AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of December 21, 2006, by and among Open Energy Corporation, a Nevada corporation ("Open Energy"), Open Energy/WE Acquisition Corporation, a Nevada corporation ("Buyer"), and WaterEye Corporation, a Delaware corporation (hereinafter referred to as the "Company" or "WaterEye"), the Persons listed in Exhibit A who are signatory hereto, including those who agree to be bound by this Agreement pursuant to a Joinder Agreement (as defined herein) (individually each such Person is referred to herein as a "Seller" and collectively, as "Sellers"), and Marvin Brown, as representative of the WaterEye stockholders for certain purposes described herein (the "Stockholders’ Representative").

RECITALS

WHEREAS , Sellers are the beneficial and record owners of all or substantially all of the issued and outstanding shares of the capital stock of the Company (the "WaterEye Shares," as further set forth and defined in Section 3.3 below); and

WHEREAS , Buyer is a wholly owned subsidiary of Open Energy; and

WHEREAS , the Board of Directors of Buyer and the Board of Directors of the Company deem it advisable and in the best interests of Buyer and the Company, respectively, and their respective shareholders and stockholders, that Open Energy, through Buyer, acquire the Company upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS , in order to effectuate the acquisition, the parties have agreed, subject to the terms and conditions set forth in this Agreement, to merge the Company with and into the Buyer so that the Buyer continues as the surviving corporation after the consummation of the Merger; and

WHEREAS , as a result of the Merger, the separate existence of the Company will terminate and Buyer, as the surviving corporation after the consummation of the Merger will continue to exist as a wholly owned subsidiary of Open Energy, and the Sellers will receive the consideration described in Section 2.2.1 of this Agreement; and

WHEREAS , the parties hereby adopt this Agreement as a "plan of reorganization" within the meaning of Treasury Regulations section 1.368-2(g) pursuant to which the Merger is treated as a "reorganization" under Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the " Code "); and

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1:

"Applicable Contract" shall mean any Contract (a) under which the Company has or may acquire any rights, (b) under which the Company has or may become subject to any obligation or liability, or (c) by which the Company or any of the assets owned or used by it is or may become bound.

"Asserted Liability" shall mean any demand, claim or circumstance which, with the lapse of time, would give rise to a claim or the commencement (or threatened commencement) of any action, proceeding or investigation relative to the General Indemnification, or relative to Open Energy’s obligation to indemnify under Section 10 for which notice of indemnity claim has been given under Section 10.2 or 10.3.

"Balance Sheet" shall mean the Company’s Balance Sheet as of November 30, 2006.

"Best Efforts" shall mean the commercially reasonable efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved; provided, however, that an obligation to use Best Efforts under this Agreement does not require the Person subject to that obligation to take actions that would result in a materially adverse change in the benefits to such Person of this Agreement and the Contemplated Transactions.

"Breach" shall mean that there is or has been, (a) any inaccuracy in or breach of, or any failure to perform or comply with a representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement, or (b) any claim (by any Person) or other occurrence or circumstance that is or was inconsistent with such representation, warranty, covenant, obligation, or other provision.

"Company" shall mean the Company and each of the subsidiaries and affiliates referred to in Section 3.1.

"Confidentiality Agreement" shall mean the Mutual Confidential Disclosure Agreement effective as of May 1, 2006 between Open Energy and the Company.

"Consent" shall mean any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

"Contemplated Transactions" shall mean all of the transactions contemplated by this Agreement, including, but not limited to:

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(a)   the execution, delivery, and performance of a Confidentiality, Nondisclosure and Assignment of Inventions Agreement by certain Sellers;

(b)   the execution, delivery, and performance of a Non-competition Agreement by certain Sellers;

(c)   the performance by Open Energy, Buyer, the Company and Sellers of their respective covenants and obligations under this Agreement;

(d)   the merger of the Buyer with and into the Company and the conversion of the WaterEye Shares into the right to receive the Open Energy Merger Shares;

"Contract" shall mean any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

"Damages" shall mean as defined in Section 10.

"Disclosure Letter" shall mean the disclosure letter delivered by the Company to Open Energy concurrently with the execution and delivery of this Agreement.

"Effective Date" shall mean the date this Agreement is executed by all of the parties hereto.

"Effective Time" shall mean as defined in Section 2.1.1.

"Encumbrance" shall mean any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

"Environmental, Health, and Safety Liabilities" shall mean any cost, damages, expense, liability, obligation, or other responsibility arising from or under environmental law or Occupational Safety and Health Law and consisting of or relating to:

(a)   any environmental, health, or safety matters or conditions;

(b)   fines, penalties, judgments, losses, claims or demands arising under Environmental Law or Occupational Safety and Health Law;

(c)   financial responsibility under environmental law or Occupational Safety and Health Law for cleanup costs or corrective action,; or

(d)   any other compliance, corrective, investigative, or remedial measures required under any environmental law or Occupational Safety and Health Law.

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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

"Exchange Act" shall mean shall mean the Securities Exchange Act of 1934, as amended, or any successor law, and regulations or rules issued pursuant to that Act or any successor law.

"Exchange Agent" shall have the meaning set forth in Section 2.2.5 hereof.

"Facilities" shall mean any real property, leaseholds, or other interests currently or formerly owned or operated by the Company and any buildings, plants, structures, or equipment (including motor vehicles) currently or formerly owned or operated by the Company.

"Financial Statements" shall mean the financial statements of the Company referenced in Section 3.4.

"GAAP" shall mean generally accepted United States accounting principles, applied on a consistent basis.

"General Holdback Stock" shall mean five percent (5%) of the Open Energy Merger Shares to be issued to Sellers under Section 2.2.1, and to be held in the General Holdback Account.

"General Holdback Account" shall mean the account consisting of the General Holdback Stock of Sellers, to be established with, and administered by, Open Energy to secure the General Indemnification by the Sellers.

"General Indemnification" shall mean the obligation of the Sellers under Section 10 to indemnify Open Energy.

"Governmental Authorization" shall mean any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

"Governmental Body" shall mean any federal, state, local, municipal, foreign, or other government; governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

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"Intellectual Property Assets" shall mean as defined in Section 3.21.

"IRS" shall mean the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury.

"Joinder Agreement" shall have the meaning given in Section 13.15.

"Knowledge" shall mean an individual will be deemed to have "Knowledge" of a particular fact or other matter if:

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

(b)   a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the existence of such fact or other matter.

A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, trustee or beneficiary of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.

"Knowledge of the Company",   "to the Company’s Knowledge" or "known to the Company" shall mean the Knowledge of Thomas D. Wolfe, Leonard Slater and Marvin D. Brown.

"Legal Requirement" shall mean any law, ordinance, principle of common law, regulation, statute, or treaty of a Governmental Body.

"Management Sellers" shall mean Thomas D. Wolfe and Leonard Slater.

"Material Adverse Change" shall mean a change in the assets (including intangible assets), properties, business, operations or conditions (financial or otherwise), or results of operations of a Person with a negative impact of $50,000 or more.

"Merger Closing" shall mean as defined in Section 2.3.

"Merger Closing Date" shall mean the date and time as of which the Merger Closing actually takes place.

"Open Energy Merger Shares" shall mean as defined in Section 2.2.1.

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"Occupational Safety and Health Law" shall mean any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.

"Open Energy Disclosure Letter" shall mean the disclosure letter delivered by Open Energy to Company concurrently with the execution and delivery of this Agreement

"Open Energy Financial Statements" shall mean those financial statements called for by Section 4.6.

"Order" shall mean any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

"Ordinary Course of Business" shall mean an action taken by a Person will be deemed to have been taken in the "Ordinary Course of Business" only if:

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

(b)   such action is similar in nature and magnitude to actions customarily taken, in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

"Organizational Documents" shall mean (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (e) any amendment to any of the foregoing.

"Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.

"Plan" shall mean as defined in Section 3.12.

"Proceeding" shall mean any action, arbitration, audit, contest, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

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"Related Person" shall mean with respect to a particular individual:

(a)   each other member of such individual's Family;

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

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

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

With respect to a specified Person other than an individual:

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

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

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

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

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

(f)   any Related Person of any individual described in clause (b) or (c).

For purposes of this definition, (a) the "Family" of an individual includes (i) the individual, (ii) the individual's spouse and former spouses, (iii) any other natural person who is related to the individual or the individual's spouse within the second degree, and (iv) any other natural person who resides with such individual, and (b) "Material Interest" means direct or indirect beneficial ownership (as defined in Rule 3d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least 1% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 1% of the outstanding equity securities or equity interests in a Person.

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"Representative" shall mean with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

"Securities Act" shall mean the Securities Act of 1933, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

"Subsidiary" shall mean with respect to any Person (the "Owner"), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries; when used without reference to a particular Person, "Subsidiary" means a Subsidiary of the Company.

"Superior Proposal" means a bona fide written proposal for a competing transaction which the Board of Directors of the Company concludes in good faith, after consultation with its financial advisor and its legal advisors, taking into account all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal (i) is more favorable to the Company’s stockholders, from a financial point of view, than the transactions contemplated by this Agreement and (ii) is fully financed or reasonably capable of being fully financed, reasonably likely to receive all required Governmental Authorizations on a timely basis and otherwise reasonably capable of being completed on the terms proposed.

"Surviving Corporation" shall mean the Buyer as specified in Section 2.1.

"Stockholders’ Representative" shall mean Marvin Brown.

"Tax" or "Taxes" shall mean taxes of any kind, liens or other like assessments, customs duties, imposts, charges or fees, including, without limitation, income, gross receipts, ad valorem, value-added, excise, real or personal property, asset, sales, use, stamp, stock transfer, license, payroll, transaction, capital, net worth and franchise taxes, withholding, employment, social security, workers' compensation, occupation, premium, windfall profits, surplus lines, transfer and gains taxes or other governmental taxes imposed or payable to the United States, or any state, county, local or foreign government or subdivision or agency thereof, and in each instance such term shall include any interest, penalties or additions to tax attributable to such tax.

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"Tax Return" shall mean any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

"Threatened" a claim, Proceeding, dispute, action, or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.

"Volume Weighted Average Price" or "VWAP" shall mean the sum of the closing bid values per share of Open Energy common stock for the twenty (20) trading days immediately prior to the Effective Time multiplied by the corresponding daily volume and divided by the total volume over the twenty trading days as reported on the Over The Counter Bulletin Board ("OTCBB").

"WaterEye Shares" shall mean as defined in Section 2.2.1.

2.1 The Merger . Subject to the terms and conditions of this Agreement, in accordance with the Nevada Revised Statutes, at the Effective Time, the Company shall merge with and into the Buyer (the "Merger"). The Buyer shall be the "Surviving Corporation" in the Merger, and its corporate existence shall continue under the laws of the State of Nevada. Upon consummation of the Merger, the separate corporate existence of the Company shall terminate.

2.1.1 Effective Time of the Merger . The Merger shall become effective as of such time as the Articles of Merger and the Certificate of Merger, respectively are duly filed with the Nevada Secretary of State and the Delaware Secretary of State, respectively, or at such other time thereafter as is specified in the Articles of Merger and the Certificate of Merger (the "Effective Time").

2.1.2 Effects of Merger . From and after the Effective Time, the Merger shall have the effects set forth in the Nevada Revised Statutes.

2.1.3 Articles of Incorporation . The Articles of Incorporation of the Buyer, as in effect on the Merger Closing Date, shall be, until duly amended in accordance with applicable law, the Articles of Incorporation of the Surviving Corporation, except that the Articles of Incorporation shall be amended to provide that the name of the Surviving Corporation shall be WaterEye Corporation.

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2.1.4 Bylaws . The Bylaws of the Buyer, as in effect on the Merger Closing Date, shall be, until duly amended in accordance with their terms, the Bylaws of the Surviving Corporation except that the Bylaws shall be amended to provide that the name of the Surviving Corporation shall be WaterEye Corporation.

2.1.5 Directors . The Board of Directors of the Buyer immediately prior to the Merger Closing Date shall constitute the Board of Directors of the Surviving Corporation from and after the Merger Closing Date until their successors have been duly elected and qualified as provided in the Bylaws of the Surviving Corporation.

2.1.6 Officers . The officers of the Buyer on the Merger Closing Date shall, after the Merger Closing Date, constitute the officers of the Surviving Corporation until their successors shall have been duly elected and qualified as provided in the Bylaws of the Surviving Corporation.

2.2 Conversion of WaterEye Shares . The manner of converting shares of the Company and Buyer in the Merger shall be as follows:

2.2.1 At the Effective Time all of the shares of capital stock of the Company issued and outstanding on the Merger Closing Date (the "WaterEye Shares"), shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive a total number of shares of common stock of Open Energy, par value $.001 per share (the "Open Energy Merger Shares") equal to the number derived by dividing $2,911,423.27 by the VWAP. No fraction of an Open Energy Merger Share shall be issued, but in lieu thereof each holder of WaterEye Shares who would otherwise be entitled to a fraction of an Open Energy Merger Share and after aggregating all fractional shares of like Open Energy Merger Shares to be received by such holder, shall receive from Open Energy an amount of cash (rounded to the nearest whole cent) equal to the value of such fractional shares. The fractional share interests of each Company stockholder shall be aggregated, so that no Company stockholder shall receive cash in respect of fractional share interests in an amount greater than the value of such full Open Energy Merger Share. With respect to allocation of the Open Energy Merger Shares among the holders of WaterEye Shares, each Seller agrees that the WaterEye Shares held by such Seller shall be converted into the number of full shares of Open Energy common stock calculated by applying the allocation formula in Schedule 2.2.1.

2.2.2 Each share of Company capital stock held in the treasury of the Company and each option or other right to acquire Company stock immediately prior to the Effective Time, shall be cancelled, and no shares of Open Energy common stock shall be issued in respect thereof.

2.2.3 At the Effective Time, all WaterEye Shares shall, by virtue of the Merger and without any action on the part of the holders thereof, no longer be outstanding and shall be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such shares shall thereafter cease to have any rights with respect to such WaterEye Shares, except the right of the Sellers to receive Open Energy Merger Shares hereunder.

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2.2.4 (a) Notwithstanding anything in this Agreement to the contrary, with respect to each WaterEye Share as to which the holder thereof shall have properly complied with the provisions of section 262 of the Delaware General Corporation Law ("DGCL") as to appraisal rights (each, a "Dissenting Share"), if any, such holder shall be entitled to payment, solely from the Surviving Corporation, of the appraisal value of the Dissenting Shares to the extent permitted by and in accordance with the provisions of section 262 of the DGCL; provided, however, that (i) if any holder of Dissenting Shares, under the circumstances permitted by and in accordance with the DGCL, affirmatively withdraws such holder’s demand for appraisal of such Dissenting Shares, (ii) if any holder of Dissenting Shares fails to establish such holder’s entitlement to appraisal rights as provided in the DGCL or (iii) if any holder of Dissenting Shares takes or fails to take any action the consequence of which is that such holder is not entitled to payment for such holder’s shares under the DGCL, such holder or holders (as the case may be) shall forfeit the right to appraisal of such WaterEye Shares and such shares shall thereupon cease to constitute Dissenting Shares and if such forfeiture shall occur following the election deadline, each such WaterEye Share shall thereafter be deemed to have been converted into and to have become, as of the Effective Time, the right to receive, without interest thereon, Open Energy Merger Shares.

(b) The Company shall give Open Energy (i) prompt notice of any notice received by the Company of intent to demand the fair value of any Shares, withdrawals of such notices and any other instruments served pursuant to Section 262 of the DGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL. The Company shall not, except with the prior written consent of Open Energy or as otherwise required by an order, decree, ruling or injunction of a court of competent jurisdiction, make any payment with respect to any such exercise of appraisal rights or offer to settle or settle any such rights.

2.2.5 (a)   Madison Stock Transfer shall act as exchange agent (the "Exchange Agent") in the Merger.

(b)   Promptly after the Effective Time, but in no event later than ten (10) days after the Effective Time, and subject to the provisions of Section 2.6 General Indemnification Holdback, Open Energy shall supply or cause to be supplied to the Exchange Agent for exchange in accordance with this Section 2.2.5 (i) certificates representing all of the Open Energy Merger Shares, duly registered in the name of Sellers and allocated among them as provided in Section 2.2.1 and (ii) cash in an amount sufficient to permit payment of cash in lieu of fractional shares pursuant to Section 2.2.1 (collectively, (i) and (ii) shall be referred to as the "Exchange Fund").

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(c)   Promptly after the Effective Time, but in no event later than five (5) days after the Effective Time, Open Energy and the Surviving Corporation shall cause to be mailed to each holder of record of a certificate or certificates (the "Certificates") that immediately prior to the Effective Time represented outstanding WaterEye Shares, whose shares were converted into the right to receive Open Energy Merger Shares (and cash in lieu of fractional shares) pursuant to Section 2.2.1, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon receipt of the Certificates by the Exchange Agent, and shall be in customary form and have such other provisions as Open Energy and the Surviving Corporation may reasonably specify); (ii) such other customary documents as may be required pursuant to such instructions; and (iii) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing Open Energy Merger Shares (and cash in lieu of fractional shares). Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such letter of transmittal and other documents, duly completed and validly executed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive in exchange therefore (i) the number of whole Open Energy Merger Shares; (ii) any dividends or other distributions to which such holder is entitled pursuant to Section 2.2.5(d); and (iii) cash (without interest) in respect of fractional shares as provided in Section 2.2.1, and the Certificate so surrendered shall forthwith be canceled. Until so surrendered, each outstanding Certificate that prior to the Effective Time represented WaterEye Shares will be deemed from and after the Effective Time, for all corporate purposes other than the payment of dividends, to evidence the ownership of the number of full Open Energy Merger Shares into which such WaterEye Shares shall have been so converted and the right to receive an amount in cash in lieu of the issuance of any fractional shares in accordance with Section 2.2.1.

(d)   No dividends or other distributions with respect to Open Energy Merger Shares with a record date after the Effective Time will be paid to the holder of any unsurrendered Certificate with respect to the WaterEye Shares represented thereby until the holder of record of such Certificate shall surrender such Certificate. Subject to applicable law, following surrender of any such Certificate, there shall be paid to the record holder of the certificates representing whole Open Energy Merger Shares issued in exchange therefor, without interest at the time of such surrender, the amount of any such dividends or other distributions with a record date after the Effective Time theretofore payable (but for the provisions of this Section 2.2.5(d)) with respect to such Open Energy Merger Shares.

(e)   At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers of WaterEye Shares thereafter on the records of the Company. If any certificate for Open Energy Merger Shares is to be issued in a name other than that in which the Certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the Certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Open Energy or any agent designated by it any transfer or other taxes required by reason of the issuance of a certificate for Open Energy Merger Shares in any name other than that of the registered holder of the Certificate surrendered, or established to the satisfaction of Open Energy or any agent designated by it that such tax has been paid or is not payable.

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(f)   Any portion of the Exchange Fund which remains undistributed to the stockholders of the Company one year after the Effective Time shall be delivered to Open Energy, upon demand, and any stockholders of the Company who have not previously complied with this Section 2.2.5 shall thereafter look only to Open Energy for payment of their claim for the Open Energy Merger Shares and the cash in lieu of fractional shares such stockholder would be entitled to pursuant to Section 2.2.1 and any dividends or distributions with respect to Open Energy Merger Shares.

(g)   Notwithstanding anything to the contrary in this Section 2.2.5 , none of the Exchange Agent, Open Energy, the Surviving Corporation or any party hereto shall be liable to any person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

(h)   The provisions of this Section 2.2.5 shall also apply to Dissenting Shares that lose their status as such, except that the obligations of Open Energy under this Section 2.2.5 shall commence on the date of loss of such status and the holder of such shares shall be entitled to receive in exchange for such shares the Open Energy Merger Shares to which such holder is entitled pursuant to Section 2.2.1 hereof.

(i)   Each of the Exchange Agent, Open Energy and the Surviving Corporation 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 WaterEye Shares such amounts as may be required to be deducted or withheld therefrom under the Code or any provision of state, local or foreign tax law. 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.

2.2.6 In the event any Certificates shall have been lost, stolen or destroyed, Open Energy shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof such Open Energy Merger Shares (and dividends, distributions and cash in lieu of fractional shares) as may be required pursuant to Section 2.2.1; provided , however , that Open Energy may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Open Energy, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

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2.3 Merger Closing.   The closing of the Merger (the "Merger Closing") provided for in this Agreement will take place at the offices of Open Energy, at 10:00 a.m. (local time) on December 21, 2006 or at such other time and place as the parties may agree (the "Merger Closing Date"). Subject to the provisions of Section 9, failure to consummate the Merger on the date and time and at the place determined pursuant to this Section 2.3 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement.

2.4   Merger Closing Obligations . At the Merger Closing:

2.4.1 The Company and the Sellers will deliver or cause to be delivered to Open Energy:

2.4.1.1 A certificate executed by the President and Chief Executive Officer of the Company representing and warranting to Open Energy that each of the Company's representations and warranties in this Agreement is accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Merger Closing Date as if made on the Merger Closing Date (giving effect to any supplements to the Disclosure Letter that are delivered by the Company to Open Energy prior to the Merger Closing Date in accordance with Section 5.5).

2.4.1.2   An Executive Employment Agreement by and between Open Energy and Thomas D. Wolfe in substantially the form attached hereto as Exhibit 2.4.1.2 .

2.4.2 Buyer will deliver to Sellers or the Exchange Agent:

2.4.2.1   Subject to the provisions of Section 2.6 General Indemnification Holdback, certificates representing all of the Open Energy Merger Shares, duly registered in the name of Sellers and allocated among them as provided in Section 2.2.1.

2.4.2.2   A certificate executed by Open Energy and Buyer to the effect that each of the representations and warranties of Open Energy and Buyer in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Merger Closing Date as if made on the Merger Closing Date.

2.4.2.3   An Executive Employment Agreement by and between Open Energy and Thomas D. Wolfe in substantially the form attached hereto as Exhibit 2.4.1.3 .

2.5   Legend . Each certificate representing Open Energy Merger Shares which is delivered (and to the extent applicable, any later certificate into which such certificate may later be exchanged) pursuant to this Agreement will bear a legend to disclose the limitations upon its transferability by virtue of the requirements of the Securities Act and/or the Exchange Act and applicable state securities law(s), and Open Energy's transfer agent will be advised accordingly. The legend to be placed on such stock certificates shall read as follows:

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THESE SECURITIES HAVE BEEN OBTAINED FROM THE ISSUER IN A TRANSACTION NOT INVOLVING A PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER AND ARE SUBJECT TO RESTRICTIONS ON RESALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES LAWS.

The legend shall be removed from any certificate representing either (a) shares sold under an effective registration statement under the Securities Act, or (b) shares as to which, in the opinion of counsel reasonably satisfactory to Open Energy, such registration is not required and that the transfer will not otherwise violate the Securities Act, the Exchange Act, or applicable state securities laws; any stop transfer instructions previously given to Open Energy's transfer agent will be revoked promptly upon the occurrence of (a) or (b) above.

2.6   General Indemnification Holdback

2.6.1 At the Merger Closing, the General Holdback Stock shall be placed in the General Holdback Account. The General Holdback Stock shall remain in the General Holdback Account for one (1) year following the Merger Closing Date in order to secure the performance of the obligations of Sellers under the General Indemnification. During such one (1) year period or until all General Holdback Stock has been distributed from the General Holdback Account, all dividends paid and distributions made with respect to the General Holdback Stock shall be the property of Sellers, and Sellers shall have the sole power to exercise all voting rights pertaining to the General Holdback Stock.

2.6.2 On the first anniversary of the Merger Closing Date all of the General Holdback Stock shall be provided to the Exchange Agent for distribution to Sellers less the number of Open Energy Merger Shares reasonably necessary to satisfy the amount of all pending indemnity claims for which notice has been given by Open Energy or Buyer pursuant to Section 10.5 and 10.6. Any dispute concerning the valuation of the indemnity claim for purposes of retention of General Holdback Stock or the number of shares to be retained shall be resolved in accordance with Section 10.7. Any shares retained beyond the initial one year period not used to satisfy indemnity claims shall be returned to Sellers immediately after the payment or termination of the last indemnity claim pending at the end of the initial one-year period.

The Company and Sellers jointly and severally represent and warrant to Open Energy and Buyer as follows and acknowledge that the Buyer and Open Energy are relying upon the following representations and warranties in connection with the acquisition of the WaterEye Shares pursuant to the Merger which representations shall be true and correct on the date hereof and on the Merger Closing Date:  

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3.1   Organization and Good Standing

3.1.1 Part 3.1.1 of the Disclosure Letter contains a complete and accurate list for the Company of its name, its jurisdiction of incorporation, other jurisdictions in which it is authorized to do business, and its capitalization (including the identity of each stockholder and the number of shares held by each). The Company is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts. The Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

3.1.2 The Company has delivered to Buyer copies of the Organizational Documents of the Company, as currently in effect.

3.2   Authority; No Conflict

3.2.1 This Agreement has been duly executed and delivered by the Company and each of the Sellers, and constitutes the legal, valid, and binding obligation of Sellers and the Company, enforceable against Sellers and the Company in accordance with its terms. Sellers have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement. Sellers have the absolute and unrestricted right, power, authority, and capacity to perform their obligations under this Agreement, the execution, delivery and performance by the Company of this Agreement has been duly authorized by all necessary corporate action (including resolutions duly adopted by its board of directors), subject only to the approval of this Agreement and the transactions contemplated hereby by the Company’s stockholders.

3.2.2 To the Knowledge of the Company and, except as set forth in Part 3.2.2 of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):

3.2.2.1   contravene, conflict with, or result in a violation of (a) any provision of the Organizational Documents of the Company, or (b) any resolution adopted by the Board of Directors or the stockholders of the Company;

3.2.2.2   contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or Sellers, or any of the assets owned or used by the Company, may be subject;

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3.2.2.3 contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company;

3.2.2.4   contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or

3.2.2.5   result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company.

3.2.3 Except as set forth in Part 3.2.3 of the Disclosure Letter, neither Sellers nor the Company are or will be required to give any notice to, or obtain any Consent from, any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

3.3   Capitalization . The authorized equity securities of the Company consist of 43,000,000 shares of common stock, $0.001 par value, of which 11,368,762 shares are issued and outstanding; 23,000,000 shares of preferred stock, $0.001 par value, of which 10,000,000 shares have been designated Series A preferred stock, 9,994,402 shares of which are issued and outstanding; and 2,500,489 shares have been designated Series B preferred stock, 2,500,487 shares of which are issued and outstanding. There are options outstanding to purchase 833,333 shares of Common Stock under the Company’s 2003 Stock Option Plan, as amended which will be cancelled, rescinded, surrendered or otherwise terminated without issuance of additional WaterEye stock at or before the Merger Closing. All of such shares of the Company constitute the WaterEye Shares. Part 3.3 of the Disclosure Letter contains a true and complete list of the current holders of WaterEye Shares and the number and class of shares held by them. Such persons are now, or will be on the Merger Closing Date, the record and beneficial owners and holders of the WaterEye Shares, free and clear of all Encumbrances. Except as noted in Part 3.3 of the Disclosure Letter, no legend or other reference to any purported Encumbrance appears upon any certificate representing equity securities of the Company. All of the outstanding equity securities of the Company have been duly authorized and validly issued and are fully paid and non-assessable. There are no Contracts relating to the issuance, sale, or transfer of any equity securities or other securities of the Company. None of the outstanding equity securities or other securities of the Company was issued in violation of the Securities Act or any other Legal Requirement. The Company does not own or have any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business, except as disclosed in the Balance Sheets or Interim Balance Sheet.

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3.4   Financial Statements

3.4.1 The Company has delivered to Open Energy its balance sheets as of March 31, 2004, March 31, 2005 and March 31, 2006 and the related statements of income and retained earnings for the three years ending on those dates; its balance sheet as of November 30, 2006, and the related statement of income and retained earnings for the seven months ending on that date; and an electronic file containing its Quick Books accounting records for those periods (collectively, the "Financial Statements"). To the Knowledge of the Company, the Financial Statements have been prepared in accordance with generally accepted accounting principles consistently followed by the Company throughout the periods indicated, except for footnotes and subject to year-end adjustments, and fairly present the financial condition and the results of operations of the Company, as at the date of and for the periods referred to in the Financial Statements.

3.4.2 The Company maintains only the bank accounts as shown in Part 3.4.2 of the Disclosure Letter and no other bank accounts of any kind. Except as shown on the Financial Statements or on Part 3.4.2 of the Disclosure Letter, or as shown on the Company’ cash receipts and disbursements journal, there have been no material receipts or disbursements, whether by cash or check, by the Company of any kind; since the Balance Sheet date, there has been no payment of any kind to or for the account of Sellers or any Related Person, and no checks which exceed $10,000.00 have been issued for any purpose other than in the Ordinary Course of Business.

3.5   Books and Records . The books of account, minute books, stock record books, and other records of the Company, all of which have been made available to Open Energy, are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The minute books of the Company contain accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the Board of Directors, and committees of the Board of Directors of the Company, and no meeting of any such stockholders, Board of Directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Merger Closing, all of those books and records will be in the possession of the Company.

3.6   Title to Properties; Encumbrances . Part 3.6 of the Disclosure Letter contains a complete and accurate list of all real property, leaseholds, or other interests therein owned by the Company, Sellers have delivered or made available to Open Energy copies of the deeds and other instruments (as recorded) by which the Company acquired such real property and interests, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of Sellers or the Company and relating to such property or interests. The Company owns (with good and marketable title in the case of real property, subject only to the matters permitted by the following sentence) all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that they purport to own located in the facilities owned or operated by the Company or reflected as owned in the books and records of the Company, including all of the properties and assets reflected in the Balance Sheet (except for assets held under capitalized leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure Letter and personal property sold since the date of the Balance Sheet, in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Company since the date of the Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice), which subsequently purchased or acquired properties and assets (other than inventory and short-term investments) are listed in Part 3.6 of the Disclosure Letter. All material properties and assets reflected in the Balance Sheet are free and clear of all Encumbrances and are not, in the case of real property, subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except, with respect to all such properties and assets, (a) mortgages or security interests shown on the Balance Sheet as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (b) mortgages or security interests incurred in connection with the purchase of property or assets after the date of the Balance Sheet (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (c) liens for current taxes not yet due, and (d) with respect to real property, (i) minor imperfections of title, if any, none of which is substantial in amount, materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of the Company, and (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. All buildings, plants, and structures owned by the Company, if any, lie wholly within the boundaries of the real property owned by the Company and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.

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3.7   Condition and Sufficiency of Assets . To the Knowledge of the Company, the buildings, plants, structures, and equipment of the Company are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, or equipment is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The building, plants, structures, and equipment of the Company are sufficient for the continued conduct of the Company’s business after the Merger Closing in substantially the same manner as conducted prior to the Merger Closing.

3.8   Accounts Receivable and Inventory

3.8.1 Accounts Receivable . All accounts receivable of the Company that are reflected on the Balance Sheet (the "Accounts Receivable") represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. The Accounts Receivable reserves shown on the Balance Sheet are adequate and calculated consistent with past practice. To the Company’s Knowledge, there is no contest, claim, or right of set-off, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Account Receivable relating to the amount or validity of such Account Receivable. Part 3.8.1 of the Disclosure Letter contains a complete and accurate list of all Accounts Receivable as of the date of the Balance Sheet, which list sets forth the aging of such Accounts Receivable.

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3.8.2 Inventory . All inventory set forth on the Financial Statements, and all additions to inventory of the Company since November 30, 2006, consist of items of a quantity and quality usable or saleable in the ordinary course of the business. Since November 30, 2006, no inventory items have been sold or disposed of except in the ordinary course of business. Part 3.8.2 the Disclosure Letter sets forth the locations of all items of inventory.

3.9   No Undisclosed Liabilities . Except as set forth in Part 3.9 of the Disclosure Letter, to the Company’s Knowledge, the Company has no liabilities or obligations of any nature except for liabilities or obligations reflected or reserved against in the Balance Sheet, and current liabilities incurred in the Ordinary Course of Business since the date thereof.

3.10   Taxes

3.10.1 The Company filed or caused to be filed all income Tax Returns and all material Tax Returns that are or were required to be filed by or with respect to it either separately or as a member of a group of corporations, pursuant to applicable Legal Requirements. The Company has delivered to Open Energy copies of, and Part 3.10 of the Disclosure Letter contains a complete and accurate list of, all income Tax Returns filed by the Company since January 1, 2004. The Company has paid, or made provision for the payment of, all Taxes reflected on income Tax Returns or material Tax Returns of the Company or pursuant to any assessment pertaining to Taxes of the Company received by Sellers or the Company, except such Taxes, if any, as are listed in Part 3.10 of the Disclosure Letter and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Balance Sheet.

3.10.2 The Company has had no audits by any taxing authority of any Tax Return.

3.10.3 To the Knowledge of the Company, the charges, accruals, and reserves with respect to Taxes on the books of the Company are adequate (determined in accordance with GAAP) and are at least equal to the Company's liability for Taxes. There exists no proposed tax assessment against the Company except as disclosed in the Balance Sheet or in Part 3.10 of the Disclosure Letter. No consent to the application of Section 341(f)(2) of the Code has been filed with respect to any property or assets held, acquired, or to be acquired by the Company. All material Taxes that the Company is or was required by Legal Requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body or other Person.

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3.11   No Material Adverse Change . Since the date of the Balance Sheet, there has not been any Material Adverse Change in the business, operations, properties, prospects, assets, or condition of the Company, and to the Company’s Knowledge, no event has occurred or circumstance exists that may result in such a Material Adverse Change.

3.12   Employee Benefit Plans

3.12.1 Part 3.12.1 of the Disclosure Letter contains a true and complete list as of the date of this Agreement of all employee benefit plans or arrangements applicable to the employees of Company and all fixed or contingent liabilities or obligations of Company with respect to any person now or formerly employed by Company including, without limitation, pension or thrift plans, individual or supplemental pension or accrued compensation arrangements, contributions to hospitalization or other health or life insurance programs, incentive plans, bonus arrangements and vacation, sick leave, disability and termination arrangements or policies, including workers' compensation policies. Except as listed in Part 3.12.1 of the Disclosure Letter, Company maintains no other employee benefit plan or arrangement applicable to the employees of Company and, to the Knowledge of the Company, possesses no other fixed or contingent liabilities or obligations with respect to any person now employed by Company. Part 3.12.1 of the Disclosure Letter also includes true and complete copies of all employee handbooks, rules and regulations.

3.12.2 Company has furnished Purchaser with copies of all applicable plan documents, trust documents, insurance contract summary plan descriptions of the written plans and arrangements listed in Part 3.12.1 of the Disclosure Letter and with descriptions, in writing, of the unwritten plans and arrangements listed in Part 3.12.1 of the Disclosure Letter.

3.12.3 The employee benefit plans listed and identified as "tax qualified plans" in Part 3.12.1 of the Disclosure Letter constitute plans qualified under Sections 401 et seq. of the Code, have been the subject of favorable determination letters from the Internal Revenue Service (the "Service") confirming their status as "tax-qualified plans" and, to the Knowledge of the Company, are in compliance in all material respects with any and all statutes and regulations which are applicable thereto.

3.12.4 All employee benefit and welfare plans or arrangements listed in Part 3.12.1 of the Disclosure Letter were established and have been executed, managed and administered in all material respects in accordance with all applicable requirements of the Code, of the Employee Retirement Income Security Act of 1974, as amended, and of other applicable laws. Company is not aware of the existence of any governmental audit or examination of any of such plans or arrangements or of any facts which would lead it to believe that any such audit or examination is pending or threatened. There have been no federal pension law excise taxes assessed against any of the benefit or welfare plans, and Company is not aware of any proceedings or events that could result in the assessment of such excise taxes.

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3.12.5 There exists no action, suit or claim (other than routine claims for benefits) with respect to any of such plans or arrangements pending or threatened against any of such plans or arrangements, and there are no facts known to the Company which could give rise to any such action, suit or claim. Except as set forth in Part 3.12.1 of the Disclosure Letter, Company is not a party to any multi-employer pension benefit or welfare plans.

3.12.6 No "accumulated funding deficiency", as defined in Section 412(a) of the Code, has been incurred with respect to any "tax qualified plan", whether or not waived. The total value of assets with respect to each "tax qualified plan" as of December 31, 1993 and the amount of vested and unvested benefits under such plans as of such date are set forth on Part 3.12.1 of the Disclosure Letter, and there was no unfunded vested liability as of such date under any such plan.

3.13   Compliance with Legal Requirements; Governmental Authorizations

3.13.1 To the Knowledge of the Company, and except as set forth in Part 3.13.1 of the Disclosure Letter:

3.13.1.1   the Company is, and has been, in full compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets;

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

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

3.13.2 To the Knowledge of the Company, Part 3.13.2 of the Disclosure Letter contains a complete and accurate list of each Governmental Authorization that is held by the Company or that otherwise relates to the business of, or to any of the assets owned or used by, the Company. Each Governmental Authorization listed or required to be listed in Part 3.13.2 of the Disclosure Letter is valid and in full force and effect. Except as set forth in Part 3.13.2 of the Disclosure Letter:

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3.13.2.1   the Company is in full compliance with all of the terms and requirements of each Governmental Authorization identified or required to be identified in Part 3.13.2 of the Disclosure Letter;

3.13.2.2   no event has occurred or circumstance exists that should (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization listed or required to be listed in Part 3.13.2 of the Disclosure Letter, or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification to, any Governmental Authorization listed or required to be listed in Part 3.13.2 of the Disclosure Letter;

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

3.13.2.4   all applications required to have been filed for the renewal of the Governmental Authorizations listed or required to be listed in Part 3.13.2 of the Disclosure Letter have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies.

3.13.2.5   The Governmental Authorizations listed in Part 3.13.2 of the Disclosure Letter collectively constitute all of the Governmental Authorizations necessary to permit the Company to lawfully conduct and operate its business in the manner it currently conducts and operates such business and to permit the Company to own and use its assets in the manner in which it currently owns and uses such assets.

3.14   Legal Proceedings; Orders

3.14.1 Except as set forth in Part 3.14 of the Disclosure Letter, there is no pending Proceeding:

3.14.1.1   that has been commenced by or against the Company or that otherwise relates to or may affect the business of, or any of the assets owned or used by, the Company; or

3.14.1.2   that challenges, or that should have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.

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3.14.2 To the Knowledge of the Company, (1) no such Proceeding has been Threatened, and (2) no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such Proceeding. The Company has delivered to Open Energy copies of all pleadings, correspondence, and other documents relating to each Proceeding listed in Part 3.14 of the Disclosure Letter.

3.14.3 To the Knowledge of the Company, except as set forth in Part 3.14 of the Disclosure Letter:

3.14.3.1   there is no Order to which any of the Company, or any of the assets owned or used by any of the Company, is subject;

3.14.3.2   none of the Sellers are subject to any Order that relates to the business of, or any of the assets owned or used by, any of the Company; and

3.14.3.3   no officer, director, agent, or employee of the Company is subject to any Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the business of any of the Company.

3.14.4 To the Knowledge of the Company, except as set forth in Part 3.14 of the Disclosure Letter:

3.14.4.1   the Company is, and has been, in full compliance with all of the terms and requirements of each Order to which it, or any of the assets owned or used by it, is or has been subject;

3.14.4.2   no event has occurred or circumstance exists that may constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which the Company, or any of the assets owned or used by the Company, is subject; and

3.14.4.3   the Company has not received, any actual, specific notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding any actual, alleged, possible, or potential violation of, or failure to comply with, any term or requirement of any Order to which the Company, or any of the assets owned or used by the Company, is or has been subject.

3.15   Absence of Certain Changes and Events . Except as set forth in Part 3.15 of the Disclosure Letter, since the date of the Balance Sheet, the Company has conducted its business only in the Ordinary Course of Business and there has not been any:

3.15.1 change in the Company's authorized or issued capital stock; grant of any stock option or right to purchase shares of capital stock of the Company; issuance of any security convertible into such capital stock; grant of any registration rights; purchase, redemption, retirement, or other acquisition by the Company of any shares of any such capital stock; or declaration or payment of any dividend or other distribution or payment in respect of shares of capital stock;

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3.15.2 amendment to the Organizational Documents of the Company;

3.15.3 payment or increase by the Company of any bonuses, salaries, or other compensation to any stockholder, director, officer, or (except in the Ordinary Course of Business) employee or entry into any employment, severance, or similar Contract with any director, officer, or employee;

3.15.4 adoption of, or increase in the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement, or other employee benefit plan for or with any employees of the Company;

3.15.5 damage to or destruction or loss of any asset or property of the Company, whether or not covered by insurance, materially and adversely affecting the properties, assets, business, financial condition, or prospects of the Company, taken as a whole;

3.15.6 entry into, termination of, or receipt of actual, specific notice of termination of (i) any license, broker, agent, sales representative, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to the Company of at least $10,000 or (iii) termination of any client which represents annual commissions exceeding $10,000;

3.15.7 sale, lease, or other disposition of any asset or property of the Company or mortgage, pledge, or imposition of any lien or other encumbrance on any material asset or property of the Company, including the sale, lease, or other disposition of any of the Intellectual Property Assets;

3.15.8 cancellation or waiver of any claims or rights;

3.15.9 material change in the accounting methods used by the Company; or

3.15.10   agreement, whether oral or written, by the Company to do any of the foregoing.

3.16   Contracts; No Defaults .

3.16.1 Part 3.16.1 of the Disclosure Letter contains a complete and accurate list, and the Company has delivered to Open Energy true and complete copies, of:

3.16.1.1   each Applicable Contract (other than insurance policies procured for clients and customers) that involves performance of services or delivery of goods or materials by the Company of an amount or value in excess of $10,000;

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3.16.1.2   each Applicable Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of the Company in excess of $10,000;

3.16.1.3   each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Applicable Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property of the Company (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $5,000 and with terms of less than one year);

3.16.1.4   each licensing agreement or other Applicable Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the non-disclosure of any of the Intellectual Property Assets;

3.16.1.5   each collective bargaining agreement and other Applicable Contract to or with any labor union or other employee representative of a group of employees;

3.16.1.6   each joint venture, partnership, and other Applicable Contract (however named) involving a sharing of profits, losses, costs, or liabilities by the Company with any other Person;

3.16.1.7   each Applicable Contract containing covenants that in any way purport to restrict the business activity of the Company or any Affiliate of the Company or limit the freedom of the Company to engage in any line of business or to compete with any Person;

3.16.1.8   each agreement defining the terms and conditions of employment for any employee of the Company;

3.16.1.9   each Applicable Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods;

3.16.1.10   each power of attorney that is currently effective and outstanding;

3.16.1.11   each Applicable Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by the Company to be responsible for consequential damages;

3.16.1.12   each Applicable Contract for capital expenditures in excess of $10,000;

3.16.1.13   each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business; and

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3.16.1.14   each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

3.16.2 Part 3.16.2 of the Disclosure Letter sets forth reasonably complete details concerning such Contracts, including the parties to the Contracts, the amount of the remaining commitment of the Company under the Contracts, and the Company's office where details relating to the Contracts are located.

3.16.3 Except as set forth in Part 3.16.3 of the Disclosure Letter:

3.16.3.1   none of the Sellers (and no Related Person of any Seller) has or may acquire any rights under, and none of the Sellers has or may become subject to any obligation or liability under, any Contract that relates to the business of, or any of the assets owned or used by, the Company; and

3.16.3.2   to the Knowledge of the Company, no officer, director, agent, employee, consultant, or contractor of the Company is bound by any Contract that purports to limit the ability of such officer, director, agent, employee, consultant, or contractor to (A) engage in or continue any conduct, activity, or practice relating to the business of the Company, or (B) assign to the Company or to any other Person any rights to any invention, improvement, or discovery.

3.16.4 to the Knowledge of the Company and except as set forth in Part 3.16.4 of the Disclosure Letter, each Contract identified or required to be identified in Part 3.16.1 of the Disclosure Letter is in full force and effect and is valid and enforceable in accordance with its terms.

3.16.5 to the Knowledge of the Company and except as set forth in Part 3.16.5 of the Disclosure Letter:

3.16.5.1   the Company is, and has been, in full compliance with all applicable terms and requirements of each Contract under which the Company has or had any obligation or liability or by which such Company or any of the assets owned or used by the Company is or was bound;

3.16.5.2   each other Person that has or had any obligation or liability under any Contract under which the Company has or had any rights is, and has been, in full compliance with all applicable terms and requirements of such Contract;

3.16.5.3   no event has occurred or circumstance exists that (with or without notice or lapse of time) may con