ASSET PURCHASE AGREEMENT

List of Exhibits

Page

Exhibit A         Seller’s Secretary’s Certificate

ASSET PURCHASE AGREEMENT, dated December 9, 2005 (together with all Schedules hereto, this " Agreement "), among Answer Connecticut Acquisition Corp., a New York   corporation, with offices at 3265 Lawson Boulevard, Oceanside, New York 11572 (" Buyer "), on the one hand, and Answer Connecticut, Inc., a Connecticut corporation doing business as ACT Teleservices and having offices at 365 Willard Avenue, Suite 2A, Newington, CT 06111 (" Seller "), and Thomas M. Gelbach, an individual and the sole stockholder of Seller, residing at 100 Fiddlehead Farms, Canton, CT 06019 (the " Stockholder ").

A. Seller is in the business of providing telephone answering services, message services, faxing services, paging services and other ancillary office services (collectively, the " Business ").

B. Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, certain of Seller's assets and properties relating to the Business, on the terms and subject to the conditions set forth herein.

C. The parties have drafted a disclosure schedule (the "Disclosure Schedule") corresponding to various provisions of this Agreement, in order to record various disclosures made pursuant to the various provisions hereof.

In consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.1 Sale and Purchase . Upon the terms and subject to the conditions contained in this Agreement, Seller, as of the date hereof (the “ Closing Date ”), hereby sells, assigns, transfers and delivers to Buyer, and Buyer, as of the Closing Date, purchases and accepts from Seller, all of the assets and rights of every nature, kind and description, tangible and intangible, wherever located, that are owned, used or held for use by Seller in or for the Business, as the same exists on the Closing Date (collectively, the " Purchased Assets "), free and clear of any and all liens, charges, claims, pledges, security interests or other encumbrances of any kind whatsoever (" Liens "), other than (i) cash, except for cash relating to Accounts Receivable belonging to Buyer as set forth in Section 1.6, (ii) all assets and rights in connection with the Employee Plans (as defined in Section 2.24 of this Agreement), except for those listed in Section 4.1(i) of the Disclosure Schedule, and (iii) all assets listed in Section 1.1 of the Disclosure Schedule hereto (collectively, the " Excluded Assets "). The Purchased Assets shall include, without limitation, the following:

(a)   customer accounts (both actual and prospective), including barter accounts, if any;

(b)   all accounts receivable, subject, however, to the provisions of Section 1.6 hereof;

(c)   deposits or expenses prepaid by the Company, and deposits made by customers;

(d)   customer and supplier lists, mailing lists, telephone numbers, DID numbers, catalogs, yellow pages advertising, brochures, promotional materials and handbooks relating to the Business;

(e)   other books, records, files, contracts, plans, notebooks, production and sales data and other data of Seller relating to the Business, including but not limited to book keeping records and ledgers, whether or not in tangible form or in the form of intangible computer storage media such as optical disks, magnetic disks, tapes and all similar storage media;

(f)   machinery, computers, file servers, networking hardware, software licensing and other data processing hardware (and all software related thereto or used therewith) and other tangible personal property of similar nature, including but not limited to all items set forth on Seller's fixed asset ledger attached to this Agreement on Section 2.5 of the Disclosure Schedule, and all telephony hardware and peripherals, including, but not limited to, telephony chasis, expansion cards, monitors, spare equipment, operator audio boxes, amplifiers and headsets;

(g)   office furniture, office equipment, fixtures and other tangible personal property of similar nature, as set forth in Section 2.5 of the Disclosure Schedule, and all other such items located in the premises identified in the Lease (as hereinafter defined), whether or not set forth in Section 2.5 of the Disclosure Schedule;

(h)   all inventory including, but not limited to, any pagers;

(i)   interests to the extent owned by Seller in any patent, copyright, trademark, trade name, brand name, service mark, service name, assumed name, domain name, website, logo, symbol, trade dress, design or representation or expression of any thereof, or registration or application for registration thereof, or any other invention, trade secret, technical information, know-how, proprietary right or intellectual property, technologies, methods, designs, drawings, software (including documentation and source code listings), processes and other proprietary properties or information (collectively, the " Intellectual Property ");

(j)   real property interests described in Section 2.8 of the Disclosure Schedule to this Agreement together with all licenses, leases, rights, privileges and appurtenances thereto including, without limitation, all leases, agreements and other rights to use, occupy or possess, or otherwise with respect to, real property or machinery, equipment, vehicles, and other tangible personal property of similar nature to which Seller is a party, and all rights arising under or pursuant to such leases, agreements and rights;

(k)   to the extent not included above, all rights under contracts, agreements, options, commitments, understandings, licenses, leases, permits and instruments relating to the Business including, without limitation, customer and supplier contracts, sales representative and distributor contracts and commission contracts with respect thereto, all as listed (the " Assigned Contracts ") on Schedule 1.1(k) of the Disclosure Schedule, but no Liabilities (as defined below) associated with any of the Assigned Contracts, except as set forth in Section 1.2 below;

(l)   the names "Answer Connecticut", "ACT Teleservices", “Crossroads Services”, “Liberty Telecommunications”, “Back Acres Answering Service” and “Answer 1” and all variations thereof and all similar names and the goodwill associated therewith and with the Purchased Assets, together with all trademarks, service marks and trade names of Seller related to the Business, if any;

(m)   third party warranties and guarantees and other similar contractual rights as to third parties held by or in favor of Seller, and arising out of, resulting from or relating to the Business or the Purchased Assets, to the extent not included as part of the Assigned Contracts;

(n)   rights to insurance and condemnation proceeds relating to any damage, destruction, taking or other similar impairment of any of the Purchased Assets; and

(o)   cash related to Accounts Receivable belonging to Buyer as set forth in Section 1.6.

1.2 No Assumption of Liabilities . Except as provided herein, Buyer is not assuming any of Seller’s direct or indirect liabilities, obligations, undertakings, indebtedness, obligations under guaranties, endorsements, adverse claims, losses, damages, deficiencies, costs, expenses or responsibilities of any kind, fixed or unfixed, known or unknown, asserted or unasserted, due or undue, liquidated or unliquidated, secured or unsecured, accrued or unaccrued, contingent or non-contingent, subordinated or non-subordinated (collectively, " Liabilities "). Buyer will assume all Liabilities relating to the Purchased Assets and the Business to the extent arising from activity of Buyer relating to periods after the Closing Date (the " Assumed Liabilities ").

1.3 Purchase Price . The aggregate purchase price for the Purchased Assets is Three Million Eighty Eight Thousand Nine Hundred Twenty Two and 60/100 ($3,088,922.60) Dollars (the " Purchase Price "). The Purchase Price shall be payable as set forth below:

(a)   Two Million Three Hundred Sixteen Thousand Six Hundred Ninety One and 95/100 ($2,316,691.95) Dollars, payable to Seller by wire transfer on the Closing Date (the " Closing Cash Purchase Price ") ;  

(b)   One Hundred Fifty Four Thousand Four Hundred Forty Six and 13/100 ($154,446.13) Dollars, payable to Seller by wire transfer upon receipt by Buyer of evidence of the filing in the applicable office of the UCC-3 termination statement identified on Section 1.3(b) of the Disclosure Schedule; provided , however , that in the event that such termination statement is not so filed by the close of business on January 9, 2005, Buyer, in its sole discretion, may use any amounts due hereunder to satisfy directly any obligations of Seller which are required to be satisfied prior to the filing of any such termination statement, and the balance of any amounts remaining pursuant to this Section 1.3(b) after such satisfaction shall be paid to Seller upon the filing of such termination statement.

(c)   Twenty Five Thousand Nine Hundred Fourteen (25,914) shares of American Medical Alert Corp. ("AMAC"), the Buyer's indirect parent, common stock (the "Shares"); and

(d)   Four Hundred Sixty Three Thousand Three Hundred Thirty Eight and 39/100 ($463,338.39) Dollars, plus interest thereon at the rate of 5% per annum from the Closing Date until the date paid, payable to Seller upon the one year anniversary of the Closing Date; provided , however , that to the extent any such amounts are not paid because of a properly asserted claim pursuant to Section 1.8 or Section 6.4 hereof, such amounts shall not be deemed to be an amount payable under this Section 1.3(d);

(e)   As additional consideration, the Buyer shall pay the Seller the amounts set forth in Section 1.7 hereof (the " Contingent Additional Good Will Payment "), to the extent so payable.

1.4 Seller's and Stockholder’s Closing Deliveries . (a)   On or prior to the Closing Date, Seller and Stockholder, will have delivered to Buyer each of the following documents (collectively, the " Seller's Closing Documents "):

(i) Certificate of Secretary. A certificate of the Secretary of Seller in the form of Exhibit A, setting forth a copy of the resolutions adopted by its board and the Stockholder approving the execution and delivery of this Agreement, ratifying all past corporate action, and the other documents and instruments contemplated hereby to which it is a party (this Agreement and all other documents and instruments to which Buyer, Seller or the Stockholder is a party in connection herewith being sometimes collectively referred to herein as the "Purchase Documents") and the consummation of the transactions contemplated hereby;

(ii) Instruments of Transfer . A Bill of Sale and Assignment Agreement, in the form of Exhibit B attached hereto (the " Bill of Sale "), duly executed by Seller and the Stockholder, that, among other things, conveys, transfers and sells to Buyer all right, title and interest of Seller in and to the Purchased Assets.

(iii) Legal Opinion of Counsel to Seller and Stockholder. An opinion, in the form of Exhibit C attached hereto, from Halloran & Sage LLP, counsel to Seller and the Stockholder .

(iv) Wire Transfer Instructions . Wire transfer instructions for the payment of the Closing Purchase Price in the form attached hereto as Exhibit E .

(v) Schedule of Receivables . A schedule of all receivables due to Seller as of the close of business on the Closing Date.

(vi) Customer List . A complete and unrestricted list of all customers of the Seller, as set forth in Schedule 2.11, including the name, address, telephone number and contact for each such customer.

(vii) Schedule of Payables . A schedule of all accounts payable of Seller as of the close of business on the Closing Date (" Payables ") as Schedule 1.4(vii) of the Disclosure Schedule.

(viii) Management Employment Agreement . Employment agreement between the Buyer and the Stockholder in the form of Exhibit D attached hereto (the " Management Employment Agreement "), duly executed by the Stockholder.

(ix) Books and Records . All books and records relating to the Business.

(x) Lease . A lease for the premises at 365 Willard Avenue, Suite 2A, Newington, CT 06111 (the " Building ") between Buyer and Answer USA, LLC (the " LLC ") in the form of Exhibit F attached hereto (the " Lease "), duly executed by the LLC. In addition, evidence satisfactory to the Buyer of the termination of that certain lease between the Seller and the LLC for the premises located at 365 Williard Avenue, Suite 2A, Newington, CT 06111.

(xi)   the documents listed in Section 1.4(xi) of the Disclosure Schedule .

1.4A. Deliveries of Buyer . On or prior to the Closing Date, Buyer will have delivered to Seller each of the following documents and payments (collectively " Buyer's Closing Documents "):

(i) Certificate of Secretary . A certificate of the Secretary of Buyer setting forth a copy of the resolutions adopted by its Board of Directors approving the execution and delivery of this Agreement and the other Purchase Documents and the consummation of transactions contemplated hereby and thereby.

(ii) Closing Purchase Price . Buyer hereby delivers or causes to the Closing Cash Purchase Price in immediately available funds.

(iii) Shares . Irrevocable instructions to AMAC's transfer agent for the issuance of the Shares, as well as an opinion by AMAC's counsel relating to such issuance.

(iv) Management Employment Agreement . The Management Employment Agreement, duly executed by the Buyer.

(v) Lease . The Lease, duly executed by the Buyer.

1.5 Adjustments for Payables . Within 90 days after the Closing Date, Buyer will prepare an accrual based statement of accounts payable (including the Payables) as of the Closing Date. Any such accounts payable which relate to any period prior to the Closing Date and which are paid by Buyer, shall be a credit in Buyer’s favor. Any amounts paid by Seller prior to the Closing Date that relate to periods after the Closing Date shall also be scheduled and shall act as a credit in favor of Seller. The net amount shall be paid by the Buyer or Seller, as the case may be, to the other within 30 days of the determination thereof. If Seller fails to timely pay any amounts due to Buyer pursuant to this Section, then such amounts may be debited from any amounts due to Seller or Stockholder pursuant to this Agreement.

1.6 Adjustment for Receivables . All accounts receivable resulting from invoices after the close of business on the Closing Date shall belong to the Buyer. All accounts receivable outstanding as of the close of business on the Closing Date, shall be payable as follows upon collection: 20% to the Buyer and 80% to the Seller. Attached hereto as Schedule 2.6 is a list of all outstanding accounts receivable as of the date hereof.

1.7 Contingent Additional Good Will Payment . (a) If: (i) the Buyer’s total accrual based revenues (" Gross Revenues ") for the 12 month period ended on December 31, 2006 equal to or exceed an amount equal to 112.5% of the Seller's Gross Revenues for the 12 month period ending on December 31, 2005 (“ Seller’s Gross Revenues ”), and (ii) the Buyer's earnings before deduction of interest, taxes (including Federal and State taxes), depreciation and amortization (" EBITDA ") for the 12 month period ending on December 31, 2006 equal to or exceed Twenty (20%) percent of the Gross Revenues of the Buyer for such one (1) year period, then Buyer shall pay to Seller an amount equal to 0.5 of the Average Monthly Revenue (as defined below) as measured as of December 31, 2006, and an additional amount equal to 0.25 of such Average Monthly Revenue for each 5% increment by which EBIDTA exceeds 20% of the Gross Revenues for the applicable period.

For example, assuming (i) Seller’s Gross Revenues equals to $1,000,000, (ii) Buyer's Gross Revenues for the 12 month period ending on December 31, 2006, equals to $1,200,000, and (iii) Buyer’s EBIDTA for such period is equal to $325,000, then Buyer shall pay Seller an amount equal to 0.75 x the Average Monthly Revenue as measured as of December 31, 2006 (0.5 x the Average Monthly Revenue for meeting the Gross Revenue (1,200,000/1,000,000 = 120%) and EBIDTA (325,000/1,200,000 = 27%) thresholds, plus an additional 0.25 x the Average Monthly Revenue based on EBIDTA exceeding 25% (i.e., a single 5% increment above 20%) of Buyer's Gross Revenues for the applicable period).

(b) If: (i) the Buyer’s Gross Revenues for the 12 month period ending on December 31, 2007 equal to or exceed an amount equal to 125% of the Seller's Gross Revenues, and (ii) the Buyer's EBITDA for the 12 month period ending on December 31, 2007 equal to or exceed Twenty (20%) percent of the Gross Revenues of the Buyer for the 12 month period, then Buyer shall pay to Seller an amount equal to 0.75 of the Average Monthly Revenue as measured as of December 31, 2007, and an additional amount equal to 0.25 of such Average Monthly Revenue for each 5% increment by which EBIDTA exceeds 20% of the Gross Revenues for the applicable period.

For example, assuming (i) Seller’s Gross Revenues equals to $1,000,000, (ii) Buyer's Gross Revenues for the 12 month period ending on December 31, 2007 equals to $1,300,000, and (iii) Buyer’s EBIDTA for such period is equal to $400,000, then Buyer shall pay Seller an amount equal to 1.25 x the Average Monthly Revenue as measured as of December 31, 2007. (0.75 x the Average Monthly Revenue for meeting the Gross Revenue (1,300,000/1,000,000 = 130%) and EBIDTA (400,000/1,300,000 = 30.7%) thresholds, plus an additional 0.5 x the Average Monthly Revenue based on EBIDTA exceeding 30% (i.e., two 5% increments above 20%) of Buyer's Gross Revenues for the applicable period).

(c) If: (i) the Buyer’s Gross Revenues for the 12 month period ending on December 31, 2008 equal to or exceed an amount equal to 135% of the Seller's Gross Revenues, and (ii) the Buyer's EBITDA for the 12 month period ended on December 31, 2008 equal to or exceed Twenty (20%) percent of the Gross Revenues of the Buyer for such one (1) year period, then Buyer shall pay to Seller an amount equal to 0.75 of the Average Monthly Revenue as measured as of December 31, 2008, and an additional amount equal to 0.25 of such Average Monthly Revenue for each 5% increment by which EBIDTA exceeds 20% of the Gross Revenues for the applicable period.

For example, assuming (i) Seller’s Gross Revenues equals to $1,000,000, (ii) Buyer's Gross Revenues for the 12 month period ending on December 31, 2008 equals to $1,400,000, and (iii) Buyer’s EBIDTA for such period is equal to $500,000, then Buyer shall pay Seller an amount equal to 1.50 x the Average Monthly Revenue as measured as of December 31, 2008. (0.75 x the Average Monthly Revenue for meeting the Gross Revenue (1,400,000/1,000,000 = 140%) and EBIDTA (500,000/1,400,000 = 35.7%) thresholds, plus an additional 0.75 x the Average Monthly Revenue based on EBIDTA exceeding 35% (i.e., three 5% increments above 20%) of Buyer's Gross Revenues for the applicable period).

(d) The term " Average Monthly Revenue " shall mean an amount equal to the sum of (i) the 28 Day Cycle Average Monthly Billings (as defined below), plus (ii) the Average Monthly Billings (as defined below). The " 28 Day Cycle Average Monthly Billings " shall mean an amount calculated by adding the amounts of the last three (3) 28 day cycle bills of each customer (as applicable), prior to the applicable measuring date, divided by three (3), multiplied by thirteen (13) and divided by twelve (12). The " Average Monthly Billings " shall mean an amount calculated by adding the last three (3) monthly bills of each customer (as applicable), prior to the applicable measuring date, divided by three (3). Any amounts attributable to sales tax and non-recurring revenue shall be excluded from the calculation.

(e) The calculation of any Contingent Additional Good Will Payment shall be made by Buyer and preliminarily delivered in writing to the Seller within 45 days after the end of the fiscal quarter in which the applicable period referenced above ends. The preliminary calculation shall be subject to adjustment in connection with the year end audit of Buyer's financials, and Buyer shall deliver a final calculation within 90 days after the end of the fiscal quarter in which the applicable period referenced above ends. Seller shall have five (5) business days to object to such final calculation in writing. If Seller does not object within such five (5) day period, Buyer shall promptly pay to Seller the Contingent Additional Good Will Payment amount as determined above. Any dispute relating to this calculation shall be adjudicated pursuant to Sections 7.5 and 7.6.

1.8 Additional Adjustment . In the event that the customer identified in Section 1.8 of the Disclosure Schedule ceases to be a customer of the Buyer at any time within the 12 month period beginning January 1, 2006, then Seller shall pay to Buyer $10,000 for each month of such 12 month period during which such customer is no longer a customer of the Buyer. Any amount which becomes payable pursuant to this Section 1.8, shall be set-off against the payment due, if any, to Seller pursuant to Section 1.3(c).

Section 2. Representations and Warranties of Seller and the Stockholder . The Seller and the Stockholder, jointly and severally, represent and warrant to Buyer that each of the following statements is true and correct as of the date hereof, and with respect to representations and warranties that speak as of a subsequent date, such representations and warranties will also be true and correct as of such date:

2.1 Organization . Seller is a Connecticut corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business and to own and operate its assets and properties as presently conducted and operated. The LLC is a Connecticut limited liability company duly formed, validly existing and in good standing under the laws of its jurisdiction of formation, with full corporate power and authority to conduct its business and to own its assets and properties as presently conducted and operated. Seller is duly qualified to do business in Massachusetts. Seller does not do business in any other jurisdiction in any manner which would require it to become qualified or licensed as a foreign entity. Seller has delivered to Buyer, as Section 2.1 of the Disclosure Schedule, true, correct and complete copies of Seller's certificate of incorporation (the " Certificate of Incorporation ") and by laws (the " By Laws "), as currently in effect.

2.2 Title to Purchased Assets; Ownership of Stock .

(a)   Seller has good and marketable title to the Purchased Assets including, without limitation, all assets set forth on Seller's fixed asset ledger attached to this Agreement on Section 2.5 of the Disclosure Schedule, free and clear of all Liens, other than (i) Liens, if any, for personal property taxes and assessments not yet due and payable and (ii) Liens disclosed on Section 2.2 of the Disclosure Schedule. The LLC is the sole owner of the Building. Upon consummation of the transactions contemplated by this Agreement, Buyer will acquire all of Seller's right, title and interest in and to the Purchased Assets, free and clear of all Liens.

(b)   The Stockholder is the sole record and beneficial owner of 100 shares of the Seller's common stock, no par value, which constitute all of the outstanding capital stock of Seller. No Person has any right, interest or claim to any of the Seller’s capital stock (other than Stockholder) or the Purchased Assets. There are no subscriptions, warrants, options, convertible securities or other rights (contingent or other) to purchase or acquire any shares of any class of capital stock of the company, issued or outstanding, and there is no commitment of the Seller to issue any shares, warrants, options or other such rights or to distribute to holders of any class of its capital stock any evidences of indebtedness or assets. The Stockholder is the owner of all of the membership interests in, and Stockholder is the sole manager of, the LLC.

2.3 Authorization; Validity of Agreement, Etc . The Stockholder has the requisite capacity, and Seller has the full right, power and authority, to execute and deliver this Agreement and the other Purchase Documents to which, as applicable, it or he are a party and to consummate the transactions contemplated hereby and thereby, and to make the representations set forth herein and therein. LLC has the full right, power and authority, to execute and deliver the Lease and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and the other Purchase Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by Seller and no other proceedings on the part of Seller are necessary to authorize the execution and delivery of this Agreement and the other Purchase Documents to which Seller is a party or the consummation of the transactions contemplated hereby and thereby by Seller and the Stockholder. The execution and delivery of the Lease and the consummation of the transactions contemplated thereby have been duly and validly authorized by the LLC and no other proceedings on the part of the LLC are necessary to authorize the execution and delivery of the Lease. Each of this Agreement and the other Purchase Documents to which Seller is a party have been duly and validly executed by Seller and constitute the valid and binding agreement of Seller, enforceable against Seller in accordance with its respective terms. Each of this Agreement and the other Purchase Documents to which the Stockholder is a party have been duly and validly executed by the Stockholder and constitute the valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its respective terms. The Lease has been duly and validly executed by the LLC and constitutes the valid and binding obligation of the LLC, enforceable against the LLC in accordance with its respective terms.

2.4 Consents and Approvals; No Violation . Except as set forth in Section 2.4 of the Disclosure Schedule, the execution, performance and delivery by Seller and the Stockholder of this Agreement and each of the other Purchase Documents to which it or he is a party, as applicable, and the consummation by Seller and the Stockholder of the transactions contemplated hereby and thereby, respectively, and the compliance by Seller and the Stockholder with the provisions hereof and thereof will not: (a) conflict with or breach any provision of the Certificate of Incorporation or Bylaws of Seller; (b) violate or breach in any respect any provision of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under, any of the terms, covenants, conditions or provisions of, or give rise to a right to terminate or accelerate or increase the amount of payment due under, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument, commitment or obligation to which Seller or the Stockholder is a party (collectively, " Contracts "), or by which Seller or the Stockholder or any of its or his properties or assets, as applicable, may be bound or affected; (c) require Seller or the Stockholder to make any filing or registration with, or obtain any other permit, authorization, consent or approval of, any Person (as hereinafter defined) or Governmental Entity (as hereinafter defined); (d) result in the creation of any Lien on or affecting the Purchased Assets; (e) violate any order, writ, injunction, decree, judgment, or ruling of any court or governmental authority, applicable to Seller or the Stockholder or any of their respective properties or assets; or (f) violate any statute, law, rule or regulation applicable to Seller or any of its properties or assets. " Person " shall mean any individual, partnership, corporation, joint venture, limited liability company, trust, organization or any other entity. " Governmental Entity " shall mean any foreign, provincial, United States federal, state, county, municipal or other local jurisdiction, political entity, body, organization, subdivision or branch, legislative or executive agency or department or other regulatory service, authority or agency.

2.5 Condition of Purchased Assets .   All items of machinery, equipment, tooling and other tangible personal property owned or leased by Seller and used in the conduct of the Business (other than items of inventory) are listed in the detailed fixed assets ledger of Seller attached to Section 2.5 of the Disclosure Schedule (collectively, the " Personal Property "). Although it may not be specifically identified in Section 2.5 of the Disclosure Schedule, the term "Personal Property" includes all of the telephony equipment hardware and peripherals, including, but not limited to, telephony chasis, expansion cards, monitors, spare equipment, operator audio boxes, amplifiers, headsets, and all computers, furniture, fixtures and machinery, in each case located in the premises identified in the Lease. The Personal Property conforms in all respects to all requirements of applicable laws.

2.6 Receivables. All accounts receivable of Seller as of the Closing Date, are reflected on Section 2.6 of the Disclosure Schedule and represent valid obligations arising from bona fide transactions in the ordinary course of Seller's business consistent with past practice and established in the ordinary course of Seller's business. To the best knowledge of Seller and Stockholder, the accounts receivable of Seller are collectible, and there is no contest, claim, or right of set off, under any contract with any obligor of an accounts receivable relating to the amount or validity of such accounts receivable.

2.7 Taxes .

(a)   Except as set forth in Section 2.7(a) of the Disclosure Schedule:

(i)   Seller has (A) duly and timely filed or caused to be filed with the Internal Revenue Service or other applicable Governmental Entity (collectively, " Taxing Authorities ") all Tax Returns (as defined below) that are required to be filed by or on behalf of Seller and that include or relate to the Purchased Assets or the Business, which Tax Returns are true, correct and complete, and (B) duly and timely paid in full or caused to be paid in full, or recorded a provision for such payment on the books and records of Seller in accordance with GAAP for the payment of, all Taxes that are due and payable and any Taxes that could result in a Lien on any Purchased Asset or the Business. Seller has adequate reserves for the payment of all Taxes that are not due and payable;

(ii)   Seller has duly and timely complied with all applicable Laws relating to the collection or withholding of Taxes, and the reporting and remittance thereof to the applicable Taxing Authorities;

(iii)   no audit, examination, investigation, reassessment or other administrative or court proceeding (collectively, a " Tax Proceeding ") is pending, proposed, or threatened, with regard to any Tax or Tax Return referred to in clause (i) above;

(iv)   there is no Lien for any Tax upon any of the Purchased Assets or the Business;

(v)   there is no outstanding request for a ruling from any Taxing Authority, closing agreement (within the meaning of Section 7121 of the Code or any analogous provision of applicable Law) relating to any Tax for which Seller is or may be liable or with respect to Seller's income, assets or business, power of attorney relating to, or in connection with, any Tax that could result in a Lien on any Purchased Asset or the Business;

(vi)   none of the Purchased Assets is "tax-exempt bond financed property" or "tax-exempt use property" within the meaning of Section 168(g) or (h), respectively, of the Code or any similar provision of applicable Law;

(vii)   none of the Purchased Assets is required to be treated as being owned by any other person pursuant to the "safe harbor" leasing provisions of Section 168(f)(8) of the Internal Revenue Code of 1954 as in effect prior to the repeal of those "safe harbor" leasing provisions or any similar provision of applicable Law;

(viii)   no claim has ever been made by a Taxing Authority in a jurisdiction where Seller or the Stockholder has not paid any Tax or filed Tax Returns relating to the Business or any Purchased Asset asserting that Seller or the Stockholder is or may be subject to Tax in such jurisdiction.

(ix)   Seller is, and has always been an "S-Corp" for all Tax purposes.

(b)   Seller has provided to Buyer true, complete and correct copies of (i) all Federal and Corporate Income Tax Returns relating to, and (ii) all audit reports relating to, each proposed adjustment, if any, made by any Taxing Authority with respect to any taxable period ending after December 31, 2001 and any and all Taxes with respect to which a Lien may be imposed on any Purchased Asset or the Business.

(c)   As used herein, (i) " Tax Return " means any return, declaration, report, information return or statement, and any amendment thereto, including without limitation any consolidated, combined or unitary return or other document (including any related or supporting information), filed or required to be filed with any Taxing Authority in connection with the determination, assessment, collection, payment, refund or credit of any federal, state, local or foreign Tax or the administration of any Laws relating to any Tax or ERISA, and (ii) "Tax" or "Taxes" means any and all taxes, charges, fees, levies, deficiencies or other assessments of whatever kind or nature including, without limitation, all net income, gross income, profits, gross receipts, excise, real or personal property, sales, ad valorem , withholding, social security, retirement, excise, employment, unemployment, minimum, estimated, severance, stamp, property, occupation, environmental, windfall profits, use, service, net worth, payroll, franchise, license, gains, customs, transfer, recording and other taxes, customs duty, fees assessments or charges of any kind whatsoever, imposed by any Taxing Authority, including any liability therefor as a transferee (including without limitation under Section 6901 of the Code or any similar provision of applicable Law), as a result of Treasury Regulation §1.1502-6 or any similar provision of applicable Law, or as a result of any Tax sharing or similar agreement, together with any interest, penalties or additions to tax relating thereto.

2.7B Financial Statements . Attached to Section 2.7B of the Disclosure Schedules are the (i) audited balance sheets of Seller as of December 31, 2002, 2003 and 2004, respectively, the audited statement of income and accumulated deficit and audited statement of cash flows of Seller, in each case, for the 12 month period ended December 31, 2002, 2003 and 2004, respectively, and (ii) the unaudited balance sheet of Seller as of September 30, 2005 (the " Balance Sheet ") and the unaudited statement of profits and losses for the 9 months ended September 30, 2005 (collectively, the " Financial Statements "). The Financial Statements, (i) except with respect to the unaudited financial statements described above, have been prepared in accordance with U.S. generally accepted accounting principles, (ii) are derived from, and agree with, the books and records of the Seller, and (iii) fairly present the financial condition of Seller as of the date thereof and the results of operations of the Seller for the periods set forth therein.

2.8 Real Property . Except as set forth in Section 2.8 of the Disclosure Schedule, Seller does not own any real property and is neither a landlord, sublandlord or licensor nor a tenant, subtenant or licensee under any lease, sublease, license or occupancy agreement with respect to real property.

2.9 Intellectual Property . Section 2.9 of the Disclosure Schedule lists all Intellectual Property that is owned by Seller or any other Person and used by Seller in the operations of the Business, and there are no pending or, to the best knowledge of each of Seller and the Stockholder, threatened claims by any Person relating to Seller's use of any Intellectual Property. With respect to such Intellectual Property, Seller has, free and clear of all Liens, such rights of ownership or such rights of license, lease or other agreement to use the Intellectual Property as are necessary to permit Seller to conduct its business and, except as set forth on Section 2.9 of the Disclosure Schedule, Seller is not obligated to pay any royalty or similar fee to any Person in connection with Seller's use or license of any of the Intellectual Property.

2.10 Material Contracts . Section 2.10 of the Disclosure Schedule sets forth a true, complete and correct list of every Contract that: (i) provides for aggregate future payments by Seller or to Seller of more than $1,000 (excluding purchase orders and invoices arising in the ordinary course of business); (ii) was entered into by Seller with the Stockholder, or an officer, director or significant employee of Seller; (iii) is a collective bargaining or similar agreement; (iv) guarantees or indemnifies or otherwise causes Seller to be liable or otherwise responsible for the Liabilities of another or provides for a charitable contribution by Seller; (v) involves an agreement with any bank, finance company or similar organization; (vi) restricts Seller or the Stockholder or the Business from engaging in any business or activity anywhere in the world; (vii) is an employment agreement, consulting agreement or similar arrangement with any employee of Seller; (viii) involves an agreement or any other Contract providing for payments from Seller to any other Person, or by any Person to Seller, based on sales, purchases or profits, other than direct payments for goods; or (ix) any other Contract that is material to the rights, properties, assets, business or operations of Seller or the Business (the foregoing, collectively, " Material Contracts "). Seller has heretofore provided true, complete and correct copies of all Material Contracts to Buyer.

There is not, and to the best knowledge of each of Seller and the Stockholder, there has not been claimed or alleged by any Person with respect to any Material Contract, any existing default, or event that with notice or lapse of time or both would constitute a default or event of default, on the part of Seller or, to the best knowledge of Seller and the Stockholder, on the part of any other party thereto, and no consent, approval, authorization or waiver from, or notice to, any Governmental Entity or other Person is required in order to maintain in full force and effect any of the Material Contracts, other than such consents and waivers that have been obtained and are unconditional and in full force and effect and such notices that have been duly given and copies of such consents, waivers and notices have been delivered to Buyer.

2.11 Customers, Suppliers and Distributors . Section 2.11 of the Disclosure Schedule sets forth (i) a list of all of Seller's customers, (ii) the sales of Seller for the 12 month period ended November 30, 2005, and (iii) the suppliers and distributors of Seller during such period. There has not been any adverse change in the business relationship of Seller with any such customer, supplier or distributor, and Seller is not aware of any threatened loss of any such customer, supplier or distributor.

Attached to Section 2.11 of the Disclosure Schedule are the two most recent forms of Seller's standard customer agreement.

2.12 Litigation; Compliance with Laws; Licenses and Permits .

(a)   Except as set forth in Section 2.12 of the Disclosure Schedule, there is no claim, suit, action or proceeding (" Proceeding ") pending, nor, to the best knowledge of Seller or the Stockholder, is there any investigation or Proceeding threatened, that involves or affects Seller or the Business, by or before any Governmental Entity, court, arbitration panel or any other Person.

(b)   Except as set forth in Section 2.12 of the Disclosure Schedule, Seller and the Business have complied with all applicable federal, state, county, municipal or other local criminal, civil or common laws, statutes, ordinances, orders, codes, rules, regulations, permits, policies, guidance documents, judgments, decrees, injunctions, or agreements of any Governmental Entity (collectively, " Laws "), including but not limited to Laws relating to zoning, building codes, antitrust, occupational safety and health, industrial hygiene, environmental protection, water, ground or air pollution, consumer product safety, product liability, hiring, wages, hours, employee benefit plans and programs, collective bargaining and the payment of withholding and social security taxes. Since January 1, 2001, Seller has not received any notice of any violation of any Law.

(c)   Except as set forth in Section 2.12 of the Disclosure Schedule, each of Seller and the Business has every license, permit, certification, qualification or franchise issued by any Governmental Entity (each, a " License ") and every approval, authorization, waiver, variance, exemption, consent or ratification by or on behalf of any Person that is not a party to this Agreement (each, a " Permit ") required for it to conduct its business as presently conducted. All such Licenses and Permits are specified on Schedule 2.12. All such Licenses and Permits are in full force and effect and neither Seller nor the Stockholder has received notice of any pending cancellation or suspension of any thereof nor, to the best knowledge of Seller or the Stockholder, is any cancellation or suspension thereof threatened. The applicability and validity of each such License and Consent will not be adversely affected by the consummation of the transactions contemplated by this Agreement. Each such License or Permit is set forth in Section 2.12 of the Disclosure Schedule.

2.13 Product or Service Claims . No product or service liability claim or a claim with respect to the conduct of the Business is pending, or to the best knowledge of each of Seller and the Stockholder threatened, against Seller or against any other party with respect to the products or services of the Business. Section 2.13 of the Disclosure Schedule lists all service and product liability claims asserted against Seller with respect to the products or services of the Business or Seller during the last five (5) years.

2.14 No Brokers . Neither Seller nor the Stockholder has employed, or otherwise engaged, any broker or finder or incurred any liability for any brokerage or investment banking fees, commissions