Document:

Exhibit
      10.1 

    MEMBERSHIP
      INTEREST

    PURCHASE
      AGREEMENT

     

    

    THIS
      MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of October 5, 2006 (the
“Agreement”),
      is by
      and among PRESTON PHENES (“Seller”)
      and
      TURBECO, INC., a Texas corporation (“Buyer”).

    

    WITNESSETH:

    

    WHEREAS,
      Buyer desires to purchase the ownership interest of Seller in and with respect
      to CAVO Drilling Motors, Ltd. Co., a Texas limited liability company, and its
      business and assets (the “Company”);

    

    WHEREAS,
      pursuant to Section 6.1(d) of this Agreement it is contemplated that Buyer
      will
      prior to Closing exchange his interest in the Company for a fifty percent (50%)
      interest in the New Company (as defined herein);

    

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

    

    ARTICLE
      I

    THE
      PURCHASE

    

    Section
      1.1. Purchase.
      On and
      subject to the terms and conditions of this Agreement, at the Closing, Buyer
      will purchase: (i) the Acquired Interest, and (ii) Seller’s fifty percent (50%)
      general partnership interest in Diamond Rock, a Texas general partnership with
      B.L. Perez (“Diamond
      Rock”)
      which
      owns the facility located at 2450 Black Gold Court, Houston, Texas 77073 and
      the
      adjacent property at 2425 Black Gold Court, Houston, Texas 77073 (the
“Real
      Estate”).
      For
      purposes hereof, the term “Acquired
      Interest”
shall
      mean all of the rights and interests of the Seller with respect to the New
      Company, including but not limited to: (i) all of his rights under the Texas
      Limited Liability Company Act with respect to the New Company, (ii) any
      agreement entered into by him with respect to the New Company, (iii) his capital
      account with respect to the New Company, and (iv) all of his rights to share
      in
      the profits and losses of the New Company, and (v) all of his rights to receive
      distributions from the New Company. If the New Company is not formed and the
      Buyer waives in writing the condition set forth in Section 6.1(d), references
      to
      the “New Company” in the immediately preceding sentence shall instead refer to
      the Company.

    

    Section
      1.2. Purchase
      Price for Acquired Interest. 
      As
      consideration for the sale to it of the Acquired Interest, Buyer
      shall:

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    

    (a) Pay
      cash
      at Closing in the aggregate amount of Two Million Seven Hundred Eighty-One
      Thousand Seven Hundred Four and No/100 Dollars ($2,781,704) (the “Cash
      Payment”);

    

    (b) Cause
      Flotek Industries, Inc. (“Flotek”)
      to
      issue to Seller, as additional purchase price for the Acquired Interest, an
      aggregate number of shares (the “Flotek
      Shares”)
      of the
      common stock of Flotek, .0001 par value per share (the “Flotek
      Common Stock”)
      determined by dividing One Million Eight Hundred Fifty-Four Thousand Four
      Hundred Sixty-Nine and No/100 Dollars ($1,854,469) by the Share Value. For
      purposes herein, the term “Share
      Value”
shall
      mean the value of the Flotek Shares based on the average for the ten business
      days that precede the Closing Date of the daily closing trading prices of the
      Flotek Common Stock on the American Stock Exchange;

    

    (c) Issue
      to
      Seller a promissory note substantially in the form attached hereto as Exhibit
      1.2(c) in the original principal amount of One Million Five Hundred Forty-Five
      Thousand Three Hundred Ninety-One and No/100 Dollars ($1,545,391);
      and

    

    (d) Assume
      the liability of Seller with respect the Wells Fargo mortgage which encumbers
      the Real Estate (the “Diamond
      Rock Mortgage”).

    

    Section
      1.3. Assumption
      of Liabilities.
      Buyer
      has not and will not assume from the Company or the Seller any liability or
      obligation with the exception of the Diamond Rock Mortgage.

    

    Section
      1.4. Allocation.
      The
      parties will allocate for all purposes (including, but not limited to, financial
      accounting and tax purposes) the purchase price of the Acquired Interest as
      indicated on Schedule 1.4. 

    

    Section
      1.5. Closing.
      The
      closing (the “Closing”)
      of the
      transactions contemplated by this Agreement (the “Purchase
      Transaction”)
      shall
      take place at the offices of the attorneys for Buyer in Houston, Texas as
      promptly as practicable (but in any event within five business days) following
      the date on which the last of the conditions set forth in Article VI is
      fulfilled or waived, or at such other time and place as Buyer and the Company
      shall agree. The date on which the Closing occurs is referred to in this
      Agreement as the “Closing
      Date.”
The
      Closing will be effective as of October 1, 2006 (the “Effective
      Time”).

    

    Section
      1.6. Transfer
      Documents.
      At the
      Closing, each of the parties hereto will perform such acts and deliver such
      documents as are required pursuant to the terms hereof to be delivered at
      Closing, including but not limited to:

    

    (a) Seller
      shall execute, acknowledge and deliver to Buyer:

    

    (i) all
      assignments, and other good and sufficient instruments of conveyance, sale,
      transfer and assignment as shall be required to vest effectively in Buyer good
      and indefeasible title in and to the Acquired Interest, free and clear of all
      liens or encumbrances, including specifically, but not by way of limitation,
      a
      membership interest assignment in the form of Exhibit 1.6(a) (the “Assignment”);
      

    
      
         

      

      
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    (ii) Employment
      Agreement in the form of Exhibit 5.6 (the “Employment
      Agreement”);
      

    

    (iii) execute
      and deliver to Buyer a voting agreement concerning the voting by Seller of
      its
      interest in the Company on behalf of Buyer in the form required by Buyer, in
      its
      sole and absolute discretion, in the event the New Company is not formed before
      Closing;

    

    (iv) execute
      and deliver to Buyer a general warranty deed and any other documents required
      to
      vest in Buyer title to his interest in Diamond Rock and the Real
      Estate.  

    

    (b) Buyer
      shall:

    

    (i) deliver
      to the Company the Cash Payment in the form of bank check or wire
      transfer;

    

    (ii) execute
      and deliver the Assignment and the Employment Agreements; 

    

    
      
        (iii)
          execute
          and deliver the Promissory Note; and

      

    

    

    (iv) execute
      and deliver such documents as are required to assume the Diamond Rock
      Mortgage.

    

    Section
      1.7. Index.
      An
      index identifying the sections in which the definitions of certain terms are
      set
      forth in Exhibit A.

    

    ARTICLE
      II

    REPRESENTATIONS
      AND

    WARRANTIES
      OF BUYER

    

    Buyer
      represents and warrants to the Seller as follows:

    

    Section
      2.1. Organization
      and Qualification.
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Texas and has the requisite corporate power and authority
      to own, lease and operate its assets and properties and to carry on its business
      as it is now being conducted. Flotek is a corporation duly organized, validly
      existing and in good standing under the laws of the State of Delaware and has
      the requisite corporate power and authority to own, lease and operate its assets
      and properties and to carry on its business as it is now being
      conducted.

    
      
         

      

      
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    Section
      2.2. Authority;
      Non-Contravention; Approvals.

    

    (a) Buyer
      and
      Flotek each have full corporate power and authority to execute and deliver
      this
      Agreement to consummate the transactions contemplated hereby. Other than the
      approval by the Board of Directors of Buyer and Flotek, no corporate proceedings
      on the part of Buyer or Flotek are necessary to authorize the execution and
      delivery of this Agreement or the consummation by Buyer and Flotek of the
      transactions contemplated hereby. This Agreement has been duly executed and
      delivered by Buyer and Flotek, and, assuming the due authorization, execution
      and delivery hereof by Seller, constitutes a valid and legally binding agreement
      of Buyer and Flotek enforceable against each of them in accordance with its
      terms, except that such enforcement may be subject to (i) bankruptcy,
      insolvency, reorganization, moratorium or other similar laws affecting or
      relating to enforcement of creditors' rights generally and (ii) general
      equitable principles.

    

    (b) The
      execution and delivery of this Agreement by Buyer and Flotek and the
      consummation by Buyer and Flotek of the transactions contemplated hereby do
      not
      and will not violate or result in a breach of any provision of, or constitute
      a
      default (or an event which, with notice or lapse of time or both, would
      constitute a default) under, or result in the termination of, or accelerate
      the
      performance required by, or result in a right of termination or acceleration
      under, or result in the creation of any lien, security interest, charge or
      encumbrance upon any of the properties or assets of Buyer or Flotek under any
      of
      the terms, conditions or provisions of (i) the charter or bylaw of Buyer and
      Flotek, (ii) any statute, law, ordinance, rule, regulation, judgment, decree,
      order, injunction, writ, permit or license of any court or governmental
      authority applicable to Buyer or Flotek or any of their properties or assets
      or
      (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise,
      permit, concession, contract, lease or other instrument, obligation or agreement
      of any kind to which Buyer or Flotek is now a party or by which Buyer or Flotek
      or any of its properties or assets may be bound or affected.

    

    Section
      2.3. Reports.
      Flotek
      has previously made available or delivered to the Company and Seller copies
      of
      the Form 10-KSB filed by it with the Securities and Exchange Commission for
      the
      period ended December 31, 2005 (the “SEC”)
      and
      its quarterly report filed with the SEC on Form 10-QSB for the periods ending
      March 31, 2006 and June 30, 2006 (“Flotek
      SEC Reports”).
      As of
      their respective dates, the Flotek SEC Reports did not contain any untrue
      statement of a material fact or omit to state any material fact required to
      be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading. Neither Buyer nor
      Flotek has made any other representation to the Company or Seller regarding
      the
      Flotek Shares. The Flotek Shares will be restricted stock which will not be
      tradable on the open market under the applicable securities laws for a period
      of
      one year.

    

    Section
      2.4. Brokers
      and Finders.
      Buyer
      has not entered into any contract, arrangement or understanding with any person
      or firm which may result in the obligation of Buyer to pay any finder's fees,
      brokerage or agent commissions or other like payments in connection with the
      transactions contemplated hereby. There is no claim for payment by Buyer of
      any
      investment banking fees, finder's fees, brokerage or agent commissions or other
      like payments in connection with the negotiations leading to this Agreement
      or
      the consummation of the transactions contemplated hereby.

    
      
         

      

      
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    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

    OF
      SELLER

    

    The
      Seller represents and warrants to Buyer that:

    

    Section
      3.1. Organization
      and Qualification.
      The
      Company is a limited liability company duly organized, validly existing and
      in
      good standing under the laws of the State of Texas and has the requisite power
      and authority to own, lease and operate its assets and properties and to carry
      on its business as it is now being conducted. The Company is duly qualified
      to
      do business and is in good standing in each jurisdiction in which the properties
      owned, leased, or operated by it or the nature of the business conducted by
      it
      makes such qualification necessary. True, accurate and complete copies of the
      Company’s organizational documents, as in effect on the date hereof, including
      all amendments thereto, have heretofore been delivered to Buyer.

    

    Section
      3.2. Ownership.
      Seller
      owns fifty percent (50%) of the issued and outstanding membership interest
      in
      the Company and B.L. Perez (“Perez”)
      owns
      the remaining fifty percent (50%) of the issued and outstanding membership
      interest in the Company. The only members and managers of the Company are the
      Seller and Perez. There are no agreements between the Seller and Perez with
      respect to the management, operation, ownership, or tax classification of the
      Company, or any other matter relating to the Company. The Acquired Interest
      is
      owned by the Seller free and clear of any lien, encumbrance or agreement. The
      Acquired Interest has been duly authorized and issued, is nonassessable, and
      is
      not subject to any agreement to contribute capital to the Company or any other
      agreement. The transfer of the Acquired Interest by the Seller to Buyer pursuant
      to the terms hereof is not subject to any right of first refusal or similar
      right, and will not violate any agreement or understanding between the Seller
      and Perez. There are no outstanding options, conversion rights or similar rights
      granting any party the right to acquire any ownership interest in the Company
      other than the Acquired Interest and the interest held by Perez as described
      herein. 

    

    Section
      3.3. Other
      Entities.
      The
      Company does not own stock or other ownership interests in any other
      entity.

    

    Section
      3.4. Authority;
      Non-Contravention; Approvals.

    

    (a) No
      further actions on the part of the Company are necessary to authorize the
      execution and delivery of this Agreement or the consummation by the Company
      of
      the transactions contemplated hereby. This Agreement has been duly executed
      and
      delivered by Seller, and, assuming the due authorization, execution and delivery
      hereof by Buyer, constitutes a valid and legally binding agreement of Seller,
      enforceable against Seller in accordance with its terms, except that such
      enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
      moratorium or other similar laws affecting or relating to enforcement of
      creditors' rights generally and (b) general equitable
      principles.

    
      
         

      

      
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    (b) Except
      as
      set forth in the disclosure schedule attached to this Agreement (the
“Disclosure
      Schedule”),
      the
      execution and delivery of this Agreement by Seller and the consummation by
      Seller of the transactions contemplated hereby do not and will not violate
      or
      result in a breach of any provision of, or constitute a default (or an event
      which, with notice or lapse of time or both, would constitute a default) under,
      or result in the termination of, or accelerate the performance required by,
      or
      result in a right of termination or acceleration under, or result in the
      creation of any lien, security interest, charge or encumbrance upon any of
      the
      properties or assets of the Company under any of the terms, conditions or
      provisions of (i) the organizational documents of the Company or Diamond Rock,
      (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
      injunction, writ, permit or license of any court or governmental authority
      applicable to the Seller, Diamond Rock, or the Company or any of their
      properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
      trust, license, franchise, permit, concession, or any agreement to which the
      Seller, Diamond Rock, or the Company is now a party or by which the Company
      or
      any of its properties or assets may be bound or affected.

    

    Section
      3.5. Financial
      Statements.
      The
      Seller has furnished Buyer with a balance sheet of the Company as of December
      31, 2004 and December 31, 2005, and the related statement of income for the
      calendar years then ended (including the notes thereto) and a balance sheet
      as
      of August 31, 2006 and the related statement of income for the seven month
      period then ended (collectively, the "Financial
      Statements").
      The
      Financial Statements have been prepared in accordance with generally accepted
      accounting principles, consistently applied, and are accurate and complete
      and
      fairly present the financial condition and result of operations of the
      Company.

    

    Section
      3.6. Absence
      of Undisclosed Liabilities.
      Except
      as disclosed in the Disclosure Schedule, neither the Company nor Diamond Rock
      has incurred any liabilities or obligations (whether absolute, accrued,
      contingent or otherwise) of any nature, except liabilities or obligations (a)
      which are provided for in the Financial Statements or reflected in the notes
      thereto, (b) which were incurred after August 31, 2006, and were incurred in
      the
      ordinary course of business and consistent with past practices, or (c)
      liabilities or obligations under this Agreement.

    
      
         

      

      
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    Section
      3.7. Absence
      of Certain Changes or Events.
      Since
      August 31, 2006, the business of the Company has been conducted in the ordinary
      course of business consistent with past practices, and there has not been any
      event, occurrence, development or state of circumstances or facts which has
      had,
      or could reasonably be anticipated to have, individually or in the aggregate,
      a
      Material Adverse Effect. Specifically, but not by way of limitation, since
      August 31, 2006, the Company has not engaged in or been subject to any of the
      actions described in Section 4.1. "Material
      Adverse Effect"
      means
      any event, occurrence, fact, condition, change, development, circumstance,
      or
      effect with respect to the business, assets (including intangible assets),
      liabilities, condition (financial or other), operations, properties (including
      intangible properties), results, or prospects of the Company with respect to
      which there is a substantial likelihood that the event, occurrence, fact etc.
      would have been viewed by a reasonable investor as having a significantly
      negative effect on the value of the consideration such reasonable investor
      would
      have been willing to pay for the purchase of the Acquired Interest.

    

    Section
      3.8. Accounts
      Receivable.
      The
      accounts receivable of the Company indicated on the Financial Statements are
      valid, genuine and subsisting, arise out of bona fide sales and delivery of
      goods, performance of services or other business transactions in the ordinary
      course of business and are current and collectible. Each of the accounts
      receivable will be collected in full, without any set-off and without resort
      to
      litigation, within 120 days after the Closing except as indicated in the
      Disclosure Schedule.

    

    Section
      3.9. Tangible
      Assets.
      The
      Financial Statements reflect all of the items of tangible personal property
      owned by the Company (the “Tangible
      Personal Property”)
      and
      all of the assets leased by the Company (the “Leased
      Assets”).
      The
      Tangible Personal Property and the Leased Assets constitute all of the tangible
      personal property necessary for the conduct by the Company of its business
      as
      now conducted. The Company has good and indefeasible title to the Tangible
      Personal Property, free and clear of all mortgages, liens, pledges, charges,
      or
      encumbrance of any nature whatsoever. The Tangible Personal Property and Leased
      Assets are in good, serviceable condition and fit for the particular purposes
      for which they are used in the business of the Company, subject only to normal
      maintenance requirements and wear and tear reasonably expected in the ordinary
      course of business. 

    

    Section
      3.10. Employee
      Benefits.
      Each
      employee benefit plan of the Company (a ”Company
      Plan”)
      is or
      was in compliance with the provisions of all applicable laws, rules and
      regulations, including, without limitation, ERISA and the Code. None of the
      Company Plans has incurred any “accumulated funding deficiency” (as defined in
      Section 412(a) of the Code). The Company has not incurred any liability to
      the
      Pension Benefit Guaranty Corporation under Section 4062, 4063 or 4064 of ERISA,
      or any withdrawal liability under Title IV of ERISA with respect to any
      multiemployer plan. The Disclosure Schedule describes all bonuses and other
      compensation which will be payable to any of the employees of the Company as
      a
      result of the consummation of the Purchase Transaction, and any obligation
      to
      pay severance payments.

    

    Section
      3.11. Litigation.
      There
      are no claims, suits, actions, or proceedings pending or, to the Knowledge
      of
      the Company, threatened against or relating to the Company, before any court,
      governmental department, commission, agency, instrumentality or authority,
      or
      any arbitrator. The Company is not subject to any judgment, decree, injunction,
      rule or order of any court, governmental department, commission, agency,
      instrumentality or authority, or any arbitrator. For purposes of this Agreement,
      “Knowledge”
means
      actual or constructive knowledge of officers of the Seller after reasonable
      inquiry.

    
      
         

      

      
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    Section
      3.12. No
      Violation of Law.
      The
      Company is not in violation of or has been given notice or been charged with
      any
      violation of, any law, statute, order, rule, regulation, ordinance or judgment
      (including, without limitation, any applicable Environmental Law) of any
      governmental or regulatory body or authority. Except as disclosed in the
      Disclosure Schedule, as of the date of this Agreement, to the Knowledge of
      the
      Seller, no investigation or review by any governmental or regulatory body or
      authority is pending or threatened, nor has any governmental or regulatory
      body
      or authority indicated an intention to conduct the same. The governmental
      permits or licenses of the Company (the “Permits”)
      are
      sufficient for the Company to conduct its business in the manner currently
      conducted, and the Company is not in violation of the terms thereof. The Company
      is not in violation of the terms of any of its Permits and is not required
      to
      possess any other permit, license, franchise, variance, exemption, order or
      other governmental authorization, consent or approval.

    

    Section
      3.13. Labor
      Matters.
      Except
      as set forth in the Disclosure Schedule, (a) there are no material controversies
      pending or, to the Knowledge of the Seller, threatened between the Company
      on
      the one hand and any of its employees on the other, (b) the Company is not
      a
      party to a collective bargaining agreement of other labor union contract
      applicable to persons employed by the Company, nor does the Company have any
      Knowledge of any activities or proceedings of any labor union to organize any
      such employees, (c) the Company is not a party to any written agreement,
      memorandum, or understanding with respect to the employment of any individual,
      and (d) Seller is not aware of any intention of any employee to terminate his
      or
      her employment with the Company, either as a result of the Purchase Transaction
      or otherwise.

    

    Section
      3.14. Customer
      Relationships.
      The
      Disclosure Schedule lists all of the material customers of the Company. Except
      as set forth in the Disclosure Schedule, there has not been (a) any adverse
      change in the business relationship of the Company with any customer; or (b)
      any
      change in any term (including credit terms) of the agreements with any such
      customer. The Company has not received any customer complaints concerning its
      products and services.

    

    Section
      3.15. Real
      Property.
      

     

    (a) Except
      as
      set forth in the Disclosure Schedule, the Company does not own and has never
      owned any interest of any kind (whether ownership, lease or otherwise) in any
      real property, except the real estate leased by it at 2425 & 2450 Black Gold
      Court, Houston, Texas 77073 (the “Company
      Facilities”).

     

    (b) The
      Company Facilities are in good condition (reasonable wear and tear excepted),
      and are adequate for the operation of the Company's business as presently
      conducted. 

     

    (c) The
      Company’s use of the Company Facilities in the normal conduct of its business
      does not violate any applicable building, zoning or other law, ordinance or
      regulation affecting such real property, and no covenants, easements, rights
      of
      way or other such conditions of record impair the Company’s use of the Company
      Facilities in the normal conduct of its business.

     

    
      
         

      

      
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    (d) The
      Company has not experienced any material interruption in the delivery of
      adequate quantities of any utilities or other public services to the Company
      Facilities required by the Company in the normal operation of its
      business.

     

    Section
      3.16. Environmental
      Matters.
      Except
      as set forth in the Disclosure Schedule:

    

    (a) no
      notice, demand, request for information, citation, summons or order has been
      received, no complaint has been served, no penalty has been assessed, and no
      investigation, action, claim, suit, proceeding or review is pending or, to
      the
      Knowledge of the Seller, is threatened by any governmental entity or other
      person relating to or arising out of any environmental law;

    

    (b) each
      of
      the Company and Diamond Rock have been in compliance with all environmental
      laws
      and environmental permits; and

    

    (c) there
      are
      no liabilities of or relating to the Company or Diamond Rock of any kind
      whatsoever, whether accrued, contingent, absolute, determined, determinable
      or
      otherwise, arising under or relating to any environmental law and there are
      no
      facts, conditions, situations or set of circumstances which could reasonable
      be
      expected to result in or be the basis for any such liability.

    

    Section
      3.17. Material
      Contracts.
      The
      Disclosure Schedule lists all agreements, leases, commitments, contracts,
      undertakings or understandings, to which the Company, Diamond Rock, or the
      Seller (with respect to the Company or Diamond
      Rock) is a party, including but not limited to service agreements, manufacturing
      agreements, purchase or sale agreements, master service agreements, supply
      agreements, distribution or distributor agreements, real estate leases, purchase
      orders, license agreements, customer orders and equipment rental agreements
      (the
“Operating
      Agreements”).
      Each
      Operating Agreement is a valid, binding and enforceable agreement of the
      Company, Diamond Rock, or the Seller and, to the Knowledge of the Company,
      the
      other parties thereto. There has not occurred any breach or default under any
      Operating Agreement on the part of the Company Diamond Rock, or the Seller
      or,
      to the Knowledge of Seller, any other parties thereto. No event has occurred
      which with the giving of notice or the lapse of time, or both, would constitute
      a default under any Operating Agreement on the part of the Company Diamond
      Rock,
      or the Seller, Diamond Rock, or the Seller, or, to the Knowledge of Seller,
      any
      of the other parties thereto. There is no dispute between the parties to any
      Operating Agreement as to the interpretation thereof or as to whether any party
      is in breach or default thereunder, and no party to any Operating Agreement
      has
      indicated its intention to, or suggested it may evaluate whether to, terminate
      any Operating Agreement. 

    

    Section
      3.18. Inventory.
      All
      inventory of the Company is usable and saleable in the ordinary course of
      business by the Company, and is owned by the Company free and clear of any
      lien
      or encumbrance, and are in good condition. No items of Company inventory are
      held by the Company on consignment from others. 

    
      
         

      

      
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    Section
      3.19. Taxes.
      The
      Company has throughout its existence been classified as an S corporation
      pursuant to Section 1361 of the Internal Revenue Code of 1986. The Company
      has
      filed all tax returns required to be filed by it and has paid all taxes required
      to be paid prior to the date hereof. The New Company will be a newly formed
      entity classified as a partnership for federal income tax purposes.

    

    Section
      3.20. Brokers
      and Finders.
      Neither
      the Seller nor the Company has entered into any contract, arrangement or
      understanding with any person or firm which may result in the obligation of
      the
      Company or Seller to pay any finder's fees, brokerage or agent commissions
      or
      other like payments in connection with the transactions contemplated hereby.
      There is no claim for payment by the Company or Seller of any investment banking
      fees, finder's fees, brokerage or agent commissions or other like payments
      in
      connection with the negotiations leading to this Agreement or the consummation
      of the transactions contemplated hereby.

    

    Section
      3.21. Purchase
      for Own Account.
      The
      Flotek Shares are being or will be acquired by Seller for his own account and
      with no intention of distributing or reselling such securities or any part
      thereof in any transaction that would be in violation of the securities laws
      of
      the United States of America, or any state, without prejudice, however, to
      the
      rights of Seller at all times (subject to Section 9.4) to sell or otherwise
      dispose of all or any part of such securities under an effective registration
      statement under the Securities Act, or under an exemption from such registration
      available under the Securities Act of 1933 (the “Securities
      Act”).
      Seller is experienced in evaluating companies such as Flotek and has such
      knowledge and experience in financial and business matters as to be capable
      of
      evaluating the merits and risks of his investment and has the ability to suffer
      the total loss of his investment. Seller has had the opportunity to ask
      questions of and receive answers from executive officers of Flotek concerning
      the terms and conditions of the offering of the Flotek Shares and to obtain
      additional information to the satisfaction of Seller. Seller is an “accredited
      investor” as that term is defined by Rule 501 of Regulation D promulgated under
      the Securities Act. The Flotek Shares will not be registered at the time of
      their issuance under the Securities Act for the reason that the sale provided
      for in this Agreement is exempt pursuant to Section 4(2) of the Securities
      Act
      and that the reliance of Flotek on such exemption is predicated in part on
      the
      representations set forth herein. Seller will not sell or assign any Flotek
      Shares except pursuant to a valid registration statement filed pursuant to
      the
      Securities Act or pursuant to a valid exemption from the registration
      requirements thereof for a period of one year. 

    

    Section
      3.22. Diamond
      Rock.
      Diamond
      Rock is a partnership formed pursuant to the laws of the State of Texas. The
      Seller owns a fifty percent (50%) interest in Diamond Rock and Perez owns the
      other fifty percent (50%) interest in Diamond Rock. There is no written
      partnership agreement with respect to Diamond Rock or any other document or
      agreement between the Seller and Perez with respect to Diamond Rock. Diamond
      Rock owns in fee simple all right, title and interest in and with respect to
      the
      Real Estate, free and clear of any liens or encumbrances, except as indicated
      in
      the Disclosure Schedule. The Company Facilities are leased by Diamond Rock
      to
      the Company pursuant to the written lease agreement a copy of which has been
      provided to the Buyer. No other person has the right to utilize any of the
      Company Facilities or the Real Estate. The amount of the Wells Fargo Mortgage
      will not exceed $958,000 as of Closing.

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    Section
      3.23. Disclosure.
      No
      representation or warranty of Seller set forth hereunder or in the schedules
      attached hereto or in any certificate delivered pursuant to Section 6.2(a)
      contains any untrue statement of the material fact or omits to state a material
      fact necessary in order to make the statements contained herein or therein
      not
      misleading. 

    

    ARTICLE
      IV

    CONDUCT
      OF BUSINESS PENDING THE CLOSING

    

    Section
      4.1. Conduct
      of Business of the Company.
      Prior
      to the Effective Time, Seller shall cause the Company to operate its business
      in, and only in, the usual, regular and ordinary course of business in
      substantially the same manner as operated on the date of this Agreement. Without
      limiting the generality of the foregoing, during the period from the date of
      this Agreement to the Effective Time, the Company will not:

    

    (a) Sell,
      lease or otherwise dispose of, or agree to sell, lease or otherwise dispose
      of,
      any of its assets other than inventory in the ordinary course of business
      consistent with past practice; 

    

    (b) Adopt,
      amend or terminate any Company Plan;

    

    (c) Except
      as
      provided in Section 5.6, amend or terminate any Operating
      Agreement;

    

    (d) Enter
      into or modify any employment or severance agreement with any director, officer,
      or employee, or agree to increase the compensation of any officer, director
      or
      employee; and/or

    

    (e) Incur
      any
      indebtedness other than indebtedness incurred in the ordinary course of
      business.

    

    Section
      4.2. Business
      Organization.
      Prior
      to the Effective Time, Seller shall use his best efforts to (a) preserve intact
      the business organization of the Company, (b) keep available the services of
      the
      officers and employees of the Company, (c) preserve the goodwill of the Company,
      (d) maintain and keep the properties and assets of the Company in as good a
      repair and condition as presently exists, and (e) maintain in full force and
      effect its insurance coverage of the Company.

    

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    

    

    

    ARTICLE
      V

    ADDITIONAL
      AGREEMENTS

    

    Section
      5.1. Cooperation.
      Seller
      shall cause the Company to afford to Buyer and its accountants, counsel,
      financial advisors and other representatives reasonable access during normal
      business hours throughout the period prior to the Effective Time to all of
      its
      properties, books, contracts, personnel, representatives of or contacts with
      governmental or regulatory authorities, agencies or bodies, commitments, and
      records (including, but not limited to, tax returns and any and all records
      or
      documents which are within the possession of governmental or regulatory
      authorities, agencies or bodies, and the disclosure of which the Company can
      facilitate or control) and, such parties as its representatives may reasonably
      request. Any investigation pursuant to this Section shall be conducted in such
      manner as not to interfere unreasonably with the conduct of the business of
      the
      Company or with the performance of any of the employees of the Company. No
      investigation pursuant to this Section shall affect any representation or
      warranty made by any party. Each of the parties hereto shall use all reasonable
      efforts to take, or cause to be taken, all action and to do, or cause to be
      done, all things necessary, proper or advisable under applicable laws and
      regulations to consummate and make effective the transactions contemplated
      by
      this Agreement,

    

    Section
      5.2. Further
      Assurances.
      Seller
      and the Company shall execute, acknowledge and deliver or cause to be executed,
      acknowledged and delivered to Buyer such assignments or other instruments of
      transfer, assignment and conveyance, in form and substance satisfactory to
      counsel of Buyer, as shall be necessary to vest in Buyer all of the right,
      title
      and interest in and to the Acquired Interest, in each case free and clear of
      all
      liens, charges, encumbrances, rights of others, mortgages, pledges or security
      interests, and any other document reasonably requested by Buyer in connection
      with this Agreement.

    

    Section
      5.3. Expenses
      and Fees.
      All
      costs and expenses incurred in connection with this Agreement and the
      transactions contemplated hereby shall be paid by the party incurring such
      expenses, regardless of whether the Closing occurs. The Company shall not be
      subject to the legal fees or other transaction costs of Seller.

    

    Section
      5.4. Public
      Statements.
      The
      parties shall consult with each other prior to issuing any press release or
      any
      written public statement with respect to this Agreement or the transactions
      contemplated hereby and shall not issue any such press release or written public
      statement prior to such consultation.

     

    Section
      5.5. Notification
      of Certain Matters.
      Each of
      the parties agrees to give prompt notice to each other of, and to use their
      respective reasonable best efforts to prevent or promptly remedy, (a) the
      occurrence or failure to occur or the impending or threatened occurrence or
      failure to occur, of any event which occurrence or failure to occur would be
      likely to cause any of its representations or warranties in this Agreement
      to be
      untrue or inaccurate in any material respect (or in all respects in the case
      of
      any representation or warranty containing any materiality qualification) at
      any
      time from the date hereof to the Effective Time and (b) any material failure
      (or
      any failure in the case of any covenant, condition or agreement containing
      any
      materiality qualification) on its part to comply with or satisfy any covenant,
      condition or agreement to be complied with or satisfied by it
      hereunder.

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    

    Section
      5.6. Employment
      Agreement.
      At the
      Closing, Seller will enter into with the Buyer an employment agreement in the
      form included on Exhibit 5.6.

    

    Section
      5.7. Prohibited
      Activities.
      Seller
      will not, during the period beginning on the date hereof and ending on the
      second anniversary of the Closing Date, directly or indirectly, for any reason,
      for his own account or on behalf of or together with any other
      person:

     

    (a) engage
      as
      an officer, director or in any other managerial capacity or as an owner,
      co-owner or other investor of or in, whether as an employee, independent
      contractor, consultant or advisor, or as a sales representative, dealer or
      distributor of any kind, in the business of manufacturing, selling,
      distributing, or marketing downhole motors for use in the oil and gas industry
      within the United States of America (the “Territory”);

    

    (b) call
      on
      or otherwise solicit any natural person who is at that time employed by the
      Company in any managerial capacity with the purpose or intent of attracting
      that
      person from the employ of the Company; or

    

    (c) call
      on,
      solicit or perform services for, either directly or indirectly, any person
      that
      at that time is, or at any time within two years prior to that time was, a
      customer of any of the Company within any Territory, for the purpose of
      soliciting or selling any product or service in competition with the Companies
      within that Territory.

    

    ARTICLE
      VI

    CONDITIONS
      TO CLOSING

    

    Section
      6.1. Conditions
      to Obligation of Seller to Effect the Purchase Transaction.
      Unless
      waived by Seller, the obligation of Seller to effect the Purchase Transaction
      shall be subject to the fulfillment at or prior to the Effective Time of the
      following additional condition:

    

    (a) Buyer
      shall have performed in all material respects (or in all respects in the case
      of
      any agreement containing any materiality qualification) its agreements contained
      in this Agreement required to be performed on or prior to the Closing Date
      and
      the representations and warranties of Buyer contained in this Agreement shall
      be
      true and correct in all material respects (or in all respects in the case of
      any
      representation or warranty containing any materiality qualification) on and
      as
      of the date made and on and as of the Closing Date as if made at and as of
      such
      date, and the Company shall have received a certificate executed on behalf
      of
      Buyer by the President or a Vice President of Buyer and on behalf of Buyer
      by
      the Chief Executive Officer of Buyer to that effect;

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    

    

    Section
      6.2. Conditions
      to Obligations of Buyer to Effect the Purchase Transaction.
      Unless
      waived by Buyer, the obligations of Buyer to effect the Purchase Transaction
      shall be subject to the fulfillment at or prior to the Effective Time of the
      following additional conditions:

    

    (a) Seller
      shall have performed in all material respects (or in all respects in the case
      of
      any agreement containing any materiality qualification) his agreements contained
      in this Agreement required to be performed on or prior to the Closing Date
      and
      the representations and warranties of Seller contained in this Agreement shall
      be true and correct in all material respects (or in all respects in the case
      of
      any representation or warranty containing any materiality qualification) on
      and
      as of the date made and on and as of the Closing Date as if made at and as
      of
      such date, and Buyer shall have received a certificate executed on behalf of
      the
      Company by the President and Chief Executive Officer of the Company to that
      effect.

    

    (b) Except
      as
      stated in the Disclosure Statement, since August 31, 2006, there shall have
      been
      no changes that constitute, and no event or events shall have occurred which
      have resulted in or constitute, a Material Adverse Effect.

    

    (c) Buyer
      shall have performed such due diligence with respect to the membership interest
      of Perez as shall be deemed appropriate by it, to its satisfaction (in its
      sole
      discretion). 

    

    (d) The
      Seller shall have exchanged his membership interest in the Company for a fifty
      percent (50%) membership interest in a Texas limited liability company which
      owns substantially all of the assets owned by the Company as of the date hereof,
      which new limited liability company will be taxable as a partnership for federal
      income tax purposes (rather than as an S corporation) (the “New
      Company”),
      which
      interest is subject to a limited liability company agreement between Seller
      and
      his successors on the one hand, and the Company, on the other, with terms and
      conditions which are acceptable to Buyer, in its sole and absolute discretion.
      

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    

    ARTICLE
      VII

    INDEMNIFICATION

    

    Section
      7.1. Indemnification
      of Buyer.
      Seller
      shall indemnify Buyer, its affiliates, and their respective officers, directors,
      employees and agents against, and hold each of them harmless from and against,
      any and all claims, actions, causes of action, arbitrations, proceedings,
      losses, damages, liabilities, judgments and expenses (including, without
      limitation, reasonable attorneys' fees) ("Indemnified
      Amounts")
      incurred by the indemnified party as a result of (a) any error, inaccuracy,
      breach or misrepresentation in any of the representations and warranties made
      by
      or on behalf of the Company or Seller in this Agreement, and/or (b) any
      violation or breach by the Company or Seller of or default by the Company or
      Seller under the terms of this Agreement. The indemnified party shall be
      entitled to recover its reasonable and necessary attorneys' fees and litigation
      expenses incurred in connection with successful enforcement of its rights under
      this Section.

    

    Section
      7.2. Indemnification
      of Seller and the Company.
      Buyer
      shall indemnify Seller against, and hold him harmless from and against, any
      and
      all Indemnified Amounts incurred by Seller or the Company as a result of (a)
      any
      error, inaccuracy, breach or misrepresentation in any of the representations
      and
      warranties made by or on behalf of Buyer in this Agreement, and/or (b) any
      violation or breach by Buyer of or default by Buyer under the terms of this
      Agreement. The indemnified party shall be entitled to recover its reasonable
      and
      necessary attorneys' fees and litigation expenses incurred in connection with
      successful enforcement of his rights under this Section.

    

    Section
      7.3. Procedure.
      The
      defense of any claim, action, suit, proceeding or investigation subject to
      indemnification under this Article shall be conducted by the indemnifying party.
      If the indemnifying party fails to conduct such defense, the indemnified parties
      may retain counsel satisfactory to them and the indemnifying party shall pay
      all
      reasonable fees and expenses of such counsel for the indemnified parties
      promptly as statements therefor are received. The party not conducting the
      defense will use reasonable efforts to assist in the vigorous defense of any
      such matter, provided that such party shall not be liable for any settlement
      of
      any claim effected without its written consent, which consent, however, shall
      not be unreasonably withheld. Any indemnified party wishing to claim
      indemnification under this Article VII, upon learning of any such claim, action,
      suit, proceeding or investigation, shall notify the indemnifying party (but
      the
      failure so to notify a party shall not relieve such party from any liability
      which it may have under this Article VII except to the extent such failure
      materially prejudices such party). If the indemnifying party is responsible
      for
      the attorneys’ fees of the indemnified parties, then the indemnified parties as
      a group may retain only one law firm to represent them with respect to each
      such
      matter unless there is, under applicable standards of professional conduct,
      a
      conflict on any significant issue between the positions of any two or more
      indemnified parties.

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    

    Section
      7.4. Express
      Negligence Rule.
      The
      indemnification obligations under this Article VII shall apply regardless of
      whether any suit or action results solely or in part from the passive or
      concurrent negligence of the indemnified party.
      The
      rights of the parties to indemnification under this Article VII shall not be
      limited due to any investigations heretofore or hereafter made by such parties
      or their representatives, regardless of negligence in the conduct of any such
      investigations. 

    

    ARTICLE
      VIII

    MISCELLANEOUS

    

    Section
      8.1. Termination.
      This
      Agreement may be terminated at any time prior to the Effective Time, as
      follows:

    

    (a) the
      Company shall have the right to terminate this Agreement:

    

    (i) if
      the
      representations and warranties of Buyer shall fail to be true and correct in
      all
      material respects (or in all respects in the case of any representation or
      warranty containing any materiality qualification) on and as of the date made
      or, except in the case of any such representations and warranties made as of
      a
      specified date, on and as of any subsequent date as if made at and as of the
      subsequent date and such failure shall not have been cured in all material
      respects (or in all respects in the case of any representation or warranty
      containing any materiality qualification) within 15 days after written notice
      of
      such failure is given to Buyer by the Company; 

    

    (ii) if
      the
      Purchase Transaction is not completed by October 15, 2006 (provided that the
      right to terminate this Agreement under this Section 8.1(a)(ii) shall not be
      available to the Company if the failure of the Company or Seller to fulfill
      any
      obligation to Buyer under or in connection with this Agreement has been the
      cause of or resulted in the failure of the Purchase Transaction to occur on
      or
      before such date); or

    

    (iii) if
      Buyer
      (A) fails to perform in any material respects any of its covenants (or in all
      respects in the case of any covenant containing any materiality qualification)
      in this Agreement and (B) does not cure such default in all material respects
      (or in all respects in the case of any covenant containing any materiality
      qualification) within 30 days after written notice of such default is given
      to
      Buyer by the Company.

    

    (b) Buyer
      shall have the right to terminate this Agreement:

    

    (i) if
      the
      representations and warranties of the Company shall fail to be true and correct
      in all material respects (or in all respects in the case of any representation
      or warranty containing any materiality qualification) on and as of the date
      made
      or, except in the case of any such representations and warranties made as of
      a
      specified date, on and as of any subsequent date as if made at and as of such
      subsequent date and such failure shall not have been cured in all material
      respects (or in all respects in the case of any representation or warranty
      containing any materiality qualification) within 15 days after written notice
      of
      such failure is given to the Company by Buyer;

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

    

    (ii) if
      the
      Purchase Transaction is not completed by October 15, 2006 (provided that the
      right to terminate this Agreement under this Section 8.1(b)(ii) shall not be
      available to Buyer if the failure of Buyer to fulfill any obligation to the
      Company under or in connection with this Agreement has been the cause of or
      resulted in the failure of the Purchase Transaction to occur on or before such
      date); or

    

    (iii) if
      the
      Company or Seller (A) fails to perform in any material respect (or in all
      respects in the case of any covenant containing any materiality qualification)
      any of their covenants in this Agreement and (B) do not cure such default in
      all
      material respects (or in all respects in the case of any covenant containing
      any
      materiality qualification) within 30 days after notice of such default is given
      to the Company by Buyer.

    

    Section
      8.2. Effect
      of Termination.
      In the
      event of termination of this Agreement by either Buyer or the Company pursuant
      to the provisions of Section 8.1, this Agreement shall forthwith become void
      and
      there shall be no further obligations on the part of the Company, Buyer, or
      its
      respective officers or directors, or Seller to perform any covenant or provision
      of this Agreement which otherwise would be required to be performed after the
      date of termination (except as set forth in this Section 8.2 and in Sections
      5.3
      and 8.9, all of which shall survive the termination). Nothing in this Section
      8.2 shall relieve any party from liability for any breach of this
      Agreement.

    

    Section
      8.3. Remedies.
      If any
      legal action or other proceeding is brought for the enforcement of this
      Agreement, or because of an alleged dispute, breach, default or
      misrepresentation in connection with any of the provisions of this Agreement,
      the successful or prevailing party or parties shall be entitled to recover
      reasonable attorneys' fees and other costs incurred in that action or proceeding
      in addition to any other relief to which it or he may be entitled at law or
      equity.

    

    Section
      8.4. Notices.
      All
      notices, consents, demands or other communications required or permitted to
      be
      given pursuant to this Agreement shall be deemed sufficiently given: (i) when
      delivered personally during a business day to the appropriate location described
      below or telefaxed to the telefax number indicated below, or (ii) five (5)
      business days after the posting thereof by United States first class, registered
      or certified mail, return receipt requested, with postage fee prepaid and
      addressed:

    

    
      	 	
              If
                to Buyer: 

            	
              7030
                Empire Central Drive

            
	 	 	
              Houston,
                Texas 77040

            
	 	 	
              Telefax
                No. (713) 466-8386

            
	 	 	 

    

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    
      	 	
              With
                a copy to:

            	
              Casey
                W. Doherty

            
	 	 	
              Doherty
                & Doherty LLP

            
	 	 	
              1717
                St. James Place, Suite 520

            
	 	 	
              Houston,
                Texas 77056

            
	 	 	
              Telefax
                No. (713) 572-1001

            
	 	 	 
	 	
              If
                to Seller:

            	
              102
                North Delmont East

            
	 	 	
              Conroe,
                Texas 77301

            

    

    

    Section
      8.5. Successors.
      This
      Agreement shall be binding upon each of the parties upon their execution, and
      inure to the benefit of the parties hereto and their successors and assigns.
      

    

    Section
      8.6. Severability.
      In the
      event that any one or more of the provisions contained in this Agreement or
      in
      any other instrument referred to herein, shall, for any reason, be held to
      be
      invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
      or unenforceability shall not affect any other provision of this Agreement
      or
      any such other instrument.

    

    Section
      8.7. Section
      Headings.
      The
      section headings used herein are descriptive only and shall have no legal force
      or effect whatsoever. Except to the extent the context specifically indicates
      otherwise, all references to articles and sections refer to articles and
      sections of this Agreement, and all references to the exhibits and schedules
      refer to exhibits and schedules attached hereto, each of which is made a part
      hereof for all purposes.

    

    Section
      8.8. Gender.
      Whenever the context so requires, the masculine shall include the feminine
      and
      neuter, and the singular shall include the plural and conversely.

    

    Section
      8.9. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas, U.S.A., applicable to agreements and contracts executed and
      to
      be wholly performed there, without giving effect to the conflicts of law
      principles thereof.

    

    Section
      8.10. Multiple
      Counterparts.
      This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original. The parties agree to accept facsimile transmissions of
      signed counterparts of this Agreement, to be followed by delivery of signed
      original counterparts.

    

    Section
      8.11. Waiver.
      Any
      waiver by either party to be enforceable must be in writing and no waiver by
      either party shall constitute a continuing waiver.

    

    Section
      8.12. Entire
      Agreement.
      This
      Agreement and the other agreements referred to herein set forth the entire
      understanding of the parties hereto relating to the subject matter hereof and
      thereof and supersede all prior agreements and understandings among or between
      any of the parties relating to the subject matter hereof and
      thereof.

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date and
      year first set forth above.

    

    
      	 	BUYER:
	 	 	 
	 	TURBECO,
              INC., a Texas corporation
	 	 	 
	 	 	 
	 	By: 	
              /s/
                Jerry D. Dumas, Sr.

            
	 	 	
              Jerry
                D. Dumas, Sr., President

            
	 	 	 
	 	SELLER:
	 	 	 
	 	 	 
	 	/s/
              Preston Phenes
	 	Preston
              Phenes

    

    

    

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    EXHIBIT
      A

    

    INDEX
      OF DEFINITIONS

    

    

    
      	
              Acquired
                Interest

            	
              Section
                1.1

            
	
              Cash
                Payment

            	
              Section
                1.2

            
	
              Closing

            	
              Section
                1.5

            
	
              Closing
                Date

            	
              Section
                1.5

            
	
              Company
                Plans

            	
              Section
                3.10

            
	
              Diamond
                Rock

            	
              Section
                1.1

            
	
              Diamond
                Rock Mortgage

            	
              Section
                1.2(d)

            
	
              Disclosure
                Schedule

            	
              Section
                3.4(b)

            
	
              Effective
                Time

            	
              Section
                1.5

            
	
              Financial
                Statements

            	
              Section
                3.5

            
	
              Flotek

            	
              Section
                1.2(b)

            
	
              Flotek
                Common Stock

            	
              Section
                1.2(b)

            
	
              Flotek
                Shares

            	
              Section
                1.2(b)

            
	
              Indemnified
                Amounts

            	
              Section
                7.1

            
	
              Knowledge

            	
              Section
                3.11

            
	
              Leased
                Assets

            	
              Section
                3.9

            
	
              Material
                Adverse Effect

            	
              Section
                3.7

            
	
              New
                Company

            	
              Section
                6.2(d)

            
	
              Operating
                Agreements

            	
              Section
                3.17

            
	
              Perez

            	
              Section
                3.2

            
	
              Purchase
                Transaction

            	
              Section
                1.5

            
	
              Real
                Estate

            	
              Section
                1.1

            
	
              Tangible
                Personal Property

            	
              Section
                3.9ASSET
      PURCHASE AGREEMENT

     

    This
      Asset Purchase Agreement (“Agreement”)
      is
      made and entered into as of the 25th day of October, 2006 (the “Effective
      Date”),
      by
      and among RAC Nutrition Corporation, a Delaware corporation, (the “Buyer”),
      and
      Millennium Biotechnologies Group, Inc., a Delaware corporation (the
“Parent”
or
      the
“Company”),
      together with its wholly owned subsidiary Millennium Biotechnologies, Inc.,
      a
      Delaware corporation (the “Seller”
or
      the
“Subsidiary”),
      and
      RAC Nutrition Holdings LLC, a Delaware limited liability company (“LLC”) and
      their respective successors and assigns. 

     

    RECITALS:

     

    (A) WHEREAS,
      Seller is engaged in the distribution and sale of nutraceuticals under the
      “Resurgex”
name
      and mark (the “Business”),
      and;

     

    (B) WHEREAS,
      Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
      substantially all of the assets used in connection with the Business, as
      provided herein, together with certain liabilities as defined herein (the sale
      of such assets of the Business and certain liabilities by Seller to Buyer
      referred to herein as the “Transaction”).

     

    (C) WHEREAS,
      for United States Federal income tax purposes, it is intended that the
      Transaction shall qualify as a “reorganization” under Section 368(a) of the
      Internal Revenue Code of 1986, as amended (together with the rules and
      regulations promulgated thereunder, the “Code”),
      and
      that this Agreement shall be, and hereby is, adopted as a plan of reorganization
      for purposes of Section 368 of the Code. 

     

    NOW,
      THEREFORE, in consideration of the premises above and of the mutual covenants,
      representations, warranties, and agreements set forth herein, the parties hereby
      agree as follows:

     

    ARTICLE
      I

    DEFINITIONS 

     

    Section
      1.1  Certain
      Definitions.
      As used
      herein, the following capitalized terms have the following
      meanings:

     

    “Accounts
      Receivable”
has
      the
      meaning set forth in Section
      2.1(k).

     

    “Adjustment
      Report”
has
      the
      meaning set forth in Section
      2.7(b).

     

    “Affiliate”
means,
      as to any Person, (a) any subsidiary of such Person and (b) any other Person
      which, directly or indirectly, controls, is controlled by, or is under common
      control with, such Person and includes, in the case of a Person other than
      an
      individual, each officer, director, general partner or member of such Person,
      and each Person who is the beneficial owner of twenty-five percent (25%) or
      more
      of such Person’s outstanding stock having ordinary voting power of such Person.
      For the purposes of this definition, “control”
means
      the possession of the power to direct or cause the direction of management
      and
      policies of such Person, whether through the ownership of voting securities,
      by
      contract or otherwise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    “Assignment
      Agreement”
has
      the
      meaning set forth in Section
      2.10(a)(ii).

     

    “Assumed
      Obligations”
has
      the
      meaning set forth in Section
      2.3.

     

    “Big
      Four”
means
      Ernst & Young, Deloitte Touche Tohmatsu, PricewaterhouseCoopers and KPMG,
      collectively.

     

    “Bill
      of Sale”
has
      the
      meaning set forth in Section
      2.10(a)(i).

     

    “Business”
has
      the
      meaning set forth in the Recitals.

     

    “Business
      Day”
means
      any day other than Saturday, Sunday, and any day on which commercial banks
      in
      the State of New York are authorized by Law to be closed.

     

    “Business
      Employees”
means,
      collectively, the individuals who are employed by Seller (or an Affiliate of
      Seller) on a full-time or permanent basis principally at or with respect to
      the
      business of the Company immediately prior to the Closing and who are identified
      on Schedule
      3.27(c).

     

    “Business
      Intellectual Property”
has
      the
      meaning set forth in Section
      2.1(h).

     

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

     

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

     

    “Buyer
      Common Stock Issuance Calculation”
means
      an amount equal to 10,000,000 shares of Buyer Common Stock less the number
      of
      shares equal to Estimated Qualified Liabilities divided by $1.00.

     

    “Certificate
      of Good Standing”
means
      a
      certificate of good standing issued by a Secretary of State of a competent
      jurisdiction evidencing the good standing of the Company or the
      Subsidiary.

     

    “Claim”
means
      any demand, suit, claim or other assertion of liability by third
      parties.

     

    “Closing”
has
      the
      meaning set forth in Section
      2.9.

     

    “Closing
      Date”
has
      the
      meaning set forth in Section
      2.9.

     

    “Closing
      Statement”
has
      the
      meaning set forth in Section
      2.7(b).

     

    “COBRA”
means
      the requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B
      of the Code.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Code”
has
      the
      meaning set forth in the Recitals.

     

    “Collected
      Receivables”
has
      the
      meaning set forth in Section
      2.6.

     

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

     

    “Company
      Common Stock”
has
      the
      meaning set forth in Section
      5.8(a).

     

    “Company
      Stockholders”
has
      the
      meaning set forth in Section
      5.8(a).

     

    “Confidentiality
      Agreements”
has
      the
      meaning set forth in Section
      2.10(a)(xii).

     

    “Consent
      Contract”
has
      the
      meaning set forth in Section
      2.5.

     

    “Contract”
and
      “Contracts”
have
      the meaning given to them in Section
      2.1(f).

     

    “Current
      Liabilities”
shall
      include all Accounts Payable, accrued expenses and accrued Tax liabilities
      of
      the Company on the Closing Date net of any and all accrued interest on any
      long-term or short-term debt obligations of Seller.

     

    “Damages”
has
      the
      meaning set forth in Section
      9.1.

     

    “Distributor
      Contracts”
has
      the
      meaning set forth in Section
      2.1(a).

     

    “Domain
      Names”
means
      URL addresses and all other internet and world wide web addresses and
      designations.

     

    “Effective
      Date”
has
      the
      meaning set forth in the Preamble.

     

    “Employee
      Benefit Plan”
means
      any (a) nonqualified deferred compensation or retirement plan or arrangement;
      (b) qualified defined contribution retirement plan or arrangement which is
      an
      Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan
      or
      arrangement which is an Employee Pension Benefit Plan (including any
      Multiemployer Plan); (d) Employee Welfare Benefit Plan; (e) material fringe
      benefit including vacation pay or paid sick leave; and (f) other retirement,
      bonus, severance, change in control, vacation, incentive, profit sharing,
      equity-incentive, employee group insurance, hospitalization, disability or
      other
      employee benefit plan, program policy or agreement, whether formal or informal,
      and whether or not subject to ERISA in each case that is sponsored, contributed
      to or maintained by Seller or to which Seller has an obligation to
      contribute.

     

    “Employer”
means
      the entity designated by Buyer (which may be the Buyer, its Affiliate or other
      entity) that employs the Transferred Employees as of the Transfer
      Date.

     

    “Encumbrances”
has
      the
      meaning set forth in Section
      3.7.

     

    “Environmental,
      Health and Safety Requirements”
has
      the
      meaning set forth in Section
      3.23.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended and the rules
      and regulations adopted pursuant thereto.

     

    “ERISA
      Affiliate”
means
      with respect to the Seller, any trade or business (whether or not incorporated)
      under common control with Seller or which, together with the Seller is treated
      as a single employer within the meaning of Sections 414(b),(c) or (m) of the
      Code.

     

    “Estimated
      Qualified Liabilities”
has
      the
      meaning set forth in Section
      2.7(a).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended and the rules and regulations
      adopted pursuant hereto.

     

    “Excluded
      Assets”
has
      the
      meaning set forth in Section
      2.2.

     

    “Exclusivity
      Period”
has
      the
      meaning set forth in Section
      10.1(a).

     

    “Fairness
      Advisor Opinion”
has
      the
      meaning set forth in Section
      7.2(k).

     

    “Fee”
has
      the
      meaning set forth in Section
      10.1(a).

     

    “Financial
      Statements”
has
      the
      meaning set forth in Section
      3.5.

     

    “401(k)
      Plan”
means
      an Employee Pension Benefit Plan that is intended to meet the requirements
      of a
      qualified cash or deferred arrangement under section 401(k) of the
      Code.

     

    “GAAP”
means
      generally accepted accounting principles in the United States of America as
      in
      effect from time to time set forth in the opinions and pronouncements of the
      Accounting Principles Board and the American Institute of Certified Public
      Accountants and the statements and pronouncements of the Financial Accounting
      Standards Board.

     

    “Governmental
      Authority”
means
      any federal, state, local or foreign government or governmental regulatory
      body
      and any of their respective subdivisions, agencies, instrumentalities,
      authorities, courts or tribunals.

     

    “Headquarters
      Lease”
means
      the Lease Agreement, dated October __, 2001, for the commercial real estate
      located at 664 Martinsville Road, Suite 219, Basking Ridge, New Jersey
      07920.

     

    “Indebtedness”
shall
      mean (a) obligations for borrowed money; (b) obligations evidenced by bonds,
      debentures, notes or other similar instrument; (c) obligations under a lease
      that are required to be classified and accounted as capital lease obligation
      under GAAP; (d) obligations for reimbursement of any obligor on any letter
      of
      credit, banker’s acceptance or similar credit transaction; and (e) guarantees
      and other contingent obligations in respect of Indebtedness referred to in
      clauses (a) through (d) above.

     

    “Indemnitee”
has
      the
      meaning set forth in Section
      9.5.

     

    “Indemnitor”
has
      the
      meaning set forth in Section
      9.5.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Independent
      Auditors”
has
      the
      meaning set forth in Section
      2.7(d).

     

    “Intellectual
      Property”
has
      the
      meaning set forth in Section
      2.1(h).

     

    “Inventory”
has
      the
      meaning set forth in Section
      2.1(d).

     

    “Key
      Employee”
means
      the employee listed in Schedule
      2.10(a)(xi).

     

    “Key
      Employment Agreement”
has
      the
      meaning set forth Section
      2.10(a)(xi).

     

    “Law”
means
      any federal, state, local or foreign law, ordinance, order, rule, regulation,
      license or permit, and any order, writ, judgment, award, injunction, or decree
      of any court or arbitrator or any Governmental Authority of the United States
      of
      America, any state or political subdivision thereof or any foreign Governmental
      Authority.

     

    “Letter
      of Intent”
means
      that certain Letter of Intent by and among the Company, the Subsidiary and
      Aisling Capital II, L.P., dated April 5, 2006.

     

    “Lien”
means
      any charge, claim, community property interest, condition, equitable interest,
      lien (including any Tax lien), mortgage, option, pledge, security interest,
      right of first refusal, easement, servitude, right of way, or other encumbrance
      or restriction of any kind, including any restrictions on use, voting, transfer,
      receipt of income, or exercise of any other attribute of ownership.

     

    “LLC”
has
      the
      meaning set forth in Section
      7.1(e).

     

    “LLC
      Interest”
means
      a
      one hundred percent (100%) membership interest in the LLC.

     

    “Material
      Adverse Effect”
means,
      when used with respect to Seller, any event, condition, change, occurrence
      or
      circumstance which has a material adverse effect on the Purchased Assets,
      operations, business, assets, liabilities, results of operations, financial
      condition or prospects of the Business on the whole, as now conducted by
      Seller.

     

    “Operating
      Agreement”
has
      the
      meaning set forth in Section
      7.1(e).

     

    “Organizational
      Documents”
has
      the
      meaning set forth in Section
      3.1.

     

    “Other
      Businesses”
has
      the
      meaning set forth in Section
      9.1(b).

     

    “Other
      Contracts”
has
      the
      meaning set forth in Section
      2.1(f).

     

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

     

    “Patent
      Assignment Agreement”
has
      the
      meaning set forth in Section
      2.10(a)(xv).

     

    “Permits”
has
      the
      meaning set forth in Section
      2.1(g).

     

    “Permitted
      Encumbrances”
has
      the
      meaning set forth in Section
      3.7.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Person”
means
      any individual, corporation, partnership, joint venture, association, limited
      liability company, joint stock company, trust, or unincorporated association,
      or
      any Governmental Authority, officer, department, commission, board, bureau
      or
      instrumentality thereof.

     

    “Personal
      Property Leases”
has
      the
      meaning set forth in Section
      2.1(j).

     

    “Proxy
      Statement”
has
      the
      meaning set forth in Section
      5.8(c).

     

    “Purchase
      Price”
has
      the
      meaning set forth in Section
      2.6.

     

    “Purchased
      Assets”
has
      the
      meaning set forth in Section
      2.1.

     

    “Qualified
      Liabilities”
has
      the
      meaning set forth in Section
      2.4.

     

    “Representatives”
has
      the
      meaning set forth in Section
      10.1(a)

     

    “Restricted
      Area”
has
      the
      meaning set forth in Section
      6.3(a).

     

    “Royalty
      Agreement”
has
      the
      meaning set forth in Section
      2.10(a)(xiii).

     

    “SEC”
has
      the
      meaning set forth in Section
      5.8(c).

     

    “SEC
      Reports”
has
      the
      meaning set forth in Section
      3.4.

     

    “Securities
      Act”
has
      the
      meaning set forth in Section
      5.8(c).

     

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

     

    “Solvency
      Opinion”
has
      the
      meaning set forth in Section
      7.2(l).

     

    “Solvent”
has
      the
      meaning set forth in Section
      3.33.

     

    “Stock
      Purchase Agreement”
has
      the
      meaning set forth in Section
      2.10(b)(x).

     

    “Straddle
      Period”
has
      the
      meaning set forth in Section
      5.9(c)(ii).

     

    “Stockholders’
      Meeting”
has
      the
      meaning set forth in Section
      5.8(a).

     

    “Sublease”
has
      the
      meaning set forth in Section
      2.10(a)(xiv).

     

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

     

    “Superior
      Proposal”
has
      the
      meaning set forth in Section
      10.1(b).

     

    “Superior
      Transaction”
has
      the
      meaning set forth in Section
      10.1(b).

     

    “Survival
      Period”
has
      the
      meaning set forth in Section
      9.4(a).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Tax
      Audit”
has
      the
      meaning set forth in Section
      3.20(a)(v).

     

    “Tax
      Deficiency”
has
      the
      meaning set forth in Section
      3.20(a)(vii).

     

    “Tax”
      (including, with correlative meaning, “Taxes”
and
      “Taxable”)
      means
      (i)(A) any net income, gross income, business and occupation, admissions, gross
      receipts, sales, use, value added, ad valorem, transfer, transfer gains,
      franchise, profits, license, withholding, payroll, employment, excise,
      severance, stamp, rent, recording, occupation, premium, real or personal
      property, intangibles, environmental or windfall profits tax, alternative or
      add-on minimum tax, customs duty or other tax, fee, duty, levy, impost,
      assessment or charge of any kind whatsoever (including but not limited to taxes
      assessed to or on real property and water and sewer rents relating thereto),
      together with (B) all interest, any penalties, additions to tax or additional
      amounts imposed by any taxing or other governmental body, authority or
      jurisdiction (domestic or foreign) (a “Tax
      Authority”);
      (ii)
      any liability for the payment of any amount of the type described in the
      immediately preceding clause (i) as a result of being a member of an affiliated,
      unitary, consolidated or combined group with any other corporation at any time
      prior to the Closing Date; and (iii) any liability for the payment of an amount
      of the type described in the preceding clause (i) by reason of a contractual
      obligation to any other Person.

     

    “Tax
      Return”
means
      any report, return, document, declaration or other information (including any
      attached schedules or amendments thereto) required to be supplied to or filed
      with any Tax Authority) with respect to any Tax, including an information
      return, any document with respect to or accompanying Tax payments or estimated
      Taxes, or with respect to or accompanying requests for an extension of time
      in
      which to file any such report, return document, declaration or other
      information.

     

    “Terminated
      Employees”
has
      the
      meaning set forth in Section
      6.1(a).

     

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

     

    “Third
      Party Acquisition”
has
      the
      meaning set forth in Section
      10.1(a).

     

    “Third
      Party Licenses”
has
      the
      meaning set forth in Section
      2.1(c).

     

    “Third
      Party Proposal”
has
      the
      meaning set forth in Section
      10.1(b).

     

    “Trademark
      and Domain Name Assignment Agreement”
has
      the
      meaning set forth in Section
      2.10(a)(xvi).

     

    “Transaction”
has
      the
      meaning set forth in the Recitals.

     

    “Transaction
      Documents”
has
      the
      meaning set forth in Section
      2.2(b).

     

    “Transferred
      Employees”
has
      the
      meaning set forth in Section
      6.1(a).

     

    “Transfer
      Date”
has
      the
      meaning set forth in Section
      6.1(b).

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Transfer
      Taxes”
means
      all excise, sales, value added, use, registration, stamp, transfer, gains,
      real
      estate transfer and other taxes imposed with respect to a change in the
      ownership of any asset or of its direct or indirect owners.

     

    “UCC”
means
      the Uniform Commercial Code in effect from time to time in the jurisdiction
      in
      which a security interest is located.

     

    “Unassumed
      Liabilities”
has
      the
      meaning set forth in Section
      2.4.

     

    “Uniform
      Resource Locator”
or
      “URL”
means
      a
      string of characters that refers to a resource on the internet by its
      location.

     

    “Updated
      Schedules”
has
      the
      meaning set forth in Section
      5.2.

     

    “Vendor
      Contracts”
has
      the
      meaning set forth in Section
      2.1(b).

     

    “Warrant”
has
      the
      meaning set forth in Section
      2.6.

     

    “Warrant
      Shares”
has
      the
      meaning set forth in Section
      2.6.

     

    “Working
      Capital Adjustment Payment”
has
      the
      meaning set forth in Section
      2.7.

     

    ARTICLE
      II

    PURCHASE
      AND SALE OF PURCHASED ASSETS 

     

    Section
      2.1  Purchase
      and Sale.
      Except
      for the Excluded Assets, as of the Closing Date, Seller will sell, assign,
      transfer, convey, and deliver to Buyer, and Buyer will purchase, accept and
      assume from Seller, all of Seller’s right, title and interest in and to all of
      the Seller’s property and assets, real or personal, tangible or intangible,
      relating to, reasonably necessary in and/or used in connection with the Business
      as set forth below (collectively, the “Purchased
      Assets”),
      free
      and clear of all Encumbrances other than Permitted Encumbrances. The Purchased
      Assets shall consist of:

     

    (a)  All
      of
      Seller’s right, title and interest in and to all written customer contracts,
      distributor contracts, reseller contracts, and contracts with sales agents
      or
      representatives, to which either Seller is a party that are related to the
      Business and that are listed in Schedule
      2.1(a),
      including, but not limited to, contracts, agreements, outstanding proposals
      and
      commitments with such distributors, reseller, dealers and sales agents (the
      “Distributor
      Contracts”);

     

    (b)  All
      of
      Seller’s right, title and interest in and to the vendor purchase orders and
      contracts, that are related to the Business and that are listed in Schedule
      2.1(b)
      (the
“Vendor
      Contracts”);

     

    (c)  All
      of
      Seller’s right, title and interest in and to third party commercial computer
      software and related maintenance contracts relating to the Business to which
      either Seller is a party and that are listed in Schedule
      2.1(c)
      (the
“Third
      Party Licenses”);

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (d)  All
      of
      Seller’s inventory items relating to the Business whether new, used, excess or
      obsolete, both in and out of service, inventory held for sale, if any,
      including, but not limited to, all inventory currently being held to supply
      Seller’s contractual commitments to customers, and all other similar items of
      inventory all of which are listed in Schedule
      2.1(d)
      (the
“Inventory”);

     

    (e)  Seller’s
      marketing and sales materials relating to the Business;

     

    (f)  All
      of
      Seller’s right, title and interest in and to any written contracts (including
      any solicitation or outstanding offers for contract), agreements, outstanding
      price quotes, commitments from service providers, customers and/or
      manufacturers, other than the Distributor Contracts, Vendor Contracts and Third
      Party Licenses that relate to the Business to which either Seller is a party
      and
      that are listed in Schedule
      2.1(f)
      (the
“Other
      Contracts”)
      (the
      Distributor Contracts, Vendor Contracts, Third Party Licenses, and Other
      Contracts are sometimes referred to collectively as the “Contracts”
and
      individually as a “Contract”);

     

    (g)  All
      of
      Seller’s right, title and interest in and to the licenses, permits,
      certificates, approvals, exemptions, franchises, registrations, variances,
      accreditations or authorizations that relate to the Business and are listed
      in
Schedule
      2.1(g)
      (the
“Permits”);

     

    (h)  All
      of
      Seller’s right, title and interest in and to the “Intellectual
      Property,”
(as
      such term is hereinafter defined) that relate to the Business and as set forth
      in Schedule
      2.1(h)
      (the
“Business
      Intellectual Property”).
      “Intellectual
      Property”
shall
      mean, for purposes of this Agreement: patents, patent rights, patent
      applications, patent disclosures, and inventions and designs that are not
      disclosed in any patent, patent application, or patent disclosure; registered
      and unregistered trademarks, trade names, and service marks, brand marks, brand
      names, copyrights, copyright registrations, and any applications therefore;
      all
      designs, diagrams, specifications, schematics, molds, tooling and assembly,
      installation and other key processes; licenses granted by or to a party; trade
      secrets relating to or arising from any monetary process; proprietary computer
      software, hardware and databases, including source code and documentation
      corresponding thereto and any software and source or object code; symbols and
      logos and all applications therefor, registrations thereof and licenses and
      sublicenses or agreements in respect thereof; improvements to any of the
      foregoing (whether or not completed); all filings, registrations or issuances
      of
      any of the foregoing with or by any federal, state, local or foreign regulatory,
      administrative or governmental office; and other tangible and intangible
      proprietary information owned or licensed by a party; including goodwill and
      going concern value; technology, and know-how related to, reasonably necessary
      in and used to support the Business and not embodied in any of the foregoing;
      and other tangible and intangible proprietary information owned or licensed
      by a
      party; 

     

    (i)  The
      machinery, equipment, furniture, fixtures, furnishings, supplies, office
      equipment, accessories, vehicles, personal computers, notebook computers,
      cellular phones, pagers, copiers, calculators, workstations, office automation
      software, printers, facsimile machines, and other property relating to the
      Business, and as listed in Schedule
      2.1(i);

     

    
      
        
        

      

      
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    (j)  All
      leases of equipment, machinery or other tangible personal property to which
      either Seller is a party, solely used in conducting the Business as listed
      in
Schedule
      2.1(j)
      (the
“Personal
      Property Leases”);

     

    (k)  All
      accounts, notes, contracts or other receivables of Seller generated in
      connection with the Business existing as of the Closing Date that are listed
      in
Schedule
      2.1(k)
      and are
      not listed as Excluded Assets herein, and rights and benefits of any security
      interests and corresponding financing statements filed under the UCC (the
“Accounts
      Receivable”);

     

    (l)  All
      of
      Seller’s books and records relating exclusively to the Business (other than
      Seller’s Tax returns and Seller’s organizational books and records) including,
      without limitation, lists of customers, vendors and suppliers, records with
      respect to pricing, volume, billing and payment history, cost, inventory,
      machinery and equipment, mailing lists, distribution lists, sales, purchasing
      and materials, technical processes, production and testing techniques and
      procedures, marketing research, design and manufacturing drawings and
      specifications and other engineering data, promotional or sales literature,
      training, operations, equipment and other manuals, quotation, correspondence,
      and other miscellaneous information, including any such records which are
      maintained on computer or any storage media;

     

    (m)  All
      service manuals, databases, and knowledge bases, in their current forms, listed
      in Schedule
      2.1(m)
      relating
      to the operation of the Business as currently operated by Seller;

     

    (n)  Seller’s
      backlog on orders relating to the Business;

     

    (o)  Seller’s
      claims, demands, actions or causes of actions, which either Seller has or may
      have against any other person or entity relating to the Business, rights to
      judgments, and proceeds resulting from the matters listed in Schedule
      2.1(o);
      and

     

    (p)  All
      of
      Seller’s domain names, internet names, web addresses and internet locations,
      links to other relevant sites and applicable related registrations related
      to
      the Business, and as listed on Schedule
      2.1(p).

     

    Section
      2.2  Excluded
      Assets.
      Notwithstanding anything to the contrary contained in Section
      2.1
      or
      elsewhere in this Agreement, the following assets of Seller (collectively,
      the
“Excluded
      Assets”)
      are
      not part of the sale and purchase contemplated hereunder, are excluded from
      the
      Purchased Assets and shall remain the property of Seller after the Closing
      Date:

     

    (a)  All
      property and assets of Seller that are not related to the Business;

     

    (b)  All
      rights of either Seller under this Agreement and the other documents, agreements
      and instruments executed or delivered in connection with this Agreement
      (together with this Agreement, the “Transaction
      Documents”)
      including all monies to be received by either Seller, and all other rights
      of
      Seller under the Transaction Documents, including without limitation, the
      Purchase Price (as defined herein);

     

    
      
        
        

      

      
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    (c)  all
      real
      estate and real property leases, including the Headquarters Lease;

     

    (d)  all
      minute books, transfer records and corporate seals of Seller;

     

    (e)  all
      cash,
      cash equivalents, bank accounts, certificates of deposit, commercial paper,
      annuities, treasury notes, bills and other marketable securities of Seller;
      

     

    (f)  all
      rights of Seller relating to claims, refunds, causes of action, rights of
      recovery, rights of set-off, deposits and prepaid expenses and claims for
      refunds and rights to offset of every kind and nature whether or not related
      to
      the Business and related to time periods prior to the Closing Date, except
      for
      Accounts Receivable claims pertaining to the Business and other matters set
      out
      in Schedule
      2.1(o);

     

    (g)  all
      insurance policies of Seller and rights thereunder, including, without
      limitation, all rights to receive proceeds of insurance policies and all rights
      of offset, counterclaims and insurance coverage thereunder;

     

    (h)  any
      tax
      credits and refunds;

     

    (i)  Intellectual
      Property of the Seller not related to the Business and any rights or obligations
      associated therewith;

     

    (j)  all
      severance, pension, retirement and other Employee Benefit Plans and
      administration and services contracts related thereto, or funding
      arrangements,

     

    (k)  all
      of
      Seller’s distributor contracts, purchase contracts and other contracts that are
      not related to the Business; and

     

    (l)  all
      of
      Seller’s Domain Names not related to the Business.

     

    Section
      2.3  Assumed
      Obligations.
      At the
      Closing, Purchaser shall assume, and agree to pay, perform, fulfill and
      discharge, the following obligations of Seller that relate to or arise out
      of
      the Purchased Assets (the “Assumed
      Obligations”).
      The
      Assumed Obligations shall include, but not be limited to, the
      following:

     

    (a)  Obligations
      which are required to be performed under the Contracts, Permits,
      Personal Property Leases and Intellectual Property, except where (i) such
      obligations are not fully disclosed in accordance with the Agreement or arise
      in
      contravention of this Agreement, or (ii) such obligations arise due to any
      breach of contract, breach of warranty, tort, infringement, or violation of
      Law
      or arose out of any Claim, provided, such breach, tort, infringement, violation
      or Claim arose out of events occurring prior to the Closing, or (iii) the
      consent of any third party is required for the assignment of such Contract,
      Permit or Personal Property Lease and such consent has not been obtained;

     

    
      
        
        

      

      
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    (b)  Obligations
      and liabilities set forth on the face of the balance sheet as of June 30, 2006
      included in the Financial Statements (rather than in any notes thereto), and
      all
      liabilities which have arisen after June 30, 2006 in the ordinary course of
      business of the Business; provided that such Assumed Obligations (i) do not
      include any Indebtedness; (ii) are reflected in the calculation of the Purchase
      Price; (iii) are fully disclosed to Buyer pursuant to this Agreement and do
      not
      arise in contravention of this Agreement; and (iv) do not relate to any breach
      of contract, breach of warranty, tort, infringement, or violation of Law or
      arise out of any Claim,; it being understood that the number of shares of Buyer
      Common Stock to be delivered to the LLC pursuant to Section
      2.6
      shall be
      reduced in the manner specified in Section
      2.6
      and
2.7
      to the
      extent that the value of Qualified Liabilities exceeds zero; and

     

    (c)  Obligations
      arising after the Closing Date with respect to Transferred Employees as set
      forth in Section
      6.1.

     

    Section
      2.4  No
      Other Liabilities Assumed.
      Anything
      in this Agreement to the contrary notwithstanding, neither Buyer nor any of
      its
      Affiliates shall assume, and shall not be deemed to have assumed, any debt,
      claim, obligation or other liability of Seller or any of its Affiliates, whether
      known or unknown, now or hereafter existing, accrued or contingent, other than
      as specifically set forth in Section
      2.3
      including, but not limited to (i) any environmental costs and liabilities,
      (ii)
      any of Seller’s liabilities in respect of Taxes, (iii) any income, transfer,
      sales, use, and other Taxes arising in connection with the consummation of
      the
      transactions contemplated hereby (other than as expressly provided in this
      Agreement), (iv) any brokers or finders’ fees, or other liability of Seller for
      costs and expenses (including legal fees and expenses) incurred in connection
      with this Agreement or the consummation of the transactions contemplated hereby,
      (vi) any liabilities or obligations arising out of the Royalty Agreements,
      (vii)
      any liability or obligation of Seller under this Agreement, (viii) any
      Indebtedness, (ix) any obligations or liabilities, including severance, for
      Seller’s employees who are not Transferred Employees, (x) any liabilities of the
      Seller or any of its ERISA affiliates relating to any Employee Benefit Plan
      to
      which any of the Seller or its ERISA Affiliates contributes or has any
      obligation to contribute, or with respect to which any of the Seller or Seller’s
      Affiliates has any liability or potential liability (including, without
      limitation any such liability (a) relating to benefits payable under any
      Employee Benefit Plan, (b) relating to Title IV of ERISA (c) relating to a
      multiemployer plan, (d) with respect to noncompliance with the notice and
      benefit continuation requirements of COBRA, or (e) with respect to any
      noncompliance with ERISA or any other applicable laws), (xi) any liability
      or
      obligation of Seller in respect of pending or threatened claims listed on
Schedule
      3.14,
      (xii)
      any obligation or liability arising as a result of or whose existence is a
      breach of Seller’s representations, warranties, agreements or covenants, or
      (xiii) any Qualified Liabilities (as defined below) to the extent that the
      aggregate value of the Qualified Liabilities is greater than $500,000
      (collectively, “Unassumed
      Liabilities”).
      Each
      of the Seller and Parent hereby agrees to pay, perform and discharge all of
      the
      obligations that are Unassumed Liabilities hereunder. “Qualified
      Liabilities”
shall
      mean liabilities assumed by Purchaser pursuant to Section
      2.3(b).

     

    
      
        
        

      

      
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    Section
      2.5  Non-Assignment
      of Certain Property.
      To the
      extent that the assignment hereunder of any of the Permits, Personal Property
      Leases or Contracts shall require the consent of any other party (or in the
      event that any of the same shall be nonassignable) (each, a “Consent
      Contract”),
      neither this Agreement nor any action taken pursuant to its provisions shall
      constitute an assignment or an agreement to assign if such assignment or
      attempted assignment would constitute a breach thereof; provided, however,
      that
      in each such case, Seller shall use its commercial reasonable efforts to obtain
      the consents of such other party to an assignment to Buyer on or prior to the
      Closing. If any such consent has not been obtained as of the Closing Date,
      the
      parties shall continue to use its commercially reasonable efforts to obtain
      such
      consent after the Closing Date. Pending the receipt of any such consents, the
      Seller shall cooperate with the Buyer in any commercially reasonable arrangement
      designed to provide for the Buyer all of the benefits under all of the Consent
      Contracts, and for the Buyer to discharge the corresponding obligations. At
      the
      Buyer’s request and expense, the Seller shall take all commercially reasonable
      best efforts requested by the Buyer to enforce, for the benefit of the Buyer,
      any and all rights of the Seller under any Consent Contract. Seller agrees
      to
      remit promptly, and to cause their Affiliates to remit promptly (but in no
      event
      later than three (3) Business Days after receipt), to the Buyer all collections
      or payments received by them or their Affiliates in respect of all Consent
      Contracts following the Closing Date, and shall hold all such collections or
      payments for the benefit of and in trust and as a fiduciary for and promptly
      pay
      the same over to, the Buyer. When such consents to the transfer, conveyance
      and
      assignment of a Consent Contract have been obtained, if ever, such Consent
      Contract shall thereupon automatically be transferred, conveyed and assigned
      to
      Buyer, and the obligations and liabilities of either Seller under such Consent
      Contract shall automatically cease to be excluded from the Assignment Agreement
      (as hereinafter defined) by reason of this Section
      2.5,
      without
      the payment of any additional consideration.

     

    Section
      2.6  Purchase
      Price.
      In
      consideration for the sale, transfer and assignment by the Seller of the
      Purchased Assets, the Buyer shall: (i) assume the Assumed Obligations;
provided,
      however, in
      no
      event shall the value of the Qualified Liabilities assumed by the Buyer exceed
      Five Hundred Thousand Dollars ($500,000.00); (ii) issue a certificate evidencing
      the LLC Interest to the Parent; and (iii) issue to the LLC a performance vesting
      warrant to purchase up to an additional Two Million Five Hundred Thousand
      (2,500,000) shares of Buyer Common Stock (the “Warrant
      Shares”)
      upon
      the terms and conditions set forth in the form of warrant reasonably agreed
      by
      Buyer and Seller (the “Warrant”).
      The
      Warrant shall be exercisable for a period of five years at an exercise price
      of
      $1.00 and shall further provide that the holder may not exercise the Warrant
      unless and until Buyer has (i) aggregate net revenues for the preceding four
      quarters of at least $50.0 million and (ii) pre-tax net income of at least
      $5.0
      million for the preceding four quarters. For purposes of this Agreement, the
      term “Purchase
      Price”
shall
      mean, initially, $10,000,000, consisting of (y) the value of Assumed Obligations
      (provided, pursuant to the terms of this Agreement, Qualified Liabilities to
      be
      assumed by the Buyer may range from zero to $500,000), and (z) the LLC Interest
      (having an assumed value equal to the $10,000,000, less the value of the
      Qualified Liabilities). At the Closing, the Buyer shall deliver to the LLC
      a
      number of shares of Buyer Common Stock equal to (i) 10,000,000, less (ii) a
      number of shares equal to (A) the Estimated Qualified Liabilities (as defined
      below) less $300,000, divided by (B) $1.00. 

     

    Section
      2.7  Purchase
      Price Payment Adjustment.
      

     

    (a)  At
      least
      ten (10) days prior to the Closing, the Sellers shall provide to the Buyer
      an
      estimate as of the Closing Date, which, absent manifest error, shall be the
      basis for calculating, on a preliminary basis, of the value of the Qualified
      Liabilities for purposes of determining the number of shares of Buyer Common
      Stock to be issued to the LLC at Closing (the “Estimated
      Qualified Liabilities”).
      

     

    
      
        
        

      

      
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    (b)  Not
      later
      than sixty (60) days after the Closing, the Buyer at its own cost, shall prepare
      and deliver to the Sellers a statement of the value of the Qualified Liabilities
      as of the Closing Date (the “Closing
      Statement”),
      prepared in accordance with GAAP, applied consistently with the Sellers’ past
      practices. A failure by the Buyer to deliver the Closing Statement within the
      required sixty (60) day period shall constitute its acceptance of the Estimated
      Qualified Liabilities. Within fifteen (15) days after the Closing Statement
      is
      delivered to the Sellers pursuant to this Section
      2.7(b),
      the
      Sellers at their own cost, shall complete its examination thereof, and provide
      for the examination thereof by its accountants, if necessary, and shall deliver
      to the Buyer either (i) a written acknowledgment accepting the determination
      of
      the value of the Qualified Liabilities or (ii) a written report of an
      independent accounting firm engaged by the Sellers setting forth in reasonable
      detail any proposed adjustments to the value of the Qualified Liabilities
      (“Adjustment
      Report”).
      A
      failure by the Sellers to deliver the Adjustment Report within the required
      fifteen (15) day period shall constitute its acceptance of the Closing
      Statement. The Buyer shall, and shall cause its independent auditors to,
      cooperate with the Sellers and its accountants in the course of the preparation
      of the Adjustment Report.

     

    (c)  Following
      the Closing, the number of shares of Common Stock issued to the LLC in
      satisfaction of the Purchase Price shall be decreased by a number of shares
      equal to (i) the amount, if any, by which the value of the Qualified Liabilities
      as specified on the Closing Statement exceeds the Estimated Qualified
      Liabilities, divided by (ii) $1.00; provided, if the Qualified Liabilities
      as
      specified in the Closing Statement is less than $300,000, there shall be no
      adjustment to the number of shares of Common Stock pursuant to this Section
      2.7(c).

     

    (d)  During
      a
      period of fifteen (15) days following the receipt by the Buyer of the Adjustment
      Report, the Buyer and Sellers shall attempt to resolve any difference they
      may
      have with respect to the matters raised in the Adjustment Report. In the event
      the Buyer and Sellers fail to agree on all of the proposed adjustments contained
      in the Adjustment Report within such fifteen (15) day period, then the Buyer
      and
      the Sellers mutually agree that the New York office of KPMG, or such other
“Big
      Four” accounting firm mutually acceptable to the Buyer and the Sellers (the
“Independent
      Auditors”),
      shall
      make the final determination with respect to the correctness of the proposed
      adjustments in the Adjustment Report in light of the terms and provisions of
      this Agreement. The decision of the Independent Auditors shall be final and
      binding on the Buyer and Sellers, and may be used in a court of law by either
      the Buyer or the Sellers for the purpose of enforcing such decision. The costs
      and expenses of the Independent Auditors and their services rendered pursuant
      to
      this clause (d) shall be borne by the non-prevailing party or, if neither party
      prevails, equally by the Buyer and the Sellers. 

     

    Section
      2.8  Prorations.
      At
      Closing, the parties hereto shall determine the proration of any expenses,
      if
      necessary.

     

    Section
      2.9  Closing.
      The
      closing of the transactions contemplated in this Agreement (the “Closing”)
      shall
      take place at the offices of Andrews Kurth LLP, 450 Lexington Avenue, 15th
      Floor, New York, NY, 10017, or such other location as the parties may select,
      within thirty (30) calendar days of the clearance of the Proxy Statement by
      the
      SEC or at such other time and place as the Purchaser, in its sole discretion,
      may agree (the “Closing
      Date”).

     

    
      
        
        

      

      
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    Section
      2.10  Deliveries
      at Closing

     

    (a)  Deliveries
      by Seller.
      At the
      Closing, Seller shall deliver or cause to be delivered to Buyer the following
      documents, instruments, certificates and agreements (which shall be in form
      and
      substance reasonably satisfactory to Buyer and its counsel):

     

    (i)  an
      executed counterpart to the Bill of Sale in a form to be mutually agreed upon
      (the “Bill
      of Sale”),
      duly
      executed by Seller;

     

    (ii)  an
      executed counterpart to the Assignment and Assumption Agreement in a form to
      be
      mutually agreed upon (the “Assignment
      Agreement”),
      duly
      executed by Seller;

     

    (iii)  such
      other deeds, bills of sale, assignments and other instruments of sale, in form
      and substance reasonably satisfactory to Buyer’s counsel, as shall be required
      or as may be desirable to vest in Buyer good and marketable title to the
      Purchased Assets, free and clear of all Encumbrances other than the Permitted
      Encumbrances; 

     

    (iv)  a
      Certificate signed by an authorized officer of each of the Seller and dated
      as
      of the Closing Date, certifying that the representations and warranties of
      Seller contained in this Agreement are true and correct on the Closing Date
      as
      if such representations and warranties were made on the Closing
      Date;

     

    (v)  an
      incumbency and specimen certificate with respect to the officer(s) of Seller
      executing the Transaction Documents to which such entity is a party;

     

    (vi)  a
      Certificate of Good Standing for Seller issued not earlier than thirty (30)
      days
      prior to the Closing Date by the Secretary of State of Delaware as applicable;
      

     

    (vii)  the
      Fairness Opinion;

     

    (viii)  The
      Solvency Opinion

     

    (ix)  a
      release
      of Liens as may be identified by the Buyer prior to the Closing;

     

    (x)  all
      of
      the required consents of third Persons set forth in Schedule
      2.10(a)(x);
      

     

    
      
        
        

      

      
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    (xi)  an
      executed employment contract between the buyer and the individual listed in
      Schedule 2.10(a)(xi)
      (the
“Key
      Employee”)
      (the
“Key
      Employment Agreement”);

     

    (xii)  executed
      copies of certain Confidentiality Agreements and Assignment of Invention
      Agreements by any Transferred Employees who are employed prior to Closing (the
      “Confidentiality
      Agreements”);

     

    (xiii)  evidence
      satisfactory to the Buyer that the Seller has obtained releases with respect
      to
      all royalty agreements between the Company and the following individuals: (i)
      P.
      Elayne Wishart; (ii) Jane Swon; (iii) Jerry T. Swon; (iv) John Swon; (v) David
      Miller; and (vi) Carl Germano (collectively, the “Royalty
      Agreements”),
      provided, that the Buyer shall have the option to waive such requirement;

     

    (xiv)  an
      executed counterpart of the sublease under the Headquarters Lease, in form
      and
      substance satisfactory to Buyer (the “Sublease”);
      in a
      form reasonably acceptable to the Buyer and the Seller, pursuant to which Buyer
      subleases the premises covered by the Headquarters Lease; 

     

    (xv)  an
      executed counterpart of the Patent Assignment Agreement (the “Patent
      Assignment Agreement”)
      in a
      form reasonably acceptable to the Buyer and Seller, pursuant to which the Seller
      shall assign all of the patents contained in the Purchased Assets to Buyer;
      

     

    (xvi)  an
      executed counterpart of Trademark and Domain Name Assignment Agreement (the
      “Trademark
      and Domain Name Assignment Agreement”)
      in a
      form reasonably acceptable to Buyer and Seller, pursuant to which the Seller
      shall assign all of the trademarks and domain names contained in the Purchased
      Assets to the Buyer; 

     

    (xvii)  evidence
      satisfactory to the Buyer regarding payoff, conversion or release of all
      Indebtedness; and

     

    (xviii)  Operating
      Agreement executed by the Parent.

     

    (b)  Deliveries
      by Buyer.
      At the
      Closing, Buyer shall deliver or cause to be delivered to Seller the following
      documents, instruments, certificates and agreements (which shall be in form
      and
      substance reasonably satisfactory to Seller and its counsel):

     

    (i)  a
      counterpart to the Bill of Sale, duly executed by Buyer;

     

    (ii)  a
      counterpart to the Assignment Agreement, duly executed by Buyer;

     

    
      
        
        

      

      
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    (iii)  a
      certificate signed by an authorized officer of Buyer and dated as of the Closing
      Date, certifying that the representations and warranties of Buyer contained
      in
      this Agreement are true and correct in all material respects on the Closing
      Date
      as if such representations and warranties were made on the Closing
      Date;

     

    (iv)  an
      incumbency and specimen certificate with respect to the officer(s) of Buyer
      executing the Transaction Documents to which Buyer is party;

     

    (v)  a
      counterpart to the Patent Assignment Agreement; 

     

    (vi)  a
      counterpart to the Trademark and Domain Name Assignment Agreement; 

     

    (vii)  the
      LLC
      Interest;

     

    (viii)  a
      copy of
      the Warrant issued to the LLC;

     

    (ix)  a
      copy of
      the Operating Agreement, duly executed by Buyer;

     

    (x)  a
      counterpart to the Key Employment Agreement duly executed by Buyer;

     

    (xi)  a
      counterpart to the Sublease duly executed by Buyer; 

     

    (xii)  evidence
      satisfactory to Seller that Buyer has been capitalized in an amount not less
      than $15 million through the sale of its Series A Convertible Preferred Stock
      in
      accordance with the Series A Preferred Stock Purchase Agreement by and among
      the
      Buyer and the purchasers named therein (the “Stock
      Purchase Agreement”).

     

    ARTICLE
      III

    REPRESENTATION
      AND WARRANTIES OF SELLER

     

    Each
      of
      Parent and Seller represent and warrant to Buyer as of the Effective Date and
      agree to represent and warrant to Buyer as of the Closing Date as
      follows:

     

    Section
      3.1  Organization.
      The
      Company is a corporation duly organized and validly existing under the Laws
      of
      the State of Delaware. Subsidiary is a corporation duly organized and validly
      existing under the laws of the State of Delaware. Both Company and Subsidiary
      have (i) the requisite power and authority to conduct the Business as now
      conducted and (ii) the necessary corporate power and authority to execute,
      deliver and perform their obligations under the Transaction Documents and to
      consummate the transactions contemplated herein and therein. Complete and
      correct copies of the Certificates of Incorporation and Bylaws of Company and
      of
      Subsidiary have previously been delivered to Buyer (such documents, the
“Organizational
      Documents”).
      Each
      of Company and Subsidiary are is duly qualified to do business in every
      jurisdiction in which the nature of its business makes such qualifications
      necessary, except where such failure would not have a Material Adverse Effect.
      Each of Company and Subsidiary have the full right, power, and authority to
      engage in the Business as it is now conducted, and has all necessary licenses
      and permits to operate the Business as it is presently being
      operated.

     

    
      
        
        

      

      
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    Section
      3.2  Authority.
      Each of
      Company and Subsidiary now have, or will have, all requisite organizational
      authority to execute, deliver and perform each Transaction Document to which
      it
      is a party, and to perform its obligations and consummate the transactions
      contemplated under the Transaction Documents to which it is a party, subject
      to
      receipt of shareholder approval, if the Board of Directors of the Company
      determines that such approval is required. Subject to receipt of shareholder
      approval, the execution and the delivery of each Transaction Document to which
      either Company or Subsidiary is a party, and the performance of the transactions
      contemplated by such Transaction Documents, have been duly authorized by each
      of
      Company and Subsidiary and all necessary corporate or organizational actions
      by
      each of Company and Subsidiary for the execution, delivery and performance
      of
      each Transaction Document to which such Company or Subsidiary is a party and
      the
      consummation of the transactions contemplated hereby and thereby have been
      taken, and no further corporate or organizational authorization will be
      necessary to authorize the execution and delivery by each of Company and
      Subsidiary, and the performance of its obligations under, each Transaction
      Document to which such Company or Subsidiary is a party.

     

    Section
      3.3  Execution
      and Delivery.
      Each
      Transaction Document to which either Company or Subsidiary is a party has been
      validly executed and delivered by such party and constitutes valid and binding
      obligations of each such party, enforceable against each such party in
      accordance with its terms, except (i) as such enforceability may be limited
      by
      or subject to any bankruptcy, insolvency, reorganization, moratorium or other
      similar laws affecting creditors’ rights generally, (ii) as such obligations are
      subject to general principles of equity and (iii) as rights to indemnity may
      he
      limited by federal or state securities laws or by public policy.

     

    Section
      3.4  SEC
      Reports.
      The
      Seller has timely filed all forms, reports, statements and documents required
      to
      be filed by it with the SEC and with any other governmental body, agency,
      official or authority (collectively, the “SEC
      Reports”).
      Each
      SEC Report (i) was prepared in accordance with the requirements of the
      Securities Act, the Exchange Act and the rules and regulations thereunder (ii)
      did not at the time it was filed contain any untrue statement of a material
      fact
      or omit to state a material fact required to be stated therein or necessary
      in
      order to make the statements made therein, in the light of the circumstances
      under which they were made, not misleading. Each of the financial statements
      (including, in each case, any notes thereto) contained in the SEC Reports was
      prepared in accordance with GAAP (except, in the case of unaudited financial
      statements, for the absence of footnotes and subject to normal year end
      adjustments, which adjustments are not material) applied on a consistent basis
      throughout the periods indicated (except as may be indicated in the notes
      thereto) and each presented fairly the financial position of Buyer as at the
      respective dates thereof, and results of operations, stockholders' equity and
      cash flows for the respective periods indicated therein, except as otherwise
      noted therein (subject, in the case of unaudited statements, to normal and
      recurring immaterial year-end adjustments).

     

    
      
        
        

      

      
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    Section
      3.5  Financial
      Statements.
      Seller
      has delivered the balance sheet of the Parent as of June 30, 2006 and the
      related statements of income, stockholders’ equity, changes in financial
      position and cash flow (the “Financial
      Statements”).
      Seller represent that, to Seller’s actual knowledge, and subject to adjustments
      recommended by Seller’s independent auditors, the Financial Statements (i) are
      true and correct: in accordance with the books of account and records of Parent
      and Subsidiary in all material respects; and (ii) accurately and fairly reflect
      in all material respects all assets and liabilities of Parent and Subsidiary.
      To
      Seller’s actual knowledge, neither Parent nor Subsidiary has any indebtedness or
      liability, absolute or contingent, which is not reflected in the financial
      statements, or that has not been specifically identified herein to Buyer, other
      than liabilities or indebtedness incurred in the ordinary course of
      business.

     

    Section
      3.6  No
      Conflict or Default.
      The
      execution and performance of this Agreement, the compliance with its provisions
      by each of Company and Subsidiary, and the transfer of the Purchased Assets
      to
      Buyer on the Closing Date will not conflict with or result in any breach of
      any
      of the terms, conditions, or provisions of any agreement, indenture, mortgage,
      or other instrument to which either Seller is a party or by which it is bound,
      except for any such breach which would not in the aggregate reasonably be
      expected to have a Material Adverse Effect or as set forth in Schedule
      3.6.
      Further, subject to shareholder approval, the execution and performance of
      this
      Agreement, the compliance with its provisions by Seller, and the transfer of
      the
      Purchased Assets to Buyer on the Closing Date will materially comply with all
      Laws of any Governmental Authority applicable to the Business or any of the
      Purchased Assets and will not conflict with, or result in, the breach of any
      of
      the terms of any Organizational Documents. Except as set forth in Schedule
      3.6,
      the
      consummation of the transactions contemplated by this Agreement will not require
      the consent of any Person with respect to the rights, licenses, franchises,
      leases, contracts or agreements (including but not limited to the Contracts)
      of
      Seller and will not have a Material Adverse Effect upon any such rights,
      licenses, franchises, leases or agreements.

     

    Section
      3.7  Title
      to Assets.
      Seller
      has or shall have good and marketable title, or valid leasehold rights (in
      the
      case of leased property) to all of the Purchased Assets, free and clear of
      all
      security interests, liabilities, conditions, pledges, liens, mortgages, licenses
      in favor of any Person other than either Seller, conditional sales contracts,
      attachments, hypothecations, judgments, easements, claims, and encumbrances
      of
      every kind and nature (collectively, “Encumbrances”),
      except for those set forth in Schedule
      3.7
      (the
“Permitted
      Encumbrances”).
      At
      the Closing, Seller will sell, assign, transfer, convey, and deliver good and
      marketable title to the Purchased Assets, or, in the case of assets constituting
      Purchased Assets which are leased or licensed by either Seller pursuant to
      Personal Property Leases or other Contracts, valid leasehold interests or
      licenses to such Personal Property Leases or other Contracts, free and clear
      of
      all Encumbrances other than Permitted Encumbrances.

     

    Section
      3.8  Contracts.
      All of
      the Contracts are in full force and are enforceable against Company or
      Subsidiary, as the case may be, in accordance with their terms. To the Company’s
      and Subsidiary’s knowledge and except as set forth in Schedule
      3.8
      and
      except a default or breach which is capable of being, and shall be, cured prior
      to the Closing, (i) none of the Contracts is in breach or default due to the
      action of Company or Subsidiary, or to Seller’s knowledge, of any other party
      thereto; and (ii) no event exists which is a default or breach due to the action
      of Company or Subsidiary, under any of the Contracts, or which after the passage
      of time or giving of notice or both would constitute a breach or default, due
      to
      the action of Company or Subsidiary. Except as set forth in Schedule
      3.8,
      all
      duties and obligations required to be performed by any party to the Contracts
      prior to Closing have been so performed or will be performed prior to Closing.
      Except as set forth in Schedule
      3.8,
      the
      Contracts are freely assignable, or if the consent of the contracting party
      to
      the assignment is required, Seller shall have obtained such consent prior to
      Closing, or if the giving of notice of such assignment is required, Seller
      has
      provided such notice prior to the Closing. To Seller’s actual knowledge: (x) no
      party to any of the Contracts is threatened with insolvency; and (y) there
      exists no fact or circumstance which may cause a party to one of the Contracts
      to fail to perform such Contract. The execution, delivery, consummation and
      performance of this Agreement and the transactions contemplated herein will
      not
      cause either Seller to be in breach or default of any of the Contracts.
Schedules
      2.1(a),
      (b),
      (c),
      and (f)
      collectively constitute accurate, correct and complete lists of the
      Contracts.

     

    
      
        
        

      

      
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    Section
      3.9  No
      Other Contracts.
      Other
      than the Contracts or the Excluded Assets, there are no written or oral or
      contractual commitments, contracts or agreements that relate to the Business
      to
      which Seller is a party that will be binding upon Buyer, or that will affect
      Buyer or the Purchased Assets, on or after the Closing.

     

    Section
      3.10  Permits.
      Other
      than the Contracts or the Excluded Assets, the Permits listed in Schedule
      2.1(g)
      constitute all of the licenses, permits, certificates, approvals, exemptions,
      franchises, registrations, variances, accreditations or authorizations related
      to, reasonably necessary in, currently used in or required for the operation
      of
      the Business. The Permits are valid and in full force and effect and there
      are
      no pending proceedings which could result in the termination, revocation,
      limitation or impairment of any of the Permits. The Seller has not received
      notice of any violations in respect of any of the Permits. Schedule
      2.1(g)
      contains
      an accurate, correct and complete list of the Permits that are reasonably
      necessary in, currently used in or required for the operation of the
      Business.

     

    Section
      3.11  Intellectual
      Property.
      Other
      than the Contracts or the Excluded Assets, the Business Intellectual Property
      listed in Schedule
      2.1(h)
      constitutes all of the Intellectual Property owned or licensed by Seller that
      is
      currently used solely in the conduct of the Business, and any license for any
      of
      the foregoing in each case. Seller owns, or licenses or otherwise possesses,
      legally enforceable rights to use the Business Intellectual Property that is
      listed in Schedule
      2.1(h)
      and such
      Business Intellectual Property is sufficient for the conduct of the Business
      of
      Seller as it is currently being conducted on the date hereof. Except as
      disclosed in Schedule
      3.11,
      neither
      the manufacture, marketing, license, sale or intended use of any tangible
      product currently sold by the Business violates any license or agreement between
      either Seller and any third party relating to such product or, to Seller’s
      knowledge, infringes any Intellectual Property right of any other party. The
      Seller has not received any written charge, complaint, claim, demand, or notice
      alleging any such interference, infringement, misappropriation, or violation
      (including any claim that either Seller must license or refrain from using
      any
      Intellectual Property rights of any Person relating to the Business Intellectual
      Property), nor is there any pending claim or litigation contesting the validity
      of the Business Intellectual Property or Seller’s ownership or right to use,
      sell, license or dispose of the Business Intellectual Property. The Seller
      has
      not received any notice asserting that any of the Business Intellectual Property
      or the proposed use, sale, license or disposition thereof conflicts or will
      conflict with the rights of any other party, and the Seller has not licensed
      the
      use of the Business Intellectual Property to any third party nor permitted
      the
      use by any third party of the same in a manner which would infringe the
      trademark rights of Seller. Seller will make available to Buyer complete and
      correct copies of all reasonably accessible user and technical documentation
      related to the Business Intellectual Property that is listed in Schedule
      2.1(h).
      Except
      as disclosed in Schedule
      3.11,
      the
      Seller has not received any notice that any of their current or prior members,
      officers, employees or consultants claim an ownership interest in any of the
      Business Intellectual Property as a result of having been involved in the
      development of such property while employed by or consulting to the Business
      or
      otherwise.

     

    
      
        
        

      

      
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    Section
      3.12  Inventory.
      Except
      as set forth in Schedule
      3.12,
      Sellers
      are not in possession of any inventory that is not owned by them. All of the
      Inventory has been valued at cost on a first-in, first-out basis.

     

    Section
      3.13  No
      Real Property Owned by Seller.
      Seller
      owns no real property used in the Business. Except as set forth in Schedule
      3.13,
      the
      Headquarters Lease may be freely assigned, assumed or sublet, is valid and
      in
      full force and effect, and to Seller’s knowledge there is not pending or
      threatened any proceedings which could result in the termination revocation,
      limitation or impairment of the Headquarters Lease.

     

    Section
      3.14  Litigation.
      Except
      as set forth in Schedule
      3.14,
      there
      is no litigation, proceeding, or governmental investigation pending in front
      of
      any court, arbitration board, administrative agency, or tribunal against or
      relating to Seller that would prevent or affect the Purchased Assets, the
      Business, or the consummation of this Agreement or the sale, transfer or
      assignment of the Purchased Assets by Seller.

     

    Section
      3.15  Compliance
      with Law.
      Except
      as set forth in Schedule
      3.15,
      Seller
      has been and are in, and the Business has been and is being conducted in,
      compliance in all material respects with all Laws that are applicable to or
      binding upon the Business or the Purchased Assets, and Seller has not received
      any written or oral notice of any violation or alleged violation of any
      Law.

     

    Section
      3.16  Investment
      Company.
      Seller
      is not an “investment company”, or an “affiliated person” of an “investment
      company”, or a company “controlled” by an “investment company” as such terms are
      defined in the Investment Company Act of 1940, as amended, and Buyer is not
      an
“investment adviser” or an “affiliated person” of an “investment adviser” as
      such terms are defined in the Investment Advisers Act of 1940, as
      amended.

     

    Section
      3.17  Brokers’
      Fees.
      Except
      as set forth in Schedule
      3.17,
      Seller
      has no liability or obligation to pay any fees or commissions to any broker,
      finder or agent with respect to the transactions contemplated by the Transaction
      Documents.

     

    Section
      3.18  No
      Material Adverse Effect.
      Since
      June 30, 2006, there have been no changes that would have a Material Adverse
      Effect. Since June 30, 2006, Seller has operated the Business in the ordinary
      course of business consistent with past practices and Seller has used reasonable
      efforts to keep the Business intact.

     

    
      
        
        

      

      
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    Section
      3.19  Accounts
      Receivable.
      Except
      as set forth on Schedule
      3.19,
      all
      Accounts Receivable of the Business arose from valid transactions and in the
      ordinary course of business for goods sold or services rendered and are not
      subject to any valid counterclaims or setoffs known to Seller with respect
      to
      any such Accounts Receivable. The list of Accounts Receivable listed in
Schedule
      2.1(k)
      is a
      true, accurate and complete list of such accounts generated in connection with
      the Business and existing as of the date thereof.

     

    Section
      3.20  Taxes

     

    (a)  Except
      as
      set forth in Schedule
      3.20 (a),
      as of
      the Closing Date:

     

    (i)  The
      Seller has timely filed or, if not yet due, will timely file all Tax Returns
      required to be filed by them on or before the Closing Date and all such Tax
      Returns are or, in the case of Tax Returns not yet filed, will be, true, correct
      and complete in all respects.

     

    (ii)  The
      Seller has paid all Taxes with respect to all Taxable periods ending on or
      before the Closing Date and all Taxable periods starting before and ending
      after
      the Closing Date to the extent attributable to the portion of such periods
      up to
      and including the Closing Date, except to the extent the failure to pay any
      such
      Taxes would not reasonably expected to have a Material Adverse Effect.

     

    (iii)  The
      Seller has made or will make available to Buyer signed copies of all Tax Returns
      filed by the Seller relating to all Taxable periods ending on or before the
      Closing Date as to which the statute of limitations remains open.

     

    (iv)  No
      extension of time has been requested or granted for the Seller to file any
      Tax
      Return that has not yet been filed or to pay any Tax that has not yet been
      paid,
      and the Seller has not granted a power of attorney that remains outstanding
      with
      regard to any Tax matter.

     

    (v)  There
      is
      no pending or, to the knowledge of the Seller, threatened examination,
      investigation, audit, suit, action, claim or proceeding relating to Taxes (a
      “Tax
      Audit”)
      of the
      Seller.

     

    (vi)  Buyer
      has
      received copies of all material audit reports and correspondence between the
      Seller and any Tax Authority and
      a
      true and complete summary of all oral communications between the Seller and
      any
      Tax Authority relating to any Tax Audit of the Seller, including without
      limitation any Tax Audit that is in progress or for which an extension of the
      statute of limitations was granted.

     

    (vii)  The
      Seller has not received notice of a determination by a Tax Authority that Taxes
      are owed by the Seller (such determination being referred to as a “Tax
      Deficiency”)
      and,
      to the knowledge of
      the
      Seller, no Tax Deficiency is proposed or threatened.

     

    
      
        
        

      

      
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    (viii)  All
      Tax
      Deficiency asserted against the Seller has been paid or finally settled and
      all
      amounts asserted in any Tax Deficiency to be owed have been paid.

     

    (ix)  There
      are
      no Liens arising from or related to Taxes on or pending against the Seller
      or
      any of their properties other than statutory Liens for personal property Taxes
      that are not yet due and payable.

     

    (x)  There
      are
      no presently outstanding waivers or extensions, or requests for waiver or
      extension, of the time within which a Tax Deficiency may be asserted or assessed
      against the Seller.

     

    (xi)  No
      issue
      has been raised in any Tax Audit of the Seller which, by application of similar
      principles to any past, present or future period as to which the statute of
      limitations remains open, would result in an adjustment to the amounts reported
      in such period.

     

    (xii)  The
      Seller has not changed a Tax accounting method during any Taxable year ending
      on
      or before the Closing Date. Seller has not taken any action, whether or not
      required, that has resulted or will result in deferring a liability for Taxes
      of
      the Seller from a Taxable period ending on or before the Closing Date to a
      Taxable period ending after such date. 

     

    (xiii)  The
      Seller has not ever been required to include in income an adjustment pursuant
      to
      Section 481 of the Code and no Tax Authority has ever made or proposed any
      such
      adjustment. The Seller has not entered into a closing agreement described in
      Section 7121 of the Code, an advance pricing agreement or any other agreement
      with a Tax Authority relating to Taxes.

     

    (xiv)  The
      Seller does not own any property that is tax-exempt use property within the
      meaning of Section 168(h) of the Code, that is described in Section 168(f)(8)
      of
      the Code as in effect prior to its amendment by the Tax Reform Act of 1986,
      that
      is tax-exempt bond financed property within the meaning of Section 168(g) of
      the
      Code or that is “limited use property” within the meaning of Rev. Proc.
      76-30.

     

    (xv)  The
      Seller is not party to any arrangement to which Section 162(m) or Section 280G
      of the Code might apply.

     

    (xvi)  The
      Seller has not filed a consent pursuant to Section 341(f) of the Code or agreed
      to have Section 341(f)(2) apply to the disposition of any asset.

     

    (xvii)  The
      Seller has not participated in or cooperated with any international boycott
      within the meaning of Section 999 of the Code.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (xviii)  The
      Seller is not now nor has ever been (a) an includable member of an
“affiliated group” within the meaning of Section 1504(a) of the Code other than
      an affiliated group consisting only of the Seller and one or more of the current
      Parent subsidiaries or otherwise liable for the Taxes (or amounts in lieu of
      Taxes) of a person other than the Seller pursuant to Treasury Regulation Section
      1.1502-6 or any similar provision of state, local or foreign Laws, whether
      or
      not as a transferee, a successor, by operation of law, by contract or otherwise,
      (b) a member of any consolidated, combined or unitary Tax Return filing group
      other than a group consisting only of the Seller and one or more of the current
      Parent subsidiaries, (c) a party to any Tax sharing agreement, Tax indemnity
      agreement or similar agreement, arrangement or practice with respect to Taxes,
      including an agreement that obligates it to make any payment computed by
      reference to the Taxes, Taxable income or Tax losses of any other individual
      or
      entity, (d) a personal holding company as defined in Section 542 of the Code,
      (e) the owner of an interest in an entity that is treated as a Tax partnership,
      trust, regulated investment company as defined in Section 851 of the Code or
      real estate investment trust as defined in Section 856 of the Code (f) a United
      States shareholder as defined in Section 951(b) of the Code of a controlled
      foreign corporation as defined in Section 957 of the Code, (g) a United States
      real property holding company within the meaning of Section 897(c)(2) of the
      Code or (h) a shareholder of a passive foreign investment company, as defined
      in
      Section 1297 of the Code.

     

    (xix)  Seller
      has not entered into a gain recognition or other agreement requiring it to
      take
      into account Taxable income or to incur a Tax liability that it would not have
      had to take into account or would not have had to incur but for such
      agreement.

     

    (xx)  Seller
      has not failed to disclose on its federal, state, local and foreign income
      Tax
      Returns all positions taken therein that could give rise to a penalty under
      Section 6662 of the Code or any corresponding provision of state, local or
      foreign Tax Laws.

     

    (xxi)  Seller
      has not ever participated, directly or indirectly, in a transaction which is
      described in Treasury Regulation Sections 1.6011-4(b)(2) or 1.6011-4(b)(3)
      nor
      has ever held “an interest” in a “tax shelter,” as those terms are defined in
      Treasury Regulation Section 301.6112-1.

     

    (xxii)  Seller
      has not ever been a party to a transaction that gave rise to deferred
      intercompany gains or losses that have not been fully taken into income for
      income Tax purposes.

     

    (xxiii)  To
      the
      knowledge of the Seller, no claim has ever been made by a Tax Authority in
      any
      jurisdiction that the Seller is or may be subject to Tax in a jurisdiction
      in
      which it does not currently pay Tax or file a Tax Return.

     

    (xxiv)  The
      Seller has not ever requested a private ruling from a Tax Authority on any
      matter.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (xxv)  Seller
      has not been a “distributing corporation” or a “controlled corporation” in
      connection with a distribution described in Section 355 of the Code.

     

    (xxvi)  The
      Seller nor, to the knowledge of the Seller, any other Person, has taken any
      action or failed to take any action that would cause the Transaction to fail
      to
      qualify as a tax-free reorganization under Section 368(a) of the Code, and
      no facts exist that would cause the Transaction to fail to so
      qualify.

     

    (xxvii)  The
      net
      operating losses, alternative minimum tax net operating losses, net capital
      losses, alternative minimum tax net capital losses, Tax credits, alternative
      minimum tax credits and other Tax attributes of the Seller are not subject
      to
      any consolidated return limitation, limitation under Section 382 of the
      Code or any other limitation on their use, allowance or availability, other
      than
      a limitation arising from the transaction pursuant to this
      Agreement.

     

    (xxviii)  The
      Seller has retained all supporting and backup papers, receipts, spreadsheets
      and
      other information necessary for the preparation of all Tax Returns with respect
      to the Seller and the defense of Tax Audits involving all Taxable periods
      either ended
      on
      or during the six (6) years prior to the Closing Date or from which there are
      unutilized net operating loss, capital loss or investment tax credit
      carryovers.

     

    (xxix)  The
      Seller has collected, or will, on or before the Closing Date, collect, all
      sales
      and use, employment, excise and other Taxes that are required to have been
      or to
      be collected on or prior to the Closing Date and the Seller has remitted, or
      will, on or before the Closing Date, or as soon as practicable thereafter,
      but
      in no event after the date such Taxes are required to be remitted, remit to
      the
      appropriate Tax Authority all sales and use, employment, excise and other Taxes
      that were collected on or before the Closing Date or that are required to have
      been or to be remitted on or prior to the Closing Date. 

     

    (xxx)  The
      Seller has maintained and has in its possession all records, supporting
      documents and exemption and resale certificates required by applicable sales
      and
      other Tax statutes and regulations to be retained in connection with the
      collection and remittance of Taxes or necessary to justify the amounts of such
      Taxes reported and paid in each case for all periods up to and including the
      Closing Date.

     

    (xxxi)  No
      Transfer Taxes or other Taxes are or will be imposed on Buyer, or the Seller
      or
      on any of their properties by reason of the Transaction pursuant to this
      Agreement.

     

    (xxxii)  The
      Seller is not subject to Tax in any foreign country and the Seller has complied
      with all applicable Tax Laws and regulations of all countries whose Tax laws
      to
      which they are subject.

     

    
      
        
        

      

      
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    (b)  Schedule
      3.20(b)
      sets
      forth:

     

    (i)  A
      schedule of the filing dates of all Tax Returns required to be filed by the
      Seller;

     

    (ii)  A
      description of all past Tax Audits involving the Seller;

     

    (iii)  A
      list of
      all elections made by the Seller relating to Taxes;

     

    (iv)  A
      description of any change of accounting method of the Seller;

     

    (v)  A
      schedule of the Seller’s Tax basis in each of its assets as of the Closing Date,
      and the recovery period and annual depreciation or amortization deduction for
      each such asset for each year of its remaining Tax recovery period and in the
      case of amortizable assets, a description of each asset; and

     

    (vi)  A
      schedule of the Tax attributes of the Seller (including, but not limited to,
      net
      operating losses, capital losses, investment credits, foreign tax credits and
      alternative minimum tax credits), together with a description of all limitations
      to which such Tax attributes are subject (e.g., limitations under Section 382
      of
      the Code).

     

    (c)  Each
      reference to a provision of law in this Section
      3.20
      shall be
      treated for state, local and foreign Tax purposes as a reference to all
      analogous and similar provisions of state, local and foreign Laws.

     

    Section
      3.21  Accounts
      Payable.
      Except
      as set forth on Schedule
      3.21,
      all
      accounts payable of Seller related to the Business are current and have been
      generated in the ordinary course of business. Except as set forth in
Schedule
      3.21,
      Seller
      has paid promptly, when due, all accounts payable related to the Business,
      including lease payments and rental fees, utility bills, and other obligations
      due as a result of the operation of the Business and the ownership of the
      Purchased Assets through the Closing Date.

     

    Section
      3.22  No
      Undisclosed Liabilities.
      Except
      as disclosed on Schedule
      3.22,
      Seller
      has no material liability related to the operation of the Business, except
      for
      liabilities reflected in the Financial Statements and for current liabilities
      incurred in the ordinary course of business. Seller has no liability or
      obligation to refund any economic development incentives received from any
      governmental entity.

     

    Section
      3.23  Environmental,
      Health & Safety Compliance.
      To
      Seller’s knowledge, neither the conduct nor operation of the Business, nor any
      condition of the Headquarters Lease, nor the premises leased by the Headquarters
      Lease, violates any Law or common law concerning public health and safety,
      worker health and safety, and pollution or protection of the environment
      (“Environmental,
      Health, and Safety Requirements”),
      where
      such violation would reasonably be expected to have a Material Adverse Effect
      and Seller has not received any notice stating that the operation or condition
      of any real property presently leased or operated in connection with the
      Business is in violation of any Environmental, Health, and Safety Requirements,
      where such violation would reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    Section
      3.24  Government
      Authorizations.
      The
      governmental authorizations listed in Schedule
      3.24
      collectively constitute all of the authorizations of any Governmental Authority
      necessary to permit Seller to lawfully conduct and operate the business in
      the
      manner in which they currently conduct and operate the business and to permit
      Seller to own and use the Purchased Assets in the manner in which they currently
      own and use such Purchased Assets, except where the failure to do so would
      not
      have a Material Adverse Effect.

     

    Section
      3.25  Relationships
      with Affiliates.
      Neither
      Seller nor any of their Affiliates has any interest in, has owned, of record
      or
      as a beneficial owner, or has an equity interest or any other financial or
      profit interest in any Person that has (a) had business dealings or a material
      financial interest in any transaction with either Seller other than business
      dealings or transactions disclosed in Schedule
      3.25
      or (b)
      engaged in competition with Seller with respect to the Business in any market
      presently served by Seller. Except as set forth in Schedule
      3.25,
      neither
      Seller nor any of their Affiliates is a party to any Contract with, or has
      any
      claim or right against, either Seller, (i) providing for the furnishing of
      services by, (ii) providing for the rental of real or personal property from,
      or
      (iii) otherwise requiring payments to (other than for services as managers,
      officers, directors or employees of the Business), any such person or any
      corporation, partnership, trust or other entity in which any such person has
      a
      substantial interest as a stockholder, officer, director, trustee or
      partner.

     

    Section
      3.26  ERISA.
      Neither
      Seller nor any ERISA Affiliate maintains or contributes to or has or had any
      obligation to maintain or contribute to any employee pension benefit plan within
      the meaning of Section 3(2) of ERISA that (i) is subject to minimum funding
      standards of the Code or ERISA; or (ii) is a multiemployer plan as defined
      in
      Section 4001(a)(3) of ERISA.

     

    Section
      3.27  Employees.

     

    (a)  Each
      Employee Benefit Plan maintained by the Seller is listed in Schedule
      3.27(a)
      and
      copies or descriptions of each such Employee Benefit Plan have been delivered
      to
      Buyer. Buyer will not have, as a consequence of the transactions contemplated
      hereby, any liability or obligation with respect to or under any agreement
      between either Seller and any of the Employees, except for the Transferred
      Employees (as such term is defined herein) to the extent contemplated by
Section
      6.1
      hereof.

     

    (b)  Each
      Employee Benefit Plan maintained by Seller with respect to the Business
      Employees has been maintained and administered at all times in material
      compliance with its terms and all applicable Laws.

     

    (c)  Schedule
      3.27(c)
      contains: (i) a list of the Business Employees; (ii) the current annual
      compensation provided by Seller to each such Business Employee as of the Closing
      Date; (iii) a list of any increase presently scheduled (including the effective
      date thereof) in the rate of compensation of any the Business Employees; (iv)
      the title and location of each such Business Employee; and (v) a job description
      for each Business Employee.

     

    
      
        
        

      

      
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    (d)  Neither
      Seller is a party to or bound by any union contract or collective bargaining
      agreement and has not experienced any strike, grievance or any arbitration
      proceeding, claim of unfair labor practices filed or, to Seller’s knowledge,
      threatened to be filed or any other material labor difficulty. 

     

    (e)  All
      of
      the Business Employees are United States citizens, or lawful residents of the
      United States.

     

    Section
      3.28  No
      Disputes.
      Except
      as set forth on Schedule
      3.28,
      to
      Seller’s knowledge, there are no material conflicts or problems with any
      officer, manager or Key Employee of Seller that would likely result in the
      termination or resignation of employment of any such individual. To Seller’s
      knowledge, there are no material disputes with suppliers that would likely
      result in the termination of the source of supply of a material product and
      there are no long term commitments with suppliers.

     

    Section
      3.29  Insurance
      Coverage.
      Except
      as set forth in Schedule
      3.29,
      Seller
      maintains insurance policies for fire, liability and other forms of insurance
      covering the Business and the Purchased Assets in amounts and against such
      losses and risks as are generally maintained for comparable businesses and
      properties and such insurance will be maintained through Closing.

     

    Section
      3.30  Consents
      and Approvals.
      Except
      for consents with respect to the Consent Contracts, no material consent,
      approval, waiver or authorization is required to be given or made by any
      Government Authority or other Person in connection with the execution, delivery
      and performance of this Agreement by the Seller.

     

    Section
      3.31  Assets
      of the Business.
      The
      Seller (and not any third party or Affiliate of any Seller) is the beneficial
      owner of the Purchased Assets, other than the leased Purchased Assets, and
      has
      (and, at the Closing, the Buyer will receive) good and marketable title to
      such
      Purchased Assets, or, in the case of leased Purchased Assets, valid and
      enforceable rights to use such Purchased Assets, free and clear of all Liens
      other than Permitted Encumbrances. All the Purchased Assets that are tangible
      assets are in good operating condition and repair for the purpose in which
      they
      are intended, subject only to ordinary wear and tear. The Purchased Assets
      constitute all of the assets (whether real or personal, tangible or intangible)
      that are required to operate the Business as currently being operated by the
      Seller prior to the Closing other than the assets listed on Schedule
      3.31.

     

    Section
      3.32  Product
      Warranties.
      Each
      product manufactured, licensed or sold by Seller has been in substantial
      conformity with all contractual commitments and express warranties applicable
      to
      Seller, all of which are described in Schedule
      3.32,
      as well
      as with all warranties implied by law.

     

    Section
      3.33  Solvency.
      Seller
      will be Solvent immediately following the Closing. Seller will not fail to
      be
      Solvent as a result of the execution and delivery of the Transaction Documents.
      “Solvent”
shall
      mean, when used with respect to any person or entity, that at the time of
      determination: (i) its assets exceed its liabilities; (ii) it is then able
      and
      expects to be able to pay its debts as they mature; and (iii) it has capital
      sufficient to carry on its business as conducted and as proposed to be
      conducted.

     

    
      
        
        

      

      
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    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF BUYER 

     

    Buyer
      represents and warrants to Seller as of the Effective Date and agrees to
      represent and warrant to Seller as of the Closing Date as follows:

     

    Section
      4.1  Organization.
      Buyer
      is a corporation duly organized and validly existing under the laws of the
      State
      of Delaware. Buyer has (i) all requisite power and authority to carry on
      respective business as it is now being conducted and as contemplated to be
      conducted immediately following the Closing, and (ii) the necessary corporate
      power and authority to execute, deliver and perform its obligations under the
      Transaction Documents and to consummate the transactions contemplated herein
      and
      therein.

     

    Section
      4.2  Authority.
      Buyer
      now has, and at Closing will have, all requisite organizational authority to
      execute, deliver and perform the Transaction Documents and to perform its
      obligations and consummate the transactions contemplated under the Transaction
      Documents to which it is a party. The execution and the delivery of the
      Transaction Documents to which Buyer is a party and the performance of the
      transactions contemplated by such Transaction Documents have been duly
      authorized by Buyer, as the case may be, and all necessary corporate or
      organizational actions by Buyer for the execution, delivery and performance
      of
      the Transaction Documents to which either of them is a party and the
      consummation of the transactions contemplated hereby and thereby have been
      taken, and no further corporate or organizational authorization will be
      necessary to authorize the execution and delivery by Buyer of, and the
      performance of its obligations under, each Transaction Document to which Buyer
      is a party. Each Transaction Document to which Buyer is a party has been validly
      executed and delivered by Buyer, as the case may be, and constitutes valid
      and
      binding obligations of Buyer, enforceable against Buyer in accordance with
      its
      terms, except (i) as such enforceability may be limited by or subject to any
      bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting creditors’ rights generally, (ii) as such obligations are subject to
      general principles of equity and (iii) as rights to indemnity may be limited
      by
      federal or state securities laws or by public policy.

     

    Section
      4.3  Approvals.
      No
      third-party action, waiver, consent or approval is required of any Person for
      the execution, delivery and performance of the Transaction Documents by Buyer,
      and the execution, delivery or performance, and the consummation of the
      transactions contemplated herein or therein do not breach any provision of
      Buyer’s Certificate of Incorporations and Bylaws. No action, waiver, consent or
      approval by any Governmental Authority is necessary to make this Agreement
      a
      valid instrument binding on Buyer in accordance with its terms.

     

    Section
      4.4  Broker
      or Finder’s Fee.
      Buyer
      has no liability or obligation to pay any fees or commissions to any broker,
      finder or agent with respect to the transactions contemplated by this
      Agreement.

     

    
      
        
        

      

      
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    Section
      4.5  No
      Conflict or Default.
      The
      execution and performance of this Agreement, the compliance with its provisions
      by Buyer, and the transfer of the Purchased Assets to Buyer on the Closing
      Date
      will not conflict with or result in any breach of any of the terms, conditions,
      or provisions of any agreement, indenture, mortgage, or other instrument to
      which either Buyer is a party or by which it is bound. Further, the execution
      and performance of this Agreement, the compliance with its provisions by Buyer,
      and the transfer of the Purchased Assets to Buyer on the Closing Date will
      materially comply with all Laws of any Governmental Authority applicable to
      the
      Business or any of the Purchased Assets and will not conflict with, or result
      in
      the breach of any of the terms of any of Buyers’ Organizational Documents. The
      consummation of the transactions contemplated by this Agreement will not require
      the consent of any Person with respect to the rights, licenses, franchises,
      leases, contracts or agreements (including but not limited to the Contracts)
      of
      Buyer.

     

    Section
      4.6  Litigation.
      There
      is no litigation, proceeding or governmental investigation pending in front
      of
      any court, arbitration board, administrative agency or tribunal against or
      relating to Buyer.

     

    Section
      4.7  No
      Default.
      Buyer
      is not in default with respect to any indebtedness, note, indenture, loan
      agreement, mortgage, lease, deed or other agreement to which Buyer is a party
      or
      by which it is bound and neither Buyer nor Parent has received any notice or
      demands with respect to the same that would prevent or affect the transactions
      contemplated by the Transaction Documents.

     

    Section
      4.8  Capitalization.
      Immediately following the Closing and after giving effect to the transactions
      contemplated in this Agreement and the Stock Purchase Agreement, (a) the
      authorized capital stock of the Buyer will consist of: (i) an aggregate of
      75,000,000 shares of Buyer Common Stock, of which up to 10,000,000 shares will
      have been issued and outstanding pursuant to this Agreement and (ii) an
      aggregate of 27,000,000 shares of Series A Convertible Preferred Stock of which
      15,000,000 shares will have been issued and outstanding pursuant to the Stock
      Purchase Agreement; and (b) there will be no options, warrants, conversion
      privileges or other rights outstanding to purchase or otherwise acquire from
      the
      Buyer any capital stock or other securities of the Buyer, or any other
      agreements to issue any such securities or rights other than (i) the Warrant,
      (ii) the issued and outstanding shares of the Series A Convertible Preferred
      Stock, (iii) pursuant to the Stock Purchase Agreement and (iv) a stock option
      plan covering 5,303,030 shares of Buyer Common Stock.

     

    ARTICLE
      V

    PARENT
      & SELLER
      COVENANTS

     

    The
      Parent and Seller hereby covenant and agree as follows:

     

    Section
      5.1  Maintenance
      of the Purchased Assets.
      Until
      the Closing Date, Seller shall not lease, sell, or dispose of any of the
      Purchased Assets other than in the ordinary course of business consistent with
      past practice or otherwise except with the prior written consent of
      Buyer.

     

    
      
        
        

      

      
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    Section
      5.2  Update
      of Disclosure Schedule.
      Prior
      to the Closing Date, Seller shall supplement or amend all relevant Schedules
      and/or notify Buyer with respect to any matter thereafter arising or discovered
      which, if existing or known on the Effective Date of this Agreement, would
      have
      been required to be set forth or described in such Schedule(s) or would have
      been required to be disclosed to Buyer under this Agreement. At the Closing
      Date, Seller shall deliver to Buyer a complete Disclosure Schedule, marked
      to
      show all of the changes since the Effective Date (the “Updated
      Schedules”).

     

    Section
      5.3  Conduct
      of Business.
      From
      the date hereof to the Closing Date, except (i) for entering into and performing
      this Agreement, and the other Transaction Documents; (ii) for the effect of
      the
      consummation of the transactions contemplated hereby and thereby; (iii)
      repayment, conversion or satisfaction of its liabilities and Indebtedness;
      (iv)
      the transactions contemplated in that certain Securities Purchase Agreement,
      dated August 16, 2006, among the Parent and the Purchasers identified therein;
      or (v) as otherwise consented to by Buyer in writing, the Seller shall conduct
      the Business in the ordinary course in substantially the same manner in which
      it
      has previously been conducted, and shall take or refrain from taking (as
      appropriate) the following actions:

     

    (a)  Seller
      will use its best efforts to maintain and preserve relationships with its
      current customers and suppliers of the Business and Transferred
      Employees;

     

    (b)  Seller
      will maintain the books, accounts and records on a basis consistent with that
      of
      prior periods and said books, accounts and records will accurately reflect
      activities of Seller with respect to the Business;

     

    (c)  Seller
      will not do any act or omit to do any act or permit any act or omission to
      act
      that will cause a material breach of any contract, commitment or obligation
      of
      either Seller, including but not limited to the Contracts, where such breach
      would reasonably likely have a Material Adverse Effect;

     

    (d)  Seller
      will use its best efforts to prevent the occurrence of any change or event
      which
      would prevent any of its representations and warranties contained herein from
      being true at and as of the Closing Date;

     

    (e)  Seller
      will maintain in full force and effect the insurance coverage under the policies
      set forth in Section
      3.29;

     

    (f)  Seller
      will give Buyer and Buyer’s Representatives access during normal business hours,
      without unreasonable interference with business operations, to all of the
      facilities, properties, books, contracts, commitments and records of Seller
      and
      shall make Seller’s officers and employees available to Buyer as Buyer shall
      from time to time reasonably request. Buyer and its Representatives will be
      furnished the information concerning Seller relating to the Business which
      Buyer
      reasonably requests.

     

    (g)  Seller
      will not enter into any settlement of any material litigation or proceeding
      relating to the Purchased Assets, the Business or the Assumed
      Obligations;

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (h)  Seller
      will not incur any material obligation or liability or enter into any
      transaction material to the Business without the prior written consent of the
      Buyer;

     

    (i)  Seller
      will discharge or satisfy any known encumbrance or pay or satisfy any known
      obligation or liability (whether absolute, accrued, contingent or otherwise),
      other than Permitted Encumbrances, liabilities being contested in good faith
      and
      for which adequate reserve have been provided and Encumbrances, obligations
      and
      liabilities arising in the ordinary course of business that do not, individually
      or in the aggregate, materially interfere with the use, operation, or
      marketability of any of the Purchased Assets or which may be discharged or
      satisfied at Closing with a portion of the Purchase Price. 

     

    (j)  Seller
      will not mortgage, pledge or subject to any Encumbrance any of the Purchased
      Assets, except for Permitted Encumbrances and Encumbrances arising in the
      ordinary course of business and consistent with past practice and liens for
      Taxes not yet due and payable;

     

    (k)  Seller
      will not dispose of any of the Purchased Assets or enter into any material
      contracts relating to the Business, except in the ordinary course of business
      and consistent with past practices, without the prior written consent of the
      Buyer;

     

    (l)  Seller
      will not become or remain in breach or default on any material obligation other
      than such breach or default which can and shall be cured prior to the
      Closing;

     

    (m)  Seller
      will not write-off as uncollectible any of its Accounts Receivable relating
      to
      the Business or any portion thereof unless otherwise advised by Seller’s
      independent accountants;

     

    (n)  Seller
      will not discontinue the sales of any products of the Business;

     

    (o)  Seller
      will not increase any salary or wage of any Transferred Employee, other than
      regularly scheduled salary increases agreed upon by the board of directors
      of
      the Company or the Subsidiary (which shall not exceed two percent (2%) in the
      aggregate, per annum), or as agreed to prior to the Effective Date, declare
      or
      pay any bonus, revise, amend, institute, or terminate any employee benefit
      of
      any Employee other than previously disclosed to Buyer;

     

    (p)  Seller
      will not enter into any agreement or make any commitment to do any of the
      foregoing;

     

    (q)  Seller
      will assist in the transfer of Transferred Employees needed for the Business;
      and

     

    (r)  Seller
      shall assist Buyer with reasonable integration efforts and
      transition.

     

    
      
        
        

      

      
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    Section
      5.4  Notification.
      Seller
      shall promptly notify Buyer in writing if it becomes aware of (a) any fact
      or
      condition that, in Seller’s reasonable determination, causes or constitutes a
      material breach of any of Seller’s representations and warranties made as of the
      Effective Date or (b) the occurrence after the Effective Date of any fact or
      condition that, in Seller’s reasonable determination, would or would be
      reasonably likely to (except as expressly contemplated by this Agreement) cause
      or constitute a breach of any such representation or warranty had that
      representation or warranty been made as of the time of the occurrence of, or
      Seller’s discovery of, such fact or condition.

     

    Section
      5.5  Interim
      Financial Statements.
      Until
      the Closing Date, Seller shall deliver to Buyer within ten (10) Business Days
      after the end of each month a copy of the unaudited financial statements of
      Subsidiary or such month prepared in accordance with GAAP, consistently applied,
      in a manner and containing information consistent with Seller’s current
      practices.

     

    Section
      5.6  Compliance
      with Laws.
      Seller
      shall duly comply with all Laws applicable to the Business or the Purchased
      Assets (including, without limitation, all environmental Laws) or as may be
      required for the valid and effective transfer and assignment of the Purchased
      Assets.

     

    Section
      5.7  Notice
      of Developments.
      Seller
      will give prompt written notice to the Buyer of any material development
      affecting the assets, liabilities, business, financial condition, operations,
      results of operations, or future prospects of Seller. Seller will give prompt
      written notice to Buyer of any material development affecting the ability of
      Seller to consummate the transactions contemplated by the Agreement. No
      disclosure by Seller pursuant to this Section
      5.7,
      however, shall be deemed to amend or supplement the Disclosure Schedule or
      to
      prevent or cure any misrepresentation, breach of warranty, or
      covenant.

     

    Section
      5.8  Meeting
      of Company Stockholders.

     

    (a)  In
      connection with obtaining the approval of the holders of Company’s common stock,
      par value $0.001 (the “Company
      Common
      Stock”,
      and
      such holders, the “Company
      Stockholders”),
      the
      Company will take all action necessary in accordance with applicable law and
      regulations and its Certificate of Incorporation and Bylaws to duly call, give
      notice of, convene and hold, as promptly as reasonably practicable after the
      date hereof, a meeting (the “Stockholders’
      Meeting”)
      of the
      Company Stockholders for the purpose of obtaining approval of this Agreement
      and
      the Transaction and shall submit this Agreement and the Transaction for approval
      by the Company Stockholders at such meeting or any adjournment
      thereof.

     

    (b)  Company,
      through its board of directors, shall recommend approval of the Transactions
      by
      the Company Stockholders at the Stockholders’ Meeting or any adjournment
      thereof, shall include such recommendation in the Proxy Statement and shall
      use
      all commercially reasonable efforts to obtain the approval of the Company
      Stockholders. 

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (c)  Within
      fourteen (14) days of the execution of this Agreement, Company shall prepare
      and
      file with the Securities and Exchange Commission (“SEC”)
      proxy
      materials as required by applicable law to solicit from the Company Stockholders
      proxies in favor of the adoption of this Agreement and the approval of the
      Transaction (the “Proxy
      Statement”),
      and
      shall use reasonable efforts to have the Proxy Statement cleared by the SEC.
      The
      Proxy Statement shall comply with applicable provisions of the Securities Act
      of
      1933, as amended (the “Securities
      Act”)
      and
      the Exchange Act and the rules and regulations thereunder. If at any time prior
      to the Stockholder’s Meeting any event shall occur that should be set forth in
      an amendment of or a supplement to the Proxy Statement, Company shall prepare
      and file with the SEC such amendment or supplement as soon thereafter as is
      reasonably practicable. Buyer and Company shall cooperate with each other in
      the
      preparation of the Proxy Statement, and Company shall notify Buyer of the
      receipt of any comments of the SEC with respect to the Proxy Statement and
      of
      any requests by the SEC for any amendment or supplement thereto or for
      additional information, and shall provide to Buyer promptly copies of all
      correspondence between Company or any representative of Company and the SEC
      with
      respect to the Proxy Statement. Buyer and its counsel shall have the right
      to
      review the Proxy Statement and all responses to requests for additional
      information by and replies to comments of the SEC before their being filed
      with,
      or sent to, the SEC. Each of Company and Buyer agrees to use commercially
      reasonable efforts, after consultation with the other parties hereto, to respond
      promptly to all such comments of and requests by the SEC in an effort to cause
      the Proxy Statement to be mailed to the holders of Company Common Stock entitled
      to vote at the Stockholders’ Meeting at the earliest practicable time. Company
      agrees that the information provided by it for inclusion in the Proxy Statement
      and each amendment or supplement thereto, at the time of mailing thereof and
      at
      the time of the Stockholders’ Meeting, will not include an untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading.

     

    Section
      5.9  Tax
      Matters.

     

    (a)  Tax
      Returns.
      The
      Seller shall prepare and shall timely file with the appropriate Tax Authority
      all Tax Returns with respect to Taxable periods ending on or before the Closing
      Date. In the event of Tax Returns whose due date is after the Closing Date,
      taking into account all extensions that are properly obtained, at least ten
      (10)
      business days prior to filing a Tax Return, the Seller shall provide or cause
      to
      be provided to Buyer a copy thereof and such Tax Return shall not be filed
      if
      Buyer notifies the Seller in writing within such ten (10) day period of its
      material objection to any material aspect of such Tax Return. 

     

    (b)  Liability
      for Taxes.
      Seller
      shall indemnify and hold harmless the Buyer, from and against all Taxes of
      or
      with respect to the Seller, any its business, its assets or its capital, which
      are owed for any Taxable period ending on or before the Closing Date, or the
      portion of any Straddle Period up to and including the Closing Date.

     

    (c)  Allocation
      of Taxes.

     

    (i)  Taxable
      Periods Ending on the Closing Date.
      Seller
      shall, whenever required or permitted to do so, end its taxable period on the
      Closing Date, including without limitation the federal income tax period ending
      on the Closing Date and begin a new taxable period on the day after the Closing
      Date.

     

    
      
        
        

      

      
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    (ii)  Straddle
      Periods.
      In the
      case of a Taxable period that begins on or before the Closing Date and ends
      after the Closing Date (a “Straddle
      Period”),
      items
      shall be allocated between the portion of the Straddle Period up to and
      including the Closing Date and the portion of the Straddle Period after the
      Closing Date, on the basis of a “closing of the books” by allocating to each
      such portion of the Straddle Period: (A) sales Taxes in proportion to the
      Taxable sales which take place in each portion of the Straddle Period, (B)
      use
      Taxes in proportion to the Taxable purchases which take place in each portion
      of
      the Straddle Period, (C) Taxes based on gross receipts in proportion to the
      gross receipts accrued in each portion of the Straddle Period, (D) Taxes which
      accrue over time (including without limitation, property Taxes) in proportion
      to
      the number of days in each portion of the Straddle Period and (E) in the case
      of
      all other Taxes, on a reasonable basis that gives effect to a “closing of the
      books.”

     

    (iii)  Cooperation.
      Parent,
      the Seller, and the Buyer shall reasonably cooperate, and shall cause their
      Representatives and agents reasonably to cooperate, in the preparation of Tax
      Returns, the payment of Taxes and the resolution of Tax Audits and Tax
      Deficiencies, including maintaining and making available to each other all
      records necessary in connection therewith.

     

    (iv)  Section
      368(a) Qualification.
      From
      and after the date hereof, neither Parent nor Seller will (i) knowingly take
      any
      action or fail to take any action that would cause the Transaction to fail
      to
      qualify as a tax-free reorganization under Section 368(a) or (ii) enter into
      any
      contract, agreement, commitment or arrangement the performance of which would
      result in any such action. 

     

    (v)  FIRPTA
      Clearance.
      Buyer
      shall have received from the Seller a statement meeting the requirements of
      Treasury Regulation Section 1.1445-2(b)(2) that the Seller is not a foreign
      person. 

     

    (vi)  Survival.
      The
      covenants set forth in this Section
      5.9
      shall
      survive the Closing and continue in full force and effect forever thereafter.
      

     

    Section
      5.10  Liquidation.
      Promptly following the Closing, Parent shall cause Subsidiary to liquidate,
      dissolve, and distribute all of its remaining assets to Parent as sole
      stockholder of Subsidiary. 

     

    ARTICLE
      VI

    MUTUAL
      COVENANTS.
      

     

    Each
      of
      the parties hereto, as the case may be, hereby covenant and agree as follows:
      

     

    Section
      6.1  Employee
      Matters.

     

    
      
        
        

      

      
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    (a)  Transferred
      Employees.
      Schedule
      3.27(c)
      lists
      all of the Business Employees as of the date of this Agreement. Seller shall
      continue to employ all of the Employees until the Closing, except for any
      Employee who prior to the Closing (i) is terminated for cause; (ii) is
      terminated with the consent of Buyer, or (iii) voluntarily resigns. Within
      sixty
      (60) business days of the execution of this Agreement, Buyer shall deliver
      to
      Seller a list of those Business Employees who will be offered employment by
      Buyer on terms and conditions of employment to be determined in the sole
      discretion of the Buyer. From the date of this Agreement to the Closing Date,
      Seller shall permit Buyer to communicate with the Business Employees, at
      reasonable times and upon reasonable notice and to interview the Business
      Employees and review the personnel records and such other information concerning
      such employees as Buyer may reasonably (subject to obtaining any legally
      required written permission of any affected employee and to any other applicable
      law). Buyer’s offer of employment shall be contingent upon and effective as of
      the Closing Date. The Business Employees who are offered and accept employment
      by the Buyer shall hereinafter be referred to as the “Transferred
      Employees.”
      Business Employees to whom offers are made but who decline such offers, or
      who
      fail to perform one hour of service for Buyer after the Closing Date shall
      hereinafter be referred to as the “Terminated
      Employees.”
Seller
      and Buyer agree, with respect to Transferred Employees, to take the position
      that they are, respectively, a “predecessor” and “successor” as defined in
      Revenue Procedure 96-60 and Treasury Regulation Section 31.3 121(a)(l)-l(b).
      Seller and Buyer shall use the “Standard Procedure” described in Section 4 of
      Revenue Procedure 96-60 with respect to all Transferred Employees. Seller shall
      supply to Buyer, with respect to all Transferred Employees, all cumulative
      payroll information as of the Closing Date that Buyer shall reasonably request
      in order not to restart the wage base of Transferred Employees for social
      security and Medicare tax purposes. 

     

    (b)  Employment
      of the Transferred Employees with the Buyer shall be effective as of 12:01
      a.m.
      on the date immediately following the Closing Date (the “Transfer
      Date”).
      As to
      the Transferred Employees, the Buyer will not cause any period of unemployment
      between the time employment with the Seller ends and the effective date of
      employment with the Buyer. 

     

    (c)  Except
      as
      specifically set forth below, the Seller shall retain sole liability for claims
      of the Business Employees and their dependents arising on or prior to the
      Closing Date. Buyer shall have sole liability to the Transferred Employees
      and
      their dependents for any and all claims by the Transferred Employees and their
      dependents arising after the Closing Date. The Seller shall be solely
      responsible for and Buyer does not assume any liability for the Seller’s actions
      in terminating the employment of any Business Employee, including but not
      limited to any obligation to pay any Business Employee a severance benefit.
      

     

    (d)  The
      Seller shall retain sole liability for and shall pay all premiums, costs and
      expenses with respect to unemployment compensation obligations occurring during
      the Seller’s employment of the Business Employees on and prior to the Closing
      Date. The Seller shall be liable for all work-related injury claims of Business
      Employees occurring on and prior to the Closing Date, including but not limited
      to those claims covered by workers’ compensation statutes. The Buyer shall be
      solely liable for and shall pay all premiums, costs and expenses with respect
      to
      unemployment compensation obligations occurring during the Buyer’s employment of
      the Transferred Employees. The Buyer shall be liable for all work-related injury
      claims of Transferred Employees occurring after the Closing Date, including
      but
      not limited to those claims covered by workers’ compensation
      statutes.

     

    
      
        
        

      

      
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    (e)  Notwithstanding
      anything herein to the contrary, the Buyer shall not assume any liability or
      responsibility for any Employee Benefit Plans sponsored or maintained by the
      Seller, and Seller shall be solely responsible and liable for such Employee
      Benefit Plans, including, but not limited to:

     

    (f)  Payment
      of any accrued but unused vacation benefits for Transferred Employees accruing
      on or prior to the Closing Date;

     

    (g)  Payment
      of any severance pay or stay bonuses due to any Business Employees pursuant to
      any severance or stay bonus program or policy of the Seller in effect as of
      the
      Closing Date; or

     

    (h)  Payment
      of benefits of the Business Employees attributable to Seller’s 401(k) plan or
      other retirement or savings plan, whether qualified or
      non-qualified;

     

    (i)  The
      Buyer
      shall recognize all service credited for the Transferred Employees on the
      Seller’s records for purposes of eligibility for benefits (but not vesting or
      benefit accrual) under the Buyer’s benefit plans and programs, but the Buyer
      shall not recognize service credited on the Seller’s records to the extent that
      such recognition of service would result in duplication of
      benefits.

     

    (j)  The
      Seller will retain responsibility for and continue to pay all hospital, medical,
      life insurance, disability and other welfare benefit plan expenses and benefits
      for each Employee with respect to claims incurred by such Employee or such
      Employee’s covered dependents on or prior to the Closing Date. Hospital, life
      insurance and other welfare benefit plan expenses and benefits with respect
      to
      claims incurred by any Transferred Employee or such Transferred Employee’s
      covered dependents after the Closing Date shall be the Buyer’s responsibility in
      accordance with the terms of any applicable welfare benefit plan maintained
      by
      the Buyer for the Transferred Employee. For purposes of this paragraph, a claim
      is deemed incurred when the services giving rise to the claim were
      performed.

     

    (k)  At
      the
      Buyer’s discretion and expense, the Seller shall maintain coverage for the
      Transferred Employees and their covered dependents in the Seller’s group medical
      and dental plans for up to sixty (60) days after the Closing Date. With respect
      to any period of coverage for the Transferred Employees in the Seller’s group
      medical and dental plans after the Closing Date, the Seller will cause the
      Transferred Employees’ medical and dental expenses to be paid under the Seller’s
      plans. The Buyer shall promptly reimburse the Seller for the Seller’s actual
      costs associated with the coverage of the Transferred Employees and their
      covered dependents and any applicable administrative costs during the period
      of
      coverage upon receipt of an invoice, supported by reasonable documentation,
      from
      the Seller for those costs. 

     

    
      
        
        

      

      
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    (l)  The
      Transferred Employees and their eligible dependents who were participants in
      Seller’s group health plan shall become participants in the group medical and
      dental plans offered by Buyer on the later of either (i) the Closing Date or
      (ii) the date of termination of coverage (other than coverage for COBRA
      purposes) under the Seller’s group health plans pursuant to the preceding
      paragraph. The Transferred Employees and their eligible dependents who present
      certificates of creditable coverage to Buyer shall not be subject to any
      pre-existing conditions limitations under the Buyer’s group health plans to the
      extent that such limitations did not apply under Seller’s group health plans.

     

    (m)  Seller
      shall retain and Buyer shall not assume liability for any of Seller’s
      obligations under COBRA, including the obligation, if any, to provide notice
      and
      continuation of coverage to any “M&A qualified beneficiary” (as such term is
      defined in COBRA). Seller shall reimburse and indemnify Buyer for any costs
      or
      liabilities relating to Seller’s COBRA responsibility with respect to any
      Business Employee or former employee of Seller.

     

    (n)  Seller
      shall be responsible for and shall pay promptly after the Closing any remaining
      vacation under the Seller’s vacation policy for the period prior to and
      including the Closing Date. The Transferred Employee shall be eligible for
      vacation under the Buyer’s vacation policy beginning on the Transfer
      Date.

     

    (o)  
      As of
      the Closing Date, each Transferred Employee will become fully vested in his
      interests in the Seller’s 401(k) or other retirement or savings plan, whether
      qualified or unqualified, maintained by the Seller. The Seller shall cause
      the
      Seller’s 401(k) plan or other retirement or savings plans to be amended, to the
      extent necessary, to accomplish the foregoing.

     

    (p)  No
      provision of this Agreement shall create any rights in any Business Employee,
      former employee of the Seller, Transferred Employee (including any beneficiary
      or dependent thereof) or Terminated Employee with respect to continued
      employment (or resumed employment), and this Agreement shall not create any
      rights in any such persons with respect to any benefits that may be provided,
      directly or indirectly, under any employee benefit plan or arrangement sponsored
      by either the Seller or the Buyer. 

     

    (q)  No
      intention, implication or interpretation of this Agreement shall convey any
      guarantee of employment for any Transferred Employee for any particular period
      of time. The Transferred Employees shall be employees-at-will of the Buyer.
      Except as otherwise provided in this Agreement, the Buyer shall have the
      absolute discretion to establish and modify the terms and conditions of
      employment for any Transferred Employee.

     

    (r)  Prior
      to
      and following the Closing Date, the Seller and the Buyer shall supply each
      other
      appropriate and reasonably necessary employee data and other records to carry
      out the purposes and terms of this Article
      VI,
      including but not limited to data appropriate to complete actuarial
      computations, evaluations, benefit reports, filings and claims analysis and
      government filings.

     

    
      
        
        

      

      
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    Section
      6.2  Payment
      of Liabilities.
      On or
      prior to the Closing Date, Seller shall pay or otherwise satisfy in the ordinary
      course of business all of its retained liabilities and other obligations
      associated with the Business, other than the Assumed Obligations. 

     

    Section
      6.3  Noncompetition,
      Nonsolicitation and Nondisparagement.

     

    (a)  Noncompetition
      with Buyer.
      For a
      period of five (5) years after the Closing Date, Seller shall not anywhere
      in
      the world (the “Restricted
      Area”),
      directly or indirectly, invest in, own, manage, operate, finance, control,
      advise, aid or assist, act as a broker for, render services to, be employed
      by
      or guarantee the obligations of any Person engaged in or planning to become
      engaged in a
      business which competes with the Business. With respect to the covenants and
      agreements set forth in this Section
      6.3,
      Seller
      agree that it may be impossible to measure in monetary terms the damages which
      will accrue to Buyer by reason of an actual breach by it of such covenants
      and
      agreements, that a violation of such covenants and agreements will cause
      irreparable injury to Buyer, and that Buyer shall be entitled, in addition
      to
      any other rights and remedies it may have, at law or in equity, to apply to
      a
      court of competent jurisdiction for an injunction to restrain Seller from
      violating, or continuing to violate, such covenants and agreements. Nothing
      in
      this Section
      6.3
      shall be
      deemed to limit Buyer’s right to recover damages caused by any actual breach by
      Seller.

     

    (b)  Nonsolicitation.
      Seller
      agrees that it shall not, for a period of two (2) years from the Closing Date,
      either directly or indirectly on its own behalf or in association with or on
      behalf of others, directly or indirectly, solicit, entice or induce any employee
      or independent consultant of Buyer to leave its service with Buyer or solicit,
      entice or induce for employment or employ, whether as an advisor, independent
      consultant or otherwise, any person who was, either at the Closing Date or
      within a period of three months prior thereto, an employee of Buyer. The
      geographic scope of this Section
      6.3(b)
      shall
      extend worldwide to anywhere the Buyer or Seller is doing business, has done
      business or has plans to do business, or to such lesser geographic area as
      a
      court of competent jurisdiction may direct. The provisions of Section
      6.3(b)
      shall
      not be deemed to apply to or include general solicitations of employment that
      are not specifically directed towards employees of the other party.

     

    (c)  Nondisparagement.
      After
      the Closing Date, neither party will disparage any other party hereto or any
      of
      such party’s Representatives.

     

    (d)  Modification
      of Covenant.
      If a
      final judgment of a court or tribunal of competent jurisdiction determines
      that
      any term or provision contained in this Section
      6.3(d)
      is
      invalid or unenforceable, then the parties agree that the court or tribunal
      will
      have the power to reduce the scope, duration or geographic area of the term
      or
      provision, to delete specific words or phrases or to replace any invalid or
      unenforceable term or provision with a term or provision that is valid and
      enforceable and that comes closest to expressing the intention of the invalid
      or
      unenforceable term or provision. This Section
      6.3(d)
      will be
      enforceable as so modified after the expiration of the time within which the
      judgment may be appealed. This Section
      6.3(d)
      is
      reasonable and necessary to protect and preserve Buyer’s legitimate business
      interests in the geographical locations in which the business operates and
      the
      value of the Purchased Assets and to prevent any unfair advantage conferred
      on
      Seller.

     

    
      
        
        

      

      
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    Section
      6.4  Further
      Assurances.
      Seller
      agrees to cooperate with Buyer and its authorized Representatives in connection
      with any steps required to be taken as part of Seller’s respective obligations
      under this Agreement, and shall (i) furnish upon request to Seller such further
      information; (ii) execute and deliver to Seller such other documents; and (iii)
      do such other acts and things, all as Buyer may reasonably request for the
      purpose of carrying out the intent of this Agreement and the transactions
      contemplated thereby.

     

    Section
      6.5  Collection
      of Accounts Receivable.
      After
      the Closing Date, Buyer shall collect any Accounts Receivable that were
      generated in connection with the Business prior to the Closing Date. Seller
      shall promptly remit to Buyer any such payments on the Accounts Receivable
      received by Seller after the Closing Date. After the Closing Date, Buyer shall
      have the right to notify any customers who owe Seller any amounts properly
      payable to Buyer to send its payments directly to Buyer.

     

    Section
      6.6  Necessary
      Action.
      Seller
      shall, at its own expense, use commercially reasonable efforts, both prior
      to
      and after the Closing, take all necessary action, obtain any consents, approvals
      and amendments of agreements required to carry out the transactions contemplated
      by this Agreement and to satisfy any conditions for which any of them is
      responsible hereunder.

     

    ARTICLE
      VII

    CONDITIONS
      TO CLOSING

     

    Section
      7.1  Conditions
      Precedent to Seller’s Obligation to Perform.
      The
      obligation of Seller to consummate the transaction contemplated in this
      Agreement is subject to the satisfaction or express waiver by Seller at or
      prior
      to the Closing of the following conditions:

     

    (a)  All
      representations and warranties by Buyer in this Agreement or in any document
      delivered by Buyer pursuant to this Agreement shall be true and correct in
      all
      material respects on and as of the Closing Date and the Effective
      Date;

     

    (b)  All
      organizational approvals necessary to authorize the transactions contemplated
      herein shall have been obtained by Seller;

     

    (c)  Buyer
      shall have performed, satisfied and complied with all covenants, agreements,
      and
      conditions required by this Agreement to be performed or complied with by it
      on
      or before the Effective Date and the Closing Date;

     

    (d)  Buyer
      shall have delivered all of the documents, agreements, instruments and other
      items that Buyer is required to deliver at the Closing pursuant to Section
      2.10(b)
      of this
      Agreement;

     

    
      
        
        

      

      
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    (e)  Buyer
      shall have formed a limited liability company under the laws of Delaware (the
      “LLC”)
      pursuant to an operating agreement in a form reasonably acceptable to Buyer
      and
      Seller (the “Operating
      Agreement”);

     

    (f)  Buyer
      shall have issued to the LLC a duly authorized stock certificate evidencing
      the
      number of shares of the Buyer Common Stock to be issued pursuant to the Buyer
      Common Stock Issuance Calculation;

     

    (g)  Buyer
      shall have issued a duly authorized Warrant to the LLC;

     

    (h)  All
      organizational approvals necessary to authorize Buyer to consummate the
      transactions contemplated under this Agreement shall have been obtained by
      Buyer
      (or obtained by Seller and evidence of such approval is delivered to
      Buyer);

     

    (i)  Since
      the
      Effective Date, there shall not have been commenced or threatened against Buyer
      any proceeding (a) involving any challenge to, or seeking Damages or other
      relief in connection with, any of the transactions contemplated under this
      Agreement or (b) that may have the effect of preventing, delaying, making
      illegal, imposing limitations or conditions on or otherwise interfering with
      any
      of the transactions;

     

    (j)  Buyer
      shall have not conducted any business other than entering into this Agreement
      and the other Transaction Documents and the transactions contemplated
      thereby;

     

    (k)  Buyer
      shall not have any obligations or liabilities other than in connection with
      this
      Agreement and the other Transaction Documents; 

     

    (l)  Buyer
      shall have received financing in an amount not less than $15 million through
      the
      sale of its Series A Convertible Preferred Stock in accordance with the Stock
      Purchase Agreement; and

     

    (m)  Since
      the
      Effective Date, there shall not have been any material adverse changes to Buyer
      or its assets.

     

    Section
      7.2  Conditions
      Precedent to Buyer’s Obligation to Perform.
      The
      obligation of Buyer to consummate the transaction contemplated in this Agreement
      is subject to the satisfaction or express waiver by Buyer at or prior to the
      Closing of the following conditions:

     

    (a)  All
      organizational approvals necessary to authorize the transaction contemplated
      under this Agreement shall have been obtained by Buyer (or obtained by Seller
      and evidence of such approval is delivered to Buyer), including without
      limitation either (i) an opinion reasonably acceptable to the Seller and Buyer,
      of Delaware counsel that is reasonably acceptable to the Seller and the Buyer,
      stating the approval by the Company Stockholders is not required under Law
      for
      the consummation of the transactions contemplated herein; or (ii) the approval
      of the transactions contemplated herein by proxy or written consent of a
      majority of the holders of the outstanding shares of Common Stock or securities
      convertible or exchangeable into Common Stock and having the right to vote
      in
      such matter in a form and substance reasonably acceptable to the
      Buyer;

     

    
      
        
        

      

      
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    (b)  All
      necessary consents of third parties to the transaction contemplated by the
      Transaction Documents shall have been obtained by Seller or Buyer, as
      applicable, including, without limitation, (i) any required consents in the
      Contracts, and (ii) any required consents of creditors, lessors, suppliers
      and
      Governmental Authorities including without limitation those listed in
Schedule
      3.24,
      attached hereto;

     

    (c)  All
      representations and warranties by Seller in this Agreement or in any document
      delivered by Seller pursuant to this Agreement shall be true and correct in
      all
      respects on and as of the Effective Date and the Closing Date;

     

    (d)  Buyer
      shall have received approval from Aisling Capital II, L.P.’s internal investment
      committee to take all actions contemplated by this Agreement and the Stock
      Purchase Agreement;

     

    (e)  Qualified
      Liabilities do not exceed $500,000;

     

    (f)  Seller
      shall have performed, satisfied and complied with all covenants, agreements,
      and
      conditions required by this Agreement to be performed or complied with by it
      on
      or before the Closing Date;

     

    (g)  Seller
      shall have delivered all of the documents, agreements, instruments and other
      items that Seller is required to deliver at the Closing pursuant to Section
      2.10(a)
      of this
      Agreement;

     

    (h)  Buyer
      shall have entered into the Key Employment Agreement with the Key
      Employee;

     

    (i)  Subject
      to Section
      2.10(a)(xii),
      Seller
      shall have obtained releases with respect to all of the Royalty
      Agreements;

     

    (j)  Seller
      shall have paid off, converted or released all of its Indebtedness;

     

    (k)  Seller
      shall have received an opinion from a financial advisor, in form and substance
      reasonably acceptable to Buyer that this transaction is fair from a financial
      point of view to the Company Stockholders (the “Fairness
      Opinion”);

     

    (l)  Seller
      shall have received an opinion from a financial advisor, in form and substance
      reasonably acceptable to Buyer that Seller is not insolvent as of the Closing
      Date, and the sale of the Purchased Assets will not cause Seller to be insolvent
      immediately following the Closing (the “Solvency
      Opinion”);

     

    (m)  Since
      the
      Effective Date, there shall not have been any material adverse changes to the
      Business;

     

    (n)  Since
      the
      Effective Date, there shall not have been commenced or threatened against Buyer,
      or against any Affiliate of Buyer, any proceeding (a) involving any challenge
      to, or seeking Damages or other relief in connection with, any of the
      transactions contemplated under this Agreement or (b) that may have the effect
      of preventing, delaying, making illegal, imposing limitations or conditions
      on
      or otherwise interfering with any of the transactions; and

     

    
      
        
        

      

      
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    (o)  Seller
      shall have provided assistance as reasonably requested by Buyer in obtaining,
      and Buyer shall have obtained, appropriate amendments to or terminations of
      any
      third party agreements that Buyer and Seller mutually agree appropriate in
      their
      reasonable discretion, provided, however, Seller shall not be required to make
      any payment in connection herewith.

     

    ARTICLE
      VIII

    TERMINATION
      

     

    Section
      8.1  Termination
      by Seller.
      Seller
      may, on or prior to the Closing Date, terminate this Agreement without liability
      if:

     

    (a)  there
      shall have been a material breach of any representations or warranties set
      forth
      in this Agreement on the part of Buyer or if any representations or warranties
      of Buyer shall have become untrue, provided that Seller has not materially
      breached any of its obligations hereunder; or

     

    (b)  there
      shall have been a material breach by Buyer of any of its covenants or agreements
      hereunder and such breach would result in a material adverse effect on Buyer
      or
      on the ability of Buyer or Seller to consummate the transactions contemplated
      by
      this Agreement, and Buyer has not cured such breach within ten (10) Business
      Days after notice by Seller thereof setting forth in reasonable detail the
      nature of such breach; provided that Seller has not materially breached any
      of
      its obligations hereunder; or

     

    (c)  the
      approval of the Company’s stockholders required by Section
      5.8 shall
      not
      have been obtained at a meeting duly convened thereafter or at any adjournment
      or postponement thereof; or 

     

    (d)  the
      Closing has not occurred by January 31, 2007, unless such date shall have been
      extended by the mutual written consent of Seller and Buyer; provided, however,
      that this right to terminate shall not be available to Seller if Seller’s
      failure to fulfill in any material respect any covenant or obligation under
      this
      Agreement has been the cause of, or results in, the failure of the Closing
      to
      occur on or before the Closing Date; or any court of competent jurisdiction
      in
      the United States or other United States federal or state governmental entity
      shall have issued a final order, decree or ruling, or taken any other final
      action, restraining, enjoining or otherwise prohibiting the transactions
      contemplated by this Agreement and such order, decree, ruling or other action
      is
      or shall have become non-appealable, and if this Agreement is terminated under
      this Section
      8.1(d),
      neither
      Buyer nor Seller shall have any liability hereunder; or

     

    (e)  in
      the
      exercise of its good faith judgment and to its fiduciary duties to its
      stockholders imposed by law, the Board of Directors of this Company determines
      that such termination is required. 

     

    
      
        
        

      

      
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    Section
      8.2  Termination
      by Buyer.
      Buyer
      may, on or prior to the Closing Date, terminate this Agreement without liability
      if:

     

    (a)  If
      prior
      to the Closing Date, the interim financial statements delivered pursuant to
      Section
      5.5
      indicate
      that the operating revenues of the Business for the fourth quarter of 2006
      are
      less than $175,000; or

     

    (b)  there
      shall have been a material breach of any representations or warranties set
      forth
      in this Agreement on the part of the Seller or if any representations or
      warranties of the Seller shall have become untrue provided that Buyer has not
      materially breached any of its obligations hereunder; or

     

    (c)  there
      shall have been a material breach by Seller of one or more of its covenants
      or
      agreements hereunder having a Material Adverse Effect on Seller or materially
      adversely affecting (or materially delaying) the ability of Seller and Buyer
      to
      consummate transactions contemplated by this Agreement, and Seller has not
      cured
      such breach within ten (10) Business Days after notice by Buyer thereof setting
      forth in reasonable detail the nature of such breach, provided that Buyer has
      not materially breached any of its obligations hereunder; or

     

    (d)  the
      approval of the Company’s stockholders required by Section
      5.8
      shall
      not have been obtained at a meeting duly convened thereafter or at any
      adjournment or postponement thereof; or 

     

    (e)  the
      Closing has not occurred by January 31, 2007, unless such date shall have been
      extended by the mutual written consent of Seller and Buyer; provided, however,
      that this right to terminate shall not be available to Buyer if Buyer’s failure
      to fulfill in any material respect any covenant or obligation under this
      Agreement has been the cause of, or results in, the failure of the Closing
      to
      occur on or before the Closing Date; or any court of competent jurisdiction
      in
      the United States or other United States federal or state governmental entity
      shall have issued a final order, decree or ruling, or taken any other final
      action, restraining, enjoining or otherwise prohibiting the transactions
      contemplated by this Agreement and such order, decree, ruling or other action
      is
      or shall have become non-appealable, and if this Agreement is terminated under
      this Section
      8.2(e),
      neither
      Buyer nor Seller shall have any liability hereunder; or

     

    (f)  Buyer
      shall not have entered into the Key Employment Agreement with the Key
      Employee;

     

    (g)  the
      Board
      of Directors shall have withdrawn or modified in any manner adverse to Buyer
      its
      approval of this Agreement and the transactions contemplated hereby;
      or

     

    (h)  Buyer
      shall have failed to receive financing in an amount not less than $15 million
      through the sale of its Series A Convertible Preferred Stock in accordance
      with
      the Stock Purchase Agreement.

     

    
      
        
        

      

      
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    Section
      8.3  Termination
      by Mutual Consent.
      This
      Agreement may be terminated by mutual written consent of Seller and Buyer (in
      which case neither Buyer not Seller shall have any liability
      hereunder).

     

    Section
      8.4  Procedures
      Upon Termination.
      In the
      event of termination pursuant to this Article
      VIII,
      written
      notice shall forthwith be given to the other party or parties, and the
      transactions contemplated hereby shall be abandoned, without further action
      by
      any party hereto; provided, however, that nothing contained herein shall be
      construed to prevent any parties hereto from pursuing any remedy available
      at
      law or in equity for any breach, violation, default or other failure of
      performance of any other party hereto prior to Closing.

     

    Section
      8.5  Expense
      Reimbursement.
      

     

    If
      this
      Agreement is terminated pursuant to Section 8.2
      (other
      than Section
      8.2(f),
      (h)
      or
(e)
      (except,
      with regard to (e),
      where
      such termination is due to any material breach of any representation, warranty,
      covenant or agreement hereunder by Seller or Parent)), the Seller shall pay
      the
      Buyer an amount equal to the lesser of (i) Buyer’s reasonable, actual
      out-of-pocket costs and expenses incurred in connection with preparing this
      Agreement and the transaction contemplated hereby, including, without
      limitation, the expenses of legal counsel or (ii) $350,000.

     

    ARTICLE
      IX

    Indemnification.

     

    Section
      9.1  Seller
      Indemnification.
      Seller
      agrees to protect, defend, indemnify and hold harmless Buyer and its directors,
      officers, employees, agents, managers, shareholders, members, successors and
      assigns, from any and all losses, claims, liabilities, obligations,
      deficiencies, assessments, fines, costs, and damages (including, without
      limitation, interest, penalties, reasonable legal fees and reasonable accounting
      fees), whether fixed or contingent, liquidated or unliquidated, matured or
      unmatured and all demands, assessments and judgments (collectively,
“Damages”),
      resulting from, arising from or relating to: (a) any liability of Seller or
      the
      Business arising on or before the Closing Date other than the Assumed
      Obligations; (b) any events relating to the Business occurring on or before
      the
      Closing Date, other than the Assumed Obligations; (c) any misrepresentation,
      inaccuracy or breach of any warranty or representation by Seller in this
      Agreement; (d) any material failure of Seller to perform any covenant or
      agreement in the Transaction Documents in a timely manner and the failure of
      which remains uncured for a period of ten (10) Business Days after receipt
      of
      written notice from Buyer setting forth in reasonable detail the nature of
      such
      material failure; or (e) any forfeitures, fines, penalties, or other sanctions
      imposed as a result of noncompliance by Seller prior to the Closing Date with
      any Laws applicable to the Business or the Purchased Assets.

     

    Section
      9.2  Buyer
      Indemnification.
      Buyer
      shall protect, defend, indemnify and hold harmless Seller and its directors,
      officers, employees, agents, managers, shareholders, partners, members,
      successors and assigns, from and against any and all Damages resulting from,
      arising from or relating to: (a) the Assumed Obligations; (b) any
      misrepresentation, inaccuracy or breach of any warranty or representation by
      Buyer in this Agreement; (c) the operation or ownership of the Business and
      the
      Purchased Assets after the Closing Date; (d) any events relating to the Business
      occurring after the Closing Date; and (e) any material failure of Buyer to
      perform any covenant or agreement in Transaction Documents in a timely manner
      and the failure of which remains uncured for a period of ten (10) Business
      Days
      after the receipt of written notice front Seller setting forth in reasonable
      detail the nature of such material failure; provided, however, Buyer shall
      not
      indemnify Seller for any Damages which arising out of a termination of this
      Agreement pursuant to Section
      8.2(d).

     

    
      
        
        

      

      
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    Section
      9.3  Exclusive
      Remedy.
      The
      parties hereby acknowledge and agree that, from and after the Closing, the
      sole
      remedy with respect to any and all claims arising under this Agreement shall
      be
      pursuant to the indemnification provisions set forth in this Article
      IX.
      In
      furtherance of the foregoing, the parties hereby waive, from and after the
      Closing, to the fullest extent permitted by Law, any and all other rights,
      claims and causes of action they may have against the other parties hereto,
      or
      any of the other parties’ Representatives and Affiliates relating to any
      misrepresentation in or breach of any representation or warranty or
      nonfulfillment of any covenant, agreement or other obligation contained in
      the
      Transaction Documents .

     

    Section
      9.4  Survival.

     

    (a)  With
      respect to any and all claims among the parties hereto arising in connection
      with this Agreement, the representations, warranties, covenants and agreements
      that are set forth in this Agreement shall be continuing and shall survive
      the
      Closing for a period of three (3) years except (1) the representations and
      warranties set out in Sections
      3.20,
      3.23,
      3.26
      and
3.32,
      which
      shall survive for the period of the applicable statute of limitations plus
      thirty (30) days; (2) the representations and warranties set out in Sections
      3.3,
      3.7
      and
4.2
      shall
      indefinitely survive the Closing; and (3) in the case of a claim for any breach
      of any of the representations and warranties contained in this Agreement
      involving fraud or fraudulent misrepresentation shall survive and continue
      in
      full force and effect without limitation of time, subject only to applicable
      limitation periods imposed by Law (the period during which the representations
      and warranties and covenants and agreements shall survive being referred to
      herein with respect to such representations and warranties and covenants and
      agreements as the “Survival
      Period”),
      but
      shall thereafter terminate and be of no further force and effect unless a
      written notice asserting a claim shall have been made pursuant to this
Section
      9.4(a)
      within
      the Survival Period with respect to such matter

     

    (b)  All
      claims made hereunder prior to the expiration of the applicable survival period
      stated above, but which are not yet settled, shall be subject to the
      indemnification provisions hereunder.

     

    Section
      9.5  Procedure
      for Indemnification.
      If a
      party entitled to indemnification under this Agreement (an “Indemnitee”)
      asserts that a party obligated to indemnify it under this Agreement (an
“Indemnitor’”)
      has
      become obligated to such Indemnitee pursuant to this Agreement, or if any suit,
      action, investigation, claim or proceeding is begun, made or instituted as
      a
      result of which the Indemnitor may become obligated to an Indemnitee hereunder,
      such Indemnitee shall promptly give written notice to the Indemnitor. The
      Indemnitor agrees to defend, contest or otherwise protect the Indemnitee against
      any such suit, action, investigation, claim or proceeding at its sole cost
      and
      expense. The Indemnitee shall have the right, but not the obligation, to
      participate at its own expense in the defense thereof by counsel of the
      Indemnitee’s choice and shall in any event cooperate with and assist the
      Indemnitor to the extent reasonably possible. If the Indemnitor fails timely
      to
      defend, contest or otherwise protect against such suit, action, investigation,
      claim or proceeding, the Indemnitee shall have the right to do so, including,
      without limitation, the right to make any compromise or settlement thereof,
      and
      the Indemnitee shall be entitled to recover the entire cost thereof from the
      Indemnitor, including, without limitation, reasonable attorneys’ fees,
      disbursements and amounts paid as the result of such suit, action,
      investigation, claim or proceeding. The parties shall in no case settle or
      compromise the other’s claim or consent to the entry of judgment, in either case
      other than solely for money damages, without the prior written consent of the
      other party if such settlement, compromise or judgment would adversely affect
      the rights of the other party in any continuing manner.

     

    
      
        
        

      

      
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    ARTICLE
      X

    MISCELLANEOUS
      

     

    Section
      10.1  No
      Negotiation.
      (a)Except
      as
      specifically set forth in Section
      10.1(a), (b), (c),
      (d) or (e)
      hereof,
      until the earlier of the Closing or the termination of this Agreement pursuant
      to Section
      8
      hereof
      (the “Exclusivity
      Period”),
      Seller shall not directly or indirectly, individually or through any of their
      respective officers, directors, stockholders, employees, representatives,
      agents, affiliates, or otherwise (collectively, the “Representatives”) initiate,
      solicit or encourage, consider, evaluate, or respond to (other than to say
      that
      Seller is contractually obligated not to respond, and referring such party
      to
      public disclosure regarding this Agreement, but shall not otherwise respond,
      including, without limitation, by way of furnishing non-public information
      or
      assistance) any proposals, inquiries or offers from any person or entity,
      (“Third
      Party”),
      or
      enter into any confidentiality agreement, due diligence agreement, letter of
      intent, purchase agreement, merger agreement or other arrangement, regarding
      any
      proposed sale of all or any portion of the Purchased Assets or control thereof,
      whether by means of a sale or exchange of shares, sale of assets, whether in
      whole or in part, merger, recapitalization, liquidation or otherwise
      (“Third
      Party Acquisition”).
      Except as specifically set forth in Sections
      10.1(a), (b), (c), (d) or (e)
      hereof,
      during the Exclusivity Period, Seller shall not have, and shall take reasonable
      efforts to cause its Representatives not to have, any discussions,
      conversations, negotiations or other communications relating to any Third Party
      Acquisition with any Third Party expressing interest therein, and shall
      immediately discontinue negotiations with any Third Party with which it
      heretofore has engaged in negotiations or discussions regarding any Third Party
      Acquisition. During the Exclusivity Period, Seller shall immediately notify
      Buyer of all terms of any written inquiry, contact, communication, or proposal
      by any Third Party with respect to any Third Party Acquisition that is received
      by Seller or any of its Representatives (including Seller’s response thereto),
      and immediately shall provide Buyer with a copy of any such written inquiry,
      contact, communication or proposal. With respect to any oral inquiry, contact,
      communication or proposal, Seller shall document the same in writing (including
      Seller’s response thereto) and reasonably promptly provide Buyer with a copy of
      the same. Seller agrees that if the Seller shall breach and fail to cure
      promptly any material provision of this Section
      10.1
      and
      within twelve (12) months thereafter enter into any definitive agreement with
      a
      Third Party, including any of its affiliates, with whom Seller breached this
      Section
      10.1
      regarding a Third Party Acquisition, then upon the consummation of such
      acquisition, Seller immediately shall pay to Buyer by wire transfer (in readily
      available funds) $300,000 (the “Fee”),
      which
      Seller acknowledges is reasonable under the circumstances and designed to
      compensate Buyer for the lost opportunity to consummate the Transaction. The
      Fee
      will serve as the exclusive remedy to Buyer hereunder in the event of a breach
      by Seller of the exclusivity arrangement set forth herein, including, but not
      limited to, Buyer’s damages relative to its efforts, expenses and costs incurred
      in evaluating the Transaction. The parties acknowledge that the foregoing
      provisions do not necessarily require Seller to provide Buyer a written summary
      of on-going discussions with a third party, nor shall Seller be required to
      document to Buyer any oral inquiry, contact, communication or proposal that
      does
      not materially change any inquiry, contact, communication or proposal previously
      provided by Buyer.

     

    
      
        
        

      

      
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    (b)  The
      parties acknowledge that prior to the Closing, in response to a bona fide
      unsolicited written proposal for a Third Party Acquisition that did not result
      from the breach of this Section
      10.1
      (a
“Third
      Party Proposal”)
      and
      following delivery to Buyer of notice and a copy of the Third Party Proposal
      in
      compliance with its obligations under Section
      10.1(a)
      hereof,
      the Seller may participate in discussions or negotiations with or furnish
      information (pursuant to a confidentiality agreement with customary terms
      comparable to those in place between Buyer and Seller) to any Third Party which
      makes a bona fide written Third Party Proposal if, and only if, prior to taking
      such action: (i) a majority of the Company’s board of directors reasonably
      determines in good faith that the transactions contemplated by such Third Party
      Proposal are capable of being completed and would, if consummated, result in
      a
      Superior Transaction (as hereinafter defined) and (ii) a majority of Company’s
      board of directors determines in good faith (after receiving the written advice
      of outside legal counsel) that it is necessary to pursue such Superior Proposal
      in order to comply with its fiduciary duties to its shareholders under
      applicable law and (iii) Seller complies with the information and notice
      obligations set forth in Section
      10.1(a).

     

    For
      purposes of this Agreement, “Superior
      Proposal”
means
      a
      bona fide Third Party Proposal to purchase at least two-thirds of the
      outstanding equity securities of Seller pursuant to a tender offer or exchange
      offer or to effect any merger, consolidation, business combination or sale
      of
      all or substantially all of the Purchased Assets, recapitalization or similar
      transaction involving the Seller, on terms which a majority of Company’s board
      of directors determines in good faith to be superior to the Company and its
      shareholders (in their capacity as shareholders) from a financial point of
      view
      (taking into account, among other things, all legal, financial, regulatory
      and
      other aspects of the proposal and identity of the offeror) as compared to (i)
      the transactions contemplated hereby and (ii) any alternative proposed by Buyer
      in accordance with Section
      10.1(e)
      which is
      reasonably capable of being consummated (any such transaction being referred
      to
      herein as a “Superior
      Transaction”).

     

    (c)  The
      Seller and Buyer agree that, notwithstanding anything to the contrary herein,
      prior to the Closing, the Company and/or its board of directors may take the
      actions otherwise prohibited by Section
      10.1(a),
      subject
      to the conditions of and as limited by Section
      10.1(b),
      if and
      only if: (i) (A) a Third Party makes a Superior Proposal, and (B) the Company
      complies with its obligations under Section
      10.1(b)
      and
(c)
      and its
      disclosure obligations under Section
      10.1(a),
      (ii)
      all of the conditions to Company’s board of directors’ right to withhold or
      withdraw its recommendation of this Transaction in accordance with Section
      10.1(e)
      hereof
      have been complied with (including the expiration of the six (6) Business Day
      period described therein) with the exception of compliance with the requirement
      to pay the amounts contemplated pursuant to Section
      10.1(e)
      hereof),
      which amount shall be paid when due pursuant to the terms thereof; and (iii)
      simultaneously therewith, the Company’s board of directors withholds or
      withdraws its recommendation of this Agreement in accordance with Section
      10.1(e)
      hereof.

     

    
      
        
        

      

      
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    (d)  Buyer
      agrees that nothing contained in this Section
      10.1
      shall
      prohibit Company from taking and disclosing to its shareholders a position
      contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”),
      with
      respect to any tender offer.

     

    (e)  If
      at any
      time prior to the Closing a Superior Proposal is received by the Seller and
      the
      board of directors of the Company reasonably determines in good faith (after
      receiving the advice of outside legal counsel) that it is necessary to withhold
      or withdraw the board’s recommendation of this Transaction and to enter into an
      agreement to effect the Superior Proposal in order to comply with its fiduciary
      duties to its shareholders under applicable law, then the Company’s board of
      directors may withhold or withdraw its recommendation of this Transaction;
      provided that the Company Board of directors may not withdraw its recommendation
      pursuant to this Section
      10.1(e)
      unless
      and until (i) six (6) Business Days have elapsed following delivery to Buyer
      of
      a written notice of such determination by the board of directors of Company,
      and
      during such six Business Day period the Company has fully cooperated with Buyer,
      including, without limitation, informing Buyer of the terms and conditions
      of
      such Superior Proposal and the identity of the Third Party making such Superior
      Proposal and providing to Buyer copies of all documents required by Section
      10.1(a),
      with
      the intent of enabling the parties hereto to agree to a modification of the
      terms and conditions of this Agreement to provide substantially equivalent
      value
      to the Seller as determined in the reasonable and good faith exercise of the
      discretion of the board of directors of Company, so that the transactions
      contemplated hereby may be effected, it being the intent that Buyer be given
      the
      opportunity to consummate the Transaction on substantially equivalent financial
      terms as any Superior Proposal, without any requirement to provide more
      favorable terms thereto; (ii) at the end of such six Business Day period the
      Third Party Proposal continues in the good faith judgment of the board of
      directors of Company to constitute a Superior Proposal compared to this
      Transaction or any other offer made by Buyer and the Board of directors of
      Company confirms its determination (after receiving the advice of outside legal
      counsel) that it is necessary to withhold or withdraw its recommendation of
      the
      Transaction and enter into an agreement to effect the Superior Proposal to
      comply with its fiduciary duties to its shareholders under applicable law;
      and
      (iii) immediately following such withdrawal, the Seller enter into a definitive
      acquisition, merger or similar agreement to effect the Superior Proposal and
      immediately following the execution of a definitive agreement for the Superior
      Transaction, Buyer is paid the Fee by wire transfer of immediately available
      funds.

     

    Section
      10.2  Time
      is of the Essence.
      Buyer,
      as a party on the one hand, and Seller and Parent, on the other hand, hereby
      agree that the time is of the essence with respect to closing of the Transaction
      contemplated by this Agreement. Therefore, it is understood by Buyer, on the
      one
      hand, and Seller and Parent, on the other hand, that timing conditions set
      forth
      in Sections
      2.9
      and
8.2
      of this
      Agreement are a material inducement to Buyer in entering this Agreement and
      the
      Transaction, and, accordingly, the extension thereof shall be solely in the
      Buyer’s discretion and business judgment. The Buyer’s refusal to extend any such
      timing conditions shall not be viewed as a bad faith action. 

     

    
      
        
        

      

      
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    Section
      10.3  Confidentiality.
      Buyer,
      as a party on the one hand, and Seller, as a party on the other, agree that
      it
      will treat in confidence all documents, materials and other information which
      it
      shall have obtained regarding the other party during the course of the
      negotiations leading to the consummation of the transactions contemplated by
      this Agreement (whether obtained before or after the date of this Agreement),
      the investigation provided for herein and the preparation of this Agreement
      and
      other related documents, and, in the event that such transactions shall not
      be
      consummated, each party will return to the other party all copies of nonpublic
      documents and materials which have been furnished in connection therewith.
      Such
      documents, materials and information shall not be communicated to any third
      Person (other than, in the case of Buyer, to its counsel, accountants, financial
      advisors or lenders, and in the case of Seller. to its counsel, accountants
      or
      financial advisors). No Person shall use any confidential information,
      including, without limitation, with respect to the Business, any information
      relating to the Business or customers, suppliers, contractors, subcontractors
      and licensors, in any manner whatsoever except for (a) the purpose of evaluating
      the proposed purchase and sale of the Purchases Assets or the negotiation or
      enforcement of this Agreement or any agreement contemplated hereby; (b) where
      the disclosure of any portion thereof is required by applicable law or
      determined to be necessary to comply with any court order or Governmental
      Authorization (but only to the extent so required); provided, however, that
      such
      party shall first notify the other party of any such requirement and, if the
      other party desires, shall cooperate with that party to seek approval to prevent
      or limit such disclosure; (c) where the disclosure of any portion thereof is
      required in order to obtain any of the consents contemplated hereby, and both
      parties agree in writing that such disclosure is necessary; (d) where the
      information becomes generally available to the public other than as a result
      of
      a disclosure by Buyer or Seller; or (e) where the information is or becomes
      lawfully available to Buyer from a source other than Seller who is authorized
      to
      make such disclosure without restriction. Notwithstanding the foregoing, after
      the Closing, Buyer may use or disclose any confidential information related
      to
      the Purchased Assets or the Business. Notwithstanding the foregoing, the parties
      hereto hereby reaffirm the confidentiality provisions set forth in the Letter
      of
      Intent. The parties acknowledge and agree that this Agreement and a description
      hereof will be made publicly available by Company upon its execution, but only
      to the extent required by applicable federal securities law.

     

    Section
      10.4  Governing
      Law.
      This
      Agreement and all claims arising out of or relating to this Agreement shall
      be
      governed by and construed in accordance with the Laws of the State of New
      York.

     

    Section
      10.5  Jurisdiction
      and Venue.
      Any
      process against Buyer, Parent or Seller in, or in connection with, any suit,
      action or proceeding arising out of or relating to this Agreement or any of
      the
      transactions contemplated by this Agreement may be served personally or by
      certified mail at the address set forth in this Section
      10.5
      with the
      same effect as though served on it personally. Buyer, Parent and Seller hereby
      irrevocably submit in any suit, action or proceeding arising out of or relating
      to this Agreement or any of the transactions contemplated by this Agreement
      to
      the exclusive jurisdiction and venue of the United States District Court for
      the
      Southern District of New York or any court of the State of New York located
      in
      Manhattan and irrevocably waive any and all objections to jurisdiction and
      review or venue that each may have under the Laws of New York or the United
      States.

     

    
      
        
        

      

      
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    Section
      10.6  Notices.
      Any
      notices or demands to another party under the terms of this Agreement shall
      be
      sent (a) by personal service, (b) by United States registered or certified
      mail,
      postage prepaid and return receipt requested, or (c) by a nationally recognized
      overnight courier, and shall be deemed effective (a) immediately upon personal
      delivery or (b) five Business Days after deposit in the mail or (c) one Business
      Day after deposit with the courier, and addressed to:

     

    If
      to
      Buyer:

     

    RAC
      Nutrition Corporation 

    888
      Seventh Avenue - 30th Floor

    New
      York,
      NY 10106

    Attention:
      Andrew N. Schiff, M.D.

    

    With
      a
      copy to (which copy shall not constitute Notice):

    

    Andrews
      Kurth LLP

    450
      Lexington Avenue, 15th
      Floor

    New
      York,
      NY 10017

    Attention:
      David Concannon

    

    If
      to
      Seller:

    

    Millennium
      Biotechnologies Group, Inc.

    665
      Martinsville Road, Suite 219

    Basking
      Ridge, NJ 07920

    Attention:
      President

    

    With
      a
      copy to (which copy shall not constitute a Notice):

    

    Silverman
      Sclar Shin & Byrne PLLC

    381
      Park
      Avenue South, 16th Floor

    New
      York,
      NY 10016

    Attention:
      Peter Silverman

    

    Any
      party
      may change the address to which notices are to he addressed by giving the other
      party notice in the manner set forth herein.

     

    Section
      10.7  No
      Assignment.
      This
      Agreement, and the covenants herein contained, shall be binding upon, shall
      inure to the benefit of, and shall be enforceable by the parties hereto and
      their respective successors and permitted assigns. Neither Party may assign
      this
      Agreement, either in part or in whole, without the prior written consent of
      the
      other party; provided that Buyer may assign its rights to any affiliate having
      an equal or greater net worth.

     

    Section
      10.8  Public
      Announcements.
      Any
      public announcement, press release or similar publicity with respect to this
      Agreement will be issued, if at all, at such time and in such manner as the
      parties may mutually determine. Seller and Buyer will consult with each other
      concerning the means by which Seller’s employees, customers, suppliers and
      others having dealings with Seller will be informed of the transactions
      contemplated by this Agreement, and Buyer will have the right to be present
      for
      any such communication. Notwithstanding the foregoing, the parties acknowledge
      that Company will disclose this Agreement, its terms and conditions, including
      a
      copy thereof, but only to the extent required pursuant to federal securities
      law.

     

    
      
        
        

      

      
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    Section
      10.9  Waiver.
      The
      waiver by either party to this Agreement of any breach of any provision of
      this
      Agreement shall not constitute a continuing waiver or a waiver of any breach
      of
      any other provision of this Agreement.

     

    Section
      10.10  Severability.
      If any
      provision of this Agreement is held to be unenforceable for any reason, the
      remainder of this Agreement shall, nevertheless, remain in full force and
      effect.

     

    Section
      10.11  Captions.
      Section
      captions used herein are for reference purposes only and shall not in any way
      affect the meaning or interpretation of this Agreement.

     

    Section
      10.12  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed on original, but all of which taken together shall constitute one
      Agreement.

     

    Section
      10.13  Entire
      Agreement; Amendment.
      This
      Agreement, together with the Schedules and Exhibits attached hereto, supersedes
      all, other agreements and understandings between the parties, either oral or
      written, constitutes the entire agreement of the parties with respect to the
      subject matter hereof, and may be amended only by an instrument in writing
      executed by all of the parties hereto.

     

    Section
      10.14  Consents
      to Assignments.
      Subject
      to Section
      2.5
      hereof,
      nothing in this Agreement or the documents to be executed and delivered at
      the
      Closing shall be deemed to constitute an assignment or an attempt to assign
      any
      Permit, Contract or other agreement to which Seller is a party, if the attempted
      assignment thereof without the consent of the other party to such Permit,
      Contract or other agreement would constitute a breach thereof or affect in
      any
      way the rights of Seller thereunder.

     

    Section
      10.15  No
      Third Party Beneficiaries.
      This
      Agreement is solely for the benefit of the parties hereto and, to the extent
      provided in Article IX, the Persons indemnified thereunder, and no provision
      of
      this Agreement shall be deemed to confer upon any other third parties any
      remedy, claim, liability, reimbursement, cause of action or other
      right.

     

    Section
      10.16  Exculpation.
      Seller
      and Parent recognize that the Buyer and their respective affiliates, directors,
      officers and consultants have participated in, directly or indirectly, and
      will
      continue to participate in, including managing and/or making venture capital
      and
      other direct investments in corporations, partnerships, joint ventures, limited
      liability companies and other entities and other similar transactions (the
      “Other
      Businesses”).
      In
      such Other Businesses, the Buyers, may encounter business opportunities that
      may
      be in direct or indirect competition with the Business. Recognizing such, in
      the
      event that this Agreement is terminated pursuant to Section
      8.2,
      the
      Seller and Parent hereby waive and release, on behalf of themselves, their
      stockholders, subsidiaries and agents, any and all claims for Damages that
      they
      may have against the Buyer and its directors, officers, employees, agents,
      managers, shareholders, members, consultants, successors and assigns in
      connection with or arising out of Buyer’s, or any such affiliates’, directors’,
      officers’ or consultants’, involvement in Other Businesses.

     

    
      
        
        

      

      
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    Section
      10.17  Expenses.
      Except
      as otherwise set forth herein, each party to this Agreement shall pay all fees
      and expenses incurred by it in connection with this Agreement and the
      transactions contemplated by this Agreement.

     

     

     

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

    
 

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      Effective Date.

     

    RAC
      NUTRITION CORPORATION

     

    By:
      /s/ Dennis
      Purcell                                                                  

    Name: 
      Dennis Purcell

    Title:

     

    MILLENNIUM
      BIOTECHNOLOGIES  GROUP,
      INC.

     

    By:
      /s/ Jerry
      Swon                                                                        

    Name: Jerry
      Swon

    Title:  
      Chief Executive Officer

     

    MILLENNIUM
      BIOTECHNOLOGIES, INC.

     

    By:
      /s/ Jerry
      Swon                                                                       

    Name:
      Jerry Swon

    Title:  
      Chief Executive Officer

     

    RAC
      NUTRITION HOLDINGS LLC

     

    By:
      /s/ Dennis
      Purcell                                                                

    Name:
      Dennis Purcell

    Title:
      

     

     

     

     

     

    
      
        
        

      

      
        54

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