Document:

MEMBERSHIP
      INTERESTS PURCHASE AGREEMENT

    

    BY
      AND AMONG

    

    NAYNA
      NETWORKS, INC.

    

    PRO
      SAT, LLC

    

    AND

    

    THE
      MEMBERS OF PRO SAT, LLC

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MEMBERSHIP
      INTERESTS PUIRCHASE
      AGREEMENT

     

    This
      Membership Interests Purchase Agreement is entered into as of January 31, 2007,
      by and among Nayna Networks, Inc., a Nevada corporation (the “Buyer”),
      PRO
      SAT, LLC, a California limited liability company (the “Seller”)
      and
      the members of Seller listed on Schedule
      A
      attached
      hereto and incorporated herein by reference (each a “Member”
and
      collectively, the “Members”)
      .

     

    A. The
      Members are the owners of all of the membership interests, and are the sole
      members, of Seller.

    

    B. The
      Buyer
      desires to purchase all outstanding membership interests in Seller (the
“Membership
      Interests”)
      from
      the Members and the Members desire to sell all outstanding Membership Interests
      in the Seller to the Buyer.

     

    C. Buyer
      and
      Seller intend to raise six million dollars ($6,000,000.00) in the first quarter
      of 2007 to be used to satisfy working capital requirements set forth in
Schedule
      B
      attached
      hereto.

     

    D. Capitalized
      terms used in this Agreement shall have the meanings ascribed to them in Article
      10.

     

    E. In
      consideration of the representations, warranties and covenants herein contained,
      the Parties agree as follows.

     

    1. THE
      MEMBERSHIP INTERESTS PURCHASE

     

    1.1 Purchase
      of Membership Interests.
      At the
      Closing and subject to and upon the terms and conditions of this Agreement,
      the
      Members hereby agree to sell, transfer, convey, assign and deliver to Buyer,
      and
      Buyer hereby agrees to purchase, acquire and accept from the Members, all
      outstanding Membership Interests in consideration for the payment to each of
      the
      Members of their pro rata portion of the Purchase Price. Buyer’s obligation
      hereunder with regard to each Member is contingent and conditioned upon each
      Member fulfilling its respective conditions and obligations
      hereunder.

     

    1.2 Purchase
      Price.
      The
      Purchase Price to be paid by the Buyer for the Membership Interests shall be
      the
      number of shares of Common Stock to be issued in the manner set forth
      below:

     

    (a) At
      the
      Closing,

     

    (i) 16,000,000
      shares (the “Initial
      Shares”)
      on the
      Closing Date shall be issued to the Members to be allocated pro rata based
      on
      their relative Membership Interests;

     

    (ii) 2,000,000
      shares (“Indemnification
      Shares”)
      shall
      be issued in the names of Members and deposited into an escrow account as
      security for the Members’ indemnification obligations (“Indemnification
      Escrow”)
      as
      described below; and

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (iii) 2,000,000
      shares (the “Employee
      Option”)
      as
      options shall be issued as directed by Seller immediately following
      Closing.

     

    Any
      Indemnification Shares not released to Buyer pursuant to Section 8 below shall
      be released from the Indemnification Escrow account to the Members on the later
      of (i) the date fifteen months following the Closing and (ii) the date on which
      any indemnification claims pending on the date fifteen months following the
      Closing have been resolved (in either case, the “Indemnification
      Release Date”).

     

    1.3 The
      Closing.

     

    (a) Unless
      this Agreement is earlier terminated in accordance with Section 9.1, subject
      to
      the satisfaction or waiver of each of the conditions set forth in Article 6,
      the
      Closing shall take place at the offices of Hutchison Law Group PLLC in Raleigh,
      North Carolina commencing at 9:00 a.m. local time on the Closing Date, or
      at such other place and time as shall be mutually agreed upon by the Buyer
      and
      the Seller. All transactions at the Closing shall be deemed to take place
      simultaneously, and no transaction shall be deemed to have been completed and
      no
      documents or certificates shall be deemed to have been delivered until all
      other
      transactions are completed and all other documents and certificates are
      delivered.

     

    (b) At
      the
      Closing:

     

    (i) each
      Member shall execute and deliver such documents as are necessary to effect
      a
      transfer of his Membership Interests to the Buyer;

     

    (ii) the
      Buyer
      shall issue to the Members the portion of the Purchase Price set forth in
      Section 1.3(a)(i); and

     

     

    the
      Buyer
      shall deposit the Indemnification Shares into the Indemnification Escrow.

     

    1.4 Tax
      Consequences.
      Buyer
      makes no representations or warranties to any Member regarding the Tax treatment
      of the sale of the Membership Interests, or any of the Tax consequences to
      any
      Member of this Agreement, the sale of the Membership Interests or any of the
      other transactions or agreements contemplated hereby. Each Member acknowledges
      that it is relying solely on its own Tax advisors in connection with this
      Agreement, the sale of the Membership Interests and the other transactions
      and
      agreements contemplated hereby.

     

    1.5 Withholding
      Rights.
      Buyer
      shall be entitled to deduct and withhold from the cash otherwise deliverable
      under this Agreement, and from any other payments otherwise required pursuant
      to
      this Agreement, to any Member such amounts in cash or shares as Buyer is
      required to deduct and withhold with respect to any such deliveries and payments
      under the Code or any provision of state, local, provincial or foreign Tax
      law.
      To the extent that amounts are so withheld, such withheld amounts shall be
      treated for all purposes of this Agreement as having been delivered and paid
      to
      such holders in respect of which such deduction and withholding was
      made.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    1.6 Taking
      of Necessary Action; Further Action.
      If, at
      any time after the Closing, any further action is necessary or desirable to
      carry out the purposes of this Agreement and to vest Buyer with full right,
      title and possession to all assets, property, rights, privileges, powers and
      franchises of Seller, the officers and directors of Buyer are fully authorized
      to take, and will take, all such lawful and necessary action, so long as such
      action is not inconsistent with this Agreement.

     

    2. REPRESENTATIONS
      AND WARRANTIES OF THE SELLER

     

    The
      Seller represents and warrants to the Buyer that, except as set forth in the
      Disclosure Schedule, the statements contained in this Article 2 are true
      and correct as of the date of this Agreement, except to the extent such
      representations and warranties are specifically made as of a particular date
      (in
      which case such representations and warranties will be true and correct as
      of
      such date). The Disclosure Schedule shall be arranged in sections and
      subsections corresponding to the numbered and lettered sections and subsections
      contained in this Article 2. The disclosures in any section or subsection of
      the
      Disclosure Schedule shall qualify only the corresponding section or subsection
      in this Article 2.

     

    2.1 Organization,
      Qualification and Corporate Power.
      The
      Seller is a limited liability company duly organized, validly existing and
      in
      good standing under the laws of the state of California, and has all requisite
      power and authority (corporate and other) to own its properties, to carry on
      its
      business as now being conducted, to execute and deliver this Agreement and
      the
      agreements contemplated herein, and to consummate the transactions contemplated
      hereby. The Seller is duly qualified to conduct business and is in good standing
      under the laws of each jurisdiction listed in Section 2.1 of the Disclosure
      Schedule, which jurisdictions constitute the only jurisdictions in which the
      nature of the Seller’s businesses or the ownership or leasing of its properties
      requires such qualification, except for those jurisdictions in which the failure
      to be so qualified or in good standing, individually or in the aggregate, has
      not had and would not reasonably be expected to have a Seller Material Adverse
      Effect. True, correct and complete copies of the Certificate of Formation and
      Limited Liability Company Agreement of the Seller, each as amended to date,
      have
      been previously delivered to the Buyer, and no amendments have been made thereto
      or have been authorized since the date thereof. The Seller is not in default
      under or in violation of any provision of its Certificate of Formation or
      Limited Liability Company Agreement.

     

    2.2 Authorization
      of Transaction.
      The
      Seller has all requisite power and authority to execute and deliver this
      Agreement and the Ancillary Agreements and to perform its obligations hereunder
      and thereunder. The execution and delivery by the Seller of this Agreement
      and, subject
      to the Requisite Member Approval, the performance by the Seller of this
      Agreement and
      the
      Ancillary Agreements and the consummation by the Seller of the transactions
      contemplated hereby and thereby have been duly and validly authorized by all
      necessary corporate action on the part of the Seller. Without limiting the
      generality of the foregoing, the managers of the Seller, at a meeting duly
      called and held, by the unanimous vote of all managers determined that, in
      their
      opinion, the sale of assets contemplated by this Agreement is fair to and in
      the
      best interests of the Seller and its members, approved this Agreement in
      accordance with the California Limited Liability Company Act, directed that
      such
      asset sale be submitted to the members of the Seller for their approval, and
      resolved to recommend that the members of the
      Seller vote in favor of the approval of such asset sale. This Agreement has
      been
      duly and validly executed and delivered by the Seller and constitutes, and
      each
      of the Ancillary Agreements, upon its execution and delivery by the Seller,
      will
      constitute, a valid and binding obligation of the Seller, enforceable against
      the Seller in accordance with its terms, except as such enforceability may
      be
      limited by bankruptcy, insolvency, reorganization, moratorium or
      other
      similar laws affecting or relating to creditors’ rights generally, and is
      subject to general principles of equity.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.3 Noncontravention.
      Except
      as set forth in Section 2.3 of the Disclosure Schedule, neither the execution
      and delivery by the Seller of this Agreement or the Ancillary Agreements, nor
      the consummation by the Seller of the transactions contemplated hereby or
      thereby, will (a) conflict with or violate any provision of the Certificate
      of Formation or Limited Liability Company Agreement of the Seller or the
      charter, by-laws or other organizational document of any Subsidiary,
      (b) require on the part of the Seller or any Subsidiary any notice to or
      filing with, or any permit, authorization, consent or approval of, any
      Governmental Entity the failure of which to obtain would have a Seller Material
      Adverse Effect, (c) conflict with, result in a breach of, constitute (with
      or without due notice or lapse of time or both) a default under, result in
      the
      acceleration of obligations under, create in any party the right to terminate,
      modify or cancel, or require any notice, consent or waiver under, any material
      contract or instrument to which the Seller or any Subsidiary is a party or
      by
      which the Seller or any Subsidiary is bound or to which any of their respective
      assets is subject, (d) result in the imposition of any Security Interest
      upon any assets of the Seller
      or
      any Subsidiary or (e) violate any order, writ, injunction, decree, statute,
      rule or regulation applicable to the Seller, any Subsidiary or any of their
      respective properties or assets. 

     

    2.4 Subsidiaries.

     

    (a) Section 2.4
      of the Disclosure Schedule sets forth: (i) the name of each Subsidiary;
      (ii) the number and type of outstanding equity securities of each
      Subsidiary and a list of the holders thereof; (iii) the jurisdiction of
      organization of each Subsidiary; (iv) the names of the officers and
      directors of each Subsidiary; and (v) the jurisdictions in which each Subsidiary
      is qualified or holds licenses to do business as a foreign corporation or other
      entity.

     

    (b) Each
      Subsidiary is duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its organization. Each Subsidiary is duly qualified
      to conduct business and is in good standing under the laws of each jurisdiction
      in which the nature of its businesses or the ownership or leasing of its
      properties requires such qualification. Each Subsidiary has all requisite power
      and authority to carry on the businesses in which it is engaged and to own
      and
      use the properties owned and used by it. The Seller has delivered to the Buyer
      complete and accurate copies of the charter, by-laws or other organizational
      documents of each Subsidiary. No Subsidiary is in default under or in violation
      of any provision of its charter, by-laws or other organizational documents.
      All
      of the issued and outstanding shares of capital stock of each Subsidiary are
      duly authorized, validly issued, fully paid, nonassessable and free of
      preemptive rights. All shares of each Subsidiary that are held of record or
      owned beneficially by either the Seller or any Subsidiary are held or owned
      free
      and clear of any restrictions on transfer (other than restrictions under the
      Securities Act of 1933, as amended (the “Securities
      Act”)
      and
      state securities laws), claims, Security Interests, options, warrants, rights,
      contracts, calls, commitments, equities and demands. There are no outstanding
      or
      authorized options, warrants, rights, agreements or commitments to which the
      Seller or any Subsidiary is a party or which are binding on any of them
      providing for the issuance, disposition or acquisition of any capital stock
      of
      any Subsidiary. There are no outstanding stock appreciation, phantom stock
      or
      similar rights with respect to any Subsidiary. There are no voting trusts,
      proxies or other agreements or understandings with respect to the voting of
      any
      capital stock of any Subsidiary.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (c) The
      Seller does not control directly or indirectly or have any direct or indirect
      equity participation or similar interest in any corporation, partnership,
      limited liability company, joint venture or other business association or entity
      which is not a Subsidiary.

     

    2.5 Financial
      Statements.
      The
      Seller has provided to the Buyer the Financial Statements. The Financial
      Statements have been prepared in accordance with GAAP applied on a consistent
      basis throughout the periods covered thereby, fairly present the consolidated
      financial condition, results of operations and cash flows of the Seller and
      the
      Subsidiaries as of the respective dates thereof and for the periods referred
      to
      therein and are consistent with the books and records of the Seller and the
      Subsidiaries; provided,
      however,
      that
      the Financial Statements referred to in clause (b) of the definition of
      such term are subject to normal recurring year-end adjustments (which will
      not
      be material) and do not include footnotes.

     

    2.6 Absence
      of Certain Changes.
      Since
      the Most Recent Balance Sheet Date, (a) there has occurred no event or
      development which, individually or in the aggregate, has had, or
      could
      reasonably be expected to have in the future, a Seller Material Adverse Effect,
      and (b) neither the Seller nor any Subsidiary has taken any of the actions
      set forth in paragraphs (a) through (n) of Section 5.4.

     

    2.7 Undisclosed
      Liabilities.
      None of
      the Seller and its Subsidiaries has any liability (whether known or unknown,
      whether absolute or contingent, whether liquidated or unliquidated and whether
      due or to become due), except for (a) liabilities shown on the Most Recent
      Balance Sheet and (b) liabilities which have arisen since the Most Recent
      Balance Sheet Date in the Ordinary Course of Business and (c) contractual
      and other liabilities incurred in the Ordinary Course of Business which are
      not
      required by GAAP to be reflected on a balance sheet.

     

    2.8 Tax
      Matters. 
      Except
      as set forth in Section 2.8 of the Disclosure Schedule, each of the Seller
      and
      the Subsidiaries has filed on a timely basis all Tax Returns that it was
      required to file, and all such Tax Returns were complete and accurate in all
      material respects. Neither the Seller nor any Subsidiary is or has ever been
      a
      member of a group of corporations with which it has filed (or been required
      to
      file) consolidated, combined or unitary Tax Returns, other than a group of
      which
      only the Seller and the Subsidiaries are or were members. Except as set forth
      in
      Section 2.8 of the Disclosure Schedule, each of the Seller and the Subsidiaries
      has paid on a timely basis all Taxes that were due and payable.

     

    2.9 Ownership
      and Condition of Assets.

     

    (a) The
      Seller is the true and lawful owner, and has good title to, all of the Acquired
      Assets, free and clear of all Security Interests, except as set forth in Section
      2.9(a)(i) of the Disclosure Schedule. Each Subsidiary is the true and lawful
      owner, and has good title to, all assets purported to be owned by such
      Subsidiary, free and clear of all Security Interests, except as set forth in
      Section 2.9(a)(i) of the Disclosure Schedule. Upon execution and delivery by
      the
      Seller to the Buyer of the instruments of conveyance referred to in Section
      1.5(b)(iii), the Buyer will become the true and lawful owner of, and will
      receive good title to, the Acquired Assets, free and clear of all Security
      Interests other than those set forth in Section 2.9(a)(ii) of the Disclosure
      Schedule.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (b) The
      Acquired Assets (as defined in Section 5.3(h)) are sufficient for the conduct
      of
      the Seller’s businesses as presently conducted and constitute all assets used by
      the Seller in such businesses. Each tangible Acquired Asset is free from
      material defects, has been maintained in accordance with normal industry
      practice, is in good operating condition and repair (subject to normal wear
      and
      tear) and is suitable for the purposes for which it presently is
      used.

     

    (c) Section
      2.9(c) of the Disclosure Schedule lists individually (i) all Acquired
      Assets which are fixed assets (within the meaning of GAAP) having a book value
      greater than $5,000, indicating the cost, accumulated book depreciation (if
      any)
      and the net book value of each such fixed asset as of the Most Recent Balance
      Sheet Date, and (ii) all other Acquired Assets of a tangible nature (other
      than
      inventories) whose book value exceeds $5,000.

     

    (d) Each
      item
      of equipment, motor vehicle and other asset that is being transferred to the
      Buyer as part of the Acquired Assets and that the Seller or a Subsidiary has
      possession of pursuant to a lease agreement or other contractual arrangement
      is
      in such condition that, upon its return to its lessor or owner under the
      applicable lease or contract, the obligations of the Seller or such Subsidiary
      to such lessor or owner will have been discharged in full.

     

    2.10 Owned
      Real Property.
      Neither
      Seller nor any of its Subsidiaries has any Owned Real Property. 

     

    2.11 Real
      Property Leases.
      Section 2.11 of the Disclosure Schedule lists all Leases.
      The
      Seller has delivered to the Buyer complete and accurate copies of the Leases.
      With respect to each Lease:

     

    (a) such
      Lease is valid;

     

    (b) such
      Lease is assignable by the Seller or a Subsidiary to the Buyer without the
      consent or approval of any party (except as set forth in Section 2.3 of the
      Disclosure Schedule) and such Lease will continue to be legal, valid, binding,
      enforceable and in full force and effect immediately following the Closing
      in
      accordance with the terms thereof as in effect immediately prior to the
      Closing;

     

    (c) neither
      the Seller nor any Subsidiary nor, to the knowledge of the Seller, any other
      party, is in breach or violation of, or default under, any such Lease, and
      no
      event has occurred, is pending or, to the knowledge of the Seller, is
      threatened, which, after the giving of notice, with lapse of time, or otherwise,
      would constitute a breach or default by the Seller or any Subsidiary or, to
      the
      knowledge of the Seller, any other party under such Lease;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d) there
      are
      no disputes, oral agreements or forbearance programs in effect as to such
      Lease;

     

    (e) neither
      the Seller nor any Subsidiary has assigned, transferred, conveyed, mortgaged,
      deeded in trust or encumbered any interest in the leasehold or
      subleasehold;

     

    (f) to
      the
      knowledge of the Seller, all facilities leased or subleased thereunder are
      supplied with utilities and other services adequate for the operation of said
      facilities;

     

    (g) the
      Seller is not aware of any Security Interest, easement, covenant or other
      restriction applicable to the real property subject to such lease which would
      reasonably be expected to materially impair the current uses or the occupancy
      by
      the Seller or a Subsidiary of the property subject thereto; and

     

    2.12 Intellectual
      Property. 

     

    (a) Section
      2.12(a) of the Disclosure Schedule lists (i) each patent, patent application,
      copyright registration or application therefor, mask work registration or
      application therefor, and trademark, service mark and domain name registration
      or application therefor of the Seller or any Subsidiary and (ii) each Customer
      Deliverable of the Seller or any Subsidiary.

     

    (b) Each
      of
      the Seller and the Subsidiaries owns or has the right to use all Intellectual
      Property necessary (i) to use, manufacture, have manufactured, market and
      distribute the Customer Deliverables and (ii) to operate the Internal Systems.
      Upon execution and delivery by the Seller to the Buyer of the instruments of
      conveyance referred to in Section 1.5(b)(iii), each item of Seller
      Intellectual Property will be owned or available for use by the Buyer or such
      Subsidiary immediately following the Closing on substantially identical terms
      and conditions as it was immediately prior to the Closing. The Seller or the
      appropriate Subsidiary has taken all reasonable measures to protect the
      proprietary nature of each item of Seller Intellectual Property, and to maintain
      in confidence all trade secrets and confidential information, that it owns
      or
      uses. No other person or entity has any rights to any of the Seller Intellectual
      Property owned by the Seller or the Subsidiaries (except pursuant to agreements
      or licenses specified in Section 2.12(d) of the Disclosure Schedule), and,
      to the knowledge of the Seller, no other person or entity is infringing,
      violating or misappropriating any of the Seller Intellectual Property.

     

    (c) None
      of
      the Customer Deliverables, or the marketing, distribution, provision or use
      thereof, infringes or violates, or constitutes a misappropriation of, any
      Intellectual Property rights of any person or entity. None of the Internal
      Systems, or the use thereof, infringes or violates, or constitutes a
      misappropriation of, any Intellectual Property rights of any person or entity.
      Section 2.12(c) of the Disclosure Schedule lists any complaint, claim or notice,
      or written threat thereof, received by the Seller or any Subsidiary alleging
      any
      such infringement, violation or misappropriation; and the Seller has provided
      to
      the Buyer complete and accurate copies of all written documentation in the
      possession of the Seller or any Subsidiary relating to any such complaint,
      claim, notice or threat. The Seller has provided to the Buyer complete and
      accurate copies of all written documentation in the Seller’s possession relating
      to claims or disputes known to the Seller concerning any Seller Intellectual
      Property.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (d) Section 2.12(d)
      of the Disclosure Schedule identifies each license or other agreement pursuant
      to which the Seller or a Subsidiary has licensed, distributed or otherwise
      granted any rights to any third party with respect to, any Seller Intellectual
      Property. Except as described in Section 2.12(d) of the Disclosure Schedule,
      neither the Seller nor any Subsidiary has agreed to indemnify any person or
      entity against any infringement, violation or misappropriation of any
      Intellectual Property rights with respect to any Customer
      Deliverables.

     

    (e) Section 2.12(e)
      of the Disclosure Schedule identifies each item of Seller Intellectual Property
      that is owned by a party other than the Seller or a Subsidiary, and the license
      or agreement pursuant to which the Seller or a Subsidiary uses it (excluding
      off-the-shelf software programs licensed by the Seller pursuant to “shrink wrap”
licenses). 

     

    (f) All
      of
      the copyrightable materials incorporated in or bundled with the Customer
      Deliverables have been created by employees of the Seller or a Subsidiary within
      the scope of their employment by the Seller or a Subsidiary or by independent
      contractors of the Seller or a Subsidiary who have executed agreements expressly
      assigning all right, title and interest in such copyrightable materials to
      the
      Seller or a Subsidiary. No portion of such copyrightable materials was jointly
      developed with any third party.

     

    (g) The
      Customer Deliverables and the Internal Systems are free from significant defects
      or programming errors and conform in all material respects to the written
      documentation and specifications therefor.

     

    2.13 Inventory.
      All
      inventory of the Seller and the Subsidiaries, whether or not reflected on the
      Most Recent Balance Sheet, consists of a quality and quantity usable and
      saleable in the Ordinary Course of Business, except for obsolete items and
      items
      of below-standard quality, all of which have been written-off or written-down
      to
      net realizable value on the Most Recent Balance Sheet. All inventories not
      written-off have been priced at the lower of cost or net realizable value on
      a
      first-in, first-out basis. The quantities of each type of inventory, whether
      raw
      materials, work-in-process or finished goods, are not excessive in the present
      circumstances of the Seller and the Subsidiaries. 

     

    2.14 Contracts.

     

    (a) Section 2.14
      of the Disclosure Schedule lists the following agreements (written or oral)
      to
      which the Seller or any Subsidiary is a party as of the date of this
      Agreement:

     

    (i) any
      agreement (or group of related agreements) for the lease of personal property
      from or to third parties providing for lease payments in excess of $1,000 per
      annum or having a remaining term longer than 12 months;

     

    (ii) any
      agreement (or group of related agreements) for the purchase or sale of products
      or for the furnishing or receipt of services (A) which calls for performance
      over a period of more than one year, (B) which involves more than the sum of
      $10,000, or (C) in which the Seller or any Subsidiary has granted manufacturing
      rights, “most favored nation” pricing provisions or exclusive marketing or
      distribution rights relating to any products or territory or has agreed to
      purchase a minimum quantity of goods or services or has agreed to purchase
      goods
      or services exclusively from a certain party;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (iii) any
      agreement concerning the establishment or operation of a partnership, joint
      venture or limited liability company;

     

    (iv) any
      agreement (or group of related agreements) under which it has created, incurred,
      assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness
      (including capitalized lease obligations) involving more than $10,000 or under
      which it has imposed (or may impose) a Security Interest on any of its assets,
      tangible or intangible;

     

    (v) any
      agreement for the disposition of any significant portion of the assets or
      business of the Seller or any Subsidiary (other than sales of products in the
      Ordinary Course of Business) or any agreement for the acquisition of the assets
      or business of any other entity (other than purchases of inventory or components
      in the Ordinary Course of Business);

     

    (vi) any
      agreement concerning confidentiality or noncompetition;

     

    (vii) any
      employment or consulting agreement;

     

    (viii) any
      agreement involving any current or former officer, director or member of the
      Seller or an Affiliate thereof;

     

    (ix) any
      agreement under which the consequences of a default or termination would
      reasonably be expected to have a Seller Material Adverse Effect; 

     

    (x) any
      agreement which contains any provisions requiring the Seller or any Subsidiary
      to indemnify any other party (excluding indemnities contained in agreements
      for
      the purchase, sale or license of products entered into in the Ordinary Course
      of
      Business); and

     

    (xi) any
      other
      agreement (or group of related agreements) either involving more than $10,000
      or
      not entered into in the Ordinary Course of Business.

     

    (b) The
      Seller has delivered to the Buyer a complete and accurate copy of each agreement
      listed in Section 2.12 or Section 2.14 of the Disclosure Schedule, except
      as otherwise indicated in such Section 2.14 of the Disclosure Schedule. With
      respect to each agreement so listed: (i) the agreement is legal, valid,
      binding and enforceable and in full force and effect; (ii) for those
      agreements to which the Seller is a party, the agreement is assignable by the
      Seller to the Buyer without the consent or approval of any party (except as
      set
      forth in Section 2.3 and 2.14 of the Disclosure Schedule) and will continue
      to be legal, valid, binding and enforceable and in full force and effect
      immediately following the Closing in accordance with the terms thereof as in
      effect immediately prior to the Closing; and (iii) neither the Seller nor
      any Subsidiary nor, to the knowledge of the Seller, any other party, is in
      breach or violation of, or default under, any such agreement, and no event
      has
      occurred, is pending or, to the knowledge of the Seller, is threatened, which,
      after the giving of notice, with lapse of time, or otherwise, would constitute
      a
      breach or default by the Seller or any Subsidiary or, to the knowledge of the
      Seller, any other party under such agreement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    2.15 Accounts
      Receivable.
      All
      accounts receivable of the Seller and the Subsidiaries reflected on the Most
      Recent Balance Sheet (other than those paid since such date) are valid
      receivables
      and, to
      the knowledge of Seller, are current and collectible, net of the applicable
      reserve for bad debts on the Most Recent Balance Sheet. All accounts receivable
      of the Seller and the Subsidiaries that have arisen since the Most Recent
      Balance Sheet Date are valid receivables and, to the knowledge of Seller, are
      collectible,
      net of
      a reserve for bad debts in an amount proportionate to the reserve shown on
      the
      Most Recent Balance Sheet.
      Neither
      the Seller nor any Subsidiary has received any written notice from an account
      debtor stating that any account receivable in an amount in excess of $10,000
      is
      subject to any contest, claim or setoff by such account debtor.

     

    2.16 Powers
      of Attorney.
      There
      are no outstanding powers of attorney executed on behalf of the any
      Subsidiary.

     

    2.17 Insurance.
      To
      Seller’s knowledge, there is no material claim pending under any insurance
      policy as to which coverage has been questioned, denied or disputed by the
      underwriter of such policy. All premiums due and payable under all such policies
      have been paid, neither the Seller nor any Subsidiary, to their knowledge, may
      be liable for retroactive premiums or similar payments, and the Seller and
      the
      Subsidiaries are otherwise in compliance in all material respects with the
      terms
      of such policies.

     

    2.18 Litigation.
      Except
      as set forth in Section 2.18 of the Disclosure Schedule, there is no Legal
      Proceeding which is pending or has been threatened in writing against the Seller
      or any Subsidiary which (a) seeks
      either damages in excess of $10,000 or equitable relief or (b) in any manner
      challenges or seeks to prevent, enjoin, alter or delay the transactions
      contemplated by this Agreement.
      There
      are no material judgments, orders or decrees outstanding against the Seller
      or
      any Subsidiary.

     

    2.19 Warranties.
      No
      product or service manufactured, sold, leased, licensed or delivered by the
      Seller or any Subsidiary is subject to any guaranty, warranty, right of
      return, right
      of
      credit or other indemnity other than (i) the applicable standard terms and
      conditions of sale or lease of the Seller or the appropriate Subsidiary, which
      are set forth in Section 2.19 of the Disclosure Schedule, and (ii)
      manufacturers’ warranties for which neither the Seller nor any Subsidiary
      has any liability. Section 2.19 of the Disclosure Schedule sets forth the
      aggregate expenses incurred by the Seller and the Subsidiaries in fulfilling
      their obligations under their guaranty, warranty, right of return and indemnity
      provisions during each of the fiscal years and the interim period covered by
      the
      Financial Statements; and the Seller does not know of any reason why such
      expenses should significantly increase as a percentage of sales in the
      future.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    2.20 Employees.

     

    (a) Section
      2.20 of the Disclosure Schedule contains a list of all employees of the Seller
      and each Subsidiary, along with the position and the annual rate of compensation
      of each such person. The annual rate of compensation listed next to each
      employee and consultant in Section 2.20 of the Disclosure Schedule has not
      been
      materially increased at any time within sixty (60) days prior to the date of
      this Agreement. Each current or past employee of the Seller or any Subsidiary
      has entered into a confidentiality/assignment of inventions agreement with
      the
      Seller or such Subsidiary, a copy or form of which has previously been delivered
      to the Buyer. Section 2.20 of the Disclosure Schedule contains a list of all
      employees of the Seller or any Subsidiary who are a party to a non-competition
      agreement with the Seller or any Subsidiary; copies of such agreements have
      previously been delivered to the Buyer. Each such agreement referenced in the
      two preceding sentences to which the Seller is a party is assignable by the
      Seller to the Buyer without the consent or approval of any party and will
      continue to be legal, valid, binding and enforceable and in full force and
      effect immediately following the Closing in accordance with the terms thereof
      as
      in effect immediately prior to the Closing. Section 2.20 of the Disclosure
      Schedule contains a list of all employees of the Seller or any Subsidiary who
      are not citizens of the United States. To the knowledge of the Seller, no key
      employee or group of employees has any plans to terminate employment with the
      Seller or any Subsidiary (other than for the purpose of accepting employment
      with the Buyer following the Closing) or not to accept employment with the
      Buyer.

     

    (b) Neither
      the Seller nor any Subsidiary is a party to or bound by any collective
      bargaining agreement, nor has any of them experienced any strikes, grievances,
      claims of unfair labor practices or other collective bargaining disputes. The
      Seller has no knowledge of any organizational effort made or threatened, either
      currently or within the past two years, by or on behalf of any labor union
      with
      respect to employees of the Seller or any Subsidiary.

     

    2.21 Employee
      Benefits.

     

    (a) Section
      2.21(a) of the Disclosure Schedule contains a complete and accurate list of
      all
      Seller Plans. Complete and accurate copies of (i) all Seller Plans which
      have been reduced to writing, (ii) written summaries of all unwritten
      Seller Plans, (iii) all related trust agreements, insurance contracts and
      summary plan descriptions, and (iv) annual reports filed on IRS Form 5500
      and (for all funded plans) all plan financial statements for the last three
      plan
      years for each Seller Plan, have been delivered to the Buyer.

     

    (b) Each
      Seller Plan has been administered in all material respects in accordance with
      its terms and the Seller and the Subsidiaries have in all material respects
      met
      their obligations with respect to each Seller Plan and have made all required
      contributions thereto. The Seller and each Subsidiary and each Seller Plan
      are
      in compliance in all material respects with the currently applicable provisions
      of ERISA and the Code and the regulations thereunder (including Section 4980B
      of
      the Code, Subtitle K, Chapter 100 of the Code and Sections 601 through 608
      and
      Section 701 et seq. of ERISA). All filings and reports as to each Seller Plan
      required to have been submitted to the Internal Revenue Service or to the United
      States Department of Labor have been duly submitted. No Seller Plan has assets
      that include securities issued by the Seller or any ERISA
      Affiliate.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (c) There
      are
      no Legal Proceedings (except claims for benefits payable in the normal operation
      of the Seller Plans and proceedings with respect to qualified domestic relations
      orders) against or involving any Seller Plan or asserting any rights or claims
      to benefits under any Seller Plan that could give rise to any material
      liability.

     

    (d) Each
      Seller Plan that is intended to be qualified under Section 401(a) of the Code
      has received a determination letter from the Internal Revenue Service to the
      effect that such Seller Plan is qualified and the plan and the trust related
      thereto is exempt from federal income taxes under Sections 401(a) and 501(a),
      respectively, of the Code, and no such determination letter has been revoked
      and
      revocation has not been threatened, or such plan is a prototype plan that is
      the
      subject of an IRS opinion letter, and no act or omission has occurred, that
      would reasonably be expected to adversely affect its qualification or materially
      increase its cost. Each Seller Plan which is required to satisfy Section
      401(k)(3) or Section 401(m)(2) of the Code has been tested for compliance with,
      and satisfies the requirements of Section 401(k)(3) and Section 401(m)(2) of
      the
      Code for each of the three plan years ending prior to the Closing
      Date.

     

    (e) Neither
      the Seller, any Subsidiary, nor any ERISA Affiliate has ever maintained an
      Employee Benefit Plan subject to Section 412 of the Code or Title IV of
      ERISA.

     

    (f) At
      no
      time has the Seller, any Subsidiary or any ERISA Affiliate been obligated to
      contribute to any “multiemployer plan” (as defined in Section 4001(a)(3) of
      ERISA).

     

    (g) There
      are
      no unfunded obligations under any Seller Plan providing benefits after
      termination of employment to any employee of the Seller or any Subsidiary (or
      to
      any beneficiary of any such employee), including but not limited to retiree
      health coverage and deferred compensation, but excluding continuation of health
      coverage required to be continued under Section 4980B of the Code or other
      applicable law and insurance conversion privileges under state law. The assets
      of each Seller Plan which is funded are reported at their fair market value
      on
      the books and records of such Seller Plan.

     

    (h) No
      act or
      omission has occurred and no condition exists with respect to any Seller Plan
      that would subject the Seller or any Subsidiary to any material fine, penalty
      or
      tax imposed under ERISA or the Code.

     

    (i) No
      Seller
      Plan is funded by, associated with or related to a “voluntary employee’s
      beneficiary association” within the meaning of Section 501(c)(9) of the
      Code.

     

    (j) Each
      Seller Plan may be amended or terminated unilaterally by the Seller at any
      time
      without liability or expense to the Seller or such Seller Plan as a result
      thereof (other than for benefits accrued through the date of termination or
      amendment and reasonable administrative expenses related thereto) and no Seller
      Plan, plan documentation or agreement, summary plan description or other written
      communication distributed generally to employees by its terms prohibits the
      Seller from amending or terminating any such Seller Plan.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (k) Section
      2.21(k) of the Disclosure Schedule discloses each: (i) agreement with any
      member, director, executive officer or other key employee of the Seller or
      any
      Subsidiary (A) the benefits of which are contingent, or the terms of which
      are altered, upon the occurrence of a transaction involving the Seller or any
      Subsidiary of the nature of any of the transactions contemplated by this
      Agreement, (B) providing any term of employment or compensation guarantee
      or (C) providing severance benefits or other benefits after the termination
      of employment of such director, executive officer or key employee;
      (ii) agreement, plan or arrangement under which any person may receive
      payments from the Seller or any Subsidiary that may be subject to the tax
      imposed by Section 4999 of the Code or included in the determination of such
      person’s “parachute payment” under Section 280G of the Code; and
      (iii) agreement or plan binding the Seller or any Subsidiary, including any
      stock option plan, stock appreciation right plan, restricted stock plan, stock
      purchase plan, severance benefit plan or Seller Plan, any of the benefits of
      which will be increased, or the vesting of the benefits of which will be
      accelerated, by the occurrence of any of the transactions contemplated by this
      Agreement or the value of any of the benefits of which will be calculated on
      the
      basis of any of the transactions contemplated by this Agreement.

     

    (l) Section
      2.21(l) of the Disclosure Schedule sets forth the policy of the Seller and
      any
      Subsidiary with respect to accrued vacation, accrued sick time and earned time
      off and the amount of such liabilities as of December 31, 2006.

     

    2.22 Environmental
      Matters.

     

    (a) Each
      of
      the Seller and the Subsidiaries has complied with all applicable Environmental
      Laws. There is no pending or, to the knowledge of the Seller, threatened civil
      or criminal litigation, written notice of violation, formal administrative
      proceeding, or investigation, inquiry or information request by any Governmental
      Entity, relating to any Environmental Law involving the Seller or any
      Subsidiary.

     

    (b) Neither
      the Seller nor any Subsidiary has any liabilities or obligations arising from
      the release of any Materials of Environmental Concern into the
      environment.

     

    (c) Neither
      the Seller nor any Subsidiary is a party to or bound by any court order,
      administrative order, consent order or other agreement with any Governmental
      Entity entered into in connection with any legal obligation or liability arising
      under any Environmental Law. 

     

    (d) Set
      forth
      in Section 2.22(d) of the Disclosure Schedule is a list of all documents
      (whether in hard copy or electronic form) that contain any environmental
      reports, investigations and audits relating to premises currently or previously
      owned or operated by the Seller or a Subsidiary (whether conducted by or on
      behalf of the Seller or a Subsidiary or a third party, and whether done at
      the
      initiative of the Seller or a Subsidiary or directed by a Governmental Entity
      or
      other third party) which were issued or conducted during the past five years
      and
      which the Seller has possession of or access to. A complete and accurate copy
      of
      each such document has been provided to the Buyer.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (e) The
      Seller is not aware of any material environmental liability of any solid or
      hazardous waste transporter or treatment, storage or disposal facility that
      has
      been used by the Seller or any Subsidiary.

     

    2.23 Legal
      Compliance.
      Each of
      the Seller and the Subsidiaries is currently conducting, and have at all times
      since their inception conducted, their respective businesses in compliance
      with
      each applicable law (including rules and regulations thereunder) of any federal,
      state, local or applicable foreign government, or any Governmental Entity,
      except for any noncompliance, violations or defaults
      that, individually or in the aggregate, have not had and would not reasonably
      be
      expected to have a Seller Material Adverse Effect.
      Neither
      the Seller nor any Subsidiary has received any notice or communication from
      any
      Governmental Entity alleging noncompliance with any applicable law, rule or
      regulation.

     

    2.24 Customers
      and Suppliers.
      Section
      2.24 of the Disclosure Schedule sets forth a list of (a) each customer that
      accounted for more than 10% of the consolidated revenues of the Seller during
      the last full fiscal year or the interim period through the Most Recent Balance
      Sheet Date and the amount of revenues accounted for by such customer during
      each
      such period and (b) each supplier that is the sole supplier of any significant
      product or service to the Seller or a Subsidiary. No such customer or supplier
      has indicated within the past year that it will stop, or decrease the rate
      of,
      buying products or supplying products, as applicable, to the Seller or any
      Subsidiary, in any such case as would reasonably be expected to have a Seller
      Material Adverse Effect. No unfilled customer order or commitment obligating
      the
      Seller or any Subsidiary to process, manufacture or deliver products or perform
      services will result in a material loss to the Seller or any Subsidiary upon
      completion of performance. No purchase order or commitment of the Seller or
      any
      Subsidiary is in excess of normal requirements, nor are prices provided therein
      in excess of current market prices for the products or services to be provided
      thereunder, in any such case as would reasonably be expected to have a Seller
      Material Adverse Effect.

     

    2.25 Permits.
      Section
      2.25 of the Disclosure Schedule sets forth a list of all Permits issued to
      or
      held by the Seller or any Subsidiary. Such listed Permits are the only Permits
      that are required for the Seller and the Subsidiaries to conduct their
      respective businesses as presently conducted or as proposed to be conducted.
      Each such Permit is in full force and effect; the Seller or the
      applicable Subsidiary
      is in compliance with the terms of each such Permit; and, to the knowledge
      of
      the Seller, no suspension or cancellation of such Permit is threatened and
      there
      is no basis for believing that such Permit will not be renewable upon
      expiration. Each such Permit is assignable by
      the
      Seller to the Buyer without the consent or approval of any party and will
      continue in full force and effect immediately following the
      Closing.

     

    2.26 Certain
      Business Relationships With Affiliates.
      Except
      as disclosed on Section 2.26 of the Disclosure Schedule, no Affiliate of the
      Seller or of any Subsidiary (a) owns any property or right, tangible or
      intangible, which is used in the business of the Seller or any Subsidiary,
      (b) has any claim or cause of action against the Seller or any Subsidiary,
      or (c) owes any money to, or is owed any money by, the Seller or any
      Subsidiary. Section 2.26 of the Disclosure Schedule describes any transactions
      or relationships between
      the Seller or a Subsidiary and any Affiliate thereof which occurred or have
      existed since the beginning of the time period covered by the Financial
      Statements.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    2.27 Brokers’
      Fees.
      Neither
      the Seller nor any Subsidiary has any liability or obligation to pay any fees
      or
      commissions to any broker, finder or agent with respect to the transactions
      contemplated by this Agreement.

     

    2.28 Capitalization. As
      of the
      Closing, the Members collectively hold 100% of the outstanding ownership
      interests in the Seller. All outstanding Membership Interests are duly
      authorized, validly issued, fully paid and non-assessable and are free of any
      liens or encumbrances other than any liens or encumbrances created by or imposed
      upon the holders thereof, and are not subject to preemptive rights or rights
      of
      first refusal created by statute, the Certificate of Formation or any agreement
      to which Seller is a party or by which it is bound. There are no options,
      warrants, calls, rights, commitments or agreements of any character to which
      Seller is a party or by which it is bound, obligating Seller to issue, deliver,
      sell, repurchase or redeem or cause to be issued, delivered, sold, repurchased
      or redeemed, any Membership Interest. There are no contracts, commitments or
      agreements relating to voting, purchase or sale of Membership Interests
      (a) between or among Seller and any of its members; and (b) to the
      Sellers’ knowledge, between or among any of the members of Seller. All
      outstanding Membership Interests and rights to acquire Membership Interests
      were
      issued in compliance with all applicable federal and state securities
      laws..

     

    2.29 Disclosure.
      No
      representation or warranty by the Seller contained in this Agreement, and no
      statement contained in the Disclosure Schedule or any other document,
      certificate or other instrument delivered or to be delivered by or on behalf
      of
      the Seller pursuant to this Agreement, contains or will contain any untrue
      statement of material fact or omits or will omit to state any material fact
      necessary, in light of the circumstances under which it was or will be made,
      in
      order to make the statements herein or therein not misleading.

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE MEMBERS

     

    The
      Members, jointly and severally, represent and warrant to Buyer that the
      statements contained in this Article 3 are true and correct as of the date
      of this Agreement.

    

    3.1 Authority.
      Each of
      the Members has legal capacity and all requisite power and authority to execute
      and deliver this Agreement and to perform the transactions contemplated hereby.
      This Agreement has been, or will be, duly executed and delivered by the Members
      and constitutes, or will constitute when executed and delivered, a valid and
      binding obligation of the Members, enforceable against the Members in accordance
      with its terms.

     

    3.2 Seller
      Membership Interests.
      Each of
      the Members is the sole beneficial and record owner of the Membership Interests
      in the percentages set forth for each such Member on Schedule
      A
      free and
      clear of all liens, encumbrances, claims, security interests, mortgages,
      restrictions or pledges of any nature, and each Member can transfer to Buyer
      valid and marketable title to such Seller Membership Interests.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    3.3 Securities
      Matters.
      Each of
      the Members seeks to acquire the shares of Buyer Common Shares to be issued
      to
      them for their own account and beneficial interest for investment purpose only,
      and not with the view to the resale, assignment, transfer or distribution
      thereof, except in accordance with applicable federal and state securities
      laws.
      Each of the Members acknowledges and agrees that, as the owner of the shares
      of
      Buyer Common Shares, they must bear the economic risks of investment in Buyer
      for an indefinite period of time, as the securities have not been registered
      under the Securities Act, or the securities laws of any state, and therefore
      cannot be sold unless registered thereunder or unless, in the opinion of counsel
      satisfactory to Buyer, an exemption from such registration is available. Each
      of
      the Members acknowledges and agrees that the shares of Buyer Common Shares
      issued to them will be subject to certain restrictions on transfer and that
      the
      certificates evidencing such shares will bear legends referring to such
      restrictions. Each of the Members is a sophisticated and knowledgeable investor
      and has such knowledge and experience in financial and business matters that
      they are capable of evaluating the merits and risks of an investment in the
      Buyer and are able to bear the economic risks for such investment. Each of
      the
      Members acknowledges that they have had adequate opportunity to ask for and
      receive any information from Buyer and its officers that the Members believe
      to
      be material or relevant to their investment hereunder and have conducted such
      due diligence as they deem necessary.

     

    4. REPRESENTATIONS
      AND WARRANTIES OF THE BUYER

     

    The
      Buyer
      represents and warrants to the Seller that the statements contained in this
      Article 4 are true and correct as
      of the
      date of this Agreement.

     

    4.1 Organization,
      Standing and Power.
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the state of Nevada. Buyer has the corporate power to own its properties
      and to carry on its business as now being conducted and as proposed to be
      conducted and is duly qualified to do business and is in good standing in each
      jurisdiction in which the failure to be so qualified and in good standing could
      reasonably be expected to have a Buyer Material Adverse Effect. Buyer has
      delivered a true and correct copy of the Certificate of Incorporation and Bylaws
      or other charter documents, as applicable, of Buyer, as amended to date, to
      Seller. Buyer is not in violation of any of the provisions of its Certificate
      of
      Incorporation or Bylaws.

     

    4.2 Authority.
      Buyer
      has all requisite corporate power and authority to enter into this Agreement
      and
      to consummate the transactions contemplated hereby. The execution and delivery
      of this Agreement and the consummation of the transactions contemplated hereby
      have been, or will have been by the Closing, duly authorized by all necessary
      corporate action on the part of Buyer. This Agreement has been duly executed
      and
      delivered by Buyer and constitutes the valid and binding obligations of Buyer
      enforceable against Buyer in accordance with its terms, except as may be limited
      by bankruptcy, insolvency, reorganization, moratorium or other similar laws
      affecting or relating to creditors’ rights generally, and subject to general
      principles of equity. The execution and delivery of this Agreement do not,
      and
      the consummation of the transactions contemplated hereby will not, conflict
      with, or result in any violation of, or default under (with or without notice
      or
      lapse of time, or both), or give rise to a right of termination, cancellation
      or
      acceleration of any material obligation or loss of a material benefit under
      (a) any provision of the Certificate of Incorporation or Bylaws of Buyer or
      any of its Subsidiaries; or (b) any material mortgage, indenture, lease,
      contract or other agreement or instrument, permit, concession, franchise,
      license, judgment, order, decree, statute, law, ordinance, rule or regulation
      applicable to Buyer or any of its Subsidiaries or their properties or assets
      No
      consent, approval, order or authorization of or registration, declaration or
      filing with any Governmental Entity is required by or with respect to Buyer
      or
      any of its Subsidiaries in connection with the execution and delivery of this
      Agreement by Buyer or the consummation by Buyer of the transactions contemplated
      hereby, except for (a) filings required under Regulation D of the
      Securities Act following the Closing Date; (b) the filing of a
      Form 8-K with the Securities and Exchange Commission (“SEC”)
      and
      National Association of Securities Dealers (“NASD”)
      within
      15 days after the Closing Date; (c) such filings as may be required
      under applicable state securities laws and the securities laws of any foreign
      country; and (d) such other consents, authorizations, filings, approvals
      and registrations which, if not obtained or made, could not reasonably be
      expected to have a Buyer Material Adverse Effect and could not prevent,
      materially alter or delay any of the transactions contemplated by this
      Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    4.3 Capital
      Structure.
      The
      authorized capital stock of Buyer consists of 1,000,000,000 shares of common
      stock, $0.0001 par value, of which there were issued and outstanding as of
      the
      close of business on the date hereof, 47,829,463 shares of Common Stock. There
      are no other outstanding shares of capital stock or voting securities of Buyer
      other than shares of Common Stock issued after that same date upon the exercise
      of options issued under the Nayna Networks, Inc. 2000 Stock Plan and 2006
      Executive Stock Plan (the “Buyer
      Option Plan”).
      All
      outstanding shares of Buyer have been duly authorized, validly issued, fully
      paid and are nonassessable. As of the close of business on that same date,
      Buyer
      has reserved (a) 10,967,480 shares of Common Stock for issuance to employees,
      directors and independent contractors pursuant to the Buyer Option Plan, of
      which 9,135,799 shares are subject to outstanding, unexercised options and
      542,563 shares have been exercised and are outstanding and 1,831,681 are
      available for grants; (b) 12,715,565 shares of Common Stock for issuance
      pursuant to outstanding warrants (the “Buyer
      Warrants”);
(c)
      up to
127,853,234
      shares issuable to Abundance Networks, LLC, as of January 22, 2007, in
      connection with the purchase of assets from Abundance Networks, LLC; and (d)
      218,181,818 shares of Common Stock for issuance pursuant to outstanding
      Convertible Notes (the “Buyer
      Notes”).
      The
      Buyer is obligated to issue additional Buyer Notes and Buyer Warrants, which
      will be convertible into and exercisable for shares of Buyer Common Stock in
      connection with the financing it closed on November 17, 2005 (the “Financing”).
      Other
      than this Agreement, the Buyer Option Plan, the Buyer Warrants and Buyer Notes
      and shares of Buyer Common Stock to be issued to brokers in connection with
      the
      Financing and the transactions contemplated by this Agreement, there are no
      other options, warrants, calls, rights, commitments or agreements of any
      character to which Buyer is a party or by which either of them is bound
      obligating Buyer to issue, deliver, sell, repurchase or redeem, or cause to
      be
      issued, delivered, sold, repurchased or redeemed, any shares of the capital
      stock of Buyer or obligating Buyer to grant, extend or enter into any such
      option, warrant, call, right, commitment or agreement.

     

    4.4 Issuance
      of Shares.
      The
      issuance and delivery of the Common Stock in accordance with this Agreement
      shall be, at or prior to the Closing Date, duly authorized by all necessary
      corporate action on the part of Buyer, and, when issued on the Closing Date
      as
      contemplated hereby, such shares of Common Stock will be duly and validly
      issued, fully paid and nonassessable. Such Common Stock, when so issued and
      delivered in accordance with the provisions of this Agreement, shall be free
      and
      clear of all liens and encumbrances and adverse claims, other than restrictions
      on transfer created by applicable securities laws and will not have been issued
      in violation of their respective properties or any preemptive rights or rights
      of first refusal or similar rights.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    4.5 Litigation.
      There
      is no private or governmental action, suit, proceeding, claim, arbitration
      or
      investigation pending before any agency, court or tribunal, foreign or domestic,
      or, to the knowledge of Buyer threatened against Buyer or any of its properties
      or any of its officers or directors (in their capacities as such) that,
      individually or in the aggregate, could reasonably be expected to have a Buyer
      Material Adverse Effect. There is no judgment, decree or order against Buyer
      or
      any of its Subsidiaries or, to the knowledge of Buyer, or any of its directors
      or officers (in their capacities as such) that could prevent, enjoin or
      materially alter or delay any of the transactions contemplated by this
      Agreement, or that could reasonably be expected to have a Buyer Material Adverse
      Effect. 

     

    4.6 Representations
      Complete.
      None of
      the representations or warranties made by Buyer herein or in any Schedule
      hereto, including the Buyer Disclosure Schedule, or certificate furnished by
      Buyer pursuant to this Agreement, or the SEC Documents, or any written statement
      furnished to Seller pursuant hereto or in connection with the transactions
      contemplated hereby, when all such documents are read together in their
      entirety, contains or will contain on the Closing Date any untrue statement
      of a
      material fact or omits or will omit on the Closing Date to state any material
      fact necessary in order to make the statements contained herein or therein,
      in
      the light of the circumstances under which made, not misleading.

     

    4.7 SEC
      Documents; Financial Statements.
      Buyer
      has filed all reports, schedules, forms, statements and other documents required
      to be filed by it with the SEC pursuant to the reporting requirements of the
      Securities Exchange Act of 1934 (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof (including all exhibits included
      therein and financial statements and schedules thereto and documents
      incorporated by reference therein) being hereinafter referred to as the
“SEC
      Documents”).
      Except as set forth on Schedule 3.8, each of the SEC Documents was filed with
      the SEC within the timeframes prescribed by the SEC for the filing of such
      SEC
      Documents such that each filing was timely filed with the SEC. As of their
      respective dates, the SEC Documents complied in all material respects with
      the
      requirements of the Exchange Act and the rules and regulations of the SEC
      promulgated thereunder applicable to the SEC Documents. None of the SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. As of their
      respective dates, the consolidated financial statements of Buyer and its
      Subsidiaries included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the SEC with respect thereto. None of Buyer or any of its
      Subsidiaries, or any of their respective officers, directors or affiliates
      (as
      defined below) or, to Buyer’s knowledge, any shareholder of Buyer has made any
      other filing with the SEC, issued any press release or made any other public
      statement or communication on behalf of Buyer or any of its Subsidiaries or
      otherwise relating to Buyer or any of its Subsidiaries that contains any untrue
      statement of a material fact or omits any statement of material fact necessary
      in order to make the statements therein, in the light of the circumstances
      under
      which they are or were made, not misleading or has provided any other
      information to Seller that contains any untrue statement of a material fact
      or
      omits to state any material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they are or were made,
      not misleading. None of Buyer, any of its Subsidiaries and any of their
      respective officers, directors, employees or agents has provided Seller with
      any
      material, nonpublic information. Buyer is not required to file and will not
      be
      required to file any agreement, note, lease, mortgage, deed or other instrument
      entered into prior to the date hereof and to which Buyer or any Subsidiary
      is a
      party or by which Buyer or any Subsidiary is bound that has not been previously
      filed as an exhibit (including by way of incorporation by reference) to its
      reports filed or made with the SEC under the Exchange Act. The auditing firm,
      which has expressed its opinion with respect to the consolidated financial
      statements included in Buyer’s annual report on Form 10-KSB for the last
      completed fiscal year (the “Audit
      Opinion”),
      is
      independent of Buyer pursuant to the standards set forth in Rule 2-01 of
      Regulation S-X promulgated by the SEC, and such firm was otherwise qualified
      to
      render the Audit Opinion under applicable law and the rules and regulation
      of
      the SEC. There is no transaction, arrangement or other relationship between
      Buyer and an unconsolidated or other off-balance-sheet entity that is required
      to be disclosed by Buyer in its reports pursuant to the Exchange Act that has
      not been so disclosed in the SEC Documents.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    4.8 Absence
      of Certain Changes.
      Since
      the filing of Buyer’s most recent Quarterly Report on Form 10-Q, and other than
      as disclosed in the SEC Documents, (a) there has occurred no event or
      development which, individually or in the aggregate, has had, or could
      reasonably be expected to have in the future, a Buyer Material Adverse Effect
      and (b) Buyer has conducted its business in the ordinary course consistent
      with
      past practices.

     

    4.9 Brokers’
      Fees.
      Buyer
      has no liability or obligation to pay any fees or commissions to any broker,
      finder or agent with respect to the transactions contemplated by this
      Agreement.

     

    5. PRE-CLOSING
      COVENANTS

     

    5.1 Closing
      Efforts.
      Each of
      the Parties shall use its Reasonable Best Efforts to take all actions and to
      do
      all things necessary, proper or advisable to consummate the transactions
      contemplated by this Agreement, including using its Reasonable Best Efforts
      to
      ensure that (i) its representations and warranties remain true and correct
      in all material respects through the Closing
      Date and (ii) the conditions to the obligations of the other Party to
      consummate the transactions contemplated by this Agreement are
      satisfied.

     

    5.2 Governmental
      and Third-Party Notices and Consents. 

     

    (a) Each
      Party shall use its Reasonable Best Efforts to obtain, at its expense, all
      waivers, permits, consents, approvals or other authorizations from Governmental
      Entities, and to effect all registrations, filings and notices with or to
      Governmental Entities, as may be required for such Party to consummate the
      transactions contemplated by this Agreement and to otherwise
      comply with all applicable laws and regulations in connection with the
      consummation of the transactions contemplated by this Agreement. Without
      limiting the generality of the foregoing, each of the Parties shall promptly
      file any Notification and Report Forms and related material that it may be
      required to file with the Federal Trade Commission and the Antitrust Division
      of
      the United States Department of Justice under the Hart-Scott-Rodino Act, shall
      use its Reasonable Best Efforts to obtain an early termination of the applicable
      waiting period, and shall make any further filings or information submissions
      pursuant thereto that may be necessary, proper or advisable; provided, however,
      that notwithstanding anything to the contrary in this Agreement, the Buyer
      shall
      not be obligated (A) to respond to formal requests for additional
      information or documentary material pursuant to 16 C.F.R. 803.20 under the
      Hart-Scott-Rodino Act except to the extent it elects to do so in its sole
      discretion or (B) to sell or dispose of or hold separately (through a trust
      or otherwise) any assets or businesses of the Buyer or its
      Affiliates.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (b) The
      Seller shall use its Reasonable Best Efforts to obtain, at its expense, all
      such
      waivers, consents or approvals from third parties, and to give all such notices
      to third parties, as are required to be listed in the Disclosure
      Schedule.

     

    (c) If
      (i) any of the Assigned Contracts or other assets or rights constituting
      Acquired Assets may not be assigned and transferred by the Seller to the Buyer
      (as a result of either the provisions thereof or applicable law) without the
      consent or approval of a third party, (ii) the Seller, after using its
      Reasonable Best Efforts, is unable to obtain such consent or approval prior
      to
      the Closing and (iii) the Closing occurs nevertheless, then (A) such
      Assigned Contracts and/or other assets or rights shall not be assigned and
      transferred by the Seller to the Buyer at the Closing and the Buyer shall not
      assume the Seller’s liabilities or obligations with respect thereto at the
      Closing, (B) the Seller shall continue to use its Reasonable Best Efforts to
      obtain the necessary consent or approval as soon as practicable after the
      Closing, and (C) upon the obtaining of such consent or approval, the Buyer
      and
      the Seller shall execute such further instruments of conveyance (in
      substantially the form executed at the Closing) as may be necessary to assign
      and transfer such Assigned Contracts and/or other assets or rights (and the
      associated liabilities and obligations of the Seller) to the Buyer.

     

    5.3 Member
      Approval.

     

    (a) The
      Members shall use their Reasonable Best Efforts to obtain, as promptly as
      practicable, the Requisite Member Approval.

     

    5.4 Operation
      of Business.
      Except
      as contemplated by this Agreement, during the period from the date of this
      Agreement to the Closing, the Seller shall (and shall cause
      each Subsidiary to) conduct its operations in the Ordinary Course of Business
      and in compliance
      with all applicable laws and regulations and, to the extent consistent
      therewith, use its Reasonable Best
      Efforts to preserve intact its current business organization, keep its physical
      assets in good working condition, keep available the services of its current
      officers and employees and preserve its relationships with customers, suppliers
      and others having business dealings with it. Without limiting
      the generality of the foregoing,
      prior to the Closing, the Seller shall not (and shall cause each Subsidiary
      not
      to), without the written consent of the Buyer which consent shall not be
      unreasonably withheld:

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (a) issue
      or
      sell any stock or other securities of the Company or any Subsidiary or any
      options, warrants or other rights to acquire any such stock or other securities
      (except pursuant to the conversion or exercise of options, warrants or other
      convertible securities outstanding on the date hereof);

     

    (b) declare,
      set aside or pay any dividend or other distribution (whether in cash, stock
      or
      property or any combination thereof) in respect of its capital
      stock;

     

    (c) create,
      incur or assume any indebtedness (including obligations in respect of capital
      leases); assume, guarantee, endorse or otherwise become liable or responsible
      (whether directly, contingently or otherwise) for the obligations of any other
      person or entity; or make any loans, advances or capital contributions to,
      or
      investments in, any other person or entity;

     

    (d) enter
      into, adopt or amend any Employee Benefit Plan or any employment or severance
      agreement or arrangement of the type described in Section 2.21(k) or
      (except for normal increases in the Ordinary Course of Business for employees
      who are not Affiliates) increase in any manner the compensation or fringe
      benefits of, or materially modify the employment terms of, its directors,
      officers or employees, generally or individually, or pay any bonus or other
      benefit to its directors, officers or employees (except for existing payment
      obligations listed in Section 2.21 of the Disclosure Schedule) or hire any
      new officers or (except in the Ordinary Course of Business) any new
      employees;

     

    (e) acquire,
      sell, lease, license or dispose of any assets or property (including any shares
      or other equity interests in or securities of any Subsidiary or any corporation,
      partnership, association or other business organization or division thereof),
      other than purchases and sales of assets in the Ordinary Course of
      Business;

     

    (f) mortgage
      or pledge any of its property or assets or subject any such property or assets
      to any Security Interest;

     

    (g) discharge
      or satisfy any Security Interest or pay any obligation or liability other than
      in the Ordinary Course of Business;

     

    (h) amend
      its
      certificate of formation, operating agreement or other organizational documents
      in a manner that could have an adverse effect on the transactions contemplated
      by this Agreement;

     

    (i) change
      its accounting methods, principles or practices, except insofar as may be
      required by a generally applicable change in GAAP, or make any new elections,
      or
      changes to any current elections, with respect to Taxes that affect the
      Seller;

     

    (j) enter
      into, amend, terminate, take or omit to take any action that would constitute
      a
      violation of or default under, or waive any rights under, any contract or
      agreement of a nature required to be listed in Section 2.11, Section 2.12 or
      Section 2.14 of the Disclosure Schedule;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (k) make
      or
      commit to make any capital expenditure in excess of $10,000 per item or $50,000
      in the aggregate;

     

    (l) institute
      or settle any Legal Proceeding;

     

    (m) take
      any
      action or fail to take any action permitted by this Agreement with the knowledge
      that such action or failure to take action would result in (i) any of the
      representations and warranties of the Seller set forth in this Agreement
      becoming untrue or (ii) any of the conditions to the Closing set forth in
      Article 6 not being satisfied; or

     

    (n) agree
      in
      writing or otherwise to take any of the foregoing actions.

     

    5.5 Access
      to Information.

     

    (a) The
      Seller shall (and shall cause each Subsidiary to) permit representatives of
      the
      Buyer to have full access (at all reasonable times, and in a manner so as not
      to
      interfere with the normal business operations of the Seller and the
      Subsidiaries) to all premises, properties, financial, tax and accounting records
      (including the work papers of the Seller's independent accountants), contracts,
      other records and documents, and personnel, of or pertaining to the Seller
      and
      each Subsidiary for the purpose of performing such inspections and tests as
      the
      Buyer deems necessary or appropriate.

     

    (b) Within
      15
      days after the end of each month ending prior to the Closing, beginning with
      December 2006, the Seller shall furnish to the Buyer an unaudited income
      statement for such month and a balance sheet as of the end of such month,
      prepared on a basis consistent with the Financial Statements. Such financial
      statements shall present fairly the financial condition and results of
      operations of the Seller and the Subsidiaries on a consolidated basis as of
      the
      dates thereof and for the periods covered thereby, and shall be consistent
      with
      the books and records of the Seller and the Subsidiaries.

     

    (c) 
      The
      Buyer (i) shall treat and hold as confidential any Confidential
      Information, (ii) shall not use any of the Confidential Information except
      in connection with this Agreement, and (iii) if this Agreement is
      terminated for any reason whatsoever, shall return to the Seller all tangible
      embodiments (and all copies) thereof which are in its possession.

     

    5.6 Notice
      of Breaches.

     

    (a) From
      the
      date of this Agreement until the Closing, the Seller shall promptly deliver
      to
      the Buyer supplemental information concerning events or circumstances occurring
      subsequent to the date hereof which would render any representation, warranty
      or
      statement in this Agreement or the Disclosure Schedule inaccurate or incomplete
      in any material respect at any time after the date of this Agreement until
      the
      Closing. No such supplemental information shall be deemed to avoid or cure
      any
      misrepresentation or breach of warranty or constitute an amendment of any
      representation, warranty or statement in this Agreement or the Disclosure
      Schedule.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (b) From
      the
      date of this Agreement until the Closing, the Buyer shall promptly deliver
      to
      the Seller supplemental information concerning events or circumstances occurring
      subsequent to the date hereof which would render any representation, warranty
      or
      statement in this Agreement inaccurate or incomplete in any material respect
      at
      any time after the date of this Agreement until the Closing. No such
      supplemental information shall be deemed to avoid or cure any misrepresentation
      or breach of warranty or constitute an amendment of any representation, warranty
      or statement in this Agreement.

     

    5.7 Exclusivity. 

     

    (a) The
      Seller shall not, and the Seller shall require each of its officers, directors,
      employees, representatives and agents not to, directly or indirectly,
      (i) initiate, solicit, encourage or otherwise facilitate any inquiry,
      proposal, offer or discussion with any party (other than the Buyer) concerning
      any merger, reorganization, consolidation, recapitalization, business
      combination, liquidation, dissolution, share exchange, sale of stock, sale
      of
      material assets or similar business transaction involving the Seller, any
      Subsidiary or any division of the Seller, (ii) furnish any non-public
      information concerning the business, properties or assets of the Seller, any
      Subsidiary or any division of the Seller to any party (other than the Buyer)
      or
      (iii) engage in discussions or negotiations with any party (other than the
      Buyer) concerning any such transaction.

     

    (b) The
      Seller shall immediately notify any
      party
      with which discussions or negotiations of the nature described in paragraph (a)
      above were pending that the Seller is terminating such discussions or
      negotiations. If the Seller receives any inquiry, proposal or offer of the
      nature described in paragraph (a) above, the Seller shall, within one
      business day after such receipt, notify the Buyer of such inquiry, proposal
      or
      offer, including the identity of the other party and the terms of such inquiry,
      proposal or offer. 

     

    6. CONDITIONS
      TO CLOSING

     

    6.1 Conditions
      to Obligations of each Party.
      The
      respective obligations of each Party to consummate the transactions contemplated
      by this Agreement to be consummated at the Closing are subject to the
      satisfaction of the following condition:

     

    (a) the
      sale
      of all outstanding Membership Interests of the Seller to the Buyer as
      contemplated by this Agreement shall have received the Requisite Member
      Approval.

     

    6.2 Conditions
      to Obligations of the Buyer.
      The
      obligation of the Buyer to consummate the transactions contemplated by this
      Agreement to be consummated at the Closing is subject to the satisfaction of
      the
      following additional conditions:

     

    (a) the
      Seller and the Subsidiaries shall have obtained at their own expense (and shall
      have provided copies thereof to the Buyer) all of the waivers, permits,
      consents, approvals or other authorizations, and effected all of the
      registrations, filings and notices, referred to in Section 5.2 which are
      required on the part of the Seller or the Subsidiaries;

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    (b) the
      representations and warranties of the Seller set forth in the first sentence
      of
      Section 2.1 and in Section 2.2 and any representations and warranties of
      the Seller set forth in this Agreement that are qualified as to materiality
      shall be true and correct in all respects, and all other representations and
      warranties of the Seller set forth in this Agreement shall be true and correct
      in all material respects, in each case as of the date of this Agreement and
      as
      of the Closing as though made as of the Closing, except to the extent such
      representations and warranties are specifically made as of a particular date
      (in
      which case such representations and warranties shall be true and correct as
      of
      such date);

     

    (c) the
      Seller shall have performed or complied with in all material respects its
      agreements and covenants required to be performed or complied with under this
      Agreement as of or prior to the Closing;

     

    (d) no
      Legal
      Proceeding shall be pending or threatened wherein an unfavorable judgment,
      order, decree, stipulation or injunction would (i) prevent consummation of
      the transactions contemplated by this Agreement, (ii) cause the
      transactions contemplated by this Agreement to be rescinded following
      consummation or (iii) affect adversely the right of the Buyer to own,
      operate or control any of the Acquired Assets, or to conduct the business of
      the
      Seller and the Subsidiaries as currently conducted, following the Closing,
      and
      no such judgment, order, decree, stipulation or injunction shall be in
      effect;

     

    (e) the
      Seller shall have delivered to the Buyer the Seller Certificate;

     

    (f) the
      Seller shall have delivered to the Buyer documents evidencing the release or
      termination of all Security Interests on the Acquired Assets, and copies of
      filed UCC termination statements with respect to all UCC financing statements
      evidencing Security Interests;

     

    (g) the
      Buyer
      shall have received from counsel to the Seller an opinion in substantially
      the
      form attached hereto as Exhibit A,
      addressed to the Buyer and dated as of the Closing Date;

     

    (h) the
      Buyer
      shall have received such other certificates and instruments (including
      certificates of good standing of the Seller and the Subsidiaries in their
      jurisdiction of organization and the various foreign jurisdictions in which
      they
      are qualified, certified charter documents, certificates as to the incumbency
      of
      officers and the adoption of authorizing resolutions) as it shall reasonably
      request in connection with the Closing;

     

    (i) the
      Buyer
      in its sole discretion, shall be satisfied with the results of its business,
      legal and financial due diligence review of the Seller;

     

    (j) the
      Buyer
      shall have received a fully executed employment agreements from Kory M. Madison
      & Cem Esin and consulting agreements from Jonathan Shiff &Mark Hagen;
      and

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (k) the
      Buyer
      shall have received a fully executed Confidentiality, Invention Assignment
      and
      Noncompetition Agreement, from each officer, employee and consultant of the
      Seller as of the Closing Date.

    

    6.3 Conditions
      to Obligations of the Seller.
      The
      obligation of the Seller to consummate the transactions contemplated by this
      Agreement to be consummated at the Closing is subject to the satisfaction of
      the
      following additional conditions:

     

    (a) the
      representations and warranties of the Buyer set forth in the first sentence
      of
      Section 4.1 and in Section 4.2 and any representations and warranties of
      the Buyer set forth in this Agreement that are qualified as to materiality
      shall
      be true and correct in all respects, and all other representations and
      warranties of the Buyer set forth in this Agreement shall be true and correct
      in
      all material respects, in each case as of the date of this Agreement and as
      of
      the Closing as though made as of the Closing, except to the extent such
      representations and warranties are specifically made as of a particular date
      (in
      which case such representations and warranties shall be true and correct as
      of
      such date);

     

    (b) the
      Buyer
      shall have performed or complied with in all material respects its agreements
      and covenants required to be performed or complied with under this Agreement
      as
      of or prior to the Closing;

     

    (c) no
      Legal
      Proceeding shall be pending or threatened wherein an unfavorable judgment,
      order, decree, stipulation or injunction would (i) prevent consummation of
      the transactions contemplated by this Agreement or (ii) cause the
      transactions contemplated by this Agreement to be rescinded following
      consummation, and no such judgment, order, decree, stipulation or injunction
      shall be in effect;

     

    (d) the
      Buyer
      shall have delivered to the Seller the Buyer Certificate;

     

    (e) the
      Seller shall have received from counsel to the Buyer an opinion in substantially
      the form attached hereto as Exhibit B,
      addressed to the Seller and dated as of the Closing Date;

     

    (f) the
      Seller shall have received such other certificates and instruments (including
      certificates of good standing of the Buyer in its jurisdiction of organization,
      certificates as to the incumbency of officers and the adoption of authorizing
      resolutions) as it shall reasonably request in connection with the
      Closing;

     

    (g) Kory
      M.
      Madison & Cem Esin shall each have received a fully executed employment
      agreement from the Buyer, and Jonathan Shiff & Mark Hagen shall each have
      received a fully executed consulting agreements from the Buyer.

     

    7. POST-CLOSING
      COVENANTS

     

    7.1 Proprietary
      Information.
      From
      and after the Closing, the Members shall not disclose or make use of (except
      to
      pursue its rights, under this Agreement or the Ancillary Agreements), and shall
      use its best efforts to cause all of its Affiliates not to disclose
      or make
      use
      of, any knowledge, information or documents of a confidential nature or not
      generally known to the public
      with respect to Acquired Assets, the Seller’s business or the Buyer or its
      business (including the financial information, technical information or data
      relating to the Seller’s products and names of customers of the Seller), as well
      as filings and testimony (if any) presented in the course of any arbitration
      of
      a Dispute pursuant to Section 8.3 and the arbitral award and the Arbitrator’s
      reasons therefor relating to the same), except to the extent that such
      knowledge, information or documents shall have become public knowledge other
      than through improper disclosure by the Members or an Affiliate.
      The
      Seller shall enforce, for the benefit of the Buyer, all confidentiality,
      invention assignments and similar agreements between the Seller and any other
      party relating to the Acquired Assets or the business of the Seller which are
      not Assigned Contracts.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    7.2 Solicitation
      and Hiring.
      For a
      period of 3 years after the Closing Date, the Members shall not, either directly
      or indirectly (including through an Affiliate), (a) solicit or attempt to induce
      any Restricted Employee to terminate his employment with the Buyer or any
      Subsidiary of the Buyer or (b) hire or attempt to hire any Restricted Employee;
      provided,
      that
      this clause (b) shall not apply to any individual whose employment with the
      Buyer or a Subsidiary of the Buyer has been terminated for a period of six
      months or longer.
      The
      Seller shall enforce, for the benefit of the Buyer, all confidentiality,
      non-solicitation and non-hiring assignments and similar agreements between
      the
      Seller and any other party which are not Assigned Contracts.

     

    7.3 Non-Competition.

     

    (a) For
      a
      period of 3 years after the Closing Date, the Members shall not, either directly
      or indirectly as a stockholder, investor, partner, consultant or otherwise,
      (i) design, develop, manufacture, market, sell or license any product or
      provide any service anywhere in the world which is competitive with any product
      designed, developed (or under development), manufactured, sold or licensed
      or
      any service provided by the Seller within the three-year period prior to the
      Closing Date or (ii) engage anywhere in the world in any business
      competitive with the business of the Seller as conducted as of the Closing
      Date
      or during the three-year period prior to the Closing Date. The Seller shall
      enforce, for the benefit of the Buyer, all non-competition and similar
      agreements between the Seller and any other party which are not Assigned
      Contracts.

     

    (b) The
      Members agrees that the duration and geographic scope of the non-competition
      provision set forth in this Section 7.3 are reasonable. In the event that
      any court determines that the duration or the geographic scope, or both, are
      unreasonable and that such provision is to that extent unenforceable, the
      Parties agree that the provision shall remain in full force and effect for
      the
      greatest time period and in the greatest area that would not render it
      unenforceable. The Parties intend that this non-competition provision shall
      be
      deemed to be a series of separate covenants, one for each and every county
      of
      each and every state of the United States of America and each and every
      political subdivision of each and every country outside the United States of
      America where this provision is intended to be effective.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (c) The
      Members shall, and shall use its best efforts to cause their Affiliates to,
      refer all inquiries regarding the business, products and services of the Seller
      to the Buyer.

     

    7.4 Tax
      Matters. 

     

    (a) Any
      agreement between the Seller and any of the Subsidiaries regarding allocation
      or
      payment of Taxes or amounts in lieu of Taxes will be terminated at and as of
      the
      Closing. 

     

    (b) All
      transfer taxes, deed excise stamps and similar charges related to the sale
      of
      the Acquired Assets contemplated by this Agreement shall be paid by the
      Seller.

     

    7.5 Sharing
      of Data.

     

    (a) The
      Seller shall have the right for a period of seven years following the Closing
      Date to have reasonable access to such books, records and accounts, including
      financial and tax information, correspondence, production records, employment
      records and other records that are transferred to the Buyer pursuant to the
      terms of this Agreement for the limited purposes of concluding its involvement
      in the business conducted by the Seller prior to the Closing Date and for
      complying with its obligations under applicable securities, tax, environmental,
      employment or other laws and regulations. The Buyer shall have the right for
      a
      period of seven years following the Closing Date to have reasonable access
      to
      those books, records and accounts, including financial and accounting records
      (including the work papers of the Seller's independent accountants), tax
      records, correspondence, production records, employment records and other
      records that are retained by the Seller pursuant to the terms of this Agreement
      to the extent that any of the foregoing is needed by the Buyer for the purpose
      of conducting the business of the Seller after the Closing and complying with
      its obligations under applicable securities, tax, environmental, employment
      or
      other laws and regulations. Neither the Buyer nor the Seller shall destroy
      any
      such books, records or accounts retained by it without first providing the
      other
      Party with the opportunity to obtain or copy such books, records, or accounts
      at
      such other Party's expense.

     

    (b) Promptly
      upon request by the Buyer made at any time following the Closing Date, the
      Seller shall authorize the release to the Buyer of all files pertaining to
      the
      Seller, the Acquired Assets or the business or operations of the Seller or
      the
      Subsidiaries held by any federal, state, county or local authorities, agencies
      or instrumentalities.

     

    7.6 Use
      of
      Name.
      The
      Seller shall not use, and shall not permit any Affiliate to use, the name “PRO
      SAT” or any name reasonably similar thereto after the Closing Date in connection
      with any business related to, competitive with, or an outgrowth of, the business
      conducted by the Seller on the date of this Agreement. Within 10 days following
      the Closing, the Seller shall amend its Certificate of Formation and other
      corporate records, if necessary, to comply with this provision.

     

    7.7 Cooperation
      in Litigation.
      From
      and after the Closing Date, each Party shall fully cooperate with the other
      in
      the defense or prosecution of any litigation or proceeding already instituted
      or which may be instituted hereafter against or by such other Party relating
      to
      or arising out of the conduct of the business of the Seller or the Buyer prior
      to or after the Closing Date (other
      than litigation among the Parties and/or their Affiliates arising out the
      transactions contemplated by this Agreement). The Party requesting such
      cooperation shall pay the reasonable out-of-pocket expenses incurred in
      providing such cooperation (including legal fees and disbursements) by the
      Party
      providing such cooperation
      and by its officers, directors, employees
      and agents, but shall not be responsible for reimbursing such Party or its
      officers, directors, employees and agents, for their time spent in such
      cooperation.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    7.8 Collection
      of Accounts Receivable.
      The
      Seller agrees that it shall forward promptly to the Buyer any monies, checks
      or
      instruments received by the Seller after the Closing Date with respect to the
      accounts receivable purchased by the Buyer from the Seller pursuant to this
      Agreement. The Seller shall provide to the Buyer such reasonable assistance
      as
      the Buyer may request with respect to the collection of any such accounts
      receivable, provided the Buyer pays the reasonable out-of-pocket expenses of
      the
      Seller and its officers, directors and employees incurred in providing such
      assistance.
      The
      Seller hereby grants to the Buyer a power of attorney to endorse and cash any
      checks or instruments payable or endorsed to the Seller or its order which
      are
      received by the Buyer and which relate to accounts receivable purchased by
      the
      Buyer from the Seller.

     

    7.9 Employees
      and Consultants.
      Effective as of the Closing, the Seller shall terminate the employment/services
      of each of its employees/consultants listed in Section 2.20 of the Disclosure
      Schedule. The Buyer shall offer employment to each such employee and a
      consulting agreement with each such consultant, each terminable at the will
      of
      the Buyer. The Seller hereby consents to the hiring of any such
      employees/consultants by the Buyer and waives, with respect to the employment/engagement
      by the Buyer of such employees/consultants, any claims or rights the Seller
      may
      have against the Buyer or any such employee/consultant under any
      non-competition, confidentiality, employment or consulting
      agreement.

     

    7.10 Maintenance
      of Corporate Existence.
      The
      Seller shall maintain its corporate existence for a period of two years
      following the Closing Date.

    

    7.11 Managing
      Members of Seller.
      At
      Closing the Managing Members of the Seller will include three (3) members
      designated by Seller and four (4) members designated by Buyer.

    

    7.12 Recovery
      of Legal Awards.
      The
      Buyer covenants and agrees to distribute ratably to the Members fifty percent
      (50%) of any amount recovered from a third party in connection with a Legal
      Proceeding less all costs, fees and expenses associated with such Legal
      Proceeding, including without limitation, amounts paid in settlement, interest,
      court costs, costs of investigators, fees and expenses of attorneys,
      accountants, financial advisors and other experts, and other expenses of
      litigation. 

     

    8. INDEMNIFICATION

    

    8.1 Indemnification
      by the Members.
      The
      Members shall jointly and severally indemnify the Buyer in respect of, and
      hold
      the Buyer harmless against, Damages incurred or suffered by the Buyer or any
      Affiliate thereof resulting from, relating to or constituting:

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (a) any
      breach, as of the date of this Agreement or as of the Closing Date, of any
      representation or warranty of the Seller or the Members contained in this
      Agreement, any Ancillary Agreement or any other agreement or instrument
      furnished by the Seller or the Members to the Buyer pursuant to this
      Agreement;

     

    (b) any
      failure to perform any covenant or agreement of the Seller or the Members
      contained in this Agreement, any Ancillary Agreement or any agreement or
      instrument furnished by the Seller to the Buyer pursuant to this Agreement;
      or

     

    (c) any
      Retained Liabilities.

     

    8.2 Indemnification
      by the Buyer.
      The
      Buyer shall indemnify the Seller and its members in respect of, and hold them
      harmless against, any and all Damages incurred or suffered by the Seller
      resulting from, relating to or constituting: 

     

    (a) any
      breach, as of the date of this Agreement or as of the Closing Date, of any
      representation or warranty of the Buyer contained in this Agreement, any
      Ancillary Agreement or any other agreement or instrument furnished
      by the Buyer to the Seller pursuant to this Agreement;

     

    (b) any
      failure to perform any covenant or agreement of the Buyer contained in this
      Agreement, any Ancillary Agreement or any other agreement or instrument
      furnished by the Buyer to the Seller pursuant to this Agreement; or

     

    (c) any
      Assumed Liabilities.

     

    8.3 Indemnification
      Claims.

     

    (a) An
      Indemnified Party shall give written notification to the Indemnifying Party
      of
      the commencement of any Third Party Action. Such notification shall be given
      within 20 days after receipt by the Indemnified Party of notice of such Third
      Party Action, and shall describe in reasonable detail (to the extent known
      by
      the Indemnified Party) the facts constituting the basis for such Third Party
      Action and the amount of the claimed damages; provided, however, that no delay
      or failure on the part of the Indemnified Party in so notifying the Indemnifying
      Party shall relieve the Indemnifying Party of any liability or obligation
      hereunder except to the extent of any damage or liability caused by or arising
      out of such failure. Within 20 days after delivery of such notification, the
      Indemnifying Party may, upon written notice thereof to the Indemnified Party,
      assume control of the defense of such Third Party Action with counsel reasonably
      satisfactory to the Indemnified Party; provided that (i) the Indemnifying
      Party may only assume control of such defense if (A) it acknowledges in
      writing to the Indemnified Party that any damages, fines, costs or other
      liabilities that may be assessed against the Indemnified Party in connection
      with such Third Party Action constitute Damages for which the Indemnified Party
      shall be indemnified pursuant to this Article 8 and (B) the
ad
      damnum
      is less
      than or equal to the amount of Damages for which the Indemnifying Party is
      liable under this Article 8 and (ii) the Indemnifying Party may not
      assume control of the defense of Third Party Action involving criminal liability
      or in which equitable relief is sought against the Indemnified Party. If the
      Indemnifying Party does not, or is not permitted under the terms hereof to,
      so
      assume control of the defense of a Third Party Action, the Indemnified Party
      shall control such defense. The Non-controlling Party may participate in such
      defense at its own expense. The Controlling Party shall keep the Non-controlling
      Party advised of the status of such Third Party Action and the defense thereof
      and shall consider in good faith recommendations made by the Non-controlling
      Party with respect thereto. The Non-controlling Party shall furnish the
      Controlling Party with such information as it may have with respect to such
      Third Party Action (including copies of any summons, complaint or other pleading
      which may have been served on such party and any written claim, demand, invoice,
      billing or other document evidencing or asserting the same) and shall otherwise
      cooperate with and assist the Controlling Party in the defense of such Third
      Party Action. The fees and expenses of counsel to the Indemnified Party with
      respect to a Third Party Action shall be considered Damages for purposes of
      this
      Agreement if (i) the Indemnified Party controls the defense of such Third Party
      Action pursuant to the terms of this Section 8.3(a) or (ii) the Indemnifying
      Party assumes control of such defense and the Indemnified Party reasonably
      concludes that the Indemnifying Party and the Indemnified Party have conflicting
      interests or different defenses available with respect to such Third Party
      Action. The Indemnifying Party shall not agree to any settlement of, or the
      entry of any judgment arising from, any Third Party Action without the prior
      written consent of the Indemnified Party, which shall not be unreasonably
      withheld, conditioned or delayed; provided that the consent of the Indemnified
      Party shall not be required if the Indemnifying Party agrees in writing to
      pay
      any amounts payable pursuant to such settlement or judgment and such settlement
      or judgment includes a complete release of the Indemnified Party from further
      liability and has no other adverse effect on the Indemnified Party. The
      Indemnified Party shall not agree to any settlement of, or the entry of any
      judgment arising from, any such Third Party Action without the prior written
      consent of the Indemnifying Party, which shall not be unreasonably withheld,
      conditioned or delayed.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (b) In
      order
      to seek indemnification under this Article 8, an Indemnified Party shall deliver
      a Claim Notice to the Indemnifying Party. If the Indemnified Party is the Buyer
      and is seeking to enforce such claim pursuant to the Escrow Agreement, the
      Indemnifying Party shall deliver
      a copy
      of the Claim Notice to the Escrow Agent.

     

    (c) Within
      20
      days after delivery of a Claim Notice, the Indemnifying Party shall deliver
      to
      the Indemnified Party a Response, in which the Indemnifying Party shall:
      (i) agree that the Indemnified Party is entitled to receive all of the
      Claimed Amount (in which case the Response shall be accompanied by a payment
      by
      the Indemnifying Party to the Indemnified Party of the Claimed Amount, by check
      or by wire transfer; provided that if the Indemnified Party is the Buyer and
      is
      seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying
      Party and the Indemnified Party shall deliver to the Escrow Agent, within three
      days following the delivery of the Response, a written notice executed by both
      parties instructing the Escrow Agent to disburse the Claimed Amount to the
      Buyer), (ii) agree that the Indemnified Party is entitled to receive the
      Agreed Amount (in which case the Response shall be accompanied by a payment
      by
      the Indemnifying Party to the Indemnified Party of the Agreed Amount, by check
      or by wire transfer; provided that if the Indemnified Party is the Buyer and
      is
      seeking to enforce such claim pursuant to the Escrow Agreement, the Indemnifying
      Party and the Indemnified Party shall deliver to the Escrow Agent, within three
      days following the delivery of the Response, a written notice executed by both
      parties instructing the Escrow Agent to disburse the Claimed Amount to the
      Buyer), or (iii) dispute that the Indemnified Party is entitled to receive
      any of the Claimed Amount. The Buyer shall be compensated for its Damages
      pursuant to this Agreement in accordance with Section 8.5 hereof.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    (d) During
      the 30-day period following the delivery of a Response that reflects a Dispute,
      the Indemnifying Party and the Indemnified Party shall use good faith efforts
      to
      resolve the Dispute. If the Dispute is not resolved within such 30-day period,
      the Indemnifying Party and the Indemnified Party shall discuss in good faith
      the
      submission of the Dispute to binding arbitration, and if the Indemnifying Party
      and the Indemnified Party agree in writing to submit the Dispute to such
      arbitration, then the provisions of Section 8.3(e) shall become effective with
      respect to such Dispute. The provisions of this Section 8.3(d) shall not
      obligate the Indemnifying Party and the Indemnified Party to submit to
      arbitration or any other alternative dispute resolution procedure with respect
      to any Dispute, and in the absence of an agreement by the Indemnifying Party
      and
      the Indemnified Party to arbitrate any Dispute, such Dispute shall be resolved
      in a state or federal court sitting in the State of California, in accordance
      with Section 11.12. If the Indemnified Party is the Buyer and is seeking to
      enforce the claim that is the subject of the Dispute pursuant to the Escrow
      Agreement, the Indemnifying Party and the Indemnified Party shall deliver to
      the
      Escrow Agent, promptly following the resolution of the Dispute (whether by
      mutual agreement, arbitration, judicial decision or otherwise), a written notice
      executed by both parties instructing the Escrow Agent as to what (if any)
      portion of the Indemnification Shares shall be disbursed to the Buyer and/or
      the
      Members (which notice shall be consistent with the terms of the resolution
      of
      the Dispute).

     

    (e) If,
      as
      set forth in Section 8.3(d), the Indemnified Party and the Indemnifying Party
      agree to submit any Dispute to binding arbitration, the arbitration shall be
      conducted by a single arbitrator (the “Arbitrator”)
      in
      accordance with the Commercial Rules in effect from time to time and the
      following provisions.

     

    (i) In
      the
      event of any conflict between the Commercial Rules in effect from time to time
      and the provisions of this Agreement, the provisions of this Agreement shall
      prevail and be controlling.

     

    (ii) The
      parties shall commence the arbitration by jointly filing a written submission
      with the California office of the AAA in accordance with Commercial Rule 5
      (or
      any successor provision).

     

    (iii) No
      depositions or other discovery shall be conducted in connection with the
      arbitration.

     

    (iv) Not
      later
      than 30 days after the conclusion of the arbitration hearing, the Arbitrator
      shall prepare and distribute to the parties a writing setting forth the arbitral
      award and the Arbitrator’s reasons therefor. Any award rendered by the
      Arbitrator shall be final, conclusive and binding upon the parties, and judgment
      thereon may be entered and enforced in any court of competent jurisdiction
      (subject to Section 11.12), provided that the Arbitrator shall have no power
      or
      authority to grant injunctive relief, specific performance or other equitable
      relief.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (v) The
      Arbitrator shall have no power or authority, under the Commercial Rules or
      otherwise, to (x) modify or disregard any provision of this Agreement,
      including the provisions of this Section 8.3(e), or (y) address or resolve
      any issue not submitted by the parties. 

     

    (vi) In
      connection with any arbitration proceeding pursuant to this Agreement, each
      party shall bear its own costs and expenses, except that the fees and costs
      of
      the AAA and the Arbitrator, the costs and expenses of obtaining the facility
      where the arbitration hearing is held, and such other costs and expenses as
      the
      Arbitrator may determine to be directly related to the conduct of the
      arbitration and appropriately borne jointly by the parties (which shall not
      include any party’s attorneys’ fees or costs, witness fees (if any), costs of
      investigation and similar expenses) shall be shared equally by the Indemnified
      Party and the Indemnifying Party.

     

    (f) Notwithstanding
      the other provisions of this Section 8.3, if a third party asserts (other than
      by means of a lawsuit) that an Indemnified Party is liable to such third party
      for a monetary or other obligation which may constitute or result in Damages
      for
      which such Indemnified Party may be entitled to indemnification pursuant to
      this
      Article 8, and such Indemnified Party reasonably determines that it has a
      valid business reason to fulfill such obligation, then (i) such Indemnified
      Party shall be entitled to satisfy such obligation, without prior notice to
      or
      consent from the Indemnifying Party, (ii) such Indemnified Party may
      subsequently make a claim for indemnification in accordance with the provisions
      of this Article 8, and (iii) such Indemnified Party shall be
      reimbursed, in accordance with the provisions of this Article 8, for any
      such Damages for which it is entitled to indemnification pursuant to this
      Article 8 (subject to the right of the Indemnifying Party to dispute the
      Indemnified Party’s entitlement to indemnification, or the amount for which it
      is entitled to indemnification, under the terms of this
      Article 8).

     

    8.4 Survival
      of Representations and Warranties.
      All
      representations and warranties that are covered by the indemnification
      agreements in Section 8.1(a) and Section 8.2(a) shall (a) survive the
      Closing and (b) shall expire on the date twelve months following the
      Closing Date. If an Indemnified Party delivers to an Indemnifying Party, before
      expiration of a representation or warranty, either a Claim Notice based upon
      a
      breach of such representation or warranty, or an
      Expected Claim Notice based upon a breach of such representation or warranty,
      then the applicable representation or warranty shall survive until, but only
      for purposes
      of, the resolution of the matter covered by such notice. If the legal proceeding
      or written claim with respect to which
      an
      Expected Claim Notice has been given is definitively withdrawn or resolved
      in
      favor of the Indemnified Party, the Indemnified Party shall promptly so notify
      the Indemnifying Party;
      and if
      the Indemnified Party has delivered a copy of the Claim Notice to the Escrow
      Agent and Indemnification Shares have been retained in escrow, the Indemnifying
      Party and the Indemnified Party shall promptly deliver to the Escrow Agent
      a
      written notice executed by both parties instructing the Escrow Agent to disburse
      such retained Indemnification Shares to the Members in accordance with the
      terms
      of the Escrow Agreement. The rights to indemnification set forth in this Article
      8 shall not be affected by (i) any investigation conducted by or on behalf
      of an
      Indemnified Party or any knowledge acquired (or capable of being acquired)
      by an
      Indemnified Party, whether before or after the date of this Agreement or the
      Closing Date (including through supplements to the Disclosure Schedule permitted
      by Section 5.6, except to the extent specifically provided in Section 5.6),
      with
      respect to the inaccuracy or noncompliance with any representation, warranty,
      covenant or obligation which is the subject of indemnification hereunder or
      (ii)
      any waiver by an Indemnified Party of any closing condition relating to the
      accuracy of any representations and warranties or the performance of or
      compliance with agreements and covenants.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    8.5 Limitations.

     

    (a) (i) any
      liability of the Members for Damages under this Article 8 shall be satisfied
      solely from the Indemnification Shares, for which purpose such shares shall
      be
      valued at the greater of (A) the original issue price thereof, and (B) the
      Average Closing Price thereof on the date on which such shares are released
      from
      the Indemnification Escrow, and (ii) the Members shall not be liable under
      this
      Agreement unless and until the aggregate Damages for which it would otherwise
      be
      liable under this Agreement exceed $50,000 (at which point the Seller shall
      become liable for the aggregate Damages under this Agreement, and not just
      amounts in excess of $50,000.

     

    (b) (i) the
      aggregate liability of the Buyer for Damages under this Article 8 shall not
      exceed the value of the Indemnification Shares, and (ii) the Buyer shall
      not be liable under this Agreement unless and until the aggregate Damages for
      which it would otherwise be liable under this Agreement exceed $50,000 (at
      which
      point the Buyer shall become liable for the aggregate Damages under this
      Agreement and not just amounts in excess of $50,000).

     

    (c) The
      limitations set forth in Sections 8.5(a) and 8.5(b) shall not apply to
      (i) the representations and warranties set forth in Sections 2.8 (Tax
      Matters), 2.18 (Litigation), 2.21 (Employee Benefits), 2.28 (Capital Structure),
      4.3 (Capital Structure) and 8.1(c), or (ii) claims based on fraud or intentional
      misrepresentation, with respect to which, in each case, (A) all Damages shall
      be
      recoverable from the first dollar and shall be counted in determining whether
      the thresholds in Sections 8.5(a) and 8.5(b) have been exceeded, (B) no Damages
      shall be counted in determining whether the cap in Sections 8.5(a) and 8.5(b)
      has been exceeded, and (C) the indemnification obligations shall not be limited
      in amount. The indemnification obligations of the parties hereto and the rights
      and remedies that may be exercised by an Indemnified Party shall not be limited
      or otherwise affected by or as a result of any information furnished to, or
      any
      investigation made by or knowledge of any of the Indemnified Parties or any
      of
      their Except
      with respect to claims based on fraud, after the Closing, the rights of the
      Indemnified Parties under this Article 8 shall be the exclusive remedy of
      the Indemnified Parties with respect to claims resulting from or relating to
      any
      misrepresentation, breach of warranty or failure to perform any covenant or
      agreement contained in this Agreement.

     

    8.6 Treatment
      of Indemnity Payments.
      Any
      payments made to an Indemnified Party pursuant to this Article 8, or
      pursuant to the Escrow Agreement, shall be treated as an adjustment to the
      Purchase Price for tax purposes.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    9. TERMINATION

     

    9.1 Termination
      of Agreement.
      The
      Parties may terminate this Agreement prior to the Closing (whether before or
      after Requisite Member Approval), as provided below:

     

    (a) the
      Parties may terminate this Agreement by mutual written consent;

     

    (b) the
      Buyer
      may terminate this Agreement by giving written notice to the Seller in the
      event
      the Seller is in breach of any representation, warranty or covenant contained
      in
      this Agreement, and such breach (i) individually or in combination with any
      other such breach, would cause the conditions set forth in clauses (b) or (c)
      of
      Section 5.2 not to be satisfied and (ii) is not cured within 20 days following
      delivery by the Buyer to the Seller of written notice of such
      breach;

     

    (c) the
      Seller may terminate this Agreement by giving written notice to the Buyer in
      the
      event the Buyer is in breach of any representation, warranty or covenant
      contained in this Agreement, and such breach (i) individually or in
      combination with any other such breach, would cause the conditions set forth
      in
      clauses (a) or (b) of Section 5.3 not to be satisfied and (ii) is not cured
      within 20 days following delivery by the Seller to the Buyer of written notice
      of such breach;

     

    (d) either
      Party may terminate this Agreement by giving written notice to the other Party
      at any time after the members of the Seller have voted on whether to approve
      the
      sale of the Acquired Assets contemplated by this Agreement in the event such
      matter failed to receive the Requisite Member Approval; or

     

    (e) the
      Buyer
      may terminate this Agreement by giving written notice to the Seller if the
      Closing shall not have occurred on or before February 28, 2007 by reason of
      the
      failure of any condition precedent under Section 5.1 or 5.2 (unless the
      failure results primarily from a breach by the Buyer of any representation,
      warranty or covenant contained in this Agreement).

     

    9.2 Effect
      of Termination.
      If
      either Party terminates this Agreement pursuant to Section 9.1, all
      obligations of the Parties hereunder shall terminate without any liability
      of
      either Party to the other Party (except for any liability of a Party for willful
      breaches of this Agreement).

     

    10. DEFINITIONS

     

    For
      purposes of this Agreement, each of the following terms shall have the meaning
      set forth below.

     

    “AAA”
shall
      mean the American Arbitration Association.

     

    “Acquired
      Assets”
shall
      mean all of the assets, properties and rights of the Seller existing as of
      the
      Closing, including:

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (a) all
      cash,
      short-term investments, deposits, bank accounts and other similar
      assets;

     

    (b) all
      trade
      and other accounts receivable and notes and loans receivable that are payable
      to
      the Seller, and all rights to unbilled amounts for products delivered or
      services provided, together with any security held by the Seller for the payment
      thereof;

     

    (c) all
      inventories of raw materials, work in process, finished goods, supplies,
      packaging materials, spare parts and similar items, wherever located, including
      consignment inventory and inventory held on order or in transit;

     

    (d) all
      computers, machinery, equipment, tools and tooling, furniture, fixtures,
      supplies, leasehold improvements, motor vehicles and other tangible personal
      property;

     

    (e) all
      real
      property, leaseholds and subleaseholds in real property, and easements,
      rights-of-way and other appurtenants thereto;

     

    (f) all
      Intellectual Property;

     

    (g) all
      rights under Assigned Contracts;

     

    (h) all
      securities owned by the Seller, including all capital stock held by the Seller
      in any Subsidiary;

     

    (i) all
      claims, prepayments, deposits, refunds, causes of action, chooses in action,
      rights of recovery, rights of setoff and rights of recoupment;

     

    (j) all
      Permits;

     

    (k) all
      books, records, accounts, ledgers, files, documents, correspondence, lists
      (including customer and prospect lists), employment records, manufacturing
      and
      procedural manuals, Intellectual Property records, sales and promotional
      materials, studies, reports and other printed or written materials;
      and

     

    (l) all
      insurance policies of the Seller, as well as all proceeds which may be payable
      thereunder.

     

    “Affiliate”
shall
      mean any affiliate, as defined in Rule 12b-2 under the Securities Exchange
      Act
      of 1934.

     

    “Agreed
      Amount”
shall
      mean part, but not all, of the Claimed Amount.

     

    “Ancillary
      Agreements”
shall
      mean the agreements referred to in Section 6.2(k).

     

    “Arbitrator”
shall
      have the meaning set forth in Section 8.3(e).

     

    “Assigned
      Contracts”
shall
      mean any contracts, agreements or instruments to which the Seller is a party,
      including any agreements or instruments securing any amounts owed to the Seller,
      any leases or subleases of real property, any employment contracts and any
      licenses or sublicenses relating to Intellectual Property. A complete list
      of
      which is set forth on Schedule
      9.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    “Assumed
      Liabilities”
shall
      mean all of the liabilities of the Seller other than the Retained
      Liabilities.

     

    “Average
      Closing Price”
      shall
      mean the average of the closing prices of the Buyer’s Common Stock as reported
      on the Over The Counter Bulletin Board during the twenty consecutive trading
      days ending one day prior to the relevant date with respect to which such
      average is relevant in accordance with the terms hereof.

    

    “Buyer”
shall
      have the meaning set forth in the first paragraph of this
      Agreement.

     

    “Buyer
      Certificate”
shall
      mean a certificate to the effect that each of the conditions specified in
      clauses (a) through (c) (insofar as clause (c) relates to Legal Proceedings
      involving the Buyer) of Section 5.3 is satisfied in all
      respects.

     

    “Buyer
      Material Adverse Effect”
shall
      mean any material adverse change, event, circumstance or development with
      respect to, or material adverse effect on, the business, assets, liabilities,
      capitalization, prospects, condition (financial or other), or results of
      operations of the Buyer and its Subsidiaries, taken as a whole. For the
      avoidance of doubt, the parties agree that the terms “material”, “materially” or
“materiality” as used in this Agreement with an initial lower case “m” shall
      have their respective customary and ordinary meanings, without regard to the
      meaning ascribed to Buyer Material Adverse Effect.

     

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

     

    “Claimed
      Amount”
shall
      mean the amount of any Damages incurred or reasonably expected to be incurred
      by
      the Indemnified Party.

     

    “Claim
      Notice”
shall
      mean written notification which contains (i) a description of the Damages
      incurred or reasonably expected to be incurred by the Indemnified Party and
      the
      Claimed Amount of such Damages, to the extent then known, (ii) a statement
      that
      the Indemnified Party is entitled to indemnification under Article 8 for such
      Damages and a reasonable explanation of the basis therefor, and (iii) a demand
      for payment in the amount of such Damages.

     

    “Closing”
shall
      mean the closing of the transactions contemplated by this
      Agreement.

     

    “Closing
      Date”
shall
      mean the date two business days after the satisfaction or waiver of all of
      the
      conditions to the obligations of the Parties to consummate the transactions
      contemplated hereby (excluding the delivery at the Closing of any of the
      documents set forth in Article 6), or such other date as may be mutually
      agreeable to the Parties.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

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

     

    “Commercial
      Rules”
shall
      mean the Commercial Arbitration Rules of the AAA.

     

    “Common
      Stock”
shall
      mean unregistered shares of the common stock, $0.001 par value per share, of
      the
      Buyer.

     

    “Confidential
      Information”
shall
      mean any confidential or proprietary information of the Seller or any Subsidiary
      that is furnished in writing to the Buyer by the Seller or any Subsidiary in
      connection with this Agreement and is labeled confidential or proprietary;
      provided, however, that it shall not include any information (A) which, at
      the time of disclosure, is available publicly, (B) which, after disclosure,
      becomes available publicly through no fault of the Buyer, (C) which the
      Buyer knew or to which the Buyer had access prior to disclosure or
      (D) which the Buyer rightfully obtains from a source other than the Seller
      or a Subsidiary.

     

    “Controlling
      Party”
shall
      mean the party controlling the defense of any Third Party Action.

     

    “Customer
      Deliverables”
shall
      mean (a) the products that the Seller or any Subsidiary (i) currently
      manufactures, markets, sells or licenses, or (ii) has manufactured, marketed,
      sold or licensed within the previous three years and (b) the services that
      the
      Seller or any Subsidiary (i) currently provides, or (ii) has provided within
      the
      previous three years.

     

    “Damages”
shall
      mean any and all debts, obligations and other liabilities (whether absolute,
      accrued, contingent, fixed or otherwise, or whether known or unknown, or due
      or
      to become due or otherwise), diminution in value, monetary damages, fines,
      fees,
      penalties, interest obligations, deficiencies, losses and expenses (including
      amounts paid in settlement, interest, court costs, costs of investigators,
      fees
      and expenses of attorneys, accountants, financial advisors and other experts,
      and other expenses of litigation), other than those costs and expenses of
      arbitration of a Dispute which are to be shared equally by the Indemnified
      Party
      and the Indemnifying Party as set forth in Section 8.3(e)(vi).

     

    “Disclosure
      Schedule”
shall
      mean the disclosure schedule provided by the Seller to the Buyer on the date
      hereof and accepted in writing by the Buyer, as the same may be supplemented
      pursuant to Section 5.6.

     

    “Dispute”
shall
      mean the dispute resulting if the Indemnifying Party in a Response disputes
      its
      liability for all or part of the Claimed Amount.

     

    “Employee
      Benefit Plan”
shall
      mean any “employee pension benefit plan” (as defined in Section 3(2) of ERISA),
      any “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), and
      any other written or oral plan, agreement or arrangement involving direct or
      indirect compensation, including insurance coverage, severance benefits,
      disability benefits, deferred compensation, bonuses, stock options, stock
      purchase, phantom stock, stock appreciation or other forms of incentive
      compensation or post-retirement compensation.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    “Environmental
      Law”
shall
      mean any federal, state or local law, statute, rule, order, directive, judgment,
      Permit or regulation or the common law relating to the environment, occupational
      health and safety, or exposure of persons or property to Materials of
      Environmental Concern, including any statute, regulation, administrative
      decision or order pertaining to: (i) the presence of or the treatment,
      storage, disposal, generation, transportation, handling, distribution,
      manufacture, processing, use, import, export, labeling, recycling, registration,
      investigation or remediation of Materials of Environmental Concern or
      documentation related to the foregoing; (ii) air, water and noise
      pollution; (iii) groundwater and soil contamination; (iv) the release,
      threatened release, or accidental release into the environment, the workplace
      or
      other areas of Materials of Environmental Concern, including emissions,
      discharges, injections, spills, escapes or dumping of Materials of Environmental
      Concern; (v) transfer of interests in or control of real property which may
      be
      contaminated; (vi) community or worker right-to-know disclosures with respect
      to
      Materials of Environmental Concern; (vii) the protection of wild life,
      marine life and wetlands, and endangered and threatened species;
      (viii) storage tanks, vessels, containers, abandoned or discarded barrels
      and other closed receptacles; and (ix) health and safety of employees and
      other persons. As used above, the term “release” shall have the meaning set
      forth in CERCLA. 

     

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

     

    “ERISA
      Affiliate”
shall
      mean any entity which is, or at any applicable time was, a member of (1) a
      controlled group of corporations (as defined in Section 414(b) of the Code),
      (2) a group of trades or businesses under common control (as defined in
      Section 414(c) of the Code), or (3) an affiliated service group (as defined
      under Section 414(m) of the Code or the regulations under Section 414(o) of
      the
      Code), any of which includes or included the Seller or a
      Subsidiary.

     

    “Expected
      Claim Notice”
shall
      mean a notice that, as a result of a legal proceeding instituted by or written
      claim made by a third party, an Indemnified Party reasonably expects to incur
      Damages for which it is entitled to indemnification under Article
      8.

     

    “Financial
      Statements”
shall
      mean:

     

    (a) the
      audited consolidated balance sheets and statements of income, changes in
      stockholders’ equity and cash flows of the Seller as of the end of and for each
      of the last three fiscal years, and

     

    (b) the
      Most
      Recent Balance Sheet and the unaudited consolidated statements of income,
      changes in stockholders’ equity and cash flows for the period from the Most
      Recent Balance Sheet Date to the most recent month end.

     

    “GAAP”
shall
      mean United States generally accepted accounting principles.

     

    “Governmental
      Entity”
shall
      mean any court, arbitrational tribunal, administrative agency or commission
      or
      other governmental or regulatory authority or agency.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    “Hart-Scott-Rodino
      Act”
shall
      mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
      amended.

     

    “Indemnified
      Party”
shall
      mean a party entitled, or seeking to assert rights, to indemnification under
      Article 8 of this Agreement.

     

    “Indemnifying
      Party”
shall
      mean the party from whom indemnification is sought by the Indemnified
      Party.

     

    “Intellectual
      Property”
shall
      mean all: 

     

    (a) patents,
      patent applications, patent disclosures and all related continuation,
      continuation-in-part, divisional, reissue, reexamination, utility model,
      certificate of invention and design patents, patent applications, registrations
      and applications for registrations; 

     

    (b) trademarks,
      service marks, trade dress, Internet domain names, logos, trade names and
      corporate names and registrations and applications for registration thereof;
      

     

    (c) copyrights
      and registrations and applications for registration thereof; 

     

    (d) mask
      works and registrations and applications for registration thereof; 

     

    (e) computer
      software, data and documentation; 

     

    (f) inventions,
      trade secrets and confidential business information, whether patentable or
      nonpatentable and whether or not reduced to practice, know-how, manufacturing
      and product processes and techniques, research and development information,
      copyrightable works, financial, marketing and business data, pricing and cost
      information, business and marketing plans and customer and supplier lists and
      information; 

     

    (g) other
      proprietary rights relating to any of the foregoing (including remedies against
      infringements thereof and rights of protection of interest therein under the
      laws of all jurisdictions); and 

     

    (h) copies
      and tangible embodiments thereof.

     

    “Internal
      Systems”
shall
      mean the internal systems of the Seller or any Subsidiary that are used in
      its
      business or operations, including computer hardware systems, software
      applications and embedded systems.

     

    “Lease”
shall
      mean any lease or sublease pursuant to which the Seller or a Subsidiary leases
      or subleases from another party any real property.

     

    “Legal
      Proceeding”
shall
      mean any action, suit, proceeding, claim, arbitration or investigation before
      any Governmental Entity or before any arbitrator.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    “Materials
      of Environmental Concern”
shall
      mean any: pollutants, contaminants or hazardous substances (as such terms are
      defined under CERCLA), pesticides (as such term is defined under the Federal
      Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes
      (as such terms are defined under the Resource Conservation and Recovery Act),
      chemicals, other hazardous, radioactive or toxic materials, oil, petroleum
      and
      petroleum products (and fractions thereof), or any other material (or article
      containing such material) listed or subject to regulation under any law,
      statute, rule, regulation, order, Permit, or directive due to its potential,
      directly or indirectly, to harm the environment or the health of humans or
      other
      living beings.

     

    “Membership
      Interests” shall
      have the meaning set forth Recital B.

     

    “Most
      Recent Balance Sheet”
shall
      mean the audited consolidated balance sheet of the Seller as of the Most Recent
      Balance Sheet Date.

     

    “Most
      Recent Balance Sheet Date”
shall
      mean December 31, 2006.

     

    “Non-controlling
      Party”
shall
      mean the party not controlling the defense of any Third Party
      Action.

     

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

     

    “Owned
      Real Property”
shall
      mean each item of real property owned by the Seller or a
      Subsidiary.

     

    “Parties”
shall
      mean the Buyer, the Seller and the Members.

     

    “Permits”
shall
      mean all permits, licenses, registrations, certificates, orders, approvals,
      franchises, variances and similar rights issued by or obtained from any
      Governmental Entity (including those issued or required under Environmental
      Laws
      and those relating to the occupancy or use of owned or leased real
      property).

     

    “Purchase
      Price”
shall
      mean the purchase price to be paid by the Buyer for the Membership Interests
      at
      the Closing, as set forth in Section 1.3.

     

    “Reasonable
      Best Efforts”
shall
      mean best efforts, to the extent commercially reasonable.

     

    “Requisite
      Member Approval”
shall
      mean the approval of the sale of all outstanding Membership Interests of Seller
      by the Members to the Buyer as contemplated by this Agreement.

     

    “Response”
shall
      mean a written response containing the information provided for in Section
      8.3(c).

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    “Restricted
      Employee”
shall
      mean any person who either (i) was an employee of the Buyer on either the
      date of this Agreement or the Closing Date or (ii) was an employee of the
      Seller on either the date of this Agreement or the Closing Date and received
      an
      employment offer from the Buyer within five business days following the Closing
      Date.

     

    “Retained
      Liabilities”
shall
      mean any and all liabilities or obligations (whether known or unknown, absolute
      or contingent, liquidated or unliquidated, due or to become due and accrued
      or
      unaccrued, and whether claims with respect thereto are asserted before or after
      the Closing) of the Seller which are not Assumed Liabilities. The Retained
      Liabilities shall include, without limitation, all liabilities and obligations
      of the Seller:

     

    (a) for
      income, transfer, sales, use or other Taxes arising in connection with the
      consummation of the transactions contemplated by this Agreement;

     

    (b) for
      costs
      and expenses incurred in connection with this Agreement or the consummation
      of
      the transactions contemplated by this Agreement;

     

    (d) for
      any
      Taxes, including deferred taxes or taxes measured by income of the Seller earned
      prior to the Closing, any liabilities for federal or state income tax and FICA
      taxes of employees of the Seller which the Seller is legally obligated to
      withhold, any liabilities of the Seller for employer FICA and unemployment
      taxes
      incurred, and any liabilities of the Seller for sales, use or excise taxes
      or
      customs and duties;

     

    (e) under
      any
      agreements, contracts, leases or licenses which are not Assigned
      Contracts;

     

    (f) for
      any
      breach, act or omission by the Seller prior to the Closing under any Assigned
      Contract other than those listed on Schedule
      9;

     

    (g) arising
      out of events, conduct or conditions existing or occurring prior to the Closing
      that constitute a violation of or non-compliance with any law, rule or
      regulation (including Environmental Laws), any judgment, decree or order of
      any
      Governmental Entity, or any Permit or that give rise to liabilities or
      obligations with respect to Materials of Environmental Concern other than those
      listed on Schedule
      9;

     

    (i) to
      pay
      severance benefits to any employee of the Seller whose employment is terminated
      (or treated as terminated) in connection with the consummation of the
      transactions contemplated by this Agreement, and all liabilities resulting
      from
      the termination of employment of employees of the Seller prior to the Closing
      that arose under any federal or state law or under any Employee Benefit Plan
      established or maintained by the Seller;

     

    (j) to
      indemnify any person or entity by reason of the fact that such person or entity
      was a director, officer, employee, or agent of the Seller or a Subsidiary or
      was
      serving at the request of the Seller or a Subsidiary as a partner, trustee,
      director, officer, employee, or agent of another entity (whether such
      indemnification is for judgments, damages, penalties, fines, costs, amounts
      paid
      in settlement, losses, expenses, or otherwise and whether such indemnification
      is pursuant to any statute, charter document, bylaw, agreement, or otherwise)
      other than in connection with any Legal Proceedings listed in Schedule
      2.18;

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    (k) injury
      to
      or death of persons or damage to or destruction of property occurring prior
      to
      the Closing (including any workers compensation claim); 

     

    (l) all
      Seller Plans and all liabilities and obligations of the Seller arising after
      the
      Closing under the Seller Plans; and

     

    (m) subject
      to the terms of the applicable Seller Plan, for medical, dental and disability
      benefits arising under each Seller Plan (both long-term and short-term
      benefits), whether insured or self-insured, owed to employees or former
      employees of the Seller based upon (A) dates of service for medical or dental
      benefits under the applicable Seller Plan prior to the Closing or (B)
      disabilities determined by the U.S. Social Security Administration or Seller
      Plan that is a disability plan as existing prior to the Closing (including
      any
      such disabilities which may have been aggravated following the
      Closing).

     

    “Security
      Interest”
shall
      mean any mortgage, pledge, security interest, encumbrance, charge or other
      lien
      (whether arising by contract or by operation of law), other than
      (i) mechanic’s, materialmen’s, and similar liens, (ii) liens arising
      under worker’s compensation, unemployment insurance, social security,
      retirement, and similar legislation (iii) liens on goods in transit incurred
      pursuant to documentary letters of credit, in each case arising in the Ordinary
      Course of Business of the Seller and not material to the Seller, (iv)
statutory
      liens for current Taxes or other governmental charges not yet due and payable
      or
      the amount or validity of which is being contested in good faith by appropriate
      proceedings by the Seller or any of its Subsidiaries and (v) such other liens
      as
      would not have, individually or in the aggregate, a Seller Material Adverse
      Effect.

     

    “Seller”
shall
      have the meaning set forth in the first paragraph of this
      Agreement.

     

    “Seller
      Certificate”
shall
      mean a certificate to the effect that each of the conditions specified in clause
      (a) of Section 5.1 and clauses (a) through (d) (insofar as clause (d)
      relates to Legal Proceedings involving the Seller or a Subsidiary) of
      Section 5.2 is satisfied in all respects.

     

    “Seller
      Intellectual Property”
shall
      mean the Intellectual Property owned by or licensed to the Seller or a
      Subsidiary and covering, incorporated in, underlying or used in connection
      with
      the Customer Deliverables or the Internal Systems.

     

    “Seller
      Material Adverse Effect”
shall
      mean any material adverse change, event, circumstance or development with
      respect to, or material adverse effect on, (i) the business, assets,
      liabilities, capitalization, prospects, condition (financial or other), or
      results of operations of the Seller and the Subsidiaries, taken as a whole,
      or
      (ii) the ability of the Buyer to operate the business of the Seller and each
      of
      the Subsidiaries immediately after the Closing. For the avoidance of doubt,
      the
      parties agree that the terms “material”, “materially” or “materiality” as used
      in this Agreement with an initial lower case “m” shall have their respective
      customary and ordinary meanings, without regard to the meaning ascribed to
      Seller Material Adverse Effect.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    “Seller
      Plan”
shall
      mean any Employee Benefit Plan maintained, or contributed to, by the Seller
      or
      any Subsidiary.

     

    “Subsidiary”
shall
      mean any corporation, partnership, trust, limited liability company or other
      non-corporate business enterprise in which the Seller or the Buyer, as the
      case
      may be (or another Subsidiary thereof), holds stock or other ownership interests
      representing (a) more than 50% of the voting power of all outstanding stock
      or
      ownership interests of such entity or (b) the right to receive more than 50%
      of
      the net assets of such entity available for distribution to the holders of
      outstanding stock or ownership interests upon a liquidation or dissolution
      of
      such entity. 

     

    “Taxes”
shall
      mean all taxes, charges, fees, levies or other similar assessments or
      liabilities, including income, gross receipts, ad valorem, premium, value-added,
      excise, real property, personal property, sales, use, transfer, withholding,
      employment, unemployment, insurance, social security, business license, business
      organization, environmental, workers compensation, payroll, profits, license,
      lease, service, service use, severance, stamp, occupation, windfall profits,
      customs, duties, franchise and other taxes imposed by the United States of
      America or any state, local or foreign government, or any agency thereof, or
      other political subdivision of the United States or any such government, and
      any
      interest, fines, penalties, assessments or additions to tax resulting from,
      attributable to or incurred in connection with any tax or any contest or dispute
      thereof.

     

    “Tax
      Returns”
shall
      mean all reports, returns, declarations, statements or other information
      required to be supplied to a taxing authority in connection with
      Taxes.

     

    “Third
      Party Action”
shall
      mean any suit or proceeding by a person or entity other than a Party for which
      indemnification may be sought by a Party under Article 8.

     

    11. MISCELLANEOUS

     

    11.1 Press
      Releases and Announcements.
      Neither
      Party shall issue any press release or public announcement relating to the
      subject matter of this Agreement without the prior written approval of the
      other
      Party; provided,
      however,
      that
      either Party may make any public disclosure it believes in good faith is
      required by applicable law, regulation or stock market rule (in which case
      the
      disclosing Party shall use reasonable efforts to advise the other Party and
      provide it with a copy of the proposed disclosure prior to making the
      disclosure).

     

    11.2 No
      Third Party Beneficiaries.
      This
      Agreement shall not confer any rights or remedies upon any person other than
      the
      Parties and their respective successors and permitted assigns.

     

    11.3 Entire
      Agreement.
      This
      Agreement (including the documents referred to herein) constitutes the entire
      agreement between the Parties and supersedes any prior understandings,
      agreements, or representations by or between the Parties, written or oral,
      with
      respect to the subject matter hereof.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    11.4 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the Parties named
      herein and their respective successors and permitted assigns. Neither Party
      may
      assign either this Agreement or any of its rights, interests, or
      obligations hereunder
      without the prior written approval of the other Party; provided that the Buyer
      may assign
      some or all of its rights, interests and/or obligations hereunder to one or
      more
      Affiliates of the Buyer.

     

    11.5 Counterparts
      and Facsimile Signature.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute
      one and the same instrument.
      This
      Agreement may be executed by facsimile signature.

     

    11.6 Headings.
      The
      section headings contained in this Agreement are inserted for convenience only
      and shall not affect in any way the meaning or interpretation of this
      Agreement.

     

    11.7 Notices.
      All
      notices, requests, demands, claims and other communications hereunder shall
      be
      in writing. Any notice, request, demand, claim or other communication hereunder
      shall be deemed duly delivered four business days after it is sent by registered
      or certified mail, return receipt requested, postage prepaid, or one business
      day after it is sent for next business day delivery via a reputable nationwide
      overnight courier service, in each case to the intended recipient as set forth
      below:

     

    
      	
              If
                to the Seller:

            	
              Copy
                to:

            
	 	 
	
              PRO
                SAT, LLC

              Attn:
                Kory M. Madison

              5590
                Morehouse Drive

              San
                Diego, California 92121

              Tel:
                (619) 247-5054

              Fax:
                (858) 200-3990

            	
              PRO
                SAT Counsel

            
	 	 
	
              If
                to the Buyer:

            	
              Copy
                to:

            
	 	 
	
              Nayna
                Networks, Inc.

              Attn:
                Chief Executive Officer

              4699
                Old Ironsides Drive, Suite 420

              Santa
                Clara, CA 95054

              Tel:
                (408) 956-8000

              Fax:
                (408) 956-8730

            	
              Hutchison
                Law Group, PLLC

              Attn:
                John M. Fogg, Esquire

              5410
                Trinity Road, Ste. 400

              Raleigh,
                NC 27607

              Tel:
                (919) 829-9600

              Fax:
                (919) 829-9696

            

    

     

    Either
      Party may give any notice, request, demand, claim or other communication
      hereunder using any other means (including personal delivery, expedited courier,
      messenger service, telecopy, telex, ordinary mail, or electronic mail), but
      no
      such notice, request, demand, claim or other communication shall be deemed
      to
      have been duly given unless and until it actually is received by the party
      for
      whom it is intended. Either Party may change the address to which notices,
      requests, demands, claims and other communications hereunder are to be delivered
      by giving the other Party notice in the manner herein set forth.

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    11.8 Governing
      Law.
      This
      Agreement (including the validity and applicability of the arbitration
      provisions of this Agreement, the conduct of any arbitration of a Dispute,
      the
      enforcement of any arbitral award made hereunder and any other questions of
      arbitration law or procedure arising hereunder) shall be governed by and
      construed in accordance with the internal laws of the State of California,
      without giving effect to any choice or conflict of law provision or rule
      (whether of the State
      of
      California or any other jurisdiction) that would cause the application of laws
      of any jurisdictions other than those of the State
      of
      California.

     

    11.9 Amendments
      and Waivers.
      The
      Parties may mutually amend any provision of this Agreement at any time prior
      to
      the Closing; provided,
      however,
      that
      any amendment effected subsequent
      to the Requisite Member Approval shall be subject to any restrictions contained
      in the California Limited Liability Company Act. No amendment of any provision
      of this Agreement shall
      be
      valid unless the same shall be in writing and signed by each of the Parties.
      No
      waiver by either Party of any right or remedy hereunder shall be valid unless
      the same shall be in writing and signed by the Party giving such waiver. No
      waiver by either Party with respect to any default, misrepresentation, or breach
      of warranty or covenant hereunder shall be deemed to extend to any prior or
      subsequent default, misrepresentation, or breach of warranty or covenant
      hereunder or affect in any way any rights arising by virtue of any prior or
      subsequent such occurrence.

     

    11.10 Severability.
      Any
      term or provision of this Agreement that is invalid or unenforceable in any
      situation in any jurisdiction shall not affect the validity or enforceability
      of
      the remaining terms and provisions hereof or the validity or enforceability
      of
      the offending term or provision in any other situation or in any other
      jurisdiction. If the final judgment of a court of competent jurisdiction
      declares that any term or provision hereof is invalid or unenforceable, the
      Parties agree that the court making the determination of invalidity or
      unenforceability shall have the
      power
      to limit the term or provision, to delete specific words or phrases, or to
      replace any invalid or unenforceable term or provision with a term or provision
      that is valid and enforceable and that comes closest to expressing the intention
      of the invalid or unenforceable term or provision, and this Agreement shall
      be
      enforceable as so modified.

     

    11.11 Expenses.
      Each
      Party shall bear its own costs and expenses (including legal fees and expenses)
      incurred in connection with this Agreement and the transactions contemplated
      hereby. The Seller agrees
      that none of the costs and expenses (including legal fees and expenses) incurred
      by it in connection with this Agreement or the transactions contemplated hereby
      will be (a) borne by any Subsidiary or (b) paid until after the
      Closing.

     

    11.12 Submission
      to Jurisdiction.
      Each
      Party (a) submits to the jurisdiction of any state or federal court sitting
      in the State of California in any action or proceeding arising out of or
      relating to this Agreement or the Ancillary Agreements (including any action
      or
      proceeding for the enforcement of any arbitral award made in connection with
      any
      arbitration of a Dispute hereunder), (b) agrees that all claims in respect
      of such action or proceeding may be heard and determined in any such court,
      (c) waives any claim of inconvenient forum or other challenge to venue in
      such court, (d) agrees not to bring any action or proceeding arising out of
      or
      relating to this Agreement or the Ancillary Agreements in any other court;
      provided in each case that, solely with respect to any arbitration of a Dispute,
      the Arbitrator shall resolve all threshold issues relating to the
      validity and
      applicability of the arbitration provisions of this Agreement, contract
      validity, applicability of statutes of limitations and issue preclusion, and
      such threshold issues shall not be heard or determined by such court. Each
      party
      agrees to accept service of any summons, complaint or other
      initial pleading made in
      the
      manner provided for the giving of notices in Section 11.7, provided
      that nothing in this Section 11.12 shall affect the right of either Party
      to serve such summons, complaint or other initial pleading in any other manner
      permitted by law.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    11.13 Specific
      Performance.
      Each
      Party acknowledges and agrees that the other Party would be damaged irreparably
      in the event any of the provisions of this Agreement (including Sections 6.1,
      6.2 and 6.3) are not performed in accordance with their specific terms or
      otherwise are breached. Accordingly, each Party agrees that the other Party
      shall be entitled to an injunction or other equitable relief to prevent breaches
      of the provisions of this Agreement and to enforce specifically this Agreement
      and the terms and provisions hereof in any action instituted in any court of
      the
      United States or any state thereof having jurisdiction over the Parties and
      the
      matter, in addition to any other remedy to which it may be entitled, at law
      or
      in equity.
      Notwithstanding the foregoing, the Parties agree that if a Dispute is submitted
      to arbitration in accordance with Section 8.3(d) and Section 8.3(e), then the
      foregoing provisions of this Section 11.13 shall not apply to such Dispute,
      and
      the provisions of Section 8.3(d) and Section 8.3(e) shall
      govern availability of injunctive relief, specific performance or other
      equitable relief with respect to such Dispute.

     

    11.14 Construction. 

     

    (a) The
      language used in this Agreement shall be deemed to be the language chosen by
      the
      Parties to express their mutual intent, and no rule of strict construction
      shall
      be applied against either Party. 

     

    (b) Any
      reference to any federal, state, local, or foreign statute or law shall be
      deemed also to refer to all rules and regulations promulgated thereunder, unless
      the context requires otherwise.

     

    (c) Any
      reference herein to "including" shall be interpreted as "including without
      limitation".

     

    (d) Any
      reference to any Article, Section or paragraph shall be deemed to refer to
      an
      Article, Section or paragraph of this Agreement, unless the context clearly
      indicates otherwise.

     

    [remainder
      of page intentionally left blank; signature page follows]

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

       

    

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

     

    

    
      	 	
              NAYNA
                NETWORKS, INC.

              a
                Nevada corporation

               

              By: /s/
                Naveen
                Bisht                                      
                

               

              Name: Naveen
                Bisht

               

              Title:Chief
                Executive Officer

               

              

              PRO
                SAT, LLC

              a
                California limited liability company

               

              By: /s/
                Kory M.
                Madison                             
                 

               

              Name: Kory
                M. Madison

               

              Title:
                Manager 

              

              MEMBERS:

              

              /s/ Kory M.
                Madison                                    
                

              Kory
                M. Madison 

               

              /s/ Cem
                Esin                  
                                                 
                

              Cem
                Esin

               
/s/
Jonathan
              Shiff          
                                             
              Jonathan
                Shiff 

               

              /s/
Mark
                Hagen                        
                                    
                

              Mark
                Hagen

               

            

    

    

    
      
        
        

      

      
        47Plainfield
      Special Situations Master Fund Limited

    c/o
      Plainfield Asset Management LLC

    55
      Railroad Avenue

    Greenwich,
      CT 06830

     

    
 

    
      	 	
              January
                31, 2007

            	 

    

    

    The
      Alpine Group, Inc.

    One
      Meadowlands Plaza, Suite 200

    East
      Rutherford, NJ 07073

    

    Re: Wolverine
      Tube, Inc. 

    

    Dear
      Sirs:

    

    Reference
      is made to the Preferred Stock Purchase Agreement, dated as of the date hereof
      (as amended, modified or supplemented from time to time, the “Purchase
      Agreement”),
      by
      and among Wolverine Tube, Inc., a Delaware corporation (the “Company”),
      Plainfield Special Situations Master Fund Limited (the “Plainfield
      Investor”)
      and
      The Alpine Group, Inc. (the “Alpine
      Investor,”
and
      together with the Plainfield Investor, the “Investors”).
      Capitalized terms used but not defined herein shall have the meanings ascribed
      to them in the Purchase Agreement. 

     

    In
      connection with entering into the Purchase Agreement, the parties to this letter
      agreement hereby agree as follows:

    

    1.  Joint
      Agreement Required.
      The
      parties hereto agree that from the date hereof until the earlier of (a) such
      time as agreed to by the Plainfield Investor and the Alpine Investor in writing
      or (b) the consummation of the transactions contemplated by the Purchase
      Agreement in accordance with its terms (any such date, the “Termination
      Date”),
      any
      decision, election, action, determination or other matter relating to, arising
      under or otherwise in connection with the Purchase Agreement or any of the
      other
      Transaction Documents (including, without limitation, any waivers or amendments
      to the Purchase Agreement and any matters relating to the termination thereof),
      shall be made only by the approval or consent of each of the Plainfield Investor
      and the Alpine Investor. Notwithstanding the foregoing, in the event the Closing
      has not occurred prior to the date set forth in Section 6.2(a)(ii)(x) of the
      Purchase Agreement, either the Plainfield Investor or the Alpine Investor may,
      at its option, request the termination of the Purchase Agreement, and the
      parties hereto shall cooperate in order to give effect to such termination
      in
      accordance with the Purchase Agreement; provided, however, that in the event
      that either the Plainfield Investor or the Alpine Investor elect to terminate
      the Purchase Agreement pursuant to the preceding sentence, then the other
      Investor may elect to accept an assignment of all of such terminating Investor’s
      rights and obligations under the Purchase Agreement, in which event the Purchase
      Agreement shall not be terminated and the non-terminating Investor shall perform
      all of the obligations of the Investors thereunder and the terminating Investor
      shall receive a written release with respect to its obligations under the
      Purchase Agreement from the non-terminating Investor.

    

    2.  Equity
      Commitment/Option.
      As
      provided in the Purchase Agreement, the Alpine Investor has agreed to purchase
      US$10,000,000 of Preferred Stock at the Closing. The Plainfield Investor has
      agreed to purchase US$40,000,000 of Preferred Stock at the Closing. In addition,
      the Alpine Investor has agreed to purchase a number of additional shares of
      Preferred Stock representing 20% of the amount of the standby commitment
      required to be invested by the Investors pursuant to and in accordance with
      Section 4.13 of the Purchase Agreement (such aggregate number of additional
      shares actually purchased by the Investors, the “Standby
      Shares”),
      and
      the Plainfield Investor has agreed to purchase a number of additional shares
      of
      Preferred Stock representing 80% of the Standby Shares. The Investors further
      agree that the Alpine Investors shall have the first option to purchase Option
      Shares under Section 4.13 of the Purchase Agreement up to an amount so that
      the
      Alpine Investor’s aggregate equity ownership in the Company acquired pursuant to
      the Purchase Agreement, following such purchase of Option Shares and including
      any option issued to Alpine under the Incentive Plan (as defined below), equals
      25% of the fully diluted equity of the Company. In addition, if the Alpine
      Investor has exercised its rights pursuant to the previous sentence prior to
      the
      expiration of the Investors’ right to purchase Option Shares pursuant to Section
      4.13 of the Purchase Agreement, the Alpine Investor shall have the right, at
      any
      time during the 60-day period following such expiration, to purchase from the
      Plainfield Investor, at a price per share that reflects the actual cost paid
      for
      such share by the Plainfield Investor plus any accrued and unpaid dividends
      on
      such share (if applicable), up to the number of shares of Preferred Stock and/or
      Common Stock (allocated among Preferred Stock and Common Stock proportionately
      based on the securities purchased by the Plainfield Investor pursuant to the
      Purchase Agreement) such that the Alpine Investor’s aggregate equity ownership
      in the Company acquired pursuant to the Purchase Agreement, following such
      purchase from the Plainfield Investor and including any option issued to Alpine
      under the Incentive Plan, equals 25% of the fully diluted equity of the
      Company.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  Exchange
      Bonds.
      The
      Plainfield Investor shall tender in the Registered Exchange Offer not less
      than
      $25,000,000 face amount of the Company’s 7.375% Notes.

    

    4.  Additional
      Secured Credit Facility.
      In the
      event of a request by the Company for a credit facility pursuant to Section
      4.12(f) of the Purchase Agreement, the Plainfield Investor will provide such
      a
      facility on the terms provided in such Section and as agreed to between the
      Company and Plainfield.

    

    5.  Representations.
      Each
      of
      the Investors, severally and not jointly, represents and warrants to the other
      parties hereto that (i) it has the requisite power and authority to execute
      and
      deliver this letter agreement and to perform its obligations hereunder; (ii)
      the
      execution and delivery of this letter agreement and the performance by it of
      its
      obligations hereunder have been duly authorized by its governing body and no
      other proceedings on its part are necessary for the execution and delivery
      of
      this letter agreement and the performance of its obligations provided for
      herein; and (iii) this letter agreement has been duly executed and delivered
      by
      it and constitutes a valid and binding obligation of it, enforceable against
      it
      in accordance with its terms.

    

    6.  No
      Reliance.
      None of
      the Investors has relied, and the Investors will continue not to rely, on any
      representation, warranty, statement, act or investment expertise of the other
      in
      making any decision to invest in the Company, take any other action in respect
      of the Company or its investment in the Company, or to participate in any of
      the
      transactions contemplated by the Purchase Agreement or the other Transaction
      Documents. Each of the Investors has and will continue to make independent
      decisions concerning the Company and the Transaction Documents (except as
      specifically provided in Section 1 above). 

    

    7.  Stockholders’
      Agreement.
      Each of
      the Investors agrees to enter into a Stockholders’ Agreement substantially in
      the form attached as Exhibit
      A
      hereto
      (the “Stockholders
      Agreement”)
      and a
      Registration Rights Agreement substantially in the form attached as Exhibit
      B
      hereto
      (the “Registration
      Rights Agreement”)
      upon
      the consummation of the Closing under the Purchase Agreement. 

    

    8.  Cooperation;
      Filings.
      In
      connection with the consummation of the transactions contemplated by the
      Purchase Agreement, each of the Investors agrees to use reasonable efforts
      to
      provide such information and assistance so as to assist in satisfaction of
      the
      obligations pursuant to the Purchase Agreement and any matters required to
      be
      undertaken in connection therewith, including, but not limited to, providing
      information that is necessary with respect to the filing of Schedule 13D (as
      a
“group” to the extent applicable), and seeking clearance with respect to HSR (if
      applicable). Notwithstanding the foregoing, no party shall be required to modify
      any internal relationship or relationship with Affiliates, divest or limit
      its
      rights with respect to any assets, agree to any restriction of its activities
      or
      modify any transaction with affiliates in order to obtain the approval of any
      regulatory agency in order to consummate the transactions contemplated by the
      Purchase Agreement. In connection with the consummation of the transactions
      contemplated by the Purchase Agreement, each of the Investors agrees to use
      all
      reasonable efforts to adopt an Equity Incentive Plan of the Company (the
“Incentive
      Plan”)
      and to
      issue to the Alpine Investor an option under the Incentive Plan, each on the
      terms agreed between the Investors.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    9.  Sharing
      of Fees and Payments.
      In the
      event any payments are made to Purchasers pursuant to Sections 6.2 or 6.3 of
      the
      Purchase Agreement, notwithstanding anything to the contrary in the Purchase
      Agreement, such amounts shall be allocated as follows: (i) first, to each of
      the
      Investors until each such parties have been fully reimbursed for any fees,
      expenses, costs or other out-of-pocket amounts incurred in connection with
      the
      transactions contemplated by the Purchase Agreement (“Transaction
      Fees”)
      and
      (ii) second, to the extent any amounts remain, pro rata to each of the Investors
      based upon their respective portion of the Aggregate Purchase Price under the
      Purchase Agreement. At any time at the request of any Investor, the Investors
      shall make such payments to each other so that all Transaction Fees are borne
      pro rata based upon their respective portions of the Aggregate Purchase
      Price.

    

    Upon
      the
      Termination Date, this letter shall terminate in accordance with its terms
      without any action by the parties hereto, and shall be of no further force
      or
      effect; provided,
      however,
      that
      the obligation to make payments pursuant to Section 10 above shall survive
      until
      all such amounts have been distributed in accordance with Section
      10.

     

    This
      letter agreement may be executed in two or more counterparts, all of which
      shall
      be considered one and the same agreement and shall become effective when one
      or
      more counterparts have been signed by each of the parties and delivered (by
      facsimile or otherwise) to the other party. Any counterpart or other signature
      hereupon delivered by facsimile shall be deemed for all purposes as constituting
      good and valid execution and delivery of this letter agreement by such party.
      This letter agreement constitutes the entire agreement between the parties
      hereto with respect to the transactions contemplated hereunder and supersedes
      all prior arrangements or understandings with respect thereto, written or oral.
      This letter agreement shall not be assignable by any Investor to any Person,
      other than an affiliate of such Investor, without the prior written consent
      of
      the other parties hereto. This letter agreement is solely for the benefit of
      the
      parties hereto and is not intended to create any rights in any third parties
      other than permitted assignees.

    

    None
      of
      the parties nor their representatives or affiliates shall make any public
      announcement with respect to this letter agreement or the transactions
      contemplated hereby, except as required by applicable law, and no such public
      announcement (including any required filing that is publicly available) shall
      be
      made, to the extent reasonably practicable, without prior consultation with
      the
      other parties hereto.

    

    This
      letter agreement shall be governed by the laws of the State of New York, without
      regard to the principles of conflicts of laws thereof that would cause the
      application of the laws of another jurisdiction. 

     

    *
      * * * *
      * *

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Please
      acknowledge your agreement and consent to the foregoing by signing as indicated
      below and returning an executed copy of this letter agreement to the
      undersigned.

     

    
      	 	 	 
	 	Plainfield
              Special Situations Master Fund Limited
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:

    

     

    Agreed
      to
      and acknowledged by:

    

    THE
      ALPINE GROUP, INC.

    

    
      
        	 	 	 	 	 
	By:	 	 	 	 
	 	
                
Name:	 	 	
              
	 	Title:	 	 	 

      

    

     

     

    
      
         

      

      
        4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]