Document:

EX-4.1

LEXINGTON REALTY TRUST

2011 EQUITY-BASED AWARD PLAN

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Plan Document

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1.             Introduction.

(a)              Purpose.  By resolution of its Board of Trustees approved on March 28, 2011, Lexington Realty Trust (the “Company”) hereby establishes this equity-based incentive compensation plan to be known as the “Lexington Realty Trust 2011 Equity-Based Award Plan” (the “Plan”), for the following purposes: (i) to enhance the Company's ability to attract highly qualified personnel; (ii) to strengthen its retention capabilities; (iii) to enhance the long-term performance and competitiveness of the Company; and (iv) to align the interests of Plan participants with those of the Company's shareholders.  This Plan is intended to serve as the sole source for all future equity-based awards to those eligible for Plan participation.

(b)              Effective Date.  This Plan shall become effective on the date (the “Effective Date”) upon which it has received approval by a vote of a majority of the votes cast at a duly held meeting of the Company's shareholders (or by such other shareholder vote that the Committee determines to be sufficient for the issuance of Shares and Awards according to the Company's governing documents and Applicable Law).

(c)              Definitions.  Terms in the Plan and any Appendix that begin with an initial capital letter have the defined meaning set forth in Appendix I or elsewhere in this Plan, in either case unless the context of their use clearly indicates a different meaning.

(d)              Effect on Other Plans, Awards, and Arrangements.  This Plan is not intended to affect and shall not affect any share options, equity-based compensation, or other benefits that the Company or its Affiliates may have provided, or may separately provide in the future, pursuant to any agreement, plan, or program that is independent of this Plan.  Notwithstanding the foregoing, effective upon shareholder approval of this Plan, no further awards of any kind shall occur under the Lexington Realty Trust 2007 Equity-Based Award Plan, and any Shares that are currently reserved for awards under such plan (as well as any Shares that in the future would have become available for awards under that plan) shall be deemed to be included in the reserve of Shares that are authorized and available for issuance pursuant to this Plan.

2.             Types of Awards.  The Plan permits, but does not require, the granting of the following types of Awards according to the Sections of the Plan listed below:

	
		
	Section 5
	Share Options

	Section 6
	Share Appreciation Rights (“SARs”)

	Section 7
	Restricted Shares, Restricted Share Units (“RSUs”), and Unrestricted Shares

	Section 9
	Performance and Cash-settled Awards

	Section 10
	Dividend Equivalent Rights

3.             Shares Available for Awards.

(a)              Generally. Subject to Section 13 below, a total of 5,000,000 Shares shall be available for issuance under the Plan.  The Shares deliverable pursuant to Awards shall be authorized but unissued Shares, or Shares that the Company otherwise holds in treasury or in trust.

(b)              Replenishment; Counting of Shares.  Any Shares reserved for Plan Awards will again be available for future Awards if the Shares for any reason will never be issued to a Participant or Beneficiary pursuant

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 to an Award (for example, due to the Award's forfeiture, cancellation, expiration, or net settlement through the issuance of Shares).  Further, and to the extent permitted under Applicable Law, the maximum number of Shares available for delivery under the Plan shall not be reduced by any Shares issued under the Plan through the settlement, assumption, or substitution of outstanding awards or obligations to grant future awards as a condition of the Company's or an Affiliate's acquiring another entity.  On the other hand, Shares that a Person owns and tenders in payment of all or part of the exercise price of an Award or in satisfaction of applicable Withholding Taxes shall increase the number of Shares available for future issuance under the Plan but not in excess of the maximum number of Shares available for delivery under the Plan.  Shares reacquired by the Company on the open market using Option Proceeds shall be available for Awards.  The increase in Shares available pursuant to the repurchase of Shares with Option Proceeds shall not be greater than the amount of such proceeds divided by the Fair Market Value of a Share on the date of exercise of the Option giving rise to such Option Proceeds.

4.             Eligibility.

(a)              General Rule.  Subject to the express provisions of the Plan, the Committee shall determine from the class of Eligible Persons those Persons to whom Awards may be granted, the number of Shares subject to each Award, the price (if any) to be paid for the Shares or the Award and, in the case of Performance Awards, in addition to matters discussed is Section 9 below, the specific objectives, goals and performance criteria that further define the Performance Award.  The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or any Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Section 424 of the Code, and may grant all other Awards to any Eligible Person.  A Participant who has been granted an Award may be granted an additional Award or Awards if the Committee shall so determine, if such person is otherwise an Eligible Person and if otherwise in accordance with the terms of the Plan.

(b)              Documentation of Award.  Each Award shall be evidenced by an Award Agreement signed by the Company and by the Participant.  The Award Agreement shall set forth the material terms and conditions of the Award established by the Committee, and each Award shall be subject to the terms and conditions set forth in Sections 15, 24 and 25 unless otherwise specifically provided in an Award Agreement.

(c)              Option and SAR Limits per Person.  During each year of the Plan, no Participant may receive Options and/or SARs that relate to more than 20% of the maximum number of Shares issuable under the Plan as of its Effective Date, as such number may be adjusted pursuant to Section 13 below.

(d)              Reserved.

5.             Share Options.

(a)              Grants.  Subject to the special rules for ISOs set forth in the next paragraph, the Committee may grant Options to Eligible Persons pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan, that may be immediately exercisable or that may become exercisable in whole or in part based on future events or conditions, that may include vesting or other requirements for the right to exercise the Option, and that may differ for any reason between Eligible Persons or classes of Eligible Persons, provided in all instances that:

(i)         the exercise price for Shares subject to purchase through exercise of an Option shall not be less than 100% of the Fair Market Value of the underlying Shares on the Grant Date; and

(ii)         no Option shall be exercisable for a term ending more than ten years after its Grant Date.

(b)           Special ISO Provisions.  The following provisions shall control any grants of Options that are denominated as ISOs; provided that ISOs may not be awarded unless the Plan receives shareholder approval within twelve (12) months after its Effective Date, and ISOs may not be granted more than ten (10) years after Board approval of the Plan.

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(i)         Eligibility.  The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or an Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Code Section 424.

(ii)         Documentation.  Each Option that is intended to be an ISO must be designated in the Award Agreement as an ISO, provided that any Option designated as an ISO will be a Non-ISO to the extent the Option fails to meet the requirements of Code Section 422 or the provisions of this Section 5(b).  In the case of an ISO, the Committee shall determine on the Grant Date the acceptable methods of paying the exercise price for Shares, and it shall be included in the applicable Award Agreement.

(iii)         $100,000 Limit.  To the extent that the aggregate Fair Market Value of Shares with respect to which ISOs first become exercisable by a Participant in any calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds U.S. $100,000, such excess Options shall be treated as Non-ISOs.  For purposes of determining whether the U.S. $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be determined as of the Grant Date.  In reducing the number of Options treated as ISOs to meet the U.S. $100,000 limit, the most recently granted Options shall be reduced first.  In the event that Code Section 422 is amended to alter the limitation set forth therein, the limitation of this paragraph shall be automatically adjusted accordingly.

(iv)         Grants to 10% Holders.  In the case of an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the ISO's term shall not exceed five years from the Grant Date, and the exercise price shall be at least 110% of the Fair Market Value of the underlying Shares on the Grant Date.  In the event that Code Section 422 is amended to alter the limitations set forth therein, the limitation of this paragraph shall be automatically adjusted accordingly.

(v)         Substitution of Options.  In the event the Company or an Affiliate acquires (whether by purchase, merger, or otherwise) all or substantially all of outstanding capital stock or assets of another corporation or in the event of any reorganization or other transaction qualifying under Code Section 424, the Committee may, in accordance with the provisions of that Section, substitute ISOs for ISOs previously granted under the plan of the acquired company provided (A) the excess of the aggregate Fair Market Value of the Shares subject to an ISO immediately after the substitution over the aggregate exercise price of such shares is not more than the similar excess immediately before such substitution, and (B) the new ISO does not give additional benefits to the Participant, including any extension of the exercise period.

(vi)         Notice of Disqualifying Dispositions.  By executing an ISO Award Agreement, each Participant agrees to notify the Company in writing immediately after the Participant sells, transfers or otherwise disposes of any Shares acquired through exercise of the ISO, if such disposition occurs within the earlier of (A) two years of the Grant Date, or (B) one year after the exercise of the ISO being exercised.  Each Participant further agrees to provide any information about a disposition of Shares as may be requested by the Company to assist it in complying with any applicable tax laws.

(c)             Method of Exercise.  Each Option may be exercised, in whole or in part (provided that the Company shall not be required to issue fractional shares) at any time and from time to time prior to its expiration, but only pursuant to the terms of the applicable Award Agreement, and subject to the times, circumstances and conditions for exercise contained in the applicable Award Agreement.  Exercise shall occur by delivery of both written notice of exercise to a designated employee of the Company, and payment of the full exercise price for the Shares being purchased.  The methods of payment that the Committee may in its discretion accept or commit to accept in an Award Agreement include:

(i)           cash or check payable to the Company (in U.S. dollars);

(ii)           other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option for at least six (6) months prior to the date of exercise, (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, and (C) are all, at the time of such surrender, free and clear of any and all claims, pledges, liens and encumbrances, or any 

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restrictions which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed prior to an issuance of such Shares by the Company to such Participant);

(iii)           a net exercise by surrendering to the Company Shares otherwise receivable upon exercise of the Option (so long as it does not result in an additional accounting charge for the Company);

(iv)           except to the extent prohibited by the Sarbanes-Oxley Act of 2002, a program that the Committee may approve, from time to time in its discretion, pursuant to which a Participant may elect to concurrently provide irrevocable instructions (A) to such Participant's Company-approved broker or dealer to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all Withholding Tax by reason of such exercise, and (B) to the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete the sale; or

(v)           any combination of the foregoing methods of payment.

The Company shall not deliver Shares pursuant to the exercise of an Option until the Company has received sufficient funds to cover the full exercise price due and all applicable Withholding Taxes required by reason of such exercise.

Notwithstanding any other provision of the Plan to the contrary, no Participant who is a Trustee or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

(d)             Exercise of an Unvested Option.  Unvested Options shall not be exercisable by the Participant.

(e)             Termination of Continuous Service.  The Committee may establish and set forth in the applicable Award Agreement or employment-related agreements the terms and conditions on which an Option shall remain exercisable, if at all, following termination of a Participant's Continuous Service.  The Committee may waive or modify these provisions at any time.  To the extent that a Participant is not entitled to exercise an Option at the date of his or her termination of Continuous Service, or if the Participant (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified in the Award Agreement, employment-related agreements or below (as applicable), the Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the Plan and become available for future Awards.  In no event may any Option be exercised after the expiration of the Option term as set forth in the Award Agreement.

The following provisions shall apply to the extent an Award Agreement or an employment-related agreement does not specify the terms and conditions upon which an Option shall terminate when there is a termination of a Participant's Continuous Service:

	
			
	Reason for terminating Continuous Service
	 
	Option Termination Date

	(I) By the Company for Cause, or what would have been Cause if the Company had known all of the relevant facts.
	 
	Termination of the Participant's Continuous Service, or when Cause first existed if earlier.

	(II) Disability of the Participant.
	 
	Within six (6) months after termination of the Participant's Continuous Service.

	(III) Retirement of the Participant.
	 
	Within six (6) months (three (3) in the case of ISOs) after termination of the Participant's Continuous Service.

	(IV) Death of the Participant during Continuous Service or within ninety (90) days thereafter.
	 
	Within six (6) months after termination of the Participant's Continuous Service.

	(V) Any other reason.
	 
	Within ninety (90) days after termination of the Participant's Continuous Service.

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If there is a Securities and Exchange Commission blackout period (or a Company-imposed blackout period) that prohibits the buying or selling of Shares during any part of the ten day period before the expiration of any Option based on the termination of a Participant's Continuous Service (as described above), the period for exercising the Options shall be extended until ten days beyond when such blackout period ends.  Notwithstanding any provision hereof or within an Award Agreement, no Option shall ever be exercisable after the expiration date of its original term as set forth in the Award Agreement.

6.             SARS.

(a)              Grants.  The Committee may grant SARs to Eligible Persons pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan; provided that:

(i)         the exercise price for the Shares subject to each SAR shall not be less than 100% of the Fair Market Value of the underlying Shares on the Grant Date (unless the Award replaces a previously issued Option or SAR);

(ii)         no SAR shall be exercisable for a term ending more than ten years after its Grant Date; and

(iii)         each SAR shall, except to the extent a SAR Award Agreement provides otherwise, be subject to the provisions of Section 5(e) relating to the effect of a termination of Participant's Continuous Service, with “SAR” being substituted for “Option.”

(b)           Settlement.  Subject to the Plan's terms, a SAR shall entitle the Participant, upon exercise of the SAR, to receive Shares having a Fair Market Value on the date of exercise equal to the product of the number of Shares as to which the SAR is being exercised, and the excess of (i) the Fair Market Value, on such date, of the Shares covered by the exercised SAR, over (ii) an exercise price designated in the SAR Award Agreement.  Notwithstanding the foregoing, a SAR Award Agreement may limit the total settlement value that the Participant will be entitled to receive upon the SAR's exercise, and may provide for settlement either in cash or in any combination of cash or Shares that the Committee may authorize pursuant to an Award Agreement.  If, on the date on which a SAR or portion thereof is to expire, the Fair Market Value of the underlying Shares exceeds their aggregate exercise price of such SAR, then the SAR shall be deemed exercised and the Participant shall within ten days thereafter receive the Shares that would have been issued on such date if the Participant had affirmatively exercised the SAR on that date.

(c)           SARs related to Options.  The Committee may grant SARs either concurrently with the grant of an Option or with respect to an outstanding Option, in which case the SAR shall extend to all or a portion of the Shares covered by the related Option, and shall have an exercise price that is not less than the exercise price of the related Option.  A SAR shall entitle the Participant who holds the related Option, upon exercise of the SAR and surrender of the related Option, or portion thereof, to the extent the SAR and related Option each were previously unexercised, to receive payment of an amount determined pursuant to Section 6(b) above.  Any SAR granted in tandem with an ISO will contain such terms as may be required to comply with the provisions of Code Section 422.

(d)           Effect on Available Shares.  All SARs that may be settled in Shares shall be counted in full against the number of Shares available for awards under the Plan, regardless of the number of Shares actually issued upon settlement of the SARs.

7.            Restricted Shares, RSUs, and Unrestricted Share Awards.

(a)           Grant.  The Committee may grant Restricted Share, RSU, or Unrestricted Share Awards to Eligible Persons, in all cases pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan.  The Committee shall establish as to each Restricted Share or RSU Award the number of Shares deliverable or subject to the Award (which number may be determined by a written formula), and the period or periods of time (the “Restriction Period”) at the end of which all or some restrictions specified in the Award Agreement shall lapse, and the Participant shall receive unrestricted Shares (or cash to the extent provided in the Award Agreement) in settlement of the Award.  Such restrictions may include, without limitation, restrictions concerning dividend and voting rights and transferability, and such restrictions may lapse separately or in 

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combination at such times and pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation, criteria based on the Participant's duration of employment, directorship or consultancy with the Company, individual, group, or divisional performance criteria, Company performance, or other criteria selection by the Committee. The Committee may make Restricted Share and RSU Awards with or without the requirement for payment of cash or other consideration.  In addition, the Committee may grant Awards hereunder in the form of Unrestricted Shares which shall vest in full upon the Grant Date or such other date as the Committee may determine or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in its sole discretion) elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash bonuses that would otherwise be paid.

(b)           Vesting and Forfeiture.  The Committee shall set forth, in an Award Agreement granting Restricted Shares or RSUs, the terms and conditions under which the Participant's interest in the Restricted Shares or the Shares subject to RSUs will become vested and non-forfeitable.  Except as set forth in the applicable Award Agreement, employment-related agreements or as the Committee otherwise determines, upon termination of a Participant's Continuous Service for any reason, the Participant shall forfeit his or her Restricted Shares and RSUs to the extent the Participant's interest therein has not vested on or before such termination date; provided that if a Participant purchases Restricted Shares and forfeits them for any reason, the Company shall return the purchase price to the Participant to the extent either set forth in an Award Agreement or required by Applicable Laws.

(c)           Account for Restricted Shares.  Unless otherwise provided in an Award Agreement, the Company shall hold Restricted Shares in a book-entry restricted account until the restrictions lapse, and the Participant shall provide the Company with appropriate stock powers endorsed in blank. The Participant's failure to provide such stock powers within ten days after a written request from the Company shall entitle the Committee to unilaterally declare a forfeiture of all or some of the Participant's Restricted Shares.

(d)           Section 83(b) Elections.  A Participant may make an election under Code Section 83(b) (the “Section 83(b) Election”) with respect to Restricted Shares.  A Participant who has received RSUs may, within ten days after receiving the RSU Award, provide the Committee with a written notice of his or her desire to make Section 83(b) Election with respect to the Shares subject to such RSUs.  The Committee may in its discretion convert the Participant's RSUs into Restricted Shares, on a one-for-one basis, in full satisfaction of the Participant's RSU Award.  The Participant may then make a Section 83(b) Election with respect to those Restricted Shares; provided that the Participant's Section 83(b) Election will be invalid if not filed with the Company and the appropriate U.S. tax authorities within 30 days after the Grant Date of the RSUs that are thereafter replaced by the Restricted Shares.

(e)           Reserved.

(f)           Issuance of Shares upon Vesting.  As soon as practicable after vesting of a Participant's Restricted Shares (or of the right to receive Shares underlying RSUs), the Company shall deliver to the Participant, free from vesting restrictions, one Share for each surrendered and vested Restricted Share (or deliver one Share free of the vesting restriction for each vested RSU), unless an Award Agreement provides otherwise and subject to Section 11 regarding Withholding Taxes.  No fractional Shares shall be distributed, and cash shall be paid in lieu thereof.

8.             Reserved.

9.             Performance and Cash-Settled Awards.

(a)           Performance Units.  Subject to the limitations set forth in paragraph (b) hereof, the Committee may in its discretion grant Performance Awards, including Performance Units to any Eligible Person and Performance Unit Awards that (i) have substantially the same financial benefits and other terms and conditions as Options, SARs or RSUs, but (ii) are settled only in cash.  All Awards hereunder shall be made pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan.

(b)           Performance Compensation Awards.  Subject to the limitations set forth herein, the Committee may, at the time of grant of a Performance Award, designate it as a “Performance Compensation Award” (payable 

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in cash or Shares) in order that such Award constitutes, “qualified performance-based compensation” under Code Section 162(m), and has terms and conditions designed to qualify as such.  With respect to each such Performance Compensation Award, the Committee shall establish, in writing within the time required under Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and “Performance Formula(e)” (each such term being defined below).  Once established for a Performance Period, the Performance Measure(s) and Performance Formula(e) shall not be amended or otherwise modified to the extent such amendment or modification would cause the compensation payable pursuant to the Award to fail to constitute qualified performance-based compensation under Code Section 162(m).

A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant's Award has been earned for the Performance Period.  As soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant.

(c)           Limitations on Awards.  The maximum Performance Unit Award and the maximum Performance Compensation Award that any one Participant may receive for any one Performance Period shall not together exceed twenty percent (20%) of the total number of Shares reserved under Section 3 above for Awards (or, for Performance Units to be settled in cash, the equivalent Fair Market Value as of the Effective Date of those twenty percent of such Shares).

(d)           Definitions.

(i)           “Performance Formula” means, for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining whether or the extent to which an Award has been earned based on the level of performance attained or to be attained with respect to one or more Performance Measure(s).  Performance Formulae may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.

(ii)           “Performance Measure” means a performance measure selected by the Committee to measure Company, Affiliate, and/or business unit performance for a Performance Period, whether in absolute or relative terms (including, without limitation, terms relative to a peer group or index).  Each such measure shall be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by the Company (or such other standard applied by the Committee) and, if so determined by the Committee, and in the case of a Performance Compensation Award, to the extent permitted under Code Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles.  Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.

(iii)           “Performance Period” means one or more periods of time (of not less than one fiscal year of the Company), as the Committee may designate, over which the attainment of one or more Performance Measure(s) will be measured for the purpose of determining a Participant's rights in respect of an Award.

(e)           Reserved.

10.           Dividend Equivalent Rights.  The Committee may grant Dividend Equivalent Rights to any Eligible Person, and may do either pursuant to an Award Agreement that is independent of any other Award (other than an Option or SAR), or through a provision in another Award that Dividend Equivalent Rights attach to the Shares underlying the Award.  For example, and without limitation, the Committee may grant a Dividend Equivalent Right in respect of each Share subject to a Restricted Share Award, Restricted Share Unit Award, or Performance Share Award.

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(a)           Nature of Right.  Each Dividend Equivalent Right shall represent the right to receive amounts based on the dividends declared on Shares as of all dividend payment dates during the term of the Dividend Equivalent Right (as determined by the Committee).  Unless otherwise determined by the Committee, a Dividend Equivalent Right shall expire upon termination of the Participant's Continuous Service, provided that a Dividend Equivalent Right that is granted as part of another Award shall have a term and an expiration date that coincide with those of the related Award.

(b)           Settlement.  Unless otherwise provided in an Award Agreement, Dividend Equivalent Rights shall be paid out on the (i) on the record date for dividends if the Award occurs on a stand-alone basis, and (ii) vesting or later settlement date for another Award if the Dividend Equivalent Right is granted as part of it.  Payment of all amounts determined in accordance with this Section shall be in Shares, with cash paid in lieu of fractional Shares, provided that the Committee may instead provide in an Award Agreement for cash settlement of all or part of the Dividend Equivalent Rights.  Only the Shares actually issued pursuant to Dividend Equivalent Rights shall count against the limits set forth in Section 3 above.

(c)           Other Terms.  The Committee may impose such other terms and conditions on the grant of a Dividend Equivalent Right as it deems appropriate in its discretion as reflected by the terms of the Award Agreement. The Committee may establish a program under which Dividend Equivalent Rights may be granted in conjunction with other Awards.

11.           Taxes; Withholding.

(a)           General Rule.  Participants are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards, and neither the Company or any Affiliate, nor any of their employees, directors, or agents shall have any obligation to mitigate, indemnify, or to otherwise hold any Participant harmless from any or all of such taxes.  The Company's obligation to deliver Shares (or to pay cash) to Participants pursuant to Awards is at all times subject to a Participant's prior or coincident satisfaction of all required Withholding Taxes.  Except to the extent otherwise either provided in an Award Agreement or thereafter authorized by the Committee, the Company or any Affiliate may satisfy required Withholding Taxes that the Participant has not otherwise arranged to settle before the due date thereof -

(i)         first from withholding any cash otherwise payable to the Participant pursuant to the Award;

(ii)         then by withholding and cancelling the Participant's rights with respect to a number of Shares that (A) would otherwise have been delivered to the Participant pursuant to the Award, and (B) have an aggregate Fair Market Value (as of the date of withholding) equal to the Withholding Taxes; and

(iii)         finally, withholding the cash otherwise payable to the Participant by the Company.

The number of Shares withheld and cancelled to pay a Participant's Withholding Taxes shall not be rounded up to the nearest whole Share sufficient to satisfy such taxes, with cash being paid by the Participant in an amount equal to the amount by which the Withholding Taxes exceed the Fair Market Value of such Shares.

(b)           U.S. Code Section 409A.   To the extent that the Committee determines that any Award granted under the Plan is subject to Code Section 409A, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Code Section 409A.  To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.  Notwithstanding any provision of the Plan to the contrary, the Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate (i) to exempt the Award from Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) to comply with the requirements of Code Section 409A and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.

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(c)           Unfunded Tax Status.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Person pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Person any rights that are greater than those of a general creditor of the Company or any Affiliate, and a Participant's rights under the Plan at all times constitute an unsecured claim against the general assets of the Company for the collection of benefits as they come due.  Neither the Participant nor the Participant's duly-authorized transferee or Beneficiaries shall have any claim against or rights in any specific assets, Shares, or other funds of the Company.

12.           Non-Transferability of Awards.

(a)           General.  Except as set forth in this Section, or as otherwise approved by the Committee, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution.  The designation of a death Beneficiary by a Participant will not constitute a transfer.  An Award may be exercised, during the lifetime of the holder of an Award, only by such holder, by the duly-authorized legal representative of a holder who is Disabled, or by a transferee permitted by this Section.

(b)              Limited Transferability Rights. The Committee may in its discretion provide in an Award Agreement that an Award in the form of a Non-ISO, Share-settled SAR, Restricted Shares, or Performance Shares may be transferred, on such terms and conditions as the Committee deems appropriate, either (i) by instrument to the Participant's “Immediate Family” (as defined below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participant's designated beneficiaries, or (iii) by gift to charitable institutions.  Any transferee of the Participant's rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan.  “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

(c)              Death.  In the event of the death of a Participant, any outstanding Awards issued to the Participant shall automatically be transferred to the Participant's Beneficiary (or, if no Beneficiary is designated or surviving, to the person or persons to whom the Participant's rights under the Award pass by will or the laws of descent and distribution).

13.           Change in Capital Structure; Change in Control; Etc.

(a)              Changes in Capitalization.  The Committee shall equitably adjust the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an Award, as well as the exercise or other price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, merger, consolidation, change in organization form, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company.  In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Awards such alternative consideration (including cash or securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all Awards so replaced.  In any case, such substitution of cash or securities shall not require the consent of any person who is granted Awards pursuant to the Plan.  Except as expressly provided herein, or in an Award Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to the number or price of Shares subject to any Award.

(b)              Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company other than as part of a Change of Control, each Award will terminate immediately prior to the consummation of such dissolution or liquidation, subject to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.

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(c)              Change in Control.  In the event of a Change in Control but subject to the terms of any Award Agreements or employment-related agreements between the Company or any Affiliates and any Participant, each outstanding Award shall be assumed or a substantially equivalent award shall be substituted by the surviving or successor company or a parent or subsidiary of such successor company (in each case, the “Successor Company”) upon consummation of the transaction.  Notwithstanding the foregoing, instead of having outstanding Awards be assumed or replaced with equivalent awards by the Successor Company, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company's shareholders or any Participant with respect to his or her outstanding Awards, take one or more of the following actions (with respect to any or all of the Awards, and with discretion to differentiate between individual Participants and Awards for any reason):

(i)           accelerate the vesting of Awards so that Awards shall vest (and, to the extent applicable, become exercisable) as to the Shares that otherwise would have been unvested and provide that repurchase rights of the Company with respect to Shares issued pursuant to an Award shall lapse as to the Shares subject to such repurchase right;

(ii)           arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of all or some outstanding Awards (based on the Fair Market Value, as of the date of the Change in Control, of the Award being cancelled, based on any reasonable valuation method selected by the Committee, and with the Committee having full discretion to cancel either all Awards or  only select Awards (such as only those that have vested on or before the Change in Control);

(iii)           terminate all or some Awards upon the consummation of the transaction, provided that the Committee shall provide for vesting of such Awards in full as of a date immediately prior to consummation of the Change in Control.  To the extent that an Award is not exercised, settled, or cancelled prior to consummation of a transaction in which the Award is not being assumed or substituted, such Award shall terminate upon such consummation; and/or

(iv)           make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate, subject however to the terms set forth above.

Notwithstanding the above and unless otherwise provided in an Award Agreement or in any employment-related agreement between the Company or any Affiliate and the Participant, in the event a Participant is Involuntarily Terminated on or within 12 months (or other period set forth in an Award Agreement) following a Change in Control, then any Award that is assumed or substituted pursuant to this Section above shall accelerate and become fully vested (and become exercisable in full in the case of Options and SARs), and any repurchase right applicable to any Shares underlying the Award shall lapse in full.  The acceleration of vesting and lapse of repurchase rights provided for in the previous sentence shall occur immediately prior to the effective date of the Participant's Involuntary Termination.

14.           Reserved.

15.           Recoupment of Awards.  Unless otherwise specifically provided in an Award Agreement, and to the extent permitted by Applicable Law, the Committee may in its sole and absolute discretion, without obtaining the approval or consent of the Company's shareholders or of any Participant, require that any Participant reimburse the Company for all or any portion of any Awards granted under this Plan (“Reimbursement”), or the Committee may require the termination of any outstanding, unexercised, unexpired Awards (“Termination”), or rescission of any exercise, payment or delivery pursuant to the Award (“Rescission”), or the recapture of any Shares (“Recapture”), if and to the extent-

(a)              the granting, vesting, or payment of such Award was predicated upon the achievement of certain financial results that were subsequently the subject of a material financial restatement;

(b)              in the Committee's view the Participant either benefited from a calculation that later proves to be materially inaccurate, or engaged in fraud or misconduct that caused or partially caused the need for a material financial restatement by the Company or any Affiliate; and

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(c)              a lower granting, vesting, or payment of such Award would have occurred based upon the conduct described in clause (b) of this Section.

In each instance, the Committee shall, to the extent practicable and allowable or required under Applicable Laws, require Reimbursement, Termination or Rescission of, or Recapture relating to, any such Award granted to a Participant; provided that the Company will not seek Reimbursement, Termination or Rescission of, or Recapture relating to, any such Awards that were paid or vested more than three years prior to the first date of the applicable restatement period.  Notwithstanding any other provision of the Plan, all Awards shall be subject to Reimbursement, Termination, Rescission, and/or Recapture to the extent required by Applicable Law, including but not limited to Section 10D of the Exchange Act.

16.           Relationship to other Benefits.  No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

17.           Administration of the Plan.  The Committee shall administer the Plan in accordance with its terms, provided that the Board may act in lieu of the Committee on any matter.  The Committee shall hold meetings at such times and places as it may determine and may prescribe, amend, and rescind such rules and regulations, and procedures for the conduct of its business as it deems advisable.  In the absence of a duly appointed Committee, the Board shall function as the Committee for all purposes of the Plan.

(a)              Committee Composition.  The Board shall appoint the members of the Committee.  The Board may at any time appoint additional members to the Committee, remove and replace members of the Committee with or without Cause, and fill vacancies on the Committee however caused.

(b)              Powers of the Committee.  Subject to the provisions of the Plan, the Committee shall have the authority, in its sole discretion:

(i)             to grant Awards and to determine Eligible Persons to whom Awards shall be granted from time to time, and the number of Shares, units, or dollars to be covered by each Award;

(ii)            to determine, from time to time, the Fair Market Value of Shares;

(iii)           to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including any applicable exercise or purchase price, the installments and conditions under which an Award shall become vested (which may be based on performance), terminated, expired, cancelled, or replaced, and the circumstances for vesting acceleration or waiver of forfeiture restrictions, and other restrictions and limitations;

(iv)           to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith which need not be identical either as to type of Award or among Participants;

 
(v)            to construe and interpret the terms of the Plan and any Award Agreement, to determine the meaning of their terms, and to prescribe, amend, and rescind rules and procedures relating to the Plan and its administration;

(vi)           to the extent consistent with the purposes of the Plan and without amending the Plan, to modify, to cancel, or to waive the Company's rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and to recognize differences in foreign law, tax policies, or customs;

(vii)           to require, as a condition precedent to the grant, vesting, exercise, settlement, and/or issuance of Shares pursuant to any Award, that a Participant agree to execute a general release of claims (in any form that the Committee may require, in its sole discretion, which form may include any other provisions, e.g. confidentiality and restrictions on competition, that are found in general claims release agreements that the Company utilizes or expects to utilize);

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(viii)            in the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting, settlement, or exercise of Award, such as a system using an internet website or interactive voice response, to implement paperless documentation, granting, settlement, or exercise of Awards by a Participant may be permitted through the use of such an automated system; and

(ix)           to make all interpretations and to take all other actions that the Committee may consider necessary or advisable to administer the Plan or to effectuate its purposes.

Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may delegate administrative functions to individuals who are Trustees or Employees.

(d)              Local Law Adjustments and Sub-plans.  To facilitate the making of any grant of an Award under this Plan, the Committee may adopt rules and provide for such special terms for Awards to Participants who are located within the United States, foreign nationals, or who are employed by the Company or any Affiliate outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the customs and requirements of particular countries.  The Company may adopt sub-plans and establish escrow accounts and trusts, and settle Awards in cash in lieu of shares, as may be appropriate, required or applicable to particular locations and countries.

(c)              Action by Committee.  Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by an officer or other employee of the Company or any Affiliate, the Company's independent certified public accounts, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

(d)              Deference to Committee Determinations.  The Committee shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion it deems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of the Plan or Award Agreements.  The Committee's prior exercise of its discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter.  The Committee's interpretation and construction of any provision of the Plan, or of any Award or Award Agreement, and all determination the Committee makes pursuant to the Plan shall be final, binding, and conclusive.   The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly made in bad faith or materially affected by fraud.

(e)              No Liability; Indemnification.  Neither the Board nor any Committee member, nor any Person acting at the direction of the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good faith with respect to the Plan, any Award or any Award Agreement.  The Company and its Affiliates shall pay or reimburse any member of the Committee, as well as any Trustee, Employee, or Consultant who in good faith takes action on behalf of the Plan, for all expenses incurred with respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims, liabilities, and costs (including reasonable attorney's fees) arising out of their good faith performance of duties on behalf of the Plan.  The Company and its Affiliates may, but shall not be required to, obtain liability insurance for this purpose.

(f)              Expenses.  The expenses of administering the Plan shall be borne jointly and severally by the Company and its Affiliates.

18.           Time of Granting Awards.  The date of grant (“Grant Date”) of an Award shall be the date on which the Committee makes the determination granting such Award or such other date as is determined by the Committee, provided that in the case of an ISO, the Grant Date shall be the later of the date on which the Committee makes the 

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determination granting such ISO or the date of commencement of the Participant's employment relationship with the Company.

19.           Modification of Awards and Substitution of Options.  Within the limitations of the Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised, to accelerate the vesting of any Award, to extend or renew outstanding Awards, to accept the cancellation of outstanding Awards to the extent not previously exercised, or to make any change that the Plan would permit for a new Award.  However, except in connection with a Change in Control or as approved by the Company's shareholders for any period during which it is subject to the reporting requirements of the Exchange Act, the Committee may not cancel an outstanding Option or SAR whose exercise price is greater than Fair Market Value at the time of cancellation for the purpose of reissuing the Option or SAR to the Participant at a lower exercise price, or granting a replacement award of a different type, or otherwise allowing for a “repricing” within the meaning of applicable federal securities laws.  Notwithstanding the foregoing in this Section 19, and except as provided in Section 15, no modification of an outstanding Award may materially and adversely affect a Participant's rights thereunder unless either (i) the Participant provides written consent to the modification, or (ii) before a Change in Control, the Committee determines in good faith that the modification is not materially adverse to the Participant.

20.           Plan Amendment and Termination.  The Committee may amend or terminate the Plan as it shall deem advisable; provided that no change shall be made that increases the total number of Shares reserved for issuance pursuant to Awards (except pursuant to Section 13 above) unless such change is authorized by the shareholders of the Company.  A termination or amendment of the Plan shall not materially and adversely affect a Participant's vested rights under an Award previously granted to him or her, unless the Participant consents in writing to such termination or amendment.  Notwithstanding the foregoing, the Committee may amend the Plan to comply with changes in tax or securities laws or regulations, or in the interpretation thereof.

21.           Term of Plan.  If not sooner terminated by the Board, this Plan shall terminate at the close of business on the date ten years after the earlier of Board approval of the Plan and its Effective Date as determined under Section 1(b) above.  No Awards shall be made under the Plan after its termination.

22.           Governing Law.  The terms of this Plan shall be governed by the laws of the State of Maryland, within the United States of America, without regard to the State's conflict of laws rules.

23.           Laws and Regulations.

 (a)              General Rules.   This Plan, the granting of Awards, the exercise of Options and SARs, and the obligations of the Company hereunder (including those to pay cash or to deliver, sell or accept the surrender of any of its Shares or other securities) shall be subject to all Applicable Law.  In the event that any Shares are not registered under any Applicable Law prior to the required delivery of them pursuant to Awards, the Company may require, as a condition to their issuance or delivery, that the persons to whom the Shares are to be issued or delivered make any written representations and warranties (such as that such Shares are being acquired by the Participant for investment for the Participant's own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in, any distribution of such Shares) that the Committee may reasonably require, and the Committee may in its sole discretion include a legend to such effect on the certificates representing any Shares issued or delivered pursuant to the Plan.

(b)              Black-out Periods.  Notwithstanding any contrary terms within the Plan or any Award Agreement, the Committee shall have the absolute discretion to impose a “blackout” period on the exercise of any Option or SAR, as well as the settlement of any Award, with respect to any or all Participants (including those whose Continuous Service has ended) to the extent that the Committee determines that doing so is either desirable or required in order to comply with applicable securities laws.

(c)              Severability; Blue Pencil.  In the event that any one or more of the provisions of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.  If, in the opinion of any court of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power and authority to 

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excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.

24.           No Shareholder Rights.  Neither a Participant nor any transferee or Beneficiary of a Participant shall have any rights as a shareholder of the Company with respect to any Shares underlying any Award until the date of issuance of a share (by certificate or book-entry) to such Participant, transferee, or Beneficiary for such Shares in accordance with the Company's governing instruments and Applicable Law.  Prior to the issuance of Shares or Restricted Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or any other rights as a shareholder with respect to the Shares underlying the Award (unless otherwise provided in the Award Agreement for Restricted Shares), notwithstanding its exercise in the case of Options and SARs.  No adjustment will be made for a dividend or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise specifically provided for in this Plan or an Award Agreement.

25.           No Employment Rights.  The Plan shall not confer upon any Participant any right to continue an employment, service or consulting relationship with the Company, nor shall it affect in any way a Participant's right or the Company's right to terminate the Participant's employment, service, or consulting relationship at any time, with or without Cause.

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___________________

Appendix I: Definitions

___________________

As used in the Plan, the following terms have the meanings indicated when they begin with initial capital letters within the Plan:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Law” means the legal requirements relating to the administration of options and share-based plans under any applicable laws of the United States, any other country, and any provincial, state, or local subdivision, any applicable stock exchange or automated quotation system rules or regulations, as such laws, rules, regulations and requirements shall be in place from time to time.

“Award” means any award made, in writing or by an electronic medium, pursuant to the Plan, including awards made in the form of an Option, a SAR, a Restricted Share, a RSU, an Unrestricted Share, a Performance Award, or Dividend Equivalent Rights, or any combination thereof, whether alternative or cumulative.

“Award Agreement” means any written document setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms of documents to be used, and may change them from time to time for any reason.

“Beneficiary” means the person or entity designated by the Participant, in a form approved by the Company, to exercise the Participant's rights with respect to an Award or receive payment or settlement under an Award after the Participant's death.

“Board” means the Board of Trustees of the Company.

“Cause” for termination of a Participant's Continuous Service will have the meaning set forth in any unexpired employment agreement between the Company and the Participant. In the absence of such an agreement, “Cause” will exist if the Participant is terminated from employment or other service with the Company or an Affiliate for any of the following reasons: (i) the Participant's willful failure to substantially perform his or her duties and responsibilities to the Company or deliberate violation of a material Company policy; (ii) the Participant's commission of any material act or acts of fraud, embezzlement, dishonesty, or other willful misconduct; (iii) the Participant's material unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant's willful and material breach of any of his or her obligations under any written agreement or covenant with the Company.

The Committee shall in its discretion determine whether or not a Participant is being terminated for Cause.  The Committee's determination shall, unless arbitrary and capricious, be final and binding on the Participant, the Company, and all other affected persons.  The foregoing definition does not in any way limit the Company's ability to terminate a Participant's employment or consulting relationship at any time, and the term “Company” will be interpreted herein to include any Affiliate or successor thereto, if appropriate.

Change in Control” means any of the following:

(i)           Acquisition of Controlling Interest.  Any Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or 

A-1

indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities.  In applying the preceding sentence, (i) securities acquired directly from the Company or its Affiliates by or for the Person shall not be taken into account, and (ii) an agreement to vote securities shall be disregarded unless its ultimate purpose is to cause what would otherwise be Change of Control, as reasonably determined by the Board.

(ii)           Change in Board Control.  During a consecutive 2-year period commencing after the date of adoption of this Plan, individuals who constituted the Board at the beginning of the period (or their approved replacements, as defined in the next sentence) cease for any reason to constitute a majority of the Board.  A new Trustee shall be considered an “approved replacement” Trustee if his or her election (or nomination for election) was approved by a vote of at least a majority of the Trustees then still in office who either were Trustees at the beginning of the period or were themselves approved replacement Trustees, but in either case excluding any Trustee whose initial assumption of office occurred as a result of an actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board.

(iii)           Merger.  The Company consummates a merger, or consolidation of the Company with any other corporation unless: (a) the voting securities of the Company outstanding immediately before the merger or consolidation would continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; and (b) no Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities.

(iv)           Sale of Assets.  The stockholders of the Company approve an agreement for the sale or disposition by the Company of all, or substantially all, of the Company's assets.

(v)           Liquidation or Dissolution.  The stockholders of the Company approve a plan or proposal for liquidation or dissolution of the Company.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Shares immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

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

“Committee” means the Compensation Committee of the Board or its successor, provided that the term “Committee” means (i) the Board when acting at any time in lieu of the Committee, (ii) with respect to any decision involving an Award intended to satisfy the requirements of Code Section 162(m), a committee consisting of two or more Trustees of the Company who are “outside directors” within the meaning of Code Section 162(m), and (iii) with respect to any decision relating to a Reporting Person, a committee consisting solely of two or more Trustees who are disinterested within the meaning of Rule 16b-3.

“Company” means Lexington Realty Trust, a Maryland real estate investment trust; provided that in the event the Company reincorporates to another jurisdiction, all references to the term “Company” shall refer to the Company in such new jurisdiction.

“Company Share” means a share of beneficial interest, $.0001 par value per share, of the Company classified as “common stock.”  In the event of a change in the capital structure of the Company affecting the common stock (as provided in Section 13), the Shares resulting from such a change in the common stock shall be deemed to be Company Stock within the meaning of the Plan.

“Consultant” means any person (other than an Employee or Trustee), including an advisor, who is engaged by the Company or any Affiliate to render services and is compensated for such services.

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“Continuous Service” means a Participant's period of service in the absence of any interruption or termination, as an Employee, Trustee, or Consultant.  Continuous Service shall not be considered interrupted in the case of:  (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in status from Trustee to advisory director or emeritus status; or (iv) transfers between locations of the Company or between the Company and its Affiliates.  Changes in status between service as an Employee, Trustee, and a Consultant will not constitute an interruption of Continuous Service if the individual continues to perform bona fide services for the Company.  The Committee shall have the discretion to determine whether and to what extent the vesting of any Awards shall be tolled during any paid or unpaid leave of absence; provided, however, that in the absence of such determination, vesting for all Awards shall be tolled during any such unpaid leave (but not for a paid leave).

“Disabled” will have the meaning set forth in any unexpired employment agreement between the Company and the Participant. In the absence of such an agreement, “Disabled” means (i) for an ISO, that the Participant is disabled within the meaning of Code section 22(e)(3), and (ii) for other Awards, a condition under which that the Participant -

(i)           is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

(ii)           is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, received income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company.

“Dividend Equivalent Rights” means Awards pursuant to Section 10 of the Plan, which may be attached to other Awards.

“Effective Date” means the date on which the Company's shareholders approve the Plan.

“Eligible Person” means any Consultant, Trustees, or Employee and includes non-Employees to whom an offer of employment has been or is being extended.

“Employee” means any person whom the Company or any Affiliate classifies as an employee (including an officer) for employment tax purposes, whether or not that classification is correct.  The payment by the Company of a director's fee to a Trustee shall not be sufficient to constitute “employment” of such Trustee by the Company.

“Employer” means the Company and each Subsidiary and Affiliate that employs one or more Participants.

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

“Fair Market Value” means, as of any date (the “Determination Date”) means: (i) the closing price of a Share on the New York Stock Exchange or the American Stock Exchange (collectively, the “Exchange”), on the day before (or, with respect to a Grant Date, the day of) Determination Date, or, if shares were not traded on such day, then on the nearest preceding trading day during which a sale occurred; or (ii) if such stock is not traded on the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the last sales price (if the stock is then listed as a National Market Issue under The Nasdaq National Market System) or (B) the mean between the closing representative bid and asked prices (in all other cases) for the stock on the day before the Determination Date as reported by NASDAQ or such successor quotation system; or (iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is otherwise traded in the over-the-counter, the mean between the representative bid and asked prices on the day before the Determination Date; or (iv) if subsections (i)-(iii) do not apply, the fair market value established in good faith by the Board.

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“Grant Date” has the meaning set forth in Section 18 of the Plan.

“Incentive Stock Option” (or “ISO”) means, an Option that qualifies for favorable income tax treatment under Code Section 422.

“Involuntary Termination” means termination of a Participant's Continuous Service under the following circumstances occurring on or after a Change in Control:

(i)           termination without Cause by the Company or an Affiliate or successor thereto, as appropriate; or

(ii)           voluntary resignation by the Participant through the following actions: (1) the Participant provides the Company with written notice of the existence of one of the events, arising without the Participant's consent, listed in clauses (A) through (C), below within thirty (30) days of the initial existence of such event; (2) the Company fails to cure such event within thirty (30) days following the date such notice is given; and (3) the Participant elects to voluntarily terminate employment within the ninety (90) day period immediately following such event. The events include: (A) a material reduction in the Participant's authority, duties, and responsibilities, provided that a mere change in the Participant's title shall not trigger an Involuntary Termination, (B) the Participant being required to relocate his place of employment, other than a relocation within fifty (50) miles of the Participant's principal work site at the time of the Change in Control, or (C) a material reduction in the Participant's Base Salary other than any such reduction consistent with a general reduction of pay for similarly-situated Participants.

“Non-ISO” means an Option not intended to qualify as an Incentive Stock Option, as designated in the applicable Award Agreement.

“Option Proceeds” shall mean the cash actually received by the Company for the exercise price in connection with the exercise of Options that are exercised after the Effective Date of the Plan, plus the maximum tax benefit that could be realized by the Company as a result of the exercise of such Options, which tax benefit shall be determined by multiplying (i) the amount that is deductible for Federal income tax purposes as a result of any such Option exercise (currently, equal to the amount upon which the Participant's withholding tax obligation is calculated), times (ii) the maximum Federal corporate income tax rate for the year of exercise. With respect to Options, to the extent that a Participant pays the exercise price and/or withholding taxes with Shares, Option Proceeds shall not be calculated with respect to the amounts so paid in Shares

“Option” means a right to purchase Shares at a price and on terms and conditions determined in accordance with the Plan.

“Participant” means any Eligible Person who holds an outstanding Award.

“Performance Awards” mean Awards granted pursuant to Section 9.

“Performance Unit” means an Award granted pursuant to Section 9(a) of the Plan which may be paid in cash, in Shares, or such combination of cash and Shares as the Committee in its sole discretion shall determine.

“Person” means any natural person, association, trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership, limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated organization or organizational entity.

“Plan” means this Lexington Realty Trust 2011 Equity-Based Award Plan.

“Recapture”, “Rescission”, “Reimbursement” have the meanings set forth in Section 15 of the Plan.

“Recoupment” has the meaning set forth in Section 15 of the Plan.

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“Reporting Person” means an Employee, Trustee, or Consultant who is subject to the reporting requirements set forth under Rule 16b-3.

“Restricted Share” means a Company Share awarded with restrictions imposed under Section 7.

“Restricted Share Unit” or “RSU” means a right granted to a Participant to receive Shares or cash upon the lapse of restrictions imposed under Section 7.

“Retirement” means a Participant's termination of employment after age 65.

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

“Share” means a share of Common Stock of the Company, as adjusted in accordance with Section 13 of the Plan.

“SAR” or “Share Appreciation Right” means a right to receive amounts awarded under Section 6.

“Ten Percent Holder” means a person who owns (within the meaning of Code Section 422) stock representing more than ten percent (10%) of the combined voting power of all classes of stock of the Company.

“Termination” has the meaning set forth in Section 15 of the Plan.

“Trustee” means a member of the Board, or a member of the board of directors of an Affiliate.

“Unrestricted Shares” mean Shares (without restrictions) awarded pursuant to Section 7 of the Plan.

“Withholding Taxes” means the aggregate minimum amount of federal, state, local and foreign income, payroll and other taxes that the Company and any Affiliates are required to withhold in connection with any Award.

A-5itrackr_ex101.htm

Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

BETWEEN

(Buyer)

ITRACKR SYSTEMS, INC.,

A FLORIDA CORPORATION,

&

(Sellers)

IDAMIA, LLC,

A FLORIDA, LLC

&

ISELSA II, LLC,

A DELAWARE CORPORATION

  

  

  

DATED: July 12, 2011

 

TABLE OF CONTENTS

 

 

	BACKGROUND 	 	 1
	 	 	 	 
	ARTICLE I – TERMS OF THE TRANSACTION	 1
	 	 	 	 
	 	SECTION 1.1 	SALE AND PURCHASE	 1
	 	SECTION 1.2	PURCHASE PRICE	 1
	 	SECTION 1.3 	THE CLOSING	 1
	 	SECTION 1.4 	FURTHER ASSURANCES	 2
	 	 	 	 
	ARTICLE II - REPRESENTATIONS AND WARRANTIES OF SELLERS	 2
	 	 	 	 
	 	SECTION 2.1	POWER AND CAPACITY	 2
	 	SECTION 2.2	THE UNITS	 2
	 	SECTION 2.3 	CONFLICTIG INSTRUMENTS: CONSENTS	 2
	 	SECTION 2.4	ORGANIZATON AND AUTHORITY	 3
	 	SECTION 2.5	SUBSIDIARIES	 3
	 	SECTION 2.6	CAPITALIZATION	 3
	 	SECTION 2.7	FINANCIAL STATEMENTS	 3
	 	SECTION 2.8	REAL PROPERTY	 3
	 	SECTION 2.9	PERSONEL PROPERTY AND INTELLECTUAL PROPERTY	 3
	 	SECTION 2.10	EMPLOYEE AND LABOR MATTERS 	 4
	 	SECTION 2.11 	COMPLIANCE AND LITIGATION	 5
	 	SECTION 2.12	CONDUCT OF BUSINESS	 5
	 	SECTION 2.13	TAX MATTERS	 6
	 	SECTION 2.14	ABSENSE OF UNDLSCLOSED LIABILITIES	 6
	 	SECTION 2.15	TRANSACTIONS WITH RELATED PARTIES	 6
	 	SECTION 2.16	BROKERS AND FINDERS	 6
	 	SECTION 2.17	DISCLOSURE	 7
	 	 	 	 
	ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER 	 7
	 	 	 	 
	 	SECTION 3.1	ORGANIZATION AND STANDING	 7
	 	SECTION 3.2	CORPORATE POWER	 7
	 	SECTION 3.3	SUBSIDIARIES	 7
	 	SECTION 3.4	CAPITALIZATION	 7
	 	SECTION 3.5	AUTHORIZATION	 8
	 	SECTION 3.6 	NO PREEMPTIVE RIGHTS	 8
	 	SECTION 3.7	PATENTS, TRADEMANTS, ETC	 8
	 	SECTION 3.8	COMPLIANCE WITH OTHER INSTRUMENTS	 8
	 	SECTION 3.9 	PROPRIETARY AGREEMENTS: EMPLOYEES	 9
	 	SECTION 3.10	LITIGATION, ETC	 9
	 	SECTION 3.11	OFFERING 	 9
	 	SECTION 3.12	 TAXES 	 9
	 	SECTION 3.13	TITLE	 10
	 	SECTION 3.14	FINANCIAL STATEMENTS	 10
	 	SECTION 3.15	ABSENCE OF CHANGES	 10
	 	SECTION 3.16	OUTSTANDING INDEBTEDNESS	 10
	 	SECTION 3.17	EMPLOYEE BENEFIT PLANS	 11
	 	SECTION 3.18	ENVIRONMENTAL AND SAFETY LAWS	 11
	 	SECTION 3.19	LABOR AGREEMENTS AND ACTIONS	 11
	 	SECTION 3.20	BROKERS AND FINDERS	 11
	 	SECTION 3.21	REGISTRATION RIGHTS	 11
	 	SECTION 3.22	DISCLOSURE	 11

 

  

  

  

 

	ARTICLE IV- MUTUAL COVENANTS 	 11
	 	 	 	 
	 	SECTION 4.1	ACCESS: COOPERATION RE TAXES	 11
	 	SECTION 4.2	THIRD PARTY CONSENTS	 12
	 	SECTION 4.3	NOTICE OF DEFAULT	 12
	 	 	 	 
	ARTICLE V – CONDUCT OF BUSINESS	 12
	 	 	 	 
	 	SECTION 5.1	COVENANTS OF THE COMPANY	 12
	 	SECTION 5.2	SOLICITATION BY SELLERS	 13
	 	 	 	 
	ARTICLE VI - INDEMNIFICATION	 14
	 	 	 	 
	 	SECTION 6.1	INDEMNIFICATION OBLIGATION	 14
	 	SECTION 6.2	LIMITATIONS	 14
	 	SECTION 6.3	NOTICE OF CLAIM	 15
	 	SECTION 6.4	MANNER OF DEFENSE OF THIRD PARTY CLAIMS	 15
	 	SECTION 6.5	MANNER OF INDEMNIFICATION FOR INDEMNIFYING PARTY CLAIMS	 16
	 	 	 	 
	ARTICLE VII – CONDITIONS TO BUYERS OBLICAITONS	 16
	 	 	 	 
	 	SECTION 7.1	REPRESENTATIONS AND WARRANTIES: COVENANTS	 16
	 	SECTION 7.2	CERTAIN DOCUMENTS	 16
	 	SECTION 7.3	LEGAL MATTERS	 17
	 	SECTION 7.4	LEGAL PROCEEDINGS 	 17
	 	 	 	 
	ARTICLE VIII – CONDITIONS TO SELLERS OBLIGATIONS	 17
	 	 	 	 
	 	SECTION 8.1	REPRESENTATIONS AND WARRANTIES: COVENANTS	 17
	 	SECTION 8.2 	CERTAIN DOCUMENTS	 17
	 	SECTION 8.3 	LEGAL MATTERS	 18
	 	SECTION 8.4	LEGAL PROCEEDINGS	  18
	 	SECTION 8.5	EMPLOYEES	  18
	 	 	 	 
	ARTICLE IX - MISCELLANEOUS	 18
	 	 	 	 
	 	SECTION 9.1	SURVIVAL OR REPRESENTATIONS, WARRANTIES AND COVENANTS	  18
	 	SECTION 9.2	PUBLICITY	  18
	 	SECTION 9.3	EXPENSES	  18
	 	SECTION 9.4	GOVERNING LAW	  18
	 	SECTION 9.5	NOTICES	 19
	 	SECTION 9.6	ARBRITRATION	 19
	 	SECTION 9.7	ENTIRE AGREEMENT	 19
	 	SECTION 9.8	BINDING EFFECT	 19
	 	SECTION 9.9	AMENDMENTS; WAIVERS	 19
	 	SECTION 9.10	 COUNTERPARTS	 20
	 	SECTION 9.11	SEVERABILITY	 20
	 	SECTION 9.12 	KNOWLEDGE	 20
	 	 	 	 
	SIGNATURES	 	 20

                                                                                                                            

  

  

  

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is dated as of July 12, 2011 between iTrackr Systems, Inc., a Florida corporation (the “Buyer”), and Idamia, LLC, a Florida limited liability corporation (“Idamia”) and Iselsa II LLC, a Delaware limited liability corporation (“Iselsa” and together with Idamia, the “Sellers” )

BACKGROUND

WHEREAS, The Sellers own directly, beneficially and of record, 100% of the issued and outstanding membership interests (the "Units") of RespondQ, LLC, a Florida limited liability company (the "Company"); and,

WHEREAS, The Buyer desires to acquire the Units from the Sellers, and the Sellers desire to sell the Units to the Buyer, all upon the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises, covenants, representations, warranties, and agreements contained herein, and intending to be legally bound, the Seller, the Buyer, and the Buyer agree as follows:

 

ARTICLE ONE

TERMS OF THE TRANSACTION

SECTION 1.1.  SALE AND PURCHASE.

The Sellers, on the Closing Date (as defined in Section 1.3 below), shall sell to the Buyer the number of Units set forth opposite each Seller's name below which represents the total Units outstanding:

 

	Name 	 	Units
	 	 	 
	Idamia, LLC: 	 	30
	Iselsa II, LLC: 	 	70

 

SECTION 1.2.  PURCHASE PRICE.

(a) The Buyer, on the Closing Date, shall deliver to the Sellers, in payment of the purchase price (the "Purchase Price") for the Units, certificates representing an aggregate of 5,000,000 (Five Million) shares (the "Shares") of Common Stock of Buyer (the "Common Stock"), and $100,000 in the form of a promissory note payable as follows:  to Iselsa II, 3,500,000 (Three Million Five Hundred Thousand) Shares and $70,000 promissory note, to Idamia, 1,500,000 (One Million Five Hundred Thousand  Shares) and $30,000 promissory note.

SECTION 1.3.  THE CLOSING.

The closing of the purchase and sale of the Shares (the "Closing") shall be held at the offices of the Buyer in Deerfield Beach, Florida, or at such other place as the parties may agree upon, on July 12, 2011, or on such other date as the parties may agree upon. The purchase and sale shall be deemed effective for all purposes as of the close of business on the Closing Date and will be subject to shareholder approval.

  

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SECTION 1.4.  FURTHER ASSURANCES.

The Buyer and the Sellers, at their sole cost and expense, will do such further acts and execute and deliver such further documents regarding their obligations hereunder as may be required solely for the purpose of accomplishing the purposes of this Agreement.

 

ARTICLE TWO

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each of the Sellers, jointly and severally, represents and warrants to the Buyer as follows:

SECTION 2.1.  POWER AND CAPACITY.

Idamia is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida.  Iselsa is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Such Sellers have all requisite power and legal capacity to execute and deliver this Agreement, to perform Seller's obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been duly authorized, executed and delivered by such Seller, constitutes the valid and binding agreement of such Seller and is enforceable against such Seller in accordance with its terms.  This Agreement has been duly authorized by the members of the Company.

SECTION 2.2.  THE UNITS.

Each Seller is the beneficial and record owner of the number of Units set forth opposite such Seller's name in Section 1.1.  The Units are held by the Sellers as record owners thereof, free and clear of all liens, charges, encumbrances, equities and claims whatsoever (other than encumbrances created by this Agreement) and are not subject to any restriction with respect to their transferability (other than restrictions on transfer under applicable federal and state securities laws).  No third party has grounds for any claims against the Units, the Company or the Sellers with respect to the transactions contemplated hereby.

SECTION 2.3.  CONFLICTING INSTRUMENTS; CONSENTS.

(a) The execution and delivery by each Seller of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the articles of organization or the operating agreement of the Company (or the articles of incorporation or bylaws of Idamia and Iselsa), or result in the creation of any lien, security interest, charge or encumbrance upon the Units (other than encumbrances created by this Agreement) or any of the assets or properties of the Company under, conflict with or result in a breach of, create an event of default (or event that, with the giving of notice or lapse of time or both, would constitute an event of default) under, or give any third party the right to accelerate any obligation under, any order, award, judgment or decree to which the Company is a party or by which the Company or any assets or properties of the Company are bound.

(b) The execution and delivery by each Seller of this Agreement does not, and the consummation of the transactions contemplated hereby will not, result in a violation of, or require any authorization, approval, consent or other action by, or registration, declaration or filing with or notice to, any court or administrative or governmental body pursuant to, any statute, law, rule, regulation or ordinance applicable to the Company or such Seller.  There is no pending action, suit, proceeding or, to the knowledge of such Seller, investigation before or by any court or governmental body or agency to restrain or prevent the consummation of the transactions contemplated by this Agreement.

 

  

2

  

SECTION 2.4.  ORGANIZATION AND AUTHORITY.

(a) The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida. The Company has all requisite power and authority to own or lease and operate its properties and assets and to carry on its business as now conducted.

(b) The articles of organization and the operating agreement and all amendments thereto, and the minute books and membership unit transfer records of the Company furnished to the Buyer for review are accurate and complete.

SECTION 2.5.  SUBSIDIARIES.

The Company does not own, either directly or indirectly, any capital stock or other equity interests of any corporation, partnership, Limited Liability Company, joint venture or other entity.

SECTION 2.6.  CAPITALIZATION.

The Company has 100 Units issued and outstanding, all of which have been duly authorized and validly issued, are fully paid and non-assessable and were issued by the Company in compliance with all applicable federal and state securities laws, rules and regulations.  There is no outstanding or authorized option, subscription, warrant, call, right, commitment or other agreement of any character obligating the Company to sell or issue any additional membership interests or any other securities convertible into or exercisable for or evidencing the right to subscribe for any membership interests.

SECTION 2.7.  FINANCIAL STATEMENTS.

(a) The Sellers have furnished the Buyer with copies of the audited financial statements of the Company for the fiscal year ended December 31, 2010, including a balance sheet as at December 31, 2010 (the "Balance Sheet" and such date, the "Balance Sheet Date"), and the related statement of income for the twelve-month period then ended (collectively, the "Financial Statements").

(b) The Financial Statements:  (i) are correct and complete in all material respects and have been prepared in accordance with the books and records of the Company; (ii) have been prepared in accordance with generally accepted accounting principles ("GAAP"); (iii) reflect and provide adequate reserves in respect of all known liabilities of the Company as of such date; and (iv) present fairly the financial condition of the Company at such date and the results of its operations for the fiscal period then ended.  The Company maintains a standard system of accounting established and administered in accordance with GAAP.

SECTION 2.8.  REAL PROPERTY.

The Company does not own any real property.

SECTION 2.9.  PERSONAL PROPERTY AND INTELLECTUAL PROPERTY.

(a) Except as described in subsection (b) hereof, the Company owns all personal property reflected on the Balance Sheet and all personal property acquired by the Company since the date of the Balance Sheet (except such personal property as has been disposed of in the ordinary course of business), free and clear of any liens, security interests, charges or encumbrances created by the Company ("Liens"), except for (i) Liens for property taxes not yet due and payable and (ii) Liens that, either individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect.

 

  

3

  

(b) The Company owns and possesses or is licensed under all patents, patent applications, licenses, trademarks, trade names, brand names, trade secrets, inventions and copyrights employed in the operation of its business as now conducted and as proposed to be conducted by the Company, with no infringement of or conflict with the rights of others respecting any of the same.  To the knowledge of such Seller, the operation of the Company's business as now conducted or as proposed to be conducted by the Company does not infringe any patent, copyright, trade secret or other proprietary rights of any third parties.  There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to patents, patent applications, licenses, trademarks, trade names, brand names, inventions, proprietary rights and copyrights of any other person or entity.  The Company is not obligated to make any payments by way of royalties, fees or otherwise to any owner, licensor of, or other claimant to any patent, trademark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business, or otherwise.  The Company has not received any communications alleging that it has violated or, by conducting its business as proposed by the Company, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity, nor is such Seller aware of any basis for the foregoing.  There are no agreements, understandings, instruments, contracts, judgments, orders, writs or decrees to which the Company is a party or by which it is bound which involve indemnification by the Company with respect to infringements of proprietary rights.

SECTION 2.10.  EMPLOYEE AND LABOR MATTERS.

(a) The Company is not a party to any contract or collective bargaining agreement with any labor organization.

(b) All obligations of the Company for unemployment compensation benefits, pension benefits, salaries, wages, bonuses, sick leave, vacation and other forms of compensation payable to the officers, directors and other employees and independent contractors of the Company through the Balance Sheet Date have been paid or adequate accruals therefore have been made in the Balance Sheet.

(c) There is no controversy pending between the Company and any of its employees that, individually or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect, and no complaint is pending against the Company before the National Labor Relations Board or any state or local agency.

(d) Each employee of the Company has executed an agreement regarding confidentiality and proprietary information.  To the knowledge of such Seller, none of the Company's employees is in violation thereof.  To the knowledge of such Seller, the employees of the Company are not 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 Company or that would conflict with the Company's business as conducted or as proposed to be conducted by the Company or that would prevent any such employee from assigning inventions to the Company.  Neither the execution nor delivery of this Agreement, nor the carrying on of the Company's business as proposed to be conducted by the Company, will 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.  The Company and such Seller do not believe that it is or will be necessary for the Company to utilize any inventions of any of its employees made prior to their employment by the Company.

  

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SECTION 2.11.  COMPLIANCE AND LITIGATION.

(a) The Company has complied with all applicable federal, state, local or other governmental statutes, regulations, orders and restrictions in respect of the conduct of the Company's business and ownership of its properties, except for such failures to comply as, individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect.  The Company has all federal, state and local franchises, licenses, permits and other governmental approvals necessary for the conduct of the Company's business and the ownership of its properties, except for such franchises, license, permits or governmental approvals as, individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect.

(b) There is no action, proceeding or investigation pending, or, to the knowledge of such Seller, threatened, against the Company or its officers, directors or members, or to the knowledge of such Seller, against employees of the Company (or, to the knowledge of such Seller, any basis therefore or threat thereof): (1) which could reasonably be expected to result, either individually or in the aggregate, in (a) any material adverse change in the business, prospects, conditions, affairs or operations of the Company or in any of its properties or assets, or (b) any material impairment of the right or ability of the Company to carry on its business as now conducted or as proposed to be conducted by the Company, or (c) any material liability on the part of the Company; or (2) which questions the validity of this Agreement, or any action taken or to be taken in connection herewith, including in each case, without limitation, actions pending or threatened involving the prior employment of any of the Company's employees, the use in connection with the Company's business of any information or techniques allegedly proprietary to any of the former employers of such employees or their obligations under any agreements with prior employers. The Company is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company currently intends to initiate.

SECTION 2.12.  CONDUCT OF BUSINESS.

Since the Balance Sheet Date the Company has conducted its business in the ordinary course, has maintained its assets and properties in at least as good order and condition as existed on the Balance Sheet Date (other than wear as may be accounted for by normal use) and as is necessary to continue to conduct it business and has not:

(a) incurred any obligation or liability (absolute, accrued, contingent or other), except in the ordinary course of business or in connection with the performance of this Agreement, none of which individually or in the aggregate could reasonably be expected to have a Company Material Adverse Effect;

(b) discharged or satisfied any lien or encumbrance, or paid or satisfied any obligation or liability (absolute, accrued, contingent or other), other than liabilities reflected on the Balance Sheet or incurred since the Balance Sheet Date in the ordinary course of business;

(c) mortgaged, pledged or subjected to any lien or encumbrance any of the assets or properties of the Company;

(d) sold, assigned or transferred any assets or property, or canceled any debt or claim or waived any right under any Company Contract, other than in the ordinary course of business;

(e) made any capital expenditures in excess of $10,000 in each instance;

(f) made any loan to, or incurred any indebtedness from, any director, officer or member, declared, set aside or paid to any member any distribution in respect of its membership interests, or redeemed or repurchased any of its membership interests;

 

  

5

  

(g) paid any commission, salary or bonus to any director, officer or member, other than the payment of wages or salaries or other amounts owed in the ordinary course of business;

(h) experienced any damage, destruction or loss (whether or not covered by insurance) affecting the assets, properties or business which could reasonably be expected to have a Company Material Adverse Effect;

(i) reclassified or changed in any manner the outstanding membership interests of the Company or issued or agreed to issue any membership interest in the Company; or

(j) incurred any material adverse change in its financial condition or assets.

SECTION 2.13.  TAX MATTERS.

(a) The Company has timely filed, or will have timely filed, all tax returns and tax reports required to be filed by it prior to the Closing Date under applicable federal, state and local tax laws and has timely paid all taxes, assessments, fees and other governmental charges for periods prior to the Closing Date shown due on such tax returns.

(b) The Company does not have any tax liability for periods ending on or prior to the Balance Sheet Date for which an adequate tax reserve has not been established on the Balance Sheet.  Without limiting the foregoing, the books and records of the Company include adequate provision for all taxes, assessments, fees and other governmental charges that have been or may in the future be assessed against the Company for all periods ending prior to the Closing Date, and the Company is not, and will not be as of the Closing Date, liable for taxes, assessments, fees and other governmental charges for which the Company has not made adequate provision in its books and records.

SECTION 2.14.  ABSENCE OF UNDISCLOSED LIABILITIES.

The Company does not have any indebtedness or liability, whether accrued, fixed or contingent, other than (a) liabilities reflected in the Balance Sheet, (b) liabilities incurred in the ordinary course of business of the Company consistent with past practice subsequent to the Balance Sheet Date, none of which, individual or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect, and (c) liabilities to be reflected in the Closing Balance Sheet.

SECTION 2.15.  TRANSACTIONS WITH RELATED PARTIES.

Set forth in the year-end Balance Sheet and financial statement footnotes is a complete list and description of all notes, advances or accounts (other than commission, salary, bonus reimbursements and other payments made by the Company in the normal course of business) receivable or payable by the Company from or to any director, officer, employee or member of the Company or any of their affiliates, as well as all agreements or arrangements under which the Company receives goods or services from any such persons. Since the Balance Sheet Date, the Company has not incurred any obligation or liability to, or become a creditor of any unit holder or former unit holder of the Company or any relative or affiliate of any unit holder or former unit holder of the Company.

SECTION 2.16.  BROKERS AND FINDERS.

Neither the Sellers nor the Company has retained any broker or finder in connection with the transactions contemplated by this Agreement.

  

6

  

SECTION 2.17.  DISCLOSURE.

No representation or warranty by the Sellers in this Agreement, or in any document or certificate furnished or to be furnished to the Buyer pursuant hereto or in connection with the transactions contemplated hereby, when taken together, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements made herein and therein, in the light of the circumstances under which they were made, not misleading.  The Company has fully provided the Buyer with all the information which the Buyer has requested for deciding whether to purchase the Units.

 

ARTICLE THREE

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents, warrants and covenants to each of the Sellers as follows:

SECTION 3.1.  ORGANIZATION AND STANDING.

The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted.  The Buyer is qualified or licensed to do business as a foreign corporation in all jurisdictions where such qualification or licensing is required, except where the failure to so qualify could reasonably be expected to have a material adverse effect on the business, prospects, condition, affairs or operations of the Buyer or on its properties or assets (a "Buyer Material Adverse Effect").

SECTION 3.2.  CORPORATE POWER.

The Buyer has now, or will have at the Closing Date, all requisite corporate power necessary for the authorization, execution and delivery of this Agreement.  This Agreement is a valid and binding obligation of the Company enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, moratorium, and other laws of general application affecting the enforcement of creditors' rights.

SECTION 3.3.  SUBSIDIARIES.

The Buyer does not control, directly or indirectly, any other corporation, association or business entity other than that which has been disclosed in its Securities and Exchange Commission (“SEC”) filings as of the date above.

SECTION 3.4.  CAPITALIZATION.

The authorized capital stock of the Buyer is 100,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock.  There are issued and outstanding 20,319,997 shares of the Buyer's Common Stock, and no shares of Preferred Stock.  The holders of record of the presently issued and outstanding Common Stock, options and warrants to purchase Common Stock immediately prior to the Closing are as set forth in the Buyers Form S-1/A filed with the SEC on February 8, 2011.  All such issued and outstanding shares have been duly authorized and validly issued, are fully paid and nonassessable, and were issued in compliance with all applicable state and federal laws concerning the issuance of securities.  The holders of any and all rights, options, warrants or conversion rights to purchase or acquire from the Buyer any of its capital stock, along with the number of shares of capital stock issuable upon exercise of such rights, are set forth in the Buyers Form S-1/A.

  

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SECTION 3.5.  AUTHORIZATION.

(a) Corporate Action.  All corporate action on the part of the Buyer, its officers, directors and stockholders necessary for the issuance of the Common Stock and the authorization, execution and performance of the Buyer's obligations hereunder have been made.

(b) Valid Issuance.  The Shares, when issued in compliance with the provisions of this Agreement when issued in accordance with the provisions of the Articles of Incorporation, as amended to date (the "Buyer's Articles"), will be validly issued, fully paid and nonassessable and will be free of any liens or encumbrances created by the Buyer; provided, however, that all such shares may be subject to restrictions on transfer under state and/or federal securities laws, and as may be required by future changes in such laws.  The rights, preferences, privileges and restrictions of the Shares are as set forth in the Buyer's Articles.

SECTION 3.6.  NO PREEMPTIVE RIGHTS.

No person has any right of first refusal or any preemptive rights in connection with the issuance of the Shares.

SECTION 3.7.  PATENTS, TRADEMARKS, ETC.

The Buyer owns and possesses or is licensed under all patents, patent applications, licenses, trademarks, trade names, brand names, trade secrets, inventions and copyrights employed in the operation of its business as now conducted and as proposed to be conducted, with no infringement of or conflict with the rights of others respecting any of the same.  To the knowledge of the Buyer, the operation of the Buyer's business as now conducted or as proposed to be conducted does not infringe any patent, copyright, trade secret or other proprietary rights of any third parties.  There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Buyer bound by or a party to any options, licenses or agreements of any kind with respect to patents, patent applications, licenses, trademarks, trade names, brand names, inventions, proprietary rights and copyrights of any other person or entity.  The Buyer is not obligated to make any payments by way of royalties, fees or otherwise to any owner, licensor of, or other claimant to any patent, trademark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business, or otherwise.  The Buyer has not received any communications alleging that it has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity, nor is the Buyer aware of any basis for the foregoing.  There are no agreements, understandings, instruments, contracts, judgments, orders, writs or decrees to which the Buyer is a party or by which it is bound which involve indemnification by the Buyer with respect to infringements of proprietary rights.

SECTION 3.8.  COMPLIANCE WITH OTHER INSTRUMENTS.

The Buyer is not in violation of any term of the Buyer's Articles or the Buyer's bylaws, as amended to date (the "Buyer's Bylaws"), nor is the Buyer in violation of or in default in any material respect under the terms of any mortgage, indenture, contract, agreement, instrument, judgment or decree, the violation of which could reasonably be expected to have a Buyer Material Adverse Effect on the Buyer, and to the knowledge of the Buyer, is not in violation of any order, statute, rule or regulation applicable to the Buyer, the violation of which could reasonably be expected to have a Buyer Material Adverse Effect. The execution, delivery and performance of and compliance with this Agreement, and the issuance of the Shares will not (a) result in any such violation, or (b) be in conflict with or constitute a default under any such term, or (c) result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Buyer pursuant to any such term. To the knowledge of the Buyer, there is no such term or any such order, statute, rule or regulation which adversely affects, or in the future which could reasonably be expected to have a Buyer Material Adverse Effect.

 

  

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SECTION 3.9.  PROPRIETARY AGREEMENTS; EMPLOYEES.

Each employee of the Buyer has executed an agreement regarding confidentiality and proprietary information.  To the knowledge of the Buyer, none of its employees is in violation thereof, and the Buyer will use its best efforts to prevent such violations.  To the knowledge of the Buyer, the employees of the Buyer are not 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 Buyer or that would conflict with the Buyer's business as conducted or as proposed to be conducted or that would prevent any such employee from assigning inventions to the Buyer.  Neither the execution nor delivery of this Agreement, nor the carrying on of the Buyer's business as proposed, will 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.  The Buyer does not believe that it is or will be necessary for the Buyer to utilize any inventions of any of its employees made prior to their employment by the Buyer.

SECTION 3.10.  LITIGATION, ETC.

There is no action, proceeding or investigation pending, or, to the knowledge of the Buyer, threatened, against the Buyer or its officers, directors or shareholders, or to the knowledge of the Buyer, against employees of the Buyer (or, to the knowledge of the Buyer, any basis therefore or threat thereof): (1) which could reasonably be expected to result, either individually or in the aggregate, in (a) any material adverse change in the business, prospects, conditions, affairs or operations of the Buyer or in any of its properties or assets, or (b) any material impairment of the right or ability of the Buyer to carry on its business as now conducted or as proposed to be conducted, or (c) any material liability on the part of the Buyer; or (2) which questions the validity of this Agreement, or any action taken or to be taken in connection herewith, including in each case, without limitation, actions pending or threatened involving the prior employment of any of the Buyer's employees, the use in connection with the Buyer's business of any information or techniques allegedly proprietary to any of the former employers of such employees or their obligations under any agreements with prior employers.  The Buyer is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit, proceeding or investigation by the Buyer currently pending or which the Buyer currently intends to initiate.

SECTION 3.11.  OFFERING.

In reliance on the representations and warranties of the Purchasers in Section 2 hereof, the offer, sale and issuance of the Shares in conformity with the terms of this Agreement will not result in a violation of the requirements of Section 5 of the Securities Act of 1933, as amended (the "Securities Act") or the qualification or registration requirements of applicable blue sky laws.

SECTION 3.12.  TAXES.

The Buyer has filed all tax returns that are required to have been filed with appropriate federal, state, county and local governmental agencies or instrumentalities, except where the failure to do so, when taken together with all other such failures, would not have a material adverse effect upon the Buyer.  The Buyer has not elected pursuant to the Code to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the Code, nor has it made any other elections pursuant to the Code (other than elections which relate solely to methods of accounting, depreciation or amortization) which could reasonably be expected to have a Buyer Material Adverse Effect.  The Buyer has paid or established reserves for all income, franchise and other taxes, assessments, governmental charges, penalties, interest and fines due and payable by it on or before the Closing.

  

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SECTION 3.13.  TITLE.

The Buyer owns its property and assets free and clear of all liens, mortgages, loans or encumbrances except liens for current taxes, and such encumbrances and liens which arise in the ordinary course of business and do not materially impair the Buyer's ownership or use of such property or assets.  With respect to the property and assets leased by the Buyer, the Buyer is in compliance with such leases and, to the knowledge of the Buyer, holds valid leasehold interests free and clear of any liens, claims or encumbrances.

SECTION 3.14.  FINANCIAL STATEMENTS.

The Buyer has delivered to the Sellers the unaudited balance sheets and related statements of operation as of December 31, 2010 and the year then ended (the "Buyer's Financial Statements").  The Buyer's Financial Statements are in accordance with the books and records of the Buyer, are complete and correct, and fairly and accurately present the financial condition and operating results of the Buyer for the periods indicated therein, all in conformity with "GAAP".  As of December 31, 2010, the Buyer did not have any liabilities, absolute, contingent, or otherwise, which in accordance with GAAP are required to be disclosed or reserved for other than as set forth in the Buyer's Financial Statements.  Other than a reduction in cash and cash equivalents in the ordinary course of business, since December 31, 2010, there has been no material adverse change in the Buyer's financial condition or assets.  The Buyer maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP.

SECTION 3.15.  ABSENCE OF CHANGES.

Since December 31, 2010, (a) the Buyer has not entered into any transaction which was not in the ordinary course of business, (b) there has been no material adverse change in the condition (financial or otherwise) of the business, property, assets or liabilities of the Buyer other than changes in the ordinary course of its business, none of which, individually or in the aggregate, has been materially adverse, (c) there has been no damage to, destruction of or loss of physical property (whether or not covered by insurance) materially adversely affecting the assets, prospects, financial condition, operating results, business or operations of the Buyer, (d) the Buyer has not declared or paid any dividend or made any distribution on its stock, or redeemed, purchased or otherwise acquired any of its stock, (e) the Buyer has not materially changed any compensation arrangement or agreement with any of its key employees or executive officers, or materially changed the rate of pay of its employees as a group, (f) the Buyer has not changed or amended any material contract by which the Buyer or any of its assets are bound or subject, except as contemplated by this Agreement, (g) there has been no resignation or termination of employment of any key officer or employee of the Buyer and the Buyer does not know of any impending resignation or termination of employment of any such officer or employee that if consummated could reasonably be expected to have a Buyer Material Adverse Effect, (h) there has been no change, except in the ordinary course of business, in the material contingent obligations of the Buyer (nor in any contingent obligation of the Buyer regarding any director, stockholder or key employee or officer of the Buyer) by way of guaranty, endorsement, indemnity, warranty or otherwise, (i) there have been no loans made by the Buyer to any of its employees, officers or directors other than travel advances and other advances made in the ordinary course of business, (j) there has been no waiver by the Buyer of a valuable right or of a material debt owing to it, and (k) there has not been any satisfaction or discharge of any lien, claims or encumbrance or any payment of any obligation by the Buyer, except in the ordinary course of business and which could not be reasonably expected to have a Buyer Material Adverse Effect.

SECTION 3.16.  OUTSTANDING INDEBTEDNESS.

The Buyer has no indebtedness for borrowed money which it has directly or indirectly created, incurred, assumed or guaranteed, or with respect to which it has otherwise become liable, directly or indirectly other than that which has been disclosed in its December 31, 2010 financial statements.

 

  

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SECTION 3.17.  EMPLOYEE BENEFIT PLANS.

The Buyer does not have any "employee benefit plan" other than that which has been disclosed in its December 31, 2010 financial statements.

 

SECTION 3.18.  ENVIRONMENTAL AND SAFETY LAWS.

To the knowledge of the Buyer, the Buyer is not in violation of any applicable statute, law, or regulation relating to the environment or occupational health and safety.  To the knowledge of the Buyer, no material expenditures are or will be required in order to comply with any such existing statute, law, or regulation.

SECTION 3.19.  LABOR AGREEMENTS AND ACTIONS.

The Buyer is not aware that any officer or key employee intends to terminate his or her employment with the Buyer, nor does the Buyer have a present intention to terminate the employment of any of the foregoing.  Subject to general principles related to wrongful termination of employees, the employment of each officer and employee of the Buyer is terminable at the will of the Buyer.

SECTION 3.20.  BROKERS AND FINDERS.

The Buyer has not retained any broker or finder in connection with the transactions contemplated by this Agreement.

SECTION 3.21.  REGISTRATION RIGHTS.

The Buyer has not granted or agreed to grant any right to register securities, including piggyback registration rights, to any person or entity.

SECTION 3.22.  DISCLOSURE.

No representation or warranty by the Buyer in this Agreement, or in any document or certificate furnished or to be furnished to the Sellers pursuant hereto or in connection with the transactions contemplated hereby, when taken together, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements made herein and therein, in the light of the circumstances under which they were made, not misleading.  The Buyer has fully provided the Seller with all the information which the Seller has requested for deciding whether to purchase the Shares.

 

ARTICLE FOUR

MUTUAL COVENANTS

SECTION 4.1.  ACCESS; COOPERATION RE TAXES.

From the date hereof through the Closing Date, the parties hereto will give one another and their respective financial advisors, legal counsel, independent accountants and other representatives reasonable access during normal business hours to all properties, documents, contracts, employees and records of the Company or Buyer, as the case may be, and will furnish one another with copies of such documents and with such information with respect to the Company or the Buyer, as the case may be, any such party may reasonably request from time to time.  Sellers shall be entitled to all losses or other income tax credits attributable to the Company's operations during the period from January 1, 2011 through the Closing Date.  After the Closing Date, the Buyer will give Sellers and their financial advisors, legal counsel, independent accountants and other representatives reasonable access during normal business hours to such records of the Company, and will furnish Sellers with copies of such documents and with such information with respect to the Company as Sellers may reasonably request in order for Sellers to complete tax returns for the period from January 1, 2011 through the Closing Date.

 

  

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SECTION 4.2.  THIRD PARTY CONSENTS.

From the date hereof through the Closing Date, each party hereto will use reasonable commercial efforts to obtain or cause to be obtained all consents, approvals and authorizations that are necessary under applicable law or the Contracts to be obtained by such party in connection with the consummation of the transactions contemplated by this Agreement; provided, however, that neither the Sellers nor the Company shall be required to pay or provide any monetary or other consideration in kind for any such consents, approvals and authorizations under the Contracts.

SECTION 4.3.  NOTICE OF DEFAULT.

From the date hereof through the Closing Date, each party will take all actions reasonably necessary to render accurate as of the Closing Date their representations and warranties contained herein and to perform or cause to be satisfied each covenant or condition to be performed or satisfied as contemplated by this Agreement.  Each party hereto will promptly give notice to the other parties of the occurrence of any event known to such party of that results in a breach of any representation or warranty by such party or the failure of such party to comply with any covenant, condition or agreement contained herein.  From the date hereof through the Closing Date, each party hereto will promptly disclose to the other parties all information that comes to such party's attention that, to such party's knowledge, is material to an understanding of the assets, properties, business, financial condition or results of operations of the Company or Buyer, as the case may be.

 

ARTICLE FIVE

CONDUCT OF BUSINESS

SECTION 5.1.  COVENANTS OF THE COMPANY.

During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing Date, the Sellers agree (except to the extent that the Buyer shall otherwise consent in writing), to cause the Company to carry on its business in the usual, regular and ordinary course in substantially the same manner as previously conducted, to pay its debts and taxes when due, to pay or perform its other obligations when due (subject in all cases to good faith disputes), and, to the extent consistent with such business, to use all reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and key employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others having business dealings with it.  The Sellers shall promptly notify the Buyer of any event or occurrence not in the ordinary course of business of the Company where such event or occurrence would result in a breach of any covenant of the Company set forth in this Agreement or cause any representation or warranty of the Sellers set forth in this Agreement to be untrue as of the date of, or giving effect to, such event or occurrence.  Except as expressly contemplated by this Agreement, the Sellers shall not allow the Company to, without the prior written consent of the Buyer:

(a) Grant any options under any employee plan of the Seller, accelerate, amend or change the period of exercisability under any outstanding options, or authorize cash payments in exchange for any options granted under any of such plans except as required by the terms of such plans or any related agreements in effect as of the date of this Agreement;

 

  

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(b) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company's intellectual property rights other than in the ordinary course of business consistent with past practices;

(c) Make any distributions (whether in cash or other property) in respect of any of its securities;

(d) Acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial equity interest in or substantial portion of the assets of, or by any other manner, any business or any corporation, partnership or other business organization or division, or otherwise acquire or agree to acquire any assets other than acquisitions involving aggregate consideration of not more than Ten Thousand Dollars ($10,000);

(e) Sell, lease, license or otherwise dispose of any of its properties or assets which are material, individually or in the aggregate, to the business of the Company;

(f) Take any action to (i) increase or agree to increase the compensation payable or to become payable to its officers or employees, (ii) grant any additional severance or termination pay to, or enter into any employment or severance agreements with, officers, (iii) grant any severance or termination pay to, or enter into any employment or severance agreement, with any non-officer employee, except in accordance with past practices, (iv) enter into any collective bargaining agreement, or (v) establish, adopt, enter into or amend in any material respect any bonus, profit sharing, thrift, compensation, pension, retirement, deferred compensation, employment, termination, severance or other plan, trust, fund, policy or arrangement for the benefit of any members, officers or employees;

(g) Revalue any of its assets, including writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business;

(h) Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities or guarantee any debt securities of others, other than indebtedness incurred under outstanding lines of credit consistent with past practice;

(i) Amend or propose to amend its Articles of Organization or operating agreement, except as contemplated by this Agreement;

(j) Incur or commit to incur any individual capital expenditure;

(k) Enter into or commit to enter into any data or marketing agreement involving any revenue guarantees or revenue-sharing arrangements;

(l) Amend or terminate any Company Contract, except in the ordinary course of business;

(m) Waive or release any material right or claim, except in the ordinary course of business;

(n) Initiate any litigation or arbitration proceeding; or

(o) Take or agree to take, in writing or otherwise, any of the actions described in Sections (a) through (n) above, or any action which is reasonably likely to make any of the Sellers' representations or warranties contained in this Agreement untrue or incorrect in any material respect (without regard to any materially qualifications contained therein) on the date made (to the extent so limited) or as of the Closing Date.

 

  

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SECTION 5.2.  NO SOLICITATION BY SELLERS.

During the period from the date of this Agreement until the earlier of the termination of this Agreement or the Closing Date, the Sellers and the Company shall not, directly or indirectly, through any officer, director, employee, representative or agent, (i) solicit, initiate, or encourage any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock or similar transactions involving the Company, other than the transactions contemplated by this Agreement (any of the foregoing inquiries or proposals being referred to in this Agreement as a "Company Acquisition Proposal"), (ii) engage in negotiations or discussions concerning, or provide any non-public information to any person or entity relating to, any Company Acquisition Proposal, or (iii) agree to, approve or recommend any Company Acquisition Proposal.

 

ARTICLE SIX

INDEMNIFICATION

SECTION 6.1.  INDEMNIFICATION OBLIGATION.

(a) Subject to the limitations set forth in Section 6.2, the Sellers (for the purposes of this Section 5.1(a) the "Seller Indemnifying Parties") shall indemnify and hold harmless the Company, the Buyer and their affiliates (collectively, the "Buyer Indemnified Parties") in respect of any and all claims, actions, causes of action, arbitrations, proceedings, losses, damages, liabilities and expenses (including, without limitation, settlement costs, reasonable attorneys' fees and any other out-of-pocket costs of investigation), incurred by the Buyer Indemnified Parties in connection with each and all of the following:

(i)   Any breach of any representation or warranty of the Sellers contained herein or in any instrument delivered at the Closing by the Sellers;

(ii)  Any breach of any covenant, agreement or obligation of the Sellers contained herein or in any instrument delivered at the Closing by the Sellers; and

(iii) Any and all liabilities and obligations of the Company of any nature, whether known or unknown, arising from or as a result of the operation of the Company's business prior to the Closing.

 (b) The Buyer shall indemnify and hold harmless the Sellers and their affiliates (collectively, the "Seller Indemnified Parties") in respect of any and all claims, actions, causes of action, arbitrations, proceedings, losses, damages, liabilities and expenses (including, without limitation, settlement costs, reasonable attorneys' fees and any other out-of-pocket costs of investigation), incurred by the Seller Indemnified Parties in connection with each and all of the following:

 (i)   any breach of any representation or warranty of the Buyer contained herein or in any instrument delivered at the Closing by the Buyer;

 (ii)  any breach of any covenant, agreement or obligation of the Buyer contained herein or in any instrument delivered at the Closing by the Buyer; and

 (iii) all liabilities and obligations of the Company of any nature, whether known or unknown, arising from or as a result of the operation of the Company's business after the Closing.

SECTION 6.2.  LIMITATIONS.

(a) The Buyer Indemnified Parties shall not be permitted to enforce any claim for indemnification pursuant to this Agreement until the aggregate of all Buyer Indemnified Parties' claims for indemnification exceed the amount of $15,000 (the "Buyer Threshold Amount").  Once claims in excess of the Buyer Threshold Amount have been asserted by the Buyer Indemnified Parties, the total amount of the claims, including the Buyer Threshold Amount, may be pursued or recovered against the Sellers.

 

  

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(b) The Seller Indemnified Parties shall not be permitted to enforce any claim for indemnification pursuant to Sections 6.1(b)(i) and (ii) of this Agreement until the aggregate of all Seller Indemnified Parties' claims for indemnification pursuant to such sections exceed the amount of $15,000 (the "Seller Threshold Amount").  Once claims in excess of the Seller Threshold Amount have been asserted by the Seller Indemnified Parties, the total amount of the claims pursuant to such sections, including the Seller Threshold Amount, may be pursued or recovered against the Buyer; provided, however, that the maximum liability of the Buyer for indemnification pursuant to Sections 6.1(b)(i) and (ii) of this Agreement shall in no event exceed Twenty Five Thousand Dollars ($25,000).  Nothing in this Section 6.2(b) shall limit the Seller Indemnified Parties' claims for indemnification pursuant to Section 6.1(b)(iii).

(c) Claims for indemnification made under this Agreement may be made during the period from the Closing Date until the first anniversary of the Closing Date; provided, however, that claims pursuant to Section 6.1(b)(iii) may be made at any time after the Closing Date.

(d) The provisions of this Article Six shall be the exclusive rights and remedies of the Buyer and Seller.

SECTION 6.3.  NOTICE OF CLAIMS.

Whenever any claim shall arise for indemnification, the indemnified parties shall promptly notify the indemnifying parties in writing of the claim and, when known, the facts constituting the basis for such claim and the amount or estimate of the amount of the liability arising from such claim; provided, however, that failure of the indemnified parties to timely give such notice shall not be a defense to the liability of the indemnifying parties for such claim, but the indemnifying parties may recover from the indemnified parties any actual damages arising from the indemnified parties' failure to give such timely notice.  A copy of any notice of claims by a Buyer Indemnified Party shall be concurrently delivered by such Buyer Indemnified Party to the Escrow Agent.

SECTION 6.4.  MANNER OF DEFENSE OF THIRD PARTY CLAIMS.

In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a person other than the indemnified parties, the indemnifying parties at their sole cost and expense, may, upon written notice to the indemnified parties assume the defense of any such claim or legal proceeding.  If the indemnifying parties assume the defense of any such claim or legal proceeding, the indemnifying parties shall select counsel reasonably acceptable to the indemnified parties to conduct the defense of such claims or legal proceedings and, at their sole cost and expense, shall take all steps necessary in the defense or settlement thereof.  The indemnifying parties shall not consent to a settlement of, or the entry of any judgment arising from, any such claim or legal proceeding, without the prior written consent of the indemnified parties, unless the indemnifying parties admit in writing their liability to hold the indemnified parties harmless from and against any losses, damages, expenses and liabilities arising out of such settlement.  The indemnified parties shall be entitled to participate in (but not control) the defense of any such action, with their own counsel and at their own expense.  If the indemnifying parties do not assume the defense of any such claim or litigation resulting therefrom in accordance with the terms hereof, the indemnified parties may defend against such claim or litigation in such manner as they may deem appropriate, including, but not limited to, settling such claim or litigation, after giving notice of the same to the indemnifying parties on such terms as the indemnified parties may deem appropriate.  The indemnifying parties shall be entitled to participate in the defense of any action by the indemnified parties, which participation shall be limited to contributing information to the defense and being advised of its status.  In any action by the indemnified parties seeking indemnification from the indemnifying parties in accordance with the provisions of this Section, the indemnifying parties shall not be entitled to question the manner in which the indemnified parties defended such claim or litigation or the amount of or nature of any such settlement.

 

  

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SECTION 6.5.  MANNER OF INDEMNIFICATION FOR INDEMNIFYING PARTY CLAIMS.

Within thirty (30) days of receipt of notice by the indemnifying parties of a claim by the indemnified parties (or such longer period not to exceed sixty (60) days as may be required to investigate such claim), including, without limitation, a claim for damages, settlement and attorneys fees or costs not assumed or paid by the indemnified parties under Section 6.4, the indemnifying parties shall either satisfy such claim by the payment of cash (or, at the option of Sellers, Shares out of the Escrow Amount) to the indemnified parties for the full amount of such claim or notify the indemnifying parties in writing that it contests such claim (a copy of any notice of contest by Sellers shall be concurrently delivered by Sellers to the Escrow Agent).  If the indemnifying parties fail to satisfy such claim or provide such written notice of contest, the claim shall be deemed contested.  If the parties, acting in good faith, cannot reach an agreement within ninety (90) days after notice was first given by the indemnifying parties hereunder, then such parties may seek any remedy available to them at law or equity.

 

ARTICLE SEVEN

CONDITIONS TO THE BUYER'S OBLIGATIONS

The obligations of the Buyer hereunder shall be subject to the satisfaction, as of the Closing Date, of the following conditions (any of which may be waived in writing, in whole or in part, by the Buyer):

SECTION 7.1.  REPRESENTATIONS AND WARRANTIES; COVENANTS.

The representations and warranties of the Sellers contained in this Agreement shall be true and correct in all respects as of the Closing Date as if made on the Closing Date.  The Sellers shall have duly performed and satisfied all covenants and agreements required by this Agreement to be performed or satisfied by the Sellers at or prior to the Closing Date.  The Buyer shall have been furnished with certificates of the Sellers, dated the Closing Date, certifying the fulfillment of the foregoing conditions.

SECTION 7.2.  CERTAIN DOCUMENTS.

The Sellers shall have furnished the Buyer with the following documents:

(a) the articles of organization of the Company, as amended to date, duly certified by the Secretary of State of the State of Florida as of the most recent practical date;

(b) certificates as to the good standing of the Company and payment of all taxes as of the most recent practical date, executed by the Secretary of State of the State of Florida;

(c) the operating agreement of the Company, duly certified by the Secretary of the Company as being in full force and effect on the Closing Date;

(d) resignations, effective on the Closing Date, of all directors and officers of the Company;

(e) originals or copies of all consents, approvals and authorizations that are necessary under applicable law or the Company Contracts to be obtained by the Sellers or the Company in connection with the consummation of the transactions contemplated by this Agreement;

 

  

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(f) the Closing Balance Sheet, certified by the Sellers as being true and correct in all material respects as of the Closing Date; and

(g) such other documents relating to the Company as the Buyer may reasonably request.

SECTION 7.3.  LEGAL MATTERS.

All legal matters, and the form and substance of all documents to be delivered by the Sellers to the Buyer at the Closing, shall be satisfactory to counsel for the Buyer.

SECTION 7.4.  LEGAL PROCEEDINGS.

No action, suit, claim, proceeding, inquiry or investigation by or before any federal, state, local or other governmental court, arbitrator or agency shall have been initiated or, to the knowledge of the Buyer, threatened, seeking to prevent or enjoin the transactions contemplated by this Agreement.

 

ARTICLE EIGHT

CONDITIONS TO THE SELLERS' OBLIGATIONS

The obligations of the Sellers hereunder shall be subject to the satisfaction, as of the Closing Date, of the following conditions (any of which may be waived in writing, in whole or in part, by the Sellers):

SECTION 8.1.  REPRESENTATIONS AND WARRANTIES; COVENANTS.

The representations and warranties of the Buyer contained in this Agreement shall be true and correct in all material respects (without regard to any materiality qualifications contained therein) as of the Closing Date as if made on the Closing Date.  The Buyer shall have duly performed and satisfied all covenants and agreements required by this Agreement to be performed or satisfied by the Buyer at or prior to the Closing Date.  The Sellers shall have been furnished with a certificate of the Buyer, dated the Closing Date, certifying the fulfillment of the foregoing conditions.

SECTION 8.2.  CERTAIN DOCUMENTS.

The Buyer shall have furnished the Sellers with the following documents or certificates:

(a) the articles of incorporation of the Buyer as amended to date, duly certified by the Secretary of State of the State of Florida as of the most recent practical date;

(b) certificates as to the good standing of the Buyer and payment of all taxes as of the most recent practical date, executed by the Secretary of State of the State of Florida;

(c) the bylaws of Buyer, duly certified by the Secretary of Buyer as being in full force and effect on the Closing Date;

(d) copies of the resolutions of the Board of Directors approving the transactions contemplated by this Agreement, including, without limitation, the authorization and issuance of the Shares;

(e) originals or copies of all consents, approvals and authorizations that are necessary under applicable law or the Buyer Contracts to be obtained by the Buyer in connection with the consummation of the transactions contemplated by this Agreement;

 

  

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(f) such other documents relating to the Buyer as the Sellers may reasonably request; and

(g) certificates in the respective names of the Sellers evidencing the Shares.

SECTION 8.3.  LEGAL MATTERS.

All legal matters, and the form and substance of all documents to be delivered by the Buyer to the Sellers at the Closing, shall be satisfactory to counsel for the Sellers.

SECTION 8.4.  LEGAL PROCEEDINGS.

No action, suit, claim, proceeding, inquiry or investigation by or before any federal, state, local or other governmental court, arbitrator or agency shall have been initiated or, to the knowledge of the Sellers, threatened, seeking to prevent or enjoin the transactions contemplated by this Agreement.

SECTION 8.5.  EMPLOYEES.

Buyer shall have offered employment to all current employees of the Company as of the Closing.

 

ARTICLE NINE

MISCELLANEOUS

SECTION 9.1.  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS.

The representations and warranties of the Sellers made in this Agreement (including the Schedules) or any certificate, instrument or other document delivered in connection herewith shall survive the Closing Date for a period of one year.

SECTION 9.2.  PUBLICITY.

 

Neither party will make any public announcement regarding the subject matter of this Agreement without the prior written consent of the other party.

SECTION 9.3.  EXPENSES.

In the event the Closing is completed, the expenses incurred by the Company will be borne by the Sellers, except that the following expenses relating to the transaction will be accrued by the Company and become post-closing obligations of the surviving company to be paid on the Closing Date:  the accounting and legal fees and expenses of the Company in an amount not to exceed Fifty ($50,000) Dollars.  In the event the Closing does not take place, each party shall pay its own expenses in connection with the preparation and performance of this Agreement and the consummation of the transactions contemplated hereby, including without limitation all fees and expenses of investment bankers, financial advisors, legal counsel, independent accountants and actuaries.

SECTION 9.4.  GOVERNING LAW.

This Agreement shall be governed by and construed and enforced in accordance with the internal, substantive laws of the State of Florida, without giving effect to the conflict of laws rules thereof.

 

  

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SECTION 9.5.  NOTICES.

Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):

 (a)  if to the Buyer, addressed to:

iTrackr Systems, Inc.

1911 E Newport Center Dr.

Suite PH D

Deerfield Beach, FL 33442

Phone: (954) 809-3538

(b)  if to the Sellers, addressed to:

Idamia, LLC                                                            Iselsa II, LLC

20423 State Road 7                                               7111 Mandarin Drive

Suite F6-490                                                           Boca Raton, FL 33433

Boca Raton, FL 33498

SECTION 9.6.  ARBITRATION.

In the event a dispute shall arise under this Agreement between the parties or any two parties hereto, such disputes shall be exclusively resolved by binding arbitration under the Commercial Rules of the American Arbitration Association with arbitration to occur at Boca Raton, Florida USA. The arbitrator may award, in addition to declaratory relief, orders of specific performance, orders specifying the cures necessary to end a breach, orders determining unresolved negotiations of price and/or terms and may award contract damages in matters of a material breach of this Agreement.  The award of the arbitrator shall be final and binding upon the parties thereto and shall include reasonable  attorneys fees as well as and costs taxable under Florida law in court cases, which award for attorneys fees and costs shall continue through any review, appeal or enforcement of  arbitration award.  An arbitration award may be enforced in any court of competent jurisdiction. The parties each waive the right to punitive or exemplary damages, and consequential damages except in cases of the intentional infliction of economic harm. The provisions of this paragraph shall not limit the right of any party to this Agreement to seek preliminary or permanent injunctive relief in any court of competent jurisdiction.

SECTION 9.7.  ENTIRE AGREEMENT.

This Agreement represents the entire agreement between the parties and supersedes and cancels any prior oral or written agreement, letter of intent or understanding related to the subject matter hereof.

SECTION 9.8.  BINDING EFFECT.

This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement.

  

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SECTION 9.9.  AMENDMENTS; WAIVERS.

No provision of this Agreement may be terminated, amended, supplemented, waived or modified other than by an instrument in writing signed by the party against whom the enforcement of the termination, amendment, supplement, waiver or modification is sought.

SECTION 9.10.  COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties.

SECTION 9.11.  SEVERABILITY.

In the event any provision, or portion thereof, of this Agreement is held by a court having proper jurisdiction to be unenforceable in any jurisdiction, then such portion or provision shall be deemed to be severable as to such jurisdiction (but, to the extent permitted by law, not elsewhere) and shall not affect the remainder of this Agreement, which shall continue in full force and effect.  If any provision of this Agreement is held to be so broad as to be unenforceable, such provision shall be interpreted to be only as broad as is necessary for it to be enforceable.

SECTION 9.12.  KNOWLEDGE.

For the purposes of this Agreement, the phrase (i) "to the knowledge of such Seller" shall mean the actual knowledge, after due inquiry within the Company, of any of the Sellers or the Company's directors and executive officers, and (ii) "to the knowledge of the Buyer" shall mean the actual knowledge, after due inquiry within the Buyer, of any of the Buyer's executive officers.

 

  

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.

BUYER:

ITRACKR SYSTEMS, INC. 

 

	By:	/s/ John Rizzo	 	 	 
	 	Name: John Rizzo 

Title: CEO

	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	SELLER:	 	SELLER:	 
	 	 	 	 	 
	 	IDAMIA, LLC 	 	ISELSA II, LLC	 
	 	 	 	 	 
	By: 	/s/ Radosveta Rizzo	By:   	/s/ Reid Shapiro	 
	 	
Name: Radosveta Rizzo

Title: Managing Member 

	 	
Name: Reid Shapiro

Title: Managing Member

	 

                                      

  

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