Document:

Exhibit 10.2

 

CREDIT AGREEMENT

 

between

 

CONSONUS ACQUISITION CORP.,

a Delaware corporation,

as Borrower

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

as Lender

 

Entered into as of May 31, 2005

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE 1. DEFINITIONS

  	
  1

  
	
  1.1

  	
  DEFINED TERMS

  	
  1

  
	
  1.2

  	
  EXHIBITS INCORPORATED

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2. LOANS

  	
  7

  
	
  2.1

  	
  LINE OF CREDIT

  	
  7

  
	
   

  	
  (a)

  	
  Line of Credit

  	
  7

  
	
   

  	
  (b)

  	
  Restriction on
  Availability

  	
  7

  
	
   

  	
  (c)

  	
  Use of Proceeds

  	
  7

  
	
  2.2

  	
  LINE OF CREDIT
  COMMITMENT FEE; UNUSED COMMITMENT FEE

  	
  7

  
	
  2.3

  	
  LINE OF CREDIT MATURITY
  DATE

  	
  8

  
	
  2.4

  	
  TERM LOAN

  	
  8

  
	
   

  	
  (a)

  	
  Term Loan

  	
  8

  
	
   

  	
  (b)

  	
  Use of Proceeds

  	
  8

  
	
  2.5

  	
  TERM LOAN COMMITMENT
  FEE

  	
  8

  
	
  2.6

  	
  TERM LOAN PRINCIPAL
  PAYMENTS

  	
  8

  
	
  2.7

  	
  TERM LOAN MATURITY DATE

  	
  8

  
	
  2.8

  	
  LOAN DOCUMENTS

  	
  8

  
	
  2.9

  	
  REQUESTS FOR ADVANCES

  	
  8

  
	
  2.10

  	
  INTEREST ON THE LOANS

  	
  8

  
	
   

  	
  (a)

  	
  Interest Payments

  	
  8

  
	
   

  	
  (b)

  	
  LIBOR Spread

  	
  9

  
	
   

  	
  (c)

  	
  Default Interest

  	
  9

  
	
   

  	
  (d)

  	
  Computation of Interest

  	
  9

  
	
   

  	
  (e)

  	
  Effective Rate

  	
  9

  
	
  2.11

  	
  PAYMENTS

  	
   

  
	
   

  	
  (a)

  	
  Credit for Principal
  Payments

  	
   

  
	
   

  	
  (b)

  	
  Collection of Payments

  	
   

  
	
   

  	
  (c)

  	
  Taxes Generally

  	
   

  
	
   

  	
  (d)

  	
  Tax Indemnification

  	
   

  
	
  2.12

  	
  LENDER’S ACCOUNTING

  	
  10

  
	
  2.13

  	
  APPRAISAL LIMITATION

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3. CONDITIONS
  PRECEDENT

  	
  11

  
	
  3.1

  	
  CONDITIONS PRECEDENT TO
  INITIAL EXTENSION OF CREDIT

  	
  11

  
	
  3 2

  	
  CONDITIONS PRECEDENT TO
  EACH ADVANCE

  	
  11

  
	
  3.3

  	
  ACCOUNT, PLEDGE AND
  ASSIGNMENT

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4. REPRESENTATIONS
  AND WARRANTIES

  	
  11

  
	
  4.1

  	
  LEGAL STATUS

  	
  11

  
	
  4.2

  	
  AUTHORIZATION AND
  VALIDITY

  	
  12

  
	
  4.3

  	
  BORROWER SOLVENCY

  	
  12

  
	
  4.4

  	
  NO VIOLATION

  	
  12

  
	
  4.5

  	
  LITIGATION

  	
  12

  
	
  4.6

  	
  CORRECTNESS OF
  FINANCIAL STATEMENT

  	
  12

  
	
  4.7

  	
  NO SUBORDINATION

  	
  12

  
	
  4.8

  	
  ERISA

  	
  12

  
	
  4.9

  	
  OTHER OBLIGATIONS

  	
  12

  
	
  4.10

  	
  NO MATERIAL ADVERSE
  CHANGE

  	
  12

  
	
  4.11

  	
  ACCURACY

  	
  13

  
							

 

I

 

	
  4.12

  	
  BUSINESS LOAN

  	
   

  	
  13

  
	
  4.13

  	
  SPECIAL REPRESENTATIONS
  AND WARRANTIES REGARDING HAZARDOUS MATERIALS

  	
   

  	
  13

  
	
   

  	
  (a)

  	
  Hazardous Materials

  	
   

  	
  13

  
	
   

  	
  (b)

  	
  Hazardous Materials
  Laws

  	
   

  	
  13

  
	
   

  	
  (c)

  	
  Hazardous Materials
  Claims

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.COLLATERAL

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6. COVENANTS OF
  BORROWER

  	
   

  	
  13

  
	
  6.1

  	
  PUNCTUAL PAYMENTS

  	
   

  	
  13

  
	
  6.2

  	
  ACCOUNTING RECORDS

  	
   

  	
  13

  
	
  6.3

  	
  FINANCIAL STATEMENTS

  	
   

  	
  14

  
	
  6.4

  	
  COMPLIANCE

  	
   

  	
  14

  
	
  6.5

  	
  INSURANCE

  	
   

  	
  14

  
	
  6.6

  	
  TAXES AND OTHER
  LIABILITIES

  	
   

  	
  14

  
	
  6.7

  	
  LITIGATION

  	
   

  	
  14

  
	
  6.8

  	
  NOTICE TO LENDER

  	
   

  	
  14

  
	
  6.9

  	
  SUBORDINATION OF OTHER
  LOANS

  	
   

  	
  14

  
	
  6.10

  	
  FURTHER ASSURANCES

  	
   

  	
  15

  
	
  6.11

  	
  ASSIGNMENT

  	
   

  	
  15

  
	
  6.12

  	
  INSPECTIONS

  	
   

  	
  15

  
	
  6.13

  	
  HAZARDOUS MATERIALS
  COVENANTS

  	
   

  	
  15

  
	
   

  	
  (a)

  	
  No Hazardous Activities

  	
   

  	
  15

  
	
   

  	
  (b)

  	
  Compliance

  	
   

  	
  15

  
	
   

  	
  (c)

  	
  Notices

  	
   

  	
  15

  
	
   

  	
  (d)

  	
  Remedial Action

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7. FINANCIAL
  COVENANTS

  	
   

  	
  15

  
	
  7.1

  	
  MINIMUM FIXED CHARGE
  COVERAGE RATIO

  	
   

  	
  15

  
	
  7.2

  	
  TOTAL FUNDED DEBT

  	
   

  	
  16

  
	
  7.3

  	
  NET WORTH

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8. NEGATIVE
  COVENANTS

  	
   

  	
  16

  
	
  8.1

  	
  USE OF FUNDS

  	
   

  	
  16

  
	
  8.2

  	
  MATERIAL AGREEMENTS

  	
   

  	
  16

  
	
  8.3

  	
  ACCOUNTING METHOD

  	
   

  	
  16

  
	
  8.4

  	
  OTHER INDEBTEDNESS

  	
   

  	
  16

  
	
  8.5

  	
  MERGER, CONSOLIDATION,
  TRANSFER OF ASSETS

  	
   

  	
  17

  
	
  8.6

  	
  GUARANTIES

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9. DEFAULTS AND
  REMEDIES

  	
   

  	
  17

  
	
  9.1

  	
  DEFAULT

  	
   

  	
  17

  
	
  9.2

  	
  ACCELERATION UPON DEFAULT;
  REMEDIES

  	
   

  	
  18

  
	
  9.3

  	
  RIGHT OF LENDER TO TAKE
  CERTAIN ACTIONS; POWER OF ATTORNEY

  	
   

  	
  19

  
	
  9.4

  	
  APPLICATION OF PAYMENTS
  AFTER DEFAULT

  	
   

  	
  19

  
	
  9.5

  	
  REPAYMENT OF FUNDS
  ADVANCED

  	
   

  	
  20

  
	
  9.6

  	
  RIGHTS CUMULATIVE, NO
  WAIVER

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10.
  MISCELLANEOUS PROVISIONS

  	
   

  	
  20

  
	
  10.1

  	
  AMENDMENTS AND WAIVERS

  	
   

  	
  20

  
	
  10.2

  	
  INDEMNITY

  	
   

  	
  20

  
	
  10.3

  	
  FORM OF DOCUMENTS

  	
   

  	
  20

  
	
  10.4

  	
  NO THIRD PARTIES
  BENEFITED

  	
   

  	
  20

  
	
  10.5

  	
  NOTICES

  	
   

  	
  20

  
	
  10.6

  	
  ACTIONS

  	
   

  	
  21

  
										

 

II

 

	
  10.7

  	
  RELATIONSHIP OF PARTIES

  	
   

  	
  21

  
	
  10.8

  	
  DELAY OUTSIDE LENDER’S
  CONTROL

  	
   

  	
  21

  
	
  10.9

  	
  ATTORNEYS’ FEES AND
  EXPENSES; ENFORCEMENT

  	
   

  	
  21

  
	
  10.10

  	
  IMMEDIATELY AVAILABLE
  FUNDS

  	
   

  	
  22

  
	
  10.11

  	
  SUCCESSORS AND ASSIGNS

  	
   

  	
  22

  
	
   

  	
  (a)

  	
  Generally

  	
   

  	
  22

  
	
   

  	
  (b)

  	
  Lender Assignments,
  Participations

  	
   

  	
  22

  
	
  10.12

  	
  SETOFF

  	
   

  	
  22

  
	
  10.13

  	
  CAPITAL ADEQUACY

  	
   

  	
  22

  
	
  10.14

  	
  LENDER’S AGENTS

  	
   

  	
  23

  
	
  10.15

  	
  WAIVER OF RIGHT TO
  TRIAL BY JURY

  	
   

  	
  23

  
	
  10.16

  	
  SEVERABILITY

  	
   

  	
  23

  
	
  10.17

  	
  HEIRS, SUCCESSORS AND
  ASSIGNS

  	
   

  	
  23

  
	
  10.18

  	
  TIME

  	
   

  	
  23

  
	
  10.19

  	
  HEADINGS

  	
   

  	
  23

  
	
  10.20

  	
  GOVERNING LAW

  	
   

  	
  23

  
	
  10.21

  	
  INTEGRATION;
  INTERPRETATION

  	
   

  	
  23

  
	
  10.22

  	
  JOINT AND SEVERAL
  LIABILITY OF BORROWING PARTIES

  	
   

  	
  24

  
	
  10.23

  	
  COUNTERPARTS

  	
   

  	
  24

  
	
  10.24

  	
  CONFIDENTIALITY
  PROVISION

  	
   

  	
  24

  
	
  10.25

  	
  SURVIVAL OF
  REPRESENTATIONS

  	
   

  	
  24

  
	
  10.26

  	
  NO BORROWER SET-OFF

  	
   

  	
  24

  
	
  10.27

  	
  STATUTE OF FRAUDS

  	
   

  	
  24

  
	
  10.28

  	
  BROKERS

  	
   

  	
  24

  
	
  10.29

  	
  INCONSISTENCIES WITH
  THE LOAN DOCUMENTS

  	
   

  	
  25

  
	
  10.30

  	
  INTERPRETATION

  	
   

  	
  25

  
	
  10.31

  	
  ACTIONS BY LENDER

  	
   

  	
  25

  
	
  10.32

  	
  PATRIOT ACT
  NOTIFICATION

  	
   

  	
  25

  

 

III

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (“Agreement”)
is entered into as of May 31, 2005, by and between CONSONUS ACQUISITION CORP.,
a Delaware corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION (“Lender”).

 

RECITALS

 

A.       Borrower intends to acquire
certain operating assets (the “Assets”) from Consonus, Inc. pursuant to the
terms and conditions of that certain Asset Purchase Agreement dated May 31,
2005, between Borrower and Consonus, Inc..

 

B.        Borrower desires to obtain
from Lender credit accommodations in a principal amount not to exceed Thirteen
Million Dollars ($13,000,000.00) to assist Borrower in making acquiring the
Assets and in conducting future business operations with the Assets.

 

NOW, THEREFORE, Borrower
and Lender agree as follows:

 

ARTICLE 1. DEFINITIONS

 

1.1       DEFINED TERMS. The following capitalized terms
generally used in this Agreement shall have the meanings defined or referenced
below. Certain other capitalized terms used only in specific sections of this
Agreement are defined in such sections.

 

“Accommodation
Obligations” – means any Indebtedness or other contractual obligation or
liability, contingent or otherwise, of another Person in respect of which
Borrower is liable, including, without limitation, any such Indebtedness,
obligation or liability directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by Borrower, or in respect of which Borrower
is otherwise directly or indirectly liable (including each partnership in which
Borrower has a general partnership interest), contractual obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase
or otherwise acquire such indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or to make payment other than for value received.

 

“Account” – means
an account with Lender, account number                                        ,
in the name of Borrower or Borrower’s designee into which proceeds of Advances
under the Line of Credit will be deposited.

 

“Advance” – means
any advance under the Term Loan or the Line of Credit made or to be made to
Borrower as provided in this Agreement.

 

“Affiliate” –
means, with respect to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, “control” (including, with correlative
meanings, the terms “controlling,” “controlled by” and “under common control
with”), as applied to any Person, means (a) the possession, directly or
indirectly, of the power to vote fifty percent (50%) or more of the Securities
having voting power for the election of directors of such Person or otherwise
to direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise,
or (b) the ownership of fifty percent (50%) or more of the outstanding general
partnership or other ownership interests of such Person.

 

1

 

“Agreement”
– shall have the meaning ascribed to such term in the preamble hereto.

 

“Applicable
LIBOR Rate” – is the rate of interest, rounded upward to the nearest whole
one-thousandth of one percent, equal to the sum of: (a) the LIBOR Spread plus
(b) the LIBOR Rate.

 

“Bankruptcy
Code” – means the Bankruptcy Reform Act of 1978 (11 U.S.C. § 101-1330) as
now or hereafter amended or recodified.

 

“Borrower” – means
CONSONUS ACQUISITION CORP., a Delaware corporation.

 

“Business Day” –
means any day except a Saturday, Sunday or any other day on which commercial
banks in Utah are authorized or required by law to close. Unless specifically
referenced in this Agreement as a Business Day, all references to “days” shall
be to calendar days.

 

“Calendar Month” –
means the 12 calendar months of the year.

 

“Code” – means the
United States Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” –
means the Personal Property and the Real Property.

 

“Commitment” –
means Lender’s obligation to make the Loans, in an amount up to, but not
exceeding the amount of the Line of Credit and the Term Loan.

 

“Default” – shall
have the meaning ascribed to such term in Section 9.1.

 

“Default Rate” –
shall mean a rate of interest per annum two percent (2%) in excess of the
Applicable LIBOR Rate in effect from time to time.

 

“Dollars; $” –
means United States dollars.

 

“EBITDA” – means
net profit before tax plus interest expense (net of capitalized interest
expense), depreciation expense and amortization expense.

 

“Effective Date” –
means the date of this Agreement first set forth above provided that this
Agreement has been executed by Borrower, and Lender has received signature
pages delivered by Borrower and Lender.

 

“Effective Rate” –
shall have the meaning given such term in Section 2.10(e).

 

“ERISA” – means
the Employee Retirement Income Security Act of 1974, as amended or recodified
from time to time.

 

“GAAP” – means
generally accepted accounting principles as consistently applied through all
relevant periods.

 

“Governmental
Authority” – means any nation or government, any federal, state, local,
municipal or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

“Hazardous Materials”
– means any oil, flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, hazardous wastes, toxic or contaminated substances or
similar materials, including, without limitation, any substances which are “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “toxic substances,” “wastes,”
“regulated substances,”

 

2

 

“industrial solid wastes,”
or “pollutants” under the Hazardous Materials Laws, and/or other applicable
environmental laws, ordinances and regulations. “Hazardous Materials” shall not
include commercially reasonable amounts of such materials used in the ordinary
course of operation of real property which are used and stored in accordance
with all applicable environmental laws, ordinances and regulations.

 

“Hazardous Materials
Claims” – means all claims or actions by any governmental entity or agency
or by any other person or entity relating to Hazardous Materials or pursuant to
the Hazardous Materials Laws.

 

“Hazardous Materials
Laws” – means all applicable laws, ordinances and regulations relating to
Hazardous Materials, including, without limitation: the Clean Air Act, as
amended, 42 U.S.C. Section 7401 et seq.;  the Federal Water Pollution Control Act,
as amended, 33 U.S.C. Section 1251 et
seq.;  the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. Section 6901 et
seq.;  the Comprehensive Environment Response, Compensation and
Liability Act of 1980, as amended (including the Superfund Amendments and
Reauthorization Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et  seq:,  the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et
seq.;  the Occupational Safety and Health Act, as amended, 29
U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section 11001 et seq.; the
Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.;
the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.;
and all comparable state and local laws, laws of other jurisdictions
or orders and regulations.

 

“Impositions”
means all (a) real estate and personal property taxes and other taxes and
assessments, water and sewer rates and charges and all other governmental
charges and any interest or costs or penalties with respect thereto and charges
for any restrictive covenants or any other easement or agreement maintained for
the benefit of any Real Property, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which
at any time may be assessed, levied or imposed upon any land or improvements,
or the rent or income received therefrom, or any use or occupancy thereof, and
(b) other Taxes levied, imposed or assessed upon or against the Borrower or any
of its properties.

 

“Indebtedness” –
means (after consolidation adjustments, if necessary, to avoid redundancy) (a)
all indebtedness, obligations or other liabilities for borrowed money, whether
or not subordinated and whether with or without recourse beyond any collateral
security; (b) all indebtedness, obligations or other liabilities evidenced by
securities or other similar instruments; (c) all reimbursement obligations and
other liabilities with respect to letters of credit (except for those undrawn
letters of credit which support future ordinary course, non-indebtedness
obligations) or banker’s acceptances; (d) all obligations to pay the purchase
price of real or personal property or services (offset by the fair value of
such property or services); (e) all obligations in respect of both operating
and capital leases; (f) all Accommodation Obligations; (g) all indebtedness,
obligations or other liabilities of any Person secured by a Lien on any asset
of Borrower, whether or not such indebtedness, obligations or liabilities are assumed
by, or are a personal liability of, Borrower (including, without limitation,
the principal amount of any assessment or similar indebtedness encumbering any
property); (h) all indebtedness, obligations or other liabilities (other than
interest expense liability) in respect of interest rate hedge, swap or similar
contracts and foreign currency exchange agreements; and (i) without duplication
or limitation, all liabilities and other obligations included in the financial
statements (or notes thereto) of Borrower as prepared in accordance with GAAP.

 

“Lender” – means
U.S. Bank National Association.

 

“LIBOR Rate” – is
the rate of interest equal to the one-month LIBOR rate quoted by Lender from
Telerate Page 3750 or any successor thereto, which shall be that one-month
LIBOR rate in effect two (2) New York Banking Days prior to the beginning of
each calendar month, adjusted for any reserve requirement and any subsequent
costs arising from a change in government regulation,

 

3

 

such rate to be reset at
the beginning of each succeeding month. If the initial Advance occurs other
than on the first day of the month, the initial one-month LIBOR Rate shall be
that one-month LIBOR Rate in effect two (2) New York Banking Days prior to the
date of the initial Advance, which rate plus the percentage described above
shall be in effect the remaining days of the month of the initial Advance, such
one-month LIBOR rate to be reset at the beginning of each succeeding month.
Lender’s internal records of applicable interest rates shall be determinative
in the absence of manifest error.

 

“LIBOR Spread” –
shall be as defined in Section 2.10(b) below.

 

“Involuntary Lien”
– means any Lien securing the payment of money or the performance of any other
obligation created involuntarily under any law, ordinance, regulation, or rule,
or otherwise and any claim of any such Lien.

 

“Lien” – means,
except for Permitted Exceptions and tenant leases entered into by Borrower upon
commercially reasonable terms, each and all of the following:

 

(a)       Any lease or other right to
occupy or use;

 

(b)       Any assignment as security,
mortgage, deed of trust, conditional sale for security purposes, grant in
trust, lien, mortgage, pledge, security interest, security agreement, title
retention arrangement, other encumbrance, or other interest or right securing
the payment of money or the performance of any other liability or obligation,
whether voluntarily or involuntarily created (including, without limitation,
Involuntary Liens) and whether arising by agreement, document, or instrument,
under any law, ordinance, regulation, or rule (federal, state, or local), or
otherwise; and

 

(c)       Any option, right of first
refusal, or other interest or right.

 

“Line of Credit” –
means the principal sum that Lenders agree to make available to Borrower on a
revolving line of credit basis and Borrower agrees to borrow pursuant to the
terms and conditions of this Agreement: TWO MILLION FIVE HUNDRED THOUSAND AND
00/100THS DOLLARS ($2,500,000.00).

 

“Line of Credit
Availability” – shall mean the principal amount under the Line of Credit
available to be Advanced to Borrower from time to time as determined by Section
2.1(b) of this Agreement.

 

“Line of Credit
Maturity Date” – means May 31, 2010.

 

“Line of Credit Note”
– means a revolving line of credit promissory note of the Borrower payable to
the order of Lender in a principal amount equal to the Line of Credit as
originally in effect and otherwise duly completed, as hereafter amended,
supplemented, replaced or modified.

 

“Loans” – means
the Line of Credit and the Term Loan.

 

“Loan Documents”
– means those documents, as hereafter amended, supplemented, replaced or
modified, properly executed and in recordable form, if necessary, listed in Exhibit
A as Loan Documents,

 

“Net Worth” –
means: (a) the total assets of Borrower as determined in accordance with GAAP
and as reflected on the most recent financial statements for Borrower as
delivered to Lender in accordance with Section 6.3, less, (b) all assets of Borrower which are
either (i) non-qualified deferred compensation plan assets contributed under
Section 401(k) of the Code and related provisions and regulations or (ii)
non-qualified deferred compensation plan assets contributed under Section 457
the Code and related provisions and regulations, and less (c)  the
total liabilities of Borrower, excluding Borrower’s liabilities under the
Questar Note, as determined in

 

4

 

accordance with GAAP, and
as reflected on the most recent financial statements for Borrower as delivered
to Lender in accordance with Section 6.3.

 

“New York Banking Day”
– means any day (other than a Saturday or Sunday) on which commercial banks are
open for business in New York, New York.

 

“Obligations” –
means all present and future obligations and liabilities of Borrower of every
type and description arising under or in connection with this Agreement, the
Note and the other Loan Documents due or to become due to the Lenders or any
Person entitled to indemnification, or any of their respective successors,
transferees or assigns, whether for principal, interest, fees, expenses,
indemnities or other amounts (including reasonable attorneys’ fees and
expenses) and whether due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or unliquidated,
determined or undetermined, and whether now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished and
later increased, created or incurred, whether or not arising after the
commencement of a proceeding under the Bankruptcy Code (including post-petition
interest) and whether or not allowed or allowable as a claim in any such
proceeding, and whether or not recovery of any such obligation or liability may
be barred by a statute of limitations or such obligation or liability may
otherwise be unenforceable.

 

“Other Related
Documents” – means those documents, as hereafter amended, supplemented, replaced
or modified from time to time, properly executed and in recordable form, if
necessary, listed in Exhibit A as Other Related Documents.

 

“Permitted Exceptions”
– means: (a) Liens for Impositions that are not delinquent; (b) Involuntary
Liens (other than for Impositions) with respect to which Borrower satisfies
each of the following requirements: (i) Borrower contests the validity of such
Involuntary Lien in good faith by appropriate legal proceedings, (ii) Borrower
gives written notice to Lender of Borrower’s intent to contest or object to the
same, (iii) Borrower demonstrates to Lender’s satisfaction that the procedures
will conclusively operate to prevent the sale of any property owned by Borrower
to satisfy the Involuntary Lien prior to final determination of such
proceedings, and (iv) Borrower takes any and all other reasonable actions
(including, without limitation, obtaining bonds, title insurance endorsements,
or other security) as Lender may deem necessary or appropriate in order to
prevent the sale of any of the properties within the Real Property Portfolio to
satisfy the Involuntary Lien and prevent any impairment of any properties
within the Real Property Portfolio; (c) the sale, transfer, or other
disposition of any personal property that is consumed or worn out in ordinary
usage and that is promptly replaced with similar items of equal or greater
value; (d) any Lien in favor of Lender for the benefit of the Lenders; (e)
matters customarily shown as standard, pre-printed exceptions in a title
insurance policy in the jurisdiction where any property in the Real Estate
Portfolio is located; (f) all covenants, conditions, easements, right-of-ways,
reservations and restrictions now of record any property in the Real Estate
Portfolio; (g) any Lien arising after the date hereof and approved by Lender in
writing; (h) Liens arising in the ordinary course of Borrower’s business in
amounts not to exceed $50,000.00 for any single Lien and $150,000.00 for all
such Liens in the aggregate; and (i) any other Liens consented to by Lender in
advance in writing from time to time in its sole and absolute discretion.

 

“Person” – means
any natural person, corporation, limited partnership, general partnership,
joint stock company, limited liability company, limited liability partnership,
joint venture, association, company, trust, bank, trust company, land trust,
business trust or other organization, whether or not a legal entity, or any
other non-governmental entity, or any Governmental Authority.

 

“Personal Property”
– means the personal property owned by Borrower and pledged to Lender as
security for the Loans, as more particularly described in the Security
Agreement.

 

“Questar” – means
Questar Corporation and its Affiliates.

 

5

 

“Questar Note”
– means the subordinated promissory note dated May 31, 2005, payable from
Borrower to the order of Questar in a principal amount not in excess of Three
Million Five Hundred Fifty Thousand Dollars ($3,550,000.00).

 

“Rate Management
Obligations” means any and all obligations of the Borrower, whether
absolute or contingent and howsoever and whensoever created, arising, evidenced
or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all Rate Management Transactions,
and (ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any Rate Management Transactions.

 

“Rate Management
Transaction” means any transaction (including an agreement
with respect thereto) now existing or hereafter entered into by the Borrower
which is a rate swap, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of these transactions) or any combination thereof, whether linked to one or
more interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.

 

“Real Estate” –
means the real property and improvements owned or leased by Borrower and
pledged to Lender as security for the Loan pursuant to the Real Estate Security
Instruments, as such real property and improvements are more particularly
described in the Real Estate Security Instruments.

 

“Real Estate Security
Instruments” – means the deeds of trust, assignment of leases and other
documents or instruments executed by Borrower in favor of Lender with respect
to the Real Estate and referenced as Loan Documents on Exhibit A.

 

“Security Agreement”
– means the Security Agreement of even date herewith, executed by Borrower in
favor of Lender and granting to Lender a first priority security interest in
the collateral described therein.

 

“Security Instruments”
– means (i) the Security Agreement; (ii) the Real Estate Security Instruments,
and (iii) any other documents or instrument, including without limitation UCC-1
Financing Statements granted Lender a security interest in Borrower’s property
as collateral for repayment of the Loans, each of even date herewith.

 

‘Taxes” – are, collectively,
all withholdings, interest equalization taxes, stamp taxes or other taxes
(except income and franchise taxes) imposed by any domestic or foreign
Governmental Authority.

 

“Term Loan” –
means the principal sum that Lenders agree to make available to Borrower on a
term loan basis and Borrower agrees to borrow pursuant to the terms and
conditions of this Agreement: TEN MILLION FIVE HUNDRED THOUSAND AND 00/100THS
DOLLARS ($10,500,000.00).

 

“Term Loan Maturity
Date” – means May 31, 2012.

 

“Term Note” –
means a promissory note of the Borrower payable to the order of Lender in a
principal amount equal to the Term Loan as originally in effect and otherwise
duly completed, as hereafter amended, supplemented, replaced or modified.

 

“Unmatured Default”
– means any event, omission or failure of a condition which would constitute a
Default after notice or lapse of time, or both.

 

6

 

1.2      EXHIBITS INCORPORATED.
Exhibits A and B, all attached hereto, are hereby incorporated into this
Agreement.

 

ARTICLE 2. LOANS

 

2.1      LINE OF CREDIT

 

(a)       Line of Credit. By and subject to the
terms of this Agreement, Lender agrees to make Advances to Borrower during the
period from and including the Effective Date to but excluding the Maturity
Date, and Borrower agrees to borrow from Lender, an aggregate principal sum up
to, but not exceeding, the Line of Credit, said sum to be evidenced by the Line
of Credit Note of even date herewith. Borrower may from time to time prior to
the Line of Credit Maturity Date borrow and partially or wholly repay its
outstanding borrowings on a revolving basis, and reborrow, subject to all the
limitations, terms and conditions contained herein; provided however, that the
total outstanding borrowings under the Line of Credit shall not at any time
exceed the maximum principal amount available under the Line of Credit.
Although the outstanding principal balance of the Line of Credit Note may be
zero from time to time, the Loan Documents will remain in full force and effect
with respect to the Line of Credit until the Line of Credit Maturity Date or
all Obligations relating to the Line of Credit are paid and performed in full.
Upon the occurrence of any Default or Unmatured Default, Lender may suspend or
terminate its Commitment to make Advances of the proceeds of the Line of Credit
in accordance with this Agreement without further action or notice to Borrower.
Advances under the Line of Credit shall be evidenced by the Line of Credit
Note.

 

(b)      Restriction on Availability.
Notwithstanding anything to the contrary, as of the Effective Date, the Line of
Credit Availability under the Line of Credit shall be restricted to One Million
Five Hundred Thousand Dollars ($1,500,000.00). From and after the period ending
December 31, 2005, the Line of Credit Availability during each fiscal quarter
of Borrower shall be determined as set forth in the this Section (with changes
to the Line of Credit Availability being effective the next fiscal quarter). As
used in this Agreement, the term “Total Leverage” shall be the Minimum Fixed
Charge Coverage Ratio as determined in Section 7.1 below, so if the Minimum
Fixed Charge Coverage Ratio is 4.0 to 1, the “Total Leverage” for purposes of
this Section is 4.0. In addition, if the Total Leverage in a succeeding fiscal
quarter of Borrower exceeds the Total Leverage in a prior fiscal quarter of
Borrower, the Line of Credit Availability will be reduced in accordance with
the formula set forth in this Section (so, for example, if Borrower’s Total
Leverage in the first fiscal quarter of 2006 is 3.6, and the Line of Credit
Availability during the next fiscal quarter is $1,750,000. If Borrower’s Total
Leverage increases to 4.0 in the second fiscal quarter of 2006, the Line of
Credit Availability during the next fiscal quarter shall be reduced to
$1,500,000).

 

	
  Total Leverage

  	
   

  	
  Line of Credit Availability

  	
   

  
	
  >4.0

  	
   

  	
  $1,500,000

  	
   

  
	
  >3.5 < 4.0

  	
   

  	
  $1,750,000

  	
   

  
	
  > 3.0 < 3.5

  	
   

  	
  $2,000,000

  	
   

  
	
  <3.0

  	
   

  	
  $2,500,000

  	
   

  

 

(c)       Use of Proceeds. The proceeds under the
Line of Credit shall be used to acquire the Assets and for the working capital
needs of Borrower.

 

2.2      LINE OF CREDIT COMMITMENT
FEE: UNUSED COMMITMENT FEE. Borrower shall pay to Lender on the
Effective Date a non-refundable commitment fee for the Line of Credit equal to
one half of one percent (.5%) of the amount of the Line of Credit, namely
Twelve Thousand Five Hundred Dollars ($12,500.00). In addition, Borrower shall
pay to Lender a fee equal to the percent

 

7

 

amount per annum
(computed on the basis of a 360-day year, actual days elapsed) specified in
Section 2.10(b) below on the average daily unused amount of the Line of Credit
Availability, which fee shall be calculated on a quarterly basis by Lender and
shall be debited by Lender from the Account on the first day of each calendar
quarter, commencing on October 1, 2005.

 

2.3      LINE OF CREDIT MATURITY
DATE. All sums then outstanding under the Line of Credit shall be
repaid in full on the Line of Credit Maturity Date.

 

2.4      TERM LOAN

 

(a)       Term Loan. By and subject to the terms
of this Agreement, upon the Effective Date, Lender agrees to lend to Borrower
and Borrower agrees to borrow from Lender, an aggregate principal sum up to,
but not exceeding, the Term Loan, said sum to be evidenced by the Term Loan
Note of even date herewith.

 

(b)      Use of Proceeds. The proceeds under the
Term Loan shall be used solely by Borrower to acquire the Assets and for the
working capital needs of Borrower.

 

2.5      TERM LOAN COMMITMENT FEE.
Borrower shall pay to Lender on the Effective Date a non-refundable commitment
fee for the Term Loan equal to one half of one percent (.5%) of the amount of
the Term Loan, namely Fifty-Two Thousand Five Hundred Dollars ($52,500.00).

 

2.6      TERM LOAN PRINCIPAL PAYMENTS.
Borrower shall make payments to reduce the outstanding principal outstanding on
the Term Loan commencing on the first Business Day in July, 2005, through the
Term Loan Maturity Date, at which time all outstanding principal and interest
under the Term Loan shall be due and payable in full, and any principal repaid
under the Term Loan may not be reborrowed. Commencing on the Effective Date and
continuing until July 1, 2007, Borrower shall make principal payments (as
determined by Lender) sufficient to amortize the outstanding principal under
the Term Loan in twenty-five (25) years. Commencing on August 1, 2007 and
continuing through the Term Loan Maturity Date, Borrower shall make principal
payments (as determined by Lender) sufficient to amortize the outstanding
principal under the Term Loan in twenty (20) years.

 

2.7      TERM LOAN MATURITY DATE.
All sums then outstanding under the Term Loan or otherwise due and owing under
this Agreement and the other Loan Documents shall be repaid in full on the Term
Loan Maturity Date.

 

2.8      LOAN DOCUMENTS. Borrower shall deliver
to Lender concurrently with this Agreement each of the documents, properly
executed and in recordable form, as applicable, described in Exhibit A
as Loan Documents, together with those documents described in Exhibit A
as Other Related Documents.

 

2.9      REQUESTS FOR ADVANCES.
All requests for Advances shall be pursuant to the draw request form attached
hereto as Exhibit B (a “Draw Request”). For purposes of requesting
Advances pursuant to this Section, Lender is authorized to rely upon the
telephonic request and acceptance of Nana Baffour as Borrower’s duly authorized
agent, or such additional authorized agents as Borrower shall designate in writing to Lender. Borrower’s telephonic
notices, requests and acceptances shall be directed to such officers of Lender
as Lender may from time to time designate.

 

2.10    INTEREST ON THE LOANS.

 

(a)       Interest Payments. Interest accrued on
the Line of Credit and the Term Loan shall be due and payable on the first Business
Day of each calendar month commencing on the first Business Day of July, 2005.

 

8

 

(b)      LIBOR Spread. The LIBOR Spread to be
used in calculating the Applicable LIBOR Rate with respect to interest accruing
on the Line of Credit and the Term Loan shall be determined as follows:

 

	
  Total Leverage

  	
   

  	
  LIBOR Spread

  	
   

  	
  Line of Credit 

  Unused Commitment Fee

  	
   

  
	
  >3.0

  	
   

  	
  2.60%

  	
   

  	
  0.500%

  	
   

  
	
  >2.5 < 3.0

  	
   

  	
  2.25%

  	
   

  	
  0.500%

  	
   

  
	
  >2.0 <2.5

  	
   

  	
  2.00%

  	
   

  	
  0.375%

  	
   

  
	
  >1.5 <2.0

  	
   

  	
  1.75%

  	
   

  	
  0.375%

  	
   

  
	
  <1.5

  	
   

  	
  1.50%

  	
   

  	
  0.250%

  	
   

  

 

(c)       Default Interest. Notwithstanding the
rates of interest specified in Sections 2.10(e) below, effective
immediately upon the occurrence and during the continuance of any Default, the
principal balance of the Loans then outstanding and, to the extent permitted by
applicable law, any interest payments on the Loans not paid when due, shall, at
the option of Lender, bear interest payable upon demand at the Default Rate.
All other amounts due Lender (whether directly or for reimbursement) under this
Agreement or any of the other Loan Documents if not paid when due, or if no
time period is expressed, If not paid within ten (10) days after demand, shall
likewise, at the option of Lender, bear interest from and after demand at the
Default Rate.

 

(d)      Computation of Interest. Interest shall
be computed on the basis of the actual number of days elapsed in the period
during which interest or fees accrue and a year of three hundred sixty (360)
days. In computing interest on the Loans, the date of the making of an Advance
under the Loans shall be included and the date of payment shall be excluded.
Notwithstanding any provision in this Section 2.10, interest in respect
of the Loans shall not exceed the maximum rate permitted by applicable law.

 

(e)       Effective Rate. The “Effective Rate”
upon which interest shall be calculated for the Loans shall be one or more of
the following:

 

(i)        Provided no Default exists
under this Agreement, the Effective Rate shall be the Applicable LIBOR Rate.

 

(ii)       During such time as a
Default exists under this Agreement, or from and after the date on which all
sums owing under the Loans become due and payable by acceleration or otherwise,
then at the option of Lender, the interest rate applicable to the then
outstanding principal balance of the Loans shall be the Default Rate.

 

2.11    PAYMENTS.

 

(a)       Credit for Principal Payments. Any
payment made upon the outstanding principal balance of the Loans shall be
credited as of the Business Day received, provided such payment is received by
Lender no later than noon (Mountain Standard Time or Mountain Daylight Time, as
applicable) and constitutes immediately available funds. All payments due to
Lender under this Agreement, whether at the Maturity Date or otherwise, shall
be paid in immediately available funds. Any principal payment received after
said time or which does not constitute immediately available funds shall be
credited upon such funds having become unconditionally and immediately
available to Lender.

 

(b)          Collection of Payments. Borrower
authorizes Lender to collect all principal, interest, fees and other charges
due under the Loan Documents by charging the Account, or any other deposit
account maintained by Borrower with Lender, for the full amount thereof. Should

 

9

 

there be insufficient
funds in the Account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.

 

(c)       Taxes Generally.
All payments by the Borrower of principal of, and interest on, the Loans and
all other Obligations shall be made free and clear of and without deduction for
any present or future excise, stamp or other Taxes, fees, duties, levies,
imposts, charges, deductions, withholdings or other charges of any nature
whatsoever imposed by any Governmental Authority, but excluding (i) franchise
Taxes, (ii) any Taxes (other than withholding taxes) that would not be imposed
but for a connection between Lender and the jurisdiction imposing such Taxes
(other than a connection arising solely by virtue of the activities of Lender
pursuant to or in respect of this Agreement or any other Loan Document), (iii)
any Taxes imposed on or measured by any Lender’s assets, net income, receipts
or branch profits, and (iv) any Taxes arising after the Effective Date solely
as a result of or attributable to a Lender changing its designated lending
office after the date such Lender becomes a party hereto. If any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, then the Borrower will:

 

(i)        pay directly to the
relevant Governmental Authority the full amount required to be so withheld or
deducted;

 

(ii)       promptly forward to the
Lender an official receipt or other documentation satisfactory to the Lender
evidencing such payment to such Governmental Authority; and

 

(iii)      pay to Lender for its
account or the account of the applicable Lender, as the case may be, such
additional amount or amounts as is necessary to ensure that the net amount
actually received by Lender will equal the full amount that Lender would have
received had no such withholding or deduction been required.

 

(d)       Tax Indemnification.
If the Borrower fails to pay any Taxes when due to the appropriate Governmental
Authority or fails to remit to Lender for its account the required receipts or
other required documentary evidence, the Borrower shall indemnify Lender for
any incremental Taxes, interest or penalties that may become payable by Lender
as a result of any such failure. For purposes of this Section, a distribution
hereunder by Lender shall be deemed a payment by the Borrower.

 

2.12    LENDER’S ACCOUNTING.
Lender shall maintain a loan account (the “Loan Account”) on its books in which
shall be recorded all Advances and repayments of principal and payments of
accrued interest, as well as payments of fees required to be paid pursuant to
this Agreement. All entries in the Loan Account shall be made in accordance
with Lender’s customary accounting practices as in effect from time to time.
Monthly or at such other interval as is customary with Lender’s practice,
Lender will render a statement of the Loan Account to Borrower. Each such
statement shall be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein (absent manifest error).

 

2.13    APPRAISAL LIMITATION.
The aggregate amount of the Loans is subject to a the following appraisal
limitation: 85% of the appraised value of the Real Property; 85% of the book
value Borrower’s accounts receivable, 50% of the book value of any equipment
owned by Borrower and 50% of the book value of any generators owned or acquired
by Borrower (the “Appraised Value Limitation”). Lender, from time to time while
the Loan remains outstanding, may determine the Appraised Value Limitation, and
if the outstanding principal of the Loans exceeds such Appraised Value
Limitation, require Borrower to reduce the outstanding principal of the Loans
to comply with the Appraised Value Limitation within one (1) year of Lenders’
request.

 

10

 

Failure of Borrower to so
reduce the outstanding principal of the Loans within such one (1) year period
shall be deemed a Default.

 

ARTICLE 3. CONDITIONS PRECEDENT

 

3.1       CONDITIONS PRECEDENT TO
INITIAL EXTENSION OF CREDIT.
The obligation of Lender to extend any credit contemplated by this Agreement is
subject to the fulfillment to Lender’s satisfaction of all of the following
conditions:

 

(a)       There shall exist no
Default, as defined in this Agreement, or Default as defined in any of the
other Loan Documents or in the Other Related Documents, or Unmatured Default;
and

 

(b)      Lender shall have received
all Loan Documents, other documents, instruments, policies, and forms of
evidence or other materials reasonably requested by Lender under the terms of
this Agreement or any of the other Loan Documents; and

 

(c)       There shall have been no
material adverse change, as reasonably determined by Lender, in the financial
condition or business of Borrower, nor any material decline, as reasonably
determined by Lender, in the market value of a substantial or material portion
of the assets of Borrower; and

 

(d)      Borrower shall have
delivered to Lender evidence of insurance coverage on all Borrower’s property,
in form, substance, amounts, covering risks and issued by companies reasonably
satisfactory to Lender, with loss payable endorsements in favor of Lender.

 

3.2      CONDITIONS PRECEDENT TO
EACH ADVANCE. Lender’s obligation to make each Advance or take any
other action under the Loan Documents shall be subject at all times to
satisfaction of each of the following conditions precedent:

 

(a)       The representations and warranties contained herein and in each of the
other Loan Documents shall be true on and as of the date of the signing of this
Agreement and on the date of each Advance by Lender pursuant hereto, with the
same effect as though such representations and warranties had been made
on and as of each such date, and on each such date, no Default or Unmatured
Default, shall have occurred and be continuing or shall exist; and

 

(b)      Lender shall have received all additional documents which may be required
in connection with such Advance.

 

3.3      ACCOUNT, PLEDGE AND ASSIGNMENT. All
Advances under the Line of Credit and Term Loan shall be deposited into the
Account or otherwise disbursed to or for the benefit or account of Borrower
under the terms of this Agreement. As additional security for Borrower’s
performance under the Loan Documents, Borrower hereby irrevocably pledges and
assigns to Lender all monies at any time deposited in the Account.

 

ARTICLE 4. REPRESENTATIONS AND WARRANTIES

 

As a
material inducement to Lender’s entry into this Agreement, Borrower represents
and warrants to Lender as of the Effective Date and continuing thereafter that:

 

4.1      LEGAL STATUS. Borrower is a profit
corporation, duly organized and existing and in good standing under the laws of
the State of Delaware, and is qualified or licensed to do business (and is

 

11

 

in
good standing as a foreign corporation, if applicable) in the State of Utah and
in all other jurisdictions in which such qualification or licensing is required
or in which the failure to so qualify or to be so licensed could have a
material adverse effect on Borrower.

 

4.2      AUTHORIZATION AND
VALIDITY.  This Agreement
and each Loan Document and Other Related Document have been duly authorized,
and upon their execution and delivery in accordance with the provisions hereof
will constitute legal, valid and binding agreements and obligations of Borrower
or the party which executes the same, enforceable in accordance with their
respective terms.

 

4.3      BORROWER SOLVENCY.
Upon acquisition of the Assets, Borrower shall be solvent under GAAP.

 

4.4      NO VIOLATION. The
execution, delivery and performance by Borrower of each of the Loan Documents
do not violate any provision of Borrower’s statutory charter or any law or
regulation binding upon Borrower, or result in any breach of or default under
any contract, obligation, indenture or other instrument to which Borrower is a
party or by which Borrower may be bound.

 

4.5      LITIGATION. There
are no pending, or to the best of Borrower’s knowledge threatened, actions,
claims, investigations, suits or proceedings by or before any Governmental
Authority, arbitrator, court or administrative agency which could have a
material adverse effect on the financial condition or operation of Borrower
other than those disclosed by Borrower to Lender in writing prior to the date
hereof.

 

4.6      CORRECTNESS OF FINANCIAL
STATEMENT.  The financial
statement of Consonus, Inc., a Utah corporation, a true copy of which has been
delivered by Borrower to Lender prior to the date hereof, (a) is complete and correct
and presents fairly the financial condition of Consonus, Inc., (b) discloses
all liabilities of Consonus, Inc. that are required to be reflected or reserved
against under GAAP, whether liquidated or unliquidated, fixed or contingent,
and (c) has been prepared in accordance with GAAP. Since the date of such
financial statement there has been no material adverse change in the financial
condition of Consonus, Inc., nor has Consonus, Inc. mortgaged, pledged, granted
a security interest in or otherwise encumbered any of its assets or properties
except in favor of Lender or as otherwise permitted by Lender in writing.

 

4.7      NO SUBORDINATION.
There is no agreement, indenture, contract or instrument to which Borrower is a
party or by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower’s obligations subject to this Agreement to
any other obligation of Borrower.

 

4.8      ERISA. Borrower
is in compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time (“ERISA”); Borrower has not violated in any material respect any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under GAAP.

 

4.9      OTHER OBLIGATIONS.
Borrower is not in default on any obligation for borrowed money, any purchase
money obligation or any other material lease, commitment, contract, instrument
or obligation.

 

4.10    NO MATERIAL ADVERSE CHANGE.  There has been no material adverse change
in the financial condition of Borrower since the dates of the latest financial
statements furnished to Lender

 

12

 

and, except as otherwise
disclosed to Lender in writing, Borrower has not entered into any material
transaction which is not disclosed in such financial statements.

 

4.11    ACCURACY. All
reports, documents, instruments, information and forms of evidence delivered to
Lender concerning the Loans or security for the Loans or required by the Loan
Documents are accurate, correct and sufficiently complete to give Lender true
and accurate knowledge of their subject matter, and do not contain any material
misrepresentation or omission.

 

4.12    BUSINESS LOAN. The Loans are a business loan transaction in
the stated amount solely for the purpose of carrying on the business of
Borrower and none of the proceeds of the Loans will be used for the personal,
family or agricultural purposes of the Borrower.

 

4.13    SPECIAL REPRESENTATIONS AND
WARRANTIES REGARDING HAZARDOUS MATERIALS. Without in any way limiting the other
representations and warranties set forth in this Agreement and after reasonable investigation and
inquiry, Borrower hereby specially represents and warrants to the best of
Borrower’s knowledge as of the date of this Agreement as follows:

 

(a)       Hazardous Materials. The Real Property
is not a site for the use, generation, manufacture, storage, treatment,
release, threatened release, discharge, disposal, transportation or presence of
any Hazardous Materials.

 

(b)        Hazardous Materials Laws. The Real Property is in compliance with all Hazardous Materials
Laws.

 

(c)       Hazardous Materials Claims. There are no Hazardous Materials Claims pending or threatened against Borrower or
the Real Property.

 

ARTICLE 5. COLLATERAL

 

As security for all
Obligations of Borrower to Lender, Borrower hereby grants to Lender security
interests of first priority in all of the Collateral as more specifically set
forth in the Security Instruments. All of the foregoing shall be evidenced by
and subject to the terms of the Security Instruments and such other such
security agreements, financing statements, pledges, collateral assignments and
other documents as Lender shall reasonably require, all in form and substance
satisfactory to Lender. Borrower shall reimburse Lender immediately upon demand
for all reasonable costs and expenses incurred by Lender in connection with any
of the foregoing security, including without limitation, any filing fees.

 

ARTICLE 6. COVENANTS OF BORROWER

 

Borrower covenants that
so long as any Lender remains committed to extend credit to Borrower pursuant
hereto, or any Obligations of Borrower to Lender under any of the Loan
Documents remain outstanding, and until payment in full of all Obligations of
Borrower subject hereto, Borrower shall, unless Lender otherwise consents in
writing:

 

6.1      PUNCTUAL PAYMENTS.
Punctually pay all principal, interest, fees or other liabilities due under any
of the Loan Documents at the times and place and in the manner specified
therein, and immediately upon demand by Lender, the amount by which the
outstanding principal balance of the Line of Credit at any time exceeds any
limitation on borrowings applicable thereto.

 

6.2      ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with GAAP, and permit any representative of Lender, at any
reasonable time, to inspect, audit and examine such books and records, upon
prior reasonable notice and without unreasonable interference with Borrower’s
business to make copies of the same, and to inspect the properties of Borrower.

 

13

 

6.3      FINANCIAL STATEMENTS. Provide to Lender all of the following, in form and detail satisfactory to Lender:

 

(a)   not later than one hundred twenty (120) days
after and as of the end of each fiscal year, an audited, unqualified,
consolidated financial statement of Borrower, which shall include, without
limitation, an income statement,
balance sheet and statement of cash flows, which shall have been audited by an
accounting firm mutually acceptable to Lender and Borrower, and which shall be
accompanied by the unqualified report of such accounting firm thereon;

 

(b)   not later than forty-five (45) days after the
end of each fiscal quarter, a company-prepared consolidated financial statement of Borrower, which shall
include, without limitation, an income statement, balance sheet, and statement
of cash flows;

 

(c)   contemporaneously with each annual and
quarterly financial statement of Borrower required hereby, a certificate of the executive director or president or
chief financial officer of Borrower that said financial statements fairly
present in all material respects the financial condition of Borrower as of the
date thereof and that there exists no Default nor any Unmatured Default; and

 

(d)   from time to time such other information as Lender may reasonably request.

 

6.4      COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of Borrower’s business; and comply with the provisions of all other
documents pursuant to which
Borrower is and/or which govern Borrower’s continued existence and with the
requirements of all laws, rules, regulations and orders of any Governmental
Authority applicable to Borrower and/or its business.

 

6.5      INSURANCE. Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that
of Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers’ compensation, with all such
insurance carried with companies and in amounts reasonably satisfactory to
Lender, and deliver to Lender from time to time at Lender’s request schedules
setting forth all insurance then in effect.

 

6.6      TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good
faith contest or as to which a bona fide
dispute may arise, and (b) for
which Borrower has made provision, to Lender’s satisfaction, for eventual
payment thereof in the event Borrower is obligated to make such payment.

 

6.7      LITIGATION. Promptly give notice in writing to Lender of
any litigation pending or threatened against Borrower with a claim in excess of
Twenty-Five Thousand Dollars ($25,000).

 

6.8      NOTICE TO LENDER. Promptly
(but in no event more than five (5) days after the occurrence of each such
event or matter) give written notice to Lender in reasonable detail of: (a) the
occurrence  of any Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute a Default; (b) any change in the name or the
organizational structure of Borrower; or (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan.

 

6.9      SUBORDINATION OF OTHER LOANS. All notes and loans from shareholders of
Borrower (including, without limitation, the Questar Note) shall be subordinate to the Obligations. Except with the respect
to the Questar Note (the repayment of which shall be governed by the terms and
conditions of the Subordination and Standstill Agreement executed among Lender,
Borrower and

 

14

 

Questar), Lender will permit Borrower to make payments thereunder provided that no
Default or Unmatured Default, shall have occurred and be continuing or shall exist.

 

6.10    FURTHER ASSURANCES. Upon Lender’s reasonable request and at
Borrower’s sole cost and expense, Borrower shall execute, acknowledge and
deliver any other instruments and perform any other acts necessary, desirable
or proper, as reasonably determined by Lender, to carry out the purposes of
this Agreement and the other Loan Documents or to perfect and preserve any
liens created by the Loan Documents.

 

6.11    ASSIGNMENT.
Borrower shall not assign Borrower’s interest under any of the Loan Documents,
or in any monies due or to become due thereunder, and any assignment without
such consent shall be void. In this regard, Borrower acknowledges that Lender
would not extend the Loans except in reliance on Borrower’s expertise,
reputation, and prior experience.

 

6.12    INSPECTIONS. Permit representatives of Lender during
business hours, upon prior reasonable notice, without unreasonable interference to Borrower’s business, and to the extent
reasonably requested to (a) visit and inspect the properties (including but not
limited to the Real Estate), books and records of the Borrower, and (b) discuss
with its principal officers and
its independent certified accountants its affairs, finances and accounts.

 

6.13    HAZARDOUS MATERIALS COVENANTS. Borrower agrees as follows:

 

(a)       No Hazardous Activities. Borrower shall not cause or permit Borrower’s
real property (including but not limited to the Real Estate) to be used as a
site for the use, generation, manufacture, storage, treatment, release,
discharge, disposal,
transportation or presence of any Hazardous Materials.

 

(b)      Compliance. Borrower shaft comply and cause Borrower’s
real property (including but not limited to the Real Estate) to comply with all
Hazardous Materials Laws.

 

(c)       Notices. Borrower shall promptly notify Lender in
writing of: (i) the discovery of any Hazardous Materials on, under or about Borrower’s real property (including but not limited to
the Real Estate); (ii) any knowledge by Borrower that Borrower’s real property
does not comply with any Hazardous Materials Laws; and (iii) any Hazardous
Materials Claims.

 

(d)      Remedial Action. In response to the presence of any Hazardous
Materials on, under or about Borrower’s real property (including but not limited to the Real Estate), Borrower shall promptly take, at
Borrower’s sole expense, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree, settlement or compromise in
respect to any Hazardous Materials Claims.

 

ARTICLE 7. FINANCIAL COVENANTS

 

Borrower covenants that
so long as any Lender remains committed to extend credit to Borrower pursuant
hereto; or any Obligation of Borrower to Lender under any of the Loan Documents
remains outstanding, and until indefeasible payment in full of all Obligations
of Borrower subject hereto, Borrower shall maintain Borrower’s financial
condition as follows in accordance with GAAP (except to the extent modified by
the definitions herein), with compliance determined commencing with Borrower’s
financial statements for the period ending June 30, 2004:

 

7.1      MINIMUM FIXED CHARGE
COVERAGE RATIO. Borrower shall maintain at all times a “Minimum Fixed
Charge Coverage Ratio” which shall be no less than 1.15 to 1 for the last two
(2) quarters of Borrower’s fiscal year ending December 31, 2005; 1.20 to 1 for
Borrower’s fiscal year ending December 31, 2006; and 1.25 to 1 thereafter. The
Minimum Fixed Charge Coverage Ratio shall be calculated utilizing a ratio
wherein (a) the numerator shall be: EBITDA plus operating lease

 

15

 

expense minus (i)
maintenance capital expenditures of $300,000 during each fiscal year period,
(ii) income taxes paid or payable, (iii) dividends and distributions and (b)
the denominator shall be (i) interest paid or payable, plus (ii)
operating lease expense, plus (iii) scheduled amortization of long term
debt (all as calculated in accordance with GAAP). This covenant will be
measured on a quarterly basis, beginning with the first full quarter of
operation for 4 quarters, thereafter on a rolling 4-quarter basis.

 

7.2      TOTAL FUNDED DEBT. Borrower shall maintain at all times the ratio
of total funded debt (excluding the Questar Note and as calculated in
accordance with GAAP) to EBITDA, measured as of the last day of each fiscal
quarter of Borrower using EBITDA for the four quarters then ended, of not more
than 4.25 to 1 last two (2) quarters of Borrower’s fiscal year ending December
31, 2005 and Borrower’s fiscal year ending December 31, 2006; 4.0 to 1 for
Borrower’s fiscal year ending December 31, 2007, and first two (2) quarters of
Borrower’s fiscal year ending December 31, 2008; and 3.5 to 1 for the last two
(2) quarters of Borrower’s fiscal year ending December 31, 2008, and
thereafter. The first measurement of Borrower’s compliance with this covenant
will be for Borrower’s fiscal quarter ending December 31, 2005.

 

7.3      NET WORTH. Borrower shall maintain at all times a Net
Worth not less than the sum of (i) Six Million Dollars ($6,000,000.00) plus
(ii) fifty percent (50%) of the cumulative quarterly net income subsequent to
the Closing, with no deduction for any quarterly net loss, measured on as of
the last day of each fiscal quarter of Borrower (all as calculated in accordance with GAAP).

 

ARTICLE 8. NEGATIVE COVENANTS

 

Borrower further
covenants that so long as Lender remains committed to extend credit to Borrower
pursuant hereto, or any Obligations (liquidated or unliquidated) of Borrower to
Lender under any of the Loan Documents remain outstanding, and until payment in
full of all Obligations of Borrower subject hereto, Borrower will not without
Lender’s prior written consent:

 

8.1      USE OF FUNDS. Use any of the proceeds of the Line of Credit hereunder except for
the purposes stated in Section 2.1 (d) hereof.

 

8.2      MATERIAL AGREEMENTS. (a) Enter into, surrender or terminate any
material agreement to which it is a party (unless the other party thereto is in
material default and the termination of such agreement would be commercially
reasonable), (b) significantly increase or consent to the significant increase
of the amount of any charges under any material agreement to which it is a
party, except as provided therein or on an arms’-length basis and commercially reasonable terms; or (c) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under any material agreement to which it is a party in any material respect,
except on an arms’-length basis and commercially reasonable terms.

 

8.3      ACCOUNTING METHOD. Modify or change its method of accounting or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower’s accounting records without
said accounting firm or service bureau agreeing to provide Lender information regarding
Borrower’s financial condition.

 

8.4      OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
Indebtedness resulting from borrowings, loans or advances, whether secured or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the Obligations of Borrower to Lender, (b) the Questar Note, (c) any
Indebtedness resulting from
borrowings in the ordinary course of Borrower’s business, in an amount not to
exceed $50,000.00 for any single borrowing and $150,000.00 for all such
borrowings in the aggregate; and (d) any other Indebtedness of Borrower
existing as of, and disclosed to Lender prior to, the date hereof.

 

16

 

8.5      MERGER, CONSOLIDATION,
TRANSFER OF ASSETS. Merge
into or consolidate with any other entity; make any substantial change in the
nature of Borrower’s business as conducted as of the date hereof; acquire all
or substantially all of the
assets of any other entity; nor sell, lease, transfer or otherwise dispose of
all or a substantial or material portion of Borrower’s assets except in the
ordinary course of its business.

 

8.6      GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security
for, any liabilities or obligations of any other person or entity, except any
of the foregoing in favor of Lender.

 

ARTICLE 9. DEFAULTS AND REMEDIES

 

9.1      DEFAULT. The occurrence of any one or more of the
following shall constitute an event of default (“Default”) under this Agreement
and the other Loan Documents:

 

(a)       Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents; or

 

(b)      Any financial statement or certificate furnished to Lender in connection
with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan
Document, shall prove to be incorrect, false or misleading in any material
respect when furnished or made; or

 

(c)       Any default in the
performance of or compliance with any obligation, agreement or other provision
contained herein or in any other Loan Document (other than those referred to in
subsections (a) and (b) above), and with respect to any such default which by
its nature can be cured, such default shall continue for a period of twenty
(20) days from its occurrence; or

 

(d)      Any default in the payment or performance of any obligation, or the
occurrence of any defined event of default, under the terms of any contract or instrument (other than any of the Loan
Documents) pursuant to which Borrower has incurred any debt or other liability
to any person or entity, including any Lender; or

 

(e)       The filing of a notice of judgment lien against Borrower; or
the recording of any abstract of judgment against Borrower in any county in
which Borrower has an interest in real property; or the service of a notice of
levy and/or of a writ of attachment or execution, or other like process,
against the assets of Borrower; or the entry of a judgment against Borrower; or

 

(f)       Borrower shall become insolvent, or shall suffer or consent to or apply
for the appointment of a receiver, trustee, custodian or liquidator of itself
or any of its property, or shall make a general assignment for the benefit of creditors; Borrower shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Code, or
under any state or federal law granting relief to debtors, whether now or
hereafter in effect; or any involuntary petition or proceeding pursuant to the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower, or Borrower shall file an answer admitting the jurisdiction
of the court and the material allegations of any involuntary petition; or
Borrower shall be adjudicated a bankrupt, or an order for relief shall be
entered against Borrower by any court of competent jurisdiction under the
Bankruptcy

 

17

 

Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors; or

 

(g)      Any court, government or
governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of
the property of Borrower which; when taken together with all other property of
Borrower so condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any such action
occurs, constitutes a substantial portion of such property; or

 

(h)      Borrower, or any Person on behalf of Borrower, shall
claim or assert that the Loan Documents
are not legal, valid and binding agreements enforceable against Borrower in
accordance with their respective terms; or the Loan Documents shall in any way
be terminated (except in accordance
with their terms) or become or be judicially declared ineffective or
inoperative or shall in any way cease to give or provide the respective liens, security interests, rights, titles,
interests, remedies, powers or privileges intended to be created thereby; or

 

(i)        Any material litigation or proceeding is commenced before any
Governmental Authority against or affecting the Borrower or any other property of the Borrower or any part thereof
and such litigation or proceeding is not defended diligently and in good faith by the Borrower; or

 

(j)        Commencement of any action
or proceeding which seeks as one of its remedies the dissolution of Borrower
and such action or proceeding is not
defended diligently and in good faith by Borrower, or a final judgment is
entered against Borrower
decreeing the dissolution of Borrower; or

 

(k)       Any Person shall obtain an
order or decree in any court of competent jurisdiction enjoining or prohibiting Lender, or Borrower
from carrying out the terms and conditions of any of the Loan Documents; in either case, if such order or decree is
not vacated or stayed within ten (10) days after Borrower receives written
notice of the filing thereof; or

 

(l)        Borrower assigns this Agreement, any of the other Loan Documents, any Advance or any
right to receive an Advance under this Agreement in violation of Section
10.11; or

 

(m)      Borrower fails to pay any Rate Management Obligation
when due or the breach by the Borrower of any term, provision or condition
contained in any Rate Management Transaction or any transaction of the type
described in the definition of “Rate Management Transactions,” whether or not
any Lender or Affiliate of a Lender is a party thereto; or

 

(n)      Any default shall occur under
the Questar Note; or

 

(o)      There shall exist or occur any event or condition which impairs, or is
substantially likely to impair, the prospect of payment or performance by Borrower of its obligations under any of
the Loan Documents.

 

9.2      ACCELERATION UPON DEFAULT;
REMEDIES

 

(a)       Upon the occurrence of any Default described in Section 9.1(f)
with respect to Borrower, the obligation, if any, of Lender to make Advances hereunder or extend any further credit under any of the Loan
Documents shall automatically terminate and the Obligations shall immediately
become due and payable without presentment, demand, protect or notice of
dishonor, all of which are hereby expressly waived by Borrower, without any
election or

 

18

 

action
on the part of Lender. Upon the occurrence of any other Default, (i) Lender may
declare all Obligations of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, and without notice to be immediately
due and payable without presentment, demand, protest or notice of dishonor, all
of which are hereby expressly waived by Borrower; (ii) the obligation, if any,
of Lender to make Advances hereunder or extend any further credit under any of
the Loan Documents shall immediately cease and terminate; and (iii) Lender
shall have all rights, powers and remedies available under each of the Loan
Documents, or accorded by law, including without limitation the right to
appoint a receiver, resort to any or all security for any credit subject hereto
and to exercise any or all of the rights of a beneficiary or secured party
pursuant to applicable law. All rights, powers and remedies of Lender may be
exercised at any time by Lender and from time to time after the occurrence of a
Default, are cumulative and not exclusive, and shall be in addition to any
other rights, powers or remedies provided by law or equity.

 

(b)      In addition to the actions
set forth in clause (a) above, upon the occurrence of a Default, Lender may
exercise any and all of the rights and remedies provided under any and all of
the Loan Documents as specified therein, including (i) the right to appoint a
receiver; (ii) the right of Lender to apply any of Borrower’s funds in their possession
to the outstanding Obligations, whether or not such Obligations are then due
and payable; (iii) the right of Lender to perform Borrower’s obligations under
this Agreement; (iv) to the extent permitted by law, the right of Lender to add
any accrued but unpaid interest on the Obligations from time to time to
principal and charge interest on such capitalized interest from the date it is
added to principal until it is paid in full; and (v) the right of Lender to
charge interest on any or all of the Obligations at the Default Rate, provided
the Default Rate will not exceed the maximum rate permitted by applicable law
under any circumstances. All sums expended by Lender for the foregoing
purposes, or in the exercise of the foregoing rights and remedies (including
attorneys’ fees and costs) shall be deemed to have been disbursed to and
borrowed by Borrower and shall be evidenced by the Loan Documents.

 

9.3      RIGHT OF LENDER TO TAKE
CERTAIN ACTIONS; POWER OF ATTORNEY. Without in any way limiting Lender’s
other rights and remedies under this Agreement and the other Loan Documents, in
the event of a Default, Borrower hereby constitutes and appoints Lender, or
independent contractors selected by Lender, as its true and lawful
attorney-in-fact with full power of substitution, for the purposes of
performing Borrower’s obligations under this Agreement and the other Loan
Documents, in the name of Borrower. It is understood and agreed that the
foregoing power of attorney shall be deemed to be a power coupled with an interest
which cannot be revoked until the repayment in full in cash of the Obligations
and the termination of the Commitment. Borrower acknowledges that Lender may
(but is not obligated to) exercise any of the foregoing powers. All sums
expended by Lender for the foregoing purposes, or in the exercise of the
foregoing rights and remedies (including attorneys’ fees and costs), shall be
deemed to have been disbursed to and borrowed by Borrower and shall be
evidenced by the Loan Documents.

 

9.4      APPLICATION OF PAYMENTS
AFTER DEFAULT. From and after the date on which Lender has taken any
action pursuant to this Article 9 and until all of the Obligations have
been paid in full, any and all proceeds or other funds received by Lender from
(i) Borrower or any other Person, or (ii) the exercise of any other right or
remedy by Lender, shall, in each case, be applied as follows:

 

(a)       first, to pay late charges
and to pay or reimburse Lender for out-of-pocket costs, expenses and
disbursements (including (i) reasonable attorneys’ fees and legal expenses
actually incurred by Lender in connection with exercising their rights and
remedies and collecting any Obligations and (ii) Advances or disbursements made
subsequent to a Default by Lender pursuant to the terms of this Agreement or
any of the other Loan Documents);

 

(b)      second, to the repayment of
all of the Obligations in any order determined by Lender; and

 

(c)       the balance, if any, as
required by law.

 

19

 

9.5      REPAYMENT OF FUNDS
ADVANCED. Any funds expended by Lender in the exercise of its rights or
remedies under this Agreement and the other Loan Documents shall be payable to
Lender upon demand, together with interest at the rate applicable to the
principal balance of the Note from the date the funds were expended.

 

9.6      RIGHTS CUMULATIVE, NO
WAIVER. All Lender’s rights and remedies provided in this Agreement and
the other Loan Documents, together with those granted by law or at equity, are
cumulative and may be exercised by Lender at any time. Lender’s exercise of any
right or remedy shall not constitute a cure of any Default unless all sums then
due and payable to Lender under the Loan Documents are repaid and Borrower has
cured all other Defaults. No waiver shall be implied from any failure of Lender
to take, or any delay by Lender in taking, action concerning any Default or
failure of condition under the Loan Documents, or from any previous waiver of
any similar or unrelated Default or failure of condition. Any waiver or approval
under any of the Loan Documents must be in writing and shall be limited to its
specific terms.

 

ARTICLE 10. MISCELLANEOUS PROVISIONS

 

10.1    AMENDMENTS AND WAIVERS.
Except as otherwise expressly provided in this Agreement, (i) any consent or
approval required or permitted by this Agreement or in any Loan Document to be
given by Lender may be given, (ii) any term of this Agreement or of any other
Loan Document may be amended, (iii) the performance or observance by the
Borrower or any other Lender of any terms of this Agreement or such other Loan
Document, and (iv) the continuance of any Default may be waived with, but only
with, the written consent of Lender.

 

10.2    INDEMNITY. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD
HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND
ASSIGNS (THE “INDEMNIFIED PARTIES”) FROM AND AGAINST ANY AND ALL LOSSES,
DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR
OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND
EXPENSES) WHICH ANY OF THE INDEMNIFIED PARTIES MAY INCUR AS A DIRECT OR
INDIRECT CONSEQUENCE OF: (a) THE PURPOSE TO WHICH BORROWER APPLIES THE LINE OF
CREDIT PROCEEDS; (b)THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND
WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; OR (c) ANY
FAILURE AT ANY TIME OF ANY OF BORROWER’S REPRESENTATIONS OR WARRANTIES TO BE
TRUE AND CORRECT. BORROWER SHALL IMMEDIATELY PAY TO ANY OF THE INDEMNIFIED
PARTIES UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH
INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF
INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER’S DUTY AND
OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES
SHALL SURVIVE CANCELLATION OF THE NOTE.

 

10.3    FORM OF DOCUMENTS.
The form and substance of all documents, instruments, and forms of evidence to
be delivered to Lender under the terms of this Agreement and any of the other
Loan Documents shall be subject to Lender’s approval and shall not be modified,
superseded or terminated in any respect without Lender’s prior written
approval.

 

10.4    NO THIRD PARTIES BENEFITED.
No person other than Lender and Borrower and their permitted successors and
assigns shall have any right of action under any of the Loan Documents. This
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and assigns.

 

10.5    NOTICES. Except as
otherwise stated in this Agreement, all notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address or facsimile number:

 

20

 

	
  BORROWER:

  	
   

  	
  Consonus Acquisition Corp.

  245 Park Avenue, 39th Floor

  New York, New York 10167

  Attn: Nana Baffour

  Facsimile No. (212) 792-4001

  
	
   

  	
   

  	
   

  
	
  LENDER:

  	
   

  	
  U.S. Bank National Association

  PD-UT-GT6

  15 W. South Temple, 6th Floor

  Salt Lake City, Utah 84101

  Attn: Terry L. Grant

  Facsimile No. (801) 534-6008

  

 

or
to such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three (3) days after deposit in the U.S.
mail, first class and postage prepaid; and (c) if sent by facsimile, upon receipt.

 

10.6    ACTIONS.  Borrower agrees that Lender, in exercising
the rights, duties or liabilities of Lender or Borrower under the Loan
Documents, may commence, appear in or defend any action or proceeding
purporting to affect the Loan Documents and Borrower shall immediately
reimburse Lender upon demand for all such expenses so incurred or paid by
Lender, including, without limitation, reasonable attorneys’ fees and expenses
and court costs.

 

10.7    RELATIONSHIP OF PARTIES.
The relationship of Borrower and Lender under the Loan Documents is, and shall
at all times remain, solely that of borrower and lender, and Lender does not
undertake nor assume any responsibility or duty to Borrower or to any third
party, except as expressly provided in this Agreement and the other Loan
Documents. Lender shall not have any fiduciary responsibilities to Borrower.
Lender undertakes no responsibility to Borrower to review or inform Borrower of
any matter in connection with any phase of Borrower’s business or operations.
Borrower agrees that Lender shall not have liability to Borrower (whether
sounding in tort, contract or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any
act, omission or event occurring in connection therewith, unless it is
determined in a final non-appealable judgment by a court of competent
jurisdiction that such losses resulted from the gross negligence or willful
misconduct of Lender. Lender shall not have any liability with respect to, and
Borrower hereby waives, releases and agrees not to sue for, any special,
indirect, consequential or punitive damages suffered by Borrower in connection
with, arising out of, or in any way related to the Loan Documents or the
transactions contemplated thereby.

 

10.8    DELAY OUTSIDE LENDER’S
CONTROL. Lender shall not be liable in any way to Borrower or any third
party for Lender’s failure to perform or delay in performing under the Loan
Documents (and Lender may suspend or terminate all or any portion of Lender’s
obligations under the Loan Documents) if such failure to perform or delay in
performing results directly or indirectly from, or is based upon, the action,
inaction, or purported action, of any Governmental Authority, or because of
war, rebellion, insurrection, strike, lock-out, boycott or blockade (whether
presently in effect, announced or in the sole judgment of Lender deemed
probable), or from any Act of God or other cause or event beyond Lender’s
control.

 

10.9    ATTORNEYS’ FEES AND
EXPENSES; ENFORCEMENT. If any attorney is engaged by Lender to enforce
or defend any provision of this Agreement, any of the other Loan Documents or
Other Related Documents, or as a consequence of any Default under the Loan
Documents, with or without the filing of any legal action or proceeding, and
including, without limitation, any fees and expenses incurred in any bankruptcy
proceeding of the Borrower, then Borrower shall immediately pay to Lender, upon
demand, the amount of all reasonable attorneys’ fees and expenses and all

 

21

 

costs incurred by Lender
in connection therewith, together with interest thereon from the date of such
demand until paid at the rate of interest applicable to the principal balance
of the Note as specified therein.

 

10.10  IMMEDIATELY AVAILABLE FUNDS.
Unless otherwise expressly provided for in this Agreement, all amounts
payable by Borrower to Lender shall be payable only in United States currency,
immediately available funds.

 

10.11  SUCCESSORS AND ASSIGNS.

 

(a)        Generally. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and assigns permitted hereby, except
that Borrower may not assign or otherwise transfer any of is rights or
obligations under the Loan Documents without the prior written consent of
Lender (and any such assignment or transfer to which Lender has not consented shall
be void).

 

(b)        Lender Assignments, Participations. Lender
reserves the right to sell, assign, transfer, negotiate or grant participations
in all or any part of, or any interest in, Lender’s rights and benefits under
each of the Loan Documents. In connection therewith, Lender may disclose all
documents and information which Lender now has or may hereafter acquire
relating to any credit subject hereto, Borrower or its business, or any
Collateral required hereunder.

 

10.12  SETOFF. In addition
to any rights now or hereafter granted under applicable law but subject to any
limitations that may be imposed by applicable law and not by way of limitation
of any such rights, Lender is hereby authorized by Borrower, at any time or
from time to time while a Default exists, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by Lender, to or for the credit or the account of the Borrower
against and on account of any of the Obligations, irrespective of whether or
not the Line of Credit, the Term Loan and all other Obligations have been
declared to be, or have otherwise become, due and payable as permitted by Section
9.2, and although such Obligations shall be contingent or unmatured.

 

10.13  CAPITAL ADEQUACY. If
Lender reasonably determines that compliance with any law or regulation or with
any guideline or request from any central bank or other governmental or quasi-
governmental agency (whether or not having the force of law), including,
without limitation, the Risk Based Capital Guidelines, affects or would affect
the amount of capital required or expected to be maintained by Lender, or any
corporation controlling Lender, as a consequence of, or with reference to, such
Lender’s or such corporation’s commitments or its making or maintaining
Advances below the rate which Lender or such corporation controlling Lender
could have achieved but for such compliance (taking into account the policies
of Lender or corporation with regard to capital), then Borrower shall, from
time to time, within fifteen (15) calendar days after written demand by Lender,
pay to Lender additional amounts sufficient to compensate Lender or such
corporation controlling Lender to the extent that Lender reasonably determines
such increase in capital is allocable to Lender’s obligations hereunder. A
certificate as to such amounts, submitted to Borrower by Lender shall be
conclusive and binding for all purposes, absent manifest error. As used herein,
“Risk-Based Capital Guidelines” means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled “International
Convergence of Capital Measurements and Capital Standards,” including
transition rules, and any amendments to such regulations adopted prior to the
date of this Agreement.

 

22

 

10.14  LENDER’S AGENTS.
Lender may designate an agent or independent contractor to exercise any of
Lender’s rights under this Agreement and any of the other Loan Documents. Any
reference to Lender in any of the Loan Documents shall include, but only if
applicable, Lender’s agents, employees or independent contractors. Borrower
shall pay the costs of such agent or independent contractor either directly to
such person or to Lender in reimbursement of such costs, as applicable.

 

10.15  WAIVER OF RIGHT TO TRIAL BY
JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER
THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE
MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN
DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.

 

10.16  SEVERABILITY. If any
provision or obligation under this Agreement and the other Loan Documents shall
be determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable, that provision shall be deemed severed from the Loan Documents
and the validity, legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the invalid, illegal, or
unenforceable provision had never been a part of the Loan Documents, provided,
however, that if the rate of interest or any other amount payable under the
Note or this Agreement or any other Loan Document, or the right of
collectibility therefor, are declared to be or become invalid, illegal or
unenforceable, Lender’s obligations to make Advances under the Loan Documents
shall not be enforceable by Borrower.

 

10.17  HEIRS, SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided under the terms and conditions of this
Agreement, the terms of the Loan Documents shall bind and inure to the benefit
of the permitted heirs, successors and assigns of the parties.

 

10.18  TIME. Time is of the
essence of each and every term of this Agreement and the other Loan Documents.

 

10.19  HEADINGS. All
article, section or other headings appearing in this Agreement and any of the
other Loan Documents are for convenience of reference only and shall be
disregarded in construing this Agreement and any of the other Loan Documents.

 

10.20  GOVERNING LAW. This
Agreement shall be governed by, and construed and enforced in accordance with
the laws of the State of Utah. Borrower and all persons and entities in any
manner obligated to Lender under the Loan Documents consent to the jurisdiction
of any federal or state court within the State of Utah having proper venue and
also consent to service of process by any means authorized by Utah or federal
law.

 

10.21  INTEGRATION; INTERPRETATION.
The Loan Documents contain or expressly incorporate by reference the entire
agreement of the parties with respect to the matters contemplated therein and
supersede all prior negotiations or agreements, written or oral. The Loan
Documents shall not be modified except by written instrument executed by all
parties. Any reference to the Loan Documents includes any amendments, renewals
or extensions now or hereafter approved by Lender in writing.

 

23

 

10.22  JOINT AND SEVERAL LIABILITY
OF BORROWING PARTIES. The liability of all persons and entities
obligated as Borrower in any manner to Lender under this Agreement and any of
the Loan Documents shall be joint and several.

 

10.23  COUNTERPARTS. To
facilitate execution, this document may be executed in as many counterparts as
may be convenient or required. It shall not be necessary that the signature of,
or on behalf of, each party, or that the signature of all persons required to
bind any party, appear on each counterpart. All counterparts shall collectively
constitute a single document. It shall not be necessary in making proof of this
document to produce or account for more than a single counterpart containing
the respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.

 

10.24  CONFIDENTIALITY PROVISION.
Subject to the terms of any confidentiality or similar agreement between
Lender and Borrower and/or its Affiliates, the parties hereto acknowledge and
agree that (i) any obligations of confidentiality contained herein and therein
do not apply and have not applied from the commencement of discussions between
the parties to the tax treatment or tax structure of the transactions
contemplated by the Loan Documents (and any related transactions or
arrangements), and (ii) each party (and each of its employees, representatives,
or other agents) may disclose to any and all parties as required, without
limitation of any kind (including opinions or other tax analyses) that are
provided to such party relating to such tax treatment and tax structure, all
within the meaning of Treasury Regulations Section 1.6011-4; provided, however,
that each party recognizes that the privilege each has to maintain, in its sole
discretion, the confidentiality of a communication relating to the transactions
contemplated by the Loan Documents, including a confidential communication with
its attorney or a confidential communication with a federally authorized tax
practitioner under Section 7525 of the Internal Revenue Code, is not intended
to be affected by the foregoing.

 

10.25  SURVIVAL OF REPRESENTATIONS.
All representations and warranties of Borrower contained in this Agreement
shall survive the making of the Advances herein contemplated until all
Obligations under this Agreement have been paid and satisfied in full.

 

10.26  NO BORROWER SET-OFF. All
Obligations shall be paid by Borrower without notice (except for such notice as
may be expressly required hereunder or under the other Loan Documents), demand,
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the Obligations shall in no way be
released, discharged or otherwise affected (except as expressly provided
herein) by reason of: (a) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Lender, or any action taken with respect to this Agreement by any
trustee or receiver of Lender, or by any court, in any such proceeding; (b) any
claim that Borrower has or might have against Lender; (c) any default or
failure on the part of Lender to perform or comply with any of the terms of the
Loan Documents or of any other agreement with Borrower; or (d) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing; in each
case, whether or not Borrower shall have notice or knowledge of any of the
foregoing. Borrower waives all rights now or hereafter conferred by statute or
otherwise to any abatement, suspension, deferment, diminution or reduction of
any Obligation.

 

10.27  STATUTE OF FRAUDS.
PURSUANT TO UTAH CODE. ANN. §25-5-4, BORROWER IS NOTIFIED THAT THE WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

 

10.28  BROKERS. Borrower and
Lender represent to each other that neither of them knows of any brokerage
commissions or finders’ fee due or claimed with respect to the transaction
contemplated

 

24

 

hereby, Borrower and
Lender shall indemnify and hold harmless the other party for, from and against
any and all loss, damage, liability, or expense, including costs and reasonable
attorney fees, which such other party may incur or sustain by reason of or in
connection with any misrepresentation by the indemnifying party with respect to
the foregoing.

 

10.29  INCONSISTENCIES WITH THE LOAN
DOCUMENTS.  In the event of
any inconsistencies between any terms of this Agreement and any terms of any of
the Loan Documents, the terms of this Agreement shall govern and prevail.

 

10.30  INTERPRETATION

 

(a)        References to the plural
include the singular, the plural, the part and the whole; “or” has the
inclusive meaning represented by the phrase “and/or”; and “including” has the
meaning represented by the phrase “Including without limitation”.

 

(b)        The words “hereof,” “herein,”
“hereunder,” “hereto” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document as a whole and not
to any particular provision of this Agreement or such other Loan Document.

 

(c)        Reference to any Person
includes such Person’s successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement or the other Loan Documents,
as the case may be.

 

(d)        Reference to any agreement
(Including this Agreement and any other Loan Document together with the
schedules and exhibits hereto or thereto), document or instrument means such
agreement, document or instrument as amended, modified, replaced, substituted
for, superseded or restated.

 

10.31  ACTIONS BY LENDER.
Unless otherwise expressly provided in this Agreement, all determinations,
consents, approvals, disapprovals, calculations, requirements, requests, acts,
actions, elections, selections, opinions, judgments, options, exercise of
rights, remedies or indemnities, satisfaction of conditions or other decisions
of or to be made by or on behalf of Lender under this Agreement or any of the
other Loan Documents shall be made in the sole and absolute discretion of
Lender.

 

10.32  PATRIOT ACT NOTIFICATION.
The following is provided to Borrower pursuant to Section 326 of the USA
Patriot Act of 2001, 31 U.S.C. Section 5318:

 

IMPORTANT INFORMATION
ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including any deposit
account, treasury management account, loan, other extension of credit, or other
financial services product. What this means for Borrower: When Borrower opens
and account, if Borrower is an individual, Lender will ask for Borrower’s name,
residential address, tax identification number, date of birth, and other
information that will allow Lender to Identify Borrower, and, if Borrower is
not an individual, Lender will ask for Borrower’s name, tax identification
number, business address, and other information that will allow Lender to
identify Borrower. Lender may also ask, if Borrower is an individual, to see
Borrower’s driver’s license or other identifying documents, and , if Borrower
is not an individual, to see Borrower’s legal organizational documents or other
identifying documents.

 

[SIGNATURES
ON FOLLOWING PAGE]

 

25

 

IN WITNESS WHEREOF,
Borrower and Lender have executed this Agreement as of the date appearing on
the first page of this Agreement.

 

	
   

  	
   

  	
  “LENDER”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Terry L. Grant

  	
   

  
	
   

  	
   

  	
  Name:
  Terry L. Grant

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

	
   

  	
   

  	
  “BORROWER”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONSONUS
  ACQUISITION CORP., 

  
	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nana Baffour

  	
   

  
	
   

  	
   

  	
  Name: Nana Baffour

  
	
   

  	
   

  	
  Title: Chairman

  

 

26

 

FIRST AMENDMENT TO

CREDIT AGREEMENT

 

This First
Amendment to Credit Agreement (this “Amendment”) is entered into as of December
12, 2006, by and between CONSONUS ACQUISITION CORP., a Delaware corporation (“Borrower”),
and U.S. BANK NATIONAL ASSOCIATION (“Lender”).

 

RECITALS

 

A.       Borrower and Lender are
parties to that certain Credit Agreement, dated as of May 31, 2005, pursuant to
which Lender agreed to extend to Borrower certain credit accommodations in the
maximum principal amount of Thirteen Million and 00/100ths Dollars
($13,000,000.00).

 

B.        Borrower and Lender desire
to amend the Credit Agreement as provided in this Amendment.

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Borrower and Lender agree as follows:

 

1.         CAPITALIZED TERMS. All initially
capitalized terms, unless specifically defined herein, shall have the meanings
ascribed thereto in the Credit Agreement.

 

2.         AMENDMENTS.

 

2.1       Article 7.1 of the Credit
Agreement, entitled “Minimum Fixed Charge Overhead Ratio”, is hereby amended as
follows:

 

(a)       Section 7.1 is hereby
amended to change the reference in Section 7.1 (a) (i) from $300,000.00 to
$150,000.00.

 

2.2       Section 7.2 of the Credit
Agreement, entitled “Total Funded Debt”, is hereby deleted in its entirety and
the following substituted in place thereof:

 

(a)       Borrower shall maintain at
all times the ratio of total funded debt (excluding the Questar Note and as
calculated in accordance with GAAP) to EBITDA, measured as of the last day of
each fiscal quarter of Borrower using EBITDA for the four quarters then ended,
of not more than 5.50 to 1.0 for the last two (2) quarters of Borrower’s fiscal
year ending December 31, 2006; 4.75 to 1.0 for the first quarter of Borrower’s
fiscal year ending December 31, 2007; and 4.00 to 1.0 for the second quarter of
Borrower’s fiscal year ending December 31, 2007 and thereafter.

 

3.         CONDITIONS PRECEDENT. The following are
conditions precedent to Lender’s obligations under this Amendment:

 

1

 

3.1       Receipt by Lender of the
executed originals of this Amendment and any and all other documents and
agreements which are required by this Agreement or by any other Loan Document,
each in form and content acceptable to Lender;

 

3.2       Reimbursement to Lender by
Borrower of Lender’s costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, attorneys’ fees and documentation costs and charges, whether such
services are furnished by Lender’s employees or agents or by independent
contractors;

 

3.3       All payments due and owing
to Lender under the Loan Documents have been paid; and

 

3.4       Payment to Lender of a
waiver fee in the amount of $6,500.00.

 

4. MISCELLANEOUS.

 

4.1       Confirmation of Loan
Agreement. Borrower hereby affirms and agrees to be bound by all of the
terms of the Credit Agreement and other Loan Documents, as amended.

 

4.2       Non-Impairment.
Except as expressly provided herein, nothing in this Amendment shall alter or
affect any provision, condition, or covenant contained in the Notes or other
Loan Documents or affect or impair any rights, powers, or remedies of Lender, it
being the intent of the parties that, except as amended hereby, all of the
terms, covenants and conditions of the Credit Agreement shall remain in full
force and effect. In the event of any conflict or discrepancy between this
Amendment and the Credit Agreement, this Amendment shall control.

 

4.3       Entire Agreement.
This Amendment constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof.

 

4.4       Governing Law. This
Amendment shall be governed by and construed in accordance with the laws of the
State of Utah.

 

4.5       Counterparts. To
facilitate execution, this document may be executed in as many counterparts as
may be convenient or required. It shall not be necessary that the signature of,
or on behalf of, each party, or that the signature of all persons required to
bind any party, appear on each counterpart. All counterparts shall collectively
constitute a single document. It shall not be necessary in making proof of this
document to produce or account for more than a single counterpart containing
the respective signatures of, or on behalf of, each of the parties hereto. Any
signature page to any counterpart may be detached from such counterpart without
impairing the legal effect of the signatures thereon and thereafter attached to
another counterpart identical thereto except having attached to it additional
signature pages.

 

2

 

IN WITNESS
WHEREOF, this Amendment has been executed as of the date first set forth above.

 

 

	
   

  	
  CONSONUS ACQUISITION
  CORP.,

  
	
   

  	
   a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nana Baffour

  	
   

  
	
   

  	
   

  	
  Nana Baffour, Chairman

  

 

 

	
   

  	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David P. Williams

  	
   

  
	
   

  	
   

  	
   

  	
  David P. Williams,
  Senior Vice President

  

 

3Exhibit 10.3

 

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

CONSONUS ACQUISITION CORP.

STRATEGIC TECHNOLOGIES, INC.,

CAC MERGER SUB, INC.,

STI MERGER SUB, INC.,

AND

CONSONUS TECHNOLOGIES, INC.

October 18, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I THE MERGERS

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Organization of the Company, CAC Merger Sub and STI Merger Sub

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  The Mergers

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Closing

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Effective Time

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Effect of the Mergers

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Certificate of Incorporation and Bylaws of the Surviving Corporations

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Certificate of Incorporation and Bylaws of the Company

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  Conversion of Securities

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.9

  	
  Payment Schedule

  	
  6

  
	
   

  	
   

  	
   

  
	
  1.10

  	
  Escrow Shares

  	
  7

  
	
   

  	
   

  	
   

  
	
  1.11

  	
  Cancellation of Outstanding Company Common Stock

  	
  8

  
	
   

  	
   

  	
   

  
	
  1.12

  	
  Conversion of Common Stock of CAC Merger Sub and STI Merger Sub into
  Common Stock of the Surviving Corporations

  	
  8

  
	
   

  	
   

  	
   

  
	
  1.13

  	
  Exchange of Shares

  	
  9

  
	
   

  	
   

  	
   

  
	
  1.14

  	
  Stock Transfer Books

  	
  11

  
	
   

  	
   

  	
   

  
	
  1.15

  	
  Restricted Shares

  	
  11

  
	
   

  	
   

  	
   

  
	
  1.16

  	
  Dissenting Shares

  	
  11

  
	
   

  	
   

  	
   

  
	
  1.17

  	
  Tax Consequences

  	
  12

  
	
   

  	
   

  	
   

  
	
  1.18

  	
  Lost, Stolen or Destroyed Certificate

  	
  13

  
	
   

  	
   

  	
   

  
	
  1.19

  	
  No Further Ownership Rights in Capital Stock of Consonus and STI

  	
  13

  
	
   

  	
   

  	
   

  
	
  1.20

  	
  Taking of Necessary Action; Further Action

  	
  13

  

 

 

	
  ARTICLE II REPRESENTATIONS AND WARRANTIES OF CONSONUS

  	
  13

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Organization and Good Standing

  	
  13

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Authorization of Agreement

  	
  14

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Conflicts; Consents of Third Parties

  	
  15

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Capitalization.

  	
  15

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Consonus Subsidiaries and Affiliated Entities

  	
  16

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Corporate Records

  	
  17

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Financial Statements

  	
  17

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  No Undisclosed Liabilities

  	
  18

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Absence of Certain Developments

  	
  18

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Taxes

  	
  20

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Real Property

  	
  23

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  Tangible Personal Property

  	
  24

  
	
   

  	
   

  	
   

  
	
  2.13

  	
  Intellectual Property

  	
  25

  
	
   

  	
   

  	
   

  
	
  2.14

  	
  Material Contracts

  	
  28

  
	
   

  	
   

  	
   

  
	
  2.15

  	
  Employee Benefit Plans

  	
  30

  
	
   

  	
   

  	
   

  
	
  2.16

  	
  Labor and Employment Matters

  	
  31

  
	
   

  	
   

  	
   

  
	
  2.17

  	
  Litigation

  	
  32

  
	
   

  	
   

  	
   

  
	
  2.18

  	
  Compliance with Laws; Permits

  	
  32

  
	
   

  	
   

  	
   

  
	
  2.19

  	
  Environmental Matters

  	
  33

  
	
   

  	
   

  	
   

  
	
  2.20

  	
  Insurance

  	
  33

  
	
   

  	
   

  	
   

  
	
  2.21

  	
  Accounts and Notes Receivable and Payable

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.22

  	
  Consonus Related Party Transactions

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.23

  	
  Customers and Suppliers

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.24

  	
  Banks; Power of Attorney

  	
  35

  
	
   

  	
   

  	
   

  
	
  2.25

  	
  Financial Advisors

  	
  35

  

 

ii

 

	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF STI

  	
  35

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization and Good Standing

  	
  35

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Authorization of Agreement

  	
  35

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Conflicts; Consents of Third Parties

  	
  36

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Capitalization

  	
  36

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  STI Subsidiaries and Affiliated Entities

  	
  37

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Corporate Records

  	
  38

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  Financial Statements

  	
  38

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  No Undisclosed Liabilities

  	
  39

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  Absence of Certain Developments

  	
  39

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  Taxes

  	
  41

  
	
   

  	
   

  	
   

  
	
  3.11

  	
  Real Property

  	
  43

  
	
   

  	
   

  	
   

  
	
  3.12

  	
  Tangible Personal Property

  	
  45

  
	
   

  	
   

  	
   

  
	
  3.13

  	
  Intellectual Property

  	
  45

  
	
   

  	
   

  	
   

  
	
  3.14

  	
  Material Contracts

  	
  48

  
	
   

  	
   

  	
   

  
	
  3.15

  	
  Employee Benefit Plans

  	
  50

  
	
   

  	
   

  	
   

  
	
  3.16

  	
  Labor and Employment Matters

  	
  52

  
	
   

  	
   

  	
   

  
	
  3.17

  	
  Litigation

  	
  53

  
	
   

  	
   

  	
   

  
	
  3.18

  	
  Compliance with Laws; Permits

  	
  53

  
	
   

  	
   

  	
   

  
	
  3.19

  	
  Environmental Matters

  	
  53

  
	
   

  	
   

  	
   

  
	
  3.20

  	
  Insurance

  	
  54

  
	
   

  	
   

  	
   

  
	
  3.21

  	
  Accounts and Notes Receivable and Payable

  	
  54

  
	
   

  	
   

  	
   

  
	
  3.22

  	
  STI Related Party Transactions

  	
  54

  
	
   

  	
   

  	
   

  
	
  3.23

  	
  Customers and Suppliers

  	
  55

  
	
   

  	
   

  	
   

  
	
  3.24

  	
  Banks; Power of Attorney

  	
  55

  

 

iii

 

	
  3.25

  	
  Financial Advisors

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV ADDITIONAL AGREEMENTS

  	
  55

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Exemption from Registration; Information Statement

  	
  55

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Meeting of Stockholders

  	
  56

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Confidentiality

  	
  56

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Public Disclosure

  	
  57

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Access to Information

  	
  57

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Consents; Cooperation

  	
  58

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Legal Requirements

  	
  58

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Expenses

  	
  58

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Commercially Reasonable Efforts and Further Assurances

  	
  58

  
	
   

  	
   

  	
   

  
	
  4.10

  	
  Treatment of Convertible Securities

  	
  59

  
	
   

  	
   

  	
   

  
	
  4.11

  	
  Board of Directors

  	
  60

  
	
   

  	
   

  	
   

  
	
  4.12

  	
  Executive Officers

  	
  60

  
	
   

  	
   

  	
   

  
	
  4.13

  	
  Director and Officer Indemnification

  	
  60

  
	
   

  	
   

  	
   

  
	
  4.14

  	
  Benefit Plans

  	
  61

  
	
   

  	
   

  	
   

  
	
  4.15

  	
  The Company Arrangements

  	
  61

  
	
   

  	
   

  	
   

  
	
  4.16

  	
  Repayment of Certain Indebtedness

  	
  61

  
	
   

  	
   

  	
   

  
	
  4.17

  	
  Break-up Fee

  	
  61

  
	
   

  	
   

  	
   

  
	
  4.18

  	
  Employment Agreements

  	
  62

  
	
   

  	
   

  	
   

  
	
  4.19

  	
  Stockholders Agreement

  	
  62

  
	
   

  	
   

  	
   

  
	
  4.20

  	
  Operating Agreement

  	
  62

  
	
   

  	
   

  	
   

  
	
  4.21

  	
  IPO

  	
  62

  
	
   

  	
   

  	
   

  
	
  4.22

  	
  Real Property Sale/Leaseback

  	
  62

  
	
   

  	
   

  	
   

  
	
  4.23

  	
  Registration Rights

  	
  63

  

 

iv

 

	
  4.24

  	
  Rescission Agreement

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME

  	
  63

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Conduct of Business of STI and Consonus

  	
  63

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  No Solicitation

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI CONDITIONS TO THE MERGERS

  	
  68

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions to Obligations of Each Party to Effect the Mergers

  	
  68

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Additional Conditions to Obligations of Consonus

  	
  68

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Additional Conditions to the Obligations of STI

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII INDEMNIFICATION

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Survival of Representations and Warranties

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Indemnification Provisions

  	
  72

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Limitations

  	
  73

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Exclusive Remedy

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Escrow; Escrow Fund

  	
  74

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Claims upon Escrow Fund

  	
  75

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Objections to Claims

  	
  75

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Resolution of Conflicts; Arbitration

  	
  76

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  Holders’ Agents

  	
  77

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Actions of a Holders’ Agent

  	
  79

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Third Party Claims

  	
  80

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  Voting Rights and Cash Distributions With Respect to Escrow Shares

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER

  	
  81

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination

  	
  81

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Effect of Termination

  	
  81

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Extension; Waiver

  	
  81

  

 

v

 

	
  ARTICLE IX GENERAL PROVISIONS

  	
  82

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  General

  	
  82

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Notices

  	
  85

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Interpretation

  	
  86

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Counterparts

  	
  86

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Schedules and Exhibits

  	
  86

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Entire Agreement; Nonassignability; Parties in Interest

  	
  86

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Severability

  	
  87

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Specific Performance

  	
  87

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Governing Law

  	
  87

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  Rules of Construction

  	
  87

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  Amendments

  	
  87

  
	
   

  	
   

  	
   

  
	
  9.12

  	
  Waiver of Jury Trial

  	
  87

  

 

vi

 

SCHEDULES

 

	
  Consonus
  Payment Schedule

  
	
  STI Payment
  Schedule

  
	
  Schedule
  1.15(a)

  	
  -

  	
  Consonus
  Restricted Shares

  
	
  Schedule
  1.15(b)

  	
  -

  	
  STI
  Restricted Shares

  
	
  Schedule
  2.3(a)

  	
  -

  	
  Conflicts;
  Consents of Third Parties (Consonus)

  
	
  Schedule
  2.3(b)

  	
  -

  	
  Conflicts;
  Consents of Third Parties (Consonus)

  
	
  Schedule
  2.4(a)

  	
  -

  	
  Consonus
  Capitalization

  
	
  Schedule
  2.4(b)

  	
  -

  	
  Consonus
  Options and Warrants

  
	
  Schedule 2.5

  	
  -

  	
  Consonus
  Subsidiaries and Affiliated Entities

  
	
  Schedule 2.8

  	
  -

  	
  No
  Undisclosed Liabilities (Consonus)

  
	
  Schedule 2.9

  	
  -

  	
  Absence of
  Certain Developments (Consonus)

  
	
  Schedule
  2.10(a)

  	
  -

  	
  Taxes
  (Consonus)

  
	
  Schedule
  2.10(d)

  	
  -

  	
  Taxes
  (Consonus)

  
	
  Schedule
  2.11

  	
  -

  	
  Real
  Property (Consonus)

  
	
  Schedule
  2.11(f)

  	
  -

  	
  Real
  Property (Consonus)

  
	
  Schedule
  2.12(a)

  	
  -

  	
  Tangible
  Personal Property (Consonus)

  
	
  Schedule
  2.12(b)

  	
  -

  	
  Consonus
  Personal Property Leases

  
	
  Schedule
  2.13(a)

  	
  -

  	
  Intellectual
  Property (Consonus)

  
	
  Schedule
  2.13(b)

  	
  -

  	
  Rights in
  Intellectual Property (Consonus)

  
	
  Schedule
  2.13(d)

  	
  -

  	
  Intellectual
  Property Licenses (Consonus)

  
	
  Schedule
  2.13(e)

  	
  -

  	
  Intellectual
  Property Contracts (Consonus)

  
	
  Schedule
  2.13(h)

  	
  -

  	
  Intellectual
  Property Contracts (Consonus)

  
	
  Schedule
  2.13(k)

  	
  -

  	
  Intellectual
  Property Contracts (Consonus)

  
	
  Schedule
  2.13(l)

  	
  -

  	
  Software
  (Consonus)

  
	
  Schedule
  2.14(a)

  	
  -

  	
  Consonus
  Material Contracts

  
	
  Schedule
  2.14(b)

  	
  -

  	
  Consonus
  Material Contracts

  
	
  Schedule
  2.15

  	
  -

  	
  Employee
  Benefit Plans (Consonus)

  
	
  Schedule
  2.15(h)

  	
  -

  	
  Employee
  Benefit Plans (Consonus)

  
	
  Schedule
  2.16(b)

  	
  -

  	
  Labor and
  Employment Matters (Consonus)

  
	
  Schedule
  2.16(c)

  	
  -

  	
  Labor and
  Employment Matters (Consonus)

  
	
  Schedule
  2.16(d)

  	
  -

  	
  Labor and
  Employment Matters (Consonus)

  
	
  Schedule
  2.16(e)

  	
  -

  	
  Labor and
  Employment Matters (Consonus)

  
	
  Schedule
  2.17

  	
  -

  	
  Litigation
  (Consonus)

  
	
  Schedule
  2.18

  	
  -

  	
  Consonus
  Permits (Consonus)

  
	
  Schedule
  2.19

  	
  -

  	
  Environmental
  Matters (Consonus)

  
	
  Schedule
  2.20

  	
  -

  	
  Insurance
  (Consonus)

  
	
  Schedule
  2.21

  	
  -

  	
  Accounts and
  Notes Receivable

  
	
  Schedule
  2.22

  	
  -

  	
  Consonus
  Related Party Transactions

  
	
  Schedule
  2.23

  	
  -

  	
  Customers
  and Suppliers (Consonus)

  
	
  Schedule
  2.24

  	
  -

  	
  Banks; Power
  of Attorney (Consonus)

  
	
  Schedule
  2.25

  	
  -

  	
  Financial
  Advisors (Consonus)

  
	
  Schedule
  3.3(a)

  	
  -

  	
  Conflicts;
  Consents of Third Parties (STI)

  
	
  Schedule
  3.3(b)

  	
  -

  	
  Conflicts;
  Consents of Third Parties (STI)

  
	
  Schedule
  3.4(a)

  	
  -

  	
  STI
  Capitalization

  
	
  Schedule
  3.4(b)

  	
  -

  	
  STI Options
  and Warrants

  

 

i

 

	
  Schedule 3.5

  	
  -

  	
  STI
  Subsidiaries and Affiliated Entities

  
	
  Schedule 3.8

  	
  -

  	
  No
  Undisclosed Liabilities (STI)

  
	
  Schedule 3.9

  	
  -

  	
  Absence of
  Certain Developments (STI)

  
	
  Schedule
  3.10(d)

  	
  -

  	
  Taxes (STI)

  
	
  Schedule
  3.11

  	
  -

  	
  Real
  Property (STI)

  
	
  Schedule
  3.11(f)

  	
  -

  	
  Real
  Property (STI)

  
	
  Schedule
  3.12(a)

  	
  -

  	
  Tangible
  Personal Property (STI)

  
	
  Schedule
  3.12(b)

  	
  -

  	
  STI Personal
  Property Leases

  
	
  Schedule
  3.13(a)

  	
  -

  	
  Intellectual
  Property (STI)

  
	
  Schedule
  3.13(b)

  	
  -

  	
  Rights in
  Intellectual Property (STI)

  
	
  Schedule
  3.13(d)

  	
  -

  	
  Intellectual
  Property Licenses (STI)

  
	
  Schedule
  3.13(e)

  	
  -

  	
  Intellectual
  Property Contracts (STI)

  
	
  Schedule
  3.13(l)

  	
  -

  	
  Software
  (STI)

  
	
  Schedule
  3.14(a)

  	
  -

  	
  STI Material
  Contracts

  
	
  Schedule
  3.14(b)

  	
  -

  	
  STI Material
  Contracts

  
	
  Schedule
  3.15

  	
  -

  	
  Employee
  Benefit Plans (STI)

  
	
  Schedule
  3.15(h)

  	
  -

  	
  Employee
  Benefit Plans (STI)

  
	
  Schedule
  3.16(b)

  	
  -

  	
  Labor and
  Employment Matters (STI)

  
	
  Schedule
  3.16(c)

  	
  -

  	
  Labor and
  Employment Matters (STI)

  
	
  Schedule
  3.16(d)

  	
  -

  	
  Labor and
  Employment Matters (STI)

  
	
  Schedule
  3.16(e)

  	
  -

  	
  Labor and
  Employment Matters (STI)

  
	
  Schedule
  3.17

  	
  -

  	
  Litigation
  (STI)

  
	
  Schedule
  3.18

  	
  -

  	
  STI Permits
  (STI)

  
	
  Schedule
  3.19

  	
  -

  	
  Environmental
  Matters (STI)

  
	
  Schedule
  3.20

  	
  -

  	
  Insurance
  (STI)

  
	
  Schedule
  3.21

  	
  -

  	
  Accounts and
  Notes Receivable

  
	
  Schedule
  3.22

  	
  -

  	
  STI Related
  Party Transactions

  
	
  Schedule
  3.23

  	
  -

  	
  Customers
  and Suppliers (STI)

  
	
  Schedule
  3.24

  	
  -

  	
  Banks; Power
  of Attorney (STI)

  
	
  Schedule
  3.25

  	
  -

  	
  Financial
  Advisors (STI)

  
	
  Schedule
  4.11

  	
  -

  	
  Board of
  Directors

  
	
  Schedule
  4.12

  	
  -

  	
  Executive
  Officers

  
	
  Schedule
  4.15

  	
  -

  	
  Equity
  Incentive Grants

  

 

EXHIBITS

 

	
  Exhibit A

  	
  -

  	
  Voting
  Agreements

  
	
  Exhibit B

  	
  -

  	
  Certificate
  of Incorporation of the Company

  
	
  Exhibit C

  	
  -

  	
  Bylaws of
  the Company

  
	
  Exhibit D

  	
  -

  	
  Calculation
  of Exchange Ratio

  
	
  Exhibit E-1

  	
  -

  	
  Form of
  Consonus Escrow Agreement

  
	
  Exhibit E-2

  	
  -

  	
  Form of STI
  Escrow Agreement

  
	
  Exhibit F

  	
  -

  	
  Michael
  Shook Employment Agreement

  
	
  Exhibit G

  	
  -

  	
  William
  Shook Employment Agreement

  
	
  Exhibit H

  	
  -

  	
  Form of
  Stockholders Agreement

  
	
  Exhibit I

  	
  -

  	
  Form of
  Operating Agreement

  
	
  Exhibit J

  	
  -

  	
  FIRPTA
  Certificate

  

 

ii

 

INDEX OF DEFINED TERMS

 

DEFINITIONS

 

	
  Defined Terms

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acquisition
  Proposal

  	
   

  	
  5.2(a)

  	
   

  
	
  Affiliate

  	
   

  	
  9.1(a)

  	
   

  
	
  Affiliated
  Group

  	
   

  	
  9.1(b)

  	
   

  
	
  Agent
  Expenses

  	
   

  	
  7.9(d)

  	
   

  
	
  Agreement

  	
   

  	
  Preamble

  	
   

  
	
  Basket
  Amount

  	
   

  	
  7.3(a)

  	
   

  
	
  CAC Merger
  Sub

  	
   

  	
  Preamble

  	
   

  
	
  Certificates

  	
   

  	
  1.13(b)

  	
   

  
	
  Certificates
  of Merger

  	
   

  	
  1.2(b)

  	
   

  
	
  Claim

  	
   

  	
  7.3(b)

  	
   

  
	
  Closing

  	
   

  	
  1.3

  	
   

  
	
  Closing Date

  	
   

  	
  1.3

  	
   

  
	
  COBRA

  	
   

  	
  2.15(g)

  	
   

  
	
  Code

  	
   

  	
  Recitals “G”

  	
   

  
	
  Company

  	
   

  	
  Preamble

  	
   

  
	
  Company
  Board

  	
   

  	
  1.1(c)

  	
   

  
	
  Company
  Common Stock

  	
   

  	
  1.8(a)(i)

  	
   

  
	
  Company
  Equity Plan

  	
   

  	
  4.15

  	
   

  
	
  Company
  Indemnified Party

  	
   

  	
  7.2(a)(i)

  	
   

  
	
  Consonus

  	
   

  	
  Preamble

  	
   

  
	
  Consonus
  Balance Sheet

  	
   

  	
  2.7(a)

  	
   

  
	
  Consonus
  Balance Sheet Date

  	
   

  	
  2.7(a)

  	
   

  
	
  Consonus
  Board

  	
   

  	
  Recitals “A”

  	
   

  
	
  Consonus
  Certificate of Merger

  	
   

  	
  1.2(a)

  	
   

  
	
  Consonus
  Common Stock

  	
   

  	
  2.4(a)

  	
   

  
	
  Consonus
  Dissenting Share Payments

  	
   

  	
  1.16(b)

  	
   

  
	
  Consonus
  Dissenting Shares

  	
   

  	
  1.16

  	
   

  
	
  Consonus
  Documents

  	
   

  	
  2.2(a)

  	
   

  
	
  Consonus
  Employees

  	
   

  	
  2.15(a)

  	
   

  
	
  Consonus
  Escrow Agreement

  	
   

  	
  1.10(a)

  	
   

  
	
  Consonus
  Escrow Fund

  	
   

  	
  1.10(d)

  	
   

  
	
  Consonus
  Escrow Shares

  	
   

  	
  1.10(b)

  	
   

  
	
  Consonus
  Exchange Ratio

  	
   

  	
  1.8(a)(i)

  	
   

  
	
  Consonus
  Financial Statements

  	
   

  	
  2.7(a)

  	
   

  
	
  Consonus
  Holders

  	
   

  	
  1.9(a)

  	
   

  
	
  Consonus
  Holders’ Agent

  	
   

  	
  7.9(a)(i)

  	
   

  
	
  Consonus
  Indemnified Party

  	
   

  	
  7.2(c)

  	
   

  
	
  Consonus’
  Information

  	
   

  	
  4.3(a)

  	
   

  
	
  Consonus
  Related Losses

  	
   

  	
  7.2(a)

  	
   

  
	
  Consonus
  Material Adverse Effect

  	
   

  	
  2.1(a)

  	
   

  
	
  Consonus
  Material Contracts

  	
   

  	
  2.14(a)

  	
   

  

 

i

 

	
  Defined Terms

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consonus
  Merger

  	
   

  	
  Recitals “B”

  	
   

  
	
  Consonus
  Officer Certificate

  	
   

  	
  6.3(c)

  	
   

  
	
  Consonus
  Owned Real Properties

  	
   

  	
  2.11(a)

  	
   

  
	
  Consonus
  Payment Schedule

  	
   

  	
  1.9(a)

  	
   

  
	
  Consonus
  Permits

  	
   

  	
  2.18(b)

  	
   

  
	
  Consonus
  Personal Property Leases

  	
   

  	
  2.12(b)

  	
   

  
	
  Consonus
  Plans

  	
   

  	
  2.15(a)

  	
   

  
	
  Consonus
  Preferred Stock

  	
   

  	
  2.4(a)

  	
   

  
	
  Consonus
  Principal Stockholder

  	
   

  	
  Recitals “F”

  	
   

  
	
  Consonus
  Real Properties

  	
   

  	
  2.11(a)

  	
   

  
	
  Consonus
  Real Property Leases

  	
   

  	
  2.11(a)

  	
   

  
	
  Consonus
  Related Losses

  	
   

  	
  7.2(a)(i)

  	
   

  
	
  Consonus
  Related Persons

  	
   

  	
  2.22

  	
   

  
	
  Consonus
  Secretary Certificate

  	
   

  	
  6.3(d)

  	
   

  
	
  Consonus
  Subsidiary

  	
   

  	
  2.5(a)

  	
   

  
	
  Consonus
  Surviving Corporation

  	
   

  	
  1.2(a)

  	
   

  
	
  Consonus
  Surviving Corporation Common Stock

  	
   

  	
  1.12(a)

  	
   

  
	
  Consonus
  Unresolved Claim

  	
   

  	
  7.5(b)

  	
   

  
	
  Consonus
  Warrants

  	
   

  	
  2.4(b)

  	
   

  
	
  Copyrights

  	
   

  	
  9.1(d)

  	
   

  
	
  DGCL

  	
   

  	
  Recitals “B”

  	
   

  
	
  Dissenting
  Shares

  	
   

  	
  1.16

  	
   

  
	
  Effective
  Time

  	
   

  	
  1.4

  	
   

  
	
  Employment
  Agreements

  	
   

  	
  4.18

  	
   

  
	
  End Date

  	
   

  	
  8.1(b)

  	
   

  
	
  Environmental
  Law

  	
   

  	
  9.1(e)

  	
   

  
	
  Environmental
  Permit

  	
   

  	
  9.1(f)

  	
   

  
	
  Equity Value

  	
   

  	
  Exhibit D

  	
   

  
	
  Escrow Agent

  	
   

  	
  7.5(a)

  	
   

  
	
  Escrow
  Agreements

  	
   

  	
  1.10(a)

  	
   

  
	
  Escrow
  Expiration Date

  	
   

  	
  7.5(b)

  	
   

  
	
  Exchange
  Fund

  	
   

  	
  1.13(a)

  	
   

  
	
  Expenses

  	
   

  	
  4.8

  	
   

  
	
  GAAP

  	
   

  	
  2.7(a)

  	
   

  
	
  GE
  Indebtedness

  	
   

  	
  4.21

  	
   

  
	
  Governmental
  Body

  	
   

  	
  9.1(g)

  	
   

  
	
  Holders’
  Agent

  	
   

  	
  7.9(a)(ii)

  	
   

  
	
  Indemnifiable
  Losses

  	
   

  	
  7.2(a)

  	
   

  
	
  Indemnified
  Parties

  	
   

  	
  7.3(a)

  	
   

  
	
  Indemnified
  Party

  	
   

  	
  7.3(a)

  	
   

  
	
  Indemnifying
  Party

  	
   

  	
  7.6(a)

  	
   

  
	
  Information
  Statement

  	
   

  	
  4.1

  	
   

  
	
  Intellectual
  Property

  	
   

  	
  9.1(h)

  	
   

  
	
  Intellectual
  Property Licenses

  	
   

  	
  9.1(i)

  	
   

  

 

ii

 

	
  Defined Terms

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IPO

  	
   

  	
  4.21

  	
   

  
	
  IRS

  	
   

  	
  9.1(j)

  	
   

  
	
  KLI

  	
   

  	
  4.11

  	
   

  
	
  Knowledge

  	
   

  	
  9.1(k)

  	
   

  
	
  Law

  	
   

  	
  9.1(l)

  	
   

  
	
  Legal
  Proceeding

  	
   

  	
  9.1(m)

  	
   

  
	
  Lien

  	
   

  	
  9.1(n)

  	
   

  
	
  Loan
  Forgiveness

  	
   

  	
  4.16

  	
   

  
	
  Loan
  Repayment

  	
   

  	
  4.16

  	
   

  
	
  Losses

  	
   

  	
  7.6(a)

  	
   

  
	
  Marks

  	
   

  	
  9.1(o)

  	
   

  
	
  Merger Subs

  	
   

  	
  Preamble

  	
   

  
	
  Mergers

  	
   

  	
  Recitals “B”

  	
   

  
	
  Multiemployer
  Plan

  	
   

  	
  2.15(a)

  	
   

  
	
  NCBCA

  	
   

  	
  Recitals “B”

  	
   

  
	
  North
  Carolina Permit

  	
   

  	
  4.1

  	
   

  
	
  Notice of
  Claim

  	
   

  	
  7.6(a)

  	
   

  
	
  Officer’s
  Certificate

  	
   

  	
  7.6(b)

  	
   

  
	
  Operating
  Agreement

  	
   

  	
  4.20

  	
   

  
	
  Order

  	
   

  	
  9.1(q)

  	
   

  
	
  Patents

  	
   

  	
  9.1(r)

  	
   

  
	
  Payment
  Schedules

  	
   

  	
  1.9(b)

  	
   

  
	
  Permits

  	
   

  	
  9.1(s)

  	
   

  
	
  Permitted
  Exceptions

  	
   

  	
  9.1(t)

  	
   

  
	
  Person

  	
   

  	
  9.1(u)

  	
   

  
	
  Post-IPO
  Voting Agreement

  	
   

  	
  4.11

  	
   

  
	
  Pre-surrender
  Dividends

  	
   

  	
  1.13(d)

  	
   

  
	
  Rescission

  	
   

  	
  1.10(e)

  	
   

  
	
  Rescission
  Agreement

  	
   

  	
  4.24

  	
   

  
	
  Restricted
  Shares

  	
   

  	
  1.15

  	
   

  
	
  Sale/Leaseback
  Transactions

  	
   

  	
  4.22

  	
   

  
	
  Software

  	
   

  	
  9.1(v)

  	
   

  
	
  STI

  	
   

  	
  Preamble

  	
   

  
	
  STI Articles
  of Merger

  	
   

  	
  1.2(b)

  	
   

  
	
  STI Balance
  Sheet

  	
   

  	
  3.7(a)

  	
   

  
	
  STI Balance
  Sheet Date

  	
   

  	
  3.7(a)

  	
   

  
	
  STI Board

  	
   

  	
  Recitals “A”

  	
   

  
	
  STI
  Certificate

  	
   

  	
  1.9(b)

  	
   

  
	
  STI Closing
  Shares

  	
   

  	
  1.10(e)

  	
   

  
	
  STI Closing
  Shares Escrow Agreement

  	
   

  	
  1.10(e)

  	
   

  
	
  STI Common
  Stock

  	
   

  	
  3.4(a)

  	
   

  
	
  STI Converted
  Option

  	
   

  	
  4.10(a)

  	
   

  
	
  STI
  Dissenting Share Payments

  	
   

  	
  1.16(c)

  	
   

  
	
  STI
  Dissenting Shares

  	
   

  	
  1.16

  	
   

  

 

iii

 

	
  Defined Terms

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  STI
  Documents

  	
   

  	
  3.2

  	
   

  
	
  STI
  Employees

  	
   

  	
  3.15(a)

  	
   

  
	
  STI Escrow
  Agreement

  	
   

  	
  1.10(a)

  	
   

  
	
  STI Escrow
  Fund

  	
   

  	
  1.10(d)

  	
   

  
	
  STI Escrow
  Shares

  	
   

  	
  1.10(c)

  	
   

  
	
  STI Exchange
  Ratio

  	
   

  	
  1.8(b)(i)

  	
   

  
	
  STI
  Financial Statements

  	
   

  	
  3.7(a)

  	
   

  
	
  STI Holders

  	
   

  	
  1.9(b)

  	
   

  
	
  STI Holders’
  Agent

  	
   

  	
  7.9(a)(ii)

  	
   

  
	
  STI
  Indemnified Party

  	
   

  	
  7.2(b)

  	
   

  
	
  STI’s
  Information

  	
   

  	
  4.3(b)

  	
   

  
	
  STI Related
  Losses

  	
   

  	
  7.2(a)(ii)

  	
   

  
	
  STI Material
  Adverse Effect

  	
   

  	
  3.1

  	
   

  
	
  STI Material
  Contracts

  	
   

  	
  2.14(a)

  	
   

  
	
  STI Merger

  	
   

  	
  Recitals “B”

  	
   

  
	
  STI Merger
  Sub

  	
   

  	
  Preamble

  	
   

  
	
  STI Officer
  Certificate

  	
   

  	
  6.2(c)

  	
   

  
	
  STI Option

  	
   

  	
  1.8(b)(iii)

  	
   

  
	
  STI Owned
  Real Properties

  	
   

  	
  3.11(a)

  	
   

  
	
  STI Payment
  Schedule

  	
   

  	
  1.9(b)

  	
   

  
	
  STI Permits

  	
   

  	
  3.18(b)

  	
   

  
	
  STI Personal
  Property Leases

  	
   

  	
  3.12(b)

  	
   

  
	
  STI Plans

  	
   

  	
  3.15(a)

  	
   

  
	
  STI
  Principal Stockholders

  	
   

  	
  Recitals “E”

  	
   

  
	
  STI Real
  Property Leases

  	
   

  	
  3.11(a)

  	
   

  
	
  STI Related
  Losses

  	
   

  	
  7.2(a)(ii)

  	
   

  
	
  STI Related
  Persons

  	
   

  	
  3.22

  	
   

  
	
  STI Secretary
  Certificate

  	
   

  	
  6.2(d)

  	
   

  
	
  STI
  Subsidiary

  	
   

  	
  3.5(a)

  	
   

  
	
  STI
  Surviving Corporation

  	
   

  	
  1.2(b)

  	
   

  
	
  STI
  Surviving Corporation Common Stock

  	
   

  	
  1.12(b)

  	
   

  
	
  STI
  Unresolved Claim

  	
   

  	
  7.5(b)

  	
   

  
	
  STI Warrants

  	
   

  	
  3.4(b)

  	
   

  
	
  Stockholders
  Agreement

  	
   

  	
  4.19

  	
   

  
	
  Stockholders’
  Meeting

  	
   

  	
  4.2

  	
   

  
	
  Superior
  Proposal

  	
   

  	
  5.2(b)

  	
   

  
	
  Surviving
  Corporations

  	
   

  	
  1.2(b)

  	
   

  
	
  Tax Return

  	
   

  	
  9.1(w)(i)

  	
   

  
	
  Taxes

  	
   

  	
  9.1(x)

  	
   

  
	
  Taxing
  Authority

  	
   

  	
  9.1(y)

  	
   

  
	
  Third Party
  Claim

  	
   

  	
  7.11(a)

  	
   

  
	
  Title IV
  Plan

  	
   

  	
  2.15(a)

  	
   

  
	
  Total Debt

  	
   

  	
  Exhibit D

  	
   

  
	
  Total Equity
  Value of the Company

  	
   

  	
  Exhibit D

  	
   

  

 

iv

 

	
  Defined Terms

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Trade
  Secrets

  	
   

  	
  9.1(z)

  	
   

  
	
  Voting
  Agreements

  	
   

  	
  Recitals “E”

  	
   

  

 

v

 

AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION

 

This AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION, made and entered into as of October 18,
2006 (as amended, supplemented or otherwise modified from time to time, this “Agreement”), by and among Consonus
Acquisition Corp., a Delaware corporation (“Consonus”),
Strategic Technologies, Inc., a North Carolina corporation (“STI”), Consonus Technologies, Inc., a
Delaware corporation (the “Company”),
CAC Merger Sub, Inc., a Delaware corporation and a wholly and directly owned
subsidiary of the Company (“CAC Merger Sub”),
STI Merger Sub, Inc., a North Carolina corporation and a wholly and directly
owned subsidiary of the Company (“STI Merger
Sub” and, together with CAC Merger Sub, the “Merger Subs”), and Knox Lawrence
International, LLC, as the Consonus Holders’ Agent, and Irvin J. Miglietta, as
the STI Holders’ Agent, for the purposes of Article VII only.

 

RECITALS

 

A.            Each of the Board of
Directors of Consonus (the “Consonus Board”)
and the Board of Directors of STI (the “STI
Board”) have determined that it is consistent with and in
furtherance of their respective long-term business strategies and fair to and
in the best interests of their respective companies and stockholders to combine
their respective businesses in a transaction so that they will be conducted by
such companies or their successors as direct subsidiaries of the Company as set
forth in this Agreement.

 

B.            The parties hereto
intend that, upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the “DGCL”) and the
North Carolina Business Corporation Act (the “NCBCA”):
(i) CAC Merger Sub will be merged with and into Consonus, the separate
corporate existence of CAC Merger Sub will thereupon cease and Consonus will
continue as the surviving corporation and a wholly owned subsidiary of the
Company (the “Consonus Merger”),
and (ii) STI Merger Sub will be merged with and into STI, the separate
corporate existence of STI Merger Sub will thereupon cease and STI will
continue as the surviving corporation and a wholly owned subsidiary of the
Company (the “STI Merger”, and
together with the Consonus Merger, the “Mergers”).

 

C.            The Consonus Board has
(i) determined that the Consonus Merger is consistent with and in furtherance
of the long-term business interests of Consonus and fair to, and in the best
interests of Consonus and its stockholders, (ii) declared this Agreement to be
advisable, (iii) approved this Agreement, the Consonus Merger and the other
transactions contemplated by this Agreement, and (iv) determined to recommend
that the stockholders of Consonus adopt this Agreement.

 

D.            The STI Board has (i)
determined that the STI Merger is consistent with and in furtherance of the
long-term business interests of STI and fair to, and in the best interests of,
STI and its stockholders, (ii) declared this Agreement to be advisable, (iii)
approved this Agreement, the STI Merger and the other transactions contemplated
by this Agreement, and (iv) determined to recommend that the stockholders of
STI adopt this Agreement.

 

1

 

E.            As an inducement to
Consonus and the Company to enter into this Agreement, Michael Shook, William
Shook and Irvin Miglietta  (the “STI Principal Stockholders”) have each
entered into a voting agreement, dated as of the date hereof and attached as
Exhibit A (the “Voting Agreements”),
pursuant to which the STI Principal Stockholders have agreed, solely in their
capacity as STI Stockholders, to vote their shares of STI Common Stock in favor
of (i) this Agreement (including the escrow and all other provisions of
Article VII hereof and the deposit of that number of shares of the Company
Common Stock equal to the Escrow Amount into the Escrow Fund and the
appointment of Irvin J. Miglietta as STI Holder Agent), (ii) the Mergers and
(iii) the other transactions contemplated by this Agreement.

 

F.             As an inducement to
STI to enter into this Agreement, Knox Lawrence International, LLC  (the “Consonus
Principal Stockholder”) has entered into a Voting Agreement, dated
as of the date hereof, pursuant to which the Consonus Principal Stockholder has
agreed, solely in its capacity as a Consonus Stockholder, to vote its shares of
Consonus Common Stock in favor of (i) this Agreement (including the escrow and
all other provisions of Article VII hereof and the deposit of that number
of shares of the Company Common Stock equal to the Escrow Amount into the
Escrow Fund and the appointment of KLI as Consonus Holder Agent), (ii) the
Mergers and (iii) the other transactions contemplated by this Agreement.

 

G.            By executing this
Agreement, the parties intend: (i) for United States Federal income tax
purposes, that the Mergers shall collectively qualify as a transaction
described in Section 351 of the Internal Revenue Code of 1986, as amended
(together with the rules and regulations promulgated thereunder, the “Code”) and that each of the Mergers shall
qualify as a reorganization within the meaning of Section 368(a) of the
Code, and that, other than with respect to cash received for fractional shares
pursuant to Section 1.13(c) and for Dissenting Shares pursuant to Section 1.16,
the stockholders of Consonus and STI will recognize no gain or loss for federal
income tax purposes as a result of the consummation of the Mergers; and (ii)
for the Mergers to be accounted for as a purchase under GAAP.

 

In
consideration of the foregoing and the representations, warranties, covenants
and agreements set forth herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE I

THE MERGERS

 

1.1          Organization of the
Company, CAC Merger Sub and STI Merger Sub.

 

(a)           Organization of the
Company. Consonus has organized the Company under the laws of the State of
Delaware for the purpose of effecting the transactions contemplated hereby. As
of the date hereof, the authorized capital stock of the Company consists of
Twenty Million (20,000,000) shares of common stock and Ten Million (10,000,000)
shares of preferred stock, of which five hundred (500) shares of common stock
are issued and outstanding, which shares have been issued to Consonus.

 

(b)           Organization of the
Merger Subs. Consonus has caused the Company to organize CAC Merger Sub and
STI Merger Sub under the laws of the State of Delaware and the

 

2

 

State of North
Carolina, respectively, for the purposes of effecting the transactions contemplated
hereby. The authorized capital stock of each of CAC Merger Sub and STI Merger
Sub consists of one thousand (1,000) shares of common stock, one (1) share of
each of which has been issued to the Company, as the sole stockholder of each
of CAC Merger Sub and STI Merger Sub, for a purchase price of One Dollar
($1.00) per share.

 

(c)           Directors. Prior
to the Effective Time, the Board of Directors of each of the Company (the “Company Board”), CAC Merger Sub and STI
Merger Sub shall consist solely of the chairman of the Consonus Board of
Directors. Beginning at the Effective Time, the Board of Directors of the
Company shall be as set forth in Section 4.11, the Board of Directors of the
STI Surviving Corporation shall be the current board of Directors of STI, and
the Board of Directors of the Consonus Surviving Corporation shall be the
current Board of Directors of Consonus.

 

(d)           Officers. Prior
to the Effective Time, the sole officer of the Company, CAC Merger Sub and STI
Merger Sub shall be the chairman of the Consonus Board of Directors as
President of each such Company. The Company, Consonus and STI shall take all
requisite action to cause the executive officers of the Company and the
Surviving Corporations as of the Effective Time to be as provided in Section 4.12
hereof.

 

(e)           Approval of
Agreement; Compliance. Consonus, in its capacity as the sole holder of all
outstanding shares of the Company’s capital stock, shall adopt this Agreement,
and shall cause the Company to take all requisite action to approve and adopt
this Agreement and approve the transactions contemplated hereby. Consonus shall
cause each of the Company, CAC Merger Sub and STI Merger Sub to perform their
respective obligations under this Agreement in accordance with the terms and
conditions hereof.

 

1.2          The Mergers.

 

(a)           The Consonus Merger.
Upon the terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, and simultaneously with the STI Merger, Consonus, the
Company and CAC Merger Sub shall cause a certificate of merger to be filed with
the Secretary of State of the State of Delaware in accordance with the relevant
provisions of the DGCL (the “Consonus
Certificate of Merger”) providing for the Consonus Merger, with
Consonus being the surviving corporation thereof (the “Consonus Surviving Corporation”) upon the
effectiveness of the Consonus Merger, pursuant to this Agreement and the
Consonus Certificate of Merger and in accordance with applicable provisions of
the DGCL.

 

(b)           The STI Merger. Upon
the terms and subject to the conditions set forth in this Agreement and in
accordance with the NCBCA, and simultaneously with the Consonus Merger, STI,
the Company and STI Merger Sub shall cause articles of merger to be filed with
the Secretary of State of the State of North Carolina in accordance with the
relevant provisions of the NCBCA (the “STI
Articles of Merger”, and together with the Consonus Certificate of
Merger, the “Certificates of Merger”)
providing for the STI Merger, with STI being the surviving corporation thereof
(the “STI Surviving Corporation”,
and together with the Consonus Surviving Corporation, the “Surviving Corporations”) upon the
effectiveness of the STI

 

3

 

Merger, pursuant to this Agreement and the
STI Certificate of Merger and in accordance with applicable provisions of the
NCBCA.

 

1.3          Closing. Subject
to the satisfaction or waiver of the conditions set forth in Article VI
hereof, the consummation of the Mergers shall take place on January 2, 2007 at
a closing (the “Closing”) to be
held at the offices of Wyrick Robbins Yates & Ponton LLP, 4101 Lake Boone
Trail, Suite 300, Raleigh, North Carolina 27607, unless another date, time or
place is agreed to by Consonus and STI (the actual time and date of the Closing
being referred to herein as the “Closing Date”).

 

1.4          Effective Time. As
soon as practicable following the Closing, the parties hereto shall cause the
Mergers to be consummated by filing the Certificates of Merger with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of North Carolina, as the case may be, in such form as is required by,
and executed and acknowledged in accordance with, the relevant provisions of
the DGCL and the NCBCA, as applicable, and make all other filings or recordings
required under the DGCL and the NCBCA. The Mergers shall become effective at
the date and time at which the Certificates of Merger are duly filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of North Carolina, in accordance with the relevant provisions of the DGCL
and the NCBCA, as applicable, or such subsequent date and time as the parties
hereto shall mutually agree and as shall be specified in the Certificates of
Merger (the “Effective Time”);
provided, however, that notwithstanding the foregoing, the parties hereto agree
that the Certificates of Merger shall provide that the Mergers shall become
effective at the same time.

 

1.5          Effect of the Mergers.
At the Effective Time, the effect of each of the Consonus Merger and the STI
Merger shall be as provided in the applicable provisions of the DGCL and the
NCBCA, as applicable. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, except as otherwise provided herein:
(a) all of the property, rights, privileges, powers and franchises of Consonus
and CAC Merger Sub shall vest in the Consonus Surviving Corporation, and all
debts, liabilities and duties of Consonus and CAC Merger Sub shall become the
debts, liabilities and duties of the Consonus Surviving Corporation; and (b)
all the property, rights, privileges, powers and franchises of STI and STI
Merger Sub shall vest in the STI Surviving Corporation, and all debts,
liabilities and duties of STI and STI Merger Sub shall become the debts,
liabilities and duties of the STI Surviving Corporation. As of the Effective
Time, each of the Surviving Corporations shall be a direct wholly-owned
subsidiary of the Company.

 

1.6          Certificate of
Incorporation and Bylaws of the Surviving Corporations. Unless otherwise
agreed by Consonus and STI prior to the Effective Time, at the Effective Time:

 

(a)           Consonus Surviving
Corporation. By virtue of the Consonus Merger, the Certificate of
Incorporation and the Bylaws of Consonus, as in effect on the Effective Date,
shall continue in full force and effect as the Certificate of Incorporation and
Bylaws of the Consonus Surviving Corporation.

 

4

 

(b)           STI Surviving Corporation.
By virtue of the STI Merger, the Articles of Incorporation and the Bylaws of
STI, as in effect on the Effective Date, shall continue in full force and
effect as the Articles of Incorporation and Bylaws of the STI Surviving
Corporation.

 

1.7          Certificate of
Incorporation and Bylaws of the Company. At the Effective Time, the
Certificate of Incorporation and Bylaws of the Company shall be identical to
the forms attached hereto as Exhibit B and Exhibit C, respectively.

 

1.8          Conversion of
Securities. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, by virtue of the Mergers, and without any
action on the part of Consonus, STI, CAC Merger Sub, STI Merger Sub, the
Company or the holders of any of the securities of the foregoing entities, the
following shall occur:

 

(a)           Consonus Securities.

 

(i)            Consonus Common
Stock. Except as provided in Section 1.8(a)(ii) and Section
1.13(c), each share of Consonus Common Stock issued and outstanding
immediately prior to the Effective Time shall, at the Effective Time, be
cancelled and extinguished and automatically converted into the right to
receive that number of fully paid and nonassessable shares of common stock, par
value $0.000001 per share, of the Company (the “Company Common Stock”) obtained by multiplying one share of
the Company Common Stock by 551.4082117 (the “Consonus
Exchange Ratio”).

 

(ii)           Certain Owned
Consonus Shares. Each share of Consonus Common Stock which is, immediately
prior to the Effective Time, held in the treasury of Consonus, or outstanding
and held by STI, the Company, or any direct or indirect wholly owned subsidiary
of Consonus, STI or the Company, shall be canceled and extinguished without any
conversion thereof.

 

(iii)          Adjustments to the
Consonus Exchange Ratio. The Consonus Exchange Ratio shall be adjusted to
reflect fully the appropriate effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities
convertible into Consonus Common Stock), reorganization, recapitalization,
reclassification or other like change with respect to Consonus Common Stock
having a record date on or after the date hereof and prior to the Effective
Time. The Consonus Exchange Ratio shall also be adjusted as set forth in Section 1.8(c).

 

(b)           STI Securities.

 

(i)            STI Common Stock.
Except as provided in Section 1.8(b)(ii) and Section 1.13(c),
each share of STI Common Stock issued and outstanding immediately prior to the
Effective Time shall, at the Effective Time, be cancelled and extinguished and
automatically converted into the right to receive that number of fully paid and
nonassessable shares of the Company Common Stock obtained by multiplying one
share of the Company Common Stock by 0.07716852370881630 (the “STI Exchange Ratio”).

 

(ii)           Certain Owned STI
Shares. Each share of STI Common Stock which is, immediately prior to the
Effective Time, held in the treasury of STI, or outstanding and

 

5

 

held by Consonus, the Company, or any direct
or indirect wholly owned subsidiary of STI, Consonus or the Company, shall be
canceled and extinguished without any conversion thereof.

 

(iii)          STI Options. Each
option to purchase a share of STI Common Stock (an “STI Option”) outstanding immediately prior to the Effective
Time shall be treated in accordance with the terms of Section 4.10
hereof.

 

(iv)          Adjustments to the
STI Exchange Ratio. The STI Exchange Ratio shall be adjusted to reflect
fully the appropriate effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible into
STI Common Stock), reorganization, recapitalization, reclassification or other
like change with respect to STI Common Stock having a record date on or after
the date hereof and prior to the Effective Time. The STI Exchange Ratio shall
also be adjusted as set forth in Section 1.8(c).

 

(c)           Adjustments to Exchange
Ratios Based on Pre-Merger Indebtedness. The Consonus Exchange Ratio and STI
Exchange Ratio designate a post-Mergers capitalization of the Company of 65% of
the issued and outstanding stock of the Company to be held by the pre-Consonus
Merger Consonus Holders and 35% of the issued and outstanding stock of the
Company to be held by the pre-STI Merger STI Holders, prior to any adjustment
pursuant to this Section 1.8(c). The calculation of the Consonus Exchange Ratio
and STI Exchange Ratio is set forth on Exhibit D attached hereto. In the event
that the Total Equity Value of the Company on the Closing Date is greater than
or less than $47,500,000 by 10% or more as a result of changes to the Total
Debt of Consonus and/or STI as set forth on Exhibit D, then the Consonus
Exchange Ratio and STI Exchange Ratio shall be adjusted to reflect the ratio of
their respective Equity Values to the Total Equity Value of the Company. Notwithstanding
any of the foregoing, in the event that an adjustment to the Consonus Exchange
Ratio or the STI Exchange Ratio results in the STI Holders receiving less than
35% of the Company Common Stock, STI will be not required to consummate the
Closing of the Mergers or any of the transactions contemplated herein.

 

1.9          Payment Schedule.

 

(a)           Prior to the Closing,
Consonus shall prepare and deliver to STI a true and correct payment schedule,
which schedule shall list, as of immediately prior to the Closing: (i) all
holders of Consonus Common Stock (the “Consonus
Holders”); (ii) the address of each Consonus Holder; (iii) the
number of whole shares of the Company Common Stock to be issued to each
Consonus Holder; and (iv) the number of whole Consonus Escrow Shares that is to
be deposited with the Escrow Agent pursuant to the Consonus Escrow Agreement on
behalf of each Consonus Holder (the “Consonus
Payment Schedule”).

 

(b)           Prior to the Closing, STI
shall prepare and deliver to Consonus a true and correct payment schedule,
which schedule shall list, as of immediately prior to the Closing: (i) all
holders of STI Common Stock (collectively, the “STI Holders”); (ii) the address of each STI Common Stockholder;
(iii) the number of whole shares of the Company Common Stock to be issued to
each STI Common Stockholder (calculated in accordance with the Articles of
Incorporation of STI, as in effect on the date of Closing (the “STI Certificate”); and (iv) the number of
whole STI Escrow Shares that is to be deposited with the Escrow Agent pursuant
to

 

6

 

the STI Escrow Agreement on behalf of each
STI Holder (the “STI Payment Schedule”
and, together with the Consonus Payment Schedule, the “Payment Schedules”).

 

1.10        Escrow Shares.

 

(a)           Prior to the Closing,
(i) the Company, Consonus, the Consonus Holders’ Agent and the Escrow Agent (as
defined in Section 7.5(a)) shall enter into an Escrow Agreement, in
the form attached hereto as Exhibit E-1 (the “Consonus
Escrow Agreement”), and (ii) the Company, STI, the STI Holders’
Agent, and the Escrow Agent (as defined in Section 7.5(a)) shall
enter into an Escrow Agreement, in the form attached hereto as Exhibit E-2 (the
“STI Escrow Agreement”, and
together with the Consonus Escrow Agreement, the “Escrow Agreements”).

 

(b)           Notwithstanding
anything to the contrary set forth in this Agreement, at the Effective Time,
the Company shall withhold from delivery to the Consonus Holders twenty percent
(20%) of the shares of the Company Common Stock (the “Consonus Escrow Shares”) otherwise issuable
to the Consonus Holders pursuant to Section 1.8(a)(i) and hereof
based on each such holder’s pro rata share of the Company Common Stock, as set
forth on the Consonus Payment Schedule.

 

(c)           Notwithstanding
anything to the contrary set forth in this Agreement, at the Effective Time,
the Company shall withhold from delivery to the STI Holders twenty percent
(20%) of the shares of the Company Common Stock (the “STI Escrow Shares”) otherwise issuable to
the STI Holders pursuant to Section 1.8(b)(i) hereof based on each
such holder’s pro rata share of the Company Common Stock, as set forth on the
STI Payment Schedule.

 

(d)           As soon as practicable
after the Effective Time, and in accordance with the provisions of the Escrow
Agreements, the Company shall cause to be deposited with the Escrow Agent,
certificates representing the Consonus Escrow Shares and the STI Escrow Shares,
which shall be registered in the name of the Escrow Agent as nominee for the
Consonus Holders and STI Holders. The certificates deposited with the Escrow
Agent representing the Consonus Escrow Shares (the “Consonus Escrow Fund”) shall be held by the Escrow Agent
pursuant to the terms of the Consonus Escrow Agreement as security for the
indemnification obligations of the Consonus Holders pursuant to Article VII.
The certificates representing the STI Escrow Shares (the “STI Escrow Fund”) shall be held by the
Escrow Agent pursuant to the terms of the STI Escrow Agreement as security for
the indemnification obligations of the STI Holders pursuant to Article VII.

 

(e)           STI Escrow.

 

(i)            At or prior to
Closing, STI, the STI Holders’ Agent and an escrow agent selected by STI will
enter into an escrow agreement (the “STI
Closing Shares Escrow Agreement”) with respect to the Company Common
Stock issued at Closing to the STI Holders other than the STI Escrow Shares
(the “STI Closing Shares”). The
STI Closing Shares will be held in escrow until the earlier of (A) the closing
of the IPO, at which time such shares will be delivered to the STI Holders in
accordance with the STI Payment Schedule, or (B) such date as the rescission
under the Rescission Agreement occurs (the “Rescission”),
in which case such

 

7

 

shares will be delivered to the Company for
cancellation in exchange for which the STI Holders will receive the STI Common
Stock held by each such STI Holder immediately prior to the closing of the Mergers,
all as further set forth in the Rescission Agreement. In the event neither of
the foregoing occurs by December 31, 2007, the STI Closing Shares will be
delivered to the STI Holders in accordance with the STI Payment Schedule.

 

(ii)           As soon as practicable
after the Effective Time, and in accordance with the provisions of the STI
Closing Shares Escrow Agreement, the Company shall cause to be deposited with
the escrow agent thereunder, a certificate or certificates representing the STI
Closing Shares, which shall be registered in the name of such escrow agent as
nominee for the STI Holders.

 

(iii)          Notwithstanding any of
the foregoing, if in STI’s reasonable discretion, the STI Closing Shares Escrow
Agreement and the provisions related thereto will not be necessary or
beneficial to the Rescission process, if necessary, STI may elect to waive the
provisions of this subsection 1.10(e) and issue the STI Closing Shares directly
to the STI Holders rather than into escrow.

 

1.11        Cancellation of
Outstanding Company Common Stock. At the Effective Time, the shares of the
Company Common Stock held by Consonus immediately prior to the Effective Time,
and all rights in respect thereof, shall be canceled and retired by the
Company, and no shares of capital stock or other securities of the Company or
either of the Surviving Corporations or any other corporation shall be
issuable, and no payment or other consideration shall be made, with respect
thereto.

 

1.12        Conversion of Common
Stock of CAC Merger Sub and STI Merger Sub into Common Stock of the Surviving
Corporations.

 

(a)           At the Effective Time,
each share of common stock, par value $.001 per share, of CAC Merger Sub issued
and outstanding immediately prior to the Effective Time, and all rights in
respect thereof, shall, without any action on the part of the Company, be
cancelled and automatically converted into one validly issued, fully paid and
nonassessable share of common stock, par value $.001 per share, of Consonus
Surviving Corporation (the “Consonus
Surviving Corporation Common Stock”). Immediately after the
Effective Time and upon surrender by the Company of the certificate
representing the shares of common stock of CAC Merger Sub, Consonus Surviving
Corporation shall deliver to the Company an appropriate certificate or
certificates representing the Consonus Surviving Corporation Common Stock
created by conversion of the common stock of CAC Merger Sub owned by the
Company.

 

(b)           At the Effective Time,
each share of common stock, par value $.001 per share, of STI Merger Sub issued
and outstanding immediately prior to the Effective Time, and all rights in
respect thereof, shall, without any action on the part of the Company, be
cancelled and automatically converted into one validly issued, fully paid and
nonassessable share of common stock, par value $.001 per share, of STI
Surviving Corporation (the “STI Surviving
Corporation Common Stock”). Immediately after the Effective Time and
upon surrender by the Company of the certificate representing the shares of
common stock of STI Merger Sub, STI Surviving Corporation shall deliver to the
Company an appropriate certificate or certificates

 

8

 

representing the STI Surviving Corporation
Common Stock created by conversion of the common stock of STI Merger Sub owned
by the Company.

 

1.13        Exchange of Shares.

 

(a)           Company to Provide
Common Stock. Promptly after the Effective Time, the Company shall
allocate, for the benefit of the holders of shares of Consonus Common Stock and
the holders of STI Common Stock, for exchange in accordance with the terms of
this Article I, certificates representing the shares of the Company Common
Stock issuable pursuant to this Agreement. In addition, the Company shall make
available, as necessary from time to time after the Effective Time as needed,
cash in an amount sufficient for payment in lieu of fractional shares pursuant
to Section 1.13(c) hereof and any Pre-surrender Dividends (as defined in
Section 1.13(d) which the Consonus Holders and the STI Holders may be
entitled to pursuant to Section 1.13(b) hereof (the “Exchange Fund”).

 

(b)           Exchange Procedures.
Promptly after the Effective Time, the Company shall mail to each holder of
record (as of the Effective Time) of, or entitled to, a certificate or certificates
(the “Certificates”) which
immediately prior to the Effective Time represented outstanding shares of
Consonus Common Stock and outstanding shares of STI Common Stock, in each case,
whose shares were converted into the right to receive shares of the Company
Common Stock pursuant to Section 1.8(a)(i) and Section 1.8(b)(i) hereof,
cash in lieu of any fractional shares pursuant to Section 1.13(c) hereof
and any Pre-surrender Dividends as defined in and pursuant to
Section 1.13(d) hereof: (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Company  and shall be in such form and have such other
provisions as Consonus and STI may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing whole shares of the Company Common Stock, cash in
lieu of any fractional shares pursuant to Section 1.13(c) hereof and any
Pre-surrender Dividends as defined in and pursuant to Section 1.13(d)
hereof. Upon surrender of Certificates for cancellation to the Company or
delivery of appropriate documentation discussed in Section 1.18, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto and such other documents as may reasonably be
required by the Company, the holder of such Certificates shall be entitled to
receive in exchange therefor the number of whole shares of the Company Common
Stock (after taking into account all Certificates surrendered by such holder)
to which such holder is entitled pursuant to Section 1.8(a)(i) or Section
1.8(a)(iv) hereof, payment in lieu of fractional shares which such holder has
the right to receive pursuant to Section 1.13(c) hereof and any Pre-surrender
Dividends as defined in and payable pursuant to Section 1.13(d) and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence the ownership of the number of full shares
of the Company Common Stock into which such shares of Consonus Common Stock or
shares of STI Common Stock shall have been so converted and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.13(c) hereof and any Pre-surrender Dividends as
defined in and payable pursuant to Section 1.13(d) hereof.

 

9

 

(c)           Fractional Shares.
No fraction of a share of the Company Common Stock will be issued by virtue of
the Mergers, but in lieu thereof each holder of STI Common Stock who
(i) would otherwise be entitled to receive a fraction of a share of
Company Common Stock of five-tenths(0.5) or more, will receive a whole share of
Company Common Stock, and (ii) would otherwise be entitled to receive a
fraction of a share of Company Common Stock of less than five-tenths (0.5), will
receive no consideration therefor, and each holder of Consonus Common Stock who
would otherwise be entitled to receive a fraction of a share of the Company
Common Stock shall, upon surrender of such holder’s Certificate(s), receive
from the Company, at such time as such holder receives a Certificate or
Certificates representing shares of the Company Common Stock as contemplated by
Section 1.8(a)(i) or 1.8(a)(iv) 
hereof (or appropriate documentation discussed in Section 1.18), an
amount of cash (rounded up to the nearest whole cent), without interest, equal
to the product obtained by multiplying (i) such fraction, and (ii) the fair
market value of one share of the Company Common Stock as of the Effective Time
as determined in good faith by the Company Board based on the Total Equity
Value.

 

(d)           Distributions With
Respect to Unexchanged Shares. No dividends or other distributions declared
or made after the date hereof with respect to the Company Common Stock,
Consonus Common Stock or STI Common Stock with a record date after the
Effective Time and no payment in lieu of fractional shares pursuant to
Section 1.13(c) hereof will be paid to the holders of any unsurrendered
Certificates with respect to the shares of the Company Common Stock represented
thereby until the holders of record of such Certificates shall surrender such
Certificates. Subject to applicable laws and legal requirements, following
surrender of any such Certificates, the Company shall deliver to the record
holders thereof, without interest (i) promptly after such surrender, the number
of whole shares of the Company Common Stock issued in exchange therefor along
with payment in lieu of fractional shares pursuant to Section 1.13(c)
hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time (“Pre-surrender
Dividends”) and theretofore paid with respect to such whole shares
of the Company Common Stock and (ii) at the appropriate payment date, the
amount of Pre-surrender Dividends with a record date after the Effective Time
and a payment date subsequent to such surrender payable with respect to such
whole shares of the Company Common Stock.

 

(e)           Transfers of
Ownership. If shares of the Company Common Stock are to be issued in a name
other than that in which the Certificates surrendered in exchange therefor are
registered, it will be a condition of the issuance thereof that the
Certificates so surrendered will be properly endorsed or accompanied by
appropriate stock powers, and otherwise in proper form for transfer and that
the Persons requesting such exchange will have paid to the Company or any agent
designated by it any transfer or other Taxes required by reason of the issuance
of shares of the Company Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of the Company or any agent designated by it that such any such
Taxes have been paid or are not payable.

 

(f)            Required
Withholding. Each of the Company and the Surviving Corporations shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of
Consonus Common Stock or STI Common Stock such amounts as may be required to be
deducted or

 

10

 

withheld therefrom under the Code or under
any provision of state, local or foreign Tax laws or under any other applicable
Laws. To the extent such amounts are so deducted or withheld, the amount of
such consideration shall be treated for all purposes under this Agreement as
having been paid to the Person to whom such consideration would otherwise have
been paid.

 

(g)           Termination of
Exchange Fund; No Liability. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of Consonus Common Stock or STI Common
Stock immediately prior to such time as such amounts would otherwise escheat to
or become property of any Governmental Body shall, to the extent permitted by
applicable Laws, become the property of the Company, free and clear of any
claims or interest of any Person previously entitled thereto. Notwithstanding
anything to the contrary in this Section 1.13(g), none of the Company, the
Surviving Corporations or any other party hereto shall be liable to a holder or
former holder of shares of Consonus Common Stock, STI Common Stock or the
Company Common Stock, as the case may be, for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar Legal Requirement.

 

1.14        Stock Transfer Books.
At the Effective Time, the stock transfer books of Consonus with respect to
Consonus capital stock and the stock transfer books of STI with respect to STI
capital stock shall each be closed, and there shall be no further registration
thereafter of transfers of shares of capital stock of Consonus or STI
outstanding immediately prior to the Effective Time on the records of any such
stock transfer books.

 

1.15        Restricted Shares. If
any shares of STI Common Stock or Consonus Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with STI or Consonus, as the case may be
(the “Restricted Shares”), then
the shares of the Company Common Stock issued in exchange for such Restricted
Shares shall also be unvested and subject to the same repurchase option, risk
of forfeiture or other condition, and the certificates representing such shares
may accordingly be marked with appropriate legends. Schedule 1.15(a)
sets forth a list of the holders of Restricted Shares of Consonus and the
number of Restricted Shares held by each such holder, and Schedule 1.15(b)
sets forth a list of the holders of Restricted Shares of STI and the number of
Restricted Shares held by each such holder. STI and Consonus shall take all
action that may be necessary to ensure that, from and after the Effective Time,
the Company will be entitled to exercise any such repurchase option or other
right set forth in any such restricted stock purchase agreement or other
agreement. The number of shares subject to repurchase and the repurchase price
pursuant to any repurchase option shall be appropriately adjusted to reflect
the Mergers.

 

1.16        Dissenting Shares. Notwithstanding
any other provisions of this Agreement to the contrary, any holder of Consonus
capital stock outstanding as of immediately prior to the Effective Time, and
with respect to which the holder thereof has properly demanded appraisal rights
in accordance with Section 262 of the DGCL and has not effectively
withdrawn or lost such holder’s appraisal rights under Section 262 of the
DGCL with respect to such Consonus Holder’s Consonus Common Stock (the “Consonus Dissenting Shares”), and any
holder of STI capital stock outstanding immediately prior to the Effective Time
and with respect to which the holder thereof has properly demanded appraisal or
dissenters’ rights in accordance with Section 55-13-21 of the NCBCA and has not
effectively withdrawn or lost such STI Holder’s appraisal

 

11

 

or dissenters’ rights under Article 13 of
Chapter 55 of the NCBCA with respect to such STI Holder’s STI Common Stock (the
“STI Dissenting Shares,” and together with the Consonus Dissenting Shares, the “Dissenting Shares”) shall not be converted
into or represent a right to receive the consideration for such shares set
forth in Section 1.8 hereof, but the holder thereof shall only be entitled
to such rights as are provided by the DGCL with respect to the Consonus
Dissenting Shares and of the NCBCA with respect to the STI Dissenting Shares.

 

(a)           If any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder’s appraisal rights under Section 262 of
the DGCL with respect to the Consonus Dissenting Shares and
Sections 55-13-21 and 55-13-23 of the NCBCA with respect to STI Dissenting
Shares, then, as of the later of the Effective Time and the occurrence of such
event, such shares shall automatically be converted into and represent only the
right to receive the consideration for such shares set forth in
Section 1.8 hereof, without interest thereon, upon surrender of the
certificate(s) representing such shares.

 

(b)           With respect to
Consonus Dissenting Shares, prior to the Effective Time, Consonus shall give
STI (i) prompt notice of any written demand for appraisal received by Consonus
pursuant to the applicable provisions of the DGCL, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such demands. Prior
to the Effective Time, Consonus shall not, except with the prior written
consent of STI, voluntarily make any payment with respect to any such demands
or offer to settle or settle any such demands. Notwithstanding the foregoing,
to the extent that Consonus or the Company (i) makes any payment or payments in
respect of any Consonus Dissenting Shares in excess of the consideration that
otherwise would have been payable in respect of such shares in accordance with
this Agreement or (ii) incurs any other costs or expenses in respect of any
Consonus Dissenting Shares (excluding payments for such shares) (together the “Consonus Dissenting Share Payments”), the
Company shall be entitled to indemnification in respect of such Consonus
Dissenting Share Payments pursuant to Article VII hereof.

 

(c)           With respect to STI
Dissenting Shares, prior to the Effective Time, STI shall give Consonus (i)
prompt notice of any written demand for appraisal or payment received by STI
pursuant to the applicable provisions of the NCBCA, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such demands. Prior
to the Effective Time, STI shall not, except with the prior written consent of
Consonus, voluntarily make any payment with respect to any such demands or
offer to settle or settle any such demands. Notwithstanding the foregoing, to
the extent that STI or the Company (i) makes any payment or payments in respect
of any STI Dissenting Shares in excess of the consideration that otherwise
would have been payable in respect of such shares in accordance with this
Agreement or (ii) incurs any other costs or expenses in respect of any STI
Dissenting Shares (excluding payments for such shares) (together the “STI Dissenting Share Payments”), the
Company shall be entitled to indemnification in respect of such STI Dissenting
Share Payments pursuant to Article VII hereof.

 

1.17        Tax Consequences. It
is intended by the parties hereto that each of the Mergers shall constitute a
tax-free reorganization within the meaning of Section 368(a) of the Code
and that the Mergers collectively shall qualify as a transaction described in
Section 351 of the Code. By executing this Agreement, the parties hereto
adopt a plan of reorganization within the

 

12

 

meaning of Treas. Reg. §§ 1.368-2(g) and
1.368-3. None of the parties hereto shall take any action that would be
reasonably expected to cause either of the Mergers to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code or the
Mergers collectively to fail to qualify as a transaction described in Section 351
of the Code.

 

1.18        Lost, Stolen or
Destroyed Certificate. In the event any certificates evidencing Consonus
Common Stock or STI Common Stock shall have been lost, stolen or destroyed, the
Company shall issue in exchange for such lost, stolen or destroyed certificates
upon the making of an affidavit of that fact by the holder thereof, such shares
of the Company Common Stock as may be required pursuant to Section 1.8
and cash in lieu of fractional shares pursuant to Section 1.13(c)
hereof (and Pre-surrender Dividends with respect thereto, if any); provided,
however, that the Company may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
certificates to deliver a reasonable form of indemnity against any claim that
may be made against the Company or either of the Surviving Corporations with
respect to the certificates alleged to have been lost, stolen or destroyed.

 

1.19        No Further Ownership
Rights in Capital Stock of Consonus and STI. All shares of the Company
Common Stock and any cash in lieu of fractional shares issued upon the
surrender for exchange of the Consonus Common Stock and STI Common Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares and there shall be no
further registration of transfers on the records of the Company or the
Surviving Corporations of the shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, certificates representing any
Consonus Common Stock or STI Common Stock are presented to the Company for any
reason, they shall be canceled and exchanged in accordance with the terms of
this Article I.

 

1.20        Taking of Necessary
Action; Further Action. If, at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporations or the Company with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Consonus and STI, as the case may be, the officers and
directors of the Company, Consonus, STI and the Merger Subs are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action, so long as such action is
not inconsistent with this Agreement.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF CONSONUS

 

Consonus
hereby represents and warrants to the Company and STI as follows:

 

2.1          Organization and Good
Standing.

 

(a)           Consonus is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. Consonus is duly qualified or authorized to do business as a
foreign corporation and is in good standing under the laws of each jurisdiction
in which it owns or leases real property and each

 

13

 

other jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing would not have a Material Adverse Effect on Consonus (a “Consonus Material Adverse Effect”).

 

(b)           Each of the Company,
CAC Merger Sub and STI Merger Sub are duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted.

 

2.2          Authorization of
Agreement.

 

(a)           Consonus has all
requisite corporate power and authority to execute and deliver this Agreement and
each other agreement, document, or instrument or certificate contemplated by
this Agreement or to be executed by Consonus in connection with the
transactions contemplated by this Agreement (the “Consonus Documents”), to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and each of Consonus
Documents, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by all required corporate
action on the part of Consonus and, except for obtaining the stockholder
approval for the adoption of this Agreement, no other corporate action on the
part of Consonus is necessary to authorize the execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been, and each of Consonus Documents
will be when executed at Closing, duly and validly executed and delivered by Consonus
and (assuming due authorization, execution and delivery by STI) this Agreement
constitutes, and each of Consonus Documents when so executed and delivered will
constitute, legal, valid and binding obligations of Consonus, enforceable
against Consonus in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally and by general principles of equity (regardless of whether considered
in a proceeding in equity or at law).

 

(b)           Each of the Company,
CAC Merger Sub and STI Merger Sub has all requisite corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by such entity in connection with the transactions contemplated by
this Agreement (the “Newco Documents”), to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and each of
Newco Documents, and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized and approved by all required corporate
action on the part of the applicable entity and no other corporate action on
the part of any such entity is necessary to authorize the execution, delivery
and performance of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been, and each of Newco
Documents will be when executed at Closing, duly and validly executed and
delivered by the Company, CAC Merger Sub and STI Merger Sub and (assuming due
authorization, execution and delivery by STI) this Agreement constitutes, and
each of Newco Documents when so executed and delivered will constitute, legal,
valid and

 

14

 

binding obligations of the Company, CAC
Merger Sub and STI Merger Sub, as applicable, enforceable against such entity
in accordance with their respective terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).

 

2.3          Conflicts; Consents
of Third Parties.

 

(a)           Except as set forth on Schedule
2.3(a), none of the execution and delivery by Consonus of this Agreement or
the Consonus Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by Consonus with any of the provisions hereof
or thereof will conflict with, or result in any violation or breach of,
conflict with or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or give rise to any
obligation of Consonus to make any payment under, or to the increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Liens upon any of the properties or
assets of Consonus under, any provision of (i) the certificate of
incorporation and bylaws or comparable organizational documents of Consonus;
(ii) any contract or Permit to which Consonus is a party or by which any
of the properties or assets of Consonus are bound; (iii) any Order applicable
to Consonus or any of the properties or assets of Consonus; or (iv) any applicable
Law, except in the case of clauses (ii) and (iv) for such violations, breaches,
conflicts or defaults as could not reasonably be expected to have a Consonus
Material Adverse Effect.

 

(b)           Except as set forth on Schedule
2.3(b), no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of Consonus in connection with (i) the execution
and delivery of this Agreement, the Consonus Documents, the compliance by
Consonus with any of the provisions hereof and thereof, or the consummation of
the transactions contemplated hereby or thereby, except for those the failure
of which to obtain would not result in a Consonus Material Adverse Effect or
(ii) the continuing validity and effectiveness immediately following the
Closing of any material Permit or Material Contract of Consonus.

 

2.4          Capitalization.

 

(a)           The authorized capital
stock of Consonus consists of 10,000 shares of Series A preferred stock, no par
value, and 15,000,000 shares of Series B preferred Stock, par value $0.10 per
share (collectively, “Consonus Preferred
Stock”), and 10,000 shares of common stock, no par value per share (“Consonus Common Stock”). As of the date
hereof, there are 15,000,000 shares of Consonus Preferred Stock issued and
outstanding and 5,254 shares of Consonus Common Stock issued and outstanding. All
of the issued and outstanding shares of Consonus Preferred Stock and Consonus
Common Stock were duly authorized for issuance and are validly issued, fully
paid and non-assessable and were not issued in violation of any purchase or
call option, right of first refusal, subscription right, preemptive right or
any similar rights. All of the outstanding shares of Consonus Common Stock and
Consonus Preferred Stock are owned of record by the holders and in the
respective amounts as are set forth on Schedule 2.4(a).

 

15

 

(b)           Schedule 2.4(b)
sets forth the holders of Consonus Options and warrants to purchase the capital
stock of Consonus (the “Consonus Warrants”)
and the respective number of shares of Consonus Common Stock subject to each
outstanding Consonus Option and Consonus Warrant, and the applicable exercise
price, expiration date and vesting date. Except for Consonus Options and
Consonus Warrants described in Schedule 2.4(b), there is no existing
option, warrant, call, right or contract requiring, and there are no securities
of Consonus outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of Consonus or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of Consonus. Except as set forth in Schedule
2.4(b), there are no obligations, contingent or otherwise, of Consonus to
(i) repurchase, redeem or otherwise acquire any shares of Consonus Common
Stock or Consonus Preferred Stock, or (ii) provide material funds to, or
make any material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of, any
Person. Except as set forth on Schedule 2.4(b), there are no outstanding
stock appreciation, phantom stock, profit participation or similar rights with
respect to Consonus. There are no bonds, debentures, notes or other
indebtedness of Consonus having the right to vote or consent (or, convertible
into, or exchangeable for, securities having the right to vote or consent) on
any matters on which stockholders of Consonus may vote. Except as set forth on Schedule
2.4(b), there are no voting trusts, irrevocable proxies or other contracts
or understandings to which Consonus or any Consonus Holder is a party or is
bound with respect to the voting or consent of any shares of Consonus Common
Stock, Consonus Preferred Stock, Consonus Options or Consonus Warrants.

 

2.5          Consonus Subsidiaries
and Affiliated Entities.

 

(a)           Schedule 2.5
sets forth the name of each entity in which Consonus holds, directly or
indirectly, more than fifty percent (50%) of the voting securities of such
entity (each a “Consonus Subsidiary”).
Each Consonus Subsidiary is a duly organized and validly existing corporation,
partnership or other entity in good standing under the laws of the jurisdiction
of its incorporation or organization and is in good standing under the laws of
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified would not have a Consonus Material Adverse Effect.

 

(b)           Each Consonus
Subsidiary has all requisite corporate or entity power and authority to own its
properties and carry on its business as presently conducted.

 

(c)           The outstanding shares
of capital stock or equity interests of each Consonus Subsidiary are validly
issued, fully paid and non-assessable and were not issued in violation of any
purchase or call option, right of first refusal, subscription right, preemptive
right or any similar right. All such shares or other equity interests
represented as being owned by Consonus or any of the Consonus Subsidiaries are
owned by them free and clear of any and all Liens, except as set forth in Schedule
2.5. No shares of capital stock are held by any Consonus Subsidiary as
treasury stock. There is no existing option, warrant, call, right or contract
to which any Consonus Subsidiary is a party requiring, and there are no
convertible securities of any Consonus Subsidiary outstanding which upon
conversion would require, the issuance of any

 

16

 

shares of capital stock or other equity
interests of any Consonus Subsidiary or other securities convertible into
shares of capital stock or other equity interests of any Consonus Subsidiary.

 

(d)           Consonus does not own,
directly or indirectly, any capital stock or equity securities of any Person
other than the Consonus Subsidiaries. Except as set forth on Schedule 2.5,
there are no material restrictions on the ability of the Consonus Subsidiaries
to make distributions of cash to their respective equity holders.

 

2.6          Corporate Records.

 

(a)           Consonus has delivered
to STI true, correct and complete copies of the certificate of incorporation
(certified by the Secretary of State of Delaware) and bylaws (certified by the
secretary) of Consonus and the organizational documents of each of the Consonus
Subsidiaries, each as amended and in effect on the date hereof, including all
amendments thereto.

 

(b)           The minute books of
Consonus and each Consonus Subsidiary previously made available to STI contain
true, correct and complete records in all material respects of all meetings and
accurately reflect in all material respects all other corporate action of the
stockholders and board of directors (including committees thereof) of Consonus
and the Consonus Subsidiaries. The stock certificate books and stock transfer
ledgers of Consonus and the Consonus Subsidiaries previously made available to
STI are true, correct and complete. All stock transfer Taxes levied, if any, or
payable with respect to all transfers of shares of Consonus prior to the date
hereof have been paid and appropriate transfer tax stamps affixed.

 

2.7          Financial Statements.

 

(a)           Consonus has delivered
to STI copies of (i) the audited consolidated balance sheets of Consonus as at
December 31, 2005 and the related audited consolidated statements of income and
of cash flows of Consonus for the year then ended, and (ii) the unaudited
consolidated balance sheet of Consonus as at August 31, 2006 and the related
consolidated statements of income and cash flows of Consonus for the
eight-month period then ended (such audited and unaudited statements, including
the related notes and schedules thereto, are referred to herein as the “Consonus Financial Statements”). Each of
the Consonus Financial Statements is complete and correct in all material
respects, has been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”)
consistently applied (except with respect to the unaudited financial statements
which lack footnotes and other presentation items and are subject to normal
year-end audit adjustments) by Consonus or such other entity without
modification of the accounting principles used in the preparation thereof
throughout the periods presented except as may be noted therein and presents
fairly in all material respects the consolidated financial position, results of
operations and cash flows of Consonus or such other entity as at the dates and
for the periods indicated therein. The consolidated balance sheet of Consonus
as at August 31, 2006 is referred to herein as the “Consonus Balance Sheet” and August 31, 2006 is referred to
herein as the “Consonus Balance Sheet Date.”

 

(b)           All books, records and
accounts of Consonus and the Consonus Subsidiaries are accurate and complete in
all material respects and are maintained in all material

 

17

 

respects in accordance with good business
practice and all applicable Laws. Consonus and the Consonus Subsidiaries
maintain systems of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are recorded
as necessary to permit the preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the actual levels at reasonable intervals and appropriate action is taken
with respect to any differences.

 

(c)           Consonus’ principal
executive officer and its principal financial officer have disclosed, based on
their most recent evaluation, to their actual knowledge, to Consonus’ auditors
(i) all significant deficiencies in the design or operation of internal
controls which could adversely affect Consonus’ ability to record, process,
summarize and report financial data and have identified for Consonus’ auditors
any material weaknesses in internal controls and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Consonus’ internal controls. Notwithstanding the foregoing, Consonus is
not representing that its internal controls meet the standards required by
Section 404 of the Sarbanes-Oxley Act, nor are they required to meet such
standards at this time.

 

(d)           Consonus currently has
an internal record retention procedure appropriate for the conduct of the
business as it has been conducted, with which it is in compliance in all
material respects.

 

2.8          No Undisclosed
Liabilities. Except as set forth on Schedule 2.8, neither Consonus
nor any Consonus Subsidiary has any indebtedness or liabilities (whether or not
required under GAAP to be reflected on a balance sheet or the notes thereto)
other than (i) those specifically reflected on and fully reserved against in
the Consonus Balance Sheet, (ii) those that are immaterial to Consonus or any
Consonus Subsidiary or (iii) liabilities (but not indebtedness) incurred in the
ordinary course of business since the Consonus Balance Sheet Date.

 

2.9          Absence of Certain
Developments. Except as expressly contemplated by this Agreement or as set
forth on Schedule 2.9, since December 31, 2005 (i) Consonus
and the Consonus Subsidiaries have conducted their business only in the
ordinary course of business and (ii) there has not been any event, change,
occurrence or circumstance that, individually or in the aggregate with any such
events, changes, occurrences or circumstances, has had or could reasonably be
expected to have a Consonus Material Adverse Effect. Without limiting the
generality of the foregoing, since December 31, 2005, and except as set
forth on Schedule 2.9:

 

(i)            there has not been any
damage, destruction or loss, whether or not covered by insurance, with respect
to the property and assets, excluding accounts receivable, of Consonus or any
Consonus Subsidiary of more than $10,000 for any single loss or $25,000 for all
such losses;

 

(ii)           there has not been any
declaration, setting aside or payment of any dividend or other distribution in
respect of any shares of capital stock of Consonus or any repurchase,
redemption or other acquisition by Consonus or any Consonus Subsidiary of any

 

18

 

outstanding shares of capital stock or other
securities of, or other ownership interest in, Consonus or any Consonus
Subsidiary;

 

(iii)          neither Consonus nor any
Consonus Subsidiary has awarded or paid any bonuses to employees of Consonus or
any Consonus Subsidiary with respect to the fiscal year most recently ended,
except to the extent accrued on the Consonus Balance Sheet, or entered into any
employment, deferred compensation, severance or similar agreement (nor amended
any such agreement) or agreed to increase the compensation payable or to become
payable by it to any of Consonus’ or any Consonus Subsidiary’s directors,
officers, employees, agents or representatives or agreed to increase the
coverage or benefits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with such directors, officers, employees, agents or representatives, except in
each case, in the ordinary course of business;

 

(iv)          there has not been any
change by Consonus or any Consonus Subsidiary in accounting or Tax reporting
principles, methods or policies;

 

(v)           neither Consonus nor
any Consonus Subsidiary has made or rescinded any election relating to Taxes or
settled or compromised any claim relating to Taxes;

 

(vi)          neither Consonus nor any
Consonus Subsidiary has entered into any material transaction or contract other
than in the ordinary course of business and other than this Agreement;

 

(vii)         neither Consonus nor any
Consonus Subsidiary has failed to promptly pay and discharge material current
liabilities when due except where disputed in good faith or upon agreement with
the third party for extended terms.

 

(viii)        neither Consonus nor any
Consonus Subsidiary has made any loans, advances or capital contributions to,
or investments in, any Person or paid any fees or expenses to any Consonus
Holder or any director, officer, partner, stockholder or Affiliate of any
Consonus Holder;

 

(ix)          except for capitalized
leases entered into in the ordinary course of business, neither Consonus nor
any Consonus Subsidiary has (A) mortgaged, pledged or subjected to any Lien any
of its assets, or (B) acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any assets of Consonus, except, in
the case of clause (B), for assets acquired, sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the ordinary course of business;

 

(x)           neither Consonus nor
any Consonus Subsidiary has discharged or satisfied any Lien, or paid any
liability, except in the ordinary course of business;

 

(xi)          neither Consonus nor any
Consonus Subsidiary has canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or

 

19

 

released any contract or right except in the
ordinary course of business and which, in the aggregate, would not be material
to Consonus;

 

(xii)         neither Consonus nor any
Consonus Subsidiary has made or committed to make any capital expenditures or
capital additions or betterments in excess of $5,000 individually or $25,000 in
the aggregate;

 

(xiii)        neither Consonus nor any
Consonus Subsidiary has issued, created, incurred, assumed, guaranteed,
endorsed or otherwise become liable or responsible with respect to (whether
directly, contingently, or otherwise) any material indebtedness, which shall
not include purchase obligations under vendor or customer agreements entered
into in the ordinary course of business;

 

(xiv)        neither Consonus nor any
Consonus Subsidiary has granted any license or sublicense of any rights under
or with respect to any Intellectual Property except in the ordinary course of
business;

 

(xv)         neither Consonus nor any
Consonus Subsidiary has instituted any Legal Proceeding or settled any Legal
Proceeding which would in the aggregate be material to Consonus; and

 

(xvi)        neither the Consonus
Principal Stockholder nor Consonus has agreed, committed, arranged or entered
into any understanding to do anything set forth in this Section 2.9.

 

2.10        Taxes.

 

(a)           (1)           All Tax Returns required to be filed by or
on behalf of each of Consonus, any Consonus Subsidiary and any Affiliated Group
of which Consonus or any Consonus Subsidiary is or was a member have been duly
and timely filed with the appropriate Taxing Authority in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all such Tax
Returns are true, complete and correct; and (ii) except as set forth on Schedule
2.10(a), all Taxes payable by or on behalf of each of Consonus, any
Consonus Subsidiary and any Affiliated Group of which Consonus or any Consonus
Subsidiary is or was a member have been fully and timely paid. With respect to
any period for which Taxes are not yet due or owing, Consonus has made due and
sufficient accruals for such Taxes in the Consonus Financial Statements and its
books and records. All required estimated Tax payments sufficient to avoid any
underpayment penalties or interest have been made by or on behalf of Consonus
and each Consonus Subsidiary.

 

(b)           Consonus and each
Consonus Subsidiary have complied with all applicable Laws relating to the
payment and withholding of Taxes and have duly and timely withheld and paid
over to the appropriate Taxing Authority all amounts required to be so withheld
and paid under all applicable Laws.

 

(c)           Consonus has delivered
to STI complete copies of (i) all federal, state, local and foreign income,
franchise and all other material Tax Returns of Consonus and Consonus
Subsidiaries relating to the taxable periods since its formation and (ii) any
audit report

 

20

 

issued since the formation of Consonus
relating to any Taxes due from or with respect to Consonus or any Consonus
Subsidiary.

 

(d)           Schedule 2.10(d)
lists (i) all material types of Taxes paid, and all types of Tax Returns filed
by or on behalf of Consonus or any Consonus Subsidiary, and (ii) all of the
jurisdictions that impose such Taxes or with respect to which Consonus or any
Consonus Subsidiary has a duty to file such Tax Returns. No claim has been made
by a Taxing Authority in any jurisdiction where Consonus or any Consonus
Subsidiary is or may be subject to Taxation by that jurisdiction with respect
to any type of Tax for which such entity does not file Tax Returns in that
jurisdiction.

 

(e)           All deficiencies
asserted or assessments made as a result of any examinations by any Taxing
Authority of the Tax Returns of, or including, Consonus or any Consonus
Subsidiary have been fully paid, and there are no other audits or
investigations by any Taxing Authority in progress, nor has Consonus or any
Consonus Subsidiaries or any officer thereof received any notice from any
Taxing Authority that it intends to conduct such an audit or investigation. No
issue has been raised by a Taxing Authority in any prior examination of
Consonus or any Consonus Subsidiary which, by application of the same or
similar principles, could reasonably be expected to result in a proposed
deficiency in Tax for any subsequent taxable period.

 

(f)            Neither Consonus nor
any Consonus Subsidiary nor any other Person on behalf of Consonus or any
Consonus Subsidiary has (i) agreed to or is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision of Law or has
any Knowledge that any Taxing Authority has proposed any such adjustment, or
has any application pending with any Taxing Authority requesting permission for
any changes in accounting methods that relate to Consonus, (ii) executed or
entered into a closing agreement pursuant to Section 7121 of the Code or any
similar provision of Law with respect to Consonus, or any Consonus Subsidiary,
(iii) requested any extension of time within which to file any Tax Return,
which Tax Return has since not been filed, (iv) granted any extension for the
assessment or collection of Taxes, which Taxes have not since been paid, or (v)
granted to any Person any power of attorney that is currently in force with
respect to any Tax matter.

 

(g)           No property owned by
Consonus or any Consonus Subsidiary is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use
property” within the meaning of Section 168(h)(1) of the Code, (iii) “tax-exempt
bond financed property” within the meaning of Section 168(g) of the Code, (iv)
leased property that is “limited use property” within the meaning of Rev. Proc.
2001-28, (v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to
any provision of state, local or foreign Law comparable to any of the
provisions listed above.

 

(h)           Consonus is not, and
will not have been at any time during the five-year period ending on the
Closing Date, a “U.S. real property holding corporation,” within the meaning of
Section 897(c) of the Code.

 

21

 

(i)            Neither Consonus nor
any Consonus Subsidiary is a party to any tax sharing, allocation, indemnity or
similar agreement or arrangement (whether or not written) pursuant to which it
will have any obligation to make any payments after the Closing.

 

(j)            There is no contract,
agreement, plan or arrangement covering any person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by Consonus or any of its respective Affiliates by reason of Section
280G of the Code.

 

(k)           Neither Consonus nor
any Consonus Subsidiary is subject to any private letter ruling of the IRS or
comparable rulings of any Taxing Authority.

 

(l)            There are no Liens as
a result of any unpaid Taxes upon any of the assets of Consonus or any Consonus
Subsidiary, except for statutory liens covering Taxes not yet due and payable.

 

(m)          Neither Consonus nor any
of Consonus Subsidiaries has ever been a member of any consolidated, combined,
affiliated or unitary group of corporations for any Tax purposes other than a
group in which Consonus is the common parent.

 

(n)           Neither Consonus nor
any of Consonus Subsidiaries has constituted either a “distributing corporation”
or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of
the Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution which could otherwise constitute part of a “plan”
or “series of related transactions” (within the meaning of Section 355(e) of
the Code) in conjunction with the transactions contemplated by this Agreement.

 

(o)           There is no taxable
income of Consonus or any Consonus Subsidiaries that will be required under
applicable Tax Law to be reported by the Company or any of its Affiliates,
including Consonus or any of Consonus Subsidiaries, for a taxable period
beginning after the Closing Date which taxable income was realized (and
reflects economic income) arising prior to the Closing Date.

 

(p)           Consonus and each
Consonus Subsidiary has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to substantial understatement of
federal income tax within the meaning of Section 6662 of the Code.

 

(q)           Neither Consonus nor
any Consonus Subsidiary currently has, or has ever had, a permanent
establishment in any jurisdiction other than the United States, or has engaged
in a trade or business in any jurisdiction other than the United States that
subjected it to tax in such country.

 

(r)            Consonus and Consonus
Subsidiaries have not participated in any “reportable transaction” as defined
in Treasury Regulations Section 1.6011-4(b).

 

22

 

2.11        Real Property.

 

(a)           Schedule 2.11
sets forth a complete list of (i) all real property and interests in real
property, including improvements thereon and easements appurtenant thereto
owned in fee by Consonus or any Consonus Subsidiary (the “Consonus Owned Real Properties”),
(ii) all real property and interests in real property leased by Consonus
or any Consonus Subsidiary with annual payments in excess of $10,000 (the “Consonus Real Property Leases” and,
together with the Consonus Owned Properties, the “Consonus Real Properties”) as lessee or lessor, including a
description of each such Consonus Real Property Lease (including the name of
the third party lessor or lessee and the date of the lease or sublease and all
amendments thereto). Consonus and the Consonus Subsidiaries have good and
marketable fee title to all Consonus Owned Real Properties, free and clear of
all Liens of any nature whatsoever, except (A) those Liens set forth on Schedule 2.11
and (B) Permitted Exceptions. The Consonus Real Properties constitute all
interests in real property currently used, occupied or currently held for use
in connection with the business of Consonus or any Consonus Subsidiary. To the
Knowledge of Consonus, all of the Consonus Real Properties and all of the
properties covered by Consonus Real Property Leases and buildings, fixtures and
improvements thereon, (i) are in good operating condition (ordinary wear and
tear excepted) without structural defects, and all mechanical and other systems
located thereon are in good operating condition (ordinary wear and tear
excepted), and no condition exists requiring material repairs, alterations or
corrections and (ii) are suitable, sufficient and appropriate in all respects
for their current uses. To the Knowledge of Consonus, none of the improvements
located on the Consonus Real Properties constitutes a legal non-conforming use
or otherwise requires any special dispensation, variance or special permit
under any Laws. Consonus has delivered to STI, or shall deliver to STI within 5
business days of the date of this Agreement, true, correct and complete copies
of (i) all deeds, title reports, surveys, engineering reports, environmental
reports, rent rolls, insurance claims history and repair history for the
Consonus Owned Properties in Consonus’ possession or control, and (ii) the
Consonus Real Property Leases, together with all amendments, modifications or
supplements, if any, thereto. Except as set forth on Schedule 2.11, the
Consonus Owned Real Properties, and to the Knowledge of Consonus, the
properties covered by the Consonus Real Property Leases, are not subject to any
leases, rights of first refusal, options to purchase or rights of occupancy.

 

(b)           Each of Consonus and
the Consonus Subsidiaries, as applicable, has a valid, binding and enforceable
leasehold interest under each of the Consonus Real Property Leases under which
it is a lessee, free and clear of all Liens other than Permitted Exceptions. Each
of the Consonus Real Property Leases is in full force and effect. Neither
Consonus nor any Consonus Subsidiary is in material default under any Consonus
Real Property Lease, and no event has occurred and no circumstance exists
which, if not remedied, and whether with or without notice or the passage of
time or both, would result in such a default. Neither Consonus nor any Consonus
Subsidiary has received or given any notice of any default or event that with
notice or lapse of time, or both, would constitute a material default by
Consonus or any Consonus Subsidiary under any of the Consonus Real Property
Leases and, to the Knowledge of Consonus, no other party is in material default
thereof, and no party to any Consonus Real Property Lease has exercised any
termination rights with respect thereto.

 

(c)           Consonus and the
Consonus Subsidiaries have all certificates of occupancy and Permits of any
Governmental Body necessary or useful for the current use and operation of each
Consonus Real Property, and Consonus and the Consonus Subsidiaries have fully
complied in all material respects with all conditions of the Permits applicable
to them. No

 

23

 

material default or violation, or event that
with the lapse of time or giving of notice or both would become a material
default or violation, has occurred in the due observance of any Permit.

 

(d)           There does not exist
any actual or, to the Knowledge of Consonus, threatened or contemplated
condemnation or eminent domain proceedings that affect any Consonus Owned Real
Properties or any part thereof, and none of Consonus or any Consonus Subsidiary
has received any written notice, oral or written, of the intention of any
Governmental Body or other Person to take or use all or any part thereof.

 

(e)           None of Consonus or any
Consonus Subsidiary has received any written notice from any insurance company
that has issued a policy with respect to any Consonus Real Property requiring
performance of any structural or other repairs or alterations to such Consonus
Real Property.

 

(f)            Except as set forth
on Schedule 2.11(f), Consonus and the Consonus Subsidiaries do not own or
hold and are not obligated under or a party to, any option, right of first
refusal or other contractual right to purchase, acquire, sell, assign or
dispose of any real estate or any portion thereof or interest therein.

 

2.12        Tangible Personal
Property.

 

(a)           Consonus and Consonus
Subsidiaries have good and marketable title to all of the items of owned
tangible personal property used in the business of Consonus and the Consonus
Subsidiaries (except as sold or disposed of subsequent to the date hereof in
the ordinary course of business and not in violation of this Agreement), free
and clear of any and all Liens, other than the Permitted Exceptions and except
as set forth on Schedule 2.12(a). Except as set forth on Schedule
2.12(a), all such items of tangible personal property which, individually
or in the aggregate, are material to the operation of the business of Consonus
and Consonus Subsidiaries are in good condition and in a state of good
maintenance and repair (ordinary wear and tear excepted) and are suitable for
the purposes used.

 

(b)           Schedule 2.12(b)
sets forth all leases of personal property involving annual payments in excess
of $10,000 relating to personal property used in the business of Consonus and
the Consonus Subsidiaries or to which Consonus or any of Consonus Subsidiaries
is a party or by which the properties or assets of Consonus or the Consonus
Subsidiaries are bound (“Consonus Personal
Property Leases”). All of the items of material personal property
under the Personal Property Leases are in good condition and repair (ordinary
wear and tear excepted) and are suitable for the purposes used, and such
property is in all material respects in the condition required of such property
by the terms of the lease applicable thereto during the term of the lease. Consonus
has delivered to STI, or shall deliver to STI within 5 business days of the
date of this Agreement, true, correct and complete copies of the Consonus
Personal Property Leases, together with all amendments, modifications or
supplements thereto.

 

(c)           Each of Consonus and
the Consonus Subsidiaries has a valid and enforceable leasehold interest under
each of the Consonus Personal Property Leases under which it is a lessee. Each
of the Consonus Personal Property Leases is in full force and effect and
neither Consonus nor any of the Consonus Subsidiaries has received or given any
notice of any

 

24

 

material default or event that with notice or
lapse of time, or both, would constitute a material default by Consonus or any
of the Consonus Subsidiaries under any of the Consonus Personal Property Leases
and, to the Knowledge of Consonus, no other party is in material default
thereof, and no party to the Consonus Personal Property Leases has exercised
any termination rights with respect thereto.

 

2.13        Intellectual Property.

 

(a)           Schedule 2.13(a)
sets forth an accurate and complete list of all applied for, registered and/or
issued Patents, Marks and Copyrights owned or used by Consonus or any Consonus
Subsidiary. Schedule 2.13(a) lists (i) the current owner, (ii) the
jurisdictions in which each such item of Intellectual Property has been issued
or registered or in which any such application for such issuance and
registration has been filed, (iii) the respective issuance, registration or
application number of each item and (iv) the dates of application, issuance and
registration of each item.

 

(b)           Except as disclosed in Schedule 2.13(b),
to Consonus’ Knowledge, Consonus or a Consonus Subsidiary is the sole and
exclusive owner of, or has valid and continuing rights to use, sell and
license, as the case may be, all Intellectual Property used, sold or licensed
by Consonus or Consonus Subsidiaries in their businesses as presently conducted
and as currently proposed to be conducted, free and clear of all Liens or
obligations to others (except for those specified liens and licenses included
in Schedule 2.13(e)).

 

(c)           To the Knowledge of
Consonus, the Intellectual Property owned, used, practiced or otherwise
commercially exploited by Consonus or any Consonus Subsidiary, the development,
manufacturing, licensing, marketing, importation, offer for sale, sale or use
of the products or Technology in connection with the business as presently
conducted and as currently proposed to be conducted, and Consonus’ and Consonus
Subsidiaries’ present and currently proposed business practices and methods, do
not infringe, violate or constitute an unauthorized use or misappropriation of
any Patent, Copyright, Mark, Trade Secret or other similar right, of any Person
(including pursuant to any non-disclosure agreements or obligations to which
Consonus or any Consonus Subsidiary or any of their present or former employees
is a party, and including any intellectual property that might exist with
respect to open software or other intellectual property publicly available for
certain types of use). The Intellectual Property owned by or licensed to
Consonus and Consonus Subsidiaries includes all of the material Intellectual
Property used by Consonus and Consonus Subsidiaries to conduct their business
in the manner in which such business is currently being conducted.

 

(d)           Except with respect to
licenses of commercial off-the-shelf Software, and except pursuant to the
Intellectual Property Licenses listed in Schedule 2.13(d), neither
Consonus nor any of Consonus Subsidiaries is currently required, obligated, or
under any liability whatsoever, to make any payments by way of royalties, fees
or otherwise or provide any other consideration of any kind, to any owner or
licensor of, or other claimant to, any Intellectual Property, or any other
Person, with respect to the use thereof or in connection with the conduct of
the business of Consonus and Consonus Subsidiaries as currently conducted or
proposed to be conducted.

 

25

 

(e)           Schedule 2.13(e)
sets forth a complete and accurate list of all contracts to which Consonus or
any Consonus Subsidiary is a party (other than commercial off-the-shelf
software) (i) granting any Intellectual Property Licenses (other than as
provided in Consonus’ standard form of customer contract), (ii) containing
a covenant not to compete or otherwise limiting its ability to use or exploit
fully any of the Intellectual Property, except as, which individually or in the
aggregate, would not be expected to have a Materially Adverse Effect on
Consonus or (iii) containing an agreement to indemnify any other Person against
any claim of infringement, violation, misappropriation or unauthorized use of
any Intellectual Property. Consonus has delivered to STI, or shall deliver to
STI within 5 business days of the date of this Agreement, true, correct and
complete copies of each contract set forth on Schedule 2.13(e), together
with all amendments, modifications or supplements thereto.

 

(f)            Each of the material
Intellectual Property Licenses is in full force and effect and is the legal,
valid and binding obligation of Consonus and/or Consonus Subsidiaries,
enforceable against them in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally and by general principals
of equity (regardless of whether considered in a proceeding in equity or at
law). Neither Consonus nor any Consonus Subsidiary is in material default under
any Intellectual Property License, nor, to the Knowledge of Consonus, is any
other party to any Intellectual Property 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 material default thereunder. No party to any of the
Intellectual Property Licenses has exercised any termination rights with
respect thereto, except in the ordinary course of business.

 

(g)           No Trade Secret of
Consonus or any Consonus Subsidiary as presently conducted has been authorized
to be disclosed or, to Consonus’ Knowledge, has been actually disclosed by
Consonus or, to Consonus’ Knowledge, any Consonus Subsidiary to any employee or
any third party other than pursuant to Consonus policy including restrictions
on the disclosure and use of the Intellectual Property consistent with
commercially reasonable practices in the industry in which Consonus and
Consonus Subsidiaries operate. Consonus and Consonus Subsidiaries have taken
reasonably adequate security measures to protect the secrecy, confidentiality
and value of all the Trade Secrets of Consonus and Consonus Subsidiaries,
including invention disclosures, not the subject of any patents owned or patent
applications filed by Consonus or a Consonus Subsidiary, which measures are
consistent with commercially reasonable practices in the industry in which
Consonus and Consonus Subsidiaries operate.

 

(h)           Except as set forth on Schedule
2.13(h), as of the date hereof, neither Consonus nor any of Consonus
Subsidiaries is the subject of any pending or, to the Knowledge of Consonus,
threatened Legal Proceedings which involve a claim of infringement,
misappropriation, unauthorized use, or violation of any intellectual property
rights of any Person against Consonus or Consonus Subsidiaries or challenging
the ownership, use, validity or enforceability of any material Intellectual
Property. Neither Consonus nor any Consonus Subsidiary has received notice of
any such threatened claim and, to the Knowledge of Consonus, there are no facts
or circumstances that would form the basis for any claim of infringement,
unauthorized use, misappropriation or violation of any intellectual property
rights of any Person against Consonus or any Consonus Subsidiary, or
challenging the ownership, use, validity or enforceability of any material
Intellectual Property.

 

26

 

(i)            To the Knowledge of
Consonus, no Person is infringing, violating, misusing or misappropriating any
material Intellectual Property of Consonus or any Consonus Subsidiary, and no
such claims have been made against any Person by Consonus or any Consonus
Subsidiary. There are no Orders to which Consonus is a party or by which Consonus
is bound which restrict, in any material respect, the right to use any of the
Intellectual Property.

 

(j)            The consummation of
the transactions contemplated hereby will not result in the loss or impairment
of Consonus’ right to own or use any of the Intellectual Property.

 

(k)           Except as set forth on Schedule
2.13(k), no present or former employee has any right, title, or interest,
directly or indirectly, in whole or in part, in any material Intellectual
Property owned or used by Consonus. Except as set forth on Schedule 2.13(k), to
the Knowledge of Consonus, no employee, consultant or independent contractor of
Consonus is, as a result of or in the course of such employee’s, consultant’s
or independent contractor’s engagement by Consonus, in material default or
breach of any material term of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement.

 

(l)            Schedule 2.13(l)
sets forth a complete and accurate list of (i) all Software that is owned
exclusively by Consonus or any Consonus Subsidiary that is material to the
operation of the business of Consonus or any Consonus Subsidiary and
(ii) all Software that is used by Consonus or any Consonus Subsidiary in
the business of Consonus or any Consonus Subsidiary that is not exclusively
owned by Consonus or any Consonus Subsidiary, excluding commercial
off-the-shelf Software.

 

(m)          No open source Software
or freeware has been incorporated into the products of Consonus that would in
any way limit the ability to make, use or sell any such product or that would
transfer the rights of ownership in any Intellectual Property or Software of
Consonus to a third party.

 

(n)           Consonus has complied
in all material respects with all (i) applicable Laws relating to privacy, data
protection and the collection and use of personal information and user
information gathered or accessed in the course of its operations and (ii)
rules, policies and procedures established by Consonus from time to time with
respect to privacy, publicity, data protection or collection and use of
personal information and user information gathered or accessed in the course of
the operations of Consonus. No claims alleging a violation of any Person’s
privacy, personal or confidentiality rights under any such rules, policies or
procedures have been asserted or to Consonus’ Knowledge threatened against
Consonus by any Person. With respect to all personal information and user
information described in this Section 2.13(n), Consonus has taken such steps as
it deems commercially reasonably necessary (including, implementing and
monitoring compliance with adequate measures with respect to technical and
physical security) to ensure that the information is protected against loss and
against unauthorized access, use, modification, disclosure or other misuse to
the extent required by applicable Laws.

 

27

 

2.14        Material Contracts.

 

(a)           Schedule 2.14(a)
sets forth, by reference to the applicable subsection of this Section
2.14(a), all of the following contracts to which Consonus or any of
Consonus Subsidiaries is a party or by which any of them or their respective
assets of properties are bound provided, however, that any contract reference
under any subsection will be deemed disclosed for all subsections of this
Section 2.14 (collectively, the “Consonus
Material Contracts”):

 

(i)            contracts with any
Consonus Principal Stockholder or Affiliate thereof or any current or former
officer, director, stockholder or Affiliate of Consonus or any of Consonus
Subsidiaries;

 

(ii)           contracts with any
labor union or association representing any employee of Consonus or any of
Consonus Subsidiaries;

 

(iii)          contracts for the sale
of any of the assets of Consonus or any of Consonus Subsidiaries other than in
the ordinary course of business or for the grant to any Person of any
preferential rights to purchase any of its assets;

 

(iv)          contracts for joint
ventures, strategic alliances, partnerships, licensing arrangements (other than
as provided in Consonus’ standard form of customer contract), or sharing of
profits or proprietary information;

 

(v)           except as, which
individually or in the aggregate, would not be expected to have a Material
Adverse Effect on Consonus, contracts containing covenants of Consonus or any
of Consonus Subsidiaries not to compete in any line of business or with any
Person in any geographical area or not to solicit or hire any person with
respect to employment or covenants of any other Person not to compete with
Consonus or any of Consonus Subsidiaries in any line of business or in any
geographical area or not to solicit or hire any person with respect to
employment;

 

(vi)          contracts relating to
the acquisition during 2004, 2005 or 2006 (by merger, purchase of stock or
assets or otherwise) by Consonus or any of Consonus Subsidiaries of any
operating business or material assets or the capital stock of any other Person;

 

(vii)         except for capitalized
leases entered into in the ordinary course of business, contracts relating to
the incurrence, assumption or guarantee of any indebtedness or imposing a Lien
on any of the assets of Consonus or any Consonus Subsidiary, including
indentures, guarantees, loan or credit agreements, sale and leaseback
agreements, purchase money obligations incurred in connection with the
acquisition of property, mortgages, pledge agreements, security agreements, or
conditional sale or title retention agreements;

 

(viii)        purchase contracts (A) for
assets included in the cost-of sale giving rise to liabilities of Consonus or
any of Consonus Subsidiaries in excess of $25,000 in any fiscal year, and (B)
for other assets giving rise to liabilities of Consonus or any of Consonus
Subsidiaries in excess of $10,000 in any fiscal year;

 

(ix)          all contracts providing
for payments by or to Consonus or any Consonus Subsidiaries in excess of
$50,000 in any fiscal year; provided however, that with

 

28

 

respect to customer contracts entered into in
the ordinary course of business, providing for payments to Consonus or any
Consonus Subsidiaries in excess of $100,000 in any fiscal year;

 

(x)           all customer contracts
making up a total of twenty-five percent (25%) of Consonus’ total customer
revenue during the past eighteen months ranked beginning with the largest.

 

(xi)          all contracts obligating
Consonus or any of Consonus Subsidiaries to provide or obtain products or
services for a period of one year or more or requiring Consonus to purchase or
sell a stated portion of its requirements or outputs;

 

(xii)         contracts under which
Consonus or any of Consonus Subsidiaries has made advances or loans to any
other Person;

 

(xiii)        contracts providing for
severance, retention, change in control or other similar payments;

 

(xiv)        contracts for the
employment of any individual on a full-time, part-time or other basis providing
base annual compensation in excess of $50,000 and having a remaining term of
more than one year from the date hereof;

 

(xv)         management contracts and
contracts with independent contractors or consultants (or similar arrangements)
providing for payments in excess of $100,000 per fiscal year and that are not
cancelable without penalty or further payment and without more than 90 days’
notice;

 

(xvi)        outstanding contracts of
guaranty, surety or indemnification, direct or indirect, by Consonus or any of
the Consonus Subsidiaries involving more than $50,000 in any fiscal year; and

 

(xvii)       contracts that are
otherwise material to Consonus and the Consonus Subsidiaries.

 

(b)           Each of the Consonus
Material Contracts is in full force and effect and is the legal, valid and
binding obligation of Consonus or any Consonus Subsidiary which is  party thereto, and, to the Knowledge of
Consonus, of the other parties thereto enforceable against each of them in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law) and, upon consummation of the
transactions contemplated by this Agreement, shall, except as otherwise stated
in Schedule 2.14(b), continue in full force and effect without material
penalty or other material adverse consequence. Neither Consonus nor any
Consonus Subsidiary is in material default under any Consonus Material
Contract, nor, to the Knowledge of Consonus, is any other party to any Consonus
Material Contract in breach of or default thereunder, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
material breach or default on Consonus, any Consonus Subsidiary or any other
party thereunder. No party to any of the Consonus Material Contracts has
exercised any termination rights with respect thereto except in the ordinary
course of business, and no

 

29

 

party has given notice of any significant
dispute with respect to any Consonus Material Contract. Consonus has delivered
to STI, or shall deliver to STI within 5 business days of the date of this
Agreement, true, correct and complete copies of all of the Consonus Material
Contracts, together with all amendments, modifications or supplements thereto.

 

2.15        Employee Benefit Plans.

 

(a)           Schedule 2.15
sets forth a correct and complete list of all “employee benefit plans” (as
defined in Section 3(3) of ERISA), and all other employee benefit plans,
programs, agreements, policies, arrangements or payroll practices, including
bonus plans, employment, consulting or other compensation agreements,
incentive, stock purchase or other equity or equity-based compensation,
deferred compensation, change in control, retention, termination, severance,
sick leave, vacation pay, educational assistance, employee loan, salary
continuation for disability, hospitalization, health insurance, life insurance
and  scholarship plans, programs,
policies, agreements and arrangements maintained by Consonus or any of Consonus
Subsidiaries or to which Consonus or any of Consonus Subsidiaries contributed
or is obligated to contribute thereunder for current or former employees of
Consonus or any of Consonus Subsidiaries (the “Consonus Employees”) or to which Consonus or any of Consonus
Subsidiaries has any obligation or liability, contingent or otherwise
(collectively, the “Consonus Plans”).
No Consonus Plan is an “employee pension plan” (as defined in Section 3(2) of
ERISA) and subject to Title IV of ERISA or Section 412 of the Code (a “Title IV Plan”), nor does Consonus have any
obligation or liability, contingent or otherwise, to a Title IV Plan, including
any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA (a “Multiemployer Plan”)), or is or has been
subject to Sections 4063 or 4064 of ERISA.

 

(b)           Correct and complete
copies of the following documents, with respect to each of Consonus Plans, have
been made available or delivered to STI by Consonus, or shall be delivered to
STI by Consonus within 5 business days of the date of this Agreement, to the extent
applicable: (i) any plans, all amendments thereto and related trust
documents, insurance contracts or other funding arrangements, and amendments
thereto; (ii) the most recent Forms 5500 and all schedules thereto and the
most recent actuarial report, if any; (iii) the most recent IRS
determination letter; (iv) summary plan descriptions; and (v) written
summaries of all non-written Consonus Plans.

 

(c)           Consonus Plans have
been maintained in all material respects in accordance with their terms and
with all provisions of ERISA, the Code (including rules and regulations
thereunder) and other applicable Federal and state Laws and regulations.

 

(d)           Consonus Plans intended
to qualify under Section 401 of the Code have either (i) received a
determination from the IRS that they are so qualified and any trusts intended
to be exempt from Federal income taxation under Section 501 of the Code are so
exempt, or (ii) are in a prototype or volume submitter plan document that has
been pre-approved by the IRS as evidenced by a letter from the IRS, and nothing
has occurred with respect to the operation of Consonus Plans that could cause
the loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code.

 

30

 

(e)           All contributions
(including all employer contributions and employee salary reduction
contributions) required to have been made under any of Consonus Plans have been
timely made.

 

(f)            There are no pending
actions, claims or lawsuits that have been asserted or instituted relating to
or arising from Consonus Plans, the assets of any of the trusts under Consonus
Plans or the sponsor or administrator of any of Consonus Plans, or against any
fiduciary of Consonus Plans with respect to the operation of any of Consonus
Plans (other than routine benefit claims), nor does Consonus have any Knowledge
of facts that could reasonably be expected to form the basis for any such claim
or lawsuit.

 

(g)           None of Consonus Plans
provides for post-employment life insurance or health insurance, benefits or
coverage for any participant or any beneficiary of a participant, except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”), or at the expense
of the participant or the participant’s beneficiary.

 

(h)           Except as set forth on Schedule
2.15(h), neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any Consonus Employee, (ii) increase any benefits
otherwise payable under any Consonus Plan or (iii) result in the acceleration
of the time of payment or vesting of any rights with respect to such benefits
under any Consonus Plan.

 

(i)            Any individual who
performs services for Consonus (other than through a contract with an
organization other than such individual) and who is not treated as an employee
of Consonus for Federal income tax purposes by Consonus is not an employee for
such purposes.

 

2.16        Labor and Employment
Matters.

 

(a)           Consonus and Consonus
Subsidiaries have complied in all material respects with all applicable Laws
respecting employment and employment practices, WARN and any similar state or
local “mass layoff” or “plant closing” Law, workers’ compensation and the
collection and payment of withholding and/or social security taxes and any
similar tax  terms and conditions of
employment, wages and hours, occupational safety and health, collective
bargaining, discrimination civil rights, including Laws concerning unfair labor
practices within the meaning of Section 8 of the National Labor Relations
Act, and the employment of non-residents under the Immigration Reform and
Control Act of 1986.

 

(b)           Except as disclosed in Schedule
2.16(b),

 

(i)            except for routine
government inquiries, examinations and inspections which Consonus and Consonus
Subsidiaries have no reason to believe are material, there are no charges,
governmental audits, investigations, administrative proceedings or complaints
concerning the employment practices of Consonus or Consonus Subsidiaries
pending or, to the Knowledge of Consonus, threatened, before any federal, state
or local agency or court and, to the Knowledge of Consonus, no basis for any
such matter exists;

 

(ii)           except for routine
government inquiries, examinations and inspections which Consonus and Consonus
Subsidiaries have no reason to believe are material,

 

31

 

there are no inquiries, investigations or
monitoring of activities pending or, to the Knowledge of Consonus, threatened,
by any state professional board or agency charged with regulating the
professional activities of any licensed, registered, or certified professional
personnel employed by, credentialed or privileged by, or otherwise affiliated
with Consonus and Consonus Subsidiaries and who provides services to Consonus
and Consonus Subsidiaries;

 

(c)           Neither Consonus nor
any of Consonus Subsidiaries is a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of Consonus or any of Consonus Subsidiaries. Consonus has
delivered or otherwise made available to STI true, correct and complete copies
of the labor or collective bargaining agreements listed on Schedule 2.16(c),
together with all amendments, modifications or supplements thereto.

 

(d)           There are no strikes,
work stoppages, slowdowns, lockouts, arbitrations, unfair labor practice
charges or material grievances or other labor disputes pending or, to the
Knowledge of Consonus, threatened against or involving Consonus or any of
Consonus Subsidiaries. Except as set forth on Schedule 2.16(d), there
are no complaints, charges or claims against Consonus or any of Consonus Subsidiaries
pending or, to Knowledge of Consonus, threatened that could be brought or
filed, with any Governmental Body based on, arising out of, in connection with
or otherwise relating to the employment or termination of employment of or
failure to employ, any individual.

 

(e)           Schedule 2.16(e)
sets forth the current total accrued but unpaid compensation of each of the
executive officers of Consonus (including salary, bonus, stock awards, option
awards, non-equity incentive plan compensation and all other compensation and
perquisites) and the expected accrued but unpaid compensation of each of the
executive officers of Consonus for the year ending December 31, 2006.

 

2.17        Litigation. Except
as set forth in Schedule 2.17, (i) there is no material Legal Proceeding
pending or, to the Knowledge of Consonus, threatened against Consonus or any of
Consonus Subsidiaries (or to the Knowledge of Consonus, pending or threatened,
against any of the officers, directors or employees of Consonus or any of
Consonus Subsidiaries with respect to their business activities on behalf of
Consonus), or to which Consonus or any of Consonus Subsidiaries is otherwise a
party before any Governmental Body; and (ii) to the Knowledge of Consonus there
is no reasonable basis for any such Legal Proceeding. Except as set forth on Schedule
2.17, neither Consonus nor any Consonus Subsidiary is subject to any Order,
and neither Consonus nor any Consonus Subsidiary is in breach or violation of
any Order. Except as set forth on Schedule 2.17, neither Consonus nor
any Consonus Subsidiary is engaged in any legal action to recover monies due it
or for damages sustained by it. There are no Legal Proceedings pending or, to
the Knowledge of Consonus, threatened against Consonus or to which Consonus is
otherwise a party relating to this Agreement or, any Consonus Document or the
transactions contemplated hereby or thereby.

 

2.18        Compliance with Laws;
Permits.

 

(a)           Consonus and Consonus
Subsidiaries are, and since December 31, 2003 have been, in compliance
with all material Laws applicable to its business, operations or assets.

 

32

 

Since such date, Consonus and Consonus
Subsidiaries have not received any notice of or been charged with the violation
of any Laws. To Consonus’ Knowledge, neither Consonus nor any of the Consonus
Subsidiaries is under investigation with respect to the violation of any Laws
and, to the Knowledge of Consonus, there are no facts or circumstances which
could form the reasonable basis for any such violation.

 

(b)           Schedule 2.18
contains a list of all Permits which are required for the operation of the
business of Consonus and Consonus Subsidiaries as presently conducted other
than those the failure of which to possess is immaterial in the aggregate (“Consonus Permits”). Consonus and Consonus
Subsidiaries currently have all of the Consonus Permits. Neither Consonus nor
any Consonus Subsidiary is in default or violation, and no event has occurred
which, with notice or the lapse of time or both, would constitute a default or
violation, in any material respect of any term, condition or provision of any
Consonus Permit, and to the Knowledge of Consonus, there are no facts or
circumstances which could form the reasonable basis for any such default or violation.
There are no Legal Proceedings pending or, to the Knowledge of Consonus,
threatened, relating to the suspension, revocation or modification of any
Consonus Permit. Assuming those consents and filings set forth on Schedule
2.18 are timely obtained or made, none of the material Consonus Permits
will be materially adversely impaired or in any way materially adversely
affected by the consummation of the transactions contemplated by this
Agreement.

 

2.19        Environmental Matters.
Except as set forth on Schedule 2.19 hereto, the operations of
Consonus and each of the Consonus Subsidiaries are and have been in compliance
in all material respects with all applicable Environmental Laws, which
compliance includes obtaining, maintaining in good standing and complying in
all material respects with all Environmental Permits and no action or
proceeding is pending or, to the Knowledge of Consonus, threatened to revoke,
modify or terminate any such Environmental Permit, and, to the Knowledge of
Consonus, no facts, circumstances or conditions currently exist that could
adversely affect such continued compliance with Environmental Laws and
Environmental Permits or require currently unbudgeted capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits. With respect to the Consonus Owned Real Properties, and
to Consonus’ Knowledge, the properties covered by the Consonus Real Property
Leases, no condition exists that may reasonably be expected to give rise to any
claim, order, directive, citation or cause of action based upon any
Environmental Laws.

 

2.20        Insurance. Consonus
and Consonus Subsidiaries have insurance policies in full force and effect (a)
for such amounts as are sufficient for all requirements of Law and all
agreements to which Consonus and Consonus Subsidiaries are bound, and (b) which
are in such amounts, with such deductibles or retention amounts and against
such risks and losses, as are reasonable for the business, assets and
properties of Consonus and Consonus Subsidiaries. Set forth in Schedule 2.20
is a list of all insurance policies and all fidelity bonds or other financial
assurance required by any Consonus Material Contract held by or applicable to
Consonus or any Consonus Subsidiaries, 
setting forth, in respect of each such policy, the policy name, policy
number, carrier, term, type and amount of coverage, deductible or retention
amount and annual premium, whether the policies may be terminated upon
consummation of the transactions contemplated hereby and if and to what extent
events being notified to the insurer after the Closing Date are generally
excluded from the scope of the respective policy. Except as set forth

 

33

 

on Schedule 2.20, no event relating
specifically to Consonus or any Consonus Subsidiaries has occurred which could
reasonably be expected to result in a material retroactive upward adjustment in
premiums under any such insurance policies or which could reasonably be
expected to result in a material prospective upward adjustment in such premiums.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been cancelled within the
last two years and, to the Knowledge of Consonus and Consonus Subsidiaries, no
threat has been made to cancel any insurance policy of Consonus or Consonus
Subsidiaries during such period. Except as noted on Schedule 2.20, all
such insurance will remain in full force and effect immediately following the
consummation of the transactions contemplated hereby. No event has occurred,
including the failure by Consonus to give any notice or information or Consonus
giving any inaccurate or erroneous notice or information, which limits or
impairs the material rights of Consonus under any such insurance policies.

 

2.21        Accounts and Notes
Receivable and Payable. All accounts and notes receivable of Consonus and
Consonus Subsidiaries have arisen from bona fide transactions in the ordinary
course of business consistent with past practice and are payable on ordinary
trade terms. Except as set forth on Schedule 2.21, none of the accounts
or the notes receivable of Consonus are subject to any setoffs or counterclaims
in excess of reserves. All accounts payable of Consonus reflected in the
Consonus Balance Sheet or arising after the date thereof are the result of bona
fide transactions in the ordinary course of business and have been paid, are
not yet due and payable or are being paid consistent with past practice.

 

2.22        Consonus Related Party
Transactions. Except as set forth on Schedule 2.22, no employee,
officer, director, stockholder or member of Consonus or any of the Consonus
Subsidiaries, any member of his or her immediate family or any of their
respective Affiliates (“Consonus Related
Persons”) (a) owes any amount to Consonus or any of Consonus
Subsidiaries nor does Consonus or any of Consonus Subsidiaries owe any amount
to, or has Consonus or any of Consonus Subsidiaries committed to make any loan
or extend or guarantee credit to or for the benefit of, any Consonus Related
Person, (b) is involved in any business arrangement or other relationship with
Consonus or any of Consonus Subsidiaries (whether written or oral), (c) owns
any property or right, tangible or intangible, that is used by Consonus or any
of Consonus Subsidiaries or (d) has any claim or cause of action against
Consonus or any of Consonus Subsidiaries owns any direct or indirect interest
of any kind in, or controls or is a director, officer, employee or partner of,
or consultant to, or lender to or borrower from or has the right to participate
in the profits of, any Person which is a competitor, supplier, customer,
landlord, tenant, creditor or debtor of Consonus or any Consonus Subsidiary; provided
that for clause (d), such representation as it relates to employees who are not
officers or directors is only given to Consonus’ Knowledge.

 

2.23        Customers and
Suppliers.

 

(a)           Schedule 2.23
sets forth a list of the ten (10) largest customers and the ten (10) largest
suppliers of Consonus and/or the Consonus Subsidiaries, as measured by the
dollar amount of purchases therefrom or thereby, during each of the fiscal
years (or partial fiscal year) ended December 31, 2005 and December 31, 2004,
showing the approximate total sales by

 

34

 

Consonus and Consonus Subsidiaries to each
such customer and the approximate total purchases by Consonus and Consonus
Subsidiaries from each such supplier, during such period.

 

(b)           Except as set forth on Schedule
2.23, since December 31, 2005, no customer or supplier listed on Schedule 2.23
has terminated its relationship with Consonus and Consonus Subsidiaries or
materially reduced or changed the pricing or other terms of its business with
Consonus and Consonus Subsidiaries and, to the Knowledge of Consonus, no
customer or supplier listed on Schedule 2.23 has notified Consonus and
Consonus Subsidiaries that it intends to terminate or materially reduce or
change the pricing or other terms of its business with Consonus and Consonus
Subsidiaries.

 

2.24        Banks; Power of
Attorney. Schedule 2.24 contains a complete and correct list of the
names and locations of all banks in which Consonus or any Consonus Subsidiary
has accounts or safe deposit boxes and the names of all persons authorized to
draw thereon or to have access thereto. Except as set forth on Schedule 2.24,
no person holds a power of attorney to act on behalf of Consonus or any
Consonus Subsidiary.

 

2.25        Financial Advisors.
Except as set forth on Schedule 2.25, no Person has acted, directly or
indirectly, as a broker, finder or financial advisor for Consonus or any
Consonus Subsidiary in connection with the transactions contemplated by this
Agreement and no Person is or will be entitled to any fee or commission or like
payment in respect thereof, other than Persons who may be entitled to fees,
commissions or like payments solely as a result of the initial public offering
of the Company’s common stock.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF STI

 

STI hereby
represents and warrants to the Company and Consonus as follows:

 

3.1          Organization and Good
Standing. STI is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now conducted. STI is duly qualified or authorized to
do business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not have a
Material Adverse Effect on STI (a “STI
Material Adverse Effect”).

 

3.2          Authorization of
Agreement. STI has all requisite corporate power and authority to execute
and deliver this Agreement and each other agreement, document, or instrument or
certificate contemplated by this Agreement or to be executed by STI in
connection with the transactions contemplated by this Agreement (the “STI Documents”), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement and each
of STI Documents, and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized and approved by all required corporate
action on the part of STI and, except for obtaining the

 

35

 

shareholder approval for the adoption of this
Agreement, no other corporate action on the part of STI is necessary to authorize
the execution, delivery and performance of this Agreement and the consummation
by it of the transactions contemplated hereby. This Agreement has been, and
each of STI Documents will be when executed at Closing, duly and validly
executed and delivered by STI and (assuming due authorization, execution and
delivery by Consonus and the Company) this Agreement constitutes, and each of
STI Documents when so executed and delivered will constitute, legal, valid and
binding obligations of STI, enforceable against STI in accordance with their
respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).

 

3.3          Conflicts; Consents
of Third Parties.

 

(a)           Except as set forth on Schedule
3.3(a), none of the execution and delivery by STI of this Agreement or the
STI Documents, the consummation of the transactions contemplated hereby or
thereby, or compliance by STI with any of the provisions hereof or thereof will
conflict with, or result in any violation or breach of, conflict with or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or give rise to any obligation of STI to make
any payment under, or to the increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or result in the creation of any
Liens upon any of the properties or assets of STI under, any provision of
(i) the certificate of incorporation and bylaws or comparable
organizational documents of STI; (ii) any contract or Permit to which STI
is a party or by which any of the properties or assets of STI are bound; (iii)
any Order applicable to STI or any of the properties or assets of STI; or (iv)
any applicable Law, except in the case of clauses (ii) and (iv) for such violations,
breaches, conflicts or defaults as could not reasonably be expected to have a
STI Material Adverse Effect.

 

(b)           Except as set forth on Schedule
3.3(b), no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of STI in connection with (i) the execution and
delivery of this Agreement, the STI Documents, the compliance by STI with any
of the provisions hereof and thereof, or the consummation of the transactions
contemplated hereby or thereby, except for those the failure of which to
obtain, would not result in a STI Material Adverse Effect or (ii) the
continuing validity and effectiveness immediately following the Closing of any
material Permit or Material Contract of STI.

 

3.4          Capitalization.

 

(a)           The authorized capital
stock of STI consists of 5,000,000 shares of preferred stock, no par value (“STI
Preferred Stock”) and 30,000,000 shares of common stock, no par value (“STI Common Stock”). As of the date hereof,
there are no shares of STI Preferred Stock issued and outstanding and
14,818,088 shares of STI Common Stock issued and outstanding. All of the issued
and outstanding shares of STI Common Stock were duly authorized for issuance
and are validly issued, fully paid and non-assessable and were not issued in
violation of any purchase or call option, right of first refusal, subscription
right, preemptive

 

36

 

right or any similar rights. All of the
outstanding shares of STI Common Stock are owned of record by the holders and
in the respective amounts as are set forth on Schedule 3.4(a).

 

(b)           Schedule 3.4(b)
sets forth the holders of STI Stock Options and warrants to purchase the
capital stock of STI (“STI Warrants”)
and the respective number of shares of STI Common Stock subject to each
outstanding STI Stock Option and STI Warrant, and the applicable exercise price
and expiration date. Except for STI Options and STI Warrants described in Schedule
3.4(b), there is no existing option, warrant, call, right or contract
requiring, and there are no securities of STI outstanding which upon conversion
or exchange would require, the issuance, sale or transfer of any additional
shares of capital stock or other equity securities of STI or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock or other equity securities of STI. Except as
set forth in Schedule 3.4(b), there are no obligations, contingent or
otherwise, of STI to (i) repurchase, redeem or otherwise acquire any
shares of STI Common Stock or STI Preferred Stock, or (ii) provide
material funds to, or make any material investment in (in the form of a loan,
capital contribution or otherwise), or provide any guarantee with respect to
the obligations of, any Person. Except as set forth on Schedule 3.4(b),
there are no outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to STI. There are no bonds,
debentures, notes or other indebtedness of STI having the right to vote or
consent (or, convertible into, or exchangeable for, securities having the right
to vote or consent) on any matters on which stockholders of STI may vote. Except
as set forth on Schedule 3.4(b), there are no voting trusts, irrevocable
proxies or other contracts or understandings to which STI or any Holder is a
party or is bound with respect to the voting or consent of any shares of STI
Common Stock, STI Preferred Stock, STI Options, or STI Warrants.

 

3.5          STI Subsidiaries and
Affiliated Entities.

 

(a)           Schedule 3.5
sets forth the name of each entity in which STI holds, directly or indirectly,
more than fifty percent (50%) of the voting securities of such entity (each a “STI Subsidiary”). Each STI Subsidiary is a
duly organized and validly existing corporation, partnership or other entity in
good standing under the laws of the jurisdiction of its incorporation or
organization and is in good standing under the laws of each jurisdiction in
which the conduct of its business or the ownership of its properties requires
such qualification or authorization, except where the failure to be so
qualified would not have a STI Material Adverse Effect.

 

(b)           Each STI Subsidiary has
all requisite corporate or entity power and authority to own its properties and
carry on its business as presently conducted.

 

(c)           The outstanding shares
of capital stock or equity interests of each STI Subsidiary are validly issued,
fully paid and non-assessable and were not issued in violation of any purchase
or call option, right of first refusal, subscription right, preemptive right or
any similar right. All such shares or other equity interests represented as
being owned by STI or any of the STI Subsidiaries are owned by them free and
clear of any and all Liens, except as set forth in Schedule 3.5. No
shares of capital stock are held by any STI Subsidiary as treasury stock. There
is no existing option, warrant, call, right or contract to which any STI
Subsidiary is a party requiring, and there are no convertible securities of any
STI Subsidiary outstanding which upon conversion would require, the issuance of
any shares of capital stock or other equity interests of

 

37

 

any STI Subsidiary or other securities
convertible into shares of capital stock or other equity interests of any STI
Subsidiary.

 

(d)           STI does not own,
directly or indirectly, any capital stock or equity securities of any Person
other than the STI Subsidiaries. Except as set forth on Schedule 3.5,
there are no material restrictions on the ability of the STI Subsidiaries to
make distributions of cash to their respective equity holders.

 

3.6          Corporate Records.

 

(a)           STI has delivered to
Consonus true, correct and complete copies of the articles of incorporation
(certified by the Secretary of State of North Carolina) and bylaws (certified
by the secretary) of STI and the organizational documents of each of STI
Subsidiaries, each as amended and in effect on the date hereof, including all
amendments thereto.

 

(b)           The minute books of STI
and each STI Subsidiary previously made available to Consonus contain true,
correct and complete records in all material respects of all meetings and
accurately reflect in all material respects all other corporate action of the
shareholders and board of directors (including committees thereof) of STI and
the STI Subsidiaries. The stock certificate books and stock transfer ledgers of
STI and the STI Subsidiaries previously made available to Consonus are true,
correct and complete. All stock transfer taxes levied, if any, or payable with
respect to all transfers of shares of STI prior to the date hereof have been
paid and appropriate transfer tax stamps affixed.

 

3.7          Financial Statements.

 

(a)           STI has delivered to
Consonus copies of (i) the audited consolidated balance sheets of STI as at
December 31, 2005, 2004 and 2003 and the related audited consolidated
statements of income and of cash flows of STI for the years then ended, and
(ii) the unaudited consolidated balance sheet of STI as at August 31, 2006 and
the related consolidated statements of income and cash flows of STI for the
eight-month period then ended, (such audited and unaudited statements,
including the related notes and schedules thereto, are referred to herein as
the “STI Financial Statements”). Each
of the STI Financial Statements is complete and correct in all material
respects, has been prepared in accordance with GAAP consistently applied
(except with respect to the unaudited financial statements which lack footnotes
and other presentation items and are subject to normal year-end audit
adjustments) by STI or such other entity without modification of the accounting
principles used in the preparation thereof throughout the periods presented
except as may be noted therein and presents fairly in all material respects the
consolidated financial position, results of operations and cash flows of STI or
such other entity as at the dates and for the periods indicated therein. The consolidated
balance sheet of STI as at August 31, 2006 is referred to herein as the “STI Balance Sheet” and August 31, 2006 is
referred to herein as the “STI Balance Sheet
Date.”

 

(b)           All books, records and
accounts of STI and the STI Subsidiaries are accurate and complete in all
material respects and are maintained in all material respects in accordance
with good business practice and all applicable Laws. STI and the STI
Subsidiaries maintain systems of internal accounting controls sufficient to
provide reasonable assurances that:

 

38

 

(i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability
for assets is compared with the actual levels at reasonable intervals and
appropriate action is taken with respect to any differences.

 

(c)           STI’s principal
executive officer and its principal financial officer have disclosed, based on
their most recent evaluation, to their actual knowledge, to STI’s auditors (i)
all significant deficiencies in the design or operation of internal controls
which could adversely affect STI’s ability to record, process, summarize and
report financial data and have identified for STI’s auditors any material
weaknesses in internal controls and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in STI’s
internal controls. Notwithstanding the foregoing, STI is not representing that
its internal controls meet the standards required by Section 404 of the
Sarbanes-Oxley Act, nor are they required to meet such standards at this time.

 

(d)           STI currently has an
internal record retention procedure, with which it is in compliance in all
material respects.

 

3.8          No Undisclosed
Liabilities. Except as set forth on Schedule 3.8, neither STI nor
any STI Subsidiary has any indebtedness or liabilities (whether or not required
under GAAP to be reflected on a balance sheet or the notes thereto) other than
(i) those specifically reflected on and fully reserved against in the STI
Balance Sheet, (ii) those that are immaterial to STI or any STI Subsidiary or
(iii) liabilities (but not indebtedness) incurred in the ordinary course of
business since the STI Balance Sheet Date.

 

3.9          Absence of Certain
Developments. Except as expressly contemplated by this Agreement or as set
forth on Schedule 3.9, since December 31, 2005 (i) STI and the
STI Subsidiaries have conducted their business only in the ordinary course of
business and (ii) there has not been any event, change, occurrence or
circumstance that, individually or in the aggregate with any such events,
changes, occurrences or circumstances, has had or could reasonably be expected
to have a STI Material Adverse Effect. Without limiting the generality of the
foregoing, since December 31, 2005, and except as set forth on Schedule
3.9:

 

(i)            there has not been any
damage, destruction or loss, whether or not covered by insurance, with respect
to the property and assets, excluding accounts receivable, of STI or any STI
Subsidiary of more than $50,000 for any single loss or $100,000 for all such
losses;

 

(ii)           there has not been any
declaration, setting aside or payment of any dividend or other distribution in
respect of any shares of capital stock of STI or any repurchase, redemption or
other acquisition by STI or any STI Subsidiary of any outstanding shares of
capital stock or other securities of, or other ownership interest in, STI or
any STI Subsidiary;

 

(iii)          neither STI nor any STI
Subsidiary has awarded or paid any bonuses to employees of STI or any STI
Subsidiary with respect to the fiscal year most recently

 

39

 

ended, except to the extent accrued on the
STI Balance Sheet, or entered into any employment, deferred compensation,
severance or similar agreement (nor amended any such agreement) or agreed to
increase the compensation payable or to become payable by it to any of STI’s or
any STI Subsidiary’s directors, officers, employees, agents or representatives
or agreed to increase the coverage or benefits available under any severance
pay, termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with such directors, officers, employees, agents or representatives,
except in each case, in the ordinary course of business;

 

(iv)          there has not been any
change by STI or any STI Subsidiary in accounting or Tax reporting principles,
methods or policies;

 

(v)           neither STI nor any STI
Subsidiary has made or rescinded any election relating to Taxes or settled or
compromised any claim relating to Taxes;

 

(vi)          neither STI nor any STI
Subsidiary has entered into any material transaction or contract (not including
contracts disclosed on Schedule 3.14(a) as a Material Contract) other
than in the ordinary course of business and other than this Agreement;

 

(vii)         neither STI nor any STI
Subsidiary has failed to promptly pay and discharge material current
liabilities when due except where disputed in good faith or upon agreement with
the third party for extended terms;

 

(viii)        neither STI nor any STI
Subsidiary has made any loans, advances or capital contributions to, or
investments in, any Person or paid any fees or expenses to any STI Holder or
any director, officer, partner, stockholder or Affiliate of any STI Holders;

 

(ix)          except for capitalized
leases entered into in the ordinary course of business, neither STI nor any STI
Subsidiary has (A) mortgaged, pledged or subjected to any Lien any of its
assets, or (B) acquired any assets or sold, assigned, transferred, conveyed,
leased or otherwise disposed of any assets of STI, except, in the case of
clause (B), for assets acquired, sold, assigned, transferred, conveyed, leased
or otherwise disposed of in the ordinary course of business;

 

(x)           neither STI nor any STI
Subsidiary has discharged or satisfied any Lien, or paid any liability, except
in the ordinary course of business;

 

(xi)          neither STI nor any STI
Subsidiary has canceled or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any contract or right except in
the ordinary course of business and which, in the aggregate, would not be
material to STI;

 

(xii)         neither STI nor any STI
Subsidiary has made or committed to make any capital expenditures or capital
additions or betterments in excess of $25,000 individually or $100,000 in the
aggregate;

 

40

 

(xiii)        neither STI nor any STI
Subsidiary has issued, created, incurred, assumed, guaranteed, endorsed or
otherwise become liable or responsible with respect to (whether directly,
contingently, or otherwise) any material indebtedness, which shall not include
purchase obligations under vendor or customer agreements entered into in the
ordinary course of business;

 

(xiv)        neither STI nor any STI
Subsidiary has granted any license or sublicense of any rights under or with
respect to any Intellectual Property except in the ordinary course of business;

 

(xv)         neither STI nor any STI
Subsidiary has instituted any Legal Proceeding or settled any Legal Proceeding
which would in the aggregate be material to STI; and

 

(xvi)        neither any of the STI
Principal Stockholders nor STI has agreed, committed, arranged or entered into
any understanding to do anything set forth in this Section 3.9.

 

3.10        Taxes.

 

(a)           (2)           All Tax Returns required to be filed by or
on behalf of each of STI, any STI Subsidiary and any Affiliated Group of which
STI or any STI Subsidiary is or was a member have been duly and timely filed
with the appropriate Taxing Authority in all jurisdictions in which such Tax
Returns are required to be filed (after giving effect to any valid extensions
of time in which to make such filings), and all such Tax Returns are true,
complete and correct; and (ii) all Taxes payable by or on behalf of each of
STI, any STI Subsidiary and any Affiliated Group of which STI or any STI
Subsidiary is or was a member have been fully and timely paid. With respect to
any period for which Taxes are not yet due or owing, STI has made due and
sufficient accruals for such Taxes in the STI Financial Statements and its
books and records. All required estimated Tax payments sufficient to avoid any
underpayment penalties or interest have been made by or on behalf of STI and
each STI Subsidiary.

 

(b)           STI and each STI
Subsidiary have complied with all applicable Laws relating to the payment and
withholding of Taxes and have duly and timely withheld and paid over to the
appropriate Taxing Authority all amounts required to be so withheld and paid
under all applicable Laws.

 

(c)           Within five (5)
business days following the date of this Agreement, STI will have delivered to
Consonus complete copies of (i) all federal, state, local and foreign income,
franchise and all other material Tax Returns of STI and STI Subsidiaries
relating to the taxable periods for the last three (3) years, and (ii) any
audit report issued within the last three (3) years relating to any Taxes due
from or with respect to STI or any STI Subsidiary.

 

(d)           Schedule 3.10(d)
lists (i) all material types of Taxes paid, and all types of Tax Returns filed
by or on behalf of STI or any STI Subsidiary, and (ii) all of the jurisdictions
that impose such Taxes or with respect to which STI or any STI Subsidiary has a
duty to file such Tax Returns. No claim has been made by a Taxing Authority in
any jurisdiction where STI or any STI Subsidiary is or may be subject to
Taxation by that jurisdiction with respect to any type of Tax for which such
entity does not file Tax returns in that jurisdiction.

 

41

 

(e)           All deficiencies
asserted or assessments made as a result of any examinations by any Taxing
Authority of the Tax Returns of, or including, STI or any STI Subsidiary have
been fully paid except with respect to sales and use taxes owed to the State of
Tennessee as reflected on the STI Balance Sheet and subject to a payment plan
as to which STI is current in all payments, and there are no other audits or
investigations by any Taxing Authority in progress, nor has STI or any STI
Subsidiaries or any officer thereof received any notice from any Taxing
Authority that it intends to conduct such an audit or investigation. No issue
has been raised by a Taxing Authority in any prior examination of STI or any
STI Subsidiary which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency in Tax for any
subsequent taxable period.

 

(f)            Neither STI nor any
STI Subsidiary nor any other Person on behalf of STI or any STI Subsidiary has
(i) agreed to or is required to make any adjustments pursuant to Section 481(a)
of the Code or any similar provision of Law or has any Knowledge that any
Taxing Authority has proposed any such adjustment, or has any application
pending with any Taxing Authority requesting permission for any changes in
accounting methods that relate to STI, (ii) executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any similar provision of Law
with respect to STI or any STI Subsidiary, (iii) requested any extension of
time within which to file any Tax Return, which Tax Return has since not been
filed, (iv) granted any extension for the assessment or collection of Taxes,
which Taxes have not since been paid, or (v) granted to any Person any power of
attorney that is currently in force with respect to any Tax matter.

 

(g)           No property owned by
STI or any STI Subsidiary is (i) property required to be treated as being owned
by another Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property”
within the meaning of Section 168(h)(1) of the Code, (iii) “tax-exempt bond
financed property” within the meaning of Section 168(g) of the Code, (iv)
leased property that is “limited use property” within the meaning of Rev. Proc.
2001-28, (v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to
any provision of state, local or foreign Law comparable to any of the
provisions listed above.

 

(h)           STI is not, and will
not have been at any time during the five-year period ending on the Closing
Date, a “U.S. real property holding corporation,” within the meaning of Section
897(c) of the Code.

 

(i)            Neither STI nor any
STI Subsidiary is a party to any tax sharing, allocation, indemnity or similar
agreement or arrangement (whether or not written) pursuant to which it will
have any obligation to make any payments after the Closing.

 

(j)            Other than as set
forth in Section 4.16, there is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by STI or any of its respective
Affiliates by reason of Section 280G of the Code.

 

(k)           Neither STI nor any STI
Subsidiary is subject to any private letter ruling of the IRS or comparable
rulings of any Taxing Authority.

 

42

 

(l)            There are no Liens as
a result of any unpaid Taxes upon any of the assets of STI or any STI
Subsidiary, except for statutory liens covering Taxes not yet due and payable
or Taxes being paid pursuant to a payment plan with which STI is in compliance
and which are reflected on the STI Balance Sheet.

 

(m)          Neither STI nor any of
STI Subsidiaries has ever been a member of any consolidated, combined,
affiliated or unitary group of corporations for any Tax purposes other than a
group in which STI is the common parent.

 

(n)           Neither STI nor any of
STI Subsidiaries has constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for tax-free treatment under Section 355 of
the Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution which could otherwise constitute part of a “plan” or “series of
related transactions” (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement.

 

(o)           Except for amounts paid
under Maintenance Manager Support Contracts and Managed Service Contracts,
there is no taxable income of STI or any STI Subsidiaries that will be required
under applicable Tax Law to be reported by the Company or any of its
Affiliates, including STI or any of STI Subsidiaries, for a taxable period
beginning after the Closing Date which taxable income was realized (and
reflects economic income) arising prior to the Closing Date.

 

(p)           STI and each STI
Subsidiary has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to substantial understatement of federal income
tax within the meaning of Section 6662 of the Code.

 

(q)           Neither STI nor any STI
Subsidiary currently has, or has ever had, a permanent establishment in any
jurisdiction other than the United States, or has engaged in a trade or
business in any jurisdiction other than the United States that subjected it to
tax in such country.

 

(r)            STI and STI
Subsidiaries have not participated in any “reportable transaction” as defined
in Treasury Regulations Section 1.6011-4(b).

 

3.11        Real Property.

 

(a)           Schedule 3.11
sets forth a complete list of (i) all real property and interests in real
property, including improvements thereon and easements appurtenant thereto
owned in fee by STI or any STI Subsidiary (the “STI Owned Real Properties”), and (ii) all real property
and interests in real property leased by STI or any STI Subsidiary with annual
payments in excess of $10,000 (the “STI Real
Property Leases” and, together with the STI Owned Properties, the “STI Real Properties”) as lessee or lessor,
including a description of each such STI Real Property Lease (including the
name of the third party lessor or lessee and the date of the lease or sublease
and all amendments thereto). STI and the STI Subsidiaries have good and
marketable fee title to all STI Owned Real Properties, free and clear of all
Liens of any nature whatsoever, except (A) those Liens set forth on Schedule 3.11
and (B) Permitted Exceptions.

 

43

 

The STI Real Properties constitute all
interests in real property currently used, occupied or currently held for use
in connection with the business of STI or any STI Subsidiary. To the Knowledge
of STI, all of the STI Real Properties and all of the properties covered by STI
Real Property Leases and buildings, fixtures and improvements thereon, (i) are
in good operating condition (ordinary wear and tear excepted) without
structural defects, and all mechanical and other systems located thereon are in
good operating condition (ordinary wear and tear excepted), and no condition
exists requiring material repairs, alterations or corrections and (ii) are
suitable, sufficient and appropriate in all respects for their current uses. To
the Knowledge of STI, none of the improvements located on the STI Real
Properties constitutes a legal non-conforming use or otherwise requires any
special dispensation, variance or special permit under any Laws. STI has
delivered to Consonus, or shall deliver to Consonus within 5 business days of
the date of this Agreement, true, correct and complete copies of (i) all deeds,
title reports, surveys, engineering reports, environmental reports, rent rolls,
insurance claims history and repair history for the STI Owned Properties in STI’s
possession or control and (ii) the STI Real Property Leases, together with all
amendments, modifications or supplements, if any, thereto. Except as set forth
on Schedule 3.11, the STI Owned Real Properties, and to the Knowledge of
STI, the properties covered by the STI Real Property Leases, are not subject to
any leases, rights of first refusal, options to purchase or rights of
occupancy.

 

(b)           Each of STI and the STI
Subsidiaries, as applicable, has a valid, binding and enforceable leasehold
interest under each of the STI Real Property Leases under which it is a lessee,
free and clear of all Liens other than Permitted Exceptions. Each of the STI
Real Property Leases is in full force and effect. Neither STI nor any STI
Subsidiary is in material default under any STI Real Property Lease, and no
event has occurred and no circumstance exists which, if not remedied, and
whether with or without notice or the passage of time or both, would result in
such a default. Neither STI nor any STI Subsidiary has received or given any
notice of any default or event that with notice or lapse of time, or both,
would constitute a material default by STI or any STI Subsidiary under any of
the STI Real Property Leases and, to the Knowledge of STI, no other party is in
material default thereof, and no party to any STI Real Property Lease has
exercised any termination rights with respect thereto.

 

(c)           STI and STI
Subsidiaries have all certificates of occupancy and Permits of any Governmental
Body necessary or useful for the current use and operation of each STI Real
Property, and STI and the STI Subsidiaries have fully complied in all material
respects with all conditions of the Permits applicable to them. No material
default or violation, or event that with the lapse of time or giving of notice
or both would become a material default or violation, has occurred in the due
observance of any Permit.

 

(d)           There does not exist
any actual or, to the Knowledge of STI, threatened or contemplated condemnation
or eminent domain proceedings that affect any STI Owned Real Properties or any
part thereof, and none of STI or any STI Subsidiary has received any written
notice, oral or written, of the intention of any Governmental Body or other
Person to take or use all or any part thereof.

 

(e)           None of STI or any STI
Subsidiary has received any written notice from any insurance company that has
issued a policy with respect to any STI Real Property requiring performance of
any structural or other repairs or alterations to such STI Real Property.

 

44

 

(f)            Except as set forth on
Schedule 3.11(f), STI and the STI Subsidiaries do not own or hold and
are not obligated under or a party to, any option, right of first refusal or
other contractual right to purchase, acquire, sell, assign or dispose of any
real estate or any portion thereof or interest therein.

 

3.12        Tangible Personal
Property.

 

(a)           STI and STI
Subsidiaries have good and marketable title to all of the items of owned
tangible personal property used in the business of STI and the STI Subsidiaries
(except as sold or disposed of subsequent to the date hereof in the ordinary
course of business and not in violation of this Agreement), free and clear of
any and all Liens, other than the Permitted Exceptions and except as set forth
on Schedule 3.12(a). Except as set forth on Schedule 3.12(a), all
such items of tangible personal property which, individually or in the
aggregate, are material to the operation of the business of STI and STI
Subsidiaries are in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted) and are suitable for the purposes
used.

 

(b)           Schedule 3.12(b)
sets forth all leases of personal property involving annual payments in excess
of $10,000 relating to personal property used in the business of STI and the
STI Subsidiaries or to which STI or any of STI Subsidiaries is a party or by
which the properties or assets of STI or the STI Subsidiaries is bound (“STI Personal Property Leases”). All of the
items of material personal property under the STI Personal Property Leases are
in good condition and repair (ordinary wear and tear excepted) and are suitable
for the purposes used, and such property is in all material respects in the
condition required of such property by the terms of the lease applicable
thereto during the term of the lease. STI has delivered to Consonus, or shall
deliver to Consonus within 5 business days of the date of this Agreement, true,
correct and complete copies of the STI Personal Property Leases, together with
all amendments, modifications or supplements thereto.

 

(c)           Each of STI and the STI
Subsidiaries has a valid and enforceable leasehold interest under each of the
STI Personal Property Leases under which it is a lessee. Each of the STI
Personal Property Leases is in full force and effect and neither STI nor any of
the STI Subsidiaries has received or given any notice of any material default
or event that with notice or lapse of time, or both, would constitute a
material default by STI or any of the STI Subsidiaries under any of the STI
Personal Property Leases and, to the Knowledge of STI, no other party is in
material default thereof, and no party to the STI Personal Property Leases has
exercised any termination rights with respect thereto.

 

3.13        Intellectual Property.

 

(a)           Schedule 3.13(a)
sets forth an accurate and complete list of all applied for, registered and/or
issued Patents, Marks and Copyrights owned or used by STI or any STI Subsidiary.
Schedule 3.13(a) lists (i) the current owner, (ii) the
jurisdictions in which each such item of Intellectual Property has been issued
or registered or in which any such application for such issuance and
registration has been filed, (iii) the respective issuance, registration or
application number of each item and (iv) the dates of application, issuance and
registration of each item.

 

45

 

(b)           Except as disclosed in Schedule 3.13(b),
to STI’s Knowledge, STI or a STI Subsidiary is the sole and exclusive owner of,
or has valid and continuing rights to use, sell and license, as the case may
be, all Intellectual Property used, sold or licensed by STI or STI Subsidiaries
in their businesses as presently conducted and as currently proposed to be
conducted, free and clear of all Liens or obligations to others (except for
those specified liens and licenses included in Schedule 3.13(e)).

 

(c)           Except as disclosed in Schedule 3.13(b),
to the Knowledge of STI, the Intellectual Property owned, used, practiced or
otherwise commercially exploited by STI or any STI Subsidiary, the development,
manufacturing, licensing, marketing, importation, offer for sale, sale or use
of the products or Technology in connection with the business as presently
conducted and as currently proposed to be conducted, and STI’s and STI
Subsidiaries’ present and currently proposed business practices and methods, do
not infringe, violate or constitute an unauthorized use or misappropriation of
any Patent, Copyright, Mark, Trade Secret or other similar right, of any Person
(including pursuant to any non-disclosure agreements or obligations to which
STI or any STI Subsidiary or any of their present or former employees is a
party, and including any intellectual property that might exist with respect to
open software or other intellectual property publicly available for certain
types of use). The Intellectual Property owned by or licensed to STI and STI
Subsidiaries includes all of the material Intellectual Property used by STI and
STI Subsidiaries to conduct their business in the manner in which such business
is currently being conducted.

 

(d)           Except with respect to
licenses of commercial off-the-shelf Software, and except pursuant to the
Intellectual Property Licenses listed in Schedule 3.13(d), neither
STI nor any of STI Subsidiaries is currently required, obligated, or under any
liability whatsoever, to make any payments by way of royalties, fees or
otherwise or provide any other consideration of any kind, to any owner or
licensor of, or other claimant to, any Intellectual Property, or any other
Person, with respect to the use thereof or in connection with the conduct of
the business of STI and STI Subsidiaries as currently conducted or proposed to
be conducted.

 

(e)           Schedule 3.13(e)
sets forth a complete and accurate list of all contracts to which STI or any
STI Subsidiary is a party (other than commercial off-the-shelf software)
(i) granting any Intellectual Property Licenses (other than as provided in
STI’s standard form of customer contract), (ii) containing a covenant not
to compete or otherwise limiting its ability to use or exploit fully any of the
Intellectual Property, except as, which individually or in the aggregate, would
not be expected to have a Material Adverse Effect on STI or (iii) containing an
agreement to indemnify any other Person against any claim of infringement,
violation, misappropriation or unauthorized use of any Intellectual Property. STI
has delivered to Consonus, or shall deliver to Consonus within 5 business days
of the date of this Agreement, true, correct and complete copies of each
contract set forth on Schedule 3.13(e), together with all amendments,
modifications or supplements thereto.

 

(f)            Each of the material
Intellectual Property Licenses is in full force and effect and is the legal,
valid and binding obligation of STI and/or STI Subsidiaries, enforceable
against them in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ rights generally and by general principals of equity
(regardless of whether considered in a proceeding

 

46

 

in equity or at law). Neither STI nor any STI
Subsidiary is in material default under any Intellectual Property License, nor,
to the Knowledge of STI, is any other party to any Intellectual Property
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 material default
thereunder. No party to any of the Intellectual Property Licenses has exercised
any termination rights with respect thereto, except in the ordinary course of
business.

 

(g)           No Trade Secret of STI
or any STI Subsidiary as presently conducted has been authorized to be
disclosed or, to STI’s Knowledge, has been actually disclosed by STI or, to STI’s
Knowledge, any STI Subsidiary to any employee or any third party other than
pursuant to STI policy including restrictions on the disclosure and use of the
Intellectual Property consistent with commercially reasonable practices in the
industry in which STI and STI Subsidiaries operate. STI and STI Subsidiaries
have taken reasonably adequate security measures to protect the secrecy,
confidentiality and value of all the Trade Secrets of STI and STI Subsidiaries,
including invention disclosures, not the subject of any patents owned or patent
applications filed by STI or a STI Subsidiary, which measures are consistent
with commercially reasonable practices in the industry in which STI and STI
Subsidiaries operate.

 

(h)           As of the date hereof,
neither STI nor any of STI Subsidiaries is the subject of any pending or, to
the Knowledge of STI, threatened Legal Proceedings which involve a claim of
infringement, misappropriation, unauthorized use, or violation of any
intellectual property rights of any Person against STI or STI Subsidiaries or
challenging the ownership, use, validity or enforceability of any material
Intellectual Property. Neither STI nor any STI Subsidiary has received notice
of any such threatened claim and, to the Knowledge of STI, there are no facts
or circumstances that would form the basis for any claim of infringement,
unauthorized use, misappropriation or violation of any intellectual property
rights of any Person against STI or any STI Subsidiary, or challenging the
ownership, use, validity or enforceability of any material Intellectual
Property.

 

(i)            To the Knowledge of
STI, no Person is infringing, violating, misusing or misappropriating any
material Intellectual Property of STI or any STI Subsidiary, and no such claims
have been made against any Person by STI or any STI Subsidiary. There are no
Orders to which STI is a party or by which STI is bound which restrict, in any
material respect, the right to use any of the Intellectual Property.

 

(j)            The consummation of
the transactions contemplated hereby will not result in the loss or impairment
of STI’s right to own or use any of the material Intellectual Property.

 

(k)           No present or former
employee has any right, title, or interest, directly or indirectly, in whole or
in part, in any material Intellectual Property owned or used by STI. To the
Knowledge of STI, no employee, consultant or independent contractor of STI is,
as a result of or in the course of such employee’s, consultant’s or independent
contractor’s engagement by STI, in material default or breach of any material
term of any employment agreement, non-disclosure agreement, assignment of
invention agreement or similar agreement.

 

(l)            Schedule 3.13(l)
sets forth a complete and accurate list of (i) all Software that is owned
exclusively by STI or any STI Subsidiary that is material to the operation of
the

 

47

 

business of STI or any STI Subsidiary and
(ii) all Software that is used by STI or any STI Subsidiary in the
business of STI or any STI Subsidiary that is not exclusively owned by STI or
any STI Subsidiary, excluding commercial off-the-shelf Software.

 

(m)          No open source Software
or freeware has been incorporated into the products of STI that would in any
way limit the ability to make, use or sell any such product or that would
transfer the rights of ownership in any Intellectual Property or Software of
STI to a third party.

 

(n)           STI has complied in all
material respects with all (i) applicable Laws relating to privacy, data
protection and the collection and use of personal information and user
information gathered or accessed in the course of its operations and (ii)
rules, policies and procedures established by STI from time to time with
respect to privacy, publicity, data protection or collection and use of
personal information and user information gathered or accessed in the course of
the operations of STI. No claims alleging a violation of any Person’s privacy,
personal or confidentiality rights under any such rules, policies or procedures
have been asserted or to STI’s Knowledge threatened against STI by any Person. With
respect to all personal information and user information described in this
Section 3.13(n), STI has taken such steps as it deems commercially reasonably
necessary (including, implementing and monitoring compliance with adequate
measures with respect to technical and physical security) to ensure that the
information is protected against loss and against unauthorized access, use,
modification, disclosure or other misuse to the extent required by applicable Laws.

 

3.14        Material Contracts.

 

(a)           Schedule 3.14(a)
sets forth, by reference to the applicable subsection of this Section
3.14(a), all of the following contracts to which STI or any of STI
Subsidiaries is a party or by which any of them or their respective assets of
properties are bound; provided, however, that any contract reference under any
subsection will be deemed disclosed for all subsections of this Section 3.14
(collectively, the “STI Material Contracts”):

 

(i)            contracts with any STI
Principal Stockholder or Affiliate thereof or any current or former officer,
director, stockholder or Affiliate of STI or any of STI Subsidiaries;

 

(ii)           contracts with any
labor union or association representing any employee of STI or any of STI
Subsidiaries;

 

(iii)          contracts for the sale
of any of the assets of STI or any of STI Subsidiaries other than in the
ordinary course of business or for the grant to any Person of any preferential
rights to purchase any of its assets;

 

(iv)          contracts for joint
ventures, strategic alliances, partnerships, licensing arrangements (other than
as provided in STI’s standard form of customer contract), or sharing of profits
or proprietary information;

 

(v)           Except as, which
individually or in the aggregate, would not be expected to have a Material
Adverse Effect on STI, contracts containing covenants of STI or any of STI
Subsidiaries not to compete in any line of business or with any Person in any

 

48

 

geographical area or not to solicit or hire
any person with respect to employment or covenants of any other Person not to
compete with STI or any of STI Subsidiaries in any line of business or in any
geographical area or not to solicit or hire any person with respect to
employment;

 

(vi)          contracts relating to
the acquisition during 2004, 2005 or 2006 (by merger, purchase of stock or
assets or otherwise) by STI or any of STI Subsidiaries of any operating
business or material assets or the capital stock of any other Person;

 

(vii)         except for capitalized
leases entered into in the ordinary course of business, contracts relating to
the incurrence, assumption or guarantee of any indebtedness or imposing a Lien
on any of the assets of STI or any STI Subsidiary, including indentures,
guarantees, loan or credit agreements, sale and leaseback agreements, purchase
money obligations incurred in connection with the acquisition of property,
mortgages, pledge agreements, security agreements, or conditional sale or title
retention agreements;

 

(viii)        purchase contracts (A) for
assets included in the cost-of-sale of goods and services giving rise to
liabilities of STI or any of STI Subsidiaries in excess of $250,000 in any
fiscal year, and (B) for all other assets giving rise to liabilities of STI or
any of STI Subsidiaries in excess of $100,000 in any fiscal year;

 

(ix)          all contracts (based on
all contracts or purchase orders for an individual customer aggregated
together) providing for payments by or to STI or any STI Subsidiaries in excess
of $250,000 in any fiscal year; provided, however, that with respect to
customer contracts entered into in the ordinary course of business, providing
for payment to STI or any STI Subsidiaries in excess of $1,000,000 in any
fiscal year;

 

(x)           all customer contracts
making up a total of twenty-five percent (25%) of STI’s total customer billings
during the past eighteen months ranked beginning with the largest, based on the
amount billed per customer under all of such customer’s contracts or purchase
orders.

 

(xi)          other than standard
maintenance support or managed service contracts entered into with customers in
the ordinary course of business, all contracts obligating STI or any of STI
Subsidiaries to provide or obtain products or services for a period of one year
or more or requiring STI to purchase or sell a stated portion of its
requirements or outputs;

 

(xii)         contracts under which STI
or any of STI Subsidiaries has made advances or loans to any other Person;

 

(xiii)        contracts providing for
severance, retention, change in control or other similar payments;

 

(xiv)        contracts for the
employment of any individual on a full-time, part-time or other basis providing
base annual compensation in excess of $50,000 and having a remaining term of
more than one year from the date hereof;

 

(xv)         management contracts and
contracts with independent contractors or consultants (or similar arrangements)
providing for payments in excess of $100,000 per fiscal

 

49

 

year and that are not cancelable without penalty
or further payment and without more than 90 days’ notice;

 

(xvi)        outstanding contracts of
guaranty, surety or indemnification, direct or indirect, by STI or any of the
STI Subsidiaries involving more than $50,000 in any fiscal year; and

 

(xvii)       contracts that are
otherwise material to STI and the STI Subsidiaries.

 

(b)           Each of the STI
Material Contracts is in full force and effect and is the legal, valid and
binding obligation of STI or any STI Subsidiary which is  party thereto, and, to the Knowledge of STI,
of the other parties thereto enforceable against each of them in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity (regardless of whether
considered in a proceeding in equity or at law) and, upon consummation of the
transactions contemplated by this Agreement, shall, except as otherwise stated
in Schedule 3.14(b), continue in full force and effect without material
penalty or other material adverse consequence. Neither STI nor any STI
Subsidiary is in material default under any STI Material Contract, nor, to the
Knowledge of STI, is any other party to any STI Material Contract in breach of
or default thereunder, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a material breach or default on
STI, any STI Subsidiary or any other party thereunder. No party to any of the
STI Material Contracts has exercised any termination rights with respect
thereto except in the ordinary course of business, and no party has given
notice of any significant dispute with respect to any STI Material Contract. STI
has delivered to Consonus, or shall deliver to Consonus within 5 business days
of the date of this Agreement, true, correct and complete copies of all of the
STI Material Contracts (other than fulfilled purchase orders), together with
all amendments, modifications or supplements thereto.

 

3.15        Employee Benefit Plans.

 

(a)           Schedule 3.15
sets forth a correct and complete list of all “employee benefit plans” (as
defined in Section 3(3) of ERISA), and all other employee benefit plans,
programs, agreements, policies, arrangements or payroll practices, including
bonus plans, employment, consulting or other compensation agreements,
incentive, stock purchase or other equity or equity-based compensation,
deferred compensation, change in control, retention, termination, severance,
sick leave, vacation pay, educational assistance, employee loan, salary
continuation for disability, hospitalization, health insurance, life insurance
and  scholarship plans, programs,
policies, agreements and arrangements maintained by STI or any of STI
Subsidiaries or to which STI or any of STI Subsidiaries contributed or is
obligated to contribute thereunder for current or former employees of STI or
any of STI Subsidiaries (the “STI Employees”)
or to which STI or any of STI Subsidiaries has any obligation or liability,
contingent or otherwise (collectively, the “STI
Plans”). No STI Plan is a Title IV Plan, nor does STI have any
obligation or liability, contingent or otherwise, to a Title IV Plan, including
any Multiemployer Plan, or is or has been subject to Sections 4063 or 4064 of
ERISA.

 

50

 

(b)           Correct and complete
copies of the following documents, with respect to each of STI Plans, have been
made available or delivered to Consonus by STI, or shall be delivered to
Consonus by STI within 5 business days of the date of this Agreement, to the
extent applicable: (i) any plans, all amendments thereto and related trust
documents, insurance contracts or other funding arrangements, and amendments
thereto; (ii) the most recent Forms 5500 and all schedules thereto and the
most recent actuarial report, if any; (iii) the most recent IRS
determination letter; (iv) summary plan descriptions; and (v) written
summaries of all non-written STI Plans.

 

(c)           STI Plans have been
maintained in all material respects in accordance with their terms and with all
provisions of ERISA, the Code (including rules and regulations thereunder) and
other applicable Federal and state Laws and regulations.

 

(d)           STI Plans intended to
qualify under Section 401 of the Code have either (i) received a determination
from the IRS that they are so qualified and any trusts intended to be exempt
from Federal income taxation under Section 501 of the Code are so exempt, or
(ii) are in a prototype or volume submitter plan document that has been
pre-approved by the IRS as evidenced by a letter from the IRS, and nothing has
occurred with respect to the operation of STI Plans that could cause the loss
of such qualification or exemption or the imposition of any liability, penalty
or tax under ERISA or the Code.

 

(e)           All contributions
(including all employer contributions and employee salary reduction
contributions) required to have been made under any of STI Plans have been
timely made.

 

(f)            There are no pending
actions, claims or lawsuits that have been asserted or instituted relating to
or arising from STI Plans, the assets of any of the trusts under STI Plans or
the sponsor or administrator of any of STI Plans, or against any fiduciary of
STI Plans with respect to the operation of any of STI Plans (other than routine
benefit claims), nor does STI have any Knowledge of facts that could reasonably
be expected to form the basis for any such claim or lawsuit.

 

(g)           None of STI Plans
provides for post-employment life insurance or health insurance, benefits or
coverage for any participant or any beneficiary of a participant, except as may
be required under COBRA, or at the expense of the participant or the
participant’s beneficiary.

 

(h)           Except as set forth on Schedule
3.15(h), neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any Employee, (ii) increase any benefits otherwise
payable under any STI Plan or (iii) result in the acceleration of the time of
payment or vesting of any rights with respect to such benefits under any STI
Plan.

 

(i)            Any individual who
performs services for STI (other than through a contract with an organization
other than such individual) and who is not treated as an employee of STI for
Federal income tax purposes by STI is not an employee for such purposes.

 

51

 

3.16        Labor and Employment
Matters.

 

(a)           STI and STI
Subsidiaries have complied in all material respects with all applicable Laws
respecting employment and employment practices, WARN and any similar state or
local “mass layoff” or “plant closing” Law, workers’ compensation and the
collection and payment of withholding and/or social security taxes and any
similar tax  terms and conditions of
employment, wages and hours, occupational safety and health, collective
bargaining, discrimination civil rights, including Laws concerning unfair labor
practices within the meaning of Section 8 of the National Labor Relations
Act, and the employment of non-residents under the Immigration Reform and
Control Act of 1986.

 

(b)           Except as disclosed in Schedule
3.16(b),

 

(i)            except for routine
government inquiries, examinations and inspections which STI and STI
Subsidiaries have no reason to believe are material, there are no charges,
governmental audits, investigations, administrative proceedings or complaints
concerning the employment practices of STI or STI Subsidiaries pending or, to
the Knowledge of STI, threatened, before any federal, state or local agency or
court and, to the Knowledge of STI, no basis for any such matter exists;

 

(ii)           except for routine
government inquiries, examinations and inspections which STI and STI
Subsidiaries have no reason to believe are material, there are no inquiries,
investigations or monitoring of activities pending or, to the Knowledge of STI,
threatened, by any state professional board or agency charged with regulating
the professional activities of any licensed, registered, or certified professional
personnel employed by, credentialed or privileged by, or otherwise affiliated
with STI and STI Subsidiaries and who provides services to STI and STI
Subsidiaries;

 

(c)           Neither STI nor any of
STI Subsidiaries is a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of STI or any of STI Subsidiaries. STI has delivered or otherwise
made available to Consonus true, correct and complete copies of the labor or
collective bargaining agreements listed on Schedule 3.16(c),
together with all amendments, modifications or supplements thereto.

 

(d)           There are no strikes,
work stoppages, slowdowns, lockouts, arbitrations, unfair labor practice
charges or material grievances or other labor disputes pending or, to the
Knowledge of STI, threatened against or involving STI or any of STI
Subsidiaries. Except as set forth on Schedule 3.16(d), there are no
complaints, charges or claims against STI or any of STI Subsidiaries pending
or, to Knowledge of STI, threatened that could be brought or filed, with any
Governmental Body based on, arising out of, in connection with or otherwise
relating to the employment or termination of employment of or failure to
employ, any individual.

 

(e)           Schedule 3.16(e)
sets forth the current total accrued but unpaid compensation of each of the
executive officers of STI (including salary, bonus, stock awards, option
awards, non-equity incentive plan compensation and all other compensation and
perquisites) and the expected accrued but unpaid compensation of each of the
executive officers of STI for the year ending December 31, 2006.

 

52

 

3.17        Litigation. Except
as set forth in Schedule 3.17, (i) there is no material Legal Proceeding
pending or, to the Knowledge of STI, threatened against STI or any of STI
Subsidiaries (or to the Knowledge of STI, pending or threatened, against any of
the officers, directors or employees of STI or any of STI Subsidiaries with
respect to their business activities on behalf of STI), or to which STI or any
of STI Subsidiaries is otherwise a party before any Governmental Body; and (ii)
to the Knowledge of STI there is no reasonable basis for any such Legal
Proceeding. Except as set forth on Schedule 3.17, neither STI nor any
STI Subsidiary is subject to any Order, and neither STI nor any STI Subsidiary
is in breach or violation of any Order. Except as set forth on Schedule 3.17,
neither STI nor any STI Subsidiary is engaged in any legal action to recover
monies due it or for damages sustained by it. There are no Legal Proceedings
pending or, to the Knowledge of STI, threatened against STI or to which STI is
otherwise a party relating to this Agreement or, any STI Document or the
transactions contemplated hereby or thereby.

 

3.18        Compliance with Laws;
Permits.

 

(a)           STI and STI
Subsidiaries are, and since December 31, 2003 have been, in compliance
with all material Laws applicable to its business, operations or assets. Other
than for the State of Tennessee with respect to sales and use taxes, since such
date, STI and STI Subsidiaries have not received any notice of or been charged
with the violation of any Laws. To STI’s Knowledge, neither STI nor any of the
STI Subsidiaries is under investigation with respect to the violation of any
Laws and, to the Knowledge of STI, there are no facts or circumstances which
could form the reasonable basis for any such violation.

 

(b)           Schedule 3.18
contains a list of all Permits which are required for the operation of the
business of STI and STI Subsidiaries as presently conducted other than those
the failure of which to possess is immaterial (“STI Permits”). STI and STI Subsidiaries currently have all of
the STI Permits. Neither STI nor any STI Subsidiary is in default or violation,
and no event has occurred which, with notice or the lapse of time or both,
would constitute a default or violation, in any respect of any term, condition
or provision of any STI Permit, and to the Knowledge of STI, there are no facts
or circumstances which could form the reasonable basis for any such default or
violation. There are no Legal Proceedings pending or, to the Knowledge of STI,
threatened, relating to the suspension, revocation or modification of any STI
Permit. Assuming those consents and filings set forth on Schedule 3.18
are timely obtained or made, none of the material STI Permits will be
materially adversely impaired or in any way materially adversely affected by
the consummation of the transactions contemplated by this Agreement.

 

3.19        Environmental Matters.
Except as set forth on Schedule 3.19 hereto, the operations of STI
and each of the STI Subsidiaries are and have been in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes obtaining, maintaining in good standing and complying in all material
respects with all Environmental Permits and no action or proceeding is pending
or, to the Knowledge of STI, threatened to revoke, modify or terminate any such
Environmental Permit, and, to the Knowledge of STI, no facts, circumstances or
conditions currently exist that could adversely affect such continued
compliance with Environmental Laws and Environmental Permits or require
currently unbudgeted capital expenditures to achieve or maintain such continued
compliance with Environmental Laws and Environmental Permits.

 

53

 

3.20        Insurance. STI and
STI Subsidiaries have insurance policies in full force and effect (a) for such
amounts as are sufficient for all requirements of Law and all agreements to
which STI and STI Subsidiaries are bound, and (b) which are in such amounts,
with such deductibles or retention amounts and against such risks and losses,
as are reasonable for the business, assets and properties of STI and STI
Subsidiaries. Set forth in Schedule 3.20 is a list of all insurance
policies and all fidelity bonds or other financial assurance required by any
STI Material Contract held by or applicable to STI and STI Subsidiaries,  setting forth, in respect of each such
policy, the policy name, policy number, carrier, term, type and amount of
coverage, deductible or retention amount and annual premium, whether the
policies may be terminated upon consummation of the transactions contemplated
hereby and if and to what extent events being notified to the insurer after the
Closing Date are generally excluded from the scope of the respective policy. Except
as set forth on Schedule 3.20, no event relating specifically to STI or
any STI Subsidiaries has occurred which could reasonably be expected to result
in a material retroactive upward adjustment in premiums under any such
insurance policies or which could reasonably be expected to result in a
material prospective upward adjustment in such premiums. Excluding insurance
policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been cancelled within the last two years and,
to the Knowledge of STI and STI Subsidiaries, no threat has been made to cancel
any insurance policy of STI or STI Subsidiaries during such period. Except as
noted on Schedule 3.20, all such insurance will remain in full force and
effect immediately following the consummation of the transactions contemplated
hereby. No event has occurred, including the failure by STI to give any notice
or information or STI giving any inaccurate or erroneous notice or information,
which limits or impairs the material rights of STI under any such insurance
policies.

 

3.21        Accounts and Notes
Receivable and Payable. All accounts and notes receivable of STI and STI
Subsidiaries have arisen from bona fide transactions in the ordinary course of
business consistent with past practice and are payable on ordinary trade terms.
Except as set forth on Schedule 3.21, none of the accounts or the notes
receivable of STI are subject to any setoffs or counterclaims in excess of
reserves. All accounts payable of STI reflected in the STI Balance Sheet or
arising after the date thereof are the result of bona fide transactions in the
ordinary course of business and have been paid, are not yet due and payable or
are being paid consistent with past practice.

 

3.22        STI Related Party
Transactions. Except as set forth on Schedule 3.22, no employee,
officer, director, stockholder or member of STI or any of the STI Subsidiaries,
any member of his or her immediate family or any of their respective Affiliates
(“STI Related Persons”) (a) owes
any amount to STI or any of STI Subsidiaries nor does STI or any of STI
Subsidiaries owe any amount to, or has STI or any of STI Subsidiaries committed
to make any loan or extend or guarantee credit to or for the benefit of, any
STI Related Person, (b) is involved in any business arrangement or other
relationship with STI or any of STI Subsidiaries (whether written or oral), (c)
owns any property or right, tangible or intangible, that is used by STI or any
of STI Subsidiaries or (d) has any claim or cause of action against STI or any
of STI Subsidiaries owns any direct or indirect interest of any kind in, or
controls or is a director, officer, employee or partner of, or consultant to,
or lender to or borrower from or has the right to participate in the profits
of, any Person which is a competitor, supplier, customer, landlord, tenant,
creditor or debtor of STI or any STI Subsidiary; provided that for clause (d),
such representation as it relates to employees who are not officers or
directors is only given to STI’s Knowledge.

 

54

 

3.23        Customers and Suppliers.

 

(a)           Schedule 3.23
sets forth a list of the ten (10) largest customers by revenue category and the
ten (10) largest suppliers of STI and the STI Subsidiaries, as measured by the
dollar amount of purchases therefrom or thereby, during each of the fiscal
years (or partial fiscal year) ended December 31, 2005 and December 31, 2004,
showing the approximate total sales by STI and STI Subsidiaries to each such
customer and the approximate total purchases by STI and STI Subsidiaries from
each such supplier, during such period.

 

(b)           Since December 31,
2005, no customer or supplier listed on Schedule 3.23 has
terminated its relationship with STI and STI Subsidiaries or materially reduced
or changed the pricing or other terms of its business with STI and STI Subsidiaries
and, to the Knowledge of STI, no customer or supplier listed on Schedule
3.23 has notified STI and STI Subsidiaries that it intends to terminate or
materially reduce or change the pricing or other terms of its business with STI
and STI Subsidiaries.

 

3.24        Banks; Power of
Attorney. Schedule 3.24 contains a complete and correct list of the
names and locations of all banks in which STI or any STI Subsidiary has
accounts or safe deposit boxes and the names of all persons authorized to draw
thereon or to have access thereto. Except as set forth on Schedule 3.24,
no person holds a power of attorney to act on behalf of STI or any STI
Subsidiary.

 

3.25        Financial Advisors.
Except as set forth on Schedule 3.25, no Person has acted, directly or
indirectly, as a broker, finder or financial advisor for STI or any STI
Subsidiary in connection with the transactions contemplated by this Agreement
and no Person is or will be entitled to any fee or commission or like payment
in respect thereof, other than Persons who may be entitled to fees, commissions
or like payments solely as a result of the initial public offering of the
Company’s common stock.

 

ARTICLE IV

ADDITIONAL AGREEMENTS

 

4.1          Exemption from
Registration; Information Statement. As soon as reasonably practicable
following the execution of this Agreement, the Company and STI shall prepare
the necessary documents, and the Company shall apply to obtain an order of
approval (a “North Carolina Permit”)
from the Secretary of State of the State of North Carolina (after a hearing
before such Secretary) pursuant to Section 78A-30 of the North Carolina
Securities Act. STI and the Company will respond to any comments from the
Secretary of State of North Carolina and use their commercially reasonable
efforts to have the North Carolina Permit granted as soon as practicable after
such filing, if applicable. Without limiting the generality of the foregoing,
promptly after the execution of this Agreement, STI, in consultation with
Consonus and the Company, will prepare an information statement (the “Information Statement”) to be used in
connection with obtaining the approval by STI’s stockholders of this Agreement.
STI shall cause the Information Statement and any other reasonably appropriate
disclosure documents to be mailed to the stockholders of STI promptly upon
receipt of a North Carolina Permit. The Company shall not distribute the
Information Statement without Consonus’ approval, which approval shall not be
unreasonably withheld or delayed. Each of the Company, CAC Merger

 

55

 

Sub, STI Merger Sub, Consonus and STI shall
in no way be responsible for any of the content of the Information Statement
except as it pertains to and is supplied by the Company, CAC Merger Sub, STI
Merger Sub, Consonus or STI, as the case may be.

 

4.2          Meeting of
Stockholders. STI shall take all action necessary in accordance with North
Carolina Law and its Articles of Incorporation and Bylaws to convene a meeting
of its stockholders (the “Stockholders’ Meeting”),
to be held as promptly as practicable or, if applicable, on such later date as
may be required by the Secretary of State of North Carolina after the issuance
of a North Carolina Permit, for the purpose of voting upon the approval and
adoption of this Agreement and the transactions contemplated hereby, as
appropriate. In connection therewith, the Information Statement shall include a
statement to the effect that the Board of Directors of STI has recommended that
the stockholders of STI vote in favor of and adopt and approve this Agreement
at the Stockholders’ Meeting. The Information Statement shall specify that
adoption of this Agreement shall constitute approval by the stockholders of STI
of: (i) the escrow and all other provisions of Article VII hereof and the
deposit of that number of shares of the Company Common Stock equal to the
Escrow Amount into the Escrow Fund and (ii) in favor of the appointment of
Irvin J. Miglietta as STI Holder Agent, under and as defined in this Agreement.
STI shall consult with Consonus regarding the date of the Stockholders’ Meeting
and shall not postpone or adjourn (other than for absence of a quorum) the
Stockholders’ Meeting without the consent of Consonus. STI shall use its best
efforts to obtain the consent of its stockholders sufficient to approve this
Agreement and to enable the Closing to occur as promptly as practicable.

 

4.3          Confidentiality.

 

(a)           STI agrees that prior
to Closing, STI and its stockholders, agents and representatives will not use
for its or their own benefit (except when required by law and in connection
with STI’s due diligence investigation of Consonus in connection with this
Agreement) and shall hold in strict confidence and not disclose: (i) any data
or information relating to Consonus obtained from Consonus or the stockholders
of Consonus or any of their directors, officers, employees, agents or
representatives in connection with this Agreement; or (ii) any data or
information relating to its business, customers, financial statements, conditions
or operations which is confidential in nature and not generally known to the
public (clauses (i) and (ii) together, “Consonus’
Information”). If the transactions contemplated in this Agreement
are not consummated for any reason, STI shall promptly return to Consonus or
its stockholders, as the case may be, all data, information and any other
written material obtained by STI in connection with this transaction and any
copies, summaries or extracts thereof, and shall refrain from disclosing any of
Consonus’ Information to any third party or using any of Consonus’ Information
for its own benefit or that of any other Person.

 

(b)           Consonus, Company, CAC
Merger Sub and STI Merger Sub agree that prior to Closing,  Consonus, Company, CAC Merger Sub and STI
Merger Sub and their stockholders, agents and representatives will not use for
its or their own benefit (except when required by law and in connection with
Consonus’ due diligence investigation of Consonus in connection with this
Agreement) and shall hold in strict confidence and not disclose: (i) any data
or information relating to STI obtained from STI or the stockholders of STI or
any of their directors, officers, employees, agents or representatives in
connection with this Agreement; or

 

56

 

(ii) any data or information relating to its
business, customers, financial statements, conditions or operations which is
confidential in nature and not generally known to the public (clauses (i) and
(ii) together, “STI’s Information”).
If the transactions contemplated in this Agreement are not consummated for any
reason, Consonus, Company, CAC Merger Sub and STI Merger Sub shall promptly
return to STI or its stockholders, as the case may be, all data, information
and any other written material obtained by them in connection with this
transaction and any copies, summaries or extracts thereof, and shall refrain
from disclosing any of STI’s Information to any third party or using any of STI’s
Information for its own benefit or that of any other Person.

 

(c)           Notwithstanding any
other provision to the contrary herein, the provisions of this Section 4.3
shall survive the termination of this Agreement.

 

4.4          Public Disclosure.
Unless otherwise expressly permitted by this Agreement, STI and Consonus shall
consult with each other before issuing any press release or otherwise making
any public statement or making any other communication or disclosure to a third
party (whether or not in response to an inquiry) regarding the terms of this Agreement
and the transactions contemplated hereby (including any termination of this
Agreement and the reasons therefore), and neither shall issue any such press
release or make any such statement or disclosure without the prior approval of
the other (which approval shall not be unreasonably delayed, conditioned or
withheld), except as may be required by law. The Parties acknowledge that the
process and the documentation required for issuance of the North Carolina
Permit is on the public record.

 

4.5          Access to Information.

 

(a)           Upon reasonable notice,
STI and Consonus each shall afford the other party and its respective
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time or the earlier
termination of this Agreement in accordance with its terms, provided that such
access does not cause disruption to the day-to-day operation of STI or
Consonus, as the case may be, to: (i) all properties, books, Tax Returns,
contracts and records; and (ii) all other information concerning its business,
properties and personnel as STI or Consonus, as the case may be, may reasonably
request. STI and Consonus each agree to provide or otherwise make available to
the other party and its respective accountants, counsel and other
representatives copies of internal financial statements, to the extent such
financial statements are available, promptly upon request. Any such information
shall constitute confidential “Information” pursuant to the Mutual Disclosure
Agreement.

 

(b)           No information or
knowledge obtained in any investigation pursuant to this Section 4.5 shall
affect or be deemed to modify any representation or warranty contained herein
or the conditions to the obligations of the parties to consummate the Mergers. Additionally,
during the period from the date hereof and prior to the Effective Time or the
earlier termination of this Agreement in accordance with its terms, each party
shall promptly notify the other parties hereto in writing of the discovery by
such party of any event, condition, fact or circumstance which causes, caused,
constitutes or constituted a breach of any representation, warranty or covenant
made by such party in this Agreement to the extent that such event, condition,
fact or circumstance would reasonably be expected to cause the condition in

 

57

 

Section 6.2(b)
in the case of STI or, Section 6.3(b) in the case of Consonus, of
this Agreement not to be satisfied.

 

4.6          Consents; Cooperation.
Each of the Company, STI, STI Merger Sub, Consonus and CAC Merger Sub shall
promptly apply for or otherwise seek, and use commercially reasonable efforts
to obtain, all consents and approvals required to be obtained by it for the
consummation of the Mergers, and shall use commercially reasonable efforts to
obtain all necessary consents, waivers and approvals under any of their
respective material contracts in connection with the consummation of the
transactions contemplated by this Agreement, including the Mergers.

 

4.7          Legal Requirements.
Each of the Company, STI, STI Merger Sub, Consonus and CAC Merger Sub shall,
and shall cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which have been or
which may be imposed on them with respect to the consummation of the
transactions contemplated by this Agreement and shall promptly cooperate with
and furnish information to any party hereto necessary in connection with any
such requirements imposed upon such other party in connection with the
consummation of the transactions contemplated by this Agreement and shall take
all reasonable actions necessary to obtain (and shall cooperate with the other
parties hereto in obtaining) any consent, approval, order or authorization of,
or any registration, declaration or filing with, any Governmental Body or other
Person, required to be obtained or made in connection with the taking of any
action contemplated by this Agreement.

 

4.8          Expenses. Whether
or not the Mergers are consummated, except as otherwise set forth herein, all
Expenses (as defined below) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses. As used in this Agreement, “Expenses”
includes all out-of-pocket expenses (including, without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its Affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the Voting
Agreements and the transactions contemplated hereby, including the preparation,
printing, filing and mailing of the North Carolina Permit and Information
Statement and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby and thereby; provided that,
Consonus shall reimburse STI for up to one-half (1/2) of the Expenses incurred
in connection with obtaining the North Carolina Permit, including, without
limitation, those imposed by the North Carolina Secretary of State for up to
$25,000 of Expenses incurred. All Expenses related to the HSR filing, if any,
including, without limitation, the filing fee, shall be the responsibility of,
and shared by, Consonus and STI. The parties hereto shall cooperate with each
other in preparing, executing and filing any Tax Returns with respect to
property or transfer taxes required to be paid as a result of the transaction
contemplated hereby. To the extent not otherwise allocated hereunder, the
responsibilities for payment of such property and/or transfer taxes, if any,
shall be allocated in accordance with law, or if not designated by law, in
accordance with customary local practice.

 

4.9          Commercially
Reasonable Efforts and Further Assurances. Each of the parties to this
Agreement shall use its commercially reasonable efforts to effect all
transactions contemplated hereby and to fulfill and cause to be fulfilled its
conditions to Closing under this

 

58

 

Agreement. Each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting completely the consummation of
this Agreement and the transactions contemplated hereby.

 

4.10        Treatment of
Convertible Securities.

 

(a)           Replacement Options.
Each STI Option granted prior to the Effective Time and remaining outstanding
immediately prior to the Effective Time shall cease to represent a right to
acquire shares of STI Common Stock and shall be converted (as so converted, an “STI Converted Option”), at the Effective
Time, into an option to acquire, on the same terms and conditions as were
applicable under the STI Option (but taking into account the acceleration of
the vesting thereof), as set forth in Section 1.8(b)(iii) that number of shares
of the Company Common Stock determined by multiplying the number of shares of
STI Common Stock subject to such STI Option by the STI Exchange Ratio, rounded,
if necessary, to the nearest whole share of the Company Common Stock; provided,
however, that in the case of any STI Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of the Code, the
option price, the number of shares subject to such option and the terms and
conditions of exercise of such option shall be determined in a manner
consistent with the requirements of Section 424(a) of the Code.

 

(b)           Notice and ISO’s.
As soon as practicable after the Effective Time, the Company shall take all
commercially reasonable efforts to deliver to the holders of STI Options, at
the latest address set forth in STI’s records, appropriate notices setting
forth such holders’ rights pursuant to the STI Option Plan and such option
holders’ specific option grant (including that, in connection with the STI
Merger and to the extent allowed by the terms of the STI Option Plan, the STI
Options have become fully vested and exercisable) and stating that such STI
Options and agreements shall be assumed by the Company and shall continue in
effect on the same terms and conditions (subject to the adjustments required by
this Section 4.10 after giving effect to the Mergers and the terms of the STI
Stock Option Plan the Company shall take such reasonable steps as are necessary
or required by, and subject to the provisions of, such STI Option Plan and
applicable legal requirements, to have the STI Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options of the Company at the Effective Time. The notice will
further indicate that the STI Options will be subject to the Rescission
including, with respect to options exercised after the Closing but before the
Rescission, that the exercise itself will be rescinded as further set forth in
the Rescission Agreement.

 

(c)           Obligations of the
Company. Prior to the Effective Time, the Company shall take all necessary
action to assume as of the Effective Time all obligations undertaken by, or on
behalf of, the Company under this Section 4.10 and to adopt at the Effective
Time the STI Stock Option Plan and each STI Converted Option, and to take all
other actions called for by this Section 4.10, including the reservation and
issuance of a number of shares of the Company Common Stock at least equal to
the number of shares of the Company Common Stock that will be subject to STI
Converted Options.

 

59

 

(d)           Consonus Preferred
Stock. Consonus shall cause all of its issued and outstanding Consonus
Preferred Stock to be converted into Consonus Common Stock prior to the
Closing.

 

4.11        Board of Directors.
The Board of Directors of the Company as of the Effective Time shall be nine
(9) members in three (3) separate classes as set forth in the Certificate of
Incorporation of the Company, (i) six (6) of whom shall be designated by Knox
Lawrence International, LLC, a Delaware limited liability company (“KLI”), two (2) of whom shall be a Class I
Director, two (2) of whom shall be a Class II Director and two (2) of whom
shall be a Class III Director, (ii) two (2) of whom shall be designated by the
STI Principal Stockholders, one (i) of whom shall be a Class II Director, and
one (1) of whom shall be a Class III Director, and one (1) of whom shall be
mutually designated by KLI and the STI Principal Stockholders and whom shall be
a Class I Director, all in accordance with the Stockholders Agreement. As of
the Effective Time, the Board of Directors of the Company shall be made up of
those individuals set forth on Schedule 4.11. Within five (5) business
days after execution of this Agreement, the parties to the Stockholders
Agreement will prepare a mutually agreeable voting agreement pursuant to which,
after the closing of an initial public offering of the Company’s common stock
and for so long as Michael Shook continues to hold at least 50% of the Company
common stock issued to him at the Closing, the parties shall vote their shares
of Company Common Stock to cause the Chief Executive Officer of the Company to
be elected to the Board of Directors of the Company (the “Post-IPO Voting Agreement”).

 

4.12        Executive Officers.
The Board of Directors of the Company and the Surviving Corporations shall take
all actions within their power to cause, effective upon the Effective Time, the
individuals listed on Schedule 4.12 hereto to be designated as executive
officers of the Company and the Surviving Corporations with the titles
indicated opposite their respective names as set forth on Schedule 4.12
hereto, each of whom shall be appointed in accordance with the certificate of
incorporation and bylaws of the Company and the Surviving Corporations, as
applicable.

 

4.13        Director and Officer
Indemnification.

 

(a)           For a period of six (6)
years after the Effective Time, the Company shall, and shall cause the
Surviving Corporations to, indemnify and hold harmless the present and former
officers and directors of Consonus and STI (solely in their capacities as
such), in respect of acts or omissions occurring on or prior to the Effective
Time to the extent such officers or directors had a right to such indemnification
under the Consonus Certificate or STI Certificate, as applicable; provided,
however, that such indemnification shall be subject to any limitation imposed
from time to time under applicable law. In addition, the Certificate of
Incorporation, or equivalent organizational documents, of the Surviving
Corporations shall contain provisions with respect to exculpation and
indemnification that are at least as favorable to such officers and directors
as those contained in the Consonus Certificate and STI Certificate, as
applicable, which provisions shall not be amended, repealed or otherwise
modified during such six (6) year period in any manner that would adversely
affect the rights thereunder of such individuals, unless such modification is
required by applicable law.

 

60

 

(b)           The parties hereto
agree that each of STI and Consonus shall purchase, prior to or promptly
following the Closing, a six (6) year director and officer tail liability
insurance policy for purposes of indemnifying and insuring those individuals
covered under STI’s and Consonus’ directors’ and officers’ insurance policies
in effect as of the date hereof, a copy of which has been made available to the
other party.

 

(c)           The terms of this Section 4.13
are intended to be for the benefit of, and shall be enforceable by such
respective current and former directors and officers of Consonus and STI and
their heirs and personal representatives and shall be binding on the Company
and the Surviving Corporations and their successors and assigns. In the event
that the Company or either of the Surviving Corporations (or any of the
respective successors or assigns) (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
in such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each case, proper
provision shall be made so that the successor or assign of the Company or
either of the Surviving Corporations, as the case may be, honors the
obligations set in this Section 4.13.

 

4.14        Benefit Plans. Each
of the Surviving Corporations will maintain their currently provided employee
benefits and similar plans and programs following the Closing. Thereafter, each
of the Surviving Corporations and Parent will take such actions as are
necessary so that all of the employees of each of the Surviving Corporations
will be provided employee benefits and similar plans and programs as will
provide benefits which, in the aggregate and in all material respects, are
substantially similar to those provided to such employees as of the date
hereof.

 

4.15        The Company
Arrangements. Prior to the Closing, the Company shall adopt an equity
compensation plan (“Company Equity Plan”),
in a form reasonably acceptable to Consonus and STI, that provides for the
issuance of stock options and other equity awards to the Company (and its
subsidiaries) employees, directors and consultants. A total of 550,000 Shares
of the Company Common Stock shall initially be reserved for issuance under the
Company Equity Plan, a portion of which shall be granted by the Board of
Directors of the Company promptly following the Closing, in accordance with Schedule 4.15
hereof.

 

4.16        Repayment of Certain
Indebtedness. At the Closing, the Company will pay all principal and
interest then owing pursuant to: (a) the First Amendment and Restatement of
Promissory Note, dated April 2, 2001 made in favor of Michael G. Shook by STI
and (b) the First Amendment and Restatement of Promissory Note, dated April 2,
2001 made in favor of William M. Shook by STI (collectively, the “Loan Repayment”). The Parties agree that
upon the closing of an initial public offering of the Company’s common stock,
Michael G. Shook and William M. Shook, in their roles as executive officers of
the Company and STI, will be entitled to the incentive payments set forth on
Exhibit K attached hereto and made a part hereof.

 

4.17        Break-up Fee. If
Consonus or STI fails to consummate the transactions contemplated herein on the
Closing as a result of the acceptance by such party of a Superior Proposal,
then within thirty (30) days thereafter, such party shall pay to the other
party, and the other party shall be entitled to receive from such party, a
break-up fee equal to the other party’s expenses incurred in connection with
this transaction, including without limitation, fees and expenses of legal
counsel, accountants and financial advisors, not to exceed Five Hundred

 

61

 

Thousand Dollars ($500,000), which break-up
fee shall be paid by wire transfer in immediately available funds to an account
designated by the other party.

 

4.18        Employment Agreements.
At the Closing, the Company shall enter into employment agreements with Michael
Shook and William Shook in substantially the forms attached hereto as Exhibits
G and H, respectively (the “Employment
Agreements”). At the Closing, the Company shall deliver the First
Amendment to Employment Agreement to Daniel Milburn and shall assume the
obligations of Consonus set forth therein, and shall assume the obligations of
Consonus with respect to the employment agreement with Rob Muir as set forth
therein and with respect to the deferred stock agreement with Justin Beckett as
set forth therein.

 

4.19        Stockholders Agreement.
At the Closing, the Consonus Stockholders and the STI Principal Stockholders
shall enter into a Stockholders Agreement in substantially the form attached
hereto as Exhibit H (the “Stockholders
Agreement”).

 

4.20        Operating Agreement.
At the Closing, KLI and the STI Principal Stockholders shall enter into an
Operating Agreement in substantially the form attached hereto as Exhibit I (the
“Operating Agreement”).

 

4.21        IPO. The Company,
Consonus and STI agree, following the Closing, to use their commercially
reasonable efforts to cause the Company to effect an initial public offering of
the Company Common Stock on the Toronto Stock Exchange and/or the London Stock
Exchange Alternative Investment Market resulting in net proceeds to the Company
of Fifty Million Dollars ($50,000,000) or more (the “IPO”). The Company, Consonus and STI agree that the net
proceeds of the IPO shall be used primarily to repay the Indebtedness, as
defined in and  under that that certain
Amended and Restated Refinancing Agreement dated as of May 20, 2005, between
STI and MRA Systems, Inc. d/b/a Access Distribution, as amended further by that
certain First Amendment to Amended and Restated Refinancing Agreement dated as
of June 22, 2006 (the “GE Indebtedness”).

 

4.22        Real Property
Sale/Leaseback. In the event that the neither the IPO nor any other
significant capital raising transaction has been completed by the Company prior
to eighteen (18) months following the Closing, the Company shall, as soon as
reasonably practicable thereafter, cause Consonus to enter into sale/leaseback
transactions (with reputable third parties and on terms reasonable and
customary for such transactions) with regard to all of the real property owned
by Consonus (the “Sale/Leaseback Transactions”).
The Company’s actions will include, without limitation, obtaining appraisals
from reputable third parties engaging real property brokers or agents, and
providing appropriate notices of sale. The proceeds from the Sale/Leaseback
Transactions (or from any other disposition of Consonus real property that
occurs within 18 months following the Closing and prior to the IPO or other
significant capital raising transaction) shall be applied (i) first to the
repayment of any indebtedness owed by Consonus to U.S. Bank National
Association or Consonus, Inc., a Utah corporation and by Consonus to Salt Lake
Data Center Company f/k/a Consonus, Inc., a Utah corporation and (ii) second to
the repayment of any GE Indebtedness. The Company need not close any
Sale/Leaseback Transaction if the closing of the IPO or other significant
comparable capital raising transaction either (i) occurs prior to the closing
of the contemplated Sale/Leaseback

 

62

 

Transaction or (ii) is imminent at the
proposed time for closing the contemplated Sale/Leaseback Transaction

 

4.23        Registration Rights.
Within five (5) business days after execution of this Agreement, the parties
shall prepare a mutually agreeable registration rights agreement that will
provide that (i) KLI and Michael Shook will have rights to participate in any
overallotment amount in connection with the initial public offering of the
Company’s common stock at the same percentage of the total number of shares of
Company common stock owned by each, and (ii) KLI and those stockholders of STI
that, after the Closing, will be deemed “affiliates” of the Company as such
term is defined in Rule 144 of the Securities Act of 1933 will have (A) two
demand registrations for sales of Company common stock reasonable expected to
generate aggregate proceeds of at least $1,000,000, and (B) unlimited piggyback
registrations (the “Registration Rights
Agreement”).

 

4.24        Rescission Agreement.
Within five (5) business days after execution of this Agreement, the parties
shall prepare a mutually agreeable rescission agreement that will provide that
if an initial public offering of the Company’s common stock is not consummated
June 30, 2007 and the term indebtedness and past due trade indebtedness owing
by STI to GE is not repaid by such date with the proceeds of the initial public
offering, the Mergers will be rescinded by no later than September 30, 2007
(the “Rescission Agreement”).

 

ARTICLE V

CONDUCT PRIOR TO THE EFFECTIVE TIME

 

5.1          Conduct of Business
of STI and Consonus.

 

(a)           During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, each of STI and Consonus hereby agrees
(except to the extent expressly permitted by this Agreement or as consented to
in writing by the other party), to carry on its respective business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted. STI and Consonus each further agree to pay or perform its
obligations when due, and to use its commercially reasonable efforts consistent
with past practice and policies to preserve intact its present business
organizations, keep available the services of its present officers and key
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others having material business dealings
with it.

 

(b)           During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, except as expressly permitted or
contemplated by this Agreement, neither STI nor Consonus shall do, cause or
permit any of the following, without the prior written consent of the other
party (such consent not to be unreasonably withheld, conditioned or delayed):

 

(i)            cause or permit any
amendments to its Bylaws, Certificate of Incorporation or Articles of
Incorporation, as the case may be, or the charter documents of any of its subsidiaries;

 

63

 

(ii)           declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock; or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock (other than upon exercise, conversion or exchange of any options
and warrants outstanding as of the date hereof), or repurchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except from
former employees, directors and consultants in accordance with agreements
outstanding as of the date hereof providing for the repurchase of shares in
connection with any termination of service to it;

 

(iii)          accelerate, amend or
change the period of exercisability or vesting of any restricted stock, or
options or other rights granted under its stock plans (except pursuant to the
terms of any such stock plans as in effect on the date hereof) or authorize
cash payments in exchange for any options or other rights granted under any of
such plans;

 

(iv)          with respect to
Consonus, amend or otherwise modify or waive any material term of any Consonus
Material Contract;

 

(v)           with respect to STI,
amend or otherwise modify or waive any material term of any STI Material
Contract;

 

(vi)          other than as set forth
on Schedule 2.4(b), issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any
such shares or other convertible securities, other than the issuance of shares
of common stock pursuant to the exercise or conversion of options or warrants
outstanding as of the date hereof;

 

(vii)         transfer to any Person
any rights to its Intellectual Property, excluding non-exclusive licenses of
Intellectual Property regularly included in such party’s products which are
sold to customers in the ordinary course;

 

(viii)        enter into or amend any
contracts pursuant to which any other party is granted exclusive marketing or
other exclusive rights of any type or scope with respect to any of its products
or technology;

 

(ix)          subject it or any of its
subsidiaries, or the Company or either of the Surviving Corporations, to any
non-compete or other material restriction on any of their respective businesses
following the Closing;

 

(x)           sell, lease, license or
otherwise dispose of or encumber any of its properties or assets which are
material, individually or in the aggregate, to its business taken as a whole,
except for sales, leases or licenses of such party’s products in the ordinary
course;

 

(xi)          incur any indebtedness
for borrowed money (other than with respect to trade payables in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any
debt securities or guarantee any debt securities of others;

 

64

 

(xii)         pay, discharge or satisfy
in an amount in excess of $10,000 in any one case or $25,000 in the aggregate,
any claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of the liabilities reflected
or reserved against in the Consonus Balance Sheet or STI Balance Sheet, as the
case may be, and except for payment of Transaction Expenses;

 

(xiii)        incur any liabilities for
new capital expenditures, capital additions or capital improvements except in
the ordinary course of business and consistent with past practice and in an
amount which does not exceed $25,000 in the aggregate;

 

(xiv)        materially reduce the
amount of any insurance coverage provided by existing insurance policies or
otherwise allow any such insurance policy to terminate;

 

(xv)         terminate or waive any
right of substantial value;

 

(xvi)        adopt or amend any
employee benefit, or stock purchase or option plan, except as required under
ERISA and except as necessary to maintain the qualified status of such plan
under the Code, or hire any new director level or officer level employee, or
increase the annual level of compensation of any employee, or grant any unusual
or extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director or consultant, except in the
ordinary course of business and in amounts consistent with past practices;

 

(xvii)       grant any severance or
termination pay to any director, officer or other employee except payments made
pursuant to written agreements outstanding on the date hereof;

 

(xviii)      commence a proceeding other
than: (A) for the routine collection of accounts receivable; (B) in such cases
where Consonus or STI, as the case may be, in good faith determines that
failure to commence suit would result in the material impairment of a valuable
aspect of its business, provided that such party commencing such suit
shall have first conferred with the other party prior to commencement of any
such action; or (C) for a breach of this Agreement;

 

(xix)        other than in the ordinary
course of business, make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, file any material
Tax Return or any amendment to a material Tax Return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;

 

(xx)         revalue any of its
assets, including without limitation writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course of
business;

 

65

 

(xxi)        except as required by
GAAP, make any change in its methods or principles of accounting since the date
of, in the case of Consonus, the Consonus Balance Sheet, and, in the case of
STI, the STI Balance Sheet; or

 

(xxii)       acquire or agree to acquire
by merging or consolidating with, or by purchasing any equity interest in or a
portion of the assets of, or by any other manner, any business or any Person or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to its business;

 

(xxiii)      make any loans, advances or
capital contributions to, or investments in, any other Person, other than loans
or investments by it or a subsidiary of it to or in it or any subsidiary of it;

 

(xxiv)     take any action, other than
in the ordinary course of business and consistent with past practice, that
would reasonably be expected to cause an adjustment to the Consonus Exchange
Ratio or the STI Exchange Ratio that would result in the STI Holders receiving
less than 35% of the Company Common Stock.

 

(xxv)      take or agree in writing or
otherwise to take any of the actions described in Sections 5.1(b)(i)
through (xxiii) above.

 

5.2          No Solicitation.

 

(a)           Each party hereto
agrees that neither it nor any of its subsidiaries, nor any of the officers or
directors of it or its subsidiaries, shall, and that it shall use commercially
reasonable efforts to cause its and its subsidiaries’ employees, agents and
representatives not to (and shall not authorize any of them to), directly or
indirectly: (i) solicit, initiate or encourage any inquiries or proposals
regarding any merger, consolidation, sale of substantial assets, sale of shares
of capital stock representing ten percent (10%) or more of the voting power of
such party, or similar transactions involving such party, or any subsidiaries
of such party with an entity other than the other party hereto (any of the
foregoing inquiries or proposals being referred to herein as an “Acquisition Proposal”); (ii) furnish to any
Person any nonpublic information or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or could reasonably be
expected to lead to, any Acquisition Proposal with respect to itself; (iii)
participate or engage in discussions or negotiations with any Person with
respect to any Acquisition Proposal with respect to itself, or the making of
any proposal that constitutes or could reasonably be expected to lead to any
Acquisition Proposal with respect to itself; (iv) approve, endorse or recommend
any Acquisition Proposal with respect to itself; or (v) enter into any letter
of intent, agreement in principal or similar agreement contemplating or
otherwise relating to any Acquisition Proposal with respect to itself.

 

(b)           Notwithstanding the
foregoing, each party may, in response to a bona fide, written and unsolicited
proposal or offer from a third party that the Board of Directors of the
applicable party determines in good faith is reasonably likely to result in a
more favorable transaction from a financial point of view to such company and
its shareholders, furnish information to and engage in discussions and
negotiations with such third party, but only if the applicable Board of
Directors determines in good faith and in the exercise of reasonable

 

66

 

judgment, after consultation with its
financial advisors and after receiving advice from outside and independent
counsel, that failing to take such action would result in a breach of the
duties of such Board of Directors under applicable law (a “Superior Proposal”); provided that, such
party complies with subsections (c) and (d) of this Section 5.2.

 

(c)           Each party will
promptly notify the other party after receipt of any Acquisition Proposal
(which shall include a Superior Proposal) or any notice that any Person is
considering making an Acquisition Proposal or any request for nonpublic
information relating to such party or any of its subsidiaries or for access to
the properties, books or records of such party or any of its subsidiaries by
any Person that has advised such party that it may be considering making, or
that has made, an Acquisition Proposal, and will keep the other party
reasonably informed of the status and details of any such Acquisition Proposal
notice (including the identity of the Person making the Acquisition Proposal,
price and material terms), request or any correspondence or communications related
thereto and shall provide the other party with a true and complete copy of such
Acquisition Proposal notice or request or correspondence or communications
related thereto, if it is in writing, or a written summary thereof, if it is
not in writing.

 

(d)           If, in connection with
any Superior Proposal, Consonus, the Consonus Board, STI or the STI Board
(including any duly constituted committees thereof), (i) withdraws,
modifies or qualifies its recommendation that its Stockholders approve the
mergers, or (ii) takes any action or makes any statements in connection
with its Stockholders’ meeting inconsistent with its recommendation to approve
the Mergers (including, approving or recommending, or proposing, publicly or
otherwise, to approve or recommend, or execute or enter into, any term sheet,
memorandum of understanding, letter of intent, agreement-in-principle,
contract, commitment, plan, arrangement or agreement, or propose, publicly or
otherwise to agree to do any of the foregoing, related to any Superior Proposal),
then such party shall postpone or delay its Stockholders’ meeting for not less
than five (5) business days after the date that written notice set forth in Section 5.2(c)
is provided to the other party. During such five (5) day period, such party shall
negotiate in good faith with the other party any changes to this Agreement (it
being understood and agreed that any material amendment to the financial or
other material terms of a Superior Proposal, if any, shall require an
additional five (5) business day period to afford the other party the
opportunity to negotiate with such party).

 

(e)           Each party shall
immediately cease and cause to be terminated any existing discussions or
negotiations with any Person conducted heretofore with respect to any of the
foregoing.

 

(f)            Each party shall
ensure that its officers, directors and employees and any investment banker or
other advisor or representative retained by it are aware of the provisions set
forth in this Section 5.2 and shall instruct its officers, directors and
employees to abide by such provisions.

 

67

 

ARTICLE VI

CONDITIONS TO THE MERGERS

 

6.1          Conditions to
Obligations of Each Party to Effect the Mergers. The respective obligations
of each party to this Agreement to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by agreement of Consonus and STI:

 

(a)           No Injunctions or
Restraints; Illegality. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Mergers shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other Governmental Body
seeking any of the foregoing be pending; nor shall there be any action taken,
or any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Mergers, which makes the consummation of the Mergers illegal.

 

(b)           Company’s
Certificate of Incorporation. The Certificate of Incorporation of the
Company in the form attached hereto as Exhibit B shall be in full force and
effect.

 

(c)           Stockholder Approval.
(i) Consonus shall have obtained the required stockholder approval in
connection with the adoption of this Agreement by the stockholders of Consonus,
and (ii) STI shall have obtained the required stockholder approval in
connection with the adoption of this Agreement by the stockholders of STI.

 

(d)           North Carolina
Permit. The Company shall have received the North Carolina Permit.

 

(e)           GE Consent. GE
shall have provided a consent to the Mergers that contains only the conditions
set forth in the letter from GE Access Distribution to STI dated October 10,
2006.

 

6.2          Additional Conditions
to Obligations of Consonus. The obligations of Consonus to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Consonus:

 

(a)           Representations,
Warranties and Covenants.

 

(i)            Each of the
representations and warranties of STI set forth in this Agreement and of the
STI Principal Stockholders set forth in the Voting Agreements, which are
qualified with respect to a STI Material Adverse Effect or in any other respect
as to materiality shall be true and correct in all respects as of the date of
this Agreement and as of the Effective Time as though made on and as of the
Effective Time (except to the extent such representations and warranties
expressly speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date) and all other
representations and warranties of STI set forth in this Agreement and of the
STI Principal Stockholders set forth in the Voting Agreements shall be true and
correct in all material respects as of the date of this

 

68

 

Agreement and as of the Effective Time as
though made on and as of the Effective Time (except to the extent that such
representations and warranties expressly speak as of another date, in which
case such representations and warranties shall be true and correct in all
material respects as of such other date);

 

(ii)           STI shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing.

 

(b)           No Material Adverse
Effect. Since the date hereof, there shall not have occurred any STI
Material Adverse Effect.

 

(c)           Certificate. STI
shall have delivered to Consonus a certificate dated as of the Closing signed
by an authorized officer of STI certifying (x) that the conditions specified
above in Sections 6.2(a)(i), 6.2(a)(ii) and 6.2(b) are satisfied in all
respects and (y) as to the accuracy of the STI Payment Schedule (the “STI Officer Certificate”).

 

(d)           Secretary’s
Certificate. STI shall have delivered to Consonus a certificate of its
Secretary dated as of the Closing certifying as to the accurateness and
completeness of: (i) resolutions of its Board of Directors approving the STI
Merger and this Agreement; and (ii) resolutions of the STI stockholders
adopting and approving the STI Merger and this Agreement, each as attached
thereto (the “STI Secretary Certificate”).

 

(e)           Escrow Agreement.
The STI Escrow Agreement shall be in full force and effect.

 

(f)            FIRPTA Certificate.
STI shall have provided to the Company a certificate, in the form of Exhibit J
hereto, to satisfy the requirements of Treasury Regulations Section 1.1445-2(c)(3).

 

(g)           Stockholders
Agreement. The STI Principal Stockholders shall have executed and delivered
the Stockholders Agreement.

 

(h)           Operating Agreement.
The STI Principal Stockholders shall have executed and delivered the Operating
Agreement.

 

(i)            Employment
Agreements. Michael Shook and William Shook shall have executed and
delivered the Employment Agreements.

 

(j)            Consents. STI
shall have obtained or caused to be obtained all of the Consents listed on
Schedule 3.3(b) of the STI Disclosure Schedule.

 

(k)           Due Diligence.

 

(i)            The results of
Consonus’ due diligence investigation of all of the documents to be delivered
to Consonus by STI pursuant to Article III shall be satisfactory to Consonus in
its sole discretion; provided, however, that this Section 6.2(k)(i) shall
be deemed

 

69

 

satisfied if Consonus has not notified STI to
the contrary in writing by the date that is 10 days following the date of this
Agreement.

 

(ii)           The results of Consonus’
due diligence investigation shall be satisfactory to Consonus in its sole
discretion and shall not have revealed that any of the representations and
warranties of STI set forth in this Agreement or the STI Principal Stockholders
set forth in the Voting Agreements, which are qualified with respect to a STI
Material Adverse Effect or in any other respect as to materiality are not true
and correct in all respects and all other representations and warranties of STI
set forth in this Agreement or of the STI Principal Stockholders set forth in the
Voting Agreements are not true and correct in all material respects; provided,
however, that this Section 6.2(k)(ii) shall be deemed satisfied if
Consonus has not notified STI to the contrary in writing by the date that is
the earlier of the Closing Date or 30 days following the date of this
Agreement.

 

(l)            Registration Rights
Agreement. The STI stockholders that will be “affiliates” of the Company as
set forth in Section 4.23 shall have executed and delivered the Registration
Rights Agreement.

 

(m)          Post-IPO Voting
Agreement. The STI Principal Stockholders shall have executed and delivered
the  Post-IPO Voting Agreement.

 

(n)           Rescission Agreement.
STI and the STI Principal Stockholders shall have executed and delivered the
Rescission Agreement.

 

6.3          Additional Conditions
to the Obligations of STI. The obligations of STI to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by STI:

 

(a)           Representations,
Warranties and Covenants.

 

(i)            Each of the
representations and warranties of Consonus set forth in this Agreement and of
the Consonus Principal Stockholder set forth in the Voting Agreement, which are
qualified with respect to a Consonus Material Adverse Effect or in any other
respect as to materiality shall be true and correct in all respects as of the
date of this Agreement and as of the Effective Time as though made on and as of
the Effective Time (except to the extent such representations and warranties
expressly speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date) and all other
representations and warranties of Consonus set forth in this Agreement and of
the Consonus Principal Stockholder set forth in the Voting Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Effective Time as though made on and as of the Effective Time (except
to the extent that such representations and warranties expressly speak as of
another date, in which case such representations and warranties shall be true
and correct in all material respects as of such other date);

 

(ii)           Consonus shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it on
or prior to the Closing.

 

70

 

(b)           No Material Adverse
Effect. Since the date hereof, there shall not have occurred any Consonus
Material Adverse Effect.

 

(c)           Certificate. Consonus
shall have delivered to STI a certificate signed by an authorized officer of
Consonus certifying (x) that the conditions specified above in Sections
6.3(a)(i), 6.3(a)(ii) and 6.3(b) are satisfied in all respects and (y) as to
the accuracy in all material respects of the Consonus Payment Schedule (the “Consonus Officer Certificate”).

 

(d)           Secretary’s
Certificate. Consonus shall have delivered to STI a certificate of its
Secretary dated as of the Closing certifying as to the accurateness and
completeness of: (i) resolutions of the Board of Directors of the Company, CAC
Merger Sub, STI Merger Sub and Consonus approving the Consonus Merger and this
Agreement; (ii) resolutions of the Consonus stockholders adopting and approving
the Consonus Merger and this Agreement; and (iii) resolutions of the sole
stockholder of CAC Merger Sub and STI Merger Sub approving the Consonus Merger
and this Agreement, each as attached thereto (the “Consonus Secretary Certificate”).

 

(e)           Escrow Agreement.
The Consonus Escrow Agreement shall be in full force and effect.

 

(f)            FIRPTA Certificate.
Consonus shall have provided to the Company a certificate, in the form of
Exhibit J hereto, to satisfy the requirements of Treasury Regulations
Section 1.1445-2(c)(3).

 

(g)           Stockholders
Agreement. KLI and the Company shall have executed and delivered the
Stockholders Agreement.

 

(h)           Operating Agreement.
KLI and the Company shall have executed and delivered the Operating Agreement.

 

(i)            Employment
Agreements. The Company shall have executed and delivered the Employment
Agreements.

 

(j)            Consents. Consonus
shall have obtained or caused to be obtained all of the Consents listed on
Schedule 2.3(b) of the Consonus Disclosure Schedule.

 

(k)           Due Diligence.

 

(i)            The results of STI’s
due diligence investigation of all of the documents to be delivered to STI by
Consonus pursuant to Article II shall be satisfactory to STI in its sole
discretion; provided, however, that this Section 6.3(k)(i) shall be deemed
satisfied if STI has not notified Consonus to the contrary in writing by the
date that is 10 days following the date of this Agreement.

 

(ii)           The results of STI’s
due diligence investigation shall be satisfactory to STI in its sole discretion
and shall not have revealed that any of the representations and warranties of
Consonus set forth in this Agreement or the Consonus Principal Stockholder or
in the Voting Agreements, which are qualified with respect to a

 

71

 

Consonus Material Adverse Effect or in any
other respect as to materiality are not true and correct in all respects and
all other representations and warranties of Consonus set forth in this
Agreement or of the Consonus Principal Stockholder set forth in the Voting
Agreement are not true and correct in all material respects; provided, however,
that this Section 6.3(k) shall be deemed satisfied if STI has not notified
Consonus to the contrary in writing by the date that is the earlier of the
Closing Date or 30 days following the date of this Agreement.

 

(l)            Consonus Preferred
Stock. All issued and outstanding shares of Consonus Preferred Stock shall
have converted into Consonus Common Stock prior to the Closing.

 

(m)          Exchange Ratios. The
Consonus Exchange Ratio and the STI Exchange Ratio determined as set forth in
Section 1.8(c) will have resulted in an issuance of not less than 35% of the
Company Common Stock to the STI Holders.

 

(n)           Registration Rights
Agreement. KLI and the Company shall have executed and delivered the
Registration Rights Agreement.

 

(o)           Post-IPO Voting
Agreement. KLI and the Company shall have executed and delivered the  Post-IPO Voting Agreement.

 

(p)           Rescission Agreement.
KLI, Consonus and the Company shall have executed and delivered the Rescission
Agreement.

 

ARTICLE VII

INDEMNIFICATION

 

7.1          Survival of
Representations and Warranties. All of the representations and warranties
of the parties contained herein or in any certificate required to be delivered
hereunder shall survive the Closing and continue in full force and effect until
the Escrow Expiration Date (as defined in Section 7.5(a) below). The
termination of any representation and warranty shall not affect any Claim (as
defined in Section 7.6 below) for breaches of representations or
warranties if a written Notice of Claim is delivered prior to the Escrow
Expiration Date in accordance with Section 7.6 below.

 

7.2          Indemnification
Provisions.

 

(a)           For Benefit of the
Company.

 

(i)            By Consonus Holders.
From and after the Effective Time and subject to the limitations and provisions
contained in this Article VII, the Consonus Holders agree, jointly and
severally, to indemnify and hold harmless the Company and its directors,
officers, legal counsel, accountants, Affiliates and other controlling persons
(each, a “Company Indemnified Party”)
against and in respect of all losses, liabilities, judgments, orders, decrees,
fines, penalties, expenses, fees, costs and amounts paid in settlement
(including, without limitation, reasonable attorneys’ and expert witness fees
and disbursements in connection with investigating, defending or settling any
action) (“Indemnifiable Losses”)
arising out of (A) the breach of any representation or warranty made by
Consonus herein, or in the Consonus Officer Certificate or the Consonus
Secretary Certificate, or (B) any failure by Consonus to perform or

 

72

 

comply with any covenant applicable to it
contained in this Agreement, or (C) any Consonus Dissenting Share Payments, or
(D) any liabilities arising out of or related to the items set forth on
Schedule 2.8 or set forth as number 2 on Schedule 2.9 (collectively, the “Consonus  Related
Losses”).

 

(ii)           By STI Common
Stockholders. From and after the Effective Time and subject to the
limitations and provisions contained in this Article VII, the STI Holders
agree, jointly and severally, to indemnify, defend and hold harmless the
Company Indemnified Parties against and in respect of all Indemnifiable Losses
arising out of (A) breach of any representation or warranty made by STI herein,
or in the STI Officer Certificate or the STI Secretary Certificate, (B) any
failure by STI to perform or comply with any covenant applicable to it
contained in this Agreement, or (C) any STI Dissenting Share Payments, or (D)
any liabilities arising out of or related to the item set forth on Schedule 3.8
(collectively, the “STI Related Losses”).

 

(b)           For the Benefit of
STI. From and after the Effective Time and subject to the limitations and
provisions contained in this Article VII, the Consonus Holders agree, jointly
and severally, to indemnify and hold harmless STI and its directors, officers,
legal counsel, accountants, Affiliates and other controlling persons (each a “STI Indemnified Party”) against and in
respect of all Indemnifiable Losses incurred by STI or the STI Holders arising
out of any Consonus Related Losses and not otherwise claimed by the Company
under 7.2(a)(i).

 

(c)           For the Benefit of
Consonus. From and after the Effective Time and subject to the limitations
and provisions contained in this Article VII, the STI Holders agree, jointly
and severally, to indemnify and hold harmless Consonus and its directors,
officers, legal counsel, accountants, Affiliates and other controlling persons
(each a “Consonus Indemnified Party”)
against and in respect of all Indemnifiable Losses incurred by Consonus or the
Consonus Holders arising out of any STI Related Losses and not otherwise
claimed by the Company under 7.2(a)(ii).

 

7.3          Limitations.

 

(a)           The rights of the
Consonus Indemnified Parties, STI Indemnified Parties and Company Indemnified
Parties (each an “Indemnified Party”
and collectively, the “Indemnified Parties”)
provided for in Section 7.2(a), Section 7.2(b) and Section
7.2(c) shall not apply unless and until the aggregate Consonus Related
Losses or STI Related Losses, as the case may be, finally determined to be due
to one or more the Indemnified Parties hereunder exceeds a cumulative aggregate
of $200,000 (the “Basket Amount”),
in which event the Indemnified Parties shall, subject to the other limitations
herein, be indemnified for all Consonus Related Losses or STI Related Losses,
as the case may be, including the Basket Amount. The Basket Amount is a
separate amount for each of the Consonus Related Losses and STI Related Losses.
In no event shall the Basket Amount apply to any of the Indemnified Parties
rights to indemnification under Section 7.2(a), Section 7.2(b) or
Section 7.2(c) for: (i) Consonus Dissenting Share Payments or STI
Dissenting Payments, or (ii) for a breach of the representations and
warranties set forth in Section 2.1, Section 2.2, Section 2.4,
Section 3.1, Section 3.2 and Section 3.4.

 

73

 

(b)           The amount of any
Consonus Losses or STI Losses, as the case may be, shall be net of any actual
recovery (whether by way of payment, discount, credit, off-set, counterclaim or
otherwise) received from a third party (including any insurer) less any
reasonable cost associated with receiving such recovery in respect of a claim
made by the applicable Indemnified Party (a “Claim”)
with respect thereto. To the extent that insurance or other form of recovery or
reimbursement from a third party is available to the Indemnified Party to cover
any item for which a Claim has been made hereunder, the party suffering the
Loss shall use its commercially reasonable efforts to effect recovery under
applicable insurance policies and warranties and otherwise pursue to conclusion
available remedies or causes of action to recover the amount of its Claim as
may be available from such other party.

 

7.4          Exclusive Remedy.

 

(a)           Except for acts of
fraud, (i) the indemnification obligations of the Consonus Holders set forth in
Section 7.2(a) and (b) shall not exceed the amount of the Consonus
Escrow Fund (ii) the indemnification obligations of the STI Holders set forth
in Section 7.2(a) and (c) shall not exceed the amount of the STI
Escrow Fund, (iii) the Consonus Escrow Fund and the STI Escrow Fund shall be
the exclusive security for the indemnity obligations of the Consonus Holders
and STI Holders, respectively, and (iii) the exclusive remedy for any the
Company Indemnified Party against any Consonus Holder or STI Holder in
connection with this Agreement shall be to make a Claim against (x) the
Consonus Escrow Fund, with respect to the Consonus Holders, and (y) the STI
Escrow Fund, with respect to the STI Holders, in accordance with and pursuant
to this Article VII and the respective Escrow Agreement.

 

(b)           Solely for purposes of
satisfaction of Consonus Related Losses or STI Related Losses, as the case may
be, under this Article VII, and for no other reason, the value of
one share of the Company Common Stock shall be equal to $9.50. Any recovery
that is made from the Consonus Escrow Fund and STI Escrow Fund, as the case may
be, pursuant to this Article VII shall be made in the Company
Common Stock on a pro rata basis among the Consonus Holders or STI Holders, as
applicable, in accordance with the Payment Schedules. Any shares of the Company
Common Stock that are paid in respect of Consonus Losses or STI Losses shall be
returned to the treasury of the Company.

 

7.5          Escrow; Escrow Fund.

 

(a)           Escrow Agent. Branch
Banking and Trust Company or such other escrow agent selected by Consonus prior
to Closing and reasonably acceptable to STI (the “Escrow Agent”), shall hold, release and perform other tasks
related to the Escrow Shares pursuant to the provisions of the Escrow
Agreements.

 

(b)           Escrow Expiration
Date. The Consonus Escrow Fund and the STI Escrow Fund shall remain in
place for a period of one (1) year from the Closing Date (the “Escrow Expiration Date”). On the Escrow
Expiration Date, the remaining amount of each of the Consonus Escrow Fund and
the STI Escrow Fund, respectively, shall promptly be delivered to the Consonus
Holders and STI Holders, respectively, in accordance with the respective
Payment Schedule; provided, however, that
the escrow period shall not terminate with respect to any

 

74

 

amount of the Consonus Escrow Fund or STI
Escrow Fund that is subject to any then unresolved Claims specified in any
Officer’s Certificate (as defined in Section 7.6(b)) delivered to the
Escrow Agent and the respective Holders’ Agent on or prior to the Escrow
Expiration Date with respect to facts and circumstances existing on or prior to
the Escrow Expiration Date (each, an “Consonus
Unresolved Claim” or a “STI
Unresolved Claim”, as applicable). Promptly following resolution of
each such Consonus Unresolved Claim or STI Unresolved Claim, as the case may
be, and subject to satisfaction of any then outstanding but unpaid Agent
Expenses (as defined in Section 7.9(b)) the Escrow Agent shall deliver the
remaining portion of the Consonus Escrow Fund or the STI Escrow Fund, as the
case may be, not required to satisfy such Claims, Agent Indemnity or Agent
Expenses, to the Consonus Holders or the STI Holders, as the case may be, in
accordance with the respective Payment Schedule.

 

7.6          Claims upon Escrow
Fund.

 

(a)           Subject to the terms of
this Agreement and the respective Escrow Agreement, the Indemnified Party shall
give written notice of a Claim (a “Notice of
Claim”) to the respective Consonus Holders’ Agent or the STI Holders’
Agent, as applicable, with a copy to the Escrow Agent, promptly after the
Indemnified Party becomes aware of the existence of any reasonably likely
potential Claim. The Indemnified Party may submit a Notice of Claim at any time
during the period commencing with the Effective Time and ending on the Escrow
Expiration Date, but shall not be permitted to bring a Notice of Claim at any
time after the Escrow Expiration Date (and any delivery or attempted delivery
of a Notice of Claim after the Escrow Expiration Date shall be void and of no
force or effect). Notwithstanding anything contained herein to the contrary,
any Claims for Consonus Related Losses or STI Related Losses, as the case may
be (collectively, “Losses”),
specified in any Notice of Claim delivered to the respective Holders’ Agent
prior to expiration of the Escrow Expiration Date shall remain outstanding
until such Claims for Losses have been resolved or satisfied, notwithstanding
the passage of the Escrow Expiration Date. Until the Escrow Expiration Date, no
delay on the part of the Indemnified Party in delivering a Notice of Claim
shall relieve any Consonus Holder or STI Holder (each an “Indemnifying Party”) from any of its
respective obligations under this Article VII unless (and then only
to the extent that) the Indemnifying Party is prejudiced thereby.

 

(b)           With respect to Claims
made against an Escrow Fund, upon receipt by the Escrow Agent on or before the
Escrow Expiration Date of a certificate signed by any officer of an Indemnified
Party (an “Officer’s Certificate”)
stating that Losses exist and specifying in reasonable detail the individual
items of such Losses included in the amount so stated, the date each such item
was paid or the Loss was suffered, the nature of the misrepresentation, or
breach of warranty or covenant to which such Loss is related, the Escrow Agent
shall, subject to the provisions of Sections 7.7 and 7.8 below,
deliver to the Company out of the Consonus Escrow Fund, or the STI Escrow Fund,
as applicable, as promptly as practicable, Escrow Shares having a value
(determined pursuant to Section 7.4(b) hereof) equal to such
Losses, in accordance with the Escrow Agreement and this Article VII.
The Company, Consonus or STI, as applicable, will simultaneously with the
delivery of the Officer’s Certificate to the Escrow Agent, deliver a copy
thereof to the Consonus Holders’ Agent or STI Holders’ Agent, as applicable.

 

7.7          Objections to Claims.
For a period of forty-five (45) days after such delivery to the Escrow Agent
and the respective Holders’ Agent of an Officer’s Certificate, the Escrow Agent
shall make no delivery of respective Escrow Shares pursuant to
Section 7.6(b) hereof

 

75

 

unless the Escrow Agent shall have received
written authorization from the respective Holders’ Agent to make such delivery.
After the expiration of such forty-five (45) day period, the Escrow Agent shall
make delivery of the respective Escrow Shares from the applicable Escrow Fund
in accordance with Section 7.6(b) hereof, provided that no such payment or
delivery may be made if the respective Holders’ Agent objects in a written
statement to the Claim made in the Officer’s Certificate, and such statement has
delivered to the Escrow Agent and to the Company Consonus, or STI, as
applicable, prior to the expiration of such forty-five (45) day period.

 

7.8           Resolution of
Conflicts; Arbitration.

 

(a)           In case either the
Consonus Holders’ Agent or STI Holders’ Agent, as the case may be, shall so
object in writing to any Claim by an Indemnified Party made in any Officer’s
Certificate delivered pursuant to Section 7.6, the Company shall
have forty-five (45) days after receipt by the Escrow Agent of such an
objection to respond in a written statement to the objection of such Holders’
Agent. If after such forty-five (45) day period there remains a dispute as to
the Claim, such Holders’ Agent and a representative of the Indemnified Party
shall attempt in good faith for sixty (60) days to agree upon the rights of the
respective parties with respect to the Claim. If such Holders’ Agent and the
Indemnified Party should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and shall be furnished to the
Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum
and shall distribute the respective Escrow Shares from the applicable Escrow
Fund in accordance with the terms thereof.

 

(b)           If no such agreement
can be reached after good faith negotiation, either the Indemnified Party or
such Holders’ Agent may, by written notice to the other, demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by one (1) independent arbitrator in New York, New York,
as mutually agreed upon by the Indemnified Party and such Holders’ Agent. In
the event that within thirty (30) days after submission of any dispute to
arbitration, the Indemnified Party and such Holders’ Agent cannot mutually
agree on one (1) arbitrator, the Indemnified Party and such Holders’ Agent
shall each select one (1) arbitrator, and the two (2) arbitrators so selected
shall select a third (3rd) arbitrator. The arbitration shall be administered by
and in accordance with the then-existing Rules of Practice and Procedure of
JAMS/Endispute. Notwithstanding anything to the contrary contained herein, the
arbitrator (or arbitrators) shall apply and follow all applicable legal
requirements in making his or her decision. The decision of the arbitrator (or
arbitrators) as to the validity and amount of the disputed Claim shall be
binding and conclusive upon the parties to this Agreement (and not subject to
appeal), and notwithstanding anything in Section 7.7 hereof, the
Escrow Agent shall be entitled to act in accordance with such decision and
make, withhold or distribute payments out of the applicable Escrow Fund in
accordance therewith.

 

(c)           Judgment upon any award
rendered by the arbitrators may be entered in any court having jurisdiction. For
purposes of this Section 7.8(c), in any arbitration hereunder in
which the amount thereof stated in the Officer’s Certificate is at issue, the
Indemnified Party shall be deemed to be the non-prevailing party, unless the
arbitrators award the Indemnified Party more than one-half (1/2) of the amount
in dispute; in which case, the applicable

 

76

 

Indemnifying Parties shall be deemed to be
the non-prevailing party. The non-prevailing party to an arbitration shall pay
its own expenses, the fees of each arbitrator, the administrative fee of
JAMS/Endispute and the expenses, including without limitation, attorneys’ fees
and costs, reasonably incurred by the other party to the arbitration. If the
applicable Indemnifying Parties are deemed to be the non-prevailing party, such
expenses and fees shall be paid first, from the respective Escrow Shares held
in the applicable Escrow Fund on behalf of the applicable Indemnifying Parties
(to the extent that such Escrow Shares are not otherwise required to satisfy
any Losses), and second, by the Indemnified Party.

 

7.9           Holders’ Agents.

 

(a)           (i)            By approval of this Agreement by the
required vote of the holders of Consonus capital stock, the Consonus Holders
shall be deemed (A) to have constituted and appointed KLI to serve as the
agent, proxy and attorney-in-fact (the “Consonus
Holders’ Agent”) for and on behalf of the Consonus Holders for all
purposes of this Article VII and the Consonus Escrow Agreement to take
such action and to exercise such powers under this Agreement and the Consonus
Escrow Agreement as are delegated to the Consonus Holders’ Agent by the terms
hereof, together with such powers as are reasonably incidental thereto,
including the power to take any action, or refrain from taking any action, in
his, her or its sole and absolute discretion as to any matter that may arise
under this Agreement or the Consonus Escrow Agreement as to which the Consonus
Holders are not given express authority hereunder and (B) to have agreed that
such agency and proxy are coupled with an interest and, therefore, are
irrevocable without the consent of the Consonus Holders’ Agent, shall survive
the death, incapacity, bankruptcy, dissolution or liquidation of any Consonus
Holder and any such revocation shall be effective only after written notice
thereof is received by the Company and the Surviving Corporations.

 

(ii)           By approval of this
Agreement by the required vote of the holders of STI capital stock, the STI
Holders shall be deemed (A) to have constituted and appointed Irvin J.
Miglietta to serve as the agent, proxy and attorney-in-fact (the “STI Holders’ Agent,” and together with the
Consonus Holders’ Agent, the “Holders’ Agent”)
for and on behalf of the STI Holders for all purposes of this Article VII
and the STI Escrow Agreement to take such action and to exercise such powers
under this Agreement and the STI Escrow Agreement as are delegated to the STI
Holders’ Agent by the terms hereof, together with such powers as are reasonably
incidental thereto, including the power to take any action, or refrain from
taking any action, in his, her or its sole and absolute discretion as to any
matter that may arise under this Agreement or the STI Escrow Agreement as to
which the STI Holders are not given express authority hereunder and (B) to have
agreed that such agency and proxy are coupled with an interest and, therefore,
are irrevocable without the consent of the STI Holders’ Agent, shall survive
the death, incapacity, bankruptcy, dissolution or liquidation of any STI Holder
and any such revocation shall be effective only after written notice thereof is
received by the Company and the Surviving Corporations.

 

(b)           Without limiting the
foregoing, the Consonus Holders’ Agent and the STI Holders’ Agent shall have
full power and authority to do each and every act and exercise any and all
rights the Consonus Holders or STI Holders, respectively, are permitted or
required to do or exercise under Article VII of this Agreement or the
Escrow Agreements, as applicable,

 

77

 

including, without limitation, (i) to give
and receive notices and communications, (ii) to authorize delivery to the
applicable Indemnified Party of the respective Escrow Shares from the
respective Escrow Fund in satisfaction of Claims by such Indemnified Parties
pursuant to this Article VII and the Escrow Agreements and to
object to such deliveries, (iii) to agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to, such Claims against the applicable
Escrow Fund, and (iv) to take all actions necessary or appropriate in the
judgment of the Consonus Holders’ Agent or STI Holders’ Agent, as the case may
be, for the accomplishment of the foregoing; provided, however, that in no case
shall the respective Holders’ Agents be entitled to take any such action the
effect of which would be to treat any Consonus Holder or STI Holder, as the
case may be, disproportionately to any other Consonus Holder or STI Holder, as
the case may be (in such capacity as a stockholder). In furtherance of their
obligations hereunder, the Holders’ Agents are expressly authorized to retain
accountants, legal counsel and other agents and may execute any of their duties
under this Agreement by and through agents, and attorneys-in-fact.

 

(c)           Notices or
communications to or from the Consonus Holders’ Agent or STI Holders’ Agent
shall constitute notice to or from each Consonus Holder or STI Holder, as applicable.
The Holders’ Agents shall have no duties or responsibilities except those
expressly set forth herein. As to any matters not expressly provided for by
this Agreement or the Escrow Agreements, each of the Holders’ Agents may
exercise his, her or its discretion as aforesaid or may, at his, her or its
sole option, take any action, or refrain from acting (and shall be fully
protected in so acting or so refraining from acting) upon the instructions of
the holders of a majority-in-interest of the applicable Escrow Fund, and such
instructions shall be binding upon all Consonus Holders or STI Holders, as
applicable; provided however,
that no Holders’ Agent shall be required to take any action which, in such
Holders’ Agent’s good faith judgment, exposes the Holders’ Agent to personal
liability or which is contrary to this Agreement, the Escrow Agreement or
applicable law.

 

(d)           The Holders’ Agents
shall not be liable for any act done or omitted hereunder as Holders’ Agents
while acting in good faith and in the exercise of reasonable judgment, and the
fact that any act was done or omitted pursuant to the advice of counsel shall
be conclusive evidence of such good faith; provided, however, that nothing
contained herein shall relieve any Holders’ Agent from liability arising out of
his, her or its own fraud, gross negligence or bad faith. The Consonus Holders
and STI Holders shall severally indemnify their respective Holders’ Agent and
hold him, her or it harmless against any loss, liability or expense incurred
without gross negligence or bad faith on the part of such Holders’ Agent
arising out of or in connection with the acceptance or administration of his,
her or its duties hereunder and under the respective Escrow Agreement (the “Agent
Indemnity”); provided, however, that no Consonus Holder or STI
Holder shall have personal liability for such indemnification and the Holders’
Agent’s sole recourse for such amounts shall be to the applicable Escrow Fund. No
bond shall be required of the Holders’ Agents, and the Holders’ Agents shall
receive no compensation for his, her or its services. Any out-of-pocket costs
and expenses reasonably incurred by a Holders’ Agent in connection with actions
taken by such Holders’ Agent pursuant to the terms of this Section 7.9
(including the hiring of legal counsel and the incurring of reasonable legal
fees and costs) not to exceed $10,000 with respect to each Holders’ Agent (the “Agent Expenses”) will be paid to the
Holders’ Agent from the respective Escrow Fund promptly following delivery by

 

78

 

the Holders’ Agent to the Company (with a
copy to the Escrow Agent) of a written request for payment of such Agent
Expenses (which written request shall include reasonable documentation
supporting such Agent Expenses).

 

(e)           Either of the Holders’
Agents may be removed at any time upon the written consent of the holders of a
majority-in-interest of the applicable Escrow Fund; provided however, that a
successor Holders’ Agent must be concurrently appointed by such holders, who
shall promptly notify the Company, the Escrow Agent and the other Holders’
Agent, in writing, of such removal of the applicable Holders’ Agent and the
appointment of a successor thereto. Either of the Holders’ Agents may resign
and be discharged from his, her or its duties and obligations as a Holders’
Agent under this Agreement by giving a least thirty (30) days prior notice to
either the Consonus Holders or the STI Holders, as applicable, the Company and
the Escrow Agent. In the event of the resignation of one of the Holders’
Agents, until a successor Holders’ Agent has been appointed as provided herein,
the resigning Holders’ Agent shall continue to perform his, her or its duties
and obligations under this Agreement and may apply to a court of competent
jurisdiction for the appointment of a successor Holders’ Agent. Within thirty
(30) days after receiving notice from a resigning Holders’ Agent or after the
death of a Holders’ Agent, holders of the applicable Escrow Fund (by agreement
of the holders of a majority-in-interest of such Escrow Fund) shall appoint a
successor Holders’ Agent and inform the Company, the Escrow Agent and the other
Holders’ Agent, in writing, of the name of such successor. Any such successor
Holders’ Agent shall execute a joinder to this Agreement and shall be entitled
to all of the rights, and have all of the obligations, of the Holders’ Agents
hereunder.

 

(f)            Each Holders’ Agent
shall have reasonable access to information about Consonus, STI and the Company
and the reasonable assistance of the Surviving Corporations’ and the Company’s
officers, directors and employees for purposes of performing his, her or its
duties and exercising his, her or its rights hereunder, provided that, any information received by a Holders’ Agent in
performing his, her or its duties and exercising rights hereunder shall
constitute Consonus’ Information or STI’s Information, as appropriate, and each
Holders’ Agent hereby agrees to be bound to the confidentiality provisions of
Section 4.3 of this Agreement with respect to any such information.

 

(g)           KLI hereby accepts the
appointment contained herein and agrees to act as the Consonus Holders’ Agent
and to discharge the duties and responsibilities of the Consonus Holders’ Agent
pursuant to the terms hereof. Irvin J. Miglietta hereby accepts the appointment
contained herein and agrees to act as the STI Holders’ Agent and to discharge
the duties and responsibilities of the STI Holders’ Agent pursuant to the terms
hereof.

 

7.10         Actions of a Holders’
Agent. A decision, act, consent or instruction of either the Consonus
Holders’ Agent or the STI Holders’ Agent, as applicable, shall constitute a
decision of all Consonus Holders or STI Holders, as applicable, for whom Escrow
Shares are deposited in an Escrow Fund and shall be final, binding and
conclusive upon each such holder, and the Escrow Agent, the Company and the
other Holders’ Agent may rely upon any decision, act, consent or instruction of
the applicable Holders’ Agent as being the decision, act, consent or
instruction of each and every such Consonus Holder or STI Holder, as applicable.
To the extent that either the Escrow Agent, the Company or the other Holders’
Agent acts in accordance with a decision, act,

 

79

 

consent or instruction of a Holders’ Agent,
the Escrow Agent, the Company and other Holders’ Agent are hereby relieved from
any liability with respect to such act, to any Person, including the Consonus
Holders and STI Holders.

 

7.11         Third Party Claims.

 

(a)           In the event that an
Indemnified Party becomes aware of a third party claim (a “Third Party Claim”) that the Indemnified
Party reasonably believes may result in a Claim against an Escrow Fund, the
Indemnified Party shall promptly notify the respective Holders’ Agent of such
Third Party Claim. If a Third Party Claim does not seek any equitable relief or
relief other than the payment of money damages in an amount not in excess of
the amount of the applicable Escrow Fund as to which no Unresolved Claims are
pending, then such Holders’ Agent may, at its election, undertake and conduct
the defense of such Third Party Claim at its sole cost and expense. The
Indemnified Party shall be entitled, at its sole cost and expense, to
participate in, but not to determine or conduct, the defense of such Third
Party Claim, and the applicable Holders’ Agent shall consult with the
Indemnified Party regarding the strategy for defense of such claim, including
with respect to the Holders’ Agent’s choice of legal counsel.

 

(b)           If the applicable
Holders’ Agent does not so elect to undertake and conduct the defense of such
Third Party Claim, the Indemnified Party may undertake the defense of and use
all reasonable efforts to defend such Third Party Claim and shall consult with
the applicable Holders’ Agent regarding the strategy for defense thereof.

 

(c)           In the event that the
applicable Holders’ Agent shall exercise its right to undertake any such
defense against any such Third Party Claim, the Indemnified Party shall
cooperate with such Holders’ Agent in such defense and make available to the
Holders’ Agent all witnesses, pertinent records, materials and information in
the Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto as is reasonably requested by the Holders’ Agent. Similarly,
in the event the Indemnified Party is, directly or indirectly, controlling or
participating in the defense against any such Third Party Claim, the Holders’
Agent shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, all such witnesses, records, materials and
information in the Holders’ Agent’s possession or under its control relating
thereto as is reasonably requested by the Indemnified Party.

 

(d)           No Third Party Claim
may be settled by the applicable Holders’ Agent or the Indemnified Party, as
the case may be, without the prior written consent of the other party (which
consent shall not be unreasonably withheld, conditioned or delayed).

 

7.12         Voting Rights and Cash
Distributions With Respect to Escrow Shares. All Escrow Shares shall be
issued and outstanding on the books and records of the Company and shall appear
thereon as held by the Escrow Agent as nominee for the Consonus Holders and STI
Holders. The Consonus Holders and STI Holders shall retain full voting power
over all Escrow Shares. Any cash dividends, dividends payable in securities or
other distributions of any kind (but excluding any shares of the Company
capital stock received upon a stock split or stock dividend), shall be promptly
distributed by the Escrow Agent to the beneficial holder of the

 

80

 

Escrow Shares to which such distribution
relates, by check mailed via first class mail, to the Holders at their
addresses, and in the percentage interests set forth in the Escrow Agreement. Any
shares of the Company capital stock received by the Escrow Agent upon a stock
split made in respect of any securities in the Escrow Fund shall be added to
their respective Escrow Fund and become a part thereof. The provisions of
Article VII shall be adjusted to appropriately reflect any stock split or
reverse stock split.

 

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

 

8.1           Termination. This
Agreement may be terminated at any time prior to the Effective Time in the
following manner:

 

(a)           by mutual written
consents duly authorized by the Boards of Directors of Consonus and STI;

 

(b)           by either STI or
Consonus, if: (i) the Closing shall not have occurred on or before January 2,
2007 (the “End Date”) (provided, that the right to terminate this
Agreement under this clause (b)(i) shall not be available to any party whose
action or willful failure to act has been a principal cause of or resulted in
the failure of the Closing to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement); or (ii) any permanent
injunction or other order of a court or other competent authority preventing
the consummation of the Mergers shall have become final and nonappealable; or

 

(c)           by either party that
receives a Superior Proposal following the procedure set forth in Section 5.2.

 

8.2           Effect of
Termination. In the event of termination of this Agreement as provided in
Section 8.1, this Agreement shall forthwith become void; provided,
however, that the provisions of Section 4.3 (Confidentiality),
Section 4.4 (Public Disclosure), Section 4.8 (Expenses), Section 4.17
(Break-up Fee), this Section 8.2 (Effect of Termination) and
Article IX (General Provisions) shall remain in full force and effect and
survive any termination of this Agreement. Nothing herein shall relieve any
party from liability for any breach of this Agreement in the event the Mergers
are not consummated.

 

8.3           Extension; Waiver.
At any time prior to the Effective Time any party hereto may, to the extent
legally allowed: (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto; and (c) waive compliance
with any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.

 

81

 

ARTICLE IX

GENERAL PROVISIONS

 

9.1           General. In this
Agreement, any reference to any event, change, condition or effect being “material”
with respect to any entity or group of entities means any material event,
change, condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of such entity or group of
entities.

 

(a)           In this Agreement,
except where otherwise provided, “Affiliate”
has the meaning set forth in Rule 12b-2 of the regulations promulgated under
the Exchange Act.

 

(b)           In this Agreement, “Affiliated Group” means any affiliated
group within the meaning of Section 1504 of the Code or any comparable or analogous
group under applicable Law.

 

(c)           In this Agreement, “Consonus Principal Stockholder” means Knox
Lawrence International, LLC, a Delaware limited liability company.

 

(d)           In this Agreement, “Copyrights” means all copyrights (including
copyrights in software programs) and registrations and applications therefor,
works of authorship, moral rights, database and design rights and mask work
rights

 

(e)           In this Agreement, “Environmental Law” means any Law, as now or
hereafter in effect, in any way relating to the protection of human health and
safety, the environment or natural resources including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
§ 1801 et  seq.), the Resource Conservation and Recovery Act
(42 U.S.C. § 6901 et  seq.), the Clean Water Act (33 U.S.C.
§ 1251 et  seq.), the Clean Air Act (42 U.S.C.
§ 7401 et  seq.) the Toxic Substances Control Act (15 U.S.C.
§ 2601 et  seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. § 136 et  seq.), and the
Occupational Safety and Health Act (29 U.S.C. § 651 et  seq.),
as each has been or may be amended and the regulations promulgated pursuant
thereto.

 

(f)            In this Agreement, “Environmental Permit” means any Permit
required by Environmental Laws for the operation of such company.

 

(g)           In this Agreement, “Governmental Body” means any government or
governmental or regulatory body thereof, or political subdivision thereof,
whether federal, state, local or foreign, or any agency, instrumentality or
authority thereof, or any court or arbitrator (public or private).

 

(h)           In this Agreement, “Intellectual Property” means all
intellectual property rights owned or used by such party arising from or in respect
of the following, whether protected, created or arising under the laws of the
United States or any other jurisdiction: 
(i) Patents, (ii) Marks, (iii) Copyrights, (iv) Trade
Secrets and (v) all Software and Technology of the Company.

 

82

 

(i)            In this Agreement, “Intellectual Property Licenses” means (i)
any grant to another Person of any right to use any of the Intellectual
Property, and (ii) any grant by another Person of a right to use such Person’s
intellectual property rights included in the Intellectual Property.

 

(j)            In this Agreement, “IRS” means the Internal Revenue Service of
the United States government.

 

(k)           In this Agreement, “Knowledge” means the actual or deemed
knowledge of any of the executive officers or directors of such party. Any of
the foregoing will be deemed to have knowledge if a prudent individual could
reasonably be expected to discover or otherwise become aware of the fact or
matter in the course of conducting a reasonable investigation of the fact or
matter being represented and warranted.

 

(l)            In this Agreement, “Law” means any foreign, federal, state or
local law (including common law), statute, code, ordinance, rule, regulation,
Order or other requirement.

 

(m)          In this Agreement, “Legal Proceeding” means any judicial,
administrative or arbitral actions, suits, mediation, investigation, inquiry,
proceedings or claims (including counterclaims) by or before a Governmental
Body.

 

(n)           In this Agreement, “Lien” means any lien, pledge, mortgage,
deed of trust, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, proxy, voting trust or agreement, transfer
restriction under any shareholder or similar agreement, encumbrance or any
other restriction or limitation whatsoever.

 

(o)           In this Agreement, “Marks” means all trademarks, service marks,
trade names, service names, brand names, trade dress rights, logos, Internet
domain names and corporate names and general intangibles of a like nature,
together with the goodwill associated with any of the foregoing, and all
applications, registrations and renewals thereof.

 

(p)           In this Agreement, any
reference to a “Material Adverse Effect on Consonus” or a “Material Adverse
Effect on STI”, as the case may be, means any change, event, violation,
inaccuracy, circumstance or effect (any such item, an “Effect”) that is
materially adverse to the business, assets, financial condition or results of
operations of (x) Consonus, taken as a whole with its subsidiaries, or (y) STI,
taken as a whole with its subsidiaries, as applicable; provided, however, in no event shall any of the following, alone or
in combination, be deemed to constitute, nor shall any of the following be
taken into account in determining whether there has been or will be, a Material
Adverse Effect on Consonus or a Material Adverse Effect on STI: (A) any Effect
resulting from compliance with the terms and conditions of this Agreement; or
(B) any Effect that results from changes affecting any of the industries as a
whole in which (x) with respect to Consonus, Consonus or its subsidiaries
operates generally, or (y) with respect to STI, STI or its subsidiaries
operates generally, or the United States or worldwide economy generally
(provided in each case that such Effect does not affect Consonus and its
subsidiaries, or STI and its subsidiaries, as the case may be, in a materially
disproportionate manner when compared to other similar businesses).

 

83

 

(q)           In this Agreement, “Order” means any order, injunction,
judgment, decree, ruling, writ, assessment or arbitration award of a
Governmental Body.

 

(r)            In this Agreement, “Patents” means all patents and applications
therefor, including continuations, divisionals, continuations-in-part, or
reissues of patent applications and patents issuing thereon.

 

(s)           In this Agreement, “Permits” means any approvals,
authorizations, consents, licenses, permits, or certificates of a Governmental
Body.

 

(t)            In this Agreement, “Permitted Exceptions” means (i) all
defects, exceptions, restrictions, easements, rights of way and encumbrances
disclosed in policies of title insurance which have been delivered to the other
party; (ii) statutory liens for current Taxes, assessments or other governmental
charges not yet delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings, provided an appropriate
reserve has been established therefor in the financial statements in accordance
with GAAP; (iii) mechanics’, carriers’, workers’, and repairers’ Liens arising
or incurred in the ordinary course of business that are not material to the
business, operations and financial condition of the property so encumbered and
that are not resulting from a breach, default or violation by such company or
any of its subsidiaries of any contract or Law; (iv) zoning, entitlement
and other land use and environmental regulations by any Governmental Body, provided
that such regulations have not been violated, and (v) Liens created in favor of
lessors pursuant to the STI Personal Property Leases and the Consonus Personal
Property Leases.

 

(u)           In this Agreement, “Person” means an individual, a 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 (or any department, agency or political subdivision
thereof).

 

(v)           In this Agreement, “Software” means any and all
(i) computer programs, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, screens, user interfaces,
report formats, firmware, development tools, templates, menus, buttons and
icons, and (iv) all documentation including user manuals and other
training documentation related to any of the foregoing.

 

(w)          In this Agreement, “STI Principal Stockholders” means Michael
G. Shook, William M. Shook and Irvin J. Miglietta .

 

(i)            In this Agreement, “Tax Return” means any return, report or
statement filed or required to be filed with respect to any Tax (including any
elections, declarations, schedules or attachments thereto, and any amendment
thereof) including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes Consonus, STI or any of their Affiliates.

 

84

 

(x)            In this Agreement, “Taxes” means (i) any and all federal,
state, local or foreign Taxes, charges, fees, imposts, levies or other
assessments imposed by any Governmental Body, including all income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated Taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or additional
amounts imposed by any Taxing Authority in connection with any item described
in clause (i) and (iii) any transferee liability in respect of any items
described in clause (i) or (ii) payable by reason of contract, assumption,
transferee liability, operation of Law, Treasury Regulation Section 1.1502-6(a)
(or any predecessor or successor thereof of any analogous or similar provision
under Law) or otherwise.

 

(y)           In this Agreement, “Taxing Authority” means the IRS and any
other Governmental Body responsible for the administration of any Tax.

 

(z)            In this Agreement, “Trade Secrets” means all discoveries,
concepts, ideas, research and development, know-how, formulae, inventions,
compositions, manufacturing and production processes and techniques, technical
data, procedures, designs, drawings, specifications, databases, and other
proprietary or confidential information, including customer lists, supplier
lists, pricing and cost information, and business and marketing plans and
proposals of a company, in each case excluding any rights in respect of any of
the foregoing that comprise or are protected by Copyrights, Marks or Patents.

 

(aa)         In this Agreement, “Treasury Regulations” and “Treas. Reg.” means the final and temporary
regulations promulgated under and pursuant to the Code.

 

9.2           Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given (i) on the date of delivery, if delivered personally (ii) on the
date of confirmation of receipt, if delivered by commercial delivery service,
or mailed by registered or certified mail (return receipt requested) or (iii)
on the date of confirmation of receipt, if sent via facsimile to the parties at
the following address (or at such other address for a party as shall be
specified by like notice):

 

(a)           if to STI or STI Merger
Sub, to:

 

Strategic
Technologies, Inc.

301 Gregson Drive

Cary, North Carolina 27511

Attention: Michael Shook

Facsimile No.: (919) 379-8000

Telephone No.: (919) 379-8100

with a copy (which shall not constitute notice) to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail

Suite 300

 

85

 

Raleigh, North
Carolina 27607

Attention:                David
L. Wilke, Esq.

Facsimile No.:       (919)
781-4865

Telephone No.:     (919) 781-4000

 

(b)           if to the Company,
Consonus or CAC Merger Sub, to:

 

Consonus
Acquisition Corp.

180 East 100 South

Salt Lake City, Utah 84111

Attention: Nana Baffour

Facsimile No.:       (801)
617-2980

Telephone No.:     (801) 617-2998

with a copy (which shall not constitute notice) to:

Greenberg Traurig, LLP

3290 Northside Parkway, N.W.

Suite 400
 Atlanta, Georgia  30327
 Attention:                Theodore
I. Blum, Esq.

Facsimile No.:       (678)
553-2621

Telephone No.:     (678) 553-2620

 

9.3           Interpretation. The
words “include,” “includes” and “including” when used herein shall be deemed in
each case to be followed by the words “without limitation.”  The phrase “made available” in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

9.4           Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.

 

9.5           Schedules and
Exhibits. All references to Schedules and Exhibits herein, unless otherwise
stated, mean the schedules and exhibits attached to this Agreement.

 

9.6           Entire Agreement;
Nonassignability; Parties in Interest. This Agreement and the documents and
instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including the Exhibits, Schedules and Consonus Disclosure
Schedule and STI Disclosure Schedule: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except the Mutual Nondisclosure
Agreement, which shall continue in full force and effect, and shall survive any
termination of this Agreement or the Closing, in accordance with its terms; (b)
shall not be

 

86

 

assigned by operation of law or otherwise
without the prior written consent of the other parties; and (c) are not
intended to create any third party beneficiaries, except as expressly provided
in Section 4.13 and Article VII. Subject to the foregoing, all of the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.

 

9.7           Severability. In
the event that any provision of this Agreement, or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
Upon such determination that any such provision is illegal, void or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable law.

 

9.8           Specific Performance.
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.

 

9.9           Governing Law. This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Delaware, without regard to its principles of
conflicts of law.

 

9.10         Rules of Construction.
The parties hereto agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.

 

9.11         Amendments. The
parties hereto, acting with the consent of their respective Boards of
Directors, if applicable, may cause any term of this Agreement to be amended at
any time before or after approval and adoption of this Agreement by the
Consonus and STI stockholders, by execution of an instrument in writing signed
on behalf of STI and Consonus; provided, however, that after approval and
adoption of this Agreement by the Consonus stockholders or STI stockholders, as
the case may be, no amendment shall be made which requires further approval by
such stockholders, without having first obtained such approval.

 

9.12         Waiver of Jury Trial.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF CONSONUS, CAC MERGER SUB, STI,
STI MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
CONSONUS, CAC MERGER SUB, STI, STI

 

87

 

MERGER SUB OR THE COMPANY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

[Signature page follows]

 

88

 

IN WITNESS
WHEREOF, the Company, Consonus, STI, CAC Merger Sub, STI Merger Sub and the
Holders’ Agents have caused this Agreement to be executed and delivered by
their respective officers thereunto duly authorized, all as of the date first
written above.

 

	
   

  	
  CONSONUS
  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Nana
  Baffour

  	
   

  
	
   

  	
   

  	
    Nana
  Baffour, Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STRATEGIC
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Michael
  G. Shook

  	
   

  
	
   

  	
   

  	
    Michael
  G. Shook, Chief Executive 

  
	
   

  	
   

  	
    Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONSONUS
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Nana
  Baffour

  	
   

  
	
   

  	
   

  	
    Nana
  Baffour, Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CAC MERGER
  SUB, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Nana
  Baffour

  	
   

  
	
   

  	
   

  	
    Nana
  Baffour, President

  
						

 

 

[Signature Page to Action by Agreement of Merger and Plan of
Reorganization]

 

89

 

	
   

  	
  STI MERGER
  SUB, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Nana
  Baffour

  	
   

  
	
   

  	
   

  	
   Nana
  Baffour, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONSONUS
  HOLDERS’ AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
  Knox Lawrence International, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Nana
  Baffour

  	
   

  
	
   

  	
   

  	
   Nana
  Baffour, Managing Principal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STI HOLDERS’
  AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Irvin
  J. Miglietta

  	
   

  
	
   

  	
   

  	
   Irvin
  J. Miglietta

  
					

 

 

[Signature Page to Action by Agreement of Merger and Plan of
Reorganization]

 

90

 

Exhibit A

Voting Agreements

 

 

1

 

Exhibit B

Certificate of Incorporation of the Company

 

 

2

 

Exhibit C

Bylaws of the Company

 

 

1

 

Exhibit D

 

Exchange Ratio Calculation

 

	
   

  	
   

  	
  CONSONUS

  	
   

  	
  STI

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FTM
  Target EBITDA

  	
   

  	
   

  	
  $

  	
  3.2

  	
   

  	
   

  	
  $

  	
  5.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EV
  Multiple

  	
   

  	
   

  	
  11

  	
   

  	
   

  	
  7.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EV

  	
   

  	
   

  	
  $

  	
  35.2

  	
   

  	
   

  	
  $

  	
  41.3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Debt

  	
   

  	
  Questar

  	
  $

  	
  4.0

  	
   

  	
  GE

  	
  $

  	
  24.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Sun

  	
  $

  	
  2.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Loans
  from S/H

  	
  $

  	
  1.0

  	
  (1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Debt

  	
   

  	
   

  	
  $

  	
  4.0

  	
   

  	
   

  	
  $

  	
  27.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity in
  Building

  	
   

  	
   

  	
  $

  	
  2.0

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity
  Value

  	
   

  	
   

  	
  $

  	
  31.2

  	
   

  	
   

  	
  $

  	
  16.3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Equity of the Company

  	
   

  	
   

  	
  $

  	
  47.5

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exchange
  Ratio (Equity Value/Total Equity of Combined the Company)(2)

  	
   

  	
   

  	
  65.8

  	
  %

  	
   

  	
  34.2

  	
  %

  

 

(1)          Represents the payment of approximately
$400,000 of debt owed to certain STI Stockholders and the assumption of a tax
liability of approximately $600,000 associated with the forgiveness of
approximately $1,600,000 of debt owed to STI by certain STI Stockholders. 

 

(2)          The Parties agreed to round the Exchange
Ratio to be 65% Consonus and 35% STI.

 

1

 

Exhibit E-1

Form of Consonus Escrow Agreement

 

 

1

 

Exhibit E-2

Form of STI Escrow Agreement

 

 

1

 

Exhibit F

Michael Shook Employment Agreement

 

 

1

 

Exhibit G

William Shook Employment Agreement

 

 

1

 

Exhibit H

Form of Stockholders Agreement

 

 

1

 

Exhibit I

Form of Operating Agreement

 

 

1

 

Exhibit J

FIRPTA Certificate

 

 

1

 

Exhibit K

Executive Incentive Payments

 

President/CEO
Bonus:

 

Upon the
successful completion of an initial public offering and the payment in full of
the GE Indebtedness, if Michael G. Shook is at such time still employed by STI
and the Company as the Chief Executive Officer and/or President of each such
entity, STI will provide as a bonus to Michael G. Shook, the lesser of (i) the
forgiveness and cancellation of any amounts owed to STI pursuant to the Loan
Agreement by and between STI and Michael G. Shook, effective April 17, 1998, as
amended April 1, 2003 and March 31, 2005, in addition to a cash bonus in the
minimum amount of $589,593 and maximum amount of $624,688 to be funded by the
Consonus Principal Stockholder, or (ii) if applicable, the maximum amount
allowed without causing excess Parachute Payments under Code Section 280G as
determined by STI and Michael G. Shook’s accountants; provided however, that
any reduction in the amount set forth in (i) shall be pro-rated as between the
loan forgiveness and the cash bonus.

 

 

Executive
Vice  of Sales & Marketing/Vice
President of Sales and Marketing Bonus:

 

Upon the
successful completion of an initial public offering and the payment of amounts
owed by STI of the GE Indebtedness, if William M. Shook is at such time still
employed by STI and the Company as the Executive Vice President of Sales &
Marketing and/or Vice President of Sales & Marketing of each such entity,
STI will provide as a bonus to William M. Shook, the lesser of (i) the
forgiveness and cancellation of any amounts owed to STI pursuant to the Loan
Agreement by and between STI and William M. Shook, effective April 17, 1998, as
amended April 1, 2003 and March 31, 2005 in addition to a cash bonus in the
minimum amount of $159,935 and maximum amount of $169,455 to be funded by the
Consonus Principal Stockholder, or (ii) if applicable, the maximum amount
allowed without causing excess Parachute Payments under Code Section 280G as
determined by STI and William M. Shook’s accountants; provided however, that
any reduction in the amount set forth in (i) shall be pro-rated as between the
loan forgiveness and the cash bonus..

 

2

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