Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Aegis Industries , Inc. - Exhibit 10.1

Exhibit 10.1 

 

 

 

AGREEMENT AND PLAN OF MERGER 

among 

Z5 TECHNOLOGIES LLC 

AEGIS MERGER CORPORATION 

AEGIS INDUSTRIES, INC. 

AND 

THOMAS KEENAN VENTURES, LLC 

 

 

May 31, 2007 

TABLE OF CONTENTS 

	 	  	  	Page 
	 	  	  	  
	
      ARTICLE I DEFINITIONS 

      	4 
	 	 	  
	 
	
      ARTICLE II GENERAL; CLOSING; CLOSING DELIVERABLES 

      	4 
	 	 	  
	 
	 	2.1 	
      The Merger 

      	4 
	 	 	  
	 
	 	2.2 	
      Effective Time of the Merger. 

      	5 
	 	 	  
	 
	 	2.3 	
      Effect of the Merger 

      	5 
	 	 	  
	 
		2.4 	
      Charter; By-Laws; Officers and Directors of Surviving Corporation;
        Voting Agreement 

      	5 
	 	 	  
	 
	 	2.5 	
      Closing. 

      	5 
	 	 	  
	 
	 	2.6 	
      Closing Deliveries 

      	6 
	 	  		  
	
      ARTICLE III PAYMENT OF MERGER CONSIDERATION; EFFECT OF
        MERGER ON CAPITAL STOCK OF CONSTITUENT CORPORATIONS 

      	8 
	 	 	  
	 
	 	3.1 	
      Merger Consideration; Effect on Capital Stock 

      	8 
	 	 	  
	 
	 	3.2 	
      No Further Ownership Rights in Membership Interests 

      	8 
	 	  		  
	
      ARTICLE IV MERGER CONSIDERATION 

      	9 
	 	 	  
	 
	 	4.1 	
      Delivery of Merger Consideration 

      	9 
	 	 	  
	 
	 	4.2 	
      Claw Back 

      	9 
	 	 	  
	 
	 	4.3 	
      Purchase Price Allocation 

      	10 
	 	  		  
	
      ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLER
      

      	11 
	 	 	  
	 
	 	5.1 	
      Title to the Units. 

      	11 
	 	 	  
	 
	 	5.2 	
      Authorization of Transaction. 

      	11 
	 	 	  
	 
	 	5.3 	
      Non-contravention. 

      	11 
	 	 	  
	 
	 	5.4 	
      Proceedings 

      	12 
	 	 	  
	 
	 	5.5 	
      Consents 

      	12 

	 	5.6 	Brokers 	12 
	 	 	 	 
	 	5.7 	Certain Investment Representations. 	12 
	 	  	  	  
	ARTICLE VI REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
      	13 
	 	 	 	 
	 	6.1 	Organization; Good Standing; Qualification and Power. 	13 
	 	 	 	 
	 	6.2 	Authority; Noncontravention; Consents. 	13 
	 	 	 	 
	 	6.3 	Capitalization. 	14 
	 	 	 	 
	 	6.4 	Subsidiaries; Investments 	15 
	 	 	 	 
	 	6.5 	Financial Statements; Funded Indebtedness; Audit Controls;
      and Inventory 	15 
	 	 	 	 
	 	6.6 	Absence of Undisclosed Liabilities. 	16 
	 	 	 	 
	 	6.7 	Absence of Changes 	16 
	 	 	 	 
	 	6.8 	Tax Matters. 	18 
	 	 	 	 
	 	6.9 	Title to assets 	18 
	 	 	 	 
	 	6.10 	Real Property. 	19 
	 	 	 	 
	 	6.11 	Intellectual Property 	19 
	 	 	 	 
	 	6.12 	Contracts. 	22 
	 	 	 	 
	 	6.13 	Litigation 	23 
	 	 	 	 
	 	6.14 	Compliance; Governmental Authorizations. 	23 
	 	 	 	 
	 	6.15 	Employees; Labor Relations 	24 
	 	 	 	 
	 	6.16 	Employee Benefits 	26 
	 	 	 	 
	 	6.17 	Environmental Matters 	29 
	 	 	 	 
	 	6.18 	Brokers 	30 
	 	 	 	 
	 	6.19 	Related Transactions 	30 
	 	 	 	 
	 	6.20 	Insurance 	30 
	 	 	 	 
	 	6.21 	Certain Payments. 	31 
	 	 	 	 
	 	6.22 	Accounts and Notes Payable 	31 
	 	 	 	 
	 	6.23 	Accounts and Notes Receivable 	31 
	 	 	 	 
	 	6.24 	Principal Customers and Suppliers. 	31 
	 	 	 	 
	 	6.25 	Disclosure. 	32 
	 	  	  	  
	ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
      	32 
	 	 	 	 
	 	7.1 	Organization; Good Standing; Qualification and Power. 	32 
	 	 	 	 
	 	7.2 	Authority; Noncontravention; Consents. 	32 
	 	 	 	 
	 	7.3 	Brokers 	33 
	 	 	 	 
	 	7.4 	Investment 	33 
	 	 	 	 
	 	7.5 	Capitalization. 	33 

- ii – 

	 	7.6 	Litigation 	34 
	 	 	 	 
	 	7.7 	Solvency 	35 
	 	 	 	 
	 	7.8 	Offering Exemption. 	35 
	 	 	 	 
	 	7.9 	Business of Merger Co 	35 
	 	 	 	 
	 	7.10 	SEC Documents; Financial Statements. 	35 
	 	 	 	 
	 	7.11 	Subsidiaries; Investments 	36 
	 	 	 	 
	 	7.12 	Absence of Undisclosed Liabilities. 	36 
	 	 	 	 
	 	7.13 	Absence of Changes 	36 
	 	 	 	 
	 	7.14 	Tax Matters. 	38 
	 	 	 	 
	 	7.15 	Title to Assets. 	39 
	 	 	 	 
	 	7.16 	Real Property. 	39 
	 	 	 	 
	 	7.17 	Intellectual Property 	40 
	 	 	 	 
	 	7.18 	Contracts. 	42 
	 	 	 	 
	 	7.19 	Reserved 	44 
	 	 	 	 
	 	7.20 	Compliance; Governmental Authorizations. 	44 
	 	 	 	 
	 	7.21 	Employees; Labor Relations 	44 
	 	 	 	 
	 	7.22 	Employee Benefits 	46 
	 	 	 	 
	 	7.23 	Environmental Matters 	49 
	 	 	 	 
	 	7.24 	Related Transactions 	50 
	 	 	 	 
	 	7.25 	Insurance 	50 
	 	 	 	 
	 	7.26 	Certain Payments. 	51 
	 	 	 	 
	 	7.27 	Accounts and Notes Payable 	51 
	 	 	 	 
	 	7.28 	Accounts and Notes Receivable 	51 
	 	 	 	 
	 	7.29 	Principal Customers and Suppliers. 	52 
	 	 	 	 
	 	7.30 	Disclosure. 	52 
	 	  	  	  
	ARTICLE VIII COVENANTS 	52 
	 	 	 	 
	 	8.1 	Closing Efforts 	52 
	 	 	 	 
	 	8.2 	Governmental and Third-Party Notices and Consents 	53 
	 	 	 	 
	 	8.3 	Operation of Business 	53 
	 	 	 	 
	 	8.4 	Notice of Breaches 	54 
	 	 	 	 
	 	8.5 	Certain Tax Matters. 	54 
	 	 	 	 
	 	8.6 	Further Assurances 	54 
	 	 	 	 
	 	8.7 	Non-Disclosure. 	54 
	 	 	 	 
	 	8.8 	Employee Equity Participation Plan. 	55 
	 	 	 	 
	 	8.9 	Review. 	55 

- iii – 

	ARTICLE IX INDEMNIFICATION 	55 
	 	 	 	 
	 	9.1 	Indemnification Generally. 	55 
	 	 	 	 
	 	9.2 	Limitations on Indemnification 	56 
	 	 	 	 
	 	9.3 	Assertion of Claims 	57 
	 	 	 	 
	 	9.4 	Notice and Defense of Third Party Claims 	58 
	 	 	 	 
	 	9.5 	Survival of Representations and Warranties; No Undisclosed
      Findings 	58 
	 	 	 	 
	 	9.6 	No Third Party Reliance. 	59 
	 	 	 	 
	 	9.7 	No Consequential Losses 	60 
	 	 	 	 
	 	9.8 	Tax Treatment 	60 
	 	  	  	  
	ARTICLE X CONDITIONS TO CONSUMMATION OF THE MERGER	60 
	 	 	 	 
	 	10.1 	Conditions to Obligations of the Purchasers 	60 
	 	 	 	 
	 	10.2 	Conditions to Obligations of the Seller 	61 
	 	  	  	  
	ARTICLE XI TERMINATION	62 
	 	 	 	 
	 	11.1 	Termination of Agreement 	62 
	 	 	 	 
	 	11.2 	Effect of Termination 	63 
	 	  	  	  
	ARTICLE XII MISCELLANEOUS PROVISIONS 	63 
	 	 	 	 
	 	12.1 	Amendments. 	63 
	 	 	 	 
	 	12.2 	Expenses. 	63 
	 	 	 	 
	 	12.3 	No Third Party Beneficiaries. 	63 
	 	 	 	 
	 	12.4 	Successors and Assigns 	64 
	 	 	 	 
	 	12.5 	Entire Agreement 	64 
	 	 	 	 
	 	12.6 	Notices. 	64 
	 	 	 	 
	 	12.7 	Governing Law. 	66 
	 	 	 	 
	 	12.8 	Dispute Resolution 	67 
	 	 	 	 
	 	12.9 	Remedies 	67 
	 	 	 	 
	 	12.10 	Severability. 	68 
	 	 	 	 
	 	12.11 	Independence of Covenants and Representations and Warranties.
      	68 
	 	 	 	 
	 	12.12 	Counterparts; Facsimile Signatures. 	68 
	 	 	 	 
	 	12.13 	Incorporation of Recitals Annexes Exhibits and Schedules.
      	68 
	 	 	 	 
	 	12.14 	Interpretation; Construction 	69 
	 	 	 	 
	 	12.15 	Headings. 	69 

- iv – 

ANNEXES, SCHEDULES AND EXHIBITS 

	Annexes 	  
	 	  
	Annex I 	Definitions

	 	  
	Schedules 	  
	 	  
	Schedule 2.6(a)(vi) 	Required Consents
    
	Schedule 5.1 (a) 	Title to Shares 
	Schedule 6.1 	Organization;
      Good Standing; Qualification 
	Schedule 6.2(b) 	Conflicts 
	Schedule 6.2(c) 	Company –
      Consents 
	Schedule 6.3(a) 	Distributions 
	Schedule 6.3(b) 	Company –
      Capitalization 
	Schedule 6.3(c) 	Contracts with respect to Equity
      Interests 
	Schedule 6.4 	Subsidiaries;
      Investments 
	Schedule 6.5(a)(i) 	Financial Statements 
	Schedule 6.5(a)(ii) 	Financial
      Statement Matters 
	Schedule 6.5(b) 	Funded Indebtedness 
	Schedule 6.5(c) 	Bank Accounts;
      Powers of Attorney 
	Schedule 6.5(d) 	Deposits 
	Schedule 6.6 	Absence of
      Undisclosed Liabilities 
	Schedule 6.7 	Absence of Changes 
	Schedule 6.8 	Tax Filings

	Schedule 6.9 	Title to Assets; Encumbrances
  
	Schedule 6.10(a) 	Real Property -
      Owned and Leased 
	Schedule 6.10(b) 	Real Property Matters 
	Schedule 6.11(a) 	Intellectual
      Property Assets 
	Schedule 6.11(b) 	Intellectual Property Exceptions
    
	Schedule 6.11(e) 	Licenses 
	Schedule 6.11(i) 	Other Agreements 
	Schedule 6.12(a) 	Contracts 
	Schedule 6.12(c) 	Termination of and Change of
      Purchasing Under Contracts 
	Schedule 6.13(a) 	Company –
      Litigation, Etc. 
	Schedule 6.13(b) 	Company – Criminal Sanctions,
      Etc. 
	Schedule 6.14(a) 	Compliance with
      Laws; Governmental Authorization 
	Schedule 6.14(b) 	Permits 
	Schedule 6.15(a) 	Directors,
      Officers and Key Employees 
	Schedule 6.15(b) 	Labor Relations; Union Issues
  
	Schedule 6.15(c) 	Federal or State
      Contractor with Affirmative Action Plan 
	Schedule 6.16(a) 	Employee Benefit Plans 
	Schedule 6.16(b) 	Employee Benefit
      Disclosures 
	Schedule 6.16(c) 	ERISA Compliance 
	Schedule 6.17(b) 	Compliance with
      Environmental Laws 
	Schedule 6.17(c) 	Environmental Liabilities 
	Schedule 6.17(d) 	Owned (and
      Previously Owned) Properties and Facilities 

- v – 

	Schedule 6.17(e) 	Environmental
      Reports 
	Schedule 6.17(f) 	Assumed Environmental Liabilities
    
	Schedule 6.19(a) 	Related Party
      Transactions 
	Schedule 6.20(a) 	Insurance 
	Schedule 6.20(b) 	Contracts with
      Insurance Requirements 
	Schedule 6.22 	Accounts and Notes Payable 
	Schedule 6.23 	Accounts and
      Notes Receivable 
	Schedule 6.24(a) 	Principal Customers 
	Schedule 6.24(b) 	Principal
      Suppliers 
	Schedule 7.2(b) 	Purchaser – Conflicts 
	Schedule 7.2(c) 	Purchaser –
      Consents 
	Schedule 7.3 	Brokers Employed by the Purchaser
    
	Schedule 7.5(c) 	Purchaser –
      Capitalization 
	Schedule 7.6(a) 	Purchaser – Litigation, etc.
  
	Schedule 7.6(b) 	Purchaser –
      Criminal Sanctions 
	Schedule 7.11 	Subsidiaries; Investments 
	Schedule 7.12 	Absence of
      Undisclosed Liabilities 
	Schedule 7.13 	Absence of Changes 
	Schedule 7.15 	Title to Assets;
      Encumbrances 
	Schedule 7.16(a) 	Purchaser Real Property - Owned
      and Leased 
	Schedule 7.16(b) 	Purchaser Real
      Property Matters 
	Schedule 7.17(a) 	Intellectual Property Assets
  
	Schedule 7.17(b) 	Intellectual
      Property Exceptions 
	Schedule 7.17(e) 	Licenses 
	Schedule 7.17(i) 	Other Agreements
    
	Schedule 7.18(a) 	Contracts 
	Schedule 7.18(c) 	Termination of
      and Change of Purchasing Under Contracts 
	Schedule 7.19(a) 	Purchaser – Litigation, Etc.
  
	Schedule 7.19(b) 	Purchaser –
      Criminal Sanctions, Etc. 
	Schedule 7.20(a) 	Compliance with Laws;
      Governmental Authorization 
	Schedule 7.20(b) 	Permits 
	Schedule 7.21(a) 	Directors, Officers and Key
      Employees 
	Schedule 7.21(b) 	Labor Relations;
      Union Issues 
	Schedule 7.22(a) 	Employee Benefit Plans 
	Schedule 7.22(b) 	Employee Benefit
      Disclosures 
	Schedule 7.22(c) 	ERISA Compliance 
	Schedule 7.23(b) 	Compliance with
      Environmental Laws 
	Schedule 7.23(c) 	Environmental Liabilities 
	Schedule 7.23(d) 	Purchaser Owned
      (and Previously Owned) Properties and Facilities 
	Schedule 7.23(e) 	Environmental Reports 
	Schedule 7.23(f) 	Assumed
      Environmental Liabilities 
	Schedule 7.24(a) 	Related Party Transactions 
	Schedule 7.25(a) 	Insurance 
	Schedule 7.25(b) 	Contracts with Insurance
      Requirements 
	Schedule 7.27 	Accounts and
      Notes Payable 
	Schedule 7.28 	Accounts and Notes Receivable
  

- vi – 

	Schedule 7.29(a) 	Principal
      Customers 
	Schedule 7.29(b) 	Principal Suppliers 
	Schedule 8.1(b) 	Terms and
      Conditions of New Employment Agreements 
	Schedule 9.1(a)(vi) 	Indemnity Matters 
	Schedule 9.1(c)(iii) 	Indemnity Matters
    

	Exhibits 	  
	  	  
	Exhibit A 	Delaware
      Certificate of Merger 
	Exhibit B 	Connecticut Certificate of Merger
    
	Exhibit C 	Promissory Note
      in the principal amount of $5 million 
	Exhibit D 	Registration Rights Agreement
  
	Exhibit E 	Form of opinion
      of Robinson & Cole LLP 
	Exhibit F 	Merger Sub Guaranty 
	Exhibit G 	Form of opinion
      of Richardson & Patel LLP 
	Exhibit H 	Asset Allocation Statement 
	Exhibit I 	Employee Equity
      Participation Plan 

- vii –

INDEX OF DEFINED TERMS 

	Term 	Section 
	Accountant’s Statement 	4.2(b) 
	Affiliate 	Annex I 
	Agreement 	Preamble 
	Asset Allocation Statement 	4.3 
	Business Day 	Annex I 
	Cap Amount 	9.2(b) 
	CERCLA 	Annex I 
	Certificates of Merger 	Annex I 
	Claw Back Period 	4.2(a) 
	Closing 	2.5 
	Closing Consideration 	Annex I 
	Closing Date 	Annex I 
	COBRA 	6.16(c)(iv) 
	Code 	Annex I 
	Commission 	7.10(c) 
	Company 	Preamble 
	Confidential Information 	Annex I 
	Connecticut Statute 	Annex I 
	Constituent Corporations 	2.1 
	Contract 	Annex I 
	Control 	Annex I 
	Delaware Statute 	Annex I 
	Distribution 	Annex I 
	Due Date 	9.3(b) 
	Effective Time 	2.2 
	Employee Benefit Plan 	Annex I 
	Employee Plans 	6.16(a) 
	Employment Agreement 	Annex I 
	Employee Equity Participation Plan 	8.8 
	Encumbrances 	Annex I 
	Environmental Laws 	Annex I 
	Equity Interests 	Annex I 
	ERISA 	Annex I 
	ERISA Affiliate 	Annex I 
	Financial Statements 	6.5(a) 
	Fundamental Documents 	Annex I 
	Funded Indebtedness 	Annex I 
	GAAP 	Annex I 
	Governmental Entity 	Annex I 
	Guaranty 	Annex I 
	Hazardous Materials 	Annex I 
	HIPAA 	6.16(c)(iv) 
	Holding Company Claw Back Stock 	4.2(a) 

- 1 – 

	Holding Company Stock 	Annex I 
	Holdings 	Preamble 
	Holdings Financial Statements 	7.10(b) 
	Holdings Latest Balance Sheet 	7.12 
	Holdings Latest Balance Sheet Date 	7.12 
	Indemnified Persons 	Annex I 
	Indemnifying Persons 	Annex I 
	Intellectual Property 	Annex I 
	IRS 	Annex I 
	JAMS 	10.8(a) 
	Knowledge 	Annex I 
	Latest Audited Balance Sheet Date 	6.5(a) 
	Latest Balance Sheet 	6.5(a) 
	Latest Balance Sheet Date 	6.5(a) 
	Law 	Annex I 
	Liability 	Annex I 
	Litigation Expense 	Annex I 
	Losses 	Annex I 
	Material Adverse Effect 	Annex I 
	Membership Interest 	Annex I 
	Merger 	Recitals 
	Merger Co. 	Preamble 
	Merger Consideration 	3.1 
	New Employment Agreements 	Annex I 
	Nevada Statue. 	Annex I 
	Note 	Annex I 
	Objection Notice 	4.2(b) 
	Orders 	Annex I 
	Permits 	Annex I 
	Permitted Encumbrances 	Annex I 
	Person 	Annex I 
	Proceedings 	Annex I 
	Purchaser 	Preamble 
	Purchaser Indemnity Threshold 	9.2(b)(i) 
	Purchaser Cap Amount 	9.2(b)(ii) 
	Purchaser Group 	Annex I 
	Purchasers’ Business 	Annex I 
	Purchaser Employee Plan 	7.22(a) 
	Purchase Price 	Annex 
	Purchaser Real Property 	7.16(a) 
	Purchaser Real Property Leases 	7.16(a) 
	Purchaser Requisite Rights 	7.17(a) 
	Purchasers 	Preamble 
	Real Property 	6.10(a) 
	Real Property Leases 	6.10(a) 
	Registration Rights Agreement 	Annex I 

- 2 – 

	Related Documents 	Annex I 
	Representatives 	Annex I 
	Requisite Rights 	6.11(a)(i) 
	Restrictive Legend 	4.2(d) 
	Revised Asset Allocation Statement 	4.3 
	Rollover Options 	6.3(a) 
	SEC Documents 	7.10(a) 
	Securities 	Annex I 
	Securities Act 	Annex I 
	Seller 	Preamble 
	Seller Indemnity Threshold 	9.2(a)(i) 
	Seller Cap Amount 	9.2(a)(ii) 
	Seller Group 	Annex I 
	Subject Business 	Annex I 
	Subsidiary 	Annex I 
	Survival Date 	9.5(a) 
	Surviving Corporation 	2.1 
	Target EBITDA 	4.2(a) 
	Tax 	Annex I 
	Tax Returns 	Annex I 
	Taxes 	Annex I 
	Third Party Claim 	9.4 
	Units 	Recitals 
	Working Capital 	Annex I 

- 3 – 

          AGREEMENT
AND PLAN OF MERGER (this “Agreement”), dated as of May 31, 2007, by and
among AEGIS INDUSTRIES, INC., a Nevada corporation (“Holdings”);
AEGIS MERGER CORPORATION, a Delaware corporation and a wholly owned
subsidiary of Holdings (“Merger Co.”, and together with Holdings, each a
“Purchaser” and together, the “Purchasers”); Z5 TECHNOLOGIES
LLC, a Connecticut limited liability company (the “Company”); and
THOMAS KEENAN VENTURES, LLC, a Delaware limited liability company (the
“Seller”). 

          WHEREAS,
the parties to this Agreement desire to effect the acquisition of the Company by
Holdings through a merger of the Company and Merger Co.; 

          WHEREAS,
the Company has issued and outstanding 850,000 membership units (the
“Units”) and the Seller is the holder of all of the issued and
outstanding Units; and 

          WHEREAS,
the Company has determined that the consideration to be paid for each Unit in
the Merger is fair to, and in the best interests of, the Company and the Seller,
and has duly approved and adopted this Agreement, the Certificates of Merger and
approved the proposed merger (the “Merger”) of the Company with and into
Merger Co. in accordance with and subject to the terms and conditions of this
Agreement, the Certificates of Merger and the Delaware Statute; 

          WHEREAS,
the Board of Directors of Merger Co. has duly approved and declared advisable
this Agreement, the Certificate of Merger and the Merger in accordance with the
Delaware Statute; and 

          WHEREAS,
concurrently herewith, this Agreement has been consented to and approved by the
requisite membership interests of Seller, pursuant to the Delaware Statute and
the Nevada Statute. 

          NOW,
THEREFORE, in consideration of the premises and the mutual benefits to be
derived from this Agreement and the representations, warranties, covenants,
agreements and conditions contained herein, the parties hereto hereby agree as
set forth below. 

ARTICLE I 
DEFINITIONS 

          Capitalized
terms used herein and not otherwise defined shall have the respective meanings
assigned to such terms in Annex I hereto. 

ARTICLE II 
GENERAL; CLOSING; CLOSING DELIVERABLES

          2.1      The
Merger. 

          In
accordance with, and subject to, the terms and conditions of this Agreement, the
Certificates of Merger, the Delaware Statute and the Connecticut Statute, upon
the Closing Date, the Company shall be merged with and into Merger Co., which,
at and after the Effective Time, shall be and is hereinafter sometimes referred
to as the “Surviving Corporation.” The Company 

- 4 – 

and Merger Co. are hereinafter sometimes collectively referred
to as the “Constituent Corporations.” 

          2.2     
Effective Time of the Merger. 

          The
Merger shall become effective upon the filing by the Company of the Certificates
of Merger with the Secretary of State of the State of Delaware and the Secretary
of State of the State of Connecticut, as applicable, and the acceptance thereof
and by making all other filings or recordings required under the Delaware
Statute and the Connecticut Statute. The Certificates of Merger shall be
executed and delivered in the manner provided under the Delaware Statute and
Connecticut Statute, as applicable. The time when the Merger shall become
effective is referred to in this Agreement as the “Effective Time.” 

          2.3     
Effect of the Merger. 

          Except
as specifically set forth in this Agreement or in the Certificates of Merger, at
the Effective Time, the separate existence and corporate organization of the
Company shall cease, the Company shall be merged with and into the Surviving
Corporation and the Merger shall have the effects provided in the Delaware
Statute and the Connecticut Statute. Without limiting the generality of the
foregoing, at the Effective Time all the property, rights, privileges, powers
and franchises of the Company and Merger Co. shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company and Merger Co. shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation

          2.4      Charter;
By-Laws; Officers and Directors of Surviving Corporation; Voting
Agreement. 

          (a)      From
and after the Effective Time: (a) the certificate of incorporation of Merger Co.
shall be the certificate of incorporation of the Surviving Corporation until
altered, amended or repealed as provided in the Delaware Statute; (b) the bylaws
of Merger Co. shall be the bylaws of the Surviving Corporation, unless and until
altered, amended or repealed as provided in the Delaware Statute, the Surviving
Corporation’s certificate of incorporation or such bylaws; and (c) the officers
and directors of the Merger Co. shall become the officers and directors of the
Surviving Corporation, respectively, unless and until removed or until their
respective terms of office shall have expired in accordance with the Delaware
Statute or the Surviving Corporation’s certificate of incorporation or bylaws,
as applicable. 

          (b)      Purchasers
agree that for a period of not less than two years following the Closing Date:
(x) Purchaser will cause Brendan Reilly to be appointed as President, Chairman
and Chief Executive Officer of Holdings and President of Surviving Corporation;
and (y) Alan Hurwitz will be appointed as Chief Financial Officer of
Holdings.

          2.5     
Closing. 

          The
closing (the “Closing”) of the consummation of the transactions
contemplated by this Agreement shall take place at the offices of Robinson &
Cole LLP, 695 E. Main Street, Stamford, Connecticut, or at such other place as
may be mutually agreed upon by the parties 

- 5 – 

hereto on the Closing Date. 

          2.6     
Closing Deliveries. 

          (a)      At
the Closing, the Company and the Seller shall deliver the following items to
Holdings or Merger Co., as applicable, each in form and substance satisfactory
to Holdings or Merger Co., as applicable: 

          (i)      an
assignment of all of Seller’s right, title and interest in the Membership
Interest and the Units to Merger Co.; 

          (ii)      a
certificate of an officer of the Company, dated as of the Closing Date,
certifying (a) the Company’s Fundamental Documents; (b) the incumbency of each
officer executing this Agreement and the Related Documents and any other
agreement, document or instrument contemplated hereby or thereby; and (c) the
resolutions of the Company’s Manager and Seller approving the Merger, this
Agreement and the Related Documents and all other agreements and documents
contemplated hereby and thereby; 

          (iii)      certificates
of the Secretaries of State (or other applicable office) in which the Company is
organized and qualified to do business, dated as of a date not more than five
(5) Business Days prior to the Closing Date, certifying as to its good standing
and non-delinquent Tax status; 

          (iv)      a
counterpart of any Related Document to which the Seller or the Company is a
party, duly executed by such Person; 

          (v)     
a counterpart of each New Employment Agreement with each of Brendan Reilly and
Alan Hurwitz, executed by such Persons; 

          (vi)     
all consents and approvals, including, without limitation, those consents and
approvals set forth on Schedule 2.6(a)(vi), in form and substance
satisfactory to the Purchasers and their counsel, that are (i) required for
consummation of the transactions contemplated by this Agreement and the Related
Documents or (ii) that are required in order to prevent a breach of, or a
default under, or a termination of, any Contract to which the Company is a party
or to which any portion of its property or assets is subject; 

          (vii)      a
counterpart of a stock option agreement for Holdings Common Stock executed by
each of the Persons holding Rollover Options; 

          (viii)     
a certificate of Seller, dated as of the Closing Date, certifying (a) Seller’s
Fundamental Documents and (b) the incumbency of each Person executing this
Agreement and the Related Documents and any other agreement, document or
instrument contemplated hereby or thereby on behalf of the Seller;

          (ix)      a
draft of the Current Report on Form 8-K due to be filed with the Securities and
Exchange Commission by Holdings within four business days of the Closing Date,
including therein a copy of the Company’s financial statements which constitute
all of the financial statements that are required to be included in the Current
- 6 – 

Report on Form 8-K. For purposes of
this Section 2.6(a)(viii) the term “business day” shall have the same meaning as
set forth in the General Instructions to the Current Report on Form 8-K; 

          (x)     
an opinion of Robinson & Cole LLP, counsel to the Company and the Seller,
dated as of the Closing Date, addressed to the Purchasers, in the Form attached
hereto as Exhibit E;

          (xi)      the
minute books of the Company; 

          (xii)      a
counterpart of the Registration Rights Agreement executed by Seller; and 

          (xiii)      copies
of all filings and notices made or given by the Seller or the Company with
Governmental Entities in connection with the consummation of the Merger or any
of the other transactions contemplated by this Agreement and the Related
Documents. 

          (b)      At
the Closing, Holdings or Merger Co., as applicable, shall deliver the following
items to the Seller: 

          (i)      the
Note executed by Holdings; 

          (ii)     
the Merger Sub Guaranty executed by Merger Co.; 

          (iii)      an
original stock certificate representing Thirteen Million (13,000,000) shares of
Holdings Common Stock registered in the name of Seller; 

          (iv)      an
original stock certificate representing Four Million (4,000,000) shares of the
Holding Company Claw Back Stock in the name of Seller with the Restrictive
Legend affixed; 

          (v)      a
counterpart of a stock option agreement with each of the Persons holding
Rollover Options executed by Holdings; 

          (vi)     
a counterpart of any Related Document to which Holdings or Merger Co. is a
party, duly executed by such Person;

          (vii)     
a certificate of the Secretary of each Purchaser, dated as of the Closing Date,
certifying (a) such Purchaser’s Fundamental Documents; (b) the incumbency of
each officer executing this Agreement and the Related Documents and any other
agreement, document or instrument contemplated hereby or thereby; and (c) the
resolutions of each Purchasers’ board of directors approving this Agreement and
the Related Documents to which such Purchaser is a party and all other
agreements and documents contemplated hereby and thereby;

          (viii)     
certificates of the Secretaries of State (or other applicable office) in which
each Purchaser is organized and qualified to do business, dated as of a date not
more than 

- 7 – 

five (5) Business Days prior to the
Closing Date, certifying as to its good standing and non-delinquent Tax status;

          (ix)     
a counterpart of any Related Document to which any Purchaser is a party, duly
executed by such Person; 

          (x)      a
counterpart of each New Employment Agreement with each of Brendan Reilly and
Alan Hurwitz, executed by Holdings; 

          (xi)     
a counterpart of the Registration Rights Agreement executed by Holdings; 

          (xii     )
a certificate of Purchasers, dated as of the Closing Date, certifying (a)
Purchasers’ Fundamental Documents and (b) the incumbency of each Person
executing this Agreement and the Related Documents and any other agreement,
document or instrument contemplated hereby or thereby on behalf of Purchasers;
and 

          (xiii)      an
opinion of Richardson & Patel LLP, counsel to the Purchasers, dated as of
the Closing Date, addressed to the Seller, in the Form attached hereto as
Exhibit F. 

ARTICLE III 
PAYMENT OF MERGER CONSIDERATION;
EFFECT OF MERGER ON CAPITAL 
STOCK OF CONSTITUENT CORPORATIONS 

          3.1      Merger
Consideration; Effect on Capital Stock. 

          The
manner and basis of converting, exchanging or canceling the shares of capital
stock of each of the Constituent Corporations into or for capital stock of the
Surviving Corporation, shall be as follows: 

          (i)      each
share of common stock, $0.01 par value per share, of Merger Co. issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of common stock, $0.01 par value per share, of the Surviving
Corporation;

          (ii)     
the Membership Interests shall be cancelled and, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding
and be automatically converted into the right to receive, at the Effective Time,
the Note and the Holding Company Stock (together, the “Merger
Consideration”); and 

          (iii)     
the Rollover Options shall be cancelled and, by virtue of the Merger and without
any action on the part of the holders thereof, cease to be outstanding and be
automatically converted into the right to receive, at the Effective Time,
options to purchase an aggregate of 3,000,000 shares of the common stock of
Holdings pursuant to the Equity Participation Plan in the amounts set forth on
Schedule 6.3(a) for a purchase price of $0.25 per share. 

          3.2      No
Further Ownership Rights in Membership Interests. 

          The
Merger Consideration paid in respect of the Membership Interests in accordance
with 

- 8 – 

the provisions of this Article III and the Certificates of
Merger shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Membership Interests. The stock transfer books of the
Surviving Corporation shall be closed with respect to the Membership Interests
of the Company, and there shall be no further registration of transfers of the
Membership Interests of the Company thereafter on the records of the Surviving
Corporation. If, after the Effective Time, certificates or other documents
representing units of Membership Interest are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article III and the Certificate of Merger.

ARTICLE IV 
MERGER CONSIDERATION 

          4.1     Delivery
of Merger Consideration. 

          At
the Effective Time, upon surrender by Seller to Merger Co. of the Membership
Interest, and subject to the further terms and conditions set forth herein, in
consideration for Seller’s delivery of the Membership Interest, Merger Co. shall
pay to the Seller for the Membership Interests so acquired from Seller, the Note
and the Holding Company Stock. 

          4.2      Claw
  Back. 

          (a)      Subject
to the provisions of Sections 4.2(b) and 4.2(c) below, if, during the period
from July 1, 2007 through June 30, 2008 (the “Claw Back Period”), the
Surviving Corporation fails to achieve EBITDA of $1,250,000 or more (the
“Target EBITDA”), Seller shall be obliged to transfer to Holdings
4,000,000 shares of Holding Company Stock (the “Holding Company Claw
Back Stock”) for cancellation.

          (b)      Within
thirty (30) days following the Claw Back Period, Holdings shall cause its
auditors or other independent accountants to which Seller consents in writing to
provide Seller a written statement indicating the Surviving Corporation’s EBITDA
during the Claw Back Period, together with such notes and worksheets as shall be
necessary to permit Seller or its representative to analyze the Surviving
Corporations’ EBITDA during the Claw Back Period (the “Accountant’s
Statement”). If Seller objects to the Accountant’s Statement, Seller
shall provide Holdings with a written notice stating in reasonable detail the
basis for its objection (an “Objection Notice”), provided
however, that if Seller fails to provide Holdings an Objection Notice
within thirty (30) days of its receipt of the Accountant’s Statement, Seller
shall be deemed to have accepted the Accountant’s Statement. If Seller timely
provides Holdings with an Objection Notice, the parties shall attempt through
good faith negotiations to resolve the objection within thirty (30) days of
Seller’s tendering the Objection Notice, (such period of resolution and
negotiation following the Claw Back Period, hereinafter, the “Resolution
Period”). In the event the parties are unable to resolve their disagreement
regarding the Accountant’s Statement, either party shall have the right to refer
the dispute to arbitration as set forth in Section 12.8. 

          (c)      During
the Claw Back Period, Purchasers shall:

          (i)     
provide Seller with a written statement, on or before the prescribed filing
date, inclusive of any permitted extension, for the filing of the applicable
Securities Exchange Act of 1934, as amended, report covering the end of each
fiscal quarter, 

- 9 – 

indicating the Surviving Corporation’s
EBITDA for such fiscal quarter; 

          (ii)      cause
the Surviving Corporation to conduct its operations in the Ordinary Course of
Business consistent with past practice, in good faith, without the addition of
any material expenses to the Surviving Corporation (without the prior written
consent of Seller), and taking into consideration, inter alia, fiduciary
duties of the Board of Directors of the Surviving Corporation; 

          (iii)      cause
allocations of expenses to the Surviving Corporation to be reasonable and in no
event disproportionate to the services and support actually provided to the
Surviving Corporation as compared to the services and support actually provided
to Purchasers and their Affiliates or divisions;

          (iv)     
not terminate the Employment Agreement of Brendan Reilly and Alan Hurwitz
without Cause (as such term is defined in the New Employment Agreements); and

          (v)      not
permit to occur a change of Control of the Surviving Corporation.

          In
the event of Purchasers’ breach of any of the covenants set forth in this
Section 4.2(c), as Seller’s (but not Mr. Reilly’s or Mr. Hurwitz’) exclusive
remedy in respect of a breach of such covenants, Holdings’ rights under Sections
4.2(a) and 4.2(b) shall terminate and be of no further force or effect, without
further action on the part of Seller.

          (d)      During
the Claw Back Period, Seller shall not transfer, sell or otherwise encumber the
Holding Company Claw Back Stock. If Seller tenders an Objection Notice, Seller
shall not transfer, sell or otherwise encumber the Holding Company Claw Back
Stock until the parties resolve their disagreement including through arbitration
as described in Section 12.8. The Holding Company Claw Back Stock shall bear the
following restrictive legend (the “Restrictive Legend”): 

          “THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THAT CERTAIN
AGREEMENT AND PLAN OF MERGER OF THE COMPANY DATED MAY 31, 2007 AND MAY ONLY BE
TRANSFERRED SUBJECT TO THE TERMS OF SECTION 4.2(d) OF SUCH AGREEMENT.” 

          4.3      Purchase
Price Allocation. 

          The
sum of the Purchase Price and the assumed liabilities shall be allocated among
the assets of the Company as of the Closing Date in accordance with Exhibit
H and Section 1060 of the Code. Not later than sixty (60) days after the
Closing Date, Seller shall prepare and deliver to Purchasers copies of Form 8594
and any required exhibits thereto (the “Asset Allocation
Statement”) allocating the Purchase Price and the assumed liabilities
among the assets of the Company as of the Closing Date consistent with the
allocations set forth on Exhibit H and in accordance with section 1060 of
the Code. Seller shall prepare and deliver to Purchasers from time to time
revised copies of the Asset Allocation Statement (the “Revised Asset
Allocation Statement”) so as to report any matters on the Asset
Allocation Statement that need updating as a 

- 10 – 

result of Purchase Price adjustments, if any. The Purchase
Price paid by Purchasers for the assets of the Company shall be allocated in
accordance with the Asset Allocation Statement or, if applicable, the last
Revised Asset Allocation Statement provided by Seller to Purchasers, and all Tax
Returns filed by or with respect to Seller and Purchasers shall be prepared
consistently with such allocation.

ARTICLE V 
REPRESENTATIONS AND WARRANTIES OF THE
SELLER 

          Seller
represents and warrants to the Purchasers as set forth below. 

          5.1      Title
to the Units. 

          Seller
is the lawful owner, of record and beneficially, of all of the Units and has
good, valid and marketable title to such Units, free and clear of any
Encumbrances whatsoever and with no restriction on the voting rights and other
incidents of record and beneficial ownership pertaining thereto. Seller is not
the subject of any bankruptcy, reorganization or similar Proceeding. Except for
this Agreement and as set forth on Schedule 5.1(a) there are no
outstanding Contracts or understandings between Seller and any other Person with
respect to the acquisition, disposition, transfer, registration or voting of or
any other matters in any way pertaining or relating to, or any other
restrictions on any of the Equity Interests of the Company and, except as
contemplated by this Agreement, the Related Documents or the transactions
specifically contemplated hereby and thereby, no Person has any right whatsoever
to receive or acquire any Equity Interests of the Company. Seller acquired the
Units in one or more transactions exempt from registration under the Securities
Act and state securities and “blue sky” laws. 

          5.2     
Authorization of Transaction. 

          Seller
has the full and absolute legal right, capacity, power and authority to enter
into this Agreement and each Related Document to which Seller is or will be a
party. This Agreement and each Related Document to which Seller is or will be a
party has been, or upon the execution thereof will be, duly and validly executed
and delivered by Seller. This Agreement and each Related Document to which
Seller is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of Seller. This Agreement and each Related Document to which
Seller is or will be a party is, or upon the execution thereof will be, assuming
the due and valid execution and delivery thereof by the other parties thereto,
the valid and binding obligation of Seller, enforceable against Seller in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles. 

          5.3     
Non-contravention. 

          Except
as set forth on Schedule 5.3(c), none of the execution, delivery and
performance by Seller of this Agreement or the Related Documents to which Seller
is or will be a party, the consummation of the transactions contemplated hereby
or thereby or compliance by Seller with any of the provisions hereof or thereof
will violate (a) the Fundamental Documents of Seller, 

- 11 – 

(b) conflict with, or result in any violation of, or cause a
default (with or without notice or lapse of time, or both) under, or give rise
to any right of termination, amendment, cancellation or acceleration of any
obligations contained in or the loss of any material benefit under any term,
condition or provision of any Contract to which Seller is a party, or by which
such Seller or its assets may be bound or (c) violate any Law applicable to
Seller or any of its properties. 

          5.4     
Proceedings. 

          As
of the date hereof there are not (a) any outstanding Orders against Seller, (b)
Proceedings pending, or, to Seller’s Knowledge, threatened against Seller, or
investigations by any Governmental Entity that are pending, or to Seller’s
Knowledge, threatened against Seller that would reasonably be expected to give
rise to any legal restraint or a prohibition against the transactions
contemplated in this Agreement. 

          5.5      Consents.

          Other
than as obtained prior to the date hereof and of which the Purchasers have prior
notice, no consent, approval, Permit or authorization, of or by, or any
notification of or filing with, any Governmental Entity or Person is required in
connection with the execution, delivery and performance by Seller of this
Agreement or the Related Documents to which Seller is or will be a party or the
consummation by Seller of the Merger, or any of the other transactions
contemplated hereby or thereby. 

          5.6      Brokers.

          Seller
has not employed any broker or finder. There is no investment banker, broker,
finder or other agent or intermediary which has been retained by or is
authorized to act on behalf of Seller who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement or
the Related Documents. 

          5.7     
Certain Investment Representations. 

          (a)      Seller
is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D under the Securities Act. 

          (b)      Seller
is acquiring the Holdings Common Stock for investment for Seller’s own account
and not with a view to, or for resale in connection with, the distribution or
other disposition thereof except as permitted by Law, including, without
limitation, the Securities Act. Seller has no present intent to resell or
distribute all or any part of its Holdings Common Stock. Seller was not
organized for the specific purpose of acquiring the Holdings Common Stock. 

          (c)     
Seller has been advised that the Holdings Common Stock has not been registered
under the Securities Act, that the shares of the Holdings Common Stock may not
be sold or otherwise disposed of unless they are registered thereunder or an
exemption from registration is available and that accordingly Seller may be
required to bear the economic risk of the investment in the Holdings Common
Stock for an indefinite period of time.

          (d)     
Seller has been given the opportunity to obtain any information or documents,
and 

- 12 – 

to ask questions and receive answers about such documents,
Holdings and its Subsidiaries and the business and prospects of Holdings and its
Subsidiaries (including, without limitation, the transactions to be consummated
pursuant to the terms of this Agreement), as it deems necessary to evaluate the
merits and risks related to its investment in the Holdings Common Stock and no
representations concerning such matters or any other matters related to such
investment have been made to Seller except as set forth in this Agreement.
Seller has consulted its own attorney, accountant or investment advisor with
respect to the investment contemplated hereby and its suitability for Seller,
including the tax and other economic considerations related to the investment.

          (e)      Seller:
(i) has knowledge and experience in financial and business matters such that
Seller is capable of evaluating the merits and risks of the purchase of the
Holdings Common Stock as contemplated by this Agreement; (ii) understands and
has taken cognizance of all risk factors related to the purchase of the Holdings
Common Stock; and (iii) is able to bear the economic risk of the investment in
the Holdings Common Stock for an indefinite period of time and can afford to
suffer a complete loss of the investment in such Holdings Common Stock. 

          (f)      Seller
has been informed that the offer of the Holdings Common Stock is being made
pursuant to an exemption from the registration requirements of the Securities
Act relating to transactions by an issuer not involving a public offering, and
that, consequently, the materials relating to the offer have not been subject to
review and comment by the staff of the Securities and Exchange Commission or any
other governmental authority. 

          (g)     
Seller is not subscribing for the Holdings Common Stock as a result of, or
subsequent to, any advertisement, article, notice or other communication
published in any newspapers, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a Person not previously known to the Seller in connection
with investments in securities generally. 

ARTICLE VI 
REPRESENTATIONS AND WARRANTIES ABOUT
THE COMPANY 

          Seller
represents and warrants to the Purchasers as set forth below. 

          6.1     
Organization; Good Standing; Qualification and Power. 

          The
Company is duly organized, validly existing and in good standing under the Laws
of its jurisdiction of organization. The Company has all requisite power and
authority (corporate or otherwise) to own, lease and operate its properties and
to carry on its business as now being conducted and proposed to be conducted,
and, except as set forth on Schedule 6.1, is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification necessary
except to the extent that any failure to qualify could not reasonably be
anticipated to have a Material Adverse Effect, each of which jurisdictions is
set forth on Schedule 6.1.

          6.2      Authority;
Noncontravention; Consents. 

          (a)      The
Company has all the requisite power and authority to enter into this 

- 13 – 

Agreement, each Related Document to which it is a party and any
and all instruments necessary or appropriate in order to effectuate fully the
terms and conditions of this Agreement, each Related Document to which it is a
party and all related transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and each Related Document to which the Company is
a party and the consummation of the Merger and the other transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement and each
Related Document to which the Company is a party has been duly and validly
executed and delivered by the Company and this Agreement and each Related
Document to which it is a party is the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors’ rights generally and general equitable principles.

          (b)      Neither
the execution, delivery and performance of this Agreement and the Related
Documents to which the Company is a party nor the consummation by the Company of
the transactions contemplated hereby or thereby nor compliance by the Company
with any provision hereof or thereof will: (i) except as set forth on
Schedule 6.2(b), conflict with, or result in any violations of, or cause
a default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any benefit under, or result in the
creation of any Encumbrance upon any asset of the Company, under any term,
condition or provision of (a) the Fundamental Documents of the Company or (b)
except as set forth on Schedule 6.2(b), any Contract to which the Company
is a party or by which any of its properties or assets are bound; or (ii)
violate any Laws applicable to the Company, the Subject Business or any of its
properties. 

          (c)      Except
as set forth on Schedule 6.2(c), no consent, approval, Order or
authorization of, registration, declaration or filing with, or notification to
any Governmental Entity or any third party is required in connection with the
execution, delivery and performance by the Company of this Agreement or the
Related Documents to which the Company is a party or the consummation of the
Merger or any of the other transactions contemplated hereby or thereby. 

          6.3     
Capitalization. 

          (a)      The
Company has 850,000 Units of Membership Interest issued and outstanding and has
granted to those employees, advisors and consultants set forth on Schedule
6.3(a) options to purchase 150,000 Units of Membership Interest in the
Company (the “Rollover Options”). No current or former member or any
other Person is contesting or, to the Knowledge of the Seller, has a valid basis
for contesting the ownership of the Membership Interests or any Distributions or
contributions relating thereto. Except for the Rollover Options and other than
the Units, there are no other Equity Interests of the Company authorized, issued
or outstanding. All of the Units are duly authorized, validly issued, fully paid
and nonassessable. Except as set forth on Schedule 6.3(a), the Company
has not made any Distribution within the preceding three (3) years and no
current or former holder of any Units has any right to receive any Distribution.

          (b)      Except
for the Rollover Options, or as contemplated by this Agreement, or as set forth
on Schedule 6.3(b), there are no Securities outstanding which are
convertible into, 

- 14 – 

exchangeable for, or carrying the right to acquire, Equity
Interests of the Company, or subscriptions, warrants, options, calls, puts,
convertible securities, registration or other rights, arrangements or
commitments obligating the Company to issue, sell, register, purchase or redeem
any of its Equity Interests or any ownership interest or rights therein. Except
as specifically contemplated by this Agreement, there are no voting trusts or
other agreements or understandings to which the Company is bound with respect to
the voting of any Equity Interests of the Company. Except as disclosed on
Schedule 6.3(b), there are no stock appreciation rights, phantom stock
rights or similar rights or arrangements outstanding with respect to the
Company, and no derivative instruments issued by the Company exist, the
underlying security of which is an Equity Interest of the Company. 

          (c)      Except
for the Rollover Options, or as set forth on Schedule 6.3(c), or as
specifically contemplated by this Agreement, there are no Contracts,
commitments, arrangements, understandings or restrictions to which the Company
is bound relating in any way to any Equity Interest of the Company, including
any rights of first refusal and any rights of first offer. 

          (d)      All
Securities issued by the Company, have been issued in transactions exempt from
registration under the Securities Act and the rules and regulations promulgated
thereunder and all applicable state securities or “blue sky” laws, and the
Company has not violated the Securities Act or any applicable state securities
or “blue sky” laws in connection with the issuance of any such Securities. 

          6.4      Subsidiaries;
Investments. 

          Other
than as set forth on Schedule 6.4, the Company has no Subsidiaries. The
Company does not own, directly or indirectly, any Equity Interest in any Person,
except for the entities set forth on Schedule 6.4. 

          6.5      Financial
Statements; Funded Indebtedness; Audit Controls; and Inventory.

          (a)     
Attached hereto as Schedule 6.5(a)(i) are true, correct and complete
copies of the Company’s financial statements prepared and reviewed by the
Company’s accounting firm (the “Financial Statements” with the balance
sheet as of March 31, 2007 being the “Latest Balance Sheet” and
the date thereof being the “Latest Balance Sheet Date”). Except as set
forth on Schedule 6.5(a)(ii), the Financial Statements (i) are in
accordance with the books and records of the Company, and (ii) fairly present
the financial condition of the Company as of the respective dates indicated and
the results of operations and cash flows of the Company for the respective
periods indicated.

          (b)      Schedule
6.5(b) sets forth a true, correct and complete accounting of the Funded
Indebtedness owed by the Company to any Person, calculated as of the date hereof
in accordance with GAAP. The Company and the Seller have performed in all
material respects all of their respective obligations required to be performed
by it under each document evidencing Funded Indebtedness and there is no
continuing event of default under any document evidencing Funded Indebtedness.

          (c)     
Schedule 6.5(c) sets forth a true, correct and complete list of (a) all
bank accounts and safe deposit boxes of the Company and all Persons who are
signatories thereunder or who 

- 15 – 

have access thereto and (b) the names of all Persons holding
general or special powers of attorney from the Company and a summary of the
terms thereof. 

          (d)      Schedule
6.5(d) sets forth a complete list of all amounts received by the Company as
deposits or advances in respect of services that have not yet been performed,
and for which the Company has not recognized revenue as of the Closing Date and
the names of the customers from whom such amounts were received. 

          6.6     
Absence of Undisclosed Liabilities. 

          The
Company has no Liabilities, except for (a) the Liabilities set forth on
Schedule 6.6; (b) Liabilities reflected in the Liabilities Section of the
Latest Balance Sheet and (c) Liabilities that have arisen since the Latest
Balance Sheet Date in the ordinary course of business (none of which are
material (individually or in the aggregate) or relate to breach of Contract,
breach of warranty, tort, infringement, violation of Law, Order or Permit, or
any Proceeding (including any Liability under any Environmental Laws)).

          6.7      Absence
of Changes. 

          Since
the Latest Balance Sheet Date, there has not been any Material Adverse Effect
with respect to the Company and to the Knowledge of Seller no event has occurred
and no circumstance or condition exists which has had or could reasonably be
expected to have a Material Adverse Effect on the Company. Since the Latest
Balance Sheet Date, except as set forth on Schedule 6.7, the Company has
been operated in the ordinary course, consistent with past practice. Without
limiting the foregoing, except as set forth on Schedule 6.7, since the
Latest Balance Sheet Date: 

          (a)     
the Company has not declared, set aside or paid any dividends on or made any
other Distribution in respect of any of its Equity Interests, or made any
payment or transfer of consideration of any kind to any Affiliate of the Company
or any Affiliate or relative of any such Affiliate, other than (i) payments or
transfers in satisfaction of amounts reflected on the Latest Balance Sheet, (ii)
salary and ordinary course expense reimbursement, or (iii) costs or expenses
incurred and repaid subsequent to the Latest Balance Sheet Date; 

          (b)      the
Company has not split, combined or reclassified any of its Equity Interests or
issued or authorized or proposed the issuance or authorization of any Securities
in respect of, in lieu of, or in substitution for Equity Interests or
repurchased, redeemed or otherwise acquired any of its Equity Interests; 

          (c)      the
Company has not issued, delivered, pledged, encumbered or sold, or authorized or
proposed the issuance, delivery, pledge, Encumbrance or sale of, any of its
Equity Interests or proposed any change in its equity capitalization; 

          (d)      the
Company has not sold, transferred, licensed, pledged, mortgaged or otherwise
disposed of tangible or intangible assets (other than inventory in the ordinary
course of business) with an aggregate fair market value of greater than $25,000;

- 16 – 

          (e)      the
Company has not amended its Fundamental Documents; 

          (f)      other
than as contemplated under this Agreement and the Related Documents, the Company
has not acquired or agreed to acquire by merging or consolidating with, or by
purchasing any material portion of the Equity Interests or assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof; 

          (g)      no
party (including the Company) has accelerated, terminated, modified or canceled
or waived any material right under any Contract (or series of related Contracts)
involving more than $25,000 to which the Company is a party or by which it is
bound and, to the Knowledge of the Seller, no other party intends to take any
such action, and no modification in excess of $25,000 has been made to any such
Contract; 

          (h)     
the Company has not experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property in excess of $25,000 individually
or $50,000 in the aggregate; 

          (i)     
there has not been any labor strike, material dispute or grievance, picketing
activity, slowdown or stoppage actually pending or, to the Knowledge of the
Seller, threatened against, involving or affecting the Company, and no event has
occurred that could reasonably be expected to give rise to any such strike,
dispute, grievance, slowdown, picketing or stoppage and there has not been any
union organizing campaigns; 

          (j)     
there has not been any write-down or write-up of the value of any asset of the
Company other than in the ordinary course of business, or any write-off of any
accounts receivable or notes receivable of the Company; 

          (k)      there
has not been any change in the Tax or accounting methods or principles used by
the Company or any change in depreciation or amortization policies or rates
theretofore adopted; 

          (l)      there
has not been any material change in the time or manner in which the Company
extends discounts or credit to customers, collects receivables from customers,
or otherwise deals with customers; 

          (m)     
there has not been any material change in the time or manner in which the
Company pays its payables to suppliers and vendors, or otherwise deals with
suppliers and vendors; 

         (n)     
there has not been any material change in the business policies in which the
Company calculates or determines its Working Capital; 

          (o)      the
Company has continued to invest in capital expenditures in accordance with its
annual budget and past practices; 

          (p)     
the Company has not altered its credit policies or practices or its payment
policies 

- 17 – 

or practices; 

          (q)      there
has not been any material change in any distribution platform where the Company
conducts business with any of its customers; and 

          (r)      there
has been no Contract, understanding or authorization for the Company to take any
of the actions specified in this Section 6.7. 

          6.8      Tax
Matters. 

          (a)      Except
as set forth on Schedule 6.8, the Company has: (i) timely filed all Tax
Returns required to be filed by it through the date hereof and as of the Closing
Date with the appropriate Governmental Entities in all jurisdictions in which
such Tax Returns are required to be filed (taking into account extensions to
which it was entitled), and such Tax Returns were (and will be) true, correct
and complete in all material respects; and (ii) timely paid or caused to be paid
all Taxes required by it to be paid through the date hereof and as of the
Closing Date. 

          (b)      The
Company has complied in all material respects with all applicable Laws relating
to the collection, withholding and paying over of Taxes (such as (i) sales or
use Taxes or (ii) payroll Taxes or other Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, member, stockholder or any other third party). 

          (c)      The
Company is not, and has never been, a party to any Tax sharing indemnity or
similar agreement allocating Tax liability that will not be terminated on the
Closing Date without any future liability to the Company or the Surviving
Corporation (including for past Taxes). 

          (d)      No
claim has ever been made by any Tax authority in a jurisdiction in which the
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction, and no basis exists for any such claim to be made. 

          (e)     
There are no liens for Taxes (other than Taxes not yet due and payable or which
are being contested in good faith in appropriate proceedings) upon any of the
assets of the Company. 

          6.9     
Title to assets. 

          The
Company has good, valid and marketable title to the assets, properties and
interests in properties, real, personal or mixed, reflected on the Latest
Balance Sheet or acquired after the Latest Balance Sheet Date (except inventory
or other property sold or otherwise disposed of since the Latest Balance Sheet
Date in the ordinary course of business and accounts receivable and notes
receivable paid in full subsequent to the Latest Balance Sheet Date), free and
clear of all Encumbrances, of any kind or character, except for those
Encumbrances set forth in Schedule 6.9 and Permitted Encumbrances. Except
as set forth on Schedule 6.9, the fixed assets of the Company are in good
operating condition and repair (ordinary wear and tear excepted). The assets,
properties and interests in properties of the Company to be owned, leased or
licensed by the Surviving Corporation after the Closing shall include all
assets, properties and interests in properties (real, personal and mixed,
tangible and intangible) and all Contracts necessary to 

- 18 – 

enable it to carry on the Subject Business as presently
conducted and proposed to be conducted by the Surviving Corporation. 

          6.10     
Real Property. 

          (a)      The
Company does not currently own, and has not at any time owned, any real
property. Schedule 6.10(a) contains a true, correct and complete list and
brief description of all of real property in which the Company has a leasehold
interest held under leases, subleases, licenses and/or other types of occupancy
agreements (the “Real Property Leases”), including any requirement of
consent of the lessor to consummate the Merger or any of the other transactions
contemplated hereby or for the Surviving Corporation to continue after the
Closing to lease the applicable property on the same terms and conditions as in
effect immediately prior to the Closing. The real property in respect of which
the Company has any Real Property Leases (the “Real Property”)
constitutes all real properties used or occupied by the Company in connection
with the Subject Business, or that will be required by the Surviving Corporation
for the Subject Business. 

          (b)     
With respect to the Real Property, except as set forth on Schedule
6.10(b): 

          (i)      no
portion thereof is subject to any pending condemnation or eminent domain
Proceeding or other Proceeding by any public or quasi-public authority and there
is no threatened condemnation or eminent domain Proceeding or other Proceeding
with respect thereto; 

          (ii)     
the Company is the owner and holder of all of the leasehold estates purported to
be granted by the Real Property Leases and each Real Property Lease is in full
force and effect and constitutes a valid and binding obligation of the Company,
and to the Company’s Knowledge, of the other parties thereto; 

          (iii)     
there are no Contracts, written or oral, to which the Company is a party,
granting to any other party the right of use or occupancy of any portion of the
Real Property; and 

          (iv)     
there are no parties (other than the Company or its lessees disclosed pursuant
to paragraph (iii) above) in possession of any portion of the Real Property.

          6.11      Intellectual
Property.

          (a)      Schedule
6.11(a) contains a complete list of each registered, applied for, or issued
item of Intellectual Property owned by the Company that is material to the
conduct of the Subject Business (the “Company’s Intellectual Property
Assets”), including without limitation: (i) all patented or registered
Intellectual Property owned by the Company and used in connection with the
Subject Business; (ii) all pending patent applications and applications for
registrations of other Intellectual Property filed by or on behalf of the
Company and used in connection with the Subject Business; (iii) all registered
trade names, trademarks, corporate names, domain names, trademarks and service
marks owned by the Company and used in connection with the Subject Business;
(iv) all registered copyrights and computer software used in connection with the
Subject Business owned by the Company; and (v) a clear identification of the
relative ownership rights of the Company in the foregoing. Schedule
6.11(a) also contains a complete list of all licenses and other 

- 19 – 

rights granted by the Company to any third party, and all
licenses and other material rights granted by any third party to the Company,
with respect to any of the Company’s Intellectual Property Assets, except for
licenses for “off the shelf” software. 

          (b)
Except as set forth on Schedule 6.11(b), to its Knowledge, the Company
(i) owns and possesses all right, title and interest in and to (or has the right
to use pursuant to a valid and enforceable license as indicated on Schedule
6.11(a)) all of Company’s Intellectual Property Assets described on
Schedule 6.11(a) which is necessary for the operation of the Subject
Business, and (ii) owns or possesses (or has the right to use pursuant to a
valid and enforceable license as indicated on Schedule 6.11(a)) all of
Company’s Intellectual Property Assets (whether or not set forth on Schedule
6.11(a)) which are material to the Subject Business and necessary for the
Subject Business as presently conducted, including, without limitation, the
right to market, sell, offer to sell, license and grant others the right to use,
market, sell, or offer to sell, and license the Company’s Intellectual Property
Assets, without any conflict with, infringement or misappropriation of the
intellectual property rights of others. To its Knowledge, the Company has taken
all commercially reasonable actions to maintain and protect its interests and
rights in all of the Company’s Intellectual Property Assets. Except as set forth
on Schedule 6.11(b):

          (i)     
there are no outstanding claims which have been made in writing, whether on
paper or electronically, or, to Seller’s Knowledge, verbally, against the
Company, or, to Seller’s Knowledge, against any customer of the Company,
asserting the invalidity, misuse or unenforceability of any of the Company’s
Intellectual Property Assets or that the Company’s Intellectual Property Assets
in any manner infringe, violate or involve the misappropriation of the
intellectual property or other proprietary rights of any other Person; 

          (ii)      the
Company has not received any outstanding written, verbal or electronic notice of
any infringement or misappropriation by, or conflict with, any Person with
respect to any of the Company’s Intellectual Property Assets (including any
demand or request that the Company license rights from any Person or cease
licensing or servicing any of its products or services); 

          (iii)      to
Seller’s Knowledge, the conduct of the Subject Business, including, without
limitation, the use, sale, offer to sell, license and use by customers of the
Company’s Intellectual Property Assets subject to Contracts, has not infringed,
misappropriated, or violated, and does not infringe, misappropriate or violate,
any Intellectual Property or other proprietary right of any other Person; 

          (iv)     
to Seller’s Knowledge, none of the Company’s Intellectual Property Assets have
been infringed, misappropriated or violated by any other Person; and 

          (v)      to
Seller’s Knowledge, except with respect to licenses of commercial off-the-shelf
software, and except pursuant to the licenses listed in Schedule 6.11(e),
the Company is not required, obligated, or under any liability whatsoever, to
make any payments by way of royalties, fees or otherwise to any owner, licensor
of, or other claimant to any of the Company’s Intellectual Property Assets or
other third party, with respect to the use thereof or in connection with the
conduct of the Subject Business as 

- 20 – 

currently conducted or proposed to be
conducted.

          (c)      Each
of the licenses set forth in Schedule 6.11(a) with respect to the Company’s
Intellectual Property Assets is in full force and effect and to the Knowledge of
Seller is the legal, valid and binding obligation of the licensor, enforceable
against each of them in accordance with its terms. The Company is not in default
under any such license, nor is any other party to any such license in default
thereunder, and to Seller’s Knowledge, no event has occurred that with the lapse
of time or the giving of notice or both would constitute a default thereunder.
No party to any such license has exercised any termination rights with respect
thereto. To Seller’s Knowledge, if any such license purports to grant the
Company exclusive rights in or to any of the Company’s Intellectual Property
Assets, such license does, in fact, grant such rights to the exclusion of any
other Person. 

          (d)     
To Seller’s Knowledge, the Company has sufficient title and ownership of or
licenses to or otherwise possess all necessary rights to use and to grant others
the right to use all of the Company’s Intellectual Property Assets, including,
without limitation, to market, sell, license, and grant others the right to use,
market, sell and license the Company’s Intellectual Property Assets, without any
conflict with, infringement or misappropriation of any Intellectual Property of
others.

          (e)      Except
as set forth on Schedule 6.11(e), there are no royalties, fees or other
payments payable by the Company to any person by reason of the ownership, use,
sale, license or other disposition of any of the Company’s Intellectual Property
Assets. 

          (f)      To
its Knowledge, the Company is not, or will not be, as a result of the execution
and delivery of this Agreement, or any Related Documents, or the closing of the
Merger or other performance of the obligations under this Agreement, or any of
the other Related Documents, in breach of any license, sublicense or other
agreement relating to the Company’s Intellectual Property Assets or of any third
party Intellectual Property. 

          (g)      the
Company has not been served with process, and, to the Seller’s Knowledge, is not
aware that any Person is intending to serve process on the Company or any
customer of the Company’s, in any proceeding which involves a claim of
infringement, violation or misappropriation of any intellectual property of any
third party. The Company has not brought any proceeding for infringement,
violation or misappropriation of any Intellectual Property or breach of any
license or agreement involving any of the Company’s Intellectual Property Assets
against any third party. 

          (h)      To
its Knowledge, no former officer, employee or consultant of the Company or of
any of its predecessors has, or could have, any right, title, interest or other
claim in, to or under any of the Company’s Intellectual Property Assets. 

          (i)      Except
as set forth on Schedule 6.11(i), there are no outstanding options,
licenses or agreements of any kind relating to any of the Company’s Intellectual
Property Assets, nor is the Company bound by or a party to any options, licenses
or agreements of any kind, including without limitation obligations to pay any
royalties or other payments with respect to the intellectual property rights of
any other Person. 

- 21 – 

          6.12      Contracts.

          (a)      Except
as set forth on Schedule 6.12(a), the Company is not a party to any: 

          (i)      Employment
Agreements; 

          (ii)     
Contract relating to any Funded Indebtedness or to the mortgaging, pledging or
otherwise placing an Encumbrance on any asset or group of assets of the Company;

          (iii)      Contract
with respect to the lending or investing of funds; 

          (iv)      Contract
with respect to any form of intangible property, including any of the Company’s
Intellectual Property Assets or Confidential Information; 

          (v)      Contract
or group of related Contracts with the same party for the purchase or sale of
products or services under which the undelivered balance of such products and
services has a selling price in excess of $25,000; 

          (vi)     
Contract that restricts it from freely engaging in business (including the
Subject Business) anywhere in the world; 

          (vii)      distributorship,
dealer, sales, advertising, agency, promotional services, retail promotional
management, marketing platform, manufacturer’s representative or other similar
Contracts; 

          (viii)      Contract
for the acquisition or disposition of a Person or a division of a Person made
within the preceding six (6) years (whether or not such acquisition or
disposition was consummated); 

          (ix)     
Contract or arrangement for the sale of any assets, properties or rights other
than the sale of services or products in the ordinary course of business at
historical profit margins; 

          (x)      partnership
agreement, limited liability company agreement or joint venture agreement or any
agreement governing the ownership or disposal of any Equity Interests of any
Person (including the Company); 

          (xi)     
Contract for any settlement agreement in respect of a Proceeding; 

          (xii)      Contract
with a remaining term of greater than six (6) months; 

          (xiii)      lease
(other than any Real Property Lease) that requires annual aggregate payments in
excess of $25,000; 

          (xiv)     
other Contracts not covered by the foregoing, (A) that is not terminable by the
Company without penalty upon advance notice of thirty (30) days or less and
involves 

- 22 – 

aggregate consideration in excess of
$25,000 or (B) that involves aggregate consideration in excess of
$50,000; 

          (xv)      Contracts
for any charitable or political contributions; or 

          (xvi)      other
Contract which could reasonably be determined to be material to the Subject
Business. 

          (b     )
Schedule 6.12(a) sets forth a true, correct and complete list of all
amendments, modification and supplements to, or waivers under, the items listed
thereon. All items listed on Schedule 6.12(a) are in full force and
effect, constitute legal, valid and binding obligations of the respective
parties thereto, and are enforceable in accordance with their respective terms.
To the Knowledge of Seller, the Company has performed all of the obligations
required to be performed by it to date, and there exists no default, or any
event, including without limitation, the execution and delivery of this
Agreement, or the consummation of the Merger or any other transaction
contemplated hereby, which upon the giving of notice or the passage of time, or
both, would give rise to a claim of a default in the performance by the Company
or any other party to any of the foregoing of their respective obligations
thereunder. The Company has furnished to Purchasers true, correct and complete
copies of all items listed in Schedule 6.12(a) or any other Schedule and
complete descriptions of all material terms of any oral Contracts described
therein. 

          (c)      To
the Knowledge of Seller, except as set forth in Schedule 6.12(c), no
other party to any Contract required to be listed in Schedule 6.12(a)
intends to cancel or terminate any such Contract or decrease, limit or otherwise
modify the goods or services purchased from the Company under any such Contract.

          6.13      Litigation.

          (a)     
Except as set forth on Schedule 6.13(a), there are no (i) Proceedings
pending or, to the Knowledge of the Seller, threatened against the Company,
whether at law or in equity, or before or by any Governmental Entity nor does
there exist any basis therefor or (ii) Orders of any Governmental Entity or
arbitrator against the Company, the Subject Business or any of its properties or
assets.

          (b)      Schedule
6.13(b) lists each Proceeding that (i) resulted in any criminal sanctions or
(ii) within the last five (5) years, resulted in payments in excess of $25,000,
in each case by or against the Company or any of its officers or directors in
their capacity as officers or directors of the Company (whether as a result of a
judgment, civil fine, settlement or otherwise). 

          6.14     
Compliance; Governmental Authorizations. 

          (a)      The
Company and the Subject Business have been and are in compliance with all Laws,
Orders or Permits applicable to its assets, properties, businesses and
operations, except for such non-compliance as would not be reasonably
anticipated to have a Material Adverse Effect. Except as set forth on
Schedule 6.14(a), no investigation or review by any Governmental Entity
with respect to the Company is pending or, to the Knowledge of the Seller,
threatened, nor has any Governmental Entity notified the Company of its
intention to conduct the same, nor does there 

- 23 – 

exist any basis therefor. 

          (b)      The
Company has all Permits necessary or advisable for its operations and the
conduct of the Subject Business, such Permits are in full force and effect, no
violations are or have been recorded in respect of any thereof and no Proceeding
is pending or, to the Knowledge of the Seller, threatened to revoke or limit any
thereof. The Company has taken all action reasonably necessary to maintain each
Permit. Schedule 6.14(b) contains a true, correct and complete list of
all Permits under which the Company is operating or by which it or any of its
assets or properties is bound, and the Company has furnished to Purchasers true,
correct and complete copies thereof. There is to the Knowledge of Seller no
proposed change in any applicable Law which would require the Company or, to the
Knowledge of the Seller, the Surviving Corporation to obtain any Permits not set
forth on Schedule 6.14(b) in order to conduct the Subject Business as
presently conducted or proposed to be conducted. None of the Permits set forth
on Schedule 6.14(b) shall be adversely affected as a result of the
Company’s execution and delivery of, or the performance of its obligations
under, this Agreement, any Related Document or the consummation of the Merger or
any of the other transactions contemplated hereby or thereby. The Company has
delivered to the Purchasers a true and correct copy of each Permit. 

          (c)      No
Governmental Entity regulating the services performed by the Company in
connection with the Subject Business has requested in writing that any such
services be modified in any way. There is no Law, and, to the Knowledge of the
Seller, there is no proposed or pending Law, which would prohibit or restrict
the Company from, or otherwise materially adversely, affect the Company in,
conducting the Subject Business as it is now conducted or is proposed to be
conducted in any jurisdiction in which it is now conducting or proposes to
conduct business. 

          6.15     
Employees; Labor Relations. 

          (a)      Schedule
6.15(a) contains a true and complete list of (i) all of the officers of the
Company, specifying their position, annual rate of compensation, date of hire,
work location and the allocation of amounts paid and other benefits provided to
each of them, respectively, and any other information reasonably requested by
the Purchasers and (ii) all of the employees (whether full-time, part-time or
otherwise), consultants and independent contractors of the Company as of the
date hereof, specifying their position, annual salary, date of hire, work
location, terms of compensation and the allocation of amounts paid and other
benefits provided to each of them, respectively, consulting or other independent
contractor fees, together with an appropriate notation next to the name of any
officer or other employee on such list who is subject to any written Employment
Agreement or any other written term sheet or other document describing the terms
or conditions of employment of such employee or of the rendering of services by
such independent contractor and any other information reasonably requested by
the Purchasers. Except as set forth on Schedule 6.15(a), the Company is
not a party to or bound by any Employment Agreement (whether written or oral).
The Company has provided to the Purchasers true, correct and complete copies of
each such Employment Agreement. The Company has not received a claim from any
Governmental Entity to the effect that the Company has improperly classified as
an independent contractor any person named on Schedule 6.15(a). Except as
set forth on Schedule 6.15(a), the Company has not made any written or
verbal commitments to any officer, employee, former employee, consultant or
independent contractor of the Company with respect to compensation, promotion,
retention, termination, severance or similar matters in connection with the
Merger or 

- 24 – 

any of the other transactions contemplated hereby or otherwise.
To the extent any employee is on a leave of absence, Schedule 6.15(a)
indicates the names of the employee, the nature of such leave of absence and
such employee’s anticipated date of return to active employment. Schedule
6.15(a) also indicates the information described in the previous sentence
for employees who have requested a leave of absence or who at the Closing Date
are expected to be on a leave of absence. Schedule 6.15(a) also sets
forth the name of any employee who is eligible to request FMLA leave as of the
Closing Date and the amount of FMLA leave utilized by each such employee during
the current leave year, each employee who will be on FMLA leave at the Closing
Date and his or her job title and description, salary and benefits, each
employee who has requested FMLA leave to begin after the Closing Date, a
description of the leave requested and a copy of all notices provided to such
employees regarding that leave. To the Knowledge of the Seller, none of the
employees listed on Schedule 6.15(a) has any plans or intends to
terminate his or their employment or engagement and except as set forth on
Schedule 6.15(a) no former officer, director or key employee has left the
service of the Company within the last six (6) months. 

          (b)      Except
as set forth on Schedule 6.15(b): (i) the Company is not delinquent in
payments to any of its employees for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed by them to date or
amounts required to be reimbursed to such employees; (ii) upon termination of
the employment of any such employees, none of the Company, the Surviving
Corporation or the Purchasers will by reason of any action taken or not taken
prior to the Closing be liable to any of such employees for severance pay or any
other payments; (iii) the Company is in material compliance with all Laws
respecting labor, employment and employment practices, terms and conditions of
employment and wages and hours, including without limitation, equal employment
opportunity, safety and health, workers’ compensation, disability, immigration,
and collective bargaining; (iv) there is no unfair labor practice complaint
actually pending or, to the Knowledge of the Seller, threatened against,
involving or affecting the Company before the National Labor Relations Board or
any other Governmental Entity; (v) there is no labor strike, material dispute or
grievance, picketing activity, slowdown or stoppage actually pending or, to the
Knowledge of the Seller, threatened against, involving or affecting the Company,
and no event has occurred that could reasonably be expected to give rise to any
such strike, dispute, grievance, slowdown, picketing or stoppage; (vi) no labor
union, trade union, or similar organization currently represents the employees
of the Company and no labor union, trade union or similar organization, or any
employees have taken any action with respect to organizing the employees of the
Company; (vii) there are no charges of employment discrimination pending before
the U.S. Equal Employment Opportunity Commission or any other state or local
agency authorized to receive and investigate changes of employment
discrimination; and (viii) there are no charges or complaints pending before the
U.S. Department of Labor or any division thereof, or before any similar state or
local agency. Except as set forth on Schedule 6.15(b), the Company is not
a party to or bound by any collective bargaining agreement, union Contract or
similar agreement. 

          (c)     
Except as set forth on Schedule 6.15(c), the Company is not, and has not
ever been, a federal or state contractor obligated to have an affirmative action
plan. 

          (d)      The
Company has not taken any action that could constitute a “mass layoff,” “mass
termination,” or “plant closing” within the meaning of the federal Worker
Adjustment and Retraining Notification Act (WARN) or otherwise trigger notice
requirements or liability under 

- 25 – 

any federal, local, state, or foreign plant closing notice or
group termination Law. 

          6.16     
Employee Benefits. 

          (a)     
Schedule 6.16(a) contains a true, correct and complete list of Employee
Benefit Plans (collectively, the “Employee Plans”): (i) that cover any
employees, contract employees or former employees of the Company or any spouses,
family members, dependents or beneficiaries thereof (a) that are maintained,
sponsored or contributed to by the Company or (b) with respect to which the
Company is obligated to contribute or has any actual or potential Liability at
any time during the six-year period ending on the Closing Date; or (ii) with
respect to which the Company has any actual or potential Liability or obligation
on account of the maintenance or sponsorship thereof or contribution thereto by
any present or former ERISA Affiliate of the Company. Any special tax status
enjoyed by an Employee Plan is noted on Schedule 6.16(a). 

          (b)      Except
as set forth on Schedule 6.16(b), with respect to each Employee Plan:

          (i)      all
required, declared or discretionary (in accordance with historical practices),
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to, or as of, the date hereof have been properly paid or properly
accrued on the Latest Balance Sheet or, with respect to accruals properly made
after the Balance Sheet Date, on the books and records of the Company and all
amounts withheld from employees have been properly deposited into the
appropriate trust or account; 

          (ii)     
there is no unfunded actual or potential Liability relating to such Employee
Plan which is not reflected on the Latest Balance Sheet or, with respect to
accruals properly made after the Latest Balance Sheet Date, on the books and
records of the Company; 

          (iii)     
no Proceedings (other than routine claims for benefits) are pending or to the
Knowledge of Seller, threatened against or relating to any Employee Plan or any
fiduciary thereof, and to the Knowledge of Seller, there is no basis for any
such Proceeding against any Employee Plan; 

          (iv)     
no Employee Plan obligates the Company to provide any employee or former
employee, or their spouses, family members or beneficiaries, any post-employment
or post-retirement health or life insurance, accident or other “welfare-type”
benefits; 

          (v)      neither
the Company nor any of its ERISA Affiliates is or has ever maintained or been
obligated to contribute to a “multiemployer plan” (as defined in Section 3(37)
of ERISA), a “multiple employer plan” (as defined in Section 413 of the Code,
whether or not subject to the Code) or a “defined benefit pension plan” (as
defined in Section 3(35) of ERISA) and no event or fact exists which could give
rise to any Liability to the Company or any of its ERISA Affiliates under Title
IV or Section 412 of the Code; 

          (vi)      each
Employee Plan has been established and operated for the exclusive 

- 26 – 

benefit of the participants and
beneficiaries of such Employee Plan; and 

          (vii)     
the Company has not made or agreed to make, and is not are required to make (in
order to bring any Employee Plan into compliance with ERISA, the Code or any
applicable Law), any changes in benefits that would materially increase the
costs of maintaining any Employee Plan. 

          (c)      Except
as set forth on Schedule 6.16(c), with respect to each Employee Plan:

          (i)      such
Employee Plan has been established, maintained, operated and administered in
accordance with its terms and in material compliance with ERISA, the Code and
other applicable Laws (including with respect to reporting and disclosure); 

          (ii)     
neither the Company nor any of its ERISA Affiliates nor any other “disqualified
person” or “party in interest” (as such terms are defined in Section 4975 of the
Code and Section 3(14) of ERISA, respectively) with respect to such Employee
Plan, has breached the fiduciary rules of ERISA or engaged in a prohibited
transaction that could subject any of the foregoing parties to any material Tax
or penalty imposed under Section 4975 of the Code of Section 502(i), (j) or (1)
of ERISA; 

          (iii)      any
Employee Plan that is intended to be “qualified”, within the meaning of Section
401(a) of the Code meets all requirements for qualification under Section 401(a)
of the Code and the regulations thereunder. With respect to each such qualified
Employee Plan, the IRS has issued either (i) a favorable determination or (ii) a
favorable opinion letter if such Employee Plan is a prototype plan; and, to the
Knowledge of the Seller, no matter exists which would adversely affect the
qualified status of such Employee Plan and any related trust; 

          (iv)     
each Employee Plan that is subject to the requirements of the Consolidated
Omnibus Budget Reconciliation of 1985 (“COBRA”) and the Health Insurance
Portability and Accountability Act of 1996, as amended, and any rules or
regulations promulgated thereunder (“HIPAA”) has been maintained in
substantial compliance with COBRA and HIPAA, including all notice requirements,
and no Tax payable on account of Section 4980B or any other Section of the Code
has been or is expected to be incurred; 

          (v)     
each Employee Plan that is intended to meet the requirements of Section 125 of
the Code meets such requirements and each program of benefits for which employee
contributions are provided pursuant to elections made under such Employee Plan
meets the requirements of the Code applicable thereto; 

          (vi)      there
has not been any act or omission by the Company, or any of its ERISA Affiliates
that has given rise to or could give rise to any material fines, penalties or
related charges under ERISA or the Code for which the Company, or any of its
ERISA Affiliates could be liable; 

          (vii)      no
Employee Plan holds employer securities; 

          (viii)     
if the Company or any of its ERISA Affiliates were to partially or 

- 27 – 

completely withdraw from any Employee
Plan that is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA),
neither the Company nor any of its ERISA Affiliates would be assessed or
required to pay any withdrawal liability upon such withdrawal (based on
calculations as of the close of the most recent plan year for such multiemployer
plan); 

          (ix)      neither
the Company nor any of its ERISA Affiliates has within the past six years had a
complete or partial withdrawal from any multiemployer plan (as defined in
Section 4001(a)(3) of ERISA); 

          (x)      No
insurance policy or any other contract or agreement affecting any Employee Plan
requires or permits a retroactive increase in premiums or payments due
thereunder. The level of insurance reserves under each insured Employee Plan is
reasonable and sufficient to provide for all incurred but unreported claims;

          (xi)      There
have been no improper withdrawals, applications or transfers of assets from any
Employee Plan or the trusts or other funding media relating thereto, and neither
the Company nor any of its agents has been in breach of any fiduciary obligation
with respect to the administration of the Employee Plans or the trusts or other
funding media relating thereto; 

          (xii)      The
Company has the right under the terms of each Employee Plan and under applicable
benefit Law to amend, revise, merge or terminate such plan (or its participation
in such plan) exclusively by action of the Company, and no additional
contributions would be required to properly effect such termination; 

          (xiii)      The
execution, delivery and performance of, and consummation of the transactions
contemplated by, this Agreement will not (1) entitle any current or former
employee, director, officer, consultant, independent contractors, contingent
worker or leased employee (or any of their dependents, spouses or beneficiaries)
of the Company to severance pay, unemployment compensation or any other payment,
or (2) accelerate the time of payment or vesting, or increase the amount of
compensation due any such individual; and 

          (xiv)      The
Company has no duty or obligation to indemnify or hold another Person harmless
for any liability attributable to any acts or omissions by such Person with
respect to any Employee Plan or ERISA Affiliate plan. 

          (xv)      Notwithstanding
anything to the contrary in this Agreement, neither this Section nor any
provision of this Agreement is intended to, or does, constitute the
establishment of, or an amendment to , any Employee Plan. 

          (d)      The
Company has provided the Purchaser with true, correct and complete copies of:
(i) all documents and any amendments thereto (or in the event the Employee Plan
is not written, a written description thereof) pursuant to which each Employee
Plan is maintained and administered (including the summary plan description for
each Employee Plan for which a summary plan description is required, and each
trust agreement and insurance or group annuity contract relating to any Employee
Plan); (ii) the three (3) most recent annual reports (Form 5500 

- 28 – 

and attachments) and financial statements therefore, if any;
(iii) all governmental rulings, determinations and opinions (and pending
requests therefor); (iv) if such Employee Plan is a defined benefit pension
plan, the most recent actuarial valuation for such Employee Plan; (v) the most
recent determination letter received from the IRS with respect to each Employee
Plan intended to qualify under Section 401(a) of the Code, if any; (vi)
nondiscrimination and coverage tests for the most plan year and other
documentation with respect to any Employee Plan (whether current or not) as it
reasonably requested by the Purchaser; and (vii) if such Employee Plan provides
post-employment or post-retirement health and life insurance, accident or other
“welfare-type” benefits, the most recent valuation of the present and future
obligations under such Employee Plan. The foregoing documents accurately reflect
all of the terms of such Employee Plans (including, without limitation, any
agreement or provision that would limit the ability of the Company or the
Surviving Corporation to make any prospective amendments or to terminate any
Employee Plan). 

          6.17     
Environmental Matters. 

          To
the Knowledge of Seller: 

          (a)      With
respect to those matters or conditions related to or arising from the Company’s
acts or omissions, neither the Company, the Real Property nor any of the
Company’s past owned, leased or operated property or operations are subject to,
or the subject of, any Proceeding, Order, settlement, or other Contract arising
under Environmental Laws, nor has any investigation been commenced or is any
Proceeding threatened against the Company under Environmental Laws alleging any
failure to comply with any Environmental Laws. 

          (b)      Except
as set forth on Schedule 6.17(b), the Company has complied and is in
compliance with all applicable Environmental Laws and all Permits,
approvals, identification numbers, licenses, registrations and other
authorizations issued pursuant to any applicable Environmental Laws. All past
non-compliance with applicable Environmental Laws has been resolved without any
pending, ongoing or future obligation, cost or liability. 

          (c)      Except
as set forth on Schedule 6.17(c), neither the Company nor any Seller has
received any written or oral notice, report, request or other information from
any Governmental Entity that the Company has violated, or has any Liability
under, applicable Environmental Laws, and the Company has not treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or
released any Hazardous Material, or owned or operated the Subject Business, the
Real Property or any other property or facility formerly owned, leased, used or
occupied in a manner that has given or would give rise to Liabilities, including
any Liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to applicable
Environmental Laws. 

          (d)      The
Company has provided the Purchasers with true, correct and complete copies of
all reports, assessments, evaluations, inspections and studies performed by or
on behalf of, or otherwise within the possession or control of, the Company with
respect to past or present environmental conditions or compliance with
applicable Environmental Laws relating to the Company’s ownership, leasing or
operation of the Subject Business or any Real Property or any 

- 29 – 

other property. Schedule 6.17(d) sets forth a complete
list of environmental reports, assessments, evaluations, inspections or studies
with respect to such properties of which the Company is aware, but which were
not performed by or on behalf of the Company or within the Company’s control.

          (e)      Except
as set forth on Schedule 6.17(e), the Company has not by Contract,
consent order, other agreement, or operation of Law assumed (i) any Liabilities
of any other Person arising under applicable Environmental Laws or (ii)
responsibility for, either directly or indirectly, the remediation of any
condition arising from or relating to the release or threatened release of
Hazardous Materials. 

          6.18     
Brokers. 

          None
of the Seller, the Company or any of its officers, directors or employees (or
any Affiliate of the foregoing) has employed any broker or finder. None of the
Seller, the Company or any of its directors or employees (or any Affiliate of
the foregoing) has incurred any Liability for any brokerage fees, commissions or
finders’ fees in connection with the transactions contemplated hereby. 

          6.19      Related
Transactions. 

          (a)      Except
as set forth on Schedule 6.19(a), and except for compensation paid or
payable by the Company to bona-fide employees of the Company in the ordinary
course of business and consistent with past practice, no, employee or current or
former stockholder of the Company is now, or has been during the last five (5)
years: (i) a party to any transaction or Contract with the Company or any of its
employees or Affiliates with a value in excess of twenty five thousand dollars
($25,000.00) or which could reasonably be anticipated to have a Material Adverse
Effect on the Company, or (ii) the direct or indirect owner of an interest in
any Person which is a present or potential competitor, supplier or customer of
the Company (other than non-affiliated holdings in publicly-held companies).
Except as set forth on Schedule 6.19(a), the Company is not a guarantor
or otherwise directly or indirectly liable for any actual or potential Liability
of its Affiliates with a value in excess of twenty five thousand dollars
($25,000.00) or which could reasonably be anticipated to have a Material Adverse
Effect on the Company. 

          (b)     
The Company does not (i) own or operate any vehicles, boats, aircrafts,
apartments or other residential or recreational properties or facilities for
executive, administrative or sales purposes or (ii) own or pay for any social
club memberships, whether or not for the benefit of the Company and/or its
executives. 

          6.20     
Insurance. 

          (a)     
Schedule 6.20(a) contains a true, correct and complete list of all
policies of liability, theft, fidelity, business interruption, life, fire,
product liability, workers compensation, health and other material forms of
insurance held by the Company for the benefit of the Company since the formation
of the Company (specifying the insurer, amount of coverage, type of insurance,
policy number, scope (including an indication of whether the coverage was on a
claims made, occurrence or some other basis, and, if on a claims made basis, a
description of any retroactive premium adjustments) and any material pending
claims thereunder).

- 30 – 

          (b)      Schedule
6.20(b) contains a true, correct and complete list of all policies of
liability, theft, fidelity, business interruption, life, fire, product
liability, workers compensation, health and other material forms of insurance
required to be held by the Company pursuant to any Contract with a customer,
vendor or supplier. 

          6.21      Certain
Payments. 

          (a)      None
of the Company, any Seller, any officer, any director, or, to the Knowledge of
the Seller, any employee, agent or other Person acting on behalf of the Company
or any such Person has, directly or indirectly, given or agreed to give any
money, gift, contribution, bribe, rebate, payoff, influence payment, kickback or
similar benefit, (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any Governmental Entity or
other Person who was, is, or may be in a position to help or hinder the Subject
Business or the Company (or assist in connection with any actual or proposed
transaction) that: (a) could subject the Company to any damage or penalty in any
Proceeding; (b) if not given in the past, would have resulted in a Material
Adverse Effect in respect of the Company; or (c) if not continued in the future,
could reasonably be expected to result in a Material Adverse Effect in respect
of the Company or the Surviving Corporation. There is not now, and there has
never been, any employment by the Company of, or beneficial ownership in the
Company by, any official of any Governmental Entity in any jurisdiction in which
the Company has conducted or proposes to conduct business. 

          (b)     
No Seller nor any of their respective Affiliates (other than the Company) has
made any direct or indirect payment to any employee, officer, director,
consultant, advisor, agent or representative of the Company in connection with
the Subject Business. 

          6.22     
Accounts and Notes Payable. 

          Except
as set forth on Schedule 6.22, all accounts payable and notes payable by
the Company to third parties arose in the ordinary course of business and,
except as set forth on Schedule 6.22, there is no such account payable or
note payable delinquent in its payment for longer than thirty (30) days, except
those contested in good faith and disclosed on Schedule 6.22. 

          6.23     
Accounts and Notes Receivable. 

          Except
as set forth on Schedule 6.23, all of the accounts receivable and notes
receivable owing to the Company constitute valid, binding and enforceable claims
arising from bona fide transactions in the ordinary course of business, and
there are no known or asserted claims, refusals to pay or other rights of
set-off against any thereof. Except as set forth on Schedule 6.23, there
is: (i) no account debtor or note debtor delinquent in its payment by more than
thirty (30) days; (ii) no account debtor or note debtor that has refused or,
threatened to refuse to pay its obligations to the Company for any reason; (iii)
no account debtor or note debtor that is insolvent or bankrupt; and (iv) no
account receivable or note receivable has been pledged to any third party by the
Company. 

     6.24      Principal
Customers and Suppliers. 

          (a)      Schedule
6.24(a) contains a true and complete list of the name and address of the

- 31 – 

top ten (10) customers of the Company based on gross revenue on
the Latest Balance Sheet, and since the Latest Balance Sheet Date no customer
has terminated its relationship with or adversely curtailed its relationship
with the Company or indicated (for any reason) its intention to so terminate or
curtail its relationship. 

          (b)     
Schedule 6.24(b) contains a true and complete list of the name and
address of the top ten (10) suppliers of the Company based on expenses reflected
on the Latest Balance Sheet, and since the Latest Balance Sheet Date no supplier
has terminated its relationship with or adversely curtailed its accommodations,
sales or services to the Company or indicated (for any reason) its intention to
so terminate its relationship or curtail its accommodations, sales or services.

          6.25      Disclosure.

          No
representation or warranty of the Company contained in this Agreement or in any
Related Document, and no statement contained in any document, certificate or
Schedule furnished or to be furnished by or on behalf of the Company or any
Seller to Purchasers or any of their Representatives pursuant to this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading or necessary in order to fully and fairly provide the
information required to be provided in any such document, certificate or
Schedule.

ARTICLE VII 
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS 

          The
Purchasers hereby jointly and severally represent and warrant to the Seller as
set forth below. For purposes of this Article VII, the term “Purchaser” shall
include any Subsidiary of any Purchaser. 

          7.1      Organization;
Good Standing; Qualification and Power. 

          Each
of the Purchasers has been duly organized, is validly existing and in good
standing under the Laws of the state of its incorporation, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification necessary
and the failure to be so qualified or in good standing would not have a Material
Adverse Effect on such Purchaser. 

          7.2     
Authority; Noncontravention; Consents. 

          (a)      Each
Purchaser has all the requisite corporate power and authority to enter into this
Agreement, each Related Document to which it is a party and any and all
instruments necessary or appropriate in order to effectuate fully the terms and
conditions of this Agreement, each Related Document to which it is a party and
all related transactions contemplated hereby and thereby and to perform its
respective obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and each Related Document to which it is a party
and

 - 32 – 

the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of such Purchaser, and this Agreement and each Related Document to
which it is a party has been duly and validly executed and delivered by such
Purchaser and this Agreement and each Related Document to which it is a party is
the valid and binding obligation of such Purchaser, enforceable against such
Purchaser in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws affecting the enforcement of creditors’ rights
generally and general equitable principles. 

          (b)     
Except as set forth on Schedule 7.2(b), neither the execution, delivery
and performance of this Agreement and the Related Documents to which such
Purchaser is a party nor the consummation by such Purchaser of the Merger or any
of the other transactions contemplated hereby or thereby nor compliance by such
Purchaser with any provision hereof will (i) conflict with, or result in any
violation of, or cause a default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in or the loss of any material benefit
under, or result in the creation of any Encumbrance upon any asset of such
Purchaser under any term, condition or provision of such Purchaser’s Fundamental
Documents, any Contract to which such Purchaser is a party or by which any of
its respective properties or, assets are bound, or (ii) violate any Laws
applicable to such Purchaser or any of its material properties, in the case of
(i) and (ii) except to the extent that such conflict or violation would prohibit
such Purchaser from consummating the transactions contemplated hereby. 

          (c)      Except
as set forth on Schedule 7.2(c), no consent, approval, Order or
authorization of, registration, declaration or filing with, or notification to
any Governmental Entity or any other third party is required in connection with
the execution, delivery and performance by the Purchasers of this Agreement or
the Related Documents to which such Purchaser is a party or the consummation of
the Merger or any of the other transactions contemplated hereby or thereby. 

          7.3      Brokers.

          Except
as set forth on Schedule 7.3, neither the Purchasers nor any of their
officers, directors or employees (or any Affiliate of any of the foregoing) have
employed any broker or finder or incurred any Liability for any brokerage fees,
commissions or finders’ fees in connection with the transactions contemplated
hereby. 

          7.4     
Investment. 

          Holdings
is acquiring the Units for its own account for investment and not with a view
to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same. Except as contemplated by
this Agreement, the Purchasers have no present or contemplated agreement,
undertaking, arrangement, obligation or commitment providing for the disposition
thereof. The Purchasers are “accredited investors” within the meaning of Rule
501 under the Securities Act. 

          7.5      Capitalization.

          (a)      As
of the date of the Closing Date, the authorized capital stock of Holdings will

- 33 – 

consist of 200,000,000 shares of common stock, par value $.001
per share, of which 45,600,000 shares will be issued and outstanding. Other than
such shares and except as set forth on Schedule 7.5(c), there are
no other Equity Interests of Holdings authorized, issued or outstanding. All of
such shares are duly authorized, validly issued, fully paid and nonassessable.
Upon consummation of the transactions contemplated by this Agreement, and
assuming the sale of $20,000,000 of Holdings securities in connection with the
Private Financing on the terms described in Section 8.3(c) hereof and further
assuming the full conversion and exercise of all such securities sold in the
Private Financing, there will not be more than 142,600,000 shares of common
stock issued and outstanding. 

          (b)      The
authorized capital stock of Merger Co. consists of 1,000 shares of common stock,
$0.01 par value per share, all of which are issued and outstanding. Other than
such shares, there are no other Equity Interests of Merger Co. authorized,
issued or outstanding. All of such shares are duly authorized, validly issued,
fully paid and nonassessable. 

          (c)      Except
as contemplated by this Agreement or as set forth on Schedule 7.5(c),
there are no Securities outstanding which are convertible into, exchangeable
for, or carrying the right to acquire, Equity Interests of the Purchasers, or
subscriptions, warrants, options, calls, puts, convertible securities,
registration or other rights, arrangements or commitments obligating either of
the Purchasers to issue, sell, register, purchase or redeem any of its Equity
Interests or any ownership interest or rights therein. Except as specifically
contemplated by this Agreement, there are no voting trusts or other agreements
or understandings to which the Purchasers are bound with respect to the voting
of any Equity Interests of either of the Purchasers. Except as disclosed on
Schedule 7.5(c), there are no stock appreciation rights, phantom stock
rights or similar rights or arrangements outstanding with respect to either of
the Purchasers, and no derivative instruments issued by the Purchasers exist,
the underlying security of which is an Equity Interest of either of the
Purchasers. 

        (d)      Except
as specifically contemplated by this Agreement, there are no Contracts,
commitments, arrangements, understandings or restrictions to which the
Purchasers are bound relating in any way to any Equity Interest of the
Purchasers, including any rights of first refusal and any rights of first offer.

         (e)     
All Securities issued by the Purchasers have been issued in transactions exempt
from registration under the Securities Act and the rules and regulations
promulgated thereunder and all applicable state securities or “blue sky” laws,
and the Purchasers have not violated the Securities Act or any applicable state
securities or “blue sky” laws in connection with the issuance of any such
Securities. 

          7.6     
Litigation. 

          (a)      Except
as set forth on Schedule 7.6(a), there are no (i) Proceedings pending or,
to the Knowledge of the Purchasers, threatened against the Purchasers, whether
at law or in equity, or before or by any Governmental Entity, except Proceedings
that could not reasonably be expected to have a Material Adverse Effect or (ii)
Orders of any Governmental Entity or arbitrator against the Purchasers or any of
their respective properties or assets. 

- 34 – 

          (b)      Schedule
7.6(b) lists each Proceeding that (i) resulted in any criminal sanctions or
(ii) within the last three (3) years, resulted in payments in excess of $25,000,
in each case by or against the Purchasers or any of their current respective
officers or directors in their capacity as officers or directors (whether as a
result of a judgment, civil fine, settlement or otherwise) or to the Knowledge
of Purchasers, their respective past officers or directors in their capacity as
officers or directors (whether as a result of a judgment, civil fine, settlement
or otherwise) all of whom are set forth on Schedule 7.6(b). 

          7.7     
Solvency. 

          Immediately
after giving effect to the Merger and the other transactions contemplated hereby
and the incurrence of any indebtedness therewith, the assets of the Surviving
Corporation will exceed its liabilities. In connection with the consummation of
the Merger and the other transactions contemplated hereby and the incurrence of
any indebtedness in connection therewith, the Company does not plan to incur
debts that would be beyond the Company’s ability to pay as they mature. 

          7.8     
Offering Exemption. 

          Assuming
the accuracy of the representation and warranties of the Seller in Section 5.7,
the Holdings Common Stock to be issued by Holdings to the Seller pursuant to
this Agreement has been issued (i) pursuant to valid exemptions from
registration under the Securities Act and all applicable state securities or
“blue sky” laws and (ii) without violating any anti-fraud provisions of the
Securities Act or any state securities laws. 

          7.9      Business
of Merger Co. 

          Prior
to the date hereof, Merger Co. (i) has not conducted any material business other
than the Merger and activities related and incident thereto, (ii) has no, nor
has ever had any, employees; and (iii) does not have any Liabilities except for
(x) obligations and Liabilities imposed by Law, and (y) obligations incurred in
connection with the Merger and activities related and incident thereto. 

          7.10      SEC
Documents; Financial Statements.

          (a)     
Holdings has filed all reports required to be filed by it under the Securities
Act and the Exchange Act (all of the foregoing filed at least ten (10) days
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to as the
“SEC Documents”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Document prior to
the expiration of any such extension. Holdings has delivered to the Seller true,
correct and complete copies of SEC Documents not available on the EDGAR system
dated after May 17, 2007. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act or
the Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be

- 35 – 

stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. 

          (b)     
As of their respective dates, the Financial Statements incorporated into the SEC
Documents (the “Holdings Financial Statements”) and the related notes
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. The Holdings Financial Statements and the related notes have been
prepared in accordance with accounting principles generally accepted in the
United States, consistently applied, during the periods involved (except (i) as
may be otherwise indicated in the Holdings Financial Statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes, may be condensed or summary statements or may conform
to the SEC’s rules and instructions for Reports on Form 10-QSB) and fairly
present in all material respects the consolidated financial position of Holdings
as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). 

          (c)     
Holdings has not received from the Securities Exchange Commission (the
“Commission”) any written comments, questions or requests for modification of
disclosure in respect of any reports filed with the Commission pursuant to the
Exchange Act, except for comments, questions or requests (i) that have been
satisfied by the provision of supplemental information to the staff of the
Commission, or (ii) in respect of which Holdings has agreed with the staff of
the Commission to make a prospective change in future reports filed by it with
the Commission pursuant to the Exchange Act, of which agreement the Seller and
their counsel have been made aware. 

          7.11      Subsidiaries;
Investments. 

          Other
than as set forth on Schedule 7.11, the Purchasers have no Subsidiaries.
Neither Purchasers own, directly or indirectly, any Equity Interest in any
Person, except for the entities set forth on Schedule 7.11. 

          7.12     
Absence of Undisclosed Liabilities. 

          Purchasers
have no Liabilities, except for: (a) the Liabilities set forth on Schedule
7.12; (b) Liabilities reflected in the Liabilities Section of Holdings’
Balance Sheet dated January 31, 2007 and included in the Holdings Financial
Statements (“Holdings Latest Balance Sheet” and the date of Holdings
Latest Balance Sheet, the “Holdings Latest Balance Sheet Date”); and (c)
Liabilities that have arisen since Holdings Latest Balance Sheet Date in the
ordinary course of business (none of which are material (individually or in the
aggregate) or relate to breach of Contract, breach of warranty, tort,
infringement, violation of Law, Order or Permit, or any Proceeding (including
any Liability under any Environmental Laws)).

          7.13      Absence
of Changes. 

          Since
Holdings’ Latest Balance Sheet Date, there has not been any Material Adverse
Effect with respect to any Purchaser and no event has occurred and no
circumstance or condition exists which has had or could reasonably be expected
to have a Material Adverse Effect on any Purchaser. Since Holdings’ Latest
Balance Sheet Date, except as set forth on Schedule 7.13, 

- 36 – 

Holdings has been operated in the ordinary course, consistent
with past practice. Without limiting the foregoing, except as set forth on
Schedule 7.13, since the Holdings’ Latest Balance Sheet Date: 

          (a)      No
Purchaser has declared, set aside or paid any dividends on or made any other
Distribution in respect of any of its Equity Interests, or made any payment or
transfer consideration of any kind to any Affiliate, other than: (i) payments or
transfers in satisfaction of amounts reflected on Holdings’ Latest Balance
Sheet, (ii) salary and ordinary course expense reimbursement, or (iii) costs or
expenses incurred and repaid subsequent to the Holdings’ Latest Balance Sheet
Date; 

          (b)      No
Purchaser has split, combined or reclassified any of its Equity Interests or
issued or authorized or proposed the issuance or authorization of any Securities
in respect of, in lieu of, or in substitution for Equity Interests or
repurchased, redeemed or otherwise acquired any of its Equity Interests; 

          (c)      No
Purchaser has issued, delivered, pledged, encumbered or sold, or authorized or
proposed the issuance, delivery, pledge, Encumbrance or sale of, any of its
Equity Interests or proposed any change in its equity capitalization; 

          (d)      No
Purchaser has sold, transferred, licensed, pledged, mortgaged or otherwise
disposed of tangible or intangible assets (other than inventory in the ordinary
course of business) with an aggregate fair market value of greater than $25,000;

          (e)      No
Purchaser has amended its Fundamental Documents; 

          (f)     
Other than as contemplated under this Agreement and the Related Documents, no
Purchaser has acquired or agreed to acquire by merging or consolidating with, or
by purchasing any material portion of the Equity Interests or assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof; 

          (g)     
no party (including a Purchaser) has accelerated, terminated, modified or
canceled or waived any material right under any Contract (or series of related
Contracts) involving more than $25,000 to which a Purchaser is a party or by
which it is bound and to the Knowledge of the Purchasers no other party intends
to take any such action, and no modification in excess of $25,000 has been made
to any such Contract; 

          (h)      No
Purchaser has experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property in excess of $25,000 individually
or $50,000 in the aggregate; 

          (i)      there
has not been any labor strike, material dispute or grievance, picketing
activity, slowdown or stoppage actually pending or, to the Knowledge of any
Purchaser, threatened against, involving or affecting a Purchaser, and no event
has occurred that could reasonably be expected to give rise to any such strike,
dispute, grievance, slowdown, picketing or stoppage and there has not been any
union organizing campaigns; 

          (j)      there
has not been any write-down or write-up of the value of any asset of a 

- 37 – 

Purchaser other than in the ordinary course of business, or any
write-off of any accounts receivable or notes receivable of a Purchaser; 

          (k)      there
has not been any change in the Tax or accounting methods or principles used by
any Purchaser or any change in depreciation or amortization policies or rates
theretofore adopted; 

          (l)      there
has not been any material change in the time or manner in which a Purchaser
extends discounts or credit to customers, collects receivables from customers,
or otherwise deals with customers; 

          (m)      there
has not been any material change in the time or manner in which a Purchaser pays
its payables to suppliers and vendors, or otherwise deals with suppliers and
vendors; 

          (n)      there
has not been any material change in the business policies in which a Purchaser
calculates or determines its Working Capital; 

          (o)      Each
Purchaser has continued to invest in capital expenditures in accordance with its
annual budget and past practices; 

         (p)      No
Purchaser has altered its credit policies or practices or its payment policies
or practices; 

         (q)      there
has not been any material change in any distribution platform where a Purchaser
conducts business with any of its customers; and 

        (r)      there
has been no Contract, understanding or authorization for the any Purchaser to
take any of the actions specified in this Section 7.13. 

          7.14     
Tax Matters. 

         (a)      Each
Purchaser has (i) timely filed all Tax Returns required to be filed by it
through the date hereof and as of the Closing Date with the appropriate
Governmental Entities in all jurisdictions in which such Tax Returns are
required to be filed (taking into account extensions to which it was entitled),
and such Tax Returns were (and will be) true, correct and complete in all
material respects; and (ii) timely paid or caused to be paid all Taxes required
by it to be paid through the date hereof and as of the Closing Date. 

          (b)     
The Purchasers have complied in all respects with all applicable Laws relating
to the collection, withholding and paying over of Taxes (such as (i) sales or
use Taxes or (ii) payroll Taxes or other Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, member, stockholder or any other third party). 

          (c)      None
of the Purchasers have been members of an affiliated group filing a consolidated
federal income Tax Return (other than a group the common parent of which was
Holdings). None of the Purchasers have any Liability for the Taxes of any Person
(other than such 

- 38 – 

Purchaser) under Treasury Reg. §1.1502 -6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise. 

          (d)      No
claim has ever been made by any Tax authority in a jurisdiction in which any of
the Purchasers do not file Tax Returns that it is or may be subject to taxation
by that jurisdiction, and no basis exists for any such claim to be made. 

          (e)     
No Purchaser has entered into, or otherwise participated (directly or
indirectly) in any “listed transaction” within the meaning of Treasury
Regulations Section 1.6011 -4(b)(2) or any other “reportable transaction” within
the meaning of Treasury Regulations Section 1.6011 -4(b). 

          7.15      Title
to Assets. 

          Purchasers
have good, valid and marketable title to the assets, properties and interests in
properties, real, personal or mixed, reflected on the Latest Balance Sheet or
acquired after the Holdings Latest Balance Sheet Date (except inventory or other
property sold or otherwise disposed of since the Holdings Latest Balance Sheet
Date in the ordinary course of business and accounts receivable and notes
receivable paid in full subsequent to the Holdings Latest Balance Sheet Date),
free and clear of all Encumbrances, of any kind or character, except for those
Encumbrances set forth in Schedule 7.15 and Permitted Encumbrances.
Except as set forth on Schedule 7.15, the fixed assets of the Purchasers
are in good operating condition and repair (ordinary wear and tear excepted).
The assets, properties and interests in properties of the Purchasers to be
owned, leased or licensed by the Surviving Corporation after the Closing shall
include all assets, properties and interests in properties (real, personal and
mixed, tangible and intangible) and all Contracts necessary to enable it to
carry on the Purchasers’ Business as presently conducted and proposed to be
conducted. 

          7.16     
Real Property. 

          (a)      Purchasers
do not own, and have not at any time owned, any real property. Schedule
7.16(a) contains a true, correct and complete list and brief description of
all of real property in which any Purchaser has a leasehold interest held under
leases, subleases, licenses and/or other types of occupancy agreements (the
“Purchaser Real Property Leases”), including any requirement of consent
of the lessor to consummate the Merger or any of the other transactions
contemplated hereby or for the Surviving Corporation to continue after the
Closing to lease the applicable property on the same terms and conditions as in
effect immediately prior to the Closing. The real property in respect of which
any Purchaser has any Real Property Leases (the “Purchaser Real
Property”) constitutes all real properties used or occupied by the
Purchasers in connection with the Purchasers’ Business, or that will be required
by the Surviving Corporation or the Purchasers’ Business. 

          (b)      With
respect to the Purchaser Real Property, except as set forth on Schedule
7.16(b): 

          (i)      no
portion thereof is subject to any pending condemnation or eminent domain
Proceeding or other Proceeding by any public or quasi-public authority and to
the Knowledge of the Purchaser there is no threatened condemnation or eminent
domain 

- 39 – 

Proceeding or other Proceeding with
respect thereto; 

          (ii)      a
Purchaser is the owner and holder of all of the leasehold estates purported to
be granted by the Purchaser Real Property Leases and each Purchaser Real
Property Lease is in full force and effect and constitutes a valid and binding
obligation of the Purchaser and of the other parties thereto; 

          (iii)     
there are no Contracts, written or oral, to which a Purchaser is a party,
granting to any other party the right of use or occupancy of any portion of the
Purchaser Real Property; and 

          (iv)     
there are no parties (other than a Purchaser or its lessees disclosed pursuant
to paragraph (iii) above) in possession of any portion of the Purchaser Real
Property. 

          7.17      Intellectual
Property.

          (a)      Schedule
7.17(a) contains a complete list of all of Purchasers’ Intellectual Property
rights that relate to, are used by, or are held for use by, Purchasers in
connection with the conduct of Purchasers’ Business (the “Purchaser
Intellectual Property Assets”), including without limitation: (i) all
patented or registered or unregistered Intellectual Property owned by Purchasers
and used in connection with Purchasers’ Business; (ii) all pending patent
applications and applications for registrations of other Intellectual Property
filed by or on behalf of Purchasers and used in connection with Purchasers’
Business; (iii) all registered or unregistered trade names, trademarks,
corporate names, domain names, trademarks and service marks owned by Purchasers
and used in connection with Purchasers’ Business; (iv) all registered or
unregistered copyrights and computer software used in connection with
Purchasers’ Business; (v) all trade secrets which are used in connection with
Purchasers’ Business; and (vi) a clear identification of the relative ownership
rights of Purchaser in the foregoing. Schedule 7.17(a) also contains a
complete list of all licenses and other rights granted by Purchasers to any
third party, and all licenses and other material rights granted by any third
party to Purchasers, with respect to any Intellectual Property. 

        (b)      Except
as set forth on Schedule 7.17(b), Purchasers (i) own and possess all
right, title and interest in and to (or have the right to use pursuant to a
valid and enforceable license as indicated on Schedule 7.17(a)) all
Intellectual Property described on Schedule 7.17(a) which is necessary
for the operation of the Purchasers’ Business, and (ii) own or possess (or have
the right to use pursuant to a valid and enforceable license as indicated on
Schedule 7.17(a)) all Intellectual Property (whether or not set forth on
Schedule 7.17(a)) which is material to the Purchasers’ Business and
necessary for the Purchasers’ Business as presently conducted, including,
without limitation, the right to market, sell, offer to sell, license and grant
others the right to use, market, sell, or offer to sell, and license the
Purchaser Intellectual Property Assets, without any conflict with, infringement
or misappropriation of the Intellectual Property rights of others. Purchasers
have taken all necessary or desirable actions to maintain and protect its
interests and rights in all the Purchaser Intellectual Property Assets. Except
as set forth on Schedule 7.17(b):

- 40 – 

          (i)      there
are no outstanding claims which have been made in writing, whether on paper or
electronically, or, to Purchasers’ Knowledge, verbally, against Purchaser, or,
to Purchaser’s Knowledge, against any customer of Purchaser, asserting the
invalidity, misuse or unenforceability of any of the Purchaser Intellectual
Property Assets or that the Purchaser Intellectual Property Assets in any manner
infringe, violate or involve the misappropriation of the Intellectual Property
or other proprietary rights of any other Person; 

          (ii)     
Purchasers have not received any outstanding written, verbal or electronic
notice of any infringement or misappropriation by, or conflict with, any Person
with respect to any of the Purchaser Intellectual Property Assets (including any
demand or request that Purchaser license rights from any Person or cease
licensing or servicing any of its products or services); 

          (iii)      the
conduct of the Purchasers’ Business, including, without limitation, the use,
sale, offer to sell, license and use by customers of the Purchaser Intellectual
Property Assets subject to Contracts, has not infringed, misappropriated, or
violated, and does not infringe, misappropriate or violate, any Intellectual
Property or other proprietary right of any other Person; 

          (iv)     
to Purchasers’ Knowledge, none of the Purchaser Intellectual Property Assets
have been infringed, misappropriated or violated by any other Person; and 

          (v)     
Except with respect to licenses of commercial off-the-shelf software, and except
pursuant to the licenses listed in Schedule 7.17(e), Purchaser is not
required, obligated, or under any liability whatsoever, to make any payments by
way of royalties, fees or otherwise to any owner, licensor of, or other claimant
to any Purchaser Intellectual Property Assets or other third party, with respect
to the use thereof or in connection with the conduct of the Purchasers’ Business
as currently conducted or proposed to be conducted.

          (c)      Each
of the licenses with respect to Purchaser Intellectual Property Assets is in
full force and effect and is the legal, valid and binding obligation of the
licensor, enforceable against each of them in accordance with its terms.
Purchasers are not in default under any such license, nor is any other party to
any such license in default thereunder, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder. No party to any such license has exercised any termination rights
with respect thereto. If any such license purports to grant the applicable
Purchaser exclusive rights in or to any Intellectual Property Asset, such
license does, in fact, grant such rights to the exclusion of any other Person.

          (d)      Purchasers
have sufficient title and ownership of or licenses to or otherwise possess all
necessary rights to use and to grant others the right to use all of the
Purchaser Intellectual Property Assets, including, without limitation, to
market, sell, license, and grant others the right to use, market, sell and
license the Purchaser Intellectual Property Assets, without any conflict with,
infringement or misappropriation of any Intellectual Property of others.

          (e)     
Except as set forth on Schedule 7.17(e), there are no royalties, fees or
other 

- 41 – 

payments payable by Purchasers to any person by reason of the
ownership, use, sale, license or other disposition of any Intellectual Property.

          (f)      Purchasers
are not, or will not be, as a result of the execution and delivery of this
Agreement, or any Related Documents, or the closing of the Merger or other
performance of the obligations under this Agreement, or any of the other Related
Documents, in breach of any license, sublicense or other agreement relating to
the Purchaser Intellectual Property Assets or of any third party Intellectual
Property. 

          (g)      Purchasers
have not been served with process, and, to Purchasers’ Knowledge, is not aware
that any Person is intending to serve process on Purchasers or any customer of
Purchasers’, in any proceeding which involves a claim of infringement, violation
or misappropriation of any Intellectual Property of any third party. Purchasers
have not brought any proceeding for infringement, violation or misappropriation
of any Intellectual Property or breach of any license or agreement involving any
Purchaser Intellectual Property Assets against any third party. 

        (h)     
No former officer, employee or consultant of Purchaser or of any of its
predecessors has, or could have, any right, title, interest or other claim in,
to or under any of the Purchaser Intellectual Property Assets (except to the
extent that all Purchaser Intellectual Property Assets are not registered or
otherwise protected. 

          (i)     
Except as set forth on Schedule 7.17(i), there are no outstanding
options, licenses or agreements of any kind relating to any of the Purchaser
Intellectual Property Assets, nor are Purchasers bound by or a party to any
options, licenses or agreements of any kind, including without limitation
obligations to pay any royalties or other payments with respect to the
Intellectual Property rights of any other Person. 

          7.18     
Contracts. 

          (a)     
Except as set forth on Schedule 7.18(a), no Purchaser is a party to any:

          (i)      Employment
Agreements; 

          (ii)      Contract
relating to any Funded Indebtedness or to the mortgaging, pledging or otherwise
placing an Encumbrance on any asset or group of assets of any Purchaser; 

          (iii)      Contract
with respect to the lending or investing of funds; 

          (iv)      Contract
with respect to any form of intangible property, including any Purchaser
Intellectual Property Assets or Confidential Information; 

        (v)      Contract
or group of related Contracts with the same party for the purchase or sale of
products or services under which the undelivered balance of such products and
services has a selling price in excess of $25,000; 

          (vi)      Contract
that restricts it from freely engaging in business (including the 

- 42 – 

Purchaser Subject Business) anywhere in
the world; 

          (vii)     
distributorship, dealer, sales, advertising, agency, promotional services,
retail promotional management, marketing platform, manufacturer’s representative
or other similar Contracts; 

          (viii)      Contract
for the acquisition or disposition of a Person or a division of a Person made
within the preceding six (6) years (whether or not such acquisition or
disposition was consummated); 

          (ix)      Contract
or arrangement for the sale of any assets, properties or rights other than the
sale of services or products in the ordinary course of business at historical
profit margins; 

          (x)      partnership
agreement, limited liability company agreement or joint venture agreement or any
agreement governing the ownership or disposal of any Equity Interests of any
Person (including any Purchaser); 

          (xi)     
Contract for any settlement agreement in respect of a Proceeding; 

          (xii)     
Contract with a remaining term of greater than six (6) months; 

          (xiii)      lease
(other than any Purchaser Real Property Lease) that requires annual aggregate
payments in excess of $25,000; 

          (xiv)      other
Contracts not covered by the foregoing, (A) that is not terminable by any
Purchaser without penalty upon advance notice of thirty (30) days or less and
involves aggregate consideration in excess of $25,000 or (B) that
involves aggregate consideration in excess of $50,000; 

          (xv)     
Contracts for any charitable or political contributions; or 

          (xvi)      other
Contract which could reasonably be determined to be material to the Purchasers’
Business. 

          (b)     
Schedule 7.18(a) sets forth a true, correct and complete list of all
amendments, modification and supplements to, or waivers under the items listed
thereon. All items listed on Schedule 7.18(a) are in full force and
effect, constitute legal, valid and binding obligations of the respective
parties thereto, and are enforceable in accordance with their respective terms.
The relevant Purchaser has performed all of the obligations required to be
performed by it to date, and there exists no default, or any event, including
without limitation, the execution and delivery of this Agreement, or the
consummation of the Merger or any other transaction contemplated hereby, which
upon the giving of notice or the passage of time, or both, would give rise to a
claim of a default in the performance by the applicable Purchaser or any other
party to any of the foregoing of their respective obligations thereunder. The
Company has furnished to Purchasers true, correct and complete copies of all
items listed in Schedule 7.18(a) or any other Schedule and complete
descriptions of all material terms of any oral Contracts described therein. 

- 43 – 

          (c)      To
the Knowledge of the Purchasers, except as set forth in Schedule 7.18(c),
no other party to any Contract required to be listed in Schedule 7.18(a)
intends to cancel or terminate any such Contract or decrease, limit or otherwise
modify the goods or services purchased from a Purchaser under any such Contract.

          7.19     
Reserved. 

          7.20      Compliance;
Governmental Authorizations. 

          (a)     
Each Purchaser and the Purchasers’ Business have been and are in compliance with
all Laws, Orders or Permits applicable to its assets, properties, businesses and
operations. Except as set forth on Schedule 7.20(a), no investigation or
review by any Governmental Entity with respect to any Purchaser is pending or,
to the Knowledge of the Purchasers, threatened, nor has any Governmental Entity
notified any Purchaser of its intention to conduct the same, nor does there
exist any basis therefor. 

          (b)     
Each Purchaser has all Permits necessary or advisable for its operations and the
conduct of the Purchasers’ Business, such Permits are in full force and effect,
no violations are or have been recorded in respect of any thereof and no
Proceeding is pending or, to the Knowledge of the Purchasers, threatened to
revoke or limit any thereof. Each Purchaser has taken all necessary action to
maintain each Permit. Schedule 7.20(b) contains a true, correct and
complete list of all Permits under which such Purchaser is operating or by which
it or any of its assets or properties is bound, and each Purchaser has furnished
to Seller true, correct and complete copies thereof. To the Knowledge of the
Purchaser there is no proposed change in any applicable Law which would require
any Purchaser or the Surviving Corporation to obtain any Permits not set forth
on Schedule 7.20(b) in order to conduct the Purchasers’ Business as
presently conducted or proposed to be conducted. None of the Permits set forth
on Schedule 7.20(b) shall be adversely affected as a result of the
Purchasers execution and delivery of, or the performance of its obligations
under, this Agreement, any Related Document or the consummation of the Merger or
any of the other transactions contemplated hereby or thereby. The Purchasers
have delivered to the Sellers a true and correct copy of each Permit. 

          (c)      No
Governmental Entity regulating the services performed by a Purchaser in
connection with the Purchasers’ Business has requested that any such services be
modified in any way. There is no Law, which would prohibit or restrict any
Purchaser from, or otherwise materially adversely, affect the any Purchaser in,
conducting the Purchasers’ Business as it is now conducted or is proposed to be
conducted in any jurisdiction in which it is now conducting or proposes to
conduct business. 

          7.21      Employees;
Labor Relations. 

          (a)      Schedule
7.21(a) contains a true and complete list of (i) all of the officers of each
Purchaser, specifying their position, annual rate of compensation, date of hire,
work location and the allocation of amounts paid and other benefits provided to
each of them, respectively, and any other information reasonably requested by
the Seller and (ii) all of the employees (whether full-time, part-time or
otherwise), consultants and independent contractors of each Purchaser as of the
date hereof, specifying their position, annual salary, date of hire, work
location, terms of 

- 44 – 

compensation and the allocation of amounts paid and other
benefits provided to each of them, respectively, consulting or other independent
contractor fees, together with an appropriate notation next to the name of any
officer or other employee on such list who is subject to any written Employment
Agreement or any other written term sheet or other document describing the terms
or conditions of employment of such employee or of the rendering of services by
such independent contractor and any other information reasonably requested by
the Seller. Except as set forth on Schedule 7.21(a), no Purchaser is a
party to or bound by any Employment Agreement (whether written or oral). The
Purchasers have provided to the Seller true, correct and complete copies of each
such Employment Agreement. No Purchaser has received a claim from any
Governmental Entity to the effect that such Purchaser has improperly classified
as an independent contractor any person named on Schedule 7.21(a). Except
as set forth on Schedule 7.21(a), no Purchaser has made any written or
verbal commitments to any officer, employee, former employee, consultant or
independent contractor with respect to compensation, promotion, retention,
termination, severance or similar matters in connection with the Merger or any
of the other transactions contemplated hereby or otherwise. To the extent any
employee is on a leave of absence, Schedule 7.21(a) indicates the names
of the employee, the nature of such leave of absence and such employee’s
anticipated date of return to active employment. Schedule 7.21(a) also
indicates the information described in the previous sentence for employees who
have requested a leave of absence or who at the Closing Date are expected to be
on a leave of absence. Schedule 7.21(a) also sets forth the name of
employee who is eligible to request FMLA leave as of the Closing Date and the
amount of FMLA leave utilized by each such employee during the current leave
year, each employee who will be on FMLA leave at the Closing Date and his or her
job title and description, salary and benefits, each employee who has requested
FMLA leave to begin after the Closing Date, a description of the leave requested
and a copy of all notices provided to such employees regarding that leave. To
the Knowledge of the Purchasers, none of the employees listed on Schedule
7.21(a) has any plans or intends to terminate his or their employment or
engagement and except as set forth on Schedule 7.21(a) no former officer,
director or key employee has left the service of a Purchaser within the last six
(6) months. 

               (b)      Except
as set forth on Schedule 7.21(b), (i) no Purchaser is delinquent in
payments to any of its employees for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed by them to date or
amounts required to be reimbursed to such employees; (ii) upon termination of
the employment of any such employees, none of the Company, the Surviving
Corporation or the Purchasers will by reason of any action taken or not taken
prior to the Closing be liable to any of such employees for severance pay or any
other payments; (iii) the Purchasers are in compliance with all Laws respecting
labor, employment and employment practices, terms and conditions of employment
and wages and hours, including without limitation, equal employment opportunity,
safety and health, workers’ compensation, disability, immigration, and
collective bargaining; (iv) there is no unfair labor practice complaint actually
pending or, to the Knowledge of the Purchasers, threatened against, involving or
affecting any Purchaser before the National Labor Relations Board or any other
Governmental Entity; (v) there is no labor strike, material dispute or
grievance, picketing activity, slowdown or stoppage actually pending or, to the
Knowledge of the Purchasers, threatened against, involving or affecting any
Purchaser, and no event has occurred that could reasonably be expected to give
rise to any such strike, dispute, grievance, slowdown, picketing or stoppage;
(vi) no labor union, trade union, or similar organization currently represents
the employees of a Purchaser and no labor union, trade union or similar
organization, or any employees have taken any action with respect to
organizing

 - 45 – 

the employees of any Purchaser; (vii) there are no charges of
employment discrimination pending before the U.S. Equal Employment Opportunity
Commission or any other state or local agency authorized to receive and
investigate changes of employment discrimination; and (viii) there are no
charges or complaints pending before the U.S. Department of Labor or any
division thereof, or before any similar state or local agency. Except as set
forth on Schedule 7.21(b), no Purchaser is a party to or bound by any
collective bargaining agreement, union Contract or similar agreement. 

          (c)      The
Purchasers are not, and have never been, a federal or state contractor obligated
to have an affirmative action plan. 

          (d)      No
Purchaser has taken any action that could constitute a “mass layoff,” “mass
termination,” or “plant closing” within the meaning of the federal Worker
Adjustment and Retraining Notification Act (WARN) or otherwise trigger notice
requirements or liability under any federal, local, state, or foreign plant
closing notice or group termination Law. 

          7.22      Employee
Benefits. 

          (a)      Schedule
7.22(a) contains a true, correct and complete list of Employee Benefit Plans
(collectively, the “Purchaser Employee Plans”) (i) that cover any
employees, contract employees or former employees of the Purchasers or any
spouses, family members, dependents or beneficiaries thereof (a) that are
maintained, sponsored or contributed to by a Purchaser or (b) with respect to
which any Purchaser is obligated to contribute or has any actual or potential
Liability at any time during the six-year period ending on the Closing Date, or
(ii) with respect to which any Purchaser has any actual or potential Liability
or obligation on account of the maintenance or sponsorship thereof or
contribution thereto by any present or former ERISA Affiliate of any Purchaser.
Any special tax status enjoyed by an Employee Plan is noted on Schedule
7.22(a). 

          (b)      Except
as set forth on Schedule 7.22(a), with respect to each Purchaser Employee
Plan: 

          (i)      all
required, declared or discretionary (in accordance with historical practices),
payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to, or as of, the date hereof have been properly paid or properly
accrued on the Holdings Latest Balance Sheet or, with respect to accruals
properly made after the Holdings Latest Balance Sheet Date, on the books and
records of any Purchaser and all amounts withheld from employees have been
timely deposited into the appropriate trust or account; 

          (ii)     
there is no unfunded actual or potential Liability relating to such Employee
Plan which is not reflected on the Holdings Latest Balance Sheet or, with
respect to accruals properly made after the Holdings Latest Balance Sheet Date,
on the books and records of any Purchaser; 

          (iii)     
no Proceedings (other than routine claims for benefits) are pending or to the
Knowledge of the Purchaser threatened against or relating to any Employee Plan
or any fiduciary thereof, and to the Knowledge of the Purchaser there is no
basis for any such Proceeding against any Employee Plan; 

- 46 – 

          (iv)     
except as may be required under Laws of general application, no Employee Plan
obligates any Purchaser to provide any employee or former employee, or their
spouses, family members or beneficiaries, any post-employment or post-retirement
health or life insurance, accident or other “welfare-type” benefits; 

          (v)     
neither any Purchaser, nor any of their ERISA Affiliates is or has ever
maintained or been obligated to contribute to a “multiemployer plan” (as defined
in Section 3(37) of ERISA), a “multiple employer plan” (as defined in Section
413 of the Code, whether or not subject to the Code) or a “defined benefit
pension plan” (as defined in Section 3(35) of ERISA) and no event or fact exists
which could give rise to any Liability to any Purchaser Company or any of their
ERISA Affiliates under Title IV or Section 412 of the Code; 

          (vi)      each
Purchaser Employee Plan has been established and operated for the exclusive
benefit of the participants and beneficiaries of such Purchaser Employee Plan;
and 

          (vii)     
no Purchaser has made or agreed to make, and is not are required to make (in
order to bring any Employee Plan into compliance with ERISA, the Code or any
applicable Law), any changes in benefits that would materially increase the
costs of maintaining any Employee Plan. 

          (c)      Except
as set forth on Schedule 7.22(c), with respect to each Employee Plan:

          (i)     
such Employee Plan has been established, maintained, operated and administered
in accordance with its terms and in compliance with ERISA, the Code and other
applicable Laws (including with respect to reporting and disclosure); 

          (ii)     
no Purchaser, nor any of their ERISA Affiliates nor any other “disqualified
person” or “party in interest” (as such terms are defined in Section 4975 of the
Code and Section 3(14) of ERISA, respectively) with respect to such Employee
Plan, has breached the fiduciary rules of ERISA or engaged in a prohibited
transaction that could subject any of the foregoing Persons to any material Tax
or penalty imposed under Section 4975 of the Code of Section 502(i), (j) or (1)
of ERISA; 

          (iii)     
any Purchaser Employee Plan that is intended to be “qualified”, within the
meaning of Section 401(a) of the Code meets all requirements for qualification
under Section 401(a) of the Code and the regulations thereunder. With respect to
each such qualified Purchaser Employee Plan, the IRS has issued either (i) a
favorable determination or (ii) a favorable opinion letter if such Purchaser
Employee Plan is a prototype plan; and, to the Knowledge of the Purchasers, no
matter exists which would adversely affect the qualified status of such
Purchaser Employee Plan and any related trust; 

          (iv)      each
Purchaser Employee Plan that is subject to the requirements of COBRA and HIPAA
has been maintained in substantial compliance with COBRA and HIPAA, including
all notice requirements, and no Tax payable on account of 

- 47 – 

Section 4980B or any other Section of
the Code has been or is expected to be incurred; 

          (v)      each
Purchaser Employee Plan that is intended to meet the requirements of Section 125
of the Code meets such requirements and each program of benefits for which
employee contributions are provided pursuant to elections made under such
Employee Plan meets the requirements of the Code applicable thereto; 

          (vi)      there
has not been any act or omission by any Purchaser, or any of their ERISA
Affiliates that has given rise to or could give rise to any fines, penalties or
related charges under ERISA or the Code for which the Purchasers, or any of
their ERISA Affiliates could be liable; 

          (vii)     
no Purchaser Employee Plan holds employer securities; 

          (viii)      if
the Purchasers or any of their ERISA Affiliates were to partially or completely
withdraw from any Employee Plan that is a “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA), neither the Purchaser nor any of its ERISA
Affiliates would be assessed or required to pay any withdrawal liability upon
such withdrawal (based on calculations as of the close of the most recent plan
year for such multiemployer plan); 

          (ix)     
neither the Purchaser nor any of their ERISA Affiliates has within the past six
years had a complete or partial withdrawal from any multiemployer plan (as
defined in Section 4001(a)(3) of ERISA); 

          (x)      No
insurance policy or any other contract or agreement affecting any Employee Plan
requires or permits a retroactive increase in premiums or payments due
thereunder. The level of insurance reserves under each insured Employee Plan is
reasonable and sufficient to provide for all incurred but unreported claims;

          (xi)     
There have been no improper withdrawals, applications or transfers of assets
from any Employee Plan or the trusts or other funding media relating thereto,
and neither the Purchasers nor any of their agents has been in breach of any
fiduciary obligation with respect to the administration of the Employee Plans or
the trusts or other funding media relating thereto; 

          (xii)      The
Purchasers have the right under the terms of each Employee Plan and under
applicable benefit Law to amend, revise, merge or terminate such plan (or its
participation in such plan) or transfer the assets of such plan to another
arrangement, plan or fund at any time exclusively by action of the Purchasers,
and no additional contributions would be required to properly effect such
termination; 

          (xiii)     
The execution, delivery and performance of, and consummation of the transactions
contemplated by, this Agreement will not (1) entitle any current or former
employee, director, officer, consultant, independent contractors, contingent
worker or leased employee (or any of their dependents, spouses or beneficiaries)
of any Purchasers to severance pay, unemployment compensation or any other
payment, or (2) accelerate the time of payment or vesting, or increase the
amount of compensation due any such 

- 48 – 

individual; 

          (xiv)      The
Purchasers have no duty or obligation to indemnify or hold another Person
harmless for any liability attributable to any acts or omissions by such Person
with respect to any Purchaser Employee Plan or ERISA Affiliate plan; and 

          (xv)      Notwithstanding
anything to the contrary in this Agreement, neither this Section nor any
provision of this Agreement is intended to, or does, constitute the
establishment of, or an amendment to, any Purchaser Employee Plan. 

          (d)     
The Purchasers have provided the Seller with true, correct and complete copies
of (i) all documents and any amendments thereto (or in the event the Employee
Plan is not written, a written description thereof) pursuant to which each
Employee Plan is maintained and administered (including the summary plan
description for each Employee Plan for which a summary plan description is
required, and each trust agreement and insurance or group annuity contract
relating to any Employee Plan); (ii) the three (3) most recent annual reports
(Form 5500 and attachments) and financial statements therefor; (iii) all
governmental rulings, determinations and opinions (and pending requests
therefor); (iv) if such Employee Plan is a defined benefit pension plan, the
most recent actuarial valuation for such Employee Plan; (v) the most recent
determination letter received from the IRS with respect to each Employee Plan
intended to qualify under Section 401(a) of the Code; (vi) nondiscrimination and
coverage tests for the most recent plan year (including the underlying data for
such tests) and other documentation with respect to any Employee Plan (whether
current or not) as reasonably requested by the Seller; and (vii) if such
Employee Plan provides post-employment or post-retirement health and life
insurance, accident or other “welfare-type” benefits, the most recent valuation
of the present and future obligations under such Employee Plan. The foregoing
documents accurately reflect all of the terms of such Employee Plans (including,
without limitation, any agreement or provision that would limit the ability of a
Purchaser or the Surviving Corporation to make any prospective amendments or to
terminate any Employee Plan). 

          7.23      Environmental
Matters. 

          To
the Knowledge of Purchasers: 

          (a)     
With respect to those matters or conditions related to or arising from the
Purchasers’ acts or omissions, neither any Purchaser, the Purchaser Real
Property nor any of the Purchasers’ past owned, leased or operated property or
operations are subject to, or the subject of, any Proceeding, Order, settlement,
or other Contract arising under Environmental Laws, nor has any investigation
been commenced or is any Proceeding threatened under Environmental Laws alleging
any failure to comply with any Environmental Laws.

          (b)     
Except as set forth on Schedule 7.23(b), the Purchaser has complied and
is in compliance with all applicable Environmental Laws and all Permits,
approvals, identification numbers, licenses, registrations and other
authorizations issued pursuant to any applicable Environmental Laws. All past
non-compliance with applicable Environmental Laws has been resolved without any
pending, ongoing or future obligation, cost or liability. 

          (c)      Except
as set forth on Schedule 7.23(c), neither the Purchaser nor any Seller
has 

- 49 – 

received any written or oral notice, report, request or other
information that the Purchaser has violated, or has any Liability under,
Environmental Laws, and the Purchaser has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
Hazardous Material, or owned or operated the Purchasers’ Business, the Purchaser
Real Property or any other property or facility formerly owned, leased, used or
occupied in a manner that has given or would give rise to Liabilities, including
any Liability for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to applicable
Environmental Laws. 

          (d)      The
Purchaser has provided the Seller with true, correct and complete copies of all
reports, assessments, evaluations, inspections and studies performed by or on
behalf of, or otherwise within the possession or control of, the Purchaser with
respect to past or present environmental conditions or compliance with
applicable Environmental Laws relating to the Purchasers’ ownership, leasing or
operation of the Purchasers’ Business or any Purchaser Real Property.
Schedule 7.23(d) sets forth a complete list of environmental reports,
assessments, evaluations, inspections or studies with respect to such properties
of which the Purchaser is aware, but which were not performed by or on behalf of
the Purchaser or within the Purchaser’s control. 

          (e)     
Except as set forth on Schedule 7.23(e), the Purchaser has not by
Contract, consent order, other agreement, or operation of Law assumed (i) any
Liabilities of any other Person arising under Environmental Laws or (ii)
responsibility for, either directly or indirectly, the remediation of any
condition arising from or relating to the release or threatened release of
Hazardous Materials. 

          7.24     
Related Transactions. 

          (a)      Except
as set forth on Schedule 7.24(a), and except for compensation paid or
payable by the Purchasers to bona-fide employees of any Purchaser in the
ordinary course of business and consistent with past practice, no, employee or
current or former stockholder of the Company is now, or has been during the last
five (5) years, (i) a party to any transaction or Contract with any Purchaser or
any of its employees or Affiliates or (ii) the direct or indirect owner of an
interest in any Person which is a present or potential competitor, supplier or
customer of any Purchaser (other than non-affiliated holdings in publicly-held
companies). Except as set forth on Schedule 7.24(a), no Purchaser is a
guarantor or otherwise directly or indirectly liable for any actual or potential
Liability of its Affiliates. 

          (b)      No
Purchaser (i) owns or operate any vehicles, boats, aircrafts, apartments or
other residential or recreational properties or facilities for executive,
administrative or sales purposes or (ii) owns or pay for any social club
memberships, whether or not for the benefit of any Purchaser and/or its
executives. 

          7.25     
Insurance. 

          (a)      Schedule
7.25(a) contains a true, correct and complete list of all policies of
liability, theft, fidelity, business interruption, life, fire, product
liability, workers compensation, health and other material forms of insurance
held by any Purchaser for the benefit of a Purchaser (specifying the insurer,
amount of coverage, type of insurance, policy number, scope (including an 

- 50 – 

indication of whether the coverage was on a claims made,
occurrence or some other basis, and, if on a claims made basis, a description of
any retroactive premium adjustments) and any material pending claims
thereunder). The applicable Purchaser has maintained such or similar types of
insurance coverage at all times during the last five (5) years. 

          (b)     
Schedule 7.25(b) contains a true, correct and complete list of all
policies of liability, theft, fidelity, business interruption, life, fire,
product liability, workers compensation, health and other material forms of
insurance required to be held by any Purchaser pursuant to any Contract with a
customer, vendor or supplier. 

          7.26      Certain
Payments. 

          (a)      None
of the Purchasers, any Seller, any officer, any director, or, to the Knowledge
of the Purchaser, any employee, agent or other Person acting on behalf of any
Purchaser or any such Person has, directly or indirectly, given or agreed to
give any money, gift, contribution, bribe, rebate, payoff, influence payment,
kickback or similar benefit, (other than legal price concessions to customers in
the ordinary course of business) to any customer, supplier, employee or agent of
a customer or supplier, or official or employee of any Governmental Entity or
other Person who was, is, or may be in a position to help or hinder the
Purchasers’ Business or any Purchaser (or assist in connection with any actual
or proposed transaction) that (a) could subject any Purchaser to any damage or
penalty in any Proceeding; (b) if not given in the past, would have resulted in
a Material Adverse Effect in respect of any Purchaser or (c) if not continued in
the future, could reasonably be expected to result in a Material Adverse Effect
in respect of any Purchaser or the Surviving Corporation. There is not now, and
there has never been, any employment by any Purchaser of, or beneficial
ownership in any Purchaser by, any official of any Governmental Entity in any
jurisdiction in which a Purchaser has conducted or proposes to conduct business.

          (b)      No
Purchaser nor any of their respective Affiliates has made any direct or indirect
payment to any employee, officer, director, consultant, advisor, agent or
representative of the Company in connection with the Subject Business. 

          7.27     
Accounts and Notes Payable. 

          Except
as set forth on Schedule 7.27, all accounts payable and notes payable by
the Purchasers to third parties arose in the ordinary course of business and,
except as set forth on Schedule 7.27, there is no such account payable or
note payable delinquent in its payment for longer than thirty (30) days, except
those contested in good faith and disclosed on Schedule 7.27. 

          7.28      Accounts
and Notes Receivable. 

          Except
as set forth on Schedule 7.28, all of the accounts receivable and notes
receivable owing to any Purchaser constitute valid, binding and enforceable
claims arising from bona fide transactions in the ordinary course of business,
and there are no known or asserted claims, refusals to pay or other rights of
set-off against any thereof. Except as set forth on Schedule 7.28, there
is (i) no account debtor or note debtor delinquent in its payment by more than
thirty (30) days; (ii) no account debtor or note debtor that has refused or,
threatened to refuse to pay its obligations to any Purchaser for any reason;
(iii) no account debtor or note 

- 51 – 

debtor that is insolvent or bankrupt; and (iv) no account
receivable or note receivable has been pledged to any third party by a
Purchaser. 

          7.29     
Principal Customers and Suppliers. 

          (a)     
Schedule 7.29(a) contains a true and complete list of the name and
address of the top ten (10) customers of the Purchasers based on gross revenue
on the Holdings Latest Balance Sheet, and since the Holdings Latest Balance
Sheet Date no customer has terminated its relationship with or adversely
curtailed its relationship with any Purchaser or indicated (for any reason) its
intention to so terminate or curtail its relationship. 

          (b)      Schedule
7.29(b) contains a true and complete list of the name and address of the top
ten (10) suppliers of the Purchasers based on expenses reflected on the Holdings
Latest Balance Sheet, and since the Holdings Latest Balance Sheet Date no
supplier has terminated its relationship with or adversely curtailed its
accommodations, sales or services to any Purchaser or indicated (for any reason)
its intention to so terminate its relationship or curtail its accommodations,
sales or services. 

          7.30      Disclosure.

          No
representation or warranty of the Purchasers contained in this Agreement or in
any Related Document, and no statement contained in any document, certificate or
Schedule furnished or to be furnished by or on behalf of the Purchasers to
Seller or any of their Representatives pursuant to this Agreement, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was or will be made, in order to make the statements herein or therein not
misleading or necessary in order to fully and fairly provide the information
required to be provided in any such document, certificate or Schedule.

ARTICLE VIII 
COVENANTS 

          8.1     
Closing Efforts.

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

          (b)     
Purchasers shall negotiate in good faith the terms and conditions of New
Employment Agreements for Brendan Reilly and Alan Hurwitz which include the
terms and conditions set forth on Schedule 8.1(b). 

- 52 – 

          8.2      Governmental
and Third-Party Notices and Consents.

          (a)      Purchasers
and Seller shall use its Reasonable Best Efforts to obtain, each at its
respective expense, all waivers, permits, consents, approvals or other
authorizations from Governmental Entities, and to effect all registrations,
filings and notices with or to Governmental Entities, as may be required for
such party to consummate the transactions contemplated by this Agreement and to
otherwise comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated by this Agreement.

          (b)      Purchasers
and Seller shall use their Reasonable Best Efforts to obtain, at their expense,
all such waivers, consents or approvals from third parties, and to give all such
notices to third parties, as are required to consummate the transactions
contemplated by this Agreement. 

          8.3      Operation
of Business. 

          (a)      Except
as expressly contemplated by this Agreement, during the period from the date of
this Agreement to the Closing, the Company shall conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use its Reasonable Best
Efforts to preserve intact its current business organization, keep its physical
assets in good working condition, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it. 

          (b)     
Except as expressly contemplated by this Agreement, during the period from the
date of this Agreement to the Closing, Purchasers shall conduct their operations
in the Ordinary Course of Business and in compliance with all applicable laws
and regulations and, to the extent consistent therewith, use its Reasonable Best
Efforts to preserve intact their current business organization, keep their
physical assets in good working condition, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it. Without limiting the
generality of the foregoing, Purchasers shall not issue any Equity Interests and
shall not enter into any agreement, or commit to enter into any agreement, with
respect to subscriptions, warrants, options, calls, puts, convertible
securities, registration or other rights or arrangements or commitments
obligating Purchasers to issue, sell, register, purchase or redeem any of its
Equity Interests or any ownership interest or rights therein other than in
connection with a Private Financing of Holdings as set forth in Sections 8.3(c),
10.2(g) and 10.2(h) . 

        (c)      Purchasers
shall use their Reasonable Best Efforts to arrange for a Private Financing of
Holdings with funds to be received by Holdings not later than thirty (30) days
following the Closing Date. Unless Seller otherwise consents in writing, the
Private Financing shall consist of (i) the issuance by Holdings of, and the
receipt by Holdings of proceeds from, between twelve million dollars
($12,000,000) and twenty million dollars ($20,000,000) principal amount of
convertible notes, which notes shall be convertible into shares of Holdings
Common Stock at a rate of no less than fifty cents ($.50) per share and which
notes shall automatically convert no later than the date that is thirty (30)
days following the receipt by Holdings of nine million dollars ($9,000,000) of
total proceeds in connection with the Private Financing, and (ii) no more than
100% warrant coverage (i.e., no more than one warrant share per share issuable
upon 

- 53 – 

conversion of such convertible promissory notes) with a warrant
exercise price of no less than one dollar ($1.00) per share. 

          8.4      Notice
of Breaches. 

          (a)      From
the date of this Agreement until the Closing, the Company shall promptly deliver
to the Purchasers in writing supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation, warranty or statement in this Agreement inaccurate or incomplete
in any material respect at any time after the date of this Agreement until the
Closing. 

          (b)      From
the date of this Agreement until the Closing, Purchasers shall promptly deliver
to the Sellers in writing supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation or warranty in this Agreement inaccurate or incomplete in any
material respect at any time after the date of this Agreement until the
Closing.

          8.5      Certain
Tax Matters. 

          The
Seller and the Purchasers agree to furnish or cause to be furnished to each
other, upon reasonable request, as promptly as practicable, such information
(including access to books and records) and assistance relating to the Company
as is reasonably requested in connection with the filing of any Tax Returns and
any audit, litigation or other proceeding with respect to Taxes, and shall
retain, or shall cause to be retained, for the appropriate period, any records
or information that may be relevant to any such Tax Return, audit, litigation or
other Proceeding. 

          8.6      Further
Assurances. 

          Subject
to the terms and conditions herein provided, at any time from and after the
Closing, at the request of a party and without further consideration, each other
party shall promptly execute and deliver such further agreements, certificates,
instruments and documents and perform such other actions as the requesting party
may reasonably request in order to fully consummate the transactions
contemplated hereby and carry out the purposes and intent of this Agreement and
the Related Documents; provided that the requesting party shall pay all
reasonable and documented expenses associated therewith. 

          8.7     
Non-Disclosure. 

          Each
party agrees that, except as otherwise compelled by Law, it will not issue any
reports, statements or releases, in each case relating to this Agreement or the
Related Documents or the transactions contemplated hereby or thereby, without
the prior written consent of the other parties hereto, which consent shall not
unreasonably be withheld, delayed or conditioned. To the extent compelled by
Law, the non-disclosing party shall have the right to review any report,
statement or release as promptly as possible prior to its publication and to
reasonably consult with the disclosing party with respect to the content
thereof. 

- 54 – 

          8.8     
Employee Equity Participation Plan. 

          Holdings
agrees to: (i) prior to Closing, adopt an employee equity participation plan
(the “Employee Equity Participation Plan”), a form of which is attached
at Exhibit I, which will permit for the exchange by holders of Rollover
Options for options to purchase the common stock of Holdings pursuant to Section
3.1 and which will permit issuance of options to employees, directors, and
consultants in accordance with the terms of the Employee Equity Participation
Plan; and (ii) as soon as practicable, following the filing of the Current
Report on Form 8-K due to be filed with the Securities and Exchange Commission
by Holdings within four business days of the Closing Date, file a registration
statement on Form S-8 with respect to the shares of common stock of Holdings
issuable under the Employee Equity Participation Plan. 

          8.9     
Review. 

          Prior
to Closing, Holdings agrees to: (i) prior to submission, provide Seller a
reasonable opportunity to review and comment upon all submissions to be made by
Purchasers to any Governmental Entity, including without limitation, the
Securities Exchange Commission; and (ii) prior to execution, provide Seller a
reasonable opportunity to review and comment upon any Contract not in the
ordinary course of business of Purchasers, including without limitation, in
connection with the Private Financing. 

ARTICLE IX 
INDEMNIFICATION 

          9.1     
Indemnification Generally. 

          (a)     
By the Seller in Favor of the Purchaser Group. Subject to the limitations
set forth in this Article IX, Seller agrees to indemnify, defend and hold
harmless the Purchaser Group for any and all Losses they may suffer, sustain or
incur arising from, in connection with, or as a result of: 

          (i)      the
inaccuracy or breach of any representation or warranty (without regard to any
qualification as to “materiality” or “Material Adverse Effect” contained
therein) of Seller contained in this Agreement or any Related Document to which
such Seller is a party or any certificate delivered in connection herewith or
therewith;

          (ii)      the
breach of any agreement or covenant (without regard to any qualification as to
“materiality” or “Material Adverse Effect” contained therein) of Seller
contained in this Agreement or any Related Document to which Seller is a party;
or 

          (iii)     
any of the matters listed in Schedule 9.1(a)(iii). 

          (b)     
By Purchasers in Favor of the Seller Group. Subject to the limitations
set forth in this Article IX, the Purchasers, jointly and severally, agree to
indemnify, defend and hold harmless the Seller Group for any and all Losses they
may suffer, sustain or incur arising from, in connection with, or as a result
of: 

- 55 – 

          (i)      the
inaccuracy or breach of any representation or warranty (without regard to any
qualification as to “materiality” or “Material Adverse Effect” contained
therein) of such Purchaser contained in this Agreement or in any Related
Document to which such Purchaser is a party or any certificate delivered by the
Purchasers in connection herewith or therewith; or 

          (ii)      the
breach of any agreement or covenant (without regard to any qualification as to
“materiality” or “Material Adverse Effect” contained therein) of the Purchasers
to be performed by the Purchasers contained in this Agreement or in any Related
Document to which Purchasers are a party; or 

          (iii)      any
of the matters listed in Schedule 9.1(b)(iii). 

          9.2      Limitations
on Indemnification. 

          (a)     
Indemnity Deductible and Cap for the Seller.

          (i)     
Subject to Sections 9.2(c) and 9.2(e), the Purchaser Group shall not have the
right to be indemnified pursuant to Section 9.1(a) unless and until the
Purchaser Group shall have incurred on a cumulative basis since the Closing Date
aggregate Losses in an amount exceeding $50,000 (the “Seller Indemnity
Threshold”), in which event the right to be indemnified shall apply to all
Losses in excess of the Seller Indemnity Threshold.

          (ii)     
Subject to Sections 9.2(c) and 9.2(e), the sum of all Losses pursuant to which
indemnification is payable by the Seller pursuant to Section 9.1(a) shall not
exceed, in the aggregate, $750,000 (the “Seller Cap Amount”);
provided, however, that notwithstanding anything set forth in this
Agreement to the contrary, no member of the Purchaser Group shall be entitled to
indemnifications to the extent that any amounts so claimed were accounted for as
an expense and incorporated in the determination of EBITDA pursuant to Section
4.2.

          (iii)      With
respect to any or all Losses indemnified hereunder, Seller shall have the right
and the option in its sole discretion, in lieu of payment of cash, to satisfy
such Losses by: (x) notifying Holdings in writing to reduce the interest and/or
principal amount due under the Note by the amount of such Losses for so long as
the Note remains outstanding; or (y) during the Claw Back Period, to transfer to
Holdings such number of shares of Holding Company Claw Back Stock with a value
equal to such Losses; or (z) any combination of (x) and (y), above, in a ratio
determined by Seller in its sole discretion. For purposes of clause (y), above,
the per share value of the Holding Company Claw Back Stock shall be deemed to be
the greater of: (a) the average closing price of Holdings’ common stock reported
by Bloomberg LP for the five (5) trading days preceding the Closing Date, or (b)
the average closing price of Holdings’ common stock reported by Bloomberg LP for
the five (5) trading days preceding the date of the indemnification claim. 

          (b)      Indemnity
Deductible and Cap for the Purchaser. 

- 56 – 

          (i)      Subject
to Sections 9.2(d) and 9.2(e), the Seller Group shall not have the right to be
indemnified pursuant to Section 9.1(b) unless and until the Seller Group shall
have incurred on a cumulative basis since the Closing Date aggregate Losses in
an amount exceeding $50,000 (the “Purchaser Indemnity Threshold”), in
which event the right to be indemnified shall apply to all Losses in excess of
the Purchaser Indemnity Threshold. 

          (ii)     
Subject to Sections 9.2(d) and 9.2(e), the sum of all Losses pursuant to which
indemnification is payable by the Purchaser pursuant to Section 9.1(b) shall not
exceed, in the aggregate, $4,500,000 (the “Purchaser Cap Amount”). 

          (c)     
Exceptions to the Indemnity Limitations for the Seller Group. In no event
shall the limitations and deductible set forth in Sections 9.2(a) apply to the
rights of the Purchaser Group to be indemnified with respect to the
representations and warranties set forth in Sections 5.1 (Title to
Units), 5.2 (Authorization), 5.6 (Brokers), 6.1
(Organization; Good Standing; Qualification and Power), 6.2
(Authority; Noncontravention; Consents), 6.3 (Capitalization), 6.4
(Subsidiaries; Investments), 6.5(b) (Funded Indebtedness), 6.6
(Undisclosed Liabilities), 6.8 (Tax Matters), 6.9 (Title to
Assets), 6.16 (Employee Benefits), 6.17 (Environmental
Matters) and 6.18 (Brokers).

          (d)     
Exceptions to the Indemnity Limitations for the Purchaser Group. In no
event shall the limitations and deductible set forth in Sections 9.2(b) apply to
the rights of the Seller Group to be indemnified with respect to the
representations and warranties set forth in Sections 7.1 (Organization; Good
Standing; Qualification and Power), 7.2 (Authority; Noncontravention;
Consents), 7.3 (Brokers), 7.5 (Capitalization), 7.10 (SEC
Documents; Financial Statements)(Funded Indebtedness), 7.12
(Undisclosed Liabilities), 7.14 (Tax Matters), 7.15 (Title to
Assets), 7.17 (Intellectual Property Assets), and 7.23
(Environmental Matters). 

          (e)     
Exclusive Remedy. Notwithstanding any other provision of this Agreement
to the contrary, the rights of the Seller Group and Purchaser under this
Article IX shall be the sole and exclusive remedy with respect to claims
resulting from or relating to any misrepresentation, breach of warranty or
failure to perform any covenant or agreement contained in this Agreement and, to
the maximum extent permitted by law, the Purchasers and the Seller hereby waive
any other rights and remedies with respect to any matter in any way relating to
this Agreement or arising in connection herewith under any laws at common law or
otherwise.

9.3     
Assertion of Claims 

         No claim
shall be brought under Section 9.1 unless the Indemnified Persons, or any of
them, shall provide to the Indemnifying Person prompt written notice (in no
event less than 10 Business Days following the Indemnified Persons’ notice of
such claim): (i) of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent known or (ii) pursuant
to Section 9.4 of any Third Party Claim, the existence of which would give rise
to such a claim. Upon the giving of such written notice prior to the applicable
Survival Date, the Indemnified Persons, or any of them, shall have the right to
commence legal Proceedings subsequent to the Survival Date for the enforcement
of their rights under 

- 57 – 

Section 9.1. , subject to any statute of limitations under
applicable Law.

          9.4      Notice
and Defense of Third Party Claims. 

          The
obligations of an Indemnifying Person with respect to a claim for Losses by
third parties (each, a “Third Party Claim”) shall be subject to the terms
and conditions set forth below. 

          (a)     
The Indemnified Persons shall give prompt written notice to the Indemnifying
Persons of any Third Party Claim which might give rise to any Loss by the
Indemnified Persons, stating the nature and basis of such Third Party Claim, and
the amount thereof to the extent known; provided, however, that no delay
on the part of the Indemnified Persons in notifying any Indemnifying Persons
shall relieve the Indemnifying Persons from any Liability hereunder, unless (and
then solely to the extent) such Indemnifying Persons are prejudiced or damaged
in any manner by such delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including,
without limitation, any summons, complaint or other pleading which may have been
served, any written demand or any other document or instrument directly relating
thereto. 

          (b)     
If the Indemnifying Persons shall acknowledge, in a writing delivered to the
Indemnified Persons within ten (10) days of its receipt of the notice described
in Section 9.4(a), that the Indemnifying Persons are obligated to indemnify,
defend and hold harmless the Indemnified Persons under the terms of their
indemnification obligations hereunder in connection with a particular Third
Party Claim, then the Indemnifying Persons shall have the right to assume the
defense of such Third Party Claim at their own expense and by their own counsel.

          (c)      If
the Indemnifying Persons elect to assume the defense of any such Third Party
Claim, the Indemnifying Persons shall consult with Indemnified Persons and the
Indemnified Persons may participate in, but not conduct, such defense, but in
such case the expenses of Indemnified Persons shall be paid by Indemnified
Persons. If the Indemnifying Persons fail to defend a Third Party Claim, are
otherwise restricted from so defending, or if, after commencing or undertaking
any such defense, the Indemnifying Persons fail to prosecute or withdraw from
such defense, the Indemnified Persons shall have the right to undertake the
defense or settlement thereof, at the Indemnifying Persons’ sole expense. If
Indemnified Persons assume the defense of any such Third Party Claim in
accordance with the terms hereof and propose to settle such Third Party Claim
prior to a final judgment thereon, then Indemnified Persons shall give the
Indemnifying Persons prompt written notice thereof, and the Indemnified Persons
may not settle such Third Party Claim without the written consent of the
Indemnifying Persons, which consent shall not be unreasonably withheld, delayed
or conditioned. 

          (d)     
If the Indemnifying Persons exercise their right to assume the defense of a
Third Party Claim, they shall not make any settlement of any claims without the
written consent of the Indemnified Persons, which consent shall not be
unreasonably withheld, delayed or conditioned, and which consent shall be deemed
to have been given if the Indemnified Persons shall not have objected to such
settlement within 10 Business Days of its receipt of written notice by the
Indemnifying Persons to the Indemnified Persons of the settlement terms. 

          9.5     
Survival of Representations and Warranties; No Undisclosed Findings.

- 58 – 

          (a)      Subject
to the further provisions of this Section 9.5, the representations and
warranties of the Seller, the Company and the Purchasers contained in this
Agreement shall survive the Closing Date until the date that is twelve (12)
months after the Closing Date; provided, however, that (x) the
representations and warranties of the Seller contained in Sections 5.1 (Title
to Shares), 5.2 (Authorization), 5.6 (Brokers), 6.1
(Organization; Good Standing; Qualification and Power), 6.2
(Authority; Noncontravention; Consents), 6.3 (Capitalization), 6.4
(Investments), 6.5(a) (Financial Statements), 6.5(b) (Funded
Indebtedness), 6.6 (Undisclosed Liabilities), 6.9 (Title to
Assets), 6.11 (Intellectual Property), 6.18 (Brokers), and the
representations and warranties of the Purchasers contained in Sections 7.1
(Organization; Good Standing; Qualification and Power), 7.2
(Authority; Noncontravention; Consents), 7.3 (Brokers); 7.4
(Investment), 7.5 (Capitalization), 7.10 (SEC Documents;
Financial Statements), 7.12 (Undisclosed Liabilities) and 7.17
(Intellectual Property)1 shall survive the Closing Date without any time
limit; and (y) the representations and warranties set forth in Sections 6.8
(Tax Matters), 6.16 (Employee Benefits), 6.17 (Environmental
Matters), 7.14 (Tax Matters), 7.23 (Environmental Matters) and
7.22 (Employee Benefits), shall survive the Closing Date until the
sixty-first day following the expiration of the statute of limitations, if any,
applicable to the subject matters set forth therein. The covenants and other
agreements of the parties contained in this Agreement shall survive the Closing
Date until they are otherwise terminated, whether by their express terms or as a
matter of applicable Law. For convenience of reference, the date upon which any
representation, warranty, covenant or other agreement contained herein shall
terminate, if any, is referred to herein as the “Survival Date.” 

          (b)     
Each party hereto shall be entitled to rely upon, and shall be deemed to have
relied upon, all representations, warranties and covenants of each other party
set forth in this Agreement which have been or are made in favor of such party,
and the rights of the Seller Group and the Purchaser Group under this Article
IX shall not be affected, notwithstanding (i) the making of this Agreement;
(ii) any investigation or examination conducted with respect to, or any
Knowledge acquired (or capable of being acquired) about the accuracy or
inaccuracy of or compliance with, any representation, warranty, covenant,
agreement, undertaking or obligation made by or on behalf of the parties hereto;
(iii) the waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant, agreement,
undertaking or obligation or (iv) the Closing hereunder. 

          9.6      No
Third Party Reliance. 

          Anything
contained herein to the contrary notwithstanding, the representations and
warranties of the Company and the Sellers contained in this Agreement (a) are
being given by the Company and the Sellers as an inducement to the Purchasers to
enter into this Agreement (and the Company and the Sellers acknowledge that the
Purchasers have expressly relied thereon) and (b) are solely for the benefit of
the Purchasers and their Affiliates. Anything contained herein to the contrary
notwithstanding, the representations and warranties of the Purchasers contained
in this Agreement (a) are being given by the Purchasers as an inducement to the
Seller to enter into this Agreement (and the Purchaser acknowledges that the
Seller and the Company have expressly 

- 59 – 

relied thereon) and (b) are solely for the benefit of the
Seller and its Affiliates. Accordingly, no third party or anyone acting on
behalf of any thereto other than the Indemnified Persons, and each of them,
shall be a third party or other beneficiary of such representations and
warranties and no such third party shall have any rights of contribution against
the Company or the Surviving Corporation with respect to such representations or
warranties or any matter subject to or resulting in indemnification under this
Article IX or otherwise. 

          9.7      No
Consequential Losses. 

          Neither
Seller on the one hand nor Purchasers on the other hand shall be liable to the
other under any legal theory for, and hereby disclaims, all punitive, indirect
and consequential Losses, including loss of profits or inability to achieve
savings, sustained by any other Person. This limitation is effective even if a
party has been advised of, or might have anticipated, the possibility of such
Losses. 

          9.8     
Tax Treatment.

          The
Purchasers and the Seller agree to treat all indemnification payments made under
this Article IX as adjustments to the Purchase Price for all Tax purposes. 

ARTICLE X 
CONDITIONS TO CONSUMMATION OF THE MERGER

          10.1      Conditions
to Obligations of the Purchasers.

          The
obligation of the Purchasers to consummate the Merger is subject to the
satisfaction (or waiver by any Purchaser) of the following additional
conditions: 

          (a)      The
Company shall have obtained all of the waivers, permits, consents, approvals or
other authorizations, and effected all of the registrations, filings and
notices, referred to in Section 8.2 which are required on the part of the
Company or the Subsidiaries, except for any failure of which to obtain or effect
would not, individually or in the aggregate, have a Material Adverse Effect on
the ability of the parties to consummate the transactions contemplated by this
Agreement; 

          (b)     
the representations and warranties of the Company set forth in this Agreement
shall be true and correct as of the date of this Agreement and shall be true and
correct as of the Closing as though made as of the Closing, except to the extent
that any such representation and warranty is expressly made as to a different
date, in which case, such representations and warranties shall be true and
correct as of such date, and except to the extent that the inaccuracy of any
such representation or warranty is the result of events or circumstances
occurring subsequent to the date of this Agreement and any such inaccuracies,
individually or in the aggregate, would not have a Material Adverse Effect on
the ability of the parties to consummate the transactions contemplated by this
Agreement; 

          (c)      the
Company shall have performed or complied with in all material respects its 

- 60 – 

agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Closing; 

          (d)      the
Company and Seller shall have delivered the deliverables required under Section
2.6(a) and the Purchasers shall have received such other certificates and
instruments (including certificates of good standing of the Company) as are
required by this Agreement or as they may reasonably request in connection with
the Closing; 

          (e)     
the Funded Indebtedness owed by the Company to all Affiliates of the Company
shall not exceed an aggregate of $250,000 upon Closing; and

          (f)     
the Purchasers shall have completed their due diligence exercise to their
satisfaction, in their absolute and sole discretion, concerning the business and
affairs and assets of the Company, and Seller has agreed to make such changes to
Seller's disclosure schedules as Purchaser may reasonably request. 

          10.2     
Conditions to Obligations of the Seller 

          The
obligation of the Seller to consummate the Merger is subject to the satisfaction
of the following additional conditions: 

          (a)     
the Purchaser shall have effected all of the registrations, filings and notices
referred to in Section 8.2 which are required on the part of the Purchasers,
except for any which if not obtained or effected would not have a Material
Adverse Effect on the ability of the parties to consummate the transactions
contemplated by this Agreement; 

          (b)     
the representations and warranties of the Purchasers set forth in this Agreement
shall be true and correct as of the date of this Agreement and shall be true and
correct as of the Closing as though made as of the Closing, except to the extent
that such representation and warranty is expressly made as to a different date,
and except to the extent that the inaccuracy of any such representation or
warranty is the result of events or circumstances occurring subsequent to the
date of this Agreement and any such inaccuracies, individually or in the
aggregate, would not have a Material Adverse Effect on the ability of the
parties to consummate the transactions contemplated by this Agreement; 

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

          (d)      the
Purchasers shall have delivered the deliverables required under Section 2.6(b)
and the Seller shall have received such other certificates and instruments
(including certificates of good standing of each of the Purchasers) as are
required by this Agreement or as it shall reasonably request in connection with
the Closing;

          (e)      the
Seller shall have completed its due diligence exercise to its satisfaction, in
its absolute and sole discretion, concerning the business and affairs, financial
affairs and assets of 

- 61 – 

Purchasers, and Purchasers have agreed to make such changes to
Purchasers' disclosure schedules as Seller may reasonably request; 

          (f)      The
Board of Directors of Holdings shall have reserved for issuance a total of Seven
Million (7,000,000) shares of its common stock for purposes of the Employee
Equity Participation Plan and shall have consented to the adoption of the
Employee Equity Participation Plan as set forth in Section 8.8;

          (g)     
Holdings has entered into an engagement letter with Knight Capital Markets or an
alternative broker/dealer registered as such pursuant to the Securities Exchange
Act of 1934, as amended, and acceptable to Seller, in Sellers’ reasonable
discretion, to engage in a private placement of Holdings’ securities to raise no
less than Twelve Million Dollars ($12,000,000), with a cap of Sixty Million
Dollars ($60,000,000) (the “Private Financing”), on a best-efforts
basis;

          (h)      Holdings
shall have either: (i) consummated prior to the Closing Date, or (ii) entered
into binding subscription, escrow and related agreements to consummate
simultaneously with the Closing with funds immediately available and held in
escrow for release to Holdings subject only to the condition that the Merger be
consummated, a tranche of the Private Financing which will result in gross
proceeds to Holdings of no less than Five Million Dollars ($5,000,000), or such
lesser amount as Purchasers and Seller shall mutually agree in writing; and 

          (i)      Holdings
shall have adopted Employee Benefit Plans substantially similar to those
currently maintained by the Company. Holdings Employee Benefit Plans shall not
include a waiting or eligibility period with respect to employees of the Company
or a preexisting condition restriction or limitation and, to the extent that
such persons have satisfied any or all of the internal limits, deductibles or
co-payment requirements of the Company’s Employee Benefit Plans for the year
that includes the Closing Date, such amounts will be credited under Holding’s
Employee Benefit Plans.

ARTICLE XI 
TERMINATION 

          11.1     
Termination of Agreement. 

          The
parties may terminate this Agreement prior to the Closing, as provided below:

          (a)      any
party may terminate this Agreement if the Closing Date shall not occur on or
before June 30, 2007; 

          (b)     
the parties may terminate this Agreement by mutual written consent; 

          (c)     
the Purchasers may terminate this Agreement by giving written notice to the
Company in the event the Company is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (c) or (d) of Section 10.1 not to be satisfied and (ii) is not cured
within 20 days following delivery by the Purchasers to the Seller of 

- 62 – 

written notice of such breach; and 

          (d)      Seller
may terminate this Agreement by giving written notice to the Purchasers in the
event that either Purchaser is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, (i) would cause the conditions set forth
in clauses (b) or (c) of Section 10.2 not to be satisfied and (ii) is not cured
within 20 days following delivery by the Seller to the Purchasers of written
notice of such breach. 

          11.2      Effect
of Termination.

          If
any party terminates this Agreement pursuant to Section 11.1, all obligations of
the parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party for willful breaches of this
Agreement), provided however, that following termination of this
Agreement, the parties shall maintain the confidence of, and shall not use or
disclose for any purpose, Confidential Information received from another party
in connection with the negotiation of this Agreement.

ARTICLE XII 
MISCELLANEOUS PROVISIONS 

          12.1     
Amendments. 

          This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto. By an instrument in writing Purchasers, on the
one hand, or Seller on the other hand, may waive compliance by the other with
any term or provision of this Agreement that such other party was or is
obligated to comply with or perform. 

          12.2     
Expenses. 

          (a)      Except
as otherwise expressly provided in this Agreement, each of the Company and the
Sellers, on one hand, and the Purchasers, on the other hand, shall bear their
own expenses in connection with the preparation for and consummation of the
transactions contemplated hereby. 

          (b)     
All transfer, documentary, sales, use, registration and other such Taxes
(including all applicable real estate transfer or gains Taxes) and related fees
(including any penalties, interest and additions to Tax) incurred in connection
with this Agreement, and the transactions contemplated hereby shall be borne by
the Purchasers, and the Seller and the Purchasers shall cooperate in timely
making all filings, returns, reports and forms as may be required to comply with
the provisions of such Tax Laws. The Purchasers shall bear and pay any stock
transfer Taxes due as a result of the sale of the Shares to Purchasers. 

          12.3      No
Third Party Beneficiaries. 

          Except
as expressly set forth herein, this Agreement shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective
successors and 

- 63 – 

permitted assigns, personal representatives, heirs and estates,
as the case may be. 

          12.4      Successors
and Assigns. 

          All
of the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, personal representatives, heirs and estates, as the case may be.
Neither this Agreement nor any rights hereunder shall be assigned in whole or in
part by any party hereto without the prior written consent of the other parties
hereto. 

          12.5      Entire
Agreement. 

          This
Agreement, the Related Documents and the other agreements and documents
referenced herein (including, but not limited to, the Schedules, Annexes,
Attachments and the Exhibits (in their executed form) contain all of the
agreements among the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements or understandings whether
written or oral, among the parties with respect thereto including, but not
limited to, the Letter of Intent dated March 19, 2007, as amended on March 20,
2007 by and between Holdings and the Company. 

          12.6     
Notices. 

          All
notices, amendments, waivers or other communications pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered, sent by e-mail, sent by facsimile, sent by nationally recognized
overnight courier or mailed by registered or certified mail with postage
prepaid, return receipt requested, to the parties hereto at the following
addresses (or at such other address for a party as shall be specified by like
notice): 

          (a)      
     if to the Company prior to the Closing, to: 

Z5 Technologies LLC 
71 Wright
Street 
Westport, CT 06880 
Attention: Brendan Reilly 
Facsimile: (203)
549-0816 

with a copy to 

Robinson & Cole, LLP 
695 East
Main Street 
Stamford, CT 06904 
Attention: Eric J. Dale 
Telephone:
(203) 462-7568 
Facsimile: (203) 462-7599 

if to Seller, to: 

Thomas Keenan Ventures LLC 

- 64 – 

71 Wright Street 
Westport, CT
06880 
Attention: Brendan Reilly 
Facsimile: (203) 549-0816 

with a copy to: 

Agincourt Consulting Group LLC

1692 Massachusetts Avenue 
Cambridge, MA 02138 
Attention: Hugh
O’Reilly 
Facsimile: (617) 354-5401 

with a copy to: 

Robinson & Cole, LLP 
695 East
Main Street 
Stamford, CT 06904 
Attention: Eric J. Dale 
Telephone:
(203) 462-7568 
Facsimile: (203) 462-7599 

          (b)      
if to the Surviving Corporation after the Closing, to: 

Aegis Industries, Inc. 
75200 Shady
Grove Road, Suite 202 
Rockville Maryland 20850 
Attention: Dennis Mee

Telephone: [•] 
Facsimile: [•] 

With a copy to: 

Robinson & Cole, LLP 
695 East
Main Street 
Stamford, CT 06904 
Attention: Eric J. Dale 
Telephone:
(203) 462-7568 
Facsimile: (203) 462-7599 

          (c)           
 if to Holdings, to: 

Aegis Industries, Inc. 
75200 Shady
Grove Road, Suite 202 
Rockville Maryland 20850 
Attention: Dennis Mee

- 65 – 

Telephone: [•] 
Facsimile: [•] 

with a copy to: 

Richardson & Patel, LLP
 The
Chrysler Building 
405 Lexington Avenue, 26th Floor 
Attention: Jody R.
Samuels 
Telephone: (212) 907-6689 
Facsimile: (212) 907-6687 

And 

          (d)          
if to Merger Co., to: 

Aegis Industries, Inc. 
75200 Shady
Grove Road, Suite 202 
Rockville Maryland 20850 
Attention: [•]

Telephone: [•] 
Facsimile: [•] 

with a copy to 

Richardson & Patel, LLP 
The
Chrysler Building 
405 Lexington Avenue, 26th Floor 
Attention: Jody R.
Samuels 
Telephone: (212) 907-6689 
Facsimile: (212) 907-6687 

          Any
such notice or communication shall be deemed to have been given and received:
(a) when delivered, if personally delivered; (b) when sent, if sent by facsimile
or email on a Business Day (or, if not sent on a Business Day, on the next
Business Day after the date sent by facsimile or email); (c) on the next
Business Day after dispatch, if sent by nationally recognized, overnight courier
guaranteeing next Business Day delivery, and (iv) on the fifth Business Day
following the date on which the piece of mail containing such communication is
posted, if sent by mail. 

          12.7     
Governing Law. 

          THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAWS OR
PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE. 

- 66 – 

          12.8     
Dispute Resolution. 

          (a)      Any
controversy or claim arising out of or relating to this Agreement (including,
without limitation, as to arbitrability), or the breach thereof, shall be
settled by individual arbitration (as opposed to class or collective
arbitration) administered by Judicial Arbitration and Mediation Services, Inc.
(“JAMS”) in accordance with its “Comprehensive Arbitration Rules and
Procedures.” This Section 12.8, however, does not apply to the resolution of
Third Party Claims under Section 9.4. 

          (b)     
In the event of any dispute, claim, question or disagreement arising from or
relating to this Agreement, or the breach thereof, with the exception of those
items excluded above, the Purchasers and the Seller shall use their commercially
reasonable efforts to resolve the dispute, claim, question or disagreement. To
this effect, the Purchasers and the Seller will meet in person or by telephone
within ten (10) Business Days of any party’s receipt of a written notice
informing that party of the existence of a dispute, claim, question or
disagreement. If the Purchasers and the Seller do not resolve or settle the
matter within ten (10) Business Days after the initial meeting, or following any
longer period as the parties may agree to in writing, the Purchasers and the
Seller shall then immediately submit the dispute to binding arbitration in
accordance with this Section 12.8. 

          (c)      The
arbitration hearing shall commence within ninety (90) calendar days after the
arbitrator is selected in accordance with JAMS’s Comprehensive Arbitration Rules
and Procedures, unless the Purchasers and the Seller agree to extend this time
period. The arbitration will comply with JAMS’s Comprehensive Arbitration Rules
and Procedures, except to the extent that those rules and procedures conflict
with this Section 12.8, in which case this Section 12.8 will control. The
arbitration shall take place in Stamford, Connecticut. 

          (d)     
The arbitrator will have full power to give directions and make such orders as
the arbitrator deems just, and all of the power given the arbitrator under
JAMS’s Comprehensive Arbitration Rules and Procedures. Nonetheless, the
arbitrator explicitly shall not have the authority, power, or right to alter,
change, amend, modify, add, or subtract from any provision of this Agreement.

          (e)      The
arbitrator shall issue a written decision within thirty (30) days after the
conclusion of the arbitration hearing. The agreement to arbitrate will be
specifically enforceable. The award rendered by the arbitrator shall be final
and binding (absent fraud or manifest error), and any arbitration award may be
enforced by judgment entered in any court of competent jurisdiction. The
Purchasers, on the one hand, and the Seller on the other, shall each pay
one-half of the fees of the arbitrator. 

          (f)     
During any arbitration proceeding, the parties shall continue to perform their
respective obligations under this Agreement. 

          12.9      Remedies.

          The
parties hereto shall each have and retain all rights and remedies existing in
their favor under this Agreement, at Law or equity, including, without
limitation, rights to bring actions for specific performance and/or injunctive
or other equitable relief (including, without

 - 67 – 

limitation, the remedy of rescission) to enforce or prevent a
breach or violation of any provision of this Agreement. All such rights and
remedies shall, to the extent permitted by applicable Law, be cumulative and the
existence, assertion, pursuit or exercise of any thereof by a party shall not
preclude such party from exercising or pursuing any other rights or remedies
available to it. 

          12.10      Severability.

          It
is the desire and intent of the parties that the provisions of this Agreement be
enforced to the fullest extent permissible under the Laws and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of this Agreement shall be adjudicated by a court of
competent jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. 

          12.11     
Independence of Covenants and Representations and Warranties.

          All
covenants hereunder shall be given independent effect so that if a certain
action or condition, constitutes a default under a certain covenant, the fact
that such action or condition is permitted by another covenant shall not affect
the occurrence of such default, unless expressly permitted under an exception to
such initial covenant. In addition, all representations and warranties hereunder
shall be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness of or a breach of a
representation and warranty hereunder. 

          12.12     
Counterparts; Facsimile Signatures. 

          This
Agreement may be executed one or more counterparts, each of which shall be
deemed an original instrument and all of which together shall constitute a
single instrument. Execution and delivery of this Agreement by electronic
exchange bearing the copies of a party’s signature shall constitute a valid and
binding execution and delivery of this Agreement by such party. Such electronic
copies shall constitute enforceable original documents. 

          12.13      Incorporation
of Recitals Annexes Exhibits and Schedules. 

          The
recitals, Annexes, Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof. Each disclosure in a
Schedule referred to in this Agreement shall be deemed to qualify all
representations and warranties of the party making such disclosure,
notwithstanding the absence of a specific cross-reference, except to the extent
that its applicability to a particular representation, warranty, agreement or
condition is not reasonably apparent from the disclosure thereof. 

- 68 – 

          12.14     
Interpretation; Construction. 

          (a)      For
the purposes of this Agreement, the term “Agreement” shall mean this agreement
together with all Schedules, Annexes and Exhibits hereto, as the same may from
time to time be amended, modified, supplemented or restated in accordance with
the terms hereof. Unless the context otherwise requires, words importing the
singular shall include the plural, and vice versa. The use in this Agreement of
the term “including” means “including, without limitation.” The words “herein”,
“hereof’, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of
similar import refer to this Agreement as a whole, including the Schedules,
Annexes and Exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular article, section,
subsection, paragraph, subparagraph or clause contained in this Agreement. All
references to articles, sections, subsections, clauses, paragraphs, schedules
and exhibits mean such provisions of this Agreement and the Schedules, Annexes
and Exhibits attached to this Agreement, except where otherwise stated. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require. 

          (b)     
The language used in this Agreement shall be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party. 

          (c)      The
parties agree that all parties participated in the preparation and negotiation
of this Agreement and the agreements contemplated hereby and that neither this
Agreement nor any of the agreements contemplated hereby shall be construed
against any Party by virtue of the fact that any party or its representatives
prepared or drafted such agreements. 

          (d)      Accounting
terms used but not otherwise defined herein shall have the meanings given to
them under GAAP. 

          (e)      The
parties hereto have been represented by counsel during the negotiation,
preparation and execution of this Agreement and, therefore, hereby waive, with
respect to this Agreement, each Schedule and each Exhibit attached hereto, the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document shall be construed against
the party drafting such agreement or document. 

          12.15      Headings.

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

******* 

- 69 – 

          IN
WITNESS WHEREOF, each of the undersigned has duly executed this Agreement
and Plan of Merger as of the date first written above. 

	 	 	COMPANY
	 	 	 
	 		Z5
      TECHNOLOGIES, LLC. 
	 	 	 
	 	By: 	/s/ Brendan Reilly 
	 	Name: 	Brendan Reilly 
	 	Title: 	President 
	 	 	 
	 		PURCHASERS 
	 	 	 
	 		AEGIS
      INDUSTRIES, INC. 
	 	  	  
	 	By:	 /s/ Dennis Mee 
	 	Name: 	Dennis Mee 
	 	Title: 	Interim President & Chief
      Financial Officer 
	 	 	 
	 		AEGIS
      MERGER CORPORATION 
	 	  	  
	 	By: 	/s/ Dennis Mee 
	 	Name: 	Dennis Mee 
	 	Title: 	President 
	 	 	 
	 		SELLER 
	 	 	 
	 		THOMAS
      KEENAN VENTURES, LLC 
	 	  	
	 	By: 	/s/ Brendan Reilly 
	 	Name: 	Brendan Reilly 
	 	Title: 	Manager 

- 70 – 

Annex I 

DEFINITIONS 

          The
following terms used in this Agreement shall have the respective meanings set
forth below. 

          
“Affiliate” means, with respect to any Person: (a) a director, officer,
partner, member, beneficiary or stockholder of such Person; (b) a spouse,
parent, sibling or descendant of such Person (or spouse, parent, sibling or
descendant of any director or executive officer of such Person); and (c) any
other Person that, directly or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such Person.

          “Business
Day” means any day that is not a Saturday, Sunday or a day on which banking
institutions in New York, New York are not required to be open. 

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

          “Certificates
of Merger” means: (a) the Certificate of Merger in the form attached as
Exhibit A to be filed with the Secretary of State of the State of
Delaware in accordance with the Delaware Statute; and (b) the Certificate of
Merger in the form attached as Exhibit B to be filed with the Secretary
of State of the State of Connecticut in accordance with the Connecticut Statute.

          “Closing
Date” shall mean the date two Business Days after the satisfaction or waiver
of all of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby, or such other date as may be mutually
agreeable to the Parties. 

          “Code”
means the Internal Revenue Code of 1986, as amended, or any successor Law. 

          “Connecticut
Statute” means the Connecticut Limited Liability Company Act, as amended.

          “Confidential
Information” means, as applicable: (x) the Intellectual Property rights of
the Company and all information of a proprietary or confidential nature relating
to the Company or the Subject Business excluding any information that (a) as of
the date hereof, is in the public domain; (b) after the date hereof enters the
public domain through no wrongful action or inaction on the part of any
Purchaser; and (c) is communicated to Purchasers by a third party under no duty
of secrecy or confidentiality to any Person or (y) the Intellectual Property
rights of the Purchasers and all information of a proprietary or confidential
nature relating to the Purchasers or the Purchasers’ Business excluding any
information that (a) as of the date hereof, is in the public domain; (b) after
the date hereof enters the public domain through no wrongful action or inaction
on the part of any Seller; and (c) is communicated to Purchasers by a third
party under no duty of secrecy or confidentiality to any Person. 

          “Contract”
means any written or oral contract, Permit, loan or credit agreement, note,
bond, mortgage, indenture, lease, sublease, Real Property Lease, purchase order
or other 

agreement, instrument, concession, franchise or license. 

          “Control”
means (including, with correlative meanings, “controlled by” and
“under common control with”), with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by Contract or otherwise. 

          “Delaware
Statute” means the Delaware General Corporation Law, as amended.

          “Distribution”
means the payment or other direct or indirect distribution of cash or any other
assets by the Company to any of its members in their capacity as such. 

          “EBITDA”
means earnings before interest, taxes, depreciation and amortization of the
Surviving Corporation determined in accordance with GAAP applied on a basis
consistent with the practice of the Company, provided however, that EBITDA shall
not include expenses associated with the granting of stock options, Rollover
Options or other interests pursuant to the terms of the Equity Participation
Plan. 

          “Employee
Benefit Plan” means, with respect to any Person, (a) each plan, fund,
program, agreement, arrangement or scheme, including each plan, fund, program,
agreement, arrangement or scheme maintained or required to be maintained under
the Laws of a jurisdiction outside the United States of America, in each case,
that is at any time sponsored or maintained or required to be sponsored or
maintained by such Person or to which such Person makes or has made, or has or
has had an obligation to make, contributions providing for employee benefits or
for the remuneration, direct or indirect, of the employees, former employees,
directors, managers, officers, consultants, independent contractors, contingent
workers or leased employees of such Person or the dependents of any of them
(whether written or oral), including each deferred compensation, bonus,
incentive compensation, pension, retirement, stock purchase, stock option and
other equity compensation plan, “welfare” plan (within the meaning of Section
3(1) of ERISA, determined without regard to whether such plan is subject to
ERISA), (b) each “pension” plan (within the meaning of Section 3(2) of ERISA,
determined without regard to whether such plan is subject to ERISA), (c) each
severance plan or agreement, health, vacation, summer hours, supplemental
unemployment benefit, hospitalization insurance, medical, dental, legal and (d)
each other employee benefit plan, fund, program, agreement, arrangement or
scheme. 

          “Employment
Agreement” means any employment contract, consulting agreement, termination
or severance agreement, change of control agreement or any other agreement
respecting the terms and conditions of employment or payment of compensation, or
of a consulting or independent contractor relationship in respect to any current
or former officer, employee, consultant or independent contractor. 

          “Encumbrances”
means and includes security interests, mortgages, liens, pledges, charges,
easements, reservations, restrictions, clouds, servitudes, rights of way,
options, rights of first refusal, community property interests, equitable
interests, restrictions of any kind, conditional sale or other title retention
agreements, any agreement to provide any of the foregoing and all other
encumbrances, whether or not relating to the extension of credit or the 

borrowing of money, whether imposed by Contract, Law, equity or
otherwise. 

          “Environmental
Laws” means all Laws and Orders concerning pollution or protection of the
environment, including without limitation all those relating to the material
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any Hazardous Materials in
effect as of the Closing Date (including but not limited to CERCLA). 

          “Equity
Interests” means any capital stock, partnership or limited liability company
interest or other equity or voting interest or any security or evidence of
indebtedness convertible into or exchangeable for any capital stock, partnership
or limited liability company interest or other equity interest, or any right,
warrant or option to acquire any of the foregoing. 

          “ERISA”
means the Employment Retirement Income Security Act of 1974, as amended, or any
successor federal Law, and the rules and regulations promulgated thereunder, all
as the same may from time to time be in effect. 

          “ERISA
Affiliate” means, with respect to any Person, any entity that is a member of
a “controlled group of corporations” with, or is under “common
control” with, or is a member of the same “affiliated service group”
with such Person as defined in Section 414(b), 414(c) or 414(m) of the Code.

          “FMLA”
means the Family and Medical Leave Act of 1993, as amended. 

          “Fundamental
Documents” means the documents by which any Person (other than an
individual) establishes its legal existence or which govern its internal
affairs. For example, the “Fundamental Documents” of a corporation would
be its certificate of incorporation and by-laws and the “Fundamental
Documents” of a limited liability company would be its articles of
organization and operating agreement. 

          “Funded
Indebtedness” means the aggregate amount (including the current portions
thereof), without duplication, of all: (a) indebtedness for money borrowed from
others and purchase money indebtedness (other than accounts payable in the
ordinary course to the extent that such accounts payable are not more than
ninety (90) days past due); (b) indebtedness of the type described in clause (a)
above guaranteed in any manner by the Company or in effect guaranteed, directly
or indirectly, in any manner by the Company through an agreement, contingent or
otherwise, to supply funds to, or in any other manner invest in, the debtor, or
to purchase indebtedness, or to purchase and pay for property if not delivered
or pay for services if not performed, primarily or exclusively, for the purpose
of enabling the debtor to make payment of the indebtedness or to insure the
owners of the indebtedness against loss (any such arrangement being hereinafter
referred to as a “Guaranty”), but excluding endorsements of checks and
other instruments in the ordinary course; (c) all indebtedness of the type
described in clauses (a) and (b) above secured by any Encumbrance upon property
owned by the Company or used by the Subject Business, even though the Company
has not in any manner become liable for the payment of such indebtedness; (d)
interest expense accrued but unpaid, and all prepayment premiums and penalties,
fees and charges on, or relating to, any of such indebtedness; (e) obligations
of the Company to pay rent or other amounts under any lease of (or other 

arrangement covering the right to use) real or personal
property, which obligations are required to be classified and accounted for as
capital leases on the balance sheet of the Company as of such date computed in
accordance with GAAP; provided however, that Funded Indebtedness
shall not include that certain Convertible Promissory Note made by the Company
in favor of Holdings, dated May 10, 2007 in principal amount of $250,000, or
that certain Convertible Promissory Note made by the Company in favor of
Holdings, dated April 5, 2007 in principal amount of $200,000. 

          “GAAP”
means generally accepted accounting principles employed in the United States.

          “Governmental
Entity” means any national, federal, state, local or foreign court,
tribunal, arbitral body, arbitrator, administrative agency or commission or
other governmental or regulatory authority or instrumentality. 

          “Guaranty”
has the meaning set forth in the definition of “Funded Indebtedness” in
this Annex I. 

          “Hazardous
Materials” means any chemicals, materials, pollutants, contaminants,
substances or waste with respect to which, in the manner in which they are
handled, any material Liability or standards of conduct may be imposed pursuant
to any Environmental Laws. 

          “Holding
Company Stock” means 17,000,000 shares of the Common Stock of Holdings.

          “Indemnified
Persons” means the Purchaser Group, the Company, or the Sellers, as the case
may be. 

          “Indemnifying
Persons” means the Purchasers, the Sellers or the Seller Group, as the case
may be. 

          “Intellectual
Property” means, as applicable, all intangible and intellectual property
owned by the Company or licensed to the Company or used in the Subject Business
or all intangible and intellectual property owned by any Purchaser or licensed
to any Purchaser or used in the Purchasers’ Business, including, without
limitation, patents, patent applications, patent rights, trademarks, trademark
applications, trade names, fictitious business names (d/b/a’s), service marks,
service mark applications, copyrights, copyright applications, domain names,
know-how, trade secrets, proprietary processes and formulae, Confidential
Information, franchises, licenses, customer lists, inventions, instructions,
marketing materials, trade dress, logos and designs and all documentation and
media constituting, describing or relating to the foregoing, including, without
limitation, manuals, memoranda and records. 

          “IRS”
means the Internal Revenue Service of the United States. 

          “Knowledge”
of any Person means (a) the actual knowledge of such Person and (b) that
knowledge which should have been acquired by such Person after making such due
inquiry and exercising such due diligence as a prudent businessperson would have
made or exercised in the management of his or her business affairs, including
due inquiry of those officers, directors, key employees and professional
advisers (including attorneys, accountants and consultants) of such Person who
could reasonably be expected to have actual knowledge of the matters in
question.

          “Law”
means any law (both common and statutory law and civil and criminal law),
treaty, convention, rule, directive, legislation, ordinance, regulatory code
(including, without limitation, statutory instruments, guidance notes,
circulars, directives, decisions, rules and regulations) or similar provision
having the force of law or an Order of any Governmental Entity or any self
regulatory organization. 

          “Liability”
means any actual liability or obligation (including as related to Taxes),
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due or to become
due, regardless of when asserted. 

          “Litigation
Expense” means any reasonable out-of-pocket expenses incurred in connection
with investigating, defending or asserting any claim, legal or administrative
action, suit or Proceeding incident to any matter indemnified against hereunder
including, without limitation, court filing fees, court costs, arbitration fees
or costs, witness fees and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals. 

          “Losses”
means any and all actual losses, claims, shortages, damages, Liabilities,
expenses (including reasonable attorneys’ and accountants’ and other
professionals’ fees and Litigation Expenses), assessments, Tax deficiencies and
Taxes (including interest and penalties thereon) incurred, arising from or in
connection with any such matter that is the subject of indemnification under
Article IX.

          “Material
Adverse Effect” means, with respect to any Person, any state of facts,
change, event, effect or occurrence (whether or not constituting a breach of a
representation, warranty or covenant set forth in this Agreement) that,
individually or in the aggregate, is or may be reasonably likely to be
materially adverse to the near-term or long-term projected business, financial
condition, results of operations, prospects, properties, assets or liabilities
(including, without limitation, contingent liabilities) of such Person, or, in
the case of the Company, the Company or the Subject Business. A Material Adverse
Effect shall also include any state of facts, change, event or occurrence that
shall have occurred or been threatened that (when taken together with all other
adverse state of facts, changes, events, effects or occurrences that have
occurred or been threatened) is or would be reasonably likely to prevent or
materially delay the performance by such Person of any of its obligations under
this Agreement or the consummation of the transactions contemplated hereby. 

          “Membership
Interest” means all of the Units of the Company held by Seller. 

          “Merger
Sub Guaranty” means the Guaranty by Merger Co. of, inter alia,
Holdings’ obligations under the Note in the form attached as Exhibit
F.

          “Nevada
Statue” means the Nevada Revised Statutes, Title 7, Chapter 78 – Private
Corporations.

          “New
Employment Agreements” means the Employment Agreements with each of Brendan
Reilly and Alan Hurwitz to be negotiated prior to the Closing Date pursuant to
Section 8.1(b) . 

          “Note”
means the unsecured promissory note made by Holdings in favor of Seller in
principal amount of $5 million in the form attached as Exhibit C.

          “Orders”
means judgments, writs, decrees, compliance agreements, injunctions or judicial
or administrative orders and legally binding determinations of any Governmental
Entity or arbitrator. 

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

          “Permits”
means all permits, licenses, authorizations, registrations, franchises,
approvals, certificates (including certificates of need), exemptions, variances
and similar rights obtained, or required to be obtained, from Governmental
Entities. 

          “Permitted
Encumbrances” means: (a) Encumbrances for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings and for which there are
adequate reserves on the books; (b) workers or unemployment compensation liens
arising in the ordinary course of business; (c) mechanic’s, materialman’s,
supplier’s, vendor’s or similar liens arising in the ordinary course of business
securing amounts that are not delinquent, (d) zoning, building and other similar
restrictions that do not, individually or in the aggregate, materially interfere
with the value or current use of any Real Property, (e) any easement, covenant,
right-of-way or other similar restriction recorded in the appropriate recorder’s
office in each case that does not materially detract from the value of any Real
Property or materially interfere with the use thereof, (f) any Contracts
disclosed pursuant to Section 6.10(a)(ii) as to any of the Real Property Lease,
and (g) any Encumbrance governed by Law affecting the interest of the lessor
thereof. 

          “Person”
shall be construed as broadly as possible and shall include an individual or
natural person, a partnership (including a limited liability partnership), a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization or a Governmental
Entity. 

          “Proceedings”
means actions, suits, claims, reviews, and investigations and legal,
administrative or arbitration proceedings. 

          “Purchasers’
Business” means the seeking of an acquisition of one or more operating
companies. 

          “Purchaser
Group” means the Purchasers and, following the Closing, the Surviving
Corporation, and each of the foregoing Person’s respective successors and
assigns, and each of their officers, directors, employees, Representatives and
Affiliates, other than any Seller and any Person who is an officer or employee
of the Company prior to the Closing. 

          “Purchase
Price” means the Merger Consideration, less any shares of Holdings Common
Stock transferred to Holdings pursuant to Section 4.2(a) . 

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

          “Related
Documents” means the Note, the Merger Sub Guaranty, the New Employment 

Agreements and the Registration Rights Agreement. 

          “Representatives”
means, as to any Person, the Affiliates, owners, directors, officers, employees,
representatives or agents of such Person. 

          “Registration
Rights Agreement” means the Registration Rights Agreement attached as
Exhibit D providing registration rights in respect of the Holdings Common
Stock held by Seller.

          “Securities”
has the meaning given to such term in the Securities Act. 

          “Securities
Act” means the Securities Act of 1933, as amended, or any successor federal
Law, and the rules and regulations promulgated thereunder, all as the same may
from time to time be in effect. 

          “Seller
Group” means the Sellers and their respective successors and assigns, but
for all purposes other than Article IX shall expressly exclude any officers,
directors, employees, agents or representatives of Seller. 

          “Subject
Business” means the design, development and sale of ruggedized, mobile
communications solutions to the military and first responder marketplace. 

          “Subsidiary”
means, with respect to any Person, any other Person of which fifty percent (50%)
or more of the Equity Interests or other interests entitled to vote in the
election of directors or comparable Persons performing similar functions are at
the time owned or Controlled, directly or indirectly through one or more
Subsidiaries, by such Person. 

          “Tax”
means any of the Taxes. 

          “Tax
Returns” means federal, state, local and foreign returns, reports,
statements, claim for refund, or information return or statement relating to
Taxes, including any Schedule or attachment thereto, including any amendment
thereof. 

          “Taxes”
means, with respect to any entity: (a) all income taxes (including any tax on or
based upon net income, gross income, income as specially defined, earnings,
profits or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties and
other taxes, fees, assessments or charges of any kind whatsoever, together with
all interest and penalties, additions to tax and other additional amounts
imposed by any taxing authority (domestic or foreign) on such entity (if any),
including any Liability for Taxes; and (b) any Liability for the Taxes described
in clause (a) hereof of any Person imposed on the Company as a result of (i)
being a transferee or successor; (ii) being a member of a consolidated,
affiliated or combined group whether pursuant to Treasury Regulation §1.1502 -6
(and any corresponding provision of state, local or foreign law) or otherwise;
(iii) any contractual obligation; or (iv) any Law, which Taxes relate to an
event or transaction occurring prior to the Closing. 

          “Working
Capital” means current assets less current liabilities.Filed by Automated Filing Services Inc. (604) 609-0244 - Aegis Industries , Inc. - Exhibit 10.2

Exhibit 10.2 

[FORM OF] REGISTRATION RIGHTS AGREEMENT
  

          This
Registration Rights Agreement (the “Agreement”) is made and entered into
as of the __ day of May, 2007 (the “Effective Date”) between Aegis
Industries, Inc., a Nevada corporation (the “Company”), and Thomas Keenan
Ventures, LLC, a Delaware limited liability company (the “Investor”).

RECITALS: 

          A.           The
Investor has acquired shares of the Company’s common stock, par value $0.001 per
share, pursuant to a certain Agreement and Plan of Merger, dated as of the date
hereof (the “Merger Agreement”) between the Company, Aegis Merger Corp.,
a wholly-owned subsidiary of the Company, Z5 Technologies LLC, a Delaware
limited liability company (“Z5”), and the Investor. 

          B.           This
Agreement is a condition to the obligation of the Investor and Z5 to consummate
the transactions contemplated by the Merger Agreement. 

          C.           The
Company and the Investor desire to set forth the registration rights and certain
transfer restrictions to be granted by the Company to the Investor. 

          NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein and in the Merger Agreement, the
parties mutually agree as follows: 

AGREEMENT: 

          1.           Certain
Definitions: As used in this Agreement, the following terms have the
following respective meanings: “Affiliate” shall have the meaning
provided for in the Securities Act. 

          “Blackout
  Period” means, only during such period that any Holder is an Affiliate
  of the Company, with respect to a registration, a period not in excess of sixty
  (60) calendar days in any calendar year during which the Company, in the good
  faith judgment of its Board of Directors, determines (because of the existence
  of, or in anticipation of, any acquisition, financing activity or other transaction
  involving the Company, or the unavailability for reasons beyond the Company’s
  control of any required financial statements, disclosure of information which
  is in its best interest not to publicly disclose, or any other event or condition
  of similar significance to the Company) that the registration and distribution
  of the Registrable Securities to be covered by such registration statement,
  if any, would be seriously detrimental to the Company and its stockholders.

          
“Commission” means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act. 

          “Common
Stock” means the common stock, par value $0.001 per share, of the Company
and any and all shares of capital stock or other equity securities of: (i) the
Company which are added to or exchanged or substituted for the Common Stock by
reason of the declaration of any stock dividend or stock split, the issuance of
any distribution or the reclassification, readjustment, recapitalization or
other such modification of the capital structure of the Company; and (ii) any
other corporation, now or hereafter organized under the laws of any state or
other governmental authority, with which the Company is merged, which results
from any consolidation or reorganization to which the Company is a party, or to
which is sold all or substantially all of the shares or assets of the Company,
if after such merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the aggregate more
than 50% of the total voting power of such other corporation. 

          “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder. 

          
“Holder” means the Investor or any of the Investor’s respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly from
such Investor, including from any Permitted Assignee. 

          The
terms “register”, “registered” and “registration” refers to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement. 

          “Registrable
Securities” means shares of Common Stock issued to the Investor pursuant to
the Merger Agreement, excluding: (i) any Registrable Securities that have
been publicly sold or may be sold immediately without registration under the
Securities Act either pursuant to Rule 144 of the Securities Act or otherwise;
(ii) any Registrable Securities sold by a person in a transaction pursuant to a
registration statement filed under the Securities Act; or (iii) any Registrable
Securities which are at the time subject to an effective registration statement
under the Securities Act.

          “Securities
Act” means the Securities Act of 1933, as amended, or any similar
federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same are in effect at the
time. 

          2.           Term.
This Agreement shall commence upon the Effective Date are remain in full force
and effect for a period of two (2) years from the Effective Date and
thereafter through the end of the Effectiveness Period (the “Term”). 

          3.           Registration.
The Company agrees that 

                         (a)           it
will file a registration statement covering the resale of the Registrable
Securities on the date that is the earlier of: (a) six months after the date
that the registration statement related to the resale of the shares of common
stock underlying all of the securities that have been or will be sold in
connection with the Private Financing (as such term is defined in the Merger
Agreement) has been declared effective by the Commission, or (b) the first
anniversary of the Effective Date (the “Filing Deadline”); and

                         (b)           it
will use its commercially reasonable efforts, and will cooperate fully with the
Commission, to cause such registration statement to be declared effective by the
Commission 

2

within sixty (60) days after the Filing Deadline (the
“Registration Deadline”), provided, however, that the
Company is not obligated to effect any such registration, qualification or
compliance pursuant to this Section 3, or keep such registration effective
pursuant to Section 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or “blue sky” laws of such
jurisdiction or to execute a general consent to service of process in effecting
such registration, qualification or compliance, in each case where it has not
already done so; or (ii) during any Blackout Period. 

          4.           Registration
Procedures. 

                         (a)      in
the case of the registration, qualification or compliance effected by the
Company pursuant to Section 3 hereof, the Company will keep each Holder
reasonably advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. With respect to
any registration statement filed pursuant to Section 3, the Company shall: 

                                        (i)      prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on any form which (a) the Company then qualifies for, (b)
counsel for the Company deems appropriate, and (c) is available for the resale
of the Registrable Securities in accordance with the intended method(s) of
distribution thereof; provided that no later than five (5) business days
before filing with the Commission a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of any registration statement, the Company must (a)
furnish to the underwriters, if any, and to Investor’s counsel
(“Investor’s Counsel”) copies of all such documents proposed to be
filed (excluding any exhibits other than applicable underwriting documents), in
substantially the form proposed to be filed, which documents are subject to the
review of the underwriters and such counsel, and (b) notify each Holder of
Registrable Securities covered by such registration statement of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered; 

                                        (ii)      cause
such registration statement to become effective prior to the Registration
Deadline and remain effective at least for a period ending with the first to
occur of (i) the sale of all Registrable Securities covered by the registration
statement, or (ii) the availability under Rule 144 for the Holders to
immediately freely resell without restriction all Registrable Securities covered
by the registration statement (the “Effectiveness Period”); 

                                        (iii)     
if a registration statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission; 

                                        (iv)      prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective during the Effectiveness
Period and comply with the provisions of the Securities Act with respect to the
disposition of all 

3

securities covered by such registration statement during such
period in accordance with the intended method(s) of disposition by the sellers
thereof set forth in such registration statement; 

                                        (v)     
furnish, without charge, to the Holder one (1) signed copy of such registration
statement (excluding any exhibits thereto other than applicable underwriting
documents), each amendment and supplement thereto (including one (1) conformed
copy to each Holder and one (1) signed copy to each managing underwriter and in
each case including all exhibits thereto), and such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus and any other prospectus filed under Rule 424 under the Securities
Act) as such Holders may request, in conformity with the requirements of the
Securities Act, and such other documents as such Holder may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
such Holder, but only during the Effectiveness Period; 

                                        (vi)     
register or qualify such Registrable Securities under such other applicable
securities or blue sky laws of such jurisdictions as any Holder, and
underwriter, if any, of Registrable Securities covered by such registration
statement as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable registration
statement is deemed effective by the Commission) and do any and all other acts
and things which may be reasonably necessary or advisable to enable such Holder
and each underwriter, if any; provided that the Company is not required
to (a) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4(a)(vi), (b) register as
a securities dealer, or (c) subject itself to taxation in any such jurisdiction;

                                        (vii)      immediately
notify each Holder in writing of any event which causes the prospectus included
in such registration statement to contain an untrue statement of a material fact
or omit any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly prepare and furnish to such
Holder a supplement or amendment to such prospectus (or prepare and file
appropriate reports under the Exchange Act) so that, as thereafter delivered to
the Investor, such prospectus does not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period; and 

                                        (viii)      comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by such
registration statement. 

                         (b)           Each
Holder agrees that, upon receipt of any written notice from the Company of the
happening of any event of the kind described in Section 4(a)(vii) or of the
commencement of a Blackout Period, such Holder shall discontinue disposition of
Registrable Securities pursuant to the registration statement until such
Holder’s receipt of the copies of the 

4

supplemented or amended prospectus contemplated by Section
4(a)(vii) hereof or notice of the end of the Blackout Period, as applicable,
and, if so directed by the Company, such Holder must deliver to the Company all
copies (including, without limitation, any and all drafts), other than permanent
file copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company gives any such notice, the period mentioned in Section 4(a)(i)
hereof is extended by the greater of (i) ten (10) business days or (ii) the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 4(a)(vii) hereof to and including the date when
each Holder of Registrable Securities covered by such registration statement has
received the copies of the supplemented or amended prospectus contemplated by
Section 4(a)(vii) hereof. 

          5.           Registration
Statement Compliance. The registration statement when filed with the
Commission will comply in all material respects with the Securities Act and the
applicable rules and regulations promulgated by the Commission pursuant thereto
and each other document incorporated by reference in the registration statement
will comply in all material respects with the Exchange Act and the applicable
rules and regulations promulgated by the Commission pursuant thereto, and the
registration statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the registration
statement in reliance upon and in conformity with the information furnished by
any Holder. 

          6.           Registration
Expenses. The Company shall pay all expenses in connection with any
registration, including, without limitation, all registration, filing, stock
exchange and NASD fees, printing expenses, all fees and expenses of complying
with securities or “blue sky” laws, and the fees and disbursements of counsel
for the Company and of its independent accountants, but excluding (i) any
brokerage fees, selling commissions or underwriting discounts incurred by Holder
of Registrable Securities in connection with sales under the registration
statement and (ii) the fees and expenses of a Holder’s Counsel. 

          7.           Assignment
of Rights. No Holder may assign its rights under this Agreement to any party
without the prior written consent of the Company; provided,
however, that a Holder may assign its rights under this Agreement to one
or more Permitted Assignee upon notice to the Company. 

          8.           Information
by Holder. The Holder or Holders of Registrable Securities included in any
registration must furnish to the Company such information regarding such Holder
or Holders and the distribution proposed by such Holder or Holders as the
Company may reasonably request in writing. 

          9.           Indemnification.

                         (a)           In
the event of the offer and sale of Registrable Securities held by Holders under
the Securities Act, the Company must, and hereby agrees to, indemnify and hold
harmless, to the fullest extent permitted by law, each Holder, its directors,
officers, partners, consultants, each other person who participates as an
underwriter in the offering or sale of such securities, 

5

and each other person, if any, who controls or is under common
control with such Holder or any such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner, consultant or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company must
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company
is not liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or omission from such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder or
(ii) if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities that
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registrable Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented). Such indemnity remains in full force and effect regardless of any
investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and survives the transfer of
such shares by the Holder. 

                         (b)           As
a condition to including Registrable Securities in a registration statement,
each such Holder agrees to be bound by the terms of this Section 9 and to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, its consultants, underwriters and each
other person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director, officer, consultant or
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement in or omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Holder, and such Holder must reimburse the
Company, and each such director, officer, and controlling person for any legal
or other expenses reasonably incurred by 

6

them in connection with investigating, defending, or settling
any such loss, claim, damage, liability, action, or proceeding. Such indemnity
remains in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares. 

                         (c)          
Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in Sections 9(a) or (b)
hereof (including any governmental action), such indemnified party must, if a
claim in respect thereof is to be made against an indemnifying party, give
prompt written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein does not relieve the indemnifying party of its obligations under
Section 9(a) or (b) hereof, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in the reasonable judgment of
counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may have
defenses not available to the indemnifying party in respect of such claim, the
indemnifying party is entitled to participate in and to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party is not liable
to such indemnified party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner. Neither an indemnified nor an indemnifying party is liable for
any settlement of any action or proceeding effected without its consent. No
indemnifying party may, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement, which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. Notwithstanding anything to the contrary set forth herein, and
without limiting any of the rights set forth above, in any event any party has
the right to retain, at its own expense, counsel with respect to the defense of
a claim. 

                         (d)           In
the event that an indemnifying party does not or is not permitted to assume the
defense of an action pursuant to Section 9(c) or in the case of the expense
reimbursement obligation set forth in Sections 9(a) and (b), the indemnification
required by Sections 9(a) and (b) hereof must be made by periodic payments of
the amount thereof during the course of the investigation or defense, as, and
when bills received or expenses, losses, damages, or liabilities are incurred.

                         (e)          
If the indemnification provided for in this Section 9 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
must (i) contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information 

7

supplied by the indemnifying party or the indemnified party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission), or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) is entitled to contribution from any indemnifying party who was
not guilty of such fraudulent misrepresentation. 

          10.           Reserved.

          11.           Rule
144. With a view to making available to Holders the benefits of certain
rules and regulations of the Commission which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to: 

                         (a)           Make
and keep public information available, as those terms are understood and defined
in Rule 144 or any similar or analogous rule promulgated under the Securities
Act, at all times after the effective date of the registration statement filed
by the Company pursuant to section 3 of this Agreement; 

                         (b)           File
with the Commission, in a timely manner, all reports and other documents
required of the Company under the Exchange Act; and 

                         (c)          
So long as any Holder owns any Registrable Securities, furnish to the Holders
upon their request; a written statement by the Company as to its compliance with
the reporting requirements of said Rule 144 of the Securities Act, and of the
Exchange Act; a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as any Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
it to sell any such securities without registration. 

          12.          
Most Favorable Registration Rights. During the Term, the Company shall
not offer or grant by way of agreement or otherwise to any Person (as such term
is defined in the Merger Agreement) in connection with the acquisition directly
or indirectly by the Company of an Affiliate of such Person, the right to
require the Company to register shares of Common Stock in a proportion in excess
of 20% of the total amount of shares of Common Stock issued to such Person, or
permit such Person to transfer shares of Common Stock registered by the Company
on terms more favorable to such Person, than the registration rights provided to
the Holders hereunder and the transfer restrictions to which the Holders are
subject as provided by this Agreement. 

          13.          
Miscellaneous 

                         (a)          
Governing Law and Dispute Resolution. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE
THE APPLICATION OF THE 

8

LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. Any
controversy or claim arising out of or relating to this Agreement (including,
without limitation, as to arbitrability), or the breach thereof, shall be
settled as set forth in the Merger Agreement. 

                         (b)          
Successors and Assigns. Except as otherwise provided herein, the
provisions hereof inure to the benefit of, and be binding upon, the successors,
Permitted Assigns, executors and administrators of the parties hereto. 

                         (c)           Entire
Agreement. This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof. 

                         (d)           Notice.
All notices or other communications which are required or permitted under this
Agreement must be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered: 

	 	If to the Company: 	 Aegis Industries, Inc. 
	 	  	 75200 Shady Grove Road, Suite 
	 	  	 202 
	 	  	 Rockville Maryland 20850 
	 	  	 Attention: Dennis Mee 
	 	  	 Telephone: 
	 	  	 Facsimile: 
	 	with a copy to: 	  
	 	  	 Richardson & Patel, LLP 
	 	  	 The Chrysler Building 
	 	  	 405 Lexington Avenue, 26th Floor 
	 	  	 Attention: Jody R. Samuels 
	 	  	 Telephone: (212) 907-6689 
	 	  	 Facsimile: (212) 907-6687 
	 	  	  
	 	  	  
	 	If to the Investor: 	Thomas Keenan Ventures LLC 
	 	  	71 Wright Street 
	 	  	Westport, CT 06880 
	 	  	Attention: Brendan Reilly 
	 	  	Facsimile: (203) 549-0816 
	 	  	  
	 	with a copy to: 	  
	 	  	Agincourt Consulting Group LLC 
	 	  	1692 Massachusetts Avenue 
	 	  	Cambridge, MA 02138 
	 	  	Attention: Hugh Reilly 
	 	  	Facsimile: (617) 354-5401 
	 	with a copy to: 	  

9

Robinson & Cole, LLP
 695 East
Main Street 
Stamford, CT 06904 
Attention: Eric J. Dale 
Telephone:
(203) 462-7568 
Facsimile: (203) 462-7599 

or at such other address as any party furnishes to the other
parties in writing. 

                         (e)           Delays
or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any Holder of any Registrable Securities, upon any breach or default
of the Company under this Agreement, shall impair any such right, power or
remedy of such Holder and shall not be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring. Any waiver of any single breach or default is not
a waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and is effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any Holder, are cumulative and not alternative. 

                         (f)           Counterparts.
This Agreement may be executed in any number of counterparts, each of which is
enforceable against the parties actually executing such counterparts, and all of
which together constitute one instrument. 

                         (g)           Severability.
In the case any provision of this Agreement is invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions are not in any way be affected or impaired thereby. 

                         (h)           Amendments.
The provisions of this Agreement may be amended at any time and from time to
time, and particular provisions of this Agreement may be waived, with and only
with an agreement or consent in writing signed by the Company and by the
Investor and/or Permitted Assigns. 

[Signature Page Follows] 

10

          This
Registration Rights and Transfer Restriction Agreement is hereby executed as of
the date first above written. 

COMPANY: 
AEGIS
INDUSTRIES, INC. 

 

By: ______________________
Name:
____________________
Its: ______________________

 

INVESTOR: 
THOMAS KEENAN
VENTURES, LLC 

 

_________________________
Name:

11

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