Document:

EXHIBIT 10.1

                                  __________

                        CEO EXECUTIVE SERVICES AGREEMENT

                                     AMONG:

                      NATURALLY ADVANCED TECHNOLOGIES INC.

                                      AND:

                           THE MERIWETHER GROUP, INC.

                      NATURALLY ADVANCED TECHNOLOGIES INC.
       1307 Venables Street, Vancouver, British Columbia, Canada, V5L 2G1
                                   __________

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                        CEO EXECUTIVE SERVICES AGREEMENT

         THIS CEO EXECUTIVE  SERVICES  AGREEMENT is made and dated for reference
effective as at August 15, 2006 (the "EFFECTIVE DATE") as fully executed on this
_____ day of __________, 2006.

BETWEEN:

         NATURALLY ADVANCED  TECHNOLOGIES INC., a company incorporated under the
         laws of the  Province  of  British  Columbia,  Canada,  and  having  an
         executive office and an address for notice and delivery located at 1307
         Venables Street, Vancouver, British Columbia, Canada, V5L 2G1

         (the "COMPANY");
                                                               OF THE FIRST PART

AND :

         THE MERIWETHER GROUP,  INC., a company  incorporated  under the laws of
         the State of  Oregon,  U.S.A.,  and  having an  address  for notice and
         delivery located at Suite 435, 2701 NW Vaughn Street, Portland, Oregon,
         U.S.A., 97210

         (the "EXECUTIVE'S COMPANY");
                                                              OF THE SECOND PART

         (the Executive's  Company and the Company being hereinafter  singularly
         also  referred  to as a "PARTY"  and  collectively  referred  to as the
         "PARTIES" as the context so requires).

         WHEREAS:

A.       The Company  is a reporting company incorporated under  the laws of the
Province of British Columbia,  Canada,  whose common shares are presently listed
for trading on the United States Over-the-counter Bulletin Board market;

B.       Ken Barker, the present Chief Executive Officer  and a Director of  the
Company  (the  "Executive"),  and the  Executive's  Company,  which is owned and
controlled by the Executive (the Executive and the Executive's  Company,  being,
collectively,  the "EXECUTIVE GROUP" herein),  have experience in and specialize
in providing  reporting and  non-reporting  companies  with  valuable  corporate
management services;

C.       The Company  and its various subsidiaries are  principally  involved in
the product-focused business of specializing in the market and sale of a line of
hemp/cotton   activewear,   including   T-shirts,   sweatshirts,   golf  shirts,
button-down  shirts and ball caps,  to  wholesalers  for  imprinting  as well as
directly to consumers  (collectively,  the  "BUSINESS");  and, as a  consequence
thereof, the Company is hereby desirous of continuing to retain the Executive as
the Chief  Executive  Officer  of the  Company,  together  with the  Executive's
Company  as a  consultant  to the  Company  and  to any or all of the  Company's
subsidiaries, as the case may be, and the Executive Group is hereby desirous of

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accepting such positions in order to provide such corporate  management  related
services to the Company and its various subsidiaries as may be necessary for the
ongoing   maintenance   and   development  of  the  Company's  and  its  various
subsidiaries'  respective  Business  interests  during the  continuance  of this
agreement (collectively, the "GENERAL SERVICES");

D.       Since the  introduction  of  the  Parties  hereto  the  Parties  hereby
acknowledge  and agree that there have been various  discussions,  negotiations,
understandings  and agreements between them relating to the terms and conditions
of the General Services and, correspondingly,  that it is their intention by the
terms and conditions of this agreement (the  "AGREEMENT") to hereby replace,  in
their entirety,  all such prior  discussions,  negotiations,  understandings and
agreements with respect to the General Services; and

E.       The Parties  hereto have  agreed  to enter into  this  Agreement  which
replaces,   in  its  entirety,   all  such  prior   discussions,   negotiations,
understandings and agreements,  and,  furthermore,  which necessarily  clarifies
their  respective  duties and  obligations  with  respect to the within  General
Services  to be  provided  hereunder,  all in  accordance  with  the  terms  and
conditions of this Agreement;

         NOW THEREFORE THIS AGREEMENT  WITNESSETH  that, in consideration of the
mutual  covenants and provisos  herein  contained,  THE PARTIES  HERETO AGREE AS
FOLLOWS:

                                    ARTICLE 1
                         DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS.  For all purposes of this Agreement, except  as  otherwise
expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:

         (a)      "AGREEMENT"  means this CEO  Executive  Services  Agreement as
                  from  time  to time  supplemented  or  amended  by one or more
                  agreements entered into pursuant to the applicable  provisions
                  hereof, together with any Schedules attached hereto;

         (b)      "BOARD  OF  DIRECTORS"  means the  Board of  Directors  of the
                  Company as duly constituted from time to time;

         (c)      "BUSINESS"  has the  meaning  ascribed  to it in recital  "C."
                  hereinabove.

         (d)      "BUSINESS DAY" means any day during which  Canadian  Chartered
                  Banks are open for business in the City of Vancouver, Province
                  of British Columbia, Canada;

         (e)      "COMPANIES" means the Company and each of its subsidiaries;

         (f)      "COMPANY"  means  Naturally  Advanced   Technologies  Inc.,  a
                  company incorporated under the laws of the Province of British
                  Columbia,  Canada, or any successor  company,  however formed,
                  whether as a result of merger, amalgamation or other action;

         (g)      "COMPANY'S  NON-RENEWAL NOTICE" has the meaning ascribed to it
                  in section "3.2" hereinbelow;

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                                      -3-

         (h)      "DATE OF GRANT"  has the  meaning  ascribed  to it in  section
                  "4.3" hereinbelow;

         (i)      "DELIVERABLES" has the meaning ascribed to it in section "4.3"
                  hereinbelow;

         (j)      "EFFECTIVE  DATE" has the meaning ascribed to on the face page
                  of this Agreement;

         (k)      "EFFECTIVE TERMINATION DATE" has the meaning ascribed to it in
                  each  of  sections  "3.3",   "3.4",  "3.5",  "3.6"  and  "5.6"
                  hereinbelow;

         (l)      "EXCHANGE ACT" has the meaning ascribed to it in section "4.3"
                  hereinbelow;

         (m)      "EXECUTIVE" means Ken Barker;

         (n)      "EXECUTIVE  GROUP"  means the  Executive  and the  Executive's
                  Company;

         (o)      "EXECUTIVE  GROUP MATERIALS" has the meaning ascribed to it in
                  section "5.7" hereinbelow;

         (p)      "EXECUTIVE'S  COMPANY"  means The  Meriwether  Group,  Inc., a
                  company  incorporated  under the laws of the State of  Oregon,
                  U.S.A.,, or any successor company,  however formed, whether as
                  a result of merger, amalgamation or other action;

         (q)      "EXERCISE  TERM" has the  meaning  ascribed  to it in  section
                  "4.3" hereinbelow;

         (r)      "EXPENSES"  has the meaning  ascribed  to it in section  "4.2"
                  hereinbelow;

         (s)      "FEE"  has  the  meaning  ascribed  to  it  in  section  "4.1"
                  hereinbelow;

         (t)      "FORM S-8 REGISTRATION  STATEMENT" has the meaning ascribed to
                  it in section "4.3" hereinbelow;

         (u)      "GENERAL  SERVICES" has the meaning  ascribed to it in section
                  "2.1" hereinbelow;

         (v)      "INDEMNIFIED  PARTY" has the meaning ascribed to it in section
                  "6.1" hereinbelow;

         (w)      "INITIAL  VESTING  DATE"  has the  meaning  ascribed  to it in
                  section "4.3" hereinbelow;

         (x)      "NOTICE OF TERMINATION" has the meaning ascribed to it in each
                  of sections "3.3", "3.4", "3.5" and "5.6" hereinbelow;

         (y)      "OPTION"  has the  meaning  ascribed  to it in  section  "4.3"
                  hereinbelow;

         (z)      "OPTION PLAN" has the meaning  ascribed to it in section "4.3"
                  hereinbelow;

         (aa)     "OPTION  SHARES"  has the  meaning  ascribed  to it in section
                  "4.3" hereinbelow;

         (ab)     "PARTIES" or "PARTY" means, individually and collectively, the
                  Company,  and/or the  Executive  and the  Executive's  Company
                  hereto,  as the  context so  requires,  together  with each of
                  their  respective  successors  and  permitted  assigns  as the
                  context so requires;

         (ac)     "PROPERTY"  has the meaning  ascribed  to it in section  "5.7"
                  hereinbelow;

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         (ad)     "REGISTRATION  STATEMENT"  has the  meaning  ascribed to it in
                  section "4.3" hereinbelow;

         (ae)     "REGULATORY  APPROVAL"  means the  acceptance  for filing,  if
                  required,  of the transactions  contemplated by this Agreement
                  by the Regulatory Authorities;

         (af)     "REGULATORY  AUTHORITIES"  and "REGULATORY  AUTHORITY"  means,
                  either  singularly or collectively as the context so requires,
                  such  regulatory  agencies  who  have  jurisdiction  over  the
                  affairs of either of the Companies  and/or the Executive Group
                  and including,  without limitation, all regulatory authorities
                  from whom any such authorization,  approval or other action is
                  required to be obtained or to be made in  connection  with the
                  transactions contemplated by this Agreement;

         (ag)     "SEC"  has  the  meaning  ascribed  to  it  in  section  "4.3"
                  hereinbelow;

         (ah)     "SECURITIES  ACT" has the  meaning  ascribed  to it in section
                  "4.3" hereinbelow;

         (ai)     "SUBSIDIARY" means any company or companies of which more than
                  50% of the  outstanding  shares  carrying  votes at all  times
                  (provided  that the ownership of such shares confers the right
                  at all times to elect at least a majority of the  directors of
                  such company or companies)  are for the time being owned by or
                  held  for  that  company  and/or  any  other  company  in like
                  relation  to that  company  and  includes  any company in like
                  relation to the subsidiary; and

         (aj)     "VESTED  OPTION"  has the  meaning  ascribed  to it in section
                  "4.3" hereinbelow; and

         (ak)     "VESTING  OPTION"  has the  meaning  ascribed to it in section
                  "4.3" hereinbelow.

1.2      INTERPRETATION. For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

         (a)      the words  "HEREIN",  "HEREOF" and "HEREUNDER" and other words
                  of similar  import refer to this  Agreement as a whole and not
                  to any  particular  Article,  section or other  subdivision of
                  this Agreement;

         (b)      any  reference to an entity shall  include and shall be deemed
                  to be a reference to any entity that is a permitted  successor
                  to such entity; and

         (c)      words in the  singular  include  the  plural  and words in the
                  masculine gender include the feminine and neuter genders,  and
                  VICE VERSA.

                                    ARTICLE 2
               GENERAL SERVICES AND DUTIES OF THE EXECUTIVE GROUP

2.1      GENERAL SERVICES.  During the continuance of this Agreement the Company
hereby  agrees to retain the  Executive  as the Chief  Executive  Officer of the
Company,  together with the  Executive's  Company as a consultant to the Company
and to any or all of the Company's subsidiaries,  as the case may be, and as may
be determined by the Board of Directors in its sole and absolute discretion from
time to time,  and the  Executive  Group  hereby  agrees  to be  subject  to the
direction and  supervision  of, and to have the authority as is delegated to the
Executive Group by, the Board of Directors  consistent with such positions,  and
the  Executive  Group also agrees to accept such  positions  in order to provide
such corporate management related services as the Board of Directors shall, from
time to time,  reasonably  assign to the Executive Group and as may be necessary

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for the ongoing  maintenance and development of the Companies'  various Business
interests during the continuance of this Agreement  (collectively,  the "GENERAL
SERVICES");  it being  expressly  acknowledged  and agreed by the Parties hereto
that the  Executive  Group  shall  commit and provide to the Company the General
Services  for which the Company,  as more  particularly  set forth  hereinbelow,
hereby  agrees to pay and provide to the order and  direction  of the  Executive
Group each of the  proposed  compensation  amounts as set forth in Articles  "4"
hereinbelow.

                  In this regard it is hereby  acknowledged  and agreed that the
Executive  Group shall be entitled to  communicate  with and shall rely upon the
immediate advice,  direction and instructions of the Board of Directors, or upon
the advice or  instructions  of such  director  or officer of the Company as the
Board of Directors  shall,  from time to time, in order to initiate,  coordinate
and implement the General Services as contemplated herein subject, at all times,
to the final direction and supervision of the Board of Directors.

2.2      ADDITIONAL  DUTIES  RESPECTING THE GENERAL  SERVICES.  Without  in  any
manner  limiting the  generality  of the General  Services to be provided as set
forth in section "2.1"  hereinabove,  it is hereby also  acknowledged and agreed
that Executive Group will, during the continuance of this Agreement, provide for
the performance of said General Services faithfully,  diligently, to the best of
the Executive  Group's abilities and in the best interests of the Companies and,
furthermore,  that the Executive  Group's time will be  prioritized at all times
for the Companies in that regard.

2.3      ADHERENCE TO RULES AND POLICIES OF THE COMPANIES.  The Executive  Group
hereby  acknowledges and agrees to abide by the reasonable  rules,  regulations,
instructions,  personnel  practices  and policies of the Company and any changes
therein  which  may be  adopted  from  time to time by the  same as such  rules,
regulations,  instructions,  personnel  practices and policies may be reasonably
applied to the  Executive as the Chief  Executive  Officer of the Company and to
the Executive's Company as a consultant to the Companies.

                                    ARTICLE 3
              EFFECTIVENESS, INITIAL TERM, RENEWAL AND TERMINATION

3.1      EFFECTIVENESS AND INITIAL TERM OF THE AGREEMENT. This Agreement becomes
effective on the Effective Date hereinabove,  however, is subject, at all times,
to the Company's prior receipt, if required, of Regulatory Approval from each of
the Regulatory  Authorities to the terms and conditions of and the  transactions
contemplated  by this  Agreement.  The initial  term of this  Agreement is for a
period  commencing  on the  Effective  Date  hereof  and  ending at the close of
business (Vancouver, British Columbia, Canada, time) one year from the Effective
Date hereof (the "INITIAL TERM").

3.2      RENEWAL BY THE  COMPANY  AFTER THE  INITIAL TERM.  Subject at all times
to sections  "3.3",  "3.4",  "3.5" and "5.6"  hereinbelow,  this Agreement shall
renew  automatically  if not  specifically  terminated  in  accordance  with the
following  provisions.  The Company agrees to notify the Executive's  Company in
writing at least 30 calendar  days prior to the end of the  Initial  Term of its
intent not to renew this Agreement (the "COMPANY'S NON-RENEWAL NOTICE").  Should
the Company fail to provide a Company's  Non-Renewal Notice this Agreement shall
automatically  renew on a  month-to-month  term renewal  basis after the Initial
Term until  otherwise  specifically  renewed  in writing by each of the  Parties
hereto for the next one-month  term of renewal or,  otherwise,  terminated  upon
delivery  by the  Company of a  corresponding  and  follow-up  30  calendar  day
Company's  Non-Renewal  Notice in  connection  with and within 30 calendar  days
prior to the end of any such one-month term renewal period.  Any such renewal on

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a one-month  basis shall be on the same terms and  conditions  contained  herein
unless modified and agreed to in writing by the Parties in advance.

3.3      TERMINATION  WITHOUT CAUSE BY THE EXECUTIVE'S COMPANY.  Notwithstanding
any other provision of this  Agreement,  this Agreement may be terminated by the
Executive's  Company at any time after the Effective Date and during the Initial
Term and during the continuance of this Agreement upon the Executive'  Company's
to the Company of prior written notice of its intention to do so (the "NOTICE OF
TERMINATION"  herein) at least 30 calendar days prior to the  effective  date of
any  such  termination  (the end of such  30-day  period  from  such  Notice  of
Termination being the "EFFECTIVE  TERMINATION  DATE" herein).  In any such event
the Executive  Group's ongoing  obligation to provide the General  Services will
continue  only  until  the  Effective  Termination  Date  and,  subject  to  the
following,  the  Company's  ongoing  obligation  to  provide  and  to pay to the
Executive  Group all of the amounts  otherwise  payable to the  Executive  Group
under Article "4" hereinbelow will continue only until the Effective Termination
Date.

3.4      TERMINATION  WITHOUT CAUSE BY THE COMPANY.  Notwithstanding  any  other
provision of this Agreement,  this Agreement may be terminated by the Company at
any time after the  Effective  Date and during the  Initial  Term and during the
continuance  of this Agreement  upon the Company's  delivery to the  Executive's
Company  of prior  written  notice of its  intention  to do so (the  "NOTICE  OF
TERMINATION"  herein) at least 30 calendar days prior to the  effective  date of
any  such  termination  (the end of such  30-day  period  from  such  Notice  of
Termination being the "EFFECTIVE  TERMINATION  DATE" herein).  In any such event
the Executive  Group's ongoing  obligation to provide the General  Services will
immediately  cease  upon the date of the  Notice of  Termination,  however,  the
Company  shall  continue to be obligated to provide and to pay to the  Executive
Group all of the amounts  otherwise payable to the Executive Group under Article
"4"  hereinbelow  until the Effective  Termination  Date and including,  without
limitation,  the Executive  Group's then right to exercise any vested portion of
the Option (as hereinafter determined) outstanding until the end of the exercise
term of the Option as set forth under Article "4" hereinbelow.

3.5 TERMINATION FOR CAUSE BY ANY PARTY.  Notwithstanding  any other provision of
this Agreement, this Agreement may be terminated by any of the Parties hereto at
any time upon written notice to the other Party of such Party's  intention to do
so (the "NOTICE OF  TERMINATION"  herein) at least 10 calendar days prior to the
effective date of any such termination (the end of such ten-day period from such
Notice of  Termination  being the  "EFFECTIVE  TERMINATION  DATE"  herein),  and
damages sought, if:

         (a)      the  other  Party  fails  to  cure a  material  breach  of any
                  provision of this  Agreement  within 10 calendar days from its
                  receipt  of  written  notice  from  said  Party  (unless  such
                  material  breach  cannot be  reasonably  cured  within said 10
                  calendar days and the other Party is actively pursuing to cure
                  said material breach);

         (b)      the other Party is willfully  non-compliant in the performance
                  of its  respective  duties  under  this  Agreement  within ten
                  calendar  days from its  receipt of written  notice  from said
                  Party (unless such willful non-compliance cannot be reasonably
                  corrected  within said 10 calendar days and the other Party is
                  actively pursuing to cure said willful non-compliance);

         (c)      the other Party commits fraud or serious neglect or misconduct
                  in the discharge of its respective  duties  hereunder or under
                  the law; or

         (d)      the other Party  becomes  adjudged  bankrupt or a petition for
                  reorganization  or  arrangement  under  any  law  relating  to
                  bankruptcy,  and where any such  involuntary  petition  is not
                  dismissed within 10 calendar days.

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                                      -7-

         In any such event the Executive  Group's ongoing  obligation to provide
the General  Services will continue  only until the Effective  Termination  Date
and, subject to the following,  the Company's ongoing  obligation to provide and
to pay to the  Executive  Group  all of the  amounts  otherwise  payable  to the
Executive under Article "4"  hereinbelow  will continue only until the Effective
Termination Date.

3.6      DISABILITY  OR  DEATH.   Notwithstanding  any  other  provision of this
Agreement,  this  Agreement may be terminated at any time by any Party within 10
calendar days after the death or disability of the Executive, as a without fault
termination (the resulting  effective date of any such termination  being herein
also the "EFFECTIVE  TERMINATION  DATE"). For the purposes of this Agreement the
term "DISABILITY" shall mean the Executive shall have been unable to provide the
General Services  contemplated  under this Agreement for a period of 30 calendar
days,  whether or not consecutive,  during any 360 calendar day period, due to a
physical or mental disability.  A determination of disability shall be made by a
physician  satisfactory to both the Executive and the Company;  provided that if
the Executive and the Company do not agree on a physician, the Executive and the
Company  shall each select a physician  and these two  together  shall  select a
third physician  whose  determination  as to disability  shall be binding on all
Parties.  In the event that the  Executive's  position is terminated by death or
because of disability  pursuant to this Agreement,  the Company shall pay to the
estate of the  Executive  or to the  Executive  Group,  as the case may be,  all
amounts to which the Executive  Group would  otherwise be entitled under Article
"4" hereinbelow until the Effective Termination Date.

3.7      EFFECT OF TERMINATION.  Terms of this Agreement relating to accounting,
payments,  confidentiality,  accountability  for damages or claims and all other
matters  reasonably  extending  beyond  the terms of this  Agreement  and to the
benefit of the Parties  hereto or for the  protection  of the  various  Business
interests of the Companies shall survive the termination of this Agreement,  and
any matter of  interpretation  thereto  shall be given a wide  latitude  in this
regard. In addition, and without limiting the foregoing, each of sections "3.2",
"3.3",  "3.4",  "3.5",  "3.6"  hereinabove and section "5.6"  hereinbelow  shall
survive the termination of this Agreement.

                                    ARTICLE 4
                       COMPENSATION OF THE EXECUTIVE GROUP

4.1      FEE. It is hereby  acknowledged  and agreed that  the  Executive  Group
shall render the General Services as defined hereinabove during the Initial Term
and during  the  continuance  of this  Agreement  and shall thus be  compensated
during the  continuance of this Agreement to the  termination of the same by way
of the payment by the Company to the Executive Group, or to the further order or
direction of the Executive  Group as the Executive  Group may determine,  in the
Executive Group's sole and absolute discretion,  and advise the Company of prior
to such payment, of the gross monthly fee of U.S. $12,500.00 (the "FEE");  (with
the acknowledgement  that an additional fee of U.S. $2,500.00 per month has been
paid, and continues to be payable, by the Company to the Executive Group, or its
affiliate or  associate,  under a  pre-existing  services  arrangement  with the
same);  with all  such  Fees  being be due and  payable  by the  Company  to the
Executive's Company, or to the further order or direction of the Executive Group
as the Executive Group may determine, in the Executive Group's sole and absolute
discretion, and advise the Company of prior to any such Fee payment,  bi-monthly
and on or  about  the  fifteenth  and  thirtieth  day of each  month of the then
monthly period of General Services during the continuance of this Agreement.

4.2      REIMBURSEMENT  OF EXPENSES.  It is hereby  acknowledged and agreed that
the Executive Group shall also be reimbursed for all direct, reasonable expenses
actually and  properly  incurred by the  Executive  Group for the benefit of the
Company  (collectively,  the  "EXPENSES");  and  which  Expenses,  it is  hereby

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acknowledged and agreed, shall be payable by the Company to the order, direction
and account of the  Executive  Group as the  Executive  Group may  designate  in
writing,  from  time  to  time,  in the  Executive  Group's  sole  and  absolute
discretion,  as soon as  conveniently  possible  after the prior delivery by the
Executive Group to the Company of written substantiation on account of each such
reimbursable Expense.

4.3      OPTIONS.   Subject  to  the  following,  and  as  soon  as   reasonably
practicable  after the Effective  Date hereof (in each case herein being a "DATE
OF GRANT"),  it is hereby  acknowledged and agreed that the Executive Group will
be granted,  subject to the rules and policies of the Regulatory Authorities and
applicable  securities  legislation,  the terms and  conditions of the Company's
existing  stock option plan (the "OPTION PLAN") and the final  determination  of
the Board of Directors, acting reasonably, the following incentive stock options
(each being an "OPTION") within the Company:

         (a)      VESTED OPTION:  the Executive Group shall have the initial and
                  fully  vested  right and Option to purchase an aggregate of up
                  to 200,000 Option Shares immediately upon its Date of Grant at
                  an exercise  price of U.S. $0.50 per Option Share for a period
                  of three  years  from the Date of Grant (the  "EXERCISE  TERM"
                  and, collectively, the "VESTED OPTION" herein); and

         (b)      VESTING  OPTION:  subject to the prior and ongoing  attainment
                  by the Company,  with the direct  assistance  of the Executive
                  Group,  of  certain   pre-determined   corporate   development
                  milestones by the Company (collectively,  the "DELIVERABLES");
                  a complete  listing of such  Deliverables  having  been agreed
                  upon by the Parties hereto in advance of the execution of this
                  Agreement;  and subject to the  following  vesting  provisions
                  unless  otherwise  accelerated as set forth  hereinbelow,  the
                  Executive Group shall have the right and Option to purchase an
                  aggregate of up to a further 500,000 Option Shares immediately
                  upon its Date of Grant; which is to occur immediately upon the
                  attainment  by the  Company  of certain  initial  Deliverables
                  which have been  agreed upon in advance  (herein the  "INITIAL
                  VESTING DATE"),  at an exercise price of U.S. $0.31 per Option
                  Share during the same  Exercise Term from its Date of Grant on
                  the following terms and conditions (collectively, the "VESTING
                  OPTION" herein):

                  (i)      the Executive  Group shall have the initial and fully
                           vested right to purchase an aggregate of up to 41,663
                           Option Shares under the Vesting Option immediately on
                           the Initial Vesting Date; and

                  (ii)     subject to the following provisions for the potential
                           and ongoing  acceleration of the Vesting Option,  the
                           Executive  Group's  remaining  right to  purchase  an
                           aggregate  of  up to  the  remaining  458,337  Option
                           Shares under the Vesting Option shall ordinarily vest
                           in equal  monthly  proportions  over a  period  of 11
                           months from the Initial Vesting Date (this portion of
                           the Initial  Vesting Option being herein the "VESTING
                           OPTION");  with the first such proportion (that being
                           1/11th or for 41,667  Option  Shares) of the  Vesting
                           Option vesting on the day which is one month from the
                           Initial  Vesting Date and with the remaining  monthly
                           proportions of the Vesting Option vesting on the same
                           day of the  month for each of the  ensuing  10 months
                           therefrom.  In this regard the Parties  hereto hereby
                           acknowledge  and agree  that the  Board of  Directors
                           may, from time to time,  and in its sole and absolute
                           discretion,    acting   reasonably,    determine   to
                           accelerate   the   Executive    Group's   right   and
                           entitlement  to  exercise  all or any  portion of the
                           remaining  Vesting  Option  at any  time  should  the
                           Company,  with the direct assistance of the Executive
                           Group,  successfully  achieve,  in any manner, any or

<PAGE>

                                      -9-

                           all of the Deliverables prior to the existing vesting
                           schedule, or otherwise, as delineated herein.

         In this  regard,  and  subject  also  to the  following,  it is  hereby
acknowledged  and  agreed  that  the  exercise  of any of the  Options  shall be
subject, at all times, to such resale provisions as may then be contained in the
Company's  Option  Plan  and as may  be  finally  determined  by  the  Board  of
Directors,  acting reasonably.  Notwithstanding  the foregoing,  however,  it is
hereby also  acknowledged  and agreed that, in the event that this  Agreement is
terminated in accordance  with either of sections "3.2",  "3.3",  "3.4" or "5.6"
herein,  such portion of the within and remaining  Options which shall have then
not  been  exercised  on  the  determined  Effective   Termination  Date  shall,
notwithstanding  the  remaining  exercise  period  of any such  Option,  then be
exercisable  by the  Executive  for the  balance  of the  Exercise  Term of each
particular  then Option which has vested on the Effective  Termination  Date. In
this regard,  and in accordance with the terms and conditions of each final form
of Option agreements, the Parties hereby also acknowledge and agree that:

         (A)      REGISTRATION  OF OPTION SHARES UNDER THE OPTIONS:  the Company
                  expects to file with the United States Securities and Exchange
                  Commission  (the "SEC") a  registration  statement on Form S-8
                  (the "FORM S-8  REGISTRATION  STATEMENT")  within 120 calendar
                  days of initial Date of Grant and covering the issuance of all
                  Option  Shares  of the  Company  underlying  the  then  issued
                  Options, and such Form S-8 Registration Statement shall comply
                  with all  requirements of the United States  SECURITIES ACT OF
                  1933, as amended (the  "SECURITIES  ACT").  In this regard the
                  Company shall use its best efforts to ensure that the Form S-8
                  Registration  Statement  remains  effective  as  long  as such
                  Options  are  outstanding,   and  the  Executive  Group  fully
                  understands and acknowledges  that these Option Shares will be
                  issued in reliance upon the exemption  afforded under the Form
                  S-8  Registration  Statement  which is  available  only if the
                  Executive Group acquires such Option Shares for investment and
                  not with a view to distribution.  The Executive Group familiar
                  with the phrase  "acquired for  investment and not with a view
                  to  distribution"  as it relates to the Securities Act and the
                  special meaning given to such term in various  releases of the
                  SEC;

         (B)      SECTION 16 COMPLIANCE: only if applicable, the  Company  shall
                  ensure  that all  grants  of the  Options  are made to  ensure
                  compliance  with all  applicable  provisions  of the exemption
                  afforded under Rule 16b-3  promulgated under the United States
                  SECURITIES AND EXCHANGE ACT OF 1934, as amended (the "EXCHANGE
                  ACT"). Without limiting the foregoing,  the Company shall have
                  an  independent  committee of the Board of  Directors  approve
                  each grant of the  Options  to the  Executive  Group  and,  if
                  required,  by the applicable  Regulatory  Authorities  and the
                  shareholders of the Company. The Company shall file, on behalf
                  of the Executive Group, all reports required to filed with the
                  SEC pursuant to the  requirements  of Section  16(a) under the
                  Exchange Act and applicable rules and regulations;

         (C)      DISPOSITION OF ANY OPTION SHARES:  the Executive Group further
                  acknowledges and understands that,  without in anyway limiting
                  the   acknowledgements   and   understandings   as  set  forth
                  hereinabove,  the  Executive  Group agrees that the  Executive
                  Group  shall in no event  make any  disposition  of all or any
                  portion of the Option  Shares  which the  Executive  Group may
                  acquire hereunder unless and until:

                  (i)      there is then in  effect a  "REGISTRATION  STATEMENT"
                           under  the  Securities  Act  covering  such  proposed
                           disposition   and   such   disposition   is  made  in
                           accordance with said Registration Statement; or

<PAGE>

                                      -10-

                  (ii)     (a) the  Executive  Group  shall  have  notified  the
                           Company of the  proposed  disposition  and shall have
                           furnished  the Company  with a detailed  statement of
                           the    circumstances    surrounding    the   proposed
                           disposition,  (B)  the  Executive  Group  shall  have
                           furnished   the  Company   with  an  opinion  of  the
                           Executive Group's own counsel to the effect that such
                           disposition will not require registration of any such
                           Option Shares under the  Securities  Act and (C) such
                           opinion of the Executive  Group's  counsel shall have
                           been  concurred in by counsel for the Company and the
                           Company  shall have  advised the  Executive  Group of
                           such concurrence; and

         (D)      PAYMENT  FOR  ANY  OPTION  SHARES:    it  is   hereby  further
                  acknowledged  and agreed that,  during the continuance of this
                  Agreement,  the Executive  Group shall be entitled to exercise
                  any portion of the vested  Options  granted  hereunder and pay
                  for the same by way of the prior  agreement  of the  Executive
                  Group, in the Executive Group's sole and absolute  discretion,
                  and with the prior  knowledge  of the  Company,  to settle any
                  indebtedness  which may be due and owing by the Company  under
                  this Agreement in payment for the exercise price of any Option
                  Shares  acquired  thereunder.  In this regard,  and subject to
                  further  discussion  as between the Company and the  Executive
                  Group,  together  with  the  prior  approval  of the  Board of
                  Directors  and the  establishment  by the Company of an Option
                  Plan predicated upon the same, it is envisioned that, when the
                  Company is in a position  to afford the same,  the Company may
                  adopt  certain  additional   "cashless  exercise"   provisions
                  respecting  the  granting  and  exercise  of  incentive  stock
                  options during the continuance of this Agreement.

4.4      PAYMENT  OF COMPENSATION AS A NON-TAXABLE  CONSULTANT.   It  is  hereby
acknowledged  and  agreed  that the  Executive  Group  will be  classified  as a
non-taxable  consultant of the Company for all purposes. In this regard, and for
all matters relating to this Agreement therefore,  the Executive Group will be a
consultant  of the  Company  under the  meaning  or  application  of any and all
applicable federal and state unemployment,  insurance and workers'  compensation
laws, and otherwise.

                                    ARTICLE 5
                  ADDITIONAL OBLIGATIONS OF THE EXECUTIVE GROUP

5.1      REPORTING.  At such  time or  times  as may be  required  by the  Board
of Directors,  acting reasonably,  the Executive Group will provide the Board of
Directors with such information  concerning the results of the Executive Group's
General Services and activities hereunder for the previous month as the Board of
Directors reasonably require.

5.2      NON-COMPETITION.   During the continuance of this Agreement, and  for a
period  of  twelve  months  following  the  termination  of  this  Agreement  in
accordance with either of sections "3.2",  "3.3",  "3.4",  "3.5", "3.6" or "5.6"
hereunder, the Executive Group shall not enter into any agreement with any third
party whose primary  business is the manufacture and  distribution of natural or
organic  fibers to provide  services  similar to those provided by the Executive
Group to the Company under this Agreement.

5.3      CONFIDENTIALITY.  The Executive Group will not, except as authorized or
required by the Executive  Group's  duties  hereunder,  reveal or divulge to any
person  or  entity  any  information  concerning  the  organization,   business,
finances,  transactions  or other affairs of the Companies which may come to the
Executive  Group's  knowledge during the continuance of this Agreement,  and the
Executive  Group will keep in  complete  secrecy  all  confidential  information
entrusted  to the  Executive  Group and will not use or  attempt to use any such
information  in any manner  which may injure or cause loss  either  directly  or

<PAGE>

                                      -11-

indirectly to the Business  interests.  This  restriction will continue to apply
after the termination of this Agreement  without limit in point of time but will
cease to apply to  information  or  knowledge  which  may come  into the  public
domain.

5.4      COMPLIANCE  WITH  APPLICABLE LAWS. The Executive Group will comply with
all  Canadian,  U.S. and foreign  laws,  whether  federal,  provincial or state,
applicable to the Executive  Group's duties  hereunder and, in addition,  hereby
represents  and warrants  that any  information  which the  Executive  Group may
provide to any person or company  hereunder  will,  to the best of the Executive
Group's  knowledge,  information  and belief,  be accurate  and  complete in all
material  respects  and not  misleading,  and will not omit to state any fact or
information which would be material to such person or company.

5.5      OPINIONS,  REPORTS AND ADVICE OF  THE  EXECUTIVE  GROUP.  The Executive
Group  acknowledges  and agrees  that all written  and oral  opinions,  reports,
advice  and  materials  provided  by the  Executive  Group to the  Companies  in
connection with the Executive Group's  engagement  hereunder are intended solely
for the  Company's  benefit and for the Company's  uses only,  and that any such
written  and oral  opinions,  reports,  advice and  information  are,  except as
specifically  provided in section "5.7"  hereinbelow,  the exclusive property of
the Company.  In this regard the Executive  Group  covenants and agrees that the
Company may utilize any such opinion, report, advice and materials for any other
purpose whatsoever and, furthermore, may reproduce,  disseminate, quote from and
refer to, in whole or in part, at any time and in any manner,  any such opinion,
report, advice and materials in the Company's sole and absolute discretion.  The
Executive  Group further  covenants and agrees that no public  references to the
Executive  Group or disclosure  of the Executive  Group's role in respect of the
Companies may be made by the Executive  Group without the prior written  consent
of the Board of Directors in each specific instance and,  furthermore,  that any
such written  opinions,  reports,  advice or materials  shall,  unless otherwise
required by the Board of Directors,  be provided by the  Executive  Group to the
Companies in a form and with such  substance as would be  acceptable  for filing
with and  approval by any  Regulatory  Authority  having  jurisdiction  over the
affairs of the Companies from time to time.

5.6      EXECUTIVE  GROUP'S BUSINESS CONDUCT.  The Executive Group warrants that
the Executive Group shall conduct the business and other  activities in a manner
which is lawful and reputable and which brings good repute to the Companies, the
Business  interests and the Executive Group. In particular,  and in this regard,
the Executive Group  specifically  warrants to provide the General Services in a
sound and  professional  manner such that the same meets  superior  standards of
performance  quality  within  the  standards  of the  industry  or as set by the
specifications  of the  Company.  In the event that the Company has a reasonable
concern that the business as conducted by the Executive Group is being conducted
in a way  contrary  to law or is  reasonably  likely to bring  disrepute  to the
Business interests or to the Companies' or the Executive Group's reputation, the
Company  may  require  that the  Executive  Group make such  alterations  in the
Executive Group's business conduct or structure,  whether of management or Board
representation  or  employee  or  sub-licensee  representation,  as the Board of
Directors may reasonably require, in its sole and absolute  discretion,  failing
which the  Company,  in its sole and absolute  discretion,  may  terminate  this
Agreement upon prior written notice to the Executive Group to do so (the "NOTICE
OF TERMINATION" herein) at least 10 calendar days prior to the effective date of
any  such  termination  (the end of such  10-day  period  from  such  Notice  of
Termination being the "EFFECTIVE  TERMINATION  DATE" herein).  In any such event
the Executive  Group's ongoing  obligation to provide the General  Services will
continue  only  until  the  Effective  Termination  Date  and,  subject  to  the
following,  the  Company's  ongoing  obligation  to  provide  and  to pay to the
Executive  Group all of the amounts  otherwise  payable to the  Executive  under
Article "4" hereinabove will continue until the Effective  Termination  Date. In
the event of any  debate or  dispute  as to the  reasonableness  of the Board of
Directors' request or requirements, the judgment of the Board of Directors shall

<PAGE>

                                      -12-

be  deemed  correct  until  such  time as the  matter  has  been  determined  by
arbitration in accordance with Article "8" hereinbelow.

5.7      RIGHT OF OWNERSHIP TO THE BUSINESS AND RELATED PROPERTY.  The Executive
Group  hereby  acknowledges  and  agrees  that any and all  Business  interests,
together with any products or improvements derived therefrom and any trade marks
or trade names used in connection with the same (collectively,  the "PROPERTY"),
are wholly owned and  controlled by the Company.  Correspondingly,  neither this
Agreement,   nor  the  General   Services  or  the  operation  of  the  Business
contemplated  by this  Agreement,  confers or shall be deemed to confer upon the
Executive Group any interest  whatsoever in and to any of the Property.  In this
regard the Executive Group hereby further covenants and agrees not to, during or
after the Initial Term and the continuance of this Agreement,  contest the title
to any of the Property  interests,  in any way dispute or impugn the validity of
the  Property  interests or take any action to the  detriment  of the  Company's
interests  therein.  The  Executive  Group  acknowledges  that, by reason of the
unique nature of the Property interests,  and by reason of the Executive Group's
knowledge of and association with the Property interests during the Initial Term
and during the  continuance  of this  Agreement,  the aforesaid  covenant,  both
during the Initial Term of this  Agreement and  thereafter,  is  reasonable  and
commensurate  for the  protection of the  legitimate  Business  interests of the
Companies.  As a final note, the Executive  Group hereby  further  covenants and
agrees to immediately  notify the Company of any infringement of or challenge to
the any of the Property  interests as soon as the Executive  Group becomes aware
of the infringement or challenge. Notwithstanding the Company's ownership of the
Property,  the  Parties  acknowledge  and agree that the  Property  may  contain
certain proprietary Executive Group materials or elements which shall remain the
property of the Executive Group (collectively, the "EXECUTIVE GROUP MATERIALS").
Executive  Group  Materials are generally used or provided to the clients of the
Executive  Group in the normal course of delivering its consulting  services and
include,  but are not limited to,  processes,  techniques  and know how, and all
intellectual property rights contained herein. The Executive Group grants to the
Company a  non-exclusive,  non-transferable  license to use the Executive  Group
Materials embodied within the Property.

         The  Executive  Group hereby  assigns to the Company,  exclusive of the
Executive Group Materials, its right, title and interest throughout the world in
and to all  work  performed,  writings,  formulas,  designs,  models,  drawings,
photographs,  design  inventions,  and other  inventions,  made,  conceived,  or
reduced to  practice  or authored  by the  Executive  Group or by the  Executive
Group's employees,  either solely or jointly with others, during the performance
of this  Agreement,  or which are made,  conceived,  or reduced to practice,  or
authored  with the use of  information  or  materials  of the  Companies  either
received or used by the Executive Group during the performance of this Agreement
or any extension or renewal thereof. The Executive Group shall promptly disclose
to the Company all works,  writings,  formulas,  designs,  models,  photographs,
drawings,  design inventions and other inventions made,  conceived or reduced to
practice,  or authored by the Executive Group or the Executive Group's employees
as set forth above. The Executive Group shall sign, execute and acknowledge,  or
cause  to be  signed,  executed  and  acknowledged,  at the  Company's  cost and
expense,  applicable patent,  trademark or copyright  protection  throughout the
world  upon all such  works,  writings,  formulas,  designs,  models,  drawings,
photographs,  design inventions and other inventions; title to which the Company
acquires in  accordance  with the  provisions  of this  section,  subject to the
Executive  Group's sole and exclusive  rights in the Executive Group  Materials.
The  Executive  Group has acquired or shall  acquire from each of the  Executive
Group's  employees,  if any, the necessary  rights to all such works,  writings,
formulas,  designs, models, drawings,  photographs,  design inventions and other
inventions  made by such employees  within the scope of their  employment by the
Executive  Group in performing the General  Services under this  Agreement.  The
Executive  Group shall seek to obtain the  reasonable  cooperation  of each such
employee to secure to the  Company's or its  nominee's the rights to such works,
writings,  formulas, designs, models, drawings,  photographs,  design inventions

<PAGE>

                                      -13-

and  other  inventions  as the  Company  may  acquire  in  accordance  with  the
provisions of this section.

                                    ARTICLE 6
                      INDEMNIFICATION AND LEGAL PROCEEDINGS

6.1      INDEMNIFICATION.  The Parties hereto hereby each agree to indemnify and
save  harmless the other Party hereto and  including,  where  applicable,  their
respective  subsidiaries and affiliates and each of their respective  directors,
officers,  employees,  consultants,  associates,  counsel and agents  (each such
party  being an  "INDEMNIFIED  PARTY")  harmless  from and  against  any and all
losses, claims, actions, suits, proceedings, damages, liabilities or expenses of
whatever nature or kind and including,  without  limitation,  any  investigation
expenses  incurred by any Indemnified  Party, to which an Indemnified  Party may
become subject by reason of the terms and conditions of this Agreement.

6.2      NO  INDEMNIFICATION.  This indemnity  will  not apply in  respect of an
Indemnified  Party in the  event  and to the  extent  that a Court of  competent
jurisdiction in a final judgment shall determine that the Indemnified  Party was
grossly negligent or guilty of willful misconduct.

6.3      CLAIM OF  INDEMNIFICATION.  The Parties hereto agree to waive any right
they might have of first requiring the  Indemnified  Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.

6.4      NOTICE OF CLAIM.  In  case any action is brought against an Indemnified
Party in respect of which  indemnity may be sought against either of the Parties
hereto,  the  Indemnified  Party will give both Parties  hereto  prompt  written
notice of any such action of which the  Indemnified  Party has knowledge and the
relevant Party will undertake the investigation and defense thereof on behalf of
the Indemnified Party,  including the prompt employment of counsel acceptable to
the  Indemnified  Party  affected and the relevant  Party and the payment of all
expenses.  Failure by the  Indemnified  Party to so notify shall not relieve the
relevant Party of such relevant Party's obligation of indemnification  hereunder
unless (and only to the extent that) such failure results in a forfeiture by the
relevant Party of substantive rights or defenses.

6.5      SETTLEMENT.  No admission of liability and no settlement of any  action
shall be made without the consent of each of the Parties  hereto and the consent
of the Indemnified Party affected, such consent not to be unreasonable withheld.

6.6      LEGAL  PROCEEDINGS.   Notwithstanding  that  the  relevant  Party  will
undertake the investigation and defense of any action, an Indemnified Party will
have the right to employ separate  counsel in any such action and participate in
the defense  thereof,  but the fees and  expenses of such counsel will be at the
expense of the Indemnified Party unless:

         (a)      such counsel has been authorized by the relevant Party;

         (b)      the  relevant  Party has not assumed the defense of the action
                  within a reasonable  period of time after receiving  notice of
                  the action;

         (c)      the named  parties to any such action  include  that any Party
                  hereto and the  Indemnified  Party shall have been  advised by
                  counsel  that there may be a conflict of interest  between any
                  Party hereto and the Indemnified Party; or

         (d)      there  are  one  or  more  legal  defenses  available  to  the
                  Indemnified  Party which are different  from or in addition to
                  those available to any Party hereto.

<PAGE>

                                      -14-

6.7      CONTRIBUTION.  If for any reason other than the gross negligence or bad
faith of the  Indemnified  Party  being  the  primary  cause of the loss  claim,
damage, liability, cost or expense, the foregoing indemnification is unavailable
to the Indemnified  Party or  insufficient  to hold them harmless,  the relevant
Party shall contribute to the amount paid or payable by the Indemnified Party as
a result of any and all such  losses,  claim,  damages  or  liabilities  in such
proportion as is appropriate to reflect not only the relative  benefits received
by the relevant  Party on the one hand and the  Indemnified  Party on the other,
but also the  relative  fault of relevant  Party and the  Indemnified  Party and
other  equitable  considerations  which  may be  relevant.  Notwithstanding  the
foregoing,  the relevant Party shall in any event  contribute to the amount paid
or payable by the  Indemnified  Party, as a result of the loss,  claim,  damage,
liability, cost or expense (other than a loss, claim, damage, liability, cost or
expenses, the primary cause of which is the gross negligence or bad faith of the
Indemnified  Party),  any  excess  of such  amount  over the  amount of the fees
actually received by the Indemnified Party hereunder.

                                    ARTICLE 7
                                  FORCE MAJEURE

7.1      EVENTS.   If either Party hereto  is at  any  time  either during  this
Agreement or thereafter prevented or delayed in complying with any provisions of
this  Agreement  by  reason  of  strikes,  walk-outs,  labour  shortages,  power
shortages,  fires, wars, acts of God, earthquakes,  storms, floods,  explosions,
accidents,  protests or  demonstrations  by  environmental  lobbyists  or native
rights groups,  delays in transportation,  breakdown of machinery,  inability to
obtain  necessary  materials in the open market,  unavailability  of  equipment,
governmental  regulations restricting normal operations,  shipping delays or any
other reason or reasons beyond the control of that Party,  then the time limited
for the performance by that Party of its respective  obligations hereunder shall
be  extended  by a period of time  equal in  length  to the  period of each such
prevention or delay.

7.2      NOTICE.  A Party shall within three  calendar  days  give notice to the
other Parties of each event of FORCE  MAJEURE  under section "7.1"  hereinabove,
and upon  cessation of such event shall furnish the other Parties with notice of
that  event  together  with  particulars  of the  number  of days by  which  the
obligations  of that Party  hereunder have been extended by virtue of such event
of FORCE MAJEURE and all preceding events of FORCE MAJEURE.

                                    ARTICLE 8
                                   ARBITRATION

8.1      MATTERS FOR ARBITRATION. Except for matters of indemnity or in the case
of urgency to prevent material harm to a substantive right or asset, the Parties
agree that all  questions or matters in dispute  with respect to this  Agreement
shall be submitted to arbitration  pursuant to the terms hereof.  This provision
shall not  prejudice a Party from seeking a Court order or assistance to garnish
or secure  sums or to seek  summary  remedy  for such  matters  as  counsel  may
consider amenable to summary proceedings.

8.2      NOTICE.  It shall be a condition precedent to the right of any Party to
submit any matter to  arbitration  pursuant  to the  provisions  hereof that any
Party  intending  to refer any matter to  arbitration  shall have given not less
than five business  days' prior written  notice of its intention to do so to the
other  Parties  together  with  particulars  of the  matter in  dispute.  On the
expiration of such five business days the Party who gave such notice may proceed
to  refer  the  dispute  to   arbitration  as  provided  for  in  section  "8.3"
hereinbelow.

<PAGE>
                                      -15-

8.3      APPOINTMENTS.   The  Party  desiring  arbitration  shall  appoint   one
arbitrator,  and shall  notify the other  Parties of such  appointment,  and the
other Parties  shall,  within five business  days after  receiving  such notice,
appoint an arbitrator,  and the two arbitrators so named,  before  proceeding to
act,  shall,  within five business days of the appointment of the last appointed
arbitrator,  unanimously agree on the appointment of a third arbitrator,  to act
with them and be  chairperson  of the  arbitration  herein  provided for. If the
other  Parties  shall fail to appoint an  arbitrator  within five  business days
after receiving  notice of the appointment of the first  arbitrator,  and if the
two  arbitrators  appointed  by the  Parties  shall  be  unable  to agree on the
appointment of the chairperson, the chairperson shall be appointed in accordance
with the scope of the rules of the Arbitration Service of Portland;  whose rules
and regulations shall govern the applicable arbitration.  The chairperson, or in
the case where only one arbitrator is appointed,  the single  arbitrator,  shall
fix a time and place in Portland, Oregon. U.S.A., for the purpose of hearing the
evidence and  representations of the Parties,  and the chairperson shall preside
over the  arbitration  and determine all questions of procedure not provided for
by the  Arbitration  Act  or  this  section.  After  hearing  any  evidence  and
representations  that the  Parties  may submit,  the single  arbitrator,  or the
arbitrators,  as the case may be,  shall  make an award and  reduce  the same to
writing, and deliver one copy thereof to each of the Parties. The expense of the
arbitration shall be paid as specified in the award.

8.4      AWARD.  The  Parties  agree  that  the  award  of  a  majority  of  the
arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be
final and binding upon each of them.

                                    ARTICLE 9
                               GENERAL PROVISIONS

9.1      ENTIRE  AGREEMENT.  This Agreement  constitutes the entire agreement to
date  between  the  Parties  hereto and  supersedes  every  previous  agreement,
expectation,  negotiation,  representation  or  understanding,  whether  oral or
written,  express or implied,  statutory or otherwise,  between the Parties with
respect to the subject matter of this Agreement.

9.2      NO ASSIGNMENT.  This  Agreement may not be assigned by any Party hereto
except with the prior written consent of the other Parties.

9.3      NOTICE.  Each  notice,  demand  or  other  communication   required  or
permitted to be given under this Agreement shall be in writing and shall be sent
by prepaid  registered  mail deposited in a recognized post office and addressed
to the Party  entitled to receive the same,  or delivered to such Party,  at the
address for such Party specified on the front page of this  Agreement.  The date
of receipt of such notice,  demand or other  communication  shall be the date of
delivery  thereof if delivered,  or, if given by  registered  mail as aforesaid,
shall be deemed  conclusively  to be the third business day after the same shall
have been so mailed,  except in the case of  interruption of postal services for
any reason  whatsoever,  in which case the date of receipt  shall be the date on
which the notice,  demand or other  communication  is  actually  received by the
addressee.  Any  Party may at any time and from  time to time  notify  the other
Parties in writing of a change of address  and the new  address to which  notice
shall be given to it thereafter until further change.

9.4      TIME OF THE ESSENCE.   Time will be of the essence of this Agreement.

9.5      ENUREMENT.   This  Agreement  will enure to  the benefit of and will be
binding  upon  the  Parties  hereto  and  their  respective  heirs,   executors,
administrators and assigns.

<PAGE>
                                      -16-

9.6      CURRENCY.  Unless  otherwise  stipulated,  all payments  required to be
made  pursuant  to the  provisions  of  this  Agreement  and  all  money  amount
references  contained  herein are in lawful  currency  of the  United  States of
America.

9.7      FURTHER  ASSURANCES.   The  Parties  will  from time to  time after the
execution of this  Agreement  make,  do,  execute or cause or permit to be made,
done or executed,  all such further and other acts, deeds,  things,  devices and
assurances in law  whatsoever as may be required to carry out the true intention
and to give full force and effect to this Agreement.

9.8      REPRESENTATION  AND COSTS.   It is hereby  acknowledged  by each of the
Parties  hereto that Lang  Michener  LLP,  Lawyers - Patent & Trade Mark Agents,
acts solely for the Company, and, correspondingly,  that the Executive Group has
been required by each of Lang Michener LLP and the Company to obtain independent
legal advice with  respect to its review and  execution  of this  Agreement.  In
addition,  it is hereby  further  acknowledged  and agreed by the Parties hereto
that  Lang  Michener  LLP,  and  certain  or  all  of its  principal  owners  or
associates,  from  time to  time,  may have  both an  economic  or  shareholding
interest in and to Company  and/or a  fiduciary  duty to the same  arising  from
either a directorship,  officership or similar  relationship  arising out of the
request of the Company for certain of such persons to act in a similar  capacity
while acting for the Company as counsel.  Correspondingly,  and even where, as a
result of this  Agreement,  the  consent  of each  Party  hereto to the role and
capacity of Lang Michener LLP, and its principal  owners and associates,  as the
case may be, is deemed to have been  received,  where any  conflict or perceived
conflict  may arise,  or be seen to arise,  as a result of any such  capacity or
representation,  each Party hereto acknowledges and agrees to, once more, obtain
independent  legal advice in respect of any such conflict or perceived  conflict
and,  consequent  thereon,  Lang Michener LLP,  together with any such principal
owners or  associates,  as the case may be,  shall be at  liberty at any time to
resign any such  position  if it or any Party  hereto is in any way  affected or
uncomfortable  with any such  capacity  or  representation.  Each  Party to this
Agreement  will  also  bear  and pay its own  costs,  legal  and  otherwise,  in
connection  with  its  respective  preparation,  review  and  execution  of this
Agreement and, in particular, that the costs involved in the preparation of this
Agreement,  and  all  documentation  necessarily  incidental  thereto,  by  Lang
Michener LLP, shall be at the cost of the Company.

9.9      APPLICABLE LAW.  This  Agreement  shall  be governed by the laws of the
State of Oregon, U.S.A., and applicable United States federal law.

9.10     SEVERABILITY AND CONSTRUCTION.  Each Article, section,  paragraph, term
and provision of this Agreement,  and any portion  thereof,  shall be considered
severable,  and if, for any reason,  any portion of this Agreement is determined
to be invalid,  contrary to or in conflict with any applicable present or future
law,  rule or  regulation  in a final  unappealable  ruling issued by any court,
agency or tribunal  with valid  jurisdiction  in a proceeding to which any Party
hereto is a party,  that ruling shall not impair the  operation  of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible  (all of which shall remain  binding on the Parties and continue to
be given full  force and  effect as of the date upon  which the  ruling  becomes
final).

9.11     CAPTIONS.  The captions,  section numbers and Article numbers appearing
in this Agreement are inserted for convenience of reference only and shall in no
way define,  limit,  construe or describe the scope or intent of this  Agreement
nor in any way affect this Agreement.

9.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as many
counterparts as may be necessary, and via facsimile if necessary,  each of which
so  signed  being  deemed  to be an  original  and  such  counterparts  together
constituting  one and the  same  instrument  and,  notwithstanding  the  date of
execution,  being  deemed to bear the  Effective  Date as set forth on the front
page of this Agreement.

<PAGE>
                                      -17-

9.13     NO PARTNERSHIP OR AGENCY.   The  Parties have not created a partnership
and  nothing  contained  in  this  Agreement  shall  in  any  manner  whatsoever
constitute  any Party the partner,  agent or legal  representative  of the other
Parties,  nor create any  fiduciary  relationship  between  them for any purpose
whatsoever.

9.14     CONSENTS AND WAIVERS.   No consent or waiver  expressed  or  implied by
either Party in respect of any breach or default by the other in the performance
by such other of its obligations hereunder shall:

         (a)      be valid unless it is in writing and stated to be a consent or
                  waiver pursuant to this section;

         (b)      be relied  upon as a consent to or waiver of any other  breach
                  or default of the same or any other obligation;

         (c)      constitute a general waiver under this Agreement; or

         (d)      eliminate or modify the need for a specific  consent or waiver
                  pursuant to this section in any other or subsequent instance.

         IN WITNESS WHEREOF each of the Company and the Executive's  Company has
duly  executed  this   Agreement  as  of  the  Effective   Date  first  provided
hereinabove.

The COMMON SEAL of                          )
NATURALLY ADVANCED                          )
TECHNOLOGIES INC.,                          )
the Company herein,                         )
was hereunto affixed in the presence of:    )                          (C/S)
                                            )
                                            )
___________________________________________ )
Authorized Signatory                        )

The COMMON SEAL of                          )
THE MERIWETHER GROUP, INC.,                 )
the Executive's Company herein,             )
was hereunto affixed in the presence of:    )                          (C/S)
                                            )
                                            )
__________________________________________  )
Authorized Signatory                        )Exhibit 10.1

    
      

      

    

     

     

     

     

     

     

     

     

     

     

     

    

    AGREEMENT
      AND PLAN OF MERGER

     

    by
      and among

     

    Solar
      Power, Inc.,

     

    Welund
      Acquisition Corp.

     

    and

     

    Welund
      Fund, Inc.

     

    dated
      as of August 23, 2006

     

    

    

    

    

     

    

    

    

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    

    AGREEMENT
      AND PLAN OF MERGER

    

    THIS
      AGREEMENT AND PLAN OF MERGER (the “Agreement”),
      is
      made and entered into as of August 23, 2006, by and among Solar Power, Inc.,
      a
      California corporation (“SPI”),
      Welund Fund, Inc., a Nevada corporation (the “Company”),
      and
      Welund Acquisition Corp., a Nevada corporation and wholly-owned subsidiary
      of
      the Company (“Merger
      Sub”).
      Certain other capitalized terms used in this Agreement are defined in
Exhibit A
      attached
      hereto.

     

    RECITALS

     

    WHEREAS,
      the respective Boards of Directors of SPI, Merger Sub and the Company believe
      it
      is in the best interest of each company and their respective stockholders to
      consummate the business combination transaction provided for herein in which
      Merger Sub would merge with and into SPI with SPI as the surviving corporation
      (the “Merger”);

     

    WHEREAS,
      the respective Boards of Directors of SPI, Merger Sub and the Company have
      approved this Agreement and the Merger, upon the terms and subject to the
      conditions set forth in this Agreement in accordance with the Nevada Revised
      Statutes (“NRS”),
      the
      California General Corporation Law (“CGCL”)
      and
      their respective charter documents; 

     

    WHEREAS,
      it is intended that, for federal income tax purposes, the Merger will qualify
      as
      a reorganization under the provisions of Section 368(a) of the Code;
      and

     

    WHEREAS,
      each of SPI and the Company desire to make certain representations, warranties,
      covenants and agreements in connection with the Merger and also to prescribe
      various conditions to the consummation thereof.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual promises,
      representations, warranties, covenants and agreements herein contained, the
      parties hereto, intending to be legally bound, hereby agree as
      follows:

     

    ARTICLE
      1

     

    THE
      MERGER

     

    1.1.
        The
      Merger.
      Upon
      the terms and subject to the conditions set forth in this Agreement, and in
      accordance with the NRS and the CGCL, Merger Sub shall be merged with and into
      SPI at the Effective Time of the Merger (as defined in Section 1.3).
      Following the Merger, the separate corporate existence of Merger Sub shall
      cease, and SPI shall continue as the surviving corporation (the “Surviving
      Corporation”)
      and
      shall succeed to and assume all the rights, properties, liabilities and
      obligations of Merger Sub in accordance with the NRS and CGCL.

     

    1.2.   Closing.
      The
      closing of the Merger (the “Closing”)
      shall
      take place at the offices of Bullivant Houser Bailey PC at 1415 L Street,
      Suite 1000, Sacramento, California 95814 at the date and time on which the
      conditions to Closing set forth in Article 8 of this Agreement shall have
      been satisfied or waived by the appropriate party or at such time as the parties
      hereto agree. The date on which the Closing actually occurs and the transactions
      contemplated hereby become effective is hereinafter referred to as the
“Closing
      Date.”
At
      the
      time of the Closing, SPI and the Company shall deliver the certificates and
      other documents and instruments required to be delivered hereunder.

     

    

    
      
        
          
          

        

        
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    1.3.   Effective
      Time of the Merger.
      At the
      Closing, the parties hereto shall (a) cause an articles of merger
      substantially in the form of Exhibit B-1
      (the
“Nevada
      Articles of Merger”)
      to be
      executed and filed with the Secretary of State of the State of Nevada, as
      provided in Section 92A.200 of the NRS, (b) cause an agreement of
      merger in substantially the form of Exhibit B-2
      (the
“California
      Agreement of Merger”)
      to be
      executed and filed with the Secretary of State of the State of California,
      as
      provided in Section 1103 of the CGCL and (c) take all such other and
      further actions
      as may be required by the NRS, the CGCL or other applicable Law to make the
      Merger effective. The Merger shall become effective as of the date and time
      of
      the filing of the Nevada Articles of Merger and the California Agreement of
      Merger. The date and time of such effectiveness are referred to herein as the
      “Effective
      Time.”

     

    1.4.
        Effects
      of the Merger.
      Subject
      to the foregoing, the effects of the Merger shall be as provided in the
      applicable provisions of the NRS and the CGCL.

     

    1.5.
        Articles
      of Incorporation and Bylaws of the Surviving Corporation. The
      Articles of Incorporation of SPI as in effect immediately prior to the Effective
      Time shall be the Articles of Incorporation of the Surviving Corporation until
      thereafter changed or amended as provided therein or in accordance with
      applicable Law. The Bylaws of SPI as in effect immediately prior to the
      Effective Time shall be the Bylaws of the Surviving Corporation until thereafter
      changed or amended as provided therein or in accordance with applicable
      law.

     

    1.6.
        Directors
      and Officers.
      The
      directors and officers of SPI immediately prior to the Effective Time shall
      be
      the directors and officers of the Surviving Corporation until their successors
      shall have been duly elected or appointed and qualified in accordance with
      applicable Law or until their earlier death, resignation or removal in
      accordance with the Surviving Corporation’s Articles of Incorporation and
      Bylaws.

     

    ARTICLE
      2

     

    EFFECT
      OF THE MERGER ON THE CAPITAL STOCK

    OF
      COMPANY AND SPI

     

    2.1.
        Effect
      on Capital Stock.
      At the
      Effective Time, by virtue of the Merger and without any action on the part
      of
      SPI or the Company:

     

    (a) 
        Capital
      Stock of Merger Sub.
      Each
      issued and outstanding share of capital stock of Merger Sub shall by virtue
      of
      the Merger and without any action on the part of any holder thereof, be
      converted into one share of SPI’s common stock. Such newly issued shares shall
      thereafter constitute all of the issued and outstanding capital stock of the
      Surviving Corporation. 

     

    (b)  
        Conversion
      of SPI Capital Stock.
      Subject
      to other provisions of this Article 2:

     

    (i)   Each
      issued and outstanding share of SPI’s capital stock immediately prior to the
      Effective Time (individually a “Share”
and
      collectively the “Shares”),
      other
      than (i) Shares held by the Company, and (ii) Dissenting Shares,
      shall, by virtue of the Merger, automatically be canceled and retired and shall
      cease to exist, and each holder of a certificate representing any such shares
      shall cease to have any rights with respect thereto, except the right to
      receive, upon surrender of any such certificates, the Company’s Common Stock
      (the “Merger
      Consideration”)
      to be
      issued or exchanged in consideration therefor upon the surrender of such
      certificate in accordance with Section 2.2 and 2.5, without
      interest.

     

    

     

    

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    

    

     

    (ii) 
        Each
      Share and Common Stock issued and outstanding immediately prior to the Effective
      Time that is restricted or not fully vested shall upon such conversion have
      the
      same restrictions or vesting arrangements as were applicable to such shares
      prior to the conversion. 

     

    (iii)
        The
      capitalization of SPI immediately prior to the Effective Time shall be set
      forth
      on a Merger Consideration certificate to be delivered by SPI to the Company
      at
      Closing (the “Merger
      Consideration Certificate”).
      The
      Company shall be entitled to rely on the Merger Consideration Certificate in
      connection with issuance of the Merger Consideration pursuant to Section
      2.2.

     

    (iv)
        At
      the
      Effective Time, each Share held by SPI as treasury stock or held by the Company
      immediately prior to the Effective Time shall, by virtue of the Merger and
      without any action on the part of SPI, the Company or the holder thereof, be
      canceled, retired and cease to exist, and no consideration shall be delivered
      with respect thereto.

     

    2.2.   Surrender
      and Exchange.

     

    (a) 
         Promptly
      after the Effective Time, the Surviving Corporation shall cause to be mailed
      to
      each holder of record of a certificate or certificates (the “Certificates”)
      which
      immediately prior to the Effective Time represented the Shares, whose shares
      were converted into the right to receive the Merger Consideration pursuant
      to
      Section 2.1(b), (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 receipt of the Certificates by the Surviving Corporation, and
      shall be in such form and have such other provisions as the Surviving
      Corporation may reasonably specify) and (ii) instructions for use in
      effecting the surrender of the Certificates in exchange for the Merger
      Consideration. Upon surrender of a Certificate for cancellation to the Surviving
      Corporation or to such agent or agents as may be appointed by the Surviving
      Corporation, together with such letter of transmittal, duly completed and
      validly executed in accordance with the instructions thereto, the holder of
      such
      Certificate shall be entitled to receive in exchange therefor the Merger
      Consideration, and the Certificate so surrendered shall forthwith be cancelled.
      Until so surrendered, each Certificate will be deemed from and after the
      Effective Time, for all corporate purposes, to evidence the right to receive
      the
      Merger Consideration.

     

    (b) 
         If
      any
      portion of the Merger Consideration is to be issued to a Person other than
      the
      registered holder of the Shares represented by the Certificates surrendered
      in
      exchange therefor, it shall be a condition to such payment that the Certificates
      so surrendered shall be properly endorsed or otherwise be in proper form for
      transfer and that the Person requesting such issuance shall pay to the Surviving
      Corporation any transfer or other taxes required as a result of such payment
      to
      a Person other than the registered holder of such Shares or establish to the
      satisfaction of the Surviving Corporation that such tax has been paid or is
      not
      payable.

     

    

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    

    

     

    (c)   If,
      after
      the Effective Time, Certificates are presented to the Surviving Corporation,
      they shall be canceled and exchanged for the Merger Consideration provided
      for,
      and in accordance with the procedures set forth, in this
      Article 2.

     

    (d)   No
      fractional shares of Common Stock shall be issued upon the surrender for
      exchange of Certificates. In lieu of any such fractional shares, each holder
      of
      Shares who would otherwise be entitled to a fraction of a share of Common Stock
      (after aggregating all fractional shares of Common Stock to be received by
      such
      holder) shall receive from the Surviving Corporation an amount of cash (rounded
      to the nearest whole cent) payable by check or otherwise equal to the product
      of
      (i) such fraction, multiplied by (ii) the fair market value of the Common
      Stock.

     

    (e)   Notwithstanding
      anything to the contrary in this Section 2.2, Surviving Corporation shall
      not be liable to any holder of Shares for any amount paid to a public official
      pursuant to and in accordance with the requirements of applicable abandoned
      property, escheat or similar Laws.

     

    (f)   If
      any
      Certificate shall have been lost, stolen or destroyed, upon the making of an
      affidavit of that fact, in form and substance acceptable to the Surviving
      Corporation, by the person claiming such Certificate to be lost, stolen or
      destroyed, and complying with such other conditions as the Surviving Corporation
      may reasonably impose (including the execution of an indemnification undertaking
      or the posting of an indemnity bond or other surety in favor of the Surviving
      Corporation with respect to the Certificate alleged to be lost, stolen or
      destroyed), the Surviving Corporation will deliver to such person the Merger
      Consideration issuable in respect of each such Certificate, without interest
      thereon.

     

    2.3. 
        Dissenting
      Shares.

     

    (a)  
        Notwithstanding
      Section 2.1, Shares outstanding immediately prior to the Effective Time and
      held by a holder who is entitled to an appraisal of the fair market value for
      such shares and who does not vote in favor of or consent in writing to the
      Merger and who otherwise complies with the provisions of Section 1300 of
      the CGCL (the “Dissenting
      Shares”)
      shall
      not be converted into the right to receive any portion of the Merger
      Consideration as provided in Section 2.1(b) of this Agreement, unless and
      until such holder fails to perfect or withdraws or otherwise loses his right
      to
      an appraisal of the fair market value of his Dissenting Shares. If, after the
      Effective Time, any such holder fails to perfect or withdraws or loses his
      right
      to an appraisal of the fair market value of his Dissenting Shares under the
      CGCL, such Dissenting Shares shall thereupon be treated as if they had been
      converted as of the Effective Time into the right to receive the Merger
      Consideration to which such holder is entitled, without interest
      thereon.

     

    (b)  
        SPI
      shall
      give the Company prompt notice of any demands received by the SPI for the
      payment of fair market value for Shares, and the Company shall have the right
      to
      direct all negotiations and proceedings with respect to such demands. SPI shall
      not make any such payment without the Company’s prior written
      consent.

     

    

     

    

    
      
        
          
          

        

        
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    2.4. 
        Additional
      Actions.
      If, at
      any time after the Effective Time, the Surviving Corporation shall consider
      or
      be advised that any deeds, bills of sale, assignments, assurances or any other
      actions or things are necessary or desirable to vest, perfect or confirm of
      record or otherwise in the Surviving Corporation its right, title or interest
      in, to or under any of the rights, properties or assets of SPI or Merger Sub
      or
      otherwise to carry out this Agreement, the officers and directors of the
      Surviving Corporation shall be authorized to execute and deliver, in the name
      and on behalf of SPI or Merger Sub, all such deeds, bills of sale, assignments
      and assurances and to take and do, in the name and on behalf of SPI or Merger
      Sub, all such other actions and things as may be necessary or desirable to
      vest,
      perfect or confirm any and all right, title and interest in, to and under such
      rights, properties or assets in the Surviving Corporation or otherwise carry
      out
      the transactions contemplated by this Agreement.

     

    2.5. 
        Withholding
      Taxes; Payments to Public Officials.
      The
      Company shall be entitled to deduct and withhold from any consideration payable
      or otherwise deliverable to holders of Shares pursuant to this Agreement such
      amounts as the Company may be required to deduct or withhold therefrom under
      the
      Code or under any provision of state, local or foreign Tax Law. To the extent
      such amounts are so deducted or withheld, such amounts shall be treated for
      all
      purposes under this Agreement as having been paid to the holders of Shares
      to
      whom such amounts would otherwise have been paid. The Company shall not be
      liable to holders of Shares for any cash amounts delivered to any public
      official pursuant to any applicable abandoned property, escheat or similar
      Law.

     

    ARTICLE
      3

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company and Merger Sub jointly and severally represent and warrant to SPI that,
      except as set forth in the disclosure schedules delivered by the Company and
      Merger Sub to SPI (the “Company
      Disclosure Schedule”)
      which
      have been provided to SPI prior to the date hereof:

     

    3.1. 
        Corporate
      Existence and Power.
      

     

    (a)  
        The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Nevada, and has all corporate powers
      and
      authority and all governmental licenses, authorizations, permits, consents
      and
      approvals required to own, lease and operate its properties and to carry on
      its
      business as now conducted, except for those licenses, authorizations, permits,
      consents and approvals the absence of which would not, individually or in the
      aggregate, have a Material Adverse Effect on the Company. The Company is duly
      qualified to do business as a foreign corporation and is in good standing in
      each jurisdiction where such qualification is necessary, except for those
      jurisdictions where the failure to be so qualified would not, individually
      or in
      the aggregate, have a Material Adverse Effect on the Company. The Company has
      heretofore delivered to SPI true and complete copies of the Company’s Articles
      of Incorporation and Bylaws as currently in effect.

     

    (b) 
        Merger
      Sub is a corporation duly incorporated, validly existing and in good standing
      under the laws of the State of Nevada, and has all corporate powers and
      authority and all governmental licenses, authorizations, permits, consents
      and
      approvals required to own, lease and operate its properties and to carry on
      its
      business as now conducted, except for those licenses, authorizations, permits,
      consents and approvals the absence of which would not, individually or in the
      aggregate, have a Material Adverse Effect on Merger Sub. Merger Sub is duly
      qualified to do business as a foreign corporation and is in good standing in
      each jurisdiction where such qualification is necessary, except for those
      jurisdictions where the failure to be so qualified would not, individually
      or in
      the aggregate, have a Material Adverse Effect on Merger Sub. Merger Sub has
      heretofore delivered to SPI true and complete copies of Merger Sub’s Articles of
      Incorporation and Bylaws as currently in effect.

     

    

    
      
        
          
          

        

        
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    3.2.
        Subsidiaries.
      Except
      for Merger Sub, the Company does not own, directly or indirectly, any equity
      or
      other ownership interest in any corporation, partnership, joint venture or
      other
      entity or enterprise.

     

    3.3.
        Corporate
      Authorization.

     

    (a) 
        The
      execution, delivery and performance by the Company of this Agreement and the
      consummation of the transactions contemplated hereby are within the Company’s
      corporate powers and have been duly authorized by all necessary corporate
      action, except for the required approval of the holders of the Company’s capital
      stock in connection with the consummation of the Merger. This Agreement and
      the
      Merger have been duly authorized by all necessary corporate action of the
      Company in accordance with the NRS. The execution, delivery and performance
      by
      Merger Sub of this Agreement and the consummation of the transactions
      contemplated hereby are within Merger Sub’s corporate powers and have been duly
      authorized by all necessary corporate action, except for the required approval
      of the holders of Merger Sub’s capital stock in connection with the consummation
      of the Merger. This Agreement and the Merger have been duly authorized by all
      necessary corporate action of Merger Sub in accordance with the
      NRS.

     

    (b) 
        Merger
      Sub’s Board of Directors, at a meeting duly called and held, has unanimously
      (i) determined that this Agreement and the transactions contemplated hereby
      (including the Merger) are fair to, and in the best interests of, its
      shareholders, and (ii) approved and adopted this Agreement and the
      transactions contemplated hereby (including the Merger), which approval
      satisfies in full any applicable requirements of the NRS. Merger Sub’s Board of
      Directors, at a meeting duly called and held, has unanimously
      (i) determined that this Agreement and the transactions contemplated hereby
      (including the Merger) are fair to, and in the best interests of, its
      shareholders, and (ii) approved and adopted this Agreement and the
      transactions contemplated hereby (including the Merger), which approval
      satisfies in full any applicable requirements of the NRS.

     

    (c)   This
      Agreement has been duly executed and delivered by the Company. This Agreement
      constitutes, and the Transaction Documents to be executed and delivered by
      the
      Company will constitute, legal, valid and binding obligations of the Company,
      enforceable against the Company, as applicable, in accordance with their
      respective terms, except to the extent that its enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium or other laws
      affecting the enforcement of creditors rights generally or by general equitable
      principles. This Agreement has been duly executed and delivered by Merger Sub.
      This Agreement constitutes, and the Transaction Documents to be executed and
      delivered by Merger Sub will constitute, legal, valid and binding obligations
      of
      Merger Sub, enforceable against Merger Sub, as applicable, in accordance with
      their respective terms, except to the extent that its enforceability may be
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws affecting the enforcement of creditors rights generally or by general
      equitable principles.

     

    3.4.
        Governmental
      Authorization.
      The
      execution, delivery and performance by the Company and Merger Sub of this
      Agreement and the consummation by the Company and Merger Sub of the transactions
      contemplated hereby require no action by or in respect of, or filing with,
      any
      governmental body, agency, official or authority, other than (a) the filing
      of the Nevada Articles of Merger and other documents in accordance with the
      NRS,
      (b) the filing of the California Agreement of Merger and other documents in
      accordance with the CGCL, and (c) any other filings, approvals or
      authorizations which, if not obtained, would not, individually or in the
      aggregate, have a Material Adverse Effect on the Company or Materially impair
      the ability of the Company or Merger Sub to consummate the transactions
      contemplated by this Agreement.

     

    

    
      
        
          
          

        

        
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    3.5.
        Non-Contravention.
      The
      execution, delivery and performance by the Company and Merger Sub of this
      Agreement and the consummation by the Company and Merger Sub of the transactions
      contemplated hereby do not and will not (i) contravene or conflict with the
      Articles of Incorporation or Bylaws of the Company or Merger Sub, respectively,
      (ii) assuming compliance with the matters referred to in Section 3.4,
      contravene or conflict with or constitute a violation of any provision of any
      Law, judgment, injunction, order or decree binding upon or applicable to the
      Company, (iii) require the consent or other action of any Person under,
      constitute a Default under, or give rise to any right of termination,
      cancellation or acceleration of any right or obligation of the Company or to
      a
      loss of any benefit to which the Company is entitled under any provision of
      any
      Material agreement or other instrument binding upon the Company or any Material
      license, franchise, permit, certificate, approval or other similar authorization
      affecting, or relating in any way to, the assets or business of the Company,
      (iv) result in the creation or imposition of any Material Lien on any asset
      of the Company, except, in the case of clause (ii), for such matters as
      would not, individually or in the aggregate, have a Material Adverse Effect
      on
      the Company or Materially impair the ability of the Company to consummate the
      transactions contemplated by this Agreement.

     

    3.6.
        Compliance
      with Law and Other Instruments.

     

    (a) 
        The
      Company holds all Material licenses, permits and authorizations necessary for
      the lawful conduct of its business as now being conducted pursuant to all
      applicable Laws of all governmental bodies, agencies and other authorities
      having jurisdiction over the Company or any part of its operations, and there
      are no violations or claimed violations by the Company, or action or proceeding
      pending against the Company of any such license, permit or authorization or
      any
      such Law. Section 3.6 of the Company Disclosure Schedule sets forth all
      such required licenses, permits and authorizations.

     

    (b)   The
      business of the Company has been and is being conducted in compliance with
      all
      applicable Laws, except for violations or failures to so comply that would
      not,
      individually or in the aggregate, have a Material Adverse Effect on the Company.
      No investigation or review by any Regulatory Authority with respect to the
      Company is pending or threatened in writing. The Company has not received any
      written communication in the past two years from a Regulatory Authority that
      alleges that the Company is not in compliance with any applicable
      Law.

     

    3.7. 
        Capitalization.

     

    (a)   The
      authorized capital stock of the Company consists of 100,000,000 shares of common
      stock, par value $0.0001 and 20,000,000 shares of preferred stock. As of August
      1, 2006, there were outstanding 5,000,000 shares of common stock and no shares
      of preferred stock. All outstanding shares of Common Stock have been duly
      authorized and validly issued and are fully paid and nonassessable and free
      of
      preemptive rights. There are no outstanding (i) shares of capital stock or
      other voting securities of the Company, (ii) securities of the Company
      convertible into or exchangeable for shares of capital stock or voting
      securities of the Company, or (iii) options, restricted stock, stock
      appreciation rights, other stock based compensation awards or other rights
      to
      acquire from the Company, or other obligation of the Company to issue, any
      capital stock, voting securities or securities convertible into or exchangeable
      for capital stock or voting securities of the Company. There are no outstanding
      obligations of the Company to repurchase, redeem or otherwise acquire any
      securities referred to in clauses (i), (ii) or (iii) above.

     

    

    
      
        
          
          

        

        
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    (b)  
        As
      of the
      date hereof, there are no outstanding bonds, debentures, notes or other
      indebtedness of the Company having the right to vote (or convertible into or
      exercisable for Common Stock having the right to vote) on any matters on which
      shareholders of the Company may vote.

     

    (c)  
        All
      of
      the Common Stock was issued or granted in compliance with all applicable federal
      and state securities laws.

     

    (d)  
        To
      the
      Knowledge of the Company, there are no voting agreements or voting trusts
      between or among any Person or Persons relating to the Company or the Common
      Stock. The Company is not obligated to issue or repurchase any shares of Common
      Stock for any purpose and no Person has entered into any Contract (whether
      preemptive or contractual) for the purchase, subscription or issuance of any
      unissued shares or other securities of the Company, whether now or in the
      future.

     

    (e)  
        The
      Company has agreed to register certain Common Stock on Form SB-2 as set forth
      on
      Schedule 3.7(e). 

     

    3.8. 
        Company
      Financial Statements; Absence of Undisclosed Liabilities.

     

    (a)  
        The
      Company has delivered to SPI the Company’s audited balance sheets as of
      December 31, 2005 and the related audited statements of income and cash
      flows for the fiscal years then ended, together with the report thereon of
      the
      Company’s independent certified public accountants and the Company’s unaudited
      balance sheet as of March 31, 2006 and the related unaudited statements of
      income and cash flows for the month ended (collectively, the “Company
      Financial Statements”).
      The
      Company Financial Statements present fairly the financial condition, results
      of
      operation and cash flows of the Company as of the respective dates and for
      the
      respective periods referred to in such financial statements, subject to normal
      year-end adjustments to unaudited financial statements.

     

    (b)  
        The
      Company Financial Statements, including the notes thereto, have been prepared
      in
      accordance with United States generally accepted accounting principles
      (“GAAP”)
      applied consistently throughout the periods involved (except as disclosed
      therein and that unaudited financial statements do not include notes thereto).
      No financial statements of any Person other than the Company is required to
      be
      included in the Company Financial Statements.

     

    (c)  
        Except
      as
      set forth in the Company Financial Statements, the Company does not have any
      liabilities or obligations of any nature (whether accrued, absolute, contingent
      or otherwise), except for liabilities and obligations incurred in the ordinary
      course of business and which, individually or in the aggregate, could not
      reasonably be expected to have a Material Adverse Effect on the
      Company.

     

    

     

    

    
      
        
          
          

        

        
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    3.9. 
        Absence
      of Certain Changes.
      Since
      July 31, 2006, the business of the Company has been conducted in the ordinary
      course consistent with past practice and there has not been any:

     

    (a) 
        event,
      occurrence or development of a state of circumstances or facts which would,
      individually or in the aggregate, have a Material Adverse Effect on the Company
      (other than adverse effects arising from the execution and performance of this
      Agreement, changes in general economic conditions or changes applicable
      generally to the industry) or any event, occurrence or development which would
      have a Material Adverse Effect on the ability of the Company to consummate
      the
      Merger;

     

    (b)  
        declaration,
      setting aside or payment of any dividend or other distribution with respect
      to
      any shares of capital stock of the Company, or any repurchase, redemption or
      other acquisition by the Company of any outstanding shares of capital stock
      or
      other securities of, or other ownership interests in the Company;

     

    (c)  
        split,
      combination, re-classification of any Common Stock or any amendment of any
      term
      of any outstanding security of the Company;

     

    (d)  
        incurrence,
      assumption or guarantee by the Company of any indebtedness for borrowed money
      other than in the ordinary course and in amounts and on terms consistent with
      past practices;

     

    (e)  
        creation
      or other incurrence by the Company of any Lien on any asset other than in the
      ordinary course consistent with past practices;

     

    (f)   transaction
      or commitment made, or any contract or agreement entered into, by the Company
      relating to their assets or business (including the acquisition or disposition
      of any assets) or any relinquishment by the Company of any contract or other
      right, in either case, Material to the Company, other than transactions and
      commitments in the ordinary course consistent with past practices and those
      contemplated by this Agreement;

     

    (g)  
        change
      in
      any method of accounting, method of tax accounting or accounting practice by
      the
      Company, except for any such change that is consistent with GAAP or required
      by
      reason of a concurrent change in GAAP;

     

    (h)  
        (i) grant
      of any severance or termination pay to any current or former director, officer
      or employee of the Company, (ii) entering into of any employment, deferred
      compensation or other similar agreement (or any amendment to any such existing
      agreement) with any current or former director, officer or employee of the
      Company, (iii) increase in benefits payable under any existing severance or
      termination pay policies or employment agreements, (iv) increase in
      compensation, bonus or other benefits payable or otherwise made available to
      current or former directors, officers or employees of the Company (other than
      in
      the ordinary course of business salary increases for employees other than
      officers and directors), or (v) the declaration or payment of any bonuses
      or year-end payments to any current or former directors, officers or employees
      of the Company;

     

    (i)   tax
      election or any settlement of tax liability, in either case that is Material
      to
      the Company;

     

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

     

    (j)   asset
      acquisition or expenditure in excess of $25,000 individually or $50,000 in
      the
      aggregate;

     

    (k)  
        payment,
      prepayment or discharge of liability other than in the ordinary course of
      business or any failure to pay any liability when due;

     

    (l)   
        write-offs
      or write-downs of any assets of the Company;

     

    (m) 
        creation,
      termination or amendment of, or waiver of any right under, any Material Contract
      of the Company;

     

    (n)  
        event
      that, if taken during the period from the date of this Agreement through the
      Effective Time, would constitute a breach of Section 5.1 hereof;
      or

     

    (o)  
        agreement
      or commitment to do any of the foregoing.

     

    3.10.  Litigation.
      There
      is no action, suit, investigation, audit or proceeding pending against, or
      to
      the Knowledge of the Company threatened against or affecting, the Company,
      its
      officers or directors or any of its properties before any court or arbitrator
      or
      any governmental body, agency or official. No former shareholder, employee,
      officer or director of the Company has any claim pending or to the Knowledge
      of
      the Company threatened against the Company, its officers or directors or any
      of
      its properties relating to sales of Common Stock by the Company or any of the
      Company’s current or former shareholders. The Company nor any of its officers
      and directors nor any of its properties are subject to any order, writ,
      judgment, decree or injunction of any court or arbitrator or any governmental
      body, agency or official. Section 3.10
      of the Company Disclosure Schedule contains a complete list of all claims
      brought against the Company, or pending, since January 1, 2001, together
      with a brief statement of the nature and amount of the claim, the court and
      jurisdiction in which the claim was brought, the resolution (if resolved),
      and
      the availability of insurance to cover the claim. To the Knowledge of the
      Company, there are no facts or circumstances that could reasonably be expected
      to give rise to any actions set forth in this Section 3.10.

     

    3.11.  Taxes.

     

    (a)  
        Except
      as
      set forth in (or resulting from matters set forth in) Section 3.11 of the
      Company Disclosure Schedule or as could not, individually or in the aggregate,
      reasonably be expected to have a Material Adverse Effect on the
      Company:

     

    (i)   the
      Company has prepared and timely filed with the appropriate governmental agencies
      all franchise, income and all other Tax returns and reports required to be
      filed
      on or before the Effective Time (collectively the “Returns”),
      taking into account any extension of time to file granted to or obtained on
      behalf of the Company;

     

    (ii)  
        all
      Taxes
      of the Company shown on such Returns or otherwise known by the Company to be
      due
      or payable have been timely paid in full to the proper authorities, other than
      such Taxes as are adequately reserved for in accordance with GAAP;

     

    (iii) 
        all
      deficiencies resulting from Tax examinations of income, sales and franchise
      and
      all other Returns filed by the Company in any jurisdiction in which such Returns
      are required to be so filed have been paid and no claim has been made by an
      authority in a jurisdiction where the Company does not file Returns that is
      or
      may be subject to the taxation by that jurisdiction;

     

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

     

     

    (iv) 
        all
      Returns filed by the Company are correct and complete in all respects or
      adequate reserves have been established with respect to any additional Taxes
      that may be due (or may become due) as a result of such Returns not being
      correct or complete;

     

    (v)  
        to
      the
      Knowledge of the Company, no Tax liens have been filed with respect to any
      Taxes;

     

    (vi) 
        the
      Company has made timely payments of the Taxes required to be deducted and
      withheld in connection with amounts paid or owing to any employee, independent
      contractor, creditor, shareholder, or other third party;

     

    (vii)   to
      the
      Knowledge of the Company, the Company is not liable to suffer any recapture,
      clawback or withdrawal of any relief or exemption from Tax howsoever arising
      (including the entering into and the consummation of the Merger), and whether
      by
      virtue of any act or omission by the Company or by any other Person or Persons;
      and

     

    (viii)  to
      the
      Knowledge of the Company, the Company is not liable to be assessed for or made
      accountable for any Tax for which any other Person or Persons may be liable
      to
      be assessed or made accountable whether by virtue of the entering into or the
      consummation of the Merger or by virtue of any act or acts done by or which
      may
      be done by or any circumstance or circumstances involving or which may involve
      any other Person or Persons; 

     

    (b)  
        The
      Company is not a party to any agreement, contract, or arrangement that would,
      as
      a result of the transactions contemplated hereby, result, separately or in
      the
      aggregate, in (i) the payment of any “excess parachute payments” within the
      meaning of Section 280G of the Code by reason of the Merger, (ii) the
      payment of any form of compensation or reimbursement for any Tax incurred by
      any
      Person arising under Section 280G of the Code, or (iii) the payment of
      any amounts not deductible by the Company, in whole or in part, by reason of
      Section 162(m) of the Code.

     

    3.12.  The
      Company Employee Benefit Plans.
      The
      Company has no employee benefit plans.

     

    3.13.  Banking
      and Finders’ Fees.
      Except
      for Roth Capital, LLP, there is no investment banker, broker, finder or other
      intermediary, which has been retained by or is authorized to act on behalf
      of
      the Company who might be entitled to any fee or commission in connection with
      the transactions contemplated by this Agreement.

     

    3.14.  Environmental
      Compliance.

     

    (a)  
        The
      Company is in compliance with all Environmental Laws and all Environmental
      Permits (except where non-compliance would not have a Material Adverse Effect
      upon the Company).

     

    (b)  
        The
      Company has not received any written notice regarding any violation of any
      Environmental Laws, or any Company Environmental Liabilities, including any
      investigatory, remedial or corrective obligations, relating to the Company
      or
      its facilities arising under Environmental Laws.

     

    

     

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

     

    3.15.  Interests
      in Real Property. Section 3.15
      of the Company Disclosure Schedule is the complete and correct list and brief
      description of all real property leased by the Company on the Closing Date.
      The
      Company does not own any real property. All real property leases to which the
      Company is a party are valid and in full force and effect and are valid and
      binding on the parties thereto, assuming enforceability as to the parties other
      than the Company,
      and the
      Company is in
      Default of any Material provision thereof. 

     

    3.16.  Personal
      Property.
      The
      Company has good and marketable title, free and clear of all title defects,
      security interests, pledges, options, claims, liens, encumbrances and
      restrictions of any nature whatsoever to all inventory and receivables and
      to
      any item of machinery, equipment, or tangible personal property reflected on
      the
      balance sheet of the Company Financial Statements or used in the business by
      the
      Company (regardless of whether reflected on the balance sheet of the Company
      Financial Statements). 

     

    3.17.  
       Employees,
      Directors and Officers.
      Except
      as disclosed in Section 3.17 of the Company Disclosure Schedules, no unpaid
      salary or bonuses, other than for the immediately preceding pay period and
      other
      than pursuant to the existing deferred compensation plans of the Company is
      now
      payable to any of the Company’s officers, directors or employees.

     

    3.18.  Contracts.
      Except
      as set forth in Section 3.18 of the Company Disclosure Schedule, the
      Company is not a party to any: 

     

    (i)   Contract
      that involves performance of services or delivery of goods or materials by
      or to
      the Company of an amount or value in excess of $25,000;

     

    (ii)  
        Contract
      that was not entered into in the ordinary course of business and that involves
      expenditures or receipts of the Company in excess of $25,000;

     

    (iii)
        lease,
      rental or occupancy agreement, license, installment and conditional sale
      agreement, and other Contract affecting the ownership of, leasing of, title
      to,
      use of, or any leasehold or other interest in, any real or personal
      property;

     

    (iv) 
        joint
      venture, partnership, and other Contract (however named) involving a sharing
      of
      profits, losses, costs, or liabilities by the Company with any other
      Person;

     

    (v)  
        Contract
      containing covenants that in any way purport to restrict in any material respect
      the business activity of the Company or any current or future Affiliate of
      the
      Company or limit the freedom of the Company or any current or future Affiliate
      of the Company to engage in any line of business or to compete with any Person
      anywhere in the world;

     

    (vi) 
        Contract
      providing for payments to or by any Person based on sales, purchases, or
      profits, other than direct payments for goods;

     

    (vii)
        Contract
      between the Company, on the one hand, and any Affiliate of the Company, on
      the
      other hand;

     

    (viii)  Contract
      regarding indebtedness for borrowed money (including guaranties of the
      obligations of others with respect thereto) or any capitalized lease obligation
      or similar arrangement, or under which a Lien on any tangible or intangible
      asset of the Company or any of their respective capital stock or equity
      securities is imposed;

     

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    

    (ix) 
        Contract
      under which the Company has advanced or loaned money to any of its Employees
      other than advancement of expenses in the ordinary course of
      business;

     

    (x)  
        Contract
      covering the employment, compensation or severance, of or otherwise relating
      to,
      any Employee;

     

    (xi)
        Contract
      that obligates the Company to act as a guarantor or surety, or to otherwise
      provide credit support for any Person, irrespective of the amount involved
      or
      type of underlying liability or obligation;

     

    (xii)
        Contract
      that contains obligations of the Company to indemnify third parties against
      any
      type of liability, whether known, unknown, fixed, contingent or otherwise;
      and

     

    (xiii)  amendment,
      supplement and modification (whether oral or written) in respect of any of
      the
      foregoing or any Contract, agreement or commitment to enter into amend,
      supplement or modify any of the foregoing.

     

    3.19.  Affiliate
      Transactions.
      There
      are no Material Contracts or other Material transactions between the Company
      and
      any Affiliate of the Company.

     

    3.20.  Insurance
      and Banking Facilities.
      The
      Company has in full force and effect all insurance and indemnity policies that
      are customary in coverage and amount for a company of its size and industry.
      

     

    3.21.  Powers
      of Attorney and Suretyships.
      The
      Company does not have any powers of attorney outstanding (other than a power
      of
      attorney issued in the ordinary course of business with respect to tax matters
      or to customs agents and customs brokers), and, except for obligations as an
      endorser of negotiable instruments incurred in the ordinary course of business,
      the Company does not have any obligations or liabilities (absolute or
      contingent) as guarantor, surety, co-signer, endorser, co-maker, indemnitor
      or
      otherwise respecting the obligation of any other Person.

     

    3.22.  Minutes
      and Stock Records.
      The
      Company has provided SPI with complete and correct copies of the minute books
      and stock records of the Company. Such items contain a complete and correct
      record in all Material respects of all proceedings and actions taken at all
      meetings of, and all actions taken by written consent by, the holders of capital
      stock of the Company and its Board of Directors, and all original issuances
      and
      subsequent transfers and repurchases of their respective capital
      stock.

     

    3.23.  Reorganization.
      The
      Company has not taken any action, nor aware of any fact, that would jeopardize
      the qualification of the Merger as a tax-free reorganization under Section
      368(a)(1)(A) of the Code.

     

    3.24.  No
      Prior Activities.
      Except
      for obligations incurred in connection with its incorporation or the negotiation
      and consummation of this Agreement and the transactions contemplated hereby,
      Merger Sub has neither incurred any obligation or liability or engaged in any
      business or activity of any type or kind whatsoever or entered into any
      agreement or arrangement with any person or entity, and has no employees,
      liabilities or assets. 

     

    

    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

     

     

    3.25.  Full
      Disclosure.
      All of
      the representations and warranties made by the Company in
      this
      Agreement, and all statements set forth in the certificates delivered by the
      Company at
      the
      Closing pursuant to this Agreement, are true, correct and complete in all
      Material respects and do not contain any untrue statement of a Material fact
      or
      omit to state any Material fact necessary in order to make such representations,
      warranties or statements, in light of the circumstances under which they were
      made, misleading. The copies of all documents furnished by the Company pursuant
      to the terms of this Agreement are complete and accurate copies of the original
      documents.

     

    ARTICLE
      4

     

    REPRESENTATIONS
      AND WARRANTIES OF SPI

     

    SPI
      represents and warrants to the Company and Merger Sub that, except as set forth
      in the disclosure schedules delivered by SPI to the Company and Merger Sub
      (the
“SPI
      Disclosure Schedule”)
      which
      have been provided to the Company and Merger Sub prior to the date
      hereof:

     

    4.1.   Organization;
      Subsidiaries. SPI
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of its jurisdiction of organization. SPI has the requisite corporate power
      and
      authority and all necessary government approvals to own, lease and operate
      its
      properties and to carry on its business as now being conducted and as proposed
      to be conducted, except where the failure to have such power, authority and
      governmental approvals would not, individually or in the aggregate, have a
      Material Adverse Effect on SPI. SPI is duly qualified or licensed as a foreign
      corporation to do business, 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 business makes such qualification or licensing necessary, except for such
      failures to be so qualified or licensed and in good standing that would not,
      individually or in the aggregate, have a Material Adverse Effect on SPI. All
      SPI
      subsidiaries are wholly-owned.

     

    4.2.
        Articles
      of Incorporation and Bylaws. SPI
      has
      delivered to Welund a true and correct copy of the Articles of Incorporation
      and
      Bylaws or other charter documents of SPI as amended to date. SPI is not in
      violation of any of the provisions of its Articles of Incorporation or Bylaws
      or
      equivalent organizational documents.

     

    4.3.
        Capital
      Structure. The
      authorized capital stock of SPI consists of 20,000,000 shares of Common Stock
      of
      which 14,000,000 shares were issued and outstanding as of the close of business
      on August 23, 2006, and 20,000,000 shares of Preferred Stock of which none
      were
      outstanding on August 23 2006. Except as set forth in Section 4.3 of the
      Disclosure Schedule, there are no other outstanding shares of capital stock
      or
      voting securities and no outstanding commitments to issue any shares of capital
      stock or voting securities. All outstanding shares of SPI Common Stock are
      duly
      authorized, validly issued, fully paid and non-assessable and are free of any
      liens or encumbrances other than any liens or encumbrances created by or imposed
      upon the holders thereof, and are not subject to preemptive rights or rights
      of
      first refusal created by statute, the Articles of Incorporation or Bylaws of
      SPI
      or any agreement to which SPI is a party or by which it is bound. All
      outstanding shares of SPI Common Stock were issued in compliance with all
      applicable federal and state
      securities laws. There are no contracts, commitments or agreements relating
      to
      voting, purchase or sale of SPI’s capital stock (i) between or among SPI and any
      of its stockholders and (ii) to the best of SPI’s knowledge, between or among
      any of SPI’s stockholders.

     

    

    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

     

    4.4.   Authority.
      SPI
      has
      all requisite corporate power and authority to enter into this Agreement and
      to
      consummate the transactions contemplated hereby. The execution and delivery
      of
      this Agreement and the consummation of the transactions contemplated hereby
      have
      been duly authorized by all necessary corporate action on the part of SPI.
      SPI’s
      Board of Directors has unanimously approved the Merger and this Agreement.
      This
      Agreement has been duly executed and delivered by SPI and assuming due
      authorization, execution and delivery by Welund, constitutes the valid and
      binding obligation of SPI enforceable against SPI in accordance with its
      terms.

     

    4.5.
        No
      Conflicts; Required Filings and Consents.

     

    (a)  
        The
      execution and delivery of this Agreement by SPI does not, and the consummation
      of the transactions contemplated hereby will not, conflict with, or result
      in
      any violation of, or default under (with or without notice or lapse of time,
      or
      both), or give rise to a right of termination, cancellation or acceleration
      of
      any obligation or loss of any benefit under (i) any provision of the
      Articles of Incorporation or Bylaws of SPI, as amended, or (ii) any
      material mortgage, indenture, lease, contract or other agreement or instrument,
      permit, concession, franchise, license, judgment, order, decree, statute, law,
      ordinance, rule or regulation applicable to SPI or any of its properties or
      assets.

     

    (b)   The
      execution, delivery and performance by SPI of this Agreement and the
      consummation by SPI of the transactions contemplated hereby require no action
      by
      or in respect of, or filing with, any governmental body, agency, official or
      authority, other than (a) the filing of the Nevada Articles of Merger and
      other documents in accordance with the NRS, (b) the filing of the
      California Agreement of Merger and other documents in accordance with the CGCL,
      and (c) any other filings, approvals or authorizations which, if not
      obtained, would not, individually or in the aggregate, have a Material Adverse
      Effect on SPI or Materially impair the ability of SPI to consummate the
      transactions contemplated by this Agreement.

     

    4.6.   Financial
      Statements.
      SPI has
      delivered to the Company its unaudited financial statements (balance sheet,
      statement of operations and statement of cash flows) for its wholly-owned
      subsidiaries for the fiscal year ended 2005 and interim period ending June
      2006
      (collectively, the “SPI
      Financial Statements”).
      The
      SPI Financial Statements accurately set out and describe the financial condition
      and operating results of SPI as of the dates, and for the periods, indicated
      therein, subject to normal year-end audit adjustments. SPI will maintain a
      standard system of accounting established and administered in accordance with
      U.S. GAAP. 

     

    4.7.
        Absence
      of Undisclosed Liabilities. SPI
      has
      no material obligations or liabilities of any nature (matured or unmatured,
      fixed or contingent) other than (i) those set forth or adequately provided
      for in the SPI Financial Statements, (ii) those incurred in the ordinary
      course of business and not required to be set forth in the SPI Financial
      Statements under U.S. GAAP, (iii) those incurred in the ordinary course of
      business since the date of the SPI Financial Statements and consistent with
      past
      practice, and (iv) those incurred in connection with the execution of this
      Agreement.

     

    4.8.
        Absence
      of Certain Changes. Except
      as
      set forth on SPI Disclosure Schedule, since June 30, 2006 there has not been,
      occurred or arisen any material change in SPI’s business or corporate operations
      or its financial condition. 

     

    4.9.
        Litigation.
      There
      is
      no private or governmental action, suit, proceeding, claim, arbitration or
      investigation pending before any agency, court or tribunal, foreign or domestic,
      or, to the Knowledge of SPI, threatened against SPI or any of its properties
      or
      any of its officers or directors (in their capacities as such) that,
      individually or in the aggregate, could reasonably be expected to have a
      Material Adverse Effect on SPI. There is no judgment, decree or order against
      SPI or, to the best Knowledge of SPI, any of its directors or officers (in
      their
      capacities as such), that could prevent, enjoin, or materially alter or delay
      any of the transactions contemplated by this Agreement, or that could reasonably
      be expected to have a Material Adverse Effect on SPI. 

     

    

    
      
        
          
          

        

        
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    4.10.  Restrictions
      on Business Activities. There
      is
      no agreement, judgment, injunction, order or decree binding upon SPI which
      has
      or could reasonably be expected to have the effect of prohibiting or Materially
      impairing any current or future business practice of SPI, any acquisition of
      property by SPI or the overall conduct of business by SPI as currently conducted
      or as proposed to be conducted by SPI. SPI has not entered into any agreement
      under which SPI is restricted from selling, licensing or otherwise distributing
      any of its products to any class of customers, in any geographic area, during
      any period of time or in any segment of the market.

     

    4.11.  Permits;
      Company Products.
      SPI is
      in possession of all franchises, grants, authorizations, licenses, permits,
      easements, variances, exceptions, consents, certificates, approvals and orders
      necessary for SPI, to own, lease and operate its properties or to carry on
      its
      business as it is now being conducted except for any such failures as would
      not,
      individually or in the aggregate, have a Material Adverse Effect on SPI.

     

    4.12.  Title
      to Property.

     

    (a)  
        SPI
      has
      good and marketable title to all of its respective properties, interests in
      properties and assets, real and personal, reflected in the SPI Financial
      Statements or acquired after the June 30, 2006 (except properties, interests
      in
      properties and assets sold or otherwise disposed of since June 30, 2006 in
      the
      ordinary course of business), or with respect to leased properties and assets,
      valid leasehold interests in, free and clear of all mortgages, liens, pledges,
      charges or encumbrances of any kind or character, except (i) the lien of
      current taxes not yet due and payable, (ii) such imperfections of title,
      liens and easements as do not and will not Materially detract from or interfere
      with the use of the properties subject thereto or affected thereby, or otherwise
      Materially impair business operations involving such properties, and
      (iii) liens securing debt which is reflected on the SPI Financial
      Statements. 

     

    (b)  
        Section
      4.12(b) of the SPI Disclosure Schedule also sets forth a true, correct and
      complete list of all equipment (the “Equipment”)
      owned
      or leased by SPI, and such Equipment is, taken as a whole, (i) adequate for
      the conduct of SPI’s business, consistent with its past practice, and
      (ii) in good operating condition (except for ordinary wear and
      tear).

     

    4.13.  Intellectual
      Property.

     

    (a) 
        SPI
      owns,
      or is licensed or otherwise possesses legally enforceable rights to use all
      patents, patent rights, trademarks, trademark rights, trade names, trade name
      rights, service marks, copyrights, and any applications for any of the
      foregoing, maskworks, net lists, schematics, industrial models, inventions,
      technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
      computer software programs or applications (in both source code and object
      code
      form), and tangible or intangible proprietary information or material
      (“Intellectual
      Property”)
      that
      are used or proposed to be used in SPI’s business as currently conducted or as
      proposed to be conducted by SPI, except to the extent that the failure to have
      such rights have not had and could not reasonably be expected to have a Material
      Adverse Effect on SPI.

     

    

    
      
        
          
          

        

        
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    (b)  
        There
      is
      no material unauthorized use, disclosure, infringement or misappropriation
      of
      any Intellectual Property rights of SPI, any trade secret material to SPI or
      any
      Intellectual Property right of any third party to the extent licensed by or
      through SPI, by any third party, including any employee or former employee
      of
      SPI. SPI has not entered into any agreement to indemnify any other person
      against any charge of infringement of any Intellectual Property, other than
      indemnification provisions contained in purchase orders arising in the ordinary
      course of business.

     

    (c) 
        SPI
      is
      not or will not be as a result of the execution and delivery of this Agreement
      or the performance of its obligations under this Agreement, in breach of any
      license, sublicense or other agreement relating to the Intellectual Property
      or
      third party Intellectual Property rights, the breach of which would have a
      Material Adverse Effect on SPI.

     

    4.14.  Taxes.

     

    (a)  
        All
      Returns required to be filed by or on behalf of SPI have been duly filed on
      a
      timely basis and such Returns are true, complete and correct. All Taxes shown
      to
      be payable on such Returns or on subsequent assessments with respect thereto,
      and all payments of estimated Taxes required to be made by or on behalf of
      SPI
      under Section 6655 of the Code or comparable provisions of state, local or
      foreign law, have been paid in full on a timely basis, and no other Taxes are
      payable by SPI with respect to items or periods covered by such Returns (whether
      or not shown on or reportable on such Returns). There are no liens on any of
      the
      Assets of SPI with respect to Taxes, other than liens for Taxes not yet due
      and
      payable or for Taxes that SPI is contesting in good faith through appropriate
      proceedings. SPI has not been at any time a member of an affiliated group of
      corporations filing consolidated, combined or unitary income or franchise tax
      returns for a period for which the statute of limitations for any Tax
      potentially applicable as a result of such membership has not
      expired.

     

    (b)   The
      amount of SPI’s liabilities for unpaid Taxes for all periods through the date of
      the Financial Statements do not, in the aggregate, exceed the amount of the
      current liability accruals for Taxes reflected on the Financial Statements,
      and
      the Financial Statements properly accrue in accordance with U.S. GAAP all
      liabilities for Taxes of SPI payable after the date of the Financial Statements
      attributable to transactions and events occurring prior to such date. No
      liability for Taxes of SPI has been incurred or material amount of taxable
      income has been realized (or prior to and including the Effective Time will
      be
      incurred or realized) since such date other than in the ordinary course of
      business.

     

    (c)   Welund
      has been furnished by SPI true and complete copies of (i) relevant portions
      of income tax audit reports, statements of deficiencies, closing or other
      agreements received by or on behalf of SPI relating to Taxes, and (ii) all
      federal, state and foreign income or franchise tax returns and state sales
      and
      use tax Returns for or including SPI for all periods since SPI’s
      inception as applicable.

     

    (d)   No
      audit
      of the Returns of or including SPI by a Governmental Entity is in process,
      threatened or, to SPI’s Knowledge, pending (either in writing or orally,
      formally or informally). No deficiencies exist or have been asserted (either
      in
      writing or orally, formally or informally) or are expected to be asserted with
      respect to Taxes of SPI, and SPI has not received notice (either in writing
      or
      orally, formally or informally) nor does it expect to receive notice that it
      has
      not filed a Return or paid Taxes required to be filed or paid. SPI is not a
      party to any action or proceeding for assessment or collection of Taxes, nor
      has
      such event been asserted or threatened (either in writing or orally, formally
      or
      informally) against SPI or any of its Assets. No waiver or extension of any
      statute of limitations is in effect with respect to Taxes or Returns of SPI.
      SPI
      has disclosed on its federal and state income and franchise tax returns all
      positions taken therein that could give rise to a substantial understatement
      penalty within the meaning of Code Section 6662 or comparable provisions of
      applicable state tax laws.

     

    

    
      
        
          
          

        

        
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    4.15.  Employee
      Matters. SPI
      is in
      compliance in all Material respects with all currently applicable Laws
      respecting employment, discrimination in employment, terms and conditions of
      employment, wages, hours and occupational safety and health and employment
      practices, and is not engaged in any unfair labor practice. There are no pending
      claims against SPI under any workers compensation plan or policy or for long
      term disability. SPI has no material obligations under COBRA or any similar
      state law with respect to any former employees or qualifying beneficiaries
      thereunder. 

     

    4.16.  Material
      Contracts.

     

    (a)   Section 4.16(a)
      of the SPI Disclosure Schedule contain a list of all contracts and agreements
      to
      which SPI is a party of an amount or value in excess of $50,000 and that are
      material to the business, results of operations, or condition (financial or
      otherwise), of SPI taken as a whole (such contracts, agreements and arrangements
      as are required to be set forth in Section 4.16(a) of the SPI Disclosure
      Schedule being referred to herein collectively as the “Material
      Contracts”).
      

     

    (b)   Except
      as
      would not, individually or in the aggregate, have a Material Adverse Effect
      on
      SPI, each Material Contract is a legal, valid and binding agreement, and none
      of
      the Material Contracts is in default by its terms or has been cancelled by
      the
      other party; SPI is not in receipt of any claim of default under any such
      agreement; and SPI does not anticipate any termination or change to, or receipt
      of a proposal with respect to, any such agreement as a result of the Merger
      or
      otherwise. SPI has furnished Welund with true and complete copies of all such
      agreements together with all amendments, waivers or other changes
      thereto.

     

    4.17.  Affiliate
      Transactions.
      Except
      as set forth in Section 4.17 of the Disclosure Schedule, there are no Material
      Contracts or other Material transactions between SPI and any Affiliate of the
      Company.

     

    4.18.  Insurance
      and Banking Facilities.
      SPI has
      in full force and effect all insurance and indemnity policies that are customary
      in coverage and amount for a company of its size and industry. 

     

    4.19.  Compliance
      With Laws. SPI
      has
      complied with, is not in violation of, and has not received any notices of
      violation with respect to, any Laws with respect to the conduct of its business,
      or the ownership or operation of its business, except for such violations or
      failures to comply as could not reasonably be expected to have a Material
      Adverse Effect on SPI.

     

    4.20.  Minute
      Books. The
      minute book of SPI made available to Welund contains a complete summary of
      all
      meetings of directors and stockholders or actions by written consent since
      the
      time of incorporation of SPI through the date of this Agreement, and reflect
      all
      transactions referred to in such minutes accurately in all Material
      respects.

     

    

    
      
        
          
          

        

        
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    4.21.  Complete
      Copies of Materials. SPI
      has
      delivered or made available true and complete copies of each document which
      has
      been requested by Welund or its counsel in connection with their legal and
      accounting review of SPI.

     

    4.22.  Brokers’
      and Finders’ Fees. Except
      for Roth Capital, LLP, SPI has not incurred, nor will it incur, directly or
      indirectly, any liability for brokerage or finders’ fees or agents’ commissions
      or investment bankers’ fees or any similar charges in connection with this
      Agreement or any transaction contemplated hereby.

     

    4.23.  The
      Company Employee Benefit Plans.
      SPI has
      no employee benefit plans currently in effect. 

     

    4.24.  Third
      Party Consents. Except
      as
      set forth in Section 4.24 of the Disclosure Schedule and otherwise provided
      herein, no consent or approval is needed from any third party in order to effect
      the Merger, this Agreement or any of the transactions contemplated
      hereby.

     

    4.25.  Full
      Disclosure.
      All of
      the representations and warranties made by SPI in
      this
      Agreement, and all statements set forth in the certificates delivered by
      SPI at
      the
      Closing pursuant to this Agreement, are true, correct and complete in all
      Material respects and do not contain any untrue statement of a Material fact
      or
      omit to state any Material fact necessary in order to make such representations,
      warranties or statements, in light of the circumstances under which they were
      made, misleading. The copies of all documents furnished by SPI pursuant to
      the
      terms of this Agreement are complete and accurate copies of the original
      documents.

     

    ARTICLE
      5

     

    COVENANTS
      OF THE COMPANY

     

    5.1.
        Conduct
      of the Company Business.
      Except
      as set forth in Section 5.1 of the Company Disclosure Schedule, prior to
      the Closing Date, except with the prior written consent of SPI or as expressly
      contemplated by this Agreement, the Company and Merger Sub shall:

     

    (a)   obtain
      approval from SPI prior to undertaking any Material new business
      opportunity;

     

    (b)   notify
      SPI of any governmental complaints, investigations or hearings (or
      communications indicating that the same may be contemplated), adjudicatory
      proceedings or submissions involving any Material property or other Material
      Assets;

     

    (c)   not
      (i) grant of any severance or termination pay to any current or former
      director, officer or employee of the Company or Merger Sub, (ii) enter into
      of any employment, deferred compensation or other similar agreement (or any
      amendment to any such existing agreement) with any current or former director,
      officer or employee of the Company or Merger Sub, (iii) increase in
      benefits payable under any existing severance or termination pay policies or
      employment agreements, (iv) increase in compensation, bonus or other
      benefits payable or otherwise made available to current or former directors,
      officers or employees of the Company or Merger Sub (other than in the ordinary
      course of business salary increases for employees other than officers and
      directors), (v)  declare or pay of any bonuses or year-end payments to any
      current or former directors, officers or employees of the Company or Merger
      Sub,
      or (vi) establish, adopt, or amend (except as required by applicable Law),
      any collective bargaining, bonus, profit sharing, thrift, pension, retirement,
      deferred compensation, compensation, stock option, restricted stock or other
      benefit plan or arrangement covering any current or former director, officer
      or
      employee of the Company or Merger Sub;

     

    

    
      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

    

     

     

    (d)   not
      (i) create or incur any indebtedness (or, even if in the ordinary course of
      business, not in excess of $50,000 in the aggregate), or (ii) release or
      create any Liens of any nature whatsoever except for Permitted
      Liens;

     

    (e)   not
      make
      or commit to make any capital expenditure, or enter into any lease of capital
      equipment as lessee or lessor;

     

    (f)
         pay,
      prepay or discharge any liability other than in the ordinary course of business
      or fail to pay any liability when due;

     

    (g)   write-off
      or write-down any assets of the Company except as contemplated by this
      Agreement;

     

    (h)     not
      amend
      the Articles of Incorporation, Bylaws or other governing instruments of the
      Company or Merger Sub, except as contemplated by this Agreement;

     

    (i)    not
      make
      any changes in its accounting methods or practices or revalue its Assets, except
      for (i) those changes required by GAAP, and (ii) changes in its tax
      accounting methods or practices that may be necessitated by changes in
      applicable Tax Laws;

     

    (j)    not
      issue, sell, pledge, encumber, authorize the issuance of, enter into any
      Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
      otherwise permit to become outstanding, any additional shares of the Common
      Stock, or any stock appreciation rights, or any option, warrant, conversion,
      or
      other right to acquire any such stock, or any security convertible into any
      such
      stock, or pay or declare or agree to pay or declare any dividend or other
      distribution with respect to any Common Stock, except for shares to be issued
      pursuant to the Company Options outstanding under the any Company stock option
      plans;

     

    (k)   not
      make
      any loan or otherwise arrange for the extension of credit to any Employee or
      increase the aggregate amount of any loan currently outstanding to any
      Employee;

     

    (l)    not
      sell
      or otherwise dispose of any Material Asset or make any Material commitment
      relating to its Assets other than in the ordinary course of business or enter
      into or terminate any lease of real property other than in the ordinary course
      of business except as contemplated by this Agreement;

     

    (m)  
        not
      purchase or redeem, or agree to purchase or redeem, any security of the Company
      (including any share of Common Stock);

     

    (n)   not
      waive
      any stock repurchase rights, accelerate, amend or change the period of
      exercisability of options or restricted stock, 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;

     

    

    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

     

     

    (o)   not
      (i) enter into any new Material Contract, other than in the ordinary course
      of business consistent with past practices, or (ii) Materially modify,
      amend or terminate any Material Contract to which the Company is a party or
      waive, release, or assign any Material rights or claims thereunder, in any
      such
      case in a manner Materially adverse to SPI except as contemplated by this
      Agreement;

     

    (p)   not
      take
      any actions that would make any representation and warranty of the Company
      or
      Merger Sub hereunder inaccurate in any Material respect at the Effective Time;
      or 

     

    (q)   authorize
      any, or commit or agree to take any of, the foregoing actions.

     

    5.2.
        Shareholder
      Approval.
      

     

    (a)   Merger
      Sub will, as promptly as practicable in accordance with applicable Law and
      its
      Articles of Incorporation and Bylaws, submit this Agreement, the Merger and
      related matters for the consideration and approval by Merger Sub’s shareholders.
      Such approval by written consent or shareholder vote will be solicited, in
      compliance with applicable Laws. If approval is obtained by written consent
      Merger Sub shall give, in a timely manner (and shall provide SPI true and
      correct copies of) all notices required to be given under NRS. The information
      distributed to the holders of shares shall not 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.

     

    (b)   The
      Company will, as promptly as practicable in accordance with applicable Law
      and
      its Articles of Incorporation and Bylaws, submit the reverse split of its Common
      Stock, name change to “Solar Power, Inc.” (the “Name
      Change”)
      and
      related matters for the consideration and approval by the Company’s
      shareholders. In connection with soliciting shareholder approval, the Company
      shall prepare and distribute to holders of Shares a disclosure statement in
      accordance with SEC rules and regulations. Such approval by written consent
      or
      shareholder vote will be solicited, in compliance with applicable Laws. If
      approval is obtained by written consent, the Company shall give, in a timely
      manner (and shall provide SPI true and correct copies of) all notices required
      to be given under NRS. The information distributed to the holders of shares
      shall not 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.

     

    5.3.
        Satisfaction
      of Conditions Precedent.
      During
      the term of this Agreement, the Company will use its commercially reasonable
      best efforts to satisfy or cause to be satisfied all the conditions precedent
      that are set forth in Article 9, and the Company will use its commercially
      reasonable best efforts to cause the Merger and the other transactions
      contemplated by this Agreement to be consummated.

     

    5.4.
        Access.
      The
      Company shall afford to SPI, and to the officers, employees, accountants,
      counsel, financial advisors and other representatives of SPI, reasonable access
      during normal business hours during the period prior to the Effective Time
      or
      the termination of this Agreement to all of the Company’s properties, books,
      contracts, commitments, personnel and records and, during such period, the
      Company shall furnish promptly to SPI, (a) a copy of each report, schedule,
      registration statement and other documents filed by it during such period
      pursuant to the requirements of federal or state securities laws and
      (b) all other information concerning its business, properties and personnel
      as SPI or its representatives may reasonably request. 

     

    

    
      
        
          
          

        

        
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    5.5.
        Notification
      of Certain Matters.
      The
      Company and Merger Sub shall give prompt notice to SPI of (i) the
      occurrence or non-occurrence of any event the occurrence or non-occurrence
      of
      which would cause any of the Company or Merger Sub representation or warranty
      contained in this Agreement to be untrue or inaccurate at or prior to the
      Effective Time and (ii) any failure of the Company or Merger Sub to comply
      with or satisfy any covenant, condition or agreement to be complied with or
      satisfied by it hereunder; provided, however, that the delivery of any notice
      pursuant to this Section 5.5 shall not limit or otherwise affect the
      remedies available hereunder to SPI.

     

    5.6.
        Name
      Change.
      The
      Company shall have filed and received confirmation of such filing, and provided
      same to SPI, of the Name Change with the Secretary of State of the State of
      Nevada. 

     

    5.7.
        Sale
      of Current Business.
      The
      Company shall have completed the sale of all of its existing businesses and
      paid
      all outstanding liabilities incurred as of the Closing Date, and provided
      evidence thereof to SPI. 

     

    5.8.   Information
      Provided by Company.
      The
      Company and Merger Sub shall provide SPI with an officer’s certificate
      certifying that all Material Information provided by the Company and Merger
      Sub
      to SPI does not contain any untrue statement of a Material fact or omit to
      state
      any Material fact necessary in order to make such statements, in light of the
      circumstances under which they were made, misleading.

     

    5.9.
        Obligations
      of Merger Sub.
      The
      Company shall take all action necessary to cause Merger Sub to perform its
      obligations under this Agreement and to consummate the Merger on the terms
      and
      conditions set forth in this Agreement. 

     

    5.10.  Indemnification.
      The
      Articles of Incorporation and the Bylaws of the Surviving Corporation shall
      contain the provisions with respect to indemnification, exculpation and
      advancement of expenses identical to those set forth in the Articles of
      Incorporation and Bylaws of SPI on the date of this Agreement, which provisions
      shall not be amended, repealed or otherwise in any manner that would adversely
      affect the rights thereunder of individuals who were directors, officers,
      employees or agents of SPI at or prior to the Effective Time, unless such
      modification is required by Law.

     

    ARTICLE
      6

     

    COVENANTS
      OF SPI

     

    6.1.
        Notification
      of Certain Matters.
      SPI
      shall give prompt notice to the Company and Merger Sub of (i) the
      occurrence or non-occurrence of any event the occurrence or non-occurrence
      of
      which would cause any SPI representation or warranty contained in this Agreement
      to be untrue or inaccurate at or prior to the Effective Time and (ii) any
      failure of SPI to comply with or satisfy any covenant, condition or agreement
      to
      be complied with or satisfied by it hereunder; provided, however, that the
      delivery of any notice pursuant to this Section 6.1 shall not limit or
      otherwise affect the remedies available hereunder to the Company and Merger
      Sub.

     

    

    
      
        
          
          

        

        
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    6.2.
        Satisfaction
      of Conditions Precedent.
      During
      the term of this Agreement, SPI will use its commercially reasonable best
      efforts to cause the Merger and the other transactions contemplated by this
      Agreement to be consummated.

     

    6.3.
        Conduct
      of Business.
      During
      the term of this Agreement, SPI will conduct its business in the ordinary course
      and not intentionally cause a Material decrease in the value of its Assets,
      stockholder equity (except as disclosed to the Company) or business.

     

    6.4.
        Information
      Provided by SPI.
      SPI
      shall provide the Company with all Material information and financial statements
      about SPI necessary for the Company to satisfy its reporting obligations with
      all Regulatory Authorities, including but not limited to the Securities and
      Exchange Commission and properly prepare and disseminate material to accredited
      investors for completing the private equity financing contemplated in Section
      9.1(d). SPI shall provide the Company with an officer’s certificate certifying
      that all Material Information provided by SPI to the Company does not contain
      any untrue statement of a Material fact or omit to state any Material fact
      necessary in order to make such statements, in light of the circumstances under
      which they were made, misleading. 

     

    ARTICLE
      7

     

    COVENANTS
      OF SPI AND THE COMPANY

     

    7.1.
        Notices
      of Certain Events.
      The
      Company and SPI shall promptly notify the other party of:

     

    (a)   any
      notice or other communication from any Person alleging that the consent of
      such
      Person is or may be required in connection with the transactions contemplated
      by
      this Agreement;

     

    (b)   any
      notice or other communication from any governmental or regulatory agency in
      connection with the transactions contemplated by this Agreement;
      and

     

    (c)   any
      actions, suits, claims, investigations or proceedings commenced or, to its
      knowledge, threatened against, relating to or involving or otherwise affecting
      such party that, if pending on the date of this Agreement, would have been
      required to be disclosed pursuant to Articles 3 or 4 or that relate to the
      consummation of the transactions contemplated by this Agreement or any other
      development causing a breach of any representation or warranty made by a party
      hereunder. Delivery of notice pursuant to this Section 7.1 shall not limit
      or otherwise affect remedies available to either party hereunder.

     

    7.2.
        Public
      Announcements.
      The
      Company shall consult with SPI before issuing any press release or other public
      statement with respect to this Agreement or the transactions contemplated
      herein, and except as may be required by applicable Law or as advised by
      counsel, will not issue any such press release or make any such public statement
      with respect to this Agreement, the Merger or any other transactions
      contemplated by this Agreement without the prior written consent of
      SPI.

     

    

     

    

    
      
        
          
          

        

        
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    7.3.
        Transfer
      Taxes.
      SPI and
      the Company shall cooperate in the preparation, execution and filing of all
      returns, questionnaires, applications or other documents regarding any real
      property transfer or gains, sales, use, transfer, value added, stock transfer
      and stamp taxes, any transfer, recording, registration and other fees, and
      any
      similar taxes which become payable in connection with the transactions
      contemplated hereby that are required or permitted to be filed on or before
      the
      Effective Time. SPI , Merger Sub and the Company agree that the Company (prior
      to the Merger) and the Surviving Corporation (following the Merger) will pay
      any
      real property, transfer or gains tax, stamp tax, stock transfer tax, or other
      similar tax imposed on the Merger or the surrender of the Shares pursuant to
      the
      Merger (collectively, “Transfer
      Taxes”),
      excluding any Transfer Taxes as may result from the transfer of beneficial
      interests in the Shares other than as a result of the Merger, and any penalties
      or interest with respect to the Transfer Taxes. The Company agrees to cooperate
      with the Surviving Corporation in the filing of any returns with respect to
      the
      Transfer Taxes.

     

    7.4.
        Reasonable
      Efforts. The
      parties further agree to use commercially 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 (A) the obtaining of all other necessary actions or
      nonactions, waivers, consents, licenses, permits, authorizations, orders and
      approvals from governmental authorities and the making of all other necessary
      registrations and filings, (B) the obtaining of all consents, approvals or
      waivers from third parties related to or required in connection with the Merger
      that are necessary to consummate the Merger and the transactions contemplated
      by
      this Agreement or required to prevent a Material Adverse Effect on the Company
      from occurring prior to or after the Effective Time, (C) the satisfaction
      of all conditions precedent to the parties’ obligations hereunder, and
      (D) the execution and delivery of any additional instruments necessary to
      consummate the transactions contemplated by, and to fully carry out the purposes
      of, this Agreement. Notwithstanding the foregoing or any other provision of
      this
      Agreement, nothing in this Section 7.4 shall limit a party’s right to
      terminate this Agreement pursuant to Section 10.1, so long as such party
      has up to then complied with its obligations under this
      Section 7.4.

     

    7.5.
        Fees
      and Expenses.
      All
      fees and expenses incurred by the Company and Merger Sub in connection with
      this
      Agreement and the transactions contemplated hereby shall be paid by the Company,
      whether or not the Merger is consummated. All fees and expenses incurred by
      SPI
      in connection with this Agreement and the transactions contemplated hereby
      shall
      be paid by SPI. Fees and expenses incurred by any party in connection with
      the
      transactions contemplated by this Agreement shall include, without limitation,
      fees and expenses incurred for legal, financial, accounting and other
      advisors.

     

    ARTICLE
      8

     

    INDEMNIFICATION

     

    8.1.
        Indemnification
      of SPI.
      Subject
      to the limitations contained in this Article 8, the Company shall defend,
      indemnify and hold harmless SPI and its respective officers, directors,
      stockholders, employees and agents from and against any and all losses, claims,
      judgments, liabilities, demands, charges, suits, penalties, costs or expenses,
      including court costs and attorneys’ fees (“Claims
      and Liabilities”)
      with
      respect to or arising from (i) the breach of any warranty or any inaccuracy
      of any representation made by the Company in this Agreement (as each such
      representation or warranty would read if all qualifications as to Material
      Adverse Effect were deleted therefrom), or (ii) the breach of any covenant
      or agreement made by the Company in this Agreement.

     

    

    
      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

    

     

     

    8.2.
        Indemnification
      of the Company.
      SPI
      shall defend, indemnify and hold harmless the Company, and its officers,
      directors, shareholders, employees and agents from and against any and all
      Claims and Liabilities with respect to or arising from (i) breach of any
      warranty or any inaccuracy of any representation made by SPI, or
      (ii) breach of any covenant or agreement made by SPI in this Agreement.

     

    8.3.
        Limitation
      on Liability.
      Notwithstanding anything to the contrary, the Company’s aggregate liability
      under Section 8.1(a) and SPI’s aggregate liability under Section 8.2 (other than
      with respect to any fraud, intentional misrepresentation or willful breach)
      shall be limited to $350,000.

     

    8.4.
        Claims
      Procedure.
      Promptly after the receipt by any indemnified party (the “Indemnitee”)
      of
      notice of the commencement of any action or proceeding against such Indemnitee,
      such Indemnitee shall, if a claim with respect thereto is or may be made against
      any indemnifying party (the “Indemnifying
      Party”)
      pursuant to this Article 8, give such Indemnifying Party written notice of
      the commencement of such action or proceeding and give such Indemnifying Party
      a
      copy of such claim and/or process and all legal pleadings in connection
      therewith. The failure to give such notice shall not relieve any Indemnifying
      Party of any of its indemnification obligations contained in this
      Article 8, except where, and solely to the extent that, such failure
      actually and Materially prejudices the rights of such Indemnifying Party. Such
      Indemnifying Party shall have, upon request within thirty (30) days after
      receipt of such notice, but not in any event after the settlement or compromise
      of such claim, the right to defend, at its own expense and by its own counsel
      reasonably acceptable to the Indemnitee, any such matter involving the asserted
      liability of the Indemnitee; provided, however, that if the Indemnitee
      determines that there is a reasonable probability that a claim may Materially
      and adversely affect it, other than solely as a result of money payments
      required to be reimbursed in full by such Indemnifying Party under this
      Article 8 or if a conflict of interest exists between Indemnitee and the
      Indemnifying Party, the Indemnitee shall have the right to defend, compromise
      or
      settle such claim or suit; and, provided, further, that such settlement or
      compromise shall not, unless consented to in writing by such Indemnifying Party,
      which shall not be unreasonably withheld, be conclusive as to the liability
      of
      such Indemnifying Party to the Indemnitee. In any event, the Indemnitee, such
      Indemnifying Party and its counsel shall cooperate in the defense against,
      or
      compromise of, any such asserted liability, and in cases where the Indemnifying
      Party shall have assumed the defense, the Indemnitee shall have the right to
      participate in the defense of such asserted liability at the Indemnitee’s own
      expense. In the event that such Indemnifying Party shall decline to participate
      in or assume the defense of such action, prior to paying or settling any claim
      against which such Indemnifying Party is, or may be, obligated under this
      Article 8 to indemnify an Indemnitee, the Indemnitee shall first supply
      such Indemnifying Party with a copy of a final court judgment or decree holding
      the Indemnitee liable on such claim or, failing such judgment or decree, the
      terms and conditions of the settlement or compromise of such claim. An
      Indemnitee’s failure to supply such final court judgment or decree or the terms
      and conditions of a settlement or compromise to such Indemnifying Party shall
      not relieve such Indemnifying Party of any of its indemnification obligations
      contained in this Article 8, except where, and solely to the extent that,
      such failure actually and Materially prejudices the rights of such Indemnifying
      Party. If the Indemnifying Party is defending the claim as set forth above,
      the
      Indemnifying Party shall have the right to settle the claim only with the
      consent of the Indemnitee; provided, however, that if the Indemnitee shall
      fail
      to consent to the settlement of such a claim by the Indemnifying Party, which
      settlement (i) the claimant has indicated it will accept, and
      (ii) includes an unconditional release of the Indemnitee and its Affiliates
      by the claimant and imposes no Material restrictions on the future activities
      of
      the Indemnitee and its affiliates, the Indemnifying Party shall have no
      liability with respect to any payment required to be made to such claimant
      in
      respect of such claim in excess of the proposed amount of settlement. If the
      Indemnitee is defending the claim as set forth above, the Indemnitee shall
      have
      the right to settle or compromise any claim against it after consultation with,
      but without the prior approval of, any Indemnifying Party, provided, however,
      that such settlement or compromise shall not, unless consented to in writing
      by
      such Indemnifying Party, which shall not be unreasonably withheld, be conclusive
      as to the liability of such Indemnifying Party to the Indemnitee.

     

    

    
      
        
          
          

        

        
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    8.5.
        Exclusive
      Remedy.
      Each of
      the parties hereto acknowledges and agrees that, from and after the Closing
      Date, its sole and exclusive monetary remedy with respect to any and all claims
      relating to the subject matter of this Agreement shall be pursuant to the
      indemnification provisions set forth in this Article 8, except that nothing
      in this Agreement shall be deemed to constitute a waiver of any injunctive
      or
      other equitable remedies or any tort claims of, or causes of action arising
      from, intentionally fraudulent misrepresentation, willful breach or deceit.
      

     

    ARTICLE
      9

     

    CONDITIONS
      TO MERGER

     

    9.1.
        Condition
      to Obligation of Each Party to Effect the Merger. The
      respective obligations of SPI, Merger Sub and the Company to consummate the
      transactions contemplated herein are subject to the satisfaction or waiver
      in
      writing at or prior to the Effective Time of the following
      conditions.

     

    (a)   No
      Injunctions.
      No
      temporary restraining order, preliminary or permanent injunction issued by
      any
      court of competent jurisdiction preventing the consummation of the transactions
      contemplated herein shall be in effect; provided, however, that each party
      shall
      have used its commercially reasonable best efforts to prevent the entry of
      such
      orders or injunctions and to appeal as promptly as possible any such orders
      or
      injunctions and to appeal as promptly as possible any such orders or injunctions
      that may be entered.

     

    (b)   Company
      Shareholder Approval.
      The
      name change and the reverse split of the Company’s Common Stock shall have been
      approved and adopted by the requisite vote of the Company and the Company’s
      shareholders in accordance with the Company’s Articles of Incorporation and the
      NRS.

     

    (c)   SPI
      Shareholder Approval.
      This
      Agreement and the Merger shall have been approved and adopted by the requisite
      vote of SPI and SPI’s shareholders in accordance with SPI’s Articles of
      Incorporation and the CGCL.

     

    (d)   Financing
      by the Company.
      The
      Company shall have received equity financing of approximately $10,000,000 on
      terms mutually acceptable to both parties. 

     

    9.2.
        Additional
      Conditions to Obligations of SPI.
      The
      obligations of SPI to consummate the transactions contemplated herein are also
      subject to the satisfaction or waiver in writing at or prior to the Effective
      Time of the following conditions.

     

    (a)   Representations
      and Warranties.
      The
      representations and warranties of the Company and Merger Sub contained in this
      Agreement and in any certificate or other writing delivered to SPI pursuant
      hereto shall be true and correct on and as of the Effective Time with the same
      force and effect as if made on and as of the Effective Time, and SPI shall
      have
      received a certificate to such effect signed by the President and the Chief
      Executive Officer of the Company.

     

    

    
      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

    

     

     

    (b)   Agreements
      and Covenants.
      The
      Company and Merger Sub shall have performed or complied with all agreements
      and
      covenants required by this Agreement to be performed or complied with by them
      on
      or prior to the Effective Time, and SPI shall have received a certificate to
      such effect signed by the President and Chief Executive Officer of the
      Company.

     

    (c)   Certificate
      of Secretary.
      The
      Company shall have delivered to SPI a certificate executed by the Secretary
      of
      the Company certifying: (i) resolutions duly adopted by the Board of Directors
      and shareholders of the Company and Merger Sub authorizing this Agreement and
      the Merger; (ii) the Articles of Incorporation and Bylaws of the Company and
      Merger Sub as in effect immediately prior to the Effective Time, including
      all
      amendments thereto; and (iii) the incumbency of the officers of the Company
      executing this Agreement and all agreements and documents contemplated
      hereby.

     

    (d)   Consents
      Obtained.
      All
      consents, waivers, approvals, authorizations or orders required to be obtained,
      and all filings required to be made, by the Company and Merger Sub for the
      authorization, execution and delivery of this Agreement and the consummation
      by
      it of the transactions contemplated hereby shall have been obtained and made
      by
      the Company and Merger Sub including, without limitation, those set forth on
      Schedule 9.2(d), except for such consents, waivers, approvals, authorizations
      and orders, which if not listed in Schedule 9.2(d) and not obtained, and such
      filings, which if not listed in Schedule 9.2(d) and not made, would not be
      reasonably likely to have a Material Adverse Effect on the Company or the
      Surviving Corporation.

     

    (e)   Absence
      of Material Adverse Effect.
      Since
      the date of the this Agreement, there shall not have been any Material Adverse
      Effect on the Company or Merger Sub, other than any change that shall result
      from general economic conditions or conditions generally affecting the industry
      in which the Company conducts operations.

     

    (f)   Opinion
      of Counsel. SPI
      shall
      have received the opinion of Kruse Landa Maycock & Ricks, counsel to the
      Company and Merger Sub, dated as of the Closing Date, in the form attached
      hereto as Exhibit D.

     

    (g)   Resignation
      of Officers and Directors.
      SPI
      shall have received letters of resignation from each of the officers and
      directors of the Company and Merger Sub immediately prior to the Effective
      Time,
      which resignations in each case shall be effective as of the Effective
      Time.

     

    (h)   Name
      Change.
      SPI
      shall have received confirmation of the filing of the Name Change by the Company
      with the Secretary of State of the State of Nevada.

     

    (i)   Sale
      of Current Business.
      SPI
      shall have received executed transaction documents regarding the sale of all
      of
      the Company’s businesses in effect prior to the Closing Date and payment of all
      outstanding liabilities incurred as of the Closing Date. 

     

    (j)   Appointment
      of Officers and Directors.
      The
      Company shall have appointed Stephen C. Kircher and Larry D. Kelly as the only
      members of the Board of Directors of the Company, and appointed Stephen C.
      Kircher as the Chief Executive Officer, Secretary and President of the Company
      and Glenn E. Carnahan as the Chief Financial Officer of the Company.

     

    

    
      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

    

     

     

    9.3.
        Additional
      Conditions to Obligations of the Company.
      The
      obligations of the Company to consummate the transactions contemplated herein
      are also subject to the satisfaction or waiver in writing at or prior to the
      Effective Time of the following conditions.

     

    (a)   Representations
      and Warranties.
      The
      representations and warranties of SPI contained in this Agreement and in any
      certificate or other writing delivered to the Company pursuant hereto shall
      be
      true and correct in all respects on and as of the Effective Time, with the
      same
      force and effect as if made on and as of the Effective Time and the Company
      shall have received a certificate to such effect signed by the President and
      the
      Chief Executive Officer of SPI.

     

    (b)   Agreements
      and Covenants.
      SPI
      shall have performed or complied with all agreements and covenants required
      by
      this Agreement to be performed or complied with by them on or prior to the
      Closing and the Company shall have received a certificate to such effect signed
      by the President and the Chief Executive Officer of SPI.

     

    (c)   Opinion
      of Counsel. The
      Company shall have received the opinion of Bullivant Houser Bailey PC, counsel
      to SPI, dated as of the Closing Date, in the form attached hereto as
Exhibit C.

     

    (d)   Investment
      Representation.
      Each
      holder of Shares to be exchanged as provided in Section 2.2 shall have executed
      the Investment Representation Letter attached hereto as Exhibit
      E.
      

     

    (e)   Delivery
      of Financial Statements. SPI
      shall
      deliver all audited and unaudited financial statements as are necessary for
      the
      Company to meet its reporting obligations under rules and regulations
      promulgated by the SEC including periodic reports, current report and proposed
      registration statement contemplated to be filed under form SB-2. Such financial
      statements shall include predecessor financial statements of acquired
      subsidiaries, proforma financial statements and schedules to the extent
      necessary.

     

    ARTICLE
      10

     

    TERMINATION

     

    10.1.  Termination.
      This
      Agreement may be terminated at any time prior to the Effective
      Time:

     

    (a)   by
      mutual
      written agreement duly authorized by the Boards of Directors of the Company
      and
      SPI;

     

    (b)   by
      either
      party, if the other party has breached any representation, warranty, covenant
      or
      agreement of such other party set forth in this Agreement and such breach has
      resulted or can reasonably be expected to result in a Material Adverse Effect
      on
      either party or would prevent or materially delay the consummation of the
      Merger;

     

    (c)   by
      either
      party if the required approval of the shareholders of either party shall not
      have been obtained by reason of the failure to obtain the required
      vote;

     

    

    
      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

    

     

     

    (d)   by
      either
      party, if all the conditions to the obligations of such party for Closing the
      Merger shall not have been satisfied or waived on or before the Final Date
      (as
      defined below) other than as a result of a breach of this Agreement by the
      terminating party; or

     

    (e)   by
      either
      party, if a permanent injunction or other order by any Federal or state court
      which would make illegal or otherwise restrain or prohibit the consummation
      of
      the Merger shall have been issued and shall have become final and
      nonappealable.

     

    As
      used
      herein, the “Final
      Date”
shall
      be October 31, 2006.

     

    10.2.  Notice
      of Termination.
      Any
      termination of this Agreement under Section 10.1 above will be effective by
      the delivery of written notice of the terminating party to the other party
      hereto.

     

    10.3.  Effect
      of Termination.
      In the
      case of any termination of this Agreement as provided in this Section 10,
      this Agreement shall be of no further force and effect (except as provided
      in
      Section 10.4) and nothing herein shall relieve any party from liability for
      any breach of this Agreement. 

     

    ARTICLE
      11

     

    SURVIVAL
      OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     

    All
      representations, warranties and covenants of the parties contained in this
      Agreement will remain operative and in full force and effect, regardless of
      any
      investigation made by or on behalf of the parties to this Agreement, until
      the
      date that is the first anniversary of the Closing Date, whereupon such
      representations, warranties and covenants will expire (except for covenants
      that
      by their terms survive for a longer period).

     

    ARTICLE
      12

     

    GENERAL
      PROVISIONS

     

    12.1.  Notices.
      All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (a) upon personal delivery to the party to be notified;
      (b) when sent by confirmed facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day; (c) five days
      after having been sent by registered or certified mail, return receipt
      requested, postage prepaid; or (d) two days after deposit with a nationally
      recognized overnight courier, specifying two day delivery, with written
      verification of receipt. All communications shall be sent to the parties at
      the
      following addresses or facsimile numbers specified below (or at such other
      address or facsimile number for a party as shall be designated by ten days
      advance written notice to the other parties hereto):

     

    (a) 
         If
      to
      SPI:

     

    Solar
      Power, Inc.

    4080
      Cavitt Stallman Road, Suite 100

     

     

    
      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

     

     

    Granite
      Bay, California 95746

    Attn:
      Stephen C. Kircher

    Ph:
      (916)
      789-0833

    Fax:
      (916) 789-7411

     

    with
      a
      copy to (which shall not constitute notice):

     

    Bullivant
      Houser Bailey PC

    1415
      L
      Street, Suite 1000

    Sacramento,
      California 95814

    Attn:
      Mark C Lee

    Ph:
      (916)
      930-2500

    Fax:
      (916) 930-2501

     

    (b)  
        If
      to the
      Company or Merger Sub:

     

    Welund
      Fund, Inc.

    136
      East
      South Temple, Suite 2112

    Salt
      Lake
      City, Utah 84111

    Attn:
      Terrell W. Smith

    Ph:
      (801)
      521-5703

     

    Fax:
      (801) 521-6325

     

    with
      a
      copy to (which shall not constitute notice):

     

    Kruse
      Landa Maycock & Ricks

    136
      East
      South Temple, Suite 2100

    Salt
      Lake
      City, Utah 84111

    Attn:
      James R. Kruse

    Ph:
      (801)
      531-7090

    Fax:
      (801) 531-7091

     

    12.2.  Amendment.
      To the
      extent permitted by Law, this Agreement may be amended by a subsequent writing
      signed by each of the parties upon the approval of the Boards of Directors
      of
      each of the parties, whether before or after any shareholder approval of the
      issuance of the Merger Consideration has been obtained; provided, that after
      any
      such approval by the holders of Shares, there shall be made no amendment that
      pursuant to the CGCL requires further approval by such shareholders without
      the
      further approval of such shareholders.

     

    12.3.  Waiver.
      At any
      time prior to the Closing, any party hereto may with respect to any other party
      hereto (a) extend the time for performance of any of the obligations or
      other acts, (b) waive any inaccuracies in the representations and
      warranties contained herein or in any document delivered pursuant hereto, or
      (c) waive compliance with any of the agreements or conditions contained
      herein. Any such extension or waiver shall be valid if set forth in an
      instrument in writing signed by the party or parties to be bound
      thereby.

     

    12.4.  Failure
      or Indulgence Not Waiver; Remedies Cumulative.
      No
      failure or delay on the part of any party hereto in the exercise of any right
      hereunder shall impair such right or be construed to be a waiver of, or
      acquiescence in, any breach of any representation, warranty or agreement herein,
      nor shall any single or partial exercise of any such right preclude other or
      further exercise thereof or of any other rights. Except as otherwise provided
      hereunder, all rights and remedies existing under this Agreement are cumulative
      to, and not exclusive of, any rights or remedies otherwise
      available.

     

    

    
      
        
          
          

        

        
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    12.5.  Headings.
      The
      headings contained in this Agreement are for reference purposes only and shall
      not affect in any way the meaning or interpretation of this
      Agreement.

     

    12.6.  Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced by any rule of Law, or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner adverse to any party. Upon such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible, in a mutually acceptable manner, to the end that transactions
      contemplated hereby are fulfilled to the extent possible.

     

    12.7.  Entire
      Agreement.
      This
      Agreement (including the Company Disclosure Schedule and SPI Disclosure Schedule
      together with the Transaction Documents and the exhibits and schedules attached
      hereto and thereto and the certificates referenced herein) constitutes the
      entire agreement and supersedes all prior agreements and undertakings both
      oral
      and written, among the parties, or any of them, with respect to the subject
      matter hereof and, except as otherwise expressly provided herein.

     

    12.8.  Assignment.
      No
      party may assign this Agreement or assign its respective rights or delegate
      their duties (by operation of Law or otherwise), without the prior written
      consent of the other party. This Agreement will be binding upon, inure to the
      benefit of and be enforceable by the parties and their respective successors
      and
      assigns.

     

    12.9.  Parties
      In Interest.
      This
      Agreement shall be binding upon and inure solely to the benefit of each party
      hereto, and nothing in this Agreement, express or implied, is intended to or
      shall confer upon any other Person any right, benefit or remedy of any nature
      whatsoever under or by reason of this Agreement, including, without limitation,
      by way of subrogation.

     

    12.10.
       Governing
      Law.
      This
      Agreement will be governed by, and construed and enforced in accordance with
      the
      laws of the State of California as applied to contracts that are executed and
      performed in California, without regard to the principles of conflicts of law
      thereof. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in Sacramento County, California, for
      the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper. Each party hereby irrevocably
      waives personal service of process and consents to process being served in
      any
      such suit, action or proceeding by mailing a copy thereof to such party at
      the
      address in effect for notices to it under this Agreement and agrees that such
      service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law.

     

    

    
      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

    

     

     

    12.11.
       Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed shall
      be
      deemed to be an original but all of which taken together shall constitute one
      and the same agreement. This Agreement shall become effective when counterparts
      have been signed by each of the parties and delivered by facsimile or other
      means to the other party. Any party who delivers a signature page via facsimile
      agrees to later deliver an original counterpart to all other
      parties.

     

    12.12.
       Attorneys
      Fees.
      If any
      action or proceeding relating to this Agreement, or the enforcement of any
      provision of this Agreement is brought by a party hereto against any party
      hereto, the prevailing party shall be entitled to recover reasonable attorneys’
fees, costs and disbursements (in addition to any other relief to which the
      prevailing party may be entitled).

     

    12.13. 
      Gender.
      For
      purposes of this Agreement, references to the masculine gender shall include
      feminine and neuter genders and entities.

     

    

     

    [Remainder
      of Page Intentionally Left Blank; Signature Page to Follow]

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    
      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

    

     

     

    IN
      WITNESS WHEREOF, the parties have caused this Agreement and Plan of Merger
      to be
      executed as of the date first written above by their respective officers
      thereunto duly authorized.

     

    
      	 	
              SOLAR
                POWER, INC.,
                a
                California corporation

            
	 	 
	 	 
	 	
              By:
                 /s/ Steven
                Kircher                                                              
                

            
	 	
              Name:
                Steven
                Kircher                                                               
                

            
	 	
              Title:  President                                                                         

            
	 	 
	 	 
	 	
              WELUND
                FUND, INC.,
                a
                Nevada corporation

            
	 	 
	 	 
	 	
              By: 
                /s/ Steven
                Strasser                                                             
                

            
	 	
              Name:  Steven
                Strasser                                                             

            
	 	
              Title:
                President                                                                          
                

            
	 	 
	 	 
	 	
              WELUND
                ACQUISITION CORP.,
                a
                Nevada corporation

            
	 	 
	 	 
	 	
              By:  
                /s/ Terrell W.
                Smith                                                           
                

            
	 	
              Name:  Terrell
                W.
                Smith                                                           
                

            
	 	
              Title:
                President                                                                          
                

            

    

    

    

    

    

    

    

    

    

    

    
      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

    

    

    

    EXHIBIT
      A

    CERTAIN
      DEFINITIONS

     

    The
      following terms, as used in the Purchase Agreement, have the following
      meanings:

     

    “Affiliate”
shall
      mean with respect to any Person, any individual, corporation, partnership,
      firm,
      joint venture, limited liability company, association, joint-stock company,
      trust, unincorporated organization or Governmental Entity, or other Person
      directly or indirectly controlling, controlled by or under common control with
      such Person, including all officers and directors of such Person.

     

    “Agreement”
shall
      have the meaning as set forth in the Preamble.

     

    “Assets”
of
      a
      Person shall mean all of the assets, properties, businesses and rights of such
      Person of every kind, nature, character and description, whether real, personal
      or mixed, tangible or intangible, accrued or contingent, or otherwise relating
      to or utilized in such Person’s business, directly or indirectly, in whole or in
      part, whether or not carried on the books and records of such Person, and
      whether or not owned in the name of such Person or any Affiliate of such Person
      and wherever located.

     

    “California
      Agreement of Merger”
shall
      have the meaning as set forth in Section 1.3 of the Agreement.

     

    “Claims
      and Liabilities”
shall
      have the meaning as set forth in Section 8.1(a) of the Agreement.

     

    “Closing”
shall
      have the meaning as set forth in Section 1.2 of the Agreement.

     

    “Closing
      Date”
shall
      have the meaning as set forth in Section 1.2 of the Agreement.

     

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

     

    “Common
      Stock”
shall
      mean the issued and outstanding shares of common stock, no par value, of the
      Company.

     

    “Company”
shall
      have the meaning as set forth in the Preamble.

     

    “Company
      Disclosure Schedule”
shall
      mean the written disclosure schedule delivered on or prior to the date hereof
      by
      the Company to SPI that is arranged in paragraphs corresponding to the numbered
      and lettered paragraphs corresponding to the numbered and lettered paragraphs
      contained in the Agreement.

     

    “Company
      Environmental Liabilities”
mean
      any and all liabilities of or relating to the Company, whether contingent or
      fixed, actual or potential, known or unknown, which (i) arise under or
      relate to matters covered by Environmental Laws and (ii) relate to actions
      occurring or conditions existing on or prior to the Closing Date.

     

    “Company’s
      Financial Statements”
shall
      have the meaning as set forth in Section 3.8 of the Agreement.

     

    

    
      
        
          
          

        

        
          A
            - 1

          
            

          

        

        
          
          

        

      

    

     

     

    “Company
      Option”
or
      “Company
      Options”
shall
      have the meaning as set forth in Section 2.4(a) of the
      Agreement.

     

    “Contract”
means
      any written or oral agreement, arrangement, commitment, contract, indenture,
      instrument, lease, obligation, plan, restriction, understanding or undertaking
      of any kind or character, or other document to which any Person is a party
      or by
      which such Person is bound or affecting such Person’s capital stock, Assets or
      business.

     

    “Default”
shall
      mean (i) any breach or violation of or default under any Contract, Order or
      Permit, (ii) any occurrence of any event that with the passage of time or
      the giving of notice or both would constitute a breach or violation of or
      default under any Contract, Order or Permit, or (iii) any occurrence of any
      event that with or without the passage of time or the giving of notice would
      give rise to a right to terminate or revoke, change the current terms of, or
      renegotiate, or to accelerate, increase, or impose any Liability under, any
      Contract, Order or Permit.

     

    “Dissenting
      Shares”
shall
      have the meaning as set forth in Section 2.3 of the Agreement.

     

    “Effective
      Time”
shall
      have the meaning as set forth in Section 1.3 of the Agreement.

     

    “Employees”
shall
      have the meaning as set forth in Section 3.20 of the
      Agreement.

     

    “Environmental
      Laws”
mean
      any and all federal, state, local and foreign statutes, laws, judicial
      decisions, regulations, ordinances, rules, judgments, orders, decrees, codes,
      plans, injunctions, permits, concessions, grants, franchises, licenses,
      agreements and governmental restrictions, relating to human health, the
      environment or to emissions, discharges or releases of pollutants, contaminants
      or other Hazardous Substances or wastes into the environment, including without
      limitation ambient air, surface water, ground water or land, or otherwise
      relating to the manufacture, processing, distribution, use, treatment, storage,
      disposal, transport or handling of pollutants, contaminants or other Hazardous
      Substances or wastes or the clean-up or other remediation thereof.

     

    “Environmental
      Permits”
means,
      with respect to any Person, all permits, licenses, franchises, certificates,
      approvals and other similar authorizations of governmental authorities relating
      to or required by Environmental Laws and affecting, or relating in any way
      to,
      the business of such Person as currently conducted.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and the rules
      and regulations promulgated thereunder.

     

    “Final
      Date”
shall
      have the meaning as set forth in Section 10.1 of the
      Agreement.

     

    “GAAP”
shall
      have the meaning as set forth in Section 3.8(b) of the
      Agreement.

     

    “Governmental
      Entity”
shall
      mean any government or any agency, bureau, board, directorate, commission,
      court, department, official, political subdivision, tribunal, or other
      instrumentality of any government, whether federal, state or local, domestic
      or
      foreign.

     

    “Indemnifying
      Party”
shall
      have the meaning as set forth in Section 8.3 of the Agreement.

     

    “Indemnitee”
shall
      have the meaning as set forth in Section 8.3 of the Agreement.

     

    

    
      
        
          
          

        

        
          A
            - 2

          
            

          

        

        
          
          

        

      

    

     

     

    “Knowledge”
means
      the actual knowledge of the officers of a party, and knowledge that a reasonable
      person in such capacity should have after due inquiry.

     

    “Law”
shall
      mean any code, law, ordinance, regulation, reporting or licensing requirement,
      rule, or statute applicable to a Person or its Assets, liabilities or business,
      including those promulgated, interpreted or enforced by any Regulatory
      Authority.

     

    “Lien”
means,
      with respect to any asset, any mortgage, lien, pledge, charge, security interest
      or encumbrance of any kind in respect to such asset.

     

    “Material”
and
      “Materially”
for
      purposes of this Agreement shall be determined in light of the facts and
      circumstances of the matter in question; provided that any specific monetary
      amount stated in this Agreement shall determine materiality in that
      instance.

     

    “Material
      Adverse Effect”
means,
      with respect to any Person, a Material adverse effect on the condition
      (financial or otherwise), business, assets, liabilities or the reported or
      future results or prospects of such Person and its Subsidiaries taken as a
      whole.

     

    “Merger”
shall
      have the meaning as set forth in the Recitals.

     

    “Merger
      Consideration”
shall
      have the meaning as set forth in Section 2.1(b)(i) of the
      Agreement.

     

    “Merger
      Consideration Certificate”
shall
      have the meaning as set forth in Section 2.1(b)(ii) of the
      Agreement.

     

    “Merger
      Sub” shall have the meaning as set forth in the Preamble. 

     

    “NASD”
means
      National Association of Securities Dealers, Inc.

     

    “Nevada
      Articles of Merger”
shall
      have the meaning as set forth in Section 1.3 of the Agreement.

     

    “Order”
shall
      mean any administrative decision or award, decree, injunction, judgment, order,
      quasi-judicial decision or award, ruling, or writ of any federal, state, local
      or foreign or other court, arbitrator, mediator, tribunal, administrative agency
      or Regulatory Authority.

     

    “SPI”
shall
      have the meaning as set forth in the Preamble.

     

    “SPI
      Disclosure Schedule”
shall
      mean the written disclosure schedule delivered on or prior to the date hereof
      by
      SPI to the Company that is arranged in paragraphs corresponding to the numbered
      and lettered paragraphs corresponding to the numbered and lettered paragraphs
      contained in the Agreement.

     

    “Person”
means
      an individual, a corporation, a partnership, an association, a trust, a limited
      liability company or any other entity or organization, including a government
      or
      political subdivision or any agency or instrumentality thereof.

     

     

    

    
      
        
          
          

        

        
          A
            - 3

          
            

          

        

        
          
          

        

      

    

     

     

    “Permit”
shall
      mean any federal, state, local, and foreign governmental approval,
      authorization, certificate, consent, easement, filing, franchise, letter of
      good
      standing, license, notice, permit, qualification, registration or right of
      or
      from any Governmental Entity (or any extension, modification, amendment or
      waiver of any of these) to which any Person is a party or that is or may be
      binding upon or inure to the benefit of any Person or its securities, Assets
      or
      business, or any notice, statement, filing or other communication to be filed
      with or delivered to any Governmental Entity.

     

    “Permitted
      Liens”
shall
      mean (a) Liens for taxes and assessments or governmental charges or levies
      not at the time due or in respect of which the validity thereof shall currently
      be contested in good faith by appropriate proceedings; (b) Liens in respect
      of pledges or deposits under workers’ compensation laws or similar legislation,
      carriers’, warehousemen’s, mechanics’, laborers’ and materialmen’s and similar
      Liens, if the obligations secured by such Liens are not then delinquent or
      are
      being contested in good faith by appropriate proceedings; and (c) Liens
      incidental to the conduct of the business of the Company which were not incurred
      in connection with the borrowing of money or the obtaining of advances or
      credits and which do not in the aggregate Materially detract from the value
      of
      its property or Materially impair the use thereof in the operation of its
      business.

     

    “Regulatory
      Authorities”
shall
      mean, collectively, the Federal Trade Commission, the United States Department
      of Justice, and all foreign, federal, state and local regulatory agencies and
      other Governmental Entities or bodies having jurisdiction over the parties
      and
      their respective Assets, employees, businesses and/or Subsidiaries, including
      the NASD and the Securities and Exchange Commission.

     

    “Returns”
shall
      have the meaning as set forth in Section 3.11(a)(i) of the
      Agreement.

     

    “Share”
or
      “Shares”
shall
      have the meaning as set forth in Section 2.1(b)(i) of the
      Agreement.

     

    “SPI”
shall
      have the meaning as set forth in the Preamble.

     

    “SPI
      Disclosure Schedule”
shall
      mean the written disclosure schedule delivered on or prior to the date hereof
      by
      SPI to the Company that is arranged in paragraphs corresponding to the numbered
      and lettered paragraphs corresponding to the numbered and lettered paragraphs
      contained in the Agreement.

     

    “Surviving
      Corporation”
shall
      have the meaning as set forth in Section 1.1 of the Agreement.

     

    “Tax”
or
      “Taxes”
shall
      mean all United States federal, state, provincial, local or foreign taxes and
      any other applicable duties, levies, fees, charges and assessments that are
      in
      the nature of a tax, including income, gross receipts, property, sales, use,
      license, excise, franchise, ad valorem, value-added, transfer, severance, stamp,
      occupation, premium, windfall profits, environmental (including taxes under
      Section 59A of the Code), customs, capital stock, real property, personal
      property, alternative or add-on minimum, estimated, social security payments,
      and health taxes and any deductibles relating to wages, salaries and benefits
      and payments to subcontractors, together with all interest, penalties and
      additions imposed with respect to such amounts.

     

    “Transaction
      Documents”
means
      the Agreement and any other document executed and delivered pursuant hereto
      together with any exhibits or schedules to such documents.

     

    “Transfer
      Taxes”
shall
      have the meaning as set forth in Section 7.3 of this
      Agreement.

     

     

    A
      - 4

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