dispute, the Indemnifying  Stockholders and the Parent shall use
good faith efforts to resolve the Dispute. If the Dispute is not resolved within
such 60-day period,  the Indemnifying  Stockholders and the Parent shall discuss
in good faith the submission of the Dispute to a mutually acceptable alternative
dispute  resolution  procedure  (which may be  non-binding  or binding  upon the
parties,  as they  agree in  advance)  (the "ADR  Procedure").  In the event the
Indemnifying  Stockholders  and the  Parent  agree upon an ADR  Procedure,  such
parties shall, in consultation with the chosen dispute  resolution  service (the
"ADR  Service"),  promptly  agree  upon a  format  and  timetable  for  the  ADR
Procedure,  agree upon the rules  applicable to the ADR Procedure,  and promptly
undertake the ADR  Procedure.  The  provisions of this Section  6.3(d) shall not
obligate the Indemnifying Stockholders and the Parent to pursue an ADR Procedure
or prevent  either such Party from  pursuing the Dispute in a court of competent
jurisdiction;  provided that, if the  Indemnifying  Stockholders  and the Parent
agree to pursue an ADR Procedure,  neither the Indemnifying Stockholders nor the
Parent may  commence  litigation  or seek  other  remedies  with  respect to the
Dispute  prior  to the  completion  of such  ADR  Procedure.  Any ADR  Procedure
undertaken by the Indemnifying Stockholders and the Parent shall be considered a
compromise  negotiation for purposes of federal and state rules of evidence, and
all statements,  offers, opinions and disclosures (whether written or oral) made
in  the  course  of the  ADR  Procedure  by or on  behalf  of  the  Indemnifying
Stockholders,  the Parent or the ADR  Service  shall be treated as  confidential
and, where  appropriate,  as privileged work product.  Such statements,  offers,
opinions  and  disclosures  shall  not be  discoverable  or  admissible  for any
purposes in any litigation or other proceeding relating to the Dispute (provided
that this sentence shall not be construed to exclude from discovery or admission
any matter that is otherwise discoverable or admissible).  The fees and expenses
of any ADR Service used by the Indemnifying Stockholders and the Parent shall be
shared equally by the Indemnifying  Stockholders and the Parent.  The Parent and
the  Indemnifying  Stockholders  shall  deliver  to the Escrow  Agent,  promptly
following the resolution of the Dispute (whether by mutual  agreement,  pursuant
to an ADR Procedure, as a result of a judicial decision or otherwise), a written
notice executed by both parties instructing the Escrow Agent as to what (if any)
portion of the Escrow  Shares shall be  distributed  to the Parent (which notice
shall be consistent with the terms of the resolution of the Dispute).

                                      -46-
<PAGE>

            (e)   Notwithstanding the other provisions of this Section 6.3, if a
third party asserts (other than by means of a lawsuit) that the Parent is liable
to such third party for a monetary or other  obligation  which may constitute or
result in Damages  for which  such  Parent may be  entitled  to  indemnification
pursuant to this Article VI, and the Parent reasonably  determines that it has a
valid  business  reason to fulfill  such  obligation,  then (i) Parent  shall be
entitled to satisfy  such  obligation,  with prior  notice to but without  prior
consent from the Indemnifying Stockholders,  (ii) Parent may subsequently make a
claim for  indemnification in accordance with the provisions of this Article VI,
and (iii) Parent shall be reimbursed,  in accordance with the provisions of this
Article VI, for any such  Damages  for which it is  entitled to  indemnification
pursuant  to  this  Article  VI  (subject  to  the  right  of  the  Indemnifying
Stockholders  to dispute the Parent's  entitlement  to  indemnification,  or the
amount  for which it is  entitled  to  indemnification,  under the terms of this
Article VI).

            (f)   For purposes of this Section 6.3 and the last two sentences of
Section 6.4, any references to the Indemnifying  Stockholders (except provisions
relating to an  obligation  to make or a right to receive any payments  provided
for  in  Section  6.3  or  Section   6.4)  shall  be  deemed  to  refer  to  the
Indemnification Representatives.  The Indemnification Representatives shall have
full power and authority on behalf of each Indemnifying  Stockholder to take any
and all actions on behalf of, execute any and all  instruments on behalf of, and
execute or waive any and all rights of, the Indemnifying Stockholders under this
Article VI. The Indemnification  Representatives  shall have no liability to any
Indemnifying  Stockholder  for any  action  taken or  omitted  on  behalf of the
Indemnifying Stockholders pursuant to this Article VI.

                                      -47-
<PAGE>

      6.4   Survival of Representations and Warranties.  All representations and
warranties  contained in this Agreement,  the Company  Certificate or the Parent
Certificate shall (a) survive the Closing and any investigation at any time made
by or on behalf of Parent or the Indemnifying  Stockholders and (b) shall expire
on the date two years  following  the  Closing  Date.  If Parent  delivers to an
Indemnifying  Stockholders,  before  expiration of a representation or warranty,
either a Claim Notice based upon a breach of such representation or warranty, or
a notice that,  as a result a legal  proceeding  instituted  by or written claim
made by a third  party,  the Parent  reasonably  expects  to incur  Damages as a
result  of a breach of such  representation  or  warranty  (an  "Expected  Claim
Notice"), then such representation or warranty shall survive until, but only for
purposes of, the resolution of the matter  covered by such notice.  If the legal
proceeding or written  claim with respect to which an Expected  Claim Notice has
been given is  definitively  withdrawn  or resolved in favor of the Parent,  the
Parent shall promptly so notify the Indemnifying Stockholders; and if the Parent
has delivered a copy of the Expected Claim Notice to the Escrow Agent and Escrow
Shares have been  retained in escrow after the  Termination  Date (as defined in
the  Escrow  Agreement)  with  respect  to  such  Expected  Claim  Notice,   the
Indemnifying  Stockholders  and the Parent shall promptly  deliver to the Escrow
Agent a written notice executed by both parties  instructing the Escrow Agent to
distribute  such retained  Escrow  Shares to the  Indemnifying  Stockholders  in
accordance with the terms of the Escrow Agreement.

      6.5   Limitations on Parent's Claims for Indemnification.

            (a)   Notwithstanding  anything to the contrary  herein,  the Parent
shall not be entitled to recover,  or be indemnified for, Damages arising out of
a  misrepresentation  or breach of  warranty  set forth in Article II unless and
until the  aggregate  of all such  Damages  paid or payable by the  Indemnifying
Stockholders collectively exceeds $50,000 (the "Damages Threshold") and then, if
such  aggregate  threshold  is  reached,  the Parent  shall only be  entitled to
recover  for  Damages in excess of such  respective  threshold;  and in no event
shall any  Indemnifying  Stockholder  be liable  under  this  Article  VI for an
aggregate  amount,  whether  paid in cash or in shares of Parent  Common  Stock,
greater than the product of the number of Escrow  Shares held on account of such
Indemnifying  Stockholder,  pursuant  to Section  1.5 above,  multiplied  by the
Value. For purposes of the preceding sentence,  each Escrow Share delivered by a
party in payment of his or its obligations under this Article VI shall be valued
at the Value.

            (b)   The Escrow Agreement is intended to secure the indemnification
obligations of the Indemnifying  Stockholders  under this Agreement and shall be
the  exclusive  means for the  Parent to  collect  any  Damages  for which it is
entitled to indemnification under this Article VI.

            (c)   Except  with  respect  to  claims  based on  fraud,  after the
Closing,  the rights of the Indemnified  Stockholders  and the Parent under this
Article  VI and the  Escrow  Agreement  shall  be the  exclusive  remedy  of the
Indemnified Stockholders and the Parent with respect to claims resulting from or
relating to any misrepresentation,  breach of warranty or failure to perform any
covenant or agreement contained in this Agreement.

                                      -48-
<PAGE>

            (d)   No   Indemnifying   Stockholder   shall   have  any  right  of
contribution against the Surviving Corporation with respect to any breach by the
Company of any of its representations,  warranties, covenants or agreements. The
amount of Damages recoverable by Parent under this Article VI with respect to an
indemnity  claim  shall be reduced by (i) any  proceeds  received by Parent with
respect to the Damages to which such indemnity claim relates,  from an insurance
carrier and (ii) the amount of any tax savings actually realized by Parent,  for
the tax year in which such Damages are incurred,  which are clearly attributable
to the Damages to which such  indemnity  claim relates (net of any increased tax
liability  which may result  from the  receipt of the  indemnity  payment or any
insurance proceeds relating to such Damages).

                                  ARTICLE VII
                                  DEFINITIONS

         For purposes of this Agreement,  each of the following defined terms is
defined in the Section of this Agreement indicated below.

Defined Term                                       Section
------------                                       -------

Acquisition Subsidiary                             Introduction
ADR Procedure                                      6.3(d)
ADR Service                                        6.3(d)
Affiliate                                          2.13(a)(vii)
Agreed Amount                                      6.3(c)
Agreement                                          Introduction
CERCLA                                             2.20(a)
Certificates                                       1.7
Certificate of Merger                              1.1
Claim Notice                                       6.3(b)
Claimed Amount                                     6.3(b)
Claims                                             1.13
Closing                                            1.2
Closing Date                                       1.2
Code                                               Introduction
Common Conversion Ratio                            1.5(b)
Company                                            Introduction
Company Certificate                                5.3(e)
Company Confidential Information                   4.5(b)
Company Material Adverse Effect                    2.1

                                      -49-
<PAGE>

Company Shares                                     1.5(a)
Company Stockholder                                1.3(d)
Contemplated Transactions                          8.3
Controlling Party                                  6.3(a)
Current Report                                     4.3(a)
Damages                                            6.1
Damages Threshold                                  6.5(a)
Defaulting Party                                   8.6
Disclosure Schedule                                Article II
Dispute                                            6.3(c)
Dissenting Shares                                  1.6(a)
Effective Time                                     1.1
Employee Benefit Plan                              2.19(a)(i)
Environmental Law                                  2.20(a)
ERISA                                              2.19(a)(ii)
ERISA Affiliate                                    2.19(a)(iii)
Escrow Agent                                       1.3(g)
Escrow Agreement                                   1.3(g)
Escrow Shares                                      1.5(b)
Exchange Act                                       2.6
Expected Claim Notice                              6.4
GAAP                                               2.6
GCL                                                1.1
Governmental Entity                                2.4
Indemnification Representative                     1.3(g)
Indemnified Executives                             4.9(b)
Indemnifying Stockholders                          1.5(b)
Initial Shares                                     1.5(b)
Legal Proceeding                                   2.17
Loss                                               1.13
Merger                                             Introduction
Merger Shares                                      1.5(b)
Non-Controlling Party                              6.3(a)
Non-Defaulting Party                               8.6
Options                                            1.5(b)
Ordinary Course of Business                        2.4
Organization Date                                  2.6
OTCBB                                              3.2
Parent                                             Introduction
Parent Certificate                                 5.3(e)
Parent Common Stock                                1.5(a)
Parent Confidential Information                    4.7(b)
Parent Disclosure Schedule                         Article III

                                      -50-
<PAGE>

Parent Liabilities                                 1.13
Parent Material Adverse Effect                     3.1
Parent Options                                     1.8(a)
Parent Option Plan                                 1.8(a)
Parent Reports                                     3.6
Party                                              Introduction
Permits                                            2.23
PPO Price                                          Introduction
Private Placement Offering                         Introduction
Reasonable Best Efforts                            4.1
Requisite Company Stockholder Approval             2.3
Response                                           6.3(c)
SEC                                                1.13
Securities Act                                     1.14
Security Interest                                  2.4
Share Contribution                                 3.2
Stock Split                                        3.2
Subsidiary                                         2.5(a)
Surviving Corporation                              1.1
Tax Returns                                        2.9(a)(ii)
Taxes                                              2.9(a)(i)
Transaction Documentation                          3.3
Value                                              6.3(c)
Warrants                                           1.5(b)

                                  ARTICLE VIII
                                   TERMINATION

      8.1   Termination by Mutual Agreement. This Agreement may be terminated at
any time by mutual consent of the parties hereto,  provided that such consent to
terminate is in writing and is signed by each of the parties hereto.

      8.2   Termination   for  Failure  to  Close.   This  Agreement   shall  be
automatically  terminated  if the  Closing  Date  shall  not  have  occurred  by
September 7, 2006.

      8.3   Termination by Operation of Law. This Agreement may be terminated by
any Party hereto if there shall be any statute,  rule or regulation that renders
consummation   of  the   transactions   contemplated   by  this  Agreement  (the
"Contemplated  Transactions)  illegal  or  otherwise  prohibited,  or a court of
competent jurisdiction or any government (or governmental  authority) shall have
issued an order,  decree or ruling,  or has taken any other action  restraining,
enjoining or otherwise  prohibiting the  consummation of such  transactions  and
such  order,  decree,  ruling  or other  action  shall  have  become  final  and
nonappealable.

                                      -51-
<PAGE>

      8.4   Termination  for Failure to Perform  Covenants or  Conditions.  This
Agreement may be terminated prior to the Effective Time:

            (a)   by the Parent and the  Acquisition  Subsidiary  if: (i) any of
the  representations  and warranties made in this Agreement by the Company shall
not be  materially  true  and  correct,  when  made  or at  any  time  prior  to
consummation of the Contemplated Transactions as if made at and as of such time;
(ii)  any of the  conditions  set  forth in  Section  5.2  hereof  have not been
fulfilled in all material  respects by the Closing Date; (iii) the Company shall
have failed to observe or perform  any of its  material  obligations  under this
Agreement; or (iv) as otherwise set forth herein; or

            (b)   by  the  Company  if:  (i)  any  of  the  representations  and
warranties of the Parent or the Acquisition  Subsidiary  shall not be materially
true  and  correct  when  made  or at any  time  prior  to  consummation  of the
Contemplated  Transactions  as if made at and as of such  time;  (ii) any of the
conditions  set forth in  Section  5.3  hereof  have not been  fulfilled  in all
material  respects  by the  Closing  Date;  (iii) the Parent or the  Acquisition
Subsidiary  shall  have  failed to  observe  or  perform  any of their  material
respective  obligations  under this  Agreement;  or (iv) as otherwise  set forth
herein.

      8.5   Effect  of  Termination  or  Default;  Remedies.  In  the  event  of
termination of this Agreement as set forth above, this Agreement shall forthwith
become void and there  shall be no  liability  on the part of any Party  hereto,
provided  that such Party is a  Non-Defaulting  Party (as  defined  below).  The
foregoing  shall not  relieve  any Party from  liability  for  damages  actually
incurred as a result of such  Party's  breach of any term or  provision  of this
Agreement.

      8.6   Remedies;  Specific  Performance.  In the event that any Party shall
fail or refuse to consummate  the  Contemplated  Transactions  or if any default
under or beach of any  representation,  warranty,  covenant or condition of this
Agreement on the part of any Party (the "Defaulting  Party") shall have occurred
that results in the failure to consummate the Contemplated Transactions, then in
addition to the other remedies provided herein,  the  non-defaulting  Party (the
"Non-Defaulting  Party") shall be entitled to seek and obtain money damages from
the  Defaulting  Party,  or may seek to obtain an order of specific  performance
thereof  against the  Defaulting  Party from a court of competent  jurisdiction,
provided that the  Non-Defaulting  Party seeking such  protection  must file its
request with such court within  forty-five  (45) days after it becomes  aware of
the Defaulting  Party's failure,  refusal,  default or breach. In addition,  the
Non-Defaulting Party shall be entitled to obtain from the Defaulting Party court
costs and reasonable  attorneys'  fees incurred in connection with or in pursuit
of enforcing the rights and remedies provided hereunder.

                                   ARTICLE IX
                                  MISCELLANEOUS

      9.1   Press  Releases  and  Announcements.  No Party shall issue any press
release or public announcement  relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided, however, that
any Party may make any public  disclosure  it believes in good faith is required
by applicable law, regulation or stock market rule (in which case the disclosing
Party shall use reasonable  efforts to advise the other Parties and provide them
with a copy of the proposed disclosure prior to making the disclosure).

                                      -52-
<PAGE>

      9.2   No Third Party  Beneficiaries.  This Agreement  shall not confer any
rights or remedies  upon any person other than the Parties and their  respective
successors and permitted assigns; provided,  however, that (a) the provisions in
Article I  concerning  issuance  of the Merger  Shares,  Article  VI  concerning
indemnification and Article VII concerning  registration rights are intended for
the benefit of the Company  Stockholders  and (b) the  provisions in Section 4.9
concerning  indemnification  are  intended  for the  benefit of the  individuals
specified therein and their successors and assigns.

      9.3   Entire Agreement.  This Agreement  (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior  understandings,  agreements or  representations  by or among the Parties,
written or oral, with respect to the subject matter hereof.

      9.4   Succession and Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted  assigns.  No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other  Parties;  provided  that the  Acquisition  Subsidiary  may assign its
rights,  interests and obligations hereunder to a wholly-owned subsidiary of the
Parent.

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

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

      9.7   Notices.  All  notices,   requests,   demands,   claims,  and  other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other  communication  hereunder  shall be deemed duly delivered four business
days after it is sent by registered or certified mail, return receipt requested,
postage  prepaid,  or one  business  day after it is sent for next  business day
delivery via a reputable  nationwide  overnight courier service, in each case to
the intended recipient as set forth below:

<TABLE>
<CAPTION>
<S>                                                               <C>
          If to the Company and Parent (subsequent to the         Copy to (which copy shall not constitute notice
          Closing):                                               hereunder):

          Beemer Energy, Inc.                                     McGuireWoods LLP
          c/o McGuireWoods LLP                                    1345 Avenue of the Americas
          1345 Avenue of the Americas                             New York, NY 10105
          New York, NY 10105                                      Attn: Louis W. Zehil, Esq.
          Attn: Mark Beemer, Chief Executive Officer              Facsimile: (212) 548-2175
          Facsimile: (212) 548-2175

          If to the Parent or                                     Copy to (which copy shall not constitute notice
          the Acquisition Subsidiary (prior to the Closing):      hereunder):

          Alternative Energy Sources, Inc.
          88 West 44th Avenue, Vancouver                          Gottbetter & Partners, LLP
          British Columbia, V5Y 2V1, Canada                       488 Madison Avenue, 12th Floor
          Attn: Stephen Jackson, President and Chief Executive    New York, NY 10022
          Officer                                                 Attn: Adam S. Gottbetter, Esq.
          Facsimile: (604) 661-0759
</TABLE>

                                      -53-
<PAGE>

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

      9.8   Governing Law. This Agreement  shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to any choice or conflict of law  provision or rule (whether of the State of New
York or any other  jurisdiction) that would cause the application of laws of any
jurisdictions other than those of the State of New York.

      9.9   Amendments and Waivers. The Parties may mutually amend any provision
of this  Agreement at any time prior to the Effective  Time. No amendment of any
provision of this  Agreement  shall be valid unless the same shall be in writing
and  signed by all of the  Parties.  No waiver of any right or remedy  hereunder
shall be valid  unless  the same  shall be in  writing  and  signed by the Party
giving  such  waiver.  No waiver  by any  Party  with  respect  to any  default,
misrepresentation or breach of warranty or covenant hereunder shall be deemed to
extend  to any  prior or  subsequent  default,  misrepresentation  or  breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

                                      -54-
<PAGE>

      9.10  Severability.  Any  term  or  provision  of this  Agreement  that is
invalid or unenforceable  in any situation in any jurisdiction  shall not affect
the validity or  enforceability  of the remaining terms and provisions hereof or
the validity or  enforceability  of the offending term or provision in any other
situation  or in any other  jurisdiction.  If the final  judgment  of a court of
competent  jurisdiction declares that any term or provision hereof is invalid or
unenforceable,  the Parties  agree that the court  making the  determination  of
invalidity  or  unenforceability  shall  have the  power  to  limit  the term or
provision,  to delete  specific  words or phrases,  or to replace any invalid or
unenforceable  term or  provision  with a term or  provision  that is valid  and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable  term or provision,  and this Agreement shall be enforceable as so
modified.

      9.11  Submission to  Jurisdiction.  Each of the Parties (a) submits to the
jurisdiction  of any state or federal court sitting in the County of New York in
the State of New York in any action or proceeding  arising out of or relating to
this  Agreement,  (b)  agrees  that all  claims  in  respect  of such  action or
proceeding may be heard and determined in any such court,  and (c) agrees not to
bring any action or proceeding  arising out of or relating to this  Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum to
the  maintenance  of any action or  proceeding  so brought  and waives any bond,
surety or other  security that might be required of any other Party with respect
thereto.  Any Party may make service on another Party by sending or delivering a
copy of the  process to the Party to be served at the  address and in the manner
provided for the giving of notices in Section 9.7. Nothing in this Section 9.11,
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law.

      9.12  Construction.

            (a)   The language used in this Agreement  shall be deemed to be the
language  chosen by the Parties to express their mutual  intent,  and no rule of
strict construction shall be applied against any Party.

            (b)   Any reference to any federal,  state, local or foreign statute
or law shall be deemed  also to refer to all rules and  regulations  promulgated
thereunder, unless the context requires otherwise.

                           \ [SIGNATURE PAGE FOLLOWS]

                                      -55-
<PAGE>

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

                                    PARENT
                                    ALTERNATIVE ENERGY SOURCES, INC.

                                    By:________________________________

                                    Name:  Stephen Jackson
                                    Title: President and Chief Executive Officer

                                    ACQUISITION SUBSIDIARY
                                    BEEMER ACQUISITION CORP.

                                    By:________________________________

                                    Name:  Stephen Jackson
                                    Title: President and Chief Executive Officer

                                    COMPANY
                                    BEEMER ENERGY, INC.

                                    By:________________________________

                                    Name:  Mark Beemer
                                    Title: President and Chief Executive Officer

                                      -56-

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