Document:

Security Agreement

 Exhibit 10.13 
 EXECUTION COPY 
 SECURITY AGREEMENT 
 THIS SECURITY AGREEMENT (this “Agreement”), dated as of January 31, 2007, is made and given by TECSTAR AUTOMOTIVE GROUP, INC.
(f/k/a Starcraft Corporation), an Indiana corporation (the “Grantor”), to Whitebox Convertible Arbitrage Partners L.P., Whitebox Hedged High Yield Partners L.P., Pandora Select Partners L.P. and Whitebox Intermarket Partners L.P.
(each a “Secured Party” and collectively, the “Secured Parties”). 
 RECITALS 
 A. Quantum Fuel Systems Technologies Worldwide, Inc., a Delaware corporation (“Quantum”), desires to obtain extensions of credit under
that certain Credit Agreement (the “Credit Agreement”), dated concurrently herewith, among the Lenders signatory thereto (collectively, the “Lenders”) and Quantum; 
 B. The Grantor is indebted to the Secured Parties under that certain Convertible Senior Subordinated Note Purchase Agreement, dated as of July 12,
2004 (as amended and modified from time to time, the “Purchase Agreement”), by and among the Grantor and the Secured Parties. In connection with the Credit Agreement, the Grantor will issue Amended and Restated Convertible
Subordinated Promissory Notes to the Secured Parties under the Purchase Agreement (the “Notes”). 
 C. It is a condition
precedent to the obligation of the Lenders to extend credit accommodations pursuant to the terms of the Credit Agreement and of the Secured Parties to continue to extend credit accommodations pursuant to the terms of the Purchase Agreement that this
Agreement be executed and delivered by the Grantor. 
 D. The Grantor is a direct subsidiary of Quantum. 
 E. The Grantor finds it advantageous, desirable and in its best interests to comply with the requirement that it execute and deliver this Agreement to
the Secured Parties. 
 NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to enter into the Credit
Agreement and to extend credit accommodations to Quantum thereunder and to induce the Secured Parties to continue to extend credit accommodations to the Grantor under the Purchase Agreement, the Grantor hereby agrees with the Secured Parties for
their ratable benefit as follows: 
 Section 1. Defined Terms. 
 1(a) As used in this Agreement, the following terms shall have the meanings indicated: 

 “Account” means a right to payment of a monetary obligation, whether or
not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued,
(iv) for a secondary obligation incurred or to be incurred, (v) for energy provided or to be provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising out of the use of a credit or charge
card or information contained on or for use with the card, or (viii) as winnings in a lottery or other game of chance operated, sponsored, licensed or authorized by a State or governmental unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit of a State. The term includes health-care insurance receivables. 
 “Account Debtor” shall mean a Person who is obligated on or under any Account, Chattel Paper, Instrument or General Intangible. 
 “Chattel Paper” shall mean a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods,
a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. 
 “Collateral” shall mean all property and rights in property now owned or hereafter at any time acquired by the Grantor in
or upon which a Security Interest is granted to the Secured Parties by the Grantor under this Agreement. 
 “Deposit
Account” shall mean any demand, time, savings, passbook or similar account maintained with a bank. 
 “Document” shall mean a document of title or a warehouse receipt. 
 “Equipment”
shall mean all machinery, equipment, motor vehicles, furniture, furnishings and fixtures, including all accessions, accessories and attachments thereto, and any guaranties, warranties, indemnities and other agreements of manufacturers, vendors and
others with respect to such Equipment. 
 “Event of Default” shall have the meaning given to such term in
Section 18 hereof. 
 “Financing Statement” shall have the meaning given to such term in Section 4
hereof. 
 “Fixtures” shall mean goods that have become so related to particular real property that an
interest in them arises under real property law. 
  

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 “General Intangibles” shall mean any personal property (other than
goods, Accounts, Chattel Paper, Deposit Accounts, Documents, Instruments, Investment Property, Letter of Credit Rights and money) including things in action, contract rights, payment intangibles, software, corporate and other business records,
inventions, designs, patents, patent applications, service marks, trademarks, tradenames, trade secrets, internet domain names, engineering drawings, good will, registrations, copyrights, licenses, franchises, customer lists, tax refund claims,
royalties, licensing and product rights, rights to the retrieval from third parties of electronically processed and recorded data and all rights to payment resulting from an order of any court. 
 “Instrument” shall mean a negotiable instrument or any other writing which evidences a right to the payment of a monetary
obligation and is not itself a security agreement or lease and is of a type which is transferred in the ordinary course of business by delivery with any necessary endorsement or assignment. 
 “Inventory” shall mean goods, other than farm products, which are leased by a person as lessor, are held by a person for
sale or lease or to be furnished under a contract of service, are furnished by a person under a contract of service, or consist of raw materials, work in process, or materials used or consumed in a business or incorporated or consumed in the
production of any of the foregoing and supplies, in each case wherever the same shall be located, whether in transit, on consignment, in retail outlets, warehouses, terminals or otherwise, and all property the sale, lease or other disposition of
which has given rise to an Account and which has been returned to the Grantor or repossessed by the Grantor or stopped in transit. 
 “Investment Property” shall mean a security, whether certificated or uncertificated, a security entitlement, a securities account and all financial assets therein, a commodity contract or a commodity account. 
 “Letter of Credit Right” shall mean a right to payment or performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or performance. 
 “Lien” shall mean
any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of the lessors under capitalized leases), in, of or on any assets or properties of the Person
referred to. 
 “Notes” shall have the meaning indicated in Recital B. 
 “Obligations” shall mean (a) all indebtedness, liabilities and obligations of the Grantor to the Secured Parties of
every kind, nature or description under the Purchase Agreement, including the Grantor’s obligations on the Notes issued under the Purchase Agreement and any note or notes hereafter issued in substitution or replacement thereof, and (b) all
liabilities of the Grantor under this Agreement, and in all of the foregoing cases whether due or to become due, and whether now existing or hereafter arising or incurred. 
  

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 “Person” shall mean any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other
capacity. 
 “Secured Parties” shall have the meaning set forth in the opening paragraph hereof. 

“Security Interest” shall have the meaning given such term in Section 2 hereof. 
 1(b) All other terms used in this Agreement which are not specifically defined herein shall have the meaning assigned to such terms in Article 9 of the
Uniform Commercial Code as in effect in the State of Minnesota. 
 1(c) Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular, the plural and “or” has the inclusive meaning represented by the phrase “and/or.” The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of
this Agreement. References to Sections are references to Sections in this Agreement unless otherwise provided. 
 Section 2. Grant of
Security Interest. As security for the payment and performance of all of the Obligations, the Grantor hereby grants to the Secured Parties a security interest (the “Security Interest”) in all of the Grantor’s right, title,
and interest in and to the following, whether now or hereafter owned, existing, arising or acquired and wherever located: 
 2(a) All
Accounts. 
 2(b) All Chattel Paper. 
 2(c) All Deposit Accounts. 
 2(d) All Documents. 
 2(e) All Equipment. 
 2(f) All Fixtures. 
 2(g) All General Intangibles. 
 2(h) All
Instruments. 
  

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 2(i) All Inventory. 
 2(j) All Investment Property. 
 2(k) All Letter of Credit Rights. 
 2(l) To the extent not otherwise included in the foregoing, all other rights to the payment of money, including rents and other sums payable to the
Grantor under leases, rental agreements and other Chattel Paper; all books, correspondence, credit files, records, invoices, bills of lading, and other documents relating to any of the foregoing, including, without limitation, all tapes, cards,
disks, computer software, computer runs, and other papers and documents in the possession or control of the Grantor or any computer bureau from time to time acting for the Grantor; all rights in, to and under all policies insuring the life of any
officer, director, stockholder, manager, member or employee of the Grantor, the proceeds of which are payable to the Grantor; all accessions and additions to, parts and appurtenances of, substitutions for and replacements of any of the foregoing;
and all proceeds (including insurance proceeds) and products thereof. 
 Section 3. Grantor Remains Liable. Anything herein to
the contrary notwithstanding, (a) the Grantor shall remain liable under the Accounts, Chattel Paper, General Intangibles and other items included in the Collateral to the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by any of the Secured Parties of any of its rights hereunder shall not release the Grantor from any of its duties or obligations under the Accounts or
any other items included in the Collateral, and (c) the Secured Parties shall have no obligation or liability under Accounts, Chattel Paper, General Intangibles and other items included in the Collateral by reason of this Agreement, nor shall
any Secured Party be obligated to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 
 Section 4. Title to Collateral. The Grantor has (or will have at the time it acquires rights in Collateral hereafter acquired or arising) and
will maintain so long as the Security Interest may remain outstanding, title to each item of Collateral (including the proceeds and products thereof), free and clear of all Liens except the Security Interest and Liens permitted by the Credit
Agreement. The Grantor will not license any Collateral except in the ordinary course of business. The Grantor will defend the Collateral against all claims or demands of all Persons (other than the Secured Parties) claiming the Collateral or any
interest therein. As of the date of execution of this Agreement, no valid and effective financing statement or other similar document used to perfect and preserve a security interest under the laws of any jurisdiction (a “Financing
Statement”) covering all or any part of the Collateral is on file in any recording office, except such as may have been filed (a) in favor of the Secured Parties relating to this Agreement, or (b) to perfect Liens permitted by the
Credit Agreement. 
  

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 Section 5. Disposition of Collateral. The Grantor will not sell, lease or otherwise dispose
of, or discount or factor with or without recourse, any Collateral, except for sales permitted by the Credit Agreement. 
 Section 6.
Names, Offices, Locations, Jurisdiction of Organization. The Grantor’s legal name (as set forth in its constituent documents filed with the appropriate governmental official or agency) is as set forth in the opening paragraph hereof. The
jurisdiction of organization of the Grantor is the state of Indiana, and the organizational number of the Grantor is set forth on the signature page of this Agreement. The Grantor will from time to time at the request of the Secured Parties provide
current good standing certificates and/or state-certified constituent documents from the appropriate governmental officials. The chief place of business and chief executive office of Grantor are located at its address set forth on the signature page
hereof. The Grantor will not locate or relocate any item of Collateral into any jurisdiction in which an additional Financing Statement would be required to be filed to maintain the Secured Parties’ perfected security interest in such
Collateral. The Grantor will not change its name, the location of its chief place of business and chief executive office or its corporate structure (including without limitation, its jurisdiction of organization) unless the Secured Parties have been
given at least 30 days prior written notice thereof and the Grantor has executed and delivered to the Secured Parties such Financing Statements and other instruments required or appropriate to continue the perfection of the Security Interest.

 Section 7. Rights to Payment. Except as the Grantor may otherwise advise the Secured Parties in writing, each Account, Chattel
Paper, Document, General Intangible and Instrument constituting or evidencing Collateral is (or, in the case of all future Collateral, will be when arising or issued) the valid, genuine and legally enforceable obligation of the Account Debtor or
other obligor named therein or in the Grantor’s records pertaining thereto as being obligated to pay or perform such obligation. Without the prior written consent of the Secured Parties, the Grantor will not agree to any modifications,
amendments, subordinations, cancellations or terminations of the obligations of any such Account Debtors or other obligors except in the ordinary course of business and in amounts not exceeding $25,000 per Account Debtor or other obligor in any
calendar year. The Grantor will perform and comply in all material respects with all its obligations under any items included in the Collateral and exercise promptly and diligently its rights thereunder. 
 Section 8. Further Assurances; Attorney-in-Fact. 
 8(a) The Grantor agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Secured
Parties may reasonably request, in order to perfect and protect the Security Interest granted or purported to be granted hereby or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder with respect to any
Collateral (but any failure to request or assure that the Grantor execute and deliver such instrument or documents or to take such action shall not affect or impair the validity, sufficiency or enforceability of this Agreement and the Security
Interest, regardless of whether any such item was or was not 

  

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executed and delivered or action taken in a similar context or on a prior occasion). Without limiting the generality of the foregoing, the Grantor will,
promptly and from time to time at the request of the Secured Parties: (i) execute and file such Financing Statements or continuation statements in respect thereof, or amendments thereto, and such other instruments or notices (including fixture
filings with any necessary legal descriptions as to any goods included in the Collateral which the Secured Parties determine might be deemed to be fixtures, and instruments and notices with respect to vehicle titles) as may be necessary or
desirable, or as the Secured Parties may request, in order to perfect, preserve and enhance the Security Interest granted or purported to be granted hereby; (ii) obtain from any bailee holding Collateral, an acknowledgement, in form
satisfactory to the Secured Parties that such bailee holds such collateral for the benefit of the Secured Parties; (iii) obtain from any securities intermediary, or other party holding any Collateral, control agreements in form satisfactory to
the Secured Parties; (iv) deliver and pledge to the Secured Parties all Instruments and Documents, duly indorsed or accompanied by duly executed instruments of transfer or assignment, with full recourse to the Grantor, all in form and substance
satisfactory to the Secured Parties; and (v) obtain waivers, in form satisfactory to the Secured Parties of any claim to any Collateral from any landlords or mortgagees of any property where any Inventory or Equipment is located. 
 8(b) The Grantor hereby authorizes the Secured Parties to file one or more Financing Statements or continuation statements in respect thereof, and
amendments thereto, relating to all or any part of the Collateral without the signature of the Grantor where permitted by law. The Grantor irrevocably waives any right to notice of any such filing. A photocopy or other reproduction of this Agreement
or any Financing Statement covering the Collateral or any part thereof shall be sufficient as a Financing Statement where permitted by law. 
 8(c) The Grantor will furnish to the Secured Parties from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Parties may reasonably
request, all in reasonable detail and in form and substance reasonably satisfactory to the Secured Parties. 
 8(d) In furtherance, and not
in limitation, of the other rights, powers and remedies granted to the Secured Parties in this Agreement, the Grantor hereby appoints the Secured Parties the Grantor’s attorneys-in-fact, with full authority in the place and stead of Grantor and
in the name of Grantor or otherwise, from time to time in the Secured Parties’ good faith discretion, to take any action (including the right to collect on any Collateral) and to execute any instrument that the Secured Parties may reasonably
believe is necessary or advisable to accomplish the purposes of this Agreement, in a manner consistent with the terms hereof. 
 Section 9. Taxes and Claims. The Grantor will promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security
Interest, as well as all other claims of any kind (including claims for labor, material and supplies) against or with respect to the Collateral, except to the extent (a) such taxes, charges or claims are being contested in good faith by
appropriate proceedings, (b) such proceedings do not involve any material danger of the sale, 

  

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forfeiture or loss of any of the Collateral or any interest therein, and (c) such taxes, charges or claims are adequately reserved against on the
Grantor’s books in accordance with generally accepted accounting principles. 
 Section 10. Books and Records. The Grantor
will keep and maintain at its own cost and expense satisfactory and complete records of its Collateral, including a record of all payments received and credits granted with respect to all Accounts, Chattel Paper and other items included in such
Collateral. 
 Section 11. Inspection, Reports. The Grantor will at all reasonable times permit the Secured Parties or their
representatives to examine or inspect any Collateral, any evidence of Collateral and the Grantor’s books and records concerning the Collateral, wherever located. The Grantor will from time to time when requested by the Secured Parties furnish
to them a report on its Accounts, Chattel Paper, General Intangibles and Instruments, naming the Account Debtors or other obligors thereon, the amount due and the aging thereof. The Secured Parties or their designee are authorized to contact Account
Debtors and other Persons obligated on any such Collateral from time to time to verify the existence, amount and/or terms of such Collateral. 
 Section 12. Notice of Loss. The Grantor will promptly notify the Secured Parties of any loss of or material damage to any material item of Collateral or of any substantial adverse change, known to Grantor, in any material item
of Collateral or the prospect of payment or performance thereof. 
 Section 13. Insurance. The Grantor will keep the Inventory
and Equipment insured against “all risks” for the full replacement cost thereof subject to a deductible not exceeding $100,000, and with an insurance company or companies satisfactory to the Secured Parties, the policies to protect Secured
Parties as their interests may appear, with such policies or certificates with respect thereto to be delivered to the Secured Parties at any Secured Party’s request. Each such policy or the certificate with respect thereto shall provide that
such policy shall not be canceled or allowed to lapse unless at least 30 days prior written notice is given to the Secured Parties. 
 Section 14. Lawful Use; Fair Labor Standards Act. The Grantor will use and keep the Collateral, and will require that others use and keep the Collateral, only for lawful purposes, without violation of any federal, state or local
law, statute or ordinance. All Inventory of the Grantor as of the date of this Agreement that was produced by the Grantor, or with respect to which the Grantor performed any manufacturing or assembly process, was produced by the Grantor (or such
manufacturing or assembly process was conducted) in compliance in all material respects with all requirements of the Fair Labor Standards Act, and all Inventory produced, manufactured or assembled by the Grantor after the date of this Agreement will
be so produced, manufactured or assembled, as the case may be. 
 Section 15. Action by a Secured Party. If the Grantor at any
time fails to perform or observe any of the foregoing agreements, the Secured Parties shall have (and the Grantor hereby grants to the Secured Parties) the right, power and authority (but not the duty) to perform or 

  

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observe such agreement on behalf and in the name, place and stead of the Grantor (or, at the Secured Parties’ option, in the Secured Parties’
names) and to take any and all other actions which the Secured Parties may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of Liens, the procurement and maintenance of
insurance, the execution of assignments, security agreements and Financing Statements, and the indorsement of instruments); and the Grantor shall thereupon pay to the Secured Parties on demand the amount of all monies expended and all costs and
expenses (including reasonable attorneys’ fees and legal expenses) incurred by the Secured Parties in connection with or as a result of the performance or observance of such agreements or the taking of such action by the Secured Parties,
together with interest thereon from the date expended or incurred at the highest lawful rate then applicable to any of the Obligations, and all such monies expended, costs and expenses and interest thereon shall be part of the Obligations secured by
the Security Interest. 
 Section 16. Insurance Claims. As additional security for the payment and performance of the
Obligations, the Grantor hereby ratably assigns to the Secured Parties any and all monies (including proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of the Grantor with respect to, any and all
policies of insurance now or at any time hereafter covering the Collateral or any evidence thereof or any business records or valuable papers pertaining thereto. At any time, whether before or after the occurrence of any Event of Default, the
Secured Parties may (but need not), in the Secured Parties’ names or in the Grantor’s name, execute and deliver proofs of claim, receive all such monies, indorse checks and other instruments representing payment of such monies, and adjust,
litigate, compromise or release any claim against the issuer of any such policy. Notwithstanding any of the foregoing, so long as no Event of Default exists the Grantor shall be entitled to all insurance proceeds with respect to Equipment or
Inventory provided that such proceeds are applied to the cost of replacement Equipment or Inventory. 
 Section 17. The Secured
Parties’ Duties. The powers conferred on the Secured Parties hereunder are solely to protect their interests in the Collateral and shall not impose any duty upon the Secured Parties to exercise any such powers. The Secured Parties shall be
deemed to have exercised reasonable care in the safekeeping of any Collateral in their possession if such Collateral is accorded treatment substantially equal to the safekeeping which the Secured Parties accords their own property of like kind.
Except for the safekeeping of any Collateral in their possession and the accounting for monies and for other properties actually received by them hereunder, the Secured Parties shall not have any duty, as to any Collateral, as to ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Secured Parties have or are deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any Persons or any other rights pertaining to any Collateral. The Secured Parties will take action in the nature of exchanges, conversions, redemptions, tenders and the like requested in writing by the
Grantor with respect to the Collateral in the Secured Parties’ possession if the Secured Parties in their reasonable judgment determine that such action will not impair the Security Interest or the value of the Collateral, but a failure of the
Secured Parties to comply with any 

  

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such request shall not of itself be deemed a failure to exercise reasonable care with respect to the taking of any necessary steps to preserve rights against
any Persons or any other rights pertaining to any Collateral. 
 Section 18. Default. Each of the following occurrences shall
constitute an “Event of Default” under this Agreement: (a) the Grantor shall fail to observe or perform any covenant or agreement applicable to the Grantor under this Agreement and such failure shall continue for a period of
thirty (30) consecutive days after written notice by a Secured Party; or (b) any representation or warranty made by Grantor in this Agreement or any schedule, exhibit, supplement or attachment hereto or in any financial statements, or
reports or certificates heretofore or at any time hereafter submitted by or on behalf of Grantor to the Secured Parties shall prove to have been untrue or misleading in any material respect when made; or (c) any Event of Default shall occur
under the Purchase Agreement which has not been waived pursuant to the terms thereof. 
 Section 19. Remedies on Default. Upon
the occurrence of an Event of Default and at any time thereafter: 
 19(a) The Secured Parties may exercise and enforce any and all rights and
remedies available upon default to a secured party under Article 9 of the Uniform Commercial Code as in effect in the State of Minnesota. 
 19(b) The Secured Parties shall have the right to enter upon and into and take possession of all or such part or parts of the properties of the Grantor, including lands, plants, buildings, Equipment, Inventory and other property as may be
necessary or appropriate in the judgment of the Secured Parties to permit or enable the Secured Parties to manufacture, produce, process, store or sell or complete the manufacture, production, processing, storing or sale of all or any part of the
Collateral, as the Secured Parties may elect, and to use and operate said properties for said purposes and for such length of time as the Secured Parties may deem necessary or appropriate for said purposes without the payment of any compensation to
the Grantor therefor. The Secured Parties may require the Grantor to, and the Grantor hereby agrees that it will, at its expense and upon request of the Secured Parties forthwith, assemble all or part of the Collateral as directed by the Secured
Parties and make it available to them at a place or places to be designated by the Secured Parties. 
 19(c) Any disposition of Collateral
may be in one or more parcels at public or private sale, at any office of the Secured Parties or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as the Secured Parties may reasonably believe are commercially
reasonable. The Secured Parties shall not be obligated to dispose of Collateral regardless of notice of sale having been given, and the Secured Parties may adjourn any public or private sale from time to time by announcement made at the time and
place fixed therefor, and such disposition may, without further notice, be made at the time and place to which it was so adjourned. 
  

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 19(d) The Secured Parties are hereby granted a license or other right to use, without charge, all of the
Grantor’s property, including, without limitation, all of the Grantor’s labels, trademarks, copyrights, patents and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral, and the Grantor’s rights under all licenses and all franchise agreements shall inure to the Secured Parties’ benefit until the Obligations are paid in full. 
 19(e) If notice to the Grantor of any intended disposition of Collateral or any other intended action is required by law in a particular instance, such
notice shall be deemed commercially reasonable if given in the manner specified for the giving of notice in Section 25 hereof at least ten calendar days prior to the date of intended disposition or other action, and the Secured Parties may
exercise or enforce any and all other rights or remedies available by law or agreement against the Collateral, against the Grantor, or against any other Person or property. The Secured Parties (i) may dispose of the Collateral in its then
present condition or following such preparation and processing as the Secured Parties deem commercially reasonable, (ii) shall have no duty to prepare or process the Collateral prior to sale, (iii) may disclaim warranties of title,
possession, quiet enjoyment and the like, and (iv) may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and none of the foregoing actions shall be deemed to adversely affect the
commercial reasonableness of the disposition of the Collateral. 
 Section 20. Remedies as to Certain Rights to Payment. Upon the
occurrence of an Event of Default and any time thereafter, the Secured Parties may notify any Account Debtor or other Person obligated on any Accounts or other Collateral that the same have been assigned or transferred to the Secured Parties and
that the same should be performed as requested by, or paid directly to, the Secured Parties, as the case may be. The Grantor shall join in giving such notice, if the Secured Parties so request. The Secured Parties may, in the Secured Parties’
names or in the Grantor’s name, demand, sue for, collect or receive any money or property at any time payable or receivable on account of, or securing, any such Collateral or grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligation of any such Account Debtor or other Person. If any payments on any such Collateral are received by the Grantor after an Event of Default has occurred, such payments shall be held in
trust by the Grantor as the property of the Secured Parties and shall not be commingled with any funds or property of the Grantor and shall be forthwith remitted to the Secured Parties for application on the Obligations. 
 Section 21. Application of Proceeds. All cash proceeds received by the Secured Parties in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the Secured Parties, be held by them as collateral for, or then or at any time thereafter be applied in whole or in part by the Secured Parties against, all or any part of
the Obligations (including, without limitation, any expenses of the Secured Parties payable pursuant to Section 22 hereof). 
  

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 Section 22. Costs and Expenses; Indemnity. The Grantor will pay or reimburse the Secured
Parties on demand for all out-of-pocket expenses, including in each case all filing and recording fees, taxes, and all reasonable charges and disbursements of outside counsel to the Secured Parties, and/or the allocated costs of in-house counsel
incurred from time to time, in connection with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations secured by the Security Interest. The Grantor shall indemnify and hold the Secured Parties harmless from and against any and all claims, losses and liabilities (including
reasonable attorneys’ fees) growing out of or resulting from this Agreement and the Security Interest hereby created (including enforcement of this Agreement) or actions of the Secured Parties pursuant hereto, except claims, losses or
liabilities resulting from the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment of a court of competent jurisdiction. Any liability of the Grantor to indemnify and hold the Secured Parties harmless
pursuant to the preceding sentence shall be part of the Obligations secured by the Security Interest. The obligations of the Grantor under this Section shall survive any termination of this Agreement. 
 Section 23. Waivers; Remedies; Marshalling. This Agreement may be waived, modified, amended, terminated or discharged, and the Security
Interest may be released, only explicitly in a writing signed by the Secured Parties. A waiver so signed shall be effective only in the specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured Parties. All rights and remedies of the Secured Parties shall be cumulative and may be exercised singly in any order or sequence, or concurrently, at the option of the
Secured Parties, and the exercise or enforcement of any such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. The Grantor hereby waives all requirements of law, if any, relating to the marshalling of
assets which would be applicable in connection with the enforcement by the Secured Parties of their remedies hereunder, absent this waiver. 
 Section 24. Notices. Any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date
of delivery thereof if manually delivered, from the date of sending thereof if sent by facsimile transmission, from the first business day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed.

 Section 25. Grantor Acknowledgments. The Grantor hereby acknowledges that (a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement, (b) none of the Secured Parties has any fiduciary relationship to the Grantor, the relationship being solely that of debtor and creditor, and (c) no joint venture exists between the
Grantor and any Secured Party. 
  

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 Section 26. Representations and Warranties. The Grantor hereby represents and warrants to the
Secured Party that: 
 26(a) It is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of
its organization and has the corporate power and authority and the legal right to own and operate its properties and to conduct the business in which it is currently engaged. 
 26(b) It has the power and authority and the legal right to execute and deliver, and to perform its obligations under, this Agreement and has taken all
necessary corporate action to authorize such execution, delivery and performance. 
 26(c) This Agreement constitutes a legal, valid and
binding obligation of the Grantor enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights
generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 
 26(d) The execution,
delivery and performance of this Agreement will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Grantor, (ii) violate or contravene any provision of the Articles of Incorporation or bylaws of the Grantor, or (iii) result in a breach of or constitute a default under any indenture, loan
or credit agreement or any other agreement, lease or instrument to which the Grantor is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder. The Grantor is not in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences
of such default or violation could have a material adverse effect on the business, operations, properties, assets or condition (financial or otherwise) of the Grantor. 
 26(e) Except for filings, recordings and registrations to perfect the Security Interest, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption
by, any governmental or public body or authority is required on the part of the Grantor to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this
Agreement. 
 26(f) There are no actions, suits or proceedings pending or, to the knowledge of the Grantor, threatened against or affecting
it or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely, would have a material adverse effect on the business, operations, property or
condition (financial or otherwise) of the Grantor or on its ability to perform its obligations hereunder. 
  

 13 

 Section 27. Continuing Security Interest; Assignments under Credit Agreement. This Agreement
shall (a) create a continuing security interest in the Collateral and shall remain in full force and effect until payment in full of the Obligations and the expiration of the obligations, if any, of the Secured Parties to extend credit
accommodations to the Grantor, (b) be binding upon the Grantor, its successors and assigns, and (c) inure to the benefit of, and be enforceable by, the Secured Parties and their respective successors, transferees, and assigns. Without
limiting the generality of the foregoing clause, (c) the Secured Parties may assign or otherwise transfer all or any portion of their rights and obligations under the Purchase Agreement to any other Persons to the extent and in the manner
provided in the Purchase Agreement and may similarly transfer all or any portion of its rights under this Agreement to such Persons. 
 Section 28. Termination of Security Interest. Upon payment in full of the Obligations and the expiration of any obligation of the Secured Parties to extend credit accommodations to the Grantor, the Security Interest granted
hereby shall terminate. Upon any such termination, the Secured Parties will return to the Grantor such of the Collateral then in the possession of the Secured Parties as shall not have been sold or otherwise applied pursuant to the terms hereof and
execute and deliver to the Grantor such documents as it shall reasonably request to evidence such termination. Any reversion or return of Collateral upon termination of this Agreement and any instruments of transfer or termination shall be at the
expense of the Grantor and shall be without warranty by, or recourse on, the Secured Parties. As used in this Section, “Grantor” includes any assigns of any Grantor, any Person holding a subordinate security interest in any of the
Collateral or whoever else may be lawfully entitled to any part of the Collateral. 
 Section 29. Governing Law and
Construction. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF MINNESOTA. Whenever possible, each provision of this
Agreement and any other statement, instrument or transaction contemplated hereby or relating hereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement or any other statement, instrument or transaction contemplated hereby or relating hereto. 
 Section 30. Consent to Jurisdiction. AT THE OPTION OF THE SECURED PARTIES, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR
MINNESOTA STATE COURT SITTING IN MINNEAPOLIS, MINNESOTA; AND THE GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH 

  

 14 

 
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE GRANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTIES AT THEIR OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. 
 Section 31. Waiver of Notice and Hearing. THE GRANTOR HEREBY WAIVES ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE SECURED PARTIES OF THEIR RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT
JUDICIAL PROCESS OR OF THEIR RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.

 Section 32. Waiver of Jury Trial. THE GRANTOR AND THE SECURED PARTIES, BY THEIR ACCEPTANCE OF THIS AGREEMENT,
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 Section 33. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. 
 Section 34. General. All representations and warranties contained in this
Agreement or in any other agreement between the Grantor and the Secured Parties shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations. The Grantor waives notice of the acceptance of
this Agreement by the Secured Parties. Captions in this Agreement are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Agreement. 
 [Signature Follows On Succeeding Page] 
  

 15 

 IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above written. 
  

			
	TECSTAR AUTOMOTIVE GROUP, INC.
		
	By	 	 /s/ Kenneth R. Lombardo

	Name	 	Kenneth Lombardo
	Title	 	General Counsel

 Address: 
 570
Executive Drive 
 Troy, Michigan 48083 
 State of Organization:
Indiana 
 Grantor’s Org # 1990120776 
 Grantor’s Tax ID
# 35-1817634 
 [Signature page to Security Agreement for Convertible Notes (TAG)] 
  

 S-1Plan Of Merger

    AGREEMENT
      AND PLAN OF MERGER

     

    Among

     

    

     

    TENTHGATE
      INCORPORATED

    a
      Delaware Corporation,

     

    TENTHGATE
      INTERNATIONAL, INC.,

    a
      Delaware Corporation,

    

    and
      

    TENTHGATE
      MERGER SUB, INC.

    a
      Utah Corporation,

    

    

     

    Dated
      as of 

     

    March
      12, 2007

     

    Effective
      March 22, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    This
      AGREEMENT AND PLAN OF MERGER (this
      “Agreement”), is entered as of March 12, 2007 by and among TENTHGATE
      INCORPORATED,
      a
      Delaware corporation (“TenthGate”), TENTHGATE
      INTERNATIONAL, INC.,
      a
      Delaware corporation (“TenthGate Int.”), and TENTHGATE
      MERGER SUB, INC.,
      a Utah
      corporation and a direct wholly-owned subsidiary of TenthGate Int. (“Merger
      Sub").

     

    RECITALS

     

    
      	1.  	
              The
                Boards of Directors of TenthGate and TenthGate Int. deem it advisable
                and
                in the best interests of each corporation and its respective shareholders
                for TenthGate Int. to acquire TenthGate, which acquisition will be
                effected through the merger of TenthGate with and into Merger Sub
                (the
                “Merger”) pursuant to, and upon the terms and subject to the conditions
                set forth in, this Agreement.

            

    

     

    
      	2.  	
              TenthGate
                Int. has caused Merger Sub to be organized as its wholly-owned subsidiary
                for the purpose of effectuating the Merger contemplated herein and
                carry
                on TenthGate's business after the Merger.

            

    

     

    
      	3.  	
              For
                federal income tax purposes, it is intended that the Merger shall
                qualify
                as a reorganization with the meaning of Section 368(a) of the Internal
                Revenue Code of 1986, as amended (the “Code”), and the regulations
                promulgated thereunder.

            

    

     

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

     

    ARTICLE
      I.  

    THE
      MERGER; CERTAIN RELATED MATTERS

     

    SECTION
      1.1:  The
      Merger. Upon
      the
      terms and subject to the conditions set forth in this Agreement, and in
      accordance with the applicable provisions of the Delaware Corporation Law
      (“Delaware Law”), Merger Sub shall be merged with and into TenthGate and the
      separate existence of Merger Sub shall thereupon cease. TenthGate shall be
      the
      surviving corporation in the Merger, shall continue its corporate existence
      under the laws of the State of Delaware, and shall succeed, without other
      transfer, to all the rights and property of Merger Sub and shall be subject
      to
      all the debts and liabilities of Merger Sub in the same manner as if Merger
      Sub
      itself had incurred them. 

     

    SECTION
      1.2:  Closing.
      Upon the
      terms and subject to the conditions set forth in this Agreement, the closing
      of
      the Merger (the “Closing”) shall be held at the place and time as agreed upon by
      the parties (as defined in Section 7.11) after all conditions precedent to
      the
      Closing shall have been satisfied, or waived, or at such other time and place
      as
      the parties hereto shall mutually agree (the actual date of the Closing being
      referred to herein as the “Closing Date”). The parties hereto hereby agree to
      deliver at the Closing such documents, certificates of officers and such other
      instruments as are specified in Article V and as reasonably may be required
      to
      effect the Merger. All events which shall occur at the Closing shall be deemed
      to occur simultaneously.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      1.3:  Effective
      Time & Date.
      As soon
      as practicable following the satisfaction or waiver of the conditions specified
      in Article V, and provided that this Agreement has not been terminated or
      abandoned pursuant to Article VI, the parties shall file this Agreement with
      the
      Secretary of State of the State of Delaware, all applicable tax clearance
      certificates with respect to TenthGate with the Secretary of State of the State
      of Delaware as may be required by Delaware Law, and all other filings or
      recordings required under Delaware Law. Subject to and in accordance with
      Delaware Law, the Merger will become effective at the date and time this
      Agreement is filed with the Secretary of State of the State of Delaware or
      such
      later time or date as may be specified in this Agreement (the “Effective Time”).
      Each of the parties will use its best efforts to cause the Merger to be
      consummated as soon as practicable following the fulfillment or waiver of the
      conditions specified in Article V., but not sooner than 10 days from the closing
      date to allow notification of shareholders as required under Delaware
      Law.

     

    SECTION
      1.4:  Effects
      of the Merger.
      At and
      after the Effective Time, the Merger will have the effects set forth in Delaware
      Law.

     

    SECTION
      1.5:  Charter
      and Bylaws; Officers and Directors.

     

    (a)  Charter.
      The
      certificate of incorporation of TenthGate, as in effect immediately prior to
      the
      Effective Time, shall be the certificate of incorporation of the surviving
      corporation after the Effective Time. 

     

    (b)  Bylaws.
      The
      Bylaws of TenthGate, as in effect immediately prior to the Effective Time,
      shall
      be the Bylaws of the surviving corporation after the Effective
      Time.

     

    (c)  Officers.
      The
      officers of TenthGate immediately prior to the Effective Time shall be the
      officers of the surviving corporation after the Effective Time.

     

    (d)  Directors.
      The
      directors of TenthGate immediately prior to the Effective Time shall be the
      directors of the surviving corporation after the Effective Time. 

     

    SECTION
      1.6:  Effects
      on TenthGate Stock.
      As of
      the Effective Time, by virtue of the Merger and without any action on the part
      of any holder of any share of Common Stock, $0.001 par value per share, of
      TenthGate (the “TenthGate Stock”):

     

    (a)  Cancellation
      of Treasury Stock.
      All
      shares of TenthGate Stock issued and owned by TenthGate, if any, at the
      Effective Time shall, by virtue of the Merger, cease to be outstanding and
      shall
      be canceled and retired, and no consideration shall be delivered in exchange
      therefore. 

     

    (b)  Conversion
      of TenthGate Stock.
      Subject
      to Section 2.3, each issued and outstanding share of TenthGate Stock, other
      than
      shares to be canceled in accordance with Section 1.6(a) and Dissenting Shares
      (as defined in Section 1.9), if any, shall be converted into the right to
      receive fully paid and nonassessable shares of Common Stock, par value $.001
      per
      share, of TenthGate Int. (the “TenthGate Int. Stock”) as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              Each
                Share of 

              TenthGate
                Stock

            	
              Number
                of Shares of TenthGate Int. Stock 

              Into
                Which Converted

            
	
               

              One
                (1)

            	
               

              One
                (1) (as the same may be adjusted according to Section 1.10, the “Exchange
                Ratio”) of TenthGate Int. Stock

            

    

    

     

    The
      shares of TenthGate Int. Stock into which shares of TenthGate Stock are
      converted pursuant to the foregoing are referred to herein collectively as
      the
“Merger Consideration.”

     

    As
      a
      result of the Merger and without any action on the part of the holders thereof,
      at the Effective Time, all shares of TenthGate Stock shall cease to be
      outstanding and shall be canceled and retired and shall cease to exist, and
      each
      holder of a certificate which immediately prior to the Effective Time
      represented any such share of TenthGate Stock (such certificate or other
      evidence of ownership, a “Certificate”) shall thereafter cease to have any
      rights with respect to such shares of TenthGate Stock, except the right (subject
      to Section 1.6(a) and Section 1.9) to receive the applicable Merger
      Consideration with respect thereto and any dividends or other distributions
      to
      which holders of TenthGate Stock become entitled all in accordance with this
      Article I upon the surrender of such Certificate.

     

    (c)  Issuance
      of Shares of TenthGate.
      TenthGate will issue TenthGate Int. One Hundred (100) shares of TenthGate common
      stock. Whereupon, TenthGate will become a wholly-owned subsidiary of TenthGate
      Int. at Closing.

     

    SECTION
      1.7:  Restrictions
      on Transfer. The
      shares of TenthGate Int. Stock issuable pursuant to this Agreement are subject
      to restrictions and limitations on transfer and shall not be transferred unless
      permitted by law and in accordance with the provisions of this Section 1.7,
      as
      follows: 

     

     

    (a)  Merger
      Consideration.
      All of
      the Merger Consideration will be subject to a restriction on transfer for a
      period of 180 days after the Effective Time.

     

    (b)  Limitations
      on Transfer.
      In
      addition to any other limitation on transfer created by applicable securities
      laws, each recipient of TenthGate Int. Stock agrees that such recipient (which
      term shall include any permitted transferee or assignee) shall not assign,
      encumber or dispose of any interest in the shares of TenthGate Int. Stock except
      in compliance with applicable securities laws.

     

    (c)  Legends.
      The
      certificate(s) representing the shares of TenthGate Int. Stock issuable pursuant
      to this Agreement shall bear the following or similar legends (as well as any
      legends required by applicable laws):

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE
      SECURITIES LAWS, OR OTHER APPLICABLE LAWS, AND MAY NOT BE OFFERED, SOLD,
      TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND QUALIFICATION UNDER
      APPLICABLE STATE SECURITIES LAWS OR OTHER APPLICABLE LAWS OR AN OPINION OF
      COUNSEL SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION
      IS
      AVAILABLE.

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE
      WITH THE TERMS OF THE MERGER AGREEMENT PURSUANT TO WHICH SUCH SECURITIES WERE
      ISSUED AND THAT IS ON FILE WITH THE SECRETARY OF THE COMPANY. 

     

    SECTION
      1.8:  Certain
      Adjustments.
      If,
      between the date of this Agreement and the Effective Time, the outstanding
      shares of TenthGate Int. Stock shall have been increased, decreased, changed
      into or exchanged for a different number of shares or different class, in each
      case, by reason of any reclassification, recapitalization, stock split,
      split-up, combination or exchange of shares or a stock dividend or dividend
      payable in any other securities shall be declared with a record date within
      such
      period, or any similar event shall have occurred, the applicable Merger
      Consideration shall be appropriately adjusted to provide to the holder of
      TenthGate Stock the same economic effect as contemplated by this Agreement
      prior
      to such event.

     

    SECTION
      1.9:  Dissenting
      Shares.
      Notwithstanding anything in this Agreement to the contrary, shares of TenthGate
      Stock which are issued and outstanding immediately prior to the Effective Time
      and which are held by holders of such shares of TenthGate Stock who have
      properly exercised appraisal rights with respect thereto in accordance with
      Section 1300 et seq. of the Delaware Law (the "Dissenting Shares") shall not
      be
      converted into or be exchangeable for the right to receive the Merger
      Consideration, and holders of such shares of TenthGate Stock shall be entitled
      to receive payment of the appraised value of such shares of TenthGate Stock
      in
      accordance with the provisions of such provisions of the Delaware Law unless
      and
      until such holders fail to perfect or shall have effectively withdrawn or lost
      their rights to appraisal and payment under the Delaware Law. If, after the
      Effective Time, any such holder fails to perfect or shall have effectively
      withdrawn or lost such right, such shares of TenthGate Stock shall thereupon
      be
      treated as if they had been converted into and to have become exchangeable
      for,
      at the Effective Time, the right to receive the Merger Consideration to which
      the holder of such shares of TenthGate Stock is entitled, without any interest
      or dividends thereon. 

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II.  

    EXCHANGE
      OF CERTIFICATES

     

    SECTION
      2.1:  Exchange
      of Stock Certificates. 

     

    (a)  At
      any
      time on or after the Effective Time, holders of Certificates will be entitled,
      upon surrender of such certificates to TenthGate Int. or its transfer agent,
      to
      receive in exchange therefor one or more new stock certificates evidencing
      ownership of the number of TenthGate Int. Stock into which such TenthGate Stock
      represented thereby shall have been converted in the Merger. If any certificate
      representing shares of TenthGate Int. Stock is to be issued in a name other
      than
      that in which the certificate surrendered in exchange therefor is registered,
      it
      shall be a condition of the issuance thereof that the certificate so surrendered
      shall be properly endorsed and otherwise in proper form for transfer, and that
      the issuance is in compliance with all applicable securities laws.

     

    (b)  From
      and
      after the Effective Time, TenthGate Int. shall be entitled to treat the
      Certificates which prior to the Effective Time represented shares of TenthGate
      Stock and which have not yet been surrendered for exchange as evidencing the
      ownership of the number of full shares of TenthGate Int. Stock into which the
      shares of TenthGate Stock represented thereby shall have been converted pursuant
      to Section 1.6, notwithstanding the failure to surrender such certificates.
      

     

    SECTION
      2.2:  Distributions
      with Respect to Unexchanged Shares.
      No
      dividends or other distributions with a record date after the Effective Time
      shall be paid to the holder of any unsurrendered Certificate with respect to
      the
      shares of TenthGate Int. Stock that such holder would be entitled to receive
      upon surrender of such Certificate until such holder shall surrender such
      Certificate in accordance with Section 2.1. Following surrender of any such
      Certificate, there shall be paid to the record holder thereof without interest,
      (a) the amount of dividends or other distributions with a record date after
      the
      Effective Time theretofore paid with respect to such whole shares of TenthGate
      Int. Stock, and (b) at the appropriate payment date, the amount of dividends
      or
      other distributions with a record date after the Effective Time and a payment
      date subsequent to such surrender payable with respect to such shares of
      TenthGate Int. Stock. 

     

    SECTION
      2.3:  No
      Fractional Shares of TenthGate Int. Stock. 

     

    (a)  No
      certificates or scrip for fractional shares of TenthGate Int. Stock shall be
      issued upon the surrender for exchange of Certificates pursuant to this Article
      II in the Merger and such fractional share interest will not entitle the owner
      thereof to vote or to have any rights of a stockholder of TenthGate Int. or
      a
      holder of shares of TenthGate Int. Stock. 

     

    (b)  Notwithstanding
      any other provision to this Agreement, any fraction of a share of TenthGate
      Int.
      Stock to which a holder of shares of TenthGate Stock shall be entitled to
      receive in exchange pursuant to the Merger (determined after taking into account
      all Certificates delivered by such holder) shall be rounded to the nearest
      whole
      number.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.4:  Lost
      Certificates.
      If any
      Certificate shall have been lost, stolen or destroyed, upon the making of an
      affidavit of that fact by the Person claiming such Certificate to be lost,
      stolen or destroyed and, if required by TenthGate Int., the posting by such
      Person of a bond in such reasonable amount as TenthGate Int. may direct as
      indemnity against any claim that may be made against it with respect to such
      Certificate, TenthGate Int. or its transfer agent will deliver in exchange
      for
      such lost, stolen or destroyed Certificate the applicable Merger Consideration
      with respect to the share of TenthGate Stock formerly represented thereby and
      unpaid dividends and distributions on shares of TenthGate Int. Stock deliverable
      in respect thereof, pursuant to this Agreement.

     

    SECTION
      2.5:  Further
      Assurances.
      At and
      after the Effective Time, the officers and directors of TenthGate Int. will
      be
      authorized to execute and deliver, in the name and on behalf of TenthGate,
      any
      deeds, bills of sale, assignments or assurances and to take and do, in the
      name
      and on behalf of TenthGate, any other actions and things to vest, perfect or
      confirm of record or otherwise in TenthGate Int. any and all right, title and
      interest in, to and under any of the rights, properties or assets acquired
      or to
      be acquired by TenthGate Int. as a result of, or in connection with, the
      Merger.

     

    SECTION
      2.6:  Closing
      of Transfer Books.
      The
      stock transfer books of TenthGate shall be closed immediately upon the Effective
      Time and there shall be no further registration of transfers of shares of
      TenthGate thereafter on the records of TenthGate. 

     

    ARTICLE
      III.  

    REPRESENTATIONS
      AND WARRANTIES

     

    SECTION
      3.1:  Representations
      and Warranties of TenthGate.
      TenthGate represents and warrants to TenthGate Int. as follows: 

     

    (a)  Organization,
      Standing and Power; Subsidiaries. 

     

    (i)  TenthGate
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Delaware, has and authority to own, lease and operate
      its
      properties and to carry on its business as now being conducted, and is duly
      qualified and in good standing to do business in each jurisdiction in which
      the
      nature of its business or the ownership or leasing of its properties makes
      such
      qualification necessary other than in such jurisdictions where the failure
      to so
      qualify or to be in good standing would not reasonably be expected to have
      a
      material adverse effect on the business, financial condition or results of
      operations of TenthGate, taken as a whole.

     

    (ii)  The
      copies of the certificate of incorporation and bylaws of TenthGate which were
      previously furnished or made available to TenthGate Int. are true, complete
      and
      correct copies of such documents as in effect on the date of this
      Agreement.

     

    (b)  Capital
      Structure.
      As of
      the date of this Agreement, the only authorized capital stock of TenthGate
      consists of 150,000,000_ common shares of TenthGate Stock, of which 52,450,200
      shares are outstanding and 50,000,000 preferred shares of TenthGate Stock of
      which 0 shares are outstanding. As of the date of this Agreement, there are
      no
      outstanding options, warrants, commitments, agreements or any other rights
      of
      any character entitling any person to acquire any of the capital stock or other
      interest in TenthGate except for the 4 Convertible Notes Holders (“NOTES”) as
      previously provided to TenthGate Int. in due diligence disclosures.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Authority;
      No Conflicts. 

     

    (i)  TenthGate
      has all requisite corporate power and authority to execute and deliver this
      Agreement and to consummate the transactions contemplated hereby, subject to
      the
      approval of this Agreement by the affirmative vote of the holders of a majority
      of the outstanding shares of TenthGate Stock. The execution and delivery of
      this
      Agreement and the consummation of the transactions contemplated hereby have
      been
      duly authorized by all necessary corporate action on the part of TenthGate
      and
      no other corporate proceedings on the part of TenthGate are necessary to
      authorize the execution and delivery of this Agreement or to consummate the
      Merger and the other transactions contemplated hereby, subject to the approval
      of this Agreement by the affirmative vote of the holders of a majority of the
      outstanding shares of TenthGate Stock. This Agreement has been duly executed
      and
      delivered by TenthGate and constitutes a valid and binding agreement of
      TenthGate, enforceable against TenthGate in accordance with its terms, except
      as
      such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and similar laws relating to or affecting creditors
      generally or by general equitable principles (regardless of whether such
      enforceability is considered in a proceeding in equity or at law).

     

    (ii)  Neither
      the execution, delivery and performance by TenthGate of this Agreement nor
      the
      consummation of the transactions contemplated hereby (1) violates any provision
      of the articles of incorporation or bylaws of TenthGate; (2) violates, conflicts
      with or results in a breach or default under (after the giving of notice or
      the
      passage of time or both), permits the termination of, or relieves the other
      party of its obligations under, any agreement or instrument to which TenthGate
      is a party or by which it or any of its properties or assets may be bound,
      or
      results in the creation of any mortgage, lien, security interest, charge or
      other encumbrance of any kind upon any of its properties or assets; or (3)
      violates any laws, regulations or orders of any applicable jurisdiction which
      are binding on TenthGate.

     

    (iii)  No
      consent, approval, order or authorization of, or registration, declaration
      or
      filing with, any governmental agency or authority is required by TenthGate
      in
      connection with the execution and delivery of this Agreement or the consummation
      of the Merger and the other transactions contemplated hereby, except for those
      required under (A) Delaware Law, and (B) any applicable state securities or
      “blue sky” laws. 

     

    (d)  Litigation.
      There
      are no actions, suits, claims, judgments or proceedings pending or, to the
      knowledge of TenthGate, threatened, against or affecting TenthGate which,
      individually or in the aggregate, would reasonably be expected to have a
      material adverse effect on the business, financial condition or results of
      operations of TenthGate.

     

    (e)   Brokers
      or Finder.
      No
      agent, broker, investment banker, or other firm or Person is or will be entitled
      to any broker’s or finder’s fee or any other similar commission in connection
      with any of the transactions contemplated by this Agreement. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)  Disclosure.
      Neither
      this Agreement, the Schedules hereto, nor any audited or unaudited financial
      statements, documents or certificates furnished or to be furnished to TenthGate
      Int. by or on behalf of TenthGate pursuant to this Agreement or in connection
      with the transactions contemplated hereby contains or will contain any untrue
      statement of a material fact or omits or will omit to state a material fact
      necessary in order to make the statements contained herein or therein not
      misleading.

     

    (g)  Accredited
      Shareholders. All
      Shareholders of TenthGate are "accredited persons" as this term is defined
      under
      Rule 501 of Regulation D of the Securities Act of 1933, as amended.

     

    SECTION
      3.2:  Representations
      and Warranties of TenthGate Int..
      TenthGate Int. represents and warrants to TenthGate as follows: 

     

    (a)  Organization,
      Standing and Power; Subsidiaries. 

     

    (i)  TenthGate
      Int. is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware, has and authority to own, lease and
      operate its properties and to carry on its business as now being conducted,
      and
      is duly qualified and in good standing to do business in the State of Delaware
      and in each other jurisdiction in which the nature of its business or the
      ownership or leasing of its properties makes such qualification necessary other
      than in such jurisdictions where the failure to so qualify or to be in good
      standing would not reasonably be expected to have a material adverse effect
      on
      the business, financial condition or results of operations of TenthGate Int.
      and
      its Subsidiar(ies), taken as a whole. Merger Sub is a corporation duly
      organized, validly existing and in good standing under the laws of the State
      of
      Utah, and has and authority to own, lease and operate its properties and to
      carry on its business as now being conducted.

     

    (ii)  TenthGate
      Int. does not have any Subsidiaries and does not directly or indirectly own
      any
      interest or investment in any other Person, except for Merger Sub.

     

    (iii)  The
      copies of the certificate or articles of incorporation and bylaws of TenthGate
      Int. and Merger Sub which were previously furnished or made available to
      TenthGate are true, complete and correct copies of such documents as in effect
      on the date of this Agreement.

     

    (b)  Capital
      Structure.
      As of
      the date of this Agreement, the only authorized capital stock of TenthGate
      Int.
      consists of 200,000,000 common shares of TenthGate Int. Stock, of which
      22,500,000 shares are outstanding and 10,000,000 shares of preferred stock
      of
      which 0 shares are outstanding. As of the date of this Agreement, there are
      no
      outstanding options, warrants, commitments, agreements or any other rights
      of
      any character entitling any person to acquire any of the capital stock or other
      interest in TenthGate Int. As of the date of this Agreement, the authorized
      capital stock of Merger Sub consists of 1,000,000 shares of common stock, $.001
      par value per share, of which, 100 shares of common stock have been issued
      to
      TenthGate Int. at a price of $.001 per share.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Authority;
      No Conflicts. 

     

    (i)  Each
      of
      TenthGate Int. and Merger Sub has all requisite corporate power and authority
      to
      execute and deliver this Agreement and to consummate the transactions
      contemplated hereby. The execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby have been duly authorized
      by all necessary corporate action on the part of each of TenthGate Int. and
      Merger Sub and no other corporate proceedings on the part of TenthGate Int.
      or
      Merger Sub are necessary to authorize the execution and delivery of this
      Agreement or to consummate the Merger and the other transactions contemplated
      hereby. This Agreement has been duly executed and delivered by each of TenthGate
      Int. and Merger Sub and constitutes a valid and binding agreement of each of
      TenthGate Int. and Merger Sub, enforceable against them in accordance with
      its
      terms, except as such enforceability may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium and similar laws relating to or affecting
      creditors generally or by general equitable principles (regardless of whether
      such enforceability is considered in a proceeding in equity or at
      law).

     

    (ii)  Neither
      the execution, delivery and performance by TenthGate Int. or Merger Sub of
      this
      Agreement nor the consummation of the transactions contemplated hereby (1)
      violates any provision of the articles of incorporation or bylaws of TenthGate
      Int. or Merger Sub; (2) violates, conflicts with or results in a breach or
      default under (after the giving of notice or the passage of time or both),
      permits the termination of, or relieves the other party of its obligations
      under, any agreement or instrument to which TenthGate Int. or Merger Sub is
      a
      party or by which it or any of its properties or assets may be bound, or results
      in the creation of any mortgage, lien, security interest, charge or other
      encumbrance of any kind upon any of its properties or assets; or (3) violates
      any laws, regulations or orders of any applicable jurisdiction which are binding
      on TenthGate Int. or Merger Sub.

     

    (iii)  No
      consent, approval, order or authorization of, or registration, declaration
      or
      filing with, any governmental agency or authority is required by TenthGate
      Int.
      or Merger Sub in connection with the execution and delivery of this Agreement
      or
      the consummation of the Merger and the other transactions contemplated hereby,
      except for those required under (A) Delaware Law, and (B) any applicable state
      securities or “blue sky” laws. 

     

    (d)  Litigation.
      There
      are no actions, suits, claims, judgments or proceedings pending or, to the
      knowledge of TenthGate Int., threatened, against or affecting TenthGate Int.
      or
      Merger Sub which, individually or in the aggregate, would reasonably be expected
      to have a material adverse effect on the business, financial condition or
      results of operations of TenthGate Int. and its Subsidiaries, taken as a whole.
      There are no debts, obligations, claims or taxing authority liabilities that
      will survive the merger transaction. If such are ever deemed to exist anytime
      post merger, they will remain as the sole responsibility and liability of the
      previous, pre-merger officers and directors of TenthGate Int.

     

    (e)   Brokers
      or Finder.
      No
      agent, broker, investment banker, or other firm or Person is or will be entitled
      to any broker’s or finder’s fee or any other similar commission in connection
      with any of the transactions contemplated by this Agreement. 

     

    (f)  Disclosure.
      Neither
      this Agreement, the Schedules hereto, nor any audited or unaudited financial
      statements, documents or certificates furnished or to be furnished to TenthGate
      by or on behalf of TenthGate Int. or Merger Sub pursuant to this Agreement
      or in
      connection with the transactions contemplated hereby contains or will contain
      any untrue statement of a material fact or omits or will omit to state a
      material fact necessary in order to make the statements contained herein or
      therein not misleading.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)  Securities
      Compliance; Blue Sky.
      The
      TenthGate Int. Common Stock to be issued pursuant to Section 1.6 hereof will
      be
      issued in a transaction exempt from registration under the Securities Act,
      by
      reason of Section 4(2) thereof. TenthGate Int. shall take such action as
      TenthGate Int. shall reasonably determine to be necessary in order to obtain
      an
      exemption for or to qualify its Common Stock, if any, to be issued in connection
      with the Merger under applicable securities or “Blue Sky” laws of the states of
      the United States; provided, however, that TenthGate Int. shall not for any
      such
      purpose be required to qualify to transact business as a foreign corporation
      in
      any jurisdiction where it is not so qualified or to consent to general service
      of process in any such jurisdiction. 

     

    ARTICLE
      IV.  

    COVENANTS
      AND AGREEMENTS 

     

    SECTION
      4.1:  Conduct
      of Business. During
      the period from the date of this Agreement and continuing until the Effective
      Time, each of TenthGate and TenthGate Int. agrees as to itself and its
      Subsidiaries (except as expressly contemplated or permitted by this Agreement,
      or to the extent the other party shall otherwise consent in
      writing):

     

    (a)  To
      carry
      on their respective businesses in the usual, regular and ordinary course in
      all
      material respects, in substantially the same manner as heretofore conducted,
      to
      preserve intact their present business organization and structure, to keep
      available the services of their present officers, agents and full-time
      employees, to use best efforts to preserve and maintain their assets and the
      goodwill of their respective businesses and to use best efforts to preserve
      their relationships with customers, clients, independent contractors, employees
      and other persons having business dealings with it or material to the operation
      of their respective businesses; 

     

    (b)  Not
      to
      declare, set aside, distribute or pay any dividend or other distributions in
      respect of its capital stock, or split, combine or reclassify any of its capital
      stock, or authorize for issuance, issue, sell, deliver or agree or commit to
      issue, sell or deliver (whether through the issuance or granting of options,
      warrants, convertible or exchangeable securities, commitments, subscriptions,
      rights to purchase or otherwise) any shares of capital stock or any other
      securities, or amend any of the terms of any such securities;

     

    (c)  Not
      to
      incur any liability (other than liabilities incurred in the ordinary course
      of
      their respective businesses, consistent with past practice, which are not in
      the
      aggregate material thereto), or pay, discharge or satisfy any material claim
      or
      liability, other than the payment, discharge or satisfaction in the ordinary
      course, of their respective businesses of claims or liabilities incurred in
      the
      ordinary course, consistent with past practice; or

     

    (d)  Not
      to
      sell, transfer convey, assign or otherwise dispose of any assets, except in
      the
      ordinary course, consistent with past practices, or create, incur or assume
      any
      Lien on any Assets.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    SECTION
      4.2:  Access
      to Information.
      Prior to
      the Closing Date, upon reasonable notice, each party shall (and shall cause
      its
      Subsidiaries to) afford to the officers, employees, accountants, counsel,
      financial advisors, agents and other representatives (collectively, the
“Representatives”) of the other party reasonable access during normal business
      hours to its properties, books, contracts, commitments, records, officers and
      employees, and, during such period, such party shall (and shall cause its
      Subsidiaries to) furnish promptly to the other party copies of such information
      concerning it and its business, properties and personnel as such other party
      may
      reasonably request. 

     

    SECTION
      4.3:  Consents,
      Filings and Authorizations; Efforts to Consummate.
      Subject
      to the terms and conditions of this Agreement, as promptly as practicable after
      the date hereof, each party will use its good faith efforts to take, or cause
      to
      be taken, all actions and to do, or cause to be done, all things necessary,
      proper or advisable under this Agreement and applicable laws and regulations
      to
      consummate the Merger and the other transactions contemplated by this Agreement,
      including without limitation, all filings and submissions under applicable
      laws
      as may be required for them to consummate the transactions contemplated hereby
      in accordance with the terms hereof, and such consents of any third party,
      whether private or governmental, required in connection with such party's
      performance of such transactions, shall furnish copies thereof to each other
      party prior to such filing, and shall not make any such filing or submission
      to
      which the other party reasonably objects in writing. All such filings shall
      comply in form and content in all material respects with applicable laws. Each
      party hereto shall cooperate with the other in all of the foregoing.

     

    SECTION
      4.4:  Approval
      of Shareholders.
      TenthGate shall (a) as soon as reasonably practicable for the purpose of voting
      on the adoption and approval of this Agreement and the Merger (the “Proposal”)
      and in accordance with Delaware Law, applicable federal and state securities
      laws and its articles of incorporation and bylaws, either obtain the written
      consent of the holders of a majority of the outstanding shares of TenthGate
      Stock or cause a meeting of its shareholders to be duly called and held, (b)
      recommend to its shareholders approval of the Proposal (except to the extent
      that the board of directors of TenthGate Int. determines, after receiving the
      written advice of counsel, that such act is not permitted by such board of
      directors in the discharge of their fiduciary duties to TenthGate), (c) use
      its
      best efforts to obtain the necessary approval of its shareholders, and (d)
      take
      all action required under Delaware Law with respect to the holders of Dissenting
      Shares. TenthGate Int. will take any action required to be taken under Delaware
      Law, and applicable federal and state securities laws and will also take action
      to secure all necessary exemptions or clearances under Delaware Law and all
      securities laws applicable to (i) the Merger, and (ii) the issuance of TenthGate
      Int. Stock pursuant thereto. 

     

    SECTION
      4.5:  Tax-Free
      Qualification.
      Each
      party hereto shall use its reasonable best efforts not to, and shall use its
      reasonable best efforts not to permit any of its Subsidiaries to, take any
      action that would prevent or impede the Merger from qualifying as a
      reorganization under Section 368 of the Code.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      4.6:  Confidentiality.
      Each
      party shall hold in strict confidence, and shall use its best efforts to cause
      each of its Representatives to hold in strict confidence, unless compelled
      to
      disclose by judicial or administrative process, or by other requirements of
      law,
      all information concerning the other party which it has obtained prior to,
      on or
      after the date hereof in connection with this Agreement and the transactions
      contemplated hereby, and each party shall not use or disclose to others, or
      permit the use of or disclosure of, any such information so obtained, and will
      not release or disclose such information to any other Person, except its
      Representatives who need to know such information in connection with this
      Agreement and the transactions contemplated hereby. The foregoing provision
      shall not apply to any such information to the extent a party can demonstrate
      (i) was known by it prior to disclosure by the other party, (ii) was rightfully
      obtained by it from a third party who lawfully obtained such information under
      conditions which did not require that such information be held in confidence,
      or
      (iii) was, at the time of disclosure or thereafter becomes, generally available
      to the public through no act or failure on its part. If this Agreement is
      terminated as provided herein, each party hereto shall return to the other
      all
      tangible evidence of all such disclosed information.

     

    SECTION
      4.7:  Public
      Announcements.
      The
      parties will consult with each other before issuing any press release or
      otherwise making any public statement with respect to this Agreement and the
      transactions contemplated hereby, and will not issue any such press release
      or
      make any such public statement without the prior approval of the other party,
      except as may be required by applicable law in which event the other party
      shall
      have the right to review and comment upon (but not approve) any such press
      release or public statement prior to its issuance.

     

    SECTION
      4.8:  Expenses.
      Except
      as otherwise specifically provided in this Agreement, the parties hereto shall
      bear their respective expenses incurred in connection with the preparation,
      execution and performance of this Agreement and the transactions contemplated
      hereby, including without limitation, all fees and expenses of their respective
      counsel, accountants and other representatives.

     

    SECTION
      4.9:  Directors’
      and Officers’ Indemnification and Insurance.
      TenthGate Int. shall (a) indemnify and hold harmless, and provide advancement
      of
      expenses to, all past and present directors, officers, employees, agents and
      advisors of TenthGate and its Subsidiaries (in all their capacities) (i) to
      the
      same extent such persons are indemnified or have the right to advancement of
      expenses as of the date of this Agreement by TenthGate pursuant to TenthGate’s
      certificate of incorporation, bylaws and indemnification agreements, if any,
      in
      existence on the date hereof with any directors, officers, employees, agents
      and
      advisors of TenthGate and its Subsidiaries, and (b) without limitation to clause
      (a), to the fullest extent permitted by law, in each case for acts or omissions
      occurring at or prior to the Effective Time (including for acts or omissions
      occurring in connection with the approval of this Agreement and the consummation
      of the transactions contemplated hereby), (ii) include and cause to be
      maintained in effect in TenthGate Int. (or any successor’s) certificate of
      incorporation and bylaws after the Effective Date, provisions regarding
      elimination of liability of directors, indemnification of officers, directors,
      employees, agents and advisors, and advancement of expenses which are, in the
      aggregate, no less advantageous to the intended beneficiaries than the
      corresponding provisions contained in the current articles of incorporation
      and
      bylaws of TenthGate.,
      

     

    SECTION
      4.10:  Directors
      and Executive Officers of TenthGate Int.
      The
      parties hereto will take all action necessary to cause (a) the Board of
      Directors of TenthGate Int. as of the Effective Time to be comprised of the
      persons listed in Part 4.10(a) of the Disclosure Schedule; and (b) the
      individuals listed in Part 4.10(b) of the Disclosure Schedule to be appointed
      as
      officers of TenthGate Int. as of the Effective Time.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V.  

    CONDITIONS
      TO CLOSING

     

    SECTION
      5.1:  Conditions
      to the Obligations Each Party.
      The
      respective obligations of each party to effect the Merger are subject to the
      satisfaction or waiver on or prior to the Closing Date of the following
      conditions:

     

    (a)  No
      Injunction.
      No
      provision of any applicable law and no order, decree, ruling or other action
      of
      any governmental authority shall prohibit the consummation of the transactions
      contemplated by this Agreement.

     

    (b)  No
      Proceeding or Litigation.
      No
      action, suit, claim before any legal, administrative or arbitration proceeding
      instituted by any person shall have been commenced or pending against any of
      the
      parties hereto or any of their respective affiliates, officers or directors
      which seeks to restrain, prevent, change or delay in any material respect the
      Merger or seeks to challenge any of the material terms or provisions of this
      Agreement or seeks material damages in connection with any of such
      transactions.

     

    (c)  Government
      Consents.
      All
      consents, approvals, authorizations or orders of, or filings with, any
      governmental agency required for the consummation of the transactions
      contemplated hereby shall have been obtained or made.

     

    (d)  Corporate
      Proceedings.
      This
      Agreement shall have been adopted by the requisite affirmative vote of the
      shareholders of TenthGate in accordance with TenthGate’s certificate of
      incorporation and bylaws and Delaware Law. 

     

    SECTION
      5.2:  Additional
      Conditions to Obligations of TenthGate.
      The
      obligation of TenthGate to effect the Merger are subject to the satisfaction,
      or
      waiver by TenthGate Int., on or prior to the Closing Date of the following
      additional conditions:

     

    (a)  Performance.
      TenthGate Int. shall have performed and complied with all agreements,
      obligations and covenants required by this Agreement to be performed or complied
      with by it on or prior to the Closing Date.

     

    (b)  Representations
      and Warranties.
      The
      representations and warranties of TenthGate Int. contained in this Agreement
      shall be true and correct in all material respects as of the date of this
      Agreement and as of the Closing Date as though made on and as of the Closing
      Date.

     

    SECTION
      5.3:  Additional
      Conditions to Obligations of TenthGate Int. The
      obligation of TenthGate Int. to effect the Merger are subject to the
      satisfaction, or waiver, on or prior to the Closing Date of the following
      additional conditions:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (a)  Performance.
      TenthGate shall have performed and complied with all agreements, obligations
      and
      covenants required by this Agreement to be performed or complied with by it
      on
      or prior to the Closing Date.

     

    (b)  Representations
      and Warranties.
      The
      representations and warranties of TenthGate contained in this Agreement shall
      be
      true and correct in all material respects as of the date of this Agreement
      and
      as of the Closing Date as though made on and as of the Closing
      Date.

     

    ARTICLE
      VI.  

     

    TERMINATION

     

    SECTION
      6.1:  Termination.
      This
      Agreement may be terminated and the Merger and other transactions contemplated
      hereby may be abandoned at any time prior to the Effective Time:

     

    (a)  By
      mutual
      written consent of the parties hereto;

     

    (b)  By
      TenthGate, if TenthGate Int. shall have breached or failed to perform any of
      its
      representation, warranties, covenants or other agreements contained in this
      Agreement, such that the conditions set forth in Section 5.1(a) or (b) are
      not
      capable of being satisfied on or before March 30, 2007 (the “Termination
      Date”);

     

    (c)  By
      TenthGate Int., if TenthGate shall have breached or failed to perform any of
      its
      representation, warranties, covenants or other agreements contained in this
      Agreement, such that the conditions set forth in Section 5.1(a) or (b) are
      not
      capable of being satisfied on or before the Termination Date; or

     

    (d)  By
      either
      party hereto, if any governmental entity shall have issued an order, decree
      or
      ruling or other action permanently restraining, enjoining or otherwise
      prohibiting the transactions contemplated by this Agreement, and such order,
      decree, ruling or other action shall have become final and
      nonappealable.

     

    SECTION
      6.2:  Effect
      of Termination; Right to Proceed.
      In the
      event that this Agreement shall be terminated pursuant to this Article VI,
      all
      further obligations of the parties under the Agreement shall terminate without
      further liability of any party hereunder (except with respect to Section 4.6
      (Confidentiality), Section 4.7 (Public Announcements), and Section 4.8
      (Expenses) as provided below). The agreements contained in Sections 4.6, 4.7
      and
      4.8 shall survive the termination hereof. In the event that a condition
      precedent to its obligation is not met, nothing contained herein shall be deemed
      to require any party to terminate this Agreement, rather than to waive such
      condition precedent and proceed with the Merger and the other transactions
      contemplated hereby.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII.  

    GENERAL
      PROVISIONS

     

    SECTION
      7.1:  Non-Survival
      of Representations, Warranties and Agreements. None
      of
      the representations, warranties, covenants and other agreements in this
      Agreement or in any instrument delivered pursuant to this Agreement, including
      any rights arising out of any breach of such representations, warranties,
      covenants, agreements and other provisions, shall survive the Effective Time,
      except for those covenants, agreements and other provisions contained herein
      that by their terms apply or are to be performed in whole or in part after
      the
      Effective Time and this Article VII. 

     

    SECTION
      7.2:  Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed duly given (a) on the date of delivery if delivered personally, or by
      telecopy or telefacsimile, upon confirmation of receipt, (b) on the first
      Business Day following the date of dispatch if delivered by a recognized
      next-day courier service, or (c) on the tenth Business Day following the date
      of
      mailing if delivered by registered or certified mail, return receipt requested,
      postage prepaid. All notices hereunder shall be delivered as set forth below,
      or
      pursuant to such other instructions as may be designated in writing by the
      party
      to receive such notice:

     

    
      	
              If
                to TenthGate to:

            	
              TENTHGATE
                INCORPORATED

              1900
                Campus Commons Drive, Suite 100

              Reston,
                VA 20191

              Attention: Tim
                Novak, Chief Executive Officer

              Fax: 703-766-6501

            
	 	 
	
              with
                a copy to:

            	
              Anslow
                & Jaclin, LLP

              195
                Route 9 South, Suite 204

              Manalapan,
                NJ 07726

              Attention:
                Gregg Jaclin, Esq.

              Fax:
                732-577-1188

            
	
               

            	 
	
              If
                to TenthGate Int. or Merger Sub to:

            	
              TenthGate
                Int., Inc.

              10757
                South River Front Pkwy

              Suite
                125

              South
                Jordan, Utah 84095

              Fax:
                801 816-2599

            
	 	 
	
              with
                a copy to:

            	
              Carley
                Enterprises, Inc.

              2206
                Eastland Drive, #305

              Bloomington,
                IL 61704

            
	 	
              Attention:
                Matthew Carley

            
	 	
              Fax:
                309-665-0824

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SECTION
      7.3:  Entire
      Agreement; No Third Party Beneficiaries. 

     

    (a)  This
      Agreement (including the Schedules and Exhibits hereto) and the other agreements
      and instruments of the parties delivered in connection herewith constitute
      the
      entire agreement and supersede all prior agreements and understandings, both
      written and oral, among the parties with respect to the subject matter hereof.
      

     

    (b)  This
      Agreement shall be binding upon and inure solely to the benefit of each party
      hereto, and nothing in this Agreement, express or implied, is intended to or
      shall confer upon any other Person any right, benefit or remedy of any nature
      whatsoever under or by reason of this Agreement, other than Section 4.9 (which
      is intended to be for the benefit of the Persons covered thereby).

     

    SECTION
      7.4:  Waivers
      and Amendments, Non-Contractual Remedies, Preservation of
      Remedies.
      This
      Agreement may be amended, superseded, canceled, renewed or extended only by
      a
      written instrument signed by the parties hereto. The provisions hereof may
      be
      waived in writing by the parties hereto. No delay on the part of any party
      in
      exercising any right, power or privilege hereunder shall operate as a waiver
      thereof, nor shall any waiver on the part of any party of any such right, power
      or privilege, nor any single or partial exercise of any such right, power or
      privilege, preclude any further exercise thereof or the exercise of any other
      such right, power or privilege. Except as otherwise provided herein, the rights
      and remedies herein provided are cumulative and are not exclusive of any rights
      or remedies that any party may otherwise have at law or in equity.

     

    SECTION
      7.5:  Governing
      Law.
      This
      Agreement shall be governed and construed in accordance with the laws of the
      State of Delaware applicable to agreements made and to be performed entirely
      within such State, without regard to the conflict of law rules
      thereof.

     

    SECTION
      7.6:  Consent
      to Jurisdiction and Service of Process.
      The
      parties hereto irrevocably (a) agree that any suit, action or other legal
      proceeding arising out of this Agreement may be brought in the courts of the
      State of Delaware or the courts of the United States located in the State of
      Delaware, (b) consent to the jurisdiction of each court in any such suit, action
      or proceeding, (c) waive any objection which they, or any of them, may have
      to
      the laying of venue of any such suit, action or proceeding in any of such
      courts, and (d) waive the right to a trial by jury in any such suit, action
      or
      other legal proceeding.

     

    SECTION
      7.7:  Binding
      Effect, No Assignment.
      This
      Agreement and all of its provisions, rights and obligations shall be binding
      upon and shall inure to the benefit of the parties hereto and their respective
      successors and assigns. Neither this Agreement nor any of the rights, interests
      or obligations hereunder shall be assigned by any of the parties hereto, in
      whole or in part (whether by operation of law or otherwise), without the prior
      written consent of the other parties, and any purported assignment, unless
      so
      consented to, shall be void and without effect. 

     

    SECTION
      7.8:  Exhibits.
      All
      Exhibits and Schedules attached hereto are hereby incorporated by reference
      into, and made a part of, this Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      7.9:  Severability.
      If any
      provision of this Agreement for any reason shall be held to be illegal, invalid
      or unenforceable, such illegality shall not affect any other provision of this
      Agreement, but this Agreement shall be construed as if such illegal, invalid
      or
      unenforceable provision had never been included herein.

     

    SECTION
      7.10:  Counterparts;
      Facsimile Signatures.
      The
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original as against any party whose signature appears thereon,
      and all of which shall together constitute one and the same instrument. This
      Agreement shall become binding when one or more counterparts hereof,
      individually or taken together, shall bear the signatures of all of the parties
      reflected hereon as the signatories. The parties shall be entitled to rely
      upon
      and enforce a facsimile of any authorized signature as if it were the
      original.

     

    SECTION
      7.11:  Definitions.
      The
      following terms, as used herein, have the following meanings:

     

    (a)  “Business
      Day” means any day other than a Saturday, Sunday or other day on which banks are
      not required or authorized to close in the City of San Francisco.

     

    (b)  The
      term
      "control",
      with
      respect to any Person, means the power to direct the management and policies
      of
      such Person, directly or indirectly, by or through stock ownership, agency
      or
      otherwise, or pursuant to or in connection with an agreement, arrangement or
      understanding (written or oral) with one or more other persons by or through
      stock ownership, agency or otherwise; and the terms "controlling" and
      "controlled" have meanings correlative to the foregoing.

     

    (c)  "Person"
      means
      an individual, corporation, partnership, joint venture, association, trust,
      unincorporated organization or other entity, including a government or political
      subdivision or an agency or instrumentality thereof.

     

    (d)  "Subsidiary"
      of a
      Person means any entity of which securities or other ownership interests having
      ordinary voting power to elect a majority of the board of directors or other
      persons performing similar functions are owned directly or indirectly through
      one or more intermediaries, or both, such Person.

     

    SECTION
      7.12:  Interpretation.
      When a
      reference is made in this Agreement to Sections or Articles, such reference
      shall be to a Section or Articles of this Agreement unless otherwise indicated.
      The headings contained in this Agreement are for reference purposes only and
      shall not affect in any way the meaning or interpretation of this Agreement.
      Whenever the words "include", "includes" or "including" are used in this
      Agreement, they shall be deemed to be followed by the words "without
      limitation."

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 
	
              TENTHGATE
                INCORPORATED

            	
              TENTHGATE
                INT., INC.

            
	 	 
	
              By:
                /s/  Tim Novak      

            	
              By: 
                /s/  Bill Coates     

            
	
              Name: Tim
                Novak

            	
              Name: Bill
                Coates 

            
	
              Title: President

            	
              Title: President

            
	 	 
	 	
              MERGER
                SUB, INC.

            
	 	 
	 	
              By: 
                /s/  Bill Coates     

            
	 	
              Name: Bill
                Coates

            
	 	
              Title: President

            
	 	 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PART
      4.10 

    OF

    DISCLOSURE
      SCHEDULE TO

    AGREEMENT
      AND PLAN OF MERGER

     

    

     

    DIRECTORS
      AND EXECUTIVE OFFICERS 

    OF
      TENTHGATE INT. AS OF THE EFFECTIVE TIME

    

     

    (a) Board
      of
      Directors of TenthGate Int.:

     

    
      	
              Tim
                Novak, Chairman

            
	
              David
                Dedman

            
	
              Matthew
                Taylor

            
	
              R.
                Paul Gray

            
	
              Neil
                Strodel

            
	
              John
                T. Wisneski

            

    

    

     

    (b) Officers
      of TenthGate Int.:

     

    
      	
              Name

            	
              Position
                and Title

            
	
              Tim
                Novak

            	
              CEO,
                President, CFO

            
	
              R.
                Paul Gray

            	
              Secretary,
                Treasurer, Exec. VP of Bus. Development

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