MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 2.1

1.       DEFINITIONS

1.1       “ Action ” shall mean any action, claim, suit, litigation, proceeding, arbitral action, governmental audit, criminal prosecution, governmental investigation or unfair labor practice charge or complaint.

1.2       “ Affiliate ” shall have the meaning set forth in the Exchange Act.

1.3       “ Ancillary Agreements ” shall mean the ancillary agreements to be entered into in connection with the consummation of the transactions contemplated by this Agreement.

1.4       “ Books and Records ” shall mean (a) all records and lists pertaining to the Company, including records and lists of the Company relating to the customers, suppliers or personnel of the Company, (b) all product, business and marketing plans of the Company, and (c) all books, ledgers, files, reports, plans, drawings and operating records of every kind maintained by the Company.

1.5       “ Business Day(s) ” shall mean any day other than a Saturday, Sunday, national holiday or other day on which banks are generally closed in the State of California.

1.6       “ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder.

1.7       “ Contract ” shall mean any material agreement, contract, sub-contract, note, loan, evidence of indebtedness, lease, purchase order, letter of credit, indenture, security or pledge agreement, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument, obligation or commitment to which Company is a party or is bound, whether oral or written.

1.8       “ Contract Rights ” shall mean all rights and obligations of Company under the Contracts.

1.9       “ Copyrights ” shall mean United States and foreign registered copyrights, copyright applications, and unregistered copyrights.

1.10       “ Court Order ” shall mean any judgment, writ, decision, consent decree, injunction, determination, ruling, or order of any federal, state or local court or governmental agency, department or authority that is binding on any person or its property under applicable law.

1.11       “ Damages ” shall mean damages, Liabilities, losses ( including diminution in value), obligations, deficiencies, claims, demands, Taxes, fines, penalties, costs, and expenses of any kind or nature whatsoever (whether or not arising out of third-party claims), including interest, costs of mitigation, lost profits, attorneys’ fees and all amounts paid in investigation, defense, or settlement of any of the foregoing.

1.12       “ Default ” shall mean (a) a breach of or default under any Contract, (b) the occurrence of an event that with the passage of time or the giving of notice or both would constitute a breach of or default under any Contract, or (c) the occurrence of an event that with or without the passage of time or the giving of notice or both would (i) give rise to a termination, renegotiation or acceleration under any Contract, or (ii) give rise to a right of termination, renegotiation or acceleration under any Contract.

1.13       “ Disclosure Schedule ” shall mean a schedule executed and delivered by the Members to Buyer as of the date hereof that sets forth the exceptions to the representations and warranties contained in Article 3 and certain other information called for by this Agreement.  Unless otherwise specified, each reference in this Agreement to any numbered schedule is a reference to that numbered schedule that is included in the Disclosure Schedule.

1.14       “ Encumbrance ” shall mean any claim, lien, pledge, option, charge, easement, security interest (including any security interest filed pursuant to a financing statement in order to perfect and/or establish the priority of such security interest), deed of trust, mortgage, right-of-way, encroachment, building or use restriction, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

1.15       “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

1.16       “ Financial Statements ” shall mean (i) the audited statement of results of operations for the Company that covers the years ended December 31, 2006 and December 31, 2007, (ii) the audited balance sheets for the Company as of December 31, 2006 and December 31, 2007, and (iii) the unaudited statements of results of operations for the Company as of July 15, 2008.  The July 15, 2008, balance sheet is hereinafter referred to as the “ Most Recent Balance Sheet ” and July 15, 2008, is hereinafter referred to as the “ Most Recent Balance Sheet Date .”  

1.17       “ GAAP ” shall mean United States generally accepted accounting principles consistently applied.

1.18       “ Intellectual Property ” shall mean all Copyrights, Trademarks, Patents, technology rights and licenses, computer software ( including any source or object codes therefor or documentation relating thereto, other than generally commercially available third party software (a) that has not been materially modified by Company, (b) for which Company can either freely assign its rights to a successor of Company or that Buyer may separately obtain on reasonable terms, and (c) that is either subject only to a shrink wrap license agreement, or is immaterial to the business of the Company), Trade Secrets, franchises, know-how, inventions, website content, designs, specifications, processes, plans, drawings, mask works, utility models, URLs and Domain Names, protocols, moral rights, internal operating systems and intellectual property rights of Company; and any renewal, extension, reissue, continuation, or division rights, applications, and/or registrations for any of the foregoing.

1.19       “ IT Assets ” shall mean those Company assets comprised of any computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and other information technology equipment, and all associated documentation.

1.20       “ Knowledge ” shall mean:

1.20.1   with respect to each Member except for Dennis Hefter (“ Hefter ”), the actual knowledge of such Member of a particular fact, event or matter; and

1.20.2   with respect to Hefter in his capacity as a Member of the Company, Hefter will be deemed to have knowledge of a particular fact, event or matter if (i) Hefter has actual knowledge of such fact, circumstance, event or matter, or (ii) knowledge of such fact, event or matter would be obtained by reasonable inquiry under the relevant circumstances.

1.21       “ Liabilities ” shall mean any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, guaranty or endorsement of or by any person of any type, whether accrued, absolute, contingent, matured, unmatured or other.

1.22       “ Material Adverse Effect ” shall mean with respect to the Company and each Subsidiary, any material adverse effect or change in the condition (financial or other), business, results of operations, prospects, assets, Liabilities or operations of the Company or Subsidiary or to the ability of the Company or any Subsidiary to consummate the transactions contemplated hereby, or any event or condition that could, with the passage of time, constitute a material adverse effect or material adverse change.  

1.23       “ Ordinary Course of Business ” or “ Ordinary Course ” or any similar phrase shall mean the ordinary course of business consistent with Company’s past commercially reasonable business practice ( including with respect to frequency and quantity).

1.24       “ Patents ” shall mean United States and foreign patents, letters patent, applications for any of the foregoing, all continuations, continuations in part, divisions, reissues, substitutions and extensions thereof, any and all rights corresponding thereto, and all inventions and discoveries that are or may be patentable.

1.25       “ Permits ” shall mean all licenses, registrations, certifications, permits, franchises, approvals, authorizations, waivers, consents or orders of, or filings with, any governmental authority, whether foreign, federal, state or local, or any other person, necessary or desirable for the present conduct of, or relating to the operation of the Company’s business.

1.26       “ Regulations ” shall mean any laws, statutes, ordinances, regulations, rules, court decisions, principles of law and orders of any foreign, federal, state or local government and any other governmental department or agency, including environmental laws, energy, motor vehicle safety, public utility, zoning, building and health codes, import and export laws, Foreign Corrupt Practices Act, and occupational safety and health and laws respecting employment practices, employee documentation, terms and conditions of employment and wages and hours.

1.27       “ Representative ” shall mean any officer, director, principal, attorney, agent, employee or other representative.

1.28       “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder.

1.29       “ Subsidiary ” shall mean any entity with respect to which a specified person ( or a subsidiary thereof) owns a majority of the voting securities or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.

1.30       “ Tax ” and “ Taxes ” shall mean all taxes, charges, fees, levies or other assessments, including all net income, gross income, gross receipts, sales, use, VAT, service, service use, ad valorem , value added, transfer, franchise, profits, capital stock, alternative or add-on minimum, estimated, license, lease, withholding, social security (or similar), payroll, employment, excise, estimated, premium, severance, stamp, recording, occupation, real and personal property, gift, environmental, unemployment, registration, windfall profits or other taxes, customs duties, fees, assessments, or charges of any kind whatsoever, whether computed on a separate, consolidated, unitary, combined or other basis, together with any interest, fines, penalties, additions to tax or other additional amounts imposed thereon or with respect thereto imposed by any taxing authority (federal, state, local or foreign).  

1.31         “ Trade Secrets ” shall mean all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, blue prints, designs, data compilations, research results, and other information.

1.32       “ Trademarks ” shall mean United States and foreign registered trademarks, registered service marks, trademark and service mark applications, unregistered trademarks and service marks, registered domain names, trade names, designs, trade dress, and general intangibles of a like nature, together with all goodwill related to the foregoing.

1.33       “ URLs and Domain Names ” shall mean all Internet uniform resource locators and domain names of Company .

2.   PURCHASE OF MEMBERSHIP INTERESTS

2.1                 Purchase of Membership Interests .  At the Closing (as defined herein) and subject to and upon the terms and conditions of this Agreement, the Members hereby agree to sell, transfer, convey, assign and deliver to Buyer, and Buyer hereby agrees to purchase, acquire and accept from the Members, all outstanding Membership Interests in consideration for the payment to each of the Members of their pro rata portion (as set forth on Schedule A) of the Purchase Price.  Buyer’s obligation hereunder with regard to each Member is contingent and conditioned upon each Member fulfilling its respective conditions and obligations hereunder.

2.2                 Purchase Price . The Purchase Price to be paid by the Buyer for the Membership Interests shall be as follows:

2.2.1   On the Closing Date (as defined herein), One Million Dollars ($1,000,000) via wire transfer to an account specified by the Members prior to Closing;

2.2.2   On the Closing Date, a senior secured promissory note (“ Note ”) in the principal amount of Five Hundred Thousand Dollars ($500,000) substantially in the form as set forth on Exhibit 1 and secured by a Security Agreement substantially in the form as forth on Exhibit 2 .

2.2.3   On the Closing Date, One Million Two Hundred Thousand (1,200,000) restricted common shares of Buyer (the “ Shares ,” including any additional shares issued pursuant to Section 2.2.3(a) below), subject to the following:

(a)   Share Reset .

(i)   On such date that is six (6) months from the Closing Date, Buyer shall determine the volume weighted average price (“ VWAP ”) of Buyer’s common stock for the preceding twenty (20) trading days (the “ Six Month VWAP ”).  In the event that the Six Month VWAP is less than Two Dollars Fifty Cents ($2.50) per share, Buyer shall issue a number of restricted common shares in addition to the Shares issued pursuant to Section 2.2.3 above, as determined by the following formula:

By way of example only and not limitation, if the Six Month VWAP is $2.00, Buyer would issue 150,000 additional restricted common shares (600,000 x $0.50/ $2.00 = 150,000)

(ii)    On such date that is twelve (12) months from the Closing Date, Buyer shall determine the VWAP of Buyer’s common stock for the preceding twenty (20) trading days (the “ Twelve Month VWAP ”).  In the event that the Twelve Month VWAP is less than Two Dollars Fifty Cents ($2.50) per share, Buyer shall issue a number of restricted common shares in addition to the Shares issued pursuant to Section 2.2.3 , as determined by the following formula:

By way of example only and not limitation, if the Twelve Month VWAP is $1.00, Buyer would issue 900,000 additional restricted common shares (600,000 x $1.50/ $1.00 = 900,000).

(iii)   Notwithstanding the foregoing, in the event that the Six Month VWAP and/or the Twelve Month VWAP is less than Seventy-Five Cents ($.75) per share, the Six Month VWAP and/or the Twelve Month VWAP, as may be the case, shall be deemed to be Seventy-Five Cents ($.75) for purposes of calculating additional shares to be issued pursuant to the above formulae (the “ VWAP Collar ”).

(b)   Trading Lockdown .  The Shares will be subject to a lockup and share release schedule as set forth on Schedule B . Each of the Members will enter into a separate Lock-Up and Share Release Agreement (“ Lock-Up Agreement ”) in substantially the form attached hereto as Exhibit 3 .  For the avoidance of doubt, the Parties acknowledge and agree that any additional restricted common Shares issued pursuant to Section 2.2.3(a) above shall constitute Shareholder Shares (as defined in the Lock-Up Agreement) and shall, for the sole purpose of the Lock-Up Agreement, be treated as if issued as of the Closing Date; therefore, such additional Shares shall not be subject to any lockup or share release restrictions except as set forth in the Lock-Up Agreement or as required by law.

(c)   Share Certificates . Buyer shall issue share certificates (“ Share Certificates ”) evidencing the Shares to the Members as soon as reasonably practicable after Closing.  The Parties agree and acknowledge that the issuance of the Share Certificates by Buyer is not a condition precedent to the Closing.

2.2.4   An additional amount (t he “Earn Out ”) up to Five Hundred Thousand Dollars ($500,000) payable in cash following the expiration of the period commencing on the Closing Date and ending on that date that is twelve (12) months from the Closing Date (t he “Earn Out Period ”) based on the Company achieving certain gross revenue performance milestones as further set forth on Schedule C , subject to the following:

(a)   No later than sixty (60) days after the end of the Earn Out Period, Buyer shall notify the duly appointed agent of the Members (the “ Members’ Agent ”) in writing of its determination of the Earn Out, which shall set forth in reasonable detail Buyer’s calculation of the Earn Out, and shall be accompanied by a certificate executed by a senior executive of Buyer to the effect that the Earn Out calculation has been prepared in accordance with GAAP and in good faith (the “ Earn Out Determination ”).  The Members’ Agent will notify Buyer in writing within thirty (30) days after receipt of the Earn Out Determination (the “ Earn Out Determination Dispute Period ”) if the Members’ Agent, in good faith, disagrees with Buyer’s calculation of the Earn Out as set forth in the Earn Out Determination (the “ Earn Out Determination Dispute Notice ”).  The Earn Out Determination Dispute Notice, if any, shall set forth in reasonable detail the basis for such disagreement, the dollar amounts involved and Members’ Agent’s calculation of the Earn Out, and shall be accompanied by a certificate executed by Members’ Agent to the effect that the Earn Out Determination Dispute Notice has been prepared in good faith.  Buyer will, upon the receipt of an Earn Out Determination Dispute Notice and a written request by the Members’ Agent, and subject to the execution by Members’ Agent of a customary confidentiality agreement, provide Members’ Agent and its representatives reasonable access during normal business hours to such books and records of the Company as are reasonably requested by Members’ Agent in connection with the Earn Out Determination Dispute Notice.  If no Earn Out Determination Dispute Notice is received by Buyer from Members’ Agent within the Earn Out Determination Dispute Period, Buyer’s Earn Out Determination will be final and binding upon the Parties hereto and Buyer shall issue payment of such Earn Out within fifteen (15) days of the expiration of the Earn Out Determination Dispute Period.

                                         Upon receipt by Buyer of the Earn Out Determination Dispute Notice, if any, the Parties agree to submit any disagreement with respect to the Earn Out in writing to a panel of two appointees, one appointed by Buyer and one appointed by Members, who shall promptly meet and confer in good faith in an effort to expeditiously resolve such dispute.  To the extent such appointees are unable to resolve any disagreement with respect to the Earn Out within thirty (30) days after receipt by Buyer of the Earn Out Determination Dispute Notice, Buyer and Members’ Agent shall submit their dispute to a mutually acceptable nationally recognized public accounting firm with no material relationship to any Party as promptly as practicable.  In the event that Buyer and Members’ Agent cannot mutually agree on an accounting firm, each of Buyer and Members’ Agent shall designate one such accounting firm, and the two accounting firms so designated shall mutually agree upon and appoint a third nationally recognized public accounting firm with no material relationship to any Party to review and resolve such dispute.  

(b)   Buyer shall have no obligation to pay the Earn Out in the event that Buyer terminates Hefter for Cause during the Earn Out Period. “Cause” shall have the meaning as defined in that certain Employment Agreement by and between Buyer and Hefter (the “ Employment Agreement ”) substantially in the form as set forth on Exhibit 4 .

2.3       The Closing .

2.3.1          Unless this Agreement is earlier terminated, and subject to the satisfaction or waiver of each of the conditions set forth herein in writing executed by the Parties, the closing (“Closing”) shall be held by electronic transmission of documents and wire transfer, and will be effective as of 12:01 a.m., Pacific Day Time, on August 12, 2008, or on such other date as Buyer and the Members may mutually agree in writing (the “ Closing Date”).  All transactions at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no documents or certificates shall be deemed to have been delivered until all other transactions are completed and all other documents and certificates are delivered.

2.3.2       At the Closing, each Member shall execute and deliver such documents as are necessary to effect a transfer of his Membership Interest to the Buyer, and Buyer shall issue to the Members their pro rata portion of the Purchase Price as set forth in Section 2.2 .

2.4       Tax Consequences .

2.4.1   Buyer makes no representations or warranties to any Member regarding the Tax treatment of the sale of the Membership Interests, or any of the Tax consequences to any Member of this Agreement, the sale of the Membership Interests or any of the other transactions or agreements contemplated hereby. Each Member acknowledges that it is relying solely on its own Tax advisors in connection with this Agreement, the sale of the Membership Interests and the other transactions and agreements contemplated hereby.

2.4.2   No Member makes any representations or warranties to Buyer regarding the Tax treatment of the purchase of the Membership Interests, or any of the Tax consequences to Buyer of this Agreement, the purchase of the Membership Interests or any of the other transactions or agreements contemplated hereby.  Buyer acknowledges that it is relying solely on its own Tax advisors in connection with this Agreement, the purchase of the Membership Interests and the other transactions and agreements contemplated hereby.

2.5       Withholding Rights . Buyer shall be entitled to deduct and withhold from any cash payments deliverable under this Agreement to any Member such amounts in cash as Buyer is required to deduct and withhold with respect to any such deliveries and payments under the Code or any provision of state, local, provincial or foreign Tax law.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to such holders in respect of which such deduction and withholding was made. Notwithstanding the foregoing, Buyer is not presently aware of any deduction or withholding required in connection with the cash payments deliverable under this Agreement.

2.6       Taking of Necessary Action; Further Action .  If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest Buyer with full right, title and possession to all assets, property, rights, privileges, powers and franchises of Company, the officers and directors of Buyer are fully authorized to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.

3.      REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

3.1            Organization, Qualification and Corporate Power . The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Colorado, and has all requisite power and authority (corporate and other) to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby. The Company is duly qualified to conduct business and is in good standing under the laws of each jurisdiction listed in Section 3.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Company’s businesses or the ownership or leasing of its properties requires such qualification, except for those jurisdictions in which the failure to be so qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.  True, correct and complete copies of the Certificate of Formation and Limited Liability Company Operating Agreement of the Company, each as amended to date, have been previously delivered to the Buyer, and no amendments have been made thereto or have been authorized since the date thereof. The Company is not in default under or in violation of any provision of its Certificate of Formation or Limited Liability Company Operating Agreement which would constitute a Material Adverse Effect.

3.2       Authorization of Transaction .  Each of the Members has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder.  To the Knowledge of each of the Members, the execution and delivery by the Members of this Agreement, the performance by the Members of this Agreement and the Ancillary Agreements and the consummation by the Members of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Company.  Without limiting the generality of the foregoing, the Members of the Company by a unanimous vote determined that the transactions contemplated by this Agreement are fair to and in the best interests of the Company and its Members. This Agreement has been duly and validly executed and delivered by the Members and constitutes, and each of the Ancillary Agreements, upon its execution and delivery by the Members, will constitute, a valid and binding obligation of the Members, enforceable against the Members in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to creditors rights generally, and is subject to general principles of equity.

3.3       Noncontravention . Except as set forth in Section 3.3 of the Disclosure Schedule, neither the execution and delivery by the Members of this Agreement or the Ancillary Agreements, nor the consummation by the Members of the transactions contemplated hereby or thereby, will (a) conflict with or violate any material provision of the Certificate of Formation or Limited Liability Company Operating Agreement of the Company or the charter, by-laws or other organizational document of any Subsidiary or Dissolving Subsidiary (as defined in Section 3.4.5 ), (b) require on the part of the Company or any Subsidiary or Dissolving Subsidiary any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity the failure of which to obtain would have a Material Adverse Effect, (c) to the Knowledge of each of the Members, conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any material contract or instrument to which the Company or any Subsidiary or any Dissolving Subsidiary is a party or by which the Company or any Subsidiary or any Dissolving Subsidiary is bound or to which any of their respective assets is subject, (d) to the Knowledge of each of the Members, result in the imposition of any security interest upon any assets of the Company or any Subsidiary or any Dissolving Subsidiary, or (e) to the Knowledge of each of the Members, violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Subsidiary, any Dissolving Subsidiary or any of their respective properties or assets.

3.4       Subsidiaries .

3.4.1     Section 3.4.1 of the Disclosure Schedule sets forth: (i) the name of each Subsidiary that is not in the process of being dissolved by the Company; (ii) the number and type of outstanding equity securities of each Subsidiary and a list of the holders thereof; (iii) the jurisdiction of organization of each Subsidiary; (iv) the names of the officers and directors of each Subsidiary; and (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity.  For the avoidance of doubt, the Members have represented that the only Subsidiary is Pagoda Marketing, Inc. (“ Pagoda ”).

3.4.2    Each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Each Subsidiary is 100% owned by the Company, free and clear of all security interests and Encumbrances.  Each Subsidiary is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification. Each Subsidiary has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. The Members have delivered to the Buyer complete and accurate copies of the charter, by-laws or other organizational documents of each Subsidiary. No Subsidiary is in default under or in violation of any provision of its charter, by-laws or other organizational documents. All of the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. Except as set forth in Section 3.4.2 of the Disclosure Schedule, all shares of each Subsidiary that are held of record or owned beneficially by either the Company or any Subsidiary are held or owned free and clear of any restrictions on transfer (other than restrictions under the Securities Act, as amended and state securities laws), claims, security interests, options, warrants, rights, contracts, calls, commitments, equities and demands. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which the Company or any Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary. There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Subsidiary. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary.

3.4.3   Section 3.4.3 of the Disclosure Schedule sets forth the financial statements for Pagoda (the “ Pagoda Financial Statements ”).  To the Knowledge of each of the Members, the Pagoda Financial Statements (i) are free from any and all material misstatements or omissions, (ii) have been prepared in accordance with the accepted and ordinary course accounting procedures of Pagoda applied on a consistent basis throughout the periods covered thereby, (iii) fairly present the consolidated financial condition, results of operations and cash flows of Pagoda as of the respective dates thereof and for the periods referred to therein, and (iv) are consistent with the books and records of Pagoda.

3.4.4   Any and all employment agreements entered into by Pagoda are and/or will be terminated prior to Closing.  Any and all members of the board of directors and officers of Pagoda other than Hefter have resigned from their position(s) as of the Closing.

3.4.5   Section 3.4.5 of the Disclosure Schedule sets forth the name of each Subsidiary of the Company for which dissolution process have been commenced (each a “ Dissolving Subsidiary ” and collectively the “ Dissolving Subsidiaries ”).  To the Knowledge of the Members, each Dissolving Subsidiary has paid all appropriate Taxes and filed all Tax Returns in all appropriate jurisdictions.  To the Knowledge of the Members, the Dissolving Subsidiaries have no outstanding liabilities or debts.

3.4.6   The Company does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture or other business association or entity which is not a Subsidiary.

3.5                Financial Statements . The Company has provided to the Buyer true, complete and correct copies of the Financial Statements.  To the Knowledge of each of the Members, the Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (with the exception of the Most Recent Balance Sheet, which has been prepared in accordance with the accepted and ordinary course accounting procedures of the Company), (ii) fairly present the consolidated financial condition, results of operations and cash flows of the Company as of the respective dates thereof and for the periods referred to therein and (iii) are consistent with the books and records of the Company.

3.6       Absence of Certain Changes .  To the Knowledge of each of the Members, except as set forth in Section 3.6 of the Disclosure Schedule, since the Most Recent Balance Sheet Date, (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Material Adverse Effect, and (b) there has not been:

3.6.1   Any change in the business assets, results of operations, financial condition, Liabilities, or prospects of the Company or any Subsidiary, which change by itself or in conjunction with all other such changes, whether or not arising in the Ordinary Course of Business, could have a Material Adverse Effect;

3.6.2   Any conti