Page

1.

THE MERGER

1

1.1

Merger

1

1.2

Effective Time

2

1.3

Certificate of Incorporation, Bylaws, Directors and Officers

2

1.4

Assets and Liabilities

2

1.5

Manner and Basis of Converting Shares

2

1.6

Surrender and Exchange of Certificates

3

1.7

Parent Common Stock

3

1.8

Operation of Surviving Corporation

4

2.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

4

2.1

Organization, Power and Authority, and Subsidiaries

4

2.2

Qualification

4

2.3

Corporate Authority; Binding Obligations

4

2.4

Capitalization of the Company

4

2.5

Company Stockholders

5

2.6

Financial Statements

5

2.7

Governmental Consents

5

2.8

Compliance with Laws and Instruments

5

2.9

Brokers and Finders Fees

6

2.10

Absence of Undisclosed Liabilities

6

2.11

Changes

6

2.12

Schedule of Assets and Contracts

7

2.14

Employees

9

2.15

Employee Benefit Plans; ERISA

9

2.16

Title to Property and Encumbrances

9

2.17

Condition of Properties

10

2.18

Insurance Coverage

10

2.19

Litigation

10

2.20

Licenses

10

Page

2.21

Interested Party Transactions

10

2.22

Questionable Payments

10

2.23

Obligations to or by Stockholders

11

2.24

Disclosure

11

3.

REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION CORP.

11

3.1

Organization; Power and Authority; Etc

11

3.2

Qualification

11

3.3

Corporate Authority; Binding Obligations

11

3.4

Capitalization

12

3.5

Acquisition Corp.

12

3.6

Validity of Shares

13

3.7

SEC Reporting and Compliance

13

3.8

Financial Statements

14

3.9

Governmental Consents

14

3.10

Compliance with Laws and Instruments

14

3.11

No General Solicitation

15

3.12

Brokers and Finders Fees

15

3.13

Absence of Undisclosed Liabilities

15

3.14

Changes

15

3.15

Tax Returns and Audits

16

3.16

Employees

16

3.17

Employee Benefit Plans; ERISA

16

3.18

Property

17

3.19

Litigation

17

3.20

Licenses

17

3.21

Interested Party Transactions

17

3.22

Questionable Payments

17

3.23

Obligations to or by Stockholders

17

3.24

Parent Contracts

17

Page

3.25

Disclosure

18

4.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS

18

5.

ADDITIONAL AGREEMENTS

18

5.1

Information

18

5.2

Additional Agreements

19

5.3

Publicity

19

5.4

Appointment of Directors and Officers

19

5.5

Parent Name Change and Exchange Listing

20

6.

CONDITIONS OF PARTIES OBLIGATIONS

20

6.1

Parent and Acquisition Corp. Obligations

20

6.2

Company Obligations

21

7.

NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES

23

8.

AMENDMENT OF AGREEMENT

23

9.

DEFINITIONS

23

10.

CLOSING

26

11.

TERMINATION PRIOR TO CLOSING

26

11.1

Termination of Agreement

26

11.2

Termination of Obligations

27

12.

MISCELLANEOUS

27

12.1

Notices

27

12.2

Entire Agreement

27

12.3

Expenses

28

12.4

Dispute Resolution

28

12.5

Severability

28

12.6

Successors and Assigns

28

12.7

No Third Parties Benefited

28

12.8

Counterparts

28

12.9

Recitals, Schedules and Exhibits

29

12.10

Section Headings and Gender

29

Page