ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and between

EMBEDDED MICROSYSTEMS, INC.

(Seller),

W. ALLEN NANCE

and

MOLLY L. NANCE

(Shareholder)

and

REAL TIME SYSTEMS INC.

(Buyer),

a subsidiary of

BOLT TECHNOLOGY CORPORATION

TABLE OF CONTENTS

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ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT , dated July 10, 2007 (the “ Agreement ”), by and between REAL TIME SYSTEMS INC. , a Connecticut corporation (“ Buyer ”), EMBEDDED MICROSYSTEMS, INC. , a Texas corporation (“ Seller ”), and W. ALLEN NANCE (“ Nance ”) and MOLLY L. NANCE , individuals with their principal residence at                                                               (“ Shareholder ”).

WITNESSETH:

WHEREAS , Seller is engaged in the business of producing controllers to air guns used in seismic exploration (the “ Business ”);

WHEREAS , Shareholder owns all of the issued and outstanding shares of Seller;

WHEREAS , Buyer is a wholly-owned subsidiary of Bolt Technology Corporation, a Delaware corporation; and

WHEREAS , Seller desires to sell, and Buyer desires to purchase, substantially all of Seller’s assets used or useful in the operation of the Business, and Seller desires to assign and Buyer desires to assume certain liabilities associated with the Business, on the terms and conditions hereinafter set forth:

NOW, THEREFORE , in consideration of the foregoing and the respective covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

1.1 Assets to be Conveyed . Subject to and in reliance upon the representations, warranties and agreements herein set forth, and subject to the terms and conditions herein contained, Seller hereby agrees to convey, sell, assign, transfer and deliver to Buyer, and Buyer hereby agrees to purchase, as of the Effective Date (as defined in Section 3.1 below), all right, title and interest in and to all of the assets and properties of the Business and Seller, other than the Excluded Assets (as defined in Section 1.2 below), including without limitation the following (collectively, the “ Purchased Assets ”):

(i) the tangible personal property of Seller used or useful and necessary in the operation of the Business, including but not limited to hardware, personal computers, machinery, equipment, vehicles, tools, furniture, furnishings, fixtures, catalogs, goods, and other tangible personal property, together with the motor vehicle identified on Schedule 1.1(i) , together with all warranties (express or implied), operating manuals and all tangible and intangible property related to the foregoing (“ Tangible Personal Property ”);

(ii) all rights under those agreements, contracts, and other instruments relating to the Business, whether written or oral, in effect on the Closing Date, including without limitation, those listed on Schedule 1.1(ii) and all rights under all sales and purchase orders relating to the Business, whether written or oral, in effect on the Closing Date (collectively, the “ Assumed Contracts ”);

(iii) all rights under those leases of personal property relating to the Business in effect on the Closing Date listed on Schedule 1.1(iii) (collectively, the “ Assumed Leases ”);

(iv) all patents and patent applications, trademarks, websites, domain names, trade names and service marks and registrations thereof and applications therefor, copyrights, registered copyrights and applications for copyright registration, know-how, trade secrets, inventions, designs, formulae, proprietary ideas or concepts, marketing data, computer software, licenses, databases, products, data and documentation and other proprietary rights and any tangible media relating to the foregoing (the “ Intellectual Property ”), including but not limited to all rights associated with the names “Real Time Systems” and the License Agreements (as defined in Section 4.10) and other Intellectual Property listed on Schedule 4.10 , together with all causes of action, demands, judgments and claims of any nature relating to the Intellectual Property.

(v) all licenses, franchises, permits or other governmental authorizations affecting, or relating in any way to, the Business (to the extent the same are transferable);

(vi) all accounts receivable, other than the Excluded A/R as set forth in Section 1.2(v) below, notes receivable and trade receivables, billed and unbilled, of the Seller, including, without limitation, those listed on Schedule 4.9 , and all related rights as of the Closing Date;

(vii) all inventory, including goods in transit, raw materials, work-in-process, finished goods, active job orders, and office and other supplies of Seller (the “ Inventory ”) as of the Closing Date;

(viii) all bank accounts, cash and cash equivalents on hand or in bank deposits and all certificates of deposit as of the Closing, subject to the provisions of Section 6.9(ix);

(ix) all prepaid expenses of Seller, except to the extent an Excluded Asset (as defined in Section 1.2 below);

(x) all rights under the Real Property Agreements (as defined in Section 4.13 below) described on Schedule 4.13 , together with any options to purchase the underlying property and leasehold improvements thereon, and in each case all other rights,

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subleases, licenses, permits, deposits and profits appurtenant to or related to such Real Property Agreements;

(xi) all security deposits deposited by or on behalf of Seller as lessee or sublessee under the Real Property Agreements and any other security deposits under the Assumed Contracts or Assumed Leases and any other security deposits of customers of Seller;

(xii) Seller’s current and prospective customer list and all customer and prospect data;

(xiii) all books, records, files and papers pertaining to the Purchased Assets and the Assumed Obligations (as defined in Section 1.4 below), whether in hard copy or computer format, including, without limitation, financial records and information, personnel files, sales and promotional literature, catalogs, photography, brochures, manuals and data, lists of present, former and prospective customers and all other marketing materials and correspondence;

(xiv) except as otherwise specifically provided herein, all other assets (other than Excluded Assets), properties, claims, credits, rights, choses in action, rights of set-off and interests of Seller relating to the Purchased Assets or the Business of every kind, nature and description whether or not disclosed herein and whether tangible or intangible, personal or mixed; and

(xv) all goodwill associated with the Business or the Purchased Assets.

1.2 Excluded Assets . Notwithstanding anything to the contrary contained herein, Seller shall not convey, sell, assign, transfer or deliver to Buyer, and Buyer shall not purchase, any of Seller’s or Shareholder’s right, title and interest in and to (the properties, assets and rights excluded by this Section 1.2 shall be referred to herein as the “ Excluded Assets ”):

(i) the corporate seal, minute books, charter documents and stock ledger of Seller;

(ii) the tax returns and records of the Seller and any tax refunds, credits or similar tax assets of Seller;

(iii) Seller’s prepaid insurance premiums to the extent not assignable to Buyer;

(iv) all rights to the name “Embedded Microsystems, Inc;”

(v) the accounts receivables listed on Schedule 1.2 (the “Excluded A/R”) and

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(vi) Intellectual property rights for the following products: the HARP data logger, GPS Telemetry buffer and LCHEAPO data logger, provided however, that the operating system and all other intellectual property used by the Seller’s Marine EM data logger product is not part of the Excluded Assets.

1.3 Encumbrances . The Purchased Assets conveyed to Buyer on the Closing Date pursuant to this Agreement will be conveyed to Buyer free and clear of all Encumbrances (as defined in Section 4.5 below).

1.4 Assumed Obligations . Subject to and in reliance upon the representations, warranties and agreements herein set forth, and subject to the terms and conditions herein contained, on the Closing Date, Buyer shall assume effective as of the Closing Date, to the extent they exist as of the Closing Date and are properly reflected on the Closing Date Balance Sheet (as defined in Section 2.3):

(i) liabilities, obligations and duties of Seller with respect to prepayments or deposits by customers of the Business, to the extent listed on Schedule 1.4(i) ;

(ii) the liabilities, obligations and duties of Seller under the Assumed Contracts, the Assumed Leases and the License Agreements (together with the Real Property Agreements, the “ Assumed Agreements ”) arising and to be performed on or after the Closing Date as provided in the Assignment and Assumption Agreement of Seller to be delivered by the parties at the Closing (the “ Assignment ”) in substantially the form of Exhibit A attached hereto, and excluding any obligations under such Assumed Agreements arising or to be performed prior to the Closing Date and excluding any obligations for Excess Costs (as defined in Section 1.5(v));

(iii) all obligations of Seller under the Real Property Agreements arising and to be performed on or after the Closing Date as provided in the form of Lease Assignment and Assumption Agreement to be delivered by Seller at the Closing for each Real Property Agreement (the “ Lease Assignment ”) in substantially the form of Exhibit B hereto, and excluding any obligations under the Real Property Agreements arising or to be performed prior to the Closing Date and excluding any obligations for Excess Costs (as defined in Section 1.5(iv) below;

(iv) all claims arising by reason of defective or non-performing goods or services provided by Seller prior to the Closing Date, whether based on contract (including obligations based on an implied warranty) or the negligence of Seller on a products liability theory or any other theory, absent fraud or gross negligence by Seller;

(v) all trade accounts payable and other accounts payable and accrued expenses of Seller incurred in the ordinary course of business;

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(vi) other expenses incurred in the ordinary course of business consistent with past practices as reflected in the Financial Statements (as defined in Section 4.7).

All of the liabilities, obligations and duties referred to in this Section 1.4 are, collectively, the “ Assumed Obligations ”.

1.5 Non-Assumption of All Other Liabilities . Other than the Assumed Obligations and other than as expressly provided in this Agreement, Buyer shall not assume or agree to be responsible in any way for any liabilities or obligations of Seller, whether related to or independent of the Business or Purchased Assets. Seller hereby retains and remains responsible for, and the Assumed Obligations shall not include, any liabilities other than the Assumed Obligations. Without limiting the generality of the foregoing, Buyer shall not assume, and shall have no liability for, any of the following liabilities and obligations of Seller or Shareholder:

(i) all of Seller’s obligations and liabilities to or with respect to its employees (current or former), including liabilities for salaries, wages, commissions, bonuses, payroll taxes and withholding liabilities, vacation and holiday pay, unemployment, disability, severance, retirement or profit sharing benefits, all obligations under any Employee Benefit Plan and all other employee benefits or claims of employees;

(ii) any liabilities not reflected on the Closing Date Balance Sheet;

(iii) any sums of money or other liabilities owed by or obligations of Seller to any family member of Shareholder or any other Affiliates (as defined in Section 4.2 below) of Seller or Shareholder;

(iv) any costs, liabilities, indemnification obligations or expenses associated with the Assumed Agreements arising in connection with performance or lack of performance under such Assumed Agreements prior to the Closing Date, or required in connection with the assignment or order to obtain consent to such assignment (“ Excess Costs ”);

(v) other than with respect to the Assumed Leases that are capital leases, any Funded Debt of Seller (as defined in Section 4.11);

(vi) any liability or obligation of Seller or Shareholder arising out of or in connection with the negotiation and preparation of this Agreement, including, without limitation, legal and accounting fees, except as set forth herein; or

(vii) all sales and other tax obligations arising from the operations of the Business prior to the Closing Date or for periods prior to the Closing Date and all other obligations of Seller or Shareholder for Taxes (as defined in Section 4.24 below).

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1.6 Non-Conveyed Items . Notwithstanding anything in this Agreement to the contrary and subject to Buyer’s right under Section 7.2 not to close as the result of the failure to obtain consent of a third party, in cases where any item included in the Purchased Assets cannot be transferred or assigned by Seller at Closing (the “ Non-Conveyed Items ”), Seller shall take all commercially reasonable steps and actions to provide Buyer with the benefit of such Non-Conveyed Items, including, but not limited to, (a) enforcing any rights of Seller arising with respect thereto or (b) permitting Buyer to enforce any rights arising with respect thereto as if such Non-Conveyed Items had been assigned to Buyer, so long as Buyer pays when due, or provides Seller with the funds to pay when due, all obligations of Seller arising after the Closing Date under the Non-Conveyed Items.

ARTICLE II

CONSIDERATION FOR THE ACQUISITION

2.1 Purchase of Purchased Assets . Subject to and in reliance upon the representations, warranties and agreements herein set forth, and subject to the terms and conditions herein contained, Seller hereby agrees to convey, sell, assign, transfer and deliver to Buyer, free and clear of all Encumbrances, and Buyer hereby agrees to purchase, all of the Purchased Assets on the Closing Date (as defined in Section 3.1).

2.2 Purchase Price and Payment Terms .

(a) The aggregate purchase price for the Purchased Assets (the “ Purchase Price ”) shall consist of (i) Three Million Five Hundred Thousand Dollars ($3,500,000) in cash paid by Buyer at Closing (the “ Cash Payment ”), provided that Seller shall use the Cash Payment to pay certain liabilities and expenses of Seller as set forth in Section (c) and (d) hereof; (ii) an amount equal to the value of all tangible assets included in the Purchased Assets less current liabilities (the “ Tangible Net Worth ”), determined and paid in accordance with the procedure set forth in Section 2.3 below; and (iii) additional amounts calculated and paid by Buyer in accordance with Section 2.4 (the “ Earnout Payment ”).

(b) The Cash Payment shall be delivered by wire transfer of immediately available funds to an account or accounts of Seller specified by Seller in writing at least five (5) business days prior to the Closing Date.

(c) To the extent that Seller has not paid the following obligations prior to Closing, Seller shall direct Buyer to use the Cash Payment to pay in full at Closing (the “ Closing Payments ”): (i) the Funded Debt of Seller (excluding any capital leases that are Assumed Leases), (ii) any capital leases that are not assumed by Buyer, and (iii) the Excess Costs (as defined in Section 1.5(v)). The Closing Payments are set forth on Schedule 2.2(c) (including, to the extent applicable, the name of lender, aggregate principal balance of loans, the total amount of Excess Costs and pay-off information).

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(d) To the extent Seller has not paid the following expenses through the Closing, Seller shall use the Cash Payment to pay in full at Closing: (i) accrued compensation benefits owed to employees of Seller, (ii) payroll taxes, withholding, income, sales or other taxes payable by Seller as of the Closing, (iii) Seller’s trade payables and accrued expenses past due as of the Closing Date according to vendor’s stated terms, and (iv) any other liability of Seller relating to the Business that is due as of the Closing and is not an Assumed Obligation, and shall provide Buyer with appropriate evidence of such payments.

2.3 Tangible Net Worth.

(a) Closing Balance Sheet . Within thirty (30) days after the Closing, Seller shall prepare or cause to be prepared and delivered to Buyer a balance sheet of Seller as of the Effective Date (the “ Closing Balance Sheet ”), which Closing Balance Sheet will set forth Tangible Net Worth calculation as of the Effective Date, prepared in such a manner to accurately reflect the Purchased Assets and current liabilities of Seller as of the Effective Date and prepared in a manner consistent with the Financial Statements.

(b) Buyer’s Response . Buyer shall notify Seller within fifteen (15) business days after receipt whether Buyer accepts or disputes the accuracy of the Closing Balance Sheet (“ Buyer’s Response ”). If Buyer’s Response accepts the accuracy of the Closing Balance Sheet or does not provide the Buyer’s Response within such fifteen business day period, the Closing Balance Sheet, including the calculation of the Tangible Net Worth set forth therein, shall be the Final Closing Balance Sheet. If Buyer’s Response disputes the accuracy of the Closing Balance Sheet, Buyer’s Response shall list any proposed corrections or changes to the Closing Balance Sheet and shall specify in reasonable detail Buyer’s reasons for such dispute. If Seller does not object to Buyer’s Response within fifteen (15) business days after receipt thereof, any proposed corrections or changes set forth in the Buyer’s Response shall be made to the Closing Balance Sheet, and such Closing Balance Sheet, as modified, shall be considered the Final Closing Balance Sheet.

(c) Disputes . If Seller disputes any item in Buyer’s Response that cannot be resolved by them within fifteen (15) business days after receipt by Seller of Buyer’s Response, the parties shall request a mutually acceptable regional or national certified public accounting firm (“ Auditor ”) to make a binding determination of the disputed items in accordance with this Agreement. The Closing Balance Sheet with those modifications determined by the Auditor to be appropriate shall be considered the Final Closing Balance Sheet. The parties shall bear their own expenses in connection with the post-closing adjustments and review, and shall bear equally the costs of the Auditor if one is utilized.

(d) Payment . Within ten (10) business days of determination of the Final Closing Balance Sheet, the Tangible Net Worth amount, (i) if positive, shall be paid by Buyer to Seller, or (ii) if negative, shall be paid by Seller to Buyer.

2.4. Earnout Payment . Buyer shall pay Seller an amount equal to (i) Thirty-Three Percent (33%) of Net Sales (as defined below) of the Business that are in excess of $2,000,000

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and less than $2,500,000 and (ii) Twenty Percent (20%) of Net Sales of the Business in excess of $2,500,000, for each of the two (2) twelve-month periods beginning on or after the Effective Date ( i.e. July 1 – June 30). “Net Sales” means the total sales price of goods billed to customers, less any taxes, duties, tariffs, freight charges, commissions, discounts or returns in the ordinary course of business. Any payment pursuant to this Section 2.4 shall be made within One Hundred Twenty (120) days following the completion of each of the twelve-month periods and shall be accompanied by a statement of Buyer setting forth the basis for the determination of the amount of the Earnout Payment. There will be no Earnout Payment for either of the twelve-month periods if Net Sales for the applicable twelve-month periods do not exceed $2,000,000.

2.5 Allocation of Purchase Price . The parties agree that the Purchase Price shall be allocated among the Purchased Assets as shown on Schedule 2.5 and agree that any and all tax returns and filings of Buyer, Seller or Shareholder shall be made on a basis consistent with such allocation.

2.6 Other Agreements .

(a) At Closing, Nance and Buyer shall enter into (i) an Employment Agreement with Buyer substantially in the form attached hereto as Exhibit C (the “ Employment Agreement ”), (ii) a Non-Competition Agreement, substantially in the form attached hereto as Exhibit D (the “ Non-Competition Agreement ”), and (iii) a License Agreement substantially in the form of Exhibit E , and Seller shall enter into (iv) the Assignment, the Lease Assignment, and such bills of sale, assignments of Intellectual Property and other instruments as are necessary or desirable to convey the Business and the Purchased Assets.

(b) This Agreement, the Assignment, the Lease Assignment, the Employment Agreement, the Non-Competition Agreement, the License Agreement, bills of sale, assignments of Intellectual Property or other instruments, and all other Seller Closing Documents (as defined in Section 7.2) shall be referred to herein as the “ Transaction Documents .”

ARTICLE III

CLOSING DATE

3.1 Closing Date . The closing of the transactions contemplated herein shall be July 10, 2007 (or on such other day as the parties shall agree, which in no event shall be later than July 31, 2007) and shall take place at the offices of Buyer’s attorneys, or such other mutually agreeable location. Such closing shall be referred to herein as the “ Closing ,” and the date as of which the Closing occurs shall be referred to herein as the “ Closing Date .” On the Closing Date, the parties shall take such actions and execute and deliver such documents as contemplated under Article VII hereunder. Upon completion of the Closing, the purchase of the Purchased Assets and assumption of the Assumed Obligations shall be deemed to have occurred as of 12:01 a.m. July 1, 2007 (the “ Effective Date ”).

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER

As an inducement to Buyer to enter into this Agreement, Seller and Shareholder hereby jointly and severally represent and warrant to Buyer that as of the Closing Date:

4.1 Authority; Binding Nature of Agreement . Each of Seller and Shareholder has the full legal right and power and all authority required by law to enter into this Agreement and the Transaction Documents to which it or he is a party and to perform their respective obligations hereunder and thereunder. Shareholder is the sole shareholder of Seller and there are no outstanding options, warrants, claims or rights of third persons with respect to any shares of the capital stock or any other interest in Seller. Each of Seller and Shareholder has duly executed and delivered this Agreement and each of the Transaction Documents to which it or he is a party and this Agreement and each of the Transaction Documents to which it or he is a party are the legal, valid and binding obligations of Seller and Shareholder enforceable against them in accordance with their terms.

4.2 Organization and Power . Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas. Seller is duly qualified to transact business in each jurisdiction listed on Schedule 4.2 . Such jurisdictions constitute all of the jurisdictions in which the conduct of the Business or ownership of the Purchased Assets requires such qualification. Seller has full corporate power and authority to own and sell the Purchased Assets and to carry on the Business. Seller has no Affiliates (defined as a person or entity that directly, or indirectly through one or more intermediaries controls or is controlled by, or under common control with Seller or Shareholder) except as set forth on Schedule 4.2 . Seller owns or leases all of the assets which are utilized to carry on the Business and neither Seller nor any third person owns or controls or has any interest, direct or indirect, in any other entity necessary for carrying on such Business.

4.3 Organizational Documents . True and complete copies of the Seller’s certificate of incorporation by-laws, minutes, stock ledger and any other organizational documents, together with all amendments thereto to date, have been delivered to Buyer by Seller, and are complete and correct as of the date hereof. Seller is not in default in any respect in the performance, observance or fulfillment of any of the terms or conditions of any of such organizational documents.

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4.4 No Conflicts; Consents .

(a) Neither the ownership nor use of the Purchased Assets nor the conduct of the Business conflicts with the rights of any other person or entity or violates, or with or without the giving of notice or the passage of time, or both, will violate, conflict with or result in a default, breach or termination, right to accelerate, loss of rights under, or give rise to a lien, any term or provision of (a) any of the Assumed Agreements, (b) any mortgage, indenture, deed of trust or Encumbrance, lease, license or agreement or (c) any law, ordinance, rule, regulation, order, judgment or decree to which Seller is a party or by which Seller, the Business or any of its properties, assets or operations may be bound or affected or which might materially adversely affect Seller, the Business or any such properties, assets or operations.

(b ) No agreement, instrument or understanding, nor any judgment, writ, injunction, decree, order, law, rule or regulation to which Seller or Shareholder is a party or by which Seller or Shareholder or any of their respective properties are bound or affected, has been or will be violated or breached by the execution and delivery of this Agreement or the performance or satisfaction of the Transaction Documents or any other agreement or condition herein contained upon its part to be performed or satisfied by Seller or Shareholder. Except as disclosed on Schedule 4.4 , no consents or other authorization (“ Consents ”) are required for the Seller’s and Shareholder’s execution, delivery, performance and satisfaction of this Agreement and the Transaction Documents and the assignment and assumption of the Assumed Agreements, and all such Consents shall have been obtained on or before Closing Date. Except as set forth on Schedule 4.4 , each of the Assumed Agreements is freely assignable (subject to Seller obtaining any required Consents set forth on Schedule 4.4 ) without cost or additional obligation to Buyer, other than the performance of the obligations arising after Closing.

4.5 Ownership of Assets . Except as set forth on Schedule 4.5 , Seller owns and has good and marketable title to all of the Purchased Assets, other than leaseholds referred to in Section 4.12, free and clear of any liens, claims, charges, taxes, mortgages, pledges, security interests, equities, encumbrances or rights of any kind in third parties (collectively, “ Encumbrances ”). Seller has obtained for each jurisdiction in which Seller has property UCC-1 and lien, judgment and tax searches for Seller, true and correct copies of which are attached hereto as a part of Schedule 4.5 . Such lien searches are accurate and complete and there are no Encumbrances on the Business or the Purchased Assets except as disclosed by such searches. All property and assets owned or utilized by Seller in the Business are in good operating condition and repair (except for ordinary wear and tear), free from any defects (except such minor defects as do not interfere with the use thereof in the conduct of the normal operations), have been maintained in accordance with good industry standards and operating manuals, licenses agreements and the like, and are sufficient to carry on the Business as presently conducted. Upon delivery by Seller to Buyer of the Transaction Documents, Buyer will receive good and marketable title to the Business and the Purchased Assets, free and clear of any Encumbrances.

4.6 Inventory . All items of Inventory consist of items of a quality and quantity usable and saleable in the normal course of Seller’s Business at regular prices and terms within ninety (90) days of the Closing Date and are accurately reflected on Schedule 4.7 . The book

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values of the Inventory do not exceed the replacement costs as of the Closing of the usable and saleable items therein, and the book values at which such inventories are carried reflect the inventory valuation policy consistently applied by Seller, the policy being to value Inventory on the basis of the cost (first-in, first-out).

4.7 Financial Statements . (a) Seller has delivered to Buyer: (A) the unaudited balance sheet of Seller, and the related statements of income and expense, retained earnings and cash flows, for the fiscal year ended December 31, 2006, and (B) a balance sheet and profit and loss statement of Seller as of March 31, 2007 (“ Interim Date ”) and a profit and loss statement for the period January 1, 2007 through March 31, 2007, each compiled and reviewed by Seller’s independent certified public accountant (collectively, the financial statements referred to in subparagraphs (A) and (B) above are referred to as the “ Financial Statements ”). The Financial Statements are true, correct and complete in all material respects and have been prepared in a manner to fairly and accurately present the assets, liabilities, results of operations and equity of Seller on an accrual basis at such dates and for such periods thereof, all in conformity with generally accepted accounting principles in effect from time to time within the United States of America (“ GAAP ”), consistently applied during the periods involved. There has not been any change since the Interim Date which has affected materially or adversely the results of the operations of Seller, and, no fact or condition exists, which might cause any material adverse change in the operations or financial condition of Seller. Schedule 4.7 sets forth all contingent liabilities or losses relating to the Business not specifically described in the Financial Statements and which are reasonably anticipated to exceed $5,000 individually or in the aggregate. Seller has disclosed to Buyer all material facts relating to the preparation of the Financial Statements, including the basis of accounting for affiliated transactions. Seller has maintained books and records in good order, accurately reflecting all transactions to be recorded thereon, and such books and records are true and complete and readily available since Seller’s incorporation and during the current fiscal year. Since March 31, 2007, Seller has not entered into any transaction or incurred any liability except in connection with the transactions described herein or in the ordinary course of business or as set forth on Schedule 4.7 .

(b) Seller has delivered to Buyer unaudited projected statements of income for the Business for the period ending December 31, 2007 (the “Projections”), together with the assumptions used for such Projections. Such Projections have been prepared by Seller on a basis reasonably consistent with the basis historically used by Seller for Projections. Notwithstanding the foregoing, it is understood, and Buyer acknowledges, that the Projections are estimates only and that actual results may differ from projected results.

4.8 Customers; Suppliers . Except as set forth on Schedule 4.8 hereto, since December 31, 2005, there has not been any material adverse change in the relationship or course of dealing between Seller and any of its suppliers or customers. Listed on Schedule 4.8 are the ten (10) largest customers and ten (10) largest suppliers (by dollar volume) of Seller each for calendar year 2006 and through the Interim Date. No current customer of Seller has advised Seller that it (A) is terminating or considering terminating the handling of its business by Seller, as a whole or in respect of any particular project or service; or (B) is planning to reduce its future spending with Seller in any material respect.

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4.9 Accounts Receivable . All customer and trade notes, fees and accounts receivable (collectively, “ Accounts Receivable ”) of Seller were (i) created in the ordinary course of business, (ii) are not subject to any discount, rebate, offset, defense or the like, (iii) are reasonably expected to be fully collectible in the aggregate to the extent of the aggregate face value thereof as indicated on the Financial Statements (subject to any reserves stated therein), and, (iv) no such Accounts Receivable of Seller are more than 60 days past due from their invoice date, except as described on Schedule 4.9 . Schedule 4.9 contains a correct and complete list of the Accounts Receivable and sets forth the total amount of the reserve for accounts of doubtful collection currently shown on the Financial Statements and any subsequent changes therein, and the specific accounts and amounts for which Seller has allocated a portion of such reserves.

4.10 Intellectual Property . (a)  Schedule 4.10 : (i) lists all trademarks, service marks, tradenames, domain names, websites, copyrights and patents, included in the Intellectual Property, whether or not registered; (ii) specifies the jurisdictions in or by which any of such Intellectual Property items have been registered, filed or issued and describes all pending Intellectual Property applications; and (iii) contains a description of all contracts or licenses (the “ License Agreements ”) pursuant to which Seller has authorized any other person(s) to use Intellectual Property and any contract, license or arrangement pursuant to which Seller may use any Intellectual Property it does not own (other than standard end-user licenses for mass market products).

(b) The Seller has provided to Buyer complete and accurate copies of each of the License Agreements, all forms of end-user licenses for the products and services of the Business, and all applications, registrations and other material documents related to each item of Intellectual Property. Except as set forth on Schedule 4.10 , Seller is the sole and exclusive owner of the Intellectual Property under Seller’s name and has the sole and exclusive right to use such Intellectual Property, and there are no patents, copyrights, trademarks, tradenames, processes, designs, formulae, inventions, ideas, or concepts which are used by or may be necessary to Seller which Seller is prohibited from using without royalty because of the ownership of any such patents, copyrights, trademarks, tradenames, processes, designs, formulae, inventions, ideas, or concepts being vested in third parties.

(c) Each of the License Agreements is in full force and effect, and there does not exist any actual or alleged condition or event which, after notice or lapse of time or both, would constitute a default by Seller or, to the best knowledge of Seller and Shareholder, by the other party, to any License Agreements. Seller has not received a notice of the termination of any such License Agreements prior to the expiration of the scheduled term thereof and Seller does not have any knowledge of the intent of a party to any such License Agreements to do the same. To the best knowledge of Seller and Shareholder, each of the License Agreements can be satisfied or performed by Seller without any material loss to it.

(d) No claim or demand by or against any third party exists pertaining to the Intellectual Property, no proceeding has been instituted or is pending by or against Seller or, to

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the best knowledge of Seller and Shareholder, threatened which for infringement or otherwise relates to any of the Intellectual Property. No claims, notices, or demands have been received by Seller concerning (i) infringement of any patent, copyright, or trademark, (ii) any unauthorized use of any name, process, trade secret, formula, invention, idea or concept, or (iii) any asserted unfair competition. None of the Intellectual Property is subject to any outstanding order, decree, judgment or stipulation and, to the best knowledge of Seller and Shareholder, none infringes upon or otherwise violates the rights of others or is being infringed by others.

(e) Neither the Seller nor the Purchased Assets are bound by, nor is any Intellectual Property subject to, any covenant or other agreement limiting or restricting the ability of the Seller to use, exploit, assert, or enforce any Intellectual Property anywhere in the world.

(f) Each person who is or was an employee or contractor of Seller and who is or was involved in the creation or development of any Intellectual Property has signed a valid, enforceable agreement containing an assignment to the Intellectual Property to Seller and confidentiality provisions protecting the Intellectual Property. No current or former employee or contractor of Seller has any claim, right (whether or not currently exercisable), or interest to or in any of the Intellectual Property.

(g) The Seller has taken all reasonable steps to maintain the confidentiality of and otherwise protect and enforce its rights in all proprietary information pertaining to the Business or the Purchased Assets. Without limiting the generality of the foregoing, to the best knowledge of the Seller and Shareholder, no portion of the source code for any software owned or developed by the Seller has been disclosed or licensed to any escrow agent or other Person.

4.11 Material Contracts and Arrangements .

(a) Schedule 4.11 contains an accurate and complete list of the following agreements (whether written or oral) to which Seller is a party: (i) any contract or agreement for the purchase or sale of Inventory in excess of Five Thousand Dollars ($5,000); (ii) any contract or agreement for the purchase or sale of supplies, services or other items in excess of Five Thousand Dollars ($5,000); (iii) except to the extent listed on Schedule 4.11 , any contract or agreement for the purchase, sale or lease of any equipment (excluding capital leases) in excess of Five Thousand Dollars ($5,000); (iv) any indenture, mortgage, note, letter of credit or other instrument relating to the borrowing or lending of money including, without limitation, any capital leases, any factoring arrangements or purchase order financing (collectively, along with all interest, fees, expenses and/or prepayment penalties associated therewith, the “ Funded Debt ”); (v) any contract or agreement that would limit Seller from entering any lines of business or any geographical area; (vi) any contract or agreement which is not terminable by Seller upon prior notice of ninety (90) days or less; (vii) any contract or agreement with independent distributors or sales representatives or similar agreements; (viii) any contracts relating to capital expenditures; (ix) any guarantee or other contingent obligation in respect of indebtedness or other obligations of any person; or (x) any other contract or agreement not made in the ordinary course of business.

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(b) True, correct and complete copies of each contract listed on Schedule 4.11 have been previously delivered to Buyer. Each of such contracts has been entered into in the ordinary course of business, except as identified on Schedule 4.11 . To the best knowledge of Seller, each of the contracts set forth on Schedule 4.11 calling for the sale of Inventory or performance of services can be satisfied or performed by Seller without any material loss to it. Each of such contracts is in full force and effect, and there does not exist any actual or alleged condition or event which, after notice or lapse of time or both, would constitute a default by Seller or, to the best knowledge of Seller, by the other party, to any written contract, agreement, lease, license, commitment, instrument or obligation. Seller has not received a notice of the termination of any such contract prior to the expiration of the scheduled term thereof and Seller does not have any knowledge of the intent of a party to any such contract to do the same. Neither Seller nor any employee or agent of Seller has entered into any enforceable agreement containing any prohibition or restriction of competition or solicitation of customers with any person, corporation, partnership, firm, association or business organization, entity or enterprise which is now in effect, other than those in favor of Seller.

(c) Schedule 4.11 also lists specifically each of the following described documents, the copies thereof heretofore delivered to Buyer being true and complete and including all amendments and supplements thereto and modifications thereof:

(i) Each inspection report, questionnaire, inquiry, demand or request for information (and each response thereto) received by Seller (other than those of general application and routinely received within the ordinary course of business) from any governmental body or administrative agency during the last five (5) years, and each statement, report or other document (other