Document:

matechexh10_23.htm

    
      
 

     

    Exhibit 10.23

     

    PROMISSORY
NOTE

    
      	$200,000	
              March 30, 2007

              (Date)

            

    

     

     

    
                 
FOR VALUE RECEIVED, Material Technologies, Inc., a Delaware corporation, its
assigns and successors (“MaTech” or the “Company”), hereby promises to pay to
the order of Nathan J. Esformes, (the “Holder”), in immediately available funds,
the total principal sum of Two Hundred Thousand Dollars ($200,000) pursuant to
the terms hereof.  The principal hereof and any accrued but unpaid interest
shall be due and payable on the date which is two (2) years from the date
hereof.  Payment of all amounts due hereunder shall be made at the address
of the Holder provided for in Section 4 hereof.  This Note shall bear
interest at the rate of eight percent (8%) per annum.

       

    

                1.       PREPAYMENT. 
The Company may, at its option, at any time and from time to time, prepay all or
any part of the principal balance of this Note, without penalty or
premium.

     

                2.       TRANSFERABILITY. 
This Note shall not be transferred, pledged, hypothecated, or assigned by the
Company or the Holder without the express written consent of the other
party.

     

                3.       DEFAULT. 
The occurrence of any one of the following events shall constitute an Event of
Default:

     

                          (a)       The
non-payment, when due, of any principal or interest pursuant to this
Note;

     

                          (b)       The
material breach of any representation or warranty in this Note.  In the
event the Holder becomes aware of a breach of this Section 3(b), the Holder
shall notify the Company in writing of such breach and the Company shall have
five business days after notice to cure such breach;

     

                          (c)      
The breach of any covenant or undertaking, not otherwise provided for in this
Section 3;

     

                          (d)      
The commencement by the Company of any voluntary proceeding under any
bankruptcy, receivership, dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or the adjudication of the
Company as insolvent or bankrupt by a decree of a court of competent
jurisdiction; or the petition or application by the Company for, acquiescence
in, or consent by the Company to, the appointment of any receiver or trustee for
the Company or for all or a substantial part of the property of the Company; or
the assignment by the Company for the benefit of creditors; or the written
admission of the Company of its inability to pay its debts as they mature;
or

    
 

    
      
         

      

      
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                          (e)       The
commencement against the Company of any proceeding relating to the Company under
any bankruptcy, receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, provided, however, that the
commencement of such a proceeding shall not constitute an Event of Default
unless the Company consents to the same or admits in writing the material
allegations of same, or said proceeding shall remain undismissed for 20 days; or
the issuance of any order, judgment or decree for the appointment of a receiver
or trustee for the Company or for all or a substantial part of the property of
the Company, which order, judgment or decree remains undismissed for 20 days; or
a warrant of attachment, execution, or similar process shall be issued against
any substantial part of the property of the Company.

     

                Upon
the occurrence of any Default or Event of Default, the Holder, may, by written
notice to the Company, declare all or any portion of the unpaid principal amount
due to Holder, together with all accrued interest thereon, immediately due and
payable, in which event it shall immediately be and become due and payable,
provided that upon the occurrence of an Event of Default as set forth in
paragraph (d) or paragraph (e) hereof, all or any portion of the unpaid
principal amount due to Holder, together with all accrued interest thereon,
shall immediately become due and payable without any such
notice.

     

                4.       NOTICES. 
Notices to be given hereunder shall be in writing and shall be deemed to have
been sufficiently given if delivered personally or sent by overnight courier, or
by facsimile transmission.  Notice shall be deemed to have been received on
the date and time of personal or overnight delivery or facsimile transmission,
if received during normal business hours of the recipient; if not, then on the
next business day. 

     

    
      	 	
              Notices to
      the Company shall be sent
      to: 

            	
              Material
      Technologies, Inc.

              11661
      San Vicente Boulevard
Suite 707
Los Angeles , California  
      90049
Facsimile (310) 473-3177

            
	 	 	 
	 	Notices to
      the Holder shall be sent to:	PO Box
      1389
Palmetto , Florida 34220
Facsimile
      No.:  (___)                           
      

    

     

                5.       JURISDICTION
AND SERVICE OF PROCESS.  Any action brought to enforce the
terms of this Note will be brought in the appropriate federal or state court
having jurisdiction over the County of Los Angeles , State of California ,
United States of America .

     

                6.       GOVERNING
LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO
THE RULES OR PRINCIPLES OF CONFLICTS OF LAW.

     

     

    
      
         

      

      
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                7.       ATTORNEYS
FEES.  In the event the Holder hereof shall refer this Note
to an attorney to enforce the terms hereof, the Company agrees to pay all the
costs and expenses incurred in attempting or effecting the enforcement of the
Holder’s rights, including reasonable attorney's fees, whether or not suit is
instituted.

     

                8.       MODIFICATION;
WAIVER. No modification or waiver of any provision of this
Note or consent to departure therefrom shall be effective unless in writing and
approved by the Company and the Holder. 

     

                IN
WITNESS WHEREOF, the Company has signed and sealed this Note and delivered it as
of March 30, 2007.

     

     

    
      	
              “The
      Company”

            	 	
              “Holder”

            
	
                 

            	 	

               

            
	
              Material
      Technologies, Inc.,

            	 	

               

            
	
              a Nevada
      corporation

            	 	
               

            
	
                

            	 	

               

            
	
                 

            	 	

               

            
	
              /s/ 
      Robert M.
      Bernstein                       
      

            	 	
              /s/ 
      Nathan J.
      Esformes                        
      

            
	
              By:      
      Robert M. Bernstein

            	 	
              By:      
      Nathan J. Esformes

            
	
              Its:       
      President

            	 	

               

            

    

     

     

     

     

     

    
      
         

      

      
        Page 3 of
3matechexh10_24.htm

    
      

    

     

    Exhibit 10.24

     

     

    AMENDMENT DATED OCTOBER
11, 2007 TO
CLASS A SENIOR SECURED
CONVERTIBLE DEBENTURE

     

    
      The following
provisions are hereby incorporated into, and are hereby made a part of, that
certain Class A Senior Secured Convertible Debenture dated September 23, 2003,
and that certain Amendment to Class A Senior Secured Convertible Debenture dated
October 27, 2006 (collectively, the “Debenture”) between Material Technologies,
Inc., a Delaware corporation (the “Company”) and Palisades Capital, LLC, a
Nevada limited liability company (the “Holder”) and such provisions are
effective retroactively to the date of the Debenture (the “Effective
Date”).  All capitalized terms in this Amendment to Debenture, to the
extent not otherwise defined herein, shall have the meanings assigned to such
terms in the Debenture.

1.       The
Maturity Date shall be extended to December 31,
2009.

2.       All other provisions of
the Debenture remain
unchanged.

          IN
WITNESS WHEREOF, the Parties have caused this Amendment to Debenture to
be duly executed and delivered as of October 11, 2007.

        
          	COMPANY: 	 	 	HOLDER:	 
	 	 	 	 	 
	
                  MATERIAL TECHNOLOGIES,
      INC., 

                  a Delaware
      corporation

                	 	 	
                  PALISADES
      CAPITAL, LLC,

                  a Nevada
      limited liability company

                	 
	 	 	 	 	 
	 	 	 	 	 
	
                  /s/ Robert M.
      Bernstein

                	 	 	
                  /s/ Reid
      Breitman

                	 
	
                  By: 
      Robert M. Bernstein

                	 	 	
                  By: 
      Reid Breitman

                	 
	
                  Its: 
      Chief Executive Officer 

                	 	 	
                  Its: 
      Presidentmatechexh10_25.htm

    
      

    

     

    Exhibit 10.25

    

 

     

    
      ACQUISITION
AGREEMENT

AMONG

MATERIAL TECHNOLOGIES, INC.,

BRIDGE TESTING
CONCEPTS, INC.,

AND

BRENT PHARES

       

    

     

     

     

     

     

    

 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    TABLE
OF CONTENTS

    
 

    
      	
              ARTICLE 1
SALE
      AND PURCHASE OF THE SHARES

            
	  	 	
            
	1.1	Issuance of the
      Shares	
              1

            
	1.2	Consideration	
              1

            
	1.3	Lockup	
              2

            
	  	 	
            
	
              ARTICLE
      2
REPRESENTATIONS AND WARRANTIES

            
	  	 	
            
	2.1	Representations and
      Warranties of the Parties	
              2

            
	 	2.1.1   
      Organization, Standing, Power	
              2

            
	 	2.1.2   
      Authority	
              3

            
	 	2.1.3   
      Capitalization of the Parties	
              3

            
	 	2.1.4   
      Subsidiaries	
              4

            
	 	2.1.5   
      No Defaults	
              4

            
	 	2.1.6   
      Governmental Consents	
              5

            
	 	2.1.7   
      Financial Statements	
              5

            
	 	2.1.8   
      Absence of Undisclosed Liabilities	
              5

            
	 	2.1.9   
      Absence of Changes	
              5

            
	 	2.1.10  Patents
      and Trademarks	
              6

            
	 	2.1.11  Certain
      Agreements	
              6

            
	 	2.1.12 
      Compliance with Other Instruments	
              6

            
	 	2.1.1.13 
      Employee Benefit Plans	
              7

            
	 	2.1.14  Other
      Personal Property	
              7

            
	 	2.1.15 
      Properties and Liens	
              7

            
	 	2.1.16 
      Inventory	
              7

            
	 	2.1.17  Major
      Contracts	
              7

            
	 	2.1.18 
      Questionable Payments	
              8

            
	 	2.1.19  Recent
      Transactions	
              9

            
	 	2.1.20  Leases
      in Effect	
              9

            
	 	2.1.21 
      Taxes	
              9

            
	 	2.1.22 
      Disputes and Litigation	
              9

            
	 	2.1.23 
      Compliance with Laws	
              10

            
	 	2.1.24  Related
      Party Transactions	
              10

            
	 	2.1.25  Minute
      Books	
              10

            
	 	2.1.26 
      Disclosure	
              10

            
	 	2.1.27 
      Reliance	
              11

            
	2.2	Representations and
      Warranties of Seller	
              11

            
	2.3	Representations and
      Warranties of Buyer	
              11

            

    

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              ARTICLE
      3
CONDITIONS PRECEDENT

            
	  	 	
            
	3.1	Conditions to Each
      Party’s Obligations	
              12

            
	3.2	Conditions to
      Seller's Obligations	
              12

            
	3.3	Conditions to
      Buyer's Obligations	
              13

            
	  	 	
            
	
              ARTICLE 4
CLOSING
      AND DELIVERY OF DOCUMENTS

            
	  	 	
            
	4.1	Time and
    Place	
              14

            
	4.2	Deliveries by
      Seller	
              14

            
	4.3	Deliveries by the
      Company	
              14

            
	4.4	Deliveries by
      Buyer	
              15

            
	  	 	
            
	
              ARTICLE
      5
INDEMNIFICATION

            
	  	 	
            
	5.1	Seller and the
      Company's Indemnity Obligations	
              15

            
	5.2	Buyer's Indemnity
      Obligations	
              15

            
	  	 	 
	
              ARTICLE
      6
DEFAULT, AMENDMENT AND WAIVER

            
	  	 	
            
	6.1	Default	
              16

            
	6.2	Waiver and
      Amendment	
              16

            
	  	 	
            
	
              ARTICLE
      7
MISCELLANEOUS

            
	  	 	
            
	7.1	Expenses	
              17

            
	7.2	Notices	
              17

            
	7.3	Entire
      Agreement	
              18

            
	7.4	Survival of
      Representations	
              18

            
	7.5	Incorporated by
      Reference	
              18

            
	7.6	Remedies
      Cumulative	
              18

            
	7.7	Execution of
      Additional Documents	
              18

            
	7.8	Costs and
    Fees	
              18

            
	7.9	Choice of
    Law	
              19

            
	7.10	Jurisdiction	
              19

            
	7.11	Attorneys’
      Fees	
              19

            
	7.12	Binding Effect and
      Assignment	
              19

            
	7.13	Counterparts;
      Facsimile Signatures	
              19

            
	7.14	Conflict
      Waiver	
              19

            

    

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
Table
of Contents
Table
of Schedules and Exhibits

    
      Exhibit
A                     
Intellectual Property of the Company

Exhibit
B                     
Material Technologies, Inc. Disclosure Schedule

Exhibit
C                     
Bridge Testing Concepts, Inc. Disclosure Schedule

Exhibit
D                     
Brent Phares Disclosure Schedule

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      ACQUISITION
AGREEMENT

       

    

    
      THIS
ACQUISITION AGREEMENT (the “Agreement”), dated September 28, 2007, is by and
among MATERIAL
TECHNOLOGIES, INC., a Delaware corporation (the “Buyer”), BRIDGE
TESTING CONCEPTS, INC., a California corporation (the “Company”), and
BRENT
PHARES, an individual (the “Seller”) (individually, a “Party”;
collectively, the “Parties”).

       

    

    
      RECITALS

       

    

    
                A.       The
capital stock of the Company consists of 10,000,000 authorized shares of Common
Stock, of which 5,100,000 are currently issued and outstanding and held by
Seller (the
“Shares”).

          B.       Upon
the terms and conditions set forth below, Seller desires to sell all of the
Company Shares to Buyer, such that, following such transaction, the Company will
be a 100% owned subsidiary of
Buyer.

          C.       For
United States federal income tax purposes, the Parties to this Agreement intend
that the transactions described in this Agreement shall qualify as a
“reorganization” within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the “Code”), and that this Agreement shall be, and is
hereby, adopted as a “plan of reorganization” for purposes of Section 368(a) of
the
Code.

          NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the Parties hereto
agree as follows:

       

    

    
      ARTICLE
1
SALE
AND PURCHASE OF THE SHARES

       

    

    
                1.1       Issuance
of the Shares.  Subject to the terms and conditions herein set
forth, and on the basis of the representations, warranties and agreements herein
contained, Seller shall sell and transfer to Buyer the Shares which constitute
100% of the issued and outstanding common stock of the
Company.

          1.2       Consideration. 
In consideration for this Agreement, the Parties shall provide the
following:

                      1.2.1.  
Buyer
Assumption of Liabilities.  Any indebtedness of the Company incurred
through the Closing (as defined in Article 4 of this Agreement) shall be the
responsibility of Seller.  Any indebtedness of the Company incurred after
the Closing shall be the responsibility of
Buyer.

                      1.2.2.  
Buyer
Acquisition of Intellectual Property.  Subject to the terms and
conditions herein set forth, and on the basis of the representations, warranties
and agreements herein contained, Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, for the purchase price as set forth in Section
1.2.3, any and all intellectual property of Seller and the 

    

     

     

    
      
        
        

      

      
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Company, including but
not limited to the intellectual property described on Exhibit
A, and all intellectual property used in the business of the Company,
including all graphics and logos; all domain names and URL’s; any proprietary
software and its source code; all existing content and HTML files; all branding
and trademarks; all trade names; all services marks; all copywritten material;
all patents; and all products and proceeds of the foregoing, in any form
whatsoever and wheresoever located (collectively the “Intellectual
Property”).

                      1.2.3   
Purchase
Price.  The purchase price for the Shares shall
be:

                                  (a)       1,500,000
shares of common stock of Buyer (the “Buyer’s Stock”);
and

                                  (b)       $37,500
payable in
cash.

          1.3       Lockup. 
Seller hereby agrees (i) not to sell, assign, transfer, convey, hypothecate,
alienate or otherwise dispose of any of the Buyer’s Stock, or any right or
interest therein, voluntarily or involuntarily, by operation of law or
otherwise, or make any offer or agreement relating to any of the foregoing, for
a period of two years from the date of this Agreement (the “Lockup Period”), and
(ii) authorizes the Buyer during the Lockup Period to cause the transfer agent
to decline to transfer and/or to note stop transfer restrictions on the transfer
books and records of the Buyer with respect to the Buyer’s Stock, and, in the
case of any such Buyer’s Stock for which Seller is the beneficial but not the
record holder, agrees to cause the record holder to cause the transfer agent to
decline to transfer and/or to note stop transfer restrictions on such books and
records with respect to such Buyer’s Stock.

    
      ARTICLE
2
REPRESENTATIONS
AND WARRANTIES

       

    

    
                2.1       Representations
and Warranties of the Parties.  Except as disclosed in a document
referring specifically to the representations and warranties in this Agreement
that identifies by section number the section and subsection to which such
disclosure relates and is delivered by each Party to the others prior to the
execution of this Agreement (the “Disclosure Schedules”), the Parties represent
and warrant each to the other, as of the date hereof and as of the Closing, as
follows:

                      2.1.1   
Organization,
Standing,
Power.

                                  (a)       Buyer. 
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Delaware.  It has all requisite corporate
power, franchises, licenses, permits, and authority to own its properties and
assets and to carry on its business as it has been and is being conducted. 
Buyer is duly qualified and in good standing to do business in each jurisdiction
in which a failure to so qualify would have a Material Adverse Effect (as
defined below) on Buyer.  For purposes of this Agreement, the term
“Material Adverse Effect” means any change or effect that, individually or when
taken together with all other such changes or effects which have occurred prior
to the date of determination of the occurrence of the Material Adverse Effect,
is or is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition, or results of operations of
the entity.

    

     

     

    
      
        
        

      

      
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                                  (b)       The
Company.  The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the state of California. 
It has all requisite corporate power, franchises, licenses, permits, and
authority to own its properties and assets and to carry on its business as it
has been and is being conducted. The Company is duly qualified and in good
standing to do business in each jurisdiction in which a failure to so qualify
would have a Material Adverse Effect (as defined above) on the
Company.

                      2.1.2   
Authority. 
The Parties have all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby.  The execution and
delivery by the Parties of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the parts of the Parties, including the approval of the Board of
Directors of each Party.  This Agreement has been duly executed and
delivered by the Parties to each other and constitutes a valid and binding
obligation of each Party enforceable in accordance with its terms, except that
such enforceability may be subject to: (a) bankruptcy, insolvency,
reorganization, or other similar laws relating to enforcement of creditors’
rights generally; and (b) general equitable principles.  Subject to the
satisfaction of the conditions set forth in Article 3 below, 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 (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation, or acceleration of any obligation, or
to loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge, or other encumbrance on any assets of any of the Parties (any
such conflict, violation, default, right, loss, or creation being referred to
herein as a “Violation”) pursuant to: (i) any provision of the organization
documents of the Parties; or  (ii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, lease, or other agreement, or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to each of the Parties’ respective
properties or assets, other than in the case of  any such Violation which
individually or in the aggregate would not have a Material Adverse Effect on any
of the
Parties.

                      2.1.3   
Capitalization
of the
Parties.

                                  (a)       The
Company.  The capital stock of the Company consists of 10,000,000
authorized shares of Common Stock, of which 5,100,000 are currently issued and
outstanding and held by
Seller.

                                  (b)       Upon
issuance pursuant to the terms of this Agreement, the Shares will be duly and
validly issued, fully paid and nonassessable, and issued in accordance with the
registration or qualification provisions of the Securities Act of 1933, as
amended (the “Act”), and any relevant state securities laws or pursuant to valid
exemptions therefrom.  The Shares are free of restrictions on transfer
other than restrictions on transfer as set forth in the Disclosure Schedules and
under applicable state and federal securities laws.  The Shares shall be
issued in a private transaction and consequently will be deemed to be
“Restricted Securities” as set forth in Rule 144 promulgated under the
Act.

                                  (c)       Except
as set forth on the Disclosure Schedules, there are no options, warrants,
rights, calls, commitments, plans, contracts, or other agreements of any
character granted or issued by any of the Parties which provide for the
purchase, issuance, or transfer of any additional shares of the capital stock of
the Parties nor are there any outstanding securities 

     

     

    
      
        
        

      

      
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granted or issued by any of the Parties that are convertible into any
shares of the equity securities of the Parties, and none is authorized. None of
the Parties have outstanding any bonds, debentures, notes, or other indebtedness
the holders of which have the right to vote (or convertible or exercisable into
securities having the right to vote) with holders of the Parties' capital stock
on any
matter.

                                  (d)       Except
as set forth on the Disclosure Schedules, none of the Parties are a party or
subject to any agreement or understanding, and, to the best of the Parties'
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a shareholder or director of any of the
Parties.

                                  (e)       Except
as set forth on the Disclosure Schedules, none of the Parties have granted or
agreed to grant any registration rights, including piggyback rights, to any
person or
entity.

                      2.1.4   
Subsidiaries. 
“Subsidiary” or “Subsidiaries” means all corporations, trusts, partnerships,
associations, joint ventures, or other Persons, as defined below, of which any
of the Parties or any Subsidiary of any of the Parties owns not less than 20% of
the voting securities or other equity or of which any of the Parties or any
Subsidiary of any of the Parties possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies, whether through
ownership of voting shares, management contracts, or otherwise.  “Person”
means any individual, corporation, trust, association, partnership,
proprietorship, joint venture, or other entity.  Prior to the Closing of
this Agreement, there are no Subsidiaries of any of the Parties other than as
disclosed herein or disclosed on the Disclosure
Schedules.

                      2.1.5   
No
Defaults.  None of the Parties has received notice that they would
be, with the passage of time, in default or violation of any term, condition, or
provision of: (i) their Articles of Incorporation or Bylaws; (ii) any judgment,
decree, or order applicable to any of the Parties; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
or other instrument to which any of the Parties is now a party or by which they
or any of their properties or assets may be bound, except for defaults and
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on any of the
Parties.

                      2.1.6   
Governmental
Consents.  Any consents, approvals, orders, or authorizations of or
registrations, qualifications, designations, declarations, or filings with or
exemptions by (collectively “Consents”), any court, administrative agency, or
commission, or other federal, state, or local governmental authority or
instrumentality, whether domestic or foreign (each a “Governmental Entity”),
which may be required by or with respect to any of the Parties in connection
with the execution and delivery of this Agreement or the consummation by the
Parties of the transactions contemplated hereby, except for such Consents which
if not obtained or made would not have a Material Adverse Effect on any of the
Parties for the transactions contemplated by this Agreement, are the
responsibility of the respective Party.  Each of the Parties hereby
represents and warrants that such Consents have been obtained by them, if
necessary.

     

    

 

    
      
        
        

      

      
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                      2.1.7   
Financial
Statements.  The Company does not have an outside independent
auditing firm.  The Company will furnish Buyer with any copies it may have,
if there be any, of its financial statements (the “Financial Statements”), which
will fairly present the financial positions of the Company as at the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring audit
adjustments not material in scope or amount).  To the best of the Company's
directors' knowledge and belief, there has been no change in the Company's
accounting policies or the methods of making accounting estimates or changes in
estimates that are material to the Financial Statements, except as described in
the notes
thereto.

                      2.1.8   
Absence
of Undisclosed Liabilities.  To the best of their knowledge and
belief, none of the Parties have any liabilities or obligations (whether
absolute, accrued, or contingent) except: (i) liabilities that are accrued or
reserved against in their respective Balance Sheets; or (ii) additional
liabilities reserved against since the date of the Financial Statements that (x)
have arisen in the ordinary course of business; (y) are accrued or reserved
against on their books and records; and (z) amount in the aggregate to less than
$10,000.

                      2.1.9   
Absence
of Changes.  To the best of their knowledge and belief, since the
date of the Financial Statements, the Parties have conducted their businesses in
the ordinary course and there has not been: (i) any Material Adverse Effect on
the business, financial condition, liabilities, or assets of the Parties or any
development or combination of developments of which management of the Parties
has knowledge which is reasonably likely to result in such an effect; (ii) any
damage, destruction, or loss, whether or not covered by insurance, having a
Material Adverse Effect on the Parties; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock, or
property) with respect to the capital stock of the Parties; (iv) any increase or
change in the compensation or benefits payable or to become payable by the
Parties to any of their employees, except in the ordinary course of business
consistent with past practice; (v) any sale, lease, assignment, disposition, or
abandonment of a material amount of property of the Parties, except in the
ordinary course of business; (vi) any increase or modification in any bonus,
pension, insurance, or other employee benefit plan, payment, or arrangement made
to, for, or with any of their employees; (vii) the granting of stock options,
restricted stock awards, stock bonuses, stock appreciation rights, and similar
equity based awards; (viii) any resignation or termination of employment of any
office of the Parties; and the Parties, to the best of their knowledge, do not
know of the impending resignation or termination of employment of any such
office; (ix) any merger or consolidation with another entity, or acquisition of
assets from another entity except in the ordinary course of business; (x) any
loan or advance by the Parties to any person or entity, or guaranty by the
Parties of any loan or advance; (xi) any amendment or termination of any
contract, agreement, or license to which any of the Parties is a party, except
in the ordinary course of business; (xii) any mortgage, pledge, or other
encumbrance of any asset of any of the Parties; (xiii) any waiver or release of
any right or claim of the Parties, except in the ordinary course of business;
(xiv) any write off as uncollectible any note or account receivable or portion
thereof; or (xv) any agreement by any of the Parties to do any of the things
described in this Section
2.1.9.

                      2.1.10 
Intellectual
Property.  The Parties each have sufficient title and ownership of
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights, and processes (collectively, the
“Entitlements”) necessary for their businesses as now conducted without any
conflict with or infringement of the rights of others.  There are no

     

    
 

    
      
        
        

      

      
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outstanding options, licenses, or
agreements of any kind relating to the Entitlements, nor are any of the Parties
bound by or a party to any options, licenses, or agreements of any kind with
respect to the Entitlements of any other person or entity.  None of the
Parties has received any communications alleging that they have violated or, by
conducting their businesses as proposed, would violate any of the Entitlements
of any other person or entity.  None of the Parties are aware that any of
their employees is obligated under any contract (including licenses, covenants,
or commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would interfere
with the use of his or her best efforts to promote the interests of the Parties
or that would conflict with each of the Parties' respective business as proposed
to be conducted.  Neither the execution or delivery of this Agreement, nor
the carrying on of each of the Parties' respective business by their respective
employees, nor the conduct of each of the Parties' respective business as
proposed, will, to the best of the Parties' knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees
is now obligated.  None of the Parties believe that it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by any of the
Parties.

                      2.1.11 
Certain
Agreements.  To the best of the Parties' knowledge and belief,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) result in any payment (including,
without limitation, severance, unemployment compensation, parachute payment,
bonus, or otherwise), becoming due to any director, employee, or independent
contractor of any of the Parties, from any other Party under any agreement or
otherwise; (ii) materially increase any benefits otherwise payable under any
agreement; or (iii) result in the acceleration of the time of payment or vesting
of any such
benefits.

                      2.1.12 
Compliance
with Other Instruments.  To the best of the Parties' knowledge and
belief, none of the Parties are in violation or default of any provision of
their respective articles of incorporation or bylaws, or of any instrument,
judgment, order, writ, decree, or contract to which they are a party or by which
they are bound, or, to the best of their knowledge, of any provision of any
federal or state statute, rule, or regulation which may be applicable to them.
The execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in any such violation or
be in conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision, instrument,
judgment, order, writ, decree, or contract, or an event that results in the
creation of any lien, charge, or encumbrance upon any assets of any Party or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to any Party, its
businesses, or operations, or any of its assets or
properties.

                      2.1.13 
Employee
Benefit Plans.  The Parties have no employee benefit plans
(including without limitation all plans which authorize the granting of stock
options, restricted stock, stock bonuses, or other equity based awards) covering
active, former, or returned employees, other than as listed in the Disclosure
Schedules.

                      2.1.14 
Other
Personal Property.  The books and records of each of the Parties
contain a complete and accurate description, and specify the location, of all
trucks, automobiles,

     

    
 

    
      
        
        

      

      
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machinery, equipment, furniture, supplies, and other tangible personal
property owned by, in the possession of, or used by the Parties in connection
with their businesses. Except as set forth in the Disclosure Schedules, no
personal property used by the Parties in connection with their businesses is
held under any lease, security agreement, conditional sales contract, or other
title retention or security
arrangement.

                      2.1.15 
Properties
and Liens.  Except as reflected in the Financial Statements or as
set forth in the Disclosure Schedules, and except for statutory mechanics’ and
material men’s liens, liens for current taxes not yet delinquent, the Parties
own, free and clear of any liens, claims, charges, options, or other
encumbrances, all of their tangible and intangible property, real and personal,
whether or not reflected in the Financial Statements (except that sold or
disposed of in the ordinary course of business since the date of such
statements) and all such property acquired since the date of such
statements.  All real property and tangible personal property of the
Parties is in good operating condition and repair, ordinary wear and tear
excepted.

                      2.1.16 
Inventory. 
In reliance upon their respective auditing firms, the inventories of the Parties
shown on the Financial Statements and inventories acquired by them subsequent to
the date of the Financial Statements consist solely of items of a quality and
quantity usable and salable in the normal course of business, with the exception
of obsolete materials and materials below standard quality, all of which have
been written down in the books of the Parties to net realizable market value or
have been provided for by adequate reserves.  Except for sales made in the
ordinary course of business, all inventory is the property of the Parties. 
No items are subject to security interests, except as set forth in the
Disclosure Schedules.  The value of the inventories has been determined on
a first-in, first-out basis consistent with prior
years.

                      2.1.17 
Major
Contracts.  Except as otherwise disclosed in the Disclosure
Schedules, none of the Parties is a party or subject
to:

                                  (a)       Any
union contract, or any employment contract or arrangement providing for future
compensation, written or oral, with any officer, consultant, director, or
employee which is not terminable by the Party on 30 days’ notice or less without
penalty or obligations to make payments related to such
termination;

                                  (b)       Any
joint venture contract, partnership agreement or arrangement or any other
agreement which has involved or is expected to involve a sharing of revenues
with other persons or a joint development of products with other
persons;

                                  (c)       Any
manufacture, production, distribution, sales, franchise, marketing, or license
agreement, or arrangement by which products or services of the Party are
developed, sold, or
distributed;

                                  (d)       Any
material agreement, license, franchise, permit, indenture, or authorization
which has not been terminated or performed in its entirety and not renewed which
may be, by its terms, accelerated, terminated, impaired, or adversely affected
by reason of the execution of this Agreement, or the consummation of the
transactions contemplated hereby or thereby;

     

    
 

    
      
        
        

      

      
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                                  (e)       Any
material agreement, contract, or commitment that requires the consent of another
person for the Party to enter into or consummate the transactions contemplated
by this
Agreement;

                                  (f)       Except
for object code license agreements for any of the Party's executed in the
ordinary course of business, any indemnification by the Party with respect to
infringements of proprietary rights;
or

                                  (g)       Any
contract containing covenants purporting to materially limit the Party's freedom
to compete in any line of business in any geographic area.

All contracts,
plans, arrangements, agreements, licenses, franchises, permits, indentures,
authorizations, instruments, and other commitments of the Parties are valid and
in full force and effect and to the best of their knowledge, neither the Parties
themselves nor any other party thereto, breached any material provisions of, or
is in default in any material respect under the terms
thereof.

                      2.1.18 
Questionable
Payments.  None of the Parties, nor to their knowledge any director,
officer, employee, or agent of any of the Parties, has: (i) made any payment or
provided services or other favors in the United States or any foreign country in
order to obtain preferential treatment or consideration by any Governmental
Entity with respect to any aspect of the business of the Parties; or (ii) made
any political contributions that would not be lawful under the laws of the
United States, any foreign country or any jurisdiction within the United States
or any foreign country.  None of the Parties, nor to their knowledge any
director, officer, employee, or agent of any of the Parties, has been or is the
subject of any investigation by any Governmental Entity in connection with any
such payment, provision of services, or
contribution.

                      2.1.19 
Recent
Transactions.  None of the Parties, nor to their knowledge any
director, officer, employee, or agent of any of the Parties, is participating in
any discussions and do not intend to engage in any discussion: (i) with any
representative of any corporation or corporations regarding the consolidation or
merger of any of the Parties with or into any such corporation or corporations;
(ii) with any corporation, partnership, association, or other business entity or
any individual regarding the sale, conveyance, or disposition of all or
substantially all of the assets of the Parties or a transaction or series of
related transactions in which more than 50% of the voting power of any of the
Parties is disposed of; or (iii) regarding any other form of acquisition,
liquidation, dissolution, or winding up of the
Parties.

                      2.1.20 
Leases
in Effect.  All real property leases and subleases as to which any
of the Parties is a party and any amendments or modifications thereof (each a
“Lease” and, collectively, the “Leases”) are valid, in full force and effect and
enforceable, and there are no existing defaults on the part of any Party and no
Party has received nor given notice of default or claimed default with respect
to any Lease, nor is there any event that with notice or lapse of time, or both,
would constitute a default thereunder.  Except as set forth on the
Disclosure Schedules, no consent is required from any Party under any Lease in
connection with the completion of the transactions contemplated by this
Agreement, and none of the Parties have received notice that any party to any
Lease intends to cancel, terminate, or refuse to renew the same or to exercise
any option or other right

     

    
 

    
      
        
        

      

      
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thereunder, except where the
failure to receive such consent, or where such cancellation, termination, or
refusal would not have a Material Adverse Effect on the
Parties.

                      2.1.21 
Taxes. 
Except as set forth elsewhere in this Agreement or in the Disclosure
Schedules:

                                  (a)       All
taxes, assessments, fees, penalties, interest, and other governmental charges
with respect to the Parties which have become due and payable by April 15, 2007
have been paid in full or adequately reserved against by the Parties, and all
taxes, assessments, fees, penalties, interest, and other governmental charges
which have become due and payable subsequent to April 15, 2007 have been paid in
full or adequately reserved against on their books of account and such books are
sufficient for the payment of all unpaid federal, state, local, foreign, and
other taxes, fees, and assessments (including without limitation, income,
property, sales, use, franchise, capital stock, excise, added value, employees'
income withholding, social security, and unemployment taxes), and all interest
and penalties thereon with respect to the periods then ended and for all periods
prior
thereto;

                                  (b)       There
are no agreements, waivers, or other arrangements providing for an extension of
time with respect to the assessment of any tax or deficiency against the
Parties, nor are there any actions, suits, proceedings, investigations, or
claims now pending against the Parties in respect of any tax or assessment, or
any matters under discussion with any federal, state, local, or foreign
authority relating to any taxes or assessments, or any claims for additional
taxes or assessments asserted by any such authority;
and

                                  (c)       There
are no liens for taxes upon the assets of the Parties except for taxes that are
not yet payable.  The Parties have withheld all taxes required to be
withheld in respect of wages, salaries, and other payments to all employees,
officers, and directors and timely paid all such amounts withheld to the proper
taxing
authority.

                      2.1.22 
Disputes
and Litigation  Except as disclosed in the Disclosure Schedules,
there is no suit, claim, action, litigation, or proceeding pending or, to the
knowledge of the Parties, threatened against or affecting any of the Parties,
respectively, or any of their properties, assets, or business or to which any of
the Parties is a party, in any court or before any arbitrator of any kind or
before or by any Governmental Entity, which would, if adversely determined,
individually or in the aggregate, have a Material Adverse Effect on the Parties,
nor is there any judgment, decree, injunction, rule, or order of any
Governmental Entity or arbitrator outstanding against any of the Parties,
respectively, and having, or which, insofar as reasonably can be foreseen, in
the future could have, any such effect.  To the knowledge of the Parties,
there is no investigation pending or threatened against any of the respective
Parties before any foreign, federal, state, municipal, or other governmental
department, commission, board, bureau, agency, instrumentality, or other
Governmental
Entity.

                      2.1.23 
Compliance
with Laws.  Except as set forth in the Disclosure Schedules, to the
best of their knowledge and belief, none of the Parties' businesses is being
conducted in violation of, or in a manner which could cause liability under any
applicable law, rule, or regulation, judgment, decree, or order of any
Governmental Entity, except for any violations or practices, which, individually
or in the aggregate, have not had and will not have a Material Adverse Effect on
the Parties.  The Parties each have all franchises, permits, licenses, and
any

    
 

    
      
        
        

      

      
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similar authority necessary for
the conduct of their business as now being conducted by them, the lack of which
could materially and adversely affect the business, properties, prospects, or
financial condition of the Parties and believes they can obtain, without undue
burden or expense, any similar authority for the conduct of their business as it
is planned to be conducted.  To the best of their respective knowledge and
belief, none of the Parties are in default in any material respect under any of
such franchises, permits, licenses, or other similar
authority.

                      2.1.24 
Related
Party Transactions.  To the best of each of the Parties' knowledge
and belief, no employee, officer, or director of any Party nor member of his or
her immediate family is indebted to that Party or any other Party, nor is any
Party indebted (or committed to make loans or extend or guarantee credit) to any
of them.  To the best of each of the Parties’ knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which any of the Parties is affiliated or with which any of the Parties has
a business relationship, or any firm or corporation that competes with the
Parties, except that employees, officers, or directors of the Parties and
members of their immediate families may own stock in publicly traded companies
that may compete with the Parties.  To the best knowledge of each of the
Parties, respectively, no member of the immediate family of any officer or
director of any of the Parties is directly or indirectly interested in any
material contract with any of the
Parties.

                      2.1.25 
Minute
Books.  The minute books of the Company provided to Buyer contain a
complete summary of all meetings of directors and shareholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material
respects.

                      2.1.26 
Disclosure. 
No representation or warranty made by any of the Parties in this Agreement, nor
any document, written information, statement, financial statement, certificate,
or exhibit prepared and furnished or to be prepared and furnished by the Parties
or their representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished, to the best of each of the
Parties' knowledge and
belief.

                      2.1.27 
Reliance. 
The foregoing representations and warranties are made by each Party with the
knowledge and expectation that the other Parties are placing reliance
thereon.

          2.2       Representations
of Seller.  Seller represents and warrants to Buyer as
follows:

                                  (a)       Seller
has adequate means of providing for current needs and contingencies, has no need
for liquidity in the investment, and is able to bear the economic risk of an
investment in the common stock offered by Buyer of the size contemplated. 
Seller represents that it is able to bear the economic risk of the investment
and at the present time can afford a complete loss of such investment. 
Seller has had a full opportunity to inspect the books and records of the Buyer
and to make any and all inquiries of Buyer officers and directors regarding the
Buyer and its business as Seller has deemed appropriate.

     

    
 

    
      
        
        

      

      
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                                  (b)       Seller
is an “Accredited Investor” as defined in Regulation D of the Securities Act of
1933 (the “Act”) or Seller, either alone or with Seller’s professional advisers
who are unaffiliated with, have no equity interest in and are not compensated by
Buyer or any affiliate or selling agent of Buyer, directly or indirectly, has
sufficient knowledge and experience in financial and business matters that
Seller is capable of evaluating the merits and risks of an investment in the
common stock offered by Buyer and of making an informed investment decision with
respect thereto and has the capacity to protect Seller’s own interests in
connection with Seller’s proposed investment in the Buyer’s common
stock.

                                  (c)       Seller
is acquiring the Buyer’s common stock solely for Seller’s own account as
principal, for investment purposes only and not with a view to the resale or
dis­tribution thereof, in whole or in part, and no other person or entity
has a direct or indirect beneficial interest in such Buyer’s common
stock.

                                  (d)       Seller
will not sell or otherwise transfer the Buyer’s common stock without
registration under the Act or an exemption therefrom and fully understands and
agrees that Seller must bear the economic risk of Seller’s purchase for an
indefinite period of time because, among other reasons, the Buyer’s common stock
have not been registered under the Act or under the securi­ties laws of any
state and, therefore, cannot be resold, pledged, assigned or other­wise
disposed of unless they are subsequently registered under the Act and under the
applicable securities laws of such states or unless an exemption from such
registration is
available.

          2.3       Representations
of Buyer.  Buyer represents and warrants to Seller as
follows:

                                  (a)       Buyer
has adequate means of providing for current needs and contingencies, has no need
for liquidity in the investment, and is able to bear the economic risk of an
investment in the common stock offered by Seller of the size contemplated. 
Buyer represents that it is able to bear the economic risk of the investment and
at the present time can afford a complete loss of such investment.  Buyer
has had a full opportunity to inspect the books and records of the Seller and to
make any and all inquiries of Seller officers and directors regarding the Seller
and its business as Buyer has deemed
appropriate.

                                  (b)       Buyer
is an “Accredited Investor” as defined in Regulation D of the Securities Act of
1933 (the “Act”) or Buyer, either alone or with Buyer’s professional advisers
who are unaffiliated with, have no equity interest in and are not compensated by
Seller or any affiliate or selling agent of Seller, directly or indirectly, has
sufficient knowledge and experience in financial and business matters that Buyer
is capable of evaluating the merits and risks of an investment in the common
stock offered by Seller and of making an informed investment decision with
respect thereto and has the capacity to protect Buyer’s own interests in
connection with Buyer’s proposed investment in the Seller’s common
stock.

                                  (c)       Buyer
is acquiring the Seller’s common stock solely for Buyer’s own account as
principal, for investment purposes only and not with a view to the resale or
dis­tribution thereof, in whole or in part, and no other person or entity
has a direct or indirect beneficial interest in such Seller’s common
stock.

       

       

      
        
          
          

        

        
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                                  (d)       Buyer
will not sell or otherwise transfer the Seller’s common stock without
registration under the Act or an exemption therefrom and fully understands and
agrees that Buyer must bear the economic risk of Buyer’s purchase for an
indefinite period of time because, among other reasons, the Seller’s common
stock have not been registered under the Act or under the securi­ties laws
of any state and, therefore, cannot be resold, pledged, assigned or
other­wise disposed of unless they are subsequently registered under the Act
and under the applicable securities laws of such states or unless an exemption
from such registration is available.

    
      ARTICLE
3
CONDITIONS
PRECEDENT

       

    

    
                3.1       Conditions
to Each Party’s Obligations.  The respective obligations of each
Party hereunder shall be subject to the satisfaction prior to or at the Closing
of the following
conditions:

                      (a)       No
Restraints.  No statute, rule, regulation, order, decree, or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity of competent jurisdiction which enjoins or
prohibits the consummation of this Agreement and shall be in
effect.

                      (b)       Legal
Action.  There shall not be pending or threatened in writing any
action, proceeding, or other application before any court or Governmental Entity
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages.

          3.2       Conditions
to Seller’s Obligations.  The obligations of Seller shall be subject
to the satisfaction prior to or at the Closing of the following conditions
unless waived by
Seller:

                      (a)       Representations
and Warranties of Buyer.  The representations and warranties of
Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing as though made on and as of the Closing,
except: (i) as otherwise contemplated by this Agreement; or (ii) in respects
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement.  Seller shall have
received a certificate signed on behalf of Buyer by the President or Chief
Executive Officer of Buyer to such effect on the
Closing.

                      (b)       Performance
of Obligations of Buyer.  Buyer shall have performed all agreements
and covenants required to be performed by it under this Agreement prior to the
Closing, except for breaches that do not have a Material Adverse Effect on the
Parties or on the benefits of the transactions provided for in this
Agreement.  Seller shall have received a certificate signed on behalf of
Buyer by the President or Chief Executive Officer of Buyer to such effect on the
Closing.

          3.3       Conditions
to Buyer’s Obligations.  The obligations of Buyer shall be subject
to the satisfaction prior to or at the Closing of the following conditions
unless waived by Buyer:

    

    
      

      
        
          
          

        

        
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                      (a)       Representations
and Warranties of Seller and the Company.  The representations and
warranties of Seller and the Company set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the Closing as though
made on and as of the Closing, except: (i) as otherwise contemplated by this
Agreement; or (ii) in respects that do not have a Material Adverse Effect on the
Parties or on the benefits of the transactions provided for in this
Agreement.  Buyer shall have received certificates signed on behalf of
Seller and the Company by the President or Chief Executive Officer of each
Seller and the Company to such effect on the
Closing.

                      (b)       Performance
of Obligations of Seller and the Company.  Seller and the Company
shall have performed all agreements and covenants required to be performed by
them under this Agreement prior to the Closing, except for breaches that do not
have a Material Adverse Effect on the Parties or on the benefits of the
transactions provided for in this Agreement.  Buyer shall have received
certificates signed on behalf of Seller and the Company by the President or
Chief Executive Officer of each Seller and the Company to such effect on the
Closing.

                      (c)       Governmental
Approvals.  All Consents of Governmental Entities legally required
by Seller and the Company for the transactions contemplated by this Agreement
shall have been filed, occurred, or been obtained, other than such Consents, the
failure of which to obtain would not have a Material Adverse Effect on the
consummation of the transactions contemplated by this
Agreement.

                      (d)       Consents
of Other Third Parties.  Seller and the Company shall have received
and delivered to Buyer all requisite consents and approvals of all lenders,
lessors, and other third parties whose consent or approval is required in order
for Seller and the Company to consummate the transactions contemplated by this
Agreement, or in order to permit the continuation after the Closing of the
business activities of the Company in the manner such business is presently
carried on by it.  Buyer shall have received copies of any necessary
written consent(s) to this Agreement and the transactions contemplated
herein.

                      (e)       Material
Adverse Change.  Since the date hereof and through Closing, there
shall not have occurred any change, occurrence, or circumstance in Seller or the
Company having or reasonably likely to have, individually or in the aggregate,
in the reasonable judgment of Buyer, a Material Adverse Effect on the Parties or
on the transactions contemplated by this
Agreement.

      

    

    
      ARTICLE
4

CLOSING
AND DELIVERY OF DOCUMENTS

       

    

    
                4.1       Time
and Place.  The closing of the transactions contemplated by this
Agreement shall take place at the offices of Buyer, located at 11661 San Vicente
Boulevard, Suite 707, Los Angeles, California 90049, immediately upon the full
execution of this Agreement, the satisfaction of all conditions, and the
delivery of all required documents, or at such other time and place as the
Parties mutually agree upon (which time and place are hereinafter referred to as
the “Closing”).

    

     

     

    
      
        
        

      

      
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          4.2       Deliveries
by Seller.  At Closing, Seller shall make the following deliveries
to
Buyer:

                      (a)       A
cancelled stock certificate representing the Shares previously owned by Seller
as set forth in Section 1.1
above;

                      (b)       A
certificate of good standing of the
Seller;

                      (c)       A
certificate executed by Seller certifying that: (i)  all Seller’s
representations and warranties under this Agreement are true as of the Closing,
as though each of those representations and warranties had been made on that
date; and (ii) Seller has performed all agreements and covenants required to be
performed by it under this Agreement prior to the Closing, except for breaches
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement;
and

                      (d)       Certified
resolutions of the Board of Directors of Seller, in form satisfactory to counsel
for Buyer, authorizing the execution and performance of this
Agreement.

          4.3       Deliveries
by the Company.  At Closing, the Company shall make the following
deliveries to
Buyer:

                      (a)       A
certificate representing the Shares that Buyer is acquiring as set forth in
Section 1.1
above;

                      (b)       A
certificate of good standing for the
Company;

                      (c)       A
certificate executed by the Company certifying that: (i)  all the Company's
representations and warranties under this Agreement are true as of the Closing,
as though each of those representations and warranties had been made on that
date; and (ii) the Company has performed all agreements and covenants required
to be performed by it under this Agreement prior to the Closing, except for
breaches that do not have a Material Adverse Effect on the Parties or on the
benefits of the transactions provided for in this Agreement;
and

                      (d)       Certified
resolutions of the Board of Directors of the Company, in form satisfactory to
counsel for Buyer, authorizing the execution and performance of this
Agreement;

                      (e)       The
minute book and corporate records of the Company;
and

                      (f)       The
financial statements of the Company as required in Section
2.1.7.

          4.4       Deliveries
by Buyer. At Closing, Buyer shall make the following deliveries to
Seller:

                      (a)       A
certificate executed by Buyer certifying that: (i)  Buyer’s representations
and warranties under this Agreement are true as of the Closing, as though each
of those representations and warranties had been made on that date; and (ii)
Buyer has performed all agreements and covenants required to be performed by it
under this Agreement prior to the

     

    
 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

Closing, except for
breaches that do not have a Material Adverse Effect on the Parties or on the
benefits of the transactions provided for in this
Agreement;

                      (b)       A
certificate of good standing for Buyer;
and

                      (c)       Certified
resolutions of the Board of Directors of Buyer in form satisfactory to counsel
for Seller, authorizing the execution and performance of this
Agreement.

    

    
      ARTICLE
5
INDEMNIFICATION

       

    

    
                5.1       Seller
and the Company’s Indemnity
Obligations.

                      (a)       Upon
receipt of notice thereof, Seller and the Company shall, jointly and severally,
indemnify, defend, and hold harmless Buyer from any and all claims, demands,
liabilities, damages, deficiencies, losses, obligations, costs and expenses,
including attorney fees and any costs of investigation that Buyer shall incur or
suffer, that arise, result from or relate to: (i) any breach of, or failure by
Seller or the Company to perform, any of their representations, warranties,
covenants, or agreements in this Agreement or in any schedule, certificate,
exhibit, or other instrument furnished or to be furnished by Seller and/or the
Company under this Agreement; and (ii) the employment of any of the Company’s
employees which is in violation of any law, regulation, or ordinance of any
Governmental
Entity.

                      (b)       Buyer
shall notify promptly Seller and the Company of the existence of any claim,
demand, or other matter to which Seller and the Company’s indemnification
obligations would apply, and shall give them a reasonable opportunity to defend
the same at their own expense and with counsel of their own selection, provided
that Seller shall at all times also have the right to fully participate in the
defense. If Seller and the Company, within a reasonable time after this notice,
fails to defend, Buyer shall have the right, but not the obligation, to
undertake the defense of, and, with the written consent of Seller and the
Company, to compromise or settle the claim or other matter on behalf, for the
account, and at the risk, of Seller and the
Company.

          5.2       Buyer’s
Indemnity
Obligations.

                      (a)       Upon
receipt of notice thereof, Buyer shall indemnify, defend, and hold harmless
Seller and/or the Company from any and all claims, demands, liabilities,
damages, deficiencies, losses, obligations, costs, and expenses, including
attorney fees and any costs of investigation that Seller and/or the Company
shall incur or suffer, that arise, result from or relate to any breach of, or
failure by Buyer to perform any of its representations, warranties, covenants,
or agreements in this Agreement or in any schedule, certificate, exhibit, or
other instrument furnished or to be furnished by Buyer under this
Agreement.

                      (b)       Seller
and/or the Company shall notify promptly Buyer of the existence of any claim,
demand or other matter to which Buyer’s indemnification obligations would
apply, and shall give it a reasonable opportunity to defend the same at its own
expense and with counsel of its own selection, provided that Seller and the
Company shall at all times also have the right to fully participate in the
defense. If Buyer, within a reasonable time after this notice, fails to

    

    
      
 

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

defend, Seller and the
Company shall have the right, but not the obligation, to undertake the defense
of, and, with the written consent of Buyer, to compromise or settle the claim or
other matter on behalf, for the account, and at the risk, of
Buyer.

      

    

    
      ARTICLE
6
DEFAULT,
AMENDMENT AND WAIVER

       

    

    
                6.1       Default. 
Upon a breach or default under this Agreement by any of the Parties (following
the cure period provided herein), the non-defaulting party shall have all rights
and remedies given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise.  Notwithstanding the foregoing, in the event of a
breach or default by any Party hereto in the observance or in the timely
performance of any of its obligations hereunder which is not waived by the
non-defaulting Party, such defaulting Party shall have the right to cure such
default within 15 days after receipt of notice in writing of such breach or
default.

          6.2       Waiver
and Amendment.  Any term, provision, covenant, representation,
warranty, or condition of this Agreement may be waived, but only by a written
instrument signed by the party entitled to the benefits thereof.  The
failure or delay of any party at any time or times to require performance of any
provision hereof or to exercise its rights with respect to any provision hereof
shall in no manner operate as a waiver of or affect such party's right at a
later time to enforce the same.  No waiver by any party of any condition,
or of the breach of any term, provision, covenant, representation, or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of the breach of any other term, provision,
covenant, representation, or warranty.  No modification or amendment of
this Agreement shall be valid and binding unless it be in writing and signed by
all Parties hereto.

    

    
      ARTICLE
7
MISCELLANEOUS

       

    

    
                7.1       Expenses. 
Whether or not the transactions contemplated hereby are consummated, each of the
Parties hereto shall bear all taxes of any nature (including, without
limitation, income, franchise, transfer, and sales taxes) and all fees and
expenses relating to or arising from its compliance with the various provisions
of this Agreement and such party's covenants to be performed hereunder, and
except as otherwise specifically provided for herein, each of the Parties hereto
agrees to pay all of its own expenses (including, without limitation, attorneys
and accountants' fees, and printing expenses) incurred in connection with this
Agreement, the transactions contemplated hereby, the negotiations leading to the
same and the preparations made for carrying the same into effect, and all such
taxes, fees, and expenses of the Parties hereto shall be paid prior to
Closing.

          7.2       Notices. 
Any notice, request, instruction, or other document required by the terms of
this Agreement, or deemed by any of the Parties hereto to be desirable, to be
given to any other party hereto shall be in writing and shall be given by
personal delivery, overnight delivery, mailed by registered or certified mail,
postage prepaid, with return receipt requested, or sent by facsimile
transmission to the addresses of the Parties as follows:

    

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      
        	 	To
      Buyer:	
                Material
      Technologies, Inc.

                Attn:
      Robert M. Bernstein, Chief Executive Officer

                11661 San
      Vicente Boulevard, Suite 707

                Los
      Angeles, California 90049

                Fax:
      (310) 473-3177

              
	 	 	 
	 	To
      the Company: 	
                Bridge
      Testing Concepts, Inc.

                Attn:
      Brent Phares, President

                11661 San
      Vicente Boulevard, Suite 707

                Los
      Angeles, California 90049

                Fax:
      (310) 473-3177

              
	 	 	 
	 	To
      Seller:	
                Brent
      Phares

                702 NW
      Boulder Brooks Dr.

                Ankeny,
      Iowa 50023

              
	 	 	 
	 	With
      a copy to:	
                Oswald
      & Yap

                Attn: Lynne Bolduc, Esq.

                16148 Sand Canyon Avenue

                Irvine, CA  92618

                Fax: (949)
788-8980

              

      

       

      The persons and
addresses set forth above may be changed from time to time by a notice sent as
aforesaid.  If notice is given by personal delivery or overnight delivery
in accordance with the provisions of this Section, such notice shall be
conclusively deemed given at the time of such delivery provided a receipt is
obtained from the recipient.  If notice is given by mail in accordance with
the provisions of this Section, such notice shall be conclusively deemed given
upon receipt and delivery or refusal. If notice is given by facsimile
transmission in accordance with the provisions of this Section, such notice
shall be conclusively deemed given at the time of delivery if during business
hours and if not during business hours, at the next business day after delivery,
provided a confirmation is obtained by the
sender.

          7.3       Entire
Agreement.  This Agreement, together with the Schedule and Exhibits
hereto, sets forth the entire agreement and understanding of the Parties hereto
with respect to the transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings related to the subject matter
hereof.  No understanding, promise, inducement, statement of intention,
representation, warranty, covenant, or condition, written or oral, express or
implied, whether by statute or otherwise, has been made by any party hereto
which is not embodied in this Agreement, or in the schedules or exhibits hereto
or the written statements, certificates, or other documents delivered pursuant
hereto or in connection with the transactions contemplated hereby, and no party
hereto shall be bound by or liable for any alleged understanding, promise,
inducement, statement, representation, warranty, covenant, or condition not so
set
forth.

          7.4       Survival
of Representations.  All statements of fact (including financial
statements) contained in the Schedules, the exhibits, the certificates, or any
other instrument delivered by or on behalf of the Parties hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the respective party hereunder.  All
representations, warranties, agreements, and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit at any
time made by or 

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
on behalf of the Parties or of any information a party may have in
respect hereto.  Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy
existed.

          7.5       Incorporated
by Reference.  The recitals, schedules, exhibits, and all documents
(including, without limitation, all financial statements) delivered as part
hereof or incident hereto are incorporated as a part of this Agreement by
reference.

          7.6       Remedies
Cumulative.  No remedy herein conferred upon the Parties is intended
to be exclusive of any other remedy and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or
otherwise.

          7.7       Execution
of Additional Documents.  Each Party hereto shall make, execute,
acknowledge, and deliver such other instruments and documents, and take all such
other actions as may be reasonably required in order to effectuate the purposes
of this Agreement and to consummate the transactions contemplated
hereby.

          7.8       Costs
and Fees.  Each of the Parties hereto is responsible for their own
costs and fees incurred with respect to this Agreement or to any of the
transactions contemplated
hereby.

          7.9       Choice
of Law.  This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
California including all matters of construction, validity, performance, and
enforcement and without giving effect to the principles of conflict of
laws.

          7.10      Jurisdiction. 
The parties submit to the jurisdiction of the Courts of the County of Orange,
State of California or a Federal Court empaneled in the State of California for
the resolution of all legal disputes arising under the terms of this
Agreement.

          7.11      Attorneys’
Fees.  In the event any Party hereto shall commence legal
proceedings against the other to enforce the terms hereof, or to declare rights
hereunder, as the result of a breach of any covenant or condition of this
Agreement, the prevailing party in any such proceeding shall be entitled to
recover from the losing party its costs of suit, including reasonable attorneys'
fees, as may be fixed by the
court.

          7.12      Binding
Effect and Assignment.  This Agreement shall inure to the benefit of
and be binding upon the Parties hereto and their respective heirs, executors,
administrators, legal representatives, and
assigns.

          7.12      Counterparts;
Facsimile Signatures.  This Agreement may be executed
simul­taneously in one or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.  The Parties agree that facsimile signatures of this Agreement
shall be deemed a valid and binding execution of this
Agreement. 

          7.14       Conflict
Waiver.  Seller hereby acknowledges that Oswald & Yap (“the
Firm”) represents the Buyer with various legal matters and does not represent
the Seller in connection

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    
      
with this Agreement or
the contemplated transaction nor in any other respect. Seller further
acknowledges that the Firm has drafted this Agreement. Seller has been given the
opportunity to consult with counsel of their choice regarding their rights under
this Agreement.  Seller hereby waives any action it may have against the
Firm regarding such conflict of interest.

    

    
      (SIGNATURE
PAGE IMMEDIATELY FOLLOWS)

       

    

    
 

     

     

     

     

     

     

     

     

     

    

 

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

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

      
 

      
        	BUYER:  	 	 	THE COMPANY:	 
	 	 	 	 	 
	
                MATERIAL TECHNOLOGIES,
      INC.,

                a
      Delaware corporation  

              	 	 	
                BRIDGE TESTING CONCEPTS,
      INC.,

                a
      California corporation 

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                /s/
      Robert M. Bernstein

              	 	 	
                /s/
      Brent Phares 

              	 
	
                By:
      Robert M. Bernstein 

              	 	 	
                By:
      Brent Phares

              	 
	
                Its:
      Chief Executive Officer  

              	 	 	
                Its:
      President

              	 
	 	 	 	 	 
	 	 	 	 	 
	SELLER:	 	 	 	 
	 	 	 	 	 
	
                BRENT
      PHARES,

                an
      individual

              	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	/s/
      Brent Phares 	 	 	 	 
	 By:
      Brent Phares	 	 	 	 

      

       

       

      

 

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

     

    
      EXHIBIT
A

INTELLECTUAL
PROPERTY OF THE COMPANY

       

    

    
                Energy-based
methods are widely used to obtain solutions to elasticity problems and to
determine deflections in structures. The fundamentals of work-energy methods of
analyzing structures are well documented elsewhere and will not be repeated in
detail here. However, in brief these methods are all based upon the principle of
conservation of energy that states that the work (W) done by external forces
applied to the structure and the internal strain energy (U) stored in the
structural members must be equal. Because this principle must always be
satisfied, the concept developed by Dr. Brent M. Phares focuses exclusively on
utilizing sensed information to assess changes in a quantity directly related to
strain
energy.

          The
internal strain energy, U, for a generic volume, V, can be expressed in terms of
the internal energy per unit volume. This quantity is more commonly referred to
as the strain energy density, U0.  Thus, the total strain energy is given
by:

       

    

    
      

       

    

    
                The
strain energy density for any elastic isotropic material (as those used in civil
structures typically are) is given in terms of the three principal strains, ε,
by:

       

    

    

     

    and in terms of
orthogonal coordinates (x, y, z) as:

     

     

    

     

    For cases where
the measured orthogonal strain is dominated by a single direction, which is
frequently the case in civil structures, the strain energy density reduces
to:

     

    
      

       

    

    with

     

    

     

    
                Where
E is the modulus of elasticity and v is Poisson's Ratio. Because strain can only
be sensed at discrete locations, one can never truly determine, from sensed
information, the strain energy for the entire 

    
      

 

      
        
           

        

        
           

          
            

          

        

        
           

volume.
However, changes in sensed strain at a single point (an infinitesimal volume)
are fortunately directly related to changes in the sum-total strain
energy.

          Strain
energy density, U0, at a point in time is, by definition, an indicator of the
energy stored in a system in response to an applied external load. As such,
strain energy density is a possible assessment metric. However, recognizing that
the goal with a structural health monitoring system is to identify changes in
the structure, coupled with the fact that St. Venant's principle indicates that
the zone of influence for changes is relatively small, a quantity termed the
cumulative live load strain energy density (CLLSED) is proposed here. This
quantity, given mathematically below, is directly related to the sum of strain
energy density with time and enhances the sensitivity of strain measurements
through mathematical integration. As measured strain is directly related to
structural characteristics, the CLLSED is a damage and deterioration
indicator.

      

    

    
      

       

    

     

     

     

     

     

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      EXHIBIT
B

MATERIAL
TECHNOLOGIES, INC. DISCLOSURE SCHEDULE

       

    

    The
Buyer incorporates the following documents by reference in this
Agreement:

The Buyer’s Annual Report on Form 10-KSB filed for the fiscal
year ended December 31, 2006; the Buyer’s Quarterly Reports on Form 10-QSB filed
for the quarters ended March 31, 2007 and June 30, 2007; and all reports and
documents filed by the Buyer pursuant to Sections 13, 14, or 15(d) of the
Exchange Act, shall be deemed to be incorporated by reference herein and to be a
part from the respective date of filing of such documents.  Any statement
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Agreement to the extent that a statement contained herein or
in any subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. 
Any statement modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Agreement.

The items set forth
below are exceptions to the representations and warranties of Material
Technologies, Inc. (the “Buyer”) set forth in Section 2 of the Agreement. 
Any matter set forth herein as an exception to a section of the Agreement shall
be deemed to constitute an exception to all other applicable sections of the
Agreement.  Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Agreement.

     

    
      	Section	Exception
	  	 
	2.4	     Subsidiaries
      of the Buyer include:
	 	
              	Matech
        International, Inc., a Nevada corporation
                  
	Matech
        Aerospace, Inc., a Nevada corporation
                  
	Materials
        Monitoring Technologies, Inc., a Florida corporation
                  
	Stress
        Analysis Technologies, Inc., a Florida
  corporation

            

    

    

 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      EXHIBIT
C

BRIDGE
TESTING CONCEPTS, INC. DISCLOSURE SCHEDULE

       

    

    
                The
items set forth below are exceptions to the representations and warranties of
Bridge Testing Concepts, Inc. (the “Company”) set forth in Section 2 of the
Agreement.  Any matter set forth herein as an exception to a section of the
Agreement shall be deemed to constitute an exception to all other applicable
sections of the Agreement.  Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Agreement.

Section            
Exception

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
D

BRENT
PHARES DISCLOSURE SCHEDULE

    
       

      
                  The
items set forth below are exceptions to the representations and warranties of
Brent Phares (the “Seller”) set forth in Section 2 of the Agreement. Any matter
set forth herein as an exception to a section of the Agreement shall be deemed
to constitute an exception to all other applicable sections of the Agreement.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Agreement.

Section            
Exception

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