Document:

Bailey-Jamar Investment Agreement

     

    Exhibit
      10.6

     

    
      EXECUTION
        COPY

       

      AGREEMENT
        dated
        as
        of December 5, 2006 (the “Agreement”)
        by and
        between NATHANIEL
        ENERGY CORPORATION,
        a
        Delaware corporation (the “Company”),
        and
BAILEY-JAMAR,
        LLC a
        Colorado limited liability company (“Bailey-Jamar”). Additionally, the party
        defined herein as the “Joint-Venture” is a party to this Agreement as of the
        date set forth below its signature on the signature page hereof.

       

      RECITALS

      

      Bailey-Jamar
        is experienced in investing, in and managing and operating energy and
        environmental related businesses and operations.

       

      Bailey-Jamar
        desires to form a joint venture with a venture capital management company
        which
        shall hereinafter be known as the “Joint Venture.” The Joint Venture will agree
        to purchase an aggregate of 56,618,333 shares (the “Shares”) of common stock,
        $0.001 par value per share, (the “Common Stock”) of the Company upon the terms
        and conditions set forth herein.

       

      NOW,
        THEREFORE,
        for
        good and valuable consideration, the receipt and sufficiency of which is
        hereby
        acknowledged, the parties hereto hereby agree as follows:

       

      
        
          
          

        

        
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      ARTICLE
        I

      PURCHASE
        AND SALE

      

      1.1.  Purchase
        and Closing.
        Subject
        to the terms and conditions set forth in this Agreement, the Company shall
        issue
        and sell to the Joint Venture (the structure of which shall be determined
        by
        Bailey-Jamar) comprised of Bailey Jamar and a venture capital management
        company
        (the “Co-Venturer”). The Joint-Venture shall purchase from the Company the
        Shares for a purchase price of Seven Million Five Hundred Thousand Dollars
        ($7,500,000) or $0.1325 per Share payable in cash (the “Purchase Price”). The
        closing (the “Closing”) of the purchase and the sale of the 56,618,333 Shares
        (subject to delivery of the Purchase Price as provided in Section 1.2) shall
        take place at the offices of the Company, at such time as the conditions
        set
        forth in Section 1.3 have been satisfied or waived by the appropriate party,
        or
        at such other location or such later date as the parties shall agree in writing
        (such date, the “Closing Date”). 

       

      1.2.  Deliveries.
        

       

      (a)  On
        the
        Closing Date, the Joint Venture will deposit the $7,500,000 Purchase Price
        into
        escrow, with an escrow agent, and upon escrow terms, mutually agreeable to
        the
        Company and Joint Venture. 

       

      (b)  The
        Purchase Price shall be delivered to the Company on the schedule and in
        accordance with the terms (the “Funding Terms”) as set out in Schedule 2.1a
        herein.

       

      (c)  Each
        time
        the escrowed Purchase Price funds are delivered to the Company pursuant to
        the
        Funding Terms, the Company will deliver a stock certificate (the “Certificate”)
        to the Joint Venture representing the number of Shares purchased with such
        Purchase Price funds so delivered, equal to the quotient of the amount of
        such
        escrowed Purchase Price funds delivered to the Company divided by
        $0.1325.

       

      1.3.  Conditions
        to Closing.

       

      (a)  The
        obligation of the Joint-Venture to perform at the Closing is subject to
        satisfaction or waiver by the Joint-Venture of each of the following
        conditions:

       

      (i)  Representations
        and Warranties.
        The
        representations and warranties of the Company in this Agreement shall be
        true
        and correct in all material respects (except where the representation and
        warranty is already qualified as to materiality, in which case the
        representation and warranty shall be true and correct in all respects) as
        of the
        date when made and as of the Closing Date as though first made at that time
        (except for representations and warranties that speak of a specific date,
        which
        need only be true and correct as of such date).

       

      (ii)  Performance
        by the Company.
        The
        Company shall have performed, satisfied and complied in all material respects
        with all covenants and agreements required by this Agreement to be performed,
        satisfied or complied with by the Company at or prior to the Closing
        Date.

       

      
        
          
          

        

        
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      (iii)  Compliance
        Certificate.
        The
        Company shall have delivered to, or as directed by, the Joint-Venture, an
        Officer’s Certificate signed by the Company’s Chief Executive Officer, dated as
        of Closing Date, certifying that the Company has satisfied the conditions
        set
        forth in Section 1.3(a).

       

      (b)  The
        obligation of the Company to perform at the Closing is subject to satisfaction
        or waiver by the Company of each of the following conditions:

       

      (i)  Representations
        and Warranties.
        The
        representations and warranties of each of the Joint-Venture and Bailey-Jamar
        in
        this Agreement shall be true and correct in all material respects (except
        where
        the representation and warranty is already qualified as to materiality, in
        which
        case the representation and warranty shall be true and correct in all respects)
        as of the date when made and as of the Closing Date as though first made
        at that
        time (except for representations and warranties that speak of a specific
        date,
        which need only be true and correct as of such date).

       

      (ii)  Agreement
        by Joint-Venture.
        The
        Joint-Venture shall have executed and delivered to the Company this
        Agreement.

       

      (iii)  Acceptability
        of the Joint-Venture.
        The
        Co-Venturer with Bailey-Jamar in the Joint-Venture and each of the principals
        and affiliates of the Co-Venturer respectively, shall (A) not have engaged
        in
        any activity of the type described in Rule 262(b)(i) through (5) of the
        Securities Act of 1933, as amended (the “Securities Act”) (with any reference to
        time period in such Rule 262(b) being measured from the date of this Agreement
        for the purposes of this Section 1.3(b)(iii)), (each a Rule 262(b)(i) Activity),
        (B) not have been for the last three years, the subject of any action, suit,
        inquiry, notice of violation, proceeding, hearing or investigation in, before
        or
        by any court, arbitrator, governmental or administrative agency or regulatory
        authority (federal, state, county, local or foreign (collectively, an (“Action”)
        involving a claim or violation of, or liability under, federal or state
        securities laws, or a claim of breach of fiduciary duty, or (C) not have
        been
        for the last three years involved as a party to any investigation by the
        Securities and Exchange Commission (the “Commission”) or any state securities
        agency, or (D) not have engaged in activities which cause the Board of Directors
        to reasonably believe that an association between the Company and the
        Joint-Venture will be materially injurious to the Company or its stockholders
        or
        will bring the Company or its stockholders into dispute.

       

      (iv)  Performance
        by the Joint-Venture and Bailey-Jamar.
        The
        Joint-Venture and Bailey-Jamar shall each have performed, satisfied and complied
        in all material respects with all covenants and agreements required by this
        Agreement to be performed, satisfied or complied with by the Joint-Venture
        and
        Bailey-Jamar respectively, at or prior to the Closing Date.

       

      (v)  Compliance
        Certificate.
        Each of
        the Joint-Venture and Bailey-Jamar shall have delivered to the Company an
        Officer’s Certificate signed by the Joint-Venture’s and Bailey-Jamar’s Chief
        Executive Officer, or equivalent authorized person, certifying that the
        Joint-Venture and Bailey-Jamar has satisfied the conditions set forth in
        Section
        1.3(b).

       

      
        
          
          

        

        
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      ARTICLE
        II

      USE
        OF PURCHASE PRICE PROCEEDS

       

      2.1.  Use
        of Purchase Price Proceeds.
        The
        proceeds of the Purchase Price shall be used by the Company for the purposes
        set
        forth on Schedule 2.1 attached hereto.

       

      ARTICLE
        III 

      Intentionally
        Omitted.

       

      ARTICLE
        IV

      REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY

       

      The
        Company makes the following representations and warranties to Bailey-Jamar
        and
        the Joint-Venture on the date hereof and the Closing Date:

       

      4.1.  Valid
        Corporate Existence.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware. The Company has the requisite corporate
        power to carry on its business as now conducted and to own its assets. The
        Company is in good standing and qualified to do business as a foreign
        corporation in each jurisdiction in which it is required to be so qualified,
        except where the failure to be so qualified or in good standing, as the case
        may
        be, would not, individually or in the aggregate, have or reasonably could
        be
        expected to result in: (i) an adverse effect on the legality, validity or
        enforceability of this Agreement, (ii) a material adverse effect on the results
        of operations, assets, business or condition (financial or otherwise) of
        the
        Company and the Subsidiaries (as defined below), taken as a whole, or (iii)
        an
        adverse impairment to the Company’s ability to perform on a timely basis its
        obligations under this Agreement (any of (i), (ii) or (iii), a “Material Adverse
        Effect”).

       

      4.2.  Capitalization.

       

      (a)  The
        authorized capital stock of the Company consists of 200,000,000 shares of
        Common
        Stock, of which 90,731,596 shares are issued and outstanding, and 10,000,000
        shares of preferred stock, $.001 par value, none of which are issued and
        outstanding. All the issued and outstanding shares of Common Stock have been
        validly issued and are fully paid and nonassessable.

       

      (b)  Except
        as
        set forth in this Agreement, there are no subscriptions, options, warrants,
        rights, calls or other commitments to which the Company is a party, or by
        which
        it is bound, calling for the issuance, sale, transfer or other disposition
        of
        any class of securities of the Company and there are no outstanding securities
        or instruments of the Company convertible into or exchangeable for shares
        of
        Common Stock or any other securities of the Company.

       

      4.3.  Consents.
        No
        consents of governmental or other regulatory agencies, foreign or domestic,
        or
        of other parties are required to be received by or on the part of the Company
        to
        enable it to enter into and carry out this Agreement and the transactions
        contemplated hereby.

       

      4.4.  Authority;
        Binding Nature of Agreement.
        The
        Company has the requisite corporate power and authority to enter into this
        Agreement and to carry out its obligations hereunder. The execution and delivery
        of this Agreement and the consummation of the transactions contemplated hereby
        have been duly authorized by the board of directors of the Company (the “Board
        of Directors”) and no other corporate proceedings are necessary to authorize the
        execution and delivery of this Agreement and the consummation of the
        transactions contemplated hereby. This Agreement constitutes the valid and
        binding obligation of the Company and is enforceable against the Company
        in
        accordance with its terms.

       

      4.5.  SEC
        Reports.
        The
        Company has filed all reports required to be filed by it under the Securities
        Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act
        of 1934, as amended (the “Exchange
        Act”), including pursuant to Section 13(a) or 15(d) thereof and including any
        and all filings required under the Sarbanes-Oxley Act of 2002, for the two
        years
        preceding the date hereof (the foregoing materials, as amended, being
        collectively referred to herein as the “SEC Reports”). As of the respective
        dates of the SEC Reports (except that, with respect to SEC Reports that have
        been amended, as of the respective dates of the latest amendment thereto),
        the
        SEC Reports complied in all material respects with the requirements of the
        Securities Act and the Exchange Act (the “Exchange Act”) and the rules and
        regulations of the Commission promulgated thereunder, and none of the SEC
        Reports, when filed (except that, with respect to SEC Reports that have been
        amended, when the latest amendment thereto was filed), contained any untrue
        statement of a material fact or omitted to state a material fact required
        to be
        stated therein or necessary in order to make the statements therein, in light
        of
        the circumstances under which they were made, not misleading. The financial
        statements of the Company included in the SEC Reports comply in all material
        respects with applicable accounting requirements and the rules and regulations
        of the Commission with respect thereto as in effect at the time of filing.
        Such
        financial statements have been prepared in accordance with generally accepted
        accounting principles applied on a consistent basis during the periods involved
        (“GAAP”), except as may be otherwise specified in such financial statements or
        the notes thereto (subject, in the case of unaudited statements, to the absence
        of footnotes), and fairly present in all material respects the financial
        position of the Company and its consolidated subsidiaries as of and for the
        dates thereof and the results of operations and cash flows for the periods
        then
        ended, subject, in the case of unaudited statements, to normal, immaterial,
        year-end audit adjustments.

       

      
        
          
          

        

        
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      4.6.  No
        Breach.
        Neither
        the execution and delivery of this Agreement nor compliance by the Company
        with
        any of the provisions hereof nor the consummation of the transactions
        contemplated hereby, will:

       

      (a)  violate
        or conflict with any provision of the Certificate of Incorporation, as amended,
        or Amended and Restated By-laws of the Company or any of its subsidiaries
        (each
        a “Subsidiary”);

       

      (b)  violate
        or, alone or with notice or the passage of time, result in the breach or
        termination of, or otherwise give any contracting party the right to terminate,
        or declare a default under, the terms of any agreement to which the Company
        or
        any of its Subsidiaries is a party or by which it or any of its assets may
        be
        bound;

       

      (c)  violate
        any judgment, order, injunction, decree or award against, or binding upon,
        the
        Company or any of its subsidiaries or upon their respective assets;
        or

       

      (d)  violate
        any law or regulation of any jurisdiction relating to the Company or any
        of its
        Subsidiaries.

       

      4.7.  Brokers.
        The
        Company has not engaged, consented to, or authorized any broker, finder,
        investment banker or other third party to act on its behalf, directly or
        indirectly, as a broker or finder in connection with the transactions
        contemplated by this Agreement. Neither Bailey-Jamar nor the Joint-Venture
        shall
        have any obligation with respect to any fees or with respect to any claims
        made
        by or on behalf of other persons for fees of a type contemplated in this
        Section
        that may be due by, or on behalf of, the Company, in connection with the
        transactions contemplated by this Agreement.

       

      4.8.  Issuance
        of the Stock.
        The
        Shares duly authorized and, when issued and paid for in accordance with this
        Agreement, will be duly and validly issued, fully paid and non-assessable,
        free
        and clear of all claims, liens, pledges, security interests, encumbrances,
        hypothecations, or other rights of third parties (collectively, the “Liens”).
        The Company has reserved the Shares from its duly authorized Common Stock
        for
        issuance hereunder.

       

      4.9.  Material
        Changes.
        Since
        the date of the latest audited financials included within the SEC Reports:
        (i)
        there has been no event, occurrence or development relating to the Company
        or
        its Subsidiaries that has had or could reasonably be expected to result in
        a
        Material Adverse Effect, (ii) the Company has not incurred any liabilities
        (contingent or otherwise) other than: (A) trade payables and accrued expenses
        incurred in the ordinary course of business consistent with past practice
        and
        (B) liabilities not required to be reflected in the Company’s financial
        statements pursuant to GAAP or required to be disclosed in filings made with
        the
        Commission, (iii) the Company has not altered its method of accounting or
        the
        identity of its auditors, (iv) the Company has not declared or made any dividend
        or distribution of cash or other property to its stockholders or purchased,
        redeemed or made any agreements to purchase or redeem any shares of its capital
        stock and (v) the Company has not issued any equity securities to any officer,
        director or affiliate. The Company does not have pending before the Commission
        any request for confidential treatment of information.

       

      
        
          
          

        

        
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      4.10.  Litigation.
        Except
        as set forth in the SEC Reports or in Schedule 4.10 attached hereto, there
        is no
        Action, pending or, to the knowledge of the Company, threatened against or
        affecting the Company, any Subsidiary or any of their respective properties
        which: (i) adversely affects or challenges the legality, validity or
        enforceability of any of this Agreement or (ii) would, if there were an
        unfavorable decision, individually or in the aggregate, have or reasonably
        be
        expected to result in a Material Adverse Effect.

       

      4.11.  Securities
        Matters.
        Neither
        the Company, nor any Subsidiary, nor any current officer or director thereof,
        is
        or has been for the last three years, the subject of any Action involving
        a
        claim of violation of or liability under federal or state securities laws
        or a
        claim of breach of fiduciary duty with respect to the Company. To the knowledge
        of the Company, there has not been during the last three years, and there
        is not
        pending or contemplated, any investigation by the Commission involving the
        Company or any current officer or director thereof or any person who served
        as a
        director of the Company during the last three years. The Commission has not
        issued any stop order or other order suspending the effectiveness of any
        registration statement filed by the Company or any Subsidiary under the Exchange
        Act or the Securities Act.

       

      4.12.  Regulatory
        Permits.
        The
        Company and the Subsidiaries possess all certificates, authorizations and
        permits issued by the appropriate federal, state, local or foreign regulatory
        authorities necessary to conduct their respective businesses as described
        in the
        SEC Reports, except where the failure to possess such permits would not,
        individually or in the aggregate, have or reasonably be expected to result
        in a
        Material Adverse Effect (“Material Permits”), and neither the Company nor any
        Subsidiary has received any notice of proceedings relating to the revocation
        or
        modification of any Material Permit.

       

      4.13.  Title
        to Assets.
        The
        Company and the Subsidiaries have good title in fee simple to all real property
        owned by them that is material to their respective businesses and good title
        in
        all personal property owned by them that is material to their respective
        businesses, in each case free and clear of all Liens, except as set forth
        in
        Schedule 4.13 attached hereto and except for Liens as do not materially affect
        the value of such property and do not materially interfere with the use made
        and
        proposed to be made of such property by the Company and the Subsidiaries.
        Any
        real property and facilities held under lease by the Company and the
        Subsidiaries are held by them under valid, subsisting and enforceable leases
        of
        which the Company and the Subsidiaries are in compliance in all material
        respects.

       

      4.14.  Patents
        and Trademarks.
        The
        Company and the Subsidiaries have, or have rights to use, all patents, patent
        applications, trademarks, trademark applications, service marks, trade names,
        copyrights, licenses and other similar rights that are necessary and material
        for use in connection with their respective businesses as described in the
        SEC
        Reports and which the failure to so could have, or reasonably be expected
        to
        result in, a Material Adverse Effect (collectively, the “Intellectual Property
        Rights”). Neither the Company nor any Subsidiary has received a written notice
        that the Intellectual Property Rights used by the Company or any Subsidiary
        violates or infringes upon the rights of any Person which if determined
        adversely to the Company would, individually or in the aggregate, have or
        could
        reasonably be expected to result in a Material Adverse Effect. To the knowledge
        of the Company, (i) all such Intellectual Property Rights are enforceable
        and
        (ii) there is no existing infringement by another Person of any of the
        Intellectual Property Rights.

       

      4.15.  Transactions
        with Affiliates and Employees.
        Except
        as set forth in SEC Reports, and Schedule 4.15 attached hereto, none of the
        officers or directors of the Company and, to the knowledge of the Company,
        none
        of the employees of the Company is presently a party to any transaction with
        the
        Company or any Subsidiary (other than for services as employees, officers
        and
        directors), including any contract, agreement or other arrangement providing
        for
        the furnishing of services to or by, providing for rental of real or personal
        property to or from, or otherwise requiring payments to or from any officer,
        director or such employee or, to the knowledge of the Company, any entity
        in
        which any officer, director, or any such employee has a substantial interest
        or
        is an officer, director, trustee or partner.

       

      4.16.  Private
        Placement.
        Assuming the accuracy of the Joint-Venture’s representations and warranties set
        forth in Section 6.9, no registration under the Securities Act is required
        for
        the offer, issuance and sale of the Shares by the Company to the Joint-Venture
        as contemplated hereby.

       

      4.17.  Disclosure.
        All
        representations and warranties of the Company set forth in this Agreement,
        including the Schedules to this Agreement are true and correct in all material
        respects and do not contain any untrue statement of a material fact or omit
        to
        state any material fact necessary in order to make the statements made therein,
        in light of the circumstances under which they were made, not
        misleading.

       

      Bailey-Jamar
        and the Joint-Venture acknowledge and agree that the Company does not make
        and
        has not made any representation or warranty with respect to the transactions
        contemplated hereby other than those specifically set forth in this Section
        4.

       

      
        
          
          

        

        
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      ARTICLE
        V

      REPRESENTATIONS
        AND WARRANTIES OF BAILEY-JAMAR

       

      Bailey-Jamar
        makes the following representations and warranties to the Company on the
        date
        hereof and the Closing Date:

       

      5.1.  Valid
        Limited Liability Company Existence.
        Bailey-Jamar is a limited liability company duly organized, validly existing
        and
        in good standing under the laws of the State of Colorado. Bailey-Jamar has
        the
        requisite limited liability company power to carry on its business as now
        conducted and to own its assets. Bailey-Jamar is in good standing and qualified
        to do business as a foreign limited liability company in each jurisdiction
        in
        which it is required to be so qualified, except where the failure to be so
        qualified or in good standing, as the case may be, would not, individually
        or in
        the aggregate, have or reasonably could be expected to result in: (i) an
        adverse
        effect on the legality, validity or enforceability of this Agreement, or
        (ii) an
        adverse impairment to Bailey-Jamar’s ability to perform on a timely basis its
        obligations under this Agreement.

       

      5.2.  Beneficial
        Ownership.

       

      (a)  The
        members, managers and beneficial owners of Bailey-Jamar are set forth on
        Schedule 5.2.

       

      (b)  There
        are
        no subscriptions, options, warrants, rights, calls or other commitments to
        which
        Bailey-Jamar or any of its members or beneficial owners is a party, or by
        which
        it or any of its members or beneficial owners is bound, calling for the
        granting, issuance, sale, transfer or other disposition of any membership
        interests or other class of securities of Bailey-Jamar and there are no
        outstanding securities or instruments of Bailey-Jamar convertible into or
        exchangeable for membership interests or any other securities of
        Bailey-Jamar.

       

      5.3.  Consents.
        No
        consents of governmental or other regulatory agencies, foreign or domestic,
        or
        of other parties are required to be received by or on the part of Bailey-Jamar
        to enable it to enter into and carry out this Agreement and the transactions
        contemplated hereby.

       

      5.4.  Authority;
        Binding Nature of Agreement.
        Bailey-Jamar has the requisite limited liability company power and authority
        to
        enter into this Agreement to carry out its obligations hereunder. The execution
        and delivery of this Agreement and the consummation of the transactions
        contemplated hereby have been duly authorized by the members or managers
        of
        Bailey-Jamar as required by Bailey-Jamar’s Articles of Organization and
        Operating Agreement and no other limited liability company proceedings are
        necessary to authorize the execution and delivery of this Agreement and the
        consummation of the transactions contemplated hereby. This Agreement constitutes
        the valid and binding obligation of Bailey-Jamar and is enforceable against
        Bailey-Jamar in accordance with its terms.

       

      5.5.  Experience;
        Qualifications.
        Bailey-Jamar, and its members and beneficial owners have extensive experience
        and skill in managing and operating environmental and energy related businesses
        and operations and developing projects in the environmental and energy
        business.

       

      
        
          
          

        

        
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      5.6.  No
        Breach.
        Neither
        the execution and delivery of this Agreement nor compliance by Bailey-Jamar
        with
        any of the provisions hereof or thereof nor the consummation of the transactions
        contemplated hereby or, will:

       

      (a)  violate
        or conflict with any provision of the Articles of Organization or Operating
        Agreement of Bailey-Jamar;

       

      (b)  violate
        or, alone or with notice or the passage of time, result in the breach or
        termination of, or otherwise give any contracting party the right to terminate,
        or declare a default under, the terms of any agreement to which Bailey-Jamar
        is
        a party or by which it or any of its assets may be bound;

       

      (c)  violate
        any judgment, order, injunction, decree or award against, or binding upon,
        Bailey-Jamar or upon its assets; or

       

      (d)  violate
        any law or regulation of any jurisdiction relating to Bailey-Jamar or any
        of its
        Subsidiaries.

       

      5.7.  Brokers.
        Bailey-Jamar has not engaged, consented to, or authorized any broker, finder,
        investment banker or other third party to act on its behalf, directly or
        indirectly, as a broker or finder in connection with the transactions
        contemplated by this Agreement. The Company shall have no obligation with
        respect to any fees or with respect to any claims made by or on behalf of
        other
        persons for fees of a type contemplated in this Section that may be due by
        or on
        behalf of Bailey-Jamar in connection with the transactions contemplated by
        this
        Agreement.

       

      5.8.  Litigation.
        There
        is no Action, pending or, to the knowledge of Bailey-Jamar, threatened against
        or affecting Bailey-Jamar, or any of its properties which: (i) adversely
        affects
        or challenges the legality, validity or enforceability of any of this Agreement
        or (ii) would, if there were an unfavorable decision, individually or in
        the
        aggregate, have or reasonably be expected to result in a Material Adverse
        Effect. 

       

      5.9.  Securities
        Matters.
        Neither
        Bailey-Jamar, nor any current member, beneficial owner, manager or affiliate
        thereof, (i) is or has been engaged in any Rule 262(b)(i) Activity, or (ii)
        is
        or has been for the last three years, the subject of any Action involving
        a
        claim of violation of or liability under federal or state securities laws
        or a
        claim of breach of fiduciary duty. To the knowledge of Bailey-Jamar, there
        has
        not been during the last three years, and there is not pending or contemplated,
        any investigation by the Commission involving Bailey-Jamar or any current
        beneficial owner, member or manager thereof or any person who has been a
        beneficial owner or member, or has served as a member or manager of Bailey-Jamar
        during the last three years.

       

      5.10.  Disclosure.
        All
        representations and warranties of Bailey-Jamar set forth in this Agreement,
        including the Schedules to this Agreement, are true and correct in all material
        respects and do not contain any untrue statement of a material fact or omit
        to
        state any material fact necessary in order to make the statements made therein,
        in light of the circumstances under which they were made, not
        misleading.

       

      The
        Company acknowledges and agrees that Bailey-Jamar does not make and has not
        made
        any representation or warranty with respect to the transactions contemplated
        hereby other than those specifically set forth in this Section 5.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VI

      REPRESENTATIONS
        AND WARRANTIES OF JOINT-VENTURE

      

      Upon
        execution of this Agreement by the Joint-Venture, and as of the date thereof,
        the Joint-Venture makes the following representations and warranties to the
        Company: 

       

      6.1.  Entity
        Existence.
        The
        Joint-Venture is an entity duly organized, validly existing and in good standing
        under the laws of the State of its formation or incorporation. The Joint-Venture
        has the requisite entity power to carry on its business as now
        conducted.

       

      6.2.  Beneficial
        Ownership.

       

      (a)  The
        shareholders, members, partners, and/or beneficial owners of the Joint-Venture
        are set forth on Schedule 6.2.

       

      (b)  There
        are
        no subscriptions, options, warrants, rights, calls or other commitments to
        which
        the Joint-Venture or any of its shareholders, members, partners or beneficial
        owners is a party, or by which it or any of its shareholders, members, partners
        or beneficial owners is bound, calling for the granting, issuance, sale,
        transfer or other disposition of any capital stock, membership interests,
        partnership interests, or other class of securities of the Joint-Venture
        and
        there are no outstanding securities or instruments of the Joint-Venture
        convertible into or exchangeable for membership interests or any other
        securities of the Joint-Venture.

       

      6.3.  Consents.
        No
        consents of governmental or other regulatory agencies, foreign or domestic,
        or
        of other parties are required to be received by or on the part of the
        Joint-Venture to enable it to enter into and carry out this Agreement and
        the
        transactions contemplated hereby.

       

      6.4.  Authority;
        Binding Nature of Agreement.
        The
        Joint-Venture has the requisite entity power and authority to enter into
        this
        Agreement to carry out its obligations hereunder. The execution and delivery
        of
        this Agreement and the consummation of the transactions contemplated hereby
        have
        been duly authorized by the charter and governing documents, agreements and
        instruments as required by the Joint-Venture’s charter and governing documents,
        agreements and instruments and no other limited liability company proceedings
        are necessary to authorize the execution and delivery of this Agreement and
        the
        consummation of the transactions contemplated hereby. This Agreement constitutes
        the valid and binding obligation of the Joint-Venture and is enforceable
        against
        the Joint-Venture in accordance with its terms.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      6.5.  No
        Breach.
        Neither
        the execution and delivery of this Agreement nor compliance by the Joint-Venture
        with any of the provisions hereof or thereof nor the consummation of the
        transactions contemplated hereby or, will:

       

      (a)  violate
        or conflict with any provision of the charter and governing documents,
        agreements and instruments of the Joint-Venture;

       

      (b)  violate
        or, alone or with notice or the passage of time, result in the breach or
        termination of, or otherwise give any contracting party the right to terminate,
        or declare a default under, the terms of any agreement to which the
        Joint-Venture is a party or by which it or any of its assets may be
        bound;

       

      (c)  violate
        any judgment, order, injunction, decree or award against, or binding upon,
        the
        Joint-Venture or upon its assets; or

       

      (d)  violate
        any law or regulation of any jurisdiction relating to the
        Joint-Venture.

       

      6.6.  Brokers.
        The
        Joint-Venture has not engaged, consented to, or authorized any broker, finder,
        investment banker or other third party to act on its behalf, directly or
        indirectly, as a broker or finder in connection with the transactions
        contemplated by this Agreement. The Company shall have no obligation with
        respect to any fees or with respect to any claims made by or on behalf of
        other
        persons for fees of a type contemplated in this Section that may be due by
        or on
        behalf of the Joint-Venture in connection with the transactions contemplated
        by
        this Agreement.

       

      6.7.  Litigation.
        Except
        as set forth on Schedule 6.7 attached hereto, there is no Action, pending
        or, to
        the knowledge of the Joint-Venture, threatened against or affecting the
        Joint-Venture, or any of its properties which: (i) adversely affects or
        challenges the legality, validity or enforceability of any of this Agreement
        or
        (ii) would, if there were an unfavorable decision, individually or in the
        aggregate, have or reasonably be expected to result in a Material Adverse
        Effect. 

       

      6.8.  Securities
        Matters.
        Neither
        the Joint-Venture, nor any current shareholder, member, partner, manager,
        director or officer thereof, (i) is or has been engaged in any Rule 262(b)(i)
        Activity, or (ii) is or has been for the last three years, the subject of
        any
        Action involving a claim of violation of or liability under federal or state
        securities laws or a claim of breach of fiduciary duty. To the knowledge
        of the
        Joint-Venture, there has not been during the last three years, and there
        is not
        pending or contemplated, any investigation by the Commission involving the
        Joint-Venture or any current shareholder, member, partner, manager, director
        or
        officer thereof.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      6.9.  Investment
        Representations.
        The
        Joint-Venture acknowledges that Shares are not, and upon issuance will not
        be,
        registered under the Securities Act, or any state securities laws. The
        Joint-Venture understands that the offering and sale of the Shares hereunder
        is
        intended to be exempt from registration under the Securities Act, by virtue
        of
        Section 4(2) thereof and the provisions of Regulation D promulgated thereunder,
        based, in part, upon the representations, warranties and agreements of the
        Joint-Venture contained in this Agreement. The Shares are subject to
        restrictions on transferability and resale and may not be transferred or
        resold
        except as permitted under the Securities Act and such laws pursuant to
        registration or exemption therefrom. The Shares have not been approved or
        disapproved by the Commission, any state securities commission or any other
        regulatory authority, nor have any of the foregoing authorities passed upon
        or
        endorsed the merits of the offering and sale of the shares hereunder. Any
        representation to the contrary is unlawful.

       

      (a)  The
        Joint-Venture, together with its attorney, accountant, Joint-Venture
        representative and/or tax advisor, if any (collectively, the “Advisors”), if
        any, have such knowledge and experience in financial, tax, and business matters,
        and, in particular, investments in securities, so as to enable them to utilize
        the information made available to them in connection with the offering and
        sale
        of the Shares hereunder to evaluate the merits and risks of an investment
        in the
        Shares and to make an informed investment decision with respect
        thereto.

       

      (b)  The
        Joint-Venture is not relying on the Company or any of its employees or agents
        with respect to the legal, tax, economic and related considerations of an
        investment in the Shares, and the Joint-Venture has relied on the advice
        of, or
        has consulted with, only his own Advisors.

       

      (c)  The
        Joint-Venture is acquiring the Shares solely for the Joint-Venture’s own account
        for investment and not with a view to resale or distribution thereof, in
        whole
        or in part. The Joint-Venture has no agreement or arrangement, formal or
        informal, with any person to sell or transfer all or any of the Shares; and
        the
        Joint-Venture has no plans to enter into any such agreement or
        arrangement.

       

      (d)  The
        Joint-Venture must bear the substantial economic risks of the investment
        in the
        Shares indefinitely because none of the Shares may be sold, assigned,
        transferred, hypothecated or otherwise encumbered or disposed of unless
        subsequently registered under the Securities Act and applicable state securities
        laws or an exemption from such registration is available. Legends shall be
        placed on the Shares to the effect that they have not been registered under
        the
        Securities Act or applicable state securities laws. In addition, appropriate
        notations thereof will be made in the Company’s books, and stop transfer
        instructions will be placed with the Company’s transfer agent of the
        Shares.

       

      (e)  The
        Joint-Venture has significant prior investment experience, including investment
        in unregistered securities. The Joint-Venture is knowledgeable about investment
        considerations in development-stage companies. The Joint-Venture has a
        sufficient net worth to sustain a loss of its entire investment in the Company
        in the event such a loss should occur. The Joint-Venture’s overall commitment to
        investments which are not readily marketable is not exces-sive in view of
        its
        net worth and financial circumstances and the purchase of the Shares will
        not
        cause such commitment to become excessive. The investment is a suitable one
        for
        the Joint-Venture.

       

      (f)  The
        Joint-Venture has adequate means of providing for such Joint-Venture’s current
        financial needs and foreseeable contingencies and has no need for liquidity
        of
        the investment in the Shares for an indefinite period of time.

       

      (g)  The
        Joint-Venture is aware that an investment in the Shares involves a number
        of
        very significant risks which are described in the Company’s SEC Reports.

       

      (h)  The
        Joint-Venture meets the requirements of at least one of the suitability
        standards for an “accredited investor” as such term is defined in Rule 501 of
        Regulation D promulgated under the Securities Act.

       

      (i)  The
        Joint-Venture and the Joint-Venture’s Advisors have reviewed the Company’s SEC
        Reports which are filed with the Commission via the Commission’s EDGAR system
        since January 1, 2005, have received all documents requested by the
        Joint-Venture, have carefully reviewed them and understand the information
        contained therein.

       

      (j)  All
        documents, records, and books pertaining to the investment in the Shares
        requested by the Joint-Venture have been made available for inspection by
        the
        Joint-Venture and its Advisors.

       

      (k)  The
        Joint-Venture and its Advisors have had the opportunity to obtain any additional
        information, to the extent the Company had such information in its possession
        (subject to restrictions as to confidentiality) or could acquire it without
        unreasonable effort or expense, necessary to verify the accuracy of the
        information contained in all documents received or reviewed in connection
        with
        the purchase of the Shares and have had the opportunity to have representatives
        of the Company provide them with such additional information regarding the
        terms
        and conditions of this particular investment and the financial condition,
        results of operations, business and prospects of the Company deemed relevant
        by
        the Joint-Venture or its Advisors, if any, and all such requested information,
        to the extent the Company had such information in its possession or could
        acquire it without unreasonable effort or expense, has been provided to its
        full
        satisfaction, and the Joint-Venture and its Advisors have had a reasonable
        opportunity to ask questions of and receive answers from a person or persons
        acting on behalf of the Company concerning the purchase of the Shares and
        the
        business, financial condition, results of operations and prospects of the
        Company and all such questions have been answered to the full satisfaction
        of
        the Joint-Venture and the Advisors.

       

      (l)  
        The
        Joint-Venture is satisfied that it has received adequate information with
        respect to all matters which it or its Advisors, consider material to its
        decision to make this investment.

       

      (m)  The
        Joint-Venture represents to the Company that any information which the
        Joint-Venture has heretofore furnished or furnishes herewith to the Company
        is
        complete and accurate and may be relied upon by the Company in determining
        the
        availability of an exemption from registration under federal and state
        securities laws in connection with sales of the Shares hereunder. The
        Joint-Venture further represents and warrants that it will notify and supply
        corrective information to the Company immediately upon the occurrence of
        any
        change therein occurring prior to the Company’s issuance of the
        Shares.

       

      (n)  The
        Joint-Venture will provide such additional information and deliver such
        additional documents as may reasonably be necessary to comply with any and
        all
        laws and ordinances to which the Company is subject.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      6.10.  Anti-Money
        Laundering.

       

      (a)  The
        Joint-Venture represents and covenants that neither it, nor any person
        controlling, controlled by, or under common control with it, nor any person
        having a beneficial interest in it, is an individual, organization, or entity
        listed on the List of Specially Designated Nationals and Blocked Persons
        (the
“OFAC Control List”)1
        maintained by the U.S. Office of Foreign Assets Control (“OFAC”) and that it is
        not investing and will not invest in the Company on behalf of or for the
        benefit
        of any individual, organization, or entity listed on the OFAC Control
        List.

       

      (b)  The
        Joint-Venture represents that (i) the amounts paid by it to the Company to
        purchase the Shares were not and are not directly or indirectly derived from
        activities that contravene U.S. federal or state laws or regulations and
        international laws and regulations, including anti-money laundering laws
        and
        regulations, and (ii) the proceeds from the Joint-Venture’s investment in the
        Company will not be used to finance any illegal activities.

       

      (c)  If
        the
        Joint-Venture is a “fund of funds” or an entity that invests on behalf of
        others, the Joint-Venture, in addition to and not by way of limiting the
        foregoing, represents and certifies that it is aware of the requirements
        of the
        USA PATRIOT Act of 2001, and rules and regulations promulgated thereunder
        and
        other applicable anti-money laundering measures in any jurisdiction
        (collectively, the “AML Rules”) and that it has adopted anti-money laundering
        policies and procedures in place reasonably designed to verify the identity
        of
        its beneficial owners or underlying investors, as the case may be, and their
        respective sources of funds. Such policies and procedures are properly enforced
        and are consistent with such AML Rules. The Joint-Venture represents and
        certifies that, to the best of its knowledge, the beneficial owners or
        investors, as the case may be, are not individuals, entities, or countries
        that
        may subject the Company or any of its affiliates to criminal or civil violations
        of any AML Rules. The Joint-Venture acknowledges that it is to furnish a
        copy of
        its anti-money laundering policies and procedures to the Company when requested.
        Among its other obligations hereunder, the Joint-Venture agrees to promptly
        notify the Company if the foregoing representation and certification becomes
        inaccurate.

       

      (d)  Joint-Venture
        represents that:

       

      (i)  it
        is not
        a Senior Foreign Political Figure2,
        a
        member of a Senior Foreign Political Figure’s Immediate Family3,
        and/or
        any Close Associate4
        of a
        Senior Foreign Political Figure residing in a non-cooperative country or
        territory or a jurisdiction that has been designated by the U.S. Treasury
        as
        warranting special measures due to primary money laundering
        concerns;

       

      (ii)  it
        is not
        a former Senior Foreign Political Figure residing in a non-cooperative country
        or territory or a jurisdiction that has been designated by the U.S. Treasury
        as
        warranting special measures due to primary money laundering
        concerns;

       

      (iii)  it
        is not
        resident in, or organized or chartered under the laws of, a jurisdiction
        that
        has been designated by the U.S. Secretary of Treasury under Sections 311
        and 312
        of the USA PATRIOT Act as warranting special measures due to primary money
        laundering concerns;

       

      (iv)  it
        is not
        a Foreign Shell Bank as the term is defined in the USA PATRIOT Act;
        and

       

      (v)  the
        funds
        for the Purchase Price did not originate from, nor will they be routed through,
        an account maintained at a Foreign Shell Bank, an “Offshore Bank,”5
        or a
        bank organized or charted under the laws of a jurisdiction deemed to be a
        non-cooperative country or territory (“NCCT”)6.

       

      6.11.  Disclosure. All
        representations and warranties of the Joint-Venture set forth in this Agreement,
        including the Schedules to this Agreement, are true and correct in all material
        respects and do not contain any untrue statement of a material fact or omit
        to
        state any material fact necessary in order to make the statements made therein,
        in light of the circumstances under which they were made, not
        misleading.

       

      The
        Company acknowledges and agrees that the Joint-Venture does not make and
        has not
        made any representation or warranty with respect to the transactions
        contemplated hereby other than those specifically set forth in this Section
        6.

       

      _______________________

        1
          -
          Available at
          http://www.ustreas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf

         

        2-
          The
          term “Senior Foreign Political Figure” is defined to mean a senior official in
          the executive, legislative, administrative, military or judicial branches
          of a
          foreign government (whether elected or not), senior official of a major
          foreign
          political party, or a senior executive of a foreign government-owned
          corporation.

         

        3-
          The
          term “Immediate Family” is defined to mean the parents, siblings, spouse,
          children and in-laws of a Senior Foreign Political Figure.

         

        4-
          The
          term “Close Associate” is defined to mean a person who is widely and publicly
          known to maintain an unusually close relationship with a Senior Foreign
          Political Figure.

         

        5-
          The
          term “Offshore Bank” refers to a foreign bank that is barred, pursuant to its
          banking license, from conducting banking activities with the citizens of,
          or
          with the local currency of, the country that issued the license.

         

        6-
          The
          Financial Action Task Force on Money Laundering (“FATF”) has designated certain
          countries or territories as NCCTs. The list of countries or territories
          deemed
          to be an NCCT is available at http://www1.oecd.org/fatf.

         

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VII

      JOINT-VENTURE
        COVENANTS

      

      7.1.  Transfer
        Restrictions 

       

      (a)  The
        Shares may only be disposed of in compliance with state and federal securities
        laws. In connection with any transfer of the Shares other than pursuant to
        an
        effective registration statement, to the Company, or to an affiliate of a
        Joint-Venture who is an “accredited investor” as defined in Rule 501(a) under
        the Securities Act, the Company may require the transferor thereof to provide
        to
        the Company an opinion of counsel reasonably satisfactory to the Company
        transferor, the form and substance of which opinion shall be reasonably
        satisfactory to the Company, to the effect that such transfer does not require
        registration of such transferred securities under the Securities Act. As
        a
        condition of transfer, any such transferee shall agree in writing to be bound
        by
        the terms of this Section 7.1. 

       

      (b)  The
        Joint-Venture agrees to the imprinting, of legend on the certificates evidencing
        the Shares, in, or substantially in, the following form:

       

      

       

      “THE
        SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933. THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND
        NOT
        FOR DISTRIBUTION. THEY MAY NOT BE SOLD, ASSIGNED, MORTGAGED, PLEDGED,
        HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
        REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933 OR
        AN
        OPINION OF COUNSEL FOR THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
        SUCH
        ACT.”

      

      7.2.  Ownership
        of the Joint-Venture. So
        long
        as the Joint-Venture is deemed to be an affiliate of the Company, the
        Joint-Venture shall not have a beneficial owner or owner of record who shall
        have engaged in a Rule 262(b)(i) Activity, or in any activity which causes
        the
        Board of Directors to reasonably believe that an association between the
        Company
        and the Joint-Venture will be materially injurious to the Company or its
        stockholders, or will bring the Company or its stockholders into
        disrepute.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VIII

      JOINT-VENTURE
        AND BAILEY-JAMAR COVENANTS

       

      8.1.  Confidentiality
        

       

      (a)  The
        Joint-Venture and Bailey-Jamar each represent that it has been informed that
        it
        is the policy of the Company to maintain as secret all Confidential Information
        (as hereinafter defined) relating to the Company, including, without limitation,
        any and all knowledge or information with respect to secret or confidential
        methods, processes, plans, materials, customer lists or data, vendor and
        supplier lists or data, or with respect to any other confidential or secret
        aspect of the Company’s activities, and further acknowledges that such
        Confidential Information is of great value to the Company. The Joint-Venture
        recognizes that, as an investor in the Company, and Bailey-Jamar recognizes
        that, by reason of its affiliation with the Joint Venture and with Brad Bailey,
        it has acquired and will or may acquire Confidential Information as aforesaid.
        Each of the Joint-Venture and Bailey-Jamar confirms that it is reasonably
        necessary to protect the Company’s goodwill, and, accordingly, hereby agrees
        that it will not, directly or indirectly (except where authorized by the
        Board
        of Directors of the Company for the benefit of the Company or as required
        by
        law, or regulation or applicable legal regulatory or administrative process
        or
        by a court of competent jurisdiction), at any time divulge to any person,
        or
        use, or cause or authorize any person, firm or other entity to use, any such
        Confidential Information.

       

      (b)  Joint-Venture
        and Bailey-Jamar each agree that, upon the expiration or termination of this
        Agreement for any reason whatsoever, or at anytime upon the Company’s demand, it
        shall promptly deliver to the Company any material relating to any Confidential
        Information or Trade Secrets (as hereinafter defined), as well as all memoranda,
        notes, records, drawings, documents, or other writings or data whatsoever
        made,
        compiled, acquired, or received by the Joint-Venture or Bailey-Jamar
        respectively, after the date of this Agreement, in the form of writing,
        electronic data or any other medium, arising out of, in connection with,
        or
        related to any activity or business of the Company including, but not limited
        to, the customers, vendors, suppliers, co-venturers, investors, lenders or
        others with whom the Company has a business relationship, the arrangements
        of
        the Company with such parties, as well as any expansion policies and strategies
        for the future development or growth of the Company, and the Executive further
        agrees that all of the above mentioned items are, and shall continue to be,
        the
        sole and exclusive property of the Company.

       

      (c)  For
        purposes hereof, the term “Confidential Information” shall mean all information
        given to, or obtained or received by, the Joint-Venture or Bailey-Jamar,
        directly or indirectly, including, but not limited to, information contained
        in
        all correspondence, memoranda, files, manuals, books, lists, financial,
        operating or marketing records, magnetic tape, floppy disks, CD-ROMS, or
        any
        other means of storing electronic data, as well as any electronic or other
        media
        or equipment of any kind by the Company and all other information relating
        to
        the Company otherwise acquired by the Joint-Venture or Bailey-Jamar
        respectively, after the date of this Agreement, including but not limited
        to,
        Trade Secrets, other than information which (i) was in the public domain
        at the
        time furnished to, or acquired by, the Joint-Venture or Bailey-Jamar
        respectively, after the date of this Agreement, or (ii) thereafter enters
        the
        public domain other than through disclosure, directly or indirectly, by the
        Joint-Venture or Bailey-Jamar or others in violation of an agreement of
        confidentiality or nondisclosure.

       

      8.2.  Trade
        Secrets. Each
        of
        the Joint-Venture and Bailey-Jamar further acknowledges that the Company
        has
        developed or acquired unique skills, concepts, technical and nontechnical
        data,
        formulas, patterns, designs, compilations, devices, inventions, innovations,
        improvements, enhancements, methods, techniques, practices, drawings, processes,
        research, development, know-how, computer programs, codes and software,
        financial and other confidential and proprietary information concerning its
        products, business, operations, and development and expansion plans (“Trade
        Secrets”). Each of Joint-Venture and Bailey-Jamar agrees that it is necessary
        for the Company to protect its business from the hardship, loss and damage
        that
        could result from the release of any Trade Secret(s) to any person, including
        the Joint-Venture or Bailey-Jamar, engaging in a business in competition
        with
        that of the Company, the measurement of which would be difficult, if not
        impossible, to ascertain. Each of Joint-Venture and Bailey-Jamar agrees and
        covenants to use its best efforts and exercise utmost diligence to protect
        and
        safeguard the Trade Secrets of the Company. Each of Joint-Venture and
        Bailey-Jamar further agrees and covenants that, except as may be required
        by the
        Company in connection with this Agreement, or with the prior written consent
        of
        the Company, the Joint-Venture’s or Bailey-Jamar’s respective shall not,
        directly or indirectly, use for the Joint-Venture’s or Bailey-Jamar’s own
        benefit or for the benefit of another, or disclose, disseminate, or distribute
        to another, any Trade Secret (whether or not acquired, learned, obtained,
        or
        developed by Joint-Venture or Bailey-Jamar alone or in conjunction with others)
        of the Company or of others with whom the Company or its subsidiaries has
        a
        business relationship. In the event of a conflict in the terms of Section
        8.1
        and this Section 8.2, the terms of this Section 8.2 shall govern.

       

      8.3.  Company
        Definition.
        For
        purposes of this Article VIII, the term “Company” shall mean and include all
        Subsidiaries, parents and affiliated entities of the Company in existence
        from
        time to time.

       

      8.4.  Survival.
        The
        covenants set forth in Article VIII shall survive any termination of the
        Agreement.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      

       

      ARTICLE
        IX

      BAILEY-JAMAR
        COVENANTS

       

      9.1.   No
        Representations.
        Neither
        Bailey-Jamar nor any of its members, managers, agents or representatives,
        including without limitation, those listed on Schedule 9.1 attached hereto,
        shall make any disclosure or representations or warranties regarding the
        Company, or the Company’s current or future performance, financial condition or
        business or financial prospectus or resources, which have not been (a) disclosed
        by the Company in its SEC Reports, or (b) expressly authorized by the Company’s
        Board of Directors in writing.

       

      9.2.  Survival.
        The
        covenants set forth in Article IX shall survive any termination of the
        Agreement.

       

      ARTICLE
        X

      COMPANY
        COVENANT

       

      10.1.  Rule
        144 Sales.
        The
        Company agrees to approve the removal of the legend set forth in Section
        7.1(b)
        from the Certificates evidencing the Shares upon request of the Joint Venture,
        as permitted pursuant to Rule 144 promulgated under the Securities
        Act.

       

      ARTICLE
        XI

      REGISTRATION
        RIGHTS

      

      11.1.  The
        Company’s Obligations

       

      (a)  Registration

       

      (i)  If
        at any
        time after the date hereof the Company shall file with the Commission a
        registration statement (a “Registration Statement”) under the Securities Act
        relating to an offering for its own account of any of its equity securities
        for
        cash (other than on Form S-4 or Form S-8 or their then equivalents relating
        to
        equity securities to be issued solely in connection with any acquisition
        of any
        entity or business or equity securities issuable in connection with stock
        option
        or other employee benefit plans), the Company shall send to the Joint Venture
        written notice of such determination and, if within fifteen (15) days after
        the
        date of such notice, the Joint Venture shall so request in writing, that
        the
        Company shall include in such Registration Statement all or any part of the
        Company Shares (for the purpose of this Article XI, the “Registrable
        Securities”) that the Joint Venture requests to be registered, except
        that if,
        in
        connection with any underwritten public offering, the managing underwriter(s)
        thereof shall impose a limitation on the number of Registrable Securities
        or
        other securities of the Company which may be included in the Registration
        Statement because, in such underwriter(s)’ judgment, marketing or other factors
        dictate such limitation is necessary to facilitate public distribution, then
        the
        Company shall be obligated to include in such Registration Statement only
        such
        limited portion of the Registrable Securities as the underwriter shall permit
        (limited to zero if necessary).

       

      (ii)  If
        an
        offering in connection with which the Joint Venture are entitled to registration
        under this Section 11.1 is an underwritten offering, then the Joint Venture
        shall, unless otherwise agreed by the Company, offer and sell such Registrable
        Securities in an underwritten offering using the same underwriter or
        underwriters and on the same terms and conditions as other like securities
        included in such underwritten offering. 

       

      
        
          
          

        

        
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      (b)  Copies
        of Filings and Correspondence.
        The
        Company shall furnish to the Joint Venture (i) promptly after the same is
        prepared and publicly distributed, filed with the Commission, or received
        by the
        Company, one copy of the Registration Statement and any amendment thereto,
        each
        preliminary prospectus and prospectus and each amendment or supplement thereto,
        and each item of correspondence from the Commission or the staff of the
        Commission which comments upon or requests information relating to the Joint
        Venture and/or the Registrable Securities (including, without limitation,
        the
        resale and plan of distribution thereof), in each case relating to such
        Registration Statement (other than any portion, if any, thereof which contains
        information for which the Company has sought confidential treatment), (ii)
        on
        the date of effectiveness of the Registration Statement or any amendment
        thereto, a notice stating that the Registration Statement or amendment has
        become effective, and (iii) such number of copies of a prospectus, including
        a
        preliminary prospectus, and all amendments and supplements thereto and such
        other documents as the Joint Venture may reasonably request in order to
        facilitate the disposition of the Registrable Securities by the Joint
        Venture.

       

      (c)  Blue
        Sky.
        The
        Company shall use its best efforts to (i) register and qualify the Registrable
        Securities covered by the Registration Statement under such other securities
        or
“Blue Sky” laws of such jurisdictions in the United States as the Joint Venture
        requests, (ii) prepare and file in those jurisdictions such amendments
        (including post-effective amendments) and supplements to such registrations
        and
        qualifications as may be necessary to maintain the effectiveness thereof
        during
        the Registration Period, and (iii) take all other actions reasonably necessary
        or advisable to qualify the Registrable Securities for sale in such
        jurisdictions; provided,
        however,
        that
        the Company shall not be required in connection therewith or as a condition
        thereto to (i) qualify to do business in any jurisdiction where it would
        not
        otherwise be required to qualify but for this Section 11.1(c), (ii) subject
        itself to general taxation in any such jurisdiction, (iii) provide any
        undertakings that cause the Company undue expense or burden, or (iv) make
        any
        change in its charter or bylaws, which in each case the Board of Directors
        of
        the Company determines to be contrary to the best interests of the Company
        and
        its shareholders.

       

      (d)  Events
        Affecting Prospectus.
        The
        Company shall notify the Joint Venture of the happening of any event, of
        which
        the Company has knowledge, as a result of which the prospectus included in
        the
        Registration Statement, as then in effect, includes an untrue statement of
        a
        material fact or omission to state a material fact required to be stated
        therein
        or necessary to make the statements therein not misleading, as promptly as
        practicable after becoming aware of such event, and if such Registration
        Statement is supplemented or amended to correct such untrue statement or
        omission, the Company shall deliver such number of amended or supplement
        Prospectuses as the Joint Venture may reasonably request.

       

      (e)  Notification
        of Amendment or Supplement.
        The
        Company shall, as promptly as practicable after becoming aware of such event
        described in Section 11.1(d), notify the Joint Venture of the issuance of
        any
        order related thereto and the resolution thereof (and if such Registration
        Statement is supplemented or amended, deliver such number of copies of such
        supplement or amendment to the Joint Venture as he may reasonably request).
        

       

      (f)  Review
        by The Joint Venture’s Counsel.
        The
        Company shall permit one firm of counsel designated by the Joint Venture
        to
        review the Registration Statement and all amendments and supplements thereto
        within a reasonable period of time prior to their filing with the
        Commission.

       

      (g)  The
        Joint Venture’s Due Diligence; Confidentiality of the Company’s
        Information.
        The
        Company shall make available for inspection by (i) the Joint Venture, and
        (ii) a
        firm of attorneys and a firm of accountants or other agents retained by the
        Joint Venture (collectively, the “Inspectors”) all pertinent financial and other
        records, and pertinent corporate documents and properties of the Company
        (collectively, the “Records”), as shall be reasonably deemed necessary by each
        Inspector to enable each Inspector to exercise its due diligence responsibility,
        and cause the Company’s officers, directors and employees to supply all
        information which the Joint Venture may reasonably request for purposes of
        such
        due diligence; provided,
        however,
        that
        each Inspector shall hold in confidence and shall not make any disclosure
        (except to the Joint Venture) of any record or other information which the
        Company determines in good faith to be confidential, and of which determination
        the Inspector so notified, unless (i) the disclosure of such Records is
        necessary to avoid or correct a misstatement or omission in any Registration
        Statement, (ii) the release of such Records is ordered pursuant to a subpoena
        or
        other order from a court or other governmental or regulatory body or self
        regulated organization of competent jurisdiction, or (iii) the information
        in
        such Records has been made generally
        available to the public other than by disclosure in violation of this or
        any
        other agreement. The Company shall not be required to disclose any confidential
        information in such Records to any Inspector until and unless such Inspector
        shall have entered into a confidentiality agreements with the Company with
        respect thereto, substantially in the form of this Section 11.1(g). The Joint
        Venture agrees that it shall, upon learning that disclosure of such Records
        is
        sought, in or by a court or governmental or regulatory body or self regulated
        organization of competent jurisdiction or through other means, give prompt
        notice to the Company and allow the Company, at its expense, to undertake
        appropriate action to prevent disclosure of, or to obtain a protective order
        for, the records deemed confidential. Nothing herein shall be deemed to limit
        the Joint Venture’s ability to sell Registrable Securities in a manner which is
        otherwise consistent with applicable laws and regulations. Additionally,
        nothing
        herein shall be deemed to narrow or limit the scope of any provisions set
        forth
        in Articles VIII and IX of this Agreement.

       

      
        
          
          

        

        
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      (h)  Confidentiality
        of The Joint Venture’s Information.
        The
        Company shall hold in confidence and not make any disclosure of information
        concerning the Joint Venture provided to the Company unless (i) disclosure
        of
        such information is necessary to comply with federal or state securities
        laws,
        (ii) the disclosure of such information is necessary to avoid or correct
        a
        misstatement or omission in any Registration Statement, (iii) the release
        of
        such information is ordered pursuant to a subpoena or other order from a
        court
        or governmental body of competent jurisdiction, (iv) such information has
        been
        made generally available to the public other than by disclosure in violation
        of this or any other agreement, or (v) the Joint Venture consents to the
        form
        and content of any such disclosure regarding it. The Company agrees that
        it
        shall, upon learning that disclosure of such information concerning any of
        the
        Joint Venture is sought in or by a court or governmental body of competent
        jurisdiction or through other means, give prompt notice to the Joint Venture
        prior to making such disclosure, and allow the Joint Venture, at its expense,
        to
        undertake appropriate action to prevent disclosure of, or to obtain a protective
        order for, such information.

       

      (i)  Compliance
        with Laws.
        The
        Company shall comply with all applicable laws, rules and regulations related
        to
        a Registration Statement and offering and sale of securities and all applicable
        rules and regulations of all governmental or other regulatory agencies and
        self-regulated organizations in connection therewith (including, without
        limitation, the Securities Act and the Exchange Act, and the rules and
        regulations promulgated by the Commission).

       

      11.2.  Obligations
        of the Joint Venture. In
        connection with a registration of the Registrable Securities, the Joint Venture
        shall have the following obligations:

       

      (a)  The
        Joint Venture’s Information.
        It
        shall be a condition precedent to the obligations of the Company to complete
        the
        registration of Registrable Securities for the Joint Venture pursuant to
        this
        Article XI that the Joint Venture shall furnish to the Company such information
        regarding itself, the Registrable Securities and the intended method of
        disposition as shall be required to effect the registration of such Registrable
        Securities and shall execute such documents in connection with such registration
        as the Company may reasonably request. At least five (5) business days prior
        to
        the first anticipated filing date of the Registration Statement, the Company
        shall notify the Joint Venture of the information the Company requires from
        the
        Joint Venture.

       

      (b)  Cooperation.
        The
        Joint Venture shall agree to cooperate with the Company as requested by the
        Company in connection with the preparation and filing of the Registration
        Statement hereunder.

       

      (c)  Underwritten
        Offering.
        In the
        event the Joint Venture determines to engage the services of an underwriter,
        the
        Joint Venture agrees to enter into and perform his obligations under an
        underwriting agreement, in usual and customary form, including, without
        limitation, customary indemnification and contribution obligations, with
        the
        managing underwriter of such offering and take such other actions as are
        reasonably required in order to expedite or facilitate the disposition of
        the
        Registrable Securities.

       

      (d)  No
        Disposition of Registrable Securities.
        The
        Joint Venture agrees that, upon receipt of any notice from the Company of
        the
        happening of any event of the kind described in Sections 11.1(d) or 11.1(e),
        the
        Joint Venture will immediately discontinue disposition of Registrable Securities
        pursuant to the Registration Statement covering the resale of such Registrable
        Securities until the Joint Venture’s receipt of the copies of the supplemented
        or amended prospectus contemplated by Sections 11.1(d) or 11.1(e) and, if
        so
        directed by the Company, the Joint Venture shall deliver to the Company or
        destroy (and deliver to the Company a certificate of destruction) all copies
        in
        the Joint Venture’s possession, of the prospectus covering such Shares of the
        Company Common Stock at the time of receipt of such notice.

       

      (e)  Method
        of Underwritten Distribution.
        The
        Joint Venture may not participate in any underwritten distribution of the
        Registrable Securities unless the Joint Venture (i) agrees to sell the
        Registrable Securities on the basis provided in any underwriting arrangements
        in
        usual and customary form entered into by the Company, and (ii) completes,
        in a
        manner reasonably acceptable to the Company, and executes all questionnaires,
        powers of attorney, indemnities, underwriting agreements and other documents
        reasonably required under the terms of such underwriting
        arrangements.

       

      11.3.  Expenses
        of Registration. All
        reasonable expenses, other than underwriting discounts and commissions, incurred
        in connection with registrations, filings or qualifications, relating to
        one (1)
        Registration Statement pursuant to this Article XI, except that if a portion
        of
        the Joint Venture’ Registrable Securities are not permitted to be included in
        one (1) Registration Statement by an underwriter as provided in Section 11.1(a),
        then relating to the least number of Registration Statements which will cover
        the resale of all of the Joint Venture’s
        Registrable Securities, including all registration, listing and qualifications
        fees, printers and accounting fees, the fees and disbursements of counsel
        for
        the Company, shall be borne by the Company.

       

      

      11.4.  Exemption
        from Registration. The
        provisions of Sections 11.1 through 11.3 notwithstanding, the Company shall
        have
        no obligation to register the resale of the Registrable Securities to the
        extent
        the Registrable Securities may be resold without registration without violating
        Section 5 of the Securities Act pursuant to Rule 144 promulgated thereunder
        or
        any other exemption or exception from registration under the Securities
        Act.

       

      
        
          
          

        

        
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      ARTICLE
        XII

      RIGHT
        OF FIRST OFFER

      

      12.1.  Notice
        of Offer; Negotiation. If,
        at
        any time during the period commencing upon the Closing and continuing for
        so
        long as the Joint Venture owns 20% or more of the voting equity securities
        of
        the Company, the Company desires to offer for sale for cash any shares of
        the
        Company’s Common Stock or any securities or instruments exercisable or
        convertible into shares of the Company’s Common Stock (the “Derivative
        Securities”) in any transaction, which is initiated by the Company or solicited
        from the Company by a third party (the “Offering”), the Company shall give
        written notice (the “Offering Notice”) to the Joint Venture of the Offering
        including the proposed material terms and conditions of the Offering which
        would
        be acceptable to the Company. Thereupon the Joint Venture shall have the
        option
        to negotiate in good faith with the Company to purchase the shares of Common
        Stock or Derivative Securities from the Company in accordance with the proposed
        material terms of the Offering.

       

      12.2.  Company
        Right to Pursue Offering.
        If the
        Joint Venture does not elect to enter into negotiations to purchase the shares
        of Common Stock or Securities in accordance with the material terms and
        conditions of the Offering by written notice to the Company (the “Election
        Notice”) within ten (10) days after the delivery of the Offering Notice (the
“Offering Notice Period”), or an agreement for the Joint Venture’s purchase of
        shares of Common Stock or Derivative Securities is not entered into by the
        Company and the Joint Venture (or an affiliate of the Joint Venture which
        is
        reasonably acceptable to the Company) within sixty (60) days following the
        delivery of the Election Notice (the “Election Period”), then the Company shall
        be free to offer and sell the shares of Common Stock and Derivative Securities
        upon the proposed material terms and conditions of the Offering. If a
        transaction to sell shares of Common Stock or Derivative Securities to a
        third
        party is not closed within one hundred twenty (120) days following the
        expiration of (a) the Offering Notice Period if no Election Notice is given,
        or
        (b) the Election Period if an Election Notice is given and a transaction
        to sell
        the shares of Common Stock or Derivative Securities to the Joint Venture
        is not
        entered into by the expiration of the Election Period, then such shares of
        Common Stock or Derivative Securities may not thereafter be sold in any Offering
        without compliance with the provisions of this Article XII.

       

      

      
        
          
          

        

        
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      ARTICLE
        XIII

      TERMINATION;
        WAIVER

       

      13.1.  Termination
        of Agreement Prior to Closing.
        The
        Parties may terminate this Agreement as provided below:

       

      (a)  The
        Company, the Joint-Venture (to the extent a Joint-Venture has executed and
        become a party to the Agreement) and Bailey-Jamar may terminate this Agreement
        by mutual written consent at any time prior to the Closing;

       

      (b)  The
        Company may terminate this Agreement by giving written notice to Bailey-Jamar
        and the Joint Venture at any time prior to the Closing (i) in the event either
        the Joint-Venture (to the extent a Joint-Venture has executed and become
        a party
        to the Agreement) or Bailey-Jamar has breached any representation, warranty,
        covenant or agreement contained in this Agreement in any material respect,
        the
        Buyer has notified both the Joint-Venture (to the extent a Joint-Venture
        has
        executed and become a party to the Agreement) and Bailey-Jamar of the breach,
        and the breach has continued without cure for a period of 10 days after the
        notice of breach or (ii) if the Closing shall not have occurred on or before
        February 28, 2007 (the “Outside Date”) by reason of the failure of any condition
        precedent under Section 1.3(b) hereof (unless the failure results primarily
        from
        the Company itself breaching any representation, warranty, covenant or agreement
        contained in this Agreement);

       

      (c)  The
        Joint-Venture (to the extent a Joint-Venture has executed and become a party
        to
        the Agreement) or Bailey-Jamar may terminate this Agreement by giving written
        notice to the Company at any time prior to the Closing (i) in the event the
        Company has breached any representation, warranty, covenant or agreement
        contained in this Agreement in any material respect, the Joint-Venture (to
        the
        extent a Joint-Venture has executed and become a party to the Agreement)
        and/or
        Bailey-Jamar themselves, or itself has notified the Company of the breach,
        and
        the breach has continued without cure for a period of 10 days after the notice
        of breach or (ii) if the Closing shall not have occurred on or before the
        Outside Date by reason of the failure of any condition precedent under Section
        1.3(a) hereof (unless the failure results primarily from the Joint-Venture
        (to
        the extent a Joint-Venture has executed and become a party to the Agreement)
        and/or Bailey-Jamar themselves, or itself breaching any representation,
        warranty, covenant or agreement contained in this Agreement);

       

      13.2.  Effect
        of Termination. If
        any
        party terminates this Agreement pursuant to Section 13.1 above, all rights
        and
        obligations of the parties hereunder shall terminate without any liability
        of
        any party to any other party, except for any liability of any party then
        in
        breach or with regards to matters which survive termination.

       

      13.3.  Waiver.
        Any
        condition to the performance of the parties which legally may be waived on,
        prior to, or after the Closing Date may be waived at any time by the party
        entitled to the benefit thereof by action taken or authorized by an instrument
        in writing executed by the relevant party or parties. The failure of any
        party
        at any time or times to require performance of any provision hereof shall
        in no
        manner affect the right of such party at a later time to enforce the same.
        No
        waiver by any party of the breach of any term, covenant, representation or
        warranty contained in this Agreement as a condition to such party’s obligations
        hereunder shall release or affect any liability resulting from such breach,
        and
        no waiver of any nature, whether by conduct or otherwise, in any one or more
        instances, shall be deemed to be or construed as a further or continuing
        waiver
        of any such condition or of any breach of any other term, covenant,
        representation or warranty of this Agreement.

       

      
        
          
          

        

        
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      ARTICLE
        XIV

      SURVIVAL
        OF REPRESENTATIONS AND WARRANTIES;

      INDEMNIFICATION

       

      14.1.  Survival
        of Representations and Warranties.
        All of
        the representations and warranties and indemnification obligations of the
        parties contained in this Agreement shall survive the Closing. The parties’
covenants and agreements shall survive termination of the Agreement to the
        extent expressly provided for in this Agreement.

       

      14.2.  Indemnification.

       

      14.2.1 General
        Indemnification Obligation of the Company.
        From
        and after the Closing, the Company will reimburse, indemnify and hold harmless
        the Joint-Venture and Bailey-Jamar against and in respect of:

       

      (a)  any
        and
        all damages, losses, deficiencies, liabilities, costs and expenses (collectively
        the “Claims”) incurred or suffered by the Joint-Venture or Bailey-Jamar
        respectively that result from, relate to or arise out of any misrepresentation,
        breach of warranty or non-fulfillment of any agreement or covenant on the
        part
        of the Company under this Agreement;

       

      (b)  any
        and
        all Actions, assessments, audits, fines, judgments, costs and other expenses
        (including, without limitation, reasonable legal fees and expenses) incident
        to
        any of the foregoing or to the enforcement of this Section 14.2.1.

       

      14.2.2 General
        Indemnification Obligation of the Joint-Venture.
        From
        and after the Closing, the Joint-Venture will reimburse, indemnify and hold
        harmless the Company against and in respect of:

       

      (a)  any
        and
        all Claims incurred or suffered by the Company that result from, relate to
        or
        arise out of any misrepresentation, breach of warranty or non-fulfillment
        of any
        agreement or covenant on the part of the Joint-Venture under this Agreement;
        and

       

      (b)  any
        and
        all Actions, assessments, audits, fines, judgments, costs and other expenses
        (including, without limitation, reasonable legal fees and expenses) incident
        to
        any of the foregoing or to the enforcement of this Section 14.2.2.

       

      14.2.3 General
        Indemnification Obligation of Bailey-Jamar.
        From
        and after the date of the Agreement, Bailey-Jamar will reimburse, indemnify
        and
        hold harmless the Company against and in respect of:

       

      (a)  any
        and
        all Claims incurred or suffered by the Company that result from, relate to
        or
        arise out of any misrepresentation, breach of warranty or non-fulfillment
        of any
        agreement or covenant on the part of Bailey-Jamar under this Agreement; and
        

       

      (b)  any
        and
        all Actions, assessments, audits, fines, judgments, costs and other expenses
        (including, without limitation, reasonable legal fees and expenses) incident
        to
        any of the foregoing or to the enforcement of this Section 14.2.3.

       

      
        
          
          

        

        
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      14.2.4 Additional
        Indemnification Obligation of Bailey-Jamar. 

       

      From
        and
        after the date of this Agreement, Bailey-Jamar will reimburse, indemnify
        and
        hold harmless
        the
        Company, each director and officer of the Company and any underwriter acting
        on
        behalf of the Company and each other person, if any, who controls the Company
        or
        any underwriter acting on behalf of the Company, within the meaning of the
        Securities Act (individually, a “Company Indemnified Party”, and collectively
        the “Company Indemnified Parties”), against and in respect of: 

       

      (a)  any
        and
        all Claims, joint or several, to which any one of them may become subject
        under
        the Securities Act or otherwise, to the extent that any such Claim arises
        out of
        or is based upon any disclosure, representation or warranty which violates
        or
        breaches the provisions in Section 9.1 hereof. Such indemnity shall remain
        in
        full force and effect, regardless of any investigation made by or on behalf
        of
        any Company Indemnified Party. 

       

      (b)  any
        and
        all Actions, assessments, audits, fines, judgments, costs and other expenses
        (including, without limitation, reasonable legal fees and expenses) incident
        to
        any of the foregoing or to the enforcement of this Section 14.2.4.

       

      ARTICLE
        XV

      NO
        NEGOTIATIONS; NO SOLICITATION

       

      15.1.  No
        Negotiations; No Solicitation.
        From
        the date hereof until the earlier of (a) the expiration of the period ending
        at
        11:59 p.m. mountain time on the Outside Date (the “Standstill Period”) or (b)
        the date this Agreement (i) closes or (ii) terminates in accordance with
        its
        terms without closing, neither the Company nor or any of its officers,
        directors, Subsidiaries, representatives or agents will take any action to
        (x)
        initiate the submission of any Transaction (as defined below), (y) enter
        into
        any agreement with respect to any Transaction or (z) participate in negotiations
        with, or provide information concerning the Company or the Company=s
        assets,
        to any person in connection with any Transaction. The Company will promptly
        communicate to Bailey-Jamar any solicitation or inquiry received by the Company
        and the terms of any proposal or inquiry that it may receive in respect of
        any
        Transaction, or of any such information requested from it, or of any such
        negotiations or discussions being sought to be initiated with it with respect
        to
        a Transaction. Nothing in this Section 15.1 shall be construed as prohibiting
        the officers of the Company from (A) making any disclosure to its Board of
        Directors or shareholders (B) responding to any unsolicited proposal or inquiry
        by advising the person making such proposal or inquiry of the terms of this
        Section 15.1. For purposes of this Section 15.1. “Transaction” means any
        proposed (1) sale of the Company’s assets, merger, consolidation, share
        exchange, financing transaction (other than customary bank and trade payable
        financing or credit), or (2) issuance, sale or other disposition of any of
        Company’s capital stock, Derivative Securities or other securities, or debt
        which is convertible or exchangeable into the Company’s capital stock, by the
        Company.

       

      15.2.  Exceptions.
        The
        provisions of Section 15.1 notwithstanding, the provisions of Section 15.1
        shall
        not apply to any unsolicited proposal or inquiry received by the Company
        that
        the Board of Directors concludes in good faith after advice from the Company’s
        outside legal counsel, and the Company’s financial advisor if any, is reasonably
        likely to lead to a proposal for a Transaction that is more favorable to
        the
        Company’s stockholders, from a financial point of view, than the transactions
        contemplated by this Agreement, and that such proposal is reasonably capable
        of
        being consummated, and that the Company’s failure to pursue such proposal and
        enter into negotiations with third parties with respect to such proposal
        is
        reasonably likely to result in a breach of the Board of Directors’ fiduciary
        obligations under applicable law. The Company shall promptly communicate
        to
        Bailey-Jamar any solicitation or proposal which is subject of this Section
        15.2.

       

      
        
          
          

        

        
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      ARTICLE
        XVI

      MISCELLANEOUS
        PROVISIONS

      

      16.1.  Entire
        Agreement.
        This
        Agreement, including the schedules attached hereto, which are a part hereof,
        constitutes the entire agreement of the parties with respect to the subject
        matter hereof.

       

      16.2.  Notices.
        All
        notices, requests, demands and other communications made under or by reasons
        of
        this Agreement shall be in writing and shall be given by hand delivery,
        certified or registered mail, return receipt requested, facsimile or next
        day
        courier to the affected party at the address set forth below. Such notices
        shall
        be deemed given: at the time personally delivered, if delivered by hand with
        receipt acknowledged; at the time received, if sent by certified or registered
        mail; upon issuance by the transmitting machine of a confirmation slip that
        the
        number of pages constituting the notice has been transmitted without error,
        if
        sent by facsimile; and the first day after timely to the courier, if sent
        by
        next day courier specifying next day delivery. The address for such notices
        and
        communications shall be as follows:

       

      If
        to the
        Company at:

      

      Nathaniel
        Energy Corporation

      8001
        South InterPort Boulevard

      Englewood,
        CO 80112

      Attention:
        Karen Strain-Smythe

      Facsimile
        No.: (303) 539-0741

      

      with
        a
        copy to:

      

      Certilman
        Balin Adler & Hyman, LLP

      90
        Merrick Avenue

      East
        Meadow, New York 11554

      Attention:
        Gavin C. Grusd, Esq.

      Facsimile
        No.: (516) 296-7111

      

      If
        to the
        Joint-Venture:

      

      c/o
        Bailey-Jamar, LLC

      1480
        Lone
        Scout Lookout

      Monument,
        CO 80132

      Attention:
        Brad E. Bailey

      Facsimile
        No.: (719) 487-7897

      

      with
        a
        copy to: 

      

      Bob
        Jamar

      P.O.
        Box
        18100

      Avon,
        CO
        81620

      Facsimile
        No.: (970) 926-2184

      

      If
        to
        Bailey-Jamar

      

      Bailey-Jamar,
        LLC

      1480
        Lone
        Scout Lookout

      Monument,
        CO 80132

      Attention:
        Brad E. Bailey

      Facsimile
        No.: (719) 487-7897

      

      with
        a
        copy to:

      

      Bob
        Jamar

      P.O.
        Box
        18100

      Avon,
        CO
        81620

      Facsimile
        No.: (970) 926-2184

      

      or
        at
        such other address as any party or person shall designate by notice to the
        other
        parties in accordance with the provisions of this Section 16.2.

      

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      16.3.  Choice
        of Law.
        All
        questions concerning the construction, validity, enforcement and interpretation
        of this Agreement shall be governed by and construed and enforced in accordance
        with the internal laws of the State of Delaware, without regard to the
        principles of conflicts of law thereof. Each party agrees that all Actions
        arising out of, or relating to this Agreement shall be commenced in the state
        and federal courts sitting in the state of Colorado, in or for Arapaho County.
        The foregoing notwithstanding, the Company may bring an Action to enforce
        its
        rights under Articles VIII and IX, and Sections 14.2.2 and 14.2.3 as those
        Sections relate to the enforcement of the Company’s rights under Articles VIII
        and IX, in any jurisdiction in which the covenants set forth in Articles
        VIII
        and IX may be enforced. Each party hereto hereby irrevocably submits to the
        exclusive jurisdiction of such state and federal courts for the adjudication
        of
        any dispute hereunder or in connection herewith or with any transaction
        contemplated hereby or discussed herein, and hereby irrevocably waives, and
        agrees not to assert in any Action, any claim that it is not personally subject
        to the jurisdiction of any such court, that such Action is improper.

       

      16.4.  Severability.
        In the
        event any clause, section or part of this Agreement shall be held or declared
        to
        be void, illegal or invalid for any reason, all other clauses, sections or
        parts
        of this Agreement which can be effected without such void, illegal or invalid
        clause, section or part shall nevertheless continue in full force and
        effect.

       

      16.5.  Successors
        and Assigns. 
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their successors and permitted assigns. No party may assign this Agreement
        or
        any of its rights or obligations hereunder without the prior written consent
        of
        the other parties.

       

      16.6.  Headings.
        The
        headings or captions in this Agreement are for convenience of reference only
        and
        do not in any way modify, interpret or construe the intent of the parties
        or
        affect any of the provisions of this Agreement.

       

      16.7.  Facsimile
        and Electronic Signatures.
        Signatures transmitted by facsimile or electronic mail
        shall be
        deemed original signatures.

       

      16.8.  Counterpart
        Signatures.
        This
        Agreement may be executed in counterparts, each of which shall be deemed
        an
        original, but all of which together shall constitute one and the same
        instrument.

       

      16.9.  Gender.
        All
        references to the masculine gender herein shall be deemed to refer to the
        feminine and neuter where applicable.

       

      16.10.  No
        Third-Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto
        and
        their respective successors and permitted assigns and is not for the benefit
        of,
        nor may any provision hereof be enforced by, any other person.

       

      16.11.  Representation
        by Counsel.
        Each
        party acknowledges that it or he has been represented by counsel in connection
        with this Agreement and the transactions contemplated hereby. Accordingly,
        any
        rule or law or any legal decision that would require the interpretation of
        any
        claimed ambiguities in this Agreement against the party that drafted it has
        no
        application and is expressly waived by the parties. The provisions of this
        Agreement shall be interpreted in a reasonable manner to give effect to the
        intent of the parties hereto.

       

      16.12.  Amendments;
        Waivers.
        No
        provision of this Agreement may be waived or amended except in a written
        instrument signed, in the case of an amendment, by the Company, Bailey-Jamar
        and
        the Joint-Venture (to the extent a Joint-Venture has executed and become
        a party
        to this Agreement) or, in the case of a waiver, by the party against whom
        enforcement of any such waiver is sought. No waiver of any default with respect
        to any provision, condition or requirement of this Agreement shall be deemed
        to
        be a continuing waiver in the future or a waiver of any subsequent default
        or a
        waiver of any other provision, condition or requirement hereof, nor shall
        any
        delay or omission of either party to exercise any right hereunder in any
        manner
        impair the exercise of any such right.

       

      

       

      [Remainder
        of page intentionally left blank. Signatures are on the following
        page.]

      
        
          

            
              
                
                

              

              
                23

                
                  

                

              

              
                
                

              

            

            IN
              WITNESS WHEREOF the
              undersigned parties have caused this Agreement to be duly executed
              as of the
              date first above written.

            

            NATHANIEL
              ENERGY CORPORATION

            

            By:
               /s/
              Karen S. Smythe 

            Director
              

            

            

            BAILEY-JAMAR,
              LLC

            

            

            By:
              /s/
              Brad E. Bailey      

             

            

            

            IN
              WITNESS WHEREOF
              the
              undersigned party has caused this Agreement to be duly executed as
              of
              ____________. 

            

            

            ________________________________

            Name
              of
              Joint-Venture

            

            By:
              _____________________________

             

            
                                                           _____________________________
                                            
Name
                and
                Title

            

            

            ________________________________

            Address
              of Joint-Venture

            

            ________________________________

            Telephone
              Number of Joint-Venture

            

            ________________________________

            Facsimile
              Number of Joint-Venture

            
              
                
                

              

              
                24

                
                  

                

              

              
                
                

              

            

            SCHEDULE
              2.1

            USE
              OF PURCHASE PRICE PROCEEDS

            

            

            The
              proceeds from the Purchase Price shall be used by the Company for the
              following
              purposes:

             

            

            
              	
                      Use

                    	 	
                      Approximate
                        Allocation

                    
	 	 	 
	
                      Project
                        Demonstration and ThermalTM Gasifier Demonstration Unit

                    	 	
                      $3,500,000
                        (for approximately 24 months)

                    
	 	 	 
	
                      Project
                        Seed Funds

                    	 	
                      $1,600,000

                    
	 	 	 
	
                      Working
                        Capital and Corporate Operations

                    	 	
                      $2,400,000
                        (for approximately 24 months)

                    
	 	 	 
	
                      Total

                    	 	
                      $7,500,000

                    

            

            

            The
              allocations set forth above are estimates. The purchase price funds
              may be
              reallocated by the officers of the Company and/or the Board of Directors
              with
              the consent of the Joint Venture which shall not unreasonably be withheld,
              if
              the officers or of the Company or Board of Directors determine that
              it is in the
              best interest of the Company and its stockholders to reallocate the
              funds among
              the above categories, or to use the funds for different purposes.

             

            
              
                
                

              

              
                25

                
                  

                

              

              
                
                

              

            

            SCHEDULE
              2.1a

            SCHEDULE
              OF COMPANY DRAWS

            

            

            The
              Company shall be permitted to draw down the Purchase Price held in
              escrow
              according to the following schedule and conditions:

             

            

             

            
              	
                      Use

                    	 	
                      Condition

                    	 	
                      Schedule

                    	 	
                      Draw

                    
	
                      Working
                        Capital and Corporate Operations

                    	 	
                      The
                        Company continues to demonstrate technical, operational,
                        and financial
                        viability.

                    	 	
                      Immediate
                        upon Closing then Quarterly (on first day of Quarter)

                    	 	
                      $300,000
                        per Quarter for approximately 8 Quarters.

                    
	 	 	 	 	 	 	 
	
                      Project
                        Seed Funds

                    	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
                      Lead
                        Revenue Project (Development costs, preliminary engineering,
                        permitting
                        legal, etc.)

                    	 	
                      Closing

                    	 	
                      Immediate
                        upon Closing

                       

                    	 	
                      $800,000

                       

                    
	 	 	 	 	 	 	 
	
                      Follow-on
                        Revenue Project (Development costs, preliminary engineering,
                        permitting,
                        legal, etc.)

                    	 	
                      Successful
                        negotiation and signing of Lead Revenue Project contract.

                       

                    	 	
                      14
                        days after Closing of Lead Revenue Project

                       

                    	 	
                      $800,000

                       

                    
	 	 	 	 	 	 	 
	
                      Nathaniel
                        GasifierTM Demonstration Project

                    	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
                      MFG-80
                        Gasifier Engineering and Fabrication Design

                    	
                    	
                      Closing

                    	 	
                      Immediate
                        upon Closing

                    	 	
                      $915,000

                    
	 	 	 	 	 	 	 
	
                      Site
                        preparation, engineering, construction and permitting

                    	 	
                      Successful
                        completion of Thermal Gasifier 60% design review

                    	 	
                      14
                        days after design review

                    	 	
                      $500,000

                    
	 	 	 	 	 	 	 
	
                      Fabrication
                        and installation contracts

                    	 	
                      Successful
                        completion of Thermal Gasifier 90% design review and
                        permitting

                    	 	
                      14
                        days after design review

                       

                    	 	
                      $575,000

                       

                    
	 	 	 	 	 	 	 
	
                      Startup,
                        handover operations & maintenance for 1 year

                    	 	
                      Thermal
                        Gasifier 100% design, fabrication and construction
                        commencement

                    	 	
                      14
                        days after fabrication and construction commencement

                    	 	
                      $1,510,000

                    
	 	 	 	 	 	 	 
	
                      Total

                    	 	 	 	 	 	
                      $7,500,000

                    

            

            
              
                
                

              

              
                26

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              4.10

            COMPANY
              LITIGATION

            

            

            

            None,
              except as set forth in the Company’s SEC Reports.

            
              
                
                

              

              
                27

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              4.13

            TITLE
              TO ASSETS

            

            

            The
              company’s assets are subject to the following Liens:

             

             

            
              
                
                

              

              
                28

                
                  

                

              

              
                
                

              

            

            

            
              	
                      Assets
                        Subject to Lien or Lienholders

                    	 	
                      Amount
                        Secured

                    
	
                      Saturn
                        Shredder

                    	 	
                      $
                        29,091.94

                    
	
                      CHAFA
                        ERS Shredder

                    	 	
                      $
                        17,591.28

                    
	
                      John
                        Deere Loader

                    	 	
                      $
                        22,432.36

                    
	
                      Caterpillar
                        Financial Services

                    	 	
                      $
                        30,192.01

                    
	
                      Hartford
                        Insurance

                    	 	
                      $
                        2,391.00

                    
	
                      Chevrolet
                        Silverado

                    	 	
                      $
                        5,464.25

                    
	
                      McDonnell
                        Note Payable

                    	 	
                      $
                        17,000.00

                    
	
                      GMC
                        Envoy

                    	 	
                      $
                        11,585.67

                    
	
                      Brown
                        Raynor

                    	 	
                      $
                        14,658.90

                    
	
                      Centennial
                        Bank

                    	 	
                      $
                        2,086.27

                    
	
                      Total

                    	 	
                      $152,493.68

                    

            

            

            Other
              Liens disclosed in the Company’s SEC reports.

            
              
                
                

              

              
                29

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              4.15

            TRANSACTIONS
              WITH AFFILIATES AND EMPLOYEES

            

            

            

            Brad
              Bailey, the Chief Executive Officer of the Company, is a member of
              Bailey-Jamar,
              a party to this Agreement.

            
              
                
                

              

              
                30

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              5.2

            BAILEY-JAMAR
              BENEFICIAL OWNERSHIP

            

            Bailey-Jamar
              is beneficially owned solely by Bob Jamar, President and Brad E. Bailey,
              Vice
              President. Mr. Jamar and Mr. Bailey are also the sole members and managers
              of
              Bailey-Jamar.

            

            

            
              
                
                

              

              
                31

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              6.2

            JOINT-VENTURE
              BENEFICIAL OWNERSHIP

            

            

            (To
              be
              added when Joint-Venture becomes party to the Agreement).

             

            

            

            
              
                
                

              

              
                32

                
                  

                

              

              
                
                

              

            

            

            SCHEDULE
              6.7

            JOINT-VENTURE
              LITIGATION

            

            

            

            

            (To
              be
              added when Joint-Venture becomes party to the Agreement).

             

            
              
                
                

              

              
                33

                
                  

                

              

              
                
                

              

            

            SCHEDULE
              9.1

            COMPANY
              AND BAILEY-JAMAR EMPLOYEES

            

            

            Brad
              E.
              Bailey is the Chief Executive Officer of the Company and a member of
              Bailey-Jamar.

             

             

            
              
                
                

              

              
                34<PAGE>

                                                               Exhibit 10(i)(16)

                                 LIMITED WAIVER
                                       TO
                           CONVERTIBLE LOAN AGREEMENTS

        This Limited Waiver to Convertible Loan Agreements ("LIMITED WAIVER") is
made, as of this 31st day of December, 2006, by and between Renaissance US
Growth Investment Trust PLC, a public limited company registered in England and
Wales formerly known as Renaissance US Growth & Income Trust PLC ("RENAISSANCE
PLC"), and BFSUS Special Opportunities Trust PLC, a public limited company
registered in England and Wales ("BFSUS") (Renaissance PLC and BFSUS are
collectively referred to as the "RENAISSANCE LENDERS"), who are the holders of
not less than a majority of the outstanding principal amount of the Renaissance
Debentures (as defined below) and not less than a majority of the outstanding
principal amount of the Additional Lenders Debentures (as defined below) (the
"Holders").

                WHEREAS, Cover-All Technologies Inc., a Delaware corporation
        (the "COMPANY"), the Renaissance Lenders and Renaissance Capital Group,
        Inc., a Texas corporation, as agent for the Renaissance Lenders, are
        parties to that certain Convertible Loan Agreement, dated as of June 28,
        2001 (as amended, the "RENAISSANCE LOAN AGREEMENT"), pursuant to which
        the Renaissance Lenders purchased from the Company 8% Convertible
        Debentures due 2008 for an aggregate principal amount of $1,400,000 and
        8% Convertible Debentures due 2009 for an aggregate principal amount of
        $700,000 (collectively, the "RENAISSANCE DEBENTURES"); and

                WHEREAS, the Company and John Roblin, Arnold Schumsky and Stuart
        Sternberg (collectively, the "ADDITIONAL LENDERS" and, together with the
        Renaissance Lenders, the "Lenders"), and Stuart Sternberg, as agent for
        the Additional Lenders, are parties to that certain Convertible Loan
        Agreement, dated as of June 28, 2001 (as amended, the "ADDITIONAL LOAN
        AGREEMENT" and, together with the Renaissance Loan Agreement, the "LOAN
        AGREEMENTS"), pursuant to which the Additional Lenders purchased from
        the Company 8% Convertible Debentures due 2008 for an aggregate
        principal amount of $400,000 (the "ADDITIONAL DEBENTURES" and, together
        with the Renaissance Debentures, the "DEBENTURES"); and

<PAGE>

                WHEREAS, terms not otherwise defined herein shall have the
        meanings as set forth in the Renaissance Agreement; and

                WHEREAS, for the fiscal quarter ending December 31, 2006, the
        Company is not in compliance with the financial covenants set forth in
        Section 7.01 of each of the Loan Agreements; and

                WHEREAS, the Company has requested that the Lenders, pursuant to
        Sections 12.02 and 11.04 of the Loan Agreements, waive, solely for the
        fiscal quarter ending December 31, 2006, the Company's failure to comply
        with the financial covenants set forth in Section 7.01 of each of the
        Loan Agreements;

                NOW, THEREFORE, in consideration of the premises and the mutual
        agreements set forth herein, the undersigned hereby agree as follows:

                1.      The Holders do hereby waive, solely for the fiscal
        quarter ending December 31, 2006, the Company's non-compliance with the
        financial covenants contained in Section 7.01 of each of the Loan
        Agreements; and

                2.      The Holders do hereby acknowledge and agree that the
        Company's non-compliance with the financial covenants contained in
        Section 7.01 of each of the Loan Agreements is not, and shall not be,
        deemed a Default or an Event of Default under the Loan Agreements.

                  [Remainder of page intentionally left blank.]

                                       2

<PAGE>

                IN WITNESS WHEREOF, this Limited Waiver is entered into as of
        the date set forth above.

                                      HOLDERS:

                                      RENAISSANCE US GROWTH INVESTMENT TRUST PLC

                                      By: /S/ RUSSELL CLEVELAND
                                          --------------------------------------
                                          Russell Cleveland, President,
                                          RENN Capital Group, Inc., Investment
                                      Manager (holding approximately 50% of the
                                      outstanding principal amount of the
                                      Renaissance Debentures and approximately
                                      42% of the outstanding principal amount of
                                      the Debentures)

                                      BFSUS SPECIAL OPPORTUNITIES TRUST PLC

                                      By: /S/ RUSSELL CLEVELAND
                                          --------------------------------------
                                          Russell Cleveland, President,
                                          RENN Capital Group, Inc., Investment
                                      Manager (holding approximately 50% of the
                                      outstanding principal amount of the
                                      Renaissance Debentures and approximately
                                      42% of the outstanding principal amount of
                                      the Debentures)

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