(a)      federal, state, local, municipal, foreign or other government;

    (b)      governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers);

    (c)     body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or

    (d)     official of any of the foregoing.

    (a)     that individual is actually aware of that fact or matter; or

    (b)     a prudent individual could be expected to discover or otherwise become aware of that fact or matter in the course of conducting a reasonably comprehensive investigation regarding the accuracy of any representation or warranty contained in this Agreement.

    (a)     is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person;

    (b)     does not require authorization by the board of directors or shareholders of such Person (or by any Person or group of Persons exercising similar authority) and does not require any other separate or special authorization of any nature; and

    (c)     is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal, day-to-day operations of other Persons that are in the same line of business as such Person.

    (a)     each other member of such individual’s immediate family;

    (b)     any Person that is directly or indirectly controlled by any one or more members of such individual’s immediate family;

    (c)     any Person in which members of such individual’s immediate family hold (individually or in the aggregate) a Material Interest; and

    (d)     any Person with respect to which one or more members of such individual’s immediate family serves as a director, officer, partner, executor or trustee (or in a similar capacity).

    (a)     any Person that directly or indirectly controls, is directly or indirectly controlled by or is directly or indirectly under common control with such specified Person;

    (b)     any Person that holds a Material Interest in such specified Person;

    (c)     each Person that serves as a director, officer, partner, executor or trustee of such specified Person (or in a similar capacity);

    (d)     any Person in which such specified Person holds a Material Interest; and

    (e)     any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity).

              (a)     Purchase and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing and effective as of the Effective Time, Seller shall sell, convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase and accept from Seller, free and clear of any Encumbrances, all of the issued and outstanding capital stock, warrants, options, convertible securities and other equity interests of the Company (collectively, the “Shares”) and as a result will own all of the equity interests of the Company. From and after the Closing, Seller shall not have any rights with respect to any of the Shares held by it immediately prior to the Closing, and all of the Shares shall be owned and registered solely in the name of Buyer. It is hereby agreed that, at Closing, Buyer shall be the sole holder of any and all equity interests in the Company.

              (b)     Excluded Assets and Liabilities. Notwithstanding any contrary provision of this Agreement, Buyer and Seller acknowledge and agree that the assets and Liabilities listed on Section 2.1(b) of the Disclosure Schedule (collectively, the “Excluded Assets and Liabilities”) are not intended to be included in the transactions contemplated by this Agreement and that Seller may take actions that are reasonably necessary to cause the Company to assign all of its respective right, title and interest in and to such Excluded Assets and Liabilities to Seller (or a person or entity designated by Seller) immediately prior to the Closing.

              (a)     Cash Consideration. On the Closing Date, Buyer shall pay $1,000,000, in immediately available funds, to Seller by wire transfer to an account designated in writing by Seller.

                  (b)     Buyer Common Stock Consideration.

            (i)      Buyer shall pay to Seller shares of common stock of the Buyer, par value of $0.40 per share (such shares will be “restricted securities”) (the “Buyer Common Stock”), having an aggregate Fair Market Value equal to the lesser of (A) $500,000or (B) the sum of (x) the Net Asset Value of the Company as set forth on the Net Asset Value Closing Date Statement and (y) $60,000,to be issued as soon as is reasonably practicable after the date of the issuance (the “Final Notification Date”) of the Federal Aviation Administration TSO authorization letter for the FAA Certification Products (“FAA Certification”). Notwithstanding anything to the contrary contained herein, no Buyer Common Stock shall be issued to Seller until (A) Seller delivers a duly executed Subscription Agreement to Buyer, and (B) Seller delivers a duly executed Lock-up Agreement with respect to the Buyer Common Stock.

            (ii)      As soon as practicable after the Closing but in no event later than 30 days after the Closing Date, Buyer shall review the books and records of the Company. Within said 30-day period, Buyer shall (i) calculate the Net Asset Value as of the Effective Time on the Closing Date, and (ii) prepare a written statement (the “Net Asset Value Closing Date Statement”) that details Buyer’s calculation of the Net Asset Value. Within five Business Days after completion thereof, Buyer shall deliver the Net Asset Value Closing Date Statement to Seller. The Net Asset Value Closing Date Statement shall include sufficient detail with respect to each category of asset and liability reasonably to enable Seller to understand the basis of Buyer’s calculations and, upon request, Buyer shall make the work papers, back-up materials and books and records used in preparing the Net Asset Value Closing Date Statement available to Seller. Following the Closing Date, Buyer shall cause its employees to cooperate fully with Seller, and shall give Seller access to those books, records and premises being transferred to Buyer hereunder, to the extent reasonably necessary for Seller to review and, if applicable, object to Net Asset Value Closing Date Statement. Seller shall have 30 days from the date it receives the Net Asset Value Closing Date Statement to object to any item or calculation on the Net Asset Value Closing Date Statement. If Seller does not object to the Net Asset Value Closing Date Statement within such 30-day period, the Net Asset Value Closing Date Statement shall be deemed final and conclusive with respect to determination of the Net Asset Value and shall be binding on Seller and all parties hereto for such purpose. If Seller objects to any item or calculation on Net Asset Value Closing Date Statement and such objection cannot be resolved by Buyer and Seller within 10 Business Days following such objection, such objection will be resolved by the Independent Accountant, who shall be directed by Buyer and Seller (A) to resolve all such objections in accordance with GAAP within 30 days after selection of such Independent Accountant and (B) to make any necessary changes or revisions to the Net Asset Value Closing Date Statement to reflect such resolution. Within five days after completing its review of the Net Asset Value Closing Date Statement, the Independent Accountant shall deliver the revised Net Asset Value Closing Date Statement (if it determines any revisions are required) to Buyer and Seller. The Net Asset Value Closing Date Statement as revised by the Independent Accountant shall be deemed final and conclusive with respect to determination of the Net Asset Value and shall be binding on all the parties hereto for such purposes. The fees and expenses of the Independent Accountant in resolving all such objections shall be borne one-half by Buyer and one-half by Seller (which may be satisfied by offset against any Earn-out Payment).

                  (c)     Earn-out Payment.

    (i)        Buyer shall pay to Seller one or more additional payments (each an “Earn-out Payment”) equal to an aggregate amount of up to $1,000,000 (the “Maximum Earn-out Amount”), payable in cash as follows: (A) if Buyer and/or the Company achieve Adjusted Gross Company Product Sales equal to or greater than an aggregate amount of $10 million on or before the third anniversary of the Closing Date (the “Sales Target Date”), the Company shall pay one-half of the Maximum Earn-out Amount (i.e., $500,000) (the “Minimum Earn-out Amount”) to Seller; (B) $.05 for each dollar of Adjusted Gross Company Product Sales in excess of $10 million on or before the Sales Target Date, not to exceed an aggregate of $500,000; and (C), with respect to any payment to be made pursuant to (A) and/or (B) of this Section 2.2(c)(i), less any Post-Certification Costs owed by Seller pursuant to Section 2.7 below. Unless an Earn-out Payment Dispute Notice is pending, any Earn-out Payment shall be made as soon as reasonably practicable after such payment becomes due to Seller but in no event later than 90 days therefrom and in accordance with the procedures set forth in Section 2.2(c)(ii) below, provided, however, any Earn-out Payment due pursuant to clause (B) of this Section 2.2(c)(i), shall be paid as soon as reasonably practicable after the end of the applicable Buyer fiscal quarter in which such Earn-out Payment shall have been earned by Seller and in accordance with the procedures set forth in Section 2.2(c)(ii) below. Notwithstanding the foregoing, in the event the Net Asset Value of the Company on the Closing Date (as determined pursuant to Section 2.2(b) above) is less than zero dollars, the Earn-out Payments, if any, shall be reduced on a dollar for dollar basis until such reduction equals the Net Asset Value of the Company on the Closing Date reflected as a positive value. By way of example only, in the event the Company has achieved a total of $15 million in Adjusted Gross Company Product Sales as of the Sales Target Date, the Seller would be entitled to be paid $750,000 ($500,000 + ($0.05 X $5,000,000), provided that, among other things, the Net Asset Value of the Company on the Closing Date is equal to or greater than zero dollars, no disputes are pending between the parties and Buyer is not entitled to any set-off as set forth herein. If, by way of example only, using the numbers in the previous example above, the Net Asset Value of the Company on the Closing Date was equal to a deficit amount of negative ($40,000), the Seller would be entitled to receive $710,000, provided that, among other things, no disputes are pending between the parties and Buyer is not entitled to any further set-off as set forth herein.

    (ii)         Until the Sales Target Date, Buyer will provide to Seller, within three Business Days after filing its quarterly or annual report with the SEC, as the case may be, a report of the Gross Company Product Sales for such quarter and a cumulative total of the Gross Company Product Sales since Closing. Upon request of Seller, Buyer will provide such additional information regarding the Gross Company Product Sales as is reasonably requested by Seller. In no event later than 21 days immediately following written notice from Seller certifying that Seller reasonably believes that an Earn-out Payment has been earned by it pursuant to Section 2.2(c)(i) above and the amount of such Earn-out Payment

    (d)              Outstanding Account Receivable. In the event the Company or Buyer, which must use reasonable best efforts, collects any portion of those certain accounts receivable of Aviation Technology Group, Inc. and Pride Aircraft, Inc. in the aggregate amount of $150,000 and $35,000, respectively (collectively, the “Outstanding A/R”), within 12 months of the Closing Date (the “Accounts Receivable Collection Period”), Buyer shall pay to Seller an amount equal to such amount collected with respect to theOutstanding A/R the within the Accounts Receivable Collection Period. Buyer shall make such payment with Buyer Common Stock having a Fair Market Value equal to the amount collected by the Company or Buyer. Buyer will report to Seller at least quarterly on the progress of such collection efforts and in any event, within 21 days after receiving any payments on the Outstanding A/R. Such Buyer Common Stock shall be issued as soon as reasonably practicable after Buyer receives written notice from Seller that such payment (in the form of Buyer Common Stock) is due. Notwithstanding anything to the contrary contained herein, no Buyer Common Stock shall be issued to Seller until (A) Seller delivers a duly executed Subscription Agreement to Buyer, and (B) Seller delivers a duly executed Lock-up Agreement with respect to the Buyer Common Stock. In the event of a dispute with respect to the amount of the Outstanding A/R collected, Seller and Buyer shall negotiate in good faith to resolve any such dispute with respect to such amounts collected by the Company or Buyer in the Accounts Receivable Collection Period.

    (a)              Seller shall deliver to Buyer:

    (i)                     stock certificates representing the Shares, dully endorsed in blank or accompanied by stock powers in proper form for transfer, with appropriate transfer tax stamps, if any, affixed, together with funds sufficient to pay all Taxes necessary for the transfer, filing or recording thereof;

    (ii)                       a lock-up agreement in the form of Exhibit 2.5(a)(ii), duly executed by Seller (the “Lock-up Agreement”);

    (iii)                       an employment agreement in the form reasonably acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Buyer, duly executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the “▇▇▇▇▇▇ ▇▇▇▇▇▇ Employment Agreement”);

    (iv)                       an employment agreement in the form reasonably acceptable to ▇▇▇▇ ▇▇▇▇ and Buyer, duly executed by ▇▇▇▇ ▇▇▇▇ (the “▇▇▇▇ ▇▇▇▇ Employment Agreement”);

    (v)                       an employment agreement in the form reasonably acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Buyer, duly executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the “▇▇▇▇▇▇ ▇▇▇▇▇▇ Employment Agreement” and together with the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employment Agreement and ▇▇▇▇ ▇▇▇▇ Employment Agreement, the “Employment Agreements”);

    (vi)                       an assignment agreement in the form reasonably acceptable to Seller and Buyer, assigning all of those certain non-disclosure agreements set forth on the schedule attached thereto, duly executed by Seller and the Company;

    (vii)                       written resignation letters of all officers and directors of the Company, and of members of all the boards committees, in the form of Exhibit 2.5(a)(vii), duly executed by such directors and officers;

    (viii)                       a certificate executed by Seller and the Company as to the accuracy of their representations and warranties as of the date of this Agreement and as of the Closing Date in accordance with Section 8.1 and as to their compliance with and performance of their covenants and obligations to be performed or complied with at or before the Closing Date in accordance with Section 8.2;

    (ix)                       a certificate of the Secretary of each of the Seller and the Company certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Seller and the Company, certifying and attaching all requisite resolutions or actions of Seller’s and the Company’s board of directors and shareholders approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein and certifying to the incumbency and signatures of the officers of Seller and the Company executing this Agreement and any other document relating to the transactions contemplated herein;

    (x)                       any and all of the Records of the Company (including, but not limited to, books of account and other financial Records of the Company, the minute books of the Company and other similar Records of the Company); and

    (xi)                       such other documents as Buyer and its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.

    (b)               Buyer shall deliver to Seller:

    (i)                $1,000,000 in cash by wire transfer to an account specified by Seller in a writing delivered to Buyer on the Closing Date;

    (ii)                 the Employment Agreements duly executed by Buyer;

    (iii)                the Investment Letter duly executed by Buyer; and

    (iv)                such other documents as Seller and its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.

    (a)              Buyer’s Right of First Refusal. Before any shares of Seller (the “Seller Shares”) held by a shareholder of the Seller (a “Selling Shareholder”) or any immediate family transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (excluding transfers by gift or operation of law to a Shareholder’s immediate family member), Buyer or its permitted assignee(s) shall have a right of first refusal to purchase the Seller Shares on the terms and conditions set forth in this Section 2.6 (the “Right of First Refusal”).

    (b)              Notice of Proposed Transfer. The Selling Shareholder shall (a) deliver to Buyer a written notice (the “Notice”) stating: (i) the Selling Shareholder’s bona fide intention to sell or otherwise transfer such Seller Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Seller Shares to be transferred to each Proposed Transferee; (iv) the bona fide cash price or other consideration for which the Selling Shareholder proposes to transfer the Seller Shares (the “Offered Price”); and (v) the material terms and conditions of the proposed transfer (the “Offer Terms”) and (b) offer the Seller Shares at the Offered Price and on the Offer Terms to Buyer or its permitted assignee(s).

    (c)              Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, Buyer and/or its permitted assignee(s) may, by giving written notice to the Selling Shareholder, elect to purchase all, but not less than all, of the Seller Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price and on the terms determined in accordance with Section 2.6(d) below.

    (d)              Right of First Refusal Purchase Price. The purchase price (“Right of First Refusal Purchase Price”) for the Seller Shares purchased by Buyer or its permitted assignee(s) under this Section 2.6 shall be the Offered Price, and the terms and conditions of the transfer shall be identical in all material respects to the Offer Terms (the “Terms”) unless otherwise agreed to by Buyer and the Selling Shareholder. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be mutually determined by the selling shareholder and the Board of Directors of Buyer.

    (e)              Payment of the Right of First Refusal Purchase Price. Payment of the Right of First Refusal Purchase Price shall be made in cash (by check), in accordance with the Terms, within 30 days after delivery of the written notice by Buyer as set forth in Section 2.6(c) above.

    (f)              Selling Stockholder’s Right to Transfer. If all of the Seller Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by Buyer and/or its assignee(s) as provided in this Section 2.6, then the Selling Shareholder may sell or otherwise transfer such Seller Shares to that Proposed Transferred at the Offered Price or at a higher price and on the Offer Terms, provided that such sale or other transfer is consummated within 75 days after the date of the Notice and provided further that any such sale or other transfer is affected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section 2.6 shall continue to apply to the Seller Shares in the hands of such Proposed Transferee in the event such Transfer was for less than all of the issued and outstanding shares of capital stock of Seller. If the Seller Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to Buyer, and Buyer and/or its assignees shall again be offered the Right of First Refusal before any Seller Shares held by the Selling Shareholder may be sold or otherwise transferred.

    (g)              Termination of Right of First Refusal; No Sale of Assets. The Right of First Refusal shall terminate as to any Seller Shares 180 days from the Closing Date (the “Right of First Refusal Period”). Seller shall not sell or otherwise transfer all or substantially all of its assets during the Right of First Refusal Period without offering to sell such assets to Buyer using the same procedure as provided in this Section 2.6.

    (h)              Assignment of Right of First Refusal. The Right of First Refusal shall be freely assignable by Buyer to a wholly owned subsidiary thereof at any time.

    (a)              Agreement and Grant. In the event that Seller may be considered to have rights in or own, in whole or in part, the Company’s Intellectual Property Assets, under applicable law, including but not limited to the trademark, copyright and patent laws of the United States (“Seller’s Rights”); for good and valuable consideration, receipt of which is hereby acknowledged, on the Closing Date, Seller does hereby agree to irrevocably assign and hereby does irrevocably assign unto Buyer, all right, title and interest in and to Seller’s Rights, together with the ongoing business, ongoing intent to resume or commence business and the goodwill associated with such Intellectual Property Assets.

    (b)              Cooperation. If required for compliance with any applicable law, regulation and/or for recordation with any governmental agency, Seller shall, without charge to Buyer, but at Buyer’s expense, execute a specific assignment of title to Buyer and do anything else reasonably necessary to enable Buyer to perfect, record or otherwise affect this assignment for patent, copyright or other form of protection for said Intellectual Property Assets anywhere in the world.

    (a)               Seller is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Company Contracts.

    (b)               Complete and accurate copies of the Governing Documents of Seller, as in effect as of the date hereof, have been delivered or made available to Buyer. The Governing Documents are complete and correct and in full force and effect, and the Company is not in violation of any of the provisions of the Governing Documents.

    (a)               This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in law or in equity). Upon the execution and delivery by Seller of each other agreement to be executed or delivered by Seller at the Closing (collectively, the “Seller’s Closing Documents”), each of Seller’s Closing Documents will constitute the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in law or in equity). Seller has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Seller’s Closing Documents to which it is a party and to perform its obligations under this Agreement and, with respect to Seller, the Seller’s Closing Documents, and such action has been duly authorized by all necessary action by Seller’s shareholders and board of directors.

    (b)               Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time): (i) violate or constitute a breach of (A) any provision of any of the Governing Documents of Seller or (B) any resolution adopted by the board of directors or the shareholders of Seller; (ii) violate or constitute a breach of or give any Governmental Body or other Person the right to challenge any of the transactions contemplated herein or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which Seller may be subject; (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by Seller or that otherwise relates to the business of Seller; (iv) cause Buyer to become subject to, or to become liable for the payment of, any Tax; (v) breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any contract; (vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Shares; or (vii) result in any shareholder of Seller having the right to exercise dissenters’ appraisal rights.

    (c)               Except as set forth on Section 3.2(c) of the Disclosure Schedule, Seller is not required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated herein.

    (a)               Seller has good and valid title to, and is the legal and beneficial owner of the Shares (and as of the Closing will have good and valid title to, and will be the legal and beneficial owner of the Shares), free and clear of any Encumbrances. Upon transfer and delivery to Buyer at the Closing, Buyer will have good and valid title to the Shares, free and clear of any Encumbrances. The Shares constitute all of the Shares over which any voting or dispositive power is held by Seller and such Seller does not own, beneficially or otherwise, directly or indirectly, any other capital stock of, or other securities, equity or ownership interest in the Company. The Shares are not subject to any voting trust agreement or other contracts or other restriction of any kind.

    (b)               The Persons set forth on the signature page of this Agreement are the holders of at least 90% of the issued and outstanding shares of capital stock, on a fully-diluted basis, of Seller.

    (a)              Section 4.1(a) of the Disclosure Schedule sets forth a complete and accurate list of the Company’s jurisdiction of incorporation and any other jurisdictions in which it is qualified to do business as a foreign corporation. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Company Contracts. The Company is duly qualified to do business as a foreign corporation in the jurisdictions set forth on Section 4.1(a) of the Disclosure Schedule and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

    (b)               Complete and accurate copies of the Governing Documents of the Company, as currently in effect, have been delivered or made available to Buyer. The Governing Documents are complete and correct and in full force and effect, and the Company is not in violation of any of the provisions of the Governing Documents.

    (c)               The Company has no Subsidiary and, except as disclosed on Section 4.1(c) of the Disclosure Schedule, does not own any shares of capital stock or other securities of any other Person.

    (a)               This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in law or in equity). The Company has the absolute and unrestricted right, power and authority to execute and deliver this Agreement to which it is a party and to perform its obligations under this Agreement and, such action has been duly authorized by all necessary action by shareholders and board of directors of the Company.

    (b)               Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated herein will, directly or indirectly (with or without notice or lapse of time): (i) violate or constitute a breach of (A) any provision of any of the Governing Documents of the Company or (B) any resolution adopted by the board of directors or the shareholders of the Company; (ii) violate or constitute a breach of or give any Governmental Body or other Person the right to challenge any of the transactions contemplated herein or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which the Company may be subject; (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of the Company; (iv) cause Buyer to become subject to, or to become liable for the payment of, any Tax; (v) breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Company Contract; (vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Shares; or (vii) result in any shareholder of the Company having the right to exercise dissenters’ appraisal rights.

    (c)               Except as set forth on Section 4.2(c) of the Disclosure Schedule, the Company is not required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated herein.

    (a)               The authorized capital stock of the Company consists of 1,000,000 shares of common stock, no-par value, of which 899,000 shares are issued and outstanding as of the date hereof. No shares of any class or series of the capital stock of the Company are held as treasury stock. Each of the Company’s issued and outstanding shares are held beneficially and of record by Seller. All of the shares of capital stock of the Company that are issued and outstanding as of the date hereof have been duly authorized and validly issued, are fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any Law, the organizational documents of the Company or any Contract to which the Company is a party or otherwise bound. There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote). There are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which the Company is a party or by which it is bound (i) obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital

    (b)               The Company (a) does not own or control, directly or indirectly, any interest in any other corporation, association, or other business entity, and (b) is not a participant in any joint venture, partnership, limited liability company, business trust or similar arrangement, and (c) does not own or hold of record and/or beneficially any shares or other securities of any class in the capital of any Person.

    (a)               All items included in the Inventories consist of a quality and quantity usable and, with respect to finished goods, saleable, in the Ordinary Course of Business of the Company except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Balance Sheet or the Interim Balance Sheet or on the accounting Records of the Company as of the Closing Date, as the case may be. The Company is not in possession of any inventory not owned by the Company, including goods already sold. All of the Inventories of have been valued at cost. Inventories now on hand that were purchased after the date of the Balance Sheet or the Interim Balance Sheet were purchased in the Ordinary Course of Business of the Company at a cost not exceeding market prices prevailing at the time of purchase. The quantities of each item of Inventories (whether raw materials, work-in-process or finished goods) are not excessive but are reasonable in the present circumstances of the Company.

    (b)               Except for the suppliers named in Section 4.9(b) of the Disclosure Schedule, the Company has no supplier from whom it purchased more than 5% of the total amount of goods and services which it purchased during its most recent full fiscal year. Since the Company’s inception there has not been (i) any material adverse change in the business relationship of the Company with any supplier of merchandise named in Section 4.9(b) of the Disclosure Schedule or (ii) any change in any material term (including credit terms) of the supply agreements or related arrangements with any such supplier.

    (c)               Except for the customers named in Section 4.9(c) of the Disclosure Schedule, the Company does not have any customer to whom it made more than 5% of its total sales during its most recent full fiscal year. Except as set forth in Section 4.9(c) of the Disclosure Schedule, there has not been (i) any material adverse change in the business relationship with any of the Company’s customers named in Section 4.9(c) of the Disclosure Schedule or (ii) any change in any material term (including credit terms) of the sales agreements or related agreements with any such customer. Except as set forth in Section 4.9(c) of the Disclosure Schedule, the Company has not received any material customer complaint concerning its products or services, nor has it had any of its products returned by a purchaser thereof.

    (a)              No Undisclosed Liabilities. Except as set forth in Section 4.10(a) of the Disclosure Schedule, the Company has no Liability.

    (b)              Dividends. Except as set forth in Section 4.10(b) of the Disclosure Schedule, the Company has not declared or paid any dividends or authorized or made any distribution upon or with respect to any class or series of its stock or redeemed or purchased or otherwise acquired any of its stock.

    (c)              Indebtedness. Except as set forth in Section 4.10(c) of the Disclosure Schedule, the Company has not incurred any indebtedness for money borrowed or any other Liabilities or made any loans or advances to any Person.

    (a)              Tax Returns Filed and Taxes Paid. The Company has filed or caused to be filed on a timely basis all Tax Returns and all reports with respect to Taxes that are or were required to be filed pursuant to applicable Legal Requirements. All Tax Returns and reports filed by the Company are true, correct and complete. The Company has paid, or made provision for the payment of, all Taxes that have or may have become due for all periods covered by the Tax Returns or otherwise, or pursuant to any assessment received by the Company. The Company currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made or is expected to be made by any Governmental Body in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Encumbrances on any of the assets of the Company that arose in connection with any failure (or alleged failure) to pay any Tax, and the Company and the Seller have no Knowledge of any basis for assertion of any claims attributable to Taxes which, if adversely determined, would result in any such Encumbrance.

    (b)              Delivery of Tax Returns and Information Regarding Audits and Potential Audits. The Company has delivered or made available to Buyer copies of, and Section 4.11(b) of the Disclosure Schedule contains a complete and accurate list of, all Tax Returns filed since the Company’s inception. No Tax Returns of the Company have been audited or are currently under audit. The Company and Seller have no Knowledge that any Governmental Body is likely to assess any additional taxes for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Taxes of the Company either (i) claimed or raised by any Governmental Body in writing or (ii) as to which the Company or any of Seller have Knowledge.

    (c)              Proper Accrual. The charges, accruals and reserves with respect to Taxes on the Records of the Company are adequate (determined in accordance with GAAP) and are at least equal to the Company’s liability for Taxes. There exists no proposed tax assessment or deficiency against the Company.

    (d)              Specific Potential Tax Liabilities and Tax Situations.

    (i)               Withholding. All Taxes that the Company is or was required by Legal Requirements to withhold, deduct or collect have been duly withheld, deducted and collected and, to the extent required, have been paid to the proper Governmental Body or other Person, without any delay or penalty.

    (ii)               Tax Sharing or Similar Agreements. There is no tax sharing agreement, tax allocation agreement, tax indemnity obligation or similar written or unwritten agreement, arrangement, understanding or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other arrangement relating to Taxes) that will require any payment by the Company .

    (iii)               Consolidated Group. The Company (A) has not been a member of an affiliated group within the meaning of Code Section 1504(a) (or any similar group defined under a similar provision of state, local or foreign law) and (B) has no liability for Taxes of any Person (other than the Company and its Subsidiaries) under Treas. Reg. Sect. 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor by contract or otherwise.

    (iv)               S Corporation. The Company is not an S corporation as defined in Code Section 1361.

    (v)               Taxes with respect to Cancellation of Indebtedness. No Taxes are due or shall become due or be assessed with respect to any cancellation of indebtedness, including, but not limited to, the cancellation of those certain promissory notes listed on Section 8.7 of the Disclosure Schedule.

    (a)               Except as set forth in Section 4.13(a) of the Disclosure Schedule, the Company has no outstanding liability for payment of wages, salaries, bonuses, stock option, stock purchase, incentive compensation, profit sharing or other extraordinary compensation amounts, pensions, or contributions under any Employee Plans (as hereinafter defined) under any written labor or employment contracts, based upon or accruing with respect to those services of the Employees performed prior to the date of this Agreement except for any payments due for the current payment period or not yet due and payable. For purposes of this Agreement, “Employee Plans” means all plans, practices and arrangements, written or unwritten, formal or informal, whether applicable to a group of individuals or a single individual, and whether active, frozen or terminated, providing compensation (other than salary or wages) or other benefits of any type or nature with respect to Employees, including but not limited to all plans providing benefits for such employees that are employee benefit plans as defined in Section 3(3) of ERISA. The Company is in full compliance with its obligations under ERISA. Section 4.13(a) of the Disclosure Schedule contains a true, complete and accurate list of the names, titles, whether full-time or part-time, and current salary and bonus arrangements for all personnel employed by, for or in respect of the Company with respect to the

    (b)               None of the Employee Plans obligates the Company to pay any separation, severance, termination or similar benefit or accelerate any vesting schedule or alter any benefit structure solely as a result of any transaction contemplated by this Agreement or solely as a result of a change in control or ownership within the meaning of any Employee Plan or Section 280G of the Code.

    (c)              Section 4.13(c) of the Disclosure Schedule lists all group health or life insurance, death benefits, pension, severance, profit sharing, retirement, supplemental unemployment, disability, medical, dental, vision, employee assistance, retiree health care and insurance, bonus, extraordinary compensation, incentive, stock option or purchase or other benefit plans, arrangements and practices maintained for or on behalf of the Employees, including plans qualified under Section 401 of the Code (including pension, savings and profit sharing plans and employee stock ownership plans), excess benefit plans, deferred compensation arrangements, employee discounts and matching gift programs. The Company has provided to Buyer copies of all summary plan descriptions provided to Employees, with respect to all plans referred to in Section 4.13(c) of the Disclosure Schedule.

    (a)               Except as set forth in Section 4.14(a) of the Disclosure Schedule:

    (ii)                to the Company’s or Seller’s Knowledge, no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) may constitute or result in a violation by the Company of, or a failure on the part of the Company to comply with, any Legal Requirement or (B) may give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and

    (iii)                the Company has not received, at any time since its formation, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement or (B) any actual, alleged, possible or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

    (b)              Section 4.14(b) of the Disclosure Schedule contains a complete and accurate list of each Governmental Authorization that is held by the Company or that otherwise relates to the Company’s Business or the Shares. Each Governmental Authorization listed or required to be listed in Section 4.14(b) of the Disclosure Schedule is valid and in full force and effect. Except as set forth in Section 4.14(b) of the Disclosure Schedule:

    (i)                the Company is, and at all times since its formation, has been, in full compliance with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Section 4.14(b) of the Disclosure Schedule;

    (ii)                to the Company’s or Seller’s Knowledge, no event has occurred or circumstance exists that may (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization listed or required to be listed in Section 4.14(b) of the Disclosure Schedule or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Governmental Authorization listed or required to be listed in Section 4.14(b) of the Disclosure Schedule;

    (iii)                the Company has not received, at any time since its formation, any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any Governmental Authorization or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of or modification to any Governmental Authorization; and

    (iv)                all applications required to have been filed for the renewal of the Governmental Authorizations listed or required to be listed in Section 4.14(b) of the Disclosure Schedule have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies.

    (a)              Section 4.17(a) of the Disclosure Schedule contains an accurate and complete list, and the Company has delivered to Buyer accurate and complete copies, each of Company Contracts (including, without limitation, all oral and written amendments, modifications and supplements):

    (i)              that involves performance of services or delivery of goods or materials by the Company of an amount or value in excess of $500.00;

    (ii)              that involves performance of services or delivery of goods or materials to the Company of an amount or value in excess of $500.00;

    (iii)              affecting the ownership of, leasing of, title to, use of or any leasehold or other interest in any real or personal property;

    (iv)              involving a sharing of profits, losses, costs or liabilities by the Company with any other Person;

    (v)              containing covenants that in any way purport to restrict the Company’s business activity or limit the freedom of the Company to engage in any line of business or to compete with any Person;

    (vi)              providing for payments to or by any Person based on sales, purchases or profits, other than direct payments for goods;

    (vii)              each power of attorney of the Company that is currently effective and outstanding;

    (viii)              entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by the Company to be responsible for consequential damages; and

    (ix)              each written warranty, guaranty and/or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business.

    (b)              Except as set forth in Section 4.17(b) of the Disclosure Schedule, Seller does not have any rights under, and Seller is not subject to any obligation or liability under, any Contract that relates to the business of the Company.

    (c)               Except as set forth in Section 4.17(c) of the Disclosure Schedule, each Contract identified or required to be identified in Section 4.17(a) of the Disclosure Schedule and which is to be assigned to or assumed by Buyer under this Agreement is in full force and effect and is valid and enforceable in accordance with its terms, is assignable by the Company to Buyer without the consent of any other Person, and no Contract will upon completion or performance thereof have a material adverse affect on the business, assets or condition of the Company or the business to be conducted by Buyer.

    (d)               Except as set forth in Section 4.17(d) of the Disclosure Schedule:

    (i)                the Company is, and at all times since its formation, has been, in compliance with all applicable terms and requirements of each Company Contract;

    (ii)              except for the Outstanding A/R, each other Person that has or had any obligation or liability under any Company Contract is, and at all times since its formation, has been, in full compliance with all applicable terms and requirements of such Contract;

    (iii)              no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a Breach of, or give the Company or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Company Contract;

    (iv)              the Company has not given to or received from any other Person, at any time since its formation, any notice or other communication (whether oral or written) regarding any actual, alleged, possible or potential violation or Breach of, or default under, any Contract.

    (a)               The term “Intellectual Property Assets” means all intellectual property owned or licensed (as licensor or licensee) by the Company in which the Company has a proprietary interest, including: (i) the Company’s name, all assumed fictional business names, trade names, registered and unregistered trademarks, service marks and applications (collectively, “Marks”); (ii) all patents, patent applications and inventions and discoveries that may be patentable (collectively, “Patents”); (iii) all registered and unregistered copyrights in both published works and unpublished works (collectively, “Copyrights”); (iv) all rights in mask works; (v) all know-how, trade secrets, confidential or proprietary information, customer lists, Software, technical information, data, process technology, plans, drawings and blue prints (collectively, “Trade Secrets”); and (vi) all rights in internet web sites and internet domain names presently used by the Company (collectively “Net Names”).

    (b)              Section 4.20(b) of the Disclosure Schedule contains a complete and accurate list and summary description, including any royalties paid or received by the Company, and the Company has delivered to Buyer accurate and complete copies, of all the Company Contracts relating to the Intellectual Property Assets, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available Software programs with a value of less than $50.00 under which the Company is the licensee. There are no outstanding and, to the Company’s or Seller’s Knowledge, no threatened disputes or disagreements with respect to any such Contract.

    (c)               (i) Except as set forth in Section 4.20(c) of the Disclosure Schedule, the Intellectual Property Assets are all those necessary for the operation of the Company’s business as it is currently conducted. The Company is the owner or licensee of all right, title and interest in and to each of the Intellectual Property Assets, free and clear of all Encumbrances, and has the right to use without payment to a Third Party all of the Intellectual Property Assets, other than in respect of licenses listed in Section 4.20(c) of the Disclosure Schedule.

    (ii)                Except as set forth in Section 4.20(c) of the Disclosure Schedule, all former and current employees of the Company have executed written Contracts with the Company that assign to the Company all rights to any inventions, improvements, discoveries or information relating to the business of the Company.

    (d)               (i) Section 4.20(d) of the Disclosure Schedule contains a complete and accurate list and summary description of all Patents.

    (ii)                       All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Closing Date.

    (iii)                No Patent has been or is now involved in any interference, reissue, reexamination, or opposition Proceeding. To the Company’s or Seller’s Knowledge, there is no potentially interfering patent or patent application of any Third Party.

    (iv)                Except as set forth in Section 4.20(d) of the Disclosure Schedule, to the Company’s or Seller’s Knowledge, (A) no Patent is infringed or has been challenged or threatened in any way and (B) none of the products manufactured or sold, nor any process or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other Person.

    (v)               All products made, used or sold under the Patents have been marked with the proper patent notice.

    (e)    (i)          Section 4.20(e) of the Disclosure Schedule contains a complete and accurate list and summary description of all Marks.

    (ii)                None of the Marks have been registered with the United States Patent and Trademark Office.

    (iii)                No ▇▇▇▇ has been or is now involved in any opposition, invalidation or cancellation Proceeding and, to the Company’s or Seller’s Knowledge, no such action is threatened with respect to any of the Marks.

    (iv)                To the Company’s or Seller’s Knowledge, there is no potentially interfering trademark or trademark application of any other Person.

    (v)                No ▇▇▇▇ is infringed or, to the Company’s or Seller’s Knowledge, has been challenged or threatened in any way. To the Company’s or Seller’s Knowledge, none of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark or service ▇▇▇▇ of any other Person.

    (vi)                All products and materials containing a ▇▇▇▇ ▇▇▇▇ the proper federal registration notice where permitted by law.

    (f)    (i)          Section 4.20(f) of the Disclosure Schedule contains a complete and accurate list and summary description of all Copyrights.

    (ii)               All of the registered Copyrights are currently in compliance with formal Legal Requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the date of Closing.

    (iii)                No Copyright is infringed or, to the Company’s or Seller’s Knowledge, has been challenged or threatened in any way. To the Company’s or Seller’s Knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any Third Party or is a derivative work based upon the work of any other Person.

    (iv)                All works encompassed by the Copyrights have been marked with the proper copyright notice.

    (g)    (i)           With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate and complies with industry standards.

    (ii)                The Company has taken reasonable precautions to protect the secrecy, confidentiality and value of all Trade Secrets (including the enforcement by the Company of a policy requiring most employees to execute proprietary information and confidentiality agreements substantially in the Company’s standard form, and all current and most former employees of the Company have executed such an agreement).

    (iii)                The Company has good title to and an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature and, to the Company’s or Seller’s Knowledge, have not been used, divulged or appropriated either for the benefit of any Person (other than Seller) or to the detriment of the Company. No Trade Secret is subject to any adverse claim or, to the Company’s or Seller’s Knowledge, has been challenged or threatened in any way or infringes any intellectual property right of any other Person.

    (h)    (i)           Section 4.20(h) of the Disclosure Schedule contains a complete and accurate list and summary description of all Net Names.

    (ii)                All Net Names have been, or as of Closing will be, registered in the name of the Company and are in compliance with all formal Legal Requirements.

    (iii)                No Net Name has been or is now involved in any dispute, opposition, invalidation or cancellation Proceeding and, to the Company’s or Seller’s Knowledge, no such action is threatened with respect to any Net Name.

    (iv)                To the Company or Seller’s Knowledge, there is no domain name application pending of any other person which would or would potentially interfere with or infringe any Net Name.

    (v)                No Net Name is infringed or, to the Company’s or Seller’s Knowledge, has been challenged, interfered with or threatened in any way. To the Company’s or Seller’s Knowledge, no Net Name infringes, interferes with or is alleged to interfere with or infringe the trademark, copyright or domain name of any other Person.

    (a)               The Company is not now insolvent and will not be rendered insolvent by any of the transactions contemplated herein. As used in this section, “insolvent” means that the sum of the debts and other probable Liabilities of the Company exceed the present fair saleable value of the Company’s assets.

    (b)               Immediately after giving effect to the consummation of the transactions contemplated herein: (i) the Company will be able to pay its Liabilities as they become due in the usual course of its business; (ii) the Company will have assets (calculated at fair market value) that exceed its Liabilities; and (iii) taking into account all pending and threatened litigation, final judgments against the Company in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, the Company will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) as well as all other obligations of the Company.

    (a)               Except as set forth in Section 4.24(a) of the Disclosure Schedule, the Company has made no warranties or guaranties relating to merchandise, including, but not limited to, the Company Products, sold by or through the Business and has no separate return policy. There are no deferred sales plans or similar arrangements with respect to the Business. The only outstanding customer special orders are listed and described in Section 4.24 of the Disclosure Schedule.

    (b)               Except as set forth in Section 4.24(b) of the Disclosure Schedule and except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company’s Business: (a) each product (including, but not limited to, Company Products) manufactured, sold, distributed, supplied or delivered by Company has been in conformity with all applicable contractual commitments and all express and implied warranties with respect to such products, and (b) no material product manufactured, sold, distributed, supplied, or delivered by the Company is subject to any material guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale, or beyond that implied or imposed by applicable law.

    (a)               No representation or warranty or other statement made by the Company or Seller in this Agreement, the Disclosure Schedule, the certificates delivered pursuant to Sections 2.5(a) and 8.4 of this Agreement or otherwise in connection with the transactions contemplated herein contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading, which would likely have a material adverse effect on the Company.

    (b)               Neither the Company nor Seller have Knowledge of any fact that has specific application to the Company (other than general economic or industry conditions) and that may materially adversely affect the Shares, assets, business, prospects, financial condition or results of operations of the Company that has not been set forth in this Agreement or the Disclosure Schedule.

    (a)               This Agreement constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Upon the execution and delivery by Buyer of the Investment Letter, the Employment Agreements and each other agreement to be executed or delivered by Buyer at Closing (collectively, the “Buyer’s Closing Documents”), each of the Buyer’s Closing Documents will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its respective terms subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in law or in equity). Buyer has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the Buyer’s Closing Documents and to perform its obligations under this Agreement and the Buyer’s Closing Documents, and such action has been duly authorized by all necessary corporate action.

    (b)               Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the transactions contemplated herein by Buyer will give any Person the right to prevent, delay or otherwise interfere with any of the transactions contemplated herein pursuant to: (i) any provision of Buyer’s Governing Documents; (ii) any resolution adopted by the board of directors or the stockholders of Buyer; (iii) any Legal Requirement or Order to which Buyer may be subject; or (iv) any Contract to which Buyer is a party or by which Buyer may be bound.

    (a)               an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, P.C., dated the Closing Date, in the form reasonably acceptable to Buyer;

    (b)               the certificate of incorporation and all amendments thereto of the Company, duly certified as of a recent date by the Secretary of State of the jurisdiction of the Company’s incorporation;

    (c)               releases of all Encumbrances in a form reasonably acceptable to Buyer;

    (d)               certificates dated as of a date not earlier than the 30 days prior to the Closing as to the good standing of the Company and payment of all applicable state Taxes by the Company, executed by the appropriate officials of the State of Oregon and each jurisdiction in which the Company is licensed or qualified to do business as a foreign corporation as specified in Section 4.1(a) of the Disclosure Schedule;

    (e)               duly signed resignations (from the applicable board of directors), effective immediately after the Closing, of all officers and directors of the Company and shall take such other action as is necessary to accomplish the foregoing;

    (f)               documents evidencing the termination of any and all employees of the Company (including, without limitation, executive personnel);

    (g)               documents evidencing the cancellation of all of issued and outstanding options of the Company; and

    (h)               such other documents as Buyer may reasonably request for the purpose of: (i) evidencing the accuracy of any of the Company ‘s or Seller’s representations and warranties; (ii) evidencing the performance by the Company or Seller, or the compliance by the Company or Seller with, any covenant or obligation required to be performed or complied with by the Company or Seller; and (iii) evidencing the satisfaction of any condition referred to in this Article 8; or otherwise facilitating the consummation or performance of any of the transactions contemplated herein.

    (a)               by Buyer if a material Breach of any provision of this Agreement has been committed by the Company or Seller and such Breach has not been waived by Buyer;

    (b)               by Seller if a material Breach of any provision of this Agreement has been committed by Buyer and such Breach has not been waived by Seller;

    (c)               by Buyer if any condition in Article 8 of this Agreement has not been satisfied as of the date specified for Closing in the first sentence of Section 2.4 hereof or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement), and Buyer has not waived such condition on or before such date;

    (d)               by Seller if any condition in Article 9 of this Agreement has not been satisfied as of the date specified for Closing in the first sentence of Section 2.4 hereof or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of the Company or Seller to comply with their obligations under this Agreement), and Seller has not waived such condition on or before such date;

    (e)               by mutual consent of Buyer and Seller;

    (f)               by Buyer if the Closing has not occurred on or before August 31, 2007,or such later date as the parties may agree upon, unless Buyer is in material Breach of this Agreement; or

    (g)               by Seller if the Closing has not occurred on or before August 31, 2007,or such later date as the parties may agree upon, unless the Company or Seller are in material Breach of this Agreement.

    (a)              Noncompetition. For a period of three years after the Closing Date, Seller will not solicit or accept for hire services to (i) recreate or reverse engineer the embedded software which is included in the Company Products (including, without but not limited to, Flight Op, OP Integrated or Pegasus Integrated Avionics Systems display products owned by the Company) or (ii) manufacture such Company Products.

    (b)              Nonsolicitation. For a period of three years after the Closing Date, Seller or any Related Persons thereof shall not, directly or indirectly:

    (i)                cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Buyer to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer; or

    (ii)                cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Seller on the Closing Date or within the year preceding the Closing Date to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer.

    (c)              Agreement not to Hire. For a period of three years from Closing, Seller on the one hand and the Company and Buyer on the other agree that they will not hire, retain or attempt to hire or retain any employee or independent contractor of the other for a period of six months after such employee or independent contractor ceases his or her employment or service, or in any way interfere with the relationship between the party and any of its employees or independent contractors.

    (d)        Nondisparagement.

    (i)                For a period of three years after the Closing Date, Seller or any Related Persons will not disparage Buyer or any of Buyer’s shareholders, directors, officers, employees or agents.

    (ii)                For a period of three years after the Closing Date, Buyer or any Related Persons will not disparage Seller or any of Seller’s shareholders, directors, officers, employees or agents.

    (e)              Modification of Covenant. If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Sections 11.4(a) through (d) of this Agreement is invalid or unenforceable, then the parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 11.4 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. This Section 11.4 is reasonable and necessary to protect and preserve Buyer’s legitimate business interests and the value of the Assets and to prevent any unfair advantage conferred on Seller.

    (a)               any Breach of any representation or warranty made by the Company or Seller in (i) this Agreement, (ii) the Disclosure Schedule, (iii) the certificates delivered pursuant to Sections 2.5 and 8.4 of this Agreement (for this purpose, each such certificate will be deemed to have stated that Seller’s and Company’s representations and warranties in this Agreement fulfill the requirements of Section 8.1 hereof as of the Closing Date as if made on the Closing), (iv) any transfer instrument or (v) any other certificate, document, writing or instrument delivered by the Company or Seller pursuant to this Agreement; (b) any Breach of any covenant or obligation of the Company or Seller in this Agreement or in any other certificate, document, writing or instrument delivered by the Company or Seller pursuant to this Agreement; (c) any Liability arising out of the ownership or operation of the Company prior to the Effective Time; (d) any product or component thereof manufactured by or shipped, or any services provided by, the Company, in whole or in part, prior to the Closing Date; (e) any matter disclosed in the Disclosure Schedule; (f) any noncompliance with any bulk sales laws or fraudulent transfer law in respect of the transactions contemplated herein; or (g) any Employee Plan established or maintained by Seller.

    (a)               any Breach of any representation or warranty made by Buyer in this Agreement or in any certificate, document, writing or instrument delivered by Buyer pursuant to this Agreement; or

    (b)               any Breach of any covenant or obligation of Buyer in this Agreement or in any other certificate, document, writing or instrument delivered by Buyer pursuant to this Agreement.

    (a)               If the Closing occurs, Seller will have liability (for indemnification or otherwise) with respect to any Breach of (i) a covenant or obligation to be performed or complied with prior to the Closing Date (other than those in Sections 2.1 and 2.5(b) and Articles 11 and 13 of this Agreement, as to which a claim may be made at any time) or (ii) a representation or warranty (other than those in Sections 3.3, 4.3 4.6, 4.11, 4.19, 4.20, 4.22, 4.23, and 4.25 of this Agreement, as to which a claim may be made at any time), only if on or before the termination of the Earn-Out Period, including any extensions thereof, Buyer notifies Seller or the Company of a claim specifying the factual basis of the claim in reasonable detail to the extent then known by Buyer.

    (b)               If the Closing occurs, Buyer will have liability (for indemnification or otherwise) with respect to any Breach of (i) a covenant or obligation to be performed or complied with prior to the Closing Date (other than those in Article 13 of this Agreement, as to which a claim may be made at any time) or (ii) a representation or warranty (other than that set forth in Section 5.4 above, as to which a claim may be made at any time), only if on or before the termination of the Earn-Out Period, including any extensions thereof, Seller notifies Buyer of a claim specifying the factual basis of the claim in reasonable detail to the extent then known by Seller.

    (a)               Promptly after receipt by a Person entitled to indemnity under Sections 12.2, 12.3 or 12.4 of this Agreement (an “Indemnified Person”) of notice of the assertion of a Third-Party Claim against it, such Indemnified Person shall give notice to the Person obligated to indemnify under such Section (an “Indemnifying Person”) of the assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying Person will not relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is prejudiced by the Indemnified Person’s failure to give such notice.

    (b)               If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section 12.6(a) hereof of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying Person is also a Person against

    (a)               As used in this Article 13, the term “Confidential Information” includes any and all of the following information of Seller, Buyer or the Company that has been or may hereafter be disclosed in any form, whether in writing, orally, electronically or otherwise, or otherwise made available by observation, inspection or otherwise by either party (Buyer on the one hand or Seller and the Company, collectively, on the other hand) or its Representatives (collectively, a “Disclosing Party”) to the other party or its Representatives (collectively, a “Receiving Party”):

    (i)               all information that is a trade secret under applicable trade secret or other law;

    (ii)                all information concerning product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer hardware, Software and computer software and database technologies, systems, structures and architectures;

    (iii)                all information concerning the business and affairs of the Disclosing Party (which includes historical and current financial statements, financial projections and budgets, tax returns and accountants’ materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, client and customer lists and files, contracts, the names and backgrounds of key personnel and personnel training techniques and materials, however documented), and all information obtained from review of the Disclosing Party’s documents or property or discussions with the Disclosing Party regardless of the form of the communication;

    (iv)                all notes, analyses, compilations, studies, summaries and other material prepared by the Receiving Party to the extent containing or based, in whole or in part, upon any information included in the foregoing; and

    (v)                all information exchanged by the parties hereto pursuant to that certain Nondisclosure Agreement, dated November 19, 2006, by and between the Company and Buyer.

    (b)               Any trade secrets of a Disclosing Party shall also be entitled to all of the protections and benefits under applicable trade secret law and any other applicable law. If any information that a Disclosing Party deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Article 13, such information shall still be considered the Confidential Information of that Disclosing Party for purposes of this Article 13 to the extent included within the definition. In the case of trade secrets, each of Buyer, Seller and the Company hereby waives any requirement that the other party submit proof of the economic value of any trade secret or post a bond or other security.

    (a)               Each Receiving Party acknowledges the confidential and proprietary nature of the Confidential Information of the Disclosing Party and agrees that such Confidential Information (i) shall be kept confidential by the Receiving Party; (ii) shall not be used for any reason or purpose other than to evaluate and consummate the transactions contemplated herein; and (iii) without limiting the foregoing, shall not be disclosed by the Receiving Party to any Person, except in each case as otherwise expressly permitted by the terms of this Agreement or with the prior written consent of an authorized representative of Seller with respect to Confidential Information of Seller (each, a “Seller Contact”) or an authorized representative of Buyer with respect to Confidential Information of Buyer (each, a “Buyer Contact”). Each of Buyer and Seller shall disclose the Confidential Information of the other party only to its Representatives who require such material for the purpose of evaluating the transactions contemplated herein and are informed by Buyer or Seller, as the case may be, of the obligations of this Article 13 with respect to such information. Each of Buyer and Seller shall (i) enforce the terms of this Article 13 as to its respective Representatives; (ii) take such action to the extent necessary to cause its Representatives to comply with the terms and conditions of this Article 13; and (iii) be responsible and liable for any breach of the provisions of this Article 13 by it or its Representatives.

    (b)               Unless and until this Agreement is terminated, Seller shall maintain as confidential any Confidential Information (including for this purpose any information of the Company of the type referred to in Sections 13.1(a)(i), (ii) and (iii) of this Agreement, whether or not disclosed to Buyer) of the Company relating to the Company. Notwithstanding the preceding sentence, Seller may use any Confidential Information of the Company before the Closing in the Ordinary Course of Business in connection with the transactions permitted by Section 6.2 hereof.

    (c)               From and after the Closing, the provisions of Section 13.2(a) above shall not apply to or restrict in any manner Buyer’s use of any Confidential Information of Seller relating to the Company.

    (a)               Any Proceeding arising out of or relating to this Agreement or any transactions contemplated herein shall be brought in the courts of the State of Florida, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the Proceeding shall be heard and determined only in any such court and agrees not to bring any Proceeding arising out of or relating to this Agreement in any other court. The parties agree that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum. Process in any Proceeding referred to in the first sentence of this Section may be served on any party anywhere in the world.

    (b)               THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.