AGREEMENT AND PLAN OF MERGER BY AND AMONG WIZZARD SOFTWARE CORPORATION, WIZZARD ACQUISITION CORP

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

WIZZARD SOFTWARE CORPORATION,

WIZZARD ACQUISITION CORP.,

WEBMAYHEM, INC. (d/b/a LIBERATED SYNDICATION),

DAVID J. CHEKAN, MATTHEW T. HOOPES,

DAVID MANSUETO and MARTIN MULLIGAN

February 27, 2007

<PAGE>

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated as of

February____, 2007, by and among WIZZARD SOFTWARE CORPORATION, a Colorado

corporation ("Parent"); WIZZARD ACQUISITION CORP., a Pennsylvania corporation

and wholly-owned subsidiary of Parent ("Merger Subsidiary"); WEBMAYHEM, INC.,

a Pennsylvania corporation doing business as LIBERATED SYNDICATION (the

"Company"), and DAVID J. CHEKAN, MATTHEW T. HOOPES, DAVID MANSUETO and MARTIN

MULLIGAN (collectively, the "Company Principal Shareholders").

WHEREAS, the Company is engaged in the podcasting business (the

"Business");

WHEREAS, the Parent and the Company have executed a Letter of Intent by

which the Company was to have merged with and into Merger Subsidiary, with

Merger Subsidiary to be the surviving entity;

WHEREAS, the Boards of Directors of Parent, Merger Subsidiary and the

Company, and the shareholders of Merger Subsidiary and the Company, believe it

would be preferable to merge Merger Subsidiary into the Company, and have

approved the merger of the Merger Subsidiary with and into the Company (the

"Merger") upon the terms and subject to the conditions set forth herein;

WHEREAS, for federal income tax purposes, it is intended that the Merger

will qualify as a reorganization within the meaning of Section 368(a)(1)(A)

and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, (i) all of the outstanding securities of the Company; and (ii)

all of the cash proceeds and Parent common stock to be paid as consideration

at Closing for such Company common stock, shall be held in escrow pending the

Closing of the transactions contemplated by this Agreement pursuant to the

terms of an escrow agreement to be executed by the parties substantially in

the form attached as Exhibit "A" hereto (the "Escrow Agreement" ); and

WHEREAS, the parties hereto desire to make certain representations,

warranties, and agreements in connection with the Merger and also to prescribe

various conditions to the Merger.

NOW, THEREFORE, in consideration of the foregoing premises and the

mutual representations, warranties, covenants, and agreements contained

herein, the parties hereto agree as follows:

ARTICLE I

THE MERGER; CONVERSION OF SHARES

1.1. The Merger. Subject to the terms and conditions of this

Agreement, at the Effective Time (as defined in Section 1.2 hereof), the

Merger Subsidiary will be merged with and into the Company in accordance with

the provisions of the Pennsylvania Consolidated Statutes (the "Pennsylvania

Code"), whereupon the separate corporate existence of the Merger Subsidiary

will cease, and the Company will continue as the surviving corporation (the

"Surviving Corporation"). From and after the Effective Time, the Surviving

Corporation will possess all the rights, privileges, powers and franchises and

be subject to all the restrictions, disabilities and duties of the Company and

Merger Subsidiary, all as more fully described in the Pennsylvania Code.

1.2. Effective Time. As soon as practicable after each of the

conditions set forth in Article VI and Article VII has been satisfied or

waived, the Company and Merger Subsidiary will file, or cause to be filed,

with the Secretary of State of the Commonwealth of Pennsylvania, Articles of

Merger for the Merger, which Articles of Merger will be in the form required

by and executed in accordance with the applicable provisions of the

Pennsylvania Code. The Merger will become effective at the time such filing

is made or, if agreed to by Parent, Merger Subsidiary and the Company, such

later time or date set forth in the Articles of Merger (the "Effective Time").

1.3. Closing.

(a) Unless this Agreement has been terminated and the

transactions contemplated herein have been abandoned pursuant to Article IX

hereof, the closing of the Merger (the "Closing") will take place at a time

and on a date (the "Closing Date") to be specified by the parties, which will

be no later than March 14, 2007 (the "Termination Date"); provided, however,

that all of the conditions provided for in Articles VI and VII hereof shall

have been satisfied or waived by such date. The Closing will be held at the

offices of Burningham & Burningham, Suite 205, 455 East 500 South Street, Salt

Lake City, Utah 84111, or such other place as the parties may agree, at which

time and place the documents and instruments necessary or appropriate to

effect the transactions contemplated herein will be exchanged by the parties.

Except as otherwise provided herein, all actions taken at the Closing will be

deemed to have been taken simultaneously.

(b) At the Closing, Parent shall issue and exchange with

the Company's shareholders as identified on Exhibit B attached hereto (the

"Company Shareholders") as consideration for all shares of Company Common

Stock (as defined in Section (1.4(a)), a total of 5,326,320 "restricted"

shares of Parent Common Stock (as defined in Section (1.4(a)) and cash in the

amount of $250,000 (the "Closing Date Payment" as defined in Section 1.4(a)).

The Closing Date Payment shall be prorated among the Company Shareholders as

indicated on Exhibit "B" hereto. The shares of Parent Common Stock referenced

in this Agreement and exchangeable with the Company Shareholders shall be

"restricted securities" as defined in Rule 144 promulgated by the Securities

and Exchange Commission (the "SEC") under the Securities Act of 1933, as

amended and shall be subject to the restrictions on transfer set forth in a

Lock-Up/Leak-Out Agreement signed by each Company Shareholder in the form

attached as "Exhibit D" hereto (the "Lock-Up/Leak-Out Agreement"). Parent

shall assume no Company debt owed to the Company Shareholders. Upon execution

of this Agreement, Parent shall cause the Closing Date Payment and shares of

Parent Common Stock issuable as additional consideration pursuant to Section

1.3(c) to be deposited into an escrow account in accordance with the terms of

the Escrow Agreement.

(c) Additional Consideration. As further consideration

for the Merger, Parent shall provide the following additional consideration to

the Company Stockholders:

(i) On that date which is six (6) months after the

Closing Date, Parent shall pay the Company Shareholders a total of $100,000 in

cash, prorated as indicated on Exhibit "B" attached hereto.

(ii) Parent shall issue and deliver a total of

713,150 additional "restricted" shares of Parent Common Stock to the Company

Shareholders, in the pro rata amounts indicated on Exhibit "B" attached hereto

if, in December 2007, both (A) the Surviving Corporation's Podcast Media File

Downloads are greater than 66,546,810 and (B) the number of Unique IP

Addresses requesting those Podcast Media File Downloads is at least 5,745,067

("Milestone No. 1"). To protect Parent from any unusual spikes in downloads

in December 2007, if both the number of monthly Podcast Media File Downloads

and the number of Unique IP Addresses have reached the amounts stated above in

December 2007, then they must have achieved at least the levels stated above

in November 2007 in order for Milestone No. 1 to be achieved. If the

increased level for Podcast Media File Downloads and Unique IP Addresses

stated above was not previously achieved in November 2007, then both the

number of monthly Podcast Media File Downloads and the number of Unique IP

Addresses must remain at or above these levels during January 2008 in order

for Milestone No. 1 to be achieved. For purposes of determining whether the

Podcast Media File Downloads element of Milestone No. 1 has been achieved, the

parties shall use the Surviving Corporation's web logs collecting requests

from the entire Libsyn media delivery network (including both the libsyn.com

and libsynpro.com media delivery systems) to count all requests for media

files received by the Surviving Corporation. The parties shall utilize the

processing of the web logs for purposes of calculating the number of Unique IP

Addresses requesting media files by filtering the web logs to include only one

request per IP address.

(iii) Parent shall issue and deliver a total of

2,281,580 additional "restricted" shares of Parent Common Stock to the

Company Shareholders, in the pro rata amounts indicated on Exhibit "B"

attached hereto, once both (A) the Surviving Corporation's gross revenues

equal or exceed five million dollars ($5,000,000) and (B) the Surviving

Corporation's EBITDA equals or exceeds one and one-half million dollars

($1,500,000) calculated from the first anniversary of the Closing Date through

the second anniversary of the Closing Date ("Milestone No. 2") provided that,

in the event Milestone No. 2 is not satisfied during such period, then

Milestone No. 2 will be deemed satisfied if its requirements are met during

the period beginning on the third anniversary of the Closing Date and ending

on the fourth anniversary of the Closing Date in which case the additional

shares of Parent Common Stock shall be due to the Company Shareholders fifteen

(15) days after the beginning of the calendar month after the month in which

the Surviving Corporation meets these requirements.

(iv) Parent shall issue and deliver a total of

2,281,580 additional "restricted" shares of Parent Common Stock to the

Company Shareholders, in the pro rata amounts indicated on Exhibit "B"

attached hereto, once both (A) the Surviving Corporation's gross revenues

equal or exceed fifteen million dollars ($15,000,000) and the Surviving

Corporation's EBITDA equals or exceeds five million dollars ($5,000,000)

calculated from the second anniversary of the Closing Date through the third

anniversary of the Closing Date ("Milestone No. 3", collectively with

Milestone No. 1 and Milestone No. 2, the "Milestones").

(d) Notice and Payment Procedures for Additional

Consideration. When the Company Shareholders believe that the Surviving

Corporation has satisfied the requirements of a Milestone, the Surviving

Corporation shall send a written notice to Parent indicating how the Milestone

has been satisfied and attaching (i) a calculation of Podcast Media File

Downloads and Unique IP Addresses (with supporting documentation for each

calculation) with regards to Milestone No. 1 and (ii) financial statements of

the Surviving Corporation and calculations of EBITDA and gross revenues with

regards to Milestones No. 2 and No. 3, evidencing satisfaction of the relevant

Milestone (the "Milestone Satisfaction Notice"). Parent shall issue the

shares of Parent Common Stock constituting the additional consideration

associated with the satisfaction of each Milestone to the Company Shareholders

based on the financial statements of the Surviving Corporation prepared in

accordance with GAAP for the measurement of each Milestone. The Surviving

Corporation shall not be obligated to audit such financial statements unless

so instructed by Parent. These financial statements shall be used to

calculate gross revenues and EBITDA for the applicable measurement period in

which the Company Shareholders believe that the Surviving Corporation has

satisfied the requirements of a Milestone and, accordingly, net income derived

from such financial statements shall be adjusted to exclude each of the items

set forth in the definition of EBITDA. Any fees related to the audit of such

financial statements performed pursuant to Parent's instruction shall be borne

by Parent and shall not be deemed an expense of the Surviving Corporation for

purposes of satisfying any of the Milestones or otherwise.

(e) Automatic Vesting Upon Sale of Surviving Corporation

or Parent. In the event that Parent sells (i) at least a majority of the

capital stock or substantially all of the assets of the Surviving Corporation

or (ii) at least a majority of the capital stock or all or substantially all

of the assets of Parent at any time before any of the Milestones have been

satisfied then, without any further action on the part of the Surviving

Corporation or the Company Shareholders, all Milestones that remain eligible

to be satisfied shall automatically be deemed satisfied and all additional

consideration related to such Milestones shall immediately be due and payable

to the Company Shareholders and shall be issued to them. In addition, the

Company Shareholders shall be released from all remaining obligations under

the Lock-Up/Leakout Agreement. In addition, all obligations of Parent set

forth in this Agreement or the Transaction Documents shall be binding on any

third party who purchases at least a majority of the capital stock or

substantially all of the assets of the Surviving Corporation or Parent.

(f) Automatic Vesting Upon Termination Without Cause. In

the event that the employment of any Company Shareholder who is employed by

the Surviving Corporation is terminated without "Cause" as such term may be

defined in any employment agreement between the Company Shareholder and the

Surviving Corporation, then, without any further action on the part of the

Surviving Corporation or the terminated Company Shareholder, all Milestones

that remain eligible to be satisfied shall automatically be deemed satisfied

and all additional consideration related to such Milestones shall immediately

be due and payable to the terminated Company Shareholder. However, the

terminated Company Shareholder shall remain subject to all remaining

obligations under the Lock-Up/Leakout Agreement.

(g) Continued Employment Not a Condition to Earning

Milestones. The parties acknowledge and agree that the additional

consideration payable to the Company Shareholders upon achievement of the

Milestones is additional consideration for the Merger and employment or

continued employment by Parent or the Surviving Corporation is not a condition

or requirement to any Company Shareholder earning any of the additional

consideration due upon achievement of the Milestones.

1.4. Conversion of Interests. Subject to the terms and

conditions of this Agreement, at the Effective Time, by virtue of the Merger

and without any action on the part of the Company and/or the Merger

Subsidiary:

(a) All of the shares of the Company (the "Company Common

Stock") issued and outstanding immediately prior to the Effective Time (except

for Company Common Stock referred to in Section 1.4(c) hereof) will be

converted into an aggregate of 5,326,320 shares of common stock of the Parent

(the "Parent Common Stock") and Two Hundred Fifty Thousand Dollars ($250,000)

payable to the Company Shareholders as described in Paragraph 1.3(b) and the

right to receive an aggregate of One Hundred Thousand Dollars ($100,000)

payable to the Company Shareholders as described in Paragraph 1.3(c)(i) and an

aggregate of 5,276,310 shares of Parent Common Stock issuable upon

satisfaction of the applicable Milestones.

(b) All stock options, warrants, convertible debt, other

convertible securities or other rights to acquire shares of the Company

(collectively the "Company's Convertible Securities") outstanding at the

Effective Time, whether or not exercisable and whether or not vested, and all

of which are listed on the "Company Disclosure Schedule" as defined in Section

2.1 hereof, shall be cancelled.

(c) Each share of Company Common Stock issued and

outstanding immediately prior to the Effective Time that is then owned

beneficially or of record by Parent, Merger Subsidiary, or any direct or

indirect subsidiary of Parent or the Company will be canceled without payment

of any consideration therefor and without any conversion thereof.

Furthermore, at the Effective Time, one (1) share of Company Common Stock

shall be issued to Parent.

(d) Except as expressly set forth herein, each share of

any other equity interest of the Company (other than Company Common Stock)

will be canceled without payment of any consideration therefor and without any

conversion thereof.

(e) Each share of common stock of Merger Subsidiary

("Merger Subsidiary Common Stock"), issued and outstanding immediately prior

to the Effective Time will be canceled as of the Effective Time.

1.5. Exchange of Company Common Stock.

(a) Immediately prior to Closing, the holders of the

Company's Series A Convertible Preferred Stock shall convert their shares of

Series A Convertible Preferred Stock into shares of Company Common Stock in

accordance with the terms of the Company's Articles of Incorporation. At the

Closing, the Company will arrange for each holder of record (a "Company

Shareholder") of Company Common Stock outstanding immediately prior to the

Effective Time to deliver to the Parent appropriate evidence of such holder's

Company Common Stock ("Company Certificates"), together with an appropriate

assignment signed by such holders, in exchange for the number of whole shares

of Parent Common Stock into which such interests have been converted as

provided in Section 1.4(a), and the Company Certificate(s) so surrendered will

be canceled.

(b) All shares of Parent Common Stock issued upon the

surrender for exchange of shares of Company Common Stock in accordance with

the terms hereof will be deemed to have been issued in full satisfaction of

all rights pertaining to such Company Common Stock.

(c) As of the Effective Time, the holders of Company

Certificates representing shares of Company Common Stock will cease to have

any rights as a Company Shareholder, except such rights, if any, as they may

have pursuant to the Pennsylvania Code. Except as provided above, until such

Company Certificates are surrendered for exchange, each such Company

Certificate will, after the Effective Time, represent for all purposes only

the right to receive certificates representing the number of whole shares of

Parent Common Stock into which Company Common Stock shall have been converted

pursuant to the Merger as provided in Section 1.4(a).

(d) No fractional shares of Parent Common Stock will be

issued upon the surrender for exchange of Company Certificates. Any

fractional share will be rounded up to the next whole share of Parent Common

Stock.

1.6. Articles of Incorporation of the Surviving Corporation. The

Articles of Incorporation of the Company as in effect immediately prior to the

Effective Time will be the Articles of Incorporation of the Surviving

Corporation.

1.7. Bylaws of the Surviving Corporation. The Bylaws of the

Company, as in effect immediately prior to the Effective Time, will be the

Bylaws of the Surviving Corporation until thereafter amended in accordance

with applicable law.

1.8. Directors and Officers of the Surviving Corporation. The

directors and officers of the Company, as of the Effective Time, shall be

designated as the directors and officers of the Surviving Corporation.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company and the Company Principal Shareholders, severally and not

jointly, each hereby represent and warrant to Parent and Merger Subsidiary as

follows:

2.1. Disclosure Schedule. The disclosure schedule attached

hereto as Exhibit 2.1 (the "Company Disclosure Schedule") is divided into

sections that correspond to the sections of this Article II. The Company

Disclosure Schedule comprises a list of all exceptions to the truth and

accuracy of, and of all disclosures or descriptions required by, the

representations and warranties set forth in the remaining sections of this

Article II.

2.2. Corporate Organization, etc. The Company is a corporation

duly organized, validly existing and duly subsisting under the laws of the

Commonwealth of Pennsylvania with the requisite corporate power and authority

to carry on its business as it is now being conducted and to own, operate and

lease its properties and assets and is duly qualified or licensed to do

business as a foreign corporation in good standing in every other jurisdiction

in which the character or location of the properties and assets owned, leased

or operated by it or the conduct of its business requires such qualification

or licensing, except in such jurisdictions in which the failure to be so

qualified or licensed and in good standing would not, individually or in the

aggregate, have a Material Adverse Effect (as defined below) on the Company.

The Company Disclosure Schedule contains a list of all jurisdictions in which

the Company is qualified or licensed to do business and includes complete and

correct copies of the Company's articles of incorporation and bylaws. The

Company does not own or control any capital stock of any corporation or any

interest in any partnership, joint venture or other entity.

2.3. Capitalization. The authorized capital securities of the

Company is set forth in the Company Disclosure Schedule. The number of shares

of Company Common Stock and Company Series A Convertible Preferred Stock

outstanding, as of the date of this Agreement and as set forth in the Company

Disclosure Schedule, represent all of the issued and outstanding capital

securities of the Company. All issued and outstanding shares of Company

Common Stock are duly authorized, validly issued, fully paid and nonassessable

and are without, and were not issued in violation of, preemptive rights.

Except as set forth in the Company Disclosure Schedule, there are no shares of

Company Common Stock or other equity securities of the Company outstanding or

any securities convertible into or exchangeable for such interests, securities

or rights. Other than as set forth on the Company Disclosure Schedule and

pursuant to this Agreement, there is no subscription, option, warrant, call,

right, contract, agreement, commitment, understanding or arrangement to which

the Company is a party, or by which it is bound, with respect to the issuance,

sale, delivery or transfer of the capital securities of the Company, including

any right of conversion or exchange under any security or other instrument.

The Company has no subsidiaries.

2.4. Authorization. The Company has all requisite corporate

power and authority to enter into, execute, deliver and perform its

obligations under this Agreement. This Agreement has been duly and validly

executed and delivered by the Company and is the valid and binding legal

obligation of the Company enforceable against the Company in accordance with

its terms, subject to bankruptcy, moratorium, principles of equity and other

limitations limiting the rights of creditors generally.

2.5. Non-Contravention. Except as set forth in the Company

Disclosure Schedule, neither the execution, delivery and performance of this

Agreement or the Transaction Documents, nor the consummation of the

transactions contemplated herein or therein will:

(a) violate, contravene or be in conflict with any

provision of the articles of incorporation or bylaws of the Company;

(b) be in conflict with, or constitute a default, however

defined (or an event which, with the giving of due notice or lapse of time,

or both, would constitute such a default), under, or cause or permit the

acceleration of the maturity of, or give rise to any right of termination,

cancellation, imposition of fees or penalties under any debt, note, bond,

lease, mortgage, indenture, license, obligation, contract, commitment,

franchise, permit, instrument or other agreement or obligation to which the

Company is a party or by which the Company or any of the Company's properties

or assets is or may be bound that would have a Material Adverse Effect;

(c) result in the creation or imposition of any pledge,

lien, security interest, restriction, option, claim or charge of any kind

whatsoever ("Encumbrances") upon any property or assets of the Company under

any debt, obligation, contract, agreement or commitment to which the Company

is a party or by which the Company or any of the Company's assets or

properties are bound; or

(d) violate any statute, treaty, law, judgment, writ,

injunction, decision, decree, order, regulation, ordinance or other similar

authoritative matters (referred to herein individually as a "Law" and

collectively as "Laws") of any foreign, federal, state or local governmental

or quasi-governmental, administrative, regulatory or judicial court,

department, commission, agency, board, bureau, instrumentality or other

authority (referred to herein individually as an "Authority" and collectively

as "Authorities") in a manner that will have a Material Adverse Effect.

2.6. Consents and Approvals. Except as set forth in the Company

Disclosure Schedule, with respect to the Company, no consent, approval, order

or authorization of or from, or registration, notification, declaration or

filing with ("Consent") any individual or entity, including without limitation

any Authority, is required in connection with the execution, delivery or

performance of this Agreement by the Company or the consummation by the

Company of the transactions contemplated herein.

2.7. Financial Statements. The Company Disclosure Schedule

contains a copy of each of the balance sheet and statement of income of the

Company as of and for the year ended December 31, 2005 (the "Financial

Statements") and each of the balance sheet as of December 31, 2006 (the

"Latest Balance Sheet") and income statement for the year ended December 31,

2006 (together with the Latest Balance Sheet, the "Latest Financial

Statements"). Except as disclosed therein or in the Company Disclosure

Schedule, the aforesaid Financial Statements and Latest Financial Statements:

(i) are based upon the books and records of the Company; and (ii) are true,

complete and accurate in all material respects and fairly present the

financial position of the Company as of the dates thereof, and the income or

loss of the Company for the periods then ended, provided that, the Financial

Statements and Latest Financial Statements were not prepared in accordance

with generally accepted accounting principles ("GAAP") and significant

adjusting journal entries and accruals may be necessary to convert the

Financial Statements and Latest Financial Statements from a cash basis to be

GAAP compliant.

2.8. Absence of Undisclosed Liabilities. To the knowledge of the

Company Principal Shareholders, the Company does not have any material

liabilities, obligations or claims, whether secured or unsecured, accrued or

unaccrued, fixed or contingent, matured or unmatured, direct or indirect,

contingent or otherwise and whether due or to become due (referred to herein

individually as a "Liability" and collectively as "Liabilities"), other than:

(a) Liabilities that are fully reflected or reserved for in the Latest Balance

Sheet; (b) Liabilities that are set forth on the Company Disclosure Schedule;

(c) Liabilities incurred by the Company in the ordinary course of business

after the date of the Latest Balance Sheet and consistent with past practice;

(d) Liabilities in an amount not to exceed $10,000 individually or in the

aggregate unless such amounts are disclosed on the Company Disclosure

Schedule; or (e) Liabilities for express executory obligations to be performed

after the Closing under the contracts described in Section 2.14 of the Company

Disclosure Schedule.

2.9. Absence of Certain Changes. Except as set forth in the

Company Disclosure Schedule, since December 31, 2006, the Company has owned

and operated its assets, properties and business in the ordinary course of

business and consistent with past practice. Without limiting the generality

of the foregoing, subject to the aforesaid exceptions:

(a) the Company has not experienced any change that has

had or could reasonably be expected to have a Material Adverse Effect on the

Company; and

(b) the Company has not suffered (i) any loss, damage,

destruction or other property or casualty (whether or not covered by

insurance) or (ii) any loss of officers, employees, dealers, distributors,

independent contractors, customers or suppliers, which had or may reasonably

be expected to result in a Material Adverse Effect on the Company.

2.10. Assets. Except as set forth in the Company Disclosure

Schedule, the Company has good and marketable title to, or a valid leasehold

interest in, all of its assets and properties, whether or not reflected in the

Latest Balance Sheet or acquired after the date thereof (except for properties

sold or otherwise disposed of since the date thereof in the ordinary course of

business and consistent with past practices), that relate to or are necessary

for the Company to conduct its business and operations as currently conducted

(collectively, the "Assets"), free and clear of any mortgage, pledge, lien,

security interest, conditional or installment sales agreement, encumbrance,

claim, easement, right of way, tenancy, covenant, encroachment, restriction or

charge of any kind or nature (whether or not of record) (a "Lien"), other than

(i) liens securing specific Liabilities shown on the balance sheet with

respect to which no breach, violation or default exists; (ii) mechanics,'

carriers,' workers' or other like liens arising in the ordinary course of

business; (iii) minor imperfections of title that do not individually or in

the aggregate, impair the continued use and operation of the Assets to which

they relate in the operation of the Company as currently conducted; and (iv)

liens for current taxes not yet due and payable or being contested in good

faith by appropriate proceedings ("Permitted Liens").

2.11. Receivables and Payables.

(a) Except as set forth on the Company Disclosure

Schedule, all accounts receivable of the Company represent sales in the

ordinary course of business and, to the knowledge of the Company Principal

Shareholders, are current and collectible net of any reserves shown on the

Latest Balance Sheet and none of such receivables is subject to any Lien other

than a Permitted Lien.

(b) Except as set forth on the Latest Balance Sheet or

elsewhere in Exhibit 2.1, there are no liabilities and there will be no

liabilities in an amount greater than $10,000 at the time of Closing.

2.12. Intellectual Property Rights. The Company Disclosure

Schedule contains a detailed listing of all patents, patent applications,

patent rights, registered and unregistered trademarks, trademark applications,

trade names, service marks, service mark applications, copyrights, internet

domain names, computer programs and other computer software, inventions, know-

how, trade secrets, technology, proprietary processes, trade dress, software

and formulae (collectively, "Intellectual Property Rights") used in the

operation of its Business as currently conducted. Except as set forth on the

Company Disclosure Schedule, to the knowledge of the Company Principal

Shareholders, the use of all Intellectual Property Rights in the Business of

the Company as presently conducted does not infringe or violate the

Intellectual Property Rights of any person or entity. Except as described on

the Company Disclosure Schedule, to the knowledge of the Company Principal

Shareholders: (a) the Company does not own or use any Intellectual Property

Rights pursuant to any written license agreement; (b) the Company has not

granted any person or entity any rights, pursuant to a written license

agreement or otherwise, to use the Intellectual Property Rights; (c) the

Company owns, has unrestricted right to use and has sole and exclusive

possession of and has good and valid title to, all of the Intellectual

Property Rights, free and clear of all Liens and Encumbrances; and (d) all

application, maintenance and other necessary fees are fully paid with the

United States Patent Office and any corresponding foreign agencies. All

license agreements relating to Intellectual Property Rights are binding and

there is not, under any of such licenses, any existing default or event of

default (or event which with notice or lapse of time, or both, would

constitute a default, or would constitute a basis for a claim of non-

performance) on the part of the Company or, to the knowledge of the Company

Principal Shareholders, any other party thereto that would cause a Material

Adverse Effect.

2.13. Litigation. Except as set forth in the Company Disclosure

Schedule, there is no legal, administrative, arbitration, or other proceeding,

suit, claim or action of any nature or investigation, review or audit of any

kind, or any judgment, decree, decision, injunction, writ or order pending,

noticed, scheduled, or, to the knowledge of the Company Principal

Shareholders, threatened or contemplated by or against or involving the

Company, its assets, properties or business or its directors, officers, agents

or employees (but only in their capacity as such), whether at law or in

equity, before or by any person or entity or Authority, which could result in

a loss of at least $10,000, or which questions or challenges the validity of

this Agreement or any action taken or to be taken by the parties hereto

pursuant to this Agreement or in connection with the transactions contemplated

herein.

2.14. Contracts and Commitments; No Default.

(a) Except as set forth in the Company Disclosure

Schedule, the Company is not a party to, nor are any of the Assets bound by,

any written or oral:

(i) employment, non-competition, consulting or

severance agreement, collective bargaining agreement, or pension, profit-

sharing, incentive compensation, deferred compensation, stock purchase, stock

option, stock appreciation right, group insurance, severance pay or retirement

plan or agreement;

(ii) indenture, mortgage, note, installment

obligation, agreement or other instrument relating to the borrowing of money

by the Company;

(iii) contract, agreement, lease (real or personal

property) or arrangement that (A) is not terminable on less than 30 days'

notice without penalty, (B) is not over one year in length of obligation of

the Company, or (C) involves an obligation of more than $10,000 over its term;

(iv) contract, agreement, commitment or license

relating to Intellectual Property Rights or contract, agreement or commitment

of any other type, whether or not fully performed, not otherwise disclosed

pursuant to this Section 2.14;

(v) obligation or requirement to provide funds to or

make any investment (in the form of a loan, capital contribution or otherwise)

in any person or entity; or

(vi) outstanding sales contracts, commitments or

proposals that will result in any material loss upon completion or performance

thereof after allowance for direct distribution expenses, or bound by any

outstanding contracts, bids, sales or service proposals quoting prices that

are reasonably expected to result in a loss in excess of $10,000.

(b) True and complete copies (or summaries, in the case of

oral items) of all agreements disclosed pursuant to this Section 2.14 (the

"Company Contracts") have been provided to Parent for review. Except as set

forth in the Company Disclosure Schedule, all of the Company Contracts items

are valid and enforceable by and against the Company in accordance with their

terms, and are in full force and effect. The Company is not in any breach,

violation or default, however defined, in the performance of any of its

obligations under any of the Company Contracts that would result in a Material

Adverse Effect, and no facts and circumstances exist which, whether with the

giving of due notice, lapse of time, or both, would constitute such breach,

violation or default thereunder or thereof, that would result in a loss in

excess of $10,000, and, to the knowledge of the Company Principal

Shareholders, no other parties thereto are in a breach, violation or default,

however defined, thereunder or thereof, that would result in a Material

Adverse Effect and no facts or circumstances exist which, whether with the

giving of due notice, lapse of time, or both, would constitute such a breach,

violation or default thereunder or thereof.

2.15. Compliance with Law; Permits and Other Operating Rights.

Except as set forth in the Company Disclosure Schedule, to the knowledge of

the Company Principal Shareholders, the Assets, properties, business and

operations of the Company are and have been in compliance in all respects with

all Laws applicable to the Company's assets, properties, business and

operations, except where the failure to comply would not have a Material

Adverse Effect. To the knowledge of the Company Principal Shareholders, the

Company possesses all material permits, licenses and other authorizations from

all Authorities necessary to permit it to operate the Business in the manner

in which it presently is conducted and the consummation of the transactions

contemplated by this Agreement will not prevent the Company from being able to

continue to use such permits and operating rights. The Company has not

received notice of any violation of any such applicable Law, and is not in

default with respect to any order, writ, judgment, award, injunction or decree

of any Authority.

2.16. Brokers. Neither the Company nor, to the knowledge of the

Company Principal Shareholders, any of the its directors, officers or

employees, has employed any broker, finder, investment banker or financial

advisor or incurred any liability for any brokerage fee or commission,

finder's fee or financial advisory fee, in connection with the transactions

contemplated hereby, nor is there any basis known to the Company for any such

fee or commission to be claimed by any person or entity as a result of the

Company's actions. Any such fees payable shall be paid by the Company

Shareholders from the Closing Date Payment or the cash paid to the Company

Shareholders as outlined in Section 1.3(b), or otherwise, by the Company

Shareholders.

2.17. Books and Records. The books of account, minute books,

stock record books, and other material records of the Company, all of which

have been made available to Parent, are complete and correct in all material

respects and have been maintained in accordance with reasonable business

practices. The minute books of the Company contain accurate and complete

records of all formal meetings held of, and corporate action taken by, the

directors and officers, the managers and committees of the managers of the

Company. At the Closing, all of those books and records will be in the

possession of the Company.

2.18. Tax Matters.

(a) Except as set forth on the Company Disclosure

Schedule: (i) the Company and (ii) each other Person included in any

consolidated or combined Tax Return and part of an affiliated group, within

the meaning of Section 1504 of the Code, of which the Company is or has been a

member ("Company Tax Affiliate"), for the years that it was a Company Tax

Affiliate:

(i) has timely paid or caused to be paid all Taxes

required to be paid by it though the date hereof and as of the Closing Date

(including any Taxes shown due on any Tax Return);

(ii) has filed or caused to be filed in a timely and

proper manner (within any applicable extension periods) all Tax Returns

required to be filed by it with the appropriate Authority in all jurisdictions

in which such Tax Returns are required to be filed; and all tax returns filed

on behalf of the Company and each Company Tax Affiliate were complete and

correct in all material respects; and

(iii) has not requested or caused to be requested any

extension of time within which to file any Tax Return, which Tax Return has

not since been filed.

(b) The Company has previously delivered true, correct and

complete copies of all Federal Tax Returns filed by or on behalf of the

Company through the date hereof for the periods ending after December 31,

2004.

(c) Except as set forth in the Company Disclosure

Schedule:

(i) since January 1, 2004, neither the Company nor

any Company Tax Affiliate (for the years that it was a Company Tax Affiliate)

has been notified by the Internal Revenue Service (the "IRS") or any other

Authority that any issues have been raised (and no such issues are currently

pending) by the IRS or any other Authority in connection with any Tax Return

filed by or on behalf of the Company or any Company Tax Affiliate; there are

no pending Tax audits and no waivers of statutes of limitations have been

given or requested with respect to the Company or any Company Tax Affiliate

(for years that it was a Company Tax Affiliate); no Tax liens have been filed

against the Company or unresolved deficiencies or additions to Taxes have been

proposed, asserted or assessed against the Company or any Company Tax

Affiliate (for the years that it was a Company Tax Affiliate);

(ii) full and adequate accrual has been made (A) on

the Latest Balance Sheet, and the books and records of the Company for all

income taxes currently due and all accrued Taxes not yet due and payable by

the Company for all periods ending on or prior to the date of the Latest

Balance Sheet, and (B) on the books and records of the Company for all Taxes

payable by the Company for all periods beginning after the date of the Latest

Balance Sheet;

(iii) The Company has not incurred any liability for

Taxes from and after the date of the Latest Balance Sheet other than Taxes

incurred in the ordinary course of business and consistent with past

practices;

(iv) The Company has not (A) made an election (or had

an election made on its behalf by another person) to be treated as a

"consenting corporation" under Section 341(f) of the Code or (B) a "personal

holding company" within the meaning of Section 542 of the Code;

(v) The Company has complied in all material

respects with all applicable Laws relating to the collection or withholding of

Taxes (such as Taxes or withholding of Taxes from the wages of employees);

(vi) The Company has no liability in respect of any

Tax sharing agreement with any Person and all Tax sharing agreements to which

the Company has been bound have been terminated;

(vii) The Company has not incurred any liability to

make any payments either alone or in conjunction with any other payments that:

(A) shall be non-deductible under, or would

otherwise constitute a "parachute payment" within the meaning of Section 280G

of the Code (or any corresponding provision of state local or foreign

Applicable Law related to Taxes); or

(B) are or may be subject to the imposition of

an excise Tax under Section 4999 of the Code;

(viii) The Company has not agreed to (nor has any other

Person agreed to on its behalf) and is not required to make any adjustments or

changes on, before or after the Closing Date, to its accounting methods

pursuant to Section 481 of the Internal Revenue Code, and the IRS has not

proposed any such adjustments or changes in the accounting methods of the

Company;

(ix) no claim has been made within the last three

years by any taxing authority in a jurisdiction in which the Company does not

file Tax Returns that the Company is or may be subject to taxation by that

jurisdiction;

(x) the consummation of the Merger will not trigger

the realization or recognition of intercompany gain or income to the Company

under the Federal consolidated return regulations with respect to Federal,

state or local taxes; and

(xi) The Company is not currently, nor has it been at

any time during the previous five years, a "U.S. real property holding

corporation" and, therefore, the shares of Company Common Stock are not "U.S.

real property interests," as such terms are defined in Section 897 of the

Code.

2.19. Reorganization.

(a) Fair Market Value. The fair market value of the

Parent Common Stock and other consideration received by each Company

Shareholder will be approximately equal to the fair market value of the

Company Common Stock surrendered in the exchange.

(b) Expenses. Other than reorganization expenses set

forth in the Company Disclosure Schedule, the Company and the Company

Shareholders will pay their own expenses, if any, incurred in connection with

the transaction.

(c) Assets Exceed Liabilities. The fair market value of

the assets of the Company will equal or exceed the sum of its liabilities plus

the amount of liabilities, if any, to which the assets are subject.

(d) Additional Shares. Following the Merger, the Company

will not issue additional shares of its stock that would result in Parent

losing control of the Company within the meaning of I.R.C. Section 368(c)(1).

(e) No Plan or Intention. To the knowledge of the

Company, there is no plan or intention by the Company Shareholders to sell,

exchange, or otherwise dispose of a number of shares of stock received in the

transaction to any person related to Parent that would reduce the

shareholders' ownership of Parent to a number of shares having a value, as of

the date of the transaction, of less than 50 percent of the value of all of

the formerly outstanding stock of the Company as of the same date. For

purposes of this representation, shares of the Company Common Stock exchanged

for cash or other property, surrendered by dissenters, or exchanged for cash

in lieu of fractional shares of Parent Stock will be treated as outstanding

Company Common Stock on the date of the transaction. Moreover, shares of

Company Common Stock and shares of Parent Common Stock held by Company

shareholders and otherwise sold, redeemed, or disposed of prior or subsequent

to the transaction will be considered in making this representation.

(f) Intercorporate Debt. Except as set forth in the

Company Disclosure Schedule, there is no intercorporate indebtedness existing

between the Company and Parent that was issued, acquired, or will be settled

at a discount.

(g) Liabilities. The liabilities of Company and the

liabilities to which the assets of Company are subject were incurred by

Company in the ordinary course of its business.

(h) Bankruptcy Proceedings. The Company is not under the

jurisdiction of a court in a Title 11 or similar case within the meaning of

I.R.C. Section 368(a)(3)(A).

(i) Assets Transferred. Following the transaction, the

Company will hold at least ninety percent (90%) of the fair market value of

its net assets and at least seventy percent (70%) of the fair market of its

gross assets and at least ninety percent (90%) of the fair market value of

Merger Subsidiary's net assets and at least seventy percent (70%) of the fair

market of Merger Subsidiary's gross assets immediately prior to the Merger.

For purposes of this representation, amounts paid by the Company or Merger

Subsidiary to dissenters, amounts paid by the Company or Merger Subsidiary to

shareholders who receive cash or other property, amounts paid by the Company

or Merger Subsidiary to pay reorganization expenses, and all redemptions and

distributions (except for regular, normal dividends) made by the Company

immediately preceding the transfer, will be included as assets of the Company

or Merger Subsidiary, respectively, immediately prior to the Merger.

(j) Voting Stock. In the Merger, shares of Company Common

Stock representing control of the Company, as defined in I.R.C. Section

368(c)(1), will be exchanged solely for voting stock of Parent. For purposes

of this representation, shares of Company Common Stock exchanged for cash or

other property originating with Parent will be treated as outstanding Company

Common Stock on the date of the Merger.

(k) Options. At the time of the Merger, the Company will

not have outstanding any warrants, options, convertible securities, or any

other type of right pursuant to which any person could acquire stock in the

Company that, if exercised or converted, would effect Parent's acquisition or

retention of control of the Company, as defined in I.R.C. Section 368(c)(1) of

the Code.

(l) No Prior Stock Holdings. Parent does not own, nor has

it owned during the past five (5) years any shares of stock of the Company.

(m) Investment Company. The Company is not an investment

company as defined in I.R.C. Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).

2.20. Business Generally; Accuracy of Information. No

representation or warranty made by the Company in this Agreement, the Company

Disclosure Schedule or in any document, agreement or certificate furnished or

to be furnished to Parent at the Closing by or on behalf of the Company in

connection with any of the transactions contemplated by this Agreement

contains or will contain any untrue statement of material fact or omit or will

omit to state any material fact necessary in order to make the statements

herein or therein not misleading in light of the circumstances in which they

are made, and all of the foregoing completely and correctly present the

information required or purported to be set forth herein or therein.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARENT

AND THE MERGER SUBSIDIARY

Parent and the Merger Subsidiary represent and warrant to the Company

and the Company Shareholders as follows:

3.1. Disclosure Schedule. The disclosure schedule attached

hereto as Exhibit 3.1 (the "Parent Disclosure Schedule") is divided into

sections that correspond to the sections of this Article III. The Parent

Disclosure Schedule comprises a list of all exceptions to the truth and

accuracy of, and of all disclosures or descriptions required by, the

representations and warranties set forth in the remaining sections of this

Article III.

3.2. Corporate Organization, Standing and Power. Parent is a

corporation duly organized, validly existing and in good standing under the

laws of the State of Colorado; and Merger Subsidiary is a corporation duly

organized, validly existing and duly subsisting under the laws of the

Commonwealth of Pennsylvania. Each of Parent and Merger Subsidiary has all

corporate power and authority to own its properties and to carry on its

business as now being conducted and is duly qualified to do business and is in

good standing in each jurisdiction in which the failure to be so qualified

would have a Material Adverse Effect on Parent and Merger Subsidiary. The

Parent Disclosure Schedule contains a list of all jurisdictions in which each

of Parent and Merger Subsidiary is qualified or licensed to do business.

Parent owns all of the outstanding capital stock of Merger Subsidiary.

3.3. Authorization. Each of Parent and the Merger Subsidiary has

all the requisite corporate power and authority to enter into this Agreement

and to carry out the transactions contemplated herein. The Board of Directors

of Parent and the Merger Subsidiary, and Parent as the sole shareholder of the

Merger Subsidiary, have taken all action required by law, their respective

articles of incorporation and bylaws or otherwise to authorize the execution,

delivery and performance of this Agreement and the consummation of the

transactions contemplated herein. This Agreement is the valid and binding

legal obligation of Parent and the Merger Subsidiary enforceable against each

of them in accordance with its terms, except as such enforceability may be

limited by applicable bankruptcy, insolvency, reorganization or similar laws

that affect creditors' rights generally.

3.4. Capitalization. The authorized capital securities of the

Parent and Merger Subsidiary are set forth in the Parent Disclosure Schedule.

The number of shares of Parent Common Stock, as of the date of this Agreement

and as set forth in the Parent Disclosure Schedule, represent all of the

issued and outstanding capital securities of the Parent. All issued and

outstanding shares of Parent Common Stock are duly authorized, validly issued,

fully paid and nonassessable and are without, and were not issued in violation

of, preemptive rights. Other than as set forth on the Parent Disclosure

Schedule, there are no shares of Parent Common Stock or other equity

securities of Parent outstanding or any securities convertible into or

exchangeable for such interests, securities or rights. Other than as set

forth on the Parent Disclosure Schedule and pursuant to this Agreement, there

is no subscription, option, warrant, call, right, contract, agreement,

commitment, understanding or arrangement to which Parent is a party, or by

which it is bound, with respect to the issuance, sale, delivery or transfer of

the capital securities of Parent, including any right of conversion or

exchange under any security or other instrument.

3.5. Non-Contravention. Neither the execution, delivery and

performance of this Agreement or the Transaction Documents, nor the

consummation of the transactions contemplated herein or therein will:

(a) violate any provision of the articles of incorporation

or bylaws of Parent or the Merger Subsidiary; or

(b) be in conflict with, or constitute a default, however

defined (or an event which, with the giving of due notice or lapse of time, or

both, would constitute such a default), under, or cause or permit the

acceleration of the maturity of, or give rise to, any right of termination,

cancellation, imposition of fees or penalties under, any debt, note, bond,

lease, mortgage, indenture, license, obligation, contract, commitment,

franchise, permit, instrument or other agreement or obligation to which Parent

or the Merger Subsidiary is a party or by which Parent or the Merger

Subsidiary or any of their respective properties or assets is or may be bound;

(c) result in the creation or imposition of any

Encumbrance upon any property or assets of Parent or the Merger Subsidiary

under any debt, obligation, contract, agreement or commitment to which Parent

or the Merger Subsidiary is a party or by which Parent or the Merger

Subsidiary or any of their respective assets or properties is or may be bound;

or

(d) violate any Law of any Authority.

3.6. Consents and Approvals. No Consent is required by any

person or entity, including without limitation any Authority, in connection

with the execution, delivery and performance by Parent or Merger Subsidiary of

this Agreement, or the consummation of the transactions contemplated herein,

other than any Consent which, if not made or obtained, will not, individually

or in the aggregate, have a Material Adverse Effect on the business of Parent

or Merger Subsidiary.

3.7. Valid Issuance. The Parent Common Stock to be issued in

connection with the Merger will be duly authorized and, when issued, delivered

and paid for as provided in this Agreement, will be validly issued, fully paid

and non-assessable.

3.8. SEC Filings; Financial Statements.

(a) Parent has delivered, or made available to the Company

via the Securities and Exchange Commission's web site www.sec.gov, accurate

and complete copies (excluding copies of exhibits) of each report,

registration statement and definitive proxy and information statements filed

by Parent with the SEC (collectively, with all information incorporated by

reference therein or deemed to be incorporated by reference therein, the

"Parent SEC Documents"). All statements, reports, schedules, forms and other

documents required to have been filed by Parent with the SEC have been so

filed. Except as set forth in the Parent Disclosure Schedule, as of the time

it was filed with the SEC (or, if amended or superseded by a filing prior to

the date of this Agreement, then on the date of such filing): (i) each of the

Parent SEC Documents complied in all material respects with the applicable

requirements of the Securities Act of 1933, as amended (the