Document:

EX-10.39 Agreement of Termination

 

Exhibit 10.39

AGREEMENT OF

TERMINATION AND CANCELLATION OF LEASE

     This Agreement of Termination and Cancellation of Lease (the “Termination Agreement”), dated
this 7th day of May, 2007, by and between CM LeJeune, LLLP, a Delaware limited liability
limited partnership doing business in Florida as CM LeJeune, LLLP, Ltd., whose address is 2855
South LeJeune Road, Fourth Floor, Coral Gables, Florida 33134 (“Landlord”) and BURGER KING
CORPORATION, a Florida corporation, whose address is 5505 Blue Lagoon Drive, Miami, Florida 33126
(“Tenant”).

W I T N E S S E T H:

     WHEREAS, CM LeJeune, Inc., as predecessor in interest to Landlord, and Tenant entered into
that certain Lease dated May 10, 2005, as amended by First Amendment to Lease dated August 23, 2006
(collectively, the “Lease”), for the demise of an office building to be constructed on the property
located at 2701 LeJeune Road, Coral Gables, Florida (“the “Premises”);

     WHEREAS, CM LeJeune, Inc., assigned all of its right, title and interest in and to the Lease
to Landlord, pursuant to that certain Assignment of Lease dated January 9, 2007; and

     WHEREAS, the parties do hereby mutually desire to terminate the Lease and release one another
from all continuing terms and conditions, subject to the terms and conditions hereinafter set
forth.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Landlord
and Tenant agree as follows:

     1. The Lease shall terminate on the date of this Termination Agreement (the “Termination
Date”), and as of the Termination Date, the Lease shall be null and void and of no further force or
effect. This Termination Agreement also serves to terminate the Memorandum of Lease of even date
with the Lease (which Memorandum of Lease has not been recorded).

     2. In consideration for the agreements contained herein, simultaneously with Tenant’s
execution of this Termination Agreement, Tenant shall pay Landlord a termination fee in the amount
of FIVE MILLION AND 00/100 ($5,000,000.00) DOLLARS (the “Termination Fee”). If this Termination
Agreement is held or rendered invalid by a court of competent jurisdiction and Tenant is required
to reinstate the Lease and occupy the Premises, Landlord shall immediately return the Termination
Fee to Tenant.

     3. Landlord hereby assigns to the Tenant Landlord’s right, if any, to receive any refund of
fees and/or costs that may have been paid to Hellmuth, Obata & Kassabaum, Inc. (“HOK”) in
connection with the design and other services provided by HOK to Tenant or otherwise in connection
with the Lease.

     4. Tenant shall indemnify, defend and hold Landlord and Landlord’s affiliates harmless from
and against any and all losses, claims, demands, damage awards, liabilities, suits, penalties,
forfeitures and/or reasonable costs and expenses (including but not limited to reasonable
attorneys’ fees) (collectively, “Claims”) for (a) any and all claims by Newmark Southern Region,
LLC (“Newmark”) under any agreements between Tenant and Newmark that Newmark is due a commission in
connection with the consummation of the Lease(the “Leasing Commission”), specifically excluding the
commission payment which has already been made by Landlord to Newmark under that certain
Representation Agreement between Tenant and Newmark, dated July 28, 2004, as amended by that
certain letter agreement dated March 18, 2005, in the amount of $900,000.00; (b)

 

 

claims of lien and breach of contract claims by third parties retained by Tenant to design the
leasehold improvements with respect to the Lease (“Tenant Improvement Indemnity”) and (c) claims by
governmental agencies and/or offices of the State of Florida, City of Coral Gables and/or
Miami-Dade County for payments made or costs incurred by such parties with respect to Tenant’s
request for economic incentives in connection with the Lease or with respect to Tenant remaining in
South Florida. Further, Tenant represents to the Landlord that Tenant has not assigned or sublet
any portion of the Premises to another party and that no party claiming by, through or under Tenant
has any right of occupancy with respect to any portion of the Premises. Tenant shall indemnify and
hold Landlord and Landlord and its affiliates harmless from and against any and all Claims arising
out of a failure of said representations.

     5. Landlord shall indemnify, defend and hold Tenant and Tenant’s affiliates harmless from and
against any and all Claims arising out of or in connection with (a) occurrences in, upon or at the
Project (as defined in the Lease) on or prior to the Termination Date, including but not limited to
loss of life, bodily injury and/or damage to or destruction of property, the presence of any
hazardous substance and/or any violation or alleged violation of any local, state or federal
environmental law, regulation, ordinance or administrative or judicial order relating to any
hazardous substance; (b) the design and construction of the building and improvements thereto,
specifically excluding the Tenant Improvement Indemnity; and/or (c) Claims by any and all third
parties relating to the Lease and/or the termination of the Lease, including but not limited to
Claims made by any lender, prospective lender and/or prospective purchaser, excluding, however, the
Leasing Commission and any and all third-party Claims arising under any agreements entered into by
Tenant.

     6. Landlord and Tenant do hereby mutually release each other and their respective
predecessors, heirs, successors, assigns, employees, officers, directors, affiliates and parent
companies from against any and all rights, duties, claims, demands, liabilities and obligations
whatsoever under the Lease, whether known or unknown, liquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal or equitable, from the beginning of the world to the date of
this Termination Agreement, excluding only the indemnification and other obligations set forth in
this Termination Agreement.

     7. Tenant and Landlord agree that neither party shall issue any public statements and/or press
releases regarding this termination of the Lease, nor shall they disclose any of the terms and
conditions of this Termination Agreement, until and unless any such public statements, press
release(s) and/or disclosures have been approved in writing by the other party. Additionally,
neither party shall disclose the existence of this Termination Agreement to any third parties prior
to an initial public statement or press release issued in accordance with this Section 7.
Notwithstanding the foregoing, this provision specifically excludes the following disclosures, all
of which may be made without the other party’s prior written consent: (i) any disclosures required
to be made by either party pursuant to the rules of the Securities and Exchange Commission or
listing standards of the New York Stock Exchange; (ii) any disclosures made by Tenant or Landlord
to governmental agencies and/or offices of the State of Florida, City of Coral Gables and/or
Miami-Dade County; (iii) any disclosures made by Landlord to its prospective purchaser for the
building and/or to the replacement tenant for the Premises.

     8. Landlord shall return to Tenant all hard and soft copies of the leasehold improvement
plans, specifications and/or drawings in connection with the Lease that have been prepared by
Tenant and/or third parties retained by Tenant and provided to Landlord, its architects,
contractors and/or agents (including but not limited to those plans, specifications and/or drawings
provided by HOK) (collectively, the “Plans”). Additionally, Landlord shall not utilize the Plans
for any purpose or disclose the Plans or the contents thereof to any person outside Landlord’s
organization without Tenant’s prior written consent, which may be granted or withheld in Tenant’s
sole discretion.

     9. The Landlord and Tenant represent and warrant that they have the power and authority to
execute this Termination Agreement and to perform the covenants contained herein. The parties each
represent,

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as to themselves, that their execution and delivery of this Termination Agreement does not require
any authorization, consent, approval or other action or notice to any other entity, or conflict
with or result in the breach of the terms, conditions or provisions of any agreement to which it is
a party, except for authorizations, consents, approvals which have been obtained prior to the date
hereof.

     10. If indemnification is sought by one party against the other party under the provisions of
this Termination Agreement, the party seeking indemnification hereunder (the “Indemnified Party”)
shall give written notice to the party against whom indemnification is sought (the “Indemnifying
Party”) of such claim. The Indemnifying Party shall have the right at its election to take over
the defense or settlement of such claim by giving prompt written notice to the Indemnified Party at
least five business days prior to the time when an answer or other responsive pleading or notice
with respect thereto is required. If the Indemnifying Party makes such election, it may conduct
the defense of such claim through counsel or representative of its choosing (subject to the
Indemnified Party’s approval of such counsel or representative, which approval shall not be
unreasonably withheld), shall be responsible for the expenses of such defense, and shall be bound
by the results of its defense or settlement of claim to the extent it produces damage or loss to
the Indemnified Party. The Indemnifying Party shall not settle any such claim without prior notice
to and consultation with the Indemnified Party, and no such settlement involving any equitable
relief or which might have a material and adverse effect on the Indemnified Party may be agreed to
without its written consent. The parties agree to cooperate in defending such third party claims
and the defending party shall have access to records, information and personnel in control of the
other party or parties which are pertinent to the defense thereof.

     11. This Termination Agreement may not be recorded by either party.

     12. This Termination Agreement contains the entire agreement between the parties, and all
negotiations between the parties relating to this Termination Agreement are merged herein. Both
Landlord and Tenant represent and warrant that other than those terms set forth in this Termination
Agreement, there are no representations or promises made by either party which are being relied
upon in entering into this Termination Agreement. This Termination Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their successors and/or assigns.

     13. The prevailing party in a suit to enforce the terms of this Termination Agreement shall be
entitled to reimbursement from the losing party of all costs associated with such suit, including
without limitation, reasonable attorneys’ fees and paralegal fees through appellate proceedings.

     14. This Termination Agreement shall be construed in accordance with the laws of the State of
Florida and exclusive venue with respect to any litigation shall be in Miami-Dade County, Florida.
If any provision of this Termination Agreement is held or rendered illegal or unenforceable, it
shall be considered separate and severable from this Termination Agreement and the remaining
provisions of this Termination Agreement shall remain in force and bind the parties as though the
illegal or unenforceable provision had never been included in this Termination Agreement. This
Termination Agreement may not be modified except by agreement in writing executed by Landlord and
Tenant. This Termination Agreement may be executed in counterparts, each of which shall constitute
an original and all of which together shall constitute one and the same agreement. This
Termination Agreement may be executed by facsimile signature which shall, for all purposes, serve
as an original executed counterpart of this Termination Agreement.

[signatures on next page]

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     IN WITNESS WHEREOF, the Landlord has caused this Termination Agreement to be executed and
sealed this 7th day of May, 2007.

	 	 	 
	WITNESSES:

	 	LANDLORD
	 
	 	 
	 

	 	CM LEJEUNE, LLLP
	 
	 	 
	 

	 	By: CM LeJeune, Inc., General Partner
	 
	 	 
	/s/ Kolleen Cobb

	 	By: /s/ Jose Hevia
	 

	 	 
	Print Name: Kolleen Cobb

	 	Print Name: Jose Hevia

Print Title: V.P.
	 
	 	 
	/s/ Jill M. Granat
	 	 
	 
	 	 
	Print Name: Jill M. Granat
	 	 

	 	 	 	 	 	 	 
	STATE OF FLORIDA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss:
	COUNTY OF MIAMI-DADE

	 	 	)	 	 	 

     The foregoing instrument was acknowledged before me this 7th day of May, 2007, by Jose Hevia,
as V.P. of CM LEJEUNE, INC., a Florida corporation, on behalf of such corporation, as general
partner of CM LEJEUNE, LLLP, a Delaware limited liability limited partnership, on behalf of such
partnership. He/She is personally known to me or produced                           as
identification.

	 	 	 	 	 
	 	 	 
	 	                                               /s/ Kolleen Cobb
 	 
	 	Notary Public State of Florida 	 
	 	 	 
	 

	 	 	 
	My commission expires:

	 	[Notarial Seal]
	October 12, 2007
	 	 

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	 	IN WITNESS WHEREOF, the Tenant has caused this Termination Agreement to be executed and sealed

this 7th day of May, 2007.

 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 
	WITNESSES:

	 	TENANT
	 
	 	 
	 

	 	BURGER KING CORPORATION
	 
	 	 
	/s/ Sharalea Andrade

	 	By: /s/ John W. Chidsey
	 

	 	 
	Print Name: Sharalea Andrade

	 	Print Name: John W. Chidsey
	 

	 	Print Title: Chief Executive Officer
	 
	 	 
	/s/ Jill M. Granat
	 	 
	Print Name: Jill M. Granat
	 	 

	 	 	 	 	 	 	 
	STATE OF FLORIDA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss:
	COUNTY OF MIAMI-DADE

	 	 	)	 	 	 

     The foregoing instrument was acknowledged before me this 7th day of May, 2007, by John W.

Chidsey, as Chief Executive Officer of BURGER KING CORPORATION, a Florida corporation, on behalf of
such corporation. He/She is personally known to me or produced                           as
identification.

	 	 	 	 	 
	 	 	 
	 	                                 /s/ Jill M. Granat
 	 
	 	Notary Public, State of Florida 	 
	 	 	 
	 

	 	 	 
	My commission expires:

	 	[Notarial Seal]
	May 2, 2008
	 	 

5EX-10.25 STOCK PURCHASE AGREEMENT

 

Exhibit 10.25

STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of May 7, 2007, by and between
DIGITAL ANGEL CORPORATION (“Stockholder”) and NEWCOMB COMMUNICATIONS, INC., a Delaware corporation
(“Buyer”).

W I T N E S S E T H:

     WHEREAS, OuterLink Corporation, a Delaware corporation (the “Company”), provides
satellite-based mobile asset tracking and data messaging systems used to manage the deployment of
aircraft and land vehicles;

     WHEREAS, the Stockholder owns of record all of the issued and outstanding Shares (as defined
in Section 4.6(a)) of the Company, which Shares represent all of the issued and outstanding capital
stock of the Company; and

     WHEREAS, the Stockholder desires to sell to Buyer, and Buyer desires to purchase from the
Stockholder, the Shares, upon the terms and conditions hereinafter set forth.

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

     1. Purchase and Sale of the Shares. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the parties set forth herein,
the Stockholder hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from the
Stockholder, the Shares on the Closing Date (as defined in Section 3) for the consideration set
forth in Section 2.

     2. Consideration.

     (a) Purchase Price. The purchase price shall be One Million Dollars
($1,000,000) (the “Purchase Price”). Upon execution and delivery of this Agreement, Buyer
shall execute and deliver to the Stockholder, as a good faith deposit and initial payment
(the “Initial Payment”) of the Purchase Price, an amount equal to One Hundred Thousand
Dollars ($100,000.00) in the form of a promissory note substantially in the form of
Exhibit A, attached hereto (the “Deposit Note”), which Initial Payment shall be
refundable (by return and cancellation of the Deposit Note) only in the event of the failure
of any condition set forth in Sections 6(a)-(i). At the Closing, Buyer shall pay to the
Stockholder the balance of the Purchase Price by wire transfer (the “Closing Payment”). The
Closing Payment shall be adjusted pursuant to Sections 2(b), (c) and (d).

 

 

     (b) Adjustments to the Closing Payment. The Closing Payment shall be adjusted
as of the Closing as follows:

     (i) The Closing Payment shall be increased dollar for dollar for the amount of
the cash balances and cash equivalents (including bank accounts and certificates of
deposit), if any, of the Company as of the Closing Date, as reflected on the Closing
Balance Sheet, provided, however, cash and cash equivalents shall exclude cash held
by the Company as deposits (which are reflected on the Closing Balance Sheet as
liabilities) from other third parties and any cash held by the Company relating to
an overpayment to the Company by a Governmental Entity under that certain Contract
with USPFO for South Carolina.

     (ii) The Closing Payment shall be decreased dollar for dollar for the amount of
any liabilities other than Permitted Liabilities (as defined herein) as reflected on
the Closing Balance Sheet. The term “Permitted Liabilities” means the following:

     (A) trade payables and accrued expenses incurred in the ordinary course
of business, including, but not limited to, payroll, payroll taxes, and real
estate taxes, if any; and

     (B) employee withholding taxes, if any.

     (iii) The preliminary adjustment to the Closing Payment shall be made on an
estimated basis at the Closing in accordance with the Pro Forma Closing Balance
Sheet (as defined in Section 2(c)(i)) and with any final adjustment and any
resulting payment to be made from the Stockholder on the one hand and the Buyer on
the other hand, or vice versa, shall be made within 15 days after completion of the
Closing Balance Sheet (as defined and prepared in accordance with the provisions of
Section 2(c)(ii)).

     (iv) There shall be no adjustment to the Closing Payment for any change in the
value of any of the Company’s fixed assets between December 31, 2006 and the Closing
Date.

     (c) Closing Balance Sheets.

     (i) On or prior to the Closing Date, the Stockholder and Buyer shall jointly
prepare a pro forma balance sheet of the Company as of the Closing Date (the “Pro
Forma Closing Balance Sheet”), determined on an accrual basis in accordance with
generally accepted accounting principles in effect in the United States (“GAAP”)
consistently applied and compiled in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified Public
Accountants, (the “Standards”), which Pro Forma Closing Balance Sheet shall be
utilized by the parties to assist in the calculation of the preliminary

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adjustments to the Purchase Price and the preparation of the Closing Balance
Sheet as hereinafter provided.

     (ii) Within 60 days after the Closing Date, Buyer, with the assistance of the
Stockholder, shall prepare a balance sheet of the Company as of the Closing Date
(the “Closing Balance Sheet”), in accordance with GAAP and compiled in accordance
with the Standards. If the parties are unable to agree upon the Closing Balance
Sheet, or any portion thereof, within 15 days after the parties have commenced
resolution of the dispute, then the matter shall be submitted for resolution to a
mutually agreeable certified public accounting firm (the “Independent Accountants”),
whose determination shall be final and binding upon the parties, and whose fees
shall be borne equally by the Stockholder and Buyer except, however, that if the
Independent Accountants determine that the Closing Balance Sheet proposed by Buyer
was correct in its entirety, then the Stockholder shall be solely responsible for
the fees of the Independent Accountants; if the Independent Accountants determine
that the dispute should be resolved in favor of the objections raised in the Closing
Balance Sheet by the Stockholder in its entirety, then Buyer shall be solely
responsible for the fees of the Independent Accountants.

     (d) Final Adjustments. To the extent that there are assets or liabilities
other than Permitted Liabilities, which were not (i) included in the Pro Forma Closing
Balance Sheet, or (ii) reflected in any adjustment made at the Closing to the Purchase
Price, but which are included in the Closing Balance Sheet or discovered subsequent thereto,
and which would, if they had been included in the Pro Forma Closing Balance Sheet, have
resulted in an adjustment to the Purchase Price, the amount thereof shall be deemed an
adjustment to the Purchase Price and the net amount due, whether from Buyer or the
Stockholder, shall be remitted to the other party within five (5) days of request therefor
from the party to whom such payment is due.

     (e) Fiduciary Out and Termination Fee. Notwithstanding anything in this
Agreement to the contrary, if in the course of discharging its fiduciary duties respecting
superior offers, Stockholder’s Board of Directors determines on or before June 29, 2007 (the
“Drop Dead Date”) that the transactions contemplated by this Agreement are inferior to any
other bona fide offer made to it and that, based on advice of legal counsel, the Stockholder
is duty-bound to accept such offer (a “Fiduciary Out”), then the Stockholder may terminate
this Agreement upon return to Buyer and cancellation of the Deposit Note and payment to
Buyer of an amount equal to the sum of $100,000.00 and the aggregate out-of-pocket costs and
reasonable expenses of Buyer in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, reasonable fees and disbursements of
accountants, attorneys, investment bankers, and consultants (collectively, “Termination
Expenses”). Notwithstanding anything to the contrary set forth in this Agreement, in
the event Buyer is required to file suit to seek all or a portion of the Termination Amount,
Buyer shall be entitled, in addition to payment of the Termination Expenses, to payment by
Stockholder of all additional expenses, including reasonable attorneys’ fees and expenses,
which it incurs in enforcing its rights hereunder. The return and cancellation of the
Deposit Note and the payment of the Termination

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Expenses shall be in lieu of any other damage, remedy or claim by Buyer against the
Stockholder on account of the termination of this Agreement by Stockholder for a Fiduciary
Out.

     3. Closing. The closing of the purchase and sale of the Shares (the “Closing”) shall
take place at the offices of Buyer’s counsel in Boston, Massachusetts at 10:00 a.m. local time, on
the second business day after the date on which all of the conditions to the Closing set forth in
Sections 6 and 7 (other than those that by their terms are to be satisfied at or before Closing)
have been satisfied or waived, or on such other date (any such date, the “Closing Date”) or at such
other time and place as Stockholder and Buyer may mutually agree. If the Closing shall not have
taken place prior to July 3, 2007, this Agreement shall be deemed terminated without further action
of the parties and the parties shall have no further obligation to each other hereunder other than
such obligations as may be then owed or owed as a result thereof, all as provided herein, which
obligations shall survive termination.

     4. Representations and Warranties of the Stockholder. The Stockholder, for itself and
the Company, represents and warrants to and agrees with Buyer on and as of the date hereof and as
of the Closing Date, as follows:

     4.1 Authority, Validity of Agreement. The Stockholder has all requisite corporate
power and authority to enter into this Agreement and to perform its obligations hereunder and
consummate the transactions contemplated by this Agreement. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated hereby are duly authorized and,
subject to the continuing obligation of the Stockholder’s Board of Directors to discharge its
fiduciary duties respecting superior offers, no other approval is required for the performance by
the Stockholder of its obligations hereunder. This Agreement has been duly executed and delivered
by the Stockholder. This Agreement constitutes a valid and binding obligation of the Stockholder,
enforceable in accordance with its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’ rights,
and with respect to the remedy of specific performance, equitable doctrines applicable thereto).

     4.2 No Violations. Except as set forth on Schedule 4.2, neither the execution
and delivery of this Agreement by the Stockholder nor the consummation of the transactions
contemplated hereby will (a) violate any provisions of the certificate of incorporation or bylaws
of the Stockholder or the Company, or (b) violate, or be in conflict with, or constitute a default
(or an event which, with or without due notice or lapse of time, or both, would constitute a
default) under, or cause or permit the acceleration of the maturity of or give rise to any right of
termination, cancellation, imposition of fees or penalties under, any note, debt, debt instrument,
indenture, security agreement, option to purchase, lease, deed of trust or license, or any other
material contract to which the Stockholder or the Company is a party or by which the Stockholder or
the Company or any of the assets of either is or may be bound, or (c) result in the creation of
imposition of any lien or other encumbrance upon any assets of the Stockholder or the Company under
any debt, obligation, contract or commitment to which Company or the Stockholder is a party or by
which any of the Company’s or the Stockholder’s assets is or may be bound, or (d) violate any laws
to which the Shareholder or the Company may be subject, which

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would have a Material Adverse Effect. For purposes of this Agreement, “Material Adverse Effect”
means an event, circumstance, fact, or condition which would: individually or in the aggregate (i)
have a material adverse effect on the business, financial condition, operations, assets and
liability of the entity to which reference is being made, taken as a whole, or (ii) would prevent a
party hereto from performing its obligations under this Agreement.

     4.3 Consents and Approvals of Governmental Authorities. Except as set forth on
Schedule 4.3, no consent, approval, order or authorization of, or registration, declaration
or filing with, any local, state, provincial, federal, foreign or international governmental
authority, agency or other entity, including, but not limited to, any court, tribunal or panel
(each a “Governmental Entity”), is required to be obtained or made by the Stockholder or the
Company in connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.

     4.4 Other Consents. No consent, waiver or approval of, or notice to, any third party
is required to be or necessary to be obtained by the Stockholder or the Company in connection with
the execution and delivery of this Agreement and the performance of the Stockholder or the
Company’s obligations hereunder. ]

     4.5 Organization and Good Standing of Stockholder and Company.

     (a) Each of the Stockholder and the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

     (b) Each of the Stockholder and the Company has all requisite corporate power and
authority to own, lease and operate its assets and to carry on its business as now
being conducted.

     (c) Company is qualified to do business and in good standing in each state set
forth in Schedule 4.5(c), which is each jurisdiction where the failure to be so
qualified would have a Material Adverse Effect on Company. Neither the Stockholder nor
the Company has received notification from any jurisdiction that Company is required to
qualify or obtain a license to do business in such jurisdiction or that it is otherwise
not in good standing in such jurisdiction.

     (d) Complete and correct copies of the certificate of incorporation, as amended
(with such certificate and all amendments thereto certified by the Secretary of State
of Delaware) and bylaws, as amended to the date hereof, of the Company have been
provided to Buyer.

     4.6 Capital Stock of Company.

     (a) Schedule 4.6(a) sets forth a true and complete list for Company as of
Closing of the number of all shares of Stock authorized and issued and outstanding
(“Shares”) (including a description of the class or series of all such outstanding
shares and all stock issued as a result of the exercise of all stock options and

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warrants), the record owners thereof and the amount and percentage of ownership of
such Shares or equity interests.

     (b) Except as disclosed on Schedule 4.6(b): (i) all outstanding Shares of
the Company are duly authorized, validly issued, fully paid and non-assessable and are
owned of record as set forth in Schedule 4.6(a); (ii) none of such Shares is
subject to any preemptive rights; (iii) neither Company nor Stockholder has any
commitment or obligation, either firm or conditional, to issue, deliver or sell, or
cause to be issued, delivered or sold, under offers, stock option agreements, stock
bonus agreements, stock purchase plans, incentive compensation plans, warrants, calls,
conversion rights or otherwise, any Shares or other securities including securities or
obligations outstanding which are convertible into or exchangeable for any Shares,
other equity securities, or ownership interests, upon payment of any consideration or
otherwise; and (iv) there are no voting trusts, voting agreements, stockholder
agreements, proxies or other agreements or understandings with respect to the Shares to
which Stockholder or Company is a party.

     (c) Except as disclosed on Schedule 4.6(a), Company does not own, directly
or indirectly, any equity, capital (whether equity or debt) or profit interest in any
corporation, partnership, association, business trust, joint venture or other business
entity.

     4.7 Ownership and Transfer of Shares to be Transferred. Except as disclosed in
Schedule 4.6(b), the Stockholder has the absolute and unrestricted right, power and
authority to exchange, transfer and assign the Shares pursuant to this Agreement, and such Shares
constitute all of the issued and outstanding securities of Company entitled to receive
consideration in the event of a sale of the Company; as of Closing, each circumstance disclosed in
Schedule 4.6(b) will be waived or modified such that the Stockholder has as of Closing such
absolute and unrestricted right, power and authority. All Shares are owned by the Stockholder free
and clear of all liens and encumbrances of any nature whatsoever. The transactions contemplated by
this Agreement will not give rise to any preemptive rights, rights of first refusal, warrants,
dividends, or conversion rights, and will not violate any law applicable to Company or Stockholder.

     4.8 Minute Books; Books, Records and Accounts; Officers and Directors. The minute
books of Company contain legally sufficient records of all corporate actions taken by the directors
and Stockholder of Company (except where the absence of such records would not adversely affect
either Company or Buyer), and true and complete copies of such minute books have been furnished to
Buyer. All accounts, books, ledgers and official and other records of whatsoever kind material to
the business of the Company have been fully, properly and accurately kept and completed in all
material respects, there are no material inaccuracies or material discrepancies of any kind
contained or reflected therein, and collectively they fairly present the financial position of the
Company. Schedule 4.8 sets forth a true and complete list of each of the current officers
and directors of Company.

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     4.9 Financial Statements. Schedule 4.9 contains true, correct and complete
copies of the following financial statements (“Financial Statements”) of Company: audited balance
sheet as of December 31, 2005 and unaudited balance sheets as of December 31, 2006 and March 31,
2007 (the latter being the “March 31, 2007 Balance Sheet”); audited income statement for the
12-month period ended December 31, 2005; and unaudited income statements for the periods ending
December 31, 2006 and March 31, 2007.

     (a) All of such Financial Statements are in accordance with the books and records of
Company.

     (b) Each balance sheet (including any related notes) included in the Financial Statements
fairly presents the assets, liabilities and financial condition of the business of the
Company as of the respective dates thereof, and each of the statements of operations
contained in the Financial Statements are complete and correct and fairly present the
results of operations for the periods referred to therein, all in accordance with GAAP
consistently applied throughout the periods involved (except for the absence of footnotes
and year-end adjustments not material in amount).

     4.10 Absence of Undisclosed Liabilities. Company has no Liabilities, including Taxes,
except:

     (a) Liabilities that are fully accrued or reserved against in the March 31, 2007 Balance
Sheet, or reflected in the notes thereto;

     (b) Liabilities (including those arising from the creation of Contracts (as defined herein)
incurred since the date of the March 31, 2007 Balance Sheet in the ordinary course of
business; and

     (c) Liabilities disclosed in Schedule 4.10(c).

For purposes of this Agreement, “Liabilities” means any and all claims, assessments, charges,
indebtedness or obligations of any nature whatsoever, whether absolute, accrued, contingent or
otherwise, and whether due or to become due, and “Tax” or “Taxes” means any tax or other similar
liability imposed or collected by any Governmental Entity, including, without limitation, all
federal, state, county, local, and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, occupation, property, excise, value added, withholding and other taxes,
duties or assessments (including the recapture of any tax items such as investment tax credits),
together with any related interest, penalties and additions and shall include any transferee or
secondary liability for a Tax and any liability arising as a result of being (or ceasing to be) a
member of any affiliated, consolidated, combined, or unitary group or being included (or required
to be included) in any Tax return relating thereto.

     4.11 Absence of Certain Changes. Except as set forth on Schedule 4.11 or as
shown on the March 31, 2007 Balance Sheet, since January 1, 2007, Company has not:

7

 

     (a) Suffered any change or changes which, individually or in the aggregate, have
had or would have, a Material Adverse Effect on the Company;

     (b) Paid, discharged, or satisfied any Liabilities other than the payment,
discharge or satisfaction in the ordinary course of business;

     (c) Become subject to any newly-enacted or adopted law which would reasonably be
expected to have a Material Adverse Effect on the Company;

     (d) Permitted or allowed any of its assets to be subjected to any lien or encumbrance;

     (e) Written up the value of any inventory, any notes or accounts receivable or any
other assets;

     (f) Canceled or amended any debts or waived any claims or rights of substantial
value, or sold, transferred or otherwise disposed of any of its assets except in the
ordinary course of business;

     (g) Licensed, sold, transferred, pledged, modified, disclosed, disposed of or
permitted to lapse any right to the use of any intellectual property right except in
the ordinary course of business;

     (h) Granted any increase in the compensation of officers or employees (other than
normal increases to non-officer employees in the ordinary course of business);

     (i) Declared, paid or set aside for payment any dividend or other distribution in
respect of its Shares or other equity securities or, directly or indirectly, redeemed,
purchased or otherwise acquired any Shares or other equity securities;

     (j) Made any change in any method of accounting or accounting practice or any
change in depreciation or amortization policies or rates previously adopted;

     (k) Paid, lent or advanced any amount to, or sold, transferred or leased any assets
to, or entered into any agreement or arrangement with, any of its affiliates, except
for directors’ fees, and employment compensation to officers in the ordinary course of
business;

     (l) Sold, leased or otherwise disposed of any of its assets, except in the ordinary
course of business;

     (m) Made capital expenditures or commitments therefor exceeding, in the aggregate,
Ten Thousand Dollars ($10,000); or

     (n) Agreed, whether in writing or otherwise, to take any action described in this
Section 4.11.

8

 

     4.12 Title to, and Sufficiency of, Assets.

     (a) The March 31, 2007 Balance Sheet includes all material tangible assets owned or
leased by Company, or otherwise used in or pertaining to the business of the Company as
presently conducted, with an indication of which such assets are owned and which are
leased.

     (b) Company has good and valid title to or a valid leasehold interest in all of the
assets included on the March 31, 2007 Balance Sheet. None of such assets is subject to
any lien or encumbrance of any nature whatsoever. The assets included on the March 31,
2007 Balance Sheet constitute all of the material tangible assets held for use or used
in connection with the business of the Company and are sufficient for the operation of
the Company’s business as presently conducted or planned to be conducted.

     4.13 Plant, Property, and Equipment. The leased real property, and other plant,
property, equipment, leasehold improvements, and other tangible assets of the Company are adequate
in all respects for the purposes for which they are being used and conform in all material respects
with applicable laws, are structurally sound with no material defects, and are in good operating
condition and repair (ordinary wear and tear excepted).

     4.14 Accounts and Notes Receivable. Except to the extent of applicable reserves for
doubtful accounts shown on the March 31, 2007 Balance Sheet, all of the accounts, notes and other
receivables owed to Company as of the date hereof or thereafter acquired or arising prior to the
Closing Date, constitute, and as of the Closing Date will constitute, valid and enforceable claims
arising from bona fide transactions in the ordinary course of business, and Company has not
received notice of any claims, refusals to pay or other rights of set-off against any of the
accounts receivable. Schedule 4.14 contains an accurate aging of the accounts, notes and
other receivables of Company at March 31, 2007.

     4.15 Accounts and Notes Payable; Interest-Bearing Debt.

     (a) There are no back Taxes owed by the Company.

     (b) Schedule 4.15(b) reflects all interest-bearing debt of Company,
including the person or institution to whom the debt is owed, the current amount of the
debt, and any instruments reflecting such debt.

     (c) The Company has no long term debt, notes payable or other long term
obligations, other than capital lease obligations which are disclosed on the March 31,
2007 Balance Sheet:

     4.16 Orders, Commitments, Warranty Claims and Returns.

     (a) All accepted and unfulfilled orders for the sale of Company products and
services entered into by Company and all outstanding Contracts for the purchase of

9

 

supplies and materials entered into by Company were made in the ordinary course of
business.

     (b) Except as disclosed on Schedule 4.17, there are no claims against
Company to return, or claims for refunds due to delivery of defective or unsatisfactory
Company products, in excess of an aggregate Five Thousand Dollars ($5,000), or
understanding that Company products in the hands of certain customers, retailers or
distributors would be returnable.

     4.17 Defects in Products; Warranties. There are no defects in Company products
heretofore or currently being distributed or sold by Company which would have a Material Adverse
Effect on the Company. Except as disclosed on Schedule 4.17, there are no express or
implied warranties outstanding with respect to Company products, except as imposed by law.

     4.18 Real Property.

     (a) No Owned Real Property. Company does not have and has not had any fee
or other direct or indirect ownership interest in any real property.

     (b) Leased Real Property Agreements. Schedule 4.18(b) sets forth a
true and complete list of all leased real property and a copy of all of the agreements
(as amended) relating thereto (the “Lease Agreements”). To the Stockholder’s
knowledge, all the Lease Agreements are in full force and effect and are valid and
enforceable against the other parties thereto in accordance with their terms. None of
the Lease Agreements is in default by Company or, to the Stockholder’s knowledge, by
other third parties thereto, and, to the Stockholder’s knowledge, no circumstance
exists with respect to Company or to the other parties thereto which, with notice, the
passage of time or both would (i) constitute a material default under the Lease
Agreements, (ii) provide a basis for termination under such agreements prior to their
normal expiration dates, (iii) have a Material Adverse Effect on the Company, or (iv)
grant a third party the right to occupy the premises. The Closing will not affect the
rights to the continued use and possession of the leased real property on the terms and
conditions specified in the Lease Agreements to the extent and for the purposes for
which such property is now used.

     (c) Leases of Real Property to Others. No real property leased by the
Company or the Stockholder in connection with the Company’s business is subject to any
lease or other right of use or possession by any person other than Company.

     (d) Utilities. To Stockholder’s knowledge, all utilities necessary for the
normal use and operation of the real property leased by the Company or the Stockholder
in connection with the Company’s business are available at such property.

     (e) Former Facilities. No former Company real property was ever used by
Company for anything other than commercial office space.

10

 

     (f) Disputes. No third party has raised any claim, dispute or controversy
with respect to any of the Lease Agreements, nor has Stockholder or Company received
notice of alleged nonperformance, delay in delivery or other noncompliance by it with
respect to its obligations under any such Lease Agreements.

     4.19 Contracts.

     (a) Schedule 4.19(a)(i) contains a complete list of all Current Customers.
For purposes of this Agreement, “Current Customer” means any person from whom Company
has recognized revenue in the past twelve months or to whom Company has any obligation
to complete work or honor any contractual warranty. Schedule 4.19(a)(ii)
contains (i) a list of all currently outstanding but unaccepted written proposals
relating to proposed contracts with customers, and (ii) a description of all oral
proposals relating to proposed contracts with customers. True and correct copies of
all standard form customer contracts used by Company have been made available to Buyer.
No contract for any Current Customer, whether written or oral, differs in any material
respect from the attached standard forms of customer contracts. True and correct
copies of all written Contracts with Current Customers have been provided or made
available to Buyer. Except as disclosed on Schedule 4.19(a)(iii), since
January 1, 2007, no Current Customer has canceled or terminated its contract, or
notified Company or Stockholder of an intent to cancel or terminate its contract.

     (b) Schedule 4.19(b) contains a complete list of all suppliers of Company
who since March 31, 2007 have invoiced Company for Thirty Thousand Dollars ($30,000) or
more, including the types of products and/or services provided by each such supplier.

     (c) Schedule 4.19(c) sets forth a true and complete list of all of the
currently effective written contracts or written or binding oral agreements (the
“Contracts”) to which Company is a party, of the following types:

     (i) Employment agreements and any outstanding offers of employment.

     (ii) Royalty agreements.

     (iii) Consulting agreements.

     (iv) Agreements or commitments for capital expenditures or the
acquisition by purchase or lease of fixed assets providing for payments in
excess of Thirty Thousand Dollars ($30,000) individually or in the aggregate.

     (v) Agreements for the purchase, sale, lease or other transfer of
any services, products, materials or supplies in excess of Five Thousand
Dollars ($5,000) individually or in the aggregate from a single person.

11

 

     (vi) Joint venture or partnership agreements with any other entity.

     (vii) Non-competition or similar agreements which prevent Company or
any of its employees from competing with any person (other than Company).

     (viii) Confidentiality or employee non-solicitation agreements with any other person
(other than as are contained in the customer Contracts).

     (ix) Agreements relating to the research or development by Company
for others or by others for Company.

     (x) Agreements for the long-term borrowing or long-term lending of
money (including capitalized leases).

     (xi) Agreements for the short-term borrowing or short-term lending
of money.

     (xii) Any Contract, not listed in other Schedules to this Agreement,
requiring the performance by Company of any obligation for a period of time
extending more than one year from the date of this Agreement or calling for
Company to pay a consideration or incur costs of more than Thirty Thousand
Dollars ($30,000).

Schedule 4.19(c) is organized by type of Contract and briefly summarizes,
with respect to each Contract, the names of the parties thereto, the products and/or
services covered, the date of the Contract, and all amendments or modifications
thereto.

     (d) Except as set forth in Schedule 4.19(d), Company has in all material
respects performed, and is now performing, the obligations of, and Company is not in
default (nor would by the lapse of time or the giving of notice or both be in default)
in respect of any Contract referred to in the Schedules to this Article IV. Each of
the Contracts or other instruments shown on the Schedules referred to in this Agreement
is in full force and effect and is a valid and enforceable obligation against Company
and, to Stockholder’s knowledge, against the other parties thereto in accordance with
its terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors’ rights,
and, with respect to the remedy of specific performance, equitable doctrines applicable
thereto). To Stockholder’s knowledge, no other parties to such Contracts or other
instruments is in default in any material respect (or would by the lapse of time or the
giving of notice or both be in default in any material respect) thereunder or has
breached in any material respect any terms or provisions thereof.

     (e) There are no Contracts to which Company is a party to or bound by which either
separately or in the aggregate has or is likely to result in a loss to Company.

12

 

     (f) No third party has raised any claim with respect to any of the Contracts, nor
has Company received notice of alleged default by Company with respect to its
obligations under any such Contracts.

     (g) No material part of the Customer Contracts or sales has been won through small
business or other set-aside programs.

     (h) Other than as provided in Section 4.19(a), true and complete copies of all of
the Contracts and instruments referred to in the Schedules delivered under this Article
IV have been delivered to Buyer.

     4.20 Litigation. Except as set forth in Schedule 4.20, there are no suits,
claims, actions, arbitrations, litigation, legal, administrative or other proceedings (including
without limitation permit revocations, permit amendments, or administrative complaints of
discrimination) or governmental investigations of which it has notice, pending, or, to
Stockholder’s knowledge, threatened against Company or its assets. Schedule 4.20 sets
forth, with respect to each such suit, claim, action, arbitration, litigation, proceeding or
investigation, the forum, the parties thereto, the subject matter thereof, the amount of damages
claimed or relief sought and the status as of a recent date.

     4.21 Compliance with Laws.

     (a) To the Stockholder’s knowledge, the operations and business of Company have
been conducted, and are being conducted, in compliance with all applicable laws.
Company has not received any notification that it is in violation of any laws.

     (b) Schedule 4.21(b) hereto sets forth a list of all governmental
approvals, permits, licenses, certifications or other authorizations of which the
failure to obtain or maintain would have a Material Adverse Effect on the Company. All
approvals, permits, licenses, certifications or other authorizations have been obtained
and are in full force and effect and are being complied with by the Company in all
material respects.

     (c) Except as set forth in Schedule 4.21(c), there are no outstanding
judgments, orders, injunctions, decrees, stipulations, awards (whether rendered by a
Governmental Entity or by arbitration) or private settlement agreements to which
Company is a party. All of the foregoing set forth in Schedule 4.21(c) are
being complied with by Company in all material respects.

     (d) Neither Company nor any director, officer, employee or agent thereof has,
directly or indirectly, given or agreed to give any gift or similar benefit to any
customer, supplier, competitor or governmental employee or official which would subject
Company or any of its assets, to any damage or penalty under any law in any civil,
criminal or governmental litigation or proceeding.

13

 

     4.22 Computer Software and Intellectual Property.

     (a) Company Software Products. Schedule 4.22(a) contains a list of
all Company Software Products. For the purposes hereof, “Company Software Products”
means all of Company’s proprietary software (i.e., computer programs in any form
(including source code and binary code), and in any stage of development, test and
release, together with all related technical documentation, user manuals, data files,
databases and other works of authorship, and all information and materials necessary or
required for the effective installation, maintenance, use and support of such computer
programs) that is included in Company products or has been offered or provided by
Company under license for use by Company’s customers. Company Software Products does
not include third party software, which for purposes of this Agreement means all
software licensed, leased or loaned by third party vendors or contractors for use by
Company in connection with its internal business operations, or for distribution by
Company under sublicense for use by customers, either on a stand-alone basis or in
combination with Company Software Products.

     (b) Third Party Software. Schedule 4.22(b) contains a list of all
material third party software under which any rights to use or distribute software have
been granted to Company. Company has delivered to Buyer copies of all such license
agreements.

     (c) Source Code Escrow. Schedule 4.22(c) contains a list of all
agreements under which Company has delivered source code for any Company Software
Product to be held in escrow and released upon the occurrence of certain events or
conditions. Company has made available to Buyer copies of all such source code escrow
agreements.

     (d) Certain Intellectual Property Rights. Schedule 4.22(d)
contains a complete list of the following items included in the Company’s intellectual
property rights: (i) United States and foreign patents and patent applications, and,
in the case of patent applications, a description of the current status of each of the
applications; (ii) copyrights in computer programs and other works of authorship which
are registered with any governmental entity; or for which registration applications
have been filed; (iii) United States and foreign trademarks, service marks and trade
names, for which registrations have been received or applications for registration have
been filed; and (iv) a list of unregistered trade names used by Company.

     (e) Miscellaneous.

     (i) Company owns good and marketable title to, and has the right to
possess, use, modify, and prepare derivative works based on, manufacture,
reproduce, license, and distribute, all Company Software Products and
intellectual property rights in the United States and throughout the world

14

 

in Company’s business as currently conducted and Company has done nothing to
cause such rights to be owned or possessed by any third party other than the
license of object code pursuant to any of the Contracts. Company has
received no claim that any Company Software Product or any intellectual
property right is in whole or in part invalid, unenforceable, ineffective or
in violation of the rights of others. All Company Software Products and all
intellectual property rights developed by Company employees and/or
independent contractors are owned exclusively by the Company.

     (ii) There is no pending claim or litigation and, to Stockholder’s
knowledge, there is no threatened claim or litigation contesting the right to
use, sell, license or dispose of any Company Software Product or intellectual
property rights, nor, to Stockholder’s knowledge, is there any fact or alleged
fact which would reasonably serve as a basis for any such claim that could
materially limit the protection afforded by the Company’s intellectual property
rights to the use, sale, license, or disposition of Company Software Products.

     (iii) Except as disclosed on Schedule 4.22(e)(iii), each
person who participated in the creation of Company’s Software Products and/or
its intellectual property rights either has executed a valid, binding and
enforceable assignment of rights of ownership to Company or was an employee of
Company acting within the scope of his or her employment at the time of such
creation, and in all cases all incidents of ownership thereto are held
exclusively by the Company.

     (iv) Except as disclosed on Schedule 4.10(c) and
Schedule 4.22(e)(iv), Company is in material compliance with the terms
and conditions of all license agreements governing the use of third party
software.

     (v) All third party software used by Company for its internal
business operations (including product development and testing) is licensed for
use only on computer equipment located at Company’s sites or on computers under
control of Company’s employees or independent contractors.

     (vi) Except as disclosed on Schedule 4.22(e)(vi), Company
has taken reasonable steps to safeguard and maintain the secrecy and
confidentiality of all trade secrets and proprietary or confidential business
and technical information included in its intellectual property rights,
including, without limitation, entering to appropriate confidentiality or
disclosure agreements with employees, officers, consultants, independent
contractors and licensees that serve Company, the forms of which have been made
available to Buyer.

15

 

     (vii) All documents and materials containing trade secrets or
proprietary or confidential business or technical information of Company
(including without limitation all source code for Company Software Products)
are presently located at one of the premises identified as leased real property
in Schedule 4.18(b) and, as applicable, at escrow agents’ sites listed
on Schedule 4.22(c), and, to Stockholder’s knowledge, have not been
used, divulged, or appropriated for the benefit of any person other than
Company, or to the detriment of Company.

     (viii) To Stockholder’s knowledge, no third party is infringing on any intellectual
property right of the Company in a manner that could materially limit the
protection afforded by the Company’s intellectual property rights to the use,
sale, license or disposition of Company Software Products.

     (ix) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not breach,
violate or conflict with any material instrument or material agreement to which
the Company or Stockholder is a party governing any intellectual property
right, will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any intellectual property right or in any way
materially impair the right of Company to use, sell, license or dispose of or
bring any action for the infringement of any intellectual property right or any
Company Software Product. As used herein, intellectual property rights means
all of Company’s rights, title and interest in and to all: (a) United States
and foreign patents and patent applications; (b) copyrights in computer
programs and other works of authorship; (c) trade secrets and proprietary or
confidential business and technical information; (d) proprietary “know-how,”
whether or not protectable by patent, copyright or trade secret right; and (e)
United States and foreign trademarks, service marks, trade names and associated
goodwill, and registrations or applications for registration of any such marks
or names; Company Software Products; and third-party software.

     4.23 No Subsidiaries. Except as set forth on Schedule 4.23, the Company does
not have any subsidiaries.

     4.24 Environmental Matters.

     (a) To Stockholder’s knowledge, there are no underground storage tanks present on
any Company real property.

     (b) Schedule 4.24(b) accurately describes all of the environmental permits
currently held by Company, and the environmental permits listed on Schedule
4.24(b) are all of the environmental permits necessary for the continued conduct of
any Hazardous Material Activity of Company as such activities are currently being

16

 

conducted. For the purposes hereof, “Hazardous Materials Activity” means the
possession, transportation, transfer, recycling, storage, use, treatment,
manufacture, investigation, removal, remediation, release, sale, or distribution of,
any hazardous material, hazardous or toxic substance, or hazardous waste that is
defined as such or regulated by law (“Hazardous Materials”).

     (c) Company has not transferred or released Hazardous Materials (except for
standard office supplies used in the ordinary course that may be considered to be
Hazardous Materials) to any disposal sites, and no action or proceeding exists or, to
Stockholder’s knowledge, is threatened against Company with respect to any transfer or
release of Hazardous Materials to a disposal site.

     (d) Company has delivered to Buyer or made available for inspection by Buyer any
records concerning the Hazardous Materials Activities of Company and all environmental
audits and environmental assessments of any Company real property conducted at the
request of, or otherwise available to, the Stockholder or Company.

     (e) Company has never conducted any Hazardous Material Activity in violation of any
applicable environmental law.

     (f) No action, proceeding, revocation proceeding, amendment procedure, writ,
injunction or claim is pending or, to Stockholder’s knowledge, threatened concerning or
relating to any environmental law or any Hazardous Materials Activity of Company.

     4.25 Employee Plans and Arrangements.

     (a) Neither Company nor any Related Party (i.e., any entity which is considered a
single employer with Company under applicable law) sponsors, maintains, administers,
contributes to or has or could reasonably be expected to have any Liability with
respect to any ERISA benefit plan other than an ERISA benefit plan specifically listed
on Schedule 4.25(a) (a “Company ERISA Benefit Plan”). No Company ERISA Benefit
Plan is subject to Code Section 412 or Part 3 of Subtitle B of Title I of ERISA or
Title IV of ERISA. Neither Company nor any Related Party has or could reasonably be
expected to have any liability to any person in connection with any “voluntary
employees’ beneficiary association” within the meaning of Code Section 501(c)(9),
“welfare benefit fund” within the meaning of Code Section 419, “qualified asset
account” within the meaning of Code Section 419A or “multiple employer welfare
arrangement” within the meaning of ERISA Section 3(40). As used herein, “Code” means
the Internal Revenue Code of 1986, as amended, and “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

     (b) Except as disclosed on Schedule 4.25(b), neither Company nor any
Related Party sponsors, maintains, administers, contributes to, is a party to or has or
could

17

 

reasonably be expected to have any liability with respect to (i) any non-ERISA
benefit arrangement other than a non-ERISA benefit arrangement specifically listed
on Schedule 4.25(b) (a “Company Non-ERISA Benefit Arrangement”), or (ii)
employment agreement, collective bargaining agreement, consulting agreement,
confidentiality agreement, agreement not to compete or other labor agreement between
either Company or a Related Party and any individual who provides or provided
personal services to either Company or a Related Party as an employee or otherwise
or such individual’s employer or agent.

     (c) True and complete copies of each of the following documents have been made
available to Buyer: (i) each Company Non-ERISA Benefit Arrangement or a complete
description of any non-ERISA benefit arrangement that is not in writing and a complete
and accurate description of the individuals covered by each such arrangement; (ii) all
written documents of any nature reflecting contractual terms and conditions of any
person’s employment with the Company (an “Employee Agreement”) or a complete
description of any Employee Agreement that is not in writing; (iii) all written
documents of any nature establishing the terms and conditions of each Company ERISA
Benefit Plan and related trust or insurance agreements or contracts evidencing any
funding vehicle with respect thereto; (iv) the three most recent annual reports on
Treasury Form 5500, including all schedules and attachments, with respect to any plan
for which such a report is required; (v) the form of summary plan description,
including any summary of material modifications thereto or other modifications
communicated to participants; and (vi) the most recent determination letter with
respect to each Company ERISA Benefit Plan intended to qualify under Section 401(a) of
the Code and the full and complete application therefor submitted to the Internal
Revenue Service.

     (d) Each Company ERISA Benefit Plan and Company Non-ERISA Benefit Arrangement and
Employee Agreement is and has been maintained and administered in accordance in all
material respects with the documents or instruments governing the plan, arrangement or
agreement (or in accordance with the written descriptions thereof provided in
Schedule 4.25(d) in the case of an unwritten Company Non-ERISA Benefit
Arrangement or Employee Agreement), except in the case of any change in applicable
governing laws that are not yet required to be incorporated into the instruments or
documents governing the plan, arrangement or agreement, in which case the plan,
arrangement or agreement has in operation been maintained and administered in
accordance with applicable laws at all times on and after the effective date of such
change. Each Company ERISA Benefit Plan that is intended to be qualified under Code
Section 401(a) is and has at all times been so qualified in form and, in all material
respects, in operation.

     (e) There are no facts or circumstances relating to any Company ERISA Benefit Plan
or Company Non-ERISA Benefit Arrangement that could, directly or indirectly, subject
Company or any Related Party to (i) any excise tax or other liability under Chapters 43
or 47 of Subtitle D of the Code, (ii) any penalty, tax or other liability

18

 

under Code Sections 6651, 6652 and 6690 or (iii) any civil penalty or other
liability under Section 502(c) of ERISA.

     (f) No payment made or benefit provided pursuant to any Company ERISA Benefit Plan,
Company Non-ERISA Benefit Arrangement or Employee Agreement will be nondeductible to
Company or any Related Party because of the applicability of Code Section 280G, nor
will either Company or any Related Party be required to gross up or otherwise
compensate any recipient in connection with the imposition of any excise tax (including
any interest or penalties related thereto) pursuant to Code Section 4999. Neither
Company nor any Related Party will incur any Liability in connection with severance
benefits which become payable solely by reason of the transactions contemplated by this
Agreement. Other than as expressly provided herein, such transactions will not result
in the acceleration of accruals, funding, vesting or payment of any contribution or
benefit under any Company ERISA Benefit Plan, Company Non-ERISA Benefit Arrangement or
Employee Agreement.

     (g) Other than as required by COBRA, Company does not provide or maintain, or
provide nor is it obligated to maintain or provide, post-retirement or post-termination
health, medical, life or other welfare benefits for employees or former employees of
Company. No promise or other commitment exists that would prevent either Buyer or
Company or Stockholder from amending or terminating any arrangement providing health,
medical, life, or other welfare benefits in respect of any current or former employee
of Company without liability therefor. Except as set forth in the applicable
government instruments or as required by law, neither Company nor any other person has
created any impediment to the amendment, termination, merger of or transfer of assets
and liabilities with respect to any Company ERISA Benefit Plan, Company Non-ERISA
Benefit Arrangement or Employee Agreement.

     (h) All contributions or benefit obligations in connection with any Company ERISA
Benefit Plan, Company Non-ERISA Benefit Arrangement or Employee Agreement have been
fully paid or properly accrued in accordance with GAAP in the Financial Statements of
Company. All obligations to provide medical, dental, vision, life, accidental death
and dismembership or long-term disability benefits pursuant to any Company ERISA
Benefit Plan, Company Non-ERISA Benefit Arrangement or Employee Agreement are either
fully insured (except for amounts not covered by reason of co-payments, deductibles,
participant contributions or similar allowances) or will be provided by an HMO with
respect to which Company’s sole liability is to pay premiums.

     (i) There are no pending or, to Stockholder’s knowledge, threatened audits or
investigations by any governmental entity, claims (other than undisputed claims for
benefits arising in the ordinary course), suits, grievances or other proceedings, and
Company is unaware of any facts or circumstances that could give rise

19

 

thereto, involving, directly or indirectly, any Company ERISA Benefit Plan, Company
Non-ERISA Benefit Arrangement, or Employment Agreement.

     4.26 Employees.

     (a) Except as set forth on Schedule 4.26(a), Company (i) is not a member of
any multi-employer bargaining group; (ii) has not withdrawn from any multi-employer
bargaining group within the past five years, and (iii) within the past three years not
defeated any collective bargaining representation petition, removed any existing
collective bargaining authority, or defeated any multi-employer bargaining group or
other third party with respect to employees.

     (b) Company has complied in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of employment,
wages and hours.

     (c) There is no strike, labor dispute, work slowdown or work stoppage actually
pending or threatened against Company. No collective bargaining representation
petition or collective bargaining agreement grievance is pending or threatened against
Company.

     (d) Except as set forth on Schedule 4.26(d), as of the Closing Date,
Company will have paid or reserved on its books any and all obligations for vacation
pay, severance pay, layoff or termination, or other amounts that may be due any person
including, but not limited to, by reason of any action taken under this Agreement;
excluded from this representation shall be any sick days or vacation days accrued by
employees during 2007 and disclosed on Schedule 4.26(h).

     (e) Company is not a joint employer with any other legal entity and does not
control labor relations or operations of any other legal entity.

     (f) Company does not employ or otherwise obtain the services of any “leased
employee” (as such term is defined in the Code).

     (g) Except as disclosed on Schedule 4.26(g), all workers associated with
the business of the Company are employees of Company.

     (h) Schedule 4.26(h) lists the names, titles, date of employment, current
base compensation rates, and estimated vacation and sick time accrued for each employee
of Company as of a recent date, and the amount of bonuses paid (or due) during the most
recent full fiscal year to each employee.

     (i) Except as set forth on attached Schedule 4.26(i), no Key Employee of
the Company has resigned since January 1, 2007 and to the Stockholder’s knowledge, no
Key Employee plans to retire or resign during the twelve-month period following the
Closing Date or otherwise be unavailable as an employee of the

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Company at compensation substantially similar to such employee’s present rate of
compensation. For purposes hereof, “Key Employee” shall mean any Company employee
whose total compensation during the prior year exceeds $50,000.

     4.27 Compensation Plans. Except as disclosed on Schedule 4.27, Company is not
a party, nor is it subject, to any plan, contract or understanding providing for any bonuses,
commissions, stock options, stock warrants, deferred compensation, profit sharing, annuity, or
similar obligations of any kind, including any incentive compensation bonus, retention bonus, sale
bonus, or similar obligations specifically relating to the consummation of the transactions
contemplated by this Agreement.

     4.28 Insurance. Schedule 4.28 contains a description of the policies of
general liability, theft, fire, flood, windstorm, earthquake, workers’ compensation, life, health,
dental, disability, business travel accident, directors and officers, and other forms of insurance
owned or held by Company.

     4.29 Taxes.

     (a) For purposes of this Section 4.29, references to Company include all
predecessors thereof or any transferee with respect thereto.

     (b) Except as set forth in Schedule 4.29(b):

	 	(i)	 	All Company Tax returns have been properly and timely filed,
and Taxes shown thereon as due have been timely paid. There exists no factual
basis or event which would make Buyer or Company liable for Company Taxes other
than those which have been paid or accrued. As of the time of each filing, the
foregoing Tax returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status, or other matters of the
Company and any other information required to be shown thereon.
	 
	 	(ii)	 	All Company Taxes arising in, or attributable to, the
pre-Closing period have been (or will be) paid or fully accrued or established
as a deferred liability on the books, records and financial statements of
Company (whether or not such Taxes are due and payable). The March 31, 2007
Balance Sheet fully accrues or establishes all liability for Company Taxes as
of the date thereof.
	 
	 	(iii)	 	There is no (nor has there been any requirement for an)
agreement, waiver or consent providing for an extension of time with respect to
the assessment or collection of, or statute of limitations regarding, any Taxes
or the filing of any Tax returns and no power of attorney granted by or with
respect to Company with respect to any Tax matter is currently in force.

21

 

	 	(iv)	 	There is no pending or, to Stockholder’s knowledge, threatened
audit, examination or investigation with respect to any Company Tax returns or
Company Taxes or any Company Tax matters, nor has any written or, to
Stockholder’s knowledge, other notice of the initiation thereof been received
by Company; there is (and there has been) no action, suit, proceeding, claim,
demand, deficiency or additional assessment pending, or threatened with respect
to any Company Tax returns or any Company Taxes.
	 
	 	(v)	 	There are no lien or encumbrances, on any asset of Company
arising out of, connected with, or related to Taxes (other than for Taxes that
are not delinquent).
	 
	 	(vi)	 	Other than elections made on the face of Tax returns provided
to Buyer, no agreement, consent, or election for foreign, federal, state or
local Tax purposes which would affect or be binding on Company after the
Closing has been filed or entered into with respect to Company or any of its
assets or operations.
	 
	 	(vii)	 	Company is not a party to, bound by, or under any obligation
(or potential obligation) under any Tax Agreement. For purposes of this
Agreement, “Tax Agreement” means any sharing, allocation, indemnity or other
agreement or arrangement (written or unwritten) relating to Taxes (other than
this Agreement).
	 
	 	(viii)	 	Company is not a party to any agreement relating to a foreign sales
corporation within the meaning of Section 922 of the Code, or a domestic
international sales corporation within the meaning of Section 991 of the Code.
	 
	 	(ix)	 	Company is not and has never been subject to Section 999 of the
Code. Company is not (and has not been) a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code;
	 
	 	(x)	 	Company is not nor has it been a partner in any partnership or
any entity treated as a partnership for Federal income tax purposes.
	 
	 	(xi)	 	No Tax years (or periods) with respect to the Federal income
Tax liabilities of Company and its assets and operations have been extended.
	 
	 	(xii)	 	Company has filed all necessary clearance certificates or
similar documents which may be required by any governmental entity upon
withdrawal from doing business in such governmental jurisdiction.

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	 	(xiii)	 	Company has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or third party.
	 
	 	(xiv)	 	Company is unaware of any facts or circumstances which would
make it likely that any tax authority will assess any additional Taxes for any
period for which Tax returns have been filed.

     (c) There have been delivered to Buyer copies of all Company Tax returns for the
last three years and all open years and all revenue agent (or other) reports, findings,
proposed assessments, deficiency (or other) notices, agreements (including any Tax
Agreement), elections, claims or demands and all other items relating to Taxes.

     4.30 Bank Accounts. Schedule 4.30 sets forth a true and complete list of all
of the (a) names and locations of all banks, trust companies, savings and loan associations,
brokerage firms, and other financial institutions at which Company maintains accounts of any
nature, lock boxes, or safety deposit boxes, and the names of all persons authorized to draw
thereon or make withdrawals therefrom and (b) the account number for each account identified in
clause (a).

     4.31 Affiliate Transactions. Except as set forth in Schedule 4.31, to
Stockholder’s knowledge, no director or officer of Company and no person related to any of them has
any interest in (a) any asset used in connection with or pertaining to the Company, or (b) any
creditor, supplier, customer, manufacturer, distributor or reseller of products of Company;
provided, however, that (i) no such director or officer or other person shall be deemed to have
such an interest solely by virtue of the ownership of less than 1% of the outstanding voting stock
or debt securities of any publicly held company, the stock or debt securities of which are traded
on a recognized stock exchange or quoted on the National Association of Securities Dealers
Automated Quotation System, and (ii) no such director or officer or other person shall be deemed to
have such an interest solely by virtue of the ownership by a partnership in which he is a partner
of less than 5% of the outstanding voting stock or debt securities of any privately-held company.

     4.32 Powers of Attorney; Guarantees, Suretyships.

     (a) Except as disclosed on Schedule 4.32(a), neither Stockholder nor Company has
granted, and there are not outstanding, any general or special powers of attorney or
comparable delegations of authority, which would be binding upon Buyer or Company, or any of
Company’s assets, after the Closing.

     (b) Except (i) as set forth in Schedule 4.32(b), (ii) as may be contained in
instruments associated with Company bank debt, Lease Agreements, equipment leases and
customer Contracts, and (iii) for endorsements for collections of deposits in the ordinary
course of business, Company has no liability as guarantor, surety, co-signer, endorser,
co-maker, indemnitor, or obligor in respect of the obligation, indebtedness or potential
liability of any person.

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     4.33 No Brokerage or Other Fees. Except as set forth on Schedule 4.33, no
broker or finder has acted for Company in connection with this Agreement or the transactions
contemplated hereby, and no person is entitled to any brokerage or finder fee or commission from
Buyer or Company in respect to this Agreement by virtue of any action by Company. The fees and
expenses of any broker or finder acting for the Company in this transaction shall be paid in full
by the Stockholder at or prior to the Closing.

     4.34 Disclosure. No representation or warranty by Stockholder or Company in this
Agreement and no statement or information contained in the Financial Statements, the Exhibits and
the Schedules attached hereto, when read together and taken as a whole, contains any untrue
statement of material fact or omits to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they were made, not false
or misleading.

     5. Buyer’s Representations and Warranties. Buyer represents and warrants and agrees
with the Stockholder as follows:

     (a) Organization and Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer has all
requisite power to own its property and to carry on its business as presently conducted, and
Buyer has complete and unrestricted power and authority to perform this Agreement and the
transactions contemplated hereby.

     (b) Binding Effect. This Agreement and all other agreements, documents and
instruments executed by Buyer in connection herewith are and will be the valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their respective terms,
and the execution, delivery and performance of this Agreement, and such other agreements,
documents and instruments executed by Buyer, and the transactions contemplated hereby and
thereby, have been duly and validly authorized and approved by Buyer’s Board of Directors.

     (c) Non-Contravention. The execution and delivery of this Agreement and all
other agreements, documents and instruments to be executed in connection herewith, and the
performance of the transactions contemplated hereby and thereby, do not, and will not,
constitute a violation of, be a default under, give rise to any right of termination,
cancellation or acceleration under, or conflict with the terms of, the Certificate of
Incorporation or By-laws of Buyer, each as amended to date, or any contract, lease,
indenture, agreement, order, judgment or decree to which Buyer is a party or by which it is
bound, and does not, and will not, violate or constitute a default under any statute, rule,
regulation, order or ordinance of any governmental, judicial or arbitrary body.

     (d) Litigation. There is no suit, action or legal, administrative, arbitration
or other proceedings of any nature pending, or to the knowledge of Buyer, threatened,
against Buyer which materially adversely affects Buyer, or which might materially and
adversely

24

 

affect the legality or validity of this Agreement, or the consummation of the transactions
contemplated hereby.

     (e) Disclosure. No representation or warranty made by Buyer in this Agreement
or in any statement or certificate furnished or to be furnished to the Company or the
Stockholder pursuant hereto or in connection herewith, contains or shall contain any untrue
statement of material fact or omits or shall omit to state a material fact necessary to make
the statements contained therein not misleading.

     (f) Brokerage. Buyer has not engaged the services of any broker, investment
banker, financial advisor, finder, or other person or entity entitled to be paid a
commission, fee or other compensation in connection with the transactions provided for in
this Agreement.

     6. Conditions to Buyer’s Obligations. The obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the satisfaction (unless waived by
Buyer) on or prior to the date hereof of each of the following conditions:

     (a) Representations and Warranties. All representations and warranties of the
Stockholder set forth in this Agreement and in any statement, certificate or other
instrument delivered to Buyer pursuant hereto or in connection herewith, shall have been
true and correct in all material respects on and as of the date of this Agreement, and shall
be true and correct in all material respects on and as of the Closing Date.

     (b) No Adverse Change. Except as set forth on Schedule 4.11, since
December 31, 2006, there shall not have been any material damage to or loss or destruction
of any of the Company’s fixed assets, or any Material Adverse Effect on the Company, or the
imposition of any laws, rules or regulations which could have a Material Adverse Effect on
the Company, or any suit or action brought against the Company the outcome of which could
have a Material Adverse Effect on the Company, its condition (financial or otherwise) or
operations of the Company’s assets.

     (c) Compliance with Agreement. The Stockholder shall have performed and
complied with all of its obligations under this Agreement which are to be performed or
complied with by it on or prior to the date hereof.

     (d) Proceedings and Instruments Satisfactory. All proceedings, corporate or
other, to be taken by the Stockholder, or by the Company or on its behalf, in connection
with the transactions contemplated by this Agreement, and all documents incident thereto,
shall be satisfactory in all respects to Buyer.

     (e) No Litigation. No investigation, suit, action or other proceeding shall be
threatened or pending against the Company or the Stockholder before any court or
Governmental Entity which seeks to restrain or prohibit or obtain damages or other relief in
connection with the performance of this Agreement or the consummation of the transactions
contemplated hereby.

25

 

     (f) FCC Compliance and Approval. Stockholder and Company shall be in
compliance in all respects with the Communications Act of 1934, as amended (the
“Communications Act”) and with all applicable Federal Communications Commission (“FCC”)
rules, regulations and policies, and shall have complied with all FCC eligibility and basic
qualifications requirements to effectuate the transactions contemplated hereunder,
including, but not limited to, the non-U.S. ownership limits of Section 310(b) of the
Communications Act and Section 5301 of the Anti-Drug Abuse Act of 1988, 21 U.S.C. Section
862. No later than June 29, 2007, the FCC shall have consented to the transfer of control
over Company to Buyer as evidenced by the FCC’s or the FCC International Bureau’s Grant of
the Transfer Application (as defined and described in Section 13 hereof) (“FCC Approval”).

     (g) Non-Competition Agreement. The Stockholder shall have entered into a
non-competition agreement with Company, to be effective from and after Closing, in the form
of Exhibit B (the “Non-Competition Agreement”).

     (h) Deliveries. The Stockholder shall have delivered (or cause to be
delivered) on or prior to the Closing Date, the following:

     (i) stock certificates representing the Shares, duly endorsed for transfer by
the Stockholder to Buyer;

     (ii) the Non-Competition Agreement duly executed by the Stockholder;

     (iii) a certificate of the Secretary of the Company as to the Company’s charter
documents, by-laws and incumbency and signatures of the Company’s officers;

     (iv) [INTENTIONALLY OMITTED.]

     (v) a copy of the charter documents of the Company, with all amendments
thereto, as certified as of a recent date by the Secretary of State of the State of
Delaware;

     (vi) a certificate of the legal existence and corporate good standing of the
Company issued as of a recent date by the Secretary of State of the State of
Delaware;

     (vii) certificate(s) of good standing to do business in all foreign
jurisdictions set forth on Schedule 4.5(c), issued as of a recent dated by
the Secretary of State of such foreign jurisdiction;

     (viii) a certificate of the tax good standing of the Company issued as of a
recent date by the applicable tax authority in the State of Delaware and any other
foreign jurisdiction where the Company files any Tax return;

26

 

     (ix) the written resignations of the directors and officers of the Company from
their respective positions with the Company;

     (x) the stock books, stock ledgers, minute books and corporate seal of the
Company (all other records of the Company being located in the corporate premises,
or otherwise, of the Company);

     (xi) documents evidencing the discharge or release of any security interests,
liens or encumbrances on the assets and properties of the Company, including,
without limitation, UCC termination statements; and

     (xii) such other documents, instruments and certificates not inconsistent with
the provisions of this Agreement, executed by the Company and/or the Stockholder, as
Buyer shall reasonably require to effectuate the purposes and intent of this
Agreement.

     (i) Financing. By 5:00 p.m. EDT, May 21, 2007, the Buyer shall have obtained
all of the financing it needs in order to consummate the transactions contemplated hereby
and fund its working capital requirements, in each case on terms and conditions satisfactory
in all reasonable respects to the Buyer. (Buyer hereby agrees to notify the Stockholder
promptly of the satisfaction of this condition.)

     7. Conditions to the Stockholder’s Obligations. The obligations of the Stockholder to
consummate the transactions contemplated by this Agreement are subject to the satisfaction (unless
waived by the Stockholder) on or prior to the date hereof of each of the following conditions:

     (a) Representations and Warranties. All representations and warranties of
Buyer set forth in this Agreement and in any statement, certificate or other instrument
delivered to the Stockholder pursuant hereto or in connection herewith, shall have been true
and correct in all material respects on and as of the date of this Agreement, and shall be
true and correct in all material respects on and as of the Closing Date.

     (b) Compliance with Agreement. Buyer shall have performed and complied with
all of the obligations under this Agreement which are to be performed or complied with by it
on or prior to the date hereof.

     (c) Proceedings and Instruments Satisfactory. All proceedings, corporate or
other, to be taken by Buyer or on behalf of Buyer in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be satisfactory in
all material respects to the Company and the Stockholder.

     (d) No Litigation. No investigation, suit, action or other proceeding shall be
threatened or pending against Buyer before any court or governmental agency which seeks to
restrain or prohibit or obtain damages or other relief in connection with the performance of
this Agreement or the consummation of the transactions contemplated hereby.

27

 

     (e) Deliveries. Buyer shall have delivered (or cause to be delivered) to the
Stockholder on or prior to the Closing Date the following:

     (i) the Closing Payment due under Section 2(a);

     (ii) a certificate of the Secretary of Buyer as to (A) the votes of Buyer’s
Board of Directors authorizing and approving the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby, and
(B) the incumbency and signatures of Buyer’s officers;

     (iii) a certificate of the legal existence and corporate good standing of Buyer
issued as of a recent date by the Secretary of State of the State of Delaware; and

     (iv) such other documents, instruments and certificates not inconsistent with
the provisions of this Agreement, executed by Buyer, as the Company and the
Stockholder shall reasonably require to effectuate the purposes and intent of this
Agreement.

     (f) Release of Imperium Encumbrances. The Stockholder shall have obtained from
Imperium (as defined in the Schedules) the discharge or release of any security interests, liens or
encumbrances, including any pledge obligations, respecting the Shares on terms and conditions that
would not, in the reasonable good faith judgment of legal counsel to the Stockholder, have a
material adverse effect on the business, financial condition, operations, assets and liability of
the Stockholder, taken as a whole. The Stockholder hereby agrees to use best efforts to obtain
such discharge or release as promptly as practicable, and shall deliver evidence of such efforts to
Buyer as Buyer may request.

     8. Survival of Representations.

     (a) Survival of Representations. All representations, warranties and agreements made
by any party in this Agreement or pursuant hereto shall survive the date hereof for a period of
three years, excluding representations and warranties relating to Sections 4.7, 4.24, 4.25, and
4.29, which shall survive until the expiration of the applicable statutes of limitations with
respect to such representation or warranty, notwithstanding any investigation by any party made
either before or after the date hereof.

     (b) Statements as Representations. All statements contained in any certificate,
schedule, list, document or other writing delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed representations and warranties within the meaning
of Section 8(a).

     9. Indemnification by the Stockholder.

28

 

     (a) Indemnity. The Stockholder shall indemnify, defend and hold Buyer and the
Company harmless from and against any and all claims, liabilities, obligations, losses,
damages, costs or expenses (including reasonable legal fees, costs and expenses arising from
or in connection with any action, suit, proceeding or claim incident to any of the
foregoing) (collectively, “Losses”) suffered by Buyer or the Company resulting from or which
arise out of (i) any acts or omissions of the Company or the Stockholder arising or
occurring prior to the Closing Date with respect to the Company’s business, including,
without limitation, any Losses related to the Company’s breach of warranty with respect to
the Company’s products or services produced or performed prior to the Closing, or any
product liability claim or other liability arising out of defective products or services
produced or performed by the Company prior to Closing; (ii) any breach of any representation
or warranty, covenant, agreement or obligation on the part of the Stockholder under this
Agreement, any Schedule or Exhibit to this Agreement or under any agreement executed in
connection therewith, or from any misrepresentation in or omission from any certificate or
other instrument furnished to Buyer pursuant hereto or in connection herewith; (iii) any
facts or circumstances relating to the Company existing or arising on or prior to the
Closing Date known to the Stockholder, including, without limitation, tax claims,
environmental claims, assessments or liabilities relating to tax periods ending on or prior
to the Closing, liabilities under or in respect of any litigation described on Schedule
4.20 and liabilities arising from the elimination from the Company’s balance sheet of
any notes or other payables to the Stockholder or former stockholders of the Company; (iv)
any failure of the Company to comply as of the Closing Date with any employee benefit plan
laws, rules, regulations or orders, including, without limitation, the so called GUST
amendments; (v) any failure of the Company to comply with any applicable bulk sales transfer
laws; and (vi) any brokers’ or finders’ fees or compensation in connection with the
transactions provided for by this Agreement by any person or entity claiming a right to same
because of having been engaged by or having served the Stockholder or the Company.
Notwithstanding the foregoing, the Stockholder shall not be liable for Permitted Liabilities
included on the Closing Balance Sheet in accordance with the provisions of Section 2.

     (b) Payment of Losses. Subject to the provisions of Section 9(c), Buyer shall
be reimbursed by the Stockholder on demand by Buyer to the Stockholder for any Losses
suffered by Buyer or the Company with respect to any liability or claim to which the
indemnity set forth in Section 9(a) relates. In addition, provided any liability or claim
to which the indemnity set forth in Section 9(a) relates is acknowledged by the Stockholder
or is adjudicated or arbitrated as a liability or claim to which the indemnity set forth in
Section 9(a) relates through the mediation and arbitration provisions set forth in Section
14(h), Buyer shall have the right to set off and deduct the amount of any payment made by it
or Loss suffered by it with respect to such liability or claim to which the indemnity set
forth in Section 9(a) relates against the amount of any payment obligation of Buyer to the
Stockholder under this Agreement. In addition, amount payable under this Section 9 shall be
reduced by and to the extent that the Company or Buyer receives proceeds under insurance
policies specifically as a result of, and in compensation for, the subject of an
indemnification liability or claim.

29

 

     (c) Third-Party Claims. Should any claim be made against Buyer or the Company
by a person not a party to this Agreement with respect to any matter to which the indemnity
set forth in Section 9(a) relates (a “Third-Party Claim”), then Buyer shall promptly give
the Stockholder written notice of any such Third-Party Claim (including all available
information regarding the details of the Third-Party Claim). If the Stockholder
acknowledges to Buyer in writing that such Third-Party Claim is subject to the indemnity set
forth in Section 9(a), the Stockholder shall have the right to defend or settle any such
Third-Party Claim, at its sole expense, on its own behalf and with counsel of its own
choosing, which counsel shall be reasonably satisfactory to Buyer. In such defense or
settlement of any Third-Party Claim, Buyer shall cooperate with and assist the Stockholder
as is reasonable and may participate therein with its own counsel at its sole expense, and
Buyer’s written consent shall be a requirement to any settlement and disposition thereof,
which consent shall not be unreasonably withheld or delayed, provided that in any such
settlement or disposition, Buyer shall not be liable for any amounts under such settlement
or disposition and such settlement or disposition shall contain a complete release of Buyer
from any liability. Failure by Buyer to give notice within a reasonable period of time
shall not constitute a defense, in whole or in part, to any claim for indemnification by
Buyer, except only to the extent that such failure by Buyer shall result in a material
prejudice to the Company and the Stockholder. If the Stockholder does not notify Buyer
within 10 days after receipt of Buyer’s written notice of a Third-Party Claim that the
Stockholder intends to undertake the defense thereof, and that such claim is subject to the
indemnity set forth in Section 9(a), or if after undertaking such defense the Stockholder
fails to pursue such defense in a prudent manner, then Buyer shall have the right to
contest, settle or compromise such Third-Party Claim, and the Stockholder shall indemnify
Buyer for the full amount of all Losses paid or suffered by Buyer in respect thereof. So
long as the Stockholder has given Buyer timely notice that the Stockholder will undertake
the defense of the Third-Party Claim, and is defending such Third-Party Claim in good faith,
Buyer shall not pay or settle any such Third-Party Claim without the written consent of the
Stockholder.

     (d) Cumulative Remedies. Except as expressly provided herein, the remedies
provided to Buyer and the Company in this Section 9 shall be cumulative and shall not
preclude the assertion by Buyer of any other rights or the seeking of any other remedies
against the Stockholder.

     (f) Limitations on Indemnification.

     (i) The Stockholder shall not be required to indemnify Buyer or the Company
with respect to any Losses resulting from or arising out of matters described in
Section 9(a), unless and until the aggregate amount of all Losses exceeds $25,000
(the “Threshold Amount”), in which case the Stockholder shall be required to
indemnify Buyer or the Company for the entire amount of which such Losses from the
first dollar. Losses thereafter may be asserted regardless of amount.

     (ii) The Stockholder’s maximum liability to Buyer or the Company under this
Section 9 shall not exceed $1,000,000.

30

 

     10. Indemnification by Buyer.

     (a) Indemnity. Buyer shall indemnify, defend and hold the Stockholder harmless
from and against any and all Losses suffered by the Stockholder resulting from (i) any
breach of any representation or warranty, covenant, agreement or obligation on the part of
Buyer under this Agreement, any schedule to this Agreement or under any agreement executed
in connection herewith; (ii) any misrepresentation in or omission from any certificate or
other instrument furnished to the Stockholder pursuant hereto or in connection herewith; and
(iii) any claims for brokers’ or finders’ fees or compensation in connection with the
transactions provided for by this Agreement by any person, firm, corporation or other entity
claiming a right to same because of having been engaged by or having served Buyer.

     (b) Payment of Losses. Subject to the provisions of Section 10(c), the
Stockholder shall be reimbursed by Buyer on demand for any Loss suffered by the Stockholder
with respect to any liability or claim to which the indemnity set forth in Section 10(a)
relates.

     (c) Third-Party Claims. Should any Third-Party Claim be made against the
Stockholder with respect to any matter to which the indemnity set forth in Section 10(a)
relates, then the Stockholder shall promptly give Buyer written notice of any such
Third-Party Claim and Buyer shall have the right to defend or settle any such Third-Party
Claim, at its sole expense, on its own behalf and with counsel of its own choosing, which
counsel shall be reasonably satisfactory to the Stockholder. The Stockholder agrees that
Posternak Blankstein & Lund LLP is satisfactory. In such defense or settlement of any
claim, the Stockholder shall cooperate with and assist Buyer to the maximum extent
reasonably possible and may participate therein with its own counsel at its own expense, and
the Stockholder’s written consent shall be a requirement to any settlement and disposition
thereof, which consent shall not be unreasonably withheld or delayed. Failure by the
Stockholder to give notice within a reasonable period of time shall not constitute a
defense, in whole or in part, to any claim for indemnification by the Stockholder, except
only to the extent that such failure by the Stockholder shall result in a material prejudice
to Buyer. If Buyer does not notify the Stockholder within 10 days after receipt of the
Stockholder’s written notice of a Third-Party Claim that Buyer intends to undertake the
defense thereof, and that such claim is subject to the indemnity set forth in Section 10(a),
or if after undertaking such defense Buyer fails to pursue such defense in a prudent manner,
then the Stockholder shall have the right to contest, settle or compromise the claim and
Buyer shall indemnify the Stockholder for the full amount of all Losses paid or suffered by
the Stockholder in respect thereof. Notwithstanding the foregoing, so long as Buyer is
contesting any such Third Party Claim in good faith, the Stockholder shall not have the
right to pay or settle any such claim without the prior written consent of Buyer.

     (d) Cumulative Remedies. Except as expressly provided herein, the remedies
provided to the Stockholder in this Section 10 shall be cumulative and shall not preclude
the

31

 

assertion by the Stockholder of any other rights or the seeking of any other remedies
against Buyer.

     11. Press Releases. The Stockholder agrees that it will not release, and shall not
permit any person or entity to release, any press releases or other similar announcements without
Buyer’s prior approval thereof, it being acknowledged by Buyer that the Stockholder is a
publicly-traded company.

     12. Conduct of the Business for Buyer’s Account After June 15, 2007. Notwithstanding
anything in this Agreement to the contrary, if for any reason whatsoever (other than the Buyer’s
failure to comply with its obligations hereunder), the Closing shall not have taken place by June
15, 2007, the Buyer agrees that upon any subsequent Closing in accordance with the terms hereof,
the Purchase Price, in addition to any adjustments made in accordance with Section 2, shall be
adjusted upward by an amount equal to the 60% of the aggregate actual operating expenses of the
Company (included such operating expenses as may be paid or otherwise covered directly by
Stockholder) for the period between June 16, 2007 and Closing, as mutually determined in good faith
by the parties and assuming operations in the ordinary course of business. Buyer and Stockholder
hereby agree that Paul F. Newcomb and Kevin McGrath, as promptly as practicable after execution and
delivery hereof, shall confer regarding an interim budget and operating plan for the period
commencing May 7, 2007 and ending July 3, 2007.

	13.	 	Covenants and Agreements of the Stockholder and Buyer Regarding Taxation,
FCC, Newcomb’s Knowledge.

     (a) Buyer and the Stockholder agree that the Company’s 2007 tax year shall be
treated as two (2) tax years, the first of which ends on the Closing Date and the
second of which begins on the day after the Closing Date and ends on December 31, 2007.
The Stockholder agrees that it will cause the Tax return for the period from January
1, 2007 to the Closing Date to be prepared and provided to Buyer, at the Stockholder’s
sole expense, for review and filing by Buyer in a timely manner consistent with the
filing requirements under the Internal Revenue Code. Buyer agrees to provide to the
Stockholder and its agents all information available from the books of the Company, as
reasonably requested by the Stockholder, for the preparation of said return.

     (b) Within five (5) business days following the date of execution hereof, the
Stockholder and Buyer shall jointly submit to the FCC completed FCC Form 312
Application (the “Transfer Application”) seeking FCC consent to the transfer of control
over Company to Buyer, and for the FCC or the FCC International Bureau to Grant the
Transfer Application. For purposes of this Agreement, “Grant” means an action or
decision of the FCC or the FCC International Bureau pursuant to delegated authority
that is made public by the FCC either pursuant to a written decision or public notice.
As provided in Section 6 above, the Closing shall be conditioned on the parties’ having
obtained FCC Approval by the Drop Dead Date.

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     (c) The Buyer acknowledges that Paul F. Newcomb has acted as an officer of the
Company, and in such capacity has overseen certain operations and affairs of the
Company. Accordingly, the Buyer warrants, represents and agrees that Paul F. Newcomb
has no knowledge of any fact or circumstance which presently, or solely with the
passage of time, could reasonably be expected to (a) result in a default by the
Stockholder of any of the warranties and representations contained in this Agreement (a
“Warranty Default”), or (b) cause a failure of a condition precedent of Buyer’s
obligations under this Agreement or give rise to any other circumstance entitling Buyer
to terminate or avoid this Agreement (either, a “Failure of Buyer’s Condition
Precedent”), or (c) give rise to an indemnity claim by Buyer against the Stockholder
pursuant to the provisons of Section 9 of this Agreement or otherwise (a “Buyer
Indemnity Claim”). To the extent that Paul F. Newcomb is, as of the date hereof, aware
of a fact or circumstance which could reasonably be expected to lead to a Warranty
Default, a Failure of Buyer’s Condition Precedent, or a Buyer Indemnity Claim, then
such shall not be grounds for the Buyer to terminate or avoid this Agreement, and the
Buyer shall have no rights against the Stockholder on account of such Warranty Default,
Failure of Buyer’s Condition Precedent or Buyer Indemnity Claim. Further, to the
extent that Paul F. Newcomb, prior to the Closing, acquires knowledge of any state of
facts which could reasonably be expected give rise to a Warranty Default, a Failure of
Buyer’s Condition Precedent, or a Buyer Indemnity Claim, the Buyer shall give immediate
written notice of the same to the Stockholder, and if thereafter the Buyer elects to
waive, as applicable, any Failure of Buyer’s Condition Precedent relating thereto and
close and consummate the transactions contemplated by this Agreement, the Buyer shall
have no rights against the Stockholder on account of such particular Warranty Default
or Buyer Indemnity Claim.

     14. Miscellaneous Provisions.

     (a) Expenses. Each party shall be responsible for all of its fees and expenses
incurred by it in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. The Stockholder shall be responsible
for all fees and expenses of the Company incurred prior to the Closing in connection with
the execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby, subject to Section 12.

     (b) Assignability; Binding Effect. This Agreement may not be assigned by any
of the parties hereto without the prior written consent of the others. Subject to the
foregoing, this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective heirs, executors, administrators, successors and assigns.

     (c) Notice. All notices, payments, demands and requests required or permitted
hereunder shall be in writing and shall be deemed duly given if personally delivered or sent
by registered or certified mail, postage prepaid, return receipt requested, or by Federal

33

 

Express or other recognized overnight express couriers, or by fax and followed by hard copy,
to the parties hereto at the following addresses:

	 	 	 
	IF TO THE STOCKHOLDER:

	 	Digital Angel Corporation
	 

	 	490 Villaume Ave.
	 

	 	South St. Paul, MN
	 
	 	 
	WITH A COPY TO:

	 	Patricia Petersen, Esq.
	 

	 	Digital Angel Corporation
	 

	 	1690 S. Congress Ave., Suite 201
	 

	 	Delray Beach, FL 33445
	 

	 	Fax: 561-276-0977
	 
	 	 
	IF TO BUYER:

	 	Newcomb Communications, Inc.
	 

	 	1465 Hooksett Road, Unit 458
	 

	 	Hooksett, NH 03106
	 

	 	Attn: Paul Newcomb,
	 

	 	President
	 

	 	Fax: ___
	 
	 	 
	WITH A COPY TO:

	 	Kevin J. O’Connell, Esq.
	 

	 	Posternak Blankstein & Lund LLP
	 

	 	The Prudential Tower
	 

	 	800 Boylston Street
	 

	 	Boston, MA 02199-8004
	 

	 	Fax: (617) 367-2315

Any party hereto may change its address for notice by giving notice of any such change of
address in the manner set forth above.

     (d) Governing Law. This Agreement and all issues related to the subject matter
hereof shall be governed by and construed in accordance with the laws of the State of
Delaware.

     (e) Consent to Jurisdiction. The parties hereto consent to the jurisdiction of
the courts of the Superior Court, Suffolk County, Boston, Massachusetts or the United States
District Court for the District of Massachusetts, sitting in Boston, Massachusetts, as well
as the jurisdiction of all courts from which an appeal may be taken from such courts, for
the purposes of any suit, action or other proceeding relating to this Agreement or with
respect to any transactions contemplated hereby, and expressly waive any and all objections
the parties hereto may have as to the venue of such courts to settle or adjudicate any claim
or controversy arising hereunder.

34

 

     (f) Entire Agreement; Severability. This Agreement, together with the
Schedules and Exhibits and the Non-Competition Agreement, sets forth the entire agreement
and understanding among the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings with respect hereto. This
Agreement and said Schedules and Exhibits may not be amended, changed or modified except by
a written instrument duly executed by the parties hereto. The provisions of this Agreement
will be deemed severable, and if any provision of this Agreement is held illegal, void or
invalid under applicable law, such provision may be changed to the extent reasonably
necessary to make the provision legal, valid and binding. If any provision of this
Agreement is held illegal, void or invalid in its entirety, the remaining provisions of this
Agreement will not be affected but will remain binding in accordance with their terms.
Buyer may, nevertheless, declare this Agreement to be null and void if it, in its sole
discretion, deems the avoidance or invalidity of any provision hereunder to adversely affect
its interests.

     (g) No Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver of any
subsequent breach or default and of the same or similar nature.

     (h) Mediation and Arbitration. Except as otherwise provided in the
Non-Competition Agreement, or as otherwise agreed by the parties, any controversy, dispute
or claim between the parties arising out of, related to or in connection with this Agreement
or the performance or breach hereof shall be submitted to and settled as follows:

     (i) All controversies or claims arising out of or relating to this Agreement
shall be settled in the first instance by non-binding mediation under the Commercial
Mediation Rules of the American Arbitration Association (“AAA”) in Boston,
Massachusetts as such rules are in effect on the date of delivery of demand for
mediation. The parties agree to use mutually acceptable professional mediation
services. Each party shall pay its own expenses, including legal fees, and agree to
share equally any other fees associated with the mediation, including the cost of
the mediator. Unless a settlement is mutually agreed to in writing, the
participants shall not be bound by the discussions or outcome of the mediation.

     (ii) If the dispute cannot be settled through mediation within 30 days of the
demand for same, the dispute shall be submitted to arbitration conducted by the AAA
in Boston, Massachusetts, in accordance with the Commercial Arbitration Rules of the
AAA as then in effect; provided that the arbitration shall be by a single
arbitrator mutually selected by Buyer on the one hand, and the Stockholder on the
other hand, and if the parties do not agree within 20 days after the date of
notification of a request for such arbitration made by either party, the selection
of the single arbitrator shall be made by the AAA in accordance with said rules.
All discovery will be completed, and the arbitration will commence, within 30 days
after appointment of the arbitrator. Unless the arbitrator finds that exceptional
circumstances justify delay, the hearing will be completed, and an award will be

35

 

rendered in writing, within 15 days after commencement of the hearing. In
addition to, and not in substitution for any and all other relief in law or equity
that may be granted by the arbitrator, the arbitrator may grant equitable relief and
specific performance to compel compliance hereunder. The determination of the
arbitrator shall be accompanied by a written opinion of the arbitrator and shall be
final, binding and conclusive on the parties, and judgment on the arbitrator’s
award, including without limitation equitable relief and specific performance, may
be entered in and enforced by any court having jurisdiction thereof.

     (iii) The fees and expenses of the AAA and of the arbitrator shall be shared
equally by Buyer on the one hand, and the Stockholder on the other hand.

     (iv) The provisions of this Section 14(h) shall not prohibit the parties from
pursuing any injunctive relief, temporary restraining orders or other remedies in
equity, available to the parties for a breach or threatened breach of this
Agreement.

     (i) Further Assurances. The parties hereto agree that they will, without
further consideration, from time to time hereafter, and at their own expense, execute and
deliver such other documents, and take such other action, as may reasonably be requested in
order to more effectively consummate the transactions contemplated hereby. The provisions
hereof shall survive the date hereof.

     (j) Counterparts. This Agreement may be signed in any number of counterparts,
including by facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGE TO FOLLOW]

36

 

[Signature page to Stock Purchase Agreement]

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed under seal as of the
date first above written.

	 	 	 	 	 
	STOCKHOLDER:	 	DIGITAL ANGEL CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin McGrath
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin McGrath
	 

	 	 	 	Title: President
	 
	 	 	 	 
	BUYER:	 	NEWCOMB COMMUNICATIONS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul F. Newcomb
	 

	 	 	 	 
	 

	 	 	 	Name: Paul F. Newcomb
	 

	 	 	 	Title: President

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