Document:

Unassociated Document

Exhibit 10.1

     

     

    AMENDMENT
      NO. 1 TO HERITAGE COMMERCE CORP

    2004
      STOCK OPTION PLAN

     

    This
      Amendment No. 1 to the Heritage Commerce Corp 2004 Stock Option Plan is dated
      as
      of May 25, 2006.

     

    RECITALS

     

    1. The
      Heritage Commerce Corp 2004 Stock Option Plan (the “Plan”) was approved by the
      Heritage Commerce Corp (the “Company”) shareholders on May 27,
      2004.

     

    2. Pursuant
      to Section 13 of the Plan, the Board of Directors and shareholders may amend
      the
      Plan from time to time.

     

    3. The
      Board
      of Directors, upon recommendation of the Compensation Committee, believes it
      is
      in the best interest of the Company and its shareholders to amend the Plan
      in
      accordance with terms of this Amendment No. 1, the form of which has been
      approved by the Board of Directors and shareholders.

     

    AMENDMENT

     

    SECTION
      1. The
      first
      paragraph of Section 3 is amended and restated in full to read as
      follows:

     

    “Subject
      to the provisions of Section 11 of the Plan, the maximum number of shares of
      Common Stock that may be issued under this Plan is 850, 000 unless amended
      by
      the Board or the shareholders of the Company.”

     

    SECTION
      2. This
      Amendment shall take effect as of May 25, 2006. Through May 24, 2006 the terms
      of the Plan shall be applied without giving effect to this Amendment, subject
      to
      approval of the Amendment by the Board of Directors and
      shareholders.

     

    SECTION
      3. Except
      as
      provided in this Amendment No. 1, the provisions, terms and conditions of the
      Plan shall remain in full force and effect. 

     

    HERITAGE
      COMMERCE CORP

     

    By:__________________________

     

    

     

    ACKNOWLEDGED
      AND AGREED:

     

    _______________________________<PDF>
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end
</PDF>Filed by Automated Filing Services Inc. (604) 609-0244 - Terrace Ventures Inc. - Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT is made effective as of the 24th day of
May, 2006.

AMONG:

GORDON F. BURLEY, of
Unit 111, 245 15th Street
West, North Vancouver, BC V7M 1S3

("Burley")

OF THE FIRST PART

AND:

SPORG CORPORATION, a
Nevada corporation with its registered office at 8275
S. Eastern Avenue,
Suite 200, Las Vegas, NV 89123

(“Sporg")

OF THE SECOND PART

AND:

TERRACE VENTURES INC., a
Nevada corporation with its principal office at 810
Peace Portal Drive, Suite
202, Blaine, WA 98230

(“Terrace")

OF THE THIRD PART

AND:

SPORG TECHNOLOGY CORP.,
a Nevada corporation with its registered office at 8275
S. Eastern Avenue,
Suite 200, Las Vegas, NV 89123

(“Terrace Sub")

OF THE FOURTH PART

WHEREAS:

A.      Burley (the “Principal
Shareholder”) is the controlling shareholder of Terrace;

B.       The Boards of Directors
of each of Terrace, Terrace Sub and Sporg deem it desirable and in the best
interests of their respective shareholders that Sporg be merged with and into
Terrace Sub with Terrace Sub as the surviving corporation (the “Merger”) on the
terms and subject to the conditions of this Agreement;

C.      The Boards of Directors of
each of Terrace, Terrace Sub and Sporg have approved and adopted this
Agreement;

D.      Terrace Sub is a wholly-owned
subsidiary of Terrace and Terrace Sub joins in the execution of this Agreement
in order to provide certain representations, warranties and covenants to
Sporg;

E.      Terrace, as the sole
shareholder of Terrace Sub, has approved the Merger; and

F.      The Principal Shareholder
joins in the execution of this Agreement in order to provide certain covenants
in respect of cancellation of his share position.

NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of covenants and agreements set forth herein and of the sum of
$10.00 paid by Sporg to the Principal Shareholder and to Terrace, the receipt of
which is hereby acknowledged, the parties hereto agree each with the other as
follows:

ARTICLE 1.
DEFINITIONS

1.1      Definitions.
  The following terms have the respective meanings specified in this Article,
  unless the context indicates otherwise.

	 	(a) 	
      "Agreement" shall mean this Agreement, and all the
      exhibits, schedules and other documents attached to or referred to in the
      Agreement, and all amendments and supplements, if any, to this
      Agreement;

	 	 	 
	 	(b) 	
      "Exchange Act" shall mean the United States Securities
      Exchange Act of 1934, as amended;

	 	 	 
	 	(c) 	
      "GAAP" shall mean United States generally accepted
      accounting principles applied in a manner consistent with prior
      periods;

	 	 	 
	 	(d) 	
      "SEC" shall mean the United States Securities and
      Exchange Commission;

	 	 	 
	 	(e) 	
      "Securities Act" shall mean the United States Securities
      Act of 1933, as amended;

	 	 	 
	 	(f) 	
      "Taxes" shall include federal, state, provincial and
      local income taxes, capital gains tax, value-added taxes, franchise,
      personal property and real property taxes, levies, assessments, tariffs,
      duties (including any customs duty), business license or other fees,
      sales, use and any other taxes relating to the assets of the designated
      party or the business of the designated party for all periods up to and
      including the Closing Date, together with any related charge or amount,
      including interest, fines, penalties and additions to tax, if any, arising
      out of tax assessments;

	 	 	 
	 	(g) 	
      "Sporg Options " shall mean any outstanding employee,
      director, officer, advisor or consultant options of Sporg, including any
      options granted under the Amended 2002 Stock Option Plan and the Amended
      2002B Stock Option Plan dated November 3, 2004 adopted by the board of
      directors of Sporg;

	 	 	 
	 	(h) 	
      "Investor Rights Agreement" shall mean the Investor
      Rights Agreement between Sporg and Charles Burtzloff as Trustee of the
      Charles Burtzloff Living Trust Dated 12/21/01; and

	 	 	 
	 	(i) 	
      "Terrace Private Placement" shall mean a private
      placement of up to 2,000,000 shares of Terrace at $0.30 per share approved
      by the directors of Terrace on May 24, 2006.

	 	 	 
	 	(j) 	
      "Interim Financing" shall mean the financing to be
      provided by Terrace to Sporg as described in paragraph 2.17 of this
      Agreement.

	 	 	 
	 	(k) 	
      "Sporg Principals" shall mean Frank Anderson, Eric
      Freeman and David Norman.

1.2      Schedules.
  The following schedules are attached to and form part of this Agreement:

	 	Schedule 	 Description 
	 	2.1 	 Articles of Merger 
	 	2.9A 	 Certificate of Non-U.S. Shareholder 
	 	2.9B	 Certificate of U.S. Shareholder 
	 	3.3 	 Capitalization of Sporg 

2

	 	Schedule 	Description 
	 	3.4 	Sporg Subsidiaries 
	 	3.6 	Actions and Proceedings 
	 	3.9 	Sporg Financial Statements 
	 	3.10 	Liabilities of Sporg 
	 	3.12 	Undisclosed Changes 
	 	3.14 	Sporg Employment and Consulting Agreements 
	 	3.15 	Intellectual Property 
	 	3.16 	Real Property 
	 	3.17 	Material Contracts 
	 	5.3 	Capitalization of Terrace 
	 	5.9 	Liabilities of Terrace 

                    1.3
       Currency. All dollar amounts referred to in
  this Agreement are in United States funds, unless expressly stated otherwise.

ARTICLE 2.
THE MERGER

                    2.1
        The Merger. At the Effective Time
  (as defined in Section 2.3 below), Sporg will be merged with and into Terrace
  Sub in accordance with this Agreement, the Articles of Merger substantially
  in the form of Schedule 2.1 attached to this Agreement (the “Articles
  of Merger”), and the applicable provisions of Chapter 92A of the Nevada
  Revised Statutes (the “Nevada Law”). Following the Merger, Terrace
  Sub will continue as the surviving corporation (the “Surviving Corporation”)
  and the separate existence of Sporg will cease, except insofar as it may be
  continued by Nevada Law.

                     2.2
        Closing. As soon as practicable following
  the satisfaction or waiver of the conditions set forth in Section 6 of this
  Agreement, and provided that this Agreement has not been terminated pursuant
  to Section 9, the parties to this Agreement will hold a closing (the “Closing”)
  for the purpose of confirming the consummation of the Merger at a time and date
  mutually agreed upon by the parties. Unless otherwise agreed by the parties,
  the Closing will take place at the offices of the lawyers for Sporg. Notwithstanding
  the location of the Closing, each party agrees that the Closing may be completed
  by the exchange of undertakings between the respective legal counsel for Sporg,
  Terrace and Terrace Sub, provided such undertakings are satisfactory to each
  party’s respective legal counsel. The date on which the Closing actually
  occurs is referred to as the “Closing Date.” At the Closing, the parties
  will execute and exchange all documents, certificates and instruments contemplated
  by this Agreement. The parties agree to use commercially reasonable efforts
  and all due diligence to cause the Closing to be consummated on or before June
  30, 2006 unless such date is extended by the mutual agreement of the parties.

                    2.3
       Effective Time of the Merger. The Merger
  will be effective at the time (the “Effective Time”) of the filing
  of the Articles of Merger with the Secretary of State of the State of Nevada,
  which certificate is to be filed as soon as practicable on or after the Closing
  Date.

                    2.4
       Effect of the Merger. The Merger will have
  the effect set forth in Section 92A.250 of Nevada Law. Without limiting the
  generality of the foregoing, and subject thereto, at the Effective Time all
  the property, rights, privileges, powers and franchises of Terrace Sub and Sporg
  will vest in the Surviving Corporation without further act or deed, and all
  debts, liabilities and duties of Terrace Sub and Sporg will become the debts,
  liabilities and duties of the Surviving Corporation. As a result or the Merger,
  the Surviving Corporation will be the wholly-owned subsidiary of Terrace.

3

                    2.5
       Certificate of Incorporation; Bylaws.

                              (a)
  The certificate of incorporation of Terrace Sub as in effect immediately prior
  to the Effective Time will continue unchanged, except to the extent amended
  by the Articles of Merger, and will be the certificate of incorporation of the
  Surviving Corporation until thereafter amended in accordance with the terms
  thereof and in accordance with applicable law.

                              (b)
       At the Effective Time, the bylaws of Terrace Sub,
  as in effect immediately prior to the Effective Time, will be the bylaws of
  the Surviving Corporation until thereafter amended in accordance with the terms
  thereof and in accordance with applicable law.

                    2.6    Directors and Officers. The directors and officers of the Surviving
  Corporation after the Effective Time will be the following persons: Frank Anderson,
  Howard Thomson, Eric Freeman and David Norman. Terrace, as the sole shareholder
  of Terrace Sub, by approving the Merger has approved these individuals as the
  directors of the Surviving Corporation and will take any further action in order
  to ensure the proper appointment of such directors to the board of directors
  of the Surviving Corporation.

                    2.7    Taking
  of Necessary Action. If after the Effective Time any further action is necessary
  to carry out the purposes of this Agreement or to vest the Surviving Corporation
  with full title to all assets, rights, approvals, immunities and franchises
  of either Terrace Sub or Sporg, the officers and directors, or the former officers
  and directors, as the case may be, of Terrace, Terrace Sub and Sporg and the
  Surviving Corporation will take all such necessary action.

                    2.8    Merger
  Consideration. Each share of Sporg common stock, par value $0.001 per share
  (“Sporg Common Stock”) issued and outstanding immediately prior to
  the Effective Time (other than Dissenting Shares, as defined in Section 2.10)
  will, by virtue of the Merger and without any action on the part of the holder
  thereof, be converted into two shares of Terrace Common Stock (as defined in
  Section 5.3) . All certificates representing the shares of Terrace Common Stock
  issued on effectiveness of the Merger will be endorsed with the following legend
  pursuant to the Securities Act in order to reflect that the fact that the shares
  of Terrace Common Stock will be issued to the shareholders of Sporg pursuant
  to exemptions or safe harbours from the registration requirements of the Securities
  Act:

For holders of Sporg Common Stock
resident in the United States:

“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT.”

For holders of Sporg Common Stock
resident outside the United States:

“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

                    2.9    Stock
  Certificate Conversion Procedure. After the Effective Time, each holder
  of Sporg Common Stock will be entitled to exchange his, her, or its certificate
  representing the Sporg Common Stock (“Sporg Stock Certificate”) for
  a certificate representing the number of shares of Terrace Common Stock into

4

which the number of shares of Sporg Common Stock previously
represented by such certificate surrendered have been converted pursuant to
Section 2.8 of this Agreement. Each holder of Sporg Common Stock may exchange
his, her or its Sporg Stock Certificate by delivering such Sporg Stock
Certificate to Terrace duly endorsed in blank (or accompanied by duly executed
stock powers duly endorsed in blank), in each case in proper form for transfer,
with signatures guaranteed, and, if applicable, with all stock transfer and any
other required documentary stamps affixed thereto and with appropriate
instructions to allow the transfer agent to issue certificates for the Terrace
Common Stock to the holder thereof together with: (i) a Regulation S Investment
Letter (if such holder is resident outside of the United States), a copy of
which is attached hereto in Schedule 2.9A, or (ii) a Regulation D
Investment Letter (if such holder is resident in the United States), a copy of
which is attached hereto in Schedule 2.9B. Until surrendered as
contemplated by this Section 2.9, each Sporg Stock Certificate will be deemed at
any time after the Effective Time to represent only the right to receive Terrace
Common Stock certificates representing the number of whole shares of Terrace
Common Stock into which the shares of Sporg Common Stock formerly represented by
such certificate have been converted. Upon receipt of such duly endorsed Sporg
Stock Certificates, Terrace will cause the issuance of the number of shares of
Terrace Common Stock as converted pursuant to Section 2.8 of this Agreement.

                    2.10    Appraisal
  Rights. Notwithstanding any provision of this Agreement to the contrary,
  shares of Sporg Common Stock (the “Dissenting Shares”) that are issued
  and outstanding immediately prior to the Effective Time and held by stockholders
  who did not vote in favor of the Merger and who comply with all of the relevant
  provisions of Sections 92A.300 to 92A.500 of Nevada Law (the “Dissenting
  Stockholders”) will not be converted into or be exchangeable for the right
  to receive Terrace Common Stock, unless and until such holders have failed to
  perfect or have effectively withdrawn or lost their rights to appraisal under
  Nevada Law. Sporg will give Terrace (i) immediate oral notice followed by prompt
  written notice of any written demands for appraisal of any shares of Sporg Common
  Stock, attempted withdrawals of any such demands and any other instruments served
  pursuant to Nevada Law and received by Sporg relating to stockholders' rights
  of appraisal, and (ii) will keep Terrace informed of the status of all negotiations
  and proceedings with respect to demands for appraisal under Nevada Law. If any
  Dissenting Stockholder fails to perfect or will have effectively withdrawn or
  lost the right to appraisal, the shares of Sporg Common Stock held by such Dissenting
  Stockholder will thereupon be treated as though such shares had been converted
  into the right to receive Terrace Common Stock pursuant to Section 2.8 of this
  Agreement.

                    2.11    No
  Further Ownership Rights in Sporg Common Stock. The promise to exchange
  the Sporg Common Stock for shares of Terrace Common Stock in accordance with
  the terms of this Agreement will be deemed to have been given in full satisfaction
  of all rights pertaining to the Sporg Common Stock, and there will be no further
  registration of transfers on the stock transfer books of Sporg of the shares
  of Sporg Common Stock that were outstanding immediately prior to the Effective
  Time. From and after the Effective Time, the holders of Sporg Common Stock outstanding
  immediately prior to the Effective Time will cease to have any rights with respect
  to such Sporg Common Stock, except as otherwise provided in this Agreement or
  by law.

                    2.12    Distributions
  with Respect to Unsurrendered Sporg Common Stock. No dividends or other
  distributions by Terrace with a record date after the Effective Time will be
  paid to the holder of any unsurrendered Sporg Stock Certificate until the surrender
  of such Sporg Stock Certificate in accordance with Section 2.9 of this Agreement.
  Following surrender of any such Sporg Stock Certificate, Terrace will pay to
  the holder of the Terrace Common Stock certificate issued in exchange the Sporg
  Stock Certificate, without interest, (i) at the time of such surrender, the
  amount of any dividends or other distributions with a record date after the
  Effective Time and paid before the time of such surrender with respect to such
  Terrace Common Stock which such holder is entitled pursuant to Section 2.8 of
  this Agreement, and (ii) at the appropriate payment date, the amount of any
  dividends or other distributions with a record date after the Effective Time
  but prior to such surrender and with a payment date subsequent to such surrender
  payable with respect to such Terrace Common Stock.

                    2.13    No
  Liability. Neither Terrace, Terrace Sub, nor the Surviving Corporation will
  be liable to any person in respect of shares of Sporg Common Stock, or dividends
  or distributions with respect thereto, pursuant to any applicable abandoned
  property, escheat or similar law. If any Sporg Stock Certificate has not have
  been surrendered prior to seven years after the Effective Time (or immediately
  prior to such earlier date on which any Sporg Stock Certificate, or any dividends
  or distributions payable to the holder of such Sporg Stock Certificate would
  otherwise escheat to or become the property of any governmental body or authority),
  any such Terrace Common Stock, dividends or distributions in respect of such
  Sporg Stock Certificate will, to 

5

the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled to such certificate

                    2.14    Lost,
  Stolen or Destroyed Certificates. If any certificate representing Sporg
  Common Stock has been lost, stolen or destroyed, upon the making of an affidavit
  of that fact by the person claiming such certificate or agreement to be lost,
  stolen or destroyed and, if required by Terrace, the posting by such person
  of a bond in such reasonable amount as Terrace may direct as indemnity against
  any claim that may be made against it with respect to such certificate, Terrace
  will cause to be issued in exchange for such lost, stolen or destroyed certificate,
  the applicable Terrace Common Stock deliverable in respect thereof, pursuant
  to Section 2.8 of this Agreement.

                    2.15    Existing
  Sporg Warrants. The holders of the outstanding warrants (the “Sporg
  Warrants’) to purchase shares of Sporg will be offered warrants entitling
  them to purchase twice the number of shares of Terrace at the same exercise
  dates and at 50% of the exercise prices in exchange for the surrender of the
  Sporg Warrants, subject to delivery of declarations by the holders of the Sporg
  Warrants, as applicable, substantially in the forms set out in Schedule 2.9A
  or Schedule 2.9B.

                    2.16    Sporg
  Options. Terrace will offer to grant, to the holders of the Sporg Options,
  options entitling them to purchase twice the number of shares under the option
  plan referred to in Section 6.2(i) of this Agreement on the same terms and conditions,
  including 50% of the exercise price, as the Sporg Options, vesting on the basis
  of 10% for each 90 day period following their granting.

                    2.17    Interim
  Financing. Following execution of this Agreement, Terrace will provide interim
  financing to Sporg through the purchase of shares of Sporg at a price of $0.65
  per share as follows:

	Purchase Date 	Number of Shares 	Amount 
	10 days following execution of this
      Agreement 	269,230 	175,000 
	30 days following execution of this
      Agreement 	269,230 	175,000 
	60 days following execution of this
      Agreement 	269,230 	175,000 
	TOTAL 	807,690 	525,000 

ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF
SPORG

     Sporg represents and warrants to
Terrace and Terrace Sub, and acknowledges that Terrace and Terrace Sub are
relying upon such representations and warranties, in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by or on behalf of Terrace or Terrace Sub, as follows:

                    3.1    Organization
  and Good Standing. Sporg is a corporation duly organized, validly existing
  and in good standing under the laws of the State of Nevada and has all requisite
  corporate power and authority to own, lease and to carry on its business as
  now being conducted. Sporg is duly qualified to do business and is in good standing
  as a foreign corporation in each of the jurisdictions in which it owns property,
  leases property, does business, or is otherwise required to do so, where the
  failure to be so qualified would have a material adverse effect on the business
  of Sporg taken as a whole.

                    3.2    Authority.
  Sporg has all requisite corporate power and authority to execute and deliver
  this Agreement and any other document contemplated by this Agreement (collectively,
  the “Sporg Merger Documents”) to be signed by Sporg and to perform
  its obligations thereunder and to consummate the Merger contemplated thereby.
  The execution and delivery of each of the Sporg Merger Documents by Sporg and
  the consummation of the Merger contemplated thereby have been duly authorized
  by its Board of Directors. No other corporate or shareholder proceedings on
  the part of Sporg are necessary to authorize such documents or to consummate
  the Merger contemplated thereby other than the approval of the shareholders
  of Sporg of the Merger. This Agreement has been, and the other Sporg Merger
  Documents when executed and delivered by Sporg as contemplated by this Agreement
  will be, duly executed and delivered by Sporg and this Agreement is, and the
  other Sporg Merger Documents when executed and delivered by Sporg as 

6

contemplated hereby will be, the valid and binding obligation
of Sporg enforceable in accordance with their respective terms, except (1) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, (2) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (3) as limited
by public policy.

                    3.3    Capitalization
  of Sporg. The entire authorized capital stock and other equity securities
  of Sporg consists of 100,000,000 shares of Sporg Common Stock, par value of
  $0.001 per share. There are 24,410,451 shares of Sporg Common Stock issued and
  outstanding as of the date of this Agreement. All of the issued and outstanding
  shares of Sporg Common Stock have been duly authorized, are validly issued,
  were not issued in violation of any pre-emptive rights and are fully paid and
  non-assessable, are not subject to pre-emptive rights and were issued in full
  compliance with all federal, state, and local laws, rules and regulations. Except
  as set forth on Schedule 3.3, there are no outstanding options, warrants,
  subscriptions, conversion rights, or other rights, agreements, or commitments
  obligating Sporg to issue any additional shares of Sporg Common Stock, or any
  other securities convertible into, exchangeable for, or evidencing the right
  to subscribe for or acquire from Sporg any shares of Sporg Common Stock. Except
  as set forth on Schedule 3.3, there are no agreements purporting to restrict
  the transfer of the Sporg Common Stock, no voting agreements, voting trusts,
  or other arrangements restricting or affecting the voting of the Sporg Common
  Stock.

                    3.4    No
  Subsidiaries. Except as set forth on Schedule 3.4, Sporg does not
  have any subsidiaries or agreements of any nature to acquire any subsidiary
  or to acquire or lease any other business operations and will not prior to the
  Closing Date acquire, or agree to acquire, any subsidiary or business without
  the prior written consent of Terrace.

                    3.5    Non-contravention.
  Neither the execution, delivery and performance of this Agreement, nor the consummation
  of the Merger, will:

                              (1)    conflict
  with, result in a violation of, cause a default under (with or without notice,
  lapse of time or both) or give rise to a right of termination, amendment, cancellation
  or acceleration of any obligation contained in or the loss of any material benefit
  under, or result in the creation of any lien, security interest, charge or encumbrance
  upon any of the material properties or assets of Sporg under any term, condition
  or provision of any loan or credit agreement, note, debenture, bond, mortgage,
  indenture, lease or other agreement, instrument, permit, license, judgment,
  order, decree, statute, law, ordinance, rule or regulation applicable to Sporg,
  or any of its respective property or assets;

                              (2)    violate
  any provision of the articles of incorporation or bylaws of Sporg; or

                              (3)    violate
  any order, writ, injunction, decree, statute, rule, or regulation of any court
  or governmental or regulatory authority applicable to Sporg or any of its respective
  property or assets.

                    3.6    Actions
  and Proceedings. Except as described in Schedule 3.6, there is no
  claim, charge, arbitration, grievance, action, suit, investigation or proceeding
  by or before any court, arbiter, administrative agency or other governmental
  authority now pending or, to the best knowledge of Sporg or the Principal Shareholders,
  threatened against Sporg or which involves any of the business, or the properties
  or assets of Sporg that, if adversely resolved or determined, would have a material
  adverse effect on the business, operations, assets, properties, prospects, or
  conditions of Sporg taken as a whole (a “Sporg Material Adverse Effect”).
  There is no reasonable basis for any claim or action that, based upon the likelihood
  of its being asserted and its success if asserted, would have such a Sporg Material
  Adverse Effect. Schedule 3.6 lists all pending legal claims or proceedings,
  whether or not such claim or proceeding would result in a Sporg Material Adverse
  Effect.

                  
    3.7    Compliance.

                              (a)    Sporg
  is in compliance with, is not in default or violation in any material respect
  under, and has not been charged with or received any notice at any time of any
  material violation by it of, any statute, law, ordinance, regulation, rule,
  decree or other applicable regulation to the business or operations of Sporg;

7

                              (b)    is
  not subject to any judgment, order or decree entered in any lawsuit or proceeding
  applicable to its business and operations that would constitute a Sporg Material
  Adverse Effect;

                              (c)    Sporg
  has duly filed all reports and returns required to be filed by it with governmental
  authorities and has obtained all governmental permits and other governmental
  consents, except as may be required after the execution of this Agreement. All
  of such permits and consents are in full force and effect, and no proceedings
  for the suspension or cancellation of any of them, and no investigation relating
  to any of them, is pending or to the best knowledge of Sporg, threatened, and
  none of them will be adversely affected by the consummation of the Merger contemplated
  hereby; and

                              (d)    Sporg
  has operated in material compliance with all laws, rules, statutes, ordinances,
  orders and regulations applicable to its business. Sporg has not received any
  notice of any violation thereof, nor is Sporg aware of any valid basis therefore.

                    3.8    Filings,
  Consents and Approvals. Other than the approval of holders owning a majority
  of the Sporg Common Stock, no filing or registration with, no notice to and
  no permit, authorization, consent, or approval of any public or governmental
  body or authority or other person or entity is necessary for the consummation
  by Sporg of the Merger contemplated by this Agreement or to enable Terrace to
  continue to conduct Sporg’s business after the Closing Date in a manner
  which is consistent with that in which it is presently conducted.

                    3.9    Financial
  Representations. Attached to this Agreement as Schedule 3.9 are true,
  correct, and complete copies of audited balance sheets for Sporg dated as of
  September 30, 2005 and 2004 and unaudited balance sheet dated as of March 31,
  2006, together with related statements of operations and deficit, statements
  of shareholders’ deficiency (equity), for the fiscal years then ended (collectively,
  the “Financial Statements”). The Financial Statements (a) are in accordance
  with the books and records of Sporg, (b) present fairly the financial condition
  of Sporg as of the respective dates indicated and the results of operations
  for such periods, and (c) have been prepared in accordance with GAAP. Sporg
  has not received any advice or notification from its independent certified public
  accountants that Sporg has used any improper accounting practice that would
  have the effect of not reflecting or incorrectly reflecting in the Financial
  Statements or the books and records of Sporg, any properties, assets, liabilities,
  revenues, or expenses. The books, records, and accounts of Sporg accurately
  and fairly reflect, in reasonable detail, the Merger, assets, and liabilities
  of Sporg. Sporg has not engaged in any transaction, maintained any bank account,
  or used any funds of Sporg, except for transactions, bank accounts, and funds
  which have been and are reflected in the normally maintained books and records
  of Sporg.

                    3.10    Undisclosed
  Liabilities. Except as set forth in Schedule 3.10, Sporg has no liabilities
  or obligations either direct or indirect, matured or unmatured, absolute, contingent
  or otherwise, which:

                               (a)    are
  not set forth in the Financial Statements or have not heretofore been paid or
  discharged;

                              (b)    did
  not arise in the regular and ordinary course of business under any agreement,
  contract, commitment, lease or plan specifically disclosed (or are not required
  to be disclosed in accordance with GAAP); or

                              (c)    have
  not been incurred in amounts and pursuant to practices consistent with past
  business practice, in or as a result of the regular and ordinary course of its
  business since the date of the last Financial Statements.

                    For
  purposes of this Agreement, the term “liabilities” includes, any direct
  or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
  cost, expense, obligation or responsibility, fixed or unfixed, known or unknown,
  asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

                    3.11    Tax
  Matters.

                              (a)    As
  of the date hereof, (i) Sporg has timely filed all tax returns in connection
  with any Taxes which are required to be filed on or prior to the date hereof,
  taking into account any extensions of the 

8

filing deadlines which have been validly granted to them; and
(ii) all such returns are true and correct in all material respects.

                              (b)     
  Sporg has paid all Taxes that have become or are due with respect to any period
  ended on or prior to the date hereof, and has established an adequate reserve
  therefore on its balance sheet for those Taxes not yet due and payable, except
  for any Taxes the nonpayment of which will not have a Sporg Material Adverse
  Effect.

                              (c)     
  Sporg is not presently under and has not received notice of, any contemplated
  investigation or audit by the Internal Revenue Service or any foreign or state
  taxing authority concerning any fiscal year or period ended prior to the date
  hereof.

                              (d)     
  All Taxes required to be withheld on or prior to the date hereof from employees
  for income Taxes, social security Taxes, unemployment Taxes and other similar
  withholding Taxes have been properly withheld and, if required on or prior to
  the date hereof, have been deposited with the appropriate governmental agency.

                    3.12    Changes.
  Except as set forth in Schedule 3.12, since September 30, 2005, Sporg
  has not:

                              (a)    
  incurred any liabilities, other than liabilities incurred in the ordinary course
  of business consistent with past practice, or discharged or satisfied any lien
  or encumbrance, or paid any liabilities, other than in the ordinary course of
  business consistent with past practice, or failed to pay or discharge when due
  any liabilities of which the failure to pay or discharge has caused or will
  cause any material damage or risk of material loss to it or any of its assets
  or properties;

                              (b)    sold,
  encumbered, assigned or transferred any fixed assets or properties which would
  have been included in the assets of Sporg if the closing had been held on September
  30, 2005 or on any date since then, except for ordinary course of business transactions
  consistent with past practice;

                              (c)    created,
  incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged,
  pledged or subjected any of the assets or properties of Sporg to any mortgage,
  lien, pledge, security interest, conditional sales contract or other encumbrance
  of any nature whatsoever;

                              (d)    made
  or suffered any amendment or termination of any material agreement, contract,
  commitment, lease or plan to which it is a party or by which it is bound, or
  cancelled, modified or waived any substantial debts or claims held by it or
  waived any rights of substantial value, whether or not in the ordinary course
  of business;

                              (e)    declared,
  set aside or paid any dividend or made or agreed to make any other distribution
  or payment in respect of its capital shares or redeemed, purchased or otherwise
  acquired or agreed to redeem, purchase or acquire any of its capital shares
  or equity securities;

                              (f)    suffered
  any damage, destruction or loss, whether or not covered by insurance, materially
  and adversely its business, operations, assets, properties or prospects;

                              (g)    suffered
  any material adverse change in its business, operations, assets, properties,
  prospects or condition (financial or otherwise);

                              (h)    received
  notice or had knowledge of any actual or threatened labor trouble, termination,
  resignation, strike or other occurrence, event or condition of any similar character
  which has had or might have an adverse effect on its business, operations, assets,
  properties or prospects;

                              (i)   
  made commitments or agreements for capital expenditures or capital additions
  or betterments exceeding in the aggregate $50,000, except such as may be involved
  in ordinary repair, maintenance or replacement of its assets;

                              (j)    
  other than in the ordinary course of business, increase the salaries or other
  compensation of, or made any advance (excluding advances for ordinary and necessary
  business expenses) 

9

or loan to, any of its employees or made any increase in, or
any addition to, other benefits to which any of its employees may be
entitled;

                              (k)    changed
  any of the accounting principles followed or the methods of applying such principles;

                              (l)  
    entered into any transaction other than in the ordinary course of
  business consistent with past practice; or

                              (m)   agreed,
  whether in writing or orally, to do any of the foregoing.

                    3.13    Personal
  Property. Sporg does not own or lease any furniture, fixtures or other tangible
  personal property.

                    3.14    Employees
  and Consultants. All employees and consultants of Sporg have been paid all
  salaries, wages, income and any other sum due and owing to them by Sporg as
  at the end of the most recent completed pay period. Sporg is not aware of any
  labor conflict with any of Sporg employees that might reasonably be expected
  to have a Sporg Material Adverse Effect. Except as disclosed in Schedule
  3.14, Sporg has not entered into any written contracts of employment or
  consulting agreements. All amounts required to be withheld by Sporg from employees’
  salaries or wages and paid to any governmental or taxing authority have been
  so withheld and paid. No employee of Sporg is in violation of any term of any
  employment contract, non-disclosure agreement, non-competition agreement or
  any other contract or agreement relating to the relationship of such employee
  with Sporg or any other nature of the business conducted or to be conducted
  by Sporg or the Surviving Corporation.

                    3.15    Intellectual
  Property. Sporg owns the intellectual property described in Schedule 3.15.

                    3.16    Real
  Property. Except as described in Schedule 3.16, Sporg does not lease or
  own any real property.

                    3.17    Material
  Contracts and Transactions. Schedule 3.17 contains a list of all
  material contracts, agreements, licenses, permits, arrangements, commitments,
  instruments, understandings or contracts, whether written or oral, express or
  implied, contingent, fixed or otherwise, to which Sporg is a party (collectively,
  the “Contracts”).

                              (a)    Except
  as listed on Schedule 3.17, Sporg is not a party to any written or oral:

	 		(1) 	 agreement for the purchase, sale or lease of any capital
        assets, or continuing contracts for the purchase or lease of any materials,
        supplies, equipment, real property or services;

	 	 	 	 
	 		(2) 	 agreement regarding, sales agency, distributorship,
        or the payment of commissions;

	 	 	 	 
	 		(3) 	 agreement for the employment or consultancy of any person
        or entity;

	 	 	 	 
	 		(4) 	 note, debenture, bond, trust agreement, letter of credit
        agreement loan agreement, or other contract or commitment for the borrowing
        or lending of money, or agreement or arrangement for a line of credit
        or guarantee, pledge, or undertaking of the indebtedness of any other
        person;

	 	 	 	 
	 		(5) 	 agreement, contract, or commitment for any charitable
        or political contribution;

	 	 	 	 
	 		(6) 	 agreement, contract, or commitment limiting or restraining
        Sporg, their business or any successor thereto from engaging or competing
        in any manner or in any business or from hiring any employees, nor is
        any employee of Sporg subject to any such agreement, contract, or commitment;

10

	 	(7) 	
      material agreement, contract, or commitment not made in
      the ordinary course of business;

	 	 	 
	 	(8) 	
      agreement establishing or providing for any joint
      venture, partnership, or similar arrangement with any other person or
      entity;

	 	 	 
	 	(9) 	
      agreement, contract or understanding containing a “change
      in control,” or similar provision; or

	 	 	 
	 	(10) 	
      power of attorney or similar authority to
  act.

                              (b)    Each
  Contract is in full force and effect, and there exists no material breach or
  violation of or default by Sporg under any Contract, or any event that with
  notice or the lapse of time, or both, will create a material breach or violation
  thereof or default under any Contract by Sporg. The continuation, validity,
  and effectiveness of each Contract will in no way be affected by the consummation
  of the Merger contemplated by this Agreement. Except as listed on Schedule
  3.17, there exists no actual or threatened termination, cancellation, or
  limitation of, or any amendment, modification, or change to any Contract. A
  true, correct and complete copy (and if oral, a description of material terms)
  of each Contract, as amended to date, has been furnished to Terrace.

                    3.18    Certain
  Transactions. Except as disclosed in Schedule 3.18, Sporg is not
  indebted, directly or indirectly, to any of its officers, directors or shareholders
  or to their respective spouses or children, in any amount whatsoever and Sporg
  is not a guarantor or indemnitor of any indebtedness of any other person, firm
  or corporation.

                    3.19    No
  Brokers. Sporg has not incurred any obligation or liability to any party
  for any brokerage fees, agent's commissions, or finder's fees in connection
  with the Merger contemplated by this Agreement for which Terrace would be responsible.

                    3.20    Minute
  Books. The minute books of Sporg provided to Terrace contain a complete
  summary of all meetings of directors and shareholders since the time of incorporation
  of such entity and reflect all transactions referred to in such minutes accurately
  in all material respects.

                    3.21    Completeness
  of Disclosure. No representation or warranty by Sporg in this Agreement
  nor any certificate, schedule, statement, document or instrument furnished or
  to be furnished to Terrace pursuant hereto contains or will contain any untrue
  statement of a material fact or omits or will omit to state a material fact
  required to be stated herein or therein or necessary to make any statement herein
  or therein not materially misleading.

ARTICLE 4.
COVENANTS, REPRESENTATIONS AND
WARRANTIES
OF THE PRINCIPAL SHAREHOLDER

The Principal Shareholder covenants with and represents and
warrants to Sporg as follows, and acknowledges that Sporg is relying upon such
covenants, representations and warranties in connection with the merger of Sporg
with Terrace Sub, as follows:

                    4.1    The
  Principal Shareholder is the legal and beneficial owner of 15,800,000 common
  shares of Terrace.

                    4.2    No
  person, firm or corporation has any agreement or option or any right or privilege
  (whether by law, pre-emptive or contractual) capable of becoming an agreement
  or option for the purchase from the Principal Shareholder of any of the shares
  of Terrace held by the Principal Shareholder.

                    4.3    This
  Agreement has been duly authorized, validly executed and delivered by the Principal
  Shareholder.

11

ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
OF
TERRACE

                    Terrace
  and Terrace Sub jointly and severally represent and warrant to Sporg and acknowledge
  that Sporg is relying upon such representations and warranties in connection
  with the execution, delivery and performance of this Agreement, notwithstanding
  any investigation made by or on behalf of Sporg, as follows:

                    5.1    Organization
  and Good Standing. Terrace and Terrace Sub are each duly organized, validly
  existing and in good standing under the laws of Nevada and have all requisite
  corporate power and authority to own, lease and to carry on its respective businesses
  as now being conducted. Terrace is duly qualified to do business and is in good
  standing as foreign corporations in each of the jurisdictions in which it owns
  property, leases property, does business, or is otherwise required to do so,
  where the failure to be so qualified would have a material adverse effect on
  the businesses, operations, or financial condition of Terrace. Terrace Sub has
  not carried on any business or acquired any assets or incurred any liabilities
  since its incorporation, other than by reason of execution of this Agreement.

                    5.2    Authority.
  Terrace and Terrace Sub have all requisite corporate power and authority to
  execute and deliver this Agreement and any other document contemplated by this
  Agreement (collectively, the “Terrace Merger Documents”) to be signed
  by Terrace and Terrace Sub and to perform their obligations thereunder and to
  consummate the Merger contemplated thereby. The execution and delivery of each
  of the Terrace Merger Documents by Terrace and Terrace Sub and the consummation
  by Terrace and Terrace Sub of the Merger contemplated thereby have been duly
  authorized by their respective Board of Directors and no other corporate or
  shareholder proceedings on the part of Terrace or Terrace Sub are necessary
  to authorize such documents or to consummate the Merger contemplated thereby.
  This Agreement has been, and the other Terrace Merger Documents when executed
  and delivered by Terrace and Terrace Sub as contemplated by this Agreement will
  be, duly executed and delivered by Terrace and Terrace Sub and this Agreement
  is, and the other Terrace Merger Documents when executed and delivered by Terrace
  and Terrace Sub, as contemplated hereby will be, the valid and binding obligations
  of Terrace and Terrace Sub enforceable in accordance with their respective terms,
  except (1) as limited by applicable bankruptcy, insolvency, reorganization,
  moratorium, and other laws of general application affecting enforcement of creditors'
  rights generally, (2) as limited by laws relating to the availability of specific
  performance, injunctive relief, or other equitable remedies, and (3) as limited
  by public policy.

                    5.3    Capitalization
  of Terrace. The entire authorized capital stock of Terrace consists of 400,000,000
  shares of common stock, par value $0.001 (“Terrace Common Stock”).
  There are 32,009,920 shares of Terrace common stock issued and outstanding as
  of the date of this Agreement. All of the issued and outstanding shares of Terrace
  Stock have been duly authorized, are validly issued, were not issued in violation
  of any pre-emptive rights and are fully paid and non-assessable, are not subject
  to pre-emptive rights and were issued in full compliance with all federal, state,
  and local laws, rules and regulations. Except as set forth on Schedule 5.3,
  there are no outstanding options, warrants, subscriptions, phantom shares, conversion
  rights, or other rights, agreements, or commitments obligating Terrace to issue
  any additional shares of Terrace Stock, or any other securities convertible
  into, exchangeable for, or evidencing the right to subscribe for or acquire
  from Terrace any shares of Terrace Stock. Except as set forth on Schedule
  5.3, there are no agreements purporting to restrict the transfer of the
  Terrace Stock, no voting agreements, voting trusts, or other arrangements restricting
  or affecting the voting of the Terrace Stock.

                    5.4    Capitalization
  of Terrace Sub. The entire authorized capital stock and other equity securities
  of Terrace Sub (“Terrace Sub Stock”) consists of an aggregate of 200,000,000
  shares comprised of 100,000,000 shares of common stock, par value $0.001 per
  share (“Terrace Sub Common Stock”) and 100,000,000 shares of preferred
  stock, par value $0.001 per share. There are 1,000 shares of Terrace Sub common
  stock issued and outstanding as of the date of this Agreement. All of the issued
  and outstanding shares of Terrace Sub Stock have been duly authorized, are validly
  issued, were not issued in violation of any pre-emptive rights and are fully
  paid and non-assessable, are not subject to pre-emptive rights and were issued
  in full compliance with all federal, 

12

state, and local laws, rules and regulations. There are no
outstanding options, warrants, subscriptions, phantom shares, conversion rights,
or other rights, agreements, or commitments obligating Terrace Sub to issue any
additional shares of Terrace Sub Stock, or any other securities convertible
into, exchangeable for, or evidencing the right to subscribe for or acquire from
Terrace any shares of Terrace Sub Stock. There are no agreements purporting to
restrict the transfer of the Terrace Stock, no voting agreements, voting trusts,
or other arrangements restricting or affecting the voting of the Terrace
Stock.

                    5.5    Validity
  of Terrace Common Stock Issuable upon the Merger. The shares of Terrace
  Common Stock to be issued upon consummation of the Merger in accordance with
  this Agreement will, upon issuance, have been duly and validly authorized and,
  when so issued in accordance with the terms of this Agreement, will be duly
  and validly issued, fully paid and non-assessable.

                    5.6    Actions
  and Proceedings. There is no claim, charge, arbitration, grievance, action,
  suit, investigation or proceeding by or before any court, arbiter, administrative
  agency or other governmental authority now pending or, to the best knowledge
  of Terrace or Terrace Sub, threatened against Terrace or Terrace Sub which involves
  any of the business, or the properties or assets of Terrace or Terrace Sub that,
  if adversely resolved or determined, would have a material adverse effect on
  the business, operations, assets, properties, prospects or conditions of Terrace
  or Terrace Sub taken as a whole. There is no reasonable basis for any claim
  or action that, based upon the likelihood of its being asserted and its success
  if asserted, would have such a material adverse effect.

                    5.7    SEC
  Filings. Terrace has furnished or made available to Sporg a true and complete
  copy of each report, schedule, registration statement and proxy statement filed
  by Terrace with the SEC since the inception of Terrace (as such documents have
  since the time of their filing been amended, the "Terrace SEC Documents").
  Terrace has timely filed with the SEC all documents required to have been filed
  pursuant to the Securities Act and the Exchange Act. As of their respective
  dates, Terrace SEC Documents complied in all material respects with the requirements
  of the Securities Act, or the Exchange Act, as the case may be, and the rules
  and regulations of the SEC thereunder applicable to such Terrace SEC Documents,
  and none of Terrace SEC Documents contained any untrue statement of a material
  fact or omitted to state a material fact required to be stated therein or necessary
  to make the statements therein, in light of the circumstances under which they
  were made, not misleading. 

                    5.8    Financial
  Representations. Included with the Terrace SEC Documents are true, correct,
  and complete copies of audited balance sheets for Terrace dated as of April
  30, 2005 and 2004 and unaudited balance sheet dated as of January 31, 2006,
  together with related statements of income, cash flows, and changes in shareholder's
  equity for the periods then ended (collectively, the “Terrace Financial
  Statements”). The Terrace Financial Statements (a) are in accordance with
  the books and records of Terrace, (b) present fairly the financial condition
  of Terrace as of the respective dates indicated and the results of operations
  for such periods, and (c) have been prepared in accordance with GAAP. Terrace
  has not received any advice or notification from its independent certified public
  accountants that Terrace has used any improper accounting practice that would
  have the effect of not reflecting or incorrectly reflecting in the Terrace Financial
  Statements or the books and records of Terrace, any properties, assets, liabilities,
  revenues, or expenses. The books, records, and accounts of Terrace accurately
  and fairly reflect, in reasonable detail, the Merger, assets, and liabilities
  of Terrace. Terrace has not engaged in any transaction, maintained any bank
  account, or used any funds of Terrace, except for transactions, bank accounts,
  and funds which have been and are reflected in the normally maintained books
  and records of Terrace. Terrace Sub has not carried on any business, entered
  into any agreements or incurred any liabilities since its incorporation, other
  than as expressly contemplated by this Agreement.

                    5.9    Undisclosed
  Liabilities. Except as set forth in Schedule 5.9, Terrace has no
  liabilities or obligations either direct or indirect, matured or unmatured,
  absolute, contingent or otherwise, which:

                              (a)    are
  not set forth in the Terrace Financial Statements or have not heretofore been
  paid or discharged;

13

                              (b)    did
  not arise in the regular and ordinary course of business under any agreement,
  contract, commitment, lease or plan specifically disclosed (or are not required
  to be disclosed in accordance with GAAP); or

                              (c)    have
  not been incurred in amounts and pursuant to practices consistent with past
  business practice, in or as a result of the regular and ordinary course of its
  business since the date of the last Terrace Financial Statements.

     For purposes of this Agreement,
the term “liabilities” includes, any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate,
liquidated or unliquidated, secured or unsecured.

                    5.10    Certain
  Changes or Events. Except as and to the extent disclosed in the Terrace
  SEC Documents, there has not been (a) a material adverse effect to the business,
  operations or financial conditions of Terrace, or (b) any significant change
  by Terrace in its accounting methods, principles or practices.

                    5.11    Filings,
  Consents and Approvals. No filing or registration with, no notice to and
  no permit, authorization, consent, or approval of any public or governmental
  body or authority or other person or entity is necessary for the consummation
  by Terrace and Terrace Sub of the Merger contemplated by this Agreement to continue
  to conduct its business after the Closing Date in a manner which is consistent
  with that in which it is presently conducted.

                    5.12    Personal
  Property. There are no material equipment, furniture, fixtures and other
  tangible personal property and assets owned or leased by Terrace or Terrace
  Sub, except as disclosed in the Terrace SEC Documents.

                    5.13    Employees
  and Consultants. Neither Terrace nor Terrace Sub have any employees or consultants,
  except as disclosed in the Terrace SEC Documents.

                    5.14    Material
  Contracts and Transactions. Other than as expressly contemplated by this
  Agreement, there are no material contracts, agreements, licenses, permits, arrangements,
  commitments, instruments, understandings or contracts, whether written or oral,
  express or implied, contingent, fixed or otherwise, to which Terrace or Terrace
  Sub is a party except as disclosed in the Terrace SEC Documents.

                    5.15    No
  Brokers. Neither Terrace nor Terrace Sub has incurred any obligation or
  liability to any party for any brokerage fees, agent's commissions, or finder's
  fees in connection with the Merger contemplated by this Agreement for which
  Sporg would be responsible.

                    5.16    Minute
  Books. The minute books of Terrace provided to Sporg contain a complete
  summary of all meetings of directors and shareholders since the time of incorporation
  of such entity and reflect all transactions referred to in such minutes accurately
  in all material respects.

                    5.17    Completeness
  of Disclosure. No representation or warranty by Terrace or Terrace Sub in
  this Agreement nor any certificate, schedule, statement, document or instrument
  furnished or to be furnished to Sporg pursuant hereto contains or will contain
  any untrue statement of a material fact or omits or will omit to state a material
  fact required to be stated herein or therein or necessary to make any statement
  herein or therein not materially misleading.

ARTICLE 6.
CLOSING CONDITIONS

                    6.1    Conditions
  Precedent to Closing by Terrace and Terrace Sub. The obligations of Terrace
  and Terrace Sub to consummate the Merger is subject to the satisfaction of the
  conditions set forth below, unless any such condition is waived Terrace and
  Terrace Sub at the Closing. The Closing of the Merger contemplated by this Agreement
  will be deemed to mean a waiver of all conditions to Closing. These 

14

conditions of closing are for the benefit of Terrace and
Terrace Sub and may be waived by Terrace and Terrace Sub in their
discretion.

                              (a)    Representations
  and Warranties. The representations and warranties of Sporg set forth in
  this Agreement will be true, correct and complete in all respects as of the
  Closing Date, as though made on and as of the Closing Date and Sporg will have
  delivered to Terrace a certificate dated as of the Closing Date, to the effect
  that the representations and warranties made by Sporg in this Agreement are
  true and correct.

                              (b)    Performance.
  All of the covenants and obligations that Sporg is required to perform or to
  comply with pursuant to this Agreement at or prior to the Closing must have
  been performed and complied with in all material respects.

                              (c)    Merger
  Documents. This Agreement and all other Sporg Merger Documents necessary
  or reasonably required to consummate the Merger, all in form and substance reasonably
  satisfactory to Terrace or Terrace Sub, will have been executed and delivered
  to Terrace and Terrace Sub.

                              (d)    Secretary's
  Certificate – Sporg. Terrace will have received a certificate of the
  Secretary of Sporg attaching (i) a copy of Sporg's articles of incorporation
  and bylaws, as amended through the Closing Date certified by the Nevada Secretary
  of State; (ii) certified copies of resolutions duly adopted by the Board of
  Directors of Sporg and the Sporg Stockholders approving the execution and delivery
  of this Agreement and the other Merger Documents and the consummation of the
  Merger and the other transactions contemplated hereby and thereby; and (iii)
  a certificate as to the incumbency and signatures of the officers of Sporg executing
  this Agreement and the Merger Documents executed on the Closing Date as contemplated
  by this Agreement.

                              (e)    Supplement
  to Schedules. Any additional disclosures of Sporg made pursuant to Section
  7.4 of this Agreement will be acceptable to Terrace and Terrace Sub in their
  sole discretion.

                              (f)    Third
  Party Consents. Sporg will have received duly executed copies of all third-party
  consents and approvals contemplated by the Merger Documents, in form and substance
  reasonably satisfactory to Terrace.

                              (g)    No
  Material Adverse Change. No Sporg Material Adverse Effect will have occurred
  since the date of this Agreement.

                              (h)    No
  Action. No suit, action, or proceeding will be pending or threatened before
  any governmental or regulatory authority wherein an unfavorable judgment, order,
  decree, stipulation, injunction or charge would (i) prevent the consummation
  of any of the Merger contemplated by this Agreement, or (ii) cause the Merger
  to be rescinded following consummation.

                              (i)    Due
  Diligence Review. Terrace and Terrace Sub will be reasonably satisfied in
  all respects with their due diligence investigation and review of Sporg.

                              (j)    Compliance
  with Securities Laws. Terrace will have received evidence satisfactory to
  Terrace that all shares of Terrace Common Stock issuable in the Merger will
  be issuable without registration pursuant to the Securities Act in reliance
  on the exemptions from the registration requirements of the Securities Act provided
  by Rule 506 of Regulation D or in reliance on the safe harbour from the registration
  requirements of the Securities Act provided by Regulation S. In order to establish
  the availability of an exemption or safe harbour from the registration requirements
  of the Securities Act for each issuance of Terrace Common Stock to each shareholder
  of Sporg, Sporg will deliver to Terrace on Closing investment representation
  letters executed by each shareholder of Sporg, other than Dissenting Shareholders
  as contemplated below:

                                        (i)    each
  shareholder of Sporg who is not a U.S. Person and who otherwise satisfies the
  eligibility requirements for issuance of Terrace Common Stock in accordance
  with Rule 903 of 

15

Regulation S of the Securities Act will deliver the Regulation
S Investment Letter in a form reasonably acceptable to legal counsel for Terrace
and for Sporg; and

                                        (ii) 
  each shareholder of Sporg resident in the United States will deliver the Regulation
  D Investment Letter in a form reasonably acceptable to legal counsel for Terrace
  and for Sporg.

                              (k)    Delivery
  of Financial Statements. Sporg will have delivered to Terrace such financial
  statements as, in the opinion of the auditors for Terrace, are required to permit
  Terrace to make the necessary filings under the Exchange Act in connection with
  the Merger.

                              (l)    Exercise
  of Appraisal Rights. The holders of no more than two (2%) percent of the
  issued and outstanding shares of Sporg Common Stock will have exercised appraisal
  rights under Nevada Law as Dissenting Shareholders. Sporg and Terrace will have
  resolved all matters of appraisal and payment under Nevada Law for each Dissenting
  Shareholder to Terrace Sub's satisfaction.

                              (m)    Amendment
  to Sporg Management Contracts. The Sporg Principals shall agree to renegotiation
  of their employment / management agreements with Sporg satisfactory to Terrace
  and without limiting the generality of the foregoing, shall have agreed that
  the change of control resulting from this merger shall not terminate, or accelerate
  any amounts due under, their agreements and that they will be entitled to receive
  only two years and not less than two years salary upon termination for reasons
  other than cause.

                    6.2    Conditions
  Precedent to Closing by Sporg. The obligation of Sporg to consummate the
  Merger is subject to the satisfaction of the conditions set forth below, unless
  such condition is waived by Sporg at the Closing. The Closing of the Merger
  will be deemed to mean a waiver of all conditions to Closing. These conditions
  precedent are for the benefit of Sporg and may be waived by Sporg in its discretion.

                              (a)    Representations
  and Warranties. The representations and warranties of Terrace and Terrace
  Sub and the Principal Shareholders set forth in this Agreement will be true,
  correct and complete in all respects as of the Closing Date, as though made
  on and as of the Closing Date and Terrace and Terrace Sub will have delivered
  to Sporg a certificate dated the Closing Date, to the effect that the representations
  and warranties made by Terrace and Terrace Sub in this Agreement are true and
  correct.

                              (b)    Performance.
  All of the covenants and obligations that Terrace and Terrace Sub are required
  to perform or to comply with pursuant to this Agreement at or prior to the Closing
  must have been performed and complied with in all material respects. Terrace
  and Terrace Sub must have delivered each of the documents required to be delivered
  by them pursuant to this Agreement.

                              (c)    Merger
  Documents. This Agreement and all Terrace Merger Documents, all in form
  and substance reasonably satisfactory to Sporg, will have been executed and
  delivered by Terrace and Terrace Sub, as applicable.

                              (d)    Secretary's
  Certificate - Terrace. Sporg will have received a certificate of the Secretary
  of Terrace attaching (a) a copy of Terrace’s certificate of incorporation,
  as amended through the Closing Date certified by the Secretary of State of the
  State of Nevada; (b) a true and correct copy of Terrace’s bylaws, as amended;
  (c) certified copies of resolutions duly adopted by the Board of Directors of
  Terrace and the sole stockholder of Terrace Sub, approving the execution and
  delivery of this Agreement and the other Merger Documents and the consummation
  of the Merger and the other transactions contemplated hereby and thereby; and
  (d) a certificate as to the incumbency and signatures of the officers of Terrace
  executing this Agreement and the Merger Documents executed by Terrace on the
  Closing Date as contemplated by this Agreement.

                              (e)    Exercise
  of Appraisal Rights. The holders of no more than two (2%) percent of the
  issued and outstanding shares of Sporg Common Stock will have exercised appraisal
  rights under Nevada Law as Dissenting Shareholders. Sporg and Terrace will have
  resolved all matters of appraisal and payment under Nevada Law for each Dissenting
  Shareholder to Sporg's satisfaction.

16

                              (f)    Supplement
  to Schedules. Any additional disclosures of Terrace made pursuant to Section
  7.4 of this Agreement will be acceptable to Sporg in its sole discretion.

                              (g)    Third
  Party Consents. Terrace and Terrace Sub will have obtained duly executed
  copies of all third-party consents and approvals contemplated by the Merger
  documents, in form and substance reasonably satisfactory to Sporg.

                              (h)    No
  Material Adverse. No event will have occurred since the date of this Agreement
  that has had a material adverse effect on the business, operations, assets,
  properties, prospects or conditions of Terrace and Terrace Sub taken as a whole.

                              (i)    No
  Action. No suit, action, or proceeding will be pending or threatened before
  any governmental or regulatory authority wherein an unfavorable judgment, order,
  decree, stipulation, injunction or charge would (i) prevent consummation of
  any of the Merger contemplated by this Agreement; or (ii) cause the Merger to
  be rescinded following consummation.

                              (j)    Schedule
  14F Filing. Terrace will have made the filing required by Paragraph 7.10.

                              (k)    Cancellation
  of Control Shares. The Principal Shareholder will have surrendered all 15,800,000
  shares of Terrace Common Stock owned by him to Terrace for cancellation without
  consideration.

                              (l)    Adoption
  of Option Plan. Terrace will have adopted an option plan sufficient to grant
  the options described in paragraph 2.16 of this Agreement.

                              (m)   Equity
  Financing. Terrace will have secured a financing proposal from a reputable
  investment dealer for equity financing of not less than $3,000,000.

                              (n)    Investor
  Rights Agreement. The Merger shall have been approved by Charles Burtzloff
  as trustee of the Charles Burtzloff Living Trust Dated 12/21/01 as required
  by the Investors Rights Agreement and the Burtzloff Living Trust dated 12/12/01
  shall have agreed to terminate the Investor Rights Agreement.

                              (o)    Interim
  Financing. Terrace shall have provided the Interim Financing on the dates
  required.

                              (p)    Terrace
  Available Funds. Terrace shall have available funds at closing sufficient
  to retire the indebtedness of Sporg to the Sporg Principals in the approximate
  amount of $425,000 US.

ARTICLE 7.
ADDITIONAL COVENANTS OF THE
PARTIES

                    7.1    Access
  and Investigation. Between the date of this Agreement and the Closing Date,
  Sporg, on the one hand, and Terrace, on the other hand, will, and will cause
  each of their respective representatives to, (a) afford the other and its representatives
  full and free access to its personnel, properties, contracts, books and records,
  and other documents and data, (b) furnish the other and its representatives
  with copies of all such contracts, books and records, and other existing documents
  and data as required by this Agreement and as the other may otherwise reasonably
  request, and (c) furnish the other and its representatives with such additional
  financial, operating, and other data and information as the other may reasonably
  request. All of such access, investigation and communication by a party and
  its representatives will be conducted during normal business hours and in a
  manner designed not to interfere unduly with the normal business operations
  of the other party. Each party will instruct its auditors to cooperate with
  the other party and its representatives in connection with such investigations.

                    7.2    Confidentiality.
  All information regarding the business of Sporg including, without limitation,
  financial information that Sporg provides to Terrace during Terrace’s due
  diligence investigation of Sporg will be kept in strict confidence by Terrace
  and will not be used (except in connection with due diligence), dealt with,
  exploited or commercialized by Terrace or disclosed to any third party (other
  than Terrace’s professional 

17

accounting and legal advisors) without the prior written
consent of Sporg. If the Merger contemplated by this Agreement does not proceed
for any reason, then upon receipt of a written request from the Sporg, Terrace
will immediately return to Sporg any information received regarding Sporg’s
business. Likewise, all information regarding the business of Terrace including,
without limitation, financial information that Terrace provides to Sporg during
its due diligence investigation of Terrace will be kept in strict confidence by
Sporg and will not be used (except in connection with due diligence), dealt
with, exploited or commercialized by Sporg or disclosed to any third party
(other than Sporg’s professional accounting and legal advisors) without
Terrace’s prior written consent. If the Merger contemplated by this Agreement do
not proceed for any reason, then upon receipt of a written request from Terrace,
Sporg will immediately return to Terrace (or as directed by Terrace) any
information received regarding Terrace’s business.

                    7.3    Notification.
  Between the date of this Agreement and the Closing Date, each of the parties
  to this Agreement will promptly notify the other parties in writing if it becomes
  aware of any fact or condition that causes or constitutes a material breach
  of any of its representations and warranties as of the date of this Agreement,
  if it becomes aware of the occurrence after the date of this Agreement of any
  fact or condition that would cause or constitute a material breach of any such
  representation or warranty had such representation or warranty been made as
  of the time of occurrence or discovery of such fact or condition. Should any
  such fact or condition require any change in the Schedules relating to such
  party, such party will promptly deliver to the other parties a supplement to
  the Schedules specifying such change. During the same period, each party will
  promptly notify the other parties of the occurrence of any material breach of
  any of its covenant in this Agreement or of the occurrence of any event that
  may make the satisfaction of such conditions impossible or unlikely.

                    7.4    Exclusivity.
  Until such time, if any, as this Agreement is terminated pursuant to this Agreement,
  Sporg will not, directly or indirectly solicit, initiate, entertain or accept
  any inquiries or proposals from, discuss or negotiate with, provide any nonpublic
  information to, or consider the merits of any unsolicited inquiries or proposals
  from, any person or entity (other than Terrace) relating to any transaction
  involving the sale of the business or assets (other than in the ordinary course
  of business), or any of the capital stock of Sporg, or any merger, consolidation,
  business combination, or similar transaction.

                    7.5    Conduct
  of Sporg Business Prior to Closing. From the date of this Agreement to the
  Closing Date, and except to the extent that Terrace otherwise consents in writing,
  Sporg will operate its business substantially as presently operated and only
  in the ordinary course and in compliance with all applicable laws, and use its
  best efforts to preserve intact its good reputation and present business organization
  and to preserve its relationships with persons having business dealings with
  it.

                    7.6    Certain
  Acts Prohibited - Sporg. Except as expressly contemplated by this Agreement,
  between the date of this Agreement and the Closing Date, Sporg will not, without
  the prior written consent of Terrace:

                              (a)    amend
  its articles of incorporation, bylaws or other organizational documents;

                              (b)    incur
  any liability or obligation other than in the ordinary course of business or
  encumber or permit the encumbrance of any properties or assets of Sporg, except
  as disclosed in a Schedule to this Agreement;

                              (c)    dispose
  of or contract to dispose of any Sporg property or assets except in the ordinary
  course of business consistent with past practice;

                              (d)    issue,
  deliver, sell, pledge or otherwise encumber or subject to any lien any shares
  of the Sporg Common Stock, or any rights, warrants or options to acquire, any
  such shares, voting securities or convertible securities;

                              (e)          (i)    declare,
  set aside or pay any dividends on, or make any other distributions in respect
  of the Sporg Common Stock, or (ii) split, combine or reclassify any Sporg Common
  Stock or issue or authorize the issuance of any other securities in respect
  of, in lieu of or in substitution for shares of Sporg Common Stock; or

18

                              (f)    materially
  increase benefits or compensation expenses of Sporg, other than as contemplated
  by the terms of any employment agreement in existence on the date of this Agreement,
  increase the cash compensation of any director, executive officer or other key
  employee or pay any benefit or amount not required by a Plan or arrangement
  as in effect on the date of this Agreement to any such person.

                    7.7    Certain
  Acts Prohibited - Terrace. Except as expressly contemplated by this Agreement,
  between the date of this Agreement and the Closing Date, Terrace will not, without
  the prior written consent of Sporg:

                              (a)    amend
  its articles of incorporation, bylaws or other organizational documents;

                              (b)    incur
  any liability or obligation other than in the ordinary course of business or
  encumber or permit the encumbrance of any properties or assets of Terrace, except
  as disclosed in a Schedule to this Agreement;

                              (c)    dispose
  of or contract to dispose of any Terrace property or assets except in the ordinary
  course of business consistent with past practice; 

                              (d)    issue
  or sell shares of Terrace Stock, or any rights, warrants or options to acquire,
  any such shares, voting securities or convertible securities, other than in
  the Terrace Private Placement; 

                              (e)          (i)    declare,
  set aside or pay any dividends on, or make any other distributions in respect
  of the Terrace Stock, or (ii) split, combine or reclassify any Terrace Stock
  or issue or authorize the issuance of any other securities in respect of, in
  lieu of or in substitution for shares of Terrace Stock; or

                              (f)    materially
  increase benefits or compensation expenses of Terrace, other than as contemplated
  by the terms of any employment agreement in existence on the date of this Agreement,
  increase the cash compensation of any director, executive officer or other key
  employee or pay any benefit or amount not required by a Plan or arrangement
  as in effect on the date of this Agreement to any such person.

                    7.8    Shareholders
  Meeting. As soon as is practical after execution of this Agreement, Sporg
  will prepare and deliver a Notice of Meeting in connection with the approval
  of the shareholders of Sporg of the Merger (the “Notice of Meeting”).
  Terrace will provide to Sporg all information relating to Terrace and Terrace
  Sub as reasonably required to prepare the Notice of Meeting in compliance with
  applicable corporate laws. Sporg will provide a copy of the Notice of Meeting
  to Terrace and its legal counsel for their review and comment prior to delivery
  to the shareholders of Sporg. Sporg will use its commercially reasonable efforts
  to finalize the Notice of Meeting and obtain the approval of the shareholders
  of Sporg to the Merger. Sporg will ensure the meeting is conducted in accordance
  with applicable laws.

                    7.9    Public
  Announcements. Terrace and Sporg each agree that they will not release or
  issue any reports or statements or make any public announcements relating to
  this Agreement or the Merger contemplated herein without the prior written consent
  of the other party, except as may be required upon written advice of counsel
  to comply with applicable laws or regulatory requirements after consulting with
  the other party hereto and seeking their consent to such announcement.

                    7.10    Terrace
  Board of Directors. Immediately upon the Closing, the current directors
  of Terrace will adopt resolutions appointing a new board of directors for Terrace
  consisting of four (4) members, Frank Anderson, Howard Thomson, Eric Freeman
  and David Norman. Terrace will prepare and file a Schedule 14F information statement
  with the SEC as required under the Exchange Act in connection with the change
  of directors arising in connection with the completion of the Merger.

                    7.11    Terrace
  Name Change. Terrace agrees that it will change its corporate name to “Sporg
  Technology Corp.”, which name change will be effected by merging the Terrace
  Sub into Terrace. If the Merger is not consummated for any reason, Terrace will
  not proceed with the change of its corporate name to “Sporg Technology
  Corp.” Sporg acknowledges that completion of the name change is not a condition
  precedent to completion of the Merger.

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ARTICLE 8.
CLOSING

                    8.1    Closing.
  The Closing shall take place on the Closing Date at the offices of the lawyers
  for Sporg or at such other location as agreed to by the parties. Notwithstanding
  the location of the Closing, each party agrees that the Closing may be completed
  by the exchange of undertakings between the respective legal counsel for Sporg
  and Terrace, provided such undertakings are satisfactory to each party’s
  respective legal counsel.

                    8.2    Closing
  Deliveries of Sporg. At Closing, Sporg will deliver or cause to be delivered
  the following, fully executed and in form and substance reasonably satisfactory
  to Terrace:

                    (a)    copies
  of all resolutions and/or consent actions adopted by or on behalf of the boards
  of directors of Sporg evidencing approval of this Agreement and the Merger;

                     (b)    the
  certificate and attached documents required by Section 6.1(d) of this Agreement;

                    (c)    a
  certificate of an officer of Sporg, dated as of Closing, certifying that (a)
  each covenant and obligation of Sporg has been complied with, and (b) each representation,
  warranty and covenant of Sporg is true and correct at the Closing as if made
  on and as of the Closing;

                    (d)    the
  Articles of Merger duly executed by Sporg and any other Sporg Merger Documents,
  each duly executed by Sporg, as required to give effect to the Merger; 

                    (e)    a
  copy of the Minutes of the Shareholders Meeting agreeing to the Merger; and

                    (f)    the
  consent required by Section 6.2(n) of this Agreement.

                    8.3    Closing
  Deliveries of Terrace. At Closing, Terrace will deliver or cause to be delivered
  the following, fully executed and in form and substance reasonably satisfactory
  to Sporg:

                    (a)    copies
  of all resolutions and/or consent actions adopted by or on behalf of the boards
  of directors of Terrace and the shareholder and directors of Terrace Sub evidencing
  approval of this Agreement and the Merger;

                    (b)    a
  certificate of an officer of Terrace, dated as of Closing, certifying that (a)
  each covenant and obligation of Terrace has been complied with, and (b) each
  representation, warranty and covenant of Terrace is true and correct at the
  Closing as if made on and as of the Closing;

                    (c)    a
  certificate of an officer of Terrace Sub, dated as of Closing, certifying that
  (a) each covenant and obligation of Terrace Sub has been complied with, and
  (b) each representation, warranty and covenant of Terrace Sub is true and correct
  at the Closing as if made on and as of the Closing;

                    (d)    the
  certificate and attached documents required by Section 6.2(d) of this Agreement;

                    (e)    the
  Articles of Merger duly executed by Terrace Sub and any other Terrace Merger
  Documents, each duly executed by Terrace and Terrace Sub, as required to give
  effect to the Merger;

                    (f)    the
  resolution required by Section 6.2(n) of this Agreement;

                    (g)    evidence
  of the surrender of stock as required by Section 6.2(o) of this Agreement; (h)
  the minute books and all corporate records of Terrace; (i) a list of all bank,
  trust, savings, checking or other accounts of Terrace; 

20

                    (j)    A
  consent letter for the financing described in Section 6.2(m) of this Agreement;
  and

                    (k)    Evidence
  of availability of funding described in Section 6.2(o) .

ARTICLE 9.
TERMINATION

                    9.1    Termination.
  This Agreement may be terminated at any time prior to the Closing Date contemplated
  hereby by:

                              (a)    mutual
  agreement of Terrace, Terrace Sub and Sporg;

                              (b)    Terrace,
  if there has been a breach by Sporg of any material representation, warranty,
  covenant or agreement set forth in this Agreement on the part of Sporg that
  is not cured, to the reasonable satisfaction of Terrace, within ten business
  days after notice of such breach is given by Terrace (except that no cure period
  will be provided for a breach by Sporg that by its nature cannot be cured);

                              (c)    Sporg,
  if there has been a breach by Terrace or the Principal Shareholders of any material
  representation, warranty, covenant or agreement set forth in this Agreement
  on the part of Terrace or the Principal Shareholders that is not cured by the
  breaching party, to the reasonable satisfaction of Sporg, within ten business
  days after notice of such breach is given by Sporg (except that no cure period
  will be provided for a breach by Terrace or the Principal Shareholders that
  by its nature cannot be cured);

                              (d)    Sporg,
  if Terrace shall fail to provide the Interim Funding when required; or

                              (e)    Terrace
  or Sporg, if the Merger contemplated by this Agreement has not been consummated
  prior to June 30, 2006, unless the parties agree to extend such date; or

                              (f)    Terrace
  or Sporg if any permanent injunction or other order of a governmental entity
  of competent authority preventing the consummation of the Merger contemplated
  by this Agreement has become final and nonappealable.

                    9.2    Effect
  of Termination. In the event of the termination of this Agreement as provided
  in Section 9.1, this Agreement will be of no further force or effect, provided,
  however, that no termination of this Agreement will relieve any party of liability
  for any breaches of this Agreement that are based on a wrongful refusal or failure
  to perform any obligations.

ARTICLE 10.
INDEMNIFICATION; REMEDIES;
SURVIVAL

                    10.1    Certain
  Definitions. For the purposes of this Article 10, the terms “Loss”
  and “Losses” means any and all demands, claims, actions or causes
  of action, assessments, losses, damages. liabilities, costs, and expenses, including
  without limitation, interest, penalties, fines and reasonable attorneys, accountants
  and other professional fees and expenses, but excluding any indirect, consequential
  or punitive damages suffered by Terrace or Sporg including damages for lost
  profits or lost business opportunities.

                    10.2    Agreement
  of Sporg to Indemnify. Sporg will indemnify, defend, and hold harmless Terrace
  and Terrace Sub, its respective officers, directors, shareholders, employees
  and affiliates from, against, and in respect of any and all Losses asserted
  against, relating to, imposed upon, or incurred by Terrace and Terrace Sub by
  reason of, resulting from, based upon or arising out of:

                              (a)    the
  breach by Sporg of any representation or warranty of Sporg contained in or made
  pursuant to this Agreement, or certificate or instrument delivered pursuant
  to this Agreement;

21

                              (b)    the
  breach or partial breach by Sporg of any covenant or agreement of Sporg made
  in or pursuant to this Agreement, or other certificate or instrument delivered
  pursuant to this Agreement.

                    10.3    Agreement
  of Terrace to Indemnify. Terrace and Terrace Sub will indemnify, defend,
  and hold harmless Sporg from, against, for, and in respect of any and all Losses
  asserted against, relating to, imposed upon, or incurred by Sporg by reason
  of, resulting from, based upon or arising out of:

                              (a)    the
  breach by Terrace or Terrace Sub of any representation or warranty of Terrace
  or Terrace Sub contained in or made pursuant to this Agreement, any Terrace
  Merger Document or certificate or instrument delivered pursuant to this Agreement;

                              (b)    the
  breach or partial breach by Terrace or Terrace Sub of any covenant or agreement
  of Terrace or Terrace Sub made in or pursuant to this Agreement, or any Terrace
  Merger Document or other certificate or instrument delivered pursuant to this
  Agreement.

ARTICLE 11.
MISCELLANEOUS PROVISIONS

                    11.1    Effectiveness
  of Representations; Survival. Each party is entitled to rely on the representations,
  warranties and agreements of each of the other parties and all such representation,
  warranties and agreement will be effective regardless of any investigation that
  any party has undertaken or failed to undertake. The representation, warranties
  and agreements will survive the Closing Date and continue in full force and
  effect until six (6) months after the Closing Date.

                    11.2    Further
  Assurances. Each of the parties hereto will cooperate with the others and
  execute and deliver to the other parties hereto such other instruments and documents
  and take such other actions as may be reasonably requested from time to time
  by any other party hereto as necessary to carry out, evidence, and confirm the
  intended purposes of this Agreement.

                    11.3    Amendment.
  This Agreement may not be amended except by an instrument in writing signed
  by each of the parties.

                    11.4    
    Expenses. Each party to this Agreement will bear its
  respective expenses incurred in connection with the preparation, execution,
  and performance of this Agreement and the Merger contemplated hereby, including
  all fees and expenses of agents, representatives, counsel, and accountants.

                    11.5    Entire
  Agreement. This Agreement, the exhibits, schedules attached hereto and the
  other Merger Documents contain the entire agreement between the parties with
  respect to the subject matter hereof and supersede all prior arrangements and
  understandings, both written and oral, expressed or implied, with respect thereto.
  Any preceding correspondence or offers are expressly superseded and terminated
  by this Agreement.

                    11.6    
    Notices. All notices and other communications required
  or permitted under to this Agreement must be in writing and will be deemed given
  if sent by personal delivery, faxed with electronic confirmation of delivery,
  internationally-recognized express courier or registered or certified mail (return
  receipt requested), postage prepaid, to the parties at the following addresses
  (or at such other address for a party as will be specified by like notice):

                    If
  to Sporg:

SPORG CORPORATION
Suite 2770, 555
West Hastings Street
P.O. Box 12035
Vancouver, British Columbia V6B
4N4
Attention:      Frank Anderson, President

22

	  	Telephone: 	         (604) 669-4555
      

	  	Facsimile: 	         (604) 669-4518
      

	  	E-Mail: 	         fanderson@sporg.com
      

	  	  	  
	  	  	  
	                    With
      a copy (which will not constitute notice) to: 
	  	  	  
	  	Bernhard J. Zinkhofer, Esq. 
	  	Lang Michener, LLP 
	  	1500 Royal Centre P.O. Box 11117 
	  	1055 West Georgia Street 
	  	Vancouver, British Columbia V6E 4N7 
	  	  	  
	  	Telephone: 	         (604) 689-9111
      

	  	Facsimile: 	         (604) 685-7084 
	  	E-Mail: 	         bzinkhofer@lmls.com 
	  	  	  
	  	  	  
	                    If
      to Terrace: 	  
	  	  	  
	  	TERRACE VENTURES INC. 
	  	810 Peace Portal Drive, Suite 202 
	  	Blaine, WA 98230 
	  	Attention: Howard Thomson, President 
	  	  	  
	  	Telephone: 	         (360) 220-5218
      

	  	Facsimile: 	         (360) 332-1817
      

	  	E-Mail: 	         howardthomson@hotmail.com
      

	  	  	  
	  	  	  
	                    With
      a copy (which will not constitute notice) to: 
	  	  	  
	  	Stephen F.X. O’Neill, Esq. 
	  	O'Neill Law Group PLLC 
	  	435 Martin Street, Suite 1010 
	  	Blaine, Washington 98230 
	  	  	  
	  	Telephone: 	
               (330) 360-3300
      

	  	Facsimile: 	         (330) 332-2291 
	  	E-Mail: 	         son@stockslaw.com 
	  	  	  
	All such notices and other communications
      will be deemed to have been received (a) in the case of personal delivery,
      on the date of such delivery, (b) in the case of a fax, when the party sending
      such fax has received electronic confirmation of its delivery, (c) in the
      case of delivery by internationally-recognized express courier, on the business
      day following dispatch and (d) in the case of mailing, on the fifth business
      day following mailing.

                    11.7    
  Headings. The headings contained in this Agreement are for convenience purposes
  only and will not affect in any way the meaning or interpretation of this Agree¬ment.

                    11.8    
  Benefits. This Agreement is and will only be construed as for the benefit of
  or enforceable by those persons party to this Agreement.

                    11.9
      Assignment. This Agreement may not be assigned (except
  by operation of law) by any party without the consent of the other parties.

                    11.10
     Governing Law. This Agreement will be governed by and construed
  in accordance with the laws of the State of Nevada applicable to contracts made
  and to be performed therein. 

23 

                    11.11   
  Construction. The language used in this Agreement will be deemed to be
  the language chosen by the parties to express their mutual intent, and no rule
  of strict construction will be applied against any party.

                    11.12   
  Counterparts. This Agreement may be executed in one or more counterparts,
  all of which will be considered one and the same agreement and will become effective
  when one or more counterparts have been signed by each of the parties and delivered
  to the other parties, it being understood that all parties need not sign the
  same counterpart.

                    11.13   
  Fax Execution. This Agreement may be executed by delivery of executed
  signature pages by fax and such fax execution will be effective for all purposes.

                    11.14   
  Schedules and Exhibits. The schedules and exhibits are attached to this
  Agreement and incorporated herein.

IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.

TERRACE VENTURES INC.
a Nevada corporation by its
authorized signatory:

	/s/ Howard Thomson 	 
	Signature of Authorized Signatory 	 
	  	 
	Howard Thomson 	 
	Name of Authorized Signatory 	 
	  	 
	President and Chief Executive Officer 	 
	Position of Authorized Signatory 	 

SPORG CORPORATION
a Nevada corporation by its
authorized signatory:

	/s/ Frank Anderson 	 
	Signature of Authorized Signatory 	 
	  	 
	Frank Anderson 	 
	Name of Authorized Signatory 	 
	  	 
	Director, Secretary and Treasurer 	 
	Position of Authorized Signatory 	 

24

SIGNED, SEALED AND DELIVERED

  BY GORDON F. BURLEY in the presence of:

 

	Signature of Witness 	 	  
	 	 	 
	  	 	/s/
      Gordon F. Burley 
	Name of Witness 	 	GORDON F. BURLEY 
	 	 	 
	 	 	 
	Address
      of Witness 	 	  

SPORG TECHNOLOGY CORP.
a Nevada corporation by its
authorized signatory:

	/s/ Howard Thomson 	 
	Signature of Authorized Signatory 	 
	  	 
	Howard Thomson 	 
	Name of Authorized Signatory 	 
	  	 
	President, Secretary, Treasurer and Director 	 
	Position of Authorized Signatory 	 

25

[SCHEDULES]

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