Document:

EXHIBIT
10.1

AGREEMENT
AND PLAN OF MERGER

This
AGREEMENT AND PLAN OF MERGER (this “Agreement”)
is made and entered into as of April 26, 2007, by and among Shea Development
Corp., a Nevada corporation (“Parent”),
Shea Development Acquisition No. 3 Corp., a Nevada corporation and a
wholly-owned subsidiary of Parent (“Merger
Sub”), Bravera, Inc. a Florida corporation (the “Company”), and Christopher Watson, the
holder of all of the outstanding capital stock of the Company (the “Shareholder”).  Capitalized terms used and not otherwise
defined herein have the meanings set forth in Article 10.

RECITALS

A.                                   The
respective Boards of Directors of Parent, Merger Sub and the Company each have
approved and declared advisable this Agreement and the merger of Merger Sub with
and into the Company (the “Merger”),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $0.01 per
share, of the Company (“Company Common
Stock”) will be converted into the right to receive common
stock, par value $0.001 per share, of Parent (“Parent Common Stock”) and cash as provided herein.

B.                                     The
respective shareholders of Parent, Merger Sub and the Company have, or will
have, prior to the Closing Date, by the legally required vote, approved and
adopted the Merger.

C.                                     In
connection with the Merger, the parties desire to make certain representations,
warranties, covenants and agreements and also to prescribe various conditions
to the Merger, upon the terms and subject to the conditions contained herein.

NOW,
THEREFORE, in consideration of the covenants, promises, representations and
warranties set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:

ARTICLE 1

THE MERGER

1.1                                 Merger.  At the Effective Time as defined below, in
accordance with this Agreement and applicable law Section 607.1105 of the
Florida Statutes and Nevada Revised Statutes Section 92A.200, Merger Sub will
be merged with and into the Company, the separate corporate existence of Merger
Sub will cease and the Company will continue as the surviving corporation in
the Merger and shall become a wholly-owned Subsidiary of Parent.  The Company, as the surviving corporation
after the Merger, is sometimes referred to herein as the “Surviving Corporation.”

1.2                                 Closing.  Subject to the terms and conditions of this
Agreement, the closing of the Merger (the “Closing”)
will take place at the offices of Dunnington, Bartholow & Miller, LLP located
at 477 Madison Avenue, New York, NY 10022 or at such other place as Parent and
the

Company mutually
agree, at 10:00 a.m. local time on the later to occur of June 15, 2007 or the
second Business Day after the day on which the last of the closing conditions
set forth in Article 6 below has been satisfied or waived, or such other date
as Parent and the Company mutually agree upon in writing (the “Closing Date”).  On the Closing Date: (a) the parties hereto
will cause the Merger to be consummated by filing with the Secretaries of State
of the State of Florida and the State of Nevada a certificate of merger, a plan
of merger and any required related documents, in such form or forms as are
required by, and executed in accordance with, applicable law (the date and time
of such filing being the “Effective Time”
and the date upon which the Effective Time occurs, being the “Effective Date”); (b) Parent will
deliver the merger consideration to the Shareholder in accordance with Section
1.6; and (c) Merger Sub, Company and Parent will cross-deliver the certificates
and other documents and instruments to be cross-delivered pursuant to Article 6
below.

1.3                                 Effect
of the Merger.   (a) At the Effective
Time, the effect of the Merger will be as provided in this Agreement and as
provided in Section 607.1105 of the Florida Statutes and Section 92A.200 of the
Nevada Revised Statutes. Without limiting the generality of the foregoing and
in accordance with Section 1.18 herein, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of Merger Sub
and the Company will vest in the Surviving Corporation, and in accordance with
the terms outlined herein all debts, liabilities and duties of Merger Sub and
the Company will become the debts, liabilities and duties of the Surviving
Corporation and all corporate acts, plans, policies, contracts, approvals and
authorizations of Merger Sub and the Company and their respective shareholders,
boards of directors, committees elected or appointed thereby, officers and
agents, which were valid and effective immediately prior to the Effective Time,
shall be taken for all purposes as the acts, plans, policies, contracts,
approvals and authorizations of the Surviving Corporation and shall be as effective
and binding thereon as the same were with respect to Merger Sub and the
Company, respectively, as of the Effective Time.   As of the Effective Time, the Surviving
Corporation will be a wholly-owned subsidiary of Parent.

(b)
At the Effective Time, all rights, franchises and interests of Merger Sub and
the Company, respectively, in and to any type of property and chooses in action
shall be vested in the Surviving Corporation by virtue of the Merger without
any deed or other transfer. The Surviving Corporation, without any order or
other action on the part of any court or otherwise, shall hold and enjoy all
rights of property, franchises and interests, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, transfer agent or registrar of stocks and bonds,
guardian, assignee, receiver and in every other fiduciary capacity, in the same
manner and to the same extent as such rights, franchises and interests were
held or enjoyed by Merger Sub and the Company, respectively, as of the
Effective Time.

1.4                                 Effect
of Merger on Capital Stock of the Parent.  
Each share of capital stock of Parent issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.

1.5                                 Effect
of Merger on Capital Stock of Merger Sub. 
At the Effective Time, each share of common stock, par value $0.001 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on

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the part of the
holders thereof, be converted into and become one validly issued, fully paid
and non-assessable share of common stock, par value $0.01 par value per share,
of the Surviving Corporation.

1.6                                 Effect
of Merger on Capital Stock of Company.

(a)                                  Company
Common Stock.  At the Effective Time,
each share of Company Common Stock shall, by virtue of the Merger and without
any action on the part of the holders thereof, be converted into the right to
receive the following (the “Merger Consideration”):

(i)                                     a
pro rata share of 3,000,000 shares of Parent Common Stock (referred to
collectively herein as the “Parent’s Shares”)
as set forth on Schedule 1.6(a)(i), which shares shall not have been
registered under the Securities Act and shall be “restricted securities” as
that term is defined in Rule 144 under the Securities Act.

(ii)                                  a
pro rata share of $1,500,000 payable in cash as set forth on Schedule
1.6(a)(ii) by wire transfer of same day funds to the account designated by
the Shareholder.

(b)                                 As
a result of the Merger and without any action on the part of the Shareholder,
at the Effective Time, all shares of Company Common Stock shall cease to be
outstanding and shall be cancelled and retired and shall cease to exist, and
each holder of a share of Company Common Stock (other than the Parent) shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except that the Shareholder shall have the right to receive,
without interest, the Merger Consideration in accordance with Section 1.6(a)
upon the surrender of the certificate or certificates representing such shares
of Company Common Stock (if any such certificates had been issued by the
Company with respect to such shares of Company Common Stock).

(c)                                  At the Effective
Time, each share of Company Common Stock held in the Company’s treasury, if
any, shall, by virtue of the Merger and without any action on the part of any
Person, cease to be outstanding and shall be cancelled and retired without
payment of any Merger Consideration or any other consideration therefor.

1.7                                 Delivery
of Certificates.  At and after the
Effective Time, Parent will make available, and Shareholder shall be entitled
to receive, (i) upon surrender to Parent or its representatives of any
certificates evidencing Company Common Stock (the “Certificates”) for cancellation and a
letter of transmittal or assignment separate from certificate in customary form
(which will be in such form and have such other provisions as Parent will
reasonably specify) (the “Transmittal
Letter”), the Merger Consideration into which such Company
Common Stock shall have been converted pursuant to the Merger, and upon such
surrender of each Certificate and delivery by Parent of the aggregate Merger Consideration
in exchange therefor, all such Company Common Stock will forthwith be cancelled
upon the transfer books and records of the Company.  Until surrendered or delivered as
contemplated by this Section 1.7, each Certificate will be deemed at any time
after the Effective Time for all purposes to evidence only the right to receive
upon such surrender the corresponding pro rata portion of the Merger
Consideration.

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1.8                                 Stock
Transfer Books.  From and after the
Effective Time, the stock transfer books of the Company will be closed, and
there will be no further registration or transfers of capital stock thereafter
on the records of the Company until such time, if any, as determined by the
Parent.

1.9                                 No
Further Ownership Rights. The Merger Consideration delivered upon the
surrender for exchange of Certificates in accordance with the terms hereof will
be deemed to have been issued in full satisfaction of all rights pertaining to
such Company Common Stock, and there will be no further registration of transfers
of such shares which were outstanding immediately prior to the Effective Time
on the records of the Surviving Corporation. 
If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they will be cancelled and exchanged as provided in this
Article 1.

1.10                           Lost,
Stolen or Destroyed Certificates.  In
the event any Certificates are lost, stolen or destroyed, Parent will issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof and the other deliveries required
above, the applicable Merger Consideration; provided, however, that the
Surviving Corporation may, in its sole discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver an indemnity 
agreement in form reasonably satisfactory to it against any claim that
may be made against it with respect to the Certificates alleged to have been
lost, stolen or destroyed.

1.11                           Charter
Documents; Directors and Officers. 
Unless otherwise agreed by the Company and Parent prior to the Closing,
at and as of the Effective Time, without any further action on the part of
Parent, Merger Sub or the Company: (i) the Articles of Incorporation and the
Bylaws of the Company as in effect immediately prior to the Effective Time will
be the Articles of Incorporation and Bylaws of the Surviving Corporation at and
after the Effective Time until thereafter amended as provided by applicable
law; (ii) the directors of the Company immediately prior to the Effective Time
will be the initial directors of the Surviving Corporation from and after the
Effective Time, until their successors are elected and qualified or until their
resignation or removal; (iii) the officers of the Company immediately prior to
the Effective Time shall serve in their respective offices of the Surviving
Corporation from and after the Effective Time, until their successors are
elected or appointed and qualified or until their resignation or removal.  The Board of Directors of the Company will
adopt a resolution to be effective as of the Effective Time electing Francis E.
Wilde to the Surviving Corporation’s Board of Directors and appointing E.
Joseph Vitetta, Jr. as Corporate Secretary of the Surviving Corporation.

1.12                           Purchase
of Intellectual Property.               At
or prior to the Effective Time, a wholly- owned Nevada subsidiary of Parent,
and Intellectus, LLC, a Florida limited liability company managed by the
Shareholder, shall enter into an Asset Purchase Agreement in substantially the
form of Exhibit A hereto.

1.13                           Earn-Out Payments.

(a)                                  Year
1 Earn-Out Payments.  Subject to the
Surviving Corporation’s gross revenue(s) exceeding ninety percent (90%) of
$6,850,000 and the Surviving Corporation’s EBITDA (the “Year 1
EBITDA”), exceeding ninety percent (90%) of $2,500,000 for the
first

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twelve (12) month period following the
Effective Date (the “Year 1 Earn-Out Period”),
Parent shall pay the following amounts:

(i)                                     to
the Shareholder a Warrant in the form attached hereto as Exhibit B.

(ii)                                  to
the Shareholder $750,000 payable in cash by wire transfer to an account
designated by the Shareholder.

(iii)                               to
the Shareholder twenty percent (20%) of the Surviving Corporation’s Year 1
EBITDA payable in cash by wire transfer to the account designated by the
Shareholder.

(b)                                 Year
2 Earn-Out Payments.  Subject to the
Surviving Corporation’s gross revenue(s) exceeding eighty percent (80%) of
$8,900,000 and the Surviving Corporation’s EBITDA (the “Year 2
EBITDA”), exceeding eighty percent (80%) of $4,500,000 for the
twelve (12) month period following the first anniversary of the Effective Date
(the “Year 2 Earn-Out Period”), Parent
shall pay the following amounts:

(i)                                      to
the Shareholder a  Warrant in the form attached hereto as Exhibit
C.

(ii)                                  to
the Shareholder $500,000 payable in cash by wire transfer to an account
designated by the Shareholder.

(iii)                               to
the Shareholder, a pro rata share of twenty percent (20%) of the Surviving
Corporation’s Year 2 EBITDA payable in cash by wire transfer to the account
designated by the Shareholder.

(c)                                  Equity
Earn-Out.   Parent shall provide a
warrant to the Shareholder in the form attached hereto as Exhibit D.

(d)                                 EBITDA
Calculations.  The parties agree
that, for the purpose of computing the Earn-Out Payments, the Surviving
Corporation shall be credited with the entire revenue(s) of the Surviving
Corporation and its Affiliates, including revenues derived from any joint
ventures, license agreements or products developed or co-developed by the
Surviving Corporation with Parent or its Subsidiaries or Affiliates, and EBITDA
recognized by the Parent (and/or its Subsidiaries and other Affiliates)
associated with each such joint venture, license agreement, product, service
and/or solution developed or co-developed by the Surviving Corporation with the
Parent and/or its Subsidiaries and Affiliates.

1.14                           Employment
Agreements. At the Effective Time, the Surviving Corporation will offer
employment to and will employ the senior management team listed in Schedule
1.14 Part I (the “Senior Management
Team”) for a period of three (3) years under the terms and
conditions of Senior Management Employment Agreements, in the form set forth at
Schedule 1.14 Part II, such employment agreements to be executed concurrently
with the Closing.

1.15                           Stock
Options.  Parent will establish an
incentive stock option program with respect to shares of the Parent Common
Stock in which employees of the Surviving Corporation are eligible to
participate (the “ISO Plan”)
and will use its best efforts to establish such ISO Plan

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within sixty (60)
days of the Closing Date.  The attached Schedule
1.15 outlines the Shareholder’s initial recommended allocation of the
incentive stock option pool to Company employees.  It is understood by the parties that such
recommendation shall require approval of the Parent’s Board of Directors and
that the Parent’s Board of Directors shall, in its sole discretion, finally
determine those Surviving Corporation employees to whom incentive stock options
will be granted.

1.16                           Company
Audit and CPA Expenses. 
Notwithstanding the terms contained herein, the Surviving Corporation
shall pay up to $150,000 in PCAOB Audit expenses associated with the Company’s
PCAOB Audit, incurred by the Company at, or prior to, Closing (the “Audit Expense Cap”).  Any amounts owed by the Surviving Corporation
for the PCAOB Audit in excess of the Audit Expense Cap shall be (i) deducted
from the cash component of the Merger Consideration at Closing and (ii)
promptly thereafter paid by the Surviving Corporation to the audit firm
providing the PCAOB Audit.

1.17                           Billing
Dispute Resolution.  Notwithstanding
the terms contained herein, the Surviving Corporation shall pay up to $400,000
(the “Settlement Commitment”)
to the DFSA, the GSA or other federal governmental agency (as directed) arising
out of or associated with settlement of a dispute among Company, Navy CNIC,
DFAS and GSA regarding services and the RAPID software product provided by the
Company to Navy CNIC  (the  “Navy
Billing Dispute”) incurred by
the Company at, or prior to, Closing or by the Surviving Corporation subsequent
to the Closing.   Any amounts due or owed
to DFAS, the GSA or other federal government agency in respect of the Navy
Billing Dispute that exceed the Settlement Commitment shall be (i) deducted
from the cash component of the Merger Consideration at Closing and (ii)
promptly thereafter paid by the Surviving Corporation to GSA.   Notwithstanding any provisions of this section
to the contrary, in the event the Navy Billing Dispute is not fully and finally
resolved on or before the Closing Date, and in order that Closing occur in a
prompt and timely manner, on the Closing Date the Shareholder shall execute a
written commitment to the Surviving Corporation to tender within five (5) days
of demand from the Surviving Corporation such amount, in excess of the
Settlement Commitment, as may be required to be paid to DFAS, the GSA or other
federal governmental agency to satisfy the Navy Billing Dispute.

1.18                           Company
Liabilities.  Notwithstanding the
terms contained herein, the Surviving Corporation shall assume an aggregate
amount of not greater than $50,000 in aggregate (x) short-term debt and
long-term debt plus (y) short-term debt, long-term debt, and other Company liabilities
to Shareholder and Affiliates of Shareholders, incurred by the Company at, or
prior to Closing.  Any liabilities in
excess of such amount shall be (i) deducted from the cash component of the
Merger Consideration at Closing, and (ii) promptly thereafter paid by the
Surviving Corporation to the designated payee.

1.19                           Taking
of Necessary Action; Further Action. 
Each of Parent, Merger Sub and the Company will take all such reasonable
lawful action as may be necessary or appropriate in order to effect the Merger
in accordance with this Agreement as promptly as practicable.  If, at any time after the Effective Time, any
such further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all the property, rights, privileges, power and franchises of the
Company and

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Merger Sub, the
officers and directors of the Company and Merger Sub immediately prior to the
Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE

COMPANY AND SHAREHOLDER

The
Company and the Shareholder hereby represent and warrant, jointly and severally,
to Parent subject to such exceptions as are disclosed in the corresponding
Schedules with respect to specific sections of this Article 2 and subject to
the right of the Company and the Shareholder to update, revise, supplement
and/or correct such Schedules through the Closing Date, as follows:

2.1                                 Organization
and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida, and has full corporate power and authority to conduct
its business as now conducted and to own, use, license and lease its Assets and
Properties.  The Company holds no
ownership or other interest in any Subsidiary To the best of Shareholder’s
knowledge, the Company is duly qualified, licensed or admitted to do business
and is in good standing in each jurisdiction in which the ownership, use,
licensing or leasing of its Assets and Properties, or the conduct or nature of
its business, makes such qualification, licensing or admission necessary,
except for such jurisdictions in which the failure to be so qualified would not
have a Material Adverse Effect on the Company. Schedule 2.1(b) sets forth each jurisdiction where
the Company is so qualified, licensed or admitted to do business.

2.2                                 Authority
Relative to this Agreement.  The
Company has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  The
execution and delivery by the Company of this Agreement and the consummation by
the Company of the transactions contemplated hereby, and the performance by the
Company of its obligations hereunder, have been duly and validly authorized by
all necessary action by the Board of Directors of the Company, and no other
action on the part of the Board of Directors of the Company is required to
authorize the execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby.  This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Parent and Merger Sub, constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors’ rights generally
and by general principles of equity.

2.3                                 Capital
Stock.  As of the date hereof, the
authorized capital stock of the Company consists of 25,000 shares of Company
Common Stock, $0.01 par value per share, of which 100 shares are issued and
outstanding.  There are no options
exercisable or convertible into shares of Company Common Stock.  All of the issued and outstanding shares of
Company Common Stock are validly issued, fully paid and nonassessable, and have
been issued in compliance with all

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applicable
federal, state and foreign securities Laws. Schedule I lists the name
and state of residence of each holder of Company Common Stock provided to the
Company by such holder and the number of shares of Company Common Stock held by
each such holder.  Except as disclosed in
Schedule 2.3, there are no other Equity Equivalents, commitments or
agreements of any character (whether created by statute, the Articles of
Incorporation or Bylaws of the Company, or any agreement or otherwise) to which
the Company is a party or by which it is bound, obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the price
or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement.  Except as set
forth in Schedule 2.3(a), the Company is not a party or subject to any
agreement or understanding, and, to the Shareholder’s knowledge, there is no
agreement, arrangement or understanding between or among any Persons, which
affects, restricts or relates to voting, giving of written consents, dividend
rights or transferability of shares with respect to the shares of Company
Common Stock, including without limitation any voting trust agreement or proxy.

2.4                                 No
Conflicts.  Except as set forth in Schedule
2.4, the execution and delivery by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby do not and
will not:

(a)                                  conflict
with or result in a violation or breach of any terms, conditions or provisions
of the Articles of Incorporation or Bylaws, as amended, or equivalent documents
of the Company except for any of the foregoing which would not reasonably
be expected to give rise to a Material Adverse Effect;

(b)                                 conflict with or
result in a violation or breach of any Law or Order by which any of the Company’s
Assets and Properties is bound or affected, except which would not
reasonably be expected to give rise to a Material Adverse Effect; or

(c)                                  (i) conflict with or
result in a violation or breach of, (ii) constitute a default (or an event
that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require the Company to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a result or
under the terms of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
(v) result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments or performance under,
(vi) result in the creation or imposition of (or the obligation to create or
impose) any Lien upon the Company or any of its Assets and Properties under or
(vii) result in the loss of a material benefit under, any of the terms,
conditions or provisions of any Contract or License to which the Company is a
party or by which the Company or its Assets and Properties is bound or
affected, except (x) where the Company or any of its Subsidiaries has
obtained or will obtain prior to the Closing the necessary written agreements,
waivers or consents of the other parties to any Company Contracts or Licenses
to avoid, release or waive any such default, conflict, breach, violation,
termination, right to terminate or accelerate, or triggering of payment with
respect to such Company Contracts or Licenses, or (y) where any such default,
conflict, breach, violation, termination, right to terminate or accelerate, or
triggering of payment with respect to such Company Contracts or Licenses would
not constitute a Material Adverse Effect.

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2.5                                 Books
and Records; Organizational Documents. 
The minute books, including the share registers, and other similar
records of the Company that have been provided or made available to Parent, its
representatives or its counsel prior to the execution of this Agreement, are
complete and correct in all material respects. 
Such minute books contain a true and complete record of all material
actions taken at all meetings and by all written consents in lieu of meetings
of the directors, shareholders and committees of the Board of Directors of the
Company through the date hereof.  The Company
has delivered a true, correct and complete copy of its Articles of
Incorporation, as set forth in Schedule 2.5(a), and its Bylaws, as set
forth in Schedule 2.5(b), or other charter documents, as applicable, of
the Company as amended to date, to Parent. 
To Shareholder’s knowledge, the Company is not in violation of any
provisions of its Articles of Incorporation.

2.6                                 Company
Financial Statements.

(a)                                  The
Company Financials, as set forth in Schedule 2.6(a), have been delivered
to the Parent.  The Company Financials
delivered to Parent have been audited by a Public Company Accounting Oversight
Board (“PCAOB”) registered Auditor
and, to Shareholder’s knowledge, were correct and complete in all material
respects as at the dates thereof.  The
Company Financials present fairly and accurately the financial condition and
operating results of the Company as of the dates and during the periods
indicated therein, subject, in the case of any interim financial statements, to
normal year-end adjustments, which adjustments will not be material in amount
or significance and except that any interim financial statements may not
contain footnotes.  Except for the Navy
Billing Dispute and as set forth in Schedule 2.6(a), since the Financial
Statement Date, there has been no change in any accounting policies,
principles, methods or practices, including any change with respect to reserves
(whether for bad debts, contingent liabilities or otherwise), of the Company
that would be likely to have a Material Adverse Effect.

(b)                                 Neither the Company
nor, to the knowledge of the Shareholder, the Company’s independent auditors
has identified or been made aware of (i) any fraud, whether or not material,
that involves the management of the Company or other employees of the Company
who have a role in the preparation of financial statements or the internal
accounting controls utilized by the Company or (ii) any claim or allegation
regarding any of the foregoing.

(c)                                  The
Company has maintained and utilized an information system and set of financial
and accounting tools that have substantiated the information gathered in
connection with the preparation of the Company Financials in accordance with
GAAP, including policies and procedures that the Company deems appropriate for
a company of its size that:  a) require
the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and disposition of the assets of the company, b)
provide reasonable assurances that the transactions are recorded as necessary
to permit the preparation of financial statements in accordance with GAAP, and
that receipts and expenditures of the Company are being made with appropriate
authorizations of management and the Board of Directors of the Company and c)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the assets of the Company,
except where the failure to maintain or utilize any of the foregoing would not
reasonably be expected to give rise to a Material Adverse Effect.

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2.7                                 Absence
of Changes.  Since the Financial
Statement Date, other than the Navy Billing Dispute, there has not been any
Material Adverse Change in the Business or Condition of the Company or any
occurrence or event, which, individually or in the aggregate could be
reasonably expected to have any Material Adverse Change in the Business or
Condition of the Company.  In addition,
without limiting the foregoing, except as expressly contemplated hereby, there
has not occurred, on the part of the Company, during the period commencing on
the Financial Statement Date and terminating on the date hereof:

(a)                                  except
with respect to the facility lease disclosed on Schedule 2.29, the
entering into of any Contract, commitment or transaction or the incurrence of
any Liabilities outside of the ordinary course of business consistent with the
Company’s past practice;

(b)                                 the
entering into of any Contract in connection with any transaction involving a
Business Combination other than this Agreement and the transactions related to
the Merger;

(c)                                  the
alteration, or entering into of any Contract or other commitment to alter, its
interest in any Person in which the Company directly or indirectly holds a
greater than 1% interest on the date hereof;

(d)                                 the
entering into of any strategic alliance, joint development or joint marketing
Contract other than joint marketing or development efforts in the ordinary
course of business consistent with the Company’s past practice;

(e)                                  any
material amendment or other modification (or agreement to do so), except in the
ordinary course of business consistent with the Company’s past practice, or
violation of a material term of, any of the Contracts set forth or described
herein;

(f)                                    the
entering into of any material transaction with any officer, director,
shareholder, Affiliate or Associate of the Company, other than pursuant to any
Contract in effect on the Financial Statement Date and disclosed to Parent
pursuant to the Schedules or otherwise contemplated by this Agreement or any
agreement or instrument related to this Agreement;

(g)                                 the
entering into or amendment of any Contract pursuant to which any other Person
is granted manufacturing, marketing, distribution, licensing or similar rights
of any type or scope with respect to any products of the Company or Company
Intellectual Property other than as contemplated by the Contracts or Licenses
of the Company disclosed herein or otherwise in the ordinary course of business
consistent with the Company’s past practice or which would not have a Material
Adverse Effect;

(h)                                 to
the Shareholder’s knowledge, the commencement of any Action or Proceeding other
than any Action or Proceeding arising out of the Navy Billing Dispute;

(i)                                     except
as set forth in Schedule 2.7(i), the declaration, setting aside or
payment of any dividends on or making of any other distributions (whether in
cash, stock or property) in respect of any Company Common Stock, or any split,
combination or reclassification of any shares of Company Common Stock or
issuance or authorization of the

 10
 

issuance of any other securities in respect
of, in lieu of or in substitution for shares of Company Common Stock, or the
repurchase, redemption or other acquisition, directly or indirectly, of any
shares of Company Common Stock by the Company except for repurchases of shares
of Company Common Stock upon termination of employment;

(j)                                     except
as set forth in Schedule 2.7(j), the issuance, grant, delivery, sale or
authorization of or proposal to issue, grant, deliver or sell, or purchase or
proposal to purchase, any shares of Company Common Stock or modification or
amendment of the rights of any holder of any outstanding shares of Company
Common Stock, nor have there been any agreements, arrangements, plans or
understandings with respect to any such modification or amendment except as
contemplated by this Agreement;

(k)                                  except as set forth
in Schedule 2.7(k), any amendments to the Company’s Articles of
Incorporation or Bylaws;

(l)                                     any transfer (by
way of a License or otherwise) to any Person of rights to any Company
Intellectual Property other than non-exclusive transfers to the Company’s
customers, distributors or other licensees in the ordinary course of business
consistent with the Company’s past practice;

(m)                               to the Shareholder’s
knowledge, any disposition or sale of, waiver of rights to, license or lease
of, or incurrence of any Lien on, any Assets and Properties (including Company
Intellectual Property) of the Company, other than dispositions of inventory, or
licenses of products to Persons in the ordinary course of business of the
Company consistent with the Company’s past practice;

(n)                                 any purchase or lease
of any Assets and Properties of any Person or the making of any capital
expenditures, lease commitments or other capital commitments by the Company
other than acquisitions of inventory, leasing of office space, or licenses of
products, in the ordinary course of business of the Company, consistent with
Company’s past practice and in an amount not in excess of one hundred thousand
dollars ($100,000) unless otherwise approved by Parent;

(o)                                 the making of any
capital expenditures or commitments by the Company for additions to property,
plant or equipment of the Company constituting capital assets individually or
in the aggregate in an amount exceeding twenty-five thousand dollars ($25,000)
except in the ordinary course of business consistent with the Company’s past
practice;

(p)                                 except as set forth in
Schedule 2.7(p), the write-off or write-down or making of any
determination to write off or write-down, or revalue, any of the Assets and
Properties of the Company, or change in any reserves or liabilities associated
therewith;

(q)                                 except as set forth in
Schedule 2.7(q), the payment, discharge or satisfaction of any material
claim or Liability, other than the payment, discharge or satisfaction in the
ordinary course of business of Liabilities reflected or reserved against in the
Company Financials or incurred in the ordinary course of the Company’s business
since the Financial Statement Date;

 11

(r)                                    except as set forth
in Schedule 2.7(r), the failure to pay or otherwise satisfy material
Liabilities of the Company or its Subsidiaries when due;

(s)                                  the incurrence of any
Indebtedness or guarantee of any such Indebtedness or issuance or sale of any
debt securities of the Company or guarantee of any debt securities of others,
except as otherwise incurred in the ordinary course of the Company’s business;

(t)                                    the grant of any
severance or termination pay to any director, officer employee or consultant,
except payments made as required by Law or pursuant to written Contracts
outstanding on the date hereof,

(u)                                 except as set forth in
Schedule 2.7(u), a change to salary, rate of commissions, rate of
consulting fees or any other compensation of any current officer, director,
shareholder, employee, independent contractor or consultant of the Company
except in the ordinary course of business consistent with the Company’s past
practice;

(v)                                 except as set forth in
Schedule 2.7(v), the payment of any consideration of any nature
whatsoever (other than, in the ordinary course of business, salary, bonus,
commissions or consulting fees and customary benefits and out of pocket
expenses paid to any current or former officer, director, shareholder, employee
or consultant of the Company) to any current or former officer, director,
shareholder, employee, independent contractor or consultant of the Company;

(w)                               the establishment or
modification of (i) targets, goals or similar provisions under any employment
Contract or other employee compensation arrangement or independent contractor
Contract or other compensation arrangement or (ii) salary ranges, increased
guidelines or similar provisions in respect of any employment Contract or other
employee compensation arrangement or independent contractor Contract or other
compensation arrangement, except for those made in the ordinary course of the
Company’s business;

(x)                                   the adoption,
entering into, amendment, modification or termination (partial or complete) of
any Benefit Plan;

(y)                                 the payment of any
discretionary or stay bonus except in the ordinary course of business
consistent with the Company’s past practice;

(z)                                   the making or
changing of any election in respect of Taxes, adoption or change in any
accounting method in respect of Taxes, the entering into of any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or closing agreement,
settlement or compromise of any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes with any Taxing Authority or otherwise,
except for any of the foregoing which would not reasonably be expected
to give rise to a Material Adverse Effect;

(aa)                            Except as set forth in Schedule
2.7(aa), the making of any change in the accounting policies, principles,
methods, practices or procedures of the Company (including without limitation
for bad debts, contingent liabilities or otherwise, respecting capitalization
or expense of research and development expenditures, depreciation or
amortization rates or timing

 12
 

of recognition of income and expense), except
for any of the foregoing which would not reasonably be expected to give rise to
a Material Adverse Effect;

(bb)                          other than in the ordinary course
of the Company’s business, the making of any representation or proposal to, or
engagement in substantive discussions with, any of the holders (or their
representatives) of any Indebtedness, or to or with any party which has issued
a letter of credit which benefits the Company;

(cc)                            the commencement or
termination of, or change in, any line of business of the Company other than in
the ordinary course of business;

(dd)                          the cancellation, amendment
or failure to renew any insurance policy other than in the ordinary course of
business consistent with past practice, or failure to use commercially
reasonable efforts to give all notices and present all claims under all such
policies in a timely fashion, except for any of the foregoing which do
not give rise to a Material Adverse Effect;

(ee)                            any amendment, failure to
renew, or failure to use commercially reasonable efforts to maintain, its
existing Approvals or failure to observe any Law or Order applicable to the
conduct of the business of the Company or the Assets and Properties of the
Company, except for any of the foregoing which would not reasonably be
expected to give rise to a Material Adverse Effect;

(ff)                                to Shareholder’s
knowledge, any failure to pay or otherwise satisfy any obligations to procure,
maintain, renew, extend or enforce any Company Intellectual Property,
including, but not limited to, submission of required documents or fees during
the prosecution of patent, trademark or other applications for Registered
Intellectual Property rights other than in the ordinary course of business or
which would not reasonably be expected to give rise to a Material Adverse
Effect;

(gg)                          any physical damage,
destruction or other casualty loss (whether or not covered by insurance)
affecting any of the real or personal property or equipment of the Company
individually or in the aggregate in an amount exceeding fifteen thousand
dollars ($15,000);

(hh)                          the repurchase, cancellation
or modification of the terms of any Company Common Stock, or other financial
instrument that derives the majority of its value from its convertibility into
Company Common Stock, other than transactions entered into in the ordinary
course of business and pursuant to contractual provisions in effect at the date
of this Agreement; or

(ii)                                  any entering into any
agreement to do any of the foregoing.

2.8                                 No
Undisclosed Liabilities.  Except for
the Navy Billing Dispute and as set forth in Schedule 2.8, the Company
has no obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or reserved against in the Company
Financials, (ii) those incurred in connection with this Agreement or the
transactions

 13
 

contemplated
hereby, (iii) those incurred in the ordinary course of business consistent with
the Company’s past practice, and (iv) those set forth in this Agreement or the
Schedules hereto.

2.9                                 Restrictions
on Business Activities.  Except as
set forth in Schedule 2.9, there is no agreement or Order binding upon
the Company, or any of its assets or properties which has had or could
reasonably be expected to have the effect of prohibiting or impairing any
current or future business practice of the Company, any acquisition of property
by the Company or the conduct of business by the Company as currently conducted
or as proposed to be conducted by the Company other than in the ordinary course
of business or which would not reasonably be expected to give rise to a
Material Adverse Effect.

2.10                           Taxes.

(a)                                  The
Company has timely filed and paid any taxes due through the Tax year ended
December 31, 2005 and through Tax year ended December 31, 2006.  The
Company has prepared and maintained adequate records so as to facilitate the
prompt filing of Tax Returns when they become due.

(b)                                 The
Company has not incurred any material liability for Taxes other than as
reflected on the Company Financials.  The
unpaid Taxes of the Company (i) did not, as of the most recent fiscal month
end, exceed by any material amount the reserve for liability for Income Tax
(other than the reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the Company’s
most recent balance sheet and (ii) will not, to Shareholder’s knowledge, exceed
by any material amount that reserve as adjusted for operations and transactions
through the Closing Date.

(c)                                  The
Company is not presently a party to any agreement extending the time within
which to file any Tax Return.  To
Shareholder’s knowledge, no claim has ever been made by a Taxing Authority of
any jurisdiction in which the Company does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.

(d)                                 To
Shareholder’s knowledge, the Company or its agents, if applicable, have
collected or withheld all amounts required to be collected or withheld by it on
account of Taxes or otherwise, and have remitted the same to the appropriate
governmental authority in the manner and within the time required under any
applicable legislation or, if it is not yet due, have set it aside in
appropriate accounts for payment when due.

(e)                                  The
Shareholder does not have knowledge of any actions by any Taxing Authority in
connection with assessing a material amount of additional Taxes against and in
respect of the Company for any past period. 
There is no dispute or claim concerning any Tax liability of the Company
(i) threatened, claimed or raised by any Taxing Authority and (ii) of which the
Company is aware.  There are no Liens for
Taxes upon the Assets and Properties of the Company other than liens for Taxes
not yet due or which are being contested by the Company in good faith.

(f)                                    There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Returns required to be filed by, or which include or are

 14
 

treated as including, the Company with respect to any Tax assessment or
deficiency affecting the Company.

(g)                                 The Company has not
received any written ruling related to Taxes or entered into any agreement with
a Taxing Authority relating to Taxes.

(h)                                 The Company has no
material liability for the Taxes of any Person other than the Company or (i) as
a transferee or successor, or (ii) by Contract or (iii) otherwise.

(i)                                     The Company has
not agreed to make and is not required to make any adjustment under Section 481
or 263A of the Code or any comparable provision under state laws by reason of a
change in accounting method or as a result of transactions or events prior to
the date hereof.

(j)                                     The
Company is not a party to or bound by any obligations under any Tax sharing,
Tax allocation, Tax indemnity or similar agreement or arrangement.

(k)                                  The
Company is not involved in, subject to, or a party to any joint venture,
partnership, Contract or other arrangement that is treated as a partnership for
federal, state, local or foreign Income Tax purposes.

(l)                                     The Company was
not included and is not includible in the Tax Return of any parent corporation
other than such a return of which the Company is the common parent corporation.

(m)                               Except as set forth in Schedule
2.10(m), the Company has not:

(i)                                     acquired
or had the use of any property from a Person with whom it was not dealing at
arm’s length other than at fair market value; or

(ii)                                  disposed
of any material asset to a Person with whom it was not dealing at arm’s length
for proceeds less than the fair market value thereof.

(n)                                 The
Company is not nor has it ever been a United States real property holding
corporation within the meaning of Section 897(c)(1)(A)(ii) of the Code.

(o)                                 The Company is not a
personal holding company.

(p)                                 To Shareholder’s
knowledge, the Company is in full compliance with all terms and conditions of
any Tax exemptions or other Tax-sharing agreement or Order of a foreign
government and the consummation of the transactions contemplated hereby will
not have any Material Adverse Effect on the continued validity and
effectiveness of any such Tax exemptions or other Tax-sharing agreement or
Order.

2.11                           Legal
Proceedings.

(a)                                  Except
for the Navy Billing Dispute and as set forth in Schedule 2.11:

 15
 

(i)                                     there
are no Actions or Proceedings brought or, to the knowledge of the Shareholder,
pending or threatened against the Company or its Assets and Properties;

(ii)                                  there
are no facts or circumstances known to the Company that could reasonably be
expected to give rise to any material Action or Proceeding against the Company;
and

(iii)                               the
Shareholder has not received notice of, and does not otherwise have knowledge
of, any Orders outstanding against the Company.

(b)                                 Prior
to the execution of this Agreement, the Company has delivered to Parent upon
Parent’s written request, all responses of counsel for the Company to auditor’s
requests for information (together with any updates provided by such counsel)
for the last three (3) years regarding Actions or Proceedings pending or, to
the knowledge of the Shareholder, threatened against, relating to or affecting
the Company.  Schedule 2.11 sets
forth all Actions or Proceedings against or by the Company during the last
three (3) years.

2.12                           Compliance
With Laws and Orders.  To Shareholder’s
knowledge, the Company has not violated, and is not currently in violation or
default under, any material Law or Order applicable to the Company or any of
its Assets and Properties.

2.13                           Benefit
Plans.  The Company has provided summary
information regarding its Benefit Plans to the Parent as set forth in Schedule
2.13.

2.14                           Title
to Property.  The Company has good
and marketable title to all of its properties, interests in properties and
assets, real and personal, reflected in the Company Financials or acquired
after the Financial Statement Date (except properties, interests in properties
and assets sold or otherwise disposed of since the Financial Statement Date in
the ordinary course of business), or with respect to leased properties and
assets, valid leasehold interests in, free and clear of all mortgages, liens,
pledges, charges or encumbrances of any kind or character, except (i) the lien
of current Taxes not yet due and payable or which are being contested by the
Company in good faith, (ii) such imperfections of title, liens and easements as
do not and will not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties, (iii) liens securing debt which
is reflected on the Company Financials and (iv) Liens listed on Schedule
2.14.  The property and equipment of
the Company that are used in the operations of its business are in good
operating condition subject to normal wear and tear.  All material properties used in the
operations of the Company are reflected in the Company Financials.  The Company owns no real property.

2.15                           Intellectual
Property    At the Effective Time,
Parent or Parent’s wholly owned subsidiary shall assign to the Surviving
Corporation all of its rights and interest in the Company Intellectual Property
as listed in Schedule II, which shall include but not be limited to the entries
listed on the Intangible Appraisers, Inc. valuation report dated November 9,
2006.

(a)                                  Except
as set forth on Schedule 2.15(a), the Company owns, or is licensed or
otherwise possesses legally enforceable rights to use, all Intellectual
Property that is used or

 16
 

currently proposed to be used
in the business of the Company as currently conducted or as presently proposed
by the Company to be conducted in the immediate future.

(b)                                 Except
as set forth in Schedule 2.15(b), the Company has not (i) licensed any
Company Intellectual Property in source code form to any third party or (ii)
entered into any exclusive agreements relating to any Company Intellectual
Property with any third party.

(c)                                  Schedule
2.15(c) lists (i) all patents and patent applications and all registered
trademarks, trade names and service marks, registered copyrights, domain names,
and maskworks, included in the Company Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has been issued or
registered or in which any application for such issuance and registration has
been filed, (ii) all licenses, sublicenses and other agreements as to which the
Company is a party and pursuant to which any other Person is authorized to use
any Intellectual Property, and (iii) all licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third-party Intellectual Property (“Third Party Intellectual Property Rights”)
which are incorporated in, are, or form a part of any Company product or which
are otherwise used (or currently proposed to be used) by the Company in the
business of the Company as currently conducted or as proposed to be conducted
by the Company, other than off-the-shelf software programs licensed under
standard Shrink Wrap License Agreements.

(d)                                 To
Shareholder’s knowledge, no Person (including employees and former employees of
the Company) is infringing, misappropriating or otherwise making any
unauthorized use or disclosure of any Intellectual Property rights of the
Company or any Third Party Intellectual Property Rights to the extent licensed
by or through the Company.  The Company
has not entered into any agreement to indemnify any other Person against any
charge of infringement of any Company Intellectual Property, except as set
forth in Schedule 2.15(d).

(e)                                  To
Shareholder’s knowledge, the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Company Intellectual Property or Third Party Intellectual
Property Rights.

(f)                                    To
Shareholder’s knowledge, all patents, registered trademarks, domain names,
service marks and copyrights held by the Company are valid and subsisting, and
the marketing, licensing or sale of its products, to the knowledge of the
Shareholder does not infringe any patent, trademark, service mark, copyright,
trade secret or other proprietary right of any third party.  Except as set forth on Schedule 2.15(f),
during the last three (3) years, the Company (i) has not been sued in any suit,
action or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party; and (ii) has not brought any action, suit
or proceeding for infringement of Intellectual Property or breach of any
license or agreement involving Intellectual Property against any third party.

(g)                                 Subsequent
to June 1, 2003, the Company has secured valid written assignments and waivers
of any rights from consultants and employees who contributed to the creation or
development of Company Intellectual Property of the rights to such
contributions that

 17
 

the Company does not already own by operation
of law.  To the best of Shareholder’s
knowledge, prior to June 1, 2003 Intellectus, LLC had all of these foregoing
rights.

(h)                                 The
Company has taken what it considers to be commercially reasonable and
appropriate steps to protect and preserve the confidentiality of all Company
Intellectual Property not otherwise protected by patents, patent applications
or copyright (“Confidential Information”).  All use, disclosure or appropriation of
Confidential Information by the Company by or to a third party has been
pursuant to the terms of a written agreement between the Company and such third
party, except where the failure to do so would not constitute a Material
Adverse Effect.

2.16                           Contracts.

(a)                                  Schedule
2.16(a) contains a true and complete list of each of the material Contracts
(true and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all continuing waivers of any material terms thereof, have been made available
to Parent prior to the execution of this Agreement) of the Company.  Schedule 2.16(a) contains a true and
complete list of each Contract (denoted with an asterisk) of the Company not
terminable by the Company upon 30 days (or less) notice by the Company without
penalty or obligation to make payments based on such termination.

(b)                                 Each Contract
disclosed in Schedule 2.16(a), unless otherwise stated therein, is in
full force and effect and constitutes, to Shareholder’s knowledge, a legal,
valid and binding agreement, enforceable in accordance with its terms, and, to
the knowledge of the Shareholder, no party to such Contract is, nor has
received notice that it is, in violation or breach of or default under any such
Contract (or with notice or lapse of time or both, would be in violation or
breach of or default under any such Contract).

(c)                                  Except as set forth
on Schedule 2.16(c), the Company is not a party to or bound by any
Contract that (i) automatically terminates or allows termination by the other
party thereto upon consummation of the transactions contemplated by this
Agreement or (ii) contains any covenant or other provision which limits the
ability of the Company to compete with any Person in any line of business or in
any area or territory.

2.17                           Insurance.  The Company’s current insurance policies, if
any, are listed on Schedule 2.17.

2.18                           Affiliate
Transactions.

(a)                                  Except
as disclosed in Schedule 2.18(a) or as otherwise disclosed or discussed
herein or contemplated hereby, (i) there are no Contracts or Liabilities
between the Company, on the one hand, and (1) any current or former officer,
director, shareholder, or to the knowledge of the Shareholder, any Affiliate or
Associate of the Company or (2) any Person who, to the knowledge of the
Shareholder, is an Associate of any such officer, director, shareholder or
Affiliate, on the other hand, (ii) the Company does not provide or cause to be
provided any assets, services or facilities to any current or former officer,
director, shareholder, Affiliate or Associate of the Company, (iii) no current
or former officer, director, shareholder, Affiliate or

 18
 

Associate of the Company
provides or causes to be provided any assets, services or facilities to the
Company and (iv) the Company does not beneficially own, directly or indirectly,
any Investment Assets of any current or former officer, director, shareholder,
Affiliate or Associate of the Company.

(b)                                 Each of the Contracts
and Liabilities listed in Schedule 2.18(a), if any, was entered into or
incurred, as the case may be, on terms no less favorable to the Company (in the
reasonable judgment of the Company) than if such Contract or Liability was
entered into or negotiated on an arm’s length basis on competitive terms.  Any Contract to which the Company is a party
and in which any director of the Company has a financial interest in such
Contract was approved in accordance with applicable law.

2.19                           Employees;
Labor Relations.

(a)                                  Except
as set forth on Schedule 2.19(a), to Shareholder’s knowledge, the Company is in
compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any material respect in any unfair
labor practice except where non-compliance with any of the foregoing by the
Company will not constitute a Material Adverse Effect.  Except as set forth on Schedule 2.19(a), to
Shareholder’s knowledge, the Company is not liable for any payment to any trust
or other fund or to any governmental or administrative authority, with respect
to employment insurance, social security, workers compensation, health or other
benefits or obligations for employees (other than routine payments to be made
in the normal course of business and consistent with past practice).  There are no pending claims against the
Company under any workers compensation plan or policy or for long term disability
which constitutes a Material Adverse Effect. 
There are no controversies pending or, to the knowledge of the
Shareholder, threatened, between the Company and any of its employees, which
controversies have or could reasonably be expected to result in an action,
suit, proceeding, claim, arbitration or investigation before any agency, court
or tribunal, foreign or domestic, which, in any of the foregoing cases,
constitutes a Material Adverse Effect. 
The Company is not a party to any collective bargaining agreement or
other labor union Contract nor does the Company know of any activities or
proceedings of any labor union to organize any such employees.  To Shareholder’s knowledge, no employees of
the Company are in violation of any term of any employment Contract, patent
disclosure agreement, non-competition agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be employed by
the Company because of the nature of the business conducted or proposed to be
conducted by the Company or to the use of trade secrets or proprietary
information of others.  No employees of
the Company have given notice to the Company, nor is the Company otherwise
aware, that any such employee intends to terminate his or her employment with
the Company.

(b)                                 Except as set forth in
Schedule 2.19(b), all employees of the Company are terminable by the
Company upon reasonable notice in accordance with applicable Law.  Schedule 2.19(b) sets forth,
individually and by category, the name of each officer, employee and
consultant, together with such person’s position or function, annual base
salary or wage and any incentive, severance or bonus arrangements with respect
to such person.  The completion of the
transactions contemplated by this Agreement will not result in any payment or
increased

 19
 

payment becoming due from the Company to any officer, director, or
employee of, or consultant to, the Company other than as set forth in Article 1
hereof.  To Shareholder’s knowledge, the
Company is not a party to any agreement for the provision of labor from any
outside agency that would result in treatment of such providers of labor as an
employee of the Company.  To Shareholder’s
knowledge, there have been no claims by employees of such outside agencies, if
any, with regard to employees assigned to work for the Company, and no claims
by any governmental agency with regard to such employees.

(c)                                  Except as disclosed
on Schedule 2.19(c), during the last three (3) years, there have been no
federal or state claims based on employment equity, sex, sexual or other
harassment, age, disability, race or other discrimination or common law claims,
including claims of wrongful dismissal, severance pay, payment in lieu of
notice or bad faith termination, by any employees of the Company or by any of
the employees performing work for the Company but provided by an outside
employment agency, and there are no facts or circumstances known to the Company
that could reasonably be expected to give rise to such complaint or claim.

(d)                                 The Company has
written employment policies and/or employee handbooks or manuals to the extent
required by Law.  To the knowledge of the
Shareholder, no officer, employee or consultant of the Company is obligated
under any Contract or other agreement or subject to any Order or Law that would
interfere with the Company’s business as currently conducted.

2.20                           Environmental
Matters.  The Company does not now
own, and has never owned, any fee simple interest in real property.

2.21                           Substantial
Customers and Suppliers.  Schedule
2.21 lists the 15 largest customers of the Company, collectively, on the
basis of revenues collected or accrued for the most recent completed fiscal
year.  Schedule 2.21 also lists
the 15 largest suppliers of the Company on the basis of cost of goods or
services purchased for the most recent fiscal year ended.  To the knowledge of the Shareholder no such
customer or supplier is threatened with bankruptcy or insolvency.

2.22                           Accounts
Receivable.  To Shareholder’s
knowledge, except as set forth in Schedule 2.22 the accounts and notes
receivable of the Company reflected on the Company Financials, and all accounts
and notes receivable arising subsequent to the Financial Statement Date, (a)
arose from bona fide sales transactions in the ordinary course of business,
consistent with past practice, and are payable on ordinary trade terms, (b) are
legal, valid and binding obligations of the respective debtors enforceable in
accordance with their respective terms, (c) are not subject to any valid
set-off or counterclaim and (d) do not represent obligations for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement.

2.23                           Inventory.  The Company maintains inventory, as listed in
Schedule 2.23, to ensure the timely delivery of products sold to end
customers.  This inventory is maintained
in storage facilities in and around Reston, Virginia.  The Company also maintains small quantities
of immaterial office supplies inventory in its offices in Reston, Virginia and
Charleston, South Carolina.

 20
 

2.24                           Other
Negotiations; Brokers; Third Party Expenses.  Except as set forth in Schedule 2.24,
neither the Company nor, to the knowledge of the Shareholder, any of its
Affiliates (nor any investment banker, financial advisor, attorney, accountant
or other Person retained by, and in connection with its actions, for or on
behalf of the Company or any such Affiliate) (i) has entered into any Contract
that conflicts with any of the transactions contemplated by this Agreement or
(ii) has entered into any Contract or had any discussions with any Person
regarding any transaction involving the Company which could result in the
Company’s being subject to any claim for liability to said Person as a result
of entering into this Agreement or consummating the transactions contemplated
hereby.  Without limiting the foregoing,
except as set forth in Schedule 2.24, no finder, broker, agent,
financial advisor, or other intermediary has acted on behalf of the Company in
connection with the Merger or the negotiation or consummation of this Agreement
or any of the transactions contemplated hereby. 
Schedule 2.24 sets forth a reasonable estimate of all Third Party
Expenses expected to be incurred by the Company through the Closing Date in
connection with the negotiation of the terms and conditions of this Agreement
and the Closing of the transactions contemplated hereby.

2.25                           Warranty
Obligations; Maintenance Contracts.

(a)                                  Schedule
2.25 sets forth (a) a list of all forms of written warranties, guarantees
and written warranty policies of the Company in respect of any of the Company’s
products and services, which are currently in effect (the “Warranty
Obligations”), and the duration of each such Warranty
Obligation, (b) each of the Warranty Obligations which is subject to any
dispute or, to the knowledge of the Shareholder, threatened dispute and (c) a
brief description of any claims during the last three (3) years made under or
with respect to warranties, guarantees and warranty policies of or relating to
the Company’s products and services. 
True and correct copies of the Warranty Obligations have been delivered
to Parent prior to the execution of this Agreement.  To Shareholder’s knowledge, there have not
been any material deviations from the Warranty Obligations, and salespersons,
employees and agents of the Company are not authorized to undertake obligations
to any customer or other Person in excess of such Warranty Obligations.  All products manufactured, designed, licensed,
leased, rented or sold by the Company (i) were, when sold by the Company, free
from material defects in construction and design and (ii) satisfy any and all
Contract or other specifications related thereto to the extent stated in
writing in such Contracts or specifications, in each case, in all material
respects, in each case other than as a result of software “bugs” that are
remediable in the ordinary course without material cost to the Company.

(b)                                 The Company has no
prepaid maintenance contracts.

2.26                           Foreign
Corrupt Practices Act.  Neither the
Company, nor to the knowledge of the Shareholder, any agent, employee or other
Person acting on behalf of the Company has, directly or indirectly, used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, made any unlawful payment to
any government official or employee or to any political party or campaign from
corporate funds, violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other similar unlawful payment which will would reasonably be
expected to give rise to a Material Adverse Effect.

 21
 

2.27                           Financial
Projections.  Any and all financial
projections discussed in presentations to investors, bankers and Parent, if
any, made by the Company with respect to the Company’s business were prepared
for internal use only.  The Company makes
no representation or warranty of any kind whatsoever regarding the accuracy of
any such projections or as to whether any such projections will be achieved,
except that (i) all future payments to the Shareholder, as outlined in Article
1 herein, are contingent on the Company achieving such financial projections
and (ii) the Company represents and warrants that any such projections were
prepared in good faith and were based on assumptions believed by it to be
reasonable at the time.

2.28                           Approvals.

(a)                                  No
Approvals of Governmental or Regulatory Authorities relating to the business
conducted by the Company are required to be given to or obtained by the Company
from any and all Governmental or Regulatory Authorities in connection with the
consummation of the transactions contemplated by this Agreement, except
(i) Approvals related to the filings contemplated by Section 1.2 or (ii) where
the failure to obtain such Approval would not constitute a Material Adverse
Effect.

(b)                                 Except as set forth in
Schedule 2.28(b), no non-Governmental or Regulatory Authority Approvals
are required to be given to or obtained by the Company from any third parties
in connection with the consummation of the transactions contemplated by this
Agreement, except where the failure to obtain such Approvals would not
constitute a Material Adverse Effect.

(c)                                  To Shareholder’s
knowledge, the Company has obtained all Approvals from Governmental or
Regulatory Authorities necessary to conduct the business conducted by the
Company in the manner as it is currently being conducted, except where the
failure to obtain such Approvals would not constitute a Material Adverse
Effect, and, during the last three (3) years, there has been no written notice
received by the Company of any violation or non-compliance with any such
Approvals.  All Approvals from
Governmental or Regulatory Authorities necessary to conduct the business
conducted by the Company as it is currently being conducted are set forth in Schedule
2.28(c).

2.29                           Leases
in Effect.  The Company has real
property leases or subleases, priced at market rates, as set forth in Schedule
2.29 relating to premises which accommodate not less than 35 employees in
locations within the Reston, Virginia and the Charleston, South Carolina metro
areas.

2.30                           Disclosure.  To the Shareholder’s knowledge, no
representation or warranty contained in this Agreement or any related Schedule
or in any certificate, list or other writing furnished to Parent pursuant to
any provision of this Agreement (including the Company Financials and the notes
thereto) contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements herein or therein, in the light of
the circumstances under which they were made, not misleading.

 22

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent
and Merger Sub hereby represent and warrant, jointly and severally, to the
Company and the Shareholder, subject to such exceptions as are disclosed in the
corresponding Schedules with respect to specific sections of this Article 3,
and subject to the right of the Parent and Merger Sub to update, revise,
supplement and/or correct such Schedules through the Closing Date, as follows:

3.1                                 Organization,
Standing and Power.  Parent and Merger
Sub are each corporations duly organized, validly existing and in good standing
under the laws of the State of Nevada. 
Parent and Merger Sub each have the corporate power to own their
properties and to carry on their business as now being conducted and as
proposed to be conducted and are duly qualified to do business and are in good
standing in each jurisdiction in which the ownership, use, licensing or leasing
of their Assets and Properties, or the conduct or nature of their business,
makes such qualification, licensing or admission necessary, except for such
failures to be so duly qualified, licensed or admitted and in good standing
that could not reasonably be expected to have a material adverse effect on the
Business or Condition of Parent or Merger Sub. 
Neither Parent nor Merger Sub is in violation of any of the provisions
of its Articles of Incorporation or Bylaws or any similar governing instruments
or agreements.

3.2                                 Capital
Structure of Parent and Merger Sub.          (a) The authorized capital stock of Parent
consists of 800,000,000 shares of Parent Common Stock and 20,000,000 shares of
Parent Preferred Stock, all $0.001 par value per share, 10,000,000 shares of
Parent Preferred Stock are designated Series A Preferred Stock.  24,945,000 shares of Parent Common Stock and
2,300,000 shares of Series A Preferred Stock, respectively, are issued and
outstanding as set forth in the Capitalization Table attached hereto and
incorporated herein as Schedule 3.2. 
Other than as set forth on Schedule 3.2, there are no shares of
Parent Common Stock or Series A Preferred Stock outstanding.  All outstanding shares of Parent Common Stock
and Series A Preferred Stock have been duly authorized, validly issued, fully
paid and are nonassessable and free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof.  Except as set forth on Schedule 3.2(a),
there are no existing options, warrants, calls, convertible securities or
commitments of any kind obligating the Parent to issue any authorized and
unissued Parent Common Stock or Series A Preferred Stock, nor does Parent have
any outstanding commitment or obligation to repurchase, reacquire or redeem any
of its outstanding capital stock. There are no stock appreciation or similar
rights to receive cash payment in respect or in lieu of options to purchase
shares of Parent Common Stock or Series A Preferred Stock or otherwise.  Except as disclosed in Schedule 3.2(a),
there are no voting trusts, voting agreements, buy-sell agreements or other
agreements or arrangements affecting Parent Common Stock or Series A Preferred
Stock.  The shares of Parent Common Stock
to be issued pursuant to the transactions contemplated herein will, upon
issuance pursuant to the terms hereof, be duly authorized, validly issued,
fully paid, and non-assessable shares of Parent Common Stock.   Parent has delivered a true, correct and
complete copy of its Articles of Incorporation, as set forth in Schedule
3.2(a)(i), and its Bylaws, as set forth in Schedule 3.2(a)(ii), as
amended to date, to Company.

 23
 

(b)  The authorized capital stock of Merger Sub
consists solely of 1,000 shares of Common Stock, $0.001 par value per share, of
which 1,000 shares are issued and outstanding and all of which are owned by
Parent.  All issued and outstanding
shares of capital stock of Merger Sub have been duly authorized and validly
issued and are fully paid and are nonassessable and free of any liens or
encumbrances.  The Merger Sub has
delivered a true, correct and complete copy of its Articles of Incorporation,
as set forth in Schedule 3.2(b)(i), and its Bylaws, as set forth in Schedule
3.2(b)(ii),  as amended to date, to
Company.

3.3                                 Authority.  Parent and Merger Sub each has full corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.  This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub, and, assuming the due
authorization, execution and delivery hereof by the Company and the
Shareholder, constitutes a legal, valid and binding obligation of Parent and
Merger Sub enforceable against Parent and Merger Sub in accordance with its
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors’ rights generally
and by general principles of equity. 
Merger Sub has been recently formed for the purpose of effecting the
Merger and has not conducted any business except in connection with preparation
for the Merger.  Parent owns all of the
issued and outstanding capital stock of Merger Sub.  The execution, delivery and performance of
each of this Agreement and any agreements contemplated hereby to which it is a
party have been duly authorized by all necessary action on the part of each of
Parent and Merger Sub, their respective boards of directors, and the sole
stockholder of Merger Sub.  A vote of
Parent’s stockholders will be required to approve the Merger and the related
transactions contemplated hereby.

3.4                                 Financial
Statements of Parent.

(a)                                  All
financial statements of Parent, as set forth in Schedule 3.4(a) and
provided to the Company and to the Shareholder (including, in each case, any
notes thereto), were prepared in accordance with GAAP on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), are correct and complete in all material respects and each present
fairly, in all material respects, the financial position and results of
operations of Parent as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring immaterial year-end
adjustments).  The Parent’s consolidated
financial statements have been filed with the U.S. Securities and Exchange
Commission.  Since the date of the last
financial statements of Parent, there has been no change in any accounting
policies, principles, methods or practices, including any change with respect
to reserves (whether for bad debts, contingent liabilities or otherwise), of
Parent.

(b)                                 Except as and to the
extent set forth or reserved against on the consolidated balance sheet of
Parent, none of Parent or any Subsidiary of Parent has any Liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on a balance sheet or in notes thereto,
except for Liabilities or obligations incurred in the ordinary course of
business consistent with past practice since January 1, 2007.

 24
 

3.5                                 No
Conflicts.  The consummation by the
Parent and Merger Sub of the transactions contemplated hereby do not and will
not:

(a)                                  conflict
with or result in a violation or breach of any terms, conditions or provisions
of the Articles of Incorporation or Bylaws, as amended, or equivalent documents
of the Parent and Merger Sub;

(b)                                 conflict with or
result in a violation or breach of any Law or Order applicable to the Parent
and Merger Sub or by which any of their Assets and Properties are bound or
affected; or

(c)                                  (i) conflict with or
result in a violation or breach of, (ii) constitute a default (or an event
that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require the Parent or Merger Sub to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of (except for filings with the Nevada Secretary of
State and the Securities and Exchange Commission, as necessitated by this
transaction and described on Schedule 3.5(c), (iv) result in or give to
any Person any right of termination, cancellation, acceleration or modification
in or with respect to, (v) result in or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments or performance under, (vi) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon the Parent or Merger Sub or
any of their Assets and Properties under or (vii) result in the loss of a
material benefit under, any of the terms, conditions or provisions of any
Contract or License to which the Parent or Merger Sub are a party or by which
the Parent or Merger Sub or their Assets and Properties are bound or affected.

3.6                                 Books
and Records; Organizational Documents. 
The minute books, including the share registers, and other similar
records of the Parent and Merger Sub have been provided or made available to
Company or its counsel prior to the execution of this Agreement, are complete
and correct in all material respects and have been maintained in accordance
with sound business practices.  Such
minute books contain a true and complete record of all material actions taken
at all meetings and by all written consents in lieu of meetings of the
directors, shareholders and committees of the Board of Directors of the Merger
Sub through the date hereof.

3.7                               Restrictions
on Business Activities.  There is no
agreement, judgment, injunction, Order or decree binding upon the Parent or
Merger Sub, or any of their Assets and Properties which has had or could
reasonably be expected to have the effect of prohibiting or impairing any
current or future business practice of the Parent or Merger Sub, respectively,
any acquisition of property by the Parent or Merger Sub or the conduct of
business by the Parent or Merger Sub as currently conducted or as proposed to
be conducted by the Parent or Merger Sub, directly related to this Agreement.

3.8                                 Taxes.

(a)                                  The
Parent and Merger Sub have, if required by statutes, properly filed and paid
any Taxes due in connection herewith. 
The Parent and Merger Sub are not required to, and do not expect to,
file and pay Taxes on their operations for the Tax year 2006, by the due

 25
 

date, or the extension thereof.  The Parent and Merger Sub have prepared and
maintained adequate records so as to facilitate the prompt filing of Tax
Returns when they become due, if required to be filed.

(b)                                 The Parent and Merger
Sub have not incurred any material liability for Taxes other than as reflected
on their financials.

(c)                                  The Parent and Merger
Sub do not have knowledge of any actions by any Taxing Authority in connection
with assessing additional Taxes against and in respect of the Parent and Merger
Sub for any past period.  There is no
dispute or claim concerning any Tax Liability of the Parent and Merger Sub (i)
threatened, claimed or raised by any Taxing Authority and (ii) of which the
Parent and Merger Sub are aware.  There
are no Liens for Taxes upon the Assets and Properties of the Parent and Merger
Sub other than Liens for Taxes not yet due.

3.9                                 Legal
Proceedings.  Except as set forth on Schedule
3.9:

(a)                                  at
the present and since the Parent’s incorporation, there are not and have not
been any Actions or Proceedings brought or, to the knowledge of the Parent or
Merger Sub, pending or threatened against the Parent or Merger Sub or its
Assets and Properties;

(b)                                 there are no facts or
circumstances known to the Parent or Merger Sub that could reasonably be
expected to give rise to any Action or Proceeding against, relating to or
affecting the Parent and Merger Sub; and

(c)                                  the Parent and Merger
Sub have not received notice, and do not otherwise have knowledge of any Orders
outstanding against the Parent and Merger Sub, respectively.

3.10                           Compliance
With Laws and Orders.  The Parent and
Merger Sub have not violated, and are not currently in violation or default under,
any Law or Order applicable to the Parent and Merger Sub or any of their Assets
and Properties.

3.11                           Benefit Plans.  Neither the Parent nor the Merger Sub has any
Benefit Plans.

3.12                           Securities
Compliance.  The Parent at the time
of Closing will be in compliance with applicable federal and state securities
laws and regulations as they apply to this transaction.

3.13                           Title
to Property. Neither the Parent nor the Merger Sub has title to any
property except, with respect to Parent, the shares of its Subsidiaries, all of
which are listed on Schedule 3.13.

3.14                           Environmental
Matters.  Neither Parent nor Merger
Sub now own, license or lease any real property and neither Parent nor Merger
Sub has ever owned, licensed or leased any real property.  The Parent and Merger Sub and all of the
Subsidiaries and Affiliates of Parent and Merger Sub (a) are in compliance with
all environmental laws; and (b) are in possession of, and in compliance with,
all permits, certificates, licenses, approvals, tariffs and other authorizations
of or issued by Governmental or Regulatory Authorities with respect to
environmental matters

 26
 

relating to the
operations of such Subsidiaries or Affiliates. 
There are no current environmental claims pending, or to  the knowledge of the Parent and the Merger
Sub threatened, against any such Subsidiary or Affiliate.  Neither the Parent nor the Merger Sub or any
of their respective Subsidiaries or Affiliates has either expressly or, to the
Parent’s knowledge, by operation of law, assumed or undertaken any liability or
corrective, investigatory or remedial obligation of any other Person relating
to any environmental claims.

3.15                           Other
Negotiations; Brokers; Third Party Expenses.  Neither the Parent nor Merger Sub, to the
knowledge of the Parent and Merger Sub, or any of their Affiliates (nor any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of the Parent and Merger Sub or any such
Affiliate) (i) has entered into any Contract that conflicts with any of the
transactions contemplated by this Agreement or (ii) has entered into any
Contract or had any discussions with any Person regarding any transaction
involving the Parent and Merger Sub which could result in the Parent or Merger
Sub’s being subject to any claim for liability to said Person as a result of
entering into this Agreement or consummating the transactions contemplated
hereby.  Without limiting the foregoing,
except as set forth in Schedule 3.14, no finder, broker, agent, financial
advisor, or other intermediary has acted on behalf of Parent or Merger Sub in
connection with the Merger or the negotiation or consummation of this Agreement
or any of the transactions contemplated hereby.

3.16                           Foreign
Corrupt Practices Act.  Neither the
Parent nor Merger Sub, nor to the knowledge of the Parent and Merger Sub, any
agent, employee or other Person associated with or acting on behalf of the
Parent and Merger Sub has, directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, made any unlawful payment to any government
official or employee or to any political party or campaign from corporate
funds, violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or made any bribe, rebate, payoff, influence payment, kickback or
other similar unlawful payment.

3.17                           Approvals.

(a)                                  No
Approvals of Governmental or Regulatory Authorities relating to the business
conducted by the Parent and Merger Sub are required to be given to or obtained
by the Parent and Merger Sub from any and all Governmental or Regulatory
Authorities in connection with the consummation of the transactions
contemplated by this Agreement, except for filings with the Nevada Secretary of
State and the National Association of Securities Dealers (NASD) as described on
Schedule 3.16(a).

(b)                                 No non-Governmental or
Regulatory Authority Approvals are required to be given to or obtained by the
Parent and Merger Sub from any third parties in connection with the
consummation of the transactions contemplated by this Agreement.

(c)                                  The Parent and Merger
Sub have obtained all Approvals from Governmental or Regulatory Authorities
necessary to conduct the business conducted by the Parent and Merger Sub in the
manner as it is currently being conducted and has been conducted since the date
of incorporation of the Parent and Merger Sub, and there has been no written

 27
 

notice received by the Parent and Merger Sub of any violation or
non-compliance with any such Approvals.

3.18                           Financing.  The Parent and Merger Sub have or shall
obtain funds sufficient to pay at Closing the amounts provided for under
Section 1.6(a)(ii).

3.19                           SEC
Status; Securities Issuances.  The
Parent is subject to the reporting provisions of Section 15(d) of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations of the SEC promulgated under the Exchange Act.  All issuances of securities by the Parent and
its Subsidiaries and Affiliates were conducted in compliance with the
provisions of all applicable securities laws and regulations.

ARTICLE 4

CONDUCT PRIOR TO THE CLOSING

4.1                                 Conduct
of Business of the Company.  All
parties mutually agree that during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to the provisions of Section 8.1 hereof or the Closing, the Company, Parent and
Merger Sub each shall (unless otherwise required by this Agreement or Company has
given its prior written consent to Parent or Merger Sub or Parent has given its
prior written consent to the Company, as the case may be) carry on its business
in the ordinary course consistent with past practice, to pay its Liabilities
and Taxes consistent with its past practices, to pay or perform other
obligations when due consistent with its past practices, subject to any good
faith disputes over such Liabilities, Taxes and other obligations and, to the
extent consistent with such business, to use reasonable efforts and institute
all policies to preserve intact its present business organization, keep
available the services of its present officers and key employees, preserve its
relationships with customers, suppliers, distributors, licensors, licensees,
independent contractors and other Persons having business dealings with it and
to cause its Subsidiaries to do the same, all with the express purpose and
intent of preserving unimpaired its goodwill and ongoing businesses at the
Closing.  Notwithstanding any other
provisions in this Agreement, the Company shall have the right to negotiate and
settle the Navy Billing Dispute.  Except
as expressly contemplated by this Agreement or disclosed in Schedules, neither
(1) Company, on the one hand, nor (2) Parent or Merger Sub on the other hand,
will, without the prior written consent of the other, voluntarily take or agree
in writing or otherwise to take any action that would make any of its
representations or warranties contained in this Agreement untrue or incorrect
or prevent the applicable party (or parties) from performing or cause the
applicable party (or parties) not to perform its agreements and covenants
hereunder.

Except as expressly contemplated by this
Agreement or disclosed in Schedules, the Company will not, without the prior
written consent of the Parent, voluntarily take or agree in writing or
otherwise to:

(a)                                  take
any of the actions described in Section 2.7;

(b)                                 issue
additional shares of its or their, as applicable, capital stock or grant any
warrants, options or other rights to acquire shares of its or their, as
applicable, capital stock;

 28
 

(c)                                  make
any capital expenditures or commitments for additions to property, plant or
equipment of the Company constituting capital assets individually in an amount
exceeding twenty-five thousand dollars ($25,000);

(d)                                 incur any additional
long-term debt, short-term debt or liabilities to Company Shareholders or their
Affiliates;

(e)                                  distribute any assets
or make any payments of any kind to Company Shareholders or their Affiliates,
except for reasonable rent payments and travel related expenses;

(f)                                    enter into or
continue any commercial relationships of any kind with Company Shareholders or
their Affiliates, except for facilities and travel related matters.

4.2                                 No
Solicitation.  Until the earlier of
the Closing or the date of termination of this Agreement pursuant to the
provisions of Section 8.1 hereof, neither Company nor Parent or Merger Sub, nor
the Shareholder, officers, directors, agents, investment bankers or other
representatives of any of them (collectively, the “Representatives”) will, directly or
indirectly, (i) solicit, engage in discussions or negotiate with any Person
(regardless of who initiates such discussions or negotiations), or take any
other action intended or designed to facilitate the efforts of any Person,
other than the parties hereto, relating to the possible acquisition of the
Company, Parent or Merger Sub (whether by way of purchase of capital stock,
purchase of assets or otherwise) or any significant portion of its capital
stock or assets by any Person other than the parties hereto (an “Alternative Acquisition”), (ii) provide
information with respect to the Company, Parent or Merger Sub to any Person
relating to a possible Alternative Acquisition by any Person, (iii) enter into
an agreement with any Person providing for a possible Alternative Acquisition,
or (iv) make or authorize any statement, recommendation or solicitation in
support of any possible Alternative Acquisition by any Person.  The Company, Parent, or Merger Sub, as the
case may be, shall cause its Representatives to immediately cease and cause to
be terminated all existing discussions or negotiations with any Person
heretofore conducted with respect to any possible Alternative Acquisition.

Each
of the Company, the Shareholder, Parent and Merger Sub acknowledge that the
terms of this Section 4.2 are a significant inducement for the Company, the
Shareholder, Parent and Merger Sub to enter into this Agreement and the absence
of such provision would have resulted in either (i) a material change in the
terms hereof or (ii) a failure to induce the parties hereto to enter into this
Agreement.

ARTICLE 5

ADDITIONAL AGREEMENTS

5.1                                 Access
to Information.  Between the date of
this Agreement and the earlier of the Closing or the termination of this
Agreement, upon reasonable advance notice given to the Company, the Company
will (i) give Parent and its respective officers, employees, accountants,
counsel, financing sources and other agents and representatives reasonable
access to all buildings, offices, and other facilities of the Company and to
the extent permitted by law to all Books and Records of the Company, regardless
of where located; (ii) permit Parent to make such

 29
 

inspections as it
may require; (iii) cause its officers to furnish Parent such financial,
operating, technical and product data and other information with respect to the
business and Assets and Properties of the Company as Parent from time to time
may reasonably request to verify the representations and warranties provided
herein and for integration planning purposes, including without limitation
financial statements and schedules; (iv) allow Parent the opportunity to
interview non-clerical employees and other personnel and Affiliates of the
Company during normal business hours with the Company’s prior written consent,
which consent will not be unreasonably withheld or delayed; and (v) assist and
cooperate with Parent in the development of integration plans for
implementation by Parent and the Company following the Closing; provided,
however, that no investigation pursuant to this Section 5.1 will affect or be
deemed to modify any representation or warranty made by the Company herein.

5.2                                 Confidentiality.  Parent, Merger Sub and Company acknowledge
and agree that the terms and conditions described in this Agreement, including
its existence, as well as the non-public information and data furnished to them
or their respective Representatives from the first introduction of the parties
and throughout the negotiation and drafting of this Agreement is confidential
and will not be disclosed to any third party, or used for any purpose not
specifically contemplated herein, without prior written consent of the other
party, unless otherwise required by Law or unless it ceases to be confidential
through no breach of the receiving party.

5.3                                 Expenses.  Whether or not the transactions contemplated
hereby are consummated, all fees and expenses incurred in connection with this
Agreement including all legal, accounting, financial advisory, consulting and
all other fees and expenses of third parties (“Third Party Expenses”), as set forth in Schedule 5.3,
incurred by a party in connection with the negotiation and effectuation of the
terms and conditions of the transactions contemplated hereby, including this
Agreement, and the transactions contemplated hereby will be the obligation of
the respective party incurring such Third Party Expenses.  Notwithstanding the foregoing, the Parent
will pay all reasonable closing costs and Company Shareholders will be jointly
and severally responsible for the payment of any fees and expenses they incur
for advice given to them by their own advisors.

5.4                                 Public
Disclosure.  The parties agree that
prior to making any public announcement with respect to this Agreement or any
other matter relating to the transactions contemplated hereby, each will
consult with the other and will use reasonable efforts either to agree upon the
text of a proposed joint announcement or to obtain the other’s approval of the
text of an announcement to be made solely on behalf of such party, provided
that any party may make such disclosures or statements as it reasonably
believes, after consulting with counsel, may be required by Law, regulation or
rule of any Governmental or Regulatory Authority or any stock exchange, though
the disclosing party will provide advance notice to the other party of such
required disclosure as far in advance as is reasonably practicable.

5.5                                 Approvals.  The Company and Parent will cooperate and use
commercially reasonable efforts to obtain the Approvals, if any, from
Governmental or Regulatory Authorities or under any of the Contracts or other
agreements as may be required in connection with the transactions contemplated
hereby as to preserve all rights of and benefits to the Company
thereunder.  Parent will provide the
Company with such assistance and information as is reasonably required to
obtain such Approvals.

 30
 

5.6                                 Notification
of Certain Matters.  The Company will
give prompt notice to Parent and Merger Sub, and Parent and Merger Sub will
give prompt notice to the Company, of (i) the occurrence or non-occurrence of
any event, the occurrence or nonoccurrence of which is likely to cause any
representation or warranty of the Company, the Shareholder, or the Parent or
Merger Sub, respectively, contained in this Agreement to be untrue or
inaccurate at or prior to the Closing Date and (ii) any failure of the Company,
the Shareholder, or Parent or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.6 will not limit or otherwise affect any remedies available to
the party receiving such notice.

5.7                                 Additional
Documents and Further Assurances. 
Each party hereto, at the request of the other party hereto, will
execute and deliver such other instruments and documents per Schedule 5.7
and do and perform such other acts and things (including, but not limited to,
all action reasonably necessary to seek and obtain any and all consents and
approvals of any Government or Regulatory Authority or Person, if any are
necessary hereunder; provided, however, that Parent will not be obligated to
consent to any divestitures or operational limitations or activities in
connection therewith and no party will be obligated to make a payment of money
as a condition to obtaining any such condition or approval) as may be necessary
or desirable for effecting completely the consummation of this Agreement and
the transactions contemplated hereby.

5.8                                 Company’s
Accountants.  The Company will use
commercially reasonable efforts to cause its management and its accountants to
facilitate on a timely basis (i) the preparation of interim financial
statements prepared in accordance with GAAP through the date of Closing, and
reviewed by the Company’s accountants, (ii) the review of any Company audit or
review work papers for up to the past two (2) complete fiscal years including
the examination of selected interim financial statements and data, and (iii)
the delivery of such reports from the Company’s independent accountants as may
be reasonably requested by Parent or its accountants.  In addition, for
the purposes of the requirements of Internal Revenue Service Revenue Ruling
59-60 and the accounting requirements pursuant to the accounting for business
combinations, the Company shall deliver within ten (10) days of the Closing a
balance sheet of the Company as of the Closing Date (the “Closing Date Balance Sheet”) that has
been reviewed and approved by its independent accounting firm.   Within
fifteen (15) days after the delivery of the Closing Date Balance Sheet, Parent
will provide to the Company a proposed allocation of the Merger Consideration
which shall have been prepared by an independent valuation accountant or
consultant.

5.9                                 Conveyance
Taxes.  Parent, Merger Sub, and the
Company will cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any sales, use,
transfer, value added, and stock transfer, any transfer, recording,
registration and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Closing.

5.10                           Commercially
Reasonable Efforts.  Each party
hereto will use its commercially reasonable efforts to perform and fulfill all
obligations to be performed and fulfilled under this

 31
 

Agreement, and to
cause all conditions precedent to the consummation of the transactions to be
timely satisfied, to the end that the transactions contemplated by this
Agreement will be consummated substantially in accordance with its terms.

5.11                           Breach
of Representations, Warranties, Agreements and Covenants.  Subject to its rights under Section 8.1, each
party hereto will not voluntarily take, or fail to take, any action which from
the date hereof through the Closing would cause or constitute a material breach
of any of its representations, warranties, agreements and covenants set forth
in this Agreement.  In the event of, and
promptly after becoming aware of, the actual, pending or threatened occurrence
of any event which would cause or constitute such a breach or inaccuracy, such
party will give detailed notice thereof to the other parties hereto and will
use its commercially reasonable efforts to prevent or promptly remedy such
breach or inaccuracy.

5.12                           Agreement
to Defend and Indemnify.

(a)                                  Parent
will cause all rights to indemnification by the Company in favor of each
present and former officer or director of the Company (hereinafter referred to
as the “Company Indemnified Parties”)
as provided in the Company’s Articles of Incorporation or Bylaws (or both) or
similar constitutive documents or pursuant to other instruments or agreements,
including insurances, in effect on the date hereof, to survive the Closing and
to continue in full force and effect following the Closing Date until the expiration
of the applicable statute of limitations.

(b)                                 Subject to the terms
set forth herein, Parent will, as an absolute and unconditional guarantor of
performance and payment, and will cause the Company to, indemnify and hold
harmless, to the fullest extent permitted under applicable Law (and will also
advance expenses as incurred by a Company Indemnified Party to the fullest
extent permitted under applicable Law), each Company Indemnified Party against
any costs or expenses (including reasonable legal fees and expenses) judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action, alleged action, omission or alleged omission by such Company
Indemnified Party on or prior to the Closing Date (including any claims,
action, suits, proceedings and investigations which arise out of or relate to
the transactions contemplated by this Agreement) until the expiration of the
applicable statute of limitations; provided that, in the event any claim,
action, suit, proceeding or investigation is asserted or made or otherwise
becomes known to Parent or the Company or is commenced prior to the expiration
of the applicable statute of limitations, all rights to indemnification in
respect of any such claim, action, suit, proceeding or investigation will
continue until the final disposition thereof.

(c)                                  The covenants
contained in this Section 5.12 will survive the Closing Date until fully
discharged and are intended to benefit the Shareholder and each of the Company
Indemnified Parties.

 32
 

ARTICLE 6

CONDITIONS TO THE ACQUISITION

6.1                                 Conditions
to Obligations of Each Party to Effect the Merger.  The respective obligations of each party to
this Agreement to effect the transactions contemplated hereby will be subject
to the satisfaction at or prior to the Closing of the following conditions:

(a)                                  No
Injunctions or Regulatory Restraints; Illegality.  No temporary restraining order, preliminary
or permanent injunction or other Order issued by any court of competent
jurisdiction or Governmental or Regulatory Authority or other legal or
regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect; nor shall there be any
action taken, or any Law or Order enacted, entered, enforced or deemed
applicable to the transactions contemplated hereby or the other transactions
contemplated by the terms of the Agreement that would prohibit the consummation
of the transactions contemplated hereby or which would permit consummation of
the transactions contemplated hereby only if certain divestitures were made or
if Parent and Merger Sub were to agree to limitations on its business
activities or operations.

(b)                                 Existence
of Board Approval.  Each party will
provide to the other party certified copies of Board minutes or consents, or
certified extracts thereof, Schedule 6.1(b), indicating Board approval has
been granted on or prior to the date hereof for the satisfaction of all
obligations hereunder and the consummation of the transaction.

6.2                                 Additional
Conditions to Obligations of the Company and the Shareholder.  The obligations of the Company and the Shareholder
to effect the transactions contemplated hereby will be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company
and the Shareholder:

(a)                                  Representations
and Warranties.  Each of the
representations and warranties made by Parent and Merger Sub in this Agreement
shall be materially true and correct when made and on and as of the Closing
Date as though such representation or warranty was made on and as of the
Closing Date, except that any representation or warranty that expressly speaks
as of a specified date earlier than the Closing Date shall have been true and
correct on and as of such earlier date, and further provided that Parent and
Merger Sub shall be permitted to update, revise, supplement and/or correct the
Schedules through the Closing Date.

(b)                                 Performance.  Parent and Merger Sub shall have performed
and complied with each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Parent and Merger Sub at or
before the Closing Date, including, without limitation, payment and delivery of
the Merger Consideration.

(c)                                  Officers’
Certificates.  Each of Parent and
Merger Sub will have delivered to the Company a certificate or certificates,
dated the Closing Date and executed by its respective President and/or its
Chief Executive Officer, certifying as to the resolutions delivered pursuant to
Section 6.1(b) and Parent’s and Merger Sub’s compliance with the condition set
forth in Section 6.2(a).

 33
 

(d)                                 Third
Party Consents.  Parent and Merger
Sub will have been furnished with evidence satisfactory to them that the
Company has obtained the consents, approvals and waivers, if any, listed in Schedule
2.28(b).

(e)                                  No
Material Adverse Change.  There will
have occurred no Material Adverse Change in the Business or Condition of Parent
or Merger Sub since the date hereof.

(f)                                    Legal
Proceedings.  No Governmental or
Regulatory Authority will have notified any party to this Agreement that it
intends to commence proceedings to restrain or prohibit the transactions
contemplated hereby or force rescission, unless such Governmental or Regulatory
Authority will have withdrawn such notice and abandoned any such proceedings prior
to the time which otherwise would have been the Closing Date.

(g)                                 Proceedings
and Documents.  All corporate and
other proceedings in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions will be in form and
substance reasonably satisfactory to the Company and its counsel, and the
Company will have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.

6.3                                 Additional
Conditions to the Obligations of Parent and Merger Sub.  The obligations of Parent and Merger Sub to
effect the transactions contemplated hereby will be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Parent and Merger Sub:

(a)                                  Representations
and Warranties.  Each of the
representations and warranties made by the Company and the Shareholder in this
Agreement shall be materially true and correct when made and on and as of the
Closing Date as though such representation or warranty was made on and as of
the Closing Date, except that any representation or warranty that expressly
speaks as of a specified date earlier than the Closing Date shall have been
true and correct on and as of such earlier date, and further provided that
Company and the Shareholder shall be permitted to update, revise, supplement
and/or correct the Schedules through the Closing Date.

(b)                                 Performance.  The Company shall have performed and complied
with each agreement, covenant and obligation required by this Agreement to be
so performed or complied with by the Company on or before the Closing Date.

(c)                                  Officers’
Certificates.  The Company and the
Shareholder shall have delivered to Parent and Merger Sub a certificate or
certificates, dated the Closing Date and executed by the President and/or the
Chief Executive Officer of the Company, certifying as to the resolutions
delivered pursuant to Section 6.1(b) and Company’s and the Shareholder’s
compliance with the condition set forth in Section 6.3(a).

(d)                                 Third
Party Consents.  Parent and Merger
Sub will have been furnished with evidence satisfactory to them that the
Company has obtained the consents, approvals and waivers, if any, listed in Schedule
2.28(b).

 34
 

(e)                                  Non-Competition
and Employment Agreements.  Each of
the members of the Senior Management Team shall have executed and delivered to
Parent, Company, and/or Merger Sub an employment and non-competition agreement
in the form attached hereto as Schedule 6.3 (each, a “Non Competition and Employment Agreement”).

(f)                                    No
Material Adverse Change.  There will
have occurred no Material Adverse Change in the Business or Condition of the
Company since the date hereof.

(g)                                 Legal
Proceedings.  No Governmental or Regulatory
Authority will have notified any party to this Agreement that it intends to
commence proceedings to restrain or prohibit the transactions contemplated
hereby or force rescission, unless such Governmental or Regulatory Authority
will have withdrawn such notice and abandoned any such proceedings prior to the
time which otherwise would have been the Closing Date.

(h)                                 Employees.  Not less than 95% of those employees listed
in Schedule 2.19(b), will be employed by the Company at the Closing (and
will have not given any notice or other indication that they will not continue
to be willing to be employed by the Company as a wholly-owned subsidiary of
Parent following the transactions contemplated hereby).  Each employee of the Company to be employed
by Company as a wholly-owned subsidiary of Parent following the Closing shall
have executed Parent’s standard form Proprietary Rights and Inventions
Assignment Agreement, substantially in the form set forth in Exhibit E
hereto.

(i)                                     Proceedings
and Documents.  All corporate and
other proceedings in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions will be in form and
substance reasonably satisfactory to Parent and Merger Sub and their counsel, and
Parent and Merger Sub will have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.

(j)                                     Equity
Equivalents.  There will be no
un-expired and unexercised Equity Equivalents of the Company outstanding as of
the Closing.

(k)                                  Financial
Performance.  The Company’s fiscal
year 2006 gross revenue, and recasted EBITDA will have been determined, to the
reasonable satisfaction of the Parent, to be not less than 99% of:  $4,300,000, and $1,300,000, respectively.  As of the Closing Date, the Company has
represented to the Parent that it has achieved the foregoing numbers.

(l)                                     IP
Asset Purchase Agreement.  Intellectus,
LLC and a wholly-owned Nevada subsidiary of Parent shall have entered into the
Asset Purchase Agreement.

ARTICLE 7

SURVIVAL OF REPRESENTATIONS, WARRANTIES,

COVENANTS AND AGREEMENTS; INDEMNIFICATION

7.1                                 Survival
of Representations, Warranties, Covenants and Agreements.  The representations and warranties set forth
in Articles 2 and 3 will survive until the first anniversary of the Closing
Date; provided, however that the representations and warranties in (i) Sections
2.3, 2.15, 2.16, 2.21, 3.2, 3.16, 3.17, 3.22 and (ii) the representations and
warranties contained in

 35
 

Sections 2.11 will
survive until the expiration of the statute of limitations applicable to claims
with respect to the matters covered thereby. 
The one-year limitation in this Section 7.1 will not apply under
circumstances involving any fraud or willful misrepresentation or other
misconduct by any party to this Agreement or the officers or directors of any
such party, in which case there shall be no limitation that shall apply to bar
a claim.

7.2                                 Indemnification.

(a)                                  Subject
to the terms, conditions and limitations set forth herein, the Shareholder will
indemnify and hold harmless Parent, Merger Sub and their respective officers,
directors and consultants (hereinafter referred to individually as a “Parent Indemnified Person” and
collectively as “Parent Indemnified Persons”)
from and against any and all Losses arising out of any misrepresentation or
breach of the representations, warranties, covenants and agreements given or
made by the Company or the Shareholder in this Agreement, or any certificate,
instrument or document delivered by the Company or the Shareholder pursuant to
this Agreement.

(b)                                 Parent shall indemnify
and hold harmless  the Shareholder “The Indemnified Person” and, from
and against any and all Losses arising out of any misrepresentation or breach
of the representations, warranties, covenants and agreements given or made by
the Parent or Merger Sub in this Agreement, or any certificate, instrument or
document delivered by the Parent or Merger Sub pursuant to this Agreement.

7.3                                 Third-Party
Claims.  In the event a Parent
Indemnified Person(s) or the “Indemnified
Person” and, collectively, the “Indemnified Parties”) becomes aware of a third-party claim
based on any misrepresentation or breach of or default in connection with any
of the representations, warranties, covenants and agreements given or made by
the other party in this Agreement (each, an “Indemnifying Party”), which the Indemnified Party believes
may result in a claim against it (a “Third
Party Claim”), the Indemnified Party will promptly notify the
Indemnifying Party of such Third Party Claim. 
By written notice to the Indemnified Party within twenty (20) days after
delivery of notice of such a claim, the Indemnifying Party’s representative (on
behalf of the Indemnifying Party) will be entitled, at the Indemnifying Party’s
expense, to participate in any defense of such claim by the Indemnified Party,
which will direct the defense and settlement of such claims.  Notwithstanding the foregoing, however, the
Indemnified Party may consent to a settlement or compromise of, or the entry of
any judgment arising from, the Third Party Claim without the prior written
consent of the Indemnifying Party if, and only if, the proposed settlement,
compromise, or judgment: (a) does not contain an admission of guilt or wrongdoing
on the part of the Indemnifying Party; and (b) does not provide for any remedy
or sanction against the Indemnifying Party other than the payment of money
which the Indemnifying Party agrees and is able to pay.  In the event that the Indemnifying Party has
consented to any such settlement amount, the Indemnifying Party will have no
power or authority to object under any provision of this Article 7 to any claim
by the Indemnified Party for indemnity with respect to such settlement amount.

 36

7.4                                 Recovery
of Losses

(a)                                  Subject
to the limitations in Sections 7.4(b) and 7.5 below: (i) a Parent Indemnified
Person will recover any claim for indemnity under Sections 7.2(a) or 7.3
relating to breaches of representations or warranties directly from  the breaching Shareholder, who will be
individually liable for such amounts.

(b)                                 No claim by a Parent
Indemnified Person for indemnity under Sections 7.2(a) or 7.3 relating to
breaches of representations or warranties will be recoverable unless the
aggregate amount owing exceeds ten thousand dollars ($10,000) per
occurrence.  In no event will the
aggregate amount recoverable from the Shareholder for all claims for indemnity
under this Agreement, including, but not limited to, Sections 7.2(a) or 7.3,
exceed one hundred thousand dollars ($100,000).

7.5                                 Limitations
on Claims.  Notwithstanding anything
herein to the contrary, the obligations of the Shareholder arising under this
Article 7 will be limited to valid written claims received by the Shareholder
within twelve (12) months of the Effective Time, and will be deemed fully
satisfied by surrender of that portion of Parent’s Shares received by the
Shareholder in connection with the Merger, valued at their then current fair
market value, necessary to satisfy the Shareholder’s obligation but subject to
the following sentence.  The
indemnification mechanism provided for by this Article 7 shall be the sole
remedy for breaches of representations or warranties under this Agreement.

ARTICLE 8

TERMINATION, AMENDMENT AND WAIVER

8.1                                 Termination.  Except as provided in Section 8.2 below, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:

(a)                                  by
mutual agreement of the Company and the Shareholder and Parent and Merger Sub;

(b)                                 by Parent and Merger
Sub or the Company (or with respect to the obligations of the Shareholder) if
(i) the Closing has not occurred before 10:00 am (Eastern Standard Time) on the
date which is 90 days after the date of this Agreement or on such later date as
the parties hereto may mutually agree (provided, however, that the right to
terminate this Agreement under this sub clause 8.1(b) (i) will not be available
to any party whose willful failure to fulfill any obligation hereunder has been
the cause of, or resulted in, the failure of the Closing to occur on or before
such date); (ii) there will be a final nonappealable order of United States
federal or state court in effect preventing consummation of the transactions
contemplated hereby; or (iii) there will be any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the transactions
contemplated hereby by any Governmental or Regulatory Authority that would make
consummation of the transactions contemplated hereby illegal;

(c)                                  by Parent and Merger
Sub if there shall be any action taken, or any Law or Order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby, by any Governmental or Regulatory Authority, which would: (i) prohibit
Parent’s ownership or operation of all or any material portion of the business
of the Company or (ii) compel Parent or the Surviving Corporation to dispose of
or hold separate all or a substantial

 37
 

portion of the Assets and Properties of the Company as a result of the
transactions contemplated hereby;

(d)                                 by Parent and Merger
Sub if there has been a breach of any representation, warranty, covenant or
agreement contained in this Agreement on the part of the Company or the
Shareholder and (i) the Company or the Shareholder, as the case may be, have
not cured such breach within thirty (30) days following receipt by the Company
or the Shareholder, as the case may be, of written notice of such breach or is
not using its reasonable efforts to cure such breach after written notice of
such breach to the Company or the Shareholder, as the case may be, (provided,
however, that, no cure period will be required for a breach which by its nature
cannot be cured) and (ii) as a result of such breach the conditions set forth
in Section 6.3(a) or 6.3(b), as the case may be, would not then be satisfied;

(e)                                  by the Company if
there has been a breach of any representation, warranty, covenant or agreement
contained in this Agreement on the part of Parent or Merger Sub and (i) Parent
or Merger Sub have not cured such breach within thirty (30) days following
receipt by the Company of written notice of such breach or is not using its
reasonable efforts to cure such breach after written notice of such breach to
Parent or Merger Sub (provided, however, that no cure period will be required
for a breach which by its nature cannot be cured), and (ii) as a result of such
breach the conditions set forth in Section 6.2(a) or 6.2(b), as the case may
be, would not then be satisfied;

8.2                                 Effect
of Termination.  In the event of a
valid termination of this Agreement as provided in Section 8.1, this Agreement
will forthwith become void and there will be no liability or obligation on the
part of Parent, Merger Sub, the Shareholder, or the Company, or their
respective officers, directors or shareholders or Affiliates or Associates;
provided, however, that the provisions of Sections 5.2, 5.3, 5.4, 8.2, 9.6,
9.9, 9.10 and 9.11 of this Agreement will remain in full force and effect and
survive any termination of this Agreement.

ARTICLE 9

MISCELLANEOUS PROVISIONS

9.1                                 Notices.  All notices, requests and other
communications hereunder must be in writing and will be deemed to have been
duly given only if delivered personally against written receipt or mailed by
prepaid first class registered or certified mail, return receipt requested, or
sent by overnight courier prepaid, to the parties at the following addresses or
facsimile numbers:

If to Parent or Merger
Sub to:

  Francis E. Wilde, Chairman & CEO

  Shea Development Corp.

  1351 Dividend Drive, Suite G

  Marietta, GA 
30067

  Telephone:      770-919-2209

with a copy to:

  Francis J. Mooney, Jr. / Robert T. Lincoln

  Dunnington, Bartholow & Miller LLP

 38
 

  477 Madison Avenue, 12th Floor

  New York, NY 10022

  Telephone:      212-682-8811

  Facsimile:       212-661-7769

If to the Company or the
Shareholder to:

  Christopher Watson

  President

  300 Bucksley Lane #305

  Daniel
Island, SC 29492

  Telephone:      703-310-6850  x302

  Facsimile:       703-310-6837

with a copy to:

Michael L. Jennings

OBER | KALER

120 East Baltimore Street

Baltimore, Maryland 21202

Telephone:      410-347-7348

Facsimile:       410-547-0699

9.2                                 Entire
Agreement.  This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof and thereof and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof.  Except for the representations
and warranties contained in this Agreement or in any instrument delivered
pursuant to this Agreement, each of the parties to this Agreement acknowledges
that no other representations or warranties have been relied upon by that party
or made by any other party or its officers, directors, employees, agents,
financial and legal advisors or other representatives.

9.3                                 Further
Assurances; Post-Closing Cooperation. 
At any time or from time to time after the Closing, the parties will
execute and deliver to the other party such other documents and instruments,
provide such materials and information and take such other actions as the other
party may reasonably request to consummate the transactions contemplated by
this Agreement and otherwise to cause the other party to fulfill its obligations
under this Agreement and the transactions contemplated hereby.  Each party agrees to use commercially
reasonable efforts to cause the conditions to its obligations to consummate the
transactions contemplated hereby to be satisfied.

9.4                                 Amendment.  This Agreement may be amended by the parties
hereto at any time before the Closing by execution of an instrument in writing
signed on behalf of each of the parties hereto by execution of an instrument in
writing signed on behalf of Parent, the Surviving Corporation and the
Shareholder.

9.5                                 Extension.  At any time prior to the Closing, Parent,
Merger Sub, the Shareholder and the Company may, to the extent legally allowed,
extend the time for the performance of any of the obligations of the other
party hereto.

 39
 

9.6                                 Waiver.  Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver will be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition.  No waiver by any party of any term or
condition of this Agreement, in any one or more instances, will be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.  All
remedies, either under this Agreement or by Law or otherwise afforded, will be
cumulative and not alternative.

9.7                                 Third
Party Beneficiaries.  The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights, and this
Agreement does not confer any such rights, upon any other Person other than any
Person entitled to indemnity as described in Article 7.

9.8                                 No
Assignment; Binding Effect.  Neither
this Agreement nor any right, interest or obligation hereunder may be assigned
(by operation of law or otherwise) by any party without the prior written
consent of the other parties and any attempt to do so will be void.  Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.

9.9                                 Headings.  The headings and table of contents used in
this Agreement have been inserted for convenience of reference only and do not
define or limit the provisions hereof.

9.10                           Invalid
Provisions.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or future
law, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (a) such provision will
be fully severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.

9.11                           Governing
Law.  This Agreement will be governed
by and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision.  The parties hereto expressly and irrevocably
consent and submit to the exclusive jurisdiction of the applicable local,
federal, or appellate courts located in New York, New York, in connection
with any proceeding arising from or out of this Agreement.  Each party
agrees that such courts shall be deemed to be a convenient forum in any such
legal proceeding, and agrees not to assert (by way of motion, as a defense or
otherwise) any claim that such party is not subject personally to the
jurisdiction of any such courts, that such legal proceeding has been brought in
an inconvenient forum, that the venue of such legal proceeding is improper or,
that this Agreement or the subject matter hereof may not be enforced in, or by,
any such courts.

9.12                           Construction.  The parties hereto agree that this Agreement
is the product of negotiation between sophisticated parties and individuals,
all of whom were represented by

 40
 

counsel, and each
of whom had an opportunity to participate in and did participate in, the
drafting of each provision hereof. 
Accordingly, ambiguities in this Agreement, if any, will not be
construed strictly or in favor of or against any party hereto but rather will
be given a fair and reasonable construction without regard to the rule of
contra proferentum.

9.13                           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

9.14                           Specific
Performance.  The parties hereto
agree that irreparable damage would occur in the event that Section 5.2 of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached.  It is agreed that
the parties will be entitled to an injunction or injunctions to prevent breaches
of Section 5.2 of this Agreement and to enforce specifically the terms and
provisions thereof in any court having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.

ARTICLE 10

DEFINITIONS

10.1                        Definitions.

(a)                                  As
used in this Agreement, the following defined terms will have the meanings
indicated below:

“$” means United States Dollars unless
otherwise indicated.

“Actions or Proceedings” means any
action, suit, petition, investigation, proceeding, arbitration, litigation or
Governmental or Regulatory Authority investigation, audit or other proceeding,
whether civil or criminal, in law or in equity, or before any arbitrator or
Governmental or Regulatory Authority.

“Affiliate”
means, as applied to any Person, (a) any other Person directly or indirectly
controlling, controlled by or under common control with, that Person, (b) any
other Person that owns or controls 10% or more of any class of equity
securities of that Person or any of its Affiliates (including any equity
securities issuable upon the exercise of any option or convertible security) of
that Person or any of its Affiliates, or (c) any director, partner or officer
of such Person.  For the purposes of this
definition, “control”  (including
with correlative meanings, the terms “controlling”, “controlled by”, and “under
common control with”) as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.

“Agreement” means this Agreement and
Plan of Merger, the Schedules the Exhibits, and the certificates and
instruments delivered in connection herewith, or incorporated by reference, as
the same may be amended or supplemented from time to time in accordance with
the terms hereof.

 41
 

“Alternative Acquisition” has the
meaning ascribed to it in Section 4.2.

“Approval” means any approval,
authorization, consent, permit, qualification or registration, or any waiver of
any of the foregoing, required to be obtained from or made with, or any notice,
statement or other communication required to be filed with or delivered to, any
Governmental or Regulatory Authority or any other Person.

“Assets and Properties” of any Person means
all assets and properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and wherever situated),
including the goodwill related thereto, operated, owned, licensed or leased by
such Person, including cash, cash equivalents, Investment Assets, accounts and
notes receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.

“Associate” means, with respect to any
Person, any corporation or other business organization of which such Person is
an officer or partner or is the beneficial owner, directly or indirectly, of
10% or more of any class of equity securities, any trust or estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as a trustee or in a similar capacity and any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such Person.

“Benefit Plan” means an employee benefit
plan maintained by any of Company, Parent or Merger Sub.

“Books and Records” means all files,
documents, instruments, papers, books and records relating to the Business or
Condition of the Company, including financial statements, internal reports, Tax
Returns and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs (including data processing files and
records), retrieval programs, operating data and plans and environmental
studies and plans.

“Business Combination” means, with
respect to any Person, (i) any amalgamation, consolidation or other business
combination to which such Person is a party, (ii) any sale or other disposition
of any capital stock or other equity interests of such Person, (iii) any tender
offer (including a self tender), exchange offer, recapitalization,
restructuring, liquidation, dissolution or similar or extraordinary
transaction, (iv) any sale, dividend or other disposition of all or a material
portion of the Assets and Properties of such Person or (v) the entering into of
any agreement or understanding, the granting of any rights or options, or the
acquiescence of the Person, with respect to any of the foregoing.

“Business Day” means a day other than
Saturday, Sunday or any day on which banks located in the State of New York are
authorized or obligated to close.

“Business or Condition of Parent or Merger Sub”
means the business, condition (financial or otherwise), results of operations,
prospects or Assets and Properties of Parent or Merger Sub and each of its
Subsidiaries, taken as a whole.

 42
 

“Business or Condition of the Company”
means the business, condition (financial or otherwise), results of operations,
prospects or Assets and Properties of the Company, taken as a whole.

“Company Indemnified Person(s)” has the
meaning ascribed to it in Section 7.2(b).

“Certificates” has the meaning ascribed
to it in Section 1.7.

“Closing” has the meaning ascribed to it
in Section 1.2.

“Closing Date” has the meaning ascribed
to it in Section 1.2.

“Code” means the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.

“Company” has the meaning ascribed to it
in the forepart of this Agreement.

“Company Common Stock” has the meaning
ascribed to it in the Recitals to this Agreement.

“Company Financials” means the audited
financial statements (balance sheet and statements of operations and cash flow,
including schedules and notes thereto) of the Company as of and for the periods
ended December 31, 2005 and December 31, 2006.

“Company Indemnified Parties” has the
meaning ascribed to it in Section 5.12(a).

“Company Intellectual Property” means
any Intellectual Property of commercial value that is (i) owned by; (ii)
licensed to; or (iii) was developed or created by or for the Company.

“Confidential Information” has the meaning
ascribed to it in Section 2.15(h).

“Contract” means any material contract,
including without limitation:

(i)                                     any
distributor, sales, advertising, agency or manufacturer’s representative
contract;

(ii)                                  any
continuing contract for the purchase of materials, supplies, equipment or
services involving in the case of any such contract more than $5,000 over the
life of the contract;

(iii)                               any
contract that expires or may be renewed at the option of any person other than
the Company so as to expire more than one year after the date of this
Agreement;

(iv)                              any
trust indenture, mortgage, promissory note, loan agreement or other contract
for the borrowing of money, any currency exchange, commodities or other hedging
arrangement or any leasing transaction of the type required to be capitalized
in accordance with generally accepted accounting principles;

 43
 

(v)                                 any
contract for capital expenditures in excess of $5,000 in the aggregate;

(vi)                              any
contract limiting the freedom of the Company to engage in any line of business
or to compete with any other Person;

(vii)                           any
contract pursuant to which the Company is a lessor of any machinery, equipment,
motor vehicles, office furniture, fixtures or other personal property having an
original cost of more than $25,000;

(viii)                        any
contract with any person with whom the Company does not deal at arm’s length;
or

(ix)                                any
agreement of guarantee, support, indemnification, assumption or endorsement of,
or any similar commitment with respect to, the obligations, liabilities
(whether accrued, absolute, contingent or otherwise) or indebtedness of any
other Person.

“Corporate Flow Downs” means all
expenses incurred by the Parent before or after the Closing Date that are (i)
unrelated to the operation of the Company (including but not limited to stock
compensation expenses associated with the issuance of stock options) and (ii)
are either assigned to the Company by the Parent or paid by the Company on
behalf of the Parent.

“Earn-Out Payments” has the meaning
ascribed to it in Section 1.13.

“EBITDA” means, for any specified
period, the earnings before interest, taxes, depreciation and amortization of
the Company as calculated in accordance with GAAP consistently applied;
provided, however, that solely for purposes of calculating EBITDA of the Company
under this Agreement, (i) the Company’s pre-Closing integration costs, (ii) the
Surviving Corporation’s post-Closing integration costs, and (iii) any Corporate
Flow Downs shall be disregarded and have no effect on the amount so calculated.

“Effective Date” has the meaning
ascribed to it in Section 1.2.

“Effective Time” has the meaning
ascribed to it in Section 1.2.

“Equity Equivalents” means securities
(including Options) which, by their terms, are or may be exercisable,
convertible or exchangeable for or into common shares, preferred shares, or
other securities of the Company at the election of the holder thereof.

“Financial Statement Date” means
December 31, 2006.

“GAAP” means accounting principles
generally accepted in the United States, as in effect from time to time.

“Governmental or Regulatory Authority”
means any court, tribunal, arbitrator, authority, agency, bureau, board,
commission, department, official or other instrumentality of the United States,
any foreign country or any domestic or foreign state, county, city or other
political subdivision.

 44
 

“Income Tax” means (i) any income,
alternative or add-on minimum tax, gross income, gross receipts, franchise,
profits, including estimated taxes relating to any of the foregoing, or other
similar tax or other like assessment or charge of similar kind whatsoever,
excluding any Other Tax, together with any interest and any penalty, addition
to tax or additional amount imposed by any Taxing Authority responsible for the
imposition of any such Tax (domestic or foreign); or (ii) any liability of a
Person for the payment of any taxes, interest, penalty, addition to tax or like
additional amount resulting from the application of Treas. Reg. § 1,1502-6.

“Indebtedness” of any Person means all
obligations of such Person (a) for borrowed money, (b) evidenced by notes,
bonds, debentures or similar instruments, (c) for the deferred purchase price
of goods or services (other than trade payables or accruals incurred in the
ordinary course of business), (d) under capital leases and (e) in the nature of
guarantees of the obligations described in clauses (a) through (d) above of any
other Person.

“Indemnified Party(ies)” has the meaning
ascribed to it in Section 7.3.

“Intellectual Property” means all
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, patents
and patent rights, utility models and utility model rights, copyrights, mask
work rights, brand names, trade dress, product designs, product packaging,
business and product names, logos, slogans, rights of publicity, trade secrets,
inventions (whether patentable or not), invention disclosures, improvements,
processes, formulae, industrial models, processes, designs, specifications,
technology, methodologies, computer software (including all source code and
object code), firmware, development tools, flow charts, annotations, all Web
addresses, sites and domain names, all data bases and data collections and all
rights therein, any other confidential and proprietary right or information,
whether or not subject to statutory registration, and all related technical
information, the information set forth in manufacturing, engineering and
technical drawings, know-how and all pending applications for and registrations
of patents, utility models, trademarks, service marks and copyrights, and the
right to sue for past infringement, if any, in connection with any of the
foregoing.

“Investment Assets” means all
debentures, notes and other evidences of Indebtedness, stocks, securities
(including rights to purchase and securities convertible into or exchangeable
for other securities), interests in joint ventures and general and limited
partnerships, mortgage loans and other investment or portfolio assets owned of
record or beneficially by the Company.

“ISO Plans” has the meaning ascribed to
it in Section 1.15.

 “knowledge”
or “known to” or any
similar phrase means, when used with respect to: (i) any Person who is an
individual, the actual knowledge of such Person; (ii) the Company, the actual
knowledge of Christopher Watson; and (iii) the Parent or Merger Sub, the actual
knowledge of Francis E. Wilde, Tom Wheeler, E. Joseph Vitetta, Jr.

“Law” or “Laws” means any law, statute, order, decree, consent
decree, judgment, rule, regulation, ordinance or other pronouncement having the
effect of law whether in the United States, any foreign country, or any
domestic or foreign state, province, county, city or other political
subdivision or of any Governmental or Regulatory Authority.

 45
 

“Liabilities” means all Indebtedness,
obligations and other liabilities of a Person, whether absolute, accrued,
contingent (or based upon any contingency), known or unknown, fixed or
otherwise, or whether due or to become due.

“License” means any Contract that grants
a Person the right to use or otherwise enjoy the benefits of any Intellectual
Property (including without limitation any covenants not to sue with respect to
any Intellectual Property).

“Lien” or “Liens” means any mortgage, pledge, assessment, security
interest, lease, lien, easement, charge or adverse claim or other encumbrance
of any kind, or any conditional sale Contract, title retention Contract or
other Contract to give any of the foregoing, except for any restrictions on
transfer generally arising under any applicable federal, provincial or state
securities law.

“Loss(es)” means any and all damages,
fines, fees, Taxes, penalties, deficiencies, losses and expenses, including
interest, reasonable expenses of investigation, court costs, reasonable fees
and expenses of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment (such
fees and expenses to include all fees and expenses, including fees and expenses
of attorneys, incurred in connection with (i) the investigation or defense of
any Third Party Claims or (ii) asserting or disputing any rights under this
Agreement against any party hereto or otherwise).

“Material Adverse Change” means, when
used with respect to:

(a)                                  the
Company, any change in the financial condition and operation of the Company
that would either individually or, if aggregated with other effects on the
financial condition of the Company, result in a deterioration of the balance
sheet of the Company by an amount equal or greater than $500,000.00; or

(b)                                 the
Parent, Merger Sub or any of their respective Subsidiaries, any change in the
financial condition and operation of the Parent, Merger Sub or any of their
respective Subsidiaries that would either individually or, if aggregated with
other effects on the financial condition of the Parent, Merger Sub or any of
their respective Subsidiaries, result in a deterioration of the consolidated
balance sheet of the Parent by an amount equal or greater than $500,000.00;
provided, however, that none of the following shall be taken into account in
determining whether there has been or would be a “Material Adverse Effect”:
(i) any adverse change resulting from conditions affecting any nation’s
economy generally, (ii) any adverse change resulting from or relating to
financial, banking or securities markets (including any disruption thereof and
any decline in the price of any security or any market index), (iii) any
adverse change in applicable Laws or the interpretation thereof, (iv) any
adverse change arising primarily out of, or resulting primarily from, actions
taken by any party in connection with (but not in breach of) this Agreement and
the transactions contemplated hereunder, or which is primarily attributable to
the announcement of this Agreement and the Merger (including any litigation,
employee attrition or any loss or postponement of business resulting from
termination or modification of any vendor, customer or other business relationships,
delay of customer order or otherwise and any corresponding change in the
margins, profitability or financial condition of a party), and (v) any
adverse change in any Company business that is cured (including by the

 46
 

payment of money),
to the extent curable, by Company before the earlier of (a) the Closing
Date, or (b) the date on which this Agreement is terminated pursuant to
Article 8 hereof.

“Material Adverse Effect” means any
event or condition of any character which results in, has resulted in, or could
reasonably be expected to result in, a Material Adverse Change on the condition
(financial or otherwise), results of operations, assets, liabilities,
properties, or business of a Person and its Subsidiaries, taken as a whole, or
would prevent or unreasonably delay consummation of the transactions
contemplated hereby.

“Merger” has the meaning ascribed to it
in the Recitals to this Agreement.

“Merger Consideration” has the meaning
ascribed to it in Section 1.6.

“Merger Sub” has the meaning ascribed to
it in the forepart of this Agreement.

“Officer’s Certificate” has the meaning
ascribed to it in Sections 6.2 and 6.3 hereof.

“Option” with respect to any Person
means any security, right, subscription, warrant, option, “phantom” stock right
or other Contract that gives the right to (i) purchase or otherwise receive or
be issued any shares of capital stock or other equity interests of such Person
or any security of any kind convertible into or exchangeable or exercisable for
any shares of capital stock or other equity interests of such Person or (ii)
receive any benefits or rights similar to any rights enjoyed by or accruing to
the holder of shares of capital stock or other equity interests of such Person,
including any rights to participate in the equity, income or election of
directors or officers of such Person.

“Order” means any writ, judgment,
decree, injunction or similar order of any Governmental or Regulatory Authority
(in each such case whether preliminary or final).

“Other Tax” means any sales, use, ad
valorem, business license, withholding, payroll, employment, excise, stamp,
transfer, recording, occupation, premium, property, value added, custom duty,
severance, windfall profit or license tax, governmental fee or other similar
assessment or charge, together with any interest and any penalty, addition to
tax or additional by any Taxing Authority responsible for the imposition of any
such tax (domestic or foreign).

“Outstanding Company Shares” means all
issued and outstanding shares of Company Common Stock immediately prior to the
Effective Time.

“Parent” has the meaning ascribed to it
in the forepart of this Agreement.

“Parent Common Stock” has the meaning
ascribed to it in the Recitals to this Agreement.

“Parent Indemnified Person(s)” has the
meaning ascribed to it in Section 7.2(a).

“Parent’s Shares” has the meaning
ascribed to it in Section 1.6(a)(i).

 47
 

“Participating Company Shares” shall
mean any Outstanding Company Shares other than shares of Company Common Stock,
if any, cancelled pursuant to Section 1.6(d).

“Person” means any natural person,
corporation, general partnership, limited partnership, limited liability
company or partnership, proprietorship, other business organization, trust,
union, association or Governmental or Regulatory Authority.

“Registered Intellectual Property” will
mean all United States, international and foreign: (i) patents, patent
applications (including provisional applications); (ii) registered trademarks
and service marks, applications to register trademarks, intent-to-use
applications, other registrations or applications to trademarks or service
marks, or trademarks or service marks in which common law rights are owned or
otherwise controlled; (iii) registered copyrights and applications for
copyright registration; (iv) any mask work registrations and applications to
register mask works; and (v) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.

“Representatives” has the meaning
ascribed to it in Section 4.2.

 “Securities
Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

“Senior Management Team” means those
persons listed in Schedule 1.13(i).

“Series A Preferred Stock” means the
Preferred Stock, par value $0.001 per share, of Parent designated as “Series A
Preferred Stock”.

 “Shareholder”
means Christopher Watson, who owns all of the Company’s Common Shares.

 “Shrink
Wrap License Agreements” means the granting conditions and terms
of use that are presumed to be acknowledged and agreed to by breaking a
thermoplastic seal.

“Subsidiary” of any specified Person
shall mean any corporation fifty percent (50%) or more of the outstanding
voting power of which, or any partnership, joint venture, limited liability
company or other entity fifty percent (50%) or more of the total equity
interest of which, is directly or indirectly owned by such specified Person.

“Surviving Corporation” has the meaning
ascribed to it in Section 1.1.

“Tax” or “Taxes” means all present and future taxes, surtaxes,
duties, levies, imposts, rates, fees, assessments, withholdings, dues and other
charges of any nature imposed by any Governmental or Regulatory Authority
(including income, capital (including large corporations), withholding,
consumption, sales, use, transfer, goods and services or other value-added,
excise, customs, anti-dumping, stumpage, countervail, net worth, stamp, registration,
franchise, payroll, employment, health, education, business, school, property,
local improvement, development, education development and occupation taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings, dues
and charges) together with all fines, interest, penalties on or in

 48
 

respect of, or in
lieu of or for non-collection of, those taxes, surtaxes, duties, levies,
imposts, rates, fees, assessments, withholdings, dues and other charges.

“Tax Liability” has the meaning ascribed
to it in Section 1.16.

“Tax Returns” means any return, report,
information return, schedule, certificate, statement or other document
(including any related or supporting information) filed or required to be filed
with, or, where none is required to be filed with a Taxing Authority, the
statement or other document issued by, a Taxing Authority in connection with
any Tax.

“Taxing Authority” means any
governmental agency, board, bureau, body, department or authority of any United
States federal, state or local jurisdiction or any foreign jurisdiction, having
or purporting to exercise jurisdiction with respect to any Tax.

“Third Party Claim” has the meaning
ascribed to it in Section 7.3.

“Third Party Expenses” has the meaning
ascribed to it in Section 5.3.

“Third Party Intellectual Property Rights”
has the meaning ascribed to it in Section 2.15(c).

“Transmittal Letter” has the meaning
ascribed to it in Section 1.7.

“Warranty Obligations” has the meaning
ascribed to it in Section 2.25.

(b)                                 Unless
the context of this Agreement otherwise requires, (i) words of any gender
include each other gender, (ii) words using the singular or plural number also
include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,”
“hereby” and derivative or similar words refer to this entire Agreement as a
whole and not to any particular Article, Section or other subdivision, (iv) the
terms “Article” or “Section” or other subdivision refer to the specified
Article, Section or other subdivision of the body of this Agreement, (v) the
phrases “ordinary course of business” and “ordinary course of business
consistent with past practice” refer to the business and practice of the
Company, (vi) the words “include,” “includes” and “including” will be deemed to
be followed by the phrase “without limitation,” and (vii) when a reference is
made in this Agreement to Schedules or Exhibits, such reference will be to a
Schedule or an Exhibit, respectively, to this Agreement unless otherwise
indicated.  The term “party” or “parties”
when used herein refer to Parent and Merger Sub, on the one hand, and the
Company and the Shareholder, on the other.

[Signatures on
Following Page]

 49
 

IN
WITNESS WHEREOF, Parent, Merger Sub, the Shareholder and the Company have
caused this Agreement to be signed by their duly authorized representatives,
all as of the date first written above.

	
  BRAVERA, INC.

  	
   

  	
  SHEA DEVELOPMENT CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/

  	
  CHRISTOPHER
  WATSON

  	
   

  	
  By:

  	
    /s/

  	
  FRANCIS E.WILDE

  
	
   

  	
   

  	
  Christopher
  Watson

  	
   

  	
   

  	
   

  	
  Francis E. Wilde

  
	
   

  	
   

  	
  President and
  CEO

  	
   

  	
   

  	
   

  	
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SHAREHOLDER

  	
   

  	
  SHEA 

  	
  DEVELOPMENT ACQUISITION

  
	
   

  	
   

  	
   

  	
  NO. 3 CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/

  	
  CHRISTOPHER
  WATSON

  	
   

  	
  BY:

  	
  /s/

  	
  E. JOSEPH VITETTA, JR.

  
	
   

  	
   

  	
  Christopher
  Watson

  	
   

  	
   

  	
   

  	
  E. Joseph Vitetta, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
									

 

 50EXHIBIT
10.1

	
  

  	
   

  	
  For additional
  information, contact

  
	
   

  	
   

  	
  Investor Relations,
  (301) 419-7877

  
	
  April 26, 2007

  	
   

  	
  Email: info@spherix.com

  

 

SPHERIX
SIGNS LETTER OF INTENT FOR THE SALE OF ITS INFORMATION SUBSIDIARY

Will
Become Exclusively a Biotech Company

BELTSVILLE, MD, Spherix
Incorporated (NASDAQ/SPEX) has signed a letter of intent to sell the stock of
its subsidiary, InfoSpherix Incorporated, to The Active Network Inc.  Terms of the deal have not been disclosed.  InfoSpherix contracts with government
agencies to design, host, and operate park reservation services and public
service contact centers.

The letter of
intent calls for an exclusivity period during which the definitive agreement is
to be finalized.  This agreement will be
submitted to Spherix’s stockholders for approval.  It is expected that the transaction can be
completed by the end of the summer.

The sale will
allow Spherix to focus all of its efforts on biotechnology products developed
by the Company’s BioSpherix Division.  The
highest priority is to commercialize Naturlose®, which Spherix is studying as a
treatment for Type 2 diabetes.  Spherix
has already developed the potential treatment through Phase 1 and Phase 2
clinical trials, with a large-scale Phase 3 trial set to begin by the end of
this month.

With the influx of
cash from the sale, Spherix will be better positioned to accelerate research
and development of Naturlose as well as other biotechnology products.  It plans to begin acquiring the necessary
resources, and intends to seek additional funding and pharmaceutical partners
to assist in completing development of these products.

“This is a great
win for all involved,” said Richard Levin, Spherix’s President and CEO.  “Spherix gets the resources it needs to fully
support Naturlose in the most critical period of its development.  The Active Network gets the best park
reservations technologies and people available to help accelerate its own
growth in that market.  And as an Active
subsidiary, InfoSpherix gets the dynamic marketing vision and reach needed to
get its innovative products and services into a much broader and deeper
market.  It will allow us to better serve
our clients.”

“The acquisition
of InfoSpherix will enable The Active Network to substantially expand its
business in park reservations, a market where we see tremendous opportunities,”
said Matt Landa, president of The Active Network, Inc. “We look forward to
working with the InfoSpherix team to provide additional and enhanced products
and services to their current and future customer base.”

Certain statements contained herein are “forward looking” statements as
defined in the Private Securities Litigation Reform Act of 1995.  Because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied.  Factors that could cause actual
results to differ materially from those expressed or implied include, but are
not limited to, those discussed in filings by the Company with the Securities
and Exchange Commission, including the filing on Form 8-K made on March 3,
1999.

—OVER—

About Spherix Incorporated

Under its motto, “A
World of Solutions,” Spherix’s mission is to create value and increase
shareholder wealth through innovations that benefit our clients and the human
condition. Spherix offers innovations in information technology, knowledge
management, and biotechnology. 
InfoSpherix designs, hosts, and operates real-time business and contact
center solutions for government agencies, with a major focus on public park
agencies. InfoSpherix is a wholly owned subsidiary of Spherix Incorporated,
based in Beltsville, Maryland.  After the
sale of InfoSpherix, Spherix will devote its full effort to the new biotech
company.

About The Active Network, Inc.

The Active Network,
Inc., based in San Diego, Calif., provides application services technology and
marketing access to community service and participatory sports organizations,
and is a leading online community for active lifestyles.

Our Internet address is http://www.spherix.com.

#  #  # 
#  #  #

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