AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (“Agreement”) is made and entered into this 12th day of August, 2008 by and among (a) Wherify Wireless, Inc., a Delaware corporation (“ Wherify ”), Wherify Acquisition, Inc., a newly-formed wholly-owned subsidiary of Wherify established under the laws of the State of Delaware (the “ Merger Sub ”), Wherify California, Inc. a wholly-owned subsidiary of Wherify established under the laws of California ( “Wherify California ”) and 4031806 Canada Inc., a wholly-owned subsidiary of Wherify established under the Canada Business Corporations Act (“ Wherify Canada ”, and collectively with Wherify and Wherify California, the “Wherify Entities ” or individually as “ Wherify Entity ”), on the one hand, and (b) LY Holdings, LLC, a Kentucky limited liability company (“ Lightyear ”), Lightyear Network Solutions, LLC, a Kentucky limited liability company (“ LNS ”), Lightyear Alliance of Puerto Rico, LLC. (“ Puerto Rico”, and collectively with Lightyear and LNS, the “ Lightyear Companies ”), LANJK LLC, a Kentucky limited liability company (“ LANJK ”), SullivanLY, LLC, a Nevada limited liability company (“ SullivanLY ”), Rice-LY Ventures, LLC, a Kentucky limited liability company (“ Rice-LY ”), Telemix Investments, LLC, a California limited liability company (“ Telemix ”) and MAP II, LLC, a Kentucky limited liability company (“ MAP ”) (LANJK, SullivanLY, Rice-LY, Telemix and MAP to be collectively referred to as “ Lightyear Members ”) (Lightyear, LNS, Puerto Rico and Lightyear Members to be collectively referred to as “ Lightyear Parties ” or individually as “ Lightyear Party ”), on the other hand (each a “ Party ” and collectively, the “ Parties ”).

WHEREAS, the Board of Directors of the Wherify Entities, Lightyear, LNS and Merger Sub deem it advisable and in the best interests of each entity and its stockholders or member that Wherify combine with Lightyear in order to advance the long-term business interests of Wherify and Lightyear; and

WHEREAS, the business combination of Wherify and Lightyear shall be effected through a merger (the “Merger”) of the Merger Sub into Lightyear in accordance with the terms of this Agreement, and the Delaware General Corporation Law (the “DGCL”) and Kentucky Revised Statutes (the “Kentucky Statutes”), with Lightyear as the surviving entity as a result of which Lightyear shall become a wholly owned subsidiary of Wherify.

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties set forth herein and other valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows:

“Acquisition Proposal” means (i) any inquiry, proposal or offer for (A) the dissolution or liquidation of Wherify, Lightyear or any Subsidiary of either or (B) a merger, consolidation, tender offer, recapitalization, share exchange or other business combination involving 25% or more of such entity’s equity securities or membership interests, (ii) any proposal for the issuance by any such entity of over 25% of its equity securities or membership interests or (iii) any proposal or offer to acquire in any manner, directly or indirectly, over 25% of the equity securities, membership interests or consolidated total assets of such entity, in each case other than the Merger contemplated by this Agreement.

“Action” shall mean any action, order, writ, injunction, judgment or decree outstanding or suit, litigation, proceeding, arbitration, audit or investigation by or before any Governmental Entity.

“Affiliate” shall mean, with respect to any Person, any other Person that directly, or through one or more intermediaries, controls or is controlled by or is under common control with such Person.

“Ancillary Agreements” shall mean the Certificate of Merger, the officers’ certificates delivered pursuant to Sections 12.2(a) and 12.3(a), the Escrow Agreement provided for in Section 10.5, and each employment agreement provided for in Section 10.3.

“Assets” shall mean, with respect to any Person, the right, title and interest of such Person, in their properties, assets and rights of any kind, whether tangible or intangible, real or personal, including without limitation the right, title and interest in the following:

(a)   all Contracts;

(b)   all Fixtures and Equipment;

(c)   all Facilities;

(d)   all inventory;

(e)   all Books and Records;

(f)   all Intellectual Property;

(g)   all Permits;

(h)   all return and other rights under or pursuant to all warranties, representations and guarantees made by suppliers and other third parties in connection with the Assets or services furnished to such Person;

(i)   all cash, accounts receivable, deposits and prepaid expenses; and

(j)   all goodwill.

“Benefit Arrangement” shall mean any employment, consulting or severance arrangement or policy and each plan, arrangement, program, agreement or commitment providing for insurance coverage, workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health, disability or accident benefits or for deferred compensation, profit-sharing bonuses, stock options, stock appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits which (a) is not a Welfare Plan, Pension Plan or Multiemployer Plan, (b) is or has been entered into, maintained, contributed to or required to be contributed to by a Party or an ERISA Affiliate of a Party or under which a Party or any ERISA Affiliate of a Party may incur any liability or obligation, and (c) covers any employee, former employee, consultant or director of a Party or any ERISA Affiliate of a Party (with respect to their relationship with such entities).

“Books and Records” shall mean, with respect to any Person, (a) all product, business and marketing plans, sales and promotional literature and artwork relating to the Assets or the business of such Person and (b) all books, records, lists, ledgers, financial data, files, reports, product and design manuals, plans, drawings, technical manuals and operating records of every kind relating to the Assets or the business of such Person, in each case whether maintained as hard copy or stored in computer memory.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq., as amended.

“Certificate” shall mean an outstanding certificate or certificates which immediately prior to the Effective Time represented units of Lightyear Membership Interests.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor law.

“Contracts” means, with respect to any Person, all agreements, contracts, obligations, binding commitments and binding arrangements (a) to which such Person is a party, (b) under which such Person has any rights, (c) under which such Person has any Liability or (d) by which such Person or any Asset of such Person is bound, including, in each case, all amendments, modifications and supplements thereto.

“Daily Per Share Price” shall mean, for any trading day, the last reported sale price per share of Wherify Common Stock as reported on the Over-the-Counter Bulletin Board (or such successor reporting agency that reports trading in Wherify Common Stock) for that day.

“DGCL” shall mean the Delaware General Corporation Law.

“Employee Plans” shall mean all Benefit Arrangements, Multiemployer Plans, Pension Plans, Welfare Plans and Employment Agreements.

“Encumbrances” shall mean any lien, pledge, option, right of first refusal, charge, easement, security interest, deed of trust, mortgage, right-of-way, covenant, condition, restriction or encumbrance of third parties. 

“Environmental Laws” shall mean any federal, state or local law, statute, ordinance, order, decree, rule or regulation relating to: (a) the preservation or reclamation of natural resources, (b) releases, discharges, emissions or disposals to air, water, land or groundwater of Hazardous Materials; (c) the use, handling or disposal of polychlorinated biphenyls, asbestos or urea formaldehyde or any other Hazardous Material; (d) the treatment, storage, disposal or management of Hazardous Materials; (e) exposure to toxic, hazardous or other controlled, prohibited or regulated substances; or (f) the transportation, release or any other use of Hazardous Materials, including CERCLA, EPCRA, HTMA, RCRA, TSCA, the Occupational, Safety and Health Act, 29 U.S.C. 651, et seq., the Clean Air Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq., and the Safe Drinking Water Act, 42 U.S.C. 300f, et seq., and other comparable state and local laws and all rules and regulations promulgated pursuant thereto or published thereunder.

“EPCRA” shall mean the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001, et seq., as amended.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean, with respect to a party, any entity which is (or at any relevant time was) a member of a “controlled group of corporations” with, under “common control” with, or a member of “affiliated service group” with, the party as defined in Section 414(b) or (c) of the Code or, solely for the purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, as defined in Section 414(m) or (o) of the Code.  

“Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Fixtures and Equipment” shall mean, with respect to any Person, all of the furniture, fixtures, furnishings, machinery and equipment owned, leased or used by such Person and located in, at or upon the Facilities of such Person.

“GAAP” shall mean generally accepted accounting principles in the United States of America, as in effect from time to time, consistently applied.

“Governmental Entity” shall mean any court, regulatory or administrative agency, commission or other governmental authority, body or instrumentality, domestic or foreign.

“Hazardous Materials” shall mean each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under applicable Environmental Laws or the release of which is regulated under applicable Environmental Laws. Without limiting the generality of the foregoing, the term includes: “hazardous substances” as defined in CERCLA; “extremely hazardous substances” as defined in EPCRA; “hazardous waste” as defined in RCRA; “hazardous materials” as defined in HMTA; a “chemical substance or mixture” as defined in TSCA; crude oil or petroleum products; radioactive materials, including source, byproduct or special nuclear materials; asbestos or asbestos-containing materials; chlorinated fluorocarbons; and radon.

“HTMA” shall mean the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et seq., as amended.

“Intellectual Property” shall mean all (a) U.S. and foreign patents, patent applications, patent disclosures and improvements thereto, including petty patents and utility models and applications therefor, (b) U.S. and foreign trademarks, service marks, trade dress, logos, trade names and corporate names and the goodwill associated therewith and registrations and applications, extensions or renewals for registration thereof, (c) U.S. and foreign copyrights and registrations and applications, extensions or renewals for registration thereof, (d) U.S. and foreign mask work rights and registrations and applications, extensions or renewals for registration thereof, (e) trade secrets, (f) inventions, formulae, tools, methods, processes, designs, know-how or other data or information, (g) works of authorship including, without limitation, computer programs, source code and executable code, whether embodied in software, firmware or otherwise, documentation, designs, files, net lists, records, data and mask works; (h) World Wide Web addresses, domain names and sites; (i) copies and tangible embodiments of any of the items described in the foregoing (a) through (g); and (j) licenses of any rights with respect to any of the items described in the foregoing (a) through (i).

“IRS” shall mean the United States Internal Revenue Service or any successor agency.

“Kentucky Statutes” shall mean the Kentucky Revised Statutes.

“Knowledge” shall mean with respect to any Person, the actual knowledge of such Person. Lightyear shall be deemed to have “Knowledge” of a particular fact or other matter if any of its Managers or officers has Knowledge of such fact or other matter. Wherify shall be deemed to have “Knowledge” of a particular fact or other matter if any of its directors and officers has Knowledge of such fact or other matter.

“Liability” shall mean any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether accrued, absolute, contingent, matured, unmatured or other.

“Lightyear Issuable Wherify Shares” shall mean a number of shares of Wherify Series C Preferred Stock which are convertible into that number of shares of Wherify Common Stock at the Closing equal to 1.038 multiplied by the Wherify Outstanding Shares, where “Wherify Outstanding Shares” means the sum of:

(i) the number of shares of Wherify Common Stock issued and outstanding immediately prior to the Effective Time (excluding any Financing Shares that are Wherify Common Stock);

(ii) the number of shares of Wherify Common Stock issuable upon exercise of warrants and conversion of shares, debentures and other rights to acquire shares of Wherify Common Stock outstanding immediately prior to the Effective Time, including without limitation:

(A) Wherify Series A Preferred Stock and Wherify Series B Preferred Stock, on an as converted basis (including without limitation any accrued but undeclared dividends payable in such shares);

(B) the number of shares of Wherify Common Stock issuable upon conversion of all Financing Shares issued prior to the Effective Time, to the extent such Financing Shares have a purchase price of up to but not more than $15,000,000, on an as converted basis;

but excluding:

(1) all shares of Series C Stock issuable as Merger Shares; and

(2) shares of Wherify Common Stock issuable upon conversion of all Financing Shares issued prior to the Effective Time, to the extent such Financing Shares have a purchase price in excess of $15,000,000, on an as converted basis. For the purpose of clarity, the equity dilution caused by the sale of Financing Shares having an aggregate purchase price in excess of $15,000,000 and of any equity issuances after the Effective Time shall apply pro rata to all holders of Wherify equity, including without limitation holders of Wherify Issuable Shares or any convertible notes, after the Effective Time.

“Lightyear Operating Agreement” shall mean that Second Amended and Restated Operating Agreement of Lightyear dated July 30, 2003.

“Lightyear Membership Interests” shall mean the membership interest of Lightyear.

“Lightyear Members” mean the holders of Lightyear Membership Interests immediately prior to the Closing.

“LNS Membership Interests” shall mean the membership interest of LNS.

“LNS Operating Agreement “shall mean that certain operating agreement of LNS dated December 2, 2003.

“Material Adverse Effect” shall mean, with respect to a Person, any event, fact or circumstance that has substantial adverse effect or substantial adverse change in the assets, liabilities, business, operations, results of operations or condition (financial or otherwise) of such Person, taken as a whole, or, if such Person is a Party, on the ability of such Person to consummate the transactions contemplated hereby; provided, however, that any adverse change, event, circumstance or development with respect to, or effect resulting from (A) general economic conditions or conditions generally affecting the Party’s industry, except in either case to the extent such Party is materially disproportionately affected thereby, (B) the announcement or pendency of the Merger or any other transactions expressly contemplated hereby, (C) compliance with the terms and conditions of this Agreement, (D) a change in the stock price or trading volume of Wherify Common Stock, provided that clause (D) shall not exclude any underlying effect which may have caused such change in stock price or trading volume or failure to meet published revenue or earnings projections, (E) any change in accounting requirements or principles or any change in applicable laws, rules or regulations or the interpretation thereof or (F) the continued incurrence of losses by Wherify shall not in and of itself constitute, or otherwise be considered in determining whether there exists, a Material Adverse Effect.

“Multiemployer Plan” shall mean any “multiemployer plan,” as defined in Section 3(37) of ERISA, (a) which the Company or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or, after September 25, 1980, maintained, administered, contributed to or was required to contribute to, or under which the Company or any ERISA Affiliate may incur any liability or obligation and (b) which covers any employee or former employee of the Company or any ERISA Affiliate (with respect to their relationship with such entities).

“Party Contract” with respect to a party shall mean the following Contracts:

(a)   all written management, compensation, employment or other Contracts entered into with any executive officer, director or key employee of such party;

(b)   all Contracts which provide for Liability to the party in excess of $25,000.00;

(c)   all contracts under which such party has any outstanding indebtedness, obligation or liability for borrowed money or the deferred purchase price of property or has the right or obligation to incur any such indebtedness, obligation or liability, in each case in an amount greater than $25,000.00 or in the aggregate more than $50,000.00;

(d)   all Contracts providing for indemnification of any Person with respect to Liabilities relating to any current or former business of such party, other than customary indemnification provisions contained in Contracts for the purchase of supplies or the sale of inventory in the ordinary course of business, in an individual amount or potential amount greater than $25,000.00 or in the aggregate more than $50,000.00;

(e)   all Contracts under which such party has directly or indirectly guaranteed any Liabilities of any Person in an individual amount or potential amount greater than $25,000.00 or in the aggregate more than $50,000.00;

(f)   all Contracts which limit the ability of such party to compete in any line of business or with any Person or in any geographic area or which limit the ability of such party with respect to the development, manufacture, marketing, sale or distribution of, or other rights with respect to, any products or services;

(g)   all Contracts concerning a partnership, joint venture or joint development;

(h)   all Contracts relating to acquisitions or dispositions of any business or product line;

(i)   all material Contracts pursuant to which such party has agreed to pay a rebate other than any such Contracts entered in the ordinary course of business consistent with past practice;

(j)   all material Contracts pursuant to which such party has licensed from or to a third party any Intellectual Property (except any such agreements relating to commercially available off the shelf software);

(k)   all Contracts providing for or granting an Encumbrance upon any material Asset of such party (other than a Permitted Encumbrance);

(l)   all Contracts providing for or containing confidentiality and non-disclosure obligations (other than standard non-disclosure forms signed by employees generally); and

(m)   all other material Contracts.

“Pension Plan” shall mean any “employee pension benefit plan” as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (a) which a Party or any ERISA Affiliate of a Party maintains, administers, contributes to or is required to contribute to, or has been maintained, administered or contributed to or required to be contributed to, or under which a Party or any ERISA Affiliate of a Party may incur any liability and (b) which covers any employee or former employee of a Party or any ERISA Affiliate of a Party (with respect to their relationship with such entities).

“Permits” means all consents, licenses, permits, certificates, variances, exemptions, franchises and other approvals issued, granted, given, or otherwise made available by any Governmental Entity.

“Permitted Encumbrances” shall mean (a) those Encumbrances that result from all statutory or other liens for Taxes or assessments (1) which are not yet due and payable or (2) the validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained in accordance with GAAP; (b) those Encumbrances that result from any cashiers’, landlords’, workers’, mechanics’, carriers’, materialmen’s, suppliers’ or repairers’ lien and other similar Encumbrances imposed by law or incurred in the ordinary course of business in respect of obligations which are not overdue; (c) those Encumbrances imposed by any law, rule, regulation, ordinance or restriction promulgated by any Governmental Entity, other than those created by agreement with a Governmental Entity; (d) those Encumbrances that result from all leases, subleases or licenses to which Lightyear or Wherify is a party; (e) any title exception set forth Section 1(a) of the Lightyear or Wherify Disclosure Schedule; and (f) all other Encumbrances which, individually, or in the aggregate, do not detract from or interfere with or impair the use, value or marketability of the Asset subject thereto or affected thereby or the conduct of the Company’s business.

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, governmental agency or instrumentality, or any other entity.

“Prohibited Transaction” means a transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA, respectively.

“Puerto Rico Membership Interests” shall mean the membership interest of Lightyear Alliance of Puerto Rico, LLC.

“Qualifying Proposal” means a Superior Proposal or an Acquisition Proposal that constitutes or, in the good faith judgment of the Board of Directors of Wherify or Lightyear, as applicable, after consultation with outside counsel and its independent financial advisor, would reasonably be expected to result in a Superior Proposal.

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq., as amended.

“Representative” shall mean, with respect to any Person, that Person’s officers, directors, employees, financial advisors, agents or other representatives.

“SEC” shall mean the Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Senior Subordinated Convertible Notes” shall mean those senior subordinated convertible notes to be issued by LNS prior to the Closing with the terms as set forth in Exhibit F , including any convertible notes issues under Section 8.2(g).

“Stock Price” shall mean the average of the Daily Per Share Prices for the ten consecutive trading days ending on the trading day two days prior to the date on which such price is to be determined.

“Subsidiary” shall mean, with respect to any Person, any corporation, partnership, limited liability company, joint venture, association or other entity, of which (a) such Person directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions; (b) such Person is a general partner, manager or managing member or (c) such Person holds a majority of the equity economic interest.

“Superior Proposal” means any unsolicited, bona fide written proposal made by a third party to acquire all or substantially all of the equity securities, equity interests or assets of Wherify or Lightyear, pursuant to a tender or exchange offer, a merger, a consolidation or a sale of its assets, on terms which the Board of Directors of Wherify or the Board of Directors of Lightyear, as applicable, determines in its good faith judgment to be more favorable from a financial point of view to the stockholders of Wherify or the Members of Lightyear, as applicable, than the transactions contemplated by this Agreement (after consultation with respect thereto with its independent financial advisor), taking into account all the terms and conditions of such proposal and this Agreement (including any proposal by either party to amend the terms of this Agreement).

“Tax” or “Taxes” shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Return” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“TSCA” shall mean the Toxic Substances Control Act, 15 U.S.C. 2601, et seq., as amended.

“Welfare Plan” shall mean any “employee welfare benefit plan” as defined in Section 3(1) of ERISA, (a) which Lightyear or Wherify or any ERISA Affiliate of Lightyear or Wherify maintains, administers, contributes to or is required to contribute to, or under which Lightyear or Wherify or any ERISA Affiliate of Lightyear or Wherify may incur any liability or obligation and (b) which covers any employee or former employee, consultant or director of Lightyear or Wherify or any ERISA Affiliate of Lightyear or Wherify (with respect to their relationship with such entities).

“Wherify Canada” shall mean 4031806 Canada Inc., a wholly-owned subsidiary of Wherify established under the Canada Business Corporations Act.

“Wherify Common Stock” shall mean the Common Stock, par value $0.01 per share, of Wherify.

“Wherify Series A Preferred Stock” shall mean the Series A Preferred Stock, par value $0.01 per share, of Wherify.

“Wherify Series B Preferred Stock” shall mean the Series B Preferred Stock, par value $0.01 per share, of Wherify.

“Wherify Series C Preferred Stock” shall mean the Series C Preferred Stock, par value $0.01 per share, of Wherify.

“Wherify Series D Preferred Stock” shall mean the Series D Preferred Stock, par value $0.01 per share, of Wherify.

2.1   The Merger . In accordance with the provisions of this Agreement, at the Effective Time (as hereinafter defined), the Merger Sub shall be merged with and into Lightyear, with Lightyear as the Surviving Entity which shall continue its existence under the laws of the State of Kentucky (the “Surviving Entity”) unimpaired and unaffected by the Merger and the separate existence of the Merger Sub shall cease. Lightyear and the Merger Sub are sometimes hereinafter collectively referred to as the “Constituent Corporations.” Lightyear and Wherify after the Merger are sometimes hereinafter referred to as the “Combined Company.”

2.2   Effective Time . The Merger shall become effective at the time of the effective filing of a Certificate of Merger, attached hereto as Exhibit A (the “Certificate of Merger”) , with the Secretary of State of Delaware and Secretary of State of Kentucky in accordance with the provisions of the DGCL and/or Chapter 271B of the Kentucky Statutes, respectively, or at such later time as is established by Wherify and Lightyear and set forth in the Certificate of Merger (the “Effective Time”). Lightyear and the Merger Sub agree to file the aforementioned Certificate of Merger at the time of the Closing, as hereinafter defined or as soon as practicable thereafter.

2.3   Effect of the Merger .

(a)   At the Effective Time, the Surviving Entity shall, without transfer, thereupon and thereafter possess all assets and property of every description, and every interest therein, wherever located, and the rights privileges, immunities, powers, franchises and authority, of a public as well as of a private nature, and be subject to all of the restrictions, disabilities, and duties of each of the Constituent Corporations, and all obligations of, or belonging to, or due to, either of the Constituent Corporations, shall be vested in the Surviving Entity without further act or deed; all assets and property of every description, and every interest therein, wherever located, and the rights, privileges, immunities, powers, franchises, and authority shall thereafter be the property of the Surviving Entity as effectively as when they were the property of the Constituent Corporations, and the title to any real estate or any interest therein vested in either of the Constituent Corporations shall not revert or in any way be impaired by reason of the Merger; all rights of creditors and all liens upon any property of the Constituent Corporations existing as of the Effective Time shall be preserved unimpaired; and all debts, liabilities, and duties of the Constituent Corporations shall thenceforth attach to the Surviving Entity and may be enforced against it to the same extent as if such debts, liabilities, and duties had been incurred for or by it; and any action or proceeding, whether civil, criminal, or administrative, pending by or against either Constituent Corporation shall be prosecuted as if the Merger had not taken place, or the Surviving Entity may be substituted in any such action or proceeding.

(b)   All corporate acts, plans, policies, contracts, approvals, and authorizations of Lightyear and its Members, Managers, committees elected or appointed by its Board of Directors, officers, and agents that were valid and effective immediately prior to the Effective Time shall be taken for all purposes as the acts, plans, policies, contracts, approvals, and authorizations of the Surviving Entity and shall be effective and binding thereon as the same were with respect to Lightyear provided that this clause shall not in any way negate or negatively affect any representations and warranties, agreements or covenants of Lightyear Parties contained in this Agreement.

(c)   All corporate acts, plans, policies, contracts, approvals, and authorizations of Merger Sub and its shareholders, directors, committees elected or appointed by its Board of Directors, officers, and agents that were valid and effective immediately prior to the Effective Time shall be taken for all purposes as the acts, plans, policies, contracts, approvals, and authorizations of the Surviving Entity and shall be effective and binding thereon as the same were with respect to Merger Sub provided that this clause shall not in any way negate or negatively affect any representations and warranties, agreements or covenants of Wherify and Merger Sub contained n this Agreement.

2.4   Closing . The Closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on a date to be specified by Wherify and Lightyear (the “Closing Date”), which shall be no later than the second business day after satisfaction or waiver of the conditions set forth in Article XII (other than delivery of items to be delivered at the Closing and other than satisfaction of those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the delivery of such items and the satisfaction or waiver of such conditions at the Closing) at the offices of Frost Brown Todd LLC, 400 West Market Street, 32 ^nd Floor, Louisville, Kentucky, 40202-3363 or at such other place and on such other date as the Parties may mutually agree in writing.

2.5   Articles of Organization, Operating Agreement . The Articles of Organization and Operating Agreement attached hereto as Exhibit B shall be the Articles of Organization and Operating Agreement of the Surviving Entity immediately after Closing. Each of the Lightyear Members hereby agrees to the amendment of the Charter Documents to the Operating Agreement attached as Exhibit  B effective as of the Closing.

2.6   Directors and Officers . The managers and officers of Merger Sub immediately prior to the Effective Time shall be the initial directors and officers, respectively, of the Surviving Entity from and after the Effective Time, each to hold office in accordance with the Articles of Organization and the Operating Agreement of the Surviving Entity until their successors are elected or appointed and qualified or until their resignation or removal.

2.7   Shareholder and Director Approvals.

(a)   Merger Sub shall submit the Merger and all other actions contemplated by this Agreement that require approval and adoption by its shareholders, for consideration, approval and adoption at a special meetings of shareholders, as the case may be, convened as soon after the date hereof as is possible (or if feasible, by means of written consent in lieu of a special meeting.

(b)   Subject to all the conditions set forth in Article XII being satisfied, the Lightyear Managers hereby approve the Merger, agree to execute any and all documents to evidence such approval as required by the Kentucky Statutes and authorize the appropriate officers of Lightyear to sign this Agreement and all documents necessary to consummate the transactions consummated herein.

(c)   The Merger Sub shall submit, for consideration, approval and adoption at a special meeting of directors convened as soon prior to the Closing as is possible after the date hereof, the Merger and all other actions contemplated by this Agreement that require approval and adoption by the directors of the Merger Sub.

(d)   Wherify and Lightyear shall promptly make any and all necessary filings with respect to the Merger under the Securities Act, the Exchange Act, applicable state blue sky laws and the rules and regulations thereunder.

3.1   Conversion . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

(a)   Each share of the common stock of the Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and nonassessable unit of membership interest of the Surviving Entity. Each certificate of Merger Sub evidencing ownership of any such shares shall evidence ownership of a like number of units of membership interest of the Surviving Entity.

(b)   Each unit of Lightyear Membership Interests issued and outstanding immediately prior to the Effective Time shall automatically be converted into (and represent the right to receive) that number of validly issued, fully paid and nonassessable shares of Wherify Series C Preferred Stock equal to the Exchange Ratio (the “Merger Shares”). As of the Effective Time, the units of Lightyear Membership Interests converted into Wherify Series C Preferred Stock pursuant to this Section 3.1(b) shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of any such units of Lightyear Membership Interests shall cease to have any rights with respect to such Lightyear Membership Interests and any other rights under or arising out of the Charter Documents except (i) the right to receive the Wherify Series C Preferred Stock pursuant to this Section 3.1(b), (ii) any cash in lieu of fractional Wherify Series C Preferred Stock to be issued or paid in consideration therefor and (iii) any dividends or distributions payable pursuant to Section 3.7 upon the surrender of such certificate in accordance with Section 3.5, without interest.

3.2   Lightyear Warrant; Legend . Lightyear has issued to MCI Worldcom n/k/a Verizon (“Verizon”) on November 5, 2003 a warrant granting Verizon the right to acquire 1,000 units in Lightyear, which was subsequently decreased by agreement between Lightyear and Verizon, to 660 units (the “Verizon Warrant”). LANJK has agreed, and hereby ratifies such agreement, that if Verizon exercises the warrant, LANJK shall sell to Lightyear 660 units for the exercise price (which amount is $1.00 per share) under the Lightyear Warrant such that LANJK would be the only Lightyear member diluted if the Lightyear Warrant were exercised by Verizon. If Verizon exercises the warrant prior to the Closing, the 660 Lightyear units shall be issued to Verizon and 660 units shall be redeemed from LANJK. If Verizon exercises the warrant after the Closing, LANJK shell convey to Verizon those number of Wherify Series C Preferred Stock that Verizon would have received under Section 3.1(b) to this Agreement it had exercised its warrant prior to the Closing. The Merger Shares issued to LANJK and the stock certificate evidencing such shall have the appropriate legends reflecting the above terms.

3.3   Fractional Shares . Wherify shall not issue fractional shares of Wherify Series C Preferred Stock pursuant to the provisions of 3.1(b) immediately above, but, in lieu thereof, shall make a cash payment equal to the product of the Stock Price multiplied by the fraction of a whole share represented by the fractional share.

3.4   Adjustments to Exchange Ratio . Subject to Lightyear’s consent, the Exchange Ratio shall be adjusted to reflect fully the effect of any reclassification, stock split, consolidation, reverse split, stock dividend (including any dividend or distribution of securities convertible into Wherify Common Stock or Lightyear Membership Interests), reorganization, capital redemption or repayment, bonus issue, recapitalization or other like change with respect to Wherify Common Stock, Wherify Series C Preferred Stock or Lightyear Membership Interests occurring (or for which a record date is established) after the date hereof and prior to the Closing.

3.5   Exchange of Certificates .

(a)   After the Effective Time, each holder of any outstanding Certificate or Certificates may, but is not required to, surrender such Certificate or Certificates to Lightyear along with such other documents as may be deemed necessary by Lightyear, the Surviving Entity or Wherify effectively to surrender and exchange such Certificate or Certificates. From and after the Effective Time and until Certificates are surrendered for exchange or registration of transfer, all Certificates shall be deemed for all purposes to represent and evidence the number of shares of Wherify Series C Preferred Stock into which they were so converted under the terms of Section 3.1(b) of this Agreement.

(b)   After the Effective Time, whenever Certificates are presented for exchange or registration of transfer, Wherify shall cause to be issued in respect thereof certificates representing the number of shares of Wherify Series C Preferred Stock into which the surrendered units of Lightyear Membership Interests were so converted under the terms of Section 3.1(b) of this Agreement.

3.6   Full Satisfaction . All shares of Wherify Series C Preferred Stock into which Lightyear Membership Interests shall have been converted pursuant to this Article III shall be deemed to have been issued in full satisfaction of all rights pertaining to such converted shares and shall, when issued pursuant to the provisions hereof, be validly issued, fully paid, and nonassessable.

3.7   Dividends and Distributions .   No dividends or other distributions declared or made after the Effective Time with respect to Wherify Series C Preferred Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Lightyear Certificate until the holder of record of such Lightyear Certificate shall surrender such Lightyear Certificate. Subject to the effect of applicable laws, following surrender of any such Lightyear Certificate, there shall be issued and paid to the record holder of the Lightyear Certificate, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time previously paid with respect to such whole Wherify Series C Preferred Stock, without interest, and, at the appropriate payment date, the amount of dividends or other distributions having a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender that are payable with respect to such whole Wherify Series C Preferred Stock.

Each Lightyear Party represents and warrants to Wherify and the Merger Sub that, to its Knowledge, the statements contained in this Article V (Section 5.1 through 5.34) are true and correct, except as expressly set forth herein or in the disclosure schedule delivered by Lightyear to Wherify on or before the date of this Agreement (the “Lightyear Disclosure Schedule”). The Lightyear Disclosure Schedule shall be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article V and the disclosure in any paragraph shall qualify the corresponding paragraph in this Article V where such disclosure would be appropriate and for which the relevance of such disclosure is reasonably apparent based upon its nature and substance.

5.1   Organization and Standing of Lightyear. Each of Lightyear and LNS is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Kentucky. Each has full requisite power and authority to carry on its business as it is now being conducted and as proposed to be conducted, and to own, operate, and lease the properties now owned, operated, or leased by it. Each is duly authorized and qualified to carry on its business in the manner as now conducted and as proposed to be conducted in each state in which authorization and qualification is required. Section 5.1 of the Lightyear Disclosure Schedule sets forth a list of the jurisdictions in which each is qualified to transact business. Each has made available to Wherify and its representatives as requested true, correct and complete copies of the contents of its minute book, which are accurate in all material respects and set forth fully and fairly all of its material transactions. Each has delivered to Wherify complete and accurate copies of the Lightyear Operating Agreement, which is the current operating agreement of Lightyear.

5.2   Capitalization of Lightyear and LNS.  

(a)   All units of Lightyear Membership Interests are held by Lightyear Members and were issued and outstanding prior to the Effective Time. The units of Lightyear Membership Interests issued and outstanding prior to the Effective Time are duly and validly authorized and issued, fully paid and non-assessable, and were not issued in violation of any preemptive rights. The units of Lightyear Membership Interests issued and outstanding prior to the Closing were issued, and all secondary transfers of such shares permitted by Lightyear were made, in compliance with all applicable law (including, without limitation, available exemptions from the securities offering registration requirements of federal and state law). Except for the Lightyear Warrant, no warrant, call, subscription, convertible security, or commitment of any kind obligating Lightyear to issue any Lightyear Membership Interests exists. Lightyear does not have any stock option or purchase plans. There is not any compensation plan applicable to any of the officers, directors, or employees of Lightyear under which compensation accrued or payable is determined, in whole or in part, by reference to Lightyear Membership Interests. There are no agreements or commitments obligating Lightyear to repurchase or otherwise acquire any Lightyear Membership Interests, except as set forth in the Lightyear Operating Agreement. Lightyear has no rights of repurchase or redemption right or right of first refusal with respect to any units of Lightyear Membership Interests, except as set forth in the Lightyear Operating Agreement.

(b)   Lightyear is the sole member of LNS. Such LNS Membership Interests issued and outstanding prior to the Effective Time are duly and validly authorized and issued, fully paid and non-assessable, and were not issued in violation of any preemptive rights. The LNS Membership Interests issued and outstanding prior to the consummation of the Merger were issued, and all secondary transfers of such shares permitted by LNS were made, in compliance with all applicable law (including, without limitation, available exemptions from the securities offering registration requirements of federal and state law). No warrant, call, subscription, convertible security, or commitment of any kind obligating LNS to issue any LNS Membership Interests exists. LNS does not have any stock option or purchase plans. There is not any compensation plan applicable to any of the officers, directors, or employees of LNS under which compensation accrued or payable is determined, in whole or in part, by reference to LNS Membership Interests. There are no agreements or commitments obligating LNS to repurchase or otherwise acquire any LNS Membership Interests, except as set forth in the LNS Operating Agreement. LNS has no rights of repurchase or redemption right or right of first refusal with respect to any units of LNS Membership Interests, except as set forth in the LNS Operating Agreement.

(c)   LNS is the sole member of Puerto Rico. Such Puerto Rico Membership Interests issued and outstanding prior to the Effective Time are duly and validly authorized and issued, fully paid and non-assessable, and were not issued in violation of any preemptive rights. The Puerto Rico Membership Interests issued and outstanding prior to the consummation of the Merger were issued, and all secondary transfers of such shares permitted by Puerto Rico were made, in compliance with all applicable law (including, without limitation, available exemptions from the securities offering registration requirements of federal and state law). No warrant, call, subscription, convertible security, or commitment of any kind obligating Puerto Rico to issue any Puerto Rico Membership Interests exists. Puerto Rico does not have any stock option or purchase plans. There is not any compensation plan applicable to any of the officers, directors, or employees of Puerto Rico under which compensation accrued or payable is determined, in whole or in part, by reference to Puerto Rico Membership Interests. There are no agreements or commitments obligating Puerto Rico to repurchase or otherwise acquire any Puerto Rico Membership Interests, except as may be set forth in applicable statutes. Puerto Rico has no rights of repurchase or redemption right or right of first refusal with respect to any units of Puerto Rico Membership Interests, except as may be set forth in applicable statute.

5.3   Subsidiaries and Other Ventures . Other than LNS, Lightyear has no subsidiaries or affiliated corporations, and owns no capital stock, bond, or other security of, or has any equity or proprietary interest in, any corporation, partnership, joint venture, trust, or unincorporated association. Other than Puerto Rico, LNS has no subsidiaries or affiliated corporations, and owns no capital stock, bond, or other security of, or has any equity or proprietary interest in, any corporation, partnership, joint venture, trust, or unincorporated association. Puerto Rico has no subsidiaries or affiliated corporations, and owns no capital stock, bond, or other security of, or has any equity or proprietary interest in, any corporation, partnership, joint venture, trust, or unincorporated association.

5.4   Ownership of Membership Interest .

(a)   Section 5.4(a) of the Lightyear Disclosure Schedule sets forth the respective ownership percentage or units of Lightyear Membership Interests. Except as set forth on Section 5.4(a) of the Lightyear Disclosure Schedule, all of Lightyear Membership Interests are owned free and clear of any Encumbrances. None of the outstanding units of Lightyear Membership Interests are subject to any voting trust, voting agreement, or other agreement or understanding with respect to the voting thereof, nor is any proxy in existence with respect to any such shares.

(b)   Except as set forth on Section 5.4(b) of the Lightyear Disclosure Schedule, all of LNS Membership Interests are owned free and clear of any Encumbrances. None of the outstanding units of LNS Membership Interests are subject to any voting trust, voting agreement, or other agreement or understanding with respect to the voting thereof, nor is any proxy in existence with respect to any such shares.

(c)   Except as set forth on Section 5.4(c) of the Lightyear Disclosure Schedule, all of Puerto Rico Membership Interests are owned free and clear of any Encumbrances. None of the outstanding units of Puerto Rico Membership Interests are subject to any voting trust, voting agreement, or other agreement or understanding with respect to the voting thereof, nor is any proxy in existence with respect to any such shares.

5.5   Capacity to Enter into Agreement . Each Lightyear Party has all requisite power and authority to enter into this Agreement, the Ancillary Agreements to which such Lightyear Party is a party, and all other agreements, documents and instruments to be executed in connection herewith and, subject only to the adoption of this Agreement and the approval of the Merger (the “Lightyear Voting Proposal”) by Lightyear Members under the Kentucky Statutes, to consummate the transactions contemplated by this Agreement. The execution and delivery by each Lightyear Party of this Agreement, the Ancillary Agreements to which such Lightyear Party is a party, and all other agreements, documents and instruments to be executed by such Lightyear Party in connection herewith have been authorized by all necessary action by such Lightyear Party. When this Agreement, the Ancillary Agreements to which such Lightyear Party is a party, and all other agreements, documents and instruments to be executed by such Lightyear Party in connection herewith have been executed by such Lightyear Party and delivered to Wherify and the Merger Sub, this Agreement, the Ancillary Agreements and such other agreements, documents and instruments will constitute the valid and binding agreements of such Lightyear Party enforceable against such Lightyear Party in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

5.6   Conflicts . Except as set forth on Section 5.6 of the Lightyear Disclosure Schedule, the execution and delivery of this Agreement and the Ancillary Agreements, the performance by each Lightyear Party of its obligations hereunder and thereunder, and the consummation of the transactions contemplated by this Agreement hereby or thereby will not (a) violate, conflict with or result in (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit) under, require a consent or waiver under, constitute a change in control under, require the payment of a penalty under or result in the imposition of any lien on any Lightyear Company’s material Assets under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license or other agreement, instrument or obligation to which any Lightyear Company is a party or by which it or any of its properties or material Assets may be bound or affected, (b) violate any statute, law, ordinance, rule, regulation or judgment, decree or order of any Governmental Entity, applicable to any Lightyear Company or any of its material Assets, (c) result in the creation of any Encumbrance upon any material Assets or business of any Lightyear Company pursuant to the terms of any Contract, permit, authorization, or any order, judgment or decree to which such Lightyear Company is a party or by which such Lightyear Company or any of its Assets are bound or encumbered, or (d) violate any provision in the Lightyear Operating Agreement, the LNS Operating Agreement or Puerto Rico Operation Agreement or any other agreement affecting the governance and control of each Lightyear Company.

5.7   Consents . Except as set forth on Section 5.7 of the Lightyear Disclosure Schedule, no consent, approval, license, permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity or any other person, which has not been obtained, is necessary in connection with the execution, delivery, or performance of this Agreement by Lightyear Parties, other than for the approval of the members of Lightyear, which will be sought pursuant to this Agreement.

5.8   LNS Financial Statements . Each Lightyear Company has delivered to Wherify or its representatives copies of the following financial statements of Lightyear Companies (including, in each case, any related notes and schedules) (hereinafter collectively referred to as the “LNS Financial Statements”): (i) financial statements with full footnotes for the fiscal years ending December 31, 2004, December 31, 2005, December 31, 2006, and December 31, 2007, and (ii)  unaudited balance sheet, statement of income and retained earnings, and cash flows as of June 30, 2008 (collectively “the LNS Balance Sheet”). Except as set forth on Section 5.8 of the Lightyear Disclosure Schedule hereto:

(a)   The LNS Financial Statements are complete and correct in all material respects, present fairly the financial condition of each Lightyear Company as at the respective dates thereof, and the results of operations for the respective periods covered thereby, complied or will comply as to form in all material respects with applicable accounting requirements and have been prepared in accordance with GAAP applied on a consistent basis, subject to year-end adjustments and except that unaudited financial statements do not contain all required footnotes;

(b)   There is no basis for the assertion of any liabilities or obligations, either accrued, absolute, contingent, or otherwise, which might have a Material Adverse Effect on the value, use, operation or enjoyment of the assets or business of each Lightyear Company, which liabilities or obligations are not expressly set forth on the LNS Balance Sheet;

(c)   None of Lightyear Companies are a party to or bound either absolutely or on a contingent basis by any agreement of guarantee, indemnification, assumption or endorsement or any like commitment of the obligations, liabilities or indebtedness of any other person (whether accrued, absolute, contingent or otherwise), which liabilities or obligations are not expressly set forth on the LNS Balance Sheet; and

(d)   The information to be supplied by or on behalf of Lightyear Companies for inclusion or incorporation by reference in the 8-K to be filed by Wherify after the signing of this Agreement and the 8-K to be filed before the commencement of the sale of the Financing Shares shall not at the time such 8-K   is filed with the SEC or at any time it is amended or supplemented, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading.

(e)   Lightyear Members do not have any claims, contingent or otherwise, against any Lightyear Company, and will not have any such claims after the Closing, under the Lightyear Operating Agreement or otherwise, except the right to receive the Merger Shares.

5.9   Absence of Certain Changes and Events . Except as set forth on Section 5.9 of the Lightyear Disclosure Schedule, since the date of the LNS Balance Sheet, there has not been:

(a)   Any change having a Material Adverse Effect in the financial condition, operations, business, employee relations, customer relations, assets, liabilities (accrued, absolute, contingent, or otherwise) or income of any Lightyear Company, or the business of any Lightyear Company, from that shown on the LNS Financial Statements;

(b)   Any declaration, setting aside, or payment of any distribution in respect of the equity interests in any Lightyear Company, or any direct or indirect redemption, purchase, or any other acquisition of any such interests;

(c)   Any borrowing of, or agreement to borrow any funds or any debt, obligation, or liability (absolute or contingent) incurred by any Lightyear Company (whether or not presently outstanding) except current liabilities incurred, and obligations under agreements entered into in the ordinary course of business;

(d)   Any creation or assumption by any Lightyear Company of any Encumbrance, other than a Permitted Encumbrance, on any material Asset;

(e)   Any sale, assignment, or transfer of any Lightyear Company’s assets, except in the ordinary course of business, any cancellation of any debts or claims owed to any Lightyear Company, any capital expenditures or commitments therefore exceeding in the aggregate $15,000, any damage, destruction or casualty loss exceeding in the aggregate $15,000 (whether or not covered by insurance), or any charitable contributions or pledges;

(f)   Any amendment or termination of any Contracts to which any Lightyear Company is or was a party or to which any Assets of any Lightyear Company is or was subject, which amendment or termination has had, or may be reasonably expected to have, a Material Adverse Effect on any Lightyear Company; or

(g)   any split, combination, reclassification or other amendment of any material term of any outstanding security of any Lightyear Company;

(h)   any making of any material loan, advance or capital contribution to any Person;

(i)   any compromise, relinquishment, settlement or waiver by any Lightyear Company of a valuable right or material debt owed to it in excess of $5,000;

(j)   any resignation or termination of employment of any key employee or executive officer of any Lightyear Company and, each Lightyear Company has not received written notice of any such pending resignation or termination;

(k)   except for regularly scheduled increases in compensation or bonuses for non-professional level employees, in each case in the ordinary course of business consistent with past practice, any material change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable or to become payable to any director, officer or employees or agreement or binding promise (orally or otherwise) to pay, conditionally or otherwise, any bonus or extra compensation or other employee benefit to any of such directors, officers or employees or severance;

(l)   any employment or severance agreement with or for the benefit of any director, officer or employee of any Lightyear Company;

(m)   any change in accounting methods, principles or practices of any Lightyear Company affecting its Assets, Liabilities or business, except immaterial changes permitted by GAAP;

(n)   any claim of wrongful discharge or other unlawful labor practice or action with respect to any Lightyear Company;

(o)   any material revaluation by any Lightyear Company of any of its Assets;

(p)   any material change or modification of any of the credit, collection or payment policies, procedures or practices of any Lightyear Company, including acceleration of collections of receivables, failure to make or delay in making collections of receivables, acceleration of payment of payables or other Liabilities or failure to pay or delay in payment of payables or other Liabilities;

(q)   any material discount activity with customers of any Lightyear Company that has accelerated or would accelerate to pre-Closing periods sales that would otherwise in the ordinary course of business consistent with past practices be expected to occur in post-Closing periods;

(r)   any settlement or compromise of any Action involving in excess of $50,000;

(s)   Any other material transaction by any Lightyear Company outside the ordinary course of business or any other event or condition pertaining to, and that has or reasonably would be expected to have a Material Adverse Effect on any Lightyear Company; or

(t)   any agreement by any Lightyear Company or any officer or employees thereof to do any of the things described in the preceding clauses (a) through (s) (other than negotiations with Wherify and its representatives regarding the transactions contemplated by this Agreement).

5.10   Assets . Except as set forth on Schedule 5.10 hereto,

(a)   Each Lightyear Company has good and valid title to all of its material Assets, free and clear of all Encumbrances other than Permitted Encumbrances;

(b)   Each Lightyear Company’s machinery, equipment, appliances, motor vehicles and fixtures are in good operating condition and repair, subject only to ordinary wear and tear and routine maintenance items;

(c)   All of the inventories of Lightyear Companies (including, without limitation, raw materials, spare parts and supplies, work-in-process, finished goods) consist of items of a quality, condition and quantity useable and saleable in the normal course of business;

(d)   All of the accounts receivable of Lightyear Entities are valid, subsisting, and genuine, arose out of bona fide transactions and are current and collectible, subject to reserves reflected on the LNS Balance Sheet;

(e)   Real Property . Section 5.10(e) of the Lightyear Disclosure Schedule sets forth a list of all real properties owned by Lightyear Companies (collectively, the “LNS Owned Real Property”). Each Lightyear Company has good and valid fee title to, and enjoys peaceful and undisturbed possession of, the LNS Owned Real Property free and clear of any and all Encumbrances other than any Permitted Encumbrances. Except as set forth in Section 5.10(e) of the Lightyear Disclosure Schedule, no Lightyear Entity has received written notice of any pending or threatened special assessment relating to the LNS Owned Real Property. Section 5.10(e) of the Lightyear Disclosure Schedule sets forth a list of all leases, licenses or other occupancy rights affecting the LNS Owned Real Property (“Occupancy Agreements”). The Occupancy Agreements are in full force and effect and there has been no material default under such Occupancy Agreements by Lightyear Companies, or to the Knowledge of any Lightyear Company, by any other party thereto, and, to the Knowledge of any Lightyear Company, there is no existing event or circumstance that with the passage of time or the giving of notice, or both, would constitute a default under such Occupancy Agreements; 

(f)   Leased Real Property . Section 5.10(f) of Lightyear Disclosure Schedule sets forth a list of all material leased real property used by Lightyear Companies (the “LNS Leased Real Property”). Each Lightyear Company has good and valid leasehold title to, and enjoys peaceful and undisturbed possession of, all of LNS Leased Real Property, free and clear of any and all Encumbrances other than any Permitted Encumbrances. There has been no material default under any lease relating to LNS Leased Real Property by any LNS Entity or, to the Knowledge of any Lightyear Company, by any other party and, to the Knowledge of any Lightyear Company, there is no existing event or circumstance that with the passage of time or the giving of notice, or both, would constitute a default under such lease. Except as set forth in Section 5.10(c) of the Lightyear Disclosure Schedule, no Lightyear Entity has received written notice of any pending or threatened special assessment relating to LNS Leased Real Property; and

(g)   There are no restrictions imposed by any Contract which preclude or restrict in any material respect the ability of any Lightyear Company to use any of LNS Owned Real Property or LNS Leased Real Property for the purposes for which it is currently being used.

5.11   Party Contracts . Section 5.11 of the Lightyear Disclosure Schedule sets forth a list of the Party Contracts of each Lightyear Company.

(a)   Except as set forth on Section 5.11(a) of the Lightyear Disclosure Schedule, each Party Contract of Lightyear Companies is in full force and effect and is legal, valid, binding and enforceable in accordance with its terms against such Lightyear Company, as applicable and, to the Knowledge of each Lightyear Company, against all other parties thereto; and

(b)   There is not, under any such Party Contract of Lightyear Companies any existing or prospective default or event of default by Lightyear Entities or to the Knowledge of Lightyear Companies, any other Person, or event which with notice or lapse of time, or both would constitute a default or give Lightyear Companies or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity of, or to cancel, terminate or modify, any right, obligation or remedy under any Party Contract of Lightyear Companies, except where such violation, breach, default, exercise, acceleration, cancellation, termination or modification would not reasonably be expected to have a Material Adverse Effect on any Lightyear Company, and in respect to which such Lightyear Company has not taken adequate steps to prevent a default from occurring.

5.12   Permits . Section 5.12 of the Lightyear Disclosure Schedule contains a complete and accurate list of all material Permits that are held by Lightyear Companies. All material Permits of Lightyear Companies are validly held by Lightyear Companies and are in full force and effect. Except as set forth on Section 5.12 of the Lightyear Disclosure Schedule,

(a)   the Permits listed on Section 5.12 of the Lightyear Disclosure Schedule, constitute all material Permits that are necessary for Lightyear Companies to carry on their business and to own and use their assets in compliance with all Laws applicable to such operation, ownership and use, and all such licenses, permits and authorizations are in good standing;

(b)   Lightyear Companies are in full compliance with and not in default or violation with respect to any term or provision of any of their material Permits;

(c)   No notice of pending, threatened, or possible violation or investigation in connection with, or loss of, any Permit of Lightyear Companies, has been received by Lightyear Companies;

(d)   Lightyear Companies have no knowledge that the issuance of such a notice is being considered or of any facts or circumstances which form the basis for the issuance of such a notice; and

(e)   Except as set forth on Section 5.12 of the Lightyear Disclosure Schedule, no material Permits of Lightyear Companies will be subject to suspension, modification, revocation, cancellation, termination or nonrenewal as a result of the execution, delivery or performance of this Agreement or any Ancillary Agreement or the consummation by Lightyear Companies of the transactions contemplated by this Agreement or any Ancillary Agreement. Lightyear Companies have complied in all material respects with all of the terms and requirements of the material Permits of Lightyear Companies.

5.13   Intellectual Property. Except as set forth on Section 5.13 of the Lightyear Disclosure Schedule,

(a)   Each Lightyear Company owns or has the exclusive right to use pursuant to license, sublicense, agreement or permission all of its Intellectual Property, free from any Encumbrances other than other than those Permitted Encumbrances set forth in clauses (a), (b), (c) and (e) of the definition of Permitted Encumbrances set forth in Article I hereof and free from any requirement of any past, present or future royalty payments, license fees, charges or other payments, or conditions or restrictions whatsoever. Lightyear’s Intellectual Property comprise all of the Intellectual Property necessary to conduct and operate the business as now being conducted by Lightyear. LNS’ Intellectual Property comprise all of the Intellectual Property necessary to conduct and operate the business as now being conducted by LNS. Puerto Rico’s Intellectual Property comprise all of the Intellectual Property necessary to conduct and operate the business as now being conducted by Puerto Rico.

(b)   Immediately after the Closing, each Lightyear Company will own all of its Intellectual Property and will have a right to use all its Intellectual Property, free from any Liens and on the same terms and conditions as in effect prior to the Closing.

(c)   The conduct of each Lightyear Company’s business does not infringe or otherwise conflict with any rights of any Person in respect of any of its Intellectual Property. None of its Intellectual Property is being infringed or otherwise used or available for use, by any other Person. As of the date of this Agreement, none of its Intellectual Property is being used or enforced in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property rights. 

(d)   Schedule 5.13 sets forth all agreements, arrangements or laws (i) pursuant to which each Lightyear Company has licensed its Intellectual Property to, or the use of its Intellectual Property is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) by, any other Person, and (ii) pursuant to which each Lightyear Company has had Intellectual Property licensed to it, or has otherwise been permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise). All of the agreements or arrangements set forth on Schedule 5.13 (x) are in full force and effect in accordance with their terms and no default exists thereunder by each Lightyear Company, or by any other party thereto, (y) are free and clear of all Encumbrances other than other than those Permitted Encumbrances set forth in clauses (a), (b), (c) and (e) of the definition of Permitted Encumbrances set forth in Article I hereof, and (z) do not contain any change in control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the transactions contemplated by this Agreement. To the extent requested, each Lightyear Company has delivered to Wherify true and complete copies of all licenses and arrangements (including amendments) set forth on Schedule 5.13. All royalties, license fees, charges and other amounts payable by, on behalf of, to, or for the account of, each Lightyear Company in respect of any Intellectual Property are disclosed in the Financial Statements.

(e)   No claim or demand of any Person has been made nor is there any proceeding that is pending, or threatened, nor is there a reasonable basis therefor, which (i) challenges the rights of any Lightyear Company in respect of any Intellectual Property, (ii) asserts that any Lightyear Company is infringing or otherwise in conflict with, or is, except as set forth on Schedule 5.13, required to pay any royalty, license fee, charge or other amount with regard to, any Intellectual Property, (iii) claims that any default exists under any agreement or arrangement listed on Schedule 5.13, or (iv) asserts that any Intellectual Property is being used or enforced in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of such Intellectual Property right. None of its Intellectual Property is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, arbitrator, or other Governmental Authority, or has been the subject of any litigation, whether or not resolved in favor of a Lightyear Company.

(f)   The Intellectual Property of each Lightyear Company has been duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office, United States Copyright Office or such other filing offices, domestic or foreign, and each Lightyear Company has taken such other actions, to ensure full protection under any applicable laws or regulations, and such registrations, filings, issuances and other actions remain in full force and effect, in each case to the extent material to the business of each Lightyear Company.

(g)   There are, and immediately after the Closing will be, no contractual restriction or limitations pursuant to any orders, decisions, injunctions, judgments, awards or decrees of any Governmental Authority on Wherify’s right to use the name and marks of the business of each Lightyear Company as presently carried on by each of them or as such business may be extended by Wherify.

(h)   There are no defects in any software embodied in the Intellectual Property that would prevent such software from performing in all material respects the tasks and functions that it was intended to perform. All of the commercially available software that is incorporated into the Owned Software can be replaced by other widely-available and similarly priced alternative commercially available software.

(i)   Except as set forth in Section 5.13(i) of the Lightyear Disclosure Schedule, all employees of each Lightyear Company have entered into a valid and binding written agreement with each Lightyear Company sufficient to vest title in each Lightyear Company of all Intellectual Property created by such employee in the scope of his or her employment with each Lightyear Company.

5.14   Employees . Except as set forth on Schedule 5.14 hereto,

(a)   No Lightyear Company is a party as an employer to any employment contract, agreement or understanding which is not terminable at will without any penalty, liquidated damages or other required payment;

(b)   Each Lightyear Company has satisfied all salaries, wages, unemployment insurance premiums, worker compensation payments, income tax, FICA and other deductions and any like payments required by law; and

(c)   No Lightyear Company’s employees are unionized and there have not been, to the Knowledge of Lightyear Company, attempts to unionize them.

5.15   Employee Benefit Plans . Except as set forth on Schedule 5.15 hereto,

(a)   No Lightyear Company nor any of its ERISA Affiliates sponsors or has ever sponsored, maintained, contributed to, or incurred an obligation to contribute to, any Employee Plan;

(b)   No individual shall accrue or receive additional benefits, service or accelerated rights to payments of benefits under any Employee Plan including the right to receive any parachute payment, as defined in Section 280G of the Code, or become entitled to severance, termination allowance or similar payments as a direct result of the transactions contemplated by this Agreement;

(c)   No Employee Plan has participated in, engaged in or been a party to any non-exempt Prohibited Transaction, and neither LNS nor any of its ERISA Affiliates has had asserted against it any claim for taxes under Chapter 43 of Subtitle D of the Code and Sections 4971 et. seq. of the Code, or for penalties under ERISA Section 502(c), (i) or (1) with respect to any Employee Plan nor is there a basis for any such claim. No officer, director or employee of any Lightyear Company has committed a breach of any material responsibility or obligation imposed upon fiduciaries by ERISA with respect to any Employee Plan;

(d)   Other than routine claims for benefits, there is no claim pending or threatened, involving any Employee Plan by any person against such plan or any Lightyear Company or any ERISA Affiliate. There is no pending or threatened proceeding involving any Employee Plan before the IRS, the U.S. Department of Labor or any other Governmental Entity;

(e)   There is no material violation of any reporting or disclosure requirement imposed by ERISA or the Code with respect to any Employee Plan;

(f)   Each Employee Plan has at all times prior hereto been maintained in all material respects, by its terms and in operation, in accordance with ERISA and the Code. Each Lightyear Company and its ERISA Affiliates have made full and timely payment of all amounts required to be contributed under the terms of each Employee Plan and applicable law or required to be paid as expenses under such Employee Plan. Each Employer Plan intended to be qualified under Code Section 401(a) has received a determination letter to that effect from the Internal Revenue Service and no event has occurred and no amendment has been made that would adversely affect such qualified status;

(g)   With respect to any group health plans maintained by each Lightyear Company or its ERISA Affiliates, whether or not for the benefit of any Lightyear Company’s employees, each Lightyear Company and its ERISA Affiliate have complied in all material respects with the provisions of Part 6 of Title I of ERISA and 4980B of the Code. No Lightyear Company is obligated to provide health care benefits of any kind to its retired employees pursuant to any Employee Plan, including without limitation any group health plan, or pursuant to any agreement or understanding; and

(h)   Each Lightyear Company has made available to Wherify a copy of the three (3) most recently filed federal Form 5500 series and accountant’s opinion, if applicable, for each Employee Plan and all applicable IRS determination letters. 

5.16   Litigation . Except as set forth on Section 5.16 of the Lightyear Disclosure Schedule,

(a)   There are no Actions instituted, pending or to the Knowledge of each Lightyear Company, threatened, against any Lightyear Company, nor are there any outstanding judgments, decrees or injunctions against any Lightyear Company or any of its Assets or any rule or order of any Governmental Entity applicable to any Lightyear Company, in each case which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect on such Lightyear Company; and

(b)   There is no action, suit, proceeding, or claim pending or, to the Knowledge of each Lightyear Company, threatened against any Lightyear Company by persons not a party to this Agreement wherein an unfavorable decision, ruling, or finding would render unlawful or otherwise materially adversely affect the consummation of the transactions contemplated by this Agreement, nor is there any basis therefor.

5.17   Compliance with Law . Except as set forth on Section 5.17 of the Lightyear Disclosure Schedule,

(a)   No Lightyear Company is in violation of, or in default with respect to, or in alleged violation of or alleged default with respect to, any applicable law, rule, regulation, permit, or any writ or decree of any Governmental Entity, including without limitation, any laws, ordinances, rules, regulations, Permits, or orders relating to the business of such Lightyear Company, or the business operations and practices, health and safety, and employment practices of such Lightyear Company except where such violation or default would not have a Material Adverse Effect on such Lightyear Company;

(b)   No Lightyear Company is delinquent with respect to any report required to be filed with any Governmental Entity that has in the past certified or endorsed the business of such Lightyear Company except where such delinquency would not have a Material Adverse Effect on such Lightyear Company; and

(c)   No Lightyear Company is delinquent with respect to any reports required by private covenants or agreements to which it is a party except where such delinquency would not have a Material Adverse Effect on such Lightyear Company.

5.18   Taxes . To the extent requested, each Lightyear Company has delivered to Wherify or its representatives as requested true, correct and complete copies of all federal, state, and other appropriate jurisdictional Tax Returns, reports, and estimates regarding LNS. Except as set forth on Section 5.18 of the Lightyear Disclosure Schedule,

(a)   Each of the Tax Returns is complete, proper and accurate and has been filed with appropriate governmental agencies by each Lightyear Company for each period for which such Tax Return was due;

(b)   All Taxes shown by the Tax Returns to be due and payable have been timely paid;

(c)   The unpaid Taxes of each Lightyear Company for Tax periods through the date of the LNS Balance Sheet do not exceed the accruals and reserves for Taxes set forth on the LNS Balance Sheet exclusive of any accruals and reserves for “deferred taxes” or similar items that reflect timing differences between Tax and financial accounting principles. All Taxes attributable to the period from and after the date of the LNS Balance Sheet and continuing through the Closing Date are attributable to the conduct by each Lightyear Company of its operations in the ordinary course of business and are consistent both as to type and amount with Taxes attributable to such comparable period in the immediately preceding year. All Taxes that each Lightyear Company is or was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Entity.

(d)   No Lightyear Company has given or been requested to give, or executed, any extension of time or waiver of any statute of limitations with respect to federal, state, or other political subdivision income or other tax for any period;

(e)   No Lightyear Company has received any notice of deficiency or assessment issued or proposed deficiency or assessment by the IRS or any other taxing authority, nor is there any basis therefor; and

(f)   The income Tax Returns of each Lightyear Company have not been audited by the applicable Governmental Entity. No examination, audit or other dispute with respect to any material Tax Return of each Lightyear Company by any Governmental Entity is currently in progress or threatened or contemplated. No Lightyear Company has been informed by any Governmental Entity that the Governmental Entity believes that such Lightyear Company was required to file any material Tax Return that was not filed. No Lightyear Company has waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency.

(g)   No Lightyear Company (i) has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code; (ii) has made any payments, is obligated to make any payments, or is a party to any agreement that could obligate it to make any payments that may be treated as an “excess parachute payment” under Section 280G of the Code (without regard to Section 280G(b)(4)); (iii) has actual or potential liability for any Taxes of any person (other than Lightyear) under Treasury Regulation Section 1.1502-6 (or any similar provision of law in any jurisdiction), or as a transferee or successor, by contract, or otherwise; or (iv) is or has been required to make a basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b). Each Lightyear Company has provided to Wherify the information necessary to accurately calculate any excise tax due under Section 4999 of the Code as a result of the transactions contemplated by this Agreement for which Lightyear, LNS or Wherify may directly or indirectly become liable and the amount of deductions that may be disallowed under Section 280G of the Code as a result of the transactions contemplated by this Agreement.

5.19   Insurance . Except as set forth on Section 5.19 of the Lightyear Disclosure Schedule,

(a)   All insurance policies either maintained by each Lightyear Company or maintained by any other person which relates to each Lightyear Company or its assets in any manner as of the date hereof (collectively, the “LNS Insurance Policies”) are still in full force and effect, and all premiums due thereon have been paid;

(b)   Each Lightyear Company has complied in all material respects with the provisions of all LNS Insurance Policies;

(c)   No claim is pending under any of the LNS Insurance Policies;

(d)   There are no outstanding requirements or recommendations by any insurance company that issued any of the LNS Insurance Policies or by any Board of Fire Underwriters or other similar body exercising similar functions or by any Governmental Entity exercising similar functions which requires or recommends any changes in the conduct of the business of, or any repairs or other work to be done on or with respect to any of the properties or Assets of, each Lightyear Company; and

(e)   No Lightyear Company has received any notice or other communication from any such insurance company within the one (1) year preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of the LNS Insurance Policies, and no such cancellation, amendment or increase of premiums is threatened.

5.20   Environmental Matters . Except as set forth on Section 5.20 of the Lightyear Disclosure Schedule,

(a)   Each Lightyear Company is in compliance with all applicable federal, state and local laws and regulations relating to pollution control and environmental contamination including, but not limited to, all laws and regulations governing the generation, use, collection, treatment, storage, transportation, recovery, removal, discharge or disposal of Hazardous Materials (and all laws and regulations with regard to record keeping, notification and reporting requirements respecting Hazardous Materials;

(b)   No Lightyear Company has received any notice from any Governmental Entity with respect to any alleged violation by it of any applicable federal, state or local environmental or health and safety statutes and regulations in connection with any Lightyear Company’s operations, nor is there any basis therefor;

(c)   No Lightyear Company has been alleged to be in violation of, or has been subject to any administrative or judicial proceeding pursuant to, such laws and regulations, either now or at any time during the past five years;

(d)   There are no permits, licenses, consents, filings or other approvals necessary or required to be obtained or made by laws and regulations relating to Hazardous Material, pollution controls and environmental contamination in connection with any Lightyear Company’s business;

(e)   No Lightyear Company is a party to any contract or other agreement relating to the storage, transportation, treatment or disposal of Hazardous Materials;

(f)   There are no claims or facts or circumstances that any Lightyear Company reasonably believes could form the basis for the assertion of any claim relating to environmental matters involving such Lightyear Company, including, but not limited to, any claim arising from past or present practices of the business of such Lightyear Company, or with respect to properties now or previously owned or leased, as asserted under CERCLA, or RCRA, or any other federal, state or local environmental statute, or the generation, use, treatment, disposal, discharge, ownership, operation, transportation, storage of Hazardous Materials, or any other related act or omission of such Lightyear Company;

(g)   No Lightyear Company is subject to any remedial obligation under applicable law or administrative order or decree pertaining to environmental, health or safety statutes or regulations, including, without limitation, CERLA, RCRA or any similar state statute;

(h)   To each Lightyear Company’s Knowledge, no Hazardous Material or other substances known or suspected to pose a threat to health or the environmental have been disposed of or otherwise released on or near any real property or improvements of any Lightyear Company, and there are no off-site locations where Hazardous Materials associated in any way with any Lightyear Company have been generated, used, collected, treated, stored, transported, recycled, discharged or disposed of.

5.21   Transactions with Affiliated Parties . Except as set forth on Section 5.21 of the Lightyear Disclosure Schedule,

(a)   There are no transactions currently engaged in between any Lightyear Company and any party affiliated with such Lightyear Company (other than transactions inherent in the normal capacities of shareholders, officers, directors, or employees);

(b)   Except for the ownership of non-controlling interests in securities of corporations the shares of which are publicly traded, no party affiliated with any Lightyear Company has any investment or ownership interest, directly, indirectly, or beneficially, in any competitor or potential competitor, major supplier, or customer of any Lightyear Company; and

(c)   There are no agreements to which any Lightyear Company is a party under which the transactions contemplated by this Agreement (i) will require payment by any Lightyear Company or any consent or waiver from any shareholder, officer, director, employee, consultant or agent of any Lightyear Company, or (ii) will result in any change in the nature of any rights of any shareholder, officer, director, employee, consultant or agent of any Lightyear Company under any such agreement.

5.22   Finder’s Fees; Certain Expenses . All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by each Lightyear Company and their counsel directly with Wherify and its counsel, without the intervention of any other person as the result of any act of any of them, without the intervention of any other person in such manner as to give rise to any valid claim against any of the parties hereto for a brokerage commission, finder’s fee, or any similar payment, other than for those parties specifically engaged by written agreement for the transactions contemplated herein.

5.23   Customers and Suppliers . Section 5.23 of the Lightyear Disclosure Schedule accurately identifies, and provides an accurate and complete breakdown of each Lightyear Company’s ten largest customers in terms of revenue of each Lightyear Company and each Person, including each reseller, with whom each Lightyear Company is currently negotiating or in discussions with a business relationship in connection with the current or future purchase, distribution or resale of each Lightyear Company’s products or services (each a “Potential Customer”) including projected orders from such customers and Potential Customers; provided, however, that each Lightyear Company makes no representation or warranty with respect to such order projections, other than that the projections were based on information provided to such Lightyear Company by such customers and Potential Customers, and the projections were prepared in good faith. Except as disclosed in Section 5.23 of the Lightyear Disclosure Schedule, no such customer has ceased or materially reduced its purchases from each Lightyear Company or has threatened to cease or materially reduce such purchases after the date hereof. Except as disclosed in Section 5.23 of the Lightyear Disclosure Schedule, no Potential Customer has ceased or threatened to cease negotiations or discussions with each Lightyear Company. To the Knowledge of Lightyear Companies, no such customer or Potential Customer is threatened with bankruptcy or insolvency.

5.24   No Registration . Each Lightyear Member understands that the Merger Shares have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, and the accuracy of the Lightyear Members’ representations as expressed herein or otherwise made pursuant hereto.

5.25   Investment Intent . Each Lightyear Member is acquiring the Merger Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof into the public market; provided, however, the Lightyear Members may at their discretion sell such number of Merger Shares equal to not more than $10,000,000 in the aggregate for tax planning purposes, so long as such sale shall be in full compliance with all applicable state and federal securities laws, including without limitation, Rule 144 and Rule 145 .

5.26   Investment Experience . Each Lightyear Member has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Wherify so that it is capable of evaluating the merits and risks of its investment in Wherify and has the capacity to protect its own interests.

5.27   Accredited Investor . Each Lightyear Member is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission, as attached hereto as Schedule 5.27 .

5.28   Restriction on Resale . Except as noted in Section 5.25, each Lightyear Member acknowledges that the Merger Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. Wherify has no present intention of registering the Merger Shares. The Lightyear Members further understand that there is no assurance that any exemption from registration under the Securities Act will be available or, if available, that such exemption will allow Lightyear Members to dispose of or otherwise transfer any or all of the Merger Shares under the circumstances, in the amounts or at the times the Lightyear Members might propose.

5.29   Access to Data. Each Lightyear Member has had an opportunity to discuss Wherify’s business, management and financial affairs with its management and to obtain any additional information which such Lightyear Member has deemed necessary or appropriate for deciding whether or not to acquire the Merger Shares hereunder, including an opportunity to receive, review and understand the information regarding Wherify’s financial statements, capitalization and other business information as such Lightyear Member deems prudent. Each Lightyear Member acknowledges that no representations or warranties, oral or written, have been made by Wherify or any agent thereof except as set forth in this Agreement.

5.30     No Fairness Determination. Each Lightyear Member is aware that no federal, state or other agency has made any finding or determination as to the fairness of the investment, nor made any recommendation or endorsement of the Merger Shares.

5.31   Restrictive Legends. Each instrument evidencing the Merger Shares which a Lightyear Me