ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made January 9, 2007,

by and among GLOBALOPTIONS GROUP, INC., a Delaware corporation ("BUYER") and SPZ

OAKLAND CORPORATION dba Online Consulting Services, a California corporation

("SELLER").

RECITALS

Seller desires to sell, and Buyer desires to purchase, the Assets (as

defined below) of Seller for the consideration and on the terms set forth in

this Agreement.

AGREEMENT

The parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

SALE AND TRANSFER OF ASSETS; CLOSING

SECTION 1.1 ASSETS TO BE SOLD. Upon the terms and subject to the

conditions set forth in this Agreement, at the Closing (as defined in Section

1.6 below), Seller shall sell, convey, assign, transfer and deliver to Buyer,

and Buyer shall purchase and acquire from Seller, free and clear of any charge,

claim, equitable interest, lien, option, pledge, security interest, mortgage,

encroachment, or restriction of any kind (an "ENCUMBRANCE"), other than any

Encumbrance identified on ANNEX A as acceptable to Buyer (a "PERMITTED

ENCUMBRANCE"), all of Seller's property and assets, real, personal or mixed,

tangible and intangible, of every kind and description, wherever located,

belonging to Seller and used in the conduct of the Seller's security consulting

business (the "BUSINESS"), including the following (but excluding the Excluded

Assets):

(a) all leasehold interest in all real property leased by Seller

(the "REAL PROPERTY"), including the Real Property described in SCHEDULE 2.6;

(b) all equipment, furniture, office equipment, computer hardware,

supplies, materials, vehicles, and other items of tangible personal property

(other than inventory) of every kind owned or leased by Seller (the "TANGIBLE

PERSONAL PROPERTY"), including those items described in SCHEDULE 2.7(B);

(c) any oral or written contracts or agreement (i) under which

Seller has or may acquire any rights or benefits, (ii) under which Seller has or

may become subject to any obligation or liability, or (iii) by which Seller or

any of the Assets is or may become bound (any such contract or agreement, a

"SELLER CONTRACT"), that are listed on SCHEDULE 2.14;

(d) all Governmental Authorizations (as defined in SECTION 2.11(b))

and all pending applications therefor or renewals thereof, in each case to the

extent transferable to Buyer;

2

(e) all data and records related to the operations of Seller, and

copies of all records referenced in SECTION 1.2(E) below;

(f) all of the intangible rights and property of Seller, including

the Intellectual Property Assets (as defined in SECTION 2.16) and the

Proprietary Assets (as defined in SECTION 2.16), going concern value, goodwill,

telephone, telecopy, and e-mail addresses, websites, domain names, and listings

including the name "On Line Consulting Services," abbreviations thereof, and On

Line Consulting Services, Inc., or any previous name or names utilized by the

Seller, but not Seller's corporate name;

(g) all insurance benefits, including rights and proceeds, arising

from or relating to the Assets prior to the Closing Date;

(h) all claims of Seller against third parties relating to the

Assets;

(i) all rights of Seller relating to deposits and prepaid expenses,

claims for refunds and rights to offset in respect thereof which are not

excluded under SECTION 1.2(F); and

(j) all other properties and assets of every kind, including an

amount of cash and/or accounts receivable equal to the trade accounts identified

in Section 1.4(a)(ii), below less any price adjustment as defined in Section

1.3(c), below, character and description, tangible or intangible, of every kind

and description, owned by Seller, whether or not similar to the items

specifically set forth above.

All of the property and assets to be transferred to Buyer hereunder are referred

to collectively as the "ASSETS". Notwithstanding the foregoing, the transfer of

the Assets pursuant to this Agreement will not include the assumption of any

liability or obligation in respect thereof unless the Buyer expressly assumes

such liability or obligation pursuant to SECTION 1.4(A).

SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary

contained in Section 1.1 or elsewhere in this Agreement, the following items

(collectively, the "EXCLUDED ASSETS") are not part of the sale and purchase

contemplated hereunder, are excluded from the Assets, and will remain the

property of Seller after the Closing:

(a) the minute book, shareholder records, and company seal of Seller

and Seller's corporate name;

(b) the equity of Seller and the remaining cash and/or accounts

receivable, plus any price adjustment as defined in Section 1.3(c), below after

the necessary amount of cash to equal to the trade accounts identified in

Section 1.4(a)(ii), below;

(c) all of Seller's life insurance policies and rights thereunder

(except to the extent specified in Sections 1.1(h) and (i));

(d) all personnel records and other records that Seller is required

by law to retain in its possession;

3

(e) all claims for refund of taxes and other governmental charges of

whatever nature;

(f) all rights in connection with and assets of any Employee Benefit

Plans (as defined in Section 2.10 below);

(g) all rights of Seller in connection with the transactions

contemplated hereby; and

(h) the property, accounts receivables and other assets expressly

designated in SCHEDULE 2.7(A).

SECTION 1.3 PURCHASE PRICE. The consideration for the Assets (the

"PURCHASE PRICE") will be Two Million Seven Hundred Thousand and No/100 Dollars

($2,700,000) wherein the Purchase Price shall include: (i) cash in the amount of

One Million Three Hundred and Fifty Thousand and No/ Dollars ($1,350,000) ("Cash

Portion"); and (ii) Buyer's stock in the amount of One Million Three Hundred and

Fifty Thousand and No/ Dollars ($1,350,000) ("Stock Portion"), and the

assumption of the Assumed Liabilities (as defined in Section 1.4 below).

(a) In accordance with SECTION 1.7(B), at the Closing or other date specified

below, the Purchase Price shall be delivered by Buyer to Seller, as follows: (A)

at Closing, the payment of Seven Hundred and Fifty Thousand and No/100 Dollars

($750,000) by wire transfer to an account specified by Seller; (B) at Closing,

an amount equal to Seven Hundred and Fifty Thousand and No/100 Dollars

($750,000) of the Stock Portion of the Purchase Price delivered to Seller, as

such Stock Portion is determined in accordance with SECTION 1.3(B); (C) at

Closing, a promissory Note in the amount of Three Hundred Thousand and No/100

Dollars ($300,000) (in the form of Exhibit 1.3(a), the "Promissory Note 1") of

the Cash Portion of the Purchase Price to be delivered to the Law Offices of

Morton S. Taubman, as escrow agent (the "ESCROW AGENT") under the Escrow

Agreement (as defined in SECTION 1.7(A) below); (D) at Closing, a promissory

note providing for the payment of an amount equal to Three Hundred Thousand and

No/100 Dollars ($300,000) of the Cash Portion of the Purchase price to the

Seller, of which One Hundred and Fifty Thousand and No/Dollars ($150,000) is

payable one year from the date of the Closing Date, and the same amount one year

thereafter (in the form of Exhibit 1.3 (b), the "Promissory Note 2"); and (E) at

Closing, the remaining Stock Portion ($600,000) shall be placed in escrow by the

Buyer and held by the Buyer for the benefit of the Seller (the "Escrowed

Stock"), and said Escrowed Stock, subject to the last sentence of this Section

1.3(a), shall be distributed to the Seller as follows: (i) one year from the

date of Closing, an amount equal to Three Hundred Thousand and No/100 Dollars

($300,000) of the Escrowed Stock , as such Stock Portion is determined in

accordance with SECTION 1.3(B), of the Purchase Price ; and (ii) two years from

the date of Closing, an amount equal to Three Hundred Thousand and No/100

Dollars ($300,000) of the Escrowed Stock , as such Stock Portion is determined

in accordance with SECTION 1.3(B), of the Purchase Price The Promissory Notes 1

and 2 shall provide if the Employment of Sandor P. Zirulnik is terminated for

cause (as that term is defined in the Employment Agreement) and/or Sandor P.

Zirulnik terminates the Employment prior to the term of said Employment

4

Agreement (the "Termination of Employment"), all payments due by the Buyer to

the Seller under the Promissory Notes shall terminate as of said date of

termination. Provided further, the Escrowed Stock shall be forfeited by the

Buyer, if the Employment of Sandor P. Zirulnik is terminated for cause (as that

term is defined in the Employment Agreement) and/or Sandor P. Zirulnik

terminates the Employment prior to the term of said Employment Agreement (the

"Termination of Employment").

Buyer agrees to make every effort to include all stock delivered under

this Agreement (or to be delivered under this Agreement) in any future

registration of Buyer's common stock, without cost or expense to Seller. This

obligation shall survive the Closing.

(b) Subject to Section 1.3(c), the number of shares of Buyer Common Stock

comprising the Stock Portion shall be equal to number of shares resulting from

$1,350,000 divided by the higher of: (i) the Fair Market Value of a Share; or

(ii) $2.00. "FAIR MARKET VALUE OF A SHARE" shall mean the average of the closing

prices of the sales of Buyer Common Stock on all securities exchanges on which

Buyer Common Stock may at the time be listed, or, if there have been no sales on

any such exchange on any day, the average of the highest bid and lowest asked

prices on all such exchanges at the end of such day, or, if on any day Buyer

Common Stock are not so listed, the average of the representative bid and asked

prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any

day Buyer Common Stock are not quoted in the NASDAQ System, the average of the

highest bid and lowest asked prices on such day in the domestic over-the-counter

market as reported by the National Quotation Bureau Incorporated, or any similar

successor organization, in each such case averaged over a period of 30 trading

days consisting of the trading day as of which the Fair Market Value of a Share

is being determined and the 29 consecutive trading days prior to such day.

(c) In the event the Fair Market Value of a Share, as determined in Section

1.3(b), above, is less than $2.00, such lesser amount (the "Fall Short Amount")

shall be a price adjustment in an amount equal to the Fall Short Amount and such

amount shall reduce the cash and/or accounts receivable required to be

transferred by the Seller to the Buyer to offset any Seller's trade accounts

assumed by the Buyer, as set forth in Sections 1.1(j), 1.2(b) and 1.4(a).

SECTION 1.4 LIABILITIES.

(a) At the Closing, Buyer shall assume and be obligated to discharge

only the following specifically enumerated liabilities and obligations of Seller

(the "ASSUMED LIABILITIES"):

(i) any trade account payable that is incurred by Seller in

the Ordinary Course of Business at the Closing Date, in each case which remains

unpaid as of the Closing, providing such account payables are described and aged

in Schedule 1.4(a)(i); and

(ii) any liability arising after the Closing under any Seller

Contract included in the Assets (other than any liability arising out of or

relating to a breach which occurred prior to the Closing);

(b) All liabilities and obligations of Seller, whether arising prior

to the Closing Date, other than the Assumed Liabilities, are referred to as the

"RETAINED LIABILITIES". All of the Retained Liabilities will remain the sole

5

responsibility of and will be retained solely by Seller. Retained Liabilities

include, but not limited to, the legal and accounting fees incurred by the

Seller as a result of the anticipated transaction under this Agreement, whether

such fees are incurred before or after the Closing Date, and accrued profit

sharing liabilities.

SECTION 1.5 ALLOCATION. The Purchase Price will be allocated, based upon

current accounting rules, as set forth in EXHIBIT 1.5. After the Closing, the

parties shall make consistent use of the allocation specified in EXHIBIT 1.5 for

all tax purposes and in any tax returns filed with the Internal Revenue Service

in respect thereof, including IRS Form 8594.

SECTION 1.6 CLOSING. The consummation of the purchase and sale provided

for in this Agreement (the "CLOSING") will take place at Buyer's offices at New

York City, at 10:00 a.m. (local time) on a date mutually agreed to by the

parties but not later than January 31, 2007 (the "CLOSING DATE"). Provided,

however, the Closing Date shall be automatically extended to permit the Seller

sufficient time to provide the audited financial statements required in a form

in compliance with Section 2.4 of this Agreement, but in no event later than

February 28, 2007. Delivery of documents at the Closing may be accomplished by

facsimile and/or PDF electronic files, to be followed by delivery of originals

by overnight courier, of national reputation, the day after Closing.

SECTION 1.7 CLOSING OBLIGATIONS.

(a) At the Closing, Seller shall deliver to Buyer:

(i) a bill of sale for all of the Assets in the form attached

hereto as EXHIBIT 1.7(A)(I) (the "BILL OF SALE"), executed by Seller;

(ii) an assignment of all of the Assets which are intangible

personal property in the form of EXHIBIT 1.7(A)(II), which assignment shall also

contain Buyer's undertaking and assumption of the Assumed Liabilities (the

"ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by Seller;

(iii) with respect to each interest in real property leased by

Seller as set forth in SCHEDULE 2.6(B) below, an Assignment and Assumption of

Lease in the form of EXHIBIT 1.7(A)(III) (the "ASSIGNMENT AND ASSUMPTION OF

Lease"), executed by Seller and the applicable lessor;

(iv) copies of any other consent (excluding consents relating

to the Non-Material Contracts (as defined in SECTION 1.8 below) required to be

obtained in connection with the execution and delivery of this Agreement and the

consummation of the transactions contemplated hereby as disclosed on SCHEDULE

2.2(C);

(v) an escrow agreement in the form of EXHIBIT 1.7(A)(V),

executed by Seller, Buyer and the Escrow Agent (the "ESCROW AGREEMENT");

(vi) the employment agreement in the form of EXHIBIT

1.7(A)(VI), executed by Sandor P. Zirulnik (the "EMPLOYMENT AGREEMENT");

6

(vii) a certificate of the Secretary of Seller certifying, as

complete and accurate as of the Closing, attached copies of the Articles of

Incorporation and the bylaws of Seller, certifying and attaching all requisite

resolutions or actions of Seller's shareholders approving the execution and

delivery of this Agreement and the consummation of the transactions contemplated

hereby and the change of name contemplated by SECTION 4.5 and certifying to the

incumbency of the officers of Seller executing this Agreement and any other

document relating to the transactions contemplated hereby and accompanied by the

requisite documents for abandoning Seller's fictitious business name;

(viii) an opinion of counsel of the Seller, dated the Closing

Date, in a form customary for a similar transactions;

(ix) the Articles of Incorporation and all amendments thereto

of Seller, duly certified as of a recent date by the Secretary of State of

California;

(x) certificates as to the good standing of Seller and payment

of all applicable state taxes by Seller, executed by the appropriate officials

of the jurisdiction of Seller's incorporation and each jurisdiction in which

Seller is licensed or qualified to do business as a foreign corporation as

specified in SCHEDULE 2.1 To the extent that such certificates cannot be

provided prior to Closing, seller agrees to indemnify and hold harmless Buyer

for the non-payment of sales taxes for any of the jurisdictions in which Seller

is licensed and qualified to do business as a foreign corporation; and

(xi) such other deeds, bills of sale, assignments,

certificates of title, documents and other instruments of transfer and

conveyance as may reasonably be requested by Buyer, each in form and substance

reasonably satisfactory to Buyer and its counsel and executed by Seller for the

purpose of facilitating the consummation or performance of the transactions

contemplated hereby.

(b) At the Closing, Buyer shall deliver to Seller:

(i) The Cash Portion and the Stock Portion in accordance with

Section 1.3 of this Agreement, by wire transfer to accounts specified in writing

by Seller (which wire transfer instructions must be delivered by Seller to Buyer

at least one (1) Business Day prior to Closing);

(ii) the Assignment and Assumption Agreement, executed by

Buyer;

(iii) The Escrow Agreement, executed by Buyer and the Escrow

Agent, together with the delivery of the Promissory Note 1, in the amount equal

to Three Hundred Thousand and No/100 Dollars ($300,000) to the Escrow Agent;

(iv) the Employment Agreement executed by Buyer;

(v) a certificate of the Secretary of Buyer certifying, as

complete and accurate as of the Closing, attached copies of the bylaws of Buyer

and certifying and attaching all requisite resolutions or actions of Buyer's

board of directors approving the execution and delivery of this Agreement and

the consummation of the transactions contemplated hereby and certifying to the

7

incumbency of the officers of Buyer executing this Agreement and any other

document relating to the transactions contemplated hereby;

(vi) a stock option plan for the executives and employees of

the Seller to be available to said employees subsequent to the Closing Date in

the form attached hereto as EXHIBIT 1.7(B)(V), and said option plan will contain

in part: (a) stock options for executives priced at the end of the Closing Date

at the market value of $225,000 as of the end of the Closing Date; (b) stock

options for managers and employees priced at the end of the Closing Date at the

market value of $75,000; (c) with a vesting schedule of three years; and (d)

distribution list of said stock options to executives, managers and employees

determined by Sandor P. Zirulnik in his sole discretion (which may include

Sandor P. Zirulnik); and

(vi) Promissory Note 2 in the amount of $300,000.

SECTION 1.8 CONSENTS. Buyer may waive the requirement that Seller obtain

consents to assignment with respect to any and all of the Seller Contracts

disclosed on SCHEDULE 2.2(C) (the contracts with respect to which Buyer grants

such waiver, the "Non-Material Contracts"), in which case any such Non-Material

Contracts will be identified as such on SCHEDULE 2.2(C). Seller and Buyer agree

to use commercially reasonable efforts prior to the Closing to obtain any

consents to assignment of the Seller Contracts that Buyer deems to be necessary

or desirable. Notwithstanding anything to the contrary in this Agreement, if any

consents to assignment relating to the Non-Material Contracts have not been

obtained at or prior to the Closing, this Agreement will not constitute an

assignment or an agreement to assign if such assignment or attempted assignment

would constitute a breach of the Non-Material Contract or result in the loss or

diminution thereof; PROVIDED, HOWEVER, that in each such case, Seller shall take

commercially reasonable steps after the Closing to obtain the consent of such

other party to the Non-Material Contract to the assignment of such Non-Material

Contract to the Buyer. If such consent is not obtained, Seller shall cooperate

with the Buyer to the extent legally permissible and feasible in any reasonable

arrangement designed to provide for Buyer the benefits of any Non-Material

Contract, including, without limitation, the enforcement, for the account and

benefit of the Buyer, of any and all rights of Seller against any other person

with respect to a Non-Material Contract.

SECTION 1.9 POST-CLOSING RECONCILIATION. [Subject to Section 1.3(c), at

the Closing Date, the sum of (x) the Accounts Receivable and/or (y) Cash equal

to the sum of (1) the Trade Accounts Payable and (2) Accrued Expenses, shall be

transferred to the Buyer by the Seller ("Closing Date Statement"). Buyer shall

return, assign, transfer, convey and deliver to Seller and any all such Accounts

Receivable which have not been collected in full by Buyer as of the day that is

ninety (90) days following the Closing Date, and Buyer shall relinquish all of

its rights with respect to such Accounts Receivable, provided that if such

Account Receivable was included in the Closing Date Statement then such Account

Receivable shall be replaced either by Cash delivered by the Seller to the Buyer

or the Buyer shall have a right to reduce the funds in the Escrow by an amount

equal to the face value of such returned Accounts Receivable. Seller shall have

the sole right to any amounts collected by Seller with respect to such Accounts

Receivable returned to Seller by Buyer.

8

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

SECTION 2.1 ORGANIZATION AND GOOD STANDING.

(a) Seller is a corporation duly organized, validly existing, and in

good standing under the laws of the State of California, with full corporate

power and authority to conduct its business as it is now being conducted, to own

or use its properties and assets, and to perform all its obligations under its

contracts. Seller is duly qualified to do business as a foreign corporation and

is in good standing under the laws of each state or other jurisdiction set forth

in SCHEDULE 2.1.

(b) Complete and accurate copies of the articles of incorporation

and bylaws of Seller (collectively, the "GOVERNING DOCUMENTS"), as currently in

effect, have been delivered to Buyer.

(c) Seller does not own and has not entered into any agreement or

contract to acquire, any equity securities or other securities of any person or

any direct or indirect equity ownership interest in any other business.

SECTION 2.2 AUTHORITY; NO CONFLICT.

(a) This Agreement constitutes the legal, valid, and binding

obligation of Seller. Upon the execution and delivery by Seller of each of the

documents and instruments to be executed and delivered by Seller at Closing

pursuant to SECTION 1.7(A) (collectively, the "SELLER'S CLOSING DOCUMENTS"),

each of Seller's Closing Documents will constitute the legal, valid, and binding

obligation of Seller, enforceable against Seller in accordance with their

respective terms. Seller has the right, power, authority, and capacity to

execute and deliver this Agreement and Seller's Closing Documents and to perform

its obligations under this Agreement and Seller's Closing Documents, and such

action has been duly authorized by all necessary action by Seller's

Shareholders.

(b) Neither the execution and delivery of this Agreement nor the

consummation or performance of any of the transactions contemplated hereby will

(with or without notice or lapse of time): (i) contravene, conflict with, or

result in a violation of any provision of any of the Governing Documents of

Seller, (ii) contravene, conflict with, or result in a violation of any Legal

Requirement (as defined in SECTION 2.11(A) below) or Order (as defined in

SECTION 2.12(B) below) of any court or governmental authority to which Seller or

any of the Assets are subject, or (iii) breach any provision of, give any person

the right to declare a default or exercise any remedy under, accelerate the

maturity or performance of or payment under, result in the creation or

imposition of any Encumbrance upon any of the Assets under, or cancel,

terminate, or modify, any contract to which Seller is a party or by which Seller

or the Assets are bound.

(c) Except as set forth in SCHEDULE 2.2(C), Seller is not and will

not be required to give any notice to or obtain any consent from any person in

9

connection with the execution and delivery of this Agreement or the consummation

or performance of the transactions contemplated hereby ( includingthe assignment

of the Seller Contracts hereunder, and such assignment shall be, if necessary,

using commercial reasonable time subsequent to the Closing).

SECTION 2.3 CAPITALIZATION. The authorized equity of Seller consists of

common stock held entirely by the parties listed on SCHEDULE 2.3.

SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.4 are the

Seller's unaudited Balance Sheets and unaudited profit and loss statement for

the twelve months ended December 31, 2004 and December 31, 2005, unaudited

balance sheet as of September 30, 2006, and unaudited profit and loss statement

for the 9 months ended September 30, 2006 (the "FINANCIAL STATEMENTS"). The

Financial Statements fairly present the financial condition and the results of

operations of Seller as at the respective dates of and for the periods referred

to in such financial statements, except as set forth on SCHEDULE 2.4. The

Financial Statements have been prepared from and are in accordance with the

books and records of Seller. Seller shall provide to the Buyer, on or before

Closing, audited financial statements for the years ended December 31, 2004,

December 31, 2005, December 31, 2006 and for the stub period through and up to

the Closing Date, and such financial statements shall be materially consistent

with the previously submitted unaudited financial statements and shall be

prepared in accordance with generally accepted accounting principals. The

aforementioned audited financial statements must be in the form and an opinion

of an independent certified public accountant attached to meet the standards

required by the Securities and Exchange Commission, and the independent

certified public accountant must provide its consent to the use of the Seller's

audited financial statements in the Buyer's 8-K and other registration filings

with the Securities and Exchange Commission. Further, the Seller's independent

public accountant shall make all of its work papers and other supporting

documents it utilized in proving its opinion available, if needed for review by

the Buyer's independent public accountant.

SECTION 2.5 SUFFICIENCY OF ASSETS. The Assets (a) constitute all of the

assets, tangible and intangible, necessary to conduct Seller's business in the

manner presently operated by Seller, and (b) constitute all of the operating

assets of Seller.

SECTION 2.6 REAL PROPERTY LEASES. SCHEDULE 2.6 sets forth all leases of

real property to which the Seller is a party (the "LEASES"). Complete and

accurate copies of the Leases, as amended or modified, have been delivered to

Buyer. The Leases are in full force and effect, are binding and enforceable

against each of the parties thereto in accordance with their respective terms,

and have not been amended or modified since the date of delivery to the Buyer.

No party to any Lease has sent written notice to the other claiming that such

party is in default thereunder, which alleged default remains uncured. Seller

enjoys peaceful and undisturbed possession of all such real property. The Leases

contain terms and conditions (including rent) that are comparable to leases in

the same market with comparable premises.

SECTION 2.7 PERSONAL PROPERTY.

(a) Except as set forth on SCHEDULE 2.7(A), Seller owns good and

transferable title to all of its Assets (excluding its interest in the real

property described in SCHEDULE 2.6), free and clear of any Encumbrances other

than Permitted Encumbrances.

10

(b) SCHEDULE 2.7(B) sets forth all items of Tangible Personal

Property with an initial, nondepreciated book value in excess of $2,500. Each

item of Tangible Personal Property is in good repair and good operating

condition, ordinary wear and tear excepted, and is suitable for immediate use in

the ordinary course of business. No item of Tangible Personal Property is in

need of repair or replacement other than as part of routine maintenance in the

ordinary course of business. All Tangible Personal Property is in the possession

of Seller.

SECTION 2.8 TAXES. Seller has timely filed all tax returns (federal, state

or local) required to be filed by it in accordance with applicable Legal

Requirements (AS DEFINED IN SECTION 2.11(A)). All of such tax returns are

accurate and complete in all material respects. Seller has paid or made

provision for the payment of all taxes that have or may become due for all

periods covered by the tax returns or otherwise, or pursuant to any assessment

received by Seller. There is no dispute or claim concerning any taxes of Seller

either claimed or raised by any governmental authority in writing other than the

notification of a potential franchise tax audit by the State of California (the

"Potential Tax Audit") Seller has not requested or been given any extension of

time within which to file returns in respect of any taxes for which Seller may

be liable. All taxes that Seller is or was required by Legal Requirements to

withhold, deduct or collect have been duly withheld, deducted and collected and,

to the extent required, have been paid to the proper governmental authority

subject to the Potential Tax Audit.

SECTION 2.9 EMPLOYEES. SCHEDULE 2.9 sets forth a complete and accurate

list, giving name, job title, current compensation paid or payable, sick and

vacation leave that is accrued but unused, and services credited for purposes of

vesting and eligibility to participate under any Employee Benefit Plan (as

defined below) (in each case, to the extent applicable), (a) for each employee

of Seller, including each employee on leave of absence or layoff status (the

"EMPLOYEES"), and (b) for any independent contractors who render services on a

regular basis to, or are under contract with, Seller. Seller has not experienced

any organized slowdown, work interruption strike, or work stoppage by its

employees, and, to the knowledge of Seller, there is no strike, labor dispute,

or union organization activity pending or threatened that affects Seller's

Employees. None of the Employees belongs to any union or collective bargaining

unit. Except as set forth on SCHEDULE 2.9, no Employee of Seller is bound by (a)

any employment or similar contract or agreement with Seller, or (b) any contract

or agreement that purports to limit or restrict the ability of such Employee to

(i) perform his duties as an employee of Seller, or (ii) engage in any conduct,

activity, or practice relating to Seller's business.

SECTION 2.10 EMPLOYEE BENEFITS. SCHEDULE 2.10 sets forth all plans,

programs, or arrangements that Seller has maintained, sponsored, adopted, or

obligated itself under with respect to employees' benefits, including pension or

retirement plans, medical or dental plans, life or long-term disability

insurance, bonus or incentive compensation, or stock option or equity

participation plans (the "EMPLOYEE BENEFIT PLANS"). Seller has no liability or

obligation with respect to any Employee under any Employee Benefit Plan other

than normal salary or wage accruals and paid vacation, sick leave, and holiday

accruals in accordance with Seller's practice and policy. Seller has performed

all obligations required to be performed under, and has complied with all Legal

Requirements in connection with, all such Employee Benefit Plans and is not in

arrears under any of the terms thereof.

11

SECTION 2.11 COMPLIANCE WITH LEGAL REQUIREMENTS, GOVERNMENTAL

AUTHORIZATIONS.

(a) Seller is, and at all times since January 1, 2003, has been, in

compliance in all material respects with any federal, state, or local law,

ordinance or regulation (including with respect to environmental, disposal of

hazardous substances, or public health or safety) (a "LEGAL REQUIREMENT"), that

is or was applicable to the operation of its business or the ownership or use of

any of its assets. Except as set forth on SCHEDULE 2.11(A), Seller has not

received, at any time since January 1, 2003, any notice or other communication

(whether oral or written) from any governmental authority or any other person

regarding any actual or alleged violation of, or failure to comply with, any

Legal Requirement with the exception of the Potential Tax Audit.

(b) SCHEDULE 2.11(B) contains a complete and accurate list of each

approval, license or permit (the "GOVERNMENTAL AUTHORIZATIONS") that is held by

Seller or that otherwise relates to the Seller's business or the Assets. The

Governmental Authorizations listed in SCHEDULE 2.11(B) collectively constitute

all of the approvals, licenses and permits necessary to permit Seller to

lawfully conduct and operate its business in the manner it currently conducts

and operates such business and to permit Seller to own and use its assets in the

manner in which it currently owns and uses such assets. Except as set forth on

SCHEDULE 2.11(B), each such license or permit is transferable to Buyer as of the

Closing.

SECTION 2.12 LEGAL PROCEEDINGS, ORDERS.

(a) Except as set