Document:

exv10w1

 

Exhibit 10.1

 

 

 

 

 

    SECOND
    AMENDED AND RESTATED

    AGREEMENT AND PLAN OF MERGER

    among

    JK ACQUISITION CORP.,

    MULTI-SHOT, INC.,

    MULTI-SHOT, LLC,

    And Each of

    CATALYST/HALL GROWTH CAPITAL MANAGEMENT CO., LLC,

    And

    SG-DIRECTIONAL, LLC, as

    MEMBERS’ REPRESENTATIVE

    Dated as of August 27, 2007

 

 

 

    

    1

 

    TABLE
    OF CONTENTS

    

 

	 	 	 	 	 
	
    ARTICLE I THE MERGER
    
	
 
	
	
    7
    
	

	

    Section 1.01    The
    Merger
    

	
 
	
	
    7
    
	

	

    Section 1.02    Effective
    Time; Closing
    

	
 
	
	
    7
    
	

	

    Section 1.03    Effect
    of the Merger
    

	
 
	
	
    7
    
	

	

    Section 1.04    Certificate
    of Incorporation and Bylaws of the Surviving Corporation
    

	
 
	
	
    7
    
	

	

    Section 1.05    Directors
    and Officers
    

	
 
	
	
    7
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE II MERGER
    CONSIDERATION; EXCHANGE OF CERTIFICATES
    
	
 
	
	
    8
    
	

	

    Section 2.01    Initial
    Merger Consideration
    

	
 
	
	
    8
    
	

	

    Section 2.02    Closing
    Balance Sheet; Indebtedness; Working Capital
    

	
 
	
	
    9
    
	

	

    Section 2.03    Post-Closing
    Adjustment
    

	
 
	
	
    10
    
	

	

    Section 2.04    Exchange
    of Certificates
    

	
 
	
	
    12
    
	

	

    Section 2.05    Membership
    Interest Transfer Books
    

	
 
	
	
    15
    
	

	

    Section 2.06    Contingent
    Awards
    

	
 
	
	
    15
    
	

	

    Section 2.07    Securities
    Laws Issues
    

	
 
	
	
    17
    
	

	

    Section 2.08    Redemption Shares
    Issuance
    

	
 
	
	
    18
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE III REPRESENTATIONS
    AND WARRANTIES OF THE COMPANY
    
	
 
	
	
    20
    
	

	

    Section 3.01    Organization
    and Qualification
    

	
 
	
	
    21
    
	

	

    Section 3.02    Articles
    of Organization and Regulations
    

	
 
	
	
    21
    
	

	

    Section 3.03    No
    Subsidiaries
    

	
 
	
	
    21
    
	

	

    Section 3.04    Capitalization
    

	
 
	
	
    22
    
	

	

    Section 3.05    Authority
    Relative to This Agreement
    

	
 
	
	
    22
    
	

	

    Section 3.06    No
    Conflict; Required Filings and Consents
    

	
 
	
	
    23
    
	

	

    Section 3.07    Permits;
    Compliance
    

	
 
	
	
    23
    
	

	

    Section 3.08    Financial
    Statements
    

	
 
	
	
    24
    
	

	

    Section 3.09    Absence
    of Certain Changes or Events
    

	
 
	
	
    24
    
	

	

    Section 3.10    Absence
    of Litigation
    

	
 
	
	
    24
    
	

	

    Section 3.11    Employee
    Benefit Plans; Labor Matters
    

	
 
	
	
    25
    
	

	

    Section 3.12    Contracts
    

	
 
	
	
    27
    
	

	

    Section 3.13    Environmental
    Matters
    

	
 
	
	
    29
    
	

	

    Section 3.14    Intellectual
    Property
    

	
 
	
	
    30
    
	

	

    Section 3.15    Taxes
    

	
 
	
	
    32
    
	

	

    Section 3.16    Vote
    Required
    

	
 
	
	
    34
    
	

	

    Section 3.17    Assets;
    Absence of Liens and Encumbrances
    

	
 
	
	
    34
    
	

	

    Section 3.18    Real
    Property
    

	
 
	
	
    34
    
	

	

    Section 3.19    Certain
    Interests
    

	
 
	
	
    35
    
	

	

    Section 3.20    Insurance
    Policies
    

	
 
	
	
    35
    
	

	

    Section 3.21    Restrictions
    on Business Activities
    

	
 
	
	
    35
    
	

	

    Section 3.22    Brokers
    

	
 
	
	
    35
    
	

	

    Section 3.23    Intentionally
    Omitted
    

	
 
	
	
    36
    
	

	

    Section 3.24    Customers
    and Suppliers
    

	
 
	
	
    36
    
	

	

    Section 3.25    Inventory
    

	
 
	
	
    36
    
	

	

    Section 3.26    Accounts
    Receivable; Bank Accounts
    

	
 
	
	
    36
    
	

	

    Section 3.27    Intentionally
    Omitted
    

	
 
	
	
    36
    
	

    

    2

 

	 	 	 	 	 
	

    Section 3.28    Offers
    

	
 
	
	
    36
    
	

	

    Section 3.29    Warranties
    

	
 
	
	
    36
    
	

	

    Section 3.30    Books
    and Records
    

	
 
	
	
    36
    
	

	

    Section 3.31    Intentionally
    Omitted
    

	
 
	
	
    37
    
	

	

    Section 3.32    Proxy
    Statement
    

	
 
	
	
    37
    
	

	

    Section 3.33    No
    Misstatements
    

	
 
	
	
    37
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IV REPRESENTATIONS
    AND WARRANTIES OF MEMBERS
    
	
 
	
	
    37
    
	

	

    Section 4.01    Ownership;
    Accredited Status
    

	
 
	
	
    37
    
	

	

    Section 4.02    Power;
    Authorization; Enforceability
    

	
 
	
	
    38
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE V REPRESENTATIONS AND
    WARRANTIES OF PARENT AND MERGER SUB
    
	
 
	
	
    38
    
	

	

    Section 5.01    Organization
    and Qualification
    

	
 
	
	
    38
    
	

	

    Section 5.02    Authority
    Relative to This Agreement
    

	
 
	
	
    39
    
	

	

    Section 5.03    Capital
    Structure
    

	
 
	
	
    39
    
	

	

    Section 5.04    No
    Conflict; Required Filings and Consents
    

	
 
	
	
    39
    
	

	

    Section 5.05    SEC
    Filings; Financial Statements
    

	
 
	
	
    40
    
	

	

    Section 5.06    Interim
    Operations of Merger Sub
    

	
 
	
	
    40
    
	

	

    Section 5.07    Board
    Approval
    

	
 
	
	
    40
    
	

	

    Section 5.08    Valid
    Issuance of Parent Shares
    

	
 
	
	
    40
    
	

	

    Section 5.09    Brokers
    

	
 
	
	
    40
    
	

	

    Section 5.10    Intentionally
    Omitted
    

	
 
	
	
    41
    
	

	

    Section 5.11    Financial
    Statements
    

	
 
	
	
    41
    
	

	

    Section 5.12    Absence
    of Certain Changes or Events
    

	
 
	
	
    41
    
	

	

    Section 5.13    Absence
    of Litigation
    

	
 
	
	
    41
    
	

	

    Section 5.14    Taxes
    

	
 
	
	
    41
    
	

	

    Section 5.15    Assets;
    Absence of Liens and Encumbrances
    

	
 
	
	
    43
    
	

	

    Section 5.16    Proxy
    Statement
    

	
 
	
	
    43
    
	

	

    Section 5.17    Registration
    Rights Agreement
    

	
 
	
	
    43
    
	

	

    Section 5.18    Offers
    

	
 
	
	
    43
    
	

	

    Section 5.19    Undisclosed
    Liabilities
    

	
 
	
	
    43
    
	

	

    Section 5.20    No
    Misstatements
    

	
 
	
	
    44
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VI CONDUCT OF
    BUSINESSES PENDING THE MERGER
    
	
 
	
	
    44
    
	

	

    Section 6.01    Conduct
    of Business by the Company Pending the Merger
    

	
 
	
	
    44
    
	

	

    Section 6.02    Conduct
    of Business by Parent Pending the Merger
    

	
 
	
	
    46
    
	

	

    Section 6.03    Litigation
    

	
 
	
	
    48
    
	

	

    Section 6.04    Notification
    of Certain Matters
    

	
 
	
	
    48
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VII ADDITIONAL
    AGREEMENTS
    
	
 
	
	
    49
    
	

	

    Section 7.01    Proxy
    Statement; Stockholder Approval. Proxy Statement; Parent
    Stockholders’ Meeting; Name Change
    

	
 
	
	
    49
    
	

	

    Section 7.02    Members’
    Approval; Exemption from Registration
    

	
 
	
	
    50
    
	

	

    Section 7.03    Access
    to Information; Confidentiality
    

	
 
	
	
    51
    
	

	

    Section 7.04    No
    Solicitation of Transactions
    

	
 
	
	
    51
    
	

	

    Section 7.05    Employee
    Benefits Matters
    

	
 
	
	
    52
    
	

	

    Section 7.06    Further
    Action; Consents; Filings
    

	
 
	
	
    53
    
	

    

    3

 

	 	 	 	 	 
	

    Section 7.07    Intentionally
    Omitted
    

	
 
	
	
    54
    
	

	

    Section 7.08    No
    Public Announcement
    

	
 
	
	
    54
    
	

	

    Section 7.09    Expenses
    

	
 
	
	
    54
    
	

	

    Section 7.10    Affiliate
    Agreements
    

	
 
	
	
    54
    
	

	

    Section 7.11    Intentionally
    Omitted
    

	
 
	
	
    54
    
	

	

    Section 7.12    AMEX
    Listing
    

	
 
	
	
    54
    
	

	

    Section 7.13    Intentionally
    Omitted
    

	
 
	
	
    55
    
	

	

    Section 7.14    Key
    Employees
    

	
 
	
	
    55
    
	

	

    Section 7.15    WARN
    Act
    

	
 
	
	
    55
    
	

	

    Section 7.16    Conversion
    Schedule
    

	
 
	
	
    55
    
	

	

    Section 7.17    Litigation
    Support
    

	
 
	
	
    55
    
	

	

    Section 7.18    Director
    and Officer Insurance
    

	
 
	
	
    56
    
	

	

    Section 7.19    Schedules
    Bring Down
    

	
 
	
	
    56
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VIII CONDITIONS TO
    THE MERGER
    
	
 
	
	
    57
    
	

	

    Section 8.01    Conditions
    to the Obligations of Each Party
    

	
 
	
	
    57
    
	

	

    Section 8.02    Conditions
    to the Obligations of Parent and Merger Sub
    

	
 
	
	
    57
    
	

	

    Section 8.03    Conditions
    to the Obligations of the Company
    

	
 
	
	
    60
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IX TERMINATION,
    AMENDMENT AND WAIVER
    
	
 
	
	
    62
    
	

	

    Section 9.01    Termination
    

	
 
	
	
    62
    
	

	

    Section 9.02    Effect
    of Termination
    

	
 
	
	
    63
    
	

	

    Section 9.03    Amendment
    

	
 
	
	
    63
    
	

	

    Section 9.04    Waiver
    

	
 
	
	
    63
    
	

	

    Section 9.05    Automatic
    Termination
    

	
 
	
	
    63
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE X INDEMNIFICATION
    
	
 
	
	
    64
    
	

	

    Section 10.01  Survival
    of Representations and Warranties
    

	
 
	
	
    64
    
	

	

    Section 10.02  Indemnification
    by the Members
    

	
 
	
	
    64
    
	

	

    Section 10.03  Indemnification
    by Parent and Merger Sub
    

	
 
	
	
    65
    
	

	

    Section 10.04  Indemnification
    Procedures
    

	
 
	
	
    66
    
	

	

    Section 10.05  Members’
    Representative
    

	
 
	
	
    67
    
	

	

    Section 10.06  Taxes
    

	
 
	
	
    68
    
	

	

    Section 10.07  Reduction
    of Indemnified Amounts
    

	
 
	
	
    68
    
	

	

    Section 10.08  Exclusive
    Rights and Remedies
    

	
 
	
	
    68
    
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XI GENERAL PROVISIONS
    
	
 
	
	
    69
    
	

	

    Section 11.01  Notices
    

	
 
	
	
    69
    
	

	

    Section 11.02  Certain
    Definitions
    

	
 
	
	
    70
    
	

	

    Section 11.03  Severability
    

	
 
	
	
    78
    
	

	

    Section 11.04  Assignment;
    Binding Effect; Benefit
    

	
 
	
	
    78
    
	

	

    Section 11.05  Incorporation
    of Exhibits
    

	
 
	
	
    78
    
	

	

    Section 11.06  Specific
    Performance
    

	
 
	
	
    78
    
	

	

    Section 11.07  Governing
    Law; Forum
    

	
 
	
	
    78
    
	

	

    Section 11.08  Time
    of the Essence
    

	
 
	
	
    79
    
	

	

    Section 11.09  Waiver
    of Jury Trial
    

	
 
	
	
    79
    
	

	

    Section 11.10  Construction
    and Interpretation
    

	
 
	
	
    79
    
	

    

    4

 

	 	 	 	 	 
	

    Section 11.11  Further
    Assurances
    

	
 
	
	
    80
    
	

	

    Section 11.12  Headings
    

	
 
	
	
    80
    
	

	

    Section 11.13  Counterparts
    

	
 
	
	
    80
    
	

	

    Section 11.14  Entire
    Agreement
    

	
 
	
	
    80
    
	

 

	 	 	 
	

    Schedule 2.03(g)
    

	
 
	
    Target Working Capital
    Calculation — Example
    

	

    Schedule 2.04(a)
    

	
 
	
    Holders of Escrow Securities
    

	

    Schedule 2.06(d)
    

	
 
	
    Contingent Award
    Calculation — Example
    

	

    Schedule 6.01(k)
    

	
 
	
    Conduct of Business by the Company
    

	

    Schedule 6.02(s)
    

	
 
	
    Bonus Payments to Officers or
    Employees
    

	

    Schedule 7.05(b)
    

	
 
	
    Individuals Entering Into
    Employment Agreement
    

	

    Schedule 7.05(c)
    

	
 
	
    Individuals Entering Into
    Non-Solicitation Agreement
    

	

    Schedule 8.02(r)
    

	
 
	
    Company Employees to be Employed
    at Closing
    

	

    Schedule 8.02(t)
    

	
 
	
    Existing Employment Agreements
    

 

	 	 	 
	

    Exhibit A
    

	
 
	
    Form of Parent Warrant
    

	

    Exhibit B
    

	
 
	
    Form of Escrow Agreement
    

	

    Exhibit C
    

	
 
	
    Form of Registration Rights
    Agreement
    

	

    Exhibit D
    

	
 
	
    Form of Company Counsel Legal
    Opinion
    

	

    Exhibit E
    

	
 
	
    Form of Parent Counsel Legal
    Opinion
    

	

    Exhibit F
    

	
 
	
    Form of GB Agreement
    

	

    Exhibit G
    

	
 
	
    Form of PB Agreement
    

 

    Company Disclosure Schedules

    Parent Disclosure Schedules

    

    5

 

    SECOND
    AMENDED AND RESTATED

    AGREEMENT AND PLAN OF MERGER

 

    SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER,
    dated as of August 27, 2007 (the “Execution
    Date”), among JK ACQUISITION CORP., a Delaware
    corporation (“Parent”), MULTI-SHOT, INC., a
    Delaware corporation and a wholly owned subsidiary of Parent
    (“Merger Sub”), MULTI-SHOT, LLC, a Texas
    limited liability company (the “Company”), and
    each of CATALYST/HALL GROWTH CAPITAL MANAGEMENT CO., LLC, a
    Texas limited liability company (“CHGCM”) and
    SG-DIRECTIONAL, LLC, an Arkansas limited liability company
    (“SGD”), collectively as Members’
    Representative (as defined in Section 10.05 hereof).

 

    W I T N E
    S S E T H

 

    WHEREAS, that certain First Amended and Restated
    Agreement and Plan of Merger dated as of February 14, 2007
    was executed by and among the Parent, Merger Sub, the Company,
    and the Members that are parties thereto (the “Second
    Agreement”), which Second Agreement amended and
    restated in its entirety that certain Agreement and Plan of
    Merger dated as of September 6, 2006 (the “Original
    Agreement”), executed by and among the Parent, Merger
    Sub, the Company, and the Members that were parties thereto;

 

    WHEREAS, the parties thereto desire to enter into this
    Agreement to fully supersede and replace the Second Agreement;

 

    WHEREAS, upon the terms and subject to the conditions of
    this Agreement, Parent and the Company will enter into a
    business combination transaction pursuant to which the Company
    will merge with and into the Merger Sub (the
    “Merger”);

 

    WHEREAS, as of the Execution Date, the Board of Managers
    of the Company has (i) determined that the Merger is fair
    to, and in the best interests of, the Company and the Members,
    and (ii) approved and adopted this Agreement, the Merger,
    and the other transactions contemplated by this Agreement;

 

    WHEREAS, the Boards of Directors of each of Parent and
    Merger Sub have (i) determined that the Merger is
    consistent with and in furtherance of the long-term business
    strategy of Parent and fair to, and in the best interests of,
    Parent, Merger Sub and their respective stockholders,
    (ii) unanimously approved and adopted this Agreement, the
    Merger, and the other transactions contemplated by this
    Agreement, and (iii) determined to unanimously recommend
    that the stockholders of Parent approve and adopt this Agreement
    and the Merger;

 

    WHEREAS, the Members of the Company currently own the
    membership interests of the Company (the “Company
    Interests”) as is set forth opposite each such
    Member’s name in Section 1.01 of the Company
    Disclosure Schedule (as defined in Article III) (such
    members being referred to herein as the
    “Members”);

 

    WHEREAS, pursuant to the Merger, each outstanding share
    of Company Interest shall be converted into the right to receive
    shares of Parent’s authorized common stock, par value
    $0.0001 per share (“Parent Common Stock”) and
    Parent Warrants (as defined herein), at the rate determined in
    this Agreement;

 

    WHEREAS, Parent has agreed to grant the Members the
    registration rights set forth in the Registration Rights
    Agreement (as defined herein);

 

    WHEREAS, all of the Parent Common Stock otherwise
    issuable by Parent in connection with the Merger to the Original
    Members (as defined in Section 11.02(a) herein), who
    own approximately 38.6% of the Company prior to the Merger shall
    be placed in escrow by Parent, the release of which amount shall
    be contingent upon certain events and conditions, all as set
    forth in this Agreement and the Escrow Agreement (as defined in
    Section 2.04(b));

 

    WHEREAS, as a condition and inducement to Parent’s
    willingness to enter into this Agreement, each individual listed
    on Schedule 7.05(b) shall enter into an Employment
    Agreement (as defined in Section 7.05(b));

 

    WHEREAS, as a condition and inducement to Parent’s
    willingness to enter into this Agreement, each individual listed
    on Schedule 7.05(c) shall enter into a Non-Solicitation
    Agreement (as defined in Section 7.05(c)); and

    

    6

 

    WHEREAS, certain capitalized terms used in this Agreement
    are defined in Section 11.02(a) and (b) of this
    Agreement.

 

    NOW, THEREFORE, in consideration of the foregoing and the
    mutual covenants and agreements herein contained, and intending
    to be legally bound hereby, Parent, Merger Sub, the Company, the
    Members’ Representative and the Members, for the limited
    purposes stated herein, hereby agree as follows:

 

    ARTICLE I

    

 

    THE
    MERGER

 

    Section 1.01  The
    Merger.  Upon the terms of this Agreement and
    subject to the conditions set forth in this Agreement, and in
    accordance with the Delaware General Corporation Law
    (“DGCL”) and Texas Limited Liability Company
    Act (“TLLCA”), at the Effective Time (as
    defined in Section 1.02), Company shall be merged
    with and into the Merger Sub. As a result of the Merger, the
    separate legal existence of Company shall cease, and the Merger
    Sub shall continue as the surviving corporation of the Merger
    (the “Surviving Corporation”).

 

    Section 1.02  Effective
    Time; Closing.  As promptly as practicable
    following the satisfaction or, if permissible by the express
    terms of this Agreement, waiver of the conditions set forth in
    Article VIII (or such other date as may be agreed by each
    of the parties hereto), the parties hereto shall cause the
    Merger to be consummated by (i) filing a certificate of
    merger (the “Certificate of Merger”) with the
    Secretary of States of (A) the State of Delaware and
    (B) the State of Texas in such forms as is required by, and
    executed in accordance with, the relevant provisions of the DGCL
    and the TLLCA, respectively, and (ii) making all other
    filings and recordings required under the DGCL and the TLLCA.
    Parent will prepare and file all proxy materials in accordance
    with Schedule 14A under the Exchange Act that set forth,
    among other things, the proposed officers and directors of
    Parent and Merger Sub after the Closing. The term
    “Effective Time” means the date and time of the
    filing of the Certificate of Merger (or such later time as may
    be agreed by each of the parties hereto and specified in the
    Certificate of Merger). Immediately prior to the filing of the
    Certificate of Merger, a closing (the
    “Closing”) will be held at the offices of
    Patton Boggs LLP (“Patton Boggs”), 2001 Ross
    Avenue, Suite 3000, Dallas, Texas (or such other place as
    the parties may agree). The date on which the Closing shall
    occur is referred to herein as the “Closing
    Date.”

 

    Section 1.03  Effect
    of the Merger.  At and after the Effective
    Time, the Merger shall have the effects as set forth in the
    applicable provisions of the DGCL and TLLCA. Without limiting
    the generality of the foregoing, and subject thereto, at the
    Effective Time, all the property, rights, privileges, powers and
    franchises of each of the Company and Merger Sub shall vest in
    the Surviving Corporation, and all debts, liabilities,
    obligations, restrictions, disabilities and duties of each of
    the Company and Merger Sub shall become the debts, liabilities,
    obligations, restrictions, disabilities and duties of the
    Surviving Corporation.

 

    Section 1.04  Certificate
    of Incorporation and Bylaws of the Surviving Corporation.

 

    (a) At the Effective Time, the Certificate of Incorporation
    of Merger Sub as currently in effect shall be the Certificate of
    Incorporation of the Surviving Corporation, except that
    Section 1 of the amended and restated Certificate of
    Incorporation of the Surviving Corporation, instead of reading
    the same as Section 1 of the Certificate of Incorporation
    of Merger Sub, shall read as follows: “The name of this
    corporation is “Multi-Shot, Inc.”

 

    (b) At the Effective Time, the Bylaws of the Surviving
    Corporation shall be the same as the Bylaws of Merger Sub as in
    effect immediately prior to the Effective Time, except that all
    references to Merger Sub in the Bylaws of the Surviving
    Corporation shall be changed to refer to Multi-Shot, Inc.

 

    Section 1.05  Directors
    and Officers.

 

    (a) The directors of Merger Sub immediately prior to the
    Effective Time shall be the initial directors of the Surviving
    Corporation, each to hold office in accordance with the
    Certificate of Incorporation and Bylaws of the Surviving
    Corporation, and the officers of Merger Sub immediately prior to
    the Effective Time shall be the initial officers of the
    Surviving Corporation, in each case until their respective
    successors are duly elected or appointed and qualified.

    

    7

 

    (b) Effective as of the Effective Time, the directors of
    Parent and the Surviving Corporation shall be Ron Nixon
    (Chairman), Allen Neel, Richard Turner, James Jacoby and Kim
    Eubanks, and up to two (2) other designees of the Members,
    such designees to be designated by the Members’
    Representative at least ninety (90) days prior to the
    Effective Time, each to hold office in accordance with the
    Certificate of Incorporation, as amended, and Bylaws, as
    amended, of Parent and the Surviving Corporation, and the
    initial officers of the Surviving Corporation shall be Allen
    Neel — Chief Executive Officer, President and
    Secretary; David Cudd — Vice President; and Paul
    Culbreth — Vice President. Effective as of the
    Effective Time, the officers of Parent shall be Allen
    Neel — Chief Executive Officer and President, and
    Scott Bork — Secretary. In each case, the foregoing
    officers shall serve until their respective successors are duly
    elected or appointed and qualified.

 

    ARTICLE II

    

 

    MERGER
    CONSIDERATION; EXCHANGE OF CERTIFICATES

 

    Section 2.01  Initial
    Merger Consideration.

 

    (a) At the Effective Time, by virtue of the Merger and
    without any action on the part of Parent, Merger Sub, the
    Company or the holders of any of the following securities:

 

    (i) each unit of Company Interest issued and outstanding
    immediately prior to the Effective Time shall be converted into
    the right to receive the following consideration, payable in the
    form of:

 

    (1) such number of shares of Parent Common Stock equal to
    the Company Interest to Parent Common Stock Exchange
    Ratio; and

 

    (2) such number of Parent Warrants equal to the Company
    Interest to Parent Warrant Exchange Ratio; and

 

    (3) a cash amount equal to the Company Interest to Cash
    Exchange Ratio;

 

    (ii) each share of common stock, par value $0.001 per
    share, of Merger Sub issued and outstanding immediately prior to
    the Effective Time, all of which shall be held by Parent, shall
    be converted into and exchanged for one validly issued, fully
    paid and nonassessable share of common stock, par value $0.001
    per share, of the Surviving Corporation. The stock certificate
    evidencing shares of common stock of Merger Sub shall then
    evidence ownership of the outstanding shares of common stock of
    the Surviving Corporation.

 

    (b) As used in this Agreement, the following terms have the
    following meanings (except as noted in this Agreement):

 

    (i) “Gross Enterprise Value” means
    the enterprise value of the Company, such enterprise value of
    which is calculated as the sum of (A) (x) 6.25 multiplied
    by (y) the forecasted trailing 12 months Adjusted
    EBITDA as of November 30, 2007, plus
    (B) $10,000,000, which such Gross Enterprise Value is
    estimated to be $197,500,000.

 

    (ii) “Estimated Net Enterprise Value”
    means Gross Enterprise Value less Estimated Third Party
    Indebtedness as of the Closing Date.

 

    (iii) “Estimated Third Party
    Indebtedness” means the Indebtedness (as defined in
    Section 2.01(b)(iv)).

 

    (iv) “Indebtedness” means all
    indebtedness or other obligations of the Company for borrowed
    money, including, without limitation, all obligations under
    capital leases which under GAAP are required to be shown as a
    liability and all indebtedness of a third party for which the
    Company is liable pursuant to a guaranty or otherwise.

 

    (v) Intentionally omitted.

 

    (vi) “Parent Stock Consideration”
    means one hundred percent (100%) of the remainder of
    Estimated Net Enterprise Value, less the Cash Consideration.

    

    8

 

 

    (vii) “Parent Shares” means the
    number of shares of Parent Common Stock equal to the quotient of
    (A) Parent Stock Consideration divided by (B) $5.40,
    rounded to the nearest whole share.

 

    (viii) “Parent Warrants” means the
    28,516,668 warrants issued by Parent pursuant to
    Section 2.01(a)(i)(2), subject to the provisions in
    Section 2.06 hereof, substantially in the form
    attached hereto as Exhibit A.

 

    (ix) “Escrow Shares” means all of
    the Parent Shares issued as Parent Stock Consideration to the
    Original Members pursuant to Section 2.01 hereto,
    all of the Redemption Liability Shares to the Original
    Members, if any, issued pursuant to Section 2.08,
    and any Parent Common Stock issued to the Original Members
    pursuant to the exchange of any Escrow Warrants.

 

    (x) “Cash Consideration” means
    $20,000,000.00.

 

    (xi) “Company Interest to Cash Exchange
    Ratio” means the quotient (calculated to five
    decimal places) obtained by dividing (x) the Cash
    Consideration by (y) the Fully Diluted Company Interest
    Amount (as defined below).

 

    (xii) “Company Interest to Parent Common Stock
    Exchange Ratio” means the quotient (calculated to
    five decimal places) obtained by dividing (x) the Parent
    Shares by (y) the Fully Diluted Company Interest Amount.

 

    (xiii) “Fully Diluted Company Interest
    Amount” means a number of units of Company
    Interests equal to the sum of (x) the number of units of
    Company Interests issued and outstanding immediately prior to
    the Effective Time and (y) the number of units of Company
    Interests issuable upon exercise, conversion
    and/or
    exchange of all securities issued and outstanding immediately
    prior to the Effective Time that are exercisable, convertible
    and/or
    exchangeable for units of Company Interests.

 

    (xiv) “Company Interest to Parent Warrant
    Exchange Ratio” means the quotient (calculated to
    five decimal places) obtained by dividing (x) the Parent
    Warrants by (y) the Fully Diluted Company Interest Amount.

 

    (c) If, during the period between the date hereof and the
    Effective Time, any change in the capital stock of Parent shall
    occur by reason of reclassification, recapitalization, stock
    split or combination, exchange or readjustment of shares, or any
    stock dividend thereon with a record date during such period or
    any similar event, all of the stock-based items that require
    adjustment so as to properly reflect the action taken,
    including, but not limited to, the Initial Merger Consideration,
    the Parent Shares, the Company Interest to Cash Exchange Ratio,
    the Company Interest to Parent Common Stock Exchange Ratio, the
    Parent Warrants, the Redemption Liability Shares (as
    defined in Section 2.08) and
    Redemption Warrants (as defined in
    Section 2.08) shall be correspondingly adjusted to
    the extent appropriate to reflect such stock dividend,
    subdivision, reclassification, recapitalization, split,
    combination, exchange or readjustment of shares. The parties
    recognize that the 2004 Incentive Plan has, in 2005 and 2006,
    and will most likely in 2007 give rise to a Transaction-Related
    Members’ Equity Charges (defined below). For the purposes
    of this Agreement and the Adjusted EBITDA will not include any
    transaction-related charge to Company earnings as required by
    GAAP (the “Transaction-Related Members’ Equity
    Charges”).

 

    (d) If any units of Company Interests 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, stock option exercise agreement or other agreement
    with the Company, then the Parent Shares issued in exchange for
    such units of Company Interests will also be unvested
    and/or
    subject to the same repurchase option, risk of forfeiture or
    other condition, and the certificates representing such Parent
    Shares may accordingly be marked with appropriate legends.

 

    (e) The aggregate consideration payable to the holders of
    Company Interests in accordance with this
    Section 2.01(a) is referred to in this Agreement as the
    “Initial Merger Consideration.” The Initial
    Merger Consideration is subject to adjustment in accordance with
    Sections 2.02 and 2.03.

 

    Section 2.02  Closing
    Balance Sheet; Indebtedness; Working Capital.

 

    (a) (i) Intentionally omitted.

    

    9

 

    (ii) For purposes of this Section 2.02,
    “Working Capital” shall mean the amount that is
    the difference between (i) Company’s Current Assets
    and (ii) Company’s Current Liabilities, calculated in
    accordance with United States generally accepted accounting
    principles (“GAAP”) and in a manner consistent
    with the Company Financial Statements (as defined in
    Section 3.08(a)). “Current Assets,”
    as used in the definition of Working Capital, shall mean cash on
    hand or in deposit accounts, cash equivalents, accounts
    receivable (net of all reserves), prepaid project costs, prepaid
    expenses, and any other current assets as defined under GAAP,
    plus any Transaction Expenses previously paid by the
    Company. “Current Liabilities”, as used in the
    definition of Closing Working Capital, shall mean accounts
    payable, accrued expenses, advanced customer payments and any
    other current liabilities (excluding any accrued but unpaid
    Transaction Expenses and current portions of Indebtedness) as
    defined under GAAP.

 

    (b) The Company will prepare and deliver to Parent at least
    one (1) business day before the Closing Date an unaudited
    balance sheet of the Company prepared on an estimated basis as
    of midnight the day prior to the Closing Date (the
    “Estimated Closing Balance Sheet”), which shall
    include detailed supporting calculations of (i) the
    estimated Indebtedness of the Company as of the Closing Date
    (the “Estimated Indebtedness”); and
    (ii) the estimated Working Capital of the Company at the
    Closing Date (the “Estimated Closing Working
    Capital”). The Estimated Closing Balance Sheet will be
    prepared in accordance with GAAP, subject to reasonable
    exceptions such as the absence of footnotes and customary
    year-end audit adjustments, in a manner consistent with the
    methods and practices used to prepare the audited balance sheet
    as of December 31, 2006 (the “2006 Balance
    Sheet”). The Company will deliver with the Estimated
    Closing Balance Sheet, including the Estimated Indebtedness and
    Estimated Closing Working Capital, a certification executed by
    the Chief Executive Officer and the Chief Financial Officer that
    the Estimated Closing Balance Sheet is being delivered in good
    faith and fairly presents, in all material respects, the
    financial condition of the Company as of 12:01 a.m. the day
    before the Closing Date, prepared in accordance with GAAP,
    subject to reasonable exceptions such as the absence of
    footnotes and customary year-end audit adjustments. For example,
    assuming a Closing Date of December 3, 2007, the Company
    shall deliver the Estimated Closing Balance Sheet on the morning
    of November 30, 2007 reflecting business activities as of
    and through November 29, 2007.

 

    Section 2.03  Post-Closing
    Adjustment.

 

    (a) Within 75 days after the Closing Date, Parent will
    prepare and deliver to the Members’ Representative written
    notice (the “Adjustment Notice”) containing an
    unaudited consolidated balance sheet of the Company as of the
    close of business on the Closing Date (the “Closing
    Balance Sheet”), including detailed supporting
    calculations of (i) the Indebtedness of the Company as of
    the Closing Date less any Parent Expense Excess (the
    “Closing Indebtedness”), (ii) the Working
    Capital of the Company as of the Closing Date (“Closing
    Working Capital”) and (iii) Parent’s
    calculation of the amount of any Initial Merger Consideration
    adjustment required pursuant to Section 2.03(i)
    (“Adjustment Amount”), if any. If Parent
    represents that no Adjustment Amount is due and required, the
    Adjustment Notice shall so state. The Closing Balance Sheet,
    including the Closing Indebtedness and Closing Working Capital,
    will be prepared in accordance with GAAP (subject to any
    adjustments that relate to Transaction Expenses as permitted
    herein) in a manner consistent with the methods and practices
    used to prepare the Estimated Balance Sheet, Estimated
    Indebtedness and Estimated Working Capital.

 

    (b) Within 30 days after delivery of the Adjustment
    Notice, the Members’ Representative will deliver to Parent
    a written response in which the Members’ Representative
    will either:

 

    (i) agree in writing with the Closing Balance Sheet as set
    forth in the Adjustment Notice, in which case such calculations
    of Closing Indebtedness, Closing Working Capital and Adjustment
    Amount, if any, will be final and binding on the parties for
    purposes of Section 2.03(i); or

 

    (ii) dispute Parent’s determination that no Adjustment
    Amount is due and required or Parent’s calculation of
    Closing Indebtedness, Closing Working Capital or Adjustment
    Amount, if any, as set forth in the Adjustment Notice by
    delivering to Parent a written notice (a “Dispute
    Notice”) setting forth in reasonable detail the basis
    for each such disputed item and certifying that all such
    disputed items are being disputed in good faith.

 

    (c) If the Members’ Representative fails to take
    either of the foregoing actions within 30 days after
    delivery of the Adjustment Notice, then the Company will be
    deemed to have irrevocably accepted Parent’s calculation of

    

    10

 

    Closing Indebtedness, Closing Working Capital
    and/or
    Adjustment Amount, if any, as set forth in the Adjustment
    Notice, in which case such calculation of Closing Indebtedness,
    Closing Working Capital and Adjustment Amount will be final and
    binding on the parties for purposes of
    Section 2.03(i).

 

    (d) If the Members’ Representative delivers a Dispute
    Notice to Parent within 30 days after delivery of the
    Adjustment Notice, then Parent and the Members’
    Representative will attempt in good faith, for a period of
    30 days, to agree on the calculations of Closing
    Indebtedness, Closing Working Capital and Adjustment Amount for
    purposes of Section 2.03(i). Any resolution by
    Parent and the Members’ Representative during such
    30-day
    period as to any disputed items will be final and binding on the
    parties for purposes of Section 2.03(i). If Parent
    and the Members’ Representative do not resolve all disputed
    items by the end of 30 days after the date of delivery of
    the Dispute Notice, then Parent and the Members’
    Representative will submit the remaining items in dispute to
    Hein & Associates, LLP, or if that firm is unwilling
    or unable to serve, Parent and the Members’ Representative
    will engage another mutually agreeable independent accounting
    firm of recognized national standing, which is not the regular
    auditing firm of Parent or the Company. If Parent and the
    Members’ Representative are unable to jointly select such
    independent accounting firm within 10 days after such
    30-day
    period, Parent and the Members’ Representative will each
    select an independent accounting firm of recognized national
    standing and each such selected accounting firm will select a
    third independent accounting firm of recognized national
    standing, which is not the regular auditing firm of Parent or
    the Company (such selected independent accounting firm, whether
    pursuant to this sentence or the preceding sentence, the
    “Independent Accounting Firm”). The Independent
    Accounting Firm will act as arbitrator to determine (based
    solely upon presentations made by Parent and the Members’
    Representative and not by independent audit or review) only
    those items still in dispute. The Purchaser and the
    Members’ Representative will instruct the Independent
    Accounting Firm to render its determination with respect to the
    items in dispute in a written report that specifies the
    conclusions of the Independent Accounting Firm as to each item
    in dispute and the resulting calculations and determination of
    the Closing Indebtedness, Closing Working Capital and the
    Adjustment Amount. The Parent and the Members’
    Representative will each use their commercially reasonable
    efforts to cause the Independent Accounting Firm to render its
    determination within 30 days after referral of the items to
    such firm or as soon thereafter as reasonably practicable. The
    determinations of the Independent Accounting Firm with respect
    to the Closing Indebtedness, Closing Working Capital and
    Adjustment Amount will be final and binding on the parties for
    purposes of Section 2.03(i). Parent and the
    Members’ Representative will revise the Closing Balance
    Sheet and the calculation of the Closing Indebtedness, Closing
    Working Capital and Adjustment Amount as appropriate to reflect
    the resolution of the issues in dispute pursuant to this
    Section 2.03. The procedures for payment of an
    Adjustment Amount, whether in favor of Parent or in favor of
    Members, are as set forth in Section 2.03(i) hereof.
    The fees and expenses of the Independent Accounting Firm will be
    shared by Parent and the Members in inverse proportion to the
    relative amounts of the disputed amount (as ultimately resolved)
    determined to be for the account of Parent and the Members,
    respectively. For example, if the final Adjustment Amount is
    forty percent (40%) of the Parent’s original Adjustment
    Amount as determined in accordance with
    Section 2.03(a), the Members shall pay forty percent
    (40%) of the fees and expenses of the Independent Accounting
    Firm and Parent shall pay the remaining sixty percent (60%) of
    such fees and expenses.

 

    (e) For purposes of complying with this
    Section 2.03, Parent and the Members’
    Representative will furnish to each other and to the Independent
    Accounting Firm such work papers and other documents and
    information relating to the disputed issues as the Independent
    Accounting Firm may request and as are available to that party
    (or its independent public accountants) and each such party will
    be afforded the opportunity to present to the Independent
    Accounting Firm any material related to the disputed items and
    to discuss the items with the Independent Accounting Firm.
    Parent must require that the Independent Accounting Firm enter
    into a customary form of confidentiality agreement with respect
    to the work papers and other documents and information regarding
    the matters, including financial information contained in the
    Adjustment Notice and Dispute Notice, provided to the
    Independent Accounting Firm pursuant to this
    Section 2.03.

 

    (f) If the Closing Indebtedness as finally determined in
    accordance with this Section 2.03 is equal to
    $60,000,000, then no adjustment shall be made. If the Closing
    Indebtedness as finally determined pursuant to this
    Section 2.03 is less than the $60,000,000, then the
    Parent shall pay the Members the amount of such difference
    pursuant to Section 2.03(i) below. If the Closing
    Indebtedness as finally determined pursuant to this
    Section 2.03 is

    

    11

 

    greater than the $60,000,000, then the Members will pay to
    Parent the amount of such difference pursuant to
    Section 2.03(i) below.

 

    (g) If the Closing Working Capital is less than 13.0% of
    the average annualized monthly revenues of the Company using the
    three (3) completed months immediately preceding the
    Closing Date (the “Target Working Capital”), an
    example of the calculation of which is set forth on
    Schedule 2.03(g) for the period ending June 30,
    2006, then the Members will pay to Parent the amount of such
    difference pursuant to Section 2.03(i) below.

 

    (h) All payments required to be made by the Members, on a
    pro rata basis in proportion to each Member’s share
    (carried to five decimal places) of the Company Interests,
    pursuant to Sections 2.03(f) and 2.03(g) will be
    satisfied by payment from the Escrow Shares (based on the Escrow
    Per Share Market Value (as defined below) of the Parent Common
    Stock at such time) in accordance with the terms of the Escrow
    Agreement or otherwise as permitted by
    Section 2.03(d) above. The Members will be
    severally, but not jointly, liable for any amount by which any
    payments required under Sections 2.03(f) or 2.03(g)
    exceed the Escrow Fund. All payments to be made by the Parent
    pursuant to Section 2.03(f) will be satisfied by
    issuance of additional shares of Parent Common Stock and Parent
    Warrants to the Members, issued and distributed to the Members
    on a pro rata basis in proportion to each Member’s share
    (carried to five decimal places) of the Company Interests based
    upon the Exchange Value. All adjustments to the Initial Merger
    Consideration pursuant to this Section 2.03 will be
    applied to the Initial Merger Consideration to be received by
    each Member pro-rata based in proportion to each Member’s
    share (carried to five decimal point places) of the Initial
    Merger Consideration. The term “Escrow Per Share
    Market Value” shall mean for any date, the price
    determined by calculating the average of the closing per share
    prices of the Parent Common Stock on the American Stock Exchange
    (“AMEX”) (as reported on AMEX) or such other
    stock exchange on which Parent Common Stock may then be trading
    (based on a Trading Day closing at 4:02 p.m. New York
    City time) for the twenty days prior to any distribution date as
    described in the Escrow Agreement.

 

    (i) To the extent that there is an Adjustment Amount, the
    Company, the Parent and the Members’ Representative agree
    as follows:

 

    (i) If an Adjustment Amount is in favor of Parent, then
    such Adjustment Amount shall be payable from the Escrow Fund and
    any such payment from the Escrow Fund for an Adjustment Amount
    shall be payable in Escrow Shares; provided, that,
    the Members’ Representative may elect to have an Adjustment
    Amount paid from Proceeds (as defined in the Escrow Agreement)
    or in other cash provided by the Members in lieu of Escrow
    Shares. The Parent, the Company and the Members’
    Representative will provide instructions to the Escrow Agent
    consistent with the foregoing; and

 

    (ii) If an Adjustment Amount is in favor of the Members,
    then the Parent Stock Consideration shall be recalculated under
    Section 2.01(b)(vi); provided that for purposes of
    such recalculation the term “Actual Net Enterprise
    Value” shall be substituted in place of the term
    “Estimated Net Enterprise Value” (the result of such
    recalculation being the “Actual Parent Stock
    Consideration”). Then, Parent will issue such number of
    Parent Shares and such number of Parent Warrants to the Members
    as would have originally been issued to the Members under
    Section 2.01(a)(i)(1) and
    Section 2.01(a)(i)(2), respectively, had the term
    “Actual Parent Stock Consideration” been substituted
    for the term “Parent Stock Consideration” under
    Section 2.01 at the time such calculations were
    made. For purposes of this Agreement the term “Actual Net
    Enterprise Value” means Gross Enterprise Value less Closing
    Indebtedness as agreed to between Parent and Members’
    Representative or as determined pursuant to
    Section 2.03(d).

 

    Section 2.04  Exchange
    of Certificates.

 

    (a) Exchange Procedures.  From and after
    the Effective Time, a bank or trust company to be designated by
    Parent shall act as exchange agent (the “Exchange
    Agent”) in effecting the exchange of the applicable
    Parent Shares, Parent Warrants, Redemption Liability
    Shares, if any, and Redemption Warrants, if any, for
    certificates which immediately prior to the Effective Time
    represented outstanding membership interests of Company
    Interests (“Company Interest Certificates”) and
    which were converted into the right to receive the applicable
    Parent Shares, Parent Warrants, Redemption Liability
    Shares, if any, and Redemption Warrants, if any, pursuant
    to Sections 2.01, 2.03 and 2.08. As promptly as
    practicable after the Effective Time, Parent and the Exchange
    Agent shall mail to each record holder of Company Interest
    Certificates a letter of transmittal (the “Letter of
    Transmittal”) in a form

    

    12

 

     approved by Parent and the Company and will include
    instructions for use in surrendering such Company Interest
    Certificates and receiving the applicable Parent Shares, Parent
    Warrants, Redemption Liability Shares, if any, and
    Redemption Warrants, if any, pursuant to
    Sections 2.01, 2.03 and 2.08. Promptly after the
    Effective Time, but in no event later than ten
    (10) business days following the delivery to Parent of the
    Final Conversion Schedule, Parent shall cause to be deposited in
    escrow with the Escrow Agent all of the Escrow Shares and Escrow
    Warrants in the names set forth on Schedule 2.04(a)
    (collectively, the “Escrow Securities”). As
    used in this Agreement, “Escrow Warrants” shall
    refer to all Parent Warrants and Redemption Warrants, if
    any, issued to the Original Members and deposited in escrow with
    the Escrow Agent.

 

    Upon the surrender of each Company Interest Certificate for
    cancellation to the Exchange Agent, together with a properly
    completed Letter of Transmittal and such other documents as may
    reasonably be required by Parent:

 

    (i) Parent shall cause to be issued to the holder of such
    Company Interest Certificate in exchange therefor separate
    certificates representing the Parent Shares, Parent Warrants,
    Redemption Liability Shares, if any, and
    Redemption Warrants, if any, to which such holder is
    entitled pursuant to Sections 2.01, 2.03 and 2.08;

 

    (ii) all Escrow Securities shall be delivered to the Escrow
    Agent to be held as Escrow Shares pursuant to the Escrow
    Agreement; and

 

    (iii) the Company Interest Certificates so surrendered
    shall forthwith be cancelled.

 

    (b) Escrow Fund.  

 

    (i) Prior to or simultaneously with the Closing, the
    Members’ Representative and Parent shall enter into an
    escrow agreement substantially in the form of
    Exhibit B hereto (the “Escrow
    Agreement”) with the Escrow Agent, or if the Escrow
    Agent is unwilling or unable to serve, then such other financial
    institution of at least $500,000,000 in total assets mutually
    acceptable to the Members’ Representative and Parent.
    Pursuant to the terms of the Escrow Agreement, Parent shall
    deposit with the Escrow Agreement (i) one or more stock
    certificates representing the Escrow Shares, and (ii) one
    or more warrants representing the Escrow Warrants issued to the
    Original Members at Closing and related irrevocable stock powers
    in the name of the Original Members representing the Escrow
    Securities, which account is to be managed by the Escrow Agent
    (the “Escrow Account”). Any Escrow Securities
    and Proceeds in the Escrow Account are collectively referred to
    herein as the “Escrow Fund”. The Escrow
    Agreement shall provide that so long as a bona fide, good faith
    claim for indemnification has not been made by Parent, that
    (i) the entirety of the Escrow Fund remain with the Escrow
    Agent until December 31, 2008, (ii) after
    December 31, 2008, that portion of Escrow Shares (and/or
    any Proceeds or common stock of Parent received by the Original
    Members by virtue of the exercise of Parent Warrants and
    Redemption Warrants) in excess of $3,000,000 in value based
    on the Escrow Per Share Market Value be released to the Original
    Members as well as the entirety of the Escrow Warrants and
    (iii) upon completion of (36) thirty-six months after
    Closing, the Escrow Account shall be closed and all remaining
    Escrow Shares and any and all other assets of the Original
    Members held in the Escrow Fund shall be released to the
    Original Members. In connection with such deposit of the Escrow
    Securities with the Escrow Agent and as of the Effective Time,
    each Original Member holder of Company Interests will be deemed
    to have constructively received and deposited with the Escrow
    Agent each Original Member’s pro rata interest in the
    Escrow Fund as determined as of Closing by reference to such
    Original Member’s ownership of Company Interests (plus any
    additional shares as may be issued upon any stock split, stock
    dividend or recapitalization effected by Parent after the
    Effective Time with respect to shares constituting the Escrow
    Fund) as reflected on the Company Interest Certificates, without
    any further action by the Original Members. Distributions of any
    Escrow Securities or the Escrow Fund or Proceeds from the Escrow
    Account shall be governed by the terms and conditions of the
    Escrow Agreement, but shall occur no later than the end of the
    indemnity periods as set forth in Section 10.01. The
    adoption of this Agreement and the approval of the Merger by the
    Members shall constitute approval of the Escrow Agreement and of
    all the arrangements relating thereto, including, without
    limitation, the placement of the Escrow Securities and Proceeds
    in the Escrow Fund and the appointment of the Members’
    Representative. No Escrow Securities contributed to the Escrow
    Fund shall be unvested or subject to any right of repurchase,
    risk of forfeiture or other condition in favor of Parent, the
    Surviving Corporation or other entity.

 

    (ii) In the event a Parent Indemnified Party (as defined in
    Section 10.02) is entitled to indemnification from a
    Member under Article X (“Indemnification
    Claim”) for any breach by the Company of any
    representations and

    

    13

 

    warranties made by the Company under Article III
    hereof, Parent shall seek payment first out of the Escrow Fund.
    Such Indemnification Amounts shall be payable in Escrow Shares;
    provided, that the Members’ Representative may elect to
    have an Indemnification Amount paid from the Proceeds or in
    other cash provided by the Members in lieu of Escrow Shares. If
    the Escrow Fund has been reduced to zero, Parent shall then be
    entitled to seek payment for an unsatisfied Indemnification
    Amount directly from the Members, subject to the terms and
    conditions set forth in Article X.

 

    (c) Distributions.  No dividends or
    other distributions declared or made after the Effective Time
    with respect to Escrow Shares comprising part of the Initial
    Merger Consideration with a record date after the Effective Time
    shall be paid to the holder of any unsurrendered Company
    Interest Certificate with respect to the Escrow Shares
    represented thereby until the holder of such Company Interest
    Certificate shall surrender such Company Interest Certificate in
    accordance with this Section 2.04. Dividends or
    other distributions declared or made after the Effective Time
    with respect to Escrow Shares comprising part of the Merger
    Consideration with a record date after the Effective Time shall
    be paid to the record owners of the Escrow Shares.

 

    (d) No Further Rights in Company
    Interests.  Except as otherwise specifically
    provided herein, the Parent Shares, the Parent Warrants, the
    Redemption Liability Shares and the
    Redemption Warrants issued upon the conversion of Company
    Interests in accordance with the terms hereof, including the
    registration rights applicable thereto, shall be deemed to have
    been issued in full satisfaction of all rights pertaining to
    such Company Interests.

 

    (e) No Fractional
    Shares.  Notwithstanding any other provision
    of this Agreement, no fractional shares of Parent Common Stock
    shall be issued upon the conversion and exchange of Company
    Interest Certificates, and no holder of Company Interest
    Certificates shall be entitled to receive a fractional share of
    Parent Common Stock. In the event that any holder of Company
    Interest would otherwise be entitled to receive a fractional
    share of Parent Common Stock (after aggregating all shares and
    fractional shares of Parent Common Stock issuable to such
    holder), then such holder will receive an aggregate number of
    shares of Parent Common Stock rounded up or down to the nearest
    whole share (with amounts equal to 0.5 and greater being rounded
    up).

 

    (f) No Liability.  Neither Parent
    nor the Surviving Corporation shall be liable to any holder of
    shares of Company Interest for any such shares of Parent Common
    Stock (or dividends or distributions with respect thereto) or
    cash properly and legally delivered to a public official
    pursuant to any abandoned property, escheat or similar Law (as
    defined in Section 3.06(a)); provided,
    however, that Parent shall promptly give the Members’
    Representative written notice of any such occurrence and such
    holder of Company Interests shall have the opportunity to
    dispute the abandonment and reclaim the shares of Parent Common
    Stock and all related rights as if such occurrence had not
    occurred, provided such dispute is fairly determined for the
    benefit of the Member or Members affected.

 

    (g) Withholding Rights.  Each of
    the Exchange Agent, the Surviving Corporation and Parent shall
    be entitled to deduct and withhold from the Merger Consideration
    otherwise payable pursuant to this Agreement to any holder of
    shares of Company Interest such amounts as it is required to
    deduct and withhold with respect to the making of such payment
    under the United States Internal Revenue Code of 1986, as
    amended (the “Code”), or any provision of
    state, local or foreign Tax (as defined in
    Section 3.15(c)) Law, including but not limited to
    federal and state withholdings as related to the compensatory
    component of the Merger Consideration that relates to the
    Company’s 2004 Incentive Plan. To the extent that amounts
    are so withheld by the Exchange Agent, the Surviving Corporation
    or Parent, as the case may be, such withheld amounts shall be
    treated for all purposes of this Agreement as having been paid
    to the holder of the shares of Company Interest in respect of
    which such deduction and withholding were made by the Exchange
    Agent, the Surviving Corporation or Parent, as the case may be.
    Any amounts so withheld shall be properly and timely transmitted
    to the appropriate parties.

 

    (h) Lost Certificates.  If any
    Company Interest Certificate shall have been lost, stolen or
    destroyed, upon the making of an affidavit of that fact by the
    person claiming such Company Interest Certificate to be lost,
    stolen or destroyed and, if required by the Surviving
    Corporation, the posting by such person of a bond, in such
    reasonable amount as the Surviving Corporation may direct, as
    indemnity against any claim that may be made against it with
    respect to such Company Interest Certificate, Parent shall issue
    in exchange for such lost, stolen or destroyed Company Interest
    Certificate, the applicable Parent Shares (and dividends or
    other distributions pursuant to Section 2.04(c)),
    Parent Warrants, Redemption Liability Shares (and dividends
    or other distributions pursuant to

    

    14

 

    Section 2.04(c)), and Redemption Warrants to
    which such person is entitled pursuant to the provisions of this
    Article II.

 

    Section 2.05
    Membership Interest Transfer Books.  Commencing
    on the date hereof, the membership interest transfer books of
    the Company shall be closed and there shall be no further
    registration or transfers of shares of Company Interest
    thereafter on the records of the Company other than as required
    to comply with the terms of this Agreement and the Plans. From
    and after the Effective Time, each holder of a Company Interest
    Certificate shall cease to have any rights as a member of the
    Company, except as otherwise provided in this Agreement or by
    Law.

 

    Section 2.06  Contingent
    Awards.

 

    (a) From time to time after the Effective Time, the Members
    shall be entitled to a contingent award payable in shares of
    Parent Common Stock (“Contingent Award”)
    pursuant to the terms of this Section 2.06.

 

    (b) On the date on which any holder (an “Index
    Warrant Holder”) of a warrant (other than a Parent
    Warrant and a Redemption Warrant) to purchase Parent Common
    Stock (an “Index Warrant”), elects to exercise
    such Index Warrant (each a “Measurement Date”),
    Parent shall calculate and record the average Trading Price
    (each a “Contingent Award Per Share Market
    Value”) of the Parent Common Stock for each of the 3
    trading days prior to such Measurement Date (each a
    “Measurement Period”). As used herein, the term
    “Trading Price” shall mean the closing trading
    price per share of Parent Common Stock for such date (or the
    nearest preceding date) on the American Stock Exchange (as
    reported on AMEX) or such other stock exchange on which the
    Parent Common Stock may then be trading.

 

    (c) On June 30, 2008 (the “Initial
    Determination Date”), Parent shall determine the
    initial Contingent Award payable to the Members for the period
    beginning on the Closing Date and ending on June 30, 2008
    (the “Initial Determination Period”).
    Subsequent Contingent Awards shall be determined on:

 

    (i) June 30, 2009 (the “Second Determination
    Date”) for the period beginning on July 1, 2008
    and ending on June 30, 2009 (the “Second
    Determination Period”); and

 

    (ii) April 30, 2010 (unless extended to June 30,
    2010 by the mutual written consent of the parties hereto) (the
    “Third Determination Date”, and together with
    the Initial Determination Date and the Second Determination
    Date, each a “Determination Date”) for the
    period beginning on July 1, 2009 and ending on
    April 30, 2010 (or June 30, 2010) (the “Third
    Determination Period”, and together with the Initial
    Determination Period and the Second Determination Period, each a
    “Determination Period”).

 

    (d) On each Determination Date, Parent shall calculate the
    respective Contingent Award as follows (an example of such
    calculation is set forth on Schedule 2.06(d)
    attached hereto):

 

    (i) first, for each exercise of an Index Warrant during
    such Determination Period, multiply (A) the respective
    Contingent Award Per Share Market Value for such exercise by
    (B) the number of shares issued pursuant to such Index
    Warrant exercise (the “Total Exercised Warrant
    Value”);

 

    (ii) second, calculate (A) the aggregate number of
    shares issued pursuant to all Index Warrant exercises during
    such Determination Period, (B) the aggregate Total
    Exercised Warrant Values from all exercises for such
    Determination Period and (C) the per share weighted average
    amount of the Total Exercised Warrant Values for all Index
    Warrant exercises during such Determination Period;

 

    (iii) third, multiply (A) the number of shares
    calculated in Section 2.06(d)(ii)(A) by (B) the
    weighted average of the exercise price of all Index Warrants
    exercised during such Determination Period (the
    “Weighted Average Index Warrant Exercise
    Price”);

 

    (iv) fourth, subtract (A) the number determined in
    Section 2.06(d)(iii) from (B) the aggregate
    Total Exercised Warrant Values for such Determination Period;

 

    (v) if the amount determined in
    Section 2.06(d)(iv) above is greater than zero,
    Parent shall issue to the Members shares of Parent Common Stock
    equal to the quotient of (A) the amount determined in
    Section 2.06(d)(iv) above divided by (B) the
    amount determined in Section 2.06(d)(ii)(C)
    (“Contingent 

    

    15

 

    Award Shares”). Any such Contingent Award Shares
    shall be allocated on a pro rata basis amongst the holders of
    all Parent Warrants (as compared to all other Parent Warrant
    holders based upon the number of originally issued Parent
    Warrants).

 

    (e) Within fifteen (15) days of each Determination
    Date, Parent shall provide written notice to the Members’
    Representative as to the number of Index Warrants exercised and
    the number of Contingent Award Shares, if any, (a
    “Contingent Award Notice”). Such Contingent
    Award Notice shall also contain Parent’s calculation of
    such Contingent Award Shares pursuant to
    Section 2.06(d).

 

    (f) Within 15 days after delivery of a Contingent
    Award Notice, the Members’ Representative will deliver to
    Parent a written response in which the Members’
    Representative will either:

 

    (i) agree in writing with the contents of the Contingent
    Award Notice, in which case such calculations of the Contingent
    Award Shares (the “Contingent Award
    Calculation”), if any, will be final and binding on the
    parties for purposes of Section 2.06; or

 

    (ii) dispute Parent’s determination of the Contingent
    Award Calculations, if any, as set forth in a written notice (a
    “Contingent Award Dispute Notice”) setting
    forth in reasonable detail the basis for each such disputed item
    and certifying that all such disputed items are being disputed
    in good faith.

 

    (g) If the Members’ Representative fails to take
    either of the foregoing actions within 15 days after
    delivery of the Contingent Award Notice, then the Company and
    Members will be deemed to have irrevocably accepted
    Parent’s determination of such Contingent Award Notice, in
    which case such determination of the Contingent Award
    Calculation will be final and binding on the parties for
    purposes of Section 2.06(j).

 

    (h) If the Members’ Representative delivers a
    Contingent Award Dispute Notice to Parent within 15 days
    after delivery of the Contingent Award Notice, then Parent and
    the Members’ Representative will attempt in good faith, for
    a period of 15 days, to agree on the calculations for
    purposes of Section 2.06. Any resolution by Parent
    and the Members’ Representative during such
    15-day
    period as to any disputed items will be final and binding on the
    parties for purposes of Section 2.06. If Parent and
    the Members’ Representative do not resolve all disputed
    items by the end of 15 days after the date of delivery of
    the Contingent Award Dispute Notice, then Parent and the
    Members’ Representative will submit the remaining items in
    dispute to the Independent Accounting Firm and the procedures
    set forth in Section 2.03(d) shall be utilized to
    resolve the disputed items. The determinations of the
    Independent Accounting Firm with respect to the Contingent Award
    Calculation will be final and binding on the parties for
    purposes of Section 2.06.  Parent will
    revise all of the affected changes in the Contingent Award
    Calculation as appropriate to reflect the resolution of the
    issues in dispute pursuant to this
    Section 2.06.  

 

    (i) For purposes of complying with this
    Section 2.06, Parent and the Members’
    Representative will furnish to each other and to the Independent
    Accounting Firm such work papers and other documents and
    information relating to the disputed issues as the Independent
    Accounting Firm may request and as are available to that party
    (or its independent public accountants) and each party will be
    afforded the opportunity to present to the Independent
    Accounting Firm any material related to the disputed items and
    to discuss the items with the Independent Accounting Firm.
    Parent must require that the Independent Accounting Firm enter
    into a customary form of confidentiality agreement with respect
    to the work papers and other documents and information regarding
    the matters, including financial information contained in the
    Contingent Award Notice and Contingent Award Dispute Notice,
    provided to the Independent Accounting Firm pursuant to this
    Section 2.06.

 

    (j) Once the Contingent Award Calculation is finalized,
    Parent shall notify each Parent Warrant holder of such
    Contingent Award Shares issuable to the Members as determined by
    the Contingent Award Calculation pursuant to
    Section 2.06(d) herein, and each Parent Warrant
    holder shall have the option, within ten (10) days of its
    receipt of the finalized Contingent Award Calculation, to accept
    its pro rata share of the Contingent Award Shares or accept a
    Cash Exercise Warrant in the amount of its pro rata share of the
    number of shares issued pursuant to the aggregate Index Warrants
    exercised during such Determination Period. If the amount
    determined in Section 2.06(d)(iv) above is zero or
    less than zero, Parent shall not issue any Contingent Award
    Shares to the Members, but each Member shall automatically be
    deemed to have elected to receive a Cash Exercise Warrant in the
    amount of the aggregate Index Warrants exercised during such
    Determination Period, if any. Parent shall promptly prepare and
    file with AMEX a Notification Form for Listing Additional Shares
    with respect to any Contingent Award Shares or shares underlying

    

    16

 

    any Cash Exercise Warrants (“Cash Exercise Warrant
    Shares”) to be issued pursuant to
    Section 2.06 and shall use its commercially
    reasonable efforts to obtain, prior to such issuance of any
    Contingent Award Shares and Cash Exercise Warrant Shares,
    approval for the listing of such Contingent Award Shares,
    subject to official notice to AMEX of issuance.

 

    (k) In the event that prior to the expiration of eighteen
    (18) months after the Closing Date, the Members are issued
    Contingent Award Shares or Cash Exercise Warrant Shares, any of
    such Contingent Award Shares issued to the Original Members and
    the possession thereof shall be given by the Original Members to
    the Escrow Agent as soon as practicable. All of the rights,
    duties and obligations with respect to said Contingent Award
    Shares and Cash Exercise Shares shall be equivalent to the
    rights, duties and obligations with respect to the Parent
    Shares, except as otherwise specifically provided herein,
    including but not limited to the rights granted to the Members
    under the Registration Rights Agreement.

 

    (l) Return of Parent Warrants and
    Redemption Warrants.  In exchange for a
    Contingent Award or Cash Exercise Warrants, each Member shall
    surrender a number of Parent Warrants
    and/or
    Redemption Warrants exercisable for an amount of Parent
    Common Stock equal to its pro rata share of the number of shares
    issued pursuant to the aggregate Index Warrant exercises during
    such Determination Period to Parent, together with such other
    documents as may reasonably be required by Parent.

 

    (m) No Fractional
    Shares.  Notwithstanding any other provision
    of this Agreement, no fractional shares of Common Stock shall be
    issued pursuant to this Section 2.06, and no Member
    shall be entitled to receive a fractional share of Common Stock
    pursuant to this Section 2.06. In the event that any
    Member would otherwise be entitled to receive a fractional share
    of Common Stock pursuant to this Section 2.06, then
    such Member will receive an aggregate number of shares of Common
    Stock rounded up or down to the nearest whole share (with
    amounts greater than 0.5 being rounded up). If the Parent
    Warrant or Redemption Warrant shall have been exercised in
    part, Parent shall, at the time of delivery of the certificate
    or certificates representing Parent Warrants or
    Redemption Warrants, deliver to holder a new Parent Warrant
    or new Redemption Warrant, as the case may be, evidencing
    the rights of holder to acquire shares of Parent Common Stock
    called for by the Parent Warrant or the Redemption Warrant,
    which new Parent Warrant or Redemption Warrant, as the case
    may be, shall in all other respects be identical with the
    original Parent Warrant or the original Redemption Warrant.

 

    (n) Parent Warrant Cash
    Exercise.  Pursuant to the provisions of
    Section 2.06(j), each holder of a Parent Warrant
    shall have the right to accept, in lieu of the Contingent Award
    Share, a warrant exercisable for cash (each, a “Cash
    Exercise Warrant”) that provides the holder the option
    to exercise such warrant for $5.00 per share (or $6.50 per share
    to the extent issued upon exercise of the FBW Warrants) for a
    number of shares in the amount of its pro rata share of the
    number of shares issued pursuant to the aggregate Index Warrant
    exercises during such Determination Period. Thereafter, and at
    any time prior to the expiration of such Cash Exercise Warrant,
    the holder of such Cash Exercise Warrant shall have the right to
    exercise such Cash Exercise Warrant for cash as set forth in
    such warrant; provided, however, that in order for
    the holder of such Cash Exercise Warrant to make such election,
    such Cash Exercise Warrant holder shall be required to
    (i) notify Parent that such Cash Exercise Warrant holder is
    making such election at or prior to its or his exercise of such
    Cash Exercise Warrant and (ii) tender payment of the
    exercise price stated in such Cash Exercise Warrant to Parent in
    cash or other readily available funds at the time of its or his
    exercise of such Cash Exercise Warrant. The Cash Exercise
    Warrant shall have the same terms as the Parent Warrant,
    including termination provisions, except that it shall be
    exercisable only for cash as set forth above.

 

    (o) Expiration of Parent
    Warrants.  The parties agree that the Parent
    Warrants and the Cash Exercise Warrants shall not expire, but
    shall survive in full force and effect, until the later of
    (i) April 10, 2010, (ii) fifteen (15) days
    following the final determination of the Contingent Award
    Calculation with respect to the Third Determination Period, or
    (iii) such time as all Index Warrants have expired, been
    exercised or have been terminated in accordance with their
    respective terms.

 

    Section 2.07
    Securities Laws Issues.  Parent shall
    issue the Parent Shares and Parent Warrants as provided in
    Section 2.01, the shares of Parent Common Stock as
    provided in Section 2.06 of this Agreement and the
    Redemption Liability Shares and Redemption Warrants
    pursuant to a “private placement” exemption or
    exemptions from registration under Section 4(2) of the
    Securities Act of 1933, as amended (the “Securities
    Act”)
    and/or
    Regulation D promulgated under the Securities Act and an
    exemption from qualification under the laws of the State

    

    17

 

    of Texas and other applicable state securities laws
    notwithstanding that the Parent Shares, Parent Warrants,
    Redemption Liability Shares, Redemption Warrants, and
    Parent Common Stock issuable pursuant to a Contingent Award
    shall be entitled to their respective rights specified in the
    Registration Rights Agreement. Parent and the Company shall
    comply with all applicable provisions of, and rules under, the
    Securities Act and applicable state securities laws in
    connection with the offering and issuance of the shares of
    Parent Common Stock pursuant to this Agreement. Such Parent
    Shares, Parent Warrants, Redemption Liability Shares,
    Redemption Warrants and Parent Common Stock issuable
    pursuant to a Contingent Award will be “restricted
    securities” under the Federal and state securities laws and
    cannot be offered or resold except pursuant to registration
    under the Securities Act or an available exemption from
    registration.

 

    Section 2.08  Redemption Shares
    Issuance.

 

    (a) As used in this Agreement, the following terms have the
    following meanings (except as noted in this Agreement):

 

    (i) “Exchange Value” means $5.40
    per share of Parent Common Stock.

 

    (ii) “Gross Redemption Dollar
    Amount” means the Redemption Shares Number
    multiplied by the Redemption Share Price.

 

    (iii) “Net Redemption Dollar
    Amount” means difference between the Gross
    Redemption Dollar Amount and the Redemption Value Safe
    Harbor.

 

    (iv) “Redemption Calculations”
    has the meaning set forth in Section 2.08(c)(i).

 

    (v) “Redemption Dispute Notice”
    has the meaning set forth in Section 2.08(c)(ii).

 

    (vi) “Redemption Liability Amount”
    means the Shares in Excess of Safe Harbor multiplied by the
    Redemption Price Differential.

 

    (vii) “Redemption Liability
    Shares” means the number of shares of Parent Common
    Stock, to be issued to the Members, if any, determined by
    dividing the Redemption Liability Amount by the Exchange
    Value.

 

    (viii) “Redemption Option”
    means the option that each holder of Parent Common Stock has
    to require the Parent to redeem or convert his, her or its
    ownership of Parent Common Stock prior to the Closing in
    accordance with the governing documents of Parent.

 

    (ix) “Redemption Notice” has
    the meaning set forth in Section 2.08(b).

 

    (x) “Redemption Share Price”
    means the price per share of Parent Common Stock that Parent
    is required to pay to any holder of Parent Common Stock
    exercising their Redemption Option.

 

    (xi) “Redemption Price
    Differential” means the difference between the
    Redemption Share Price and the Exchange Value.

 

    (xii) “Redemption Shares Number”
    means the aggregate number of shares of Parent Common Stock
    which are required to be redeemed by Parent from the holders of
    such Parent Common Stock prior to the Closing in accordance with
    the governing documents of Parent based on those holders who
    exercise their Redemption Option.

 

    (xiii) “Redemption Value Safe
    Harbor” means $3,000,000.

 

    (xiv) “Redemption Warrant”
    means the warrants issued by Parent pursuant to this
    Section 2.08.

 

    (xv) “Safe Harbor Shares” means the
    Redemption Value Safe Harbor divided by the
    Redemption Share Price.

 

    (xvi) “Shares in Excess of Safe Harbor”
    means the Net Redemption Dollar Amount divided by the
    Redemption Share Price.

 

    (b) Parent and Merger Sub covenant and agree that they
    shall comply with all of the requirements of their respective
    governing documents in connection with timely execution relating
    to the holders of Parent Common

    

    18

 

    Stock and their collectively held Redemption Option. Once
    the expiration date for any holders of Parent Common Stock to
    exercise the Redemption Option has occurred, Parent shall
    promptly provide written notice to the Members’
    Representative as to the amount of the Redemption Shares
    Number, if any, and the Redemption Share Price paid
    therefore (the “Redemption Notice”). Such
    Redemption Notice shall also contain Parent’s
    calculation of the amount of the Redemption Liability
    Amount and the aggregate amount of Redemption Liability
    Shares and Redemption Warrants as follows:

 

    (i) First, determine the Gross Redemption Dollar
    Amount by multiplying the Redemption Shares Number by the
    Redemption Share Price;

 

    (ii) Second, determine the Net Redemption Dollar
    Amount by subtracting the Redemption Value Safe Harbor from
    the Gross Redemption Dollar Amount, and if the resulting
    amount is negative, stop; if the resulting amount is positive,
    continue;

 

    (iii) Third, determine the Safe Harbor Shares by dividing
    the Redemption Value Safe Harbor by the
    Redemption Share Price;

 

    (iv) Fourth, determine the Shares in Excess of Safe Harbor
    by dividing the Net Redemption Dollar Amount by the
    Redemption Share Price;

 

    (v) Fifth, determine the Redemption Price Differential
    by subtracting the Exchange Value from the Redemption Share
    Price;

 

    (vi) Sixth, determine the Redemption Liability Amount
    by multiplying the Redemption Price Differential by Shares
    in Excess of Safe Harbor; and

 

    (vii) Lastly, determine the number of
    Redemption Liability Shares by dividing the
    Redemption Liability Amount by the Exchange Value.

 

    (c) Within 15 days after delivery of the
    Redemption Notice, the Members’ Representative will
    deliver to Parent a written response in which the Members’
    Representative will either:

 

    (i) agree in writing with the contents of the
    Redemption Notice, in which case such calculations of the
    Redemption Shares Number, Redemption Share Price,
    Redemption Liability Amount and the aggregate amount of
    Redemption Liability Shares and Redemption Warrants
    (collectively, the
    “Redemption Calculations”), if any, will
    be final and binding on the parties for purposes of
    Section 2.08; or

 

    (ii) dispute Parent’s determination of the
    Redemption Calculations, if any, as set forth in a written
    notice (a “Redemption Dispute Notice”)
    setting forth in reasonable detail the basis for each such
    disputed item and certifying that all such disputed items are
    being disputed in good faith.

 

    (d) If the Members’ Representative fails to take
    either of the foregoing actions within 15 days after
    delivery of the Redemption Notice, then the Company and
    Members will be deemed to have irrevocably accepted
    Parent’s determination of the Redemption Notice, in
    which case such determination of the Redemption Calculation
    will be final and binding on the parties for purposes of
    Section 2.08(g).

 

    (e) If the Members’ Representative delivers a
    Redemption Dispute Notice to Parent within 15 days
    after delivery of the Redemption Notice, then Parent and
    the Members’ Representative will attempt in good faith, for
    a period of 15 days, to agree on the calculations for
    purposes of Section 2.08. Any resolution by Parent
    and the Members’ Representative during such
    15-day
    period as to any disputed items will be final and binding on the
    parties for purposes of Section 2.08. If Parent and
    the Members’ Representative do not resolve all disputed
    items by the end of 15 days after the date of delivery of
    the Redemption Dispute Notice, then Parent and the
    Members’ Representative will submit the remaining items in
    dispute to the Independent Accounting Firm and the procedures
    set forth in Section 2.03(d) shall be utilized to
    resolve the disputed items. The determinations of the
    Independent Accounting Firm with respect to the
    Redemption Calculations will be final and binding on the
    parties for purposes of Section 2.08. Parent will
    revise all of the affected changes in the
    Redemption Calculations as appropriate to reflect the
    resolution of the issues in dispute pursuant to this
    Section 2.08.

    

    19

 

    (f) For purposes of complying with this
    Section 2.08, Parent and the Members’
    Representative will furnish to each other and to the Independent
    Accounting Firm such work papers and other documents and
    information relating to the disputed issues as the Independent
    Firm may request and as are available to that party (or its
    independent public accountants) and each party will be afforded
    the opportunity to present to the Independent Accounting Firm
    any material related to the disputed items and to discuss the
    items with the Independent Accounting Firm. Parent must require
    that the Independent Accounting Firm enter into a customary form
    of confidentiality agreement with respect to the work papers and
    other documents and information regarding the matters, including
    financial information contained in the Redemption Notice
    and Redemption Dispute Notice, provided to the Independent
    Accounting Firm pursuant to this Section 2.08.

 

    (g) Once the Redemption Calculations are finalized,
    Parent shall issue the Redemption Liability Shares and
    Redemption Warrants to the Members pro rata based in
    proportion to each Member’s share (carried to five decimal
    point places) of the Company Interests. Notwithstanding anything
    to the contrary contained herein, if the amount of
    Redemption Liability Shares is zero (0) or negative,
    then the Members shall not be entitled to receive any additional
    shares of Parent Common Stock under this
    Section 2.08. If there are any
    Redemption Liability Shares to be issued to the Members, on
    or about the Closing pursuant to this Section 2.08,
    such Redemption Liability Shares shall be issued to each of
    the Members together with two Redemption Warrants,
    substantially in the identical form of the Parent Warrants, for
    each Redemption Liability Share issued pursuant to this
    Section 2.08(g).

 

    (h) Distributions, dividends or other distributions
    declared or made after the Effective Time with respect to
    Redemption Liability Shares with a record date after the
    Effective Time shall be paid to the record owners of
    Redemption Liability Shares.

 

    (i) Notwithstanding any other provision of this Agreement,
    no fractional shares or Redemption Liability Shares shall
    be issued. In the event that any Member would otherwise be
    entitled to receive a fractional share of a
    Redemption Liability Share (after aggregating all shares
    and fractional shares of Parent Common Stock issuable to such
    holder under this Section 2.08 and otherwise under
    this Agreement), then such holder will receive an aggregate
    number of shares of Parent Common Stock rounded up or down to
    the nearest whole share (with amounts equal to 0.5 and greater
    being rounded up).

 

    (j) If prior to December 31, 2008, the Original
    Members are issued Redemption Liability Shares and
    Redemption Warrants, all of such Redemption Liability
    Shares and Redemption Warrants and the possession thereof
    shall be given to the Escrow Agent as soon as practicable. All
    of the rights, duties and obligations with respect to said
    Redemption Liability Shares and Redemption Warrants
    shall be equivalent to the rights, duties and obligations with
    respect to the Parent Shares and Parent Warrants, except as
    otherwise specifically provided herein, including but not
    limited to the rights granted to the Members under the
    Registration Rights Agreement and the rights specified in
    Section 2.06 pertaining to Contingent Awards.

 

    (k) Any issuance of Redemption Liability Shares and
    Redemption Warrants pursuant to this Section 2.08 will
    be treated by the parties as an adjustment to the Initial Merger
    Consideration and the Initial Merger Consideration as so
    adjusted is referred to in this Agreement as the “Merger
    Consideration.”

 

    ARTICLE III
    

 

    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

    The Company hereby represents and warrants to Parent and Merger
    Sub that the statements contained in this Article III are
    true and correct except as set forth in the disclosure schedules
    delivered by the Company to Parent and Merger Sub (the
    “Company Disclosure Schedule”). The Company
    Disclosure Schedule shall initially be as of June 30, 2007
    with respect to the representations and warranties set forth in
    Section 3.07 through Section 3.33, and
    as of the Execution Date with respect to the representations and
    warranties contained in Section 3.01 through
    Section 3.06, except where any schedule specifically
    purports to be as of a different date in which case such
    schedule shall be as of the date on the schedule. The Company
    Disclosure Schedules may be updated pursuant to
    Section 7.19 hereof, and shall be updated as of the Closing
    Date. The Company Disclosure Schedule shall be arranged and
    cross-referenced to specific sections in this Article III
    and shall provide exceptions to, or otherwise qualify in
    reasonable detail, only the specific corresponding section in
    this Article III.

    

    20

 

 

    Section 3.01  Organization
    and Qualification.  The Company is a limited
    liability company duly organized, validly existing and in good
    standing under the laws of the State of Texas and has all
    requisite limited liability company power and authority to own,
    lease and otherwise hold and operate its properties and other
    assets and to carry on its business as it is now being conducted
    and as currently proposed to be conducted, except where the
    failure to be so organized, existing or in good standing or to
    have such limited liability company power and authority has not
    had, and could not reasonably be expected to have, individually
    or in the aggregate, a Company Material Adverse Effect (as
    defined below). The Company is duly qualified or licensed as a
    foreign corporation to do business, and is in good standing, in
    each jurisdiction where the character of the properties owned,
    leased or operated by it or the nature of its business makes
    such qualification or licensing necessary, except where the
    failure to be so qualified or licensed and in good standing has
    not had, and could not reasonably be expected to have,
    individually or in the aggregate, a Company Material Adverse
    Effect. Section 3.01 of the Company Disclosure
    Schedule sets forth each jurisdiction where the Company is
    qualified or licensed as a foreign corporation and each other
    jurisdiction in which the Company owns, uses, licenses or leases
    real property or has employees or engages independent
    contractors. The term “Company Material Adverse
    Effect” means any event, change, violation, inaccuracy,
    circumstance or effect (regardless of whether or not such
    events, changes, violations, inaccuracies, circumstances or
    effects are inconsistent with the representations or warranties
    made by the Company in this Agreement) that has, or could
    reasonably be expected to have, individually or in the
    aggregate, a material adverse effect on the business,
    operations, condition (financial or otherwise), assets (tangible
    or intangible), liabilities, employees, properties, prospects,
    capitalization or results of operations of the Company, except
    for any such events, changes, violations, inaccuracies,
    circumstances or effects resulting from or arising in connection
    with (i) any changes in general, political, global or other
    national or worldwide events or changes in economic or business
    conditions that do not disproportionately impact the Company as
    compared to other entities similar in size and scope as that of
    the Company and that are within its industry or (ii) any
    changes or events affecting the industry in which the Company
    operates that do not disproportionately impact the Company as
    compared to other entities similar in size and scope as that of
    the Company and that are within its industry.

 

    Section 3.02  Articles
    of Organization and Regulations.  The Company
    has heretofore made available to Parent a complete and correct
    copy of (a) the Articles of Organization and Regulations of
    the Company (together, the “Company Charter
    Documents”) including all amendments thereto,
    (b) the minute books containing all consents, actions and
    meetings of the Members of the Company and the Company’s
    Board of Managers and any committees thereof, to the extent they
    exist, and (c) the Member Interest transfer books of the
    Company setting forth all issuances or transfers of any
    interests of the Company. Such Company Charter Documents are in
    full force and effect. No such revisions or amendments to the
    Company Charter Documents will conflict with this Agreement. The
    Company is not in violation of any of the provisions of the
    Company Charter Documents. The minute books, membership
    interests transfer books, stock registers and other records of
    the Company are complete and accurate, and the signatures
    appearing on all documents contained therein are the true or
    facsimile signatures of the persons purported to have signed the
    same.

 

    Section 3.03  No
    Subsidiaries.

 

    (a) The Company does not own, of record or beneficially, or
    control any direct or indirect equity or other interest, or any
    right (contingent or otherwise) to acquire the same, in any
    corporation, partnership, limited liability company, joint
    venture, association or other entity. The Company is not a
    member of (nor is any part of the Company’s business
    conducted through) any partnership, nor is the Company a
    participant in any joint venture or similar arrangement. There
    are no contractual obligations of the Company to provide funds
    to, or make any investment in (whether in the form of a loan,
    capital contribution or otherwise), any other person.

 

    (b) The Company does not control, directly or indirectly,
    or have any direct or indirect equity participation or similar
    interest in any corporation, partnership, limited liability
    company, joint venture, trust or other business association
    which is not a Subsidiary. Except as provided in the Regulations
    of the Company, there are no contractual obligations of the
    Company to provide funds to, or make any investment in (whether
    in the form of a loan, capital contribution or otherwise), any
    other person.

    

    21

 

    Section 3.04  Capitalization.  Without
    regard to any disclosure in the Company Disclosure Schedule
    (except as specifically mentioned below):

 

    (a) The Company Interests set forth in
    Section 3.04(a) of the Company Disclosure Schedule
    will represent all of the outstanding member or other equity
    ownership interests of the Company on the Closing Date. The
    Members hold 100% of the Company Interests. The Company has no
    securities or other instruments convertible into or exercisable
    for membership or other equity ownership interests of the
    Company that have not already been converted as of the Closing
    Date. All of the Company Interests have been duly authorized and
    validly issued and are fully paid and non-assessable.

 

    (b) As of the Closing Date, there are no options, warrants
    or other rights, agreements, arrangements or commitments of any
    character, whether or not contingent, relating to the issued or
    unissued capital stock of the Company or obligating the Company
    to issue or sell any share of capital stock of, or other equity
    interest in, the Company. All shares of Company Interest so
    subject to issuance, upon issuance in accordance with the terms
    and conditions specified in the instruments pursuant to which
    they are issuable, will be duly authorized, validly issued,
    fully paid and nonassessable.

 

    (c) The Company does not have outstanding any bonds,
    debentures, notes or other obligations the holders of which have
    the right to vote (or which are convertible into or exercisable
    for securities having the right to vote) with the Members of the
    Company on any matter (other than the consent rights of the
    Company’s lender as disclosed in
    Section 3.06(a) of the Company Disclosure Schedule).

 

    (d) All of the securities offered, sold or issued by the
    Company (i) have been offered, sold or issued in compliance
    with the requirements of the Federal securities laws and any
    applicable state securities or “blue sky” laws, and
    (ii) are not subject to any preemptive right, right of
    first refusal, right of first offer or right of rescission.

 

    (e) Except as set forth in Section 3.04(e) of
    the Company Disclosure Schedule, the Company has never
    repurchased, redeemed or otherwise reacquired any shares of
    capital stock or other securities of the Company, other than
    unvested securities in the ordinary course upon termination of
    employment or consultancy. There are no outstanding contractual
    obligations of the Company to repurchase, redeem or otherwise
    acquire any share of capital stock of, or other equity interest
    in, the Company. Other than as set forth in
    Section 3.04(e) of the Company Disclosure Schedule,
    there are no member agreements, voting trusts or other
    agreements or understandings to which the Company is a party, or
    of which the Company is aware, that (i) relate to the
    voting, registration or disposition of any securities of the
    Company, (ii) grant to any person or group of persons the
    right to elect, or designate or nominate for election, a manager
    to the Board of Managers of the Company, or (iii) grant to
    any person or group of persons information rights.

 

    (f) Each of the 2004 Incentive Plans and the Special Bonus
    Plan were terminated in connection with the Recapitalization and
    no further awards or other obligations of the Company remain
    outstanding with respect to either thereunder.

 

    Section 3.05  Authority
    Relative to This Agreement.

 

    (a) The Company has the legal power, capacity and authority
    to execute this Agreement and all other agreements and documents
    contemplated hereby to which it is a party. The execution and
    delivery of this Agreement and such other agreements and
    documents by the Company, to the extent a party thereto, and the
    consummation by the Company of the transactions contemplated
    hereby have been validly authorized by the Company and the
    Members and no other action on the part of the Company or the
    Members is necessary to validly authorize the transactions
    contemplated hereby (other than the approval and adoption of
    this Agreement and the Merger by the Members as described in
    Section 3.16 hereof and the filing and recordation
    of appropriate merger documents as required by the DGCL and
    TLLCA). This Agreement has been duly and validly executed and
    delivered by the Company and, assuming the due authorization,
    execution and delivery by Parent and Merger Sub, constitutes a
    legal, valid and binding obligation of the Company, enforceable
    against the Company in accordance with its terms, subject to the
    effect of any applicable bankruptcy, reorganization, insolvency,
    moratorium or similar Laws affecting creditors’ rights
    generally and subject, as to enforceability, to the effect of
    general principles of equity.

    

    22

 

    (b) Without limiting the generality of the foregoing, the
    Board of Managers of the Company, at a meeting duly called and
    held, has unanimously (i) determined that the Merger and
    the other transactions contemplated hereby are fair to, and in
    the best interests of, the Company and Members,
    (ii) approved and adopted the Merger, this Agreement and
    the other transactions contemplated hereby in accordance with
    the provisions of the DGCL and TLCCA and the Company’s
    charter documents, and (iii) directed that this Agreement
    and the Merger be submitted to the Members for their approval
    and adoption and (iv) resolved to recommend that the
    Members vote in favor of the approval and adoption of this
    Agreement.

 

    Section 3.06  No
    Conflict; Required Filings and Consents.

 

    (a) Except as set forth in Section 3.06(a) of
    the Company Disclosure Schedule, the execution and delivery of
    this Agreement by the Company do not, and the performance of
    this Agreement by the Company will not, (i) conflict with
    or violate the Company Charter Documents, (ii) assuming
    that all consents, approvals, authorizations and other actions
    described in Section 3.06(b) have been obtained and
    all filings and obligations described in
    Section 3.06(b) have been made or complied with,
    conflict with or violate any material foreign or domestic
    (Federal, state or local) law, statute, ordinance, franchise,
    permit, concession, license, writ, rule, regulation, order,
    injunction, judgment or decree (“Law”)
    applicable to the Company or by which any property or asset of
    the Company is bound or affected, or (iii) conflict with,
    result in any breach of or constitute a default (or an event
    which with notice or lapse of time or both would become a
    default) under, require consent, approval or notice under, give
    to others any right of termination, amendment, acceleration or
    cancellation of, require any payment under, or result in the
    creation of a lien or other encumbrance on any property or asset
    of the Company pursuant to, any material note, bond, mortgage,
    indenture, contract, agreement, lease, license, permit,
    franchise or other instrument or obligation to which the Company
    is a party or by which any property or asset of the Company is
    bound or affected.

 

    (b) Except as set forth in Section 3.06(b) of
    the Company Disclosure Schedule, the execution and delivery of
    this Agreement by the Company do not, and the performance of
    this Agreement by the Company will not, require any consent,
    approval, order, permit or authorization from, or registration,
    notification or filing with, any domestic or foreign
    governmental, regulatory or administrative authority, agency or
    commission, any court, tribunal or arbitral body, or any
    quasi-governmental or private body exercising any regulatory,
    taxing, importing or other governmental authority (a
    “Governmental Entity”), except (i) for the
    pre-merger notification requirements of the
    Hart-Scott-Rodino
    Antitrust Improvements Act of 1976, as amended, and the rules
    and regulations promulgated thereunder (the “HSR
    Act”), if applicable, and (ii) for the filing and
    recordation of appropriate merger documents as required by the
    DGCL or the TLLCA, and (iii) for such other consents,
    approvals, orders, permits, authorizations, registrations,
    notifications or filings, which if not obtained or made could
    not reasonably be expected, individually or in the aggregate, to
    prevent or materially delay the consummation of the transactions
    contemplated by this Agreement.

 

    Section 3.07  Permits;
    Compliance.

 

    (a) The Company is in possession of all franchises, grants,
    authorizations, licenses, permits, easements, variances,
    exceptions, consents, certificates, approvals and orders of any
    Governmental Entity necessary for the Company to own, lease and
    otherwise hold and operate its properties and other assets and
    to carry on its business as it is now being conducted and as
    currently proposed to be conducted (the “Company
    Permits”). All Company Permits are in full force and
    effect and will remain so after the Closing and no suspension or
    cancellation of any Company Permit is pending or, to the
    Knowledge of the Company, threatened. The Company has not
    received any notice or other communication from any Governmental
    Entity regarding (i) any actual or possible violation of or
    failure to comply with any term or requirement of any Company
    Permit, or (ii) any actual or possible revocation,
    withdrawal, suspension, cancellation, termination or
    modification of any Company Permit.

 

    (b) The Company is not in conflict with, or in default or
    violation of (i), to the Knowledge of the Company, any Law
    applicable to the Company or by which any property or asset of
    the Company is bound or affected, (ii) any material note,
    bond, mortgage, indenture, contract, agreement, lease, license,
    permit, franchise or other instrument or obligation to which the
    Company is a party or by which the Company or any property or
    asset of the Company is bound or affected, or (iii), to the
    Knowledge of the Company, any Company Permit.

    

    23

 

    Section 3.08  Financial
    Statements.

 

    (a) True and complete copies of (i) the audited
    balance sheets, the statements of operations, changes in
    members’ equity and changes in cash flows for the years
    ended December 31, 2005 and 2006, together with all related
    notes and schedules thereto (collectively referred to herein as
    the “Audited Financial Statements”), and
    (ii) the unaudited balance sheet of the Company as of
    June 30, 2007 (the “Reference Balance
    Sheet”), and the related statements of operations,
    changes in members’ equity and changes in cash flows for
    the six month period ended June 30, 2007 (and together with
    the Reference Balance Sheet, the “Interim Financial
    Statements”), are attached as
    Section 3.08(a) of the Company Disclosure Schedule.
    The Audited Financial Statements and the Interim Financial
    Statements (including, in each case, any notes
    thereto)(collectively, the “Company Financial
    Statements”) were prepared in accordance with GAAP
    applied on a consistent basis throughout the periods indicated
    (except as may be indicated in the notes thereto or, in the case
    of unaudited statements, as permitted by GAAP) and each present
    fairly, in all material respects, the financial position of the
    Company as at the respective dates thereof and for the
    respective periods indicated therein, except as otherwise noted
    therein (subject, in the case of the Interim Financial
    Statements, to normal and recurring year-end adjustments which
    were not and are not expected, individually or in the aggregate,
    to be material).

 

    (b) To the Knowledge of the Company, except as set forth in
    Section 3.08(b) of the Company Disclosure Schedule,
    the Company does not have any debts, liabilities or obligations
    of any nature (whether accrued or fixed, absolute or contingent,
    matured or unmatured, determined or determinable, or as a
    guarantor or otherwise) (“Liabilities”), other
    than Liabilities (i) recorded or reserved against on the
    Reference Balance Sheet or (ii) incurred in the ordinary
    course of business, consistent with past practice, since
    June 30, 2007 plus up to an aggregate amount of $100,000
    incurred since June 30, 2007 not in the ordinary course of
    the business, consistent with past practice. Except as set forth
    in Section 3.08(b) of the Company Disclosure
    Schedule, reserves are reflected on the Reference Balance Sheet
    and on the books of account and other financial records of the
    Company against all Liabilities of the Company in amounts that
    have been established on a basis consistent with the past
    practice of the Company and in accordance with GAAP. To the
    Knowledge of the Company and except as set forth in
    Section 3.08(b) of the Company Disclosure Schedule,
    there are no outstanding warranty claims against the Company. To
    the extent any specific representation or warranty in this
    Agreement is otherwise qualified as to the party’s
    knowledge or as to materiality; the definition of
    “Liabilities” used in this Section 3.08(b)
    does not undermine or modify any other representation contained
    herein, and the Company shall not be deemed in violation of this
    Section 3.08(b) for any Liabilities governed by
    other specific representations and warranties in this Agreement.

 

    Section 3.09  Absence
    of Certain Changes or Events.  Since
    January 1, 2007, except as contemplated by or as disclosed
    in this Agreement and except for the Settlement Agreement, the
    Ulterra Acquisition and the Recapitalization, the Company has
    conducted its business only in the ordinary course and in a
    manner consistent with past practice and, since such date,
    (a) there has not been any Company Material Adverse Effect
    and (b) the Company has not taken or legally committed to
    take any of the actions specified in Section 6.01(a)
    through (z).

 

    Section 3.10  Absence
    of Litigation.  Except for the Dispute and the
    matters addressed in the Settlement Agreement, and as otherwise
    set forth in Section 3.10 of the Company Disclosure
    Schedule, there is no litigation, suit, claim, action,
    proceeding or investigation (a “Legal
    Proceeding”) pending or, to the Knowledge of the
    Company, threatened against the Company, or any property or
    asset owned or used by the Company or any person whose liability
    the Company has or may have assumed, either contractually or by
    operation of Law, before any arbitrator or Governmental Entity
    that could reasonably be expected, if resolved adversely to the
    Company, to (i) impair the operations of the Company as
    currently conducted, including, without limitation, any claim of
    infringement of any intellectual property right,
    (ii) collectively result in losses to the Company in excess
    of $250,000, (iii) impair the ability of the Company to
    perform its obligations under this Agreement or
    (iv) prevent, delay or make illegal the consummation of the
    transactions contemplated by this Agreement. To the
    Company’s Knowledge, no event has occurred, and no claim,
    dispute or other condition or circumstance exists, that could
    reasonably be expected to give rise to or serve as a basis of
    the commencement of any Legal Proceeding involving the Company
    (as set forth above). Neither the Company nor the officers or
    managers thereof in their capacity as such, or any property or
    asset of the Company is subject to any continuing order of,
    consent decree, settlement agreement or other similar written
    agreement with, or, to the Knowledge of the Company, continuing
    investigation by, any Governmental Entity, or any order, writ,
    judgment, injunction, decree, determination or award of any
    court,

    

    24

 

    arbitrator or Governmental Entity. Except as disclosed in
    Section 3.10 of the Company Disclosure Schedule, the
    Company has no plans to initiate any Legal Proceeding against
    any third party.

 

    Section 3.11  Employee
    Benefit Plans; Labor Matters.

 

    (a) Section 3.11(a) of the Company Disclosure
    Schedule lists (i) all employee benefit plans (as defined
    in Section 3(3) of the Employee Retirement Income Security
    Act of 1974, as amended (“ERISA”)) and all
    bonus, stock option, stock purchase, stock appreciation right,
    restricted stock, phantom stock, incentive, deferred
    compensation, retiree medical, disability or life insurance,
    cafeteria benefit, dependent care, disability, director or
    employee loan, fringe benefit, sabbatical, supplemental
    retirement, severance or other benefit plans, programs or
    arrangements, and all employment, termination, severance or
    other contracts or agreements (whether legally enforceable or
    not, whether formal or informal and whether in writing or not)
    to which the Company is a party, with respect to which the
    Company has any obligation or which are maintained, contributed
    to or sponsored by the Company for the benefit of any current or
    former employee, officer or manager of the Company,
    (ii) each employee benefit plan for which the Company could
    incur liability under Section 4069 of ERISA in the event
    such plan has been or were to be terminated, (iii) any plan
    in respect of which the Company could incur liability under
    Section 4212(c) of ERISA, and (iv) any employment
    agreements, offer letters or other contracts, arrangements or
    understandings between the Company and any key employee of the
    Company (whether legally enforceable or not, whether formal or
    informal and whether in writing or not) including, without
    limitation, any contracts, arrangements or understandings
    relating to a sale of the Company (each, a
    “Plan,” and collectively, the
    “Plans”).

 

    (b) Each Plan is in writing and the Company has furnished
    Parent with a true and complete copy of each Plan (or a written
    summary where the Plan is not in writing) and a true and
    complete copy of each material document, if any, prepared in
    connection with each such Plan, including, without limitation,
    (i) a copy of each trust or other funding arrangement,
    (ii) each summary plan description and summary of material
    modifications, (iii) the two (2) most recent annual
    reports (Form 5500 series and all schedules and financial
    statements attached thereto), if any, required under ERISA or
    the Code in connection with each Plan, (iv) the most
    recently received Internal Revenue Service determination letter
    for each Plan intended to qualify under ERISA or the Code,
    (v) the most recently prepared actuarial report and
    financial statement in connection with each such Plan,
    (vi) any correspondence with the Internal Revenue Service
    or the Department of Labor with respect to each such Plan and
    (vii) each form of notice of grant and stock option
    agreement used to document Company Options. Except as disclosed
    on Section 3.11(a) of the Company Disclosure
    Schedule, there are no other employee benefit plans, programs,
    arrangements or agreements, whether formal or informal, whether
    in writing or not, to which the Company is a party, with respect
    to which the Company has any obligation or which are maintained,
    contributed to or sponsored by the Company for the benefit of
    any current or former employee, officer or manager of the
    Company. The Company has no express or implied commitment,
    whether legally enforceable or not, (x) to create, incur
    liability with respect to, or cause to exist, any other employee
    benefit plan, program or arrangement, (y) to enter into any
    contract or agreement to provide compensation or benefits to any
    individual, or (z) to modify, change or terminate any Plan,
    other than with respect to a modification, change or termination
    required by ERISA or the Code.

 

    (c) None of the Plans is a multi-employer plan (within the
    meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
    “Multi-employer Plan”) or a single employer
    pension plan (within the meaning of Section 4001(a)(15) of
    ERISA) for which the Company could incur liability under
    Section 4063 or 4064 of ERISA (a “Multiple Employer
    Plan”). Each Plan is subject only to the Laws of the
    United States or a political subdivision thereof.

 

    (d) Except as set forth in Section 3.11(d) of
    the Company Disclosure Schedule, none of the Plans provides for
    the payment of separation, severance, termination or similar
    benefits to any person or obligates the Company to pay
    separation, severance, termination or similar-type benefits
    solely or partially as a result of any transaction contemplated
    by this Agreement or as a result of a “change in ownership
    or control,” within the meaning of such term under
    Section 280G of the Code. Neither the execution and
    delivery of this Agreement nor the consummation of the
    transactions contemplated hereby, either alone or together with
    another event, will (i) result in any payment (including,
    without limitation, severance, unemployment compensation, golden
    parachute, forgiveness of indebtedness or otherwise) becoming
    due under any Plan, whether or not such payment is contingent,
    (ii) increase any benefits otherwise payable under any Plan
    or other arrangement, (iii) result in the acceleration of
    the time of payment, vesting or funding of any benefits
    including, but not limited to, the acceleration of the vesting

    

    25

 

    and exercisability of any Company Option, whether or not
    contingent, or (iv) affect in any material respects any
    Plan’s current treatment under any Laws including any Tax
    or social contribution Law. No Plan provides, or reflects or
    represents any liability to provide, retiree health, disability,
    or life insurance benefits to any person for any reason, except
    as may be required by the Consolidated Omnibus Budget
    Reconciliation Act of 1985, as amended
    (“COBRA”), or other applicable statute, and the
    Company has never represented, promised or contracted (whether
    in oral or written form) to any employee (either individually or
    to employees as a group) or any other person that such employee
    or other person would be provided with retiree health,
    disability, or life insurance benefits, except to the extent
    required by statute.

 

    (e) Each Plan is now and always has been operated in all
    material respects in accordance with its terms and the
    requirements of all applicable Laws, regulations and rules
    promulgated thereunder including, without limitation, ERISA and
    the Code. The Company has performed all obligations required to
    be performed by it under, is not in any respect in default under
    or in violation of, and to the Knowledge of the Company, there
    is not any default or violation by any party to, any Plan. No
    action, claim or proceeding is pending or, to the Knowledge of
    the Company, threatened with respect to any Plan (other than
    claims for benefits in the ordinary course) and no fact or event
    exists that could give rise to any such action, claim or
    proceeding. Neither the Company nor any person that is a member
    of the same controlled group as the Company or under common
    control with the Company within the meaning of Section 414
    of the Code (each, an “ERISA Affiliate”) is
    subject to any penalty or Tax with respect to any Plan under
    Section 502(i) of ERISA or Sections 4975 through 4980
    of the Code. Each Plan can be amended, terminated or otherwise
    discontinued at any time without material liability to Parent,
    the Company or any of their ERISA Affiliates (other than
    ordinary administration expenses). Neither the Company nor any
    Affiliate has, prior to the Effective Time and in any material
    respect, violated any of the health care continuation
    requirements of COBRA, the requirements of the Family Medical
    Leave Act of 1993, the requirements of the Health Insurance
    Portability and Accountability Act of 1996, the requirements of
    the Women’s Health and Cancer Rights Act of 1998, the
    requirements of the Newborns’ and Mothers’ Health
    Protection Act of 1996, or any amendment to each such act, or
    any similar provisions of state Law applicable to its employees.

 

    (f) Each Plan intended to qualify under Section 401(a)
    or Section 401(k) of the Code and each trust intended to
    qualify under Section 501(a) of the Code (i) has
    received a favorable determination, opinion, notification or
    advisory letter from the Internal Revenue Service with respect
    to each such Plan as to its qualified status under the Code,
    including all amendments to the Code effected by the Tax Reform
    Act of 1986 and subsequent legislation, and no fact or event has
    occurred since the date of such determination letter or letters
    from the Internal Revenue Service to adversely affect the
    qualified status of any such Plan or the exempt status of any
    such trust, or (ii) has remaining a period of time under
    applicable Treasury regulations or Internal Revenue Service
    pronouncements in which to apply for such a letter and make any
    amendments necessary to obtain a favorable determination as to
    the qualified status of each such Plan.

 

    (g) Neither the Company nor any ERISA Affiliate has
    incurred any liability under, arising out of or by operation of
    Title IV of ERISA (other than liability for premiums to the
    Pension Benefit Guaranty Corporation arising in the ordinary
    course), including, without limitation, any liability in
    connection with (i) the termination or reorganization of
    any employee benefit plan subject to Title IV of ERISA or
    (ii) the withdrawal from any Multi-employer Plan or
    Multiple Employer Plan, and no fact or event exists which could
    give rise to any such liability.

 

    (h) The Company has not, since its inception, terminated,
    suspended, discontinued contributions to or withdrawn from any
    employee pension benefit plan, as defined in Section 3(2)
    of ERISA, including, without limitation, any Multi-employer
    Plan. All contributions, premiums or payments required to be
    made or accrued with respect to any Plan have been made on or
    before their due dates. All such contributions have been fully
    deducted for income tax purposes and no such deduction has been
    challenged or disallowed by any Governmental Entity and no fact
    or event exists which could give rise to any disallowance.

 

    (i) Except as set forth in Section 3.11(i) of
    the Company Disclosure Schedule, (i) the Company is not a
    party to any collective bargaining agreement or other labor
    union contract applicable to persons employed by the Company or
    in the Company’s business, and currently, to the Knowledge
    of the Company, there are no organizational campaigns, petitions
    or other unionization activities seeking recognition of a
    collective bargaining unit that could affect the Company;
    (ii) there are no controversies, strikes, slowdowns or work
    stoppages pending or, to the

    

    26

 

     Knowledge of the Company, threatened between the Company and
    any of its employees, and the Company has not experienced any
    such controversy, strike, slowdown or work stoppage within the
    past three years; (iii) the Company has not breached or
    otherwise failed to comply with the provisions of any collective
    bargaining or union contract and there are no grievances
    outstanding against the Company under any such agreement or
    contract; (iv) the Company has not engaged in any unfair
    labor practice, and there are no unfair labor practice
    complaints pending against the Company before the National Labor
    Relations Board or any other Governmental Entity or any current
    union representation questions involving employees of the
    Company; (v) the Company is currently in compliance with
    all applicable Laws relating to the employment of labor,
    including those related to wages, hours, worker classification
    (including the proper classification of independent contractors
    and consultants), collective bargaining, workers’
    compensation and the payment and withholding of Taxes and other
    sums as required by the appropriate Governmental Entity and has
    withheld and paid to the appropriate Governmental Entity or is
    holding for payment not yet due to such Governmental Entity all
    amounts required to be withheld from employees of the Company
    and is not liable for any arrears of wages, Taxes, penalties or
    other sums for failure to comply with any of the foregoing;
    (vi) the Company has paid in full to all employees or
    adequately accrued for in accordance with GAAP consistently
    applied all wages, salaries, commissions, bonuses, benefits and
    other compensation due to or on behalf of such employees,
    including, if required, accruals related to compensation
    pursuant to the incentive plans on the Closing Balance Sheet,
    including with respect to the Transaction-Related Members’
    Equity Charge; (vii) there is no claim with respect to
    payment of wages, salary, overtime pay, workers compensation
    benefits or disability benefits that has been asserted or
    threatened against the Company or that is now pending before any
    Governmental Entity with respect to any person currently or
    formerly employed by the Company; (viii) the Company is not
    a party to, or otherwise bound by, any consent decree with, or
    citation by, any Governmental Entity relating to employees or
    employment practices; (ix) the Company is in compliance
    with all Laws and regulations relating to occupational safety
    and health Laws and regulations, and there is no charge or
    proceeding with respect to a violation of any occupational
    safety or health standards that has been asserted or is now
    pending or threatened with respect to the Company; (x) the
    Company is in compliance with all Laws and regulations relating
    to discrimination in employment, and there is no charge of
    discrimination in employment or employment practices for any
    reason, including, without limitation, age, gender, race,
    religion or other legally protected category, which has been
    asserted or, to the Knowledge of the Company, threatened against
    the Company or that is now pending before the United States
    Equal Employment Opportunity Commission or any other
    Governmental Entity; and (xi) each employee of the Company
    who is located in the United States and is not a United States
    citizen has all approvals, authorizations and papers necessary
    to work in the United States in accordance with applicable Law.

 

    (j) Section 3.11(j) of the Company Disclosure
    Schedule contains a true and complete list of all individuals
    who serve as employees of or consultants to the Company as of
    the date set forth on such schedule whose annual compensation
    from the Company and positions with the Company have been
    previously detailed to Parent, and whose annual compensation has
    not been modified in any material manner other than as permitted
    hereby, and for which a Company representation of such fact will
    be provided at Closing.

 

    (k) To the Company’s Knowledge, no employee of or
    consultant to the Company has been injured in the workplace or
    in the course of his or her employment or consultancy, except
    for injuries which are covered by insurance or for which a claim
    has been made under worker’s compensation or similar Laws.

 

    Section 3.12  Contracts.

 

    (a) Section 3.12(a) of the Company Disclosure
    Schedule lists (under the appropriate subsection) each of the
    following written contracts and agreements of the Company (such
    contracts and agreements being the “Material
    Contracts”):

 

    (i) each contract and agreement for the purchase or lease
    of personal property with any supplier or for the furnishing of
    services to the Company with payments greater than $100,000 per
    year;

 

    (ii) all broker, exclusive dealing or exclusivity,
    distributor, dealer, manufacturer’s representative,
    franchise, agency, sales promotion, market research, marketing,
    consulting and advertising contracts and agreements to which the
    Company is a party or any other contract that compensates any
    person based on any sales by the Company;

    

    27

 

    (iii) all leases and subleases of real property;

 

    (iv) all contracts and agreements relating to Indebtedness
    other than trade indebtedness of the Company, including any
    contracts and agreements in which the Company is a guarantor of
    Indebtedness;

 

    (v) all contracts and agreements with any Governmental
    Entity to which the Company is a party;

 

    (vi) all contracts and agreements that limit or purport to
    limit the ability of the Company to compete in any line of
    business or with any person or in any geographic area or during
    any period of time;

 

    (vii) all contracts containing confidentiality requirements
    (including all nondisclosure agreements);

 

    (viii) all contracts and agreements between or among the
    Company and any Member of the Company or any Affiliate of such
    person, other than contracts or agreements that will have no
    force and effect after the Closing Date;

 

    (ix) all contracts and agreements (x) relating to the
    voting and any rights or obligations of a Member of the Company,
    other than contracts or agreements that will have no force and
    effect after the Closing Date, (y) that restrict the
    voting, acquisition, issuance or transfer of Parent Common Stock
    following the Effective Time;

 

    (x) all contracts to manufacture for, supply to or
    distribute to any third party any products or components;

 

    (xi) all contracts regarding the acquisition, issuance or
    transfer of any securities and each contract affecting or
    dealing with any securities of the Company, including, without
    limitation, any restricted stock agreements or escrow agreement
    or any securities issuances pursuant to any existing incentive
    plans;

 

    (xii) all contracts providing for indemnification of any
    officer, manager, employee or agent of the Company;

 

    (xiii) all contracts related to or regarding the
    performance of consulting, advisory or other services or work of
    any type by any third party, other than contracts or agreements
    that will have no force and effect after the Closing Date;

 

    (xiv) all other contracts that have a term of more than
    180 days and that may not be terminated by the Company,
    without any material penalty, within 30 days after the
    delivery of a termination notice by the Company;

 

    (xv) any agreement of the Company that is terminable upon
    or prohibits assignment or a change of ownership or control of
    the Company;

 

    (xvi) all other contracts and agreements, excluding master
    service agreements or contracts for services to be provided by
    the Company, whether or not made in the ordinary course of
    business, that contemplate an exchange of consideration with an
    aggregate value greater than $200,000; and

 

    (xvii) any agreement of guarantee, assumption or
    endorsement of, or any similar commitment with respect to, the
    obligations, liabilities (whether accrued, absolute, contingent
    or otherwise) or indebtedness of any person other than software
    licenses or professional services contracts entered into in the
    ordinary course of business.

 

    (b) Each Material Contract and master service agreement or
    contract for services to be provided by the Company (i) is
    valid and binding on the Company, as the case may be, and, to
    the Knowledge of the Company, on the other parties thereto, and
    is in full force and effect, and (ii), other than contracts
    which will have no force or effect after the Closing Date upon
    consummation of the transactions contemplated by this Agreement,
    shall continue in full force and effect without penalty or other
    adverse consequence. The Company is not in breach or violation
    of, or default under, any Material Contract and, to the
    Knowledge of the Company, no other party to any Material
    Contract is in breach or violation thereof or default thereunder.

 

    (c) The Company has delivered or made available to Parent
    accurate and complete copies of all Material Contracts
    identified in Section 3.12(a) of the Company
    Disclosure Schedule, including all amendments thereto.

    

    28

 

    (d) To the Company’s Knowledge, the Company does not
    have any oral contracts.

 

    (e) Except as set forth in Section 3.12(e) of
    the Company Disclosure Schedule, to the Company’s
    Knowledge, no event has occurred, and no circumstance or
    condition exists, that (with or without notice or lapse of time)
    will, or could reasonably be expected to, (i) result in a
    breach or violation of, or default under, any Material Contract,
    (ii) give any entity the right to declare a default, seek
    damages or exercise any other remedy under any Material
    Contract, (iii) give any entity the right to accelerate the
    maturity or performance of any Material Contract or
    (iv) give any entity the right to cancel, terminate or
    modify any Material Contract.

 

    Section 3.13  Environmental
    Matters.  Except as disclosed on
    Section 3.13 of the Company Disclosure Schedule:

 

    (a) The Company and, to the Knowledge of the Company, all
    third-party vendors of the Company have obtained all
    Environmental Permits required by Environmental Laws and
    necessary for the conduct of its business. The Company and, to
    the Knowledge of the Company, all third-party vendors of the
    Company are in compliance with such permits and, in connection
    with its Business, applicable Environmental Laws, and there is
    no past material non-compliance which has not been resolved
    (including the payment of any fines and penalties related
    thereto).

 

    (b) The Company as a direct result of it actions alone, in
    the conduct of its business, and not as a result of the actions
    of others, has not incurred or become liable for or subject to
    any Environmental Liabilities in connection with the Real
    Property or the Business.

 

    (c) The Company has not received any written notice from
    any Governmental Entity or other third party of a violation of
    or liability under any Environmental Laws in connection with the
    Real Property or the Business, which notice has not been
    resolved.

 

    (d) The Company has not received any written notice, claim,
    or request for information alleging that the Company, to the
    extent related to the Business, or the Business are or may be
    liable for damages, remediation or cost recovery as a result of
    a Release or threatened Release of Hazardous Substances.

 

    (e) Neither the Company nor its respective predecessors or
    Affiliates has treated, stored, disposed of, arranged for or
    permitted the disposal of, handled, or Released any Hazardous
    Substances on, at, or from the Real Property or owned or
    operated any real property in a manner so as to give rise to
    liabilities of such parties for Remedial Action pursuant to
    Environmental Laws.

 

    (f) The Company has furnished to Parent all final,
    non-privileged environmental audits and reports prepared by or
    for the Company and all correspondence or orders from any
    Governmental Entity alleging responsibility for Environmental
    Liabilities or violations of Environmental Laws and relating to
    the current and former operations and facilities of the Company
    or any of its Affiliates with respect to the Business, which are
    in the Company’s possession, custody or control.

 

    (g) The Company has not received any written request for
    information, or been notified that it is a potentially
    responsible party, under CERCLA or any similar Law of any state,
    locality or any other jurisdiction. The Company has not entered
    into or agreed to any consent decree or order or is subject to
    any judgment, decree or judicial order relating to compliance
    with Environmental Laws, Environmental Permits or the
    investigation, sampling, monitoring, treatment, remediation,
    removal or cleanup of Hazardous Substances and, no
    investigation, litigation or other proceeding is pending or
    threatened in writing with respect thereto.

 

    For purposes of this Agreement:

 

    “Business” means the business of the Company as
    conducted on the date of this Agreement, including, without
    limitation, providing directional drilling and surveying
    services primarily to the oil and gas industry.

 

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

    

    29

 

 

    “Environmental Laws” shall mean all Legal
    Requirements relating to pollution, the protection of the
    environment or the use, handling, Release or management of
    Hazardous Substances, including CERCLA, the Federal Solid Waste
    Disposal Act, as amended by the RCRA and Hazardous and Solid
    Waste Amendments thereto, the Clean Air Act, the Clean Water
    Act, the Toxic Substances Control Act, the Safe Drinking Water
    Act, and any similar or analogous Legal Requirements of any
    Governmental Entity, as each of the foregoing is in effect on or
    prior to the date hereof.

 

    “Environmental Liabilities” shall mean any and
    all damages, claims or liabilities (whether known or unknown,
    foreseen or unforeseen, contingent or otherwise), including,
    without limitation, liability for response costs, personal
    injury to Persons, the Company with respect to the Business,
    property damage, natural resource damage or any investigatory,
    corrective or remedial obligation, which arise under or relate
    to any Environmental Laws in effect at the time of such
    liability.

 

    “Environmental Permits” means any permit,
    approval, identification number, license and other authorization
    required under any applicable Environmental Law.

 

    “Hazardous Substance” shall mean any hazardous
    substance as that term is defined in CERCLA, including
    petroleum, crude oil or any fraction thereof, asbestos, and
    natural gas in its various forms, and any hazardous waste as
    defined or regulated under RCRA.

 

    “Legal Requirement” means any material
    requirement arising under any action, law, treaty, rule or
    regulation, manual, guidance, advisory, alert, determination,
    order or direction of a Governmental Entity and any binding
    arbitration award or order.

 

    “Real Property” means the real property
    described on Section 3.18 of the Company Disclosure
    Schedule and the leased real property subject to the leases
    described in Section 3.12(a)(iii) of the Company
    Disclosure Schedule.

 

    “Release” shall have the meaning set forth in
    CERCLA.

 

    “Remedial Action” shall mean all actions to
    investigate, clean up, remove or treat a Release(s) of Hazardous
    Substances (including required remedial investigations,
    feasibility studies, corrective actions, closures and
    post-remedial or post-closure studies, operations and
    maintenance and monitoring).

 

    “RCRA” means the Resource Conservation and
    Recovery Act.

 

    Section 3.14  Intellectual
    Property.

 

    (a) The Company owns or is licensed for, and in any event
    possess sufficient and legally enforceable rights with respect
    to, all Company Intellectual Property (as defined below)
    relevant to their respective businesses, as previously,
    presently or proposed to be conducted, or necessary to conduct
    any such business without any conflict with or infringement or
    misappropriation of any rights or property of any person
    (“Infringement”). Such ownership, licenses and
    rights are exclusive except with respect to standard, generally
    commercially available, “off-the-shelf” third party
    products that are not part of any previous, current or proposed
    product, service or Intellectual Property offering of the
    Company. “Intellectual Property” means
    (i) inventions (whether or not patentable); trade names,
    trade and service marks, logos, domains, URLs, websites,
    addresses and other designations (“Marks”);
    works of authorship; mask works; data; technology, know-how,
    trade secrets, ideas and information; designs; formulas;
    algorithms; processes; methods; schematics; computer software
    (in source code
    and/or
    object code form); and all other intellectual property of any
    sort (“Inventions”) and (ii) patent
    rights; Mark rights; copyrights; mask work rights; sui
    generis database rights; trade secret rights; moral rights;
    and all other intellectual and industrial property rights of any
    sort throughout the world, and all applications, registrations,
    issuances and the like with respect thereto (“IP
    Rights”). “Company Intellectual
    Property” means all Intellectual Property that was or
    is used, exercised, or exploited (“Used”) or
    proposed to be Used in any business of the Company, or that may
    be necessary to conduct any such business as previously or
    presently conducted or proposed to be conducted; this term will
    also include all other Intellectual Property owned by or
    licensed to the Company now or in the past. All copyrightable
    matter within Company Intellectual Property that is relevant to
    the Company has been created by persons who were employees of
    the Company at the time of creation and no third party has or
    will have “moral rights” or rights to terminate any

    

    30

 

    assignment or license with respect thereto. With respect to
    patent rights, moral rights and Mark rights, the representations
    and warranties of this Section 3.14(a) are made only
    to the Company’s Knowledge.

 

    (b) To the extent included in Company Intellectual
    Property, Section 3.14(b) of the Company Disclosure
    Schedule lists (by name, number, jurisdiction and owner) all
    patents and patent applications; all registered and unregistered
    Marks; and all registered and material unregistered copyrights
    and mask works; and all other issuances, registrations,
    applications and the like with respect to those or any other IP
    Rights. All the foregoing (i) are valid, enforceable and
    subsisting to the extent such concepts are applicable, and
    (ii) along with all related filings, registrations and
    correspondence, have been provided to Parent. No cancellation,
    termination, expiration or abandonment of any of the foregoing
    (except natural expiration or termination at the end of the full
    possible term, including extensions and renewals) is anticipated
    by the Company. Except as referenced in written documentation
    previously provided to Parent (including without limitation file
    wrappers), the Company is not aware of any questions or
    challenges (or any potential basis therefor) with respect to the
    patentability or validity of any claims of any of the foregoing
    patents or patent applications or the validity (or any other
    aspect or status) of any such IP Rights.

 

    (c) Section 3.14(c) of the Company Disclosure
    Schedule lists: (i) all licenses, sublicenses and other
    agreements to which the Company is a party (or by which it or
    any Company Intellectual Property is bound or subject) which
    involve annual payments or expected receipt of funds in an
    amount greater than $50,000 and pursuant to which any person has
    been or may be assigned, authorized to Use, granted any lien or
    encumbrance regarding, or given access to any Company
    Intellectual Property other than distribution of standard object
    code product pursuant to a standard form end-user, object code,
    internal-use software license and support/maintenance agreements
    entered into in the ordinary course of business; and
    (ii) all licenses, sublicenses and other agreements
    pursuant to which the Company has been or may be assigned or
    authorized to Use, or has incurred or may incur any obligation
    in connection with, (A) any third party Intellectual
    Property be incorporated or embodied in, or form all or any part
    of any previous, current or proposed product, service or
    Intellectual Property offering of the Company or (B) any
    Company Intellectual Property and (iii) each agreement
    pursuant to which the Company has deposited or is required to
    deposit with an escrowholder or any other person, all or part of
    the source code (or any algorithm or documentation contained in
    or relating to any source code) of any Company Intellectual
    Property (“Source Materials”). The Company has
    not entered into any agreement to indemnify, hold harmless or
    defend any other person with respect to any assertion of
    Infringement or warranting the lack thereof. Any standard form
    referred to above in this section has been clearly identified as
    such and provided to Parent.

 

    (d) No event or circumstance has occurred, exists or is
    contemplated (including, without limitation, the authorization,
    execution or delivery of this Agreement or the consummation of
    any of the transactions contemplated hereby) that (with or
    without notice or the lapse of time) could result in
    (i) the breach or violation of any license, sublicense or
    other agreement required to be listed in
    Section 3.14 of the Company Disclosure Schedule or
    (ii) the loss or expiration of any right or option by the
    Company (or the gain thereof by any third party) under any such
    license, sublicense or other agreement or (iii) the
    release, disclosure or delivery to any third party of any part
    of the Source Materials. Further, the Company makes all the same
    representations and warranties with respect to each license,
    sublicense and agreement listed on Section 3.14 of
    the Company Disclosure Schedule as are made with respect to
    Material Contracts elsewhere in this Agreement.

 

    (e) There is, to the Knowledge of the Company, no
    unauthorized Use, disclosure, or Infringement of any Company
    Intellectual Property by any third party, including, without
    limitation, any employee or former employee of the Company. The
    Company has not brought or threatened any action, suit or
    proceeding against any third party for any Infringement of any
    Company Intellectual Property or any breach of any license,
    sublicense or agreement involving Company Intellectual Property.

 

    (f) The Company has taken all reasonably necessary and
    appropriate steps to protect and preserve the confidentiality of
    all Company Intellectual Property not otherwise disclosed in
    published patents or patent applications or registered
    copyrights (“Company Confidential
    Information”). All use by and disclosure to employees
    or others of Company Confidential Information has been pursuant
    to the terms of valid and binding written confidentiality and
    nonuse/restricted-use agreements or agreements that contain
    similar obligations. The

    

    31

 

    Company has not disclosed or delivered to any third party, or
    permitted the disclosure or delivery to any escrow agent or
    other third party, any part of the Source Materials.

 

    (g) Substantially all of the current employees of the
    Company and substantially all of the current independent
    contractors or consultants who devote substantially all of their
    business time to performing services for the Company as set
    forth in Section 3.11(j) of the Company Disclosure
    Schedule have executed and delivered (and to the Company’s
    Knowledge, is in compliance with) an agreement in substantially
    the form of the Company’s standard Confidentiality
    Agreement, which is attached to Section 3.14(g) of
    the Company Disclosure Schedule.

 

    (h) The Company has not received any communication alleging
    or suggesting that or questioning whether the Company has been
    or may be (whether in its past, current or proposed business or
    otherwise) engaged in, liable for or contributing to any
    Infringement, nor does the Company have any reason to expect
    that any such communication will be forthcoming.

 

    (i) The Company has no Knowledge that any of its employees
    or contractors is obligated under any agreement, commitment,
    judgment, decree, order or otherwise (an “Employee
    Obligation”) that could interfere with the use of his
    or her commercially reasonable best efforts to promote the
    interests of the Company or that could conflict with any of
    their businesses as conducted or proposed to be conducted.
    Neither the execution nor delivery of this Agreement nor the
    conduct of the Company’s business as conducted or proposed
    to be conducted, will conflict with or result in a breach of the
    terms, conditions or provisions of, or constitute a default
    under, any Employee Obligation. The Company is not Using, and it
    will not be necessary to Use, (i) any Inventions of any of
    their past or present employees or contractors (or people
    currently intended to be hired) made prior to or outside the
    scope of their employment by the Company or (ii) any
    confidential information or trade secret of any former employer
    of any such person.

 

    (j) To the Knowledge of the Company, all Software is free
    of all viruses, worms, trojan horses and other infections or
    harmful routines and does not contain any bugs, errors, or
    problems that, to the Company’s Knowledge, could disrupt
    its operation or have an adverse impact on the operation of
    other software programs or operating systems.
    “Software” means software, programs, databases
    and related documentation, in any form (including Internet
    sites, Internet content and links) that is (i) material to
    the operation of the business of the Company, including, but not
    limited to, that operated by the Company on its web sites or
    used by the Company in connection with processing customer
    orders, storing customer information, or storing or archiving
    data, or (ii) manufactured, distributed, sold, licensed or
    marketed by the Company.

 

    (k) The Company has obtained all approvals and agreements
    necessary or appropriate (including, without limitation,
    assurances from customers regarding further export) for
    exporting any Company Intellectual Property outside the United
    States and importing any Company Intellectual Property into any
    country in which they are or have been disclosed, sold or
    licensed for Use, and all such export and import approvals in
    the United States and throughout the world are valid, current,
    outstanding and in full force and effect.

 

    Section 3.15  Taxes.

 

    (a) All Tax (as defined below) returns, statements,
    reports, declarations and other forms and documents (including
    without limitation estimated Tax returns and reports and
    material information returns and reports) required to be filed
    with any Tax Authority (as defined below) with respect to any
    Taxable (as defined below) period ending on or before the
    Closing, by or on behalf of the Company (collectively,
    “Tax Returns” and individually, a “Tax
    Return”), have been or will be completed and filed when
    due (including any extensions of such due date) and all amounts
    shown due on such Tax Returns on or before the Effective Time
    have been or will be paid on or before such date. The Interim
    Financial Statements (i) fully accrue or record all actual
    and contingent liabilities for Taxes or Permitted Tax
    Distributions (as defined below) with respect to all periods
    through June 30, 2007 and the Company has not and will not
    incur any Tax liability in excess of the amount reflected
    (excluding any amount thereof that reflects timing differences
    between the recognition of income for purposes of GAAP and for
    Tax purposes) on the Reference Balance Sheet included in the
    Interim Financial Statements with respect to such periods, and
    (ii) properly accrue or record in accordance with GAAP all
    material liabilities for Taxes or Permitted Tax Distributions
    payable after June 30, 2007, with respect to all
    transactions and events occurring on or prior to such date. All
    information set forth in the notes to the Interim Financial
    Statements relating to Tax matters is true,

    

    32

 

    complete and accurate in all material respects. The Company has
    not incurred any material Tax liability since June 30, 2007
    other than in the ordinary course of business and the Company
    has made adequate provisions for all Taxes since that date in
    accordance with GAAP on at least a quarterly basis.

 

    (b) The Company has withheld and paid to the applicable
    financial institution or Tax Authority all amounts required to
    be withheld. To the Knowledge of the Company, no Tax Returns
    filed with respect to Taxable years through the Taxable year
    ended December 31, 2005 in the case of the United States,
    have been examined and closed. The Company (or any member of any
    affiliated or combined group of which the Company has been a
    member) has not granted any extension or waiver of the
    limitation period applicable to any Tax Returns that is still in
    effect and there is no material claim, audit, action, suit,
    proceeding, or (to the Knowledge of the Company) investigation
    now pending or threatened against or with respect to the Company
    in respect of any Tax or assessment. No notice of deficiency or
    similar document of any Tax Authority has been received by the
    Company, and there are no liabilities for Taxes (including
    liabilities for interest, additions to Tax and penalties thereon
    and related expenses) with respect to the issues that have been
    raised (and are currently pending) by any Tax Authority that
    could, if determined adversely to the Company, materially and
    adversely affect the liability of the Company for Taxes. There
    are no liens for Taxes (other than for current Taxes not yet due
    and payable) upon the assets of the Company. The Company has
    never been a member of an affiliated group of corporations,
    within the meaning of Section 1504 of the Code. The Company
    is in full compliance with all the terms and conditions of any
    Tax exemption or other Tax-sharing agreement or order of a
    foreign government, and the consummation of the Merger will not
    have any adverse effect on the continued validity and
    effectiveness of any such Tax exemption or other Tax-sharing
    agreement or order. Neither the Company nor any person on behalf
    of the Company has entered into or will enter into any agreement
    or consent pursuant to the collapsible corporation provisions of
    Section 341(f) of the Code (or any corresponding provision
    of state, local or foreign income tax Law) or agreed to have
    Section 341(f)(2) of the Code (or any corresponding
    provision of state, local or foreign income tax Law) apply to
    any disposition of any asset owned by the Company. None of the
    assets of the Company is property that the Company is required
    to treat as being owned by any other person pursuant to the
    so-called “safe harbor lease” provisions of former
    Section 168(f)(8) of the Code. None of the assets of the
    Company directly or indirectly secures any debt the interest on
    which is tax exempt under Section 103(a) of the Code. None
    of the assets of the Company is “tax-exempt use
    property” within the meaning of Section 168(h) of the
    Code. The Company has not made and will not make a deemed
    dividend election under Treas. Reg.
    § 1.1502-32(f)(2)
    or a consent dividend election under Section 565 of the
    Code. The Company has never been a party (either as a
    distributing corporation, a distributed corporation or
    otherwise) to any transaction intended to qualify under
    Section 355 of the Code or any corresponding provision of
    state Law. The Company has not participated in (and will not
    participate in) an international boycott within the meaning of
    Section 999 of the Code. No Member is other than a United
    States person within the meaning of the Code. The Company does
    not have and has not had a permanent establishment in any
    foreign country, as defined in any applicable Tax treaty or
    convention between the United States of America and such foreign
    country and the Company has not engaged in a trade or business
    within any foreign country. The Company has never elected to be
    treated as an
    S-corporation
    under Section 1362 of the Code or any corresponding
    provision of Federal or state Law. All material elections with
    respect to the Company’s Taxes made during the fiscal years
    ending December 31, 2004 and 2005 are reflected on the
    Company’s Tax Returns for such periods, copies of which
    have been provided to Parent. After the date of this Agreement
    but prior to the Effective Time, no material election with
    respect to Taxes will be made without the prior written consent
    of Parent, which consent will not be unreasonably withheld or
    delayed. The Company is not party to any joint venture,
    partnership, or other arrangement or contract that could be
    treated as a partnership for Federal income tax purposes other
    than that the Company itself is taxed as a partnership for
    Federal income tax purposes. The Company is not currently and
    never has been subject to the reporting requirements of
    Section 6038A of the Code. There is no agreement, contract
    or arrangement to which the Company is a party that could,
    individually or collectively, result in the payment of any
    amount that would not be deductible by reason of
    Sections 280G (as determined without regard to
    Section 280G(b)(4)), 162 (other than 162(a)) or 404 of the
    Code. The Company is not a party to or bound by any Tax
    indemnity, Tax sharing or Tax allocation agreement (whether
    written or unwritten or arising under operation of Federal Law
    as a result of being a member of a group filing consolidated Tax
    Returns, under operation of certain state Laws as a result of
    being a member of a unitary group, or under comparable Laws of
    other states or foreign jurisdictions) that includes a party
    other than the Company nor does the Company owe any amount under
    any such agreement. The Company has previously provided or made
    available to Parent true and

    

    33

 

    correct copies of all income, franchise, and sales Tax Returns,
    and, as reasonably requested by Parent, prior to or following
    the date hereof, presently existing information statements and
    reports. The Company is not, and has not been, a United States
    real property holding corporation (as defined in
    Section 897(c)(2) of the Code) during the applicable period
    specified in Section 897(c)(1)(A)(ii) of the Code. Other
    than by reason of the Merger, the Company has not been and will
    not be required to include any material adjustment in Taxable
    income for any Tax period (or portion thereof) pursuant to
    Section 481 or 263A of the Code or any comparable provision
    under state or foreign Tax Laws as a result of transactions,
    events or accounting methods employed prior to the Merger.

 

    (c) For purposes of this Agreement, the following terms
    have the following meanings: “Tax” (and, with
    correlative meaning, “Taxes” and
    “Taxable”) means any and all taxes including,
    without limitation, (i) any net income, alternative or
    add-on minimum tax, gross income, gross receipts, sales, use, ad
    valorem, transfer (except transfer taxes that may or may not be
    applicable to this Transaction, which if applicable will be
    accrued on the Estimated Closing Balance Sheet), franchise,
    profits, value added, net worth, license, withholding, payroll,
    employment, excise, severance, stamp, occupation, premium,
    property, environmental or windfall profit tax, custom, duty or
    other tax, governmental fee or other like assessment or charge
    of any kind whatsoever, together with any interest or any
    penalty, addition to tax or additional amount imposed by any
    Governmental Entity responsible for the imposition of any such
    tax (domestic or foreign) (a “Tax Authority”),
    (ii) any liability for the payment of any amounts of the
    type described in (i) above as a result of being a member
    of an affiliated, consolidated, combined or unitary group for
    any taxable period or as the result of being a transferee or
    successor thereof and (iii) any liability for the payment
    of any amounts of the type described in (i) or
    (ii) above as a result of any express or implied obligation
    to indemnify any other person
    and/or as it
    relates to any Permitted Tax Distribution. As used in this
    Section 3.15, the term “Company” means the
    Company and any entity included in, or required under GAAP to be
    included in, any of the Audited Financial Statements or the
    Interim Financial Statements.

 

    Section 3.16  Vote
    Required.  The only vote necessary to approve
    and adopt this Agreement, the Merger and the other transactions
    contemplated by this Agreement is the affirmative vote of the
    holders of at least
    662/3%
    of the Company Interests in favor of the approval and adoption
    of this Agreement and the Merger.

 

    Section 3.17  Assets;
    Absence of Liens and Encumbrances.  Except as
    set forth in Section 3.17 of the Company Disclosure
    Schedule, the Company owns, leases or has the legal right to use
    all of the assets, properties and rights of every kind, nature,
    character and description, including, without limitation, real
    property and personal property (other than Intellectual
    Property, which is covered by Section 3.14 hereof),
    used or intended to be used in the conduct of the business of
    the Company or otherwise owned or leased by the Company and,
    with respect to contract rights, is a party to and enjoys the
    right to the benefits of all contracts, agreements and other
    arrangements used or intended to be used by the Company in or
    relating to the conduct of the business of the Company (all such
    properties, assets and contract rights being the
    “Assets”). Other than with respect to the
    Permitted Liens, the Company has good and indefeasible title to,
    or, in the case of leased or subleased Assets, valid and
    subsisting leasehold interests in, all the Assets, free and
    clear of all mortgages, liens, pledges, charges, claims, defects
    of title, restrictions, infringements, security interests or
    encumbrances of any kind or character
    (“Liens”). The equipment of the Company used in
    the operations of its business is, taken as a whole, in good
    operating condition and repair, ordinary wear and tear excepted.

 

    Section 3.18  Real
    Property.  Section 3.18 of the
    Company Disclosure Schedule lists all real property that the
    Company owns or leases. With respect to each parcel of such Real
    Property that is owned, the Company has good and clear record
    title to such parcel, free and clear of any Lien, easement,
    covenant or other restriction, except for recorded easements,
    covenants or other restrictions which do not impair the use,
    occupancy or value of such parcel. Except as disclosed in
    Section 3.18 of the Company Disclosure Schedule,
    with respect to each parcel of Real Property that is leased:
    (a) such lease is valid, legal, binding and enforceable by
    the lessee, and in full force and effect; (b) such lease
    will continue to be legal, valid, binding, enforceable and in
    full force and effect following the Closing Date; (c) the
    lessee is not in material breach or default under any such
    lease, and to the Knowledge of the Company, no other party to
    such lease is in material breach or default, and no event has
    occurred that, with notice or lapse of time, would constitute a
    material breach or default by the lessee or, to the Knowledge of
    the Company, any other party thereto, or permit termination,
    modification or acceleration by the lessor thereunder;
    (d) the lessee has not repudiated and, to the Knowledge of
    the Company, no other party to any such lease has repudiated any
    provision thereof; (e) the lessee has not received any
    information from which a reasonable person would conclude that
    there

    

    34

 

    are any disputes with respect to any such lease; and
    (f) all Real Property subject to such lease has been
    operated and maintained in all material respects in accordance
    with applicable laws.

 

    Section 3.19  Certain
    Interests.

 

    (a) Except as set forth on Section 3.19(a) of
    the Company Disclosure Schedule, no holder of greater than 1% of
    the voting power of the Company or its Affiliates or any officer
    or, to the Knowledge of the Company, any manager of the Company
    or any immediate relative or spouse (or immediate relative of
    such spouse) who resides with, or is a dependent of, any such
    officer or manager:

 

    (i) has any direct or indirect financial interest in any
    creditor, competitor, supplier, manufacturer, agent,
    representative, distributor or customer of the Company;
    provided, however, that the ownership of
    securities representing no more than 1% of the outstanding
    voting power of any creditor, competitor, supplier,
    manufacturer, agent, representative, distributor or customer,
    and which are listed on any national securities exchange or
    traded actively in the national over-the-counter market, shall
    not be deemed to be a “financial interest” as long as
    the person owning such securities has no other connection or
    relationship with such creditor, competitor, supplier,
    manufacturer, agent, representative, distributor or customer;

 

    (ii) owns, directly or indirectly, in whole or in part, or
    has any other interest in, any tangible or intangible property
    that the Company uses in the conduct of its business (except for
    any such ownership or interest resulting from the ownership of
    securities in a public company);

 

    (iii) has any claim or cause of action against the
    Company; or

 

    (iv) has outstanding any indebtedness of or to the Company,
    other than the Stephens Group Debt.

 

    (b) Except as set forth on Section 3.19(b) of
    the Company Disclosure Schedule and for the payment of employee
    compensation or remuneration in the ordinary course of business,
    consistent with past practice, the Company has no liability or
    any other obligation of any nature whatsoever to any Member or
    any Affiliate thereof or to any officer or manager of the
    Company or, to the Knowledge of the Company, to any immediate
    relative or spouse (or immediate relative of such spouse) of any
    such officer or manager.

 

    Section 3.20  Insurance
    Policies.  Section 3.20 of the
    Company Disclosure Schedule sets forth (i) a true and
    complete list of all insurance policies to which the Company is
    a party or is a beneficiary or named insured and (ii) any
    claims made thereunder or made under any other insurance policy
    since August 6, 2004. True and complete copies of all such
    policies have been provided to Parent. All premiums due on such
    policies have been paid and the Company is otherwise in
    compliance with the terms of such policies. The Company has not
    failed to give any notice or present any claim under any such
    policy in a timely fashion. Such insurance to the date hereof
    has been maintained in full force and effect and not been
    canceled or changed, except to extend the maturity dates
    thereof. Except as set forth on Section 3.20 of the
    Company Disclosure Schedule, since August 6, 2004, the
    Company has not received any notice or other communication
    regarding any actual or possible (i) cancellation or
    threatened termination of any insurance policy,
    (ii) refusal of any coverage or rejection of any claim
    under any insurance policy or (iii) adjustment in the
    amount of the premiums payable with respect to any insurance
    policy.

 

    Section 3.21  Restrictions
    on Business Activities.  There is no
    agreement, commitment, judgment, injunction, order or decree
    binding upon the Company or to which the Company is a party
    which has or could reasonably be expected to have the effect of
    prohibiting or materially impairing any business practice
    material to the Company, any acquisition of property by the
    Company or the conduct of business by the Company as currently
    conducted or as proposed to be conducted.

 

    Section 3.22  Brokers.  Except
    as set forth in Section 3.22 of the Company
    Disclosure Schedule, no broker, finder or investment banker is
    entitled to any brokerage, finder’s or other fee or
    commission in connection with the origination, negotiation or
    execution of this Agreement, the Merger or the other
    transactions contemplated by this Agreement based upon
    arrangements made by or on behalf of the Company. The Company
    has heretofore furnished to Parent a complete and correct copy
    of all agreements between the Company and those entities set
    forth in Section 3.22 of the Company Disclosure
    Schedule pursuant to which such advisor would be entitled to any
    payment in relation to the Merger or the transactions
    contemplated by this Agreement. The Original Members are
    responsible for any such fees paid or payable by the Company.

    

    35

 

    Section 3.23  Intentionally
    Omitted.

 

    Section 3.24  Customers
    and Suppliers.  Section 3.24 of
    the Company Disclosure Schedule contains a complete list of all
    customers who individually accounted for more than 2% of the
    Company’s gross revenues during the fiscal years ended
    December 31, 2005 and 2006 and the six month period ended
    June 30, 2007. No customer listed on
    Section 3.24 of the Company Disclosure Schedule has,
    within the past 12 months, cancelled or otherwise
    terminated, or, to the Knowledge of the Company, made any threat
    to cancel or terminate, its relationship with the Company, or
    decreased materially its usage of the Company’s services or
    products. Except as set forth in Section 3.24 of the
    Company Disclosure Schedule, since January 1, 2007, no
    material supplier of the Company has cancelled or otherwise
    terminated any contract with the Company prior to the expiration
    of the contract term, or, to the Knowledge of the Company, made
    any threat to the Company to cancel, reduce the supply or
    otherwise terminate its relationship with the Company. The
    Company has not (i) breached (so as to provide a benefit to
    the Company that was not intended by the parties) any agreement
    with or (ii) engaged in any fraudulent conduct with respect
    to, any customer or supplier of the Company.

 

    Section 3.25  Inventory.  All
    inventory of the Company, whether or not reflected on the
    Reference Balance Sheet, consists of a quality and quantity
    usable and saleable in the ordinary course of business, except
    for obsolete items and items of below-standard quality, all of
    which have been written-off or written-down to net realizable
    value on the Reference Balance Sheet pursuant to the
    Company’s policies and the best estimates of the
    Company’s management in accordance with GAAP. All
    inventories not written-off have been priced at the lower of
    cost or market on a
    first-in,
    first-out basis. The value of each type of inventory, whether
    raw materials,
    work-in-process
    or finished goods, are not excessive in the present
    circumstances of the Company in the best estimate of the
    Company’s management in accordance with GAAP.

 

    Section 3.26  Accounts
    Receivable; Bank Accounts.  Except as set
    forth in Section 3.26 of the Company Disclosure
    Schedule, all accounts receivable of the Company reflected on
    the Reference Balance Sheet are valid receivables properly
    reflected pursuant to the Company’s policies and practices
    and the best estimates of the Company’s management in
    accordance with GAAP, and subject to no material setoffs or
    counterclaims and are current and collectible (within
    90 days after the date on which they first became due and
    payable), net of the applicable reserve for bad debts on the
    Reference Balance Sheet. Except as set forth in
    Section 3.26 of the Company Disclosure Schedule, all
    accounts receivable reflected in the financial or accounting
    records of the Company that have arisen since the date of
    Reference Balance Sheet are valid receivables subject to no
    material setoffs or counterclaims and are current and
    collectible (within 90 days after the date on which they
    first became due and payable), net of a reserve for bad debts in
    an amount reasonably proportionate to the reserve shown on the
    Reference Balance Sheet. Section 3.26 of the Company
    Disclosure Schedule describes each account maintained by or for
    the benefit of the Company at any bank or other financial
    institution.

 

    Section 3.27  Intentionally
    Omitted.

 

    Section 3.28  Offers.  The
    Company has suspended or terminated, and has the legal right to
    terminate or suspend, all negotiations and discussions of any
    acquisition, merger, consolidation or sale of all or
    substantially all of the assets or member interests of the
    Company with parties other than Parent.

 

    Section 3.29  Warranties.  No
    product or service manufactured, sold, leased, licensed or
    delivered by the Company is subject to any guaranty, warranty,
    right of return, right of credit or other indemnity other than
    (i) the applicable standard terms and conditions of sale or
    lease of the Company, which are set forth in
    Section 3.29 of the Company Disclosure Schedule and
    (ii) manufacturers’ warranties for which the Company
    has no liability. Section 3.29 of the Company
    Disclosure Schedule sets forth the aggregate expenses incurred
    by the Company in fulfilling its obligations under its guaranty,
    warranty, right of return and indemnity provisions during each
    of the Company’s fiscal years ended December 31, 2005
    and 2006 covered by the Audited Financial Statements and the
    Company represents that such expense has not increased as a
    percentage of sales since December 31, 2006 and the Company
    does not reasonably expect such expenses to increase in the
    future.

 

    Section 3.30  Books
    and Records.  The minute books and other
    similar records of the Company contain complete and accurate
    records of all actions taken at any meetings of the
    Company’s members, Board of Managers or any committee
    thereof and of all written consents executed in lieu of the
    holding of any such meeting. The books

    

    36

 

    and records of the Company accurately reflect in all material
    respects the assets, liabilities, business, financial condition
    and results of operations of the Company and have been
    maintained in accordance with good business and bookkeeping
    practices consistent with GAAP.

 

    Section 3.31  Intentionally
    Omitted.

 

    Section 3.32  Proxy
    Statement.  The information previously
    supplied or to be supplied by the Company for inclusion in
    Parent’s proxy statement in connection with the
    transactions contemplated by this Agreement (such proxy
    statement as amended or supplemented is referred to herein as
    the “Proxy Statement”) shall not contain at the
    time the Proxy Statement is filed with the SEC and at the time
    it becomes effective under the Securities Act, any untrue
    statement of a material fact or omit to state any material fact
    required to be stated therein or necessary in order to make the
    statements therein not misleading. The information to be
    supplied by the Company for inclusion in the proxy statement to
    be delivered to Parent’s stockholders in connection with
    the meeting of Parent’s stockholders to consider the
    approval of this Agreement (the “Parent
    Stockholders’ Meeting”) shall not contain, on the
    date the Proxy Statement is first mailed to Parent’s
    stockholders, and at the time of the Parent Stockholders’
    Meeting, any untrue statement of a material fact or omit to
    state any material fact required to be stated therein or
    necessary in order to make the information and, accordingly, the
    resulting statements therein, in light of the circumstances
    under which they are made, not false or misleading; or omit to
    state any material fact necessary to correct any information
    provided by the Company in any earlier communication with
    respect to the solicitation of proxies for the Parent
    Stockholders’ Meeting which has become false or misleading.
    If at any time prior to the Effective Time, any event relating
    to the Company or any of its Affiliates, officers or managers
    should be discovered by the Company which should be, in the
    reasonable opinion of the Company, set forth in a supplement to
    the Proxy Statement, the Company shall promptly inform Parent.

 

    Section 3.33  No
    Misstatements.  No representation or warranty
    made by the Company in this Agreement, the Company Disclosure
    Schedule or any certificate delivered or deliverable pursuant to
    the terms hereof contains or will contain any untrue statement
    of a material fact, or omits, or will omit, when taken as a
    whole, to state a material fact, necessary in order to make the
    statements made, in light of the circumstances under which they
    were made, not misleading; provided, however, that any
    representations and warranties made by the Company herein that
    are qualified by the Company’s “Knowledge” or
    materiality shall be incorporated into the representation and
    warranty made by this sentence of this Section 3.33.
    To the Knowledge of the Company, the Company has disclosed to
    Parent all material information relating to the business of the
    Company or the transactions contemplated by this Agreement.

 

    ARTICLE IV

    

 

    REPRESENTATIONS
    AND WARRANTIES OF MEMBERS

 

    Each Member hereby severally, and not jointly, represents and
    warrants to Parent and Merger Sub only with respect to itself
    and not with respect to any other Member that the statements
    contained in this Article IV are true and correct.

 

    Section 4.01  Ownership;
    Accredited Status.

 

    (a) Except as provided in the FARMITA referenced in
    Section 3.04(e) of the Company Disclosure Schedule,
    which will be terminated as of Closing, Member is the record and
    beneficial owner of, or is the trustee of a trust that is the
    record holder of, and whose beneficiaries are the beneficial
    owners of, and has good and indefeasible title to, the Company
    Interests as set forth in Sections 1.01 and
    3.04(a) of the Company Disclosure Schedule, which as of
    the date hereof are, and at all times prior to the Closing Date,
    such Company Interests shall be, free and clear of any liens,
    claims, options, charges or other encumbrances other than to the
    extent such circumstances do not impair Member’s ability to
    comply with its obligations hereunder. Except as provided in the
    FARMITA referenced in Section 3.04(e) of the Company
    Disclosure Schedule, which will be terminated as of Closing,
    Member has the sole right to vote the Company Interests with
    respect to the Merger, and except as contemplated by this
    Agreement, none of the Company Interests is subject to any
    voting trust or other agreement, arrangement or restriction with
    respect to the voting of such Company Interests with respect to
    the Merger.

    

    37

 

    (b) As of the Closing Date, Member shall not own, either
    beneficially or of record, any equity interests of the Company
    other than the Company Interests set forth in
    Sections 1.01 and 3.04(a) of the Company
    Disclosure Schedule.

 

    (c) Such Member is an “accredited investor” as
    such term is defined in Rule 501(a) of Regulation D as
    promulgated under the Securities Act.

 

    Section 4.02  Power;
    Authorization; Enforceability.  Member has all
    requisite power, authority and legal capacity to execute this
    Agreement, to perform its obligations hereunder, and to
    consummate the transactions contemplated hereby. Member has duly
    executed and delivered this Agreement, and this Agreement
    constitutes a legal, valid and binding obligation of Member,
    enforceable against Member in accordance with its terms, subject
    to the effect of any applicable bankruptcy, reorganization,
    insolvency, moratorium or similar Laws affecting creditors’
    rights generally and subject, as to enforceability, to the
    effect of general principles of equity. Except as provided in
    the FARMITA referenced in Section 3.04(e) of the
    Company Disclosure Schedule, which will be terminated as of
    Closing, the execution and delivery by Member of this Agreement
    do not, and the consummation of the transactions contemplated
    hereby and compliance with the terms hereof will not, result in
    any material breach of or constitute a material default (or an
    event that with notice or lapse of time or both would become a
    default) under, or give to others any right to terminate,
    materially amend, accelerate or cancel any right or obligation
    under, or result in the creation of any lien or encumbrance on
    any Company Interests pursuant to, any material note, bond,
    mortgage, indenture, contract, agreement, lease, license permit,
    franchise or other instrument or obligation to which Member is a
    party or by which Member or the Company Interests are or will be
    bound or affected. If Member is a natural person and is married
    and the Company Interests constitute community property of
    Member or otherwise need spousal or other approval for this
    Agreement to be legal, valid and binding, this Agreement has
    been duly authorized, executed and delivered by, and constitutes
    a valid and binding agreement of, Member’s spouse,
    enforceable against such spouse in accordance with its terms.

 

    ARTICLE V

    

 

    REPRESENTATIONS
    AND WARRANTIES OF PARENT AND MERGER SUB

 

    Parent and Merger Sub hereby represent and warrant to the
    Company that the statements contained in this Article V are
    true and correct except as set forth in the disclosure schedule
    delivered by Parent to the Company concurrently with the
    execution of this Agreement (the “Parent Disclosure
    Schedule”). The Parent Disclosure Schedules may be
    updated pursuant to Section 7.19 hereof, and shall
    be updated as of the Closing Date. The Parent Disclosure
    Schedule shall be arranged according to specific sections in
    this Article V and shall provide exceptions to, or
    otherwise qualify in reasonable detail, only the corresponding
    section in this Article V.

 

    Section 5.01  Organization
    and Qualification.

 

    (a) Parent is a corporation duly incorporated, 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 otherwise hold and operate its properties and
    other assets and to carry on its business as it is now being
    conducted, except where the failure to be so organized, existing
    or in good standing or to have such corporate power and
    authority have not had, and could not reasonably be expected to
    have, individually or in the aggregate, a Parent Material
    Adverse Effect (as defined below). Parent is duly qualified or
    licensed as a foreign corporation to do business, and is in good
    standing, in each jurisdiction where the character of the
    properties owned, leased or operated by it or the nature of its
    business makes such qualification or licensing necessary, except
    where the failure to be so qualified or licensed and in good
    standing has not had, and could not reasonably be expected to
    have, individually or in the aggregate, a Parent Material
    Adverse Effect. The term “Parent Material Adverse
    Effect” means any event, change or effect that is
    materially adverse to the business, operations, condition
    (financial or otherwise), assets (tangible or intangible),
    liabilities, prospects or results of operations of Parent and
    its subsidiaries taken as a whole, except for any such events,
    changes or effects resulting from or arising in connection with
    (i) any changes in general, political, global or other
    national or worldwide events or changes in economic or business
    conditions that do not disproportionately impact Parent as
    compared to other entities similar in size and scope as that of
    Parent and that are within its industry or (ii) any changes
    or events affecting the industry in which Parent operates that
    do not disproportionately impact Parent as

    

    38

 

    compared to other entities similar in size and scope as that of
    Parent and that are within its industry, (iii) any decline
    in the trading price of Parent Common Stock, or (iv) any
    adverse change in the United States securities market that does
    not disproportionately impact Parent, on or after the date of
    this Agreement and prior to the Closing Date.

 

    (b) Merger Sub is a corporation duly incorporated, validly
    existing and in good standing under the laws of the State of
    Delaware.

 

    Section 5.02  Authority
    Relative to This Agreement.  Each of Parent
    and Merger Sub has all necessary corporate power and authority
    to execute and deliver this Agreement, and, subject to obtaining
    the necessary approvals of the stockholders of Parent, to
    perform its obligations hereunder and to consummate the Merger
    and the other transactions contemplated by this Agreement. The
    execution and delivery of this Agreement by each of Parent and
    Merger Sub and the consummation by each of Parent and Merger Sub
    of the Merger and the other transactions contemplated by this
    Agreement have been duly and validly authorized by all necessary
    corporate action, and no other corporate proceedings on the part
    of Parent or Merger Sub are necessary to authorize this
    Agreement or to consummate the Merger and the other transactions
    contemplated by this Agreement (other than with respect to the
    Merger, the filing and recordation of appropriate merger
    documents as required by the DGCL and the TLLCA). This Agreement
    has been duly and validly executed and delivered by each of
    Parent and Merger Sub and, assuming the due corporate
    authorization, execution and delivery by the Company,
    constitutes a legal, valid and binding obligation of each of
    Parent and Merger Sub, enforceable against each of Parent and
    Merger Sub in accordance with its terms, subject to the effect
    of any applicable bankruptcy, reorganization, insolvency,
    moratorium or similar Laws affecting creditors’ rights
    generally and subject, as to enforceability, to the effect of
    general principles of equity.

 

    Section 5.03  Capital
    Structure.

 

    (a) As of the Execution Date, the authorized capital stock
    of Parent consists of (i) 50,000,000 shares of Parent
    Common Stock and (ii) 1,000,000 shares of preferred
    stock, par value $0.001 per share, of Parent (“Parent
    Preferred Stock”). As of the Execution Date,
    (i) 16,516,667 shares of Parent Common Stock were
    issued and outstanding, all of which are duly authorized,
    validly issued, fully paid and non-assessable,
    (ii) 2,100,000 shares of Parent Common Stock were
    reserved for future issuance pursuant to a unit purchase option
    issued by Parent to the underwriters in connection with its
    initial public offering, and (iii) warrants to purchase
    28,516,668 shares of Parent Common Stock were outstanding,
    an equal number of which shares were reserved for issuance
    pursuant thereto. As of the date hereof, no shares of Parent
    Preferred Stock were issued and outstanding.

 

    (b) As of the Execution Date, except for outstanding
    options and warrants referred to in clauses (ii) and
    (iii) of the second sentence of Section 5.03(a)
    and otherwise as disclosed in the Parent SEC Reports (as defined
    below), there are no outstanding options, warrants, or other
    agreements relating to the issuance of capital stock of Parent
    or obligating Parent to issue or sell any shares of its capital
    stock.

 

    Section 5.04  No
    Conflict; Required Filings and Consents.

 

    (a) The execution and delivery of this Agreement by each of
    Parent and Merger Sub do not, and the performance of this
    Agreement by each of Parent and Merger Sub will not,
    (i) conflict with or violate their respective
    organizational documents, (ii) assuming that all consents,
    approvals, authorizations and other actions described in
    Section 5.04(b) have been obtained and all filings
    and obligations described in Section 5.04(b) have
    been made or complied with, conflict with or violate in any
    material respect any Law applicable to Parent or Merger Sub or
    by which any property or asset of Parent or Merger Sub is bound
    or affected, or (iii) conflict with, result in any breach
    of or constitute a default (or an event which with notice or
    lapse of time or both would become a default) under, or give to
    others any right of termination, amendment, acceleration or
    cancellation of, or result in the creation of a lien or other
    encumbrance on any property or asset of Parent or Merger Sub
    pursuant to, any material note, bond, mortgage, indenture,
    contract, agreement, lease, license, permit, franchise or other
    instrument or obligation to which Parent or Merger Sub is a
    party, except, with respect to clauses (ii) and (iii), for
    any such conflicts, violations, breaches, defaults, or other
    occurrences that could not reasonably be expected to have,
    individually or in the aggregate, a Parent Material Adverse
    Effect.

 

    (b) Except as set forth in Section 5.04(b) of
    the Parent Disclosure Schedule, the execution and delivery of
    this Agreement by each of Parent and Merger Sub do not, and the
    performance of this Agreement by each of Parent and Merger Sub
    will not, require any consent, approval, order, authorization,
    registration or permit of, or filing with or

    

    39

 

    notification to, any Governmental Entity, except (i) for
    the pre-merger notification requirements of the HSR Act, if
    applicable, (ii) for the filing and recordation of
    appropriate merger documents as required by the DGCL or the
    TLLCA, (iii) for applicable requirements, if any, of the
    Securities Exchange Act of 1934, as amended (the
    “Exchange Act”), Federal and state securities
    laws and AMEX, and (iv) for such other consents, approvals,
    orders authorizations, registrations or permits, filings or
    notifications that if not obtained or made could not reasonably
    be expected, individually or in the aggregate, to prevent or
    materially delay the consummation of the transactions
    contemplated by this Agreement.

 

    Section 5.05  SEC
    Filings; Financial Statements.

 

    (a) Parent has correctly, accurately and timely in all
    material respects filed all forms, reports and documents
    required to be filed by it with the Securities and Exchange
    Commission (the “SEC”) since its inception date
    through the date of this Agreement (collectively, the
    “Parent SEC Reports”). As of the respective
    dates they were filed (and if amended or superseded by a filing
    prior to the date of this Agreement, then on the date of such
    filing), (i) the Parent SEC Reports complied in all
    material respects with the requirements of the Securities Act or
    the Exchange Act, as the case may be, and (ii) none of the
    Parent SEC Reports contained any untrue statement of a material
    fact or omitted to state a material fact required to be stated
    therein or necessary in order to make the statements made
    therein, in the light of the circumstances under which they were
    made, not misleading.

 

    (b) Each of the Parent Audited Financial Statements (as
    defined in Section 5.11(a)) and Parent Interim
    Financial Statements (as defined in Section 5.11(a))
    (including, in each case, any notes thereto) contained in the
    Parent SEC Reports was prepared in accordance with GAAP applied
    on a consistent basis throughout the periods indicated (except
    as may be indicated in the notes thereto or, in the case of
    unaudited statements, as permitted by
    Form 10-Q
    or 8-K
    promulgated by the SEC) and each presented fairly, in all
    material respects, the consolidated financial position of Parent
    and its consolidated subsidiaries as at the respective dates
    thereof and for the respective periods indicated therein, except
    as otherwise noted therein (subject, in the case of unaudited
    statements, to normal and recurring year-end adjustments which
    were not and are not expected, individually or in the aggregate,
    to have a Parent Material Adverse Effect).

 

    Section 5.06  Interim
    Operations of Merger Sub.  Merger Sub was
    formed by Parent solely for the purpose of engaging in the
    transactions contemplated by this Agreement, has engaged in no
    other business activities and has conducted its operations only
    as contemplated by this Agreement. Merger Sub has no liabilities
    and, except for a subscription agreement pursuant to which all
    of its authorized capital stock was issued to Parent, is not a
    party to any agreement other than this Agreement and agreements
    with respect to the appointment of registered agents and similar
    matters.

 

    Section 5.07  Board
    Approval.  Subject to certain conditions
    contained in Sections 8.01 and 8.02, including, but
    not limited to receiving a third party fairness opinion, dated
    as of the date of this Agreement (the
    “Opinion”), the Board of Directors of Parent
    (including any required committee or subgroup of the Board of
    Directors of Parent) has, as of the date of this Agreement,
    unanimously (i) declared the advisability of the Merger and
    approved this Agreement and the transactions contemplated
    hereby, (ii) determined that the Merger is in the best
    interests of the stockholders of Parent, and
    (iii) determined that the fair market value of the Company
    is equal to at least 80% of Parent’s net assets.

 

    Section 5.08  Valid
    Issuance of Parent Shares.  The shares of
    Parent Common Stock to be issued pursuant to this Agreement and
    pursuant to the Parent Warrants and Redemption Warrants
    will, when issued, be duly authorized, validly issued, fully
    paid and non-assessable.

 

    Section 5.09  Brokers.  Except
    as set forth on Section 5.09 of the Parent
    Disclosure Schedule, no broker, finder or investment banker is
    entitled to any brokerage, finder’s or other fee or
    commission in connection with the Merger or the other
    transactions contemplated by this Agreement based upon
    arrangements made by or on behalf of Parent or Merger Sub.

    

    40

 

    Section 5.10  Intentionally
    Omitted.

 

    Section 5.11  Financial
    Statements.

 

    (a) True and complete copies of (i) the audited
    balance sheet, the audited statements of operations, changes in
    stockholders’ equity and changes in cash flows for the year
    then ended, together with all related notes and schedules
    thereto (collectively referred to herein as the “Parent
    Audited Financial Statements”, and (ii) the
    unaudited balance sheet of the Parent as of June 30, 2007,
    (the “Parent Reference Balance Sheet”), and the
    related statements of operations, changes in members’
    equity and changes in cash flows for the year ended
    June 30, 2007, (together with Parent Reference Balance
    Sheet, the “Parent Interim Financial
    Statements”), attached as Section 5.11(a)
    of the Parent Disclosure Schedule. The Parent Audited Financial
    Statements and the Parent Interim Financial Statements
    (including, in each case, any notes thereto) were prepared in
    accordance with the GAAP applied on a consistent basis
    throughout the periods indicated (except as may be indicated in
    the notes thereto or, in the case of unaudited statements, as
    permitted by GAAP) and each present fairly, in all material
    respects, the financial position of Parent as at the respective
    dates thereof and for the respective periods indicated therein,
    except as otherwise noted therein (subject, in the case of the
    Parent Interim Financial Statements, to normal and recurring
    year-end adjustments which were not and are not expected,
    individually or in the aggregate, to be material).

 

    (b) To the Knowledge of Parent, except as set forth in
    Section 5.11(b) of the Parent Disclosure Schedule,
    Parent does not have any Liabilities, other than Liabilities
    (i) recorded or reserved against on the Parent Reference
    Balance Sheet or (ii) incurred in the ordinary course of
    business, consistent with past practice, since June 30,
    2007 plus up to an aggregate amount of $100,000 incurred since
    June 30, 2007 not in the ordinary course of the business,
    consistent with past practice. Except as set forth in
    Section 5.11(b) of the Parent Disclosure Schedule,
    reserves are reflected on the Parent Reference Balance Sheet and
    on the books of account and other financial records of Parent
    against all Liabilities of Parent in amounts that have been
    established on a basis consistent with the past practice of
    Parent and in accordance with GAAP. To the Knowledge of Parent,
    there are no outstanding warranty claims against Parent.

 

    Section 5.12  Absence
    of Certain Changes or Events.  Since
    January 1, 2007, except as contemplated by or as disclosed
    in this Agreement or as set forth in Section 5.12 of
    the Parent Disclosure Schedule, Parent has conducted its
    business only in the ordinary course and in a manner consistent
    with past practice and, since such date, (a) there has not
    been any Parent Material Adverse Effect and (b) Parent has
    not taken or legally committed to take any of the actions
    specified in Section 6.02(a) through (x).

 

    Section 5.13  Absence
    of Litigation.  Except for the Dispute and the
    matters addressed in the Settlement Agreement, there is no Legal
    Proceeding pending or, to the Knowledge of Parent, threatened
    against Parent or Merger Sub, or any property or asset owned or
    used by Parent or any person whose liability Parent has or may
    have assumed, either contractually or by operation of Law,
    before any arbitrator or Governmental Entity that could
    reasonably be expected, if resolved adversely to Parent, to
    (i) impair the operations of Parent or Merger Sub as
    currently conducted, including, without limitation, any claim of
    infringement of any intellectual property right,
    (ii) collectively result in losses to Parent or Merger Sub
    in excess of $250,000, (iii) impair the ability of Parent
    or Merger Sub to perform its obligations under this Agreement,
    or (iv) prevent, delay or make illegal the consummation of
    the transactions contemplated by this Agreement. To
    Parent’s Knowledge, no event has occurred, and no claim,
    dispute or other condition or circumstance exists, that could
    reasonably be expected to give rise to or serve as a basis of
    the commencement of any Legal Proceeding. Neither Parent nor
    Merger Sub nor the officers or managers thereof in their
    capacity as such, or any property or asset of Parent or Merger
    Sub is subject to any continuing order of, consent decree,
    settlement agreement or other similar written agreement with,
    or, to the Knowledge of Parent, continuing investigation by, any
    Governmental Entity, or any order, writ, judgment, injunction,
    decree, determination or award of any court, arbitrator or
    Governmental Entity. Neither Parent nor Merger Sub has plans to
    initiate any Legal Proceeding against any third party.

 

    Section 5.14  Taxes.

 

    (a) All Tax Returns have been or will be completed and
    filed when due (including any extensions of such due date) and
    all amounts shown due on such Tax Returns on or before the
    Effective Time have been or will be paid on or before such date.
    The Parent Interim Financial Statements (i) fully accrue
    all actual and contingent liabilities for

    

    41

 

    Taxes (as defined below) with respect to all periods through
    June 30, 2007, and (ii) properly accrues in accordance
    with GAAP all material liabilities for Taxes payable after
    June 30, 2007, with respect to all transactions and events
    occurring on or prior to such date. All information set forth in
    the notes to the Parent Interim Financial Statements relating to
    Tax matters is true, complete and accurate in all material
    respects. Parent has not incurred any material Tax liability
    since June 30, 2007 other than in the ordinary course of
    business and Parent has made adequate provisions for all Taxes
    since that date in accordance with GAAP on at least a quarterly
    basis.

 

    (b) Parent has withheld and paid to the applicable
    financial institution or Tax Authority all amounts required to
    be withheld. To the Knowledge of Parent, no Tax Returns filed
    with respect to Taxable years through the Taxable year ended
    December 31, 2006 in the case of the United States, have
    been examined and closed. Parent (or any member of any
    affiliated or combined group of which Parent has been a member)
    has not granted any extension or waiver of the limitation period
    applicable to any Tax Returns that is still in effect and there
    is no material claim, audit, action, suit, proceeding, or (to
    the Knowledge of Parent) investigation now pending or threatened
    against or with respect to Parent in respect of any Tax or
    assessment. No notice of deficiency or similar document of any
    Tax Authority has been received by Parent, and there are no
    liabilities for Taxes (including liabilities for interest,
    additions to Tax and penalties thereon and related expenses)
    with respect to the issues that have been raised (and are
    currently pending) by any Tax Authority that could, if
    determined adversely to Parent, materially and adversely affect
    the liability of Parent for Taxes. There are no liens for Taxes
    (other than for current Taxes not yet due and payable) upon the
    assets of Parent. Parent has never been a member of an
    affiliated group of corporations, within the meaning of
    Section 1504 of the Code. Parent is in full compliance with
    all the terms and conditions of any Tax exemption or other
    Tax-sharing agreement or order of a foreign government, and the
    consummation of the Merger will not have any adverse effect on
    the continued validity and effectiveness of any such Tax
    exemption or other Tax-sharing agreement or order. Neither
    Parent nor any person on behalf of Parent has entered into or
    will enter into any agreement or consent pursuant to the
    collapsible corporation provisions of Section 341(f) of the
    Code (or any corresponding provision of state, local or foreign
    income tax Law) or agreed to have Section 341(f)(2) of the
    Code (or any corresponding provision of state, local or foreign
    income tax Law) apply to any disposition of any asset owned by
    Parent. None of the assets of Parent is property that Parent is
    required to treat as being owned by any other person pursuant to
    the so-called “safe harbor lease” provisions of former
    Section 168(f)(8) of the Code. None of the assets of Parent
    directly or indirectly secures any debt the interest on which is
    tax exempt under Section 103(a) of the Code. None of the
    assets of Parent is “tax-exempt use property” within
    the meaning of Section 168(h) of the Code. Parent has not
    made and will not make a deemed dividend election under Treas.
    Reg. § 1.1502-32(f)(2) or a consent dividend election
    under Section 565 of the Code. Parent has never been a
    party (either as a distributing corporation, a distributed
    corporation or otherwise) to any transaction intended to qualify
    under Section 355 of the Code or any corresponding
    provision of state Law. Parent has not participated in (and will
    not participate in) an international boycott within the meaning
    of Section 999 of the Code. Parent does not have and has
    not had a permanent establishment in any foreign country, as
    defined in any applicable Tax treaty or convention between the
    United States of America and such foreign country and Parent has
    not engaged in a trade or business within any foreign country.
    Parent has never elected to be treated as an S-corporation under
    Section 1362 of the Code or any corresponding provision of
    Federal or state Law. All material elections with respect to
    Parent’s Taxes made during the fiscal years ending
    December 31, 2005 and 2006 are reflected on Parent’s
    Tax Returns for such periods, copies of which have been provided
    to the Company. After the date of this Agreement, no material
    election with respect to Taxes will be made without the prior
    written consent of the Company, which consent will not be
    unreasonably withheld or delayed. Parent is not party to any
    joint venture, partnership, or other arrangement or contract
    that could be treated as a partnership for Federal income tax
    purposes. Parent is not currently and never has been subject to
    the reporting requirements of Section 6038A of the Code.
    There is no agreement, contract or arrangement to which Parent
    is a party that could, individually or collectively, result in
    the payment of any amount that would not be deductible by reason
    of Sections 280G (as determined without regard to
    Section 280G(b)(4)), 162 (other than 162(a)) or 404 of the
    Code. Parent is not a party to or bound by any Tax indemnity,
    Tax sharing or Tax allocation agreement (whether written or
    unwritten or arising under operation of Federal Law as a result
    of being a member of a group filing consolidated Tax Returns,
    under operation of certain state Laws as a result of being a
    member of a unitary group, or under comparable Laws of other
    states or foreign jurisdictions) that includes a party other
    than Parent nor does Parent owe any amount under any such
    agreement. Parent has previously provided or made available to
    the Company true and correct copies of all income, franchise,
    and sales Tax Returns, and, as reasonably

    

    42

 

    requested by the Company, prior to or following the date hereof,
    presently existing information statements and reports. Parent is
    not, and has not been, a United States real property holding
    corporation (as defined in Section 897(c)(2) of the Code)
    during the applicable period specified in
    Section 897(c)(1)(A)(ii) of the Code. Other than by reason
    of the Merger, Parent has not been and will not be required to
    include any material adjustment in Taxable income for any Tax
    period (or portion thereof) pursuant to Section 481 or 263A
    of the Code or any comparable provision under state or foreign
    Tax Laws as a result of transactions, events or accounting
    methods employed prior to the Merger.

 

    (c) As used in this Section 5.14, the term
    “Parent” means Parent and any entity included
    in, or required under GAAP to be included in, any of the Parent
    Interim Financial Statements.

 

    Section 5.15  Assets;
    Absence of Liens and Encumbrances.  Parent
    owns, leases or has the legal right to use all of the assets,
    properties and rights of every kind, nature, character and
    description, including, without limitation, real property and
    personal property, used or intended to be used in the conduct of
    the business of Parent or otherwise owned or leased by Parent
    and, with respect to contract rights, is a party to and enjoys
    the right to benefits of all contracts, agreements and other
    arrangements used or intended to be used by Parent in or
    relating to the conduct of the business of Parent (all such
    properties, assets and contract rights being the “Parent
    Assets”). Parent has good and indefeasible title to,
    or, in the case of leased or subleased Parent Assets, valid and
    subsisting leasehold interests in, all Parent Assets, free and
    clear of all mortgages, liens, pledges, charges, claims, defects
    of title, restrictions, infringements, security interests or
    encumbrances of any kind or character (“Parent
    Liens”).

 

    Section 5.16  Proxy
    Statement.  The information previously
    supplied or to be supplied by Parent for inclusion in the Proxy
    Statement shall not contain at the time the Proxy Statement is
    filed with the SEC and at the time it becomes effective under
    the Securities Act, any untrue statement of a material fact or
    omit to state any material fact required to be stated therein or
    necessary in order to make the statements therein not
    misleading. At the time it becomes effective, the Proxy
    Statement will not contain any untrue statement of a material
    fact or omit to state any material fact required to be stated
    therein or necessary in order to make the statements therein not
    misleading, except to the extent that information provided to
    the Parent by the Company is contained therein and such
    information, as provided to the Parent by the Company, contains
    any untrue statement of a material fact or omits to state any
    material fact required to be stated therein or necessary in
    order to make the statements therein not misleading. The
    information to be supplied by Parent for inclusion in the Proxy
    Statement to be delivered to Parent’s stockholders in
    connection with the Parent Stockholders’ Meeting shall not
    contain, on the date the Proxy Statement is first mailed to
    Parent’s stockholders, and at the time of the Parent
    Stockholders’ Meeting, any untrue statement of a material
    fact or omit to state any material fact required to be stated
    therein or necessary in order to make the statements therein, in
    light of the circumstances under which they are made, not false
    or misleading; or omit to state any material fact necessary to
    correct any statement provided by Parent in any earlier
    communication with respect to the solicitation of proxies for
    the Parent Stockholders’ Meeting which has become false or
    misleading. If at any time prior to the Effective Time, any
    event relating to Parent or any of its Affiliates, officers or
    managers should be discovered by Parent which should be set
    forth in a supplement to the Proxy Statements, Parent shall
    promptly inform Company.

 

    Section 5.17  Registration
    Rights Agreement.  The Registration Rights
    Agreement contains substantially the same terms and conditions
    as the registration rights agreement entered into among Parent,
    Founders and FBW, dated April 10, 2006 (the
    “Founders RR Agreement”), and such Founders RR
    Agreement has not been and shall not be amended without the
    prior written consent of the Members’ Representative.

 

    Section 5.18  Offers.  The
    Company acknowledges that Parent is permitted to receive general
    inquiries from third parties concerning potential transactions
    that would be in substitution of or in addition to, the
    transaction contemplated by this Agreement (a “Back Up
    Transaction”), and to conduct preliminary dialogue
    related thereto. However, Parent may not negotiate, present, or
    propose related to any presentations or proposals concerning
    conditional terms with any third party with respect to any Back
    Up Transaction until the earlier of (i) the Closing or
    (ii) the Termination of this Agreement pursuant to the
    terms provided for in Article IX hereof.

 

    Section 5.19  Undisclosed
    Liabilities.  Neither Parent nor Merger Sub
    has any liabilities or obligations of a type required to be
    reflected on a balance sheet prepared in accordance with GAAP or
    the footnotes required to be included therewith, without regard
    to materiality, except (i) as and to the extent disclosed
    in the Parent SEC Reports

    

    43

 

    or on Section 5.19 of the Parent Disclosure
    Schedule, or (ii) as incurred by Parent or Merger Sub in
    the ordinary course of business after June 30, 2007 in an
    aggregate amount not to exceed $25,000. The aggregate
    liabilities and indebtedness of the Parent and Merger Sub as of
    the date hereof do not, and as of the Closing Date will not,
    exceed Four Million Two Hundred and Two Thousand Five Hundred
    and No/100 Dollars ($4,202,500), including, but not limited to,
    the Estimated Parent Expenses.

 

    Section 5.20  No
    Misstatements.  No representation or warranty
    made by Parent or Merger Sub in this Agreement, the Parent
    Disclosure Schedule or any certificate delivered or deliverable
    pursuant to the terms hereof contains or will contain any untrue
    statement of a material fact, or omits, or will omit, when taken
    as a whole, to state a material fact, necessary in order to make
    the statements made, in light of the circumstances under which
    they were made, not misleading; provided, however, that any
    representations and warranties made by Parent or Merger Sub
    herein that are qualified by Parent’s or Merger Sub’s
    “Knowledge” or materiality shall be incorporated into
    the representation and warranty made by this sentence of this
    Section 5.20. To the Knowledge of Parent and Merger
    Sub, Parent and Merger Sub have disclosed to the Company all
    material information relating to the business of Parent and
    Merger Sub or the transactions contemplated by this Agreement.

 

    ARTICLE VI

    

 

    CONDUCT
    OF BUSINESSES PENDING THE MERGER

 

    Section 6.01  Conduct
    of Business by the Company Pending the
    Merger.  During the period from the date of
    this Agreement and continuing until the earlier of the
    termination of this Agreement or the Effective Time the Company
    agrees to carry on its business in the usual, regular and
    ordinary course and in substantially the same manner as
    previously conducted, to pay its debts and Taxes, including
    Permitted Tax Distributions, when due (subject to good faith
    disputes over such debts or Taxes), to pay or perform other
    obligations when due and, to the extent consistent with such
    business, to use all commercially reasonable efforts consistent
    with past practices and policies to preserve intact its present
    business organization, keep available the services of its
    present officers and key employees and consultants and preserve
    its relationships with customers, suppliers, distributors,
    licensors, licensees, and others having business dealings with
    it, to the end that its goodwill and ongoing businesses would be
    substantially identical at the Effective Time. The Company shall
    promptly notify Parent of any material event or occurrence not
    in the ordinary course of business of the Company. The Company
    agrees to use its commercially reasonable best efforts to
    satisfy all conditions to the Closing set forth in
    Article VIII, to the extent such conditions are applicable
    to the Company, and timely consummate the Merger contemplated
    herein.

 

    By way of amplification and not limitation, except as
    specifically contemplated by this Agreement or as specifically
    set forth in Section 6.01 of the Company Disclosure
    Schedule, the Company shall not, between the date of this
    Agreement and the Effective Time, directly or indirectly, do, or
    propose to do, any of the following without the prior written
    consent, which consent shall not be unreasonably withheld, of
    Parent:

 

    (a) amend or otherwise change the Company Charter Documents
    or equivalent organizational documents;

 

    (b) issue, sell, pledge, dispose of, grant, encumber,
    authorize or propose the issuance, sale, pledge, disposition,
    grant or encumbrance of any shares of its capital stock of any
    class, or any options, warrants, convertible securities or other
    rights of any kind to acquire any shares of such capital stock
    or any other ownership interest (including, without limitation,
    any phantom interest), of the Company, except pursuant to the
    terms of options, warrants or preferred stock outstanding on the
    date of this Agreement and new issuances under the Gain Share
    Plan;

 

    (c) sell, lease, license, pledge, grant, encumber or
    otherwise dispose of any of its properties or assets which are
    material, individually or in the aggregate, to its business;

 

    (d) split, combine, subdivide, redeem 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, or purchase or otherwise
    acquire, directly or indirectly, any shares of its equity
    interests except from former

    

    44

 

     employees, managers, directors and consultants in accordance
    with agreements providing for the repurchase of shares in
    connection with any termination of service by such party;

 

    (e) acquire (including, without limitation, by merger,
    consolidation, or acquisition of stock or assets) any interest
    or any assets in any corporation, partnership, other business
    organization or any division thereof other than the RST
    Transaction;

 

    (f) except for the Settlement Agreement, institute or
    settle any Legal Proceeding for an amount greater than $100,000,
    except as related to Legal Proceedings disclosed in
    Section 3.10 of the Company Disclosure Schedule;

 

    (g) incur any indebtedness for borrowed money or issue any
    debt securities or assume, guarantee or endorse, or otherwise as
    an accommodation become responsible for, the obligations of any
    person, or make any loans or advances other than such
    indebtedness described herein and to be included on the
    Estimated Closing Balance Sheet;

 

    (h) authorize any unbudgeted capital expenditure in excess
    of $100,000, individually or in the aggregate;

 

    (i) enter into any lease or contract for the purchase or
    sale of any property, real or personal, other than as permitted
    by subparagraph 6.01(h) above, in an amount greater than
    $100,000 on an annual basis other than the new lease agreement
    contemplated to be entered into between the Company and
    Angel/McIver Interests, LP, regarding the Company’s
    facility in Conroe, Texas;

 

    (j) waive or release any material right or claim;

 

    (k) except as set forth on Schedule 6.01(k) as it
    relates to increases in compensation for persons covered herein
    to the extent the person has or is expected to have a material
    increase in duties, responsibilities and authority,
    and/or has
    received a documented promotion, increase, or agree to increase,
    the compensation payable, or to become payable, to its
    (i) officers or (ii) employees (provided that any
    employee’s annual compensation may be increased by an
    amount not to exceed 10% of such employee’s current annual
    base salary), or grant any severance or termination pay to, or
    enter into any employment or severance agreement with, any of
    its managers, officers or other employees, or establish, adopt,
    enter into or amend any collective bargaining, bonus, profit
    sharing, thrift, compensation, stock option, restricted stock,
    pension, retirement, deferred compensation, employment,
    termination, severance or other Plan, agreement, trust, fund,
    policy or arrangement for the benefit of any director, officer
    or employee; provided, however, that the foregoing
    provisions of this subsection shall not apply to any amendments
    to employee benefit plans described in Section 3(3) of
    ERISA that may be required by Law;

 

    (l) accelerate, amend or change the period of
    exercisability or the vesting schedule of restricted stock or
    Company Options granted under any option plan, employee stock
    plan or other agreement or authorize cash payments in exchange
    for any Company Options granted under any of such plans, except
    as specifically required by the terms of such plans or any such
    agreement or any related agreement in effect as of the date of
    this Agreement and disclosed in the Company Disclosure Schedule;

 

    (m) extend any offers of employment to potential employees,
    consultants or independent contractors or terminate any existing
    employment relationships for which the annual remuneration is
    greater than $200,000;

 

    (n) enter into, amend or terminate any Material Contract;

 

    (o) enter into, amend or terminate any contract, agreement,
    commitment or arrangement that, if fully performed, would not be
    permitted under this Section 6.01;

 

    (p) other than in the ordinary course of business
    consistent with past practice and current business plans, enter
    into any licensing, distribution, OEM agreements, sponsorship,
    advertising, merchant program or other similar contracts,
    agreements or obligations, other than the RST Transaction or as
    contemplated thereby, that may not be cancelled without
    penalties by the Company upon notice of 30 days or less;

 

    (q) take any action, other than reasonable and usual action
    in the ordinary course of business, consistent with past
    practice, with respect to accounting policies, principles or
    procedures;

    

    45

 

 

    (r) other than the 754 election that has been made or will
    be made on the Company’s March 31, 2007 short
    form Tax return on or prior to the Closing Date, make or
    change any Tax or accounting election, change any annual
    accounting period, adopt or change any accounting method, file
    any amended Tax Return, enter into any closing agreement, settle
    any Tax claim or assessment relating to the Company, surrender
    any right to claim refund of Taxes, consent to any extension or
    waiver of the limitation period applicable to any Tax claim or
    assessment relating to the Company, but in no event take any
    other action or omit to take any action that would have the
    effect of increasing the Tax liability of the Company or Parent;

 

    (s) (i) sell, assign, lease, terminate, abandon,
    transfer, permit to be encumbered or otherwise dispose of or
    grant any security interest in and to any item of the Company
    Intellectual Property, in whole or in part, (ii) grant any
    license with respect to any Company Intellectual Property, other
    than a license of Software granted to customers of the Company
    to whom the Company licenses such Software in the ordinary
    course of business and the license contemplated to be entered
    into by the Company with respect to the RST Transaction,
    (iii) other than in connection with the RST Transaction,
    develop, create or invent any Intellectual Property jointly with
    any third party, or (iv) disclose, or allow to be
    disclosed, any confidential Company Intellectual Property,
    unless such Company Intellectual Property is subject to a
    confidentiality or non-disclosure covenant protecting against
    disclosure thereof;

 

    (t) make (or become obligated to make) any bonus payments
    to any of its officers or employees except: (1) for those
    for which the Company is simultaneously fully reimbursed or
    (2) between the execution date hereof and the Effective
    Time, bonus payments to certain employees not covered by the
    incentive plan in an amount not to exceed an aggregate of
    $500,000;

 

    (u) except as permitted by GAAP, revalue any of its assets,
    including writing down the value of inventory or writing off
    notes or accounts receivable;

 

    (v) fail to maintain its equipment and other assets in good
    working condition and repair according to the standards it has
    maintained up to the date of this Agreement, subject only to
    ordinary wear and tear, unless it is more commercially
    reasonable to replace any such asset in the ordinary course of
    Company’s business;

 

    (w) take any action or fail to take any reasonable action
    that would cause there to be a Company Material Adverse Effect;

 

    (x) permit any insurance policy naming it as a beneficiary
    or a loss payable payee to be cancelled or terminated and not
    replaced by a substantially similar replacement policy without
    notice to Parent;

 

    (y) except in the ordinary course of its business, the
    Company will not write off as uncollectible, or establish any
    extraordinary reserve with respect to, any account receivable or
    other right of the Company to customer remittances for services
    in excess of $150,000 with respect to a single matter, or in
    excess of $450,000 in the aggregate; or

 

    (z) take, or agree in writing or otherwise to take, any of
    the actions described in subsections (a) through
    (y) above, or any action which is reasonably likely to make
    any of the Company’s representations or warranties
    contained in this Agreement untrue or incorrect on the date made
    (to the extent so limited) or as of the Effective Time.

 

    Section 6.02  Conduct
    of Business by Parent Pending the
    Merger.  During the period from the date of
    this Agreement and continuing until the earlier of the
    termination of this Agreement or the Effective Time, Parent
    agrees to carry on its business in the usual, regular and
    ordinary course and in substantially the same manner as
    previously conducted, to pay its debts and Taxes when due
    (subject to good faith disputes over such debts or Taxes), to
    pay or perform other obligations when due and, to the extent
    consistent with such business, to use all reasonable efforts
    consistent with past practices and policies to preserve intact
    its present business organization, keep available the services
    of its present officers and key employees and consultants and
    preserve its relationships with customers, suppliers,
    distributors, licensors, licensees, and others having business
    dealings with it, to the end that its goodwill and ongoing
    businesses would be substantially identical at the Effective
    Time. Parent shall promptly notify the Company of any material
    event or occurrence not in the ordinary course of business of
    Parent. The Parent and the

    

    46

 

     Merger Sub agree to use their commercially reasonable best
    efforts to satisfy all conditions to the Closing set forth in
    Article VIII and timely consummate the Merger contemplated
    herein.

 

    By way of amplification and not limitation, except as
    specifically contemplated by this Agreement or as specifically
    set forth in Section 6.02 of the Parent Disclosure
    Schedule, Parent shall not, between the date of this Agreement
    and the Effective Time, directly or indirectly, do, or propose
    to do, any of the following without the prior written consent,
    which consent shall not be unreasonably withheld, of Company:

 

    (a) amend or otherwise change the Certificate of
    Incorporation and Bylaws or equivalent organizational documents;

 

    (b) except as it relates to the redemption or cancellation
    of Parent Common Stock pursuant to the Settlement Agreement,
    issue, sell, pledge, dispose of, grant, encumber, authorize or
    propose the issuance, sale, pledge, disposition, grant or
    encumbrance of any shares of its capital stock of any class, or
    any options, warrants, convertible securities or other rights of
    any kind to acquire any shares of such capital stock or any
    other ownership interest (including, without limitation, any
    phantom interest), of Parent, except pursuant to the terms of
    options, warrants or preferred stock outstanding on the date of
    this Agreement;

 

    (c) sell, lease, license, pledge, grant, encumber or
    otherwise dispose of any of its properties or assets which are
    material, individually or in the aggregate, to its business;

 

    (d) split, combine, subdivide, redeem 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, or purchase or otherwise
    acquire, directly or indirectly, any shares of its equity
    interests except from former employees, managers, directors and
    consultants in accordance with agreements providing for the
    repurchase of shares in connection with any termination of
    service by such party;

 

    (e) acquire (including, without limitation, by merger,
    consolidation, or acquisition of stock or assets) any interest
    or any assets in any corporation, partnership, other business
    organization or any division thereof;

 

    (f) except for the Settlement Agreement, institute or
    settle any Legal Proceeding for an amount greater than $100,000;

 

    (g) incur any indebtedness for borrowed money or issue any
    debt securities or assume, guarantee or endorse, or otherwise as
    an accommodation become responsible for, the obligations of any
    person, or make any loans or advances other than such
    indebtedness described herein;

 

    (h) authorize any unbudgeted capital expenditure in excess
    of $100,000, individually or in the aggregate;

 

    (i) enter into any lease or contract for the purchase or
    sale of any property, real or personal, in an amount greater
    than $50,000 on an annual basis;

 

    (j) waive or release any material right or claim;

 

    (k) increase, or agree to increase, the compensation
    payable, or to become payable, to its (i) officers or
    (ii) employees (provided that any employee’s annual
    compensation may be increased by an amount not to exceed 10% of
    such employee’s current annual base salary), or grant any
    severance or termination pay to, or enter into any employment or
    severance agreement with, any of its managers, officers or other
    employees or establish, adopt, enter into or amend any
    collective bargaining, bonus, profit sharing, thrift,
    compensation, stock option, restricted stock, pension,
    retirement, deferred compensation, employment, termination,
    severance or other Plan, agreement, trust, fund, policy or
    arrangement for the benefit of any director, officer or
    employee; provided, however, that the foregoing
    provisions of this subsection shall not apply to any amendments
    to employee benefit plans described in Section 3(3) of
    ERISA that may be required by Law;

 

    (l) accelerate, amend or change the period of
    exercisability or the vesting schedule of restricted stock or
    stock options granted under any option plan, employee stock plan
    or other agreement or authorize cash payments in exchange for
    any stock options granted under any of such plans, except as
    specifically required by the terms of such plans or any such
    agreement or any related agreement in effect as of the date of
    this Agreement and disclosed in the Parent Disclosure Schedule;

    

    47

 

 

    (m) extend any offers of employment to potential employees,
    consultants or independent contractors or terminate any existing
    employment relationships for which the annual remuneration is
    greater than $200,000;

 

    (n) enter into, amend or terminate any Material Contract to
    which it is a party;

 

    (o) enter into, amend or terminate any contract, agreement,
    commitment or arrangement that, if fully performed, would not be
    permitted under this Section 6.02;

 

    (p) other than in the ordinary course of business
    consistent with past practice, enter into any licensing,
    distribution, OEM agreements, sponsorship, advertising, merchant
    program or other similar contracts, agreements or obligations
    that may not be cancelled without penalties by Parent upon
    notice of 30 days or less;

 

    (q) take any action, other than reasonable and usual action
    in the ordinary course of business, consistent with past
    practice, with respect to accounting policies, principles or
    procedures;

 

    (r) make or change any Tax or accounting election, change
    any annual accounting period, adopt or change any accounting
    method, file any amended Tax Return, enter into any closing
    agreement, settle any Tax claim or assessment relating to
    Parent, surrender any right to claim refund of Taxes, consent to
    any extension or waiver of the limitation period applicable to
    any Tax claim or assessment relating to Parent, or take any
    other action or omit to take any action that would have the
    effect of increasing the Tax liability of Parent or the Company;

 

    (s) make (or become obligated to make) any bonus payments
    to any of its officers or employees except as set forth on
    Schedule 6.02(s);

 

    (t) except as permitted by GAAP, revalue any of its assets,
    including writing down the value of inventory or writing off
    notes or accounts receivable;

 

    (u) fail to maintain its equipment and other assets in good
    working condition and repair according to the standards it has
    maintained up to the date of this Agreement, subject only to
    ordinary wear and tear, unless it is more commercially
    reasonable to replace any such asset in the ordinary course of
    Parent’s business;

 

    (v) take any action or fail to take any reasonable action
    that would cause there to be a Parent Material Adverse Effect;

 

    (w) permit any insurance policy naming it as a beneficiary
    or a loss payable payee to be cancelled or terminated and not
    replaced by a substantially similar replacement policy without
    notice to the Company;

 

    (x) amend, modify, terminate or otherwise change the PB
    Agreement or the GB Agreement;

 

    (y) take, or agree in writing or otherwise to take, any of
    the actions described in subsections (a) through
    (x) above, or any action which is reasonably likely to make
    any of Parent’s or Merger Sub’s representations or
    warranties contained in this Agreement untrue or incorrect on
    the date made (to the extent so limited) or as of the Effective
    Time; and

 

    (z) fail to timely file any Parent SEC Reports with the SEC.

 

    Section 6.03  Litigation.  The
    parties shall notify one another in writing promptly after
    learning of any claim, action, suit, arbitration, mediation,
    proceeding or investigation by or before any court, arbitrator
    or arbitration panel, board or other Governmental Entity
    initiated by it or them or against it or them, or known by
    either party to be threatened against it or them or any of its
    or their officers, directors, managers, employees or
    stockholders in their capacity as such.

 

    Section 6.04  Notification
    of Certain Matters.  Parent shall give prompt
    notice to the Company, and the Company shall give prompt notice
    to Parent, of (i) the occurrence, or non-occurrence, of any
    event the occurrence, or non-occurrence, of which would be
    likely to cause (x) any representation or warranty
    contained in this Agreement to be untrue or inaccurate or
    (y) any covenant, condition or agreement contained in this
    Agreement not to be complied with or satisfied; and
    (ii) any failure or inability of Parent or the Company, as
    the case may be, to comply with or satisfy, any covenant,
    condition or agreement to be complied with or satisfied by it
    hereunder;

    

    48

 

    provided, however, that the delivery of any notice
    pursuant to this Section 6.04 shall not limit or
    otherwise affect the remedies available hereunder to the party
    receiving such notice. The parties hereto acknowledge that
    reliance shall not be an element of any claim or cause of action
    by any party hereto for misrepresentation or breach of a
    representation, warranty or covenant under this Agreement.

 

    ARTICLE VII

    

 

    ADDITIONAL
    AGREEMENTS

 

    Section 7.01  Proxy
    Statement; Stockholder Approval. Proxy Statement; Parent
    Stockholders’ Meeting; Name Change.

 

    (a) Parent will use its commercially reasonable best
    efforts to timely prepare and file the Proxy Statement with the
    SEC, including but not limited to, describing changes in this
    Agreement, updating the Financial Statements and Company
    Financial Statements as required, describing the
    Recapitalization, the Ulterra Acquisition and the Settlement
    Agreement, disclosing all changes to the Proxy Statement
    associated therewith, and addressing, to the extent relevant,
    SEC comments received by Parent on June 19, 2007 to the
    Proxy Statement filed by the Parent on May 8, 2007. Parent
    will solely be responsible to respond to, and will respond to,
    any comments of the SEC and Parent will use its commercially
    reasonable best efforts to mail the Proxy Statement to its
    stockholders at the earliest practicable time. As promptly as
    practicable after the execution of this Agreement, the Parent
    will prepare and file any other filings required under the
    Exchange Act, the Securities Act or any other Federal, foreign
    or Blue Sky laws relating to the Merger and the transactions
    contemplated by this Agreement, (collectively, the
    “Other Filings”). The Company shall, within a
    reasonable time, provide all information with respect to the
    Company and its Affiliates and Ulterra reasonably requested by
    Parent as required to prepare and file the Proxy Statement and
    any Other Filings and such information shall not contain any
    untrue statement of a material fact or omit to state any
    material fact required to be stated therein or necessary in
    order to make the statements therein not misleading, and the
    Company shall and shall cause its employees and advisors to
    comply with this provision. The Company shall use its
    commercially reasonable best efforts to cause its Chief
    Executive Officer to participate as reasonably requested by
    Parent in the “road show” presentations to investors.
    Each of the Members shall, within a reasonable time, provide all
    information with respect to that Member reasonably requested by
    Parent as required to prepare and file the Proxy Statement and
    any Other Filings and such information shall not contain any
    untrue statement of a material fact or omit to state any
    material fact required to be stated therein or necessary in
    order to make the statements therein not misleading. The Company
    or the Parent will notify the other party promptly upon its
    receipt of any comments from the SEC or its staff and of any
    request by the SEC or its staff or any other governmental
    officials for amendments or supplements to the Proxy Statement
    or any Other Filing or for additional information and will
    supply the other party with copies of all correspondence between
    such party or any of its representatives, on the one hand, and
    the SEC, or its staff or other government officials, on the
    other hand, with respect to the Proxy Statement, the Merger or
    any Other Filing. The Parent will cause the Proxy Statement and
    the Other Filings to comply in all material respects with all
    applicable requirements of law and the rules and regulations
    promulgated thereunder. Whenever any material event occurs with
    respect to the Company, the Company will, within a reasonable
    time, inform the Parent of such occurrence and, within a
    reasonable time, provide Parent with the information reasonably
    requested by the Parent in connection therewith. The proxy
    materials will be sent to the stockholders of Parent for the
    purpose of soliciting proxies from holders of Parent Common
    Stock to vote in favor of (i) the adoption of this
    Agreement and the approval of the Merger (“Parent
    Stockholder Approval”), (ii) the issuance and sale
    of shares of Common Stock to the extent that such issuance
    requires shareholder approval under the rules of AMEX and
    (iii) the election of Ron Nixon (Chairman), Allen Neel,
    Richard Turner, James Jacoby and Kim Eubanks, and up to two
    (2) other designees of the Members, such designees to be
    designated by the Members’ Representative at least ninety (
    90) days prior to the Effective Time, and the resignation
    of Messrs. Wilson, Spickelmier, McConnell and Williamson to
    Parent’s Board of Directors at the Parent
    Stockholders’ Meeting. Such proxy materials shall be in the
    form of a proxy statement to be used for the purpose of
    soliciting such proxies from holders of Parent Common Stock.
    Nothing contained in this Section 7.01(a) shall
    impose any additional obligations on the Company except to the
    extent explictly set forth herein.

    

    49

 

 

    (b) As soon as practicable following its approval by the
    SEC, Parent shall distribute the Proxy Statement to the holders
    of Parent Common Stock and, pursuant thereto, shall call the
    Parent Stockholders’ Meeting in accordance with the DGCL
    and, subject to the other provisions of this Agreement, solicit
    proxies from such holders to vote in favor of the adoption of
    this Agreement and the approval of the Merger and the other
    matters presented to the stockholders of Parent for approval or
    adoption at the Parent Stockholders’ Meeting, including,
    without limitation, the matters described in
    Section 7.01(a).

 

    (c) Parent shall comply with all applicable provisions of
    and rules under the Exchange Act, the Securities Act and all
    applicable provisions of the DGCL in the preparation, filing and
    distribution of the Proxy Statement, the solicitation of proxies
    thereunder, and the calling and holding of the Parent
    Stockholders’ Meeting. Without limiting the foregoing,
    Parent shall ensure that the Proxy Statement does not, as of the
    date on which it is distributed to the holders of Parent Common
    Stock, and as of the date of the Parent Stockholders’
    Meeting, contain any untrue statement of a material fact or omit
    to state a material fact necessary in order to make the
    statements made, in light of the circumstances under which they
    were made, not misleading (provided that Parent shall not be
    responsible for the accuracy or completeness of any information
    provided by the Company pursuant to Section 7.01(d)
    below relating to the Company or any other information furnished
    by the Company for inclusion in the Proxy Statement to the
    extent the Company information or its interpretation thereof has
    not been altered by Parent or Parent’s representatives).

 

    (d) Except as set forth in this Agreement, the parties
    acknowledge and agree that (i) Parent shall be responsible
    for preparing the Proxy Statement and the Other Filings and
    (ii) that the Company and the Members shall have no duty,
    obligation or responsibility with respect to the Proxy Statement
    and the Other Filings.

 

    (e) Prior to the Effective Time, Parent shall take such
    actions necessary to change its name from “JK Acquisition
    Corp.” to “MS Energy Services, Inc.”

 

    Section 7.02  Members
    Approval; Exemption from Registration.

 

    (a) Within a reasonable time after the date the Parent
    mails the “definitive” proxy materials to its
    stockholders, and in any event within ten (10) days of such
    mailing, so long as such mailing has occurred, and in accordance
    with applicable Law and the Company’s Charter Documents,
    the Company shall convene a meeting of its Members or solicit
    written consents from its Members to obtain their approval and
    adoption of this Agreement and the other transactions
    contemplated hereby. The Company shall ensure that the
    Members’ meeting is called, noticed, convened and held, and
    that all proxies or written consents are solicited and obtained
    from the Members, in compliance with applicable Law, the
    Company’s Charter Documents, and all other applicable legal
    requirements. The Company agrees to use its commercially
    reasonable best efforts to take all action necessary or
    advisable to secure the necessary votes required by applicable
    Law and the Company’s Charter Documents to effect the
    Merger. The Board of Managers of the Company shall unanimously
    recommend that the Members vote in favor of and adopt and
    approve this Agreement and the other transactions contemplated
    hereby. Neither the Board of Managers of the Company nor any
    committee thereof shall withdraw, amend or modify, or propose or
    resolve to withdraw, amend or modify in a manner adverse to
    Parent, the recommendation of the Board of Managers of the
    Company that the Members vote in favor of and adopt and approve
    this Agreement and the other transactions contemplated hereby,
    except that the Board of Managers shall not be obligated to
    approve or recommend to the Members for approval any proposed
    amendment or modification of this Agreement unless the Board of
    Managers determines, in its sole reasonable discretion, that
    such amendment or modification is in the best interest of the
    Company.

 

    (b) At every meeting of the Members of the Company called
    with respect to any of the following, and at every adjournment
    thereof, and on every action or approval by written consent of
    the Members of the Company with respect to the Merger so long as
    Parent and Merger Sub are not in material violation of this
    Agreement, each Member shall vote or cause to be voted the
    Company Interests and any New Company Interests (as defined
    below) in favor of (x) adoption of the Merger Agreement and
    approval of the Merger, and (y) any matter that is required
    for the Company to ensure the satisfaction of the conditions
    precedent to the consummation of the Merger. Each current Member
    and any future Member agrees that any Company Interests to which
    that Member acquires record or beneficial ownership
    (“New Membership Interests”) after the
    execution of this Agreement and prior to the Closing Date
    (including through the exercise of any options, warrants or
    similar instruments), shall be subject to the terms and
    conditions of this Agreement to the same extent as if the New
    Membership Interests constituted Company

    

    50

 

     Interests. The Members will provide information and otherwise
    execute documents and take other ministerial actions reasonably
    necessary to complete the transactions described herein.

 

    (c) Each of the parties hereto acknowledge that the shares
    of Parent Common Stock issued to the Members pursuant to this
    Agreement are intended to be issued pursuant to the
    “private placement” exemption from registration under
    Section 4(2) of the Securities Act
    and/or
    Regulation D promulgated under the Securities Act and agree
    to fully cooperate with Parent in its efforts to ensure that the
    shares of Parent Common Stock may be issued pursuant to such
    private placement exemption; provided, however,
    that neither Parent nor Merger Sub makes any representation or
    warranty that such issuance in fact qualifies for such private
    placement exemption. Such Parent Shares shall be subject to a
    Registration Rights Agreement substantially in the form attached
    hereto as Exhibit C (the “Registration
    Rights Agreement”).

 

    (d) Notwithstanding the foregoing and anything to the
    contrary in Article VIII hereof, in the event that Parent,
    based on advice of its counsel, has determined that the shares
    of Parent Common Stock to be issued pursuant to this Agreement
    cannot be issued under the “private placement”
    exemption from registration under Section 4(2) of the
    Securities Act
    and/or
    Regulation D promulgated under the Securities Act, then
    Parent shall take all action necessary to prepare and file, on a
    timely basis, a registration statement on
    Form S-4
    with the SEC which registers the issuance of the shares of
    Parent Common Stock pursuant to this Agreement (the
    “Form S-4
    Alternative”). Parent shall use, and shall cause its
    officers, employees, agents, advisors or other representatives
    to use, their respective commercially reasonable best efforts to
    effectuate the foregoing (and fully cooperate with the other
    parties), including, without limitation, preparing and filing
    all applications, documents and forms necessary to register the
    shares of Parent Common Stock on an effective registration
    statement on
    Form S-4.
    In the event that shares of Parent Common Stock are issued
    pursuant to the Form
    S-4
    Alternative, no Shares of Parent Common Stock (or certificates
    therefor) shall be issued in exchange for any Company Interest
    Certificates to any person who, prior to the Effective Time, may
    be an “Affiliate” (as that term is used in
    Rule 145 under the Securities Act) of the Company until
    such person has delivered to Parent and the Company a duly
    executed Affiliate Agreement in the form provided by Parent.

 

    (e) The Members agree that they shall vote any shares of
    Parent Common Stock held by such Members on the record date of
    the Parent Stockholder Meeting in favor of the Merger and for
    the approval of all of the other items brought before the Parent
    Stockholder Meeting for which Parent seeks approval in the Proxy
    Statement.

 

    (f) The Members agree that, prior to the Effective Time,
    they shall not transfer any of their Company Interests to any
    Person who is not an “accredited investor” as such
    term is defined in Rule 501(a) of Regulation D as
    promulgated under the Securities Act.

 

    Section 7.03  Access
    to Information; Confidentiality.

 

    (a) From the date of this Agreement to the Effective Time,
    the Parent and the Company shall, subject to the other
    party’s compliance with the covenant set forth in
    Section 7.03(b) below, use commercially reasonable
    efforts to provide to each other (and each party’s
    officers, directors, employees, accountants, consultants, legal
    counsel, advisors, agents and other representatives
    (collectively, “Representatives”) access as may
    be reasonably necessary at reasonable times upon prior notice to
    the directors, officers, employees, agents, properties, offices
    and other facilities of the other party and to the books and
    records of the Company. The parties acknowledge and agree that
    in the event the Company voluntarily undertakes to perform any
    action other than providing access to its books, records,
    directors, officers, employees, or agents as described herein,
    no such action or actions shall give rise to any obligation on
    the part of the Company broader than the obligations expressly
    set forth in this Section 7.03(a) and as otherwise
    set forth in this Agreement.

 

    (b) The parties shall comply with, and shall cause their
    respective Representatives to comply with, all of their
    respective obligations under the Non-Disclosure Agreement, dated
    May 25, 2006 (the “Non-Disclosure
    Agreement”), between the Company and Parent.

 

    Section 7.04  No
    Solicitation of Transactions.

 

    (a) The Company will not, directly or indirectly, and will
    instruct its Representatives not to, directly or indirectly,
    solicit, initiate or encourage (including by way of furnishing
    nonpublic information), or take any other

    

    51

 

     action to facilitate, any inquiries or the making of any
    proposal or offer (including, without limitation, any proposal
    or offer to its Members) that constitutes any Competing
    Transaction (as defined below), or enter into or maintain or
    continue discussions or negotiate with any person in furtherance
    of such inquiries or to obtain a Competing Transaction, or agree
    to or endorse any Competing Transaction, or authorize or permit
    any of the officers, managers or employees of the Company, or
    any investment banker, financial advisor, attorney, accountant
    or other representative retained by the Company, to take any
    such action. The Company will notify Parent immediately after
    receipt by the Company (or by any of its officers, directors,
    employees, agents, advisors or other representatives) of any
    written proposal for, or written inquiry respecting, any
    Competing Transaction, or any request for nonpublic information
    in connection with such written proposal or inquiry or for
    access to the properties, books or records of the Company by any
    person that informs or has informed the Company that it is
    considering making or has made such a written proposal or
    inquiry. Such notice to Parent shall indicate in reasonable
    detail the identity of the person making such written proposal
    or inquiry and the terms and conditions of such written proposal
    or inquiry. The Company immediately shall cease and cause to be
    terminated all existing discussions or negotiations with any
    parties conducted heretofore with respect to a Competing
    Transaction. The Company agrees not to release any third party
    from, or waive any provision of, any confidentiality or
    standstill agreement to which it is a party.

 

    (b) A “Competing Transaction” means any of
    the following involving the Company (other than the Merger and
    the other transactions contemplated by this Agreement):
    (i) a merger, consolidation, share exchange, business
    combination or other similar transaction; (ii) any sale,
    lease, exchange, transfer or other disposition of a material
    portion of the assets or debt or equity securities of such
    party; (iii) a tender offer or exchange offer for 15% or
    more of the outstanding voting securities of such party; or
    (iv) any solicitation in opposition to approval by the
    Members of the Company of this Agreement and the Merger.

 

    Section 7.05  Employee
    Benefits Matters.

 

    (a) Subject to the requirements of third parties and laws
    associated with existing Company employee benefit plans and
    further subject to determination of any and all obligations
    relating to existing Company benefit plans on the Closing Date,
    all employees of the Company shall continue in their existing
    benefit plans, except for the Company’s satisfaction of its
    obligations under any existing incentive plans and the Special
    Bonus Plan as noted in Section 3.11 of the Company
    Disclosure Schedule, until such time as, in Parent’s sole
    discretion, an orderly transition can be accomplished to
    employee benefit plans and programs maintained by Parent or
    Merger Sub for its and its Affiliates’ employees in the
    United States. Parent and Merger Sub shall take such reasonable
    actions, to the extent permitted by Parent’s and Merger
    Sub’s benefits programs, as are necessary to allow eligible
    employees of the Company to participate in the health, welfare
    and other benefits programs of Parent or Merger Sub or
    alternative benefits programs in the aggregate that are
    substantially equivalent to those applicable to employees of the
    Company prior to Closing in similar functions and positions on
    similar terms (it being understood that equity incentive plans
    are not considered employee benefits). Pending such action,
    Parent shall maintain the effectiveness of and be solely
    responsible for the Company’s benefit plans.

 

    (b) At Closing, Parent will enter into employment
    agreements or the Company will amend existing employment
    agreements (in either case, collectively, the
    “Employment Agreements,” and, individually, an
    “Employment Agreement”) with the individuals
    set forth on Schedule 7.05(b) hereto.

 

    (c) At Closing, Parent will enter into non-solicitation and
    non-competition agreements (collectively, the
    “Non-Solicitation Agreements”, and,
    individually, a “Non-Solicitation Agreement”)
    with the individuals set forth on Schedule 7.05(c) hereto.

 

    (d) Prior to the Effective Time, the Company shall take all
    necessary actions to obtain the requisite Member approval under
    Section 280G(b)(5) of the Code of any payments or benefits
    that could be considered “excess parachute payments”
    within the meaning of Section 280G of the Code and shall
    require all “disqualified individuals” within the
    meaning of Section 280G of the Code to subject their
    existing benefits and payments to the stockholder approval
    requirements of Section 280G(b)(5) of the Code, as
    contemplated in the Proposed Treasury Regulations promulgated
    thereunder. The Company further agrees that whether or not its
    Members approve any such excess parachute payments, neither
    Parent nor the Surviving Corporation shall have any
    responsibility or liability with respect to any excise taxes
    owed by the recipients of any such payments.

    

    52

 

 

    (e) Intentionally omitted.

 

    (f) The Company and, as applicable, its ERISA Affiliates
    each agree to terminate any and all group severance, separation
    or salary continuation plans, programs or arrangements
    immediately prior to Closing. Parent shall receive from the
    Company evidence that the plans, programs or arrangements of the
    Company and, as applicable, each ERISA Affiliate have been
    terminated pursuant to resolutions adopted by each such
    entity’s board of managers or directors (the form and
    substance of which resolutions shall be subject to review and
    approval of Parent), effective as of the day immediately
    preceding the Closing Date but contingent on the Closing.

 

    (g) With respect to all equity interest purchase, option
    and award agreements (including any restricted units, unit
    purchase, option or award agreements under the incentive plans)
    between the Company and any current or former employee, manager,
    consultant or founder effective as of the Effective Time, any
    and all rights of repurchase under each such agreement shall be
    assigned to Parent (or to such other entity as Parent shall
    designate) by virtue of the Merger and without any further
    action on the part of the Company, such assignment to be
    effective as of the Effective Time.

 

    Section 7.06  Further
    Action; Consents; Filings.

 

    (a) Upon the terms and subject to the conditions hereof
    including, without limitation, those set forth in
    Section 7.01(d), each of Parent, Merger Sub and the
    Company shall use its commercially reasonable best efforts to
    (i) take, or cause to be taken, all appropriate action and
    do, or cause to be done, all things necessary under applicable
    Law or this Agreement to consummate and make effective the
    Merger and the other transactions contemplated by this
    Agreement, (ii) obtain from any Governmental Entity or any
    other person all consents, licenses, permits, waivers,
    approvals, authorizations or orders required to be obtained or
    made by Parent or the Company or any of their subsidiaries in
    connection with the authorization, execution and delivery of
    this Agreement and the consummation of the Merger and the other
    transactions contemplated by this Agreement, including those
    required under the HSR Act, and (iii) make all necessary
    filings, and thereafter make any other required submission, with
    respect to this Agreement, the Merger and the other transactions
    contemplated by this Agreement required under applicable Law.
    The Company, Merger Sub and the Company shall, subject to the
    limitations contained in Section 7.01(d), cooperate
    with each other in connection with the making of all such
    filings, including by providing copies of all such documents to
    the non-filing party and its advisors prior to filing and, if
    requested, by accepting all reasonable additions, deletions or
    changes suggested in connection therewith. The Parent covenants
    and agrees that it will provide the Company with not less than
    ten (10) business days advance written notice of its intent
    to file the Premerger Notification Report Form under the HSR Act.

 

    (b) To the extent required, Parent and the Company shall
    file as soon as practicable notifications under the HSR Act and
    each of Parent and the Company shall use commercially reasonable
    efforts to respond as promptly as practicable to all reasonable
    inquiries or requests and to resolve such objections, if any, as
    may be asserted by any Governmental Entity with respect to the
    transactions contemplated by this Agreement under the HSR Act,
    the Sherman Act, as amended, the Clayton Act, as amended, the
    Federal Trade Commission Act, as amended, and any other Federal,
    state or foreign statutes, rules, regulations, orders or decrees
    that are designed to prohibit, restrict or regulate actions
    having the purpose or effect of monopolization or restraint of
    trade (collectively, “Antitrust Laws”). Parent
    shall be solely responsible for any fee payable by Parent,
    Company or the Members in connection with filing the required
    notifications under the HSR Act, if applicable. In connection
    therewith, if any administrative or judicial action or
    proceeding is instituted (or threatened to be instituted)
    challenging any transaction contemplated by this Agreement as
    violating any Antitrust Law, each of Parent and Company shall
    cooperate and Parent shall use all reasonable efforts to contest
    and resist vigorously any such action or proceeding and to have
    vacated, lifted, reversed, or overturned any decree, judgment,
    injunction or other order, whether temporary, preliminary or
    permanent, that is in effect and that prohibits, prevents, or
    restricts consummation of the Merger or any such other
    transactions contemplated by this Agreement, unless by mutual
    agreement Parent and Company decide that litigation is not in
    their respective best interests. The Parent and the Company will
    consult and cooperate with one another, at no expense to the
    Company, and consider in good faith the views of one another, in
    connection with any analyses, appearances, presentations,
    memoranda, briefs, arguments, opinions and proposals made or
    submitted by or on behalf of any party hereto in connection with
    proceedings under or relating to any Antitrust Laws, if
    necessary; provided, that Company shall have no duty, obligation
    or responsibility to undertake any analyses, efforts or other

    

    53

 

     actions in connection with any Proceedings under or relating to
    any Antitrust Laws, except with respect to its obligations to
    file a response to the Premerger Notification Report Form filed
    by the Parent under the HSR Act. Notwithstanding the provisions
    of the immediately preceding sentence, it is expressly
    understood and agreed that neither the Company, the Parent nor
    the Members shall have any obligation to litigate or contest any
    administrative or judicial action or proceeding or any Antitrust
    Order. Each of Parent and Company shall use all commercially
    reasonable efforts to take such actions as may be required to
    cause the expiration of the waiting periods under the HSR Act or
    other Antitrust Laws with respect to such transactions as
    promptly as possible after the execution of this Agreement;
    provided, however, that nothing contained herein
    shall require either party to seek early termination of any such
    waiting period under the Antitrust Laws.

 

    (c) Notwithstanding anything to the contrary in
    Section 7.06(a) or (b), (i) neither Parent nor
    Merger Sub shall be required to divest (including, without
    limitation, through a licensing arrangement) any of their
    respective businesses, product lines or assets, or to take or
    agree to take any other action or agree to any limitation that
    could reasonably be expected to have a Parent Material Adverse
    Effect and (ii) the Company shall not be required to divest
    (including, without limitation, through a licensing arrangement)
    any of its respective businesses, product lines or assets, or to
    take or agree to take any other action or agree to any
    limitation that could reasonably be expected to have a Company
    Material Adverse Effect.

 

    (d) From the date of this Agreement until the earlier of
    the Effective Time or the termination of this Agreement, the
    Company and the Parent shall promptly notify one another in
    writing of any pending or, to the knowledge of such party,
    threatened action, proceeding or investigation by any
    Governmental Entity or any other person (i) challenging or
    seeking material damages in connection with this Agreement or
    the transactions contemplated hereunder or (ii) seeking to
    restrain or prohibit the consummation of the Merger or the
    transactions contemplated hereunder or otherwise limit the right
    of Parent or its subsidiaries to own or operate all or any
    portion of the business, assets or properties of the Company.

 

    Section 7.07  Intentionally
    Omitted.

 

    Section 7.08  No
    Public Announcement.  The initial press
    release relating to this Agreement shall be a joint press
    release the text of which has or will have been substantially
    agreed to by each of Parent and the Company prior to its
    release. Thereafter, unless otherwise required by applicable
    Law, neither Parent nor the Company shall issue any press
    release or otherwise make any public statements with respect to
    this Agreement, the Merger or any of the other transactions
    contemplated by this Agreement without the prior written consent
    of the other party.

 

    Section 7.09  Expenses.  Except
    as provided in Article IX or
    Section 2.03, in the event that the Merger is
    consummated, then at Closing (a) the Parent shall reimburse
    the Members for all prepaid Transaction Expenses and either pay
    to the Members, or pay directly to the third parties who are
    owed Transaction Expenses, all unpaid Transaction Expenses,
    (b) the Parent shall reimburse James P. Wilson and Keith D.
    Spickelmier for their proportionate share of the $300,000
    advanced to the Parent as of the date hereof, and (c) with
    respect to Founder Expenses paid or incurred after the date
    hereof, either pay any such Founder Expenses to James P. Wilson
    and Keith D. Spickelmier or to the third parties who are owed
    Founder Expenses; provided, however, in no event will the
    aggregate amount of Founder Expenses paid or reimbursed to
    Messrs. Wilson and Spickelmier under Subsection (b)
    and (c) above exceed $800,000. In addition, at Closing or
    at such other time as may be specified under the GB Agreement or
    the PB Agreement, the Parent shall pay all amounts required to
    be paid by it under the GB Agreement and the PB Agreement. In
    the event that the Merger is not consummated, then the
    provisions of Article IX shall govern.

 

    Section 7.10  Affiliate
    Agreements.  In the event that Parent elects
    to issue the shares of Parent Common Stock pursuant to the
    Form S-4
    Alternative, the Company shall request each person that could
    reasonably be deemed to be an “Affiliate” of the
    Company for purposes of the Securities Act to execute and
    deliver to Parent, as promptly as practicable after the
    execution of this Agreement, an Affiliate Agreement in the form
    provided by Parent.

 

    Section 7.11  Intentionally
    Omitted.

 

    Section 7.12  AMEX
    Listing.  Parent shall promptly prepare and
    file with AMEX a Notification Form for Listing Additional Shares
    with respect to the Parent Shares and Redemption Liability
    Shares to be issued at the

    

    54

 

     Effective Time pursuant to this Agreement and shall use its
    reasonable efforts to obtain, prior to the Effective Time,
    approval for the listing of such Parent Shares and
    Redemption Liability Shares, subject to official notice to
    AMEX of issuance, and the Company shall reasonably cooperate
    with Parent with respect to such filing on a basis consistent
    with the Company’s duties under Section 7.01
    hereof.

 

    Section 7.13  Intentionally
    Omitted.

 

    Section 7.14  Key
    Employees.  Prior to the Closing, the Company
    shall notify Parent if, to the Company’s Knowledge, any key
    employee or officer of the Company expects to or has expressed
    an intent to resign from his or her position with the Company
    within twelve (12) months after the Closing Date.

 

    Section 7.15  WARN
    Act.  To the extent that the Merger triggers a
    termination of the Company’s employees, the Company agrees
    to use commercially reasonable efforts to make available the
    existing Company employees to Parent that the Merger Sub desires
    to continue employment of for the purpose of operating the
    Business. Parent and Merger Sub agree to continue the
    opportunity to be employed to all or substantially all of the
    Company employees on the terms and conditions that presently
    exist as of the Closing Date. Nothing between the parties shall
    prohibit Parent or Merger Sub from terminating any of the
    existing employees subsequent to their employment by Merger Sub.
    If it appears that a violation of the federal Worker Adjustment
    and Retraining Notification Act (the “WARN
    Act”) is likely to occur, Parent or the Company may
    elect to terminate this Agreement without further liability or,
    by mutual agreement, they may elect to proceed with complying
    with said laws and close the transaction as soon after such
    compliance as is reasonably practicable. The parties agree to
    consult with each other on the need for and timing of notices
    pursuant to the WARN Act, if applicable, and utilize
    commercially reasonable efforts to comply with same.

 

    Section 7.16  Conversion
    Schedule.  Section 7.16 of the
    Company Disclosure Schedule is a schedule prepared by the
    Company (the “Preliminary Conversion Schedule”)
    showing the number of Parent Shares, Parent Warrants,
    Redemption Liability Shares and Redemption Warrants to
    be issued to each holder of shares of Company Interests and each
    holder of rights to acquire membership interests of the Company,
    including the number of Parent Shares, Parent Warrants,
    Redemption Liability Shares and Redemption Warrants to
    be deposited in the Escrow Fund, as of the execution of this
    Agreement as if the Effective Time and the exchange of shares
    pursuant to the Merger had occurred as of the date of the
    execution of this Agreement (assuming that no
    Redemption Liability Shares and Redemption Warrants
    will be issued to the Members pursuant to
    Section 2.08). Within ten (10) days after the
    Closing, the Company and the Members’ Representative shall
    prepare a final schedule as of the Effective Time (the
    “Final Conversion Schedule”), and an officer of
    the Company shall certify the Final Conversion Schedule and
    deliver such schedule to Parent.

 

    Section 7.17  Litigation
    Support.  In the event and for so long as any
    Member is actively contesting or defending against any action,
    suit, proceeding, hearing, investigation, charge, complaint,
    claim or demand in connection with (i) any transaction
    contemplated under this Agreement, or (ii) any fact,
    situation, circumstance, status, condition, activity, practice,
    plan, occurrence, event incident, action, failure to act, or
    transaction on or prior to the Closing Date involving the
    Company, each of the Parent, Merger Sub and the Company will
    reasonably cooperate with one another and their respective
    counsel in the contest or defense, reasonably make available
    their personnel, and provide such testimony and access to their
    books and records as shall be reasonably necessary in connection
    with the contest or defense, all at the sole cost and expense of
    the contesting or defending Member (unless the contesting or
    defending Member is entitled to indemnification therefore as
    described below). Parent and Merger Sub acknowledge and agree
    that any Member that is individually brought into any litigation
    in connection with the Company for facts, events or
    circumstances arising prior to the Closing shall be indemnified
    to the maximum extent permitted to be indemnified under the
    Company’s Charter Documents. Notwithstanding the foregoing,
    the Member(s) shall not be entitled to indemnification to the
    extent of any of the following:

 

    (i) they are sued for any shareholder derivative action or
    suit by any Member; or

 

    (ii) actions or inactions which constitute a breach of any
    Member representation, warranty, covenant or agreement set forth
    herein; or

 

    (iii) actions or inactions by any Member which constitute a
    breach of any fiduciary duty; or

    

    55

 

 

    (iv) to the extent such Member(s) are found to have engaged
    in gross negligence, intentional misconduct, willful misconduct
    or fraud or other non-indemnifiable conduct set forth in the
    Company Charter Documents.

 

    Section 7.18  Director
    and Officer Insurance.  On or before the
    Closing Date, Parent shall provide to the Company an updated
    commitment for a director and officer insurance policy covering
    Parent, Merger Sub and Company directors, managers and executive
    officers with coverage limits not less than $10,000,000. Such
    policy shall be, without exception, effective as of the
    Effective Time, and reasonably acceptable to the Company and all
    directors of Parent and Merger Sub in accordance with the terms
    and provisions contained in the commitment. The bylaws,
    regulations or other operative documents of the Surviving
    Corporation shall furthermore continue to provide
    indemnification to all directors and executive officers to the
    maximum extent provided by Delaware law.

 

    Section 7.19  Schedules
    Bring Down.

 

    (a) The representations and warranties of the Company
    contained in this Agreement and all information delivered in the
    Company Disclosure Schedule, or any attachment or exhibit hereto
    or in any certificate delivered by the Company to Parent
    and/or
    Merger Sub shall be true and correct on the Closing Date as
    though then made and as though the Closing Date was substituted
    for the date to which such representations and warranties relate
    throughout such representations and warranties; provided,
    however, that the Company Disclosure Schedule delivered to
    Parent and Merger Sub as of the date of the Original Agreement
    shall be permitted to be revised and amended as of the Closing
    Date pursuant to the terms and conditions of
    Section 7.19(c) below.

 

    (b) The representations and warranties of Parent and Merger
    Sub contained in this Agreement and all information delivered in
    the Parent Disclosure Schedule, or any attachment or exhibit
    hereto or in any certificate delivered by Parent to the Company
    shall be true and correct on the Closing Date as though then
    made and as though the Closing Date was substituted for the date
    of this Agreement throughout such representations and
    warranties; provided, however, that the Parent Disclosure
    Schedule delivered to the Company as of the date of the Original
    Agreement shall be permitted to be revised and amended as of the
    Closing Date pursuant to the terms and conditions of
    Section 7.19(c) below.

 

    (c) The Company agrees to use its commercially reasonable
    best efforts to update Company Disclosure Schedules and deliver
    a revised and amended Company Disclosure Schedule to Parent on
    or prior to September 30, 2007, which updated Company
    Disclosure Schedules will be as of the Execution Date. The
    Parent and the Company agree to use their commercially
    reasonable best efforts to provide each other with any revised
    and amended schedules pursuant to this Section 7.19
    no later than five (5) business days prior to the Closing
    Date mutually agreed upon by Parent and the Company. Based upon
    its review of the schedules delivered pursuant to
    Section 7.19 by the other party, either party may
    terminate this Agreement and the Merger and the other
    transactions contemplated by this Agreement may be abandoned at
    any time prior to the Effective Time (i) by the Company if
    the revised Parent Disclosure Schedules contain an adverse
    change (other than a Parent Excluded Change) that can reasonably
    be valued in excess of $1,000,000, or (ii) by the Parent if
    the revised Company Disclosure Schedules contain an adverse
    change (other than a Company Excluded Change) that can
    reasonably be valued in excess of $1,000,000; provided,
    however, if (i) Parent terminates this Agreement
    pursuant to this Section 7.19(c) or if Parent’s
    termination is not reasonable pertaining to the schedules
    delivered by the Company to Parent, and Parent’s duties
    under Section 9.02(b) herein would otherwise have
    existed, then the terms of Section 9.02(b) shall
    apply to Parent, and (ii) the Company terminates this
    Agreement pursuant to this Section 7.19(c), and
    Parent’s duties under Section 9.02(b) herein
    would otherwise have existed, then the terms of
    Section 9.02(b) shall apply to Parent. The term
    “Parent Excluded Change” means (i) any
    changes in general, political, global or other national or
    worldwide events or changes in economic or business conditions
    that do not disproportionately impact Parent as compared to
    other entities similar in size and scope as that of Parent and
    that are within its industry or (ii) any changes or events
    affecting the industry in which Parent operates that do not
    disproportionately impact Parent as compared to other entities
    similar in size and scope as that of Parent and that are within
    its industry, (iii) any decline in the trading price of
    Parent Common Stock, (iv) any adverse change in the United
    States securities market that does not disproportionately impact
    Parent, or (v) the expenditure or incurrence of the Parent
    Estimated Expenses, on or after the date of this Agreement and
    prior to the Closing Date. The term “Company Excluded
    Change” means (i) any changes in general,
    political, global or other national or worldwide events or
    changes in economic or business conditions that do not
    disproportionately impact the Company as compared to other
    entities similar in size

    

    56

 

     and scope as that of the Company and that are within its
    industry or (ii) any changes or events affecting the
    industry in which the Company operates that do not
    disproportionately impact the Company as compared to other
    entities similar in size and scope as that of the Company and
    that are within its industry.

 

    (d) Notwithstanding anything to the contrary contained
    herein, the parties acknowledge and agree that all the schedules
    attached hereto are as of the Execution Date except for the
    schedules attached hereto that pertain to
    Sections 3.07 through 3.33, which will be as
    of June 30, 2007 (until, with respect to the Company
    Disclosure Schedules, such schedules are updated as contemplated
    in Section 7.19(c)). Accordingly, none of the
    parties shall be in breach of any of the representations and
    warranties containing schedules by virtue of those schedules
    being inaccurate due to changes thereto between the time of
    June 30, 2007 and the Execution Date; provided, however,
    that the provisions contained in Section 7.19(a),
    (b) and (c) hereof shall apply with respect to the
    right, duty and obligation of the parties to update the
    schedules no later than five (5) business days prior to the
    Closing Date, and as further updated up to the actual Closing
    Date.

 

    ARTICLE VIII

    

 

    CONDITIONS
    TO THE MERGER

 

    Section 8.01  Conditions
    to the Obligations of Each Party.  The
    respective obligations of the Company, Parent and Merger Sub to
    consummate the Merger are subject to the satisfaction or waiver
    (where permissible) of the following conditions:

 

    (a) Stockholder Approval.  This
    Agreement shall have been approved and adopted by the requisite
    affirmative vote of the stockholders of Parent in accordance
    with the DGCL and the Parent’s Certificate of Incorporation
    and Bylaws, provided that Parent will proceed with the Merger
    only if (i) a majority of the shares of Parent Common Stock
    voted by the Public Stockholders are voted in favor of the
    Merger and (ii) Public Stockholders owning less than 20% of
    the shares of Parent Common Stock both vote against the Merger
    and exercise their Redemption Option pursuant to the
    Parents’ Certificate of Incorporation. As used herein, the
    term “Public Stockholders” shall mean any
    stockholder of Parent holding shares of Parent Common Stock
    issued in connection the Parent’s IPO, excluding shares of
    Parent Common Stock held by the Founders. As used herein, the
    term “Founders” shall mean James P. Wilson,
    Keith D. Spickelmier, Michael H. McConnell and Herbert C.
    Williamson;

 

    (b) No Order.  No Governmental
    Entity or court of competent jurisdiction located or having
    jurisdiction in the United States shall have enacted, issued,
    promulgated, enforced or entered any statute, rule, regulation,
    decree, judgment, injunction or other order, whether temporary,
    preliminary or permanent (each an “Order”)
    which is then in effect and has the effect of making the Merger
    illegal or otherwise prohibiting consummation of the Merger;

 

    (c) HSR Act.  Any waiting period
    (and any extension thereof) applicable to the consummation of
    the Merger under the HSR Act shall have expired or been
    terminated, if applicable;

 

    (d) Listing.  Parent shall have
    filed with AMEX a Notification Form for Listing Additional
    Shares with respect to Parent Shares and
    Redemption Liability Shares at the Effective Time to be
    issued pursuant to this Agreement; and

 

    (e) Registration Rights
    Agreement.  Parent, the Members and the
    Members’ Representative shall have entered into the
    Registration Rights Agreement.

 

    Section 8.02  Conditions
    to the Obligations of Parent and Merger Sub.

 

    The obligations of Parent and Merger Sub to consummate the
    Merger are subject to the satisfaction or waiver (where
    permissible) of the following additional conditions:

 

    (a) Representations and
    Warranties.  Each of the representations and
    warranties made by the Company in this Agreement that are
    qualified as to Knowledge, materiality or Company Material
    Adverse Effect, or any similar standard or qualification, shall
    be true and correct in all respects, and each of the
    representations and warranties made by the Company in this
    Agreement that are not qualified as to Knowledge, materiality or

    

    57

 

     Company Material Adverse Effect, or any similar standard or
    qualification, shall be true and correct in all material
    respects, in each case as of the Effective Time with the same
    force and effect as if made on and as of the Effective Time,
    except that those representations and warranties that address
    matters only as of a particular date shall remain true and
    correct as of such date, and Parent shall have received a
    certificate of the Chief Executive Officer of the Company to
    that effect;

 

    (b) Agreements and Covenants.  The
    Company 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 Effective Time and Parent shall have received a certificate
    of the Chief Executive Officer of the Company to that effect;

 

    (c) Approvals.  Parent shall have
    received, each in form and substance reasonably satisfactory to
    Parent, all authorizations, consents, orders and approvals
    (i) required by any Governmental Entity or official, if
    any, (ii) set forth in Section 3.06 of the
    Company Disclosure Schedule or (iii) the failure of which
    to obtain would have, or could reasonably be expected to have, a
    Company Material Adverse Effect;

 

    (d) No Company Material Adverse
    Effect.  No event or events shall have
    occurred, or could be reasonably likely to occur, which,
    individually or in the aggregate, have, or could reasonably be
    expected to have, a Company Material Adverse Effect;

 

    (e) Employment Agreements.  Each
    individual set forth on Schedule 7.05(b) hereto
    shall remain employed by the Company and the Employment
    Agreements shall have been entered into at Closing on mutually
    acceptable terms to Parent and such individuals;

 

    (f) Non-Solicitation
    Agreements.  Each individual set forth on
    Schedule 7.05(c) shall have entered into a
    Non-Solicitation Agreement on mutually acceptable terms to
    Parent and such individuals;

 

    (g) Affiliate Agreements.  In the
    event that Parent elects to issue the shares of Parent Common
    Stock pursuant to the
    Form S-4
    Alternative, each of the Affiliates of the Company shall have
    executed and delivered to Parent an Affiliate Agreement and such
    agreement shall (i) become effective at Closing or
    (ii) remain in full force and effect and shall not have
    been anticipatorily breached or repudiated by any of such
    Affiliates;

 

    (h) No Restraints.  There shall not
    be pending or threatened any suit, action, investigation or
    proceeding to which a Governmental Entity is a party
    (i) seeking to restrain or prohibit the consummation of the
    Merger or any of the other transactions contemplated by this
    Agreement or seeking to obtain from Parent or the Company any
    damages that are material or (ii) seeking to prohibit or
    limit the ownership or operation by Parent or the Company of any
    material portion of their respective businesses or assets;

 

    (i) Issuance of Shares of Parent Common
    Stock.  The issuance of the shares of Parent
    Common Stock pursuant to this Agreement will be validly issued
    pursuant to the “private placement” exemption from
    registration provided by Section 4(2) of the Securities Act
    and/or
    Regulation D promulgated under the Securities Act. If
    Parent elects to utilize the
    Form S-4
    Alternative, the registration statement on
    Form S-4
    shall have become effective under the Securities Act and shall
    not be the subject of any stop order or proceeding seeking a
    stop order;

 

    (j) Escrow Agreement.  Parent, the
    Members’ Representative and Escrow Agent shall have entered
    into the Escrow Agreement and the Escrow Agreement shall be in
    full force and effect and shall not have been anticipatorily
    breached or repudiated;

 

    (k) Termination or Amendment of Incentive
    Plans.  The Company shall have terminated or
    amended the incentive plans identified by Parent prior to
    Closing, and the Company shall have provided Parent with
    evidence, reasonably satisfactory to Parent, as to the
    termination or amendment of the incentive plans;

 

    (l) Opinion of the Company’s
    Counsel.  Parent shall have received the
    opinion of Franklin, Cardwell & Jones, P.C.,
    counsel to the Company, substantially in the form attached
    hereto as Exhibit D;

 

    (m) Intentionally omitted;

    

    58

 

 

    (n) Secretary’s
    Certificate.  Parent shall have received
    (i) a certificate executed by the Secretary of the Company
    attaching and certifying as to matters customary for a
    transaction of this sort, including, without limitation, the
    true and correct copies of the Company’s Charter Documents
    and copies of the resolutions of the Company’s Board of
    Managers and the Members approving and adopting this Agreement
    and the transactions relating hereto, and (ii) such other
    documents relating to the transactions contemplated by this
    Agreement as Parent may reasonably request;

 

    (o) Estoppel Certificate.  Parent
    shall have received an estoppel certificate, dated as of a date
    not more than seven (7) days prior to the Closing Date and
    satisfactory in form and content to Parent, executed by each of
    those landlords listed on Section 3.12(a)(iii) of
    the Company Disclosure Schedule whose consent is required in
    order that the parties might consummate the transactions
    contemplated hereby;

 

    (p) FIRPTA Compliance.  The Company
    shall, prior to the Closing Date, provide Parent with a properly
    executed Foreign Investment in Real Property Tax Act of 1980
    (“FIRPTA”) Notification Letter, in form and
    substance satisfactory to Parent, which states that the
    membership interests of the Company do not constitute
    “United States real property interests” under
    Section 897(c) of the Code, for purposes of satisfying
    Parent’s obligations under Treasury
    Regulation Section 1.1445-2(c)(3).
    In addition, simultaneously with delivery of such Notification
    Letter, the Company shall have provided to Parent, as agent for
    the Company, a form of notice to the Internal Revenue Service in
    accordance with the requirements of Treasury
    Regulation Section 1.897-2(h)(2)
    along with written authorization for Parent to deliver such
    notice form to the Internal Revenue Service on behalf of the
    Company upon the consummation of the Merger;

 

    (q) Parachute Payments.  Prior to
    the Effective Time, the Company shall have obtained the
    requisite Members approval, if any, under
    Section 280G(b)(5) of the Code of any payments or benefits
    that could be considered “excess parachute payments”
    within the meaning of Section 280G of the Code, and any
    “disqualified individuals” as defined in
    Section 280G of the Code shall have agreed to forfeit any
    payments that would otherwise be non-deductible if such Member
    approval, if required is not obtained;

 

    (r) Employees.  Each of the
    individuals set forth on Schedule 8.02(r) shall be
    employed in good standing by the Company;

 

    (s) Board and Officer
    Resignations.  The Company shall have received
    written letters of resignation from each of the current members
    of the Board of Managers and officers of the Company, in each
    case effective at the Effective Time;

 

    (t) Termination or Amendment of Employee
    Agreements.  Parent shall have been furnished
    evidence satisfactory to it that the Company has terminated or
    amended all employment agreements with Messrs. Neel,
    Culbreth and Cudd, and that any employment agreements existing
    prior to Closing between the Company and each of those employees
    set forth on Schedule 8.02(t) shall be valid and
    enforceable;

 

    (u) Termination of the Company’s
    Agreements.  Parent shall have been furnished
    evidence satisfactory to it that all rights granted by the
    Company to its members and in effect prior to the Closing,
    including, but not limited to, rights of co-sale, voting,
    registration, first refusal, first offer, preemptive, board
    observation or information or operational covenants, shall have
    terminated prior to the Closing Date;

 

    (v) Intentionally Omitted.

 

    (w) Termination of Membership Interest Transfer
    Agreement.  The Company shall have terminated
    the Membership Interest Transfer Agreement effective as of the
    date of the Closing; and

 

    (x) Fairness Opinion.  The Opinion
    shall have been issued by a nationally recognized firm that
    (i) the Merger is fair to, and in the best interest of,
    Parent, Merger Sub and their respective stockholders and
    (ii) the fair market value of the Company is equal to at
    least 80% of Parent’s net assets.

    

    59

 

 

    Section 8.03  Conditions
    to the Obligations of the Company.  The
    obligations of the Company to consummate the Merger are subject
    to the satisfaction or waiver (where permissible) of the
    following additional conditions:

 

    (a) Representations and
    Warranties.  Each of the representations and
    warranties of Parent and Merger Sub contained in this Agreement
    that are qualified as to materiality or Parent Material Adverse
    Effect, or any similar standard or qualification, shall be true
    and correct, and each of the representations and warranties of
    Parent and Merger Sub contained in this Agreement that are not
    qualified as to materiality or Parent Material Adverse Effect,
    or any similar standard or qualification, shall be true and
    correct in all material respects, in each case as of the
    Effective Time with the same force and effect as if made on and
    as of the Effective Time, except that those representations and
    warranties which address matters only as of a particular date
    shall remain true and correct as of such date, and the Company
    shall have received a certificate of a duly authorized officer
    of Parent to that effect;

 

    (b) Approvals.  The Company shall
    have received, each in form and substance reasonably
    satisfactory to the Company, all authorizations, consents,
    orders and approvals (i) required by any Governmental
    Entity or official, if any, (ii) set forth in
    Section 5.04(b) of the Parent Disclosure Schedule or
    (iii) the failure of which to obtain would have, or could
    reasonably be expected to have, a Parent Material Adverse Effect;

 

    (c) Employment Agreements.  Each
    individual set forth on Schedule 7.05(b) hereto
    shall remain employed by the Company and the Employment
    Agreements shall be entered into with such individuals at
    Closing on mutually acceptable terms;

 

    (d) Non-Solicitation
    Agreements.  Each individual set forth on
    Schedule 7.05(c) hereto shall enter into a
    Non-Solicitation Agreement at Closing on mutually acceptable
    terms;

 

    (e) Affiliate Agreements.  In the
    event that Parent elects to issue the shares of Parent Common
    Stock pursuant to the
    Form S-4
    Alternative, each of the Affiliates of the Company shall have
    executed and delivered to Parent an Affiliate Agreement and such
    agreement shall (i) become effective at Closing, or
    (ii) remain in full force and effect and shall not have
    been anticipatorily breached or repudiated by any of such
    Affiliates;

 

    (f) No Restraints.  There shall not
    be pending or threatened any suit, action, investigation or
    proceeding to which a Governmental Entity is a party
    (i) seeking to restrain or prohibit the consummation of the
    Merger or any of the other transactions contemplated by this
    Agreement or seeking to obtain from Parent or the Company any
    damages that are material or (ii) seeking to prohibit or
    limit the ownership or operation by Parent or the Company of any
    material portion of their respective businesses or assets;

 

    (g) Issuance of Shares of Parent Common
    Stock.  The issuance of the shares of Parent
    Common Stock pursuant to this Agreement will be validly issued
    pursuant to the “private placement” exemption from
    registration provided by Section 4(2) of the Securities Act
    and/or
    Regulation D promulgated under the Securities Act. If
    Parent elects to utilize the
    Form S-4
    Alternative, the registration statement on
    Form S-4
    shall have become effective under the Securities Act and shall
    not be the subject of any stop order or proceeding seeking a
    stop order;

 

    (h) Escrow Agreement.  Parent, the
    Members’ Representative and Escrow Agent shall have entered
    into the Escrow Agreement and the Escrow Agreement shall be in
    full force and effect and shall not have been anticipatorily
    breached or repudiated;

 

    (i) Secretary’s
    Certificate.  The Company shall have received
    (i) certificates executed by the Secretary of each of
    Parent and Merger Sub attaching and certifying as to matters
    customary for a transaction of this sort, including, without
    limitation, the true and correct copies of Parent’s and
    Merger Sub’s organizational documents and copies of the
    resolutions of the each of their Boards of Directors approving
    and adopting this Agreement and the transactions relating
    hereto, and (ii) such other documents relating to the
    transactions contemplated by this Agreement as the Company may
    reasonably request;

 

    (j) FIRPTA Compliance.  Parent
    shall, prior to the Closing Date, provide the Company with a
    properly executed FIRPTA Notification Letter, in form and
    substance satisfactory to the Company, which states that the
    stock of Parent and Merger Sub do not constitute “United
    States real property interests” under Section 897(c)

    

    60

 

     of the Code, for purposes of satisfying Parent’s
    obligations under Treasury
    Regulation Section 1.1445-2(c)(3).
    In addition, simultaneously with delivery of such Notification
    Letter, Parent shall have provided to the Company, as agent for
    Parent, a form of notice to the Internal Revenue Service in
    accordance with the requirements of Treasury
    Regulation Section 1.897-2(h)(2)
    along with written authorization for Company to deliver such
    notice form to the Internal Revenue Service on behalf of Parent
    upon the consummation of the Merger;

 

    (k) Employees.  Each of the
    individuals set forth on Schedule 8.02(r) shall be
    employed in good standing by the Company;

 

    (l) Termination of the Company’s
    Agreements.  All rights granted by the Company
    to its Members and in effect prior to the Closing, including,
    but not limited to, rights of co-sale, voting, registration,
    first refusal, first offer, preemptive, board observation or
    information or operational covenants, shall have terminated
    prior to the Closing Date;

 

    (m) Termination of Incentive
    Plan.  The Company shall have terminated or
    amended the incentive plans effective as of the date of the
    Closing;

 

    (n) Termination of Membership Interest Transfer
    Agreement.  The Company shall have terminated
    the Membership Interest Transfer Agreement effective as of the
    date of the Closing;

 

    (o) Agreements and Covenants.  Each
    of Parent and Merger Sub 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 Effective Time, and the Company shall have received
    a certificate of a duly authorized officer of Parent to that
    effect;

 

    (p) Opinion of Parent’s
    Counsel.  The Company shall have received the
    opinion of Patton Boggs, counsel to Parent, or another counsel
    reasonably satisfactory to the Company, substantially in the
    form attached hereto as Exhibit E;

 

    (q) Resignations.  Parent shall
    have received a written letter of resignation and release from
    Herbert C. Williamson and Michael H. McConnell as directors of
    Parent, and from James P. Wilson as a director and Chief
    Executive Officer of Parent and Keith D. Spickelmier as a
    director and President of Parent, in each case effective at the
    Effective Time; provided, that such resignation and
    release will not release Parent from any contractual or
    statutory obligations owed by it to insure
    and/or
    indemnify any of the foregoing individuals for such
    individuals’ acts or omissions in their capacity as
    officers
    and/or
    directors of Parent.

 

    (r) No Parent Material Adverse
    Effect.  No event or events shall have
    occurred, or be reasonably likely to occur, which, individually
    or in the aggregate, have, or could have, a Parent Material
    Adverse Effect;

 

    (s) Fairness Opinion.  An updated
    Opinion shall have been issued by a nationally recognized firm
    that (i) the Merger is fair to, and in the best interest
    of, Parent, Merger Sub and their respective stockholders and
    (ii) the fair market value of the Company is equal to at
    least 80% of Parent’s net assets;

 

    (t) Evidence of Funding.  Parent
    shall provide the Company with evidence satisfactory to the
    Company that Messrs. Wilson and Spickelmier have funded the
    Parent with up to an additional $500,000 (in addition to the
    $300,000 advanced as of the Execution Date) as necessary for the
    expenses of the Parent on terms acceptable to the Company;

 

    (u) Contribution of Founder
    Shares.  For the consideration provided in the
    Settlement Agreement and each to be effective upon the Effective
    Time: (i) the Parent shall have received, and James P.
    Wilson shall have contributed to Parent, 1,327,339 shares
    of Parent Common Stock; (ii) Parent shall have received,
    and Keith D. Spickelmier shall have contributed to Parent,
    1,086,005 shares of Parent Common Stock, (iii) Parent
    shall have received, and Michael H. McConnell shall have
    contributed to Parent, 22,495 shares of Parent Common
    Stock, (iv) Parent shall have received, and Herbert C.
    Williamson shall have contributed to Parent, 22,495 shares
    of Parent Common Stock, and Parent shall hold such shares of
    Parent Common Stock as treasury stock;

 

    (v) PB Agreement.  Parent shall
    provide the Company with a copy of the PB Agreement duly
    executed by the Parent and Patton Boggs;

    

    61

 

 

    (w) GB Agreement.  Parent shall
    provide the Company with a copy of the GB Legal Fees Agreement
    duly executed by the Parent, Merger Sub, James P. Wilson,
    Keither D. Spickelmier, Herbert C. Williamson, Michael H.
    McConnell and Gibbs & Bruns;

 

    (x) Transfer of Parent Common Stock to
    Gibbs & Bruns.  (i) James P.
    Wilson shall have transferred all of his right, title and
    interest in and to 50,417 shares of Parent Common Stock to
    Gibbs & Bruns, (ii) Keith D. Spickelmier shall
    have transferred all of his right, title and interest in and to
    41,250 shares of Parent Common Stock to Gibbs &
    Bruns, (iii) Herbert C. Williamson shall have transferred
    all of his right, title and interest in and to 463 shares
    of Parent Common Stock to Gibbs & Bruns, and
    (iv) Michael H. McConnell shall have transferred all of his
    right, title and interest in and to 463 shares of Parent
    Common Stock to Gibbs & Bruns, in each instance in
    accordance with the terms of the GB Agreement and effective as
    of the Effective Time;

 

    (y) Repayment of Stephens Group
    Debt.  At the Closing, the Company shall have
    repaid the Stephens Group Debt in full;

 

    (z) Transaction Expenses.  At the
    Closing, the Parent shall have either directly paid the
    Transaction Expenses on behalf of the Members and Company or
    reimbursed the Members for the Transaction Expenses;

 

    (aa) Cash Consideration.  At the
    Closing, the Parent shall have paid the Cash Consideration to
    the Members in cash or other readily available funds as provided
    in Section 2.01(a)(i)(3) hereof; and

 

    (bb) Parent Warrants.  At the
    Closing, the Parent shall have duly executed and delivered the
    Parent Warrants to the Members as provided in
    Section 2.01(a)(i)(2) hereof.

 

    ARTICLE IX

    

 

    TERMINATION,
    AMENDMENT AND WAIVER

 

    Section 9.01  Termination.  This
    Agreement may be terminated and the Merger and the other
    transactions contemplated by this Agreement may be abandoned at
    any time prior to the Effective Time, notwithstanding any
    requisite approval and adoption of this Agreement and the
    transactions contemplated by this Agreement, as follows:

 

    (a) by mutual written consent duly authorized by the Board
    of Directors of Parent and Merger Sub and the Board of Managers
    of the Company prior to the Effective Time;

 

    (b) by either Parent or the Company upon the issuance of
    any Order which is final and nonappealable which would
    (i) prevent the consummation of the Merger,
    (ii) prohibit Parent’s or the Company’s ownership
    or operation of any portion of the business of the Company or
    (iii) compel Parent or the Company to dispose of or hold
    separate, as a result of the Merger, any material portion of the
    business or assets of the Company or Parent;

 

    (c) by Parent upon a breach of any material representation,
    warranty, covenant or agreement on the part of the Company set
    forth in this Agreement, or if any representation or warranty of
    the Company shall have become untrue, in either case such that
    the conditions set forth in Sections 8.02(a) and
    8.02(b) would not be satisfied (“Terminating
    Company Breach”); provided, however,
    that, if such Terminating Company Breach is curable by the
    Company through the exercise of its commercially reasonable best
    efforts and for so long as the Company continues to exercise
    such commercially reasonable best efforts, Parent may not
    terminate this Agreement under this Section 9.01(c)
    unless such breach is not cured within 30 days after notice
    thereof is provided by Parent to the Company (but no cure period
    is required for a breach which, by its nature, cannot be cured);

 

    (d) by the Company upon a breach of any material
    representation, warranty, covenant or agreement on the part of
    Parent and Merger Sub set forth in this Agreement, or if any
    representation or warranty of Parent and Merger Sub shall have
    become untrue, in either case such that the conditions set forth
    in Sections 8.03(a) and 8.03(b) would not be
    satisfied (“Terminating Parent Breach”);
    provided, however, that, if such Terminating
    Parent Breach is curable by Parent and Merger Sub through the
    exercise of their respective commercially reasonable best
    efforts and for so long as Parent and Merger Sub continue to
    exercise such commercially reasonable best efforts, the Company
    may not terminate this Agreement under this
    Section 9.01(d) unless such breach is not cured
    within 30 days after notice thereof is provided by the
    Company to Parent (but no cure period

    

    62

 

     is required for a breach which, by its nature, cannot be
    cured); provided that, in the event that the aggregate
    liabilities and indebtedness of Parent and Merger Sub exceed
    $4,202,500 as of the Closing Date, then Parent shall be in
    material breach of its representation contained in the last
    sentence of Section 5.19 and such breach shall constitute a
    Terminating Parent Breach for purposes of this
    Section 9.01(d); or

 

    (e) by Parent if the Company’s 2007 Annualized
    Adjusted EBITDA is less than $29,000,000 through the end of the
    most recently completed month prior to the month in which the
    Effective Time occurs.

 

    Section 9.02  Effect
    of Termination.

 

    (a) In the event of termination of this Agreement pursuant
    to Sections 9.01(a), 9.01(c),
    9.01(d) or 9.01(e), or by Parent to the extent
    permitted under Section 7.19(c), this Agreement
    shall forthwith become void, there shall be no liability under
    this Agreement on the part of Parent, Merger Sub or the Company
    or any of their respective officers, managers or directors, and
    all rights and obligations of each party hereto shall cease;
    provided, however, that (i)
    Section 7.03(b), Section 9.02 and
    Article XI shall remain in full force and effect and
    survive any termination of this Agreement and (ii) nothing
    herein shall relieve (x) a Member from liability for such
    Member’s breach of any of its, his or her own
    representations or warranties set forth in Article IV of
    this Agreement, or (y) Parent, Merger Sub or Company from
    liability for the breach of any of its representations or
    warranties or the breach of any of its covenants or agreements
    set forth in this Agreement;

 

    (b) In the event of termination of this Agreement pursuant
    to any other provision contained in this Agreement or otherwise
    (including, without limitation, pursuant to
    Section 9.05) except for those cited in
    Section 9.02(a), or if the Company has terminated
    this Agreement pursuant to Section 7.19(c), Parent
    shall reimburse the Company and the Members for all Transaction
    Expenses; provided, that the Company and the Members
    acknowledge and agree that they shall not seek such expenses
    from (i) the trust fund holding the net proceeds of the
    Parent’s initial public offering and the interest thereon,
    or (ii) the Founders individually, except in the instance
    of the Founders’ gross negligence, willful misconduct or
    fraud or to the extent the Parents liabilities exceed $4,202,500
    as a result of expenses that are not reasonable in amount and
    purpose, and then only to the extent of such unreasonable
    expenses; and

 

    (c) Other than termination giving rise to the
    Company’s right of expense reimbursement by the Parent as
    outlined in Section 9.02(b) above, each party’s
    responsibility and right to reimbursement for its costs and
    expenses incurred in connection with this Merger shall be as
    provided for in Section 7.09 hereto in the same
    manner as though the Closing had occurred and the Merger been
    consummated.

 

    Section 9.03  Amendment.  This
    Agreement may be amended by the parties hereto by action taken
    by or on behalf of their respective Boards of Directors or Board
    of Managers at any time prior to the Effective Time. This
    Agreement may not be amended except by an instrument in writing
    signed by the parties hereto.

 

    Section 9.04  Waiver.  At
    any time prior to the Effective Time, any party hereto may
    (a) extend the time for the performance of any obligation
    or other act of any other party hereto, (b) waive any
    inaccuracy in the representations and warranties contained
    herein or in any document delivered pursuant hereto, and
    (c) waive compliance with any agreement or condition
    contained herein. Any such extension or waiver shall be valid if
    set forth in an instrument in writing signed by the party or
    parties to be bound thereby.

 

    Section 9.05  Automatic
    Termination.  This Agreement will be
    automatically terminated without the requirement of any action
    or notice by or to any party hereto in the event that:

 

    (a) Parent has failed to file with the SEC and mail to its
    stockholders the “definitive” Proxy Statement prior to
    December 31, 2007; or

 

    (b) if the Effective Time shall not have occurred on or
    before January 31, 2008.

    

    63

 

 

    ARTICLE X

    

 

    INDEMNIFICATION

 

    Section 10.01  Survival
    of Representations and Warranties.  

 

    (a) The representations and warranties of the Company and
    the Members contained in this Agreement and any other document
    or certificate relating hereto (collectively, the
    “Acquisition Documents”) shall survive the
    Effective Time until December 31, 2008; provided,
    however, that the representations and warranties set
    forth in Section 3.14 shall survive the Effective
    Time for a period of 36 months; provided
    further that the representations and warranties set forth
    in Sections 3.01, 3.02, 3.03,
    3.04, 3.05, 3.06, 3.13, 3.15
    and 3.16 (the “Company Basic
    Representations”) shall survive until the end of the
    applicable statute of limitations pertinent thereto in each
    instance. Neither the period of survival nor the liability of
    the Members with respect to the Company’s and such
    Members’ representations and warranties shall be affected
    by any investigation made at any time (whether before or after
    the Effective Time) by or on behalf of Parent or by any actual,
    implied or constructive knowledge or notice of any facts or
    circumstances that Parent may have as a result of any such
    investigation or otherwise.

 

    (b) The representations and warranties of Parent and the
    Merger Sub contained in the Acquisition Documents shall survive
    the Effective Time until December 31, 2008;
    provided, however, that the representations and
    warranties set forth in Sections 5.01, 5.02,
    5.03, 5.04, 5.05(a), 5.07,
    5.08, 5.11, 5.14, 5.16, 5.17
    and 5.19 (the “Parent Basic
    Representations”) shall survive until the end of the
    applicable statute of limitations pertinent thereto in each
    instance; provided, that, in the event any
    inaccuracy or breach of the representations and warranties set
    forth in Section 5.16 by Parent or Merger Sub is due
    to any inaccuracy or breach of the representations and
    warranties set forth in Section 3.32 (subject to its
    survival period pursuant to Section 10.01(a)) by the
    Company, the representations and warranties of Parent and the
    Merger Sub contained in Section 5.16 shall only
    survive from the Effective Time for a period of 18 months.
    Neither the period of survival nor the liability of Parent and
    Merger Sub with respect to Parent’s and Merger Sub’s
    representations and warranties shall be affected by any
    investigation made at any time (whether before or after the
    Effective Time) by or on behalf of the Company or by any actual,
    implied or constructive knowledge or notice of any facts or
    circumstances that the Company may have as a result of any such
    investigation or otherwise.

 

    (c) The parties hereto agree that reliance shall not be an
    element of any claim for misrepresentation or indemnification
    under this Agreement. The waiver by any party of any condition
    based on the accuracy of any such representation or warranty, or
    based on the performance of, or compliance with, any covenant or
    obligation, shall not affect the right to indemnification or
    other remedy based on such representations, warranties,
    covenants or obligations. If written notice of a claim has been
    given in good faith prior to the expiration of the applicable
    representations and warranties by any party, then the relevant
    representations and warranties shall survive as to such claim
    until such claim has been finally resolved.

 

    Section 10.02  Indemnification
    by the Members.

 

    (a) After the Effective Time, Parent and its Affiliates
    (including, after the Effective Time, the Surviving
    Corporation), officers, directors, employees, agents, successors
    and assigns (collectively, the “Parent Indemnified
    Parties”) shall be indemnified and held harmless by the
    Members, severally, and not jointly and severally, for any and
    all liabilities, losses, damages of any kind, diminution in
    value, claims, costs, expenses, fines, fees, deficiencies,
    interest, awards, judgments, amounts paid in settlement and
    penalties (including, without limitation, attorneys’,
    consultants’ and experts’ fees and expenses and other
    costs of defending, investigating or settling claims) suffered,
    incurred, accrued (in accordance with GAAP) or paid by them
    (including, without limitation, in connection with any action
    brought or otherwise initiated by any of them) (collectively,
    “Losses”) arising out of or resulting from:

 

    (i) any inaccuracy or breach of any representation or
    warranty (without giving effect to any qualification as to
    materiality (or similar qualifications) contained therein) made
    by the Company or any Member in the Acquisition Documents;

 

    (ii) the breach of any covenant or agreement made by the
    Company or any Member in the Acquisition Documents;

    

    64

 

 

    (iii) Losses from breach of contract or other claims made
    by any party that had a contractual or other right to acquire
    the Company’s membership interests or assets;

 

    (iv) any cost, loss or other expense (including the value
    of any Tax deduction lost) as a result of the application of
    Section 280G of the Code to any of the transactions
    contemplated by this Agreement plus any necessary gross up
    amount; or

 

    (v) any Member expenses paid by the Surviving Corporation
    following the Closing.

 

    (b) As used herein, “Losses” are not limited to
    matters asserted by third parties, but include Losses incurred
    or sustained by the Parent Indemnified Parties in the absence of
    claims by third parties.

 

    (c) Notwithstanding anything to the contrary contained in
    this Agreement, except with respect to (A) claims for
    equitable remedies and (B) claims based on fraud or willful
    misrepresentation or misconduct:

 

    (i) the maximum aggregate amount of indemnifiable Losses
    arising out of or resulting from the causes enumerated in
    Sections 10.02(a) or 10.02(b) that may be
    recovered from the Members shall not exceed $10,000,000; and

 

    (ii) no indemnification payment by the Members with respect
    to any indemnifiable Losses otherwise payable under
    Section 10.02(a) and arising out of or resulting
    from the causes enumerated in Section 10.02(a)(i)
    shall be payable until such time as all such indemnifiable
    Losses shall aggregate to more than $500,000, after which time
    the Members shall be liable in full for all indemnifiable Losses
    in excess of the first $500,000.

 

    (d) In the event of a claim relating to any Indemnification
    Claim any Parent Indemnified Person may have under
    Article X, Parent shall seek payment first out of
    the Escrow Fund. Such Indemnification Amounts shall be payable
    in Escrow Shares; provided, that, the Members’
    Representative may elect to have all or a portion of an
    Indemnification Amount paid from Proceeds or other cash provided
    by the Members in lieu of Escrow Shares. If the Escrow Fund has
    been reduced to zero, Parent shall then be entitled to seek
    payment for an unsatisfied Indemnification Amount directly from
    the Members, subject to the terms and conditions set forth in
    Article X.

 

    Section 10.03  Indemnification
    by Parent and Merger Sub.

 

    (a) After the Effective Time, the Members shall be
    indemnified and held harmless by Parent and Merger Sub
    (collectively, the “Member Indemnified
    Parties”) for any Losses arising out of or resulting
    from :

 

    (i) any inaccuracy or breach of any representation or
    warranty (without giving effect to any qualification as to
    materiality (or similar qualifications) contained therein) made
    by Parent or Merger Sub in the Acquisition Documents; or

 

    (ii) the breach of any covenant or agreement made by Parent
    or Merger Sub in the Acquisition Documents.

 

    (b) Notwithstanding anything to the contrary contained in
    this Agreement:

 

    (i) the maximum aggregate amount of indemnifiable Losses
    arising out of or resulting from the causes enumerated in
    Section 10.03(a) that may be recovered from Parent
    shall not exceed an amount determined as follows;

 

    (1) determine the percentage of ownership of Parent held by
    the Members, on a fully diluted basis resulting from the Closing
    of the Merger, as of the Closing Date (after considering any
    Redemption Shares, but not considering any Parent Warrants);

 

    (2) subtract the amount determined in
    Section 10.03(b)(i)(1) above from 1.00, which will
    represent the percentage ownership of JKA common stock on a
    fully diluted basis held by JKA stockholders resulting from the
    Closing of the Merger, as of the Closing Date (after considering
    and Redemption Shares, but not considering any Parent
    Warrants); and

 

    (3) determine the maximum aggregate amount of indemnifiable
    Losses that may be recovered from Parent by dividing $10,000,000
    by the fractional percentage determined by subsection (2)
    above.

    

    65

 

 

    (ii) no indemnification payment by Parent with respect to
    any indemnifiable Losses otherwise payable under
    Section 10.03(a) and arising out of or resulting
    from the causes enumerated in Section 10.03(a) shall
    be payable until such time as all such indemnifiable Losses
    shall aggregate to more than $500,000, after which time Parent
    shall be liable in full for all indemnifiable Losses in excess
    of the first $500,000.

 

    (iii) Any payments made pursuant to
    Section 10.03(b)(ii) shall be paid to the Members in
    an amount determined by dividing (A) the claim amount by
    (B) the amount determined in
    Section 10.03(b)(i)(2) above.

 

    (c) In no event shall the Members be entitled to
    indemnification pursuant to this Article X for
    Losses for which they are compensated through the post closing
    adjustment mechanism in Section 2.03 hereof. In
    addition, the exclusion of the first $500,000 of Losses in
    Section 10.03(b)(ii) shall not apply to reduce the
    Losses of the Company in connection with any Parent Expense
    Excess.

 

    Section 10.04  Indemnification
    Procedures.

 

    (a) For purposes of this Section 10.04, a party
    against which indemnification may be sought is referred to as
    the “Indemnifying Party” and the party which
    may be entitled to indemnification is referred to as the
    “Indemnified Party”.

 

    (b) The obligations and liabilities of Indemnifying Parties
    under this Article X with respect to Losses arising
    from actual or threatened claims or demands by any third party
    which are subject to the indemnification provided for in this
    Article X (“Third Party Claims”)
    shall be governed by and contingent upon the following
    additional terms and conditions: if an Indemnified Party shall
    receive notice of any Third Party Claim, the Indemnified Party
    shall give the Indemnifying Party notice of such Third Party
    Claim within 15 days of the receipt by the Indemnified
    Party of such notice; provided, however, that the
    failure to provide such notice shall not release an Indemnifying
    Party from any of its obligations under this
    Article X except to the extent that such
    Indemnifying Party is materially prejudiced by such failure. The
    notice of claim shall describe in reasonable detail the facts
    known to the Indemnified Party giving rise to such
    indemnification claim, and the amount or good faith estimate of
    the amount arising therefrom.

 

    (c) If the Indemnifying Party acknowledges in writing its
    obligation to indemnify the Indemnified Party hereunder against
    any Losses that may result from such Third Party Claim, then the
    Indemnifying Party shall be entitled to assume and control the
    defense of such Third Party Claim through counsel of its choice
    (such counsel to be reasonably acceptable to the Indemnified
    Party) if it gives notice of its intention to do so to the
    Indemnified Party within 15 days of the receipt of such
    notice from the Indemnified Party; provided,
    however, that the Indemnifying Party shall not have the
    right to assume the defense of the Third Party Claim if
    (i) any such claim seeks, in addition to or in lieu of
    monetary losses, any injunctive or other equitable relief,
    (ii) the Indemnifying Party fails to provide reasonable
    assurance to the Indemnified Party of the adequacy of the Escrow
    Fund to provide indemnification in accordance with the
    provisions of this Agreement and the Escrow Agreement with
    respect to such proceeding, (iii) there is reasonably
    likely to exist a conflict of interest that would make it
    inappropriate (in the judgment of the Indemnified Party in its
    reasonable discretion) for the same counsel to represent both
    the Indemnified Party and the Indemnifying Party, or
    (iv) settlement of, or an adverse judgment with respect to,
    the Third Party Claim may establish (in the good faith judgment
    of the Indemnified Party) a precedential custom or practice
    adverse to the business interests of the Indemnified Party or
    would increase the Tax liability of the Indemnified Party;
    provided further, that if by reason of the Third
    Party Claim a Lien, attachment, garnishment, execution or other
    encumbrance is placed upon any of the property or assets of such
    Indemnified Party, the Indemnifying Party, if it desires to
    exercise its right to assume such defense of the Third Party
    Claim, must agree to use a portion of the Escrow Fund to furnish
    a satisfactory indemnity bond to obtain the prompt release of
    such Lien, attachment, garnishment, execution or other
    encumbrance. If the Indemnifying Party assumes the defense of a
    Third Party Claim, it will conduct the defense actively,
    diligently and at its own expense, and, subject to the limits of
    this Agreement, it will hold all Indemnified Parties harmless
    from and against all Losses caused by or arising out of any
    settlement thereof. The Indemnified Party shall cooperate with
    the Indemnifying Party in such defense and make available to the
    Indemnifying Party, at the Indemnifying Party’s expense,
    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 Indemnifying Party. Except with the written consent of
    the Indemnified Party (not to be unreasonably withheld), the
    Indemnifying Party will not, in the defense of a Third Party
    Claim, consent to the

    

    66

 

     entry of any judgment or enter into any settlement
    (i) which does not include as an unconditional term thereof
    the giving to the Indemnified Party by the third party of a
    release from all liability with respect to such suit, claim,
    action, or proceeding; (ii) unless there is no finding or
    admission of (A) any violation of Law by the Indemnified
    Party (or any Affiliate thereof), (B) any liability on the
    part of the Indemnified Party (or any Affiliate thereof) or
    (C) any violation of the rights of any person and no effect
    on any other claims of a similar nature that may be made by the
    same third party against the Indemnified Party (or any Affiliate
    thereof); or (iii) which exceeds the limits of
    indemnification set forth in this Agreement.

 

    (d) In the event that the Indemnifying Party fails or
    elects not to assume the defense of an Indemnified Party against
    such Third Party Claim which the Indemnifying Party had the
    right to assume pursuant to Section 10.04(c), the
    Indemnified Party shall have the right, at the expense of the
    Indemnifying Party, to defend or prosecute such claim in any
    manner as it may reasonably deem appropriate and may settle such
    claim after giving written notice thereof to the Indemnifying
    Party, on such terms as such Indemnified Party may deem
    appropriate, and the Indemnified Party may seek prompt
    reimbursement from the Escrow Fund for any Losses incurred in
    connection with such settlement. If no settlement of such Third
    Party Claim is made, the Indemnified Party may seek prompt
    reimbursement from the Escrow Fund for any Losses arising out of
    any judgment rendered with respect to such claim. Any Losses for
    which an Indemnified Party is entitled to indemnification
    hereunder shall be promptly paid as suffered, incurred or
    accrued (in accordance with GAAP). If the Indemnifying Party
    does not elect to assume the defense of a Third Party Claim
    which it has the right to assume hereunder, the Indemnified
    Party shall have no obligation to do so.

 

    (e) In the event that the Indemnifying Party is not
    entitled to assume the defense of the Indemnified Party against
    such Third Party Claim pursuant to Section 10.04(c),
    the Indemnified Party shall have the right, at the expense of
    the Indemnifying Party, to defend or prosecute such claim and
    consent to the entry of any judgment or enter into any
    settlement with respect to the Third Party Claim in any manner
    it may reasonably deem appropriate after giving written notice
    thereof to the Indemnifying Party, and the Indemnified Party may
    seek prompt reimbursement from the Escrow Fund for any Losses
    incurred in connection with such judgment or settlement. In such
    case, the Indemnified Party shall conduct the defense of the
    Third Party Claim actively and diligently, and the Indemnifying
    Party shall cooperate with the Indemnified Party in such defense
    and make available to the Indemnified Party, at the Indemnifying
    Party’s expense, all such witnesses, records, materials and
    information in the Indemnifying Party’s possession or under
    the Indemnifying Party’s control relating thereto as is
    reasonably requested by the Indemnified Party. If no settlement
    of such Third Party Claim is made, the Indemnified Party may
    seek prompt reimbursement from the Escrow Fund for any Losses
    arising out of any judgment rendered with respect to such claim.
    Any Losses for which an Indemnified Party is entitled to
    indemnification hereunder shall be promptly paid as suffered,
    incurred or accrued (in accordance with GAAP).

 

    Section 10.05  Members’
    Representative.

 

    (a) CHGCM Co., LLC, and SGD (such person or persons and any
    successor or successors being collectively, each or either or
    both, the “Members’ Representative”) shall
    act as the representative of the Members, and shall be
    authorized to act on behalf of the Members and to take any and
    all actions required or permitted to be taken by the
    Members’ Representative under this Agreement with respect
    to any claims (including the settlement thereof) made by a
    Parent Indemnified Party for indemnification pursuant to this
    Article X and with respect to any actions to be
    taken by the Members’ Representative pursuant to the terms
    of the Escrow Agreement (including, without limitation, the
    exercise of the power to (i) authorize the delivery of
    Escrow Securities to a Parent Indemnified Party in satisfaction
    of claims by a Parent Indemnified Party, (ii) agree to,
    negotiate, enter into settlements and compromises of, and comply
    with orders of courts with respect to any claims for
    indemnification and (iii) take all actions necessary in the
    judgment of the Members’ Representative for the
    accomplishment of the foregoing). In all matters relating to
    this Article X, the Members’ Representative
    shall be the only party entitled to assert the rights of the
    Members, and the Members’ Representative shall perform all
    of the obligations of the Members hereunder. The Parent
    Indemnified Parties shall be entitled to rely on all statements,
    representations and decisions of the Members’
    Representative. The Members shall have the right to change
    either one or both of the persons serving as Members’
    Representative from time to time, which shall be effective upon
    written notification to the Parent; provided, however that any
    person serving as a Members’ Representative must be a
    Member or employed by a Member.

    

    67

 

 

    (b) The Members shall be bound by all actions taken by the
    Members’ Representative in his, her or its capacity
    thereof, except for any action that conflicts with the
    limitations set forth in subsection (d) below. The
    Members’ Representative shall promptly, and in any event
    within five (5) business days, provide written notice to
    the Members of any action taken on behalf of them by the
    Members’ Representative pursuant to the authority delegated
    to the Members’ Representative under this
    Section 10.05. The Members’ Representative
    shall at all times act in his or her capacity as Members’
    Representative in a manner that the Members’ Representative
    believes to be in the best interest of the Members. Neither the
    Members’ Representative nor any of its directors, officers,
    agents or employees, if any, shall be liable to any person for
    any error of judgment, or any action taken, suffered or omitted
    to be taken under this Agreement or the Escrow Agreement, except
    in the case of its gross negligence, bad faith or willful
    misconduct. The Members’ Representative may consult with
    legal counsel, independent public accountants and other experts
    selected by it. The Members’ Representative shall not have
    any duty to ascertain or to inquire as to the performance or
    observance of any of the terms, covenants or conditions of this
    Agreement or the Escrow Agreement. As to any matters not
    expressly provided for in this Agreement or the Escrow
    Agreement, the Members’ Representative shall not exercise
    any discretion or take any action.

 

    (c) Each Member shall indemnify and hold harmless and
    reimburse the Members’ Representative from and against such
    Member’s ratable share of any and all liabilities, losses,
    damages, claims, costs or expenses suffered or incurred by the
    Members’ Representative arising out of or resulting from
    any action taken or omitted to be taken by the Members’
    Representative under this Agreement or the Escrow Agreement,
    other than such liabilities, losses, damages, claims, costs or
    expenses arising out of or resulting from the Members’
    Representative’s gross negligence, bad faith or willful
    misconduct.

 

    (d) Notwithstanding anything to the contrary herein or in
    the Escrow Agreement, the Members’ Representative is not
    authorized to, and shall not, accept on behalf of any Member any
    merger consideration to which such Member is entitled under this
    Agreement and the Members’ Representative shall not in any
    manner exercise, or seek to exercise, any voting power
    whatsoever with respect to shares of capital stock of the
    Company or Parent now or hereafter owned of record or
    beneficially by any Member unless the Members’
    Representative is expressly authorized to do so in a writing
    signed by such Member.

 

    Section 10.06  Taxes.  In
    addition to, and not by way of limitation on, the indemnities
    set forth in Section 10.02(a), the Members agree to,
    and shall, indemnify a Parent Indemnified Party and hold each of
    them harmless for Losses resulting from Taxes for all tax
    periods prior to Closing (or otherwise related to a tax periods
    prior to Closing).

 

    Section 10.07  Reduction
    of Indemnified Amounts.

 

    (a) Notwithstanding any provision of this
    Article X to the contrary, Losses owed by the
    Members to a Parent Indemnified Party shall be reduced by the
    amount of any mitigating recovery a Parent Indemnified Party
    shall have received with respect thereto from any recovery by
    the Parent Indemnified Party under any insurance policies,
    without regard to whether the Parent Indemnified Party or
    another person paid the premiums therefor. If such a recovery is
    received by an a Parent Indemnified Party after it receives
    payment or other credit under this Agreement with respect to
    indemnified Losses, then a refund equal to the aggregate amount
    of such recovery shall be made promptly to the Members.

 

    (b) Notwithstanding any provision of this
    Article X to the contrary, Losses owed by Parent to
    a Member Indemnified Party shall be reduced by the amount of any
    mitigating recovery a Member Indemnified Party shall have
    received with respect thereto from any recovery by the Member
    Indemnified Party under any insurance policies, without regard
    to whether the Member Indemnified Party or another person paid
    the premiums therefor. If such a recovery is received by an a
    Member Indemnified Party after it receives payment or other
    credit under this Agreement with respect to indemnified Losses,
    then a refund equal to the aggregate amount of such recovery
    shall be made promptly to Parent.

 

    Section 10.08  Exclusive
    Rights and Remedies.  The provisions of this
    Article X shall be the exclusive basis of the
    parties to this Agreement for (i) any breach of a
    representation or warranty herein and (ii) any failure of a
    party to comply with any obligation, covenant, agreement or
    condition herein.

    

    68

 

 

    ARTICLE XI

    

 

    GENERAL
    PROVISIONS

 

    Section 11.01  Notices.  All
    notices, requests, claims, demands and other communications
    hereunder shall be in writing and shall be given (and shall be
    deemed to have been duly given upon receipt) by delivery in
    person, by cable, telecopy, facsimile, telegram or telex or by
    registered or certified mail (postage prepaid, return receipt
    requested) to the respective parties
    and/or their
    designees or successors at the following addresses (or at such
    other address for a party as shall be specified in a notice
    given in accordance with this Section 11.01):

 

    (a) if to Parent or Merger Sub:

 

    JK Acquisition Corp.

    4400 Post Oak Parkway

    Suite 2530

    Houston, Texas 77027

    Facsimile No.:
    (713) 552-9226

    Attention: James P. Wilson

 

    with a copy to:

 

    Patton Boggs LLP

    2001 Ross Avenue, Suite 3000

    Dallas, Texas 75201

    Facsimile No.:
    (214) 758-1550

    Attention: Fred S. Stovall, Esq.

 

    (b) if to the Company:

 

    Multi-Shot, LLC

    2507 N. Frazier

    Conroe, Texas 77303

    Facsimile No.:
    (936) 441-6635

    Attention: Allen Neel

 

    with a copy to:

 

    Catalyst Hall Growth Capital Co., LLC

    2 Riverway, Suite 1710

    Houston, Texas 77056

    Facsimile No.:
    (713) 623-0473

    Attention: Ron Nixon and Rick Herrman

 

    with a copy to:

 

    SG-Directional, LLC

    P.O. Box 3417

    Little Rock, Arkansas
    72203-3417

    Facsimile No.:
    (501) 377-3463

    Attn: Ronald M. Clark

 

    (c) if to the Members’ Representatives:

 

    Catalyst Hall Growth Capital Co., LLC

    2 Riverway, Suite 1710

    Houston, Texas 77056

    Facsimile No.:
    (713) 623-0473

    Attention: Ron Nixon and Rick Herrman

 

    and

    

    69

 

 

    SG-Directional, LLC

    P.O. Box 3417

    Little Rock, Arkansas
    72203-3417

    Facsimile No.:
    (501) 377-3463

    Attn: Ronald M. Clark

 

    with a copy to:

 

    Franklin, Cardwell & Jones, P.C.

    1001 McKinney, Suite 1800

    Houston, Texas 77002

    Facsimile No.:
    (713) 227-5657

    Attention: Randolph Ewing, Esq.

 

    with a further copy to:

 

    Locke, Liddell & Sapp, PLLC

    3400 JPMorgan Chase Tower

    600 Travis

    Houston, Texas 77002

    Facsimile No.:
    (713) 229-2510

    Attention: Craig L. Weinstock, Esq.

 

    Section 11.02  Certain
    Definitions.

 

    (a) As used in this Agreement, the following terms shall
    have the following meanings:

 

    (i) “Adjusted EBITDA” means for any
    period, an amount equal to: the sum, without duplication, of the
    amounts for such period of (a) Net Income,
    (b) interest expense, (c) provisions for taxes based
    on income, (d) total depreciation expense, (e) total
    amortization expense, (f) non-cash losses in connection
    with dispositions of equipment having a basis at the time of
    disposition, (g) so called “First
    Tier Bonuses” or “Commission Bonuses” paid
    to or accrued to management personnel, as defined in
    Schedule B of each of the employment agreements dated
    August 1, 2004, between Messrs. Neel, Culbreth and
    Cudd and the Company, and further defined within these
    agreements as 0.50% of monthly sales for one of the
    aforementioned participants and 1.00% of Company’s monthly
    EBITDA for two of the aforementioned participants, (h) any
    bonuses or payments made to or accrued to employees of the
    Company under the Multi-Shot LLC 2004 Incentive Plan and the
    Multi-Shot, LLC Special Bonus Plan, each of such plans having
    been terminated on or about April 1, 2007, and (j) any
    and all management fees paid to or accrued for with respect to
    amounts due to Affiliates of the Company (which shall not exceed
    an aggregate of $120,000 on an annualized basis), all as
    determined in accordance with GAAP.

 

    (ii) “Affiliate” of a specified
    person means a person who directly or indirectly through one or
    more intermediaries controls, is controlled by, or is under
    common control with such specified person.

 

    (iii) “beneficial owner” with
    respect to any shares means a person who shall be deemed to be
    the beneficial owner of such shares (i) which such person
    or any of its Affiliates or associates (as such term is defined
    in
    Rule 12b-2
    promulgated under the Exchange Act) beneficially owns, directly
    or indirectly, (ii) which such person or any of its
    Affiliates or associates has, directly or indirectly,
    (A) the right to acquire (whether such right is exercisable
    immediately or subject only to the passage of time), pursuant to
    any agreement, arrangement or understanding or upon the exercise
    of consideration rights, exchange rights, warrants or options,
    or otherwise, or (B) the right to vote pursuant to any
    agreement, arrangement or understanding, or (iii) which are
    beneficially owned, directly or indirectly, by any other persons
    with whom such person or any of its Affiliates or associates or
    person with whom such person or any of its Affiliates or
    associates has any agreement, arrangement or understanding for
    the purpose of acquiring, holding, voting or disposing of any
    shares.

    70

 

 

    (iv) “business day” means any day
    on which banks are not required or authorized to close in New
    York, New York.

 

    (v) “control” (including the terms
    “controlled by” and “under common control
    with”) means the possession, directly or indirectly or as
    trustee or executor, of the power to direct or cause the
    direction of the management and policies of a person, whether
    through the ownership of voting securities, as trustee or
    executor, by contract or credit arrangement or otherwise.

 

    (vi) “Dispute” means that certain
    lawsuit styled JK Acquisition Corp. v. Multi-Shot, LLC,
    et al, Cause
    No. 2007-42384,
    District Court of Harris County, Texas.

 

    (vii) “EBITDA” means for a period,
    an amount equal to: the sum, without duplication, of the amounts
    for such period of (a) Net Income, (b) interest
    expense, (c) provisions for taxes based on income,
    (d) total depreciation expense, and (e) total
    amortization expense.

 

    (viii) “Escrow Agent” means First
    Zions National Bank, a national banking association.

 

    (ix) “Estimated Parent Expenses”
    means the $3,202,500 of expenses estimated to be comprised
    of (1) the $300,000 advanced by Messrs. Wilson and
    Spickelmier to date, (2) up to $500,000 additional advances
    that Messrs. Wilson and Spickelmier may fund, (3) the
    $350,000 to be paid to Patton Boggs pursuant to the PB
    Agreement, (4) the $500,000 to be paid to Gibbs &
    Bruns pursuant to the GB Agreement, and (5) the $1,552,500
    payable to FBW.

 

    (x) “FARMITA” means that certain
    First Amended and Restated Membership Interest Transfer
    Agreement, dated as of March 30, 2007, by and among the
    Company, the Original Members and SGD.

 

    (xi) “FBW” means Ferris, Baker
    Watts, Incorporated.

 

    (xii) “FBW Warrants” means the
    warrants to purchase up to 1,400,000 shares of Parent
    Common Stock at an exercise price of $6.50 per share held by FBW.

 

    (xiii) “Founder Expenses” means all
    documented expenses paid to third parties not affiliated with
    James P. Wilson or Keith D. Spickelmier at the direction of
    Messrs. Wilson or Spickelmier that are reasonable in amount
    and purpose until the Closing, which Founder Expenses will be
    listed on Section 11.02(a)(x) of the Parent
    Disclosure Schedule to be delivered to the Company at Closing,
    provided that the Founder Expenses shall not include amounts
    paid to Patton Boggs under the PB Agreement or to
    Gibbs & Bruns under the GB Agreement or the amounts
    payable to FBW.

 

    (xiv) “Gain Share Plan” means that
    certain 2007 Gain Share Plan adopted by the Board of Managers of
    the Company on or about April 1, 2007.

 

    (xv) “GB Agreement” means an
    agreement among Parent, Merger Sub, James P. Wilson, Keith D.
    Spickelmier, Herbert C. Williamson, Michael H. McConnell and
    Gibbs & Bruns, a copy of which is attached hereto as
    Exhibit F.

 

    (xvi) “Knowledge” means, with
    respect to any party hereto, actual or deemed knowledge of:
    (i) in the case of the Company, the Company’s
    managers, as well as Allen Neel, Paul Culbreth, David Cudd, and
    Scott Bork, and (ii) in the case of Parent, James P.
    Wilson, Keith D. Spickelmier, Michael H. McConnell and Herbert
    C. Williamson, and such knowledge that would be imputed to such
    persons upon reasonable inquiry or due investigation. An
    individual will be deemed to have knowledge of a particular
    fact, circumstance, event or other matter if (i) such fact
    circumstance, event or other matter is reflected in one or more
    documents, written or electronic, that are or have been in such
    individual’s possession or that would reasonably be
    expected to be reviewed by an individual who has the duties and
    responsibilities of such individual in the customary performance
    of such duties and responsibilities, or (ii) such knowledge
    could be obtained from reasonable inquiry of those persons
    employed by the Company (as the case may be) charged with
    administrative or operational responsibility for such matter for
    such party by the person in the discharge of his duties and
    responsibilities with regards to those persons.

    

    71

 

 

    (xvii) “Net Income” means, for any
    period, the net income (or loss) of the Company for such period
    taken as a single accounting period determined in conformity
    with GAAP.

 

    (xviii) “Original Members” means
    all of the Company’s existing Members, excluding SGD.

 

    (xix) “Parent Expense Excess” means
    the amount to which the aggregate liabilities and indebtedness
    at the Closing exceed the Estimated Parent Expenses.

 

    (xx) “PB Agreement” means an
    agreement between Parent, Merger Sub and Patton Boggs, a copy of
    which is attached hereto as Exhibit G.

 

    (xxi) “Permitted Liens” means
    (a) mechanic’s and materialmen’s liens and
    similar encumbrances arising in the ordinary course of the
    Business of the Company that are not delinquent and not material
    to the business of the Company, (b) liens or encumbrances
    for federal, state, local, foreign and other taxes or
    assessments not yet due and payable or delinquent,
    (c) purchase money encumbrances and encumbrances securing
    rental payments under capital lease arrangements that are not
    delinquent and not material to the Business, and (d) liens
    in favor of Wells Fargo Bank.

 

    (xxii) “Permitted Tax Distributions”
    means any distribution by the Company to its Members of such
    portion of the Net Income for any applicable year necessary to
    pay the Taxes incurred by the Members as permitted by the
    Company Regulations.

 

    (xxiii) “Person” means an
    individual, corporation, partnership, limited partnership,
    syndicate, person (including, without limitation, a
    “person” as defined in Section 13(d)(3) of the
    Exchange Act), trust, association or entity or government,
    political subdivision, agency or instrumentality of a government.

 

    (xxiv) “Recapitalization” means the
    transaction consummated on or about April 1, 2007 pursuant
    to the terms of that certain Recapitalization and Purchase
    Agreement dated effective April 1, 2007, by and among the
    Company, the Original Members and SGD.

 

    (xxv) “RST Transaction” means the
    transaction under which the Company is acquiring an ownership
    interest, together with Cyrus Solutions Corporation, a Texas
    corporation (“Cyrus”) in a legal entity to be
    formed.

 

    (xxvi) “Settlement Agreement” means
    that certain Settlement Agreement entered into by and among
    Parent, Company and SGD, which settles the Dispute.

 

    (xxvii) “Stephens” means The
    Stephens Group, LLC, an Arkansas limited liability company.

 

    (xxviii) “Stephens Group Debt”
    means all indebtedness or other obligations of the Company
    owing to Stephens pursuant to that certain subordinated
    promissory note dated on or about April 1, 2007, executed
    by the Company in favor of Stephens in the original principal
    amount of $15,000,000.

 

    (xxix) “subsidiary” or
    “subsidiaries” of any person means any
    corporation, partnership, joint venture or other legal entity of
    which such person (either alone or through or together with any
    other subsidiary) owns, directly or indirectly, more than 50% of
    the stock or other equity interests, the holders of which are
    generally entitled to vote for the election of the board of
    directors or other governing body of such corporation or other
    legal entity.

 

    (xxx) “Transaction Expenses” means
    all out-of-pocket expenses and costs incurred by the Company
    and/or the
    Members from and after May 15, 2006, in connection with or
    relating to (A) the negotiation, drafting and contemplated
    consummation of the transactions contemplated under the Original
    Agreement, the Second Agreement, this Agreement and the
    Settlement Agreement, and (B) the Dispute, including,
    without limitation, all legal, accounting, tax, travel and
    ordinary expenses, but excluding any expenses referenced under
    Section 3.22 hereof, which Transaction Expenses will
    be summarized on Section 11.02(a)(xxvi) of the
    Company Disclosure Schedule to be delivered to the Parent at
    Closing.

 

    (xxxi) “Ulterra Acquisition” means
    the transaction consummated on July 6, 2007, pursuant to
    the terms of that certain Asset Purchase Agreement dated
    effective July 6, 2007, by and among the Company, Ulterra
    MWD, L.P. and Ulterra Drilling Technologies, L.P.

    

    72

 

 

    (b) The following terms shall have the meanings defined for
    such terms in the Sections of this Agreement set forth below:

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    2006 Balance Sheet
    

	
 
	
    2.02(b)
    

	

    Acquisition Documents
    

	
 
	
    10.01(a)
    

	

    Actual Net Enterprise Value
    

	
 
	
    2.03(i)
    

	

    Actual Parent Stock Consideration
    

	
 
	
    2.03(i)
    

	

    Adjusted EBITDA
    

	
 
	
    11.02(a)(i)
    

	

    Adjustment Amount
    

	
 
	
    2.03(a)
    

	

    Adjustment Notice
    

	
 
	
    2.03(a)
    

	

    Affiliate
    

	
 
	
    7.02(b), 7.10, 11.02(a)
    

	

    AMEX
    

	
 
	
    2.03(h)
    

	

    Antitrust Laws
    

	
 
	
    7.06(b)
    

	

    Assets
    

	
 
	
    3.17
    

	

    Audited Financial Statements
    

	
 
	
    3.08(a)
    

	

    Back Up Transaction
    

	
 
	
    5.18
    

	

    Beneficial Owner
    

	
 
	
    11.02(a)
    

	

    Business
    

	
 
	
    3.13
    

	

    Business Day
    

	
 
	
    11.02(a)
    

	

    Cash Consideration
    

	
 
	
    2.01(b)
    

	

    Cash Exercise Warrant
    

	
 
	
    2.06(n)
    

	

    Cash Exercise Warrant Shares
    

	
 
	
    2.06(j)
    

	

    CERCLA
    

	
 
	
    3.13
    

	

    Certificate of Merger
    

	
 
	
    1.02
    

	

    CHGCM
    

	
 
	
    Recitals
    

	

    Closing
    

	
 
	
    1.02
    

	

    Closing Balance Sheet
    

	
 
	
    2.03(a)
    

	

    Closing Date
    

	
 
	
    1.02
    

	

    Closing Indebtedness
    

	
 
	
    2.03(a)
    

	

    Closing Working Capital
    

	
 
	
    2.03(a)
    

	

    COBRA
    

	
 
	
    3.11(d)
    

	

    Code
    

	
 
	
    2.04(g)
    

	

    Company
    

	
 
	
    Preamble, 3.15(c)
    

	

    Company Basic Representations
    

	
 
	
    10.01(a)
    

	

    Company Charter Documents
    

	
 
	
    3.02
    

	

    Company Confidential Information
    

	
 
	
    3.14(f)
    

	

    Company Disclosure Schedule
    

	
 
	
    Article III
    

	

    Company Exluded Changes
    

	
 
	
    7.19(c)
    

	

    Company Financial Statements
    

	
 
	
    3.08(a)
    

	

    Company Insiders
    

	
 
	
    7.13
    

	

    Company Intellectual Property
    

	
 
	
    3.14(a)
    

	

    Company Interest Certificates
    

	
 
	
    2.04(a)
    

	

    Company Interest to Cash Exchange
    Ratio
    

	
 
	
    2.01(b)
    

	

    Company Interest to Parent Common
    Stock Exchange Ratio
    

	
 
	
    2.01(b)
    

	

    Company Interest to Parent Warrant
    Exchange Ratio
    

	
 
	
    2.01(b)
    

    

    73

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    Company Interests
    

	
 
	
    Preamble
    

	

    Company Material Adverse Effect
    

	
 
	
    3.01
    

	

    Company Permits
    

	
 
	
    3.07(a)
    

	

    Competing Transaction
    

	
 
	
    7.04(b)
    

	

    Contingent Award
    

	
 
	
    2.06(a)
    

	

    Contingent Award Calculation
    

	
 
	
    2.06(f)
    

	

    Contingent Award Dispute Notice
    

	
 
	
    2.06(f)
    

	

    Contingent Award Notice
    

	
 
	
    2.06(e)
    

	

    Contingent Award Per Share Market
    Value
    

	
 
	
    2.06(b)
    

	

    Contingent Award Shares
    

	
 
	
    2.06(d)
    

	

    Control
    

	
 
	
    11.02(a)
    

	

    Current Assets
    

	
 
	
    2.02(a)
    

	

    Current Liabilities
    

	
 
	
    2.02(a)
    

	

    Determination
    

	
 
	
    2.06(c)
    

	

    Determination Date
    

	
 
	
    2.06(c)
    

	

    DGCL
    

	
 
	
    1.01
    

	

    Dispute
    

	
 
	
    11.02(a)
    

	

    Dispute Notice
    

	
 
	
    2.03(b)
    

	

    EBITDA
    

	
 
	
    11.02(a)
    

	

    Effective Time
    

	
 
	
    1.02
    

	

    Employee Obligation
    

	
 
	
    3.14(i)
    

	

    Employment Agreement(s)
    

	
 
	
    7.05(b)
    

	

    Environmental Laws
    

	
 
	
    3.13
    

	

    Environmental Liabilities
    

	
 
	
    3.13
    

	

    Environmental Permits
    

	
 
	
    3.13
    

	

    ERISA
    

	
 
	
    3.11(a)
    

	

    ERISA Affiliate
    

	
 
	
    3.11(e)
    

	

    Escrow Account
    

	
 
	
    2.04(b)
    

	

    Escrow Agent
    

	
 
	
    11.02(a)
    

	

    Escrow Agreement
    

	
 
	
    2.04(b)
    

	

    Escrow Fund
    

	
 
	
    2.04(b)
    

	

    Escrow Per Share Market Value
    

	
 
	
    2.03(h)
    

	

    Escrow Securities
    

	
 
	
    2.04(a)
    

	

    Escrow Shares
    

	
 
	
    2.01(b)
    

	

    Escrow Warrants
    

	
 
	
    2.04(a)
    

	

    Estimated Closing Balance Sheet
    

	
 
	
    2.02(b)
    

	

    Estimated Closing Working Capital
    

	
 
	
    2.02(b)
    

	

    Estimated Indebtedness
    

	
 
	
    2.02(b)
    

	

    Estimated Net Enterprise Value
    

	
 
	
    2.01(b)
    

	

    Estimated Parent Expenses
    

	
 
	
    11.02(a)
    

	

    Estimated Third Party Indebtedness
    

	
 
	
    2.01(b)
    

	

    Exchange Act
    

	
 
	
    5.04(b)
    

	

    Exchange Agent
    

	
 
	
    2.04(a)
    

	

    Exchange Value
    

	
 
	
    2.08(a)
    

    74

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    Execution Date
    

	
 
	
    Preamble
    

	

    FARMITA
    

	
 
	
    11.02(a)
    

	

    FBW
    

	
 
	
    11.02(a)
    

	

    FBW Warrants
    

	
 
	
    11.02(a)
    

	

    Final Conversion Schedule
    

	
 
	
    7.16
    

	

    FIRPTA
    

	
 
	
    8.02(p)
    

	

    Form S-4
    Alternative
    

	
 
	
    7.02(b)
    

	

    Founder Expenses
    

	
 
	
    11.02(a)
    

	

    Founders
    

	
 
	
    8.01(a)
    

	

    Founders RR Agreement
    

	
 
	
    5.17
    

	

    Fully Diluted Company Interest
    Amount
    

	
 
	
    2.01(b)
    

	

    GAAP
    

	
 
	
    2.02(a)
    

	

    Gain Share Plan
    

	
 
	
    11.02(a)
    

	

    GB Agreement
    

	
 
	
    11.02(a)
    

	

    Governmental Entity
    

	
 
	
    3.06(b)
    

	

    Gross Enterprise Value
    

	
 
	
    2.01(b)
    

	

    Gross Redemption Dollar Amount
    

	
 
	
    2.08(a)
    

	

    Hazardous Substances
    

	
 
	
    3.13
    

	

    HSR Act
    

	
 
	
    3.06(b)
    

	

    Indebtedness
    

	
 
	
    2.01(b)
    

	

    Indemnification Claim
    

	
 
	
    2.04(b)
    

	

    Indemnified Party
    

	
 
	
    10.04(a)
    

	

    Indemnifying Party
    

	
 
	
    10.04(a)
    

	

    Independent Accounting Firm
    

	
 
	
    2.03(d)
    

	

    Index Warrant
    

	
 
	
    2.06(b)
    

	

    Index Warrant Exercise Notice
    

	
 
	
    2.06(o)
    

	

    Index Warrant Holder
    

	
 
	
    2.06(b)
    

	

    Infringement
    

	
 
	
    3.14(a)
    

	

    Initial Determination Date
    

	
 
	
    2.06(c)
    

	

    Initial Merger Consideration
    

	
 
	
    2.01(e)
    

	

    Intellectual Property
    

	
 
	
    3.14(a)
    

	

    Interim Financial Statements
    

	
 
	
    3.08(a)
    

	

    Inventions
    

	
 
	
    3.14(a)
    

	

    IP Rights
    

	
 
	
    3.14(a)
    

	

    Knowledge
    

	
 
	
    11.02(a)
    

	

    Law
    

	
 
	
    3.06(a)
    

	

    Legal Proceeding
    

	
 
	
    3.10
    

	

    Legal Requirement
    

	
 
	
    3.13
    

	

    Letter of Transmittal
    

	
 
	
    2.04(a)
    

	

    Liabilities
    

	
 
	
    3.08(b)
    

	

    Liens
    

	
 
	
    3.17
    

	

    Losses
    

	
 
	
    10.02(a)
    

	

    Marks
    

	
 
	
    3.14(a)
    

	

    Material Contracts
    

	
 
	
    3.12(a)
    

    75

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    Measurement Date
    

	
 
	
    2.06(b)
    

	

    Measurement Period
    

	
 
	
    2.06(b)
    

	

    Member Indemnified Parties
    

	
 
	
    10.03(a)
    

	

    Members
    

	
 
	
    Preamble
    

	

    Members’ Representative
    

	
 
	
    10.05(a)
    

	

    Merger
    

	
 
	
    Preamble
    

	

    Merger Consideration
    

	
 
	
    2.03(i), 2.08(k)
    

	

    Merger Sub
    

	
 
	
    Preamble
    

	

    Multi-employer Plan
    

	
 
	
    3.11(c)
    

	

    Multiple Employer Plan
    

	
 
	
    3.11(c)
    

	

    Multi-Shot, Inc. 
    

	
 
	
    1.04(a)
    

	

    Net Income
    

	
 
	
    11.02(a)
    

	

    Net Redemption Dollar Amount
    

	
 
	
    2.08(a)
    

	

    New Membership Interests
    

	
 
	
    7.02(b)
    

	

    Non-Disclosure Agreement
    

	
 
	
    7.03(b)
    

	

    Non-Solicitation Agreement(s)
    

	
 
	
    7.05(c)
    

	

    Opinion
    

	
 
	
    5.07
    

	

    Order
    

	
 
	
    8.01(b)
    

	

    Original Agreement
    

	
 
	
    Preamble
    

	

    Original Members
    

	
 
	
    11.02(a)
    

	

    Other Filings
    

	
 
	
    7.01(a)
    

	

    Parent
    

	
 
	
    Preamble, 5.14(c)
    

	

    Parent Assets
    

	
 
	
    5.15
    

	

    Parent Audited Financial Statements
    

	
 
	
    5.11(a)
    

	

    Parent Basic Representations
    

	
 
	
    10.01(b)
    

	

    Parent Common Stock
    

	
 
	
    Preamble
    

	

    Parent Disclosure Schedule
    

	
 
	
    Article V
    

	

    Parent Expense Excess
    

	
 
	
    11.02(a)
    

	

    Parent Excluded Changes
    

	
 
	
    7.19(c)
    

	

    Parent Indemnified Parties
    

	
 
	
    10.02(a)
    

	

    Parent Interim Financial Statements
    

	
 
	
    5.11(a)
    

	

    Parent Liens
    

	
 
	
    5.15
    

	

    Parent Material Adverse Effect
    

	
 
	
    5.01(a)
    

	

    Parent Preferred Stock
    

	
 
	
    5.03(a)
    

	

    Parent Reference Balance Sheet
    

	
 
	
    5.11(a)
    

	

    Parent SEC Reports
    

	
 
	
    5.05(a)
    

	

    Parent Shares
    

	
 
	
    2.01(b)
    

	

    Parent Stock Consideration
    

	
 
	
    2.01(b)
    

	

    Parent Stockholder Approval
    

	
 
	
    7.01(a)
    

	

    Parent Stockholders’ Meeting
    

	
 
	
    3.32
    

	

    Parent Warrant
    

	
 
	
    2.01(b)
    

	

    Patton Boggs
    

	
 
	
    1.02
    

	

    PB Agreement
    

	
 
	
    11.02(a)
    

	

    Permitted Liens
    

	
 
	
    11.02(a)
    

    76

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    Permitted Tax Distributers
    

	
 
	
    11.02(a)
    

	

    Person
    

	
 
	
    11.02(a)
    

	

    Plan(s)
    

	
 
	
    3.11(a)
    

	

    Preliminary Conversion Schedule
    

	
 
	
    7.16
    

	

    Proceeds
    

	
 
	
    2.03(i)(i)
    

	

    Proxy Statement
    

	
 
	
    3.32
    

	

    Public Stockholders
    

	
 
	
    8.01(a)
    

	

    RCRA
    

	
 
	
    3.13
    

	

    Real Property
    

	
 
	
    3.13
    

	

    Recapitalization
    

	
 
	
    11.02(a)
    

	

    Redemption Calculations
    

	
 
	
    2.08(a), 2.08(c)
    

	

    Redemption Dispute Notice
    

	
 
	
    2.08(a), 2.08(c)
    

	

    Redemption Liability Amount
    

	
 
	
    2.08(a)
    

	

    Redemption Liability Shares
    

	
 
	
    2.08(a)
    

	

    Redemption Notice
    

	
 
	
    2.08(a), 2.08(b)
    

	

    Redemption Option
    

	
 
	
    2.08(a)
    

	

    Redemption Price Differential
    

	
 
	
    2.08(a)
    

	

    Redemption Share Price
    

	
 
	
    2.08(a)
    

	

    Redemption Shares Number
    

	
 
	
    2.08(a)
    

	

    Redemption Value Safe Harbor
    

	
 
	
    2.08(a)
    

	

    Redemption Warrant
    

	
 
	
    2.08(a)
    

	

    Reference Balance Sheet
    

	
 
	
    3.08(a)
    

	

    Registration Rights Agreement
    

	
 
	
    7.02(a)
    

	

    Release
    

	
 
	
    3.13
    

	

    Remedial Action
    

	
 
	
    3.13
    

	

    Representatives
    

	
 
	
    7.03(a)
    

	

    RST Transaction
    

	
 
	
    11.02(a)
    

	

    Safe Harbor Shares
    

	
 
	
    2.08(a)
    

	

    SEC
    

	
 
	
    5.5(a)
    

	

    Second Agreement
    

	
 
	
    Preamble
    

	

    Second Determination Date
    

	
 
	
    2.06(c)
    

	

    Section 16 Information
    

	
 
	
    7.13
    

	

    Securities Act
    

	
 
	
    2.07
    

	

    Settlement Agreement
    

	
 
	
    11.02(a)
    

	

    SGD
    

	
 
	
    Preamble
    

	

    Shares in Excess of Safe Harbor
    

	
 
	
    2.08(a)
    

	

    Software
    

	
 
	
    3.14(j)
    

	

    Source Materials
    

	
 
	
    3.14(c)
    

	

    Stephens
    

	
 
	
    11.02(a)
    

	

    Stephens Group Debt
    

	
 
	
    11.02(a)
    

	

    Subsidiary(ies)
    

	
 
	
    11.02(a)
    

	

    Surviving Corporation
    

	
 
	
    1.01
    

	

    Target Working Capital
    

	
 
	
    2.03(g)
    

	

    Tax(s)
    

	
 
	
    3.15(c)
    

    77

 

	 	 	 
	

    Term

	
 
	

    Section

	 

	

    Tax Authority
    

	
 
	
    3.15(c)
    

	

    Tax Return(s)
    

	
 
	
    3.15(a)
    

	

    Taxable
    

	
 
	
    3.15(c)
    

	

    Terminating Company Breach
    

	
 
	
    9.01(c)
    

	

    Terminating Parent Breach
    

	
 
	
    9.01(d)
    

	

    Third Determination Date
    

	
 
	
    2.06(c)
    

	

    Third Determination Period
    

	
 
	
    2.06(c)
    

	

    Third Party Claims
    

	
 
	
    10.04(b)
    

	

    TLLCA
    

	
 
	
    1.01
    

	

    Total Exercise Warrant Value
    

	
 
	
    2.06(d)
    

	

    Trading Price
    

	
 
	
    2.06(b)
    

	

    Transaction Expenses
    

	
 
	
    11.02(a)
    

	

    Transaction — Related
    Members’ Equity Charges
    

	
 
	
    2.01(c)
    

	

    Ulterra Acquisition
    

	
 
	
    11.02(a)
    

	

    Used
    

	
 
	
    3.14(a)
    

	

    WARN Act
    

	
 
	
    7.15
    

	

    Weighted Average Index Warrant
    Exercise Price
    

	
 
	
    2.06(d)
    

	

    Working Capital
    

	
 
	
    2.02(a)
    

 

    Section 11.03  Severability.  If
    any term or other provision of this Agreement is invalid,
    illegal or incapable of being enforced by any rule of Law or
    public policy, all other conditions and provisions of this
    Agreement shall nevertheless remain in full force and effect so
    long as the economic or legal substance of the transactions
    contemplated by this Agreement is not affected in any manner
    materially adverse to any party. Upon such determination that
    any term or other provision is invalid, illegal or incapable of
    being enforced, 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 in order that the transactions contemplated by this
    Agreement be consummated as originally contemplated to the
    fullest extent possible.

 

    Section 11.04  Assignment;
    Binding Effect; Benefit.  Neither this
    Agreement nor any of the rights, interests or obligations
    hereunder shall be assigned by any of the parties hereto
    (whether by operation of Law or otherwise) without the prior
    written consent of the other parties. Subject to the preceding
    sentence, this Agreement shall be binding upon and shall inure
    to the benefit of the parties hereto and their respective
    successors and assigns. Notwithstanding anything contained in
    this Agreement to the contrary, nothing in this Agreement,
    expressed or implied, is intended to confer on any person other
    than the parties hereto or their respective successors and
    assigns any rights, remedies, obligations or liabilities under
    or by reason of this Agreement.

 

    Section 11.05  Incorporation
    of Exhibits.  The Company Disclosure Schedule,
    the Parent Disclosure Schedule, the Schedules and all Exhibits
    attached hereto and referred to herein are hereby incorporated
    herein and made a part hereof for all purposes as if fully set
    forth herein.

 

    Section 11.06  Specific
    Performance.  Each party acknowledges and
    agrees that the other party would be damaged irreparably in the
    event any of the provisions of this Agreement is not performed
    in accordance with its specific terms or is otherwise breached.
    Accordingly, each party agrees that the other party shall be
    entitled to an injunction or injunctions to prevent breaches of
    the provisions of this Agreement and to enforce specifically
    this Agreement and the terms and provisions hereof in any action
    instituted in any court in the United States or in any state
    having jurisdiction over the parties and the matter in addition
    to any other remedy to which they may be entitled pursuant
    hereto.

 

    Section 11.07  Governing
    Law; Forum.  

 

    (a) This Agreement shall be governed by, and construed in
    accordance with, the laws of the State of Delaware applicable to
    contracts executed in and to be performed in that state and
    without regard to any applicable conflicts of

    78

 

     law. In any action between the parties hereto arising out of or
    relating to this Agreement or any of the transactions
    contemplated by this Agreement: (i) each of the parties
    irrevocably and unconditionally consents and submits to the
    exclusive jurisdiction and venue of either the state courts
    located in Harris County, Texas or the United States District
    Court for the Southern District of Texas and (ii) each of
    the parties irrevocably consents to service of process by first
    class certified mail, return receipt requested, postage prepaid.

 

    (b) Notwithstanding anything contained in this Agreement to
    the contrary, the parties hereto agree that a condition
    precedent to Parent or Merger Sub asserting a claim or cause of
    action against the Company
    and/or any
    Member alleging that the Company or such Member has breached any
    obligation(s) to provide access to information and to personnel
    as reasonably necessary for Parent to prepare and file the Proxy
    Statement with the SEC, shall be that (i) Parent
    and/or
    Merger Sub shall provide written notice of the alleged breach to
    the Company and the Members’ Representative, (ii) the
    Company
    and/or the
    Members’ Representative, shall have three (3) business
    days from the date of receipt of the aforementioned written
    notice to cure the alleged breach, and (iii) if Parent
    and/or
    Merger Sub contend that an alleged breach has not been cured
    after the expiration of this three (3) business day cure
    period, then as a final condition precedent to asserting a claim
    or cause of action against the Company
    and/or any
    Member alleging that the Company or such Member has breached any
    obligation(s) to provide access to information and to personnel
    as reasonably necessary for Parent to prepare and file the Proxy
    Statement with the SEC, Parent or Merger Sub first shall seek
    compliance by filing a motion with the 234th Judicial
    District Court in Harris County, Texas seeking to compel
    compliance with this Agreement. The parties hereto further agree
    that the 234th Judicial District Court shall retain
    jurisdiction over the parties to enforce this Agreement with
    respect to any such alleged breach(es), and agree not to take
    the position that such motion is a procedurally improper
    mechanism for seeking such relief or that the Court lacks the
    authority to order specific compliance with this Agreement.
    Parent and Merger Sub acknowledge and agree that Parent and
    Merger Sub shall be barred from asserting a claim or cause of
    action against the Company
    and/or any
    Member alleging the Company
    and/or a
    Member has breached any obligation(s) to provide access to
    information or otherwise assist with the SEC proxy process if
    Parent or Merger Sub fails to follow the procedures set forth in
    the first sentence of this Subparagraph with respect to such
    alleged breach, and any such failure to so comply with the
    aforementioned procedures shall operate as an absolute waiver of
    any such claims or causes of action by Parent or Merger Sub.

 

    Section 11.08  Time
    of the Essence.  For purposes of this
    Agreement and the transactions contemplated by this Agreement,
    time is of the essence.

 

    Section 11.09  Waiver
    of Jury Trial.  Each of the parties hereto
    hereby irrevocably waives any and all right to trial by jury in
    any legal proceeding arising out of or relating to this
    Agreement or the transactions contemplated hereby.

 

    Section 11.10  Construction
    and Interpretation.

 

    (a) For purposes of this Agreement, whenever the context
    requires, the singular number shall include the plural, and vice
    versa; the masculine gender shall include the feminine and
    neuter genders; the feminine gender shall include the masculine
    and neuter genders; and the neuter gender shall include the
    masculine and feminine genders.

 

    (b) Neither this Agreement nor any uncertainty or ambiguity
    herein shall be construed or resolved against any party, whether
    under any rule of construction or otherwise. No party to this
    Agreement shall be considered the draftsman. The parties
    acknowledge and agree that this Agreement has been reviewed,
    negotiated, and accepted by all parties and their attorneys and
    shall be construed and interpreted according to the ordinary
    meaning of the words used so as fairly to accomplish the
    purposes and intentions of all parties hereto.

 

    (c) As used in this Agreement, the words
    “include” and “including,” and variations
    thereof, shall not be deemed to be terms of limitation, but
    rather shall be deemed to be followed by the words “without
    limitation.”

 

    (d) Except as otherwise indicated, all references in this
    Agreement to “Articles,” “Sections,”
    “Schedules” and “Exhibits” are intended to
    refer to an Article or Section of, or Schedule or Exhibit to,
    this Agreement.

 

    (e) Except as otherwise indicated, all references
    (i) to any agreement (including this Agreement), contract
    or Law are to such agreement, contract or Law as amended,
    modified, supplemented or replaced from time to time, and
    (ii) to any Governmental Entity include any successor to
    that Governmental Entity.

    

    79

 

 

    (f) This Agreement may not be modified by the parties’
    course of dealing or course of performance. The parties
    expressly agree that their duties, obligations and rights shall
    not be expanded, altered or modified based on their conduct.
    Furthermore, the wavier of any right on one occasion shall not
    constitute the waiver of that right on any other occasion or the
    wavier of any other rights. Moreover, any action voluntarily
    undertaken by the Company or its members shall not modify alter
    or expand their obligations in connection with Parent’s
    Proxy Statement or otherwise under this Agreement.

 

    Section 11.11  Further
    Assurances.  Each party hereto shall execute
    and cause to be delivered to each other party hereto such
    instruments and other documents, and shall take such other
    actions, as such other party may reasonably request (prior to,
    at or after the Closing) for the purpose of carrying out or
    evidencing any of the transactions contemplated by this
    Agreement.

 

    Section 11.12  Headings.  The
    descriptive headings contained in this Agreement are included
    for convenience of reference only and shall not affect in any
    way the meaning or interpretation of this Agreement.

 

    Section 11.13  Counterparts.  This
    Agreement may be executed and delivered (including by facsimile
    transmission) in two or more counterparts, each of which when
    executed and delivered shall be deemed to be an original but all
    of which taken together shall constitute one and the same
    agreement.

 

    Section 11.14  Entire
    Agreement.  This Agreement (including the
    Exhibits, the Schedules, the Company Disclosure Schedule and the
    Parent Disclosure Schedule) and the Non-Disclosure Agreement
    constitute the entire agreement among the parties with respect
    to the subject matter hereof and supersede all prior agreements
    and understandings among the parties with respect thereto. No
    addition to or modification of any provision of this Agreement
    shall be binding upon any party hereto unless made in writing
    and signed by all parties hereto.

 

    [Remainder
    of this page intentionally left blank; signature page
    follows.]

    

    80

 

 

    IN WITNESS WHEREOF, each of Parent, Merger Sub, the
    Company and the Members’ Representative has executed or has
    caused this Agreement to be executed by its duly authorized
    officer as of the date first written above.

 

    JK ACQUISITION CORP.

 

			
	 	    By: 
	
    /s/  James
    P. Wilson

    

     James P. Wilson

     Chief Executive Officer

 

    MULTI-SHOT, INC.

 

			
	 	    By: 
	
    /s/  James
    P. Wilson

    

     James P. Wilson

     President

 

    MULTI-SHOT, LLC

 

			
	 	    By: 
	
    /s/  Allen
    Neel

    

     Allen Neel

     President

 

    SG-DIRECTIONAL, LLC

     (in such capacity as Members’ Representative)

 

			
	 	    By:  
	
    The Stephens Group, LLC,

     Its Manager

 

			
	 	    By: 
	
    /s/  Ronald
    M. Clark

    

     Ronald M. Clark

     Senior Vice President

 

    CATALYST/HALL GROWTH CAPITAL MANAGEMENT CO., LLC

     (in such capacity as Members’ Representative)

 

			
	 	    By: 
	
    /s/  Rick
    Herrman

    

     Rick Herrman

     President

    

    Merger Agreement — Signature Pages

 

 

    JOINDER
    OF MEMBERS

 

    Each of the undersigned Members hereby joins in execution of
    this Agreement to evidence its or his agreement to be bound by
    the provisions contained in Article IV, Article VII,
    Article X and Article XI, to the extent that such
    provisions relate to such Member individually.

 

    SG-DIRECTIONAL, LLC

 

			
	 	    By:  
	
    The Stephens Group, LLC,

     Its Manager

 

			
	 	    By: 
	
    /s/  Ronald
    M. Clark

    

     Ronald M. Clark

     Senior Vice President

 

    CATALYST/HALL GROWTH CAPITAL, LP

 

			
	 	    By:  
	
    Catalyst/Hall Growth Capital Management Co.,

     LLC

     Its sole general partner

 

			
	 	    By: 
	
    /s/  Rick
    Herrman

    

     Rick Herrman

     President

 

    CATALYST/HALL PRIVATE EQUITY, LP

 

			
	 	    By:  
	
    Catalyst/Hall Private Equity Management

     Company, LLC

     Its sole general partner

 

			
	 	    By: 
	
    /s/  Rick
    Herrman

    

     Rick Herrman

     President

    

    Merger Agreement — Signature Pages

 

 

    CATALYST CAPITAL PARTNERS I, LTD.

 

			
	 	    By:  
	
    The Catalyst Group, Inc.

     Its sole general partner

 

			
	 	    By: 
	
    /s/  Rick
    Herrman

    

     Rick Herrman

     Vice President

     CATALYST CAPITAL PARTNERS II, LTD.

 

			
	 	    By:  
	
    The Catalyst Group II, Inc.

     Its sole general partner

 

			
	 	    By: 
	
    /s/  Rick
    Herrman

    

     Rick Herrman

     Vice President

 

    CRF AIR, LLC

 

			
	 	    By: 
	
    /s/  Jay
    C. Jimerson

    

     Jay C. Jimerson

     Manager

 

    /s/  Robert
    P. Vilyus

    

     ROBERT P. VILYUS

 

    /s/  Allen
    Neel

    

     ALLEN NEEL

 

    /s/  David
    Cudd

    

     DAVID CUDD

 

    /s/  Paul
    Culbreth

    

     PAUL CULBRETH

    

    Merger Agreement — Signature Pages

 

Schedule 2.06(d)

Contingent Award Calculation — Example

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Merger	 	 	 	 	 	 	 	 
	Agreement	 	 	 	 	 	 	 	 
	section. ref.	 	 	 	 	 	 	 	 
	2.06 (c)
	 	Initial Determination Date (“IDD”)

	 	 	 	 	 	6/30/2008
	 
	Assumptions:
	 	1) 1,000,000 Index Warrants exercised
during the IDD;
	 	 	 	 	 	 
	 	 	2) $7/sh. weighted avg. Total Exercise
Warrant Value/sh. for those exercised
Index Warrants
	 	 	 	 	 	 
	 	 	3) $5/sh. Weighted Average Index Warrant
Exercise Price
	 	 	 	 	 	 
	Step One:
	 	 
	 	 	 	 	 	 
	 
	2.06 (d) (i) (A)
	 	Multiple-Assumed Contingent Award Per 

Share Market Value

	 	$	7.00	 	 	 
	 	 	Xs (times)
	 	 	 	 	 	 
	2.06 (d) (i) (B)
	 	1,000,000 Index Warrants exercised 

during IDD period

	 	 	1,000,000	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	determining, Total Exercised Warrant Value

	 	$	7,000,000	 	 	 
	Step Two:
	 	 
	 	 	 	 	 	 
	 
	2.06 (d) (ii) (A)
	 	Calc.-Aggregate # of Index Warrants for
IDD Period

	 	 	1,000,000	 	 	 
	 	 	 
	 	 	 	 	 	 
	2.06 (d) (ii) (B)
	 	Calc.-Aggregate Total Exercised Warrant
Value for IDD Period

	 	$	7,000,000	 	 	 
	 	 	 
	 	 	 	 	 	 
	2.06 (d) (ii) (C)
	 	Calc.-Per share weighted avg. Total
Exercised Warrant Value for all Index
Warrants during DD Period

	 	$	7.00	 	 	 
	Step Three:
	 	 
	 	 	 	 	 	 
	 
	2.06 (d) (iii) (A)
	 	Multiply # shs. in 2.06 (d) (ii) (A) above

	 	 	1,000,000	 	 	 
	 	 	Times
	 	 	 	 	 	 
	2.06 (d) (iii) (B)
	 	# of shares in 2.06 (d) (iii) A by $5.00

	 	$	5.00	 	 	 
	 	 	 

	 	 	 	 	 
	 	 	 

	 	$	5,000,000	 	 	 
	Step Four:
	 	 
	 	 	 	 	 	 
	 
	2.06 (d) (iv) (A)
	 	Subtract-the amount determined in 2.06
(d) (iii)

	 	$	5,000,000	 	 	 
	 	 	from
	 	 	 	 	 	 
	2.06 (d) (iv) (B)
	 	the Total Exercised Warrant Value for
Initial Determination Period 2.06 (d) (i)

	 	$	7,000,000	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Determining-Contingent Award amt.

	 	$	2,000,000	 	 	 
	Step Five:
	 	 
	 	 	 	 	 	 
	 
	 	 	If Contingent Award amt. > than $0
	 	 	 	 	 	 
	2.06 (d) (v) (A)
	 	Divide-Contingent Award amount per 2.06
(d) (iv)

	 	$	2,000,000	 	 	 
	 	 	By
	 	 	 	 	 	 
	2.06 (d) (v) (B)
	 	Amount determined in 2.06 (d) (ii) (C):
	 	 	 	 	 	 
	 	 	(per/sh. weighted avg. Total Exercise
Warrant Value for the Determination
Period)

	 	$	7.00	 	 	 
	 	 	 

	 	 	 	 	 
	 	 	In determining the # of
	 	 	 	 	 	 
	 	 	Parent Common Shares to be issued
(“Contingent Award Shares”)

	 	 	285,714exv10w2

 

 

    Exhibit 10.2

 

 

    THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
    HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
    AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED,
    SOLD, OFFERED FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF IN
    THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION FROM SUCH
    ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

    THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
    ARE SUBJECT TO THE TERMS AND PROVISIONS OF THE SECOND AMENDED
    AND RESTATED AGREEMENT AND PLAN OF MERGER, DATED AS OF
    AUGUST   , 2007, AMONG JK ACQUISITION CORP. (THE
    “COMPANY”), MULTI-SHOT, INC., MULTI-SHOT, LLC,
    AND CATALYST HALL GROWTH CAPITAL MANAGEMENT CO., LLC, AND
    SG-DIRECTIONAL, LLC, TOGETHER AS MEMBERS’ REPRESENTATIVE,
    AND THE MEMBERS OF MULTI-SHOT, LLC (AS SUCH AGREEMENT MAY BE
    SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME,
    THE “MERGER AGREEMENT”). A COPY OF THE
    AGREEMENT IS AVAILABLE AT THE EXECUTIVE OFFICES OF THE
    COMPANY.

 

		
	    [          ] Shares
    	    Warrant
    No. [          ]
    

 

    WARRANT
    TO ACQUIRE SHARES OF COMMON STOCK OF

    JK ACQUISITION CORP.

 

    This is to certify that, in consideration of valuable
    consideration, which is hereby acknowledged as received,
    [          ],
    its successors and registered assigns, is entitled at any time
    after the Closing Date (as defined in the Merger Agreement) to
    exercise this Warrant to acquire as an Contingent Award Share or
    a Cash Exercise Warrant pursuant to Section 2.06 of the
    Merger Agreement
    [          ]
    (          )
    shares of common stock, par value $0.0001 per share, of JK
    ACQUISITION CORP., a Delaware corporation (which shall be
    renamed MS Energy Services, Inc. at the Effective Time)(the
    “Company”), and to exercise the other rights,
    powers, and privileges hereinafter provided, all on the terms
    and subject to the conditions specified in this Warrant and in
    the Merger Agreement. All capitalized terms used herein but not
    otherwise defined shall have the meaning set forth in the Merger
    Agreement. This Warrant is one of a series of Parent Warrants
    issued pursuant to the Merger Agreement (the “Parent
    Warrants”).

 

    1.  Duration of Warrants.  A
    Warrant may be exercised only during the period
    (“Exercise Period”) commencing on the Effective
    Time and ending on the later of (i) April 10, 2010,
    (ii) fifteen (15) days following the final
    determination of the Contingent Award Calculation with respect
    to the Third Determination Period, or (iii) such time as
    all Index Warrants have expired, been exercised or have been
    terminated in accordance with their respective terms (in any
    case, the “Expiration Date”). Each Warrant not
    exercised on or before the Expiration Date shall become void,
    and all rights thereunder and all rights in respect thereof
    under this Warrant shall cease at the close of business on the
    Expiration Date. The Company in its sole discretion may extend
    the duration of the Warrants by delaying the Expiration Date;
    provided, however, that any extension of the duration of the
    Warrants must apply equally to all of the Warrants.

 

    2.  Exercise of Warrants.

 

    (a) Payment by Return of
    Warrant.  A Warrant may be exercised by the
    registered holder thereof by surrendering it, at the office of
    the Company, for the number of shares of Common Stock which the
    registered holder is entitled to receive as an Contingent Award
    pursuant to Section 2.06 of the Merger Agreement, as well
    as any and all applicable taxes due in connection with the
    exercise of the Warrant, the exchange of the Warrant for shares
    of Common Stock, and the issuance of the Common Stock. The
    registered holder shall not be required to provide any
    additional consideration upon the exercise of the Warrant or the
    issuance of Common Stock upon exercise of a Warrant. Subject to
    the terms of Section 2.06 of the Merger Agreement, the
    holder of the Warrant shall

    

    1

 

     have the option, prior to exercise, to exchange a portion of
    this Warrant for Cash Exercise Warrants pursuant to
    Section 2.06(n) of the Merger Agreement.

 

    (b) Certificates and Remaining
    Warrants.  As soon as practicable after the
    exercise of any Warrant, the Company shall issue to the
    registered holder of such Warrant a certificate or certificates
    for the number of full shares of Common Stock to which he is
    entitled pursuant to the exercise of the Warrant pursuant to
    Section 2.06 of the Merger Agreement, registered in such
    name or names as may be directed by him, her or it, and
    additionally if such Warrant shall not have been exercised in
    full, a new countersigned Warrant for the number of shares as to
    which such Warrant shall not have been exercised pursuant to
    Section 2.06(l) of the Merger Agreement. Notwithstanding
    the foregoing, the Company shall not be obligated to deliver any
    securities pursuant to the exercise of a Warrant unless a
    registration statement under the Act and all applicable state
    securities laws with respect to the Common Stock is effective or
    an exemption under the Act and all applicable state securities
    laws is available for the issuance and provided that any shares
    to be received upon exercise of this Warrant while in the Escrow
    Account shall be issued and held in the Escrow Account until
    released pursuant to the terms of the Escrow Agreement.

 

    (c) Shares.  All shares of Common
    Stock issued upon the proper exercise of a Warrant in conformity
    with this Warrant shall be validly issued, fully paid and
    nonassessable.

 

    (d) Rights as a Shareholder.  Each
    person in whose name any such certificate for shares of Common
    Stock is issued shall for all purposes be deemed to have become
    the holder of record of such shares on the date on which the
    Warrant was surrendered, irrespective of the date of delivery of
    such certificate, except that, if the date of such surrender and
    payment is a date when the stock transfer books of the Company
    are closed, such person shall be deemed to have become the
    holder of such shares at the close of business on the next
    succeeding date on which the stock transfer books are re-opened,
    which shall be the earliest practical date available to the
    Company.

 

    (e) Aggregate Limit.  In no event
    shall the aggregate number of shares of Parent Common Stock
    issued in connection with this Warrant exceed the aggregate
    number of shares set forth in the preamble paragraph of this
    Warrant.

 

    3. No Fractional
    Shares.  Notwithstanding any other provision
    of this Warrant or the Merger Agreement, no fractional shares of
    Common Stock shall be issued pursuant to the terms of this
    Warrant, and no Member shall be entitled to receive a fractional
    share of Common Stock pursuant to the terms of this Warrant.

 

    4. Transfer and Exchange of Warrants.

 

    (a) Registration of Transfer.  The
    Company shall register the transfer, from time to time, of any
    outstanding Warrant in the Warrant register, upon the surrender
    of such Warrant for transfer, properly endorsed with signatures
    properly guaranteed and accompanied by appropriate instructions
    for transfer. Upon any such transfer, a new Warrant representing
    an equal aggregate number of Warrants shall be issued and the
    old Warrant shall be cancelled by the Company.

 

    (b) Procedure for Surrender of
    Warrants.  Warrants may be surrendered to the
    Company, together with a written request for exchange or
    transfer, and thereupon the Company shall issue in exchange
    therefor one or more new Warrants as requested by the registered
    holder of the Warrants so surrendered, representing an equal
    aggregate number of Warrants.

 

    (c) Partial Exercise.  If the
    Warrant shall have been exercised in part, the Company shall, at
    the time of delivery of the certificate or certificates
    representing shares of Parent Common Stock, deliver to holder a
    new Warrant evidencing the unexercised rights of holder to
    acquire shares of Parent Common Stock called for by the Warrant,
    which new Warrant shall in all other respects be identical with
    the original Warrant.

 

    (d) Service Charges.  No service
    charge shall be made for any exchange of Warrants.

 

    5. Other Provisions Relating to Rights of Holders of
    Warrants.

 

    (a) No Rights as Stockholder.  A
    Warrant does not entitle the registered holder thereof to any of
    the rights of a stockholder of the Company, including, without
    limitation, the right to receive dividends, or other
    distributions, exercise any preemptive rights to vote or to
    consent or to receive notice as stockholders in respect of the
    meetings of stockholders or the election of directors of the
    Company or any other matter. The holder shall be entitled to all
    rights

    

    2

 

     of a stockholder of the Company with respect to shares of
    Common Stock issuable upon exercise of this Warrant immediately
    upon such exercise notwithstanding that a certificate
    representing such shares Common Stock has not been issued.

 

    (b) Lost, Stolen, Mutilated, or Destroyed
    Warrants.  If any Warrant is lost, stolen,
    mutilated, or destroyed, the Company may on such terms as to
    indemnity or otherwise as they may in their discretion impose
    (which shall, in the case of a mutilated Warrant, include the
    surrender thereof), issue a new Warrant of like denomination,
    tenor, and date as the Warrant so lost, stolen, mutilated, or
    destroyed. Any such new Warrant shall constitute a substitute
    contractual obligation of the Company, whether or not the
    allegedly lost, stolen, mutilated, or destroyed Warrant shall be
    at any time enforceable by anyone.

 

    (c) Reservation of Common
    Stock.  The Company shall at all times that
    any Warrant is outstanding reserve and keep available a number
    of its authorized but unissued shares of Common Stock that will
    be sufficient to permit the exercise in full of all outstanding
    Warrants.

 

    (d) Registration of Common
    Stock.  The registration of the Common Stock
    issuable pursuant to the terms of this Warrant shall be subject
    to that certain Registration Rights Agreement, dated
    [                    ],
    200[          ]
    by and between the Company, the Members’ Representative and
    the members of Multi-Shot, LLC.

 

    6.  Miscellaneous Provisions.

 

    (a) Successors.  All the covenants
    and provisions of this Warrant by or for the benefit of the
    Company shall bind and inure to the benefit of their respective
    successors and assigns.

 

    (b) Notices.  All notices,
    requests, claims, demands and other communications hereunder
    shall be in writing and shall be given (and shall be deemed to
    have been duly given upon receipt) by delivery in person, by
    cable, telecopy, facsimile, telegram or telex or by registered
    or certified mail (postage prepaid, return receipt requested) to
    the respective parties at the following addresses (or at such
    other address for a party as shall be specified in a notice
    given in accordance with this Section 6(b)):

 

    if to the Company:

 

    JK Acquisition Corp.

    4400 Post Oak Parkway, Suite 2530

    Houston, Texas 77027

    Facsimile No.:
    (713) 552-9226

    Attention: James P. Wilson

 

    with a copy to:

 

    Patton Boggs LLP

    2001 Ross Avenue, Suite 3000

    Dallas, Texas 75201

    Facsimile No.:
    (214) 758-1550

    Attention: Fred S. Stovall, Esq.

 

    if to Holder, to the address reflected on the register of
    Warrants kept by

    the Company, with a copy to the Members’ Representative at:

 

    Catalyst Hall Growth Capital Management Co., LLC

    2 Riverway, Suite 1710

    Houston, Texas 77056

    Facsimile No.:
    (713) 623-0473

    Attention: Ron Nixon and Rick Herrman

    

    3

 

 

    And

 

    SG-Directional, LLC

    P.O. Box 3417

    Little Rock, Arkansas
    72203-3417

    Facsimile No.:
    (501) 377-3463

    Attention: Ronald M. Clark

 

    with a copy to:

 

    Franklin, Cardwell & Jones, P.C.

    1001 McKinney, Suite 1800

    Houston, Texas 77002

    Facsimile No.:
    (713) 227-5657

    Attention: Randolph Ewing, Esq.

 

    (c) Applicable law.  The validity,
    interpretation, and performance of the Warrants shall be
    governed in all respects by the laws of the State of Delaware,
    applicable to contracts executed in and to be performed in that
    state and without regard to any applicable conflicts of law. In
    any action between the parties hereto arising out of or relating
    to the Warrants: (i) each of the parties irrevocably and
    unconditionally consents and submits to the exclusive
    jurisdiction and venue of either the state courts located in
    Harris County, Texas or the United States District Court for the
    Southern District of Texas and (ii) each of the parties
    irrevocably consents to service of process by first class
    certified mail, return receipt requested, postage prepaid.

 

    (d) Persons Having Rights under this
    Warrant.  Nothing in this Warrant expressed
    and nothing that may be implied from any of the provisions
    hereof is intended, or shall be construed, to confer upon, or
    give to, any person or corporation other than the parties hereto
    and the registered holders of the Warrants. All covenants,
    conditions, stipulations, promises, and agreements contained
    herein shall be for the sole and exclusive benefit of the
    parties hereto and their successors and assigns and of the
    registered holders of the Warrants.

 

    (e) Counterparts.  This Agreement
    may be executed in any number of counterparts and each of such
    counterparts shall for all purposes be deemed to be an original,
    and all such counterparts shall together constitute but one and
    the same instrument.

 

    (f) Effect of Headings.  The
    Section headings herein are for convenience only and are not
    part of this Warrant Agreement and shall not affect the
    interpretation thereof.

 

    (g) Other.  This Warrant is issued
    under, and the rights represented hereby are subject to the
    terms and provisions contained in the Merger Agreement, to all
    terms and provisions of which the registered holder of this
    Warrant, by acceptance of this Warrant, assents. Reference is
    hereby made to the Merger Agreement for a more complete
    statement of the rights and limitations of rights of the
    registered holder of this Warrant and the rights and duties of
    the Company under this Warrant. A copy of the Merger Agreement
    is on file at the office of the Company.

 

    [Remainder
    of this page intentionally left blank; signature page
    follows.]

    

    4

 

 

    IN WITNESS WHEREOF, the Company has caused this Warrant to be
    duly executed on this
    [          ] day
    of
    [          ],
    200[  ].

 

    JK ACQUISITION CORP.

 

    By: ­
    ­

    Name: ­
    ­

    Title: ­
    ­

 

    Form of
    Warrant — Signature Page

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