Document:

Exhibit 10.117

    Exhibit
      10.117

      

      

       

      

      

      

      MERGER
        AGREEMENT

      

      by
        and between

      

      WARP
        TECHNOLOGY HOLDINGS, INC. (D/B/A HALO TECHNOLOGY HOLDINGS)

      

      and

      

      EXECUTIVE
        CONSULTANTS, INC. 

      

      

      

      

      

      

      

      

      

      January
        30, 2006

      

      

      

      

      

      

      

      

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      MERGER
        AGREEMENT

      

      

      This
        MERGER AGREEMENT (this “Agreement”) is made and entered into as of January 30,
        2006, by and between Warp Technology Holdings, Inc., a Nevada corporation
        doing
        business as Halo Technology Holdings (“Purchaser”), ECI Acquisition, Inc., a
        Maryland corporation and wholly owned subsidiary of Purchaser (“MergerSub”),
        Executive Consultants, Inc., a Maryland corporation (the “Company”) and all of
        the stockholders of the Company (the “Sellers”). The Sellers are listed on the
        signature page to this Agreement.

       

      

      R
        E C I T A L S

      

      A.
         The
        Sellers own in the aggregate 100% of the outstanding equity securities of
        the
        Company (the “Equity Interests”). 

       

      B.
         Each
        of
        the Company, the Sellers and the Purchaser desire to cause the Company to
        become
        an indirect wholly owned subsidiary of the Purchaser on the terms and subject
        to
        the conditions of this Agreement.

       

      

      A
        G R E E M E N T 

      

      In
        consideration of the foregoing recitals and the respective covenants,
        agreements, representations and warranties contained herein, the parties,
        intending to be legally bound, agree as follows:

       

      

      ARTICLE
        1

      DEFINITIONS

       

      

      1.1  Unless
        otherwise defined, capitalized terms used herein shall have the following
        meanings:

       

      “Action”
shall
        mean any action, claim, suit, litigation, proceeding, arbitration or
        mediation.

       

      “Agreement”
shall
        have the meaning given to it in the Preamble.

       

      “Books
        and Records”
shall
        mean all product, business and marketing plans, sales and promotional literature
        and artwork relating to the Company, (b) all books, records, lists, ledgers,
        financial data, files, reports, product and design manuals, plans, drawings,
        technical manuals and operating records of every kind relating to the Company
        (including records and lists of customers, distributors, suppliers and
        personnel), and (c) all telephone and fax numbers used by the Company, in
        each
        case whether maintained as hard copy or stored in computer memory, and (d)
        the
        organizational documents of the Company.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Business”
shall
        mean the business and operations of the applicable Company.

       

      “Closing”
shall
        have the meaning given to such term in Section 2.3 hereof.

       

      “Closing
        Date”
shall
        have the meaning given to such term in Section 2.3 hereof.

       

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

       

      “Company”
shall
        have the meanings given to such term in the Preamble to this
        Agreement.

       

      “Company
        Stockholders”
shall
        mean all of the holders of Equity Interests, including the Sellers.

       

      “Contracts”
shall
        mean all contracts, arrangements, licenses, Leases, understandings, purchase
        orders, invoices and other agreements to which any of the Company is a party,
        whether written, oral, established through course of dealing or
        otherwise.

       

      “Damages”
shall
        mean all claims, demands, losses, liabilities, obligations, damages
        (including incidental and consequential damages), expenses, actions, judgments,
        injunctions, orders, decrees, taxes, fines or diminution of value,
        including, without limitation, interest, penalties and reasonable attorneys’,
        accountants’ and experts’ fees and costs of investigation incurred as a result
        thereof. 

       

      “Drop
        Dead Date”
shall
        have the meaning ascribed to it in Section 5.1.1.

       

      “Environmental
        Laws”
shall
        mean all applicable Laws (including consent decrees and administrative orders)
        relating to the public health and safety and protection of the environment,
        including those governing the use, handling, storage, transportation and
        disposal or remediation of hazardous substances.

       

      “Equity
        Interests”
shall
        mean all of the outstanding equity interests of the Company, including the
        Sellers’ Equity Interests. 

       

      “Employee
        Benefit Plan(s)”
shall
        mean other than any obligations pursuant to any Laws, (i) any Employee Welfare
        Plan or any Pension Plan, (ii) any “multi-employer plan,” as defined in Section
        4001(a)(3) of ERISA to which the Company has contributed or been obligated
        to
        contribute, and (iii) any deferred compensation plan, severance pay, bonus
        plan,
        profit sharing plan, stock option plan, employee stock purchase plan, and
        any
        other employee benefit plan, agreement (other than employment agreements
        with
        individual Employees), arrangement or commitment maintained by the Company
        for
        the benefit of Employees.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “Employee
        Welfare Plan”
shall
        mean other than any obligations pursuant to any Laws, any “employee welfare
        benefit plan,” as defined in Section 3(l) of ERISA, which  the
        Company
        sponsor,
        or
        under which  the
        Company
        or any
of
        the
        Subsidiaries
        may
        incur any liability, and which covers any Employees, including each
        multi-employer welfare benefit plan.

       

      “Employees”
shall
        have the meaning given to such term in Section 3.10.5 hereof.

       

      “Encumbrances”
shall
        mean any claim, lien, pledge, option, charge, mortgage, security interest,
        restriction, encumbrance or other right of third parties, whether voluntarily
        incurred or arising by operation of law, and includes any agreement to give
        any
        of the foregoing in the future, and any contingent sale or other title retention
        agreement or lease in the nature thereof.

       

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

       

      “Financial
        Statements”
shall
        have the meaning given to such term in Section 3.9.1 hereof.

       

      “GAAP”
shall
        mean generally accepted accounting principles as in effect in the United
        States
        of America on the date hereof, consistently applied.

       

      “Governmental
        Authority”
shall
        mean (i) any nation, state, county, city or other jurisdiction of any nature,
        (ii) any federal, state, local, municipal, foreign or other government (or
        any
        department, agency, or political subdivision thereof), (iii) any governmental
        or
        quasi-governmental authority of any nature, or (iv) any body exercising
        executive, legislative, judicial, regulatory or administrative actions of
        or
        pertaining to government.

       

      “Indebtedness”
shall
        mean (i) any liability for borrowed money, including
        without limitation (i) any liability evidenced by a note, (ii) any obligation
        for the acquisition of property or assets, (iii) the sale or factoring of
        any
        obligation under working capital or other debt facility, (iv)
        any
        liability arising from a guarantee or
        endorsement of
        another Person’s borrowed money, (v)
        a
        promissory note or similar instrument of indebtedness, (vi)
        any
        lease payments due under leases constituting Material Contracts and which
        are
        required to be capitalized in accordance with GAAP, and (vii)
        any
        liability for the payment of purchase price from past acquisitions of
 the
        Company,
        or past
        acquisitions of other businesses by  the
        Company.

       

      “Indemnitee”
shall
        have the meaning given to such term in Section 9.2.3
        hereof.

       

      “Indemnitor”
shall
        have the meaning given to such term in Section 9.2.3
        hereof.

       

       “Intellectual
        Property”
shall
        mean (i) any and all trademarks, service marks, tradenames,
        mask
        works, copyrights and patents (including registrations, licenses, and
        applications pertaining thereto) owned by or licensed to the
        Company,
        and
        (ii) any and all trade secrets, confidential Business information, discoveries,
        inventions, know-how and any and all other intellectual property rights owned
        by
        or licensed to the Company that relate to, or are used by, the Company, other
        than standard licenses to use ordinary, commercially available software and
        systems. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Knowledge
        of
        the Company”,
        “to
        the
        Company’s
        knowledge”
and
        any
        similar phrase shall mean the actual knowledge of James Gilbert or Joy
        Gilbert.

       

      “Laws”
shall
        mean any and all case law, common law, and any and all federal, state, local
        or
        foreign laws, statutes, rules, regulations, executive orders, codes or
        ordinances enacted, adopted, issued or promulgated by any Governmental
        Authority.

       

      “Leased
        Real Property”
shall
        have the meaning given to such term in Section 3.11 of this Agreement.

       

      “Leases”
shall
        mean all leases, subleases, licenses and other lease agreements, together
        with
        all amendments, supplements and nondisturbance agreements pertaining thereto,
        to
        which the Company is a party and pursuant to which the Company leases, subleases
        or licenses any real property.

       

      “Material
        Adverse Effect”
shall
        mean any event, change, circumstance or effect that has, or is reasonably
        likely
        to have, a material adverse effect on the business, operations, condition,
        financial or otherwise,
        or
        prospects,
        taken
        as a whole, of
        the
        respective Company, other than any event, change, circumstance or effect
        relating (i) to the United States economy in general, or the economy of any
        foreign country in general in which the Company participates, (ii) in general
        to
        the industries in which the Company operates and not specifically relating
        to
        the Company, (iii) financial, banking, or securities markets (including any
        disruption thereof and any decline in the price of any security or any market
        index), (iv) to the announcement of the Agreement or any transactions
        contemplated hereunder, the fulfillment of the parties’ obligations hereunder or
        the consummation of the transactions contemplated by this Agreement, or (v)
        to
        any outbreak or escalation of hostilities or acts of terrorism involving
        the
        United States or any declaration of war by the U.S. Congress.

       

      “Material
        Contracts”
shall
        have the meaning given to such term in Section 3.12.1. 

       

      “Most
        Recent Balance Sheet”
shall
        have the meaning given to such term in Section 3.9.1.

       

      “Net
        Working Capital”
        shall
        mean the Company’s aggregate (a) cash on hand, plus (b) accounts receivable (net
        of the
        allowance for doubtful accounts
        reflected on the Financial Statements), plus (c) cash deposits held by third
        parties, plus (d) prepaid expenses, less (x) Accounts Payable (as defined
        below), (y) Accrued Expenses (as defined below), and (z) Accrued Compensation
        (as defined below) and related benefits including bonuses and commissions.
        “Accrued
        Expenses”
shall
        mean all expenses of the Company, including Taxes, that have been accrued
        and
        unpaid as of the date of determination. “Accrued
        Compensation”
shall
        mean all accrued, but unpaid, compensation to Employees for services to the
        Company, in their capacity as Employees, for a compensation time period ending
        as of the date of determination but which is to be paid to such Employees
        on a
        date occurring after the date of determination. “Accounts
        Payable”
shall
        mean the right to payments by third parties who have delivered goods or
        performed services to the Company as of the date of determination, whether
        billed or unbilled, and whether or not evidenced by any contract or agreement.
        Specifically excluded from Net Working Capital are any inter-company obligations
        between and/or among the Sellers and the Company, none of which shall exist
        as
        of the Closing Date.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Objection
        Notice”
shall
        have the meaning ascribed to it in Section 2.9.1.

       

      “Obligation”
shall
        mean any debt, liability or obligation of any nature, whether secured,
        unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, absolute,
        fixed, contingent, ascertained, unascertained, known, unknown or
        otherwise.

       

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

       

      “Pension
        Plan”
shall
        mean other than any obligations pursuant to any Laws, any “employee pension
        benefit plan,” as defined in Section 3(2) of ERISA (including any “multiemployer
        plan,” as defined in Section 3(37) of ERISA), which the Company sponsors or to
        which the Company contributes or is required to contribute, or under which
        the
        Company may incur any liability.

       

      “Permits”
shall
        mean all franchises, permits, licenses, qualifications, rights-of-way,
        easements, municipal and other approvals, authorizations, orders, consents
        and
        other rights from, and filings with, any Governmental Authority.

       

      “Permitted
        Encumbrances”
shall
        mean (i) tax liens with respect to taxes not yet due and payable or which
        are
        being contested in good faith by appropriate proceedings and for which
        appropriate reserves have been established in accordance with GAAP, consistently
        applied; (ii) deposits or pledges made in connection with, or to secure payment
        of, utilities or similar services, workers
        compensation, unemployment insurance, old age pensions or other social security
        obligations; (iii) liens reflected on the Most Recent Balance Sheet; (iv)
        mechanics’, materialmen’s or contractors’ liens or encumbrances or any similar
        lien or restriction for amounts not yet due and payable or which are being
        contested in good faith by appropriate proceedings and for which appropriate
        reserves have been established in accordance with GAAP, consistently applied;
        (v) easements, rights-of-way, restrictions and other similar charges and
        encumbrances not interfering with the Ordinary Course of the Company or
        materially detracting from the value of the assets of the Company; and (vi)
        source code escrows granted in favor of certain customers.

       

      “Person”
means
        an individual, a partnership (general or limited), a corporation, an
        association, a limited liability company, a joint stock company, a trust,
        an
        estate, a joint venture or an unincorporated organization.

       

      “Pre-Closing
        Tax Period”
shall
        have the meaning given to such term in Section 7.1 hereof.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Proceeding”
shall
        mean any demand, claim, suit, action, litigation, investigation, audit,
        arbitration, administrative hearing or other proceeding of any nature.

       

      “Purchase
        Price”
shall
        have the meaning given to such term in Section 2.9 hereof.

       

      “Purchase
        Price Reduction Amount”
shall
        have the meaning given to such term in Section 2.9.2 hereof.

       

      “Purchase
        Price Increase Amount”
shall
        have the meaning given to such term in Section 2.9.2 hereof.

       

      “Purchaser”
shall
        have the meaning given to such term in the Preamble to this Agreement.

       

      “Purchaser
        Shares”
means
        shares
        of
        Common Stock of the Purchaser.

       

      “Registration
        Rights Agreement”
shall
        mean that certain Registration Rights Agreement dated January __, 2006, as
        amended by Amendment No. 1 to Registration Rights Agreement in the form attached
        hereto as Exhibit A between the Purchaser and the Sellers, pursuant to which
        the
        Sellers shall be granted certain registration rights with respect to the
        Purchaser Shares. 

       

      “Related
        Party”
shall
        mean, with respect to any Person, any partner, owner, equity owner, member,
        director, officer, manager, or controlling Person of such Person.

       

      “Representative”
shall
        mean any officer, director, principal, shareholder, partner, member, attorney,
        accountant, advisor, agent, trustee, employee or other representative of
        a
        party.

       

      “Sellers”
shall
        have the meaning given to such term in the Preamble to this Agreement and
        “Seller”
shall
        mean any one of them, as applicable.

       

      “Software”
shall
        mean any computer program, operating or other system, application, firmware
        or
        software of any nature, whether operational, active, under development or
        design, non-operational, or inactive (including, without limitation, all
        object
        code, source code, comment code, algorithms, processes, formulae, interfaces,
        navigational devices, menu structures or arrangements, icons, operational
        instructions, scripts, commands, syntax, screen designs, reports, designs,
        concepts, and visual expressions), technical manuals, test scripts, user
        manuals
        and other documentation therefore, whether in machine-readable form, programming
        language or any other language or symbols, and whether stored, encoded, recorded
        or written on disk, tape, film, memory device, paper or other media of any
        nature and any and all databases necessary or appropriate to operate or in
        the
        use of any such computer program, operating or other system, application,
        firmware or software.

       

      “Tax(es)”
shall
        mean all taxes, charges, fees, levies, duties, imposts or other assessments
        or
        charges imposed by and required to be paid to any Governmental Authority,
        including, without limitation, income, excise, property, sales, use, transfer,
        gains, ad valorem or value added, stamp, payroll, windfall, profits, gross
        receipts, employment, withholding, social security, workers’
        compensation, unemployment compensation, documentation, license, registration,
        customs duties, tariffs, net worth and franchise taxes (including any interest,
        penalties or additions attributable to or imposed on or with respect to any
        such
        assessment) and any estimated payments or estimated taxes.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Tax
        Audit”
shall
        have the meaning given to such term in Section 10.4 hereof.

       

      “Tax
        Return”
shall
        mean any return, report, information return or other similar document or
        statement (including any related or supporting information) filed or required
        to
        be filed with any Governmental Authority in connection with the determination,
        assessment or collection of any Tax or the administration of any Laws,
        regulations or administrative requirements relating to any Tax, including,
        without limitation, any information, return, claim for refund, amended return
        or
        declaration of estimated Tax and all federal, state, local and foreign returns,
        reports and similar statements.

       

      “Third
        Party Reimbursement”
shall
        have the meaning given to such term in Section 9.5 hereof.

       

      ARTICLE
        2

      THE
        MERGER.

       

      2.1  The
        Merger.
        Upon
        the terms and subject to the conditions set forth in this Agreement, and
        in
        accordance with the Maryland Annotated Code, Corporations Article (the “MACCL”),
        at the Effective Time, the MergerSub shall be merged with and into the Company,
        the separate corporate existence of the MergerSub shall thereupon cease and
        the
        Company shall be the successor or surviving corporation. The Company, as
        the
        surviving corporation after the consummation of the Merger, is sometimes
        hereinafter referred to as the “Surviving Corporation.”

       

      2.2  Effective
        Time.
        Subject
        to the provisions of this Agreement, the parties shall cause the Merger to
        be
        consummated by filing the certificate of merger of the Company and MergerSub
        (the “Certificate of Merger”) with the Secretary of State of the State of
        Maryland in such form as required by, and executed in accordance with, the
        relevant provisions of the MACCL as soon as practicable on or before the
        Closing
        Date. The Merger shall become effective upon such filing or at such time
        thereafter as is provided in the Certificate of Merger (the “Effective Time”).
        The Certificate of Merger will be in such form as may be agreed to by the
        Company and the Purchaser prior to its filing.

       

      2.3  Closing.
        The
        closing of the Merger (the “Closing”) shall take place at 10:00 a.m., local
        time, at the offices of counsel for Purchaser, on the date the Effective
        Time
        occurs (the “Closing Date”).

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.4  Effect
        of
        the Merger.
        At
        the
        Effective Time, the effect of the Merger shall be as provided in this Agreement
        and the applicable provisions of the MACCL. Without limiting the generality
        of
        the foregoing, and subject thereto, at the Effective Time, all the property,
        rights, privileges, powers and franchises of the Company and MergerSub shall
        vest in the Surviving Corporation, and all debts, liabilities and duties
        of the
        Company and MergerSub shall become the debts, liabilities and duties of the
        Surviving Corporation.

       

      2.5  Certificate
        of Incorporation; Name.
        At the
        Effective Time, the Articles of Incorporation of the Company immediately
        prior
        to the Effective Time shall be the Articles of Incorporation of the Surviving
        Corporation, and the name of the Surviving Corporation shall continue to
        be
“Executive Consultants, Inc.”.

       

      2.6  By-Laws.
        At the
        Effective Time, the By-Laws of the Corporation in effect immediately prior
        to
        the Effective Time shall become the By-Laws of the Surviving
        Corporation.

       

      2.7  Directors.
        The
        directors of MergerSub shall be the initial directors of the Surviving
        Corporation, until their respective successors have been duly elected or
        appointed and qualified or until their earlier death, resignation or removal
        in
        accordance with the Surviving Corporation’s Articles of Incorporation and
        By-Laws.

       

      2.8  Officers.
        The
        officers of the Corporation shall be the initial officers of the Surviving
        Corporation, until their successors have been duly elected or appointed and
        qualified or until their earlier death, resignation or removal in accordance
        with the Surviving Corporation’s Articles of Incorporation and
        By-Laws.

       

      2.9  Merger
        Consideration.
        The
        total merger consideration for the Equity Interests (the “Purchase Price”) shall
        be $603,571.43 in cash and cash equivalents and 330,688 Purchaser Shares,
        which
        shall be made available for delivery to the Sellers at the Closing. Each
        Seller’s allocation of the Purchase Price is set forth on Exhibit 2.9. The
        parties acknowledge that the cash portion of the Purchase Price may be reduced
        by $25,000 if the Company transfers one of the Company vehicles to one of
        the
        Sellers prior to the Closing.

       

      2.9.1  Not
        later
        than thirty (30) days after the Closing Date, Purchaser shall calculate the
        Net
        Working Capital as of the Closing Date and shall provide Sellers with a written
        copy of such calculation. Such calculation shall be definitive and binding
        upon
        the parties unless Sellers shall give Purchaser written notice of any objection
        to such calculation within thirty days after the receipt thereof (an “Objection
        Notice”). If Sellers deliver an Objection Notice, the parties shall negotiate in
        good faith to resolve all disputes regarding the Net Working Capital. If
        the
        parties can not resolve such a dispute they shall mutually agree upon a
        nationally or regionally recognized accounting firm to determine the Net
        Working
        Capital, whose decision, absent manifest error, shall be binding upon the
        parties.

       

      2.9.2  To
        the
        extent the Net Working Capital as of the Closing Date is less than $0 (the
        amount of any such difference referred to as the “Purchase Price Reduction
        Amount”), the Purchase Price, shall be reduced, dollar for dollar and share for
        share (based on the per share closing valuation), by the Purchase Price
        Reduction Amount. To the extent the Net Working Capital as of the Closing
        Date
        is greater than $ 0 (the amount of any such difference referred to as the
        “Purchase Price Increase Amount”) the Purchase Price, shall be increased, dollar
        for dollar and share for share (based on the per share closing valuation),
        by
        such amount. The amount due hereunder shall be paid within five (5) business
        days of the final determination of the Purchase Price Reduction Amount or
        Purchase Price Increase Amount, as the case may be, by wire transfer of
        immediately available funds. The the extent the calculation of Net Working
        Capital results in a Purchase Price Reduction Amount, the Sellers shall be
        responsible for this amount, although the Sellers may make arrangements among
        the Company Stockholders to allocate this obligation pro rata among all Company
        Stockholders.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.9.3  Nothing
        contained in this Section 2.9 shall be interpreted to limit the indemnification
        provisions contained in Article 9 hereof except that to the extent the Net
        Working Capital calculation includes an amount for an item, such amount and
        item
        can not form the basis of a claim for indemnification under Article
        9.

       

      2.10  Conversion
        of Shares. As
        of the
        Effective Time, by virtue of the Merger and without any action on the part
        of
        any holder of Equity Interests or any shares of common stock of
        MergerSub:

       

      2.10.1  Each
        common share of the Company that is issued and outstanding as of the Effective
        Time shall, by virtue of the Merger and without any action on the part of
        the
        holder thereof, be terminated and canceled and become the right to receive
        the
        consideration described in Exhibit 2.9 for each Seller. As of the Effective
        Time, all such Company common shares shall be canceled, and when so canceled,
        shall no longer be outstanding and shall automatically be retired and shall
        cease to exist, and each holder of a certificate or other instrument
        representing any such common shares shall cease to have any rights with respect
        thereto, except the right to receive the Purchaser Shares hereunder, without
        interest.

       

      2.10.2  Each
        option granted to an employee, consultant, director or independent contractor
        of
        the Company to acquire common shares that is outstanding as of the Effective
        Time, whether or not then vested or exercisable, shall automatically be
        terminated and canceled for no consideration whatsoever. 

       

      2.10.3  All
        other
        Equity Interests, including common stock or other equity of the Company that
        is
        owned by, or held in the treasury of, the Company as of the Effective Time
        shall, by virtue of the Merger and without any action on the part of the
        holder
        thereof, automatically be canceled and retired and shall cease to exist,
        and no
        consideration shall be delivered in exchange therefor.

       

      2.10.4  Each
        share of the capital stock of MergerSub that is issued and outstanding as
        of the
        Effective Time shall, by virtue of the Merger and without any action on the
        part
        of the holder thereof, automatically be converted into and become one validly
        issued, fully paid and non-assessable share of the Surviving Corporation.
        Such
        newly issued shares shall thereafter constitute all of the issued and
        outstanding capital stock of the Surviving Corporation.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        3

      REPRESENTATIONS
        AND WARRANTIES OF SELLERS

       

      Sellers
        jointly and severally represent and warrant to Purchaser as set forth
        below:

       

      3.1  Organization
        and Existence.
        The
        Company is a corporation duly incorporated, validly existing and in good
        standing under the laws of its state of Maryland. TheCompany has all requisite
        power and authority to own and operate its Business and to carry on such
        Business as presently conducted. The Company is qualified or licensed to
        do
        business in each jurisdiction in which the conduct of its Business or ownership
        of its properties make such qualification necessary, except for such
        jurisdictions in which the failure to be so duly qualified or licensed would
        not
        have a Material Adverse Effect on the Company. Schedule 3.1 lists: (i) the
        employer identification number for the Company; (ii) all legal names used
        by the
        Company and its predecessors in the last three (3) years; (iii) all entities
        merged with or into the Company or its predecessors in the last three (3)
        years;
        and (iv) the address for each location at which the Company has an office
        or
        otherwise has any material assets (other than Employees working out of their
        homes). Accurate and
        complete copies of the articles or certificates of organization or formation,
        operating agreements and other organization documents for the Company, each
        as
        amended to date, have been delivered to Purchaser.

       

      3.2  Authorization.
        The
        Company and each Seller has the requisite power and authority to enter into
        this
        Agreement, to perform its obligations hereunder, and to consummate the
        transactions contemplated hereby. The execution, delivery and performance
        of
        this Agreement by the Company and each Seller has been duly authorized by
        all
        necessary action on the part of the Company and such Seller. 

       

      3.3  Due
        Execution and Delivery; Binding Obligations.
        This
        Agreement has been duly executed and delivered by the Company and each Seller.
        This Agreement constitutes a legal, valid and binding agreement of the Company
        and each Seller, enforceable against the Company and each Seller in accordance
        with its terms, except as such enforcement may be limited by bankruptcy,
        insolvency, reorganization, arrangement, moratorium or similar Laws relating
        to
        or limiting creditors’ rights generally or by equitable principles relating to
        enforceability.

       

      3.4  Capitalization;
        Title to Equity Interests.
        

       

      3.4.1  (i)
        The
        Equity Interests are solely owned, of record and beneficially, by the Sellers.
        The Equity Interests represent the only outstanding economic, voting, ownership
        or any other type of equity interest in the Company. There are no securities
        in
        the Company other than the Equity Interests. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.4.2  The
        articles of incorporation and bylaws of the Company do
        not
        impose upon any holder of any Equity Interests any obligation to make capital
        contribution commitments to such Company. As of the Closing Date, the Equity
        Interests will be held by Sellers free and clear of all Encumbrances.

       

      3.4.3  As
        of the
        Closing
        Date,
        none of
        the Sellers are subject to any restrictions on transfer, rights of first
        refusal
        or other restrictions or obligations relating to the Equity Interests. As
        of the
        Closing Date, except as set forth on Schedule 3.4, there will be no outstanding
        subscription, option, warrant, call right, preemptive right or other agreement
        or commitment obligating the Company to issue, sell, deliver or transfer
        (including any right of conversion or exchange under any outstanding security
        or
        other instrument) any economic, voting, ownership or any other type of
        membership or other interest or security in the Company, other than pursuant
        to
        any actions taken by on behalf of Purchaser or its affiliates. 

       

      3.4.4  Schedule
        3.4.4 sets forth a list of the officers and directors of the
        Company.

       

      3.5  Subsidiaries.
        The
        Company has no subsidiaries and owns no equity interests in any other
        entity.

       

      3.6  No
        Conflict or Violation; Consents.
        Except
        as set forth on Schedule 3.6, neither the execution and delivery of this
        Agreement by the Company and the Sellers nor the consummation of the
        transactions contemplated hereby, will result in (i) a violation of, or a
        conflict with, the organizational documents of such Seller or the Company;
        (ii)
        a violation by any Sellers or the Company of any applicable Law; (iii) a
        violation by any Seller or the Company of any order, judgment, writ, injunction,
        decree or award to which such Seller or the Company is a party or by which
        any
        Seller or the Company is bound or affected; (iv) a breach of or cause a default
        under, or result in the termination of, or accelerate the performance of,
        or
        create in favor of any Person other than the Company a right of termination
        or
        consent under, any Material Contract to which the Company is a party; or
        (v) an
        imposition of an Encumbrance on the Equity Interests, or the assets of the
        Company.

       

      3.7  Governmental
        Consents and Approvals.
        Except
        as set forth on Schedule 3.7, and except to the extent that the absence thereof
        would not have a Material Adverse Effect on the Company, no Permit, approval,
        consent or authorization of, or declaration, filing, application, transfer
        or
        registration with, any Governmental Authority is required to be made or obtained
        by any Seller or the Company by virtue of the execution, delivery or performance
        of this Agreement or the consummation of the transactions contemplated hereby
        in
        order to enable Purchaser to own the Equity Interests and to permit the Company
        to continue the lawful operation of its Business following the Closing Date
        in
        substantially the same manner as it is presently conducted by the
        Company.

       

      3.8  Pending
        Litigation.
        Schedule 3.8 sets forth a complete and correct list of all pending Actions
        and,
        to the knowledge the Company, any Actions threatened against the Company,
        or
        which have been initiated by the Company, or which would affect the ability
        of
        each Seller to consummate the sale of their respective Equity Interests.
        None of
        the Actions, if adversely determined against the Company, or its directors
        or
        officers, would reasonably be expected to result in a loss, individually
        or in
        the aggregate, in excess of $10,000. To the knowledge of the Company, there
        is
        no basis for any Action which, if adversely determined against the Company,
        would reasonably be expected to result in a loss, individually or in the
        aggregate, in excess of $10,000. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.9  Financial
        Information.

       

      3.9.1  Financial
        Statements.
        The
        Company have furnished to Purchaser copies of (i) the unaudited balance sheet
        of
        the Company as of December 31, 2004, and the related statements of income
        for
        the fiscal year then ended, (ii) the unaudited balance sheet of the Company
        as
        of December 31, 2003 and the related consolidated statements of income for
        the
        fiscal year then ended and (iii) the balance sheet for the Company as of
        November, 2005 (with respect to the Company, the “Most
        Recent Balance Sheet”)
        and
        the related statement of income for the 11 months then ended (with respect
        to
        the Company, the “Financial Statements”).
        The
        Financial Statements have been prepared in accordance with GAAP on a consistent
        basis during the respective periods, fairly and accurately present in all
        material respects the financial condition of the Company to which it relates
        at
        the respective dates thereof and the results of operations of the Company
        to
        which it relates for the respective periods covered by the statements of
        income
        contained therein,
        and
are
        correct and complete in all material respects.

       

      3.9.2  Accounting
        Controls.
        The
        Company
        has
        maintained a system of internal accounting controls sufficient to provide
        reasonable assurance that transactions have been executed with management's
        authorizations, and transactions have been recorded as necessary to permit
        preparation of the Financial Statements in accordance with GAAP. As
        of the
        date of the Most Recent Balance Sheet, there were no changes in the Company’s
        accounting procedures or internal controls. 

       

      3.9.3  Indebtedness.
        As of
        the Closing Date, the Company has no outstanding Indebtedness except as shown
        on
        Schedule 3.9.3.

       

      3.9.4  Undisclosed
        Liabilities.
        Except
        as set forth on Schedule 3.9.4,
        the
        Company has no liabilities or obligations (known, unknown, asserted, unasserted,
        absolute, contingent, accrued, unaccrued, liquidated, unliquidated, due,
        to
        become due, or otherwise, including any liability for Taxes) except (i)
        liabilities which are reflected and properly reserved against in the Most
        Recent
        Balance Sheet of the Company
        and
        (ii)
        liabilities incurred in the ordinary course since the Most Recent Balance
        Sheet
        in an aggregate amount not exceeding $15,000 arising under any of the
        Contracts
        listed
        on Schedule 3.12.1. 

       

      3.9.5  Inter-company
        Assets and Liabilities.
        Except
        as set forth on Schedule 3.9.5,
        as of
        the Closing Date, all payable inter-company accounts receivable, accounts
        payable and accrued inter-company expenses between or among the inter-company
        group consisting of the Company, the Sellers and their respective affiliates,
        shall have been paid or otherwise extinguished and there will be no
        inter-company assets or liabilities.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.10  Absence
        of Certain Changes.
        Since
        the Most Recent Balance Sheet, there has been no Material Adverse Effect.
        Without limiting the generality of the foregoing, except as set forth on
        Schedule 3.10, since the Most Recent Balance Sheet the Company has
        not:

       

      3.10.1  sold,
        assigned, licensed, leased, transferred, disposed of, or agreed to sell,
        assign,
        license, lease, transfer or dispose of, any asset other than in the Ordinary
        Course;

       

      3.10.2  acquired
        any equity interests in any other Person, acquired any material assets, except
        in the Ordinary Course, nor acquired or merged with any other business or
        Person;

       

      3.10.3  incurred
        or created any material Encumbrances on any of its assets;

       

      3.10.4  suffered
        the destruction, damage or other loss (whether or not covered by insurance)
        of
        any assets or property material to the conduct of the Business;

       

      3.10.5  increased
        the salary or other compensation payable or to become payable to any employee
        of
        the Company (“Employees”)
        or
        obligated itself to pay any bonus or other additional salary or compensation
        to
        any Employee in each case other
        than in the Ordinary Course; 

       

      3.10.6  other
        than with respect to at-will Employees, entered into any employment Contract
        or
        collective bargaining Contract, or modified the terms of any existing such
        Contract, or made any other change in employment terms for any Employees
        outside
        of the Ordinary Course; 

       

      3.10.7  terminated
        any Employees whose responsibilities are material to any of the
        Company.

       

      3.10.8  adopted,
        amended, modified, or terminated any Employee Benefit Plan;

       

      3.10.9  made
        any
        loan to, or entered into any other transaction with, any Employees, other
        than
        the hiring of at-will Employees in the Ordinary Course;

       

      3.10.10  entered
        into any new Contract not in the Ordinary Course;

       

      3.10.11  waived,
        amended, modified, terminated or canceled any Material Contract
        or
        material right,
        nor has
        any third party taken any such action with respect to any Material
        Contracts;

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      3.10.12  suffered
        any disposition or lapse of any Intellectual Property, including, without
        limitation, the expiration of any applications for registration of any
        Intellectual Property rights;

       

      3.10.13  licensed
        any Intellectual Property, other than to end users, customers or distributors
        in
        the Ordinary Course;

       

      3.10.14  made
        any
        capital expenditures;

       

      3.10.15  made
        any
        investment in, or any loan to, any other Person;

       

      3.10.16  created,
        incurred, assumed, or guaranteed any Indebtedness; 

       

      3.10.17  entered
        into any Contract to take any action, or permit any occurrence, described
        above;

       

      3.10.18  satisfied
        or discharged any Encumbrances or discharged or paid any Indebtedness or
        other
        Obligation to any party;

       

      3.10.19  entered
        into any other Obligation with any third party;

       

      3.10.20  declared,
        set aside or paid any dividends, or in respect of any shares of capital stock,
        repurchased, redeemed or otherwise acquired shares of outstanding stock of
        the
        Company;

       

      3.10.21  mortgaged,
        pledged or transferred any security interest in, or lien, created by the
        Company, with respect to any assets (except for tax liens for taxes not yet
        due
        and payable);

       

      3.10.22  instituted
        or settled any action or Proceeding against the Company;

       

      3.10.23  issued
        any new equity securities;

       

      3.10.24  changed
        accounting methods or internal controls; or

       

      3.10.25  failed
        to
        pay any obligation due in the ordinary course.

       

      3.11  Real
        Property.
        Schedule 3.11 sets forth a complete and correct list of all real
        property leased by the Company (“Leased Real Property”).
        Except
        as set forth in Schedule 3.11, the Company has not subleased or otherwise
        granted any other Person a right to use any real property. The Company owns
        no
        fee interest in any real property.

       

      3.11.1  To
        Company’s knowledge, no Proceedings are pending which would affect or pertain to
        the zoning, use or environmental condition of any of the Leased Real
        Property.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.12  Material
        Contracts.

       

      3.12.1  Schedule
        3.12.1
        sets
        forth a complete list of the following Contracts (the “Material Contracts”):
        all
        (i) agreements for Indebtedness to which the Company is a party; (ii) agreements
        or commitments to make material capital expenditures; (iii) agreements to
        sell,
        lease or otherwise dispose of any material assets or properties of the Company
        ,
        other than in the Ordinary Course; (iv) agreements limiting the freedom of
        the
        Company to compete in any line of business or in any geographic area or with
        any
        Person; (v) Leases; (vi) joint venture agreements and partnership agreements
        to
        which the Company is a party; (vii) any license from a third party to the
        Company for Intellectual Property, other than shrink wrapped software that
        is
        generally available in the commercial markets, such as word processing programs;
        (viii) Contracts involving any Company investment in, or any loan to, any
        other
        Person; (ix) other than with respect to at-will Employees, employment agreements
        or loan agreements with any Employees; (x) Contracts that involve payments
        or
        receipts of either (A) more than $20,000
        annually
        or (B) $50,000
        in the
        aggregate in future payments or receipts over the life of such
        Contract;
        (xi)
        Contracts of value which default could have a Material Adverse Effect; (xii)
        Contracts outside of the Ordinary Course and (xiii) Contracts that require
        consent or notice of assignment or will accelerate or terminate on change
        of
        control; (xiv) manufacturing
        or joint development agreements; (xv) confidentiality and non-disclosure
        agreements (whether the Company is the beneficiary or the obligated party
        thereunder); (xvi) contracts or commitments relating to commission arrangements
        with others; (xvii) consulting contracts and severance agreements, (xviii)
        indemnification agreements; (xix) any Contract with the federal, state or
        local
        government or any agency or department thereof; (xx) any Contract or other
        arrangement or understanding with a Related Party; (xxi) Contracts that are
        in
        the nature of offset or barter agreements. 

       

      3.12.2  Each
        Material Contract is valid, binding and enforceable against the Company in
        accordance with its term, except that (i) such enforcement may be subject
        to
        bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
        other
        laws, now or hereafter in effect, relating to or limiting creditors’ rights
        generally, and (ii) general principles of equity (regardless of whether
        enforceability is considered in a proceeding at law or in equity). To the
        knowledge of the Company, each Material Contract is valid, binding and
        enforceable against the other parties thereto, in accordance with its terms.
        TheCompany is not in default, violation or breach in any material respect
        under
        any Material Contract,
        and no
        event
        has occurred which with notice or lapse of time would constitute a material
        breach or default, or permit termination, modification, or acceleration,
        under
        such Material Contract. Except as disclosed on Schedule 3.12.2,
        each
        Material Contract shall be in full force and effect without penalty in
        accordance with its terms immediately following the consummation of the
        transaction contemplated hereby. The Company has not committed any act, and
        there has been no omission by the Company, which may result in, and there
        has
        been no occurrence which may give rise to, material product liability or
        liability for breach of warranty (whether covered by insurance or not) on
        the
        part of the Company, with respect to products designed, manufactured, assembled,
        sold, repaired, maintained, delivered or installed or services rendered prior
        to
        or on the Closing Date.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.13  Intellectual
        Property.
        

       

      3.13.1  Schedule
        3.13.1
        sets
        forth a complete and correct list of all patents, patent applications,
        registered trademarks, registered service marks, mask works, trade
        names,
        registered copyrights, Software owned or licensed, under development or held
        for
        use the Company, and, in the case of Software developed by the Company, if
        any,
        a product description, the language in which it is written and the type of
        hardware platform(s) on which it runs,
        and all
        applications for registration included in the registered Intellectual Property
        filed by or held in the name of the Company.

       

      3.13.2  (i)
        Without expansion of the representations and warranties made in this
subsection
        3.13.2(ii)
        and
        3.13.2(iii),
        all right, title and interest in and to the Intellectual Property is either
        owned by the Company
        free and
        clear of all Encumbrances, other than Permitted Encumbrances, or is licensed
        by
the
        Company
        from a
        third party unaffiliated with any Seller pursuant to a valid and enforceable
        written license,
        and the
Company
        has
        good
        and marketable title to such Intellectual Property,
        (ii) no
        claims have been made or, to the knowledge of the Company, threatened (including
        by way of a demand letter or offer to license), to the Sellers or the Company
        by
        any Person, and there are no grounds for any Person to claim that (A) the
        Companydoes not own or have the right to use, as applicable, any material
        Intellectual Property used in its Business, (B) the operation of the Business
        of
        the Company as presently conducted is infringing, misappropriating or otherwise
        violating the intellectual property rights of any Person, or (C) the
        Intellectual Property purported to be owned by the Company infringes,
        misappropriates or otherwise violates the intellectual property rights of
        any
        third party or is invalid or unenforceable, and (iii) to the knowledge of
        the
        Company,the Company is not infringing, misappropriating or otherwise violating,
        or has infringed, misappropriated or otherwise violated any intellectual
        property rights of any other Person. The Company has taken all steps customary
        and reasonable in the industry (including, entering into appropriate
        confidentiality and nondisclosure agreements and work product agreements
        with
        all current and former officers, directors, subcontractors, employees, licensees
        and customers) in connection with the Business to safeguard and maintain
        the
        secrecy and confidentiality of, and the proprietary rights in, the Intellectual
        Property. Without limiting the foregoing, all Intellectual Property rights
        that
        were created by consultants, independent contractors or other third parties
        for
        or on behalf of the Company are subject to written agreements pursuant to
        which
        all right, title and interest therein, including without limitation the
        copyrights thereto, have been duly and properly assigned to the Company.
        No
        current or former owners, equity owners, partners, directors, executives,
        officers, employees, independent contractors or any other parties has any
        interest in or right to any Intellectual Property, including, but not limited
        to, the right to royalty payments. 

       

      3.13.3  Except
        as
        set forth on Schedule 3.13.3,
        to the
        knowledge of the Company, no Person is currently infringing or otherwise
        violating any Company rights in any owned Intellectual Property. 

       

      3.13.4  No
        rights
        or permission of the Company or any other party are necessary to use, make,
        manufacture, reproduce, distribute, display, perform, market, license, sell,
        offer to sell, modify, adapt, translate, enhance, improve, update, or create
        derivative works based upon any Intellectual Property, except as provided
        under
        any licenses relating thereto. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.13.5  Set
        forth
        on Schedule 3.13.5 are all Internet domain names related to or used or held
        for
        use in connection with, related to, pursuant to, in the conduct of, or as
        part
        of the Business, or licensed to or used, owned, or registered by the
        Company.

       

      3.13.6  The
        registrations with respect to the registered Intellectual Property owned
        by the
        Company set forth on Schedule 3.13.1
        (other
        than those trademarks designated “Inactive Marks” or “Trademark Applications”)
        are complete
        and accurate and are in
        full
        force and effect. 

       

      3.13.7  The
        Company maintains in connection with their operations, activity, conduct
        and
        business on the World Wide Web (“Web”) and any and all other applicable Internet
        operations, activity, conduct, and business, a written privacy statement
        or
        policy governing the collection, maintenance, and use of data and information
        collected from users of Web sites owned, operated, or maintained by, on behalf
        of, or for the benefit of the Company in connection with, related to, pursuant
        to, in the conduct of, or as part the Business. The privacy statement is
        attached on Schedule 3.13.7.

       

      3.14  Employee
        Matters.

       

      3.14.1  There
        is
        no labor strike, dispute, slowdown, or stoppage pending or, to the knowledge
        of
        the Company, threatened against the Company. The Company is not a party to
        or
        bound by any collective bargaining agreement with respect to any Employees.
        To
        the knowledge of the Sellers and the Company, no certification question or
        organizational drive exists or has existed within the past two (2) years
        with
        respect to Employees. Except as set forth on Schedule 3.8, there is no unfair
        labor practice, charge or complaint of discrimination (including discrimination
        based upon sex, age, marital status, race, national origin, sexual preference,
        handicap or veteran status) or any other matter against or involving the
        Company
        pending or, to the knowledge of the Company, threatened before the National
        Labor Relations Board, the Equal Employment Opportunity Commission or any
        other
        Governmental Authority pertaining to or involving Employees. Except as set
        forth
        on Schedule 3.14.1
        and
        except as required by any Law, the Company has not entered into any severance
        Contract or similar arrangement in respect of any Employee that will result
        in
        any obligation (absolute or contingent) of the Company to make any payment
        to
        any Employee following termination of employment or upon consummation of
        the
        transactions contemplated by this Agreement. 

       

      3.14.2  Schedule
        3.14.2
        lists
        the names, current base salary or hourly wage rate and the 2004 bonuses and
        commissions of all Employees,
        consultants and third party agents of the Company.

       

      3.14.3  The
        Company is in compliance in all material respects with all applicable Laws
        relating to employment practices. The Company has delivered to Purchaser
        accurate and complete copies of all current employee manuals and handbooks,
        disclosure materials, policy statements and other materials relating to the
        employment of its employees. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.14.4  Schedule
        3.14.4
        sets
        forth a complete and correct list of all Employee Benefit Plans of the Company.
        Each such Employee Benefit Plan complies in all material respects with the
        provisions of and has been administered in compliance with the provisions
        of
        ERISA and all other applicable Laws. Without limiting the generality of the
        foregoing, no “prohibited transaction” (as such term is defined in Section 4975
        of the Code, or in Part 4 of Subtitle B of Title I of ERISA) has occurred
        with
        respect to any such Employee Benefit Plan that could result in the imposition
        of
        material Taxes or penalties on the Company, and neither any Seller nor the
        Company has failed to make any contribution to, or to make any payment under,
        any such Employee Benefit Plan that it was required to make prior to Closing
        pursuant to the terms of such Employee Benefit Plan or pursuant to applicable
        Law that could result in any material liability to the Company. Further,
        the
        Company maintains a non-qualified deferred compensation plan designated as
        “NQDC” on Schedule 3.14.4 whereby employees may elect to exclude a portion of
        their compensation to purchase life insurance. The Company shall terminate
        the
        "Plan" prior to Closing.

       

      3.15  Taxes.
        Except
        as set forth on Schedule 3.15, (i) all Tax Returns relating to the Company
        that
        are required by Law to be filed have been duly filed on a timely basis, (ii)
        all
        amounts set forth thereon have been paid in full and all such Tax Returns
        are
        correct and complete in all material respects, (iii) the Company has not
        waived
        nor has been requested to waive any statute of limitations in respect of
        Taxes,
        (iv) there are no pending or threatened Actions for the assessment or collection
        of Taxes that relate to the activities or income of the Company, (v) there
        are
        no liens for Taxes upon the assets of the Company other than liens for Taxes
        not
        yet due and payable or being contested in good faith, (vi) all material Taxes
        which the Company is required by Law to withhold or to collect for payment
        have
        been duly withheld and collected, and have been paid or accrued, reserved
        against and entered on their respective Books and Records in accordance with
        GAAP and (vii) all Tax deficiencies of the Company determined as a result
        of any
        past completed audit have been satisfied. There are no Tax-sharing agreements
        or
        similar arrangements (including indemnity arrangements) with respect to or
        involving the Company. The Sellers have properly requested, received and
        retained all necessary exemption certificates and other documentation supporting
        any claimed exemption or waiver of Taxes on sales or other transactions for
        which Purchaser would have been obligated to collect or withhold
        Taxes.

       

      3.16  Compliance
        with Law.
        Except
        as set forth on Schedule 3.16, the Company currently conducts its Business
        in
        compliance in all material respects with all Laws applicable to the conduct
        of
        its Business. No Seller or the Company has received any written notice from,
        nor
        does any Seller have any knowledge that, any Governmental Authority or other
        Person is claiming or threatening to claim any violation or potential violation
        of any Law with respect to the Company.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      3.17  Permits.
        The
        Company holds all material Permits necessary for the lawful operation of
        its
        Business as presently conducted, and all such Permits are in full force and
        effect. 

       

      3.18  Insurance.
        Schedule 3.18
        contains
        an accurate list of all policies of insurance in effect on the date hereof
        relating to the Company. All such policies are valid, outstanding and
        enforceable. The Company has not received notice of any actual or threatened
        modification or cancellation of any such insurance.
        Except
        as set forth on Schedule 3.18, there are no pending claims under any insurance
        policies.

       

      3.19  Brokers
        and Finders.
        All
        negotiations relating to this Agreement and the transactions contemplated
        hereby
        have been carried on without the intervention of any Person acting on behalf
        of
        any Seller or the Company in such manner as to give rise to any claim for
        any
        brokerage or finders’ commission, fee or similar compensation. 

       

      3.20  Accounts
        Receivable; Expenses. 

       

      3.20.1  The
        accounts and notes receivable reflected in
        the Most
        Recent Balance Sheet of the Company are recorded in accordance with
        GAAP.
        The
accounts
        and notes receivable on
        the date
        of the Most Recent Balance Sheet arose from bona fide transactions, including
        sales of goods or services rendered,
        and
        represent bona fide claims against debtors for sales, services performed
        or
        other charges and all of the goods delivered and services performed which
        give
        rise to such accounts were delivered or performed in accordance with applicable
        orders, contract or customer requirements. All such accounts and notes are
        collectible except to the extent of any reserves.
        All
        reserves for bad debt shown on the Most Recent Balance Sheet of the Company
        are
        reflected properly in accordance with GAAP. 

       

      3.20.2  The
        collection practices employed by the Company have not changed from the Ordinary
        Course since the date of the Most Recent Balance Sheet. 

       

      3.20.3  There
        has
        been no unusual discounts or accelerations in connection with any accounts
        or
        notes receivable after the date of the Most Recent Balance Sheet of the
        Company.

       

      3.20.4  As
        of the
        Closing Date, the Company shall have paid all expenses currently due and
        owing,
        consistent with past practices.

       

      3.21  Customers.
        Schedule 3.21
        sets
        forth a complete and accurate list of the names of all of the customers of
        the
        Company, showing the approximate total billings in United States dollars
        to each
        such customer during the last fiscal year and the present year to date. The
        Company has not received any written communication from any customer named
        on
        Schedule 3.21
        of any
        intention to return, terminate or materially reduce purchases from the
        Company.

       

      3.22  Bank
        Accounts.
        Set
        forth on Schedule 3.22
        is a
        complete list of all
        bank,
        brokerage or similar account of the Company and
        the
        names of all officers or employees who are authorized to make withdrawals
        therefrom or dispositions thereof. 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      3.23  Books
        and Records.
        Except
        as set forth on Schedule 3.23,
        the
        Books and Records of the Company have been maintained in accordance with
        generally accepted industry practice.
        The
        Books and Records are true, accurate and complete in all material respects
        and
        fairly reflect the activities of the Company.

       

      3.24  Questionable
        Payments.
        None of
        the partners, members, owners, directors, managers, executives, officers,
        representatives, agents or employees of the Company (when acting in such
        capacity or otherwise on behalf of the Company): (i) has used or is using
        any
        corporate funds for illegal contributions, gifts, entertainment or other
        unlawful expenses relating to political activity; (ii) has used or is using
        any
        corporate funds for any direct or indirect unlawful payments to any foreign
        or
        domestic government officials or employees; (iii) has violated or is violating
        any provision of the Foreign Corrupt Practices Act of 1977; (iv) has established
        or maintained, or is maintaining, any unlawful or unrecorded fund of corporate
        monies or other corporate properties; (v) has made at any time since the
        date of
        formation any false or fictitious entries on the books and records of the
        Company; or (vi) has made any bribe, rebate, payoff, influence payment, kickback
        or other unlawful payment of any nature using corporate funds or otherwise
        on
        behalf of the Company.

       

      3.25  Environmental
        Matters.

       

      The
        Company has at all times been in compliance in all material respects with
        applicable Environmental Laws in respect to the Leased Real Properties. The
        Company has not received any notice from any governmental agency in connection
        with environmental issues arising out of or relating to the Leased Real
        Property. There are no pending civil, criminal or administrative proceedings
        against the Company under any Environmental Laws arising out of relating
        to the
        condition of any of the Leased Properties or the Company’s activities thereon.
        Except as set forth on Schedule 3.25, to the Company’s knowledge, no underground
        or above ground storage tanks, active or abandoned, are present at any Leased
        Real Property.

       

      3.26  Financial
        Projections: Operating Plan.
        The
        Sellers
        have
        made available to Purchaser certain financial projections with respect to
        the
        Company which projections were prepared for internal use only. These projections
        were prepared in good faith and are based on assumptions believed by the
        Sellers
        to be reasonable as of the date the projections were prepared and the Sellers
        have disclosed any material changes since their delivery to the
        Purchaser.

       

      3.27  Investment
        Intent.
        Sellers
        are
        acquiring the Purchaser Shares for their own account for investment and not
        with
        a view to, or for sale in connection with, any distribution thereof. Sellers
        are
“accredited investors” as defined in Rule 501(a) of Regulation D of the
        Securities Act of 1933, as amended. Sellers understand and agree that they
        may
        not sell, dispose, transfer, pledge, hypothecate or otherwise dispose of
        any of
        the Purchaser Shares (i) without registration under the Securities Act of
        1933,
        as amended, except pursuant to an exemption from such registration available
        under such Act and (ii) except in accordance with any applicable provisions
        of
        state and local securities Laws.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      3.28  No
        Other Agreements to Sell the Company or the Equity Interests.
        The
        Sellers do not have any legal obligation, absolute or contingent, to any
        other
        Person to sell the Equity Interests or the assets of the Company or to effect
        any merger, consolidation or other reorganization of the Company or to enter
        into any agreement with respect thereto, except pursuant to this
        Agreement 

       

      3.29  Full
        Disclosure.
        No
        representation or warranty of any of the Sellers in this Agreement and no
        statement contained in any written material or certificates furnished or
        to be
        furnished to Purchaser (including the information provided in the Schedules
        hereto) pursuant hereto (i) contains any untrue statement of any material
        fact
        or (ii) omits to state any fact that is necessary to make the statements
        made,
        in the context in which made, not false or misleading in any material respects.
        

       

      3.30   Tax
        Status. Effective
        for years beginning on or after January 1, 1997, the Company, with consent
        of
        the Sellers, has elected under the Internal Revenue Code to be an "S"
        Corporation. In lieu of corporation income taxes, the stockholders of an
        S
        corporation are taxed on their proportionate share of the Company's taxable
        income. The Company presently operates on a calendar year basis for financial
        and income tax reporting purposes.

       

      

       

      ARTICLE
        4

      REPRESENTATIONS
        AND WARRANTIES OF PURCHASER

       

      Purchaser
        represents and warrants to Sellers as follows:

       

      4.1  Organization.
        Purchaser is a corporation
        duly
        organized, validly existing and in good standing under the Laws of Nevada.
        The
        MergerSub is a corporation
        duly
        organized, validly existing and in good standing under the Laws of Maryland.
        

       

      4.2  Authorization.
        Each of
        Purchaser and MergerSub has the requisite power and authority to enter into
        this
        Agreement, to perform its obligations hereunder, and to consummate the
        transactions contemplated hereby. The execution, delivery and performance
        by
        Purchaser and MergerSub of this Agreement has been duly authorized by all
        necessary action on the part of Purchaser and/or MergerSub.

       

      4.3  Due
        Execution and Delivery; Binding Obligations.
        This
        Agreement has been duly executed and delivered by Purchaser and MergerSub
        and
        constitutes a legal, valid and binding agreement of each of Purchaser and
        MergerSub, enforceable in accordance with its terms, except as such enforcement
        may be limited by bankruptcy, insolvency, reorganization, arrangement,
        moratorium or similar Laws relating to or limiting creditors’ rights generally
        or by equitable principles relating to enforceability.

       

      4.4  No
        Conflict or Violation.
        Neither
        the execution and delivery of this Agreement by Purchaser and MergerSub nor
        the
        consummation of the transactions contemplated hereby, will result in (i)
        a
        violation of, or a conflict with, Purchaser’s or MergerSub’s organizational
        documents or any subscription, members’ or similar agreements or understandings
        to which any of them is a party; (ii) a violation by Purchaser or MergerSub
        of
        any applicable Law or (iii) a violation by Purchaser or MergerSub of any
        order,
        judgment, writ, injunction, decree or award to which any of them is a party
        or
        by which any of them is bound or affected.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      4.5  Consents
        and Approvals.
        No
        consent, permit, approval or authorization of, or declaration, filing,
        application, transfer or registration with, any Governmental Authority, or
        any
        other Person is required to be made or obtained by Purchaser or MergerSub
        by
        virtue of the execution, delivery or performance of this Agreement.

       

      4.6  Brokers
        and Finders.
        All
        negotiations relating to this Agreement and the transactions contemplated
        hereby
        have been carried on without the intervention of any Person acting on behalf
        of
        Purchaser in such manner as to give rise to any claim for any brokerage or
        finders’ commission, fee or similar compensation. 

       

      4.7  Investment
        Intent.
        Purchaser is acquiring the Equity Interests for its own account for investment
        and not with a view to, or for sale in connection with, any distribution
        thereof. Purchaser is an “accredited investor” as defined in Rule 501(a) of
        Regulation D of the Securities Act of 1933, as amended. Purchaser understands
        and agrees that it may not sell, dispose, transfer, pledge, hypothecate or
        otherwise dispose of any of the Equity Interests (i) without registration
        under
        the Securities Act of 1933, as amended, except pursuant to an exemption from
        such registration available under such Act and (ii) except in accordance
        with
        any applicable provisions of state and local securities Laws.

       

      4.8  Capital
        Structure.
        As of
        June 30, 2005, the authorized capital stock of Purchaser consists only
        of:  150,000,000 shares of Common Stock, of which 3,110,800 shares
        were issued and outstanding; 16,000,000 shares of Series C Preferred
        Stock, 14,193,095 shares of which are issued and outstanding; 8,863,636
        shares of Series D Preferred Stock, 6,136,136 of which are issued and
        outstanding; and outstanding options and warrants to purchase 22,285,971
        shares
        of Common Stock and there are no other authorized shares of any class
        authorized, issued or outstanding.  In addition, outstanding convertible
        subordinated notes are convertible into 2,500,000 shares of Common Stock
        and
        warrants to purchase 2,065,505 shares of Common Stock were issued in connection
        with the Purchaser’s senior credit facility. Other than the convertible
        instruments described above, no person has any phantom rights, options, warrants
        or other equity interest or instrument convertible into any equity interest
        in
        Purchaser or otherwise has any right to acquire any equity interest or any
        instrument convertible into any equity interest in Purchaser.  All of the
        issued and outstanding shares of Purchaser’s capital stock have been duly
        authorized and validly issued and are fully paid, nonassessable and free
        of
        preemptive rights and were issued in full compliance with applicable state
        and
        Federal securities law and any rights of third parties.   

       

      4.9
        SEC Documents/Purchaser Financial Statements.
        Purchaser has furnished or made available to the Sellers true and complete
        copies of all reports or registration statements filed by it with the U.S.
        Securities and Exchange Commission (the “SEC”)
        since
        January 1, 2004, all in the form so filed (all of the foregoing being
        collectively referred to herein as the “SEC
        Documents”).
        As of
        their respective filing dates, the SEC Documents complied in all material
        respects with the requirements of the Securities Act or the Exchange Act
        as the
        case may be, and none of the SEC Documents contained any untrue statement
        of a
        material fact or omitted to state a material fact required to be stated therein
        or necessary to make the statements therein, in light of the circumstances
        in
        which they were made, not misleading, except to the extent corrected by a
        document subsequently filed with the SEC. The consolidated financial statements
        of Purchaser, including the notes thereto, included in the SEC Documents
        (the
“Purchaser
        Financial Statements”)
        have
        been prepared in accordance with GAAP consistently applied (except as may
        be
        indicated in the notes thereto or, in the case of unaudited statements, as
        permitted by SEC rule) and present fairly, in all material respects, the
        consolidated financial position of Purchaser at the dates thereof and the
        consolidated results of its operations and cash flows for the periods then
        ended
        (subject, in the case of unaudited statements, to normal year-end audit
        adjustments). 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

         

       

      

         

        ARTICLE
          5 

        CLOSING

         

        5.1.1 Closing.
          The
          Closing shall
          take place on
          or
          about February __, 2006 or such later date as all of
          the
          conditions in Articles 7 and 8 are fulfilled
          or waived,
          but in
          no event shall the Closing be later than February 28, 2006 (the “Drop Dead
          Date”). 

         

        5.1.2 General
          Procedure.
          At the
          Closing, each party shall deliver to the party entitled to receipt thereof
          the
          documents required to be delivered pursuant to Article VIII hereof and
          such
          other documents, instruments and materials (or complete and accurate copies
          thereof, where appropriate) as may be reasonably required in order to effectuate
          the intent and provisions of this Agreement, and all such documents, instruments
          and materials shall be satisfactory in form and substance to counsel for
          the
          receiving party.

         

         

        ARTICLE
          6

        COVENANTS

         

        6.1 Access
          to Information. 

         

        6.1.1 The
          Company and Sellers have given and shall continue to give Purchaser and
          its
          designated representatives, upon reasonable notice and at mutually agreeable
          times, access to all of the properties and assets and customers of the
          Company
          and to all of the Company’s documents, Books and Records relating to its current
          and past operations and Business and to make copies thereof and permit
          such
          representatives to interview
          and question the Customer’s employees. Purchaser will not reveal any
          confidential data and/or
          information supplied by the Company except to its management, counsel,
          accountants, insurance representatives, investment and commercial bankers
          and
          like agents, for purposes relating
          to the evaluation and consummation of the transactions contemplated by
          this
Agreement,
          and in the event the transactions contemplated by this Agreement are not
          consummated,
          such data and information will be returned to the Company and will be held
          confidential
          by those to whom it is disclosed.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        6.1.2 Provided
          Purchaser and Purchaser’s representatives have signed reasonable confidentiality
          agreements protecting the confidential information of Sellers, each Seller
          shall
          give Purchaser access to such Seller’s Books and Records as they relate to the
          Company or any Subsidiary after the Closing, during regular business hours
          upon
          not less than two (2) business days’ notice, as necessary, in order for
          Purchaser to prepare tax filings and audits and in connection with debt
          or
          equity financings. 

         

        6.2 Conduct
          of the Business Pending Closing. Between
          the date hereof
          and the Closing hereunder, the Company will:

         

        6.2.1 not
          take
          any action which would render untrue any of
          the
          representations or warranties of the Company and the Sellers herein contained,
          and not omit to take any action within its power, the omission of which
          would
          render untrue any such
          representation or warranty;

         

        6.2.2 conduct
          its Business in the Ordinary Course;

         

        6.2.3 not
          enter
          into any Contract with any party, other than Contracts entered into
          in
          the Ordinary Course, and not amend, modify or terminate any Contract other
          than
          in the Ordinary Course without the prior written consent of
          Purchaser;

         

        6.2.4 use
          commercially reasonable efforts to preserve its business intact, to keep
          available the services of its Employees, and to preserve its relationships
          with
          its customers and others with whom it deals consistent with past
          practice;

         

        6.2.5 not
          reveal, orally or in writing, to any party, other than Purchaser and
Purchaser’s
          authorized agents, any of the business procedures and practices followed
          by it
          in the conduct of its Business or any technology used in the conduct of
          its
          Business;

         

        6.2.6  maintain
          in full force and effect all of the insurance policies listed on Schedule
          3.18
          and make
          no change in any insurance coverage without the prior written consent
          of Purchaser;

         

        6.2.7 keep
          the
          premises occupied by it and all of its equipment and other tangible
          personal property in good order and repair and perform all necessary repairs
          and
maintenance
          within normal time frames of scheduled maintenance;

         

        6.2.8 continue
          to maintain all of its usual Books and Records in accordance
          with its past practices and not to make any material Tax elections;

         

        6.2.9 not
          amend
          its articles or incorporation, bylaws or other organizational
          documents;

         

        6.2.10 not
          declare or make any dividend or other payment on or with respect to the
          Equity
          Interests, redeem or otherwise acquire any securities or issue any securities
          or
          any, option,
          warrant or right relating thereto;

         

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        6.2.11 not
          pay
          any bonuses to any of its Employees, other than in the Ordinary Course;
          

         

        6.2.12 not
          waive
          any right or cancel any claim;

         

        6.2.13 not
          increase the compensation or the rate of compensation payable to any
          of
          its Employees without the prior written approval of the Purchaser;

         

        6.2.14 maintain
          its entity existence and not merge or consolidate with any other
          entity;

         

        6.2.15 comply
          with all provisions of any Contract applicable to it and all applicable
          Laws consistent with past practices;

         

        6.2.16 except
          with Purchaser’s consent, not make any capital expenditures in excess
          of
          $5,000 per expenditure and/or $10,000 in
          the
          aggregate;

         

        6.2.17 neither
          discuss nor negotiate with any other Person or entity the sale or other
          transfer, or Encumbrance, of the assets or the Equity Interests of the
          Company;

         

        6.2.18 deposit
          all funds received into the Company’s principal bank accounts and will pay all
          expenses of the Company from such accounts; and

         

        6.2.19 use
          commercially reasonable efforts to effectuate the transactions contemplated
          by this Agreement, and to do all things whatsoever necessary and proper
          to
effect
          the transactions and agreements contemplated herein.

         

        6.3 Payment
          on Account of Contract.
          Between
          the date hereof and up until and after the Closing hereunder, each Seller
          shall
          immediately remit any payment it receives (if any) on account of a Contract
          to
          the Company.

         

        6.4 Product
          Development; Competition.
          Sellers
          shall not directly or indirectly sell or develop products that are functionally
          similar or that would compete with the current products of the
          Company.

         

        6.5 Governmental
          Permits and Approvals.
          The
          Company and the Sellers shall use
          their
          commercially reasonable efforts to obtain all
          Permits and approvals from any Governmental
          Authority required to be obtained by the Sellers and/or the Company and/or
          the
Purchaser
          for the lawful consummation of the transactions contemplated hereby, and
          to take
          all steps necessary to transfer or have reissued to Purchaser any governmental
          licenses, approvals or permits
          by Closing.

         

        6.6 Reasonable
          Efforts.
          Purchaser shall use commercially reasonable efforts to effectuate the
          transactions contemplated
          by this Agreement, and to do all things whatsoever necessary and proper
          to
effect
          the transactions and agreements contemplated herein.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        6.7 Confidentiality.
          No
          party shall use any information or data obtained in connection with the
          negotiation of the transactions contemplated by this Agreement for any
          purpose
          other than to pursue and further the consummation of such
          transactions.

         

        6.8 Health
          Insurance. In
          addition to the payments specified herein the Purchaser agrees that the
          Company
          shall continue health insurance coverage for Joy Gilbert, Joel Gilbert
          and
          Jeffrey Gilbert under the same terms as exist as of the date of the Agreement
          (including where applicable family coverage) at no cost to the Sellers
          until the
          end of the month in which a date ninety (90) days after the Closing Date
          occurs.

         

        ARTICLE
          7

        CONDITIONS
          PRECEDENT TO CLOSING

         

        7.1 Conditions
          Precedent to Closing of Purchaser.
          Each
          and every obligation
          of Purchaser
          to enter into the transactions contemplated by this Agreement and complete
          the
          Merger is subject, at Purchaser’s option, to the fulfillment and satisfaction of
          each of the following conditions:

         

        7.1.1 The
          representations and warranties of the Company and Sellers contained in
          this
          Agreement will be true and correct in all material respects on and as
          of the
          Closing Date with the same force and effect as though made on and as of
          the
          Closing Date.
          The
          Schedules to this Agreement will be complete, accurate and current on and
          as of
the
          Closing Date. Each Seller and the Company will have performed and complied
          with
          all covenants and agreements required by this Agreement to be performed
          or
          complied with by them
          on
          or prior to the Closing Date. Each Seller and the Company will have delivered
          to Purchaser a certificate, dated the Closing Date, to
          the
          foregoing effect;

         

        7.1.2 No
          action, suit or proceeding will have been instituted before any court
          or
          Governmental Authority or instituted or threatened by any Person which
          could
          materially affect
          the assets, Obligations, financial condition or prospects of the Company
          or
          restrain or prevent the carrying out of the transactions contemplated hereby
          or
          seek damages in connection
          with such transactions;

         

        7.1.3 All
          necessary approvals and/or filings for the transactions
          contemplated hereby to be obtained and/or made by the Company and any Seller
          will have been obtained
          and/or made, as the case may be, and shall be in full force and effect;
          and

         

        7.1.4 The
          deliveries set forth in Section 8.1 shall have occurred.

         

        7.2 Conditions
          Precedent to Closing of the Company and Sellers.
          Each
          and
every
          obligation of the Company and Sellers to enter into the transactions
          contemplated by this Agreement and complete the Closing is subject,
          at their option, to the fulfillment and satisfaction of each of the following
          conditions:

         

        7.2.1 The
          representations and warranties of Purchaser contained in this Agreement
          will be
          true and correct on and as of the Closing Date with the same force and
          effect as
          though made on and as of the Closing Date. Purchaser will have performed
          and
          complied with all covenants and agreements required by this Agreement to
          be
          performed or complied
          with by it on or prior to the Closing Date. Purchaser
          will have delivered
          to Seller a certificate, dated the Closing Date, to
          the
          foregoing effect;
          

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        7.2.2 All
          necessary approvals and/or filings for the transactions contemplated
          hereby to be obtained and/or made by Purchaser will have been obtained
          and/or
made,
          as
          the case may be, and shall be in full force and effect;

         

        7.2.3 No
          action, suit or proceeding will have been instituted before any court
          or
          government body or restricted or threatened by any person which could materially
          prevent
          the carrying out of the transactions contemplated hereby; and

         

        7.2.4 The
          deliveries set forth in Section 8.2 shall have occurred.

         

        ARTICLE
          8

        DELIVERIES
          AT CLOSING 

         

        8.1 The
          Company and Sellers Deliveries at Closing. The
          Company and the Sellers,
          as
          applicable, shall deliver to Purchaser at Closing:

         

        8.1.1 Good
          standing certificate or the equivalent for the Company, dated no earlier
          than ten (10) days before the Closing Date, from the jurisdiction of
incorporation.

         

        8.1.2 A
          certified copy of the articles of incorporation or organization, and
          each
          amendment thereto, of the Company, from the secretary of state of the
jurisdiction
          in which such Company is incorporated.

         

        8.1.3 A
          true
          and correct copy of the Company’ bylaws or operating or similar agreement,
and
          each
          amendment thereto.

         

        8.1.4 Duly
          executed resignations of each member of the board of directors
          of the Company.

         

        8.1.5 The
          minute books, equity transfer books or similar books and records and seal
          of the
          Company.

         

        8.1.6 All
          keys
          to safe deposit boxes of the Company and authorized forms to change (i)
          the
          permitted users of the safe deposit boxes and (ii) permitted users and
          authorized persons for banking relationships.

         

        8.1.7 All
          other
          agreements, certificates, instruments, financial statement certifications
          and documents reasonably requested by Purchaser in order to fully consummate
          the
          transactions contemplated by this Agreement and carry out the purposes
          and
          intent of this Agreement.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        8.2 Purchaser’s
          Deliveries at Closing. Purchaser
          shall deliver to the Sellers at Closing:

         

        8.2.1 .All
          other agreements, certificates, instruments and documents reasonably requested
          by any Seller in order to fully consummate the transactions
          contemplated by this Agreement and carry out
          the
          purposes and intent of this Agreement.

         

        8.3 Exchange
          of Equity Interests for Purchase Price. The
          Purchaser shall deliver to each Seller such Seller’s portion of the Purchase
          Price as set forth on Exhibit 2.9 at such time as each Seller delivers
          to the
          Purchaser (i) the certificate representing the Equity Interest held by
          such
          Company Stockholder and (ii) for any Seller receiving Purchaser Shares,
          an
          executed signature page to the Registration Rights Agreement.

         

        ARTICLE
          9

        INDEMNIFICATION

         

        9.1 Survival
          of Representations and Warranties.
          All
          representations and warranties made hereunder or pursuant hereto or in
          connection with the transactions contemplated hereby shall survive the
          Closing
          for a period of one year following the Closing Date, except all representations
          and warranties made by Sellers under Sections 3.4,
          3.5,
          and
3.15,
          which
          shall survive the Closing through the date of the applicable statute of
          limitations.

         

        9.2 Indemnification
          Obligations.

         

        9.2.1 Indemnification
          by Seller.
          Sellers
          shall jointly and severally indemnify, defend and hold harmless Purchaser,
          the
          Company and their respective affiliates, and Representatives, and shall
          reimburse each such Person on demand for any Damages resulting from any
          of the
          following: (i) any breach or default in the performance by any
          of
          the Sellers
          of any covenant or agreement contained herein, in any agreement contemplated
          hereby or executed in connection herewith, or in any certificate or other
          instrument delivered or to be delivered by or on behalf of any
          of
          the Sellers
          pursuant hereto or thereto; (ii) any breach of warranty or inaccurate
          representation made by
          any of
          the
          Sellers
          herein; and (iii) the operation of the Business of the Company prior to
          the
          Closing Date provided, however, that: 

         

        9.2.1.1 None
          of
          the Sellers shall be required to pay any Damages to Purchaser unless the
          aggregate amount of all Damages exceeds $10,000, in which case all Damages
          shall
          be paid, and (ii) in no event shall the aggregate amount of Damages payable
          by
          the Sellers exceed $100,000, provided, however, that this limit on Damages
          shall
          not apply to Damages for breaches of warranty or inaccurate representation
          made
          by Sellers under Sections 3.2, 3.4, 3.5, 3.9.5, 3.15 and 3.19; and

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

                    9.2.2 Indemnification
          by Purchaser.
          Purchaser and MergerSub shall indemnify, defend and hold harmless Sellers
          and
          any of their affiliates and Representatives, and shall reimburse each such
          Person on demand for any Damages resulting from any of the following: (i)
          any
          breach or default in the performance by Purchaser of any covenant or agreement
          of Purchaser contained herein, in any agreement contemplated hereby or
          executed
          in connection herewith, or in any certificate or other instrument delivered
          or
          to be delivered by or on behalf of Purchaser pursuant hereto or thereto;
          (ii)
          any breach of warranty or inaccurate representation made by Purchaser herein;
          and (iii) the operation of the Business of each of the Company after the
          Closing
          Date (including tax liabilities arising after the Closing Date for periods
          commencing after the Closing Date) provided, however, that, (A) Purchaser
          shall
          not be required to pay any Damages to Sellers or any such Persons with
          respect
          to the breach of any representation or warranty pursuant to the foregoing
          clause
          (ii) unless the aggregate amount of all Damages exceeds $10,000, in which
          case
          all Damages shall be paid, and (B) in no event shall the aggregate amount
          of
          Damages payable by Purchaser exceed $100,000.

         

        9.2.3 Claims
          for Indemnity.
          Whenever a claim for Damages shall arise for which one party (“Indemnitee”)
          shall
          be entitled to indemnification hereunder, Indemnitee shall notify the other
          party(s) (“Indemnitor”)
          in
          writing within thirty (30) days of the first receipt of notice of such
          claim,
          and in any event within such shorter period as may be necessary for Indemnitor
          to take appropriate action to resist such claim; provided that the failure
          to
          give notice as herein provided shall not relieve Indemnitor of its obligation
          to
          indemnify Indemnitee except to the extent that Indemnitor shall have been
          prejudiced in its ability to defend such claim. Notwithstanding anything
          in this
          Agreement to the contrary, written notice of any Indemnitee’s claim for
          indemnification for breach of representations and warranties must be given
          within the survival period for such representations and warranties set
          forth in
          Section 9.1, and any indemnity claim for breaches of representations and
          warranties which has not been noticed in writing by such date shall be
          time-barred, irrespective of whether such claim was known or unknown by
          such
          date to the party seeking indemnification. Each notice shall specify all
          facts
          known to Indemnitee giving rise to such indemnity rights and shall estimate
          the
          amount of the liability arising therefrom. If Indemnitee is duly notified
          of a
          dispute, the parties shall attempt to settle and compromise the same, or
          if
          unable to do so within thirty (30) days (or such longer period as they
          may
          agree) of Indemnitor’s delivery of notice of a dispute, either party may seek
          judicial resolution of the dispute. Any rights of indemnification established
          by
          reason of such settlement, compromise or arbitration shall promptly thereafter
          be paid and satisfied by Indemnitor.

         

        9.2.4 Defense
          of Third Party Claims.
          Upon
          receipt by Indemnitor of a notice from an Indemnitee with respect to any
          claim
          of a third party against Indemnitee, Indemnitor may assume the defense
          of such
          claim with counsel reasonably satisfactory to Indemnitee, and Indemnitee
          shall
          cooperate to the extent reasonably requested by Indemnitor in defense or
          prosecution thereof and shall furnish such records, information and testimony
          and attend all such conferences, discovery proceedings, hearings, trials
          and
          appeals as may be reasonably requested by Indemnitor in connection therewith.
          If
          Indemnitor assumes the defense of such claim, Indemnitee shall have the
          right to
          employ its own counsel in any such case, but the fees and expenses of such
          counsel shall be at the expense of Indemnitee. If Indemnitor has assumed
          the
          defense of any claim against Indemnitee, Indemnitor shall have the right
          to
          settle any claim for which indemnification has been sought and is available
          hereunder involving only cash payment and/or a release it from liability;
          provided that, to the extent that such settlement requires Indemnitee to
          take,
          or prohibits Indemnitee from taking, any action or purports to obligate
          Indemnitee, then Indemnitor shall not settle such claim without the prior
          written consent of Indemnitee. If Indemnitor does not assume the defense
          of a
          third party claim and disputes Indemnitee'’s
          right
          to indemnification, Indemnitee shall have the right to participate in the
          defense of such claim through counsel of its choice, at Indemnitor'’s
          expense
          (subject to the validity of the Indemnitee’s claim), and Indemnitee shall have
          control over the litigation and authority to resolve such claim with the
          prior
          consent of Indemnitor, which consent shall not be unreasonably
          withheld.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        9.3 No
          Double Recovery.
          Notwithstanding the fact that any Indemnitee may have the right to assert
          claims
          for indemnification under or in respect of more than one provision of this
          Agreement or another agreement entered into in connection herewith in respect
          of
          any fact, event, condition or circumstance, no Indemnitee shall be entitled
          to
          recover the amount of any Damages suffered by such Indemnitee more than
          once
          under all such agreements in respect of such fact, event, condition or
          circumstance, and an Indemnitor shall not be liable for indemnification
          to the
          extent the Indemnitee has otherwise been fully compensated on a
          dollar-for-dollar basis for such Damages pursuant to the procedures set
          forth in
          Section 9.2. 

         

        9.4 Cooperation.
          Notwithstanding anything to the contrary contained in this Article 6, the
          parties shall cooperate with each other in connection with any claim for
          indemnification hereunder, including to obtain the benefits of any insurance
          coverage for third party claims that may be in effect at the time a third
          party
          claim is asserted.

         

        9.5 Mitigation.
          The
          amount of any Damages of any Indemnitee under this Article 6 shall be net
          of (a)
          the amount, if any, receivable by the Indemnitee from any third party
          (including, without limitation, any insurance company or other insurance
          provider) and (b) the amount, if any, equal to the Tax benefit (such amounts
          being collectively referred to herein as a “Third
          Party Reimbursement”),
          in
          respect of or attributable to the Damages suffered thereby. If, after receipt
          by
          the Indemnitee of any indemnification payment hereunder, such Person receives
          or
          becomes entitled to receive a Third Party Reimbursement in respect of the
          same
          Damages for which indemnification was made and such Third Party Reimbursement
          was not taken into account in assessing the amount of indemnification,
          then the
          Indemnitee shall turn over all of such Third Party Reimbursement to the
          Indemnitor up to the amount of the indemnification paid pursuant
          hereto.

         

        9.6 Exclusive
          Remedy.
          Except
          in the case of fraud, the indemnification provided in this Article 9 will
          constitute the exclusive remedy of the Purchaser, the MergerSub, the Company,
          or
          Sellers and their affiliates and Representatives, as the case may be, and
          their
          respective assigns from and against any and all Damages asserted against,
          resulting to, imposed upon or incurred or suffered by, any of them, directly
          or
          indirectly, as a result of, or based upon or arising from the breach of
          any
          representation or warranty or the non-fulfillment of any agreement or covenant
          in or pursuant to this Agreement or any other agreement, document, or instrument
          required hereunder. Purchaser and Sellers each hereby waive, to the fullest
          extent permitted under applicable Law, any and all rights, claims, and
          causes of
          action it may have against any other party, or any of such other party’s
          affiliates, to the contrary.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        9.7 Adjustments
          to Purchase Price.
          Any
          payments made pursuant to this Article 9 shall be consistently treated
          as
          adjustments to Purchase Price for all Tax purposes by Sellers and
          Purchaser.

         

        9.8 Intentional
          Misrepresentation.
          Notwithstanding any other provision hereof to the contrary, any claims
          of fraud
          shall not be limited by any survival period contained in this Agreement
          or any
          limit on indemnification or remedy contained in this Agreement. 

         

        9.9 Damages.
          Notwithstanding anything to the contrary elsewhere in this Agreement, no
          party
          or its affiliates will be liable to the other party(s) or its affiliates
          for any
          Damages other than compensatory Damages. Each party agrees that it is not
          entitled to recover and agrees to waive any claim with respect to, and
          will not
          seek, consequential, punitive or any other special Damages as to any matter
          under, relating to or arising out of the transactions contemplated by this
          Agreement; provided, however that the foregoing shall not limit any
          indemnification obligations of either party with respect to third party
          claims.

        

        ARTICLE
          10

        TAX
          MATTERS

         

        10.1 Payment
          of Taxes.
          Sellers
          shall pay, and indemnify, defend and hold the Purchaser and the Company
          harmless
          against, any and all Taxes of the Company (including without limitation,
          any
          Taxes due from Sellers) allocable to any taxable periods ending on or before
          the
          Closing Date and the portion through the end of the Closing Date for any
          taxable
          period that includes (but does not end on) the Closing Date, including
          Taxes due
          after the Closing Date relating to deferred revenue for which the underlying
          license or maintenance payments were collected prior to the Closing Date
          (the
“Pre-Closing Tax Period”). In the case of any taxable period that includes (but
          does not end on) the Closing Date, the amount of any Taxes based on or
          measured
          by income or receipts of the Company allocable to the Pre-Closing Tax Period
          shall be determined based on an interim closing of the books as of the
          close of
          business on the Closing Date, and the amount of other Taxes of the Company
          allocable to the Pre-Closing Tax Period shall be deemed to be the amount
          of such
          Tax for the entire taxable period multiplied by a fraction the numerator
          of
          which is the number of days in the taxable period ending on the Closing
          Date and
          the denominator of which is the number of days in such taxable
          period. 

         

        10.2 Preparation
          of Tax Returns. 
          Sellers
          shall prepare and file all income Tax Returns for the Company for any tax
          periods ending on or prior to the Closing Date, except for any Tax Returns
          due
          after the Closing Date in which case Purchaser shall prepare such Tax Returns
          and Sellers shall have the right to review and approve such Tax Returns
          at least
          10 business days prior to filing, which approval shall not be unreasonably
          withheld. Except as otherwise provided in the preceding sentence, Purchaser
          shall prepare all Tax Returns for the Company. Sellers shall reimburse
          Purchaser
          for Taxes of the Company which are allocable to the Pre-Closing Period
          (in
          accordance with Section 10.1) within 15 days after payment by Purchaser
          or the
          applicable Company of such Taxes. Purchaser shall not file, or cause the
          Company
          to file, any amended Tax Returns for the Company for tax periods that include
          a
          period prior to the Closing Date without prior written consent of Sellers,
          such
          consent not to be unreasonably withheld or delayed.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        10.3 Payment
          Over of Refunds.
          The
          Company shall promptly pay, and Purchaser shall cause the Company to pay,
          to
          Sellers any refund, overpayment, or credit (including any interest paid
          or
          credited with respect thereto) of Taxes attributable to Tax periods (or
          portions
          thereof) ending on or before the Closing Date.

         

        10.4 Control
          of Tax Audits.
          Sellers
          shall have the right, at their own expense, to control any audit or examination
          by any Governmental Authority (a “Tax
          Audit”),
          initiate any claim for refund, contest, resolve and defend against any
          assessment, notice of deficiency, or other adjustment or proposed adjustment
          relating to any and all Taxes for any taxable period ending on or before
          the
          Closing Date with respect to the Company; provided that Sellers shall not
          resolve any such contest without the consent of Purchaser, such consent
          not to
          be unreasonably withheld or delayed. Purchaser shall have the right, at
          its own
          expense, to control, or have the Company control, any other Tax Audit,
          initiate
          any other claim for refund, and contest, resolve and defend against any
          other
          assessment, notice of deficiency, or other adjustment for tax years beginning
          after the Closing Date.

         

        10.5 Cooperation.
          Purchaser and the Company, on the one hand, and Sellers, on the other hand,
          shall cooperate fully, as and to the extent reasonably requested by the
          other
          party, in connection with the filing of Tax Returns pursuant to this Article
          10,
          and any audit, litigation or other proceeding with respect to Taxes. Such
          cooperation shall include the retention and (upon the other party’s
          request) the provision of records and information which are reasonably
          relevant
          to any such audit, litigation or other proceeding and making employees
          available
          on a mutually convenient basis to provide additional information and explanation
          of any material provided hereunder. Purchaser, the Company and Sellers
          shall (i)
          retain all books and records with respect to Tax matters pertinent to the
          Company relating to any taxable period beginning before the Closing Date
          until
          the expiration of the statute of limitations (and, to the extent notified
          by
          Purchaser or Sellers, any extensions thereof) of the respective taxable
          periods,
          and to abide by all record retention agreements entered into with any
          Governmental Authority and (ii) to give the other party reasonable written
          notice prior to transferring, destroying or discarding any such books and
          records and, if the other party so requests, the Company or Sellers as
          the case
          may be, shall allow the other party to take possession of such books and
          records. Upon request, Purchaser and Sellers further agree to use their
          reasonable commercial efforts to obtain any certificate or other document
          from
          any Governmental Authority or any other Person as may be necessary to mitigate,
          reduce or eliminate any Tax that could be imposed (including but not limited
          to
          with respect to the transactions contemplated hereby).

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        10.6
          Payment
          of Taxes.
          Not
          withstanding anything to the contrary contained herein the Sellers and
          Purchaser
          agree to elect the "specifc accounting" method of allocation under Section
          1377(a)(2) of the Internal Revenue Code, whereby the Company is treated
          as if it
          has two tax years for allocating income and losses. Such allocation will
          be
          calculated "as if" the Company had elected to be taxed on the accrual basis
          of
          accounting whereby income will be recognized when earned, irrespective
          of when
          the payment is received; and expenses are recognized in the period benefited,
          and not when payment is made for such services. 

         

        10.7 Transfer
          Taxes.
          Purchaser and Sellers shall each bear one half of all sales, transfer,
          stamp,
          real property transfer or gains or similar Taxes incurred, whether direct
          or
          indirect, as a result of the purchase of the Equity Interests by the
          Purchaser.

         

        ARTICLE
          11

        TERMINATION

         

        11.1 Right
          to Terminate. Notwithstanding
          anything to the contrary set forth in this Agreement,
          this Agreement may be terminated and the transactions contemplated herein
          abandoned
          at any time prior to the Closing:

         

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

         

        (ii) by
          Purchaser, on the one hand, or Sellers, on the
          other
          hand, if the Closing shall not have occurred by the Drop Dead Date, provided,
          however, that the right to terminate this Agreement under this Section
          11.1
          shall not be available to any party
          whose failure to fulfill any obligation under this Agreement has been the
          cause
          of, or resulted
          in, the failure of the Closing to occur on or before such date;

         

        (iii)
          by
          Purchaser, on the one hand, or Sellers on the other hand, if a court of
          competent jurisdiction shall have issued an order, decree or ruling 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;

         

        (iv) by
          Sellers if Purchaser (x) breaches its representations
          and warranties in any material respect or (y) fails to comply in any material
          respect
          with any of its covenants or agreements contained herein; or 

         

        (v) by
          Purchaser if Sellers and/or the Company (x) breach their representations
          and warranties in any material respect or (y) fail to comply in any material
          respect with any of its covenants or agreements contained herein.

         

        11.2 Effect
          of Termination.
          In the
          event of termination of this Agreement by either Purchaser or Sellers as
          provided above, the provisions of this Agreement shall immediately become
          void
          and of no further force and effect (other than this Section 11.2 and Sections
          6.7 (Confidentiality), the limitations on indemnity set forth in Article
          9,
          Section 12.3 (Expenses) and 12.5 (Controlling Law), which shall each survive
          the
          termination of this Agreement), and there shall be no liability on the
          part of
          any of Purchaser or Seller to one another, except for knowing or willful
          breaches of this Agreement prior to the time of such termination. 

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        ARTICLE
          12

        MISCELLANEOUS
          PROVISIONS

         

        12.1 Further
          Assurances.
          Each
          party to this Agreement shall execute, acknowledge and deliver any further
          documents and instruments and take any other action consistent with the
          terms of
          this Agreement that may reasonably be requested by the other party for
          the
          purpose of giving effect to the transactions contemplated by this Agreement,
          whether before, concurrent with or after the consummation of the transactions
          contemplated hereby. 

         

        12.2 Publicity.
          Any
          press release or similar announcement concerning the consummation of the
          transactions contemplated hereby by any party shall be provided to the
          other
          parties for review and approval prior to its release, which approval shall
          not
          be unreasonably withheld; provided, however, Sellers or Purchaser or their
          affiliates may, without the consent of the other, publish and use standard
          tombstone announcements regarding the consummation of the transactions
          contemplated by this Agreement; provided further, that in no event shall
          any
          party publicly disclose the Purchase Price or the approximate amount thereof,
          without the consent of the other parties. Following the issuance of the
          initial
          announcement, either party may, without the consent of the other, publish
          additional announcements that contain substantially similar material as
          the
          initial announcement. This Section 12.2 shall not prevent announcements
          provided
          by law or securities regulations, provided that the other parties hereto
          shall
          have the opportunity to read and comments on such announcements prior to
          the
          release thereof. 

         

        12.3 Expenses.
          Each of
          the parties shall pay all costs and expenses incurred by it or on its behalf
          in
          connection with this Agreement and the transactions contemplated hereby,
          including, without limitation, fees and expenses of its own financial
          consultants, accountants and counsel.

         

        12.4 Entire
          Agreement.
          This
          Agreement, together with the agreements referred to herein and the Schedules
          hereto and thereto, set forth the entire agreement between the parties
          with
          regard to the subject matter hereof and thereof.

         

        12.5 Governing
          Law; Jurisdiction.
          The
          validity, construction and performance of this Agreement, and any Action
          arising
          out of or relating to this Agreement shall be governed by the Laws of the
          State
          of Maryland, without regard to the Laws of the State of Maryland as to
          choice or
          conflict of Laws. 

         

        12.6 Waiver
          and Amendment.
          This
          Agreement may be amended, supplemented, modified and/or rescinded only
          through
          an express written instrument signed by the parties or their respective
          successors and permitted assigns. Any party may specifically and expressly
          waive
          in writing any portion of this Agreement or any breach hereof, but only
          to the
          extent such provision is for the benefit of the waiving party, and no such
          waiver shall constitute a other or continuing waiver of any preceding or
          succeeding breach of the same or any other provision. The consent by one
          party
          to any act for which such consent was required shall not be deemed to imply
          consent or waiver of the necessity of obtaining such consent for the same
          or
          similar acts in the future, and no forbearance by a party to seek a remedy
          for
          noncompliance or breach by another party shall be construed as a waiver
          of any
          right or remedy with respect to such noncompliance or breach.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        12.7 Assignment.
          Except
          as specifically provided otherwise in this Agreement, neither this Agreement
          nor
          any interest herein shall be assignable (voluntarily, involuntarily, by
          judicial
          process, operation of Law, or otherwise), in whole or in part, by any party
          without the prior written consent of the other party. Notwithstanding the
          foregoing, each Seller may, without the consent of Purchaser, whether before
          or
          after the Closing, assign all of its rights and obligations under this
          Agreement
          to any Affiliate of such Seller, provided that such assignment shall not
          relieve
          any Seller of any of its obligations under this Agreement and Purchaser
          may,
          without the consent of Sellers, whether before or after the Closing, assign
          all
          of its rights under this Agreement to a wholly owned subsidiary of Purchaser,
          provided that such assignment shall not relieve Purchaser of any of its
          obligations under this Agreement prior to Closing.

         

        12.8 Successors
          and Assigns; No Third Party Beneficiary.
          Each of
          the terms, provisions, and obligations of this Agreement shall be binding
          upon,
          shall inure to the benefit of, and shall be enforceable by the parties
          and their
          respective legal representatives, successors and permitted assigns. Nothing
          in
          this Agreement will be construed as giving any Person, other than the parties
          to
          this Agreement and their successors and permitted assigns, any right, remedy
          or
          claim under, or in respect of, this Agreement or any provision
          hereof.

         

        12.9 Notices.
          All
          notices, requests, demands and other communications made under this Agreement
          shall be in writing, correctly addressed to the recipient as
          follows:

         

        

        If
          to Sellers:
          

        

        Exeutive
          Consultants, Inc.

        16
          Battery Ridge Drive

        Gettysburg,
          PA 17325

        Attn:
          Jim
          Gilbert

        Facsimile
          No.: 717-359-7547

        

        With
          a copy to:

        

        Gerald
          K.
          Gimmel, Esquire

        4
          Professional Drive, Suite 145

        Gaitherburg,
          MD 20879

        Facsimile
          No.: 301-590-9784

         

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
 

        If
          to Purchaser:
          

        

        Warp
          Technology Holdings, Inc.

        200
          Railroad Avenue, Third Floor

        Greenwich,
          CT 06830

        Attn:
          Ernest Mysogland

        Facsimile
          No.: (203) 422-5329

        

        Notices,
          requests, demands and other communications made under this Agreement shall
          be
          deemed to have been duly given (i) upon delivery, if served personally
          on the
          party to whom notice is to be given, (ii) on the date of receipt, refusal
          or
          non-delivery indicated on the receipt if mailed to the party to whom notice
          is
          to be given by first class mail, registered or certified, postage prepaid,
          or by
          air courier, or (iii) upon confirmation of satisfactory transmission of
          a
          facsimile if sent by facsimile. Any party may give written notice of a
          change of
          address in accordance with the provisions of this Section and after such
          notice
          of change has been received, any subsequent notice shall be given to such
          party
          in the manner described at such new address.

         

        12.10 Severability.
          Each
          provision of this Agreement is intended to be severable. Should any provision
          of
          this Agreement or the application thereof be judicially declared to be
          or become
          illegal, invalid, unenforceable or void, the remainder of this Agreement
          will
          continue in full force and effect and the application of such provision
          to other
          Persons or circumstances will be interpreted so as reasonably to effect
          the
          intent of the parties.

         

        12.11 Cumulative
          Remedies.
          No
          remedy made available hereunder by any of the provisions of this Agreement
          is
          intended to be exclusive of any other remedy, and each and every remedy
          shall be
          cumulative and shall be in addition to every other remedy given hereunder
          or now
          or hereafter existing at Law or in equity or by statute or
          otherwise.

         

        12.12 Counterparts.
          This
          Agreement may be executed in one or more counterparts, each of which shall
          be
          deemed an original, but all of which together shall constitute a single
          agreement.

         

        12.13 Facsimile
          Signatures.
          This
          Agreement and any other document or agreement executed in connection herewith
          (other than any document for which an originally executed signature page
          is
          required by law) may be executed by delivery of a facsimile copy of an
          executed
          signature page with the same force and effect as the delivery of an originally
          executed signature page. In the event any party delivers a facsimile copy
          of a
          signature page to this Agreement or any other document or agreement executed
          in
          connection herewith, such party shall deliver an originally executed signature
          page upon request; provided, however, that the failure to deliver any such
          originally executed signature page shall not affect the validity of the
          signature page delivered by facsimile, which has and shall continue to
          have the
          same force and effect as the originally executed signature page.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        12.14 Interpretation.
          The
          language in all parts of this Agreement shall be in all cases construed
          simply
          according to its fair meaning and not strictly for or against any party.
          The
          captions of the Sections and Subsections of this Agreement are for convenience
          only and shall not affect the construction or interpretation of any of
          the
          provisions of this Agreement. Except as otherwise provided or if the context
          otherwise requires, whenever used in this Agreement, (a) any noun or pronoun
          shall be deemed to include the plural and the singular, (b) the terms “include”
and “including” shall be deemed to be followed by the phrase “without
          limitation,” (c) the word “or” shall be inclusive and not exclusive, (d) unless
          the context otherwise requires, all references to Articles and Sections
          refer to
          Articles and Sections of this Agreement and all references to Schedules
          are to
          Schedules attached to this Agreement, each of which is made a part of this
          Agreement for all purposes, (e) the words “herein,” “hereof” and “hereunder” and
          other words of similar import refer to this Agreement as a whole and not
          to any
          particular Section or other subdivision, (f) any definition of or reference
          to
          any Law, agreement, instrument or other document herein will be construed
          as
          referring to such Law, agreement, instrument or other document as from
          time to
          time amended, supplemented or otherwise modified, and (g) any definition
          of or
          reference to any statute will be construed as referring also to any rules
          and
          regulations promulgated thereunder. 

         

        12.15 Warranty
          of Authority.
          Each of
          the entities signing this Agreement warrants and represents that the individual
          signing on behalf of such entity is duly authorized and empowered to enter
          into
          this Agreement and bind such entity hereto.

         

        12.16 Attorney’s
          Fees.  In
          furtherance and not limitation of Article 9, if any party should breach
          any
          term, condition or obligation created by this Agreement, then the non-breaching
          party shall be entitled to be reimbursed for all of its reasonable attorneys'
          fees, court costs, litigation fees, transcript costs, deposition costs,
          and
          other related litigation and non-litigation costs incurred by said non-breaching
          party, with all of the same to be paid by the breaching party to the
          non-breaching party

         

         

         

        

         

        

        [REMAINDER
          OF THIS PAGE LEFT INTENTIONALLY BLANK]

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        [SIGNATURE
          PAGE TO PURCHASE AGREEMENT]

        

        IN
          WITNESS WHEREOF, each of the parties has executed this Agreement as of
          the date
          first set forth above.

         

        PURCHASER:

        

        WARP
          TECHNOLOGY HOLDINGS, INC.

        

        By:
           /s/
          Ernest Mysogland   

        Name:
          Ernest Mysogland

        An
          authorized officer

        

        MERGERSUB:

        

        ECI
          ACQUISITION, INC.

        

        By:
           /s/
          Ernest Mysogland   

        Name:
          Ernest Mysogland

        An
          authorized officer

        

        COMPANY:

        

        EXECUTIVE
          CONSULTANTS, INC.

        

        By:
           /s/
          James Gilbert   

        Name:
          James Gilbert

        An
          authorized officer

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        [SIGNATURE
          PAGE TO MERGER AGREEMENT]

        

        SELLERS:

        /s/
          James Gilbert    

        Name:
          James Gilbert

        

        

         /s/
          Joy Gilbert    

        Name:
          Joy
          Gilbert

        

        

         /s/
          Jeff Gilbert    

        Name:
          Jeff Gilbert

        

        

         /s/
          Joel Gilbert    

        Name:
          Joel GilbertExhibit 4.1

Exhibit 4.1

	
ZAP

	
 

	
2002 INCENTIVE STOCK PLAN

1.         PURPOSES.

            1.         The purpose of this Plan is to provide a means by which selected Employees and Directors of and Consultants
to ZAP. (the “Company”), and its Affiliates, may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of (i)  Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv)
rights to purchase restricted stock, and (v) stock appreciation rights, all as defined below.

            2.         The Company intends that the Stock Awards issued under this Plan shall, in the discretion of the Board or
any Committee to which responsibility for administration of this Plan has been delegated pursuant to subsection 3.c, be either (i) Options granted pursuant to Section 6 hereof, including Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or
rights to purchase restricted stock granted pursuant to Section 7 hereof, or (iii) Stock Appreciation Rights granted pursuant to Section 8 hereof.

2.         DEFINITIONS.

            1.         "Affiliate" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f) respectively, of the Code.

            2.         "Board" means the Board of Directors of the Company.

            3.         "Code" means the Internal Revenue Code of 1986, as amended.

            4.         "Committee" means a committee of directors of the Company appointed by the Board in accordance with
subsection 3.c of this Plan.

            5.         "Company" means ZAP., a California corporation.

            6.         "Concurrent Stock Appreciation Right" or "Concurrent Right" means a right granted pursuant to subsection
8.b.ii of this Plan.

            7.         "Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render
consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors.

1

            8.         "Continuous Status as an Employee, Director or Consultant" means that the service of an individual to the
Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Board or the chief executive officer of the Company may determine, in that party's sole discretion, in its sole discretion, may determine whether Continuous Status as an
Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board or the chief executive officer, including sick leave, military leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.

            9.         "Covered Employee" means the chief executive officer and the four (4) other highest compensated officers of
the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

            10.       "Director" means a member of the Board.

            11.       "Employee" means any person, including Officers and Directors, employed by the Company or any Affiliate of the
Company.  Neither service as a Director nor payment of a director's fee by the Company shall be itself sufficient to constitute "employment" by the Company.

            12.       "Exchange Act" means the Securities Exchange Act of 1934, as amended.

            13.       "Fair Market Value" means, as of any date, the value of the common stock of the Company determined as
follows:

                        1.         If the common stock is listed on any
national securities exchange or traded on the Nasdaq National Market or the Nasdaq Small Cap Market, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing  bid, if no sales were  reported) as quoted
on such exchange or market (or the exchange or market with the greatest  volume of trading in the Company's  common stock) on the last market trading day prior to the day of  determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

                        2.         In the absence of such markets for
the common stock, the Fair Market Value shall be determined in good faith by the Board.

            14.       "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section
421 of the Code and the regulations promulgated thereunder.

            15.       "Independent Stock Appreciation Right" or "Independent Right" means a right granted pursuant to subsection 8.b.iii of
this Plan.

            16.       "Non‐Employee Director" means a Director who: (i) is not a current Employee or Officer of the Company or its
parent or subsidiary; (ii) does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in

2

any capacity other than as a Director; (iii) does not possess an interest in any other transaction which the Company would be required to disclosure in filings with the Securities and Exchange Commission; (iv) is not engaged
in a business relationship with the Company which the Company would be required to so disclose under Regulation S‐K; or (v)  is otherwise considered a “non‐employee director” for purposes of Rule 16b‐3.

            17.       "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

            18.       "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

            19.       "Option" means a stock option granted pursuant to this Plan.

            20.       "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of
an individual Option grant.  Each Option Agreement shall be subject to the terms and conditions of this Plan.

            21.       "Optionee" means an Employee, Director or Consultant who holds an outstanding Option.

            22.       "Outside Director" means a Director who: (i) is not a current employee of the Company or an "affiliated corporation"
(within the meaning of Treasury regulations promulgated under Section 162(m) of the Code); (ii) is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan);
(iii) was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (iv) is
otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

            23.       "Plan" means this ZAP 2002 Stock Incentive Plan.

            24.       "Rule 16b‐3" means Rule 16b‐3 of the Exchange Act or any successor to Rule 16b‐3, as in effect when
discretion is being exercised with respect to this Plan.

            25.       "Securities Act" means the Securities Act of 1933, as amended.

            26.       “Stock” means, unless the context otherwise requires, the Common Stock of the Company.

            27.       "Stock Appreciation Right" means any of the various types of rights which may be granted under Section 8 of this
Plan.

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            28.       "Stock Award" means any right granted under this Plan, including any Option, any stock bonus, any right to purchase
restricted stock, and any Stock Appreciation Right.

            29.       "Stock Award Agreement" means a written agreement between the Company and a holder of a Stock Award evidencing the
terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of this Plan.

            30.       "Tandem Stock Appreciation Right" or "Tandem Right" means a right granted pursuant to subsection 8.b.i of this
Plan.

3.         ADMINISTRATION.

            1.         General Administration. This Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3.c.

            2.         Powers of Board.  The Board shall have the power, subject to, and within the limitations of, the
express provisions of this Plan:

                        1.         To determine from time to time which
of the persons eligible under this Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock, a Stock
Appreciation Right, or a combination of the foregoing; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock  Award;  whether a person
shall be permitted  to receive stock upon exercise of an Independent Stock Appreciation Right; and the number of shares with respect to which a Stock Award shall be granted to each such person.

                        2.         To construe and interpret this Plan
and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may correct any defect, omission or inconsistency in this Plan or in any Stock Award Agreement, in a
manner and to the extent it shall deem necessary or expedient to make this Plan fully effective.

                        3.         To amend this Plan or a Stock Award
as provided in Section 12.

                        4.         Generally, to exercise such powers
and to perform such acts as the Board deems necessary or expedient which are not inconsistent with the terms of this Plan to promote the best interests of the Company.

            3.         The Committee.  The Board may delegate administration of this Plan to a committee of the Board
composed of not fewer than two (2) members (the "Committee").  No less than a majority of the members of the Committee shall be Non‐Employee Directors and/or Outside Directors.  If administration is delegated to a Committee, the Committee shall have,
in connection

4

with the administration of this Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more Outside Directors any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of this Plan, as may be adopted from time to time by the
Board.  The Board may abolish the Committee at any time and revest in the Board the administration of this Plan.  Notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a committee of one or more members of
the Board the authority to grant Stock Awards to eligible persons who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are either: (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award; or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code.

4.         SHARES SUBJECT TO PLAN.

            1.         Number of Shares.  Subject to the provisions of Section 11 relating to adjustments upon changes
in stock, the Company may issue a maximum of ten million (10,000,000) shares of its Common Stock under this Plan.

            2.         Source of Stock.  The stock subject to this Plan may be unissued shares or reacquired shares
bought on the market or otherwise.

5.         ELIGIBILITY.

            1.         General.  Incentive Stock Options and Stock Appreciation Rights appurtenant thereto may be
granted only to Employees.  Stock Awards other than Incentive Stock Options and Stock Appreciation rights appurtenant thereto may be granted only to Employees, Directors or Consultants.

            2.         Major Shareholders.  An Incentive Stock Option or Nonstatutory Stock Option granted to a person
who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates must have an exercise price of at least one hundred ten percent (110%) of the Fair Market Value of such stock
at the date of grant.  In addition, an Incentive Stock Option granted to a person described in the previous sentence may only be exercised for a period of five years after the date of grant.

6.         OPTION PROVISIONS.

            Each Option shall be in the form of an agreement executed by the Optionee.  The Option agreement shall contain such terms and conditions as the Board
shall deem appropriate, provided that no terms may be contrary to the provisions of this Plan.  The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:

5

            1.         Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was
granted.

            2.         Price.  The exercise price of each Incentive Stock Option shall be not less than one hundred
percent  (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted.  The exercise price of each Nonstatutory Stock Option shall be no less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date of grant.  Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

            3.         Consideration.  The purchase price of stock acquired pursuant to an Option shall be paid, to the
extent permitted by applicable statutes and regulations, in cash at the time the Option is exercised.  In addition, the Board of Directors may allow for the Option to be exercised by means of any of the following methods: (i) by delivery and surrender to the
Company of other common stock of the Company owned by the Optionee; (ii) by delivery of a promissory note with a term of no more than four years and with an interest rate on the unpaid balance accumulating at a rate of no less than the Applicable Federal Rate
announced by the Department of the Treasury as of the date the note is issued; (iii) by surrender by the Optionee of the right to purchase that number of shares under the Option with a fair market value equal to the exercise price; (iv) such other methods of
exercising the Option which are allowed under applicable state and federal law.

            4.         Transferability.  An Incentive Stock Option shall not be transferable except by Will or by the
laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by such person.  A Nonstatutory Stock Option shall only be transferable by the Optionee upon such terms and conditions
as are set forth in the Option Agreement for such Nonstatutory Stock Option, as the Board or the Committee shall determine in its discretion.  Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option.

            5.         Vesting.  The total number of shares of stock subject to an Option may, but need not, be
allotted in periodic installments  (which may,  but need not, be equal).  The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised.  The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate, provided that in no event will stock options vest at a rate of less than 20% of the shares subject to the Option per
annum.

6

            6.         Termination of Employment or Relationship as a Director or Consultant.  In the event an
Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination)
but only within such period of time ending on the earlier of: (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (or such longer or shorter period specified in the Option Agreement or by the
Board of Directors), or (ii) the expiration of the term of the  Option as set forth in the Option Agreement.  If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion
of the Option shall revert to and again become available for issuance under this Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered
by such Option shall revert to and again become available for issuance under this Plan.

            7.         Disability of Optionee.  In the event an Optionee's Continuous Status as an Employee, Director
or Consultant terminates as a result of the Optionee's disability, the Optionee  may  exercise  his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on
the earlier of: (i) the date twelve  (12)  months following such termination (or such longer or shorter period specified in the Option Agreement; or (ii) the expiration of the term of the Option as set forth in the Option Agreement.  If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under this Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under this Plan.

            8.         Death of Optionee. In the event of the death of an Optionee during, or within a period specified in
the Option after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6.d, but only within the period ending on the earlier of (i) the date twelve (12) months following
the date of death; or (ii) the expiration of the term of such Option as set forth in the Option Agreement.  If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under this Plan.  If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become
available for issuance under this Plan.

            9.         Early Exercise.  The Option may, but need not, include a provision whereby the Optionee may
elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option.  Any

7

unvested shares so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate.

            10.       Re‐Load  Options.  Without in any way limiting the authority of the Board or Committee to make
or not to make grants of Options hereunder, the Board or Committee shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling the Optionee to a further Option (a "Re‐Load Option") in the event the Optionee
exercises the Option evidenced by the Option agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the Option Agreement.  Any such Re‐Load Option (i) shall be for a number
of shares equal to the number of shares surrendered as part or all of the exercise price of such Option; (ii) shall have an expiration date which is the same as the expiration date of the Option the exercise of which gave rise to such Re‐Load Option; and (iii)
shall have an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Re‐Load Option on the date of exercise of the original Option.  Notwithstanding the foregoing, a Re‐Load Option
which is granted to a 10% stockholder (as described in subsection 5.b), shall have an exercise price which is equal to one hundred ten percent  (110%) of the Fair Market Value of the stock subject to the Re‐Load Option on the date of exercise of the
original Option and shall have a term which is no longer than five (5) years.  Any such Re‐Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board or Committee may designate at the time of the grant of the original Option;
provided, however, that the designation of any Re‐Load Option as an Incentive Stock Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation on exercisability of Incentive Stock Options described in subsection 10.d of this Plan
and in Section 422(d) of the Code.  There shall be no Re‐Load Options on a Re‐Load Option.  Any such Re‐Load Option shall be subject to the availability of sufficient shares under this Plan and the limits on the grants of Options as
provided elsewhere under this Plan and shall be subject to such other terms and conditions as the Board or Committee may determine which are not inconsistent with the express provisions of this Plan regarding the terms of Options.

7.         TERMS OF STOCK GRANTS

            Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or the Committee shall
deem appropriate.  The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each stock bonus or restricted stock purchase
agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions as appropriate:

            1.         Purchase Price.  The purchase price under each restricted stock purchase agreement shall be such
amount as the Board or Committee shall determine and designate in such agreement.  In any event, the Board or the Committee may determine that eligible participants in this Plan may be

8

awarded stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

            2.         Transferability.  No rights under a stock bonus or restricted stock purchase agreement shall be
transferable except by Will or the laws of descent and distribution, or otherwise only upon such terms and conditions as are set forth in the applicable Stock Award Agreement, as the Board or the Committee shall determine in its discretion, so long as stock awarded
under such agreement remains subject to the terms of that agreement.

            3.         Consideration.  The purchase price of stock acquired pursuant to a stock purchase agreement
shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or the Committee, according to a deferred payment arrangement, or; ( iii) in any other form of legal consideration that may be acceptable to the Board or the Committee in
its discretion.  Notwithstanding the foregoing, the Board or the Committee may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

            4.         Vesting.  Shares of stock sold or awarded under this Plan may, but need not, be subject to a
repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or the Committee.

            5.         Termination of  Employment or Relationship as a Director or Consultant.  In the event a
Participant's Continuous Status as an Employee, Director or Consultant terminates, the Company may repurchase or otherwise reacquire, any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the
stock bonus or restricted stock purchase agreement between the Company and such person.

8.         STOCK APPRECIATION RIGHTS.

            1.         General.  The Board or Committee shall have full power and authority, exercisable in its sole
discretion, to grant Stock Appreciation Rights under this Plan to Employees or Directors of or Consultants to the Company or its Affiliates.  To exercise any outstanding Stock Appreciation Right, the holder must provide written notice of exercise to the Company
in compliance with the terms of the Stock Award Agreement evidencing such right.  No limitation shall exist on the aggregate amount of cash payments the Company may make under this Plan in connection with the exercise of a Stock Appreciation Right.

            2.         Types of Stock Appreciation Rights.  Three types of Stock Appreciation Rights shall be
authorized for issuance under this Plan:

                        1.         Tandem Stock Appreciation
Rights.  Tandem Stock Appreciation Rights will be granted appurtenant to an Option, and shall, except as specifically set forth in this Section 8, be subject to the same terms and conditions applicable to the particular Option grant to which it

9

pertains. Tandem Stock Appreciation Rights will require the holder to elect between the exercise of the underlying Option for shares of stock and the surrender, in whole or in part, of such Option for an appreciation
distribution.  The appreciation distribution payable on the exercised Tandem Right shall be in cash (or, if so provided, in an equivalent number of shares of stock based on the Fair Market Value (on the date of the Option surrender) in an amount up to the excess
of (A) the Fair Market Value (on the date of the Option surrender) of the amount of shares of stock covered by that portion of the surrendered Option in which the Optionee is vested over (B) the aggregate exercise  price payable for such vested
shares.

                        2.         Concurrent Stock Appreciation
Rights.  Concurrent Rights will be granted appurtenant to an Option and may apply to all or any portion of the shares of stock subject to the underlying Option and shall, except as specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which the Concurrent Right pertains.  A Concurrent Right shall be exercised automatically at the same time the underlying Option is exercised with respect to the particular shares of stock to which the
Concurrent Right pertains.  The appreciation distribution payable on an exercised Concurrent Right shall be in cash (or, if so provided, in an equivalent number of shares of stock based on the Fair Market Value on the date of exercise of the Concurrent Right) in
an amount equal to such portion as shall be determined by the Board or the Committee at the time of the grant of the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Concurrent Right) of the vested shares of stock purchased under the
underlying Option which have Concurrent Rights appurtenant to them over (B) the aggregate exercise price paid for such shares.

                        3.         Independent Stock Appreciation
Rights.  Independent Rights will be granted independently of any Option and shall, except as specifically set forth in this Section 8, be subject to the same terms and conditions applicable to Nonstatutory Stock Options.  Independent Rights will be
denominated in share equivalents.  The appreciation distribution payable on the exercised Independent Right shall be not greater than an amount equal to the excess of (A) the aggregate Fair Market Value (on the date of the exercise of the Independent Right) of a
number of shares of Company stock equal to the number of share equivalents in which the holder is vested under such Independent Right, and with respect to which the holder is exercising the Independent Right on such date, over (B) the aggregate Fair Market Value (on
the date of the grant of the Independent Right) of such number of shares of Company stock.  The appreciation distribution payable on the exercised Independent Right shall be in cash or, if so provided, in an equivalent number of shares of stock based on the Fair
Market Value on the date of the exercise of the Independent Right.

9.         CANCELLATION AND RE‐GRANT OF OPTIONS.

            1.         Change in Terms.  The Board or the Committee shall have the authority to effect, at any time and
from time to time with the consent of the Optionee or holder of the Stock Appreciation Rights, to (i) reprice any outstanding Options and/or Stock Appreciation Rights under this Plan and/or (ii) cancel any outstanding Options and/or Stock Appreciation Rights and
grant in substitution therefor new Options and/or Stock Appreciation Rights covering the same or different numbers of

10

shares of stock, but having an exercise price per share not less than one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option or, in the case of a 10% stockholder (as described in
subsection 5.b)  receiving a new grant of an Incentive Stock Option, not less than one hundred ten percent  (110%) of the Fair Market  Value) per share of stock on the new grant date.  Notwithstanding the foregoing, the Board or the Committee may
grant an Option and/or Stock Appreciation Right with an exercise price lower than that set forth above if such Option and/or Stock Appreciation Right is granted as part of a transaction to which Section 424(a) of the Code applies.

            2.         Effect of Cancellation.  Shares subject to an Option or Stock Appreciation Right canceled under
this Section 9 shall continue to be counted against the maximum award of Options or Stock Appreciation Rights permitted to be granted pursuant to this Plan.  The repricing of an Option or Stock Appreciation Right under this Section 9, resulting in a reduction of
the exercise price, shall be deemed to be a cancellation of the original Option or Stock Appreciation Right and the grant of a substitute Option and/or Stock Appreciation Right.  In the event of such repricing, both the original and the substituted Options shall
be counted against the maximum awards of Options and Stock Appreciation Rights permitted to be granted pursuant to this Plan, if any.  The provisions of this subsection 9.b) shall be applicable only to the extent required by Section 162(m) of the
Code.

10.       MISCELLANEOUS.

            1.         Acceleration.  The Board shall have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof will vest, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

            2.         No Rights as Shareholder.  Neither an Employee, Director or Consultant, nor any person to whom a
Stock Award is transferred shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to
its terms.

            3.         No Agreement for Employment.  Nothing in this Plan, or any instrument executed or Stock Award
granted pursuant hereto, shall confer upon any Employee, Director or Consultant or other holder of Stock Awards any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director of or Consultant) or shall affect the right of the
Company or any Affiliate to terminate the employment of any Employee with or without cause, the right of the Company's Board and or the Company's shareholders to remove any Director pursuant to the terms of the Company's ByLaws and the laws of the State of
California, or the right to terminate the relationship of any Consultant pursuant to the terms of such Consultant's agreement with the Company or Affiliate.

            4.         Limitations on Incentive Stock Options.  To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the

11

Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

            5.         Investment Representations.  The Company may require any person to whom a Stock Award is
granted, or any person to whom a Stock Award is transferred, as a condition of exercising or acquiring stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to such person's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that such person is acquiring  the stock subject to the Stock Award for such person's own account and not with any present intention of
selling or otherwise distributing the stock.  The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if: (i) the issuance of the shares upon the exercise or acquisition of stock under the Stock Award has been
registered under a then currently effective registration statement under the Securities Act; or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then
applicable securities laws.  The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under this Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the stock.

            6.         Tax Payments.  To the extent provided by the terms of a Stock Award Agreement, the person to
whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (iii) delivering to the Company owned and unencumbered shares of the
common stock of the Company.

11.       ADJUSTMENTS UPON CHANGES IN STOCK.

            1.         General.  If any change is made in the stock subject to this Plan, or subject to any Stock
Award  (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company), this Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to this Plan, and the outstanding Stock Awards will be appropriately adjusted in the type(s) and number of
securities and price per share of stock subject to such outstanding Stock Awards.  Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive.  (The conversion of any
convertible

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securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.”)

            2.         Reorganization.  If the Company enters into an Acquisition Transaction (as defined below) and
the surviving or acquiring business entity agrees to assume the obligations of the Company with respect to Stock Awards, the recipients of Stock Awards under this Plan will be entitled to receive substitute Stock Awards from the acquiring or surviving business entity
which provide similar rights to those which they possessed in the Company.  If the surviving or acquiring business entity does not agree to assume or continue such Stock Awards, or to substitute similar options for such Stock Awards outstanding under this Plan,
then, with respect to Stock Awards held by persons then performing services as Employees, Directors or Consultants, the time during which such Stock Awards may be exercised shall be accelerated and the Stock Awards terminated if not exercised after such acceleration
and at or prior to such event.  For the purposes of this subsection 11.b, an “Acquisition Transaction” shall be defined as: (i) a sale of all or substantially all of the Company’s assets other than in the ordinary course of business, followed
by a liquidation of the Company’s assets to its shareholders; (ii) a merger of the Company into or consolidation of the Company with another business entity in which the Corporation is not the surviving entity (other than a merger or consolidation for the
purposes of reincorporating the Company in another jurisdiction or if the existing shareholders of the Company prior to the merger or consolidation own over 50% of the voting securities of the surviving business entity after the transaction); or (iii) a reverse
merger in which the Company is the surviving entity but the shares of the Company’s Common Stock are converted by virtue of the merger into other property.

12.       AMENDMENT OF THE PLAN AND STOCK AWARDS.

            1.         Authority to Amend.  The Board at any time, and from time to time, may amend this Plan. 
However, except as provided in Section 11 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the shareholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment
will:

                        1.         Increase the number of shares
reserved for Stock Awards under this Plan;

                        2.         Modify the requirements as to
eligibility for participation in this Plan (to the extent such modification requires stockholder approval in order for this Plan to satisfy the requirements of Section 422 of the Code); or

                        3.         Modify this Plan in any other way if
such modification requires stockholder approval in order for this Plan to satisfy the requirements of Section 422 of the Code or to comply with the requirements of Rule 16b-3.

            2.         Shareholder Approval.  The Board may in its sole discretion submit any other amendment to this
Plan for stockholder approval, including, but not limited to, amendments to this Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations

13

promulgated thereunder regarding  the exclusion of performance‐based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

            3.         Maximum Benefits.  It is expressly contemplated that the Board may amend this Plan in any
respect the Board deems necessary or advisable to provide eligible Employees, Directors or Consultants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring this Plan and/or Incentive Stock Options granted under it into compliance therewith.

            4.         No Impairment of Rights.  The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations under any Stock Award shall not be impaired by any such amendment unless: (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person
consents in writing to the amendment.

13.       TERMINATION OR SUSPENSION OF PLAN.

            1.         Date of Termination/Suspension.  The Board may suspend or terminate this Plan any time. 
Unless sooner terminated, this Plan shall terminate on the tenth anniversary date after which this Plan was adopted by the Board.  No Stock Awards may be granted under this Plan while this Plan is suspended or after it is terminated.

            2.         Existing Rights Not Impaired.  Rights and obligations under any Stock Award granted while this
Plan is in effect shall not be impaired by suspension or termination of this Plan, except with the consent of the person to whom the Stock Award was granted.

14.       EFFECTIVE DATE OF PLAN.

            This Plan shall become effective upon the date adopted by the Board, provided that this Plan shall terminate and be of no further effect if the shareholders do
not approve this Plan within 12 months of the date it is adopted.  No Stock Awards granted under this Plan shall be exercised unless and until this Plan has been approved by the shareholders, and all Stock Awards granted under this Plan shall immediately
terminate and be rescinded if such approval is not obtained within that time.

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