AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF JUNE 30, 2004 BY AND AMONG ACCUPOLL HOLDING CORP. AND NTSD ACQUISITION, INC. AND NTS DATA SERVICES CORP. AND NTS DATA SERVICES, INC. AND MATTHEW M. BIONDI AND JOHN F. JENNINGS

EXHIBIT 10.1

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF JUNE 30, 2004

BY AND AMONG

ACCUPOLL HOLDING CORP.

AND

NTSD ACQUISITION, INC.

AND

NTS DATA SERVICES CORP.

AND

NTS DATA SERVICES, INC.

AND

MATTHEW M. BIONDI

AND

JOHN F. JENNINGS

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AGREEMENT AND PLAN OF REORGANIZATION

This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated

as of June 30, 2004, is by and among NTS Data Services Corp. ("Seller"), a

Delaware corporation with an address at c/o NTS Data Services, LLC, 1342

Military Road, Niagara Falls, New York 14304; NTS Data Services, Inc.

("NTS-Inc."), a New York corporation with an address at 1342 Military Road,

Niagara Falls, New York 14304; Matthew M. Biondi ("Biondi"), an individual with

an address at 115 Tuscarora Rd., Buffalo, New York 14220; John F. Jennings

("Jennings"), an individual with an address at 22 W. Bryan St. #107, Savannah,

Georgia 31401 (NTS-Inc., Biondi and Jennings are each a "Shareholder" and

collectively, the "Shareholders"); AccuPoll Holding Corp. ("Buyer"), a Nevada

corporation having its principal executive office at 15101 Red Hill Avenue,

Suite 220, Tustin, California 92780; and NTSD Acquisition, Inc. ("Merger Sub"),

a Delaware corporation and a direct wholly-owned subsidiary of the Buyer having

its offices at c/o AccuPoll Holding Corp., 15101 Red Hill Avenue, Suite 220,

Tustin, California 92780.

R E C I T A L S

WHEREAS, the parties hereto desire that the Seller shall be

acquired by the Buyer through the merger ("Merger") of the Seller with and into

Merger Sub, with Merger Sub as the surviving corporation pursuant to an

Agreement and Plan of Merger substantially in the form attached hereto as

EXHIBIT A ("Plan of Merger") and the Delaware General Corporation Law ("DGCL");

and

WHEREAS, it is intended for federal income tax purposes that

the Merger shall qualify as a reorganization within the meaning of Section

368(a) of the Internal Revenue Code of 1986, as amended; and

WHEREAS, the Seller owns all of the membership interests (the

"Membership Interests") of NTS Data Services, LLC (the "Company"), a New York

limited liability company; and

WHEREAS, the Boards of Directors of the Buyer, the Merger Sub

and the Seller have approved the transactions contemplated by this Agreement

(the "Transactions") upon the terms and subject to the conditions set forth

herein; and

WHEREAS, the parties hereto desire to provide for certain

undertakings, conditions, representations, warranties and covenants in

connection with the Transactions;

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

mutual representations, warranties and covenants herein contained and intending

to be legally bound hereby, the parties hereto do hereby agree as follows:

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ARTICLE I

DEFINITIONS

SECTION 1.1 DEFINITIONS.

As used in this Agreement, the following terms shall have the following

meanings:

(a) "Affiliate" means with respect to any Person, a Person

directly or indirectly controlling or controlled by or under common control with

such Person.

(b) "Closing" means the consummation of the Transactions.

(c) "Closing Date" means the date of the Closing.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(f) "GAAP" means generally accepted accounting principles of the

United States as set forth by the Financial Accounting Standards Board.

(g) "Governmental Authorizations" means the permits,

authorizations, consents or approvals of any Governmental Entity, which are a

condition to the lawful consummation of the Transactions.

(h) "Governmental Entity" means any court, or any federal, state,

municipal or other governmental authority, department, commission, board, agency

or other instrumentality (domestic or foreign).

(i) "Intellectual Property" means and shall include the following:

(1) all of the Company's rights, title and interest in

and to the copyrights, copyright registrations, proprietary processes,

trade secrets, license rights, specifications, technical manuals and

data, drawings, inventions, designs, patents, patent applications,

trade names, trademarks, service marks, domain names, URL's, product

information and data, know-how and development work-in-progress,

customer lists, software, business and marketing plans and other

intellectual or intangible property embodied in or pertaining to the

Company's business, whether pending, applied for or issued, whether

filed in the United States or in other countries listed on SCHEDULE

1.1(I);

(2) all things authored, discovered, developed, made,

perfected, improved, designed, engineered, acquired, produced,

conceived or first reduced to practice by the Company or any of its

employees or agents that are exclusively used by the Company in the

conduct of its business or developed by the Company exclusively for use

in its business, in any stage of development, including, without

limitation, modifications, enhancements, designs, concepts, techniques,

methods, ideas, flow charts, coding sheets, notes and all other

information relating to the Company's business; and

(3) any and all design and code documentation,

methodologies, processes, trade secrets, copyrights, design

information, product information, technology, formulae,

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routines, engineering specifications, technical manuals and data,

drawings, inventions, know-how, techniques, engineering work papers,

and notes, development work-in-process, and other proprietary

information and materials of any kind used in or derived from the

Company's assets.

(j) "Lien" means any mortgage, pledge, lien, security interest,

option, covenant, condition, restriction, encumbrance, charge or other

third-party claim of any kind.

(k) "Material Adverse Effect" with respect to a Person means any

event, change or effect that is materially adverse to the condition (financial

or otherwise), properties, assets, liabilities, business, operations, results of

operations, or prospects of such Person and its Affiliates, taken as a whole.

(l) "Net Cash" means, as of any date, the excess of the Company's

cash on hand over the sum of its accounts payable and accrued expenses.

(m) "Person" means an individual, corporation, partnership,

association, trust, government or political subdivision or agent or

instrumentality thereof, or other entity or organization.

(n) "Securities Act" means the Securities Act of 1933, as amended,

and the rules and regulations promulgated thereunder.

(o) "Taxes" means all taxes, however denominated, including any

interest, penalties or other additions to tax that may become payable in respect

thereof, (i) imposed by any federal, territorial, state, local or foreign

government or any agency or political subdivision of any such government, for

which the Buyer could become liable as successor to or transferee of the

business or which could become a charge against or lien on any of the Seller's

assets or the Company's assets, which taxes shall include, without limiting the

generality of the foregoing, all sales and use taxes, ad valorem taxes, excise

taxes, business license taxes, occupation taxes, real and personal property

taxes, stamp taxes, environmental taxes, real property gains taxes, transfer

taxes, payroll and employee withholding taxes, unemployment insurance

contributions, social security taxes, and other governmental charges, and other

obligations of the same or of a similar nature to any of the foregoing, which

are required to be paid, withheld or collected, or (ii) any liability for

amounts referred to in (i) as a result of any obligations to indemnify another

Person.

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ARTICLE II

PURCHASE AND SALE BY MERGER

SECTION 2.1 MERGER.

Subject to the terms and conditions of this Agreement and of the Plan

of Merger, the Seller shall be merged with and into Merger Sub, with Merger Sub

as the surviving corporation, in accordance with the provisions of the Plan of

Merger and this Agreement. In connection with the Closing, Merger Sub shall

execute a Certificate of Merger and shall cause to be delivered, as soon as

practicable on the Closing Date, the Certificate of Merger to the Delaware

Secretary of State in accordance with the DGCL. The Merger will be effective on

the Closing Date. After the Merger, the Company shall continue as a wholly-owned

subsidiary of Merger Sub. Buyer agrees to maintain the separate existence of

Merger Sub for a period of not less than one year following the Closing Date.

SECTION 2.2 PURCHASE PRICE.

As full and complete consideration for the Merger, the Buyer shall

deliver to the Shareholders at the Closing the aggregate purchase price of

$6,651,234, adjusted as provided in Section 2.3 below, (the "Purchase Price") in

the following manner: (a) cash, by wire transfer of immediately available funds

or by certified or cashier's check, in the amount of Three Million Dollars

($3,000,000) (the "Cash Payment"), and (b) stock certificates in the names of

the Shareholders for an aggregate number of shares equal to $3,651,234 divided

by the Per Share Price (as defined below), and (c) the adjustments specified

pursuant to Section 2.3. All payments hereunder shall be distributed pro rata

among the Shareholders and shall be allocated as set forth on SCHEDULE 2.2. The

"Per Share Price" will be equal to eighty-five percent (85%) of the average

closing or last trade price of the Buyer's common stock for the twenty (20)

trading days immediately preceding the Closing Date.

SECTION 2.3 PURCHASE PRICE ADJUSTMENTS.

(a) RESERVED.

(b) The Company agrees that it shall have Net Cash as of the

Closing Date of at least Two Hundred Thousand Dollars ($200,000). To the extent

that, as of the Closing Date, the Company's Net Cash exceeds Two Hundred

Thousand Dollars ($200,000), the Purchase Price shall be increased by such

excess over Two Hundred Thousand Dollars, and the Buyer shall pay such excess to

the Shareholders in cash as additional Purchase Price within three (3) business

days following Closing. In addition, Buyer agrees (i) to use commercially

reasonable efforts to cause the Company to collect the accounts receivable of

the Company existing on the closing date as expeditiously as practicable

thereafter, (ii) that for this purpose all amounts collected from customers of

the Company on or after the Closing Date shall be applied to the oldest

receivables of such customers, and (iii) to pay to the Shareholders in cash each

week following Closing, as increased Purchase Price, the amount of such existing

accounts receivable collected during the previous week.

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(c) Except as set forth in subsection 2.3(b), under no

circumstances shall the Cash Payment component of the Purchase Price be reduced

below the sum of Three Million Dollars ($3,000,000.00). Except as set forth in

subsection 2.3(b), any adjustment made to the Purchase Price pursuant to this

Agreement shall be made to the Payment Shares component of the Purchase Price.

SECTION 2.4 REGISTRATION OF PAYMENT SHARES.

The Buyer agrees to register the Shareholders' resale of one-third of

the Payment Shares (the "Registered Shares"). If practicable (based on the time

of completion of the "Company Financial Statements", as defined in Section 3.5

below), and subject to the approval of any placement agent (the "Placement

Agent") leading the Equity Financing (as defined in Section 7.3(h)), the Buyer

shall include the Registered Shares in the registration statement on Form S-1

(the "S-1") to be filed by the Buyer with the Securities and Exchange Commission

(the "Commission") in connection with the Equity Financing. If the Placement

Agent advises the Buyer that the Registered Shares may not be included in such

registration statement, then, as soon as reasonably practicable following the

date that the Commission declares effective the registration statement filed on

S-1, but in no event greater than sixty (60) days thereafter, the Buyer shall

file with the Commission a second registration statement on Form S-1 (the

"Second S-1") covering the resale of the Registered Shares on a delayed basis

pursuant to Rule 415 under the Securities Act, and shall use its best efforts to

have the Second S-1 declared effective by the Commission as soon as practical

(each of the S-1 and the Second S-1 is sometimes referred to hereafter as a

"Registration Statement"). The Buyer agrees to maintain the effectiveness of the

Registration Statement which registers the resale of the Registered Shares

pursuant to Rule 415 at all times until the later of (i) the date that is six

months from the effective date of such Registration Statement and (ii) the date

that the Shareholder can dispose of all of the Registered Shares pursuant to

Rule 144 in a 90 day period (the "Registration Period"). The Buyer agrees to

furnish to each of the Shareholders, promptly after the same is filed with the

Commission, such number of copies of the Registration Statement and any

amendment thereto, each preliminary prospectus and each prospectus and any

amendment thereto, as such Shareholder shall reasonably request. The

Shareholders agree that remaining two-thirds of the Payment Shares shall be

legended as provided in Section 4.4.

SECTION 2.5 CLOSING.

The Closing shall take place within ten (10) days following the closing

of the Equity Financing at such time and place as the Buyer, the Shareholders

and the Seller shall agree, but in no event later than August 30, 2004, unless

the parties otherwise agree in writing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF

THE SELLER AND THE SHAREHOLDERS

Each representation and warranty set forth below is qualified by any

exception or disclosures set forth in the Seller's Disclosure Schedule attached

hereto, which exceptions specifically reference the Section(s) to be qualified.

In all other respects, each representation and warranty set out in this Article

3 is not qualified in any way whatsoever, will not merge on

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Closing or by reason of the execution and delivery of any agreement, document or

instrument at the Closing, will remain in force on and after the Closing Date

(although not deemed to be given as of any date after the Closing Date), is

given with the intention that liability is not confined to breaches discovered

before Closing, is separate and independent and is not limited by reference to

any other representation or warranty or any other provision of this Agreement,

and is made and given as of the date hereof with the intention of inducing the

Buyer to enter into this Agreement. The Seller and the Shareholders hereby

jointly and severally represent and warrant to the Buyer as of the Closing Date

as follows:

SECTION 3.1 ORGANIZATION AND QUALIFICATION.

(a) The Company is a limited liability company duly organized,

validly existing and in good standing under the laws of the State of New York

and has the requisite power and authority to own, lease and operate its assets

and properties and to carry on its business as it is now being conducted. The

Company is qualified to do business and is in good standing in each jurisdiction

in which the properties owned, leased or operated by it or the nature of the

business conducted by it makes such qualification necessary. True, accurate and

complete copies of the Company's Articles of Organization and Operating

Agreement, including all amendments thereto, have heretofore been delivered to

the Buyer.

(b) The Seller is a corporation duly organized, validly existing

and in good standing under the laws of the State of Delaware and has the

requisite power and authority to own, lease and operate its assets and

properties and to carry on its business as it is now being conducted. The Seller

is qualified to do business and is in good standing in each jurisdiction in

which the properties owned, leased or operated by it or the nature of the

business conducted by it makes such qualification necessary. True, accurate and

complete copies of the Seller's Certificate of Incorporation and By-Laws,

including all amendments thereto, have heretofore been delivered to the Buyer.

SECTION 3.2 CAPITALIZATION.

(a) As of the date hereof, there are 100,000 units of Membership

Interests of the Company issued and outstanding, all of which are owned by the

Seller. All of the issued and outstanding units of Membership Interests of the

Company are duly authorized, validly issued, fully paid, nonassessable, free of

preemptive rights and were issued in compliance with federal and applicable

state securities laws. The authorized capital stock of the Seller consists of

3,000 shares of common stock, par value $1.00 per share. As of the date hereof,

there are 100 shares of common stock of the Seller issued and outstanding, all

of which are owned by the Shareholders as set forth on SCHEDULE 3.2(A). All of

the issued and outstanding shares of common stock of the Seller are duly

authorized, validly issued, fully paid, nonassessable, free of preemptive rights

and were issued in compliance with federal and applicable state securities laws.

(b) As of the date hereof, there are no outstanding subscriptions,

options, calls, contracts, agreements, commitments, understandings,

restrictions, arrangements, rights or warrants, including any right of

conversion or exchange under any outstanding security, instrument or other

agreement, obligating the Company to issue, deliver, sell, purchase, redeem or

acquire, or cause to be issued, delivered, sold, purchased, redeemed or

acquired, units of

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membership interest of the Company or obligating the Company to grant, extend or

enter into any such agreement or commitment, except for this Agreement. There

are no outstanding or authorized membership interest appreciation, phantom,

participation, or other similar rights with respect to the Company. There are no

voting trusts, proxies, other agreements or understandings to which the Company

is a party or is bound with respect to the voting of any units of membership

interests of the Company. Notwithstanding the foregoing, Biondi and Jennings

have been granted options to purchase membership interests of the Company, which

options are contained in their respective Employment Agreements and which

options shall be surrendered and terminated effective upon the Closing.

(c) As of the date hereof, there are no outstanding subscriptions,

options, calls, contracts, agreements, commitments, understandings,

restrictions, arrangements, rights or warrants, including any right of

conversion or exchange under any outstanding security, instrument or other

agreement, obligating the Seller to issue, deliver, sell, purchase, redeem or

acquire, or cause to be issued, delivered, sold, purchased, redeemed or

acquired, shares of capital stock of the Seller or obligating the Seller to

grant, extend or enter into any such agreement or commitment, except for this

Agreement. There are no outstanding or authorized capital stock appreciation,

phantom, participation, or other similar rights with respect to the Seller.

There are no voting trusts, proxies, other agreements or understandings to which

the Seller is a party or is bound with respect to the voting of any shares of

capital stock of the Company.

SECTION 3.3 SUBSIDIARIES; OTHER INVESTMENTS.

Except as set forth on SCHEDULE 3.3, the Company does not own, directly

or indirectly, any capital stock of any corporation and has no subsidiaries.

Except as set forth on SCHEDULE 3.3, the Company does not own any securities

issued by any other business organization or governmental authority. The Company

is not a partner or participant in any joint venture or partnership of any kind.

SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.

(a) Each of the Shareholders and the Seller has the power,

corporate or otherwise, and authority to execute, deliver and perform this

Agreement and the Plan of Merger and to consummate the Transactions. The

execution and delivery of this Agreement and the Plan of Merger, and the

consummation by each of the Shareholders and the Seller of the Transactions,

have been duly authorized and approved by the Shareholders and, as to NTS-Inc.

and the Seller, by their respective Boards of Directors, and no other corporate

proceedings are necessary to authorize the execution and delivery of this

Agreement and the consummation by each Shareholder or the Seller of the

Transactions. Each of this Agreement and the Plan of Merger has been duly and

validly executed and delivered by each Shareholder and the Seller and, assuming

the due authorization, execution and delivery hereof and thereof by the Buyer,

Merger Sub and each other party hereto, constitutes a valid and binding

agreement of such Shareholder and the Seller, enforceable against such

Shareholder and the Seller, in accordance with its terms, except that such

enforcement may be subject to (a) bankruptcy, insolvency, reorganization,

moratorium or other similar laws affecting or relating to enforcement of

creditors' rights generally and (b) general equitable principles.

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(b) The execution and delivery of this Agreement by each

Shareholder and the Seller do not, and the consummation by each Shareholder and

the Seller of the Transactions will not, violate, conflict with or result in a

breach of any provision of, or constitute a default (or an event which, with

notice or lapse of time or both, would constitute a default) under, or result in

the termination of, or accelerate the performance required by, or result in a

right of termination or acceleration under, or result in the creation of any

lien, security interest, charge or encumbrance upon any of the properties or

assets of the Company under any of the terms, conditions or provisions of (i) as

to NTS-Inc. and the Seller, the respective charters, operating agreement or

by-laws of the Company, NTS-Inc. and the Seller, and as to all Shareholders and

the Seller, (ii) any statute, law, ordinance, rule, regulation, judgment,

decree, order, injunction, writ, permit or license of any court or governmental

authority applicable to the Company or any of its properties or assets, or (iii)

any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,

concession, contract, lease or other instrument, obligation or agreement of any

kind to which the Company is now a party or by which the Company or any of its

properties or assets may be bound or affected.

(c) Other than the filing with the Delaware Secretary of State of

the Certificate of Merger, as to each Shareholder and the Seller, no

declaration, filing or registration with, or notice to, or authorization,

consent, permit or approval of, any Governmental Entity is necessary for the

execution, delivery or performance of this Agreement and the Plan of Merger by

such Shareholder or the Seller or consummation by such Shareholder or the Seller

of the Transactions. No consent of any party to any contract, agreement,

instrument, lease, license, arrangement or understanding to which any

Shareholder or the Seller is a party, or to which any of its or his properties

or assets are subject, is required for the execution, delivery or performance of

this Agreement and the Plan of Merger.

SECTION 3.5 FINANCIAL STATEMENTS.

Prior to the Closing, the Seller will cause to be prepared by an

accounting firm of the Seller's choice (the "Accountants") audited financial

statements of the Company for the fiscal years ending December 31, 2002 and 2003

(collectively, the "Company Financial Statements"). The Company Financial

Statements will be prepared in accordance with GAAP as applied on a consistent

basis, and the Company Financial Statements will fairly and accurately present

the financial position of the Company in all materials respects as of the dates

thereof and the results of operations and changes in financial position for the

periods then ended. The Seller has made available to the Buyer copies of the

Company's compiled financial statements for the fiscal years ending December 31,

2002 and 2003.

SECTION 3.6 ABSENCE OF UNDISCLOSED LIABILITIES.

Except as expressly disclosed and described in the Company Financial

Statements, the Company did not have at December 31, 2003, any liability,

indebtedness, expense, claim, deficiency, guarantee or obligation of any type

(whether absolute, accrued, contingent, matured, unmatured or otherwise) or of

any nature, except liabilities, obligations or contingencies which are accrued

or reserved against in the Company Financial Statements or reflected in the

notes thereto. Since December 31, 2003, the Company has not incurred liabilities

or obligations in the ordinary course of business which, in the aggregate,

exceed $10,000, except those liabilities or obligations listed on SCHEDULE 3.6.

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SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.

From December 31, 2003 through the date hereof, there has not been any

Material Adverse Effect with respect to the Company.

SECTION 3.8 ASSETS GENERALLY.

(a) The Company owns good and marketable title to all properties

and assets reflected on the Company Financial Statements or acquired since the

date thereof, free and clear of all Liens, except for (i) liens for current

taxes not yet due and payable, (ii) assets disposed of since December 31, 2003,

in the ordinary course of business, and (iii) Liens described on SCHEDULE 3.8.

The foregoing shall apply only to those properties and assets of the Company

necessary for the conduct of the Company's business as it is presently being

conducted.

(b) (i) The Company does not own any real estate; (ii) the

properties subject to the real property leases described in SCHEDULE 3.8

constitute all of the real estate used or occupied by the Company (the "the

Company Real Estate"), and (iii) the Company Real Estate has access, sufficient

for the conduct of the Company's business, to public roads and to all utilities,

including electricity, sanitary and storm sewer, potable water, natural gas and

other utilities, used in the operations of the Company.

(c) The real property leases described in SCHEDULE 3.8 are in full

force and effect, and the Company has a valid and existing leasehold interest

under each such lease for the term set forth therein. The Seller has delivered

to the Buyer complete and accurate copies of each of the leases and none of such

leases has been modified in any respect, except to the extent that such

modifications are disclosed by the copies delivered to the Buyer. The Company is

not in default, and no circumstances exist which could result in such default,

under any of such leases, nor, to the knowledge of the Shareholders or the

Seller, is any other party to any of such leases in default.

(d) All of the buildings, machinery, equipment and other tangible

assets necessary for the conduct of the Company's business are in good condition

and repair, ordinary wear and tear excepted, and are usable in the ordinary

course of business. A complete list of all material items of machinery,

equipment and other tangible assets used in the business of the Company is

included in SCHEDULE 3.8. The Company owns or leases under valid leases, all

buildings, machinery, equipment and other tangible assets necessary for the

conduct of its business. The Seller has delivered to the Buyer complete and

accurate copies of all equipment leases and such leases are listed in SCHEDULE

3.8. None of such equipment leases has been modified in any respect. The Company

is not in default, and no circumstances exist which could result in such

default, under any of such equipment leases, nor, to the best knowledge of each

Shareholder or the Seller, is any other party to any of such equipment leases in

default.

(e) The Company is not in any material respect in violation of any

applicable zoning ordinance or other law, regulation or requirement relating to

the operation of any properties used in the operation of its business, and the

Company has not received any notice of any such violation, or of the existence

of any condemnation proceeding with respect to any properties owned or leased by

the Company.

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SECTION 3.9 INTELLECTUAL PROPERTY.

(a) The execution, delivery and performance of this Agreement and

the consummation of the Transactions (including without limitation the continued

conduct by Buyer after the Closing Date of the Company's business and the

incorporation of any Intellectual Property in any product of Buyer or an

Affiliate of Buyer) will not breach, violate or conflict with any instrument or

agreement governing any Intellectual Property and will not cause the forfeiture

or termination or give rise to a right of forfeiture or termination of any

Intellectual Property or in any material way impair the right of Buyer or any of

its Affiliates to use, sell, license or dispose of, or to bring any action for

the infringement of, any Intellectual Property or portion thereof

(b) Neither the development, manufacture, marketing, license, sale

or use of any product or intellectual property currently licensed, used or sold

by the Company in its business or currently under development in its business

violates or will violate any license or agreement to which the Company is a

party or infringes or will infringe any copyright, patent, trademark, service

mark, trade secret or other intellectual property or other proprietary right of

any other Person. All registered Intellectual Property (including without

limitation trademarks, domain names, service marks, patents and copyrights) are

valid and subsisting. There is no pending or threatened claim against the

Company or litigation contesting the validity, ownership or right to use, sell,

license or dispose of any of the its assets (including without limitation the

Intellectual Property) necessary or required for, or used in, the conduct of its

business nor is there any basis for any such claim, nor has the Company, any

Shareholder or the Seller received any notice asserting that any such asset

(including without limitation the Intellectual Property) or the proposed use,

sale, license or disposition thereof conflicts or will conflict with the rights

of any other Person, nor is there any basis for any such assertion. There is no

material unauthorized use, infringement or misappropriation on the part of any

third party of the Company's assets (including without limitation the

Intellectual Property).

(c) SCHEDULE 3.9(C) contains a complete and accurate list of all

applications, filings and other formal actions made or taken pursuant to

federal, state, local and foreign laws by the Company to perfect or protect its

interest in the Intellectual Property, including, without limitation, all

patents, patent applications, trademarks, trademark applications, service marks

and copyright or mask work registrations.

(d) The Company has taken reasonable steps, including, without

limitation, entering into confidentiality and non-disclosure with all officers

and employees of and consultants with access to or knowledge of the Company's

assets (including without limitation the Intellectual Property) to maintain the

secrecy and confidentiality of such assets (including without limitation the

Intellectual Property).

(e) All fees to maintain the Company's rights in the Intellectual

Property, including, without limitation, patent and trademark registration and

prosecution fees and all professional fees in connection therewith pertaining to

the Intellectual Property due and payable on or before the Closing Date, have

been paid by the Company.

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SECTION 3.10 CUSTOMER AGREEMENTS.

(a) SCHEDULE 3.10 contains a list (including names, addresses,

contact names and telephone numbers), which is complete in all material

respects, of all agreements or other arrangements pursuant to which the Company

is obligated to supply products, perform services or otherwise engage in the

conduct of its business (such agreements, as supplemented below, are referred to

collectively as the "Customer Agreements"). The Shareholders have made available

a true and complete copy of all Customer Agreements to Buyer. All such Customer

Agreements are in full force and effect and are valid and effective in

accordance with their respective terms against the Company, and against the

other party thereto. The Company holds all right, title and interest to the

benefits afforded it under the terms of each Customer Agreement free of all

Liens. The Company is not in default under any such Customer Agreements (or has

caused an event which with notice or lapse of time, or both, would constitute a

default), nor, is the other party thereto in default (or has caused an event

which with notice or lapse of time, or both, would constitute a default) under

any such Customer Agreements.

(b) The Company has not entered into any agreement under which it

is restricted from selling, licensing or otherwise distributing any products or

services of its business to any class of customers, in any geographic area,

during any period of time or in any segment of the market.

(c) After the Closing, Buyer will not be prevented by any act of

the Company from changing prices charged in any future agreement to existing or

future customers of any products or services.

(d) The Company has not granted any third party the right to

supply any products or services of its business to any other Person. No

agreement for supply of the products or services of the Company obligates the

Company, and no agreement would obligate Buyer after the Closing Date, to

provide any change in specification of such products or services or to provide

new products or services. No agreement pursuant to which the Company has

licensed to a third party the use of any products of the Company's business

obligates the Company to provide any change in specification in the performance

of such products or to provide new products or services.

SECTION 3.11 WARRANTIES AND INDEMNITIES.

SCHEDULE 3.11 sets forth a summary of all contractual warranties and

indemnities, express or implied, relating to products sold or services rendered

by the Company in connection with its business, and no contractual warranty or

indemnity in connection with its business has been given by the Company which is

not listed on the Seller's Disclosure Schedule or which differs therefrom in any

respect. The Company is in compliance, in all material respects, with all

warranties described in the Seller's Disclosure Schedule. The Seller's

Disclosure Schedule, in all material respects, also indicates all warranty and

indemnity claims currently pending, and to the best of knowledge of the Company,

Seller and Shareholders, threatened, against the Company in connection with its

business. The Company has expressly disclaimed in all agreements with third

parties all implied warranties of merchantability and fitness for a particular

purpose with respect to all products and services, except as expressly set forth

in SCHEDULE 3.11.

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SECTION 3.12 ACCOUNTS RECEIVABLE.

All accounts receivable, notes receivable and other receivables

included in the Company Financial Statements as of December 31, 2003, are valid,

genuine and are expected to be fully collectible in the aggregate amount

thereof, subject to normal and customary trade discounts less any reserves for

doubtful accounts recorded therein. All accounts, notes receivable, and other

receivables actually invoiced and arising out of or relating to the Company's

business on December 31, 2003 have been included in the balance sheet to the

Company Financial Statements. Since December 31, 2003, there have been no write

offs or other adjustments to the accounts comprising the accounts receivable as

of December 31, 2003, which, either individually or in the aggregate, would have

a material adverse affect on the Company.

SECTION 3.13 LICENSES AND PERMITS.

To the best of the Shareholders' and the Seller's knowledge, the

Company holds all consents, approvals, registrations, certifications,

authorizations, permits and licenses of, and has made all filings with, or

notifications to, all Governmental Entities pursuant to applicable requirements

of all federal, state, local and foreign laws, ordinances, governmental rules or

regulations applicable to the Company, including, but not limited to, all such

laws, ordinances, governmental rules or regulations relating to registration of

the Company's products (at their current level of development and use). The

Company is in material compliance with all federal, state, local and foreign

laws, ordinances, governmental rules and regulations relating to the products

produced by the Company or otherwise related to the Company, and the Company,

the Shareholders and the Seller have no reason to believe that any consents,

approvals, authorizations, registrations, certifications, permits, filings or

notifications that the Company has received or made to operate its business are

invalid or have been or are being suspended, canceled, revoked or questioned.

There is no investigation or inquiry to which the Company is a party or, pending

or threatened, relating to its business and its compliance with applicable

foreign, state, local or foreign laws, ordinances, governmental rules or

regulations. Each such consent, approval, registration, certification,

authorization, permit or license is transferable and will not be terminated or

invalidated upon the consummation of the Transactions.

SECTION 3.14 LITIGATION.

There are no claims, suits, actions, proceedings or investigations

pending or, to the knowledge of the Shareholders or the Seller, threatened

against, relating to or affecting the Company, before any court, governmental

department, commission, agency, instrumentality or authority, or any arbitrator,

except as disclosed on SCHEDULE 3.14. The Company is not subject to any

judgment, decree, injunction, rule or order of any court, governmental

department, commission, agency, instrumentality or authority or any arbitrator

which prohibits or restricts the consummation of the Transactions or would have

any Material Adverse Effect on the business, operations, properties, assets,

condition (financial or other), results of operations or prospects of the

Company. For the purposes of this Agreement, "knowledge" shall be based upon a

reasonable level of inquiry by the party making the representation.

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SECTION 3.15 AGREEMENTS, CONTRACTS AND COMMITMENTS.

(a) Except for the Customer Agreements set forth on SCHEDULE 3.10

and other agreements set forth on SCHEDULE 3.15 (true and correct copies of

which have been made available to the Buyer), the Company is not a party to and

it is not bound by:

(i) any employment or consulting agreement, contract or

commitment with an employee or individual consultant or salesperson or

consulting or sales agreement, contract or commitment with a firm or

other organization;

(ii) any agreement or plan, including, without limitation, any

stock option plan, stock appreciation rights plan or stock purchase

plan, any of the benefits of which will be increased, or the vesting of

benefits of which will be accelerated, by the occurrence of any of the

Transactions or the value of any of the benefits of which will be

calculated on the basis of any of the Transactions;

(iii) any fidelity or surety bond or completion bond;

(iv) any lease of personal property with fixed annual rental

payments in excess of $10,000;

(v) any agreement, contract, commitment or grant containing

any covenant limiting the freedom of the Company or any of its

subsidiaries to engage in any line of business or to compete with any

person;

(vi) any agreement, contract or commitment relating to capital

expenditures and involving future payments in excess of $10,000 either

individually or in the aggregate;

(vii) any agreement, contract or commitment relating to the

disposition or acquisition of assets or any interest in any business

enterprise outside the ordinary course of the Company's business;

(viii) any mortgage, indenture, loan or credit agreement,

security agreement or other agreement or instrument relating to the

borrowing of money, the extension of credit or placing of Liens on any

assets of the Company;

(ix) any guaranty of any obligation for borrowed money or

otherwise;

(x) any purchase order or contract for the purchase of

materials involving in excess of $10,000 either individually or in the

aggregate;

(xi) any dealer, distribution, joint marketing or development

agreement;

(xii) any sales representative, original equipment

manufacturer, value added, remarketing or other agreement for

distribution of the Company's products or services;

(xiii) any collective bargaining agreement or contract with

any labor union;

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(xiv) any medical insurance or similar plan; or

(xv) any other agreement, contract, commitment or grant

pursuant to which the obligations of any party thereto is in excess of

$10,000.

(b) To the best knowledge of each Shareholder and the Seller, the

Company is in compliance with and has not breached, violated or defaulted under,

or received notice that it has breached, violated or defaulted under, any of the

terms or conditions of any existing agreement (including Customer Agreements),

contract, grant, covenant, instrument, lease, license or commitment to which the

Company is a party or by which it is bound (collectively, a "Contract"), nor is

any Shareholder or the Seller aware of any event that would constitute such a

breach, violation or default with the lapse of time, giving of notice or both.

To the best knowledge of each Shareholder and the Seller, each Contract is in

full force and effect and is not subject to any default thereunder by any party

obligated to the Company pursuant thereto. The Company has obtained, or will

obtain prior to the Closing Date, all necessary consents, waivers and approvals

of parties to any Contract as are required thereunder for such Contracts to

remain in effect without modification or termination after the Closing.

Following the Closing Date, the Company will be permitted to exercise all of its

rights under the Contracts without the payment of any additional amounts or

consideration other than ongoing fees, royalties or payments which the Company

would otherwise be required to pay had the Transactions not occurred.

SECTION 3.16 TAX MATTERS.

(a) TAX RETURNS AND AUDITS.

(i) The Seller and the Company each has prepared and timely

filed (or has properly filed the extensions for) all required federal,

state, local and foreign returns, estimates, information statements and

reports ("Returns") relating to any and all Taxes concerning or

attributable to it, its subsidiaries or operations thereof, and such

Returns are true and correct and have been completed in accordance with

applicable law.

(ii) The Company (A) has paid all Taxes it is required to pay

as shown on the filed returns and has withheld with respect to its

employees all federal and state income taxes, Federal Insurance

Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and

other Taxes required to be withheld, and (B) has accrued on the Company

Financial Statements all Taxes attributable to the periods covered by

the Company Financial Statements and has not incurred any liability for

Taxes for the period prior to the Closing Date other than in the

ordinary course of business. The Seller has paid all Taxes it is

required to pay as shown on the filed returns and has withheld with

respect to its employees all federal and state income taxes, FICA, FUTA

and other Taxes required to be withheld.

(iii) Neither the Seller nor the Company has been delinquent

in the payment of any Tax and there is no Tax deficiency outstanding,

assessed or proposed against it by the Internal Revenue Service (the

"IRS") or any other governmental taxing authority, and it has not

executed any waiver of any statute of limitations on or extending the

period for the assessment or collection of any Tax.

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(iv) No audit or other examination of any Return of the Seller

or the Company is presently in progress, and neither the Seller nor the

Company has been notified of any request for such an audit or other

examination.

(v) No adjustment relating to any Returns filed by the Seller

or the Company has been proposed formally or informally by any Tax

authority to the Seller, the Company or any of their respective

representatives.

(vi) The Seller and the Company each has made available to the

Buyer or its legal counsel, copies of all federal and state income and

all state sales and use Returns for it filed for the past three (3)

years.

(vii) There are (and immediately following the Closing Date

there will be) no Liens on the assets of the Seller or the Company

relating to or attributable to Taxes other than Liens for Taxes not yet

due and payable.

(viii) No Shareholder has any knowledge of any basis for the

assertion of any claim relating or attributable to Taxes which, if

adversely determined, would result in any Lien on the assets of the

Seller or the Company.

(ix) None of the Seller's nor the Company's assets are treated

as "tax-exempt use property" within the meaning of Section 168(h) of

the Code.

(x) There is no contract, agreement, plan or arrangement,

including but not limited to the provisions of this Agreement, covering

any employee or former employee of the Seller or the Company that,

individually or collectively, could give rise to the payment of any

amount that would not be deductible by the Seller or the Company, as

applicable, as an expense under applicable law.

(xi) Neither the Seller nor the Company has filed any consent

agreement under Section 341(f) of the Code or agreed to have Section

341(f)(4) of the Code apply to any disposition of a subsection (f)

asset (as defined in Section 341(f)(4) of the Code) owned by it.

(xii) Neither the Seller nor the Company is a party to any tax

sharing, indemnification or allocation agreement and neither the Seller

nor the Company owes any amount under any such agreement.

SECTION 3.17 EMPLOYMENT.

(a) Except as set forth in SCHEDULE 3.17(A), at the date hereof,

the Company does not maintain, contribute to or have any liability under any

employee benefit plans, programs, arrangements or practices, including employee

benefit plans within the meaning set forth in Section 3(3) of the Employee

Retirement Income Security Act of 1974, as amended ("ERISA"), any deferred

compensation or retirement plans or arrangements, or other similar material

arrangements for the provision of benefits (excluding any "Multiemployer Plan"

within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"

within the meaning of Section 413(c) of the Code). The Company does not have any

obligation to create any such plan.

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(b) With respect to each plan listed in SCHEDULE 3.17(A): (i) the

Company has performed in all material respects all obligations required to be

performed by it under each such plan and each such plan has been established and

maintained in all material respects in accordance with its terms and in

compliance with all applicable laws, statutes, rules and regulations, including

but not limited to the Code and ERISA; (ii) there are no actions, suits or

claims pending or, to the best knowledge of each Shareholder and the Seller,

threatened (other than routine claims for benefits) against any such plan; (iii)

each such plan can be amended or terminated after the Closing Date in accordance

with its terms, without liability to the Company; and (iv) there are no

inquiries or proceedings pending or, to the best knowledge of each Shareholder

and the Seller, threatened by the IRS or the Department of Labor with respect to

any such plan.

(c) SCHEDULE 3.17 (C) contains a complete and accurate list of the

employees for the Company, including job title, current compensation, vacation

accrued and service credited for purposes of vesting and eligibility to

participate under any pension, retirement, profit-sharing, thrift-savings,

deferred compensation, equity bonus, equity option, cash bonus, employee

membership interest ownership, severance pay, insurance, medical, welfare or

vacation plan. No employee of the Company is a party to, or is otherwise bound

by, any agreement or arrangement, including any confidentiality, noncompetition,

or proprietary rights agreement, between such employee and any other person or

entity that in any way adversely affects or will affect (i) the performance of

his or her duties as an employee of the Company, or (ii) the ability of the

Company to conduct its business. Neither the Company, any Shareholder nor the

Seller has received verbal or written notice that any of the employees listed in

SCHEDULE 3.17(C) will not continue their employment relationship with the

Company after the Closing Date. Except as noted on SCHEDULE 3.17(C), all

employees of the Company are terminable at will by the Company.

SECTION 3.18 LABOR CONTROVERSIES.

There are no significant controversies pending or, to the best

knowledge of any Shareholder or the Seller, threatened between the Company and

its employees. There are no material organizational efforts presently being made

involving any of the presently unorganized employees of the Company. The Company

has complied in all material respects with all laws relating to the employment

of labor, including, without limitation, any provisions thereof relating to

wages, hours, and the payment of social security and similar taxes, and no

person has asserted that the Company is liable in any material amount for any

arrears of wages or any taxes or penalties for failure to comply with any of the

foregoing.

SECTION 3.19 ENVIRONMENTAL MATTERS.

Except as set forth in SCHEDULE 3.19, to the best of the Shareholders'

and the Seller's knowledge, the Company (i) has obtained all applicable permits,

licenses and other authorizations which are required under federal, state or

local laws relating to pollution or protection of the environment

("Environmental Laws"), including laws relating to emissions, discharges,

releases or threatened releases of pollutants, contaminants or hazardous or

toxic materials or wastes into ambient air, surface water, ground water or land,

or otherwise relating to the manufacture, processing, distribution, use,

treatment, storage, disposal, transport or handling

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of pollutants, contaminants or hazardous or toxic materials or wastes by the

Company (or its agents); (ii) is in compliance in all material respects with all

terms and conditions of any required permits, licenses and authorizations, and

any other limitations, restrictions, conditions, standards, prohibitions,

requirements, obligations, schedules and timetables contained in Environmental

Laws or in any regulation, code, plan, order, decree, judgment, notice or demand

letter issued, entered, promulgated or approved thereunder; (iii) is not aware

of nor has it received notice of any event, condition, circumstance, activity,

practice, incident, action or plan which is reasonably likely to interfere with

or prevent continued compliance with or which would give rise to any

Environmental Law or statutory liability, or otherwise form the basis of any

claim, action, suit or proceeding, based on or resulting from the Company's (or

any agent's) manufacture, processing, distribution, use, treatment, storage,

disposal, transport, or handling, or the emission, discharge or release into the

environment, of any pollutant, contaminant, or hazardous or toxic material or

waste; (iv) has taken all actions necessary under applicable requirements of

Environmental Laws, rules or regulations to register any products or materials

required to be registered by the Company (or its agents) thereunder; and (v) has

not transported, stored, used, manufactured, released, disposed of or handled

any hazardous substance or any product containing a hazardous substance in

violation of any Environmental Law.

SECTION 3.20 INTERESTED PARTY TRANSACTIONS.

Except as set forth on SCHEDULE 3.20, the Company is not a party to any

oral or written (a) consulting or similar agreement with any present or former

director, officer or employee or any entity controlled by any such person, (b)

agreement with any executive officer or other key employee of the Company the

benefits of which are contingent, or the terms of which are materially altered,

upon the occurrence of a transaction involving the Company of the nature

contemplated by this Agreement or (c) agreement with respect to any executive

officer or other key employee of the Company providing any term of employment or

compensation guarantee. The Company is not a party to any agreement, contract,

lease, license, arrangement, or other understanding with any Shareholder or any

employee of the Company (except employment agreements disclosed on SCHEDULE

3.17(C)), any relative or Affiliate of any Shareholder or any employee of the

Company, or any other partnership or enterprise in which any Shareholder or any

employee of the Company, or any such relative or Affiliate thereof, had or now

has a 5% or greater ownership interest, or other substantial interest, other

than contracts or agreements listed and so specified in SCHEDULE 3.20.

SECTION 3.21 INSURANCE.

SCHEDULE 3.21 lists all insurance policies and fidelity bonds covering

the assets, business, equipment, properties, operations, employees, officers and

directors of the Company. All insurance policies listed are in full force and

effect. There is no claim by the Company pending under any of such policies or

bonds as to which coverage has been questioned, denied or disputed by the

underwriters of such policies or bonds. All premiums due and payable under all

such policies and bonds have been paid and there is no retroactive premium

adjustment obligation of any kind, and the Company is otherwise in compliance

with the terms of such policies and bonds (or other policies and bonds providing

substantially similar insurance coverage). Neither the Company, any Shareholder

nor the Seller has any knowledge of any threatened termination of, or premium

increase with respect to, any of such policies.

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SECTION 3.22 BOOKS AND RECORDS.

(a) The books of account, minute books, membership interest record

ledgers and other records of the Company, all of which have been made available

to the Buyer, are complete and correct. The minute books of the Company contain

accurate and complete records of all meetings held of, and limited liability

company action taken by, the members of the Company and no meeting of the

members of the Company has been held for which minutes have not been prepared

and are not contained in such minute books.

(b) The books of account, minute books, stock record ledgers and

other records of the Seller, all of which have been made available to the Buyer,

are complete and correct. The minute books of the Seller contain accurate and

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

Shareholders, the Board of Directors and committees thereof of the Seller, and

no meeting of the Shareholders, Board of Directors or committee of the Seller

has been held for which minutes have not been prepared and are not contained in

such minute books.

SECTION 3.23 PRODUCTS.

To the best of the Shareholders' and the Seller's knowledge, each of

the products and services produced, sold or provided by the Company in

connection with its business is, and at all times has been, in compliance in all

material respects with all applicable federal, state, local and foreign laws and

regulations and is, and at all relevant times has been, fit for the ordinary

purposes for which it is intended to be used and conforms in all material

respects to any promises or affirmations of fact made in connection with the

sale of such product or service. There are no known material design defects with

respect to any of such products, and each of such products contains adequate

warnings, presented in a reasonably prominent manner, in accordance with

applicable laws and current industry practice with respect to its contents and

use. Notwithstanding the foregoing, however, this representation does not

constitute a guarantee, indemnity or warranty to the Buyer that no defects will

be found or claims made after the Closing.

SECTION 3.24 PRODUCT LIABILITY.

There are no claims, actions, suits, inquiries, proceedings or

investigations pending by or against the Company, relating to any products of

the Company and containing allegations that such products are defective or were

improperly designed or manufactured or improperly labeled or otherwise

improperly described for use.

SECTION 3.25 REPRESENTATIONS COMPLETE.

None of the representations or warranties nor any statement made by the

Shareholders or the Seller in this Agreement, the Plan of Merger or any Schedule

or certificate furnished by the Shareholders or the Seller pursuant to this

Agreement or the Plan of Merger, contains any knowingly untrue statement of a

material fact, or knowingly omits to state any material fact necessary in order

to make the statements contained herein or therein, in the light of the

circumstances under which made, not misleading.

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SECTION 3.26 BROKERS AND FINDERS.

Except as set forth on SCHEDULE 3.26, neither any Shareholder, the

Seller nor the Company or any of their respective officers, directors or

employees has employed any broker or finder or incurred any liability for any

brokerage fee, commission or finder's fee in connection with the Transactions.

ARTICLE IV

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

CONCERNING THE PAYMENT SHARES.

Each Shareholder hereby represents and warrants to the Buyer as of the

Closing Date as follows

SECTION 4.1 PURCHASE ENTIRELY FOR OWN ACCOUNT.

This Agreement is made with each Shareholder in reliance upon such

Shareholder's representation to Buyer, which by such Shareholder's execution of

this Agreement such Shareholder hereby confirms, that the Payment Shares to be

acquired by such Shareholder will be acquired for investment for such

Shareholder's own account, not as a nominee or agent, and not with a view to the

resale or distribution of any part thereof, other than as a required part of the

fee arrangement with Paramax Corporation, broker for the Shareholders, and that

otherwise such Shareholder has no present intention of selling, granting any

participation in, or otherwise distributing the same. By executing this

Agreement, each Shareholder further represents that such Shareholder does not

presently have any contract, undertaking, agreement or arrangement with any

person to sell, transfer or grant participations to such person or to any

Person, with respect to any of the Payment Shares.

SECTION 4.2 DISCLOSURE OF INFORMATION.

Each Shareholder believes it or he has received all of the information

it or he considers necessary or appropriate for deciding whether to acquire the

Payment Shares. Each Shareholder further represents that it or he has had an

opportunity to ask questions and receive answers from the Buyer regarding the

Payment Shares. The foregoing, however, does not limit or modify the

representations and warranties of the Buyer contained in Article 5 or the right

of each Shareholder to rely thereon.

SECTION 4.3 RESTRICTED SECURITIES.

Each Shareholder understands that the Payment Shares have not been, and

as provided in Section 2.4 may not be as of the Closing Date, registered under

the Securities Act, by reason of a specific exemption from the registration

provisions of the Securities Act which depends upon, among other things, the

bona fide nature of the investment intent and the accuracy of such Shareholder's

representations as expressed herein. Each Shareholder understands that such

unregistered the Payment Shares are "restricted securities" under applicable

U.S. federal and state securities laws and that, pursuant to these laws, such

Shareholder must hold the Payment Shares unless and until they are registered

with the Commission and qualified by state authorities, or an exemption from

such registration and qualification requirements is available.

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Each Shareholder acknowledges that, except as provided under Section 2.4 hereof,

Buyer has no obligation to register or qualify any of the Payment Shares for

resale. Each Shareholder further acknowledges that if an exemption from

registration or qualification is available, such as that under Rule 144 under

the Securities Act, it may be conditioned on various requirements including ,

but not limited to, the time and manner of sale, the one (1) year holding period

for the Payment Shares, and on requirements relating to Buyer which are outside

of such Shareholder's control (such as the Buyer remaining current in its

filings with the Commission).

SECTION 4.4 LEGENDS.

(a) Prior to the effectiveness of the Registration Statement, each

Shareholder understands that the certificates representing the Payment Shares,

and any securities issued in respect of or exchange for the Payment Shares, may

bear one or all of the following legends:

(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR

INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR

DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN

EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A

FORM REASONABLY SATISFACTORY TO THE PURCHASER THAT SUCH REGISTRATION IS NOT

REQUIRED UNDER THE SECURITIES ACT OF 1933";

(ii) Any legends required by the laws of the State of California,

including any legend required by the California Department of Corporations;

and/or

(iii) Any legend required by the Blue Sky laws of any state to the

extent such laws are applicable to the shares represented by the certificate so

legended, including New Jersey.

Upon the Registration Statement being declared effective by the

Commission, Buyer shall use its best efforts to have any and all of the above

legends removed from the Registered Shares, except that certificates

representing two-thirds of the Payment Shares may bear a legend restricting

transfer of such shares until the first anniversary of the Closing Date. On the

first anniversary of the Closing Date, Buyer shall use its best efforts to have

this legend removed from the Payment Shares.

SECTION 4.5 CORPORATE SECURITIES LAW.

THE SALE OF THE SECURITIES THAT IS THE SUBJECT OF THIS AGREEMENT HAS

NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF

CALIFORNIA. THE ISSUANCE OF SUCH SECURITIES OR THE RECEIPT OF ANY PART OF THE

ASSETS FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE

SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR

25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS

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AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED

UNLESS THE SALE IS SO EXEMPT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MERGER SUB

Each representation and warranty set forth below is qualified by any

exception or disclosures set forth in the Buyer's Disclosure Schedule attached

hereto, which exceptions specifically reference the Section(s) to be qualified.

In all other respects, each representation and warranty set out in this Article

5 is not qualified in any way whatsoever, will not merge on Closing or by reason

of the execution and delivery of any agreement, document or instrument at the

Closing, will remain in force on and after the Closing Date (although not deemed

to be given as of any date after the Closing Date), is given with the intention

that liability is not confined to breaches discovered before Closing, is

separate and independent and is not limited by reference to any other

representation or warranty or any other provision of this Agreement, and is made

and given as of the date hereof with the intention of inducing the Shareholders

and the Seller to enter into this Agreement. The Buyer and Merger Sub hereby

jointly and severally represent and warrant to the Shareholders and the Seller

as of the Closing Date as follows:

SECTION 5.1 ORGANIZATION AND QUALIFICATION.

(a) The Buyer is a corporation duly organized, validly existing

and in good standing under the laws of the State of Nevada and has the requisite

power and authority to own, lease and operate its assets and properties and to

carry on its business as it is now being conducted. The Buyer is qualified to do

business and is in good standing in each jurisdiction in which the properties

owned, leased or operated by it or the nature of the business conducted by it

makes such qualification necessary. True, accurate and complete copies of the

Buyer's Articles of Incorporation and By-laws, in each case as in effect on the

date hereof, including all amendments thereto, have heretofore been delivered to

the Shareholders and the Seller.

(b) Merger Sub is a corporation duly organized, validly existing

and in good standing under the laws of the State of Delaware and has the

requisite power and authority to own, lease and operate its assets and

properties and to carry on its business as it is now being conducted. Merger Sub

is qualified to do business and is in good standing in each jurisdiction in

which the properties owned, leased or operated by it or the nature of the

business conducted by it makes such qualification necessary. True, accurate and

complete copies of Merger Sub's Articles of Incorporation and By-laws, in each

case as in effect on the date hereof, including all amendments thereto, have

heretofore been delivered to the Shareholders and the Seller.

SECTION 5.2 CAPITALIZATION.

(a) The authorized capital stock of the Buyer consists of

600,000,000 shares of Common Stock, $0.001 par value per share ("Common Stock")

and 80,000 shares of convertible series A preferred stock, $0.01 par value per

share ("Preferred Stock"). As of the date hereof, there are [148,449,049] shares

of Common Stock issued and outstanding and 71,529 shares of Preferred Stock

outstanding. All of the issued and outstanding shares of the Common Stock and

Preferred Stock are duly authorized, validly issued, fully paid, nonassessable

and free of

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preemptive rights and were issued in compliance with federal and applicable

state securities laws. The authorized capital stock of Merger Sub consists of

1,000 shares of common stock, $0.0001 par value per share. As of the date

hereof, there are 1,000 shares of common stock of Merger Sub issued and

outstanding, all of which are owned by the Buyer. All of the issued and

outstanding shares of the common stock of Merger Sub are duly authorized,

validly issued, fully paid, nonassessable and free of preemptive rights and were

issued in compliance with federal and applicable state securities laws.

(b) The Payment Shares issued to the Shareholders will be at the

Closing Date duly authorized, validly issued, fully paid and nonassessable and

free of preemptive rights and issued in compliance with federal and applicable

state securities laws.

SECTION 5.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.

(a) Each of the Buyer and Merger Sub has full corporate power and

authority to enter into this Agreement and the Plan of Merger and to consummate

the Transactions. The execution and delivery of this Agreement and the Plan of

Merger, and the consummation by each of the Buyer and Merger Sub of the

Transactions, have been duly authorized by the Buyer's Board of Directors and by

Merger Sub's Board of Directors and sole shareholder, and no other corporate

proceedings on the part of the Buyer or Merger Sub are necessary to authorize

the execution and delivery of this Agreement and the Plan of Merger and the

consummation by the Buyer and Merger Sub of the Transactions. Each of this

Agreement and the Plan of Merger has been duly and validly executed and

delivered by the Buyer and Merger Sub and, assuming the due authorization,

execution and delivery hereof by the Shareholders and the Seller, constitutes a

valid and binding agreement of the Buyer and Merger Sub, enforceable against the

Buyer and Merger Sub in accordance with its terms, except that such enforcement

may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or

other similar laws affecting or relating to enforcement of creditors' rights

generally and (b) general equitable principles.

(b) The execution and delivery of this Agreement and the Plan of

Merger by the Buyer and Merger Sub do not, and the consummation by the Buyer and

Merger Sub of the Transactions will not, violate, conflict with or result in a

breach of any provision of, or constitute a default (or an event which, with

notice or lapse of time or both, would constitute a default) under, or result in

the termination of, or accelerate the performance required by, or result in a

right of termination or acceleration under, or result in the creation of any

lien, security interest, charge or encumbrance upon any of the properties or

assets of the Buyer or Merger Sub under any of the terms, conditions or

provisions of (i) the charter or by-laws of the Buyer or Merger Sub, (ii) any

statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,

writ, permit or license of any court or governmental authority applicable to the

Buyer or Merger Sub or any of their respective properties or assets, or (iii)

any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,

concession, contract, lease or other instrument, obligation or agreement of any

kind to which the Buyer or Merger Sub is now a party or by which the Buyer or

Merger Sub or any of their respective properties or assets may be bound or

affected.

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(c) Other than the appropriate filing under Regulation D of the

Securities Act of 1933, as amended (the "Securities Act"), and the filing with

the Delaware Secretary of State of the Certificate of Merger, no declaration,

filing or registration with, or notice to, or authorization, consent or approval

of, any Governmental Entity is necessary for the execution, delivery and

performance of this Agreement and the Plan of Merger by the Buyer or Merger Sub

or the consummation by the Buyer or Merger Sub of the Transactions. No consent

of any party to any contract, agreement, instrument, lease, license, arrangement

or understanding to which the Buyer, Merger Sub or any of their respective

subsidiaries is a party, or to which any of them or any of their properties or

assets are subject, is required for the execution, delivery or performance of

this Agreement and the Plan of Merger.

SECTION 5.4 REPORTS AND FINANCIAL STATEMENTS.

The Buyer has previously delivered to the Shareholders copies of its

(a) Form 10-KSB for the fiscal year ending June 30, 2003, as amended, (b) Form

10-Q for the quarter ended December 31, 2003 and (c) all other reports or

registration statements filed by the Buyer with the Securities and Exchange

Commission (the "Commission") since December 31, 2003, including all such

amendments thereto (such reports and other filings, together with any amendments

or supplements thereto, are collectively referred to herein as the "Buyer

Reports"). Since March 31, 2003, and with the exception of its Form 10-Q for the

quarter ended March 31, 2004 (which was filed on June 8, 2004), the Buyer has

timely filed all forms, reports, schedules, statements and documents with the

Commission required to be filed by it pursuant to the federal securities laws

and Commission rules and regulations promulgated thereunder, and all such forms,

reports, schedules, statements and documents, as amended, filed with the

Commission have complied in all material respects with all applicable provisions

of the federal securities laws and the Commission rules and regulations

promulgated thereunder. As of their respective dates, the Buyer Reports did not

contain any untrue statement of a material fact or omit to state a material fact

required to be stated therein or necessary to make the statements therein, in

light of the circumstances under which they were made, not misleading. The

audited financial statements and unaudited interim financial statements of the

Buyer included in the Buyer Reports (together, the "Buyer Financial Statements")

have been prepared in accordance with GAAP applied on a consistent basis (except

as may be indicated therein or in the notes thereto) and fairly and accurately

present the consolidated financial position of the Buyer and its subsidiaries as

of the dates thereof and the consolidated results of operations and changes in

financial position for the periods then ended.

SECTION 5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.

From December 31, 2003 through the date hereof, there has not been any

material adverse change in the business, operations, properties, assets,

liabilities, condition (financial or other), results of operations or prospects

of the Buyer, Merger Sub and each of their subsidiaries, taken as a whole.

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