Document:

Exhibit 10.1

 

AGREEMENT AND PLAN OF MERGER

 

 

DSE FISHMAN, INC.

 

and

 

GACC ACQUISITION CORP., INC.

 

and

 

GREAT AMERICAN COFFEE COMPANY, INC.

 

, 2006

 

 

AGREEMENT AND PLAN OF MERGER

 

I

 

PARTIES

 

THIS
AGREEMENT AND PLAN OF MERGER (the “Agreement”) is entered
into effective as of the          day
of                   ,
2006 (the “Effective Date”), by and between DSE FISHMAN, INC., a Nevada corporation
(“Parent”); GACC ACQUISITION CORP., INC., a California corporation and a
wholly-owned subsidiary of Parent (“GACC”); and, GREAT AMERICAN COFFEE COMPANY, INC., a California corporation
(“Great American”). Parent, GACC, and Great American are sometimes referred to
collectively herein as the “Parties”, and each individually as a “Party”.

 

II

 

RECITALS

 

A.            The Board of Directors of Parent has deemed
it advisable, and in the best interests of Parent and its stockholders, that Parent,
GACC, and Great American consummate the business combination and other
transactions provided for herein in order to advance the long-term strategic
business interests of Parent.

 

B.            The Board of Directors of GACC has deemed it
advisable, and in the best interests of GACC and its stockholder, that GACC,
Parent, and Great American consummate the business combination and other
transactions provided for herein in order to advance the long-term strategic
business interests of GACC.

 

C.            GACC is a direct, wholly-owned subsidiary of
Parent, formed solely for the purpose of effecting the Merger and will conduct
no activity and incur no liability or obligation other than as contemplated by
this Agreement.

 

D.            The Board of Directors of Great American has
deemed it advisable, and in the best interests of Great American and its
stockholders, that Great American, Parent, and GACC consummate the business combination
and other transactions provided for herein in order to advance the long-term
strategic business interests of Great American.

 

E.             The respective Boards of Directors of Parent,
GACC, and Great American have approved, in accordance with applicable provisions
of Nevada General Corporation Law, California General Corporation Law, and California
General Corporation Law, respectively, this Agreement and the transactions
contemplated hereby, including the Merger.

 

F.             The Board of Directors of Great American has
resolved to recommend to its stockholders approval and adoption of this
Agreement and approval of the Merger.

 

1

 

G.            The Board of Directors of GACC has resolved
to recommend to its stockholder approval and adoption of this Agreement and
approval of the Merger.

 

H.            The Parties desire to make certain
representations, warranties, and agreements in connection with the Merger and
also to prescribe certain conditions to the Merger.

 

I.              The
Parties desire to enter into a transaction under which GACC would merge into Great
American. As a result of the Merger, among other things: (i) Great American would
acquire and assume all of the assets,
business, obligations, and liabilities of GACC, as provided for and qualified
herein; (ii) each issued and outstanding share of common stock of Great
American will be converted into shares of common stock of Parent in accordance
with the provisions of this Agreement; (iii) each issued and outstanding share
of common stock of GACC will be converted into shares of common stock of Great
American in accordance with the provisions of this Agreement; (iv) GACC would
disappear and cease to be an active corporation; and (v) and, Great American
would become a direct, wholly-owned subsidiary of Parent.

 

J.             For United States federal income tax
purposes, and for purposes of state tax reporting, the Parties intend that the
Merger qualify as a reorganization under the provisions of Section 368(a) of
the Code, and the Parties further intend, by executing this Agreement, to adopt
a plan of reorganization within the meaning of Section 354(a) of the Code.

 

K.            NOW, THEREFORE, in consideration of the promises and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties, intending to be legally bound, hereby agree as follows:

 

III

 

DEFINED TERMS AND INTERPRETATION

 

3.1           Definitions.   The following capitalized
terms shall have the respective meanings specified in this Article III. Other
terms defined elsewhere herein shall have meanings so given them.

 

3.1.1.       Affiliate.   “Affiliate” shall mean a
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first Person.

 

3.1.2.       California Law.   “California Law” shall
mean the General Corporation Law of the State of California, as amended.

 

3.1.3.       Code.   “Code” shall mean the
Internal Revenue Code of 1986, as amended from time-to-time, and the rules and
regulations thereunder.

 

3.1.4.       Confidential Information.   “Confidential Information”
shall mean any information concerning the businesses and affairs of a
respective Party that is not already generally available to the public.

 

2

 

3.1.5.       Control.   “Control” (including the
terms “controlled by” and “under common control with”) shall mean 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 or otherwise.

 

3.1.6.       Dissenting Share.   “Dissenting Shares” shall
mean the shares held by a Dissenting Stockholder.

 

3.1.7.       Dissenting Stockholder.   “Dissenting Stockholder”
shall mean any holder of Great American Common Stock outstanding immediately
prior to the Effective Time who shall have not voted in favor of the Merger and
who shall have made and perfected a proper demand in writing for payment of the
value of said shares in accordance with all applicable dissenters’ rights
statutes in accordance with California Law, and who has not effectively
withdrawn or lost the right to such payment.

 

3.1.8.       GACC Stock.   “GACC Stock” shall mean
any share of the Common Stock, zero ($.00) par value per share, of GACC.

 

3.1.9.       Great American Common Stock.   “Great American
Common Stock” shall mean any share of the Common Stock, zero ($.00) par value
per share, of Great American.

 

3.1.10.     Intellectual Property.   “Intellectual Property”
(also referred to as “Intellectual Property Assets”) shall mean and include the
following, as well as all other general intangibles of a like nature and all
(i) goodwill, and (ii) confidential data or information relating to the below
listed items, for each respective party:

 

(a)           The Party’s full legal name and all
derivations thereof used by that Party, all fictional business names, trading
names, designs, registered and unregistered trademarks, registered and
unregistered service marks, and applications (collectively, the “Marks”);

 

(b)           All patents, patent applications, and
inventions and discoveries that may be patentable (collectively, the “Patents”);

 

(c)           All copyrights in both published works and
unpublished works (collectively, the “Copyrights”);

 

(d)           All rights in mask works (collectively, the “Rights
in Mask Works”); and

 

(e)           All know-how, trade secrets, confidential
information, customer lists, computer software, databases, source codes, object
codes, works of authorship, know-how, technical information, data, process
technology, user interfaces, proprietary concepts, ideas, techniques, business
models and methodologies, plans, drawings, and blue prints owned, used,
or licensed by Parent as licensee or licensor (collectively, the “Trade
Secrets”).

 

3

 

3.1.11.     IRS.   “IRS” shall mean the
Internal Revenue Service.

 

3.1.12.     Knowledge.   “Knowledge” shall mean
actual knowledge after reasonable investigation.

 

3.1.13.     Material Adverse Change.   “Material Adverse Change”
shall mean a change which results in a Material Adverse Effect.

 

3.1.14.     Material Adverse Effect.   “Material Adverse Effect”
shall mean the following meaning:

 

(a)           with respect to Great American, (i) a
material adverse effect (whether taken individually or in the aggregate with
all other such effects) on the financial condition, business, results of
operations or properties of Great American; (ii)  an effect which would materially impair Great
American’s ability to timely consummate the transactions contemplated under
this Agreement; or, (iii) any event, circumstance or condition affecting Great
American which would prevent or materially delay the consummation of the
transactions contemplated under this Agreement;

 

(b)           with respect to Parent, (i) a material
adverse effect (whether taken individually or in the aggregate with all other
such effects) on the financial condition, business, results of operations or
properties of Parent; (ii) an effect which would materially impair Parent’s
ability to timely consummate the transactions contemplated under this
Agreement; or, (iii) any event, circumstance or condition affecting Parent
which would prevent or materially delay the consummation of the transactions
contemplated by this Agreement; and

 

(c)           with respect to the GACC, (i) a material
adverse effect (whether taken individually or in the aggregate with all other
such effects) on the financial condition, business, results of operations or
properties of GACC; (ii)  an effect which
would materially impair GACC’s ability to timely consummate the transactions
contemplated under this Agreement; or, (iii) any event, circumstance or
condition affecting GACC which would prevent or materially delay the
consummation of the transactions contemplated under this Agreement

 

3.1.15.     Merger Consideration.   “Merger Consideration”
shall mean the consideration which each holder of Great American Common Stock
is entitled to receive pursuant to Section 4.4, below.

 

3.1.16.     Nevada Law.   “Nevada General Corporation
Law” shall mean the General Corporation Law of the State of Nevada, as amended.

 

3.1.17.     Ordinary Course of Business.   “Ordinary Course of
Business” shall mean the course of business procedures and practices consistent
with past custom and practice (including with respect to quantity and
frequency).

 

4

 

3.1.18.     Parent Common Stock.   “Parent Common Stock”
shall mean any share of the Common Stock, $.001 par value per share, of Parent.

 

3.1.19.     Person.   “Person” shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, unincorporated
organization, governmental entity, or any other type of entity.

 

3.1.20.     Requisite Stockholder
Approval.   “Requisite
Stockholder Approval” shall mean the affirmative vote of the holders of a
majority of that company’s issued and outstanding shares entitled to vote on
the Merger actually voting in favor of this Agreement and the Merger.

 

3.1.21.     SEC.   “SEC” shall mean the
Securities and Exchange Commission.

 

3.1.22.     SEC Filings.   “SEC Filings” shall mean that
Person’s filings with the SEC.

 

3.1.23.     Security Interest.   “Security Interest” shall
mean any mortgage, pledge, lien, encumbrance, charge, or other security
interest, other than (a) mechanic’s, materialmen’s, and similar liens,
(b) liens for taxes not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.

 

3.1.24.     Subsidiary.   “Subsidiary” shall mean any
corporation with respect to which a specified Person (or a Subsidiary thereof)
owns a majority of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors.

 

3.1.25.     Surviving Corporation.   “Surviving Corporation”
shall mean the corporate entity of Great American as existing immediately after
the Merger.

 

3.1.26.     Surviving Corporation Common
Stock.   “Surviving
Corporation Common Stock” shall mean any share of the Common Stock, $.00
par value per share, of the Surviving Corporation.

 

3.1.27.     Tax or Taxes.   “Tax” or “Taxes” shall
mean any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.

 

5

 

3.1.28.     Tax Return.   “Tax Return” shall mean
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

 

3.1.29.     Transaction Expenses.   “Transaction Expenses”
shall mean and include all reasonable, actual, and documented out-of-pocket
expenses (including, without limitation, all reasonable fees and expenses of
counsel, accountants, and investment bankers to a Party and its Affiliates)
incurred by a Party or on its behalf in connection with or related to (i) the
authorization, preparation, negotiation, execution, and performance of this
Agreement; (ii) the preparation, printing, filing, and mailing of any SEC
Filings made or contemplated by that Party in connection with this Agreement
and the transactions envisioned hereunder; and, (iii) all other matters related
to the consummation of the transactions contemplated under this Agreement.

 

3.2           Accounting Terms and
Determinations.   All
accounting terms used in this Agreement and not otherwise defined shall have
the meaning accorded to them in accordance with GAAP and, except as expressly
provided herein, all accounting determinations shall be made in accordance with
GAAP, consistently applied. When used herein, the term “financial statements”
shall include the notes and schedules attached thereto. The term “GAAP” means
generally accepted accounting principles consistently applied as in effect from
time to time.

 

3.3           Interpretation.

 

3.3.1.       Provision Not Construed
Against Party Drafting Agreement.   This Agreement is the result of negotiations by and
between the Parties, and each Party has had the opportunity to be represented
by independent legal counsel of its choice. This Agreement is the product of
the work and efforts of all Parties, and shall be deemed to have been drafted
by all Parties. In the event of a dispute, no Party hereto shall be entitled to
claim that any provision should be construed against any other Party by reason
of the fact that it was drafted by one particular Party.

 

3.3.2.       Number and Gender.   Wherever from the context
it appears appropriate, (i) each term stated either in the singular or plural
shall include the singular and plural; and, (iii) wherever from the context it
appears appropriate, the masculine, feminine, or neuter gender, shall each
include the others

 

3.3.3.       Incorporation of Exhibits
and Schedules.   The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof as if set out in full herein.

 

3.3.4.       Article and Section Headings.   The article and section
headings used in this Agreement are inserted for convenience and identification
only and are not to be used in any manner to interpret this Agreement.

 

6

 

3.3.5.       Severability.   Each and every provision
of this Agreement is severable and independent of any other term or provision
of this Agreement. If any term or provision hereof is held void or invalid for
any reason by a court of competent jurisdiction, such invalidity shall not
affect the remainder of this Agreement.

 

3.3.6.       Entire Agreement.   This Agreement, and all
references, documents, or instruments referred to herein, contains the entire
agreement and understanding of the Parties hereto in respect to the subject
matter contained herein. The Parties have expressly not relied upon any
promises, representations, warranties, agreements, covenants, or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes any and all prior written or oral agreements, understandings, and
negotiations between the Parties with respect to the subject matter contained
herein.

 

3.4           Additional Definitions and
Interpretation Provisions.   For
purposes of this Agreement, (i) those words, names, or terms which are
specifically defined herein shall have the meaning specifically ascribed to
them; (ii); the words “hereof”, “herein”, “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; (iii) all references to
designated “Articles”, “Sections”, and to other subdivisions are to the
designated Articles, Sections, and other subdivisions of this Agreement as
originally executed; (iv) all references to “Dollars” or “$” shall be construed
as being United States dollars; (v) the term “including” is not limiting and
means “including without limitation”; and, (vi) all references to all statutes,
statutory provisions, regulations, or similar administrative provisions shall
be construed as a reference to such statute, statutory provision, regulation,
or similar administrative provision as in force at the date of this Agreement
and as may be subsequently amended.

 

IV

 

THE MERGER

 

4.1           Basic Transaction.   On and subject to the
terms and conditions of this Agreement, and pursuant to California Law, GACC
will merge with and into Great American (the “Merger”) at the Effective Time,
as defined in Section 4.2.1., below. Immediately following the Merger, the
corporate existence of GACC will cease and Great American will continue as the surviving
corporation of the Merger, and is sometimes referred to herein as the Surviving
Corporation. Surviving Corporation will succeed to and assume all of the rights
and obligations of GACC in accordance with California Law.

 

4.2           Effects of the Merger.

 

4.2.1.       General.   The Merger shall become
legally effective at the time Great American and GACC file a Certificate of
Merger in the form attached hereto as Exhibit 4.2.1. (the “Certificate of
Merger”) with the Secretary of State of the State of California, which shall be
referred to herein as the “Effective Time”. The Merger shall have the effect
set forth under California Law. Surviving Corporation may, at any time after
the Effective Time, take any action (including, but not limited to, executing, delivering,
filing, or recording, any document) in the name and on behalf of either Great
American or GACC in order to carry out and

 

7

 

effectuate the transactions contemplated by this Agreement or as
required under California Law.

 

4.2.2.       Articles of Incorporation.   The Articles of
Incorporation of Great American in effect at and as of the Effective Time shall
remain the Articles of Incorporation of Surviving Corporation after the
Effective Time without any further modification or amendment until thereafter
as may amended as provided therein and as permitted by California Law and this
Agreement (the “Certificate”).

 

4.2.3.       Bylaws.   The Bylaws of Great
American in effect at and as of the Effective Time shall remain the Bylaws of
the Surviving Corporation without any further modification or amendment until
thereafter as may be amended in accordance with California Law and as provided
in the Certificate and the Bylaws of Great American (the “Bylaws”).

 

4.2.4.       Directors and Officers of Great
American.   Each
and every one of the directors and officers of Great American in office at and
as of the Effective Time will retain their respective position(s) as of and at the
Effective Time, and they shall serve until their respective successors are duly
elected or appointed and qualified.

 

4.2.5.       Directors and Officers of Parent.   In accordance with the
following and as reflected on Exhibit 4.2.5., attached hereto and incorporated
herein by reference:

 

(i)            Immediately prior to the Effective Time the
directors of Parent will have taken all necessary action to (1) remove all
officers of Parent; and, (2) designate and appoint the individuals noted on
Exhibit 4.2.5., attached hereto and incorporated herein by reference, to assume
their respective officer positions as of and at the Effective Time.

 

(ii)           Immediately prior to the Effective Time the
directors of Parent will have taken all necessary action to (1) appoint as
directors those individuals listed on Exhibit 4.2.5.; and, (2) accept
resignations from all other directors, with said resignations and appointments
to be effective as of the acceptance of the SEC Filings made in connection with
this Section 4.2.5.

 

(iii)          The new directors and officers of Parent
shall retain their respective positions until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.

 

4.3           Conversion of GACC Stock.   Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any further action on the part of the Parties, each share of GACC
Stock issued and outstanding immediately prior to the Effective Time shall be converted
into and become one (1) validly issued, fully paid, and nonassessable share of
Surviving Corporation Common Stock. Each certificate evidencing ownership of
shares of GACC Common Stock outstanding immediately prior to the Effective Time
shall evidence ownership of such shares of capital stock of the Surviving
Corporation, and such converted shares, collectively, will represent all of the
issued and outstanding Surviving Corporation Common Stock of the Surviving
Corporation.

 

8

 

4.4           Conversion of Great American
Common Stock.   Upon
the terms and subject to the conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of GACC, the Great
American, or the holders of any of the following securities, the following
shall occur:

 

4.4.1.       Conversion of Shares.   Each share of Great American Common Stock issued and outstanding immediately
prior to the Effective Time(other than any shares of Great American Common
Stock to be canceled pursuant to Section 4.4.2. or Section 4.4.3., below, and
any Dissenting Shares, as defined in Section 4.6, below) will be canceled and
extinguished and automatically converted into the right to receive, upon
surrender of the certificate(s) representing such Great American Common Stock
in the manner provided in Section 5.1, below (or in the case of a lost, stolen
or destroyed certificate, upon delivery of an affidavit, and bond, if required,
in the manner provided in Section 5.2, below), one (1) duly authorized, validly
issued, fully paid, and  nonassessable
shares of Parent Common Stock. Each Dissenting Share shall be converted into
the right to receive payment from the Surviving Corporation with respect
thereto in accordance with the provisions of California Law. As of the
Effective Time, all such shares of Great American Common Stock will no longer
be outstanding and will automatically be cancelled and retired and will cease
to exist, and each holder of a certificate or a certificate which immediately
prior to the Effective Time represented outstanding shares of Great American
Common Stock will cease to have any rights with respect thereto, except the
right to receive the Merger Consideration.

 

4.4.2.       Cancellation of Treasury and
Parent-Owned Shares.   All
Great American Common Stock held by Great American or owned by GACC, Parent, or
any direct or indirect wholly-owned subsidiary of the Great American or of
Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.

 

4.4.3.       Fractional Shares.   No fraction of a share of
Parent Common Stock will be issued by virtue of the Merger, but in lieu thereof
each holder of shares of Great American Common Stock who would otherwise be
entitled to a fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock that otherwise would be received by
such holder) shall receive a total number of Parent Common Stock rounded down
to the closest whole number.

 

4.4.4.       Stock Options; Employee Stock
Purchase Plans.

 

(i)            At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of outstanding options
to purchase Great American Common Stock (the “Great American Stock Options”), each Great American Stock Option,
whether vested or unvested, and all stock option plans or other equity-related
plans of the Great American (the “Great
American Stock Plans”), insofar as they relate to Great American Stock
Options, shall be assumed by Parent and the Great American Stock Options shall
become an option to acquire shares of Parent
Common Stock, on the same terms and conditions as were applicable under
the Great American Stock Option immediately prior to the Effective Time, except
that (i) such assumed Great American Stock Option shall be exercisable for that
number of whole shares of Parent Common Stock equal to the product (rounded
down to the nearest whole number of shares of Parent Common Stock) obtained by
multiplying the number of

 

9

 

shares of Great American Common Stock issuable upon the exercise of
such Great American Stock Option immediately prior to the Effective Time by the
conversion ratio referenced in Section 4.4.1., above; and, (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed Great American Stock Options shall be equal to the quotient
(rounded up to the nearest whole cent) obtained by dividing the exercise price
per share of the Great American Common Stock for which the Great American Stock
Option was exercisable immediately prior to the Effective Time by the conversion
ratio referenced in Section 4.4.1., above.

 

(ii)           The rights and preferences of all affected
Persons under similar or related plans or arrangements, such as stock
appreciation, phantom stock, profit participation, or other similar rights,
shall remain substantially unaffected by the Merger and shall be treated in a
manner substantially similar to that under subparagraph (i), above.

 

(iii)          As promptly as practicable after the Closing
Date, Parent shall issue to each holder of an outstanding Great American Stock
Option immediately prior to the Effective Time a document evidencing the
foregoing assumption of such Great American Stock Option.

 

4.4.5.       No Further Ownership Rights in Great
American Common Stock.   Payment
of the Merger Consideration shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Great American Common Stock, and
after the Effective Time, there shall be no further registration of transfers
on the records of the Surviving Corporation of the Great American Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in Article V, below.

 

4.5           Parent Shares.   Each share of Parent
Common Stock issued and outstanding at and as of the Effective Time will remain
issued and outstanding.

 

4.6           Dissenting Shares.

 

4.6.1.       General.   Notwithstanding any
provision of this Agreement to the contrary, the Dissenting Shares of each Dissenting
Stockholder shall not be converted into, or represent the right to receive, any
shares of Parent Common Stock under Section 4.4.1., above. Instead, Dissenting
Stockholders shall be entitled to receive payment of the appraised value of
such Dissenting Shares held by them in accordance with the provisions of California
Law. However, all Dissenting Shares held by Dissenting Stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Dissenting Shares under California Law shall
thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive Parent Common
Stock under Section 4.4.1., above.

 

4.6.2.       Notice.   Great American shall give
Parent (i) prompt notice of any demands for appraisal received by Great
American, withdrawals of such demands, and any

 

10

 

other instruments served pursuant to California Law and received by Great
American and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under California Law. Great American
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.

 

4.7           Taking of Necessary Action;
Further Action.   If,
at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest Surviving
Corporation with full right, title, and possession to all assets, property,
rights, privileges, powers, and franchises of Great American and GACC, the
officers and directors of Great American and GACC will take all such lawful and
necessary action.

 

4.8           Tax-Free Reorganization.   The Parties intend that
the Merger be treated as a tax  free plan
of reorganization under Section 368(a) of the Code. The Parties shall not take
a position on any Tax Return or before any taxing authority that is
inconsistent with this Section 4.8 unless otherwise required by a final and
binding determination or resolution of a governmental body with appropriate
jurisdiction, and each Party agrees to promptly notify the other Parties of any
assertion by a taxing authority of a position that is inconsistent with this
Section 4.8. No Party represents or warrants that the Merger will qualify as
reorganization under the Code.

 

V

 

SHARE AND CASH ISSUANCE

 

5.1           Issuance of Parent Common
Stock.   At
the Closing, Parent shall issue share certificates of Parent Common Stock in a
total amount equal to the same number of outstanding shares of Great American
Common Stock (other than any Dissenting Shares). The Parent Common Stock shall
be issued hereunder to each record holder of outstanding Great American Common
Stock, in the form of a share certificate representing the number of shares of
Parent Common Stock to which he is entitled, in exchange for his surrender of
his share certificates which represented his shares of Great American Common
Stock.

 

5.2           Lost, Stolen, or Destroyed
Certificates.   In
the event that any certificates shall have been lost, stolen, or destroyed, Parent
shall transfer the Merger Consideration payable with respect to such lost,
stolen, or, destroyed certificates upon the making of an affidavit of that fact
by the holder thereof. However, Parent may, in its sole discretion and
as a condition precedent to the payment of such portion of the Merger
Consideration, require the owner of such lost, stolen, or destroyed certificates
to deliver a bond in such reasonable and customary amount as it may direct as
indemnity against any claim that may be made against Parent or Surviving
Corporation with respect to the certificates alleged to have been lost, stolen
or destroyed.

 

5.3           Cash Payment for Dissenting
Shares.   At
the Closing, Great American shall tender all necessary cash payments for the
Dissenting Shares, as required under Section 4.6,

 

11

 

above. In connection therewith, Surviving Corporation shall be entitled
to deduct and withhold from any consideration payable or otherwise deliverable
pursuant to this Agreement to any holder or former holder of Great American
Common Stock such amounts as may be required to be deducted or withheld
therefrom under the Code or under any provision of state, local, or foreign tax
law or under any other applicable legal requirement. To the extent such amounts
are so deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the person to whom such amounts
would otherwise have been paid.

 

5.4           Surrender of GACC Share
Certificates.   Promptly
after the Effective Time, Surviving Corporation shall issue, as appropriate,
the correct number of shares of Great American Common Stock to holders of GACC
Stock.

 

VI

 

REPRESENTATIONS AND WARRANTIES BY PARENT

 

Parent
hereby represents and warrants to Great American as follows:

 

6.1           Generally.   Parent represents and warrants to Great American that
the statements contained in this Article VI are correct and complete as of the Effective
Date and will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article VI), except as expressly set forth to the
contrary herein and in Schedules attached to this Agreement, corresponding to
the lettered and numbered paragraphs contained in this Article VI.

 

6.2           Organization and
Qualification.   Parent
is currently not in good standing under the laws of the State of Nevada, and
hereby commits to be authorized to conduct business and be in good standing
under the laws of the State of Nevada as soon as practicable after the
Effective Time.

 

6.3           Subsidiaries.   Schedule 6.3, attached
hereto and incorporated herein by reference, sets forth for each subsidiary of
Parent (i) its name and jurisdiction of incorporation, and (ii) the percentage
of such Person’s issued and outstanding shares of capital stock owned by
Parent.

 

6.4           Authorization.

 

6.4.1.       Operation of Business.   Parent has the requisite
corporate power and authority and all requisite licenses, permits and
franchises necessary to own and operate its properties and to carry on its
business as now being conducted.

 

6.4.2        Execution of Agreement.   Parent has the requisite
corporate power and authority and has obtained all approvals and consents
necessary to enter into and carry out the terms and conditions of this Agreement,
as well as all transactions contemplated hereunder. All corporate proceedings
have been taken and all corporate authorizations have been secured which are
necessary to authorize the execution, delivery and performance by Parent of
this

 

12

 

Agreement. This Agreement has been duly and validly executed and
delivered by Parent and constitutes the valid and binding obligations of
Parent, enforceable in accordance with the respective terms.

 

6.5           Effect of Agreement.   As of the Closing, the
consummation by Parent of the transactions herein contemplated, including the
execution, delivery and consummation of this Agreement, will comply with all
applicable law and will not:

 

(a)           Violate any judgment, statute, law, code,
act, order, writ, rule, ordinance, regulation, governmental consent or
governmental requirement, or determination or decree of any arbitrator, court,
or other governmental agency or administrative body, which now or at any time
hereafter may be applicable to and enforceable against the relevant party,
work, or activity in question or any part thereof (collectively, “Requirement
of Law”) applicable to or binding upon Parent or the Parent Common Stock to be
issued hereunder;

 

(b)           Violate (i) the terms of the Articles of Incorporation
or Bylaws of Parent; or, (ii) any material agreement, contract, mortgage,
indenture, bond, bill, note, or other material instrument or writing binding
upon Parent or to which Parent is subject;

 

(c)           Accelerate or constitute an event entitling
the holder of any indebtedness of Parent to accelerate the maturity of such
indebtedness or to increase the rate of interest presently in effect with
respect to such indebtedness; or

 

(d)           Result in the breach of, constitute a default
under, constitute an event which with notice or lapse of time, or both, would
become a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any part of the assets of Parent or any
other assets of Parent under any agreement, commitment, contract (written or
oral) or other instrument to which Parent is a party, or by which any of its
assets (or any part thereof) is bound or affected.

 

6.6           Consents.   No consents, approvals or
other authorizations or notices, other than those which have been obtained and
are in full force and effect, are required by any state or federal regulatory
authority or other Person or entity in connection with the execution and
delivery of this Agreement  and the
performance of any obligations contemplated hereunder.

 

6.7           Legal Proceedings.   Except as set forth
in the SEC Filings of Parent and in Schedule 6.7, attached hereto and
incorporated herein by reference, there
is no claim, legal action, suit, arbitration, investigation or hearing,
notice of claims or other legal, administrative or governmental proceedings
pending or to the best knowledge of Parent, threatened against Parent (or in
which Parent is plaintiff or otherwise a party thereto), and, to the best
knowledge of Parent, there are no facts existing which might result in any such
claim, action, suit, arbitration, investigation, hearing, notice of claim or
other legal, administrative or governmental proceeding. Parent has not waived
any statute of limitations or other affirmative defense with respect to any of
its liabilities. There is no continuing order, injunction, or decree of any
court, arbitrator, or governmental or administrative authority to which Parent
is a party or to which it or any of its assets are subject. Parent has not been
permanently or temporarily enjoined or barred by order, judgment or decree of
any court or other tribunal or any agency or regulatory body from engaging in
or continuing any conduct or practice.

 

13

 

6.8           Regulatory Compliance.   To the best Knowledge of
Parent, it has not violated any Requirement of Law, the violation of which
would be reasonably likely to have a Material Adverse Effect. Further, Parent
and each Subsidiary have met the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA, and no event has
occurred resulting from Parent’s failure to comply with ERISA that could result
in Parent’s incurring any material liability. Parent is not an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940.

 

6.9           Capitalization.   Parent is authorized to
issue twenty-four million (24,000,000) shares of Parent Common Stock, and one
million (1,000,000) shares of preferred stock. Ten million five hundred
thousand (10,500,000) shares of Parent Common Stock are issued and outstanding.
All of the issued and outstanding Parent Common Stock has been duly authorized
and is validly issued, fully paid, and nonassessable. Other than as otherwise
provided for herein or reflected Schedule 6.9, attached hereto and incorporated
herein by reference, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Parent to issue, sell, or
otherwise cause to become outstanding any of its capital stock.

 

6.10         Parent Common Stock to be Issued.   The Parent Common Stock to
be issued pursuant to the provisions of this Agreement will, upon such
transfer, be duly authorized, legally and validly issued, fully paid and
nonassessable, and free and clear of all liens, mortgages, pledges, and other
encumbrances of any nature, unless expressly provided herein to the contrary.

 

6.11         Employee Benefit Plans.   Except as set forth in the
SEC Filings of Parent and in Schedule 6.11, attached hereto and incorporated
herein by reference, Parent is not a party to any written or oral (i) contract
with any labor union, (ii) bonus, pension, profit-sharing, retirement, deferred
compensation, savings, stock purchase, stock option, hospitalization, insurance
or other plan providing employees benefits, (iii) employment, agency,
consulting or similar contract which cannot be terminated by it in one hundred
twenty (120) days or less, without cost, or (iv) any other plan, agreement or
arrangement governed by the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).

 

6.12         Permits and Licenses.   Parent has all licenses
and permits (federal, state, and local) required by governmental authorities to
own, operate, and carry on its business as now being conducted, and such
licenses and permits are in full force and effect. No violations are or have
been recorded in respect to the licenses or permits, included but not limited
to fire and health and safety law violations, and no proceeding is pending or
threatened looking toward the revocation or limitation of any of them.

 

6.13         Leases and Similar Agreements.   Except as set forth in the
SEC Filings of Parent and in Schedule 6.13, attached hereto and incorporated
herein by reference, Parent is not

 

14

 

a party to, nor are any of its assets bound by or subject to, any
leases or other similar agreements or instruments, whether as lessor or lessee.
With regard to all such disclosed leases and similar agreements, Parent has
delivered to Great American any and all consents or waivers of other parties
necessary for the continuation of the leases and similar agreements upon the
same terms and conditions in effect as of the Closing.

 

6.14         Material Agreements.   Except as set forth in the
SEC Filings of Parent and in Schedule 6.14, attached hereto and incorporated
herein by reference, Parent is not a party to, nor are any of its assets bound
by or subject to, any of the following:

 

(a)           license agreement, assignment or contract
(whether as licensor or licensee, assignor or assignee) relating to trademarks,
trade names, patents or copyrights (or applications therefore), know-how or
technical assistance, or other proprietary rights (other than trademark
agreements) which are entered into in the ordinary course of Parent’s business
in conjunction with sales agreements;

 

(b)           agreement or other arrangement for the sales
of goods or services by Parent to any government or governmental authority
(other than pursuant to open purchase orders issued by such entities);

 

(c)           agreement with any vendor, distributor,
dealer, sales agent or representative other than contracts or orders for the
purchase or sale of goods made in the usual and Ordinary Course of Business at
an aggregate price per contract or order of less than $10,000 and on terms of
less than ninety days under any such contract or order;

 

(d)           agreement with any supplier or customer with
respect to discounts (other than those reflected on Parent’s current price
lists) or allowances or extended payment terms;

 

(e)           joint venture or partnership agreement with
any other person;

 

(f)            agreement which restricts Parent from doing
business anywhere in the world; or

 

(g)           long-term services agreement.

 

6.15         Employment Agreements.   Except as set forth in the
SEC Filings of Parent and in Schedule 6.15, attached hereto and incorporated
herein by reference, and except as otherwise provided for herein, Parent is not
a party to any employment agreement, independent contractor agreement, or
similar arrangement or agreement, whether it be reduced to written form or an
oral promise.

 

6.16         Restrictive Covenant Agreements.   Schedule 6.16, attached
hereto and incorporated herein by reference, represents a list of all
restrictive covenant agreements and arrangements held by Parent with regard to
its business. Copies of all such contracts are also attached hereto as part of
Schedule 6.16.

 

15

 

6.17         Environmental Matters.   To the best Knowledge of
Parent, with regard to matters of environmental compliance:

 

(a)           Parent has conducted and is conducting its
business, and has used and is using its properties, whether currently owned,
operated or leased or owned, operated or leased by Parent at any time in the
past; and at the time of acquisition of any security interest, all properties
in which Parent has a security interest had always been used, in compliance
with all applicable federal, and state and local environmental laws and
regulations, except where the failure to comply with such laws and regulations,
in the aggregate, has not had and could not have a material adverse effect on
the condition (financial or otherwise), business or properties of Parent.

 

(b)           Neither Parent nor any property currently
owned, operated or leased or which has been owned, operated or leased by
Parent, is subject to any existing, pending or threatened investigation, action
or proceeding, including any notice of violation, by any governmental authority
regarding contamination of any part of such property or infractions of any law,
statute, ordinance or regulation or any license or permit issued by any
government agency pertaining to health, industrial hygiene or environmental
safety or environmental conditions on, under or about such property, except
where such investigations, actions, proceedings, notifications or infractions,
in the aggregate, have not had and could not have a material adverse effect on
the condition (financial or otherwise), business or properties of Parent.

 

(c)           Except as set forth in Schedule
6.17, attached hereto and incorporated herein by reference, there are no
underground storage tanks or toxic or hazardous wastes, substances, or
materials, or pollutants or contaminants, including asbestos, presently located
on or under any property which is currently or has been owned, operated or
leased by Parent; there were no underground storage tanks or toxic or hazardous
wastes, substances, or materials, or pollutants or contaminants, including
asbestos, located on or under any property in which Parent or Parent has or had
an interest. As used herein, the terms toxic or hazardous wastes, substances or
materials, pollutants and contaminants mean any material which is or becomes
during the term of this Agreement regulated or controlled as a hazardous or
toxic waste or environmental pollutant under any federal, state or local law,
ordinance, order, decree or regulation currently in effect and applicable to
Parent or any property owned, operated or leased by Parent.

 

6.18         Other Arrangements.   Parent is not a party to
any contract, commitment or agreement, nor are any of its assets subject to, or
bound or affected by, any order, judgment, decree, law, statute, ordinance,
rule, regulation or other restriction of any kind or character which is not
applicable to Parent generally, which would, individually or in the aggregate,
cause a Material Adverse Effect on Parent. Parent is also not a party or
subject to any agreement, contract or other obligation which would require the
making of any payment, other than payments contemplated by this Agreement, to
any other person as a result of the consummation of the transactions
contemplated herein.

 

6.19         Undisclosed Liabilities.   Parent does not have any
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including

 

16

 

any liability for Taxes, except for (i) liabilities set forth in the
Parent Financial Statements, and (ii) liabilities which have arisen after the date
of the Parent Financial Statements in the Ordinary Course of Business (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).

 

6.20         Material Defaults.   Parent is not in material
default, or alleged to be in default, under any material agreement, contract,
lease, mortgage, commitment, instrument or obligation, and no other party to
any agreement, contract, lease, mortgage, commitment, instrument or obligation
to which Parent is a party is in default thereunder, which default would
materially and adversely affect the properties, assets, business or prospects
of Parent.

 

6.21         Tax Returns and Disputes.   Parent has not filed all
Tax Returns (federal, state and local) required to be filed by it. Any and all
Tax Returns which have been filed by Parent are complete and accurate in all
material respects. Parent has paid all Taxes shown to be due and payable on the
returns or any assessments or penalties received by it and all other Taxes
(federal, state and local) due and payable by it. Parent has collected and
withheld all Taxes which it has been required to collect or withhold and has
timely submitted all such collected and withheld amounts to the appropriate
authorities with regard to the Tax Returns it has filed. Parent is in
compliance with the back-up withholding and information reporting requirements
under the Code and any state, local, or foreign laws, and the rules and
regulations thereunder.

 

6.22         Title to Assets.   Parent has good and
marketable title to all of its assets, free and clear of all liens, mortgages,
conditional sale and other title retention agreements, pledges, assessments,
tax liens, and other encumbrances of any nature, except as expressly disclosed
on Schedule 6.22, attached hereto and incorporated herein by reference.

 

6.23         Financial
Condition.   The financial statements of
Parent as reflected in the most recently filed Parent’s SEC Filings requiring
to contain financial statements (collectively, the “Parent Financial Statements”)
present fairly the financial position, results of operations, and cash flows of
Parent at the dates and for the fiscal periods then ended, in accordance with
GAAP. There has been no Material Adverse Change in the Parent Financial
Statements.

 

6.24         No Other Material Adverse Change.   Since 01 January 2006 there
has been no Material Adverse Change in the business, financial condition,
results of operations, assets, or liabilities of Parent, including but not
limited to the following:

 

(a)           Any
damage, destruction or loss (whether or not covered by insurance) materially
and adversely affecting the properties, assets, business or prospects of
Parent;

 

(b)           Any
change in the accounting methods or practices followed by Parent or any change
in the depreciation or amortization policies or rates adopted by Parent
(whether or not presently outstanding), except liabilities incurred, and
obligations under agreements entered into, in the ordinary course of business;
or

 

17

 

(c)           Any
sale, lease, abandonment or other disposition by Parent, other than in the
ordinary course of business, of any machinery, equipment or other operating
properties directly or indirectly related to Parent.

 

6.25         Other Matters.   Parent has not taken and
has not agreed to take any action, and has no Knowledge of any fact or
circumstances that would materially impede or delay the consummation of the
transactions contemplated hereby.

 

6.26         Disclosure.   The representations and
warranties of Parent contained in this Agreement and in the SEC Filings of
Parent and in any agreement, certificate, affidavit, statutory declaration or
other document delivered or given pursuant to this Agreement are true and
correct and do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained in such
representations and warranties not misleading to the Stockholders.

 

6.27         Advice of Changes.   Between the Effective Date
hereof and the Closing Date, Parent shall promptly advise Great American in
writing of any fact which, if existing or known at the Effective Date, would
have been required to be set forth or disclosed in or pursuant to this Agreement
or of any fact which, if existing or known at the Effective Date, would have
made any of the representations contained herein untrue.

 

6.28         Lack of Fairness Opinion.   The
Board of Directors of Parent has made a well informed, independent, good faith
decision to not obtain any type of written opinion from a qualified
professional that the Merger is fair, from a financial point of view.

 

6.29         Tax-Free Transaction.   Neither Parent nor any of
its Subsidiaries knows of any fact or has taken, or failed to take, any action
that could prevent the Merger from qualifying as a tax-free reorganization
within the meaning of Section 368(a) of the Code.

 

VII

 

REPRESENTATIONS AND WARRANTIES BY GREAT AMERICAN

 

Great
American hereby represents and warrants to Parent and GACC as follows:

 

7.1           Generally.   Great American hereby represents and warrants to Parent and GACC that the statements
contained in this Article VII are correct and complete as of the Effective Date
and will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Article VII), except as expressly set forth to the contrary
herein and in Schedules attached to this Agreement, corresponding to the lettered
and numbered paragraphs contained in this Article VII.

 

7.2           Organization and Good Standing.   Great American is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California.

 

18

 

7.3           Subsidiaries.   Schedule 7.3, attached
hereto and incorporated herein by reference, sets forth for each subsidiary of Great
American (i) its name and jurisdiction of incorporation, and (ii) the
percentage of such Person’s issued and outstanding shares of capital stock
owned by Great American.

 

7.4           Authorization.

 

7.4.1.       Operation of Business.   Great American has the
requisite corporate power and authority and all requisite licenses, permits and
franchises necessary to own and operate its properties and to carry on its
business as now being conducted.

 

7.4.2        Execution of Agreement.   Great American has the
requisite corporate power and authority and has obtained all approvals and
consents necessary to enter into and carry out the terms and conditions of this
Agreement, as well as all transactions contemplated hereunder. All corporate
proceedings have been taken and all corporate authorizations have been secured
which are necessary to authorize the execution, delivery and performance by Great
American of this Agreement. This Agreement has been duly and validly
executed and delivered by Great American and constitutes the valid and binding
obligations of Great American, enforceable in accordance with the respective
terms, provided, however, that Great American cannot consummate the
Merger unless and until it receives the Requisite Stockholder Approval.

 

7.5           Effect of Agreement   As of the Closing, the
consummation by Great American of the transactions herein contemplated,
including the execution, delivery and consummation of this Agreement, will
comply with all applicable law and will not:

 

(a)           Violate any Requirement of Law applicable to
or binding upon Great American;

 

(b)           Violate (i) the terms of the Articles of Incorporation
or Bylaws of Great American; or, (ii) any material agreement, contract,
mortgage, indenture, bond, bill, note, or other material instrument or writing
binding upon Great American or to which Great American is subject;

 

(c)           Accelerate or constitute an event entitling
the holder of any indebtedness of Great American to accelerate the maturity of
such indebtedness or to increase the rate of interest presently in effect with
respect to such indebtedness; or

 

(d)           Result in the breach of, constitute a default
under, constitute an event which with notice or lapse of time, or both, would
become a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the assets or any other properties
of Great American under any agreement, commitment, contract (written or oral)
or other instrument to which Great American is a party or by which it is bound
or affected.

 

7.6           Consents.   No consents, approvals or
other authorizations or notices, other than those which have been obtained and
are in full force and effect, are required by any state or federal regulatory
authority or other Person or entity in connection with the execution and
delivery of this Agreement  and the
performance of any obligations contemplated hereunder.

 

19

 

7.7           Legal Proceedings.   There are no legal,
administrative, arbitral or other actions, claims, suits or proceedings or
investigations instituted or pending or, to the Knowledge of Great American’s
management, threatened against Great American, or against any property, asset,
interest or right of Great American, that might reasonably be expected to have
a Material Adverse Effect or that might reasonably be expected to threaten or
impede the consummation of the transactions contemplated by this Agreement.

 

7.8           Regulatory Compliance.   To the best Knowledge of Great
American, it has not violated any Requirement of Law, the violation of which
would be reasonably likely to have a Material Adverse Effect. Further, Great
American and each Subsidiary have met the minimum funding requirements of ERISA
with respect to any employee benefit plans subject to ERISA, and no event has
occurred resulting from Great American’s failure to comply with ERISA that
could result in Great American’s incurring any material liability. Great
American is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940.

 

7.9           Capitalization.   Great American is
authorized to issue fifty million (50,000,000) shares of Great American Stock. One
million seven hundred fifty thousand (1,750,000) shares of Great American Stock
are issued and outstanding. All of the issued and outstanding Great American
Stock has been duly authorized and is validly issued, fully paid, and
nonassessable. Other than as otherwise provided for herein or reflected
Schedule 7.9, attached hereto and incorporated herein by reference, there are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Great American to issue, sell, or otherwise cause to become
outstanding any of its capital stock.

 

7.10         Disclosure.   No representation or
warranty made by Great American in this Agreement or in its SEC Filings or in
any writing furnished or to be furnished pursuant to or in connection with this
Agreement knowingly contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements herein or therein contained not misleading.

 

7.11         Material Defaults.   Great American is not in
material default, or alleged to be in default, under any material agreement,
contract, lease, mortgage, commitment, instrument or obligation, and no other
party to any agreement, contract, lease, mortgage, commitment, instrument or
obligation to which Great American is a party is in default thereunder, which
default would materially and adversely affect the properties, assets, business
or prospects of Great American.

 

7.12         Tax Returns and Disputes.   Great American has filed
all Tax Returns (federal, state and local) required to be filed by it, has paid
all Taxes shown to be due and payable on the returns or any assessments or
penalties received by it and all other Taxes (federal, state and local) due and
payable by it. There are no audits pending and there are no present disputes as
to Taxes of any nature payable by Great American.

 

20

 

7.13         No Material Adverse Change.   Since 31 December 2005
there has been no Material Adverse Change in the business, financial condition,
results of operations, assets, or liabilities of Great American.

 

7.14         Disclosure.   The representations and
warranties of Great American contained in this Agreement and in any agreement,
certificate, affidavit, statutory declaration or other document delivered or
given pursuant to this Agreement are true and correct and do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained in such representations and warranties not
misleading to Parent.

 

7.15         Other Matters.   Great American has not
taken and has not agreed to take any action, and has no Knowledge of any fact
or circumstances that would materially impede or delay the consummation of the
transactions contemplated under this Agreement.

 

7.16         Advice of Changes.   Between the Effective Date
hereof and the Closing Date, Great American shall promptly advise Parent in
writing of any fact which, if existing or known at the Effective Date, would
have been required to be set forth or disclosed in or pursuant to this
Agreement or of any fact which, if existing or known at the Effective Date,
would have made any of the representations contained herein untrue.

 

7.17         Tax-Free Transaction.   Neither Great American nor
any of its Subsidiaries knows of any fact or has taken, or failed to take, any
action that could prevent the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the Code.

 

VIII

 

REPRESENTATIONS AND WARRANTIES BY GACC

 

Parent
and GACC, jointly and severally, hereby represent and warrant to Great
American as follows:

 

8.1           Generally.   Parent and GACC, jointly and severally, hereby
represent and warrant to Great American
that the statements contained in this Article VIII are correct and complete as
of the Effective Date and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article VIII), except as expressly set
forth to the contrary herein and in Schedules attached to this Agreement,
corresponding to the lettered and numbered paragraphs contained in this Article
VIII.

 

8.2           Organization and
Qualification.   GACC is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of California. GACC is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required.

 

8.3           Capitalization.   The entire authorized
capital stock of GACC consists of one million (1,000,000) shares of GACC Stock,
of which one thousand (1,000) shares of GACC Stock are issued and outstanding.
All of the issued and outstanding shares of GACC Stock have

 

21

 

been duly authorized and are validly issued, fully paid, and
nonassessable. Other than as reflected Schedule 8.3, attached hereto and
incorporated herein by reference, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require GACC to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to GACC, other than as
reflected on Schedule 8.3.

 

8.4           Authorization.

 

8.4.1.       Operation
of Business.   GACC
has the requisite corporate power and authority and all requisite licenses,
permits and franchises necessary to own and operate its properties and to carry
on its business as now being conducted. GACC is also duly qualified and in good
standing as a foreign corporation authorized to do business in every
jurisdiction in which it owns or leases properties, or conducts any business,
so as to require qualification.

 

8.4.2        Execution
of Agreement.   GACC
has the requisite corporate power and authority to enter into and carry out the
terms and conditions of this Agreement,
as well as all transactions contemplated hereunder. All corporate
proceedings have been taken and all corporate authorizations have been secured
which are necessary to authorize the execution, delivery, and performance by GACC
of this Agreement. This Agreement has been duly and validly executed and
delivered by GACC and constitutes the valid and binding obligations of GACC,
enforceable in accordance with the respective terms, provided, however,
that GACC cannot consummate the
Merger unless and until it receives the Requisite Stockholder Approval.

 

8.5           Effect of Agreement.   As of the Closing,
the consummation by GACC of the transactions herein contemplated, including the
execution, delivery and consummation of this Agreement, will comply with all
applicable law and will not:

 

(a)           Violate any Requirement of Law applicable to
or binding upon GACC;

 

(b)           Violate (i) the terms of the Articles of
Incorporation or Bylaws of GACC; or, (ii) any material agreement, contract,
mortgage, indenture, bond, bill, note, or other material instrument or writing
binding upon GACC or to which GACC is subject;

 

(c)           Accelerate or constitute an event entitling
the holder of any indebtedness of GACC to accelerate the maturity of such
indebtedness or to increase the rate of interest presently in effect with
respect to such indebtedness; or

 

(d)           Result in the breach of, constitute a default
under, constitute an event which with notice or lapse of time, or both, would
become a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the assets or any other properties
of GACC under any agreement, commitment, contract (written or oral) or other
instrument to which GACC is a party or by which it is bound or affected.

 

22

 

8.6           Legal Proceedings.   Except as set forth
in Schedule 8.6, attached hereto and incorporated herein by reference, there is
no claim, legal action, suit, arbitration, investigation or hearing, notice of
claims or other legal, administrative or governmental proceedings pending or to
the best knowledge of GACC, threatened against GACC (or in which GACC
is plaintiff or otherwise a party thereto), and, to the best knowledge of GACC, there are no facts existing
which might result in any such claim, action, suit, arbitration, investigation,
hearing, notice of claim or other legal, administrative or governmental
proceeding. GACC has not waived
any statute of limitations or other affirmative defense with respect to any of
its liabilities. There is no continuing order, injunction or decree of any
court, arbitrator or governmental or administrative authority to which GACC is a party or to which it or any
of its assets are subject. GACC has
not been permanently or temporarily enjoined or barred by order, judgment or
decree of any court or other tribunal or any agency or regulatory body from
engaging in or continuing any conduct or practice.

 

8.7           Material Agreements and Arrangement.   Except as set forth
in Schedule 8.7, attached hereto and incorporated herein by reference, GACC is not a party to, nor are any of
its assets bound by or subject to, any contract, commitment, agreement, order,
judgment, decree, law, statute, ordinance, rule, regulation, or other
restriction of any kind or character which would, individually or in the
aggregate, result in a Material Adverse Change to GACC. GACC is
also not a party or subject to any agreement, contract or other obligation
which would require the making of any payment, other than payments contemplated
by this Agreement, to any other Person as a result of the consummation of the
transactions contemplated herein.

 

8.8           Undisclosed Liabilities.   GACC does not have any
liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for taxes,
except for those set forth on Schedule 8.8, attached hereto and
incorporated herein by reference.

 

8.9           Disclosure.   No representation or
warranty made by GACC in this Agreement or in any writing furnished or to be
furnished pursuant to or in connection with this Agreement knowingly contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact required to make the statements herein or therein
contained not misleading. GACC has disclosed to Great American all material
information known to it related to GACC.

 

8.10         Material Defaults. GACC is not in
material default, or alleged to be in default, under any material agreement,
contract, lease, mortgage, commitment, instrument or obligation, and no other party
to any agreement, contract, lease, mortgage, commitment, instrument or
obligation to which GACC is a party is in default thereunder, which default
would materially and adversely affect the properties, assets, business, or
prospects of GACC.

 

8.11         Other Matters.   GACC has not taken and has
not agreed to take any action, and has no Knowledge of any fact or
circumstances that would materially impede or delay the consummation of the
transactions contemplated under this Agreement.

 

23

 

8.12         Advice of Changes.   Between the Effective Date
hereof and the Closing Date, GACC shall promptly advise Great American in
writing of any fact which, if existing or known at the Effective Date, would
have been required to be set forth or disclosed in or pursuant to this
Agreement or of any fact which, if existing or known at the Effective Date,
would have made any of the representations contained herein untrue.

 

IX

 

CONDUCT OF BUSINESS PRIOR TO CLOSING

 

9.1           Conduct Prior to Closing.   Parent hereby covenants
and agrees that, prior to the Closing, unless the prior written consent of Great
American shall have been obtained, which consent shall not be unreasonably
withheld, and except as otherwise contemplated in this Agreement, Parent and GACC
shall both operate its respective business only in the usual, regular, and
Ordinary Course of Business and in accordance with its prior practices, and
shall use its reasonable best efforts to preserve intact its business
organizations and assets and maintain its rights, franchises, and business and
customer relations necessary to run its business as currently run.

 

9.2           Forbearances.   From the Effective Date
until the Closing, Parent covenants and agrees to ensure that neither Parent
nor GACC will (other than as contemplated in this Agreement) do any of the
following without the prior written consent of Great American acting in good
faith:

 

(a)           declare, set aside, make or pay any dividend
or other distribution in respect of its capital stock or otherwise purchase or
redeem, directly or indirectly, any shares of its capital stock;

 

(b)           issue, sell or deliver or enter into any
agreement to issue, sell or deliver any shares of its capital stock or any
options, warrants, or other rights, agreements, commitments, arrangements or
understandings of any kind, contingent or otherwise, to purchase, sell or
deliver any such shares, or any securities convertible into or exchangeable for
any such shares, or effect any stock split, or otherwise change, combine or
reclassify its authorized capitalization;

 

(c)           incur any indebtedness or issue or sell any
debt securities or prepay any debt;

 

(d)           mortgage, pledge or otherwise subject to any
material lien or lease, any of its properties or assets, tangible or intangible
or permit or suffer any such property or asset to be subjected to any material
lien or lease; or license or dispose of any material assets, except in the
Ordinary Course of Business consistent with its prior practice;

 

(e)           forgive or cancel any debts or claims, or
waive any rights, except for fair value;

 

(f)            modify or extend the current term of any
material agreement, or waive any material rights thereunder;

 

24

 

(g)           pay any bonus to any employee or agent or
contractor, or grant to any employee or agent or contractor any increase in
compensation except in the Ordinary Course of Business consistent with its
prior practice, or enter into any employment, severance, termination or similar
agreement with any employee or agent or contractor;

 

(h)           amend its Certificate of Incorporation or
Bylaws or any other organizational documents;

 

(i)            make any material changes in policies or
practices relating to business practices or other terms accounting therefore or
in policies of employment;

 

(j)            enter into any type of business not conducted
by it as of the Effective Date or create or organize any subsidiary or enter
into or participate in any joint venture or partnership;

 

(k)           except as otherwise expressly contemplated by
this Agreement, enter into any agreement or transactions with any Affiliates or
make any amendment or modification to any such agreement;

 

(l)            make or change any election in respect of
Taxes or settle any claim related to Taxes; or

 

(m)          enter into any contract, commitment or
arrangement to do any of the foregoing.

 

9.3           Full Access.   Each Party will permit
representatives of the other to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each Party. Each Party will treat and hold as such any
Confidential Information it receives from the other in the course of the
reviews contemplated by this Section 9.2, will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to the other Party all
tangible embodiments (and all copies) thereof which are in its possession.

 

9.4           Exclusivity.   Parent will not solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to all or any of the capital stock or assets of GACC or Parent
(including any acquisition structured as a merger, consolidation, or share
exchange); provided, however, that GACC and Parent, and their respective
directors and officers, will remain free to (i) assist or participate in or
facilitate any discussions or negotiations; or, (ii) furnish any information,
in regard to any attempt by any Person to do or seek any of the foregoing to
the extent their fiduciary duties may require. Parent shall notify Great
American immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.

 

9.5           Pre-Existing Indemnification
Obligations.   Great
American, as the Surviving Corporation in the Merger, will observe any
indemnification provisions now existing in the

 

25

 

Certificate of Incorporation or Bylaws of GACC for the benefit of any
individual who served as a director or officer of GACC at any time prior to the
Effective Date, as well as all written agreements providing similar protections
and rights to the same group.

 

9.6           SEC Merger Filings.

 

9.6.1.       Parent Obligation to File.   As promptly as practicable
after the execution of this Agreement, Parent will prepare and file with the
SEC any and all additional SEC Filings which are reasonably required as a
result of the transactions envisioned hereunder (together with any amendments
thereof or supplements thereto, collectively referred to herein as the “SEC
Merger Filings”). Parent will use its reasonable best efforts to cause the SEC
Merger Filings to become  effective as
promptly as  practicable,  and, will take all or any action required
under any applicable  federal or state
securities laws in connection with the Merger. Each of Parent and Great
American will furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such actions
and the preparation of the SEC Merger Filings. None of the SEC Merger Filings will
be filed with the SEC by, and no amendment or supplement to the SEC Merger
Filings will be made by, Parent without the approval of Great American, (which
approval will not be unreasonably withheld or delayed). Parent will advise Great
American, promptly after it receives notice thereof, of the time when the SEC
Merger Filings become effective or any supplement or amendment has been filed,
and of all other communications from the SEC in regard to the SEC Merger
Filings.

 

9.6.2.       Accuracy of Information.   Parent shall ensure that the
information included in the SEC Merger Filings will not, at (i) the time the SEC
Merger Filings are declared effective; and, (ii) the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not misleading.
If at any time prior to the Closing Date any event or circumstance relating to
Parent or any of its officers or directors should be discovered by Parent which
should be set forth in an amendment or a supplement to the SEC Merger Filings, Parent
will promptly inform Great American. The SEC Merger Filings will comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations thereunder, and the Exchange
Act and the rules and regulations thereunder.

 

X

 

CONDITIONS PRECEDENT

 

10.1         Mutual Obligations.   The Parties agree as
follows with respect to the period from and after the execution of this
Agreement up to the Closing:

 

10.1.1.     General.   Each of the Parties will
use its best efforts to take all action and to do all things necessary in order
to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of all conditions for
Closing established herein).

 

26

 

10.1.2.     Notices and Consents.   Each Party will give any
notices to third parties, and will use its best efforts to obtain any third
party consents the other reasonably may request in connection with the Merger.

 

10.1.3.     Regulatory Matters and
Approvals.   Each
of the Parties will give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred
to herein.

 

10.1.4.     Special Shareholder Meetings.   GACC will call a special
meeting of its stockholders (the “Special GACC Meeting”) as soon as reasonably
practicable in order that the stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in accordance with California
Law. Great American will call a special meeting of its stockholders (the “Special
Great American Meeting”) as soon as reasonably practicable in order that the
stockholders may consider and vote upon the adoption of this Agreement and the
approval of the Merger in accordance with California Law.

 

10.1.5.     Notice of Developments.   Each Party will give
prompt written notice to the other of any material adverse development causing
a breach of any of its own representations and warranties hereunder. No
disclosure by any Party pursuant to this Section 10.1.5., however, shall be
deemed to amend or supplement the Schedules attached hereto or serve to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant
hereunder.

 

10.1.6.     Certificate of Merger.   The Parties shall execute the
Certificate of Merger, which shall be filed with the Office of the Secretary
State of California as part of the legal compliance with California Law.

 

10.2         Conditions to Obligation of Great
American.   The
obligation of Great American to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions, any or all of which Great American may waive if it executes a
writing so stating at or prior to the Closing:

 

(a)           This Agreement and the Merger shall have
received the Requisite Stockholder Approval of GACC;

 

(b)           Parent and GACC shall have procured all
necessary third party consents;

 

(c)           The representations and warranties set forth
in Articles VI and VIII, above, shall be true and correct in all material
respects at and as of the Closing Date;

 

(d)           Parent and GACC shall have performed and
complied with all of its respective covenants hereunder in all material
respects through the Closing;

 

(e)           No
action, suit, or proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or

 

27

 

charge would (i) prevent consummation of any
of the transactions contemplated by this Agreement; (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following consummation;
or, (iii) affect adversely the right of the Surviving Corporation to own the
former assets, and to operate the former businesses of GACC (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

(f)            this Agreement and the Merger shall have
received the Requisite Stockholder Approval of Great American;

 

(g)           Parent shall have take the necessary action
so as to be in good standing in the State of Nevada; and

 

(h)           all actions to be taken by Parent and GACC in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Great American.

 

10.3         Conditions to Obligation of
Parent and GACC.   The
obligation of Parent and GACC to consummate the transactions to be performed by
each in connection with the Closing is subject to satisfaction of the following
conditions, any or all of which Parent or GACC may waive if it executes a
writing so stating at or prior to the Closing.

 

(a)           This Agreement and the Merger shall have
received the Requisite Stockholder Approval of Great American;

 

(b)           the representations and warranties set forth
in Article VII above shall be true and correct in all material respects at and
as of the Closing Date;

 

(c)           Great American shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing;

 

(d)           No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation; or, (iii) affect
adversely the right of the Surviving Corporation to own the former assets and
to operate the former businesses of GACC (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);

 

(e)           this Agreement and the Merger shall have
received the Requisite Stockholder Approval of GACC; and

 

(f)            all
actions to be taken by Great American in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to Parent and GACC.

 

28

 

XI

 

TERMINATION

 

11.1         Termination of Agreement.   Any
of the Parties may terminate this Agreement with the prior authorization of its
board of directors (whether before or after stockholder approval) as provided
below:

 

(a)           The Parties may terminate this Agreement by their
written consent at any time prior to the Effective Time;

 

(b)           Great American may terminate this Agreement
by giving written notice to Parent at any time prior to the Effective Time (i)
in the event Parent or GACC has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, and Great
American has notified Parent of the breach, and the breach has continued
without cure for a period of ten (10) days after the notice of breach; or, (ii)
if the Closing shall not have occurred on or before the 10th day of May,
2006, by reason of the failure of any condition precedent under Section 10.2
hereof (unless the failure results primarily from Great American breaching any
representation, warranty, or covenant contained in this Agreement);

 

(c)           Parent may terminate this
Agreement by giving written notice to Great American at any time prior to the
Effective Time (i) in the event Great American has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, and GACC has notified Great American of the breach, and the
breach has continued without cure for a period of ten (10) days after the
notice of breach; or, (ii) if the Closing shall not have occurred on or before
the 10th day of May, 2006, by reason of the failure of any condition
precedent under Section 10.3 hereof (unless the failure results primarily from GACC
breaching any representation, warranty, or covenant contained in this
Agreement);

 

(d)           Any Party may terminate this Agreement by
giving written notice to the other Party at any time in the event this
Agreement and the Merger fail to receive the Requisite Stockholder Approval for
the other Party.

 

11.2         Effect of Termination.   If
any Party terminates this Agreement pursuant to this Article XI, all rights and
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party (except for any liability of any Party then in
breach, and except as otherwise provided for under Section 14.3, below); provided,
however, that the confidentiality provisions contained herein shall survive
any such termination.

 

29

 

XII

 

CLOSING AND CLOSING DATE

 

12.1         Closing. The closing of the transactions
contemplated under this Agreement (the “Closing”) shall take place as soon as
practicable after all of the conditions precedent set forth in Article X have
been satisfied or waived by the applicable Parties, at such place as the Parties
may agree, or at such other time as the Parties may agree. The date on which
the Closing occurs is referred to herein as the “Closing Date”.

 

12.2         Obligations of Parent.   At the
Closing, Parent shall deliver or cause to be delivered to Great American the
following:

 

(a)           Executed
Board of Directors resolution authorizing the transactions contemplated
hereunder;

 

(b)           All
share certificates representing shares of Parent Common Stock to be issued as
part of the Merger Consideration hereunder, endorsed in favor of the
stockholders of Great American as required under Sections 4.4, 5.1, and 5.2,
above;

 

(c)           Proof
of the filing of all SEC Merger Filings required to be made by Parent;

 

(d)           Proof
that all directors and officers of Parent existing as of the Effective Time
have resigned as of the Closing, and that new directors and officers have been
designated and legally elected pursuant to Section 4.2.5., as of the Closing;

 

(e)           Any
governmental and third party consents, approvals, and assurances necessary for
the consummation of the transactions contemplated by this Agreement.

 

12.3         Obligations of GACC.   At the
Closing, GACC shall deliver or cause to be delivered to Great American the
following:

 

(a)           Executed
Board of Directors and Shareholders resolution authorizing the transactions
contemplated hereunder;

 

(b)           All
share certificates representing ownership of all issued and outstanding shares
of GACC Stock; and

 

(c)           Any
governmental and third party consents, approvals, and assurances necessary for
the consummation of the transactions contemplated by this Agreement.

 

12.4         Obligations of Great American.   At the Closing, Great American shall deliver
or cause to be delivered to GACC:

 

(a)           Executed
Board of Directors and Shareholders resolution authorizing the transactions
contemplated hereunder;

 

(b)           Share
certificates representing one thousand (1,000) shares of Great American Common
Stock Great American, endorsed pro rata in favor of Parent as the sole
shareholder of GACC, subject to the terms and conditions of this Agreement;

 

30

 

(c)           All
share certificates representing ownership of all issued and outstanding shares
of Great American Common Stock; and

 

(d)           Any governmental and third party consents,
approvals, and assurances necessary for the consummation of the transactions
contemplated by this Agreement.

 

XIII

 

REGULATORY FILINGS

 

13.1         Required Filings.   The Parties shall coordinate and cooperate
with one another and shall each use all reasonable efforts to comply with, and
shall each refrain from taking any action that would impede compliance with any
and all applicable federal, state, local, municipal, foreign or other law,
statute, constitution, principle of common law, resolution, ordinance, code,
order, edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any governmental entity. As promptly as practicable after the date
hereof, the Parties shall make all filings, notices, petitions, statements,
registrations, submissions of information, application or submission of other
documents required by any governmental entity in connection with the Merger and
the transactions contemplated hereby.

 

13.2         Exchange Of Information.   Each of the Parties shall promptly supply the
other with any information which may be required in order to effectuate any
filings or application pursuant to Section 13.1, above. Except where prohibited
by applicable legal requirements, each of the Parties shall consult with the
other prior to taking a position with respect to any such filing, shall permit
the other to review and discuss in advance, and consider in good faith the
views of the other in connection with any analyses, appearances, presentations,
memoranda, briefs, white papers, arguments, opinions and proposals before
making or submitting any of the foregoing to any governmental entity by or on
behalf of any Party hereto in connection with any investigations or proceedings
in connection with this Agreement or the transactions contemplated hereby,
coordinate with the other in preparing and exchanging such information and
promptly provide the other (and its counsel) with copies of all filings,
presentations or submissions (and a summary of any oral presentations) made by
such Party with any governmental entity in connection with this Agreement or
the transactions contemplated hereby. However, with respect to any such filing,
presentation or submission, each of the Parties need not supply the other (or
its counsel) with copies (or in case of oral presentations, a summary) to the
extent that any law, treaty, rule or regulation of any governmental entity
applicable to such Party requires such Party to restrict or prohibit access to
any such properties or information.

 

13.3         Notification.   Each
of the Parties will notify the other promptly upon the receipt of: (i) any
comments from any officials of any governmental entity in connection with any
filings made pursuant hereto and (ii) any request by any officials of any
governmental entity

 

31

 

for amendments or supplements to any filings
made pursuant to, or information provided to comply in all material respects
with, any applicable legal requirements. Whenever any event occurs that is
required to be set forth in an amendment or supplement to any filing made
pursuant to Section 13.1, above, the responsible Party will promptly inform the
other of such occurrence and cooperate in filing with the applicable
governmental entity such amendment or supplement.

 

XIV

 

ADDITIONAL OBLIGATIONS AND AGREEMENTS

 

14.1         Survival of Representations.   All of the covenants, agreements,
representations, and warranties made by each Party in this Agreement, or
pursuant hereto or in connection with the transactions contemplated hereby,
shall survive the Closing for a period of five (5) years.

 

14.2         Brokers.   Each Party represents and warrants that if it
has entered into any deal, arrangement, or commitment with any broker or finder
who has acted for it in connection with this Agreement or the transactions
contemplated hereby, that the Party entering into the deal, arrangement, or
commitment will be solely responsible thereunder, and that the other Party will
have no obligation thereunder. Each Party agrees to indemnify and hold harmless
the other Party with respect to any claim for any brokerage or finder’s fee or
other commission.

 

14.3         Payment
of Transaction Expenses.   Except as otherwise provided for in this
Section 14.3, all Transaction Expenses incurred by the Parties will be borne
solely and entirely by the Party that incurred such Transaction Expenses. However,
Parent agrees that if Parent terminates this Agreement for any reason other
than a material breach of this Agreement by Great American, then Parent shall pay
by wire transfer of immediately available funds to Great American the actual
and documented Transaction Expenses of Great American, the payment of which will
not relieve Parent of any liability or damages resulting from any breach by Parent
of any of its representations, warranties, covenants, or agreements set forth
in this Agreement.

 

14.4         Books and Records.   Parent shall deliver to Great American all
books and records in the possession of Parent or reasonably accessible by
Parent which are reasonably related to the conduct of its business.

 

14.5         Payment of Taxes: Filing of Returns.
  Surviving Corporation shall be liable
for the filing of all tax returns and reports and for the payment of all
federal, state and local taxes of GACC for any period ending on or prior to the
Closing Date. Surviving Corporation shall remain so liable for the payment of
all taxes attributable to or relating to said filings. All other Parties are
responsible for all reporting and payment obligations related to all Taxes.

 

14.6         Public Disclosure.   Without
limiting any other provision of this Agreement, unless otherwise required by a
Requirement of Law or the requirements of any listing agreement with any
applicable stock exchange, the Parties will use their reasonable best efforts
to consult with each other before issuing, and provide each other the
opportunity to review,

 

32

 

comment upon and concur with, and use all
reasonable efforts to agree on any press release or public statement with
respect to this Agreement and the transactions contemplated hereby, including
the Merger, and will not issue any such press release or make any such public
statement prior to such consultation and (to the extent practicable) agreement,
except as may be required by law or any other applicable national or regional
securities exchange. The Parties have agreed to the text of the joint press
release announcing the signing of this Agreement.

 

14.7         Escrow Agreement.   At
or prior to Closing the Parties, or some of them, shall enter into an Escrow
Agreement, the satisfaction of which is an express condition to Closing.

 

XV

 

NOTICES

 

All notices, requests,
demands and other communications required or permitted to be given hereunder
shall be effected pursuant to Section 16.10, below, as follows:

 

	
  If to Great American:

  	
   

  	
  With a copy to:

  
	
  Mr. Thomas Hemingway

  	
   

  	
  Keith A.
  Rosenbaum, Esq.

  
	
  GREAT AMERICAN COFFEE COMPANY,
  INC.

  	
   

  	
  SPECTRUM
  LAW GROUP, LLP

  
	
  1900 Main Street

  	
   

  	
  1900 Main Street

  
	
  Suite 125

  	
   

  	
  Suite 125

  
	
  Irvine, California
  92628

  	
   

  	
  Irvine,
  California 92618

  
	
   

  	
   

  	
   

  
	
  If to Parent or GACC:

  	
   

  	
   

  
	
  Gary B. Wolff, P.C.

  	
   

  	
   

  
	
  805 Third Avenue

  	
   

  	
   

  
	
  Twenty First Floor

  	
   

  	
   

  
	
  New York, New York
  10022

  	
   

  	
   

  

 

XVI

 

ADDITIONAL
PROVISIONS

 

16.1         Executed Counterparts.   This
Agreement may be executed in any number of original, fax, electronic, or copied
counterparts, and all counterparts shall be considered together as one
agreement. A faxed, electronic, or copied counterpart shall have the same force
and effect as an original signed counterpart. Each of the Parties hereby
expressly forever waives any and all rights to raise the use of a fax machine
or E-Mail to deliver a signature, or the fact that any signature or agreement
or instrument was transmitted or communicated through the use of a fax machine or
E-Mail, as a defense to the formation of a contract.

 

16.2         Successors and Assigns.   Except
as expressly provided in this Agreement, each and all of the covenants, terms,
provisions, conditions and agreements herein contained shall be binding upon
and shall inure to the benefit of the successors and assigns of the Parties
hereto.

 

33

 

16.3         Governing Law.   This Agreement shall be
governed by the laws of the State of California, without giving effect to any
choice or conflict of law provision or rule (whether of the State of California
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California. If any court action is
necessary to enforce the terms and conditions of this Agreement, the Parties
hereby agree that the Superior Court of California, County of Orange, shall be
the sole jurisdiction and venue for the bringing of such action.

 

16.4         Additional Documentation.   The
Parties hereto agree to execute, acknowledge, and cause to be filed and
recorded, if necessary, any and all documents, amendments, notices, and
certificates which may be necessary or convenient under the laws of the State
of California.

 

16.5         Attorney’s Fees.   If any legal action (including arbitration) is
necessary to enforce the terms and conditions of this Agreement, the prevailing
Party shall be entitled to costs and reasonable attorney’s fees.

 

16.6         Amendment.   This Agreement may be amended
or modified only by a writing signed by all Parties.

 

16.7         Remedies.

 

16.7.1.     Specific Performance.   The
Parties hereby declare that it is impossible to measure in money the damages
which will result from a failure to perform any of the obligations under this
Agreement. Therefore, each Party waives the claim or defense that an adequate
remedy at law exists in any action or proceeding brought to enforce the
provisions hereof.

 

16.7.2.     Cumulative.
  The remedies of the Parties under this
Agreement are cumulative and shall not exclude any other remedies to which any
person may be lawfully entitled.

 

16.8         Waiver.   No failure by any Party to
insist on the strict performance of any covenant, duty, agreement, or condition
of this Agreement or to exercise any right or remedy on a breach shall
constitute a waiver of any such breach or of any other covenant, duty,
agreement, or condition. No course of dealing between the Parties, nor any
failure to exercise, nor any delay in exercising, any right, power or privilege
of either Party shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.

 

16.9         Assignability.   This Agreement is not
assignable by either Party without the expressed written consent of all
Parties.

 

34

 

16.10       Notices.   All
notices, requests and demands hereunder shall be in writing and delivered by
hand, by facsimile transmission, by E-Mail, by mail, by telegram, or by
recognized commercial over-night delivery service (such as Federal Express,
UPS, or DHL), and shall be deemed given (a) if by hand delivery, upon such
delivery; (b) if by facsimile transmission, upon telephone confirmation of
receipt of same; (c) if by E-Mail, upon telephone confirmation of receipt of
same; (d) if by mail, forty-eight (48) hours after deposit in the United States
mail, first class, registered or certified mail, postage prepaid; (e) if by
telegram, upon telephone confirmation of receipt of same; or, (f) if by
recognized commercial over-night delivery service, upon such delivery.

 

16.11       Time.   All
Parties agree that time is of the essence as to this Agreement.

 

16.12       Disputes.

 

16.12.1.   Mediation.   All
disputes, claims or controversies arising out of or relating to this Agreement
with more than Five Thousand Dollars ($5,000) in controversy, including but not
limited to any dispute, claim or controversy arising out of or relating to this
Agreement or the breach, termination, enforcement, interpretation or validity
thereof, including the determination of the scope or applicability of this
agreement to arbitrate, shall be initially submitted to Judicial Arbitration
and Mediation Services (“JAMS”) in Orange County, California, or its successor,
for mediation. Mediation shall be commenced by providing to JAMS and the other
Party a written request for mediation, setting forth the subject of the dispute
and the relief requested. The Parties will cooperate with JAMS and with one
another in selecting a mediator from JAMS’ panel of neutral mediators, and in
scheduling the mediation proceedings. The Parties will participate in the
mediation in good faith, and they will share equally in its costs. All offers,
promises, conduct and statements, whether oral or written, made in the course
of the mediation by any of the Parties, their agents, employees, experts and
attorneys, and by the mediator or any JAMS employees, are confidential,
privileged and inadmissible for any purpose, including impeachment, in any
arbitration or other proceeding involving the Parties, provided that evidence
that is otherwise admissible or discoverable shall not be rendered inadmissible
or non-discoverable as a result of its use in the mediation. Either Party may
initiate arbitration with respect to the matters submitted to mediation by
filing a written demand for arbitration at any time following the initial
mediation session or 45 days after the date of filing the written request for
mediation, whichever occurs first. The mediation may continue after the
commencement of arbitration if the Parties so desire. Unless otherwise agreed
by the Parties, the mediator shall be disqualified from serving as arbitrator
in the case. The provisions of this paragraph may be enforced by any Court
of competent jurisdiction, and the Party seeking enforcement shall be entitled
to an award of all costs, fees and expenses, including attorney fees, to be paid
by the Party against whom enforcement is ordered.

 

16.12.2.   Arbitration.   If
the matter is not resolved through mediation under Section 16.12.1., above,
then it shall be submitted to JAMS in Orange County, California, or its
successor, for final and binding arbitration before a sole arbitrator. The
arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and

 

35

 

Procedures
if the amount in controversy exceeds $250,000, or pursuant to its Streamlined
Arbitration Rules and Procedures if the amount in controversy is $250,000 or
less. Judgment on the Award may be entered in any court having jurisdiction.

 

16.12.3.   Small Claims.   All
disputes, claims, or controversies arising out of or relating to this Agreement
with Five Thousand Dollars ($5,000) or less in controversy shall be adjudicated
in the Harbor Municipal Court District of the Superior Court of California,
County of Orange, according to California law.

 

16.12.4.   Waiver of Jury Trial and Related
Rights.   By
initialing the space below, the Parties hereby agree to have all disputes,
claims or controversies arising out of or relating to this Agreement, which are
not resolved by mediation, decided by neutral binding arbitration as provided
in this Agreement. Each Party is giving up any rights it might possess to have
those matters litigated in a court or jury trial. By initialing in the space
below, each Party is giving up its judicial rights to discovery and appeal
except to the extent that they are specifically provided for under this
Agreement. If either Party refuses to submit to arbitration after agreeing to
this provision, that Party may be compelled to arbitrate under federal or state
law. The foregoing has been read and understood. Each Party agrees to submit
all disputes, claims or controversies arising out of or relating to this
Agreement, that have not been resolved by mediation, to binding arbitration in
accordance with this Agreement.

 

16.13       Recitals.
  The facts recited in Article II, above,
are hereby conclusively presumed to be true as between and affecting the
Parties.

 

16.14       Consents, Approvals, and
Discretion.   Except as herein expressly provided to the
contrary, whenever this Agreement requires consent or approval to be given by a
Party, or a Party must or may exercise discretion, the Parties agree that such
consent or approval shall not be unreasonably withheld, conditioned, or
delayed, and such discretion shall be reasonably exercised. Except as otherwise
provided herein, if no response to a consent or request for approval is
provided within ten (10) days from the receipt of the request, then the consent
or approval shall be presumed to have been given.

 

16.15       Best Efforts.   The Parties shall use and
exercise their best efforts, taking all reasonable, ordinary and necessary
measures to ensure an orderly and smooth relationship under this Agreement, and
further agree to work together and negotiate in good faith to resolve any
differences or problems which may arise in the future.

 

XVIII

 

EXECUTION

 

IN WITNESS WHEREOF, this AGREEMENT AND PLAN OF MERGER has been duly executed by the
Parties in Irvine, California, and shall be effective as of and on the
Effective Date set forth in Article I of this Agreement. Each of the
undersigned Parties hereby represents and warrants that it (i) has the
requisite power and authority to enter into and carry out the terms and
conditions of this Agreement, as well as all transactions contemplated
hereunder; and, (ii) it is duly authorized and empowered to execute and deliver
this Agreement.

 

36

 

SIGNATURES APPEAR ON NEXT PAGE

 

EXECUTION PAGE TO AGREEMENT AND PLAN OF MERGER

 

	
  PARENT:

  	
   

  	
  GACC:

  
	
   

  	
   

  	
   

  
	
  DSE FISHMAN, INC.,

  	
   

  	
  GACC ACQUISITION CORP.,
  INC.,

  
	
  a Nevada corporation

  	
   

  	
  a California
  corporation

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME:

  	
   

  	
   

  	
  NAME:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME:

  	
   

  	
   

  	
  NAME:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  DATED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GREAT
  AMERICAN:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GREAT AMERICAN COFFEE
  COMPANY, INC.,

  	
   

  
	
  a California
  corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME:

  	
   

  	
   

  	
  NAME:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  DATED:

  	
   

  	
   

  
											

 

37

 

INDEX
OF EXHIBITS AND SCHEDULES

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  4.2.1.

  	
   

  	
  Certificate
  of Merger

  
	
  Exhibit
  4.2.5.

  	
   

  	
  Directors
  and Officers of Parent

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  6.3

  	
   

  	
  Parent
  Subsidiaries

  
	
  Schedule
  6.7

  	
   

  	
  Parent
  Legal Proceedings

  
	
  Schedule
  6.9

  	
   

  	
  Parent
  Capitalization

  
	
  Schedule
  6.11

  	
   

  	
  Parent
  Employee Benefits

  
	
  Schedule
  6.13

  	
   

  	
  Parent
  Leases and Similar Agreements

  
	
  Schedule
  6.14

  	
   

  	
  Parent
  Material Agreements

  
	
  Schedule
  6.15

  	
   

  	
  Parent
  Employment Agreements

  
	
  Schedule
  6.16

  	
   

  	
  Parent
  Restrictive Covenants Agreements

  
	
  Schedule
  6.17

  	
   

  	
  Parent
  Environmental Matters

  
	
  Schedule
  6.22

  	
   

  	
  Parent
  Title to Assets

  
	
   

  	
   

  	
   

  
	
  Schedule
  7.3

  	
   

  	
  Great
  American Subsidiaries

  
	
  Schedule
  7.9

  	
   

  	
  Great
  American Capitalization

  
	
   

  	
   

  	
   

  
	
  Schedule
  8.3

  	
   

  	
  GACC
  Capitalization

  
	
  Schedule
  8.6

  	
   

  	
  GACC
  Legal Proceedings

  
	
  Schedule
  8.7

  	
   

  	
  GACC
  Material Agreements

  
	
  Schedule
  8.8

  	
   

  	
  Undisclosed
  Liabilities

  

 

38

 

EXHIBIT 4.2.1.

 

CERTIFICATE OF MERGER

 

39

 

EXHIBIT 4.2.5.

 

DIRECTORS AND OFFICERS OF PARENT

 

New Directors:

 

Tom Hemingway

 

Keith A. Rosenbaum

 

New Officers:

 

Chief Executive Officer:       Tom
Hemingway

 

Chief Financial Officer:

 

Secretary:                              Keith
A. Rosenbaum

 

40

 

SCHEDULE 6.3

 

PARENT
SUBSIDIARIES

 

41

 

SCHEDULE 6.7

 

PARENT
LEGAL PROCEEDINGS

 

42

 

SCHEDULE 6.9

 

PARENT
CAPITALIZATION

 

43

 

SCHEDULE 6.11

 

PARENT
EMPLOYEE BENEFITS

 

44

 

SCHEDULE 6.13

 

PARENT
LEASES AND SIMILAR AGREEMENTS

 

45

 

SCHEDULE 6.14

 

PARENT
MATERIAL AGREEMENTS

 

46

 

SCHEDULE 6.15

 

PARENT
EMPLOYMENT AGREEMENTS

 

47

 

SCHEDULE 6.16

 

PARENT
RESTRICTIVE COVENANTS AGREEMENTS

 

48

 

SCHEDULE 6.17

 

PARENT
ENVIRONMENTAL MATTERS

 

49

 

SCHEDULE 6.22

 

PARENT
TITLE TO ASSETS

 

50

 

SCHEDULE 7.3

 

GREAT
AMERICAN SUBSIDIARIES

 

None.

 

51

 

SCHEDULE 7.9

 

GREAT
AMERICAN CAPITALIZATION

 

None.

 

52

 

SCHEDULE 8.3

 

GACC
CAPITALIZATION

 

None.

 

53

 

SCHEDULE 8.6

 

GACC LEGAL
PROCEEDINGS

 

None.

 

54

 

SCHEDULE 8.7

 

GACC
MATERIAL AGREEMENTS

 

None.

 

55

 

SCHEDULE 8.8

 

GACC
UNDISCLOSED LIABILITIES

 

None.

 

56Exhibit 4.1

 

KASHYA, INC.

2003 STOCK PLAN

 

1.             Purposes of the Plan. The purposes of this 2003 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.

 

2.             Definitions. As
used herein, the following definitions shall apply:

 

(a)                 “Administrator” means the Board or any of
its Committees as shall be administering the Plan in accordance with
Section 4 hereof. At such time as any class of equity securities of the
Company is registered pursuant to Section 12 of the Exchange Act, the
Administrator shall consist solely of individuals (not less than two) who are
Non-Employee Directors as that term is defined in Rule 16b-3 promulgated under
the Exchange Act.

 

(b)                 “Applicable Laws” means the requirements
relating to the administration of stock option plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws, rules and regulations of any other country or jurisdiction
where Options or Stock Purchase Rights are granted under the Plan.

 

(c)                 “Board” means the Board of Directors of the
Company.

 

(d)                 “Code” means the Internal Revenue Code of
1986, as amended.

 

(e)                 “Committee” 
means a committee of Directors appointed by the Board in accordance with
Section 4 hereof.

 

(f)                  “Common Stock” means the Common Stock of the
Company.

 

(g)                 “Company” means Kashya, Inc., a Delaware
corporation.

 

(h)                 “Consultant” means any person who is engaged
by the Company or any Parent or Subsidiary to render consulting or advisory
services to such entity.

 

(i)                  “Director” means a member of the Board.

 

(j)                  “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code.

 

 

(k)                 “Employee” means any person, including
Officers and Directors, employed by the Company or any Parent or Subsidiary of
the Company. An Employee shall not cease to be an Employee in the case of
(i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options, no such
leave may exceed ninety days, unless reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 181st day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.

 

(l)                  “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(m)                “Fair Market Value” means, as of any date,
the value of Common Stock determined as follows:

 

(i)      If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq Small Cap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination, as
reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

 

(ii)     If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for
the Common Stock on the last market trading day prior to the day of
determination; or

 

(iii)    In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith
by the Administrator.

 

(n)       Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

 

(o)       “Nonstatutory Stock Option” means an Option
not intended to qualify as an Incentive Stock Option.

 

2

 

(p)       “Officer” means a person who is an officer
of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.

 

(q)       “Option” means a stock option granted
pursuant to the Plan.

 

(r)        “Option Agreement” means a written or
electronic agreement between the Company and an Optionee evidencing the terms
and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.

 

(s)        “Option Exchange Program” means a program
whereby outstanding Options are exchanged for Options with a lower exercise
price.

 

(t)        “Optioned Stock” means the Common Stock
subject to an Option or a Stock Purchase Right.

 

(u)       “Optionee” means the holder of an
outstanding Option or Stock Purchase Right granted under the Plan.

 

(v)       “Parent” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of the
Code.

 

(w)       “Plan” means this 2003 Stock Plan.

 

(x)        “Restricted Stock” means shares of Common
Stock acquired pursuant to a grant of a Stock Purchase Right under
Section 11 below.

 

(y)       “Section 16(b)” means Section 16(b) of
the Exchange Act.

 

(z)        “Service Provider”  means an Employee, Director or Consultant.

 

(aa)      “Share”
means a share of the Common Stock, as adjusted in accordance with
Section 12 below.

 

(bb)     “Stock Purchase Right” means a right to
purchase Common Stock pursuant to Section 11 below.

 

(cc)      “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.

 

3.             Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be subject to
Options or Stock Purchase Rights and sold under the Plan is 2,496,552 Shares. The
Shares may be authorized but unissued, or reacquired shares of Common Stock.

 

3

 

If an
Option or Stock Purchase Right expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by
the Company at their original purchase price, such Shares shall become
available for future grant under the Plan.

 

4.             Administration of the Plan.

 

(a)                 Administrator. The
Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable Laws.

 

(b)                 Powers of the Administrator. Subject to the provisions of the Plan and, in the
case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:

 

(i)         to determine the Fair Market Value;

 

(ii)        to select the Service Providers to whom Options and
Stock Purchase Rights may from time to time be granted hereunder;

 

(iii)       to determine the number of Shares to be covered by
each such award granted hereunder;

 

(iv)       to approve forms of agreement for use under the
Plan;

 

(v)        to determine the terms and conditions of any Option
or Stock Purchase Right granted hereunder; such terms and conditions include,
but are not limited to, the exercise price, the time or times when Options or
Stock Purchase Rights may be exercised (which may be based on performance
criteria), any vesting, acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or Stock Purchase Right or
the Optioned Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

 

(vi)       to determine whether and under what circumstances
an Option may be settled in cash under subsection 9(e) instead of Common
Stock;

 

(vii)      to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common

 

4

 

Stock
covered by such Option has declined since the date the Option was granted;

 

(viii)     to initiate an Option Exchange Program;

 

(ix)       to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;

 

(x)        to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld;  the Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined;  all elections by
Optionees to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
and

 

(xi)       to construe and interpret the terms of the Plan,
Option Agreements and Stock Purchase Rights granted pursuant to the Plan.

 

(c)                 Effect of Administrator’s Decision. All decisions, determinations and interpretations
of the Administrator shall be final and binding on all Optionees.

 

5.             Eligibility.

 

(a)                 Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.

 

(b)                 Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

 

(c)                 Neither the Plan nor any Option or Stock Purchase
Right shall confer upon any Optionee any right with respect to continuing the
Optionee’s relationship as a Service Provider with the Company, nor

 

5

 

shall it
interfere in any way with his or her right or the Company’s right to terminate
such relationship at any time, with or without cause.

 

6.             Term of Plan. The
Plan shall become effective upon its adoption by the Board. It shall continue
in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.

 

7.             Term of Option. The
term of each Option shall be stated in the Option Agreement; provided, however,
that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option granted to an Optionee who,
at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the Option
Agreement.

 

8.             Option Exercise Price and Consideration.

 

(a)                 The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall not be less than the par value of the Shares and in
the case of an Incentive Stock Option:

 

(i)         granted to an Employee who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant; or

 

(ii)        granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

 

(b)                 The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined in the sole discretion of the Administrator (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant). Such
consideration  may consist of
(1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option, have
been owned by the Optionee for more than six months as of the date of
surrender, and (y) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan, or
(6) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Administrator
shall consider if

 

6

 

acceptance
of such consideration may be reasonably expected to benefit the Company.

 

7

 

9.             Exercise of Option.

 

(a)                 Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable
according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. Unless
the Administrator provides otherwise, vesting of Options granted hereunder
shall be tolled during any unpaid leave of absence. An Option may not be
exercised for a fraction of a Share.

 

An Option
shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement and
procedures adopted by the Administrator) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the
Option is exercised. Full payment may consist of any consideration and method
of payment authorized by the Administrator and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in
Section 12 of the Plan.

 

Exercise
of an Option in any manner shall result in a decrease in the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

 

(b)                 Termination of Relationship as a Service Provider. Except as set forth in subsections 9(c) and 9(d),
if an Optionee ceases to be a Service Provider, such Optionee may exercise his
or her Option to the extent that the Option is vested on the date of
termination within such period of time as is specified in the Option Agreement
(of at least thirty (30) days (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement), unless the Optionee
is terminated for cause, in which case the Option shall expire immediately, to
the extent that the Option is vested on the date of termination. In the absence
of a specified time in the Option Agreement, the Option shall remain
exercisable for thirty (30) days following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the

 

8

 

Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified by the Administrator or as specified in the Option Agreement,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

 

(c)                 Disability of Optionee. If an Optionee ceases to be a Service Provider as
a result of the Optionee’s Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of
at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for six (6)
months following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

 

(d)                 Death of Optionee. If
an Optionee dies while a Service Provider, the Option may be exercised within
such period of time as is specified in the Option Agreement (of at least six
(6) months) to the extent that the Option is vested on the date of death (but
in no event later than the expiration of the term of such Option as set forth
in the Option Agreement) by the Optionee’s estate or by a person who acquires
the right to exercise the Option by bequest or inheritance. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
six (6) months following the Optionee’s termination. If, at the time of death, the Optionee is not vested as to
the entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.

 

(e)                 Buyout Provisions. The
Administrator may at any time offer to buy out for a payment in cash or Shares,
an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made.

 

10.           Non-Transferability of Options and Stock Purchase
Rights. The Options and Stock Purchase
Rights may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee.

 

9

 

11.           Stock Purchase Rights.

 

(a)                 Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with Options granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing or electronically of the terms, conditions and restrictions related to
the offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must
accept such offer. The offer shall be accepted by execution of a Restricted
Stock purchase agreement in the form determined by the Administrator.

 

(b)                 Repurchase Option. Unless
the Administrator determines otherwise, the Restricted Stock purchase agreement
shall grant the Company a repurchase option exercisable upon the voluntary or
involuntary termination of a Service Provider with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the Service Provider and may be paid by cancellation of any purchase
money indebtedness of the Service Provider to the Company. The Administrator
may provide that the repurchase option shall lapse at such times and under such
conditions as the Administrator shall determine in its sole discretion.

 

(c)                 Other Provisions. The
Restricted Stock purchase agreement shall contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

 

(d)                 Rights as a Stockholder. Once the Stock Purchase Right is exercised in
accordance with the terms of the Restricted Stock purchase agreement (including
full payment for the Shares of Restricted Stock), the purchaser shall have
rights equivalent to those of a stockholder and shall be a stockholder when his
or her purchase is consummated and the Shares are issued by appropriate entry
on the books of the Company and upon the records of the duly authorized transfer
agent of the Company. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in Section 12 of the Plan.

 

12.           Adjustments Upon Changes in Capitalization, Merger
or Asset Sale.

 

(a)                 Changes in Capitalization. The number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of Shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock

 

10

 

Purchase
Rights have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase Right or which are
shares of Restricted Stock repurchased by the Company at their original
purchase price, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company. The conversion of any convertible
securities of the Company shall not be deemed to have been “effected without
receipt of consideration.”  Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.

 

(b)                 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction. The
Administrator in its sole discretion may provide for an Optionee to have the
right to exercise his or her Option or Stock Purchase Right until fifteen
(15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase
Right would not otherwise be exercisable, which exercise may, in the discretion
of the Administrator, be made subject to and conditioned upon the consummation
of such proposed transaction. In addition, the Administrator may provide that
any Company repurchase option applicable to any Shares purchased upon exercise
of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate upon the consummation of such
proposed action.

 

(c)                 Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of all or substantially all of the assets
or securities of the Company  the portion
of each outstanding Option and Stock Purchase Right  that would have become exercisable at the end
of the first anniversary after such merger or sale shall become exercisable
immediately before the completion of such merger or sale if the Optionee is a
Service Provider at such time, and the remaining unvested portion of each
outstanding Option and Stock Purchase Right shall be assumed or an equivalent
option or right substituted by the successor corporation or

 

11

 

a Parent
or Subsidiary of the successor corporation on terms that provide for a twelve
month acceleration of the vesting schedule of such Options and Stock Purchase
Rights. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger or sale of assets or
securities, the option or right confers the right to purchase or receive, for
each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets or securities, the consideration
(whether stock, cash, or other securities or property) received in the merger
or sale of assets or securities by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger or sale of assets or securities is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in Fair
Market Value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

 

13.           Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase
Right shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other date
as is determined by the Administrator. Notice of the determination shall be
given to each Optionee to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.

 

14.           Amendment and Termination of the Plan.

 

(a)                 Amendment and Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.

 

(b)                 Stockholder Approval. The Board shall obtain stockholder approval of
any Plan amendment to the extent necessary to comply with Applicable Laws.

 

(c)                 Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company. Termination
of the Plan shall not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Options granted under the Plan prior to
the date of such termination.

 

12

 

15.        Conditions Upon Issuance of Shares.

 

(a)                    Legal Compliance. Shares
shall not be issued pursuant to the exercise of an Option or Stock Purchase
Right unless the exercise of such Option or Stock Purchase Right and the
issuance and delivery of such Shares shall comply with Applicable Laws and
shall be further subject to the approval of counsel for the Company with
respect to such compliance. 

 

(b)                    Investment Representations. As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option or Stock Purchase
Right: (a) to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is necessary or desirable, (b) and to make
such other representations, warranties and covenants as may be reasonably
required to comply with Applicable Laws.

 

16.           Indemnification.
The Board, any Committee, the Administrator any member of them, and any
employees, advisory agents or affiliates, shall not be liable for any action,
omission, interpretation, construction or determination made in good faith in
connection with respect to this Plan, and the Company hereby agrees to
indemnify all such persons in respect of any claim, loss, damage or expense
(including reasonable counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full extent permitted by
law. Notwithstanding anything to the contrary in the foregoing, this indemnity
shall not apply to a person in his or her capacity as an Optionee under the
Plan.

 

17.           Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.

 

18.           Reservation of Shares. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

19.           Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Such stockholder approval shall be obtained in the degree and
manner required under Applicable Laws.

 

13

 

KASHYA
ISRAEL LTD.

2003
STOCK PLAN

 

1.             Purposes
of the Plan. The purpose and intent of the Plan is to provide incentives to
the Israeli employees and directors of Kashya Israel Ltd. by giving them the
opportunity to purchase shares of Common Stock of Kashya Inc., pursuant to an
incentive plan approved by the Board of Directors of the Company and the
Israeli tax authorities, which is designed to benefit from tax benefits
available to employees under Section 102 of the Income Tax Ordinance and the
rules and regulations promulgated thereunder.

 

2.             This
Plan is designed to comply with the “Capital Gain Track”  under
Section 102 of the Income Tax Ordinance; i.e. Options granted hereunder shall
be subject to Section 102(b)(2) of the Income Tax Ordinance.

 

3.             Definitions. As used herein, the following definitions shall apply:

 

(a)                 “Administrator” means the Board or any of
its Committees as shall be administering the Plan in accordance with
Section 4 hereof.

 

(b)                 “Applicable Laws” means the requirements
relating to the administration of stock option plans under Israeli law, U.S.
state corporate laws, U.S. federal and state securities laws, any stock
exchange or quotation system on which the Common Stock is listed or quoted and
the applicable laws, rules and regulations of any other country or jurisdiction
where Options are granted under the Plan.

 

(c)                 “Board” means the Board of Directors of the
Company.

 

(d)                 “Committee” 
means a committee of Directors appointed by the Board in accordance with
Section 4 hereof.

 

(e)                 “Common Stock” means the Common Stock of
the Parent.

 

(f)                  “Company” means Kashya Israel Ltd.

 

(g)                 “Companies Law” shall mean the Israeli Companies Law, 1999.

 

(h)                 “Controlling Stockholder” shall mean any
person that holds, directly or indirectly, alone or together with such person’s
Relative, either: (i) 10% or more of the Company’s issued share capital or
voting power; (ii) the right to hold 10% or more of the Company’s issued share
capital or voting power or to acquire the same; (iii) the right to receive 10%
or more of the Company’s profits; or (iii) the right to appoint at least one
Director.

 

(i)                  “Director” means a member of the Board.

 

(j)                  “Disability” means the inability, due to
illness, injury or mental condition to engage in any gainful occupation for
which an

 

 

individual is qualified by education,
training or experience, and such condition continues for at least six (6)
months.

 

(k)                 “Employee” means  an Israeli employee of the Company, including
an Israeli Director or other Officer of the Company, excluding, however, a
Controlling Shareholder.

 

(l)                  “Fair Market Value” means, as of any date,
the value of Common Stock determined as follows:

 

(i)      If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq Small Cap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

 

(ii)     If the Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination; or

 

(iii)    In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Administrator.

 

(m)       “Income Tax Ordinance” shall mean the Israeli Income Tax Ordinance
[New Version], 1961, as amended.

 

(n)       “Officer” means an office holder in the Company – “Nose Misra” , as such term is defined in the Companies Law,
excluding, however, a Director.

 

(o)       “Option” means a stock option granted pursuant to the Plan.

 

(p)       “Option Agreement” means a written or electronic agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.

 

(q)       “Option Exchange Program” means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.

 

(r)        “Optioned Stock” means the Common Stock subject to an Option.

 

2

 

(s)        “Optionee” means the holder of an outstanding Option granted under
the Plan.

 

(t)        “Parent” means Kashya, Inc.

 

(u)       “Plan” means this 2003 Stock Plan.

 

(v)       “Relative” shall mean a spouse, sibling, parent grandparent,
descendant, a spouse’s descendant and a spouse of any of the foregoing.

 

(w)       “Release Date” shall have the meaning set forth in Section 11.

 

(x)        “Share” means a share of the
Common Stock, as adjusted in accordance with Section 13 below.

 

(y)       “Trustee” shall mean a
trustee designated by the Board and approved by the Income Tax Authorities.

 

3.             Stock Subject to the Plan.

 

(a) 
Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares which may be subject to Options and sold under the
Plan is 5,100,000 Shares. The Shares may be authorized but unissued, or
reacquired shares of Common Stock.

 

(b) If an Option expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated). However, Shares that have actually been issued under
the Plan, upon exercise of an Option, shall not be returned to the Plan and
shall not become available for future distribution under the Plan.

 

(c) The Board shall be entitled to grant to
certain Employees shares of the Company instead of Options, as it may deem
desirable. The provisions of the Plan shall apply to such grant of shares
mutatis mutandis.

 

(d) No shares, and/or options to purchase
shares, of the Company may be granted to any Employee of the Company other than
under the terms of the Plan, or of another plan that shall be adopted by the
Board under the terms of Section 102 of the Income Tax Ordinance. In any event,
the Board may not adopt a new share incentive plan for the grant of shares
and/or options to purchase shares to Employees prior to January 2005.

 

4.             Administration of the Plan.

 

(a)                 Administrator. The Plan shall be administered by the Board or a Committee appointed by
the Board, which Committee shall be constituted to comply with Applicable Laws.

 

3

 

(b)                 Powers of the Administrator. Subject to the provisions of the Plan and, in
the case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:

 

(i)         to determine the Fair Market Value;

 

(ii)        to select the Employees to whom Options may from time to time be granted
hereunder;

 

(iii)       to determine the number of Shares to be covered by each such award granted
hereunder;

 

(iv)       to approve forms of agreement for use under the Plan;

 

(v)        to determine the terms and conditions of any Option granted hereunder; such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on performance
criteria), any vesting, acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the Optioned Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

 

(vi)       to determine whether and under what circumstances an Option may be settled
in cash under subsection 9(e) instead of Common Stock;

 

(vii)      to reduce the exercise price of any Option to the then current Fair Market
Value if the Fair Market Value of the Common Stock covered by such Option has
declined since the date the Option was granted;

 

(viii)     to initiate an Option Exchange Program;

 

(ix)       to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;

 

(x)        to allow Optionees to satisfy withholding tax obligations by electing to
have the Company withhold from the Shares to be issued upon exercise of an
Option that number of Shares having a Fair Market Value equal to the amount
required to be withheld;  the Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined; all elections by Optionees to
have Shares withheld for this purpose shall be made in such

 

4

 

form and under such conditions as the
Administrator may deem necessary or advisable; and

 

(xi)       to construe and interpret the terms of the Plan and Option Agreements
granted pursuant to the Plan.

 

(c)                 Effect of Administrator’s Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all
Optionees.

 

5.             Eligibility.

 

(a)                 Options may be granted to Employees.

 

(b)                 Neither the Plan nor any Option shall confer upon
any Optionee any right with respect to continuing the Optionee’s relationship
as an Employee with the Company, nor shall it interfere in any way with his or
her right or the Company’s right to terminate such relationship at any time,
with or without cause.

 

6.             Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless sooner terminated
under Section 15 of the Plan.

 

7.             Term of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from
the date of grant thereof. If any Option has not been exercised within ten (10)
years after the date of grant (or any shorter period set forth in the notice of
grant), such Option shall terminate, all interests and rights of the Optionee
in and to the same shall ipso facto expire, and, in the event that in
connection therewith any Options are still held in trust, the trust with
respect thereto shall ipso facto expire.

 

8.             Option Exercise Price and Consideration.

 

(a)                 The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall not be less than the par value of the Shares.

 

(b)                 The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined in the sole discretion of the Administrator. Such consideration  may consist of (1) cash, (2) check,
(3) promissory note, (4) other Shares which have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which such Option shall be exercised, (5) consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (6) any combination of the foregoing methods
of payment. In making its determination as to the type of consideration to
accept, the Administrator shall consider if

 

5

 

acceptance of such consideration may be
reasonably expected to benefit the Company.

 

9.             Exercise of Option.

 

(a)                 Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be
exercisable according to the terms hereof at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. Unless the Administrator provides otherwise, vesting of Options
granted hereunder shall be tolled during any unpaid leave of absence. An Option
may not be exercised for a fraction of a Share.

 

An Option shall be deemed exercised when the
Company receives: (i) written or electronic notice of exercise (in
accordance with the Option Agreement and procedures adopted by the Administrator)
from the person entitled to exercise the Option, and (ii) full payment for
the Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

 

Exercise of an Option in any manner shall
result in a decrease in the number of Shares thereafter available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

 

(b)                 Termination of Relationship as an Employee. Except as set forth in subsections 9(c) and
9(d), if an Optionee ceases to be an Employee, such Optionee may exercise his
or her Option to the extent that the Option is vested on the date of
termination within such period of time as is specified in the Option Agreement
(of at least thirty (30) days (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement), unless the Optionee
is terminated for cause, in which case the Option shall expire immediately, to
the extent that the Option is vested on the date of termination. In the absence
of a specified time in the Option Agreement, the Option shall remain
exercisable for thirty (30) days following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares

 

6

 

covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator or as
specified in the Option Agreement, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

 

(c)                 Disability of Optionee. If an Optionee ceases to be an Employee as a
result of the Optionee’s Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of
at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for six (6)
months following the Optionee’s termination. If,
on the date of termination, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

 

(d)                 Death of Optionee. If an Optionee dies while an Employee, the
Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee’s
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for six (6) months following the Optionee’s
termination. If, at the time of
death, the Optionee is not vested as to the entire Option, the Shares covered
by the unvested portion of the Option shall immediately revert to the Plan. If
the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.

 

(e)                 Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

 

10.           Non-Transferability of Options. Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

 

7

 

11.           Trust.

 

(a) Options granted under the Plan to Optionees shall be granted by the
Company to the Trustee, who shall hold each such Option and the Common Stock
issued upon exercise thereof in trust for the benefit of the Optiontee in
respect of whom such Option was granted. All certificates representing Common
Stock issued to the Trustee under the Plan shall be deposited with the Trustee,
and shall be held by the Trustee until such time that such shares of Common
Stock are released from the trust as herein provided.

 

(b) Anything herein to the contrary notwithstanding, the Release Date
of an Option shall be the later of: (i) the lapse of two (2) calendar
years from the end of the calendar year of the date of grant; (ii) the vesting
of such Options.

 

(c) After the Release Date, Options granted, and/or Common Stock issued
to the Trustee shall continue to be held by the Trustee, on behalf of the
Optionee.

 

(d) From the Release Date and thereafter, upon the written request of
the Optionee, the Trustee shall release Options, and/or the shares of Common
Stock issued upon the exercise thereof, from the trust by executing and
delivering to the Company such instrument(s) as the Company may require, giving
due notice of such release to such Optionee, provided, however, that the
Trustee shall not so release any such Options and/or shares of Common Stock to
such Optionee unless, prior to, or concurrently with, such release, the latter
provides the Trustee with evidence, satisfactory in form and substance to the
Trustee, that all taxes, if any, required to be paid upon such release have, in
fact, been paid.

 

(e) Alternatively, from and after the Release Date, upon the written
instructions of the Optionee to sell any shares of Common Stock issued upon
exercise of Options, the Trustee shall use its best efforts to effect such sale
and shall transfer such shares to the purchaser thereof concurrently with the
receipt, or after having made suitable arrangements to secure the payment of
the proceeds, of the purchase price in such transaction. The Trustee shall
withhold from such proceeds any and all taxes required to be paid in respect of
such sale, shall remit the amount so withheld to the appropriate tax
authorities, and shall pay the balance thereof directly to the Optionee (after
deducting its costs as provided hereunder), reporting to such Optionee and to
the Company the amount so withheld and paid to said tax authorities.

 

(f) Should the Trustee sell shares of Common Stock at the request of
the Optionee, the Optionee shall pay the Trustee for its services and expenses
incurred with respect to such sale of shares, and the Trustee will be entitled
to withhold such amounts and pay the balance thereof to said Optionee.

 

12.           Dividend and Voting Rights.

 

All Common Stock issued upon the exercise of Options granted under the
Plan shall entitle the Optionee to all the rights attached to the Common Stock
of the

 

8

 

Company, including the right to receive dividends with respect thereto
and to vote the same at any meeting of the stockholders of the Company.
Notwithstanding the above, for so long as the Common Stock is held by the
Trustee on behalf of an Optionee, the dividends paid or distributed with
respect thereto shall be remitted to the Trustee for the benefit of such
Optionee, and the Trustee and/or the Optionee shall not be entitled to vote and
participate in any meeting of the shareholders of the Company.

 

13.           Adjustments Upon Changes in Capitalization, Merger
or Asset Sale.

 

(a)                 Changes in Capitalization. The number of shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.

 

(b)                 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its sole discretion may provide for an Optionee to have
the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable, which
exercise may, in the discretion of the Administrator, be made subject to and
conditioned upon the consummation of such proposed transaction. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the
time and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate upon the consummation of such proposed
action.

 

9

 

(c)                 Merger or Asset Sale. In the event of a merger of the Parent with or
into another corporation, or the sale of all or substantially all of the assets
or securities of the Parent the portion of each outstanding Option that would
have become exercisable at the end of the first anniversary after such merger
or sale shall become exercisable immediately before the completion of such
merger or sale if the Optionee is an Employee at such time, and the remaining
unvested portion of each outstanding Option and shall be assumed or an
equivalent option or right substituted by the successor corporation or a parent
or subsidiary of the successor corporation on terms that provide for a twelve
month acceleration of the vesting schedule of such Options. For the purposes of
this paragraph, the Option shall be considered assumed if, following the merger
or sale of assets or securities, the option or right confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets or securities, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets or securities by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets or securities is not solely common stock of the
successor corporation or its parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
the exercise of the Option, for each Share of Optioned Stock subject to the
Option, to be solely common stock of the successor corporation or its parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.

 

14.           Time of Granting Options. Options may be granted at any time after the
passage of thirty (30) days following the delivery by the Company to the
Israeli income tax authorities of this Plan for their approval. The date of
grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date
as is determined by the Administrator. Notice of the determination shall be
given to each Optionee to whom an Option is so granted within a reasonable time
after the date of such grant.

 

15.           Amendment and Termination of the Plan.

 

(a)                 Amendment and Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.

 

(b)                 Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers

 

10

 

granted to it hereunder with respect to
Options granted under the Plan prior to the date of such termination.

 

16.        Conditions Upon Issuance of Shares.

 

(a)                    Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance. 

 

(b)                    Investment Representations. As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option: (a) to represent
and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is necessary or desirable, (b) and to make such other
representations, warranties and covenants as may be reasonably required to
comply with Applicable Laws.

 

17.           Indemnification. The Board, any Committee, the Administrator any member of them, and any
employees, advisory agents or affiliates, shall not be liable for any action,
omission, interpretation, construction or determination made in good faith in
connection with respect to this Plan, and the Company hereby agrees to
indemnify all such persons in respect of any claim, loss, damage or expense
(including reasonable counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full extent permitted by
law. Notwithstanding anything to the contrary in the foregoing, this indemnity
shall not apply to a person in his or her capacity as an Optionee under the
Plan.

 

18.           Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

 

19.           Reservation of Shares. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

20.           Tax Consequences.

 

(a)     Any tax consequences to the Trustee, the Optionee or the Optionee’s
successors in interest arising from the grant or exercise of any Option, from
the payment for Shares upon exercise thereof or from any other event or act (of
the Company, the Trustee or the Optionee), hereunder, shall be borne solely by
the Optionee. The Company and/or the Trustee shall withhold taxes according to
the requirements under Applicable Laws, including withholding taxes at source.

 

11

 

(b)     The Optionee shall agree to indemnify the Company and the Trustee and hold
them harmless against and from any and all liability for any such tax or
interest or penalty thereon, including without limitation, liabilities relating
to the necessity to withhold, or to have withheld, any such tax from any
payment made to the Optionee.

 

(c)     The Administrator, the Company and/or the Trustee shall not be required to
release any Share certificate to an Optionee until all required payments have
been fully made.

 

12

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