Document:

exv4w4

Table of Contents

Exhibit 4.4

BANK OF IRELAND

RESTRICTED STOCK PLAN — 2006

Established by the Bank in General Court

On       •       2006

 

 

CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.
	 	DEFINITIONS AND INTERPRETATION	 	 	1	 
	2.
	 	ELIGIBILITY	 	 	2	 
	3.
	 	GRANT OF AWARDS	 	 	2	 
	4.
	 	LIMITS	 	 	3	 
	5.
	 	RELEASE OF SHARES TO PARTICIPANTS; TERMINATION OF AWARDS	 	 	4	 
	6.
	 	TAKE-OVER, RECONSTRUCTION AND WINDING -- UP	 	 	5	 
	7.
	 	VARIATION OF CAPITAL	 	 	5	 
	8.
	 	ALTERATIONS	 	 	6	 
	9.
	 	MISCELLANEOUS	 	 	6	 
	10.
	 	GOVERNING LAW AND JURISDICTION	 	 	7	 
	11.
	 	TERMINATION OF THE PLAN	 	 	7	 

 

Table of Contents

	1.	 	DEFINITIONS AND INTERPRETATION

	 	 	In this Plan, the words and expressions set out below shall have the meaning specified unless
otherwise specifically provided and references to “Acts” refer to Acts of the Oireachtas and
any references to a provision of an Act of the Oireachtas shall include any amendment,
modification, re-enactment or extension of its for the time being in force.
	 
	 	 	“Accounting Period” means any period in respect of which the Bank prepares an annual report
and financial statements;
	 
	 	 	“Announcement Date” means the date on which the Bank makes an announcement of its final
results for the preceding Accounting Period;
	 
	 	 	“Award” means an award of Units of Stock granted pursuant to sub-rule (1) of Rule 3;
	 
	 	 	“the Bank” means The Governor and Company of the Bank of Ireland;
	 
	 	 	“Basic Remuneration” means the basic salary or wages paid by a Group Company to an employee
in the relevant Plan Year excluding bonus, commissions or other fluctuating emoluments;
	 
	 	 	“Code of Conduct for Group Employees” means guidelines that specify the periods during which
senior management of a Group Company may deal in Bank Stock;
	 
	 	 	“Control” means control within the definition given by Section 432 of the Taxes Consolidation
Act 1997;
	 
	 	 	“the Court” means the Court of Directors of the Bank or a duly authorised committee thereof;
	 
	 	 	“the Grant Date” means the date on which an Award was granted;
	 
	 	 	“Group Company” means the Bank or any other company of which the Bank has Control;
	 
	 	 	“the Group Remuneration Committee” means the group remuneration committee of the Court save
that upon the occurrence of any of the corporate events described in Rule 6, then the term
means the Group Remuneration Committee of the Court as constituted immediately before such
event occurs;
	 
	 	 	“Initial Market Value” means for any Plan Year the value of a Unit of Stock as determined
under the SSI for purposes of the Scheme Year (as defined in the SSI) that corresponds to
such Plan Year;
	 
	 	 	“Internal Reorganisation” means an event contemplated by sub-rule (1) of Rule 6 the result of
which is that the Bank will be under the Control of another company or the business of the
Bank is carried on by another company and the persons who owned the shares in the Bank
immediately before the change of Control will immediately afterwards
own more than 75% of the shares in that other company;
	 
	 	 	“Participant” means a person who holds an Award granted under the Plan;
	 
	 	 	“the Plan” means the Bank of Ireland Restricted Stock Plan — 2006 as herein set out but
subject to any alterations or additions made under Rule 8;
	 
	 	 	“Plan Year” means each year during the operation of the Plan being the twelve months to the
end of the relevant Accounting Period;
	 
	 	 	“the SSI” means the Bank of Ireland Staff Stock Issue  — 2006 Scheme;

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	 	 	“Trust” means the Trust established by the Bank for the purpose of satisfying Awards granted
under the Plan, “Trustee” means the trustee of the Trust and “Trust Agreement” means the
agreement between the Bank and the Trustee establishing the Trust.
	 
	 	 	“Unit of Stock” means a unit of Ordinary Stock in the capital of the Bank and “Units of
Stock” and “Stock” and “Ordinary Stock” shall be construed accordingly.
	 
	(2)	 	Any reference in the Plan to any enactment includes a reference to that enactment as from
time to time modified, extended or re-enacted.
	 
	(3)	 	Where the context so permits, the singular shall include the plural and vice versa.
	 
	(4)	 	Headings and words in italics are for guidance only and do not form part of the Plan.

	2.	 	ELIGIBILITY
	 
	(1)	 	A person is eligible to be granted an Award for a Plan Year if (and only if) he or she:

	 	(a)	 	Is employed on both the immediately preceding Announcement Date and the Grant
Date as an executive director, an officer or an employee of a Group Company who is
required to devote the whole or substantially the whole of his or her working time to
his or her office or employment with a Group Company, and
	 
	 	(b)	 	Has been in the continuous employment of a Group Company for a period of not less
than twelve months ending on the last day of the relevant Plan Year.

	3.	 	GRANT OF AWARDS
	 
	(1)	 	Subject to sub-rule (3) of this Rule 3 and Rule 4, the Group Remuneration Committee may at
its absolute discretion grant to any person who is eligible in accordance with Rule 2 an Award
for a Plan Year consisting of a number of Units of Stock having a “Value” (being the product
of the number of Units of Stock and the Initial Market Value) equal to the same percentage of
such person’s Basic Remuneration for such Plan Year that applies for purposes of the award of
free Units of Stock under the SSI to participants in the SSI for the Scheme Year (as defined
in the SSI) corresponding to such Plan Year; provided, however, that such percentage of Basic
Remuneration shall in no event exceed 7.5%. Such Award shall be subject to the terms set out
in the Plan and to any other objective conditions as the Group Remuneration Committee may
specify on the Grant Date.
	 
	(2)	 	The Group Remuneration Committee may adopt such procedures as it thinks fit for granting
Awards, whether by issuing invitations or without issuing invitations.
	 
	(3)	 	An Award may only be granted:

	 	(a)	 	within the period of 6 weeks beginning with:

	 	(i)	 	the date on which the Plan is adopted by the Bank at the Annual
General Court; or
	 
	 	(ii)	 	the dealing day next following any Announcement Date; or
	 
	 	(iii)	 	the removal of any restriction imposed under statute, order or
regulation (including any regulation, order or requirement imposed by any
regulatory authority) which had previously prevented the grant of an Award
under sub-paragraph (ii) above; or

	 	(b)	 	at any other time when the circumstances are considered by the Group Remuneration
Committee to be sufficiently exceptional to justify its grant; and

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	 	(c)	 	within the period of 10 years beginning with the date on which the Plan is
adopted by the Bank.

	(4)	 	An Award (and Units of Stock covered by an Award) shall not, except on the death of a
Participant, be capable of being sold, assigned, charged, pledged or otherwise transferred by
him or her and any purported sale, assignment, charge, pledge or other transfer shall cause
the Award to lapse forthwith; and an Award shall lapse forthwith if the Participant is
adjudged bankrupt.
	 
	(5)	 	There shall be no monetary consideration for the grant of an Award.
	 
	(6)	 	The Bank shall issue to each Participant an Award Certificate which shall be in such form as
the Group Remuneration Committee shall from time to time determine. The Award Certificate
shall include details of:

	 	(a)	 	the Grant Date in relation to the Award; and
	 
	 	(b)	 	the number of Units of Stock subject to the Award.

	(7)	 	As soon as is practicable following the Grant Date, the Bank shall contribute to the Trust an
amount sufficient to acquire the aggregate number of Units of Stock awarded to Eligible
Employees on the Grant Date. The Trustees may purchase on the open market and/or subscribe
for the appropriate number of Units of Stock in accordance with the provisions of the Trust
Agreement. The Trustee shall establish a separate account in the name of each Participant to
hold the Units of Stock covered by an Award to such Participant, and a separate account to
which any forfeitures occurring under the Plan shall be credited pending reallocation to
Participants. The accounts shall also hold any cash dividend or other distribution paid on
Units of Stock held therein until such distributions are payable pursuant to the Plan and the
Trust Agreement. Units of Stock covered by an Award shall be released to the Participant by
the Trust in accordance with the provisions of Rules 5 and 6 hereof and the Trust Agreement.
	 
	(8)	 	In accordance with the applicable provisions of the Trust Agreement, a Participant will be
entitled to:

	 	(a)	 	receive the amount of any cash dividend or other distribution paid on Units of
Stock awarded to the Participant and not yet released to the Participant; and
	 
	 	(b)	 	provide directions to the Trustee regarding the exercise of any voting rights
attaching to Units of Stock awarded to the Participant.

	4.	 	LIMITS
	 
	(1)	 	The Bank shall determine in its absolute discretion the amount of funds to be made available
to the Plan in respect of any Plan Year provided that in any calendar year not more than 5% of
the consolidated profits (before tax and extraordinary items) for the last Accounting Period
immediately preceding the relevant Grant Date shall be made available for the purchase on the
open market and/or subscription for Stock under this Plan and any similar profit sharing plan
established by the Bank and any of its subsidiaries. For this purpose profits shall be taken
into account on the basis of profits which are attributable to Group Companies whose employees
participate in the Plan or in any similar profit sharing plan established by the Bank and its
subsidiaries which will be operated in the relevant year.
	 
	(2)	 	No Awards shall be granted which would, at the time they are granted, cause the number of
Units of Stock in the Bank which shall have been or may be issued in the period of ten years
ending with the date the Awards are granted, under the Plan or under any other employees’
stock scheme adopted by the Bank, to exceed such number as represents 10% of the Units of
Stock of the Bank in issue at that time.

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	(3)	 	Not more than 1% of the Units of Stock of the Bank in issue at the commencement of any
calendar year may be subscribed for or purchased in that year under this Plan or any other
profit sharing scheme established by the Bank or any of its subsidiaries.
	 
	(4)	 	In determining the above limits:

	 	(a)	 	No account shall be taken of Stock which is not new issue Stock;
	 
	 	(b)	 	No account shall be taken of any Units of Stock where the right to acquire them
under any share option scheme operated by the Bank or any of its subsidiaries has
lapsed, been renounced or otherwise become incapable of being exercised;
	 
	 	(c)	 	Any Stock issued on the exercise or vesting of rights shall be taken into
account once only (when the rights are granted) and shall not fall out of account when
the rights are exercised.

	(5)	 	Subject to sub-rule 4(3) above, and to the extent permitted by the recognised institutional
investor guidelines, any Stock issued or issuable under a broadly based employee stock plan
including the Bank’s Employee Stock Issue Scheme — 1997, Staff Stock Issue — 2006 Scheme,
the SIP, the Bank’s Sharesave Scheme and this Plan shall be disregarded for the purposes of
calculating the amount of Stock which may be allocated for the subscription or purchase under
the Plan.

	5.	 	RELEASE OF SHARES TO PARTICIPANTS; TERMINATION OF AWARDS
	 
	(1)	 	Subject to sub-rules (2), (3), (5) and (6) of this Rule 5 and Rule 6, the Units of Stock
covered by an Award shall be released to a Participant or his or her nominee on or as soon as
reasonably practicable after the third anniversary of the Grant Date.
	 
	(2)	 	Subject to sub-rule (3) of this Rule 5, if any Participant ceases to be an executive
director, an officer or an employee of a Group Company for any reason, including (without
limitation) resignation, early retirement or dismissal, any Award held by him or her shall
lapse upon the date of such cessation.
	 
	(3)	 	If any Participant ceases to be an executive director, an officer or an employee of a Group
Company by reason of:

	 	(a)	 	death;
	 
	 	(b)	 	permanent or long-term disability (each proved to the satisfaction of the Group
Remuneration Committee); or
	 
	 	(c)	 	retirement on or after reaching contractual retirement age;
	 
	 	then the Units of Stock covered by an Award shall be released to him or her, his or her
nominee or his or her personal representatives as soon as reasonably practicable after he or
she dies or ceases to be an executive director, officer or employee of a Group Company.

	(4)	 	A Participant shall not be treated for the purposes of sub-rules (2) and (3) of this Rule 5
as ceasing to be an executive director, an officer or an employee of a Group Company until
such date as he or she is no longer an executive director, an officer or an employee of any
Group Company.
	 
	(5)	 	No Units of Stock shall be released to a Participant unless:

	 	(a)	 	the Group Remuneration Committee considers that the release of the Units of Stock
would be lawful in the relevant jurisdiction; and
	 
	 	(b)	 	if the Court so requires, the Participant has entered into such agreement with
the relevant Group Member either to remit to the Group Member or to the Trustee an

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	 	 	 	amount sufficient in the opinion of the Group Member to satisfy any federal or other
governmental tax withholding obligation on the part of such Group Member relating to
an Award (including, without limitation, FICA tax) or entered into arrangements
acceptable to that Group Member to secure that such a payment is made by authorising
the sale of some or all of the Units of Stock on his or her behalf and the payment
to the relevant person of the relevant amount out of the proceeds of sale or
otherwise.

	(6)	 	The release of any Units of Stock under the Plan pursuant to an Award shall be subject to the
provisions of the Code of Conduct for Group Employees, or any replacement guidelines, in
relation to transactions in securities by directors and relevant employees or any other
regulation or enactment. Where the release of Units of Stock pursuant to an Award is
prohibited at any time, such release shall instead take place as soon as reasonably
practicable after it is no longer prohibited.
	 
	(7)	 	All Units of Stock allotted under the Plan shall rank pari passu in all respects with the
Units of Stock of the same class for the time being in issue save as regards any rights
attaching to such Units of Stock by reference to a record date prior to the date of the
allotment.
	 
	(8)	 	If Units of Stock of the same class as those allotted under the Plan are listed in The Irish
Stock Exchange Official List or The London Stock Exchange Official List (or any successor to
these exchanges), the Bank shall apply to the Irish Stock Exchange or the London Stock
Exchange (or any successor to these exchanges) for any Units of Stock so allotted to be
admitted to the appropriate list.

	6.	 	TAKE-OVER AND WINDING — UP
	 
	(1)	 	Subject to sub-rule (3) of this Rule 6, if:

	 	(a)	 	any person obtains Control of the Bank as a result of making a general offer to
acquire Units of Stock, or having obtained Control makes such an offer; or
	 
	 	(b)	 	an order is made for the compulsory winding up of the Bank;
	 
	 	then the Units of Stock subject to each outstanding Award shall be released to the
Participant or his or her nominee (and the Group Remuneration Committee shall so instruct the
Trustee) as soon as reasonably practicable after the first to occur of these events.	 	 

	(2)	 	For the purposes of sub-rule (1) of this Rule 6, a person shall be deemed to have obtained
Control of the Bank if he or she and others acting in concert with him or her have together
obtained Control of it.
	 
	(3)	 	Upon the occurrence of an Internal Reorganisation, an Award shall not vest (unless the Group
Remuneration Committee, in its discretion, determines otherwise) but shall instead be replaced
by a new award over shares in the company which Controls the Bank or which carries on the
business of the Bank (as the case may be) that have an equivalent market value as the Stock to
which the Award relates immediately prior to the Internal Reorganisation (such market values
to be determined by the Group Remuneration Committee) and the Rules shall continue to apply to
the new award mutatis mutandis to take account of this alteration as the Group Remuneration
Committee shall reasonably determine.

	7.	 	VARIATION OF CAPITAL
	 
	(1)	 	In the event of any variation in the capital structure of the Bank, including a
capitalisation issue, a rights issue, a sub-division or consolidation of Stock, or a reduction
in capital, a demerger, a payment of a capital dividend, or other similar event, the Group
Remuneration Committee may make such adjustments to the number of Units of Stock in respect of
which any Award is subject as it considers appropriate.

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	(2)	 	As soon as reasonably practicable after making any adjustment under sub-rule (1) of this Rule
7, the Group Remuneration Committee shall give notice in writing to any Participant affected
by it.

	8.	 	ALTERATIONS
	 
	(1)	 	Subject to sub-rules (2), (4) and (5) of this Rule 8, the Group Remuneration Committee may at
any time alter the Plan or the terms of any Award granted under it.
	 
	(2)	 	Subject to sub-rule (3) of this Rule 8, no alteration to the advantage of the persons to whom
Awards have been or may be granted may be made under sub-rule (1) of this Rule 8, to Rule 2
(the eligibility of Participants), sub-rule (1) of Rule 3 (terms and conditions of Award),
sub-rule (4) of Rule 3 (the Transfer Restrictions), Rule 4 (limits on the number of Units of
Stock which may be issued under the Plan), Rules 5 and 6 (the release of Units of Stock,
termination of Awards and effect of a change in Control), Rule 7 (adjustment of Awards on a
variation of capital), or this Rule, without the prior approval by resolution of the members
of the Bank in general meeting.
	 
	(3)	 	Sub-rule (2) of this Rule 8 shall not apply to any alteration to benefit the administration
of the Plan, to take account of a change in legislation or to obtain or maintain favourable
tax, exchange control or regulatory treatment for Participants or any Group Company.
	 
	(4)	 	No alteration to the disadvantage of any Participant in respect of any Award granted to him
or her shall be made under sub-rule (1) of this Rule 8 unless:

	 	(a)	 	the Group Remuneration Committee shall have invited every relevant Participant to
give an indication as to whether or not he or she approved the alteration, and
	 
	 	(b)	 	the alteration is approved by a majority of those Participants who have given
such an indication.

	(5)	 	As soon as reasonably practicable after making any alteration under this Rule 8, the Group
Remuneration Committee shall give notice in writing to any Participant affected by it.

	9.	 	MISCELLANEOUS
	 
	(1)	 	The rights and obligations of any individual under the terms of his or her office or
employment with any Group Company shall not be affected by his or her participation in the
Plan or any right which he or she may have to participate in it.
	 
	(2)	 	If a Participant shall cease for any reason to be in the office or employment of a Group
Company, he or she shall not be entitled, by way of compensation for loss of office or
otherwise howsoever, to any sum or any benefit to compensate him or her for the loss of any
right or benefit accrued or in prospect under the Plan.
	 
	(3)	 	In the event of any dispute or disagreement as to the interpretation of the Plan, or as to
any question or right arising from or related to this Plan, the decision of the Group
Remuneration Committee ratified by the Court shall be final and binding upon all persons.
	 
	(4)	 	Any notice or other communication under or in connection with this Plan may be given by
personal delivery or by post, in the case of a company to its registered office, and in the
case of an individual to his or her last known address, or, where he or she is a director,
officer or an employee of a Group Company, either to his or her last known address, or to the
address of the place of business at which he or she performs the whole or substantially the
whole of the duties of his or her office of employment or in an electronic communication to an
address for the time being notified for that purpose to the person giving the notice.
	 
	(5)	 	Any and all grants of Awards and releases of Units of Stock under the Plan shall constitute a
special incentive payment to the Participant and shall not be taken into account in computing

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	 	 	the amount of salary or other compensation of the Participant for the purpose of determining
any benefits under any pension, profit-sharing, bonus, life insurance or other benefit plan
of any Group Company or under any agreement with the Participant, unless such plan or
agreement specifically provides otherwise.

	(6)	 	All cost, charges and expenses (including any capital or stamp duties) incurred in
introducing and administering the Plan shall be borne by the Group Companies as determined by
the Group Remuneration Committee.
	 
	(7)	 	Any stamp duty chargeable in respect of the release of Units of Stock to a Participant
pursuant to an Award shall be borne by the relevant Group Company in respect of Participants
employed by it.

	10.	 	GOVERNING LAW AND JURISDICTION
	 
	 	 	This Plan and all Awards granted under it shall be governed and construed in accordance with
Irish law and the Courts of Ireland shall have exclusive jurisdiction to hear any dispute.

	11.	 	TERMINATION OF THE PLAN
	 
	 	 	The Plan shall terminate on the tenth anniversary of the date on which it is approved by the
stockholders of the Bank in general court or at any earlier time by the passing of a
resolution by the Court. Termination of the Plan shall be without prejudice to the
subsisting rights of Participants.

-7-Execution Copy

 

 

 

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ECHO HEALTHCARE ACQUISITION CORP.,

PET DRX ACQUISITION COMPANY,

AND

XLNT VETERINARY CARE, INC.

DATED AS OF SEPTEMBER 11, 2006

 

TABLE OF CONTENTS

	
 	 	 	    	Page

	
ARTICLE
I  THE MERGER
	    	    	    	    	2	  
	1.1        The Merger
	    	    	    	    	2	   
	1.2        Effective Time; Closing
	    	    	    	    	2	   
	1.3        Effect of the Merger
	    	    	    	    	2	   
	1.4        Certificate of Incorporation; Bylaws; Directors; Officers
	    	    	    	    	2	   
	1.5        Conversion of Capital Stock
	    	    	    	    	3	   
	1.6        Exchange Ratio; Fractional Shares; Adjustments
	    	    	    	    	3	   
	1.7        Exchange of Certificates
	    	    	    	    	5	   
	1.8        Treatment of Stock Options; Warrants
	    	    	    	    	8	   
	1.9        Taking of Necessary Action; Further Action
	    	    	    	    	9	   
	1.10      Escrow
	    	    	    	    	9	   
	1.11      Committee and Stockholders’ Representatives for Purposes of Escrow Agreement
	    	    	    	    	10	   
	1.12      Notice to Holders of Derivative Securities
	    	    	    	    	13	   
	1.13      Shares Subject to Appraisal Rights
	    	    	    	    	13	   
	1.14      Tax Consequences
	    	    	    	    	13	   
	 
	
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
	    	    	    	    	13	  
	2.1        Organization and Qualification
	    	    	    	    	14	   
	2.2        Subsidiaries
	    	    	    	    	14	   
	2.3        Capitalization
	    	    	    	    	14	   
	2.4        Authority Relative to this Agreement
	    	    	    	    	16	   
	2.5        No Conflict; Required Filings and Consents
	    	    	    	    	16	   
	2.6        Compliance
	    	    	    	    	17	   
	2.7        Financial Statements
	    	    	    	    	17	   
	2.8        No Undisclosed Liabilities
	    	    	    	    	18	   
	2.9        Absence of Certain Changes or Events
	    	    	    	    	18	   
	2.10      Litigation
	    	    	    	    	19	   
	2.11      Employee Benefit Plans and Compensation
	    	    	    	    	19	   
	2.12      Labor Matters
	    	    	    	    	23	   
	2.13      Restrictions on Business Activities
	    	    	    	    	24	   
	2.14      Owned and Leased Real Properties
	    	    	    	    	24	   
	2.15      Taxes
	    	    	    	    	25	   
	2.16      Environmental Matters
	    	    	    	    	26	   
	2.17      Brokers; Third Party Expenses
	    	    	    	    	27	   
	2.18      Intellectual Property
	    	    	    	    	27	   
	2.19      Agreements, Contracts and Commitments
	    	    	    	    	28	   
	2.20      Insurance
	    	    	    	    	30	   
	2.21      Governmental Actions/Filings
	    	    	    	    	30	   
	2.22      Interested Party Transactions
	    	    	    	    	31	   
	2.23      Corporate Approvals
	    	    	    	    	31	   
	2.24      Proxy Statement/Prospectus
	    	    	    	    	31	   
	2.25      No Reliance
	    	    	    	    	32	   
	2.26      Survival of Representations and Warranties
	    	    	    	    	33	   

i

	
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
	    	    	    	    	33	  
	3.1        Organization and Qualification
	    	    	    	    	33	   
	3.2        Subsidiaries
	    	    	    	    	33	   
	3.3        Capitalization
	    	    	    	    	34	   
	3.4        Authority Relative to this Agreement
	    	    	    	    	35	   
	3.5        No Conflict; Required Filing and Consents
	    	    	    	    	35	   
	3.6        Compliance
	    	    	    	    	36	   
	3.7        SEC Filings; Financial Statements
	    	    	    	    	36	   
	3.8        No Undisclosed Liabilities
	    	    	    	    	37	   
	3.9        Absence of Certain Changes or Events
	    	    	    	    	37	   
	3.10      Litigation
	    	    	    	    	38	   
	3.11      Employee Benefit Plans
	    	    	    	    	38	   
	3.12      Restrictions on Business Activities
	    	    	    	    	38	   
	3.13      Title to Property
	    	    	    	    	38	   
	3.14      Taxes
	    	    	    	    	38	   
	3.15      Brokers
	    	    	    	    	39	   
	3.16      Intellectual Property
	    	    	    	    	39	   
	3.17      Agreements, Contracts and Commitments
	    	    	    	    	39	   
	3.18      Insurance
	    	    	    	    	41	   
	3.19      Interested Party Transactions
	    	    	    	    	41	   
	3.20      Indebtedness
	    	    	    	    	41	   
	3.21      Over-the-Counter Bulletin Board Quotation
	    	    	    	    	41	   
	3.22      Board Approval
	    	    	    	    	41	   
	3.23      Trust Fund
	    	    	    	    	42	   
	3.24      No Reliance
	    	    	    	    	42	   
	3.25      Company Proxy Materials
	    	    	    	    	42	   
	3.26      Survival of Representations and Warranties
	    	    	    	    	43	   
	 
	
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME 
	    	    	    	    	43	  
	4.1        Conduct of Business by Company, Parent and Merger Sub
	    	    	    	    	43	   
	4.2        Acquisitions
	    	    	    	    	46	   
	4.3        Officers of the Company
	    	    	    	    	47	   
	 
	
ARTICLE V
ADDITIONAL AGREEMENTS 
	    	    	    	    	48	  
	5.1        Proxy Statement/Prospectus; Parent Stockholders’ Meeting

	    	    	    	    	48	   
	5.2        Company Stockholder Approval
	    	    	    	    	49	   
	5.3        Directors and Officers of Parent and the Surviving Corporation After
Merger
	    	    	    	    	50	   
	5.4        Voting Agreements
	    	    	    	    	50	   
	5.5        HSR Act
	    	    	    	    	50	   
	5.6        Other Actions
	    	    	    	    	51	   
	5.7        Required Information
	    	    	    	    	52	   
	5.8        Confidentiality; Access to Information
	    	    	    	    	52	   

ii

	5.9        Charter Protections; Directors’ and Officers’ Liability
Insurance
	    	    	    	    	53	   
	5.10      Public Disclosure
	    	    	    	    	54	   
	5.11      Reasonable Best Efforts
	    	    	    	    	54	   
	5.12      Certain Claims
	    	    	    	    	55	   
	5.13      No Securities Transactions
	    	    	    	    	55	   
	5.14      No Claim Against Trust Fund; Sole Remedy For Termination of Agreement

	    	    	    	    	55	   
	5.15      Disclosure of Certain Matters
	    	    	    	    	55	   
	5.16      No Solicitation
	    	    	    	    	56	   
	5.17      Parent Option Plan
	    	    	    	    	58	   
	5.18      Benefit Arrangements
	    	    	    	    	59	   
	5.19      Intentionally Omitted
	    	    	    	    	59	   
	5.20      Intentionally Omitted
	    	    	    	    	59	   
	5.21      Fees and Expenses
	    	    	    	    	59	   
	5.22      Tax-Free Reorganization
	    	    	    	    	60	   
	5.23      Consulting Services
	    	    	    	    	60	   
	 
	
ARTICLE VI
CONDITIONS TO THE TRANSACTION 
	    	    	    	    	60	  
	6.1        Conditions to Obligations of Each Party to Effect the Merger

	    	    	    	    	60	   
	6.2        Additional Conditions to Obligations of the Company
	    	    	    	    	61	   
	6.3        Additional Conditions to the Obligations of Parent
	    	    	    	    	63	   
	 
	
ARTICLE VII
INDEMNIFICATION
	    	    	    	    	65	  
	7.1        Indemnification
	    	    	    	    	65	   
	7.2        Indemnification of Third Party Claims
	    	    	    	    	66	   
	7.3        Insurance Effect
	    	    	    	    	68	   
	7.4        Limitations on Indemnification
	    	    	    	    	69	   
	7.5        Exclusive Remedy
	    	    	    	    	70	   
	7.6        Damages; Adjustment to Merger Consideration
	    	    	    	    	70	   
	7.7        Representative Capacities; Application of Escrow Fund

	    	    	    	    	70	   
	 
	
ARTICLE VIII
TERMINATION
	    	    	    	    	71	  
	8.1        Termination.
	    	    	    	    	71	   
	8.2        Notice of Termination; Limited Remedy.
	    	    	    	    	73	   
	8.3        Intentionally Omitted
	    	    	    	    	73	   
	8.4        Termination Fee.
	    	    	    	    	73	   
	 
	
ARTICLE IX
GENERAL PROVISIONS
	    	    	    	    	74	  
	9.1        Notices
	    	    	    	    	74	   
	9.2        Interpretation
	    	    	    	    	75	   
	9.3        Counterparts; Facsimile Signatures
	    	    	    	    	77	   
	9.4        Entire Agreement; Third Party Beneficiaries
	    	    	    	    	77	   
	9.5        Severability
	    	    	    	    	77	   
	9.6        Other Remedies; Specific Performance
	    	    	    	    	78	   
	9.7        Governing Law
	    	    	    	    	78	   
	9.8        Rules of Construction
	    	    	    	    	78	   
	9.9        Assignment
	    	    	    	    	78	   
	9.10      Amendment
	    	    	    	    	78	   
	9.11      Extension; Waiver
	    	    	    	    	79	   
	9.12      Dispute Resolution
	    	    	    	    	79	   

 

iii

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF
MERGER (this “Agreement”) is made and entered
into as of September 11, 2006, by and among Echo Healthcare Acquisition Corp., a Delaware corporation (“
Parent”), Pet DRx Acquisition Company, a Delaware corporation and a wholly-owned subsidiary of Parent
(“Merger Sub”), and XLNT Veterinary Care, Inc., a Delaware corporation (the
“Company”).

RECITALS

A.
    Parent, Merger Sub and the Company intend to enter into a business combination
transaction by means of a merger (the “Merger”) of Merger Sub with and into
the Company in accordance with this Agreement and the Delaware General Corporation Law (the “DGCL
”), with the Company to be the surviving corporation of the Merger.

B.
     It is intended that the Merger qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”
).

C.
    Pursuant to the Merger, each outstanding share of common stock, par value $.0001 per
share of the Company (“Company Common Stock”), and Series A preferred
stock, par value $.0001 per share of the Company (“Company Preferred Stock
”), shall be converted into the right to receive the Merger Consideration (as determined by and defined in Section 1.5(b)),
upon the terms and subject to the conditions set forth herein. 

D.
    The Board of Directors of the Company (the “Company Board
”), based upon the recommendation to the Company Board by the Special Committee of the Board of
Directors (the “Company Special Committee
”) has unanimously (i) determined that the Merger on the terms and subject to the conditions set forth in this
Agreement is advisable and is in the best interest of the Company and the Company’s stockholders, (ii) approved this Agreement,
the Merger, and the other transactions contemplated by this Agreement and (iii) determined to recommend that the stockholders of the
Company adopt and approve this Agreement, the Merger and the other transactions contemplated by this Agreement. 

E.
     The respective Boards of Directors of Parent (the “
Parent Board”) and Merger Sub, based upon the recommendation by the Special Committee of the Parent
Board (the “Parent Special Committee”)  have (i) determined that the Merger
on the terms and subject to the conditions set forth in this Agreement is advisable and in the best interest of Parent and Merger
Sub and their respective stockholders, (ii) approved this Agreement, the Merger and the other transactions contemplated by this
Agreement and (iii) determined to recommend that the stockholders of Parent and Merger Sub adopt and approve this Agreement, the
Merger and the other transactions contemplated by this Agreement. 

NOW, THEREFORE
, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows (certain defined terms
used in this Agreement are listed alphabetically in Section 9.2). 

ARTICLE I

THE MERGER

	
             
  	
            1.1

 	
            The
Merger.
 

At the Effective Time (as
defined in Section 1.2) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the
DGCL, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company as the surviving corporation after the Merger is hereinafter
sometimes referred to as the “Surviving Corporation
.”

	
             
  	
            1.2

 	
            Effective
Time; Closing.
 

Subject to the conditions of
this Agreement, the parties hereto shall cause the Merger to be consummated by filing with the Secretary of State of the State of
Delaware a properly executed Certificate of Merger (the “Certificate of Merger
”) in such form as may be agreed by the parties hereto and as required by the relevant provisions of the DGCL (the time of such
filing with the Secretary of State of the State of Delaware, or such later time as may be agreed in writing by the Company and
Parent and specified in the Certificate of Merger, being the “Effective Time
”) as soon as practicable on or after the Closing Date (as herein defined). The term “Agreement” as used herein refers to this Agreement and Plan of Merger, as the same may be
amended from time to time, and all schedules hereto (including the Company Disclosure Schedule and the Parent Disclosure Schedule,
as defined in the preambles to Articles II and III hereof, respectively). Unless this Agreement shall have been terminated pursuant
to Section 8.1, the closing of the Merger (the “Closing ”) shall take place
at the offices of Powell Goldstein LLP (“Powell Goldstein
”), counsel to Parent, at 1201 West Peachtree St. NE, 14th Floor, Atlanta, Georgia 30309, at a time and
date to be specified by the parties, which shall be no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as the parties hereto agree in writing (the “
Closing Date”). Closing signatures may be
transmitted by facsimile.

	
             
  	
            1.3

 	
            Effect of
the Merger.
 

At the Effective Time, the
effect of the Merger shall be as provided in this Agreement and Section 259 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become
the debts, liabilities and duties of the Surviving Corporation.

	
             
  	
            1.4

 	
            
Certificate of Incorporation; Bylaws; Directors; Officers.
 

(a)
    The Certificate of Merger shall provide that, at the Effective Time, the certificate of
incorporation of the Merger Sub, as in effect immediately prior to the Effective Time, which shall be in a form reasonably
acceptable to Parent and the Company, shall become the certificate of incorporation of the Surviving Corporation, until thereafter
amended in accordance with the provisions thereof and as provided by applicable law.

 

2 

(b)
   At the Effective Time, the by-laws of the Merger Sub, as in effect immediately prior to the
Effective Time, which shall be in a form reasonably acceptable to Parent and the Company, shall become the by-laws of the Surviving
Corporation until thereafter amended as provided by applicable law, the certificate of incorporation of the Surviving Corporation
and such by-laws. 

(c)
    At the Effective Time, the directors of Parent and the Surviving Corporation shall be as set forth in 
Schedule 1.4(c), each to hold office in accordance with the certificate of incorporation and
by-laws of Parent and the Surviving Corporation, as applicable.

(d)
   At the Effective Time, the officers of Parent and the Surviving Corporation shall be as set forth in 
Schedule 1.4(d), each to hold office in accordance with the certificate of incorporation and
by-laws of Parent and the Surviving Corporation, as applicable.

 

	
             
  	
            1.5

 	
            
Conversion of Capital Stock.
 

At the Effective Time, by virtue
of the Merger and without any additional action on the part of Parent, Merger Sub or the Company or their respective shareholders:

(a)
    Each share of common stock, par value $.01 per share, of Merger Sub (“
Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time
shall be converted into one share of common stock, without par value, of the Surviving Corporation.  Such newly issued shares shall
thereafter constitute all of the issued and outstanding capital stock of the Surviving Corporation.

(b)
   Subject to the other provisions of this Article I, (i) each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (including Company Common Stock issued upon conversion of Company
Preferred Stock, as contemplated by clause (ii) below) shall be converted into and represent the right to receive such number of
shares of common stock of Parent (the “Parent Common Stock”) as is
determined by multiplying such share by the Exchange Ratio (as defined in Section 1.6) (the “Merger
Consideration”) and (ii) each share of Company Preferred Stock issued and outstanding immediately prior
the Effective Time shall be converted into shares of Company Common Stock pursuant to and in accordance
with the terms of the Company Preferred Stock and shall there after represent the right to receive the Merger Consideration.

(c)
    Each share of capital stock of the Company held in the treasury of the Company or held
by Parent, Merger Sub or any other wholly owned Subsidiary of Parent shall be cancelled and retired and no payment shall be made in
respect thereof.

	
             
  	
            1.6

 	
            Exchange
Ratio; Fractional Shares; Adjustments.
 

(a)
    The aggregate Merger Consideration payable by Parent in connection with the consummation
of the Merger (the “Aggregate Merger Consideration”) shall be a number of
shares of Parent Common Stock equal to the quotient obtained by dividing (A) the product of (i)

3 

the lesser of (x) the consolidated
gross revenues of the Company for the year ending on December 31, 2006, including those revenues attributable to hospitals or
clinics that are the subject of a definitive acquisition agreement on or before December 31, 2006 (each an “
Acquisition Candidate”) and are subsequently acquired by the Company on or before March
31, 2007, and (y) $60.0 million, but in no event less than $48.0 million, multiplied by (ii) 2.00, plus $1.0 million; by (B) the
product of (a) the amount of cash in Parent’s trust fund at the Closing (without deduction for amounts paid in connection with
obtaining a fairness opinion from a nationally recognized financial advisor and the conversion by public stockholders of Parent
voting against the Merger of up to 19.9% of the shares of Parent Common Stock issued in Parent’s initial public offering (the
“IPO”) into a pro rata share of the funds held in Parent’s Trust Fund established in connection with the IPO) divided
by the number of shares of Parent’s Common Stock then issued and outstanding (excluding therefrom any shares of common stock
issuable upon the exercise or exchange of other Parent securities which by their terms are convertible into or exercisable or
exchangeable for Parent Common Stock) multiplied by (b) 1.25, provided, however, that in no event will the product determined in
accordance with this clause (B) exceed $7.20 (as adjusted for (i) any events set forth in Section 1.6(d) or (ii) any issuances of
any additional shares of Parent Common Stock or any securities convertible into or exercisable or exchangeable for shares of Parent
Common Stock) (the amount determined pursuant to this clause (B) being the “
Parent Common Stock Per Share Issue Price”).  The “
Exchange Ratio” shall be equal to the quotient of (x) the Aggregate Merger Consideration, divided by
(y) the fully diluted number of outstanding shares of Company Common Stock (assuming for purposes of the foregoing calculation that
all securities convertible into or exercisable or exchangeable for Company Common Stock have been so converted, exercised or
exchanged unless otherwise adjusted pursuant to the provisions of this Agreement to reflect the consummation of the Merger)
immediately prior to the Effective Time. If at the Closing the amount of the Company’s Indebtedness exceeds $16,500,000 in
principal amount of Indebtedness (excluding (i) accounts payable incurred in the ordinary course of business and (ii) any Company
Convertible Notes (as defined in Section 2.3(a)) that are converted into Company Common Stock on or prior to the Closing Date) (the
amount of such excess being the “Excess Indebtedness”), the Aggregate
Merger Consideration shall be reduced (on a pro rata basis among those Company stockholders entitled to receive such Merger
Consideration) by an amount equal to the quotient (expressed as a whole number) of (A) the amount of Excess Indebtedness, divided by
(B) the Parent Common Stock Per Share Issue Price. 

(b)
   No certificates for fractional shares of Parent Common Stock shall be issued as a result of
the conversion provided for in Section 1.5(b) and such fractional share interest will not entitle the owner thereof to vote or have
any rights as a holder of Parent Common Stock.

(c)
    In lieu of any such fractional share of Parent Common Stock, the holder of a certificate
or certificates (the “Certificates”) that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock or Company Preferred Stock whose shares were converted into
the right to receive shares of Parent Common Stock pursuant to Section 1.5(b), upon presentation of such fractional interest
represented by an appropriate certificate for Company Common Stock to the Exchange Agent (as defined in Section 1.7) pursuant to
Section 1.7, shall be entitled to receive, without interest, a cash payment therefor in an amount equal to the Parent Common Stock
Per Share Issue Price multiplied by such fractional interest.  Such payment with respect to any
fractional share is merely intended to provide a mechanical rounding off of, and is not a separately bargained for, consideration.
If more than

4 

one Certificate shall be surrendered
for the account of same holder, the number of shares of Parent Common Stock that shall be deliverable with respect to such
surrendered Certificates shall be computed on the basis of the aggregate number of shares represented by the Certificates so
surrendered.

(d)
   In the event that prior to the Effective Time Parent or the Company shall declare a stock
dividend or other distribution payable in Parent Common Stock, Company Common Stock or securities convertible into or exercisable or
exchangeable for Parent Common Stock or Company Common Stock, as appropriate, or effect a stock split, reclassification, combination
or other change with respect to Parent Common Stock or Company Common Stock, the Exchange Ratio set forth in this Section 1.6 shall
be adjusted to reflect such dividend, distribution, stock split, reclassification, combination or other change.

	
             
  	
            1.7

 	
            Exchange
of Certificates.
 

(a)
    Exchange Agent.  Prior to the Effective Time, Parent shall
deposit with Corporate Stock Transfer, Inc. or such other exchange agent as may be designated by Parent (subject to approval by the
Company, not to be unreasonably withheld or delayed) (the “Exchange Agent
”), for the benefit of the Company’s stockholders, for exchange in accordance with this Section 1.7, certificates
representing shares of Parent Common Stock issuable pursuant to Section 1.5 in exchange for outstanding shares of Company Common
Stock and shall, from time to time, deposit cash in an amount required to be paid pursuant to Section 1.6 with respect to any
fractional interest in any share of Parent Common Stock (such Parent Common Stock and cash, together with
any dividends or distributions with respect thereto, the “Exchange Fund”).
At the time of such deposit, Parent shall irrevocably instruct the Exchange Agent to deliver the Exchange Fund to the Company’s
stockholders in accordance with the terms and procedures set forth in this Section 1.7. 

(b)
   Exchange Procedures.  As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a Certificate, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and shall be in such form and have such other customary provisions as Parent may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for certificates representing Parent Common Stock or for
payments in exchange for fractional shares.  Upon surrender of a Certificate for cancellation to the Exchange Agent, together with a
duly executed letter of transmittal, the holder of such Certificate shall receive in
exchange therefor (i) a certificate or certificates representing that whole number of shares of Parent Common Stock which such
holder has the right to receive pursuant to Section 1.5 in such denominations and registered in such names as such holder may
request and (ii) a check representing the amount of cash in lieu of any fractional shares, if any, and unpaid dividends and
distributions on Parent Common Stock, if any, which such holder has the right to receive pursuant to the provisions of this Article
I, after giving effect to any required withholding tax.  The shares represented by Certificates so surrendered shall forthwith be
cancelled.  No interest will be paid or accrued on the cash in lieu of fractional shares, if any, and unpaid dividends and
distributions on Parent Common Stock, if any, payable to holders of shares of Company Common Stock or Company Preferred Stock.  In
the event of a transfer of ownership of shares of Company Common Stock or

5 

Company Preferred Stock that is
not registered on the transfer records of Company, a certificate representing the proper number of shares of Parent Common Stock,
together with a check for the cash to be paid in lieu of fractional shares, if any, and unpaid dividends and distributions on Parent
Common Stock, if any, may be issued to such transferee if the Certificate representing such shares of Company Common Stock or
Company Preferred Stock held by such transferee is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.  Until surrendered as
contemplated by this Section 1.7, each Certificate shall be deemed at any time after the Effective Time to represent only the right
to receive upon surrender thereof a certificate representing shares of Parent Common Stock and cash in lieu of fractional shares, if
any, and unpaid dividends and distributions on Parent Common Stock, if any, as provided in
this Article I.  If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if required, by Parent, the posting by such Person of a bond
in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate, a certificate representing
the proper number of shares of Parent Common Stock, together with a check for the cash to be paid in lieu of fractional shares, if
any, and unpaid dividends and distributions on shares of Parent Common Stock, if any, as provided in this Article I.

(c)
    Distributions with Respect to Unexchanged Shares.
Notwithstanding any other provisions of this Agreement, no dividends or other distributions declared or made with respect to Parent
Common Stock having a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate, and no cash
payment in lieu of fractional shares shall be paid to any such holder, until the holder shall surrender such Certificate as provided
in this Section 1.7.  Subject to the effect of applicable Legal Requirements, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore payable with respect to such whole shares of Parent Common Stock and not
paid, less the amount of any withholding taxes that may be required thereon, and (ii) at the appropriate payment date subsequent to
surrender, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole shares of Parent Common Stock, less the amount of any
withholding taxes which may be required thereon.

(d)
   No Further Ownership Rights in Company Common Stock.  All Parent
Common Stock issued upon surrender of Certificates in accordance with the terms hereof (including any cash paid pursuant to this
Article I) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Common Stock
or Company Preferred Stock represented thereby, and, as of the Effective Time, the stock transfer books of Company shall be closed
and there shall be no further registration of transfers on the stock transfer books of Company of shares of Company Common Stock or
Company Preferred Stock outstanding immediately prior to the Effective Time.  If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Section 1.7.  Certificates surrendered for exchange by any Person (i) constituting an “affiliate” of the
Company for purposes of Rule 145(c) under the Securities Act of 1933, as

6 

amended (together with the rules and
regulations thereunder, the “Securities Act”), shall not be exchanged until
Parent has received written undertakings from such Person in respect of the resale restrictions under Rule 145 under the Securities
Act, which written undertakings shall be in a form reasonably acceptable to Parent and the Company (ii) constituting a Significant
Stockholder (as defined in Section 6.1(e)) shall not be exchanged until Parent has received a signed Significant Stockholder Lock-Up
Agreement (as defined in Section 6.1(e)).

(e)
    Termination of Exchange Fund.  Any portion of the Exchange
Fund that remains undistributed to the Company’s stockholders six months after the Effective Time shall be delivered to Parent,
upon demand thereby, and holders of Certificates who have not theretofore complied with this Section 1.7 shall thereafter look only
to Parent for payment of any claim to Parent Common Stock, cash in lieu of fractional shares thereof, or dividends or distributions
on Parent Common Stock, if any, in respect thereof.  Parent hereby agrees to timely make such payments of Parent Common Stock, cash
in lieu of fractional shares thereof, or dividends or distributions on Parent Common Stock, upon receipt of a proper claim from any
of the Company’s stockholders pursuant to the terms hereof.  

(f)
     No Liability.  None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of any shares of Company Common Stock or Company
Preferred Stock (or dividends or distributions with respect thereto) or cash from the Exchange Fund properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.  If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or immediately prior to such earlier date on which any cash, any cash in lieu of
fractional shares or any dividends or distributions with respect to whole shares of the Company’s Common Stock in respect of
such Certificate would otherwise escheat to or become the property of any Governmental Entity), any such
cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable Legal Requirements,
become the property of Parent, free and clear of all claims or interest of any Person previously entitled thereto.

(g)
    Investment of Exchange Fund.  The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent (but subject to the approval of the Company (prior to the Effective
Time) or the Stockholders’ Representatives (following the Effective Time), not to be unreasonably withheld or delayed), on a
daily basis.  Any interest and other income resulting from such investments shall be paid to Parent upon termination of the Exchange
Fund pursuant to Section 1.7(e).

(h)
    Withholding Rights.  Prior to the Effective Time, each of the
holders of shares of Company Common Stock shall provide to the Company and Parent certificates as to the exempt status of such
holder from withholding pursuant to Code sections 1441 and 3406(a). With respect to any holder of shares of Company Common Stock
that fails to provide such certificates, each of the Surviving Corporation and Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any such holder of shares of Company Common Stock or Company
Preferred Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or
any provision of state, local or foreign tax law.  To the extent that amounts are so withheld by
the Surviving Corporation or Parent, as the case may be, such withheld amounts shall be treated for

7 

all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock or Company Preferred Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as the case may be.  Any amounts so withheld shall be paid by
reducing the number of shares of Parent Common Stock otherwise issuable to such holder in exchange for shares of Company Common
Stock or Company Preferred Stock so surrendered by such number of shares that when multiplied by the Parent Common Stock Per Share
Issue Price equals (as nearly as possible) the amount of such withholding with any resulting fractional share settled in cash.

	
             
  	
            1.8

 	
            Treatment
of Stock Options; Warrants.
 

(a)
    Prior to the Effective Time, Parent shall take all such actions as may be necessary to
cause each unexpired and unexercised outstanding option granted or issued under stock option plans of the Company (“
Company Stock Option Plans”) in effect on the date hereof (each, a “
Company Option”) and each unexercised and outstanding warrant to acquire Company Common
Stock (a “Company Warrant”) to be automatically converted at the Effective
Time into an option (a “Parent Exchange Option”) or warrant (a “
Parent Exchange Warrant”), as appropriate, to
purchase that number of shares of Parent Common Stock equal to the number of shares of Company Common Stock subject to the Company
Option or Company Warrant, as appropriate, immediately prior to the Effective Time multiplied by the Exchange Ratio (and rounded to
the nearest share in accordance with established mathematical principles), with an exercise price per share equal to the exercise
price per share that existed under the corresponding Company Option or Company Warrant, as appropriate, divided by the Exchange
Ratio (and rounded to the nearest cent in accordance with established mathematical principles), and with other terms and conditions
that are the same as the terms and conditions of such Company Option or Company Warrant, as appropriate, immediately before the
Effective Time; provided that, with respect to any Company Option that is an
“incentive stock option” within the meaning of Section 422 of the Code, the
foregoing conversion shall be carried out in a manner satisfying the requirements of Section 424(a) of the Code, including, without
limitation that the  adjustments to such Company Options set forth above shall be determined such that (a) the aggregate intrinsic
value of the new options to purchase Parent Common Stock is not greater than the aggregate intrinsic value of the Company Options
immediately prior to the assumption and (b) the ratio of the exercise price per option to market value per share is unchanged. The
parties agree that Parent will permit holders of vested Company Options to elect, on an individual basis, to either exercise such
Company Options and participate in the Merger or have those Company Options assumed, on the same basis as the unvested Company
Options, by Parent.  The parties will make such determination on or before the date the Proxy Statement/Prospectus (as defined in
Section 2.24) is first filed with the SEC.  

(b)
   In connection with the issuance of Parent Exchange Options and Parent Exchange Warrants,
Parent shall (i) reserve for issuance the number of shares of Parent Common Stock that will become subject to Parent Exchange
Options and Parent Exchange Warrants pursuant to this Section 1.8 and (ii) from and after the Effective Time, upon exercise of
Parent Exchange Options and Parent Exchange Warrants, make available for issuance all shares of Parent Common Stock covered thereby,
subject to the terms and conditions applicable thereto.  Immediately following the Effective Time, Parent will send to each holder
of Parent Exchange Options or Parent Exchange Warrants a written notice setting forth (i) the number of shares of

8 

Parent Common Stock that are subject
to such Parent Exchange Options or Parent Exchange Warrants, and (ii) the
exercise price per share of Parent Common Stock issuable upon exercise of such Parent Exchange Options or Parent Exchange Warrants.
Each Parent Exchange Option shall be subject to the same terms and conditions set forth in the Company Option Plan as in effect
immediately prior to the Effective Time.  

(c)
    The Company agrees to issue treasury shares of Company, to the extent available, upon
the exercise of Company Options prior to the Effective Time.

(d)
   Parent agrees to file with the Securities and Exchange Commission (the “
SEC”) within five business days after the Closing Date a registration statement on Form
S-8 or other appropriate form under the Securities Act to register Parent Common Stock issuable upon exercise of the Parent Exchange
Options and to use its reasonable best efforts to cause such registration statement to remain effective until the exercise or
expiration of such Parent Exchange Options.

(e)
    Prior to the Effective Time, the Board of Directors of Parent, or the Compensation
Committee thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC so that the acquisition by any
officer or director of the Company who may become a covered person of Parent for purposes of Section 16 (together with the rules and
regulations thereunder, “Section 16”) of the Securities Exchange Act of
1934, as amended (together with the rules and regulations thereunder, the “Exchange Act
”) of Parent Common Stock or Parent Exchange Options pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16.

	
             
  	
            1.9

 	
            Taking of
Necessary Action; Further Action.
 

If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company
and Merger Sub, the officers and directors of the Company and Merger Sub will take all such lawful and necessary action.

	
             
  	
            1.10

 	
            Escrow.

 

As the sole and exclusive remedy
for the indemnity obligations set forth in Article VII, at the Effective Time, Parent will cause to be delivered to, and directly
deposited with JPMorgan Chase Bank or such other escrow agent that is mutually agreeable to the parties (the “
Escrow Agent”), for the account and future potential benefit of the Company’s
stockholders, a stock certificate representing ten percent (10%) of the shares of Parent Common Stock to be issued at Closing
otherwise issuable to such holders pursuant to Section 1.6, which certificate shall be registered in the name of the Escrow Agent
f/b/o the Former Holders of Capital Stock of XLNT Veterinary Care, Inc.  All such shares of Parent Common Stock so delivered to the
Escrow Agent, together with all subsequent dividends or distributions of cash, other shares of
Parent Common Stock or property received in respect of such shares while deposited with the Escrow Agent shall be referred to as
“Escrow Shares” and such account containing the Escrow Shares shall be
referred to as the “Escrow Fund.”  A pro rata number of the Escrow Shares

9 

(determined on the basis of the
respective pro rata ownership interest of each holder of Company Common Stock immediately prior to the Effective Time, subject to
adjustments by the Escrow Agent to eliminate fractional shares) shall be subtracted from the number of shares of Parent Common Stock
each holder of Company Common Stock (including Company Common Stock issued upon conversion of Company Preferred Stock) at the
Effective Time is entitled to receive pursuant to the Merger.  The Escrow Shares shall be held by the Escrow Agent pursuant to the
terms and conditions of an Escrow Agreement, the form of
which shall be reasonably acceptable to Parent and the Company (the “Escrow Agreement
”) among the Escrow Agent,  Parent and the Stockholders’ Representatives (as hereinafter defined) or the
successors thereto pursuant to the terms of the Escrow Agreement. Subject to the provisions of Article VII, the Escrow Shares shall
be promptly delivered to the applicable Company stockholders upon expiration of the Survival Period (as defined in Section 7.4(a)).

	
             
  	
            1.11

 	
            Committee
and Stockholders’ Representatives for Purposes of Escrow Agreement..
 

(a)
    Parent Committee. Prior to the Closing, the Board of Directors
of Parent shall appoint a committee consisting of two of its then members to act on behalf of Parent to take all necessary actions
and make all decisions pursuant to the Escrow Agreement regarding Parent’s right to indemnification pursuant to Article VII
hereof. In the event of a vacancy in such committee, the Board of Directors of Parent shall appoint as a successor a Person who was
a director of Parent prior to the Closing Date or some other Person who would qualify as an “independent” director of
Parent and who has not had any relationship with the Company prior to the Closing. Such committee is intended to be the
“Committee” referred to in Articles V and VII hereof and the Escrow Agreement.

 

	
             
  	
            (b)

 	
            
Stockholders’ Representatives.
 

(i)
     In order to administer efficiently (i) the implementation of this
Agreement on behalf of the holders of Company Common Stock, Company referred Stock and options, warrants and other equity securities
of the Company prior to the Effective Time (the “Former Stockholders”) and
(ii) the settlement of any dispute with respect to this Agreement, the Company shall, prior to the Effective Time, designate three
Persons to act as representatives on behalf of the Former Stockholders (collectively, the “
Stockholders’ Representatives”). By approving this
Agreement, the Company’s stockholders authorize and empower the Company to make such
designation, approve and ratify all of the rights, powers and authorities provided to the Stockholders’ Representatives under
the terms of this Agreement, and agree to be bound by all decisions and other actions taken by the Stockholders’
Representatives. 

(ii)
    From and after the Effective Time, the Former Stockholders hereby authorize
the Stockholders’ Representatives (i) to take all action necessary in connection with the implementation of the Agreement on
behalf of the Former Stockholders or the settlement of any dispute, including, without limitation, with regard to matters pertaining
to the indemnification provisions of this Agreement and the Escrow Agreement, (ii) to give and receive all notices required to be

10 

 

given under this Agreement and the Escrow Agreement, and (iii) to take any and all additional action as is contemplated to be taken
by or on behalf of the Former Stockholders by the terms of this Agreement and the Escrow Agreement.

(iii)
   If any Stockholders’ Representative dies, becomes legally incapacitated or
resigns from such position, another Person designated by the remaining Stockholders’ Representatives, or if none remain, by the
Former Stockholders holding the right to receive more than 50% in interest of the Escrow Fund (the “
Requisite Former Stockholders”), who shall be identified to Parent as soon as practicable, shall fill
such vacancy and shall be deemed to be the Stockholders’ Representative(s) for all purposes of this Agreement; provided,
however, that no change in the Stockholders’ Representatives shall be effective until Parent is given written notice of such
change. If no Stockholders’ Representative is then currently serving, the
Stockholders’ Representative shall be deemed to be the Requisite Former Stockholders.

(iv)
   All decisions and actions by the Stockholders’ Representatives as provided
in this Section 1.11 or under the Escrow Agreement shall be binding upon all of the Former Stockholders, and no Former Stockholder
shall have the right to object, dissent, protest or otherwise contest the same.

(v)
    By their execution and/or approval of this Agreement and the Merger, the
Company and its stockholders agree that:

(A)
  Parent shall be able to rely conclusively on the instructions and decisions of the
Stockholders’ Representatives as to any actions required or permitted to be taken by the Stockholders’ Representatives
hereunder and under the Escrow Agreement, and no party hereunder shall have any cause of action against Parent for any action taken
by Parent in reliance upon the instructions or decisions of the Stockholders’ Representatives.

(B)
   All actions, decisions and instructions of the Stockholders’ Representatives
shall be conclusive and binding upon all of the Former Stockholders and no Former Stockholder shall have any cause of action against
the Stockholders’ Representatives for any action taken, decision made or instruction given by the Stockholders’
Representatives under this Agreement, the Escrow Agreement, except for fraud or willful breach of this Agreement by the
Stockholders’ Representatives. 

(C)
  The provisions of this Section 1.11 are independent and severable, shall constitute an
irrevocable power of attorney, coupled with an interest and surviving death, granted by the Former Stockholders to each of the
Stockholders’ Representatives and shall be binding upon the executors, heirs, legal representatives and successors of each
Former Stockholder.

11 

(D)
  Each Former Stockholder shall be responsible to pay his, her or its pro rata share,
based on the relative percentage of the payments in respect of the Merger Consideration that are allocable and payable to such
Former Stockholder hereunder (his, her or its “Pro Rata Share”), of all
fees and expenses, including, without limitation, all attorney’s fees and expenses incurred in connection with defending or
settling any claim under this Agreement, and any amounts under subsection (E) below, incurred by the Stockholders’
Representatives.

(E)
   By approving this Agreement, each Former Stockholder agrees to severally
indemnify and hold harmless the Stockholders’ Representatives and their respective Affiliates and their respective officers,
directors, stockholders, partners, employees and agents (collectively, the “Stockholder Representative
Parties”) from and against any Losses (except Losses caused by such parties’ fraud or willful
breach) that such Stockholder Representative Parties may suffer or incur in connection with any action or omission taken or omitted
to be taken by the Stockholders’ Representatives hereunder.  Each Former Stockholder shall be responsible to pay his, her or
its Pro Rata Share of such Losses.

(F)
   The Stockholders’ Representatives shall have the right to recover from the
Escrow Fund, prior to any distribution to the Former Stockholders, an amount equal to any reasonable fees, costs and expenses in
connection with the acceptance and administration of the Stockholders’ Representatives’ duties hereunder.

In taking any action hereunder
and under the Escrow Agreement, the Stockholders’ Representatives shall be protected in relying upon any notice or other
document reasonably believed by it to be genuine, or upon any evidence reasonably deemed by it, in its good faith judgment, to be
sufficient; provided, however, that the Stockholders’ Representatives shall not waive any rights with respect to any individual
Former Stockholder(s)’ interest(s) if such waiver would have the effect of disproportionately and adversely affecting such
individual Former Stockholders(s) as compared to the interests of the other Former Stockholders, without the prior consent of the
affected Former Stockholder(s). No Stockholders’ Representative shall be liable to Parent or the Former Stockholders for any
act performed or omitted to be performed by it in the good faith exercise of its duties and
shall be liable only in the case of fraud or willful breach of this Agreement by such Stockholders’ Representative. The
Stockholders’ Representatives may consult with counsel in connection with its duties hereunder and shall be fully protected in
any act taken, suffered or permitted by it in good faith in accordance with the advice of counsel. The Stockholders’
Representatives shall not be responsible for determining or verifying the authority of any Person acting or purporting to act on
behalf of any party to this Agreement. 

12 

 

	
             
  	
            1.12

 	
            Notice to
Holders of Derivative Securities.
 

As promptly as practicable after
the execution of this Agreement, the Company, after consultation with Parent, shall give the holders of Company Options, Company
Warrants and Company Preferred Stock any required notices pursuant to the terms thereof.

	
             
  	
            1.13

 	
            Shares
Subject to Appraisal Rights.
 

(a)
    Notwithstanding any provisions of this Agreement to the contrary, Dissenting Shares (as
defined in Section 1.13(b)) shall not be entitled to receive the Merger Consideration and the holders thereof shall be entitled only
to such rights as are granted by the DGCL. Each holder of Dissenting Shares who becomes entitled to payment for such shares pursuant
to the DGCL shall receive payment therefor from the Surviving Corporation in accordance with the DGCL, provided, however, that (i)
if any stockholder of the Company who asserts appraisal rights in connection with the Merger (a “Dissenter
”) shall have failed to establish his or its entitlement to such rights as provided in the DGCL, or
(ii) if any such Dissenter shall have effectively withdrawn his or its demand for payment
for such shares or waived or lost his or its right to payment for his or its shares under the appraisal rights process under the
DGCL, the shares of Company Common Stock held by such Dissenter shall be treated as if they had been converted, as of the Effective
Time, into a right to receive the Merger Consideration (net of the pro rata amounts deposited in the Escrow Account) as provided in
Section 1.5, and the right to participate pro rata in distributions of any remaining amounts of Escrow Shares. The Company shall
give Parent prompt notice of any demands for payment received by the Company from a Person asserting appraisal rights, and Parent
shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except
with the prior written consent of Parent (not to be unreasonably withheld or delayed), make any payment with respect to, or settle
or offer to settle, any such demands.

(b)
   As used herein, “Dissenting Shares”
means any shares of Company Common Stock held by stockholders of the Company who are entitled to appraisal rights under the DGCL,
and who have properly exercised, perfected and not subsequently withdrawn or lost or waived their rights to demand payment with
respect to their shares in accordance with the DGCL.

1.14          Tax Consequences. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368(a) of the Code. The parties to this Agreement hereby
adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to the exceptions and
other disclosures set forth in a disclosure schedule of the Company to be delivered by the Company contemporaneously with execution
of this Agreement (the “Company Disclosure Schedule”), the Company hereby
represents and warrants to Parent and Merger Sub, as follows:  

13 

	
             
  	
            2.1

 	
            
Organization and Qualification.
 

(a)
    The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. The Company is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“Approvals
”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry
on its business as it is now being conducted, except where the failure to have such Approvals would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the Company.  Complete
and correct copies of the certificate of incorporation and by-laws (collectively referred to herein as “
Charter Documents”) of the Company, as amended and currently in effect, have been heretofore delivered
or made available to Parent or Parent’s counsel. The Company is not in violation of any of the provisions of the Company’s
Charter Documents. 

(b)
   The Company is duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good
standing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
As of the date hereof, each jurisdiction in which the Company is so qualified or licensed is listed in 
Section 2.1 of the Company Disclosure Schedule.

	
             
  	
            2.2

 	
            
Subsidiaries.
 

As of the date hereof, (i)
except as set forth in Section 2.2 of the Company Disclosure Schedule, the Company
has no subsidiaries (the “Company Subsidiaries”), and (ii) except as set
forth in Section 2.2 of the Company Disclosure Schedule, the Company does not own,
directly or indirectly, any ownership, equity, profits or voting interest in any Person or have any agreement or commitment to
purchase any such interest, and has not agreed and is not obligated to make nor is bound by any agreement, contract, binding
understanding, instrument, note, option, commitment or undertaking of any nature, under which it may become obligated to make, any
future investment in or capital contribution to any other entity.

	
             
  	
            2.3

 	
            
Capitalization.
 

(a)
    As of the date hereof, the authorized capital stock of the Company consists of (i)
50,000,000 shares of Company Common Stock, $.0001 par value per share, and (ii) 10,000,000 shares of Company Preferred Stock, $.0001
par value per share, all of which such Company Preferred Stock have been designated Series A Preferred Stock. 
Section 2.3(a) of the Company Disclosure Schedule sets forth the issued and outstanding shares
of Company Common Stock and Series A Preferred Stock as of the date hereof.  As of the date hereof and except as set forth on
Section 2.3(a) of the Company Disclosure Schedule, no other shares of Company Common
Stock and Company Preferred Stock are issued or outstanding and no shares of capital stock are held in the
Company’s treasury. Except as set forth in Section 2.3(a) of the Company
Disclosure Schedule, all outstanding shares of Company Common Stock and

14 

Company Preferred Stock
(collectively, the “Company Capital Stock”) 
are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created
by statute, the Charter Documents or any agreement or document to which the Company is a party or by which it is bound, and were
issued in compliance with all applicable federal and state securities laws. Section 2.3(a)
 of the Company Disclosure Schedule sets forth the number of shares of Company Common Stock that have been reserved for
issuance, as of the date hereof, upon the exercise, conversion or exchange of (i) the Company Options, (ii) Company Warrants,
(iii) any convertible notes issued by the Company (“Company Convertible Notes
”), and (iv) any other options, warrants, convertible securities or derivatives of the Company Capital Stock.  All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. 
Section 2.3(a) of the Company Disclosure Schedule lists, as of the date hereof, the name of each holder of
Company Common Stock, Company Preferred Stock, Company Convertible Note, each outstanding Company Option and each outstanding
Company Warrant to acquire shares of Company Common Stock or Company Preferred Stock, as applicable, the number of shares of Company
Common Stock issuable upon conversion of such Company Preferred Stock or Company Convertible
Notes (including the number of shares of Company Common Stock issued upon conversion in payment of any accrued interest if permitted
by such Convertible Notes) or subject to such Company Option or Company Warrant, the per share conversion price of such Convertible
Notes, the exercise price of such option or warrant, the number of shares as to which such option or warrant will have vested at
such date, the interest rate and maturity date of each Company Convertible Note and the vesting schedule and termination date of
such Company Option or Company Warrant and whether the convertibility of any Company Convertible Note or the exercisability of such
option or warrant will be accelerated in any way by the transactions contemplated by this Agreement or for any other reason,
indicating the extent of acceleration, if any. Except as set forth in Section 2.3(a)
of the Company Disclosure Schedule, the Company has no obligation (contingent or
otherwise) to pay any dividend with respect to any shares of Company Capital Stock or to make any other distribution in respect
thereof. The Company has delivered or made available to Parent or Parent’s counsel true and accurate copies of the forms of
documents used for the issuance of Company Capital Stock, Company Convertible Notes, Company Options and Company Warrants.  

(b)
   Except as contemplated by this Agreement and except as set forth in 
Section 2.3(a) hereof or in Section 2.3(b) of the Company
Disclosure Schedule, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company is a party
or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase,
redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership
interests or similar ownership interests of the Company or obligating the Company to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or
agreement.

(c)
    Except as contemplated by this Agreement and except as set forth in 
Section 2.3(c) of the Company Disclosure Schedule, there are no registration rights, and there
is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to

15 

which the Company is a party or by
which the Company is bound with respect to the voting of any equity security of any class of the Company.

(d)
   All issuances, sales and repurchases of Company Capital Stock, Company Convertible Notes,
Company Options and Company Warrants and any other equity interests by the Company and its Subsidiaries have been effected in
compliance with all applicable laws, including, without limitation, applicable foreign, federal and state securities laws and all
requirements set forth in any applicable Company Contracts, except where non-compliance would not reasonably be expected to have a
Material Adverse Effect on the Company. 

	
             
  	
            2.4

 	
            Authority
Relative to this Agreement.
 

The Company has all necessary
corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby (including the Merger). The execution and delivery of this Agreement and the consummation by the
Company of the transactions contemplated hereby (including the Merger), will upon approval by the Company’s stockholders, be
duly and validly authorized by all necessary corporate action on the part of the Company (including the approval by its Board of
Directors), subject in all cases to the satisfaction of the terms and conditions of this Agreement, including the conditions set
forth in Article VI), and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby pursuant to the DGCL and the terms and
conditions of this Agreement. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the other parties hereto, constitutes the legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of
equity.

	
             
  	
            2.5

 	
            No
Conflict; Required Filings and Consents.
 

(a)
    The execution and delivery of this Agreement by the Company do not, and the performance
of this Agreement by the Company shall not, (i) conflict with or violate the Company’s Charter Documents, (ii) subject to
obtaining the approval of this Agreement and the Merger by the stockholders of the Company, conflict with or violate any Legal
Requirements (as defined in Section 9.2), (iii) except as set forth in Section 2.5 of
the Company Disclosure Schedule, result in any breach of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or materially impair the Company’s rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company pursuant to,
any Material Company Contracts or (iv) except as set forth in Section 2.5 of the
Company Disclosure Schedule, result in the triggering, acceleration or increase of any payment to any Person pursuant to any
Material Company Contract, including any “change in control” or similar provision of any Material Company Contract;
except, with respect to clauses (ii), (iii) or (iv), for such conflicts, violations, breaches, defaults, triggerings, cancellations,
increases or other occurrences that would not have a Material Adverse Effect on the Company.

16 

(b)
   The execution and delivery of this Agreement by the Company do not, and the performance of its
obligations hereunder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for the filing of any notifications required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the “HSR Act”) and the expiration of the required
waiting period thereunder, (ii) applicable requirements, if any, under the Securities Act, the Exchange Act or state securities or
“blue sky” laws, and the rules and regulations thereunder, and appropriate documents received from or filed with the
relevant authorities of other jurisdictions in which the Company is licensed or qualified to do
business, and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company,
or prevent consummation of the Merger or otherwise prevent the Company from performing its obligations under this Agreement.

	
             
  	
            2.6

 	
            
Compliance.
 

Except as set forth in 
Section 2.6 of the Company Disclosure Schedule, (a) the Company and each Company
Subsidiary has complied with, and is not in violation of, any Legal Requirements with respect to the conduct of its business, or the
ownership or operation of its business, and (b) no written notice of non-compliance with any Legal Requirements has been received by
the Company or any of the Company Subsidiaries, except, in each case, for any non-compliance, failure to comply or violation that
would not reasonably be expected to have a Material Adverse Effect on the Company and the Company’s Subsidiaries, taken as a
whole. Neither the Company nor any Company Subsidiary is in default or violation of any term, condition or provision of its Charter
Documents. 

	
             
  	
            2.7

 	
            Financial
Statements.
 

(a)
    The Company has provided or made available to Parent the unaudited consolidated
financial statements (including any related notes thereto) of the Company for the six-month period ending June 30, 2006 (the “
Unaudited Financial Statements”). The Unaudited Financial Statements were
prepared in accordance with generally accepted accounting principles of the United States (“U.S. GAAP
”) applied on a consistent basis throughout the periods involved (except as may be indicated in the
notes thereto, if any), and each fairly presents in all material respects the financial position of the Company at the respective
dates thereof and the results of its operations and cash flows for the periods indicated in accordance with
U.S. GAAP, except that such statements do not contain notes and are subject to normal year-end adjustments and adjustments resulting
from purchase price reallocation based on post-closing valuation reports that will not have a Material Adverse Effect on the
Company.

(b)
   The Historical Audits, the 2006 Audit and each Significant Acquisition Audit (each as defined
in Section 5.6), when delivered or made available in accordance with Section 5.6, shall be prepared in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto, if any), and each
Historical Audit, the 2006 Audit and each Significant Acquisition Audit shall fairly present, when delivered, in all material
respects the financial position of the Company (or the subject of the Significant Acquisition Audit) at the respective dates thereof
and the results of its operations and

17 

cash flows for the periods indicated
in accordance with U.S. GAAP, except that any Unaudited Financial Statements do not contain notes and are subject to normal year-end
adjustments and
adjustments resulting from purchase price reallocation based on post-closing valuation reports that will not have a Material Adverse
Effect on the Company. 

(c)
    The books of account, minute books, stock certificate books and stock transfer ledgers
and other similar books and records of the Company have been maintained in accordance with good business practice, are complete and
correct in all material respects and there have been no material transactions that are required to be set forth therein and which
are not so set forth.

(d)
   Except as otherwise noted in the Audited Financial Statements or the Unaudited Financial
Statements, or as set forth in Section 2.7(d) of the Company Disclosure Schedule, the
accounts and notes receivable of the Company reflected on the balance sheets included in the Audited Financial Statements and the
Unaudited Financial Statements (i) arose from bona fide transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) to the knowledge of the Company, are legal, valid and binding obligations of the respective debtors enforceable in
accordance with their terms, except as such may be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting creditors’ rights generally, and by general equitable principles, (iii) to the
knowledge of the Company, are not subject to any valid set-off or counterclaim except to the extent set forth in such balance sheet
contained therein, and (iv) except as set forth in Section 2.7(d) of the Company
Disclosure Schedule, as of the date hereof, are not the subject of any actions or proceedings brought by or on behalf of the
Company.

(e)
    To the knowledge of the Company, the Company has established adequate internal controls
for a privately held company for purposes of preparing the Company’s periodic financial statements.

	
             
  	
            2.8

 	
            No
Undisclosed Liabilities.
 

Except as set forth in 
Section 2.8 of the Company Disclosure Schedule, to the knowledge of the Company, as of the
date hereof, the Company has no liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet in accordance with U.S. GAAP which are, individually or in the aggregate, material to the business, results of
operations or financial condition of the Company, except: (i) liabilities provided for in or otherwise disclosed in the balance
sheet included (or which will be included when delivered) in the Unaudited Financial Statements or the Audited Financial Statements,
and (ii) such liabilities arising in the ordinary course of the Company’s business since January 1, 2006, none of which would
have a Material Adverse Effect on the Company.

	
             
  	
            2.9

 	
            Absence
of Certain Changes or Events.
 

Except as set forth in 
Section 2.9 of the Company Disclosure Schedule or in the Audited Financial Statements or the
Unaudited Financial Statements when delivered, or as otherwise provided in this Agreement, since January 1, 2006 to the date of this
Agreement, there has not been: (i) any Material Adverse Effect on the Company; (ii) any declaration, setting aside

18 

or payment of any dividend on, or
other distribution (whether in cash, stock or property) in respect of, any of the Company’s stock, or any purchase, redemption
or other acquisition by the Company of any of the Company Capital Stock or any options, warrants, calls or rights to acquire any
such shares or other securities; (iii) any split, combination or reclassification of any of the Company’s Capital Stock; (iv)
any granting by the Company of any increase in compensation or
fringe benefits, except for normal increases of cash compensation in the ordinary course of business consistent with past practice,
or any payment by the Company of any bonus, except for bonuses made in the ordinary course of business consistent with past
practice, or any granting by the Company of any increase in severance or termination pay or any entry by Company into any currently
effective employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or
the terms of which are materially altered upon the occurrence of a transaction involving the Company of the nature contemplated by
this Agreement; (v) entry by the Company into any licensing or other agreement with regard to the acquisition or disposition of any
Intellectual Property (as defined in Section 2.18 hereof) other than licenses in the ordinary course of business consistent with
past practice or any amendment or consent with respect to any licensing agreement filed
or required to be filed by the Company with respect to any Governmental Entity; (vi) any material change by the Company in its
accounting methods, principles or practices; (vii) any change in the auditors of the Company; (viii) any issuance of capital stock
of the Company, other than pursuant to the Company Stock Option Plans in the ordinary course; (ix) any revaluation by the Company of
any of its material assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or
accounts receivable or any sale of assets of the Company other than in the ordinary course of business; or (x) any agreement to do
any of the foregoing.

	
             
  	
            2.10

 	
            
Litigation.
 

Except as disclosed in 
Section 2.10 of the Company Disclosure Schedule, as of the date hereof, there are no claims,
suits, actions or proceedings pending which have been served on the Company, threatened in writing or, to the knowledge of the
Company, otherwise pending, against the Company before any court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seeks to restrain or enjoin the consummation of the transactions contemplated by this Agreement or
which could reasonably be expected, either singularly or in the aggregate with all such claims, actions or proceedings, to have a
Material Adverse Effect on the Company or have a Material Adverse Effect on the ability of the Company to consummate the Merger.

	
             
  	
            2.11

 	
            Employee
Benefit Plans and Compensation.  
 

(a)
    Definitions. With the exception of the definition of
“Affiliate” set forth in Section 2.11(a) below (which definition shall apply only to this Section 2.11(a)), for purposes
of this Agreement, the following terms shall have the following respective meanings:

“
Affiliate” shall mean any other Person that is treated as a single employer with the Company under
Section 414(b), (c), (m) or (o) of the Code and the regulations issued thereunder.

“
Company Employee Plan” shall mean any plan, program, policy, practice, contract, agreement or other
arrangement providing for compensation, severance, termination pay,

19 

deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee benefits or remuneration of any kind, whether written,
unwritten or otherwise, funded or unfunded, including without limitation, each “employee benefit plan,” within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any Employee. 

“
COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

“Code” 
shall mean the Internal Revenue Code of 1986, as amended.

“DOL
” shall mean the United States Department of Labor.

“
Employee” shall mean any current, former or rehired employee, consultant, officer or director of the
Company or any Affiliate.

“
Employee Agreement” shall mean each employment, consulting or similar agreement not terminable at will
by the Company, each agreement providing for severance, relocation, repatriation, expatriation or similar agreement (including,
without limitation, any offer letter or any agreement providing for acceleration of Company Stock Options) between the Company or
any Affiliate and any Employee.

“
ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“FMLA
” shall mean the Family Medical Leave Act of 1993, as amended.

“
HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as amended.

 “IRS
” shall mean the United States Internal Revenue Service.

“PBGC
” shall mean the United States Pension Benefit Guaranty Corporation.

“
Pension Plan” shall mean each Company Employee Plan that is an “employee pension benefit
plan,” within the meaning of Section 3(2) of ERISA.

(b)
   Section 2.11(b) of the Company Disclosure Schedule sets forth a
complete and accurate list of each material Company Employee Plan and Employee Agreement as of the date hereof. As of the date
hereof, neither the Company nor an Affiliate has made any plan or commitment to establish any new Company Employee Plan or Employee
Agreement, to modify any Company Employee Plan or Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any applicable law, or as required by this Agreement), or to
enter into any Company Employee Plan or Employee Agreement, nor does it have any intention or commitment to do any of the foregoing.
The Company has previously made available to Parent a true and complete table setting forth the
name, position and compensation of each Employee (or other similar summary).

20 

(c)
    Documents. The Company has provided or made available to
Parent or its counsel: (i) correct and complete copies of all documents embodying each Company Employee Plan and each Employee
Agreement including, without limitation, all amendments thereto and written interpretations thereof and all related trust documents;
(ii) the three (3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, filed under ERISA or the Code in connection with each Company Employee Plan; (iii)
if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee Plan assets; (iv) the
most recent summary plan description together with the summary(ies) of material modifications
thereto, if any, required under ERISA with respect to each Company Employee Plan; (v) all material written agreements and contracts
relating to each Company Employee Plan, including, without limitation, administrative service agreements and group insurance
contracts; (vi) all correspondence to or from any governmental agency relating to any Company Employee Plan received by the Company
or an Affiliate within the prior three (3) years; (vii) all forms of COBRA notices; (viii) all policies pertaining to fiduciary
liability insurance covering the fiduciaries for each Company Employee Plan; (ix) all discrimination tests for each Company Employee
Plan for the three (3) most recent plan years; and (x) the most recent IRS determination or opinion letter issued with respect to
each Company Employee Plan, if any, that is intended to satisfy or be subject to Code Section 401(a).  There have been no
communications in the past three (3) years by the Company or any
Affiliate to any Employee relating to any Company  Employee Plan or any proposed Company Employee Plan, in each case, relating to
any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or
other events that are not reflected in the terms of the Company Employee Plan. 

(d)
   Employee Plan Compliance. The Company and each Affiliate have
performed all obligations required to be performed by it under, is not in default or violation of, and have no knowledge of any
default or violation by any other party to, any Company Employee Plan, and each Company Employee Plan has been established and
maintained in accordance with its terms and in compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code, except for such failure to perform, default, violation or non-compliance that would
not reasonably be expected to have a Material Adverse Effect. Any Company Employee Plan intended to be qualified under Section
401(a) of the Code and any trust intended to qualify under Section 501(a) of the Code has obtained a favorable
determination letter (or opinion letter, if applicable) as to its qualified status under the Code. No “prohibited
transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under
Section 408 of ERISA, has occurred with respect to any Company Employee Plan. There are no actions, suits or claims pending which
have been served on the Company or an Affiliate or, to the knowledge of the Company, otherwise pending or threatened in writing or
reasonably anticipated (other than routine claims for benefits) against any Company Employee Plan or against the assets of any
Company Employee Plan. Other than as set forth in Section 2.11(h) below, each Company Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company or any
Affiliate (other than accrued benefits and ordinary administration expenses). There are no audits,
inquiries or proceedings pending or, to the knowledge of the Company or any Affiliates, threatened in writing by the IRS, DOL, or
any other Governmental Entity with respect to any Company Employee Plan. Neither the Company nor any Affiliate is subject to any
material penalty or tax with respect to any

21 

Company Employee Plan under Section
402(i) of ERISA or Sections 4975 through 4980 of the Code. The Company and its Affiliates have made all material contributions and
other payments required by and due under the terms of each Company Employee Plan. Neither the Company nor an Affiliate maintains or
has any obligation under a nonqualified deferred compensation plan within the meaning of Code Section 409A that fails to meet the
requirements of paragraph (2), (3), or (4) of Code Section 409A or that is not operated in accordance with a good faith
interpretation of such requirements or with respect to which assets are subject to Code Section 409A(b).  Neither the Company nor an
Affiliate has
any obligation to make a nondeductible contribution to any Company Employee Plan.

(e)
    No Pension Plan. Neither the Company nor any Affiliate has
ever maintained, established, sponsored, participated in, or contributed to, any Pension Plan that is subject to Title IV of ERISA
or Section 412 of the Code.

(f)
     No Self-Insured Plan. Neither the Company nor any
Affiliate has ever maintained, established sponsored, participated in or contributed to any self-insured plan that provides
healthcare, life or long-term disability benefits to employees (including, without limitation, any such plan pursuant to which a
stop-loss policy or contract applies).

(g)
    Collectively Bargained, Multiemployer and Multiple-Employer Plan
. At no time has the Company or any Affiliate contributed to or been obligated to contribute to any multiemployer plan
within the meaning of Section 3(37) of ERISA. Neither the Company nor any Affiliate has at any time ever maintained, established,
sponsored, participated in or contributed to any multiple employer welfare arrangement within the meaning of Section 3(40) of ERISA
or to any plan described in Section 413 of the Code.

(h)
    No Post-Employment Obligations. Except as set forth in
Section 2.11(h) of the Company Disclosure Schedule, no Company Employee Plan or
Employee Agreement provides, or reflects or represents any liability to provide, retiree or post-employment life insurance, retiree
or post-employment health or other retiree or post-employment employee welfare benefits to any person for any reason, except as may
be required by COBRA or other applicable statute, and the Company has not represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group) or any other person that such Employee(s) or other
person would be provided with retiree or post-employment life insurance, or post-employment retiree
health or other or post-employment retiree employee welfare benefits, except to the extent required by statute.

(i)
     COBRA; FMLA; HIPAA. The Company and each Affiliate
have, prior to the Effective Time, complied with COBRA, FMLA, HIPAA, and any similar provisions of state law applicable to its
Employees in all material respects. The Company does not have material unsatisfied obligations to any Employees or qualified
beneficiaries pursuant to COBRA, HIPAA or any state law governing health care coverage or extension.

(j)
     Effect of Transaction. Except as set forth in 
Section 2.11(j) of the Company Disclosure Schedule, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Employee Plan, Employee

22 

Agreement, trust or loan that will
or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits or be deemed a “parachute payment” under Section 280G of
the Code with respect to any Employee.

(k)
   Employment Matters. Except as set forth in 
Section 2.11(k) of the Company Disclosure Schedule and except in each case where non-compliance, failure to
withhold or report, failure to comply or liability would not have a Material Adverse Effect, the Company and each Affiliate: (i) are
in compliance with all applicable foreign, federal, state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment, termination of employment, employee safety and wages and hours, and in each case,
with respect to Employees; (ii) have withheld and reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to Employees; (iii) are not liable for
any arrears of wages, severance pay or any taxes or any penalty for failure to comply with any of the foregoing; and (iv) are not
liable for any payment to any trust or other fund governed by or maintained by or on behalf of any governmental authority, with
respect to unemployment compensation benefits, social security or other benefits or obligations for Employees (other than routine
payments to be made in the normal course of business and consistent with past practice). As of the date hereof, there are no
actions, suits, claims or administrative matters pending which have been served on the Company or an Affiliate, or to the
Company’s or an Affiliate’s knowledge, otherwise pending or threatened in writing against the Company relating to any
Employee, Employee Agreement or Company Employee Plan, except where such actions, suits, claims or administrative matters would not
have a Material Adverse Effect. As of the date hereof, there are no pending claims or actions which have
been served on the Company or an Affiliate, or to the Company’s or an Affiliate’s knowledge, otherwise threatened in
writing against the Company, or an Affiliate under any worker’s compensation policy of the Company or an Affiliate, except
where such pending claims would not have a Material Adverse Effect.  To the Company’s and the Affiliates’ knowledge, no
Employee has violated any employment contract, nondisclosure agreement, non-competition or non-solicitation agreement by which such
Employee is bound. As of the date hereof, except as set forth in Section 2.11(k) of
the Company Disclosure Schedule, the services provided by each of the Company’s and its Affiliate’s Employees is
terminable at the will of the Company and its Affiliates and any such termination would result in no liability to the Company, any
Affiliate or Parent.

(l)
     No Interference or Conflict. To the knowledge of the
Company, no Employee of the Company or any Affiliate is obligated under any contract or agreement, subject to any judgment, decree,
or order of any court or administrative agency that would interfere with such person’s efforts to promote the interests of the
Company or an Affiliate or that would interfere with the Company’s or an Affiliate’s business. 

	
             
  	
            2.12

 	
            Labor
Matters.
 

Neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the
Company nor does the Company know of any activities or proceedings of any labor union to organize any such employees.  To the
Company’s knowledge (i) there are no employees of the Company working

23 

in the United States who are not
U.S. citizens and (ii) all employees of the Company who are performing services for the Company in the United States are legally
able to work in the United States and will be able to continue to work in the United States following the Acquisition.

	
             
  	
            2.13

 	
            
Restrictions on Business Activities.
 

Except as disclosed in 
Section 2.13 of the Company Disclosure Schedule, to the Company’s knowledge, as of the
date hereof, there is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or its assets or to
which the Company or any Subsidiary is a party which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any Subsidiary, any acquisition of property by the Company or any
Subsidiary or the conduct of business by the Company or any Subsidiary as currently conducted, other than such effects, individually
or in the aggregate, which would not reasonably be expected to have a Material Adverse Effect on the Company.

	
             
  	
            2.14

 	
            Owned and
Leased Real Properties.
 

(a)
    Section 2.14(a) of the Company Disclosure Schedule sets forth
a complete and accurate list as of the date of this Agreement of all real property and interests in real property owned in fee by
the Company or any of its Subsidiaries (collectively, the “Owned Real Property
”) and the address and owner of each parcel of Owned Real Property.  Except as set forth in Section
2.14(b) of the Company Disclosure Schedule, to the Company’s knowledge, the Company or one of its
Subsidiaries has good and valid fee simple title to each parcel of Owned Real Property listed in Section
2.14(a) of the Company Disclosure Schedule free and clear of all Liens,
except for such Permitted Liens and Liens that, individually or in the aggregate, are not reasonably likely to result in a Material
Adverse Effect on the Company and the Company’s Subsidiaries, taken as a whole.  To the extent in the possession and control of
the Company, the Company has made available to Merger Sub prior to the date hereof copies of all existing vesting deeds, title
policies and surveys and all other material documents, instruments and agreements directly affecting title to the Company’s or
the Company’s Subsidiaries’ property rights to ownership, use and possession of, the Owned Real Property.

(b)
   Section 2.14(b)(i) of the Company Disclosure Schedule sets forth a
complete and accurate list as of the date of this Agreement of all real property leased, subleased or licensed by the Company or any
of its Subsidiaries (the “Leased Real Property”) pursuant to lease
agreements having an annual base rent in excess of $35,000 (collectively, the “Leases
”).  Except as set forth in Section 2.14(b)(ii) of the Company
Disclosure Schedule, (A) the Company or one of its Subsidiaries has good and valid leasehold interest in the Leased Real Property
and (B) neither the Company nor any of its Subsidiaries leases, subleases or licenses any real property
to any Person other than the Company and its Subsidiaries.  The Company has made available to Parent or its counsel complete and
accurate copies of all Leases.

(c)
    Each Lease is in full force and effect, is a valid and binding obligation of, and is
legally enforceable against, the Company or its Subsidiary party thereto and, to the knowledge of the Company, the respective
counterparties thereto.

24 

(d)
   Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any
other party to any Lease is in default or material breach under any of the Leases (or has taken or has failed to take any action
which, with notice, lapse of time, or both, would constitute a default) that would be likely to result in a Material Adverse Effect
on the Company and the Company’s Subsidiaries, taken as a whole.

(e)
    Except as set forth in Section 2.14(e) of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is obligated under or bound by any option, right of
first refusal, purchase contract or other contractual right to sell or purchase any Owned Real Property or Leased Real Property or
any portions thereof or interests therein.

	
             
  	
            2.15

 	
            Taxes.

 

(a)
    Definition of Taxes. For the purposes of this Agreement,
“Tax” or “Taxes”
refers to any and all federal, state, local and foreign taxes, including, without limitation, gross receipts, income, profits,
sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, assessments, governmental charges and duties together with all interest, penalties and additions imposed with
respect to any such amounts and any obligations under any agreements or arrangements with any other person with respect to any such
amounts and including any liability of a predecessor entity for any such amounts.

(b)
   Tax Returns and Audits. Except as set forth in 
Section 2.15 of the Company Disclosure Schedule:

(i)
     The Company has timely filed all federal, state, local and foreign
returns, estimates, information statements and reports relating to Taxes (“Returns
”) required to be filed by the Company with any Tax authority prior to the date hereof, except such Returns which
are not material to the Company. To the Company’s knowledge, all such Returns are true, correct and complete in all material
respects. The Company has paid all Taxes shown to be due on such Returns. The Company is not a “United States real property
holding corporation,” as defined in section 897 of the Internal Revenue Code of 1986, as amended, and Section 1.897-2(b) of the
regulations promulgated thereunder.

(ii)
    All material Taxes that the Company is required by law to withhold or
collect have been duly withheld or collected, and have been timely paid over to the proper governmental authorities to the extent
due and payable.

(iii)
   The Company is not delinquent in the payment of any material Tax nor is there any
material Tax deficiency outstanding, proposed or assessed against the Company, nor has the Company executed any unexpired waiver of
any statute of limitations on or extending the period for the assessment or collection of any material Tax.

(iv)
   As of the date hereof, to the Company’s knowledge, no audit or other
examination of any material Return of the Company by any Tax authority is

25 

 

in progress and the Company has not been notified of any request for such an audit or other examination.

(v)
    As of the date hereof, no adjustment relating to any material Taxes has
been proposed in writing, formally or informally, by any Tax authority to the Company or any representative thereof.

(vi)
   The Company has no liability for any material unpaid Taxes which have not been
accrued for or reserved on the Company’s balance sheets included in the Audited Financial Statements or the Unaudited Financial
Statements, whether asserted or unasserted, contingent or otherwise, which is material to the Company, other than any liability for
unpaid Taxes that may have accrued since the end of the most recent fiscal year in connection with the operation of the business of
the Company in the ordinary course of business.

(vii)
  The Company has not taken any action and does not know of any fact, agreement, plan or
other circumstance that is reasonably likely to prevent the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.

	
             
  	
            2.16

 	
            
Environmental Matters.
 

(a)
    Except as disclosed in Section 2.16 of
the Company Disclosure Schedule, to the knowledge of the Company: (i) the Company has complied with all applicable Environmental
Laws; (ii) the properties currently operated by the Company (including soils, groundwater, surface water, buildings or other
structures) have not been contaminated with any Hazardous Substances by any action of the Company; (iii) the properties formerly
owned by the Company were not contaminated with Hazardous Substances during the period of ownership or operation by the Company or,
to the Company’s knowledge, during any prior period; (iv) the Company is not subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) the Company has not been associated with
any release of any Hazardous Substance; (vi) as of the date hereof, the Company has not received any notice, demand, letter, claim
or request for information alleging that the Company may be in violation of or liable under any Environmental Law; and (vii) the
Company is not subject to any orders, decrees or injunctions with any Governmental Entity or subject to any indemnity or other
agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances.

(b)
   As used in this Agreement, the term “Environmental Law
” means any federal, state, local or foreign law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health and
safety, or natural resources; (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance;
or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property.

(c)
    As used in this Agreement, the term “Hazardous Substance
” means any substance that is: (i) listed, classified or regulated pursuant to any Environmental Law;
(ii) any

26 

petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or (iii)
any other substance which is the subject of regulatory action by any Governmental Entity pursuant to any Environmental Law. 

(d)
   Except as set forth on Section 2.16 of the
Company Disclosure Schedule, there are no environmental investigations, studies or audits with respect to any of the Properties or
Leased Real Property owned or commissioned by, or in the possession of, the Company. 

	
             
  	
            2.17

 	
            Brokers;
Third Party Expenses.
 

Except as set forth in 
Section 2.17 of the Company Disclosure Schedule, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage, finders’ fees, agent’s commissions or any similar charges in
connection with this Agreement or any transactions contemplated hereby. No shares of Company Capital Stock and no Company Options or
Company Warrants or other securities of the Company are payable to any third party by the Company as brokerage, finders’ fees,
agent’s commissions or any similar charge as a result of the Merger.

	
             
  	
            2.18

 	
            
Intellectual Property.  
 

For the purposes of this
Agreement, the following terms have the following definitions:

“
Intellectual Property” shall mean any or all of the following and all worldwide common law and
statutory rights in, arising out of, or associated therewith: (i) patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part thereof (“Patents
”); (ii) inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii)
copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world;
(iv) software and software programs; (v) domain names, uniform resource locators and other
names and locators associated with the Internet; (vi) industrial designs and any registrations and applications therefor; (vii)
trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor
(collectively, “Trademarks”); (viii) all databases and data collections and
all rights therein; (ix) all moral and economic rights of authors and inventors, however denominated; and (x) any similar or
equivalent rights to any of the foregoing (as applicable).

“
Company Intellectual Property” shall mean any Intellectual Property that is owned by, or exclusively
licensed to, the Company, including software and software programs developed by or exclusively licensed to the Company (specifically
excluding any off the shelf or shrink-wrap software).

“
Registered Intellectual Property” means all Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued, filed with, or recorded by any private, state, government
or other legal authority.

27 

“
Company Registered Intellectual Property” means all of the Registered Intellectual Property owned by,
or filed in the name of, the Company.

(a)
    Except as disclosed in Section 2.18(a) of
the Company Disclosure Schedule, as of the date hereof, no Company Intellectual Property is subject to any material proceeding or
outstanding decree, order, judgment, contract, license, agreement or stipulation which has been served on the Company, or to the
Company’s knowledge, otherwise pending, restricting in any manner the use, transfer or licensing thereof by the Company, or
which may affect the validity, use or enforceability of such Company Intellectual Property, which in any such case could reasonably
be expected to have a Material Adverse Effect on the Company.

(b)
   Except as disclosed in Section 2.18(b) of the
Company Disclosure Schedule, the Company owns and has good and marketable title to each material item of Company Intellectual
Property owned by it free and clear of any liens and encumbrances (excluding non-exclusive licenses and related restrictions granted
by it in the ordinary course of business); and the Company is the exclusive owner of all material registered Trademarks used in
connection with the operation or conduct of the business of the Company as now conducted, including the sale of any products or the
provision of any services by the Company.

(c)
    To the Company’s knowledge, the operation of the business of the Company, as such
business currently is conducted, including the Company’s use of any product, device or process, has not and does not infringe
or misappropriate the Intellectual Property of any third party or constitute unfair competition or trade practices under the laws of
any jurisdiction.

	
             
  	
            2.19

 	
            
Agreements, Contracts and Commitments.
 

(a)
    Section 2.19(a) of the Company Disclosure Schedule sets forth
a complete and accurate list of all Material Company Contracts (as hereinafter defined) as of the date hereof, specifying the
parties thereto. For purposes of this Agreement, (i) the term “Company Contracts
” shall mean all contracts, agreements, leases, mortgages, indentures, notes, bonds, franchises, purchase orders, sales orders,
and other understandings, commitments and obligations of any kind, whether written or oral, to which the Company is a party or by or
to which any of the properties or assets of Company may be bound, subject or affected (including without limitation notes or other
instruments payable to the Company), (ii) the term “Routine
Operating Contracts” shall mean operating agreements, distribution agreements and other similar
agreements routinely used in the day-to-day operations of the Company’s business, and (iii) the term “
Material Company Contracts” shall mean (x) each Company Contract that is not a Routine
Operating Contract and (I) which provides for payments (present or future) to the Company in excess of $35,000  in the aggregate or
(II) under which or in respect of which the Company presently has any liability or obligation of any nature whatsoever (absolute,
contingent or otherwise) in excess of $35,000, and (y) without limitation of subclause (x), each of the following Company Contracts
(but excluding in every case Routine Operating Contracts), the relevant terms of which remain executory:

28 

(i)
      any mortgage, indenture, note, installment obligation or other
instrument, agreement or arrangement for or relating to any borrowing of money by the Company in excess of $35,000;

(ii)
     any mortgage, indenture, note, installment obligation or other
instrument, agreement or arrangement for or relating to any borrowing of money from the Company by any officer or director of the
Company, or stockholder owning 5% or more of the Company’s stock (a “Company Insider
”);

(iii)
    any guaranty, direct or indirect, by the Company or any Company Insider of
any obligation for borrowings, or otherwise, excluding endorsements made for collection in the ordinary course of business;

(iv)
    any Company Contract of employment other than for at-will employment;

(v)
     any Company Contract made other than in the ordinary course of
business or (x) providing for the grant of any preferential rights to purchase or lease any asset of the Company or (y) providing
for any right (exclusive or non-exclusive) to sell or distribute, or otherwise relating to the sale or distribution of, any product
or service of the Company;

(vi)
    any obligation to register any shares of the capital stock or other
securities of the Company with any Governmental Entity;

(vii)
   any obligation to make payments, contingent or otherwise, arising out of the
prior acquisition of the business, assets or stock of other Persons;

(viii)
  any collective bargaining agreement with any labor union;

(ix)
    any lease or similar arrangement for the use by the Company of personal
property (other than leases of vehicles, office equipment or operating equipment where the annual lease payments are less than
$35,000 in the aggregate); and

(x)
      any Company Contract to which any Company Insider is a party.

(b)
   Except as set forth in Section 2.19(b) of the
Company Disclosure Schedule, each Material Company Contract was entered into at arm’s length, is in full force and effect and
is valid and binding upon and enforceable against the Company, and to its knowledge, each of the other parties thereto.  True,
correct and complete copies of all Material Company Contracts (or written summaries in the case of oral Material Company Contracts)
have been heretofore made available to Parent or its counsel.

(c)
    Except as set forth in Section 2.19(c) of
the Company Disclosure Schedule, as of the date hereof (i) neither the Company nor, to the Company’s knowledge, any other party
thereto is in breach of or in default under, and no event has occurred which with notice or lapse of time or both would become a
breach of or default under, any Material

29 

Company Contract, (ii) no party to
any Material Company Contract has given any written notice of any claim of any breach, default or event, which, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on the Company and (iii) each Material Company Contract to
which the Company is a party or by which it is bound that has not expired by its terms is in full force and effect, except in each
such case for
any breach, default, notice, termination or expiration that would not reasonably be expected to have a Material Adverse Effect on
the Company.

	
             
  	
            2.20

 	
            
Insurance.
 

(a)
    Section 2.20(a) of the Company Disclosure Schedule sets forth
as of the date hereof, each insurance policy (including fire, theft, casualty, general liability, workers compensation, business
interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the
Company or any Subsidiary is a party (the “Insurance 
Policies”). The Insurance Policies are in full force and effect, maintained with reputable companies
against loss relating to the business, operations and properties and such other risks as reasonably determined by the Company. All
material premiums due and payable under the Insurance Policies have been paid on a timely basis
and the Company or any Subsidiary is in compliance in all material respects with all other terms thereof. True, complete and correct
copies of the Insurance Policies have been made available to Parent or Parent’s counsel.

(b)
   As of the date hereof, there are no claims under Insurance Policies that are pending as to
which coverage has been questioned, denied or disputed, except as would not be reasonably expected to have a Material Adverse
Effect. All claims thereunder have in all material respects been filed in a due and timely fashion and the Company has not been
refused insurance for which it has applied or had any policy of insurance terminated (other than at its request), nor has the
Company received notice from any insurance carrier that: (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated; or (ii) premium costs with respect to such insurance will be increased, other than premium increases in the
ordinary course of business applicable on their terms to all holders of similar policies, in any case where
such refusal, termination, cancellation, reduction, elimination or increase would not reasonably be expect to have a Material
Adverse Effect. 

	
             
  	
            2.21

 	
            
Governmental Actions/Filings.
 

Except as set forth in 
Section 2.21 of the Company Disclosure Schedule, to the Company’s knowledge, the
Company and each Subsidiary has been granted and holds, and has made, all Governmental Actions/Filings necessary to the conduct by
the Company of its business (as presently conducted), other than such failure to be granted, to hold or make Governmental
Actions/Filings, individually or in the aggregate, which would not reasonably be expected to have a Material Adverse Effect on the
Company and the Company’s Subsidiaries, taken as a whole. To the Company’s knowledge, each such Governmental Action/Filing
is in full force and effect, and the Company and each Subsidiary is in substantial compliance with all of its obligations with
respect thereto. To the Company’s knowledge, no Governmental Action/Filing is necessary to be
obtained, secured or made by the Company or any Subsidiary to enable it to continue to conduct its businesses and operations and use
its properties after the Closing in a

30 

manner which is substantially
consistent with current practice.  For purposes of this Agreement, the term “Governmental Action/Filing
” shall mean any franchise, license, certificate of compliance, authorization, consent, order, permit,
approval, consent or other action of, or any filing, registration or qualification with, any federal, state, municipal, foreign or
other governmental, administrative or judicial body, agency or authority.

	
             
  	
            2.22

 	
            
Interested Party Transactions.
 

Except as set forth in the
Section 2.22 of the Company Disclosure Schedule or in the Audited Financial
Statements or the Unaudited Financial Statements, no employee, officer, director or stockholder of the Company or a member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company, and (iii) for other employee benefits made generally available to all employees. Except as set
forth in Section 2.22 of the Company Disclosure Schedule, to the Company’s
knowledge, none of the Company’s officers or employees has any direct or indirect ownership
interest in any Person with whom the Company is affiliated or with whom the Company has a contractual relationship, or in any Person
that competes with the Company, except that each officer or employee of the Company and members of their respective immediate
families may own less than 5% of the outstanding stock in publicly traded companies that may compete with Company. Except as set
forth in Section 2.22 of the Company Disclosure Schedule, to the knowledge of the
Company, no officer or director or any member of their immediate families is, directly or indirectly, interested in any Material
Company Contract with the Company or any Subsidiary (other than such contracts as relate to any such Person’s ownership of
Company Capital Stock or other securities of the Company or such Person’s employment with the Company).

	
             
  	
            2.23

 	
            Corporate
Approvals.
 

The Board of Directors of the
Company has, as of the date of this Agreement, based upon the recommendation to the Company Board by the Company Special Committee,
determined (i) that the Merger is fair to, and in the best interests of the Company and its stockholders, and (ii) to recommend that
the stockholders of the Company approve this Agreement.

	
             
  	
            2.24

 	
            Proxy
Statement/Prospectus.
 

The information to be supplied
by the Company for inclusion in Parent’s proxy statement/prospectus included in the Company’s Registration Statement on
Form S-4 in connection with obtaining approval of the Merger by Parent’s stockholders and registration of the issuance of the
Merger Consideration (such proxy statement/prospectus as amended or supplemented is referred to herein as the “
Proxy Statement/Prospectus”) shall not at the time the Proxy Statement/Prospectus is filed
with the SEC and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The
information to be supplied by the Company for inclusion in the Proxy
Statement/Prospectus to be sent in connection with the meeting of Parent’s stockholders to

31 

consider the approval of this
Agreement (the “Parent Stockholders’ Meeting”) shall not, on the date
the Proxy Statement/Prospectus is first mailed to Parent’s stockholders, and at the time of the Parent Stockholders’
Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading;
or omit to state any material fact necessary to correct any statement provided by the Company in any earlier communication with
respect to the solicitation of proxies for the Parent Stockholders’ Meeting which has become false or misleading. If at any
time prior to the Effective Time, any event relating to the Company or any of its affiliates,
officers or directors should be discovered by the Company which should in the reasonable opinion of the Company be set forth in a
supplement to the Proxy Statement/Prospectus, the Company shall promptly inform Parent. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by Parent or any Person other than the Company which is
contained in any of the foregoing documents.

	
             
  	
            2.25

 	
            No
Reliance.
 

The representations and
warranties of the Company contained in this Agreement and the other agreements contemplated hereby constitute the sole and exclusive
representations and warranties of the Company to Parent and Merger Sub in connection with the transactions contemplated hereby.
Except for such representations and warranties (in each case, as modified by the Company Disclosure Schedule), neither the Company
nor any other Person makes any other express or implied representation or warranty with respect to the Company or the transactions
contemplated by this Agreement, and the Company disclaims any other representations or warranties, whether made by any of its
employees, agents or representatives (including with respect to the distribution to, or any such Person’s reliance on, any
information, documents or other material made available to Parent or Merger Sub or their
representatives in any data room, management presentation or in any other form in expectation of, or in connection with, the
transactions contemplated hereby).  Except for such representations and warranties (in each case, as modified by the Company
Disclosure Schedule), the Company hereby disclaims all liability and responsibility for any projection, forecast or information
made, communicated, or furnished (orally or in writing) to Parent, Merger Sub or any of their respective affiliates, officers,
directors, employees, agents or representatives (including opinion, information, projection, or advice that may have been or may be
provided to any such Person or any director, officer, employee, agent, consultant, or representative of such Person or any of its
affiliates).  Each of Parent and Merger Sub acknowledges and agrees that it has not relied on any representations and warranties
other than the express representations and warranties set forth in this Agreement and the agreements
contemplated hereby in entering into this Agreement. 

32 

 

	
             
  	
            2.26

 	
            Survival
of Representations and Warranties.  
 

The representations and
warranties of the Company set forth in this Agreement shall survive the Closing until the end of the Survival Period. 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB

Except as set forth in Schedule 3
attached hereto (the “Parent Disclosure Schedule”), Parent represents and
warrants to the Company, as follows:

	
             
  	
            3.1

 	
            
Organization and Qualification.
 

(a)
    Parent is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned by Parent to be conducted. Parent is in possession
of all Approvals necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its
business as it is now being or currently planned by Parent to be conducted, except where the failure to have such Approvals could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent. Complete and correct
copies of the Charter Documents of Parent, as amended and currently in effect, have been heretofore
delivered to or made available (including as may be available pursuant to the Parent SEC Reports) the Company. Parent is not in
violation of any of the provisions of Parent’s Charter Documents.

(b)
   Parent is duly qualified or licensed to do business as a foreign corporation and is in good
standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing
that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.  

(c)
    Merger Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being or currently planned to be conducted. Merger Sub was formed solely for
purposes of the Merger.  Complete and correct copies of the Charter Documents of Merger Sub, as amended and currently in effect, are
attached hereto as Exhibit A. Merger Sub is not in violation of any of the provisions
of the Merger Sub’s Charter Documents. 

	
             
  	
            3.2

 	
            
Subsidiaries.
 

Except for Merger Sub, which is a
wholly-owned subsidiary of Parent, Parent has no subsidiaries and does not own, directly or indirectly, any ownership, equity,
profits or voting interest in any Person and has no agreement or commitment to purchase any such interest, and Parent has not agreed
and is not obligated to make nor is it bound by any agreement, contract,  binding understanding, instrument, note, option,
commitment or undertaking of any nature, under

33 

which it may become obligated to
make, any future investment in or capital contribution to any other entity.

 

	
             
  	
            3.3

 	
            
Capitalization.
 

(a)
    The authorized capital stock of Parent consists of 25,000,000 shares of common stock,
par value $0.0001 per share (“Parent Common Stock”) and 1,000,000 shares of
preferred stock, par value $0.0001 per share (“Parent Preferred Stock”), of
which 8,750,000 shares of Parent Common Stock and no shares of Parent Preferred Stock were issued and outstanding, all of which are
validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, its Charter Documents or
any agreement or document to which Parent is a party or by which it is bound.  Except as set forth in the Parent SEC Reports (as
defined below) (i) no shares of Parent Common Stock or Parent Preferred Stock are
reserved for issuance upon the exercise of outstanding options to purchase Parent Common Stock or Parent Preferred Stock granted to
employees of Parent or other parties (“Parent Stock Options”) and there are
no outstanding Parent Stock Options; (ii) no shares of Parent Common Stock or Parent Preferred Stock are reserved for issuance upon
the exercise of outstanding warrants to purchase Parent Common Stock or Parent Preferred Stock (“Parent
Warrants”) and there are no outstanding Parent Warrants; and (iii) no shares of Parent Common Stock or
Parent Preferred Stock are reserved for issuance upon the conversion of the Parent Preferred Stock or any outstanding convertible
notes, debentures or securities (“Parent Convertible Securities”).  All
outstanding shares of Parent Common Stock and Parent Preferred Stock, all
Parent Stock Options, all Parent Warrants and all Parent Convertible Securities have been issued and granted in compliance with
(x) all applicable securities laws and other applicable laws and regulations, and (y) all requirements set forth in any
applicable Parent Contracts, except where non-compliance would not reasonably be expected to have a Material Adverse Effect. Parent
has no obligation (contingent or otherwise) to pay any dividend with respect to any shares of Parent Common Stock or Parent
Preferred Stock or to make any other distribution in respect thereof.  

(b)
   Except as contemplated by this Agreement and except as set forth in the Parent SEC Reports,
there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character to which Parent is a party or by which it is bound
obligating Parent to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire,
or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership
interests of Parent or obligating Parent to grant, extend, accelerate the vesting of or enter into any such subscription, option,
warrant, equity security, call, right, commitment or agreement.

(c)
    The shares of Parent Common Stock to be issued by Parent in connection with the Merger,
upon issuance in accordance with the terms of this Agreement, will be duly authorized and validly issued and such shares of Parent
Common Stock will be fully paid and non-assessable and will be issued in compliance with all Legal Requirements, including
securities laws, except where non-compliance would not reasonably be expected to have a Material Adverse Effect on the Parent.

34 

(d)
   Except as set forth in Section 3.3(d) of the
Parent Disclosure Schedule or as contemplated by this Agreement or the Parent SEC Reports, there are no registration rights, and
there is no voting trust, proxy, rights plan, antitakeover plan or other agreements or understandings to which Parent is a party or
by which Parent is bound with respect to any equity security of any class of Parent.

 

	
             
  	
            3.4

 	
            Authority
Relative to this Agreement.
 

Each of Parent and Merger Sub
has full corporate power and authority to: (i) execute, deliver and perform this Agreement, and each ancillary document which Parent
or Merger Sub has executed or delivered or is to execute or deliver pursuant to this Agreement, and (ii) carry out Parent’s and
Merger Sub’s obligations hereunder and thereunder and, to consummate the transactions contemplated hereby and thereby
(including the Merger). The execution and delivery of this Agreement and the consummation by Parent and Merger Sub of the
transactions contemplated hereby (including the Merger) have been duly and validly authorized by all necessary corporate action on
the part of Parent and Merger Sub (including the approval by its Board of Directors), and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby, other than the Parent Stockholder Approval (as defined in Section 5.1(a)). This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery thereof
by the other parties hereto, constitutes the legal and binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by general principles of equity.

	
             
  	
            3.5

 	
            No
Conflict; Required Filings and Consents.
 

(a)
    The execution and delivery of this Agreement by Parent and Merger Sub do not, and the
performance of this Agreement by Parent and Merger Sub shall not: (i) conflict with or violate Parent’s or Merger Sub’s
Charter Documents, (ii) conflict with or violate any Legal Requirements, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, or materially impair Parent’s or Merger
Sub’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of
Parent or Merger Sub pursuant to, any Parent Contracts, except, with respect to clauses (ii) or
(iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually and in the
aggregate, have a Material Adverse Effect on Parent.

(b)
   The execution and delivery of this Agreement by Parent and Merger Sub do not, and the
performance of their respective obligations hereunder will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity, except (i) for the filing of any notifications required under the HSR Act and the
expiration of the required waiting period thereunder, (ii) the qualification of
Parent as a foreign corporation in those jurisdictions in which the business of the Company makes such qualification

35 

necessary, and (iii) where the
failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Parent, or prevent consummation of the Merger or otherwise prevent the parties hereto from performing their obligations
under this Agreement.

	
             
  	
            3.6

 	
            
Compliance.
 

Parent has complied with, is not
in violation of, any Legal Requirements with respect to the conduct of its business, or the ownership or operation of its business,
except for failures to comply or violations which, individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect on Parent. The business and activities of Parent have not been and are not being conducted in
violation of any Legal Requirements. Parent is not in default or violation of any term, condition or provision of its Charter
Documents. No written notice of non-compliance with any Legal Requirements has been received by Parent.

	
             
  	
            3.7

 	
            SEC
Filings; Financial Statements.
 

(a)
    Parent has made available to the Company a correct and complete copy of each report,
registration statement and definitive proxy statement filed by Parent with the SEC (the “Parent SEC
Reports”), which are all the forms, reports and documents required to be filed by Parent with the SEC
prior to the date of this Agreement. As of their respective dates, the Parent SEC Reports: (i) were timely filed and prepared in
accordance and 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 Parent SEC Reports; and (ii) did not at the time they
were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the
date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent set forth in the preceding sentence, Parent makes no representation or warranty
whatsoever concerning the Parent SEC Reports as of any time other than the time they were filed.

(b)
   Each set of financial statements (including, in each case, any related notes thereto)
contained in Parent SEC Reports, including each Parent SEC Report filed after the date hereof until the Closing, at the time they
were filed complied or will comply as to form in all material respects with the published rules and regulations of the SEC with
respect thereto, was or will be prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by
Form 10-Q of the Exchange Act) and each fairly presents or will fairly present in all material respects the financial position of
Parent at the respective dates thereof and the results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were, are or will be subject to normal year-end
adjustments which were not and will not have a Material Adverse Effect on Parent in the aggregate. 

36 

	
             
  	
            3.8

 	
            No
Undisclosed Liabilities.
 

Parent has no liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the
financial statements included in Parent SEC Reports which are, individually or in the aggregate, material to the business, results
of operations or financial condition of Parent, except (i) liabilities provided for in or otherwise disclosed in Parent SEC Reports
filed prior to the date hereof, and (ii) liabilities incurred since January 1, 2006 in the ordinary course of business, none of
which would have a Material Adverse Effect on Parent. Merger Sub has no assets or properties of any kind, does not now conduct and
has never conducted any business, and has and will have at the Closing no obligations or liabilities of any nature whatsoever except
such obligations and liabilities as are imposed under this Agreement. Parent’s
accrued expenses as of August 31, 2006 are listed in Section 3.8 of the Parent
Disclosure Schedule. 

	
             
  	
            3.9

 	
            Absence
of Certain Changes or Events.
 

Except as set forth in Parent
SEC Reports filed prior to the date of this Agreement, and except as contemplated by this Agreement, since January 1, 2006, there
has not been: (i) any Material Adverse Effect on Parent or Merger Sub; (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in respect of, any of Parent’s or Merger Sub’s
capital stock, or any purchase, redemption or other acquisition by Parent or Merger Sub of any of Parent’s or Merger Sub’s
capital stock or any other securities of Parent or Merger Sub or any options, warrants, calls or rights to acquire any such shares
or other securities; (iii) any split, combination or reclassification of any of Parent’s or Merger Sub’s capital stock;
(iv) any granting by Parent or Merger Sub of any increase in compensation or fringe
benefits, except for normal increases of cash compensation in the ordinary course of business consistent with past practice, or any
payment by Parent or Merger Sub of any bonus, except for bonuses made in the ordinary course of business consistent with past
practice, or any granting by Parent or Merger Sub of any increase in severance or termination pay or any entry by Parent or Merger
Sub into any currently effective employment, severance, termination or indemnification agreement or any agreement the benefits of
which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving Parent or Merger
Sub of the nature contemplated hereby; (v) entry by Parent or Merger Sub into any licensing or other agreement with regard to the
acquisition or disposition of any Intellectual Property other than licenses in the ordinary course of business consistent with past
practice or any amendment or consent with respect to any licensing agreement filed or
required to be filed by Parent or Merger Sub with respect to any Governmental Entity; (vi) any material change by Parent or Merger
Sub in its accounting methods, principles or practices, except as required by concurrent changes in U.S. GAAP; (vii) any change in
the auditors of Parent or Merger Sub; (viii) any issuance of capital stock of Parent or Merger Sub; (ix) any revaluation by Parent
or Merger Sub of any of its assets or any sale of assets of Parent or Merger Sub other than in the ordinary course of business;
(x) any material claims, suits, actions or proceedings commenced or settled by Parent; or (xi) any material transaction or
any other material action taken by Parent outside the ordinary course of business or inconsistent with past practices; or
(xii) any agreement to do any of the foregoing.

37 

	
             
  	
            3.10

 	
            
Litigation.
 

There are no claims, suits,
actions or proceedings pending or to Parent’s knowledge, threatened in writing against Parent or Merger Sub, before any court,
governmental department, SEC, agency, instrumentality or authority, or any arbitrator that seek to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to have a Material Adverse Effect on Parent or Merger Sub or have a Material
Adverse Effect on the ability of Parent and Merger Sub to consummate the Merger.

	
             
  	
            3.11

 	
            Employee
Benefit Plans.
 

Parent does not maintain, and has
no liability under, any employee benefit plan, and neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any stockholder, director, officer or employee of Parent, or (ii) result in the acceleration of
the time of payment or vesting of any such benefits.

 

	
             
  	
            3.12

 	
            
Restrictions on Business Activities.
 

Except as set forth in the
Charter Documents of Parent and in the Parent SEC Reports, there is no agreement, commitment, judgment, injunction, order or decree
binding upon Parent or to which Parent is a party which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Parent, any acquisition of property by Parent or the conduct of business by Parent as
currently conducted other than such effects, individually or in the aggregate, which have not had and could not reasonably be
expected to have, a Material Adverse Effect on Parent.

 

	
             
  	
            3.13

 	
            Title to
Property.
 

Parent does not own or lease any
real property or personal property.  Except as set forth in the Parent SEC Reports, there are no options or other contracts under
which Parent has a right or obligation to acquire or lease any interest in real property or personal property.

 

	
             
  	
            3.14

 	
            Taxes.
  Except as set forth in Section 3.14 of the Parent
Disclosure Schedule:
 

(a)
    Parent has timely filed all Returns required to be filed by Parent with any Tax
authority, except such Returns which are not material to Parent.  All such Returns are true, correct and complete in all material
respects.  Parent has paid all Taxes (whether or not shown to be due on such Returns) that have become due and payable on or before
the date hereof except for Taxes which are being contested in good faith and for which adequate reserves have been established in
accordance with GAAP.

(b)
   All Taxes that Parent is required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper Tax authorities to the extent due and payable.

38 

(c)
    There are no material Tax deficiencies outstanding, assessed or, to the knowledge of
Parent, threatened against Parent, nor has Parent executed any waiver of any statute of limitations or extended any period for the
assessment or collection of any Tax.

(d)
   No audit or other examination of any Return of Parent by any Tax authority is presently
pending, nor has Parent been notified of any request for such an audit or other examination.

(e)
    There are no Tax liens upon the assets of Parent, except liens for current Taxes not yet
due and payable.

(f)
     No adjustment relating to any Returns filed by Parent has been proposed in
writing, formally or informally, by any Tax authority to Parent or any representative thereof.

(g)
    Parent is not liable for the Taxes of any Person, is not currently under any contractual
obligation to indemnify any Person with respect to Taxes (except for customary agreements to indemnify lenders) and is not a party
to or bound by any Tax sharing agreement.

(h)
    Parent has not taken any action and does not know of any fact, agreement, plan or other
circumstance that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

(i)
     Parent has not engaged in any transaction which requires its participation to be
disclosed under Treasury Regulation Section 1.6011-4.

	
             
  	
            3.15

 	
            Brokers.

 

Except as set forth in 
Section 3.15 of the Parent Disclosure Schedule, Parent has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders’ fees or agent’s commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.

 

	
             
  	
            3.16

 	
            
Intellectual Property.
 

Parent does not own, license or
otherwise have any right, title or interest in any Intellectual Property.

 

	
             
  	
            3.17

 	
            
Agreements, Contracts and Commitments.
 

(a)
    The Parent SEC Reports contain a complete and accurate list of all Material Parent
Contracts (as hereinafter defined), specifying the parties thereto. For purposes of this Agreement, (i) the term “
Parent Contracts” shall mean all contracts, agreements, leases, mortgages, indentures,
notes, bonds, franchises, purchase orders, sales orders, and other understandings, commitments and obligations of any kind, whether
written or oral, to which Parent is a party or by or to which any of the properties or assets of Parent may be bound, subject or
affected (including without limitation notes or other instruments payable to Parent) and (ii) the term “
Material Parent Contracts” shall mean (x) each Parent Contract which
(I) provides for payments (present or future) to Parent in excess of $35,000 in the aggregate or (II) under which

39 

or in respect of which Parent
presently has any liability or obligation of any nature whatsoever (absolute, contingent or otherwise) in excess of $35,000, and (y)
without limitation of subclause (x), each of the following Parent Contracts, the relevant terms of which remain executory:

(i)
      any mortgage, indenture, note, installment obligation or other
instrument, agreement or arrangement for or relating to any borrowing of money by Parent in excess of $35,000;

(ii)
     any mortgage, indenture, note, installment obligation or other
instrument, agreement or arrangement for or relating to any borrowing of money from Parent by any officer or director of Parent, or
stockholder owning 5% or more of Parent’s stock (a “Parent 
Insider”);

(iii)
    any guaranty, direct or indirect, by Parent or any Parent Insider of any
obligation for borrowings, or otherwise, excluding endorsements made for collection in the ordinary course of business;

(iv)
    any Parent Contract of employment other than for at-will employment;

(v)
     any Parent Contract made other than in the ordinary course of
business or (x) providing for the grant of any preferential rights to purchase or lease any asset of Parent or (y) providing for any
right (exclusive or non-exclusive) to sell or distribute, or otherwise relating to the sale or distribution of, any product or
service of Parent;

(vi)
    any obligation to register any shares of the capital stock or other
securities of Parent with any Governmental Entity;

(vii)
   any obligation to make payments, contingent or otherwise, arising out of the
prior acquisition of the business, assets or stock of other Persons;

(viii)
  any collective bargaining agreement with any labor union;

(ix)
    any lease or similar arrangement for the use by Parent of personal property
(other than leases of vehicles, office equipment or operating equipment where the annual lease payments are less than $35,000in the
aggregate); and

(x)
     any Parent Contract to which any Parent Insider is a party.

(b)
   Each Material Parent Contract was entered into at arm’s length, is in full force and
effect and is valid and binding upon and enforceable against the Parent and Merger Sub, and to the knowledge or Parent, each of the
other parties thereto.  True, correct and complete copies of all Material Parent Contracts have been filed as exhibits to the Parent
SEC Reports.

(c)
    Neither Parent nor, to the knowledge of Parent, any other party thereto is in breach of
or in default under, and no event has occurred which with notice or lapse of time or

40 

both would become a breach of or
default under, any Material Parent Contract, and no party to any Material Parent Contract has given any written notice of any claim
of any such breach, default or event, which, individually or in the aggregate, is reasonably likely to have a Material Adverse
Effect on Parent.  Each agreement, contract or commitment to which Parent is a party or by which it is bound that has not expired by
its terms is in full force and effect, except in each such case for any breach, default, notice, termination or expiration that
would not reasonably be expected to have a Material Adverse Effect on the Parent. 

	
             
  	
            3.18

 	
            
Insurance.
 

Except for directors’ and
officers’ liability insurance, Parent does not maintain any Insurance Policies.

 

	
             
  	
            3.19

 	
            
Interested Party Transactions.
 

Except as set forth in the Parent
SEC Reports filed prior to the date of this Agreement, no employee, officer, director or stockholder of Parent or a member of his or
her immediate family is indebted to Parent, nor is Parent indebted (or committed to make loans or extend or guarantee credit) to any
of them, other than reimbursement for reasonable expenses incurred on behalf of Parent.  Except as set forth in the Parent SEC
Reports, to Parent’s knowledge, none of such individuals has any direct or indirect ownership interest in any Person with whom
Parent is affiliated or with whom Parent has a contractual relationship, or any Person that competes with Parent, except that each
employee, stockholder, officer or director of Parent and members of their respective immediate families may own less than 5% of the
outstanding stock in publicly traded companies that may compete with Parent.
Except as set forth in the Parent SEC Reports, to Parent’s knowledge, no officer, director or stockholder or any member of
their immediate families is, directly or indirectly, interested in any material contract with Parent or any Subsidiary (other than
such contracts as relate to any such individual ownership of capital stock or other securities of Parent).

 

	
             
  	
            3.20

 	
            
Indebtedness.
 

Except as set forth in the Parent
SEC Reports, Parent has no indebtedness for borrowed money. 

 

	
             
  	
            3.21

 	
            
Over-the-Counter Bulletin Board Quotation.
 

Parent Common Stock is quoted on
the Over-the-Counter Bulletin Board (“OTC BB”).  There is no action or
proceeding pending or, to Parent’s knowledge, threatened against Parent by NASD, Inc. (“NASD
”) with respect to any intention by the NASD to prohibit or terminate the quotation of Parent Common Stock on
the OTC BB.

 

	
             
  	
            3.22

 	
            Board
Approval.
 

The Board of Directors of
Parent, based upon the recommendation by the Parent Special Committee, has, as of the date of this Agreement, unanimously (i)
declared the advisability of the Merger and approved this Agreement and the transactions contemplated

41 

hereby, (ii) determined that the
Merger is in the best interests of the stockholders of Parent, and (iii) determined that the fair market value of the Company is
equal to at least 80% of Parent’s net assets.

	
             
  	
            3.23

 	
            Trust
Fund.
 

As of the date hereof and at the
Closing Date, Parent has and will have no less than $52,000,000 in cash, less any amounts paid in connection with (a) obtaining a
fairness opinion from a nationally recognized financial advisor and (b) the conversion by public stockholders of Parent voting
against the Merger of up to 19.9% of the shares of common stock issued in the Parent’s IPO into a pro rata share of the funds held in Parent’s trust fund
established in connection with the IPO, which shall be invested in United States Government securities or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 in a trust account at Northern Trust
Corporation maintained by the Escrow Agent (the “Trust
Fund”).

	
             
  	
            3.24

 	
            No
Reliance.
 

The representations and
warranties of the Parent and Merger Sub contained in this Agreement and the other agreements contemplated hereby constitute the sole
and exclusive representations and warranties of the Parent and Merger Sub to the Company in connection with the transactions
contemplated hereby.  Except for such representations and warranties (in each case, as modified by the Parent Disclosure Schedule),
neither the Parent, the Merger Sub nor any other Person makes any other express or implied representation or warranty with respect
to Parent and Merger Subor the transactions contemplated by this Agreement, and each of the Parent and Merger Sub disclaims any
other representations or warranties, whether made by it or any of its employees, agents or representatives (including with respect
to the distribution to, or any such Person’s reliance on, any information, documents or
other material made available to Company or its representatives in any data room, management presentation or in any other form in
expectation of, or in connection with, the transactions contemplated hereby).  Except for such representations and warranties (in
each case, as modified by the Parent Disclosure Schedule), each of the Parent and Merger Sub hereby disclaims all liability and
responsibility for any projection, forecast, or information made, communicated, or furnished (orally or in writing) to Company or
any of its affiliates, officers, directors, employees, agents or representatives (including opinion, information, projection, or
advice that may have been or may be provided to any such Person or any director, officer, employee, agent, consultant, or
representative of such Person or any of its affiliates).  The Company acknowledges and agrees that it has not relied on any
representations and warranties other than the express representations and warranties set forth in this
Agreement and the other agreements contemplated hereby in entering into this Agreement. 

 

	
             
  	
            3.25

 	
            Company
Proxy Materials.
 

The information relating to Parent
and Merger Sub supplied by Parent and Merger Sub for inclusion in any proxy or other materials provided by the Company to its
stockholders will not as of date of its distribution to the holders of Company Capital Stock (or any the date of distribution of any
amendment or supplement thereto) or at the time of the Company

42 

Stockholders’ Approval (as
defined in Section 5.2(a)) contain any statement which, at such time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omits to state any material fact required to be stated therein or necessary in
order to make the statement therein not false or misleading.

 

3.26        Survival of Representations and
Warranties.  The representations and warranties of Parent set forth in this Agreement shall survive until
the end of the Survival Period (as defined in Section 7.4(a)). 

 

ARTICLE IV

CONDUCT PRIOR TO THE EFFECTIVE TIME

	
             
  	
            4.1

 	
            Conduct
of Business by Company, Parent and Merger Sub.
 

During the period from the date
of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Closing, each
of the Company, Parent and Merger Sub shall, except in connection with Permitted Acquisitions (as defined in Section 4.2) or
Permitted Financings or to the extent that the other parties shall otherwise consent in writing, carry on its business in the usual,
regular and ordinary course consistent with past practices, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations (except where noncompliance would not have a Material Adverse Effect), pay its
debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when
due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve substantially intact
its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has significant business
dealings. In addition, except in connection with Permitted Acquisitions (as defined in Section 4.2) or Permitted Financings or as
otherwise required or permitted by the terms of this Agreement, without the prior written consent of the other parties, not to be
unreasonably withheld or delayed, during the period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Closing, each of the Company, Parent and Merger Sub shall not do any of
the following:

(a)
    Waive any stock repurchase rights, accelerate (except as disclosed in the Company
Disclosure Schedule), amend or (except as specifically provided for herein) change the period of exercisability of options, warrants
or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash
payments in exchange for any options granted under any of such plans or any warrants except in connection with severance
arrangements with employees or consultants terminated prior to the date hereof;

(b)
   Grant any severance or termination pay to any officer or employee terminated after the date
hereof except pursuant to applicable law, written agreements outstanding, or policies existing on the date hereof and as previously
or concurrently disclosed in writing or made available to the other party, or adopt any new severance plan, or amend or modify or
alter in any manner any severance plan, agreement or arrangement existing on the date hereof;

(c)
    Transfer or license to any Person or otherwise extend, amend or modify any material
rights to any Intellectual Property of the Company, Merger Sub or Parent, as

43 

applicable, or enter
into grants to transfer or license to any Person future patent rights, other than in the ordinary course of business consistent with
past practices, provided that in no event shall the Company, Merger Sub or Parent license on an exclusive basis or sell any material
Intellectual Property of the Company, Merger Sub or Parent as applicable;

(d)
   Declare, set aside or pay
any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital
stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for any capital stock of the Company;

(e)
    Purchase,
redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company, Merger Sub or Parent, as
applicable, excluding repurchases of unvested shares at cost in connection with the termination of the relationship with any
employee or consultant pursuant to stock option or purchase agreements in effect on the date hereof;

(f)
     Issue,
deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital
stock or any securities convertible into or exchangeable for shares of capital stock, or subscriptions, rights, warrants or options
to acquire any shares of capital stock or any securities convertible into or exchangeable for shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such shares or convertible or exchangeable securities,
except for the issuance of Company Common Stock upon the exercise of outstanding Company Options or Company Warrants, or issuance of
Company Common Stock upon the conversion of any Company Preferred Stock or Company
Convertible Notes;  

(g)
    Amend its Charter Documents unless required to do so hereunder;  

(h)
    Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the business of Parent or the Company as applicable, or
enter into any joint ventures, strategic partnerships or alliances or other arrangements that provide for exclusivity of territory
or otherwise restrict such party’s ability to compete or to offer or sell any products or services, other than franchise and
area development agreements entered into by the Company in the ordinary course of business; 

(i)
     Sell, lease, license, encumber or otherwise dispose of any properties or assets,
except (A) sales of inventory in the ordinary course of business consistent with past practice and (B) and the sale, lease, license,
encumbrance or other disposition of property or assets that are not material, individually or in the aggregate, to the business of
such party;

44 

(j)
     Incur Indebtedness, except that the Company may incur Indebtedness in connection
with Permitted Acquisitions, Permitted Financings or otherwise in the ordinary course of business in connection with implementing the Company’s
business plan that shall have terms and conditions consistent with the then prevailing market for similar indebtedness incurred by
borrowers having a financial condition similar to the Company; provided, that in no event will any such Indebtedness incurred
subsequent to the execution of this Agreement:  (i) have a term to maturity of less than 36 months; (ii) contain any prepayment
penalties or make whole payment penalties associated with the refinancing thereof; or (iii) carry an interest rate in excess of nine
percent (9%); provided, however, that notwithstanding the foregoing, the Company may incur up to
$3.0 million in principal amount of Indebtedness that carries an interest rate not to exceed twelve percent (12%).  For purposes of
the foregoing, “Indebtedness” shall mean (a) all obligations for borrowed
money, (b) all obligations evidenced by bonds, debentures, notes or similar instruments, (c) all obligations upon which interest is
customarily paid, (d) all obligations for purchase money financing, including obligations under conditional sale or other title
retention agreements or issued or assumed in respect of deferred purchase price, relating to assets purchased by the Company or
Parent, (e) all guarantees of any obligation of the type described in the clauses hereof of any other person, (f) all capital lease
obligations, (g) all interest rate protection, foreign currency exchange or other interest or exchange rate hedging agreements and
(h) all obligations as an account party in respect of bankers’ acceptances, in
the case of each clause above, as of such date;

(k)
   Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase
or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are
terminable “at will”), pay any special bonus or special remuneration to any director or employee, or increase the salaries
or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or
consultants, except in connection with the employment agreement referenced in Section 6.1(h) or in the ordinary course of business
consistent with past practices;

(l)
     (i) Pay, discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of
this Agreement) other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with
past practices or in accordance with their terms, or liabilities recognized or disclosed in the Audited Financial Statements or
Unaudited Financial Statements or in the most recent financial statements included in the Parent SEC Reports filed prior to the date
of this Agreement, as applicable, or incurred since the date of such financial statements, or (ii) waive the benefits of, agree to
modify in any manner, terminate, release any Person from or knowingly fail to enforce any
confidentiality or similar agreement to which the Company is a party or of which the Company is a beneficiary or to which Parent is
a party or of which Parent is a beneficiary, as applicable;

(m)
  Except in the ordinary course of business consistent with past practices, modify, amend or terminate
any Material Company Contract or Parent Contract, as applicable, or waive, delay the exercise of, release or assign any material
rights or claims thereunder; 

45 

(n)
    Except as required by U.S. GAAP, revalue any of its assets or make any change in
accounting methods, principles or practices;

(o)
   Except in the ordinary course of business consistent with past practices, incur or enter into
any agreement, contract or commitment requiring such party to pay in excess of $35,000 in any 12 month period, other than the
Company under a Routine Operating Contract or the incurrence of
Indebtedness permitted by clause (j) above;

(p)
   Make or rescind any Tax elections that, individually or in the aggregate, could be reasonably
likely to adversely affect in any material respect the Tax liability or Tax attributes of such party, settle or compromise any
material income tax liability or, except as required by applicable law, materially change any method of accounting for Tax purposes
or prepare or file any Return in a manner inconsistent with past practice;

(q)
   Form, establish or acquire any subsidiary except as
contemplated by this Agreement;

(r)
    Except as set forth in the Company Disclosure Schedule, permit any Person to exercise
any of its discretionary rights under any Company Employee Plan to provide for the automatic acceleration of any outstanding
options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such
plans; 

(s)
    Make capital expenditures except in accordance with prudent business and operational
practices consistent with prior practice;

(t)
     Take or omit to take any action, the taking or omission of which would be
reasonably anticipated to have a Material Adverse Effect on the Company and the Company’s Subsidiaries, taken as a whole;

(u)
    Enter into any transaction with or distribute or advance any assets or property to any
of its officers, directors, partners, stockholders or other Affiliates (other than (i) payment of salary and benefits in the
ordinary course of business consistent with past practice, (ii) the reimbursement of reasonable expenses incurred on behalf of
the Company or Parent (as applicable), or (iii) the providing of other employee benefits made generally available to all
employees); or

(v)
    Agree in writing or otherwise agree, commit or resolve to take any of the actions
described in Section 4.1(a) through 4.1(u) above.

	
             
  	
            4.2

 	
            
Acquisitions.
 

(a)
    Between the date of the signing of the Merger Agreement and December 31, 2006, the
Company shall continue to present for the approval of its Board of Directors, in a manner consistent with its current practice, new
letters of intent or definitive agreements for any hospital or clinic acquisitions or group of hospital or clinic acquisitions.  If
any such hospital or clinic acquisition, or group of hospital or clinic acquisitions, presented to the Company’s Board 

46 

of Directors at a particular time,
has a purchase price (aggregated in the case of a group of acquisitions) which exceeds either (i) six times such target’s (or
targets’) trailing twelve month EBITDA as of the end of the most recent fiscal quarter of such target or (ii) 1.1 times the
aggregate of such target’s (or targets’) trailing twelve month revenue as of the end of the most recent fiscal quarter of
such target (or targets), any such acquisition or group of acquisitions shall be subject to the approval of an acquisition committee
of the Parent Board consisting of one person that Parent expects to designate as its post-closing Board of Directors nominees in
accordance with Section 5.3 below, a member of Parent’s Special Committee and an additional person who is a member of the Parent
Board, which additional person may rotate among the other members of the Parent Board (the “Acquisition
Committee”), which approval shall not unreasonably be withheld. The Acquisition Committee shall be
deemed to have approved any acquisition presented for its approval pursuant to this Section 4.2 if it does not notify the Company of
its disapproval of such acquisition within seven business days following the date of the presentation of such acquisition by the
Company to the Acquisition Committee.

(b)
   From the date of this Agreement until the earlier of the termination of this Agreement
pursuant to its terms or the Closing, the Company will permit Parent to send up to three non-voting observers to attend the portion of the meetings
of the Company’s Board of Directors at which the Company Board reviews possible hospital or clinic acquisitions and will
provide such observers with a copy of all information that is provided to the Company Board regarding such possible acquisitions at
the same time as such information is first provided to the Company Board; provided, however, that the Company reserves the right to
exclude such observers from access to any material or meeting or portion thereof if the Company believes that such exclusion is
reasonably necessary to preserve the attorney-client privilege; provided, further, however, that
Parent shall not, and shall cause such observers not to, disclose or use any confidential information disclosed at or in connection
with any meeting of the Company Board or consent of the Company Board.   For purposes of this Agreement, “
Permitted Acquisition” shall mean any hospital or clinic acquisition that is permitted
under this Section 4.2.   

(c)
    For purposes of this Agreement, “EBITDA
” shall mean consolidated earnings from hospital/clinic operations before corporate expenses, interest, taxes,
depreciation and amortization, and after adjustments for elimination of non-recurring expenses, calculated in accordance with
historical accounting principles and practices consistently applied. Notwithstanding the foregoing, in determining EBITDA,  EBITDA
shall not include (i) any  “extraordinary items” of gain or loss; (ii) any gains, losses or profits realized from the sale
of any assets or services other than in the ordinary course of business; and (iii) any deduction for any non-cash compensation
expenses.

4.3
   Officers of the Company.  Commencing on the execution of this
Agreement until the earlier of the termination of this Agreement pursuant to its terms or the Closing, the Company shall not retain
any senior executive officers such as a President, Chief Operating Officer, Chief Financial Officer or similar positions without the
prior approval of the Parent Special Committee, such approval not to be unreasonably withheld or delayed.  In addition, at or prior
to the Closing, the Company and Parent shall use their reasonable best efforts to develop a written plan setting forth the
Company’s plan to retain regional coordinators for each regional hub area as well as additional accounting personnel.

47 

 

ARTICLE V

ADDITIONAL AGREEMENTS

	
             
  	
            5.1

 	
            Proxy
Statement/Prospectus; Parent Stockholders’ Meeting.
 

(a)
    As promptly as practicable after the execution of this Agreement, Parent will prepare
and file the Proxy Statement/Prospectus with the SEC. The Company and its counsel shall be given a reasonable opportunity to review
and comment on the Proxy Statement/Prospectus prior to its filing with the SEC. Parent will respond to any comments of the SEC and
Parent will use its reasonable best efforts to obtain an order of effectiveness from the SEC and to mail the Proxy
Statement/Prospectus to its stockholders at the earliest practicable time. As promptly as practicable after the execution of this
Agreement, the Company and Parent will prepare and file any other filings required under the Securities Act or any other Federal, foreign or Blue Sky laws relating
to the Merger and the transactions contemplated by this Agreement, (collectively, the “Other Filings
”). Each party will notify the other party promptly upon the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff or any other governmental officials for amendments or supplements to the Proxy
Statement/Prospectus or any Other Filing or for additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one hand, and the SEC, or its staff or other government
officials, on the other hand, with respect to the Proxy Statement/Prospectus, the Merger or any Other Filing. The Proxy
Statement/Prospectus and the Other Filings will comply in all material respects with all applicable requirements of law and the
rules and regulations promulgated thereunder. Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus or any Other Filing, the Company or Parent, as the case may be, will promptly inform
the other party of such occurrence and cooperate in filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company and Parent, such amendment or supplement. The Proxy Statement/Prospectus will be sent to the
stockholders of Parent as described in Section 5.1(b) for the purpose of soliciting proxies from holders of Parent Common Stock to
vote at the Parent Stockholders’ Meeting in favor of: (i) the adoption of this Agreement and the approval of the Merger
(“Parent Stockholder Approval”); (ii) the issuance and sale of shares of
Parent Common Stock to the extent that such issuance requires shareholder approval; (iii) the amendment to Parent’s charter to,
among other things, increase the number of authorized shares; and (iv) the adoption of an Equity Incentive Plan (the
“Parent Option Plan”). 

(b)
   As soon as practicable following its declaration of effectiveness by the SEC, Parent shall
distribute Parent’s proxy statement to the holders of Parent Common Stock and, pursuant thereto, shall call the Parent
Stockholders’ Meeting in accordance with the DGCL and, subject to the other provisions of this Agreement, solicit proxies from
such holders to vote in favor of the adoption of this Agreement and the approval of the Merger and the other matters presented to
the stockholders of Parent for approval or adoption at the Parent Stockholders’ Meeting, including, without limitation, the
matters described Section 5.1(a).

(c)
    Parent shall comply with all applicable provisions of and rules under the Securities
Act, Exchange Act and all applicable provisions of the DGCL in the preparation, filing and distribution of the Proxy
Statement/Prospectus, the solicitation of proxies thereunder, and the

48 

calling and holding of the Parent
Stockholders’ Meeting. Without limiting the foregoing, Parent shall ensure that the Proxy Statement/Prospectus does not, as of
the date on which it is distributed to the holders of Parent Common Stock, and as of the date of the Parent Stockholders’
Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading (provided that Parent shall not be responsible for
the accuracy or
completeness of any information relating to the Company or any other information furnished by the Company for inclusion in the Proxy
Statement/Prospectus). 

(d)
   Parent, acting through its board of directors, shall include in the Proxy Statement/Prospectus
the recommendation of its board of directors (and any committee thereof) that the holders of Parent Common Stock vote in favor of
the adoption of this Agreement and the approval of the Merger, and shall otherwise use its best efforts to obtain the Parent
Stockholder Approval.

(e)
    The Company agrees to provide, and will cause its directors, officers and employees to
provide, all cooperation reasonably necessary in connection with obtaining the approval of the Merger by Parent’s stockholders.

 

	
             
  	
            5.2

 	
            Company
Stockholder Approval.
 

(a)
    As promptly as practicable after the execution of this Agreement, the Company will
prepare and file any materials required under the DGCL, the Securities Act or any Other Filings relating to the Merger and the
transactions contemplated by this Agreement required by law to be filed by the Company. The Other Filings will comply in all
material respects with all applicable requirements of law and the rules and regulations promulgated thereunder. Appropriate proxy or
consent materials or other materials will be sent to the stockholders of the Company for the purpose of soliciting proxies to vote
in favor of or consent to the adoption of this Agreement and the approval of the Merger and any other matters presented to the
stockholders of the Company for approval or adoption (the “Company
Stockholders’ Approval”).  

(b)
   The Company will use its reasonable best efforts to obtain the Company Stockholders’
Approval prior to the date the Proxy Statement/Prospectus is filed with the SEC, but in any event as soon as practicable following
the date of this Agreement and in no event shall any such meeting be held later than October 15, 2006 (except if due to the failure
by Parent to provide the Company with information necessary for inclusion in the Company’s proxy or consent materials). The
Company shall seek to obtain such approval by calling a meeting of the Company’s stockholders’ or otherwise obtain
approval of the stockholders pursuant to valid written consents for the purpose of the adoption of this Agreement and the approval
of the Merger and any other matters presented to the stockholders of Company for approval or adoption.

	
             
  	
            5.3

 	
            Directors
and Officers of Parent and the Surviving Corporation After Merger.
 

(a)
    Pursuant to a voting agreement in the form and substance reasonably satisfactory to the
Stockholders’ Representatives, Galen and the Founding Stockholders (the “Board
Voting Agreement”),  immediately following the Closing, the Parent Board shall
consist

49 

of seven individuals, which shall
include Robert Wallace for so long as Mr. Wallace is serving as the Chief Executive Officer of Parent or otherwise continues to
beneficially own two percent or more of the fully diluted shares of Parent Common Stock following the Closing, three designees named
by the Stockholders’ Representatives (one of whom shall be a designee named by Galen Partners IV LP and/or its affiliated funds
(“Galen”)) and three designees named by the Founding Stockholders of Parent set forth on Schedule
5.3(a) (the “Founding Stockholders”) (one of whom shall be Gene E.
Burleson, who shall serve as the non-executive Chairman of the Parent Board; provided, that in the event, Mr. Burleson is
unavailable for such service, the Founding Stockholders shall have the right to designate another individual to serve in such
capacity as is reasonably acceptable to the Company and Galen). The Founding Stockholders, the Stockholders’ Representatives
and Galen will be entitled to name such designees until the annual meeting of stockholders of Parent following the third anniversary
of the Closing.  Parent and the Company shall take all necessary action so that the persons listed on Schedules 1.4(c) and 1.4(d)
are appointed or elected, as applicable, to the positions as officers and directors of Parent and the
Surviving Corporation, as set forth therein, to serve in such positions effective immediately after the Closing.   

(b)
    Until the annual meeting of stockholders of Parent following the third anniversary of
the Closing, at least one individual who is a legacy Parent director will serve on each standing committee of the Parent Board and
the charter of each standing committee will provide that each such committee will make recommendations to the full Parent Board for
consideration and appropriate action.

	
             
  	
            5.4

 	
            Voting
Agreements.
 

Subject to applicable law,
certain of the stockholders of the Company listed on Schedule 6.1(e) shall enter into a voting agreement in the form attached as
Exhibit B (the “Merger Voting Agreement
”) concurrently with the execution of this Agreement. 

 

	
             
  	
            5.5

 	
            HSR Act
.  
 

If required pursuant to the HSR
Act, as promptly as practicable after the date of this Agreement, Parent and the Company shall each prepare and file the
notification required of it thereunder in connection with the transactions contemplated by this Agreement and shall promptly and in
good faith respond to all information requested of it by the Federal Trade Commission and Department of Justice in connection with
such notification and otherwise cooperate in good faith with each other and such Governmental Entities. Parent and the Company shall
(a) promptly inform the other of any communication to or from the Federal Trade Commission, the Department of Justice or any other
Governmental Entity regarding the transactions contemplated by this Agreement, (b) give the other prompt notice of the commencement
of any action, suit, litigation, arbitration, proceeding or investigation by or before
any Governmental Entity with respect to such transactions and (c) keep the other reasonably informed as to the status of any such
action, suit, litigation, arbitration, proceeding or investigation. Filing fees with respect to the notifications required under the
HSR Act shall be shared equally by Parent and the Company.  

50 

	
             
  	
            5.6

 	
            Other
Actions.
 

(a)
    At least five (5) days prior to Closing, Parent shall prepare a draft Form 8-K
announcing the Closing, together with, or incorporating by reference, the financial statements prepared by the Company and its
accountant, and such other information that may be required to be disclosed with respect to the Merger in any report or form to be
filed with the SEC (“Merger Form 8-K”), which shall be in a form reasonably
acceptable to the Company and in a format acceptable for EDGAR filing. Prior to Closing, Parent and the Company shall prepare the
press release announcing the consummation of the Merger hereunder (“Press Release
”). Simultaneously with the Closing, Parent shall file the Merger Form 8-K with the SEC and
distribute the Press Release.  The Company and Parent each acknowledge that Parent and the Company will be required to (i) prepare
and file with the SEC the Proxy Statement/Prospectus in connection with obtaining the Parent Stockholder Approval and (ii) include
in the Proxy Statement/Prospectus audited financial statements of the Company for the year ending December 31, 2005 (the “
2005 Audit”) as well as the audited financial statements for the nine-month
period ending September 30, 2006 (the “Nine Month Audit”,
 and together with the 2005 Audit, the “
Historical Audits”) in accordance with the rules and regulations promulgated by
the SEC.  

(b)
   The Company will use commercially reasonable best efforts to provide to Parent (i) the
Historical Audits on or before December 15, 2006 and (ii) the audited financial statements for the year ending December 31, 2006 on
or before February 15, 2007 (the “2006 Audit”), together with any other
audited financial statements (“Significant Acquisition Audits”) that may be
required by the SEC, with respect to the Historical Audits or the 2006 Audit, as applicable, due to any acquisitions of businesses
acquired in accordance with the parameters set forth in Section 4.2 that either individually or in the aggregate meet any
significance tests then prescribed by the SEC for determining financial statement disclosure
requirements relevant to the Proxy Statement/Prospectus. For purposes of this Agreement, the Historical Audits, the 2006 Audit and
the Significant Acquisition Audits are referred to collectively as the “Audited Financial Statements
”). 

(c)
    The Company and Parent shall further cooperate with each other and use their respective
reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable laws to consummate the Merger and the other transactions contemplated
hereby as soon as practicable, including preparing and filing as soon as practicable all documentation to effect all necessary
notices, reports and other filings and to obtain as soon as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party (including the respective independent accountants of the
Company and Parent) and/or any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated hereby. This obligation shall include, on the part of Parent, sending a termination letter to Corporate
Stock Transfer, Inc. (“CSI”) in substantially the form of Exhibit A
attached to the Investment Management Trust Agreement by and between Parent and CSI dated as of March 22, 2006.  Subject to
applicable laws relating to the exchange of information and the preservation of any applicable attorney-client privilege,
work-product doctrine, self-audit privilege or other similar privilege, each of the Company and Parent shall have the right to
review and comment on in advance, and to the extent practicable each will consult the other on, all the information relating to such
party that appears in any filing made with, or written

51 

materials submitted to, any third
party and/or any Governmental Entity in connection with the Merger and the other transactions contemplated hereby. In exercising the
foregoing right,
each of the Company and Parent shall act reasonably and as promptly as practicable.

	
             
  	
            5.7

 	
            Required
Information.
 

In connection with the
preparation of the Merger Form 8-K and Press Release, and for such other reasonable purposes, the Company and Parent each shall,
upon request by the other, furnish the other with all information concerning themselves, their respective directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable in connection with the Merger, or any other
statement, filing, notice or application made by or on behalf of the Company and Parent to any third party and/or any Governmental
Entity in connection with the Merger and the other transactions contemplated hereby. Each party warrants and represents to the other
party that all such information shall be true and correct in all material respects and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they were made, not misleading.

	
             
  	
            5.8

 	
            
Confidentiality; Access to Information.
 

(a)
    Confidentiality. Any confidentiality agreement previously
executed by the parties shall be superseded in its entirety by the provisions of this Agreement. Each party agrees to maintain in
confidence any non-public information received from the other party, and to use such non-public information only for purposes of
consummating the transactions contemplated by this Agreement. Such confidentiality obligations will not apply to: (i) information
which was known to the one party or its agents prior to receipt from the other party; (ii) information which is or becomes generally
known without the breach of any duty or obligation to the party asserting the confidential nature of such information; (iii)
information acquired by a party or its agents from a third party who was not bound to an obligation
of confidentiality; and (iv) disclosure required by law; provided, however, that while any such disclosure will not be a breach of
this Agreement, the disclosed information shall continue to be confidential information for purposes of this Agreement unless one of
the other exceptions noted above shall be applicable. Notwithstanding anything to the contrary contained herein, the Company may
disclose such non-public information to potential acquisition targets in connection with potential acquisitions (in accordance with
Section 4.2 hereof), provided that to the extent such information relates to Parent or the Merger, any such acquisition targets
shall be bound by confidentiality obligations as least as restrictive as those set forth herein, which obligations shall be directly
enforceable by Parent either as a party to such arrangements or as a third party beneficiary thereunder, and shall be specifically
advised that the federal securities laws in the United States prohibit trading in
securities of an issuer when in possession of material non-public information relating to such issuer.  In the event this Agreement
is terminated as provided in Article VIII hereof, each party (X) will return or cause to be returned to the other all documents and
other material obtained from the other in connection with the Merger contemplated hereby, and (Y) will use its reasonable best
efforts to delete from its computer systems all documents and other material obtained from the other in connection with the Merger
contemplated hereby. Notwithstanding anything to the contrary contained herein, in the event this Agreement is terminated pursuant
to its terms, Parent shall not, and shall cause its Affiliates, employees, representatives and agents

52 

not to, use any information obtained
by it or its representatives, agents, lenders and investors about the Company to contact or solicit clients, customers or employees
or compete with the Company in any way for a period of three (3) years
following the termination of this Agreement.  

(b)
   Access to Information.  Each party will afford
the other and its respective financial advisors, accountants, counsel and other representatives reasonable access during normal
business hours, upon reasonable notice, to its properties, books, records and personnel during the period prior to the Closing to
obtain all information concerning such party’s business, including the status of business development efforts, properties,
results of operations and personnel as may be reasonably requested; provided, however, that all such information shall be subject to
the confidentiality restrictions set forth in paragraph (a) above. No information or knowledge obtained by either party in any
investigation pursuant to this Section 5.8 will affect or be deemed to modify any representation
or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger. Notwithstanding anything
to the contrary contained herein, each party (“Subject Party”) hereby
agrees that by proceeding with the Closing, it shall be conclusively deemed to have waived for all purposes hereunder any inaccuracy
of representation or breach of warranty by another party which is actually known by the Subject Party prior to the Closing  as
conclusively established by written materials in the possession of the Subject Party.

	
             
  	
            5.9

 	
            Charter
Protections; Directors’ and Officers’ Liability Insurance.
 

(a)
    All rights to indemnification for acts or omissions occurring through the Closing Date
now existing in favor of the current directors and officers of the Company or Parent as provided in the Charter Documents of Parent
or the Company, as applicable, or in any indemnification agreements shall survive the Merger and shall continue in full force and
effect in accordance with their terms.

(b)
   For a period of six (6) years after the Closing Date, Parent shall cause to be maintained by
the Surviving Corporation the current policies of directors’ and officers’ liability insurance maintained by the Company
as of the Closing Date for an annual premium not to exceed $50,000 (or policies of at least the same coverage and amounts containing
terms and conditions which are no less advantageous) with respect to claims arising from facts and events that occurred prior to the
Closing Date.  

(c)
    If Parent or any of its successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers or conveys all
or substantially all of its properties and assets to any Person, then, in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of Parent assume the obligations set forth in this Section 5.9.

	
             
  	
            5.10

 	
            Public
Disclosure.
 

From the date of this Agreement
until Closing or termination, the parties shall cooperate in good faith to jointly prepare all press releases and public
announcements pertaining to this Agreement and the transactions governed by it, and no party shall issue or otherwise make any
public announcement or communication pertaining to this Agreement or the transaction

53 

without the prior consent of Parent
(in the case of the Company) or the Company (in the case of Parent), except as required by any Legal Requirement or by the rules and
regulations of, or pursuant to any agreement of a stock exchange or trading system. Each party will not unreasonably withhold
approval from the others with respect to any press release or public announcement. If any party determines with the advice of
counsel that it is required to make this Agreement and the terms of the transaction public or otherwise issue a
press release or make public disclosure with respect thereto, it shall, at a reasonable time before making any public disclosure,
consult with the other parties regarding such disclosure, seek such confidential treatment for such terms or portions of this
Agreement or the transaction as may be reasonably requested by the other parties and disclose only such information as is legally
compelled to be disclosed. This provision will not apply to communications by any party to its counsel, accountants and other
professional advisors. Notwithstanding the foregoing, the parties hereto agree that as promptly as practicable after the execution
of this Agreement, Parent will file with the SEC a Current Report on Form 8-K pursuant to the Exchange Act to report the execution
of this Agreement (and may include a copy of this Agreement as an exhibit thereto), with respect to which Parent shall consult with
the Company. Parent shall provide to the Company for review and comment a draft of the
Current Report on Form 8-K prior to filing with the SEC; provided that unless objected to by the Company by written notice given to
Parent within five (5) days after delivery to the Company specifying the language to which reasonable objection is taken, any
language included in such Current Report shall be deemed to have been approved by the Company and may be filed with SEC and used in
other filings made by Parent with the SEC.

	
             
  	
            5.11

 	
            
Reasonable Best Efforts.
 

Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including using reasonable best efforts to accomplish the following: (i) the
taking of all reasonable acts necessary to cause the conditions precedent set forth in Article VI to be satisfied; (ii) the
obtaining of all necessary actions, waivers, consents, approvals, orders and authorizations from Governmental Entities and the
making of all necessary registrations, declarations and filings (including registrations, declarations and
filings with Governmental Entities, if any) and the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity; (iii) the obtaining of all consents, approvals or waivers from third
parties required as a result of the transactions contemplated in this Agreement, including without limitation the consents referred
to in the Company Disclosure Schedule; (iv) the defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed; and
(v) the execution or delivery of any additional instruments reasonably necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement.  In connection with and without
limiting the foregoing, Parent and its board of directors and the Company and its board of directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to the Merger, this Agreement or any of the transactions
contemplated by this

54 

Agreement, use its reasonable best
efforts to enable the Merger and the other transactions contemplated by this Agreement to be consummated as promptly as practicable
on the terms contemplated by this Agreement and to otherwise act to eliminate or minimize the effects of such takeover statute.

	
             
  	
            5.12

 	
            Certain
Claims.
 

As additional consideration for
the issuance of the Merger Consideration pursuant to this Agreement, by their approval of this Agreement and the Merger each of the
Company stockholders releases and forever discharges, effective as of the Closing Date, the Company and its directors, officers,
employees and agents, from any and all rights, claims, demands, judgments, obligations, liabilities and damages, whether accrued or
unaccrued, asserted or unasserted, direct or indirect, and whether known or unknown arising out of or resulting from such
stockholder’s (i) status as a holder of an equity interest in the Company and (ii) employment, service, consulting or other
similar agreement entered into with the Company prior to Closing, to the extent that the bases for claims under any such agreement
that survive the Closing arise prior to the Closing; provided, however, the foregoing shall
not release any obligations of Parent set forth in this Agreement or the Escrow Agreement.  

	
             
  	
            5.13

 	
            No
Securities Transactions.
 

The Company shall not, directly
or indirectly, engage in any transactions involving the securities of Parent prior to the time of the making of a public
announcement of the transactions contemplated by this Agreement. The Company shall use its reasonable best efforts to require each
of its Affiliates, officers, directors, employees, agents, representatives and stockholders to comply with the foregoing
requirement.

	
             
  	
            5.14

 	
             No
Claim Against Trust Fund; Sole Remedy For Termination of Agreement.
 

The Company acknowledges that,
if the transactions contemplated by this Agreement are not consummated by Parent by September 22, 2007 (subject to a six-month
extension in certain circumstances), Parent will be obligated to return to its stockholders the amounts being held in the Trust
Fund. Accordingly, the sole remedy for any claim by the Company against Parent or the Merger Sub, for any monetary claims or
otherwise, for any reason whatsoever, including but not limited to a breach of this Agreement by Parent or Merger Sub or any
agreements or understandings in connection herewith shall be as set forth in Section 8.2.

	
             
  	
            5.15

 	
            
Disclosure of Certain Matters.
 

Each of Parent and the Company
will provide the other with prompt written notice of any event, development or condition that (a) would cause any of such
party’s representations and warranties to become untrue or misleading or which may affect its ability to consummate the
transactions contemplated by this Agreement, (b) had it existed or been known on the date hereof would have been required to be
disclosed under this Agreement, (c) gives such party any reason to believe that any of the conditions set forth in Article VI will
not be satisfied, (d) is of a nature that is or may be materially adverse to the operations, prospects or condition (financial or
otherwise) of Parent or the Company or (e) would require any amendment or

55 

supplement to the Proxy
Statement/Prospectus. The parties shall have the right and obligation to supplement or amend the Company Disclosure Schedule and
Parent Disclosure Schedule (the “Disclosure Schedules”) being delivered
pursuant to this Agreement with respect to any matter arising or discovered after delivery thereof which, if existing or known at
the date of this Agreement, would have been required to be set forth or described in the Disclosure Schedules; provided, however,
that any such amendment subsequent to the date hereof be approved by the Company (in the case of any amendments to the Parent
Disclosure Schedule) or Parent (in the case of any  amendments to the Company Disclosure Schedule), other than such amendments
provided in connection with Permitted Acquisitions, Permitted Financings or Indebtedness permitted pursuant to Section 4.1(j).
Notwithstanding anything to the contrary herein, the parties hereby agree that the Company shall deliver to Parent the updated
Disclosure Schedules dated as of the Closing relating to Sections 2.3(a), 2.3(b), 2.3(c), 2.8, and
2.13 (the “Bring-Down Schedules”).  The obligations of the parties to amend
or supplement the Disclosure Schedules being delivered herewith shall terminate on the Closing Date. 

	
             
  	
            5.16

 	
            No
Solicitation.
 

(a)
    During the period between the date of this Agreement and the earlier of the date the
Company obtains the Company Stockholders’ Approval and the date this Agreement is terminated pursuant to its terms, the Company
agrees that it shall not, and that it shall use its commercially reasonable efforts to ensure that none of its directors, officers,
employees, investment bankers, attorneys, accountants and other advisors or representatives (such directors, officers, employees,
investment bankers, attorneys, accountants, other advisors and representatives, collectively, “
Representatives”) shall, directly or indirectly, take any of the following actions:

(i)
     solicit, initiate,  encourage or otherwise facilitate (including by
way of furnishing non-public information) any inquiries or the making of any proposal or offer (including any proposal from or offer
to the Company’s stockholders) with respect to, or that would reasonably be expected to lead to, any Acquisition Proposal;

(ii)
    enter into, continue or otherwise participate in any discussions or
negotiations regarding, or furnish to any Person any non-public information or grant access to its properties, books and records or
personnel in connection with, any Acquisition Proposal; or

(iii)
   terminate, release, amend, waive or modify any provision of any confidentiality,
standstill or similar agreement to which it is a party (or knowingly fail to take reasonable measures to enforce the provisions of
any such agreements), or take any action to exempt any Person (other than Parent and Merger Sub) from the restrictions on
“business combinations” contained in Section 203 of the DGCL or otherwise cause such restrictions not to apply.

Notwithstanding the foregoing,
the Company may, but only prior to receiving the Company Stockholders’ Approval, and only if the failure to do so would, or
would reasonably be expected to, result in a breach of the fiduciary duties to stockholders of the Company, as

56 

determined in good faith by the
Company Board after consultation with outside counsel, in response to a bona fide,
unsolicited written Acquisition Proposal received by the Company after the date of this Agreement that the Company Board determines
in good faith after consultation with outside counsel is reasonably expected to result in a Superior Proposal, in each case, so long
as such Acquisition Proposal did not result from a breach by the Company of this Section 5.16
 and the Company has complied with this Section 5.16 in all material respects, (x) furnish information with respect to the Company to
the Person making such Acquisition Proposal and its Representatives pursuant to a customary confidentiality agreement no less
restrictive than the terms of the confidentiality agreement executed by Parent and the Company, (y) participate in discussions, or
negotiations with, or making counter-offers to, such Person and its Representatives regarding any Acquisition Proposal, and (z)
waive any standstill provisions related to the submission of such Acquisition Proposal; provided
 that the Company shall substantially contemporaneously make available to Parent and Merger Sub (to the extent it has
not previously done so) all nonpublic information made available to such Person making such Acquisition Proposal. 

(b)
   The Company shall as promptly as possible (but in any event within forty-eight
(48) hours) provide oral and written notice to Parent of receipt by the Company of any Acquisition Proposal, any inquiry with
respect to, or any request for nonpublic information in connection with, any Acquisition Proposal, the material terms and conditions
of any such Acquisition Proposal, inquiry or request and the identity of the Person making any such Acquisition Proposal, inquiry or
request and shall keep Parent informed in all material respects on a current basis of the status thereof and of any material
communications, material modifications or material developments with respect to such Acquisition Proposal, inquiry or request,
including, without limitation, copies of all Acquisition Proposals, inquiries or requests and written
information relating thereto, including draft agreements, term sheets and material communications.  The Company agrees that it will
not enter into a confidentiality agreement with any Person subsequent to the date of this Agreement that prohibits the Company from
providing such information to Parent.

(c)
    The Company shall inform its Representatives of the obligations undertaken in this
Section 5.16 promptly following the date of this Agreement.  The Company shall, and
shall direct its Representatives to, cease immediately all discussions and negotiations that commenced prior to the date of this
Agreement regarding any proposal that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal and shall
request that all confidential information previously furnished to any such third parties be promptly returned or destroyed.  

	
             
  	
            (d)

	
            For purposes of
this Agreement:
 

“
Acquisition Proposal” means any proposal or offer (i) relating to a merger, reorganization,
consolidation, sale of substantial assets, tender offer, exchange offer, recapitalization,  joint venture, share exchange or other
business combination involving the Company that is determined by the Company Board after consultation with outside counsel to be
strategic in nature, it being specifically acknowledged by the Company that any transaction involving the Company or its
stockholders where the result is the termination of the equity interests held by the Company’s stockholders solely in exchange
for cash will not constitute a

57 

“strategic transaction” for
purposes of this Agreement, (ii) for the issuance by the Company of 20% or more of its equity securities or (iii) to acquire in any
manner, directly or indirectly, 20% or
more of the capital stock or assets of the Company, in each case other than the transactions contemplated by this Agreement. 

 “
Superior Proposal” means any unsolicited, bona fide
written proposal, which was not obtained in violation of this Section 5.16, made by a
third party to acquire, directly or indirectly, at least 90% of the equity securities or all or substantially all of the assets of
the Company, pursuant to a tender or exchange offer, a merger, a consolidation or a sale of its assets, which the Company Board
determines in its good faith reasonable judgment after consultation with outside counsel would, if consummated, result in a
strategic transaction that is (i) more favorable to the holders of Company Common Stock from a financial point of view than the
transactions contemplated by this Agreement (including any proposal by Parent to amend the terms of
this Agreement), taking into account all the terms and conditions of such proposal and this Agreement and other factors reasonably
deemed relevant by the Company Board and (ii) reasonably capable of being completed on the terms proposed, in each case taking
into account all financial (including the financing terms of such proposal), regulatory, legal (with the advice of outside counsel)
and other aspects of such proposal. 

(e)
    Parent will not, and will cause its employees, agents and representatives not to,
directly or indirectly, solicit or enter into discussions or transactions with, or encourage, or provide any information to, any
corporation, partnership or Person (other than the Company and its designees) concerning any merger, purchase of ownership interests
and/or assets, recapitalization or similar transaction, or any other transaction that might reasonably impair Parent’s ability
to consummate the Merger on the terms hereof.

(f)
     Notwithstanding anything to the contrary contained herein, nothing contained
herein shall prevent the Company from soliciting, initiating, encouraging, facilitating or otherwise negotiating or entering into or
consummating any Permitted Financing or Permitted Acquisition.

	
             
  	
            5.17

 	
            Parent
Option Plan
 

At the Closing, Parent shall
establish the Parent Option Plan funded with such number of shares of Parent Common Stock as is equal to ten percent (10%) of
Parent’s issued and outstanding Parent Common Stock at Closing (after giving effect to the Merger but excluding the impact of
any Parent Warrants, Parent Exchange Options, Parent Exchange Warrants, Company Convertible Notes assumed by Parent or shares of
Parent Common Stock reserved for issuance upon exercise of such Parent Warrants, Parent Exchange Options, Parent Exchange Warrants
or Company Convertible Notes assumed by Parent.  Parent will reserve sufficient shares of Parent Common Stock for issuance
thereunder and shall use its reasonable best efforts to include a proposal in the Proxy Statement/Prospectus pursuant to which
Parent shall seek to obtain the approval of Parent’s stockholders of the Parent Option Plan.
Parent shall file by the 90th day following the Closing, a registration statement on Form S-8 registering the exercise of
any options granted pursuant to the Parent Option Plan (to the extent the exercise of such options is eligible to be registered
using a Form S-8 registration statement). Following the Closing, Parent Board, upon a recommendation by the Compensation Committee
of Parent, shall be responsible

58 

for the review and approval of all
grants of awards under the Parent Option Plan and amount of stock covered thereby.  

	
             
  	
            5.18

 	
            Benefit
Arrangements.  
 

Parent agrees that all employees
of the Company and any of its Subsidiaries who continue employment with Parent or any subsidiary of Parent after the Effective Time
(“Continuing Employees”) shall be eligible to continue to participate in
the Company’s (or its Subsidiary’s, as applicable) health, vacation, welfare and retirement benefit plans; provided,
however, that (i) nothing in this Section 5.18 or elsewhere in this Agreement shall limit the right of Parent to amend or terminate
any such benefit plan or arrangement at any time, and (ii) if Parent terminates any such plan, then (upon expiration of any
appropriate transition period), the Continuing Employees shall be eligible to participate in Parent’s benefit plans and
vacation policies, in each case to the same extent as employees of Parent in similar positions
and at compensation grade levels. Notwithstanding the foregoing, for a period of one year following the Closing Date, Parent shall
ensure that each of the Continuing Employees shall, so long as such employee continues to remain employed with the Surviving
Corporation (or any of its Subsidiaries), continue to be paid base salary at no lower a rate than that in effect on the Closing Date
and be entitled to receive health, vacation, welfare and retirement benefits on terms, in the aggregate, at least as favorable as
those in effect on the Closing Date. Continuing Employees shall receive credit for service time as an employee of the Company for
purposes of eligibility to participate, vesting, and eligibility to receive benefits under any such Parent benefit plan and for
purposes of vacation accrual for service accrued or deemed accrued prior to the Effective Time. Additionally, any life, health and
disability benefits available to Continuing Employees and their eligible dependents under
Parent’s benefit plans shall not be subject to any insurability requirement or pre-existing condition exclusion that would not
apply to the corresponding benefit provided under a plan maintained by the Company or any of its Subsidiaries immediately prior to
the Effective Time. Parent shall further provide each Continuing Employee with credit for any co-payments and deductibles paid prior
to the Effective Time for the plan year in which the Effective Time occurs in satisfying any applicable deductibles or out-of-pocket
requirements under corresponding Parent benefit plans. Nothing in this Section 5.18 or elsewhere in this Agreement, shall be
construed to create a right in any employee to continuing employment.

	
             
  	
            5.19

 	
            
[Intentionally Omitted.]
 	
             

	
             
  	
            5.20

 	
            
[Intentionally Omitted.].
 
	
             
  	
            5.21

 	
            Fees and
Expenses.
 	
             

					

Whether or not the Merger is
consummated, all fees and expenses incurred in connection with the Merger, including, without limitation, all legal, accounting,
financial advisory, consulting and all other fees and expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby (“
Third Party Expenses”), shall be the obligation of the respective party incurring such
fees and expenses. The Company shall provide Parent with a statement of estimated Third Party Expenses incurred by the Company which
will not be paid prior to the Closing Date (“Company Third Party Expenses”)
at least five (5) business days

59 

prior to the Closing Date in form
reasonably satisfactory
to Parent (the “Statement of Expenses”).  The Company Third Party Expenses
shall reduce the Aggregate Merger Consideration in an amount equal to the quotient obtained by dividing such Company Third Party
Expenses by the Parent Common Stock Per Share Issue Price. Any Company Third Party Expense actually incurred in excess of the
Company Third Party Expenses reflected on the Statement of Expenses (“Excess Third Party Expenses
”), shall be subject to the indemnification provisions of Article VII and shall not be subject to the Basket.

5.22        Tax-Free Reorganization.
  Parent shall report the Merger as a reorganization within the meaning
of Section 368(a) of the Code and will not knowingly take any action or fail to take any action that would cause the Merger not to
qualify as such. 

5.23        Consulting Services. Parent shall make available to the Company for the
period commencing on the date hereof and ending on the Closing, the consulting services of Kevin Pendergest on terms and conditions
reasonably acceptable to the parties hereto and Mr. Pendergest.

 

ARTICLE VI

CONDITIONS TO THE TRANSACTION

	
             
  	
            6.1

 	
            
Conditions to Obligations of Each Party to Effect the Merger.
 

The respective obligations of
each party to this Agreement to effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:

(a)
    HSR Act; No Order. If applicable, all specified waiting
periods under the HSR Act shall have been terminated or expired and no Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger, substantially on the terms contemplated by this Agreement.

(b)
   Stockholder Approval. The Parent Stockholders’ Approval and
Company Stockholders’ Approval shall have been obtained by the requisite vote under the laws of the State of Delaware and the
Parent Charter Documents and the Company Charter Documents, as applicable, and an executed copy of an amendment to Parent’s
Certificate of Incorporation shall, in a form reasonably acceptable to Parent and the Company, have been filed with the Secretary of
State of the State of Delaware to be effective as of the Closing.

(c)
    Parent Common Stock. Holders of twenty percent (20%) or more
of the shares of Parent Common Stock issued in Parent’s IPO and outstanding immediately
before the Closing shall not have exercised their rights to convert their shares into a pro rata share of the Trust Fund in
accordance with Parent’s Charter Documents.

(d)
   Escrow Agreement. Parent, the Company, the Escrow Agent and the
Stockholders’ Representatives shall have executed and delivered the Escrow Agreement. 

60 

(e)
    The Significant Stockholder Lock-Up Agreement. Each
stockholder of the Company listed on Schedule 6.1(e)(the “Significant Stockholders”)  shall have executed and delivered a
lock-up agreement substantially in the form attached hereto as Exhibit C – 1
(the “Significant Stockholder Lock-Up Agreement
”). 

(f)
     The Founding Stockholder Lock-Up Agreement. Each
Founding Stockholder shall have executed and delivered a lock-up agreement substantially in the form attached hereto as 
Exhibit C -2  (the “Founding Stockholder
Lock-Up Agreement”). 

(g)
    Board Voting Agreement. Each of the Significant Stockholders
 and each of
the Founding Stockholders shall have executed and delivered the Board Voting Agreement. 

(h)
    Employment Agreements. The employment agreement between the
Company and/or Parent and Robert Wallace, substantially in the form attached hereto as Exhibit D
, shall have been executed and delivered.  

	
             
  	
            6.2

 	
            
Additional Conditions to Obligations of the Company.
 

The obligations of the Company
to consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:

(a)
    Representations and Warranties. Each representation and
warranty of Parent and Merger Sub contained in this Agreement that is qualified as to materiality shall have been true and correct
(i) as of the date of this Agreement and (ii) on and as of the
Closing Date with the same force and effect as if made on the Closing Date. Each representation and warranty of Parent contained in
this Agreement that is not qualified as to materiality shall have been true and correct (i) in all material respects as of the date
of this Agreement and (ii) in all material respects on and as of the
Closing Date with the same force and effect as if made on the Closing Date. The Company shall
have received a certificate with respect to the foregoing signed on behalf of Parent by an authorized officer of Parent (“
Parent Closing Certificate”).

(b)
   Agreements and Covenants. Each of Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, except to the extent that any failure to perform or comply (other than a
willful failure to perform or comply or failure to perform or comply with an agreement or covenant reasonably within the control of
Parent or Merger Sub) does not, or will not, constitute a Material Adverse Effect with respect to Parent or Merger Sub, and the
Parent Closing Certificate shall include a provision to such effect.

(c)
    No Litigation. No action, suit or proceeding shall be pending
before any Governmental Entity which is reasonably likely to (i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or
(iii) affect materially and adversely or otherwise encumber the title of the shares of Parent Common Stock to be issued by
Parent in

61 

connection with the Merger and no
order, judgment, decree, stipulation or injunction to any such effect shall be in effect.

(d)
   Consents. Parent and Merger Sub shall have obtained all consents,
waivers and approvals required to be obtained by Parent and Merger Sub in connection with the consummation of the transactions
contemplated hereby, other than consents, waivers and approvals the absence of which, either alone or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Parent or Merger Sub and the Parent Closing Certificate shall include a
provision to such effect.

(e)
    Material Adverse Effect. No Material Adverse Effect with
respect to Parent or Merger Sub shall have occurred since the date of this Agreement.

(f)
     Other Deliveries. At or prior to Closing, Parent shall
have delivered to the Company (i) copies of resolutions and actions taken by Parent’s board of directors and stockholders in
connection with the approval of this Agreement and the transactions contemplated hereunder, and (ii) such other documents or
certificates as shall reasonably be required by the Company and its counsel in order to consummate the transactions contemplated
hereunder.

(g)
    Opinion of Parent Counsel. The Company shall have received
from Powell Goldstein, counsel to Parent, an opinion of counsel in a form reasonably acceptable to the Company and its counsel.

(h)
    Opinion of Company Counsel. The Company shall have received
from McDermott Will & Emery LLP, counsel to the Company, an opinion of counsel to the effect that the Merger will be treated for
all Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code.  

(i)
     Trust Fund. Parent shall have made appropriate
arrangements with the Escrow Agent to have the Trust Fund, which shall contain no less than the amount referred to in Section 3.23,
disbursed to Parent immediately upon the Closing and there shall be no claim against such Trust Fund other than claims by holders of
Parent Common Stock for conversion in accordance with Parent’s Charter Documents.

(j)
     Registration Rights Agreement.  Parent and each Company
stockholder that is an affiliate of the Company for purposes of Rule 145(c) under the Securities Act shall have executed and
delivered a Registration Rights Agreement in a form reasonably acceptable to Parent and such Company stockholders providing for
demand and other registration rights for the resale of the shares of Parent Common Stock issued to such stockholders in the Merger
(the “Registration Rights Agreement”). 

(k)
    Parent Option Plan.  Parent shall have
established the Parent Option Plan, which shall be in a form reasonably acceptable to the Parent and the Company. 

(l)
     SEC Compliance.  Immediately prior to Closing, the
Proxy Statement/Prospectus shall be declared effective by the SEC and there shall be no stop order pending or threatened in
connection therewith. 

62 

(m)
  Co-Sale Agreement. Certain Significant Stockholders shall have executed
and delivered the co-sale agreement substantially in the form of Exhibit E attached
hereto (the “Co-Sale Agreement
”).

	
             
  	
            6.3

 	
            
Additional Conditions to the Obligations of Parent.
 

The obligations of Parent to
consummate and effect the Merger shall be subject to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent:

(a)
    Representations and Warranties. Each representation and
warranty of the Company contained in this Agreement that is qualified as to materiality shall have been true and correct (i) as of
the date of this Agreement (except to the extent such representation or warranty speaks to an earlier date, in which case as of such
earlier date) and (ii) on and as of the Closing Date (except to the
extent such representation or warranty speaks to an earlier date, in which case as of such earlier date) with the same force and
effect as if made on the Closing Date. Each representation and warranty of the Company contained in this Agreement that is not
qualified as to materiality shall have been true and correct (i) in all material respects as of
the date of this Agreement (except to the extent such representation or warranty speaks to an earlier date, in which case as of such
earlier date) and (ii) in all material respects on and as of the
Closing Date (except to the extent such representation or warranty speaks to an earlier date, in which case as of such earlier date)
with the same force and effect as if made on the Closing Date. Parent shall have received a certificate with respect to the
foregoing signed on behalf of the Company by an authorized officer of the Company (“Company Closing
Certificate”).

(b)
   Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by
it at or prior to the Closing Date, except to the extent that any failure to perform or comply (other than a willful failure to
perform or comply or failure to perform or comply with an agreement or covenant reasonably within the control of the Company) does
not, or will not, constitute a Material Adverse Effect on the Company, and the Company Closing Certificate shall include a provision
to such effect.

(c)
    No Litigation. No action, suit or proceeding shall be pending
before any Governmental Entity which is reasonably likely to (i) prevent consummation of any of the transactions contemplated by
this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii)
affect materially and adversely the right of Parent to own, operate or control any of the assets and operations of the Surviving
Corporation following the Merger and no order, judgment, decree, stipulation or injunction to any such effect shall be in effect.

(d)
   Dissenters’ Rights.  The aggregate number of shares of Company
Common Stock that are issued and outstanding immediately prior to the Effective Time and which are held by holders who have
exercised dissenters’ rights or provided notice of intent to exercise dissenters’ rights in accordance with the provisions
of Section 262 of the DGCL shall

63 

constitute less than five percent
(5%) of the shares of Company Common Stock outstanding as of the date of this Agreement.  

(e)
    Consents. The Company shall have obtained all consents,
waivers, permits and approvals required to be obtained by the Company in connection with the consummation of the transactions
contemplated hereby and set forth in Section 6.3(c) of the Company Disclosure
Schedule, other than consents, waivers and approvals the absence of which, either alone or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and the Company Closing Certificate shall include a provision to such
effect.

(f)
     Material Adverse Effect. No Material Adverse Effect
with respect to the Company and its Affiliates and Subsidiaries taken as a whole, shall have occurred since the date of this
Agreement.

(g)
    Opinion of Counsel. Parent shall have received from McDermott
Will & Emery LLP or Foley & Lardner (or both, as applicable), an opinion of counsel, in a form reasonably acceptable to
Parent and its counsel.

(h)
    Comfort Letters. Parent shall have received
“comfort” letters in the customary form from Singer Lewak, dated the date of distribution of the Proxy
Statement/Prospectus and the Closing Date (or such other date or dates reasonably acceptable to Parent) with respect to certain
financial statements and other financial information included in the Proxy Statement/Prospectus.

(i)
    [Intentionally Omitted]

(j)
    Other Deliveries. At or prior to Closing, the Company shall
have delivered to Parent: (i) copies of resolutions and actions taken by the Company’s board of directors and stockholders in
connection with the approval of this Agreement and the transactions contemplated hereunder, and (ii) such other documents and
certificates as shall reasonably be required by Parent and its counsel in order to consummate the transactions contemplated
hereunder. 

(k)
   Stockholder List. The Company shall have delivered to Parent, as of
the Closing Date, a true and complete list of all holders of Company Capital Stock and all holders of Company Options, Company
Warrants and any other rights to purchase Company Capital Stock as of the Closing Date including the number of shares held at the
Closing Date by each such holder and the address of each such holder certified by the Secretary of the Company.  

(l)
    [Intentionally Omitted]

(m)
  Stockholder Representatives. The Company shall have identified the
Stockholders’ Representatives and caused them to become a party to this Agreement and the Escrow Agreement.

(n)
   Fairness Opinion.  The Parent shall have received an opinion from a
nationally recognized financial advisor that the transactions contemplated by this Agreement are fair to the stockholders of Parent
from a financial point of view.   

64 

(o)
   Company Common Stock.  Immediately prior to the Closing, the
Company shall not have outstanding, on a fully-diluted basis, more than 19,500,000 shares of Company Common Stock (the “
Cap”).  For purposes of this section, “fully diluted
” shall mean the conversion of all Company Convertible Notes and any other convertibles securities and the
exercise or exchange of any securities that are exercisable or exchangeable for Company Common Stock. 

(p)
   Bring-Down Schedules.  The Company shall have delivered to Parent
the Bring-Down Schedules.

(q)
   Company Third Party Expenses. The Company shall have delivered to
Parent the Statement of Expenses certified by the Chief Executive Officer of the Company setting forth the Company Third Party
Expenses.

(r)
    Positive Working Capital.  The Company shall have a positive
working capital as of the end of the month immediately preceding the month in which the Effective Date occurs. 

 

ARTICLE VII

INDEMNIFICATION

	
             
  	
            7.1

 	
            
Indemnification.  
 

(a)
    Parent Indemnification..  Subject to the terms and conditions
of this Article VII (including, without limitation, the limitations set forth in Section 7.4), Parent and the Surviving Corporation
and their respective representatives, successors and permitted assigns (the “Parent Indemnitees
”) shall have the right to recover from the Escrow Agent out of the Escrow Fund, any and all Losses asserted
against, resulting to, imposed upon, or incurred by any Parent Indemnitee by reason of, arising out of or resulting from:

(i)
     the inaccuracy or breach of any representation or warranty of the
Company contained in Article II of this Agreement, or any certificate delivered by the Company to Parent pursuant to this Agreement
in connection with the Closing; 

(ii)
    the non-fulfillment or breach of any covenant or agreement of the Company
contained in this Agreement; and

(iii)
    the settlement of any claim made by a Dissenter for an appraisal of the value of
such Dissenting Shares pursuant to, and in accordance with, the provisions of the DGCL; provided, however, that in no event shall
Parent be entitled to recover Losses for Dissenter claims from more than five percent (5%) of the shares of any class of securities
of the Company outstanding immediately prior to the Effective Time and provided further that Parent shall be entitled to recover
Losses only to the extent the appraisal of the value of the Dissenting Shares exceeds the Parent Common Stock Per Share Issue Price.

65 

(b)
   Company Indemnification.  Subject to the terms and conditions of
this Article VII (including, without limitation, the limitations set forth in Section 7.4), the stockholders of the Company and
their respective representatives, successors and permitted assigns (the “Company Indemnitees
”) shall have the right to recover from Parent, any and all Losses asserted against, resulting to, imposed upon,
or incurred by any Company Indemnitee by reason of, arising out of or resulting from:

(i)
     the inaccuracy or breach of any representation or warranty of the
Parent or Merger Sub contained in Article III of this Agreement, or any certificate delivered by Parent or Merger Sub to Parent
pursuant to this Agreement in connection with the Closing; and

(ii)
    the non-fulfillment or breach of any covenant or agreement of Parent or
Merger Sub  contained in this Agreement. 

(c)
    As used in this Article VII, the term “Losses
” shall include all losses, liabilities, damages, judgments, awards, orders, penalties, settlements, costs and
expenses (including, without limitation, interest, penalties, court costs and reasonable legal fees and expenses) including those
arising from any demands, claims, suits, actions, costs of investigation, notices of violation or noncompliance, causes of action,
proceedings and assessments whether or not made by third parties or whether or not ultimately determined to be valid. Solely for the
purpose of determining the amount of any Losses (and not for determining any breach) for which any party may be entitled to
indemnification pursuant to Article VII, any representation or warranty contained in this Agreement
that is qualified by a term or terms such as “material,” “materially,” or “Material Adverse Effect”
shall be deemed made or given without such qualification and without giving effect to such words. Losses shall not be reduced by any
insurance purchased by Parent or the Company Indemnitees, as applicable, to indemnify it for breaches of representations and
warranties under this Agreement. 

	
             
  	
            7.2

 	
            
Indemnification of Third Party Claims.  
 

The indemnification obligations
and liabilities under this Article VII with respect to actions, proceedings, lawsuits, investigations, demands or other claims
brought against Parent or Company (as the case may be)  by a Person other than the Company or Parent (as the case may be)  (a “
Third Party Claim”) shall be subject to the following terms and conditions:

(a)
    Notice of Claim. In the case of Third Party Claims against
the Company,  Parent, acting through the Committee, will give the Stockholders’ Representatives or, in the case of Third Party
Claims against the Parent, the Stockholders’ Representatives will give the Parent prompt written notice after receiving written
notice of any Third Party Claim or discovering the liability, obligation or facts giving rise to such Third Party Claim (a “
Notice of Third Party Claim”) which Notice of Third Party Claim shall set forth
(i) a brief description of the nature of the Third Party Claim, (ii) the total amount of the actual out-of-pocket Loss or the
anticipated potential Loss (including any costs or expenses which have been or may be
reasonably incurred in connection therewith), and (iii) whether such Loss may be covered (in whole or in part) under any insurance
and the estimated amount of such Loss which may be covered under such insurance, and the Stockholders’ Representatives or the
Parent (as the case may be) shall be

66 

entitled to participate in the
defense of the Third Party Claim at their own expense (subject to Sections 1.11(b)(v)(D) and 7.7(a) hereof).

(b)
   Defense. The Stockholders’ Representatives or the Parent (as
the case may be) shall have the right, (subject to the limitations set forth in subsection 7.2(c) below) at their own expense
(subject to Sections 1.11(b)(v)(D) and 7.7(a) hereof), by written notice to Parent or the Stockholders’ Representatives (as the
case may be) to assume the entire control of, subject to the right of Parent or the Stockholders’ Representatives (as the case
may be) to participate (at its expense and with counsel of its choice) in, the defense, compromise or settlement of the Third Party
Claim as to which such Notice of Third Party Claim has been given, and shall be entitled to appoint counsel reasonably acceptable to
Parent or the Stockholders’ Representatives (as the case may be)  to be the lead
counsel in connection with such defense. If the Stockholders’ Representatives or Parent (as the case may be) elect to assume
the defense of a Third Party Claim:

(i)
     the Stockholders’ Representatives or Parent (as the case may
be), shall diligently and in good faith defend such Third Party Claim and shall keep Parent or the Stockholders’
Representatives (as the case may be)  reasonably informed of the status of such defense; provided, however, that in the case of any
settlement providing for remedies other than monetary damages for which indemnification is provided, Parent or the
Stockholders’ Representatives (as the case may be)  shall have the right to approve the settlement, which approval will not be
unreasonably withheld or delayed; and

(ii)
    Parent or the Stockholders’ Representatives (as the case may be) shall
cooperate fully in all respects with the Stockholders’ Representatives or Parent (as the case may be) in any such defense,
compromise or settlement thereof, including, without limitation, the selection of counsel, and Parent shall make available to the
Stockholders’ Representatives or Parent (as the case may be) all pertinent information and documents under its control.

(c)
    Limitations of Right to Assume Defense.  The
Stockholders’ Representatives or the Parent (as the case may be) shall not be entitled to assume control of such defense if: (i)
the Third Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or
investigation; (ii) the Third Party Claim seeks an injunction or equitable relief against Parent or the Stockholders’
Representatives (as the case may be); or (iii) there is a reasonable probability that a Third Party Claim may materially and
adversely affect Parent or the Stockholders’ Representatives (as the case may be) other than as a result of money damages or
other money payments.

(d)
   Other Limitations. Failure to give prompt Notice of Third Party
Claim or to provide copies of relevant available documents or to furnish relevant available data shall not affect the
Stockholders’ Representatives’ or Parent (as the case may be) duties or obligations under this Article VII, except to the
extent (and only to the extent that) such failure shall have (i) adversely affected the ability of the Stockholders’
Representatives or Parent (as the case may be) to defend against such Third Party Claim or reduce any liability caused, (ii)
increased such liability or (iii) otherwise caused the Losses claimed by Parent or the Stockholders’ Representatives (as the
case may be) to be greater than such Losses would have been had Parent or the Stockholders’

67 

Representatives (as the
case may be) given the Stockholders’ Representatives or Parent (as the case may be) prompt notice or copies of relevant
documents or data hereunder. So long as the Parent or the Stockholders’ Representatives (as the case may be) are defending any
such action actively and in good faith, Parent shall not settle such action. Parent shall make available to the Parent or the
Stockholders’ Representatives (as the case may be) all relevant records and other relevant materials required by them and in
the possession or under the control of Parent, for the use of the Parent or the Stockholders’ Representatives (as the case may
be) and its respective representatives in defending any such action, and shall in other respects give reasonable cooperation in such
defense. 

(e)
    Failure to Defend. If the Stockholders’ Representatives
or Parent (as the case may be), promptly after receiving a Notice of Third Party Claim, fail to defend such Third Party Claim
actively and in good faith, Parent or the Stockholders’ Representatives (as the case may be) will have the right to undertake
the defense, compromise or settlement of such Third Party Claim as it may determine in its reasonable discretion, provided that the
Stockholders’ Representatives or Parent (as the case may be) shall have the right to approve any settlement in which the Parent
or Stockholders’ Representatives (as the case may be) fail to secure a complete general release for Parent and the Company and
their respective Affiliates relating to such Third Party Claim, which approval will not be
unreasonably withheld or delayed.

(f)
     Indemnitor’s Rights. Anything in this Section 7.2
to the contrary notwithstanding, the no party hereto shall, without the written consent of the other, settle or compromise any
action or consent to the entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Parent Indemnitees or Company Indemnitees, as applicable, of a full and unconditional release from all
liability and obligation in respect of such action without any payment by Parent or the Stockholders’ Representatives (as the
case may be).

(g)
    Stockholders’ Representative Consent. Unless the
indemnifying party has consented to a settlement of a Third Party Claim, the amount of the settlement shall not be a binding
determination of the amount of the Loss and such amount shall be determined in accordance with the provisions of the Escrow
Agreement, if applicable.

	
             
  	
            7.3

 	
            Insurance
Effect.
 

To the extent that any Losses
that are subject to indemnification pursuant to this Article VII are covered by insurance, Parent shall use commercially reasonable
efforts to obtain the maximum recovery under such insurance; provided that Parent shall nevertheless be entitled to bring a claim
for indemnification under this Article VII in respect of such Losses and the time limitations set forth in Section 7.4 hereof for
bringing a claim of indemnification under this Agreement shall be tolled during the pendency of such insurance claim. The existence
of a claim by Parent for monies from an insurer or against a third party in respect of any Loss shall not, however, delay any
payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing. If Parent has
received the payment required by this Agreement from the Stockholders’ Representatives
or Former Stockholders in respect of any Loss and later receives proceeds from insurance or other amounts in respect of such Loss,
then it

68 

shall hold such proceeds or other
amounts in trust for the benefit of the Former Stockholders and shall pay to the Stockholders’ Representatives, as promptly as
practicable after receipt, a sum equal to the amount of such proceeds or other amount received, up to the aggregate amount of any
payments received from the Escrow Fund, if applicable, pursuant to this Agreement in respect of such Loss. Notwithstanding any other
provisions of this Agreement, it is the intention of the parties that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions, or (ii) relieved of the
responsibility to pay any claims for which it is obligated.

	
             
  	
            7.4

 	
            
Limitations on Indemnification.
 

(a)
    Survival; Time Limitation. The representations and warranties
in this Agreement or in any certificate or agreement delivered by one party hereto to the other party hereto pursuant to this
Agreement in connection with the Closing (including the certificate required to be delivered by the Company pursuant to Section
6.3(a)) shall survive until the earlier of the date that is (i) 90 calendar days following the receipt by Parent of the final
results of the audit of Parent’s consolidated operations for the year ended December 31, 2007 and (ii) the 18 month anniversary
of the Closing Date (the “Survival Period”). The covenants and agreements
contained herein shall survive the Closing without limitation as to time unless the covenant or
agreement specifies a term, in which case such covenant or agreement shall survive for such specified term.  The indemnification and
other obligations under this Article VII shall survive for the Survival Period and shall terminate with the expiration of such
Survival Period, except that: (i) any claims for breach of representation or warranty made by a party hereunder by filing a demand
for arbitration under Section 9.12 shall be preserved until final resolution thereof despite the subsequent expiration of the
Survival Period; and (ii) any claims set forth in a Notice of Third Party Claim sent prior to the expiration of such Survival Period
shall survive until final resolution thereof. No claim for indemnification under this Article VII shall be first asserted after the
end of the applicable Survival Period.

(b)
   Basket. No amount shall be payable under Article VII unless and
until the aggregate amount of all indemnifiable Losses otherwise payable exceeds three-quarters of one percent (.75%) of the
aggregate Merger Consideration in the aggregate (the “Basket”), in which
event the amount payable shall be for all such Losses (including all Losses included within the Basket). Notwithstanding anything
contained herein to the contrary, the Basket will not be applicable to, and all such claims shall be indemnified from the first
dollar of Loss, incurred (i) by Parent for Excess Third Party Expenses or (ii) by any indemnitee for claims arising from actual
fraud, willful misrepresentation or willful misconduct.

(c)
    Aggregate Amount Limitation. The aggregate liability for
Losses pursuant to Section 7.1(a) shall not in any event exceed the Escrow Fund (the “Company Liability
Cap”) and no Parent Indemnitee shall have any claim against any of the Former Stockholders or other
former equity holders of the Company other than for sole recourse to the Escrow Fund (including any earnings thereon) provided that
such limitations shall not apply (i) in the case of claims arising from fraud, willful misrepresentation or willful misconduct, or
(ii) to any Excess Third Party Expenses.  Notwithstanding anything herein to the contrary, Parent’s recovery hereunder in
connection with any fraud, willful misrepresentation or willful misconduct shall not exceed the
Aggregate Merger Consideration.  The aggregate liability for Losses pursuant to Section 7.1(b)

69 

shall not in any event exceed an
amount equal to ten percent of the Aggregate Merger Consideration (the “Parent Liability
Cap”) and no Company Indemnitee shall have any claim against the Parent or Merger Sub other than as set
forth in this Article VII provided that such limitations shall not apply in the case of claims arising from actual fraud, willful
misrepresentation or willful misconduct.

 (d)
    No Claim Against Trust Fund.  Notwithstanding anything to the
contrary, in no event shall a Company Indemnitee have any rights or claims against the Trust Fund unless and until the transactions
contemplated by this Agreement are consummated and the Trust Fund is released in accordance with the terms thereof.  In the event
this Agreement is terminated prior to the consummation of the Merger by any party, no Company Indemnitee shall have a claim against
the Trust Fund for any reason whatsoever.

 

	
             
  	
            7.5

 	
            Exclusive
Remedy.
 

The parties hereby acknowledges
and agrees that, from and after the Closing, their sole and exclusive remedy with respect to any and all claims, whether direct,
third party or otherwise, for money damages arising out of or relating to this Agreement shall be pursuant and subject to the
requirements of the indemnification provisions set forth in this Article VII. Notwithstanding anything herein to the contrary (i)
nothing contained in this Article VII shall in any way impair, modify or otherwise limit the right of any party hereto to bring any
claim, demand or suit against the other party based upon such other party’s actual fraud or intentional misrepresentation, it
being understood that a mere breach of a representation and warranty, unless conclusively established to have been intentional or
willful misrepresentation or omission, does not constitute fraud, and (ii) the Parent
Indemnitees’ or Company Indemnitees’, as applicable,  recovery hereunder in connection with any fraud or intentional
misrepresentation shall not in any event exceed the Aggregate Merger Consideration.  

	
             
  	
            7.6

 	
            Damages;
Adjustment to Merger Consideration.
 

Amounts paid for indemnification
under this Article VII shall reduce the Aggregate Merger Consideration received by the Company’s stockholders.

	
             
  	
            7.7

 	
            
Representative Capacities; Application of Escrow Fund.
 

(a)
    The parties acknowledge that the Stockholders’ Representatives’ obligations
under this Article VII are solely as representatives of the Former Stockholders in the manner set forth in the Escrow Agreement with
respect to the obligations to indemnify Parent under this Article VII and that the Stockholders’ Representatives shall have no
personal responsibility for any expenses incurred by the Stockholders’ Representatives in such capacity and that all payments
to Parent as a result of such indemnification obligations shall be made solely from, and to the extent of, the Escrow Fund.  The
parties further acknowledge that all actions to be taken by Parent pursuant to this Article VII shall be taken on its behalf by the
Committee in accordance with the provisions of the Escrow Agreement. The Escrow Agent,
pursuant to the Escrow Agreement after the Closing, may apply all or a portion of the Escrow Fund to satisfy any claim for
indemnification pursuant to this Article VII. The Escrow Agent will hold the remaining portion of the Escrow Fund until final
resolution of all claims for indemnification or disputes relating thereto.

70 

(b)
   Upon the expiration of the Survival Period, the Escrow Agent shall release the Escrow Fund, or
the remaining balance in the manner set forth in the Escrow Agreement, to the Former Stockholders on a pro-rata basis, subject to
any shares reserved (in the manner provided for in the following sentence) to address unresolved claims for indemnification
submitted prior to the expiration of the Survival Period. To the extent that claims for indemnification submitted prior to the
expiration of the Survival Period remain unresolved as of such date, the Escrow Agent shall reserve and not pay to the Former
Stockholders an amount intended to satisfy such claims when finally resolved, which amount shall be determined in the following
manner: (i) to the extent that the amount of the claim is included in the notice provided pursuant to 7.1 or
7.2, as the case may be, such amount plus an amount reasonably estimated by the Parent Indemnitees to provide reimbursement for
reasonable costs and expenses incurred in resolving such claim shall be reserved until the final resolution and payment of such
claim, and (ii) to the extent that the amount of the claim remains unknown, an amount reasonably estimated by the Parent Indemnitees
as providing adequate recourse for satisfaction of the final amount of the claim, plus an amount reasonably estimated by the Parent
Indemnitees to provide reimbursement for reasonable costs and expenses incurred in resolving such claim shall be reserved until the
final resolution and satisfaction of such claim. As outstanding claims are resolved, reserves in excess of the amounts withheld with
respect to all claims remaining unresolved shall be released to the Former Stockholders as provided for in this Section 7.7(b).  All
Parent Common Stock held in the Escrow Fund shall be valued at the Parent Common
Stock Per Share Issue Price for purposes of establishing the number of shares of Parent Common Stock to be released from the Escrow
Fund to Parent in satisfaction of any Losses or in connection with establishing any reserves for unresolved claims. 

ARTICLE VIII

TERMINATION

	
             
  	
            8.1

 	
            
Termination.
 

This Agreement may be terminated
at any time prior to the Closing:

(a)
   by mutual written agreement of Parent and the Company at any time;

(b)
   by either Parent or the Company if a Governmental Entity shall have issued an order, decree or
ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;

(c)
    by the Company, upon a material breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if any representation or warranty of Parent or Merger
Sub shall have become untrue, in either case such that the conditions set forth in Article VI would not be satisfied as of the time
of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such breach by Parent
or Merger Sub is curable by Parent or Merger Sub prior to the Closing Date, then the Company may not terminate this Agreement under
this Section 8.1(c) for thirty (30) days after delivery of written notice from the Company to Parent of such breach, provided Parent
continues to exercise commercially reasonable efforts to cure such breach (it being
understood

71 

that the Company may not terminate
this Agreement pursuant to this Section 8.1(c) if it shall have materially breached this Agreement or if such breach by Parent or
Merger Sub is cured during such thirty (30) day period);

(d)
   by the Company, if the Company Board elects to pursue a Superior Proposal in accordance with
Section 5.16;

(e)
    by Parent, upon a material breach of any representation, warranty, covenant or agreement
on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become
untrue, in either case such that the conditions set forth in Article VI would not be satisfied as of the time of such breach or as
of the time such representation or warranty shall have become untrue, provided, that if such breach by the Company is curable by the
Company prior to the Closing Date, then Parent may not terminate this Agreement under this Section 8.1(e) for thirty (30) days after
delivery of written notice from Parent to the Company of such breach, provided the Company continues to exercise commercially
reasonable efforts to cure such breach (it being understood that Parent may not terminate this
Agreement pursuant to this Section 8.1(e) if it shall have materially breached this Agreement or if such breach by the Company is
cured during such thirty (30) day period);

(f)
     by the Company, if the Company’s stockholders decline to approve the
transactions contemplated by this Agreement, by giving Parent ten business days prior written notice thereof; provided, the Company
may not terminate this Agreement pursuant to this Section 8.1(f) if the Company Board has not at all times approved and recommended
the Merger and this Agreement and the transactions contemplated hereby

(g)
    by either Parent or the Company, if, at the Parent Stockholders’ Meeting (including
any adjournments thereof), this Agreement and the Merger shall fail to be approved and adopted by the affirmative vote of the
holders of Parent Common Stock required under Parent’s certificate of incorporation, or the holders of 20% or more of the
number of shares of Parent Common Stock issued in Parent’s initial public offering and outstanding as of the date of the record
date of the Parent Stockholders’ Meeting exercise their rights to convert the shares of Parent Common Stock held by them into
cash in accordance with Parent’s certificate of incorporation (“Conversion Rights”)
; provided, in each case Parent may not terminate this Agreement pursuant to this
Section if the Parent Board has not at all times approved and recommended the Merger and this Agreement and the transactions
contemplated hereby; 

(h)
    by either Parent or the Company if the Closing Date shall not have occurred by October
31, 2007 (the “Termination Date”); provided, however, that the Termination
Date shall be advanced by one business day for each day the Company delivers the Historical Audits prior to December 15, 2006;

(i)
     by Parent, if the Company fails to deliver the Historical Audits on or before
December 15, 2006; provided that Parent notifies the Company of its intention to so terminate on or before December 31, 2006; or

(j)
     by Parent, if (i) the annualized consolidated revenue of the Company (together
with any Acquisition Candidates) based on the trailing twelve-month period ending on

72 

December 31, 2006 is less than
$48,000,000 (the “Revenue Target”) or (ii) the annualized consolidated
hospital EBITDA for the Company (together with any Acquisition Candidates) based on the trailing twelve-month period ending on
December 31, 2006 is less than $8,150,000 (the “EBITDA Target” and together
with the Revenue Target, the “Targets”), which right shall be exercisable
within 5 business days after: (A) the Company notifies Parent (the “Company
Notice”) that the Company does not reasonably believe that it will meet one or both of the Targets,
which Company Notice shall include a good faith estimate as to the amount by which the Company will fall short of either or both
Targets as of December 31, 2006; or (B) March 31, 2007 if either or both of the Targets are not met due to the failure by the
Company to complete the acquisition of one or more Acquisition Candidates (except to the extent that the amount of the shortfall was
previously disclosed in a Company Estimate and Parent did not terminate pursuant to clause (A) above).  

	
             
  	
            8.2

 	
            Notice of
Termination; Limited Remedy.
 

Any termination of this
Agreement under Section 8.1 above will be effective immediately upon (or, if the termination is pursuant to Section 8.1(c) or
Section 8.1(e) and the proviso therein is applicable, thirty (30) days after) the delivery of written notice of the terminating
party to the other parties hereto. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement
shall be of no further force or effect and the Merger shall be abandoned, except for and subject to the following: (i) Sections
5.8(a), 8.2, 8.4 and Article IX (General Provisions) shall survive the termination of this Agreement. The sole remedy of any party
hereto for breach of this Agreement occurring prior to Closing by any other party hereto shall be limited to termination of this
Agreement, and no party shall have any claim against the other for damages for breach of this Agreement occurring prior to the
Closing; provided, however, that Parent shall retain the right to the Termination Fee on the terms and conditions set forth in
Section 8.4. Notwithstanding the foregoing, the parties may sue for and obtain specific performance or injunctive relief; provided
that, the Company shall not be entitled to sue for and obtain specific performance if Parent does not obtain the Parent Stockholder
Approval at the Parent Stockholders’ Meeting or twenty percent (20%) or more of the holders of Parent Common Stock exercise
their Conversion Rights. 

	
             
  	
            8.3

 	
            
[Intentionally Omitted.]
 
	
             
  	
            8.4

 	
            
Termination Fee.
 	
             

If the Company terminates this
Agreement under Section 8.1(d)  and enters into a definitive agreement with respect to a Superior Proposal within twelve months of
such termination, as a condition to entering into a definitive agreement with respect to a Superior Proposal, the Company shall pay
to Parent, upon entering into such definitive agreement, a fee in the amount of $5,000,000 plus reimbursement of documented
reasonable out of pocket costs and expenses incurred by Parent in pursuing the transactions contemplated hereby (the “
Termination Fee”). The Company expressly acknowledges and agrees that the agreements
set forth in this Section 8.4 are an integral part of the transactions contemplated by this Agreement and that, without these
agreements, Parent would not have entered into this Agreement. The amounts payable pursuant to
this Section constitute liquidated damages and not a penalty and

73 

shall be the sole monetary remedy in
the event of termination of this Agreement on the bases specified in this Section. 

 

ARTICLE IX

GENERAL PROVISIONS

	
             
  	
            9.1

 	
            Notices.

 

All notices and other
communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or
sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):

if to Parent, to:

Echo Healthcare Acquisition Corp.

8000 Towers Crescent Drive

Suite 1300

Vienna, Virginia 22102

	
             

 	
            Attention:

 	
            Gene E.
Burleson
 
	
             

 	
            Telephone:

 	
            703-448-7688

 	
             

	
             

 	
            Facsimile:

 	
            703-288-0070

 	
             

 

with a copy to:

Powell Goldstein LLP 

One Atlanta Center

1201 West Peachtree Street, NW

Atlanta, Georgia 30309

Attention:  Rick Miller

Telephone: 404-572-6600

Facsimile:  404-572-6999

 

if to the Company to: 

XLNT Veterinary Care, Inc.

560 South Winchester Blvd.

Suite 500

San Jose, California  95128

	
             

 	
            Attention:

 	
            Robert
Wallace
 
	
            
 
 	
            Telephone:

 	
            408-236-7422

 	
             

	
            
 
	
            Facsimile:

	
            408-236-7421

	
             

 

	
            
 
 	
            
with a copy to:
 

 

	
            
 
 	
            
McDermott Will & Emery LLP
 	
             

	
            
 
 	
            
340 Madison Avenue
 	
             

	
            
 
 	
            
New York, New York 10173-1922
 
	
            
 
 	
            Attention:

 	
            Joel L.
Rubinstein
 	
             

	
            
 
 	
            Telephone:

 	
            212-547-5400

 	
             

	
            
 
 	
            Facsimile:

 	
            212-547-5444

 	
             

							

74 

 

	
             
  	
            9.2

 	
            
Interpretation.
 

When a reference is made in this
Agreement to an Exhibit or Schedule, such reference shall be to an Exhibit or Schedule to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections or subsections, such reference shall be to a Section or subsection of this
Agreement. Unless otherwise indicated the words “include,” “includes” and “including” when used herein
shall be deemed in each case to be followed by the words “without limitation” unless preceded by a negative predicate. The
table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to “the business of” an entity, such reference
shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity. For purposes of this Agreement:

(a)
    the term “affiliate” means, as
applied to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control
with, such Person. For purposes of this definition, “control” (including with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise; 

(b)
   the term “Governmental Entity” shall
mean any court, administrative agency, tribunal, department, bureau or commission or other governmental authority, instrumentality
or arbitral body, domestic or foreign, federal, state or local.

(c)
    the term “knowledge” (including
any derivation thereof such as “known” or “
knowing”) shall mean the actual knowledge of (i) Gene Burleson, Joel Kanter and Kevin Pendergest, in
the case of Parent’s knowledge and (ii) Robert Wallace, in the case of the Company’s knowledge 
and in the case of any of the foregoing, the knowledge that such Person or Persons would have obtained of the matter
represented after reasonable due and diligent inquiry of those employees and agents of such Person whom such Person reasonably
believes would have actual knowledge of the matters represented. 

 

(d)
   the term “Legal Requirements” means
any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity;

75 

(e)
    the term “Lien” means any
mortgage, pledge, security interest, encumbrance, lien, restriction or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature thereof, any sale with recourse against the seller or any
Affiliate of the seller, or any agreement to give any security interest);

(f)
     the term “Material Adverse Effect
” when used in connection with an entity means any change, event, circumstance, conditions, occurrences,
developments or effects, individually or when aggregated with other changes, events, circumstances, conditions, occurrences,
developments or effects, that is materially adverse to the business, properties, assets, liabilities, condition (financial or
otherwise) or results of operations of such entity, it being understood that none of the following alone or in combination shall be
deemed, in and of itself, to constitute a Material Adverse Effect: 

(i)
    changes in GAAP or applicable Laws after the date hereof;

(ii)
    any SEC rulemaking requiring enhanced disclosure of reverse merger
transactions with a public shell;

 

(iii)
   changes, events, circumstances, conditions, occurrences, developments or effects
resulting from the announcement of the execution of this Agreement or of the pendency of the Merger;

 

(iv)
   changes, events, circumstances, conditions, occurrences, developments or effects
resulting from compliance by the Company or Parent with the terms of, or the taking of any action specifically required to be taken
in, this Agreement (other than the consummation of the Merger itself);

 

(v)
    changes in economic, financial, credit or securities markets, or political
conditions generally, except to the extent such changes have a materially disproportionate adverse effect on the Company and its
Subsidiaries or Parent as compared to others engaged in the same businesses; 

 

(vi)
    any act of terrorism or war (whether or not declared); or

 

(vii)
  changes affecting generally the industries in which the Company and its Subsidiaries or
Parent conduct business, except to the extent such changes have a materially disproportionate adverse effect on the Company and its
Subsidiaries or Parent as compared to others engaged in the same businesses. 

 

(g)
    the term “Permitted Lien” shall
mean (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings,
(ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not
yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and
other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or
that are being contested in good faith by appropriate 

76 

proceedings or (iv) any Lien
that does not materially detract from the value of the property or asset or materially impair the operations of the entity or
materially
interfere with the use of such property or asset.

(h)
    the term “Permitted Financing”
shall mean any issuance of securities by the Company (including securities exercisable or exchangeable for, or convertible into,
Company Common Stock) that would not exceed the Cap determined as of the Closing, provided that (i) any equity security convertible
into Company Common Stock shall have a conversion price of at least $4.75 and (ii) any debt security convertible into Company Common
Stock shall have a conversion price of at least $5.50, except for warrants issued as a yield enhancement or mezzanine debt.

(i)
     the term “Person” shall
mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other
enterprise, association, organization, entity or Governmental Entity;

(j)
     all monetary amounts set forth herein are referenced in United States dollars,
unless otherwise noted.

	
             
  	
            9.3

 	
            
Counterparts; Facsimile Signatures.
 

This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not
sign the same counterpart. Delivery by facsimile to counsel for the other party of a counterpart executed by a party shall be deemed
to meet the requirements of the previous sentence.

	
             
  	
            9.4

 	
            Entire
Agreement; Third Party Beneficiaries.
 

This Agreement and the documents
and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Exhibits and
Schedules hereto (a) constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter
hereof and thereof (including the Letter of Intent dated September 1, 2006, by and between Parent and the Company); and (b) are not
intended to confer upon any other person any rights or remedies hereunder (except as specifically provided in this Agreement).

	
             
  	
            9.5

 	
            
Severability.
 

In the event that any provision
of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provisions of this Agreement with a valid and enforceable provision that will achieve, to the

77 

greatest extent possible, the
economic, business and other purposes of such void or unenforceable provision.

	
             
  	
            9.6

 	
            Other
Remedies; Specific Performance.
 

Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy; provided, however, that no party will be entitled to cumulative awards of damages. The parties hereto
agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.

	
             
  	
            9.7

 	
            Governing
Law.
 

This Agreement shall be governed
by and construed in accordance with the law of the State of Delaware regardless of the law that might otherwise govern under
applicable principles of conflicts of law thereof.

	
             
  	
            9.8

 	
            Rules of
Construction.
 

The parties hereto agree that
they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application
of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.

	
             
  	
            9.9

 	
            
Assignment.
 

No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Subject
to the first sentence of this Section 9.9, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

	
             
  	
            9.10

 	
            
Amendment.
 

This Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed on behalf of each of the parties.

	
             
  	
            9.11

 	
            
Extension; Waiver.
 

At any time prior to the
Closing, any party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (iii) waive

78 

compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Delay in exercising
any right under this Agreement shall not constitute a waiver of such right.

	
             
  	
            9.12

 	
            Dispute
Resolution.
 

(a)
    In the event of a dispute hereunder or relating to the transactions contemplated hereby,
including under or with respect to any of the agreements to be executed and delivered pursuant hereto, arbitration will be the sole
and exclusive method of resolving the dispute, except that a party may seek a preliminary injunction, temporary restraining order,
or other preliminary judicial relief if, in its judgment, the action is necessary to avoid irreparable damage or harm.

(b)
   The arbitrator will consist of any person who is mutually acceptable to the parties to the
dispute. However, if the parties are unable to agree on a single arbitrator, an arbitration panel of three arbitrators will be
selected as provided below. Each party (Parent and Merger Sub, on the one hand, and Company and the Former Stockholders through the
Stockholders’ Representatives, on the other hand), shall select one arbitrator, within 10 days from the date one party advises
the other party that it cannot agree on a single arbitrator, and the third arbitrator shall be selected by the two chosen by the
parties within 10 days of such two arbitrators being chosen. Every arbitrator must be independent (not a party to this Agreement or
a lawyer or relative to a party to this Agreement or an agent, officer, director, employee,
shareholder or Affiliate of a party to or a relative of any of those persons) without any economic or financial interest of any kind
in the outcome of the arbitration. Each arbitrator’s conduct will be governed by the rules of the American Arbitration
Association. The arbitration will be conducted in Wilmington, Delaware, in accordance
with the rules of the American Arbitration Association and the discovery rules of the Delaware Rules of Civil Procedure. The
arbitrator or arbitration panel will use reasonable efforts to cause the arbitration to be concluded as soon as practicable. The
arbitrators shall not be empowered to award punitive damages. The arbitrator’s or arbitrators’ fees shall be shared
equally by the parties unless the arbitrator or arbitration panel shall determine that the non-prevailing party in such arbitration
shall pay the entire or a disproportionate amount of such fees.

(c)
    The arbitrator or a majority of the arbitration panel shall render its decision in
writing within thirty (30) days after the conclusion of the hearing. The decision of the arbitrator arbitration panel will be final,
binding and conclusive as to all the parties and the decision of the arbitrator or arbitration panel will not be subject to appeal,
review or re-examination, except for willful misconduct by an arbitrator that prejudices the rights of any party to the arbitration.
Any party may enforce the arbitration award in any state or federal court located in the State of Delaware.

(d)
   The prevailing party in any dispute shall be entitled to recover from the other party all of
its costs and expenses incurred in connection with the enforcement of its rights hereunder or thereunder, including reasonable
attorneys’ fees and costs incurred before and at arbitration, at any other proceeding, at all tribunal levels and whether or
not suit or any other proceeding is brought.

79 

(e)
    In the case of any dispute involving the holders of Company Capital Stock and/or holders
of any Company Options after the Closing Date, the Stockholders’ Representatives shall have all absolute and sole authority
acting in their sole and absolute discretion and judgment to act on behalf of and bind all of the stockholders and/or holders of any
Company Options, on all matters directly or indirectly related to or arising under this Agreement and the Escrow Agreement or any
other agreement or matter related thereto. By execution of this Agreement, the Stockholders’ Representatives agree to be bound
by and comply with all of the terms of this Agreement and the Escrow Agreement as if a signatory thereto.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY
LEFT BLANK.]

80 

IN WITNESS WHEREOF
, the parties hereto have caused this Agreement and Plan of Merger to be executed as of the date first written
above.

 

ECHO HEALTHCARE ACQUISITION CORP.

 

 

 

By: 
/s/ Gene E. Burleson                                          
                                    

Title: Chief Executive Officer

 

 

PETDRX ACQUISITION COMPANY

 

 

 

By: 
/s/ Joel Kanter                                          
                                    

Title: President 

 

XLNT VETERINARY CARE INC.

 

 

 

By: 
/s/ Robert Wallace                                          
                                    

Title: Chief Executive Officer

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