Document:

ex10_1.htm

    
      

    

    Exhibit 10.1

     

    SECURITIES
PURCHASE AGREEMENT

    

    THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of May
19, 2008, is by and among OccuLogix, Inc. (the “Company”), a Delaware
corporation with executive offices located at 2600 Skymark Avenue, Unit 9, Suite
201, Mississauga, Ontario L4W 5B2, Marchant Securities Inc. (the “Agent”), an Ontario
corporation with offices located at 100 York Boulevard, Suite 404, Richmond
Hill, Ontario, L4B 1J8, and the investors listed on the Schedule of Investors
attached hereto as Exhibit A
(individually, an “Investor” and, collectively,
the “Investors”).

    

    The
Company may be considered a “connected issuer” and/or a “related issuer” (as
those terms are defined in National Instrument 33-105—Underwriting Conflicts) of
the Agent, the exclusive placement agent in Canada in connection with the
purchase and sale of the Common Shares (as defined below) pursuant to this
Agreement.  Elias Vamvakas, the Chairman and Chief Executive Officer
of the Company, and members of his family have an indirect ownership interest in
the Agent as to approximately 32%.  See Section 3.2(p) of this
Agreement.

    

    BACKGROUND

     

    A.          The
Company and each Investor are executing and delivering this Agreement in
reliance upon the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), and Rule 506
of Regulation D (“Regulation
D”), as
promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act, and Rule 903 of Regulation S (“Regulation S”), as
promulgated by the SEC under the Securities Act, and the exemptions from the
prospectus and registration requirements afforded by National Instrument
45-106—Prospectus and Registration Exemptions (“NI 45-106”).  With
specific reference to this Agreement entered into with any Investor resident or
located in Italy, the Company executes and delivers this Agreement in reliance
upon the exemption from the publication of a prospectus in Italy, pursuant to
Article 100 of the Legislative Decree 24 February 1998, no. 58 and its
implementing regulation, as amended, as well as pursuant to any other provision
implementing Article 3(2) of the Prospectus Directive (defined
below).

     

    B.           Each
Investor wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement shares of common stock, par value $.001 per
share, of the Company (the “Common Stock”) in the
aggregate dollar amount set forth opposite such Investor’s name on the Schedule
of Investors attached hereto as Exhibit A (such
shares of the Common Stock are referred to herein, collectively, as the “Common Shares”), and the
aggregate number of the Common Shares to be purchased and sold pursuant to this
Agreement shall be at least 50,765,000 (the “Offering”).

     

    C.           It
is contemplated that, immediately prior to the closing of the purchase and sale
of the Common Shares pursuant to Section 2.1 (the
“Closing”), the Company
shall acquire, by way of a merger transaction, all of the issued and
outstanding shares of the capital stock of OcuSense, Inc. that the Company does
not own on the date hereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Investors agree as
follows:

     

    ARTICLE
I

    DEFINITIONS

     

    1.1         
Definitions.  In
addition to the terms defined elsewhere in this Agreement, the following terms
have the meanings indicated:

     

    “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 promulgated under the Securities
Act.

     

    “Agency Agreement” means the
Agency Agreement, dated the date hereof, between the Agent and the Company in
respect of the Offering.

     

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

     

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

     

    “Best Efforts” means the
efforts that a prudent person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as expeditiously as
practical; provided,
however, that an obligation to use Best Efforts under this Agreement does
not require the Company to dispose of or make any change to its business, expend
any material funds or incur any other material burden.

     

    “Board” means the board of
directors of the Company.

     

    “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in New York
City are authorized or required by law to remain closed.

     

    “Canadian Securities Laws”
means, collectively, all applicable securities laws in each of the provinces and
territories of Canada and the respective regulations made thereunder, together
with applicable published fee schedules, prescribed forms, policy statements,
notices, orders, blanket rulings and other regulatory instruments of the
Canadian securities regulatory authorities.

     

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

     

    “Closing Date” means the date
of the Closing and shall be on such date as is mutually agreed to by the Company
and the Agent for and on behalf of the Investors, subject to the provisions of
Section
2.1.

     

    “Closing Price” means, for any
date, the closing price per share of the Common Stock for such date (or the
nearest preceding date) on the primary Trading Market.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

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

     

    “Company Counsel” means Torys
LLP, counsel to the Company.

     

    “Common Shares” has the meaning
set forth in the Preamble.

     

    “Common Stock” has the meaning
set forth in the Preamble.

     

    “Contingent Obligation” has the
meaning set forth in Section
3.1(z).  

     

    “Convertible Securities” means
any stock or securities (other than Options) convertible into or exercisable or
exchangeable for shares of the Common Stock.

     

    “Covering Shares” has the
meaning set forth in Section
4.1(b).

     

    “Disclosure Materials” has the
meaning set forth in Section
3.1(g).

     

    “Effective Date” means the date
that the Registration Statement is first declared effective by the
SEC.

     

    “Effectiveness Period” has the
meaning set forth in Section
6.1(b).

     

    “Eligible Market” means any of
the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global
Market, the Nasdaq Capital Market or the Toronto Stock Exchange.

     

    “Escrow Agent” means Cassels,
Brock & Blackwell LLP, counsel to the Agent.

     

    “Event” has the meaning set
forth in Section
6.1(d).

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

     

    “Filing Date” means 30 days
after the Closing Date.

     

    “FINRA” means Financial
Industry Regulatory Authority, Inc.

     

    “GAAP” has the meaning set
forth in Section
3.1(g).  

     

    “Indebtedness” has the meaning
set forth in Section
3.1(z).

     

    “Indemnified Party” has the
meaning set forth in Section
6.4(c).

     

    “Indemnifying Party” has the
meaning set forth in Section
6.4(c).

     

    “Intellectual Property Rights”
has the meaning set forth in Section
3.1(s).

     

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Lien” means any lien, charge,
claim, security interest, encumbrance, right of first refusal or other
restriction.

     

    “Losses” means any and all
losses, claims, damages, liabilities, settlement costs and expenses, including,
without limitation, reasonable attorneys’ fees.

     

    “Material Adverse Effect” means
(i) a material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole on a
consolidated basis, or (ii) material and adverse impairment of the Company’s
ability to perform its obligations under any of the Transaction Documents,
provided, that none of the following alone shall be deemed, in and of itself, to
constitute a Material Adverse Effect:  (i) a change in the market
price or trading volume of the Common Stock or (ii) changes in general economic
conditions or changes affecting the industry in which the Company operates
generally (as opposed to Company-specific changes) so long as such changes do
not have a disproportionate effect on the Company and the Subsidiaries, taken as
a whole.

     

    “Material Permits” has the
meaning set forth in Section
3.1(u).

     

    “Merger Agreement” means the
Agreement and Plan of Merger and Reorganization, dated April 22, 2008, by and
among the Company, OcuSense Acquireco, Inc. and the Material
Subsidiary.

     

    “NI 45-106” has the meaning
set forth in the Preamble.

     

    “OcuSense” means OcuSense,
Inc.

     

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

     

    “Options” means any outstanding
rights, warrants or options to subscribe for or purchase shares of the Common
Stock or Convertible Securities.

     

    “OSC” means the Ontario
Securities Commission.

     

    “PCMLTFA” has the meaning set
forth in Section
3.2(j).

     

    “Person” means any individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company or joint stock company.

     

    “Proceeding” means an action,
claim, suit, investigation or proceeding (including, without limitation, a
partial proceeding, such as a deposition), whether commenced or threatened in
writing.

     

    “Prospectus” means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Prospectus Directive” means
Directive 2003/71/EC and includes any relevant implementing measure in the
United Kingdom or in Italy, as applicable.

     

    “Public Disclosure Documents”
has the meaning set forth in Section
3.1(g).

     

    “Purchase Price” has the
meaning set forth in Section
2.1.

     

    “Registrable Securities” means
the Common Shares purchased and sold pursuant to this Agreement, together with
any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.

     

    “Registration Statement” means
each registration statement required to be filed under Article VI, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

     

    “Regulation D” has the meaning
set forth in the Preamble.  

     

    “Regulation S” has the meaning
set forth in the Preamble.

     

    “Required Effectiveness Date”
means the date which is the earliest of (i) if the Registration Statement does
not become subject to review by the SEC, (a) 90 days after the Closing Date or
(b) five Trading Days after the Company receives notification from the SEC that
the Registration Statement will not become subject to review, or (ii) if the
Registration Statement, or any portion thereof or any document incorporated by
reference therein, becomes subject to review by the SEC, 120 days after the
Closing Date.

     

    “Rule 144”, “Rule 415” and “Rule 424” means Rule 144, Rule 415
and Rule 424, respectively, promulgated by the SEC pursuant to the Securities
Act, as such Rules may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.

     

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

     

    “Securities Act” has the
meaning set forth in the Preamble.  

     

    “Short Sales” has the meaning
set forth in Section
3.2(h).  

     

    “Subsidiary” means any direct
or indirect subsidiary of the Company, including, for greater certainty,
OcuSense.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Trading Day” means (i) any day
on which the Common Stock is listed or quoted and traded on its primary Trading
Market, (ii) if the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on the Nasdaq Global Market
(or any successor thereto), or (iii) if trading ceases to occur on the Nasdaq
Global Market (or any successor thereto), any Business Day.

     

    “Trading Market” means the
Nasdaq Global Market or any other Eligible Market, or any other national
securities exchange, market or trading or quotation facility, in each case, on
which the Common Stock is then listed or quoted.

     

    “Transaction” has the meaning
set forth in Section
3.2(h).

     

    “Transaction Documents” means
this Agreement (including the Schedules and Exhibits attached hereto), the
Merger Agreement and the Transfer Agent Instructions.

     

    “Transfer Agent” means Mellon
Investor Services LLC, or any successor transfer agent for the
Company.

     

    “Transfer Agent Instructions”
means, with respect to the Company, the Irrevocable Transfer Agent Instructions,
in the form of Exhibit B, executed by the
Company and delivered to and acknowledged in writing by the Transfer
Agent.

     

    ARTICLE
II

    PURCHASE
AND SALE

     

    2.1          Closing.  Subject
to the terms and conditions set forth in this Agreement, at the Closing, the
Company shall issue and sell to each Investor, and each Investor, severally and
not jointly, shall purchase from the Company, the Common Shares in the dollar
amount set forth opposite such Investor’s name on the Schedule of Investors
attached hereto as Exhibit A. The
purchase price of each Common Share shall be the lower of (i) $0.10 and (ii) the
volume-weighted average Closing Price for the 15-Trading Day period immediately
preceding the Closing Date (the “Purchase
Price”).  The time of the Closing shall be 8:00 a.m., Eastern
Time, on the Closing Date which, in any event, shall occur by no later than the
seventh Business Day following the fulfillment of the condition precedent
contained in each of Section 5.1(b) and
Section
5.1(c).  The Closing shall take place at the Toronto offices of
the Company Counsel.

     

    2.2          Closing
Deliveries.

     

    (a)         
  At the Closing, the Company shall deliver, or cause to be delivered,
to each Investor the following:

     

    (i)   
   one or more stock certificates (or copies thereof provided by the
Transfer Agent), free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b) hereof),
evidencing such number of the Common Shares set forth opposite such Investor’s
name on the Schedule of Investors attached hereto as Exhibit A, registered
in the name of such Investor;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)   
  a legal opinion of Company Counsel, in the form of Exhibit C, executed
by such counsel;

     

    (iii)    
duly executed Transfer Agent Instructions acknowledged by the Transfer Agent;
and

     

    (iv)   
 evidence of filing with each applicable Trading Market of an additional
shares listing application covering all of the Common Shares (and, if
applicable, evidence of conditional listing approval).

     

    (b)       
    The Agent shall notify the Investors of the Closing Date
in writing as soon as practicable.  No later than the seventh calendar
day preceding the Closing Date as so notified by the Agent, each Investor shall
deliver, or cause to be delivered, to the Escrow Agent the aggregate Purchase
Price of the number of the Common Shares set forth opposite such Investor’s name
on the Schedule of Investors attached hereto as Exhibit A, in United
States dollars and in immediately available funds, by wire transfer to an
account of the Escrow Agent designated in writing to the Investors by the Agent
for such purpose or by certified check or bank draft payable to “Cassels, Brock
& Blackwell LLP, in trust”.  Each of the Investors hereby
acknowledges and agrees that the Escrow Agent shall pay such Purchase Price to
the Company at the Closing, solely upon the direction of the Agent and without
any further instructions, direction or confirmation of such
Investor.  Furthermore, each of the Investors hereby waives any and
all claims that he, she or it has, or may have in the future, against the Escrow
Agent as a result of, or arising from or in connection with, the Escrow Agent
making such payment to the Company upon the direction of the Agent, and each of
the Investors hereby releases the Escrow Agent from any and all such
claims.

     

    2.3          Authorization of
Agent.  Each of the Investors hereby irrevocably authorizes the
Agent, in its discretion, to act as such Investor’s representative at the
Closing and hereby appoints the Agent, with full power of substitution, as his,
her or its true and lawful attorney with full power and authority in such
Investor’s place and stead:

     

    (a)        
   to receive certificates representing the Common Shares; to
execute, in such Investor’s name and on its behalf, all closing receipts and
documents; to complete and correct any errors or omissions in any form or
document provided by such Investor, including this Agreement and the Schedules
and Exhibits hereto, in connection with the subscription for the Common Shares;
and to exercise any rights of termination contained in the Agency
Agreement;

     

    (b)        
   to extend such time periods and to waive, in whole or in part,
any representations, warranties, covenants or conditions for the Investors’
benefit contained in this Agreement, the Agency Agreement or any ancillary or
related document;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)          
 to terminate this Agreement if any condition precedent is not satisfied,
in such manner and on such terms and conditions as the Agent, in its sole
discretion, may determine; and

     

    (d)        
   without limiting the generality of the foregoing, to
negotiate, settle, execute, deliver and amend the Agency Agreement.

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES AND COVENANTS

     

    3.1          Representations and
Warranties of the Company.  References in this Section 3.1 to
Schedules are references to the Schedules that form the Company Disclosure
Schedule attached hereto as Exhibit
D.  The Company hereby represents and warrants to the Investors
as follows:

     

    (a)        
   Subsidiaries.  The
Company has no Subsidiaries other than those listed in Schedule 3.1(a)
hereto.  Except as set forth in Schedule 3.1(a)
hereto, the Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien, and
all the issued and outstanding shares of capital stock or comparable equity
interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of pre-emptive and similar rights.

     

    (b)         
  Organization and
Qualification.  Each of the Company and the Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the
requisite legal authority to own and use its properties and assets and to carry
on its business as currently conducted.  Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents, except, in the case of the Subsidiaries, where the violation
would not, individually or in the aggregate, have, or reasonably be expected to
result in, a Material Adverse Effect.  Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.

     

    (c)         
  Authorization;
Enforcement.  The Company has the requisite corporate authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery by
the Company of each of the Transaction Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Board, and
no further consent or action is required on the part of the Company, other than
the approval of the majority of the stockholders of the Company who are
disinterested in the transactions contemplated by the Transaction
Documents.  Each of the Transaction Documents to which it is a party
has been duly executed by the Company and is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of specific performance and other equitable
remedies.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)         
  No
Conflicts.  Other than as set forth in Schedule 3.1(d)
hereto, the
execution, delivery and performance of the Transaction Documents by the Company
to which it is a party and the consummation by the Company of the transactions
contemplated hereby and thereby do not, and will not, (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that, with notice or
lapse of time or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound, or affected, except
to the extent that such conflict, default, termination, amendment, acceleration
or cancellation right would not reasonably be expected to have a Material
Adverse Effect, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including, assuming the continued validity and accuracy of the representations
and warranties of the Investors set forth in Section 3.2(c)
hereof, U.S. federal and state securities laws and regulations, Canadian
provincial securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are subject,
including all applicable Trading Markets), or by which any property or asset of
the Company or a Subsidiary is bound or affected, except to the extent that such
violation would not reasonably be expected to have a Material Adverse
Effect.

     

    (e)         
  The Common
Shares.  The Common Shares are duly authorized and, when issued
and paid for in accordance with this Agreement and the Transfer Agent
Instructions, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens and will not be subject to pre-emptive or similar
rights of stockholders (other than those imposed by the
Investors).  Assuming the continued validity and accuracy of each
Investor’s representations and warranties contained in Section 3.2(c), the
offer and sale of the Common Shares to the Investors pursuant to this Agreement
are exempt from the registration requirements of the Securities Act and from the
prospectus and registration requirements of applicable Canadian provincial
securities laws and regulations.

     

    (f)         
   Capitalization.  The
aggregate number of shares and type of all authorized, issued and outstanding
classes of capital stock, Options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in Schedule 3.1(f)
hereto.  All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
in all material respects with all applicable securities laws.  Except
as set forth in Schedule 3.1(f)
hereto, the Company did not have outstanding at March 31, 2008, any other
Options, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or entered into any agreement giving any Person
any right to subscribe for or acquire, any shares of the Common Stock, Options
or Convertible Securities.  Except as set forth in Schedule 3.1(f)
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) and the issuance and sale of the
Common Shares will not obligate the Company to issue shares of the Common Stock
or other securities to any Person (other than the Investors) and will not result
in a right of any holder of securities to adjust the exercise, conversion,
exchange or reset price under such securities.  To the knowledge of
the Company, except as disclosed in the SEC Reports and any Schedules 13D or 13G
filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting
persons or in Schedule
3.1(f) hereto, no Person or group of related Persons beneficially owns
(as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common
Stock.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (g)        
   Public Disclosure Documents;
Financial Statements.  Except as set forth in Schedule 3.1(g)
hereto, the Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, and under
Canadian Securities Laws, for the 12 months preceding the date hereof on a
timely basis or has received a valid extension of such time of filing and has
filed any such Public Disclosure Documents (as defined below) prior to the
expiration of any such extension and has filed all reports required to be filed
by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, and under Canadian Securities Laws, for the two years preceding the
date hereof.  Such reports required to be filed by the Company under
the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, and
under Canadian Securities Laws, together with any materials filed or furnished
by the Company under the Exchange Act and Canadian Securities Laws, whether or
not any such reports were required, are referred to herein, collectively, as the
“Public Disclosure
Documents” and, together with this Agreement and the Schedules to this
Agreement, the “Disclosure
Materials”.  As of their respective dates, the Public
Disclosure Documents filed by the Company complied in all material respects with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and Canadian Securities Laws, and
none of the Public Disclosure Documents, when filed by the Company, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.  The financial statements of the Company included in the
Public Disclosure Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC and Canadian
Securities Laws with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements, the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP or may be condensed or summary statements, and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments.  All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or identified in the Public Disclosure Documents, to the extent such
agreements are required to be included or identified pursuant to the rules and
regulations of the SEC or Canadian Securities Laws.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h)         
  Since the date of the latest audited financial statements included
within the Public Disclosure Documents, except as disclosed in the Public
Disclosure Documents or in Schedule 3.1(h)
hereto, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that would result in a Material
Adverse Effect, (ii) the Company has not incurred any material liabilities other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the SEC or pursuant to the requirements of
Canadian Securities Laws, (iii) the Company has not altered its method of
accounting or changed its auditors, (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its stockholders, in
their capacities as such, or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (except for repurchases by
the Company of shares of capital stock held by employees, officers, directors or
consultants pursuant to an option of the Company to repurchase such shares upon
the termination of employment or services) and (v) the Company has not issued
any equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock-based plans.  

     

    (i)          
  Absence of
Litigation.  Except as disclosed in the Public Disclosure
Documents, there is no action, suit, claim or proceeding, or, to the Company’s
knowledge, inquiry or investigation, before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
the Subsidiaries that would be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.

     

    (j)       
     Compliance.  Except
as set forth in Schedule 3.1(j)
hereto, neither the Company nor any Subsidiary, except in each case as would
not, individually or in the aggregate, reasonably be expected to have or result
in a Material Adverse Effect, (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received written notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (k)        
   Title to
Assets.  The Company and the Subsidiaries own no real
property.  Except as set forth in Schedule 3.1(k)
hereto, the Company and the Subsidiaries have good and marketable title in all
personal property owned by them that is material to the business of the Company
and the Subsidiaries, free and clear of all Liens, except for Liens that do not,
individually or in the aggregate, have or result in a Material Adverse
Effect.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in material
compliance.

     

    (l)          
  No General
Solicitation; No Directed Selling Efforts; Placement Agent’s
Fees.  Neither the Company, nor any of its Affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) or any
directed selling efforts (within the meaning of Regulation S) in connection with
the offer and sale of the Common Shares to the Investors pursuant to this
Agreement.  The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees or broker’s commission (other
than for Persons engaged by any Investor or his, her or its investment advisor)
relating to, or arising out of, the purchase and sale of the Common Shares
pursuant to this Agreement.  The Company shall pay, and hold each
Investor harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any claim for fees arising out of the purchase and sale of the
Common Shares pursuant to this Agreement.  The Company acknowledges
that it has engaged the Agent as its exclusive placement agent in Canada in
connection with the purchase and sale of the Common Shares pursuant to this
Agreement.  Other than the Agent, the Company has not engaged any
placement agent or other agent in connection with the purchase and sale of the
Common Shares pursuant to this Agreement.

     

    (m)        
  Private
Placement.  Neither the Company nor any of its Affiliates nor
any Person acting on the Company’s behalf has, directly or indirectly, at any
time within the past six months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that would
eliminate the availability of the exemption from registration under Regulation D
in connection with the offer and sale by the Company of the Common Shares as
contemplated hereby (assuming the continued validity and accuracy of the
representations and warranties of each Investor contained in Section
3.2(c)).  The purchase and sale of the Common Shares hereunder
does not contravene the rules and regulations of any Trading Market on which the
Common Stock is listed or quoted.  The Company is not, and will not be
as a result of the purchase and sale of the Common Shares contemplated hereby,
required to be registered as an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.  The Company is not
required to be registered as a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of
1980.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (n)         
  Form S-3
Eligibility.  The Company is eligible to register the Common
Shares for resale by the Investors using Form S-3 promulgated under the
Securities Act.

     

    (o)          
 Listing and
Maintenance Requirements.  Except as disclosed in the SEC
Reports, the Company has not, in the twelve months preceding the date hereof,
received notice (written or oral) from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading
Market.

     

    (p)      
     Registration
Rights.  Except as set forth in Schedule 3.1(p)
hereto, the Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the
Company registered with the SEC or any other governmental authority that have
not been satisfied or waived.

     

    (q)       
    Application of Takeover
Protections.  Except as set forth in Schedule 3.1(q) hereto, there is no
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s charter documents or the laws of its state of incorporation
that is or could become applicable to any of the Investors as a result of the
Investors and the Company fulfilling their respective obligations or exercising
their respective rights under the Transaction Documents, including, without
limitation, as a result of the Company’s issuance of the Common Shares and the
Investors’ ownership of the Common Shares.

     

    (r)          
  Disclosure.  To
the Company’s knowledge, except for the transactions contemplated by this
Agreement and the Merger Agreement, no event or circumstance has occurred or
information exists with respect to the Company or any of the Subsidiaries or its
or their respective businesses, properties, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.

     

    (s)         
  Patents
and Trademarks.  OcuSense owns, or, to the knowledge of the
Company, possesses adequate rights or licenses to use, all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”)
necessary to conduct its business as now conducted, other than as would not have
or reasonably be expected to have a Material Adverse Effect.  Except
as set forth in Schedule 3.1(s)
hereto, none of OcuSense’s Intellectual Property Rights have expired or
terminated, or are expected to expire or terminate, within three years from the
date of this Agreement.  Neither the Company nor any of the
Subsidiaries is the subject of any claim of infringement or misappropriation by
the Company or any of the Subsidiaries of Intellectual Property Rights of
others.  Except as disclosed in the SEC Reports, there is no
Proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or the Subsidiaries regarding their respective
Intellectual Property Rights.  

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (t)        
    Insurance.  The
Company and the Subsidiaries (other than OcuSense) are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are deemed by the management of the Company to be prudent and
customary in the businesses and locations in which the Company and the
Subsidiaries are engaged and located, respectively.

     

    (u)        
   Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, provincial, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports (“Material Permits”), except
where the failure to possess such permits does not, individually or in the
aggregate, have or would reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of any Material
Permit.

     

    (v)     
      Transactions with Affiliates
and Employees.  Except as set forth or incorporated by
reference in the SEC Reports, none of the officers, directors or employees of
the Company is presently a party to any transaction that would be required to be
reported on Form 10-K with the Company or any of the Subsidiaries (other than
for ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such officer, director or
employee or, to the Company’s knowledge, any corporation, partnership, trust or
other entity in which any such officer, director or employee has a substantial
interest or is an officer, director, trustee or partner.

     

    (w)       
   Internal Accounting
Controls.  The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
the preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.

     

    (x)         
  Sarbanes-Oxley
Act.  The Company is in compliance in all material respects
with applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable
rules and regulations promulgated by the SEC thereunder, except where such
non-compliance would not have, individually or in the aggregate, a Material
Adverse Effect.

     

    (y)         
  Foreign
Corrupt Practices.  Neither the Company nor any of the
Subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of the
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity, (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (z)          
 Indebtedness.  Except
as set forth in the SEC Reports or Schedule 3.1(h) hereto,
neither the Company nor any of the Subsidiaries (i) has any outstanding
Indebtedness (as defined below) in an individual amount of more than $100,000,
(ii) is in violation of any term of, or in default under, any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, or (iii) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect.  The SEC Reports or Schedule
3.1(h) hereto provides a detailed description of the material terms
of any such outstanding Indebtedness in an individual amount of more than
$100,000.  For purposes of this Agreement:  (x) “Indebtedness” of any Person
means, without duplication, (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, under GAAP, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract
rights) owned by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.

     

    (aa)          Employee
Relations.  Neither the Company nor any of the Subsidiaries is
a party to any collective bargaining agreement or employs any member of a
union.  The Company believes that its relations with its employees are
as disclosed in the Public Disclosure Documents.  Except as disclosed
in Schedule
3.1(bb) hereto, no executive officer (as defined in Rule 501(f) of the
Securities Act) of the Company or any of the Subsidiaries has notified the
Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary.  To the knowledge of the Company, no
executive officer of the Company or any of the Subsidiaries is in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any such
Subsidiary to any liability with respect to any of the foregoing
matters.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (bb)         Labor
Matters.  The Company and the Subsidiaries are in compliance in
all material respects with all applicable federal, state, provincial, local and
foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.

     

    (cc)     
    Subsidiary
Rights.  Except as set forth in Schedule 3.1(a) hereto, the
Company or one of the Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of the Subsidiaries as owned by the
Company or such Subsidiary.

     

    (dd)         Tax
Status.  The Company and each of the Subsidiaries (i) has made
or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
except for any which the failure to make or file would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, and (iii) has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.

     

    3.2           Representations, Warranties
and Covenants of the Investors.  Each Investor, as to himself,
herself or itself only and for no other Investor, hereby represents, warrants
and covenants to the Company as follows:

     

    (a)        
   Organization;
Authority.  In the case of an Investor that is not a natural
person, (i) such Investor is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and has the
requisite corporate, partnership or other power and authority to enter into this
Agreement and to carry out its obligations hereunder, and (ii) the execution and
delivery of this Agreement have been duly authorized by all necessary corporate,
partnership or other action on the part of such Investor.  In the case
of all Investors, whether or not a natural person, this Agreement has been duly
executed and delivered by such Investor and constitutes a valid and binding
obligation of such Investor, enforceable against him, her or it in accordance
with its terms, except as may be limited by (A) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (B) the effect of
rules of law governing the availability of specific performance and other
equitable remedies.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)       
    No Public Sale or
Distribution.  Such Investor is acquiring the Common Shares in
the ordinary course of business, as principal, for his, her or its account and
not with a view towards, or for resale in connection with, the public sale or
distribution thereof, and such Investor does not have a present arrangement to
effect any distribution of the Common Shares to or through any
Person.  Such Investor represents and agrees that he, she or it has
not made, and will not make, “an offer of the Common Shares to the public” in
the United Kingdom or in Italy.  The expression “an offer of the Common Shares to the
public” means the communication in any form and by any means of
sufficient information on the terms of the offer and the Common Shares to be
offered so as to enable an investor to decide to purchase or subscribe for the
Common Shares, as the same may be varied in the United Kingdom or in Italy by
any measure implementing the Prospectus Directive in the United Kingdom or in
Italy, as the case may be.

     

    (c)         
  Investor
Status.  At the time such Investor was offered the Common
Shares, he, she or it was, and at the date hereof is, (i) an “accredited
investor” as defined in Rule 501(a) promulgated under Regulation D, if he, she
or it is a resident of the U.S., (ii) an “accredited investor” as defined in NI
45-106, if he, she or it is a resident of Canada or is otherwise subject to
Canadian Securities Laws, (iii) a “qualified investor” within the meaning of the
law in the United Kingdom implementing Article 2(1)(e) of the Prospectus
Directive, if he, she or it is a resident of the United Kingdom or (iv) a
“qualified investor” within the meaning of the law in Italy implementing Article
2(1)(e) of the Prospectus Directive, if he, she or it is a resident of, or
located in, Italy.  Such Investor is not a registered broker dealer
registered under Section 15(a) of the Exchange Act, or a member of FINRA, or an
entity engaged in the business of being a broker dealer.  Such
Investor is not affiliated with any broker dealer registered under Section 15(a)
of the Exchange Act, or a member of FINRA, or an entity engaged in the business
of being a broker dealer.

     

    (d)       
    Experience of
Investor.  Such Investor, either alone or together with his,
her or its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of entering into this Agreement and of the investment in the Common Shares
and has so evaluated the merits and risks of such investment.  Such
Investor understands that he, she or it must bear the economic risk of this
investment in the Common Shares indefinitely and is able to bear such risk and
is able to afford a complete loss of such investment.

     

    (e)         
  Access to
Information.  Such Investor acknowledges that he, she or it has
reviewed the Disclosure Materials and has been afforded:  (i) the
opportunity to ask such questions as he, she or it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms and
conditions of the offering and sale of the Common Shares and the merits and
risks of investing in the Common Shares; (ii) access to information about the
Company and the Subsidiaries and their respective financial condition, results
of operations, business, properties, management and prospects sufficient to
enable him, her or it to evaluate his, her or its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)          
  No Governmental
Review.  Such Investor understands that no U.S. federal or
state agency, Canadian provincial or territorial securities commission or any
other government or governmental agency has passed on or made, or will pass on
or make, any recommendation or endorsement of the Common Shares or the fairness
or suitability of the investment in the Common Shares, nor have any such
authorities passed upon or endorsed the merits of the offering and sale of the
Common Shares.

     

    (g)         
  No
Advertising.  Such Investor has not become aware of any
advertisement in printed media of general and regular paid circulation (or other
printed public media), radio, television or telecommunications or other form of
advertisement (including electronic display) with respect to the distribution of
the Common Shares.

     

    (h)          
 Filings.  Such
Investor will execute and deliver and file, or assist the Company with the
filing of, such reports, undertakings and other documents with respect to the
purchase and sale of the Common Shares pursuant to this Agreement as may be
required by the SEC, the OSC, any other securities regulatory authority, any
Trading Market or any other regulatory authority.

     

    (i)           
 No
Conflicts.  The execution, delivery and performance by such
Investor of this Agreement and the consummation by him, her or it of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Investor, in the case of an Investor that is
not a natural person, or (ii) conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Investor
is a party or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including, without limitation, U.S. federal and state
securities laws and Canadian provincial and territorial securities laws and
regulations) applicable to such Investor except, in the case of clause (ii)
above, for such that are not material and do not otherwise affect his, her or
its ability to consummate the transactions contemplated hereby.

     

    (j)        
    Anti-Money
Laundering.  The funds representing such Investor’s portion of
the aggregate Purchase Price, which is being paid by such Investor to the
Company hereunder, does not represent proceeds of crime for the purposes of the
Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”), and such Investor
acknowledges that the Company, in the future, may be required by law to disclose
his, her or its name and other information on a confidential basis pursuant to
the PCMLTFA.  To the knowledge of such Investor, none of such funds
(i) have been or will be derived from, or related to, any activity that is
deemed criminal under the laws of Canada, any of the jurisdictions of the United
States of America or any other jurisdiction or (ii) are being tendered on behalf
of any Person other than such Investor.  Such Investor shall notify
the Company promptly if he, she or it discovers that any part of this
representation and warranty ceases to be true and to provide the Company with
all relevant information in connection therewith.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (k)          
 Securities
Transactions.  Such Investor has not engaged, directly or
indirectly, and no Person acting on behalf of or pursuant to any understanding
with such Investor has engaged, in any purchases or sales of any securities of
the Company (including, without limitation, any Short Sales involving any of the
Company’s securities) (a “Transaction”) since the time
such Investor was first contacted by the Company, or by any Person, regarding an
investment in the Company, including, without limiting the generality of the
foregoing, this Agreement and the transactions contemplated
hereby.  Such Investor covenants that he, she or it will not engage,
directly or indirectly, in any Transactions in the securities of the Company
(including, without limitation, Short Sales) prior to the time the transactions
contemplated by the Transaction Documents are publicly disclosed and that no
Person acting on his, her or its behalf or pursuant to any understanding with
him, her or it will engage, directly or indirectly, in any such Transactions
prior to the time the transactions contemplated by the Transaction Documents are
publicly disclosed.  “Short Sales” includes,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sales contracts, options, puts, calls, short sales, swaps,
derivatives and similar arrangements (including on a total return basis) and
sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers.

     

    (l)           
 Restricted
Securities.  Such Investor understands that the Common Shares
are characterized as “restricted securities” under
the U.S. federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that, under such
laws and applicable regulations, the Common Shares may be resold in the U.S.
without registration under the Securities Act only in certain limited
circumstances.  Such Investor acknowledges that the Common Shares are
not qualified for distribution to the public in Canada and that he, she or it
will not, directly or indirectly, offer or re-sell the Common Shares in Canada
or to any Canadian resident, or to any Person who is acting on behalf of a
resident of Canada or to any Person whom he, she or it believes intends to
re-offer, re-sell or deliver any of the Common Shares in Canada, unless
permitted under applicable Canadian provincial and territorial securities laws
and regulations.  Such Investor understands that an offer of the
Common Shares to the public may not be made in the United Kingdom, except in
circumstances falling within Article 3(2) of the Prospectus
Directive.  Such Investor further understands that an offer of the
Common Shares to the public may not be made in Italy, except in circumstances
falling within Article 100 of the Legislative Decree 24 February 1998, no. 58
and its implementing regulation, as amended, as well as within any other
provision implementing Article 3(2) of the Prospectus Directive.  Such
Investor will not, directly or indirectly, offer or re-sell the Common Shares in
Australia or to any Australian resident, or to any Person who is acting on
behalf of a resident of Australia, or to any Person whom he, she or it believes
intends to re-offer, re-sell or deliver any of the Common Shares in Australia,
unless permitted under Chapter 6D of the Corporations Act 2001
(Cth).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (m)           Legends.  It
is understood that, except as provided in Section 4.1(b),
certificates evidencing the Common Shares may bear the legends set forth in
Section 4.1(b)
and that, with respect to the Legend C set forth in Section 4.1(b), until
such legend has been removed in accordance with the procedures set forth in
Section 4.1(b):  (A)
the Common Shares cannot be traded through the facilities of the Toronto Stock
Exchange (on the Toronto Stock Exchange, certificates representing the Common
Shares are not freely transferable and consequently are not “good delivery” in
settlement of transactions); and (B) the Toronto Stock Exchange may deem such
Investor to be responsible for any loss incurred on a sale made by him, her or
it of the Common Shares.

     

    (n)         
  Collection
of Information.  In the case of an Investor who is a resident
of the Province of Ontario or is otherwise subject to the securities laws of the
Province of Ontario, such Investor acknowledges that he, she or it has been
notified by the Company:  (i) of the delivery to the OSC of his, her
or its full name, residential address and telephone number, the number and type
of securities purchased by him, her or it, the total purchase price, the
exemption under NI 45-106 relied upon and the date of distribution; (b) that
this information is being collected indirectly by the OSC under the authority
granted to it under the securities legislation of the Province of Ontario; (c)
that this information is being collected for the purposes of the administration
and enforcement of such securities legislation; and (d) that the Administrative
Assistant to the Director of Corporate Finance can be contacted at Suite 1903,
Box 55, 20 Queen Street West, Toronto, Ontario, M5H 3S8, or at (416) 593-8086,
regarding any questions about the OSC’s indirect collection of this
information.  Each such Investor hereby authorizes the indirect
collection of this information by the OSC.

     

    (o)        
   No
Legal, Tax or Investment Advice.  Such Investor understands
that nothing in this Agreement or any other materials presented by or on behalf
of the Company to him, her or it in connection with this Agreement and the
transactions contemplated hereby constitutes legal, tax or investment
advice.  Such Investor has consulted such legal, tax and investment
advisors as he, she or it, in his, her or its sole discretion, has deemed
necessary or appropriate in the circumstances.

     

    (p)         
  Connected
and Related Issuer.  Such Investor understands that (i) the
Company may be considered a “connected issuer” and/or a “related issuer” of the
Agent (as those terms are defined in National Instrument 33-105—Underwriting
Conflicts), (ii) Elias Vamvakas, the Chairman and Chief Executive Officer of the
Company, and members of his family have an indirect ownership interest in the
Agent as to approximately 32%, (iii) the Agent’s decision to act as placement
agent in connection with the Offering was made independently of the relationship
referred to in (ii), (iv) the terms of the Offering (including the pricing
terms) were negotiated and settled by the Agent and Mr. Vamvakas and (v) the
Agent will not receive any benefit in connection with the Offering, other than
the commission payable to the Agent by the Company pursuant to the Agency
Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1          Transfer
Restrictions.

     

    (a)           
The Investors covenant that the Common Shares will only be disposed of pursuant
to, as applicable:  (i) an effective registration statement under, and
in compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from the registration requirements of the Securities Act,
and in compliance with any applicable state securities laws; (ii) a valid
prospectus and registration under Canadian Securities Laws or under an exemption
from the prospectus and registration requirements thereunder and in compliance
with Canadian Securities Laws; or (iii) the publication of a prospectus pursuant
to Article 3 of the Prospectus Directive or under an exemption from the
requirements to publish a prospectus in circumstances falling within Article
3(2) of the Prospectus Directive.  In connection with any transfer of
the Common Shares other than (i) pursuant to an effective registration statement
in the U.S., (ii) pursuant to a valid prospectus and registration in Canada,
(iii) pursuant to the publication of a prospectus pursuant to Article 3 of the
Prospectus Directive or (iv) in connection with any transfer of the Common
Shares to the Company, the Company may require the transferor to provide to the
Company an opinion of counsel (and the documents upon which the opinion is
based) selected by the transferor, the form and substance of which opinion shall
be reasonably satisfactory to the Company, to the effect, as applicable, that
such transfer does not require registration under the Securities Act in the U.S.
or a valid prospectus and registration in Canada under Canadian Securities Laws
or the publication of a prospectus pursuant to Article 3 of the Prospectus
Directive.  Notwithstanding the foregoing, the Company hereby consents
to and agrees to register on the books of the Company and with the Transfer
Agent, without any such legal opinion, except to the extent that the Transfer
Agent requests such legal opinion, any transfer of the Common Shares by an
Investor to any of its Affiliates, provided that the transferee certifies to the
Company that it is an “accredited investor” as defined in Rule 501(a)
promulgated under Regulation D or an “accredited investor” as defined in NI
45-106 or a “qualified investor” within the meaning of the law in the United
Kingdom implementing Article 2(1)(e) of the Prospectus Directive, or a
“qualified investor” within the meaning of the law in Italy implementing Article
2(1)(e) of the Prospectus Directive, as applicable, and provided that such
Affiliate does not request any removal of any existing legends on any
certificate evidencing the Common Shares.

     

    (b)          
 The Investors agree to the imprinting, so long as is required by this
Section 4.1(b),
of either the below-noted Legend A or Legend B and of the below-noted Legend C
(or legends to substantially similar effect) on any certificate evidencing any
of the Common Shares.  In the case of those Investors who are
residents of Canada or are otherwise subject to Canadian Securities Laws, such
Investors agree to, in addition to the imprinting of the aforementioned legends,
the imprinting of the below-noted Legend D (or a legend to substantially similar
effect) on any certificate evidencing any of the Common Shares.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Legend A

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

     

    Legend B

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS.  HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

     

    Legend C

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (THE "TSX"); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY" IN
SETTLEMENT OF TRANSACTIONS ON THE TSX.

     

    Legend D

     

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE ■ {INSERT THE DATE THAT IS FOUR MONTHS
AND A DAY AFTER THE CLOSING DATE}

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Other
than to the extent required by the Transfer Agent, certificates evidencing the
Common Shares shall not be required to contain such restrictive legends (i)
while a registration statement (including the Registration Statement) covering
the resale of the Common Shares is effective under the Securities Act, (ii)
following any sale of the Common Shares pursuant to Rule 144 if the holder
provides the Company with a legal opinion (and the documents upon which the
legal opinion is based) reasonably acceptable to the Company to the effect that
the Common Shares can be sold under Rule 144, (iii) if the holder provides the
Company with a legal opinion (and the documents upon which the legal opinion is
based) reasonably acceptable to the Company to the effect that the Securities
are eligible for sale under Rule 144(b)(1) or (iv) if the holder provides the
Company with a legal opinion (and the documents upon which the legal opinion is
based) reasonably acceptable to the Company to the effect that the legend is not
required under applicable requirements of the Securities Act (including
controlling judicial interpretations and pronouncements issued by the Staff of
the SEC).  The Company shall cause its counsel to issue the legal
opinion included in the Transfer Agent Instructions to the Transfer Agent on the
Effective Date.  Following the Effective Date or at such earlier time
as a legend is no longer required for certain of the Common Shares, the Company
will, no later than five Trading Days following the delivery by an Investor to
the Company or the Transfer Agent of (i) a legended certificate representing the
Common Shares and (ii) an opinion of counsel to the extent required by Section 4.1(a),
deliver or cause to be delivered to such Investor a certificate representing
such of the Common Shares that is free from such restrictive
legends.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section
4.1(b).

     

    If within
five Trading Days after the Company’s receipt of a legended certificate and the
other documents as specified in clauses (ii), (iii) and (iv) of the paragraph
immediately above, as applicable, the Company shall fail to issue and deliver to
such Investor a certificate representing such of the Common Shares that is free
from such restrictive legends, and if on or after such Trading Day such Investor
purchases (in an open market transaction or otherwise) shares of the Common
Stock to deliver in satisfaction of a sale by such Investor of shares of his,
her or its Common Shares that such Investor anticipated receiving from the
Company without any such restrictive legend (the “Covering Shares”), then the
Company shall, within five Trading Days after such Investor’s request, pay cash
to such Investor in an amount equal to the excess (if any) of such Investor’s
total purchase price (including brokerage commissions, if any) for the Covering
Shares, over the product of (A) the number of Covering Shares, times (B) the
closing bid price on the date of delivery of such certificate and the other
documents as specified in clauses (ii), (iii) and (iv) of the paragraph
immediately above, as applicable.

     

    (c)            The
Company will not object to (and shall permit (except as prohibited by law)) the
Investors to pledge or grant a security interest in some or all of the Common
Shares in connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Common Shares, and, if required under the
terms of such agreement, loan or arrangement, the Company will not object to
(and shall permit (except as prohibited by law)) the Investors to transfer
pledged or secured Common Shares to the pledgees or secured
parties.  Except as required by law, such a pledge or transfer would
not be subject to approval of the Company, no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith, and no
notice shall be required of such pledge.  The Investors hereby
acknowledge that the Company shall not be responsible for any pledges relating
to, or the grant of any security interest in, any of the Common Shares or for
any agreement, understanding or arrangement between an Investor and his, her or
its pledgee or secured party.  At the relevant Investor’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of any of the Common Shares may reasonably request in connection
with a pledge or transfer of them, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to amend appropriately the list
of Selling Stockholders thereunder.  Provided that the Company is in
compliance with the terms of this Section 4.1(c), the
Company’s indemnification obligations pursuant to Section 6.4 shall not
extend to any Proceeding or Losses arising out of or related to this Section
4.1(c).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.2          Furnishing of
Information.  Until the date that any Investor owning any of
the Common Shares may sell all of them under Rule 144(b)(1) of the Securities
Act (or any successor provision), the Company covenants to use its commercially
reasonable efforts to file timely (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act.  The
Company further covenants that it will take such further action as any holder of
the Common Shares may reasonably request to satisfy the provisions of this Section
4.2.

     

    4.3          Integration.  The
Company shall not, and shall use its commercially reasonable efforts to ensure
that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy,
or otherwise negotiate in respect of, any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer and sale of the
Common Shares to the Investors pursuant hereto in a manner that would require
the registration under the Securities Act of such offer and sale.

     

    4.4          Use of
Proceeds.  The Company intends to use the net proceeds from the
sale of the Common Shares for working capital and general corporate
purposes.  Pending these uses, the Company intends to invest the net
proceeds from this offering in short-term, interest-bearing, investment-grade
securities, or otherwise, pursuant to the Company’s customary investment
policies.

     

    4.5          Restriction on
Issuances.  From the Closing Date until 45 days after the
Effective Date, the Company shall not issue or sell any shares of the Common
Stock other than the issuance of shares of the Common Stock (i) upon the
exercise of Options outstanding on the Closing Date, (ii) upon the exercise of
Options issued in the future under the Company’s 2002 Stock Option Plan or other
security-based compensation arrangements, (iii) upon the exercise of Convertible
Securities outstanding on the Closing Date, (iv) to banks, equipment lessors or
other financial institutions, or to real property lessors, pursuant to a debt
financing, equipment leasing or real property leasing transaction, (v) pursuant
to the acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or other reorganization or pursuant to a joint
venture agreement and (vi) in connection with marketing or similar agreements or
strategic partnerships (including, without limitation, by way of a private
placement to strategic investors and/or entities (whatever the legal form) in
which, or of which, one or more members of the Company’s management owns or
controls an equity stake of 10% or greater).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.6          Accredited Investor
Certificate.  Each of the Investors, as to himself, herself or
itself and for no other Investor, agrees to complete and execute and deliver the
Accredited Investor Certificate attached hereto as Exhibit E, if such
Investor is a resident of the U.S., and the Accredited Investor Certificate
attached hereto as Exhibit F, if such
Investor is a resident of Canada or is otherwise subject to Canadian provincial
or territorial securities laws.

     

    ARTICLE
V

    CONDITIONS

     

    5.1          Conditions Precedent to the
Obligations of Investors.  The
obligation of each Investor to acquire the Common Shares at the Closing is
subject to the satisfaction or waiver by such Investor, at or before the
Closing, of each of the following conditions:

     

    (a)         
  Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the
date when made and as of the Closing as though made on and as of such
date;

     

    (b)         
  Stockholder
Approval.  The majority of the stockholders of the Company who
are disinterested in the transactions contemplated by the Transaction Documents
shall have duly approved such transactions;

     

    (c)          
 Regulatory
Approvals.  All
approvals, if any, required to be given by the SEC, the OSC, any other
securities regulatory authority, any Trading Market or any other regulatory
authority, with respect to the transactions contemplated by the Transaction
Documents, shall have been obtained (other than those which, if not obtained or
not obtained prior to the Closing, would not have, or reasonably be expected to
result in, a Material Adverse Effect or be reasonably likely to subject the
Company or any of the Subsidiaries or any of their respective officers or
directors to substantial penalties or criminal liability); and

     

    (d)         
  Performance.  The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the
Closing.

     

    5.2          Conditions Precedent to the
Obligations of the Company.  The obligation of the Company to
sell the Common Shares at the Closing is subject to the satisfaction or waiver
by the Company, at or before the Closing, of each of the following
conditions:

     

    (a)        
   Representations and
Warranties.  The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made on and as of
such date;

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)         
  Stockholder
Approval.  The majority of the stockholders of the Company who
are disinterested in the transactions contemplated by the Transaction Documents
shall have duly approved such transactions;

     

    (c)         
  Regulatory
Approvals.  All
approvals, if any, required to be given by the SEC, the OSC, any other
securities regulatory authority, any Trading Market or any other regulatory
authority, with respect to the transactions contemplated by the Transaction
Documents, shall have been obtained (other than those which, if not obtained or
not obtained prior to the Closing, would not have, or reasonably be expected to
result in, a Material Adverse Effect or be reasonably likely to subject the
Company or any of the Subsidiaries or any of their respective officers or
directors to substantial penalties or criminal liability); and

     

    (d)         
  Performance.  The
Investors shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Investors at or prior to the
Closing, including, without limitation, the delivery of the aggregate Purchase
Price in accordance with Section 2.2(b) and
the completion and execution and delivery of the Accredited Investor Certificate
in accordance with Section
4.6.

     

    ARTICLE
VI

    REGISTRATION
RIGHTS

     

    6.1          Registration
Statement.

     

    (a)          
 As promptly as possible, and in any event on or prior to the Filing Date,
the Company shall prepare and file with the SEC a Registration Statement
covering the resale of all Registrable Securities for an offering to be made on
a continuous basis pursuant to Rule 415.  The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance with the Securities Act and
the Exchange Act) and shall contain (except if otherwise directed by the
Investors or requested by the SEC) the “Plan of Distribution” in substantially
the form attached hereto as Exhibit
G.  Notwithstanding the foregoing or anything else in this
Agreement or the Agency Agreement to the contrary, any inability on the part of
the Company to register for resale all Registrable Securities as a result of
written comments from the SEC (including, without limitation, due to the
limitations under Rule 415), resulting in the Registration Statement covering
the resale of less than all Registrable Securities, shall not constitute, nor
shall it be deemed to be, a breach or default by the Company under this
Agreement or the Agency Agreement or under any other agreement among the Company
and the Investors.

     

    (b)         
  The Company shall use its commercially reasonable efforts to cause
the Registration Statement to be declared effective by the SEC as promptly as
possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its commercially reasonable efforts to keep
the Registration Statement continuously effective under the Securities Act until
the earlier of the date that all of the Common Shares covered by such
Registration Statement have been sold or can be sold publicly under Rule
144(b)(1) (the “Effectiveness
Period”); provided that, upon notification by the SEC that a Registration
Statement will not be reviewed or is no longer subject to further review and
comments, the Company shall request acceleration of such Registration Statement
within five Trading Days after receipt of such notice and request that it
becomes effective at 4:00 p.m., Eastern Time, on the Effective
Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)         
  The Company shall notify the Investors in writing promptly (and, in
any event, within two Trading Days) after receiving notification from the SEC
that the Registration Statement has been declared effective.

     

    (d)           
Notwithstanding anything in this Agreement or the Agency Agreement to the
contrary, after 60 consecutive Trading Days of continuous effectiveness of the
initial Registration Statement filed and declared effective pursuant to this
Agreement, the Company may, by written notice to the Investors, suspend sales
under a Registration Statement after the Effective Date thereof and/or require
that the Investors immediately cease the sale of Registrable Securities pursuant
thereto and/or defer the filing of any subsequent Registration Statement if the
Company is engaged in a material merger, acquisition or sale and the Board
determines in good faith, by appropriate resolutions, that, as a result of such
activity, (A) it would be materially detrimental to the Company (other than as
relating solely to the price of the Common Stock) to maintain a Registration Statement
at such time or (B) it is in the best interests of the Company to suspend sales
under such registration at such time.  Upon receipt of such notice,
the Investors shall immediately discontinue any sales of Registrable Securities
pursuant to such registration until the Investors are advised in writing by the
Company that the current Prospectus or amended Prospectus, as applicable, may be
used.  In no event, however, shall this right be exercised to suspend
sales beyond the period during which (in the good faith determination of the
Board) the failure to require such suspension would be materially detrimental to
the Company.  The Company’s rights under this Section 6(e) may be
exercised for a period of no more than 30 Trading Days at a time and not more
than two times in any twelve-month period, without such suspension being
considered as part of an Event Payment determination.  Immediately
after the end of any suspension period under this Section 6(e), the
Company shall take all necessary actions (including filing any required
supplemental prospectus) to restore the effectiveness of the applicable
Registration Statement and the Investors’ ability to publicly re-sell
Registrable Securities pursuant to such effective Registration
Statement.

     

    (e)           
The Company shall not, from the date hereof until the Effective Date of the
Registration Statement, prepare and file with the SEC a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than any registration
statement relating to the Company’s employee benefit plans registered on Form
S-8.

     

    6.2          Registration
Procedures.  In connection with the Company’s registration
obligations hereunder, the Company shall:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)        
   Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto, furnish via e-mail to those Investors who have provided the Company
with e-mail addresses copies of all such documents proposed to be filed, which
documents (other than any document that is incorporated or deemed to be
incorporated by reference therein) will be subject to the review of such
Investors.  The Company shall reflect in each such document when so
filed with the SEC such comments regarding the Investors and the plan of
distribution as the Investors may reasonably and promptly propose no later than
two Trading Days after the Investors have been so furnished with copies of such
documents as aforesaid.

     

    (b)        
   (i) Subject to Section 6.1(e),
prepare and file with the SEC such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective, as to the applicable Registrable Securities, for the Effectiveness
Period and prepare and file with the SEC such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
and in any event within 12 Trading Days (except to the extent that the Company
reasonably requires additional time to respond to accounting comments), to any
comments received from the SEC with respect to the Registration Statement or any
amendment thereto; and (iv) comply in all material respects with the provisions
of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Investors set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

     

    (c)          
 Notify the Investors as promptly as reasonably possible (and if requested
by them, confirm such notice in writing no later than two Trading Days
thereafter) of any of the following events:  (i) the SEC notifies the
Company whether there will be a “review” of any Registration Statement; (ii) the
SEC comments in writing on any Registration Statement; (iii) any Registration
Statement or any post-effective amendment is declared effective; (iv) the SEC or
any other federal or state governmental authority requests any amendment or
supplement to any Registration Statement or Prospectus or requests additional
information related thereto; (v) the SEC issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for
that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any Registration Statement
or Prospectus or other document contains any untrue statement of a material fact
or omits 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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           
Use its reasonable Best Efforts to avoid the issuance of or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of any Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as possible.

     

    (e)         
  If requested by an Investor, provide such Investor, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, and all exhibits to the
extent requested by such Investor (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
SEC.

     

    (f)           
 Promptly deliver to each Investor, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request. The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by the Investors in connection with the offering and sale of
the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto to the extent permitted by federal and state securities laws
and regulations.

     

    (g)          
 (i) In the time and manner required by each Trading Market, prepare and
file with such Trading Market an additional shares listing application covering
the Registrable Securities; (ii) take all steps necessary to cause the
Registrable Securities to be approved for listing on each Trading Market as soon
as possible thereafter; (iii) upon request by an Investor, provide to such
Investor evidence of such listing; and (iv) except as exempted pursuant to Section 6.1(e),
during the Effectiveness Period, maintain the listing of the Registrable
Securities on each such Trading Market or another Eligible Market.

     

    (h)         
  Prior to any public offering of Registrable Securities, use its
reasonable Best Efforts to register or qualify or cooperate with the Investors
in connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Investor requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective for so long as required, but
not to exceed the duration of the Effectiveness Period, and to do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.

     

    (i)            
Cooperate with the Investors to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by this Agreement and the Transfer Agent and under
law, of all restrictive legends, and to enable such certificates to be in such
denominations and registered in such names as the Investors may reasonably
request.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (j)       
     Upon the occurrence of any event described in
Section
6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain 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 the light of the circumstances under which they were
made, not misleading.

     

    (k)          
 Cooperate with any reasonable due diligence investigation undertaken by
the Investors in connection with the sale of Registrable Securities, including,
without limitation, by making available documents and information, provided that
the Company will not deliver or make available to any Investor material,
nonpublic information unless such Investor requests in advance in writing to
receive material, nonpublic information and agrees in writing to keep such
information confidential.

     

    (l)         
   Comply with all rules and regulations of the SEC applicable to
the registration of the Registrable Securities.

     

    (m)           It
shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of any particular Investor or to make any Event Payments to such
Investor pursuant to Section 6.1(d) that
he, she or it furnish to the Company the information specified in Exhibits H-1, H-2 and
H-3 hereto and
such other information regarding him, her or it, the Registrable Securities and
other shares of the Common Stock held by him, her or it and the intended method
of disposition of the Registrable Securities held by him, her or it (if
different from the Plan of Distribution set forth on Exhibit G hereto), as
shall be reasonably required to effect the registration of such Registrable
Securities, and shall complete and execute such documents in connection with
such registration as the Company may reasonably request.

     

    (n)           The
Company shall comply with all applicable rules and regulations of the SEC under
the Securities Act and the Exchange Act, including, without limitation, Rule 172
under the Securities Act, file any final Prospectus, including any supplement or
amendment thereto, with the SEC pursuant to Rule 424 under the Securities Act,
promptly inform the Investors in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified in
Rule 172 and, as a result thereof, the Investors are required to make available
a Prospectus in connection with any disposition of the Registrable Securities
and take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder.

     

    6.3          Registration
Expenses.  The Company shall pay all fees and expenses incident
to the performance of or compliance with Article VI by the
Company, including, without limitation, (a) all registration and filing fees and
expenses, including, without limitation, those related to filings with the SEC,
any Trading Market and in connection with applicable state securities or Blue
Sky laws, (b) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and
delivery expenses, (d) fees and disbursements of counsel for the Company, (e)
fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement and (f)
all listing fees to be paid by the Company to the Trading
Market.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.4          Indemnification

     

    (a)       
    Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Investor, and, in the case of
each Investor that is not a natural person, its officers, directors, partners,
members, agents and employees, each Person who controls such Investor (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising out of
or relating to (i) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby, (ii) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or any other
certificate, instrument or document contemplated hereby or (iii) any cause of
action, suit or claim brought or made against such Indemnified Party (as defined
in Section
6.4(c) below) by a third party (including, for these purposes, a
derivative action brought on behalf of the Company), arising out of or resulting
from (x) the execution, delivery, performance or enforcement of this Agreement
or any other certificate, instrument or document contemplated hereby, (y) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Common Shares or (z) the
status of an Indemnified Party as a holder of the Common
Shares.    

     

    (b)         
  Indemnification by
Investors.  Each Investor, severally and not jointly, shall
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act) and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of any untrue statement of a material fact contained
in the Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto, or arising out of or relating to any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, but only to the extent that such untrue statement or
omission is contained in any information so furnished by such Investor in
writing to the Company specifically for inclusion in such Registration Statement
or such Prospectus or to the extent that (i) such untrue statements or omissions
are based solely upon information regarding such Investor furnished to the
Company by him, her or it in writing expressly for use therein, or to the extent
that such information relates to him, her or it or his, her or its proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved by such Investor expressly for use in the Registration Statement (it
being understood that the information provided by such Investor to the Company
in Exhibits H-1,
H-2 and H-3 and the Plan of
Distribution set forth on Exhibit G, as the
same may be modified by such Investor and other information provided by such
Investor to the Company in or pursuant to the Transaction Documents constitutes
information reviewed and expressly approved by such Investor in writing
expressly for use in the Registration Statement), such Prospectus or such form
of prospectus or in any amendment or supplement thereto.  In no event,
shall such Investor’s liability hereunder be greater in amount than the dollar
amount of the net proceeds received by him, her or it upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)       
    Conduct of Indemnification
Proceedings.  If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with the defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party
unless:  (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of
separate counsel shall be at the expense of the Indemnifying
Party).  It shall be understood, however, that the Indemnifying Party
shall not, in connection with any one such Proceeding (including separate
Proceedings that have been or will be consolidated before a single judge) be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all Indemnified Parties, which firm shall be appointed by a
majority of the Indemnified Parties.  The Indemnifying Party shall not
be liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld.  No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    All
reasonable fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section 6.4(c)) shall
be paid to the Indemnified Party, as incurred, within 20 Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

     

    (d)         
  Contribution.  If
a claim for indemnification under Section 6.4(a)
or  Section
6.4(b)
is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission.  The amount paid or payable by a party as a result of any
Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its
terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.4(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph.  Notwithstanding the provisions of
this Section
6.4(d), no Investor shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the proceeds actually received by
such Investor from the sale of the Registrable Securities subject to the
Proceeding exceed the amount of any damages that he, she or it has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
indemnity and contribution agreements contained in this Section 6.4 are in
addition to any other liability that the Indemnifying Parties may have to the
Indemnified Parties.

     

    6.5          Dispositions.  Each
Investor agrees that he, she or it will comply with the prospectus delivery
requirements of the Securities Act as applicable to him, her or it in connection
with sales of Registrable Securities pursuant to the Registration Statement and
shall sell Registrable Securities in accordance with the Plan of Distribution
set forth in the Prospectus.  Each Investor further agrees that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Sections
6.2(c)(v), (vi) or (vii), such Investor
will discontinue disposition of Registrable Securities under the Registration
Statement until he, she or it is advised in writing by the Company that the use
of the Prospectus, or amended Prospectus, as applicable, may be
resumed.  The Company may provide appropriate stop orders to enforce
the provisions of this Section
6.5.

     

    6.6          Piggy-Back
Registrations.  If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 or their then equivalents, relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans, then the Company shall send to each Investor,
provided that he, she or it is not then eligible to sell all of his, her or its
Registrable Securities under Rule 144 in a three-month period, written notice of
such determination and if, within ten days after receipt of such notice, such
Investor shall so request in writing, the Company shall include in such
registration statement all or any part of his, her or its Registrable Securities
that such Investor requests to be registered.  Notwithstanding the
foregoing, in the event that, in connection with any underwritten public
offering, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of the Common Stock which may be included in such registration
statement because, in such underwriter(s)’ judgment, marketing or other factors
dictate that such limitation is necessary to facilitate public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion of the Registrable Securities with respect to which
such Investor has requested inclusion hereunder as the underwriter(s) shall
permit; provided, however, that (i) the Company
shall not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities, the holders of which are not contractually
entitled to inclusion of such securities in such registration statement or are
not contractually entitled to pro rata inclusion with the Registrable Securities
and (ii) after giving effect to the immediately preceding proviso, any such
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities and the holders of other securities
having the contractual right to inclusion of their securities in such
registration statement by reason of demand registration rights, in proportion to
the number of Registrable Securities or other securities, as applicable, sought
to be included by each such Investor and each other holder.  If an
offering in connection with which an Investor is entitled to registration under
this Section
6.6 is an underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall, unless otherwise
agreed by the Company, offer and sell his, her or its Registrable Securities in
an underwritten offering using the same underwriter(s) and, subject to the
provisions of this Agreement, on the same terms and conditions as other shares
of the Common Stock included in such underwritten offering and shall enter into
an underwriting agreement in form and substance reasonably satisfactory to the
Company and the underwriter(s).  Upon the effectiveness of the
registration statement for which piggy-back registration has been provided in
this Section
6.6, any
Event Payments payable shall terminate and no longer be
payable.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
VII

    MISCELLANEOUS

     

    7.1          Termination.  This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date, notwithstanding any requisite
approval thereof by the majority of the stockholders of the Company who are
disinterested in such transactions:

     

    (a)          
 by duly authorized mutual written consent executed by the Company and all
of the Investors;

     

    (b)          
 automatically if the majority of the stockholders of the Company who are
disinterested in such transactions does not provide the requisite approval
thereof;

     

    (c)          
 automatically if there shall be any law that makes the consummation of
such transactions illegal or otherwise prohibited or if any court of competent
jurisdiction, governmental authority or Trading Market shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting such transactions; and

     

    (d)         
  automatically on August 31, 2008.

     

    7.2          Fees and
Expenses.  Except as expressly set forth in this Agreement to
the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.  The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Common Shares hereunder.

     

    7.3          Entire
Agreement.  This Agreement, together with the Exhibits and
Schedules attached hereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.  At or after the Closing, and without further
consideration, the Company will execute and deliver to the Investors such
further documents as may be reasonably requested in order to give practical
effect to the intention of the parties under the Transaction
Documents.

     

    7.4          Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice
or communication is delivered via facsimile or e-mail at the facsimile number or
e-mail address referred to in this Section
7.4 prior to 6:30 p.m., Eastern Time, on a Trading Day,
(b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile or e-mail at the facsimile number or
e-mail address referred to in this Section 7.4 on a day
that is not a Trading Day or later than 6:30 p.m., Eastern Time, on
any Trading Day, (c) the Trading Day following the date of deposit with a
nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given.  The
addresses, facsimile numbers and e-mail addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address, facsimile number or e-mail address as may be designated in writing
hereafter, in the same manner, by any such Person.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.5          Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Investors or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such
right.

     

    7.6          Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

     

    7.7          Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Investors.  Prior to the Closing, no Investor may assign his, her or
its rights and obligations under, and his, her or its right, title and interest
in and to, this Agreement without the prior written consent of the Company,
which may be given upon the fulfillment of certain conditions or which may be
withheld in the Company’s sole discretion.  Following the Closing, an
Investor may assign his, her or its rights under this Agreement to any Person to
whom such Investor assigns or transfers any of the Common Shares, provided that
(i) such transferor agrees in writing with the transferee or assignee to assign
such rights and a copy of such agreement is furnished to the Company after such
assignment, (ii) the Company is furnished with written notice of (x) the name
and address of such transferee or assignee and (y) the Registrable Securities
with respect to which such registration rights are being transferred or
assigned, (iii) following such transfer or assignment, the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, Canadian Securities Laws,
and the Prospectus Directive as implemented in the United Kingdom or in Italy,
as applicable, (iv) such transferee agrees in writing to be bound, with respect
to the transferred Common Shares, by the provisions hereof that apply to the
“Investor”, (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto
and (vi) in the case of an assignment of registration rights pursuant to Article VI, such
transferee or assignee acquires at least 100,000 Common Shares.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.8          No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each
case) may enforce the provisions of such Section directly against the parties
with obligations thereunder.

     

    7.9          Governing Law; Venue; Waiver
of Jury Trial.  THE CORPORATE LAWS OF THE STATE OF DELAWARE
SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.  THE COMPANY AND EACH INVESTOR HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING
IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY
DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH
OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY
IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT HE, SHE OR IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY
ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE
COMPANY AND EACH INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY
JURY.

     

    7.10        Survival.  The
representations and warranties, agreements and covenants of the Investors and
the Company contained herein shall survive the Closing for a period of twelve
months.

     

    7.11        Execution.  This
Agreement may be executed in any number of separate counterparts (including by
facsimile or e-mail transmission), all of which, when taken together, shall be
considered one and the same agreement.  In the event that any
signature is delivered by facsimile transmission or e-mail attachment, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or e-mail-attached signature page were an original
thereof.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.12        Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    7.13        Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) this Agreement, whenever any
Investor exercises a right, election, demand or option owed to him, her or it by
the Company hereunder and the Company does not timely perform its related
obligations within the periods herein provided, then, prior to the performance
by the Company of the Company’s related obligation, such Investor may rescind or
withdraw, in his, her or its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to his, her or its future actions and
rights.

     

    7.14        Replacement of
Securities.  If any certificate or instrument evidencing any of
the Common Shares is mutilated, lost, stolen or destroyed, the Company shall
issue, or cause to be issued, in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and an agreement
to indemnify and hold harmless the Company for any losses in connection
therewith.  The applicants for a new certificate or instrument under
such circumstances shall also pay any reasonable third party costs associated
with the issuance of such replacement certificate or instrument.

     

    7.15        Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Investors and the Company will
be entitled to seek specific performance under this Agreement.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of any
such obligation (other than in connection with any action for a temporary
restraining order) the defense that a remedy at law would be
adequate.

     

    7.16        Payment Set
Aside.  To the extent that the Company makes a payment or
payments to any Investor hereunder or any Investor enforces or exercises his,
her or its rights hereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration, the obligation or
part thereof originally intended to be satisfied shall be revived and shall
continue in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.17        Independent Nature of
Investors’ Obligations and Rights.  The obligations of each
Investor under this Agreement are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor hereunder.  The
decision of each Investor to purchase the Common Shares pursuant to this
Agreement has been made by such Investor independently of any other Investor and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company which
may have been made or given by any other Investor or by any agent or employee of
any other Investor, and no Investor or any of its agents or employees shall have
any liability to any other Investor (or any other Person) relating to or arising
from any such information, materials, statements or opinions.  Nothing
contained herein, and no action taken by any Investor pursuant hereto, shall be
deemed to constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity or shall create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement.  Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making his, her or its investment hereunder and that
no other Investor will be acting as agent of such Investor in connection with
monitoring his, her or its investment hereunder.  Each Investor shall
be entitled to protect and enforce his, her or its rights independently,
including, without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any other Investor to be joined as an additional
party in any Proceeding for such purpose.

     

    7.18        Currency.  All
dollar amounts in this Agreement are expressed in the lawful currency of the
U.S.

     

     

    [SIGNATURE
PAGES TO FOLLOW]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

    

    
      	 
      	 
      	
              OCCULOGIX,
      INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	By:	
              /s/ Elias
      Vamvakas

            
	 
      	 
      	
              Name:  Elias Vamvakas

            
	 
      	 
      	
              Title:    Chairman
      and CEO

            
	 
      	 
      	 
      
	 
      	 
      	
              2600
      Skymark Avenue

            
	 
      	 
      	
              Building
      9, Suite 201

            
	 
      	 
      	
              Mississauga,
      Ontario

            
	 
      	 
      	
              L4W
      5B2  Canada

            
	 
      	 
      	
              Facsimile
      No.:  (905) 602-7623

            
	 
      	 
      	
              Telephone
      No.: (866) 622-8564

            
	 
      	 
      	
              Attn:  Elias Vamvakas

            
	 
      	 
      	 
      
	
              With
      a copy to:

            	 
      	
              Torys
      LLP

            
	 
      	 
      	
              237
      Park Avenue

            
	 
      	 
      	
              New
      York, New York 10017

            
	 
      	 
      	
              U.S.A.

            
	 
      	 
      	
              Facsimile:  (212)
      682-0200

            
	 
      	 
      	
              Telephone:  (212)
      880-6000

            
	 
      	 
      	
              Attn:  Andrew J. Beck,
      Esq.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              MARCHANT
      SECURITIES INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	By:	
              /s/ Gregory L. Marchant
      

            
	 
      	 
      	
              Name:  Gregory L. Marchant

            
	 
      	 
      	
              Title:    President
      and CEO

            
	 
      	 
      	 
      
	 
      	 
      	
              100
      York Boulevard, Suite 404

            
	 
      	 
      	
              Richmond
      Hill, Ontario

            
	 
      	 
      	
              L4B
      1J8  Canada

            
	 
      	 
      	 
      
	 
      	 
      	
              Facsimile
      No.:  (416) 322-7527

            
	 
      	 
      	
              Telephone
      No.: (416) 322-9700, ext. 5000

            
	 
      	 
      	
              Attn:  Gregory L. Marchant

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Investor Signature
Page

     

    By his,
her or its execution and delivery of this signature page, the undersigned hereby
joins in and agrees to be bound by the terms and conditions of the Securities
Purchase Agreement, dated as of May 19, 2008, (the “Agreement”) by and among
OccuLogix, Inc., Marchant Securities Inc. and the investors listed on the
Schedule of Investors attached thereto as Exhibit A, as to the
number of the Common Shares (as defined in the Agreement) set forth below, and
authorizes this signature page to be attached to the Agreement or counterparts
thereof.

     

    
      	 
      	
              Name
      of Investor:

            
	 
      	 
      
	 
      	 
      
	 	 

    

     

    
      	 
      	By:	
               

            
	 
      	
              Name:

            
	 
      	
              Title:

            
	 
      	 
      

    

     

    
      	 
      	Address:	
               

            
	 
      	 
      
	 	 
	 
      	 
      
	 	 

    

     

    
      	 
      	Telephone
      No.:	
               

            
	 	 
	 
      	
              Facsimile
      No.:

            	
               

            
	 	 
	 
      	
              Email
      Address:

            	
               

            

    

     

    
      	 
      	
              Number
      of Common Shares:

            	
               

            

    

     

    
      	 
      	
              Aggregate
      Purchase Price:  U.S.$

            	
               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        Exhibit
A

        

        SCHEDULE OF
INVESTORS

        

        
          	
                  Investor

                	
                  Amount of Investment
      (U.S.$)

                
	 
      	 
      
	
                  2016728
      Ontario Inc.

                	
                      
      100,000

                
	
                  2144304
      Ontario Inc.

                	
                        
      10,000

                
	
                  Dalton
      J. Albrecht

                	
                        
      75,000

                
	
                  Tsambikos
      Antonarakis

                	
                        
      10,000

                
	
                  Karl
      & Kathryn Arrington

                	
                        
      20,000

                
	
                  Ralph
      J. Barry

                	
                        
      17,000

                
	
                  Simon
      Benstead

                	
                      
      350,000

                
	
                  Michael
      S. Berg

                	
                        
      50,000

                
	
                  Paul
      Bluhm

                	
                        
      50,000

                
	
                  Tina
      & Kenny Brienza

                	
                        
      10,000

                
	
                  Frank
      W. Burr

                	
                      
      100,000

                
	
                  Kris
      Calder

                	
                          
      5,000

                
	
                  Thomas
      Calder

                	
                          
      5,000

                
	
                  Timothy
      Callan

                	
                          
      5,000

                
	
                  Trevor
      Callan

                	
                        
      10,000

                
	
                  Cardinal
      Crest Holdings, LLC

                	
                      
      125,000

                
	
                  Cedarview
      II Holdings Inc.

                	
                        
      50,000

                
	
                  Cheresh
      Varner Trust

                	
                          
      5,000

                
	
                  Norine
      Cohen

                	
                        
      20,000

                
	
                  John
      B. Cornish

                	
                        
      75,000

                
	
                  Marcy
      Colton

                	
                        
      50,000

                
	
                  Tom
      Colton

                	
                        
      50,000

                
	
                  Michael
      Cucuz

                	
                        
      20,000

                
	
                  Allison
      Dabney

                	
                        
      25,000

                
	
                  John
      Danas

                	
                        
      10,000

                
	
                  Sunil
      Dattani

                	
                      
      100,000

                
	
                  Sally
      A. Davidson

                	
                      
      350,000

                
	
                  Thomas
      N. Davidson Education Trust – 2006

                	
                      
      125,000

                
	
                  Thomas
      N. Davidson Revocable Trust

                	
                      
      200,000

                
	
                  Justin
      DiCiano

                	
                        
      20,000

                
	
                  Alessandro
      DeSimone

                	
                        
      10,000

                
	
                  Bryce
      C. Douglas

                	
                      
      450,000

                
	
                  Excite
      Holdings Corporation

                	
                        
      10,000

                
	
                  Ralph
      W. Goldsilver

                	
                        
      25,000

                
	
                  Amarkumar
      Gudka

                	
                        
      10,000

                
	
                  HEC
      Fellows LLC

                	
                        
      30,000

                
	
                  W
      & R Hickel Family Trust

                	
                        
      60,000

                
	
                  Guisse
      Management Corporation Defined Benefit Pension Plan

                	
                        
      10,000

                

        

        

          
            
               

            

            
               

              
                

              

            

            
               

            

          

        

         

        
          	
                  Investor

                	
                  Amount
      of Investment (U.S.$)

                
	 	 
	
                  James
      and Daphne Jameson Family Trust

                	
                  125,000

                
	
                  Gus
      and Anne Karnasiotis

                	
                   
      70,000

                
	
                  Francis
      Kai-Shing Lam

                	
                   
      10,000

                
	
                  Richard
      L. Lindstrom

                	
                  100,000

                
	
                  Attlilio
      Lombardi

                	
                   
      50,000

                
	
                  Lynchburg
      Wisdom Ventures, LLC

                	
                   
      10,000

                
	
                  Rachel
      Mamounis

                	
                   
      18,000

                
	
                  Peter
      McCague

                	
                   
      25,000

                
	
                  The
      Peter Meinig Revocable Trust

                	
                  500,000

                
	
                  Melton
      Willows Pty Ltd

                	
                  100,000

                
	
                  Reed
      A. Miller

                	
                   
      25,000

                
	
                  Kristine
      Morrill

                	
                   
      30,000

                
	
                  Loutfi
      Mouaket

                	
                   
      40,000

                
	
                  Peter
      R. Munson

                	
                   
      10,000

                
	
                  Sean
      J. Na

                	
                   
      25,000

                
	
                  New
      Horizons Holdings Inc.

                	
                    10,000

                
	
                  Vicki
      G. Norton

                	
                   
      10,000

                
	
                  Peoples
      International Co. Inc.

                	
                   
      40,000

                
	
                  Voula
      Politis

                	
                   
      10,000

                
	
                  Alfonso
      Principato

                	
                   
      20,000

                
	
                  Kathy
      Rakhit

                	
                   
      10,000

                
	
                  Anthony
      Reisis

                	
                   
      70,000

                
	
                  Chris
      Salapoutis

                	
                   
      75,000

                
	
                  David
      Sarraf

                	
                   
      10,000

                
	
                  S.I.F.I.
      S.p.A.

                	
                  150,000

                
	
                  David
      W. Stevens

                	
                  20,000

                
	
                  Syra
      Kamin Limited

                	
                  50,000

                
	
                  John
      C. Taylor

                	
                  25,000

                
	
                  Visionary
      Consultants Inc.

                	
                     
      10,000

                
	
                  Felicia
      Warheit

                	
                     
      25,000

                
	
                  Glenn
      Warheit

                	
                     
      25,000

                
	
                  Phillip
      Warheit

                	
                   
      100,000

                
	
                  Jack
      Wasserman Trust

                	
                   
      500,000

                
	
                  Martin
      J. Waters

                	
                   
      20,000

                
	
                  Markus
      & Edith Weigand

                	
                   
      20,000

                
	
                  WS
      Investment Company LLC (2008A)

                	
                   
      40,000

                
	
                  WS
      Investment Company LLC (2008C)

                	
                   
      10,000

                
	
                  Thomas
      Yan

                	
                   
      10,000

                
	
                  Jason
      Yim

                	
                   
      31,500

                

        

         

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Exhibit B

      

      TRANSFER AGENT
INSTRUCTIONS

      

      

      Mellon
Investor Services LLC

      Newport
Office Center VII

      480
Washington Boulevard

      Jersey
City, New Jersey  07310

      

      Attention:

      

      Ladies
and Gentlemen:

      

      Reference
is made to that certain Securities Purchase Agreement, dated as of May 19, 2008
(the “Agreement”), by
and among OccuLogix, Inc., a Delaware corporation (the “Company”), Marchant Securities
Inc., an Ontario corporation, and the investors named on the Schedule of
Investors attached thereto (collectively, the “Investors”), pursuant to which the
Company is issuing to the Investors shares (the “Common Shares”) of Common
Stock of the Company, par value $.001 per share (the “Common Stock”).

      

      This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time) to
issue shares of the Common Stock upon transfer or resale of the Common
Shares.

      

      You
acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company’s legal counsel that either
(i) a registration statement covering resales of the Common Shares has been
declared effective by the Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “1933
Act”), and that resales of the Common Shares may be made thereunder, or
(ii) sales of the Common Shares may be made in conformity with
Rule 144 under the 1933 Act (“Rule 144”), (b) if
applicable, a copy of such registration statement, and (c) notice from
legal counsel to the Company or any Investor that a transfer of Common Shares
has been effected either pursuant to the registration statement (and a
prospectus delivered to the transferee) or pursuant to Rule 144, then,
unless otherwise required by law, within three (3) business days of your receipt
of the notice referred to in (c), you shall issue the certificates representing
the Common Shares so sold to the transferees registered in the names of such
transferees, and such certificates shall not bear any legend restricting
transfer of the Common Shares thereby and should not be subject to any
stop-transfer restriction.

      

      Please be
advised that the Investors have relied upon this letter as an inducement to
enter into the Agreement and, accordingly, each Investor is a third party
beneficiary to these instructions.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions.  Should you have any questions
concerning this matter, please contact me at (905) 602-0887.

      

      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      	 
      
	 
      	
                OCCULOGIX,
      INC.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

      

      THE
FOREGOING INSTRUCTIONS ARE

      ACKNOWLEDGED
AND AGREED TO

      this      day
of ___________, 2007

      

      MELLON
INVESTOR SERVICES LLC

       

       

      
        	
                By:

              	 
      	 
      
	 
      	
                Name:

              	
                 

              	 
      
	 
      	
                Title:

              	
                 

              	 
      

      

      

      

      Enclosures

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit C

      

      OPINION
OF COMPANY
COUNSEL

      

      ____________,
2008

      

      

      To the
Investors identified on Exhibit
A

      to the
Agreement defined below

      

      
        	
                 
      

              	
                Re:

              	
                OccuLogix,
      Inc.

              

      

      

      Ladies
and Gentlemen:

      

      We have
acted as counsel to OccuLogix, Inc., a Delaware corporation (the “Company”), in
connection with the Securities Purchase Agreement, dated as of May __, 2008, by
and among the Company, Marchant Securities Inc. and the investors signatory
thereto (the “Agreement”), and the
transactions contemplated therein.  Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Agreement.

      

      This
opinion is being delivered pursuant to Section 2.2(a)(ii) of the
Agreement.

      

      In
rendering this opinion, we have examined executed originals, counterparts or
copies of each of the following:

      

      1.         
   the Agreement (and the exhibits and schedules
thereto);

      

      2.          
  the Company’s Amended and Restated Certificate of Incorporation as
in effect on the date hereof (the “Certificate of
Incorporation”);

      

      3.          
  the amendment to the Certificate of Incorporation dated the date
hereof (the “Amendment”);

      

      4.        
    the Company’s Amended and Restated Bylaws (the “Bylaws”) as in effect
on the date hereof;

      

      5.        
    the corporate resolutions of the Board of Directors of
the Company and the stockholders of the Company authorizing the execution and
delivery of the Agreement and the consummation of the transactions contemplated
thereby, including the issuance and sale of the Common Shares;

      

      6.        
    a certificate from the Secretary of State of the State
of Delaware as to the good standing of the Company dated ____________, 2008 (the
“Good Standing
Certificate”);

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      7.       
     the Officer’s Certificate of the Company, dated as
of the date hereof (the “Officer’s
Certificate”); and

      

      8.             such
other documents and certificates of public officials and representatives of the
Company as we have deemed necessary as a basis for the opinions expressed
herein.

      

      References
to (1) “Applicable
Laws” shall mean those laws, rules and regulations of the State of New
York and the United States of America as well as the General Corporation Law of
the State of Delaware (“DGCL”) which, in our
experience, are normally applicable to transactions of the type similar to the
issuance and sale of the Common Shares, (2) the term “Governmental
Authorities” shall mean any New York State or federal executive,
legislative, judicial, administrative or regulatory body and (3) the term “Applicable Orders”
shall mean those orders or decrees of Governmental Authorities applicable to the
Company identified to us by the Chief Financial Officer or Secretary of the
Company.

      

      As to
various questions of fact material to this opinion, we have relied upon the
representations and warranties contained in the Agreement and upon certificates
and other documents and statements of officers of the Company, including without
limitation, the Officer’s Certificate, and of public officials.  In
our examination of the documents referred to above, we have assumed (i) the
genuineness of all signatures; (ii) the incumbency, authority, capacity (in the
case of natural persons), and legal right and power under all applicable laws,
statutes, rules and regulations of all persons executing the Agreement on behalf
of the parties thereto other than the Company to enter into the Agreement and
perform the obligations thereunder that are applicable to them; (iii) the
Agreement has been duly authorized, executed and delivered by, and is binding
upon and enforceable against, all persons (other than the Company) executing the
Agreement; (iv) the authenticity and completeness of all documents submitted to
us as original or certified documents; (v) the conformity to authentic original
documents of all documents submitted to us as certified, conformed, facsimile or
photostatic copies; and (vi) that the Good Standing Certificate remains accurate
from the date thereof through and including the date of this
opinion.  We have made no independent investigation of such
assumptions.

      

      We are
attorneys admitted to practice only in the State of New York and we opine herein
only as to the effect of the Applicable Laws of the State of New York, the
federal laws of the United States of America and the DGCL on the subject
transaction.  We do not opine on and we assume no responsibility as to
the applicability of or the effect on any of the matters covered herein other
than the Applicable Laws.

      

      The
opinions set forth below are subject to the following additional assumptions,
limitations, qualifications and exceptions:

      

      
        	
                 
      

              	
                A.

              	
                The
      legality, validity, binding effect and enforceability of the Agreement may
      be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
      reorganization, moratorium, marshaling or other similar laws now or
      hereafter in effect, affecting creditors’ rights and remedies
      generally;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                B.

              	
                The
      legality, validity, binding effect and enforceability of the Agreement may
      be subject to general principles of equity, regardless of whether
      considered in equity or at law;

              

      

      

      
        	
                 
      

              	
                C.

              	
                No
      opinion is expressed with respect to the enforceability of provisions
      regarding indemnification and contribution against liabilities where such
      indemnification and contribution is contrary to public
    policy;

              

      

      

      
        	
                 
      

              	
                D.

              	
                We
      have assumed that the issuance and sale of the Common Shares do not and
      will not conflict with, contravene, violate or constitute a default under
      (i) any mortgage, lien, lease, agreement, contract, instrument, order,
      arbitration award, judgment or decree to which the Company is subject,
      (ii) any rule, law or regulation to which the Company is subject (other
      than the Applicable Laws) or (iii) any judicial or administrative
      order or decree of any governmental authority (other than the Applicable
      Orders);

              

      

      

      
        	
                 
      

              	
                E.

              	
                Where
      we render an opinion “to our knowledge” with respect to the Company, it is
      based solely upon (i) the actual, current knowledge of those attorneys
      within this firm who devoted substantive attention to the representation
      of the Company in connection with the transactions to which this opinion
      relates, (ii) the representations and warranties of the Company set forth
      in the Agreement, (iii) receipt of a certificate executed by an authorized
      officer of the Company covering such matters, and (iv) review of documents
      provided to us by the Company in connection with rendering this opinion,
      and the due diligence performed in connection therewith, which review and
      due diligence were limited to reviewing the Agreement, the Certificate of
      Incorporation, the Bylaws and minute books of the Company, the Good
      Standing Certificate and certificates of the Company, and which due
      diligence did not include any examination of courts, boards, other
      tribunals or public records with respect to any litigation, investigation
      or proceedings, or judgments, orders or decrees applicable to the Company
      or any of its properties;

              

      

      

      
        	
                 
      

              	
                F.

              	
                We
      express no opinion as to the effect on the opinions herein stated of (i)
      the compliance or non-compliance of any party to the Agreement (other than
      the Company to the extent set forth herein) with any state, federal or
      other laws or regulations applicable to them, or (ii) the legal or
      regulatory status or the nature of the business of such other
      parties;

              

      

      

      
        	
                 
      

              	
                G.

              	
                Our
      opinion as to good standing contained in paragraph 1 is based solely on
      the Good Standing Certificate and is given only as of the date
      thereof;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                H.

              	
                We
      express no opinion on the due authorization of the Common Shares, in each
      case where the amount of Common Stock required to be issued under such
      instruments exceeds the authorized but unissued Common Stock set forth in
      the Certificate of Incorporation;

              

      

      

      
        	
                 
      

              	
                I.

              	
                The
      Amendment and the issuance of the Common Shares pursuant to
      the   Agreement have been duly approved by the stockholders
      of the Company (we express no opinion regarding the sufficiency of the
      disclosure made to such stockholders) and the Amendment has been or will
      be duly filed with the Secretary of State of the State of Delaware:
      and

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                J.

              	
                This
      opinion is limited to the matters expressly set forth herein and no
      opinion is implied or may be inferred beyond the matters expressly so
      stated.  This opinion is based upon facts known to the
      undersigned on the date hereof, and the undersigned does not undertake any
      liability or responsibility to inform you of any change in circumstances
      occurring after the date hereof which might alter the opinions contained
      herein.

              

      

      

      Based
upon and subject to the foregoing, we are of the opinion that:

      

      1.      The
Company is a corporation validly existing and in good standing under the laws of
the State of Delaware and has the requisite corporate power and authority to
carry on its business as now conducted and to own its properties.

      

      2.      (a)
The Company has the requisite corporate power and authority to enter into and
perform the Agreement and to issue the Common Shares in accordance with the
terms of the Agreement; (b) the execution and delivery of the Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by the Company’s Board of Directors and no further consent
or authorization of the Company, its Board of Directors, or its shareholders is
required; (c) the Agreement has been duly executed and delivered by the Company;
and (d) the Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.

      

      3.      The
Common Shares are duly authorized and, upon issuance in accordance with the
terms of the Agreement, will be validly issued, fully paid and non-assessable,
and, to our knowledge, free from all liens and charges with respect to the
issuance thereof.

      

      4.      No
authorization, approval or consent of any Governmental Authority is required for
the issuance and sale of the Common Shares as contemplated by the Agreement or
the consummation of the other transactions contemplated thereby.

      

      5.      The
execution and delivery of the Agreement by the Company and the issuance of the
Common Shares pursuant thereto do not (i) violate any provision of the
Certificate of Incorporation or Bylaws, as currently in effect, or (ii) violate
or contravene any Applicable Law, the violation or contravention of which would
result in a Material Adverse Effect.

      

      6.      Assuming
the representations made by the Investors in the Agreement are true and correct,
the sale of the Common Shares is exempt from the registration requirements of
Section 5 of the Securities Act.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      These
opinions are rendered only to you and are solely for your benefit in connection
with the transactions contemplated by the Agreement and may not, without our
prior express written consent, be quoted or relied upon for any other purpose or
by an other person.

      

      

      
        	 
      	
                Very
      truly yours,

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
D

      

      OCCULOGIX,
INC.

      

      COMPANY
DISCLOSURE SCHEDULE

      

      This Company Disclosure Schedule is made and given pursuant to the
Securities Purchase Agreement (the “Agreement”), dated as of May
19, 2008, by and among OccuLogix, Inc., a Delaware corporation (the “Company”), Marchant
Securities Inc., an Ontario corporation (the “Agent”), and the investors
listed on the Schedule of Investors attached thereto as Exhibit
A.

      

      All
capitalized terms used but not defined herein have the respective meanings
attributed to such terms in the Agreement, unless otherwise
provided.  The section numbers below correspond to the section of the
representations and warranties contained in the Agreement that are modified by
the disclosure contained herein and any other section of the
Agreement.  To the extent that (a) one portion of this Company
Disclosure Schedule specifically refers to another portion hereof by specific
cross-reference or (b) it is readily apparent from the text of the disclosure
contained herein that an item disclosed in one section of this Company
Disclosure Schedule is omitted from another section where such disclosure would
be appropriate, such item shall be deemed to have been disclosed in the section
of this Company Disclosure Schedule from which such item is
omitted.

      

      Nothing
in this Company Disclosure Schedule is intended to broaden the scope of any
representation and warranty contained in the Agreement or to create any
covenant.  Inclusion of any item in this Company Disclosure Schedule
(a) does not represent a determination that such item is material or establish a
standard of materiality, (b) does not represent a determination that such item
did not arise in the ordinary course of business and (c) shall not constitute,
or be deemed to be, an admission to any third party concerning such item or an
admission of default or breach under any agreement or
document.  Unless otherwise stated herein or in the Agreement, all
statements made herein are made as of the date hereof.  Matters
reflected in this Company Disclosure Schedule are not necessarily limited to
matters required by the Agreement to be reflected herein; such additional
matters, if any, are included for informational purposes only.

      

      The
information contained herein is provided solely for purposes of making
disclosure to the Investors under the Agreement.  In disclosing such
information, the Company does not waive any attorney-client privilege attaching
to such information or any protection afforded by the work-product doctrine with
respect to any of the matters disclosed herein.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(a)

      

      Subsidiaries

      

      OcuSense,
Inc.1

      OcuSense
Acquireco, Inc.

      OccuLogix
Holdings, Inc.

      OccuLogix
LLC

      OccuLogix
Canada Corp.

      

      ____________________________

      1 The Company owns 1,754,589
shares of the Series A Preferred Stock of OcuSense, Inc., representing 50.1% of
OcuSense, Inc.’s capital stock on a fully diluted basis.  Refer to
Schedule 3.1(k).

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE 3.1
(d)

      

      No
Conflicts

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(f)

      

      Capitalization

      

      

      At the
date of the Agreement:

      

      

      
        	
                Type of
      Securities

              	 	
                Number 

                Authorized

              	 	 	
                Number
      Issued 

                and
      Outstanding

              	 
	 
      	 	 	 	 	 	 
	
                Common
      Stock, par value $0.001 per share (“Common
      Stock”)

              	 	 	75,000,000	 	 	 	57,306,145	 
	 
      	 	 	 	 	 	 	 	 
	
                Preferred
      Stock, par value $0.001 per share

              	 	 	10,000,000	 	 	 	-	 
	 
      	 	 	 	 	 	 	 	 
	
                Options
      to purchase shares of Common Stock under the Company’s 2002 Stock Option
      Plan (the “2002 Stock
      Option Plan”)

              	 	 	6,456,000	 	 	 	3,748,400	 
	 
      	 	 	 	 	 	 	 	 
	
                Options
      to purchase shares of Common Stock outside the 2002 Stock Option
      Plan

              	 	 	n/a	 	 	 	472,000	 
	 
      	 	 	 	 	 	 	 	 
	
                Warrants
      to purchase shares of Common Stock (the “Warrants”)

              	 	 	n/a	 	 	 	2,764,416	 

      

      

      

      The
closing of the sale of the Common Shares pursuant to the Agreement will cause a
downward adjustment of the per share exercise price of the Warrants to
$1.85.

      

      To the
knowledge of the Company, each of the following Persons beneficially owns in
excess of 5% of outstanding Common Stock.  The Company makes no
statement regarding the filing with the SEC by any of them of Schedule 13D or
Schedule 13G.

      

      
        	
                 
      

              	
                ·

              	
                TLC
      Vision Corporation

              

      

      
        	
                 
      

              	
                ·

              	
                Diamed
      Medizintechnik GmbH

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHDULE
3.1(g)

      

      Public Disclosure Documents;
Financial Statements

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(h)

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(j)

      

      Compliance

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(k)

      

      Title to
Assets

      

      

      Pursuant
to the Share Pledge Agreement, dated as of February 19, 2008, by the Company to
Marchant Securities Inc., as collateral agent, the Company has pledged all of
its shares of the capital stock of OcuSense for the rateable benefit of the
lenders of the $3,300,000 aggregate principal amount loan advanced to the
Company pursuant to the Loan Agreement, dated as of February 19, 2008, by and
among the Company, the lenders listed on the Schedule of Lenders attached
thereto as Exhibit A and Marchant Securities Inc., as amended (the “Loan
Agreement”).  Such share pledge secures all indebtedness,
obligations and liabilities owing by the Company to such lenders under, or in
connection with, the Loan Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(p)

      

      Registration
Rights

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(q)

      

      Application of Takeover
Protections

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3.1(s)

      

      Patents and
Trademarks

      

      

      Nil

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
E

      

      U.S. ACCREDITED INVESTOR
CERTIFICATE

      

      

      
        	
                 
      

              	
                TO:

              	
                OccuLogix,
      Inc. (the “Company”)

              

      

      

      
        	
                 
      

              	
                RE:

              	
                Securities
      Purchase Agreement, dated as of ___________________, 2008, by and among
      the Company, Marchant Securities Inc. and the investors listed on the
      Schedule of Investors attached thereto as Exhibit A (the “Agreement”)

              

      

      

      This
Accredited Investor Certificate is being delivered to the Company pursuant to
Section 3.2(c) of the Agreement.  Capitalized terms used in this
Accredited Investor Certificate, but not defined herein, have the respective
meanings attributed to such terms in the Agreement.

      

      

      The
undersigned hereby certifies that, as of the Closing, the
undersigned:

      

      1.           
     is experienced in evaluating and investing in
securities;

      

      2.           
     is able to fend for the undersigned;

      

      3.         
       can bear the economic risk of the
undersigned’s investment in the Common Shares pursuant to the Agreement (the
“Investment”);

      

      4.          
      has such knowledge and experience in financial or
business matters that the undersigned is capable of evaluating the merits and
risks of the Investment;

      

      5.            
    understands and acknowledges that the opportunity for
the Investment is available only to “accredited investors” (“Accredited Investors”) who
satisfy one or more of the criteria set forth in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”);

      

      6.           
     understands and acknowledges that the Common Shares may
not be registered under the Securities Act or the securities laws of any state
of the United States and may not be offered or sold within the United States,
constitute “restricted securities” (as defined in Rule 144 promulgated under the
Securities Act) and may not be resold unless they are registered under the
Securities Act or an applicable exemption from such registration requirement is
available;

      

      7.            
    is an Accredited Investor and falls within one or more
of the categories set forth below, as indicated by an “X” or “ü” mark placed in the
space(s) designated therefor:

      

      {MARK ONE
OR MORE OF THE FOLLOWING CATEGORIES, AS APPLICABLE}

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                □

              	
                a
      bank as defined in Section 3(a)(2) of the Securities Act, or any savings
      and loan association or other institution as defined in Section 3(a)(5)(A)
      of the Securities Act, whether acting in an individual or fiduciary
      capacity; a broker or dealer registered pursuant to Section 15 of the
      Securities Exchange Act of 1934, as amended; an insurance company as
      defined in Section 2(a)(13) of the Securities Act; an investment company
      registered under the Investment Company Act of 1940 (the “Investment Company
      Act”) or a business development company as defined in Section
      2(a)(48) of the Investment Company Act; a Small Business Investment
      Company licensed by the U.S. Small Business Administration under Section
      301(c) or (d) of the Small Business Investment Act of 1958; a plan
      established and maintained by a state, its political subdivisions or any
      agency or instrumentality of a state or its political subdivisions, for
      the benefit of its employees, if such plan has total assets in excess of
      U.S.$5,000,000; an employee benefit plan within the meaning of the
      Employee Retirement Income Security Act of 1974 (“ERISA”) if the
      investment decision is made by a plan fiduciary, as defined in Section
      3(21) of ERISA, which is either a bank, savings and loan association,
      insurance company or registered investment adviser, or if the employee
      benefit plan has total assets in excess of U.S.$5,000,000 or, if a
      self-directed plan, with investment decisions made solely by persons that
      are Accredited Investors

              

      

      

      
        	
                □

              	
                a
      private business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of 1940

              

      

      

      
        	
                □

              	
                an
      organization described in Section 501(c)(3) of the Internal Revenue Code,
      corporation, Massachusetts or similar business trust, or partnership, not
      formed for the specific purpose of acquiring the Shares, with total assets
      in excess of U.S.$5,000,000

              

      

      

      
        	
                □

              	
                a
      director or an executive officer of the
Company

              

      

      

      
        	
                □

              	
                a
      natural person whose individual net worth, or joint net worth with that
      person’s spouse, at the Closing, exceeds
  U.S.$1,000,000

              

      

      

      
        	
                □

              	
                a
      natural person who had an individual income in excess of U.S.$200,000 in
      each of the two most recent years or joint income with that person’s
      spouse in excess of U.S.$300,000 in each of those years and who has a
      reasonable expectation of reaching the same income level in the current
      year

              

      

      

      
        	
                □

              	
                a
      trust, with total assets in excess of U.S.$5,000,000, not formed for the
      specific purpose of acquiring the Shares, whose purchase is directed by a
      sophisticated person as described in Rule 506(b)(2)(ii) promulgated under
      the Securities Act

              

      

      

      
        	
                □

              	
                an
      entity in which all of the equity owners are Accredited
      Investors;

              

      

      

      8.            
    understands and acknowledges that the Common Shares will
not be qualified by prospectus for distribution in any of the provinces or
territories of Canada.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the undersigned has duly executed this Accredited Investor
Certificate as of the Closing.

      

      
        	 
      	 
      
	
                Name
      of Investor

              	 
      
	
                (please
      print)

              	 
      
	 
      	 
      
	
                Signature

              	 
      
	 
      	 
      
	
                Name
      of Person Signing

              	 
      
	
                (and
      indicate capacity of person signing if signing as custodian, trustee or on
      behalf of an entity)

              	 
      

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Exhibit
F

      

      CANADIAN ACCREDITED INVESTOR
CERTIFICATE

      

      

      
        	
                 
      

              	
                TO:

              	
                OccuLogix,
      Inc. (the “Company”)

              

      

      

      
        	
                 
      

              	
                RE:

              	
                Securities
      Purchase Agreement, dated as of ___________________, 2008, by and among
      the Company, Marchant Securities Inc. and the investors listed on the
      Schedule of Investors attached thereto as Exhibit A (the “Agreement”)

              

      

      

      This
Accredited Investor Certificate is being delivered to the Company pursuant to
Section 3.2(c) of the Agreement.  Capitalized terms used in this
Accredited Investor Certificate, but not defined herein, have the respective
meanings attributed to such terms in the Agreement.

      

      The
undersigned hereby acknowledges that the Company is relying on this Accredited
Investor Certificate to determine the undersigned’s suitability for investment
in the Common Shares pursuant to the Agreement (the “Investment”) and hereby
represents and warrants and certifies that, as of the Closing, the
undersigned:

      

      

      1.   
     is acting as principal and not as agent in
connection with the Investment and is doing so for investment only and not with
a view to resale or distribution;

      

      2.    
    is a resident of the Province of
__________________________________ and is an “accredited investor” as
defined in NI 45-106 by virtue of being one of the following, as indicated by an
“X” or “ü” mark
placed in the space designated therefor:

      

        
{MARK ONE OF THE FOLLOWING CATEGORIES}

      

      
        	
                □

              	
                (a)

              	
                a
      Canadian financial institution, or a Schedule III
  bank

              

      

      

      
        	
                □

              	
                (b)

              	
                the
      Business Development Bank of Canada incorporated under the Business Development Bank of
      Canada Act (Canada)

              

      

      

      
        	
                □

              	
                (c)

              	
                a
      subsidiary of any person referred to in paragraphs (a) or (b), if the
      person owns all of the voting securities of the subsidiary, except the
      voting securities required by law to be owned by directors of that
      subsidiary

              

      

      

      
        	
                □

              	
                (d)

              	
                a
      person registered under the securities legislation of a jurisdiction of
      Canada as an adviser or dealer, other than a person registered solely as a
      limited market dealer registered under one or both of the Securities Act
      (Ontario) or the Securities Act
      (Newfoundland and
Labrador)

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                □

              	
                (e)

              	
                an
      individual registered or formerly registered under the securities
      legislation of a jurisdiction of Canada as a representative of a person
      referred to in paragraph (d)

              

      

      

      
        	
                □

              	
                (f)

              	
                the
      Government of Canada or a jurisdiction of Canada, or any crown
      corporation, agency or wholly owned entity of the Government of Canada or
      a jurisdiction of Canada

              

      

      

      
        	
                □

              	
                (g)

              	
                a
      municipality, public board or commission in Canada and a metropolitan
      community, school board, the Comité de gestion de la taxe scolaire de
      l’île de Montréal or an intermunicipal management board in
      Québec

              

      

      

      
        	
                □

              	
                (h)

              	
                any
      national, federal, state, provincial, territorial or municipal government
      of or in any foreign jurisdiction, or any agency of that
      government

              

      

      

      
        	
                □

              	
                (i)

              	
                a
      pension fund that is regulated by either the Office of the Superintendent
      of Financial Institutions (Canada) or a pension commission or similar
      regulatory authority of a jurisdiction of
Canada

              

      

      

      
        	
                □

              	
                (j)

              	
                an
      individual who, either alone or with a spouse, beneficially owns, directly
      or indirectly, financial assets1
      having an aggregate realizable value that before taxes, but net of any
      related liabilities2,
      exceeds $1,000,000

              

      

      

      
        	
                □

              	
                (k)

              	
                an
      individual whose net income before taxes exceeded $200,000 in each of the
      two most recent calendar years or whose net income before taxes combined
      with that of a spouse exceeded $300,000 in each of the two most recent
      calendar years and who, in either case, reasonably expects to exceed that
      net income level in the current calendar
year

              

      

      

      
        	
                □

              	
                (l)

              	
                an
      individual who, either alone or with a spouse, has net assets of at least
      $5,000,000

              

      

      

      
        	
                □

              	
                (m)

              	
                a
      person, other than an individual or investment fund, that has net assets
      of at least $5,000,000 as shown on its most recently prepared financial
      statements

              

      

      

      
        	
                □

              	
                (n)

              	
                an
      investment fund that distributes or has distributed its securities only to
      (i) a person that is or was an accredited investor at the time of the
      distribution, (ii) a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 [Minimum investment
      amount] and 2.19 [Additional investment in
      investment funds] of NI 45-106, or (iii) a person described in
      paragraph (i) or (ii) that acquires or acquired securities under section
      2.18 [Investment fund
      reinvestment] of NI 45-106

              

      

       

       

      
        	
                 
      

              	
                _____________________________

              

      

      1 Financial
assets means (a) cash, (b) securities, and (c) a contract of insurance, a
deposit or an evidence of a deposit that is not a security for securities laws
purposes.

      

      2 Related
liabilities means (a) liabilities incurred or assumed for the purposes of
financing the acquisition or ownership of financial assets, and (b) liabilities
that are secured by financial assets.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                □

              	
                (o)

              	
                an
      investment fund that distributes or has distributed securities under a
      prospectus in a jurisdiction of Canada for which the securities regulator
      has issued a receipt

              

      

      

      
        	
                □

              	
                (p)

              	
                a
      trust company or trust corporation registered or authorized to carry on
      business under the Trust
      and Loan Companies Act (Canada) or under comparable legislation in
      a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
      fully managed account managed by the trust company or trust corporation,
      as the case may be

              

      

      

      
        	
                □

              	
                (q)

              	
                a
      person acting on behalf of a fully managed account managed by that person,
      if that person is registered or authorized to carry on business as an
      adviser or the equivalent under the securities legislation of a
      jurisdiction of Canada or a foreign
jurisdiction

              

      

      

      
        	
                □

              	
                (r)

              	
                a
      registered charity under the Income Tax Act (Canada)
      that, in regard to the trade, has obtained advice from an eligibility
      adviser or an adviser registered under the securities legislation of the
      jurisdiction of the registered charity to give advice on the securities
      being traded

              

      

      

      
        	
                □

              	
                (s)

              	
                an
      entity organized in a foreign jurisdiction that is analogous to any of the
      entities referred to in paragraphs (a) through (d) or paragraph (i) in
      form and function

              

      

      

      
        	
                □

              	
                (t)

              	
                a
      person in respect of which all of the owners of interests, direct,
      indirect or beneficial, except the voting securities required by law to be
      owned by directors, are persons that are accredited
    investors

              

      

      

      
        	
                □

              	
                (u)

              	
                an
      investment fund that is advised by a person registered as an adviser or a
      person that is exempt from registration as an
  adviser

              

      

      

      
        	
                □

              	
                (v)

              	
                a
      person that is recognized or designated by the securities regulator as (i)
      an accredited investor or (ii) an exempt purchaser in Alberta or British
      Columbia  {IF
      MARKING THIS CATEGORY, PLEASE ATTACH A COPY OF SUCH ORDER};
      and

              

      

      

      3.           has
received and reviewed a copy of the revised PowerPoint presentation of the
Company dated May 6, 2008.

       

      [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the undersigned has duly executed this Accredited Investor
Certificate as of the Closing.

      

      

      

      
        	 
      	 
      
	
                Name
      of Investor

              	 
      
	
                (please
      print)

              	 
      
	 
      	 
      
	
                Signature

              	 
      
	 
      	 
      
	
                Name
      of Person Signing

              	 
      
	
                (and
      indicate capacity of person signing if signing as custodian, trustee or on
      behalf of an entity)

              	 
      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit G

      

      PLAN OF
DISTRIBUTION

      

      The
selling stockholders may, from time to time, sell any or all of their shares of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions.  These sales may be at
fixed or negotiated prices.  The selling stockholders may use any one
or more of the following methods when selling shares:

      

      
        	
                ·

              	
                ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

              

      

      

      
        	
                ·

              	
                block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

              

      

      

      
        	
                ·

              	
                purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

              

      

      

      
        	
                ·

              	
                an
      exchange distribution in accordance with the rules of the applicable
      exchange;

              

      

      

      
        	
                ·

              	
                privately
      negotiated transactions;

              

      

      

      
        	
                ·

              	
                short
      sales;

              

      

      

      
        	
                ·

              	
                broker-dealers
      may agree with the selling stockholders to sell a specified number of such
      shares at a stipulated price per
share;

              

      

      

      
        	
                ·

              	
                a
      combination of any such methods of sale;
and

              

      

      

      
        	
                ·

              	
                any
      other method permitted pursuant to applicable
  law.

              

      

      

      The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

      

      Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated.  The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.  Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act.  Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by a selling stockholder.  The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.

      

      The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933
supplementing or amending the list of selling stockholders to include the
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed a supplement to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this
prospectus.

      

      The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales.  In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares of common stock purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act.

      

      We are
required to pay all fees and expenses incident to the registration of the shares
of common stock.  We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.

      

      The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder.  If we are
notified by any selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus.  If the
selling stockholders use this prospectus for any sale of the shares of common
stock, they will be subject to the prospectus delivery requirements of the
Securities Act.

      

      The
anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
stockholders.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit H

      

      INSTRUCTION SHEET FOR
INVESTOR

      

      (to be
read in conjunction with the entire Securities Purchase Agreement)

      
        	
                 
      

              	 

      

      
        	
                A.

              	
                Complete the following
      items in the Securities Purchase
  Agreement:

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                1.

              	
                Complete
      and execute the Investor Signature Page.  The Agreement must be
      executed by an individual authorized to bind the
  Investor.

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                2.

              	
                Exhibit H-1
      - Stock Certificate Questionnaire:

              

      

      

      Provide the information
requested by the Stock Certificate Questionnaire.

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                3.

              	
                Exhibit H-2
      - Registration Statement
Questionnaire:

              

      

      

      Provide the information
requested by the Registration Statement Questionnaire.

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                4.

              	
                Exhibit H-3
      - Investor Certificate:

              

      

      

      
        	
                 
      

              	 

      

      
        	
                B.

              	
                Instructions
      regarding the wire transfer of funds for the purchase of the Securities
      will be telecopied to the Investor by the Company at a later
      date.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit H-1

      

      OCCULOGIX,
INC.

      

      STOCK CERTIFICATE
QUESTIONNAIRE

      

      

      
        	 
      	
                Please
      provide us with the following information:

              	 	 
      
	 
      	 
      	 	 
      
	
                1.

              	
                The
      exact name that the Common Shares are to be registered in (this is the
      name that will appear on the stock certificate(s)).  You may use
      a nominee name if appropriate:

              	 	 
      
	 
      	 
      	 	 
      
	
                2.

              	
                The
      relationship between the Investor of the Common Shares and the Registered
      Holder listed in response to item 1 above:

              	 	 
      
	 
      	 
      	 	 
      
	
                3.

              	
                The
      mailing address, telephone and telecopy number and email address of the
      Registered Holder listed in response to item 1 above:

              	 	 
      
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 	 	 	 
	 	 	 	 
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	
                4.

              	
                The
      Tax Identification Number of the Registered Holder listed in response to
      item 1 above:

              	 	 
      

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Exhibit H-2

      

      OCCULOGIX,
INC.

      

      REGISTRATION STATEMENT
QUESTIONNAIRE

      

      

      In
connection with the Registration Statement, please provide us with the following
information regarding the Investor.

      

      1.           Please
state you name or your organization’s name exactly as it should appear in the
Registration Statement:

       

      
        
          	 

        

         

      

      Except as
set forth below, you or your organization does not hold any equity securities of
the Company on behalf of another person or entity.  

      

      State any
exceptions here:

      
         

        
          
            	 

          

        

      

      

      2.        
    Your address or address of your organization:

      
 

      ______________________________________________________

      ______________________________________________________

      Telephone:  ___________________________

      Fax:  _________________________________

      Contact
Person:  ________________________

      

      3.           Have
you or your organization had any position, office or other material relationship
within the past three years with the Company or its
affiliates?  (Include any relationships involving you or any of your
affiliates, officers, directors, or principal equity holders (5% or more) that
has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three
years.)

       

       

      
        
          	 	
                  Yes

                	 	
                  No

                

        

      

      

      If yes,
please indicate the nature of any such relationship below:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.           Are
you the beneficial owner of any other securities of the
Company?  (Include any equity securities that you beneficially own or
have a right to acquire within 60 days after the date hereof, and as to which
you have sole voting power, shared voting power, sole investment power or shared
investment power.)

       

       

      
        
          	 	
                  Yes

                	 	
                  No

                

        

      

      

      If yes,
please describe the nature and amount of such ownership as of a recent
date.

      

      

      5.           Except
as set forth below, you wish that all the shares of the Company’s common stock
beneficially owned by you or that you have the right to acquire from the Company
be offered for your account in the Registration Statement.

      

      State any
exceptions here:

      

      

      6.           Have
you made or are you aware of any arrangements relating to the distribution of
the shares of the Company pursuant to the Registration Statement?

      

      
        	 	
                Yes

              	 	
                No

              

      

      

      If yes,
please describe the nature and amount of such arrangements.

      

      

      7.           NASD
Matters

      

      (a)           State
below whether (i) you or any associate or affiliate of yours are a
member of the NASD, a
controlling shareholder
of an NASD member, a
person associated with a member, a direct
or indirect affiliate
of a member, or an
underwriter or related
person with respect to the proposed offering; (ii) you or any associate or affiliate of yours owns any
stock or other securities of any NASD member not purchased in the
open market; or (iii) you or any associate or affiliate of yours has made
any outstanding subordinated loans to any NASD member. If you are a general
or limited partnership, a no answer asserts that no such relationship exists for
you as well as for each of your general or limited partners.

       

      
        	
                Yes:

              	 
      	
                No:

              
	 
      	 
      	 
      

      

      

      

      If “yes”,
please identify the NASD member and describe your
relationship, including, in the case of a general or limited partner, the name
of the partner

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      If you
answer “no” to Question 7(a), you need not respond to Question
7(b).

      

      

      (b)           State
below whether you or any associate or affiliate of yours has been
an underwriter, or a controlling person or member
of any investment banking or brokerage firm which has been or might be an
underwriter for securities of the Corporation or any affiliate thereof including,
but not limited to, the common stock now being registered.

       

      
         

        
          	
                  Yes:

                	 
      	
                  No:

                
	 
      	 
      	 
      

        

      

       

       

      If “yes”,
please identify the NASD member and describe your
relationship, including, in the case of a general or limited partner, the name
of the partner.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ACKNOWLEDGEMENT

      

      The
undersigned hereby agrees to notify the Company promptly of any changes in the
foregoing information which should be made as a result of any developments,
including the passage of time.  The undersigned also agrees to provide
the Company and the Company’s counsel any and all such further information
regarding the undersigned promptly upon request in connection with the
preparation, filing, amending, and supplementing of the Registration Statement
(or any prospectus contained therein).  The undersigned hereby
consents to the use of all such information in the Registration
Statement.

      

      The
undersigned understands and acknowledges that the Company will rely on the
information set forth herein for purposes of the preparation and filing of the
Registration Statement.

      

      The
undersigned understands that the undersigned may be subject to serious civil and
criminal liabilities if the Registration Statement, when it becomes effective,
either contains an untrue statement of a material fact or omits to state a
material fact required to be stated in the Registration Statement or necessary
to make the statements in the Registration Statement not
misleading.  The undersigned represents and warrants that all
information it provides to the Company and its counsel is currently accurate and
complete and will be accurate and complete at the time the Registration
Statement becomes effective and at all times subsequent thereto, and agrees
during the Effectiveness Period and any additional period in which the
undersigned is making sales of shares under and pursuant to the Registration
Statement, to notify the Company immediately of any misstatement of a material
fact in the Registration Statement, and of the omission of any material fact
necessary to make the statements contained therein not misleading.

      

      

      
        	
                Dated:  __________

              	 
      
	 
      	
                 

              
	 
      	
                Name
      

              
	 
      	 
      
	 
      	
                 

              
	 
      	
                Signature

              
	 
      	 
      
	 
      	
                 

              
	 
      	
                Name
      and Title of Signatory

              

      

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Exhibit H-3

      

      OCCULOGIX,
INC.

      

      CERTIFICATE
FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY,

      TRUST, FOUNDATION
AND JOINT
INVESTORS

      

      If the
Investor is a corporation, partnership, limited liability company, trust,
pension plan, foundation, joint investor (other than a married couple) or other
entity, an authorized officer, partner, or trustee must complete, date and sign
this Certificate.

      

      

      CERTIFICATE

      

      The
undersigned certifies that the representations and responses below are true and
accurate:

      

      (a)                 The
Investor has been duly formed and is validly existing and has full power and
authority to invest in the Company.  The person signing on behalf of
the undersigned has the authority to execute and deliver the Securities Purchase
Agreement on behalf of the Investor and to take other actions with respect
thereto.

      

      (b)           Indicate
the form of entity of the undersigned:

      

      ____    Limited
Partnership

      

      ____    General
Partnership

      

      ____    Limited
Liability Company

      

      ____    Corporation

      

      ____    Revocable
Trust (identify each grantor and indicate under what circumstances the trust is
revocable by the grantor):
______________________________________________

       

      
        
          ________________________________________________________________________

        
 (Continue on a separate piece of paper,
if necessary.)

      

      ____    Other
type of Trust (indicate type of trust and, for trusts other than pension trusts,
name the grantors and beneficiaries):
___________________________________________

      
         

        ________________________________________________________________________
(Continue
on a separate piece of paper, if necessary.)

      

      ____    Other
form of organization (indicate form of organization):
_______________________________________________________________________________________.

      

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      (c)           Indicate
the approximate date the undersigned entity was formed: .

      

      (d)           In
order for the Company to offer and sell the Securities in conformance with state
and federal securities laws, the following information must be obtained
regarding your investor status.  Please initial each category
applicable to you as an investor in the Company.

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                1.

              	
                A
      bank as defined in Section 3(a)(2) of the Securities Act, or any savings
      and loan association or other institution as defined in Section 3(a)(5)(A)
      of the Securities Act whether acting in its individual or fiduciary
      capacity;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                2.

              	
                A
      broker or dealer registered pursuant to Section 15 of the Securities
      Exchange Act of 1934;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                3.

              	
                An
      insurance company as defined in Section 2(13) of the Securities
      Act;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                4.

              	
                An
      investment company registered under the Investment Company Act of 1940 or
      a business development company as defined in Section  2(a)(48) of
      that Act;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                5.

              	
                A
      Small Business Investment Company licensed by the U.S.  Small
      Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                6.

              	
                A
      plan established and maintained by a state, its political subdivisions, or
      any agency or instrumentality of a state or its political subdivisions,
      for the benefit of its employees, if such plan has total assets in excess
      of $5,000,000;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                7.

              	
                An
      employee benefit plan within the meaning of the Employee Retirement Income
      Security Act of 1974, if the investment decision is made by a plan
      fiduciary, as defined in Section 3(21) of such Act, which is either a
      bank, savings and loan association, insurance company, or registered
      investment advisor, or if the employee benefit plan has total assets in
      excess of $5,000,000 or, if a self-directed plan, with investment
      decisions made solely by persons that are accredited
      investors;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                8.

              	
                A
      private business development company as defined in Section 202(a)(22)
      of the Investment Advisers Act of
1940;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                9.

              	
                Any
      partnership or corporation or any organization described in
      Section 501(c)(3) of the Internal Revenue Code or similar business
      trust, not formed for the specific purpose of acquiring the Securities,
      with total assets in excess of
$5,000,000;

              

      

      
        	
                 
      

              	 

      

      
        	
                 
      

              	
                ___

              	
                10.

              	
                A
      trust, with total assets in excess of $5,000,000, not formed for the
      specific purpose of acquiring the Securities, whose purchase is directed
      by a sophisticated person as described in Rule  506(b)(2)(ii) of
      the Exchange Act;

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                ___

              	
                11.

              	
                An
      entity in which all of the equity owners qualify under any of the above
      subparagraphs.  If the undersigned belongs to this investor
      category only, list the equity owners of the undersigned, and the investor
      category which each such equity owner satisfies:
  

              

      

      

      _______________________________________________________________

      (Continue
on a separate piece of paper, if necessary.)

      

      Please
set forth in the space provided below the (i) states, if any, in the U.S.
in which you maintained your principal office during the past two years and the
dates during which you maintained your office in each state, (ii) state(s),
if any, in which you are incorporated or otherwise organized and
(iii) state(s), if any, in which you pay income taxes.

      

      
        	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

      

      

      

      
        	
                Dated:__________________________, 2008

              	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                Print
      Name of Investor

              	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                Name:

              	 
      
	
                Title:

              	 
      
	
                (Signature
      and title of authorized officer, partner or trustee)

              	 
      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SECURITIES DELIVERY
INSTRUCTIONS

      

      

      Please
instruct us as to where you would like the Common Shares delivered at
Closing:

      

      

      
        	
                Name:

              	 
      
	 
      	 
      
	
                Company:

              	 
      
	 
      	 
      
	
                Address:

              	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                Telephone:

              	 
      

      

      

      

      
        	
                Other
      Special Instructions:ex10_1.htm

    
      

    

    EXHIBIT
10.1

     

    
      	 
      	
              EXECUTION
      COPY

            

    

    

    STOCK
PURCHASE AGREEMENT

    

    THIS
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as
of May 15, 2008, by and among (a) BOOKRAGS, INC., a Delaware corporation (the
“Company”), (b)
DAVID LIEBERMAN, a stockholder of the Company (“David”), (c) JAMES
YAGMIN, a stockholder of the Company (“James”), (d) CHARLES
LIEBERMAN, a stockholder of the Company (“Charles”), (e) SUE A.
IDLEMAN, in her capacity as Executrix of the ESTATE OF LEE H. IDLEMAN, a
stockholder of the Company (the “Idleman Estate”), and
(F) AMBASSADORS GROUP, INC., a Delaware corporation, or its assigns (“Purchaser”).  David,
James, Charles and the Idleman Estate are sometimes referred to herein
individually as a “Stockholder,” and
collectively as the “Stockholders.”  The
Company, the Stockholders and Purchaser are sometimes referred to herein
individually as a “Party,” and
collectively as the “Parties.”

     

    WITNESSETH:

    

    WHEREAS,
the Company is in the business of owning and operating a website that provides
educational materials and content (the “Business”).

     

    WHEREAS,
each Stockholder owns the number of shares of common stock of the Company,
$0.001 par value per share (the “Shares”), as is set
forth opposite such Stockholder’s name below, which Shares in the aggregate
represent all of the issued and outstanding shares of capital stock of the
Company.

     

    
      	
              Stockholder

            	
              Number of
      Shares

            	
              Percentage

            
	
              David

            	
              532,000

            	
              54.53%

            
	
              James

            	
              354,666

            	
              36.36%

            
	
              Charles

            	
              78,889

            	
              8.09%

            
	
              Idleman
      Estate

            	
              10,000

            	
              1.02%

            

    

     

    WHEREAS,
upon the terms and subject to the conditions set forth herein, each of the
Stockholders desires to sell such Stockholder’s Shares to Purchaser, and
Purchaser desires to purchase the Shares from the Stockholders.

     

    WHEREAS,
the Parties intend that the transaction contemplated by this Agreement be
treated as an asset acquisition pursuant to Section 338(h)(10) of the
Code.

     

    NOW,
THEREFORE, in consideration of the foregoing recitals and the premises and
mutual terms, conditions and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:

     

    ARTICLE
I

    

    DEFINITIONS

    

    SECTION
1.1.  Certain Defined
Terms.  As used in this Agreement, the following terms shall
have the following meanings:

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Accounts Receivable”
of a Person shall mean all accounts, notes, accounts receivable, contract
rights, drafts and other forms of claims, demands, instruments, receivables and
rights to the payment of money or other forms of consideration, whether for
goods sold or leased, services performed or to be performed, or otherwise, owned
by that Person or in which that Person has any interest, together with all
guarantees, security agreements and rights and interests securing the
same.

    

    “Action” shall mean
any claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority.

    

    “Affiliate” shall
mean, with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person.

    

    “Agreement” shall mean
this Stock Purchase Agreement by and among the Company, the Stockholders and
Purchaser (including the Schedules and Exhibits hereto).

    

    “Alternative Proposal”
shall mean a proposal or offer (other than by Purchaser) for a stock purchase,
asset acquisition, merger, consolidation or other business combination involving
the Company or any proposal to acquire in any manner a direct or indirect
substantial equity interest in, or all or any substantial part of the assets of,
the Company.

    

    “Books and Records” of
a Person shall mean all books and records, ledgers, employee records, customer
lists, files, correspondence, computer data bases, accounting information and
other records of every kind, whether written, computerized or maintained in any
other medium, which are owned by that Person or in which that Person has any
interest.

    

    “Business Day” shall
mean any day that is not a Saturday, a Sunday or other day on which banks are
required or authorized by law to be closed in the city of Spokane,
Washington.

    

    “CERCLA” shall mean
the Comprehensive Environmental Response, Compensation and Liability Act of
1980.

    

    “Change In Control”
shall mean with respect to a Person, when (a) such Person merges or consolidates
with another entity, unless (i) the other entity controls, is under common
control with or is controlled by such Person immediately prior to the
consolidation or merger whether or not such Person shall be the surviving entity
in such consolidation or merger, or (ii) the equity holders of such Person
immediately before such merger or consolidation own, directly or indirectly,
immediately following such merger or consolidation, more than fifty percent
(50%) of the combined voting power of the outstanding voting securities of the
entity resulting from such merger or consolidation (whether or not such Person
is the surviving entity); or (b) such Person consummates a sale of all or
substantially all of its assets; or (c) the equity holders of such Person sell,
exchange or transfer securities in a tender offer or other transaction
representing more than fifty percent (50%) of the combined voting power of the
outstanding voting securities of such Person.

    

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

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    “Company Documents”
shall mean this Agreement and all other agreements, instruments and certificates
to be executed by the Company in connection with this Agreement.

    

    “EBITDA” shall mean a
dollar amount as is calculated in accordance with the following
formula:  Revenue – expenses (excluding income Taxes, interest,
depreciation and amortization), as applied by the Company and in accordance with
the methodology set forth on Appendix
1.  The Parties acknowledge and agree that, in determining
expenses, there shall be deducted reasonable and customary corporate overhead
charges and expenses to the Company, subject to the requirements of Section
2.3(f).

    

    “Environmental Laws and
Orders” shall mean, collectively, all applicable Laws and Governmental
Orders relating to the protection of the environment, human health or
occupational health and safety, including without limitation, (a) all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of Hazardous Substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land; (b) all requirements
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature; and (c) RCRA, CERCLA, the Clean Air Act, the
Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act, the
Hazardous Materials Transportation Act, the Occupational Safety and Health Act
of 1970 and all regulations promulgated pursuant to any of these or analogous
state or local statutes.

    

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

    

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

    

    “Executives” shall
mean David and James.

    

    “GAAP” shall mean
United States generally accepted accounting principles and practices as in
effect from time to time.

    

    “Governmental
Authority” shall mean any federal, state or local or any foreign
government, political subdivision thereof, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
judicial body.

    

    “Governmental Order”
shall mean any order, writ, injunction, decree, stipulation, determination or
award entered by or with any Governmental Authority.

    

    “Hazardous Substance”
shall mean any substance, waste or material: (a) the presence of which requires
investigation or remediation under any Environmental Law or Order, (b) the
generation, storage, treatment, transportation, disposal, remediation, removal,
handling or management of which is regulated by any Environmental Law or Order,
(c) that is defined as a “hazardous waste” or hazardous substance” under any
Environmental Law or Order, (d) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous and is
regulated by any Governmental Authority, (e) the presence of which poses a
hazard to the health or safety of Persons, (f) the presence of which constitutes
a nuisance, trespass or other tortious condition for which the Company could be
or is alleged to be liable or (g) without limitation, that contains gasoline,
diesel fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or
asbestos.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    “Intellectual
Property” of a Person shall mean all intangible properties owned by that
Person or in which that Person has any interest (including the right to use by
license or otherwise), and all rights arising from or associated therewith,
whether protected, created or arising under the laws of any jurisdiction and
includes, without limitation: (a) all registered and unregistered trademarks,
service marks, trade names, trade dress, logos, corporate names, slogans and
commercial symbols, all applications therefor, and all associated goodwill; (b)
all domain names and URL’s, and all websites and the “look and feel” of all such
websites (including, without limitation, each such website’s particular
typefaces, color schemes, programming code themes and the like); (c) all works
of authorship, derivative works thereof and statutory, common law and registered
copyrights therein, all applications therefor and all associated goodwill; (d)
all inventions, including all related and associated patents and patent
applications, technical information, shop rights, know-how, trade secrets,
processes, operating, maintenance and other manuals, drawings and
specifications, process flow diagrams and related data, and all associated
goodwill; (e) all software developed for a Person pursuant to an agreement
between such Person and the software designer designating the software a “work made for hire” or assigning ownership
rights to such software to such Person, all software developed by an employee or
contractor of a Person, and all documentation thereof, (including all electronic
data processing systems and program specifications, functional specifications,
source and object codes, algorithms, architecture, input data, report layouts
and format, record file layouts, diagrams, narrative descriptions and flow
charts) (collectively, the “owned software,”) and all “off the shelf” software
purchased in retail transactions or used in connection with the Business
(collectively the “licensed software”); (f) all other mask works, moral rights,
inventions, discoveries, improvements, processes, formulae (secret or
otherwise), data, drawings, specifications, trade secrets, confidential
information, financial, marketing and business data, pricing and cost models and
information, business and marketing plans, operating procedures, customer and
supplier lists, and knowledge of customer preferences and buying practices; (g)
all drawings, records, books or other tangible media embodying the foregoing;
(h) all rights to obtain and rights to register patents, trademarks and
copyrights; (i) all content utilized in the operation of the Company’s Business
and displayed on the Company’s websites; and (j) all rights to sue or recover
and retain damages and costs and attorneys fees for present and past
infringement of any of the foregoing.

    

    “Knowledge” shall mean
(a) with respect to Purchaser, the actual knowledge of each of Jeffrey D. Thomas
and Chadwick J. Byrd, Jody Gentemann and Kris Bliesner, and the knowledge that
each such person would have acquired upon reasonable inquiry, and (b) with
respect to the Company, the actual knowledge of each of David and James, and the
knowledge that each such person would have acquired upon reasonable
inquiry.

    

    “Labor Agreements” of
a Person shall mean, collectively: (a) all employment agreements, collective
bargaining agreements or other labor agreements to which that Person is a party
or by which any of its properties is bound; (b) all pension, profit sharing,
deferred compensation, bonus, stock option, stock purchase, savings, retainer,
consulting, retirement, welfare or incentive plans or contracts (including, in
the case of the Company, Company Benefit Plans) to which that Person is a party
or by which any of its properties is bound; and (c) all plans or agreements
under which “fringe benefits” (including, but not limited to, hospitalization
plans or programs, medical insurance, vacation plans or programs, sick plans or
programs and related benefits) are afforded to any employees of that
Person.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    “Law” shall mean any
statute, law, ordinance, regulation or rule of any Governmental Authority,
including without limitation, environmental laws.

    

    “Liabilities” shall
mean any and all liabilities and obligations, whether accrued, absolute, known,
unknown, contingent, matured or unmatured.

    

    “Lien” shall mean any
security interest, easement, mortgage, charge, lease, lien, claim, option,
pledge, agreement, limitation in voting rights, restriction on transfer (other
than as imposed by federal and state securities Laws), or other encumbrance of
any kind or nature whatsoever.

    

    “Loss” or “Losses” shall mean
any and all losses, damages, claims, costs and expenses, interest, awards,
judgments, penalties and amounts paid in settlement (including reasonable
attorneys’ fees and expenses) actually suffered or incurred by a
Party.

    

    “Material Adverse
Effect” shall mean any material adverse effect on the Business, results
of operations or financial condition of the Company taken as a
whole.

    

    “Person” shall mean
any individual, partnership, firm, corporation, association, trust, estate,
unincorporated organization, joint venture, limited liability company or other
entity.

    

    “RCRA” shall mean the
Resource Conservation and Recovery Act of 1976.

    

    “Real Property” of a
Person shall mean all real properties owned by that Person or in which that
Person has any interest or estate (including the right to use or by way of a
lease), together with all buildings, fixtures, trade fixtures, plant and all
other equipment and improvements located thereon or attached thereto; all of
that Person’s rights arising out of the ownership or use thereof (including air,
water, oil and mineral rights), and all subleases, franchises, licenses,
permits, easements and rights-of-way which are appurtenant thereto.

    

    “Revenues” shall mean
the aggregate amount of revenues actually received or credited to the Company,
if any, as determined in accordance with GAAP, as applied by the Company and in
accordance with the methodology set forth on Appendix
1.

    

    “Stockholder
Documents” shall mean this Agreement and all other agreements,
instruments and certificates to be executed and delivered by the Stockholders in
connection with this Agreement.

    

    “Tangible Personal
Property” of a Person shall mean all machinery, equipment, furniture,
trade fixtures, computers, supplies, spare parts or tools and other tangible
personal property owned by that Person, leased by that Person or in which that
Person has any other interest (including the right to use).

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    “Tax” shall mean any
federal, state, county, local, foreign and other tax, charge, fee, levy,
deficiency or other assessment of any nature or kind that is imposed by a Taxing
Authority (including any income, profits, premium, estimated, excise, sales,
use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy,
production, transfer, withholding, employment, unemployment, payroll, property,
license, withholding, stamp, occupation, occupancy, recording, minimum,
environmental, built in gains and excess passive income tax), whether directly,
as transferee (including under code Section 6901 or any similar provision under
applicable Law), as a result of being a member of a consolidated, combined or
unitary group (including under Treasury Regulations Section 61502-6 or any
similar provision of applicable Law), as a result of a Tax sharing or similar
agreement, or otherwise, together with any interest, addition to tax or penalty
with respect thereto.

    

    “Taxing Authority”
shall mean any Governmental Authority exercising Tax regulatory
authority.

    

    “Tax Return” shall
mean any return, declaration, report, claim for refund or credit, or information
return, with respect to Tax, or any other similar report, statement,
declaration, or document that is filed or required to be filed under the Code or
other Tax Law with any Taxiing Authority in connection with the determination,
reporting, assessment, collection or payment of any Tax or the administration of
any Tax Law, including any attachments, exhibits, or other materials submitted
with any of the foregoing, and including any amendments to any of the
foregoing.

    

    “Transfer Tax” shall
mean all Tax (other than Tax measured on or by net income) incurred or imposed
by reason of the transfer and sale of the Shares to Purchaser pursuant to this
Agreement regardless of upon whom such Tax is levied or imposed by law,
including sales and use tax, real property transfer tax, excise tax, and stamp,
documentary, filing, recording, permit, license, registration, or authorization
duties or fees (including penalties and interest in respect of any of the
foregoing).

    

    “WARN Act” shall mean
the Worker Adjustment and Retraining Notification Act, or any similar state
statute or local law, as the same may be amended, modified or supplemented from
time to time or any law that may come to supersede the requirements
thereof.

    

    SECTION
1.2.  Other
Defined Terms.  In addition to those terms defined above, the
following terms shall have the respective meanings given thereto in the Sections
indicated below:

    

    
      	
              Term

            	 	
              Section

            
	 
      	 	 
      
	
              Arbitrating
      Accountants

            	 	
              2.3(d)

            
	
              Assumed
      Liabilities

            	 	
              3.6(a)

            
	
              Broker’s
      Fees

            	 	
              3.6(a)

            
	
              Business

            	 	
              Recitals

            
	
              California
      Taxes

            	 	
              3.6(a)

            

    

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    
      	
              Term

            	 	
              Section

            
	 
      	 	 
      
	
              Carved
      Out Company Representations and Warranties

            	 	
              6.10(a)

            
	
              Carved
      Out Stockholder Representations and Warranties

            	 	
              6.10(a)

            
	
              Charles

            	 	
              Preamble

            
	
              Closing

            	 	
              2.8

            
	
              Closing
      Date

            	 	
              2.8

            
	
              Closing
      Cash Payment

            	 	
              2.2(a)

            
	
              Company
      Benefit Plans

            	 	
              3.13

            
	
              Closing
      Date Amount

            	 	
              2.4(a)

            
	
              Closing
      Date Amount Schedule

            	 	
              2.4(a)

            
	
              Closing
      Date Balance Sheet

            	 	
              2.4(a)

            
	
              Company’s
      Disclosure Schedule

            	 	
              Article
      III

            
	
              Company
      Software

            	 	
              3.17

            
	
              Confidential
      Information

            	 	
              5.18

            
	
              Contract

            	 	
              3.9

            
	
              David

            	 	
              Preamble

            
	
              Disclosing
      Party

            	 	
              5.18

            
	
              Earn-out
      Payments

            	 	
              2.3(b)

            
	
              Elections

            	 	
              5.21(b)

            
	
              Employment
      Agreements

            	 	
              5.11

            
	
              Financial
      Statements

            	 	
              3.6

            
	
              Foreign
      Business Tax Liabilities

            	 	
              3.6(a)

            
	
              Franchise
      Taxes

            	 	
              2.6

            
	
              Idleman
      Estate

            	 	
              Preamble

            
	
              Indemnified
      Party

            	 	
              6.5

            
	
              Indemnifying
      Party

            	 	
              6.5

            
	
              Independent
      Tax Firm

            	 	
              5.20

            
	
              Initial
      Earn-out Payment

            	 	
              2.3(a)

            
	
              Initial
      Earn-out Period

            	 	
              2.3(a)

            
	
              Inventions
      Assignment Agreement

            	 	
              5.25

            
	
              James

            	 	
              Preamble

            
	
              Non-compete
      Agreements

            	 	
              5.12

            
	
              Open
      Source Software

            	 	
              3.17(a)

            
	
              Options

            	 	
              5.13

            
	
              Party

            	 	
              Preamble

            
	
              Parties

            	 	
              Preamble

            
	
              Pre-Closing
      Period

            	 	
              6.3(a)

            
	
              Prepayments

            	 	
              3.9(a)

            
	
              Purchase
      Price

            	 	
              2.2

            
	
              Purchaser

            	 	
              Preamble

            
	
              Purchaser
      SEC Documents

            	 	
              4.5

            
	
              Receiving
      Party

            	 	
              5.18

            
	
              Reference
      Balance Sheet

            	 	
              3.6

            

    

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

     

    
      	
              Term

            	 	
              Section

            
	 
      	 	 
      
	
              Required
      Consents

            	 	
              3.3

            
	
              SEC

            	 	
              4.5

            
	
              Second
      Earn-out Payment

            	 	
              2.3(b)

            
	
              Second
      Earn-out Period

            	 	
              2.3(b)

            
	
              Shares

            	 	
              Recitals

            
	
              Stockholder(s)

            	 	
              Preamble

            
	
              Stock
      Consideration

            	 	
              2.2(b)

            
	
              Tax
      Liability

            	 	
              3.11(b)

            
	
              Tax
      Proceeding

            	 	
              3.11(b)

            
	
              Threshold
      Amount

            	 	
              2.4(a)

            
	
              Transferred
      Employees

            	 	
              5.9

            
	
              338
      Tax

            	 	
              5.20

            

    

    

    SECTION
1.3.  Other
Interpretive Provisions.  The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified, and reference to a given agreement or instrument
shall be a reference to that agreement or instrument as modified, amended,
supplemented and restated through the date as of which such reference is
made.  The words “include,” “includes,” and “including” shall be
deemed to be followed by the phrase “without limitation.”  The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.  Any references to Laws,
statutes or agreements shall mean such Laws, statutes or agreements as amended,
modified or supplemented from time to time.  If any action is required
to be taken or notice is required to be given on a day that is not a Business
Day, such action or notice shall be considered timely if it is taken or given on
or before the next Business Day.

    

    ARTICLE
II

    

    SALE AND
PURCHASE OF SHARES; PURCHASE PRICE; CLOSING

    

    SECTION
2.1.  Sale
and Purchase of the Shares.  Upon the terms and conditions set
forth in this Agreement and in reliance upon the representations and warranties
of the Stockholders, the Company and Purchaser herein set forth, as of the
Closing, each Stockholder shall sell, transfer, convey, assign and deliver to
Purchaser, and Purchaser shall purchase, acquire and accept from each
Stockholder, all of the Shares owned by each such Stockholder, free and clear of
any and all Liens.

    

    SECTION
2.2.  Purchase
Price.  In consideration for the Shares, Purchaser shall pay to
the Stockholders, on a pro-rata basis, the aggregate purchase price (the “Purchase Price”) of
up to Eighteen Million Dollars ($18,000,000) subject to the terms and conditions
of Section 2.3 and subject to the post-Closing adjustment in accordance with the
terms of Section 2.4, which Purchase Price shall be payable as
follows:

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    (a)           On
the Closing Date, Purchaser shall pay to the Stockholders, on a pro-rata basis,
cash in the amount of Eight Million Five Hundred Thousand Dollars ($8,500,000)
(the “Closing Cash
Payment”), which shall be paid by wire transfer of immediately available
funds to one or more bank accounts designated in writing by each of the
Stockholders immediately prior to the Closing.

    

    (b)           On
the Closing Date, Purchaser shall issue to and hold pending release to the
Stockholders pursuant to the terms of this Section 2.2(b) and Article VI,
233,584 shares of Purchaser’s common stock in the name of each of the
Stockholders (the number of such shares to be issued to the Stockholders on a
pro-rata basis), which shares have an agreed upon aggregate fair market value of
Four Million Five Hundred Thousand Dollars ($4,500,000) (the “Stock
Consideration”).  Subject to the offset rights set forth in
Section 6.12 and the terms of Section 6.11, the Stock Consideration (i) shall be
held in escrow by Purchaser and shall be available to satisfy the
indemnification obligations of the Stockholders pursuant to the terms of Article
VI, and (ii) shall be released from escrow to the Stockholders (on a pro rata
basis) on the second anniversary of the Closing Date.  Each of the
Stockholders shall be entitled to vote such Stockholder’s pro rata portion of
the shares of Stock Consideration and receive any dividends (to the extent
declared by Purchaser) with respect thereto during such hold-back or escrow
period to the extent such shares are not forfeited in accordance with the terms
of Article VI.

    

    SECTION
2.3.  Earn-out Payments and
Adjustments.

    

    (a)           Subject
to the terms and conditions of Article VI to the extent that, during the period
commencing January 1, 2008 through and including December 31, 2009 (the “Initial Earn-out
Period”), the EBITDA of the Company on a stand-alone basis, computed in
accordance with GAAP, as applied by the Company and in accordance with the
methodology set forth on Appendix 1, is
between Four Million Six Hundred Thousand Dollars ($4,600,000) and Seven Million
Dollars ($7,000,000), then Purchaser shall pay to the Stockholders, on a pro
rata basis, a pro rata cash amount of up to Two Million Dollars ($2,000,000)
(the “Initial Earn-out
Payment”); provided, however, that no
Initial Earn-out Payment shall be paid until the EBITDA of the Company on a
stand-alone basis for the Initial Earn-out Period is greater than Four Million
Nine Hundred Thousand Dollars ($4,900,000) in the aggregate.  By way
of example, if the EBITDA of the Company on a stand-alone basis for the Initial
Earn-out Period is Six Million Dollars ($6,000,000), then the amount of the
Initial Earn-out Payment due shall be One Million One Hundred Sixty Six Thousand
Six Hundred Sixty Six Dollars ($1,166,666) or approximately 58.3% of Two Million
Dollars ($2,000,000).

    

    (b)           Subject
to the terms and conditions of Article VI, to the extent that, during the period
commencing January 1, 2008 through and including December 31, 2010 (the “Second Earn-out
Period”), the EBITDA of the Company on a stand-alone basis, computed in
accordance with GAAP, as applied by the Company and in accordance with the
methodology set forth on Appendix 1, is
between Seven Million Three Hundred Thousand Dollars ($7,300,000) and Twelve
Million Three Hundred Thousand Dollars ($12,300,000), then Purchaser shall pay
to the Stockholders, on a pro rata basis, a pro rata cash amount of up to Three
Million Dollars ($3,000,000) (the “Second Earn-out
Payment” and together with the Initial Earn-out Payment, the “Earn-out Payments”);
provided, however, that no
Second Earn-out Payment shall be paid until the EBITDA of the Company on a
stand-alone basis for the Second Earn-out Period is greater than Eight Million
Dollars ($8,000,000) in the aggregate.  By way of example, if the
EBITDA of the Company on a stand-alone basis for the Second Earn-out Period is
Ten Million Dollars ($10,000,000), then the amount of the Second Earn-out
Payment due shall be One Million Six Hundred Twenty Thousand Dollars
($1,620,000) or approximately 54% of Three Million Dollars
($3,000,000).

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (c)           Within
ninety (90) days after the end of the Initial Earn-out Period or the Second
Earn-out Period, as applicable, Purchaser shall deliver to the Executives a
schedule setting forth (i) Purchaser’s calculation of the EBITDA of the Company
for the applicable earn-out period together with a written explanation and
analysis in reasonable detail of each component thereof and any adjustments
thereto, and (2) the resulting Earn-out Payments, if any, payable to the
Stockholders.  The Executives shall have thirty (30) days from receipt
of any such schedule to accept or reject in writing Purchaser’s calculation of
the EBITDA of the Company and the Earn-out Amounts, which acceptance or
rejection shall be furnished to Purchaser within such thirty (30) day
period.  If Purchaser does not receive any such written notice from
the Executives within such thirty (30) day period, the Executives and the other
Stockholders shall be deemed to have accepted Purchaser’s calculation of the
EBITDA of the Company and the Earn-out Payments and such calculation shall be
conclusive, final and binding upon the Executives and the other
Stockholders.  If the Executives’ reject such calculation, the
Executives will provide Purchaser, together with the Executives’ notice of
rejection, a written explanation of the basis of such rejection, specifying in
reasonable detail the particulars of the Executives’ disagreement with
Purchaser’s calculation of the EBITDA of the Company and the Earn-out Payments
and the Executives’ proposed alternative calculations.  The Executives
and Purchaser shall use their respective reasonable best efforts for a period of
fifteen (15) days after the Executives deliver such rejection notice to
Purchaser to resolve such disagreement.  If the Executives and
Purchaser fail to resolve such disagreement within such fifteen (15) day period,
then the subject of such disagreement shall be resolved in accordance with the
procedures set forth in Section 2.3(d).

    

    (d)           If
the Executives and Purchaser are unable to reach a resolution within fifteen
(15) days after delivery by the Executives of the rejection notice, the
Executives and Purchaser shall submit such disagreement for final binding
resolution to an independent accounting firm mutually acceptable to the
Executives and Purchaser (the “Arbitrating
Accountants”), who shall be engaged to provide a conclusive, final and
binding resolution of the unresolved dispute.  The Executives and
Purchaser shall each be entitled to make a presentation to the Arbitrating
Accountants pursuant to procedures to be agreed to among the Executives,
Purchaser and the Arbitrating Accountants, advocating the merits of the position
espoused by such Party and the Arbitrating Accountants shall be required to
resolve the dispute with respect to the EBITDA of the Company and the Earn-out
Payments within fifteen (15) days thereafter.  The determination of
the Arbitrating Accountants shall be final and binding upon the Parties, absent
fraud.  The fees and expenses of the Arbitrating Accountants shall be
shared equally by and between the Executives and the other Stockholders, on the
one hand, and Purchaser, on the other hand.

    

    (e)           Purchaser
shall pay to the Stockholders, on a pro rata basis, by wire transfer of
immediately available funds, the applicable Earn-out Payment by no later than
three (3) Business Days after the final determination of the applicable Earn-out
Payment is made pursuant to Sections 2.3(c) and 2.3(d), as
applicable.

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    (f)           The
earn-out thresholds set forth in Sections 2.3(a) and 2.3(b) shall be adjusted to
thresholds to be mutually agreed upon by the Company and the Executives, if,
between the Closing Date and the date of the calculation of the Earn-Out
Payments, Purchaser: (i) assesses any unreasonable and non-customary corporate
overhead charges and expenses to the Company in calculating the EBITDA of the
Company that does not benefit the Company and that is not otherwise agreed to by
management of the Company, which agreement shall not be unreasonably withheld,
delayed or conditioned; (ii) requires any material adverse operational changes
to the Company that are not agreed upon by management of the Company, which
agreement shall not be unreasonably withheld, delayed or conditioned; (iii)
calculates the EBITDA of the Company other than in accordance with the
methodology set forth on Appendix 1; or (iv)
to the extent the Purchaser derives additional benefit from the Company, from
which the Company could have derived additional benefit if it had sold such
benefit to an outside third-party on an arm’s length basis, such benefit will be
credited to the EBITDA of the Company as if such benefits were negotiated on an
arms-length basis with Purchaser (by way of example, banner advertisements on
behalf of Purchaser for which no payments are made to the
Company).  Notwithstanding the foregoing, the Parties acknowledge and
agree that the provisions of Section 2.3(f)(iv) shall not apply Revenues
attributable to the business (excluding the Business of the Company) of
Purchaser (by way of example, Revenue generated by Purchaser from the sale of
its services derived from banner advertisements placed on the Company’s
website).

    

    (g)           The
Earn-out Payments shall become immediately due and payable in full (subject to
the internal projections of EBITDA of the Company) in the event of (x) a Change
In Control of the Company in which Purchaser actually receives consideration in
excess of the Purchase Price, or (y) a Change in Control of
Purchaser.

    

    SECTION
2.4.  Post-Closing Adjustment;
Resolution Procedure.

    

    (a)           As
soon as practicable after the Closing Date, but in no event more than fifteen
(15) Business Days thereafter, the Executives shall prepare and deliver to
Purchaser a balance sheet of the Company as of the Closing Date, using the form,
policies, methodologies and procedures used by the Company in preparing the
Reference Balance Sheet (the “Closing Date Balance
Sheet”), along with a schedule setting forth the Closing Date Amount of
the Company as of the Closing Date (the “Closing Date Amount
Schedule”). Subject to the terms and conditions of Section 2.4(b) below,
(i) if the agreed upon Closing Date Amount is in excess of the Threshold Amount,
the Stockholders shall make a cash payment to Purchaser, on a dollar-for-dollar
and pro rata basis, in the amount of such excess, and (ii) if the agreed upon
Closing Date Amount is less than the Threshold Amount, Purchaser shall make a
cash payment to the Stockholders, on a dollar-for-dollar and pro rata basis, in
an amount equal to such difference. The “Closing Date Amount”
shall be an amount as determined in accordance with the following
formula:  [(the aggregate dollar value of the Accounts Receivable of
the Company listed on the Reference Balance Sheet) – (the aggregate dollar value
of the accounts payable of the Company listed on the Reference Balance Sheet)] –
[(the aggregate dollar value of the Accounts Receivable of the Company listed on
the Closing Date Balance Sheet) – (the aggregate dollar value of the accounts
payable of the Company listed on the Closing Date Balance Sheet)]; provided that
the deferred revenue has been recognized or accrued in the ordinary course of
business. The “Threshold Amount”
shall be Fifty Thousand Dollars ($50,000).

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (b)           Purchaser
shall have forty five (45) Business Days from receipt of the Closing Date
Balance Sheet and the Closing Amount Schedule to accept or reject in writing the
Executives’ calculation of the Closing Date Amount, which acceptance or
rejection shall be furnished to the Executives within such forty five (45)
Business Day period.  If the Executives do not receive any such
written notice from Purchaser within such forty five (45) Business Day period,
Purchaser shall be deemed to have accepted the Executives’ calculation of the
Closing Date Amount and such calculation shall be conclusive, final and binding
upon Purchaser and the Stockholders.  If Purchaser rejects such
calculation, Purchaser will provide the Executives, together with Purchaser’s
notice of rejection, a written explanation of the basis of such rejection,
specifying in reasonable detail the particulars of Purchaser’s disagreement with
the Executives’ calculation of the Closing Date Amount and Purchaser’s proposed
alternative calculation.  The Executives and Purchaser shall use their
respective reasonable best efforts for a period of ten (10) days after Purchaser
delivers such rejection notice to the Executives to resolve such
disagreement.  If the Executives and Purchaser fail to resolve such
disagreement within such ten (10) day period, then the subject of such
disagreement shall be resolved in accordance with the resolution procedures set
forth in Section 2.3(d).  Any payment made pursuant to the terms of
this Section 2.5 shall be made within five (5) Business Days of the final
determination of any post-closing adjustment.

    

    SECTION
2.5.  Purchase Price – Allocation
Among the Stockholders.  The Purchase Price shall be allocated
and paid to each Stockholder based upon, and the phrase “on a pro rata basis”
when used in this Agreement with respect to each Stockholder shall mean, the
percentage set forth below following such Stockholder’s name:

    

    
      	
              Name

            	
              Percentage

            
	
              David

            	
              54.53%

            
	
              James

            	
              36.36%

            
	
              Charles

            	
              8.09%

            
	
              Idleman
      Estate

            	
              1.02%

            

    

    

    SECTION
2.6.  Franchise
Taxes.  When due and payable, the Stockholders shall pay to
Purchaser, all corporate franchise Taxes imposed by any Tax
Authority  (whether or not such Taxes are due and payable as of the
Closing Date with respect to the operation of the Company (“Franchise Taxes”) for
any period through and including the Closing Date.

    

    SECTION
2.7.  Transfer
Taxes.  All Transfer Taxes imposed by any Tax Authority with
respect to any transaction contemplated by this Agreement (if any) shall be duly
and timely paid by the Stockholders, who shall also duly and timely file all Tax
Returns in connection with such Transfer Taxes.  The Stockholders
shall give a copy of each such Tax Return to Purchaser for its review with
sufficient time for comments prior to filing, and shall give Purchaser a copy of
such Tax Return as filed, together with proof of payment of the Transfer Tax
shown thereon, promptly after filing.

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    SECTION
2.8.  Closing.  Upon
the terms and subject to the conditions hereof, the closing of the transactions
contemplated by this Article II (the “Closing”) shall be
held at the offices of Loeb & Loeb LLP, 10100 Santa Monica Boulevard, Suite
2200, Los Angeles, California, at 10:00 a.m. (P.S.T) on the second (2nd)
Business Day following the satisfaction or waiver of all conditions to the
obligations of the Parties set forth in Article VII (other than conditions which
are not capable of being satisfied until the Closing Date), or at such other
place or at such other time as the Executives and Purchaser may mutually agree
upon in writing (the date on which the Closing takes place being the “Closing Date”). The
Closing shall be deemed effective as of 11:59 p.m. (P.S.T) on the Closing
Date.

    

    SECTION
2.9.  Transactions at
Closing.  At or immediately prior to the Closing, the following
shall occur:

    

    (a)           Purchaser
shall pay the Closing Cash Payment to the Stockholders (on a pro rata basis) by
wire transfer in immediately available funds;

    

    (b)           Purchaser
shall have delivered to the Executives the certificate required to be delivered
pursuant to Section 7.1(a) hereof;

    

    (c)           The
Stockholders shall deliver to Purchaser the certificates representing the
Shares, endorsed in blank or accompanied by executed blank stock
powers;

    

    (d)           Each
of the Executives shall deliver executed Employment Agreements and Non-compete
Agreements;

    

    (e)           The
Company shall deliver to Purchaser a certificate of the Secretary of the Company
certifying as to (i) the consent of the Company’s Board of Directors and the
Stockholders authorizing this Agreement and the transactions contemplated
hereby, (ii) the Company’s Certificate of Incorporation, and (iii) the Company’s
bylaws, as amended (the “Secretary’s
Certificate”)

    

    (f)        
   The Company shall provide Purchaser with a certificate of good
standing with respect to the Company (as to the Company’s corporate existence
and its payment of Franchise Taxes) issued by the Secretary of State of the
State of Delaware;

    

    (g)           The
Company shall have terminated the Company’s 2000 Stock Option Plan (the “Stock Option
Plan”);

    

    (h)           The
Company and the Executives shall have terminated that certain Shareholders
Agreement of the Company, entered into during the 2000 calendar year, by and
among the Company and the Stockholders (the “Stockholders’
Agreement”);

    

    (i)        
   The Company shall have terminated all of the Company Benefit
Plans, if any;

    

    (j)         
  The Company shall deliver to the Purchaser all of the Books and
Records of the Company;

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    (k)           Each
of David, James and Charles shall have delivered to Purchaser a resignation
letter, in form and substance satisfactory to Purchaser, pursuant to which each
of David, James and Charles shall have resigned as directors of the Company
effective as of the Closing;

    

    (l)       
    Each of David and James shall have delivered to
Purchaser a resignation letter, in form and substance satisfactory to Purchaser,
pursuant to which David shall have resigned as President and Treasurer of the
Company and James shall have resigned a Secretary of the Company effective as of
the Closing;

    

    (m)           The
Company, the Stockholders and the Company’s Board of Directors shall have taken
all action necessary on the part of the Company, the Stockholders and the
Company’s Board of Directors to appoint John Ueberroth and Jeffrey D. Thomas as
directors of the Company effective as of the Closing;

    

    (n)           The
Company, the Stockholders and the Company’s Board of Directors shall have taken
all action necessary on the part of the Company, the Stockholders and the
Company’s Board of Directors to amend the Company’s bylaws to the reasonable
satisfaction of Purchaser;

    

    (o)           The
Company and the Executives shall deliver to Purchaser the certificates required
to be delivered pursuant to Section 7.2(a) and Section 7.2(b)
hereof;

    

    (p)           David
and the Company shall have taken all action necessary on the part of David and
the Company to assign all of David’s ownership rights in and to the domain names
and URLs listed in Section 3.19 of the Company’s Disclosure
Schedule to the Company;

    

    (q)           The
Company shall have taken all action necessary to qualify the Company to conduct
business as a foreign corporation in the State of California; and

    

    (r)       
    The Stockholders shall deliver, or cause the Company to
deliver, to Purchaser any and all other assignments, documents, instruments and
conveyances requested by Purchaser to effect the consummation of the
transactions contemplated by this Agreement.

    

    ARTICLE
III

    

    REPRESENTATIONS
AND WARRANTIES

    OF THE
COMPANY AND THE EXECUTIVES

    

    Except as
disclosed in a document referring specifically to the representations and
warranties in this Agreement which identifies by section number the section and
subsection to which such disclosure relates (provided, however, that the
Company shall be deemed to have adequately disclosed with respect to any section
or subsection matters that are clearly described elsewhere in such document if a
reasonably prudent reader can understand the applicability of such disclosure to
such non-referenced sections or subsections and the Company has not
intentionally omitted any required cross references) and is delivered by the
Company to Purchaser prior to or simultaneous with the execution of this
Agreement (the “Company’s Disclosure
Schedule”), the Company and each of the Executives, jointly and
severally, hereby represents and warrants to Purchaser as follows:

    

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    SECTION
3.1.  Organization and Good
Standing.  The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite power to own, lease and operate its assets, properties and business
and to carry on its business as conducted during the twelve (12) month period
prior to the date hereof, as now conducted and as proposed to be conducted; and
is duly qualified or licensed to conduct business as a foreign corporation and
is in good standing in every jurisdiction in which the nature of the Business or
the location of its properties requires such qualification or licensing, except
for such jurisdictions where the failure to so qualify or be licensed would not
have any adverse effect on the enforceability of any of the Company’s Contracts
or the Company’s ability to bring or defend lawsuits, or a Material Adverse
Effect.  The Company’s Disclosure
Schedule sets
forth all jurisdictions in which the Company is qualified or licensed to conduct
business as a foreign corporation.

    

    SECTION
3.2.  Authority and
Enforceability.  The Company has all requisite corporate power
and authority to execute and deliver this Agreement and the other Company
Documents and perform its obligations hereunder and thereunder.  The
execution and delivery by the Company of this Agreement and the other Company
Documents and the performance by the Company of the Company’s obligations
hereunder and thereunder have been duly authorized by all requisite corporate
action on the part of the Company.  This Agreement and the other
Company Documents have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by Purchaser, constitute the
legal, valid and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors’ rights generally and
general equitable principles (whether considered in a proceeding in equity or at
law).

    

    SECTION
3.3.  Non-Contravention; Third
Party Consents.  Except as set forth in the Company’s Disclosure
Schedule, the execution, delivery and performance by the Company of this
Agreement and the other Company Documents do not and will not (a) violate,
conflict with or result in the breach of any provision of the Certificate of
Incorporation, bylaws or other charter documents of the Company, (b) conflict
with or violate any Law or Governmental Order applicable to the Company, the
Stockholders or any of their assets, (c) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, or give to others any rights of
termination, amendment or acceleration of, or result in the creation of any Lien
or other encumbrance on the Shares or the assets of the Company pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, license, permit
or franchise to which the Company is a party or by which any of its assets is
bound or affected, or (d) require the consent or notification of any third party
under any note, bond, mortgage or indenture, contract, license, permit or
franchise to which the Company or any of the Stockholders is a party or by which
any of the Company’s assets is bound or affected (any such notices and consents
being referred to collectively as the “Required
Consents”).

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    SECTION
3.4.  Subsidiaries.  The
Company does not own, directly or indirectly, any interest or investment
(whether equity or debt) in any Person.

    

    SECTION
3.5.  Capitalization.  The
authorized capital stock of the Company consists of 10,000,000 shares of common
stock, $0.001 par value per share, of which 975,555 shares of common stock are
issued and outstanding, and 1,000,000 shares of preferred stock, $0.001 par
value per share, of which no shares of preferred stock are issued and
outstanding.  All
such issued and outstanding shares are duly authorized, validly issued and
outstanding, are fully paid and nonassessable, are not subject to any right or
rescission or preemptive rights and have been offered and sold by the Company in
full compliance with all registration or qualification requirements (or
applicable exceptions therefrom) of applicable federal and state securities
laws.  A list of all holders of outstanding securities of the
Company and the number of shares held by each as of the date of this
Agreement, is set forth in the Company’s Disclosure Schedule,
and except for such issued and outstanding shares, there are no shares of
capital stock or other securities or other equity interests of the Company
issued or outstanding.  The Stockholders own all of the issued and
outstanding capital stock of the Company.  There are no issued and
outstanding warrants and options (under the Stock Option Plan or otherwise) to
purchase or acquire any of the Company’s securities.  Except as
indicated in the Company’s Disclosure
Schedule:

    

    (a)           there
are no outstanding subscriptions, warrants, options, calls, agreements or
commitments of any character relating to or entitling any Person to purchase or
otherwise acquire any capital stock (including the Shares) or other securities
or other equity interests of the Company;

    

    (b)           the
Company is not a party or subject to any agreement or understanding, and there
is no agreement or understanding between any Persons that affects or related to
the voting or giving of written consents with respect to an security or voting
by a director of the Company;

    

    (c)           there
are no outstanding obligations or securities convertible into or exchangeable
for shares of any capital stock (including the Shares) or other securities or
other equity interests of the Company or any commitments of any character
relating to or entitling any person to purchase or otherwise acquire any such
obligations or securities; and

    

    (d)           there
are no other commitments of any kind or type for the issuance of any capital
stock (including the Shares) or other securities or other equity interests of
the Company.

    

    SECTION
3.6.  Financial Statements and
Condition.  The Company’s Disclosure
Schedule sets forth (a) the unaudited balance sheet of the Company as of
December 31, 2007, and the related statements of income and retained earnings
and changes of financial position for the fiscal year then ended, (b) the
unaudited balance sheet of the Company as of December 31, 2006, and the related
statements of income and retained earnings and changes of financial position for
the fiscal year then ended, and (c) the unaudited balance sheet as of February
29, 2008 (“Reference
Balance Sheet”), and statements of income of the Company for the three
(3) months ended March 31, 2008 (collectively, the “Financial
Statements”).  Except as set forth on the Company’s Disclosure
Schedule, the Financial Statements: (i) were prepared in accordance with
the Books and Records of the Company and, to the Company’s Knowledge, in
accordance with GAAP; (ii) fairly present the Company’s financial condition and
the results of its operations as of the relevant dates thereof and for the
periods covered thereby; (iii) contain and reflect all necessary adjustments and
accruals for a fair presentation of the Company’s financial condition and the
results of operations covered by the Financial Statements; (iv) contain and
reflect adequate provisions for all reasonably anticipate liabilities for
applicable Taxes; and (v) with respect to contracts and commitments for the sale
of goods or the provision of services by the Company, contain and reflect
adequate reserves for all reasonably anticipated material losses and costs and
expenses in excess of expected receipts.

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    

    (a)           No Undisclosed
Liabilities.  Except for (i) those Liabilities specifically
reflected or reserved against on the Reference Balance Sheet, (ii) those
Liabilities otherwise disclosed in the Company’s Disclosure
Schedule, and (iii) those Liabilities reflected on the Closing Balance
Sheet, all of which were incurred by the Company since the date of the Reference
Balance Sheet in the ordinary course of business and consistent with past
practices in an amount not to exceed Twenty-Five Thousand Dollars ($25,000) in
the aggregate (all such Liabilities other than: (w) all Taxes and fees payable
for the period through and including the Closing Date with respect the Company’s
failure to be qualified to conduct business in the States of California and
Connecticut, as well as all penalties and interest with respect thereto
(collectively, “Foreign Business Tax
Liabilities”), (x) those Liabilities for Taxes payable for the
Pre-Closing, including without limitation, Liabilities for Taxes (and any
penalties or interest in connection therewith) in the States of California, New
Jersey, Connecticut, Massachusetts and Missouri, (y) Tax withholding and any
other Taxes and any penalties and interest payable in connection therewith
payable to the State of California for the period through and including the
Closing Date (“California Taxes”),
and (z) all brokerage, finder’s, commitments or other fees or commissions in
connection with this Agreement or the transactions contemplated hereby (“Broker’s Fees”); the
foregoing being referred to collectively as the “Assumed
Liabilities”), the Company does not have, as of the date hereof, any
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, known or unknown, liquidated or unliquidated,
accrued, absolute, contingent or otherwise, and whether or not of a kind
required by GAAP to be set forth on a financial statement.

    

    (b)           Accounts
Receivable.  The Company’s Disclosure
Schedule sets forth a complete and accurate schedule of the Accounts
Receivable of the Company as of the date of the Reference Balance
Sheet.  All Accounts Receivable of the Company accrued on the
Reference Balance Sheet and all Accounts Receivable of the Company existing as
of the date hereof resulted from valid sales in the ordinary course of business
and were, and are, subject to no valid offsets or
counterclaims.  Except as set forth in the Company’s Disclosure
Schedule, all such Accounts Receivable were, and are, owned by the
Company free and clear of any Liens. 

    

    (c)           Accounts
Payable.  The Company’s Disclosure
Schedule sets forth a true and correct aged list of all accounts payable
of the Company as of the date of the Reference Balance Sheet in excess of Five
Thousand Dollars ($5,000) to any one (1) payee.  Since the date of the
Reference Balance Sheet all accounts payable of the Company have been incurred
in the ordinary course of business and consistent with past
practices.

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    (d)           Books of
Account.  The books of account of the Company are stated in
reasonable detail and accurately reflect in all material respects the
transactions of the Company as required by GAAP.

    

    SECTION
3.7.  Governmental
Consents.  The execution, delivery and performance by the
Company of this Agreement and the Company Documents do not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to any Governmental Authority.

    

    SECTION
3.8.  Brokers.  Except
as described in the Company’s Disclosure
Schedule, no Person is entitled to any brokerage, finder’s, commitment or
other fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon any agreements or arrangements or commitments,
written or oral, made by or on behalf of the Company or any of its
Affiliates.

    

    SECTION
3.9.  Properties, Contracts and
Other Data.  The Company’s Disclosure
Schedule contains a true and complete statement, listing and description
of the following:

    

    (a)           A
schedule for the current fiscal quarter of all prepayments, prepaid expenses,
advances to employees, credits from suppliers, deposits and the like (the “Prepayments”) as
generated by the Company’s internal information systems in the ordinary course
of business, as of the date set forth thereon, and showing each of the
Prepayments having any book value on the Books and Records of the Company as of
such date;

    

    (b)           All
material written or oral consulting, work for hire and independent contractor
agreements with, or similar commitments to, authors, consultants and independent
contractors of the Company to which the Company is a party or to which any of
the Company’s assets may be subject;

    

    (c)           All
other existing written or oral agreements, contracts, certificates, licenses,
leases, purchase orders, options, notes, guarantees, letters of credit, or other
commitments to which the Company is a party, or to which any of the Company’s
assets are subject, except (i) contracts or commitments otherwise listed in the
Company’s Disclosure
Schedule, (ii) other than work for hire agreements, contracts or
commitments, or any related group of contracts or commitments, involving a
liability, whether actual or contingent, of or to the Company of less than Seven
Thousand Five Hundred Dollars ($7,500), and (iii) contracts for the purchase or
sale of merchandise, goods or services entered into in the ordinary course of
business consistent with its past practices the performance of which by the
Company will extend either over a period of less than one (1) year from the date
of such contract or are cancellable or terminable within one (1) year from the
date of such contract without penalty;

    

    (d)           All
written or oral contracts or arrangements (unless the particular provision
described below is expressly contained in another document otherwise identified
in the Schedules hereto) to which the Company is a party or to which any of the
Company’s assets are subject, which (i) contains any covenant not to compete,
covenant of non-solicitation or similar restrictive covenant or otherwise
significantly restricts the nature of the business activities in which the
Company may engage or the customers, vendors or employees it may have, (ii) with
respect to existing Accounts Receivable in excess of Five Thousand Dollars
($5,000), provides for the extension of credit on terms other than payment
within ninety (90) days of invoice, (iii) provides for a guaranty by the
Company, or (iv) contains a right of first refusal in favor of another
Person;

    

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    (e)           The
top ten (10) vendors and content providers of the Company ranked by aggregate
purchases or revenue share during fiscal year ended December 31, 2007, together
with the aggregate amounts spent with each such vendor during such fiscal
year;

    

    (f)           Any
governmental permit, license or registration held by the Company;
and

    

    (g)           All
insurance policies held by the Company.

    

    Except as
otherwise set forth in the Company’s Disclosure
Schedule, no breach of, or default by the Company under any item referred
to in the Company’s
Disclosure Schedule in response to clauses (b), (c) and (d) above or
under any Labor Agreement (each, a “Contract”) (or event
which would, with the passage of time, notice or both, constitute a breach or
default) has occurred, and each such Contract remains in full force and
effect.

    

    SECTION
3.10.  Absence of Differences from
Schedules.  Except as is contemplated by this Agreement or as
otherwise disclosed in the Company’s Disclosure
Schedule:

    

    (a)           No Material Adverse
Change.  Since the date of the Reference Balance Sheet, except
for (i) changes in the general economic climate in which the Company operates
the Business, including without limitation the possible economic recession into
which the United States may be entering and the current credit market
disruptions), and (ii) changes contemplated or permitted by this Agreement or
that relate to the execution of this Agreement or the transactions contemplated
herein, including, without limitation, the fact that Purchaser will own and
operate the Company following the Closing, there has not been:

    

    (i)       
     any material event out of the ordinary course of
business affecting the operations or financial condition of the
Company;

    

    (ii)     
      any material entry into, modification or
termination by the Company of any Contract, other than in the ordinary course of
business;

    

    (iii)           any
material casualty, damage, destruction or loss;

    

    (iv)           any
default or breach by the Company under any Contract;

    

    (v)           any
sale or other disposition of any asset of the Company having a net book value in
excess of Five Thousand Dollars ($5,000), or any mortgage, pledge or imposition
of any encumbrances on any asset of the Company, other than in the ordinary
course of business and consistent with past practices;

    

    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

    

    (vi)           declaration
or payment of dividends or other distribution to the Company’s stockholders or
upon or in respect of any shares of its capital stock, or purchase, retirement
or redemption any of the Company’s shares of capital stock or other
securities;

    

    (vii)          any
material change made in executive compensation levels or in the manner in which
the Company’s employees are compensated or in benefits provided to such
employees;

    

    (viii)         any
change in the Company’s accounting methods, procedures or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) or any revaluation of any of the Company’s assets;

    

    (ix)           any
entry by the Company into any transaction, contract or commitment other than in
the ordinary course of its business and consistent with past
practices;

    

    (x)     
      any loss by the Company of one (1) or more
clients that generated revenue in the 2007 and/or 2008 to the Company of more
than Fifteen Thousand Dollars ($15,000), in the aggregate, or received notice of
any impending loss; or

    

    (xi)           any
express or deemed Tax election by the Company, filing by the Company of any
amended Tax Return, agreement to an extension or waiver of the statute of
limitations with respect to the assessment or determination of Taxes owed by the
Company, entry by the Company into any closing agreement with respect to any
Tax, any surrender by the Company of any right to claim a Tax refund, or any
settlement or compromise by the Company regarding any liability with respect to
Taxes.

    

    (b)           Litigation.  The
Company’s Disclosure
Schedule sets forth an accurate and complete description of every pending
or, to the Company’s Knowledge threatened, adverse claim, audit, dispute,
governmental investigation, suit, action (including, without limitation, any
non-judicial real or personal property foreclosure action), arbitration, legal,
administrative or other proceeding of any nature, domestic or foreign, criminal
or civil, at law or in equity, by or against or otherwise affecting the Company,
the Business, or
the Company’s operations, properties, financial conditions or
prospects.  The Company has delivered to Purchaser copies of all
relevant court papers and other documents relating to the matters referred to in
the Company’s
Disclosure Schedule, and the Company’s Disclosure
Schedule also sets forth a description of the current status of each such
matter.  Except as disclosed in the Company’s Disclosure
Schedule:

    

    (i)         
   no such matter or matters, if decided adversely to the
Company, individually or in the aggregate, would or could reasonably be expected
to have a Material Adverse Effect;

    

    (ii)        
   the Company is not in default with respect
to any Governmental Order by which it is bound or to which its property is
subject and there exists no Governmental Order enjoining or requiring the
Company to take any action of any kind with respect to the
Business;

    

    
      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    

    (iii)           neither
the Company, nor any officer, director, stockholder or employee of the Company,
has been permanently or temporarily enjoined by any Governmental Order from
engaging in or continuing any conduct or practice in connection with the
Company; and

    

    (iv)           to
the Company’s Knowledge, no basis exists for any claim, audit, investigation,
suit or proceeding which, if decided adversely to the Company would or could
reasonably be expected to have a Material Adverse Effect.

    

    In
addition, the Company’s Disclosure
Schedule sets forth a description of any and all audits that were
commenced or threatened against the Company, and resolved, settled or
compromised during the period January 1, 2006 through the date of this
Agreement, and the terms and conditions of such resolution, settlement or
compromise.

    

    (c)           Compliance with
Laws.  The Company (i) has received no notice as yet unremedied
of any violation of any Laws applicable to the Company or its operations or with
respect to which compliance is a condition of engaging in the Business, (ii) is
in compliance with all Laws, including without limitation, all Environmental
Laws and Orders, and (iii) has all permits, licenses and other governmental
authorizations necessary to conduct the Business as presently conducted and
proposed to be conducted.

    

    (d)           Title.  The
Company at the Closing will have good and marketable title in and to all of the
Company’s assets, free and clear of any and all Liens.

    

    SECTION
3.11.  Taxes.

    

    (a)           Except
as set forth in the Company’s Disclosure
Schedule, the Company has (i) duly and timely filed all Tax Returns
required to be filed by the Company on or prior to the date hereof, which Tax
Returns are true, correct and complete, and (ii) duly and timely paid all Taxes
due and payable in respect of all periods up to and including the date hereof,
and has made adequate provision on its Books and Records (including the
Reference Balance Sheet) in accordance with GAAP for any such Tax which is not
yet due.  Prior to the Closing Date, the Company shall provide
Purchaser with a schedule which sets forth each Taxing jurisdiction in which the
Company has filed or is required to file Tax Returns and a copy of such Tax
Returns as have been requested by Purchaser.  Any Tax Returns filed
subsequent thereto were consistent with the Tax Returns furnished to the
Purchaser and did not make, amend or terminate any election with respect to any
Tax or change any accounting method, practice or procedure.  The
Company has complied with all applicable Laws relating to the reporting,
payment, collection and withholding of Taxes and has duly and timely withheld or
collected, paid over and reported all Taxes required to be withheld or collected
by the Company on or before the date hereof.

    

    Except as
set forth in the Company’s Disclosure
Schedule, (i) no Taxing Authority has asserted any adjustment that could
result in an additional Tax for which the Company is or may be liable or that
could result in a Lien on any of its assets which has not been fully paid or
adequately provided for on the Reference Balance Sheet (collectively, “Tax Liability”), or
which adjustment, if asserted with respect to another period, would result in
any Tax Liability, (ii) there is no pending audit, examination, investigation,
dispute, proceeding or claim (collectively, “Tax Proceeding”)
relating to any Tax Liability and to the Company’s Knowledge, no Taxing
Authority is contemplating such a Tax Proceeding and there is no basis for any
such Tax Proceeding, (iii) no statute of limitations with respect to any Tax has
been waived or extended (unless the period to which it has been waived or
extended has expired), (iv) there is no outstanding power of attorney
authorizing anyone to act on behalf of the Company in connection with any Tax
Liability, Tax Return or Tax Proceeding relating to any Tax, (v) there is no
outstanding closing agreement, ruling request, request to consent to change a
method of accounting, subpoena or request for information with or by any Taxing
Authority with respect to the Company, its income, assets or business, or any
Tax Liability, (vi) the Company is not required to include any adjustment under
Section 481 of the Code (or any corresponding provision of applicable Law) in
income for any period ending after the date of the Reference Balance Sheet Date,
(vii)  the Company is not and has never been a party to any Tax
sharing or Tax allocation agreement, arrangement or understanding, (viii) the
Company is not and has never been included in any consolidated, combined or
unitary Tax Return, (ix) all taxable periods for the assessment or collection of
any Tax Liability are closed by agreement or by operation of the normal statute
of limitations (without extension) or will close by operation of the normal
statute of limitations for such Taxes (in each case determined without regard to
any omission, fraud or other special circumstance other than the timely filing
of the Tax Return), (x) the Company will not be required to include any item of
income, or exclude any item of deduction, for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (A) inter-company
transactions or excess loss accounts described in Treasury regulations under
Section 1502 of the Code (or any similar provision of applicable Law), (B)
installment sale, open transaction or use of a completed contract method of
accounting with respect to any transaction that occurred on or prior to the
Closing Date, or (C) prepaid amount received on or prior to the Closing Date,
and (xi) no Taxing Authority has ever asserted that the Company should file a
Tax Return in a jurisdiction where it does not file.

    

    
      
        
           

        

        
          21

          
            

          

        

        
           

        

      

    

    

    (b)           The
Company is not a party to any agreement, contract or arrangement for services
that would result, individually or in the aggregate, in the payment of any
amount that would not be deductible by the Company by reason of Section 162,
280G or 404 of the Code.  The Company is not a “consenting
corporation” within the meaning of Section 341(f) of the Code (as in effect
prior to the repeal of such provision).  The Company does not have any
plan, arrangement or agreement providing for deferred compensation that is subject to
Section 409A(a) of the Code or any asset, plan, arrangement or agreement that is
subject to Section 409A(b) of the Code.  The Company does not have any
“tax-exempt bond financed property” or “tax-exempt use property” within the
meaning of Section 168(g) or (h), respectively, of the Code.  None of
the assets of the Company is required to be treated as being owned by any other
Person pursuant to the “safe harbor” leasing provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as in effect prior to the repeal of said
leasing provisions.  The Company has never made or been required to
make an election under Section 338 of the Code (except as required by this
Agreement).  During the last two (2) years, the Company has not
engaged in any exchange under which gain realized on the exchanged was not
recognized under Section 1031 of the Code.  The Company has not
constituted a “distributing corporation” or a “controlled corporation” under
Section 355 of the Code in any distribution in the last two (2) years or
pursuant to a plan or series of related transactions (within the meaning of Code
Section 355(e)) with the transactions contemplated by this
Agreement.  The Company is not and has never been a “personal holding
company” (within the meaning of Code Section 542), a shareholder in a
“controlled foreign corporation” (within the meaning of Code Section 957), in a
“foreign personal holding company” (within the meaning of Code Section 552), or
in a “passive foreign investment company” (within the meaning of Code Section
1297), or an owner in any entity treated as a partnership or disregarded entity
for federal income Tax purposes.  The Company does not have and has
never had a fixed place of business or permanent establishment in any foreign
country.  None of the outstanding indebtedness of the Company
constitutes indebtedness to which any interest deduction may be disallowed under
Section 163(i), 163(l), 265 or 279 of the Code or under any other provision of
applicable Law.  The Company has not been a “United States real
property holding corporation” (within the meaning of Code Section 897(c)(2)) at
any time during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.  The Company has not entered into any “reportable
transaction” (within the meaning of Code Section 6707A or Treasury Regulations
Section 1.6011-4 or any predecessor thereof).  In the case of any
transaction that could result in a “substantial understatement of income tax”
(within the meaning of Code Section 6662(d)) if the claimed Tax treatment were
disallowed, the Company has “substantial authority” (within the meaning of Code
Section 6662(d)) for the claimed treatment, or in the case of a transaction
other than a “tax shelter” (within the meaning of Code Section
6662(d)(2)(C)(ii)), has “adequately disclosed” (within the meaning of Code
Section 6662(d)) the relevant facts affecting the tax treatment on its income
Tax Return.

    

    
      
        
           

        

        
          22

          
            

          

        

        
           

        

      

    

    

    (c)           The
Company elected to be treated as an S corporation for federal income Tax
purposes as of January 1, 2006 and such election is effective for such Tax year
and each Tax year thereafter up to and including the Closing
Date.  The Company’s Disclosure
Schedule sets forth each other jurisdiction for which the Company has an
S election (or similar election) in effect, including the jurisdiction, the
effective date of the election, the date of any termination of such election and
the cause of such termination, and whether such election is still in
effect.  Except as set forth in the Company’s Disclosure
Schedule, there is no Tax Liability under Section 1363(d), 1374 or 1375
of the Code or any similar provision of applicable Law.  Prior to the
effective time of the Closing, none of the Stockholders nor the Company shall
take any action or fail to take any action which could result in the termination
or revocation of any S election (or similar election).

    

    SECTION
3.12.  Labor
and Employment Matters.

    

    (a)           Labor
Matters.  There are, and during the past three (3) years there
have been, no unfair labor practice complaints, labor strikes, arbitrations,
disputes, work slowdowns or work stoppages pending or, to the Company’s
Knowledge, threatened, between the Company and any of its employees, current or
former.  Each employee of the Company is an “at-will” employee, and
the employment of each such employee may be terminated immediately by the
Company without liability, notice or severance, except as otherwise provided by
statute or decisional authority.

    

    (b)           Labor
Agreements. The Company’s Disclosure Schedule
sets forth a true and current list of all of the Labor Agreements of the
Company, other than Company Benefit Plans.  The Company’s Disclosure Schedule
also includes a true and complete schedule listing the names, total annual
compensation, total accrued vacation and other fringe benefits of each person
employed by the Company presently receiving compensation aggregating in excess
of Twenty Five Thousand Dollars ($25,000) per year. Except as set forth in
the Company’s
Disclosure Schedule:

    

    
      
        
           

        

        
          23

          
            

          

        

        
           

        

      

    

    

    (i)          
  the Company does not have any employees; and

    

    (ii)        
   the Company does not have any material labor relations
problems.

    

    (c)           Compliance with Labor Laws
and Agreements.  Except as disclosed in the Company’s Disclosure Schedule,
the Company has complied in all material respects with all of its Labor
Agreements and all applicable Laws and Governmental Orders relating to the
employment of labor, including those related to wages, hours, collective
bargaining and the payment and withholding of Taxes and other sums as required
by appropriate Governmental Authorities and has withheld and paid to the
appropriate Governmental Authorities, or is holding for payment not yet due to
such Governmental Authorities, all amounts required to be withheld from such
employees of the Company and is not liable for any arrears of wages, Taxes,
penalties or other sums for failure to comply with any of the foregoing. Without
limiting the generality of the foregoing, the Company has complied in all
material respects with the continuation coverage requirements of Section 4980B
of the Code and the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, Sections 601 through 608 of ERISA, the American Civil Disabilities Act
of 1990, as amended, and the Family Medical Leave Act of 1993, as amended, and
the regulations thereunder, and no material Tax payable on account of Section
4980B of the Code has been incurred with respect to any current or former
employees (or their beneficiaries) of the Company. No present or former
employee, officer or director of the Company has, or will have at the date
hereof, any claim against the Company for any matter, including but not limited
to (i) overtime pay for work done through the date hereof; (ii) wages or salary
for the work done through the date hereof; (iii) vacation time off or pay in
lieu of vacation time off for the period through the date hereof; (iv) any
violation of any statute, ordinance or regulation relating to minimum wages or
maximum hours, workplace conditions, or any other matter; or (v) injuries or
other damages which are not fully covered by the Company’s insurance
policies.  Except
as disclosed in the Company’s Disclosure Schedule,
there is no:

    

    (i)         
   unfair labor practice complaint against the Company pending
before the National Labor Relations Board or any state or local
agency;

    

    (ii)       
    labor grievance pending against the
Company;

    

    (iii)           pending
representation question respecting the employees of the Company; or

    

    (iv)           pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which the Company is a party.

    

    SECTION
3.13.  Employee
Benefits.  Except as disclosed in the Company’s Disclosure Schedule,
the Company does not currently have and has never had any employee benefit plans
within the meaning of Section 3(3) of ERISA, any deferred compensation, bonus,
stock option, restricted stock, incentive, profit sharing, retirement, savings,
medical, health, life insurance, disability, sick leave, cafeteria or flexible
spending, vacation, unemployment compensation, severance or change in control
agreements, arrangements, programs, policies or plans and any other benefit
arrangements or payroll practices (collectively, the “Company Benefit
Plans”).   Except as disclosed in the Company’s Disclosure Schedule,
the Company does not have and has never had any obligation to contribute or any
other liability with respect to any Company Benefit Plans.

    

    
      
        
           

        

        
          24

          
            

          

        

        
           

        

      

    

    

    SECTION
3.14.  Real
Property.  The Company has no ownership, leasehold and/or other
interest in any Real Property and has never had an ownership, leasehold and/or
other interest in any Real Property.

    

    SECTION
3.15.  Contracts.  Except
as disclosed in the Company’s Disclosure
Schedule:

    

    (a)           each
Contract is the legal, valid and binding obligation of the other contracting
party, enforceable against the other contracting party in accordance with terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting
creditors’ rights generally and general equitable principles (whether considered
in a proceeding in equity or at law);

    

    (b)           the
Company has fulfilled all material obligations required pursuant to each
Contract to have been performed by it prior to the date hereof, and to the
Company’s Knowledge, the Company has the resources, capability and capacity to
fulfill, when due, all its obligations under each Contract which remain to be
performed after the date hereof; and

    

    (c)           To
the Company’s Knowledge, no other contracting party to any Contract has breached
such Contract in any material respect within the twelve (12) month period prior
to the date hereof.

    

    SECTION
3.16.  Insurance.  The
Company is not in default, nor has it ever been in default, with respect to any
provision contained in any insurance policy of the Company or has failed to give
any notice or present any claim under any such policy in due and timely
fashion.  There are no outstanding unpaid claims under any such
policy.  The Company has not received any notice of cancellation or
non-renewal of any such policy.  No such policy is terminable or
cancelable by the insurer by virtue of the consummation of the transactions
contemplated herein.

    

    SECTION
3.17.  Software.  Except
as listed in the Company’s Disclosure
Schedule, all software designs, programs, object code and source code
that is not Open Source Software and that constitutes a part of or used in the
operations of the Company or the development of the Intellectual Property of the
Company (the “Company
Software”) are owned solely by the Company or the Company has obtained a
license of all rights necessary for such use.  Except for customer
licenses for the Company Software listed in the Company’s Disclosure
Schedule, no other Person has any right, title or interest in or to the
Company Software, or in or to any part of the software designs, programs, object
code or source code constituting a part of or used in the development of the
Company Software.  Without limiting the generality of the
foregoing:

    

    
      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    

    

    (a)           Except
as listed on the Company’s Disclosure
Schedule, the Company does not use and has not used any open source,
shareware or freeware code or any other freely available software (“Open Source
Software”).  The Company is in full compliance with all
licenses applicable to any Open Source Software that it uses or has used in the
development of the Company Software.  Except as listed on the Company’s Disclosure
Schedule, no Open Source Software is or has been used in, incorporated
into, integrated or bundled with any the Company Software, or used in the
development of the Company Software, and the Company has not made any derivative
works, improvements, enhancements or modifications of or to any Open Source
Software.

    

    (b)           Neither
the sale nor licensing of the Company Software is governed, in whole or in part,
by the terms of any third party license (whether or not considered a license for
Open Source Software).  No source code included in the assets of the
Company has been contributed by the Company to open source development or is
dedicated to the public domain or is required to be so contributed or
dedicated.

    

    (c)           The
Company is not subject to any obligation (i) to dedicate to general public use,
or to provide any form of public disclosure, with respect to any part of the
source code underlying or related to the Company Software; (ii) to disclose or
acknowledge or provide any attribution notice with respect to the use of any
other Person’s Intellectual Property in connection with the Company Software; or
(iii) to comply with any restriction on the commercial use, licensing or the
sale of services using the Company Software, or any portion
thereof.

    

    (d)           All
copyrights in and to the original works constituting the Company Software are
solely and exclusively owned by the Company. No person has any moral or legal
rights, title or interest in or to the Intellectual Property created by such
Person for the benefit of the Company.

    

    SECTION
3.18.  Tangible Personal
Property.  The Company’s Disclosure
Schedule sets forth (a) a description of each item of Tangible Personal
Property owned by the Company having on the date hereof either a depreciated
book value or estimated fair market value per unit in excess of Five Thousand
Dollars ($5,000), or not owned by the Company but in the possession of or used
by the Company and having rental payments therefor in excess of One Thousand
Dollars ($1,000) per month or Twelve Thousand Dollars ($12,000) per year; and
(b) a description of the owner of, and any Contract of the Company relating to
the use of, each such item of Tangible Personal Property not owned by the
Company and the circumstances under which such property is
used.  Except as indicated in the Company’s Disclosure
Schedule:

    

    (i)        
    the Company has good and marketable title to each item
of its Tangible Personal Property, free and clear of all Liens;

    

    (ii)       
    no officer, director, stockholder or employee of the
Company, nor Affiliate thereof, owns directly or indirectly, in whole or in
part, any item of the Tangible Personal Property of the Company or has any other
interest therein; and

    

    
      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    

    

    (iii)           each
item of Tangible Personal Property owned or used by the Company is in good
operating condition and repair, usable in the ordinary course of business
(ordinary wear and tear excepted).

    

    SECTION
3.19.  Intellectual
Property.  The Company’s Disclosure
Schedule sets forth: (a) a true and accurate identification of each item
comprising Company Intellectual Property, including each registered and
unregistered fictitious business name, trademark, copyright, service mark, trade
name, domain name, URL, web site and slogan, and each registration and
application for any of the foregoing, constituting a part of the Intellectual
Property of the Company; (b) a true and complete schedule of each statutory,
common law and registered copyright, and each registration and application for
any of the foregoing, constituting a part of such Intellectual Property; (c) a
true and complete schedule of each patent and associated invention, industrial
model, process and design, technical information, know-how and operating
maintenance or other manual and each registration and application for any of the
foregoing, constituting a part of such Intellectual Property; (d) each item of
the Open Source Software and Company Software and associated documentation used
in the business and operations of the Company other than “shrink wrap” software;
(e) a true and complete list of all Contracts with respect to which the Company
is a party either as licensee, licensor or owner of work made for hire relating
to any item of such Intellectual Property; and (f) a true and complete list of
all of persons with whom the Company has a contract for advertisements as of the
date of this Agreement.  The Company has provided Purchaser with a
current list of the Company’s subscribers.  The consummation of the
transactions contemplated herein will not have a Material Adverse Effect on the
usefulness of any item of such Intellectual Property.  Except as
indicated in the Company’s Disclosure
Schedule:

    

    (a)           the
Company is the owner of all right, title and interest in and to each item of its
Intellectual Property, free and clear of all Liens;

    

    (b)           all
trademarks, service marks, patents, copyrights and other state, federal and
foreign registrations and all applications therefor listed in the Company’s Disclosure
Schedule are valid and in full force and effect and are not subject to
any Taxes, maintenance fees or actions falling due within ninety (90) days after
the date hereof

    

    (c)           all
the Open Source Software and Company Software used in the operation of the
Business performs in reasonable compliance with the specifications therefor
(including, without limitation, functional specifications) set forth in user
manuals, promotional materials or license agreements;

    

    (d)           accurate
and complete copies of each trade secret constituting a part of the Company’s
Intellectual Property, including without limitation, each related process or
item of know-how or other technical data, and including as to each such trade
secret, the specific location of each writing, computer program or other
tangible medium contain its complete description, specifications, source codes,
charts, procedures, manuals and other descriptive material relating to all
versions of each item of the Company Software exist and have been made available
to Purchaser;

    

    
      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    

    (e)      
     there are no pending claims, actions, judicial or
other adversary proceedings, disputes or disagreements involving the Company
concerning any item of its Intellectual Property, and, to the Company’s
Knowledge, no such action, proceeding, dispute or disagreement is
threatened;

    

    (f)        
   all current officers, authors and consultants of the Company
(other than employees and consultants who have not been involved in developing
any Intellectual Property of the Company and who have no managerial
responsibilities) have executed and delivered to the Company agreements
regarding the protection of proprietary information and the assignment to the
Company of all Intellectual Property rights arising from the services performed
for the Company by such Persons, and the Company has made available to Purchaser
or its counsel copies of all such agreements;

    

    (g)      
     to the Company’s Knowledge, no contractor or
consultant of the Company is in violation of any term of any contractor or
consultant Contract, patent disclosure agreement, non-competition agreement or
any other Contract or restrictive covenant relating to the right of such Person
to be employed or engaged by the Company or to use the Intellectual Property
rights of others;

    

    (h)    
       the Company has complied with all
Contracts and licenses pursuant to which the Company is a licensee or
distributor of Intellectual Property;

    

    (i)        
    the Company has not modified or altered any of the
content provided to the Company pursuant to any Contract or license related to
Intellectual Property;

    

    (j)     
       the Company has properly complied with
all credit and formatting requirements with respect to the content provided to
the Company pursuant to any Contract or license related to Intellectual
Property; and

    

    (k)      
     the Company owns all right, title and interest in
and to, or has valid licenses pursuant to which the Company has the rights to
display and disseminate, the content disseminated on the Company’s
website.

    

    SECTION
3.20.  Necessary
Properties.  The Tangible Personal Property and Intellectual
Property of the Company include all of the tangible personal properties and
intangible personal properties necessary for the conduct of the Business as
conducted during the twelve (12) month period prior to the date hereof, as
presently conducted and as proposed to be conducted and include substantially
all of those properties actually used in the conduct of such business during the
twelve (12) month period prior to the date hereof.

    

    SECTION
3.21.  Certain
Interests.  No officer, employee, director or stockholder of
the Company and no relative or spouse (or relative of such spouse) who resides
with, or is a dependent of, any such officer, employee, director or stockholder
and no Affiliates of the foregoing:

    

    (a)        
   has any direct or indirect financial interest in any
competitor, supplier or customer of the Company (other than record and
beneficial ownership of not more than 5% of the outstanding capital stock of any
such Person subject to the periodic and other reporting requirements of Section
13 or Section 15(d) of the Exchange Act);

    

    
      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    (b)           holds
any beneficial interest in any Contract of the Company;

    

    (c)           owns,
directly or indirectly, in whole or in part, or has any other interest in any
tangible or intangible property which is necessary for the conduct of the
Business; or

    

    (d)           has
any outstanding indebtedness for borrowed money to the Company.

    

    SECTION
3.22.  Books
and Records.  The Company has made all of its Books and Records
available to Purchaser for its inspection, each of which is accurate and
complete in all material respects.

    

    SECTION
3.23.  Banking
Facilities.  The Company’s Disclosure Schedule
contains a true and complete list of:

    

    (a)           each
bank, savings and loan or similar financial institution in which the Company has
an account or safety deposit box and the numbers of the accounts or safety
deposit boxes maintained by the Company thereat; and

    

    (b)           the
names of all Persons authorized to draw on each such account or to have access
to any such safety deposit box facility, together with a description of the
authority (and conditions thereof, if any) of each such Person with respect
thereto.

    

    SECTION
3.24.  Delivery of
Documents.  The Company has delivered to Purchaser true and
complete copies of all agreements and documents referred to in the Company’s Disclosure
Schedule.

    

    SECTION
3.25.  Disclosure.  This
Agreement (including all Exhibits and Schedules hereto) and the other
agreements, documents and instruments contemplated to be executed or delivered
by the Company in connection with this Agreement collectively do not contain any
untrue statement of material fact regarding the Company; and such agreements,
documents and instruments collectively do not omit to state any material fact
necessary to make any of the representations, warranties or other statements or
information contained therein not misleading.

    

    SECTION
3.26.  No
Third-Party Rights to Acquire the Company.  There is no
outstanding option, right of first offer, right of first refusal or any other
agreement or commitment of any kind or nature whatsoever that grants any Person
the right to purchase or otherwise acquire in any manner a direct or indirect
substantial equity interest in, or all or any substantial part of the assets or
business of, the Company.

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    ARTICLE
III-A

    

    REPRESENTATIONS
AND WARRANTIES
OF THE STOCKHOLDERS

    REGARDING THE SHARES

    

    Each
Stockholder, individually, represents and warrants to Purchaser
that:

    

    SECTION
3-A.1            Title to
Shares.  Such Stockholder has good and marketable title to the Shares to be
transferred to Purchaser by such Stockholder, and upon consummation of the
purchase contemplated herein, Purchaser will acquire from such Stockholder good
and marketable title to such Shares, free and clear of any and all
Liens.

    

    SECTION
3-A.2            Authority to Execute and
Perform Agreements.  Such Stockholder has the right, power and
authority to enter
into, execute and deliver this Agreement and all other Stockholder Documents and
to transfer, convey and sell to Purchaser at the Closing the Shares to be sold
by such Stockholder under the terms of this Agreement.  Sue A. Idleman
is the duly authorized Executrix of the Estate of Lee H. Idleman and has full
power and authority to enter into this Agreement and all other Company Documents
to which the Idleman Estate is a party without the consent of, or notice to, any
other Person or Governmental Authority.

    

    SECTION
3-A.3            Enforceability.  This
Agreement and all applicable Stockholder Documents have been duly and validly
executed by such Stockholder and (assuming the due authorization, execution and
delivery of Purchaser) constitute the legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar applicable Laws affecting
creditors’ rights generally or by general equitable principles affecting the
enforcement of contracts.

    

    SECTION
3-A.4            No
Violation.  Neither the execution or delivery by the
Stockholders of this Agreement or any of the other Stockholder Documents, nor
the consummation by the Stockholders of the transactions contemplated herein or
therein will (a) violate any applicable Law or Governmental Order, (b)
constitute a default under, or give rise to any right of termination or
acceleration of, or to a loss of any benefits of the Company under, any Contract
of the Company, (c) result in the creation or imposition of any Lien upon any
assets of the Company, or (d) result in the creation or imposition of any Lien
upon the Shares.

    

    SECTION
3-A.5            Adverse Agreements; Consents
and Notifications.  Neither the execution or delivery by such
Stockholder of this Agreement or any other Stockholder Document nor the
consummation by such Stockholder of the transactions contemplated herein or
therein require the consent or notification of any Person.

    

    SECTION
3-A.6           No Adverse
Litigation.  Such Stockholder is not a party to any pending
litigation which seeks to enjoin or restrict such Stockholder’s ability to sell
or transfer such Stockholder’s Shares hereunder, nor is any such litigation
threatened against such Stockholder.  Furthermore, there is no
litigation pending or threatened against such Stockholder which, if decided
adversely to such Stockholder, could adversely affect such Stockholder’s ability
to consummate the transactions contemplated herein.

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

    SECTION
3-A.7            No Broker.  Except
as described in the Company’s Disclosure
Schedule, no Person is entitled to any brokerage, finder’s, commitment or
other fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon any agreements or arrangements or commitments,
written or oral, made by or on behalf of such Stockholder.

    

    SECTION
3-A.8            Acquisition of Stock
Consideration for Investment.  The Stock Consideration will be
acquired by each Stockholder for investment purposes, for such Stockholder’s own
account, not as a nominee or agent, and not with a view to the sale of
distribution of any part of the Stock Consideration.  Each Stockholder
agrees that such Stockholder will not sell or otherwise transfer the Stock
Consideration unless the shares of stock which make up the Stock Consideration
are registered under the Securities Act of 1933, as amended, or unless an
exemption from registration is available.  Each Stockholder represents
and warrants that such Stockholder is an “Accredited Investor,” as such term is
defined in Rule 501(a) of Regulation D of the Securities Act of 1933, as
amended.

    

    ARTICLE
IV

    

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

    

    Purchaser
hereby represents and warrants to the Stockholders as follows:

     

    SECTION
4.1.  Organization.  Purchaser
is duly incorporated, validly existing and in good standing under the laws of
the State of Delaware.

    

    SECTION
4.2.  Authority and
Enforceability.  Purchaser has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.  The execution and delivery by Purchaser of this Agreement
and the performance by Purchaser of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of
Purchaser.  This Agreement has been duly executed and delivered by
Purchaser and constitutes a legal, valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors’ rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).

    

    SECTION
4.3.  Non-Contravention.  The
execution, delivery and performance by Purchaser of this Agreement do not and
will not (a) violate, conflict with or result in the breach, of any provision of
the Certificate of Incorporation, bylaws or other charter documents of
Purchaser, or (b) to Purchaser’s Knowledge, conflict with or violate any Law or
Governmental Order applicable to Purchaser.

    

    SECTION
4.4.  Brokers.  No
Person is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser.

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

    SECTION
4.5.  SEC
Filings.  Purchaser has filed all required periodic reports on
Forms 10-K and 10-Q and all required reports on Form 8-K with the U.S.
Securities & Exchange Commission (“SEC”) since January
1, 2006 (the “Purchaser SEC
Documents”).  As of their respective dates, and giving effect
to any amendments thereto, (a) the Purchaser SEC documents complied in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations of the SEC promulgated thereunder, and (b) none of the
Purchaser SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.

    

    SECTION
4.6.  Consents.  The
execution, delivery and performance by Purchaser of this Agreement do not and
will not require any filing or registration with, or consent, approval,
authorization or other order of, action by, filing with or notification to any
Governmental Authority.

    

    SECTION
4.7.  Capitalization.  The
authorized capital stock of Purchaser consists of (a) 50,000,00 shares of common
stock, $0.01 par value per share, of which 19,129,441 shares are issued and
outstanding as of March 24, 2008 , and (b) 2,000,000 shares of preferred stock,
$0.01 par value per share, of which no shares are issued and outstanding as of
the date hereof.  As of March 24, 2008, 1,692,771 shares of the
Company’s common stock have been issued and/or are issuable in connection with
grants of restricted stock and options to purchase shares of the Company’s
common stock.

    

    SECTION
4.8.  Financial
Statements.  The financial statements of Purchaser (including,
in each case, any notes thereto) included in the Purchaser SEC Documents were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto and except that unaudited statements do not
contain footnotes in substance or form required by GAAP).

    

    ARTICLE
V

    

    ADDITIONAL
AGREEMENTS

    

    SECTION
5.1.  Preservation and Conduct of
Business.  From the date hereof through the Closing Date, the
Company shall conduct the Business only in the ordinary course and consistent
with past practices and shall use its best efforts (a) to preserve the Business
intact, (b) to keep available to the Company the services of its present
officers, employees, consultants, agents and independent contractors, (c) to pay
its current obligations in a manner consistent with its past practices, and (iv)
to preserve for the benefit of Purchaser the goodwill of its customers,
licensees, advertisers, suppliers and others having business relations with
it.

    

    SECTION
5.2.  Covenants.  Without
limiting the foregoing, from and after the execution of this Agreement through
the Closing Date:

    

    (a)           Affirmative
Covenants.  The Company shall:

    

    (i)           (A)
maintain its assets in the ordinary course of its business consistent with its
past practices in good operating order and condition, reasonable wear and tear,
damage by fire and other casualty excepted, (B) promptly repair, restore or
replace assets in the ordinary course of its business consistent with its past
practices, and (C) upon any damage, destruction or loss to any of its assets,
apply any and all insurance proceeds received with respect thereto to the prompt
repair, replacement and restoration thereof to the condition of its assets
before such event;

    

    
      
        
           

        

        
          32

          
            

          

        

        
           

        

      

    

    

    (ii)         
  comply in all material respects with all applicable Laws and all
Governmental Orders;

    

    (iii)           promptly
notify Purchaser of any lawsuits, claims, proceedings or investigations which
after the date hereof are threatened or commenced against the Company or any
officer, director, employee, manager, consultant, independent contractor,
stockholder, agent or member thereof, in their capacities as such, which, if
decided adversely, would or could reasonably be expected to have a Material
Adverse Effect;

    

    (iv)           collect
all Accounts Receivable of the Company existing as of the date of the Reference
Balance Sheet in the ordinary course of business and retain any all cash
collected from such Accounts Receivable in the Company’s bank accounts for the
benefit of Purchaser; and

    

    (v)           promptly
notify Purchaser in writing of any other action, event, condition or
circumstance, or group of actions, events, conditions or circumstances, that
results in, or could reasonably be expected to result in, a Material Adverse
Effect, other than changes in general economic or industry
conditions.

    

    (b)           Negative
Covenants.  Without Purchaser’s prior written consent, except
as is contemplated by this Agreement in which case the consent of Purchaser is
not required, the Company shall not:

    

    (i)           
 merge or consolidate with any other Person, acquire control of all or
substantially all of the assets of any other Person, or take any steps incident
to, or in furtherance of, any of such actions, whether by entering into an
agreement or otherwise;

    

    (ii)       
    purchase, lease, license or otherwise acquire any
material amount of rights or assets from any other Person other than in the
ordinary course of its business and consistent with its past
practices;

    

    (iii)           change
the terms and conditions (including without limitation, with respect to price or
acceleration of vesting) of any outstanding options, warrant and/or other
securities;

    

    (iv)           amend
its Certificate of Incorporation, bylaws or other charter
documents;

    

    (v)           sell,
assign, lease, license, transfer or otherwise dispose of, or mortgage, pledge or
encumber any material amount of its assets other than in the ordinary course of
its business consistent with its past practices;

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

    (vi)           issue
or sell any shares of its capital stock or any other of its securities, or
issue, grant or create any warrants, obligations, subscriptions, options,
convertible securities, stock appreciation rights or other commitments to issue
shares of its capital stock;

    

    (vii)          hire
any new employees or increase salaries or other employee benefits with respect
to existing employees; provided, that, the Company may
hire two (2) managing writers in accordance with the terms previously disclosed
to Purchaser;

    

    (viii)         make
or commit to make any capital expenditure if, after giving effect thereto, the
aggregate of capital expenditures made or committed to be made after the date of
this Agreement would exceed Twenty Five Thousand Dollars ($25,000), except for
commitments and payments to writers and editors in the ordinary course of
business; which will not exceed Twenty Five Thousand Dollars ($25,000) in the
aggregate;

    

    (ix)           create,
incur, assume, or guarantee any indebtedness for borrowed money or enter into
any “keep well” or other agreement to maintain any financial statement
condition, in each case other than in the ordinary course of its business
consistent with past practices;

    

    (x)         
  amend or terminate any Contract of the Company or any material
license or permit to which it is a party, or relinquish any Contract of the
Company or any material license or permit to which it is a party or waive,
release or assign any material rights or claims thereunder;

    

    (xi)           commit
a material default under any term or provision of, or suffer or permit to exist
any condition or event which, with notice or lapse of time or both, would
constitute a material default by it under, any Contract of the Company or any
material licenses or permits;

    

    (xii)          dispose
of or permit to lapse any rights to the use of any Intellectual Property of the
Company or dispose of or disclose any Intellectual Property of the Company not a
matter of public knowledge, except for dispositions and lapses which, in the
aggregate, do not have a Material Adverse Effect;

    

    (xiii)         take
any action which could reasonably be expected to have a Material Adverse
Effect;

    

    (xiv)         make
any changes in any accounting policies, procedures or practices customarily
followed by it (other than changes required by GAAP);

    

    (xv)          except
as set forth on the Company’s Disclosure
Schedule, make any declaration or payment of dividends or any other
distribution to the Company’s stockholders or upon or in respect of any shares
of its capital stock, or purchase, retire or redeem any of the Company’s shares
of capital stock or other securities;

    

    (xvi)         change
any Tax election of Company, amend any Tax Returns filed by the Company, enter
into any agreement to extend or waive the statute of limitations with respect to
the assessment or determination of any Taxes owed by the Company, enter into any
closing agreement with respect to any Tax, surrender any right to claim a Tax
refund, or settle or compromise any liability with respect to Taxes;
or

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    (xvii)        agree
to do any of the things described in the preceding clauses
(i)-(xvi).

    

    SECTION
5.3.  Access
to Information.

    

    (a)           From
the date hereof until the Closing, the Company shall afford the employees,
authorized agents and representatives of Purchaser, at Purchaser’s sole cost and
expense, with reasonable access, during normal business hours and upon
reasonable advance written notice, to the facilities from which the Company is
operated and the Books and Records of the Company, as Purchaser reasonably deems
necessary or advisable, and to those employees of the Company to whom Purchaser
reasonably requests access.  All information obtained by Purchaser and
its employees, agents and representatives pursuant to this Section 5.3 shall be
deemed to be Confidential Information and shall be kept
confidential.

    

    (b)           In
order to facilitate the resolution of any claims made by or against or incurred
by the Company prior to or after the Closing or for any other reasonable
purpose, for a period of four (4) years after the Closing (or, with respect to
any Books and Records of the Company necessary for the preparation and filing of
any Tax Returns, reports or forms or the defense of any Tax audit, claim or
assessment, until one hundred eighty (180) days after the expiration of the
applicable statute of limitations period (including extensions thereof)),
Purchaser shall (i) retain the Books and Records of the Company relating to
periods prior to the Closing in a manner reasonably consistent with the prior
practice of the Company and (ii) upon reasonable notice, afford the Stockholders
and the Stockholders’ agents and representatives reasonable access (including
the right to make photocopies, at the Stockholders’ sole cost and expense),
during normal business hours and upon reasonable advance written notice, to such
Books and Records; provided, that, the
Stockholders shall reimburse Purchaser promptly upon demand for all
out-of-pocket expenses incurred by Purchaser in connection
therewith.

    

    SECTION
5.4.  Regulatory and Other
Authorizations and Notices and Consents.

    

    (a)           Each
of the Parties shall use their reasonable best efforts to obtain all permits,
authorizations, consents, orders and approvals of all Governmental Authorities
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully with the other Parties in promptly seeking to obtain all such permits,
authorizations, consents, orders and approvals.  Each of the Parties
agrees to use their reasonable best efforts to contest any Action seeking to
restrain, enjoin or alter the transactions contemplated by this Agreement and to
avoid the imposition of such restraint, injunction or alteration, and if any
such Governmental Order has been granted, to use their reasonable best efforts
to have such Governmental Order vacated or lifted.

    

    (b)           The
Company shall give such notices to third parties (other than Governmental
Authorities) and use its reasonable best efforts to obtain such third party
consents that may be or become necessary for the Company’s execution and
delivery of, and the performance of the Company’s obligations pursuant to, this
Agreement.  Purchaser shall cooperate and use all commercially
reasonable efforts to assist the Company in giving such notices and obtaining
such consents.

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    SECTION
5.5.  Notice
of Changes.  Prior to the Closing, each of the Parties shall,
promptly after obtaining knowledge of the occurrence (or non-occurrence) of any
event, circumstance or fact arising subsequent to the date of this Agreement
which would result in the failure to satisfy any of the conditions set forth in
Article VII give notice thereof to the other Parties.

    

    SECTION
5.6.  Books
and Records.  At or immediately prior to the Closing, the
Company and the Executives shall deliver or cause to be delivered to Purchaser
all of the Books and Records of the Company.

    

    SECTION
5.7.  Expenses.  Whether
or not the transactions contemplated hereby are consummated, except as otherwise
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
Stockholders with respect to those costs and expenses incurred by the Company
and the Stockholders and by Purchaser with respect to those costs and expenses
incurred by Purchaser.

    

    SECTION
5.8.  Benefit Plan
Matters.  With respect to each Company Benefit Plan, the
Company shall take the following actions: (a) adopt resolutions and take such
other actions as are required by such Company Benefit Plan to terminate the
Company Benefit Plan effective immediately prior to the Closing Date; (b) cease
contributions under the Company Benefit Plan effective as of the Closing Date;
and (c) file with the U.S. Internal Revenue Service such forms as may be
required by applicable Law to terminate such Company Benefit
Plan.  Such resolutions, actions and filed forms shall be in a form
satisfactory to Purchaser.  

    

    SECTION
5.9.  Employment
Matters.

    

    (a)           Continued
Employment.  From the Closing Date, Purchaser (through the
Company) shall continue to employ each of the employees of the Company listed on
Appendix 2
attached hereto (the “Transferred
Employees”), which Appendix 2 sets forth
the position and salary of each of the Transferred Employees.  Each of
the Company and the Executives shall cooperate and assist Purchaser in the
employment of the Transferred Employees.  Each of the
Transferred  Employees shall be employed in the same position and at
the compensation level as is set forth opposite such Transferred Employee’s name
on Appendix 2
attached hereto.

    

    (b)           Termination of
Employees. The Executives, jointly and severally, shall be responsible
for any Losses related to employee terminations before or as of the Closing
including without limitation, those related to severance expenses and payments,
COBRA costs and expenses and claims arising under the WARN Act, if
any.

    

    (c)           Accrued
Vacation.  Effective as of the Closing Date, the obligation to
provide the accrued and unused vacation for the current fiscal year of the
Transferred Employees shall be transferred to and assumed by Purchaser (through
the Company), and Purchaser (through the Company) shall recognize and provide
all such accrued and unused vacation for the current fiscal year with respect to
such Transferred Employees.

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

    SECTION
5.10.  Resignations;
Appointments.  Effective as of the Closing:

    

    (a)           Each
of David, James and Charles shall have resigned as directors of the Company and
all action necessary on the part of the Company, the Stockholders and the
Company’s Board of Directors to appoint John Ueberroth and Jeffrey D. Thomas
shall have been taken; and

    

    (b)           David
shall have resigned as President and Treasurer of the Company and James shall
have resigned a Secretary of the Company.

    

    SECTION
5.11.  Employment
Agreements.  On the Closing Date, Purchaser and each of the
Executives shall execute and deliver the Employment Agreement, substantially in
the form set forth on Exhibit A attached
hereto (collectively, the “Employment
Agreements”).  The Employment Agreements shall set forth the
terms and conditions governing the Company’s employment of the Executives after
the Closing Date.

    

    SECTION
5.12.  Non-compete
Agreements.  On the Closing Date, Purchaser and each of the
Executives shall execute and deliver the Non-compete Agreement, substantially in
the form set forth on Exhibit B attached
hereto (collectively, the “Non-compete
Agreements”).

    

    SECTION
5.13.  Termination of Options and
Stock Option Plan.  Effective as of the Closing, the Company
shall have terminated all options and/or warrants to purchase the capital stock
or other securities of the Company (collectively, “Options”) and the
Stock Option Plan.

    

    SECTION
5.14.  Termination of Stockholders’
Agreement.  Effective as of the Closing, the Company and the
Executives shall have terminated the Stockholders’ Agreement.

    

    SECTION
5.15.  Intentionally
Deleted.

    

    SECTION
5.16.  Risk
of Loss.  The Company hereby assumes all risk of loss, damage
and destruction to all or any part of the Company’s assets until the Closing
Date from any cause whatsoever, whether or not the Company is insured therefor,
including, but not limited to, fire, flood, accident, acts of God, earthquake,
insurrection, riot, or other causes commonly referred to as force majeure
events.  The Company further assumes all risk until the Closing Date
of any Material Adverse Effect from any cause whatsoever.

    

    SECTION
5.17.  No
Solicitation or Negotiation.  Unless and until this Agreement
is terminated, neither the Company (or its directors) nor the Stockholders shall
initiate or solicit, directly or indirectly, any inquiries or the making of any
offer or proposal that constitutes or could be reasonably expected to lead to an
Alternative Proposal from any Person, or engage in negotiations or discussions
relating thereto or accept any Alternative Proposal, or make or authorize any
statement, recommendation or solicitation in support of any Alternative
Proposal.  Unless proscribed by duties of confidentiality, the Company
and the Stockholders shall notify Purchaser orally and in writing of the receipt
of any such inquiries, offers or proposals (including the terms and conditions
of any such offer or proposal, the identity of the Person making it and a copy
of any written Alternative Proposal), as promptly as practicable and in any
event within forty-eight (48) hours after the receipt thereof, and shall keep
Purchaser informed of the status and details of any such inquiry, offer or
proposal.  The Company (and its directors) and the Stockholders shall
immediately terminate any existing solicitation, activity, discussion or
negotiation with any Person hereafter conducted by the Company (and its
directors) and the Stockholders.

    

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

    

    SECTION
5.18.  Confidentiality.  Subject
to any obligation to comply with any applicable Law, any rule or regulation of
any authority or securities exchange or any subpoena or other legal process to
make information available to the Persons entitled thereto, from and after the
date hereof, all confidential information (as defined below) obtained by either
Party about the other or its Affiliates and all of the terms and conditions of
this Agreement shall be kept in confidence by each Party, and each Party shall
cause its Affiliates, stockholders, members, partners, directors, officers,
managers, employees, agents and attorneys to hold such information
confidential.  For purposes of this Agreement, “Confidential
Information” is any information provided by any Party or such Party’s
representatives (“Disclosing Party”) to
the other Parties or their representatives (“Receiving Party”)
before or during the term of this Agreement, either directly or indirectly in
writing, electronically, orally, by inspection of tangible objects, or any other
form, that the Disclosing Party has identified to the Receiving Party as
confidential or which, under the circumstances surrounding disclosure ought to
be treated as confidential by the Receiving Party, including without limitation
information that relates to the business, productions, processes and services of
the Disclosing Party, including but not limited to, information related to
products, services, customers, suppliers, processes, market opportunities,
business plans, affairs, operations, systems, computer software in source code
and object code form, documentation, procedures, the existence of and terms of
certain agreements, processes and/or
intellectual property, products under
development, purchasing, accounting, information technology, marketing, pricing,
and lists of employees and customers.  The term “Confidential
Information” shall be deemed to include, in addition to the information
described above, all notes, analyses, compilations, studies, interpretations or
other documents prepared by the Receiving Party which contain, reflect or are
based upon, in whole or in part, the Confidential Information furnished to the
Receiving Party pursuant hereto.  The term Confidential Information
shall exclude information: (a) received from a third party provided that such
source is not known by the Receiving Party to be bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation of
confidentiality to, the Disclosing Party; (b) which is or becomes known to the
public other than through the breach of this Agreement; (c) which was within the
Receiving Party’s possession prior to its being furnished to the Receiving Party
by the Disclosing Party pursuant to this Agreement; (d) is independently
developed by the Receiving Party without reference to the Confidential
Information, provided such independent development can reasonably be proven by
Receiving Party through a written record; or (d) is publicly disclosed or no
longer considered Confidential Information by the Disclosing
Party.  In the event any Party becomes legally compelled to disclose
any such Confidential Information, it shall promptly provide the other Parties
with written notice of such requirement so that it may seek a protective order
or other remedy or waive compliance with this Section 5.18.  If this
Agreement is terminated for any reason, each Party shall return or cause to be
returned to the other all Confidential Information, including all written data,
information, files, records and copies of documents, worksheets and other
materials obtained by that Party in connection with this Agreement.

    

    
      
        
           

        

        
          38

          
            

          

        

        
           

        

      

    

    

    SECTION
5.19.  Further
Action.  Each of the Parties shall use such Party’s reasonable
best efforts to take, or cause to be taken, all appropriate actions, do or cause
to be done all things necessary, proper or advisable under applicable Law, and
execute and deliver such documents and other papers, as may be required to
consummate the transactions contemplated by this Agreement.

    

    SECTION
5.20.  Additional Tax
Liability.  If and only if, as a result of the Election, the
Stockholders (on behalf of themselves or the Company for a Pre-Closing Period)
file a federal or state tax return under which the Stockholders and/or the
Company are required to pay additional Tax Liability for the Tax year in which
the Closing occurs, Purchaser shall pay such increase in Tax Liability (“338 Tax”) up to an
amount not to exceed Eight Hundred Thousand Dollars ($800,000) in the aggregate,
which Tax Liability shall be paid by the Stockholders and/or the Company (for a
Pre-Closing Period) directly to the relevant Taxing Authority upon such Tax
Liability becoming due and payable.  In the event the 338 Tax exceeds
Eight Hundred Thousand Dollars ($800,000) in the aggregate, Purchaser shall
first pay any 338 Tax due on behalf of the Company and then any 338 Tax due on
behalf of the Stockholders.  For clarity, the additional Tax Liability
(subject to the foregoing Liability cap) shall be an amount equal to the
difference between (i) the Tax payable by the Stockholders and by the Company as
a result of the Election and (ii) the Tax that would have been payable by the
Stockholders and by the Company if the Election had not been made. The
Executives (on behalf of the Stockholders) shall provide Purchaser with a tax
opinion from an independent certified public accounting firm stating the extent
of such 338 Tax, which tax opinion shall set forth the computation of the 338
Tax in reasonable detail. The Stockholders shall provide Purchaser with access
to their Tax information related to the Election to enable Purchaser to
determine the 338 Tax and review the tax opinion. Unless within sixty (60) days
of delivery of such tax opinion by the Executives to Purchaser the Executives
shall have received a written objection from Purchaser to such tax opinion, then
such tax opinion shall be considered the final tax opinion with respect to this
matter. If, within such sixty (60) day period, the Executives receive a written
objection from Purchaser to such tax opinion, then the Executives (on behalf of
the Stockholders) and Purchaser shall attempt to reconcile their differences
diligently and in good faith and any resolution by them shall be final, binding
and conclusive on all Parties. If the Executives and the Purchaser are unable to
reach a final resolution within thirty (30) days of the Executives’ receipt of
the Purchaser’s written notice, the Executives and the Purchaser shall submit
such dispute for resolution to an independent tax accounting firm mutually
appointed by the Executives and the Purchaser (the “Independent Tax
Firm”), which, acting as experts, shall determine and report to the
Parties, within fifteen (15) days after their appointment, the 338 Tax and such
determination shall be final, binding and conclusive on the Parties. The fees
and disbursements of the Independent Tax Firm shall be shared equally by the
Stockholders, on the one hand, and the Purchaser, on the other hand. The Company
(prior to Closing) and Stockholders agree that from and after the execution of
this Agreement, none of them will take any action (other than filing the
required Tax Return) which would result in an increase in such Tax
Liability.  Any 338 Tax payments shall treated by the Parties as
additional Purchase Price.

    

    SECTION
5.21.  Section 338(h)(10)
Election.

    

    
      
        
           

        

        
          39

          
            

          

        

        
           

        

      

    

    

    (a)           Neither
the Stockholders nor the Company shall take any action (or fail to take any
action) that would prohibit the Stockholders from making an Election with
respect to the sale of the Shares pursuant to this Agreement.

    

    (b)           Purchaser
and each Stockholder shall duly and timely make a joint election pursuant to
Section 338(h)(10) of the Code, and Treasury Regulation Section 1.338(h)(10)-1,
and any comparable election under applicable state or local Tax law
(collectively, the “Elections”) with
respect to the sale of the Shares pursuant to this Agreement.  At the
Closing Date, with respect to the federal Election, Purchaser and each
Stockholder shall mutually prepare, execute and file a Form 8023 (with all
attachments) and Forms 8883 (with respect to that part of the Purchase Price
paid at the Closing).  Purchaser and each Stockholder shall each duly
and timely file (or cause to be filed) the respective supplemental Forms 8883 in
connection with such sale as and when required and shall promptly furnish a copy
of such Forms 8883 to the other promptly after filing.  In addition,
Purchaser and each Stockholder shall, as promptly as practicable following the
Closing Date, cooperate with each other to take all actions necessary and
appropriate (including filing such additional forms, returns, elections,
schedules and other documents as may be required) to effect and preserve timely
Elections in accordance with the provisions of Code Section 338(h)(10) and
Treasury Regulations Section 1.338(h)(10)-1 and any comparable provision of
applicable Law for such sale.

    

    (c)           In
connection with the Elections, Purchaser and the Executives (on behalf of all of
the Stockholders) shall mutually determine, as promptly as reasonably
practicable following the Closing, the Aggregate Deemed Sales Price and Adjusted
Grossed-Up Basis (in each case, as defined under the applicable Treasury
Regulations), or other amounts required under applicable Law with respect to the
sale of the Shares pursuant to this Agreement.  After thorough
analysis and arms’ length negotiations between the applicable Parties, such
Parties agree that the Aggregate Deemed Sales Price and Adjusted Grossed-Up
Basis (and any other amount required to be determined under applicable Law) (in
each case as defined under the applicable Treasury Regulations or applicable
Law) shall be allocated among the assets of the Company as set forth in Appendix
3.

    

    (d)           The
Parties agree that that the Purchase Price is for payments from the sale of
stock of a corporation, subject to the effect of the Election.  No
amount of the Purchase Price is, or shall be considered to be, payment for the
services of the Stockholders, Executives, or any other Person, and the Purchase
Price is the only amount paid to Stockholders under this Agreement related to
the sale of the Shares.

    

    (e)           Purchaser
and each Stockholder (i) shall be bound by the allocations described in this
Section 5.21 for all purposes, including determining any Taxes, (ii) shall
prepare and file all Tax Returns, including Forms 8883, in a manner consistent
with such allocations, and (iii) shall not take (or permit any Affiliate to
take) any position inconsistent with the Election or such allocation, in any Tax
Return, any proceeding before any Taxing Authority or otherwise.  In
the event the allocation is disputed by any Taxing Authority, the Party
receiving notice of such dispute shall promptly notify and consult with the
other Parties concerning resolution of such dispute, and shall keep the other
Parties apprised of the status of such dispute and the resolution
thereof.

    

    
      
        
           

        

        
          40

          
            

          

        

        
           

        

      

    

    

    SECTION
5.22.  Tax
Matters.

    

    (a)           The
Executives shall prepare or cause to be prepared and file or cause to be filed
on a timely basis all Tax Returns with respect to the Company for taxable
periods ending on or prior to the Closing Date.  Such Tax Returns
shall be true, correct and complete, shall be prepared on a basis consistent
with the similar Tax Returns for the immediately preceding periods and shall not
make, amend, revoke or terminate any election or change any accounting practice
or procedure without Purchaser’s consent.  The Executives shall give a
copy of each such Tax Return to Purchaser with sufficient time for its review
and comment prior to filing.  The Executives shall cause the Company
to timely pay Taxes shown due and owing on such Tax Returns.  The
Executives shall cause the Company to duly and timely pay all Taxes required to
be paid by the Company on or before the Closing Date.

    

    (b)           From
and after the Closing Date, Purchaser shall not file (or permit the Company to
file) any amended Tax Return, carryback claim or other adjustment with respect
to any Tax period of the Company ending on or before the Closing Date, without
the Executives’ consent, which consent shall not
unreasonably be withheld, delayed or conditioned.

    

    (c)           The
Executives shall cause to be prepared and filed (the cost and expense of which
shall be borne by the Stockholders on a pro rata basis) with the applicable
Governmental Authority, as soon as is reasonably practicable, but in any event
within ninety (90) days after the Closing Date: (i) an application of Relief
from Contract Voidability and all Tax Returns for the State of California with
respect to the Company (including without limitation, as a result of the Company
being an S Corporation) for taxable periods ending on or prior to the Closing
Date; (ii) all Tax Returns which were required to be filed on the part of the
Company (including, without limitation, as a result of the Company being an S
Corporation, if applicable) in the State of Connecticut; and (iii) all Tax
Returns which were required to be filed on the part of the Company (including
without limitation, as a result of the Company being an S Corporation, if
applicable) in the State of New Jersey.  Such application and Tax
Returns shall be true, correct and complete, and such Tax Returns shall be
prepared on a basis consistent with the similar Tax Returns for the immediately
preceding periods and shall not make, amend, revoke or terminate any election or
change any accounting practice or procedure without Purchaser’s
consent.  The Executives shall give a copy of such application and Tax
Returns to Purchaser with sufficient time for its review and comment prior to
filing.  The Executives shall cause the Stockholders (on a pro rata
basis) to pay all Taxes shown due and owing by the Company on such Tax Returns
within such ninety (90) day period.

    

    SECTION
5.23.  Release.  In
consideration of the payment of the Purchase Price to the Stockholders,
effective as of the Closing Date, each of the Stockholders hereby releases and
discharges the Company, Purchaser, Purchaser’s Affiliates, and each of their
respective, stockholders, members, managers, officers, directors, employees,
agents and attorneys, from any and all claims, contentions, demands, causes of
action at law or in equity, debts, Liens, agreements, notes, obligations or
Liabilities of any nature, character or description whatsoever, whether known or
unknown, which they or either of them may now or hereafter have against any such
Persons by reason of any matter, event, thing or state of facts occurring,
arising, done, omitted or suffered to be done prior to the Closing
Date.

    

    
      
        
           

        

        
          41

          
            

          

        

        
           

        

      

    

    

    Each of
the Stockholders hereby acknowledges and represents that such Stockholder has
been advised by such Stockholder’s attorney of record, and is familiar with,
Section 1542 of the Civil Code of the State of California, which presently
provides as follows:

    

    “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

    

    Each of
the Stockholders hereby waives and relinquishes any and all rights and benefits
under Section 1542 of the Civil Code of the State of California or any similar
statute of any other state (as applicable) as now worded and as it may from time
to time hereafter be amended.

    

    SECTION
5.24.  Dispute
Assistance.  Each of the Executives agrees that in the event of
any dispute with respect to the business or operations of the Company arising
out of events which occurred prior to the Closing, such Executive shall
cooperate with Purchaser, in the resolution of such dispute, including, without
limitation, making appearances in any litigation which may result therefrom;
provided, however, this
agreement by the Executives to cooperate shall not be deemed an acceptance by
the Executives of any liability arising from such dispute, as to which the other
provisions of this Agreement shall control.

    

    SECTION
5.25.  Amendment to Company’s
Bylaws.  On or before Closing, the Company, the Stockholders
and the Company’s Board of Directors shall have taken all action necessary on
the part of the Company, the Stockholders and the Company’s Board of Directors
to amend the Company’s bylaws to the reasonable satisfaction of
Purchaser.

    

    SECTION
5.26.  Foreign Business
Qualification.  On or before Closing, the Company shall have
taken all action necessary to qualify the Company to conduct business as a
foreign corporation in the State of California.

    

    SECTION
5.27. Assignment of
Domain Names.  On or before Closing, David and the Company
shall have taken all action necessary on the part of David and the Company to
assign all of David’s ownership rights in and to the domain names and URLs
listed in Section 3.19 of the Company’s Disclosure
Schedule to the Company.

    

    SECTION
5.28.Inventions
Assignment Agreement.  Prior to the Closing, the Stockholders
shall, and the Company shall cause each of the Company’s employees, consultants
and independent contractors listed on Appendix 4 attached
hereto to, execute and deliver to the Company an Inventions Assignment
Agreement, in form and substance satisfactory to the Purchaser (the “Inventions Assignment
Agreement”).

    

    ARTICLE
VI

    

    INDEMNIFICATION

    

    SECTION
6.1.  General Indemnification by
the Stockholders.  Each of the Stockholders, severally and not
jointly, shall indemnify, defend and hold harmless Purchaser and its Affiliates
and their respective officers, directors, managers, stockholders, employees,
agents and representatives (each, a “Purchaser Indemnified
Party”) from any and all Losses directly suffered that arise out of or
relate to: (a) any breach of any representation and warranty of such Stockholder
made in Article III-A of this Agreement; (b) any breach of any covenant or
agreement of such Stockholder contained in this Agreement or in any other
Stockholder Document; and/or (c) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incurred in enforcing this indemnity
(provided, that, if there is a disagreement among the Parties as to a Party’s
indemnification obligation, then only to the extent a court of competent
jurisdiction determines such Party is obligated to indemnify the other Party or
Parties).

    

    
      
        
           

        

        
          42

          
            

          

        

        
           

        

      

    

    

    SECTION
6.2.  General Indemnification by
the Company and the Executives and the other Stockholders.  The
Company and each of the Executives, jointly and severally, and Charles and the
Idleman Estate, jointly and not severally, shall indemnify, defend and hold
harmless each Purchaser Indemnified Party from any and all Losses directly
suffered that arise out of or relate to: (a) any breach of any representation,
warranty, covenant or agreement of the Company and/or the Executives contained
in this Agreement or in any other Company Document; (b) any litigation,
arbitration, governmental investigation, suit, action or other proceeding
referred to in the Company’s Disclosure
Schedule; (c) any and all Franchise Taxes allocable to the operation of
the Company for any period through and including the Closing Date; (d) the
termination of any of the Company’s employees, if any, in connection with or
incident to the transactions contemplated hereby, whether such termination is
initiated by the Company or otherwise, including severance payments, WARN Act
liabilities and COBRA costs related to such employees; (e) the termination of
the Company Benefit Plans, if any; (f) the failure on the part of the Company to
maintain any worker’s compensation insurance for the period through and
including the Closing Date; (h) the Broker’s Fees; (i) any debt, liability or
obligation of the Company (other than the Assumed Liabilities), direct or
indirect, fixed, contingent or otherwise, now or as of the Closing known or
unknown, and whether or not then due or payable, which exists at or as of the
Closing or which arises after the Closing but which is based upon or arises from
any act, omission, transaction, circumstance, sale of goods or services,
Contracts to which the Company is or was a party, state of facts or other
condition which occurred or existed on or before the Closing; (j) Foreign
Business Tax Liabilities; and/or (k) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incurred in enforcing this indemnity
(provided, that, if there is a disagreement among the Parties as to a Party’s
indemnification obligation, then such amounts shall be payable only to the
extent incurred following the determination by a court of competent jurisdiction
that such Party is obligated to indemnify the other Party or Parties); provided, however, that the
Executives, jointly and not severally, shall indemnify, defend and hold harmless
each Purchaser Indemnified Party from any and all Losses directly suffered that
arise out of or relate to (y) the Company’s knowing and willful infringement (as
determined by a court of competent jurisdiction) of the Intellectual Property
rights of third parties as such is based on the Knowledge of the Company, and/or
(z) any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including, without limitation, legal fees and
expenses, incurred in enforcing such indemnity (provided, that, if there is a
disagreement among the Parties as to a Party’s indemnification obligation, then
such amounts shall be payable only to the extent incurred following the
determination by a court of competent jurisdiction that such Party is obligated
to indemnify the other Party or Parties);

    

    
      
        
           

        

        
          43

          
            

          

        

        
           

        

      

    

    

    Notwithstanding
anything to the contrary contained in this Agreement, the Company’s obligation
to indemnify the Purchaser Indemnified Parties shall cease immediately after the
Closing.

    

    SECTION
6.3.  Indemnification by
Executives for Taxes.

    

    (a)           The
Executives, jointly and severally, and Charles and the Idleman Estate, jointly
and not severally, shall indemnify, defend
and hold harmless each Purchaser Indemnified Party from and against (i)
any Tax Liability in respect of (A) any period that ends on or before the
Closing Date or (B) with respect to a period that begins on or before and ends
after the Closing Date, the portion of such period, through and including the
Closing Date (each period under (A) or (B), a “Pre-Closing Period”),
(ii) any increased income Tax on any Purchaser Indemnified Party in any Tax
period as a result of the Stockholders’ failure or inability to make a valid
Election, (iii) the California Taxes, the Foreign Business Tax Liabilities and
any Tax Liabilities for failing to file Tax Returns or make valid S Corporation
Elections in the States of California, New Jersey, Connecticut, Massachusetts
and/or Missouri (as applicable); and/or (iv) any and all costs and expenses,
including, without limitation, legal fees and expenses, incurred in enforcing
this indemnity.

    

    (b)           The
indemnities provided for in this Section 6.3 (i) shall apply notwithstanding any
investigation made by Purchaser in connection with the transactions contemplated
by this Agreement, or Purchaser’s receipt or review of, or commenting on, any
Tax Return of the Company, (ii) subject to the terms of Section 6.10(b), shall
be separate and independent of any other indemnity provision contained herein,
and (iii) anything in this Agreement to the contrary notwithstanding shall
survive until three (3) months after the expiration of the applicable statute of
limitations, including extensions or waivers thereof; provided, however, that the
indemnification obligations with respect to California Taxes and the Foreign
Business Tax Liabilities shall survive indefinitely.

    

    (c)           The
Executives shall promptly forward to Purchaser a copy of all written
communications from a Taxing Authority received by any of the Stockholders that
relates to any Tax Liability.  Purchaser shall promptly forward to the
Executives a copy of all written communications from a Taxing Authority received
by it that relates to a Tax Liability for any Pre-Closing Period.  The
failure by Purchaser to give the notice provided in this Section 6.3(c) shall
not release, waive or otherwise affect the Executives’ obligations hereunder
except to the extent the Executives can demonstrate actual loss and prejudice as
a result of such failure.

    

    (d)           (i)         
   The Executives shall have the right, at their option, to
assume control of the defense of the proposed adjustments described in the
notice as set forth in Section 6.3(c) by providing notice to Purchaser within
twenty (20) days of the date of such notice stating that the Executives are
assuming control of such defense and admitting that each portion of the proposed
adjustment is subject to indemnification under this Section 6.3.  If
the Executives timely assume control pursuant to this clause (i), the Executives
shall defend against such proposed adjustment diligently and in good faith,
using counsel selected by the Executives, provided such counsel is reasonably
acceptable to Purchaser.  The Executives shall keep Purchaser apprised
as to the status of the proposed adjustments and any proceedings or resolution
thereof, including the positions taken by the parties, and shall provide
Purchaser with copies of all correspondence and other communications with
respect to such proposed adjustment or the resolution
thereof.  Purchaser may participate in any such proceeding and the
resolution thereof at its own expense.

    

    
      
        
           

        

        
          44

          
            

          

        

        
           

        

      

    

    

    (ii)         
  Notwithstanding anything herein to the contrary, the Executives
shall not take any position or agree to any settlement that could adversely
affect the Tax liability of Purchaser in any period ending after the Closing
Date without Purchaser’s prior written consent, unless the Executives fully
indemnify Purchaser therefrom in a manner satisfactory to
Purchaser.

    

    (iii)           If
the Executives fail to timely assume control as provided above, Purchaser may
(but shall not be required to) contest such proposed adjustment, the expenses
and costs of which shall be borne by the Executives.  In such case,
Purchaser shall keep the Executives informed as to the status of such proceeding
and the resolution thereof.  Purchaser shall not be required to appeal
an adverse decision of an administrative agency or court of competent
jurisdiction with respect thereto.  In such case, the decision shall
be conclusive and binding on the Parties for purposes of this
indemnification.

    

    (iv)           The
Executives’ right to control any defense under this Section 6.3 shall be limited
to the items and amounts in dispute for which the Company and the Executives
would be liable for indemnification under this Section 6.3.  If there
is a proposed adjustment or a period involving proposed adjustments for which
the Executives would not be liable to fully indemnify Purchaser under this
Section 6.3, the Executives and Purchaser shall jointly control the defense of
such items.  In such case, the Executives and Purchaser shall work
together in good faith to defend against the proposed
adjustments.  Each such Party may use counsel selected by it, provided
such counsel is reasonably acceptable to the other applicable
Parties.  The Executives shall bear the costs associated with the
defense against the proposed adjustments to the extent they relate to proposed
adjustments (or portions thereof) for which the Executives would be liable for
indemnification under this Section 6.3.

    

    (v)         
  The Executives (and the other Stockholders) and Purchaser shall
cooperate with each other in the defense against the proposed adjustments,
including providing reasonable access to the Books and Records of the Company
that are relevant to such proposed adjustments and defense.

    

    (e)           To
the extent permitted by applicable Law, the Parties shall elect to treat the
period that includes the Closing Date with respect to any Tax as ending on such
date and shall take such steps as may be necessary therefor.  For
purposes of this indemnification, any Taxes for a period which includes but does
not end on the Closing Date shall be allocated between a Pre-Closing Period and
the balance of the period based on an interim closing of the books as of the
close of the Closing Date, provided, however, that any
property Taxes and any annual exemption amounts shall be allocated based on the
relative number of days in the Pre-Closing Period and the balance of the
period.

    

    SECTION
6.4.  General Indemnification by
Purchaser.  Purchaser shall indemnify, defend and hold harmless
the Company, the Company’s officers, directors, employees, agents and
representatives and the Stockholders from any and all Losses directly suffered
that arise out of or relate to: (a) any breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement; (b) the Assumed
Liabilities; and/or (c) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incurred in enforcing this indemnity
(provided, that, if there is a disagreement among the Parties as to a Party’s
indemnification obligation, then such amounts shall be payable only to the
extent incurred following the determination by a court of competent jurisdiction
that such Party is obligated to indemnify the other Party or
Parties);

    

    
      
        
           

        

        
          45

          
            

          

        

        
           

        

      

    

    

    SECTION
6.5.  Indemnification
Procedures.  If any claim for which a party is obligated under
Section 6.1 or 6.2 hereof to provide indemnification (“Indemnifying Party”)
is asserted by any third party against or sought to be collected from any party
indemnified hereunder (“Indemnified Party”),
such Indemnified Party shall promptly notify the Indemnifying Party in writing
of such claim and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount of such
claim) (such notice to include all relevant correspondence from or with any
Taxing Authority).  The Indemnifying Party shall have thirty (30) days
after receipt of such notice to assume the conduct and control, through counsel
reasonably acceptable to the Indemnified Party and at the expense of the
Indemnifying Party, of the settlement or defense thereof; provided that the
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by the Indemnified Party so long as
the fees and expenses of such counsel are borne by the Indemnified
Party.  The Indemnified Party shall not pay or settle any such claim
during the thirty (30) day period during which the Indemnifying Party is
entitled to assume control.  So long as the Indemnifying Party is
reasonably contesting any such claim in good faith, the Indemnified Party shall
not pay or settle any such claim; provided that the Indemnified Party may pay or
settle any such claim if the Indemnified Party waives its right to
indemnification hereunder in respect of such claim.  If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
after the receipt of the Indemnified Party’s notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof or is not eligible to
assume such defense pursuant to this Section 6.5, the Indemnified Party shall
have the right in good faith to contest, pay or settle the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement; provided, that, unless that
Indemnifying Party did not or was not eligible to assume the conduct and control
of the claim, the Indemnified Party shall not pay or settle any such claim
without the prior consent of the Indemnifying Party, unless the Indemnified
Party waives its right to indemnification hereunder with respect to such
claim.  The Indemnifying Party shall not, except with the prior
consent of the Indemnified Party, enter into any settlement that does not
include as an unconditional term thereof the unconditional release of the
Indemnified Party from all liability and damages with respect to the related
claim.  The Parties acknowledge and agree that the procedures set
forth in this Section 6.5 shall not apply to the indemnification for Taxes as
set forth in Section 6.3.

    

    SECTION
6.6.  Books
and Records.  The Indemnified Party shall make available to the
Indemnifying Party and its attorneys and accountants all Books and Records of
the Indemnified Party relating to such proceedings or litigation, and the
parties hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding (including any necessary powers
of attorney).

    

    
      
        
           

        

        
          46

          
            

          

        

        
           

        

      

    

    

    SECTION
6.7.  Treatment of Indemnification
Payment.  Any payments made pursuant to indemnification
obligations arising under this Agreement shall be treated as an adjustment to
the Purchase Price.

    

    SECTION
6.8.  Insurance.  If
any claims are made by third parties against an Indemnified Party for which an
Indemnifying Party would be liable, and it appears that such claims might also
be covered by the Indemnified Party’s insurance policies, the Indemnified Party
shall make a timely claim under such policies and to the extent that such party
obtains any recovery from such insurance, such recovery shall be offset against
any sums due from an Indemnifying Party (or shall be repaid by the Indemnified
Party to the extent that an Indemnifying Party has already paid any such
amounts).

    

    SECTION
6.9.  Survival and Timing of
Claims for Indemnification.  Subject to the terms of Section
6.3, the representations, warranties, covenants and agreements contained in this
Agreement (other than those covenants and agreements to be performed after the
Closing) shall survive the Closing until the two (2) year anniversary of the
Closing; provided, however, that the
representations and warranties contained in Sections 3.2 (Authority and
Enforceability), 3.3 (Non-Contravention; Third Party Consents), 3.4
(Organization), 3.10(b) (Litigation), 3.10(d) (Title), 3-A.1 (Title to Shares),
3-A.2 (Authority to Execute and Perform Agreements) and 3-A.3 (Enforceability)
shall survive indefinitely; and, the indemnification obligations pursuant to
Section 6.2(f), Section 6.2(h) and Section 6.2(j) shall survive
indefinitely.

    

    SECTION
6.10.  Limitation on Claims for
Indemnification.

    

    (a)           Subject
to the terms and conditions set forth in Section 6.10(b) and Section 6.10(c),
the aggregate amount of all payments made by the Company, the Executives and/or
the Stockholders (as applicable) in satisfaction of claims for indemnification
shall not exceed Four Million Five Hundred Thousand Dollars
($4,500,000).  The Parties acknowledge and agree that Purchaser’s sole
remedy will be the Stock Consideration for: (i) a breach of the representations
and warranties made by the Company and the Stockholders in Article III of this
Agreement other than with respect to the representations and warranties
contained in Sections 3.2 (Authority and Enforceability), 3.10(b) (Litigation),
3.10(d) (Title) and/or 3.11 (Taxes) (such other representations and warranties
being collectively referred to herein as the “Carved Out Company
Representations and Warranties”), and/or (ii) a breach of the
representations and warranties made by the Stockholders in Article III-A of this
Agreement other than with respect to the representations and warranties
contained Sections 3-A.1 (Title to Shares), 3-A.2 (Authority to Execute and
Perform Agreements) and/or 3-A.3 (Enforceability) (such other representations
and warranties being collectively referred to herein as the “Carved Out Stockholder
Representations and Warranties”).  The Parties acknowledge and
agree that subject to the terms and conditions of Section 6.10(b), Section
6.10(c) and Section 6.12, Purchaser shall make any indemnification claims
directly against the Company, the Executives and/or the Stockholders (as
applicable) personally and not against the Stock Consideration with respect to:
(A) the Carved Out Company Representations and Warranties and the Carved Out
Stockholder Representation and Warranties, (B) claims made pursuant clauses (b),
(c), (d), (e), (f), (g), (h), (j) and (k) of Section 6.2, and/or Section 6.3
(Tax Liability) (including with respect to the California Taxes and the Foreign
Business Tax Liabilities), (C) claims made with respect to the Company’s knowing
and willful infringement (as determined by a court of competent jurisdiction) of
the Intellectual Property rights of third parties (as such is based on the
Knowledge of the Company) in excess of the Four Million Five Hundred Thousand
Dollars ($4,500,000) of Stock Consideration, and/or (D) claims for fraud,
willful misrepresentation and/or willful misconduct; provided, however, if the
Company, the Executives and/or the Stockholders (as applicable) fail to satisfy
any such indemnification claims made by Purchaser in a prompt and expeditious
manner, Purchaser may satisfy any such indemnification claims against all or a
portion of the Stock Consideration; provided, further, if the
Company, the Executives and/or the Stockholders (as applicable) are unable to
fully satisfy any such indemnification claims, Purchaser may satisfy any such
shortfall against all or a portion of the Stock Consideration.

    

    
      
        
           

        

        
          47

          
            

          

        

        
           

        

      

    

    

    (b)           Notwithstanding
any provision to the contrary contained in this Agreement, but subject to the
terms and conditions of Section 6.3 and Section 6.9: (i) there shall be no
dollar amount caps, thresholds or other limitations on indemnification claims of
a Purchaser Indemnified Party made pursuant to: (A) clause (a) of Section 6.2
with respect to the representations and warranties contained in Sections 3.2
(Authority and Enforceability), 3.10(b) (Litigation), 3.10(d) (Title) and/or
3.11 (Taxes), (B) clauses (b), (c), (d), (e), (f), (g), (h), (j) and (k) of
Section 6.2, and/or (C) Section 6.3 (Tax Liability) (including with respect to
the California Taxes and the Foreign Business Tax Liabilities); (ii) there shall
be no dollar amount caps, thresholds or other limitations on indemnification
claims of a Purchaser Indemnified Party made pursuant to clause (a) of Section
6.1 with respect to the representations and warranties contained in Sections
3-A.1 (Title to Shares), 3-A.2 (Authority to Execute and Perform Agreements)
and/or 3-A.3 (Enforceability); and (iii) the maximum liability of the Executives
(on a pro rata basis) with respect to any indemnification claim for Losses
pursuant to Section 6.2 with respect to a knowing and willful infringement by
the Company (as determined by a court of competent jurisdiction) of the
Intellectual Property rights of third parties as such is based on the Knowledge
of the Company, shall be the Four Million Five Hundred Thousand Dollars
($4,500,000) of the Stock Consideration and an additional amount of One Million
Five Hundred Thousand Dollars ($1,500,000).

    

    (c)           There
shall be no dollar caps, thresholds or other limitations on indemnification
claims made or other remedies sought by an Indemnified Party in connection with
fraud and/or willful misrepresentation the Company, the Executives and/or the
Stockholders (as applicable) and/or in connection with the willful misconduct of
the Executives.

    

    (d)           Subject
to the terms of Section 6.10(b), the Indemnifying Party shall not be required to
indemnify, defend or hold harmless an Indemnified Party pursuant to this Article
VI until the aggregate amount of all Losses exceeds Fifty Thousand Dollars
($50,000), after which the Indemnifying Party shall be obligated to pay the full
amount of Losses of the Indemnified Party (from the first dollar) regardless of
the dollar amount of the claim.

    

    SECTION
6.11.  Disbursement of Stock
Consideration.  On the second anniversary of the Closing Date,
there shall be released from escrow to the Stockholders (on a pro rata basis)
that number of shares of Stock Consideration equal to the difference between (a)
all of the shares of Stock Consideration and (b) the sum of (i) the dollar
amount of shares of Stock Consideration which were subject to offset by
Purchaser pursuant to the terms of Section 6.12 and (ii) the sum or all Losses
subject to then-pending indemnification claims made under this Agreement. The
number of shares subject to disbursement pursuant to this Section 6.11 shall be
based upon the same value used to determine the number of shares of the Stock
Consideration.

    

    
      
        
           

        

        
          48

          
            

          

        

        
           

        

      

    

    

    SECTION
6.12.  Offset Rights and Order of
Payment.  Subject to the terms of Sections 6.1, 6.2, 6.3 and
6.10, Purchaser shall seek payment for any amounts due with respect to claims of
indemnification under this Article VI solely as follows: (a) first, against the
Stock Consideration, (b) second, against the Earn-out Payments, if any, and (c)
to the extent the amounts owing by the Company, the Executives and/or the
Stockholders to Purchaser exceed the foregoing, Purchaser shall be entitled to
seek payment directly from the Company, the Executives and/or the Stockholders,
as applicable.  The number of shares subject to offset shall be based
upon the same value used to determine the number of shares of the Stock
Consideration. In
the event Purchaser elects to offset against the Purchase Price any claimed
amount which has not been finally determined to be due to it from the Company,
the Executives and/or any of the Stockholders, the offset shall remain in effect
during the pendency of any proceedings to determine the merits of the claim of
Purchaser, or until the parties otherwise agree upon a resolution of such claim,
and upon such final determination or resolution, appropriate adjustments or
payments between the Parties shall be made so as to place each Party in as
nearly as practicable the same position in which it would have been had such
final determination or resolution been in effect at the time such offset was
taken by Purchaser.  Purchaser’s offset rights herein set forth
represent neither a liquidation of damages nor a limitation of
liability.

    

    SECTION
6.13.  Exclusive
Remedies.  Except for fraud, willful misrepresentation or
willful misconduct and remedies that cannot be waived as a matter of law, if the
Closing occurs, this Article VI shall be the exclusive remedy for breaches of
this Agreement (including, any covenant, obligation, representation or warranty
contained in this Agreement or any certificates or other documents delivered
pursuant to this Agreement) or otherwise in respect to the transactions
contemplated hereby.

    

    ARTICLE
VII

    

    CONDITIONS
TO CLOSING

    

    SECTION
7.1.  Conditions to Obligations of
the Stockholders.  The obligation of the Stockholders to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction (or waiver by the Stockholders), at or prior to the Closing, of
each of the following conditions:

    

    (a)         
  Representations, Warranties
and Covenants.  The representations and warranties of Purchaser
contained in this Agreement and in each other document or agreement to be
executed and delivered by Purchaser pursuant to this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date, other than such representations and
warranties as are made as of another specified date, which shall be true and
correct as of such date.  The covenants and agreements contained in
this Agreement to be complied with by Purchaser at or before the Closing shall
have been complied with in all material respects.  The Stockholders
shall have received a certificate from Purchaser signed by an executive officer
thereof with respect to the matters described in this Section
7.1(a).

    

    
      
        
           

        

        
          49

          
            

          

        

        
           

        

      

    

    

    (b)         
  No
Order.  There shall not be in effect any Law or Governmental
Order directing that the transactions contemplated by this Agreement not be
consummated or which has the effect of rendering it unlawful to consummate such
transactions; provided, that, the Company and
the Stockholders shall have used reasonable best efforts to have any such
Governmental Order vacated or lifted and shall have complied with its
obligations under Section 5.4 hereof.

    

    (c)     
      Employment
Agreements.  Purchaser shall have executed and delivered the
Employment Agreements.

    

    (d)     
      Non-compete
Agreements.  Purchaser shall have executed and delivered the
Non-compete Agreements.

    

    (e)     
      Intentionally
Deleted.

    

    (f)            Litigation.  No
action, suit or proceeding shall have instituted before any Governmental
Authority or instituted or threatened by any Governmental Authority expressly
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages in connection therewith.

    

    SECTION
7.2.  Conditions to Obligations of
Purchaser.  The obligation of Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or waiver by Purchaser), at or prior to the Closing, of each of the following
conditions:

    

    (a)       
    Representations, Warranties
and Covenants.  The representations and warranties of the
Company, the Executives and the Stockholders contained in this Agreement and in
each other Company Document and Stockholder Document shall have been true and
correct when made and shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date, other than such representations and warranties as are made
as of another specified date, which shall be true and correct as of such
date.  The covenants and agreements contained in this Agreement to be
complied with by the Company, the Executives and/or the Stockholders, as
applicable, at or before the Closing shall have been complied with in all
material respects.  Purchaser shall have received a certificate from
the Company and the Executives signed by an executive officer the Company and by
each of the Executives with respect to the matters described in this Section
7.2(a).

    

    (b)           No Adverse
Change.  There shall not have occurred between the date hereof
and the Closing Date any Material Adverse Effect in the Business, results of
operations or financial condition of the Company taken as a whole, nor shall
these have occurred any event, development or state of facts or circumstances
(other than a change in general economic conditions) which could reasonably be
expected to result in any of the foregoing.  Purchaser shall have
received a certificate from the Company and the Executives signed by an
executive officer the Company and by each of the Executives with respect to the
matters described in this Section 7.2(b).

    

    
      
        
           

        

        
          50

          
            

          

        

        
           

        

      

    

    

    (c)     
      No
Order.  There shall not be in effect any Law or Governmental
Order directing that the transactions contemplated by this Agreement not be
consummated or which has the effect of rendering it unlawful to consummate such
transactions; provided that Purchaser shall have used reasonable best efforts to
have any such Governmental Order vacated or lifted and shall have complied with
its obligations under Section 5.4 hereof.

    

    (d)     
      Employment
Agreements.  The Executives shall have executed and delivered
the Employment Agreements.

    

    (e)      
     Non-Compete
Agreements.  The Executives shall have executed and delivered
the Non-compete Agreements.

    

    (f)     
       Intentionally
Deleted.

    

    (g)     
      Inventions Assignment
Agreements.  Prior to the Closing, each of the Company’s
employees, consultants and independent contractors listed on Appendix 4 shall have
executed and delivered an Inventions Assignment Agreement.

    

    (h)    
       Litigation.  No
action, suit or proceeding shall have instituted before any Governmental
Authority or instituted or threatened by any Governmental Authority expressly
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages in connection therewith.

    

    (i)         
   Company Benefit
Plans.  The Company shall have terminated all of the Company
Benefit Plans, if any.

    

    (j)         
   Required
Consents.  The Company shall have obtained and/or made all
Required Consents.

    

    (k)        
   Termination of Options and
Stock Option Plan.  The Company shall have terminated all
Options and the Stock Option Plan.

    

    (l)          
  Termination of Stockholders’
Agreement.  The Company and the Executives shall have
terminated the Stockholders’ Agreement.

    

    (m)           Amendment to Company’s
Bylaws.  The Company, the Stockholders and the Company’s Board
of Directors shall have taken all action necessary on the part of the Company,
the Stockholders and the Company’s Board of Directors to amend the Company’s
bylaws to the reasonable satisfaction of Purchaser.

    

    (n)           Foreign
Qualification.  The Company shall have taken all action
necessary to qualify the Company to conduct business as a foreign corporation in
the State of California.

    

    (o)           Assignment of Domain
Names.  David and the Company shall have taken all action
necessary on the part of David and the Company to assign all of David’s
ownership rights in and to the domain names and URLs listed in Section 3.19 of
the Company’s
Disclosure Schedule to the Company.

    

    
      
        
           

        

        
          51

          
            

          

        

        
           

        

      

    

    

    (p)           Certain Agreements and
Instruments.  Purchaser shall have received the agreements,
documents and instruments referred to in Section 2.9 (Duly Endorsed Stock
Certificates, Secretary’s Certificate, resignations, etc.) to be delivered to
Purchaser by the Stockholders and/or the Company at Closing.

    

    ARTICLE
VIII

    

    TERMINATION

    

    SECTION
8.1.  Termination.  This
Agreement may be terminated at any time prior to the Closing:

    

    (a)           by
either the Company and the Stockholders, on the one hand, or Purchaser, on the
other hand,  if the Closing shall not have occurred on or before May
20, 2008 or such
later date mutually agreed upon by the Parties;

    

    (b)           by
either the Company and the Stockholders, on the one hand, or Purchaser, on the
other hand, in the event that any Governmental Authority shall have issued a
final, non-appealable order, decree or ruling (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement;

    

    (c)           by
the written consent of the Company, the Stockholders and Purchaser;
or

    

    (d)           if
either the Company and/or the Stockholders, on the one hand, or Purchaser, on
the other hand, materially defaults in the due and timely performance of any of
their or its warranties, covenants or agreements under this Agreement (as
applicable), the non-defaulting party may on or prior to the Closing Date give
notice of termination of this Agreement, which notice shall specify with
particularity the default or defaults on which the notice is based; provided, however, that with
respect to any default or defaults that are of a nature that can be cured, such
termination shall be effective ten (10) days after such notice is received by
the defaulting party only if such default or defaults shall not have been cured
on or before the effective time for termination.

    

    SECTION
8.2.  Effect
of Termination.  In the event of the termination of this
Agreement in accordance with Section 8.1, this Agreement shall become void and
have no effect, with no liability on the part of any Party or its Affiliates,
directors, officers, employees, stockholders or agents in respect thereof; provided, however, that nothing
herein shall relieve any Party hereto from liability for any breach by such
Party of this Agreement.

    

    
      
        
           

        

        
          52

          
            

          

        

        
           

        

      

    

    

    ARTICLE
IX

    

    GENERAL
PROVISIONS

    

    SECTION
9.1.  Notices.  Any
notice, payment, demand, or communication required or permitted to be given by
any provision of this Agreement shall be in writing and shall be deemed to have
been delivered, given, and received for all purposes (a) if delivered personally
to the Person or to an officer of the Person to whom the same is directed, or
(b) when the same is actually received, if sent by a nationally recognized
courier service (which provides proof of delivery), by registered or certified
mail (postage and charges prepaid), or by facsimile (if such facsimile is
followed by a hard copy of the facsimile communication sent promptly thereafter
by a nationally recognized courier service (which provides proof of delivery) or
registered or certified mail (postage and charges prepaid)), addressed as
follows, or to such other address as such Person may from time to time specify
by due notice:

    

    
      	
               
      

            	
              (a)           if
      to the Company or the Stockholders,
to:

            

    

    

    
      	
               
      

            	
              BookRags,
      Inc.

            

    

    
      	
               
      

            	
              332
      North Pleasant

            

    

    
      	
               
      

            	
              Ridgewood,
      New Jersey  07450

            

    

    
      	
               
      

            	
              Attention:  David
      Lieberman

            

    

    
      	
               
      

            	
              Facsimile
      No.: (253) 550-8788

            

    

    

    
      	
               
      

            	
              with
      a copy to:

            

    

    

    
      	
               
      

            	
              Law
      Office of Mark R. Beatty

            

    

    
      	
               
      

            	
              10900
      N.E. 4th
      Street, Suite 1850

            

    

    
      	
               
      

            	
              Bellevue,
      Washington  98004

            

    

    
      	
               
      

            	
              Attention:  Mark
      R. Beatty, Esq.

            

    

    
      	
               
      

            	
              Facsimile
      No.: (425) 451-0714

            

    

    

    
      	
               
      

            	
              (b)           if
      to Purchaser, to:

            

    

    

    
      	
               
      

            	
              Ambassadors
      Group, Inc.

            

    

    
      	
               
      

            	
              2001
      South Flint

            

    

    
      	
               
      

            	
              Spokane,
      Washington 99224

            

    

    
      	
               
      

            	
              Attention:  Chadwick
      J. Byrd, Chief Financial Officer

            

    

    
      	
               
      

            	
              Facsimile
      No.: (866) 234-3706

            

    

    

    
      	
               
      

            	
              with
      a copy to:

            

    

    

    
      	
               
      

            	
              Loeb
      & Loeb LLP

            

    

    
      	
               
      

            	
              10100
      Santa Monica Boulevard

            

    

    
      	
               
      

            	
              Los
      Angeles,
California  90067

            

    

    
      	
               
      

            	
              Attention:  Gerald
      M. Chizever, Esq.

            

    

    
      	
               
      

            	
              Facsimile
      No.: (310) 282-2200

            

    

    

    
      
        
           

        

        
          53

          
            

          

        

        
           

        

      

    

    

    SECTION
9.2.  Public
Announcements.  No Party shall make, or cause to be made, any
press release or public announcement in respect of this Agreement or the
transactions contemplated hereby or otherwise communicate with any news media
without the prior written consent of the other Parties, which consent shall not
be unreasonably withheld or delayed, and the Parties shall cooperate as to the
timing and contents of any such press release or public announcement; provided, however, that a Party
may, without the prior consent of the other Parties, make such press release,
public announcement or filing as may be required by Law, rule or
regulation.

    

    SECTION
9.3.  Headings.  The
descriptive headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.

    

    SECTION
9.4.  Severability.  If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any Law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

    

    SECTION
9.5.  Appointment of Executives as
Stockholders’ Representatives.  By the execution and delivery
of this Agreement, each of the Stockholders hereby irrevocably constitutes and
appoints each of the Executives (and by their execution of this Agreement, each
of the Executives hereby accepts his appointment) as the true and lawful agent
and attorney-in-fact of the Stockholders to act in the name, place and stead of
the Stockholders in connection with the transactions contemplated by this
Agreement, in accordance with the terms and provisions of this Agreement, and to
act on behalf of the Stockholders in any mediation, litigation
or arbitration involving this Agreement or any other document to be executed and
delivered in connection with this Agreement, to do or refrain from doing all
such further acts and things, and to execute all such documents as the
Executives shall deem necessary or appropriate in connection with the
transactions contemplated by this Agreement or any other document to be executed
and delivered in connection with this Agreement, including without limitation,
the power:

    

    (a)      
     to act for the Stockholders with regard to matters
pertaining to the determination of the Earn-out Payments, the post-closing
adjustment, and any related adjustments to the Purchase Price;

    

    (b)       
    to act for the Stockholders in connection with the
issuance of press releases, if any;

    

    (c)       
    to act for the Stockholders and the Company in
connection with the filing of the Company’s Tax Returns and/or the defense of
any proposed Tax adjustments for a Pre-Closing Period;

    

    
      
        
           

        

        
          54

          
            

          

        

        
           

        

      

    

    

    (d)      
     to act for the Stockholders with regard to matters
pertaining to indemnification referred to in this Agreement, including the power
to compromise any indemnity claim on behalf of or involving the Stockholders and
to transact and settle matters of litigation or claims against the
Stockholders;

    

    (e)       
    to execute and deliver all waivers, ancillary
agreements, certificates and documents that the Executives deem necessary or
appropriate in connection with the consummation of the transactions contemplated
by this Agreement;

    

    (f)        
    to receive funds for the payment of expenses of the
Stockholders and apply such funds in payment for such expenses;

    

    (g)       
    to do or refrain from doing any further act or deed on
behalf of the Stockholders that the Executives deem necessary or appropriate in
their sole discretion relating to the subject matter of this Agreement as fully
and completely as the Stockholders could do if personally present;

    

    (h)        
   to deliver and receive notices and service of process in
connection with any claims under this Agreement; and

    

    (i)         
   to engage and employ agents and representatives (including
accountants, legal counsel and other professionals) and to incur such other
expenses as the Executives deem necessary or prudent in connection with the
administration of the foregoing.

    

    Each
Stockholder agrees that the powers granted to the Executives pursuant to this
Section 9.5 are coupled with an interest, and are therefore irrevocable without
the consent of the Executives and shall survive the death, incapacity or
bankruptcy of any Stockholder.  In the event of any dispute between
the Executives, the decision of David shall be conclusive and binding upon Jim
and all of the other Stockholders. Purchaser, the Company (after the Closing)
and any other Person may conclusively and absolutely rely, without inquiry, upon
any action of the Executives in all matters referred to herein. The Stockholders
hereby confirm all that the Executives shall do or cause to be done by virtue of
their appointment as the representatives of the Stockholders.  The
Executives shall act for the Stockholders on all of the matters set forth in
this Agreement in the manner the Executives believe to be in the best interest
of the Stockholders and consistent with the obligations under this Agreement,
but the Executives shall not be responsible to the Stockholders for any loss or
damages the Stockholders may suffer by the performance of their duties under
this Agreement, other than loss or damage arising from willful violation of the
law or gross negligence in the performance of their duties under this
Agreement.

    

    SECTION
9.6.  Entire
Agreement.  This Agreement constitutes the entire agreement of
the Parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, between the Parties with
respect to the subject matter hereof, including but not limited to, that certain
Term Sheet dated as of March 7, 2008, by and between the Company and
Purchaser.

    

    SECTION
9.7.  Assignment.  Except
with respect to an assignment by Purchaser to an Affiliate of Purchaser (which
shall in no event release Purchaser from its obligations hereunder), this
Agreement may not be assigned by any Party, by operation of law or otherwise,
without the prior written consent of the other Parties (which consent may be
granted or withheld in the sole discretion of such other Parties).

    

    
      
        
           

        

        
          55

          
            

          

        

        
           

        

      

    

    

    SECTION
9.8.  No
Third Party Beneficiaries.  This Agreement shall be binding
upon and inure solely to the benefit of the Parties and their heirs and
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.

    

    SECTION
9.9.  Amendment.  This
Agreement may not be amended except by an instrument in writing signed by the
Parties.

    

    SECTION
9.10.  Waiver.  The
Company and the Stockholders, on the one hand, and Purchaser, on the other hand,
may (a) extend the time for the performance of any of the obligations or other
acts of the other, (b) waive any inaccuracies in the representations and
warranties of the other contained herein or in any document delivered by the
other pursuant hereto, or (c) waive compliance with any of the agreements or
conditions of the other contained herein.  Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the Parties.  Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement.  The failure of any Party to assert any of its rights
hereunder shall not constitute a waiver of any of such rights.

    

    SECTION
9.11.  Governing Law;
Venue.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington, without reference to the
choice of law doctrine of the State of Washington.  All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any federal or state court sitting in the State of Washington, and
the Parties hereby irrevocably submit to the jurisdiction of such courts in any
such action or proceeding and irrevocably waive the defense of an inconvenient
forum.  The Parties hereby irrevocably waive their respective rights
to trial by jury of any cause of action, claim, counterclaim or cross-complaint
in any action or other proceeding brought by a Party against another Party with
respect to any matter arising out of, or in any way connected with or related
to, this Agreement or any portion thereof, whether based upon contractual,
statutory, tortious or other theories of liability.  Each Party
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to such Party at its address
specified in Section 9.1 hereof.  Nothing in this Section 9.11 shall
affect the right of any Party to serve legal process in any other manner
permitted by Law.  The consents to jurisdiction set forth in this
Section 9.11 shall not constitute general consents to service of process in the
State of Washington and shall have no effect for any purpose except as provided
in this Section 9.11 and shall not be deemed to confer rights on any person
other than the Parties.

    

    SECTION
9.12.  Interpretation.  There
shall be no presumption against any Party on the ground that such Party was
responsible for drafting this Agreement or any part hereof.

    

    SECTION
9.13.  Counterparts.  This
Agreement may be executed in one or more counterparts, and by the Parties in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to
this Agreement, or any other document or agreement to be executed in connection
herewith by facsimile shall be as effective as delivery of a manually executed
counterpart of any such agreement or document.

    

    
      
        
           

        

        
          56

          
            

          

        

        
           

        

      

    

    

    SECTION
9.14.  Mediation.  The
Parties involved in any dispute, Loss or claim with respect to this Agreement,
shall, prior to initiating any litigation, attempt in good faith to settle such
dispute, for a period of thirty (30) days following the date on which a Party
notifies the other Party or Parties of such dispute, loss or claim, through
consultation and negotiation, in good faith and a spirit of mutual
cooperation.  Each Party to the mediation shall send a representative
with full and unlimited power to negotiate a settlement to such dispute, loss or
claim.  If the Parties’ attempts to mediate the dispute fail, then the
dispute shall be mediated by a mutually acceptable mediator to be chosen by the
Parties within ten (10) days after written notice by one Party to the other
Party or Parties demanding mediation.  No Party to a dispute shall
unreasonably withhold consent to the selection of a mediator, and the
Stockholders, on the one hand, and the Purchaser, on the other hand, will share
the costs of the mediation equally and will, if required by such mediator, pay
the costs of the mediator in advance. The Parties agree that the decision of any
mediator shall not be binding.

    

    [SIGNATURE
PAGE FOLLOWS]

    

    
      
        
           

        

        
          57

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the Parties have caused this Stock Purchase Agreement to be
executed as of the date first written above.

     

    
      	 
      	
              COMPANY:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              BOOKRAGS,
      INC.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      David Lieberman  	 
      
	 
      	
              Name:

            	David
      Lieberman  	 
      
	 
      	
              Title:

            	President 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              STOCKHOLDERS:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	/s/
      David Lieberman  	 
      
	 
      	
              DAVID
      LIEBERMAN, Individually

            	 
      
	 
      	 
      	 
      	 
      
	 
      	/s/
      James Yagmin  	 
      
	 
      	
              JAMES
      YAGMIN, Individually

            	 
      
	 
      	 
      	 
      	 
      
	 
      	/s/
      Charles Lieberman  	 
      
	 
      	
              CHARLES
      LIEBERMAN, Individually

            	 
      
	 
      	 
      	 
      	 
      
	 
      	/s/
      Sue A. Idleman  	 
      
	 
      	
              SUE
      A. IDLEMAN, in her capacity as Executrix

            	 
      
	 
      	
              of
      the ESTATE OF LEE H. IDLEMAN

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              PURCHASER:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              AMBASSADORS
      GROUP, INC.

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      Jeffrey D. Thomas  	 
      
	 
      	
              Name:

            	Jeffrey
      D. Thomas    	 
      
	 
      	
              Title:

            	President
      and CEO  	 
      

    

     

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    

    Form
of Employment Agreement – Executives

    

    EXECUTION
COPY

    

    

    EMPLOYMENT
AGREEMENT

    

    BookRags,
Inc., a Delaware Corporation, (the “Company”), and
________, a natural person (the “Executive”)
(collectively, the “Parties”), make this
EMPLOYMENT AGREEMENT (“Agreement”) as of May
___, 2008 (“Commencement
Date”).  The Company and the Executive are individually
referred to herein as a "Party” and collectively as the “Parties”.

    

    RECITALS

    

    WHEREAS,
this Agreement is entered into concurrently with that certain Stock Purchase
Agreement, dated May___________, 2008 (“SPA”), by and among
the Company, Executive, David Lieberman, Charles Lieberman, Sue A. Idleman, in
her capacity as Executrix of the Estate of Lee H. Idleman, and Ambassadors
Group, Inc. (“AGI”), pursuant to
which AGI shall acquire the business of the Company  through the
purchase of all of the issued and outstanding capital stock of the
Company;

    

    WHEREAS,
the Executive is an owner, founder and officer of the Company and, upon the
consummation of the transactions contemplated by the SPA, the Executive will
receive certain benefits as a result of the purchase of the Company by
AGI;

    

    WHEREAS,
pursuant to the SPA, the Company hereby employs the Executive as Vice-President
of Technology in
accordance with the terms of this Agreement;

    

    WHEREAS,
the Executive is bound by the Noncompetition, Nonsolicitation and Confidential
Information Agreement (the “Non-Compete
Agreement”), which is executed concurrently with the SPA;
and

    

    WHEREAS,
the Company and the Executive wish to enter into this Agreement to outline the
terms and conditions of the Executive’s employment with Company.

    

    AGREEMENT

    

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, the Company and the Executive agree as follows:

    

    1.         
    Employment.

    

    (a)           Term.  The
Term of this Agreement shall begin as of the Commencement Date and shall
continue for period of  (3) years
(“Initial
Term”) and shall be automatically extended for successive one (1) year
periods (“Renewal
Periods”) unless either Party notifies the other Party at least ninety
(90) days prior to the end of the Initial Term or any Renewal Period then in
effect or unless sooner terminated as hereinafter provided (“Termination
Date”).  The Initial Term and any Renewal Periods are
collectively referred to as the “Term.”

    

    (b)           Duties and
Responsibilities.  The Executive will report to the Chief
Executive Officer of the Company (the “CEO”).  The
Executive shall be employed as Vice-President of Technology of the Company and
shall perform and discharge well and faithfully the duties which may be assigned
to him from time to time by the CEO and the Company’s Board of Directors (the
“Board”) or an
appointee of the Board in connection with the conduct of the Company’s business
as well as those duties which are normally and customarily vested in the office
of Vice-President of Technology of a
corporation.  The Executive shall perform his duties at such place(s)
as designated by the Company and may be required to travel in order to fulfill
such duties, as determined by the Company.

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    2.        
     Compensation.

    

    Base
Salary.  The Executive shall be paid a base salary (“Base Salary”) during
the Term at the annual rate of one hundred thousand dollars
($100,000.00).  The Executive’s base salary may be increased, but in
no event may Executive’s base salary be reduced during the Term.  The
Executive shall receive a guaranteed minimum five percent (5%) increase in his
then current Base Salary, on an annual basis.  The Executive’s Base
Salary shall be payable in accordance with the Company’s normal payroll
practices established by the Company with respect to its senior executive
employees, as in effect from time to time, and such payment shall be subject to
applicable withholdings.  On the third anniversary of this Agreement,
the Company agrees to evaluate the Executive’s Base Salary in light of then
market conditions  and, if below market, to increase the Base Salary
commensurate with the marketplace (any such increase to be  determined
by the Board) and shall be increased thereafter as determined by the
compensation policies of the Company applicable to its senior executive
employees.

    

    3.           
  Other
Employment Benefits.

    

    (a)           Business
Expenses.  Upon submission of itemized expense statements, in
the manner as shall be specified by the Company, the Executive shall be entitled
to reimbursement for reasonable business and travel expenses duly incurred by
the Executive in the performance of his duties under this Agreement, pursuant to
the Company policy and any relevant policies established by the
Board.

    

    (b)           Savings and Retirement
Plans.  During the Term, the Executive shall be entitled to
participate in any saving and retirement plans, policies and programs that are
available generally to similarly situated executives of AGI and such benefits
shall be provided by AGI.  However, nothing in this Agreement shall
preclude the Company or AGI from amending any such plan or program from time to
time.

    

    (c)           Health & Welfare Benefit
Plans.  During the Term, the Executive shall be entitled to
participate in health and welfare benefit plans, policies and programs
(including, if applicable, medical, dental, disability, employee life, group
life and accidental death insurance plans and programs) to the same extent as
similarly situated executives of AGI and such benefits shall be provided by
AGI.  However, nothing in this Agreement shall preclude the Company or
AGI from amending any employee benefit plan or program from time to
time.

    

    (d)           Vacation.  The
Executive shall be entitled to twenty (20) business days of vacation each year
during the Term, during which time Executive’s compensation shall be paid in
full.  Executive shall also be entitled to an additional ten (10)
business days of previously accrued vacation during the first calendar year of
the Term.  Executive’s vacation allowance shall be applied and
extended under the same terms and conditions as are generally applicable to
other senior executive employees of Company.  Executive will also
receive other leave benefits, consistent with the vacation and leave benefit
policies established by the Company for its senior executive
employees.

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    4.          
   Termination of
Employment.

    

    (a)           Death or
Disability.  If the Executive dies during the Term, the
Executive’s employment shall be deemed to terminate the date of the Executive’s
death.  If the Executive is incapacitated or disabled by accident,
sickness or otherwise so as to render him mentally or physically incapable of
fully performing the essential functions of his position with reasonable
accommodation for a period of more than three (3) months or more during any
twelve (12) month period, the Company, in its reasonable discretion, may
terminate the Executive’s employment due to “Disability” by providing written
notice of such termination to the Executive.  A termination of the
Executive’s employment, and the Term, by either the Executive or the Company,
for Disability shall be communicated to the other Party by written notice, and
shall be effective the thirtieth (30th) day
after receipt of such notice of Disability by the other Party.

    

    (b)           For
Cause.  Notwithstanding anything herein to the contrary, the
Company may terminate the Executive’s employment hereunder “for Cause” for any
one of the following reasons: (i) the Executive’s conviction, pleading guilty or
no contest with respect to a felony or a misdemeanor involving dishonesty or
moral turpitude or where imprisonment is imposed, (ii) the Executive’s
commission of any act of theft, fraud, dishonesty, or falsification of any
employment or Company records, (iii) the Executive’s engagement in misconduct
that is materially detrimental to the Company’s reputation or business, as
determined by the Board in its sole discretion, (iv) upon written notice to the
Executive of the Executive’s insubordination or the Executive’s refusal without
proper legal reason to substantially perform the duties and responsibilities
required of the Executive, other than by reason of mental or physical illness or
incapacity, and the Executive’s failure to cure such insubordination or to
perform such duties and responsibilities, as determined by the Board in its sole
discretion, within five (5) days of the date of such notice, or (v) upon written
notice to the Executive of any breach by the Executive of any material term of
this Agreement, the Non-Compete Agreement and/or of the Executive’s fiduciary
duties to the Company and the Executive’s failure to cure such breach within ten
(10) days of the date of such notice (to the extent curable), as determined by
the Board in its sole discretion.

    

    (c)           Without
Cause.  The Company may also terminate the Executive’s
employment hereunder without cause at any time for any reason or for no reason
immediately by written notice to the Executive.   The Date of
Termination shall be the date on which the Executive’s notice becomes effective
in accordance Paragraph 9(h), below.

    

    (d)           Voluntary
Termination.  The Executive may terminate the Term and his
employment hereunder without Cause or without Good Reason at any time by
providing the Company with ninety (90) days written notice of his
resignation.  Any termination of the employment of the Executive
hereunder by resignation (or other voluntary action of the Executive), or by the
Executive’s or Company’s decision not to extend the Term for any of the Renewal
Periods (as outlined in Paragraph 1(a)), shall be deemed to be a “Voluntary
Termination.”

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    (e)           Termination by Executive for
Good Reason.  Executive may terminate the Employment Period
upon thirty (30) days prior written notice to Company of any event constituting
“Good Reason” as defined herein.  The term “Good Reason” means
the occurrence of any of the following, without the prior written consent of the
Executive:  (i) assignment of the Executive to duties materially
inconsistent with the Executive’s position as described in Paragraph 1 hereof,
or any significant diminution in the Executive’s duties or responsibilities or
change of Executive’s job title; or (ii) any material breach of this Agreement
by the Company and the Company fails to cure such conduct or event within thirty
(30) days of receipt of notice from the Executive; or (iii) a material reduction
in Executive’s compensation, executive perquisites or other employee benefits;
or (iv) fraud on the part of the Company.

    

    (f)           Payments Upon
Termination.  If the Term is terminated by the Company for or
without Cause, by Voluntary Termination, for Good Reason by the Executive, by
the Executive’s Death, or by the Company or the Executive due to the Executive’s
Disability, the Company shall promptly pay or provide to the Executive, or his
estate, (i) the Executive’s earned but unpaid Base Salary accrued through such
date of termination, (ii) accrued, but unpaid, vacation time through such date
of termination, (iii) reimbursement of any business expenses incurred by the
Executive prior to the date of termination that are reimbursable under Paragraph
3(a) above, (iv) any vested payable and unpaid deferred compensation; and (v)
any vested benefits and other amounts due to the Executive under any plan,
program, policy of, or other agreement with, the Company. Subsections (i) to (iv),
above, are referred to together as the “Accrued
Obligations”.

    

    If the
Term is terminated by the Company without Cause, for Good Reason by Executive,
by Executive’ Death, or by Company or Executive as a result of Executive’s
Disability, in addition to the Accrued Obligations, the Executive, or his
estate, shall receive (i) an amount equal to the projected cost of Executive’s
medical insurance under COBRA for the eighteen (18) month period immediately
following the termination; ; (ii) all of Executive’s unvested stock options and
stock grants, fully vested upon the date that the termination becomes effective.
The Executive hereby acknowledges that the benefits provided in this Section
4(f) constitute the sole and exclusive remedy upon termination of his employment pursuant to
this Paragraph 4(f).

    

    If the
Term is terminated by the Company without Cause, for Good Reason by Executive,
by Executive’ Death, or by Company or Executive as a result of Executive’s
Disability, in addition to the Accrued Obligations, and only in exchange for the
execution and delivery of a general release of all claims against the Company
and its related individuals and entities and their personnel, the Executive, or
his estate, shall receive: (i) (A) if Executive’s employment terminates during
the Initial Term, the unpaid Base Salary due for remainder of the Initial Term
which remains unpaid at the date of termination of Executive’s employment, or
(B) if Executive’s employment terminates during any Renewal Period, the unpaid
Base Salary due for the remainder of the Renewal Period then in effect which
remains unpaid at the date of termination of Executive’s employment; and (ii) an
amount equal to the projected costs of Executive’s medical insurance under COBRA
for a period of ninety (90) days (collectively, “Severance”).  The
Executive hereby acknowledges that Severance is the sole and exclusive remedy
upon termination of his employment pursuant to
this Paragraph 4(f).

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    5.         
    The Executive’s Duties Upon
Termination

    

    (a)           Cooperation.  After
notice of termination, the Executive shall , at the Company’s expense and
subject to the Executive’s professional availability, cooperate with the
Company, as reasonably requested by the Company, to effect a transition of the
Executive’s responsibilities and to ensure that the Company is aware of all
matters being handled by the Executive.

    

    (b)           Return of Company
Property.  Promptly after the termination of the Executive’s
employment under this Agreement for any reason, the Executive will return all
Company property in the Executive’s possession to the Company.

    

    (c)           Resignation of
Office.  On the termination of the Executive’s employment for
whatever reason, the Executive agrees that the Executive shall resign all
offices held by the Executive in the Company or any subsidiary of the
Company.

    

    6.         
    Non-Compete
Agreement.  The Non-Compete Agreement entered into by the
Executive in conjunction with the SPA is incorporated herein by this reference
as if set forth in full.  The Executive hereby acknowledges and
reaffirms his obligations contained in the Non-Compete Agreement, including
those obligations which survive termination of employment.

    

    7.         
    Assignment and
Transfer.  The Executive’s rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be
void.  This Agreement shall be assignable by the Company without the
consent of the Executive and inure to the benefit of, and be binding upon and
enforceable by, any purchaser of substantially all of Company’s assets, any
corporate successor to the Company or any assignee thereof.

    

    8.         
    No Inconsistent
Obligations.  This Agreement and the Non-Compete Agreement
shall represent the sole agreement with the Company as to the subject matter
herein, and the Executive has no obligations or encumbrances, legal or
otherwise, inconsistent with the terms of this Agreement or the Non-Compete
Agreement or with the Executive undertaking employment with the Company or
fulfilling the duties contemplated by this Agreement.  The Executive
represents and warrants that the Executive has the right and power to enter into
this Agreement, to perform the Executive’s obligations hereunder and by entering
into this Agreement and performing the Executive’s obligations hereunder the
Executive is not in conflict with any agreement with any third
party.  The Company represents and warrants that the Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    9.        
     Miscellaneous.

    

    (a)        
   Survival.  The
provisions of this Agreement, including, without limitation Paragraph 6
(Non-Compete Agreement) and Paragraph 9(c) (Arbitration) contained herein shall
survive the termination of employment.

    

    (b)        
   Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the state in which Executive performs his services
for the Company.

    

    (c)        
   Arbitration
.  Except for claims under the National Labor Relations Act,
claims for workers compensation, claims for unemployment insurance, claims
before governmental administrative bodies, or as otherwise required by
applicable law, the Executive and the Company agree that any dispute regarding
this Agreement or the Executive’s relationship with Company will be submitted to
binding arbitration before a neutral arbitrator subject to rules Employment
Arbitration Rules and Mediation Procedures of the American Arbitration
Association.  Such disputes include, without limitation, any claims
under Title VII of the Civil Rights Act, California’s Fair Employment and
Housing Act, the Family Medical Leave Act, the California Family Rights Act, and
related Washington state provisions, including Chapter 49.60 of the Revised Code
of Washington.  The Arbitrator may award all damages authorized by
law, including where authorized by statute or contract, reasonable attorneys’
fees.  The Parties agree to file any demand for arbitration within the
time limit established by the applicable statute of limitations.  The
award of the Arbitrator shall be in writing and shall set forth the basis for
his or her decision.  Fees of the Arbitrator shall be paid by the
Company as required by applicable law.  The Parties agree to keep the
fact of arbitration, and any decision thereto, confidential and shall execute
all documents necessary to maintain such confidentiality, including execution of
a protective order. THE PARTIES UNDERSTAND AND AGREE THAT THEY ARE WAIVING THEIR
RIGHTS TO BRING SUCH CLAIMS TO COURT, INCLUDING THE RIGHT TO A TRIAL IN A COURT
OF LAW.

    

    (d)           Amendment. This
Agreement may be amended only by a writing signed by the Executive and by a duly
authorized representative of the Company (other than the
Executive).

    

    (e)        
   Severability. If any
term, provision, covenant or condition of this Agreement is held by a court of
competent jurisdiction, or arbitrator(s), as applicable, to exceed the
limitations permitted by applicable law, as determined by such court or
arbitrator(s) in such action, then the provisions will be deemed reformed or
blue penciled to the maximum limitations permitted by applicable law and the
Parties hereby expressly acknowledge their desire that, in such event, such
action be taken.  Notwithstanding the foregoing, the Company and
Executive further agree that if any term, provision, covenant or condition of
this Agreement is held by a court of competent jurisdiction, or arbitrator(s) to
be invalid, void or unenforceable, the remainder of the provisions shall remain
in full force and effect and in no way shall be affected, impaired or
invalidated.

    

    (f)         
   Construction. The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this Agreement. The
language in all parts of this Agreement shall be in all cases construed
according to its fair meaning and not strictly for or against the Company or the
Executive.

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    (g)       
    Nonwaiver. No failure
or neglect of either Party hereto in any instance to exercise any right, power
or privilege hereunder or under law shall constitute a waiver of any other
right, power or privilege or of the same right, power or privilege in any other
instance. All waivers by either Party hereto must be contained in a written
instrument signed by the Party to be charged and, in the case of the Company, by
an officer of the Company (other than the Executive) or other person duly
authorized by the Company.

    

    (h)       
    Notices. All notices,
requests, demands, claims and other communications hereunder will be in
writing.  Any notice, request, demand, claim or other communication
hereunder will be deemed duly given if and when sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:

    If to the
Executive:

    

    

    [Address]

    Attn:

    Tel:

    Fax:

    

    If to
Company:

    

    

    c/o
Ambassadors Group, Inc.

    2001
South Flint

    Spokane,
Washington 99224

    Attn:

    Tel:

    Fax:

    

    Any Party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means,
including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail or by facsimile (if such facsimile is
followed by a hard copy of the email or facsimile communication sent promptly
thereafter by a nationally recognized courier service (which provides proof of
delivery) or registered or certified mail (postage and charges
prepaid)).  Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set
forth.

    

    (i)          
  Assistance
in Litigation.  The Executive shall, during employment furnish
such information and proper assistance to the Company as may reasonably be
required by the Company in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party.  Following
termination of employment, Executive may, if permitted by Executive’s then
employer, or subject to Executive’s then professional availability, furnish such
information and assistance to the Company in connection with any litigation in
which Company or any of its subsidiaries or affiliates is, or may become, a
party; provided, however, that the
Company pays Executive such compensation, fees and expenses as may be mutually
agreed upon by Executive and the Company.

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    (j)         
   Executive
Acknowledgment. The Executive hereby acknowledges that he has had the
option to consult legal counsel in regard to this Agreement, that he has read
and understands this Agreement, that he is fully aware of its legal effect, and
the he has entered into it freely and voluntarily and based on his own judgment
and not on any representations or promises other than those contained in this
Agreement.  Further, the Executive hereby agrees to abide by all
federal, state, and local laws, ordinances and regulations.

    

    (k)      
     Counterparts. This
Agreement may be executed in one or more counterparts, and by the Parties in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to
this Agreement, or any other document or agreement to be executed in connection
herewith by facsimile shall be as effective as delivery of a manually executed
counterpart of any such agreement or document.

    

    (l)          
  Entire
Agreement. This Agreement, the SPA (including without limitation the
schedules and attachments to the SPA executed and delivered in connection
therewith) and the Non-Compete Agreement contain the entire agreement and
understanding between the Parties and supersedes any prior or contemporaneous
written or oral agreements, representations and warranties between them
respecting the subject matter hereof

    

    

    [SIGNATURE PAGE
FOLLOWS].

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date set forth above.

    

    
      	 
      	 
      	 
      	
              The
      Company:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              BookRags,
      Inc.

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	 
      	 
      	
              By:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Title:

            	 
      	 
      

    

    

    
      	 
      	 
      	 
      	
              Executive:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	 
      	 
      	
              Signature:

            	 
      	 
      
	 
      	 
      	 
      	 
      	
               

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              (Address)

            	 
      

    

     

    EMPLOYMENT AGREEMENT SIGNATURE PAGE

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

    

    Form
of Non-compete Agreement – Executives

    

    EXECUTION
COPY

    

    NONCOMPETITION,
NONSOLICITATION

    AND
CONFIDENTIAL INFORMATION AGREEMENT

    

    THIS NONCOMPETITION, NONSOLICITATION
AND CONFIDENTIAL INFORMATION AGREEMENT (this “Agreement”) is
entered into on May ______, 2008 between BookRags, Inc. (the “Company”) and
________________ (the “Executive”).

    

    RECITALS

    

    WHEREAS,
this Agreement is entered into concurrently with the Stock Purchase Agreement,
dated May_____, 2008 (“SPA”), by and among
the Company, Executive, David Lieberman, Charles Lieberman, Sue A. Idelman, in
her capacity as the Executrix of the Estate of Lee. H. Idleman, and Ambassadors
Group, Inc. (“AGI”), pursuant to
which AGI shall acquire the business of the Company through the purchase of all
of the issued and outstanding capital stock of the Company.  The
Executive is an owner, founder and officer of the Company and, pursuant to the
SPA, the Executive will receive certain benefits as a result of the purchase of
the Company by AGI.  The Company further wishes to employ the
Executive in order to promote the business of the Company and will therefore
enter into a three (3) year employment agreement with the Executive so as to
promote the business of the Company.  The Company and AGI, as well as
all of their past, current and future parents, subsidiaries, divisions and
affiliates, are collectively referred to herein as the “Companies”.

    

    WHEREAS,
the Companies have Confidential Information (as defined below) and Trade Secrets
(as defined below) which they wish to safeguard and keep
confidential.

    

    WHEREAS,
the Companies have strong relationships with business partners, and are using,
and will use, various marketing efforts to develop valuable relationships with
these business partners and others, all of which have been and are being
accomplished through the expenditure of extensive time, effort and resources and
which they wish to maintain.

    

    WHEREAS,
the Companies have hired, trained and developed an unusual and extraordinary
workforce through the expenditure of extensive time, effort and resources and
which they wish to retain.

    

    WHEREAS,
the Executive acknowledges that entering into this Agreement is a material
condition to execution of, and consummation of the transactions contemplated by,
the SPA.

    

    AGREEMENT

    

    NOW,
THEREFORE, in consideration of the Executive’s employment by the Company, as
well as the resultant benefits to the Executive from the purchase of the Company
by AGI, the Executive and the Company agree as follows:

    

    1.         
    Noncompetition.  The
Executive acknowledges and agrees that he has received and shall continue to
receive valuable Confidential Information and Trade Secrets of the Companies and
exposure to key suppliers and service providers of the
Companies.  Accordingly, because of the Executive’s access to, and
knowledge of, the Companies’ Confidential Information and Trade Secrets and key
suppliers, service providers and customers, as well as the Executive’s position
within the Companies, the Executive would be in a unique position to divert
business from the Companies and to commit irreparable damage to the Companies
were the Executive to be allowed to compete with the Companies or to commit any
of the other acts prohibited below.

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    The
Executive therefore agrees that the Executive shall not, during his employment
with any of the Companies and for the Noncompete Period (as defined below),
directly or indirectly, own, organize, consult with, be employed by, advise, be
a stockholder, partner of or joint venturer with, be a director or managing
member of, or otherwise assist or provide services to, any Competitor (as
defined below) within the Restricted Area (as defined below) except to the
extent the Executive is acting on behalf of any of the Companies or in
furtherance of the any of the Companies’ interests.  The Executive
further agrees that, during the Executive’s employment and for the Noncompete
Period, the Executive shall not, directly or indirectly, purchase any equity
securities of any corporation or other business (other than as a stockholder or
beneficial owner directly or indirectly owning one percent (1%) or less of the
outstanding securities of a public company) which is a Competitor, without the
prior written consent of the Company.

    

    2.        
     Nonsolicitation of
Employees.  The Executive acknowledges and agrees that the
Companies have expended and will continue to expend significant time, effort and
resources in the hiring, training and development of an unusual and
extraordinary workforce whose identities and abilities the Executive would not
know of or learn but for his relationship with the Companies.  The
Executive therefore agrees that, during his employment with any of the Companies
and for the Nonsolicitation Period, the Executive shall not, directly or
indirectly, (a) solicit, or attempt to solicit, any employee of or consultant to
the Companies to work for, contract with, become a partner with or otherwise be
retained by any Competitor of the Companies; (b) assist or advise any such
Competitor in hiring, employing, retaining or soliciting such employees or
consultants; or (c) encourage any such employee or consultant to be hired,
employed, retained or solicited by any Competitor.

    

    3.          
   Nonsolicitation of
Customers.  The Executive acknowledges and agrees that he
possesses and will continue to receive valuable Confidential Information and
Trade Secrets of the Companies and exposure to customers and potential customers
of the Companies.  The Executive therefore agrees that, during his
employment with any of the Companies and for the Nonsolicitation Period, the
Executive shall not, directly or indirectly, solicit any customers or potential
customers of any of the Companies with whom the Executive had contact with or
about whom the Executive learned information during the Executive’s employment
with any of the Companies on behalf of any Competitor.

    

    4.          
   Nonsolicitation of Suppliers and
Service Providers.  The Executive acknowledges and agrees that
the Executive has received and shall continue to receive valuable Confidential
Information and Trade Secrets of the Companies with respect to their
relationships with their suppliers and service providers and that the ability to
acquire services from such suppliers and service providers is
limited.  Accordingly, such relationships constitute valuable assets
of the Companies.  The Executive therefore agrees that, during his
employment with any of the Companies and for the Nonsolicitation Period, the
Executive shall not use any Confidential Information or Trade Secrets to,
directly or indirectly, solicit any suppliers or service providers with whom the
Executive had contact with or about whom the Executive learned information
during the Executive’s employment with any of the Companies on behalf of any
Competitor.

    

    
      
        
           

        

        
          - 2
-

          
            

          

        

        
           

        

      

    

    

    5.          
   Non-disparagement.  Executive
agrees during his employment, and subsequent to termination for any reason, he
shall not disparage the Companies, including, without limitation, their
employees, directors, officers, agents, stockholders or products, services or
programs to any person or entity, including, without limitation, any current,
former or future customer, supplier or service provider.  The
Companies agree not to, and will direct their officers and directors not to,
disparage Executive or the performance or the services he rendered to the
Companies.

    

    6.           
  Confidentiality of
Information.  The Executive acknowledges and agrees that the
Executive has been and shall be exposed to the Companies’ Confidential
Information and Trade Secrets.  The Executive agrees to keep all such
information strictly confidential at all times.  Except as required by
the Executive’s duties for any of the Companies or by virtue of a subpoena or
other court order applicable to the Executive, the Executive agrees not to make
use or disclose any Confidential Information or Trade Secrets to any person,
company, firm, organization or other entity, or encourage any such person,
company, firm, organization or other entity to make use of such Confidential
Information or Trade Secrets.  However, should the Executive receive
any such subpoena or court order which may require disclosure of Trade Secrets
or Confidential Information, the Executive will immediately disclose such
subpoena or court order to Company so that it may interpose any objection it may
have.

    

    7.         
    Return
of Documents and Electronic Media.  At the termination of the
Executive’s employment with any of the Companies, the Executive agrees to
promptly return to the Company all property of the Companies, including any and
all documents and other tangible information and data, regardless of the form in
which it is recorded, as well as any and all copies and reproductions of such
documents or other tangible information and data (regardless of the form of such
copies or reproductions), which the Executive (i) received or obtained from or
on behalf of any of the Companies, or (ii) prepared, compiled or collected while
employed by any of the Companies.  The Executive specifically agrees
not to retain any copies of any Confidential Information or Trade
Secrets.

    

    8.         
    Ownership of Work
Product.  All work product, data, documentation, information or
materials conceived, discovered, developed or created by the Executive in the
course of the Executive’s work for any of the Companies (collectively, the
“Work Product”)
shall be owned exclusively by the Companies.  To the greatest extent
possible, any Work Product shall be deemed to be a “work made for hire” (as
defined in the United States Copyright Act, 17 U.S.C.A. §101 et seq., as amended) and
owned exclusively by the Company.  The Executive hereby
unconditionally and irrevocably transfers and assigns to the Companies all
right, title and interest in or to any such Work Product.  The
Companies and the Executive acknowledge that, pursuant to Wash. Rev. Code §
49.44.140(e), any provision in this Agreement requiring Employee to assign his
rights in any Work Product does not apply to an invention for which no
equipment, supplies, facility, or trade secret information of the employer was
used and which was developed entirely on the employee’s own time, unless (a) the
invention relates (i) directly to the business of the employer, or (ii) to the
employer’s actual or demonstrably anticipated research or development, or (b)
the invention results from any work performed by the employee for the
employer.

    

    
      
        
           

        

        
          - 3
-

          
            

          

        

        
           

        

      

    

    

    9.          
   Definitions.

    

    (a)      
     A “Competitor,” as used
herein, shall mean any person (including Executive), company (except the
Companies), firm, organization or other entity which is in the business being
conducted, or proposed to be conducted, by any of the Companies, including,
without limitation, (i) the development, marketing, organizing, operation or
conducting of student and professional educational tours; or (ii) research or
compilation, via the internet, worldwide web, or otherwise, of literature
summaries, biographies, literary criticisms, essays, encyclopedias, e-Books or
education databases.

    

    (b)        
   The term “Trade Secrets” shall
be given its broadest possible interpretation and shall mean any and all
documents, information or other data (whether recorded or otherwise) (as defined
below), which concerns any of the Companies or their business and which (i)
derives independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.  Such
Trade Secrets include, without limitation, information related to any of the
Companies’ customers and potential customers (including, without limitation,
students and educational institutions), customer preferences and habits,
suppliers, partners, service providers, research methodology, internet search
programs and methodology, databases, marketing plans, advertising, contracts,
potential contracts, training plans, strategies, forecasts, pricing, methods,
practices, techniques, business plans, financial plans, research plans,
advertising plans, development plans, purchasing plans, accounting, programming
or tour development.

    

    (c)       
    The term “Confidential
Information” shall also be given its broadest possible interpretation and
shall mean any and all information disclosed or made available by any of the
Companies to the Executive, including, without limitation, any information which
is not publicly known or available upon which any of the Companies’ business or
success depends.

    

    (d)      
     “Noncompete Period”
shall be a period of three (3) years from the last date on which Executive is
employed by any of the Companies, regardless of the reason for termination of
such employment.

    

    (e)       
    “Nonsolicitation
Period” shall be a period of three (3) years from the last date on which
Executive is employed by any of the Companies, regardless of the reason for
termination of such employment.

    

    (f)      
      “Restricted Area”
shall be any state, province, territory or foreign country in which any of the
Companies, or their subsidiaries and/or affiliates, markets, sells or
distributes their products or services.

    

    10.           Injunctive
Relief.  The Executive understands and agrees that any
violation of this Agreement may cause immediate and irreparable harm to the
Companies, the exact extent of which may be difficult to ascertain, and that the
remedies at law for any such violation may not adequately compensate the
Companies.  Therefore, the Executive agrees that, in addition to such
other damages or remedies that may be available, the Companies shall be entitled
to specific performance and/or immediate, preliminary and permanent injunctive
relief for any violations of this Agreement and for such purposes, the Executive
irrevocably consents to the jurisdiction of the United States District Court and
State Courts of the State of Washington.  The Company shall be
entitled to such relief without the necessity of proving actual damages or
posting a bond.

    

    
      
        
           

        

        
          - 4
-

          
            

          

        

        
           

        

      

    

    

    11.           Arbitration.  Except
as set forth in Section 10 above, any controversy relating to this Agreement
shall be settled by binding arbitration according to the applicable employment
dispute resolution rules of the American Arbitration Association in Spokane,
Washington.  To the extent required by law, the Company agrees to pay
all costs, including the arbitrator’s fees, which are peculiar to the
arbitration process.  The parties agree to keep the fact of
arbitration, and any decision thereto, confidential and shall execute all
documents necessary to maintain such confidentiality, including execution of a
protective order.  The prevailing party shall be awarded his/its
costs, unless otherwise prohibited by applicable law.

    

    12.           Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Washington, without reference to principles of conflict of
laws.

    

    13.           Assignment.  The
Executive shall not assign, sell, transfer, delegate or otherwise dispose of any
rights or obligations under this Agreement without the prior written consent of
the Company.  The Company may assign its rights under this Agreement
without the Executive’s consent.

    

    14.           Voluntary
Agreement.  The Executive expressly acknowledges that the
Executive has voluntarily executed this Agreement and that the Executive has had
the opportunity to be represented and advised by counsel concerning the terms
and conditions of this Agreement as well as the Executive’s execution
thereof.

    

    15.           Entire Agreement; Waivers;
Modification.  This Agreement, and the SPA, including without
limitation the schedules and attachments to the SPA executed and delivered in
connection therewith, are intended by the
parties to be the complete, exclusive and final expression of the Company’s and
the Executive’s agreement with respect to the subject matter hereof and
supersedes, and may not be contradicted by, or modified or supplemented by,
evidence of any prior or contemporaneous agreement as to the subject matter
hereof, and no extrinsic evidence whatsoever may be introduced to vary the terms
of this Agreement.  No waiver of any of the provisions of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed or construed as a further, continuing or subsequent waiver of any such
provision or as a waiver of any other provision of this Agreement.  No
failure to exercise and no delay in exercising any right, remedy or power
hereunder shall preclude any other or further exercise of any other right,
remedy or power provided herein or by law or in equity.  The Company
and the Executive expressly agree that (i) this Agreement shall survive any
termination or cessation of the Executive’s employment by any of the Companies
or by the Executive, and (ii) this Agreement may not be altered, amended,
changed, terminated or modified in any respect except by a written instrument
clearly expressing the intent to so modify this Agreement signed by the
Executive and an officer or director of the Company.

    

    
      
        
           

        

        
          - 5
-

          
            

          

        

        
           

        

      

    

    

    16.           Severability.  If
any term, provision, covenant or condition of this Agreement is held by a court
of competent jurisdiction, or arbitrator(s), as applicable, to exceed the
limitations permitted by applicable law, as determined by such court or
arbitrator(s) in such action, then the provisions will be deemed reformed or
blue penciled to the maximum limitations permitted by applicable law and the
parties hereby expressly acknowledge their desire that, in such event, such
action be taken.  Notwithstanding the foregoing, the Company and
Employee further agree that if any term, provision, covenant or condition of
this Agreement is held by a court of competent jurisdiction, or arbitrator(s) to
be invalid, void or unenforceable, the remainder of the provisions shall remain
in full force and effect and in no way shall be affected, impaired or
invalidated.

    

    17.           Descriptive
Headings.  Descriptive headings contained herein are for
reference only and in no way define, limit, extend or describe the scope of this
Agreement or any provisions thereof.

    

    18.           Counterparts.  This
Agreement may be executed in one or more counterparts, and by the parties in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to
this Agreement, or any other document or agreement to be executed in connection
herewith by facsimile shall be as effective as delivery of a manually executed
counterpart of any such agreement or document.

    

    [SIGNATURE
PAGE FOLLOWS]

    

    
      
        
           

        

        
          - 6
-

          
            

          

        

        
           

        

      

    

     

    EXECUTION COPY

     

    IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

    

    

    
      	 	 
      	 	
              The
      Company:

            	 
      
	 	 
      	 	 
      	 
      	 
      
	 	 
      	 	
              BookRags,
      Inc.

            	 
      
	 	 
      	 	 
      	 
      	 
      
	Date:	
               

            	 	
              By:

            	 
      	 
      
	 	 
      	 	 
      	 
      	 
      
	 	 
      	 	
              Name:

            	 
      	 
      
	 	 
      	 	
               
      

            	 
      	 
      
	 	 
      	 	
              Title:

            	 
      	 
      

    

    

    
      	 
      	 	 	
              Executive:

            	 
      
	 
      	 	 	 
      	 
      	 
      
	
              Date:

            	 	 	
              Signature:

            	 
      	 
      
	 
      	 	 	
               
      

            	 
      	 
      
	 
      	 	 	
              Print
      Name:

            	 
      	 
      
	 
      	 	 	 
      	 
      	 
      
	 
      	 	 	
              (Address)

            	 
      	 
      

    

     

    SIGNATURE PAGE
TO NONCOMPETITION, NONSOLICITATION AND CONFIDENTIAL INFORMATION AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]