Document:

Exhibit 10.16

    
      

    

    Exhibit
      10.16

     

    CERTAIN
      INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
      COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
      OMITTED PORTION.

    
 

    FIRST
      AMENDMENT TO AMENDED AND RESTATED

    SUPPLY,
      LICENSE AND DEVELOPMENT AGREEMENT

    

    

    This
      First Amendment to the Amended and Restated Supply, License, and Development
      Agreement dated December 27, 2005, is dated May 9, 2007 (the “Amended
      Agreement”) by and between Digital Angel Corporation (“Digital Angel”) and
      VeriChip Corporation (“VeriChip”), both Delaware corporations.

    

    RECITALS

    

    Whereas,
      Digital Angel and VeriChip have previously entered into an Amended and Restated
      Supply, License and Development Agreement dated December 27, 2005 (the “Original
      Agreement”).

    

    Whereas,
      due to changes in the timing of VeriChip’s IPO, it made its commercial sales
      launch approximately twelve months later than such launch had been contemplated
      when the Original Agreement was entered into.

    

    Whereas,
      Digital Angel and VeriChip wish to amend the Original Agreement with regard
      to
      order quantities and timing to reflect the delay in the launch of commercial
      sales efforts.

    

    AGREEMENT

    

    
      	
              1.

            	
              The
                parties agree to replace the Schedule 5 in the Original Agreement
                with the
                new Schedule 5, which is attached to this Amended
                Agreement.

            
	 	
               

            
	
              2.

            	
              The
                parties agree that the Original Agreement term will be extended by
                one
                year.

            
	 	 
	
              3.

            	
              All
                other terms, conditions, representations, warranties and other clauses
                of
                the Original Agreement shall remain
                unchanged.

            

    

    

    IN
      WITNESS WHEREOF, this Amended Agreement has been executed as of the day and
      year
      first above written.

    

    
      	
               

            	
              DIGITAL
                ANGEL CORPORATION

            
	
               

            	
              A
                Delaware corporation

            
	 	 
	 	 
	 	 
	
               

            	
              By:
                /s/ Kevin N.
                McGrath            
                

            
	
               

            	
              Title:
                Chief Executive Officer

            
	 	 
	
               

            	
              VERICHIP
                CORPORATION

            
	
               

            	
              A
                Delaware corporation

            
	 	 
	 	 
	 	 
	
               

            	
              By:
                /s/ William J.
                Caragol             
                

            
	
               

            	
              Title:
                Chief Financial Officer

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      5 (dated May 9, 2007)

    

    MINIMUM
      PURCHASE COMMITMENTS

    (to
      and forming a part of the Agreement)

    

    

    

    
      	
              Calendar
                Year 2006

            	
              No
                minimum

            
	 	 
	
              Calendar
                Year 2007

            	
              No
                minimum

            
	 	 
	
              Calendar
                Year 2008

            	
              ***

            
	 	 
	
              Calendar
                Year 2009

            	
              ***

            
	 	 
	
              Calendar
                Year 2010

            	
              ***

            
	 	 
	
              Calendar
                Year 2011

            	
              ***

            

    

    

    

    Unless
      the Parties agree to a different Minimum Unit Commitment for Calendar Years
      2012
      and after, the Minimum Unit Commitment applicable to Calendar Years 2012 and
      after shall be *** units per year.

    

    

    
 

    

    

    
      ***CERTAIN
        INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
        COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
        OMITTED PORTION.Exhibit 10.17

    
      

    

    Exhibit
      10.17

    STOCK
      PURCHASE AGREEMENT

    

    

    THIS
      STOCK PURCHASE AGREEMENT
      (this
“Agreement”) is made as of May 7, 2007, by and between DIGITAL ANGEL CORPORATION
      (“Stockholder”) and NEWCOMB COMMUNICATIONS, INC., a Delaware corporation
      (“Buyer”).

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      OuterLink Corporation, a Delaware corporation (the “Company”), provides
satellite-based
      mobile asset tracking and data messaging systems used to manage the deployment
      of aircraft and land vehicles;

    

    WHEREAS,
      the
      Stockholder owns of record all of the issued and outstanding Shares (as defined
      in Section 4.6(a)) of the Company, which Shares represent all of the issued
      and
      outstanding capital stock of the Company; and

    

    WHEREAS,
      the
      Stockholder desires to sell to Buyer, and Buyer desires to purchase from the
      Stockholder, the Shares, upon the terms and conditions hereinafter set
      forth.

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual agreements and covenants contained herein, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereby agree as follows: 

    

    1. Purchase
      and Sale of the Shares.
      Subject
      to the terms and conditions of this Agreement and in reliance upon the
      representations and warranties of the parties set forth herein, the Stockholder
      hereby agrees to sell to Buyer, and Buyer hereby agrees to purchase from the
      Stockholder, the Shares on the Closing Date (as defined in Section 3) for the
      consideration set forth in Section 2.

    

    2. Consideration.
      

    

    (a) Purchase
      Price.
      The
      purchase price shall be One Million Dollars ($1,000,000) (the “Purchase Price”).
      Upon execution and delivery of this Agreement, Buyer shall execute and deliver
      to the Stockholder, as a good faith deposit and initial payment (the “Initial
      Payment”) of the Purchase Price, an amount equal to One Hundred Thousand Dollars
      ($100,000.00) in the form of a promissory note substantially in the form of
      Exhibit
      A,
      attached hereto (the “Deposit Note”), which Initial Payment shall be refundable
      (by return and cancellation of the Deposit Note) only in the event of the
      failure of any condition set forth in Sections 6(a)-(i). At the Closing, Buyer
      shall pay to the Stockholder the balance of the Purchase Price by wire transfer
      (the “Closing Payment”). The Closing Payment shall be adjusted pursuant to
      Sections 2(b), (c) and (d).

    

    (b) Adjustments
      to the Closing Payment.
      The
      Closing Payment shall be adjusted as of the Closing as follows:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (i) The
      Closing Payment shall be increased dollar for dollar for the amount of the
      cash
      balances and cash equivalents (including bank accounts and certificates of
      deposit), if any, of the Company as of the Closing Date, as reflected on the
      Closing Balance Sheet, provided, however, cash and cash equivalents shall
      exclude cash held by the Company as deposits (which are reflected on the Closing
      Balance Sheet as liabilities) from other third parties and any cash held by
      the
      Company relating to an overpayment to the Company by a Governmental Entity
      under
      that certain Contract with USPFO for South Carolina.

    

    (ii) The
      Closing Payment shall be decreased dollar for dollar for the amount of any
      liabilities other than Permitted Liabilities (as defined herein) as reflected
      on
      the Closing Balance Sheet. The term “Permitted Liabilities” means the
      following:

    

    (A) trade
      payables and accrued expenses incurred in the ordinary course of business,
      including, but not limited to, payroll, payroll taxes, and real estate taxes,
      if
      any; and

    

    (B) employee
      withholding taxes, if any.

    

    (iii) The
      preliminary adjustment to the Closing Payment shall be made on an estimated
      basis at the Closing in accordance with the Pro Forma Closing Balance Sheet
      (as
      defined in Section 2(c)(i)) and with any final adjustment and any resulting
      payment to be made from the Stockholder on the one hand and the Buyer on the
      other hand, or vice versa, shall be made within 15 days after completion of
      the
      Closing Balance Sheet (as defined and prepared in accordance with the provisions
      of Section 2(c)(ii)).

    

    (iv) There
      shall be no adjustment to the Closing Payment for any change in the value of
      any
      of the Company’s fixed assets between December 31, 2006 and the Closing
      Date.

    

    (c) Closing
      Balance Sheets.
      

    

    (i) On
      or
      prior to the Closing Date, the Stockholder
      and
      Buyer shall jointly prepare a pro forma balance sheet of the Company as of
      the
      Closing Date (the “Pro Forma Closing Balance Sheet”), determined on an accrual
      basis in accordance with generally accepted accounting principles in
      effect
      in the United States (“GAAP”)
      consistently applied and compiled in accordance with Statements on Standards
      for
      Accounting and Review Services issued by the American Institute of Certified
      Public Accountants, (the “Standards”), which Pro Forma Closing Balance Sheet
      shall be utilized by the parties to assist in the calculation of the preliminary
      adjustments to the Purchase Price and the preparation of the Closing Balance
      Sheet as hereinafter provided. 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (ii) Within
      60
      days after the Closing Date, Buyer, with the assistance of the Stockholder,
      shall
      prepare a balance sheet of the Company as of the Closing Date (the “Closing
      Balance Sheet”), in accordance with GAAP and compiled in accordance with the
      Standards. If the parties are unable to agree upon the Closing Balance Sheet,
      or
      any portion thereof, within 15 days after the parties have commenced resolution
      of the dispute, then the matter shall be submitted for resolution to a mutually
      agreeable certified public accounting firm (the “Independent Accountants”),
      whose determination shall be final and binding upon the parties, and whose
      fees
      shall be borne equally by the Stockholder and Buyer except, however, that if
      the
      Independent Accountants determine that the Closing Balance Sheet proposed by
      Buyer was correct in its entirety, then the Stockholder shall be solely
      responsible for the fees of the Independent Accountants; if the Independent
      Accountants determine that the dispute should be resolved in favor of the
      objections raised in the Closing Balance Sheet by the Stockholder
      in its
      entirety, then Buyer shall be solely responsible for the fees of the Independent
      Accountants.

    

    (d) Final
      Adjustments.
      To the
      extent that there are assets or liabilities other than Permitted Liabilities,
      which were not (i) included in the Pro Forma Closing Balance Sheet, or (ii)
      reflected in any adjustment made at the Closing to the Purchase Price, but
      which
      are included in the Closing Balance Sheet or discovered subsequent thereto,
      and
      which would, if they had been included in the Pro Forma Closing Balance Sheet,
      have resulted in an adjustment to the Purchase Price, the amount thereof shall
      be deemed an adjustment to the Purchase Price and the net amount due, whether
      from Buyer or the Stockholder, shall be remitted to the other party within
      five
      (5) days of request therefor from the party to whom such payment is
      due.

    

    (e) Fiduciary
      Out and Termination Fee.
      Notwithstanding anything in this Agreement to the contrary, if
      in the
      course of discharging its fiduciary duties respecting superior offers,
      Stockholder’s Board of Directors determines on or before June 29, 2007 (the
“Drop Dead Date”) that the transactions contemplated by this Agreement are
      inferior to any other bona fide offer made to it
      and
      that, based on advice of legal
      counsel, the Stockholder is duty-bound to accept such offer (a “Fiduciary Out”),
      then the Stockholder may terminate this Agreement upon return to Buyer and
      cancellation of the Deposit Note and payment to Buyer of an amount equal to
      the
      sum of $100,000.00 and the aggregate out-of-pocket costs and reasonable expenses
      of Buyer in connection with this Agreement and the transactions contemplated
      hereby, including, without limitation, reasonable fees and disbursements of
      accountants, attorneys, investment bankers, and consultants (collectively,
      “Termination
      Expenses”).
      Notwithstanding anything to the contrary set forth in this Agreement, in the
      event Buyer is required to file suit to seek all or a portion of the Termination
      Amount, Buyer shall be entitled, in addition to payment of the Termination
      Expenses, to payment by Stockholder of all additional expenses, including
      reasonable attorneys’ fees and expenses, which it incurs in enforcing its rights
      hereunder. The return and cancellation of the Deposit Note and the payment
      of
      the Termination Expenses shall be in lieu of any other damage, remedy or claim
      by Buyer against the

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Stockholder
      on account of the termination of this Agreement by Stockholder for a Fiduciary
      Out.

     

    3. Closing.
      The
      closing of the purchase and sale of the Shares (the “Closing”) shall take place
at
      the
      offices of Buyer’s counsel in Boston, Massachusetts at 10:00 a.m. local time, on
      the second business day after the date on which all of the conditions to the
      Closing set forth in Sections 6 and 7 (other than those that by their terms
      are
      to be satisfied at or before Closing) have been satisfied or waived, or on
      such
      other date (any such date, the “Closing Date”) or at such other time and place
      as Stockholder and Buyer may mutually agree. If the Closing shall not have
      taken
      place prior to July 3, 2007, this Agreement shall be deemed terminated without
      further action of the parties and the parties shall have no further obligation
      to each other hereunder other than such obligations as may be then owed or
      owed
      as a result thereof, all as provided herein, which obligations shall survive
      termination. 

    

    4. Representations
      and Warranties of the Stockholder.
      The
      Stockholder,
      for
      itself and the Company, represents
      and warrants to and agrees with Buyer on and as of the date hereof and as of
      the
      Closing Date, as follows:

    

    4.1 Authority,
      Validity of Agreement.
      The
      Stockholder has all requisite corporate power and authority to enter into this
      Agreement and to perform its obligations hereunder and consummate the
      transactions contemplated by this Agreement. The execution and delivery of
      this
      Agreement, and the consummation of the transactions contemplated hereby are
      duly
      authorized and, subject to the continuing obligation of the Stockholder’s Board
      of Directors to discharge its fiduciary duties respecting superior offers,
      no
      other approval is required for the performance by the Stockholder of its
      obligations hereunder. This Agreement has been duly executed and delivered
      by
      the Stockholder. This Agreement constitutes a valid and binding obligation
      of
      the Stockholder, enforceable in accordance with its terms (subject, as to the
      enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
      moratorium and similar laws affecting creditors’ rights, and with respect to the
      remedy of specific performance, equitable doctrines applicable
      thereto).

    

    4.2 No
      Violations.
      Except
      as set forth on Schedule
      4.2,
      neither
      the execution and delivery of this Agreement by the Stockholder nor the
      consummation of the transactions contemplated hereby will (a) violate any
      provisions of the certificate of incorporation or bylaws of the Stockholder
      or
      the Company, or (b) violate, or be in conflict with, or constitute a default
      (or
      an event which, with or without due notice or lapse of time, or both, would
      constitute a default) under, or cause or permit the acceleration of the maturity
      of or give rise to any right of termination, cancellation, imposition of fees
      or
      penalties under, any note, debt, debt instrument, indenture, security agreement,
      option to purchase, lease, deed of trust or license, or any other material
      contract to which the Stockholder or the Company is a party or by which the
      Stockholder or the Company or any of the assets of either is or may be bound,
      or
      (c) result in the creation of imposition of any lien or other encumbrance upon
      any assets of the Stockholder or the Company under any debt, obligation,
      contract or commitment to which Company or the Stockholder is a party or by
      which any of the Company’s or the Stockholder’s assets is or may be bound, or
      (d) violate any laws to which the Shareholder or the Company may be subject,
      which

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     would
      have a Material Adverse Effect. For purposes of this Agreement, “Material
      Adverse Effect” means an event, circumstance, fact, or condition which would:
      individually or in the aggregate (i) have a material adverse effect on the
      business, financial condition, operations, assets and liability of the entity
      to
      which reference is being made, taken as a whole, or (ii) would prevent a party
      hereto from performing its obligations under this Agreement.

    

    4.3 Consents
      and Approvals of Governmental Authorities.
      Except
      as set forth on Schedule 4.3,
      no
      consent, approval, order or authorization of, or registration, declaration
      or
      filing with, any local, state, provincial, federal, foreign or international
      governmental authority, agency or other entity, including, but not limited
      to,
      any court, tribunal or panel (each a “Governmental Entity”), is required to be
      obtained or made by the Stockholder or the Company in connection with the
      execution, delivery and performance of this Agreement or the consummation of
      the
      transactions contemplated hereby. 

    

    4.4 Other
      Consents.
      No
      consent, waiver or approval of, or notice to, any third party is required to
      be
      or necessary to be obtained by the Stockholder or the Company in connection
      with
      the execution and delivery of this Agreement and the performance of the
      Stockholder or the Company’s obligations hereunder. 

    

    4.5 Organization
      and Good Standing of Stockholder and Company.

    

    
      	 	
              (a)

            	
              Each
                of the Stockholder and the Company is a corporation duly organized,
                validly existing and in good standing under the laws of the State
                of
                Delaware.

            

    

    

    
      	 	
              (b)

            	
              Each
                of the Stockholder and the Company has all requisite corporate power
                and
                authority to own, lease and operate its assets and to carry on its
                business as now being conducted.

            

    

    

    
      	 	
              (c)

            	
              Company
                is qualified to do business and in good standing in each state set
                forth
                in Schedule
                4.5(c),
                which is each jurisdiction where the failure to be so qualified would
                have
                a Material Adverse Effect on Company. Neither the Stockholder nor
                the
                Company has received notification from any jurisdiction that Company
                is
                required to qualify or obtain a license to do business in such
                jurisdiction or that it is otherwise not in good standing in such
                jurisdiction.

            

    

    

    
      	 	
              (d)

            	
              Complete
                and correct copies of the certificate of incorporation, as amended
                (with
                such certificate and all amendments thereto certified by the Secretary
                of
                State of Delaware) and bylaws, as amended to the date hereof, of
                the
                Company have been provided to
                Buyer.

            

    

    

    4.6 Capital
      Stock of Company.

    

    
      	 	
              (a)

            	
              Schedule
                4.6(a)
                sets forth a true and complete list for Company as of Closing of
                the
                number of all shares of Stock authorized and issued and outstanding
                (“Shares”) (including a description of the class or series of all such
                outstanding

            

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    shares
      and all stock issued as a result of the exercise of all stock options and
      warrants), the record owners thereof and the amount and percentage of ownership
      of such Shares or equity interests.

    

    
      	 	
              (b)

            	
              Except
                as disclosed on Schedule
                4.6(b):
                (i) all outstanding Shares of the Company are duly authorized, validly
                issued, fully paid and non-assessable and are owned of record as
                set forth
                in Schedule
                4.6(a);
                (ii) none of such Shares is subject to any preemptive rights; (iii)
                neither Company nor Stockholder has any commitment or obligation,
                either
                firm or conditional, to issue, deliver or sell, or cause to be issued,
                delivered or sold, under offers, stock option agreements, stock bonus
                agreements, stock purchase plans, incentive compensation plans, warrants,
                calls, conversion rights or otherwise, any Shares or other securities
                including securities or obligations outstanding which are convertible
                into
                or exchangeable for any Shares, other equity securities, or ownership
                interests, upon payment of any consideration or otherwise; and (iv)
                there
                are no voting trusts, voting agreements, stockholder agreements,
                proxies
                or other agreements or understandings with respect to the Shares
                to which
                Stockholder or Company is a party.

            

    

    

    
      	 	
              (c)

            	
              Except
                as disclosed on Schedule
                4.6(a),
                Company does not own, directly or indirectly, any equity, capital
                (whether
                equity or debt) or profit interest in any corporation, partnership,
                association, business trust, joint venture or other business entity.
                

            

    

    

    4.7 Ownership
      and Transfer of Shares to be Transferred.
      Except
      as disclosed in Schedule
      4.6(b),
      the
      Stockholder has the absolute and unrestricted right, power and authority to
      exchange, transfer and assign the Shares pursuant to this Agreement, and such
      Shares constitute all of the issued and outstanding securities of Company
      entitled to receive consideration in the event of a sale of the Company; as
      of
      Closing, each circumstance disclosed in Schedule
      4.6(b)
      will be
      waived or modified such that the Stockholder has as of Closing such absolute
      and
      unrestricted right, power and authority. All Shares are owned by the Stockholder
      free and clear of all liens and encumbrances of any nature whatsoever. The
      transactions contemplated by this Agreement will not give rise to any preemptive
      rights, rights of first refusal, warrants, dividends, or conversion rights,
      and
      will not violate any law applicable to Company or Stockholder. 

    

    4.8 Minute
      Books; Books, Records and Accounts; Officers and Directors.
      The
      minute books of Company contain legally sufficient records of all corporate
      actions taken by the directors and Stockholder of Company (except where the
      absence of such records would not adversely affect either Company or Buyer),
      and
      true and complete copies of such minute books have been furnished to Buyer.
      All
      accounts, books, ledgers and official and other records of whatsoever kind
      material to the business of the Company have been fully, properly and accurately
      kept and completed in all material respects, there are no material inaccuracies
      or material discrepancies of any kind contained or reflected therein, and
      collectively they fairly present the financial position of the Company.
Schedule
      4.8
      sets
      forth a true and complete list of each of the current officers and directors
      of
      Company.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    4.9 Financial
      Statements.
      Schedule
      4.9
      contains
      true, correct and complete copies of the following financial statements
      (“Financial Statements”) of Company: audited balance sheet as of December 31,
      2005 and unaudited balance sheets as of December 31, 2006 and March 31, 2007
      (the latter being the “March 31, 2007 Balance Sheet”); audited income statement
      for the 12-month period ended December 31, 2005; and unaudited income statements
      for the periods ending December 31, 2006 and March 31, 2007.

    

    (a) All
      of
      such Financial Statements are in accordance with the books and records of
      Company.

    

    (b) Each
      balance sheet (including any related notes) included in the Financial Statements
      fairly presents the assets, liabilities and financial condition of the business
      of the Company as of the respective dates thereof, and each of the statements
      of
      operations contained in the Financial Statements are complete and correct and
      fairly present the results of operations for the periods referred to therein,
      all in accordance with GAAP consistently applied throughout the periods involved
      (except for the absence of footnotes and year-end adjustments not material
      in
      amount).

    

    4.10 Absence
      of Undisclosed Liabilities.
      Company
      has no Liabilities, including Taxes, except:

    

    (a) Liabilities
      that are fully accrued or reserved against in the March 31, 2007 Balance Sheet,
      or reflected in the notes thereto;

    

    (b) Liabilities
      (including those arising from the creation of Contracts (as defined herein)
      incurred since the date of the March 31, 2007 Balance Sheet in the ordinary
      course of business; and

    

    (c) Liabilities
      disclosed in Schedule
      4.10(c).

    

    For
      purposes of this Agreement, “Liabilities” means any and all claims, assessments,
      charges, indebtedness or obligations of any nature whatsoever, whether absolute,
      accrued, contingent or otherwise, and whether due or to become due, and “Tax” or
“Taxes” means any tax or other similar liability imposed or collected by any
      Governmental Entity, including, without limitation, all federal, state, county,
      local, and foreign income, profits, franchise, gross receipts, payroll, sales,
      employment, use, occupation, property, excise, value added, withholding and
      other taxes, duties or assessments (including the recapture of any tax items
      such as investment tax credits), together with any related interest, penalties
      and additions and shall include any transferee or secondary liability for a
      Tax
      and any liability arising as a result of being (or ceasing to be) a member
      of
      any affiliated, consolidated, combined, or unitary group or being included
      (or
      required to be included) in any Tax return relating thereto. 

    

    4.11 Absence
      of Certain Changes.
      Except
      as set forth on Schedule
      4.11
      or as
      shown on the March 31, 2007 Balance Sheet, since January 1, 2007, Company has
      not:

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      	 	
              (a)

            	
              Suffered
                any change or changes which, individually or in the aggregate, have
                had or
                would
                have, a Material Adverse Effect on the
                Company;

            

    

    

    
      	 	
              (b)

            	
              Paid,
                discharged, or satisfied any Liabilities other than the payment,
                discharge
                or satisfaction in the ordinary course of
                business;

            

    

    

    
      	 	
              (c)

            	
              Become
                subject to any newly-enacted or adopted law which would reasonably
                be
                expected to have a Material Adverse Effect on the
                Company;

            

    

     

    
      
        	 	
                (d)

              	
                Permitted
                  or allowed any of its assets to be subjected to any lien or
                  encumbrance;

              

      

    

    

    
      	 	
              (e)

            	
              Written
                up the value of any inventory, any notes or accounts receivable or
                any
                other assets;

            

    

    

    
      	 	
              (f)

            	
              Canceled
                or amended any debts or waived any claims or rights of substantial
                value,
                or sold, transferred or otherwise disposed of any of its assets except
                in
                the ordinary course of business;

            

    

    

    
      	 	
              (g)

            	
              Licensed,
                sold, transferred, pledged, modified, disclosed, disposed of or permitted
                to lapse any right to the use of any intellectual property right
                except in
                the ordinary course of business;

            

    

    

    
      	 	
              (h)

            	
              Granted
                any increase in the compensation of officers or employees (other
                than
                normal increases to non-officer employees in the ordinary course
                of
                business);

            

    

    

    
      	 	
              (i)

            	
              Declared,
                paid or set aside for payment any dividend or other distribution
                in
                respect of its Shares or other equity securities or, directly or
                indirectly, redeemed, purchased or otherwise acquired any Shares
                or other
                equity securities;

            

    

    

    
      	 	
              (j)

            	
              Made
                any change in any method of accounting or accounting practice or
                any
                change in depreciation or amortization policies or rates previously
                adopted;

            

    

    

    
      	 	
              (k)

            	
              Paid,
                lent or advanced any amount to, or sold, transferred or leased any
                assets
                to, or entered into any agreement or arrangement with, any of its
                affiliates, except for directors’ fees, and employment compensation to
                officers in the ordinary course of
                business;

            

    

    

    
      	 	
              (l)

            	
              Sold,
                leased or otherwise disposed of any of its assets, except in the
                ordinary
                course of business;

            

    

    

    
      	 	
              (m)

            	
              Made
                capital expenditures or commitments therefor exceeding, in the aggregate,
                Ten Thousand Dollars ($10,000); or

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      

      
        	 	
                (n)

              	
                Agreed,
                  whether in writing or otherwise, to take any action described in
                  this
                  Section 4.11.

              

      

       

    

    4.12 Title
      to, and Sufficiency of, Assets.

    

    
      	 	
              (a)

            	
              The
                March 31, 2007 Balance Sheet includes all material tangible assets
                owned
                or leased by Company, or otherwise used in or pertaining to the business
                of the Company as presently conducted, with an indication of which
                such
                assets are owned and which are
                leased.

            

    

    

    
      	 	
              (b)

            	
              Company
                has good and valid title to or a valid leasehold interest in all
                of the
                assets included on the March 31, 2007 Balance Sheet. None of such
                assets
                is subject to any lien or encumbrance of any nature whatsoever. The
                assets
                included on the March 31, 2007 Balance Sheet constitute all of the
                material tangible assets held for use or used in connection with
                the
                business of the Company and are sufficient for the operation of the
                Company’s business as presently conducted or planned to be
                conducted.

            

    

    

    4.13 Plant,
      Property, and Equipment.
      The
      leased real property, and other plant, property, equipment, leasehold
      improvements, and other tangible assets of the Company are adequate in all
      respects for the purposes for which they are being used and conform in all
      material respects with applicable laws, are structurally sound with no material
      defects, and are in good operating condition and repair (ordinary wear and
      tear
      excepted).

    

    4.14 Accounts
      and Notes Receivable.
      Except
      to the extent of applicable reserves for doubtful accounts shown on the March
      31, 2007 Balance Sheet, all of the accounts, notes and other receivables owed
      to
      Company as of the date hereof or thereafter acquired or arising prior to the
      Closing Date, constitute, and as of the Closing Date will constitute, valid
      and
      enforceable claims arising from bona fide transactions in the ordinary course
      of
      business, and Company has not received notice of any claims, refusals to pay
      or
      other rights of set-off against any of the accounts receivable. Schedule
      4.14
      contains
      an accurate aging of the accounts, notes and other receivables of Company at
      March 31, 2007.

    

    4.15 Accounts
      and Notes Payable; Interest-Bearing Debt.

    

    (a)         
      There
      are
      no back Taxes owed by the Company.

    

    
      	 	
              (b)

            	
              Schedule
                4.15(b)
                reflects all interest-bearing debt of Company, including the person
                or
                institution to whom the debt is owed, the current amount of the debt,
                and
                any instruments reflecting such
                debt.

            

    

    

    
      	 	
              (c)

            	
              The
                Company has no long term debt, notes payable or other long term
                obligations, other than capital lease obligations which are disclosed
                on
                the March 31, 2007 Balance Sheet:

            

    

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      4.16 Orders,
        Commitments, Warranty Claims and Returns.

       

      
        	 	
                (a)

              	
                All
                  accepted and unfulfilled orders for the sale of Company products
                  and
                  services entered into by Company and all outstanding Contracts
                  for the
                  purchase of supplies and materials entered into by Company were
                  made in
                  the ordinary course of
                  business.

              

      

    

    

    
      	 	
              (b)

            	
              Except
                as disclosed on Schedule
                4.17,
                there are no claims against Company to return, or claims for refunds
                due
                to delivery of defective or unsatisfactory Company products, in excess
                of
                an aggregate Five Thousand Dollars ($5,000), or understanding that
                Company
                products in the hands of certain customers, retailers or distributors
                would be returnable.

            

    

    

    4.17 Defects
      in Products; Warranties.
      There
      are no defects in Company products heretofore or currently being distributed
      or
      sold by Company which would have a Material Adverse Effect on the Company.
      Except as disclosed on Schedule
      4.17,
      there
      are no express or implied warranties outstanding with respect to Company
      products, except as imposed by law.

    

    4.18 Real
      Property.

    

    
      	 	
              (a)

            	
              No
                Owned Real Property.
                Company does not have and has not had any fee or other direct or
                indirect
                ownership interest in any real
                property.

            

    

    

    
      	 	
              (b)

            	
              Leased
                Real Property Agreements.
                Schedule
                4.18(b)
                sets forth a true and complete list of all leased real property and
                a copy
                of all of the agreements (as amended) relating thereto (the “Lease
                Agreements”). To the Stockholder’s knowledge, all the Lease Agreements are
                in full force and effect and are valid and enforceable against the
                other
                parties thereto in accordance with their terms. None of the Lease
                Agreements is in default by Company or, to the Stockholder’s knowledge, by
                other third parties thereto, and, to the Stockholder’s knowledge, no
                circumstance exists with respect to Company or to the other parties
                thereto which, with notice, the passage of time or both would (i)
                constitute a material default under the Lease Agreements, (ii) provide
                a
                basis for termination under such agreements prior to their normal
                expiration dates, (iii) have a Material Adverse Effect on the Company,
                or
                (iv) grant a third party the right to occupy the premises. The Closing
                will not affect the rights to the continued use and possession of
                the
                leased real property on the terms and conditions specified in the
                Lease
                Agreements to the extent and for the purposes for which such property
                is
                now used. 

            

    

    

    
      	 	
              (c)

            	
              Leases
                of Real Property to Others.
                No real property leased by the Company or the Stockholder in connection
                with the Company’s business is subject to any lease or other right of use
                or possession by any person other than
                Company.

            

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      

      
        	 	
                (d)

              	
                Utilities.
                  To Stockholder’s knowledge, all utilities necessary for the normal use and
                  operation of the real property leased by the Company or the Stockholder
                  in
                  connection with the Company’s business are available at such
                  property.

              

      

       

      
        	 	
                (e)

              	
                Former
                  Facilities.
                  No former Company real property was ever used by Company for anything
                  other than commercial office
                  space.

              

      

      
        	 	
                (f)

              	
                Disputes.
                  No third party has raised any claim, dispute or controversy with
                  respect
                  to any of the Lease Agreements, nor has Stockholder or Company
                  received
                  notice of alleged nonperformance, delay in delivery or other noncompliance
                  by it with respect to its obligations under any such Lease
                  Agreements.

              

      

       

    

    4.19 Contracts.

    

    
      	 	
              (a)

            	
              Schedule
                4.19(a)(i)
                contains a complete list of all Current Customers. For purposes of
                this
                Agreement, “Current Customer” means any person from whom Company has
                recognized revenue in the past twelve months or to whom Company has
                any
                obligation to complete work or honor any contractual warranty.
                Schedule
                4.19(a)(ii)
                contains (i) a list of all currently outstanding but unaccepted written
                proposals relating to proposed contracts with customers, and (ii) a
                description of all oral proposals relating to proposed contracts
                with
                customers. True and correct copies of all standard form customer
                contracts
                used by Company have been made available to Buyer. No contract for
                any
                Current Customer, whether written or oral, differs in any material
                respect
                from the attached standard forms of customer contracts. True and
                correct
                copies of all written Contracts with Current Customers have been
                provided
                or made available to Buyer. Except as disclosed on Schedule
                4.19(a)(iii),
                since January 1, 2007, no Current Customer has canceled or terminated
                its
                contract, or notified Company or Stockholder of an intent to cancel
                or
                terminate its contract.

            

    

    

    
      	 	
              (b)

            	
              Schedule
                4.19(b)
                contains a complete list of all suppliers of Company who since March
                31,
                2007 have invoiced Company for Thirty Thousand Dollars ($30,000)
                or more,
                including the types of products and/or services provided by each
                such
                supplier.

            

    

    

    
      	 	
              (c)

            	
              Schedule
                4.19(c)
                sets forth a true and complete list of all of the currently effective
                written contracts or written or binding oral agreements (the “Contracts”)
                to which Company is a party, of the following
                types:

            

    

     

    
      
        	 	
                (i)

              	
                Employment
                  agreements and any outstanding offers of
                  employment.

              

      

       

    

    
      	 	
              (ii)

            	
              Royalty
                agreements.

            

    

    

    
      	 	
              (iii)

            	
              Consulting
                agreements.

            

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (iv)

            	
              Agreements
                or commitments for capital expenditures or the acquisition by purchase
                or
                lease of fixed assets providing for payments in excess of Thirty
                Thousand
                Dollars ($30,000) individually or in the
                aggregate.

            

    

     

    
      	 	
              (v)

            	
              Agreements
                for the purchase, sale, lease or other transfer of any services,
                products,
                materials or supplies in excess of Five Thousand Dollars ($5,000)
                individually or in the aggregate from a single
                person.

            

    

     

    
      
        	 	
                (vi)

              	
                Joint
                  venture or partnership agreements with any other
                  entity.

              

      

    

     

    
      	 	
              (vii)

            	
              Non-competition
                or similar agreements which prevent Company or any of its employees
                from
                competing with any person (other than
                Company).

            

    

    

    
      	 	
              (viii)

            	
              Confidentiality
                or employee non-solicitation agreements with any other person (other
                than
                as are contained in the customer
                Contracts).

            

    

    

    
      	 	
              (ix)

            	
              Agreements
                relating to the research or development by Company for others or
                by others
                for Company.

            

    

    

    
      	 	
              (x)

            	
              Agreements
                for the long-term borrowing or long-term lending of money (including
                capitalized leases).

            

    

    

    
      	 	
              (xi)

            	
              Agreements
                for the short-term borrowing or short-term lending of
                money.

            

    

    

    
      	 	
              (xii)

            	
              Any
                Contract, not listed in other Schedules to this Agreement, requiring
                the
                performance by Company of any obligation for a period of time extending
                more than one year from the date of this Agreement or calling for
                Company
                to pay a consideration or incur costs of more than Thirty Thousand
                Dollars
                ($30,000).

            

    

    

    Schedule
      4.19(c)
      is
      organized by type of Contract and briefly summarizes, with respect to each
      Contract, the names of the parties thereto, the products and/or services
      covered, the date of the Contract, and all amendments or modifications
      thereto.

    

    
      	 	
              (d)

            	
              Except
                as set forth in Schedule
                4.19(d),
                Company has in all material respects performed, and is now performing,
                the
                obligations of, and Company is not in default (nor would by the lapse
                of
                time or the giving of notice or both be in default) in respect of
                any
                Contract referred to in the Schedules to this Article IV. Each of
                the
                Contracts or other instruments shown on the Schedules referred to
                in this
                Agreement is in full force and effect and is a valid and enforceable
                obligation against Company and, to Stockholder’s knowledge, against the
                other parties thereto in accordance with its terms (subject, as to
                the
                enforcement of remedies, to applicable bankruptcy, reorganization,
                insolvency, moratorium and similar laws affecting creditors’ rights, and,
                with respect to the remedy of specific

            

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      performance,
        equitable doctrines applicable thereto). To Stockholder’s knowledge, no other
        parties to such Contracts or other instruments is in default in any material
        respect (or would by the lapse of time or the giving of notice or both be
        in
        default in any material respect) thereunder or has breached in any material
        respect any terms or provisions thereof.

      

      
        	 	
                (e)

              	
                There
                  are no Contracts to which Company is a party to or bound by which
                  either
                  separately or in the aggregate has or is likely to result in a
                  loss to
                  Company.

              

      

    

    

    
      	 	
              (f)

            	
              No
                third party has raised any claim with respect to any of the Contracts,
                nor
                has Company received notice of alleged default by Company with respect
                to
                its obligations under any such
                Contracts.

            

    

    

    
      	 	
              (g)

            	
              No
                material part of the Customer Contracts or sales has been won through
                small business or other set-aside
                programs.

            

    

    

    
      	 	
              (h)

            	
              Other
                than as provided in Section 4.19(a), true and complete copies of
                all of
                the Contracts and instruments referred to in the Schedules delivered
                under
                this Article IV have been delivered to Buyer.

            

    

    

    4.20 Litigation.
      Except
      as set forth in Schedule
      4.20,
      there
      are no suits, claims, actions, arbitrations, litigation, legal, administrative
      or other proceedings (including without limitation permit revocations, permit
      amendments, or administrative complaints of discrimination) or governmental
      investigations of which it has notice, pending, or, to Stockholder’s knowledge,
      threatened against Company or its assets. Schedule
      4.20
      sets
      forth, with respect to each such suit, claim, action, arbitration, litigation,
      proceeding or investigation, the forum, the parties thereto, the subject matter
      thereof, the amount of damages claimed or relief sought and the status as of
      a
      recent date.

    

    4.21 Compliance
      with Laws.

    

    
      	 	
              (a)

            	
              To
                the Stockholder’s knowledge, the operations and business of Company have
                been conducted, and are being conducted, in compliance with all applicable
                laws. Company has not received any notification that it is in violation
                of
                any laws. 

            

    

    

    
      	 	
              (b)

            	
              Schedule
                4.21(b)
                hereto sets forth a list of all governmental approvals, permits,
                licenses,
                certifications or other authorizations of which the failure to obtain
                or
                maintain would have a Material Adverse Effect on the Company. All
                approvals, permits, licenses, certifications or other authorizations
                have
                been obtained and are in full force and effect and are being complied
                with
                by the Company in all material
                respects.

            

    

    

    
      	 	
              (c)

            	
              Except
                as set forth in Schedule
                4.21(c),
                there are no outstanding judgments, orders, injunctions, decrees,
                stipulations, awards (whether rendered by a Governmental Entity or
                by
                arbitration) or private settlement agreements to which
                

            

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Company
      is a party. All of the foregoing set forth in Schedule
      4.21(c)
      are
      being complied with by Company in all material respects.

     

    
      
        	 	
                (d)

              	
                Neither
                  Company nor any director, officer, employee or agent thereof has,
                  directly
                  or indirectly, given or agreed to give any gift or similar benefit
                  to any
                  customer, supplier, competitor or governmental employee or official
                  which
                  would subject Company or any of its assets, to any damage or penalty
                  under
                  any law in any civil, criminal or governmental litigation or proceeding.
                  

              

      

    4.22 Computer
      Software and Intellectual Property.
      

    

    
      	 	
              (a)

            	
              Company
                Software Products.
                Schedule
                4.22(a)
                contains a list of all Company Software Products. For the purposes
                hereof,
                “Company Software Products” means all of Company’s proprietary software
                (i.e., computer programs in any form (including source code and binary
                code), and in any stage of development, test and release, together
                with
                all related technical documentation, user manuals, data files, databases
                and other works of authorship, and all information and materials
                necessary
                or required for the effective installation, maintenance, use and
                support
                of such computer programs) that is included in Company products or
                has
                been offered or provided by Company under license for use by Company’s
                customers. Company Software Products does not include third party
                software, which for purposes of this Agreement means all software
                licensed, leased or loaned by third party vendors or contractors
                for use
                by Company in connection with its internal business operations, or
                for
                distribution by Company under sublicense for use by customers, either
                on a
                stand-alone basis or in combination with Company Software Products.
                

            

    

    

    
      	 	
              (b)

            	
              Third
                Party Software.
                Schedule
                4.22(b)
                contains a list of all material third party software under which
                any
                rights to use or distribute software have been granted to Company.
                Company
                has delivered to Buyer copies of all such license agreements.
                

            

    

    

    
      	 	
              (c)

            	
              Source
                Code Escrow.
                Schedule
                4.22(c)
                contains a list of all agreements under which Company has delivered
                source
                code for any Company Software Product to be held in escrow and released
                upon the occurrence of certain events or conditions. Company has
                made
                available to Buyer copies of all such source code escrow agreements.
                

            

    

    

    
      	 	
              (d)

            	
              Certain
                Intellectual Property Rights.
                Schedule
                4.22(d)
                contains a complete list of the following items included in the Company’s
                intellectual property rights: (i) United States and foreign patents
                and
                patent applications, and, in the case of patent applications, a
                description of the current status of each of the applications; (ii)
                copyrights in computer programs and other works of authorship which
                are
                registered with any governmental entity; or for which registration
                applications have been filed; (iii) United States and foreign trademarks,
                service marks and 

            

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      
        
          	 	
                   

                	
                  trade
                    names, for which registrations have been received or applications
                    for
                    registration have been filed; and (iv) a list of unregistered
                    trade names
                    used by Company. 

                

        

      

       

      
        	 	
                (e)

              	
                Miscellaneous.
                  

              

      

      

      
        	 	
                (i)

              	
                Company
                  owns good and marketable title to, and has the right to possess,
                  use,
                  modify, and prepare derivative works based on, manufacture, reproduce,
                  license, and distribute, all Company Software Products and intellectual
                  property rights in the United States and throughout the world in
                  Company’s
                  business as currently conducted and Company has done nothing to
                  cause such
                  rights to be owned or possessed by any third party other than the
                  license
                  of object code pursuant to any of the Contracts. Company has received
                  no
                  claim that any Company Software Product or any intellectual property
                  right
                  is in whole or in part invalid, unenforceable, ineffective or in
                  violation
                  of the rights of others. All Company Software Products and all
                  intellectual property rights developed by Company employees and/or
                  independent contractors are owned exclusively by the
                  Company.

              

      

    

     

    
      	 	
              (ii)

            	
              There
                is no pending claim or litigation and, to Stockholder’s knowledge, there
                is no threatened claim or litigation contesting the right to use,
                sell,
                license or dispose of any Company Software Product or intellectual
                property rights, nor, to Stockholder’s knowledge, is there any fact or
                alleged fact which would reasonably serve as a basis for any such
                claim
                that could materially limit the protection afforded by the Company’s
                intellectual property rights to the use, sale, license, or disposition
                of
                Company Software Products. 

            

    

    

    
      	 	
              (iii)

            	
              Except
                as disclosed on Schedule
                4.22(e)(iii),
                each person who participated in the creation of Company’s Software
                Products and/or its intellectual property rights either has executed
                a
                valid, binding and enforceable assignment of rights of ownership
                to
                Company or was an employee of Company acting within the scope of
                his or
                her employment at the time of such creation, and in all cases all
                incidents of ownership thereto are held exclusively by the
                Company.

            

    

    

    
      	 	
              (iv)

            	
              Except
                as disclosed on Schedule
                4.10(c)
                and Schedule
                4.22(e)(iv),
                Company is in material compliance with the terms and conditions of
                all
                license agreements governing the use of third party software.
                

            

    

    

    
      	 	
              (v)

            	
              All
                third party software used by Company for its internal business operations
                (including product development and testing) is licensed for use only
                on
                computer equipment located at Company’s sites or on computers under
                control of Company’s employees or independent contractors.
                

            

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      
        	 	
                (vi)

              	
                Except
                  as disclosed on Schedule
                  4.22(e)(vi),
                  Company has taken reasonable steps to safeguard and maintain the
                  secrecy
                  and confidentiality of all trade secrets and proprietary or confidential
                  business and technical information included in its intellectual
                  property
                  rights, including, without limitation, entering to appropriate
                  confidentiality or disclosure agreements with employees, officers,
                  consultants, independent contractors and licensees that serve Company,
                  the
                  forms of which have been made available to
                  Buyer.

              

      

       

    

    
      	 	
              (vii)

            	
              All
                documents and materials containing trade secrets or proprietary or
                confidential business or technical information of Company (including
                without limitation all source code for Company Software Products)
                are
                presently located at one of the premises identified as leased real
                property in Schedule
                4.18(b)
                and, as applicable, at escrow agents’ sites listed on Schedule
                4.22(c),
                and, to Stockholder’s knowledge, have not been used, divulged, or
                appropriated for the benefit of any person other than Company, or
                to the
                detriment of Company. 

            

    

    

    
      	 	
              (viii)

            	
              To
                Stockholder’s knowledge, no third party is infringing on any intellectual
                property right of the Company in a manner that could materially limit
                the
                protection afforded by the Company’s intellectual property rights to the
                use, sale, license or disposition of Company Software Products.
                

            

    

    

    
      	 	
              (ix)

            	
              The
                execution, delivery and performance of this Agreement and the consummation
                of the transactions contemplated hereby will not breach, violate
                or
                conflict with any material instrument or material agreement to which
                the
                Company or Stockholder is a party governing any intellectual property
                right, will not cause the forfeiture or termination or give rise
                to a
                right of forfeiture or termination of any intellectual property right
                or
                in any way materially impair the right of Company to use, sell, license
                or
                dispose of or bring any action for the infringement of any intellectual
                property right or any Company Software Product. As used herein,
                intellectual property rights means all of Company’s rights, title and
                interest in and to all: (a) United States and foreign patents and
                patent
                applications; (b) copyrights in computer programs and other works
                of
                authorship; (c) trade secrets and proprietary or confidential business
                and
                technical information; (d) proprietary “know-how,” whether or not
                protectable by patent, copyright or trade secret right; and (e) United
                States and foreign trademarks, service marks, trade names and associated
                goodwill, and registrations or applications for registration of any
                such
                marks or names; Company Software Products; and third-party
                software.

            

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      

      4.23 No
        Subsidiaries.
        Except
        as set forth on Schedule
        4.23,
        the
        Company does not have any subsidiaries. 

       

      4.24 Environmental
        Matters.
        

      

      
        	 	
                (a)

              	
                To
                  Stockholder’s knowledge, there are no underground storage tanks present on
                  any Company real property. 

              

      

      

      
        	 	
                (b)

              	
                Schedule
                  4.24(b)
                  accurately describes all of the environmental permits currently
                  held by
                  Company, and the environmental permits listed on Schedule
                  4.24(b)
                  are all of the environmental permits necessary for the continued
                  conduct
                  of any Hazardous
                  Material Activity of Company as such activities are currently being
                  conducted. For the purposes hereof, “Hazardous Materials Activity” means
                  the possession, transportation, transfer, recycling, storage, use,
                  treatment, manufacture, investigation, removal, remediation, release,
                  sale, or distribution of, any hazardous material, hazardous or
                  toxic
                  substance, or hazardous waste that is defined as such or regulated
                  by law
                  (“Hazardous
                  Materials”).

              

      

    

    

    
      	 	
              (c)

            	
              Company
                has not transferred or released Hazardous Materials (except for standard
                office supplies used in the ordinary course that may be considered
                to be
                Hazardous Materials) to any disposal sites, and no action or proceeding
                exists or, to Stockholder’s knowledge, is threatened against Company with
                respect to any transfer or release of Hazardous Materials to a disposal
                site. 

            

    

    

    
      	 	
              (d)

            	
              Company
                has delivered to Buyer or made available for inspection by Buyer
                any
                records concerning the Hazardous Materials Activities of Company
                and all
                environmental audits and environmental assessments of any Company
                real
                property conducted at the request of, or otherwise available to,
                the
                Stockholder or Company. 

            

    

    

    
      	 	
              (e)

            	
              Company
                has never conducted any Hazardous Material Activity in violation
                of any
                applicable environmental law. 

            

    

    

    
      	 	
              (f)

            	
              No
                action, proceeding, revocation proceeding, amendment procedure, writ,
                injunction or claim is pending or, to Stockholder’s knowledge, threatened
                concerning or relating to any environmental law or any Hazardous
                Materials
                Activity of Company.

            

    

    

    4.25 Employee
      Plans and Arrangements.
      

    

    
      	 	
              (a)

            	
              Neither
                Company nor any Related Party (i.e., any entity which is considered
                a
                single employer with Company under applicable law) sponsors, maintains,
                administers, contributes to or has or could reasonably be expected
                to have
                any Liability with respect to any ERISA benefit plan other than an
                ERISA
                benefit plan specifically listed on Schedule
                4.25(a)
                (a
                “Company ERISA Benefit Plan”). 

            

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                 

              	
                No
                  Company ERISA Benefit Plan is subject to Code Section 412 or Part
                  3 of
                  Subtitle B of Title I of ERISA or Title IV of ERISA. Neither Company
                  nor
                  any Related Party has or could reasonably be expected to have any
                  liability to any person
                  in connection with any “voluntary employees’ beneficiary association”
                  within the meaning of Code Section 501(c)(9), “welfare benefit fund”
                  within the meaning of Code Section 419, “qualified asset account” within
                  the meaning of Code Section 419A or “multiple employer welfare
                  arrangement” within the meaning of ERISA Section 3(40). As used herein,
                  “Code” means the Internal Revenue Code of 1986, as amended, and “ERISA”
                  means the Employee Retirement Income Security Act of 1974, as
                  amended.

              

      

       

    

    
      	 	
              (b)

            	
              Except
                as disclosed on Schedule
                4.25(b),
                neither Company nor any Related Party sponsors, maintains, administers,
                contributes to, is a party to or has or could reasonably be expected
                to
                have any liability with respect to (i) any non-ERISA benefit arrangement
                other than a non-ERISA benefit arrangement specifically listed on
                Schedule
                4.25(b)
                (a
                “Company Non-ERISA Benefit Arrangement”), or (ii) employment agreement,
                collective bargaining agreement, consulting agreement, confidentiality
                agreement, agreement not to compete or other labor agreement between
                either Company or a Related Party and any individual who provides
                or
                provided personal services to either Company or a Related Party as
                an
                employee or otherwise or such individual’s employer or agent.
                

            

    

    

    
      	 	
              (c)

            	
              True
                and complete copies of each of the following documents have been
                made
                available to Buyer: (i) each Company Non-ERISA Benefit Arrangement
                or a
                complete description of any non-ERISA benefit arrangement that is
                not in
                writing and a complete and accurate description of the individuals
                covered
                by each such arrangement; (ii) all written documents of any nature
                reflecting contractual terms and conditions of any person’s employment
                with the Company (an “Employee Agreement”) or a complete description of
                any Employee Agreement that is not in writing; (iii) all written
                documents
                of any nature establishing the terms and conditions of each Company
                ERISA
                Benefit Plan and related trust or insurance agreements or contracts
                evidencing any funding vehicle with respect thereto; (iv) the three
                most
                recent annual reports on Treasury Form 5500, including all schedules
                and
                attachments, with respect to any plan for which such a report is
                required;
                (v) the form of summary plan description, including any summary of
                material modifications thereto or other modifications communicated
                to
                participants; and (vi) the most recent determination letter with
                respect
                to each Company ERISA Benefit Plan intended to qualify under Section
                401(a) of the Code and the full and complete application therefor
                submitted to the Internal Revenue Service.

            

    

    

    
      	 	
              (d)

            	
              Each
                Company ERISA Benefit Plan and Company Non-ERISA Benefit Arrangement
                and
                Employee Agreement is and has been maintained and administered in
                accordance in all material respects with the documents or instruments
                governing the plan, arrangement or agreement (or in accordance with
                

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                 

              	
                
                  the written descriptions thereof provided
                    in Schedule
                    4.25(d)
                    in
                    the case of an unwritten Company Non-ERISA Benefit Arrangement
                    or Employee
                    Agreement), except in the case of any change in applicable governing
                    laws
                    that are not yet required to be incorporated
                    into the instruments or documents governing the plan, arrangement
                    or
                    agreement, in which case the plan, arrangement or agreement has
                    in
                    operation been maintained and administered in accordance with
                    applicable
                    laws at all times on and after the effective date of such change.
                    Each
                    Company ERISA Benefit Plan that is intended to be qualified under
                    Code
                    Section 401(a) is and has at all times been so qualified in form
                    and, in
                    all material respects, in operation.

                

              

      

    

     

    
      	 	
              (e)

            	
              There
                are no facts or circumstances relating to any Company ERISA Benefit
                Plan
                or Company Non-ERISA Benefit Arrangement that could, directly or
                indirectly, subject Company or any Related Party to (i) any excise
                tax or
                other liability under Chapters 43 or 47 of Subtitle D of the Code,
                (ii)
                any penalty, tax or other liability under Code Sections 6651, 6652
                and
                6690 or (iii) any civil penalty or other liability under Section
                502(c) of
                ERISA. 

            

    

    

    
      	 	
              (f)

            	
              No
                payment made or benefit provided pursuant to any Company ERISA Benefit
                Plan, Company Non-ERISA Benefit Arrangement or Employee Agreement
                will be
                nondeductible to Company or any Related Party because of the applicability
                of Code Section 280G, nor will either Company or any Related Party
                be
                required to gross up or otherwise compensate any recipient in connection
                with the imposition of any excise tax (including any interest or
                penalties
                related thereto) pursuant to Code Section 4999. Neither Company nor
                any
                Related Party will incur any Liability in connection with severance
                benefits which become payable solely by reason of the transactions
                contemplated by this Agreement. Other than as expressly provided
                herein,
                such transactions will not result in the acceleration of accruals,
                funding, vesting or payment of any contribution or benefit under
                any
                Company ERISA Benefit Plan, Company Non-ERISA Benefit Arrangement
                or
                Employee Agreement. 

            

    

    

    
      	 	
              (g)

            	
              Other
                than as required by COBRA, Company does not provide or maintain,
                or
                provide nor is it obligated to maintain or provide, post-retirement
                or
                post-termination health, medical, life or other welfare benefits
                for
                employees or former employees of Company. No promise or other commitment
                exists that would prevent either Buyer or Company or Stockholder
                from
                amending or terminating any arrangement providing health, medical,
                life,
                or other welfare benefits in respect of any current or former employee
                of
                Company without liability therefor. Except as set forth in the applicable
                government instruments or as required by law, neither Company nor
                any
                other person has created any impediment to the amendment, termination,
                merger of or transfer of assets and liabilities with respect to any
                Company ERISA Benefit Plan, Company Non-ERISA Benefit Arrangement
                or
                Employee Agreement. 

            

    

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                (h)

              	
                All
                  contributions or benefit obligations in connection with any Company
                  ERISA
                  Benefit Plan, Company Non-ERISA Benefit Arrangement or Employee
                  Agreement
                  have been fully paid or properly accrued in accordance with GAAP
                  in the
                  Financial Statements of Company. All obligations to provide medical,
                  dental, vision, life, accidental death and dismembership or long-term
                  disability benefits pursuant to any Company ERISA Benefit Plan,
                  Company
                  Non-ERISA Benefit Arrangement or Employee Agreement are either
                  fully
                  insured (except for amounts not covered by reason of co-payments,
                  deductibles, participant contributions or similar allowances) or
                  will be
                  provided by an HMO with respect to which Company’s sole liability is to
                  pay premiums.

              

      

       

    

    
      	 	
              (i)

            	
              There
                are no pending or, to Stockholder’s knowledge, threatened audits or
                investigations by any governmental entity, claims (other than undisputed
                claims for benefits arising in the ordinary course), suits, grievances
                or
                other proceedings, and Company is unaware of any facts or circumstances
                that could give rise thereto, involving, directly or indirectly,
                any
                Company ERISA Benefit Plan, Company Non-ERISA Benefit Arrangement,
                or
                Employment Agreement. 

            

    

    

    4.26 Employees.
      

    

    
      	 	
              (a)

            	
              Except
                as set forth on Schedule
                4.26(a),
                Company (i) is not a member of any multi-employer bargaining group;
                (ii)
                has not withdrawn from any multi-employer bargaining group within
                the past
                five years, and (iii) within the past three years not defeated any
                collective bargaining representation petition, removed any existing
                collective bargaining authority, or defeated any multi-employer bargaining
                group or other third party with respect to employees.
                

            

    

    

    
      	 	
              (b)

            	
              Company
                has complied in all material respects with all applicable laws respecting
                employment and employment practices, terms and conditions of employment,
                wages and hours. 

            

    

    

    
      	 	
              (c)

            	
              There
                is no strike, labor dispute, work slowdown or work stoppage actually
                pending or threatened against Company. No collective bargaining
                representation petition or collective bargaining agreement grievance
                is
                pending or threatened against Company.

            

    

    

    
      	 	
              (d)

            	
              Except
                as set forth on Schedule
                4.26(d),
                as of the Closing Date, Company will have paid or reserved on its
                books
                any and all obligations for vacation pay, severance pay, layoff or
                termination, or other amounts that may be due any person including,
                but
                not limited to, by reason of any action taken under this Agreement;
                excluded from this representation shall be any sick days or vacation
                days
                accrued by employees during 2007 and disclosed on Schedule
                4.26(h).
                

            

    

    

    
      	 	
              (e)

            	
              Company
                is not a joint employer with any other legal entity and does not
                control
                labor relations or operations of any other legal entity.
                

            

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      

      
        	 	
                (f)

              	
                Company
                  does not employ or otherwise obtain the services of any “leased employee”
                  (as such term is defined in the Code).

              

      

       

      
        	 	
                (g)

              	
                Except
                  as disclosed on Schedule
                  4.26(g),
                  all workers associated with the business of the Company are employees
                  of
                  Company. 

              

      

      

      
        	 	
                (h)

              	
                Schedule
                  4.26(h)
                  lists the names, titles, date of employment, current base compensation
                  rates, and estimated vacation and sick time accrued for each employee
                  of
                  Company as of a recent date, and the amount of bonuses paid (or
                  due)
                  during the most recent full fiscal year to each employee.
                  

              

      

      

      
        	 	
                (i)

              	
                Except
                  as set forth on attached Schedule
                  4.26(i),
                  no Key Employee of the Company has resigned since January 1, 2007
                  and to
                  the Stockholder’s knowledge, no Key Employee plans to retire or resign
                  during the twelve-month period following the Closing Date or otherwise
                  be
                  unavailable as an employee of the Company at compensation substantially
                  similar to such employee’s present rate of compensation. For purposes
                  hereof, “Key Employee” shall mean any Company employee whose total
                  compensation during the prior year exceeds
                  $50,000.

              

      

       

    

    4.27 Compensation
      Plans.
      Except
      as disclosed on Schedule
      4.27,
      Company
      is not a party, nor is it subject, to any plan, contract or understanding
      providing for any bonuses, commissions, stock options, stock warrants, deferred
      compensation, profit sharing, annuity, or similar obligations of any kind,
      including any incentive compensation bonus, retention bonus, sale bonus, or
      similar obligations specifically relating to the consummation of the
      transactions contemplated by this Agreement. 

    

    4.28
       Insurance.
      Schedule
      4.28
      contains
      a description of the policies of general liability, theft, fire, flood,
      windstorm, earthquake, workers’ compensation, life, health, dental, disability,
      business travel accident, directors and officers, and other forms of insurance
      owned or held by Company. 

    

    4.29 Taxes.
      

    

    
      	 	
              (a)

            	
              For
                purposes of this Section 4.29, references to Company include all
                predecessors thereof or any transferee with respect thereto.
                

            

    

    

    
      	 	
              (b)

            	
              Except
                as set forth in Schedule
                4.29(b):
                

            

    

    

    
      	 	
              (i)

            	
              All
                Company Tax returns have been properly and timely filed, and Taxes
                shown
                thereon as due have been timely paid. There exists no factual basis
                or
                event which would make Buyer or Company liable for Company Taxes
                other
                than those which have been paid or accrued. As of the time of each
                filing,
                the foregoing Tax returns correctly reflected the facts regarding
                the
                

            

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      
        
          	 	
                   

                	
                  income,
                    business, assets, operations, activities, status, or other matters
                    of the
                    Company and any other information required to be shown thereon.
                    

                

        

      
        	 	
                (ii)

              	
                All
                  Company Taxes arising in, or attributable to, the pre-Closing period
                  have
                  been (or will be) paid or fully accrued or established as a deferred
                  liability on the books, records and financial statements of Company
                  (whether or not such Taxes are due and payable). The March 31,
                  2007
                  Balance Sheet fully accrues or establishes all liability for Company
                  Taxes
                  as of the date thereof. 

              

      

       

      
        	 	
                (iii)

              	
                There
                  is no (nor has there been any requirement for an) agreement, waiver
                  or
                  consent providing for an extension of time with respect to the
                  assessment
                  or collection of, or statute of limitations regarding, any Taxes
                  or the
                  filing of any Tax returns and no power of attorney granted by or
                  with
                  respect to Company with respect to any Tax matter is currently
                  in force.
                  

              

      

       

    

    
      	 	
              (iv)

            	
              There
                is no pending or, to Stockholder’s knowledge, threatened audit,
                examination or investigation with respect to any Company Tax returns
                or
                Company Taxes or any Company Tax matters, nor has any written or,
                to
                Stockholder’s knowledge, other notice of the initiation thereof been
                received by Company; there is (and there has been) no action, suit,
                proceeding, claim, demand, deficiency or additional assessment pending,
                or
                threatened with respect to any Company Tax returns or any Company
                Taxes.
                

            

    

    

    
      	 	
              (v)

            	
              There
                are no lien or encumbrances, on any asset of Company arising out
                of,
                connected with, or related to Taxes (other than for Taxes that are
                not
                delinquent). 

            

    

    

    
      	 	
              (vi)

            	
              Other
                than elections made on the face of Tax returns provided to Buyer,
                no
                agreement, consent, or election for foreign, federal, state or local
                Tax
                purposes which would affect or be binding on Company after the Closing
                has
                been filed or entered into with respect to Company or any of its
                assets or
                operations. 

            

    

    

    
      	 	
              (vii)

            	
              Company
                is not a party to, bound by, or under any obligation (or potential
                obligation) under any Tax Agreement. For purposes of this Agreement,
“Tax
                Agreement” means any sharing, allocation, indemnity or other agreement or
                arrangement (written or unwritten) relating to Taxes (other than
                this
                Agreement).

            

    

    

    
      	 	
              (viii)

            	
              Company
                is not a party to any agreement relating to a foreign sales corporation
                within the meaning of Section 922 of the Code, or a domestic
                

            

    

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    
      
        
          	 	
                   

                	
                  international
                    sales corporation within the meaning of Section 991 of the Code.
                    

                

        

      
        	 	
                (ix)

              	
                Company
                  is not and has never been subject to Section 999 of the Code. Company
                  is
                  not (and has not been) a United States real property holding corporation
                  within the meaning of Section 897(c)(2) of the Code;
                  

              

      

      

      
        	 	
                (x)

              	
                Company
                  is not nor has it been a partner in any partnership or any entity
                  treated
                  as a partnership for Federal income tax purposes.
                  

              

      

      

      
        	 	
                (xi)

              	
                No
                  Tax years (or periods) with respect to the Federal income Tax liabilities
                  of Company and its assets and operations have been
                  extended.

              

      

      

      
        	 	
                (xii)

              	
                Company
                  has filed all necessary clearance certificates or similar documents
                  which
                  may be required by any governmental entity upon withdrawal from
                  doing
                  business in such governmental
                  jurisdiction.

              

      

    
      	 	
              (xiii)

            	
              Company
                has withheld and paid all Taxes required to have been withheld and
                paid in
                connection with amounts paid or owing to any employee, independent
                contractor, creditor, stockholder, or third party.
                

            

    

    

    
      	 	
              (xiv)

            	
              Company
                is unaware of any facts or circumstances which would make it likely
                that
                any tax authority will assess any additional Taxes for any period
                for
                which Tax returns have been filed. 

            

    

    

    
      	 	
              (c)

            	
              There
                have been delivered to Buyer copies of all Company Tax returns for
                the
                last three years and all open years and all revenue agent (or other)
                reports, findings, proposed assessments, deficiency (or other) notices,
                agreements (including any Tax Agreement), elections, claims or demands
                and
                all other items relating to Taxes. 

            

    

    

    4.30 Bank
      Accounts.
      Schedule
      4.30
      sets
      forth a true and complete list of all of the (a) names and locations of all
      banks, trust companies, savings and loan associations, brokerage firms, and
      other financial institutions at which Company maintains accounts of any nature,
      lock boxes, or safety deposit boxes, and the names of all persons authorized
      to
      draw thereon or make withdrawals therefrom and (b) the account number for each
      account identified in clause (a). 

    

    4.31 Affiliate
      Transactions.
      Except
      as set forth in Schedule
      4.31,
      to
      Stockholder’s knowledge, no director or officer of Company and no person related
      to any of them has any interest in (a) any asset used in connection with or
      pertaining to the Company, or (b) any creditor, supplier, customer,
      manufacturer, distributor or reseller of products of Company; provided, however,
      that (i) no such director or officer or other person shall be deemed to have
      such an interest solely by virtue of the ownership of less than 1% of the
      outstanding voting stock or debt securities of any publicly held company, the
      stock or debt securities of which are traded on a recognized stock exchange
      or
      quoted on the National Association of Securities Dealers 

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

Automated Quotation System, and (ii) no such director
      or officer or other
      person shall be deemed to have such an interest solely by virtue of the
      ownership by a partnership in which he is a partner of less than 5% of the
      outstanding voting stock or debt securities of any privately-held company.
      
       

      4.32 Powers
        of Attorney; Guarantees, Suretyships.
        

      

      (a) Except
        as
        disclosed on Schedule
        4.32(a),
        neither
        Stockholder nor Company has granted, and there are not outstanding, any general
        or special powers of attorney or comparable delegations of authority, which
        would be binding upon Buyer or Company, or any of Company’s assets, after the
        Closing. 

      

      (b) Except
        (i) as set forth in Schedule
        4.32(b),
        (ii) as
        may be contained in instruments associated with Company bank debt, Lease
        Agreements, equipment leases and customer Contracts, and (iii) for endorsements
        for collections of deposits in the ordinary course of business, Company has
        no
        liability as guarantor, surety, co-signer, endorser, co-maker, indemnitor,
        or obligor in respect of the obligation, indebtedness or potential liability
        of
        any person. 

    

    

    4.33 No
      Brokerage or Other Fees.
      Except
      as set forth on Schedule
      4.33,
      no
      broker or finder has acted for Company in connection with this Agreement or
      the
      transactions contemplated hereby, and no person is entitled to any brokerage
      or
      finder fee or commission from Buyer or Company in respect to this Agreement
      by
      virtue of any action by Company. The fees and expenses of any broker or finder
      acting for the Company in this transaction shall be paid in full by the
      Stockholder at or prior to the Closing.

    

    4.34 Disclosure.
      No
      representation or warranty by Stockholder or Company in this Agreement and
      no
      statement or information contained in the Financial Statements, the Exhibits
      and
      the Schedules attached hereto, when read together and taken as a whole, contains
      any untrue statement of material fact or omits to state any material fact
      necessary in order to make the statements herein or therein, in light of the
      circumstances under which they were made, not false or misleading. 

    

    5. Buyer’s
      Representations and Warranties.
      Buyer
      represents and warrants and agrees with the Stockholder as follows:

    

    (a) Organization
      and Authority.
      Buyer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Delaware. Buyer has all requisite power to own its property
      and to carry on its business as presently conducted, and Buyer has complete
      and
      unrestricted power and authority to perform this Agreement and the transactions
      contemplated hereby.

    

    (b) Binding
      Effect.
      This
      Agreement and all other agreements, documents and instruments executed by Buyer
      in connection herewith are and will be the valid and binding obligations of
      Buyer, enforceable against Buyer in accordance with their respective terms,
      

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    and
      the
      execution, delivery and performance of this Agreement, and such other
      agreements, documents and instruments executed by Buyer, and the transactions
      contemplated hereby and thereby, have been duly and validly authorized and
      approved by Buyer’s Board of Directors. 

     

    (c) Non-Contravention.
      The
      execution and delivery of this Agreement and all other agreements, documents
      and
      instruments to be executed in connection herewith, and the performance of the
      transactions contemplated hereby and thereby, do not, and will not, constitute
      a
      violation of, be a default under, give rise to any right of termination,
      cancellation or acceleration under, or conflict with the terms of, the
      Certificate of Incorporation or By-laws of Buyer, each as amended to date,
      or
      any contract, lease, indenture, agreement, order, judgment or decree to which
      Buyer is a party or by which it is bound, and does not, and will not, violate
      or
      constitute a default under any statute, rule, regulation, order or ordinance
      of
      any governmental, judicial or arbitrary body. 

    

    (d) Litigation.
      There
      is no suit, action or legal, administrative, arbitration or other proceedings
      of
      any nature pending, or to the knowledge of Buyer, threatened, against
Buyer which materially adversely affects Buyer, or which might materially
      and adversely affect the legality or validity of this Agreement, or the
      consummation of the transactions contemplated hereby. 

    

    (e) Disclosure.
      No
      representation or warranty made by Buyer in this Agreement or in any statement
      or certificate furnished or to be furnished to the Company or the Stockholder
      pursuant hereto or in connection herewith, contains or shall contain any untrue
      statement of material fact or omits or shall omit to state a material fact
      necessary to make the statements contained therein not misleading.

    

    (f) Brokerage.
      Buyer
      has not engaged the services of any broker, investment banker, financial
      advisor, finder, or other person or entity entitled to be paid a commission,
      fee
      or other compensation in connection with the transactions provided for in this
      Agreement.

    

    6. Conditions
      to Buyer’s Obligations.
      The
      obligations of Buyer to consummate the transactions contemplated by this
      Agreement are subject to the satisfaction (unless waived by Buyer) on or prior
      to the date hereof of each of the following conditions:

    

    (a) Representations
      and Warranties.
      All
      representations and warranties of the Stockholder set forth in this Agreement
      and in any statement, certificate or other instrument delivered to Buyer
      pursuant hereto or in connection herewith, shall have been true and correct
      in
      all material respects on and as of the date of this Agreement, and shall be
      true
      and correct in all material respects on and as of the Closing Date.

    

    (b) No
      Adverse Change.
      Except
      as set forth on Schedule
      4.11,
      since
      December 31, 2006, there shall not have been any material damage to or loss
      or destruction of any of the Company’s fixed assets, or any Material Adverse
      Effect on the Company, or 

    
 

    
      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

    

    the
      imposition of any laws, rules or regulations which could have a Material Adverse
      Effect on the Company, or any suit or action brought against the Company the
      outcome of which could have a Material Adverse Effect on the Company, its
      condition (financial or otherwise) or operations of the Company’s
      assets.

     

    (c) Compliance
      with Agreement.
      The
      Stockholder shall have performed and complied with all of its obligations under
      this Agreement which are to be performed or complied with by it on or prior
      to
      the date hereof.

    

    (d) Proceedings
      and Instruments Satisfactory.
      All
      proceedings, corporate or other, to be taken by the Stockholder, or by the
      Company or on its behalf, in connection with the transactions contemplated
      by
      this Agreement, and all documents incident thereto, shall be satisfactory in
      all
      respects to Buyer.

    

    (e) No
      Litigation.
      No
      investigation, suit, action or other proceeding shall be threatened or pending
      against the Company or the Stockholder before any court or Governmental Entity
      which seeks to restrain or prohibit or obtain damages or other relief
      in connection with the performance of this Agreement or the
      consummation of the transactions contemplated hereby.

    

    (f) FCC
      Compliance and Approval.
      Stockholder and Company shall be in compliance in all respects with the
      Communications Act of 1934, as amended (the “Communications Act”) and with all
      applicable Federal Communications Commission (“FCC”) rules, regulations and
      policies, and shall have complied with all FCC eligibility and basic
      qualifications requirements to effectuate the transactions contemplated
      hereunder, including, but not limited to, the non-U.S. ownership limits of
      Section 310(b) of the Communications Act and Section 5301 of the Anti-Drug
      Abuse
      Act of 1988, 21 U.S.C. Section 862. No later than June 29, 2007, the FCC shall
      have consented to the transfer of control over Company to Buyer as evidenced
      by
      the FCC’s or the FCC International Bureau’s Grant of the Transfer Application
      (as defined and described in Section 13 hereof) (“FCC Approval”).

    

    (g) Non-Competition
      Agreement.
      The
      Stockholder shall have entered into a non-competition agreement with Company,
      to
      be effective from and after Closing, in the form of Exhibit
      B
      (the
“Non-Competition Agreement”). 

    

    (h) Deliveries.
      The
      Stockholder shall have delivered (or cause to be delivered) on or prior to
      the
      Closing Date, the following:

    

    (i) stock
      certificates representing the Shares, duly endorsed for transfer by the
      Stockholder to Buyer;

    

    (ii) the
      Non-Competition Agreement duly executed by the Stockholder;

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    
 

    
      (iii) a
        certificate of the Secretary of the Company as to the Company’s charter
        documents, by-laws and incumbency and signatures of the Company’s
        officers;

      

      (iv) [INTENTIONALLY
        OMITTED.]

       

      (v) a
        copy of
        the charter documents of the Company, with all amendments thereto, as certified
        as of a recent date by the Secretary of State of the State of
        Delaware;

      

      (vi) a
        certificate of the legal existence and corporate good standing of the Company
        issued as of a recent date by the Secretary of State of the State of
        Delaware;

      

      (vii) certificate(s)
        of good standing to do business in all foreign jurisdictions set forth on
        Schedule
        4.5(c),
        issued
        as of a recent dated by the Secretary of State of such foreign
        jurisdiction;

       

    

    (viii) a
      certificate of the tax good standing of the Company issued as of a recent date
      by the applicable tax authority in the State of Delaware and any other foreign
      jurisdiction where the Company files any Tax return; 

    

    (ix) the
      written resignations of the directors and officers of the Company from their
      respective positions with the Company;

    

    (x) the
      stock
      books, stock ledgers, minute books and corporate seal of the Company (all other
      records of the Company being located in the corporate premises, or otherwise,
      of
      the Company); 

    

    (xi) documents
      evidencing the discharge or release of any security interests, liens or
      encumbrances on the assets and properties of the Company, including, without
      limitation, UCC termination statements; and

    

    (xii) such
      other documents, instruments and certificates not inconsistent with the
      provisions of this Agreement, executed by the Company and/or the Stockholder,
      as
      Buyer shall reasonably require to effectuate the purposes and intent of this
      Agreement. 

    

    (i) Financing.
      By 5:00
      p.m. EDT, May 21, 2007, the
      Buyer
      shall have obtained all of the financing it needs in order to consummate the
      transactions contemplated hereby and fund its working capital requirements,
      in
      each case on terms and conditions satisfactory in all reasonable respects to
      the
      Buyer. (Buyer hereby agrees to notify the Stockholder promptly of the
      satisfaction of this condition.)

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    7. Conditions
      to the Stockholder’s Obligations.
      The
      obligations of the Stockholder to consummate the transactions contemplated
      by
      this Agreement are subject to the satisfaction (unless waived by the
Stockholder)
      on or
      prior to the date hereof of each of the following conditions:

    

    (a) Representations
      and Warranties.
      All
      representations and warranties of Buyer set forth in this Agreement and in
      any
      statement, certificate or other instrument delivered to the Stockholder pursuant
      hereto or in connection herewith, shall have been true and correct in
      all
      material respects on and as of the date of this Agreement, and shall be true
      and
      correct in all material respects on and as of the Closing Date.

    

    (b) Compliance
      with Agreement.
      Buyer
      shall have performed and complied with all of the obligations under this
      Agreement which are to be performed or complied with by it on or prior to the
      date hereof.

    

    (c) Proceedings
      and Instruments Satisfactory.
      All
      proceedings, corporate or other, to be taken by Buyer or on behalf of Buyer
      in
      connection with the transactions contemplated by this Agreement, and all
      documents incident thereto, shall be satisfactory in all material respects
      to
      the Company and the Stockholder.

    (d) No
      Litigation.
      No
      investigation, suit, action or other proceeding shall be threatened or pending
      against Buyer before any court or governmental agency which seeks to restrain
      or
      prohibit or obtain damages or other relief in connection with the performance
      of
      this Agreement or the consummation of the transactions contemplated
      hereby.

    

    (e) Deliveries.
      Buyer
      shall have delivered (or cause to be delivered) to the Stockholder on or prior
      to the Closing Date the following: 

    

    (i) the
      Closing Payment due under Section 2(a);

    

    (ii) a
      certificate of the Secretary of Buyer as to (A) the votes of Buyer’s Board of
      Directors authorizing and approving the execution, delivery and performance
      of
      this Agreement and the consummation of the transactions contemplated hereby,
      and
      (B) the incumbency and signatures of Buyer’s officers;

    

    (iii) a
      certificate of the legal existence and corporate good standing of Buyer issued
      as of a recent date by the Secretary of State of the State of Delaware;
      and

    

    (iv) such
      other documents, instruments and certificates not inconsistent with the
      provisions of this Agreement, executed by Buyer, as the Company and the
      Stockholder shall reasonably require to effectuate the purposes and intent
      of
      this Agreement.

    

    (f) Release
      of Imperium Encumbrances.
      The
      Stockholder shall have obtained from Imperium (as defined in the Schedules)
      the
      discharge or release of any security interests, liens 

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    or
      encumbrances, including any pledge obligations, respecting the Shares on terms
      and conditions that would not, in the reasonable good faith judgment of legal
      counsel to the Stockholder, have a material adverse effect on the business,
      financial condition, operations, assets and liability of the Stockholder, taken
      as a whole. The Stockholder hereby agrees to use best efforts to obtain such
      discharge or release as promptly as practicable, and shall deliver evidence
      of
      such efforts to Buyer as Buyer may request. 
      

      8. Survival
        of Representations.

      

      (a) Survival
        of Representations.
        All
        representations, warranties and agreements made by any party in this Agreement
        or pursuant hereto shall survive the date hereof for a period of three years,
        excluding representations and warranties relating to
        Sections
        4.7, 4.24, 4.25, and 4.29, which shall survive until
        the
        expiration of the applicable statutes of limitations with respect to such
        representation or warranty, notwithstanding any investigation by any party
        made
        either before or after the date hereof.

      

      (b) Statements
        as Representations.
        All
        statements contained in any certificate, schedule, list, document or other
        writing delivered pursuant hereto or in connection with the transactions
        contemplated hereby shall be deemed representations and warranties within
        the
        meaning of Section 8(a). 

    

    

    9. Indemnification
      by the Stockholder.
      

    

    (a) Indemnity.
      The
      Stockholder shall indemnify, defend and hold Buyer and the Company harmless
      from
      and against any and all claims, liabilities, obligations, losses, damages,
      costs
      or expenses (including reasonable legal fees, costs and expenses arising from
      or
      in connection with any action, suit, proceeding or claim incident to any of
      the
      foregoing) (collectively, “Losses”) suffered by Buyer or the Company resulting
      from or which arise out of (i) any acts or omissions of the Company or the
      Stockholder arising or occurring prior to the Closing Date with respect to
      the
      Company’s business, including, without limitation, any Losses related to the
      Company’s breach of warranty with respect to the Company’s products or services
      produced or performed prior to the Closing, or any product liability claim
      or
      other liability arising out of defective products or services produced or
      performed by the Company prior to Closing; (ii) any breach of any representation
      or warranty, covenant, agreement or obligation on the part of the Stockholder
      under this Agreement, any Schedule or Exhibit to this Agreement or under any
      agreement executed in connection therewith, or from any misrepresentation in
      or
      omission from any certificate or other instrument furnished to Buyer pursuant
      hereto or in connection herewith; (iii) any facts or circumstances relating
      to
      the Company existing or arising on or prior to the Closing Date known to the
      Stockholder, including, without limitation, tax claims, environmental claims,
      assessments or liabilities relating to tax periods ending on or prior to the
      Closing, liabilities under or in respect of any litigation described on
Schedule
      4.20
      and
      liabilities arising from the elimination from the Company’s balance sheet of any
      notes or other payables to the Stockholder or former stockholders of the
      Company; (iv) any failure of the Company to comply as of the Closing Date with
      any employee benefit plan laws, rules, regulations or 

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    orders,
      including, without limitation, the so called GUST amendments; (v) any failure
      of
      the Company to comply with any applicable bulk sales transfer laws; and (vi)
      any
      brokers’ or finders’ fees or compensation in connection with the transactions
      provided for by this Agreement by any person or entity claiming a right to
      same
      because of having been engaged by or having served the Stockholder or the
      Company. Notwithstanding the foregoing, the Stockholder
      shall not be liable for Permitted Liabilities included on the Closing Balance
      Sheet in accordance with the provisions of Section 2.

    

    (b) Payment
      of Losses.
      Subject
      to the provisions of Section 9(c), Buyer shall be reimbursed by the Stockholder
      on demand by Buyer to the Stockholder for any Losses suffered by Buyer or the
      Company with respect to any liability or claim to which the indemnity set forth
      in Section 9(a) relates. In addition, provided any liability or claim to which
      the indemnity set forth in Section 9(a) relates is acknowledged by the
      Stockholder or is adjudicated or arbitrated as a liability or claim to which
      the
      indemnity set forth in Section 9(a) relates through the mediation and
      arbitration provisions set forth in Section 14(h), Buyer shall have the right
      to
      set off and deduct the amount of any payment made by it or Loss suffered by
      it
      with respect to such liability or claim to which the indemnity set forth in
      Section 9(a) relates against the amount of any payment obligation of Buyer
      to
      the Stockholder
      under this Agreement. In
      addition, amount payable under this Section 9 shall be reduced by and to the
      extent that the Company or Buyer receives proceeds under insurance policies
      specifically as a result of, and in compensation for, the subject of an
      indemnification liability or claim.

    

    (c) Third-Party
      Claims.
      Should
      any claim be made against Buyer or the Company by a person not a party to this
      Agreement with respect to any matter to which the indemnity set forth in Section
      9(a) relates (a “Third-Party Claim”), then Buyer shall promptly give the
      Stockholder written notice of any such Third-Party Claim (including all
      available information regarding the details of the Third-Party Claim). If the
      Stockholder acknowledges to Buyer in writing that such Third-Party Claim is
      subject to the indemnity set forth in Section 9(a), the Stockholder shall have
      the right to defend or settle any such Third-Party Claim, at its sole expense,
      on its own behalf and with counsel of its own choosing, which counsel shall
      be
      reasonably satisfactory to Buyer. In such defense or settlement of any
      Third-Party Claim, Buyer shall cooperate with and assist the Stockholder as
      is
      reasonable and may participate therein with its own counsel at its sole expense,
      and Buyer’s written consent shall be a requirement to any settlement and
      disposition thereof, which consent shall not be unreasonably withheld or
      delayed, provided that in any such settlement or disposition, Buyer shall not
      be
      liable for any amounts under such settlement or disposition and such settlement
      or disposition shall contain a complete release of Buyer from any liability.
      Failure by Buyer to give notice within a reasonable period of time shall not
      constitute a defense, in whole or in part, to any claim for indemnification
      by
      Buyer, except only to the extent that such failure by Buyer shall result in
      a
      material prejudice to the Company and the Stockholder. If the Stockholder does
      not notify Buyer within 10 days after receipt of Buyer’s written notice of a
      Third-Party Claim that the Stockholder intends to undertake the defense thereof,
      and that such claim is subject to the indemnity set forth in Section 9(a),
      or if
      after undertaking such defense the Stockholder fails to pursue such

    
 

    
      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

    

    

    defense
      in a prudent manner, then Buyer shall have the right to contest, settle or
      compromise such Third-Party Claim, and the Stockholder shall indemnify Buyer
      for
      the full amount of all Losses paid or suffered by Buyer in respect thereof.
      So
      long as the Stockholder has given Buyer timely notice that the Stockholder
      will
      undertake the defense of the Third-Party Claim,
      and is defending such Third-Party Claim in good faith, Buyer shall not pay
      or
      settle any such Third-Party Claim without the written consent of the
      Stockholder. 

     

    (d) Cumulative
      Remedies.
      Except
      as expressly provided herein, the remedies provided to Buyer and the Company
      in
      this Section 9 shall be cumulative and shall not preclude the assertion by
      Buyer
      of any other rights or the seeking of any other remedies against the
      Stockholder.

    

    (e) Limitations
      on Indemnification.

    

    (i) The
      Stockholder
      shall
      not be required to indemnify Buyer or the Company with respect to any Losses
      resulting from or arising out of matters described in Section 9(a), unless
      and
      until the aggregate amount of all Losses exceeds $25,000 (the
      “Threshold Amount”), in which case the Stockholder shall be required to
      indemnify Buyer or the Company for the entire amount of which such Losses from
      the first dollar. Losses thereafter may be asserted regardless of
      amount.

    

    (ii) The
      Stockholder’s maximum liability to Buyer or the Company under this Section 9
      shall not exceed $1,000,000. 

    

    10. Indemnification
      by Buyer.

    

    (a) Indemnity.
      Buyer
      shall indemnify, defend and hold the Stockholder harmless from and against
      any
      and all Losses suffered by the Stockholder resulting from (i) any breach of
      any
      representation or warranty, covenant, agreement or obligation on the part of
      Buyer under this Agreement, any schedule to this Agreement or under any
      agreement executed in connection herewith; (ii) any misrepresentation in or
      omission from any certificate or other instrument furnished to the Stockholder
      pursuant hereto or in connection herewith; and (iii) any claims for brokers’ or
      finders’ fees or compensation in connection with the transactions provided for
      by this Agreement by any person, firm, corporation or other entity claiming
      a
      right to same because of having been engaged by or having served
      Buyer.

    

    (b) Payment
      of Losses.
      Subject
      to the provisions of Section 10(c), the Stockholder shall be reimbursed by
      Buyer
      on demand for any Loss suffered by the Stockholder with respect to any liability
      or claim to which the indemnity set forth in Section 10(a) relates.

    

    (c) Third-Party
      Claims.
      Should
      any Third-Party Claim be made against the Stockholder with respect to any matter
      to which the indemnity set forth in Section 10(a) 

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    relates,
      then the Stockholder
      shall
      promptly give Buyer written notice of any such Third-Party Claim and Buyer
      shall
      have the right to defend or settle any such Third-Party Claim, at its sole
      expense, on its own behalf and with counsel of its own choosing, which counsel
      shall be reasonably satisfactory to the Stockholder.
      The
      Stockholder agrees that Posternak Blankstein
      & Lund LLP is satisfactory. In such defense or settlement of any claim, the
      Stockholder shall cooperate with and assist Buyer to the maximum extent
      reasonably possible and may participate therein with its own counsel at its
      own
      expense, and the Stockholder’s
      written
      consent shall be a requirement to any settlement and disposition thereof, which
      consent shall not be unreasonably withheld or delayed. Failure by the
Stockholder
      to give
      notice within a reasonable period of time shall not constitute a defense, in
      whole or in part, to any claim for indemnification by the Stockholder, except
      only to the extent that such failure by the Stockholder
      shall
      result in a material prejudice to Buyer. If Buyer does not notify the
Stockholder
      within
      10 days after receipt of the Stockholder’s
      written
      notice of a Third-Party Claim that Buyer intends to undertake the defense
      thereof, and that such claim is subject to the indemnity set forth in Section
      10(a), or if after undertaking such defense Buyer fails to pursue such defense
      in a prudent manner, then the Stockholder
      shall
      have the right to contest, settle or compromise the claim and Buyer shall
      indemnify the Stockholder for the full amount of all Losses paid or suffered
      by
      the Stockholder
      in respect thereof. Notwithstanding the foregoing, so long as Buyer is
      contesting any such Third Party Claim in good faith, the Stockholder shall
      not
      have the right to pay or settle any such claim without the prior written consent
      of Buyer.

    

    (d) Cumulative
      Remedies.
      Except
      as expressly provided herein, the remedies provided to the Stockholder in this
      Section 10 shall be cumulative and shall not preclude the assertion by the
      Stockholder of any other rights or the seeking of any other remedies against
      Buyer. 

    

    11. Press
      Releases.
      The
      Stockholder agrees that it will not release, and shall not permit any person
      or
      entity to release, any press releases or other similar announcements without
      Buyer’s prior approval thereof, it being acknowledged by Buyer that the
      Stockholder is a publicly-traded company. 

    

    12. Conduct
      of the Business for Buyer’s Account After June 15, 2007.
      Notwithstanding
      anything in this Agreement to the contrary, if for any reason whatsoever (other
      than the Buyer’s failure to comply with its obligations hereunder), the Closing
      shall not have taken place by June 15, 2007, the Buyer agrees that upon any
      subsequent Closing in accordance with the terms hereof, the Purchase Price,
      in
      addition to any adjustments made in accordance with Section 2, shall be adjusted
      upward by an amount equal to the 60% of the aggregate actual operating expenses
      of the Company (included such operating expenses as may be paid or otherwise
      covered directly by Stockholder) for the period between June 16, 2007 and
      Closing, as mutually determined in good faith by the parties and assuming
      operations in the ordinary course of business. Buyer and Stockholder hereby
      agree that Paul F. Newcomb and Kevin McGrath, as promptly as practicable after
      execution and delivery hereof, shall confer regarding an interim budget and
      operating plan for the period commencing May 7, 2007 and ending July 3,
      2007.

     

     

    
 

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	 	
              13.

            	
              Covenants
                and Agreements of the Stockholder and Buyer Regarding Taxation, FCC,
                Newcomb’s Knowledge.
                

            

    

     

    
      
        	 	
                (a)

              	
                Buyer
                  and the Stockholder agree that the Company’s 2007 tax year shall be
                  treated as two (2) tax years, the first of which ends on the Closing
                  Date
                  and the second of which begins on the day after the Closing Date
                  and ends
                  on December 31, 2007. The Stockholder agrees that it will cause
                  the Tax
                  return for the period from January 1, 2007 to the Closing Date
                  to be
                  prepared and provided to Buyer, at the Stockholder’s sole expense, for
                  review and filing by Buyer in a timely manner consistent with the
                  filing
                  requirements under the Internal Revenue Code. Buyer agrees to provide
                  to
                  the Stockholder and its agents all information available from the
                  books of
                  the Company, as reasonably requested by the Stockholder, for the
                  preparation of said return.

              

    

    

    
      	 	
              (b)

            	
              Within
                five (5) business days following the date of execution hereof, the
                Stockholder and Buyer shall jointly submit to the FCC completed FCC
                Form
                312 Application (the “Transfer Application”) seeking FCC consent to the
                transfer of control over Company to Buyer, and for the FCC or the
                FCC
                International Bureau to Grant the Transfer Application. For purposes
                of
                this Agreement, “Grant” means an action or decision of the FCC or the FCC
                International Bureau pursuant to delegated authority that is made
                public
                by the FCC either pursuant to a written decision or public notice.
                As
                provided in Section 6 above, the Closing shall be conditioned on
                the
                parties’ having obtained FCC Approval by the Drop Dead
                Date.

            

    

     

    
      	 	
              (c)

            	
              The
                Buyer acknowledges that Paul F. Newcomb has acted as an officer of
                the
                Company, and in such capacity has overseen certain operations and affairs
                of the Company. Accordingly, the Buyer warrants, represents and agrees
                that Paul F. Newcomb has no knowledge of any fact or circumstance
                which
                presently, or solely with the passage of time, could reasonably be
                expected to (a) result in a default by the Stockholder of any of
                the
                warranties and representations contained in this Agreement (a “Warranty
                Default”), or (b) cause a failure of a condition precedent of Buyer’s
                obligations under this Agreement or give rise to any other circumstance
                entitling Buyer to terminate or avoid this Agreement (either, a “Failure
                of Buyer’s Condition Precedent”), or (c) give rise to an indemnity claim
                by Buyer against the Stockholder pursuant to the provisons of Section
                9 of
                this Agreement or otherwise (a “Buyer Indemnity Claim”). To the extent
                that Paul F. Newcomb is, as of the date hereof, aware of a fact or
                circumstance which could reasonably be expected to lead to a Warranty
                Default, a Failure of Buyer’s Condition Precedent, or a Buyer Indemnity
                Claim, then such shall not be grounds for the Buyer to terminate
                or avoid
                this Agreement, and the Buyer shall have no rights against the Stockholder
                on account of such Warranty Default, Failure of Buyer’s Condition
                Precedent or Buyer Indemnity Claim. Further, to the extent that Paul
                F.
                Newcomb, prior to the Closing, acquires knowledge of any state of
                facts
                which could reasonably be expected give rise to a Warranty Default,
                a
                Failure of Buyer’s Condition Precedent, or a Buyer Indemnity Claim, the
                Buyer 

            

    

     

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                 

              	
                shall
                  give immediate written notice of the same to the Stockholder, and
                  if
                  thereafter the Buyer elects to waive, as applicable, any Failure
                  of
                  Buyer’s Condition Precedent relating thereto and close and consummate
                  the
                  transactions contemplated by this Agreement, the Buyer shall have
                  no
                  rights against the Stockholder on account of such particular Warranty
                  Default or Buyer Indemnity
                  Claim.

              

      

    

     

    14. Miscellaneous
      Provisions.
      

    

    (a) Expenses.
      Each
      party shall be responsible for all of its fees and expenses incurred by it
      in
      connection with the execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby. The Stockholder shall
      be
      responsible for all fees and expenses of the Company incurred prior to the
      Closing in connection with the execution and delivery of this Agreement and
      the
      consummation of the transactions contemplated hereby, subject to Section
      12.

    

    (b) Assignability;
      Binding Effect.
      This
      Agreement may not be assigned by any of the parties hereto without the prior
      written consent of the others. Subject to the foregoing, this Agreement shall
      be
      binding upon, and inure to the benefit of, the parties hereto and their
      respective heirs, executors, administrators, successors and assigns.

    

    (c) Notice.
      All
      notices, payments, demands and requests required or permitted hereunder shall
      be
      in writing and shall be deemed duly given if personally delivered or sent by
      registered or certified mail, postage prepaid, return receipt requested, or
      by
      Federal Express or other recognized overnight express couriers, or by fax and
      followed by hard copy, to the parties hereto at the following addresses:

    

    IF
      TO THE
      STOCKHOLDER:                       
Digital
      Angel Corporation

    490
      Villaume Ave.

    South
      St.
      Paul, MN

    

    

    

    WITH
      A
      COPY
      TO:                                    
Patricia
      Petersen, Esq.

    Digital
      Angel Corporation

    1690
      S.
      Congress Ave., Suite 201

    Delray
      Beach, FL 33445

    Fax:
      561-276-0977

    

    IF
      TO
      BUYER:                                             
Newcomb
      Communications, Inc.

    1465
      Hooksett Road, Unit 458

    Hooksett,
      NH 03106

     

    Attn:
      Paul Newcomb,

    President
      

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    Fax:
      ___________________________

    

    

    WITH
      A
      COPY
      TO:                                    
Kevin
      J.
      O’Connell, Esq.

    Posternak
      Blankstein & Lund LLP

    The
      Prudential Tower

    800
      Boylston Street

    Boston,
      MA 02199-8004

    Fax:
      (617) 367-2315

    

    Any
      party
      hereto may change its address for notice by giving notice of any such change
      of
      address in the manner set forth above. 

    

    (d) Governing
      Law.
      This
      Agreement and all issues related to the subject matter hereof shall be governed
      by and construed in accordance with the laws of the State of
      Delaware.

    

    (e) Consent
      to Jurisdiction.
      The
      parties hereto consent to the jurisdiction of the courts of the Superior Court,
      Suffolk County, Boston, Massachusetts or the United States District Court for
      the District of Massachusetts, sitting in Boston, Massachusetts, as well as
      the
      jurisdiction of all courts from which an appeal may be taken from such courts,
      for the purposes of any suit, action or other proceeding relating to this
      Agreement or with respect to any transactions contemplated hereby, and expressly
      waive any and all objections the parties hereto may have as to the venue of
      such
      courts to settle or adjudicate any claim or controversy arising
      hereunder.

    

    (f) Entire Agreement;
      Severability.
      This
      Agreement, together with the Schedules and Exhibits and the Non-Competition
      Agreement, sets forth the entire agreement and understanding among the parties
      as to the subject matter hereof and merges and supersedes all prior discussions,
      agreements and understandings with respect hereto. This Agreement and said
      Schedules and Exhibits may not be amended, changed or modified except by a
      written instrument duly executed by the parties hereto. The
      provisions of this Agreement will be deemed severable, and if any provision
      of
      this Agreement is held illegal, void or invalid under applicable law, such
      provision may be changed to the extent reasonably necessary to make the
      provision legal, valid and binding. If any provision of this Agreement is held
      illegal, void or invalid in its entirety, the remaining provisions of this
      Agreement will not be affected but will remain binding in accordance with their
      terms. Buyer may, nevertheless, declare this Agreement to be null and void
      if
      it, in its sole discretion, deems the avoidance or invalidity of any provision
      hereunder to adversely affect its interests.

    

    (g) No
      Waiver.
      No
      waiver of any breach or default hereunder shall be considered valid unless
      in
      writing, and no such waiver shall be deemed a waiver of any subsequent breach
      or
      default and of the same or similar nature. 

     

    
 

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    (h) Mediation
      and Arbitration.
      Except
      as otherwise provided in the Non-Competition Agreement, or as otherwise agreed
      by the parties, any controversy, dispute or claim between the parties arising
      out of, related to or in connection with this Agreement or the performance
      or
      breach hereof shall be submitted to and settled as follows: 

     

    (i) All
      controversies or claims arising out of or relating to this Agreement shall
      be
      settled in the first instance by non-binding mediation under the Commercial
      Mediation Rules of the American Arbitration Association (“AAA”) in Boston,
      Massachusetts as such rules are in effect on the date of delivery of demand
      for
      mediation. The parties agree to use mutually acceptable professional mediation
      services. Each party shall pay its own expenses, including legal fees, and
      agree
      to share equally any other fees associated with the mediation, including the
      cost of the mediator. Unless a settlement is mutually agreed to in writing,
      the
      participants shall not be bound by the discussions or outcome of the mediation.
      

    

    (ii) If
      the
      dispute cannot be settled through mediation within 30 days of the demand for
      same, the dispute shall be submitted to arbitration conducted by the AAA in
      Boston, Massachusetts, in accordance with the Commercial Arbitration Rules
      of
      the AAA as then in effect; provided
      that the
      arbitration shall be by a single arbitrator mutually selected by Buyer on the
      one hand, and the Stockholder on the other hand, and if the parties do not
      agree
      within 20 days after the date of notification
      of a request for such arbitration made by either party, the selection of the
      single arbitrator shall be made by the AAA in accordance with said rules. All
      discovery will be completed, and the arbitration will commence, within 30 days
      after appointment of the arbitrator. Unless the arbitrator finds that
      exceptional circumstances justify delay, the hearing will be completed, and
      an
      award will be rendered in writing, within 15 days after commencement of the
      hearing. In addition to, and not in substitution for any and all other relief
      in
      law or equity that may be granted by the arbitrator, the arbitrator may grant
      equitable relief and specific performance to compel compliance hereunder. The
      determination of the arbitrator shall be accompanied by a written opinion of
      the
      arbitrator and shall be final, binding and conclusive on the parties, and
      judgment on the arbitrator’s award, including without limitation equitable
      relief and specific performance, may be entered in and enforced by any court
      having jurisdiction thereof. 

    

    (iii) The
      fees
      and expenses of the AAA and of the arbitrator shall be shared equally by Buyer
      on the one hand, and the Stockholder on the other hand. 

    

    (iv) The
      provisions of this Section 14(h) shall not prohibit the parties from pursuing
      any injunctive relief, temporary restraining orders or other remedies in equity,
      available to the parties for a breach or threatened breach of this
      Agreement.

    

    (i) Further Assurances.
      The
      parties hereto agree that they will, without further consideration, from time
      to
      time hereafter, and at their own expense, execute and deliver

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    such
      other documents, and take such other action, as may reasonably be requested
      in
      order to more effectively consummate the transactions contemplated hereby.
      The
      provisions hereof shall survive the date hereof. 

     

    (j) Counterparts.
      This
      Agreement may be signed in any number of counterparts, including by facsimile,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument. 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    [SIGNATURE
      PAGE TO FOLLOW]

    

    

    

    

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

        
          

        

      

    

    [Signature
      page to Stock Purchase Agreement]

    

    IN
      WITNESS WHEREOF,
      the
      parties have caused this Agreement to be executed under seal as of the date
      first above written.

    

    
      	
              STOCKHOLDER:

            	
              DIGITAL
                ANGEL CORPORATION

            
	 	 
	 	
              By:
                /s/ Kevin McGrath

            
	 	
                    
                Name: Kevin McGrath

            
	 	
                    
                Title: President 

            
	 	 
	 	 
	 	 
	
              BUYER:

            	
              NEWCOMB
                COMMUNICATIONS, INC.

            
	 	 
	 	 
	 	
              By:
                /s/Paul F. Newcomb

            
	 	
                    
                Name: Paul F. Newcomb

            
	 	
                    
                Title: President

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