AGREEMENT AND PLAN OF MERGER

1.1 The Company at Closing

1.2 Effect of the Merger

1.3 Surviving Company

1.3.1 Articles of Incorporation

1.3.2 Bylaws

1.3.3 Board of Directors

1.3.4 PEcoS

1.3.5 Officers

1.3.6 Board of Directors of the Company and PEcoS

1.4 Conversion of Shares

1.4.1 Capital Stock of Merger Sub

1.4.2 Conversion of Company Common Stock

1.4.3 Exchange of Company Certificates

1.4.3.1 Exchange of Company Certificates by Those Company Stockholders That Are Not Accredited Investor

1.4.3.2 Exchange of Company Certificates by Accredited Investors

1.4.4 Cancellation of Company Common Stock

1.4.5 Company Stock Options, Company Warrants and Other Rights to Receive Company Common Stock

1.4.6 Cancellation of Treasury Shares

1.4.7 Escheat

1.5 Consideration

1.5.1 Payment and Allocation of Amount of Purchase Price Payable to Unaccredited Stockholders

1.5.2 Payment and Allocation of the Amount of Purchase Price Payable to Accredited Stockholders Pursuant to Paragraphs 1.5(ii)(a) and (b)

1.5.3 Determination and Payment of Earn-Out Amount

1.5.3.1 Earn-Out Amount

1.5.3.2  Calculation of Earn-Out Amount for a Fiscal Year

1.5.3.3 Operation of the Parent, PEcoS and the Parent’s Nuclear Business

1.5.3.4 Tax Treatment

1.5.3.5 Resolution of Disputes

1.5.3.6 No Other Representations, Warranties or Commitments

1.5.3.7 Payment and Allocation of Earn-Out Amount

1.5.3.8 Earn-Out Amount Limitations

1.5.3.9 Other Representations and Covenants Regarding the Earn-Out Amount

1.5.4 Adjustment to Purchase Price

1.5.5 Intentionally Omitted

1.5.6 Paying Agent Agreement

1.6 Further Assurances

4.1 Escrow

4.1.1 Escrow Agreement Representative

4.2 Shareholder Debt

5.1 Required Withholding

7.1 Organization and Qualification

7.1.1 Authority

7.1.2 Certification

7.1.3 Minute Books

7.1.4 Ledger

7.2 Subsidiaries

7.3 Capitalization

7.3.1 Company Capital Stock

7.3.2 PEcoS Capital Stock

7.3.3 Company Stock Options and Company Warrants

7.3.4 PEcoS Options and Warrants

7.3.5 Other Rights Respecting Stock

7.4 Authority Relative to this Agreement

7.5 No Conflict

7.6 Required Filings and Consents

7.7 Compliance

7.8 Financial Statements

7.8.1 Audited Financials

7.9 Books and Records

7.10 Receivables

7.11 Aggregate Liabilities

7.12 No Undisclosed Liabilities

7.13 Absence of Certain Changes or Events

7.14 Litigation

7.15 Obligations to Employees

7.16 Labor Matters

7.17 Restrictions on Business Activities

7.18 Title to Property

7.18.1 Real Property

7.18.2 Leases

7.18.3 Personal Property

7.19 Taxes

7.20 Environmental Matters

7.20.1 Environmental Law

7.20.2 Hazardous Substance

7.21 Brokers and Payment of Broker’s Fee

7.22 Condition of Plant, Machinery and Equipment

7.23 Intellectual Property.

7.23.1 Ownership; Infringement

7.23.2 Definitions

7.24 Agreements, Contracts and Commitments

7.25 Insurance

7.27 Interested Party Transactions

7.28 Board Approval

7.29 SEC Filings

7.30 Disposition of Assets

7.31 Assets of the Company at Closing

7.32 Sensitive Payments

7.33 Notice

7.34 Business Prospects

7.35 Representations and Warranties Complete

7.36 Survival of Representations and Warranties

8.1 Organization and Qualification

8.2 Merger Sub

8.3 Capitalization

8.4 Authority Relative to this Agreement

8.5 No Conflict

8.6 Required Filings and Consents

8.7 Absence of Certain Changes or Events

8.8 Litigation

8.9 Brokers

8.10 Listing

8.11 Board Approval

8.12 No Breach of Statute or Contract, Governmental Authorizations

8.13 Status of Parent Common Stock

8.14 Survival of Representations and Warranties

9.1 Severance

9.2 Intellectual Property

9.3 Distribution

9.4 Redemptions

9.5 Stock Issuance

9.8 Sales

9.9 Liabilities

9.10 Employee Plans

9.11 Company Contracts and PEcoS Contracts

9.12 Accounting

9.13 Commitments

9.14 Intentionally Omitted

9.15 Litigation

9.16 Tax

9.17 Subsidiaries

9.18 Capital Expenditures

9.19 Other Action

9.20 Inside Transactions

9.21 Agreements

9.22 Termination of Employees; WARN Compliance

9.23 Permitted Dispositions

25.1 Conditions to Obligations of Each Party

25.1.1 Subscription Agreements

25.1.2 Stock Quotation or Listing

25.1.3 No Injunction

25.1.4 Definitive Agreements

25.1.5 Approval

25.1.6 Receipt

25.1.7 Lender Approvals

25.1.8 Escrow Agreement

25.1.9 Paying Agent Agreement

25.1.10 Articles of Merger

25.1.11 No Registration Statement

25.2 Additional Conditions to Obligations of Company

25.2.1 Representations and Warranties

25.2.2 Agreements and Covenants

25.2.3 No Litigation

25.2.4 Consents

25.2.5 Material Adverse Effect

25.2.6 Opinion of Counsel

25.2.7 Release

25.2.8 Other Deliveries

25.3 Additional Conditions to the Obligations of Parent

25.3.1 Representations and Warranties

25.3.2 Agreements and Covenants

25.3.3 No Litigation

25.3.4 Consents

25.3.5 Material Adverse Effect

25.3.6 Termination of Derivative Securities

25.3.7 Title Reports

25.3.8 Survey

25.3.9 Good Standing Certificates

25.3.10 Letter from Broker

25.3.11 Opinion of Counsel

25.3.12 Company Merger Expenses

25.3.13 Other Deliveries

25.3.14 Resignations and Release of Indemnification Agreements

25.3.15 Appraisal Rights

25.3.16 Non-Compete

25.3.17 Due Diligence

25.3.18 Governmental Approvals

25.3.19 No Liens

25.3.20 Recipient Contract and 401(k) Plans

25.3.21 Legacy Waste

25.3.22 Food Safety

25.3.23 Release of Liabilities Other Than Assumed Liabilities

25.3.24 Inter-company Balances

25.3.25 Liabilities of Company and PEcoS at Closing

25.3.26 Material Change to Parent

25.3.27 Financial Assurance Obligations of PEcoS

26.1 Losses

26.2 Indemnification Procedures

26.2.1 Notice of Claim

26.2.2 Defense

26.2.3 Limitations of Right to Assume Defense

26.2.4 Other Limitations

26.2.5 Failure to Defend

26.2.6 Parent’s Rights

26.2.7 Representative Consent

26.3 Limitations on Indemnification

26.3.1 Survival; Time Limitation

26.3.2 Aggregate Amount Limitation

27.1 Notice of Termination; Effect of Termination

27.2 Fees and Expenses

30.1 Notices

30.2 Reference to Exhibits; Schedules

30.3 Counterparts; Facsimile Signatures

30.4 Entire Agreement; Third Party Beneficiaries

30.5 Severability

30.6 Other Remedies; Specific Performance

30.7 Governing Law and Venue

30.8 Rules of Construction

30.9 Assignment

30.10 Amendment

30.11 Extension; Waiver

No.

Exhibit/Schedule

Description

19.  

Schedule 7.18.1

Company Disclosure Schedule: Real Property

20.  

Schedule 7.18.2

Company Disclosure Schedule: Leases

21.  

Schedule 7.18.3

Company Disclosure Schedule: Liens

22.  

Schedule 7.19

Company Disclosure Schedule: Taxes

23.  

Schedule 7.20

Company Disclosure Schedule: Environmental Matters

24.  

Schedule 7.22

Company Disclosure Schedule: Condition of Plant, Machinery and Equipment

25.  

Schedule 7.23

Company Disclosure Schedule: Intellectual Property

26.  

Schedule 7.24

Company Disclosure Schedule: Material Company Contracts

27.  

Schedule 7.25

Company Disclosure Schedule: Insurance

28.  

Schedule 7.26

Company Disclosure Schedule: Governmental Actions/Filings

29.  

Schedule 7.27

Company Disclosure Schedule: Interested Party Transactions

30.  

Schedule 7.33

Company Disclosure Schedule: Notice

31.  

Schedule 7.34

Company Disclosure Schedule: Business Prospects

32.  

Schedule 9.23

Company Disclosure Schedule: Permitted Dispositions

33.  

Schedule 25.3.14

Company Disclosure Schedule: Resignations

1.1

The Company at Closing . The parties acknowledge that at the Closing the assets of the Company on a non-consolidated basis shall consist of the following: (i) all of the issued and outstanding capital stock of PEcoS; (ii) certain fixed assets, including, but not limited to, “Calibration Laboratory Equipment”, described in Schedule 1.1 attached hereto; (iii) all of the Company’s cash and cash equivalents; (iv) all of the Company’s accounts receivable and working capital, (v) goodwill assets of the Company; (vi) 24,000 shares of stock of IsoRay, Inc., (vii) deferred tax assets of the Company existing as of Closing, and (viii) all other assets specifically identified in Schedule 1.1 of the Company Disclosure Schedule as assets of the Company as of the Closing, but specifically excluding those assets of the Company listed on Schedule 9.23 of the Company Disclosure Schedule that are part of the Pre-Closing Distributions, as defined in paragraph 9.23 , (the assets referenced to in (i) through (viii) above, collectively, the “ Assets of the Company at Closing ”). The parties hereto agree that as of the Closing, the Liabilities (as defined in paragraph 7.11 ) of the Company shall consist only of the Lender Debt (as defined in paragraph 7.11 ) and the Shareholder Debt (as defined in paragraph 7.27 ). The Lender Debt and the Shareholder Debt are collectively referred to as the “ Assumed Liabilities ”). At the Closing, the Company and PEcoS (on a consolidated basis) shall have no Liabilities other than the Liabilities at Closing (as defined in paragraph 7.11 ). At the Closing, the Company, consolidated with PEcoS, shall consist of the business and operations of PEcoS, the Assets of the Company at Closing and the Liabilities at Closing (collectively referred to herein as the “ Company at Closing ”).

1.2

Effect of the Merger . The Merger shall have the effects provided in this Agreement and the Washington BCA. Without limiting the generality of the foregoing, at the Effective Time:

(a)

the Merger Sub shall be merged with and into the Company, with the Company being the survivor, and the separate existence of the Merger Sub shall cease (except as may be continued by operation of law);

(b)

the Company shall continue its corporate existence under the laws of the state of Washington, with all of the issued and outstanding shares of capital stock of the Company being owned by the Parent upon the Closing of the Merger;

(c)

the Company shall own all of the Assets of the Company at Closing, including, without limitation, all of the issued and outstanding shares of capital stock of PEcoS;

(d)

subject to the terms, limitations and restrictions of this Agreement, the Surviving Company shall possess all of the rights, privileges, powers and franchises of each of the Constituent Companies, the Assets of the Company at Closing and all property, real, personal and mixed, shall be vested in the Surviving Company;

(e)

all property, rights, privileges, powers and franchises and all and every other interest shall be thereafter as effectively the property of the Surviving Company as they were of the Constituent Companies, and the title to any real estate vested by deed or otherwise in any of the Constituent Companies shall not revert or be in any way impaired by reason of the Merger.

(f)

at the Closing, all rights of creditors of the Constituent Corporations shall be preserved unimpaired, and, subject to the terms, limitations and restrictions of this Agreement (including, without limitation, the terms, limitations and restrictions set forth in paragraph 7.11 ), all Liabilities (as defined in paragraph 7.11 ) of the Company as of the Closing shall attach to the Surviving Company and may be enforced against it to the same extent as if such Liabilities had been incurred or contracted by the Surviving Company.

1.3

Surviving Company . At the Effective Time, the Surviving Company will be organized as follows:

1.3.1

Articles of Incorporation . The Articles of Incorporation of the Surviving Company, as in effect at the Effective Time, as amended by the Articles and Plan of Merger, shall be the Articles of Incorporation of the Surviving Company, until amended or repealed in accordance with the provisions thereof and applicable law.

1.3.2

Bylaws . The bylaws of the Surviving Company, as in effect at the Effective Time, shall be the bylaws of the Merger Sub, until amended or repealed in accordance with the provisions thereof and applicable law.

1.3.3

Board of Directors . The Board of Directors of the Surviving Company shall consist of Dr. Louis F. Centofanti, Larry McNamara and Steve Baughman, until their respective successors are duly elected and qualified in the manner provided in the Articles of Incorporation and Bylaws of the Surviving Company, as such may be amended, or until their earlier resignation or removal or as otherwise provided by applicable law.

1.3.4

PEcoS . PEcoS shall retain its separate existence as a wholly owned subsidiary of the Surviving Company.

1.3.5

Officers . The officers of the Company, as of the Effective Time, shall be Dr. Louis F. Centofanti, President; Larry McNamara, Vice President; and Steve Baughman, Secretary, until their successors are duly elected and qualified in the manner provided in the Articles of Incorporation and bylaws of the Surviving Company or until their earlier resignation or removal or as otherwise provided by applicable law. Each officer of the Company and PEcoS immediately prior to the Effective Time shall, in writing, have (i) resigned as an officer of the Company and PEcoS effective as of the Effective Time, and (ii) shall have fully and completely released and discharged the Company, PEcoS, Parent and the Merger Sub from any and all liability, obligation and responsibility under any and all indemnification agreements and/or undertakings by the Company and/or PEcoS, whether evidenced by or under the Company’s Charter Documents, PEcoS Charter Documents or a separate agreement, all in a manner satisfactory of the Parent, effective as of the Effective Time.

1.3.6

Board of Directors of the Company and PEcoS . The members of the Board of Directors of the Company and PEcoS immediately prior to the Effective Time shall, in writing, have (i) resigned as a director of the Company and PEcoS, effective as of the Effective Time, and (ii) fully and completely released and discharged the Company, PEcoS, Parent and the Merger Sub from any and all liability, obligation and responsibility under any and all indemnification agreements and/or undertakings by the Company and/or PEcoS, whether evidenced by the Company Charter Documents, PEcoS Charter Documents or a separate agreement, all in a manner satisfactory to the Parent, effective as of the Effective Time.

1.4

Conversion of Shares . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or Company Stockholders:

1.4.1

Capital Stock of Merger Sub . Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be exchanged for one hundred (100) fully paid and nonassessable shares of Company Common Stock, and upon the Effective Time of the Merger the Parent shall be the owner, beneficially and of record, of all of the issued and outstanding shares of Company Common Stock.

1.4.2

Conversion of Company Common Stock . All of the shares of the Company Common Stock issued and outstanding immediately prior to the Effective Time of the Merger shall, by virtue of the Merger and without any action on the part of the Company Stockholders, automatically be cancelled and be exchanged for the Purchase Price, as adjusted, as set forth in this Agreement, subject to the terms and provisions of this Agreement. Surrendered Company Certificates (as defined in paragraph 1.4.3 ) shall be cancelled by the Surviving Company. Each share of

common stock, no par value per share, of the Company (the “ Company Common Stock ”) issued and outstanding immediately prior to the Effective Time shall be automatically cancelled and converted only into the right to receive a certain amount of the Purchase Price, as adjusted, pursuant and subject to the terms of this Agreement and subject further to the first $1.0 million of the Earn-Out Amount to be retained and deposited in escrow pursuant to paragraphs 1.5.3 and 4.1 . Shares of Company Common Stock issued immediately prior to the Effective Time as a result of the exercise of outstanding Company Stock Options or Company Warrants shall be considered to be issued and outstanding immediately prior to the Effective Time.

1.4.3

Exchange of Company Certificates .

1.4.3.1

Exchange of Company Certificates by Those Company Stockholders That Are Not Accredited Investors . On and after the Effective Time of the Merger, each of the Company Stockholders (as defined in paragraph 1.5 ) that are not Accredited Investors (as defined below) (individually, “ Unaccredited Stockholder ” and collectively, “ Unaccredited Stockholders ”) shall be entitled, upon (i) surrender to the Parent of all certificates representing all of the shares of the Company Common Stock issued and outstanding immediately prior to the Effective Time and held of record by such Unaccredited Stockholder, duly and validly endorsed and assigned to the order of the Parent by such stockholder and (ii) receipt by the Parent of a completed Letter of Transmittal (as defined in paragraph 1.5.1 ), duly executed by such stockholder, all in form satisfactory to the Parent, to receive, when payable, in exchange for such Company certificates his, her or its pro-rata portion of the Amount of Purchase Price Payable to Unaccredited Stockholders (as defined in paragraph 1.5(i) ), as adjusted, pursuant and subject to the terms of this Agreement, into which the shares of Company Common Stock theretofore represented by such Company certificates representing shares of the Company Common Stock owned or held by such Unaccredited Stockholder issued and outstanding immediately prior to the Effective Time shall have been automatically cancelled and exchanged pursuant to the provisions of paragraphs 1.5(i) and 1.5.1 . Until surrendered, as contemplated by this paragraph 1.4.3 , each outstanding Company certificate owned or held by such Unaccredited Stockholder shall be deemed, as of the Effective Time of the Merger, automatically cancelled and to represent only the right to receive, upon such surrender, his, her or its pro-rata portion of the Amount of Purchase Price Payable to Unaccredited Stockholders, as adjusted, pursuant and subject to the terms of this Agreement. For the purposes of this Agreement, (i) the term “ Accredited

1.4.3.2

Exchange of Company Certificates by Accredited Stockholders . On and after the Effective Time of the Merger, each of the Company Stockholders that are listed by the Company on Exhibit B as an Accredited Investor, based on the above definition of Accredited Investor (individually, “ Accredited Stockholder ” and collectively, “ Accredited Stockholders ”) shall be entitled, upon (i) surrender to the Parent of all certificates representing all of the shares of the Company Common Stock issued and outstanding immediately prior to the Effective Time and held of record by such Accredited Stockholder, duly and validly endorsed and assigned to the order of the Parent by such Accredited Stockholder, (ii) a completed Letter of Transmittal delivered to the Parent, duly executed by such Accredited Stockholder, and (iii) receipt by the Parent on or prior to the Effective Time of a completed Subscription Agreement (as defined in paragraph 5.2 ), duly executed by such Accredited

Stockholder, all in form satisfactory to the Parent, to receive, when payable, in exchange for such Company certificates his, her or its pro-rata portion of the Purchase Price payable to the Accredited Stockholders, as adjusted, pursuant and subject to the terms of this Agreement, into which the shares of Company Common Stock theretofore represented by such Company certificates shall have been automatically cancelled and exchanged pursuant to the provisions of paragraph 1.5 . Until surrendered, as contemplated by this Section 1.4.3.2 , each outstanding Company certificate representing shares of the Company Common Stock outstanding immediately prior to the Effective Time owned or held by the Accredited Stockholders shall be deemed, as of the Effective Time of the Merger, automatically cancelled and to represent only the right to receive, upon such surrender, his, her or its portion of the Amount of Purchase Price Payable to Accredited Stockholders, as adjusted, pursuant and subject to the terms of this Agreement.

1.4.4

Cancellation of Company Common Stock . As of the Effective Time, all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a Company certificate evidencing Company Common Stock issued and outstanding immediately prior to the Effective Time shall automatically cease to have any rights with respect thereto, except the right to receive, upon the terms and subject to the conditions hereof, a portion of the applicable amount of the Purchase Price, as adjusted, pursuant and subject to the terms of this Agreement. Surrendered Company certificates shall be cancelled by the Surviving Company.

1.4.5

Company Stock Options, Company Warrants and Other Rights to Receive Company Common Stock . All Company Stock Options, Company Warrants and other rights to receive Company Common Stock not exercised in full prior to the Effective Time and outstanding as of the Effective Time shall be automatically cancelled and cease to exist as of the Effective Time, without any liability, obligation or responsibility on the part of the Company, the Parent or the Merger Sub, in a manner satisfactory to the Parent. All of the Company’s stock option plans shall automatically be cancelled and shall cease to exist as of the Effective Time.

1.4.6

Cancellation of Treasury Shares . Each share of Company Common Stock held in the treasury of the Company and each share of Company Common Stock owned or held, directly or indirectly, by the Company or its wholly-owned subsidiaries in each case immediately prior to the Effective Time, shall be cancelled and retired and shall cease to exist without any

1.4.7

Escheat . Neither the Surviving Company nor the Parent shall be liable to any Person in respect of amounts properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

1.5

Consideration . Subject to terms of this Agreement and as adjusted pursuant to paragraph 1.5.4 hereof, the aggregate consideration to be paid by the Parent to holders of the issued and outstanding shares of the Company Common Stock immediately prior to the Effective Time (individually, the “ Company Stockholder ” and collectively, the “ Company Stockholders ”) in connection with the Merger shall consist of the following (collectively, the “ Purchase Price ”):

(i)

At the Closing, the sum of $1.8 million, subject to the terms of this Agreement and as adjusted pursuant to paragraph 1.5.4 , payable by the Parent for the benefit of the Unaccredited Stockholders pursuant to paragraph 1.5.1 (“ Amount of Purchase Price Payable to Unaccredited Stockholders ”);

(ii)

The sum of $5.2 million, subject to the terms of this Agreement and as adjusted pursuant to paragraph 1.5.4 , by the Parent for the benefit of only the Accredited Stockholders (“ Amount of Purchase Price Payable to Accredited Stockholders ”), payable as follows:

(a)

$700,000, as adjusted pursuant to paragraph 1.5.4 , payable at Closing pursuant to paragraph 1.5.2 .

(b)

$2.5 million, as adjusted pursuant to paragraph 1.5.4 , payable only to Accredited Stockholders in four annual installments (“ Installment Payments ”), pursuant to paragraph 1.5.2 , with the unpaid principal amount due under this subparagraph (b) (w) bearing an annual rate of interest of 8.25%, (x) not being secured with any assets of the Parent, the Surviving Company or any of their Affiliates, (y) shall not be negotiable and (z) may not be assigned, transferred, negotiated or pledged in any manner, and that any such transfer, negotiation, pledge or assignment by any Accredited Stockholder in and to his, her or its interest in and to the amount payable under this subparagraph (b) shall be null and void and of no force or effect; except upon the death of an Accredited Stockholder, the deceased Accredited Stockholder’s interest may be transferred or assigned to his or her designated beneficiary in accordance with the terms of his or her will or, if such stockholder dies intestate, pursuant to intestate succession, provided such beneficiary acknowledges in writing to the Parent that he or she shall be subject to the terms hereof. The amount payable under this subparagraph (b) shall be payable by the Parent

in four annual installments, with the first annual installment due on June 30, 2008, consisting only of interest that has accrued and is unpaid on the unpaid principal amount due under this subparagraph (b) ; the second annual installment due on June 30, 2009, in the principal sum of $833,333.33, plus accrued and unpaid interest on the unpaid principal amount thereof; the third annual installment due on June 30, 2010, in the sum of $833,333.40, plus accrued and unpaid interest on the unpaid principal amount thereof; and the fourth annual installment due on June 30, 2011, consisting of the remaining unpaid principal balance of $833,333.40, plus accrued and unpaid interest on such unpaid principal balance. The Parent may prepay, in whole or in part, any unpaid principal amount due under this paragraph 1.5(ii)(b) , without penalty.

(c)

$2 million, subject to the terms of this Agreement, payable only to Accredited Stockholders in the Parent’s shares of common stock, par value $.001 per share (“ Parent Common Stock ”), with the total number of shares of Parent Common Stock that will be issued by the Parent in connection herewith to be determined by dividing $2 million, as adjusted pursuant to paragraph 1.5.4 , by a price that is 95% of the average of the closing price of the Parent Common Stock as quoted on the Nasdaq during the 20 trading day period ending five (5) business days prior to the Effective Time (“ Total Number of Shares of Parent Common Stock Issuable to Accredited Stockholders ”). The Total Number of Shares of Parent Common Stock Issuable to Accredited Stockholders shall be allocated pro-rata among each of the Accredited Stockholders based on the number of shares of the Company Common Stock owned by each such holder immediately prior to the Effective Time, with the number of shares allocated for each share of the Company Common Stock owned by an Accredited Stockholder outstanding immediately prior to the Effective Time determined by dividing the Total Number of Shares of Parent Common Stock Issuable to Accredited Stockholders by the number of shares of Company Common Stock owned by all such Accredited Stockholders issued and outstanding immediately prior to the Effective Time. The Parent shall issue to each Accredited Stockholder his, her or its pro-rata number of shares from the Total Number of Shares of Parent Common Stock Issuable to Accredited Stockholders within seven (7) business days after receipt by the Parent of (i) the certificate or certificates representing all of the shares of the Company Common Stock owned by the Accredited Stockholder, duly endorsed and assigned to the order of the Parent by such holder, (ii) duly completed and executed by such holder of the letter of transmittal in the form satisfactory to the Parent (the “ Letter of Transmittal ”), and (iii) receipt by the Parent on or prior

(d)

The issuance of that portion of the Purchase Price constituting the Parent Common Stock pursuant to paragraphs 1.5(ii)(c) and the Installment Payments under paragraph 1.5(ii)(b) must be in a transaction exempt from registration under the Securities Act and applicable state securities laws, as determined by counsel for the Parent. As of the Closing, each of the Accredited Stockholders shall have executed a Subscription Agreement, substantially in the form attached hereto as Exhibit D (“ Subscription Agreement ”) and delivered such to the Parent on or prior to the Closing. The Subscription Agreement provides, among other things:

(1)

that such Accredited Stockholder is an Accredited Investor and the reasons that he, she or it qualifies as an Accredited Investor;

(2)

that such Accredited Stockholder is acquiring an interest in that portion of the installment payments under paragraphs 1.5(ii)(b) and the shares of Parent Common Stock payable pursuant to paragraph 1.5(c) for his, her or its own account, to hold for investment, with no present intention of dividing such Accredited Stockholder’s participation with others or reselling or otherwise participating, directly or indirectly, in a distribution thereof, and not with a view to or for sale in connection with any distribution thereof, except as to shares of the Parent Common Stock received under this Agreement pursuant to a registration statement under the Securities Act, and any applicable state securities laws;

(3)

that such Accredited Stockholder has been advised that the interest in that portion of the installment payments under paragraphs 1.5(ii)(b) and the Parent’s Common Stock being acquired under this Agreement is not being registered under any state securities laws on the ground that the issuance thereof is exempt from registration, and are not being registered under the Securities Act on the ground that the issuance thereof is exempt from registration under Rule 506 of Regulation D and/or 4(2) of the Securities Act and that reliance by the Parent on such exemption is predicated in part on such Accredited Stockholder’s representations set forth in the Subscription Agreement;

(4)

that such Accredited Stockholder agrees that the Parent may refuse to permit the sale, transfer or disposition of such of his, her or its interest in the installment payments under paragraph 1.5(ii)(b) or the Parent Common Stock, may refuse to permit the sale, transfer or disposition of the shares of Parent’s Common Stock unless there is in effect a registration statement under the Securities Act and any applicable state securities law covering such transfer or the Accredited Stockholder furnishes an opinion of counsel or other evidence, reasonably satisfactory to counsel for the Parent, to the effect that such registration is not required;

(5)

that the shares of the Parent’s Common Stock to be issued will have placed against them a stop transfer order and that there will be placed on the certificate or certificates representing such shares, any substitutions therefor and any certificates for additional shares which might be distributed with respect thereto, a legend stating in substance:

(6)

that the Accredited Stockholder’s interest in the installment payments under paragraph 1.5(ii)(b) is non-negotiable and may not be sold, transferred or assigned;

(7)

that such Accredited Stockholder understands that under the Securities Act, the shares of Parent’s Common Stock must be held indefinitely unless they are subsequently registered under the Securities Act or unless an exemption from such registration is available.

(8)

that such Accredited Stockholder understands that the Parent is required to file periodic reports with the SEC and

that certain sales of the Parent’s Common Stock may be exempt from registration under the Securities Act by virtue of Rule 144 promulgated by the SEC under the Securities Act, provided that such sales are made in accordance with all of the terms and conditions of that Rule, including compliance with the required one (1) year holding period. Such Accredited Stockholder further understands that if Rule 144 is not available for sales of the Parent’s Common Stock, such shares may not be sold without registration under the Securities Act or compliance with some other exemption from such registration, and that the Parent does not have any obligations to register the Parent’s Common Stock or take any other action necessary in order to make compliance with an exemption from registration available.

·

Upon the written request of any such Accredited Stockholder made within 20 days after receipt of any such notice (which request shall specify the number of shares of the Acquired Parent Common Stock that such holder intends to include in such registration statement), the Parent will use its reasonable efforts to effect the registration under the Securities Act of those shares of Acquired Parent Common Stock as requested by such Accredited Stockholder to be included in such registration, to the extent required to permit the disposition of such shares of Acquired Parent Common Stock to be registered, by inclusion of such shares of the Acquired Parent Common Stock in the registration statement which covers the securities which the Parent proposes to register, for its own account, provided that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Parent shall determine for any

reason whatsoever not to register or to delay registration of such securities, the Parent may, at its election, and in its sole discretion, give written notice of such determination to each Accredited Stockholder whose Acquired Parent Common Stock is included in the registration statement and, thereupon, (a) in the case of a determination not to register, the Parent shall be relieved of its obligation to register any of the Acquired Parent Common Stock in connection with such registration and (b) in the case of a determination to delay registering, shall be permitted to delay registering any such shares of the Acquired Parent Common Stock for the same period as the delay in registering such other securities.

·

Notwithstanding the above, if a registration statement pursuant to the above paragraph involves an underwritten offering and the managing underwriter advises the Parent in writing that, in its opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering, the Parent will include in such registration to the extent of the number which the Parent is so advised can be sold in such offering securities determined as follows:

(a)

first, the securities proposed by the Parent to be sold for its own account, and

(b)

second, any shares of the Acquired Parent Common Stock so held by the Accredited Stockholders requested to be included in such registration, and any other securities the Parent proposes to include in such registration statement, pro-rata among the holders thereof requesting such registration on the basis of the number of shares of such securities requested to be included by such holder;

(9)

that the Accredited Stockholder has received no public solicitation or advertisement concerning an offer to sell the Parent’s Common Stock;

(10)

that the Accredited Stockholder has received and had an opportunity to review copies of the Parent’s SEC Filings (as defined in paragraph 7.29 );

(11)

that the Accredited Stockholder has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of the purchase of the Parent’s Common Stock; and

(12)

that no fractional shares of the Parent Common Stock shall be issued by the Parent.

(iii)

subject to the terms of this Agreement, an additional earn-out consideration up to a maximum of $4.6 million, less the first $1.0 million of the Earn-Out Amount to be paid by the Parent and/or the Surviving Company hereunder to be retained and placed in an escrow account to be held by the Escrow Agent pursuant to paragraph 4.1 , payable by the Parent for the benefit of the Company Stockholders pursuant to paragraph 1.5.3 (the “ Earn-Out Amount ”).

1.5.1

Payment and Allocation of Amount of Purchase Price Payable to Unaccredited Stockholders . Subject to the terms of this Agreement and as adjusted pursuant to paragraph 1.5.4 , the Amount of Purchase Price Payable to Unaccredited Stockholders shall be allocated on a pro-rata basis among each of the holders of the Company Common Stock owned by Unaccredited Stockholders based on the number of shares of the Company Common Stock owned by each such Unaccredited Stockholder immediately prior to the Effective Time, with the amount allocated for each share of the Company Common Stock owned by the Unaccredited Stockholders outstanding immediately prior to the Effective Time determined by dividing the Amount of Purchase Price Payable to Unaccredited Stockholders by the number of shares of Company Common Stock owned by all of the Unaccredited Stockholders issued and outstanding immediately prior to the Effective Time. At the Closing, the Parent shall pay to a paying agent selected by the Representatives, which paying agent shall be satisfactory to the Parent (the “ Paying Agent ”), the Amount of Purchase Price Payable to Unaccredited Stockholders, in good funds, to hold and pay such to the Unaccredited Stockholders on a pro-rata basis pursuant to the terms hereof and the Paying Agent Agreement (as defined in paragraph 1.5.5 ). The Paying Agent shall pay to each of the Unaccredited Stockholders his, her or its pro-rata share of the Amount of Purchase Price Payable to Unaccredited Stockholders within seven (7) business days after receipt by the Parent or the Paying Agent of a Company certificate or Company certificates, duly endorsed and assigned

to the order of the Parent by such holder, representing all of the shares of the Company Common Stock held by such holder, and delivery to the Parent or the Paying Agent of a duly executed and completed Letter of Transmittal, the pro-rata portion of the Amount of Purchase Price Payable to Unaccredited Stockholders due to such Unaccredited Stockholder pursuant to this paragraph 1.5.1 .

1.5.2

Payment and Allocation of the Amount of Purchase Price Payable to Accredited Stockholders Pursuant to Paragraphs 1.5(ii)(a) and (b) . Subject to the terms of this Agreement and as adjusted pursuant to paragraph 1.5.4 , the Amount of Purchase Price Payable to Accredited Stockholders under paragraphs 1.5(ii)(a) and (b) will be paid by the Parent, when due pursuant to paragraphs 1.5(ii)(a) and (b) , to the Paying Agent, and the Paying Agent shall hold and pay such to the Accredited Stockholders on a pro-rata basis pursuant to this paragraph 1.5.2 and the Paying Agent Agreement. If the Parent has received from such Accredited Stockholder (i) his, her or its Company certificates, duly endorsed and assigned to the order of the Parent by such holder, representing all of the Company Common Stock owned by such Accredited Stockholder, (ii) the Letter of Transmittal, duly completed and executed by such Accredited Stockholder, and (iii) the completed Subscription Agreement, duly executed by such Accredited Stockholder, then, upon receipt by the Paying Agent from the Parent of any Amount of Purchase Price Payable to Accredited Stockholders, the Paying Agent shall pay to each such Accredited Stockholder a pro-rata portion of such amount based on the number of shares of the Company Common Stock owned by such Accredited Stockholder, and the amount allocated for each share of the Company Common Stock owned by such Accredited Stockholder outstanding immediately prior to the Effective Time determined by dividing the amount received under paragraphs 1.5(ii)(a) and/or (b) by the number of shares of the Company Common Stock owned by all such Accredited Stockholders issued and outstanding immediately prior to the Effective Time;

1.5.3

Determination and Payment of Earn-Out Amount .

1.5.3.1

Earn-Out Amount . Subject to the terms of this Agreement, an Earn-Out Amount, if any, is to be paid for each fiscal year (as defined below) ending June 30, 2008, June 30, 2009, June 30, 2010, and June 30, 2011 (collectively, the “ Earn-Out Period ”), with the aggregate Earn-Out Amount paid during all of the Earn-Out Period not to exceed a total of $4.6 million. The amount of the Earn-Out Amount paid for each calendar year during the Earn-Out Period shall be based on the following: for each calendar year during the Earn-Out Period that the Revenues (as defined below) of the Parent’s Nuclear Business (as defined below) exceeds the Budgeted Amount of Revenues for the

Calculation of Earn-Out Amount for a Fiscal Year . No later than 20 business days following the issuance of the auditor’s opinion relating to the Parent’s Audited Financial Statements for a Fiscal Year during the Earn-Out Period by the Parent’s independent auditors (the “ Audit Firm ”), the Parent shall deliver to the Representatives (as defined in paragraph 4.1.1 ) a written statement (“ Earn-Out Statement ”) setting forth (x) the computation of the Earn-Out Amount for that Fiscal Year, and (y) a summary of all material financial information used in making such computation. In the event that the Representatives dispute the Parent’s determination of the Earn-Out Amount or the Parent’s calculation of the Earn-Out Amount for that particular Fiscal Year, the Representatives shall notify the Parent in writing by 5:00 PM United States Eastern Time on the fifteenth (15 ^th ) day following the receipt of the Earn-Out Statement of such dispute (such date, calculated without including the date of receipt of the Earn-Out Notice, the “ Earn-Out Dispute Deadline ” and such notice, the “ Earn-Out Dispute Notice ”), which Earn-Out Dispute Notice shall provide a reasonably detailed description of such dispute and the Representatives’ calculation of the Earn-Out Amount. The parties agree that any dispute regarding the Earn-Out Statement shall be resolved exclusively in the manner and pursuant to the procedures set forth in paragraph 1.5.3.5 . If the Representatives do not deliver an Earn-Out Dispute Notice on or before the Earn-Out Dispute Deadline, then the Earn-Out Amount set forth in the Earn-Out Statement shall be deemed conclusive, final and binding on the parties and none of the Company Stockholders or the Representatives will be permitted to dispute such amount. Attached hereto as Exhibit E is an example, and only an example, of the Earn-Out determination; provided, however, such is only an example and is not to be construed as determinative as to the amount of, or how to calculate, the Earn-Out Amount. If there is any conflict between Exhibit E and the

other terms and provisions of this paragraph 1.5.3 , the other terms and provisions of paragraph 1.5.3 shall be controlling.

1.5.3.3

Operation of the Parent, PEcoS and the Parent’s Nuclear Business . The Company Stockholders shall, in the Letter of Transmittal, agree and acknowledge that the Parent shall have the full and excessive power and right to control all aspects of its business and its subsidiaries’ or Affiliates’ business and operations (including regarding the features, functions and characteristics of its products and services, the technology on which its products and services, and associated software, are based, whether and when to launch its products and services, and how to price, market and distribute its products and services), and nothing in this Agreement shall require the Parent or any of its Affiliates to take any action that would be, or shall otherwise be interpreted in any manner that is, inconsistent with such right and power, and the Company Stockholders will have no right to claim any lost Earn-Out Amount as a result of such decisions or any inaction on the part of the Parent or any of its Affiliates or their respective Board of Directors or officers.

1.5.3.4

Tax Treatment . The Earn-Out Amount payable pursuant to this Agreement, if any, are intended to be treated for all Tax purposes as additional consideration for the Merger pursuant to this Agreement (subject to any requirement to treat a portion as imputed interest), except to the extent reasonably determined by the Parent in the event of a dispute with, or contrary guidance or instruction is issued by, a taxing authority.

1.5.3.5

Resolution of Disputes . If the Representatives timely deliver an Earn-Out Dispute Notice to the Parent and the Parent and the Representative are unable to mutually agree on the Earn-Out Amount within ten (10) business days following receipt by the Parent of the Earn-Out Dispute Notice (calculated without including the date of receipt), the Parent and the Representatives shall mutually agree on a nationally-recognized independent public accounting firm in the United States (the “ Independent Accountant ”) to review the Earn-Out Statement and the Earn-Out Dispute Notice (and all related information and documentation provided by the parties to the Independent Accountant), which review shall be limited to a determination of the Earn-Out Amount that is to be determined solely in accordance with the terms and provisions of this paragraph 1.5.3 (the Earn-Out Amount, as determined by the Independent Accountant, the “ Accountant’s Earn-Out Amount ”). Any meetings of the parties required in connection with the resolution of any such dispute shall take place in Atlanta, Georgia, unless the Representatives

and the Parent agree otherwise. The Independent Accountant’s determination shall be final and binding on all parties absent manifest error in the application of this paragraph 1.5.3 . The costs of the Independent Account shall be borne as follows: 50% shall be borne by the Parent and 50% shall be proportionately borne by the Company Stockholders and may be paid with the Parent’s consent from the Escrow Amount.

1.5.3.6

No Other Representations, Warranties or Commitments . The Company, and each of the Company Stockholders in his, her or its Letter of Transmittal, will expressly acknowledge and agree that this paragraph 1.5.3 contains the entire agreement with respect to the Parent’s, Merger Sub’s and the Surviving Corporation’s obligations in connection with the achievement of the earn-outs described in this paragraph 1.5.3 .

1.5.3.7

Payment and Allocation of Earn-Out Amount . Subject to the terms of this Agreement and the first $1.0 million of such Earn-Out Amount being retained and placed by the Parent in an escrow account to be held by the Escrow Agent pursuant to paragraphs 1.5.3.1 and 4.1 and the Escrow Agreement, the Earn-Out Amount, if any, for any Fiscal Year during the Earn-Out Period shall be paid by the Parent to the Paying Agent, in good funds, within 30 days after the date that the Earn-Out Statement is delivered to the Representatives, unless the Representatives deliver to the Parent an Earn-Out Dispute Notice pursuant to the terms of this paragraph 1.5.3 . If an Earn-Out Dispute Notice is delivered to the Parent pursuant to the terms hereof, then such Earn-Out Amount shall be paid by the Parent or the Surviving Company to the Paying Agent, in good funds, within 30 days after the Earn-Out Amount is resolved pursuant to the terms hereof and the determination of the Earn-Out Amount becomes final and binding, except as otherwise provided in this Agreement. The Earn-Out Amount for a Fiscal Year received by the Paying Agent shall be paid by the Paying Agent to those Company Stockholders that have delivered to the Parent or Paying Agent, whichever is applicable, his, her or its Company certificates, duly endorsed and assigned to the order of the Parent by such Company Stockholder, representing all of such Company Common Stock owned by such Company Stockholder, the Letter of Transmittal, duly executed by such Company Stockholder and, if an Accredited Stockholder, a completed Subscription Agreement duly executed by such Accredited Stockholder, with that portion of such Earn-Out Amount for that Fiscal Year to be paid to such Company Stockholder to be based on the number of shares of the Company Common Stock owned by such Company Stockholder, with the amount per share

determined by dividing the Earn-Out Amount for that particular Fiscal Year, if any, by the number of shares of the Company Common Stock issued and outstanding immediately prior to the Effective Time; provided, however, that it is acknowledged and agreed that the first $1.0 of the Earn-Out Amount to be paid shall not be paid by the Parent and/or Surviving Company to the Company Stockholders or the Paying Agent but shall be placed and deposited into escrow with the Escrow Agent pursuant to paragraph 4.1 .

1.5.3.8

Earn-Out Amount Limitations . Notwithstanding anything to the contrary contained herein, the Parent shall not be obligated, and the Company Stockholders shall have no right to receive, (i) any Earn-Out Amounts in excess of an aggregate amount of $4.6 million paid during the Earn-Out Period, and (ii) any Earn-Out Amount for any fiscal year beginning after the expiration of the Earn-Out Period.

1.5.3.9

Other Representations and Covenants Regarding the Earn-Out Amount . The parties hereto acknowledge, and the Company Stockholders shall acknowledge in the Letter of Transmittal, that the Earn-Out Amount (i) shall not bear interest, (ii) shall not be secured with any assets of the Parent, the Surviving Company or any of their Affiliates, (iii) are non-negotiable and there shall be no market for the Earn-Out Amounts, or any portions thereof, and (iv) may not be transferred, negotiated, pledged or assigned in any manner or for any reason by any of the Company Stockholders, and that any such transfer, negotiation, pledge or assignment of any of the Company Stockholders interest in and to Earn-Out Amount shall be null and void and of no force or effect; except, upon the death of a Company Stockholder, the deceased Company Stockholder’s interest may be transferred or assigned to such Company Stockholder’s designated beneficiary in accordance with the terms of his or her will or if such Company Stockholder dies intestate, pursuant to intestate succession, provided such beneficiary acknowledges in writing to the Parent that he or she shall be subject to the terms of this paragraph 1.5.3.9 in connection with the Earn-Out Amount.

1.5.4

Adjustment to Purchase Price . The Company has provided to the Parent a true and correct copy of an unaudited balance sheet of the Company, consolidated with PEcoS, as of January 31, 2007, which balance sheet has been prepared in good faith and in accordance with GAAP and adjusted on a pro forma basis as though all of the assets constituting the Pre-Closing Distributions (as defined in paragraph 9.23 ) had been transferred, dividended, assigned or distributed by the Company pursuant to the terms of paragraph 9.23 prior to January 31, 2007 (the “ Adjusted January 31,

1.5.5

Intentionally Omitted .

1.5.6

Paying Agent Agreement . As a condition precedent to the Closing, the Parent, the Representatives (as defined in paragraph 4.1.1 ) and the Paying Agent shall have entered into the Paying Agent Agreement, a copy of which is attached hereto as Exhibit F (“ Paying Agent Agreement ”), which Paying Agent Agreement shall provided, among other things, that the Paying Agent shall pay the Purchase Price to be paid to the Company Stockholders shall be paid by the Paying Agent in accordance with the Terms of paragraphs 1.5.1 , 1.5.2 , and 1.5.3 , that any fees due to the Paying Agent for services rendered shall be paid out of, or deducted from, the funds constituting the Purchase Price received by the Paying Agent, and that the originals of Company certificates and endorsements thereof and the executed Letter of Transmittals received by the Paying Agent shall be delivered to the Parent within seven (7) business days after receipt thereof by the Paying Agent, with the Paying Agent retaining copies thereof The Company Stockholders shall direct the Parent and the Surviving Company, in the Letter of Transmittal, to pay the Purchase Price (as adjusted) to the Paying Agent, subject to the terms of paragraph 1.5 , and the Paying Agent Agreement. The Letter of Transmittal shall, among other things, direct the Parent and the Surviving Company to deliver the Purchase Price (as adjusted and subject to the terms hereof) and in the name of the Paying Agent, be held pursuant to the terms of paragraph 1.5 and the Paying Agent Agreement.

1.6

Further Assurances . If, at any time after the Effective Time, the Surviving Company determines or is advised that any further deeds, assignments or assurances in law or any other acts are necessary, desirable or proper to vest, perfect or confirm, of record or otherwise, in the Surviving Company the title to any property or right of the Constituent Companies acquired or to be acquired by reason of, or as a result of, the Merger or to otherwise carry out the purposes of this Agreement or effect the Merger, the Surviving Company and its managers, officers and directors shall execute and deliver all such property, deeds, assignments and assurances in law and do all acts necessary, desirable or proper to vest, perfect or confirm title to such property or right in the Surviving Company, and the officers and directors of the Constituent Companies and the managers, officers and directors of the Surviving Company are fully authorized in the name of the Constituent Companies or otherwise to take any and all such action for the purposes set forth in this paragraph 1.6 .

4.1

Escrow . Subject to the terms and conditions of this Agreement, the first $1.0 million of the Earn-Out Amount payable by Parent or the Surviving Company pursuant to the terms of this Agreement shall be deposited by the Parent in escrow (the “ Escrow Amount ”) in lieu of paying such to the holders of the Company Stockholders that would otherwise be entitled to receive such pursuant to paragraph 1.5.3 , with such Escrow Amount to be held by and in the name of the Escrow Agent for the period ending on the second anniversary of the date that the full $1.0 million is placed into escrow by the Parent pursuant to the terms hereof (the “ Escrow Period ”) and for such further period as may be required pursuant to the Escrow Agreement. The Escrow Amount shall be allocated among the Persons entitled to receive them in the same proportions as the Purchase Price is allocated among them, pursuant to paragraph 1.5 , all in accordance with the terms and conditions of the Escrow Agreement to be entered into at the Closing between Parent, the Representative referred to in paragraph 4.1.1 , and an escrow agent to be mutually designated by the Parent and the Representatives (as defined in paragraph 4.1.1 ) prior to the Closing (the “ Escrow Agent ”), in substantially the form annexed hereto as Exhibit G (the “ Escrow Agreement ”). The Company Stockholders hereby direct, in the Letter of Transmittal, the Parent and the Merger Sub to issue the Escrow Amount in the name of the Escrow Agent, and to deliver such Escrow Amount to the Escrow Agent to be held pursuant to the terms of the Escrow Agreement. The Letter of Transmittal shall, among other things, direct the Parent and the Merger Sub to deliver the Escrow Amount to, and in the name of, the Escrow Agent, to be held pursuant to the terms of the Escrow Agreement.

4.1.1

Escrow Agreement Representative . The Company hereby designate, and all of the Company Stockholders entitled to receive a portion of the Purchase Price as a result of the Merger shall designate in the Letter of Transmittal, Robert L. Ferguson (“ Ferguson ”) and William N. Lampson (“ Lampson ”) (Ferguson and Lampson individually referred to as, the “ Representative ,” and collectively referred to as, the “ Representatives ”) to represent the interests of the Company Stockholders s for purposes of the Escrow Agreement and the Paying Agent Agreement. If any Representative ceases to serve in such capacity for any reason, the other Representative shall serve as the sole Representative. If both of the Representatives cease to serve for any reason, the Board of Directors of Parent shall appoint as successor Representative a Person who was a former shareholder of the Company or such other Person as the Parent’s Board of Directors shall designate.

4.2

Shareholder Debt . Within five (5) business days prior to the Closing, the Company shall deliver to the Parent a list of the names and the amount of such Shareholder Debt owing to each Shareholder, together with the accrued and unpaid interest thereon, and the mailing address of each Shareholder to whom such Shareholder Debt is owing. At the Closing, the Parent shall pay to the

5.1

Required Withholding . Each of Parent and the Surviving Company shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of Company Common Stock such amounts as are required to be deducted or withheld therefrom under the Code or under any provision of any Taxes (as defined in paragraph 7.19 ) or under any other applicable Legal Requirements (as defined in paragraph 30.2(b) ). To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

7.1

Organization and Qualification .

7.1.1

Authority . Each of the Company and PEcoS is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Washington and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned by the Company and PEcoS to be conducted. Each of the Company and PEcoS is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“ Approvals ”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being or currently planned by the Company and PEcoS to be conducted. Complete and correct copies of the certificates of incorporation and by-laws (or other comparable governing instruments with different names) (collectively referred to herein as “ Company Charter Documents ”) of the Company, as amended and currently in effect, have been heretofore delivered to Parent or Parent’s counsel. The Company is not in violation of any term, condition or provision of the Company Charter Documents. Complete and correct copies of the certificates of incorporation and by-laws (or other comparable governing instruments with different names) (collectively referred to herein as “ PEcoS Charter Documents ”) of PEcoS, as amended and currently in effect, have been

7.1.2

Certification . Each of the Company and PEcoS is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except in such jurisdictions in which a failure to be so qualified or licensed as a foreign corporation would not result, or reasonably be expected to result, in any Material Adverse Effect. Each jurisdiction in which each of the Company and PEcoS is so qualified or licensed is listed in Schedule 7.1.2 of the Company Disclosure Schedule.

7.1.3

Minute Books . The minute books of the Company contain true, complete and accurate records of all meetings and consents in lieu of meetings of its Board of Directors (and any committees thereof), similar governing bodies and shareholders (“ Company Corporate Records ”) since the time of the organization. Copies of the Company Corporate Records have been heretofore delivered to Parent or Parent’s counsel. The minute books of the PEcoS contain true, complete and accurate records of all meetings and consents in lieu of meetings of its Board of Directors (and any committees thereof), similar governing bodies and shareholders (“ PEcoS Corporate Records ”) since the time of the organization. Copies of the PEcoS Corporate Records have been heretofore delivered to Parent or Parent’s counsel.

7.1.4

Ledger . The stock transfer, warrant and option transfer and ownership records of the Company contain true, complete and accurate records of the securities ownership as of the date of such records and the transfers involving the capital stock and other securities of the Company since the time of organization. The stock transfer, warrant and option transfer and ownership records of the PEcoS contain true, complete and accurate records of the securities ownership as of the date of such records and the transfers involving the capital stock and other securities of the PEcoS since the time of organization. Copies of such records of the Company and PEcoS have been heretofore delivered to Parent or Parent’s counsel.

7.2

Subsidiaries . Except as set forth on Schedule 7.2 of the Company Disclosure Schedule, the Company has no Subsidiaries (as defined below) other than PEcoS and does not own, directly or indirectly, any ownership, equity, profits or voting interest in any Person or have any agreement or commitment to purchase any such interest, and has not agreed and is not obligated to make nor is bound by any written, oral or other agreement, contract, subcontract, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan, commitment or undertaking of any nature, as of the date hereof or as may hereafter be in effect under which it may

become obligated to make, any future investment in or capital contribution to any other entity. PEcoS has no Subsidiaries and does not own, directly or indirectly, any ownership, equity, profits or voting interest in any Person or have any agreement or commitment to purchase any such interest, and has not agreed and is not obligated to make nor is bound by any written, oral or other agreement, contract, subcontract, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan, commitment or undertaking of any nature, as of the date hereof or as may hereafter be in effect under which it may become obligated to make, any future investment in or capital contribution to any other entity. For purposes of this Agreement, a “ Subsidiary ” with respect to any entity referred to in this Agreement shall mean a corporation, limited liability, partnership, limited partnership or other entity, of which the entity owns directly or indirectly 50% or more of the outstanding equity or voting power to vote for the election of a majority of the directors.

7.3

Capitalization .

7.3.1

Company Capital Stock . The authorized capital stock of the Company consists of 97,000,000 shares of Company Common Stock and 3,000,000 shares of Company Preferred Stock (“ Company Preferred Stock ”), of which 10,707,818 shares of Company Common Stock are issued and outstanding and no shares of Company Preferred Stock are issued and outstanding. All of the shares of issued and outstanding Company Common Stock are validly issued, fully paid and nonassessable.

7.3.2

PEcoS Capital Stock . The authorized Capital Stock of PEcoS consists solely of 10,000,000 of Common Stock, no par value (“ PEcoS Common Stock ”), of which 3,803,540 shares of PEcoS Common Stock are issued and outstanding. No shares of PEcoS preferred stock are authorized for issuance. All of the shares of issued and outstanding PEcoS Common Stock are owned beneficially and of record by the Company and are validly issued, fully paid and nonassessable.

7.3.3

Company Stock Options and Company Warrants . Except as set forth in Schedule 7.3.3 of the Company Disclosure Schedule, as of the date of this Agreement (a) no shares of Company Common Stock are reserved for issuance upon the exercise of outstanding options to purchase Company Common Stock granted to employees of Company or other parties (“ Company Stock Options ”), and (b) no shares of Company Common Stock or Company Preferred Stock are reserved for issuance upon the exercise of outstanding warrants or other rights (other than Company Stock Options) to purchase Company Common Stock or Company Preferred Stock (“ Company Warrants ”). No shares of the Company’s Preferred Stock are reserved for issuance upon the exercise of outstanding options or warrants, and no shares of the Company’s Preferred Stock are issuable upon the exercise of outstanding options or warrants. All

outstanding shares of Company Common Stock and all outstanding Company Stock Options and Company Warrants have been issued and granted in compliance with (x) all applicable securities laws and (in all material respects) other applicable laws and regulations, and (y) all requirements set forth in any applicable Company Contracts (as defined in paragraph 7.24 ). Immediately prior to the Closing all Company Stock Options and Company Warrants shall have been exercised in full or terminated on terms reasonably satisfactory to Parent, without the Company or PEcoS being obligated to pay any consideration for such termination, and at the Closing no Company Stock Options or Company Warrants will be outstanding. The Company has heretofore delivered to Parent or Parent’s counsel true and accurate copies of the forms of documents used for the issuance of Company Stock Options and Company Warrants and a true and complete list of the holders thereof, including their names and the numbers of shares of Company Common Stock underlying such holders’ Company Stock Options and the Company Warrants.

7.3.4

PEcoS Options and Warrants . There are no outstanding options, warrants or other rights to purchase PEcoS Common Stock or shares PEcoS preferred stock.

7.3.5

Other Rights Respecting Stock . Except as set forth in Schedule 7.3.5 to the Company Disclosure Schedule, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or PEcoS is a party or by which the Company or PEcoS is bound obligating the Company or PEcoS to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company or PEcoS or obligating the Company or PEcoS to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. No outstanding shares of Company Common Stock, Company Preferred Stock or PEcoS Common Stock are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement. There are no registration rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which the Company or PEcoS is a party or by which the Company or PEcoS is bound with respect to any equity security of any class of the Company or PEcoS. At the Closing, neither the Company nor PEcoS shall be subject to or have outstanding any subscriptions, options, warrants, calls, rights or interest, commitments or agreements to issue, deliver or sell, or caused to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or

7.4

Authority Relative to this Agreement . Each of the Company and PEcoS has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and, to consummate the transactions contemplated hereby (including the Merger). Subject to approval of this Agreement by the Company Stockholders, the execution and delivery of this Agreement and the consummation by the Company and PEcoS of the transactions contemplated hereby (including the Merger) have been duly and validly authorized by all necessary corporate action on the part of the Company (including the approval by its Board of Directors), subject in all cases to the satisfaction of the terms and conditions of this Agreement, and, subject to approval of this Agreement by the Company Stockholders, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby pursuant to the Washington BCA and the terms and conditions of this Agreement. This Agreement has been duly and validly executed and delivered by the Company and PEcoS and, assuming the due authorization, execution and delivery thereof by the other parties hereto, constitutes the legal and binding obligation of the Company and PEcoS, enforceable against the Company and PEcoS in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

7.5

No Conflict . The execution and delivery of this Agreement by the Company and PEcoS do not, and the performance of this Agreement by the Company and PEcoS shall not, (a) conflict with or violate the Company Charter Documents or the PEcoS Charter Documents, (b) except as set forth in Schedule 7.5 to the Company Disclosure Schedule, conflict with or violate any Legal Requirements (as defined in paragraph 30.2(b)) , (c) except as set forth in Schedule 7.5 to the Company Disclosure Schedule, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or materially impair the Company’s or PEcoS’ rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company or PEcoS pursuant to, any Company Contracts, or (d) except as set forth in Schedule 7.5 to the Company Disclosure Schedule, result in the triggering, acceleration or increase of any payment to any Person pursuant to any Company Contracts, including any “change in control” or similar provision of any Company Contracts.

7.6

Required Filings and Consents . Except as set forth in Schedule 7.6 to the Company Disclosure Schedule, the execution and delivery of this Agreement by the Company and PEcoS does not, and the performance of its obligations hereunder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or other third party

(including, without limitation, lenders and lessors), other than applicable requirements, if any, of the Securities Act, the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) or Blue Sky Laws, and the rules and regulations thereunder.

7.7

Compliance . Except as set forth in Schedule 7.7 to the Company Disclosure Schedule, each of the Company and PEcoS has complied with and is not in violation of any Legal Requirements with respect to the conduct of its business, or the ownership or operation of its business. No written notice of non-compliance with any Legal Requirements has been received by the Company or PEcoS (and neither the Company nor PEcoS has knowledge of any such notice delivered to any other Person)