AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

SENTITO NETWORKS, INC.,

VERSO TECHNOLOGIES, INC.,

SN ACQUISITION CORPORATION

AND

BRETT HAUSER,
as the
STOCKHOLDERS’ AGENT

As of April 4, 2007

TABLE OF CONTENTS

EXHIBITS

iv

AGREEMENT AND PLAN OF MERGER

      THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of April 4, 2007, by and among SENTITO NETWORKS, INC. ( “TARGET” ), a corporation organized and existing under the laws of the State of Delaware, with its principal office located at 43 Nagog Park, Acton, Massachusetts 01720, VERSO TECHNOLOGIES, INC. ( “PURCHASER” ), a corporation organized and existing under the laws of the State of Minnesota, with its principal office located at 400 Galleria Parkway, Suite 200, Atlanta, Georgia 30339, SN ACQUISITION CORPORATION ( “MERGER SUB” ), a corporation organized and existing under the laws of the State of Delaware and a wholly-owned subsidiary of PURCHASER , and BRETT HAUSER , in his capacity as a representative of the TARGET Indemnifying Persons for the limited purposes described herein and in the Escrow Agreement (such person, and any successors thereto, being the “Stockholders’ Agent”).

PREAMBLE

     Certain terms used in this Agreement are defined in Section 13.1 hereof.

     The Boards of Directors of TARGET , MERGER SUB and PURCHASER are of the opinion that the transactions described herein are in the best interests of the Parties and their respective stockholders. This Agreement provides for the combination of TARGET with MERGER SUB by virtue of the merger of MERGER SUB with and into TARGET , as a result of which the outstanding shares of TARGET Capital Stock (to the extent provided herein) shall be converted into the right to receive the consideration provided for herein, and the stockholders of such TARGET Capital Stock shall become stockholders of PURCHASER . This Agreement also provides for the issuance of a portion of the merger consideration to the Management Members in satisfaction of TARGET ’s obligations under the TARGET Employee Bonus Pool in connection with the Merger. This Agreement and the transactions described herein have been approved and adopted by the respective Boards of Directors of TARGET , MERGER SUB and PURCHASER .

     The TARGET ’s Amended and Restated Certificate of Incorporation, as amended, provides that a “Sale Transaction” (as that term is used therein) shall constitute a liquidation, dissolution or winding up of TARGET for purposes of such Certificate, and the Merger constitutes a “Sale Transaction” as such term is used in paragraph 4 of such Certificate. The aggregate liquidation value of the outstanding shares of TARGET Series E-3 Stock and TARGET Prior Series E Stock exceeds the value of the merger consideration to be paid to the TARGET stockholders pursuant to Article 3 hereof and, hence, such merger consideration shall be distributed to the holders of TARGET Series E-3 Stock and TARGET Prior Series E Stock in accordance with the terms of such Certificate, and the outstanding shares of TARGET Other Preferred Stock and TARGET Common Stock shall not receive any merger consideration pursuant to Article 3 hereof and shall be cancelled by operation of law upon consummation of the Merger.

     Following the Closing, TARGET will be operated as a separate subsidiary of PURCHASER .

      NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants and agreements set forth herein, the Parties agree as follows:

ARTICLE 1
TERMS OF MERGER

      SECTION 1.1 Merger . Subject to the terms and conditions of this Agreement, at the Effective Time, MERGER SUB shall be merged with and into TARGET in accordance with the provisions of Section 252 of the DGCL and with the effect provided in Section 259 of the DGCL (the “Merger”). TARGET shall be the Surviving Corporation resulting from the Merger and a separate, wholly-owned subsidiary of PURCHASER . The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Boards of Directors of TARGET , MERGER SUB and PURCHASER and shall be approved and adopted by the stockholders of TARGET in accordance with the provisions of the DGCL.

      SECTION 1.2 Time and Place of Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at 10:00 a.m. on the date that the Effective Time occurs or such other time as the Parties, acting through their chief executive officers or chief financial officers, may mutually agree (the “Closing Date”). The place of Closing shall be at the offices of PURCHASER or such other place as may be mutually agreed upon by the Parties.

      SECTION 1.3 Effective Time. The Merger and other transactions contemplated by this Agreement shall become effective on the date and at the time the Certificate of Merger reflecting the Merger (the “Certificate of Merger”) shall be filed with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL (the “Effective Time”), which filing shall occur as promptly as practicable (but in any event within one (1) business day) following the date on which the last of the conditions set forth in Article 9 hereof is fulfilled or waived or such other time as the Parties shall agree.

ARTICLE 2
ARTICLES, BYLAWS, MANAGEMENT

      SECTION 2.1 Certificate of Incorporation. The Certificate of Incorporation of MERGER SUB in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation until otherwise amended or repealed. A copy of the Certificate of Incorporation of MERGER SUB is attached as Exhibit 1 hereto.

      SECTION 2.2 Bylaws. The Bylaws of MERGER SUB in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until otherwise amended or repealed. A copy of the Bylaws of MERGER SUB is attached as Exhibit 2 hereto.

      SECTION 2.3 Directors and Officers. The Board of Directors of MERGER SUB immediately prior to the Effective Time, together with such additional persons as may thereafter be elected or appointed, shall serve as the Board of Directors of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation. The officers of MERGER SUB in office immediately prior to the Effective Time, together with such

additional persons as may thereafter be elected, shall serve as the officers of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of TARGET .

ARTICLE 3
MANNER OF CONVERTING SHARES AND EXCHANGING CERTIFICATES

      SECTION 3.1 Conversion of Shares and Management Merger Consideration. Subject to the provisions of this Article 3, at the Effective Time, by virtue of the Merger and without any action on the part of the holders of the shares of MERGER SUB or TARGET :

     (a) Each share of the common stock, par value $.01 per share, of MERGER SUB issued and outstanding immediately prior to the Effective Time shall be converted solely into one hundred (100) fully paid and non-assessable shares of common stock of the Surviving Corporation.

     (b) Subject to the provisions of this Article 3, upon the execution and delivery to PURCHASER by each Management Member of a Management Member Agreement and an Investor Representation Statement, such Management Member shall be entitled to receive such member’s Management Percentage of: (i) Management Initial Merger Consideration payable, subject to Section 3.8 and Section 3.9 hereof, in a number of shares of PURCHASER Common Stock equal to the quotient obtained by dividing (A) the amount equal to such member’s Management Percentage of the Management Initial Merger Consideration by (B) the Average Stock Price (collectively, the “Management Initial Stock Consideration”); and (ii) Management Contingent Consideration payable, subject to Sections 3.6, 3.8 and 3.9 hereof, in a number of shares of PURCHASER Common Stock equal to the quotient obtained by dividing (x) the amount equal to such Management Member’s Management Percentage of the Management Contingent Consideration, if any, by (y) the Contingent Consideration Average Stock Price. Notwithstanding anything in this Agreement to the contrary, the Person listed on the TARGET Disclosure Letter in connection with Section 4.19 hereof shall not be required to deliver an executed Investor Representation Statement to PURCHASER in order for such Person to become entitled to receive the consideration otherwise payable to such Person pursuant to this Section 3.1(b).

     (c) Subject to the provisions of this Article 3, each share of TARGET Series E-3 Stock and TARGET Prior Series E Stock (including, without limitation, any shares currently subject to options or warrants which are exercised prior to the Effective Time, if any, and any shares currently subject to convertible promissory notes which are converted prior to the Effective Time, if any) outstanding immediately prior to the Effective Time, other than shares with respect to which statutory dissenters’ rights have been perfected and shares held by TARGET or by any PURCHASER Company, in each case other than in a fiduciary capacity or as a result of debts previously contracted (collectively, the “Outstanding TARGET Shares”), shall automatically be converted at the Effective Time into the right to receive whole shares of PURCHASER Common Stock, Holder Warrants, if any, and cash subject to Section 3.8 and Section 3.9 hereof, if applicable, in accordance with the provisions of TARGET ’s Amended and Restated Certificate of Incorporation, as amended, as follows:

     (i) each holder of a certificate or certificates theretofore representing Outstanding TARGET Shares which constituted TARGET Series E-3 Stock immediately prior to the Effective Time (“Outstanding TARGET Series E-3 Shares”) shall thereafter surrender such certificate or certificates and shall be entitled, upon such surrender, to receive in exchange therefor;

     (A) such holder’s Pro-Rata Share of the Holder Initial Merger Consideration in a number of shares of PURCHASER Common Stock equal to the quotient obtained by dividing (x) the amount equal to such holder’s Pro-Rata Share of the Holder Initial Merger Consideration by (y) the Average Stock Price (collectively, the “Holder Initial Stock Consideration”);

     (B) such holder’s Pro-Rata Share of the Holder Warrants; and

     (C) subject to Section 3.6, such holder’s Pro-Rata Share of the Series E-3 Contingent Consideration, if any, in a number of shares of PURCHASER Common Stock equal to the quotient obtained by dividing (x) the amount equal to such holder’s Pro-Rata Share of the Series E-3 Contingent Consideration by (y) the Contingent Consideration Average Stock Price.

     (ii) each holder of a certificate or certificates theretofore representing Outstanding TARGET Shares which constituted TARGET Prior Series E Stock immediately prior to the Effective Time shall thereafter surrender such certificate or certificates and shall be entitled, upon such surrender and subject to Section 3.6, to receive in exchange therefor such holder’s Pro-Rata Share of the Prior Series E Contingent Consideration, if any, in a number of shares of PURCHASER Common Stock equal to the quotient obtained by dividing (A) the amount equal to such holder’s Pro-Rata Share of the Prior Series E Contingent Consideration by (B) the Contingent Consideration Average Stock Price.

     (d) Except as contemplated in this Section 3.1, each share of capital stock of TARGET that is not an Outstanding TARGET Share, including, without limitation, all of the outstanding shares of TARGET Other Preferred Stock and TARGET Common Stock, as of the Effective Time shall be cancelled without consideration therefor. All options and warrants to purchase shares of TARGET Capital Stock outstanding immediately prior to the Effective Time shall be terminated or cancelled or otherwise shall be void and of no effect as of the Effective Time, except for such options and warrants which are assumed by the Surviving Corporation as contemplated by Section 8.7 hereof.

     (e)  PURCHASER and TARGET hereby agree that, for purposes of applying the liquidation provisions of the TARGET ’s Amended and Restated Certificate of Incorporation, as amended, to the consideration payable pursuant to this Section 3.1, the fair market value of each Warrant shall be deemed to be $0.134.

     (f) Notwithstanding any provision of this Agreement to the contrary, any shares of TARGET Capital Stock held by TARGET stockholders who, prior to the Effective Time, have met the requirements of Section 262 of the DGCL with respect to stockholders dissenting from

the Merger (“Dissenting Shares”) shall not be converted in the Merger (if such conversion is provided for herein), but all such shares shall be cancelled and such stockholders shall thereafter have only such rights as are granted to dissenting stockholders under the DGCL; provided, however, that if any such stockholder fails to perfect such stockholder’s rights as a dissenting stockholder with respect to such stockholder’s TARGET Capital Stock in accordance with the DGCL, then such shares held by such stockholder shall, upon the happening of that event, be treated the same as all other stockholders of such TARGET Capital Stock who have not dissented as to the Merger.

     (g) Notwithstanding anything herein to the contrary, 920,624 shares of PURCHASER Common Stock comprising Holder Initial Stock Consideration and 69,294 shares of PURCHASER Common Stock comprising Management Initial Stock Consideration (collectively, the “Indemnification Escrow Shares”) shall be issued in the name of the Escrow Agent as nominee for the holders of certificates representing Outstanding TARGET Series E-3 Shares immediately prior to the Effective Time and the Management Members, respectively. The Indemnification Escrow Shares shall be beneficially owned by such holders and members based on each such holder’s Pro-Rata Share of the Indemnification Escrow Shares constituting Holder Initial Stock Consideration and such member’s Member Percentage of the Indemnification Escrow Shares constituting Management Initial Stock Consideration, and the Indemnification Escrow Shares shall be held in escrow and shall be available to compensate PURCHASER for certain damages as provided in Article 12 hereof and the Escrow Agreement. To the extent not used for such purposes, the Indemnification Escrow Shares shall be released, all as provided in Article 12 hereof and the Escrow Agreement.

     (h) Furthermore, notwithstanding anything herein to the contrary, an additional 1,150,780 shares of PURCHASER Common Stock comprising Holder Initial Stock Consideration and an additional 86,618 shares of PURCHASER Common Stock comprising Management Initial Stock Consideration (collectively, the “Primo Escrow Shares”) shall be issued in the name of the Escrow Agent as nominee for the holders, as of the Effective Time, of the certificates representing Outstanding TARGET Series E-3 Shares and the Management Members, respectively. The Primo Escrow Shares shall be beneficially owned by such holders and members based on each such holder’s Pro Rata Share of the Primo Escrow Shares constituting Holder Initial Stock Consideration and such member’s Member Percentage of the Primo Escrow Shares constituting Management Initial Stock Consideration, and the Primo Escrow Shares shall be held in escrow and shall be released in accordance with Article 12 hereof and the Escrow Agreement either to the PURCHASER or to such holders and members.

      SECTION 3.2 Anti-Dilution Provisions. In the event TARGET or PURCHASER changes the number of shares of TARGET Capital Stock or PURCHASER Common Stock, respectively, issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend or similar recapitalization with respect to such stock and the record date therefor (in the case of a stock dividend) or the effective date therefor (in the case of a stock split or similar recapitalization) shall be prior to the Effective Time, the consideration payable pursuant to Section 3.1(b) and Section 3.1(c) hereof and the number of Indemnification Escrow Shares and Primo Escrow Shares set forth in Section 3.1(g) and Section 3.1(h) hereof, respectively, shall be equitably adjusted.

      SECTION 3.3 Shares Held by TARGET or PURCHASER. Each of the shares of TARGET Capital Stock held by TARGET or any PURCHASER Company, in each case other than in a fiduciary capacity or as a result of debts previously contracted, shall be canceled and retired at the Effective Time, and no consideration shall be issued in exchange therefor.

      SECTION 3.4 Exchange of Certificates .

     (a) From and after the Effective Time, upon exchange of a certificate or certificates which immediately prior thereto represents outstanding shares of TARGET Series E-3 Stock or TARGET Prior Series E Stock, a TARGET stockholder shall be entitled to receive, upon delivery to PURCHASER of an Investor Representation Statement executed by such stockholder and surrender to PURCHASER of such certificate or certificates duly endorsed in blank, (i) one or more certificates as requested by such stockholder (properly issued, executed and countersigned, as appropriate) representing that number of whole shares of PURCHASER Common Stock and Holder Warrants, if any, to which such stockholder shall have become entitled to receive pursuant to Section 3.1 hereof and (ii) a check representing the cash payable to such stockholder pursuant to Section 3.8 and Section 3.9 hereof, if any, and all of the certificate or certificates for such TARGET Series E-3 Stock and TARGET Prior Series E Stock so surrendered shall forthwith be canceled. No interest will be paid or accrued on the cash payable upon the surrender of any certificate. No portion of the consideration to be received pursuant to Section 3.1 hereof upon exchange of a certificate (whether a certificate representing shares of PURCHASER Common Stock, a Holder Warrant or a check representing any cash payable hereunder) may be issued or paid to a Person other than the Person in whose name the certificate surrendered in exchange therefor is registered. From the Effective Time until such delivery and surrender in accordance with the provisions of this Section 3.4, each certificate which immediately prior to the Effective Time represents outstanding shares of TARGET Series E-3 Stock or TARGET Prior Series E Stock shall represent for all purposes only the right to receive the consideration provided in Section 3.1 hereof. All payments in respect of shares of TARGET Series E-3 Stock and TARGET Prior Series E Stock that are made in accordance with the terms of Section 3.1 hereof shall be deemed to have been made in full satisfaction of all rights pertaining to such securities.

     (b) In the case of any lost, mislaid, stolen or destroyed certificate, the TARGET stockholder may be required, as a condition precedent to delivery to the stockholder of the consideration described in Section 3.1 hereof, to deliver to PURCHASER a reasonably satisfactory indemnity agreement as PURCHASER may direct as indemnity against any claim that may be made against PURCHASER or the Surviving Corporation with respect to the certificate alleged to have been lost, mislaid, stolen or destroyed.

     (c) After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of the shares of TARGET Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates representing TARGET Capital Stock are presented to the Surviving Corporation or PURCHASER for transfer, they shall be canceled and exchanged for the consideration, if any, described in Section 3.1 hereof.

     (d) Any shares of PURCHASER Common Stock, Holder Warrants or cash due former stockholders of TARGET pursuant to Section 3.1 hereof that remain unclaimed by such former stockholders for six (6) months after the Effective Time shall be held by PURCHASER , and any former holder of TARGET Capital Stock who has not theretofore complied with Section 3.4(a) and Section 3.4(b) hereof shall thereafter look only to PURCHASER for the shares of PURCHASER Common Stock, Holder Warrants and cash to which such holder has become entitled pursuant to the provisions of Section 3.1 hereof; provided, however, that neither PURCHASER nor any Party hereto shall be liable to a former stockholder of shares of TARGET Capital Stock for any amount required to be paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.

      SECTION 3.5 Rights of Former TARGET Stockholders and Management Members. Unless required by Law (i) former stockholders of record of TARGET shall not be entitled to vote after the Effective Time at any meeting of PURCHASER stockholders any shares of PURCHASER Common Stock into which their respective shares of TARGET Series E-3 Stock and TARGET Prior Series E Stock may have been converted pursuant to Section 3.1(c) hereof unless and until such stockholders have delivered to PURCHASER an executed Investor Representation Statement and regardless of whether such stockholders have exchanged their certificate or certificates formerly representing TARGET Series E-3 Stock and TARGET Prior Series E Stock for certificates representing PURCHASER Common Stock in accordance with the provisions of this Agreement; and (ii) Management Members shall not be entitled to vote after the Effective Time at any meeting of PURCHASER stockholders any shares of PURCHASER Common Stock which such members may be entitled to receive pursuant to Section 3.1(b) hereof unless and until such members have delivered to PURCHASER an executed Management Member Agreement and Investor Representation Statement in accordance with the provisions of this Agreement. Whenever a dividend or other distribution is declared by PURCHASER on the PURCHASER Common Stock, the record date for which is at or after the Effective Time, the declaration shall include dividends or other distributions on all shares of PURCHASER Common Stock issued or issuable pursuant to this Agreement, but no dividend or other distribution payable to the holders of record of PURCHASER Common Stock as of any time subsequent to the Effective Time shall be delivered to a former stockholder of TARGET Series E-3 Stock or TARGET Prior Series E Stock or a Management Member until such (A) stockholder delivers to PURCHASER an executed Investor Representation Statement and surrenders such stockholder’s certificate or certificate which formerly represented such shares of TARGET Series E-3 Stock or TARGET Prior Series E Stock for exchange as provided in Section 3.4 hereof or (B) member delivers to PURCHASER an executed Investor Representation Statement and Management Member Agreement as provided in Section 3.1(b) hereof. However, upon such delivery and surrender, the certificate representing the PURCHASER Common Stock (together with all such undelivered dividends or other distributions without interest) and Holder Warrants, if any, issuable pursuant to Section 3.1(c) hereof, and any undelivered cash to be paid pursuant to Section 3.8 or Section 3.9 hereof (all without interest) shall be delivered and paid with respect to each share represented by such surrendered certificate. Upon delivery of a Management Member Agreement and an Investment Representation Statement by a Management Member, the certificate representing the PURCHASER Common Stock issuable pursuant to Section 3.1(b) hereof (together with all such undelivered dividends or other distributions without interest) and any undelivered cash to be paid

pursuant to Section 3.8 or Section 3.9 hereof (all without interest) shall be delivered and paid to such member.

      SECTION 3.6 Contingent Consideration and Set-Off Right .

     (a) The Management Contingent Consideration, Series E-3 Contingent Consideration and Prior Series E Contingent Consideration shall be payable pursuant to Section 3.1 hereof if, during the first twelve (12) months following the Closing (the “Earnout Period”), PURCHASER Companies recognize revenue in accordance with GAAP and PURCHASER ’s then-current revenue recognition policy (provided that any revenue which would have been so recognized in accordance with PURCHASER ’s revenue recognition policy in effect on the date hereof shall, for the purposes of this Agreement, be deemed to have been so recognized and, provided further, that such revenue shall not be deemed recognized if GAAP as in effect during the Earnout Period does not permit PURCHASER to actually recognize such revenue) (the “Earnout Revenues”) equal or greater to TWELVE MILLION DOLLARS ($12,000,000) attributable to (i) sales or licenses of any TARGET Products, (ii) sales or licenses of any TARGET Product or PURCHASER Product to any TARGET Existing Customer, excluding the portion of any such revenue which arises or results primarily from any relationship between such customer and any PURCHASER Company (including its officers, directors, employees, consultants, agents or representatives, but expressly excluding any relationship of any Transferred TARGET Person) which relationship existed prior to the Closing Date, or (iii) sales or licenses of any PURCHASER Product to any Person located or domiciled in the Russian Federation, excluding the portion of any such revenue which arises or results primarily from any relationship between any such Person and PURCHASER Company (including its officers, directors, employees, consultants, agents or representatives, but expressly excluding any relationship of any Transferred TARGET Person) which relationship existed prior to the Closing Date.

     (b) For purposes of Section 3.6(a) hereof, (i) from the Closing Date until the end of the Earnout Period, PURCHASER shall use its commercially reasonable best efforts in good faith to recognize the revenue that gives rise to the payment of any Contingent Consideration at the earliest date permitted by GAAP and the PURCHASER ’s then-current revenue recognition policy; and (ii) the amount of any revenue which is attributable to a sale which satisfies the conditions set forth in two or more of subsections (i), (ii) or (iii) of Section 3.6(a) hereof shall only be counted once in the calculation of the Earnout Revenues. In addition, notwithstanding anything in Section 3.6(a) hereof to the contrary, the amount of revenue attributable to sales that satisfy the conditions set forth in Section 3.6(a)(i), (ii) or (iii) hereof shall only be included in the calculation of Earnout Revenues if the aggregate gross margin relating to all such sales during the period is at least thirty percent (30%); in calculating such aggregate gross margin, overhead costs shall be allocated to the costs of goods sold in accordance with PURCHASER ’s standard practices, provided that such allocated overhead costs shall not exceed 9% of actual material costs of goods sold associated with such sales.

     (c) From the Closing Date until the end of the Earnout Period, PURCHASER , without Stockholders’ Agent’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, shall not (i) take any action primarily aimed at artificially decreasing the Earnout Revenues, including, without limitation, any action which would result in revenues that would otherwise qualify as Earnout Revenues being recognized after the Earnout Period; (ii)

change PURCHASER ’s accounting practices or procedures so as to render impossible or impracticable the calculation of Earnout Revenues in accordance with the terms hereof; or (iii) take any corporate action to liquidate its Assets or dissolve or wind-up, or to consolidate or merge PURCHASER with or into any other corporation or other business entity unless PURCHASER shall be the surviving legal entity of such consolidation or merger, or the surviving legal entity of such consolidation or merger shall have assumed in full by a written instrument PURCHASER ’s obligations under this Agreement.

     (d) Notwithstanding anything herein to the contrary, subject to Section 3.7 hereof, PURCHASER shall have a right to set-off (the “Set-Off Right”) against the Contingent Consideration which otherwise may be payable by PURCHASER pursuant to Section 3.1 and Section 3.6(a) hereof any amounts to which any PURCHASER Indemnified Person may be entitled to indemnification under Article 12 hereof.

     (i) PURCHASER may elect to exercise the Set-Off Right by delivering to the Stockholders’ Agent during the Escrow Period a notice (the “Set-Off Notice”) signed by an officer of PURCHASER (A) stating that Damages exist and the amount thereof, (B) specifying in reasonable detail the individual items of such Damages included in the amount so stated, the date each such item was paid, or properly accrued or arose, and the nature of the misrepresentation, breach of warranty, covenant or claim to which such item is related, and (C) stating the amount of such Damage with respect to which PURCHASER is exercising the Set-Off Right (the “Set-Off Amount”).

     (ii) PURCHASER shall be entitled to exercise the Set-Off Right with respect to the Set-Off Amount stated in the Set-Off Notice unless the Stockholders’ Agent objects to the claims made in the Set-Off Notice and PURCHASER ’s exercise of the Set-Off Right by delivering to PURCHASER a written statement stating such objection no later than thirty (30) days after PURCHASER delivers the Set-Off Notice to the Stockholders’ Agent. In case the Stockholders’ Agent shall so object in writing, PURCHASER shall have thirty (30) days to respond in a written statement to the objection of the Stockholders’ Agent. If after such thirty (30) day period there remains a dispute as to the claims made in the Set-Off Notice and PURCHASER ’s exercise of the Set-Off Right, then the Stockholders’ Agent and PURCHASER shall attempt in good faith for sixty (60) days to resolve such dispute. If such agreement between PURCHASER and the Stockholders’ Agent can not be reached, then the matter shall be arbitrated in the manner set forth in Section 12.6 hereof.

     (e) If it is finally determined in accordance with Section 3.6(d) that PURCHASER is entitled to exercise the Set-Off Right and the Set-Off Amount with respect to such right, then the amount of the Contingent Consideration otherwise payable by PURCHASER pursuant to Section 3.1 and Section 3.6(a) hereof, and subject to Section 3.7 hereof, shall be reduced by deducting such Set-Off Amount first from the Prior Series E Contingent Consideration. If the Set-Off Amount exceeds the Prior Series E Contingent Consideration, 93% of the amount of such excess shall be deducted from the Series E-3 Contingent Consideration and 7% of the amount of such excess shall be deducted from the Management Contingent Consideration until the entire Set-Off Amount has been applied to offset and reduce the Contingent Consideration.

      SECTION 3.7 Disputes Regarding Calculation of Earnout Revenues .

     (a)  PURCHASER will determine in good faith the amount of the Earnout Revenues, if any, based upon the books and records of TARGET and PURCHASER as soon as practicable and no later than thirty (30) days after the last day of the Earnout Period, and promptly after such determination PURCHASER shall deliver to the Stockholders’ Agent a letter setting out in reasonable detail PURCHASER ’s calculation of the Earnout Revenues and the supporting detail therefor (the “ PURCHASER Determination Notice”). The calculation of the Earnout Revenues set forth in the PURCHASER Determination Notice will be final and binding on PURCHASER and the holders of Outstanding TARGET Shares and Management Members unless the Stockholders’ Agent shall have notified PURCHASER in writing within thirty (30) days after receipt of the PURCHASER Determination Notice that the Stockholders’ Agent disagrees with such calculation. In such event, if the PURCHASER and the Stockholders’ Agent cannot agree on the calculation of the Earnout Revenues within thirty (30) days after PURCHASER’ s receipt of such notice, then a mutually acceptable independent public accountant agreed upon by PURCHASER and the Stockholders’ Agent, will make such calculation as soon thereafter as practicable. Such independent public accountants will deliver as soon as practicable to PURCHASER and the Stockholders’ Agent a letter setting forth such calculation of the Earnout Revenues and the supporting detail therefor (the “Accountant Determination Notice”). The calculation of the Earnout Revenues set forth in the Accountant Determination Notice shall be final and binding on PURCHASER , the holders of the Outstanding TARGET Shares and the Management Members unless PURCHASER or the Stockholders’ Agent shall notify the other within fifteen (15) days after receipt of the Accountant Determination Notice that PURCHASER or the Stockholders’ Agent disputes any matter with respect to such accountants’ calculation. If such notice is given, then any such matters (the “Disputed Matters”) shall be submitted to arbitration in Atlanta, Georgia within fifteen (15) days after such notice unless PURCHASER and the Stockholders’ Agent agree in writing to extend such fifteen (15) day period in an attempt to negotiate a settlement of such Disputed Matters. The arbitrator (the “Arbitrator”) shall be any one of the nationally recognized independent accounting firms which is on the date of this Agreement among the four largest such firms (the “Big Four Accounting Firms”) mutually agreed to by PURCHASER and the Stockholders’ Agent. Any reference herein to the Big Four Accounting Firms shall be deemed to include a reference to any member or employee thereof (who is a certified public accountant) which any such firm may designate as the Arbitrator on its behalf. If within ten (10) days following the expiration of the fifteen (15) day period referred to above or any extension thereof PURCHASER and the Stockholders’ Agent shall have failed to agree upon the selection of the Arbitrator or any such Arbitrator selected by them shall not have agreed to perform the services called for hereunder, the Arbitrator shall thereupon be selected in accordance with the rules of the American Arbitration Association, with preference being given to any one of the Big Four Accounting Firms or any member or employee thereof (who is a certified public accountant) which or who may be willing to perform such services, other than any such firm which is then employed by PURCHASER or any Affiliate thereof. The Arbitrator shall consider only the Disputed Matters and the arbitration shall be conducted in accordance with the rules of the American Arbitration Association then in effect. The Arbitrator shall act promptly to resolve all Disputed Matters and its decision with respect to all Disputed Matters shall be final and binding upon the Parties hereto and shall not be appealable to any court.

     (b) The costs and expenses of the services of the independent public accountants contemplated by Section 3.7(a) hereof shall be paid by the Stockholders’ Agent. If the final and binding calculation of the Earnout Revenues, as determined in accordance with Section 3.7(a) hereof, provides that the Earnout Revenues are equal to or exceed TWELVE MILLION DOLLARS ($12,000,000), then PURCHASER shall reimburse the Stockholders’ Agent for such costs and expenses of the independent public accountants promptly upon the final determination of such calculation. The costs of the Arbitrator shall be paid by the party which disputes the Accountant Determination. Otherwise, each party shall pay its own costs and expenses of arbitration; provided, however, that the non-prevailing party, as determined by the Arbitrator, shall reimburse, subject to the provisions of the last sentence of this subsection, the prevailing party for such costs and expenses of the arbitration. In the event reimbursement of costs and expenses of the arbitration is due to PURCHASER pursuant to this Section 3.7(b), then the holders of the Outstanding TARGET Shares and the Management Members shall (severally and not jointly) indemnify and hold harmless PURCHASER in accordance with Article 12 hereof for such costs and expenses.

     (c)  PURCHASER shall cause the certificates for the PURCHASER Common Stock issuable pursuant to Section 3.6(a), if any, to be issued within five (5) business days of the Contingent Consideration Payment Date.

      SECTION 3.8 No Fractional Shares. Notwithstanding any other provision of this Agreement, each holder of shares of TARGET Series E-3 Stock and TARGET Prior Series E Stock exchanged pursuant to the Merger and each Management Member who would otherwise have been entitled to receive a fraction of a share of PURCHASER Common Stock (after taking into account all certificates delivered by such holder) in respect of Holder Initial Merger Consideration, Management Initial Merger Consideration or Contingent Consideration, if applicable, shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of PURCHASER Common Stock multiplied by the Average Stock Price or the Contingent Consideration Average Stock Price, as applicable. No such holder or member will be entitled to dividends, voting rights, or any other rights as a stockholder in respect of any fractional shares.

      SECTION 3.9 Payment in Cash.

     (a) Notwithstanding anything herein to the contrary, PURCHASER , in its sole discretion, may pay all or any portion of the Holder Initial Merger Consideration, the Management Initial Merger Consideration or the Contingent Consideration in cash to the extent necessary to avoid violating NASDAQ Marketplace Rule 4350, in which case, each holder of a certificate or certificates representing Outstanding TARGET Shares immediately prior to the Effective Time who is entitled to receive a portion of the Holder Initial Merger Consideration or Contingent Consideration pursuant to Section 3.1(c) hereof, and each Management Member who is entitled to receive a portion of the Management Initial Merger Consideration or Management Contingent Consideration pursuant to Section 3.1(b) hereof, shall receive such holder’s Pro Rata Share or such member’s Member Percentage of the aggregate cash amount paid by PURCHASER pursuant to this Section 3.9 in respect of such Holder Initial Merger Consideration, Management Initial Merger Consideration or Contingent Consideration, as applicable, and shall receive the remaining portion of such Holder Initial Merger Consideration,

Management Initial Merger Consideration or Contingent Consideration that such holder or member is otherwise entitled to receive in shares of PURCHASER Common Stock in accordance with Section 3.1(b) and Section 3.1(c) hereof, respectively.

     (b) Furthermore, notwithstanding anything herein to the contrary, PURCHASER , in its sole discretion, may pay the consideration otherwise payable by PURCHASER pursuant to Section 3.1 hereof in cash instead of shares of PURCHASER Common Stock to any Management Member otherwise entitled to receive such consideration if such Management Member does not execute and deliver to PURCHASER an Investor Representation Statement as contemplated by Section 3.1(b) hereof.

      SECTION 3.10 Adjustment to Merger Consideration .

     (a) Attached hereto as Exhibit 3 is (i) a projected unaudited balance sheet of TARGET , which (A) gives effect to the transactions contemplated hereby and other actions of TARGET contemplated herein, including, among other things, the receipt by TARGET of an additional $2,504,486 from the issuance of convertible promissory notes issued prior to the Closing, payment or adequate accrual of transaction expenses, settlement of or adequate accrual for the proceeding referenced in Section 4.15 of the TARGET Disclosure Letter, a $60,000 accrual for 2006 audit fees and all amounts owing to Comerica under that certain Amended and Restated Loan and Security Agreement referenced in Section 4.2 of the TARGET Disclosure Letter, and (B) sets forth TARGET ’s estimate of the Cash Ratio (the “Estimated Cash Ratio”) as of April 3, 2007 and (ii) a schedule of TARGET’s accounts receivable as of the date hereof other than accounts receivable pursuant to the terms and conditions of the Primo Contract (the “Other Accounts Receivable”). If the Closing shall not have been consummated on or prior to April 6, 2007, TARGET shall prepare and deliver to PURCHASER an updated projected unaudited balance sheet of TARGET as of the Closing Date, which (x) gives effect to the transactions contemplated hereby and other actions of TARGET contemplated in the projected balance sheet attached as Exhibit 3 and (y) sets forth an Estimated Cash Ratio updated as of the Closing Date. The balance sheet contemplated by this Section 3.10(a), as updated if applicable, shall be the “Pro Forma Balance Sheet.”

     (b) At PURCHASER ’s option, within ninety-five (95) days following the Closing Date, if it so elects, PURCHASER shall prepare and deliver to the Stockholders’ Agent (i) an unaudited balance sheet (the “Final Balance Sheet”) of the Surviving Corporation as of the Adjustment Date and (ii) a schedule of Other Accounts Receivable that have not been collected by TARGET or any PURCHASER Company on or before the ninetieth (90 ^th ) day following the Closing Date (the “Uncollected Accounts Receivable”). The Final Balance Sheet shall be substantially in the form of the Pro Forma Balance Sheet and shall be prepared in good faith and on a basis consistent with and utilizing the same GAAP compliant principles, practices and policies as those used in preparing the Pro Forma Balance Sheet. The Final Balance Sheet shall set forth the Cash Ratio as of the Adjustment Date (the “Final Cash Ratio”). The Stockholders’ Agent shall be given timely access to all supporting workpapers used in the preparation of the Final Balance Sheet and the schedule of Uncollected Accounts Receivable.

     (c) The Stockholders’ Agent may dispute any amounts reflected on the Final Balance Sheet or the calculation of the Final Cash Ratio or amounts reflected on the schedule of

Uncollected Accounts Receivable by notifying PURCHASER in writing of each disputed item, specifying the amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute, within thirty (30) days of PURCHASER’s delivery of the Final Balance Sheet and schedule of Uncollected Accounts Receivable pursuant to Section 3.10(b) hereof. If the Stockholders’ Agent delivers a notice of disagreement within such thirty (30)-day period, the Stockholders’ Agent and PURCHASER shall, during the thirty (30) days following such delivery, each use good faith efforts to reach agreement on the disputed items or amounts in order to finally determine the Final Balance Sheet, Final Cash Ratio and/or Uncollected Accounts Receivable. If the Stockholders’ Agent and PURCHASER are unable to reach agreement concerning the Final Balance Sheet, Final Cash Ratio and/or Uncollected Accounts Receivable during such thirty (30)-day period, either PURCHASER or the Stockholders’ Agent may, by written notice to the other, demand arbitration of the matter in accordance with the procedures set forth in Section 12.6 hereof.

     (d) The Final Balance Sheet, Final Cash Ratio and Uncollected Accounts Receivable shall be deemed conclusively determined for purposes of this Agreement upon the earlier to occur of (i) the failure of the Stockholders’ Agent to notify PURCHASER of a dispute within thirty (30) days of PURCHASER ’s delivery of the Final Balance Sheet and schedule of Uncollected Accounts Receivable as set forth in Section 3.10(c) hereof, (ii) the written resolution of all disputes pursuant to Section 3.10(c) hereof by PURCHASER and the Stockholders’ Agent, and (iii) the resolution of all disputes by the arbitrator pursuant to Section 12.6 hereof. Within three (3) business days of such conclusive determination: if (A) the Final Cash Ratio is less than 2.30, and/or (B) the amount of the Uncollected Accounts Receivable exceeds the Established Reserve, then PURCHASER and the Stockholders’ Agent shall jointly instruct the Escrow Agent in writing to transfer from the Escrow Amount to PURCHASER an amount equal to the Adjustment Amount.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TARGET

     With such exceptions, if any, as may be disclosed forth in a letter (the “ TARGET Disclosure Letter”) to be delivered by TARGET to PURCHASER on the date hereof, TARGET hereby represents and warrants to PURCHASER as follows:

      SECTION 4.1 Organization, Standing and Power. TARGET is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Delaware. TARGET has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets. TARGET is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET . The TARGET Disclosure Letter contains a true and complete list of all jurisdictions in which TARGET is duly qualified or licensed to transact business as a foreign corporation. TARGET has no Subsidiaries.

      SECTION 4.2 Authority; No Breach.

     (a)  TARGET has all corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and any Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and any Ancillary Agreements and the consummation of the transactions contemplated herein and therein, including, without limitation, the Merger, have been duly and validly authorized by all necessary corporate action in respect thereof on the part of TARGET . This Agreement and the Merger have been approved by TARGET ’s stockholders in accordance with the DGCL and TARGET ’s Amended and Restated Certificate of Incorporation, as amended. Assuming due authorization, execution and delivery by the other parties hereto and thereto, this Agreement and any Ancillary Agreements represent legal, valid, and binding obligations of TARGET , enforceable against TARGET in accordance with their terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought).

     (b) Neither the execution and delivery of this Agreement or any Ancillary Agreements by TARGET , nor the consummation by TARGET of the transactions contemplated hereby or thereby, nor compliance by TARGET with any of the provisions hereof or thereof, will (i) conflict with or result in a breach of any provision of TARGET ’s Amended and Restated Certificate of Incorporation, as amended, or Bylaws; (ii) constitute or result in a Default under, or other than those Consents listed in the TARGET Disclosure Letter, require any Consent pursuant to, or result in the creation of any Lien on any Asset of TARGET under, any Contract or Permit of TARGET , where such Default or Lien, or any failure to obtain such Consent, is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET ; or (iii) violate any Law or Order applicable to TARGET or any of its Assets.

     (c) Other than in connection or compliance with the provisions of the Securities Laws and applicable state corporate and securities Laws, and other than Consents required from Regulatory Authorities, and other than notices to or filings with the Internal Revenue Service, and other than Consents, filings or notifications which, if not obtained or made, are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , no notice to, filing with, or Consent of any public body or authority is necessary for the consummation by TARGET of the Merger and the other transactions contemplated in this Agreement and any Ancillary Agreements.

      SECTION 4.3 Capital Stock.

     (a) As of the date hereof, the authorized capital stock of TARGET consists of (i) 72,469,573 shares of TARGET Common Stock, of which 3,191,197 shares are issued and outstanding as of the date of this Agreement; (ii) 128,000,780 shares of TARGET Preferred Stock, of which (a) 1,690,000 shares designated as Series A Preferred Stock are issued and outstanding as of the date of this Agreement, (b) 1,824,905 shares designated as Series B Preferred Stock are issued and outstanding as of the date of this Agreement, (c) 3,727,930 shares

designated as Series C Preferred Stock are issued and outstanding as of the date of this Agreement, (d) 10,121,720 shares designated as Series D Preferred Stock are issued and outstanding as of the date of this Agreement, (e) 10,762,472 shares designated as Series D-1 Preferred Stock are issued and outstanding as of the date of this Agreement, (f) 2,797,509 shares designated as Series E Preferred Stock are issued and outstanding as of the date of this Agreement, (g) 2,805,010 shares designated as Series E-1 Preferred Stock are issued and outstanding as of the date of this Agreement, (h) 402,035 shares designated as Series E-1A Preferred Stock are issued and outstanding as of the date of this Agreement, (i) no shares designated as Series E-2 Preferred Stock are issued and outstanding as of the date of this Agreement, and (j) no shares designated as Series E-3 Preferred Stock are issued and outstanding as of the date of this Agreement. The TARGET Disclosure Letter sets forth the aggregate liquidation preference for each series of the TARGET Preferred Stock as of the date hereof.

     (b) All of the issued and outstanding shares of TARGET Capital Stock are duly authorized, validly issued and outstanding, fully paid and nonassessable under the DGCL. None of the outstanding shares of TARGET Capital Stock has been issued in violation of any preemptive rights of the current or past stockholders of TARGET .

     (c) Except as set forth in Section 4.3(a) hereof and in the TARGET Disclosure Letter, there are no shares of capital stock or other equity securities of TARGET outstanding and no outstanding options, warrants, scrip, rights to subscribe to, calls, promissory notes, or commitments or instruments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of TARGET or contracts, commitments, understandings, or arrangements by which TARGET is or may be bound to issue additional shares of its capital stock or options, warrants, or rights to purchase or acquire any additional shares of its capital stock (collectively, the “ TARGET Derivative Securities”). As of the Effective Time, all TARGET Derivative Securities outstanding as of the date of this Agreement and all TARGET Derivative Securities issued by TARGET after such date shall be exercised for or converted into shares of TARGET Capital Stock or shall, in the case of options and warrants outstanding (including those assumed by the Surviving Corporation as contemplated by Section 8.7 hereof), represent the right on and after the Effective Time to receive upon exercise thereof the consideration (if any) that a holder of TARGET Capital Stock of the same class or series underlying such option or warrant would have received if such option or warrant had been exercised prior to the Effective Time, but in no event shall the holder of any such option or warrant have any right to purchase or acquire any interest in the Surviving Corporation.

     (d) The TARGET Disclosure Letter sets forth a complete and accurate list of the TARGET stockholders as of the date hereof, including the number of shares, series and class of the TARGET Capital Stock held by each such stockholder. Each Management Member and Bowen own shares of TARGET Capital Stock.

      SECTION 4.4 Financial Statements.

     (a)  TARGET has previously delivered to PURCHASER copies of all TARGET Financial Statements prepared prior to the date hereof. The TARGET Financial Statements (as of the dates thereof and for the periods covered thereby) (i) are in accordance with the books and

records of TARGET , which are complete and correct in all material respects; and (ii) present fairly in all material respects the financial position of TARGET as of the dates indicated and the results of operations, changes in stockholders’ equity, and cash flows of TARGET for the periods indicated, in accordance with GAAP (subject to any exceptions as to consistency specified therein or as may be indicated in the notes thereto or, in the case of interim financial statements, to normal recurring year-end adjustments that are not material and the absence of notes and schedules).

     (b)  TARGET maintains internal accounting controls, policies and procedures, and such books and records as are reasonably designed to provide reasonable assurance that (i) all transactions to which TARGET is a party or by which its properties are bound are effected by a duly authorized employee or agent of TARGET , supervised by and acting within the scope of the authority granted by the senior management of TARGET ; (ii) the recorded accounting of the Assets of TARGET is compared with existing assets at regular intervals; and (iii) all transactions to which TARGET is a party, or by which its properties are bound, are recorded (and such records maintained) as necessary to ensure that the TARGET Financial Statements are prepared in accordance with GAAP.

      SECTION 4.5 Absence of Undisclosed Liabilities. TARGET has no Liabilities that are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , except Liabilities which are accrued or reserved against in the balance sheet of TARGET as of December 31, 2006 that are included in the TARGET Financial Statements or reflected in the notes thereto. TARGET has not incurred or paid any Liability since December 31, 2006, except for such Liabilities incurred or paid in the ordinary course of business consistent with past business practice and which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET or as disclosed in the TARGET Disclosure Letter.

      SECTION 4.6 Absence of Certain Changes of Events. Except as set forth in the TARGET Disclosure Letter, (a) since December 31, 2006, there have been no events, changes or occurrences which have had, or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET ; and (b) TARGET has not taken any action, or failed to take any action, prior to the date of this Agreement, which action or failure, if taken after the date of this Agreement, would represent or result in a breach or violation of any of the covenants and agreements of TARGET provided in Article 7 hereof.

      SECTION 4.7 Tax Matters.

     (a) All Tax returns required to be filed by or on behalf of TARGET have been duly filed or requests for extensions have been timely filed, granted, and have not expired for periods ended on or before the date of the most recent fiscal year end immediately preceding the Effective Time, except to the extent that all such failures to file, taken together, are not reasonably likely to have a Material Adverse Effect on TARGET , and all returns filed are complete and accurate in all material respects to the Knowledge of TARGET . All Taxes shown on filed returns have been paid. As of the date of this Agreement, except as set forth in the TARGET Disclosure Letter, there is no audit examination, deficiency, or refund Litigation with respect to any Taxes that is reasonably likely to result in a determination that would have,

individually or in the aggregate, a Material Adverse Effect on TARGET , except as reserved against in the TARGET Financial Statements delivered prior to the date of this Agreement. All Taxes and other Liabilities due with respect to completed and settled examinations or concluded Litigation have been paid.

     (b) Except as set forth in the TARGET Disclosure Letter, TARGET has not executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due that is currently in effect, and no unpaid tax deficiency has been asserted in writing against or with respect to TARGET , which deficiency is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (c) Adequate provision for any Taxes due for TARGET for the period or periods through and including the date of the TARGET Financial Statements has been made and is reflected on such TARGET Financial Statements in accordance with GAAP.

     (d) Deferred Taxes of TARGET have been provided for in accordance with GAAP.

     (e) To the Knowledge of TARGET , TARGET is in material compliance with, and its records contain all material information and documents (including, without limitation, properly completed IRS Forms W-9) necessary to comply in all material respects with, all applicable information reporting and Tax withholding requirements under federal, state and local Tax Laws, except for such instances of noncompliance and such omissions as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

      SECTION 4.8 TARGET Patents, Trademarks and Trade Names. The TARGET Disclosure Letter sets forth a true and complete list of: (a) all patents, trademarks and trade names (including, without limitation, all federal, state and foreign registrations pertaining thereto) and all copyright registrations owned by TARGET (collectively, the “Proprietary Intellectual Property”); and (b) all patents, trademarks, trade names, copyrights and all technology and processes currently used by TARGET in its business which are material to its business and are used pursuant to a license or other right granted by a third party (collectively, the “Licensed Intellectual Property” and, together with the Proprietary Intellectual Property, herein referred to as “Intellectual Property”). A true and complete list of all such licenses with respect to Licensed Intellectual Property is set forth in the TARGET Disclosure Letter. Each of the federal, state and foreign registrations pertaining to the Proprietary Intellectual Property is valid and in full force and effect. All required filings in association with such registrations have been properly made and all required fees have been paid, except where a failure to make such filings or remit such payments are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , TARGET owns, or has the right to use pursuant to valid and effective agreements, all Intellectual Property, and the consummation of the transactions contemplated hereby will not alter or impair any such rights, except for such defects in title or other matters which in the aggregate would not have a Material Adverse Effect on TARGET . No claims are pending against TARGET by any person with respect to the use of any Intellectual Property or challenging or questioning the validity or effectiveness of any material license or agreement relating to the same that is in force as of the date hereof, and, to the Knowledge of TARGET , the current use by TARGET of the Intellectual Property does not infringe on the patent or trademark rights of any third party.

      SECTION 4.9 Assets. Except as disclosed or reserved against in the TARGET Financial Statements or in the TARGET Disclosure Letter, TARGET has good and marketable title, free and clear of all Liens, to all of its Assets. All material tangible properties used in the business of TARGET are in good condition, reasonable wear and tear excepted, and are usable in the ordinary course of business consistent with TARGET ’s past practices. All Assets that are material to the business of TARGET , held under leases or subleases by TARGET are held under valid Contracts enforceable in accordance with their respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceedings may be brought), and to the Knowledge of TARGET , each such Contract is in full force and effect. To the Knowledge of TARGET , the policies of fire, theft, liability, and other insurance maintained with respect to the Assets or business of TARGET provide adequate coverage in light of TARGET ’s current business practices against loss or Liability, and the fidelity and blanket bonds in effect as to which TARGET is a named insured are reasonably sufficient. The Assets of TARGET include all material assets required to operate the business of TARGET as presently conducted.

      SECTION 4.10 Environmental Matters.

     (a)  TARGET , its Participation Facilities and its Loan Properties are, and have been, in compliance with all Environmental Laws, except for violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (b) There is no Litigation pending which TARGET has received proper notice or service thereof or, to the Knowledge of TARGET , threatened before any court, governmental agency or regulatory authority in which TARGET or any of its Participation Facilities has been or, with respect to threatened Litigation, is reasonably likely to be named as a defendant (i) for alleged noncompliance with any Environmental Law or (ii) relating to TARGET ’s release into the environment of any Hazardous Material or oil, occurring at, on, under or involving a site owned, leased or operated by TARGET or any of its Participation Facilities, except for such Litigation pending or, to the Knowledge of TARGET , threatened that is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (c) There is no Litigation pending which TARGET has received proper notice or service thereof or, to the Knowledge of TARGET , threatened before any court, governmental agency or regulatory authority in which any of its Loan Properties has been or, with respect to threatened litigation, is reasonably likely to be named as a defendant (i) for alleged noncompliance with any Environmental Law or (ii) relating to TARGET ’s release into the environment of any Hazardous Material or oil, occurring at, on, under or involving a Loan Property, except for such Litigation pending or, to the Knowledge of TARGET , threatened that is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (d) During the period of (i) TARGET ’s ownership or operation of any of its respective current properties, (ii) TARGET ’s participation in the management of any

Participation Facility, or (iii) TARGET ’s holding of a security interest in a Loan Property, there have been no releases of Hazardous Material or oil by TARGET in, on, under or affecting any such property, Participation Facility, or to the Knowledge of TARGET , Loan Property, except such as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

      SECTION 4.11 Compliance with Laws.

     (a)  TARGET has in effect all Permits necessary for it to own, lease or operate its Assets and to carry on its business as now conducted, except for those Permits the absence of which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , and there has occurred no Default under any such Permit, other than Defaults which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (b)  TARGET :

     (i) is not in violation of any Laws, Orders or Permits applicable to its business or employees conducting its business, except for violations which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET ; and

     (ii) has not received any notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (A) asserting that TARGET is not in compliance with any of the applicable Laws or Orders which such governmental authority or Regulatory Authority enforces, where such noncompliance is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , (B) threatening to revoke any Permits, the revocation of which is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , or (C) requiring TARGET to enter into or consent to the issuance of a cease and desist order, formal agreement, directive, commitment or memorandum of understanding, or to adopt any Board resolution or similar undertaking, which restricts materially the conduct of its business, or in any manner relates to its capital adequacy, its credit or reserve policies, its management, or the payment of dividends.

      SECTION 4.12 Labor Relations and Employee Matters.

     (a)  TARGET is not the subject of any Litigation asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state law) or seeking to compel it to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving TARGET , pending or, to the Knowledge of TARGET , threatened, nor to the Knowledge of any TARGET Company, is there any activity involving TARGET ’s employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

     (b) Except as set forth in the TARGET Disclosure Letter, TARGET has not violated, and has not incurred any liabilities under, the Worker Adjustment and Retraining

Notification Act (the “WARN Act”) or any similar state or local Law. During the ninety (90) day period prior to the date of this Agreement, TARGET has terminated fifteen (15) employees, and TARGET has paid in full to such terminated employees all accrued salary and other compensation payable to them through and including the date of such termination. As of the date hereof, TARGET has two (2) employees and, except for compensation payable to them by TARGET with respect to the pay period which includes the date hereof, TARGET has paid such employees all amounts of compensation payable to them as of the date hereof.

     (c) All Persons employed by TARGET prior to the date of this Agreement have executed an Employee Invention Assignment, Non-Disclosure, Non-Solicitation and Non-Competition Agreement, the form of which has been delivered to PURCHASER prior to the date hereof, and such Persons’ obligations thereunder have not been modified or amended after the date of such execution.

      SECTION 4.13 Employee Benefit Plans.

     (a)  TARGET has set forth in the TARGET Disclosure Letter, and delivered or made available to PURCHASER , copies in each case of all pension, retirement, profit-sharing, deferred compensation, stock option, employee stock ownership, severance pay, vacation, bonus, or other incentive plans, all medical, vision, dental, or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including, without limitation, “employee benefit plans,” as that term is defined in Section 3(3) of ERISA, as currently adopted, maintained by, sponsored in whole or in part by, or contributed to by TARGET or any Affiliate thereof for the benefit of employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries and under which employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries are eligible to participate (collectively, the “ TARGET Benefit Plans”). Any of the TARGET Benefit Plans which is an “employee pension benefit plan,” as that term is defined in Section 3(2) of ERISA, is referred to herein as a “ TARGET ERISA Plan.” No TARGET ERISA Plan is also a “defined benefit plan” (as defined in Section 414(j)) of the Internal Revenue Code).

     (b) All TARGET Benefit Plans are in compliance with the applicable terms of ERISA, the Internal Revenue Code, and any other applicable Laws the breach or violation of which are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET . Each TARGET ERISA Plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code has received a favorable determination or opinion letter from the Internal Revenue Service, and TARGET is not aware of any circumstances likely to result in revocation of any such favorable determination or opinion letter. To the Knowledge of TARGET , TARGET has not engaged in a transaction with respect to any TARGET Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof would subject TARGET to a tax or penalty imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

     (c) Within the six-year period preceding the Effective Time, to TARGET ’s Knowledge, no Liability under Subtitle C or D of Title IV or ERISA has been or is expected to be incurred by TARGET with respect to any ongoing, frozen or terminated single-employer plan

or the single-employer plan of any ERISA Affiliate, which Liability is reasonably likely to have a Material Adverse Effect on TARGET . TARGET has not incurred any withdrawal Liability with respect to a multi-employer plan under Subtitle B of Title TV or ERISA (regardless of whether based on contributions of an ERISA Affiliate), which Liability is reasonably likely to have a Material Adverse Effect on TARGET . No notice of a “reportable event,” within the meaning of Section 4043 of ERISA for which the thirty (30)-day reporting requirement has not been waived, has been required to be filed by any ERISA Affiliate within the twelve (12)-month period ending on the date hereof.

     (d)  TARGET does not have any obligations for retiree health benefits under any of the TARGET Benefit Plans and there are no restrictions on the rights of TARGET to amend or terminate any such Plan without incurring any Liability thereunder, which Liability is reasonably likely to have a Material Adverse Effect on TARGET .

     (e) Except as set forth in the TARGET Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any employee of TARGET from TARGET under any TARGET Benefit Plan or otherwise, (ii) materially increase any benefits otherwise payable under any TARGET Benefit Plan, or (iii) result in any acceleration of the time of payment or vesting of any such benefit.

     (f) The actuarial present values of all accrued deferred compensation entitlements (including, without limitation, entitlements under any executive compensation, supplemental retirement, or employment agreement) of employees and former employees of TARGET and their respective beneficiaries, other than entitlements accrued pursuant to funded retirement plans subject to the provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA, have been fully reflected on the TARGET Financial Statements to the extent required by and in accordance with GAAP.

      SECTION 4.14 Material Contracts. Neither TARGET , nor any of its respective Assets, business or operations, is a party to, or is bound or affected by, or receives benefits under, (a) any employment, severance, termination, consulting or retirement Contract providing for aggregate payments to any Person in any calendar year in excess of $10,000, and (b) any Contract relating to the borrowing of money by TARGET or the guarantee by TARGET of any such obligation (other than Contracts evidencing deposit liabilities, purchases of federal funds, fully secured repurchase agreements, trade payables, and Contracts relating to borrowings or guarantees made in the ordinary course of business) (together with all Contracts referred to in Section 4.9 and Section 4.13(a) hereof, the “ TARGET Contracts”). To its Knowledge and except as disclosed in the TARGET Disclosure Letter, TARGET is not in Default under any TARGET Contract. All of the indebtedness of TARGET for money borrowed is prepayable at any time by TARGET without penalty or premium.

      SECTION 4.15 Legal Proceedings. Except as disclosed in the TARGET Disclosure Letter, there is no Litigation instituted or pending or, to the Knowledge of TARGET , threatened (or unasserted but considered probable of assertion and which, if asserted, would have at least a reasonable probability of an unfavorable outcome) against TARGET , or against any Asset,

interest, or right of TARGET , that is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET , nor are there any Orders of any Regulatory Authorities, other governmental authorities, or arbitrators outstanding against TARGET , that are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on TARGET .

      SECTION 4.16 Reports. Since January 1, 2005, TARGET has timely filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with all Regulatory Authorities, except for such reports, the failure of which to file would not have a Material Adverse Effect on TARGET . As of their respective dates, each of such reports and documents, including the financial statements, exhibits, and schedules thereto, complied in all material respects with all applicable Laws. As of their respective dates, none of such reports or documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

      SECTION 4.17 Statements True and Correct. No statement, certificate, instrument or other writing furnished or to be furnished by TARGET or any Affiliate thereof to PURCHASER pursuant to this Agreement or Ancillary Agreement contains or will contain any untrue statement of material fact or omits or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied or to be supplied by TARGET or any Affiliate thereof for inclusion in any documents to be filed by PURCHASER, TARGET or any Affiliate thereof with the SEC or any other Regulatory Authority in connection with the transactions contemplated hereby, will, at the respective time such required documents are filed be false or misleading with respect to any material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All documents that TARGET or any Affiliate thereof is responsible for filing with any Regulatory Authority in connection with the transactions contemplated hereby will comply as to form in all material respects with the provisions of applicable Law.

      SECTION 4.18 Charter and Bylaw Provisions. TARGET has taken all necessary corporate action so that the entering into of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement do not and will not result in the grant of any rights to any Person under the Amended and Restated Certificate of Incorporation, as amended, or the Bylaws or restrict or impair the ability of PURCHASER to vote, or otherwise to exercise the rights of a stockholder with respect to, shares of TARGET that may be acquired or controlled by it.

      SECTION 4.19 Investor Status. Except for the Person identified on the TARGET Disclosure Letter, to the Knowledge of TARGET each Person entitled to receive shares of PURCHASER Common Stock pursuant to or as contemplated by this Agreement, including, without limitation, Stephen Crummey and Bowen, is an “accredited investor” as such term is defined in Rule 501 promulgated under the 1933 Act.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

     With such exceptions, if any, as may be disclosed in a letter (the “ PURCHASER Disclosure Letter”) to be delivered by PURCHASER to TARGET on the date hereof or as disclosed in the Current SEC Documents, PURCHASER hereby represents and warrants to the TARGET and the TARGET Indemnified Persons as follows:

      SECTION 5.1 Organization, Standing and Power. PURCHASER is a corporation duly organized, validly existing, and in good standing under the laws of the State of Minnesota. PURCHASER has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets. PURCHASER is duly qualified or licensed to transact business as a foreign corporation in good standing in the states of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on PURCHASER .

      SECTION 5.2 Authority; No Breach.

     (a)  PURCHASER has all corporate power and authority necessary to execute, deliver and per