Document:

Unassociated Document

    DEER
CONSUMER PRODUCTS, INC.

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
REGISTRATION RIGHTS AGREEMENT (the “Agreement”), dated as of________________, is
made by and between Deer Consumer Products, Inc., a Nevada corporation (the
“Company”), and the undersigned investor (the “Investor”).

     

    WHEREAS,
in connection with that certain Subscription Agreement by and among the Company
and the Investor (the “Subscription Agreement”), the Company desires to sell to
the Investor, and the Investor desires to purchase from the Company units of (a)
shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”); and (b) Warrants to purchase additional shares of Common Stock (the
“Warrants”) equal to 15% of the Common Stock initially purchased;
and

     

    WHEREAS,
to induce the Investor to purchase the Common Stock and Warrants, the Company
has agreed to register the shares of Common Stock purchased and the Common Stock
underlying the Warrants pursuant to the terms of this Agreement.

     

    NOW,
THEREFORE, the Company and the Investor hereby covenant and agree as
follows:

     

    1. Certain
Definitions.  As used in this Agreement, the following terms
shall have the following respective meanings:

     

    “Closing”
shall mean the closing of the sale of the Units.

     

    “Commission”
shall mean the Securities and Exchange Commission, or any other federal agency
at the time administering the Securities Act.

     

    “Effectiveness
Date” shall mean that date which is one hundred eighty (180) days following the
final closing of the Offering.

     

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

     

    “Filing
Date” shall mean that date which is sixty (60) days following the Final Closing
Date.

     

    “Final
Closing Date” shall mean any date after the Company conducts a Closing for at
least the Minimum Offering which occurs at the earlier of: (i) January 31, 2009,
or up to 60 days thereafter if the Company extends the Offering, (ii) any date
prior to January 31, 2009 as determined by the Company, or (iii) the date on
which the Company conducts a Closing in which the aggregate funds received by
Company equal the Maximum Offering.

     

    “Offering”
shall refer to the Company’s proposal to sell Units for $.80 per Unit, with each
Unit consisting of (i) one share of Common Stock of the Company and (ii) a three
(3) year Warrant to purchase 15% of one share of Common Stock of the Company
with an exercise price of $1.50 per share.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Maximum
Offering” shall mean 6,250,000 Units for a total maximum purchase price of
$5,000,000 USD.

     

    “Minimum
Offering” shall mean of Units being offered is 375,000 Units for a total
purchase price of $300,000 USD.

     

    “Register,”
“registered” and “registration” each shall refer to a registration effected by
preparing and filing a Registration Statement or statements or similar documents
in compliance with the Securities Act and the declaration or ordering of
effectiveness of such Registration Statement or document by the
Commission.

     

    “Registrable
Securities” shall mean the shares of Common Stock issued pursuant to the
Subscription Agreement or upon the exercise of the Warrants delivered as part of
the Offering; provided, however, that shares
of Common Stock which are Registrable Securities shall cease to be Registrable
Securities (x) upon any sale pursuant to a Registration Statement or Rule 144
under the Securities Act or (y) at such time as they become eligible for sale
pursuant to Rule 144 under the Securities Act or another similar exemption under
the Securities Act; provided, further, that the maximum amount of Registrable
Securities at any one time shall be limited by Rule 415.

     

    “Securities
Act” shall mean the Securities Act of 1933, as amended.

     

    Capitalized
terms used but not defined herein shall have the meanings set forth in the
Subscription Agreement or the Warrants.

     

    2. Automatic
Registration.

     

    (a) On or
prior to the Filing Date, the Company shall prepare and file with the Commission
the Registration Statement covering the resale of all of the Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415.  The Registration Statement required hereunder shall be on Form
S-1.  Subject to the terms of this Agreement, the Company shall use
its commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event not later than the Effectiveness Date, and
shall use its commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act until the date when all
Registrable Securities covered by the Registration Statement have been sold or
may be sold pursuant to Rule 144 as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company’s transfer agent and the Investor (the “Effectiveness Period”). The
maximum amount of Registrable Securities at any one time shall be limited by
Rule 415 as required by the Commission. In the event that there is a limitation
by the Commission on the number of Registrable Securities that may be registered
at one time the Company shall use its reasonable best efforts to file an
additional Registration Statement covering such ineligible within 30 days of the
date such securities become eligible and to make such Registration Statement be
declared effective by the Commission as soon as practicably
possible.

     

    
      
         

      

      
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    (b)
If:  (i) a Registration Statement is not filed on or prior to the
Filing Date, or (ii) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the Securities Act,
within 5 trading days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be “reviewed,” or is not subject to further review, or (iii) a
Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission on or before the Effectiveness Date as a result of
the failure of the Company to meet its obligations with respect to such filing
as provided for herein, or (iv) after a Registration Statement is first declared
effective by the Commission, it ceases for any reason to remain continuously
effective as to the Registrable Securities held by the Investor, or the Investor
is not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for in any such case 20 consecutive trading days but no more than an
aggregate of 30 trading days during any 12-month period (which need not be
consecutive trading days) during which the Investor is not permitted to sell
such Registrable Securities under Rule 144 (any such failure or breach being
referred to as an “Event,” and for purposes of clause (i) or (iii) the date on
which such Event occurs, or for purposes of clause (ii) the date on which such 5
trading day period is exceeded, or for purposes of clause (iv) the date on which
such 20- or 30-day period, as applicable, is exceeded being referred to as
“Event Date”), then: (x) on the first Event Date to occur the Company shall pay
to such Investor an amount, at the election of the Company, in cash or in Common
Stock, as liquidated damages and not as a penalty, equal to 1.0% of the
aggregate purchase price paid by such Investor pursuant to the Subscription
Agreement for any Registrable Securities then held by such Investor for which such Investor has not received liquidated
damages pursuant to Section
2(c) below; and (y) on each anniversary of such Event Date (if the
applicable Event, or any subsequent Event, shall not have been cured by such
date) until all Event(s) are cured, the Company shall pay to such Investor an
amount, as determined by the Company, in cash or in Common Stock, as liquidated
damages and not as a penalty, equal to 1.0% of the aggregate purchase price paid
by such Investor pursuant to the Subscription Agreement for any Registrable
Securities then held by such Investor for which such Investor has not received liquidated
damages pursuant to Section
2(c) below. In determining the number of shares of Common Stock payable
to the Investor, the 20 day average closing price of the Common Stock ending on
the Event Date shall be used.  If the Company fails to pay any
liquidated damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 10% per annum
(or such lesser maximum amount that is permitted to be paid by applicable law)
to the Investor, accruing daily from the date such liquidated damages are due
until such amounts, plus all such interest thereon, are paid in
full.  The liquidated damages pursuant to the terms hereof shall apply
on a daily pro-rata basis for any portion of a year prior to the cure of an
Event.

     

    (c)
Notwithstanding any other provision of this Section 2, if the
Commission  determines that the number of securities that the Company
may register on the Registration Statement pursuant to Rule 415 is limited such
that the shares so registered thereunder shall exclude any Registrable
Securities held by the Investor, then the Company shall promptly so advise the
Investor and the Company shall use commercially reasonable efforts to effect the
registration of any Registrable Securities not so included on the Registration
Statement as a result thereof as soon as is legally possible to do
so.  In such event, the Company shall pay to such Investor liquidated
damages as set forth in Section 2(b) hereof with respect to  any
Registrable Securities then held by the Investor that were not registered by the
Effectiveness Date.

     

    
      
         

      

      
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    (d) The
parties acknowledge and agree that (i) the maximum amount of damages that the
Company shall be obligated to pay the Investor for any and all breaches of this
Section 2 is the amount of liquidated damages set forth in Section 2(b) or 2(c),
and (ii) such liquidated damages shall be the sole remedy available to Investor
for any breach of this Agreement, provided that nothing in this Section 2(d)
shall preclude Investor from seeking injunctive relief, including specific
performance of its rights under this Section 2.

     

    3. Registration
Procedures.  If and whenever the Company is required by the
provisions of Section 2 hereof to use its commercially reasonable efforts to
affect the registration of any Registrable Securities under the Securities Act,
the Company will, as expeditiously as possible:

     

    (a)
prepare and file with the Commission the Registration Statement with respect to
such securities and use its reasonable best efforts to cause such Registration
Statement to become effective in an expeditious manner;

     

    (b)
prepare and file with the Commission such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement continuously effective during the
Effectiveness Period and comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement in accordance with the intended method of disposition set
forth in such Registration Statement for such period;

     

    (c)
furnish to each seller of Registrable Securities and to each underwriter such
number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the intended disposition of the Registrable
Securities covered by such Registration Statement;

     

    (d) use
its commercially reasonable efforts (i) to register or qualify the Registrable
Securities covered by such Registration Statement under the securities or “blue
sky” laws of such jurisdictions as the sellers of Registrable Securities or, in
the case of an underwritten public offering, the managing underwriter,
reasonably shall request, (ii) to prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements, and take such
other actions, as may be necessary to maintain such registration and
qualification in effect at all times for the period of distribution contemplated
thereby and (iii) to take such further action as may be necessary or advisable
to enable the disposition of the Registrable Securities in such jurisdictions,
provided, that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;

     

    
      
         

      

      
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    (e) use
its commercially reasonable efforts to list the Registrable Securities covered
by such Registration Statement with any securities exchange on which the Common
Stock of the Company is then listed;

     

    (f)
immediately notify each seller of Registrable Securities and each underwriter
under such Registration Statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such Registration Statement, as then in effect, includes
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and promptly amend or
supplement such Registration Statement to correct any such untrue statement or
omission;

     

    (g)
promptly notify each seller of Registrable Securities of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose and make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible
time;

     

    (h) if
the offering is an underwritten offering, enter into a written agreement with
the managing underwriter selected in the manner herein provided in such form and
containing such provisions as are usual and customary in the securities business
for such an arrangement between such underwriter and companies of the Company’s
size and investment stature, including, without limitation, customary
indemnification and contribution provisions;

     

    (i) if
the offering is an underwritten offering, at the request of any seller of
Registrable Securities, use its commercially reasonable efforts to furnish to
such seller on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration: (i) a copy of an opinion
dated such date of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, stating that such Registration
Statement has become effective under the Securities Act and that (A) to the
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the Registration
Statement, the related prospectus and each amendment or supplement thereof
comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as to
financial statements or other financial or statistical information contained
therein) and (C) to such other effects as reasonably may be requested by counsel
for the underwriters; and (ii) a copy of a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the Registration Statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request;

     

    
      
         

      

      
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    (j) take
all actions reasonably necessary to facilitate the timely preparation and
delivery of certificates (not bearing any legend restricting the sale or
transfer of such securities) representing the Registrable Securities to be sold
pursuant to the Registration Statement and to enable such certificates to be in
such denominations and registered in such names as the Investor or any
underwriters may reasonably request; and

     

    (k) take
all other reasonable actions necessary to expedite and facilitate the
registration of the Registrable Securities pursuant to the Registration
Statement.

     

    4. Obligations of
Investor.  The Investor shall furnish to the Company such
information regarding such Investor, the number of Registrable Securities owned
and proposed to be sold by it, the intended method of disposition of such
securities and any other information as shall be required to effect the
registration of the Registrable Securities, and cooperate with the Company in
preparing the Registration Statement and in complying with the requirements of
the Securities Act.

     

    5. Expenses.

     

    (a) All
expenses incurred by the Company in complying with Sections 2 and 3 including,
without limitation, all registration and filing fees (including the fees of the
Securities and Exchange Commission and any other regulatory body with which the
Company is required to file), printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, and fees of transfer agents and registrars are
called “Registration Expenses.” All underwriting discounts and selling
commissions applicable to the sale of Registrable Securities are called “Selling
Expenses.”

     

    (b) The
Company will pay all Registration Expenses in connection with any Registration
Statement filed hereunder, and the Selling Expenses in connection with each such
Registration Statement shall be borne by the participating sellers in proportion
to the number of Registrable Securities sold by each or as they may otherwise
agree.

     

    6. Indemnification and
Contribution.

     

    (a) In
the event of a registration of any of the Registrable Securities under the
Securities Act pursuant to the terms of this Agreement, the Company will
indemnify and hold harmless and pay and reimburse, each seller of such
Registrable Securities thereunder, each underwriter of such Registrable
Securities thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Securities Act
pursuant hereto or any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation or alleged violation of the Securities Act or any state
securities or blue sky laws and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon the Company’s reliance on an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such seller, any such
underwriter or any such controlling person in writing specifically for use in
such Registration Statement or prospectus.

     

    
      
         

      

      
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    (b) In
the event of a registration of any of the Registrable Securities under the
Securities Act pursuant hereto each seller of such Registrable Securities
thereunder, severally and not jointly, will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the Registration
Statement, each director of the Company, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
reliance on any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant hereto or, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, that such seller will be liable hereunder in any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller specifically for use in such Registration
Statement or prospectus, and provided that, the liability of each seller
hereunder shall be limited to the proceeds received by such seller from the sale
of Registrable Securities covered by such Registration
Statement.  Notwithstanding the foregoing, the indemnity provided in
this Section 6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected without
the consent of such indemnified party and provided further, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability (or action in respect thereof) arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission in such Registration Statement, which untrue statement or alleged
untrue statement or omission or alleged omission is completely corrected in an
amendment or supplement to the Registration Statement and the undersigned
indemnitees thereafter fail to deliver or cause to be delivered such
Registration Statement as so amended or supplemented prior to or concurrently
with the sale of the Registrable Securities to the person asserting such loss,
claim, damage or liability (or actions in respect thereof) or expense after the
Company has furnished the undersigned with the same.

     

    
      
         

      

      
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    (c)
Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 6 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 6 if and to the extent the indemnifying party is materially prejudiced
by such omission.  In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected, provided that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon written advise of its counsel that there may be reasonable defenses
available to it which are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.

     

    (d) In
order to provide for just and equitable contribution to joint liability under
the Securities Act in any case in which either (i) any holder of Registrable
Securities exercising rights under this Agreement, or any controlling person of
any such holder, makes a claim for indemnification pursuant to this Section 6
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 6 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
6; then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; provided, that, in any such case, (A) no such holder will be required
to contribute any amount in excess of the public offering price of all such
Registrable Securities offered by it pursuant to such Registration Statement and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 12 (f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

     

    
      
         

      

      
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    7. Changes in Capital
Stock.  If, and as often as, there is any change in the capital
stock of the Company by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue as so changed.

     

    8. Representations and
Warranties of the Company.  The Company represents and warrants
to the Investor as follows:

     

    (a) The
execution, delivery and performance of this Agreement by the Company have been
duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Articles of Incorporation or By-laws of the Company or any provision of any
indenture, agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company or its subsidiaries.

     

    (b) This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to any applicable bankruptcy, insolvency or
other laws affecting the rights of creditors generally and to general equitable
principles and the availability of specific performance.

     

    9. Rule 144
Requirements.  The Company agrees to:

     

    (a) make
and keep current public information about the Company available, as those terms
are understood and defined in Rule 144;

     

    (b) use
its commercially reasonable efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and

     

    (c)
furnish to any holder of Registrable Securities upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company, and (iii) such other reports
and documents of the Company as such holder may reasonably request to avail
itself of any similar rule or regulation of the Commission allowing it to sell
any such securities without registration.

     

    
      
         

      

      
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    10. Termination.  All
of the Company’s obligations to register Registrable Shares under Sections 2 and
3 hereto shall terminate upon the date on which the Investor holds no
Registrable Securities or all of the Registrable Securities are eligible for
resale under Rule 144.

     

    11. Miscellaneous.

     

    (a) All
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto (including without limitation
transferees of any Registrable Securities), whether so expressed or
not.

     

    (b) All
notices, requests, consents and other communications hereunder shall be in
writing and shall be delivered in person, mailed by certified or registered
mail, return receipt requested, or sent by telecopier, addressed (i) if to the
Company, at Deer Consumer Products, Inc., c/o The Newman Law Firm, PLLC, 14 Wall
Street, 20th Floor,
New York, New York 10005 USA, Attn: Robert Newman, Esquire, phone (631)
458-0540, facsimile (212) 202-6055; and (ii) if to any holder of Registrable
Securities, to it at such address as may have been furnished to the Company or
its counsel in writing by such holder; or, in any case, at such other address or
addresses as shall have been furnished, in writing to the Company or its counsel
(in the case of a holder of Registrable Securities) or to the holders of
Registrable Securities (in the case of the Company) in accordance with the
provisions of this paragraph.

     

    (c) This
Agreement shall be governed by and construed under the laws of the State of New
York, without giving effect to principles of conflicts of laws.  The
Company and Investor (1) agree that any legal suit, action or proceeding arising
out of or relating to this Agreement shall be instituted exclusively in any
state court located in New York, New York or in the United States District Court
for the Southern District of New York, (2) waive any objection which the Company
or Investor may have now or hereafter to the venue of any such suit, action or
proceeding, and (3) irrevocably consent to the jurisdiction of any state court
located in New York, New York, and the United States District Court for the
Southern District of New York in any such suit, action or
proceeding.  The Company and Investor further agree to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in any state court located in New York, New York, or in the
United States District Court for the Southern District of New York and agree
that service of process upon the Company or Investor mailed by certified mail
to, in the case of the Company, the Company’s address, and in the case of the
Investor, to the Investor’s address as set forth on the Company’s books and
record, shall be deemed in every respect effective service of process upon the
Company, in any such suit, action or proceeding.  THE PARTIES HERETO
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY.

     

    (d) In
the event of a breach by the Company or by the Investor, of any of their
obligations under this Agreement, the Investor or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.  The Company
and the Investor agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (e) This
Agreement may not be amended or modified without the written consent of the
Company and the Investor.

     

    (f)
Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.  No waiver shall be effective unless and
until it is in writing and signed by the party granting the waiver.

     

    (g) This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.

     

    (h) If
any provision of this Agreement shall be held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render illegal, invalid
or unenforceable any other provision of this Agreement, and this Agreement shall
be carried out as if any such illegal, invalid or unenforceable provision were
not contained herein.

     

    (i) This
Agreement constitutes the entire contract among the Company and the Investor
relative to the subject matter hereof and supersedes in its entirety any and all
prior agreements, understandings and discussions with respect
thereto.

     

    (j) The
headings of the sections of this Agreement are for convenience and shall not by
themselves determine the interpretation of this Agreement.

     

    [The
Remainder of this Page is intentionally left blank]

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

       

    

    [Signature
Page to the Registration Rights Agreement]

     

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

     

    
      
        	 	      
                COMPANY

                 

                DEER
      CONSUMER PRODUCTS, INC.

              	 
	
                 

              	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	Name:
      Ying He	 
	 	      
                Title:   Chief
      Executive Officer

              	 
	 	 	 	 
	 	 	 	 
	 	INVESTOR	 
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

       

      
        
           

        

        
          12Unassociated Document

    
       

      EXHIBIT
10.1

      

      AGREEMENT FOR SALE AND
PURCHASE OF BUSINESS ASSETS

    

     

    This
AGREEMENT FOR SALE AND PURCHASE OF BUSINESS ASSETS (this “Agreement”), dated as of March
31, 2009, is between Middletown & New Jersey Railway Company, Inc., a New
York corporation (the “Seller”), Chartwell
International Inc., a Nevada corporation (the “Selling Shareholder”) and
Middletown & New Jersey Railroad, LLC., a  Delaware limited
liability company (the “Buyer”).

     

    RECITALS

     

    A.          
The Seller operates a business primarily engaged in railroad freight services
serving central Orange County in Middletown, New York south to the Slate Hill
(the “Business”).  The
Seller’s principal place of business is 140 East Main St., Middletown, NY
10940.  The Seller owns equipment, inventory, contract rights,
leasehold interests, real property, and miscellaneous assets used in connection
with the operation of its business.

     

    B.          
The Buyer desires to acquire substantially all the assets used or useful, or
intended to be used, in the operation of the Seller’s business, and the Seller
desires to sell such assets to the Buyer.

     

    C.          
The Selling Shareholder is the sole shareholder of the Seller.

     

    AGREEMENT

     

    The
parties agree as follows:

     

    
      
        	
                SECTION
      1

              	
                ASSETS
      PURCHASED; LIABILITIES
ASSUMED

              

      

    

     

    1.1          
Assets
Purchased.  The Seller agrees
to sell to the Buyer and the Buyer agrees to purchase from the Seller, on the
terms and conditions set forth in this Agreement, the following assets (the
“Assets”):

     

    (a)           All
equipment (including 3 locomotives), tools, furniture, and fixtures held by
Seller and currently used for the conduct of the Business, including without
limitation all such items listed on attached Schedule 1.1(a), together with
any replacements or additions to the equipment made before the
Closing;

     

    (b)           All
inventories of supplies, raw materials, parts, and finished goods inventory
owned by the Seller and currently used for the conduct of the Business,
including without limitation all such items listed on attached Schedule 1.1(b), together with
any replacements or additions to the inventories made before the Closing, but
excluding inventory disposed of in the ordinary course of the Seller’s
business;

     

    (c)           All
the Seller’s rights under Contracts held by Seller and currently used for the
conduct of the Business, including without limitation all such items listed on
Schedule
9.6;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)           All
the Seller’s rights under purchase orders held by Seller and currently used for
the conduct of the Business, including those entered into in the ordinary course
of business before the Closing, including such items listed on Schedule 1.1(d);

     

    (e)           The
Seller’s business and goodwill;

     

    (f)           All
patents, trademarks, trade names, copyrights, service marks, and domain names of
the Seller held by the Seller and currently used for the conduct of the
Business, including without limitation all such items listed on Schedule 9.12, all
registrations for them, all applications pending for them, and all other
proprietary rights and intangible property of the Seller, including trade
secrets, inventions, technology, software, operating systems, customer lists,
customer relationships, customer agreements, customer understandings, drawings,
blueprints, know-how, formulae, slogans, processes, and operating rights and all
other similar items and all such items acquired by the Seller or coming into
existence on or before the Closing Date;

     

    (g)           To
the extent transferable, all approvals, authorizations, consents, licenses,
permits, franchises, tariffs, orders, and other registrations of any federal,
state, or local court or other governmental department, commission, board,
bureau, agency, or instrumentality held by the Seller and required or
appropriate for the conduct of the Business , including without limitation all
such items listed on Schedule
1.1(g) and all such items granted or received on or before the Closing
Date;

     

    (h)           All
accounts receivable and other receivables of the Seller, including without
limitation all receivables listed on Schedule 1.1(h) and all
receivables arising on or before the Closing Date, other than to the extent that
those receivables have been collected by the Seller in the ordinary course of
business before the Closing Date;

     

    (i)           All
choses in action, causes of action, rights of recovery and setoff, warranty
rights, and other similar rights of the Seller, including without limitation all
such items listed on Schedule
1.1(i) and all such items arising or acquired on or before the Closing
Date;

     

    (j)           All
prepaid and deferred items of the Seller, including without limitation prepaid
insurance, taxes, rent and unbilled charges and deposits relating to the
Business and all other such items reflected on the Financial Statements
described in Section 9.3;

     

    (k)           All
correspondence, engineering, and plant records, and other similar documents and
records relating to the Business;

     

    (l)           All
assignable rights, if any, to all telephone lines and numbers currently used in
the conduct of the Business, including without limitation those listed on Schedule 1.1(l);
and

     

    (m)           All
Real Property (as defined in Section 9.11.1 below) as listed on Schedule 9.11.1, Tangible
Personal Property (as defined in Section 9.12.1) listed on Schedule 9.11.2, all Real
Property Improvements (as defined in Section 9.11.3) and all Operating Assets
(as defined in Section 9.11.4).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.2          Liabilities
Assumed.

     

    1.2.1  The
Buyer will accept the assignment and assume responsibility for all unfilled
orders from customers of the Seller assigned to the Buyer listed on Schedule
1.1(d).  The
Buyer will assume and perform the Seller’s obligations arising on or after the
Closing Date under the Contracts listed on Schedule 9.6 and the
liabilities listed on Schedule
1.2.1.  Liabilities and obligations to be assumed by the Buyer
under this Section 1.2.1 shall be the “Assumed Liabilities”.

     

    1.2.2  Except
for the Assumed Liabilities, the Buyer will not assume and will not be liable
for any liabilities of the Seller, known or unknown, contingent or absolute,
accrued or other, and the Assets will be free of all liabilities, obligations,
liens, and encumbrances.  Without limiting the generality of the
foregoing and except as otherwise provided above, the Buyer will not be
responsible for any of the following:

     

    (a)           Liabilities,
obligations, or debts of the Seller, whether fixed, contingent, or mixed and
whether based on events occurring before or after the Closing, including without
limitation those based on tort, contract, statutory, or other claims or
involving fines or penalties payable to any governmental authority;

     

    (b)           Liabilities,
obligations, or debts of the Seller for any federal, state, or local tax,
including without limitation federal income taxes, state income and excise
taxes, state and local real and personal property taxes, and federal, state, and
local withholding and payroll taxes;

     

    (c)           Liabilities
or obligations of the Seller to employees for salaries, bonuses, or health and
welfare benefits or with respect to any profit-sharing, stock bonus, pension,
retirement, stock purchase, option, bonus, or deferred compensation plan or for
any other benefits or compensation (including without limitation accrued
vacation);

     

    (d)           Liabilities
or obligations of the Seller for employee severance payments or arrangements
resulting from termination of the Seller’s employees;

     

    (e)           Liabilities
or obligations of the Seller relating to issuances of securities;

     

    (f)           Liabilities
or obligations of the Seller incurred in connection with distributions to
shareholders or any corporate dissolution; and

     

    (g)           Liabilities
or obligations of the Seller under any environmental law.

     

    
      
        	
                SECTION
      2

              	
                EXCLUDED
      ASSETS

              

      

    

     

    The
following assets of Seller are excluded from this sale and purchase (“Excluded
Assets”):

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.1           All
cash and cash equivalents;

     

    2.2           All
bank, investment and other accounts, other than accounts
receivable;

     

    2.3           All
corporate seals, minute books, stock records and tax returns, other than as
provided in Section 22.5;

     

    2.4           All
insurance policies of Seller and all of Seller’s rights thereunder;

     

    2.5           All
Contracts, Real Property, Tangible Personal Property, and other assets of Seller
listed on attached Schedule 2.5; and

     

    2.6           All
receivables collected by Seller on or before the Closing Date with the exception
of any freight and/or fuel surcharge revenue that is received or invoiced for
the movement of any rail cars that remain on the lines of the railroad on or
after the Closing date.  Buyer shall be entitled to receive fifty percent
(50%) of all applicable freight and/or fuel surcharge revenues for those rail
cars remaining on the line on or after Closing. 

     

    
      
        	
                SECTION
      3

              	
                ALLOCATION
      OF PURCHASE PRICE

              

      

    

     

    For tax
purposes, including without limitation the filing of IRS Form 8594, the
parties agree that they will report an allocation of the Purchase Price as
provided in Schedule
3.   For all tax purposes, Buyer and the Seller agree that
the transactions contemplated by this Agreement shall be reported in a manner
consistent with the terms of this Agreement, including the allocation, and that
neither of them will take any position inconsistent therewith in any tax return,
in any refund claim, in any litigation, or otherwise.

     

    
      
        	
                SECTION
      4

              	
                PURCHASE
      PRICE

              

      

    

     

    4.1           Purchase Price.  The purchase
price for the Assets (the “Purchase Price”) will
be:

     

    (a)           $386,900;
and

     

    (b)           The
assumption by the Buyer of the Assumed Liabilities.

     

    
      
        	
                SECTION
      5

              	
                PAYMENT
      OF PURCHASE PRICE

              

      

    

     

    The price
for the Assets will be paid as follows:

     

    5.1           Escrow.  At
the Closing (or if not practical, within 1 business day after the Closing), the
Buyer will pay by wire transfer the purchase price, in the amount of $386,900
(“Escrowed Funds”) into
an escrow established with Weintraub Genshlea Chediak Law Corporation, 400
Capitol Mall, Suite 1100, Sacramento, California 95814, which funds shall be
released pursuant to the terms of a separate agreement between Buyer and Seller
(“Escrow Agreement”)
concerning the resolution of i) title report and title insurance with respect to
all Real Property and Real Property Improvements acquired pursuant to this
Agreement and ii) a certain purchase and sale agreement entered into by Seller
and Harold J. Rasmussen, dated May 2, 2007, relating to a portion of the Real
Property (“Rasmussen
Property”). 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.2           Title Insurance/Title
Report/UCC Termination.  Within 75 days after the Closing Date,
Seller shall have provided at its sole expense i)  a standard owner’s
title insurance policy in the amount of $200,000, insuring title vested in the
Buyer to the Real Property and Real Property Improvements, subject only to
non-delinquent real property taxes and assessments and any other matter revealed
by the final title report delivered to Buyer and not objected to by the Buyer
(“Title Policy”) and ii)
evidence of termination or release of UCC financing statements affecting the
Assets.  During the 75 day timeframe, Seller will provide periodic
updates with respect to the Title Policy.  If this Section 5.2
post-closing condition is satisfied within the 75 day timeframe, Buyer will
direct the Escrow Agent to make a payment in the amount of the Escrowed Funds
less $30,000 to the Seller.  If this Section 5.2 post-closing
condition is not satisfied within the 75 day timeframe, Buyer may, in its sole
discretion without any input or approval needed from Seller, direct the Escrow
Agent to make payment of all Escrowed Funds (including the $30,000 relating to
the Rasmussen Property) to Buyer and this Agreement will be
rescinded.

     

    5.3           Rasmussen
Issue.  Subject first to the release of Escrow Funds to Seller
pursuant to Section 5.2, the remaining $30,000 of Escrow Funds will be paid to
Seller upon the earlier of Seller providing written evidence of:

     

    (a)
Harold J. Rasmussen legally subdividing a portion of the Real Property relating
to the Rasmussen Property; or

     

    (b)
Seller entering into a definitive purchase agreement with Mr. Rasmussen to
repurchase the Rasmussen Property for $30,000, Seller agreeing in writing to
cause the Rasmussen Property to be quitclaimed to Buyer, and a general release
and indemnification by Mr. Rasmussen and Seller of any of their rights to the
Rasmussen Property for the benefit of Buyer.

     

    If this
Section 5.3 post-closing condition is not satisfied within 6 months after the
Closing Date, Buyer may, in its sole discretion without any input or approval
needed from Seller, direct the Escrow Agent to make payment of the Escrowed
Funds to Buyer.

     

    
      
        	
                SECTION
      6

              	
                ADJUSTMENTS

              

      

    

     

    The
operation of the Business and related income and expenses up to the close of
business on the day before the Closing will be for the account of the Seller and
from and after the day of the Closing for the account of the
Buyer.  Expenses, including but not limited to utilities, personal
property taxes, rents, wages, vacation pay, payroll taxes, and fringe benefits
of employees of the Seller, will be prorated between the Seller and the Buyer as
of the close of business on the Closing, the proration to be made and paid,
insofar as reasonably possible, on the Closing, with settlement of any remaining
items to be made within 30 days after the Closing.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        	
                SECTION
      7

              	
                OTHER
      AGREEMENTS

              

      

    

     

    At the
Closing, the parties will execute the following additional agreements (the
“Related
Agreements”):

     

    (a)           The
Escrow Agreement between the Buyer and the Seller as it relates to the release
of the Escrowed Funds, substantially in the form attached as Exhibit A;

     

    (b)           The
Assignment and Assumption Agreement, substantially in the form attached as Exhibit B;

     

    (c)           The
Bill of Sale, substantially in the form attached as Exhibit C; and

     

    (d)           A
Bargain and Sale Deed transferring title to Real Property from Seller to Buyer,
substantially in the form attached as Exhibit D

     

    (e)           Agreement
terminating and/or revoking Tom Winnant power of attorney to negotiate certain
transactions on Seller’s behalf .

     

    
      
        	
                SECTION8

              	
                [Intentionally Left
      Blank]

              

      

    

     

    
      
        	
                SECTION
      9

              	
                SELLER’S
      AND SELLING SHAREHOLDER’S REPRESENTATIONS AND
  WARRANTIES

              

      

    

     

    Subject to, and except as disclosed by
the Seller in the Schedule of Exceptions in a numbered paragraph that
corresponds to the section for which disclosure is made, the Seller and the
Selling Shareholder represent and warrant to the Buyer as set forth
below.  For purposes of this Agreement, “Seller’s Knowledge” means the
current, actual knowledge, after reasonable investigation in the exercise of
one’s duties, of the officers of the Selling Shareholder or the
Seller.  As used in this Agreement, “Material Adverse Effect” means a
material adverse effect on the business, results of operations, financial
position, assets, or prospects of the Seller, which will in any event include
any adverse effect on the Seller’s equity, assets, revenue, or net income of the
Seller in excess of $10,000; and “Material Adverse Change” means any change that
has resulted, will result or is likely to result in a Material Adverse
Effect.

     

    9.1           Corporate
Existence. The Seller is a
corporation duly incorporated and legally existing under the laws of the state
of New York and is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify except where
the failure to so qualify would not have a Material Adverse Effect on the
Business.  The Seller has all requisite corporate power and authority
and all material licenses, permits, and authorizations necessary to own and
operate the Assets and to carry on its business as now conducted.  The
copies of the Seller’s charter documents and bylaws that have been furnished to
the Buyer’s counsel reflect all amendments made thereto at any time before the
Closing Date and are correct and complete.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    9.2           Authorization. The execution, delivery,
and performance of this Agreement and the Related Agreements to which the Seller
or the Selling Shareholder is a party have been duly authorized by the Seller or
the Selling Shareholder, as the case may be.  This Agreement and the
Related Agreements, when executed and delivered by the parties thereto, will
constitute the legal, valid, and binding obligation of the Seller or the Selling
Shareholder, as the case may be, enforceable against the Seller or the Selling
Shareholder, as the case may be, in accordance with their respective terms
except as enforceability may be limited by bankruptcy, reorganization,
insolvency, or similar laws affecting the enforcement of creditors’ rights or by
the application of general principles of equity.  Except as set forth
on Schedule 9.2, the
execution and delivery by the Seller and the Selling Shareholder of this
Agreement and the Related Agreements to which the Seller or the Selling
Shareholder is a party, and the fulfillment of and compliance with the
respective terms hereof and thereof by the Seller or the Selling Shareholder, do
not and will not (a) conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any Contract, (b)
result in the creation of any lien, security interest, charge, or encumbrance on
the Assets, (c) result in a violation of the charter or bylaws of the Seller or
the Selling Shareholder or any law, statute, rule, or regulation to which the
Seller or the selling Shareholder is subject, or any order, judgment, or decree
to which the Seller or the Selling Shareholder is subject, or (d) require any
authorization, consent, approval, exemption, or other action by or notice to any
court or administrative or governmental body.

     

    9.3           Financial
Statements. The unaudited balance
sheet of the Seller at December 31, 2008, in the form attached to this Agreement
as Schedule 9.3 (the
“2008 Balance Sheet”), fairly
presents the financial position of the Seller at December 31, 2008, and the
unaudited income statement of the Seller for the year ended December 31, 2008,
in the form attached to this Agreement as Schedule 9.3 (the “2008 Income Statement”),
fairly present the results of operations of the Seller for the year ended
December 31, 2008, and both have been prepared in a manner substantially
consistent with prior financial statements of the Seller.  The 2008
Balance Sheet and the 2008 Income Statement are referred to collectively in this
Agreement as the “Unaudited
Statements.” The unaudited balance sheet at February 28, 2009, in the
form attached to this Agreement as Schedule 9.3 (the “Current Balance Sheet”) and
the income statement of the Seller for the 2 months then ended, in the form
attached to this Agreement as Schedule 9.3 (the “Unaudited Financial
Statements”), fairly present the financial position of the Seller at
February 28, 2009, and the results of operations for the 8 months then ended and
have been prepared in accordance with generally accepted accounting principles
(GAAP), consistently applied, and in a manner substantially consistent with the
Unaudited Statements.  The Unaudited Statements and the Unaudited
Financial Statements are collectively referred to as the “Financial
Statements.”

     

    9.4           Brokers and
Finders. The
Seller and/or the Selling Shareholder has employed Strategic Rail Finance as a
broker or finder in connection with the transactions contemplated by this
Agreement.   Seller and/or Selling Shareholder will assume
responsibility for all brokerage commission, finder’s fee, or other like payment
owed to Strategic Rail Finance and will indemnify Buyer against any claim for
such payment.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    9.5           Transfer Not Subject to
Encumbrances or Third-Party Approval. Except as set forth on
Schedule 9.5 and to
Seller’s Knowledge, the execution and delivery of this Agreement and the Related
Agreements by the Seller and the Selling Shareholder, and the consummation of
the contemplated transactions, will not result in the creation or imposition of
any valid lien, charge, or encumbrance on any of the Assets, and will not
require the authorization, consent, or approval of any third party, including
any governmental subdivision or regulatory agency.

     

    9.6           Contracts.  Schedule 9.6
contains a complete and accurate list of each contract, agreement, instrument,
lease, purchase order, sales order, document and commitment (including license
agreements) to which the Seller is a party (the “Contracts”).  The
Seller has delivered a copy of each Contract to the Buyer.  Except as
otherwise set forth on Schedule
9.6:

     

    (a)           The
Seller is not in default under any Contract, nor, to the Seller’s Knowledge,
does there exist any event that, with notice or the passage of time or both,
would constitute a default or event of default by the Seller under any
Contract.

     

    (b)           No
power of attorney or similar authorization given by the Seller is presently in
effect or outstanding.  No Contract limits the freedom of the Seller
to compete in any line of business or with any person.

     

    (c)           Each
of the Contracts is valid, binding, and enforceable by the Seller in accordance
with its terms and is in full force and effect, except as enforceability may be
limited by equitable principles or by bankruptcy, fraudulent conveyance or
insolvency laws affecting the enforcement of creditor’s rights generally. There
is no pending or, to Seller’s Knowledge, threatened proceeding that would
interfere with the quiet enjoyment of any leasehold of which the Seller is the
lessee or sublessee.  Except as set forth on Schedule 9.6(c), all other
parties to the Contracts have consented or, before the Closing, will have
consented (when such consent is necessary) to the consummation of the
transaction contemplated by this Agreement without requiring modification of the
Seller’s rights or obligations under any Contract.

     

    (d)           To
Seller’s Knowledge there is no default by any other party to any Contract or of
any event that (whether with or without notice, lapse of time, or both) would
constitute a default by any other party with respect to obligations of that
party under any Contract, and, to Seller’s Knowledge, there are no facts that
exist indicating that any of the Contracts may be totally or partially
terminated or suspended by the other parties.

     

    (e)           To
Seller’s Knowledge, no Contract will result in any loss to the Seller on the
performance thereof (including any liability for penalties or damages, whether
liquidated, direct, indirect, incidental, or consequential).

     

    9.7           Compliance with Codes and
Regulations. To Seller’s Knowledge,
no leasehold improvements violate any provisions of any applicable building
codes, fire regulations, building restrictions, or other ordinances, orders, or
regulations.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    9.8           Litigation. Except as set forth on
Schedule 9.8, there are
no actions, suits, proceedings, orders, investigations, or claims pending or, to
Seller’s Knowledge, threatened against the Seller or its property, at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency, or instrumentality; the Seller is not subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to Seller’s
Knowledge, any governmental investigations or inquiries; and to Seller’s
Knowledge, there is no basis for any of the foregoing.

     

    9.9           Compliance with
Laws. To
Seller’s Knowledge, (a) the Seller has at all relevant times conducted its
business in compliance with its articles of incorporation and bylaws, and is in
compliance with all applicable laws and regulations, and (b) the Seller is not
in violation of any applicable laws or regulations, other than violations that
singly or in the aggregate do not have a Material Adverse Effect on the
Business.  The Seller is not subject to any outstanding order, writ,
injunction, or decree, and the Seller has not been charged with, or to Seller’s
Knowledge threatened with a charge of, a violation of any provision of federal,
state, or local law or regulation.

     

    9.10        Employment
Matters.

     

    9.10.1  Labor
Matters.

     

    (a)           The
Seller is not a party or otherwise subject to any collective bargaining or other
agreement governing the wages, hours, or terms of employment of its
employees.

     

    (b)           There
is no (i) unfair labor practice complaint against the Seller pending before the
National Labor Relations Board or any other governmental authority, (ii) labor
strike, slowdown, or work stoppage actually occurring or, to Seller’s Knowledge,
threatened against the Seller, (iii) to Seller’s Knowledge, representation
petition regarding the Seller’s employees pending before the National Labor
Relations Board, or (iv) to Seller’s Knowledge, grievance or any arbitration
proceeding pending arising out of or under collective bargaining agreements
applicable to the Seller.

     

    (c)           The
Seller has not experienced any primary work stoppage or other organized work
stoppage involving its employees in the past two years.

     

    9.10.2  Employment
Claims. Except as disclosed on
Schedule 9.10(2), there
are no pending claims and, to Seller’s Knowledge, no threatened claims by or on
behalf of any of its employees under any federal, state, or local labor or
employment laws or regulations.

     

    9.10.3  Employee
Benefits.  Schedule 9.10(3)
lists all pension, retirement, profit-sharing, deferred compensation, bonus,
commission, incentive, life insurance, health and disability insurance,
hospitalization, and all other employee benefit plans or arrangements
(including, without limitation, any contracts or agreements with trustees,
insurance companies, or others relating to any such employee benefit plans or
arrangements) established or maintained by the Seller (the “Plans”), and complete and
accurate copies of all of the Plans have been provided to the
Buyer.  None of the Plans is a defined benefit pension plan under
Title IV of the Employee Retirement Income Security Act of 1974 (ERISA), as
amended.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    9.10.4  Employment
Agreements. Except as disclosed on
Schedule 9.10(4), each
of Seller’s employees is an “at-will” employee and there are no written
employment, commission, or compensation agreements of any kind between the
Seller and any of its employees.  Schedule 9.10.4 lists all the
Seller’s employment or supervisory manuals, employment or supervisory policies,
and written information generally provided to employees (such as applications or
notices), and true and complete copies of those manuals, policies, and written
information have been provided to the Buyer.  The Seller does not have
any agreements or understandings with its employees except as reflected in the
items listed on Schedules
9.10.3 and 9.10.4.

     

    9.10.5  Compensation.  Schedule 9.10.5
contains a complete and accurate list of employees, and consultants of the
Seller, specifying their names and job designations, the total amount paid or
payable as compensation to each of them, and the basis of such compensation,
whether fixed or commission or a combination thereof, and accrued benefits for
them as of the date of this Agreement.

     

    9.10.6  Severance. Except as set forth on
Schedule 9.10.6, the
Seller has no severance pay plan, policy, practice, or agreement with any of its
employees.

     

    9.11        Tangible and Operating
Assets.

     

    9.11.1  Real Property.  Schedule 9.11.1
contains a complete and accurate list of all real property owned or leased by
the Seller (the “Real
Property”).

     

    9.11.2  Personal
Property.  Schedule 9.11.2
contains a complete and accurate list of all the tangible personal property
owned by the Seller (the “Tangible Personal
Property”).

     

    9.11.3  Real Property
Improvements. All of the structures,
buildings and other improvements on the Real Property are included in the Assets
(“Real Property
Improvements”).

     

    9.11.4  All Operating
Assets.  The Assets include all the assets, properties, and
rights owned or used by the Seller in the Business, other than the Excluded
Assets (“Operating
Assets”).

     

    9.12        Intellectual
Property.  Schedule 9.12
contains a complete and accurate list of the Seller’s patents, trademarks, trade
names, copyrights, technology, domain names, know-how, processes, related
applications, and other intellectual property used in the Business (the “Intellectual
Property”).  The Seller owns all its Intellectual Property free
and clear of all liens, claims, and encumbrances.  To the Seller’s
Knowledge, the Seller’s use of its Intellectual Property does not create any
conflict with or infringe on any rights of any other person and no claims of
conflict or infringement have been asserted against the Seller.  Schedule 9.12 also describes
all agreements, licenses, permits, and other instruments under which the Seller
has acquired or been granted or sold or granted a right to use any Intellectual
Property, together with a brief description of such Intellectual
Property.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    9.13        Leases. The Seller is not a
party to any real estate leases other than the real property leases described on
Schedule
9.6.

     

    9.14        Title to and Condition of
Assets.

     

    9.14.1  The
Seller owns (and at Closing the Buyer will acquire) all the Assets free and
clear of all mortgages, pledges, security interests, options, claims, charges,
or other encumbrances or restrictions of any kind, except as set forth on Schedule 9.14.

     

    9.14.2  The
Seller has (and at Closing the Buyer will acquire) good and marketable title to
the Assets, subject to any matters disclosed in the disclosure schedules
attached to this Agreement.

     

    9.14.3  All
Tangible Personal Property has been maintained and operated in accordance with
manufacturers’ specifications and prudent industry practices, is in a good state
of maintenance and repair, ordinary wear and tear excepted, adequate for the
conduct of the Business as currently conducted except where the failure would
not have a Material Adverse Effect on the Business.

     

    9.14.4  To
Seller’s Knowledge, there are no defects or liabilities affecting any of the
Tangible Personal Property that might detract from the value of the property or
assets, interfere with any present use of any of the property or assets, or
affect the marketability of the property or assets, in each case, other than
those that will not have a Material Adverse Effect on the Business.

     

    9.14.5  The
plants, buildings, and structures included in the Real Property currently have
access to (a) public roads or valid easements over private streets or private
property for ingress to and egress from the Real Property, and (b) water supply,
storm and sanitary sewer facilities, telephone, gas and electrical connections,
fire protection, drainage, and other public utilities, in each case as is
necessary for the conduct of the Business.

     

    9.14.6  To
Seller’s Knowledge, none of the material structures on the Real Property
encroaches on real property of another person, and no structure of any other
person substantially encroaches on any of the Real Property.

     

    9.14.7  To
Seller’s Knowledge, neither the current operations on the Real Property nor any
improvements on the Real Property violate any applicable building code, zoning
requirement, or other statute or ordinance, and the Seller has not received any
notice of any pending or contemplated special assessments against the Real
Property.

     

    9.14.8  To
Seller’s Knowledge, there are no material structural defects in any structure on
the Real Property, all electrical wiring, heating, cooling, and plumbing systems
are in working order, all utility connections enter the Real Property through
either adjoining public streets or private easements that will inure to the
benefit of the Buyer; and no structures are located on utility lines or encroach
on utility rights-of-way except where any defect or deficiency would not have a
Material Adverse Effect on the Business.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    9.15        Undisclosed
Liabilities. To Seller’s Knowledge,
the Seller does not have any liability or obligation (whether absolute, accrued,
contingent, or other, and whether due or to become due) that is not accrued,
reserved against, or disclosed in the Current Balance Sheet, other than
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Current Balance Sheet or that individually or in
the aggregate will not have a Material Adverse Effect on the
Business.

     

    9.16        Absence of Certain Changes
or Events. Since the date of the
Current Balance Sheet, there has not been:

     

    (a)           To
Seller’s Knowledge, any Material Adverse Change or any event, occurrence,
development, or state of circumstances or facts that could reasonably be
expected to result in a Material Adverse Change;

     

    (b)           To
Seller’s Knowledge, any damage, destruction, or casualty loss, whether insured
against or not, to any of the Assets;

     

    (c)           Any
entry into any agreement, commitment, or transaction (including, without
limitation, any borrowing, capital expenditure, or capital financing or any
amendment, modification, or termination of any existing agreement, commitment,
or transaction) by the Seller, except agreements, commitments, or transactions
in the ordinary course of business and consistent with past practices or as
expressly contemplated in this Agreement;

     

    (d)           Any
conduct of business that is outside the ordinary course of business or not
substantially in the manner that the Seller previously conducted the
Business;

     

    (e)           Any
purchase or other acquisition of property or any sale, lease, or other
disposition of property, or any expenditure, except in the ordinary course of
business;

     

    (f)           Any
incurrence of any noncontract liability known to the Seller that, either singly
or in the aggregate, is material to the Business, results of operations,
financial condition, or prospects of the Seller;

     

    (g)           Any
encumbrance or consent to encumbrance of any property or assets except in the
ordinary course of business; or

     

    (h)           To
Seller’s Knowledge, any material change in the assets, liabilities, licenses,
permits, or franchises of the Seller, or in any material agreement to which the
Seller is a party or is bound, which has had or reasonably could be expected to
have a Material Adverse Effect on the Business.

     

    9.17        Environmental
Conditions.

     

    9.17.1  Definitions. As used in this
Agreement,

     

    (a)           “Environmental Law” means any
federal, state, or local statute, ordinance, or regulation pertaining to the
protection of human health or the environment and any applicable orders,
judgments, decrees, permits, licenses, or other authorizations or mandates under
such statutes, ordinances, or regulations; and

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (b)           “Hazardous Substance” means any
hazardous, toxic, radioactive, or infectious substance, material, or waste as
defined, listed, or regulated under any Environmental Law.

     

    9.17.2  Compliance. Except as disclosed on
Schedule 9.17, to
Seller’s Knowledge, the Seller, the Business, and the Assets are in material
compliance with all Environmental Laws and the Seller has all permits required
under Environmental Laws in connection with the construction, ownership, or
operation of the Assets and the Seller’s business except where the failure to do
so would not have a Material Adverse Effect on the Business.  The
Seller is not aware of and has not received notice of any past or present,
conditions, activities, investigation, studies, plans, or proposals that (a)
would interfere with or prevent compliance by the Seller, the Business, or the
Assets with any Environmental Law or (b) result in any common-law or other
liability, or otherwise, to Seller’s Knowledge, form the basis of a claim,
action, suit, proceeding, hearing, or investigation, involving the Seller, the
Business, or the Assets and related in any way to Hazardous Substances or
Environmental Laws.

     

    9.17.3  Hazardous
Substances. To Seller’s Knowledge,
except as disclosed on Schedule
9.17:

     

    (a)           No
Hazardous Substance has been disposed of, spilled, leaked, or otherwise released
on, in, under, or from, or otherwise come to be located in the soil or water
(including surface water and groundwater) on or under, the Real Property or any
other real property owned, leased, or occupied by the Seller in connection with
the Business now or in the past in material violation of Environmental
Laws;

     

    (b)           None
of the Assets have incorporated into them any asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls (in electrical equipment or otherwise),
lead-based paint, or any other Hazardous Substance that is prohibited,
restricted, or regulated under Environmental Laws when present in buildings,
structures, fixtures, or equipment;

     

    (c)           All
wastes generated in connection with the Business are and have been transported
to and disposed of at an authorized waste disposal facility in compliance with
all Environmental Laws; and

     

    (d)           The
Seller is not liable under any Environmental Law for investigation, remedial,
removal, or other response costs, natural resources damages, or other claims
(including administrative orders) arising out of the release or threatened
release of any Hazardous Substance at the Real Property or any other facility,
and no basis exists for any such liability.

     

    9.17.4  Underground Storage
Tanks. To
Seller’s Knowledge, except as disclosed on Schedule 9.17, there are no
underground storage tanks on the Real Property (whether or not regulated and
whether or not out of service, closed, or decommissioned).

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    9.17.5  Environmental
Records. Except as disclosed on
Schedule 9.17, the
Seller has disclosed and made available to the Buyer true, complete, and correct
copies or results of any reports, studies, analysis, tests, monitoring,
correspondence with governmental agencies, or other documents in the possession
of or initiated by the Seller or otherwise known to the Seller and pertaining to
the existence of Hazardous Substances, to compliance with Environmental Laws, or
to any other environmental concern relating to the Assets or the
Business.  Notwithstanding the foregoing, Seller makes no
representations or warranties regarding, and shall have no liability with regard
to the accuracy or correctness of the content of any such materials produced or
prepared by any third party.

     

    9.18        Receivables. Each of the Seller’s
receivables (including accounts receivable, loans receivable, and advances) that
is reflected in the Current Balance Sheet, and each of the receivables that has
arisen since that date, has arisen only from bona fide transactions in the
ordinary course of the Business. 

     

    9.19        Accuracy of Representations
and Warranties. None of the
representations or warranties of the Seller or the Selling Shareholder contains
any untrue statement of a material fact or to Seller’s Knowledge, omit or
misstate a material fact necessary in order to make statements in this Agreement
not misleading..

     

    
      
        	
                SECTION
      10

              	
                REPRESENTATIONS
      OF BUYER

              

      

    

     

    The Buyer
represents and warrants to the Seller and the Selling Shareholder as
follows:

     

    10.1         Corporate
Existence. The Buyer is a limited
liability company duly organized and legally existing under the laws of the
state of Delaware.  The Buyer has all requisite power and authority to
enter into this Agreement and the Related Agreements and to perform its
obligations under them.

     

    10.2         Authorization. The execution, delivery,
and performance of this Agreement and the related agreements have been duly
authorized and approved by the Manager and Members of the Buyer.  This
Agreement and the Related Agreements constitute valid and binding agreements of
the Buyer, enforceable in accordance with their terms, except as enforceability
may be limited by bankruptcy, reorganization, insolvency, or similar laws
affecting the enforcement of creditors’ rights or by the application of general
principles of equity.

     

    10.3         Brokers and
Finders. The
Buyer has not employed any broker or finder in connection with the transactions
contemplated by this Agreement and has taken no action that would give rise to a
valid claim against any party for a brokerage commission, finder’s fee, or other
like payment.

     

    10.4         No Conflict with Other
Instruments or Agreements. The execution, delivery,
and performance by the Buyer of this Agreement and the Related Agreements will
not result in a breach or violation of, or constitute a default under, the
Buyer’s Articles of Incorporation or Bylaws or any material agreement to which
the Buyer is a party or by which the Buyer is bound.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    10.5         Governmental
Authorities. Except as set forth on
Schedule 10.5, (a) the
Buyer is not required to submit any notice, report, or other filing with any
governmental or regulatory authority in connection with the execution and
delivery by the Buyer of this Agreement and the Related Agreements and the
consummation of the purchase and (b) no consent, approval, or authorization of
any governmental or regulatory authority is required to be obtained by the Buyer
in connection with the Buyer’s execution, delivery, and performance of this
Agreement and the Related Agreements and the consummation of the purchase of the
Assets.

     

    10.6         Litigation. Except as set forth on
Schedule 10.6, there are
no actions, suits, proceedings, orders, investigations, or claims pending or, to
Buyer’s actual knowledge, threatened against the Buyer or its property, at law
or in equity, or before or by any governmental department, commission, board,
bureau, agency, or instrumentality; to Buyer’s actual knowledge, the Buyer is
not subject to any arbitration proceedings under collective bargaining
agreements or otherwise or any governmental investigations or
inquiries.

     

    10.7         Accuracy of Representations
and Warranties. None of the
representations or warranties of the Buyer contain any untrue statement of a
material fact.

     

    
      
        	
                SECTION
      11

              	
                COVENANTS
      OF SELLER AND SELLING
SHAREHOLDER

              

      

    

     

    11.1         Seller’s Operation of
Business Before Closing. The Seller and the
Selling Shareholder agree that between the date of this Agreement and the
Closing, the Seller will:

     

    (a)           Continue
to operate the Business in the usual and ordinary course and in substantial
conformity with all applicable laws, ordinances, regulations, rules, or orders,
and will use its best efforts to preserve its business organization and to
preserve the continued operation of its business with its customers, suppliers,
and others having business relations with the Seller;

     

    (b)           Not
assign, sell, lease, or otherwise transfer or dispose of any of the Assets used
in the performance of the Business, whether now owned or hereafter acquired,
except in the normal and ordinary course of business and in connection with its
normal operation;

     

    (c)           Maintain
all the Assets in their present condition, reasonable wear and tear and ordinary
usage excepted; and

     

    (d)           Notify
the Buyer promptly in the event of any material change in the Assets or the
Seller’s business before Closing.

     

    11.2         Access to Premises and
Information. At reasonable times
before the Closing, the Seller will provide the Buyer and its representatives
with reasonable access during business hours to the assets, titles, contracts,
and records of the Seller and furnish such additional information concerning the
Seller’s business as the Buyer from time to time may reasonably
request.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    11.3         Employee
Matters.

     

    11.3.1  Before
the Closing, the Seller will deliver to the Buyer a statement of amounts paid to
Harold Rasmussen (collectively, “Identified Employees”) during
the Seller’s most recent fiscal year and amounts paid for services from the
beginning of the current fiscal year to the Closing.  Before the
Closing, the Seller will also provide the Buyer with any employee bonus
arrangement and a schedule of other material compensation or personnel benefits
or policies in effect with respect to the Identified Employees.

     

    11.3.2  Before
the Closing, the Seller will not, without the Buyer’s prior written consent,
enter into any material agreement with its employees, increase the rate of
compensation or bonus payable to or to become payable to any employee, or effect
any changes in the management, personnel policies, or employee benefits, except
in accordance with existing employment practices.

     

    11.3.3  As
of the Closing, the Seller will terminate all of its employees and will pay each
employee all wages, commissions, and accrued vacation pay earned up to the time
of termination, including overtime pay.

     

    11.4         Change of Name. At the Closing, the
Seller will take all action necessary or appropriate to permit the Buyer to
legally commence operating the Business under Buyer’s name as of the day after
Closing.

     

    11.5         Conditions and Best
Efforts. The
Seller and the Selling Shareholder will use their best efforts to effectuate the
transactions contemplated by this Agreement and the Related Agreements and to
fulfill all the conditions of their obligations under this Agreement and the
Related Agreements, and will do all acts and things as may be required to carry
out their respective obligations under this Agreement and the Related
Agreements.

     

    11.6         No Negotiations with
Others. Except as otherwise
permitted by this Agreement, or with the Buyer’s prior written consent, the
Seller and the Selling Shareholder will refrain, and will cause the Seller’s
officers, directors, and employees and any investment banker, lawyer,
accountant, or other agent retained by the Seller or the Selling Shareholder to
refrain, from initiating or soliciting any inquiries or making any proposals
with respect to, or engaging in negotiations concerning, or providing any
confidential information or data to, or having any discussions with any person
relating to, any acquisition, business combination or purchase of all or any
significant portion of the Assets of, or any equity interest in, the
Seller.  The Seller and the Selling Shareholder will immediately cease
and cause to be terminated any existing activities, discussions, or negotiations
with any parties conducted heretofore with respect to any of the
foregoing.

     

    11.7         Press Releases. No press releases, other
public announcements, or notices to customers concerning the transactions
contemplated by this Agreement will be made by the Seller or the Selling
Shareholder without the Buyer’s prior written consent, which consent will not be
unreasonably withheld; however, nothing in this section will prevent a party
from supplying such information or making statements as required by governmental
authority (prompt notice of which must in any such case be given to the other
party or parties) or in order for a party to satisfy its legal obligations under
U.S. securities laws.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      
        	
                SECTION
      12

              	
                COVENANTS
      OF BUYER

              

      

    

     

    12.1         Conditions and Best
Efforts. The
Buyer will use its best efforts to effectuate the transactions contemplated by
this Agreement and the Related Agreements and to fulfill all the conditions of
the Buyer’s obligations under this Agreement and the Related Agreements, and
will do all acts and things as may be required to carry out the Buyer’s
obligations and to consummate this Agreement and the Related
Agreements.

     

    12.2         Confidential
Information. If for any reason the
sale of Assets contemplated by this Agreement is not consummated, the Buyer will
promptly return to the Seller and will not disclose to third parties any
confidential information received from the Seller in the course of
investigating, negotiating, and performing the transactions contemplated by this
Agreement.  For purposes of this provision, “confidential information
shall mean” all information provided or disclosed by Seller to Buyer, except for
such information that (a) was
rightfully in the possession of, or was known by, the Buyer prior to its receipt
from Seller, free of any obligation of confidence; (b) is or becomes generally
known to the public without violation of this Agreement; (c) is obtained by the
Buyer from a third party, without an obligation to keep such information
confidential; or (d) is independently developed by the Buyer without use of or
reference to the confidential information.

     

    12.3         Press Releases. No press releases, other
public announcements, or notices to customers concerning the transactions
contemplated by this Agreement will be made by the Buyer without the prior
written consent of the Seller, which consent will not be unreasonably withheld;
however, nothing in this section will prevent a party from supplying such
information or making statements as required by governmental authority or in
order for a party to satisfy its legal obligations (prompt notice of which must
in any such case be given to the other party or parties).

     

    
      
        	
                SECTION
      13

              	
                CONDITIONS
      PRECEDENT TO BUYER’S
OBLIGATIONS

              

      

    

     

    The
obligation of the Buyer to purchase the Assets is subject to the fulfillment,
before or at the Closing, of each of the following conditions, any one or
portion of which may be waived in writing by the Buyer:

     

    13.1         Representations, Warranties,
and Covenants of Seller and Selling Shareholder. All representations and
warranties made in this Agreement by the Seller and the Selling Shareholder will
be true in all material respects as of the Closing and neither the Seller nor
the Selling Shareholder will have violated or will have failed to perform in
accordance with any covenant contained in this Agreement or the Related
Agreements.

     

    13.2         Licenses and
Permits. The
Buyer will have obtained all licenses and permits from public authorities
necessary to authorize the ownership and operation of a business using the
Assets.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    13.3         Consents. The Seller will have
obtained the third-party consents required under the terms of the Contracts to
be assigned by it under this Agreement, and such consents will not have required
any change to the terms and conditions of the Contracts other than changes
consented to in writing by the Buyer.

     

    13.4         No Suits or
Actions. No
action, suit, or proceeding before any court or any governmental or regulatory
authority will have been commenced and be continuing, and no investigation by
any governmental or regulatory authority will have been commenced and be
continuing, and to each parties’ knowledge, no action, investigation, suit, or
proceeding will be threatened at the time of the Closing, against the Seller or
the Buyer or any of their affiliates, associates, officers, or directors,
seeking to restrain or prevent or questioning the validity of the transactions
contemplated by this Agreement or the Related Agreements.

     

    13.5         Material Adverse
Change. From
the date of this Agreement to the Closing, the Seller will not have suffered any
Material Adverse Change in the Business or Assets.

     

    13.6         Corporate
Action. The
Seller will have furnished to the Buyer a copy, certified by the Seller’s
secretary or assistant secretary, of the resolutions of the Seller authorizing
the execution, delivery, and performance of this Agreement and the Related
Agreements.

     

    13.7         STB
Authority.  On or before the Closing Date, Buyer shall have
obtained any necessary authority or exemption from the Surface Transportation
Board to acquire the Assets.

     

    
      
        	
                SECTION
      14

              	
                CONDITIONS
      PRECEDENT TO OBLIGATIONS OF SELLER AND SELLING
  SHAREHOLDER

              

      

    

     

    The
obligations of the Seller and the Selling Shareholder to consummate the
transactions contemplated by this Agreement and the Related Agreements are
subject to the fulfillment, before or at the Closing, of each of the following
conditions, any one or a portion of which may be waived in writing by the
Seller:

     

    14.1         Representation, Warranties,
and Covenants of Buyer. All representations and
warranties made in this Agreement by the Buyer will be true in all material
respects as of the Closing, and the Buyer will have neither violated nor failed
to perform in accordance with any covenant contained in this Agreement or the
Related Agreements.

     

    14.2         No Proceeding or
Litigation. No action, suit, or
proceeding before any court or any governmental or regulatory authority will
have been commenced and be continuing, and no investigation by any governmental
or regulatory authority will have been commenced and be continuing, and to each
parties’ knowledge, no action, investigation, suit, or proceeding will be
threatened at the time of the Closing, against the Seller or the Buyer or any of
their affiliates, associates, officers, or directors, seeking to restrain or
prevent questioning the validity of the transactions contemplated by this
Agreement or the Related Agreements.

     

    14.3         Corporate
Action. The
Buyer will have furnished to the Seller a copy, certified by the Buyer’s
secretary or assistant secretary, of the resolutions of the Buyer authorizing
the execution, delivery, and performance of this Agreement and the Related
Agreements.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      
        	
                SECTION
      15

              	
                [Intentionally
      Left Blank]

              

      

    

     

    
      
        	
                SECTION
      16

              	
                RISK
      OF LOSS

              

      

    

     

    The risk
of loss, damage, or destruction to any of the Assets will be the Seller’s
responsibility before the Closing.  In the event of such loss, damage,
or destruction, the Seller may elect at it sole option to, to the extent
reasonable, replace the lost property or repair or cause to repair the damaged
property to its condition before the damage.  If replacement, repairs,
or restorations are not completed before the Closing, then the purchase price
will be adjusted by an amount agreed on by the Buyer and the Seller that will be
required to complete the replacement, repair, or restoration after the
Closing.  If the Buyer and the Seller are unable to agree, then the
Buyer, at its sole option and notwithstanding any other provision of this
Agreement, and on notice to the Seller, may terminate this Agreement and declare
it to be of no further force and effect, in which event there will be no closing
of this Agreement and except for provisions that by their reasonable
interpretation or as expressly set forth will survive termination of this
Agreement, all the terms and provisions of this Agreement will be deemed null
and void.

     

    
      
        	
                SECTION
      17

              	
                INDEMNIFICATION
      AND SURVIVAL

              

      

    

     

    17.1         Survival of Representations
and Warranties. All representations and
warranties made in this Agreement will survive the Closing of this
Agreement.  The representations and warranties in this Agreement will
terminate one (1) year after the Closing Date, and such representations or
warranties will thereafter be without force or effect, except for any claim with
respect to which notice has been given to the potentially indemnifying party
before such expiration date.

     

    17.2         Seller’s and Selling
Shareholder’s Indemnification.

     

    17.2.1  Subject
to the limitations set forth herein, the Seller and the Selling Shareholder
hereby agree to indemnify, defend, and hold the Buyer, its successors, and
assigns harmless from and against any and all claims, liabilities, obligations,
costs, and expenses, including reasonable attorney fees, (collectively, “Damages”) arising out of or
related to:

     

    (a)           Any
material breach or inaccuracy of any representation or warranty of the Seller or
the Selling Shareholder made in this Agreement or any Related
Agreement;

     

    (b)           Any
failure by the Seller or the Selling Shareholder to perform any covenant
required to be performed by it pursuant to this Agreement or any Related
Agreement; and

     

    (c)           Any
liability or obligation of the Seller or arising out of or in connection with
the ownership, use, condition, maintenance, or operation of the Business or the
Assets by the Seller or its shareholders on or before the Closing, in either
case not expressly assumed by the Buyer in accordance with the terms of this
Agreement.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    17.2.2  If
any claim is asserted against the Buyer that would give rise to a claim by the
Buyer against the Seller or the Selling Shareholder for indemnification under
Section 17.2, then the Buyer will promptly give written notice to the
Seller concerning such claim and the Seller and the Selling Shareholder will, at
no expense to the Buyer, defend the claim.

     

    17.3         Buyer’s
Indemnification. 

     

    17.3.1  Subject
to the limitations set forth herein, the Buyer agrees to defend, indemnify, and
hold harmless the Seller, Selling Shareholder, each of their affiliates, and
their successors and assigns, from and against all Damages arising out of or
related to:

     

    (a)           Any
breach or inaccuracy of any representation or warranty of the Buyer made in this
Agreement or any Related Document;

     

    (b)           Any
failure by the Buyer to perform any covenant required to be performed by it
pursuant to this Agreement or any Related Document;

     

    (c)           Any
liability or obligation arising out of or in connection with the ownership, use,
condition, maintenance, or operation of the Assets by the Buyer from and after
the Closing; and

     

    (d)           Any
liability or obligation of the Seller to any third party expressly assumed by
the Buyer in accordance with the terms of this Agreement.

     

    17.3.2  If
any claim is asserted against the Seller that would give rise to a claim by the
Seller against the Buyer for indemnification under Section 17.3, then the
Seller will promptly give written notice to the Buyer concerning such claim and
the Buyer will, at no expense to the Seller, defend the claim.

     

    17.4         Dollar
Limitations.  Notwithstanding anything set forth in this
Section 17 to the contrary, no indemnification shall be required:

     

    17.4.1  under
Sections 17.2 and 17.3 until the total amount of the Damages under such section
exceeds $10,000, after which the indemnifying party shall have the obligation to
indemnify for the full amount of Damages without regard to such limitation;
and

     

    17.4.2  under
Sections 17.2 and 17.3, as the case may be, to the extent the total amount of
the Damages under such section exceeds the Purchase Price.

     

    17.5         Time
Limitations.  Notwithstanding anything set forth in this
Section 17 to the contrary, no indemnification shall be required:

     

    17.5.1  under
Section 17.2 (excluding any claim under Section 17.2.1(c) relating to
litigation set forth on Schedule 10.6) unless Seller and Selling Shareholder
shall have received notice of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by Buyer on or before the date
twelve (12) months after the Closing Date;

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    17.5.2  under
Section 17.2.1(c) relating to litigation set forth on Schedule 10.6 unless
Seller and Selling shareholder shall have received notice of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Buyer on or before the date 36 months after the Closing Date;.

     

    17.5.3  under
Section 17.3 unless the Buyer shall have received notice of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Seller or Selling Shareholder on or before the date twelve (12) months after the
Closing Date.

     

    17.6         Primacy of Remedies;
Calculation of Damages.

     

    17.6.1  The
amount of any Damages payable under Sections 17.2 or 17.3 by the
indemnifying party shall be net of any amounts recovered or recoverable by the
indemnified party under applicable insurance policies, or from any other person
alleged to be responsible therefor.

     

    17.6.2  The
indemnifying party shall not be liable under Sections 17.2 or 17.3 for any
incidental, consequential or punitive damages.

     

    
      
        	
                SECTION
      18

              	
                CLOSING

              

      

    

     

    18.1         Time and Place. This Agreement will be
closed at the offices of Weintraub Genshlea Chediak, at 400 Capitol Mall,
11th
Floor, Sacramento, California, on or before April 6, 2009, (“Closing Date”) or at such
other time as the parties may agree in writing (the “Closing”).

     

    18.2         Obligations of Seller and
Selling Shareholder at Closing. At the Closing, the
Seller and the Selling Shareholder will deliver to the Buyer the
following:

     

    (a)           The
Related Agreements;

     

    (b)           Any
bills of sale, assignments, properly endorsed certificates of title, and other
instruments of transfer, in form and substance reasonably satisfactory to
counsel for the Buyer, necessary to transfer and convey all of the Assets to the
Buyer;

     

    (c)           Possession
of the business facilities to be conveyed pursuant to this Agreement;
and

     

    (d)           Such
other certificates and documents as may be called for by the provisions of this
Agreement.

     

    18.3         Buyer’s Obligations at
Closing. At
the Closing, the Buyer will deliver to the Seller the following:

     

    (a)           Wire
transfer the Purchase Price to the Escrow Agent pursuant to the Escrow Agreement
;

     

    (b)           The
Related Agreements ; and

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (c)           Such
other certificates and documents as may be called for by the provisions of this
Agreement.

     

    
      
        	
                SECTION
      19

              	
                [Intentionally
      Left Blank]

              

      

    

     

    
      
        	
                SECTION
      20

              	
                [Intentionally
      Left Blank]

              

      

    

     

    
      
        	
                SECTION
      21

              	
                TERMINATION
      OF AGREEMENT

              

      

    

     

    21.1         Right of Parties to
Terminate.

     

    21.1.1  This
Agreement may be terminated by the Buyer at any time prior to Closing
if:

     

    (a)           Any
of the licenses, permits, or consents described in Sections 13.2 and 13.3 have
been denied, not permitted to go into effect, or obtained on terms not
reasonably satisfactory to the Buyer and all reasonable final appeals have been
exhausted; or

     

    (b)           The
Seller breaches any of its obligations under this Agreement in any material
respect.

     

    21.1.2  This
Agreement may be terminated by the Seller at any time prior to Closing
if:

     

    (a)           Any
of the consents described in Section 13.3 have not been obtained on terms
satisfactory to the Seller; or

     

    (b)           The
Buyer breaches any of its obligations under this Agreement in any material
respect.

     

    21.1.3  This
Agreement may be terminated by either the Seller or the Buyer, by written notice
to the other party, if the Closing fails to occur on or before April 6, 2009;
however, the right to terminate this Agreement under this Section 21.1.3 will
not be available to any party whose failure to fulfill or perform any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date.

     

    21.1.4  This
Agreement may be terminated and rescinded as provided in Section 5.2 and Section
5.3 if certain post-closing conditions are not timely satisfied.

     

    21.2         Effect of
Termination. If either the Buyer or
the Seller decides to terminate this Agreement pursuant to Section 21.1,
such party will promptly give written notice to the other party to this
Agreement of such decision.  In the event of a termination of this
Agreement, the parties to this Agreement will be released from all liabilities
and obligations arising under this Agreement (other than those described in
Section 12.2 or that survive the termination of this Agreement) with
respect to the matters contemplated by this Agreement, other than for damages
arising from a breach of this Agreement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      
        	
                SECTION
      22

              	
                MISCELLANEOUS
      PROVISIONS

              

      

    

     

    22.1         Binding
Effect.  This Agreement will be binding on and inure to the
benefit of the parties and their respective heirs, personal representatives,
successors, and assigns.

     

    22.2         Assignment.  Neither
this Agreement nor any of the rights, interests, or obligations under this
Agreement may be assigned by any party, except as provided within this
Agreement.

     

    22.3         No Third-Party
Beneficiaries.  Nothing in this Agreement, express or implied,
is intended or will be construed to confer on any person, other than the parties
to this Agreement, any right, remedy, or claim under or with respect to this
Agreement.

     

    22.4         Notices.  All
notices and other communications under this Agreement must be in writing and
will be deemed to have been given if delivered personally, sent by facsimile
(with confirmation), mailed by certified mail, or delivered by an overnight
delivery service (with confirmation) to the parties at the following addressees
or facsimile numbers (or at such other address or facsimile number as a party
may designate by like notice to the other parties):

    

    
      	
            	
              To: 

            	
              Bob
      Parker

            

    

    Middletown
& New Jersey Railroad, LLC

    505 South
Broad Street

    Kennett
Square, PA 19348

    Fax:  610.925.0135

    

    
      	
            	
              To: 

            	
              Paul
      Biberkraut

            

    

    Chief
Financial and Administrative Officer

    Chartwell
International, Inc.

    P.O. Box
976

    McLean,
VA 22101-0976

    paul.biberkraut@chartwellint.com

    

    Any
notice or other communication will be deemed to be given (a) on the date of
personal delivery, (b) at the expiration of the fourth day after the date of
deposit in the United States mail, or (c) on the date of confirmed delivery by
facsimile or overnight delivery service.  The address or facsimile
number for notice may be changed by notice in accordance with this
Section.  Each party at all times agrees to maintain a street address
to which notice can be delivered and a facsimile number hereunder.

    

    22.5         Books and
Records.  Unless precluded by applicable law, possession and
custody of the Seller’s books and records relating to the Assets will be
retained by the Buyer for a period of one years after Closing.  During
this period, the Seller will have access to such books and records required to
comply with applicable law, including the filing of tax returns, upon reasonable
advanced written request.  The Buyer will exercise reasonable care in
the safekeeping of such records.    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    22.6         Amendments.  This
Agreement may be amended only by an instrument in writing executed by all the
parties, which writing must refer to this Agreement.

     

    22.7         Construction.  The
captions used in this Agreement are provided for convenience only and will not
affect the meaning or interpretation of any provision of this
Agreement.  All references in this Agreement to “Section” or
“Sections” without additional identification refer to the Section or Sections of
this Agreement.  All words used in this Agreement will be construed to
be of such gender or number as the circumstances require.  Whenever
the words include or
including are used in
this Agreement, they will be deemed to be followed by the words without
limitation.

     

    22.8         Counterparts. This Agreement may be
executed in counterparts, each of which will be considered an original and all
of which together will constitute one and the same agreement.

     

    22.9         Facsimile
Signatures.  Facsimile transmission of any signed original
document, and retransmission of any signed facsimile transmission, will be the
same as delivery of an original.  At the request of any party, the
parties will confirm facsimile transmitted signatures by signing an original
document.

     

    22.10      Further
Assurances.  Each party agrees (a) to execute and deliver such
other documents and (b) to do and perform such other acts and things, as any
other party may reasonably request, to carry out the intent and accomplish the
purposes of this Agreement.

     

    22.11      Time of Essence. Time is of the essence
with respect to all dates and time periods set forth or referred to in this
Agreement.

     

    22.12      Expenses. Except as otherwise
expressly provided in this Agreement, each party to this Agreement will bear the
party’s own expenses in connection with the preparation, execution, and
performance of this Agreement and the transactions contemplated by this
Agreement.

     

    22.13      Waiver.  Any
provision or condition of this Agreement may be waived at any time, in writing,
by the party entitled to the benefit of such provision or
condition.  Waiver of any breach of any provision will not be a waiver
of any succeeding breach of the provision or a waiver of the provision itself or
any other provision.

     

    22.14      Governing
Law.  This Agreement will be governed by and construed in
accordance with the laws of the state of New York, without regard to
conflict-of-laws principles.

     

    22.15       Attorney
Fees.  With respect to any dispute relating to this Agreement,
or in the event that a suit, action, arbitration, or other proceeding of any
nature whatsoever is instituted to interpret or enforce the provisions of this
Agreement, including, without limitation, any proceeding under the U.S.
Bankruptcy Code and involving issues peculiar to federal bankruptcy law or any
action, suit, arbitration, or proceeding seeking a declaration of rights or
rescission, the prevailing party shall be entitled to recover from the losing
party its reasonable attorney fees, paralegal fees, expert fees, and all other
fees, costs, and expenses actually incurred and reasonably necessary in
connection therewith, as determined by the judge or arbitrator at trial,
arbitration, or other proceeding, or on any appeal or review, in addition to all
other amounts provided by law.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    22.16      Injunctive and Other
Equitable Relief. The parties agree that
the remedy at law for any breach of threatened breach by a party may, by its
nature, be inadequate, and that the other parties will be entitled, in addition
to damages, to a restraining order, temporary and permanent injunctive relief,
specific performance, and other appropriate equitable relief, without showing or
proving that any monetary damage has been sustained.

     

    22.17       Venue.  Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement will be brought against any of the parties in New
York County Circuit Court of the State of New York or, subject to applicable
jurisdictional requirements, in the United States District Court for the
District of New York, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to such venue.

     

    22.18      Exhibits.  The
exhibits referenced in this Agreement are part of this Agreement as if fully set
forth in this Agreement.

     

    22.19      Severability. If any provision of this
Agreement is invalid or unenforceable in any respect for any reason, the
validity and enforceability of such provision in any other respect and of the
remaining provisions of this Agreement will not be in any way
impaired.

     

    22.20      Entire
Agreement.  This Agreement (including the exhibits and
schedules referred to in this Agreement) constitutes the entire agreement and
understanding of the parties with respect to the subject matter of this
Agreement and supersedes all prior understandings and agreements, whether
written or oral, among the parties with respect to such subject
matter.

     

    22.21      Exhibits.  Following
are the Exhibits to the Agreement.

     

    
      	
            	
              Exhibit
      A

            	
              Escrow
      Agreement

            

    

     

    
      	
            	
              Exhibit
      B

            	
              Assignment
      and Assumption Agreement

            

    

     

    
      	
            	
              Exhibit
      C

            	
              Bill
      of Sale

            

    

     

    
      	
            	
              Exhibit
      D

            	
              Bargain
      and Sale Deed (or the form reasonably required by title
      company)

            

    

     

    22.22     [SIGNATURE
PAGE TO FOLLOW]

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    The
parties enter into this Agreement as of the date first written
above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  MIDDLETOWN & NEW JERSEY RAILWAY COMPANY, INC.,
      Seller

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  Name: 

                                	 
      
	
                                  Title:

                                	 
      
	 
      	 
      
	
                                  CHARTWELL
      INTERNATIONAL INC., Selling Shareholder

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  Name:

                                	 
      
	
                                  Title:

                                	 
      
	 
      	 
      
	
                                  MIDDLETOWN
      & NEW JERSEY RAILROAD, LLC, Buyer

                                
	 
      	 
      
	
                                  By:

                                	 
      
	
                                  Name:

                                	 
      
	
                                  Title:

                                	 
      

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        26

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