Document:

Execution
      Copy

    

    STOCK
      PURCHASE AGREEMENT

     

    by
      and among

     

    NATIONAL
      INVESTMENT MANAGERS INC.,

     

    THE
      PENSION GROUP, INC.,

     

    PETER
      R. STEPHAN,

    individually
      and as Trustee of The Stephan Family Trust Dated August 2,
      1993,

     

    JAMES
      R. NORMAN, JR.,

    individually
      and as Trustee of The Norman Living Trust Dated December 7,
      2005,

     

    and

     

    RISE
      SPIEGEL,

    individually
      and as Trustee of The Rise Norris Spiegel Trust Dated November 16,
      2005

     

    Dated
      as of November 21, 2008

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

     

    
      	 	 	
              Page

            
	 	 	 
	
              I.

            	
              DEFINITIONS

            	
              1

            
	
              II.

            	
              PURCHASE
                AND SALE

            	
              10

            
	 	
              2.1.

            	
              Purchase
                and Sale of the Shares

            	
              10

            
	 	
              2.2.

            	
              Retained
                Assets

            	
              10

            
	 	
              2.3.

            	
              Purchase
                Price

            	
              10

            
	 	
              2.4.

            	
              [Intentionally
                omitted.]

            	
              11

            
	 	
              2.5.

            	
              Payment
                of the Purchase Price

            	
              11

            
	 	
              2.6.

            	
              Adjustments
                to the Notes

            	
              12

            
	
              III.

            	
              CLOSING,
                DELIVERIES AND OTHER ACTIONS

            	
              13

            
	 	
              3.1.

            	
              Time
                and Place of Closing

            	
              13

            
	 	
              3.2.

            	
              Deliveries
                by the Sellers

            	
              13

            
	 	
              3.3.

            	
              Deliveries
                by the Purchaser

            	
              15

            
	
              IV.

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE sellers

            	
              15

            
	 	
              4.1.

            	
              Authority,
                Validity and Effect

            	
              15

            
	 	
              4.2.

            	
              Title
                to Shares

            	
              15

            
	 	
              4.3.

            	
              No
                Conflict

            	
              15

            
	 	
              4.4.

            	
              Consents

            	
              16

            
	 	
              4.5.

            	
              Litigation

            	
              16

            
	 	
              4.6.

            	
              Purchaser
                Shares Legend

            	
              16

            
	 	
              4.7.

            	
              Rule 144

            	
              16

            
	 	
              4.8.

            	
              Investment
                Representations

            	
              16

            
	
              V.

            	
              REPRESENTATION
                AND WARRANTIES RELATING TO THE COMPANY

            	
              17

            
	 	
              5.1.

            	
              Existence
                and Good Standing

            	
              17

            
	 	
              5.2.

            	
              Power

            	
              17

            
	 	
              5.3.

            	
              Capitalization
                of the Company

            	
              17

            
	 	
              5.4.

            	
              Property

            	
              17

            
	 	
              5.5.

            	
              Litigation

            	
              18

            
	 	
              5.6.

            	
              Compliance
                with Laws

            	
              18

            
	 	
              5.7.

            	
              Necessary
                Property

            	
              19

            
	 	
              5.8.

            	
              Conduct
                of Business

            	
              19

            
	 	
              5.9.

            	
              Labor
                Matters

            	
              20

            
	 	
              5.10.

            	
              Employee
                Benefit Plans

            	
              21

            
	 	
              5.11.

            	
              Environmental

            	
              23

            
	 	
              5.12.

            	
              Contracts

            	
              24

            
	 	
              5.13.

            	
              Permits

            	
              24

            
	 	
              5.14.

            	
              Intellectual
                Property

            	
              24

            
	 	
              5.15.

            	
              Insurance

            	
              25

            

    

     

    
      
         

      

      
        -i-

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

    (continued)

    

    
      	 	 	
              Page

            
	 	 	 
	 	
              5.16.

            	
              Financial
                Statements

            	
              25

            
	 	
              5.17.

            	
              Undisclosed
                Liabilities

            	
              26

            
	 	
              5.18.

            	
              Bank
                Accounts

            	
              26

            
	 	
              5.19.

            	
              Product
                Liability and Warranty

            	
              26

            
	 	
              5.20.

            	
              Indebtedness

            	
              27

            
	 	
              5.21.

            	
              Taxes

            	
              27

            
	 	
              5.22.

            	
              Customers

            	
              28

            
	 	
              5.23.

            	
              Disclosure

            	
              29

            
	 	
              5.24.

            	
              Related
                Party Transactions

            	
              29

            
	 	
              5.25.

            	
              Brokers

            	
              29

            
	
              VI.

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE PURCHASER

            	
              29

            
	 	
              6.1.

            	
              Existence
                and Good Standing

            	
              29

            
	 	
              6.2.

            	
              Power

            	
              29

            
	 	
              6.3.

            	
              Validity
                and Enforceability

            	
              29

            
	 	
              6.4.

            	
              No
                Conflict

            	
              29

            
	 	
              6.5.

            	
              Consents

            	
              29

            
	 	
              6.6.

            	
              Purchaser
                Shares; SEC Reports

            	
              30

            
	 	
              6.7.

            	
              Brokers

            	
              30

            
	 	
              6.8.

            	
              Senior
                Debt

            	
              30

            
	
              VII.

            	
              TAX
                MATTERS

            	
              30

            
	 	
              7.1.

            	
              Returns

            	
              30

            
	 	
              7.2.

            	
              Apportionment
                of Taxes

            	
              31

            
	 	
              7.3.

            	
              Cooperation;
                Audits

            	
              32

            
	 	
              7.4.

            	
              Certain
                Controversies

            	
              32

            
	 	
              7.5.

            	
              Tax
                Sharing Agreements

            	
              32

            
	
              VIII.

            	
              CERTAIN
                COVENANTS AND AGREEMENTS

            	
              33

            
	 	
              8.1.

            	
              Pre-Closing
                Covenants

            	
              33

            
	 	
              8.2.

            	
              Post-Closing
                Covenants

            	
              34

            
	
              IX.

            	
              CONDITIONS
                TO CLOSING

            	
              37

            
	 	
              9.1.

            	
              Conditions
                Precedent to the Purchaser’s Obligations

            	
              37

            
	 	
              9.2.

            	
              Conditions
                Precedent to the Sellers’ Obligations

            	
              38

            
	
              X.

            	
              REMEDIES

            	
              39

            
	 	
              10.1.

            	
              General
                Indemnification Obligation

            	
              39

            
	 	
              10.2.

            	
              Notice
                and Third Party Liability

            	
              40

            
	 	
              10.3.

            	
              Survivability;
                Limitations

            	
              41

            
	 	
              10.4.

            	
              Specific
                Performance

            	
              42

            

    

     

    
      
         

      

      
        -ii-

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

    (continued)

    

    
      	 	 	
              Page

            
	 	 	 
	 	
              10.5.

            	
              Adjustment
                to the Purchase Price

            	
              42

            
	 	
              10.6.

            	
              Set-Off

            	
              42

            
	 	
              10.7.

            	
              Exclusive
                Remedy

            	
              42

            
	
              XI.

            	
              MISCELLANEOUS

            	
              43

            
	 	
              11.1.

            	
              Competitive
                Activity; Non-Solicitation; Confidentiality

            	
              43

            
	 	
              11.2.

            	
              Further
                Assurances

            	
              45

            
	 	
              11.3.

            	
              Press
                Release and Announcements

            	
              45

            
	 	
              11.4.

            	
              Termination

            	
              45

            
	 	
              11.5.

            	
              Expenses

            	
              46

            
	 	
              11.6.

            	
              No
                Assignment

            	
              46

            
	 	
              11.7.

            	
              Headings

            	
              46

            
	 	
              11.8.

            	
              Integration,
                Modification and Waiver

            	
              46

            
	 	
              11.9.

            	
              Construction

            	
              46

            
	 	
              11.10.

            	
              Severability

            	
              46

            
	 	
              11.11.

            	
              Notices

            	
              47

            
	 	
              11.12.

            	
              Governing
                Law

            	
              47

            
	 	
              11.13.

            	
              Attorney’s
                Fees

            	
              48

            
	 	
              11.14.

            	
              Counterparts

            	
              48

            

    

     

    
      
         

      

      
        -iii-

        
          

        

      

      
         

      

    

    LIST
      OF EXHIBITS

     

    Exhibits

    

    
      	
              Exhibit A

            	
              Form
                of Notes

            
	
              Exhibit B-1

            	
              Form
                of Stephan Employment Agreement

            
	
              Exhibit B-2

            	
              Form
                of Norman Employment Agreement

            
	
              Exhibit B-3

            	
              Form
                of Spiegel Employment Agreement

            
	
              Exhibit C

            	
              Form
                of Release

            
	
              Exhibit D

            	
              Form
                of Guaranty and Security Agreement

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    STOCK
      PURCHASE AGREEMENT

     

    This
      STOCK PURCHASE AGREEMENT, dated as of November 21, 2008 (this “Agreement”),
      is by
      and among National Investment Managers Inc., a Florida corporation (the
“Purchaser”),
      The
      Pension Group, Inc., a California corporation (the “Company”),
      Peter
      R. Stephan, an individual resident of the State of California, in his individual
      capacity and as Trustee of The Stephan Family Trust Dated August 2, 1993 (in
      either capacity, jointly and severally with the other, “Stephan”),
      James
      R. Norman, Jr., an individual resident of the State of California, in his
      individual capacity and as Trustee of The Norman Living Trust Dated December
      7,
      2005 (in either capacity, jointly and severally with the other, “Norman”),
      and
      Rise Spiegel, an individual resident of the State of California, in her
      individual capacity and as Trustee of The Rise Norris Spiegel Trust Dated
      November 16, 2005 (in either capacity, jointly and severally with the other,
      “Spiegel”).
      Stephan, Norman and Spiegel are sometimes referred to herein collectively as
      the
“Principals”
or
      “Trusts”
and
      individually as a “Principal”
or
      “Trust”
as
      the
      context requires. The Purchaser, the Principals, the Trusts and the Company
      are
      sometimes referred to in this Agreement collectively as the “Parties”
or
      individually as a “Party”.

     

    BACKGROUND

     

    A. The
      Trusts are the registered and beneficial owners of all of the issued and
      outstanding shares of capital stock of the Company (the “Shares”).
      

     

    B. The
      Trusts desire to sell to the Purchaser, and the Purchaser desires to purchase
      from the Trusts, all of the Shares, subject to the terms and conditions
      contemplated by this Agreement.

     

    C. The
      respective Boards of Directors of the Purchaser and the Company have each
      determined that the transactions contemplated by this Agreement are advisable,
      fair to and in the best interests of their respective companies and shareholders
      and accordingly have approved such transactions.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the foregoing and the respective representations,
      warranties, covenants and agreements set forth in this Agreement and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Parties, intending to be legally bound, hereby agree as
      follows:

     

    I.
      DEFINITIONS

     

    “Actions”
means
      any claim, demand, charge, complaint, action, suit, proceeding, hearing, audit,
      investigation, interference, opposition, re-examination, concurrent use,
      cancellation or other dispute resolution or proceeding, whether judicial,
      administrative or arbitrative, of any Person or Governmental
      Authority.

     

    “Adjusted
      EBITDA”
for
      any
      period, means the net income of the Company for such period plus,
      to the
      extent deducted in computing such net income (without duplication), (a) income
      tax expense, (b) interest expense, (c) depreciation and amortization
      expense, (d) Selling Expenses, (e) Bonus Payments, if any, paid in accordance
      with Section
      8.2(c)(i)
      below,
      (f) any extraordinary nonrecurring losses or charges (including excess
      compensation paid to Sellers prior to the Closing Date), (g) management charges,
      overhead and the like allocated to the Company after the Closing by the
      Purchaser or any Affiliate of the Purchaser, (h) with respect to goods and/or
      services provided after the Closing to the Company by the Purchaser or any
      Affiliate of the Purchaser, any charges for such goods and/or services to the
      extent such charges exceed what the Company would otherwise be charged for
      such
      goods and/or services in transactions with un-Affiliated parties; and
minus,
      to the
      extent added in computing such net income (without duplication), (i) interest
      income, and (ii) extraordinary nonrecurring gains, all determined in accordance
      with GAAP. A calculation of Adjusted EBITDA as of December 31, 2007 is set
      forth
      in Section
      1.1(a) of the Disclosure Schedule.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    “Affiliate”
means
      with respect to any Person, a Person that directly or indirectly controls,
      is
      controlled by, or is under common control with, any such Person. The term
“control”
      (including the terms “controlled
      by”
or
      “under
      common control with”)
      means,
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of such Person, whether through
      ownership of voting securities, membership interests, by contract or otherwise.
      The term “Affiliate”
also
      includes any child, stepchild, grandchild, parent, stepparent, grandparent,
      spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
      brother-in-law or sister-in-law, including adoptive relationships, of such
      Person.

     

    “Agreement”
has
      the
      meaning set forth in the Preamble.

     

    “Ancillary
      Agreements”
means
      each other agreement, document, instrument or certificate contemplated by this
      Agreement or to be executed by the Purchaser or any of the Sellers in connection
      with the consummation of the transactions contemplated by this Agreement, in
      each case only as applicable to the relevant party or parties to such Ancillary
      Agreement, as indicated by the context in which such term is used.

     

    “Bonus
      Amounts”
means
      any and all bonus and incentive compensation amounts that have been or should
      have been accrued for or are payable to the officers, directors, employees
      or
      consultants of the Company (including the employer portion of any employment,
      payroll, social security, unemployment or similar Taxes related to such Bonus
      Amounts) as of the Closing Date. The certificate referenced in Section 3.2(j)
      will set
      forth the entire amount of the Bonus Amounts of the Company as of the Closing
      Date (indicating the amount and the Person to whom such Bonus Amount is owed).
       

     

    “Bonus
      Payment”
has
      the
      meaning set forth in Section 8.2(c)(i).

     

    “Buyout
      Date”
has
      the
      meaning set forth in Section 8.2(j)(ii).

     

    “Buyout
      Notice”
has
      the
      meaning set forth in Section 8.2(j)(ii).

     

    “Buyout
      Option”
has
      the
      meaning set forth in Section 8.2(j)(ii).

     

    “Cash
      Proceeds”
has
      the
      meaning set forth in Section 2.3(a)(i).

     

    “Cash
      Purchase Price”
has
      the
      meaning set forth in Section 2.3(a)(ii).

     

    “Claims”
has
      the
      meaning set forth in Section 10.2(b).

     

    “Claims
      Notice”
has
      the
      meaning set forth in Section 10.2(a).

     

    “Closing”
has
      the
      meaning set forth in Section 3.1.

     

    “Closing
      Certificate”
means
      any one or more of the certificates delivered by the Sellers pursuant to
Section
      3.2(h),
      3.2(j)
      or
9.1(e)
      hereof.

     

    “Closing
      Date”
has
      the
      meaning set forth in Section 3.1.

     

    “Closing
      Date Balance Sheet”
has
      the
      meaning set forth in Section
      8.2(g).

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Company”
has
      the
      meaning set forth in the Preamble.

     

    “Company’s
      Knowledge”
means
      the actual awareness of any Principal or of any officer or director of the
      Company and the awareness that any such person could reasonably be expected
      to
      acquire in the course of having served in any such position with the care that
      an ordinarily prudent person in a like position would use.

     

    “Consent”
means
      any consent, approval, authorization, qualification, waiver, registration or
      notification required to be obtained from, filed with or delivered to a
      Governmental Authority or any other Person in connection with the consummation
      of the transactions provided for herein.

     

    “Contracts”
means
      all written and oral contracts, agreements (including, without limitation,
      employment agreements and non-competition agreements), leases (whether real
      or
      personal property), licenses, commitments, arrangements, instruments,
      guarantees, bids, orders and proposals.

     

    “Controlled
      Group”
means
      any trade or business (whether or not incorporated) (a) under common
      control within the meaning of Section 4001(b)(1) of ERISA with the Company
      or (b) which together with the Company is treated as a single employer
      under Section 414(t) of the Code.

     

    “Conversion
      Transaction”
means
      a
      merger, consolidation, recapitalization or other transaction to which the
      Purchaser is a party that results in the Purchaser Shares being converted into
      the right to receive cash and/or other securities or property.

     

    “Customer
      Advances”
means
      an aggregate amount equal to any gross revenues billed or received by the
      Company to the extent such gross revenues relate to services or products that,
      at the time of determination, have not yet been provided by the Company, as
      determined in accordance with GAAP, including, to the extent applicable, any
      Retained Accounts Receivable.

     

    “Disclosure
      Schedule”
has
      the
      meaning set forth in Article
      IV.

     

    “EBITDA
      Shortfall”
has
      the
      meaning set forth in Section 2.6(b)(i).

     

    “Election
      Period”
has
      the
      meaning set forth in Section 8.2(j)(ii).

     

    “Employee
      Plan”
and
      “Employee
      Plans”
have
      the meaning set forth in Section 5.10(a).

     

    “Employment
      Agreements”
has
      the
      meaning set forth in Section 3.2(c).

     

    “Environment”
means
      soil, surface waters, groundwater, land, stream sediments, surface or subsurface
      strata, ambient air, or indoor air, including, without limitation, any material
      or substance used in the physical structure of any building or improvement
      and
      any environmental medium.

     

    “Environmental
      Condition”
shall
      mean any condition of the Environment with respect to the Real Property, with
      respect to any property previously owned, leased or operated by the Company
      to
      the extent such condition of the Environment existed at the time of such
      ownership, lease or operation, or with respect to any other real property at
      which any Hazardous Material generated by the operation of the business of
      the
      Company has been handled, treated, stored or disposed of, which violates any
      Environmental Law, or even though not violative of any Environmental Law,
      nevertheless results in any Release, or Threat of Release, damage, loss, cost,
      expense, claim, demand, order or liability.

    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

     

    “Environmental
      Law”
shall
      mean any Law relating to health or safety or protection of the Environment,
      Releases of Hazardous Materials or injury to persons relating to exposure to
      any
      Hazardous Materials.

     

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

     

    “Excess
      EBITDA”
means
      (a) Final EBITDA minus
      (y) Target EBITDA, for the applicable Measurement Period, provided such
      calculation results in a positive number.

     

    “Existing
      Paybridge Referrals”
has
      the
      meaning set forth in Section
      5.12.

     

    “Expiration
      Date”
has
      the
      meaning set forth in Section 10.3(a).

     

    “Fair
      Market Value”
means
      the average closing price of Purchaser Common Stock as quoted on the OTC
      Bulletin Board (or other exchange in which Purchaser Common Stock may then
      be
      quoted) over a period of five consecutive trading days, the latest of which
      will
      be the trading day immediately preceding the Closing Date.

     

    “Final
      EBITDA”
has
      the
      meaning set forth in Section 2.6(b)(i).

     

    “Financial
      Advisor”
has
      the
      meaning set forth in Section
      8.2(f).

     

    “Financial
      Statements”
has
      the
      meaning set forth in Section 5.16(a).

     

    “First
      Cash Purchase Price”
has
      the
      meaning set forth in Section 2.3(a)(ii).

     

    “First
      Measurement Period”
has
      the
      meaning set forth in Section 2.6(a).

     

    “Foreign
      Plan”
has
      the
      meaning set forth in Section 5.10(k).

     

    “GAAP”
means
      accounting principles generally accepted in the United States of America as
      in
      effect on the Closing Date, as consistently applied during the relevant
      period.

     

    “General
      Enforceability Exceptions”
has
      the
      meaning set forth in Section 4.1.

     

    “Governmental
      Authority”
means
      any government or political subdivision or regulatory authority, whether
      federal, state, local or foreign, or any agency or instrumentality of any such
      government or political subdivision or regulatory authority, or any federal
      state, local or foreign court or arbitrator.

     

    “Gross
      Proceeds”
has
      the
      meaning set forth in Section 2.3(a).

     

    “Guarantee”
by
      any
      Person means any obligation, contingent or otherwise, of such Person directly
      or
      indirectly guaranteeing or otherwise supporting in whole or in part the payment
      of any Indebtedness or other obligation of any other Person and, without
      limiting the generality of the foregoing, any obligation, direct or indirect,
      contingent or otherwise, of such Person (a) to purchase or pay (or advance
      or supply funds for the purchase or payment of) such Indebtedness or other
      obligation of such other Person (whether arising by virtue of partnership
      arrangements, by agreement to keep well, to purchase assets, goods, securities
      or services, to take or pay, or to maintain financial statement conditions
      or
      otherwise) or (b) entered into for the purpose of assuring in any other
      manner the obligee of such Indebtedness or other obligations of the payment
      of
      such Indebtedness or to protect such obligee against loss in respect of such
      Indebtedness (in whole or in part). The term “Guarantee”
used
      as
      a verb has a correlative meaning.

    
      
         

      

      
        -
          4 -

        
          

        

      

      
         

      

    

     

    “Guaranty
      and Security Agreement”
has
      the
      meaning set forth in Section
      3.2(k).

     

    “Hazardous
      Material”
shall
      mean any pollutant, toxic substance including asbestos and asbestos-containing
      materials, hazardous waste, hazardous material, hazardous substance,
      contaminant, petroleum or petroleum-containing materials, infectious or medical
      wastes, radiation and radioactive materials, leaded paints, toxic mold and
      other
      harmful biological agents, and polychlorinated biphenyls as defined in, the
      subject of, or which could give rise to liability under any Environmental
      Law.

     

    “Holdback
      Amount”
means
      $467,500.

     

    “Indebtedness”
of
      any
      Person means: either (a) any liability of such Person (i) for borrowed
      money (including the current portion thereof), (ii) under any reimbursement
      obligation relating to a letter of credit, bankers’ acceptance or note purchase
      facility, (iii) evidenced by a bond, note, debenture or similar instrument
      (including a purchase money obligation), (iv) for the payment of money
      relating to any lease that is required to be classified as a capitalized lease
      obligation in accordance with GAAP, (v) for all or any part of the deferred
      purchase price of property or services (including, without limitation, accounts
      and trade payables (whether or not invoiced)), including any “earnout” or
      similar payments or any non-compete payments, (vi) under interest rate
      swap, hedging or similar agreements, (vii) for any deferred compensation or
      accrued incentive compensation, or (viii) for any severance payable to
      individuals or organizations; or (b) any liability of others described in
      the preceding clause (a) that such Person has Guaranteed, that is recourse
      to such Person or any of its assets or that is otherwise its legal liability
      or
      that is secured in whole or in part by the assets of such Person. For purposes
      of this Agreement, Indebtedness of the Company includes (A) any and all
      accrued interest, success fees, prepayment premiums, make whole premiums or
      penalties and fees or expenses actually incurred (including attorneys’ fees)
      associated with the prepayment of any Indebtedness, (B) all “cut” but
      uncashed checks issued by the Company that are outstanding as of the Closing
      Date to the extent the cash left in the Company’s account pursuant to
Section 2.2
      is
      insufficient to pay for such “cut” but uncashed checks, (C) cash, book or
      bank account overdrafts and (D) any and all amounts owed by the Company to
      any of its Affiliates, including, without limitation, any of the Sellers or
      any
      of their Affiliates. The certificate referenced in Section 3.2(j)
      will set
      forth, to the Sellers’ good faith best estimate based on the Company’s
      Knowledge, all Indebtedness of the Company as of the Closing Date (indicating
      the amount and the Person to whom such Indebtedness is owed).

     

    “Indemnification
      Cap”
has
      the
      meaning set forth in Section
      10.3(b)(ii).

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 10.2(a).

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 10.2(a).

     

    “Independent
      Arbitrator”
has
      the
      meaning set forth in Section 2.6(a).

     

    “Information
      Systems”
means
      all computer hardware, databases and data storage systems, computer, data,
      database and communications networks (other than the Internet), architecture
      interfaces and firewalls (whether for data, voice, video or other media access,
      transmission or reception) and other apparatus used to create, store, transmit,
      exchange or receive information in any form.

    
      
         

      

      
        -
          5 -

        
          

        

      

      
         

      

    

    “Intellectual
      Property”
means
      all of the following that is used in the business of the Company, along with
      all
      income, royalties, damages and payments due or payable on the Closing Date
      or
      thereafter, including, without limitation, damages and payments for past or
      future infringements or misappropriations thereof, the right to sue and recover
      for past infringements or misappropriations thereof and any and all
      corresponding rights that, now or hereafter, may be secured throughout the
      world: (a) patents, patent applications, patent disclosures and inventions
      (whether or not patentable and whether or not reduced to practice) and any
      reissue, continuation, continuation in part, revision, extension or
      reexamination thereof; (b) trademarks, service marks, trade dress, logos,
      Internet domain names (including, without limitation, the URL www.pensions.com),
      trade names and corporate names together with all goodwill associated therewith,
      including, without limitation, the use of the current corporate name and all
      translations, adaptations, derivations and combinations of the foregoing;
      (c) copyrights and copyrightable works; (d) all registrations,
      applications and renewals for any of the foregoing; (e) trade secrets and
      confidential business information (including, without limitation, ideas,
      formulae, compositions, know how, manufacturing and production processes and
      techniques, research and development information, drawings, specifications,
      designs, plans, proposals, technical data, financial, business and marketing
      plans, sales and promotional literature, and customer and supplier lists
      and
      related information); (f) computer software and websites (including,
      without limitation, source code and object code and any data and related
      documentation); (g) other intellectual property rights; and (h) all
      copies and tangible embodiments of the foregoing (in whatever form or medium),
      in each case including, without limitation, the items set forth in Section
      5.14 of the Disclosure Schedule.

     

    “IRCA”
has
      the
      meaning set forth in Section 5.9(d).

     

    “IRS”
means
      the Internal Revenue Service.

     

    “Law”
means
      any law, common law, statute, code, ordinance, regulation or other requirement
      of any Governmental Authority as well as foreign collective bargaining
      agreements and regulations of the employers’ liability insurance
      association.

     

    “Leased
      Real Property”
has
      the
      meaning set forth in Section 5.4(b).

     

    “Liability
      Claim”
has
      the
      meaning set forth in Section 10.2(a).

     

    “Liens”
has
      the
      meaning set forth in Section 2.1.

     

    “Litigation
      Conditions”
has
      the
      meaning set forth in Section 10.2(b).

     

    “Loss”
and
      “Losses”
means:
      (a) all losses, liabilities, claims, damages, penalties, fines, judgments,
      awards, settlements, Taxes, costs, fees, expenses (including but not limited
      to
      reasonable attorneys’ fees) and disbursements; and (b) with respect to any
      Liability Claim asserted by a Purchaser Indemnified Party related to any
      inaccuracy or misrepresentation regarding the Company’s pre-Closing Adjusted
      EBITDA that was relied upon by the Purchaser in determining the Gross Proceeds,
      diminution in value of the Company determined using the multiple of such
      Adjusted EBITDA that was relied upon by the Purchaser in determining such Gross
      Proceeds, exclusive of the value attributed to www.pensions.com as disclosed
      in
      that certain letter of intent, dated April 24, 2008, between the Purchaser
      and
      the Company.

     

    “Measurement
      Periods”
has
      the
      meaning set forth in Section 2.6(a).

     

    “Non-Compete
      Period”
means
      the five-year period immediately following the Closing Date.

     

    “Norman”
has
      the
      meaning set forth in the Preamble.

     

    “Norman
      Employment Agreement”
has
      the
      meaning set forth in Section 3.2(c).

     

    “Note”
and
      “Notes”
have
      the meaning set forth in Section 2.3(a)(iii).

     

    “Objections
      Statement”
has
      the
      meaning set forth in Section 2.6(a).

    
      
         

      

      
        -
          6 -

        
          

        

      

      
         

      

    

     

    “Order”
means
      any order, judgment, injunction, award, decree, ruling, charge or writ of any
      Governmental Authority.

     

    “Ordinary
      Course of Business”
means
      the ordinary course of business consistent with past custom and practice
      (including with respect to quantity and frequency).

     

    “OTC
      Bulletin Board”
means
      the regulated electronic quotation service offered by the National Association
      of Securities Dealers that displays real-time quotes, last-sale prices, and
      volume information in over-the-counter equity securities.

     

    “Party”
and
      “Parties”
have
      the meaning set forth in the Preamble.

     

    “PayBridge”
means
      PayBridge, LLC, an Ohio limited liability company.

     

    “Paybridge
      Contract”
means
      that certain Agreement, dated as of November 26, 2007, by and among PayBridge,
      PSL and the Company, as it may be amended, restated, supplemented or
      replaced.

     

    “Permits”
means
      any license, permit, authorization, certificate of authority, accreditation,
      qualification or similar document or authority that has been issued or granted
      by any Governmental Authority.

     

    “Permitted
      Exceptions”
means
      (a) Liens for current Taxes, assessments, fees and other charges by
      Governmental Authorities that are not due and payable as of the Closing Date
      and
      (b) those matters that are set forth in Section
      1.1(c) of the Disclosure Schedule.

     

    “Person”
means
      any individual, sole proprietorship, partnership, corporation, limited liability
      company, unincorporated society or association, trust or other entity, or any
      division of such Person.

     

    “Post-Closing
      Straddle Period”
has
      the
      meaning set forth in Section 7.2(a).

     

    “Pre-Closing
      Straddle Period”
has
      the
      meaning set forth in Section 7.2(a).

     

    “Pre-Closing
      Tax Period”
means
      any Tax period ending on or before the Closing Date.

     

    “Principal”
and
      “Principals”
has
      the
      meaning set forth in the Preamble.

     

    “Privilege
      Period”
has
      the
      meaning set forth in Section 7.2(b)(iv).

     

    “PSL”
means
      Paybridge Solutions, LLC, a California limited liability company and Affiliate
      of the Company.

     

    “Purchase
      Price”
has
      the
      meaning set forth in Section 2.3(a)(iv).

     

    “Purchaser”
has
      the
      meaning set forth in the Preamble.

     

    “Purchaser’s
      Advisors”
has
      the
      meaning set forth in Section 8.1(a).

     

    “Purchaser
      Common Stock”
means
      the common stock, par value $0.001 per share, of Purchaser.

     

    “Purchaser
      Indemnified Party”
has
      the
      meaning set forth in Section 10.1(a).

     

    “Purchaser
      Shares”
has
      the
      meaning set forth in Section 2.3(a)(iv).

    
      
         

      

      
        -
          7 -

        
          

        

      

      
         

      

    

     

    “Real
      Property”
means
      any and all real property and interests in real property of the Company,
      including the Leased Real Property, any real property leaseholds and
      subleaseholds, purchase options, easements, licenses, rights to access and
      rights of way and any other real property otherwise owned, occupied or used
      by
      the Company.

     

    “Real
      Property Leases”
has
      the
      meaning set forth in Section 5.4(b).

     

    “Release”
shall
      mean any releasing, spilling, leaking, pumping, pouring, emitting, emptying,
      discharging, injecting, escaping, leaching, migrating, disposing or dumping
      of a
      Hazardous Material into the Environment (including, without limitation, the
      abandonment or discarding of barrels, containers and other closed receptacles
      containing any Hazardous Materials) and any condition that results in the
      exposure of a Person to a Hazardous Material.

     

    “Restricted
      Territory”
means:
      (a) the State of California and each State contiguous to the State of
      California; and (b) all of the specific customer accounts of the Company,
      whether within or outside of the geographic area described in clause (a)
      above, with which any Principal had any contact or for which any Principal
      had
      any responsibility (either direct or supervisory) immediately prior to the
      Closing, at any time during the two-year period prior to the Closing, or at
      any
      time during the Non-Compete Period.

     

    “Retained
      Accounts Receivable” means
      all
      accounts receivable and other receivables generated in the Ordinary Course
      of
      Business of the Company, including, without limitation, notes receivables of
      the
      Company existing as of the Closing Date. The certificate referenced in
Section 3.2(j)
      will set
      forth a true and complete list of the Sellers’ best estimate of all Retained
      Accounts Receivable as of the Closing Date.

     

    “Returns”
means
      all returns, declarations, statements, reports, claims for refund, information
      returns and forms relating to Taxes, including any schedule or attachment
      thereto, and including any amendment thereof.

     

    “Second
      Cash Purchase Price”
has
      the
      meaning set forth in Section 2.3(a)(ii).

     

    “Second
      Measurement Period”
has
      the
      meaning set forth in Section 2.6(a).

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Sellers”
means,
      collectively, the Principals and the Trusts, with each being a
“Seller”.

     

    “Selling
      Expenses”
means
      all (a) unpaid costs, fees and expenses of outside professionals incurred
      by the Company (including expenses incurred by the Company on behalf of the
      Sellers) relating to the process of selling the Company whether incurred in
      connection with this Agreement or otherwise, including, without limitation,
      all
      legal, accounting, consulting, tax and investment banking fees and expenses,
      and
      (b) severance obligations, retention bonuses, “stay” bonuses and sale
      bonuses owed by the Company triggered prior to or in connection with the
      transactions contemplated by this Agreement (including the employer portion
      of
      any related employment, payroll, social security, unemployment or similar
      Taxes). The certificate referenced in Section 3.2(j)
      will set
      forth the entire amount of the Selling Expenses of the Company as of the Closing
      Date (indicating the amount and the Person to whom such Selling Expense is
      owed).

     

    “Shares”
has
      the
      meaning set forth in Background Paragraph A.

    
      
         

      

      
        -
          8 -

        
          

        

      

      
         

      

    

     

    “Special
      Representations”
means
      the representations and warranties listed in clauses (i) and (ii) of
Section 10.3(a),
      excluding the representations and warranties set forth in Section 5.17
      (Undisclosed Liabilities).

     

    “Spiegel”
has
      the
      meaning set forth in the Preamble.

     

    “Spiegel
      Employment Agreement”
has
      the
      meaning set forth in Section 3.2(c).

     

    “Statement
      of Operations”
has
      the
      meaning set forth in Section 2.6(a).

     

    “Stephan”
has
      the
      meaning set forth in the Preamble.

     

    “Stephan
      Employment Agreement”
has
      the
      meaning set forth in Section 3.2(c).

     

    “Straddle
      Period”
has
      the
      meaning set forth in Section 7.2(a).

     

    “Subsidiary”
or
      “Subsidiaries”
means
      any Person of which at least 20% of the outstanding shares or other equity
      interests having ordinary voting power for the election of directors or
      comparable managers of such Person are at the time owned by the Company, by
      one
      or more directly or indirectly wholly or partially owned subsidiaries of the
      Company or by the Company and one or more such subsidiaries, whether or not
      at
      the time the shares of any other class or classes or other equity interests
      of
      such Person shall have or might have voting power by reason of the happening
      of
      any contingency.

     

    “Tangible
      Personal Property”
has
      the
      meaning set forth in Section 5.4(c).

     

    “Target
      EBITDA”
means
      (a) with respect to the First Measurement Period, $995,775, and
      (b) with respect to the Second Measurement Period, $1,060,500.

     

    “Tax”
means
      any (a) foreign, United States federal, state, or local net income,
      alternative or add-on minimum tax, gross income, gross receipts, sales, use,
      ad
      valorem, value added, transfer, franchise, profits, license, withholding,
      payroll, employment, excise, severance, stamp, occupation, premium, property,
      environmental or windfall profit tax, custom, duty or other tax, governmental
      fee or other like assessment or charge of any kind whatsoever, together with
      any
      interest, penalty, addition to tax or additional amount imposed by any Law
      or
      Taxing Authority, whether disputed or not, (b) any liability for the
      payment of any amounts of any of the foregoing types as a result of being a
      member of an affiliated, consolidated, combined or unitary group, or being
      a
      party to any agreement or arrangement whereby liability for payment of such
      amounts was determined or taken into account with reference to the liability
      of
      any other Person and (c) any liability for the payment of any amounts of
      any of the foregoing types as a result of being a party to any agreements or
      arrangements (whether or not written) or with respect to the payment of any
      amounts of any of the foregoing types as a result of any express or implied
      obligation to indemnify any other Person.

     

    “Tax
      Matter”
means
      any inquiries, claims, assessments, audits or similar events with respect to
      Taxes of the Company.

     

    Taxing
      Authority”
means
      any Governmental Authority responsible for the administration or imposition
      of
      any Tax.

     

    “Third
      Party Claim”
has
      the
      meaning set forth in Section 10.2(b).

     

    “Threat
      of Release”
shall
      mean a substantial likelihood of a Release that requires action to prevent
      or
      mitigate damage or injury to health, safety or the Environment that might result
      from such Release.

    
      
         

      

      
        -
          9 -

        
          

        

      

      
         

      

    

     

    “Tier
      1 Payment”
means
      all amounts paid or otherwise owing to PSL under the Paybridge Contract with
      respect to revenues generated as fees and/or float, after sales commissions,
      for
      clients referred to PayBridge by PSL.

     

    “Tier
      2 Payment”
means
      all amounts paid or otherwise owing to PSL under the Paybridge Contract with
      respect to revenues generated as fees and/or float for clients referred to
      PayBridge by other service providers that were introduced to PayBridge by
      PSL.

     

    “Transfer
      Taxes”
has
      the
      meaning set forth in Section 7.2(e).

     

    “Triggering
      Event”
means
      the occurrence of any of the following: (a) Stephan’s employment with the
      Company ends
      after the Closing due to a Termination Without Cause or a Resignation For Good
      Reason (each as defined in the Stephan Employment Agreement), (b) Norman’s
      employment with the Company ends
      after the Closing due to a Termination Without Cause or a Resignation For Good
      Reason (each as defined in the Norman Employment Agreement), or (c) Spiegel’s
      employment with the Company ends
      after the Closing due to a Termination Without Cause or a Resignation For Good
      Reason (each as defined in the Spiegel Employment Agreement).

     

    “Trust”
or
      “Trusts”
has
      the
      meaning set forth in the Preamble.

     

    II.
      PURCHASE AND SALE

     

    2.1. Purchase
      and Sale of the Shares.
      At the
      Closing, the Purchaser shall purchase (or cause to be purchased) from the
      Trusts, and the Trusts shall sell, transfer, assign, convey and deliver to
      the
      Purchaser, all of the Shares, free and clear of any mortgage, pledge,
      hypothecation, rights of others, claim, security interest, encumbrance, title
      defect, title retention agreement, voting trust agreement, interest, option,
      lien, charge or similar restrictions or limitations (collectively, “Liens”).

     

    2.2. Retained
      Assets.
      The
      Parties agree that the Company shall have the right, at or prior to the Closing,
      to distribute to the Sellers pro rata based on their percentage ownership of
      the
      Shares (a) all of the cash and cash equivalents of the Company other than
      an amount of cash sufficient to pay for all “cut” but uncashed checks issued by
      the Company that are outstanding as of the Closing Date and (b) the
      Retained Accounts Receivable, without adjustment to the Purchase
      Price.

     

    2.3. Purchase
      Price.
      

     

    (a)
      In
      full consideration for the transfer of the Shares, the Purchaser shall pay
      (or
      cause to be paid) to the Trusts an aggregate amount equal to Four Million Six
      Hundred Seventy-Five Thousand Dollars ($4,675,000) (the “Gross
      Proceeds”)
      or
      such lesser amount resulting from deductions, if any, pursuant to this
Section 2.3(a))
      consisting of:

     

    (i)
      an
      amount in cash equal to $2,805,000 plus
      an
      amount in cash, if any, the Purchaser determines to pay to the Trusts pursuant
      to Section
      2.3(a)(iv)
      below,
      payable at the Closing (the “Cash
      Proceeds”),
      minus
      (A) any and all outstanding Indebtedness of the Company as of the Closing
      Date, (B) any and all Customer Advances as of the Closing Date, (C) any and
      all
      Selling Expenses, (D) any and all Bonus Amounts, and (E) the Holdback
      Amount (such amount resulting from the deductions, if any, to the Cash Proceeds
      is referred to herein as the “First
      Cash Purchase Price”);

     

    (ii)
      $935,000 in cash payable within 90 days after the Closing (the “Second
      Cash Purchase Price”
and
      together with the First Cash Purchase Price, the “Cash
      Purchase Price”);
      

    
      
         

      

      
        -
          10 -

        
          

        

      

      
         

      

    

     

    (iii)
      $467,500 payable under two promissory notes (one payable 14 months after the
      Closing and one payable 26 months after the Closing, subject to extension as
      provided therein), each in the amount of $233,750 (subject to adjustment as
      set
      forth in Section 2.6)
      and
      substantially in the form attached hereto as Exhibit A
      (each, a
“Note”
and
      together, the “Notes”);
      and

     

    (iv)
      $467,500 payable in (A) shares of Purchaser Common Stock, (B) cash, or (C)
      any
      combination of the foregoing, as determined in the sole discretion of the
      Purchaser. The number of shares of Purchaser Common Stock issued pursuant to
      this Section
      2.3(a)(iv)
      shall
      equal (x) $467,500 less
      the
      amount of cash, if any, the Purchaser determines to pay to the Trusts pursuant
      to this Section
      2.3(a)(iv),
      divided
      by
      (y) the
      Fair Market Value of one share of Purchaser Common Stock as of the Closing
      Date.
      For example, if the Purchaser determines to the pay the Trusts the sum of
      $100,000 in cash pursuant to this Section
      2.3(a)(iv)
      and the
      Fair Market Value of one share of Purchaser Common Stock is $0.50, then (I)
      at
      the Closing, the Cash Proceeds would equal $2,905,000 (i.e., $2,805,000 +
      $100,000 = $2,905,000) and (II) the Purchaser would issue the Trusts 735,000
      shares of Purchaser Common Stock (i.e., ($467,500 - $100,000) / $0.50 =
      735,000). The number of shares of Purchaser Common Stock issued pursuant to
      this
Section
      2.3(a)(iv)
      is
      referred to herein as the “Purchaser
      Shares”.
      Collectively, the Cash Purchase Price, the Purchaser Shares and the Notes are
      referred to herein as the “Purchase
      Price”.
      

     

    (b)
      Subject to the terms of Article X,
      on the
      date that is 120 days after the Closing Date, the Purchaser shall pay or cause
      to be paid to the Trusts the Holdback Amount, minus
      the
      amount required to satisfy any unresolved Claims made by the Purchaser or any
      Purchaser Indemnified Party in accordance with the terms of Article X.
      In the
      event that any portion of the Holdback Amount is retained pursuant to the
      immediately preceding sentence, such retained portion will be paid to the Trusts
      within three (3) business days following resolution of the Claim with respect
      to
      which it was withheld, less the amount applied to resolve such Claim.

     

    (c)
      At
      the Closing, the Purchaser shall pay (or cause to be paid) on behalf of the
      Company (i) to the Persons entitled thereto, all of the Indebtedness of the
      Company to the extent it is to be repaid in connection therewith as determined
      by the Purchaser, (ii) to the Persons entitled thereto, all of the Selling
      Expenses to the extent unpaid, and (iii) to the Persons entitled thereto,
      when due and payable and as reduced by applicable employment or withholding
      Taxes, the Bonus Amounts. 

     

    2.4. [Intentionally
      omitted.] 

     

    2.5. Payment
      of the Purchase Price. 

     

    (a)
      On
      the Closing Date, the Purchaser shall (i) pay the First Cash Purchase Price
      to the Trusts by bank wire transfer of immediately available funds and
      (ii) deliver the Notes to the Trusts. 

     

    (b)
      As
      soon as practicable, and in any event within five (5) days, after the Closing,
      the Purchaser shall instruct its transfer agent to issue the Purchaser Shares
      to
      the Trusts. 

     

    (c)
      Within 90 days after the Closing Date, the Purchaser shall pay the Second Cash
      Purchase Price to the Trusts by bank wire transfer of immediately available
      funds. 

     

    (d)
      All
      payments made to the Trusts hereunder (including the First Cash Purchase Price,
      the Second Cash Purchase Price, all or any portion of the Holdback Amount and
      the payment of principal and interest under the Notes) shall be paid to the
      Trusts (i) by wire transfer to the accounts listed in Section
      2.5 of the Disclosure Schedule
      and (ii)
      in the following percentages among the Trusts: Stephan
–
      47.5%; Norman – 47.5%; and Spiegel – 5.0%. The Purchaser Shares shall be issued
      among the Trusts in the same percentages. 

    
      
         

      

      
        -
          11 -

        
          

        

      

      
         

      

    

     

    2.6. Adjustments
      to the Notes.

     

    (a)
      Statement
      of Operations Calculation.
      Within
      60 days after each of (i) the period beginning on the first day of the
      first full calendar month following the Closing and ending on the day
      immediately preceding the one-year anniversary of such date (the “First
      Measurement Period”)
      and
      (ii) the period beginning on the day after expiration of the First
      Measurement Period and ending on the day immediately preceding the one-year
      anniversary of such date (the “Second
      Measurement Period”,
      and
      together with the First Measurement Period, the “Measurement
      Periods”),
      the
      Purchaser shall cause to be prepared and delivered to the Principals a statement
      of operations of the Company (the “Statement
      of Operations”)
      for
      the applicable Measurement Period, determined in accordance with GAAP. Each
      Statement of Operations shall include a (A) calculation of the Company’s
      Adjusted EBITDA for the applicable Measurement Period, and (B) written
      determination of whether the Company achieved the Target EBITDA for such
      Measurement Period. If the Principals have any objections to the Statement
      of
      Operations for the applicable Measurement Period, then the Principals shall
      deliver to the Purchaser a statement setting forth their objections thereto,
      including supporting calculations and documentation (an “Objections
      Statement”).
      If an
      Objections Statement is not delivered to the Purchaser within 30 days after
      delivery of the Statement of Operations for such Measurement Period, then the
      Statement of Operations shall be final, binding and non-appealable by the
      Parties. The Principals, on the one hand, and the Purchaser, on the other hand,
      shall negotiate in good faith to resolve any such objections, but if they do
      not
      reach a final resolution within 30 days after the delivery of an Objections
      Statement, then the Principals and the Purchaser shall submit such dispute
      for
      resolution to an independent accounting firm (the “Independent
      Arbitrator”)
      mutually appointed by the Principals, on the one hand, and the Purchaser, on
      the
      other hand. If the Principals, on the one hand, and the Purchaser, on the other
      hand, cannot agree on the identity of the Independent Arbitrator, then they
      shall select the Independent Arbitrator from a list of regional accounting
      firms
      that maintain offices in Southern California; provided,
      however,
      no firm
      selected shall have (or have had) a material relationship with the Sellers,
      the
      Purchaser or their respective Affiliates. If the Principals, on the one hand,
      or
      the Purchaser, on the other hand, fail to cooperate in selecting the Independent
      Arbitrator, the cooperating Party may apply to the American Arbitration
      Association office located in Southern California, which office shall have
      the
      power to designate the Independent Arbitrator. The Principals and the Purchaser
      shall use their commercially reasonably efforts to cause the Independent
      Arbitrator to resolve all disagreements as soon as practicable. The resolution
      of the dispute by the Independent Arbitrator, or any written agreement of the
      Sellers and the Purchaser as to the resolution of such dispute, shall be final
      and binding on, and non-appealable by, the Parties. The costs and expenses
      of
      the Independent Arbitrator shall be allocated between the Purchaser, on the
      one
      hand, and the Sellers, on the other hand, based upon the percentage that the
      portion of the contested amount not awarded to each Party bears to the amount
      actually contested by such Party. For example, if the Principals claim Adjusted
      EBITDA for the applicable Measurement Period is $1,000 greater than the amount
      determined by the Purchaser, and the Purchaser contests only $500 of the amount
      claimed by the Principals, and if the Independent Arbitrator ultimately resolves
      the dispute by awarding the Sellers $300 of the $500 contested, then the costs
      and expenses of arbitration will be allocated 60% (i.e., 300 ÷ 500) to the
      Purchaser and 40% (i.e., 200 ÷ 500) to the Sellers.

     

    (b)
      Adjustments.

     

    (i)
      If
      Adjusted EBITDA as finally determined pursuant to Section 2.6(a)
      (“Final
      EBITDA”)
      for
      the First Measurement Period is less than the Target EBITDA for the First
      Measurement Period, then the principal amount of the Note payable 14 months
      after the Closing (subject to extension as provided therein) shall decrease
      in
      an amount equal to the difference of (A) Target EBITDA minus
      (B) Final EBITDA, for the First Measurement Period (the “EBITDA
      Shortfall”).

    
      
         

      

      
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    (ii)
      If
      Final EBITDA for the Second Measurement Period is less than the Target EBITDA
      for the Second Measurement Period, then the principal amount of the Note payable
      26 months after the Closing (subject to extension as provided therein) shall
      decrease in an amount equal to the difference of (A) Target EBITDA
minus
      (B) Final EBITDA, for the Second Measurement Period.

     

    (iii)
      If
      a reduction is made to the Note payable 14 months after the Closing (subject
      to
      extension as provided therein) pursuant to Section 2.6(b)(i),
      or the
      EBITDA Shortfall is offset against any amount owed to the Sellers under any
      Ancillary Agreement, and Final EBITDA for the Second Measurement Period is
      greater than Target EBITDA for the Second Measurement Period, then the principal
      amount of the Note payable 26 months after the Closing (subject to extension
      as
      provided therein) shall increase in an amount equal to the lesser of
      (A) Excess EBITDA for the Second Measurement Period, or (B) the EBITDA
      Shortfall. For the avoidance of doubt, in no event shall the Notes exceed their
      aggregate value on the Closing Date (except to the extent that the EBITDA
      Shortfall is offset against any amount owed to the Sellers under any Ancillary
      Agreement).

     

    (c)
      Relationship
      of Notes to Employment Agreements.
      Upon
      the occurrence of a Triggering Event or any Event of Default (as defined in
      either of the Notes), the provisions of Sections
      2.6(b)(i) and (ii)
      shall be
      of no force or effect thereafter and the original principal amount of the Notes
      shall remain fixed as of the date of such Triggering Event or Event of Default,
      subject to increase, however, pursuant to Section 2.6(b)(iii). For the avoidance
      of doubt, (A) under no circumstances will the Notes (or any of them)
      accelerate and become immediately due and payable solely as a result of a
      Triggering Event (or any component thereof), and (B) nothing herein shall
      affect the Purchaser’s rights of set-off set forth in Section 10.6
      below.

     

    (d)
      Access.
      After
      delivery of the Statement of Operations, and solely in connection therewith,
      the
      Purchaser shall permit the Principals and their representatives to have
      reasonable access to the books, records and other documents (including work
      papers) pertaining to or used in connection with preparation of the Statement
      of
      Operations, and shall provide the Principals with copies thereof as reasonably
      requested by the Principals. The Principals and their representatives may make
      inquiries of the Purchaser and the Company and their respective employees,
      accountants and representatives regarding the Statement of Operations arising
      in
      the course of their review thereof, and the Purchaser shall use, and shall
      cause
      the Company to use, their commercially reasonable efforts to cause any such
      employees, accountants and representatives to cooperate with and respond to
      such
      inquiries.

     

    III.
      CLOSING, DELIVERIES AND OTHER ACTIONS

     

    3.1. Time
      and Place of Closing.
      The
      closing of the transactions contemplated hereby (the “Closing”)
      shall
      take place remotely via the exchange of documents and signatures on the second
      business day after satisfaction or waiver of the conditions (excluding
      conditions that, by their terms, cannot be satisfied until the Closing Date
      but
      subject to the satisfaction or waiver of those conditions) set forth in
Article IX,
      or in
      such other manner and such other time as the Purchaser and the Sellers shall
      agree in writing. The date on which the Closing occurs is referred to herein
      as
      the “Closing
      Date”.

     

    3.2. Deliveries
      by the Sellers.
      At the
      Closing, the Sellers shall deliver, or cause to be delivered, to the Purchaser
      the following items:

     

    (a)
      (i) stock certificates representing all of the Shares with duly executed
      stock powers attached in proper form for transfer to the Purchaser and
      (ii) any other documents that are necessary to transfer to the Purchaser
      good and valid title to the Shares free and clear of any Liens, with any
      necessary transfer tax stamps affixed or accompanied by evidence that all stock
      transfer taxes have been paid;

    
      
         

      

      
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    (b)
      a
      receipt, duly executed by the Trusts, evidencing receipt by the Trusts of the
      Purchase Price (other than the Second Cash Purchase Price, the Holdback Amount
      and Purchaser Shares);

     

    (c)
      (i)
      an employment agreement, in the form attached hereto as Exhibit B-1,
      by and
      between the Company and Stephan (the “Stephan
      Employment Agreement”),
      duly
      executed by Stephan; (ii) an employment agreement, in the form attached hereto
      as Exhibit B-2,
      by and
      between the Company and Norman (the “Norman
      Employment Agreement”),
      duly
      executed by Norman; and (iii) an employment agreement, in the form attached
      hereto as Exhibit B-3,
      by and
      between the Company and Spiegel (the “Spiegel
      Employment Agreement”,
      and
      collectively with the Stephan Employment Agreement and the Norman Employment
      Agreement, the “Employment
      Agreements”),
      duly
      executed by Spiegel;

     

    (d)
      releases, each in the form of Exhibit C,
      duly
      executed by each Seller;

     

    (e)
      reasonably current long form good standing certificates (or equivalent document)
      for the Company issued by the appropriate Governmental Authority in the
      Company’s jurisdiction of incorporation and in each jurisdiction where the
      Company is qualified to do business as a foreign corporation;

     

    (f)
      copies of the Certificate of Incorporation (or equivalent document) of the
      Company, certified by the secretary of state of its jurisdiction of
      incorporation, and copies of the Bylaws (or equivalent document) of the Company,
      certified by an officer of the Company;

     

    (g)
      the
      original corporate record books and stock record books of the Company, and
      all
      books and records (including data stored on discs, tapes or other media) related
      to the Company’s business, including, to the extent available, all current and
      historical financial, accounting and Tax records);

     

    (h)
      certificates of the Sellers required pursuant to Sections 9.1(c)
      and
(h);

     

    (i)
      non-foreign person affidavits that comply with the requirements of
      Section 1445 of the Code, duly executed by each Seller and reasonably
      satisfactory to the Purchaser;

     

    (j)
      a
      certificate of the Sellers, dated as of the Closing Date, setting forth in
      sufficient detail acceptable to the Purchaser (i) to the Sellers’ good
      faith best estimate based on the Company’s Knowledge, all Indebtedness of the
      Company, (ii) all Customer Advances of the Company (other than Customer
      Advances not yet calculated as of the Closing Date, which Customer Advances
      shall remain a liability of the Sellers as Customer Advances), (iii) all Selling
      Expenses, (iv) all Bonus Amounts, and (v) the Sellers’ best estimate
      of all Retained Accounts Receivable, in each case, as of the Closing
      Date;

     

    (k)
      a
      subordinated guaranty and security agreement in the form attached hereto as
      Exhibit
      D
      (the
“Guaranty
      and Security Agreement”),
      duly
      executed by each of the Sellers;

     

    (l)
      appropriate termination statements under the Uniform Commercial Code and other
      instruments as may be reasonably requested by the Purchaser to evidence the
      release of any and all Liens (other than Permitted Encumbrances) on any of
      the
      assets or properties of the Company;

     

    (m)
      written resignations of each director and officer of the Company;
      and

     

    (n)
      such
      other documents and instruments as the Purchaser reasonably requests to
      consummate the transactions contemplated hereby.

    
      
         

      

      
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          14 -

        
          

        

      

      
         

      

    

     

    3.3. Deliveries
      by the Purchaser.
      At the
      Closing, the Purchaser shall deliver, or cause to be delivered, to the Sellers
      (unless otherwise indicated herein) the following items:

     

    (a)
      the
      First Cash Purchase Price, payable as set forth in Section 2.5;

     

    (b)
      the
      Notes, duly executed by the Purchaser;

     

    (c)
      the
      Employment Agreements, duly executed by the Company;

     

    (d)
      the
      Guaranty and Security Agreement, duly executed by the Company;

     

    (e)
      a
      certificate of the Purchaser required pursuant to Sections
      9.2(c);
      and

     

    (f)
      such
      other documents and instruments as the Sellers reasonably request to consummate
      the transactions contemplated hereby.

     

    IV.
      REPRESENTATIONS AND WARRANTIES OF THE sellers

     

    Subject
      only to those exceptions and qualifications listed and described (including
      an
      identification by Section reference to the representations and warranties to
      which such exceptions and qualifications relate) on the Disclosure Schedule
      attached to this Agreement (the “Disclosure
      Schedule”),
      each
      Seller, severally and with respect to him or herself and not with respect to
      any
      other Seller (except that each Principal makes the following representations
      and
      warranties on a joint and several basis with any Trust for which such Principal
      is a trustee), represents and warrants to the Purchaser as follows:

     

    4.1. Authority,
      Validity and Effect.
      Such
      Seller has all requisite authority and full legal capacity to enter into and
      perform his, her or its obligations under this Agreement and any Ancillary
      Agreement to which such Seller is a party and to consummate the transactions
      contemplated herein and therein. This Agreement has been, and such Ancillary
      Agreements, when delivered at the Closing will have been, duly executed and
      delivered by such Seller pursuant to all necessary authorization and, assuming
      due authorization, execution and delivery by the Purchaser or any other party
      thereto, are or will be the legal, valid and binding obligation of such Seller,
      enforceable against such Seller in accordance with their terms, subject to
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
      fraudulent conveyance and other similar Laws and principles of equity affecting
      creditors’ rights and remedies generally (the “General
      Enforceability Exceptions”).

     

    4.2. Title
      to Shares.
      Such
      Seller (a) is the record and beneficial owner of the Shares as set forth in
Section
      5.3 of the Disclosure Schedule,
      (b) has full power, right and authority, and any approval required by Law,
      to make and enter into this Agreement and to sell, assign, transfer and deliver
      his, her or its Shares to the Purchaser, and (c) has good and valid title
      to his, her or its Shares free and clear of all Liens. Upon the consummation
      of
      the transactions contemplated by this Agreement in accordance with the terms
      hereof, at the Closing, the Purchaser will acquire good and valid title to
      the
      Shares of such Seller, free and clear of all Liens, other than Liens that may
      be
      created by the Purchaser.

     

    4.3. No
      Conflict.
      Neither
      the execution of this Agreement or the Ancillary Agreements, nor the performance
      by such Seller of his, her or its obligations hereunder or thereunder will
      (a) violate or conflict with the Certificate of Incorporation (or
      equivalent document) or the Bylaws (or equivalent document) of the Company,
      or
      any Law or Order, (b) violate, conflict with or result in a breach or
      termination of, or otherwise give any Person additional rights or compensation
      under, or the right to terminate or accelerate, or constitute (with notice
      or
      lapse of time, or both) a default under the terms of any note, deed, mortgage
      or
      Contract to which the Company, or such Seller is a party or by which any of
      their respective assets or properties are bound, (c) result in the creation
      or imposition of any Lien with respect to, or otherwise have an adverse effect
      upon, the Shares or any of the assets or properties of the Company or such
      Seller, or (d) invalidate or adversely affect any Permit required for the
      conduct of the businesses of the Company, including, without limitation, any
      business license.

    
      
         

      

      
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          15 -

        
          

        

      

      
         

      

    

     

    4.4. Consents.
      No
      Consent of any third party or Governmental Authority is required in connection
      with the execution and delivery by such Seller of this Agreement or the
      Ancillary Agreements to which such Seller is a party, or the consummation of
      the
      transactions contemplated hereby or thereby.

     

    4.5. Litigation.
      There is
      no Order and no Action pending, or to the Company’s Knowledge, threatened
      against such Seller that would give any Person the right to enjoin or rescind
      the transactions contemplated by this Agreement or otherwise prevent such Seller
      from complying with the terms of this Agreement.

     

    4.6. Purchaser
      Shares Legend.
      Such
      Seller acknowledges and accepts that until such time as the Purchaser Shares
      have been registered under the Securities Act or otherwise may be sold pursuant
      to Rule 144 under the Securities Act without any restriction as to the
      amount of shares that may be immediately sold as of a particular date, the
      certificates representing the Purchaser Shares shall be issued with restrictive
      legends substantially similar to the following form (and a stop-transfer order
      may be placed against any transfer):

     

    “The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended. The securities may not be sold, transferred
      or assigned in the absence of an effective registration statement for the
      securities under said Act, or an opinion of counsel, in form, substance and
      scope customary for opinions of counsel in comparable transactions, that
      registration is not required under said Act or unless sold pursuant to
      Rule 144 under said Act.”

     

    4.7. Rule 144.
      Such
      Seller acknowledges and accepts that until such time as the Purchaser Shares
      have been registered under the Securities Act or a Conversion Transaction
      occurs, if such Seller desires to sell any of his or her respective shares
      of
      the Purchaser Shares, then such Seller must comply with the terms and conditions
      of Rule 144 under the Securities Act, which terms and conditions include,
      among other things, mandatory holding periods.

     

    4.8. Investment
      Representations.

     

    (a)
      The
      Purchaser Shares acquired by such Seller are being acquired for investment
      only
      and not with a view of any distribution thereof that would violate the
      Securities Act or any applicable state securities laws.

     

    (b)
      Such
      Seller (i) is financially able to hold the Purchaser Shares for long-term
      investment, (ii) understands that the nature and amount of the Purchaser
      Shares being purchased is consistent with his or her overall investment program
      and financial position and (iii) recognizes that there are substantial
      risks involved in the acquisition of the Purchaser Shares, including risk of
      loss of the entire amount of such investment.

     

    (c)
      Such
      Seller confirms that he or she (i) is familiar with the Purchaser,
      (ii) has been given the opportunity to ask questions of the officers and
      directors of the Purchaser and to obtain (and has received to his or her
      satisfaction) such information about the business and financial condition of
      the
      Purchaser as he of she has reasonably requested and (iii) has such
      knowledge and experience in financial and business matters (either alone or
      in
      conjunction with a financial advisor) that he or she is capable of evaluating
      the merits and risks of the investment in the Purchaser Shares.

    
      
         

      

      
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          16 -

        
          

        

      

      
         

      

    

     

    (d)
      Such
      Seller is an “accredited investor” as such term is defined in Rule 501 of
      Regulation D promulgated under the Securities Act.

     

    V.
      REPRESENTATION AND WARRANTIES RELATING TO THE COMPANY

     

    Subject
      only to those exceptions and qualifications listed and described (including
      an
      identification by Section reference to the representations and warranties to
      which such exceptions and qualifications relate) on the Disclosure Schedule,
      the
      Sellers hereby jointly and severally represent and warrant to the Purchaser
      as
      follows:

     

    5.1. Existence
      and Good Standing.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of California and is duly authorized, qualified
      or
      licensed to do business as a foreign corporation in each of the jurisdictions
      set forth in Section
      5.1 of the Disclosure Schedule,
      which
      are the only jurisdictions in which the Company is required to be so
      qualified.

     

    5.2. Power.
      The
      Company has the necessary power and authority to (a) own, operate and lease
      its properties and assets as and where currently owned, operated and leased
      and
      (b) carry on its business as currently conducted.

     

    5.3. Capitalization
      of the Company.
      The
      authorized capital stock of the Company consists of 4,000,000 shares of common
      stock, without par value, of which 600,000 shares are issued and outstanding
      all
      of which have been (a) duly authorized and validly issued and are fully
      paid and non-assessable and (b) issued in compliance with all securities
      laws and all applicable agreements. All of the Shares are owned beneficially
      and
      of record by the Sellers in each case free and clear of any Liens. There are
      no
      outstanding options, warrants, rights, calls, subscriptions, claims of any
      character, agreements, obligations, convertible or exchangeable securities
      or
      other commitments, contingent or otherwise, of any kind obligating the Company
      to issue, directly or indirectly, any additional shares of its capital stock
      or
      other equity securities. The Shares represent the only issued and outstanding
      shares of capital stock of the Company. No former equity owner of the Company
      or
      any of its respective predecessors, and no former holder of any right to acquire
      any interest in the Company or any of its respective predecessors (whether
      by
      warrant, option, convertible instrument or otherwise) has any claim or rights
      against the Company. There are no Contracts relating to the issuance, sale,
      transfer or voting of any equity securities or other securities of the Company.
      Section
      5.3 of the Disclosure Schedule
      sets
      forth a true and complete statement of the capitalization of the Company. The
      Company has no Subsidiaries. 

     

    5.4. Property.

     

    (a)
      Title.
      Other
      than the Permitted Exceptions, the Company has good and marketable title to,
      valid and enforceable leasehold interests in, or a valid and enforceable license
      to, all of its tangible assets and properties free and clear of any Liens.
      The
      assets and properties owned, leased or licensed by the Company are in good
      condition and repair (subject to normal wear and tear consistent with the age
      of
      the assets and properties) and are sufficient for the operation of the business
      of the Company as it is currently conducted and proposed to be conducted. The
      Company owns no real property.

    
      
         

      

      
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          17 -

        
          

        

      

      
         

      

    

    (b)
      Real
      Property Leases.
      Section
      5.4(b) of the Disclosure Schedule
      sets
      forth a true and complete description of all real property leased, licensed
      to
      or otherwise used or occupied (but not owned) by the Company (collectively,
      the
“Leased
      Real Property”),
      including the address thereof, the annual fixed rental, the expiration of the
      term, any extension options and any security deposits. A true and correct copy
      of each such lease, license or occupancy agreement, and any amendments thereto,
      with respect to the Leased Real Property (collectively, the “Real
      Property Leases”)
      has
      been delivered to the Purchaser, and no changes have been made to any Real
      Property Leases since the date of delivery. All of the Leased Real Property
      is
      used or occupied by the Company pursuant to a Real Property Lease. Each Real
      Property Lease is valid, binding and enforceable in accordance with its terms
      and is in full force and effect. There are no existing defaults by the Company
      or, to the Company’s Knowledge, by the lessor, under any of the Real Property
      Leases, and no event has occurred with respect to the Company and, to the
      Company’s Knowledge, with respect to the lessor, which (with notice, lapse of
      time or both) could reasonably be expected to constitute a breach or default
      under any of the Real Property Leases by any party or give any party the right
      to terminate, accelerate or modify any Real Property Lease. Except as set forth
      in Section
      5.4(b) of the Disclosure Schedule,
      (i) no Consent is required from the lessor under any of the Real Property
      Leases to consummate the transactions contemplated by this Agreement and the
      Ancillary Agreements and (ii) no Affiliate of the Company or any Seller is
      the owner or lessor of any Leased Real Property. The Company has not leased
      or
      sublet as lessor or sublessor, and no third party is in possession of, any
      of
      the Leased Real Property.

     

    (c)
      Tangible
      Personal Property.
      Section
      5.4(c) of the Disclosure Schedule
      sets
      forth a true and complete list, by category, of all equipment, machinery and
      other similar tangible personal property, with an individual original cost
      of
      $1,000 or more, that is owned or leased by the Company (the “Tangible
      Personal Property”).
      The
      Company is in full possession of all of its Tangible Personal
      Property.

     

    (d)
      Absence
      of Violations.
      To the
      Company’s Knowledge, none of the Real Property, nor the leasing, occupancy or
      use of the Real Property, is in violation of any Law, including, without
      limitation, any building, zoning, environmental or other ordinance, code, rule
      or regulation. The condition and use of the Real Property conforms to each
      applicable certificate of occupancy and all other Permits required to be issued
      in connection with the Real Property. The Company has obtained all Permits
      necessary for the operation of its business at the Real Property.

     

    (e)
      Reassessments.
      To the
      Company’s Knowledge, there is not now pending nor contemplated any reassessment
      of any parcel included in the Real Property that could result in a change in
      the
      rent, additional rent or other sums and charges payable by the Company under
      any
      agreement relating to the Real Property.

     

    (f)
      No
      Condemnation.
      To the
      Company’s Knowledge, there is no pending condemnation, expropriation, eminent
      domain or similar proceeding affecting all or any portion of the Real Property.
      Neither the Company nor any Seller has received any written notice or oral
      notice of any such proceeding, and to the Company’s Knowledge, no such
      proceeding is contemplated.

     

    (g)
      Condition
      of Property.
      To the
      Company’s Knowledge, there are no material defects in, mechanical failure of, or
      damage to, the Real Property. To the Company’s Knowledge, the mechanical,
      electrical and HVAC systems serving the Real Property are in good working
      condition.

     

    5.5. Litigation.
      There is
      no instance in which the Company is or has been within the previous five years
      (a) subject to any unsatisfied Order, or (b) a party or threatened to
      be made a party to any Action. To the Company’s Knowledge, no event has occurred
      or circumstances exist that could give rise to or serve as a basis for the
      commencement of any Action. There are no Actions pending or threatened that
      question the validity of this Agreement, the Ancillary Agreements or any of
      the
      transactions contemplated hereby or thereby.

     

    5.6. Compliance
      with Laws.
      The
      Company is now, and has been at all times during the previous five years, in
      compliance with all Laws and Orders, including, without limitation, those
      respecting (a) pension administration, (b) labor relations or
      employment matters and related foreign social security laws, (c) zoning,
      (d) delivery practices and procedures, and (e) intellectual property.
      To the Company’s Knowledge, no proposed Law or Order exists that would be
      applicable to the Company and that would adversely affect any assets,
      properties, liabilities, operations or prospects of the Company. Neither the
      Company nor any Seller has received any notification or communication from
      any
      Governmental Authority threatening to revoke any Permit owned or held by the
      Company.

    
      
         

      

      
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          18 -

        
          

        

      

      
         

      

    

     

    5.7. Necessary
      Property.
      The
      Company is the only operation through which the business of the Company is
      conducted, and no similar business is conducted by any Affiliate of the Company
      or of any Seller. The assets and properties currently owned, leased or licensed
      by the Company, constitute all of the assets and properties used in or necessary
      to conduct the business of the Company as it is currently conducted and proposed
      to be conducted.

     

    5.8. Conduct
      of Business.
      Since
      December 31, 2007, the business and operations of the Company have been
      conducted in the Ordinary Course of Business and there has not been any adverse
      change in the operation of the business or the performance or financial
      condition of the Company. Without limiting the generality of the foregoing,
      since December 31, 2007 the Company has not:

     

    (a)
      borrowed any amount or incurred or become subject to any liability except
      (i) current liabilities incurred in the Ordinary Course of Business,
      (ii) liabilities under Contracts entered into in the Ordinary Course of
      Business, and (iii) borrowings under lines of credit existing on such
      date;

     

    (b)
      sold,
      assigned or transferred (including, without limitation, transfers to any
      employees, shareholders or Affiliates) any assets or properties except in the
      Ordinary Course of Business, or canceled any debts or claims;

     

    (c)
      waived any rights of value or suffered any losses;

     

    (d)
      declared or paid any dividends or other distributions with respect to any shares
      of its capital stock or redeemed or purchased, directly or indirectly, any
      shares of its capital stock, any options or any other rights to acquire any
      of
      its equity interests;

     

    (e)
      taken
      any other action or entered into any other transaction (including any
      transactions with employees, shareholders or Affiliates) other than in the
      Ordinary Course of Business or other than the transactions contemplated by
      this
      Agreement and the Ancillary Agreements;

     

    (f)
      (i) increased the salary, wages or other compensation rates of any officer,
      employee, director or consultant, (ii) made or granted any increase in
      benefits under any Employee Plan, or amended or terminated any existing Employee
      Plan, or adopted any new Employee Plan or (iii) made any commitment or
      incurred any liability to any labor organization;

     

    (g)
      made
      any capital expenditures in excess of $1,000 in the aggregate or any commitments
      therefor;

     

    (h)
      made
      any change in accounting or Tax principles, practices or policies from those
      utilized in the preparation of the Financial Statements;

     

    (i)
      made,
      changed or rescinded any Tax election;

     

    (j)
      made
      any write off or write down of or made any determination to write off or write
      down any of its assets and properties;

     

    (k)
      made
      any change in its general pricing practices or policies or any change in its
      credit or allowance practices or policies;

    
      
         

      

      
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    (l)
      entered into any amendment, modification, termination (partial or complete)
      or
      granted any waiver under or given any Consent with respect to any Contract
      that
      is required to be disclosed in the Disclosure Schedule;

     

    (m)
      commenced or terminated any line of business;

     

    (n)
      received notice from any customer or supplier that such customer or supplier
      has
      ceased, may cease or will cease to do business with it; or

     

    (o)
      (i) delayed, or taken any action to delay, payment of any accounts payable
      of the Company or failed to pay any accounts payable of the Company when due
      in
      accordance with their terms, or (ii) accelerated, or taken any action to
      accelerate, the payment of any accounts receivable of the Company or the
      collection of customer deposits by the Company.

     

    5.9. Labor
      Matters.

     

    (a)
      Union
      and Employee Contracts.
      (i) The Company is not a party to or bound by any union contract,
      collective bargaining agreement or other similar type of contract; (ii) the
      Company has not agreed to recognize any union or other collective bargaining
      representative; and (iii) no union or collective bargaining representative
      has been certified as representing any employees of the Company and no
      organizational attempt has been made or threatened by or on behalf of any labor
      union or collective bargaining representative with respect to any employees
      of
      the Company. Neither the Company nor any of its predecessors has experienced
      any
      labor strike, dispute, slowdown or stoppage or any other material labor
      difficulty during the past five years and to the Company’s Knowledge there are
      no facts or circumstances that might lead to any such labor dispute. The Company
      is not a party to or bound by any employment contract, independent contractor
      agreement, consultation agreement or other similar type of
      contract.

     

    (b)
      List
      of Employees, Etc.
      Section
      5.9(b) of the Disclosure Schedule
      sets
      forth a list of all officers, directors, employees (which term shall include
      any
      managing director), consultants and independent contractors of the Company,
      the
      rate of all regular and special compensation payable to each such Person in
      any
      and all capacities and any regular or special compensation that will be payable
      to each such Person in any and all capacities other than the then current
      accrual of regular payroll compensation, and any potentially existing
      change-in-control clause. The Company does not employ any employee who cannot
      be
      dismissed immediately, whether currently or immediately after the transactions
      contemplated by this Agreement and the Ancillary Agreements, without notice
      or
      cause and without further liability to the Company. To the Company’s Knowledge,
      no employee of the Company intends to terminate his or her employment
      relationship with the Company.

     

    (c)
      WARN
      Act.
      With
      respect to the employees of the Company, during the last twelve months, there
      has been no mass layoff, plant closing, or shutdown that implicates the Worker
      Adjustment Retraining & Notification Act of 1988, as amended, or any similar
      Law.

     

    (d)
      IRCA.
      To the
      Company’s Knowledge, all current employees of the Company who work in the United
      States are, and all former employees of the Company who worked in the United
      States whose employment terminated, voluntarily or involuntarily, within the
      previous three years, were legally authorized to work in the United States.
      The
      Company has completed and retained the necessary employment verification
      paperwork under the Immigration Reform and Control Act of 1986 (“IRCA”)
      for
      all employees. Further, at all times, the Company was in material compliance
      with both the employment verification provisions (including the paperwork and
      documentation requirements) and the anti-discrimination provisions of
      IRCA.

    
      
         

      

      
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    (e)
      Unemployment,
      Social Security and Other Benefits.
      The
      Company is not liable for any payment to any trust or other fund or to any
      Governmental Authority, with respect to unemployment compensation benefits,
      social security or other benefits or obligations for employees (other than
      routine payments to be made in the ordinary course of business and consistently
      with past practice). There are no pending claims against the Company under
      any
      workers compensation plan or policy or for long term disability.

     

    (f)
      Former
      Employment Arrangements.
      To the
      Company’s Knowledge, no employee of the Company is in violation, in any material
      respect, of any term of any employment agreement, nondisclosure agreement,
      common law nondisclosure obligation, fiduciary duty, non-competition agreement
      or restrictive covenant to a former employer.

     

    (g)
      Manuals,
      Handbooks, Policies, Etc.
      True
      and complete copies have been made available to the Purchaser of the material
      written personnel manuals, handbooks, policies, rules or procedures applicable
      to any employee of the Company.

     

    (h)
      Compliance
      and Investigations.
      The
      Company is not a party to, or otherwise bound by, any consent decree with,
      or
      citation by, any Governmental Authority relating to employees or employment
      practices. Neither the Company nor any of its executive officers has received
      within the past five years any notice of intent by any Governmental Authority
      responsible for the enforcement of labor or employment laws to conduct an
      investigation relating to the Company or any of its Subsidiaries and, to the
      Company’s Knowledge, no such investigation is in progress.

     

    (i)
      Effect
      of Execution and Delivery.
      None of
      the execution and delivery of this Agreement or the consummation of any
      transaction contemplated hereby or any termination of employment or service
      in
      connection therewith or subsequent thereto will (i) result in any payment
      (including severance, unemployment compensation, golden parachute, bonus or
      otherwise) becoming due to any Person, (ii) materially increase any
      benefits otherwise payable by the Company, (iii) result in the acceleration
      of the time of payment or vesting of any such benefits, (iv) increase the
      amount of compensation due to any Person, or (v) result in the forgiveness
      in whole or in part of any outstanding loans made by the Company to any
      Person.

     

    (j)
      Effect
      of Other Agreements.
      To the
      Company’s Knowledge, no current employee or current officer or director of the
      Company is a party to, or is otherwise bound by, any agreement or arrangement,
      including any confidentiality, non-competition or proprietary rights agreement,
      between such employee, officer or director and any other Person that in any
      way
      materially and adversely affects (i) the performance of his or her duties
      as an employee, officer or director of the Company or (ii) the ability of
      the Company to conduct the business now being conducted by it.

     

    5.10. Employee
      Benefit Plans.

     

    (a) Section
      5.10(a) of the Disclosure Schedule
      sets
      forth a complete list of (i) all “employee benefit plans,” as defined in
      Section 3(3) of ERISA, (ii) all other severance pay, salary
      continuation, bonus, incentive, stock option, enhanced redundancy or other
      severance schemes, share incentive schemes, share option schemes, bonus or
      profit sharing schemes, retirement, pension, profit sharing or deferred
      compensation plans, contracts, programs, funds or arrangements of any kind,
      and
      (iii) all other employee benefit plans, contracts, programs, funds or
      arrangements (whether written or oral, qualified or nonqualified, funded or
      unfunded, foreign or domestic, currently effective or terminated) and any trust,
      escrow or similar agreement related thereto, whether or not funded, in respect
      of any present or former employees, directors, officers, shareholders,
      consultants, or independent contractors of the Company that are sponsored or
      maintained by the Company or any member of the Controlled Group or with respect
      to which the Company or any member of the Controlled Group has made or is
      required to make payments, transfers, or contributions (all of the above being
      hereinafter individually or collectively referred to as an “Employee
      Plan”
or
      “Employee
      Plans”,
      respectively). The Company has no liability with respect to any plan,
      arrangement or practice of the type described in the preceding sentence other
      than the Employee Plans.

    
      
         

      

      
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          21 -

        
          

        

      

      
         

      

    

     

    (b)
      True
      and complete copies of the following materials have been delivered or made
      available to the Purchaser: (i) all current and prior plan documents for
      each Employee Plan or, in the case of an unwritten Employee Plan, a written
      description thereof, (ii) all determination letters from the IRS with
      respect to any of the Employee Plans, (iii) all current and prior summary
      plan descriptions, summaries of material modifications, annual reports, and
      summary annual reports with respect to the Employee Plans, (iv) all current
      and prior trust agreements, insurance contracts, and other documents relating
      to
      the funding or payment of benefits under any Employee Plan, and (v) any
      other documents, forms or other instruments relating to any Employee Plan
      reasonably requested by the Purchaser.

     

    (c)
      Each
      Employee Plan has been maintained, operated, and administered in compliance
      with
      its terms and any related documents or agreements and in compliance with all
      applicable Laws. There have been no prohibited transactions or breaches of
      any
      of the duties imposed on “fiduciaries” (within the meaning of Section 3(21)
      of ERISA) by ERISA with respect to the Employee Plans that could result in
      any
      liability or excise Tax under ERISA or the Code being imposed on the Company.
      All contributions, transfers and payments in respect of any Employee Plan,
      other
      than transfers incident to an incentive stock option plan within the meaning
      of
      Section 422 of the Code, have been or are fully deductible under the Code.
      There is no pending or threatened assessment, Action, complaint, proceeding,
      or
      investigation of any kind before any Governmental Authority with respect to
      any
      Employee Plan (other than routine claims for benefits), nor is there any basis
      for one. The Company has reserved all rights necessary to amend or terminate
      each of the Employee Plans without the consent of any other Person.

     

    (d)
      Each
      Employee Plan intended to be qualified under Section 401(a) of the Code is
      so qualified and has been determined by the IRS to be so qualified, and each
      trust created under any Employee Plan has been determined by the IRS to be
      exempt from Tax under the provisions of Section 501(a) of the Code, and
      nothing has occurred since the date of any such determination that could
      reasonably be expected to give the IRS grounds to revoke such
      determination.

     

    (e)
      Neither the Company nor any member of the Controlled Group currently has and
      at
      no time in the past has had an obligation to contribute to a “defined benefit
      plan” as defined in Section 3(35) of ERISA, a pension plan subject to the
      funding standards of Section 302 of ERISA or Section 412 of the Code, a
“multiemployer plan” as defined in Section 3(37) of ERISA or
      Section 414(f) of the Code or a “multiple employer plan” within the meaning
      of Section 210(a) of ERISA or Section 413(c) of the Code.

     

    (f)
      With
      respect to each group health plan benefiting any current or former employee
      of
      the Company or any member of the Controlled Group that is subject to
      Section 4980B of the Code, the Company and each member of the Controlled
      Group has complied with the continuation coverage requirements of
      Section 4980B of the Code and Part 6 of Subtitle B of
      Title I of ERISA. No Employee Plan is or at any time was funded through a
“welfare benefit fund” as defined in Section 419(e) of the Code, and no
      benefits under any Employee Plan are or at any time have been provided through
      a
      voluntary employees’ beneficiary association (within the meaning of
      subsection 501(c)(9) of the Code) or a supplemental unemployment benefit
      plan (within the meaning of Section 501(c)(17) of the
      Code).

    
      
         

      

      
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          22 -

        
          

        

      

      
         

      

    

    (g)
      All
      (i) insurance premiums required to be paid with respect to,
      (ii) benefits, expenses, and other amounts due and payable under, and
      (iii) contributions, transfers, or payments required to be made to, any
      Employee Plan prior to the Closing Date will have been paid, made or accrued
      on
      or before the Closing Date. With respect to any insurance policy providing
      funding for benefits under any Employee Plan, (A) there is no liability of
      the Company, in the nature of a retroactive rate adjustment, loss sharing
      arrangement, or other actual or contingent liability, nor would there be any
      such liability if such insurance policy was terminated on the Closing Date,
      and
      (B) no insurance company issuing any such policy is in receivership,
      conservatorship, liquidation or similar proceeding and, to the Company’s
      Knowledge, no such proceedings with respect to any insurer are
      imminent.

     

    (h)
      No
      Employee Plan provides benefits, including, without limitation, death or medical
      benefits, beyond termination of service or retirement other than
      (i) coverage mandated by Law, or (ii) death or retirement benefits
      under any Employee Plan that is intended to be qualified under
      Section 401(a) of the Code. No Employee Plan provides benefits to any
      individual who is not a current or former employee of the Company, or the
      dependents or other beneficiaries of any such current or former
      employee.

     

    (i)
      The
      execution and performance of this Agreement and the Ancillary Agreements will
      not (i) constitute a stated triggering event under any Employee Plan that
      will result in any payment (whether of severance pay or otherwise) becoming
      due
      from the Company to any current or former officer, employee, director or
      consultant (or dependents of such Persons), or (ii) accelerate the time of
      payment or vesting, or increase the amount of compensation due to any current
      or
      former officer, employee, director or consultant (or dependents of such Persons)
      of the Company. No amount that could be received (whether in cash or property
      or
      the vesting of property) as a result of any of the transactions contemplated
      by
      this Agreement by any employee, officer or director of the Company or any of
      its
      affiliates who is a “disqualified individual” (as such term is defined in
      Treasury Regulation Section 1.280G-1) under any employment, severance or
      termination agreement, other compensation arrangement or Employee Plan currently
      in effect would be characterized as an “excess parachute payment” (as such term
      is defined in Section 280G(b)(1) of the Code).

     

    (j)
      All
      Employee Plans subject to Section 409A of the Code comply in both form and
      operation with Section 409A of the Code and the rules and regulations
      thereunder.

     

    (k)
      The
      term “Foreign
      Plan”
shall
      mean any Employee Plan that is maintained outside of the United States. The
      Company does not currently maintain, contribute to or is not otherwise obligated
      under, nor in the past has it maintained, contributed to or was otherwise
      obligated under, any Foreign Plans.

     

    5.11. Environmental.
      The
      Company is presently and has been at all times in compliance with all
      Environmental Laws applicable to the Real Property, formerly owned, leased
      or
      operated locations, or its business, and, to the Company’s Knowledge, there
      exists no Environmental Conditions that require reporting, investigation,
      assessment, cleanup, remediation or any other type of response action pursuant
      to any Environmental Law or that could be the basis for any liability of any
      kind pursuant to any Environmental Law.

     

    
      
         

      

      
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    5.12. Contracts. Section
      5.12 of the Disclosure Schedule
      sets
      forth all of the Contracts (a) governing the borrowing of money or the
      Guarantee or the repayment of Indebtedness of the Company or granting of Liens
      on any property or asset of the Company (including any such contract under
      which
      the Company has incurred any Indebtedness); (b) providing for the
      employment of any Person by the Company; (c) containing covenants limiting
      the freedom of the Company to compete in any line of business or with any Person
      or in any geographic area or market; (d) for the use of or restricting the
      use of the Intellectual Property; (e) with any shareholders, directors,
      officers, employees of the Company or its respective Affiliates or Affiliates
      of
      any Seller; (f) providing for the purchase, maintenance or acquisition, or
      the sale or furnishing, of materials, supplies, merchandise, equipment or
      services of or by the Company (including, without limitation, computer hardware
      or software or other property or services) in excess of $10,000;
      (g) granting to any Person a first refusal, first offer or similar
      preferential right to purchase or acquire any right, asset or property of the
      Company; (h) pertaining to the lease of equipment or other personal
      property of or by the Company; (i) providing for any offset, countertrade
      or barter arrangement with respect to the Company; (j) involving a
      distributor, sales representative, broker, franchise or advertising arrangement
      with respect to the Company; (k) involving a joint venture of the Company;
      (l) involving management services, consulting services, support services or
      any other similar services of or by the Company, including, without limitation,
      service agreements under which the Company is required to provide services
      to
      insurers, self insured employees or any governmental or private health plan,
      managed care plan or other similar Person; (m) involving the acquisition of
      any business enterprise by the Company, whether via stock or asset purchase
      or
      otherwise; or (n) any other material contract or agreement of the Company.
      The Company has provided to the Purchaser true and complete copies of each
      such
      Contract, as amended to date. Each Contract listed in Section
      5.12 of the Disclosure Schedule
      (or
      required to be listed thereon) is a valid, binding and enforceable obligation
      of
      the Company enforceable in accordance with its terms, subject to General
      Enforceability Exceptions. With respect to the Contracts listed in Section
      5.12 of the Disclosure Schedule
      (or
      required to be listed thereon): (a) neither the Company nor, to the
      Company’s Knowledge, any other party thereto, is in material default under or in
      violation of any Contract; (b) no event has occurred with respect to the
      Company or, to the Company’s Knowledge, with respect to any counterparty, which,
      with notice or lapse of time or both, would constitute such a default or
      violation; and (c) the Company has not released any of its rights under any
      Contract. Section
      5.12 of the Disclosure Schedule
      also
      sets forth a (i) true, accurate and complete list of all referrals as of
      the date of this Agreement for which PSL receives, has received, or is eligible
      to receive referral revenue under the Paybridge Contract, and (ii) true and
      accurate list of referrals as of the date of this Agreement for which PSL has
      had significant communications surrounding a potential agreement to market
      services provided by or purchase services from PayBridge. As used herein,
“Existing
      Paybridge Referrals”
shall
      mean the referrals contemplated in clause (i) of the immediately preceding
      sentence, and the referrals contemplated in clause (ii) of the immediately
      preceding sentence that enter into an agreement to market services provided
      by
      or purchase services from PayBridge on or before March 31, 2009, as further
      described in Section 5.12
      of the Disclosure Schedule.

     

    5.13. Permits. Section 5.13
      of the Disclosure Schedule
      sets
      forth a true and complete list and description of all Permits issued to the
      Company and used in the conduct of its business. The Company is in compliance
      with the terms of such Permits, and all such Permits are in full force and
      effect. There is no pending or, to the Company’s Knowledge, threatened
      termination, expiration or revocation of any such Permits. Neither the execution
      of this Agreement or the Ancillary Agreements, nor the performance by the
      Sellers of their respective obligations hereunder or thereunder will invalidate
      or adversely affect any such Permits. There are no other Permits that are
      necessary or required for the conduct of the business of the
      Company.

     

    5.14. Intellectual
      Property.

     

    (a) Section
      5.14 of the Disclosure Schedule
      sets
      forth, with the application number, application date, registration/issue number,
      registration/issue date, title or mark, country or other jurisdiction and
      owner(s), as applicable, a complete and correct list of all the following
      Intellectual Property: (i) patents; (ii) registered trademarks and
      applications therefor; (ii) registered copyrights and applications
      therefor; and (iv) Internet domain names. Any and all renewal and
      maintenance fees, taxes, annuities or other fees payable in respect of the
      Intellectual Property and due before the Closing have been paid in full through
      the Closing, and no such fees are due in the two-month period after the Closing.
      All actions required to record each owner throughout the entire chain of title
      of all of the Intellectual Property required to have been listed on Section
      5.14 of the Disclosure Schedule
      with
      each applicable Governmental Authority up through the Closing, have been taken,
      including payment of all costs, fees, taxes and expenses associated with such
      recording activities.

    
      
         

      

      
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          24 -

        
          

        

      

      
         

      

    

     

    (b)
      The
      Company owns and possesses all right, title and interest in and to the
      Intellectual Property (other than Intellectual Property licensed to the Company,
      for which it has a valid leasehold or licensee interest), free and clear of
      all
      Liens. The Company has the sole and exclusive right to use the Intellectual
      Property (other than Intellectual Property licensed to the Company, for which
      it
      has a valid leasehold or licensee interest) for the life thereof. No claim
      by
      any Person contesting the validity, enforceability or ownership of any of the
      Intellectual Property has been made, is currently outstanding or, to the
      Company’s Knowledge, is threatened and, to the Company’s Knowledge, there are no
      grounds for the same. No loss or expiration of any part of the Intellectual
      Property is pending or reasonably foreseeable. Neither the Company nor any
      Seller has received any notices of, and is not aware of any facts that indicate
      a likelihood of, any infringement or misappropriation by, or conflict with,
      any
      Person with respect to the Intellectual Property. The Company has not infringed,
      misappropriated or otherwise conflicted with any intellectual property rights
      or
      other rights of any Person and neither the Company nor any Seller is aware
      of
      any infringement, misappropriation or conflict that will occur as a result
      of
      the continued operation of the business of the Company, nor has the Company
      or
      any Seller received any demand or request that the Company license any rights
      from any Person.

     

    (c)
      The
      Intellectual Property comprises all of the intellectual property rights used
      in
      or necessary for the operation of the business of the Company as conducted
      or
      proposed to be conducted. The transactions contemplated by this Agreement and
      the Ancillary Agreements will have no adverse effect on the Company’s right,
      title and interest in and to the Intellectual Property. To the Company’s
      Knowledge, the owners of any intellectual property licensed to the Company
      have
      taken all necessary and desirable action to maintain and protect that portion
      of
      the intellectual property subject to such licenses. Except pursuant to a
      Contract set forth in Section
      5.12 of the Disclosure Schedule,
      the
      Company has not licensed or otherwise granted any right to any Person under
      any
      Intellectual Property owned by the Company or has otherwise agreed not to assert
      any such Intellectual Property against any Person.

     

    (d)
      All
      Information Systems used by the Company in the conduct of its business are
      owned, controlled and operated by the Company and are not wholly or partly
      dependent upon any Information System of any other Person (other than the
      Internet).

     

    5.15. Insurance. Section
      5.15 of the Disclosure Schedule
      sets
      forth a true and complete list and brief description (including all applicable
      premiums and deductibles) of all policies of, and binders evidencing, life,
      fire, workmen’s compensation, product liability, general liability and other
      forms of insurance, including title insurance, owned or maintained by the
      Company. Such policies are in full force and effect, and the Company is not
      in
      default under any of them. No notice of cancellation or termination or non
      renewal has been received with respect to any such policy. During the last
      three
      years, the Company has not been refused any insurance with respect to its
      business or its assets, nor has coverage been limited by any insurance carrier
      to which the Company has applied for insurance or with which the Company has
      carried insurance. No event relating to the Company has occurred that could
      reasonably be expected to result in a retroactive upward adjustment in premiums
      under any of the insurance policies set forth in Section
      5.15 of the Disclosure Schedule.
      The
      insurance maintained by the Company is sufficient to comply with all applicable
      Laws and Contracts to which the Company is a party. No insurance carrier
      providing insurance to the Company is in receivership, conservatorship,
      liquidation or similar proceedings, and to the Company’s Knowledge, no such
      proceeding with respect to any such carrier is imminent.

     

    5.16. Financial
      Statements.

     

    (a) Section
      5.16(a) of the Disclosure Schedule
      sets
      forth true and complete copies of (i) the audited balance sheet of the
      Company as of December 31, 2007, and the related audited statements of income,
      retained earnings and cash flows for the fiscal year ended December 31, 2007,
      and (ii) the unaudited balance sheet of the Company as of October 31, 2008,
      and the related unaudited statements of income, retained earnings and cash
      flows
      for the 10-month period then ended (collectively, the “Financial
      Statements”).  

    
      
         

      

      
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    (b)
      The
      Financial Statements present fairly, in all material respects, the financial
      position, results of operations, shareholders’ equity and cash flows of the
      Company at the dates and for the time periods indicated and have been prepared
      in accordance with GAAP (except in the case of unaudited statements, for
      normally recurring year-end adjustments and the absence of footnotes, which
      adjustments and footnotes would not be material, either individually or in
      the
      aggregate) consistently applied throughout the periods indicated and reviewed
      by
      the management of the Company. The Financial Statements were derived from the
      books and records of the Company, which are accurate and complete and there
      are
      no material inaccuracies or discrepancies of any kind contained or reflected
      therein. The Company’s internal controls and procedures are sufficient to ensure
      that the Financial Statements are accurate in all material
      respects.

     

    5.17. Undisclosed
      Liabilities.
      The
      Company has no liabilities (whether accrued, absolute, contingent, unliquidated
      or otherwise, and whether due or to become due) arising out of transactions
      or
      events, or any action or inaction, or any state of facts existing, with respect
      to or based upon transactions or events entered into by the Sellers or the
      Company, which, in each case, would be required to be reflected in the Company’s
      financial statements (including the Financial Statements) prepared in accordance
      with GAAP, except: (a) liabilities actually reflected in the Financial
      Statements; and (b) liabilities that have arisen after the date of the
      Financial Statements in the Ordinary Course of Business, none of which relates
      to (i) breach of Contract by the Company, (ii) breach of warranty by
      the Company, (iii) infringement by the Company, (iv) violation of Law
      by the Company or (v) any environmental liability.

     

    5.18. Bank
      Accounts. Section
      5.18 of the Disclosure Schedule
      sets
      forth a true and complete list of the name and address of (a) each bank or
      financial institution with which the Company has an account or safe deposit
      box
      and the name of each Person authorized to draw thereon or have access thereto,
      and (b) the name of each Person holding a power of attorney on behalf of
      the Company.

     

    5.19. Product
      Liability and Warranty.

     

    (a)
      Each
      product or service sold or otherwise delivered by the Company has been in
      conformity with all applicable contractual commitments and all express and
      implied warranties, and the Company has no liability (and there is no basis
      for
      any present or future action, suit, proceeding, hearing, investigation, charge,
      complaint, claim or demand against, or recall by, the Company) for replacement
      or repair of any such products or services or other damages in connection
      therewith, subject only to the reserve for product and service warranty claims
      set forth in the Financial Statements. No product manufactured, sold, leased
      or
      delivered, and no service provided, by the Company is subject to any recall
      or
      any guaranty, warranty or other indemnity beyond the applicable standard terms
      and conditions of sale, lease or service. Section
      5.19 of the Disclosure Schedule sets
      forth true and complete copies of the standard terms and conditions of sale,
      lease or service of the Company (containing applicable guaranty, warranty and
      indemnity provisions). There have been no recalls of any of the products
      manufactured, sold, distributed, leased, delivered or provided by the Company
      and there exists no basis that could result in any such recalls.

     

    (b)
      The
      Company has no liability, and there is no basis for any present or future Action
      against the Company giving rise to any liability, arising out of any injury
      to
      Person or property as a result of the ownership, possession or use of a product
      or service manufactured, sold, distributed, leased, delivered or provided by
      the
      Company.

    
      
         

      

      
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    5.20. Indebtedness. Section
      5.20 of the Disclosure Schedule
      sets
      forth a true and complete list of the individual components (indicating the
      amount and the Person to whom such Indebtedness is owed) of all the Indebtedness
      outstanding with respect to the Company as of the date of this
      Agreement.

     

    5.21. Taxes.

     

    (a)
      All
      Returns required to be filed with any Taxing Authority with respect to any
      Pre-Closing Tax Period by or on behalf of the Company have been filed when
      due
      in accordance with all applicable Laws.

     

    (b)
      All
      Returns with respect to Pre-Closing Tax Periods (i) correctly and
      completely reflect the income, business, assets, operations, activities and
      status of the Company, (ii) were correct and complete in all respects and
      (iii) have been prepared in accordance with all applicable Laws. The
      Company is not currently a beneficiary of any extension of time within which
      to
      file any Return.

     

    (c)
      All
      Taxes owed by the Company (whether or not shown as having been due and payable
      on any Return) have been timely paid or withheld and remitted to the appropriate
      Taxing Authority.

     

    (d)
      No
      Return of the Company with respect to any Pre-Closing Tax Period has ever been
      audited by any Taxing Authority.

     

    (e)
      There
      is no Action now pending or, to the Company’s Knowledge, threatened against or
      with respect to the Company in respect of any Tax.

     

    (f)
      The
      Company has no Tax liabilities (whether due or to become due) with respect
      to
      the income, property and operations of the Company that relate to any
      Pre-Closing Tax Periods or Pre-Closing Straddle Periods, except for Tax
      liabilities reflected in the Financial Statements and Tax liabilities that
      have
      arisen after the date of the Financial Statements in the Ordinary Course of
      Business.

     

    (g)
      Neither the Company nor any member of any affiliated, consolidated, combined
      or
      unitary group of which the Company is or has been a member has granted any
      extension or waiver of the statute of limitations period applicable to any
      Return, which period (after giving effect to such extension or waiver) has
      not
      yet expired.

     

    (h)
      There
      are no Liens for Taxes upon any of the assets or properties of the Company,
      except for Permitted Exceptions.

     

    (i)
      The
      Company has not been a member of an affiliated, consolidated, combined or
      unitary group or participated in any other arrangement whereby any income,
      revenues, receipts, gain or loss was determined or taken into account for Tax
      purposes with reference to or in conjunction with any income, revenues,
      receipts, gain, loss, asset or liability of any other Person other than a group
      of which the Company was the parent. The Company is not liable for the Taxes
      of
      any Person under Treasury Regulation Section 1.1502-6 (or any similar
      provision of state, local or foreign Law) as a transferee or successor, by
      contract or otherwise.

     

    (j) Section
      5.21(j) of Disclosure Schedule
      contains
      a list of all jurisdictions (whether foreign or domestic) to which any Tax
      is
      properly payable by the Company.

     

    (k)
      Neither the Company nor any Seller has received notice of any claim by a Taxing
      Authority in a jurisdiction where the Company does not file Returns that the
      Company is or may be subject to taxation by that jurisdiction or Taxing
      Authority.

    
      
         

      

      
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    (l)
      The
      Company has withheld and timely paid all Taxes required to have been withheld
      and paid in connection with amounts paid or owing to any employee, independent
      contractor, creditor, shareholder or other third party.

     

    (m)
      The
      Company has disclosed on its federal income Tax Returns (to the extent
      applicable) all positions taken in such Returns that could give rise to a
      substantial understatement of federal income Tax within the meaning of
      Section 6662 of the Code.

     

    (n)
      The
      Company will not be required to include any item of income in, or exclude any
      item of deduction from, taxable income for any period ending after the Closing
      Date as a result of (i) any change in method of accounting for a
      Pre-Closing Tax Period, (ii) any “closing agreement” as described in Code
      Section 7121 (or any corresponding or similar provision of state, local or
      foreign law) executed on or prior to the Closing Date, (iii) any
      intercompany transactions or any excess loss account described in Treasury
      Regulation Section 1.1502-19 (or any corresponding or similar provision of
      state, local or foreign law), (iv) the installment method of accounting,
      the completed contract method of accounting or the cash method of accounting
      with respect to a transaction that occurred prior to the Closing Date, or
      (v) any prepaid amount received on or prior to the Closing
      Date.

     

    (o)
      The
      Company is not a party to any Tax allocation or sharing agreement or
      arrangement.

     

    (p)
      The
      Company has not been a United States real property holding corporation within
      the meaning of Section 897(c)(2) during the applicable period specified in
      Section 897(c)(1)(A)(ii) of the Code. The Company has not distributed the
      stock of another Person, nor had its stock distributed by another Person, in
      a
      transaction that was purported or intended to be governed in whole or in part
      by
      Section 355 of the Code.

     

    (q)
      The
      Company has not participated in a reportable transaction as defined in
      Section 6707A of the Code or Treasury Regulation Section 1.6011-4(b)
      and (c)(3) (or any predecessor provision thereto).

     

    (r)
      Since
      February 2, 2003, the Company has been a validly electing S corporation
      within the meaning of Sections 1361 and 1362 of the Code and in each state
      where the Company is required to file income Tax Returns at all times since
      February 2, 2003 up to and including the date hereof. The Company has no
      qualified subchapter S Subsidiaries within the meaning of
      Section 1361(b)(3)(B) of the Code. The Company has not, in the past 10
      years, (i) acquired assets from another corporation in a transaction in
      which the Company’s Tax basis for the acquired assets was determined, in whole
      or in part, by reference to the Tax basis of the acquired assets (or any other
      property) in the hands of the transferor or (ii) acquired the stock of any
      corporation that is a qualified subchapter S Subsidiary.

     

    5.22. Customers.
      All
      material customers continue to be customers of the Company and none of such
      material customers has reduced materially its business with the Company from
      the
      levels achieved during the year ended December 31, 2007, and to the
      Company’s Knowledge, no such reduction will occur. Since December 31, 2007, no
      material customer has terminated its relationship with the Company or has
      threatened to do so. The Company is not involved in any claim, dispute or
      controversy with any material customer. The Company is not involved in any
      claim, dispute or controversy with any of its other customers that, individually
      or in the aggregate could reasonably be anticipated to have a material adverse
      effect on the condition (financial or otherwise), business, results of
      operations or prospects of the Company.

    
      
         

      

      
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    5.23. Disclosure.
      The
      Sellers have not withheld from the Purchaser any material facts relating to
      the
      assets, properties, liabilities, business operations, financial condition,
      results of operations or prospects of the Company’s business. This Agreement
      (including the Disclosure Schedule) does not, and no Closing Certificate will,
      contain any untrue statement of a material fact or, to the Company’s Knowledge,
      omit to state a material fact necessary in order to make the statements
      contained herein or therein not misleading. The Principals have delivered to
      the
      Purchaser a true and complete copy of each document disclosed or required to
      be
      disclosed in the Disclosure Schedule.

     

    5.24. Related
      Party Transactions.
      None of
      the Company, the Sellers or any of their respective Affiliates, nor any current
      or former director, officer or employee of the Company, (a) has or during
      the last three fiscal years has had any direct or indirect interest (i) in,
      or is or during the last three fiscal years was, a director, officer or employee
      of, any Person that is a client, customer, supplier, lessor, lessee, debtor,
      creditor or competitor of the Company, or (ii) in any material property,
      asset or right that is owned or used by the Company in the conduct of its
      business, or (b) is, or during the last three fiscal years has been, a
      party to any agreement or transaction with the Company. There is no outstanding
      Indebtedness owed to the Company from any current or former director, officer,
      employee or consultant of the Company or any Seller or any of their respective
      Affiliates.

     

    5.25. Brokers.
      Except
      for Strategic Equity Group (the fees of which will be paid entirely by the
      Sellers or will constitute Selling Expenses), no Person has acted directly
      or
      indirectly as a broker, finder or financial advisor for the Company or any
      Seller in connection with the negotiations relating to the transactions
      contemplated by this Agreement.

     

    VI.
      REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     

    The
      Purchaser hereby represents and warrants to the Sellers as follows:

     

    6.1. Existence
      and Good Standing.
      The
      Purchaser is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Florida.

     

    6.2. Power.
      The
      Purchaser has the corporate power and authority to execute, deliver and perform
      fully its respective obligations under this Agreement and the Ancillary
      Agreements.

     

    6.3. Validity
      and Enforceability.
      The
      Purchaser has the capacity to execute, deliver and perform its obligations
      under
      this Agreement and the Ancillary Agreements. This Agreement and each of the
      Ancillary Agreements to which the Purchaser is a party have been duly executed
      and delivered by the Purchaser and, assuming due authorization, execution and
      delivery by the Sellers or any other party thereto, represent the legal, valid
      and binding obligation of the Purchaser, enforceable against the Purchaser
      in
      accordance with their respective terms, subject to General Enforceability
      Exceptions.

     

    6.4. No
      Conflict.
      Neither
      the execution of this Agreement or the Ancillary Agreements, nor the performance
      by the Purchaser of its obligations hereunder or thereunder will (a) violate
      or
      conflict with the Purchaser’s Certificate of Incorporation (or equivalent
      document) or Bylaws (or equivalent document) or any Law or Order, or (b) subject
      to the consents identified in Section
      9.1(i)
      below,
      violate, conflict with or result in a breach or termination of, or otherwise
      give any Person additional rights or compensation under, or the right to
      terminate or accelerate, or constitute (with notice or lapse of time, or both)
      a
      default under the terms of any note, deed, mortgage or Contract to which the
      Purchaser is a party or by which any of its assets or properties are
      bound.

     

    6.5. Consents.
      Except
      as set forth in Section 9.1(i),
      no
      Consent of any third party or Governmental Authority is required in connection
      with the execution and delivery by the Purchaser of this Agreement or the
      Ancillary Agreements to which the Purchaser is a party or the consummation
      of
      the transactions contemplated hereby or thereby.

    
      
         

      

      
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    6.6. Purchaser
      Shares; SEC Reports.
      Upon
      issuance, the Purchaser Shares will have been duly authorized and validly
      issued and be fully paid and non-assessable. The Purchaser has timely filed,
      and
      on the Closing Date will have timely filed, all forms, reports and documents
      required to be filed by it with the Securities and Exchange Commission since
      December 31, 2007.

     

    6.7. Brokers.
      No
      Person has acted directly or indirectly as a broker, finder or financial advisor
      for the Purchaser in connection with the negotiations relating to the
      transactions contemplated by this Agreement for which the Sellers will become
      obligated to pay a fee or commission.

     

    6.8.
      Senior
      Debt.
      As of
      the date of this Agreement, no default or event of default exists under any
      Senior Indebtedness of the Purchaser, and subject to obtaining the consents
      contemplated by Section
      9.1(i)
      below,
      no such default or event of default will exist as of the Closing Date. Based
      on
      the Purchaser’s forecasts made in good faith, the Purchaser does not anticipate
      that any default or event of default will occur under any Senior Indebtedness
      of
      the Purchaser as a result of the Closing or at any time thereafter through
      the
      date which is one hundred thirty (130) days after the Closing Date, whether
      resulting from the payment or the Holdback Amount, the Second Cash Purchase
      Price or otherwise. For purposes of the foregoing, “Senior
      Indebtedness of the Purchaser”
means
      the principal of (and premium, if any) and interest on (a) all indebtedness
      of
      Purchaser or the Company for money borrowed from any bank, merchant bank,
      savings and loan, insurance company, finance company, credit union, investment
      bank, broker-dealer, or other financial institution of any nature whatsoever,
      or
      any affiliate thereof, whether outstanding on the date of execution of this
      Agreement or thereafter created, assumed or incurred (with respect to the
      Purchaser), or created assumed or incurred by the Company after the Closing,
      including, without limitation, all indebtedness evidenced by that certain (i)
      Revolving Line of Credit and Term Loan Agreement, dated as of November 30,
      2007,
      between the Purchaser and RBS Citizens, National Association, and (ii)
      Securities Purchase and Loan Agreement, dated November 30, 2007, by and among
      the Purchaser, Woodside Capital Partners IV, LLC, Woodside Capital Partners
      IV
      QP, LLC, Woodside Capital Partners V, LLC, as assignee of Woodlands Commercial
      Bank (f/k/a Lehman Brothers Commercial Bank), Woodside Capital Partners V QP,
      LLC, as assignee of Woodlands Commercial Bank (f/k/a Lehman Brothers Commercial
      Bank), and Woodside Agency Services, LLC, as collateral agent, and (b) any
      deferrals, renewals, increases, extensions or refinancings of any such Senior
      Indebtedness. As used herein, “indebtedness
      of Purchaser or the Company for money borrowed”
means
      any obligation of, or any obligation guaranteed by, the Purchaser or the Company
      for the repayment of money borrowed, whether or not evidenced by bonds,
      debentures, notes or other written instruments, any capitalized lease obligation
      and any deferred obligation for payment of the purchase price of any property
      or
      assets (but with respect to the Company, only such obligations or guarantees
      created, incurred or assumed after the Closing).

     

    VII.
      TAX MATTERS

     

    7.1. Returns. 

     

    (a)
      The
      Sellers shall prepare (or cause to be prepared) all income Tax Returns of the
      Company for which the taxable year would end on the Closing Date. The Sellers
      shall provide a copy of such Returns (including any related workpapers or other
      relevant item) to the Purchaser within 30 days prior to their filing. If the
      Purchaser has any comments to any such Return, then the Purchaser shall deliver
      such comments in writing to the Principals within 15 days after the Purchaser’s
      receipt of such Return. The Sellers agree to incorporate all reasonable comments
      made by the Purchaser to such Return, as determined by the Principals in their
      reasonable discretion. If the Purchaser does not provide any comments in writing
      to the Purchaser within the time period specified above, then such Return shall
      be final, binding and non-appealable by the Purchaser. 

    
      
         

      

      
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    (b)
      The
      Purchaser shall prepare (or cause to be prepared) all other income Tax Returns
      of the Company that are due with respect to any Pre-Closing Tax Period or
      Straddle Period. Not less than 30 days prior to filing any such Return, the
      Purchaser shall provide a copy of such Return to the Principals. If the
      Principals have any comments to such Return, then the Principals shall deliver
      such comments in writing to the Purchaser within 15 days after the Principals’
receipt of such Return. The Purchaser agrees to incorporate all reasonable
      comments made by the Principals to such Return, as determined by the Purchaser
      in its reasonable discretion. If the Principals do not provide any comments
      in
      writing to the Purchaser within the time period specified above, then such
      Return shall be final, binding and non-appealable by the Sellers. 

     

    (c)
      Upon
      finalization of a Return pursuant to this Section 7.1,
      the
      Sellers or the Purchaser, as applicable, shall timely file such Return. The
      Sellers shall pay all Taxes owed with respect to such Return (or, in the case
      of
      a Return for a Straddle Period, Taxes attributable to the Pre-Closing Straddle
      Period in accordance with Section
      7.2
      below)
      within five days of the Purchaser’s request therefor.

     

    7.2. Apportionment
      of Taxes.

     

    (a)
      General.
      For
      purposes of this Agreement, the portion of Tax, with respect to the income,
      property or operations of the Company that is attributable to any Tax period
      that begins on or before the Closing Date and ends after the Closing Date (a
      “Straddle
      Period”)
      will
      be apportioned with respect to such Straddle Period based on the period ending
      on the Closing Date (the “Pre-Closing
      Straddle Period”)
      and
      the period that begins on the day after the Closing Date (the “Post-Closing
      Straddle Period”)
      in
      accordance with this Section 7.2.

     

    (b)
      Pre-Closing
      Straddle Period Calculation.
      The
      portion of Tax attributable to the Pre-Closing Straddle Period:

     

    (i)
      In
      the case of any Taxes other than sales or use taxes, value added taxes,
      employment taxes, withholding taxes, and any Tax based on or measured by income,
      receipts or profits earned during a Straddle Period, will be deemed to be the
      amount of such Tax for the entire taxable period multiplied by a fraction,
      the
      numerator of which is the number of days in the Pre-Closing Straddle Period
      and
      denominator of which is the number of days in the Straddle Period.

     

    (ii)
      In
      the case of any sales or use taxes, value added taxes, employment taxes,
      withholding taxes, and any Tax based on or measured by income, receipts or
      profits earned during a Straddle Period, will be deemed equal to the amount
      that
      would be payable if the Straddle Period ended on and included the Closing
      Date.

     

    (iii)
      To
      the extent that any Tax for a Straddle Period is based on the greater of a
      Tax
      on net income, on the one hand, and a Tax measured by net worth or some other
      basis not otherwise measured by income, on the other hand, the portion of such
      Tax related to the Pre-Closing Straddle Period will be deemed to be (A) if
      the amount of such Tax for the Straddle Period is measured by net worth or
      such
      other basis, the amount of such Tax determined as though the taxable values
      for
      the entire Straddle Period equal the respective values as of the end of the
      Closing Date and multiplying the amount of such Tax by a fraction, the numerator
      of which is the number of days during the Straddle Period that are in the
      Pre-Closing Straddle Period, and the denominator of which is the number of
      days
      in the Straddle Period or (B) if the amount of such Tax for the Straddle
      Period is measured by net income, the amount of such Tax determined as though
      the applicable Tax period terminated at the end of the day on the Closing
      Date.

    
      
         

      

      
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    (iv)
      In the
      case of a Tax that is (A) paid for the privilege of doing business during a
      period (a “Privilege
      Period”)
      and
      (B) computed based on business activity occurring during an accounting
      period ending prior to the Privilege Period, any reference to a “Tax period,” a
“tax period” or a “taxable period” shall mean such accounting period and not the
      Privilege Period.

     

    (c)
      Post-Closing
      Straddle Period Apportionment.
      The
      portion of Tax attributable to a Post-Closing Straddle Period will be calculated
      in a corresponding manner to the calculation of the portion of Tax attributable
      to a Pre-Closing Straddle Period described in Section 7.2(b).

     

    (d)
      Liability.
      The
      Sellers will be liable for the payment of all Taxes of the Company that are
      attributable to any Pre-Closing Tax Period or Pre-Closing Straddle Period,
      whether or not shown on any Returns, which shall be treated as an adjustment
      to
      the Purchase Price, unless otherwise required by Law.

     

    (e)
      Transfer
      Taxes.
      All
      transfer, excise, franchise, property, documentary, sales, use, stamp,
      registration, value added and other such Taxes and fees (including any penalties
      and interest) imposed on the Purchaser or the Company in connection with this
      Agreement (“Transfer
      Taxes”)
      will
      be borne and paid by the Sellers when due, and the Sellers, will cause to be
      filed all necessary Returns and other documentation with respect to all such
      Transfer Taxes.

     

    7.3. Cooperation;
      Audits.
      In
      connection with the preparation of Returns, audit examinations, and any
      administrative or judicial proceedings relating to the Tax liabilities imposed
      on the Sellers or the Company for all Pre-Closing Tax Periods, the Purchaser
      and
      the Company, on the one hand, and the Sellers, on the other hand, shall
      cooperate fully with each other, including, without limitation, the furnishing
      or making available during normal business hours of records, personnel (as
      reasonably required), books of account, powers of attorney or other materials
      necessary or helpful for the preparation of such Returns, the conduct of audit
      examinations or the defense of claims by Taxing Authorities as to the imposition
      of Taxes. The Sellers shall within ten days of the Purchaser’s request therefor
      deliver any information required to be reported by the Purchaser or the Company
      pursuant to Section 6043A of the Code. Any Party that receives notice of
      any audit examination or any other administrative or judicial proceeding
      relating to the Tax liabilities of the Sellers or the Company for any
      Pre-Closing Tax Period or Straddle Period shall promptly provide the other
      Parties with a copy of such notice.

     

    7.4. Certain
      Controversies.
      Notwithstanding Section 10.2,
      the
      Purchaser (or the Company after the date hereof), at its sole expense, will
      have
      the exclusive authority to represent the interests of the Company with respect
      to any Tax Matter that does not relate solely to a Pre-Closing Tax Period before
      the IRS or any other Taxing Authority and will have the sole right to extend
      or
      waive the statute of limitations with respect to such a Tax Matter and to
      control the defense, compromise or other resolution of any such Tax Matter,
      including responding to inquiries, filing Returns and settling audits;
provided,
      however,
      that
      the Purchaser (or the Company after the date hereof) will not enter into any
      settlement of or otherwise compromise any Tax Matter that adversely affects
      or
      may adversely affect the indemnification obligations of the Sellers hereunder
      without the prior written consent of the Sellers, which consent may not be
      unreasonably withheld or delayed. The Purchaser shall, in good faith, allow
      the
      Sellers to consult with the Purchaser regarding the conduct of or positions
      taken in any such proceeding. 

     

    7.5. Tax
      Sharing Agreements.
      All Tax
      sharing agreements or similar agreements with respect to or involving the
      Company will be terminated as of the Closing Date and, after the Closing Date,
      the Company will not be bound thereby or have any liability thereunder.

    
      
         

      

      
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    VIII.
      CERTAIN COVENANTS AND AGREEMENTS

     

    8.1. Pre-Closing
      Covenants.

     

    (a)
      Access
      to Information.
      Until
      the Closing, the Sellers shall, and shall cause the Company and its respective
      representatives to, (i) afford the Purchaser and its counsel, accountants,
      lenders and other representatives (collectively, “Purchaser’s
      Advisors”)
      full
      and free access to the Company’s personnel, customers, suppliers, landlords,
      properties, facilities, offices, contracts, books and records, permits and
      other
      documents and data during normal business hours and upon reasonable notice,
      (ii) furnish the Purchaser and Purchaser’s Advisors with copies of all such
      contracts, books and records, permits and other existing documents and data
      as
      the Purchaser may reasonably request and (iii) furnish the Purchaser and
      Purchaser’s Advisors with such additional financial, operating and other data
      and information as the Purchaser may reasonably request. Any such access shall
      be conducted at the Purchaser’s expense, and shall be managed by and conducted
      through the Sellers and subject to such additional limitations the Sellers
      may
      reasonably require to prevent the unreasonable disruption of the Company’s
      business.

     

    (b)
      Conduct
      of Business in Normal Course.
      The
      Sellers covenant and agree to (i) use commercially reasonable efforts to
      keep the Company’s present business organization intact, (ii) use
      commercially reasonable efforts to keep available the services of the present
      officers, employees and agents of the Company, (iii) use commercially
      reasonable efforts to preserve present relationships and good will with
      suppliers, customers, landlords, creditors, employees, agents and other Persons
      having business dealings with the Company, (iv) generally operate the
      business of the Company in the Ordinary Course of Business, (v) maintain
      the Company’s books and records in accordance with good business practice and
      GAAP, (vi) maintain all Permits necessary for the conduct of the Company’s
      business and (vii) use reasonable efforts to operate the Company in such a
      manner as to cause the representations and warranties relating to the Company
      set forth in this Agreement to be true and correct in all material respects
      as
      of the Closing. The Sellers covenant and agree that, except as otherwise
      expressly contemplated by this Agreement, required by applicable Law or as
      specifically consented to in writing by the Purchaser, the Sellers shall not
      undertake, and shall use commercially reasonable efforts not to permit, any
      action that would (x) require disclosure under Section 5.8
      that has
      not been made in Section
      5.8 of the Disclosure Schedule
      (if
      any), (y) result in a breach of the representations and warranties
      contained in Section 5.8
      or
      (z) likely result in a material adverse effect on the Company’s condition
      (financial or otherwise), business, assets, properties, liabilities, results
      of
      operations or prospects.

     

    (c)
      Notification
      of Certain Matters.
      The
      Sellers, on the one hand, and the Purchaser, on the other hand, agree to give
      prompt notice to the other of (i) any circumstance that would likely cause
      any of such Party’s representations or warranties contained in this Agreement to
      be untrue or inaccurate, (ii) any failure on such Party’s part to comply
      with or satisfy any covenant or agreement to be complied with or satisfied
      by
      such Party hereunder and (iii) any circumstance that may make the
      satisfaction of the conditions in Article IX
      impossible or unlikely.

     

    (d)
      Commercially
      Reasonable Efforts.
      Prior
      to the Closing Date or the earlier termination of this Agreement, (i) the
      Parties agree to use commercially reasonable efforts to obtain the closing
      deliverables specified in this Agreement necessary to consummate the
      transactions contemplated hereby, and (ii) the Sellers agree, and agree to
      cause the Company to, reasonably cooperate in the Purchaser’s efforts to obtain
      any required consent of the Purchaser’s lenders to the transactions contemplated
      by this Agreement and the Ancillary Agreements, which cooperation may include,
      without limitation, the execution and delivery by the Sellers of subordination
      agreements with respect the deferred payments under this Agreement or any
      Ancillary Agreement (other than any Employment Agreement) such as the Holdback
      Amount, the Second Cash Purchase Price and the Notes (but not any payments
      due
      at the Closing). Prior to the Closing Date or the earlier termination of this
      Agreement, the Purchaser agrees to use its commercially reasonable efforts
      to
      obtain any required consent of the Purchaser’s lenders to the transactions
      contemplated by this Agreement and the Ancillary Agreements; provided that,
      the
      failure to obtain such consent, in and of itself, shall not constitute a breach
      of any of the Purchaser’s covenants or agreements set forth in this
      Agreement.

    
      
         

      

      
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    8.2. Post-Closing
      Covenants.

     

    (a)
      Purchaser
      Shares.
      No
      Seller will transfer any Purchaser Shares in the absence of a Conversion
      Transaction or an effective registration statement unless such Seller has
      furnished the Purchaser with an opinion of counsel, reasonably satisfactory
      to
      the Purchaser, that such disposition does not require registration of such
      Purchaser Shares under the Securities Act, or the Purchaser determines that
      such
      opinion of counsel is unnecessary. The Purchaser will not require opinions
      of
      counsel for transfers of Purchaser Shares made pursuant to Rule 144 under
      the Securities Act if the Purchaser is provided with any certificates or other
      evidence of compliance with Rule 144 under the Securities Act reasonably
      required by it in connection with such transfer (including a copy of the
      relevant Form 144).

     

    (b)
      Retained
      Accounts Receivable.
      If the
      Purchaser or the Company receives any payment on account of or relating to
      any
      Retained Accounts Receivable, then such payment shall be the property of, and
      shall be promptly forwarded and remitted to the Sellers. The Purchaser and
      the
      Company shall promptly endorse and deliver to the Sellers any cash, checks
      or
      other documents received by the Purchaser or the Company on account of any
      such
      Retained Accounts Receivable. All payments received by the Company after the
      Closing Date from any Person that is a debtor under any Retained Account
      Receivable will be (i) applied to the specific invoice number to which such
      payment relates or (ii) in the absence of any such specific invoice number,
      deemed to be a payment on the Retained Account Receivable and will, until the
      same has been paid in full, not be applied by the Purchaser or the Company
      to
      any other debt or obligation of such Person, including any account receivable
      of
      the Company arising after the Closing Date. The Purchaser and the Company shall
      advise the Sellers (promptly following the Purchaser or the Company becoming
      aware thereof) of any counterclaims or set-offs that may arise subsequent to
      the
      Closing Date with respect to any Retained Accounts Receivable.

     

    (c)
      Bonus
      Pool.
      

     

    (i)
       For
      all
      Measurement Periods containing Excess EBITDA, the Company shall pay to its
      employees an aggregate amount equal to 10% of Excess EBITDA (each, a
“Bonus
      Payment”)
      to be
      allocated among the Company’s employees (or any of them) as determined by the
      Principals in their reasonable discretion. Each Bonus Payment, if any, shall
      be
      paid by the Company to such employees within 60 days of determination of the
      amount of Excess EBITDA. For the avoidance of doubt, the actual amount of the
      Bonus Payment for any Measurement Period shall not be treated as an expense
      of
      the Company for purposes of calculating the Adjusted EBITDA for any applicable
      Measurement Period.

     

    (ii) In
      addition to the Bonus Payments, the Company shall be entitled to pay to its
      employees (other than Stephan or Norman) the following bonuses or incentive
      compensation:

     

    
      	 	
              (A)

            	
              For
                the year ending December 31, 2008, bonuses or incentive compensation
                (including any Bonus Amounts paid at Closing) in an aggregate amount
                not
                to exceed $156,000;

            

    

     

    
      
         

      

      
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              (B)

            	
              For
                the First Measurement Period, bonuses or incentive compensation (including
                any amounts paid during such First Measurement Period pursuant to
                clause
                (A) above) calculated in a manner consistent with the Company’s historical
                practices, and in an aggregate amount not to exceed 8.5% of the Company’s
                aggregate payroll expenses for such First Measurement Period; and
                

            

    

    

    
      	 	
              (C)

            	
              For
                the Second Measurement Period, bonuses or incentive compensation
                calculated in a manner consistent with the Company’s historical practices,
                and in an aggregate amount not to exceed 8.5% of the Company’s aggregate
                payroll expenses for such Second Measurement
                Period.

            

    

    

    For
      the
      avoidance of doubt, the amount of bonuses and incentive compensation paid
      pursuant to this Section
      8.2(c)(ii)
      shall be
      included in calculating the Adjusted EBITDA for any applicable Measurement
      Period.

    

    (d)
      Operations
      During the Measurement Periods.
      During
      the Measurement Periods, the Purchaser shall not divert any business from the
      Company to the Purchaser’s other Affiliates unless: (i) the Company (A) has
      engaged in any unlawful conduct, (B) committed any act that could reasonably
      be
      expected to materially damage the reputation of the Purchaser or its Affiliates,
      or (C) acted with gross negligence in providing or failing to provide client
      services; or (ii) both Stephan’s and Norman’s employment with the Company ceases
      as a result of a Termination For Cause and/or a resignation that is not a
      Resignation For Good Reason (each as defined in the applicable Employment
      Agreement). This Section
      8.2(d)
      shall
      not limit the Purchaser’s rights under any of the Ancillary Agreements,
      including, without limitation, any of the Employment Agreements, and shall
      not
      prevent any Affiliate of the Purchaser from accepting business that is moved
      from the Company at the request of the Company (other than at the direction
      of
      the Purchaser) or any of its customers or clients. 

     

    (e)
      Access
      to Books and Records.
      After
      the Closing, the Purchaser will direct the Company to (i) retain all of the
      Company’s material books and records in existence on the Closing Date, and not
      destroy or dispose of any thereof for a period of seven (7) years commencing
      on
      the Closing Date or such longer period as may be required by applicable Law;
      and
      (ii) afford the Sellers and their representatives, upon request and with
      reasonable advance notice, reasonable access to such books and records during
      normal business hours, and the right to make copies or extracts therefrom,
      at
      Sellers’ cost, in each case, to the extent that such request is made for any
      legitimate business purpose, including, but not limited to, any Seller’s
      response to a Tax audit.

     

    (f)
      Solicitation
      of Certain of the Company’s Customers.
      The
      Purchaser acknowledges that the Company derives a portion of its new retirement
      plan administration business from referrals by insurance agents, registered
      representatives, brokers, registered investment advisors and other financial
      advisors who receive commissions or other compensation from the sale of
      investment and/or insurance products (each, a “Financial
      Advisor”).
      After
      the Closing, and subject to Section
      8.2(d)
      above,
      neither the Purchaser nor any Affiliate of the Purchaser will, without the
      prior
      consent of a Principal, directly or indirectly solicit any customer of the
      Company that has been referred to it by a Financial Advisor who is then
      currently engaged or otherwise advising such customer for the purpose of
      attempting to sell to such customer investment or insurance
      products.

     

    (g)
      Closing
      Date Balance Sheet.
      Within
      30 days after the Closing Date, the Sellers shall prepare (or cause to be
      prepared), at the Company’s expense, and deliver to the Purchaser an unaudited
      balance sheet of the Company as of the Closing Date (the “Closing
      Date Balance Sheet”),
      including a trial balance with respect thereto, prepared in accordance with
      GAAP
      (except for the absence of footnotes). The Closing Date Balance Sheet shall
      be
      prepared using the same principles and procedures used to prepare the unaudited
      Financial Statements. Upon the Purchaser’s request, the Sellers will provide the
      Purchaser with true and complete copies of any work papers or other supporting
      documentation used in connection with preparing the Closing Date Balance
      Sheet.

    
      
         

      

      
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    (h)
      Security
      Deposit; Insurance Premiums.
      

     

    (i)
      If
      and to the extent any amount of the security deposit made by the Company
      pursuant to that certain Real Property Lease, dated as of September 15, 2005,
      between the Company, as tenant, and The Realty Associates Fund VIII, L.P.,
      as
      landlord, is remitted by the landlord and actually received by the Company
      at
      the expiration of such Real Property Lease, then the Purchaser agrees to cause
      the Company to remit such amount to the Sellers, up to a maximum amount of
      $19,186. Neither the Purchaser nor the Company shall be under any obligation,
      however, to guaranty the landlord’s remittance of any portion of the security
      deposit at expiration of the lease or otherwise.

     

    (ii)
      The
      Company shall be entitled to terminate its existing Errors and Omissions
      Insurance Policy (#CME04025113), between the Company, as insured, and Fireman’s
      Fund, as insurer. If such termination occurs on or after the Closing Date,
      the
      Purchaser agrees to cause the Company to remit any refunded premium actually
      received by the Company under such policy to the Sellers. Neither the Purchaser
      nor the Company shall be under any obligation, however, to guaranty the
      insurer’s remittance of any portion of such premium.

     

    (iii)
      Any
      remittance made to the Sellers pursuant to this Section
      8.2(h)
      shall be
      treated as an adjustment to the Purchase Price, unless otherwise required by
      Law.

     

    (i)
      401(k)
      Plan.
      The
      Company shall be entitled to maintain its existing 401(k) Plan through December
      31, 2008, and continue to provide any employer match and profit sharing
      contributions under such 401(k) Plan in a manner consistent with the Company’s
      historical practices; provided that,
      the
      Company funds such employer contributions accrued through the Closing Date
      and,
      thereafter, the Purchaser agrees to accrue and fund (or cause to be funded)
      such
      employer contributions accrued thereafter until December 31, 2008 in an
      aggregate amount not to exceed $11,700 and in a manner consistent with the
      Company’s accrual and funding of $9,000 per month.

     

    (j)
      Paybridge
      Contract.
      The
      Principals and/or PSL shall be entitled to retain all Tier 1 Payments
      and Tier 2 Payments to the extent attributable to the Existing
      Paybridge Referrals. With respect to all other payments under the Paybridge
      Contract, including, without limitation, all Tier 1 Payments and
      Tier 2 Payments, not attributable to the Existing Paybridge Referrals,
      the Parties agree as follows:

     

    (i)
      The
      Principals and/or PSL shall be entitled to retain all Tier 2 Payments;
provided,
      however,
      if the
      revenues attributable to any Tier 2 Payment are generated from
      referrals located in territories in which the Purchaser or any of its
      Subsidiaries operates, then, unless such referral was previously consented
      to in
      writing by the Purchaser, the Principals agree to cause PSL to immediately
      remit
      such payment to the Purchaser.

     

    (ii)
      The
      Principals agree to cause PSL to assign any and all of its right, title and
      interest in and to all Tier 1 Payments and all other payments owing to
      PSL under the Paybridge Contract (exclusive of Tier 2 Payments
      governed by Section 8.2(j)(i)),
      including, without limitation, under Section 8 thereof, to the Company in
      the percentages and during the periods set forth in the table below.
      Notwithstanding anything to the contrary contained in this Section 8.2(j)(ii),
      including, without limitation, the table set forth below, on January 1, 2012
      and
      for seven days thereafter (the “Election
      Period”),
      the
      Principals, on behalf of PSL, at their election, by giving timely written notice
      (the “Buyout
      Notice”)
      to the
      Purchaser, shall have the option to require the Purchaser, within 60 days of
      receipt of the Buyout Notice (the “Buyout
      Date”),
      to
      pay $25,000 to PSL in exchange for a direct and unconditional assignment by
      PSL
      of 100% of all payments contemplated in this Section 8.2(j)(ii)
      (the
“Buyout
      Option”)
      and,
      upon such payment by the Purchaser, or on its behalf, the Principals agree
      to
      cause PSL to immediately assign 100% of any and all of its right, title and
      interest in and to such payments to the Company; provided,
      however,
      if the
      Paybridge Contract has been terminated or is otherwise no longer in effect
      at
      any time prior to the Buyout Date or the Buyout Notice is not provided during
      the Election Period, then the Buyout Option shall be null and void ab
      initio.

    
      
         

      

      
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              PERIOD

            	 	
              PERCENTAGE OF TIER 1 PAYMENT

            	 
	
              Closing Date – 12/31/2009

            	 	
              0

            	
              %

            
	
              01/01/2010 – 12/31/2010

            	 	
              25

            	
              %

            
	
              01/01/2011 – 12/31/2011

            	 	
              50

            	
              %

            
	
              On and after 01/01/2012

            	 	
              75

            	
              %*

            
	
              *Notwithstanding anything to the contrary contained in this Section 8.2(j)(ii), if the

              Principals, on behalf of PSL, elect the Buyout Option, then immediately after the

              Purchaser’s $25,000 payment required in accordance therewith, the percentage

              shall increase from 75% to 100%.

            
	 	 	 

    

    Any
      payments actually received by the Company pursuant to this Section 8.2(j)
      shall be
      included in the calculation of the Company’s Adjusted EBITDA for any applicable
      periods. Within 30 days after each calendar quarter, the Principals shall cause
      PSL to prepare and deliver to the Company and the Purchaser a statement
      detailing all referrals under the Paybridge Contract and any and all payments
      received with respect thereto, including, without limitation, all
      Tier 1 Payments and Tier 2 Payments. Any payments received
      by PSL and/or the Principals that are owing to the Company under this
Section 8.2(j)
      shall be
      immediately remitted to the Company. At the request of the Purchaser, the
      Principals shall request and use commercially reasonable efforts to cause
      PayBridge to direct all payments owing to the Company under this Section 8.2(j)
      directly
      to the Company. Notwithstanding anything to the contrary set forth in this
      Section
      8.2(j),
      if the
      Purchaser or the Company (at the direction of the Purchaser) enters into a
      payroll strategy and/or vendor relationship, whether or not similar to that
      contemplated by the Paybridge Contract, then the Principals agree to follow,
      and
      agree to cause PSL to follow, the Purchaser’s directions as to such new payroll
      strategy and/or vendor relationship, which may include terminating the PayBridge
      Contract; provided that,
      the
      Parties agree that under such new payroll strategy and/or vendor relationship
      the Principals or PSL shall be entitled to compensation with respect to the
      Company’s clients substantially equivalent to what they would have received
      under this Section
      8.2(j)
      by
      reference to the Paybridge Contract. The Principals shall cause PSL not to
      waive
      any of its rights under, or amend, restate, supplement or otherwise modify,
      the
      Paybridge Contract, without the prior written consent of the Purchaser, which
      shall not be unreasonably withheld.

     

    IX.
      CONDITIONS TO CLOSING

     

    9.1. Conditions
      Precedent to the Purchaser’s Obligations.
      The
      obligations of the Purchaser to consummate the transactions contemplated by
      this
      Agreement are expressly subject to the fulfillment or express written waiver
      of
      the following conditions on or prior to the Closing Date: 

     

    (a)
      Representations
      and Warranties True.
      Each of
      the representations and warranties of the Sellers contained in this Agreement
      that are not expressly limited or qualified as to the Company’s Knowledge or
      materiality shall be true and correct in all material respects as if made at
      and
      as of the Closing Date, and each of the representations and warranties of the
      Sellers contained in this Agreement that are expressly limited or qualified
      as
      to the Company’s Knowledge or materiality shall be true and correct in all
      respects as if made at and as of the Closing Date (except, in both instances,
      (i) as a result of any event, circumstance or transaction contemplated by
      this Agreement or otherwise approved in writing by the Purchaser, and
      (ii) for any representation or warranty that expressly relates to an
      earlier date, in which case such representation and warranty shall be true
      and
      correct in all respects as if made as of such date).

    
      
         

      

      
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    (b)
      Covenants
      Performed.
      The
      Sellers and/or the Company shall have performed in all material respects, on
      or
      before the Closing Date, all obligations contained in this Agreement which
      by
      the terms hereof are required to be performed by the Sellers and/or the Company
      on or before the Closing Date.

     

    (c)
      Compliance
      Certificate.
      The
      Purchaser shall have received a certificate signed by the Sellers certifying
      as
      to the matters set forth in Sections 9.1(a)
      and
(b).

     

    (d)
      Consents.
      The
      Sellers or the Company, as applicable, shall have obtained all of the Consents
      listed in Sections
      4.4 and 5.4(b) of the Disclosure Schedule,
      and
      provided copies of such Consents to the Purchaser.

     

    (e)
      [intentionally omitted];

     

    (f)
      No
      Injunction, etc.
      There
      will not be any Law or Order of any Governmental Authority prohibiting, delaying
      or invalidating the transactions contemplated by this Agreement, or any pending
      or threatened Action by an unrelated third party to such effect or seeking
      damages from the Purchaser or the Company if the transactions contemplated
      by
      this Agreement are completed.

     

    (g)
      The
      Sellers’ Closing Deliverables.
      The
      Sellers shall have delivered or caused to be delivered to the Purchaser the
      items listed in Section 3.2.

     

    (h)
      Material
      Adverse Effect.
      Since
      December 31, 2007, there shall have been no change, event or condition of any
      character (whether or not covered by insurance) that, in the aggregate, has
      had,
      or would reasonably be expected to have, a material adverse effect on the
      condition (financial or otherwise), business, assets, properties, liabilities,
      results of operations or prospects of the Company, and the Purchaser will have
      received a certificate attesting thereto duly executed by the
      Sellers.

     

    (i)
      Lender
      Consent.
      The
      Purchaser’s lenders shall have granted any required consents to the transactions
      contemplated by this Agreement and the Ancillary Agreements, without any adverse
      conditions or stipulations on the Purchaser or any of its Affiliates, as
      determined by the Purchaser in its sole discretion.

     

    9.2. Conditions
      Precedent to the Sellers’ Obligations.
      The
      obligations of the Sellers to sell the Shares are subject to the fulfillment
      or
      express written waiver of the following conditions on or prior to the Closing
      Date:

     

    (a)
      Representations
      and Warranties True.
      Each of
      the representations and warranties of the Purchaser contained in this Agreement
      that are not expressly limited or qualified as to materiality shall be true
      and
      correct in all material respects as if made at and as of the Closing Date,
      and
      each of the representations and warranties of the Purchaser contained in this
      Agreement that are expressly limited or qualified as to materiality shall be
      true and correct in all respects as if made at and as of the Closing Date
      (except, in both instances, (i) as a result of any event, circumstance or
      transaction contemplated by this Agreement or otherwise approved in writing
      by
      the Principals, and (ii) for any representation or warranty that expressly
      relates to an earlier date, in which case such representation and warranty
      shall
      be true and correct in all respects as if made as of such date).

    
      
         

      

      
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    (b)
      Covenants
      Performed.
      The
      Purchaser shall have performed in all material respects, on or before the
      Closing Date, all obligations contained in this Agreement which by the terms
      hereof are required to be performed by the Purchaser on or before the Closing
      Date.

     

    (c)
      Compliance
      Certificate.
      The
      Sellers shall have received a certificate signed by an authorized officer of
      the
      Purchaser certifying as to the matters set forth in Sections 9.2(a)
      and
(b).

     

    (d)
      Consents.
      The
      Sellers or the Company, as applicable, shall have obtained all of the Consents
      listed in Sections
      4.4 and 5.4(b) of the Disclosure Schedule.

     

    (e)
      No
      Injunction, etc.
      There
      will not be any Law or Order of any Governmental Authority prohibiting, delaying
      or invalidating the transactions contemplated by this Agreement, or any pending
      or threatened Action by an unrelated third party to such effect or seeking
      damages from the Sellers if the transactions contemplated by this Agreement
      are
      completed.

     

    (f)
      Purchaser
      Closing Deliverables.
      The
      Purchaser shall have delivered or caused to be delivered to the Sellers the
      items listed in Section 3.3.

     

    (g)
      Lender
      Consent.
      The
      Purchaser’s lenders shall have granted the consents contemplated by Section
      9.1(i)
      above.

     

    X.
      REMEDIES

     

    10.1. General
      Indemnification Obligation.

     

    (a)
      Sellers’
      Indemnification Obligations.
      Subject
      to the procedures and limitations set forth in this Article
      X,
      the
      Sellers jointly and severally shall indemnify and hold harmless the Purchaser,
      the Company and their respective officers, directors, employees, agents and
      Affiliates (each a “Purchaser
      Indemnified Party”)
      from
      and against any and all Losses incurred or suffered by any Purchaser Indemnified
      Party based upon, arising out of, or otherwise in respect of: (i) any
      inaccuracies in or any breach of any representation or warranty of the Sellers
      contained in this Agreement (other than Article
      IV
      hereof)
      or any Closing Certificate, in each case, determined without regard to any
      qualification with respect to materiality, material adverse effect or other
      similar qualification; (ii) any breach of any covenant or agreement of any
      Seller contained in this Agreement or any Closing Certificate (other than any
      several indemnification obligation of a Seller described in the immediately
      following sentence); (iii) any Indebtedness of the Company, Customer Advances,
      Selling Expenses, or Bonus Amounts not fully paid or taken as a reduction to
      the
      Purchase Price; (iv) any obligations or liabilities of the Company, whether
      incurred before or after the Closing, under the Paybridge Contract (other than
      those related to the Company’s breach after the Closing of the Company’s
      obligations under Sections 4 and 9 thereof), including, without limitation,
      any obligations for indemnification pursuant to Section 10 thereof; or (v)
      (A) any Taxes of the Company attributable to any Pre-Closing Tax Period or
      Pre-Closing Straddle Period (to the extent allocable to the Sellers as provided
      in Section 7.2); (B) all Taxes of any member of an affiliated, combined or
      unitary group of which the Company is or was a member on or prior to the Closing
      Date, including pursuant to Treasury Regulation Section 1.1502-6 or any
      analogous or similar state, local or foreign Law; and (C) any and all Taxes
      of any Person (other than the Company) imposed on the Company as a transferee
      or
      successor, by contract or pursuant to any Law, which Taxes relate to an event
      or
      transaction occurring on or before the Closing. Each Seller shall severally
      indemnify and hold harmless (except that each Principal shall indemnify and
      hold
      harmless the Purchaser on a joint and several basis with any Trust for which
      such Principal is a trustee) each Purchaser Indemnified Party from and against
      any Losses based upon, arising out of, or otherwise in respect of (1) any
      inaccuracies in or any breach of any representation or warranty of such Seller
      (and not of any other Seller) set forth in Article
      IV
      hereof,
      in each case, determined without regard to any qualification with respect to
      materiality, material adverse effect or other similar qualification, or (2)
      any
      breach of any covenant or agreement of such Seller (and not of any other Seller)
      contained in Section
      11.1
      or such
      Seller’s Employment Agreement.

    
      
         

      

      
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    (b)
      Purchaser’s
      Indemnification Obligations.
      The
      Purchaser shall indemnify and hold harmless the Sellers from and against any
      and
      all Losses incurred or suffered by any Seller based upon, arising out of, or
      otherwise in respect of (i) any inaccuracies in or any breach of any
      representation or warranty of the Purchaser contained in this Agreement or
      any
      Ancillary Agreement, in each case, determined without regard to any
      qualification with respect to materiality, material adverse effect or other
      similar qualification, or (ii) any breach of any covenant or agreement of
      the Purchaser contained in this Agreement or any Ancillary
      Agreement.

     

    (c)
      No
      Contribution.
      The
      Sellers shall have no right of contribution from any of the Purchaser
      Indemnified Parties with respect to any Loss claimed by a Purchaser Indemnified
      Party.

     

    10.2. Notice
      and Third Party Liability.

     

    (a)
      Notice
      of Asserted Liability.
      As soon
      as is reasonably practicable after any Seller, on the one hand, or the
      Purchaser, on the other hand, becomes aware of any claim that such Party (or,
      with respect to the Purchaser, any Purchaser Indemnified Party) has under
Section 10.1
      that may
      result in a Loss for which such Party (or, with respect to the Purchaser, any
      Purchaser Indemnified Party) is entitled to indemnification hereunder (a
“Liability
      Claim”),
      such
      Party (the “Indemnified
      Party”)
      shall
      give written notice of such Liability Claim (a “Claims
      Notice”)
      to the
      other Party (the “Indemnifying
      Party”).
      A
      Claims Notice must describe the Liability Claim in reasonable detail and must
      indicate the amount (estimated, if necessary and to the extent feasible) of
      the
      Loss that has been or may be suffered by the Indemnified Party and, if the
      Liability Claim relates to a Third Party Claim (as defined below), the Claims
      Notice must be accompanied by all written communications from the third party
      relating to the Liability Claim. No delay in or failure to give a Claims Notice
      by the Indemnified Party to the Indemnifying Party pursuant to this Section 10.2(a)
      will
      adversely affect any of the other rights or remedies that the Indemnified Party
      has under this Agreement or alter or relieve the Indemnifying Party of its
      obligation to indemnify the Indemnified Party except to the extent that such
      delay or failure has prejudiced the Indemnifying Party, or except as provided
      in
      Section 10.3.

     

    (b)
      Third
      Party Claims.
      If any
      Claims Notice identifies a Liability Claim brought by a third party (a
“Third
      Party Claim”
and
      together with the Liability Claims, the “Claims”),
      then
      the Indemnifying Party has the right, exercisable by written notice to the
      Indemnified Party within ten days after receipt of such Claims Notice, to assume
      and conduct the defense of such Third Party Claim in accordance with the limits
      set forth in this Agreement with counsel selected by the Indemnifying Party
      and
      reasonably acceptable to the Indemnified Party; provided,
      however,
      that
      (i) the defense of such Third Party Claim by the Indemnifying Party will
      not, in the reasonable judgment of the Indemnified Party, have a material
      adverse effect on the Indemnified Party; (ii) the Indemnifying Party has
      sufficient financial resources, in the reasonable judgment of the Indemnified
      Party, to satisfy the amount of any adverse monetary judgment that is reasonably
      likely to result; (iii) the Third Party Claim solely seeks (and continues
      to seek) monetary damages; and (iv) the Indemnifying Party expressly agrees
      in writing that as between the Indemnifying Party and the Indemnified Party,
      the
      Indemnifying Party may only satisfy and discharge the Third Party Claim in
      accordance with the limits set forth in this Agreement (the conditions set
      forth
      in clauses (i) through (iv) are, collectively, the “Litigation
      Conditions”).
      If
      the Indemnifying Party does not assume the defense of a Third Party Claim in
      accordance with this Section 10.2(b),
      then
      the Indemnified Party may continue to defend the Third Party Claim.
      Notwithstanding the foregoing, if (i) any of the Litigation Conditions
      cease to be met or (ii) the Indemnifying Party fails to take reasonable
      steps necessary to defend diligently such Third Party Claim, the Indemnified
      Party may assume its own defense, and the Indemnifying Party will be liable
      for
      all reasonable costs or expenses paid or incurred in connection with such
      defense, subject to Section 10.3. The Indemnifying Party or the Indemnified
      Party, as the case may be, has the right to participate in (but not control),
      at
      its own expense, the defense of any Third Party Claim which the other is
      defending as provided in this Agreement. The Indemnifying Party, if it has
      assumed the defense of any Third Party Claim as provided in this Agreement,
      may
      not, without the prior written consent of the Indemnified Party, consent to
      a
      settlement of, or the entry of any judgment arising from, any such Third Party
      Claim that (i) does not include as an unconditional term thereof the giving
      by the claimant or the plaintiff to the Indemnified Party a complete release
      from all liability in respect of such Third Party Claim, (ii) grants any
      injunctive or equitable relief or (iii) may reasonably be expected to have
      a material adverse effect on the Indemnified Party. The Indemnified Party has
      the right to settle any Third Party Claim, the defense of which has not been
      assumed by the Indemnifying Party.

    
      
         

      

      
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    10.3. Survivability;
      Limitations.

     

    (a)
      The
      representations and warranties of the Sellers and the Purchaser contained in
      this Agreement or in any Closing Certificate will survive for a period of 18
      months following the Closing (the “Expiration
      Date”);
      provided,
      however,
      that:

     

    (i)
      the
      Expiration Date for any Claims relating to a breach of or inaccuracy in the
      representations and warranties set forth in Sections
      4.1 (Authority, Validity and Effect),
      4.3
      (No Conflict),
      4.4 (Consents),
      4.7 (Rule 144),
      4.8 (Investment
      Representations),
      5.10 (Employee
      Benefit Plans),
      5.11 (Environmental),
      5.21
      (Taxes),
      the
      first sentence of Section
      5.4(a) (Title),
      the
      first sentence of Section
      5.14(b)(i) (Intellectual Property),
      and
Sections
      5.17 (Undisclosed Liabilities),
      6.3
      (Validity and Enforceability),
      6.4
      (No Conflict)
      and
6.5
      (Consents)
      will be
      the longer of the three-year anniversary of the Closing or the expiration of
      the
      applicable statute of limitations as extended;

     

    (ii)
      there will be no Expiration Date for any Claims relating to a breach of or
      inaccuracy in the representations and warranties set forth in Sections
      4.2 (Title to Shares),
      5.3 (Capitalization
      of the Company),
      5.20 (Indebtedness),
      5.25 (Brokers),
      the
      first sentence of Section
      6.6 (Purchaser Shares; SEC Reports),
      and
6.7
      (Brokers);
      and

     

    (iii)
      no
      Indemnified Party shall be entitled to indemnification with respect to any
      inaccuracy in or breach of any representation or warranty unless a Claims Notice
      with respect thereto is given to the Indemnifying Party in accordance with
      Section
      10.2
      on or
      before the applicable Expiration Date, but any Claims pending on any Expiration
      Date for which a Claims Notice has been given in accordance with Section 10.2
      on or
      before such Expiration Date may continue to be asserted and indemnified against
      until finally resolved.

     

    (b)
      Notwithstanding anything to the contrary contained in this Article X:

     

    (i)
      the
      Sellers will not have any liability as a result of any breach of or inaccuracy
      in any of the representations and warranties contained in this Agreement (other
      than the Special Representations made by the Sellers), until the aggregate
      amount of all such Losses sustained by the Purchaser Indemnified Parties exceeds
      $50,000, in which case the Sellers will be liable as set forth in this Agreement
      for all such Losses exceeding such amount up to the Indemnification Cap;
      and

     

    (ii)
      the
      Sellers’ maximum aggregate obligation to indemnify the Purchaser Indemnified
      Parties as a result of any breach of or inaccuracy in any of the representations
      and warranties contained in this Agreement (other than the Special
      Representations made by the Sellers) shall not exceed an amount equal to fifty
      percent (50%) of the Gross Proceeds (the “Indemnification
      Cap”).

    
      
         

      

      
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    (c)
      Notwithstanding anything to the contrary in this Agreement, any indemnification
      obligations of the Sellers shall first be drawn from the Holdback Amount and,
      thereafter, the Sellers will be liable for all indemnification obligations
      as
      set forth in this Agreement; provided that,
      if
      (i) the Holdback Amount is insufficient to satisfy any Claim(s) or has
      otherwise been disbursed to the Purchaser and/or the Sellers, and (ii) the
      Second Cash Purchase Price or either Note is due or matures by its terms not
      later than sixty (60) days after the date that any Purchaser Indemnified
      Party first asserts a Claim, then the indemnification obligations of the Sellers
      with respect to such Claim shall be satisfied by offset against such Second
      Cash
      Purchase Price or Note in accordance with Section 10.6
      and,
      only if such offset results in a deficiency with respect to such Claim, will
      the
      Sellers be obligated to satisfy the balance of the indemnification obligation
      by
      making direct payments.

     

    (d)
      Each
      Indemnified Party agrees to use its commercially reasonable efforts to mitigate
      any Losses for which it seeks to be indemnified.

     

    (e)
      Prior
      to asserting any Claim under this Article
      X,
      each
      Indemnified Party shall file or cause to be filed a claim with respect to the
      Losses in question under any insurance policies which may be maintained by
      such
      Indemnified Party or any Affiliate thereof under which coverage may be obtained,
      and thereafter use commercially reasonable efforts to pursue such claim. If
      any
      such insurance policies cover any such Losses, then the Indemnified Party’s
      right to indemnification under this Article
      X
      for such
      Losses shall be limited to only those amounts in excess of the insurance
      proceeds actually collected by the Indemnified Party with respect to such
      Losses, net of the Indemnified Party’s reasonable expenses in collecting such
      insurance proceeds.

     

    10.4. Specific
      Performance.
      Each
      Party’s obligation under this Agreement is unique. If any Party should breach
      its covenants under this Agreement, each of the Parties acknowledge that it
      would be extremely impracticable to measure the resulting damages; accordingly,
      the non-breaching Party or Parties, in addition to any other available rights
      or
      remedies, may sue in equity for specific performance, and each Party expressly
      waives the defense that a remedy in damages will be adequate.

     

    10.5. Adjustment
      to the Purchase Price.
      Any
      indemnification payments made pursuant to this Article X
      shall be
      treated as an adjustment to the Purchase Price, unless otherwise required by
      Law.

     

    10.6. Set-Off.
      If the
      Sellers are obligated to indemnify any Purchaser Indemnified Party and fail
      to
      do so directly, then the Purchaser shall be entitled, in addition to any other
      right or remedy such Purchaser Indemnified Party may have, but subject to the
      limitations set forth in Section 10.3,
      to
      exercise rights of set-off against any amounts due and payable by the Purchaser
      to the Sellers arising under this Agreement or any Ancillary Agreement (other
      than any of the Employment Agreements) or that may thereafter be due and payable
      to the Sellers under this Agreement or any Ancillary Agreement (other than
      any
      of the Employment Agreements.

     

    10.7. Exclusive
      Remedy.
      Except
      as may be required to enforce post-Closing covenants contained in this
      Agreement, or any remedies under any applicable federal or state securities
      laws, after the Closing Date the indemnification rights in this Article X
      are and
      shall be the sole and exclusive remedies of the Parties with respect to this
      Agreement and the transactions contemplated hereby; provided,
      however,
      that
      this sentence shall not be deemed a waiver by any Party of its right to seek
      specific performance or injunctive relief in the case of another Party’s failure
      to comply with the post-Closing covenants made by such other Party; and
provided,
      further,
      that
      this sentence shall not be deemed a waiver by any Party of its right to pursue
      claims for fraud, intentional or knowing misrepresentation, or active
      concealment, all of which shall be claims that are outside the terms and
      conditions of this Agreement.

    
      
         

      

      
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    XI.
      MISCELLANEOUS

     

    11.1. Competitive
      Activity; Non-Solicitation; Confidentiality.

     

    (a)
      Non-Competition.
      

     

    (i)
      Principals
      Other Than Spiegel.
      As
      additional consideration for the Purchase Price, each Principal (other than
      Spiegel) agrees that, during the Non-Compete Period, he shall not, directly
      or
      indirectly, (A) enter into, engage in, consult, manage or otherwise
      participate in the operation of any business which competes with the business
      of
      the Company (as conducted at any time prior to the Closing) within the
      Restricted Territory; (B) solicit customers, business, patronage or orders
      for, or sell, any products and services in competition with, or for any business
      that competes with, the business of the Company (as conducted at any time prior
      to the Closing) within the Restricted Territory; (C) divert, entice or
      otherwise take away any existing or potential customers, business, patronage
      or
      orders of the Company within or outside the Restricted Territory, or attempt
      to
      do so; or (D) promote or assist, financially or otherwise, any Person
      engaged in any business that competes with the business of the Company (as
      conducted at any time prior to the Closing) within the Restricted Territory.
      Nothing contained in this Section 11.1
      shall
      prohibit the Principals from: (I) acquiring or holding at any one time a passive
      investment of less than two percent of the outstanding shares of capital stock
      of any publicly traded corporation that may compete with the Company within
      the
      Restricted Territory; (II) owning any securities in, or participating in the
      business of, PSL, as long as such entity limits its activities to marketing,
      selling and/or providing third-party payroll services; or (III) owning less
      than
      25% individually (or 49.9% in the aggregate when considered with all other
      Sellers) of the outstanding securities in, or otherwise participating in (but
      not controlling or directing) the business of, PenChecks, Inc. (it being
      understood that any Seller who is an officer or director of PenChecks, Inc.
      must
      abstain from any decision or vote to change the line of business conducted
      by
      PenChecks, Inc. to a line of business that competes, directly or indirectly,
      with the business of the Company).

     

    (ii)
      Spiegel.
      As
      additional consideration for the Purchase Price, Spiegel agrees that, during
      the
      Non-Compete Period, she shall not, directly or indirectly, (A) solicit any
      of the then-current or former customers or clients of the Company for any
      business that competes with the business of the Company (as conducted at any
      time prior to the Closing) within the Restricted Territory, or (B) divert,
      entice or otherwise take away any then-existing or potential customers of the
      Company within or outside the Restricted Territory, or attempt to do so.

     

    (b)
      Non-Solicitation.
      During
      the Non-Compete Period, each Principal agrees that he or she shall not directly
      or indirectly at any time solicit or induce or attempt to solicit or induce
      any
      employee(s), sales representative(s), agent(s) or consultant(s) of the Company
      and/or of its parent, or its other subsidiary, affiliated or related companies
      to terminate their employment, representation or other association with the
      Company and/or its parent or its other subsidiary, affiliated or related
      companies, without obtaining written consent of the Company prior to such
      solicitation or inducement.

     

    
      
         

      

      
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    (c)
      Non-Disclosure.

    (i)
      Each
      Seller will keep in strict confidence, and will not, directly or indirectly,
      at
      any time, disclose, furnish, disseminate, make available or, except in the
      course of performing the Sellers’ respective duties as employees of the Company,
      use any trade secrets or confidential business and technical information of
      the
      Company, any of its subsidiary, affiliated or related companies, or any of
      its
      customers or vendors, without limitation as to when or how the Sellers may
      have
      acquired such information. Such confidential information shall include, without
      limitation, the Company’s unique selling and servicing methods and business
      techniques, training, service and business manuals, promotional materials,
      training courses and other training and instructional materials, vendor and
      product information, customer and prospective customer lists, other customer
      and
      prospective customer information and other business information. The Sellers
      specifically acknowledge that all such confidential information, whether reduced
      to writing, maintained on any form of electronic media, or maintained in the
      mind or memory of any Seller whether compiled by the Company and/or the Sellers,
      derives independent economic value from not being readily known to or
      ascertainable by proper means by others who can obtain economic value from
      its
      disclosure or use, that reasonable efforts have been made by the Company to
      maintain the secrecy of such information, that such information is the sole
      property of the Company and that any retention and use of such information
      by
      any Seller (except in the course of performing their respective duties and
      obligations to the Company) shall constitute a misappropriation of the Company’s
      trade secrets. The foregoing confidentiality and restricted-use obligations
      shall not apply to information which the applicable Seller can demonstrate:
      (A)
      is or has become public information through no fault of the Seller, (B) is
      received by the Seller from a third party having no confidentiality obligations
      to the Company or its Affiliates, or (C) disclosure is required in response
      to a
      valid order by a Governmental Authority (provided
      that in
      the event a Seller believes he, she or it is so required to disclose the
      confidential information, he, she or it shall promptly provide notice of such
      request or requirement so that the Company or its Affiliates may seek an
      appropriate order or take other action as it deems appropriate). 

     

    (ii)
      Each
      Seller agrees that at any time upon the request of the Company, such Seller
      shall return to the Company, in good condition, all property of the Company,
      including, without limitation, the originals and all copies of any materials
      that contain, reflect, summarize, describe, analyze or refer or relate to any
      items of information listed in Section 11.1(c)(i).
      If such
      items are not so returned, then the Company will have the right to charge such
      Seller for all reasonable damages, costs, attorneys’ fees and other expenses
      incurred in searching for, taking, removing and/or recovering such
      property.

     

    (d)
      Acknowledgment
      and Relief.
      The
      Sellers acknowledge that (i) their obligations under this Section 11.1
      are
      reasonable in the context of the nature of the business of the Company and
      the
      competitive injuries likely to be sustained by the Company if the Sellers were
      to violate such obligations, (ii) the covenants in this Section 11.1
      are
      adequately supported by consideration from the Purchaser for the benefit of
      the
      Company after the Closing Date, and (iii) the foregoing makes it necessary
      for the protection of the business of the Company that the Sellers not compete
      with the Company for the reasonable period contained herein. Accordingly, the
      Sellers acknowledge and agree that the remedy at law available to the Company
      for breach of any of the Sellers’ obligations under this Section 11.1
      would be
      inadequate; therefore, in addition to any other rights or remedies that the
      Company may have at law or in equity, temporary and permanent injunctive relief
      may be granted in any proceeding which may be brought to enforce any provision
      contained in this Section 11.1,
      without
      the necessity of proof of actual damage. If it shall be judicially determined
      that any Seller has violated this Section 11.1,
      then
      the period applicable to each obligation that such Seller has been determined
      to
      have violated will automatically be extended (for that Seller and no other)
      by a
      period of time equal in length to the period during which such violation(s)
      occurred.

     

    (e)
      Employment
      Agreements.
      The
      obligations and restrictions set forth in this Section 11.1
      are in
      addition to the provisions of any employment or other agreement between the
      Company and the applicable Seller that may be entered into from time to time
      and
      addresses the same or similar subject matter covered by this Section 11.1 (including,
      without limitation, the Employment Agreements).

    
      
         

      

      
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    (f)
      Purchaser
      Default.
      If the
      Purchaser fails to pay to the Sellers (i) the Second Cash Purchase Price in
      accordance with Section
      2.3(a)(ii)
      above,
      (ii) the Holdback Amount in accordance with Section
      2.3(b)
      above,
      (iii) any portion of the principal and interest under the Notes in accordance
      with the terms and conditions thereof, or (iv) any amounts owing the Sellers
      under any other Ancillary Agreement, whether or not any such failure results
      from Purchaser’s compliance with any subordination or intercreditor agreement
      executed by the Sellers, and in any such case, such failure continues for 30
      days after the Purchaser’s receipt of written notice from the Sellers regarding
      such failure, then the Sellers shall, automatically and without any further
      action, be released from the restrictions set forth in Section
      11.1(a),
      as
      applicable; provided that,
      if the
      Sellers (or any of the them) breach this Section
      11.1
      prior to
      such automatic release, then this Section
      11.1(f)
      will be
      null and void and of no force or effect whatsoever.

     

    11.2. Further
      Assurances.
      From and
      after the Closing Date, at the request of the Purchaser, the Sellers shall
      execute and deliver or cause to be executed and delivered to the Purchaser
      or
      the Company, such instruments and other documents as the Purchaser or the
      Company may reasonably request in order to implement the transactions
      contemplated by this Agreement and the Ancillary Agreements.

     

    11.3. Press
      Release and Announcements.
      No
      Seller may issue (or cause to be issued) any press release or other public
      announcement relating to the existence or subject matter of this Agreement
      or
      any Ancillary Agreement or the transactions contemplated hereby or thereby
      without the prior approval of the Purchaser; provided,
      however,
      nothing
      in this Section 11.3 will
      preclude any Seller from making any disclosures necessary and proper in
      conjunction with the filing of any Tax Return or other document required to
      be
      filed in connection with making or obtaining (as the case may) consents from
      any
      Governmental Authority.

     

    11.4. Termination.

     

    (a)
      Right
      to Terminate.
      Notwithstanding anything contained in this Agreement to the contrary, this
      Agreement may be terminated at any time prior to the Closing:

     

    (i)
      by
      mutual written consent of the Purchaser, on the one hand, and the Sellers,
      on
      the other hand;

     

    (ii)
      by
      the Purchaser, if the Sellers shall have breached or failed to perform in any
      material respect any of their covenants or agreements under this Agreement
      required to be performed before the Closing Date, or if any of the
      representations and warranties of the Sellers set forth in this Agreement shall
      not be true in any material respect;

     

    (iii)
      by
      the Sellers, if the Purchaser shall have breached or failed to perform in any
      material respect any of its covenants or agreements under this Agreement
      required to be performed before the Closing Date, or if any of the
      representations and warranties of the Purchaser set forth in this Agreement
      shall not be true in any material respect;

     

    (iv)
      by
      either the Purchaser or the Sellers if the Closing has not occurred by November
      30, 2008 other than as a result of any breach of the party attempting such
      termination, or such other date, if any, as the Purchaser and the Sellers may
      agree in writing;

     

    (v)
      by
      either the Purchaser or the Sellers if any Governmental Authority has issued
      an
      Order permanently restraining, enjoining or otherwise prohibiting the
      transactions contemplated by this Agreement; or

     

    (b)
      Effect
      of Termination.
      Each
      Party’s right of termination under Section 11.4(a)
      is in
      addition to any other rights it may have under this Agreement or otherwise
      and
      the exercise of a right of termination will not be an election of remedies.
      If
      this Agreement is terminated pursuant to Section 11.4(a),
      written
      notice thereof must be given by the terminating Party to all other Parties
      specifying the provision of Section 11.4(a)
      pursuant
      to which such termination is made, and this Agreement will terminate and become
      void and of no further force and effect and there will be no further liability
      or obligation on the part of any Party, except that the provisions of this
      Section 11.4,
      and
Sections 11.5
      through
11.11
      shall
      survive any termination of this Agreement. Nothing in this Section 11.4(b)
      shall
      relieve any Party of liability for any breach of this Agreement.

    
      
         

      

      
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    11.5. Expenses.
      Except
      as otherwise provided in this Agreement, each of the Parties shall bear their
      respective expenses incurred or to be incurred in connection with the execution
      and delivery of this Agreement and the Ancillary Agreements and the consummation
      of the transactions contemplated hereby and thereby.

     

    11.6. No
      Assignment.
      The
      rights and obligations of the Sellers under this Agreement may not be assigned
      without the prior written consent of the Purchaser; provided that,
      in the
      event of the death of any Principal, his or her rights under this Agreement
      may
      be transferred without the consent of the Purchaser by will or the laws of
      descent and distribution. The rights and obligations of the Purchaser under
      this
      Agreement may not be assigned without the prior written consent of the Sellers;
      provided that,
      the
      Purchaser may, without the consent of the Sellers, assign its rights and
      obligations under this Agreement (a) for collateral purposes to any lender
      of
      the Purchaser (which will not relieve the Purchaser of any of its obligations
      under this Agreement), (b) to any purchaser of all or substantially all of
      the
      assets or the business of the Company (provided that any such assignment to
      a
      purchaser that is an Affiliate of the Purchaser will not relieve the Purchaser
      of any of its obligations under this Agreement), or (c) to any purchaser of
      all
      or substantially all of the assets or the business of the Purchaser (provided
      that any such assignment to a purchaser that is an Affiliate of the Purchaser
      will not relieve the Purchaser of any of its obligations under this
      Agreement).

     

    11.7. Headings.
      The
      headings contained in this Agreement are included for purposes of convenience
      only, and do not affect the meaning or interpretation of this
      Agreement.

     

    11.8. Integration,
      Modification and Waiver.
      This
      Agreement, together with the Exhibits, Disclosure Schedule and certificates
      or
      other instruments delivered under this Agreement, constitutes the entire
      agreement between the Parties with respect to the subject matter hereof and
      supersedes all prior understandings of the Parties. No supplement, modification
      or amendment of this Agreement will be binding unless executed in writing by
      the
      Parties. No waiver of any of the provisions of this Agreement will be deemed
      to
      be or will constitute a continuing waiver. No waiver will be binding unless
      executed in writing by the Party making the waiver.

     

    11.9. Construction.
      The
      Parties have participated jointly in the negotiation and drafting of this
      Agreement. In the event an ambiguity or question of intent or interpretation
      arises, this Agreement shall be construed as if drafted jointly by the Parties
      and no presumption or burden of proof shall arise favoring or disfavoring any
      Party by virtue of the authorship of any of the provisions of this Agreement.
      Any reference to any federal, state, local or foreign statute or law will be
      deemed also to refer to all rules and regulations promulgated thereunder, unless
      the context requires otherwise. The word “including” shall mean including
      without limitation. Any reference to the singular in this Agreement shall also
      include the plural and vice versa.

     

    11.10. Severability.
      If any
      provision of this Agreement or the application of any provision of this
      Agreement to any Party or circumstance is, to any extent, adjudged invalid
      or
      unenforceable, the application of the remainder of such provision to such Party
      or circumstance, the application of such provision to other Parties or
      circumstances, and the application of the remainder of this Agreement will
      not
      be affected thereby.

    
      
         

      

      
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    11.11. Notices.
      All
      notices and other communications required or permitted under this Agreement
      must
      be in writing and will be deemed to have been duly given (a) when delivered
      in person, (b) when dispatched by electronic facsimile transfer (if
      confirmed in writing by mail simultaneously dispatched), (c) one business
      day after having been dispatched by a nationally recognized overnight courier
      service or (d) five business days after being sent by registered or
      certified mail, return receipt requested, postage prepaid, to the appropriate
      Party at the address or facsimile number specified below:

     

    If
      to the
      Sellers:

     

    Peter
      R.
      Stephan

    33
      White
      Sail Drive

    Laguna
      Niguel, California 92677

    Facsimile
      No.: (949) 600-7640

    

    James
      R.
      Norman, Jr.

    20912
      Paseo Olma

    Lake
      Forest, California 92630

    Facsimile
      No.: (949) 600-7641

    

    Rise
      Spiegel

    2172
      E.
      Wellington Ave.

    Santa
      Ana, California 92701

    Facsimile
      No.: (949) 600-7642

    

    with
      a
      copy to:

    

    McConnell,
      Dunning & Barwick LLP

    15
      Enterprise, Suite 360

    Aliso
      Viejo, California 92656-2655

    Attention:
      Scott E. McConnell, Esq.

    Facsimile
      No.: (949) 900-4401

    

    If
      to the
      Purchaser:

     

    National
      Investment Managers Inc.

    485
      Metro
      Place South, Suite 275

    Dublin,
      Ohio 43017

    Attention:
      John M. Davis

    Facsimile
      No.: (614) 923-5242

    

    with
      a
      copy to:

    

    Jones
      Day

    325
      John
      H. McConnell Blvd., Suite 600

    Columbus,
      Ohio 43215

    Attention:
      Jeffrey D. Litle, Esq.

    Facsimile
      No.: (614) 461-4198

    

    11.12. Governing
      Law.
      This
      Agreement will be governed by and construed and enforced in accordance with
      the
      laws of the State of Ohio without regard to principles of conflicts of
      law.

    
      
         

      

      
        -
          47 -

        
          

        

      

      
         

      

    

     

    11.13. Attorney’s
      Fees.
      In
      the
      event any Party brings an Action to enforce the provisions of this Agreement
      or
      any Ancillary Agreement, the non-prevailing Party shall reimburse the prevailing
      Party for all costs and expenses, including reasonable attorney fees, incurred
      by it in connection therewith. 

     

    11.14. Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which will be
      deemed an original, but all of which together will constitute one and the same
      instrument. Delivery of an executed signature page to this Agreement by
      facsimile or electronic transmission will be effective as delivery of a manually
      executed counterpart to this Agreement.

     

    [Remainder
      of Page Intentionally Blank – Signature Page Follows]

    
      
         

      

      
        -
          48 -

        
          

        

      

      
         

      

    

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

     

    
      	 	
              
                NATIONAL INVESTMENT MANAGERS INC.

              

            
	 	 	 
	 	
              By:

            	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

     

    
      	 	
              THE PENSION GROUP, INC.

            
	 	 	 
	 	
              By:

            	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

    

    
      	 	 
	 	
              Peter R. Stephan, individually and as Trustee of The

              Stephan Family Trust Dated August 2, 1993

            
	 	 
	 	 
	 	
              James R. Norman, Jr., individually and as Trustee of The

              Norman Living Trust Dated December 7, 2005

            
	 	 
	 	 
	 	
              Rise Spiegel, individually and as Trustee of The Rise

              Norris Spiegel Trust Dated November 16, 2005

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    Form
      of Notes

     

    [attached]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      B-1

     

    Form
      of Stephan Employment Agreement

     

    [attached]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      B-2

     

    Form
      of Norman Employment Agreement

     

    [attached]

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      B-3

     

    Form
      of Spiegel Employment Agreement

     

    [attached]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      C

     

    Form
      of Release

     

    [attached]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
      D

     

    Form
      of Guaranty and Security Agreement

     

    [attached]Unassociated Document

    
      CREDIT
        AGREEMENT

       

      THIS
        CREDIT AGREEMENT
        (this
“Agreement”)
        is
        entered into as of November 26, 2008, by and between PEET’S
        COFFEE & TEA, INC.,
        a
        Washington corporation (“Borrower”),
        and
WELLS FARGO
        BANK, NATIONAL ASSOCIATION
        (“Bank”).

      

      RECITALS

       

      Borrower
        has requested that Bank extend or continue credit to Borrower as described
        below, and Bank has agreed to provide such credit to Borrower on the terms
        and
        conditions contained herein.

       

      NOW,
        THEREFORE,
        for
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, Bank and Borrower hereby agree as follows:

      

      ARTICLE
        I

      CREDIT
        TERMS

       

      SECTION
        1.1. LINE
        OF
        CREDIT.

       

      (a) Line
        of Credit.
        Subject
        to the terms and conditions of this Agreement, Bank hereby agrees to make
        advances to Borrower from time to time up to and including
        December 1, 2009, or if Borrower duly exercises extension option under
        and pursuant to the terms of the Line of Credit Note (defined below), December
        1, 2010, not to exceed at any time the aggregate principal amount of Twenty-five
        Million Dollars ($25,000,000.00) (“Line
        of Credit”),
        the
        proceeds of which shall be used to finance Borrower’s repurchase of stock and to
        fund working capital, capital expenditures and other needs of its operating
        subsidiary, Peet’s Operating Company, Inc. (“POCI”).
        Borrower’s obligation to repay advances under the Line of Credit shall be
        evidenced by a promissory note dated as of November 26, 2008 (“Line
        of Credit Note”),
        all
        terms of which are incorporated herein by this reference.

       

      (b) Borrowing
        and Repayment.
        Borrower may from time to time during the term of the Line of Credit borrow,
        partially or wholly repay its outstanding borrowings, and reborrow, subject
        to
        all of the limitations, terms and conditions contained herein or in the Line
        of
        Credit Note; provided however, that the total outstanding borrowings under
        the
        Line of Credit shall not at any time exceed the maximum principal amount
        available thereunder, as set forth above. 

       

      SECTION
        1.2. INTEREST/FEES.

       

      (a) Interest.
        The
        outstanding principal balance of the Line of Credit shall bear interest at
        the
        rate of interest set forth in the Line of Credit Note.

       

      (b) Computation
        and Payment.
        Interest shall be computed on the basis of a 360-day year, actual days elapsed.
        Interest shall be payable at the times and place set forth in each promissory
        note or other instrument or document required hereby.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      (c) Commitment
        Fee.
        Borrower shall pay to Bank a non-refundable commitment fee for the Line of
        Credit equal to $43,750.00, which fee shall be due and payable in full upon
        the
        execution of this Agreement. If Borrower duly exercises the extension option
        under the Line of Credit Note, Borrower shall pay to Bank an extension
        commitment fee as provided in the Line of Credit Note. 

       

      SECTION
        1.3. COLLATERAL.

       

      As
        security for all indebtedness and other obligations of Borrower to Bank under
        the Line of Credit, Borrower hereby grants to Bank security interests of
        first
        priority (except for Permitted Liens) in all Borrower’s personal
        property.

       

      As
        security for all indebtedness and other obligations of Borrower to Bank under
        the Line of Credit, Borrower shall cause POCI to grant to Bank security
        interests of first priority (except for Permitted Liens) in all POCI’S personal
        property.

       

      All
        of
        the foregoing shall be evidenced by and subject to the terms of such security
        agreements, financing statements and other documents as Bank shall reasonably
        require, all in form and substance satisfactory to Bank; provided that Bank
        shall not require any leasehold mortgages, certificates of title for vehicles
        or
        other assets subject thereto, landlord waivers or acknowledgements (other
        than
        Emeryville Properties LLC) or filings with the US Patent and Trademark Office.
        Borrower shall pay to Bank immediately upon demand the full amount of all
        charges, costs and expenses (to include fees paid to third parties and all
        allocated costs of Bank personnel), expended or incurred by Bank in connection
        with any of the foregoing security, including without limitation, filing
        and
        recording fees and costs of appraisals, audits and title insurance.

       

      SECTION
        1.4. GUARANTY.
        The
        payment and performance of all indebtedness and other obligations of Borrower
        to
        Bank shall be guaranteed by POCI in the principal amount of Twenty-five Million
        Dollars ($25,000,000.00), as evidenced by and subject to the terms of a guaranty
        in form and substance satisfactory to Bank.

      

      ARTICLE
        II

      REPRESENTATIONS
        AND WARRANTIES

       

      Borrower
        makes the following representations and warranties to Bank, which
        representations and warranties shall survive the execution of this Agreement
        and
        shall continue in full force and effect until the full and final payment,
        and
        satisfaction and discharge, of all obligations of Borrower to Bank subject
        to
        this Agreement.

       

      SECTION
        2.1. LEGAL
        STATUS.
        Borrower is a corporation, duly organized and existing and in good standing
        under the laws of Washington, and POCI is a corporation, duly organized and
        existing and in good standing under the laws of Virginia. Borrower and each
        of
        its subsidiaries is qualified or licensed to do business (and is in good
        standing as a foreign corporation, if applicable) in all jurisdictions in
        which
        the failure to so qualify or to be so licensed could have a material adverse
        effect on Borrower or such subsidiary.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      SECTION
        2.2. AUTHORIZATION
        AND VALIDITY.
        This
        Agreement and each promissory note, contract, instrument and other document
        required hereby or at any time hereafter delivered to Bank in connection
        herewith (collectively, the “Loan
        Documents”)
        have
        been duly authorized, and upon their execution and delivery in accordance
        with
        the provisions hereof will constitute legal, valid and binding agreements
        and
        obligations of Borrower or the party which executes the same, enforceable
        in
        accordance with their respective terms, subject to the effect of bankruptcy,
        insolvency, reorganization, moratorium or similar laws affecting the
        enforceability of creditor’s rights generally and to general principles of
        equity.

       

      SECTION
        2.3. NO
        VIOLATION.
        The
        execution, delivery and performance by Borrower and POCI of each of the Loan
        Documents to which it is a party do not violate any material provision of
        any
        law or regulation, or contravene any provision of the Articles of Incorporation
        or By-Laws of Borrower or POCI, or result in any breach of or default under
        any
        material contract, obligation, indenture or other material instrument to
        which
        Borrower or POCI is a party or by which Borrower or POCI may be
        bound.

       

      SECTION
        2.4. LITIGATION.
        There
        are no pending, or to the best of Borrower’s knowledge threatened, actions,
        claims, investigations, suits or proceedings by or before any governmental
        authority, arbitrator, court or administrative agency which would reasonably
        be
        expected to have a material adverse effect on the financial condition or
        operation of Borrower or POCI other than those disclosed by Borrower to Bank
        in
        writing (including as disclosed pursuant to Borrower’s Forms 8-K, 10-K and 10-Q
        filed with the United States Securities and Exchange Commission) prior to
        the
        date hereof.

       

      SECTION
        2.5. CORRECTNESS
        OF FINANCIAL STATEMENT.
        The
        consolidated annual financial statement of Borrower dated December 30, 2007,
        and
        all interim financial statements delivered to Bank since said date, true
        copies
        of which have been delivered by Borrower to Bank prior to the date hereof,
        (a)
        are complete and correct and present fairly the financial condition of Borrower
        and POCI, (b) disclose all liabilities of Borrower and POCI that are required
        to
        be reflected or reserved against under generally accepted accounting principles
        (“GAAP”),
        whether liquidated or unliquidated, fixed or contingent, and (c) have been
        prepared in accordance with generally accepted accounting principles
        consistently applied. Since the dates of such financial statements there
        has
        been no material adverse change in the financial condition of Borrower or
        POCI,
        nor has Borrower or POCI mortgaged, pledged, granted a security interest
        in or
        otherwise encumbered any of its assets or properties except for Permitted
        Liens
        or in favor of Bank or as otherwise permitted by Bank in writing.

       

      SECTION
        2.6. INCOME
        TAX RETURNS.
        Borrower has no knowledge of any pending assessments or adjustments of its
        income tax payable with respect to any year.

       

      SECTION
        2.7. NO
        SUBORDINATION.
        There
        is no agreement, indenture, contract or instrument to which Borrower is a
        party
        or by which Borrower may be bound that requires the subordination in right
        of
        payment of any of Borrower’s obligations subject to this Agreement to any other
        obligation of Borrower.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      SECTION
        2.8. PERMITS,
        FRANCHISES.
        Each of
        Borrower and POCI possesses, and Borrower will and will cause POCI to hereafter
        possess, all permits, consents, approvals, franchises and licenses required
        and
        rights to all trademarks, trade names, patents, and fictitious names, if
        any,
        necessary to enable it to conduct the business in which it is now engaged
        in
        compliance with applicable law, except to the extent the failure to so possess
        would not reasonably be expected to have a material adverse effect on Borrower
        or any of its subsidiaries.

       

      SECTION
        2.9. ERISA.
        Borrower and its subsidiaries each (i) is in compliance in all material respects
        with all applicable provisions of the Employee Retirement Income Security
        Act of
        1974, as amended or recodified from time to time (“ERISA”);
        (ii)
        has not violated any provision of any defined employee pension benefit plan
        (as
        defined in ERISA) maintained or contributed to by it (each, a “Plan”); (iii) has
        had no Reportable Event as defined in ERISA occur and be continuing with
        respect
        to any Plan initiated by it; (iv) has met its minimum funding requirements
        under
        ERISA with respect to each Plan; and (v) represent and warrant that each
        Plan
        will be able to fulfill its benefit obligations as they come due in accordance
        with the applicable Plan documents and under generally accepted accounting
        principles.

       

      SECTION
        2.10. OTHER
        OBLIGATIONS.
        Except
        as disclosed to Bank prior to the date hereof, neither Borrower nor POCI
        is in
        default on any obligation for borrowed money, any purchase money obligation
        or
        any other material lease, commitment, contract, instrument or
        obligation.

       

      SECTION
        2.11. ENVIRONMENTAL
        MATTERS.
        Except
        as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower
        and its subsidiaries each are in compliance in all material respects with
        all
        applicable federal or state environmental, hazardous waste, health and safety
        statutes, and any rules or regulations adopted pursuant thereto, which govern
        or
        affect any of Borrower’s operations and/or properties, including without
        limitation, the Comprehensive Environmental Response, Compensation and Liability
        Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
        Federal Resource Conservation and Recovery Act of 1976, and the Federal
        Toxic Substances Control Act, as any of the same may be amended, modified
        or
        supplemented from time to time. None of the operations of Borrower or any
        of its
        subsidiaries is the subject of any federal or state investigation evaluating
        whether any remedial action involving a material expenditure is needed to
        respond to a release of any toxic or hazardous waste or substance into the
        environment. Neither Borrower nor any subsidiary has any material contingent
        liability in connection with any release of any toxic or hazardous waste
        or
        substance into the environment.

      

      ARTICLE
        III

      CONDITIONS

       

      SECTION
        3.1. CONDITIONS
        OF INITIAL EXTENSION OF CREDIT.
        The
        obligation of Bank to extend the initial credit extension contemplated by
        this
        Agreement is subject to the fulfillment to Bank’s satisfaction of all of the
        following conditions:

       

      (a) Approval
        of Bank Counsel.
        All
        legal matters incidental to the extension of credit by Bank shall be
        satisfactory to Bank’s counsel.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (b) Documentation.
        Bank
        shall have received, in form and substance satisfactory to Bank, each of
        the
        following, duly executed:

      

      
        	
              	(i)	
                This
                  Agreement and each promissory note or other instrument or document
                  required hereby.

              

      

      
        	
              	(ii)	
                Certificate
                  of Incumbency.

              

      

      
        	
              	(iii)	
                Corporate
                  Resolution: Borrowing.

              

      

      
        	
              	(iv)	
                Corporate
                  Resolution: Continuing Guaranty.

              

      

      
        	
              	(v)	
                Corporation
                  Resolution: Third Party Collateral and Automatic Transfer
                  Authorization.

              

      

      
        	
              	(vi)	
                Disbursement
                  Order.

              

      

      
        	
              	(vii)	
                Continuing
                  Guaranty.

              

      

      
        	
              	(viii)	
                Security
                  Agreement.

              

      

      
        	
              	(ix)	
                Third
                  Party Security Agreement.

              

      

      
        	
              	(x)	
                Agreement
                  and Acknowledgment of Security
                  Interest.

              

      

      
        	
              	(xi)	
                Notices
                  to Warehouse of Security Interest.

              

      

      
        	
              	(xii)	
                Such
                  other documents as Bank may require under any other Section of
                  this
                  Agreement.

              

      

       

      (c) Financial
        Condition.
        There
        shall have been no material adverse change, as determined by Bank, in the
        financial condition or business of Borrower or any guarantor hereunder, nor
        any
        material decline, as determined by Bank, in the market value of any collateral
        required hereunder or a substantial or material portion of the assets of
        Borrower or any such guarantor.

       

      (d) Insurance.
        Borrower shall have delivered to Bank evidence of insurance coverage on all
        Borrower’s and POCI’S property, in form, substance, amounts, covering risks and
        issued by companies satisfactory to Bank, and where required by Bank, with
        loss
        payable endorsements in favor of Bank.

       

      SECTION
        3.2. CONDITIONS
        OF EACH EXTENSION OF CREDIT.
        The
        obligation of Bank to make each extension of credit requested by Borrower
        hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of
        the following conditions:

       

      (a) Compliance.
        The
        representations and warranties contained herein and in each of the other
        Loan
        Documents shall be true in all material respects on and as of the date of
        the
        signing of this Agreement and on the date of each extension of credit by
        Bank
        pursuant hereto, with the same effect as though such representations and
        warranties had been made on and as of each such date, and on each such date,
        no
        Event of Default as defined herein, and no condition, event or act which
        with
        the giving of notice or the passage of time or both would constitute such
        an
        Event of Default, shall have occurred and be continuing or shall
        exist.

       

      (b) Documentation.
        Bank
        shall have received all additional documents which may be required in connection
        with such extension of credit.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      ARTICLE
        IV

      AFFIRMATIVE
        COVENANTS

       

      Borrower
        covenants that so long as Bank remains committed to extend credit to Borrower
        pursuant hereto, or any liabilities (whether direct or contingent, liquidated
        or
        unliquidated) of Borrower to Bank under any of the Loan Documents remain
        outstanding, and until payment in full of all obligations of Borrower subject
        hereto, Borrower shall, unless Bank otherwise consents in writing:

       

      SECTION
        4.1. PUNCTUAL
        PAYMENTS.
        Punctually pay all principal, interest, fees or other liabilities due under
        any
        of the Loan Documents at the times and place and in the manner specified
        therein.

       

      SECTION
        4.2. ACCOUNTING
        RECORDS.
        Maintain, and cause POCI to maintain, adequate books and records in accordance
        with generally accepted accounting principles consistently applied, and permit
        any representative of Bank, at any reasonable time and upon reasonable advance
        notice, to inspect, audit and examine such books and records, to make copies
        of
        the same, and to inspect the properties of Borrower and POCI.

       

      SECTION
        4.3. FINANCIAL
        STATEMENTS; REPORTS.
        Provide
        to Bank all of the following, in form and detail satisfactory to
        Bank:

       

      (a) not
        later
        than 90 days after and as of the end of each fiscal year, consolidated financial
        statements of Borrower, audited and accompanied by a report and opinion of
        Deloitte & Touche LLP or another independent certified public accountant
        reasonably acceptable to Bank, which financial statements are to include
        balance
        sheet, income statement, statement of cash flow and all supporting schedules
        and
        footnotes;

       

      (b) not
        later
        than 45 days after and as of the end of each fiscal quarter, consolidated
        financial statements of Borrower, which financial statements are to include
        balance sheet, income statement and statement of cash flow;

       

      (c) contemporaneously
        with the delivery of any annual and quarterly financial statements of Borrower
        required hereby, a certificate of the chief financial officer of Borrower
        that
        said financial statements fairly present the consolidated financial position
        and
        results of operations of Borrower as of and for the periods presented, subject
        in the case of quarterly financial statements, to normal year-end adjustments
        and the absence of footnotes, and that to the best knowledge of such officer,
        there exists no Event of Default nor any condition, act or event which with
        the
        giving of notice or the passage of time or both would constitute an Event
        of
        Default, and including covenant calculation information on a schedule in
        the
        form attached as Exhibit A hereto;

       

      (d)
        promptly,
        or if applicable, within the time frame required for delivery of items required
        above that may be included therein, copies of all proxy statements, financial
        statements, reports, and notices sent or made available generally by Borrower
        to
        its security holders or to any holders of its debt and all registration
        statements, regular, periodic and special reports filed with the Securities
        and
        Exchange Commission or any governmental authority that may be substituted
        therefor, or with any national securities exchange;
        provided
        that any such proxy statements, financial statements, reports and notices
        shall
        be deemed to have been provided to Bank to the extent publicly available
        on the
        website of the United States Securities and Exchange Commission;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

      

      (e) from
        time
        to time such other information as Bank may reasonably request.

       

      SECTION
        4.4. COMPLIANCE.
        Preserve and maintain and cause POCI to preserve and maintain, all licenses,
        permits, governmental approvals, rights, privileges and franchises necessary
        for
        the conduct of its business (other than such approvals, rights, privileges
        and/or franchises, the failure to preserve or maintain would not reasonably
        be
        expected to result in a material adverse effect on Borrower or any of its
        subsidiaries); and comply with the provisions of all documents pursuant to
        which
        it is organized and/or which govern its continued existence and with the
        requirements of all laws, rules, regulations and orders of any governmental
        authority applicable to it and/or its business, except where non-compliance
        would not reasonably be expected to result in a material adverse effect on
        Borrower or any of its subsidiaries.

       

      SECTION
        4.5. INSURANCE.
        Maintain and keep in force, and cause POCI to maintain and keep in force,
        for
        each business in which it is engaged, insurance of the types and in amounts
        customarily carried in similar lines of business, including but not limited
        to
        fire, extended coverage, public liability, flood, property damage and workers’
compensation, with all such insurance carried with companies and in amounts
        reasonably satisfactory to Bank, and deliver to Bank from time to time at
        Bank’s
        request schedules setting forth all insurance then in effect. 

       

      SECTION
        4.6. FACILITIES.
        Keep
        all properties useful or necessary to Borrower’s and POCI ‘s businesses in good
        repair and condition, subject to normal wear and tear, and from time to time
        make necessary repairs, renewals and replacements thereto, except where the
        failure to do so would not reasonably be expected to have a material adverse
        effect on Borrower or any of its subsidiaries.

       

      SECTION
        4.7. TAXES
        AND
        OTHER LIABILITIES.
        Pay and
        discharge when due (subject to applicable grace periods) any and all
        indebtedness, obligations, assessments and taxes, both real or personal,
        including without limitation federal and state income taxes and state and
        local
        property taxes and assessments applicable to Borrower and its subsidiaries,
        except (a) such as Borrower may in good faith contest or as to which a bona
        fide
        dispute may arise, and (b) for which Borrower has set aside adequate reserves
        in
        accordance with GAAP.

       

      SECTION
        4.8. LITIGATION.
        Promptly give notice in writing to Bank of any litigation pending or threatened
        against Borrower or POCI involving any claims in excess of
        $1,000,000.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      SECTION
        4.9. FINANCIAL
        CONDITION.
        Maintain Borrower’s financial condition as follows on a consolidated basis using
        GAAP consistently applied and used consistently with prior practices (except
        to
        the extent modified by the definitions herein):

       

      (a) Current
        Ratio not less than 0.75 to 1.0 at each fiscal quarter end, with “Current Ratio”
defined as total current assets plus long-term marketable securities divided
        by
        total current liabilities, in each case as of the last day of such fiscal
        quarter. 

       

      (b) Leverage
        Ratio not greater than 1.75 to 1.0 at each fiscal quarter end, with
        (i) ”Leverage
        Ratio”
defined
        as Total Liabilities plus Adjusted Rental Expense divided by Tangible Net
        Worth,
        (ii) “Total
        Liabilities”
defined
        as the aggregate of current liabilities and non-current liabilities as of
        the
        last day of such fiscal quarter, (iii) “Adjusted
        Rental Expense”
defined
        as Rental Expense for the trailing four fiscal quarters multiplied by six
        (6),
        (iv) ”Rental
        Expense”
for
        any
        fiscal quarter defined as all rental expense incurred during such fiscal
        quarter
        under any rental agreements or leases, other than obligations in respect
        of any
        capitalized leases, and (v) ”Tangible
        Net Worth”
defined
        as the aggregate of total stockholders’ equity plus subordinated debt less any
        intangible assets, in each case as of the last day of such fiscal
        quarter.

       

      (c) Net
        income after tax provision not less than $1.00 on a quarterly basis, determined
        as of each fiscal quarter end.

       

      (d) EBITDAR
        Coverage Ratio not less than 1.75 to 1.0 as of each fiscal quarter end, with
        “EBITDAR”
defined
        as income before income taxes plus interest expense, depreciation expense
        amortization expense, and Rental Expense, and with “EBITDAR
        Coverage Ratio”
defined
        as EBITDAR for the trailing four fiscal quarters divided by the sum of total
        interest expense for such trailing four quarter fiscal period, scheduled
        payments of principal of long-term debt (including capitalized leases) made
        during such trailing four fiscal quarter period and Rental Expense for such
        trailing four fiscal quarter period.

       

      SECTION
        4.10. NOTICE
        TO
        BANK.
        Promptly (but in no event more than five (5) days after the occurrence of
        each
        such event or matter) give written notice to Bank in reasonable detail of:
        (a) the occurrence of any Event of Default, or any condition, event or act
        which with the giving of notice or the passage of time or both would constitute
        an Event of Default; (b) any change in the name or the organizational
        structure of Borrower or POCI; (c) the occurrence and nature of any
        Reportable Event or Prohibited Transaction, each as defined in ERISA, or
        any
        funding deficiency with respect to any Plan; or (d) any termination or
        cancellation of any insurance policy which Borrower or POCI is required to
        maintain, or any uninsured or partially uninsured loss through liability
        or
        property damage, or through fire, theft or any other cause affecting Borrower’s
        or POCI’s property. 

      

      ARTICLE
        V

      NEGATIVE
        COVENANTS

       

      Borrower
        further covenants that so long as Bank remains committed to extend credit
        to
        Borrower pursuant hereto, or any liabilities (whether direct or contingent,
        liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
        remain outstanding, and until payment in full of all obligations of Borrower
        subject hereto, Borrower will not without Bank’s prior written
        consent:

       

      SECTION
        5.1. USE
        OF
        FUNDS.
        Use or
        permit the use of any of the proceeds of any credit extended hereunder except
        for the purposes stated in Article I hereof.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      SECTION
        5.2. OTHER
        INDEBTEDNESS.
        Create,
        incur, assume or permit to exist or permit POCI to create, incur, assume
        or
        permit, any indebtedness or liabilities resulting from borrowings, loans
        or
        advances, whether secured or unsecured, matured or unmatured, liquidated
        or
        unliquidated, joint or several, except (a) liabilities to Bank, (b) any other
        liabilities of Borrower and POCI existing as of, and disclosed to Bank prior
        to,
        the date hereof, (c) new purchase money debt, and (d) other unsecured
        indebtedness of Borrower not existing on the date hereof, provided that the
        aggregate principal amount of all such indebtedness does not exceed
        $500,000.

       

      SECTION
        5.3. MERGER,
        CONSOLIDATION, TRANSFER OF ASSETS.
        Merge
        into or consolidate or permit POCI to merge or consolidate with any other
        entity; make any substantial change in the nature of Borrower’s or POCI’s
        business as conducted as of the date hereof; acquire all or substantially
        all of
        the assets of any other entity or permit POCI to do the same; or sell, lease,
        transfer or otherwise dispose of all or a substantial or material portion
        of
        Borrower’s assets except in the ordinary course of its business or POCI to do
        the same in respect of its assets; provided, however, that Borrower and/or
        POCI
        shall be permitted to engage in any non-hostile mergers or acquisitions so
        long
        as (a) Borrower or POCI, as the case may be, remains the surviving entity
        in the
        event of any merger, (b) no Event of Default or any condition, event or act
        which with the giving of notice or the passage of time or both would constitute
        an Event of Default exists at the time of such transaction or would result
        from
        the consummation of any such transaction, immediately after giving effect
        thereto, on a pro-forma basis, and (c) any such merger or acquisition involves
        a
        line of business substantially the same as that which is presently engaged
        in by
        Borrower and POCI. 

       

      SECTION
        5.4. GUARANTIES.
        Guarantee
        or become liable in any way as surety, endorser (other than as endorser of
        negotiable instruments for deposit or collection in the ordinary course of
        business), accommodation endorser or otherwise for, nor pledge or hypothecate
        any assets as security for, any liabilities or obligations of any person
        or
        entity (other than Borrower or POCI), except any of the foregoing in favor
        of
        Bank, or allow POCI to do any of the foregoing, except that Borrower and
        POCI
        may guarantee or become liable for indebtedness otherwise permitted under
        Section 5.2 and Borrower and POCI may incur Permitted Liens (as defined
        below).

       

      SECTION
        5.5. LOANS,
        ADVANCES, INVESTMENTS.
        Make
        any
        loans or advances to or investments (collectively, “investments”)
        in any
        person or entity, or allow POCI to do any of the foregoing, except (a) any
        of
        the foregoing existing as of, and disclosed to Bank prior to, the date hereof,
        (b) investments acquired as a result of an acquisition or merger permitted
        by Section 5.3, (c) investments in cash, cash equivalents, and
        investments approved by Borrower’s board of directors or otherwise pursuant to
        an investment policy approved by Borrower’s board of directors, (d) guaranties
        and other contingent obligations permitted by Section 5.4,
        (e) investments by Borrower in POCI, (f) investments consisting of
        extensions of credit to Borrower’s or any subsidiary’s customers that arise in
        the ordinary course of Borrower’s or such subsidiary’s business and are in the
        nature of accounts receivables, prepaid royalties or notes receivables arising
        from the sale or lease of goods, provision of services or licensing activities
        of Borrower, (g) investments, not to exceed $100,000.00 in the aggregate
        outstanding at any time, received in satisfaction or partial satisfaction
        of
        obligations owed by financially troubled obligors and investments acquired
        in
        connection with or as a result of a bankruptcy, workout, reorganization or
        recapitalization of an obligor or customer, (h) investments consisting of
        commodity forward purchase contracts, (i) investments consisting of loans
        and
        advances to employees in an aggregate amount not to exceed $250,000 at any
        one
        time outstanding, (j) investments constituting accounts receivables, trade
        debt or deposits made in the ordinary course of business, and (k) Joint
        Ventures, provided (a) no Event of Default or any condition, event or act
        which
        with the giving of notice or the passage of time or both would constitute
        an
        Event of Default exists at the time of such transaction or would result from
        the
        consummation of any such transaction, immediately after giving effect thereto,
        on a pro-forma basis, and (b) any such joint venture involves a line of
        business substantially the same as, or related to, that which is presently
        engaged in by Borrower and POCI.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      SECTION
        5.6. PLEDGE
        OF
        ASSETS.
        Mortgage,
        pledge, grant or permit to exist a security interest in, or lien upon
        (collectively, “liens”),
        all
        or any portion of Borrower’s assets now owned or hereafter acquired, or permit
        POCI to do the same in respect of its assets, except the following liens
        (collectively, “Permitted
        Liens”):
        (a)
        liens in favor of Bank, (b) liens existing as of, and disclosed to Bank in
        writing prior to, the date hereof, (c) liens to the extent they secure purchase
        money debt permitted under Section 5.2 hereof provided that such liens do
        not
        extend beyond the assets (including accessions, additions, parts, replacements,
        fixtures, improvements and attachments thereto, and the proceeds thereof)
        subject to such purchase money financing, (d) liens for taxes, fees,
        assessments or other government charges or levies, either not delinquent
        or
        being contested in good faith pursuant to appropriate proceedings and for
        which
        Borrower maintains adequate reserves on its books in accordance with GAAP,
        (e)
        liens incurred in the extension, renewal or refinancing of the indebtedness
        secured by Liens described in (b) through (d), but any extension, renewal
        or
        replacement Lien must be limited to the property encumbered by the existing
        Lien
        and the terms relating to principal amount, amortization, maturity, collateral
        (if any) and subordination (if any), and other material terms taken as a
        whole,
        of any such refinancing, refunding, renewing or extending indebtedness, and
        of
        any agreement entered into and of any instrument issued in connection therewith,
        are no less favorable in any material respect to Borrower than the terms
        of any
        agreement or instrument governing the indebtedness being refinanced, refunded,
        renewed or extended and the interest rate applicable to any such refinancing,
        refunding, renewing or extending indebtedness does not exceed the then
        applicable market interest rate; (f) leases, subleases, licenses or sublicenses
        of property granted in the ordinary course of business and not substantial
        in
        amount; (g) liens in favor of other financial institutions arising in connection
        with Borrower’s deposit or securities accounts held at such institutions; (h)
        liens to secure payment of workers’ compensation, employment insurance, old-age
        pensions, social security and other like obligations incurred in the ordinary
        course of business (other than Liens imposed by ERISA); (i) liens on property
        of, or on shares of stock or Indebtedness of, any corporation existing at
        the
        time such corporation becomes, or becomes a part of, any subsidiary; provided
        that such liens do not extend to or cover any property or assets of Borrower
        or
        any subsidiary other than the property or assets acquired and the proceeds
        and
        products thereof and were not incurred in anticipation of such person becoming
        a
        subsidiary; (j) liens arising by operation of law and in the ordinary
        course of Borrower’s and its subsidiaries’ business of landlords and carriers,
        warehousemen, mechanics, suppliers, sellers, material men or repairmen, or
        other
        similar liens; (k) easements, rights-of-way, municipal and zoning and building
        ordinances and similar charges, encumbrances, title defects or other
        irregularities, governmental restrictions on the use of property or conduct
        of
        business, and liens in favor of governmental authorities and public utilities,
        that do not materially interfere with the ordinary course of business of
        Borrower and its subsidiaries; (l) liens arising from the rendering of an
        interim or final judgment or order against Borrower or any subsidiary that
        does
        not give rise to an Event of Default; and (m) liens arising in the ordinary
        course of Borrower’s and/or its subsidiaries’ business in favor of customs and
        revenue authorities arising as a matter of law to secure payment of customs
        duties in connection with the importation of goods.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      ARTICLE
        VI

      EVENTS
        OF DEFAULT

       

      SECTION
        6.1. The
        occurrence of any of the following shall constitute an “Event
        of Default”
under
        this Agreement:

       

      (a) Borrower
        shall fail to pay when due any principal, interest, fees or other amounts
        payable under any of the Loan Documents and such failure, in the case of
        interest, fees or other amounts continues for five (5) business
        days.

       

      (b) Any
        financial statement or certificate furnished to Bank in connection with,
        or any
        representation or warranty made by Borrower or any other party under this
        Agreement or any other Loan Document shall prove to be incorrect, false or
        misleading in any material respect when furnished or made.

       

      (c) Any
        default in the performance of or compliance with any obligation, agreement
        or
        other provision contained herein or in any other Loan Document (other than
        those
        referred to in subsections (a) and (b) above), and with respect to any such
        default which by its nature can be cured, such default shall continue for
        a
        period of thirty (30) days.

       

      (d) Borrower
        or POCI: (i) fails to make any payment when due (whether by scheduled maturity,
        required prepayment, acceleration, demand, or otherwise) in respect of any
        debt
        having an aggregate principal amount (including undrawn committed or available
        amounts and including amounts owing to all creditors under any combined or
        syndicated credit arrangement) of more than $100,000; or (ii) fails to observe
        or perform any other agreement or condition relating to any such other debt
        or
        contained in any document evidencing, securing or relating to any of the
        foregoing, or any other default or event occurs, the effect of which default
        or
        other event is to cause, or to permit the holder or holders of such debt
        (or a
        trustee or agent on behalf of such holder or holders) to cause, with the
        giving
        of notice if required, such debt to be demanded or to become due or to be
        repurchased, prepaid, defeased or redeemed (automatically or otherwise),
        or an
        offer to repurchase, prepay, defease or redeem such Debt to be made, prior
        to
        its stated maturity.

       

      (e) There
        is
        entered against Borrower or POCI: (i) one or more final judgments or orders
        for
        the payment of money in an aggregate amount exceeding $1,000,000 (to the
        extent
        not covered by independent third-party insurance as to which the insurer
        does
        not dispute coverage); or (ii) any one or more non-monetary final judgments
        that
        have, or could reasonably be expected to have, individually or in the aggregate,
        a material adverse effect on Borrower or POCI, as applicable, and, in either
        case: (A) enforcement proceedings are commenced by any creditor upon such
        judgment or order; or (B) there is a period of thirty consecutive days during
        which a stay of enforcement of such judgment, by reason of a pending appeal
        or
        otherwise, is not in effect.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (f) Borrower
        or POCI shall become insolvent, or shall suffer or consent to or apply for
        the
        appointment of a receiver, trustee, custodian or liquidator of itself or
        any of
        its property, or shall generally fail to pay its debts as they become due,
        or
        shall make a general assignment for the benefit of creditors; Borrower or
        POCI
        shall file a voluntary petition in bankruptcy, or seeking reorganization,
        in
        order to effect a plan or other arrangement with creditors or any other relief
        under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended
        or recodified from time to time (“Bankruptcy
        Code”),
        or
        under any state or federal law granting relief to debtors, whether now or
        hereafter in effect; or any involuntary petition or proceeding pursuant to
        the
        Bankruptcy Code or any other applicable state or federal law relating to
        bankruptcy, reorganization or other relief for debtors is filed or commenced
        against Borrower or POCI, or Borrower or POCI shall file an answer admitting
        the
        jurisdiction of the court and the material allegations of any involuntary
        petition; or Borrower or POCI shall be adjudicated a bankrupt, or an order
        for
        relief shall be entered against Borrower or POCI by any court of competent
        jurisdiction under the Bankruptcy Code or any other applicable state or federal
        law relating to bankruptcy, reorganization or other relief for
        debtors.

       

      (g) There
        shall exist or occur any event or condition that would reasonably be expected
        to
        materially impair the prospect of payment or performance by Borrower of its
        obligations under any of the Loan Documents.

       

      (h) The
        dissolution or liquidation of Borrower or POCI (other than the dissolution
        or
        liquidation of POCI into Borrower); or Borrower or POCI, or any of its directors
        or stockholders, shall take action seeking to effect the dissolution or
        liquidation of Borrower or POCI (other than the dissolution or liquidation
        of
        POCI into Borrower).

       

      SECTION
        6.2. REMEDIES.
        Upon
        the occurrence of any Event of Default: (a) all indebtedness of Borrower
        under each of the Loan Documents, any term thereof to the contrary
        notwithstanding, shall at Bank’s option and without notice become immediately
        due and payable without presentment, demand, protest or notice of dishonor,
        all
        of which are hereby expressly waived by Borrower; (b) the obligation, if
        any, of Bank to extend any further credit under any of the Loan Documents
        shall
        immediately cease and terminate; and (c) Bank shall have all rights, powers
        and remedies available under each of the Loan Documents, or accorded by law,
        including without limitation the right to resort to any or all security for
        any
        credit subject hereto and to exercise any or all of the rights of a beneficiary
        or secured party pursuant to applicable law. All rights, powers and remedies
        of
        Bank may be exercised at any time by Bank and from time to time after the
        occurrence of an Event of Default, are cumulative and not exclusive, and
        shall
        be in addition to any other rights, powers or remedies provided by law or
        equity.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

      ARTICLE
        VII

      MISCELLANEOUS

       

      SECTION
        7.1. NO
        WAIVER.
        No
        delay, failure or discontinuance of Bank in exercising any right, power or
        remedy under any of the Loan Documents shall affect or operate as a waiver
        of
        such right, power or remedy; nor shall any single or partial exercise of
        any
        such right, power or remedy preclude, waive or otherwise affect any other
        or
        further exercise thereof or the exercise of any other right, power or remedy.
        Any waiver, permit, consent or approval of any kind by Bank of any breach
        of or
        default under any of the Loan Documents must be in writing and shall be
        effective only to the extent set forth in such writing.

       

      SECTION
        7.2. NOTICES.
        All
        notices, requests and demands which any party is required or may desire to
        give
        to any other party under any provision of this Agreement must be in writing
        delivered to each party at the following address:

      

      
        	
              	BORROWER:	
                PEET’S
                  COFFEE & TEA, INC.

              

      

      1400
        Park
        Avenue

      Emeryville,
        CA 94608-3520

       

      
        	
              	BANK:	
                WELLS
                  FARGO BANK, NATIONAL ASSOCIATION

              

      

      East
        Bay
        RCBO

      One
        Kaiser Plaza, Suite #850

      Oakland,
        CA 94612

       

      or
        to
        such other address as any party may designate by written notice to all other
        parties. Each such notice, request and demand shall be deemed given or made
        as
        follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
        mail, upon the earlier of the date of receipt or three (3) days after deposit
        in
        the U.S. mail, first class and postage prepaid; and (c) if sent by
        telecopy, upon receipt.

       

      SECTION
        7.3. COSTS,
        EXPENSES AND ATTORNEYS’ FEES.
        Borrower shall pay to Bank immediately upon demand the full amount of all
        payments, advances, charges, costs and expenses, including reasonable attorneys’
fees (to include outside counsel fees but not including any allocated costs
        of
        Bank’s in-house counsel), expended or incurred by Bank in connection with
        (a) the negotiation and preparation of this Agreement and the other Loan
        Documents, Bank’s continued administration hereof and thereof, and the
        preparation of any amendments and waivers hereto and thereto, (b) the
        enforcement of Bank’s rights and/or the collection of any amounts which become
        due to Bank under any of the Loan Documents, and (c) the prosecution or
        defense of any action in any way related to any of the Loan Documents, including
        without limitation, any action for declaratory relief, whether incurred at
        the
        trial or appellate level, in an arbitration proceeding or otherwise, and
        including any of the foregoing incurred in connection with any bankruptcy
        proceeding (including without limitation, any adversary proceeding, contested
        matter or motion brought by Bank or any other person) relating to Borrower
        or
        any other person or entity.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      SECTION
        7.4. SUCCESSORS,
        ASSIGNMENT.
        This
        Agreement shall be binding upon and inure to the benefit of the heirs,
        executors, administrators, legal representatives, successors and assigns
        of the
        parties; provided however, that Borrower may not assign or transfer its
        interests or rights hereunder without Bank’s prior written consent. Bank
        reserves the right to sell, assign, transfer, negotiate or grant participations
        in all or any part of, or any interest in, Bank’s rights and benefits under each
        of the Loan Documents. In connection therewith, Bank may disclose all documents
        and information which Bank now has or may hereafter acquire relating to any
        credit subject hereto, Borrower or its business, any guarantor hereunder
        or the
        business of such guarantor, or any collateral required hereunder.

       

      SECTION
        7.5. ENTIRE
        AGREEMENT; AMENDMENT.
        This
        Agreement and the other Loan Documents constitute the entire agreement between
        Borrower and Bank with respect to each credit subject hereto and supersede
        all
        prior negotiations, communications, discussions and correspondence concerning
        the subject matter hereof. This Agreement may be amended or modified only
        in
        writing signed by each party hereto.

       

      SECTION
        7.6. NO
        THIRD
        PARTY BENEFICIARIES.
        This
        Agreement is made and entered into for the sole protection and benefit of
        the
        parties hereto and their respective permitted successors and assigns, and
        no
        other person or entity shall be a third party beneficiary of, or have any
        direct
        or indirect cause of action or claim in connection with, this Agreement or
        any
        other of the Loan Documents to which it is not a party.

       

      SECTION
        7.7. TIME.
        Time is
        of the essence of each and every provision of this Agreement and each other
        of
        the Loan Documents.

       

      SECTION
        7.8. SEVERABILITY
        OF PROVISIONS.
        If any
        provision of this Agreement shall be prohibited by or invalid under applicable
        law, such provision shall be ineffective only to the extent of such prohibition
        or invalidity without invalidating the remainder of such provision or any
        remaining provisions of this Agreement.

       

      SECTION
        7.9. COUNTERPARTS.
        This
        Agreement may be executed in any number of counterparts, each of which when
        executed and delivered shall be deemed to be an original, and all of which
        when
        taken together shall constitute one and the same Agreement.

       

      SECTION
        7.10. GOVERNING
        LAW.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of California.

       

      SECTION
        7.11. ARBITRATION.

       

      (a) Arbitration.
        The
        parties hereto agree, upon demand by any party, to submit to binding arbitration
        all claims, disputes and controversies between or among them (and their
        respective employees, officers, directors, attorneys, and other agents),
        whether
        in tort, contract or otherwise in any way arising out of or relating to (i)
        any
        credit subject hereto, or any of the Loan Documents, and their negotiation,
        execution, collateralization, administration, repayment, modification,
        extension, substitution, formation, inducement, enforcement, default or
        termination; or (ii) requests for additional credit.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      (b) Governing
        Rules.
        Any
        arbitration proceeding will (i) proceed in a location in California selected
        by
        the American Arbitration Association (“AAA”); (ii) be governed by the Federal
        Arbitration Act (Title 9 of the United States Code), notwithstanding any
        conflicting choice of law provision in any of the documents between the parties;
        and (iii) be conducted by the AAA, or such other administrator as the parties
        shall mutually agree upon, in accordance with the AAA’s commercial dispute
        resolution procedures, unless the claim or counterclaim is at least
        $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in
        which
        case the arbitration shall be conducted in accordance with the AAA’s optional
        procedures for large, complex commercial disputes (the commercial dispute
        resolution procedures or the optional procedures for large, complex commercial
        disputes to be referred to herein, as applicable, as the “Rules”).
        If
        there is any inconsistency between the terms hereof and the Rules, the terms
        and
        procedures set forth herein shall control. Any party who fails or refuses
        to
        submit to arbitration following a demand by any other party shall bear all
        costs
        and expenses incurred by such other party in compelling arbitration of any
        dispute. Nothing contained herein shall be deemed to be a waiver by any party
        that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
        similar applicable state law.

       

      (c) No
        Waiver of Provisional Remedies, Self-Help and Foreclosure.
        The
        arbitration requirement does not limit the right of any party to (i) foreclose
        against real or personal property collateral; (ii) exercise self-help remedies
        relating to collateral or proceeds of collateral such as setoff or repossession;
        or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
        relief, attachment or the appointment of a receiver, before during or after
        the
        pendency of any arbitration proceeding. This exclusion does not constitute
        a
        waiver of the right or obligation of any party to submit any dispute to
        arbitration or reference hereunder, including those arising from the exercise
        of
        the actions detailed in sections (i), (ii) and (iii) of this
        paragraph.

       

      (d) Arbitrator
        Qualifications and Powers.
        Any
        arbitration proceeding in which the amount in controversy is $5,000,000.00
        or
        less will be decided by a single arbitrator selected according to the Rules,
        and
        who shall not render an award of greater than $5,000,000.00. Any dispute
        in
        which the amount in controversy exceeds $5,000,000.00 shall be decided by
        majority vote of a panel of three arbitrators; provided however, that all
        three
        arbitrators must actively participate in all hearings and deliberations.
        The
        arbitrator will be a neutral attorney licensed in the State of California
        or a
        neutral retired judge of the state or federal judiciary of California, in
        either
        case with a minimum of ten years experience in the substantive law applicable
        to
        the subject matter of the dispute to be arbitrated. The arbitrator will
        determine whether or not an issue is arbitratable and will give effect to
        the
        statutes of limitation in determining any claim. In any arbitration proceeding
        the arbitrator will decide (by documents only or with a hearing at the
        arbitrator’s discretion) any pre-hearing motions which are similar to motions to
        dismiss for failure to state a claim or motions for summary adjudication.
        The
        arbitrator shall resolve all disputes in accordance with the substantive
        law of
        California and may grant any remedy or relief that a court of such state
        could
        order or grant within the scope hereof and such ancillary relief as is necessary
        to make effective any award. The arbitrator shall also have the power to
        award
        recovery of all costs and fees, to impose sanctions and to take such other
        action as the arbitrator deems necessary to the same extent a judge could
        pursuant to the Federal Rules of Civil Procedure, the California Rules of
        Civil
        Procedure or other applicable law. Judgment upon the award rendered by the
        arbitrator may be entered in any court having jurisdiction. The institution
        and
        maintenance of an action for judicial relief or pursuit of a provisional
        or
        ancillary remedy shall not constitute a waiver of the right of any party,
        including the plaintiff, to submit the controversy or claim to arbitration
        if
        any other party contests such action for judicial relief.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      (e) Discovery.
        In any
        arbitration proceeding, discovery will be permitted in accordance with the
        Rules. All discovery shall be expressly limited to matters directly relevant
        to
        the dispute being arbitrated and must be completed no later than 20 days
        before
        the hearing date. Any requests for an extension of the discovery periods,
        or any
        discovery disputes, will be subject to final determination by the arbitrator
        upon a showing that the request for discovery is essential for the party’s
        presentation and that no alternative means for obtaining information is
        available.

       

      (f) Class
        Proceedings and Consolidations.
        No
        party hereto shall be entitled to join or consolidate disputes by or against
        others in any arbitration, except parties who have executed any Loan Document,
        or to include in any arbitration any dispute as a representative or member
        of a
        class, or to act in any arbitration in the interest of the general public
        or in
        a private attorney general capacity. 

       

      (g) Payment
        Of Arbitration Costs And Fees.
        The
        arbitrator shall award all costs and expenses of the arbitration
        proceeding.

       

      (h) Real
        Property Collateral; Judicial Reference.
        Notwithstanding anything herein to the contrary, no dispute shall be submitted
        to arbitration if the dispute concerns indebtedness secured directly or
        indirectly, in whole or in part, by any real property unless (i) the holder
        of
        the mortgage, lien or security interest specifically elects in writing to
        proceed with the arbitration, or (ii) all parties to the arbitration waive
        any
        rights or benefits that might accrue to them by virtue of the single action
        rule
        statute of California, thereby agreeing that all indebtedness and obligations
        of
        the parties, and all mortgages, liens and security interests securing such
        indebtedness and obligations, shall remain fully valid and enforceable. If
        any
        such dispute is not submitted to arbitration, the dispute shall be referred
        to a
        referee in accordance with California Code of Civil Procedure Section 638
        et
        seq., and this general reference agreement is intended to be specifically
        enforceable in accordance with said Section 638. A referee with the
        qualifications required herein for arbitrators shall be selected pursuant
        to the
        AAA’s selection procedures. Judgment upon the decision rendered by a referee
        shall be entered in the court in which such proceeding was commenced in
        accordance with California Code of Civil Procedure Sections 644 and
        645.

       

      (i) Miscellaneous.
        To the
        maximum extent practicable, the AAA, the arbitrators and the parties shall
        take
        all action required to conclude any arbitration proceeding within 180 days
        of
        the filing of the dispute with the AAA. No arbitrator or other party to an
        arbitration proceeding may disclose the existence, content or results thereof,
        except for disclosures of information by a party required in the ordinary
        course
        of its business or by applicable law or regulation. If more than one agreement
        for arbitration by or between the parties potentially applies to a dispute,
        the
        arbitration provision most directly related to the Loan Documents or the
        subject
        matter of the dispute shall control. This arbitration provision shall survive
        termination, amendment or expiration of any of the Loan Documents or any
        relationship between the parties.

       

      (j) Small
        Claims Court.
        Notwithstanding anything herein to the contrary, each party retains the right
        to
        pursue in Small Claims Court any dispute within that court’s jurisdiction.
        Further, this arbitration provision shall apply only to disputes in which
        either
        party seeks to recover an amount of money (excluding attorneys’ fees and costs)
        that exceeds the jurisdictional limit of the Small Claims Court.

       

      [Signatures
        on following page]

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

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

       

       

      
        	 	 	 	 WELLS FARGO
                BANK,
	PEET’S COFFEE & TEA,
                INC. 	 	 NATIONAL
                ASSOCIATION
	 	 	 	 	 
	By:
                	 	 	 By:
                	 
	 	
                Thomas
                  P. Cawley 

                Chief
                  Financial Officer, 

                Vice
                  President, Secretary

              	 	 	
                Todd G. Tajiri

                Vice President

              

      

       

       

      
        
          
          

        

        
          Credit
            Agreement

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      
 

      
        	To:	
                WELLS
                  FARGO BANK, NATIONAL ASSOCIATION

              

      

      One
        Kaiser Plaza, Suite 850

      Oakland,
        CA 94612

      Attn:
        Todd Tajiri

      

      

      
        	
              	Re:	
                PEET’S
                  COFFEE & TEA, INC.

              

      

      (“Borrower”)

       

      The
        undersigned is the Chief Financial Officer of Borrower. In said capacity,
        the
        undersigned hereby certifies to Wells Fargo Bank, National Association
        (“Bank”)
        that
        (a) the financial statement of Borrower dated as of ________________, ______,
        heretofore or concurrently herewith delivered by Borrower to Bank, and all
        schedules and footnotes thereto, fairly present the financial condition and
        results of operations as of and for the period set forth therein, and (b)
        as of
        the date hereof, there exists no default or defined Event of Default under
        the
        Credit Agreement, dated as of November 26, 2008, by and between the Borrower
        and
        Bank, as amended, modified and/or supplemented prior to the date
        hereof.

      

      

      Dated:
        _______________, ______

      

        
          	
                   

                	
                  By:

                	 
	
                   

                	
                  Title: 

                	
                   

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        I

      To
        Compliance Certificate for 

      Peet’s
        Coffee & Tea, Inc.

       

      
        
          	
                  Financial
                    Statement Date: _____________

                	 
	 	 	 	 
	
                  I.     Section
                    4.9(a) Current Ratio

                	 	 	 
	 	 	 	 
	 	
                  A.

                	
                  Current
                    Assets

                	 	 	 
	 	 	
                  1.

                	
                   Current
                    Assets

                	 	
                  --

                	 
	 	 	
                  2.

                	
                   Long-term
                    marketable securities

                	 	
                  --

                	 
	 	 	
                  3.

                	
                   Sum
                    of Lines A.1. and A.2.

                	 	
                  --

                	 
	 	 	 	 	 	 	 
	 	
                  B.

                	
                  Current
                    Liabilities

                	 	
                  --

                	 
	 	 	 	 	 	 
	 	 	 	 	
                   Actual
                    Current Ratio (A.3./B.)

                	 	
                  --

                	 
	 	 	 	 	
                   Required
                    Minimum

                	
                   

                	
                  0.75

                	
                  x

                
	 	 	 	 	
                   Borrower
                    is in Compliance Y/N

                	 	 	 
	 	 	 	 	 
	
                  II.    Section
                    4.9(b) Leverage Ratio

                	 	 	 
	 	 	 	 	 
	 	
                  A.

                	
                  Total
                    Liabilities

                	 	 	 
	 	 	
                  1.

                	
                  Current
                    liabilities

                	 	
                  --

                	 
	 	 	
                  2.

                	
                  Non-current
                    liabilities

                	 	
                  --

                	 
	 	 	
                  3.

                	
                  Sum
                    of Lines A.1. and A.2

                	 	
                  --

                	 
	 	 	 	 	 	 	 	 
	 	
                  B.

                	
                  Adjusted
                    Rental Expense

                	 	 	 
	 	 	
                  1.

                	
                  Rental
                    Expense

                	 	
                  --

                	 
	 	 	
                  2.

                	
                  Multiplied
                    by six (6)

                	 	
                  --

                	 
	 	 	 	 	 	 	 	 
	 	
                  C.

                	
                  Tangible
                    Net Worth

                	 	 	 
	 	 	
                  1.

                	
                  Total
                    stockholders’ equity

                	 	
                  --

                	 
	 	 	
                  2.

                	
                  Subordinated
                    debt

                	 	
                  --

                	 
	 	 	
                  3.

                	
                  Intangible
                    assets

                	 	 	 
	 	 	
                  4.

                	
                  Sum
                    of Lines C.1. plus C.2. minus C.3.

                	 	
                  --

                	 
	 	 	 	 	 	 	 	 
	 	 	 	 	
                   Actual
                    Leverage Ratio (A.3. + B.2.)/C.4.

                	 	
                  --

                	 
	 	 	 	 	
                   Required
                    Maximum

                	 	
                  1.75

                	
                  x

                
	 	 	 	 	
                   Borrower
                    is in Compliance Y/N

                	 	 	 
	 	 	 	 	 
	
                  III.   Section
                    4.9(c) Net Income After Tax Provision

                	 	 	 
	 	 	 	 	 
	 	
                  A.

                	
                  Net
                    income after tax provision for current quarter

                	 	
                  --

                	 
	 	 	 	 	 	 
	 	 	 	 	
                   Required
                    Minimum

                	
                   

                	
                  
                    $1.00

                  

                	 
	 	 	 	 	
                   Borrower
                    is in Compliance Y/N

                	 	 	 
	 	 	 	 	 
	
                  IV.   Section
                    4.9(d) EBITDAR Coverage Ratio

                	 	 	 
	 	 	 	 	 

        

        
          	 	
                  A.

                	
                  EBITDAR

                	 	 	 
	 	 	
                  1.

                	
                  Income
                    before income taxes

                	
                   

                	
                  --

                	 
	 	 	
                  2.

                	
                  Interest
                    expense

                	
                   

                	
                  --

                	 
	 	 	
                  3.

                	
                  Depreciation
                    expense

                	
                   

                	
                  --

                	 
	 	 	
                  4.

                	
                  Amortization
                    expense

                	
                   

                	
                  --

                	 
	 	 	
                  5.

                	
                  Rental
                    Expense

                	
                   

                	
                  --

                	 
	 	 	
                  6.

                	
                  Sum
                    of Lines A.1. plus A.2. plus A.3. plus A.4. plus A.5

                	
                   

                	
                  --

                	
                   

                
	 	 	 	 	 	 	
                  --

                	 
	 	
                  B.

                	
                  Interest
                    expense

                	
                   

                	
                  --

                	 
	 	
                  C.

                	
                  Prior
                    period current maturity long-term debt (including capitalized
                    leases)

                	
                   

                	
                  --

                	 
	 	
                  D.

                	
                  Rental
                    Expense

                	
                   

                	
                  --

                	 
	 	
                  E.

                	
                  Sum
                    of Lines B. plus C. plus D.

                	
                   

                	
                  --

                	 
	 	 	 	 	 	 
	 	 	 	 	
                  Actual
                    EBITDAR Coverage Ratio A.6./E.

                	
                   

                	
                  --

                	 
	 	 	 	 	
                  Required
                    Minimum

                	
                	
                  
                    1.75

                  

                	
                  x

                
	 	 	 	 	
                  Borrower
                    is in Compliance Y/N

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]