Document:

EX-10.68

FOURTH AMENDMENT TO 

AMENDED AND RESTATED CREDIT AGREEMENT AND LIMITED WAIVER OF DEFAULTS

This Fourth Amendment to Amended and Restated Credit Agreement and Limited Waiver of Defaults
(this “Amendment”) is dated as of May 27, 2005 (the “Amendment Closing Date”) and
entered into by and among Bank of America, N.A., as lender (the “Lender”), with offices at
55 South Lake Avenue, Suite 900, Pasadena, California 91101, and Meade Instruments Corp., a
Delaware corporation, Simmons Outdoor Corp., a Delaware corporation, and Coronado Instruments,
Inc., a California corporation (such entities being referred to hereinafter each individually as a
“Borrower” and collectively, the “Borrowers”).

WHEREAS, the Lender and the Borrowers have entered into that certain Amended and Restated
Credit Agreement dated as of October 25, 2002 (as amended, restated or modified from time to time,
the “Agreement”);

WHEREAS, the Borrowers have informed the Lender that a violation may occur, as of the fiscal
year ending February 28, 2005, of the financial covenant set forth in Section 7.22 of the
Agreement (the “Prospective Covenant Violation”). The Prospective Covenant Violation would
constitute an Event of Default under the Agreement; and

WHEREAS, the Borrowers have requested a waiver of the Prospective Covenant Violation and
certain amendments to the Agreement, and the Lender has agreed to waive the Prospective Covenant
Violation and to amend the Agreement pursuant to the terms and conditions provided herein.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the
Agreement and this Amendment, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby
agree as follows:

ARTICLE I

Definitions

Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent
not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.

ARTICLE II

Amendments

Section 2.01. Amended Definition of “Applicable Margin”. The definition of
“Applicable Margin” set forth in Annex A to the Agreement is hereby amended and restated to read in
its entirety as follows:

“ ‘Applicable Margin’ means:

(i) with respect to Base Rate Revolving Loans, and all other Obligations (other than
LIBOR Loans), .75%; and

(ii) with respect to LIBOR Revolving Loans, 3.00%; and

(iii) with respect to LIBOR Term Loans, 3.00%.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	If Fixed Charge	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Coverage Ratio	 	Pricing Level	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
2.00 to 1.00
	 	Level I
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
1.75 to 1.00 but less than
2.00 to 1.00
	 	Level II
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
1.50 to 1.00 but less than
1.75 to 1.00
	 	Level III
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
1.20 to 1.00 but less than
1.50 to 1.00
	 	Level IV
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
1.00 to 1.00 but less than
1.20 to 1.00
	 	Level V
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
..75 to 1.00 but less than
1.00 to 1.00
	 	Level VI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Greater than or equal to
..50 to 1.00 but less than
..75 to 1.00
	 	Level VII
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

1

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	If Fixed Charge	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Coverage Ratio	 	Pricing Level	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Applicable Margins	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Level I            
	 	Level II            	 	Level III            	 	Level IV            	 	Level V            	 	Level VI            	 	Level VII
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Rate Revolving Loans
	 		0.0	%	 		0.0	%	 		0.0	%	 		0.25	%	 		0.50	%	 		0.75	%	 		1.00	%
	LIBOR Revolving Loans
	 		1.75	%	 		2.00	%	 		2.25	%	 		2.50	%	 		2.75	%	 		3.00	%	 		3.25	%
	Term Loans
	 		3.00	%	 		3.00	%	 		3.00	%	 		3.00	%	 		3.00	%	 		3.00	%	 		3.25	%

All adjustments in the Applicable Margins after July 15, 2005, shall be
implemented quarterly on a prospective basis, commencing with the first day of the
first calendar month that occurs more than 5 days after the required date of
delivery to the Lender of quarterly unaudited or annual draft audited (as
applicable) Financial Statements evidencing the need for an adjustment. In the
event the draft audited Financial Statements are subsequently determined to be in
error, then any resulting change in the Applicable Margin shall be made
retroactively to the date when the incorrect Applicable Margin was utilized.
Concurrently with the delivery of those Financial Statements, Meade shall deliver to
the Lender a certificate, signed by its chief financial officer, setting forth in
reasonable detail the basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such Financial Statements shall, in addition to
any other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until the
first day of the first calendar month following the delivery of those Financial
Statements demonstrating that such an increase is not required. If a Default or
Event of Default has occurred and is continuing at the time any reduction in the
Applicable Margins is to be implemented, no reduction may occur until the first day
of the first calendar month following the date on which such Default or Event of
Default is waived or cured.”

Section 2.02. Amended Definition of “Reserves”. A new clause (h) is hereby
added to the definition of “Reserves” set forth in Annex A to the Agreement to read in its
entirety as follows:

“(h) the Fixed Charge Coverage Reserve.”

Section 2.03. New Definition. A new definition of “Fixed Charge Coverage Reserve” is
hereby added to Annex A to the Agreement to read in its entirety as follows:

“‘Fixed Charge Coverage Reserve’ means $1,000,000 during any fiscal
quarter following a period of four consecutive fiscal quarters during which the
Borrowers’ Fixed Charge Coverage Ratio is less than 1.0 to 1.0.”

Section 2.04. Amendment to Section 7.22. Section 7.22 of the Agreement is
hereby amended and restated in its entirety to read as follows:

“ 7.22 Fixed Charge Coverage Ratio. Meade and its consolidated Subsidiaries
will maintain a Fixed Charge Coverage Ratio for each period of four consecutive
fiscal quarters ending on the last day of each fiscal quarter of not less than the
applicable ratio set forth below:

	 	 	 
	 	 	Minimum Fixed Charge Coverage
	“Fiscal Quarter Ending	 	Ratio
	February 28, 2005

	 	.80 to 1.00
	 

	 	 
	 
	 	 
	May 31, 2005

	 	.50 to 1.00
	 

	 	 
	 
	 	 
	August 31, 2005

	 	.80 to 1.00
	 

	 	 
	 
	 	 
	November 30, 2005

	 	.90 to 1.00
	 

	 	 
	 
	 	 
	February 28, 2006 and each fiscal

quarter ending thereafter

	 	

1.10 to 1.00”
	 

	 	 

Section 2.05. Amendment to Section 7.24. Section 7.24 of the Agreement is
hereby amended and restated in its entirety to read as follows:

“ 7.24 US Fixed Charge Coverage Ratio. Meade and its consolidated
Subsidiaries will maintain a US Fixed Charge Coverage Ratio for each period of four
consecutive fiscal quarters ending on the last day of each fiscal quarter beginning
February 28, 2006 of not less than 1.0 to 1.0.”

ARTICLE III

Section 3.01. Waiver. The Lender hereby waives the Prospective Covenant Violation and
agrees not to exercise any rights or remedies available as a result of the occurrence thereof.

Section 3.02. Limitation of Waiver. The waiver granted in Section 3.01 of
this Amendment shall be limited strictly as written and shall not be deemed to constitute a waiver
of, or any consent to noncompliance with, any term or provision of this Amendment, the Agreement or
any other Loan Document except as expressly set forth herein. Further, the waiver granted in
Section 3.01 of this Amendment shall not constitute a waiver of any other Default or Event
of Default arising as a result of the violation of any other term or provision of this Amendment,
the Agreement or any other Loan Document or a waiver of any rights or remedies arising as a result
of any such other Defaults or Events of Default.

Section 3.03. Amendment Fee. In connection with the preparation, negotiation and
execution of this Amendment, the Borrowers shall pay to the Lender an amendment fee (the
“Amendment Fee”) in the amount of Sixty-five Thousand Dollars ($65,000), which, at the
Lender’s option, may be charged as an advance and a Revolving Loan under the Agreement, and which
fee is fully earned and payable as of the Amendment Closing Date.

ARTICLE IV

Section 4.01. Conditions Precedent. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:

(i) The representations and warranties contained herein and in the Agreement, as
amended hereby, shall be true and correct in all material respects as of the date hereof as
if made on the date hereof, except for such representations and warranties limited by their
terms to a specific date;

(ii) The Borrowers shall have delivered to the Lender an executed original copy of this
Amendment;

(iii) The Borrowers shall have delivered to the Lender executed original copies of each
of the Consents and Reaffirmations attached to this Amendment;

(iv) The Borrowers shall have paid the Lender the Amendment Fee;

(v) No Default or Event of Default (other than the Prospective Covenant Violation)
shall have occurred and be continuing; and

(vi) All proceedings taken in connection with the transactions contemplated by this
Amendment and all documentation and other legal matters incident thereto shall be
satisfactory to the Lender in its sole and absolute discretion.

ARTICLE V

Section 5.01. Acknowledgment. Each Borrower hereby represents and warrants that the
execution and delivery of this Amendment and compliance by such Borrower with all of the provisions
of this Amendment, (i) are within its powers and purposes, (ii) have been duly authorized or
approved by such Borrower, and (iii) when executed and delivered by or on behalf of such Borrower,
will constitute valid and binding obligations of the Borrower, enforceable in accordance with their
terms. Each Borrower reaffirms its obligation to pay all amounts due the Lender under the Loan
Documents in accordance with the terms thereof, as modified hereby.

Section 5.02. Loan Documents Unmodified. Except as otherwise specifically modified by
this Amendment, all terms and provisions of the Agreement and all other Loan Documents, as modified
hereby, shall remain in full force and effect. Nothing contained in this Amendment shall in any
way impair the validity or enforceability of the Loan Documents, as modified hereby or alter,
waive, annul, vary, affect, or impair any provisions, conditions, or covenants contained therein or
any rights, powers, or remedies granted therein. Any lien and/or security interest granted to the
Lender in the Collateral set forth in the Agreement or any other Loan Document are and shall remain
unchanged and in full force and effect and the Agreement and the other Loan Documents shall
continue to secure the payment and performance of all of the Obligations thereunder, as modified
hereby, and the Borrowers’ obligations hereunder.

Section 5.03. Parties, Successors and Assigns. This Amendment shall be binding upon
and shall inure to the benefit of each of the Borrowers, the Lender, and their respective
successors and assigns.

Section 5.04. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original, but all of which
when taken together shall constitute one and the same instrument.

Section 5.05. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of this Amendment.

Section 5.06. Expenses of the Lender. The Borrowers agree to pay on demand (i) all
reasonable costs and expenses incurred by the Lender in connection with the preparation,
negotiation and execution of this Amendment and the other Loan Documents executed pursuant hereto
and any and all subsequent amendments, modifications, and supplements hereto or thereto, including,
without limitation, the costs and fees of the Lender’s legal counsel and the allocated cost of
staff counsel and (ii) all costs and expenses reasonably incurred by the Lender in connection with
the enforcement or preservation of any rights under the Agreement, this Amendment and/or other Loan
Documents, including, without limitation, the reasonable costs and fees of the Lender’s legal
counsel, the allocated cost of staff counsel, and the costs and fees associated with any
environmental due diligence conducted in relation hereto.

Section 5.07. Total Agreement. This Amendment, the Agreement, and all other Loan
Documents shall constitute the entire agreement between the parties relating to the subject matter
hereof, and shall rescind all prior agreements and understandings between the parties hereto
relating to the subject matter hereof, and shall not be changed or terminated orally.

[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the day and
year first above written.

“BORROWERS”:

MEADE INSTRUMENTS CORP.

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	SIMMONS OUTDOOR CORP.

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	CORONADO INSTRUMENTS, INC.

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	“LENDER”:

BANK OF AMERICA, N.A.

By: /s/ Todd R. Eggertsen

3

	 	 	 
	 	 	Name: Todd R. Eggertsen
	 	 	Title: Vice President

CONSENTS AND REAFFIRMATIONS

Each of MEADE INSTRUMENTS EUROPE CORP., a California corporation, and MEADE INSTRUMENTS
HOLDINGS CORP., a California corporation, hereby acknowledges the execution of, and consent to, the
terms and conditions of that Fourth Amendment to Amended and Restated Credit Agreement and Limited
Waiver of Defaults dated as of May 27, 2005, among MEADE INSTRUMENTS CORP., SIMMONS OUTDOOR CORP.,
CORONADO INSTRUMENTS, INC. and BANK OF AMERICA, N.A. (“Creditor”), and reaffirms its
obligations under (a) that certain Continuing Guaranty (the “Guaranty”) dated as of
September 24, 2001, made by the undersigned in favor of the Creditor, and (b) that certain Security
Agreement (the “Security Agreement”) dated as of September, 2001, by and between the
undersigned and the Creditor. Each of the undersigned acknowledges and agrees that each of the
Guaranty and the Security Agreement remain in full force and effect and are hereby ratified and
confirmed.

Dated as of May 27, 2005.

MEADE INSTRUMENTS EUROPE CORP., a California
corporation

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	MEADE INSTRUMENTS HOLDINGS CORP., a California
corporation

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 
	 
	 	 

4

CONSENTS AND REAFFIRMATIONS

Each of MTSC HOLDINGS, INC., a California corporation (“MTSC”), MC HOLDINGS,
INC., a California corporation (“MC HOLDINGS”), and MEADE CORONADO HOLDINGS CORP., a
California corporation (“MCHC”), hereby acknowledges the execution of, and consents to, the
terms and conditions of that Fourth Amendment to Amended and Restated Credit Agreement and Limited
Waiver of Defaults dated as of May 27, 2005, among MEADE INSTRUMENTS CORP., SIMMONS OUTDOOR CORP.,
CORONADO INSTRUMENTS, INC. and BANK OF AMERICA, N.A. (“Creditor”), and reaffirms its
obligations under that certain Continuing Guaranty (the “Guaranty”) dated as of September
24, 2001 executed in favor of the Creditor and joined by each of the undersigned pursuant to an
Instrument of Joinder, dated as of (i) October 25, 2002 with respect to MTSC and MC HOLDINGS, and
(ii) December 1, 2004 with respect to MCHC (respectively, the “Instrument”). Each of the
undersigned acknowledges and agrees that each of the Guaranty and Instrument remain in full force
and effect and are hereby ratified and confirmed.

Dated as of May 27, 2005.

MTSC HOLDINGS, INC., a California corporation,

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	MC HOLDINGS, INC., a California corporation

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 

	 	 	 	MEADE CORONADO HOLDINGS CORP., a California
corporation

	 	 	 
	By:

	 	/s/ Brent W. Christensen
	
 
	 	 
	Name:

	 	Brent W. Christensen
	
 
	 	 
	Title:

	 	Senior Vice President, Finance and Chief Financial Officer
	
 
	 	 
	 
	 	 

5Exhibit 10.1 Exchange Agreement

 

EXHIBIT 10.1

EXCHANGE
AGREEMENT

Between

TABATHA
I, Inc.

and

ZIGEN,
Inc.

Dated
February 25, 2005

 

 

EXCHANGE
AGREEMENT

THIS
EXCHANGE AGREEMENT
(hereinafter referred to as this "Agreement") is entered into as of this 25th
day of February 2005 by and between TABATHA I, Inc., a Colorado corporation
(hereinafter referred to as "TABATHA I"), Zigen, Inc., a Texas corporation
(hereinafter referred to as "ZIG"), and all of the shareholders of ZIG
(“Shareholders”) upon the following premises:

Premises

WHEREAS, TABATHA
I is a publicly held corporation organized under the laws of the State of
Colorado; 

WHEREAS, ZIG is
a corporation organized under the laws of the State of Texas;

WHEREAS,
management of the constituent corporations have determined that it is in the
best interest of the parties that TABATHA I acquire I00% of the issued and
outstanding securities of ZIG in exchange for the issuance of certain shares of
TABATHA I to the Shareholders (the "Exchange") on the terms described herein;
and

WHEREAS, TABATHA
I and the Shareholders desire to set forth the terms of the Exchange, which is
intended to constitute a tax-free reorganization pursuant to the provisions of
Section 368(a)(I)(B) of the Internal Revenue Code of I986,as amended (the
"code").

Agreement

NOW
THEREFORE, on the
stated premises and for and in consideration of the mutual covenants and
agreements hereinafter set forth and the mutual benefits to the parties to be
derived herefrom, it is hereby agreed as follows:

 

ARTICLE
I

 

REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF ZIGEN, INC.

As an
inducement to, and to obtain the reliance of TABATHA I, except as set forth on
the ZIG Schedules (as hereinafter defined), ZIG represents and warrants as
follows:

Section
I.0I Organization. ZIG is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas and has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
the states or countries in which the character and location of the assets owned
by it or the nature of the business transacted by it requires qualification,
except where failure to be so qualified would not have a material adverse effect
on its business. Complete and correct Articles of Incorporation and Bylaws as in
effect on the date hereof, have been delivered to TABATHA I. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of ZIG’s Articles of
Incorporation or Bylaws. ZIG has taken all actions required by law, its Articles
of Incorporation or Bylaws, or otherwise to authorize the execution and delivery
of this Agreement. ZIG has full power, authority, and legal right and has taken
all action required by law, its Articles of Incorporation and Bylaws and
otherwise to consummate the transactions herein contemplated.

Section
I.02 Capitalization. The
authorized capitalization of ZIG consists of I,000 shares of common stock, of
which I,000 shares are currently issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the preemptive or other rights of any
person.

Section
I.03 Subsidiaries
and Predecessor Corporations. ZIG
does not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation. 

Section
I.04 Financial
Statements.

 

(a) All such
financial statements have been prepared in accordance with generally accepted
accounting principles. The ZIG balance sheets present a true and fair view as of
the dates of such balance sheets of the financial condition of ZIG. ZIG did not
have, as of the dates of such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations (absolute
or contingent) which should be reflected in the balance sheets or the notes
thereto, prepared in accordance with generally accepted accounting principles,
and all assets reflected therein are properly reported and present fairly the
value of the assets of ZIG in accordance with generally accepted accounting
principles. 

(b) ZIG has
no liabilities with respect to the payment of any federal, state, county, local
or other taxes (including any deficiencies, interest or penalties), except for
taxes accrued but not yet due and payable.

(c) ZIG has
filed all state, federal or local income and/or franchise tax returns required
to be filed by it from inception to the date hereof. Each of such income tax
returns reflects the taxes due for the period covered thereby, except for
amounts which, in the aggregate, are immaterial.

(d) The books
and records, financial and otherwise, of ZIG are in all material respects
complete and correct and have been maintained in accordance with good business
and accounting practices.

(e) All of
ZIG's assets are reflected on its financial statements, and, except as set forth
in the ZIG Schedules or the financial statements of ZIG or the notes thereto,
ZIG has no material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.

Section
I.05 Information. The
information concerning ZIG set forth in this Agreement is complete and accurate
in all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading. In
addition, ZIG has fully disclosed in writing to TABATHA I all information
relating to matters involving ZIG or its assets or its present or past
operations or activities which (i) indicated or may indicate, in the aggregate,
the existence of a greater than $50,000 liability of ZIG.

Section
I.06 Options
or Warrants. There
are no existing options, warrants, calls, or commitments of any character
relating to the authorized and unissued ZIG common stock.

Section
I.07 Absence
of Certain Changes or Events. Except
as set forth in this Agreement;

(a) there has
not been (i) any material adverse change in the business, operations,
properties, assets, or condition of ZIG or (ii) any damage, destruction, or loss
to ZIG (whether or not covered by insurance) materially and adversely affecting
the business, operations, properties, assets, or condition of ZIG;

 

(b) ZIG has
not (i) borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability (absolute or contingent) except as
disclosed herein and except liabilities incurred in the ordinary course of
business; (ii) paid or agreed to pay any material obligations or liability
(absolute or contingent) other than current liabilities reflected in or shown on
the most recent ZIG balance sheet, and current liabilities incurred since that
date in the ordinary course of business and professional and other fees and
expenses in connection with the preparation of this Agreement and the
consummation of the transactions contemplated hereby; (iii) sold or transferred,
or agreed to sell or transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its business which, in the
aggregate have a value of less than $I0,000), or canceled, or agreed to cancel,
any debts or claims (except debts or claims which in the aggregate are of a
value of less than $I0,000); (iv) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such amendment
or termination is material, considering the business of ZIG; or (v) issued,
delivered, or agreed to issue or deliver any stock, bonds or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock); and

(c)  to the
best knowledge of ZIG, ZIG has not become subject to any law or regulation which
materially and adversely affects, or in the future may adversely affect the
business, operations, properties, assets, or condition of ZIG.

Section
I.08 Title
and Related Matters. ZIG has
good and marketable title to all of its properties, inventory, interests in
properties, and assets, real and personal, which are reflected in the most
recent ZIG balance sheet or acquired after that date (except properties,
inventory, interests in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business) free and clear of all liens,
pledges, charges, or encumbrances except (a) statutory liens or claims not yet
delinquent and (b) such imperfections of title and easements as do not and will
not materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; ZIG owns, free and clear of any
liens, claims, encumbrances, royalty interests, or other restrictions or
limitations of any nature whatsoever, any and all products it is currently
manufacturing, including the underlying technology and data, and all procedures,
techniques, marketing plans, business plans, methods of management, or other
information utilized in connection with ZIG business; no third party has any
right to, and ZIG has not received any notice of infringement of or conflict
with asserted rights of others with respect to any product, technology, data,
trade secrets, know-how, propriety techniques, trademarks, service marks, trade
names, or copyrights which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a materially adverse
effect on the business, operations, financial condition, income, or business
prospects of ZIG or any material portion of its properties, assets, or
rights.

Section
I.09 Litigation
and Proceedings. There
are no actions, suits, proceedings, or investigations pending or, to the
knowledge of ZIG after reasonable investigation, threatened by or against ZIG or
affecting ZIG or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. ZIG does not have any knowledge of any material default
on its part with respect to any judgment, order, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.

Section
I.I0 Contracts.

(a) There are
no "material" contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which ZIG is a party or by which it or any
of its assets, products, technology, or properties are bound other than those
incurred in the ordinary course of business (as used in this Agreement, a
"material" contract, agreement, franchise, license agreement, debt instrument or
commitment is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations of at
least one-hundred thousand dollars ($I00,000));

 

(b) All
material contracts, agreements, franchises, license agreements, and other
commitments to which ZIG is a party or by which its properties are bound and
which are material to the operations of ZIG taken as a whole are valid and
enforceable by ZIG in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally;

(c) ZIG is
not a party to or bound by, and the properties of ZIG are not subject to any
material contract, agreement, other commitment or instrument; any charter or
other corporate restriction; or any judgment, order, writ, injunction, decree,
or award which materially and adversely affects, the business operations,
properties, assets, or condition of ZIG; and

(d) ZIG is
not a party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days, or less notice; (ii)
profit sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, (iii) material agreement, contract, or
indenture relating to the borrowing of money, (iv) guaranty of any obligation,
other than one on which ZIG is a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one year or
providing for payments in excess of $50,000 in the aggregate; (vi) collective
bargaining agreement; or (vii) agreement with any present or former (on or after
Jan. I, 2005) officer or director of ZIG.

Section
I.II Material
Contract Defaults. ZIG is
not in default in any material respect under the terms of any outstanding
material contract, agreement, lease, or other commitment and there is no event
of default in any material respect under any such material contract, agreement,
lease, or other commitment in respect of which ZIG has not taken adequate steps
to prevent such a default from occurring.

Section
I.I2 No
Conflict With Other Instruments. The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute an event of default under, or terminate, accelerate or
modify the terms of any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which ZIG is a party or to which
any of its properties or operations are subject.

Section
I.I3 Governmental
Authorizations. ZIG has
all licenses, franchises, permits, and other governmental authorizations that
are legally required to enable it to conduct its business in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by ZIG of this Agreement and the consummation by ZIG
of the transactions contemplated hereby.

Section
I.I4 Compliance
With Laws and Regulations. To the
best of its knowledge ZIG has complied with all applicable statutes and
regulations of any federal, state, or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets, or condition of
ZIG or except to the extent that noncompliance would not result in the
occurrence of any material liability for ZIG.

Section
I.I5 Insurance. All of
the properties of ZIG are insured for an amount deemed reasonable. 

Section
I.I6 Approval
of Agreement. The
board of directors of ZIG has authorized the execution and delivery of this
Agreement by ZIG and has approved this Agreement and the transactions
contemplated hereby.

 

Section
I.I7 Valid
Obligation. This
Agreement and all agreements and other documents executed by ZIG in connection
herewith constitute the valid and binding obligation of ZIG, enforceable in
accordance with its or their terms, except as may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.

 

ARTICLE
II

 

REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF TABATHA I

As an
inducement to, and to obtain the reliance of ZIG and the ZIG Shareholders,
except as set forth in the TABATHA I Schedules (as hereinafter defined), TABATHA
I represents and warrants as follows:

Section
2.0I Organization. TABATHA
I is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Colorado and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets, to carry on its business in all material respects as it
is now being conducted, and except where failure to be so qualified would not
have a material adverse effect on its business, there is no jurisdiction in
which it is not qualified in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of TABATHA I's certificate of incorporation or bylaws. TABATHA I has
taken all action required by law, its certificate of incorporation, its bylaws,
or otherwise to authorize the execution and delivery of this Agreement, and
TABATHA I has full power, authority, and legal right and has taken all action
required by law, its certificate of incorporation, bylaws, or otherwise to
consummate the transactions herein contemplated.

Section
2.02 Capitalization. TABATHA
I's authorized capitalization consists of 100,000,000 shares of common stock
with no par value of which 8,302,500 shares are issued and outstanding. No
shares of preferred stock or any other claim of common stock are authorized. All
issued and outstanding shares are legally issued, fully paid, and non-assessable
and not issued in violation of the preemptive or other rights of any
person.

Section
2.03 Subsidiaries
and Predecessor Corporations. TABATHA
I does not have any predecessor corporation(s) or subsidiaries, and does not
own, beneficially or of record, any shares of any other
corporation.

Section
2.04 Securities
Filings; Financial Statements.

(a) For at
least the past twenty-four months TABATHA I has timely filed all forms, reports
and documents required to be filed with the Securities and Exchange Commission,
and has heretofore delivered to ZIG, in the form filed with the Commission, (i)
all quarterly and annual reports on Forms I0-QSB and I0-KSB filed since December
3I, 200I (ii) all other reports filed by TABATHA I with the Securities and
Exchange Commission since December 3I, 200I, (collectively, the "SEC Reports")
and (iii) all comment letters from the Securities and Exchange Commission with
respect to the SEC Reports. The SEC Reports (i) were prepared in accordance with
the requirements of the Securities Exchange Act of I934 or the Securities Act of
I933, as appropriate, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading as of the date hereof
none of its SEC Reports need to be amended to correct any prior disclosure in
order for prior SEC Reports to not contain any untrue statement of material fact
or omission to state any material fact. TABATHA I is current in all of its
obligations under federal securities laws. 

 

(b) All such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved. The
TABATHA I balance sheets present fairly as of their respective dates the
financial condition of TABATHA I. As of the date of such balance sheets, except
as and to the extent reflected or reserved against therein, TABATHA I had no
liabilities or obligations (absolute or contingent) which should be reflected in
the balance sheets or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of TABATHA I, in accordance
with generally accepted accounting principles. The statements of operations,
stockholders' equity and cash flows reflect fairly the information required to
be set forth therein by generally accepted accounting principles.

(c) TABATHA I
has no liabilities with respect to the payment of any federal, state, county,
local or other taxes (including any deficiencies, interest or penalties), except
for taxes accrued but not yet due and payable.

(d) TABATHA I
has timely filed all state, federal or local income and/or franchise tax returns
required to be filed by it from inception to the date hereof. Each of such
income tax returns reflects the taxes due for the period covered thereby, except
for amounts which, in the aggregate, are immaterial.

(e) The books
and records, financial and otherwise, of TABATHA I are in all material aspects
complete and correct and have been maintained in accordance with good business
and accounting practices.

(f) All of
TABATHA I's assets are reflected on its financial statements, and, except as set
forth in the TABATHA I Schedules or the financial statements of TABATHA I or the
notes thereto, TABATHA I has no material liabilities, direct or indirect,
matured or unmatured, contingent or otherwise.

Section
2.05 Information. The
information concerning TABATHA I set forth in this Agreement and the TABATHA I
Schedules is complete and accurate in all material respects and does not contain
any untrue statements of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. In addition, TABATHA I has fully disclosed in
writing to ZIG (through this Agreement or the TABATHA I Schedules) all
information relating to matters involving TABATHA I or its assets or its present
or past operations or activities which (i) indicated or may indicate, in the
aggregate, the existence of a greater than $5,000 liability of TABATHA
I.

Section
2.06 Options
or Warrants. There
are no existing options, warrants, calls, or commitments of any character
relating to any issued and outstanding capital stock or to any authorized and
unissued capital stock of TABATHA I. 

Section
2.07 Absence
of Certain Changes or Events. Since
the date of the most recent TABATHA I balance sheet:

(a) there has
not been (i) any material adverse change in the business, operations,
properties, assets or condition of TABATHA I or (ii) any damage, destruction or
loss to TABATHA I (whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets or condition of TABATHA
I;

 

(b) TABATHA I
has not (i) amended its certificate of incorporation or bylaws; (ii) declared or
made, or agreed to declare or make any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are outside of the ordinary course of business
or material considering the business of TABATHA I; (iv) made any material change
in its method of management, operation, or accounting; (v) entered into any
transactions or agreements other than in the ordinary course of business; (vi)
made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer or employee; (vii) increased the rate of compensation payable or
to become payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceed $I,000; or (viii) made any
increase in any profit sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan, payment, or arrangement,
made to, for or with its officers, directors, or employees;

(c) TABATHA I
has not (i) granted or agreed to grant any options, warrants, or other rights
for its stock, bonds, or other corporate securities calling for the issuance
thereof or with respect to outstanding common stock; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid or agreed to pay any material obligations or
liabilities (absolute or contingent) other than current liabilities reflected in
or shown on the most recent TABATHA I balance sheet and current liabilities
incurred since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this Agreement and
the consummation of the transaction contemplated hereby; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights (except assets, properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $I000), or canceled, or agreed
to cancel, any debts or claims (except debts or claims which in the aggregate
are of a value less than $I000); (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a party if
such amendment or termination is material, considering the business of TABATHA
I; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds, or
other corporate securities including debentures (whether authorized and unissued
or held as treasury stock), except in connection with this Agreement;
and

(d) to the
best knowledge of TABATHA I, it has not become subject to any law or regulation
which materially and adversely affects, or in the future, may adversely affect,
the business, operations, properties, assets or condition of TABATHA
I.

Section
2.08 Title
and Related Matters. TABATHA
I has good and marketable title to all of its properties, inventory, interest in
properties, and assets, real and personal, which are reflected in the most
recent TABATHA I balance sheet or acquired after that date (except properties,
inventory, interest in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges, or encumbrances except (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not and
will not materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the TABATHA I Schedules. Except as set forth in the TABATHA I Schedules, TABATHA
I owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with TABATHA I's
business. Except as set forth in the TABATHA I Schedules, no third party has any
right to, and TABATHA I has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, propriety techniques, trademarks, service marks,
trade names, or copyrights which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a materially
adverse effect on the business, operations, financial condition, income, or
business prospects of TABATHA I or any material portion of its properties,
assets, or rights.

Section
2.09 Litigation
and Proceedings. There
are no actions, SEC inquires (formal or informal), suits, proceedings or
investigations pending or, to the knowledge TABATHA I after reasonable
investigation, threatened by or against TABATHA I or affecting TABATHA I or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any kind.
TABATHA I has no knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator, or governmental agency or instrumentality or any circumstance
which after reasonable investigation would result in the discovery of such
default.

Section
2.I0 Contracts.

(a)
 TABATHA I
is not a party to, and its assets, products, technology and properties are not
bound by, any material contract, franchise, license agreement, agreement, debt
instrument or other commitments whether such agreement is in writing or
oral.

(b) All
contracts, agreements, franchises, license agreements, and other commitments to
which TABATHA I is a party or by which its properties are bound and which are
material to the operations of TABATHA I taken as a whole are valid and
enforceable by TABATHA I in all respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of creditors
generally;

(c) TABATHA I
is not a party to or bound by, and the properties of TABATHA I are not subject
to any contract, agreement, other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree, or
award which materially and adversely affects, the business operations,
properties, assets, or condition of TABATHA I; and

(d) Except as
included or described in the TABATHA I Schedules or reflected in the most recent
TABATHA I balance sheet, TABATHA I is not a party to any oral or written (i)
contract for the employment of any officer or employee which is not terminable
on 30 days, or less notice; (ii) profit sharing, bonus, deferred compensation,
stock option, severance pay, pension benefit or retirement plan, (iii)
agreement, contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation, other than one on which TABATHA I is a primary
obligor, for the borrowing of money or otherwise, excluding endorsements made
for collection and other guaranties of obligations which, in the aggregate do
not exceed more than one year or providing for payments in excess of $25,000 in
the aggregate; (vi) collective bargaining agreement; or (vii) agreement with any
present or former officer or director of TABATHA I.

(e)
 Any and
all contracts (written or verbal) by and between TABATHA I and
Jimmy Wang and TABATHA I and
Bob Smith have been terminated. TABATHA I does
not owe these parties any monies, shares of its common stock or any other
consideration. 

Section
2.II Material
Contract Defaults. TABATHA
I is not in default in any material respect under the terms of any outstanding
contract, agreement, lease, or other commitment which is material to the
business, operations, properties, assets or condition of TABATHA I and there is
no event of default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which TABATHA I has not taken adequate
steps to prevent such a default from occurring.

Section
2.I2 No
Conflict With Other Instruments. The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate or modify the
terms of, any indenture, mortgage, deed of trust, or other material agreement or
instrument to which TABATHA I is a party or to which any of its assets or
operations are subject.

Section
2.I3 Governmental
Authorizations. TABATHA
I has all licenses, franchises, permits, and other governmental authorizations,
that are legally required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for compliance with
federal and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, of registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by TABATHA I of this Agreement and the consummation
by TABATHA I of the transactions contemplated hereby.

Section
2.I4 Compliance
With Laws and Regulations. To the
best of its knowledge, TABATHA I has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity or
agency thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
TABATHA I or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports to date with federal and state securities
authorities. 

Section
2.I5 Insurance. All of
the properties of TABATHA I are fully insured for their full replacement cost.

Section
2.I6 Approval
of Agreement. The
board of directors of TABATHA I has authorized the execution and delivery of
this Agreement by TABATHA I and has approved this Agreement and the transactions
contemplated hereby and will recommend to its shareholders that they approve
this Agreement and the transactions contemplated hereby.

Section
2.I7 Continuity
of Business Enterprises. TABATHA
I has no commitment or present intention to liquidate ZIG or sell or otherwise
dispose of a material portion of ZIG’s business or assets following the
consummation of the transactions contemplated hereby.

Section
2.I8 Material
Transactions or Affiliations. Except
as disclosed herein and in the TABATHA I Schedules, there exists no contract,
agreement or arrangement between TABATHA I and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by TABATHA I to own beneficially,
5% or more of the issued and outstanding common stock of TABATHA I and which is
to be performed in whole or in part after the date hereof or was entered into
not more than three years prior to the date hereof. Neither any officer,
director, nor 5% shareholder of TABATHA I has, or has had since inception of
TABATHA I, any known interest, direct or indirect, in any such transaction with
TABATHA I which was material to the business of TABATHA I. TABATHA I has no
commitment, whether written or oral, to lend any funds to, borrow any money
from, or enter into any other transaction with, any such affiliated
person.

Section
2.I9 Bank
Accounts; Power of Attorney. Set
forth in Schedule 2.I9 is a true and complete list of (a) all accounts with
banks, money market mutual funds or securities or other financial institutions
maintained by TABATHA I within the past twelve (I2) months, the account numbers
thereof, and all persons authorized to sign or act on behalf of TABATHA I, (b)
all safe deposit boxes and other similar custodial arrangements maintained by
TABATHA I within the past twelve (I2) months, and (c) the names of all persons
holding powers of attorney from TABATHA I or who are otherwise authorized to act
on behalf of TABATHA I with respect to any matter, other than its officers and
directors, and a summary of the terms of such powers or
authorizations.

Section
2.20 Valid
Obligation. This
Agreement and all agreements and other documents executed by TABATHA I in
connection herewith constitute the valid and binding obligation of TABATHA I,
enforceable in accordance with its or their terms, except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.

 

ARTICLE
III

 

PLAN
OF EXCHANGE

Section
3.0I The
Exchange. On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date (as defined in Section 3.03), each ZIG Shareholder who shall elect to
accept the exchange offer described herein (the "Accepting Shareholders"), shall
assign, transfer and deliver, free and clear of all liens, pledges,
encumbrances, charges, restrictions or known claims of any kind, nature, or
description, the number of shares of common stock of ZIG in the aggregate
constituting I00% of the issued and outstanding shares of common stock of ZIG
held by each of such shareholders; the objective of such Exchange being the
acquisition by TABATHA I of I00% of the issued and outstanding common stock of
ZIG. In exchange for the transfer of such securities by the ZIG Shareholders,
TABATHA I shall issue to the ZIG Shareholders (I) an aggregate of approximately
73,000,000 shares of common stock of TABATHA I (the "Initial Shares"). At the
Closing, each ZIG Shareholder shall, on surrender of his certificate or
certificates representing such ZIG shares to TABATHA I or its registrar or
transfer agent, be entitled to receive a certificate or certificates evidencing
his proportionate interest in the Initial Shares. Upon consummation of the
transaction contemplated herein, assuming participation by all of the ZIG
Shareholders, all of the shares of capital stock of ZIG shall be held by TABATHA
I.

Section
3.02 Anti-Dilution. The
number of shares of TABATHA I common stock issuable upon exchange pursuant to
Section 3.0I shall be appropriately adjusted to take into account any other
stock split, stock dividend, reverse stock split, recapitalization, or similar
change in the TABATHA I common stock which may occur (i) between the date of the
execution of this Agreement and the Closing Date, as to the Initial Shares, and
(ii) between the date of the execution of this Agreement and the release date,
as to the Additional Shares.

Section
3.03 Closing. The
closing ("Closing") of the transactions contemplated by this Agreement shall be
on February 25, 2005 ("Closing Date"). Such Closing shall take place at a
mutually agreeable time and place.

 

Section
3.04 Closing
Events. At the
Closing, TABATHA I, ZIG and each of the Accepting Shareholders shall execute,
acknowledge, and deliver (or shall ensure to be executed, acknowledged, and
delivered) any and all certificates, opinions, financial statements, schedules,
agreements, resolutions, rulings or other instruments required by this Agreement
to be so delivered at or prior to the Closing, together with such other items as
may be reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions contemplated hereby.
Among other things, TABATHA I shall provide an opinion of counsel in the form
attached hereto as Exhibit “A”. 

 

ARTICLE
IV

 

SPECIAL
COVENANTS

Section
4.0I Access
to Properties and Records. TABATHA
I and ZIG will each afford to the officers and authorized representatives of the
other full access to the properties, books and records of TABATHA I or ZIG, as
the case may be, in order that each may have a full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the
other.

Section
4.02 Delivery
of Books and Records. At the
Closing, ZIG shall deliver to TABATHA I the originals of the corporate minute
books, books of account, contracts, records, and all other books or documents of
ZIG now in the possession of ZIG or its representatives.

Section
4.03 Third
Party Consents and Certificates. TABATHA
I and ZIG agree to cooperate with each other in order to obtain any required
third party consents to this Agreement and the transactions herein
contemplated.

Section
4.04 Reserved.
 

 

Section
4.05 Reserved.

Section
4.06 Reserved.

Section
4.07 Reserved. 

Section
4.08 Exclusive
Dealing Rights. Until
5:00 P.M. Central Daylight Time on February 28, 2005.

(a) In
recognition of the substantial time and effort which TABATHA I has spent and
will continue to spend in investigating ZIG and its business and in addressing
the matters related to the transactions contemplated herein, each of which may
preempt or delay other management activities, neither ZIG, nor any of its
officers, employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except where
required by fiduciary obligations under applicable law as advised by counsel,
participate in any negotiations with or provide any information to or otherwise
cooperate in any other way with, or facilitate or encourage any effort or
attempt by, any corporation, partnership, person or other entity or group (other
than TABATHA I and its directors, officers, employees, representatives and
agents) concerning any merger, sale of substantial assets, sale of shares of
capital stock, or similar transactions involving ZIG (all such transactions
being referred to as "ZIG Acquisition Transactions"). If ZIG receives any
proposal with respect to a ZIG Acquisition Transaction, it will immediately
communicate to TABATHA I the fact that it has received such proposal and the
principal terms thereof.

(b) In
recognition of the substantial time and effort which ZIG has spent and will
continue to spend in investigating TABATHA I and its business and in addressing
the matters related to the transactions contemplated herein, each of which may
preempt or delay other management activities, neither TABATHA I, nor any of its
officers, employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except where
required by fiduciary obligations under applicable law as advised by counsel,
participate in any negotiations with or provide any information to or otherwise
cooperate in any other way with, or facilitate or encourage any effort or
attempt by, any corporation, partnership, person or other entity or group (other
than ZIG and its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of capital
stock, (including without limitation, any public or private offering of the
common stock of TABATHA I) or similar transactions involving TABATHA I (all such
transactions being referred to as "TABATHA I Acquisition Transactions"). If
TABATHA I receives any proposal with respect to a TABATHA I Acquisition
Transaction, it will immediately communicate to ZIG the fact that it has
received such proposal and the principal terms thereof.

Section
4.09 Actions
Prior to Closing. 

(a) From and
after the date of this Agreement until the Closing Date and except as set forth
in the TABATHA I Schedules or ZIG Schedules or as permitted or contemplated by
this Agreement, TABATHA I (subject to paragraph (d) below) and ZIG respectively,
will each:

(i) carry on
its business in substantially the same manner as it has heretofore;

(ii) maintain
and keep its properties in states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty;

(iii) maintain
in full force and effect insurance comparable in amount and in scope of coverage
to that now maintained by it;

 

(iv) perform
in all material respects all of its obligations under material contracts,
leases, and instruments relating to or affecting its assets, properties, and
business;

(v) use its
best efforts to maintain and preserve its business organization intact, to
retain its key employees, and to maintain its relationship with its material
suppliers and customers; and

(vi) fully
comply with and perform in all material respects all obligations and duties
imposed on it by all federal and state laws and all rules, regulations, and
orders imposed by federal or state governmental authorities.

(b) From and
after the date of this Agreement until the Closing Date, neither TABATHA I nor
ZIG will:

(i) make any
changes in their articles or certificate of incorporation or
bylaws;

(ii) take any
action described in Section I.07 in the case of ZIG , or in Section 2.07, in the
case of TABATHA I (all except as permitted therein or as disclosed in the
applicable party's schedules);

(iii) enter
into or amend any contract, agreement, or other instrument of any of the types
described in such party's schedules, except that a party may enter into or amend
any contract, agreement, or other instrument in the ordinary course of business
involving the sale of goods or services; or

(iv) sell any
assets or discontinue any operations (other than the Divestiture), sell any
shares of capital stock (other than as contemplated in Sections 4.07 and 4.08
hereof and the sale of securities underlying existing warrants or options of
TABATHA I) or conduct any similar transactions other than in the ordinary course
of business.

(c) In light
of the fact that ZIG Shareholders will control TABATHA I as a result of the
Exchange, from and after the date of this Agreement until the Closing Date,
TABATHA I shall take no action which is material to its business without the
prior written approval of ZIG , which ZIG may give or withhold in its sole
discretion after consultation with TABATHA I.

Section
4.I0 Reserved.
 

Section
4.II Indemnification.

(a) ZIG
hereby agrees to indemnify TABATHA I and each of the officers, agents and
directors of TABATHA I as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or based on
any inaccuracy appearing in or misrepresentations made under Article I of this
Agreement. The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement.

(b) TABATHA I
hereby agrees to indemnify ZIG and each of the officers, agents, and directors
of ZIG and each of the ZIG Shareholders as of the date of execution of this
Agreement against any loss, liability, claim, damage, or expense (including, but
not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or misrepresentation made
under Article II of this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.

Section
4.I2 Indemnification
of Subsequent Corporate Actions. No
officer, director, controlling shareholder, agent or representative of TABATHA
I, or any other person currently affiliated with TABATHA I, has offered or
agreed to assist in the promotion, market making, development, enhancement, or
support of TABATHA I’s business, capital raising, or securities
market.

 

ARTICLE
V

 

CONDITIONS
PRECEDENT TO OBLIGATIONS OF TABATHA I

The
obligations of TABATHA I under this Agreement are subject to the satisfaction,
at or before the Closing Date, of the following conditions:

Section
5.0I Accuracy
of Representations and Performance of Covenants. The
representations and warranties made by ZIG in this Agreement were true when made
and shall be true at the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement). ZIG shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by ZIG prior to or at the Closing. 

 

Section
5.02 Reserved. 

Section
5.03 Good
Standing. TABATHA
I shall have received a certificate of good standing from ZIG , dated as of a
date within ten days prior to the Closing Date certifying that ZIG is in good
standing as a corporation in the State of Texas.

Section
5.04 Approval
by ZIG
Shareholders. The
Exchange shall have been approved, and shares delivered in accordance with
Section 3.0I, by the holders of not less than ninety percent (90%) of the
outstanding common stock of ZIG, unless a lesser number is agreed to by TABATHA
I.

Section
5.05 No
Governmental Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.

Section
5.06 Consents. All
consents, approvals, waivers or amendments pursuant to all contracts, licenses,
permits, trademarks and other intangibles in connection with the transactions
contemplated herein, or for the continued operation of TABATHA I and ZIG after
the Closing Date on the basis as presently operated shall have been
obtained.

Section
5.07 Other
Items. TABATHA I
shall have received a list of ZIG Shareholders containing the name, address, and
number of shares held by each ZIG Shareholder as of the date of Closing,
certified by an executive officer of ZIG as being true, complete and accurate.

 

ARTICLE
VI

 

CONDITIONS
PRECEDENT TO OBLIGATIONS OF ZIGEN, INC AND THE
ZIG
SHAREHOLDERS

The
obligations of ZIG and the ZIG Shareholders under this Agreement are subject to
the satisfaction, at or before the Closing Date, of the following
conditions:

Section
6.0I Accuracy
of Representations and Performance of Covenants. The
representations and warranties made by TABATHA I in this Agreement were true
when made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, TABATHA I shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by
TABATHA I and shall have satisfied the conditions described below prior to or at
the Closing:

(a) Immediately
prior to the Closing, TABATHA I shall have no more than an aggregate of
8,302,500 shares of common stock issued and outstanding or issuable pursuant to
outstanding warrants and options, excluding any shares issuable pursuant to the
Exchange.

 

(b) The
shareholders of TABATHA I shall have approved the Exchange and the related
transactions described herein.

Section
6.02 Reserved.

Section
6.03 Good
Standing. ZIG
shall have received a certificate of good standing from the Secretary of State
of the State of Colorado or other appropriate office, dated as of a date within
ten days prior to the Closing Date certifying that TABATHA I is in good standing
as a corporation in the State of Colorado and has filed all tax returns required
to have been filed by it to date and has paid all taxes reported as due
thereon.

Section
6.04 No
Governmental Prohibition. No
order, statute, rule, regulation, executive order, injunction, stay, decree,
judgment or restraining order shall have been enacted, entered, promulgated or
enforced by any court or governmental or regulatory authority or instrumentality
which prohibits the consummation of the transactions contemplated
hereby.

Section
6.05 Other
Items. ZIG
shall have received an acceptable legal opinion as contemplated in Section 3.04.

 

ARTICLE
VII

 

MISCELLANEOUS

Section
7.0I Brokers. TABATHA
I and ZIG agree that, there were no finders or brokers involved in bringing the
parties together or who were instrumental in the negotiation, execution or
consummation of this Agreement. TABATHA I and ZIG each agree to indemnify the
other against any claim by any third person other than those described above for
any commission, brokerage, or finder's fee arising from the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.

Section
7.02 Governing
Law. This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to the matters
of state law, with the laws of the State of Texas without giving effect to
principles of conflicts of law thereunder. Each of the parties (a) irrevocably
consents and agrees that any legal or equitable action or proceedings arising
under or in connection with this Agreement shall be brought exclusively in the
federal courts of the United States, (b) by execution and delivery of this
Agreement, irrevocably submits to and accepts, with respect to any such action
or proceeding, generally and unconditionally, the jurisdiction of the aforesaid
court, and irrevocably waives any and all rights such party may now or hereafter
have to object to such jurisdiction.

Section
7.03 Notices. Any
notice or other communications required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered to it or sent by
telecopy, overnight courier or registered mail or certified mail, postage
prepaid, addressed as follows:

 

If to
TABATHA I, to:

        TABATHA
I, INC.

            Attention: Diane Thelan

            1926 S.
Oswego Way

            Aurora,
Colorado 80114

 

        
If to ZIG , to:  ZIGEN,
INC.

            Attention:
Kevan Casey

            III7
Herkimer Street

            Houston,
Texas 77008

or such
other addresses as shall be furnished in writing by any party in the manner for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given (i) upon receipt, if personally delivered, (ii) on the day
after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.

Section
7.04 Attorney's
Fees. In the
event that either party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the prevailing
party shall be reimbursed by the losing party for all costs, including
reasonable attorney's fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.

Section
7.05 Confidentiality. Each
party hereto agrees with the other that, unless and until the transactions
contemplated by this Agreement have been consummated, it and its representatives
will hold in strict confidence all data and information obtained with respect to
another party or any subsidiary thereof from any representative, officer,
director or employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or disclose the
same to others, except (i) to the extent such data or information is published,
is a matter of public knowledge, or is required by law to be published; or (ii)
to the extent that such data or information must be used or disclosed in order
to consummate the transactions contemplated by this Agreement. In the event of
the termination of this Agreement, each party shall return to the other party
all documents and other materials obtained by it or on its behalf and shall
destroy all copies, digests, work papers, abstracts or other materials relating
thereto, and each party will continue to comply with the confidentiality
provisions set forth herein.

Section
7.06 Public
Announcements and Filings. Unless
required by applicable law or regulatory authority, none of the parties will
issue any report, statement or press release to the general public, to the
trade, to the general trade or trade press, or to any third party (other than
its advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and the
transactions contemplated hereby, except as may be mutually agreed by the
parties. Copies of any such filings, public announcements or disclosures,
including any announcements or disclosures mandated by law or regulatory
authorities, shall be delivered to each party at least one (I) business day
prior to the release thereof.

Section
7.07 Schedules;
Knowledge. Each
party is presumed to have full knowledge of all information set forth in the
other party's schedules delivered pursuant to this Agreement.

Section
7.08 Third
Party Beneficiaries. This
contract is strictly between TABATHA I and ZIG, and, except as specifically
provided, no director, officer, stockholder (other than the ZIG Shareholders),
employee, agent, independent contractor or any other person or entity shall be
deemed to be a third party beneficiary of this Agreement.

Section
7.09 Expenses. Whether
or not the Exchange is consummated, each of TABATHA I and ZIG will bear their
own respective expenses, including legal, accounting and professional fees,
incurred in connection with the Exchange or any of the other transactions
contemplated hereby.

Section
7.I0 Entire
Agreement. This
Agreement represents the entire agreement between the parties relating to the
subject matter thereof and supersedes all prior agreements, understandings and
negotiations, written or oral, with respect to such subject matter.

 

Section
7.II Survival;
Termination. The
representations, warranties, and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of one year.

Section
7.I2 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.

Section
7.I3 Amendment
or Waiver. Every
right and remedy provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may by amended by a writing signed by
all parties hereto, with respect to any of the terms contained herein, and any
term or condition of this Agreement may be waived or the time for performance
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.

Section
7.I4 Best
Efforts. Subject
to the terms and conditions herein provided, each party shall use its best
efforts to perform or fulfill all conditions and obligations to be performed or
fulfilled by it under this Agreement so that the transactions contemplated
hereby shall be consummated as soon as practicable. Each party also agrees that
it shall use its best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective this Agreement
and the transactions contemplated herein.

IN
WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the date
first-above written.

ATTEST:      TABATHA
I, INC.

_____________________
    ___________________ 

Secretary             BY: John
Ballard

                    President

ATTEST:      ZIGEN ,
INC.

___________________            ___________________

Secretary               BY: Carl A. Chase

              President

 

The
undersigned shareholders of ZIGEN, Inc. hereby agree to participate in the
Exchange on the terms set forth above. Subject to Section 7.II above, each of
the undersigned hereby represents and affirms that he has read each of the
representations and warranties of ZIGEN, INC. set out in Article I hereof and
that, to the best of his knowledge, all of such representations and warranties
are true and correct.

_______________________________

Kevan
Casey, trustee for Silver Star Holdings Trust

 

_______________________________

Carl A.
Chase, individually

 

 

 

EXHIBIT
A

 

LEGAL
OPINION

Tabatha
I’s Counsel’s legal opinion shall contain opinions, the substance of which are
set forth below. Capitalized terms not defined below shall have the meanings set
forth in the Exchange Agreement (the “Agreement”).

(a) Tabatha I
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado, the jurisdiction of its incorporation, and has
the full corporate power and authority to own its properties and to carry on its
business as now being conducted.

(b) Tabatha I
has full power and authority to execute, deliver and perform its obligations
under the Agreements, and all corporate actions or approvals required for the
execution, delivery and performance thereof by Tabatha I have been duly taken or
obtained.

(c) The
Agreement has been duly executed and delivered by Tabatha I and constitute the
legal, valid and binding obligations of Tabatha I, enforceable against it in
accordance with its terms.

(d) Neither
the execution and delivery by Tabatha I of the Agreement nor its compliance with
the provisions thereof constitute or will constitute a violation of the Articles
of Incorporation or bylaws of Tabatha I or the application provisions of any
statutory laws or regulations, or, to our knowledge, breach or result in a
default under any material contract or agreement to which Tabatha I is now a
party or by which it or its property is bound, or, to our knowledge, any
judgment, writ, order or decree of any governmental authority by which Tabatha I
or its property is bound.

(e)
 To our
knowledge, there is not pending or overtly threatened action, suit or proceeding
against Tabatha I or its properties before any governmental authority (a)
seeking to enjoin, prevent or challenge the transactions set forth in the
Agreements or claiming damages with respect thereto, or (b) in which the
likelihood of an outcome materially and adversely affecting Tabatha I, its
business or financial condition, or its ability to duly perform its obligations
under the Agreements, is not remote.

(f) The stock
was issued to Zigen, Inc.’s shareholders pursuant to an exemption under the
Securities Act of 1933.

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