SETTLEMENT AGREEMENT AND ASSET PURCHASE AGREEMENT

SETTLEMENT AGREEMENT AND

ASSET PURCHASE AGREEMENT

D.   The Seller will make a payment in the amount of $250,000 to EIG Venture Capital, Limited (which will be made out of the Seller funds available on the Closing Date (as defined) that are not included in the Acquired Assets).

E.   The Management will provide evidence to the Plaintiffs that the California Litigation (as defined) has been settled and dismissed with no further liability or obligation on the Seller as set forth in Section 2(e).

F.   All Indebtedness (as defined) and Liabilities of the Seller (including, but not limited to, all of the Liabilities listed on the Seller’s financial statements, including, all Liabilities and obligations owing by the Seller on its long term debt, capital lease obligations, Mortgage (as defined), line of credit, and notes payable) shall have either been satisfied, discharged and paid-in-full or assigned to the Buyer with releases in favor of the Seller.

G.   All Liens (as defined), UCC-1 Financing Statements, Mortgages, security interests, and other encumbrances on the Seller’s assets and real property shall have either been discharged and paid-in-full or assigned to the Buyer with releases in favor of the Seller.

H.   The Buyer will hire all employees of the Seller and assume and pay all amounts owing by the Seller to its former employees (including, but not limited to, all wages, bonuses, performance incentives and rights to receive monies or other remuneration from the Seller).

I.   The Management will tender their written resignations as officers and directors of the Seller as set forth in Section 2(f)(i) and cause the Seller’s Board of Directors to remove all other existing officers and Directors and appoint ▇▇▇ ▇▇▇▇▇▇▇▇ as the Seller’s sole officer and Director.

J.   The Management will provide evidence to the Seller and the Plaintiffs that the Seller’s 2001 Employee/Consultant Stock Compensation Plan (and all similar plans) has been terminated and all previously granted rights thereunder (except for any as may be approved by Plaintiffs) shall have been terminated as set forth in Section 2(f)(iii).

K.   The Buyer will pay-in-full all accrued and anticipated Seller obligations for periods up to and including the Closing Date that may become due and owing after the Closing Date, including, but not limited to, all Closing Date Outstanding Checks (as defined) and all amounts that may become due and owing for federal, state and local Taxes, real property transfer and real property state and local taxes, and amounts owing by the Seller for the preparation of financial statements and SEC filings and miscellaneous legal and other fees, including all amounts owing to the Seller’s legal counsel, ▇▇▇▇▇▇▇▇ & Temple, P.C. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP relating to the documentation of this Agreement and the settlement of the Pending Litigation and the California Litigation and all amounts owing to the Seller’s Transfer Agent, Interwest Transfer Co., Inc. and all amounts owing to the Seller’s audit and accounting firm ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. and all other service providers to the Seller (e.g., all legal, accounting, audit, Transfer Agent and related costs, fees and expenses of the Seller).

 

1.   Definitions.

“Acquired Assets” means all of the right, title, and interest that the Seller possesses and has the right to transfer in and to all of its assets (other than the Excluded Assets described herein), provided, however, that the Acquired Assets shall not include (i) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of the Seller as a corporation, (ii) $250,000 that will be paid by the Seller to EIG Venture Capital, Limited on the Closing Date, (iii) any rights of the Seller to continue operating as a fully reporting Over-the-Counter Bulletin Board company following the Closing, and (iv) any of the rights of the Seller under this Agreement. The Acquired Assets shall include the Real Property owned by the Seller located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ which Real Property will be conveyed to the Buyer concurrently with the discharge of the existing Deeds of Trust and the concurrent release of the Seller from all liabilities and obligations owing to AmSouth Bank or its successor(s) that are secured by the Deeds of Trust or the assignment to and assumption by the Buyer on the Closing Date of the Deeds of Trust and all obligations that are secured by the Deeds of Trust and the concurrent release of the Seller from all liabilities and obligations owing to AmSouth Bank or its successor(s) that are secured by the Deeds of Trust.

“Ancillary Agreements” means all of the agreements referenced herein that are to be executed and delivered in connection with the consummation of the transactions described in this Agreement.

“Assumed Liabilities” means all Liabilities and obligations of the Seller 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, but not limited to all Tax Liabilities and the Mortgage on the Real Property.  

 

“Basis” means any known past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction that forms or could form a reasonable basis for any specified consequence.

“Buyer” has the meaning set forth in the preface above.

 

“Confidential Information” means any information concerning the businesses and affairs of the Seller that is not already generally available to the public.

“Deeds of Trust” means and refers collectively to (a) the Deed of Trust from the Seller to FMLS, Inc., Trustee for AmSouth Bank, in the original amount of $800,000, dated December 21, 2004, and recorded in Book 1381, page 1788, in the ▇▇▇▇▇▇▇▇ County Register’s Office, and (b) the Deed of Trust from the Seller to FMLS, Inc., Trustee for AmSouth Bank, in the original amount of $400,000, dated June 29, 2006, and recorded in Book 1428, page 918, in the ▇▇▇▇▇▇▇▇ County Register’s Office.

“Environmental, Health, and Safety Requirements” shall mean all federal, state, local and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, as such requirements are enacted and in effect on or prior to the Closing Date.

“Environmental Law” means any and all Legal Rules pertaining to land use (excluding Legal Rules regarding zoning and building code restrictions), air, soil, surface water, ground-water (including the protection, cleanup, removal, remediation or damage thereof), public or employee health or safety, industrial hygiene, environmental conditions, protection of the environment or any other environmental matter, including, without limitation, the following laws as the same have been or may be amended from time to time: (a) Clean Air Act (42 ▇.▇. ▇▇▇▇, et seq. ); (b) Clean Water Act (33 U.S.C. 1251, et seq. ); (c) Resource Conservation and Recovery Act (42 U.S.C. 6901, et seq. ); (d) Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) (42 U.S.C. 9601, et seq. ); (e) Safe Drinking Water Act (42 U.S.C. 300f, et seq. ); (vi) Toxic Substances Control Act (15 U.S.C. 2601, et seq. ); (f) Rivers and Harbors Act (33 U.S.C. 401, et seq. ); (g) Occupational Safety and Health Act (29 U.S.C. 651, et seq. ); Part 201, et seq. of Michigan Natural Resources and Environmental Protection Act, Act 451 of 1994, as amended, together with all other Legal Rules relating to emissions, discharges, releases or threatened releases of any hazardous substance into ambient air, land, surface water, ground-water, personal property or structures, or otherwise relating to the presence, manufacture, processing, distribution, use, treatment, storage, disposal, transport, discharge, labeling, testing, warning, monitoring or handling of any hazardous substance.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the validly issued regulations thereunder.

“Excluded Assets” has the meaning set forth in Section 2(a)(i).

 

“Financial Statement” has the meaning set forth in Section 3(j) below.

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

“Governmental Entity” means any United States, foreign, international or multinational government and any state or local or other political subdivision thereof or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority.

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“Income Tax” means any federal, state, local, or foreign tax based on or measured by reference to net income, including any interest, penalty, or addition thereto, whether disputed or not.

“Indebtedness” of the Seller means (without duplication) (a) any Liability of the Seller (i) in respect of borrowed money, (ii) evidenced by bonds, debentures, notes or other similar instruments, (iii) representing the deferred purchase price of property or services, (iv) created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Seller, (v) as lessee under capitalized leases, (vi) under bankers' acceptance and letter of credit facilities, (vii) to purchase, redeem, retire, decease or otherwise acquire for value any capital stock of the Seller, or (viii) in respect of hedging obligations; (b) all Indebtedness of others that is either (i) guaranteed by the Seller or (ii) secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by the Seller, even though the Seller has not assumed or become liable for the payment of such Indebtedness; and (c) all interest costs, expenses and fees related to any of the foregoing.

“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (b) all trademarks, service marks, trade dress, logos, trade names, brand names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registration, and renewals in connection therewith; (c) all copyrightable works, all works of authorship, all copyrights, and all applications, registrations and renewals in connection therewith; (d) all trade secrets and confidential business information, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, ideas, research and development, know-how, discoveries, concepts, formulas, compositions, manufacturing and production processes, techniques, methods and procedures and all other processes, techniques, methods and procedures, technical data, operating and maintenance manuals, designs, drawings and specifications; (e) all computer software (including assemblers, applets, compilers, source code and object code, user interfaces and databases and related documentation) and information systems and programs (including data and related documentation), internet websites, URLs and domain names, whether owned or leased; (f) all other proprietary rights; and (g) all copies and tangible embodiments of the items described in clauses (a) through (f) in whatever form or medium.

“Knowledge” means, when used in reference to the Seller or the Management, that any member of the Management or any of the Seller’s senior management team or officer or director of the Seller is actually aware of the fact or other matter to which the term “Knowledge” relates, or with respect to such matters for which such individual has responsibility within the scope of his or her employment by the Seller, would have become aware of the fact or other matter to which the term Knowledge relates had they made reasonable inquiry to verify the accuracy of such matter.

“Legal Rules” means all laws, codes, statutes, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations of all Governmental Entities (including the SEC and all entities with authority over publicly traded entities in the United States) with jurisdiction.

 

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“Liability” and “Liabilities” means any liability, obligation or commitment of any nature whatsoever (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether secured or unsecured, and whether due or to become due), including, without limitation, any Indebtedness, any guaranty of Indebtedness or obligations of any other Person, any liability for Taxes (including any interest, penalty, or addition thereto), any liability with respect to any Employee Pension Benefit Plan which is subject to Section 412 of the Code and any withdrawal liability under Section 4201 of ERISA, as such liability may be set forth in a notice of withdrawal liability under Section 4219 of ERISA (and as adjusted from time to time subsequent to the date of such notice).

“Liens” means all liens, mortgages, pledges, encumbrances, Security Interests, claims, options, purchase agreements, security agreements and interests, commission arrangements, title retention agreements, deeds of trust, hypothecations, rights of first refusal or offer, occupancy rights, encroachments, easements, rights of way, charges, covenants, restrictions and adverse claims or interests of any kind or nature whatsoever.

“Litigation” has the meaning set forth in Section 3(p) below.

 

“Material Adverse Effect” means a material adverse effect on the business, property, liabilities, financial condition, or results of operations of the Seller, including any event that may reasonably cause the delisting of trading of the Seller’s common stock on the Over-the-Counter Bulletin Board, and any Securities and Exchange Commission investigation relating to the Seller.

 

“Mortgage” means the mortgage on the Real Property that will be discharged on the Closing Date and either assumed by the Buyer or replaced with a new mortgage in the name of the Buyer that encumbers the Real Property after it is conveyed to the Buyer.

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Party” and “Parties” has the meaning set forth in the introductory paragraph to this Agreement.

“Purchased Management Stock” means the 3,000,000 shares of the Seller’s common stock that is owned by the Management that will be sold to the Plaintiffs for Three Hundred Dollars ($300) on the Closing Date.

“Purchase Price” has the meaning set forth in Section 2(c) below.

“Real Property” means the real property that is owned by the Seller located at ▇▇▇▇ ▇▇▇▇ ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ that includes an approximately 45,000 square foot facility that the Seller uses as its corporate headquarters and as its warehouse.

“SEC” means the Securities and Exchange Commission.

“Security Interest” means 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, (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.

“Seller” has the meaning set forth in the preface above.

“Taxes” (and, individually, “Tax”) means (i) any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, property (real, personal or intangible), 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 imposed by any Governmental Entity and (ii) any Liability for the payment of any amount described in clause (i) as the result of being a member of an affiliated, consolidated, combined, unitary or aggregate group, (iii) any liability for the payment of any amounts as a result of an express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clauses (i) or (ii), and (iv) any liability for the payment of any amounts as a result of transferee or successor liability with respect to the payment of any amounts of the type described in clauses (i), (ii) or (iii).

 

“Taxing Authority” means any United States, federal, state or local governmental or quasi-governmental authority or entity or any foreign governmental or quasi-governmental authority or entity that is authorized to levy and/or collect Taxes.

 

“Tax Liabilities” means (1) all Liabilities of the Seller for unpaid Taxes with respect to periods beginning prior to the Closing and ending prior to or on the Closing, (2) all Liabilities of the Seller for unpaid Taxes attributable to periods beginning prior to the Closing and ending after the Closing, (3) all Liabilities of the Seller for Taxes resulting (directly or indirectly) from transactions and events that occurred in a period beginning prior to Closing, (4) all Liabilities of the Seller for transfer, sales, use, real property, and Income Taxes arising (directly or indirectly) in connection with the consummation of the transactions contemplated under this Agreement, and (5) all Liabilities of the Seller for unpaid Taxes of Persons other than the Seller under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract or otherwise.

 

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“Tax Return” means any return, declaration, estimate, report, claim for refund, or information return or statement relating to the determination, assessment, collection or administration of any Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“Transfer Agent” means Interwest Transfer Co., Inc. and any other transfer agent engaged by the Seller.

“Treasury Regulations” means the regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

2.   Basic Transaction. Concurrently with the consummation of the Conditions Precedent to Close, the Parties shall consummate or cause the consummation of the following actions:

(a)   Purchase and Sale of Acquired Assets . The Buyer agrees to purchase from the Seller, and the Seller shall sell, transfer, convey, and deliver to the Buyer, all of the Acquired Assets at the Closing for the consideration specified below in this Section 2. The Acquired Assets will be conveyed to the Buyer on the Closing Date pursuant to a ▇▇▇▇ of Sale in the form attached hereto as Exhibit A .

(i)   Excluded Assets . The Parties acknowledge and agree that the Acquired Assets shall exclude cash in the amount of Two Hundred and Fifty Thousand ($250,000) Dollars which will be paid by the Seller to EIG Venture Capital, Limited, a Belize corporation on the Closing Date.

(b)   Assumption and Discharge of all Indebtedness, Liabilities and obligations of the Seller; Release of Encumbrances and Mortgage; Retention of Seller’s Employees . The Buyer agrees to assume and become responsible for and pay and discharge all of the Seller’s Indebtedness, Assumed Liabilities and obligations at the Closing (and, where applicable, with respect to the Assumed Liabilities, after the Closing to the extent that any of the Assumed Liabilities becomes known, quantifiable and/or due and owing after the Closing Date). The Assumed Liabilities will be assigned by the Buyer’s execution of an Assumption Agreement on the Closing Date in the form attached hereto as Exhibit B . In connection with the foregoing, at the Closing, the Buyer and the Management will provide evidence of the following to the Plaintiffs and the Seller at the Closing:

(i)   evidence that all Indebtedness of the Seller (including, but not limited to, all of the Liabilities listed on the Seller’s financial statements, including, all Liabilities and obligations owing by the Seller on its long term debt, capital lease obligations, Mortgage, Line of Credit, and all notes payable) shall have either been satisfied, discharged and paid-in-full and/or assigned to Buyer with releases in favor of the Seller;

(ii)   evidence that all Liens, UCC-1 Financing Statements, Mortgages encumbering the Real Property, security interests, and other encumbrances on the Seller’s assets, including all personal property and real property shall have been discharged and paid in full or assigned to Buyer with releases in favor of the Seller; and

(iii)   evidence that the Buyer has hired all employees of the Seller and shall have assumed and paid all amounts owing or on behalf of the Seller to its former employees (including, but not limited to, all wages, bonuses, performance incentives and rights to receive monies or other remuneration from the Seller and all withholding amounts and employment and other Tax contributions shall have been withheld and paid to the appropriate Governmental Entity as of the Closing Date).

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(c)   Purchase Price; Assumption of Assumed Liabilities; Assignment and Cancellation of Common Stock and Options Owned by Management . On the Closing Date, (1) the Buyer shall discharge in full all of the Assumed Liabilities set forth in Schedule 2(c) and the Mortgage, (2) the Management shall assign and transfer to the Seller for immediate cancellation all of their respective shares of the Seller’s common stock and all of their options and rights to acquire shares of the Seller’s common stock except for the Purchased Management Stock that the Management will sell to the Plaintiffs for Three Hundred Dollars ($300) on the Closing Date. In connection with the foregoing, on the Closing Date, the Management will provide the following to the Plaintiffs and the Seller:

(i)   a stockholder ledger and a stock option and stock rights ledger (as of the close of business on the prior trading day that lists the names and number of shares held by each of the Seller’s stockholders of record and a ledger of all option or right to acquire any of Seller’s shares that have been granted to any Person or entity (and which will also include a reference to the Purchased Management Stock), a copy of which shall be attached hereto as Schedule 2(c)(i) .

(ii)   a Management stockholder ledger that lists the number of shares and option to purchase shares of the Seller’s common stock held by each of the individual members of Management on the Closing Date, a copy of which shall be attached hereto as Schedule 2(c)(ii) .

(iii)   assignment documents in a form acceptable to legal counsel for the Plaintiffs pursuant to which each of the members of the Management will (a) sell One Million (1,000,000) shares of the Seller’s common stock that they own to the Plaintiffs for One Hundred Dollars ($100), and (b) assign and transfer to the Seller for immediate cancellation, all of their other shares of common stock and all of their respective options to purchase shares of common stock in the Seller. These assignment documents will be in the forms attached hereto as Exhibits C-1 – C-6 .

(iv)   stock certificates issued to each of the Plaintiffs for 1,000,000 shares of the Seller’s common stock.

(d)   Settlement Payment : On the Closing Date, the Seller will make a payment in the amount of $250,000 to EIG Venture Capital, Limited (which will be made out of the Seller funds available on the Closing Date that are not included in the Acquired Assets).

(e)   Dismissal of California Litigation and Pending Litigation . On the Closing Date, (a) the Management shall provide evidence to the Plaintiffs that the California Litigation has been settled and dismissed with no further liability or obligation on the Seller, and (b) the Plaintiffs shall dismiss the Pending Litigation.

(f)   Management Resignations; Termination of Stock Compensation Plans . On the Closing Date, the Management will provide the following to the Plaintiffs and the Seller:

(i)   written resignations of each individual who is a member of Management or an officer or director of the Seller from their positions as Officers and Directors of the Seller in the forms attached hereto as Exhibits D-1 – D-5 ;

 

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(ii)   appropriate (pre-Closing) resolutions of the Management removing all of the Seller’s officers and Directors and appointing ▇▇▇ ▇▇▇▇▇▇▇▇ as the President, Treasurer and Secretary and sole director of the Seller effective concurrently with the resignation of the Management on the Closing Date in the form attached hereto as Exhibit E ;

(iii)   evidence that the Seller’s 2001 Employee/Consultant Stock Compensation Plan and all similar plans has/have been terminated and all previously granted rights there under shall have been terminated; and

(iv)   evidence that all options, warrants and similar rights that any person and/or entity may have to acquire any common stock or equity ownership interest in the Seller shall have been terminated and on the Closing Date, no such options, warrants or similar rights exist.

(g)   The Closing . The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at a location mutually agreed upon by the Parties, or by facsimile and overnight courier, commencing at 10:00 a.m. New York time, as promptly as practicable after the execution of this Agreement and the satisfaction of the Conditions Precedent to Close on the specific Closing Date agreed to by the Parties.

(h)   Deliveries at the Closing . At the Closing, (i) the Seller will deliver to the Plaintiffs the various consideration, certificates, instruments, and documents referred to in Section 6(a) below including the payment of $250,000 to EIG Venture Capital, Limited and a general release in the form attached as Exhibit F ; (ii) the Plaintiffs will deliver to the Seller and the Management the various certificates, instruments and documents referred to in Section 6(b) below including a general release in the form attached as Exhibit G ; (iii) the Buyer will duly execute and deliver to the Seller (A) an assumption in the form attached as Exhibit B and (B) such other instruments of assumption as the Plaintiffs and their counsel may request; and (iv) the Management will deliver to the Plaintiffs (A) a general release in the form attached as Exhibit H and all of the items that are described in Sections 2(b)(i) – (iii); 2(c)(i) – (iv); 2(d); and 2(e)(i) – (iv) herein above, and (B) assignment documents evidencing the sale and transfer of the Purchased Management Stock to the Plaintiffs effective as of the Closing Date.

3.   Representations and Warranties of the Seller and Management.  

The Seller and the Management, jointly and severally, represent and warrant to the Plaintiffs that the statements contained in this Section 3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date.

(b)   Articles of Incorporation and Bylaws . A true, complete and correct copy of the Articles of Incorporation and the Amended and Restated Bylaws of the Seller, each as amended to date, are attached to this Agreement as Schedules 3(b)(i) and 3(b)(ii). A copy of the Certificate of Incorporation and Bylaws for the Seller after it reincorporates in Delaware are attached to this Agreement as Schedules 3(b)(iii) and 3(b)(iv) . The Articles of Incorporation and the Bylaws are in full force and effect and the Seller is not in violation or breach of any of the provisions thereof. The Management has delivered to the Plaintiffs true, complete and correct copies of the Articles of Incorporation and the Bylaws of the Seller and all minutes of meetings and written consents in lieu of meeting of the directors and shareholders of the Seller since January 1, 2005.

(c)   Capital Structure .

 

(i)   The authorized capital stock of the Seller consists solely of 50,000,000 shares of common stock, $0.01 par value per share, of which [20,105,867] shares are issued and outstanding (the “Seller Shares”). Management collectively owns [8,983,170] shares of the Seller’s common stock and options to purchase an aggregate additional [8,000,000] common shares, all, free and clear of all Liens (collectively, the “Management Shares and Options”). All of the Seller Shares are and as of the Closing Date will be duly authorized, validly issued, fully paid and non-assessable and not issued in violation of any preemptive rights and the Seller Shares are registered with the SEC and all applicable securities agencies and in accordance with all applicable securities laws and are fully tradable as the registered shares of an Over-the-Counter Bulleting Board company. The Seller Shares are not subject to preemptive rights or rights of first refusal created by statute, the Articles of Incorporation or Bylaws of the Seller, or any agreement to which the Seller or the Management is a party or by which the Seller or the Management is bound. All of the Seller Shares have been issued in compliance with all applicable federal and state securities laws. Other than as disclosed in Schedule 3(c)(i) , there is no outstanding capital stock or other securities of the Seller and no outstanding options, rights or commitments to issue such capital stock or other securities. Other than as disclosed in Schedule 3(c)(ii) , the Seller has never adopted, sponsored or maintained any stock option plan or any other plan or entered into any contract providing for equity compensation to any Person and, as of the Closing Date, all such rights and plans (if any) shall have been terminated and cancelled.

 

(ii)   Other than as disclosed in Schedule 3(c)(iii) , there is no subscription, option, warrant, call, right, agreement or commitment relating to the issuance, sale, transfer or delivery by the Seller or the Management (including any right of conversion or exchange under any outstanding security or other instrument) of any of the Seller Shares or any additional shares of the capital stock of the Seller. Except as disclosed in this Agreement, there are no voting agreements, voting trusts, proxies, powers-of-attorney, shareholder agreements or other agreements or understandings   relating to the voting of the Seller Shares.

 

(iii)   Concurrently with the Closing and the consummation of the transactions described in this Agreement, all of the Management Shares and Options (other than the Purchased Management Stock) shall have been transferred and assigned to the Seller for immediate cancellation (except for the Purchased Management Stock), and following the transfer, assignment and cancellation of the Management Shares and Options (other than the Purchased Management Stock), the sole remaining issued and outstanding shares of common stock and options to purchase common stock of the Seller shall be those set forth on Schedule 3(c)(iv) .

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(iv)   From the date of the execution of this Agreement until the Closing Date, the Seller will not change its capital structure, issue any new shares, options or warrants or incur any secured indebtedness.

(d)   Authorization of Transaction . Subject to approval by the Seller’s shareholders, the Seller and the Management have the requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its and their respective obligations under this Agreement and the Ancillary Agreements. Without limiting the generality of the foregoing, the Board of Directors of the Seller and the Management have duly authorized the execution, delivery, and performance of this Agreement and the Ancillary Agreements. This Agreement and the Ancillary Agreements constitute the valid and legally binding obligation of the Seller and the Management, enforceable in accordance with its and their respective terms and conditions.

(e)   Noncontravention. Neither the execution and the delivery of this Agreement or the Ancillary Agreements, nor the consummation of the transactions contemplated hereby or thereby, including the assignments and assumptions referred to in Section 2 above, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, Governmental Entity, or court to which the Seller or the Management is subject or any provision of the charter or bylaws of the Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller or the Management is a party or by which it or they is or are bound or to which any of its or their respective assets (real or personal) is subject or result in the imposition of any Security Interest upon any of its or their respective assets (real or personal), except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Security Interest would not have a Material Adverse Effect on the Seller or on the ability of the Parties to consummate the transactions contemplated by this Agreement.

(f)   No Consents . Except as set forth in Schedule 3(f) no consent, approval, authorization, permit or other order of or filing with any Governmental Entity or any other Person is required in connection with the execution, delivery or consummation of this Agreement or any other agreement contemplated hereby to be executed by the Seller or the Management (including, without limitation, the Ancillary Agreements).

(g)     Brokers’ Fees . The Seller and the management have no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated.

(h)   SEC Reports . The Seller has filed with the SEC all reports required to be filed since January 1, 2006, none of the reports filed with the SEC contained any material statements which were not true and correct or omitted to state any statements of material fact necessary in order to make the statements made not misleading.

 

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(i)     Financial Statements .. The Seller has filed with the SEC the following financial statements of the Seller: (i) audited balance sheets, income statements, statements of shareholders’ equity and statement of cash flows as of and for the fiscal years ended December 31, 2007 and 2006; and (ii) unaudited balance sheets, income statements and cash flow statements as of and for the three months ended March 31, 2008 and June 30, 2008 (collectively, the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated, except that the unaudited Financial Statements may not contain all footnotes required by GAAP (none of which will be material). The Financial Statement presents fairly the financial condition and operating results of the Seller as of the dates indicated, subject in the case of the unaudited financial statements to normal year-end audit adjustments (none of which will be material). The books and records of the Seller are accurate and complete in all material respects and have been maintained in accordance with reasonable business practices. No financial statement of any Person other than the Seller is required by GAAP to be included in the Financial Statements.

(j)   Changes .. Since March 31, 2008, there has not been any change, event or condition of any character, whether or not in the Ordinary Course of Business, whether separately or in the aggregate with other changes, events or conditions, that could reasonably be expected to result in a Material Adverse Effect.

(k)   Legal Compliance . To the best of Management’s Knowledge, the Seller is and at all times has been in material compliance with all Legal Rules applicable to it and has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments, including all applicable federal and state securities laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced or is pending or threatened against the Seller alleging any failure to so comply . The Seller has all applicable approvals and authorizations to operate as a fully reporting Over-the-Counter Bulletin Board company and as of the Closing Date will be up to date in all of its filings and will have filed all reports with the SEC required to be filed by it and will be in full compliance with all applicable federal and state securities laws and regulations that are required for it to continue as a fully reporting Over-the-Counter Bulletin Board company following the Closing.

(l)   Tax Matters .

(i)   Except as set forth in Schedule 3(l)(i) , (1) the Seller has filed all Tax Returns that it was required to file on or before the date hereof, which Tax Returns are, true, correct and complete in all material respects and reflect in all material respects the Tax liabilities of the Seller for the applicable periods; (2) to the Knowledge of the Seller and Management, all Taxes owed by the Seller (whether or not shown on any Tax Return) have been paid; (3) the Seller is not currently the beneficiary of any extension of time within which to file any Tax Return; and (4) no claim has ever been made in writing by any Taxing Authority in a jurisdiction where the Seller does not file Tax Returns that the Seller is or may be subject to taxation by that jurisdiction. There are no Security Interests on any of the assets of the Seller that arose in connection with any failure, or alleged failure, to pay any Tax. The Seller has withheld and paid all required Taxes in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.

 

(ii)   The Seller has deducted, withheld and or remitted to the appropriate Taxing Authority all Taxes required to have been deducted, withheld and/or remitted by the Seller under any applicable Tax law in connection with amounts paid or credited by the Seller to or for the account or benefit of any Person, including without limitation, payments to any of its present or former employees, independent contractors, stockholders, directors, officers, creditors and non-residents of the United States, and the Seller has complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with the amounts paid to such Persons.

 

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(iii)   Schedule 3(l)(iii)   lists all Tax Returns filed by the Seller for taxable periods ending on or after January 1 , 2001 and with respect to those Tax Returns, indicates those Tax Returns that have been audited and those Tax Returns that are currently being audited. The Seller has delivered to the Plaintiffs accurate and complete copies of all such Tax Returns.   The Seller and the Management do not expect any Taxing Authority to assess any additional Taxes for any period for which Tax Returns have been filed.

 

(iv)   The Seller and the Management have not received notice from a Taxing Authority, in writing or through personal contact with a Taxing Authority agent, regarding any action, suit, proceeding, investigation, audit or claim, proposed or pending against or with respect to the Seller in respect of any Taxes and, no such action, suit, proceeding, investigation, audit or claim is pending or threatened.

 

(v)   The Seller has not waived or extended any statute of limitations in respect of any Taxes and no such waiver or extension has been requested from the Seller by any Taxing Authority. The Seller has not agreed to any extension of time with respect to a Tax assessment or deficiency. The Seller has not entered into any closing agreement with the IRS pursuant to Code Section 7121 or any similar agreement with any other Taxing Authority. There are no outstanding rules for, or requests for rulings with any Tax Authority that are, or if issued would be, binding on the Seller. No power of attorney currently in force has been granted by the Seller concerning any Tax matter.

 

(vi)   The Seller has disclosed on its federal Tax Returns all positions taken therein that could give rise to a substantial understatement of federal Income Tax within the meaning of Code Section 6662. The Seller is not a party to any Tax allocation or Tax sharing agreement, and has no Liability for Taxes of any Person (other than itself) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. The Seller has not agreed to, nor is it required to make, any adjustment under Code Section 481.

 

(m)   Real Property . Schedule 3(m) lists all real property owned by or leased or subleased to the Seller. The Seller has delivered to the Plaintiffs correct and complete copies of the leases and subleases listed on Schedule 3(m) . To the Knowledge of Management, each lease and sublease listed on Schedule 3(m) of the is legal, valid, binding, enforceable, and in full force and effect, except where the illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness would not have a Material Adverse Effect. Schedule 3(m) lists and describes briefly all real property that any of the Seller owns. From and after the Closing Date, all of the foregoing leases to which the Seller is a party shall have been terminated and the Seller shall have no further Liability or obligation arising out of or related to any of the foregoing leases. With respect to each such parcel of owned real property:

(i)   except as reflected on Schedule 3(m) , the Seller has good and marketable title to the parcel of real property, free and clear of any Security Interest, easement, covenant, or other restriction, except for installments of special assessments not yet delinquent and recorded easements, covenants, and other restrictions which do not impair the current use, occupancy, or value, or the marketability of title, of the property subject thereto;

 

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(o)   Contracts . Schedule 3(o) lists all written contracts and other written agreements to which the Seller is a party, the performance of which will involve consideration in excess of $10,000. The Seller has delivered to the Plaintiffs a correct and complete copy of each contract or other agreement listed in Schedule 3(o ) , each of which will be assigned to the Buyer and all Liabilities thereunder assumed by the Buyer as of the Closing Date.

(p)   Litigation.   Schedule 3(p)   sets forth each instance in which the Seller or the Management (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction, except where the injunction, judgment, order, decree, ruling, action, suit, proceeding, hearing, or investigation would not have a Material Adverse Effect. Except as set forth in Schedule 3(p) , there is no suit, action, hearing, claim or litigation, or legal, administrative, arbitration or other proceeding (whether civil, criminal, administrative, judicial, whether formal or informal, whether public or private, including, without limitation, workers’ compensation and employment related claims) (“Litigation”) pending or, to the Knowledge of the Seller or Management, threatened against or affecting the Seller or any of the Seller’s properties or assets, nor to the Knowledge of the Seller or Management, any investigation pending or threatened against or affecting, the Seller or any of the Seller’s properties or assets, before any Governmental Entity. To the Knowledge of the Seller and Management, there is no Basis to believe that any such Litigation or investigation may be brought against the Seller or any of its properties or assets (including, to the Knowledge of the Seller or Management, no unreported incidents that could reasonably be expected to lead to any workers’ compensation claims against the Seller). None of the matters set forth in Schedule (3)(p)   could reasonably be expected to have a Material Adverse Effect on the Seller or could reasonably be expected to materially adversely affect the ability of the Seller or the Management to consummate the transactions contemplated hereby. Except as set forth in Schedule 3(p) , during the past five (5) years, the Seller has not been made a party to or become the subject of, nor to the Knowledge of the Seller and Management threatened to be made a party to or become the subject of, any Litigation, and, to the Knowledge of the Seller and Management, there is no Basis for any present or future Litigation against the Seller.

 

(q)   Environmental, Health, and Safety Matters .

(i)   To the best of the Management’s Knowledge, the Seller is in compliance with Environmental, Health, and Safety Requirements, except for such noncompliance as would not have a Material Adverse Effect. Without limiting the generality of the foregoing, the Seller has obtained and complied with, and is in compliance with, all permits, licenses and other authorizations that are required pursuant to Environmental, Health and Safety Requirements for the occupation of its facilities and the operation of its business; a list of all such permits, licenses and other authorizations (if any) are set forth on Schedule 3(q)(i) .

 

(ii)   The Seller has not received any written notice, report or other information regarding any actual or alleged material violation of Environmental, Health, and Safety Requirements, or any material liabilities or potential material liabilities, whether accrued, absolute, contingent, unliquidated or otherwise, including any investigatory, remedial or corrective obligations, relating to the Seller or its facilities arising under Environmental, Health, and Safety Requirements, the subject of which would have a Material Adverse Effect.

(iii)   Except as set forth in Schedule 3(q)(iii) , the present and former activities of the Seller comply and have always complied in all material respects with all applicable Environmental Laws.

(iv)   This Section 4 contains the sole and exclusive representations and warranties of the Seller and Management with respect to any environmental, health, or safety matters, including without limitation any arising under any Environmental, Health, and Safety Requirements.

(r)   Labor Matters .     Except as set forth in Schedule 3(r) , the Seller is not delinquent in any payment to any of its employees, consultants, leased employees or independent contractors for any wages, salaries, commissions, bonuses, or other compensation for any services performed for it to the date of this Agreement or the Closing Date, The Seller has withheld and paid to the appropriate Governmental Entity, or is holding for payment not yet due to such Governmental Entity, all amounts required to be withheld from employees of the Seller and is not liable for any arrears of material wages, taxes, penalties or other sums for failure to comply with any of the foregoing. The Seller has properly classified each of its respective employees as employees and its independent contractors as independent contractors. On the Closing Date, the Seller will have no Liability or obligation owing to any of its Closing Date or former employees or independent contractors for any wages, salaries, commissions, bonuses, severance or other compensation or payments for any services performed for it to Closing Date.

(s)   Shell Company. As of the Closing, the Seller will be a shell company with no operations and no Liabilities, Liens, Litigation, encumbrances or Indebtedness that is up to date in its filings and in compliance with all applicable federal and state securities laws and regulations and its common stock will be traded on the Over-the-Counter Bulletin Board.

(t)   Interested Party Transactions . As of the Closing, the Seller is not indebted to any of the directors, officers or employees of the Seller (except for amounts due as salaries, bonuses, commissions and reimbursements of expenses in the Ordinary Course of Business), and no such Person is indebted to the Seller.

 

(u)   Absence of Undisclosed Liabilities . The Seller does not have any Liability except for (a) Liabilities set forth and itemized in Schedule 3(u) , (b) Liabilities arising in the Ordinary Course of Business since the date of its last Form 10-Q filed with the SEC, and (c) Liabilities reflected or reserved against on the Seller’s balance sheet or disclosed in the accompanying notes thereto, which individually or in the aggregate are not material and are of the same character and nature as the Liabilities quantified on the face of the balance sheet, none of which results from or relates to any breach of Contract, breach of warranty, tort, infringement or breach of Law or arose out of any Litigation. The Seller has not guaranteed any obligation of any officer, director, employee of shareholder of Seller, or any other Person.

 

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(v)   Absence of Undisclosed Options or Rights to Acquire Seller Shares . Except as set forth and itemized in Schedules 3(v) , the Seller has not issued and no person or entity has any rights or options to acquire any of the Seller’s stock.

(w)   Control of Seller . Following the Plaintiff’s acquisition of the Purchased Management Stock, the Plaintiffs will own and control a majority of the Seller’s stock and in accordance with the Seller’s Articles and Bylaws, the Plaintiff will have voting control and the right to control the operations and actions of the Seller.

(x)   Disclaimer of Other Representations and Warranties . The Seller and the Management shall not be deemed to have made to Plaintiffs any representations or warranties other than those expressly made in this Section 3 and 4.

4.   Representations and Warranties of the Buyer.

The Buyer and the Management, jointly and severally, represent and warrant to the Plaintiffs that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date.

(a)   Organization of the Buyer . The Buyer is a newly formed corporation duly organized, validly existing, and in good standing under the laws of the State of Tennessee. The Buyer was formed specifically for this transaction.

(b)   Authorization   of Transaction .. The Buyer and the Management have all requisite corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its and their respective obligations under this Agreement and the Ancillary Agreements. This Agreement and the Ancillary Agreements constitute the valid and legally binding obligation of the Buyer and the Management (where applicable), enforceable in accordance with their respective terms and conditions.

(c)   Brokers’ Fees . The Buyer and the Management have no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement or the Ancillary Agreements for which the Seller could become liable or obligated.

5.   Covenants.

The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing.

(a)   Use of Commercially Reasonable Efforts . The Seller, the Buyer, the Management and the Plaintiffs shall cooperate with each other and use all their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things necessary, proper or advisable on their respective parts to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements as soon as reasonably practicable. In exercising the foregoing right, each of the Seller, the Buyer, the Management and the Plaintiffs shall act reasonably and as promptly as reasonably practicable.

 

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(b)   Notices and Consents . The Seller and the Management will give any notices to third parties, and the Seller and the Management will use its commercially reasonable efforts to obtain any third party consents, that are necessary to consummate the transactions described in this Agreements and that the Plaintiffs reasonably may request. All of the Parties will give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters referred to herein. In connection with the foregoing, the Parties agree that promptly following the execution of this Agreement the Management shall (a) cause ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLP to prepare a Proxy that will (i) be sent to the Plaintiffs for their review and approval prior to being forwarded to the SEC and the Seller’s shareholders, and (ii) seek approval by the Seller’s shareholders of the transactions described herein, and (b) call a shareholders meeting seeking approval of the transactions described herein and transmit the Proxy to all of the Seller’s shareholders and take any required actions necessary to seek approval of the transactions described herein by the Seller’s shareholders.

(c)   Operation of Business . The Seller and the Management will not engage in any practice, take any action, or enter into any transaction outside the Ordinary Course of Business.

(d)   Full Access . The Seller and the Management will permit representatives of the Plaintiffs to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Seller to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to the Seller. The Plaintiffs will treat and hold as such any Confidential Information they receive from the Management and the Seller in the course of the reviews contemplated by this Section 5(d), will not use any of the Confidential Information except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will return to the Seller all tangible embodiments (and all copies) of the Confidential Information which are in their possession.

(e)     Notice of Developments .

(i)   The Seller and the Management shall promptly notify the Plaintiffs in writing of any development causing a breach of any of its or their respective representations and warranties in Section 3 above. Unless the Plaintiffs has the right to terminate this Agreement pursuant to Section 7(a)(ii) below by reason of the development and exercises that right within the period of 20 business days, the written notice pursuant to this Section 5(e)(i) will be deemed to have amended the Schedules or otherwise to have qualified the representations and warranties contained in Section 3 above, and to have cured any misrepresentation or breach of warranty that otherwise might have existed under this Agreement by reason of the development.

(ii)   Each Party will give prompt written notice to the other Party of any material adverse development causing a breach of any of its own representations and warranties in Section 3 and Section 4 above. No disclosure by any Party pursuant to this Section 5(e)(ii), however, shall be deemed to amend this Agreement or to prevent or cure any misrepresentation or breach of warranty.

 

(f)   Irrevocable Proxy . The Plaintiffs hereby grants the Seller’s Board of Directors an irrevocable proxy to vote the Plaintiffs’ shares of common stock of the Seller in favor of the approval of this Agreement in connection with the shareholder approval of this Agreement. This proxy is coupled with an interest and shall not expire unless this Agreement has terminated.

 

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(g)   Cooperation with Counsel . Prior to and subsequent to the Closing, the Plaintiffs shall cooperate with the Seller’s and the Management’s counsel in connection with the preparation of any SEC filings, including, but not limited to the Proxy. The Parties acknowledge and agree that (1) the Management and its legal counsel shall be responsible along with the Seller (pre-Closing) to prepare and file all SEC filings, including, but not limited to the Proxy that are necessary to obtain approval for and consummate the transactions described in this Agreement and the Ancillary Agreements, and (2) the Management and the Seller (pre-Closing) shall be responsible for the payment of all transaction expenses related to negotiation, preparation and consummation of the transactions described in this Agreement and for the preparation and filing of all SEC filings that are due prior to or on the Closing Date, including, but not limited to the Proxy and the Form 10-Q for the quarter ending June, 2008 (and September, 2008, if applicable) that are necessary to obtain approval for and consummate the transactions described in this Agreement, provided, however, the Plaintiffs shall pay for or reimburse the Seller for the filing fees and Registered Agent’s fees and expenses incurred in connection with the reincorporation in Delaware.

(h)   California Litigation . Prior to the Closing, the Seller shall have settled the California Litigation, and in any event, if there has not been a settlement of the California Litigation, the Management shall, jointly and severally, indemnify, defend and hold harmless the Plaintiffs against any and all losses suffered, incurred or sustained by them or the Seller. All parties to the California Litigation will pay their own expenses, including attorneys’ fees and costs of the litigation, and will provide general releases to all parties of the California Litigation, provided, however, that from and after the Closing Date, the Seller will have no further Liability or obligations relating to the settlement of the California Litigation. If the California Litigation is not settled as of the Closing, the Management shall have the exclusive authority to control the California Litigation as long as they timely pay all attorneys’ fees and costs.

(i)   Voting of the Management’s Shares . At the shareholders meeting called to consider the transaction contemplated by this Agreement, the Management agrees to vote their shares of common stock in connection with the vote of the majority of other shares which vote for or against the proposal to sell the assets of the Seller to the Buyer.

(j)   Surrender of Ownership . At the Closing, the Management will return to the treasury of the Seller for cancellation and Seller will cancel for no consideration all outstanding shares of capital stock, stock options and warrants of the Seller (other than the Purchased Management Stock) that are directly and/or indirectly owned and/or controlled by the Management.

(k)   Amendment and Restatement of Bylaws . As soon as practicable, the Seller shall amend and restate its Bylaws in the form attached as Schedule 3(b)(ii).

(i)   the Seller’s and the Management’s representations and warranties set forth in Sections 3 and 4 are true and correct in all material respects at and as of the Closing Date;

(ii)   the Seller and the Management shall have performed and complied with all of their covenants under this Agreement in all material respects through the Closing;

(iii)   there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;

(iv)   the Seller and the Management shall have delivered to the Plaintiffs a certificate to the effect that each of the conditions specified above in Section 6(a)(i)-(iii) is satisfied in all respects;

(v)   the Plaintiffs shall have received from counsel to the Buyer, Seller and Management an opinion of counsel as attached as Exhibit I , which is reasonably acceptable to legal counsel to the Plaintiffs, addressed to the Plaintiffs, and dated as of the Closing Date;

(vi)   the Plaintiffs shall have received from the Seller and the Management executed general releases in the form attached as Exhibits F   and H ;

(vii)   all actions to be taken by the Seller and the Management in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents, including the Proxy, required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Plaintiffs; and

(viii)   the Seller’s shareholders shall approve the sale of assets and all other transactions contemplated by this Agreement at a meeting called for that purpose.

(ix)   all Assumed Liabilities, contractual obligations, Liabilities and Indebtedness of the Seller shall have been assigned to and assumed by the Buyer as of the Closing Date with the Seller having been relieved of all Liability and obligations for all such Assumed Liabilities, Contractual Obligations, Indebtedness, Liability, and obligations.

(x)   all Liens, encumbrances, security agreements, Indebtedness, Security Interests, financing statements, and mortgages on the assets (personal or real property) of the Seller shall have been terminated.

(xi)   all Leases to which the Seller is a party or to which the Seller has any Liability or obligation shall have been terminated as of the Closing Date.

(xii)   the Seller and the Management shall have delivered to the Plaintiffs all monies and items to be delivered pursuant to Section 2 of this Agreement, including, but not limited to, $250,000 payment to EIG Venture Capital, Limited, and the Purchased Management Stock, all in a form reasonably satisfactory to Plaintiffs’ counsel.

(xiii)   the Seller and the Management shall have delivered all Schedules to this Agreement to Plaintiffs’s counsel and Plaintiffs’ counsel shall be satisfied with the form of all such Schedules.

 

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(xiv)   the Buyer shall have hired all employees of the Seller as of the Closing Date and shall have assumed and paid all amounts owing to such employees by the Seller.

(ii)   Plaintiffs may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing in the event (A) the Seller has within the then previous 20 business days given the Plaintiffs any notice pursuant to Section 5(e)(i) above and (B) the development that is the subject of the notice has had a Material Adverse Effect;

(iii)   the Plaintiffs may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing (A) in the event the Seller or the Management has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Plaintiffs has notified the Seller of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach, provided , however , that the Plaintiffs may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing (and without providing a notice and cure period to the Seller and the Management) in the events that (i) the Seller does not file an Information Statement on Schedule 14C relating to the Seller’s reincorporation in Delaware with the SEC on or before September 30, 2008, or (ii) the Seller does not file a Preliminary Proxy Statement relating to the transactions described in this Agreement with the SEC on or before October 31, 2008, or (B) if the Closing shall not have occurred on or before December 31, 2008, by reason of the failure of any condition precedent under Section 6(a) hereof (unless the failure results primarily from the Plaintiffs themselves breaching any covenant contained in this Agreement); and

(iv)   the Seller may terminate this Agreement by giving written notice to the Plaintiffs at any time prior to the Closing (A) in the event the Plaintiffs has breached any material covenant contained in this Agreement in any material respect, the Seller has notified the Plaintiffs of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach or (B) if the Closing shall not have occurred on or before December 31, 2008, by reason of the failure of any condition precedent under Section 6(b) hereof (unless the failure results primarily from the Seller itself breaching any representation, warranty, or covenant contained in this Agreement).

(b)   Effect of Termination . If any Party terminates this Agreement pursuant to Section 7(a) above, all rights and obligations of the Parties under this Agreement shall terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); except, that the confidentiality provisions contained in Section 5(d) above shall survive termination.

8.   Additional Agreements ..

(a)   Conditions to the Transaction . Each Party shall take all reasonable actions necessary to comply promptly with all Legal Rules, which may be imposed on such Party with respect to the transactions contemplated hereby and shall promptly cooperate with and furnish information to each other Party in connection with any such requirements imposed upon each other Party or affiliate of each other Party in connection with such transactions. Each Party shall take, and shall cause its affiliates to take, all reasonable actions to obtain (and to cooperate with each other Party and its affiliates in obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity, or other third party, required to be obtained or made by such Party or its affiliates in connection with the transactions or the taking of any action contemplated thereby or by this Agreement

 

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(b)   Tax Returns of the Seller; Responsibility for Payment of Taxes Post-Close .

The Seller shall in good faith prepare or cause to be prepared (and submit to the Buyer and the Management for their respective review and comment which comments the Seller shall consider and (if applicable) incorporate before filing) and file or cause to be filed all Tax Returns for the Seller for all periods through the Closing. If, after preparation of a Tax Return or after notice from a Taxing Authority, the Seller determines that the Buyer and Management owe an amount for Assumed Liabilities not already paid, the Seller shall provide the Buyer and Management with written notice of the amount owed, along with a copy of the corresponding Tax Return. The Buyer and Management shall remit the amount owed to the Seller within fifteen (15) business days after receipt of such notice. Additionally, the Buyer and Management shall gross up all payments made by the Buyer and the Management pursuant to this Section 8(b) so that after the Seller pays Taxes on such payment, it will have a net amount equal to the amount it would have been entitled to receive if the payment had not been taxable income to the Seller.

  

9.   Indemnification ..

(a)   Survival .. Except as otherwise expressly provided herein, all covenants and agreements of the Buyer, the Management, and the Seller contained in this Agreement (including those made in the Ancillary Agreements, Exhibits and Schedules hereto) shall survive the Closing, except for any covenant or agreement that expressly provides that it is to be performed for or survive for a given period of time, which shall continue until the last date on which such covenant or agreement expressly provides that it is to be performed or survives. All of the representations and warranties of the Buyer, the Management and the Seller contained in this Agreement (including those made in the Ancillary Agreements, Exhibits and Schedules hereto), any updates to the Schedules referenced herein and any other agreement, document or certificate delivered pursuant to this Agreement shall survive the Closing and shall continue in full force and effect for thirty-six (36) months thereafter, other than (a) the representations, warranties, covenants and agreements contained in Sections 2, 3(a), 3(c), 3(d), 3(e), 3(f), 3(g), 3(s), 4(a), 4(b) and 4(c) (the “ Transactional Reps ”), and the agreement contained in Section 8, which shall continue in full force and effect indefinitely and (b) the representations, warranties, covenants and agreements contained in Sections 5.11(b) ,     3(h), 3(k), 3(l), 3(n) and 3(q) which shall continue in full force and effect until the expiration of their respective statute of limitations (the “ Statutory Reps ”). In the event that a notice of action or claim for indemnification under this Section is given within the applicable survival periods set forth above, the representation, warranty, covenant or agreement that is the subject of such indemnification action or claim shall survive with respect to such action or claim until such action or claim is finally resolved.

(b)   Indemnification by the Buyer and Management . Except as otherwise expressly provided in this Section, on and after the Closing Date, the Buyer and the Management shall, jointly and severally, defend, indemnify and hold harmless the Plaintiffs and the Seller and each of their respective affiliates, partners, officers, directors, employees, agents, successors and assigns (collectively, “ Plaintiffs’ Indemnified Persons ”), and shall reimburse the Plaintiffs’s Indemnified Persons, for, from and against, each and every demand, claim, cost, expense, loss, Liability, judgment, damage, fine, penalty and fee including, without limitation, reasonable attorneys’ fees (individually, a “ Loss ” and collectively, the “ Losses ”) imposed on or incurred by any of the Plaintiffs’s Indemnified Persons, directly or indirectly, relating to, resulting from or arising out of (i) any breach of or inaccuracy in any representation or warranty of the Buyer or the Management under this Agreement, any Ancillary Agreement, any Schedule or Exhibit hereto or any agreement, certificate or other document delivered or to be delivered hereunder, determined in all cases without regard to the terms “material” “materially” “Material Adverse Effect” or “Material Adverse Change”, (ii) any breach, default or non-fulfillment of any covenant, agreement or other obligation of the Buyer or the Management under this Agreement, any Ancillary Agreement, any Schedule or Exhibit hereto or any agreement, certificate or other document delivered or to be delivered hereunder or thereunder, or (iii) any Third Party Claim that may be brought against any member of Plaintiffs or the Seller or any affiliated person or entity based on or arising out of the entry into this Agreement or consummation of the transactions described herein by the Plaintiffs.

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(c)   Notice and Defense of Third-Party Claims . If any action, claim or proceeding shall be brought or asserted by a third party (a “ Third Party Claim ”) against an indemnified party or any successor thereto (the “ Indemnified Person ”) in respect of which indemnity may be sought under this Section from an indemnifying person or any successor thereto (the “ Indemnifying Person ”), the Indemnified Person shall give prompt written notice of such Third Party Claim to the Indemnifying Person who shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Person and the payment of all expenses; except that any delay or failure to so notify the Indemnifying Person shall relieve the Indemnifying Person of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. The Indemnified Person shall have the right to employ separate counsel in any such Third Party Claim and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Person unless both the Indemnified Person and the Indemnifying Person are named as parties and counsel selected by the Indemnifying Person determines that the representation by the same counsel is inappropriate. In the event that the Indemnifying Person, within ten (10) days after notice of any such Third Party Claim, fails to assume the defense thereof, the Indemnified Person shall have the right to undertake the defense, compromise or settlement of such Third Party Claim for the account of the Indemnifying Persons, subject to the right of the Indemnifying Person to assume, at its expense, the defense of such Third Party Claim with counsel satisfactory to the Indemnified Person at any time prior to the settlement, compromise or final determination thereof. Anything in this Section to the contrary notwithstanding, the Indemnifying Person shall not, without the Indemnified Person’s prior written consent, settle or compromise any Third Party Claim or consent to the entry of any judgment with respect to any Third Party Claim other than in accordance with the following sentence. The Indemnifying Person may, without the Indemnified Person’s prior written consent, settle or compromise any such Third Party Claim or consent to entry of any judgment with respect to any such Third Party Claim that requires solely the payment of money damages by the Indemnifying Person and that includes as an unconditional term thereof the release by the claimant or the Plaintiffs of the Indemnified Person from all Liability with respect to such Third Party Claim.

(d)   Non-Third Party Claims . An Indemnified Person will notify the Indemnifying Person in writing promptly of its discovery of any matter that does not involve a Third Party Claim in respect of which indemnity may be sought under this Section, which written notice shall specify the nature of the claim and the amount of Losses therefor. In the event that the Indemnifying Person does not notify the Indemnified Person in writing that it disputes such claim within thirty (30) days from receipt of such written notice of claim, specifying in reasonable detail the basis for contesting such claim, the Indemnifying Person will be deemed to have acknowledged liability for such claim and the amount of Losses therefor and Indemnifying Person shall promptly pay the amount of such Losses to the Indemnified Party. The Indemnified Person will reasonably cooperate and assist the Indemnifying Person in determining the validity of any claim for indemnity by the Indemnifying Person and in otherwise resolving such matters.

 

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10.   Miscellaneous.

(a)   Severability . In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void parts were deleted.

(b)   Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

(c)   Notices and Addresses . All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by Federal Express or similar overnight next business day delivery, or by facsimile delivery followed by overnight next business day delivery, as follows:

To the Plaintiffs:		Sofcon, Limited
		EIG Venture Capital, Limited
		EIG Capital Investments, Limited
		c/o ▇▇▇ ▇▇▇▇▇▇▇▇, President
		EIG Capital
		▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
		▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
		▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
		Facsimile:  (▇▇▇) ▇▇▇-▇▇▇-▇▇▇
With a Copy to:		▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
		Williams, Williams, Rattner & ▇▇▇▇▇▇▇▇, P.C.
		▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇ ▇▇▇
		▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
		Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and to		▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
		▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇ ▇▇▇
		▇▇▇ ▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇
		Facsimile:  (▇▇▇) ▇▇▇-▇▇▇▇

or to such other address as any of them, by notice to the other may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be evidence of successful facsimile delivery. Time shall be counted from the date of transmission.

(d)   Attorney’s Fees . In the event that there is any controversy or claim arising out of or relating to this Agreement or the Ancillary Agreements, or to the interpretation, breach or enforcement thereof, and any action or arbitration proceeding is commenced to enforce the provisions of this Agreement, the prevailing Party shall be entitled to a reasonable attorney's fee, including the fees on appeal, costs and expenses.

(g)   Section or Paragraph Headings . Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part any of the terms or provisions of this Agreement.

(h)   Force Majeure .   Force majeure shall mean no strikes; labor disputes; freight embargoes; interruption or failure in the Internet, telephone or other telecommunications service or related equipment; material interruption in the mail service or other means of communication with the United States; if the Seller shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious act, whether or not such loss shall have been insured; acts of God; outbreak or material escalation of hostilities or civil disturbances, national emergency or war (whether or not declared), or other calamity or crises including a terrorist act or acts affecting the United States; future laws, rules, regulations or acts of any government (including any orders, rules or regulations issued by any official or agency of such government); or any cause beyond the reasonable control of such Party.

(i)   Survival of Representations and Warranties . All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing.

(j)   Press Releases and Public Announcements . No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the other Party; except, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities in which case the disclosing Party will use its reasonable best efforts to advise the other Party prior to making the disclosure.

(k)   No Third-Party Beneficiaries . The terms and provisions of this Agreement are intended solely for the benefit of the Parties hereto and their respective successors and permitted assigns, and it is not the intention of the Parties to confer third-party beneficiary rights and this Agreement does confer any such rights upon any other purpose.

 

(l)   Expenses .. The Plaintiffs, the Management, the Buyer and the Seller will bear their own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

(m)   Drafting. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

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In witness whereof, the undersigned has executed this Asset Purchase Agreement as of the date first written above.

WITNESSES:		DIVERSIFIED PRODUCT INSPECTIONS, LLC
		By:	/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇
			▇▇▇▇ ▇▇▇ ▇▇▇▇, Authorized Member and Manager
		DIVERSIFIED PRODUCT INSPECTIONS, INC.
		By:	/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇
			▇▇▇▇ ▇▇▇ ▇▇▇▇, President
		/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇
		▇▇▇▇ ▇▇▇ ▇▇▇▇
		/s/ ▇▇▇ ▇▇▇▇▇▇▇
		▇▇▇ ▇▇▇▇▇▇▇
		/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
		▇▇▇▇▇▇ ▇▇▇▇▇
		SOFCON, LIMITED
		By:	/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
			▇▇▇ ▇▇▇▇▇▇▇▇, President
		EIG VENTURE CAPITAL, LIMITED
		By:	/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
			▇▇▇ ▇▇▇▇▇▇▇▇, President
		EIG CAPITAL INVESTMENTS, LIMITED
		By:	/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
			▇▇▇ ▇▇▇▇▇▇▇▇, President

 

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EXHIBIT A

▇▇▇▇ OF SALE

EXHIBIT B

ASSIGNMENT AND ASSUMPTION OF ASSUMED LIABILITIES

EXHIBIT C-2

ASSIGNMENT OF STOCK AND OPTIONS FOR CANCELLATION

[Separate from Certificate]

---

 

 

EXHIBIT C-3

ASSIGNMENT OF STOCK

[Separate from Certificate]

---

 

 

EXHIBIT C-4

ASSIGNMENT OF STOCK AND OPTIONS FOR CANCELLATION

[Separate from Certificate]

---

 

 

 

EXHIBIT C-5

ASSIGNMENT OF STOCK

[Separate from Certificate]

---

 

 

 

EXHIIBIT C-6

ASSIGNMENT OF STOCK AND OPTIONS FOR CANCELLATION

[Separate from Certificate]

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EXHIBIT D-1

___________________, 2008

The Board of Directors

Diversified Product Inspections, Inc.

▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Ladies and Gentlemen:

EXHIBIT D-2

___________________, 2008

The Board of Directors

Diversified Product Inspections, Inc.

▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Ladies and Gentlemen:

This resignation letter is being provided pursuant to the terms of a certain Settlement Agreement and Asset Purchase Agreement dated September _____, 2008 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the undersigned hereby tenders his resignation as an Office and Director of Diversified Product Inspections, Inc. effective immediately.

	▇▇▇▇▇▇ ▇▇▇▇▇

 

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EXHIBIT D-3

______________________, 2008

The Board of Directors

Diversified Product Inspections, Inc.

▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Ladies and Gentlemen:

This resignation letter is being provided pursuant to the terms of a certain Settlement Agreement and Asset Purchase Agreement dated September ____, 2008 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the undersigned hereby tenders her resignation as an Office and Director of Diversified Product Inspections, Inc. effective immediately.

 

EXHIBIT D-4

___________________, 2008

The Board of Directors

Diversified Product Inspections, Inc.

▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Ladies and Gentlemen:

This resignation letter is being provided pursuant to the terms of a certain Settlement Agreement and Asset Purchase Agreement dated September _____, 2008 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the undersigned hereby tenders his resignation as an Office and Director of Diversified Product Inspections, Inc. effective immediately.

	▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

 

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EXHIBIT D-5

___________________, 2008

The Board of Directors

Diversified Product Inspections, Inc.

▇▇▇▇ ▇. ▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Ladies and Gentlemen:

This resignation letter is being provided pursuant to the terms of a certain Settlement Agreement and Asset Purchase Agreement dated September _____, 2008 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the undersigned hereby tenders his resignation as an Office and Director of Diversified Product Inspections, Inc. effective immediately.

EXHIBIT E

DIVERSIFIED PRODUCT INSPECTIONS, INC.

CONSENT RESOLUTIONS OF THE BOARD OF DIRECTORS

The undersigned, constituting all of the members of the Board of Directors of Diversified Product Inspections, Inc. , a Florida corporation (the “ Corporation ”), hereby consent, in writing, to the actions embodied in the following resolutions, without a meeting:

RESOLVED , that ▇▇▇ ▇▇▇▇▇▇▇▇ is appointed to the Board of Directors of the Corporation; and be it further

RESOLVED, that, Section 3.01 of the Corporation’s Bylaws is amended to change to permissible number of Directors from a minimum of 3 and a maximum of 9 to a minimum of 1 and a maximum of 5 (the “ Bylaw Amendment ”); and be it further

RESOLVED , that any Officer of the Corporation be, and each of them hereby is, authorized, empowered and directed to file the Bylaw Amendment with the records of the Corporation; and be it further

RESOLVED , that the resignations of ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Officers of the Corporation are hereby accepted; and be it further

RESOLVED , that ▇▇▇ ▇▇▇▇▇▇▇▇, is appointed the sole Officer of the Corporation; and be it further

RESOLVED , that the resignations of ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Directors of the Corporation are hereby accepted.

Dated: _____________________ __, 2008      

▇▇▇▇ ▇▇▇ ▇▇▇▇		▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇		▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇

 

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EXHIBIT F

SELLER’S GENERAL RELEASE

 

This General Release of Seller (this “ Release ”) is being executed and delivered in accordance with Section 2(h) of the Settlement Agreement and Asset Purchase Agreement dated as of September ________, 2008 (the “ Asset Purchase   Agreement ”) by and among Diversified Product Inspections, LLC, a Tennessee limited liability company (the “Buyer”), Diversified Product Inspections, Inc., a Florida corporation (the “Seller”), ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the “Management”) and Sofcon, Limited, a Belize corporation, EIG Venture Capital, Limited, a Belize corporation, and EIG Capital Investments, Limited, a Belize corporation (collectively, the “Plaintiffs”). Capitalized terms used in this Release without definition have the respective meanings ascribed to them in the Asset Purchase Agreement.

 

The Seller acknowledges that execution and delivery of this Release is a condition to the Plaintiffs’ obligation to enter into the Asset Purchase Agreement and to consummate the transactions contemplated by the Asset Purchase Agreement, and that the Plaintiffs are relying on this Release in consummating such transactions.

 

The Seller, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, in order to induce the Plaintiffs to consummate the transactions contemplated in the Asset Purchase Agreement, hereby agrees as follows:

 

Except as provided below, the Seller, on behalf of itself, and each of its Directors, Officers, shareholders and employees, or Persons controlled by, controlling or under common control with Seller (together, “ Related Persons ”), hereby releases and forever discharges the Plaintiffs (individually, a “ Releasee ” and collectively, “ Releasees ”) from any and all claims, demands, proceedings, causes of action, and other liabilities whatsoever, whether known or unknown, absolute or contingent, direct or indirect or nominally or beneficially claimed or possessed, both at law and in equity, which the Seller or any of its respective Related Persons have against the respective Releasees arising contemporaneously with or prior to the Closing Date arising out of or related to the claims asserted in the Pending Litigation (collectively, “ Liabilities ”).

 

The Seller hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter purported to be released hereby. Notwithstanding the preceding, this Release shall not operate, nor shall it be construed, to release the Buyer, Management or Plaintiffs from their respective duties and obligations arising out of the Asset Purchase Agreement.

 

The Seller expressly acknowledges that it has received the advice of counsel prior to signing this Release.

 

The Seller acknowledges that it may hereafter discover facts different from or in addition to those it now knows or believes to be true with respect to the matters released herein. The Seller acknowledges that the releases contained herein shall remain effective in all respects notwithstanding such different or additional facts.

 

If any provision of this Release is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Release will remain in full force and effect. Any provision of this Release held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

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This Release may not be changed except in a writing signed by the person(s) against whose interest such change shall operate. This Release shall be governed by and construed under the laws of the State of Florida without regard to principles of conflicts of law.

 

All words used in this Release will be construed to be of such gender or number as the circumstances require.

 

IN WITNESS WHEREOF, the Seller has executed and delivered this Release as of this ___ day of ________, 2008.

 

	Diversified Product Inspections, Inc.
	By:
		▇▇▇▇ ▇▇▇ ▇▇▇▇
	Its:	President

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EXHIBIT G

PLAINTIFFS’ GENERAL RELEASE

 

This General Release of Plaintiffs (this “ Release ”) is being executed and delivered in accordance with Section 2(h) of the Settlement Agreement and Asset Purchase Agreement dated as of September _______, 2008 (the “ Asset Purchase   Agreement ”) by and among Diversified Product Inspections, LLC, a Tennessee limited liability company (the “Buyer”), Diversified Product Inspections, Inc., a Florida corporation (the “Seller”), ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the “Management”) and Sofcon, Limited, a Belize corporation, EIG Venture Capital, Limited, a Belize corporation, and EIG Capital Investments, Limited, a Belize corporation (collectively, the “Plaintiffs”). Capitalized terms used in this Release without definition have the respective meanings ascribed to them in the Asset Purchase Agreement.

 

The Plaintiffs acknowledge that execution and delivery of this Release is a condition to the Seller’s and Management’s obligations to enter into the Asset Purchase Agreement and to consummate the transactions contemplated by the Asset Purchase Agreement, and that the Seller and Management are relying on this Release in consummating such transactions.

 

The Plaintiffs, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, in order to induce the Seller and Management to consummate the transactions contemplated in the Asset Purchase Agreement, hereby agree as follows:

 

Except as provided below, the Plaintiffs, on behalf of themselves, and each of their respective Directors, Officers, shareholders and employees, or Persons controlled by, controlling or under common control with each Plaintiff (together, “ Related Persons ”), hereby release and forever discharge the Seller and the Management (individually, a “ Releasee ” and collectively, “ Releasees ”) from any and all claims, demands, proceedings, causes of action, and other liabilities whatsoever, whether known or unknown, absolute or contingent, direct or indirect or nominally or beneficially claimed or possessed, both at law and in equity, which the Plaintiffs or any of their respective Related Persons have against the respective Releasees arising contemporaneously with or prior to the Closing Date arising out of or related to the claims asserted in the Pending Litigation (collectively, “ Liabilities ”).

 

The Plaintiffs hereby irrevocably covenant to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter purported to be released hereby. Notwithstanding the preceding, this Release shall not operate, nor shall it be construed, to release the Buyer, Management or Seller from their respective duties and obligations arising out of the Asset Purchase Agreement.

 

The Plaintiffs expressly acknowledge that they have received the advice of counsel prior to signing this Release.

 

The Plaintiffs acknowledge that they may hereafter discover facts different from or in addition to those they now know or believe to be true with respect to the matters released herein. The Plaintiffs acknowledge that the releases contained herein shall remain effective in all respects notwithstanding such different or additional facts.

 

If any provision of this Release is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Release will remain in full force and effect. Any provision of this Release held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

46

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This Release may not be changed except in a writing signed by the person(s) against whose interest such change shall operate. This Release shall be governed by and construed under the laws of the State of Florida without regard to principles of conflicts of law.

 

All words used in this Release will be construed to be of such gender or number as the circumstances require.

 

IN WITNESS WHEREOF, the Plaintiffs have executed and delivered this Release as of this ___ day of ________, 2008.

	SOFCON, LIMITED
	By:
		▇▇▇ ▇▇▇▇▇▇▇▇, President
	EIG VENTURE CAPITAL, LIMITED
	By:
		▇▇▇ ▇▇▇▇▇▇▇▇, President
	EIG CAPITAL INVESTMENTS, LIMITED
	By:
		▇▇▇ ▇▇▇▇▇▇▇▇, President

 

47

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EXHIBIT H

MANAGEMENT’S GENERAL RELEASE

 

This General Release of Management (this “ Release ”) is being executed and delivered in accordance with Section 2(h) of the Settlement Agreement and Asset Purchase Agreement dated as of September _______, 2008 (the “ Asset Purchase   Agreement ”) by and among Diversified Product Inspections, LLC, a Tennessee limited liability company (the “Buyer”), Diversified Product Inspections, Inc., a Florida corporation (the “Seller”), ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the “Management”) and Sofcon, Limited, a Belize corporation, EIG Venture Capital, Limited, a Belize corporation, and EIG Capital Investments, Limited, a Belize corporation (collectively, the “Plaintiffs”). Capitalized terms used in this Release without definition have the respective meanings ascribed to them in the Asset Purchase Agreement.

 

The Management acknowledges that execution and delivery of this Release is a condition to the Plaintiffs’ obligation to enter into the Asset Purchase Agreement and to consummate the transactions contemplated by the Asset Purchase Agreement, and that the Plaintiffs are relying on this Release in consummating such transactions.

 

The Management, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, in order to induce the Plaintiffs to consummate the transactions contemplated in the Asset Purchase Agreement, hereby agrees as follows:

 

Except as provided below, the Management, on behalf of itself, and each Person constituting the Management, and any Person controlled by each of them, controlling or under common control with Management (together, “ Related Persons ”), hereby releases and forever discharges the Plaintiffs (individually, a “ Releasee ” and collectively, “ Releasees ”) from any and all claims, demands, proceedings, causes of action, and other liabilities whatsoever, whether known or unknown, absolute or contingent, direct or indirect or nominally or beneficially claimed or possessed, both at law and in equity, which the Management or any of its respective Related Persons have against the respective Releasees arising contemporaneously with or prior to the Closing Date arising out of or related to the claims asserted in the Pending Litigation (collectively, “ Liabilities ”).

 

The Management hereby irrevocably covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Releasee, based upon any matter purported to be released hereby. Notwithstanding the preceding, this Release shall not operate, nor shall it be construed, to release the Buyer, Seller or Plaintiffs from their respective duties and obligations arising out of the Asset Purchase Agreement.

 

The Management expressly acknowledges that it has received the advice of counsel prior to signing this Release.

 

The Management acknowledges that it may hereafter discover facts different from or in addition to those it now knows or believes to be true with respect to the matters released herein. The Management acknowledges that the releases contained herein shall remain effective in all respects notwithstanding such different or additional facts.

 

If any provision of this Release is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Release will remain in full force and effect. Any provision of this Release held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

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This Release may not be changed except in a writing signed by the person(s) against whose interest such change shall operate. This Release shall be governed by and construed under the laws of the State of Florida without regard to principles of conflicts of law.

 

All words used in this Release will be construed to be of such gender or number as the circumstances require.

 

IN WITNESS WHEREOF, the Seller has executed and delivered this Release as of this ___ day of ________, 2008.

 

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