Document:

Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

INCENTRA SOLUTIONS, INC.

INCENTRA HELIO ACQUISITION CORP.

HELIO SOLUTIONS, INC.

AND

DAVID CONDENSA,

AS SHAREHOLDERS’ REPRESENTATIVE

Dated as of August ___, 2007

TABLE OF CONTENTS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Page

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
RECITALS

	
 

	
 

	
10

	
 

	
 

	
 

	
 

	
 

	
ARTICLE I

	
 

	
 

	
 

	
THE MERGER

	
 

	
 

	
11

	
 

	
 

	
 

	
 

	
 

	
Section 1.1

	
The Merger

	
 

	
11

	
 

	
Section1.2

	
Closing

	
 

	
11

	
 

	
Section 1.3

	
Effective Time

	
 

	
11

	
 

	
Section 1.4

	
Effects of the Merger

	
 

	
11

	
 

	
Section 1.5

	
Certificate of Incorporation and By-Laws of the Surviving Corporation

	
 

	
11

	
 

	
Section 1.6

	
Directors and Officers

	
 

	
12

	
 

	
 

	
 

	
 

	
 

	
ARTICLE II

	
 

	
 

	
 

	
MERGER CONSIDERATION; EFFECT ON CAPITAL STOCK; EXCHANGE OF
 CERTIFICATES

	
 

	
12

	
 

	
 

	
 

	
 

	
 

	
 

	
Section 2.1

	
Merger Consideration

	
 

	
12

	
 

	
Section 2.2

	
Fractional Shares

	
 

	
18

	
 

	
Section 2.3

	
Exchange of Certificates

	
 

	
18

	
 

	
Section 2.4

	
Certain Adjustments

	
 

	
19

	
 

	
Section 2.5

	
Shares of Dissenting Shareholders

	
 

	
20

	
 

	
Section 2.6

	
Tax-Free Reorganization

	
 

	
20

	
 

	
 

	
 

	
 

	
ARTICLE III

	
 

	
 

	
 

	
REPRESENTATIONS AND WARANTIES OF THE COMPANY

	
 

	
20

	
 

	
 

	
 

	
 

	
Section 3.1

	
Organization, Standing and Corporate Power

	
 

	
21

	
 

	
Section 3.2

	
Subsidiaries

	
 

	
21

	
 

	
Section 3.3

	
Capital Structure

	
 

	
21

	
 

	
Section 3.4

	
Authority; Noncontravention

	
 

	
22

	
 

	
Section 3.5

	
Financial Statements; Undisclosed Liabilities

	
 

	
23

	
 

	
Section 3.6

	
Material Contracts

	
 

	
25

	
 

	
Section 3.7

	
Permits; Compliance with Applicable Laws

	
 

	
27

	
 

	
Section 3.8

	
Absence of Litigation

	
 

	
28

	
 

	
Section 3.9

	
Tax Matters

	
 

	
28

	
 

	
Section 3.10

	
Employee Benefit Plans

	
 

	
30

	
 

	
Section 3.11

	
Labor Matters

	
 

	
33

	
 

	
Section 3.12

	
Environmental Matters

	
 

	
34

	
 

	
Section 3.13

	
Intellectual Property

	
 

	
35

	
 

	
Section 3.14

	
Insurance Matters

	
 

	
38

Page 2

	
 

	
 

	
 

	
 

	
 

	
 

	
Section 3.15

	
Transactions with Affiliates

	
 

	
38

	
 

	
Section 3.16

	
Voting Requirements

	
 

	
38

	
 

	
Section 3.17

	
Brokers

	
 

	
38

	
 

	
Section 3.18

	
Real Property

	
 

	
38

	
 

	
Section 3.19

	
Tangible Personal Property

	
 

	
39

	
 

	
Section 3.20

	
Powers of Attorney

	
 

	
39

	
 

	
Section 3.21

	
Offers

	
 

	
39

	
 

	
Section 3.22

	
Warranties

	
 

	
40

	
 

	
Section 3.23

	
Investment Company

	
 

	
40

	
 

	
Section 3.24

	
Board Approval

	
 

	
40

	
 

	
Section 3.25

	
Books and Records

	
 

	
40

	
 

	
Section 3.26

	
Status of Shares Being Transferred

	
 

	
40

	
 

	
Section 3.27

	
Investment in Parent Common Stock

	
 

	
40

	
 

	
Section 3.28

	
Disclosure

	
 

	
41

	
 

	
Section 3.29

	
No Shareholder Competing Business

	
 

	
42

	
 

	
 

	
 

	
 

	
 

	
ARTICLE IV

	
 

	
 

	
REPRESENTATIONS AND WARRANTIES OF PARENT

	
 

	
42

	
 

	
 

	
 

	
 

	
Section 4.1

	
Organization; Standing and Corporate Power

	
 

	
42

	
 

	
Section 4.2

	
Capital Structure

	
 

	
43

	
 

	
Section 4.3

	
Authority; Noncontravention

	
 

	
43

	
 

	
Section 4.4

	
Parent Documents

	
 

	
44

	
 

	
Section 4.5

	
Voting Requirements

	
 

	
44

	
 

	
Section 4.6

	
Brokers

	
 

	
45

	
 

	
Section 4.7

	
Board Approval

	
 

	
45

	
 

	
Section 4.8

	
Books and Records

	
 

	
45

	
 

	
Section 4.9

	
Sarbanes Oxley Act Compliance

	
 

	
45

	
 

	
Section 4.10

	
Additional Representations

	
 

	
45 

	
 

	
Section 4.11

	
Litigation

	
 

	
46 

	
 

	
Section 4.12

	
Compliance

	
 

	
46

	
 

	
Section 4.13

	
Contracts with Third Parties

	
 

	
46 

	
 

	
Section 4.14

	
Disclosure

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
ARTICLE V

	
 

	
 

	
 

	
COVENANTS RELATING TO CONDUCT OF BUSINESS

	
 

	
47

	
 

	
 

	
 

	
 

	
 

	
 

	
Section 5.1

	
Conduct of Business by the Company

	
 

	
47

	
 

	
Section 5.2

	
Advice of Changes

	
 

	
48

	
 

	
Section 5.3

	
No Solicitation by the Company

	
 

	
48

	
 

	
Section 5.4

	
Conduct of Business by Parent

	
 

	
49

	
 

	
Section 5.5

	
Transition

	
 

	
49

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VI

	
 

	
 

	
 

	
ADDITIONAL AGREEMENTS

	
 

	
49

Page 3

	
 

	
 

	
 

	
 

	
 

	
 

	
Section 6.1

	
Access to Information; Confidentiality

	
 

	
49

	
 

	
Section 6.2

	
Commercially Reasonable Efforts

	
 

	
50

	
 

	
Section 6.3

	
Fees and Expenses

	
 

	
51

	
 

	
Section 6.4

	
Public Announcements

	
 

	
51

	
 

	
Section 6.5

	
Regulation D

	
 

	
51

	
 

	
Section 6.6

	
Shareholders Covenant Not to Compete

	
 

	
52

	
 

	
Section 6.7

	
Parent Audit of Company

	
 

	
52

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VII

	
 

	
 

	
CONDITIONS PRECEDENT

	
 

	
52

	
 

	
 

	
 

	
 

	
Section 7.1

	
Conditions to Each Party’s Obligation to Consummate the Merger

	
 

	
52

	
 

	
Section 7.2

	
Conditions to Obligations of Parent and Merger Sub

	
 

	
53

	
 

	
Section 7.3

	
Conditions to Obligations of the Shareholders

	
 

	
55

	
 

	
Section 7.4

	
Frustration of Closing Conditions

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
ARTICLE VIII

	
 

	
 

	
INDEMNIFICATION; ARBITRATION

	
 

	
57

	
 

	
 

	
 

	
 

	
Section 8.1

	
Survival of Representations and Warranties

	
 

	
57

	
 

	
Section 8.2

	
Indemnification by Shareholders

	
 

	
57

	
 

	
Section 8.3

	
Indemnification by Parent

	
 

	
59

	
 

	
Section 8.4

	
Claims and Procedures

	
 

	
59

	
 

	
Section 8.5

	
Arbitration

	
 

	
61

	
 

	
Section 8.6

	
Shareholders’ Representative

	
 

	
61

	
 

	
 

	
 

	
 

	
 

	
ARTICLE IX

	
 

	
 

	
TERMINATION, AMENDMENT AND WAIVER

	
 

	
63

	
 

	
 

	
 

	
 

	
Section 9.1

	
Termination

	
 

	
63

	
 

	
Section 9.2

	
Effect of Termination

	
 

	
64

	
 

	
Section 9.3

	
Amendment

	
 

	
64

	
 

	
Section 9.4

	
Extension; Waiver

	
 

	
64

	
 

	
 

	
 

	
 

	
 

	
ARTICLE X

	
 

	
 

	
 

	
GENERAL PROVISIONS

	
 

	
65

	
 

	
 

	
 

	
 

	
Section 10.1

	
Notices

	
 

	
65

	
 

	
Section 10.2

	
Definitions

	
 

	
66

	
 

	
Section 10.3

	
Interpretation

	
 

	
66

	
 

	
Section 10.4

	
Counterparts

	
 

	
67

	
 

	
Section 10.5

	
Entire Agreement; no Third-Party Beneficiaries

	
 

	
67

	
 

	
Section 10.6

	
Governing Law

	
 

	
67

Page 4

	
 

	
 

	
 

	
 

	
 

	
 

	
Section 10.7

	
Assignment

	
 

	
67

	
 

	
Section 10.8

	
Consent to Jurisdiction

	
 

	
67

	
 

	
Section 10.9

	
Headings

	
 

	
68

	
 

	
Section 10.10

	
Severability

	
 

	
68

	
 

	
Section 10.11

	
Enforcement

	
 

	
68

Page 5

EXHIBITS

Exhibit A -
Surviving Corporation Certificate of Incorporation

Exhibit B -
Form of Escrow Agreement

Exhibit C -
Form of Employment Agreements

Exhibit D
–Form of Registration Rights Agreements

Exhibit E -
Form of Legal Opinion of Counsel to the Company and Shareholders

Exhibit F -
Form of Lock-Up and Voting Agreement

Exhibit G -
Form of Legal Opinion of Counsel to Parent

Exhibit H -
Mutual Release and Settlement Agreement

Exhibit I -
Form of Joinder Agreement

SCHEDULES

Company
Disclosure Schedule

Parent Disclosure Schedule

Page 6

INDEX OF DEFINED TERMS

	
 

	
 

	
 

	
DEFINED TERMS

	
 

	
SECTION

	

	
 

	

	
DEFINED

	
 

	
 

	
 

	
 

	
 

	
Affiliate

	
 

	
Section
 9.3(a)

	
Agreement

	
 

	
Preamble

	
Cash
 Consideration

	
 

	
Section
 2.1(b)

	
Certificate
 of Merger

	
 

	
Section 1.3

	
CGCL

	
 

	
Preamble

	
Closing

	
 

	
Section 1.2

	
Closing Date

	
 

	
Section 1.2

	
Closing
 Statement

	
 

	
Section
 1.2(c)(i)

	
Closing Net
 Working Capital

	
 

	
Section
 2.1(e)(i)

	
Code

	
 

	
Section
 2.9(e)

	
Company

	
 

	
Preamble

	
Company
 Acquisition Proposal

	
 

	
Section
 4.3(a)

	
Company
 Certificate of Incorporation

	
 

	
Section
 2.2(b)

	
Company
 Common Stock

	
 

	
Preamble

	
Company
 Disclosure Schedule

	
 

	
Article II

	
Company
 Financial Statements

	
 

	
Section
 2.5(a)

	
Company IP
 Agreements

	
 

	
Section
 2.13(g)

	
Company
 Material Contracts

	
 

	
Section
 2.6(b)

	
Company
 Permitted Lien

	
 

	
Section 2.19

	
Competing
 Business

	
 

	
Section 5.9

	
DGCL

	
 

	
Preamble

	
Dispute

	
 

	
Section 7.3

	
Earn Out
 Payment

	
 

	
Section 1.1

	
EBITDA

	
 

	
Section
 2.11(f)(vi)

	
Effective
 Time

	
 

	
Section 1.3

	
Employee
 Plans

	
 

	
Section
 2.10(a)

	
Employment
 Agreements

	
 

	
Section
 6.2(h)

	
Encumbrance

	
 

	
Section
 9.3(c)

	
Environmental
 Laws

	
 

	
Section
 2.12(d)(i)

	
Environmental Permits

	
 

	
Section 2.12(d)(ii)

	
ERISA

	
 

	
Section 2.10(a)

	
ERISA Affiliate

	
 

	
Section 2.10(a)

	
Escrow
 Agreement

	
 

	
Section
 2.1(d)

	
Escrow
 Deposit

	
 

	
Section
 2.1(d)

	
Escrow
 Account

	
 

	
Section
 2.1(d)

	
Escrow Fund

	
 

	
Section
 2.1(d)

	
Escrow
 Termination Date

	
 

	
Section
 1.2(d)

	
Excluded
 Assets

	
 

	
Section 1.3

	
Fair Market
 Value

	
 

	
Section
 2.1(e)(iv)

	
Fiduciary

	
 

	
Section
 2.10(e)

Page 7

	
 

	
 

	
 

	
GAAP

	
 

	
Section
 2.1(e)

	
Government
 Entities

	
 

	
Section
 2.4(c)

	
Governmental
 Entity

	
 

	
Section
 2.4(c)

	
Hazardous
 Substances

	
 

	
Section
 2.12(d)(iii)

	
Indemnified
 party

	
 

	
Section
 7.2(a)

	
Indemnifying
 party

	
 

	
Section
 7.2(a)

	
Initial
 Consideration

	
 

	
Section 1.1

	
Intellectual
 Property

	
 

	
Section
 2.13(a)

	
IRS

	
 

	
Section
 2.10(g)

	
Knowledge

	
 

	
Section
 9.3(d)

	
Liens

	
 

	
Section
 2.4(d)

	
Material
 adverse change

	
 

	
Section
 9.3(e)

	
Material
 adverse effect

	
 

	
Section
 9.3(e)

	
Merger

	
 

	
Preamble

	
Merger
 Consideration

	
 

	
Section
 2.1(b)

	
Merger Sub

	
 

	
Preamble

	
Measurement
 Period

	
 

	
Section
 2.1(f)(i)

	
Measurement
 Period Earn Out Payment

	
 

	
Section
 2.1(f)(i)

	
Multi-Employer
 Plans

	
 

	
Section
 2.10(d)

	
Net Working
 Capital

	
 

	
Section
 1.2(c)

	
NVGL

	
 

	
Preamble

	
NWC Deficit

	
 

	
Section
 2.1(e)(iii)

	
NWC Excess

	
 

	
Section
 2.1(e)(iv)

	
Other
 Company Documents

	
 

	
Section
 2.7(c)

	
Over 90
 Collections

	
 

	
Section
 1.2(c)(iv)

	
Person

	
 

	
Section
 9.3(f)

	
Parent

	
 

	
Preamble

	
Parent
 Common Stock

	
 

	
Section
 3.2(a)

	
Parent
 Employee Stock Options

	
 

	
Section
 3.2(a)

	
Parent
 Indemnified Parties

	
 

	
Section
 7.1(a)

	
Parent
 Losses

	
 

	
Section
 7.1(a)

	
Parent SEC
 Documents

	
 

	
Section
 3.4(a)

	
Parent
 Preferred Stock

	
 

	
Section
 3.2(a)

	
Parent
 Shares

	
 

	
Section
 2.1(a)(ii)

	
Parent Stock
 Plans

	
 

	
Section
 3.2(a)

	
Permits

	
 

	
Section
 2.7(a)

	
Release

	
 

	
Section
 2.12(d)(iv)

	
Registration Rights Agreement

	
 

	
Section 6.2(i)

	
Requisite Regulatory Approvals

	
 

	
Section 6.1(b)

	
Restraints

	
 

	
Section 6.1(c)

	
Sarbanes Oxley Act

	
 

	
Section 3.9

	
SEC

	
 

	
Section 3.4(a)

	
Secretary

	
 

	
Section 1.3

	
Securities Act

	
 

	
Section 2.24(a)

	
Shareholder Indemnified Parties

	
 

	
Section 7.1(b)

	
Shareholder Losses

	
 

	
Section 7.1(b)

Page 8

	
 

	
 

	
 

	
Shareholders

	
 

	
Preamble

	
Shares

	
 

	
Recitals

	
Software

	
 

	
Section 2.13(a)

	
Subsidiary

	
 

	
Section 9.3(g)

	
Surviving Corporation

	
 

	
Section 1.1

	
Tangible Personal Property

	
 

	
Section 2.18

	
Tax

	
 

	
Section 2.9(i)(i)

	
Taxes

	
 

	
Section 2.9(i)(i)

	
Tax Return

	
 

	
Section 2.9(i)(ii)

	
Third Party Rights

	
 

	
Section 2.13(d)

	
Working Capital

	
 

	
Section 6.2(e)

Page 9

AGREEMENT AND PLAN OF MERGER

          AGREEMENT AND PLAN OF MERGER (this
“Agreement”) dated as of August ___, 2007, by and among INCENTRA SOLUTIONS,
INC., a Nevada corporation (“Parent”), INCENTRA HELIO ACQUISITION CORP., a Delaware corporation and
wholly owned subsidiary of Parent (“Merger Sub”), HELIO SOLUTIONS, INC., a California corporation (the
“Company”), and DAVID CONDENSA, as
Shareholders’ Representative (as defined in Section 8.6). 

RECITALS

          WHEREAS, each of Parent, Merger Sub and the
Company desire Parent to consummate a business combination with the Company in
a transaction whereby, upon the terms and subject to the conditions set forth
in this Agreement, the Company will merge with and into Merger Sub (the
“Merger”), each outstanding share of Common Stock of the Company (“Company
Common Stock”) (other than Dissenting Shares (as defined herein), will be
converted into the right to receive the Merger Consideration, and Merger Sub
will be the surviving corporation in the Merger; 

          WHEREAS, the Board of Directors of the
Company has unanimously determined and resolved that the Merger and all of the
transactions contemplated by this Agreement are in the best interest of the
holders of Company Common Stock and that the Merger is fair and advisable, and
has approved this Agreement in accordance with the California General
Corporation Law, as amended (the “CGCL”), and has further resolved unanimously
to recommend to all holders of Company Common Stock that they authorize,
approve and adopt this Agreement and the transactions contemplated hereby; and 

          WHEREAS, the Boards of Directors of Parent
and Merger Sub have unanimously determined and resolved that the Merger and all
of the transactions contemplated by this Agreement are in the best interest of
Parent and the holders of Parent Common Stock and has adopted this Agreement in
accordance with the Nevada General Corporation Law, as amended (the “NVGCL”)
and Parent, as sole Shareholder of Merger Sub, has adopted this Agreement in accordance
with the Delaware General Corporation Law, as amended (the “DGCL”). 

          NOW, THEREFORE, in consideration of the
foregoing and the mutual representations, warranties, covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto intending to
be legally bound do hereby agree as follows: 

Page 10

ARTICLE I

THE MERGER

          SECTION 1.1 The Merger. Upon the
terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, at the Effective Time, the Company shall be merged
with and into Merger Sub and Merger Sub shall be the surviving corporation in
the Merger (the “Surviving Corporation”) and, as such, Merger Sub shall
continue its corporate existence as a direct, wholly owned subsidiary of Parent
under the laws of the State of Delaware, and the separate corporate existence
of the Company thereupon shall cease. 

          SECTION 1.2 Closing. Subject to the
satisfaction or, to the extent permitted by applicable law, waiver of the
conditions to consummation of the Merger contained in Article VII hereof, the
closing of the Merger (the “Closing”) shall take place at 9:00 a.m., Denver, CO
time, on a date to be specified by the parties (the “Closing Date”), which date
shall not be later than the third business day next following the satisfaction
or, to the extent permitted by applicable law, waiver of the conditions set
forth in Article VII (other than those conditions that by their nature are to
be satisfied at the Closing, but subject to the fulfillment or, to the extent
permitted by applicable law, waiver of those conditions), unless another time
or date is agreed to by the parties hereto. The Closing will be held at the
offices of Parent, located at 1140 Pearl Street, Boulder, CO 80302 or at such
other location as is agreed to by the parties hereto. 

          SECTION 1.3 Effective Time. Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing
the parties shall cause the Merger to be consummated by filing with the
Secretary of State of the State of Delaware (the “Secretary”) a certificate of
merger in form and substance acceptable to the parties hereto (the “Certificate
of Merger”) duly executed and so filed in accordance with the DGCL and shall
make all other filings and recordings required under the DGCL and CGCL to
effectuate the Merger and the transactions contemplated by this Agreement. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Secretary, or at such subsequent date or time as Parent and the
Company mutually shall agree and specify in the Certificate of Merger (the time
the Merger becomes so effective being hereinafter referred to as the “Effective
Time”). The parties shall cooperate with each other and take all commercially
reasonable action to pre-position and/or pre-clear the Certificate of Merger
with the Secretary of State of Delaware so that the Certificate of Merger is accepted
and becomes effective on the Closing Date. 

          SECTION 1.4 Effects of the Merger.
The Merger shall have the effects set forth in the DGCL. 

          SECTION 1.5 Certificate of Incorporation and
By-laws of the Surviving Corporation. The certificate of
incorporation of Merger Sub as set forth in Exhibit A attached hereto shall be
the certificate of incorporation of the Surviving Corporation until thereafter
amended or restated as provided therein or by applicable law. The by-laws of 

Page 11

Merger Sub in
effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until thereafter amended or restated as provided therein
or by applicable law. 

          SECTION 1.6 Directors and Officers.
The directors of Merger Sub at the Effective Time shall, from and after the
Effective Time, be and become the directors of the Surviving Corporation until
their successors shall have been duly elected and qualified or until their
earlier death, resignation or removal in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation and the DGCL; provided
that the board of directors of the Merger Sub shall be comprised of two (2)
directors, consisting of Thomas P. Sweeney III and Matthew G. Richman. The
officers of Merger Sub at the Effective Time shall, from and after the
Effective Time, be and become the officers of the Surviving Corporation until
their successors shall have been duly appointed and qualified or until their
earlier death, resignation or removal in accordance with the certificate of
incorporation and the by-laws of the Surviving Corporation. 

ARTICLE II

MERGER CONSIDERATION; EFFECT ON CAPITAL
STOCK; EXCHANGE 

OF CERTIFICATES

          SECTION 2.1 Merger Consideration. At
the Effective Time, by virtue of the Merger and without any action on the part
of Parent, Merger Sub, the Company or the holders of any of the following
securities: 

          (a)
The Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares, as defined in Section 2.5
hereof) shall be converted into the right for each stockholder of the Company,
as set forth in Section 3.3(a) of the Company Disclosure Schedule (the
“Shareholders”) to receive his or her respective pro rata share of: 

	
 

	
 

	
 

	
 

	
 

	
          (i)
 cash in the amount of Three Million Four Hundred Thousand Dollars
 ($3,400,000.00); and

	
 

	
 

	
 

	
 

	
 

	
          (ii)
 Five Million shares of Parent’s unregistered common stock, par value $.001
 per share (the “Parent Shares”).

	
 

	
 

	
 

	
 

	
 

	
          (iii)
 For purposes of this Agreement, a Shareholder’s pro rata share shall be such
 Shareholder’s percentage interest in the total number of shares of Company
 Common Stock as set forth in Section 3.3(a) of the Company Disclosure Schedule.

          (b)
For purposes of this Agreement, the payment pursuant to Section 2.1(a)(i) shall
be referred to as the “Cash Consideration”, and the term “Merger Consideration”
shall mean, collectively, the Parent Shares and the Cash Consideration. At the
Closing, Parent shall (i) pay the Cash Consideration described in Section
2.1(a)(i), less the Escrow 

Page 12

Deposit (as
defined in Section 2.1(c) hereof), to the Shareholders by wire transfer of
immediately available U.S. federal funds to such accounts as the Shareholders
may direct by written notice delivered to Parent or Parent’s counsel; and (ii)
issue and deliver stock certificates to the Shareholders representing their
respective pro rata shares of the Parent Shares. 

          (c)
Simultaneously with the Closing, Shareholders’ Representative and Parent shall
enter into an escrow agreement (the “Escrow Agreement”) with an escrow agent
selected by Parent and reasonably acceptable to the Shareholder Representative
(the “Escrow Agent”) substantially in the form of Exhibit B hereto. Pursuant to
the terms of the Escrow Agreement, Parent shall deposit Seven Hundred Fifty
Thousand Dollars ($750,000.00) of the Cash Consideration (the “Escrow Deposit”)
into an interest bearing escrow account, which account is to be managed by the
Escrow Agent (the “Escrow Account”). Any Escrow Deposit, any interest thereon,
and any other property in the Escrow Account are referred to as the “Escrow
Fund”. The Escrow Fund shall be available to satisfy any NWC Deficit (as defined
in Section 2.1(d)(iii) below) and any amounts owed by Shareholders to Parent
pursuant to Article VIII of this Agreement and the terms of the Escrow
Agreement (which amounts shall be paid first from the Escrow Fund until the
Escrow Fund is exhausted). Distributions from the Escrow Account shall be
governed by the terms and conditions of the Escrow Agreement. The adoption of
this Agreement and the approval of the transactions contemplated herein by
Shareholders shall constitute approval of the Escrow Agreement and all of the
arrangements relating thereto, including, without limitation, the placement of
the Escrow Deposit in escrow. 

	
 

	
 

	
 

	
(d)        (i)
 As promptly as practicable, but no later than ninety (90) days after the
 Closing Date, Parent shall cause to be prepared and delivered to the
 Shareholders’ Representative a closing statement (the “Closing Statement”)
 presenting the Net Working Capital (defined in accordance with generally
 accepted accounting principles (“GAAP”) as current assets minus current
 liabilities) as of the end of business on the Closing Date (“Closing Net
 Working Capital”). Accounts receivable included within Net Working Capital
 for this purpose shall be valued at face value if the age of the receivable
 is ninety (90) days or less , and at zero (0) if the age of the receivable is
 more than ninety (90) days; provided, however receivables aged more than
 ninety (90) days shall be valued at the face value with respect to purchase
 orders that have extended terms as a result of extended terms granted to the
 Company by its vendors, all of which purchase orders are identified in
 Section __ of Schedule III hereto. Shareholders’ Representative shall have
 twenty (20) days from receipt of the Closing Statement to dispute the
 calculation of Net Working Capital by Parent. Shareholders’ Representative
 shall provide notice to Parent of any such dispute in accordance with the
 notice provisions of Section 10.1 below. In the event no notice of dispute is
 provided to Parent, the Closing Statement shall be deemed final and binding
 on the parties. In the event Shareholders and Parent are not able to agree
 within thirty (30) days of receipt of the Closing Statement by the
 Shareholders’ Representative on such calculation, it shall be submitted to a
 mutually agreed upon independent public accounting firm for final resolution
 in accordance with the guidelines as provided herein. 

Page 13

	
 

	
 

	
 

	
          (ii)
 The independent accounting firm selected by Parent and Shareholders’
 Representative will be a firm with offices in more than one location. Each
 party may present financial information to the accounting firm for review
 within ten (10) days of selection of the firm provided that all such
 information is simultaneously provided to the other party. No such firm will
 be engaged that does not undertake to provide its final determination within
 thirty (30) days of submission of all materials to be reviewed. The decision
 of the selected accounting firm will be presented in a written report to
 include the basis for all adjustments made to the Closing Statement. The fees
 of the accounting firm will be paid one-half by the Parent and one-half by
 the Shareholders. 

	
 

	
 

	
 

	
          (iii)
 In the event Closing Net Working Capital is less than One Million Eight
 Hundred Thousand Dollars ($1,800,000.00), the shortfall shall be referred to
 herein as the “NWC Deficit”, the Purchase Price shall be reduced by the
 amount of the NWC Deficit, and an amount equal to the NWC Deficit shall be
 released from the Escrow Account to Parent. As soon as reasonably practicable
 (which shall in any case be within fifteen (15) days after the Closing
 Statement is deemed final), the Parties shall execute and deliver to the
 Escrow Agent joint instructions as contemplated in Section 4 of the Escrow
 Agreement, instructing the Escrow Agent to liquidate such portion of the
 Escrow Fund as required and deliver to Parent funds from the Escrow Fund in
 an amount equal to the NWC Deficit. In the event the Escrow Fund is less than
 the NWC Deficit, then each Shareholder shall, within fifteen (15) days of the
 Closing Working Capital Statement being deemed final, pay to Parent his or
 her pro rata share of the amount by which the NWC Deficit exceeds the Escrow
 Fund. 

	
 

	
 

	
 

	
          (iv)
 In the event Closing Net Working Capital is greater than Two Million Two
 Hundred Thousand Dollars ($2,200,000.00), the excess shall be referred to
 herein as the “NWC Excess”, the Purchase Price shall be increased by the
 amount of the NWC Excess, and an amount equal to the NWC Excess shall be paid
 to Shareholders in their respective pro rata shares by Parent within fifteen
 (15) days after the Closing Statement is deemed to be final. 

	
 

	
 

	
 

	
          (v)
 As soon as reasonably practicable (which shall in any case be within fifteen
 (15) days after the twelve (12) month anniversary date hereof), the Parties
 shall execute and deliver to the Escrow Agent joint instructions, as
 contemplated in Section 4 of the Escrow Agreement, instructing the Escrow
 Agent immediately to liquidate the Escrow Fund and deliver to Shareholders or
 Incentra (together with interest earned thereon in proportion to the
 distribution being made), as designated in such joint instructions, funds
 then remaining in the Escrow Fund, less the aggregate amount of all disputed
 amounts relating to any claims made pursuant to Section 8.2 of this
 Agreement, if any, not paid or otherwise resolved by the aforementioned date.
 If any such claims are pending resulting in disputed amounts remaining in
 escrow, the Parties shall, as soon as reasonably practicable after the
 resolution of such claim, execute and deliver to 

Page 14

	
 

	
 

	
 

	
the Escrow
 Agent joint instructions (which shall be within fifteen (15) days of such
 resolution) as contemplated in Section 4 of the Escrow Agreement, instructing
 the Escrow Agent to liquidate the Escrow Fund and deliver the funds then
 remaining in escrow in accordance with the resolution of the claim or
 dispute. 

          (e)
Subject to the conditions set forth below, Parent will pay Shareholders their
respective pro rata shares of Measurement Period Earn Out Payments, as defined
below and to be computed as follows: 

	
 

	
 

	
 

	
          (i)
 For the first twelve (12) calendar month period beginning on the first day of
 the first calendar month after Closing (the “First Measurement Period”), in
 the event Company’s EBITDA is in excess of Two Million Dollars
 ($2,000,000.00), Parent will pay Shareholders, in their respective pro rata
 shares, additional consideration (the “First Measurement Period Earn Out
 Payment”) equal to One Dollar for each dollar of Company EBITDA earned during
 the First Measurement Period, up to a maximum First Measurement Period Earn
 Out Payment of Five Million Dollars ($5,000,000.00). The First Measurement
 Period Earn Out Payment shall be payable within ninety (90) days after the
 end of the First Measurement Period and shall be paid one-half (1/2) in cash
 and one-half (1/2) in unregistered Parent Common Stock, with the total number
 of shares of Parent Common Stock to be issued pursuant to this Subsection 2.1(e)(i)
 determined by dividing one-half (1/2) of the total First Measurement Period
 Earn Out Payment by One Dollar ($1.00). In the event First Measurement Period
 EBITDA exceeds Four Million Dollars ($4,000,000.00), the excess EBITDA above
 Four Million Dollars ($4,000,000.00) shall be carried over and considered
 EBITDA earned for the Second Measurement Period and thus included in the
 determination of the Second Measurement Period Earn Out Payment. 

	
 

	
 

	
 

	
          (ii)
 For the second twelve (12) calendar month period beginning on the first day
 of the first calendar month after Closing (the “Second Measurement Period”),
 in the event Company’s EBITDA is in excess of Two Million Five Hundred
 Thousand Dollars ($2,500,000.00), Parent will pay Shareholders, in their respective
 pro rata shares, additional consideration (the “Second Measurement Period
 Earn Out Payment”) equal to One Dollar for each dollar of Company EBITDA
 earned during the Second Measurement Period, up to a maximum Second
 Measurement Period Earn Out Payment of Five Million Dollars ($5,000,000.00).
 The Second Measurement Period Earn Out Payment shall be payable within ninety
 (90) days after the end of the Second Measurement Period and shall be paid
 one-half (1/2) in cash and one-half (1/2) in unregistered Parent Common
 Stock, with the total number of shares of Parent Common Stock to be issued
 pursuant to this Subsection 2.1(e)(ii) determined by dividing one-half (1/2)
 of the total Second Measurement Period Earn Out Payment by the greater of One
 Dollar ($1.00) or ninety percent (90%) of the Fair Market Value of Parent
 Common Stock (as defined in Section 2.1(e)(iv) below) at the end of the
 Second Measurement Period (the “Second Period Determination Date”). In the
 event

Page 15

	
 

	
 

	
 

	
Second
 Measurement Period EBITDA exceeds Five Million Dollars ($5,000,000.00), the
 excess EBITDA above Five Million Dollars ($5,000,000.00) shall be carried
 over and considered EBITDA earned for the Third Measurement Period and thus
 included in the determination of the Third Measurement Period Earn Out
 Payment. 

	
 

	
 

	
 

	
          (iii)
 For the third twelve (12) calendar month period beginning on the first day of
 the first calendar month after Closing (the “Third Measurement Period”), in
 the event Company’s EBITDA is in excess of Three Million Dollars
 ($3,000,000.00), Parent will pay Shareholders, in their respective pro rata
 shares, additional consideration (the “Third Measurement Period Earn Out
 Payment”) equal to One Dollar for each dollar of Company EBITDA earned during
 the Third Measurement Period, up to a maximum Third Measurement Period Earn
 Out Payment of Five Million Dollars ($5,000,000.00). The Third Measurement
 Period Earn Out Payment shall be payable within ninety (90) days after the
 end of the Third Measurement Period and shall be paid one-half (1/2) in cash
 and one-half (1/2) in unregistered Parent Common Stock, with the total number
 of shares of Parent Common Stock to be issued pursuant to this Subsection
 2.1(e)(iii) determined by dividing one-half (1/2) of the total Third Measurement
 Period Earn Out Payment by the greater of Two Dollars ($2.00) or ninety
 percent (90%) of the Fair Market Value of Parent Common Stock (as defined in
 Section 2.1(f)(iv) below) at the end of the Third Measurement Period (the
 “Third Period Determination Date”). 

	
 

	
 

	
 

	
          (iv)
 For purposes of this Agreement, the Fair Market Value of Parent Common Stock,
 shall be: (i) if the Company’s common stock is traded on the American Stock
 Exchange or another national exchange or is quoted on the National or
 SmallCap Market of The Nasdaq Stock Market, Inc. (“Nasdaq”), then the average
 of the closing price, reported for the last five (5) business days
 immediately preceding and including the Determination Date, or (ii) if the
 Company’s common stock is not traded on the American Stock Exchange or
 another national exchange or on the Nasdaq but is traded on the National
 Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board, then
 the mean of the average of the closing prices reported for the last five (5)
 business days immediately preceding and including the Determination Date. 

	
 

	
 

	
 

	
          (v)
 In the event that Company EBITDA for any individual Measurement Period is
 less than the respective EBITDA threshold for that Measurement Period, there
 shall be no Measurement Period Earn Out Payment for that Measurement Period. 

	
 

	
 

	
 

	
          (vi) In the
 event Company EBITDA for any individual Measurement Period is less than the
 amount of EBITDA required for a Measurement Period Earn Out Payment for that
 Measurement Period and the Company’s aggregate EBITDA for the three
 Measurement Periods is greater than Seven Million Five 

Page 16

	
 

	
 

	
 

	
Hundred
 Thousand Dollars ($7,500,000.00), an adjustment to the earn-out consideration
 will be calculated whereby Parent shall pay Shareholders their respective pro
 rata shares of an amount equal to the difference between (y) the actual
 aggregate EBIDTA over the three Measurement Periods, up to a maximum of
 Fifteen Million Dollars ($15,000,000.00), and (z) the actual Measurement Period
 Earn Out Payments made by Parent to Shareholders pursuant to Sections
 2.1(e)(i) - (iii) above (the “Adjusting Earn Out Payment”). Any payment
 pursuant to this Section 2.1(e)(vi) shall be made within ninety (90) days of
 the end of the final Measurement Period and shall be paid one-half (1/2) in
 cash and one-half (1/2) in unregistered Parent Common Stock. The number of
 shares of unregistered Parent Common Stock to be issued shall be determined
 by dividing one-half (1/2) of the Adjusting Earn Out Payment by the greater
 of Two Dollars ($2.00) or ninety percent (90%) of the per share Fair Market
 Value of Parent’s unregistered Common Stock. 

	
 

	
 

	
 

	
          (vii)
 Notwithstanding anything herein to the contrary, One Million (1,000,000)
 shares of the Parent Shares issued to Shareholders at Closing pursuant to
 Section 2.1(a)(ii) above shall be deemed issued as an advance against Parent
 Common Stock to be issued in payment of Measurement Period Earn Out Payments
 such that Parent shall not be required to issue any new Parent Common Stock
 to Shareholders in payment of any Measurement Period Earn Out Payment unless
 and until Shareholders shall become entitled to receive, in the aggregate, in
 excess of One Million (1,000,000) shares of Parent Common Stock in payment of
 one or more Measurement Period Earn Out Payments, and then, and only then,
 Parent shall be required to issue to Shareholders only the number of shares
 of Parent Common Stock by which the total to which they are otherwise
 entitled pursuant to this Section 2.1(e) exceeds One Million (1,000,000).
 Parent shall not, however, be entitled to recover any Parent Shares issued to
 Shareholders at Closing which have not been applied to payment of one or more
 Measurement Period Earn Out Payments pursuant to this Section 2.1(e)(vii) as
 of the end of the third Measurement Period. 

	
 

	
 

	
 

	
          (viii)
 For purposes of this Agreement, EBITDA shall be defined as the net income of
 the Company, as determined by generally accepted accounting principles, plus
 interest, taxes, depreciation and amortization and subject to the other
 restrictions or limitations on allocation of expenses as provided in this
 Agreement.The parties agree
 that no headquarters or overhead expenses or costs of Parent or its
 Affiliates or Subsidiaries or other charges of or from Parent, its affiliates
 or subsidiaries will be allocated or charged to Company for purposes of
 determining EBITDA under this Agreement, provided that direct costs incurred
 by Parent, its affiliates or subsidiaries for services provided to and paid
 for by customers of the Company to the Company, at rates agreed to by the
 Company and Parent with respect to such services, shall be included at such
 agreed upon rates for purposes of determining EBITDA hereunder. The parties
 agree that no new “line items” reflecting costs or expenses shall be
 permitted to be included as 

Page 17

	
 

	
 

	
 

	
an expense
 in arriving at this EBITDA, unless previously approved by the Shareholder
 Representative in his reasonable discretion. In the event of a merger, consolidation
 or other combination of the Company with another entity, the EBITDA
 calculation, for purposes of this Agreement, shall be made in a manner that
 as nearly as is reasonably possible reflects the EBITDA of the Company as it
 would have been but for such merger, consolidation or combination. Nothing in
 this Section 2.1(e) shall, however, be construed to prevent any such merger,
 consolidation or combination or the introduction of new goods and/or services
 to the line of goods and services provided by the Company. An accountant of
 Shareholders’ choosing shall be permitted to review and approve the
 computation of EBITDA following each of the Measurement Periods in question,
 which approval will not be unreasonably withheld. 

	
 

	
 

	
 

	
          (ix)
 Parent shall have the right to withhold payment of any Measurement Period
 Earn Out Payment to a Shareholder up to the amount of the Shareholder’s pro
 rata liability for any claim reasonably made by Parent pursuant to Article
 VIII hereof to the extent such claim or claims (A) are not limited by the
 amount of the Shareholder’s pro rata share of the Escrow Funds in accordance
 with Section 8.2 below, and (B) exceed the Shareholder’s pro rata share of
 the then current Escrow Funds. 

	
 

	
 

	
 

	
          (x)
 Notwithstanding anything herein to the contrary, in the event a Shareholder
 other than David Condensa resigns his or her employment with the Surviving
 Corporation during any Measurement Period, such Shareholder shall receive a
 percentage of his or her pro rata share of the Measurement Period Earn Out
 Payment for the Measurement Period during which he or she left equal to the
 percentage of such Measurement Period he or she was employed by Surviving
 Corporation during such Measurement Period, and shall forfeit and not be entitled
 to receive any Measurement Period Earn Out Payment for any future Measurement
 Period. In the event a Shareholder is terminated by the Surviving Corporation
 For Cause (as defined in his or her employment agreement), such Shareholder
 shall forfeit and not be entitled to receive any Measurement Period Earn Out
 Payment for the Measurement Period in which such termination For Cause
 occurred or for any future Measurement Period thereafter. Any Measurement
 Period Earn Out Payment forfeited by a Shareholder other than David Condensa
 pursuant to this Section 2.1(e)(x) shall be reallocated among the
 non-forfeiting Shareholders in their pro rata shares. 

	
 

	
 

	
 

	
          (xi)
 In the event David Condensa resigns his or her employment with the Surviving
 Corporation without Good Reason (as defined in his or her employment
 agreement) during any Measurement Period, he shall receive a percentage of
 his pro rata share of the Measurement Period Earn Out Payment for the
 Measurement Period during which he left equal to the percentage of such
 Measurement Period he was employed by Surviving Corporation during such
 Measurement Period, and shall forfeit and not be entitled to receive any
 Measurement Period Earn Out Payment for any future Measurement Period. In the
 event David Condensa is terminated by the Surviving Corporation For Cause 

Page 18

	
 

	
 

	
 

	
(as defined
 in his employment agreement), he shall forfeit and not be entitled to receive
 any Measurement Period Earn Out Payment for the Measurement Period in which
 such termination For Cause occurred or for any future Measurement Period
 thereafter. Any Measurement Period Earn Out Payment forfeited by David
 Condensa pursuant to this Section 2.1(e)(xi) shall be forfeited in full and
 shall not be reallocated among non-forfeiting Shareholders. 

	
 

	
 

	
 

	
          (xii)
 Notwithstanding anything herein to the contrary, in the event Parent or
 Surviving Corporation engages in any Fundamental Business Changes (as defined
 below) without the prior written consent of the Shareholder Representative,
 which consent shall not be unreasonably withheld or delayed, Parent shall pay
 the Shareholders, in their then applicable percentage interests, the sum of
 Fifteen Million Dollars ($15,000,000), less the amount of any Measurement
 Period Earn Out Payments already paid to the Shareholders (such difference,
 the “Accelerated Earn Out Payment”). The Accelerated Earn Out Payment shall
 be payable within ninety (90) days after the occurrence of the Fundamental
 Business Change (unless the prior consent of the Shareholder Representative
 was obtained) and shall be paid one-half (1/2) in cash and one-half (1/2) in
 unregistered Parent Common Stock, with the total number of shares of Parent
 Common Stock to be issued pursuant to this Subsection 2.1(e)(xii) determined
 by dividing one-half (1/2) of the total Accelerated Earn Out Payment by the
 greater of One Dollars ($1.00) or the Fair Market Value of Parent Common
 Stock (as defined in Section 2.1(e)(iv)) at the time of the Fundamental
 Business Change. “Fundamental Business Change” shall mean (A) the termination
 of employment of Dave Condensa other than For Cause (as defined in his
 employment agreement) after Closing; (B) the resignation of Dave Condensa for
 Good Reason (as defined in his employment agreement); (C) a Change of Control
 (as defined below) of Parent or Surviving Corporation; (D) a change in the
 business strategy, fundamental areas of business or corporate objectives of
 the Surviving Corporation, other than changes consistent with the natural
 evolution of the business, as operated by the Company, or the industry that
 results in a Material Adverse Effect on the EBITDA of Surviving Corporation;
 (G) any material changes in the accounting practices, revenue recognition
 policies, cost allocation methodologies or categories or types of operating
 expenses of the Surviving Corporation in a manner inconsistent with those
 used in the preparation of the prior financial statements of the Company
 (except to the extent necessary to comply with any changes in GAAP) that
 results in a Material Adverse Effect on the EBITDA of Surviving Corporation;
 or (H) any acceleration of recognition of revenue or delay in incurrence of
 capital expenditures or expenses in a manner inconsistent with past practices
 of the Company (except to the extent necessary to comply with any changes in
 GAAP) that results in a Material Adverse Effect on the EBITDA of Surviving
 Corporation; provided, however, in no event shall a Fundamental Business
 Change be deemed to have occurred as a result of the addition of services
 offered by Parent or its Affiliates to the Surviving Corporation’s line of
 business and accounting or revenue recognition practices required thereby,
 changes to accounting or revenue recognition practices to the extent
 necessary to comply with any changes in GAAP or SEC reporting 

Page 19

	
 

	
 

	
 

	
requirements,
 or by any change in business strategy or accounting practices implemented by
 the Shareholder Representative in his capacity as an officer or manager of
 Surviving Corporation. “Change of Control” means any sale of voting
 securities or sale of assets (whether by sale, merger, consolidation, share
 exchange, or otherwise in one transaction or a series of transactions) of
 Parent or Surviving Corporation that results in any third party that is not a
 shareholder immediately prior to
 the Closing becoming the owner of securities or assets of the Surviving
 Corporation or Parent representing over fifty percent (50%) of the combined
 voting power of Surviving Corporation’s or Parent’s then outstanding
 securities or all or substantially all of their respective assets; provided,
 however, no Change of Control shall be deemed to have occurred as a result of
 any transfer or acquisition of Parent shares or other Parent securities by
 one or more Shareholders.

          SECTION
2.2 Fractional Shares. No certificates
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of certificates representing Company capital stock
(“Company Stock Certificates”), no dividend or distribution by Parent shall
relate to such fractional share interests, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights as a Shareholder
of Parent. Further, no holder of a Company Stock Certificate who otherwise
would have been entitled to receive in the Merger a fractional share interest
in exchange for such Company Stock Certificate shall have the right to receive
cash payment in lieu thereof. In lieu of any such fractional shares or cash
payment, (x) any such fractional share interest greater than or equal to
one-half of a share (0.5) shall be rounded up to the next whole share number,
and (y) any such fractional share less than one-half of a share (0.5) shall be
rounded down to the preceding whole share number and the certificates
representing shares of Parent Common Stock to be issued in the Merger shall
reflect such adjustments. 

          SECTION
2.3 Exchange of Certificates. (a) At the
Closing, the Shareholders shall surrender to the Parent all Company Stock
Certificates in proper form for cancellation, and upon such surrender shall be
entitled to receive in exchange therefor his or her respective Merger
Consideration, including a certificate (or certificates) representing such
whole number of shares of Parent Common Stock as such holder is entitled to receive
pursuant to this Article II in such denominations and registered in such names
as such holder may request. The shares represented by the Company Stock
Certificate so surrendered shall forthwith be cancelled. Without limiting the
generality of the foregoing (and notwithstanding any other provisions of this
Agreement), no interest shall be paid or accrued in respect of any of the
Merger Consideration payable to holders of Company Common Stock in accordance
with this Article II. Until surrendered in accordance with this Section 2.3,
each Company Stock Certificate shall be deemed at all times from and after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration.

Page 20

          (b) If any Company Stock Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Company Stock Certificate to be lost, stolen
or destroyed and, if required by the Surviving Corporation, the posting by such
person of a bond, in such reasonable amount as the Surviving Corporation may
direct, as indemnity against any claim that may be made against it with respect
to such Company Stock Certificate, Parent shall issue in exchange for such
lost, stolen or destroyed Company Stock Certificate, the applicable Merger
Consideration to which such person is entitled pursuant to the provisions of
this Article II.

          (c) Notwithstanding any other provisions of
this Agreement, no dividends or other distributions declared or made after the
Effective Time in respect of shares of Parent Common Stock having a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Company Stock Certificate until the holder shall surrender such Company Stock
Certificate as provided in this Section 2.3. Subject to applicable law,
following surrender of any such Company Stock Certificate, there shall be paid
to the holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefore, in each case without any interest thereon,
(i) at the time of such surrender, the amount of dividends or other
distributions, if any, having a record date after the Effective Time
theretofore payable with respect to such whole shares of Parent Common Stock
and not paid, less the amount of all required withholding Taxes in respect
thereof, and (ii) at the appropriate payment date subsequent to surrender, the
amount of dividends or other distributions having a record date after the
Effective Time but prior to the date of such surrender and having a payment
date subsequent to the date of such surrender and payable with respect to such
whole shares of Parent Common Stock, less the amount of all required
withholding Taxes in respect thereof.

          (d) All shares of Parent Common Stock
issued upon surrender of Company Stock Certificates in accordance with this
Article II shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to such shares of Company Common Stock represented
thereby and, as of the Effective Time, the stock transfer books and records of
the Company shall be closed and there shall be no further registration of
transfers on the stock transfer books and records of the Company of shares of
Company Common Stock outstanding immediately prior to the Effective Time. If,
after the Effective Time, Company Stock Certificates are properly presented to
the Surviving Corporation for any reason (but otherwise in accordance with this
Article II), they shall be cancelled and exchanged for the Merger Consideration
as provided in this Section 2.3.

          SECTION
2.4 Certain Adjustments. If, after the date
hereof and prior to the Effective Time and to the extent permitted by this
Agreement, the outstanding shares of Parent Common Stock or Company Common
Stock shall be changed into a different number, class or series of shares by
reason of any reclassification, recapitalization or combination, forward stock
split, reverse stock split, stock dividend or rights issued in respect of such
stock, or any similar event shall occur (any such action, an “Adjustment
Event”), the Merger Consideration shall be adjusted correspondingly to provide
to the

Page 21

holders of
Company Common Stock the right to receive shares of Parent Common Stock having
the same economic value as contemplated by this Agreement immediately prior to
such Adjustment Event and Parent’s payment obligations likewise shall be
correspondingly adjusted such that it shall be required to pay and deliver not
more than the aggregate Merger Consideration contemplated by this Agreement.
Notwithstanding the foregoing provision, the aggregate amount of the Cash
Consideration shall not change under any circumstances.

          SECTION
2.5 Shares of Dissenting Shareholders.
Notwithstanding anything in this Agreement to the contrary, any shares of
Company Common Stock that are outstanding as of the Effective Time and that are
held by a holder of Company Common Stock who has properly exercised his or her
rights under Section 1300 et. seq. of the CGCL (the “Dissenting Shares”) or
under the DGCL shall not be converted into the right to receive the Merger
Consideration; provided, however, if any such holder shall have failed to
perfect or shall have effectively withdrawn or lost his right to dissent from
the Merger under the CGCL or DGCL and to receive such consideration as may be
determined to be due with respect to such Dissenting Shares pursuant to and
subject to the requirements of the CGCL or DGCL, each share of such holder’s
Company Common Stock thereupon shall be deemed to have been converted into and
to have become, as of the Effective Time, the right to receive, without any
interest thereon, the Merger Consideration in accordance with Article II. The
Company shall give Parent prompt written notice of (i) all demands for
appraisal or payment for shares of Company Common Stock received by the Company
prior to the Effective Time in accordance with the CGCL or DGCL, and (ii) any
settlement or offer to settle any such demands. The Company shall not, except
with the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.

          SECTION
2.6 Tax-Free Reorganization. The Merger
is intended to qualify as a reorganization described in Section 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the “Code”), and the parties
hereto agree not to take any action which could result in the Merger failing to
so qualify. The parties hereto further agree to report the Merger for all
purposes as a reorganization under Section 368 of the Code, and that this
Agreement is intended to be a “plan of reorganization” within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
The parties agree to cooperate to minimize the taxes payable with the respect
to the transactions contemplated by this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except
as set forth on the Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement which hereby is incorporated by
reference

Page 22

in and
constitutes an integral part of this Agreement (the “Company Disclosure
Schedule”), Company hereby represents and warrants to Parent as follows:

          SECTION
3.1 Organization, Standing and Corporate Power.

     (a)
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and
has the requisite corporate power and authority to carry on its business as
presently being conducted. The Company is duly qualified or licensed to conduct
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those jurisdictions where
the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company.

     (b)
The Company has delivered or made available to Parent prior to the execution of
this Agreement complete and correct copies of the certificate of incorporation
and by-laws of the Company and each of its subsidiaries, each as in effect at
the date of this Agreement.

          SECTION
3.2. Subsidiaries. The Company has no
Subsidiaries. Except as set forth in Section 3.2 of the Company Disclosure
Schedule, the Company does not own, directly or indirectly, any capital stock
of or other equity or voting interests in any person.

          SECTION
3.3. Capital
Structure. As of the date hereof: 

                    (a)
(i) The only class of capital stock authorized by the
Company is common stock (“Company Common Stock”); and (ii) 8,000,000 shares of
Company Common Stock are authorized and 3,940,000shares of Company Common Stock are
issued and outstanding, all held by those persons named in Section 3.3(a) of
the Company Disclosure Schedule in the amounts set forth next to their
respective names therein.

                    (b)
Except as set forth on Section 3.3(b) of the Company Disclosure Schedule, all
outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable and are not subject to
preemptive rights created by the Company’s Articles of Incorporation (the “Company
Certificate of Incorporation”) or any agreement to which the Company is a
party or by which the Company may be bound. 

                    (c)
Except as set forth in Section 3.3(c) of the Company
Disclosure Schedule, there are outstanding (i) no shares of capital stock or
other voting securities of the Company, (ii) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, and (iii) no options or other

Page 23

rights to
acquire from the Company, and no obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock of the Company, other than the shares of Company Common Stock
set forth in Section 3.3(a) of the Company Disclosure Schedule. 

          SECTION
3.4. Authority; Noncontravention.

                    (a)
The Companyhas
all necessary corporate power and authority to execute, deliver and perform
this Agreement and, subject to obtaining the necessary approvals of the
Shareholders, to perform its obligations hereunder and to consummate the Merger
and the other transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the Merger and the other transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement or to consummate the Merger and the other transactions contemplated
by this Agreement (other than the approval and adoption of this Agreement and
the Merger by the Shareholders as described in Section 3.16 hereof and the
filing and recordation of the appropriate merger documents as required by the
CGCL, NGCL and DGCL). This Agreement has been duly and validly delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.

                    (b)
Except as set forth in Section 3.4(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict
with or result in a violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any material obligation under (i) any provision of the
Company Certificate of Incorporation or by-laws, (ii) any material loan or
credit agreement, note, mortgage, indenture, lease or other material agreement
or (iii) material instrument, permit, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or its
properties or assets.

                    (c)
The execution, delivery and performance by the
Shareholders of this Agreement and the consummation of the purchase and sale of
the Shares by Shareholders require no consent, approval, order or authorization
of, action by or in respect of, or registration or filing with, any
governmental body, court, agency, official or authority (each, a “Governmental
Entity”, collectively “Government Entities”).

                    (d)
The execution and delivery of this Agreement and the
consummation of the purchase and sale of the Shares will not result in the
creation of any pledges, claims, liens, charges, encumbrances, adverse claims,
mortgages and security 

Page 24

interests of
any kind or nature whatsoever (collectively, “Liens”) upon any asset of the
Company. 

                    (e)
Except as set forth in Section 3.4(e) of the Company
Disclosure Schedule, no consent, approval, waiver or other action by any person
(other than the Governmental Entities referred to in (d) above) under any
Company Material Contract is required or necessary for, or made necessary by
reason of, the execution, delivery and performance of this Agreement by the
Shareholders or the consummation of the purchase and sale of the Shares. 

          SECTION
3.5. Financial Statements; Undisclosed Liabilities.

                    (a)
The Company has furnished to the Parent true, correct
and complete copies of a balance sheet, income statement, statement of cash
flows and statement of Shareholders equity and the footnotes thereto for each
of the fiscal years ended December 31, 2004, December 31, 2005, and December
31, 2006 reviewed by the Company’s independent accountants, and Company
prepared balance sheets, income statements, statements of cash flow and
statements of Shareholders equity for each of the fiscal years ended December
31, 2005, December 31, 2006 and for the three month period ended March 31, 2007
(collectively, the “Company Financial Statements”). Except as set forth in
Section 3.5(a) of the Company Disclosure Schedule, the Company Financial
Statements have been prepared in accordance with Generally Accepted Accounting
Principles in the United States and fairly present in all material respects the
financial condition of the Company and its subsidiaries as at the respective
dates thereof; provided, however, that the Company prepared financial
statements for the three month period ended March 31, 2007 are subject to
normal year-end adjustments (which will not be material individually or in the
aggregate) and lack footnotes and other presentation items.

                    (b)
Except for liabilities (i) set forth in Section 3.5 of
the Company Disclosure Schedule, (ii) reflected in the Company Financial
Statements or described in any notes thereto (or for which neither accrual nor
footnote disclosure is required pursuant to GAAP), or (iii) incurred in the
ordinary course of business, consistent with past practice or in connection
with this Agreement or the transactions contemplated hereby, neither the
Company nor any of its subsidiaries has any material liabilities or obligations
of any nature. The Company is not in default in respect of any terms or
conditions of any indebtedness.

                    (c)
Other than changes in the usual and ordinary conduct
of business since December 31, 2006, there have been, and at the Closing Date there
will be, no material, adverse changes in the financial condition of the
Company. Specifically, but, not by way of limitation, since its balance sheet
of December 31, 2006 the Company has not, and prior to the Closing Date will
not have:

Page 25

                         (i)
Issued or sold any stock, bond, or other Company securities;

                         (ii)
Except for current liabilities incurred and obligations under contracts entered
into in the ordinary course of business and except as set forth in Section
3.5(c)(ii) of the Company Disclosure Schedule, incurred any obligation or
liability, whether absolute or contingent (in excess of $100,000 individually
or in the aggregate);

                         (iii)
Except for current liabilities shown on the balance sheet and current
liabilities incurred since that date in the ordinary course of business and
except as set forth in Section 3.5(c)(iii) of the Company Disclosure Schedule,
discharged or satisfied any lien or encumbrance, or paid any obligation or
liability, absolute or contingent nor has it delayed or postponed the payment
of accounts payable and other Liabilities outside the ordinary course of
business; 

                         (iv)
Mortgaged, pledged or subjected to lien or any other encumbrance, any of its
assets, tangible or intangible; 

                         (v)
Except in the ordinary course of business, sold or transferred any of its
inventory or other tangible assets or canceled any debts or claims, except any
excluded assets, or canceled debts or claims as listed in Section 3.5(c)(v) of
the Company Disclosure Schedule;

                         (vi)
Sold, assigned, or transferred any patents, formulas, trademarks, trade names,
copyrights, licenses, or other intangible assets other than in the ordinary
course of business;

                         (vii)
Suffered any extraordinary losses, been subjected to any strikes or other labor
disturbances, or waived any rights of any substantial value; or

                         (viii)
Except for transactions contemplated by this Agreement, entered into any
transaction other than in the ordinary course of business; including, but not
limited to, any loan to or other transaction with any of its owners, directors,
officers, and employees outside the ordinary course of business.

                    (d)
Subject to any changes that may have occurred in the
ordinary and usual course of business, the assets of the Company at the Closing
Date will be substantially those owned by it and shown on the Company Financial
Statements.

                    (e)
All accounts receivable of the Company and the
Subsidiaries reflected on the Company Financial Statements are valid
receivables subject to no setoffs

Page 26

or
counterclaims and are current and collectible (within 90 days after the date on
which they first become due and payable), net of the applicable reserve for bad
debts on the Company Financial Statements. All accounts receivable reflected in
the financial or accounting records of the Company and the Subsidiaries that
have arisen since the date of the Company Financial Statements are valid
receivables subject to no setoffs or counterclaims and are current and
collectible (within 90 days after the date on which they first become due and
payable), net of the applicable reserve for bad debts on the Company Financial
Statements.

                    (f)
Section 3.5(f) of the Company Disclosure schedule
describes each account maintained by or for the benefit of the Company or any
Subsidiary at any bank or other financial institution.

                    (g)
All inventory of the Company and the
Subsidiaries whether or not reflected on the Company Financial Statements,
consists of a quality and quantity usable and saleable in the ordinary course
of business, except for obsolete items and items of below-standard quality, all
of which have been written-off or written-down to net realizable value on the
Company Financial Statements. All inventories not written-off have been priced
at the lower of net realizable value on a first -in, first-out basis. The
quantity of each type of inventory, whether raw materials, or work-in-process
or finished goods, are not excessive in the present circumstances of the
Company and the Subsidiaries. 

          SECTION
3.6. Material Contracts.

                    (a)
Each Company Material Contract is valid and binding on
and enforceable against the Company (or, to the extent a subsidiary is a party,
such subsidiary) and each other party thereto and is in full force and effect.
Except as set forth in Section 3.6 of the Company Disclosure Schedule, neither
the Company nor any of the individual Shareholders nor any of the Company’s
subsidiaries nor any related parties is in breach or default under any Company
Material Contract nor has caused an event, committed any act or failed to
commit any act which would create a breach or default under any Company
Material Contract. Except as set forth in Section 3.6 of the Company Disclosure
Schedule, neither the Shareholders, the Company nor any of its subsidiaries
knows of, regardless of whether or not notice has been received, any violation
or default under (nor does there exist any condition which with the passage of
time or the giving of notice or both would result in such a violation or
default under) any Company Material Contract by any other party thereto. In
addition, the Company is not in breach or default and none of the Shareholders,
individually, has performed any act that would create a breach or default under
the Sun Microsystems reseller and partner agreements nor that would violate the
spirit of the aforementioned agreements. Prior to the date hereof, the
Shareholders have made available to Parent true and complete copies of all
Company Material Contracts. 

Page 27

                    (b)
Section 3.6(b) of the Company Disclosure Schedule
lists (under the appropriate subsection) each of the following written or oral
contracts and agreements of the Company or any Subsidiary of the Company (such
contracts and agreements being the “Company Material Contracts”):

	
 

	
 

	
 

	
(i) each
 contract and agreement for the purchase or lease of personal property with
 any supplier or for the furnishing of services to the Company or any
 Subsidiary with payments greater than One Hundred Thousand Dollars
 ($100,000.00) in the aggregate;

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
(iv)
 all contracts and agreements between or among the Company and any Shareholder
 of the Company or any Affiliate of a Shareholder;

	
 

	
 

	
 

	
(v) all
 contracts and agreements relating to the voting and any rights or obligations
 of a stockholder of the Company or any 

	
 

	
 

	
 

	
(vi) all
 contracts regarding the acquisition, issuance or transfer of any securities
 and each contract affecting or dealing with any securities of the Company,
 including, without limitation, any restricted stock agreements or escrow
 agreements;

	
 

	
 

	
 

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

Page 28

	
 

	
 

	
 

	
(viii) all
 other contracts and agreements, whether or not made in the ordinary course of
 business, that contemplate an exchange of consideration with an aggregate
 value greater than One Hundred Thousand Dollars ($100,000.00); and

	
 

	
 

	
 

	
(ix) all
 contracts with Sun Microsystems, Arrow Electronics (Moca) and other contracts
 and agreements with distributors or manufacturers essential to the ongoing
 operation of the business of Company. 

                    (c)
The Company has delivered or made available to Parent
accurate and complete copies of (i) all Company Material Contracts identified
in Section 3.6(b) of the Company Disclosure Schedule, including all amendments
thereto, and (ii) all correspondence related to the status of, any alleged
breach of or noncompliance with Company agreements with Sun Microsystems and
Arrow Electronics (Moca). Section 3.6(b) of the Company Disclosure Schedule
provides an accurate description of the terms of each Company Material Contract
that is not in written form.

                    SECTION
3.7. Permits; Compliance with Applicable Laws.

                    (a)
The Company owns and/or possess all material permits,
licenses, variances, authorizations, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the operation of
the business of the Company (the “Permits”) as presently conducted. The
Company is in compliance in all material respects with the terms of the
Permits. All the Permits are in full force and effect and no suspension,
modification or revocation of any of them is pending or threatened nor do
grounds exist for any such action. 

                    (b)
Except as set forth in Section 3.7(b) of the Company
Disclosure Schedule, the Company, to its Knowledge, is in compliance in all
material respects with all applicable statutes, laws, regulations, ordinances,
Permits, rules, writs, judgments, orders, decrees and arbitration awards of
each Governmental Entity applicable to the Company.

                    (c)
Except for filings with respect to Taxes, which are
the subject of Section 3.9 and not covered by this Section 3.7(c) and except as
set forth in Section 3.7(c) of the Company Disclosure Schedule, the Company has
timely filed all material regulatory reports, schedules, forms, registrations
and other documents, together with any amendments required to be made with
respect thereto, that they were required to file with each Governmental Entity
(the “Other Company Documents”), and have timely paid all fees and
assessments, if any, due and payable in connection therewith, except where the

Page 29

failure to
make such payments and filings individually or in the aggregate would not have
a Material Adverse Effect on the Company. 

                    SECTION
3.8. Absence of Litigation. Section 3.8 of the
Company Disclosure Schedule contains a true and current summary description of
each pending and, to the Knowledge of the Company, threatened litigation,
action, suit, case, proceeding, investigation or arbitration. Except as set
forth in Section 3.8 of the Company Disclosure Schedule, no action, inquiry,
demand, charge, requirement or investigation by any Governmental Entity and no
litigation, action, suit, case, proceeding, investigation or arbitration by any
person, shareholder, former shareholder or Governmental Entity, in each case
with respect to the Company, its officers or directors in such capacities, or
any of its subsidiaries or any of their respective properties or Permits, is
pending or, to the knowledge of Shareholders, threatened. 

                    SECTION
3.9. Tax Matters.

                    (a)
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, the Company has (i) filed with the appropriate
Governmental Entities all United States federal and state income and other
material Tax Returns required to be filed by it (giving effect to all
extensions) and such Tax Returns are true, correct and complete in all material
respects; (ii) paid in full all United States federal income and other material
Taxes required to have been paid by it; and (iii) made adequate provision for
all accrued Taxes not yet due. The accruals and provisions for Taxes reflected in
the Company Financial Statements are adequate for all Taxes accrued or
accruable through the date of such statements.

                    (b)
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, as of the date of this Agreement, no Federal, state, local
or foreign audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of the Company, and
the Company has not received a written notice of any material pending or proposed
claims, audits or proceedings with respect to Taxes.

                    (c)
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed,
asserted, or assessed in writing by any Governmental Entity against, or with
respect to, the Company or any of its subsidiaries. There is no action, suit or
audit now in progress, pending or, to the Knowledge of the Company, threatened
against or with respect to the Company or any of its subsidiaries with respect
to any material Tax.

Page 30

                    (d)
Neither the Company nor any of its subsidiaries has
been included in any “consolidated,” “unitary” or “combined” Tax Return (other
than Tax Returns which include only the Company) provided for under the laws of
the United States, any foreign jurisdiction or any state or locality with
respect to Taxes for any taxable year.

                    (e)
No election under Section 341(f) of the Internal
Revenue Code as from time to time amended (the “Code”) has been made by the
Company or any of its subsidiaries.

                    (f)
No claim has been made in writing by any Governmental
Entities in a jurisdiction where the Company or any of its subsidiaries does
not file Tax Returns that the Company is, or may be, subject to taxation by
that jurisdiction.

                    (g)
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, the Company has made available to Parent correct and
complete copies of (i) all of its material Tax Returns filed within the past
three (3) years, (ii) all audit reports, letter rulings, technical advice
memoranda and similar documents issued by a Governmental Entity within the past
three (3) years relating to the Federal, state, local or foreign Taxes due from
or with respect to the Company or any of its subsidiaries, and (iii) any
closing letters or agreements entered into by the Company with any Governmental
Entities within the past three (3) years with respect to Taxes.

                    (h)
Except as set forth in Section 3.9 of the Company
Disclosure Schedule, the Company has not received any notice of deficiency or
assessment from any Governmental Entity for any amount of Tax that has not been
fully settled or satisfied, and to the knowledge of the Shareholders, no such
deficiency or assessment is proposed.

                    (i)
For purposes of this Agreement:

	
 

	
 

	
 

	
     (i)
 “Tax” or “Taxes” shall mean all federal, state, county, local,
 foreign and other taxes of any kind whatsoever (including, without
 limitation, income, profits, premium, excise, sales, use, occupancy, gross
 receipts, franchise, ad valorem, severance, capital levy, production,
 transfer, license, stamp, environmental, withholding, employment,
 unemployment compensation, payroll related and property taxes, import duties
 and other governmental charges and assessments), whether or not measured in
 whole or in part by net income, and including deficiencies, interest,
 additions to tax or interest, and penalties with respect thereto, and
 including expenses associated with contesting any proposed adjustment related
 to any of the foregoing.

Page 31

	
 

	
 

	
 

	
     (ii)
 “Tax Return” shall mean any return, information report or filing with
 respect to Taxes, including any schedules attached thereto and including any
 amendments thereof.

                    SECTION
3.10. Employee Benefit Plans.

                    (a)
Section 3.10 of the Company Disclosure Schedule
contains a true and complete list of all pension, stock option, stock purchase,
benefit, welfare, profit-sharing, retirement, disability, vacation, severance,
hospitalization, insurance, incentive, deferred compensation and other similar
fringe or employee benefit plans, funds, programs or arrangements, whether
written or oral, in each of the foregoing cases which (i) covers, is maintained
for the benefit of, or relates to any or all current or former employees of the
Company or any of its subsidiaries and any other entity (“ERISA Affiliate”)
related to the Company under Section 414(b), (c), (m) and (o) of the Code and
(ii) is not a “multiemployer plan” as defined in Section 3(37) or Section
4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) or Section 414 of the Code (the “Employee Plans”).
Section 3.10 of the Company Disclosure Schedule identifies and includes but is
not limited to, each of the Employee Plans that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code. Neither the Company, any of its
subsidiaries nor any ERISA Affiliate of the Company or any of its subsidiaries
has any commitment or formal plan, whether or not legally binding, to create
any additional employee benefit plan or modify or change any existing Employee
Plan other than as may be required by the express terms of such Employee Plan
or applicable law.

                    (b)
With respect to each Employee Plan that has been
qualified or is intended to be qualified under the Code or that is an “Employee
Benefit Plan” within the meaning of Section 3.3 of ERISA, such Employee Plan
has been duly approved and adopted by all necessary and appropriate action of
the Board of Directors of the Company (or a duly constituted committee
thereof).

                    (c)
Except as set forth in Section 3.10 of the Company
Disclosure Schedule, with respect to the Employee Plans, all required
contributions for all periods ending before the Closing Date have been or will
be paid in full by the Closing Date. Subject only to normal retrospective
adjustments in the ordinary course, all required insurance premiums have been
or will be paid in full with regard to such Employee Plans for policy years or
other applicable policy periods ending on or before the Closing Date by the Closing
Date. As of the date hereof, none of the Employee Plans has unfunded benefit
liabilities, as defined in Section 4001(a)(16) of ERISA. 

                    (d)
The Company has no “multi-employer plans,” as defined
in Section 3(37) or Section 4001(a)(3) of ERISA or Section 414 (“Multi-Employer
Plans”), and never has had any such plans.

Page 32

                    (e)
With respect to each Employee Plan (i) no prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code
have occurred or are expected to occur as a result of the Purchase or the
transactions contemplated by this Agreement, (ii) no action, suit, grievance,
arbitration or other type of litigation, or claim with respect to the assets of
any Employee Plan (other than routine claims for benefits made in the ordinary
course of plan administration for which plan administrative review procedures
have not been exhausted) is pending or, to the knowledge of the Shareholders,
threatened or imminent against the Company, any ERISA Affiliate or any
fiduciary, as such term is defined in Section 3(21) of ERISA (“Fiduciary”),
including, but not limited to, any action, suit, grievance, arbitration or
other type of litigation, or claim regarding conduct that allegedly interferes
with the attainment of rights under any Employee Plan. To the knowledge of the
Shareholders, neither the Company, nor its directors, officers, employees nor
any Fiduciary has any liability for failure to comply with ERISA or the Code
for any action or failure to act in connection with the administration or
investment of such plan. None of the Employee Plans is subject to any pending
investigations or to the knowledge of the Company threatened investigations
from any Governmental Agencies who enforce applicable laws under ERISA and the
Code.

                    (f)
Except as set forth in Section 3.10 of the Company
Disclosure, each of the Employee Plans is, and has been, operated in accordance
with its terms and each of the Employee Plans, and administration thereof, is,
and has been, in all material respects in compliance with the requirements of
any and all applicable statutes, orders or governmental rules or regulations
currently in effect, including, but not limited to, ERISA and the Code. Except
as set forth in Section 3.10 of the Company Disclosure Schedule, all required
reports and descriptions of the Employee Plans (including but not limited to
Form 5500 Annual Reports, Form 1024 Application for Recognition of Exemption
Under Section 501(a), Summary Annual Reports and Summary Plan Descriptions)
have been timely filed and distributed as required by ERISA and the Code. Any
notices required by ERISA or the Code or any other state or federal law or any
ruling or regulation of any state or federal administrative agency with respect
to the Employee Plans, including but not limited to any notices required by
Section 4980B of the Code, have been appropriately given.

                    (g)
The Internal Revenue Service (the “IRS”) has
issued a favorable determination letter or opinion letter with respect to each
Employee Plan intended to be “qualified” within the meaning of Section 401(a)
of the Code that has not been revoked and, to the knowledge of the
Shareholders, no circumstances exist that could adversely affect the qualified
status of any such plan and the exemption under Section 501(a) of the Code of
the trust maintained thereunder. Each Employee Plan intended to satisfy the
requirements of Section 125, 501(c)(9) or 501(c)(17) of the Code has satisfied
such requirements in all material respects.

                    (h)
With respect to each Employee Plan to which the
Company or any ERISA Affiliate made, or was required to make, contributions on
behalf of any employee

Page 33

during the
five-year period ending on the last day of the most recent plan year end prior
to the Closing Date, (i) no liability under Title IV or Section 302 of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and (ii) to the knowledge of Shareholders, no condition
exists that presents a material risk to the Company or any ERISA Affiliate of
incurring any such liability and (iii) the present value of accrued benefits
under such plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such plan’s actuary with
respect to such plan did not exceed, as of its latest valuation date, the then
current value of the assets of such plan allocable to such accrued benefits. No
Employee Plan or any trust established thereunder has incurred any “accumulated
funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most recently ended
fiscal year.

                    (i)
Except as set forth in Section 3.10 of the Company
Disclosure Schedule, no Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by Section 4980B of the Code, Section
601 of ERISA or other applicable law, (ii) death benefits under any “pension
plan,” (iii) benefits the full cost of which is borne by the employee (or his
beneficiary) or (iv) Employee Plans that can be amended or terminated by the
Company without consent. The Company does not have any current or projected
liability with respect to post-employment or post-retirement welfare benefits
for retired, former, or current employees of the Company.

                    (j)
No material amounts payable under the Employee Plans
will fail to be deductible for Federal income tax purposes by virtue of Section
162(m) of the Code.

                    (k)
To the extent that the Company is deemed to be a
fiduciary with respect to any Plan that is subject to ERISA, the Company (i)
during the past five years has complied with the requirements of ERISA and the
Code in the performance of its duties and responsibilities with respect to such
employee benefit plan and (ii) has not knowingly caused any of the trusts for
which it serves as an investment manager, as defined in Section 3(38) of ERISA,
to enter into any transaction that would constitute a “prohibited transaction”
under Section 406 of ERISA or Section 4975 of the Code, with respect to any
such trusts, except for transactions that are the subject of a statutory or
administrative exemption.

                    (l)
No person will be entitled to a “gross up” or other
similar payment in respect of excise taxes under Section 4999 of the Code with
respect to the transactions contemplated by this Agreement.

                    (m)
None of the Employee Plans have been completely or
partially terminated and none has been the subject of a “reportable event” as
that term is defined in

Page 34

Section 4043
of ERISA. No amendment has been adopted which would require the Company or any
ERISA Affiliate to provide security pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code. 

          SECTION
3.11. Labor Matters. 

                    (a)
With respect to employees of the Company or its
subsidiaries: (i) to the Knowledge of the Company, no senior executive or key
employee has any plans to terminate employment with the Company or any of its
subsidiaries; (ii) there is no unfair labor practice charge or complaint
against the Company pending or, to the knowledge of Shareholders, threatened
before the National Labor Relations Board or any other comparable Governmental
Entity; (iii) there is no demand for recognition made by any labor organization
or petition for election filed with the National Labor Relations Board or any
other comparable Governmental Entity; (iv) no grievance or any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claims therefor have been threatened other than grievances or
arbitrations incurred in the ordinary course of business; (v) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby will not give rise to termination of any
existing collective bargaining agreement or permit any labor organization to
commence or initiate any negotiations in respect of wages, hours, benefits,
severance or working conditions under any such existing collective bargaining
agreements; and (vi) there is no litigation, arbitration proceeding,
governmental investigation, administrative charge, citation or action of any
kind pending or, to the knowledge of Shareholders, proposed or threatened
against the Company relating to employment, employment practices, terms and
conditions of employment or wages, benefits, severance and hours.

                    (b)
Section 3.11(b) of the Company Disclosure Schedule
lists the name, title, date of employment and current annual salary of each
current salaried employee whose annual salary exceeds $100,000. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and thereby will not (i) result in any payment (including
severance, unemployment compensation, tax gross-up, bonus or otherwise)
becoming due to any current or former director, employee or independent
contractor of the Company or any of its subsidiaries, from the Company or any
of its subsidiaries under any Employee Plan or other agreement, (ii) materially
increase any benefits otherwise payable under any Employee Plan or other
agreement, or (iii) result in the acceleration of the time of payment, exercise
or vesting of any such benefits.

                    (c)
Section 3.11(c) of the Company Disclosure Schedule
sets forth all contracts, agreements, plans or arrangements covering any
employee of the Company or its subsidiaries containing “change of control,”
“stay-put,” transition, retention, severance or similar provisions, and sets
forth the names and titles of all such employees, the amounts payable under
such provisions, whether such provisions would become payable 

Page 35

as a result of
the Purchase and the transactions contemplated by this Agreement, and when such
amounts would be payable to such employees, all of which are in writing, have
heretofore been duly approved by the Company’s Shareholders, and true and
complete copies of all of which have heretofore been delivered to Parent. There
is no contract, agreement, plan or arrangement (oral or written) covering any
employee of the Company that individually or collectively could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.

          SECTION
3.12 Environmental Matters. Except for such
matters which would not, individually or in the aggregate, reasonably be
expected to result in a material adverse effect on the Company or are listed in
Section 3.12 of the Company Disclosure Schedule, to the best of Shareholders’
knowledge:

                    (a)
Compliance. To the Knowledge of the Company (i)
the Company is in compliance in all material respects with all applicable
Environmental Laws; (ii) neither the Company nor any of its subsidiaries has
received any written communication from any person or governmental entity that
alleges that the Company or any of its subsidiaries is not in compliance with
applicable Environmental Laws; and (iii) there have not been any Releases of
Hazardous Substances by the Company or, by any other party, at any property
currently or formerly owned or operated by the Company or any of its
subsidiaries that occurred during the period of the Company’s or any of its
subsidiaries’ ownership or operation of such property.

                    (b)
Environmental Permits. The Company and its
subsidiaries have all Environmental Permits necessary for the conduct and
operation of its business, and all such permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency
approval, and the Company or its subsidiaries are in compliance with all terms
and conditions of all such Environmental Permits and is not required to make
any expenditure in order to obtain or renew any Environmental Permits.

                    (c)
Environmental Claims. There are no
Environmental Claims pending or, to the Knowledge of the Company, threatened,
against the Company, or against any real or personal property or operation that
the Company owns, leases or manages.

                    (d)
As used in this Agreement:

	
 

	
 

	
 

	
(i) “Environmental
 Laws” shall mean any and all binding and applicable local, municipal,
 state, federal or international law, statute, treaty, directive, decision,
 judgment, award, regulation, decree, rule, code of practice, guidance, order,
 direction, consent, authorization, permit or similar requirement, approval or
 standard concerning (A) 

Page 36

	
 

	
 

	
 

	
occupational,
 consumer and/or public health and safety, and/or (B) environmental matters
 (including clean-up standards and practices), with respect to buildings,
 equipment, soil, sub-surface strata, air, surface water, or ground water,
 whether set forth in applicable law or applied in practice, whether to
 facilities such as those of the Company Properties in the jurisdictions in
 which the Company Properties are located or to facilities such as those used
 for the transportation, storage or disposal of Hazardous Substances generated
 by the Company or otherwise.

	
 

	
 

	
 

	
(ii) “Environmental
 Permits” shall mean Permits required by Environmental Laws.

	
 

	
 

	
 

	
(iii) “Hazardous
 Substances” shall mean any and all dangerous substances, hazardous
 substances, toxic substances, radioactive substances, hazardous wastes,
 special wastes, controlled wastes, oils, petroleum and petroleum products, computer
 component parts, hazardous chemicals and any other materials which are
 regulated by the Environmental Laws or otherwise found or determined to be
 potentially harmful to human health or the environment.

	
 

	
 

	
 

	
(iv) “Release”
 shall mean any spilling, leaking, pumping, emitting, emptying, discharging,
 injecting, escaping, leaching, migrating, dumping or disposing of Hazardous
 Substances (including the abandonment or discarding of barrels, containers or
 other closed receptacles containing Hazardous Substances) into the
 environment.

                    SECTION
3.13 Intellectual Property. 

                    (a)
Section 3.13(a) of the Company Disclosure Schedule
sets forth, for the Intellectual Property (as defined below) owned or purported
to be owned by the Company or any of its subsidiaries, a complete and accurate
list of all U.S. and foreign (i) patents and patent applications, (ii)
trademarks and service marks which are registered or the subject of an
application for registration and material unregistered trademarks or service
marks , (iii) copyrights which are registered or the subject of an application
for registration, and (iv) Internet domain names. The Company or one of its
subsidiaries owns or has the valid right to use all patents and patent applications,
patent rights, trademarks, service marks, trademark or service mark
registrations and applications, trade names, logos, designs, Internet domain
names, slogans and general intangibles of like nature, together with all
goodwill related to the foregoing, copyrights, copyright registrations,
renewals and applications, Software (as defined below), technology, inventions,
discoveries, trade secrets and other confidential information, know-how,
proprietary processes, designs, processes, techniques, formulae, algorithms,
models and methodologies, licenses, and all other proprietary rights
(collectively, the “Intellectual 

Page 37

Property”) that it owns or purports to own or
is licensed to Company in a manner sufficient for the conduct of the business
of the Company as it currently is conducted. “Software” means any and
all (i) computer programs, including any and all software implementations of
algorithms, models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data and collections of
data, whether machine readable or otherwise, (iii) descriptions, flow-charts
and other work product used to design, plan, organize and develop any of the
foregoing, (iv) the technology supporting and content contained on any owned or
operated Internet site(s), and (v) all documentation, including user manuals
and training materials, relating to any of the foregoing.

                    (b)
Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, all of the Intellectual Property owned or purported to be
owned by the Company is free and clear of all Liens. The Company is listed in
the records of the appropriate United States, state or foreign agency as, the
sole owner of record for each patent and patent application and trademark,
service mark and copyright which is registered or the subject of an application
for registration that is listed in Section 3.13(a) of the Company Disclosure
Schedule.

                    (c)
All of the patents, patent applications, trademarks,
service marks and copyrights owned or purported to be owned by the Company
which have been issued by, or registered or the subject of an application filed
with, as applicable, the U.S. Patent and Trademark Office, the U.S. Copyright
Office or in any similar office or agency anywhere in the world, including, but
not limited to the items listed in Section 3.13(a) of the Company Disclosure
Schedule are subsisting, enforceable, in full force and effect, and have not
been cancelled, expired, abandoned or otherwise terminated and all renewal fees
in respect thereof have been duly paid and are currently in compliance with all
formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications) and are valid.
There is no pending or, to the Knowledge of the Company, threatened opposition,
interference, invalidation or cancellation proceeding before any court or
registration authority in any jurisdiction against any of the items listed in
Section 2.13(a) of the Company Disclosure Schedule or against any other
Intellectual Property used by the Company or its subsidiaries. 

                    (d)
To the Knowledge of the Company, the conduct of the
Company’s business as currently conducted does not infringe upon (either
directly or indirectly such as through contributory infringement or inducement
to infringe), dilute, misappropriate or otherwise violate (i) any Intellectual
Property owned or controlled by any third party (“Third Party Rights”),
other than the rights of any third party under any patent, or (ii) the rights
of any third party under any patent. Neither the Company nor Shareholders have
received any communication alleging or claiming that the Company has been or
may be engaged in, liable for or contributing to any infringement of any Third
Party Rights, nor does the Company or Shareholders have any reason to expect
that any such communication will be forthcoming. There are no pending or, to
the Knowledge of the 

Page 38

Company
threatened claims against the Company or any of its subsidiaries alleging that
the operation of the business as currently conducted, infringes on or conflicts
with any Third Party Rights. 

                    (e)
To the Knowledge of the Company, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned or purported to be owned by or licensed to or by the Company or its
subsidiaries and no such claims have been made against a third party by the Company
or any of its subsidiaries.

                    (f)
Each material item of Software, which is used by the
Company or any of its subsidiaries in connection with the operation of its
business as currently conducted, is either (i) owned by the Company or any of
its subsidiaries, (ii) currently in the public domain or otherwise available to
the Company without the need of a license, lease or consent of any third party,
or (iii) used under rights granted to the Company or any of its subsidiaries
pursuant to a written agreement, license or lease from a third party. 

                    (g)
Section 3.13(g) of the Company Disclosure Schedule
sets forth a complete list of all agreements under which the Company or any of
its subsidiaries is granted rights to acquire or use the Intellectual Property
of a third party (other than shrink-wrap or click on-downloadable general
purpose software) (the “Company IP Agreements”). Except as set forth in
Section 3.13(g) of the Company Disclosure Schedule, the Company is not under
any obligation to pay royalties or other payments in connection with any
Company IP Agreement, nor restricted from assigning its rights respecting
Intellectual Property nor will the Company otherwise 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 Company IP Agreement. Each Company IP
Agreement is in full force and effect and has not been amended. Neither the
Company nor any other party thereto, is in default or breach under any such
Company IP Agreement. No event has occurred which, with the passage of time or
the giving of notice or both, would cause a breach of or default by the Company
under any of the Company IP Agreements and there is no breach or anticipated breach
by any other party to any Company IP Agreement.

                    (h)
The Company does not sell any products that
intentionally contain any “viruses”, “time-bombs”, “key-locks”, or any other
devices intentionally created that could disrupt or interfere with the
operation of the products or the integrity of the data, information or signals
they produce in a manner adverse to the Company, any of its subsidiaries or any
licensee or recipient. 

                    (i)
Neither the Company nor any of its subsidiaries has
embedded any open source, copyleft or community source code in any of its
Products which are generally available or in development, including but not
limited to any libraries or code

Page 39

licensed under
the GNU General Public License, GNU Lesser General Public License or similar
license arrangement. 

                    SECTION
3.14 Insurance Matters. All
policies providing insurance coverage as set forth in Section 3.14 of the
Company Disclosure Schedule are in full force and effect, all premiums due and
payable thereon have been paid and no written or oral notice of cancellation or
termination has been received and is outstanding. 

                    SECTION
3.15 Transactions with Affiliates. Except
as set forth on Section 3.15 of the Company Disclosure Schedule, there are no
outstanding amounts payable to or receivable from, loans, leases or other
existing agreements between the Company, on the one hand, and any member,
officer, manager, employee or Affiliate of the Company or any of the
Shareholders, Shareholder affiliated companies, or any family member or
affiliate of such member, officer, manager, employee, affiliate or otherwise
related party on the other hand. 

                    SECTION
3.16 Voting Requirements. The affirmative vote
(in person or by duly authorized and valid proxy at a Company Shareholders’
meeting or by written consent) of the holders of not less than One Hundred
Percent (100%) of the outstanding Company Common Stock in favor of the adoption
of this Agreement is the only vote of the holders of any class or series of the
Company’s Shares required by applicable law and the Company’s organizational
instruments to duly effect such adoption.

                    SECTION
3.17 Brokers. No broker,
investment banker, financial advisor, finder, consultant or other person other
than Pagemill Partners, LLC is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee, compensation or commission, however and
whenever payable, in connection with the Purchase and the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. Parent shall be solely responsible for any fees charged by
Pagemill Partners LLC. 

                    SECTION
3.18 Real Property.

                    (a)
The Company does not own any real property. Section
3.18(a) of the Company Disclosure Schedule sets forth a complete list of all
real property leased, subleased, or otherwise occupied or used by the Company
or any of its subsidiaries as lessee. With respect to each parcel of real
property leased, subleased, or otherwise occupied or used by the Company as
lessee: (i) the Company has a valid leasehold interest or other right of use
and occupancy, free and clear of any Liens on such leasehold interest or other
rights of use and occupancy, or any covenants, easements or title defects known
to or created by the Company , except as do not materially affect the occupancy
or uses of such property. The Company’s agreement with respect to real property
leased, subleased, or otherwise occupied or used by the Company as lessee is in
full force and

Page 40

effect and has
not been amended. The Company nor, to the Knowledge of the Company, any other
party thereto, is in material default or material breach under any such
agreement. To the Knowledge of the Company, no event has occurred which, with
the passage of time or the giving of notice or both, would cause a breach of or
default by the Company or the applicable subsidiary under any of such agreement
and, to the Knowledge of the Company or the applicable subsidiary, there is no
breach or anticipated breach by any other party to such agreements. 

                    (b)
As used in this Agreement, Company Permitted Liens
shall mean: (i) Any Lien reflected in Section 3.18(b)(i) of the Company
Disclosure Schedule, (ii) Liens for Taxes not yet due or delinquent or as to
which there is a good faith dispute and for which there are adequate provisions
on the books and records of the Company, (iii) with respect to real property,
any Lien, encumbrance or other title defect which is not in a liquidated amount
(whether material or immaterial) and which does not, individually or in the
aggregate, interfere materially with the current use or materially detract from
the value or marketability of such property (assuming its continued use in the
manner in which it is currently used) and (iv) inchoate materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s liens arising in the ordinary
course and not past due and payable or the payment of which is being contested
in good faith by appropriate proceedings.

                    SECTION
3.19 Tangible Personal Property.
Except as would not materially impair the Company and its operations, the
machinery, equipment, furniture, fixtures and other tangible personal property
(the “Tangible Personal Property”) owned, leased or used by the Company or any
of its subsidiaries is in the aggregate sufficient and adequate to carry on
business in all material respects as presently conducted and is, in the
aggregate and in all material respects, in operating condition and repair,
normal wear and tear excepted. The Company is in possession of and has good
title to, or valid leasehold interests in or valid rights under contract to
use, the Tangible Personal Property material to the Company, taken as a whole,
free and clear of all Liens, other than the Company Permitted Liens as set
forth in Section 3.18(b) of the Company Disclosure Schedule.

                    SECTION
3.20 Powers of Attorney. There
are no outstanding powers of attorney executed on behalf of the Company or any
Subsidiary.

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

                    SECTION
3.22 Warranties. No product
or service manufactured, sold, leased, licensed or delivered by the Company or
any Subsidiary is subject to any guaranty, warranty, right of return, right of
credit or other indemnity other than (i) the applicable standard terms and
conditions of sale or lease by the Company, which are set forth in Section 3.22
of the Company Disclosure Schedule, in the ordinary course of

Page 41

business, and
(ii) manufacturers’ warranties. Section 3.22 of the Company Disclosure
Schedules sets forth the aggregate expenses incurred by the Company and the
Subsidiaries in fulfilling their obligations under their guaranty, warranty,
right of return and indemnity provisions during each of the fiscal years and
the interim period covered by the Company Financial Statements and the Company
does not know of any reason why such expenses should significantly increase as
a percentage of sales in the future.

                    SECTION
3.23 Investment Company. Neither the Company
nor any of its subsidiaries is an investment company required to be registered
as an investment company pursuant to the Investment Company Act.

                    SECTION
3.24 Board Approval. Pursuant to meetings duly
noticed and convened in accordance with all applicable laws and at each of
which a quorum was present, or by written consent as permitted by applicable
law and governing documents, the Board of Directors of the Company, after full
and deliberate consideration, unanimously (other than for directors who
abstain) has (i) duly approved this Agreement and resolved that the
transactions contemplated hereby are fair to, advisable and in the best
interests of the Company’s Shareholders, (ii) resolved to unanimously recommend
that the Company’s Shareholders approve the transactions contemplated hereby
and (iii) directed that the Merger be submitted for consideration by the
holders of the Company Common Stock.

                    SECTION
3.25 Books and Records. Except as to certain
accruals and expenses as set forth in Section 3.5(a) of the Company Disclosure
Schedule, each of the Company and its subsidiaries maintains and has in all
material respects, maintained accurate books and records reflecting its assets
and liabilities and accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis. 

                    SECTION
3.26 Status of Shares Being Transferred.
Subject to Section 3.23 of the Company Disclosure Schedule, Shareholders own
all of the issued and outstanding shares of capital stock of the Company.
Shareholders have full power to convey good and marketable title to their
Shares, free of any liens, charges, or encumbrances of any nature.

                    SECTION
3.27 Investment in Parent Common Stock.

                    (a)
Each Shareholder is an “accredited investor” as
defined in Rule 501(a)(5) or (6) under the Securities Act of 1933, as amended
(the “Securities Act”). 

                    (b)
Shareholders are acquiring the shares of common stock
of Parent to be issued hereunder for investment for their own account, and not
for the account of another Person and not with a view to, or for sale in
connection with, any distribution, assignment, or resale of any part thereof in
violation of the Securities Act of 1933 (the “Securities Act”), nor with any
present intention of any such distribution, assignment, or resale.
Notwithstanding the foregoing, Parent hereby acknowledges Shareholders’
intention to assign certain shares of the Parent Common Stock to employees of the

Page 42

Company to be
designated by Shareholders subject to such assignees making to Parent the
representations contained in this Section 3.27. Shareholders understand that
the shares of Parent Common Stock to be issued to them hereunder have not been
and will not be, registered in the United States under the Securities Act or
applicable state securities laws, and may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or unless disposed of in a transaction
exempt from such laws, such as in compliance with Rule 144 promulgated by the
SEC, and that certificates representing the shares of Parent Common Stock shall
bear legends to this effect. Shareholders understand that Parent’s issuance of
shares of Parent Common Stock contemplated by this Agreement is intended to be
exempt from the registration provisions of the Securities Act, the availability
of which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of Shareholders’ representations as
expressed herein. No Shareholder is a party to nor bound by any agreement
regarding the ownership or disposition of the shares of Parent Common Stock
other than this Agreement. 

                    (c)
Shareholders have made independent investigation of
Parent and related matters as (i) they deem to be necessary or advisable in
connection with the their investment in and acceptance of the shares of Parent
Common Stock to be issued to them hereunder and (ii) they believe to be
necessary in order to reach an informed decision as to the advisability of
making an investment in and accepting the shares of Parent Common Stock to be
issued to them hereunder. Without limiting the foregoing, Shareholders have
reviewed the Parent SEC Documents (as hereinafter defined) and the Parent’s
other publicly-available SEC filings. In evaluating their investment in and
acceptance of the shares of Parent Common Stock to be issued to them hereunder,
Shareholders have not relied upon any representation or other information (oral
or written) other than as set forth in this Agreement or in such Parent SEC
Documents and other SEC filings.

                    (d)
Shareholders have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of their
investment in the Parent Common Stock as contemplated by this Agreement, and
are able to bear the economic risk of such investment for an indefinite period
of time. Shareholders are not relying on Parent for advice with respect to
economic considerations involved in their acquisition and acceptance of the
shares of Parent Common Stock. 

                    SECTION
3.28 Disclosure. On the date of this Agreement,
the Company, Shareholders and all officers of the Company have, and at the
Closing Date will have, disclosed all events, conditions, and facts materially
affecting the business of the Company. Shareholders and all officers of the
Company have not now and will not have, at the Closing Date, withheld knowledge
of any such events, conditions, and facts which they know, or have reasonable
ground to know, may materially affect the business of the Company. None of the
representations and warranties made by the Company or Shareholders in this
Agreement and contained in any certificate or other instrument furnished or to
be furnished to Parent pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary in order to make the statements contained in this Agreement not
misleading.

Page 43

                    SECTION
3.29 No Shareholder Competing Business. As of
the Closing Date, no Shareholder directly or indirectly, whether as owner,
partner, shareholder, consultant, agent, employee, co-venturer or otherwise,
engages, participates, assists or is invested in any Competing Business (as
defined in Section 6.6 below).

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT

          Except
as set forth on the Disclosure Schedule delivered by Parent to the Company
prior to execution of this Agreement which hereby is incorporated by reference
in and constitutes an integral part of this Agreement (the “Parent Disclosure
Schedule”), Parent hereby represents and warrants to the Shareholders as
follows:

                    SECTION
4.1 Organization, Standing and Corporate Power.

                    (a)
Each of Parent and its Subsidiaries, including the Surviving Corporation, is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
the requisite corporate power and requisite authority to carry on its business
as presently being conducted. Each of Parent and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect on Parent.

                    (b)
Parent has delivered or made available to the Company prior to the execution of
this Agreement complete and correct copies of the certificate of incorporation
and by-laws or other organizational documents of Parent and its Subsidiaries,
including Surviving Corporation, each as in effect at the date of this
Agreement. 

                    SECTION
4.2 Capital Structure.

                    (a)
The authorized capital stock of Parent consists of 200,000,000 shares of common
stock, $.001 par value (the “Parent Common Stock”), and 5,000,000 shares of
Series A Preferred Stock, par value $.001 per share, of Parent (“Parent
Preferred Stock”). As of the date hereof: (i) 13,087,142 shares of Parent
Common Stock were issued and outstanding and 1,000,000 shares of Parent Common
Stock will be issued concurrently with the Closing as partial consideration for
the Chopra Stock (as defined in Section 7.2(s) below; (ii) no shares of Parent
Common Stock were held by Parent in its treasury; 

Page 44

(iii) no
shares of Parent Common Stock were held by subsidiaries of Parent; (iv)
approximately 3,367,486 shares of Parent Common Stock were reserved for
issuance pursuant to stock-based plans (such plans, collectively, the “Parent
Stock Plans”), all of which are subject to outstanding employee stock
options or other rights to purchase or receive Parent Common Stock granted
under the Parent Stock Plans (collectively, “Parent Employee Stock Options”);
(v) 964,286 shares of Parent Common Stock are reserved for issuance pursuant to
convertible notes and an additional 770,000 shares of Parent Common Stock will
be reserved concurrently with the Closing pursuant to a Convertible Note issued
as partial consideration for the Chopra Stock, (vi) 7,703,118 shares of Parent
Common Stock were reserved for issuance pursuant to outstanding warrants. As of
the date hereof, (w) 2,466,971 shares of Parent Preferred Stock were issued and
outstanding; (x) no shares of Parent Preferred Stock were held by Parent in its
treasury; (y) no shares of Parent Preferred Stock were held by subsidiaries of
Parent; and (z) 16,551 shares of Parent Preferred Stock were reserved for
issuance pursuant to outstanding warrants. 

                    (b)
All outstanding shares of capital stock of Parent have
been, and all shares thereof which may be issued pursuant to this Agreement or
otherwise (including upon the conversion of the Parent Series A Preferred
Stock) will be, when issued, duly authorized and validly issued and are fully
paid and nonassessable and are not subject to preemptive rights created by
statute, the Parent’s articles of incorporation or any agreement to which
Parent is a party or by which Parent may be bound. Except as set forth in this
Section and except for changes since the date of this Agreement resulting from
the exercise of Parent’s employee stock options outstanding on such date, there
are outstanding (i) no shares of capital stock or other voting securities of
Parent, (ii) no securities of Parent convertible into or exchangeable for
shares of capital stock or voting securities of Parent, and (iii) no options or
other rights to acquire from Parent, other than Employee Stock Options, and no
obligation of Parent to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock of Parent. 

                    (c)
Parent has a sufficient number of duly authorized but
unissued shares of Parent Common Stock to issue the maximum number of such
shares contemplated by Article II of this Agreement as the Merger
Consideration. The shares of Parent common stock to be issued and delivered
hereunder will be duly and validly issued, fully paid and non-assessable, free
and clear of all Encumbrances.

                    SECTION
4.3 Authority; Noncontravention. Parent has the
corporate power and authority to execute, deliver and perform this Agreement
and the other agreements to be executed and delivered by Parent in connection
herewith and to consummate the transactions contemplated hereby and thereby.
All corporate acts and proceedings required to be taken by or on the part of
Parent to authorize Parent to execute, deliver and perform this Agreement and
the other agreements to be executed and delivered by Parent in connection
herewith and to consummate the transactions contemplated hereby and thereby
have been duly and validly taken. This Agreement

Page 45

constitutes a valid and binding agreement, and the other agreements to be
executed and delivered by Parent in connection herewith when so executed and
delivered will constitute valid and binding agreements, of Parent.

                    SECTION
4.4 Parent Documents.

                    (a)
Except as set forth in Section 4.4 of the Parent
Disclosure Schedule, as of their respective filing dates, (i) all reports filed
by Parent and which must be filed by Parent in the future with the Securities
and Exchange Commission (the “SEC”) pursuant to the Exchange Act (the “Parent SEC Documents”)
complied and, with respect to future filings, will comply in all material
respects with the requirements of the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Parent SEC
Documents, and (ii) no Parent SEC Documents, as of their respective dates
contained any untrue statement of a material fact or omitted, and no Parent SEC
Document filed subsequent to the date hereof will omit as of their respective
dates, to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of registration statements of the Parent
under the Securities Act, in light of the circumstances under which they were
made) not misleading. 

                    (b)
The financial statements of Parent included in the
Parent SEC Documents (including the related notes) complied as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Quarterly Report
Form 10-Q of the SEC) applied on a consistent basis during the periods and at
the dates involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial condition of Parent and its subsidiaries at
the dates thereof and the consolidated results of operations and cash flows of
Parent and its subsidiaries for the periods then ended (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that were
not material in amount or effect). Except for liabilities (i) reflected in
Parent’s unaudited balance sheet as of December 31, 2006 or described in any
notes thereto (or for which neither accrual nor footnote disclosure is required
pursuant to GAAP), or (ii) incurred in the ordinary course of business since
December 31, 2006 consistent with past practice or in connection with this
Agreement or the transactions contemplated hereby, neither Parent nor any of
its subsidiaries has any material liabilities or obligations of any nature. 

                    SECTION
4.5 Voting Requirements. No
consent or approval of the holders of the outstanding shares of Parent Common
Stock or any other class of Parent capital stock is required to approve the
Purchase and the transactions contemplated by this Agreement under applicable
law or the Parent’s organizational instruments. 

                    SECTION
4.6 Brokers. Except for
Pagemill Partners, LLC, no broker, investment banker, financial advisor,
finder, consultant or other person is entitled to any

Page 46

broker’s,
finder’s, financial advisor’s or other similar fee, compensation or commission,
however and whenever payable, in connection with the Purchase and the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent. Parent shall be solely responsible for any fees charged by
Pagemill Partners LLC. 

                    SECTION
4.7 Board and Other Approvals. Pursuant to
meetings duly noticed and convened in accordance with all applicable laws and
at each of which a quorum was present, or by written consent as permitted by
applicable law and governing documents, the Board of Directors of Parent, after
full and deliberate consideration, unanimously (other than for directors who
abstain) has duly adopted this Agreement and resolved that the Purchase and the
transactions contemplated hereby are fair to, advisable and in the best
interests of Parent’s Shareholders. The Board of Directors of Parent
unanimously has duly approved this Agreement and has determined that the
Purchase is advisable. Parent has obtained all other approvals or consents
required in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated herein. 

                    SECTION
4.8 Books and Records. Each of Parent and its
subsidiaries maintains and has maintained accurate books and records reflecting
its assets and liabilities and accounts, notes and other receivables and inventory
are recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.

                    SECTION
4.9 Sarbanes Oxley Act Compliance. Parent is in
compliance with all presently effective and applicable provisions of the
Sarbanes Oxley Act of 2002 (the “Sarbanes Oxley Act”) and is actively
taking steps to ensure that it will be in compliance with other provisions of
the Sarbanes Oxley Act upon the effectiveness or applicability to Parent of
such provisions. Parent is currently in compliance and will use its reasonable
efforts to continue to comply in all material respects with all public
reporting requirements necessary to permit sales of its restricted shares by
Shareholders pursuant to Rule 144.

                    SECTION
4.10 Additional
Representations.

                    Neither
the execution nor delivery of this Agreement nor the consummation or
performance of any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time):

                              (i)
Breach (a) any provision of any of the governing documents of Parent or (b) any
resolution adopted by the Board of Directors or the Shareholders; 

                              (ii)
Breach or give any Governmental Entity or other Person the right to challenge
any of the transactions contemplated herein, or to exercise any remedy or
obtain any relief under any rule, ordinance, contract, order, decree, or agreement
under any legally binding arrangement to which Parent is subject;

Page 47

                              (iii)
Contravene, conflict with or result in a violation or breach of any of the
terms or requirements of, or give any Governmental Entity the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Permit or governmental
authorization that is held by Parent or that otherwise relates to the business
of Parent;

                              (iv)
Cause Shareholders or Company to become subject to, or to become liable for the
payment of, any penalty or fine resulting from the contemplated transaction
subsequent to the Closing Date; or

                              (v)
result in a violation or Breach of, or constitute a default under, any of the
terms, conditions or provisions of any agreement or other instrument or obligation
to which Parent is a party or by which Parent or any of its properties or
assets may be bound.

                    SECTION
4.11 Litigation. Except as set forth in the Parent SEC
Documents or Section 4.11 of the Parent Disclosure Schedule, there is no suit,
claim, action, proceeding or investigation pending or to the knowledge of
Parent threatened against Parent or its Affiliates that is reasonably likely to
have a material adverse effect on Parent or would prevent Parent from
consummating the transactions contemplated herein. Parent is not subject to any
outstanding order, writ, injunction or decree which in so far as can be
reasonably foreseen, individually or in the aggregate, which now or in the
future would have a material adverse effect or result in adverse consequences,
or would prevent Parent from consummating the transactions contemplated herein.

                    SECTION
4.12 Compliance. Parent holds all Permits, and is in
material compliance with the terms of the Permits. Parent is not in violation
of any legal or governmental requirement, except where such a failure to comply
would not have a material affect on Parent. 

                    SECTION
4.13 Contracts with Third Parties. Parent
and its Affiliates have no contract, agreement, or understanding with a third
party concerning the potential sale of the assets, stock or business acquired
under the terms of this Agreement, or any portion thereof, following the
closing.

                    SECTION
4.14 Disclosure. No representation or warranty made by
Parent in this Agreement, the Parent Disclosure Schedules or any certificate
delivered or deliverable pursuant to the terms hereof, contains or will
contain, any untrue statement of a material fact, or omits, or will omit, when
taken as a whole, to state a material fact, necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.

ARTICLE
V

COVENANTS
RELATING TO CONDUCT OF BUSINESS

                    SECTION
5.1 Conduct of Business by the Company. Except as
required by applicable law or regulation and except as otherwise contemplated
by this 

Page 48

Agreement, until the earlier of the termination of
this Agreement or the Closing Date, the Company shall, and shall cause each of
its subsidiaries to, conduct its and their respective businesses in the
ordinary course and consistent with past practices. Except as set forth in
Section 5.1 of the Company Disclosure Schedule, as required by applicable law
or regulation and except as otherwise contemplated by this Agreement or except
as previously consented to by Parent, in writing, after the date hereof and
until the earlier of the termination of this Agreement or the Closing Date, the
Company shall not: 

                    (a)
amend or otherwise change its Certificate of Incorporation or
by-laws;

                    (b)
issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of
any class, or options, warrants, convertible securities or other rights of any
kind to acquire shares, or any other ownership interest, thereof, or (ii) any
of its assets, tangible or intangible, other than in the ordinary course of
business;

                    (c)
declare, set aside, make or pay any dividend or other
distribution, payable in cash, property or otherwise, with respect to its
shares;

                    (d)
reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its shares;

                    (e)
(i) acquire (including, without limitation, for cash or
shares of stock, by Purchase, consolidation, or acquisition of stock or assets)
any interest in any corporation, partnership or other business organization or
division thereof, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except in the
ordinary course of business, consistent with past practice, purchase any
property or assets of any other person, (ii) except in the ordinary course of
business, incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or advances,
or (iii) enter into any Company Material Contract except in the ordinary course
of business; 

                    (f)
make any capital expenditure in excess of $100,000 or enter
into any contract or commitment therefore;

                    (g)
except in the ordinary course of business, sell or transfer
any of its inventory or other tangible assets;

                    (h)
amend, terminate or extend any Company Material Contract;

Page 49

                    (i)
delay or accelerate payment of any account payable or other
liability of the Company beyond or in advance of its due date or the date when
such liability would have been paid in the ordinary course of business
consistent with past practice; or

                    (j)
agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty contained in Article III untrue or incorrect.

                    SECTION
5.2 Advice of Changes. Shareholders and the Company
shall promptly advise the Parent, and Parent shall advise the Shareholders and
the Company, orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by them contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by any of them to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by them under this Agreement; (iii) any suspension, termination,
limitation, modification, change or other alteration of any material agreement,
arrangement, business or other relationship, in any material respect, with any
of the Company’s customers, suppliers or sales or design personnel; or (iv) any
change or event having, or which, insofar as reasonably can be foreseen, could
have a material adverse effect on the Company or Parent or on the accuracy and
completeness of the Company’s or Parent’s representations and warranties or the
ability of the Shareholders or the Company or Parent to satisfy the conditions
set forth in Article VII; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement; and provided further
that a failure to comply with this Section 5.2 shall not constitute a failure
to be satisfied of any condition set forth in Article VII unless the underlying
untruth, inaccuracy, failure to comply or satisfy, or change or event would
independently result in a failure of a condition set forth in Article VII to be
satisfied.

                    SECTION
5.3 No Solicitation by the Company.

                    (a)
The Company will promptly notify Parent after receipt of any
offer or indication that any person is considering making an offer with respect
to a Company Acquisition Proposal or any request for nonpublic information
relating to the Company or for access to the properties, books or records of
the Company by any person that may be considering making, or has made, an offer
with respect to a Company Acquisition Proposal and will keep Parent fully
informed of the status and details of any such offer, indication or request.
“Company Acquisition Proposal” means any proposal for a Purchase or other
business combination involving the Company or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company, other than
the transactions contemplated by this Agreement.

Page 50

                    (b)
From the date hereof until the termination hereof pursuant to
Section 9.1, the Company and the officers of the Company will not and the
Company will use commercially reasonable efforts to cause its officers,
employees and agents not to, directly or indirectly, (i) take any action to
solicit, initiate or encourage any offer or indication of interest from any
person or entity with respect to any Company Acquisition Proposal, (ii) engage
in negotiations with, or disclose any nonpublic information relating to the
Company or (iii) afford access to the properties, books or records of the
Company to, any person or entity that may be considering making, or has made,
an offer with respect to a Company Acquisition Proposal.

                    SECTION
5.4 Conduct of Business by Parent. Except as required
by applicable law or regulation and except as otherwise contemplated by this
Agreement, until the earlier of the termination of this Agreement or the
Closing Date, Parent shall conduct its business in the ordinary course and
consistent with past practices. Except as required by applicable law or
regulation and except as otherwise contemplated by this Agreement or except as
previously consented to by the Shareholder Representative in writing, after the
date hereof and until the earlier of the termination of this Agreement or the
Closing Date, Parent shall not

                    (a)
amend or otherwise change its Certificate of Incorporation or
by-laws;

                    (b)
declare, set aside, make or pay any dividend or other
distribution, payable in cash, property or otherwise, with respect to its
shares;

                    (c)
agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any representation or
warranty contained in Article III untrue or incorrect.

                    SECTION
5.5 Transition. To the extent permitted by applicable
law, Parent and the Company shall, and shall cause their respective
subsidiaries, affiliates, officers and employees to, use their commercially
reasonable efforts to facilitate the integration of the Company and its
subsidiaries with the businesses of Parent and its subsidiaries to be effective
as of the Closing Date. 

ARTICLE
VI

ADDITIONAL
AGREEMENTS

Page 51

                    SECTION
6.1 Access to Information; Confidentiality.

                    (a)
The Company and Shareholders shall, and shall cause the
Company’s subsidiaries to, afford to Parent and to the officers, current
employees, accountants, counsel, financial advisors, agents, lenders and other
representatives of Parent, reasonable access during normal business hours
during the period prior to the Effective Date to all the Company’s properties,
books, contracts, commitments, personnel and records and, during such period,
shall furnish promptly to Parent (i) a copy of each material report, schedule,
registration statement and other document filed by it with any Governmental
Entity, and (ii) all other information concerning its business, properties and
personnel as Parent may reasonably request; provided, however, that prior to
the Closing, the Company and Shareholders shall not be required to divulge any
information precluded from being divulged under the Confidentiality Agreement
between the parties dated as of March 27, 2007, (the “Confidentiality
Agreement”). Notwithstanding any provision to the contrary contained herein, in
no event shall Shareholders be required to disclose personal or personal
financial information unless required by applicable law or regulation. 

                    (b)
The parties will hold, and will use their best efforts to
cause their officers, directors, employees, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the other party and its subsidiaries furnished to it in
connection with the transactions contemplated hereby, except to the extent that
such information can be shown to have been (i) previously known on a
nonconfidential basis by the receiving party, (ii) in the public domain through
no fault of the receiving party, or (iii) later lawfully acquired by the
receiving party from other sources; provided that each party may
disclose such information to its officers, directors, employees, consultants,
advisors and agents in connection with the Purchase so long as such persons are
informed of the confidential nature of such information and are directed to
treat such information confidentially. Each parties’ obligation to hold such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would exercise to preserve the
confidentiality of its own similar information. Notwithstanding any other
provision of this Agreement, if this Agreement is terminated, such
confidentiality shall be maintained and all confidential materials shall be
destroyed or delivered to their owner, upon request. Notwithstanding any
provisions of this Agreement to the contrary, this Agreement shall not be
deemed to supersede, cancel or otherwise alter the Confidentiality Agreement
until the Closing, at which time such Confidentiality Agreement shall be deemed
superseded by the provisions herein.

                    SECTION
6.2 Commercially Reasonable Efforts. Except where
otherwise provided in this Agreement, each party will use its commercially
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the 

Page 52

Purchase as soon as practicable after the satisfaction
of the conditions set forth in Article VII hereof, provided that the
foregoing shall not require the Company, any Shareholder or Parent to take any
action or agree to any condition that might, in the reasonable judgment of the
Company or Parent, as the case may be, have a material adverse effect on the
Company or Parent, respectively; and further provided, that any action
and the cost thereof shall be borne by the party hereto on which the burden of
compliance is placed in order to permit consummation of the transaction. By way
of example and not limitation, if a Governmental Entity must grant a Requisite
Regulatory Approval to a party hereto to permit said party to consummate this
transaction, then said party must bear the cost and expense including but not
limited to attorneys’ fees, to attempt to obtain such Requisite Regulatory
Approval, and the other party shall not have to participate in, contribute or
otherwise pay any costs in obtaining such Requisite Regulatory Approval. 

                    SECTION
6.3 Fees and Expenses. Except as stated to the
contrary herein, all costs, fees and expenses incurred in connection with the
Purchase, this Agreement (including all instruments and agreements prepared and
delivered in connection herewith), and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses.

                    SECTION
6.4 Public Announcements. Parent, Shareholders and the
Company shall consult with each other before issuing, and shall provide each
other the opportunity to review, comment upon and concur with, and shall use
reasonable efforts to agree on, any press release or other public statements or
announcements (including pursuant to Rule 165 under the Securities Act and Rule
14a-12 under the Exchange Act) and any broadly distributed internal
communications with respect to the Purchase, this Agreement and the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement or announcement prior to such
consultation, except as either party may determine is required by applicable
law or court process (provided prior notice is given to the other party with a
copy of any such disclosure). The parties agree that the initial press releases
(or joint press release if the parties so determine) to be issued with respect
to the Merger, this Agreement and the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.

                    SECTION
6.5 Regulation D. Each party hereto shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued
hereunder in connection with the Purchase to be issued in accordance with
Regulation D promulgated under the Securities Act. Each party hereto shall
cooperate with the other parties hereto with respect to all filings required
pursuant to Regulation D promulgated under the Securities Act and shall not
knowingly take any action or fail to act to the extent such action or failure
to act would jeopardize the issuance of the shares of Parent Common Stock
hereunder in accordance with such Regulation D. Notwithstanding the foregoing,
Shareholders shall not have to expend funds or pay legal fees to undertake the
actions indicated in this Section 6.5. 

                    SECTION
6.6 Shareholders Covenant Not to Compete.  Without the prior written consent of
the Parent’s Chief Executive Officer, for a period of 

Page 53

five (5) years after the Closing Date, Shareholders,
and each of them, (i) will not, directly or indirectly, whether as owner,
partner, shareholders, consultant, agent, employee, co-venturer or otherwise,
engage, participate, assist or invest in any Competing Business (as hereinafter
defined); (ii) will refrain from, recruiting or otherwise soliciting, inducing
or influencing any person to leave employment with the Surviving Corporation or
Parent; and (iii) will refrain from soliciting a customer or supplier of the
Company, Parent or any Parent Affiliate to terminate or otherwise modify
adversely its business relationship with the Surviving Corporation, Parent or
Parent Affiliate. Shareholders understand that the restrictions set forth in
this Section 6.6 are intended to protect the Parent’s and Company’s interests
in their respective Confidential Information and established employee, customer
and supplier relationships and goodwill, and agree that such restrictions are
reasonable and appropriate for this purpose. For purposes of this Agreement,
the term “Competing Business” shall mean any business that provides the same or
similar types of services or products as those currently provided by the
Company in any geographic area now served or targeted by the Company.
Notwithstanding the foregoing, a Shareholder may own up to three percent (3%)
of the outstanding stock of a publicly held corporation that is engaged in a
Competing Business. 

                    SECTION
6.7 Parent Audit of Company. Within seventy-five (75)
days after the Closing Date, Parent shall cause to have been completed an audit
of the Company’s Financial Statements for the twelve (12) month periods ended
December 31, 2005 and December 31, 2006 for purposes of Net Working Capital
Adjustments and the verification of the financial information used as a basis
for valuation. Such audit shall be conducted by an independent certified public
accounting firm, and Shareholders’ Representative or another Shareholder
designated by Shareholders agrees to sign the standard management
representation letter in connection with such audit on behalf of Company. The
cost of such audit shall be paid by Parent.

                    SECTION
6.8 Shareholder Consent. The Company shall promptly,
after the date of this Agreement and in accordance with applicable law, the
Company’s Certificate of Incorporation and By-Laws, convene a meeting of the
Shareholders or solicit written consents to obtain their approval and adoption
of this Agreement. The Company shall ensure that the Shareholders’ meeting is
called, noticed, convened, held and conducted, and that all proxies solicited
by the Company in connection with the Shareholders’ meeting are solicited or,
in the alternative that written consents are solicited from the Shareholders,
in compliance with applicable law, the Company’s Certificate of Incorporation
and By-Laws, and all other applicable legal requirements. The Company agrees to
use its best efforts to take all action necessary or advisable to secure the
necessary votes required by applicable law, the Company’s Certificate of
Incorporation and By-Laws, and this Agreement to effect the Merger.

Page 54

ARTICLE
VII

CONDITIONS
PRECEDENT

                    SECTION
7.1 Conditions to Each Party’s Obligation to Consummate the Merger.
The respective obligation of each party to consummate the Merger is subject to
the satisfaction or, to the extent permitted by applicable law, waiver by each
of Parent and the Company and the Shareholder Representative on or prior to the
Closing Date of the following conditions:

                    (a)
Shareholders and Board Approvals. The Company, Merger Sub and Parent shall
each have obtained the consent of its Board of Directors and Shareholders to
the Merger, this Agreement and the transactions contemplated hereby as in each
case required.

                    (b)
Governmental and Regulatory Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental Entity
required by the Company, Parent or any of their subsidiaries under applicable
law or regulation to consummate the Purchase and the transactions contemplated
by this Agreement, the failure of which to be obtained or made would result in
a material adverse effect on Parent’s ability to conduct the business of the
Company in substantially the same manner as presently conducted, shall have
been obtained or made (all such approvals and the expiration of all such
waiting periods, the “Requisite Regulatory Approvals”), provided that,
the party which is required to procure such Requisite Regulatory Approvals
shall bear the cost of such procurement.

                    (c)
No Injunctions or Restraints. No judgment, order,
restraining order and/or injunction (temporary or otherwise), decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity or other legal restraint or
prohibition (collectively, “Restraints”) shall be in effect preventing
or materially delaying the consummation of the Purchase; provided, however,
that each of the parties shall have used its commercially reasonable efforts to
have such Restraint lifted, vacated or rescinded, and; provided, further, that
such efforts shall be all at the sole cost and expense of the party hereto
which is the subject of the Restraint.

                    SECTION
7.2 Conditions to Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Merger is further
subject to satisfaction or waiver as part of Closing or on or prior to the
Closing Date of the following additional conditions:

                    (a)
Representations and Warranties of the Company. The
representations and warranties of the Company set forth herein and in the
Company 

Page 55

Disclosure Schedule shall be true and correct in all
material respects at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which case
such representations and warranties shall be true and correct as of such date).
Parent shall have received a certificate of the Company’s Chief Executive
Officer to the foregoing effect. 

                    (b)
Performance of Obligations of the
Company. The Company and the Shareholders shall have performed in all
material respects all obligations required to be performed by them at or prior
to the Closing Date under this Agreement. Parent shall have received a
certificate of the Company’s Chief Executive Officer and Treasurer to the
foregoing effect.

                    (c)
Regulatory Condition. No condition or requirement
shall have been imposed by one or more Governmental Entities in connection with
any required approval by them of the Purchase that requires the Company or any
of its subsidiaries to be operated in a manner that would have a material
adverse effect on the Company.

                    (d)
Vote in Favor of the Merger. Stockholders holding not
less than One Hundred Percent (100%) of the Company Common Stock outstanding
immediately prior to the Effective Time must have voted such stock in favor of
the approval and adoption of this Agreement and the other transactions
contemplated by this Agreement.

                    (e)
No Company Material Adverse Effect. There shall not be
or exist any change, effect, event, circumstance, occurrence or state of facts
that has had, has or which reasonably could be expected to have, a material
adverse effect on the Company. 

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

                    (g)
Employment Agreement. David Condensa, Bert Condensa,
Kevin Hawkins, David Auerweck, Terri Marine and Surviving Corporation shall
have executed the Employment Agreements in substantially the forms attached
hereto as Exhibit C.

                    (h)
Registration Rights Agreement. Parent and all
Shareholders shall have entered into a Registration Rights Agreement in the
form attached hereto as Exhibit D (the “Registration Rights Agreement”).

                    (i)
Lock-Up and Voting Agreement. Parent and all
Shareholders shall have entered into a Lock-Up and Voting Agreement in the form
attached hereto as Exhibit E (the “Lock-Up and Voting Agreement”) and
Shareholders shall have each executed and delivered to Parent the Irrevocable
Proxies described therein.

Page 56

                    (j)
SunMicrosystems. Parent and the Company shall have had a meeting with
SunMicrosystems, which meeting shall take place prior to the Closing, and
Parent shall have received reasonable assurances of a continuing positive
relationship between SunMicrosystems and the Company. 

                    (k)
Certificate of Good Standing. Parent shall have
received prior to or at the Closing a certificate of good standing regarding
the Company from the Secretary of State of the State of California dated not
more than fifteen (15) days prior to Closing.

                    (l)
Legal Opinion. Parent shall have received an opinion
of the law firm MBV Law, LLP, counsel to the Company and Shareholders, in
substantially the form attached hereto as Exhibit F.

                    (m)
Chopra Litigation. Dismissals with prejudice shall have been entered in
Case No. CIV 462802, Superior Court of California, County of San Mateo (Chopra
v. Helio Solutions, Inc., et. al.) and Case No. 1-06-CV-062181, Superior Court
of California, County of Santa Clara (Chopra v. Helio Solutions, Inc., et. al.)
and a Mutual Release and Settlement Agreement in the form attached hereto as
Exhibit H
shall have been entered into by all of the parties to each of the foregoing
cases and any and all contingencies or conditions of such Mutual Release and
Settlement Agreement shall have been satisfied.

                    (n)
Joinder Agreement. Each Shareholder shall have entered
into a Joinder Agreement in the form attached hereto as Exhibit I and thereby
(i) become a party to this Agreement, (ii) individually acknowledged the
representations and warranties made by the Company, and (iii) individually
acknowledged and assumed the Shareholder indemnification obligations of Article
VIII hereof. 

                    (o)
Third Party Consents. The Company shall have procured all of the third party consents specified
in Section 3.4(e) of the Company Disclosure Schedule.

                    (p)
Company 2006 Adjusted EBITDA.   Adjusted EBITDA of the Company for the year ended December
31, 2006, shall be not less than Two Million Five Hundred Thousand Dollars
($2,500,000.00). 

                    (q)
Company Working Capital. Notwithstanding any provisions herein regarding adjustments for
Net Working Capital of Company, Company Net Working Capital as of the Closing
Date shall be not less than One Million Five Hundred Thousand Dollars ($1,500,000.00).

Page 57

	
 

	
                    (r)
 Resignation of Officers and Directors. There shall have been delivered
 to Parent the written resignations of the officers and directors of the
 Company.

	
 

	
                    (s)
 Acquisition of Chopra Shares. Concurrently with or
 immediately prior to the Closing, Parent shall have acquired all of the
 outstanding stock of Company issued to Paul Chopra (the “Chopra Stock”), and
 Shareholders shall have each waived, in writing, their rights to acquire the
 Chopra Stock pursuant to that certain Entity Buy-Sell Agreement dated as of
 May 3, 2001, by and among certain of the Shareholders, the Company and Paul
 Chopra. 

                    
SECTION 7.3 Conditions to Obligations of
Company and Shareholders. The obligation of the Company, the
Shareholder Representative and Shareholders to consummate the Merger is further
subject to satisfaction or waiver on or prior to the Closing Date of the
following additional conditions:

                    (a)
Representations and Warranties. The representations
and warranties of Parent set forth herein and in the Parent Disclosure Schedule
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case such representations and warranties shall be
true and correct as of such date). The Company shall have received a
certificate of Parent’s Chief Executive Officer and Chief Financial Officer to
the foregoing effect.

                    (b)
Performance of Obligations of Parent. Parent shall
have performed in all material respects all obligations required to be
performed by it at or prior to the Closing Date under this Agreement. The
Company shall have received a certificate of Parent’s Chief Executive Officer
and Chief Financial Officer to the foregoing effect.

                    (c)
Regulatory Condition. No condition or requirement
shall have been imposed by one or more Governmental Entities in connection with
any required approval by them of the Purchase that requires Parent or any of
its subsidiaries to be operated in a manner that would have a material adverse
effect on Parent.

                    (d)
No Parent Material Adverse Effect. There shall not be
or exist any change, effect, event, circumstance, occurrence or state of facts
that has had, has or which reasonably could be expected to have, a material
adverse effect on Parent.

Page 58

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

                    (f)
Employment Agreement. David Condensa, Bert Condensa,
Kevin Hawkins, David Auerweck, Terri Marine and Surviving Corporation shall
have executed Employment Agreements in substantially the forms attached hereto
as Exhibit C.

                    (g)
Legal Opinion. Shareholders shall have received an
opinion of counsel to the Parent, Law Offices of Karl Reed Guest, in
substantially the form attached hereto as Exhibit H.

                    (h)
Registration Rights Agreement. Parent
and the Shareholders shall have entered into the Registration Rights Agreement
in the form attached hereto as Exhibit D.

                    (i)
Certificate of Good Standing. Shareholders shall have
received prior to or at the Closing a certificate of good standing regarding
the Parent from the Secretary of State of the State of Nevada dated not more
than fifteen (15) days prior to Closing.

                    (j)
Vote in Favor of the Merger. Stockholders holding not
less than One Hundred Percent (100%) of the Company Common Stock outstanding
immediately prior to the Effective Time must have voted such stock in favor of
the approval and adoption of this Agreement and the other transactions
contemplated by this Agreement.

                    (k)
Chopra Litigation. Dismissals with prejudice shall
have been entered in Case No. CIV 462802, Superior Court of California, County
of San Mateo (Chopra v. Helio Solutions, Inc., et. al.) and Case No.
1-06-CV-062181, Superior Court of California, County of Santa Clara (Chopra v.
Helio Solutions, Inc., et. al.) and a Mutual Release and Settlement Agreement
in the form attached hereto as Exhibit G shall have been entered into by all of
the parties to each of the foregoing cases and any and all contingencies or
conditions of such Mutual Release and Settlement Agreement shall have been
satisfied.

                    (l)
Joinder Agreement. Each Shareholder shall have entered
into a Joinder Agreement in the form attached hereto as Exhibit I and thereby
(i) become a party to this Agreement, (ii) individually acknowledged the
representations and warranties made by the Company, and (iii) individually
acknowledged and assumed the Shareholder indemnification obligations of Article
VIII hereof. 

Page 59

                    SECTION
7.4 Frustration of Closing Conditions. Neither Parent
nor the Company nor the Shareholders may rely on the failure of any condition
set forth in Section 7.1, 7.2 or 7.3, as the case may be, to be satisfied if
such failure was caused by such party’s failure to use its own commercially
reasonable efforts to consummate the Merger and the other transactions contemplated
by this Agreement, as required by and subject to Section 6.2.

Page 60

ARTICLE
VIII

INDEMNIFICATION; ARBITRATION

          SECTION
8.1. Survival of Representations and Warranties. The
representations and warranties of the Company, Shareholders and Parent
contained in this Agreement and any other document or certificate relating
hereto (collectively, the “Acquisition Documents”) shall survive the Effective
Time for a period of eighteen (18) months; provided, however, claims related to
fraud, willful misconduct or gross negligence shall survive for a period of
twenty-four (24) months. Neither the period of survival nor the liability of
the parties with respect to their respective representations and warranties
shall be affected by any investigation made at any time (whether before or
after the Effective Time) by or on behalf of another party or by any actual,
implied or constructive knowledge or notice of any facts or circumstances that
the other parties may have as a result of such investigation or otherwise. The
parties hereto agree that reliance shall not be an element of any claim for
misrepresentation or indemnification under this Agreement. The waiver by a
party of any condition based on the accuracy of any such representation or
warranty, or based on the performance of, or the compliance with, any covenant
or obligation, shall not affect the right to indemnification or other remedy
based on such representations, warranties, covenants or obligations. If written
notice of claim has been given prior to the expiration of the applicable
representations and warranties,
then the relevant representations and warranties shall survive as to such claim
until such claim has been finally resolved.

          SECTION
8.2 Indemnification by Shareholders. (a) By
virtue of their adoption of this Agreement and their approval of the
transactions contemplated hereby, the Shareholders agree that after the
Effective Time, Parent and is affiliates (including, after the Effective Time,
the Surviving Corporation), officers, directors, employees, agents, successors
and assigns (collectively, the “Parent Indemnified Parties”) shall be
indemnified and held harmless by the Shareholders, jointly and severally, for
any and all liabilities, losses, damages of any kind, diminution in value,
claims, costs, expenses, fines, fees, deficiencies, interest, awards, judgments,
amounts paid in settlement and penalties (including, without limitation,
attorneys’ fees, consultants’ and experts’ fees and expenses and other costs of
defending, investigations or settling claims) suffered, incurred, accrued (in
accordance with GAAP) or paid by them (including, without limitation, in
connection with any action brought or otherwise initiated by any of them)
(collectively, “Parent Losses”), (but with adjustment for any insurance
recovery or tax deduction relating thereto), to the extent arising out of or
resulting therefrom:

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

Page 61

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

                    (iii)
Parent Losses arising from breach of contract or other claims made by any party
alleging to have had a contractual or other right to acquire the Company’s
capital or assets, specifically including, but not limited to, pursuant to that
Entity Buy-Sell Agreement entered into by and among the Company and certain of
the Shareholders and dated as of May 3, 2001;

                    (iv)
in the event that any Shareholder properly exercises appraisal rights under
applicable law, the amount, if any, by which the fair market value (determined
in accordance with applicable law) of the Dissenting Shares exceeds the amount
such Shareholder was otherwise entitled to receive pursuant to Section 2.1 of
this Agreement (including the Earn Out Payments); 

                    (v)
any cost, loss or other expense (including the value of any Tax deduction after
such loss) as a result of the application of Section 280G of the Code to any of
the transactions contemplated by this Agreement or any previous transactions
which result in such liability after the Closing, plus any necessary gross up
amount; or

                    (vi)
any Shareholder expenses payable by the Surviving Corporation following the
Closing which are incurred prior to the Closing and are not set forth in
Section 3.15 of the Company Disclosure Schedule;

Page 62

                    (vii)
provided, however, that (A) no Parent Indemnified Party shall be
entitled to receive indemnification payments with respect to any Parent Loss
unless and until the aggregate deductible amount of the Parent Losses exceeds
$100,000.00, and then only to the extent of the Parent Losses in excess of such
aggregate amount; (B) this Section 8.2 shall provide the sole and exclusive
remedy of Parent or a Parent Indemnified Party with respect to any breach or
failure of any representation or warranty or covenant under this Agreement or
any of the Acquisition Documents; and (C) the aggregate liability of the
Shareholders under this Section 8.2 shall not exceed Three Million Dollars ($3,000,000.00) except for
claims related to willful misconduct (other than fraud) or gross negligence, in
which case the aggregate liability of the Shareholders under this Section 8.2
shall not exceed the aggregate Merger Consideration actually paid to
Shareholders (inclusive of any Escrow Fund), and the liability of each
Shareholder under this Section 8.2 shall be limited to his or her pro rata
share of Parent Losses and shall not exceed
his or her pro rata share of such liability cap;
provided, further, however, that the $100,000.00 threshold set forth above
shall not apply and the aggregate Merger Consideration liability cap shall
apply to the following Excepted Parent Losses (t) Parent Losses covered by
Section 8.2(a)(iii) above, (u) tax obligations of the Company or Shareholders
pertaining to periods prior to the Closing, (v) breach of the Company’s
contracts with Sun Microsystems, (w) any claim brought by or based upon claims
of any Company stockholder or related party accruing prior to the Closing, (x)
damages and or costs incurred as a result of or in the defense of the legal
actions set forth in Section 3.8 of the Company Disclosure Schedule, (y) claims
related to the ownership or loans for the purchase of or secured by that
building located at 3000 Lakeside Drive, Santa Clara, CA or (z) a breach by a
Shareholder of his or her obligations under Section 6.6. With respect to such
Excepted Parent Losses, the liability of each Shareholder under this Section
8.2 shall be limited to such Shareholder’s pro
rata share of such Excepted Parent Losses and shall not exceed the
Shareholder’s pro rata share of the Merger Consideration actually paid to the
Shareholders. Parent agrees that in the case of a breach by an identifiable
individual Shareholder (a “Breaching Shareholder”), Parent will look first for
satisfaction of the indemnification claim to (i) such Breaching Shareholder’s
pro rata share of the Escrow Fund, then (ii) to any Earn Out Payment then
payable to such Breaching Shareholder, then (iii) to such Breaching Shareholder’s
pro rata share of the remaining Merger Consideration actually received by such
Breaching Shareholder, then, (iv) to the remaining Shareholders’ pro rata
shares of the Escrow Fund in pro rata portions, then (v) to any Earn Out
Payment then payable to the Remaining Shareholders, in pro rata portions, then
(vi) to the remaining Shareholders’ pro rata shares of the remaining Merger
Consideration actually received by such remaining Shareholders, in pro rata
portions, and then (vii) to any future Earn Out Payment that may become payable
to the Shareholders, in pro rate portions. In the case of a breach not
attributable to an individual identifiable Shareholder, Parent agrees to look
for satisfaction of the indemnification claim, in pro rata portions, to, first (1)
the Escrow Fund, then (2) to any Earn Out Payment then payable to the
Shareholders, in pro rata portions, then (3) to the Shareholders’ pro rata
shares of the remaining Merger Consideration actually received by such
remaining Shareholders, in pro rata portions, and, then (4) to any future Earn
Out Payments that may become payable to Shareholders, in pro rata portions. At
the Shareholder’s sole option, a Shareholder may pay any indemnification amount
that may 

Page 63

become due and
payable from Merger Consideration actually received by directing Parent to
first use shares of Parent Common Stock, without any discounts for brokerage or
underwriting commissions. For purposes of any indemnity claim limited by the
Merger Consideration, the value of the Parent Shares shall be the lesser of (X)
their value at the time issued to the Shareholders, or (Y) their Fair Market
Value at the time the indemnity claim is made. 

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

          (c)
By virtue of their adoption of this Agreement and their approval of the transactions
contemplated hereby, the Shareholders acknowledge and agree that, if the
Surviving Corporation suffers, incurs or otherwise becomes subject to any
Losses as a result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation,
to have incurred Losses as a result of and in connection with such inaccuracy
or breach, provided that there shall be no duplicate recovery with respect to
any Parent Losses.

          (d)
No Shareholder shall have any right of contribution, right of indemnity or
other right or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which such Shareholder may
become subject under or in connection with this Agreement.

          (e)
Notwithstanding anything herein to the contrary, the Company’s representations
and warranties contained in Article III of this Agreement shall, for purposes
of the Company’s or Shareholders’ indemnification obligations, be deemed to be
made as of the date of this Agreement and as of the Effective Time (except for
any such representation or warranty that expressly speaks of and earlier date)
without regard to the exceptions set forth in the certificates to be delivered
in connection with Section 7.2.

Page 64

          SECTION
8.3 Indemnification by Parent. Shareholders
(the “Shareholder Indemnified Parties”) shall be indemnified and held harmless
by Surviving Corporation and Parent, jointly and severally, against all claims,
losses, liabilities, damages, deficiencies, costs and expenses, including
reasonable attorneys’ fees and expenses of investigation (hereinafter
individually a “Shareholder Loss” and collectively “Shareholder Losses”) (but
with adjustment for any insurance recovery or tax deduction relating thereto),
to the extent arising out of or resulting therefrom, incurred by the
Shareholder Indemnified Parties directly or indirectly as a result of: (i) any
inaccuracy of a representation or warranty of Parent contained in this
Agreement or (ii) any failure by Parent or Surviving Corporation to perform or
comply with any covenant contained in this Agreement; provided, that the
Shareholder Indemnified Parties shall not be entitled to receive
indemnification payments with respect to any Shareholder Loss under (i) or (ii)
above unless and until the aggregate deductible amount of the Shareholder
Losses exceeds $100,000.00 and then only to the extent of such Shareholder
Losses in excess of such aggregate amount; provided, however, such aggregate
deductible amount shall not apply to Parent’s failure to make payments under
Section 2.2(a)(i) hereof or under the Employment Agreements, so long as there
has been no termination of the Employment Agreements in accordance with their
terms which would relieve Parent of its payment obligations thereunder, or to
Parent’s obligation to issue its Common Stock in accordance with the provisions
of Section 2.1 of this Agreement. 

          SECTION
8.4 Claims and Procedure

          (a)
Claims. Whenever any claim shall arise for indemnification, the party seeking
indemnification hereunder (the “indemnified
party”) shall notify the party or parties from whom indemnification
is sought (collectively, the “indemnifying
party”) of the claim pursuant to Section 8.4(c) hereunder and, when
known, the facts constituting the basis for such claim and the amount or
estimate of the amount of the liability arising from such claim. The
indemnified party shall not settle or compromise any claim by a third party for
which the indemnified party is entitled to indemnification hereunder without
the prior written consent of the indemnifying party unless (i) suit shall have
been instituted against the indemnified party and (ii) the indemnifying party
shall not have taken control of such suit as provided in Section 8.4(b) within
25 days after notification thereof. 

          (b)
Defense by Indemnifying Party. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a third party, the indemnifying party, at its sole cost and
expense, may, upon written notice to the indemnified party, assume the defense
of any such claim or legal proceeding. If the indemnifying party assumes the
defense of any such claim or legal proceeding, the indemnifying party shall
select counsel reasonably acceptable to the indemnified party to conduct the
defense of such claims or legal proceedings and at the indemnifying party’s
sole cost and expense shall take all reasonable steps necessary in the defense
or settlement thereof. The indemnifying party shall not consent to a settlement
of, or the entry of any judgment arising from, any such claim or legal
proceeding, without the prior written consent of the indemnified party, which
consent shall not be

Page 65

unreasonably
withheld, conditioned or delayed, if (a) the indemnifying party admits in
writing its liability to hold the indemnified party harmless from and against
any losses, damages, expenses and liabilities arising out of such settlement,
(b) concurrently with such settlement the indemnifying party pays into court
the full amount of all losses, damages, expenses and liabilities to be paid by
the indemnifying party in connection with such settlement and obtains a full
release of any liability of the indemnified party which is not conditioned upon
any further payment and (c) such settlement would not otherwise have a material
adverse effect on the indemnified party. The indemnified party shall be
entitled to participate in (but not control) the defense of any such action,
with its own counsel and at its own expense. If the indemnifying party does not
assume the defense of any such claim or litigation resulting therefrom in
accordance with the terms hereof, the indemnified party may defend against such
claim or litigation in such manner as it may deem appropriate including, but
not limited to, settling such claim or litigation, after giving notice of the
same to the indemnifying party, on such terms as the indemnified party may deem
appropriate. The indemnifying party shall be required to participate in the
defense of any action by providing information necessary to permit the
indemnified party to defend such action as indicated in (d) below and shall be
advised of its status. In any action by the indemnified party seeking
indemnification from the indemnifying party in accordance with the provisions
of this Section, if the indemnifying party did not assume the defense of any
such claim or litigation, the indemnifying party shall not be entitled to
question the manner in which the indemnified party defended such claim or
litigation or the amount or nature of any such settlement.

          (c)
Notice. In the event of any occurrence which may give rise to a claim by an
indemnified party against an indemnifying party hereunder, the indemnified
party will give notice thereof to the indemnifying party within 20 days of the
indemnified party becoming aware of events giving rise to the possibility of a
right to indemnification and the first opportunity to reduce, remedy or incur
the damages or potential damages caused by such occurrence; provided, however, that failure of the
indemnified party to timely give the notice provided in this Section 8.4(c)
shall not be a defense to the liability of an indemnifying party for such
claim, but such indemnifying party may recover from the indemnified party any
actual damages arising from the indemnified party’s failure to give such timely
notice; provided, further that Parent may take preemptive legal action of a
pressing nature, with respect to a third party Claim, only after providing notice
to the Shareholders in the manner provided for in Section 10.1 hereof.

          (d)
Access to Information. Regardless of which party shall assume the defense of a
claim, each party shall provide to the other parties, upon written request, all
information and documentation in the possession or control of such party and
reasonably necessary to support and verify any Parent or Shareholder Losses
which give rise to such claim for indemnification and shall provide reasonable
access to all books, records and personnel in such party’s possession or
control which would have a bearing on such claim.

          (e)
Tax Audits. Notwithstanding any provision to the contrary contained herein, in
all events Shareholders shall be permitted to retain legal counsel, accountants,
and any and all professional assistance Shareholders desires, (all at
Shareholders’ sole cost and expense) to defend against any audits involving
taxes relating to the time during which

Page 66

Shareholders
owned the Company. Parent agrees to give Shareholder notice in the event Parent
has received notice of any such tax audit.

          (f)
Fraud Claims. Notwithstanding anything to the contrary herein, the existence of
this Article VIII and of the rights and restrictions set forth herein do not limit
any legal remedy for claims based on common law fraud.

          SECTION
8.5 Arbitration.
Any dispute, controversy or claim arising out of or relating to this Agreement
(a “Dispute”), shall be settled by binding arbitration. Any such arbitration
proceeding shall be conducted by one arbitrator mutually agreeable to
Shareholders and Parent. In the event that within forty-five (45) days after
submission of any Dispute to arbitration, Shareholders and Parent cannot
mutually agree on one arbitrator, Shareholders and Parent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator
who will arbitrate the case on his own. The agreed upon arbitrator or the third
arbitrator, as the case may be, shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery while allowing
the parties an opportunity, adequate in the sole judgment of the arbitrator or
third arbitrator, as the case may be, to discover relevant information from the
opposing parties about the subject matter of the Dispute. The arbitrator or the
third arbitrator, as the case may be, shall rule upon motions to compel or
limit discovery and shall have the authority to impose sanctions, including
attorneys’ fees and costs, to the same extent as a competent court of law or
equity, should the arbitrator or third arbitrator, as the case may be,
determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The
decision of the arbitrator shall be binding and conclusive upon the parties to
this Agreement. Such decision shall be written and shall be supported by
written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator(s). Judgment upon any award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
Any such arbitration shall be held in San Francisco, California, under the
rules then in effect of Judicial Arbitration and Mediation Services. The
substantially non-prevailing party shall pay all expenses relating to the
arbitration, including without limitation, the respective expenses of each
party, the fees of each arbitrator and applicable administrative fees. 

          SECTION
8.6 Shareholders’ Representative.

          (a)
David Condensa (such person and any successor being the “Shareholders’
Representative”) shall act as the representative of the Shareholders, and shall
be authorized to act on behalf of the Shareholders and to take any and all
actions required or permitted to be taken by the Shareholders’ Representative
under this Agreement with respect to any claims (including the settlement
thereof) made by a Parent Indemnified Party for indemnification pursuant to
this Article VIII and with respect to any actions to be taken by the
Shareholders’ Representative pursuant to the Escrow Agreement (including,
without limitation, the exercise of the power to (i) authorize the delivery of
the Escrow Fund to a Parent Indemnified Party, (ii) agree to, negotiate, enter
into 

Page 67

settlements
and compromises of, and comply with orders of courts with respect t any claims
for indemnification and (iii) take all actions necessary in the judgment of the
Shareholders’ Representative for the accomplishment of the foregoing). In all
matters relating to this Article VIII, the Shareholders’ Representative shall
be the only party entitled to assert the rights of the Shareholders, and the
Shareholders’ Representative shall perform all of the obligations of the
Shareholders hereunder. The Parent Indemnified Parties shall be entitled to
rely on all statements, representations and decisions of the Shareholders’
Representative.

          (b)
The Shareholders shall be bound by all actions taken by the Shareholders’
Representative in his, her or its capacity thereof, except for any action that
conflicts with the limitations set forth in subsection (d) below. The
Shareholders’ Representative shall promptly, and in any event within five (5)
business days, provide written notice to the Shareholders of any action taken
on behalf of them by the Shareholders’ Representative pursuant to the authority
delegated to the Shareholders’ Representative under this Section 8.6. The
Shareholders’ Representative shall, at all times, act in his or her capacity as
Shareholders’ Representative in a manner that the Shareholders’ Representative
believes to be in the best interest of the Shareholders. Neither the
Shareholders’ Representative nor any of its directors, officers, agents or
employees, if any, shall be liable to any person for any error of judgment, or
any action taken, suffered or omitted to be taken under this Agreement or the
Escrow Agreement, except in the case of its gross negligence, bad faith or
willful misconduct. The Shareholders’ Representative may consult with legal
counsel, independent public accountants and other experts selected by it. The
Shareholders’ Representative shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the Escrow Agreement. As t any matters not
expressly provided for in this Agreement or the Escrow Agreement, the Shareholders’
Representative shall not exercise any discretion or take any action.

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

          (d)
If Shareholders’ Representative shall die, resign, become disabled or otherwise
be unable to fulfill his responsibilities hereunder, or if Shareholders owning
a majority of Shares of the Surviving Corporation owned by all Shareholders in
the aggregate at the time (or as of the Closing, if after the Closing) shall
elect to remove (with or without cause) Shareholders’ Representative,
Shareholders shall (by consent of Shareholders owning at least a majority of
shares of the Company owned by all Shareholders in the aggregate at the time
(or as of the Closing, if after the Closing), within 10 days after such death,
resignation, disability, inability or removal, appoint a successor to
Shareholders’ Representative (who shall be reasonably satisfactory to

Page 68

Parent). Any
such successor shall succeed Shareholders’ Representative as Shareholders’
Representative hereunder. If for any reason there is no Shareholders’
Representative at any time, all references herein to Shareholders’
Representative shall be deemed to refer to Shareholders holding a majority of
the Shares. 

          (e)
Shareholders, jointly and severally, agree to indemnify Shareholders’
Representative and to hold Shareholders’ Representative harmless against any
and all loss, liability or expense incurred without fraud, willful misconduct
or gross negligence on the part of Shareholders’ Representative and arising out
of or in connection with his duties as Shareholders’ Representative, including
the reasonable costs and expenses incurred by Shareholders’ Representative in
defending against any claim or liability in connection with this Agreement.
This indemnification shall survive the termination of this Agreement. The costs
of such indemnification (including the costs and expenses of enforcing the
right of indemnification) shall be paid by the Shareholders pro rata in
accordance with amounts of the total Purchase Price to be received by each
Shareholder (and assuming payment in full of the Earn out Payments).
Shareholders’ Representative may, in all questions arising under this Agreement,
rely on the advice of counsel and for anything done, omitted or suffered by
Shareholders’ Representative in accordance with such advice, Shareholders’
Representative, solely in its capacity as Shareholders’ Representative, shall
not be liable to Shareholders, except as expressly provided hereunder. In no
event shall Shareholders’ Representative be liable to Shareholders hereunder or
in connection herewith, solely in its capacity as Shareholders’ Representative,
for any consequential, special, consequential or punitive damages.

          (f)
Neither Parent nor its Affiliates shall have the right to object to, protest or
otherwise contest any matter related to the procedures for action being taken
by Shareholders’ Representative as between Shareholders’ Representative and the
Shareholders. 

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

                  
  SECTION
9.1 Termination.
This Agreement may be terminated at any time prior to August 31, 2007:

	
 

	
 

	
 

	
(a) by
 mutual written consent of Parent and the Company;

	
 

	
 

	
 

	
(b) upon
 failure of any condition precedent set forth in Section 7.1 hereof;

	
 

	
 

	
 

	
(c) by
 Parent upon failure of any condition precedent set forth in Section 7.2
 hereof;

	
 

	
 

	
 

	
(d) by
 Company or Shareholder Representative upon failure of any condition precedent
 set forth in Section 7.3 hereof

Page 69

	
 

	
 

	
 

	
(e) by
 Parent or the Company if the Effective Time shall not have occurred on or
 before August 31, 2007; 

	
 

	
 

	
 

	
(f) by
 Parent upon a breach of any material representation, warranty, covenant or
 agreement on the part of the Company or Shareholders set forth in this
 Agreement, or if any representation or warranty of the Company or
 Shareholders shall have become untrue, in either case such that the
 conditions set forth in 7.2(a) or 7.2(b) would not be satisfied (“Terminating
 Company Breach”); provided, however, that if such Terminating Company Breach
 is curable by the Company or Shareholders through the exercise of their
 respective best efforts and for so long as the Company and Shareholders
 continue to exercise such best efforts, Parent may not terminate this
 Agreement under this Section 9.1(d) unless such breach is not cured within
 thirty (30) days after notice thereof is provided by Parent to the Company
 and Shareholders (but no cure period is required for a breach which, by its
 nature, cannot be cured); or

	
 

	
 

	
 

	
(g) by the
 Company or the Shareholder Representative upon a breach of any material
 representation, warranty, covenant or agreement on the part of Parent or
 Merger Sub set forth in this Agreement, or if any representation or warranty
 of the Company or Shareholders shall have become untrue, in either case such
 that the conditions set forth in 7.3(a) or 7.3(b) would not be satisfied
 (“Terminating Parent Breach”); provided, however, that if such Terminating
 Parent Breach is curable by Parent and Merger Sub through the exercise of
 their respective best efforts and for so long as Parent and Merger Sub
 continue to exercise such best efforts, the Company and Shareholders may not
 terminate this Agreement under this Section 9.1(e) unless such breach is not
 cured within thirty (30) days after notice thereof is provided by the Company
 or Shareholders to Parent (but no cure period is required for a breach which,
 by its nature, cannot be cured); 

	
 

	
 

	
 

	
(h)
 provided, however, that neither Parent nor the Company may rely on the
 failure of any condition set forth in Section 7.1, 7.2 or 7.3, as the case
 may be, to be satisfied if such failure was caused by such party’s failure to
 use its own commercially reasonable efforts to consummate the Merger and the
 other transactions contemplated by this Agreement, as required by and subject
 to Section 6.2.

                  
  SECTION
9.2 Effect of Termination.

                  
  (a) If this Agreement
is terminated as provided in Section 9.1, this Agreement forthwith shall become
void and have no effect, without any liability or obligation on the part of
Parent or Shareholders; provided, however, that nothing herein
shall relieve any party from any liability (in contract, tort or otherwise, and
whether pursuant to an action at law or in equity) for any knowing or willful
breach by such party

Page 70

of any of its
representations, warranties, covenants or agreements set forth in this
Agreement or in respect of fraud by any party. Notwithstanding the foregoing, the
provisions of this Article IX, Section 6.1(b), Section 6.3, Section 6.4,
Article X shall survive any termination of this Agreement.

                  
  (b)
Anything in this Agreement to the contrary notwithstanding, if any of the
conditions specified in Article VII hereof for its benefit have not been
satisfied, Parent, Shareholders or the Company (as applicable) shall have the
right to waive the satisfaction thereof and to proceed with the transactions
contemplated hereby.

                  
  SECTION
9.3 Amendment. This Agreement may be amended by
the parties at any time. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties to be bound
thereby.

                  
  SECTION
9.4 Extension; Waiver. At any time prior to the
Closing, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
provisions of Section 9.3, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.

ARTICLE X

GENERAL PROVISIONS

                  
  SECTION
10.1 Notices. All notices, requests,
claims, demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

	
 

	
 

	
 

	
(a) If to Parent, to:

	
 

	
 

	
 

	
Incentra
 Solutions, Inc.

	
 

	
1140 Pearl
 Street

	
 

	
Boulder,
 Colorado 80302

	
 

	
Fax No.:
 (303) 440-7114

	
 

	
Attention:
 Thomas P. Sweeney III

Page 71

	
 

	
 

	
 

	
with a copy
 (which shall not constitute notice pursuant to this Section 10.2) to:

	
 

	
 

	
 

	
Reed Guest,
 Esq.

	
 

	
94 Underhill
 Road

	
 

	
Orinda, CA
 94563

	
 

	
Fax No.:
 (925) 254-9226.

	
 

	
 

	
 

	
(b) if to Shareholders, to:

	
 

	
 

	
 

	
David
 Condensa

	
 

	
5676 Scenic
 Meadow Lane

	
 

	
San Jose, CA
 95135

	
 

	
Fax No.: 

	
 

	
 

	
 

	
with a copy
 (which shall not constitute notice pursuant to this Section 10.2) to:

	
 

	
 

	
 

	
MBV Law LLP

	
 

	
855 Front
 Street

	
 

	
San
 Francisco, CA 94111

	
 

	
Attention:
 Donald Buder

	
 

	
 

	
 

	
Fax No.:
 (415) 989-5143

	
 

	
Telephone
 No. (415) 781-4400

                  
  SECTION
10.2 Definitions.
For purposes of this Agreement:

                  
  (a) an “affiliate”
of any person means another person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, such first person, where “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise.

                  
  (b) “Encumbrances”
shall mean Liens, security interests, deeds of trust, encroachments,
reservations, orders of Governmental Entities, decrees, judgments, contract
rights, claims or equity of any kind.

                  
  (d)
“Knowledge” means, (i) with respect to
Shareholders, their actual knowledge after reasonable due inquiry, (ii) with
respect to the Company, the actual knowledge after reasonable due inquiry of
the Shareholders or any of Company’s executive officers; and (ii) with respect
to Parent, the actual knowledge after reasonable due inquiry of any of Parent’s
executive officers.

Page 72

                  
  (e)
“Material Adverse Change” or “Material Adverse Effect” means,
when used in reference to the Company or Parent, any change, effect, event,
circumstance, occurrence or state of facts that is, or which reasonably could
be expected to be, materially adverse to the business, assets, liabilities,
condition (financial or otherwise), cash flows or results of operations of such
party and its subsidiaries, considered as an entirety. 

                  
  (f)
“Person” means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.

                  
  (g)
“Shareholders” shall mean David Condensa, Bert Condensa, David Auerweck,
Kevin Hawkins and Terri Marine.

                  
  (h)
a “Subsidiary” of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect not less than a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such first
person.

                  
  SECTION
10.3 Interpretation. Whenever the words “include,” “includes” or “including” are used
in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. 

                  
  SECTION
10.4 Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties. A facsimile copy of a signature page shall be deemed to be an
original signature page.

                  
  SECTION
10.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein, but
excluding the Confidentiality Agreement to the extent stated herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement, and; (b) except for the provisions of Section
6.4 which shall inure to the benefit of and be enforceable by the persons
referred to therein, are not intended to confer upon any person

Page 73

other than the
parties any rights or remedies; and (c) all Exhibits and Schedules to this
Agreement are incorporated into this Agreement by reference.

                  
  SECTION
10.6 Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the internal substantive and procedural laws of the State of
California, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law of such state. 

                  
  SECTION
10.7 Assignment. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be assigned,
in whole or in part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

                  
  SECTION
10.8 Consent to Jurisdiction. Each of the
parties hereto (a) consents to submit itself to the personal jurisdiction of
any State or Federal court located in the Northern District of the State of
California in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement and arbitration is first demanded
or suit is first filed by Parent, (b) consents to submit itself to the personal
jurisdiction of any Federal court located in the Northern District of the State
of California event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement and arbitration is first demanded
or suit is first filed by Shareholders, (c) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (d) agrees that it will not bring any action relating
to this Agreement or any of the transactions contemplated by this Agreement in
any court other than a court as provided in (a) above with respect to claims by
Parent or (b) with respect to claims by Shareholders. The parties irrevocably
and unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or any of the transactions
contemplated by this Agreement in any State or Federal court as provided above,
and hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum. 

                  
  SECTION
10.9 Headings. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

                  
  SECTION
10.10 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in a reasonably
acceptable

Page 74

manner to the
end that the transactions contemplated hereby are fulfilled to the extent
possible.

                  
  SECTION
10.11 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement, this being in
addition to any other remedy to which they are entitled at law or in equity. If
any litigation or arbitration shall be commenced to enforce, or relating to,
any provision of this Agreement, the prevailing party shall be entitled to an
award of reasonable attorneys fees and reimbursement of such other costs as it
incurs in prosecuting or defending such litigation. For purposes of this
section, “prevailing party” shall include a party awarded injunctive relief or
a party prevailing based upon final, unappealable order.

[The remainder of
this page is intentionally left blank.]

Page 75

                  
  IN
WITNESS WHEREOF, Shareholders, and Parent have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.

	
 

	
 

	
 

	
 

	
INCENTRA SOLUTIONS, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name: Thomas
 P. Sweeney III

	
 

	
Title: Chief
 Executive Officer

	
 

	
 

	
 

	
INCENTRA HELIO ACQUISITION CORP.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name: Thomas
 P. Sweeney III

	
 

	
Title: Chief
 Executive Officer

	
 

	
 

	
 

	
 

	
HELIO SOLUTIONS, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
Title:

	
 

	
 

	
 

	
 

	
SHAREHOLDERS’ REPRESENTATIVE:

	
 

	
 

	
 

	
 

	

	
 

	
David
 Condensa, solely as Shareholders’ Representative

	
 

	
 

	
 

Page 76Exhibit 10.2

FIRST
AMENDMENT TO

AGREEMENT
AND PLAN OF MERGER

          FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
(this “First Amendment”) dated as of August ___, 2007, by and among INCENTRA SOLUTIONS, INC., a Nevada
corporation (“Parent”), INCENTRA HELIO
ACQUISITION CORP., a
Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), HELIO SOLUTIONS, INC., a California
corporation (the “Company”), and DAVID
CONDENSA, as Shareholders’ Representative. 

RECITALS

          WHEREAS, Parent, Merger Sub, Company and
Shareholders’ Representative are parties to that certain Agreement and Plan of
Merger dated August __, 2007 (the “Merger Agreement”). Capitalized terms not
defined herein shall have the meaning set forth in the Merger Agreement.

          WHEREAS, the parties desire to amend the
Merger Agreement on the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the
foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto intending to
be legally bound do hereby agree as follows:

          1.
Closing. Closing shall occur on August 16, 2007, subject to the terms
and conditions set forth in the Merger Agreement, as amended by this First Amendment.

          2.
Waiver of Covenants and Closing Conditions. Parent and Merger Sub
acknowledge and accept that as of Closing, notwithstanding the certificates of
the President and Treasurer of the Company to be delivered at Closing, the
Company will not have obtained consents from third parties required under the
terms of agreements entered into between the Company and such third parties,
including without limitation in relation to the Company’s lease for its San
Jose office space and with respect to an SBA loan (the “SBA Loan”) used to
acquire property owned by 3000 Lakeside LLC, a California limited liability
company owned by certain of the Shareholders, under which SBA Loan the Company
is an obligor (collectively, the “Third Party Consents”). Parent and Merger Sub
hereby waive, as of the date hereof and as of Closing, the conditions and
covenants set forth in the Merger Agreement to the extent such conditions or
covenants are breached or not fulfilled as a result of the failure of the
Company to obtain the Third Party Consents as of Closing, including without
limitation the conditions to Closing set forth in subsections (a), (b) and (o)
of Section 7.2 of the Merger Agreement (but such waiver to apply only to the
extent the failure or breach of such Closing conditions and related covenants
arise from the failure to obtain the Third Party Consents).

          3.
SBA Loan. The Shareholders, jointly and severally, agree to repay the
SBA Loan in full, or obtain a full release of the Company, Parent and Merger
Sub with respect to any obligations or claims arising thereunder, on the
earlier to occur of (a) the

SBA Loan becomes due and payable for any
reason, including without limitation by reason of the lender declaring a
default thereunder; or (b) one hundred eighty (180) days after Closing. The
joint and several obligations of the Shareholders under this Section 3 of the
First Amendment shall be subject to the indemnification obligations of the
Shareholders under Section 8.2(a) of the Merger Agreement, provided that (w)
the limitations set forth in subsection (vii) of Section 8.2 (a) shall not
apply, (x) Shareholders shall not be allowed to satisfy their obligations under
this Section 3 of the First Amendment with stock of Parent until the entire
cash portion of each component of merger consideration is first paid to Parent
in satisfaction of such obligations, (y) Shareholders hereby grant to Parent
and Merger Sub a security interest in their respective interests in that
limited liability company known as 3000 Lakeside, LLC, a California limited
liability company (the “LLC”), of which each Shareholder is a member, and (z)
Shareholders and further agree to enter into a Security Agreement with Parent
and Merger Sub, in the form attached hereto as Exhibit A and made a part
hereof, to secure Shareholders obligations hereunder.

          4.
Scope of Amendment. Any provision of the Merger Agreement inconsistent
with the terms of this First Amendment is hereby amended. Except as amended
hereby, the Merger Agreement remains unamended and in full force and effect.

[Signature Pages Follow]

               IN
WITNESS WHEREOF, Shareholders, and Parent have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.

	
 

	
 

	
 

	
 

	
INCENTRA SOLUTIONS, INC.

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name: Thomas
 P. Sweeney III

	
 

	
Title: Chief
 Executive Officer

	
 

	
 

	
 

	
 

	
INCENTRA HELIO ACQUISITION CORP.

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name: Thomas
 P. Sweeney III

	
 

	
Title: Chief
 Executive Officer

	
 

	
 

	
 

	
 

	
HELIO SOLUTIONS, INC.

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
Title:

	
 

	
 

	
 

	
 

	
SHAREHOLDERS’ REPRESENTATIVE:

	
 

	
 

	
 

	
 

	

	
 

	
David
 Condensa, solely as Shareholders’ Representative

	
 

	
 

	
 

	
 

	
 

	
SHAREHOLDERS

	
 

	
 

	
 

	
 

	

	
 

	
David Condensa

	
 

	
 

	
 

	
 

	

	
 

	
Bert Condensa

	
 

	
 

	
 

	

	
 

	
Dave Auerweck

	
 

	
 

	
 

	

	
 

	
Kevin Hawkins

	
 

	
 

	
 

	

	
 

	
Terri Marine

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