forms4.htm

We expect that our cash flow from operations and the proceeds from the public equity offering will allow us to meet our anticipated cash requirements for the next twelve months, excluding any additional funding we will need to pursue our acquisition strategy. Such acquisitions, if entered into, will be funded by the sale of additional debt or equity securities or additional bank financing. The sale of additional equity securities could result in additional dilution to our stockholders, and there can be no guarantee that we will be successful in raising those additional funds on terms that are acceptable to us. Any acquisitions we undertake may be funded through other forms of debt, such as publicly issued or privately placed senior or subordinated debt.

F - 12

NOTE 4 - PROPERTY AND EQUIPMENT

At December 31, property and equipment consisted of the following:

	Estimated Useful Life	2009			2008
Office equipment	3 years	$	7,758		$	7,758
Furniture and fixtures	10 years		7,882			6,257
Equipment under capital leases	3 years		48,146			52,439
			63,786			66,454
Accumulated depreciation			(13,102	)		(9,839	)
Accumulated amortization of equipment under capital leases			(32,791	)		(22,349	)
		$	17,893		$	34,266

Property and equipment are stated at cost. Depreciation and amortization is provided on the straight-line method over the estimated useful lives of the assets. Depreciation expense was $5,789 and $2,635 for years ended December 31, 2009 and 2008, respectively. Amortization expense was $14,134, and $15,210 for the years ended December 31, 2009 and 2008, respectively.

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At December 31, accounts payable and accrued expenses consisted of the following:

	2009		2008
Accounts payable	$	682,719	$	336,906
Accrued payroll and vacation		301,597		163,207
Due to Knox Lawrence International, LLC		381,382		50,000
Other accrued expenses		161,890		30,647
	$	1,527,588	$	580,760

NOTE 6 - NOTES PAYABLE

At December 31, secured revolving credit facilities and other debt obligations consisted of the following:

			2009		2008
		Secured revolving credit facilities:
(1	)	Bank of Albuquerque	$	-	$	216,590
(2	)	Proficio Bank		164,384		-
(3	)	Chase Bank		7,420		-
		Subtotal		171,804		216,590
(4	)	Related party notes		817,951		575,398
				989,755		791,988
		Current maturities of debt		656,219		277,382

		Long-term debt	$	333,536	$	514,606

Utilipoint had a revolving credit facility, used for working capital needs, with the Bank of Albuquerque from 2005 through mid-2008 at which point the line expired. Utilipoint had not been in compliance with debt covenant financial ratios on debt coverage, funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) and tangible net worth during 2008. The balance at December 31, 2008 was partially paid down on January 22, 2009 and converted into a short-term note in the amount of $165,000 due September 30, 2009 with an interest rate of 9.25%. Six monthly consecutive principal payments of $16,500 plus interest on unpaid principal were due commencing January 15, 2009 with a final payment of $66,000 plus interest due September 30, 2009. The Company paid the first five installments and subsequently renegotiated the remaining balance of principal and interest totaling $82,264 into a new 9.25% note with the Bank of Albuquerque on September 30, 2009. The 9.25% note matured on December 31, 2009 and was repaid in 5 principal payments of $9,000 each and one final principal and interest payment of $37,561. The 9.25% note was a modification of the credit facility and as such was secured by Utilipoint’s accounts receivable, fixed assets and a right of offset against cash accounts held with the bank.

F - 13

On October 14, 2009, the Company, entered into a revolving loan agreement with Proficio Bank (the “Loan Agreement”). Pursuant to the terms of the Loan Agreement, the Lender agreed to loan up to $500,000 (the “Loan”) to the Company which amounts will be evidenced by a Senior Secured Revolving Promissory Note. The Loan matures on October 14, 2010, unless earlier accelerated upon the occurrence of an event of default, as such term is defined in the loan agreement. Interest on the Loan is payable monthly in arrears commencing on November 1, 2009, at a rate which is equal to the Wall Street Journal prime rate plus 2.5%, or a minimum of 6.5%. In the event of default, as such term is defined in the Loan Agreement; the interest rate shall bear additional interest of 3%. The Loan is secured by all of our property, including, all our accounts, inventory, furniture, fixtures, equipment, leasehold improvements, chattel paper and general intangibles and all proceeds thereof. In connection with the Loan, in addition to the Loan Agreement, we entered into a Security Agreement with Proficio Bank and the holders of the senior subordinate debentures issued by Utilipoint entered into a Subordination and Standstill Agreement. There was a balance of $164,384 outstanding at December 31, 2009. As of December 31, 2009 the loan was not in default. In anticipation of violating the revolving loan's tangible net worth covenant, as of March 31, 2010, the Company is engaged in renegotiating the tangible net worth covenant with Proficio Bank and anticipates that the first covenant compliance date under the renegotiated covenant will be June 30, 2010.

In July 2009, IP secured a revolving credit facility with Chase Bank. The credit facility allows IP to borrow up to $15,000 at an interest rate ranging from 13.24% to 19.24%. Interest accrues at an annual percentage rate of 13.24% for purchases and 19.24% for cash advances and overdraft protection. As of December 31, 2009, the amount outstanding under this credit facility was $7,420.

As of December 31, 2009 and 2008, the Company had unsecured notes payable due to current and former shareholders totaling $817,951 and $575,398, respectively. The various notes accrue interest ranging from 4% to 12% per annum and were subordinated to obligations under the above credit facility borrowings.

Knox Lawrence International, LLC has provided financing including:

(i)	On December 31, 2008, Utilipoint issued a Senior Subordinated Debenture to Knox Lawrence International, LLC in the principal amount of $62,500. The Debenture provides for payment of interest in the amount of 10% per annum. The Debenture matures on December 31, 2013. As of December 31, 2009 and 2008, the balance outstanding was $62,500.
(ii)	On January 15, 2009, Utilipoint issued a Senior Subordinated Debenture to Knox Lawrence International, LLC in the principal amount of $10,000. The Debenture provides for payment of interest in the amount of 10% per annum and matures on January 15, 2014. As of December 31, 2009 and 2008, the balance outstanding was $10,000 and $0, respectively.

(iii)	On June 30, 2009, the Intelligent Project, LLC issued an unsecured promissory note to KLI IP Holding, Inc. in the amount of $108,969. Interest on this note accrues at an annual percentage rate of 5%. The note matures on June 30, 2012. As of December 31, 2009 and 2008, the balance outstanding was $108,969 and $0, respectively.

(iv)	On July 1, 2009, Utilipoint issued a Revolving Senior Subordinated Debenture to Knox Lawrence International, LLC. The Debenture provides for payment of interest in the amount of 10% per annum and matures on July 1, 2014. As of December 31, 2009 and 2008, the balance outstanding was $137,067 and $0, respectively.

Officers and other affiliates of Utilipoint have provided the following financing including:

(i)	On January 1, 2006, Utilipoint issued a Senior Subordinated Debenture to Bruce R. Robinson Trust in the principal amount of $447,106. The Debenture provides for payment of interest in the amount of 12% per annum. The Debenture was due to mature on January 1, 2010 but has been extended through June 30, 2010. As of December 31, 2009 and 2008, the balance outstanding was $447,106.
(ii)	An unsecured note bearing interest at a variable interest rate (which was 4% at December 31, 2009) and which was due on August 20, 2009 but extended through 2010. As of December 31, 2009 and 2008, the balance outstanding was $16,309 and $35,070, respectively.
(iii)	An unsecured note bearing interest at 4% per annum which is due on May 4, 2010. As of December 31, 2009 and 2008, the balance outstanding was $5,000.
(iv)	An unsecured note bearing interest at 10% per annum which is due on January 15, 2014. As of December 31, 2009 and 2008, the balance outstanding was $15,000 and $0, respectively.

In accordance with separation agreement with a former executive, a $16,000 note payable which was originally due on September 23, 2009 was restructured on August 1, 2009 in connection with the resignation of the Company executive who holds the note. Per terms of a separation agreement, the former Company executive agreed to an extension of terms in the amount of two installments of $2,000 and $14,000 due December 31, 2009 and January 30, 2010, respectively. As of December 31, 2009 and 2008, the balance outstanding was $16,000. The balance was paid off as of March 30, 2010.

The unpaid portion ($3,722) of a $9,722 note due June 2, 2009 to the same former Company executive was paid on October 16, 2009.

F - 14

Interest expense on notes payable and the revolving credit facilities was $86,967, $61,265 and $64,433 for the years ended December 31, 2009, 2008 and 2007, respectively which includes $71,640 and $53,102 of interest to related parties for the years ended December 31, 2009 and 2008 respectively.

The Company's contractual payments of long-term related party borrowings at December 31, 2009 are as follows:

Year	Amount
2010	$	484,415
2011		-
2012		108,969
2013		62,500
2014		162,067
Total	$	817,951

NOTE 7 - 401(K) PLAN

The Company maintains a defined contribution retirement plan under Internal Revenue Code Section 401(k). Substantially all regular full time employees are eligible to participate in the plan. The Company matches each eligible employee’s salary reduction contribution up to a limit of 3%. The Company’s contributions were $14,204, $27,560 and $40,128 for the years ended December 31, 2009, 2008 and 2007, respectively.

NOTE 8 - STOCKHOLDERS’ DEFICIT

In accordance with the reverse merger on August 21, 2009 (refer to Note 1, Description of Business and Basis of Presentation), an aggregate of 1,348,516 shares with a par value of $.001 of Midas Medici were issued to Utilipoint shareholders in exchange for 42,191 Utilipoint shares (which represented 100% of the then outstanding shares). This included 21,523 Utilipoint Series A Preferred Stock that were converted to 687,922 Midas Medici common shares. Further, all outstanding Utilipoint stock options at the time of the reverse merger were exchanged for 172,597 Midas Medici stock options in accordance with the Midas Medici stock option program, adopted on July 27, 2009. The shares of common stock issued in connection with the reverse merger were not registered with the Securities and Exchange Commission and are considered to be restricted securities.

As a result of the reverse merger, all references to common stock, preferred stock, share and per share amounts were retroactively restated to reflect the exchange ratio of 31.96217203 shares of Midas Medici’s Common Stock for 1 share of all of the classes of the Utilipoint’s common stock and preferred stock outstanding immediately prior to the merger as if the exchange had taken place as of the beginning of the earliest period presented.

Stock Issued and Outstanding – The total number of shares of capital stock which the Company shall have authority to issue is fifty million (50,000,000). These shares shall be divided into two classes with 40,000,000 shares designated as Common Stock at $.001 par value and 10,000,000 shares designated as Preferred Stock at $.001 par value (the “Preferred Stock”). The Preferred Stock of the Company shall be issued by the Board of Directors of the Company in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Company may determine, from time to time.

Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders' meetings for all purposes, including the election of directors.

Shares issued and outstanding at December 31 were:

	2009			2008			2007
Common Stock issued (*)		2,735,516			2,192,094			2,136,160
Treasury shares held		(425,000	)		(808,611	)		(754,787	)
Common Stock outstanding		2,310,516			1,383,483			1,381,373

(*) including converted retroactive restatement of Series A Preferred Stock.

Preferred Stock Dividends - Prior to the merger transaction, Utilipoint had 21,523 shares of Series A Preferred Stock outstanding and was required to pay preferential cumulative dividends in cash to the holders. This obligation terminated when the Preferred Stock was converted into common stock as part of the merger transaction. Dividends associated with the Series A Preferred Stock were payable as follows:

F - 15

·	An annual dividend equal to 13% of the original purchase price, payable quarterly on October 31st, January 31st, April 30th and July 31st of each year commencing on October 31, 2007 (the “Quarterly Dividends”). This equated to $34,125 per quarter.

Commencing on January 31, 2010, and continuing on the last day of each month thereafter until July 23, 2010, a dividend equal to the monthly payment that would be payable on the Original Purchase Price based on a 24-month amortization schedule using a 13% annual interest rate (the “Monthly Dividends”). This equated to $49,919 per month.

Upon the first to occur of the following: (i) a liquidation of the Company; (ii) a change in control of the Board of Directors of the Company; or (iii) the failure to convert the Series A Preferred Stock to Common Stock by July 23, 2010, a dividend equal to the Original Purchase Price less any portion of the Monthly Dividends that would be allocable to principal if the Monthly Dividends were treated as loan payments (the “Balloon Dividend”). This equated to an $812,382 Balloon Dividend.

Series A Preferred Stock dividends were cumulative so that, if the Company was unable to pay, or if the Board of Directors failed to declare Series A Preferred Stock dividend for any period, such Series A Preferred Stock dividends nevertheless accrued and were payable in subsequent periods. Any payment of Series A Preferred Stock dividends by the Company in any period first were to be applied to any accrued but unpaid Series A Preferred Stock dividends for prior periods, in chronological order, and then to dividends due for that period.

Stated Series A Preferred Stock dividends of $109,958, $136,500 and $34,125 were declared in 2009, 2008 and 2007, respectively. The Company is in a negative retained earnings position and therefore the dividends were recorded as a reduction in the Additional Paid-in Capital. The Company would not pay any of the Series A Preferred Stock dividends if, in the opinion of the Board of Directors, the Company was not able to meet its debt obligations or growth initiatives. For the years ended December 31, 2009, 2008, dividends declared but not paid totaled $109,958 and $68,250, respectively. The 2007 declared dividends was paid. As of the conversion date, which is the same as the acquisition date, August 21, 2009 and December 31, 2009, $178,208 of stated Series A Preferred Stock dividends had been paid to the preferred shareholders by Knox Lawrence on behalf of Utilipoint. Refer to Note 13, Related Party Transactions - Utilipoint Preferred Dividends.

The discount resulting from the increasing rate feature of the Series A Preferred Stock dividend represented an unstated dividend cost that was being amortized over the three year period preceding payment of the Balloon Dividend using the effective interest method, by charging the imputed dividend cost against Additional Paid-in Capital. The total stated dividends, whether or not declared, and unstated dividend cost combined represented a period’s total preferred stock dividend, which was deducted from net income (loss) to arrive at net loss available to common shareholders.

Pursuant to the Merger Agreement, the 21,523 outstanding shares of Series A Preferred Stock were converted to 687,922 Midas Medici common shares (refer to Note 1, Description of Business and Basis of Presentation).

Common Stock Put Options - In conjunction with the July 2007 stock purchase and reorganization, the Company issued a total of 191,390 Common Stock put options to two management stockholders. These agreements gave the management stockholders the right and the option, but not obligation, to sell all of their common shares to the Company through December 31, 2009. The agreements defined the purchase price of the put based on original purchase price if calendar year 2007 EBITDA exceeded $520,000 or, if the management shareholder was still employed by the Company at December 31, 2008, based on the lesser of the original purchase price or fair market value (“FMV”) as determined by an independent valuation expert. If the shareholders exercise their options at different times, the FMV first determined would apply to both shareholders.

The Common Stock put options were not exercisable at December 31, 2007 based on 2007 EBITDA. Both shareholders continued to be employed by the Company at December 31, 2008. Management estimated the FMV as of December 31, 2008 and 2007 to be the value of the most recent per share purchase price; which was higher than the original purchase price. Due to the absence of quoted FMV and significant third-party transactions, this estimate was subject to change should better inputs become available.

Cancellation of Common Stock Put Options - On July 26, 2009, per renewal terms of one executive’s employment agreement and on August 1, 2009 per terms of the separation agreement of a different executive, all common stock put options were cancelled.

Common Stock Dividends

The Company may declare dividends on the common stock. There has been no common stock dividends declared as of December 31, 2009. Under the terms of the Loan Agreement with Proficio Bank (refer to Note 6, Notes Payable), the Company is restricted from declaring or paying dividends without the prior written consent of the bank, so long as it may borrow under the Loan Agreement or so long as any indebtedness remains outstanding under the Loan Agreement.

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NOTE 9 - STOCK OPTIONS AND WARRANTS

On July 27, 2009, the Board approved the MMGH Plan. The maximum number of shares that may be issued under the Plan is 650,000. However for a period of ten (10) years commencing January 1, 2010, the maximum number of shares issuable under the Plan shall be equal to 20% of the issued and outstanding shares of the Company’s common stock on a fully diluted basis but shall not be less than 650,000. Pursuant to the Plan, incentive stock options or non-qualified options to purchase shares of common stock may be issued. The plan may be administered by our board of directors or by a committee to which administration of the Plan, or part of the Plan, may be delegated by our board of directors. Options granted under the Plan are not generally transferable by the optionee except by will, the laws of descent and distribution or pursuant to a qualified domestic relations order, and are exercisable during the lifetime of the optionee only by such optionee. Options granted under the plan vest in such increments as is determined by our board of directors or designated committee. To the extent that options are vested, they must be exercised within a maximum of thirty days of the end of the optionee's status as an employee, director or consultant, or within a maximum of 12 months after such optionee's termination or by death or disability, but in no event later than the expiration of the option term. The exercise price of all stock options granted under the plan will be determined by our board of directors or designated committee. With respect to any participant who owns stock possessing more than 10% of the voting power of all classes of our outstanding capital stock, the exercise price of any incentive stock option granted must equal at least 110% of the fair market value on the grant date.

Stock option awards granted from this plan are granted at the fair market value on the date of grant, vest over a period determined at the time the options are granted, ranging from zero to one year, and generally have a maximum term of ten years. Certain options provide for accelerated vesting if there is a termination of employment event for specified reasons set forth in certain employment agreements. When options are exercised, new shares of the Company’s common stock, par value $0.001 per share, are issued.

On July 27, 2009 the Company granted options to purchase an aggregate of 247,500 shares of common stock under the MMGH Plan with a weighted-average exercise price of $2.27.

On August 21, 2009, the Company completed an offer to exchange Utilipoint stock options, all of which were granted in 2009, for Midas Medici stock options (the “Exchange”). All previously granted Utilipoint options were exchanged for new Midas Medici options with a lower exercise price on a one-for-thirty two basis. Options for an aggregate of 5,400 shares of Utilipoint’s common stock were exchanged. Options granted pursuant to the Exchange have an exercise price of $1.56 per share and vested on grant date. The outstanding Utilipoint options were exchanged for 172,597 Midas Medici options.

On August 21, 2009, we issued options to purchase 45,000 shares of our common stock to employees and one of our directors at an exercise price of $6.00 per share.

On October 26, 2009, we issued options to purchase 7,000 shares of our common stock to an employee at an exercise price of $6.00 per share.

A summary of option activity under the MMGH Plan as of December 31, 2009, and changes during the year then ended is presented below:


				Weighted-Average		Weighted-Average Remaining		Aggregate
	Shares			Exercise Price		Contractual Term		Intrinsic Value
Outstanding at January 1, 2009		-		$	-
Granted		472,097		$	2.42
Exercised		-		$	-
Forfeited or expired		(15,981	)	$	1.56
Outstanding at December 31, 2009		456,116		$	2.45		5.5	$	1,113,480
Expected to vest at December 31, 2009		430,691		$	2.39		5.5	$	1,070,199
Exercisable at December 31, 2009		161,616		$	1.58		5.2	$	512,855

The weighted-average grant-date fair value of options granted during the year ended December 31, 2009, was $1.39 and was estimated using the Black-Scholes-Merton option pricing model. To date, no options have been exercised.

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The fair value of each stock option grant is estimated on the grant date using the Black-Scholes-Merton option-pricing model, which incorporates a number of valuation assumptions noted in the following table, shown at their weighted-average values:

Expected dividend yield	0	%
Risk-free rate	1.59	%
Expected stock price volatility	103.84	%
Expected term (years)	3.1

The expected volatility is calculated by using the average historical volatility of companies that management believes are representative of Midas Medici’s business and market capitalization.

The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method provided in ASC Topic 718, which averages an award’s weighted-average vesting period and expected term for share options. The Company will continue to use the simplified method until it has the historical data necessary to provide a reasonable estimate of expected life in accordance with ASC Topic 718, as amended by SAB 110. For the expected option term, the Company used a simple average of the vesting period and the contractual term for options granted subsequent to January 1, 2006 as permitted by ASC Topic 718.

For equity awards to non-employees, the Company also applies the Black-Scholes-Merton option pricing model to determine the fair value of such instruments in accordance with ASC Topic 718 and the provisions of ASC Topic 505-50, “Equity-Based Payments to Non-Employees.” The options granted to non-employees are re-measured as they vest and the resulting value is recognized as an adjustment against the Company’s net loss over the period during which the services are received.

The total value of the stock option awards is expensed ratably over the vesting period of the option. As of December 31, 2009, total unrecognized compensation cost related to stock option awards, to be recognized as expense subsequent to December 31, 2009 was approximately $253,881, and the related weighted-average period over which it is expected to be recognized was approximately one (1) year.

The total fair value of options vested during the year ended December 31, 2009 was $158,684. Stock-based compensation in the amount of $301,457 was expensed for the year ended December 31, 2009, and $0 was expensed for the years ended December 31, 2008 and 2007.

NOTE 10 - LOSS PER COMMON SHARE

In August 2009, Utilipoint's Series A preferred Shares were converted into 687,922 shares of common stock as part of the merger transaction. Prior to the conversion, the Preferred Shares were not included in the basic or diluted net loss per share since the Company included the impact of the preferred dividends and discount accretion as adjustments to arrive at the net loss applicable to common stockholders during the years ended December 31, 2008 and 2007 and for the period January 1, 2009 to the date of the merger transaction. After the conversion date, which was the same as the date of the merger, those shares were included in the basic and diluted net loss per share. The written put options issued July 23, 2007 for the purchase of 191,390 shares of Common Stock and any other outstanding options were not included in the computation of diluted net loss per share because the inclusion of such shares would have an anti-dilutive effect on the net loss applicable to common stockholders.

Basic loss per share has been computed by dividing net loss available to common stockholders by the weighted average number of shares of Common Stock, adjusted as noted above, outstanding during each period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. The following table sets forth the computation of basic and diluted loss per share for years ended December 31:

	2009			2008			2007
Net (loss) income attributable to to Midas Medici Group Holdings, Inc. and Subsidiaries	$	(1,496,266	)	$	(299,689	)	$	68,063
Less stated preferred dividends		(109,958	)		(136,500	)		(34,125	)
Less preferred stock discount accretion		(203,109	)		(279,353	)		(116,232	)
Net loss applicable to common stockholders	$	(1,809,333	)	$	(715,542	)	$	(82,294	)
Shares used in net loss per share;
basic and diluted		1,290,777			679,995			1,065,779
Net loss per share; basic and diluted	$	(1.40	)	$	(1.05	)	$	(0.08	)

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NOTE 11 - COMMITMENTS AND CONTINGENCIES

(a) Capital Leases

The Company is obligated under capital leases for computer equipment that expire on various dates through December 2012. The minimum payments for the capital leases in effect at December 31, 2009 are as follows:

Year Ending December 31,
2010	$	13,179
2011		6,143
2012		61
		19,383
Less amount representing interest		1,615
Present value of minimum lease payments	$	17,768

Short term portion	$	11,899
Long term portion		5,869
	$	17,768

Interest on capital leases amounted to $2,671, $2,677 and $1,947 for the years ended December 31, 2009, 2008 and 2007, respectively.

(b) Operating Leases

The Company leases buildings and equipment under various operating leases with lease terms ranging from one to three years. The following is a schedule of the future minimum lease payments required under operating leases that have initial non-cancelable lease terms in excess of one year:

Fiscal year ending December 31,	Minimum Lease Commitments
2010	$	53,788
2011		3,503
	$	57,291

Rent expense for office space amounted to $132,284, $78,164 and $152,463 for the years ended December 31, 2009, 2008 and 2007, respectively.

The Company, in the normal course of business, may be subject to claims and litigation. Management is not aware of any outstanding claims or assessments against the Company that are estimable and likely.

(d) Stockholder Agreements

The Company had entered into stockholder agreements with its minority stockholders, some of whom are key managers of the Company. These agreements provided the Company the first right to purchase each stockholder’s shares in the event of a bona fide offer from any persons to purchase shares from the stockholder. The Company had the right to purchase such shares on the same terms and conditions set forth in any such purchase agreement within sixty days following the Company’s receipt of the notice to purchase. The agreements contained restrictions on transfer of stock to third parties and clauses on the Company’s right to repurchase terminated shareholders shares for a price equal to the net book value of the shares at the time of termination of employment. The agreements terminated in conjunction with the merger transaction.

(e) Employment Agreements

Effective July 16, 2009, we entered into employment agreements with two key executive officers which agreements contain the same terms and provisions. The agreements provide for an initial term of five years which shall be automatically extended for successive one year periods unless terminated.

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The employment agreements provide for an annual base salary of $125,000 which shall be increased as follows: (i) to $200,000 on the earlier to occur of the first anniversary of the agreements or the Company publicly reports consolidated annual gross revenues of at least $10,000,000, (ii) to $250,000 on the earlier to occur of the second anniversary of the agreements or the Company publicly reports consolidated annual gross revenues of at least $35,000,000, (iii) to $350,000 on the earlier to occur of the third anniversary of the agreements or the Company publicly reports consolidated annual gross revenues of at least $100,000,000. In addition, the executives will each be entitled to an annual bonus targeted between 150% to 250% of the base salary during the first 3 years of the term of the Agreements and thereafter, at a target to be determined in good faith by the Company’s board of directors.

In the event of the executives’ death while employed by the Company, the agreements shall automatically terminate and any unvested equity compensation shall vest immediately and any vested warrants may be exercised on the earlier of the warrant’s expiration or 18 months after the death. In the event of the executives' death or if the agreement is terminated due to a disability or for cause (as defined in the agreements), any unpaid compensation, prorata bonus or bonus options earned and any amounts owed to the executives shall be paid by us. In addition, if the agreements are terminated due to the disability of the executive, any unvested equity compensation shall vest immediately and any vested warrants may be exercised on the earlier of the warrant’s expiration or 18 months after such termination. In the event the executive’s employment is terminated without cause, the executives shall be entitled to receive, in a lump sum payment, the base salary, the maximum bonus and options that would have been paid to the executives if the agreements had not been terminated or for 12 months, whichever is greater. In addition, any unpaid compensation, pro rata bonus or bonus options earned and any amounts owed to the executives shall be paid by us and any unvested equity compensation shall vest immediately and any vested warrants may be exercised on the earlier of the warrant’s expiration or 18 months after the termination. In the event of the executives’ resignation without good reason (as defined in the agreement), or retirement, the executives shall be entitled to receive any unpaid compensation, pro rata bonus or bonus options earned and any amounts owed to the executives.

As a method to retain senior management in the event of a change of control, the agreements also provide that upon the closing of a transaction that constitutes a “liquidity event”, as such term is defined in the agreements, each executive shall be entitled to receive a transaction bonus equal to 2.99 times his then current base salary, provided that he remains employed with the Company on the closing of such liquidity event, unless his employment is terminated without cause or he resigns for good reason. Liquidity events include any consolidation or merger, acquisition of beneficial ownership of more than 50% of the voting shares of the Company, or any sale, lease or transfer of all or substantially all of the Company’s assets.

NOTE 12 - CONCENTRATION RISKS

(a) Credit Concentration

Our demand deposits are placed with major financial institutions. Management believes the Company is not exposed to undue credit risk for any demand deposits that may, from time to time, exceed the federally insured limits.

(b) Revenue and Accounts Receivable Concentration

Two customers accounted for 25% of revenue for the year ended December 31, 2009 and one customer accounted for 10% of revenue for the year ended December 31, 2008. As of December 31, 2007, three customers accounted for 40% of revenue. As of December 31, 2009, three customers accounted for approximately 51% of the total outstanding net accounts receivable and as of December 31, 2008 two customers accounted for approximately 38% of the total outstanding net accounts receivable.

NOTE 13 - RELATED PARTY TRANSACTIONS

Revenues

Revenues from KLI were $0, $10,264 and $14,878 in 2009, 2008 and 2007, respectively.

Legal and Consulting Expense

A member of the Board of Directors and a law firm which employs a relative of the Board member were reimbursed for fees in conjunction with operational support during 2008. Expenses for the Board member and the law firm were $52,500 and $10,864, respectively, of which $25,000 was paid with Common Stock issued to the Board member.

Business Combination Under Common Control

In July 2009, Utilipoint acquired a controlling interest in The Intelligent Project, LLC (“IP”). The acquisition was accounted for as a combination of entities under common control.

IP was founded on March 10, 2009, by KLI IP Holding, Inc. and David Steele, the current president of Utilipoint and former President of a predecessor Knox Lawrence International, LLC (“KLI”) portfolio company. Nana Baffour, our CEO, was the managing member of IP prior to the acquisition. IP’s management committee consisted of Nana Baffour, Johnson Kachidza, David Steele and Ken Globerman, a KLI employee. Prior to the acquisition, David Steele, a managing director of IP was also a senior managing director of Utilipoint. From inception to when IP was acquired, its operations were funded through loans provided by KLI. Prior to its acquisition, IP was controlled by KLI IP Holding Inc., which held a 75% interest in IP. KLI IP Holding, Inc. is controlled by Nana Baffour and Johnson Kachidza, who held a 60% interest.

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In connection with the acquisition of IP:

Utilipoint entered into a capital commitment agreement with IP for an amount of up to $200,000. IP will be able to make capital requests on the capital commitment agreement for initial financing. Utilipoint received a 60% interest in IP as a result of signing the capital contribution agreement. As of December 31, 2009, Utilipoint had provided no capital under the capital commitment agreement.

The existing members of IP will provide services to Utilipoint in exchange for options to purchase an aggregate of 44,747 shares of the common stock of the Company that are fully-vested on the date of grant and that have a strike price equal to the fair market value of the Company’s common stock on the date of grant. The stock options for the individuals will be granted pursuant to the equity compensation plan that was adopted by the Company effective as of May 1, 2009. All of the stock options will have a term of five years and a cashless exercise option. The Consulting Agreement provides that KLI IP Holding Inc. will provide consulting services to the Company in connection with the joint business and marketing efforts of the Company and IP. In exchange for its services KLI IP Holding Inc. received Company stock options.

The Stock Options Agreement provides that, in consideration of the services being provided to the Company by IP and KLI IP Holding Inc., the Company shall issue stock options in such amounts as set forth below. The stock options will be fully-vested upon issuance and will have an exercise price equal to the fair market value of the Company Common Stock on the grant date ($1.56). The stock options will have a term of five years and a cashless exercise option.

·	KLI IP Holding Inc. – options to purchase 27,168 shares

·	IP management shareholders – options to purchase 17,579 shares

In accordance with the merger, the above outstanding Utilipoint options were exchanged for Midas Medici options in accordance with the Midas Medici stock option program, adopted on July 27, 2009.

3)	The Company will provide certain management services to IP in exchange for reasonable compensation.
4)	For a period of two (2) months ending September 1, 2009, KLI will agree to purchase up to $100,000 of the common stock of the Company at a per share purchase price of $1.56 per share. KLI will also agree to lend up to $100,000 pursuant to a Revolving Senior Subordinated Debenture for a period of five (5) years ending July 1, 2014.

Utilipoint Management Fees

Effective with the acquisition of Utilipoint, management fees to Knox Lawrence of $25,000 per quarter are no longer applicable. At December 31, 2009 and 2008, outstanding management fees of $113,978 and $50,000 are due to Knox Lawrence, respectively.

Utilipoint Preferred Dividends

The net assets of Utilipoint acquired by the Company on August 21, 2009 included preferred dividends payable to Knox Lawrence. Knox Lawrence assumed the obligation to pay the preferred dividends to UTP International, LLC (“UTPI”) on Utilipoint’s behalf as per the former Utilipoint preferred shareholders’ agreement. Utilipoint’s obligation for preferred dividends therefore became an obligation to Knox Lawrence. At December 31, 2009, outstanding dividends payable of $178,208 are due to Knox Lawrence.

Expense Reimbursement Agreement

On August 7, 2009, the Company entered into an expense reimbursement agreement (the “Reimbursement Agreement”) with Knox Lawrence. Pursuant to the Reimbursement Agreement, Knox Lawrence is authorized to incur up to $350,000 in certain expenses and obligations on behalf of the Company and the Company agreed to reimburse Knox Lawrence for such expenses and obligations promptly after delivery of invoices for such expenses. The Reimbursement Agreement has a term of one year, subject to earlier termination upon 30 days’ written notice by either party. Knox Lawrence also allocates expenses for rent and office services to the Company.

Incurred and allocated expenses related to office rent, office services and professional fees for the year ended December 31, 2009 were $404,704 for which the Company reimbursed Knox Lawrence $173,300. The balance of $267,404 at December 31, 2009 is a component of "Accrued Expenses" on the consolidated balance sheets. The expenses are a component of “Selling, general and administrative” operating expenses on the consolidated statements of operations and comprehensive loss.

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NOTE 14 - INCOME TAXES

Utilipoint International, Inc. is a C-corporation, cash basis taxpayer. The Intelligent Project LLC has elected to be treated under the Internal Revenue Code as a Partnership. Accordingly, all income taxes relating to their profits and losses are the responsibility of the members. Utilipoint, s.r.o., is established in the Czech Republic and incurs corporation income taxes at the rate of approximately 20%.

As a result of operating losses incurred for tax purposes, the Company has no current liability for federal or state income taxes in those years (other than minimum state taxes due regardless of income).

A reconciliation of income tax expense using the statutory federal and state income tax rates is as follows for the years ended December 31:

	2009			2008			2007
Federal tax at statutory rates	$	(537,570	)	$	(114,071	)	$	38,692
State tax at statutory rates		(89,776	)		(20,130	)		6,828
Increase (decrease) in tax due to:
S- Corporation income taxable to shareholders		-			-			(74,158	)
Nondeductible expenses		7,013			6,988			8,869
Change in deferred tax asset valuation allowance		607,574			35,531			63,113
Effect of difference between statutory rates and
graduated rates used to calculate deferred taxes		-			50,533			414
Other		13,779			5,334			1,979
Income tax expense (benefit)	$	1,020		$	(35,815	)	$	45,737

Deferred income taxes reflect the tax consequences in future years for differences between the tax basis of assets and liabilities and their basis for financial reporting purposes. Temporary differences giving rise to the deferred tax assets and liabilities relate in part to accrual-to-cash adjustments, as the Company follows the accrual basis of accounting for financial reporting but the cash basis for tax purposes. Deferred tax assets arise from net operating losses, and from temporary differences in depreciation and amortization and from equipment leases capitalized on the financial statements but treated as operating leases for tax purposes. A deferred tax liability arises from the net income of a wholly owned foreign corporation (Utilipoint s.r.o.), which becomes taxable in the United States upon repatriation of the funds. Deferred tax assets and liabilities were calculated using the graduated rates anticipated in the years tax assets and liabilities are anticipated to reverse. The reversal of timing differences requires significant estimation; accordingly, deferred tax assets and liabilities may reverse at tax rates significantly different than anticipated.

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As a result of net losses incurred and because the likelihood of being able to utilize these losses is not presently determinable, the Company has recorded a valuation allowance to fully reserve its deferred tax asset. If in the future the Company were to determine that it would be able to realize its deferred tax assets in excess of its net recorded amount, an adjustment would increase income in such period or, if such determination were made in connection with an acquisition, an adjustment would be made in conjunction with the allocation of the purchase price.

At December 31, 2009 and 2008 the significant components of the Company’s deferred tax assets and liabilities were:

	2009			2008
Deferred tax assets:
Net operating loss carryforwards	$	257,350		$	12,012
Accrual to cash adjustments		120,583			53,980
Stock based compensation		271,637			-
Depreciation and amortization adjustments		56,648			29,360
Leases not capitalized for tax purposes		-			3,292
Total deferred tax assets		706,218			98,644
Valuation allowance		(706,218	)		(98,644	)
Total deferred tax assets net of valuation allowance	$	-		$	-

Deferred tax liabilities:
Accrual to cash adjustments	$	-		$	-
Wholly owned foreign corporation		-			(1,057	)
Total deferred tax liability	$	-		$	(1,057	)

For income tax reporting purposes, the Company's aggregate unused net operating losses of approximately $643,000 will expire through 2029, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset related to the net operating loss carryforward was deemed to be $218,748. Due to the uncertainty of its ability to utilize the deferred tax assets relating to the loss carry forwards and other temporary differences between tax and financial reporting purposes, the Company has recorded a valuation allowance equal to the related deferred tax assets.

NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

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As of December 31, 2008, the financial liability measured at fair value consisted of Common Stock put options. The fair value was based on recent related party transactions which approximate the original purchase price and falls within the Level 3 hierarchy of Fair Value Measurements.

The Common Stock put options are reflected as a liability with a corresponding reduction to equity. The amount recorded at December 31, 2008 was $269,000. On July 26, 2009, per renewal terms of one executive’s employment agreement and on August 1, 2009 per terms of the separation agreement of a different executive, all common stock put options were cancelled.

The following is a reconciliation of the common stock put option liability for which Level 3 inputs were used in determining fair value:


Beginning balance at December 31, 2008	$	269,000
Put options cancelled		(269,000	)
Ending balance at December 31, 2009	$	-

NOTE 16 - SUBSEQUENT EVENTS

Public Offering of 256,000 shares – On February 22, 2010, the Company completed a firm commitment public offering of 256,000 shares of our common stock. Certain of our affiliates converted outstanding debt of up to $250,000 in the offering, pursuant to which they purchased shares of our common stock at the public offering price of $5.00, which constitute part of the 256,000 shares sold in the offering. For more information please refer to the prospectus as filed with the Securities and Exchange Commission on February 17, 2010.

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CONSONUS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

Description of Business

Consonus Technologies, Inc. (the Company or CTI), incorporated in the State of Delaware, was formed in connection with the merger of Consonus Acquisition Corporation (CAC) and Strategic Technologies, Inc. (STI) on January 22, 2007. The Company designs, builds and operates e-business data centers to store, protect and manage critical business information computer systems. The Company owns two facilities in Utah and leases one facility in Utah. In addition, the Company has partnership agreements with data centers in 13 other states in the United States and Toronto, Canada. The Company also provides its clients with information technology infrastructure services and solutions and data center services, which include designing, planning, building and supporting business systems that integrate technologies, information, processes and people.

Reverse Stock Split

In January 2008, the Company’s board of directors and stockholders approved a reverse stock split whereby each 1.5 shares of common stock were exchanged for 1 share of common stock. All historical CAC and CTI share and per share amounts have been retroactively adjusted to give effect to the Merger and the January 2008 reverse stock split.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Revenue Recognition

The Company derives revenues from data center services and IT infrastructure solutions and services. Data center services are comprised of managed infrastructure, managed services and maintenance support services. IT infrastructure solutions and services include the resale of hardware and software, along with consulting, integration and training services. The Company recognizes revenue when all of the following conditions are satisfied: there is persuasive evidence of an arrangement; delivery has occurred; the collection of fees is probable; and the amount of fees to be paid by the customer is fixed or determinable. Delivery does not occur until products have been shipped or services have been provided and risk of loss has transferred to the client.

When the Company provides a combination of the above referenced products or services to its customers, recognition of revenues for the hardware and related maintenance services component is evaluated to determine if any software included in the arrangement is not essential to the functionality of the hardware based on accounting guidance related to “Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software.” Hardware and related elements qualify for separation when the services have value on a stand-alone basis, objective and verifiable evidence of fair value of the separate elements exists and, in arrangements that include a general right of refund relative to the delivered element, performance of the undelivered element is considered probable and substantially in its control. Fair value is determined principally by reference to relevant third-party evidence of fair value. Such third-party information is readily available since the Company primarily resells products offered by its vendors. The application of the appropriate accounting guidance to the Company’s sales requires judgment and is dependent upon the specific transaction. The Company recognizes revenues from the sale of hardware products at the time of sale provided the revenue recognition criteria are met and any undelivered elements qualify for separation.

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In arrangements that include multiple elements, including software licenses, maintenance and/or professional services, the Company allocates and defers revenue for the undelivered items based on vendor specific objective evidence (VSOE) of fair value for the undelivered elements, and recognizes the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue. VSOE of fair value for each undelivered element is based on the price for which the undelivered element is sold separately. The Company determines the fair value of the undelivered elements based on historical evidence of stand-alone sales of these elements to third parties. When VSOE does not exist for undelivered items such as maintenance and professional services, then the entire arrangement fee is recognized ratably over the performance period.

Maintenance contract revenue is deferred and recognized ratably over the contractual period. The deferred revenue consists primarily of the unamortized balance of product maintenance. Occasionally, the Company resells maintenance contracts to certain customers in which the Company assumes an agency relationship. For such contracts, the Company generally has no further obligation to the customer beyond the billing and collection of the maintenance contract amount. These agent maintenance contracts are established between the vendor and the customer and the Company has no obligation to provide the maintenance services. In such arrangements, the Company recognizes the net fees retained as revenues at the time of sale with no associated cost of sales.

Consulting services revenue is recognized as the services are rendered. Revenues generated from fixed price arrangements are recognized using the proportional performance method, measured principally by the total labor hours incurred as a percentage of estimated total labor hours. For fixed price contracts when the current estimates of total contract revenue and contract cost indicate a loss, the estimated loss is recognized in the period the loss becomes evident.

Unbilled services are recorded for consulting services revenue recognized to date that has not yet been billed to customers. In general, amounts become billable upon the achievement of contractual milestones or in accordance with predetermined payment schedules. Unbilled services are generally billable to customers within one year from the respective balance sheet date.

Revenue also consists of monthly fees for data center services and solutions including managed infrastructure and managed services and is included within “data center services” revenue in the accompanying consolidated statements of operations. Revenue from managed infrastructure and managed services is billed and recognized over the term of the contract which is generally one to three years. Installation fees associated with managed infrastructure and managed services revenue is billed at the time the installation service is provided and recognized over the estimated term of the related contract or customer relationship. Costs incurred related to installation are capitalized and amortized over the estimated term of the related contract or customer relationship.

The following table summarizes the components of revenue recognition for the year ended December 31, 2009 and 2008:

	Year Ended December 31,
	2009					2008					Change
			Percentage					Percentage
(in thousands)	Amount		of Revenue			Amount		of Revenue			Amount			Percent

Data center services and solutions	$	47,210		56	%	$	48,127		44	%	$	(917	)		(2	)%
IT infrastructure services		4,136		5	%		10,355		9	%		(6,219	)		(60	)%
IT infrastructure solutions		33,231		39	%		51,565		47	%		(18,334	)		(36	)%

Totals	$	84,577		100	%	$	110,047		100	%	$	(25,470	)		(23	)%

Allowance for Doubtful Accounts

Accounts receivable consist primarily of amounts due to the Company from its normal business activities. Accounts receivable amounts are determined to be past due when the amount is overdue based on contractual terms. The Company maintains an allowance for doubtful accounts to reflect the expected uncollectability of accounts receivable based on past collection history and specific risks identified among uncollected amounts. Accounts receivable are charged off against the allowance for doubtful accounts when the Company determines that the receivable will not be collected. The Company performs ongoing credit evaluations of its customers.

Concentration of Credit Risk, Supply Risk, and Economic Conditions

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At times, such amounts may exceed federally insured limits. As of December 31, 2009, these excess balances totaled $462,000.

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For the years ended December 31, 2009 and 2008, no customer comprised more than 10% of consolidated revenues. For the year ended December 31, 2009, one customer comprised 12% and for the year ended December 31, 2008, no customer comprised more than 10% of consolidated accounts receivable.

Approximately 91% and 96% of the Company’s hardware and software purchases for the years ended December 31, 2009 and 2008, respectively, were from Avnet, Inc. and approximately 80% and 82% of accounts payable at December 31, 2009 and 2008, respectively, were due to this vendor. Approximately 90% and 93% of the Company’s total IT infrastructure solutions revenues for the years ended December 31, 2009 and 2008, respectively, are also related to re-sales of this supplier’s products.

The Company sells to the small and medium size business market primarily in the East, Southeast and select markets in the Western part of the United States. A continued downturn in the economy, especially for an extended period of time, could adversely impact customer demand of discretionary items such as IT infrastructure services and solutions, particularly affecting our hardware and software products category and to a lesser extent the Company's maintenance offerings. These factors could have a material adverse effect on the Company's business and consolidated financial condition and results of operations.

Cash and Cash Equivalents

The Company considers all short-term investments with original maturities of three months or less to be cash equivalents.

Prepaid Data Center Services Costs

Prepaid data center services costs represent the unused portion of the maintenance support the Company has contracted with software and hardware vendors. These costs are amortized to costs of data center services ratably over the term of the related contracts. Prepaid data center services costs also represent costs incurred related to installation of customers in our data centers and are capitalized and amortized over the estimated life of the customer relationship. These costs are amortized to costs of infrastructure solutions.

Long-lived Assets

Property, equipment and definite lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.

The Company is required to use the non-amortization approach to account for purchased goodwill and certain intangibles. Under the non-amortization approach, goodwill and certain intangibles are not amortized into results of operations, but instead are reviewed for impairment at least annually and written down and charged to operations only in the periods in which the recorded values of goodwill or certain intangibles exceed their fair value. The Company has elected to perform its annual impairment test as of December 31 of each calendar year. An interim goodwill impairment test would be performed if an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Fair Value of Financial Instruments

In September 2006, new accounting standards related to "Fair Value Measurements" were issued to provide enhanced guidance when using fair value to measure assets and liabilities by defining fair value and establishing a framework for measuring fair value for disclosures of fair value measurements. These standards apply whenever other pronouncements require or permit assets or liabilities to be measured at fair value and, while not requiring new fair value measurements, may change current practices. The Company adopted these standards on January 1, 2008 and there was no material impact on its consolidated financial statements.

In February 2007, new accounting standards addressing "The Fair Value Option for Financial Assets and Financial Liabilities" permit all entities to choose to measure certain financial assets and liabilities at fair value at specified election dates and establish presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The Company adopted these new standards on January 1, 2008 and there was no material impact on its consolidated financial statements.

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt obligations. The carrying amount of the cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term nature. Management believes that the Company’s debt obligations in general bear interest at rates which approximate prevailing market rates for instruments with similar characteristics and, accordingly, the carrying values for these instruments approximate fair value.

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Derivative Financial Instruments

In the first quarter of 2009, the Company adopted a recent accounting standard which requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreement. All derivatives are recognized on the balance sheet at their fair values. The carrying value of the derivative is adjusted to market value at each reporting period and the increase or decrease is reflected in interest expense in the consolidated statements of operations. In August 2005, the Company entered into an interest rate swap agreement with U.S. Bank. At December 31, 2009, this agreement covers a notional amount of approximately $4.5 million related to its term loan with U.S. Bank. In August 2007, the Company entered into an additional interest rate swap agreement with U.S. Bank, effective September 15, 2007 with a notional amount of approximately $1.3 million at December 31, 2009. As of December 31, 2009 and, 2008, approximately $390,000 and $552,000, respectively, was recorded in other liabilities, respectively, related to these instruments. The Company recognized a gain of approximately $162,000 for the year ended December 31, 2009 and a loss of approximately $378,000 for December 31, 2008 of other expense as a result of the change in the market value of these instruments. These amounts are included in interest expense in the accompanying statements of operations. See Note 7.

Stock-Based Compensation

The cost resulting from all share based payment transactions are required to be recognized in the financial statements using the fair value method. The benefits of tax deductions in excess of recognized compensation cost are required to be reported as a financing cash flow, rather than as an operating cash flow. The Company will recognize excess tax benefits when those benefits reduce current income taxes payable. The Company has elected to use the Black-Scholes Merton option pricing model to determine the fair value of options granted. See Note 11 for further discussion of the Company’s accounting for stock-based compensation.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities, and net operating loss and tax credit carry forwards, utilizing enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect of any future change in income tax rates is recognized in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefit or if future deductibility is uncertain. See Note 9 for further discussion of the Company’s accounting for income taxes.

Recently Issued Accounting Standards

Recently issued standards related to “Business Combinations” and "Noncontrolling Interests in Consolidated Financial Statements" will significantly change the financial accounting and reporting of business combination transactions and noncontrolling (minority) interests in consolidated financial statements. Specifically, companies will be required to:

·	Recognize and measure in their financial statements, the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree

·	Recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase

·	Determine what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination

·	Improve the relevance, comparability and transparency of the financial information the reporting entity provides in its consolidated financial statements

The recently issued standards related to “Business Combinations” and "Noncontrolling Interests in Consolidated Financial Statements" are effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption did not have a material effect on consolidated results of operations at December 31, 2009.

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Recently issued standards related to derivatives and hedging require enhanced disclosures about how and why companies use derivatives, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows. The provisions of this requirement are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. Consequently, this disclosure is effective for the Company’s year ended December 31, 2009. The adoption did not have a material effect on consolidated results of operations at December 31, 2009.

Property and equipment

Property and equipment are carried at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:

Useful Lives:

Buildings

30-40 years

Computers, software and equipment

3-15 years

Office furniture and equipment

7-10 years

Property and equipment held under capital leases and leasehold improvements are amortized based on the straight-line method over the shorter of the lease term or estimated life of the assets. Maintenance and repairs which neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred.

NOTE 3 – PROPERTY AND EQUIPMENT, NET

As of December 31, 2009 and 2008, property and equipment, net consisted of (in thousands):

	December 31,			December 31,
	2009			2008
Buildings	$	15,608		$	15,439
Land		1,456			1,456
Leasehold improvements		1,108			1,100
Computer software and equipment		7,205			5,680
Office furniture and equipment		814			372
Construction in process		67			222
Total property and equipment		26,258			24,269
Less accumulated depreciation		(5,820	)		(4,429	)

Property and equipment, net	$	20,438		$	19,840

Depreciation for the years ended December 31, 2009 and 2008 amounted to approximately $1,500,000 and $1,643,000, respectively, including depreciation of computer software and equipment and office furniture and equipment under capital leases of $96,000 and $70,000, respectively.

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NOTE 4 – CAPITAL LEASE OBLIGATIONS:

The Company leases certain equipment under capital lease obligations with interest ranging from approximately 5.2% to 14.0%. Future minimum payments under capital lease obligations in each of the years subsequent to December 31, 2009 are as follows:

Year Ending
December 31,	Amount
2010	$	168
2011		159
2012		80
Total minimum lease payments		407
Less amount representing interest		24
Net minimum lease payments		383
Less current portion of obligations under capital leases		153

Long-term obligations under capital leases	$	230

The following is an analysis of the equipment held under capital lease obligations at December 31:


	2009			2008
Computer software and equipment	$	174		$	164
Office furniture and equipment		491			68
Less accumulated amortization		(231	)		(136	)

Totals	$	434		$	96

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

As of December 31, 2009 and 2008, intangible assets consist of (in thousands):

	December 31,			December 31,
	2009			2008

Definite-lived intangible assets:
Customer relationships	$	19,130		$	19,130
Developed technology		2,000			2,000
Less accumulated amortization		(8,275	)		(5,261	)
Total definite-lived intangible assets		12,855			15,869
Indefinite-lived intangible assets:
Goodwill		21,624			21,624

Goodwill and other intangible assets, net	$	34,479		$	37,493

During the years ended December 31, 2009 and 2008, the Company recorded amortization expense of $3,014,000 and $2,680,000, respectively.

NOTE 6 – ACCRUED LIABILITIES

In 2008, the Company expensed approximately $8.1 million related to a failed initial public offering. As of December 31, 2009 and 2008, the Company had unpaid accrued liabilities for these expenses of approximately $1.2 million and $2.4 million, respectively.

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NOTE 7 – LONG-TERM DEBT

As of December 31, 2009 and 2008, long-term debt consists of the following:

	December 31,			December 31,
	2009			2008
	(in thousands)

Line of credit agreement with U.S. Bank with a maximum borrowing limit of $2.5 million with a variable interest rate based on LIBOR plus a LIBOR spread (2.83% and 4.03% at December 31, 2009 and 2008, respectively), with principal due on November 21, 2011	$	1,084		$	1,650

Term Loans of $10.5 million and $1.9 million with U.S. Bank with variable monthly payments and variable interest rates based on LIBOR (2.83% and 4.03% at December 31, 2009 and 2008, respectively), with principal due on May 31, 2012 and November 19, 2014, respectively		9,625			10,428

Term Loan of $0.5 million with U.S. Bank with a maximum borrowing amount of $1.0 million with variable monthly payments and variable interest rate based on LIBOR plus 4.0% (4.23% at December 31, 2009) with principal due on July 5, 2014		468

Term Loan of $3 million with Proficio Bank with quarterly payments of principal and monthly variable interest payments based on LIBOR plus 10% (10.24% and 11.90% at December 31, 2009 and 2008, respectively), with remaining balance due on November 21, 2011		2,300			2,700

Secured note payable and trade payable to Avnet, Inc. Our "Senior Lender" with an interest rate of 8.0% payable through December 31, 2011		22,343			20,191

Bank mortgage note payable with interest at 8% payable in equal monthly installments of $23,526 through February 2011. The note is collateralized by a first deed of trust on STI's office building, assignment of all leases, and a security interest in all fixtures and equipment		2,195			2,295

Unsecured notes payable to vendor with interest rate of LIBOR plus 1.5% (1.79% and 4.31% at December 31, 2009 and 2008, respectively)		4,245			4,245

Other		383			211

Totals		42,643			41,720
Less debt discount		(9	)		(31	)
Less current maturities of long-term debt		(6,727	)		(3,405	)

Long-term debt	$	35,907		$	38,284

U.S. Bank Line of Credit

On May 31, 2005, the Company entered into a credit agreement with U.S. Bank that provided a $2.5 million line of credit and a $10.5 million term loan. At December 31, 2009, the Company had $1.1 million drawn on the revolving line of credit. The Company has negotiated with U.S. Bank for the issuance for an amendment on the line of credit (see Note 16). Based on the amendment, the amount outstanding on the line of credit of approximately $1.1 million has been reclassified from the current portion of long-term debt to long-term debt (see Note 16).

At December 31, 2009, the Company had additional availability of $1.4 million. The availability of the revolving line of credit varies between $1.5 million and $2.5 million based on a leverage ratio as defined in the credit agreement. The line of credit also requires the Company to pay a quarterly commitment fee on the unused portion of the line of credit at a defined rate (0.5% as of December 31, 2009).

U.S. Bank Term Loans

The proceeds of the term loan plus $1.5 million of the line of credit were used for the acquisition of the assets of Consonus, Inc. At December 31, 2009, the term loan had approximately $8.3 million principal amount outstanding. The term loan bears interest at a rate equal to LIBOR plus a LIBOR spread as defined in the credit agreement (2.83% interest rate at December 31, 2009). The term loan requires monthly principal payments of $44,722 plus applicable monthly interest payments from April 2008 through May 31, 2012, at which time the balance of the term loan is due.

F - 36

On November 19, 2007, the Company entered into an amended and restated credit agreement with U.S. Bank. The amended and restated credit agreement with U.S. Bank provides for a new term loan in the amount of approximately $1.9 million, in addition to the existing revolving line of credit of $2.5 million and the existing $10.5 million term loan, as further described above. The new term loan in the amount of approximately $1.9 million bears interest at a rate equal to LIBOR plus a LIBOR spread as defined in the amended and restated credit agreement (2.83% interest rate at December 31, 2009) which is payable monthly. The new term loan in the amount of $1.9 million requires monthly principal payments of $22,155 plus applicable monthly interest payments from April 2008 through November 19, 2014, at which time the balance of the new term loan is due. The proceeds of the new term loan were used to finance the costs of retrofitting a new leased data center facility in the Salt Lake City, Utah area, including the costs of equipment for use in the new data center facility. At December 31, 2009, approximately $1.3 million was due on this term loan.

In June 2009, the Company entered into an amendment to its amended and restated credit agreement with U.S. Bank. The amended and restated credit agreement with U.S. Bank provides for additional availability of new term loans of up to $1.0 million as reimbursement of capital expenditures related to the data centers. On June 30, 2009, $510,000 was funded from this new equipment line. At December 31, 2009, $468,000 is outstanding and $490,000 remains available for future expenditures. The new term loan in the amount of approximately $0.5 million bears interest at a rate equal to LIBOR plus a LIBOR spread as defined in the amended and restated credit agreement (4.23% interest rate at December 31, 2009) which is payable monthly. The new term loan in the amount of $0.5 million requires monthly principal payments of $8,500 plus applicable monthly interest payments from August 2009 through June 2014, at which time the balance of the new term loan is due. The proceeds of the new term loan were used to finance the costs of new equipment within one of the Company’s data center facilities in the Salt Lake City, Utah area.

The term loans and line of credit are collateralized by all assets and leases of CAC. The credit agreement contains affirmative, negative and financial covenants. As of December 31, 2009 and 2008, the Company was in compliance with all covenants.

In connection with the purchase of the assets of Consonus, Inc. from a utility company, the Company entered into various notes with the seller of the assets. These notes were collateralized by all assets and capital leases on equipment of CAC and are subordinate to the U.S. Bank agreement. The First Utility Note with an original principal amount of $0.5 million was repaid in May 2006. The Second Utility Note of $2.8 million and the Third Utility Note of $0.442 million both accrued interest which were payable upon maturity of the notes. The Second Utility Note of $2.8 million was paid in May 2008 and the Third Utility Note of $0.4 million was repaid in April 2007.

In January 2008, the Company entered into the first amendment to the amended and restated credit agreement with U.S. Bank. This amendment allowed for the bank to issue a letter of credit to the Company up to $0.5 million and that letter of credit outstanding would reduce the availability of the line of credit. As of December 31, 2009, the Company had no letters of credit outstanding.

Proficio Bank Term Loan

In May 2008, the Company entered into a subordinated debt facility with Proficio Bank. The facility provides for a new term loan in the amount of $3.0 million. The facility bears interest at a rate equal to LIBOR plus 10% (12.8% interest rate at closing) which is payable monthly. The new facility required quarterly principal payments of $100,000 from July 2008 through May 2010, at which time the balance of the new term loan was due. Proceeds from the facility were used to help pay off the note due to a utility company of principal of $2.8 million and related interest of $0.8 million. In connection with the issuance of the debt facility, the Company incurred approximately $138,000 of direct and incremental issuance costs. Approximately $45,000 was paid directly to the lender and, as such, has been reflected as a debt discount and is being amortized to interest expense over the term of the facility.

In December 2009, the first amendment to the credit agreement with Proficio Bank was signed. The amendment extends the maturity date of the debt to November 2011. Quarterly principal payments of $100,000 will continue to be made until maturity. The Company paid the financial institution $20,000 in fees at the time of the amendment. The subordinated debt facility is collateralized by all assets and leases of CAC and is subordinate to the U.S. Bank agreement. The credit agreement contains affirmative, negative and financial covenants. As of December 31, 2009, the Company was in compliance with all covenants.

At December 31, 2009, the Company had $68,264 of legal and other direct costs, net of amortization, associated with the loans with U.S. Bank and Proficio Bank has been reflected within other assets and is also being amortized to interest expense over the term of the facility.

F - 37

Avnet, Inc (Senior Lender) Note Payable

In connection with the Merger on January 22, 2007, the Company assumed all outstanding debt of STI. On May 20, 2005, STI entered into an Amended and Restated Refinancing Agreement (the Amended Agreement) with the lender (Senior Lender) which was later amended on June 22, 2006, May 1, 2007, September 10, 2007, October 8, 2007, July 11, 2008 and December 31, 2009. The Agreement, with amendments, consists of one note and a past due trade debt. The note in the amount of $20.1 million carries an interest rate of 8%. Payments of principal and interest under both the note and the past due trade debt are $300,000 monthly. Additionally, in connection with the Merger, the Company issued 231,514 warrants to purchase common stock to the Senior Lender. At December 31, 2009, the amount outstanding on the note was $16.0 million and the outstanding past due trade debt was $6.3 million.

In July 2008, STI entered into a fifth amendment to the Amended and Restated Refinancing Agreement with the Senior Lender to amend certain restrictive financial covenants for covenant periods beginning March 31, 2008, which allowed the Company to be in compliance at March 31, 2008. At December 31, 2008, May 31, 2009 and September 30, 2009, STI was not in compliance with certain of these covenants under the fifth amendment to the Amended and Restated Refinancing Agreement (Amended Agreement). On December 31, 2009, the Company entered into a sixth amendment to the Amended and Restated Refinancing Agreement with the Senior Lender to amend certain restrictive financial covenants, which allowed the Company to be in compliance at December 31, 2009. The amendment extended the due date from September 2010 to December 2011. The key terms of the amendment were as follows:

·	Interest rate changed from 8% to a base rate (as defined in the agreement) plus 5%, such sum not to exceed 12%. The rate adjusts annually with a maximum increase of 1.5% per annum.

·	Additional warrants totaling 150,000 will be provided giving the lender the right to purchase 50,000 shares of common stock each at March 31, 2010, June 30, 2010 and September 30, 2010 at an exercise price of $.000173 per share (see Note 15).

·	The Company is no longer required to complete an initial public offering.

·	Certain other financial covenants were redefined or terminated.

The Senior Lender also provides goods and services for resale by the Company, referred to as trade debt in the agreement. Past Due Trade Debt, defined in the Agreement as trade debt that is unpaid 50 days or more after invoice date at such time, will accrue interest of 8% per annum. Past Due Trade Debt is paid with excess cash remaining after payments are made on the notes payable as noted in the Agreement.

The Amended Agreement contains certain financial covenants as defined in the credit agreement which include a fixed charge coverage ratio, a limitation on capital expenditures, a minimum quarterly revenue attainment and a quarterly gross margin attainment.

Bank Mortgage Notes Payable

In March 2008, the Company revised the terms of its two bank mortgage notes payable with principal amounts totaling $2.2 million with a single bank mortgage note payable in the amount of $2.4 million, with an interest rate of 8%. The note is collateralized by a first deed of trust on STI’s office building, assignment of all leases and a security interest in all fixtures and equipment. Additional borrowings received under the revised note were used to fund anticipated capital expenditures. At December 31, 2009, the amount outstanding on the note was $2.2 million.

Vendor Notes Payable

At December 31, 2009, the Company also had an outstanding note payable of approximately $4.2 million to one of its vendors, with interest at LIBOR plus 1.5% (1.79% at December 31, 2009). The note is unsecured and is payable in payments based on excess cash flow as defined in an inter creditor agreement. At December 31, 2009, the outstanding balance on this note was approximately $4.2 million.

Future minimum principal payments on long-term debt, excluding $1.623 million on a note payable to a stockholder, and including capital lease obligation principal payments, are as follows (in thousands):

2010	$	6,736
2011		23,649
2012		11,587
2013		368
2014		303
Total minimum payments		42,643

Debt discount		9

Total payments excluding discount	$	42,634

F - 38

KLI Note Payable

On September 24, 2008, CAC issued a Secured Promissory Note to KLI. Under the terms of the note, CAC may borrow up to a maximum of $2.5 million, of which it had borrowed $1.623 million as of the date of the note. In connection with the issuance of the note, CAC entered into a security agreement with KLI and subordination and standstill agreement with KLI, U.S. Bank and Proficio Bank, each dated as of September 24, 2008. The note will mature, and all interest due under the note will be due on the earlier of January 24, 2011 or the date on which all of the obligations under the amended and restated credit agreement dated as of November 19, 2007 between CAC and U.S. Bank and under the loan agreement dated as of May 21, 2008 between CAC and Proficio Bank are paid in full. The note bears interest at the applicable LIBOR rate for each month in which any amounts are outstanding under the note plus 12.5% (12.74% at December 31, 2009). At December 31, 2009, the amount outstanding on the note was $1.623 million and had accrued interest of approximately $298,000 and is included in the consolidated balance sheets as a note payable to a stockholder and other long-term liabilities.

NOTE 8 – FAIR VALUE MEASUREMENTS

As stated in Note 1, the Company adopted the methods of fair value as described in “Fair Value Measurements”. As defined, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are as described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Assets (in thousands)

Quoted Prices in

Active Markets

Significant Other

Significant

for Identical

Observable Inputs

Unobservable

Total December

Assets (Level 1)

(Level 2)

Inputs (Level 3)

31, 2009

Marketable security

*Amount is included in Other Assets on the Consolidated Balance Sheet

Liabilities (in thousands)

Quoted Prices in

Active Markets

Significant Other

Significant

for Identical

Observable Inputs

Unobservable

Total December

Assets (Level 1)

(Level 2)

Inputs (Level 3)

31, 2009

Swap liability on hedge

390

** Amount is included in Other Long-Term Liabilities on the Consolidated Balance Sheet

NOTE 9 – INCOME TAXES

The Company has adopted the provisions of recently issued accounting standards related to “Accounting for Uncertainty in Income Taxes". As a result of the implementation, the Company recognized no material adjustment in the liability for unrecognized income tax benefits. As a result of an acquisition during 2007, the Company recognized an increase of $0.9 million in its unrecognized income tax benefits. The Company had an increase of $0.4 million in unrecognized income tax benefits for the year ended December 31, 2009. The Company does not anticipate any significant increase or decrease of unrecognized tax benefit within the twelve month period following December 31, 2009.

F - 39

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

	Year Ended
	December		December
		31, 2009		31, 2008

Balance at January 1	$	929	$	929
Increases related to current year tax provision		390

Balance at December 31	$	1,319	$	929

If these unrecognized tax benefits were recognized, they would have decreased the Company’s annual effective tax rate. No interest or penalties have been recorded related to these tax provisions.

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. As of the date of adoption, January 1, 2007 and as of December 31, 2009 and 2008, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company has its tax years’ ended 1996 to 2008 open to examination by federal tax and major state tax jurisdictions. The Company has not been informed by any tax authorities for any jurisdiction that any of its tax years are under examination as of December 31, 2009.

The Company has estimated operating loss and operating loss carryforwards for federal tax purposes of approximately $30.6 million and $29.6 million at December 31, 2009 and 2008, respectively, of which $20.4 million is limited by Section 382 of the Internal Revenue Code. The Company has estimated gross North Carolina operating loss and gross North Carolina operating loss carryforwards in the amount of $11.9 million and $11.0 million at December 31, 2009 and 2008, respectively.

The provision (benefit) for income taxes estimated for the years ended December 31, 2009 and 2008 consist of the following:

	Year Ended		Year Ended
	December		December
		31, 2009		31, 2008
Current:
Federal	$	-	$	(250	)
State		4		(14	)
		4		(264	)
Deferred:
Federal		-		-
State		-		-
Totals	$	4	$	(264	)

The provision (benefit) for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate of 35% for the years ended December 31, 2009 and 2008 to loss before taxes as a result of the following differences (in thousands):


	Year Ended			Year Ended
	December			December
		31, 2009			31, 2008
Income tax benefit at the statutory U.S. tax rate	$	(1,194	)	$	(3,966	)
Increase in rate resulting from:
State income taxes		(220	)		(698	)
Purchased contract revenue		(14	)		(14	)
Meals and entertainment		38			47
Provision to return		585			288
Valuation allowance		692			4,101
Other		117			(22	)
	$	4		$	(264	)

Deferred income taxes reflect the tax impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations.

F - 40

Deferred tax assets and (liabilities) at December 31, 2009 and 2008 are comprised of the following (in thousands):

	December 31, 2009			December 31, 2008
Current:
Accrued vacation and bonuses	$	245		$	343
Allowance for bad debt expense		197			217
Net operating loss carryforward		12,150			11,945
Stock-based compensation		67			84
Deferred contract revenue		1,653			1,875
Other		153			98
Total current assets		14,465			14,562

Non-current:
Intangibles		(4,513	)		(5,579	)
Tax depreciation in excess of book depreciation		(917	)		(640	)
Total non-current assets		(5,430	)		(6,219	)

Gross deferred tax assets		9,035			8,343
Valuation allowance		(9,035	)		(8,343	)
Net deferred tax assets	$	-		$	-

The Company has provided a valuation allowance for the deferred tax assets due to the uncertainty regarding the Company’s ability to realize the entire asset. The valuation allowance increased by approximately $0.7 million for the year ended December 31, 2009.

Utilization of the federal net operating loss carryforwards are subject to a substantial annual limitation due to the change in ownership provisions of the Internal Revenue Code of 1986. The ultimate ability for the Company to use existing net operating loss carryovers to offset future income is limited. The Company’s net operating loss carryforwards begin to expire at the end of the taxable year ending December 31, 2020.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

The Company leases various office space and land under non-cancelable operating leases which expire at various times from 2010 to 2055. Future aggregate minimum lease payments under non-cancelable operating leases as of December 31, 2009 were as follows (in thousands):

2010	$	1,051
2011		521
2012		380
2013		222
2014		119
Thereafter		372

Total minimum lease payments	$	2,665

Lease expense for the years ended December 31, 2009 and 2008 was approximately $0.4 and $0.6 million, respectively.

From time to time, the Company is subject to various lawsuits and other legal proceedings, which arise in the ordinary course of business. Management accrues an estimate of expense for any matters that can be reasonably estimated and that are considered probable of occurring based on the facts and circumstances. Management believes that the ultimate resolution of current matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

NOTE 11 – STOCK-BASED COMPENSATION

The Company adopted an incentive compensation plan (2007 Equity Plan) on December 15, 2006. The 2007 Equity Plan provides for the issuance of a variety of stock based awards that may be granted to executive officers, employees and consultants. The pricing, vesting and other terms of the equity instruments are at the discretion of the Board of Directors. A total of 366,667 shares of common stock are reserved for issuance under the 2007 Equity Plan.

In June 2008, the Company issued 175,000 shares of common stock to an affiliate of KLI in connection with services provided to the Company, including negotiation of the Avnet debt reduction as well as prior and continued financial support to the Company to assist the Company with operating and debt service obligations. In connection with this issuance, the Company recognized approximately $1.6 million of stock-based compensation expense within selling, general and administrative expenses for the year ended December 31, 2008, which was equal to the estimated fair value of the stock issued.

F - 41

Stock Options

A summary of the Company’s stock option plan at December 31, 2009 and 2008 and changes during the year then ended is as follows:


						Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Terms		Value
Outstanding at January 1, 2009		163,767		$	24.36
Forfeited or expired		(26,176	)		37.64

Outstanding at December 31, 2009		137,591		$	21.83		1.5	$	-

						Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Terms		Value
Outstanding at January 1, 2008		164,568		$	24.29
Forfeited or expired		(801	)		10.74

Outstanding at December 31, 2008		163,767		$	24.36		4.1	$	-

As of December 31, 2009, there is zero unrecognized compensation cost related to outstanding stock options because all options were fully vested immediately prior to the Merger closing date of January 22, 2007. Therefore all outstanding options at December 31, 2009 are exercisable. There were no options granted during the years ended December 31, 2009 and 2008.

Restricted and Deferred Shares

In January 2009, 22,222 shares of restricted stock vested under the 2007 Equity Plan. The Board of Directors approved a plan to purchase 7,210 shares of the vested restricted stock for approximately $27,000, which represents management’s estimate of the fair value on the date of repurchase. In October, 2009, 22,222 shares of restricted stock vested under the 2007 Equity Plan. The Board of Directors approved a plan to purchase 7,210 shares of the vested restricted stock for approximately $46,000, which represents management’s estimate of the fair value on the date of repurchase. In January 2008, 102,350 shares of restricted stock and 43,510 shares of deferred stock vested under the 2007 Equity Plan. The Board of Directors approved a plan to purchase 51,013 shares of vested restricted and deferred stock issued under the 2007 Equity Plan and 12,449 shares of vested deferred stock issued under a previous CAC plan. These shares were purchased by the Company for approximately $625,000, which represents management’s estimate of the fair value on the date of repurchase. In December 2008, the Board of Directors approved a plan to purchase 16,878 shares of vested deferred stock issued under a previous CAC plan. These shares were purchased by the Company for approximately $37,000 which represents management’s estimate of the fair value on the date of repurchase.

Restricted Shares

In accordance with “Equity Based Payment”, the Company recognized approximately $0.6 million and $0.3 million of compensation expense for the years ended December 31, 2009 and 2008, respectively, based on management’s estimate of the awards expected to vest. At December 31, 2009, there is approximately $0.4 million of unrecognized compensation costs related to these awards, which will be recognized through 2011.

F - 42

A summary of the Company’s outstanding non-vested restricted shares at December 31, 2009 and 2008 and the years then ended are as follows:

				Weighted
				Average Grant
	Number of			Date Fair
Nonvested Restricted Shares	Shares			Value
Nonvested at January 1, 2009		156,169		$	10.08

Granted		41,870			5.46
Vested		(44,444	)		10.01
Forfeited		(37,283	)		10.72

Nonvested at December 31, 2009		116,312		$	8.25


				Weighted
				Average Grant
	Number of			Date Fair
Nonvested Restricted Shares	Shares			Value
Nonvested at January 1, 2008		178,203		$	10.51

Granted		80,316			9.38
Vested		(102,350	)		10.27
Forfeited		0			10.72

Nonvested at December 31, 2008		156,169		$	10.09

CAC Deferred Shares

The Company has current agreements with two of its officers and one of its board members which give them an opportunity to earn a certain percentage of the equity of CAC. Those percentages ranged from 1.5% to 3.5% of the initial investment of CAC and vest over a 2 or 3 year vesting period. The Company has recognized compensation expense for the years ended December 31, 2009 and 2008 of approximately $0 and $23,000, respectively, under these agreements based on the estimated fair value of the Company’s stock on the date of the agreements. All shares under these agreements vested prior to December 31, 2008 and, as a result, there are no remaining shares to vest or compensation expense to recognize related to these agreements.

The Company issued 24,261 shares of common stock in October 2006 as part of a consulting agreement whereby a third-party consulting firm performed certain services in connection with the pending public offering. An additional 31,246 shares are to be issued for services previously provided during the year ended December 31, 2006. The Company has recognized approximately $218,000 in expense (included in the write-off of previously capitalized offering costs) for the year ended December 31, 2008 since the costs were direct and incremental to the failed public offering.

Deferred Shares

In accordance with “Equity Based Payment”, the Company recognized approximately $139,000 and $26,000 of compensation expense for the years ended December 31, 2009 and 2008, respectively, based on management’s estimate of the awards expected to vest. At December 31, 2009, there is $0 of unrecognized compensation costs related to these awards.

F - 43

A summary of the Company’s outstanding nonvested deferred shares at December 31, 2009 and 2008 and the years then ended are as follows:

				Weighted
				Average Grant
	Number of			Date Fair
Nonvested Deferred Shares	Shares			Value
Nonvested at January 1, 2009		118,269		$	6.67

Forfeited or expired		(59,244	)		6.67

Nonvested at December 31, 2009		59,025		$	6.67


				Weighted
				Average Grant
	Number of			Date Fair
Nonvested Deferred Shares	Shares			Value
Nonvested at January 1, 2008		215,448		$	6.67

Vested		(97,179	)		6.67

Nonvested at December 31, 2008		118,269		$	6.67

At December 31, 2009, the Company had reserved a total of 792,147 of its authorized 13,333,333 shares of common stock for future issuance as follows:

Outstanding warrants ($.00039 price per share)			231,514
Outstanding warrant rights ($.000173 price per share)			150,000
Outstanding stock options			137,591
Outstanding restricted stock			116,312
Outstanding deferred stock			59,025
Possible future issuance under 2007 Equity Plan			97,705
Total			792,147

F - 44

SARs

The Company has awarded Stock Appreciation Rights (“SARs”) to three of its independent directors and one executive in exchange for services rendered by them to the Company or a subsidiary. The executive received 7,000 SARs granted on May 5, 2009 at a base price of $3.50 per SAR, which is the fair market value at the date of grant. The three independent directors received 5,495 SARs each for a total 16,485 SARs granted on September 10, 2009 at a base price of $5.46 per SAR, which is the fair market value at the date of grant. The SARs subject to the awards shall be vested in full upon the Date of Grant; provided, however, that they shall only be exercisable in connection with the occurrence of an Exercise Event, as such term as defined. For purposes of this Agreement, an “Exercise Event” shall mean: (i) any merger or consolidation to which the Company is a party so long as, as a result of such merger or consolidation, the Company’s majority stockholder, Knox Lawrence International, LLC (“KLI”), owns less than 25% of the stock in the surviving or resulting entity or its parent entity; (ii) the sale by the shareholders of the Company, in a single transaction or series of related transactions, of all of the stock of the Company or, if less than all, an amount of stock such that, as a result of the sale, KLI is the owner of less than 25% of the outstanding voting power of the Company; (iii) the sale of all or substantially all of the assets of the Company to an unrelated third party; or (iv) such other time for the allowance of the exercise of SARs as may be recommended by the Committee and approved by the Board of Directors.

NOTE 12 – EMPLOYEE SAVINGS PLAN

The Company sponsors a defined contribution 401(k) plan (the Retirement Plan). Employees become eligible to participate in the Retirement Plan beginning the month subsequent to three months of employment. Participants may contribute up to 100% of their compensation up to a maximum annual contribution of $16,500 and $15,500 for 2009 and 2008, respectively, if they are under the age of 50 and $21,500 and $20,500, respectively, if they are age 50 or over as prescribed by the Internal Revenue Service. Currently, the Company provides contributions equal to 3% of employees’ eligible earnings. The Company recognized expense related to these contributions of approximately $68,000 and $77,000 for the years ended December 31, 2009 and 2008, respectively.

NOTE 13 – RELATED PARTY TRANSACTIONS

The Company recognized expenses for services provided by Knox Lawrence International, KLI, a principal shareholder of the Company, and its affiliates for each of the years ended December 31, 2009 and 2008 of approximately $250,000.

On September 24, 2008, CAC issued a Secured Promissory Note to KLI. Under the terms of the note, CAC may borrow up to a maximum of $2,500,000, of which it has borrowed $1,623,485. The balance of the available funds may be used to support CAC’s operating and debt servicing obligations. In connection with the issuance of the note, CAC entered into a security agreement with KLI and subordination and standstill agreement with KLI, U.S. Bank National Association and Proficio Bank, each dated as of September 24, 2008. The note is collateralized by all assets of CAC and is subordinate to the term loans with U.S. Bank and Proficio. The note bears interest at the “applicable LIBOR rate” plus 12.5% (12.74% at December 31, 2009).

At December 31, 2009, there is approximately $298,000 in accrued interest on the balance sheet as well as approximately $231,000 in interest expense for the year ended December 31, 2009 related to the note. Interest expense for 2008 on the KLI note was $67,000 and it was also in accrued liability at December 31, 2008.

The Company entered into Confidential Settlement Agreements and Releases with the former CEO and the former Senior Vice-President of Channels on September 4, 2009 and September 9, 2009, respectively. The agreements outline terms of their separation which was effective October 9, 2009. The CEO will receive monthly payments through February 2011 and the Senior Vice-President of Channels will receive payments until October 8, 2010. Both parties are entitled to insurance and automobile allowances for the periods of time as defined in the individual separation agreements. The Company incurred approximately $676,000 in separation expense related to these agreements which is reflected in the selling, general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2009. Both are shareholders of the Company and serve as members of the Board of Directors. Their Directorships will continue through the term of their respective appointments.

F - 45

NOTE 14 – LOSS PER SHARE

Basic loss per common share is based upon the weighted average number of common shares outstanding for the period. Diluted loss per common share is based upon the assumption that all common stock equivalents were converted at the beginning of the year. Shares calculated for diluted shares for the year ended December 31, 2009 and 2008 do not include unvested equity instruments and unissued shares associated with stock-based compensation arrangements as their effect would be antidilutive.

NOTE 15 – STOCKHOLDERS’ EQUITY

Repurchase of Common Stock

In January 2008, 102,350 shares of restricted stock and 43,510 of deferred stock vested under the 2007 Equity Plan. The Board of Directors approved a plan to repurchase 51,013 shares of vested restricted and deferred stock issued under the 2007 Equity Plan and 12,449 shares of vested deferred stock issued under a previous CAC plan. These shares were purchased by the Company for approximately $625,000, which represents management’s estimate of fair value.

In June 2009, the Board of Directors approved a plan to purchase 7,210 shares of vested restricted stock issued under the 2007 Equity Plan. The shares were purchased by the Company for approximately $27,000, which represents management’s estimate of fair value on the date of purchase.

In December 2009, the Board of Directors approved a plan to purchase 7,210 shares of vested restricted stock issued under the 2007 Equity Plan. The shares were purchased by the Company for approximately $39,400, which represents management’s estimate of fair value on the date of purchase.

On December 31, 2009, the Company entered into a Sixth Amendment to the Amended and Restated Refinancing Agreement with Avnet, Inc. Included in this amendment is the right for Avnet to receive additional warrants on March 31, 2010, June 30, 2010 and September 30, 2010, each providing for the right to purchase 50,000 shares of common stock (150,000 shares in aggregate) of the Company at a price of $.000173 per share. These warrant rights are in replacement of warrant rights previously agreed to in the Fourth Amendment to the Amended and Restated Refinancing Agreement with Avnet, Inc., which were to be issued on September 30, 2009 if the indebtedness remained outstanding. The warrant rights are reflected as $993,000 of interest expense in the consolidated statement of operations for the year ended December 31, 2009. The value of $6.62 per share as determined by applying the Black-Scholes Model using the stock price as determined by the Company, the exercised price of $.000173, and a risk free interest rate of 0.6%.

NOTE 16 – SUBSEQUENT EVENTS

The Company has evaluated events and transactions for potential recognition or disclosure through March 30, 2010, which is the date the financial statements were available to be issued.

Subsequent to year end, the Company entered into an amendment to its amended and restated credit agreement with U.S. Bank in March 2010. The amended amendment extended the maturity date of the line of credit from May 2010 to November 2011. In addition, the amendment changed the amount available on the line of credit to a fixed amount of $2.5 million. The amendment also increased the LIBOR spread as defined in the amended and restated credit agreement which effectively increased the interest rate by 0.40%. The amendment also redefined certain other financial covenants within the agreement. Based on the amendment, the amount outstanding on the line of credit of approximately $1.1 million has been reclassified from the current portion of long-term debt to long-term debt.

F - 46

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Consonus Technologies, Inc.

We have audited the accompanying consolidated balance sheet of Consonus Technologies, Inc. as of December 31, 2007, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consonus Technologies, Inc. at December 31, 2007, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Raleigh, North Carolina
May 2, 2008 (except for the sixth paragraph of Note 14, as to which the date is May 21, 2008)

F - 47

CONSONUS TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET

As of December 31, 2007

(in thousands, except share and per share amounts)

	2007
Assets
Current assets:
Cash and cash equivalents	$	982
Accounts receivable, net of allowance of$539		18,563
Current portion of prepaid data center services costs		10,830
Prepaid expenses and other current assets		8,439
Total current assets		38,814
Property and equipment, net		19,452

Other Assets:
Goodwill		21,624
Other intangible assets, net		18,549
Prepaid data center services costs, net of current portion		2,478
Other		54
Total other assets		42,705

Total assets	$	100,971

Liabilities
Current liabilities:
Accounts payable	$	17,751
Accrued liabilities		6,457
Payable to stockholder		1,543
Current maturities of long-term debt		5,799
Current portion of deferred revenue		16,801
Total current liabilities		48,351
Long-term debt, net of current maturities		37,322
Deferred revenue, net of current portion		3,815
Other long-term liabilities		174
Total liabilities		89,662

Commitments and contingencies

Stockholders' Equity
Preferred stock, $.10 par value, 15,000,000 and zero shares authorized, issued, and outstanding as of December 31, 2007		–
Preferred stock, $0.000001 par value, 10,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2007		–
Common stock, $0.000001 par value, 13,333,333 shares authorized 3,021,066 shares issued and outstanding at December 31and 2007		–
Additional paid-in capital		13,977
Warrants		2,316
Accumulated deficit		(4,995	)
Accumulated other comprehensive income		11
Total stockholders' equity		11,309

Total liabilities and stockholders' equity	$	100,971

F - 48

CONSONUS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2007

(in thousands, except share and per share amounts)

	2007
Revenues:
Data center services and solutions	$	35,449
IT infrastructure services		11,016
IT infrastructure solutions		54,574
Total revenues		101,039

Operating expenses:
Costs of data center services and solutions		21,349
Costs of IT infrastructure services		7,333
Costs of IT infrastructure solutions		44,527
Selling, general and administrative expenses		24,876
Depreciation and amortization expense		3,565
Total operating expenses		101,650

Loss from operations		(611	)
Interest expense, net		(4,035	)
Loss before taxes		(4,646	)
Income tax expense (benefit)		303

Net loss	$	(4,949	)

Loss per common share – basic	$	(1.78	)

Loss per common share – diluted	$	(1.78	)

Basic weighted average number of common shares outstanding		2,774,733

Diluted weighted average number of common shares outstanding		2,774,733

See notes to consolidated financial statements.

F - 49

CONSONUS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

For the Year Ended December 31, 2007

(in thousands, except share amounts)

																		Accumulated
	Preferred Stock			Preferred			Common Stock		Common		Additional Paid-In				Accumulated			Other Compre-hensive		Total Stock- holders'
	Shares			Stock			Shares		Stock		Capital		Warrants		Deficit			Income		Equity
Balance at January 1, 2007		15,000,000		$	176			1,955,658	$	-	$	3,525	$	-	$	(46	)	$	-	$	3,655
Preferred stock converted to common stock		(15,000,000	)		(176	)		65,066		-		176		-		-			-		-
Common shares issued in connection with Strategic Technologies, Inc. acquisition		-			-			761,118		-		7,632		-		-			-		7,632
Stock options issued in connection with Strategic Technologies, Inc. acquisition		-			-			-		-		874		-		-			-		874
Warrants issued in connection with Strategic Technologies, Inc. acquisition		-			-			-		-		-		2,316		-			-		2,316
Issuance of restricted stock		-			-			178,203		-		-		-		-			-		-
Common shares issued to related party		-			-			18,380		-		184		-		-			-		184
Issuance of deferred stock		-			-			42,641		-		-		-		-			-		-
Stock-based compensation		-			-			-		-		1,436		-		-			-		1,436
Capital contribution by principal stockholder		-			-			-		-		150		-		-			-		150
Unrealized gain on securities available-for-sale		-			-			-		-		-		-		-			11		11
Net loss		-			-			-		-		-		-		(4,949	)		-		(4,949	)
Total comprehensive loss																					(4,938	)
Balance at December 31, 2007		-		$	-			3,021,066	$	-	$	13,977	$	2,316	$	(4,995	)	$	11	$	11,309

See notes to consolidated financial statements.

F - 50

CONSONUS TECHNOLOGIES, INC.


CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2007
(Amounts in thousands)

	2007


Net loss	$	(4,949	)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		3,565
Non-cash interest		310
Non-cash loss on derivative		253
Stock-based compensation		1,620
Deferred taxes		3

Changes in operating assets and liabilities:
Accounts receivable		(1,174	)
Prepaid expenses and other current assets		(7,133	)
Other assets		330
Accounts payable		3,525
Accrued liabilities		13
Payable to stockholder		1,372
Deferred revenue		4,685
Net cash provided by operating activities		2,420

Cash flows from investing activities:
Capital expenditures		(950	)
Acquisition of Strategic Technologies, Inc., net of cash acquired		893
Net cash used in investing activities		(57	)

Cash flows from financing activities:
Proceeds from line of credit		6,056
Payments on line of credit		(6,799	)
Proceeds from debt		1,861
Payments on debt		(2,649	)
Contributed capital		150
Net cash used in financing activities		(1,381	)

Increase in cash		982

Cash and cash equivalents at the beginning of the period		-

Cash and cash equivalents at the end of the period	$	982

Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,512

Cash paid for income taxes	$	482

Supplemental disclosures of non-cash investing and financing activities:
Debt forgiveness	$	4,965


Purchase of property and equipment with capital leases	$	517

See notes to consolidated financial statements

F - 51

CONSONUS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

Description of Business

Consonus Technologies, Inc. (the Company), incorporated in the state of Delaware, was formed in connection with the merger of Consonus Acquisition Corporation (CAC) and Strategic Technologies, Inc. (STI) on January 22, 2007. The Company designs, builds, and operates e-business data centers to store, protect, and manage critical business information computer systems. The Company owns two facilities in Utah and leases two facilities in Utah. In addition, the Company has partnership agreements with data centers in Colorado, Ohio, Massachusetts and North Carolina. The Company also provides its clients with information technology infrastructure services and solutions and data center services, which include designing, planning, building and supporting business systems that integrate technologies, information, processes and people.

Acquisitions

On October 18, 2006, CAC and STI entered into an Agreement (the Merger Agreement) and Plan of Merger and Reorganization (the Merger). The Merger closed on January 22, 2007 whereby the two companies became wholly owned subsidiaries of the Company. In connection with the Merger, the structure of CAC was modified such that it became a wholly-owned subsidiary of CTI. In connection with the STI Merger, CAC's shares in its subsidiary, the Company, were canceled, and the shareholders of STI and CAC exchanged their respective shares for new shares of the Company. The Merger was accounted for under the purchase method of accounting in accordance with U.S. generally accepted accounting principles. Under this method of accounting, STI was determined to be the "acquired" company for accounting and financial reporting purposes.

Reverse Stock Split

In January 2008, the Company's board of directors and stockholders approved a reverse stock split whereby each 1.5 shares of common stock were exchanged for 1 share of common stock. All historical CAC and CTI share and per share amounts have been retroactively adjusted to give effect to the Merger and the January 2008 reverse stock split.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will differ from those estimates and could differ materially.

F - 52

Revenue Recognition

The Company derives revenues from data center services and IT infrastructure solutions and services. Data center services are comprised of managed infrastructure, managed services and maintenance support services. IT infrastructure solutions and services include the resale of hardware and software, along with consulting, integration and training services. The Company recognizes revenues in accordance with Securities and Exchange Commission's (SEC) Staff Accounting Bulletin No. 104. "Revenue Recognition" (SAB 104). The Company recognizes revenue when all of the following conditions are satisfied: there is persuasive evidence of an arrangement; delivery has occurred; the collection of fees is probable; and the amount of fees to be paid by the customer is fixed or determinable. Delivery does not occur until products have been shipped or services have been provided and risk of loss has transferred to the client.

When the Company provides a combination of the above referenced products or services to its customers, recognition of revenues for the hardware and related maintenance services component is evaluated under Emerging Issues Task Force Issue (EITF) No. 00-21 (EITF 00-21), "Revenue Arrangements with Multiple Deliverables" provided any software included in the arrangement is not essential to the functionality of the hardware based on guidance included in EITF 03-5, "Applicability of AICIPA Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software." Hardware and related elements qualify for separation under EITF 00-21 when the services have value on a stand-alone basis, objective and verifiable evidence of fair value of the separate elements exists and, in arrangements that include a general right of refund relative to the delivered element, performance of the undelivered element is considered probable and substantially in its control. Fair value is determined principally by reference to relevant third-party evidence of fair value in accordance with EITF 00-21. Such third-party information is readily available since the Company primarily resells products offered by its vendors. The application of the appropriate accounting guidance to the Company's sales requires judgment and is dependent upon the specific transaction. The Company recognizes revenues from the sale of hardware products at the time of sale provided the SAB 104 revenue recognition criteria are met and any undelivered elements qualify for separation under EITF 00-21.

Software and related maintenance and professional services are evaluated under Statement of Position (SOP) No. 97-2 (SOP 97-2), "Software Revenue Recognition." In arrangements that include multiple elements, including software licenses, maintenance and/or professional services, the Company allocates and defers revenue for the undelivered items based on vendor-specific objective evidence (VSOE) of fair value for the undelivered elements, and recognizes the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue. VSOE of fair value for each undelivered element is based on the price for which the undelivered element is sold separately. The Company determines the fair value of the undelivered elements based on historical evidence of stand-alone sales of these elements to third parties. When VSOE does not exist for undelivered items such as maintenance and professional services, then the entire arrangement fee is recognized ratably over the performance period.

Maintenance contract revenue is deferred and recognized ratably over the contractual period. The deferred revenue consists primarily of the unamortized balance of product maintenance. Occasionally, the Company resells maintenance contracts to certain customers in which the Company assumes an agency relationship as defined by EITF 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent." For such contracts, the Company generally has no further obligation to the customer beyond the billing and collection of the maintenance contract amount. These agent maintenance contracts are established between the vendor and the customer and the Company has no obligation to provide the maintenance services. In such arrangements, the Company recognizes the net fees retained as revenues at the time of sale with no associated costs of sales.

Revenue also consists of monthly fees for data center services and solutions including managed infrastructure and managed services and is included within "data center services" revenue in the accompanying consolidated statements of operations. Revenue from managed infrastructure and managed services is billed and recognized over the term of the contract which is generally one to three years. Installation fees associated with managed infrastructure and managed services revenue is billed at the time the installation service is provided and recognized over the estimated term of the related contract or customer relationship. Costs incurred related to installation are capitalized and amortized over the estimated term of the related contract or customer relationship.

F - 53

Allowance for Doubtful Accounts

The following table summarizes the changes in the Company's allowance for doubtful accounts (in thousands):

	Year Ended December 31, 2007
Balance at beginning of period	$	5
Increase due to Acquisitions		557
Charges to expense		20
Deductions		(43	)

Balance at end of period	$	539

Concentration of Credit and Supply Risk

For the year ended December 31, 2007, no customer comprised more than 10% of consolidated revenues. As of December 31, 2007, no customer comprised more than 10% of accounts receivable.

Approximately 85% of the Company's hardware and software purchases for the year ended December 31, 2007 was from one vendor and approximately 70% of accounts payable at December 31, 2007 were due to this vendor. Approximately 87% of the Company's total IT infrastructure solutions revenues for the year ended December 31, 2007 are related to resales of this supplier's products.

Cash and Cash Equivalents

The Company considers all short-term investments with original maturities of three months or less to be cash equivalents.

Prepaid Data Center Services Costs

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:

Buildings		30 – 40 years
Computers and equipment		3 – 15 years
Furniture		7 – 10 years
Software		3 years

F - 54

Long-lived Assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Long-lived Assets", such as property, equipment, and definite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases.

Goodwill and Other Intangible Assets

The Company accounts for its goodwill and other intangibles in accordance with SFAS No. 142, "Goodwill and Other Intangibles" (SFAS 142). SFAS 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under the non-amortization approach, goodwill and certain intangibles are not amortized into results of operations, but instead are reviewed for impairment at least annually and written down and charged to operations only in the periods in which the recorded values of goodwill or certain intangibles exceed their fair value. The Company has elected to perform its annual impairment test as of December 31 of each calendar year. An interim goodwill impairment test would be performed if an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt obligations. The carrying amount of the cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term nature. Management believes that the Company's debt obligations in general bear interest at rates which approximate prevailing market rates for instruments with similar characteristics and, accordingly, the carrying values for these instruments approximate fair value.

Derivative Financial Instruments

All derivatives are recognized on the balance sheet at their fair values. The carrying value of the derivative is adjusted to market value at each reporting period and the increase or decrease is reflected in interest expense in the consolidated statements of operations. In August 2005, the Company entered into an interest rate swap agreement with U.S. Bank (U.S. Bank). At December 31, 2007, this agreement covers a notional amount of approximately $5.0 million related to its term loan with U.S. Bank. In August 2007, the Company entered into an additional interest rate swap agreement with U.S. Bank, effective September 15, 2007 with a notional amount of approximately $1.8 million at December 31, 2007. As of December 31, 2007, approximately $174,000 was recorded in other liabilities related to these instruments. The Company recognized a loss of approximately $253,000 during the year ended December 31, 2007 of other income (expense) as a result of the change in the market value of these instruments. This is reflected as a increase to interest expense in the accompanying statements of operations.

Stock-Based Compensation

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), "Share Based Payment" (SFAS 123R). SFAS 123R replaces SFAS No. 123, "Accounting for Stock Based Compensation," and supersedes APB 25, "Accounting for Stock Issued to Employees". SFAS 123R requires that the cost resulting from all share based payment transactions be recognized in the financial statements using the fair value method. SFAS 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. The Company will recognize excess tax benefits when those benefits reduce current income taxes payable. Upon the adoption of SFAS 123R, the Company has elected to use the Black Scholes Merton option pricing model to determine the fair value of options granted. See Note 10 for further discussion of the Company's accounting for stock-based compensation.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes, as set forth in SFAS No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities, and net operating loss and tax credit carryforwards, utilizing enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect of any future change in income tax rates is recognized in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefit or if future deductibility is uncertain. See Note 8 for further discussion of the Company's accounting for income taxes.

F - 55

Earnings (Loss) Per Share

Basic earnings (loss) per common share is based upon the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is based upon the assumption that all common stock equivalents were converted at the beginning of the year. Shares calculated for diluted shares for the years ended December 31, 2007 do not include unvested equity instruments and unissued shares associated with stock based compensation arrangements as their effect is antidilutive.

Recently Issued Accounting Standards

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157), to provide enhanced guidance when using fair value to measure assets and liabilities. SFAS 157 defines fair value and establishes a framework for measuring fair value for disclosures of fair value measurements. SFAS 157 applies whenever other pronouncements require or permit assets or liabilities to be measured at fair value and, while not requiring new fair value measurements, may change current practices. The Company is currently evaluating the impact SFAS 157 will have on its consolidated financial statements. SFAS 157 is effective for the Company beginning on January 1, 2008.

In February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment to FASB Statement No. 115" (SFAS 159), which permits all entities to choose to measure certain financial assets and liabilities at fair value at specified election dates. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 is effective for the Company beginning on January 1, 2008. The Company is currently evaluating the impact SFAS 159 will have on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(revised 2007), "Business Combinations" ("SFAS 141R") and SFAS No. 160 "Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements, and amendment of ARB No. 51" ("SFAS 160"). These new standards will significantly change the financial accounting and reporting of business combination transactions and noncontrolling (minority) interests in consolidated financial statements. Specifically, under SFAS 141R and SFAS 160 companies will be required to:

§	Recognize and measure in your financial statements, the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree

§	Recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase

§	Determine what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination

§	Improve the relevance, comparability and transparency of the financial information of the reporting entity provides in its consolidated financial statements

SFAS 141R and SFAS 160 are required to be adopted concurrently, and are effective for business combination transactions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Early adoption is prohibited. The Company is currently evaluating the impact SFAS 141R and SFAS 160 will have on its consolidated financial statements.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities ("FAS 161"). FAS 161 requires enhanced disclosures about how and why companies use derivatives, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect a company's financial position, financial performance and cash flows. The provisions of FAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. Consequently, FAS 161 will be effective for the Company's quarter ended March 31, 2009. The Company is in the process of determining the impact, if any, the adoption of FAS 161 will have on its financial statement disclosures.

NOTE 3 – ACQUISITIONS

On October 18, 2006, the Merger Agreement was entered into between CAC and STI, and closed on January 22, 2007. The Merger was accounted for under the purchase method of accounting in accordance with SFAS No. 141, "Business Combinations". Under this method of accounting, STI was determined to be the acquired company for accounting and financial reporting purposes. The financial results of STI are included in the consolidated financial statements of the Company from the date of acquisition. The Company believes that the merger will create benefits and synergies that will allow the Company to expand its margins, offer broader services and solutions, offer new services and solutions and improve its customer penetration.

F - 56

Consideration paid to the stockholders of STI included 761,118 shares of common stock, 231,514 warrants to purchase common stock, and 172,361 stock options that vested immediately prior to the merger. The aggregate purchase consideration was determined as follows (in thousands):

Fair value of common stock	$	7,632
Fair value of vested stock options		874
Fair value of warrant		2,316
Direct and incremental transaction costs		1,392

Total	$	12,214

Included in the transaction costs is approximately $624,000 of costs payable to a principal stockholder for consulting services provided in connection with the merger.

The purchase price has been allocated based on estimated fair values of assets acquired and liabilities assumed. In 2007, goodwill was adjusted by approximately $(5.0) million as a result of (i) a $5.0 million forgiveness of debt originally included in the allocation of purchase price and (ii) miscellaneous adjustments of approximately $29,000, which reduced goodwill accordingly. The Company's purchase price allocation is as follows (amounts in thousands):

Cash	$	1,944
Accounts receivable		17,064
Property and equipment		6,217
Goodwill		20,026
Customer relationships		16,000
Developed technology		2,000
Other assets		11,552
Outstanding debt		(29,505	)
Other liabilities assumed		(33,084	)

Total	$	12,214

As part of the allocation of the purchase price, the Company estimated the fair value of the acquired deferred revenue and prepaid data center services costs in accordance with SFAS 141 and related literature, including EITF 01-3, "Accounting in a Business Combination for Deferred Revenue of an Acquiree" and also the guidance of EITF 04-11, "Accounting in a Business Combination for Deferred Postcontract Customer Support Revenue of a Software Vendor". The guidance requires the acquiring entity to recognize a legal performance obligation related to a revenue arrangement of an acquired entity and that the amount assigned to that liability should be based on its fair value at the date of the acquisition. The Company decreased the historical carrying value of STI's deferred revenue by approximately $3,018,000 and the prepaid data center services costs by approximately $403,000 to management's estimate of fair value in connection with the allocation of the purchase price of the Merger.

The following unaudited pro forma financial information (in thousands) presents the consolidated results for the year ended December 31, 2007, reported as though the acquisition of the assets Consonus, Inc. had been completed as of January 1, 2007 and that the Merger had been completed at the beginning of the periods presented. This pro forma unaudited financial information is not intended to be indicative of future results.

	Year Ended December 31, 2007
Revenues	$	104,169
Net loss	$	(5,739	)
Basic and diluted net loss per common share	$	(2.04	)

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NOTE 4 – GOODWILL AND OTHER INTANGIBLES

As of December 31, 2007 intangible assets consist of (in thousands):

	December 31, 2007
Definite-lived intangible assets:
Customer relationships	$	19,130
Developed technology		2,000
Less accumulated amortization		(2,581	)

Total definite-lived intangible assets		18,549
Indefinite-lived intangible assets:
Goodwill		21,624

Goodwill and other intangible assets, net	$	40,173

The $3.1 million assigned to customer relationships in connection with the acquisition of the assets of Consonus, Inc. is being amortized on a straight line basis over 7 years. Customer relationships of $16.0 million assigned as part of the Merger is being amortized over its useful life of 10 years in a pattern consistent with which the economic benefit is expected to be realized. The $2.0 million assigned to developed technology is being amortized on a straight line basis over an estimated useful life of 4 years. During the year ended December 31, 2007, the Company recorded amortization expense of approximately $1,873,000.

Estimated future amortization expense of definite-lived intangible assets is as follows (in thousands):

2008	$	2,680
2009		3,014
2010		3,200
2011		2,826
2012		2,152
Thereafter		4,677

Total	$	18,549

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

The Company capitalized direct and incremental expenses associated with the proposed initial public offering of approximately $5.7 million at December 31, 2007 which is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet.

NOTE 6 – PROPERTY AND EQUIPMENT, NET

As of December 31, 2007 property and equipment, net consisted of (in thousands):

	December 31, 2007
Buildings	$	15,433
Land		1,456
Leasehold improvements		62
Computer software and equipment		4,888
Office furniture and equipment		368
Construction in process		77

Total property and equipment		22,284
Less accumulated depreciation		(2,832	)

Property and equipment, net	$	19,452

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NOTE 7 – LONG-TERM DEBT

As of December 31, 2007 long-term debt consists of the following (in thousands):

	December 31, 2007
Line of credit agreement with a financial institution with a maximum borrowing limit of $2,500,000 with a variable interest rate (7.83% at December 31, 2007) payable monthly, principal due on May 31, 2010.	$	–
Term loan of $10.5 million with a financial institution with monthly variable payments, a variable interest rate (7.83% at December 31, 2007), remaining balance due on May 31, 2012		9,392
Term loan of $1.9 million with a financial institution with monthly variable payments, a variable interest rate (7.83% at December 31, 2007), remaining balance due on November 19, 2014.		1,839
Note payable to a utility company (Second Utility Note), principal and accrued interest of 9% per annum due May 31, 2008.		2,800
Bank mortgage note payable, with interest at 8.5%, payable in equal monthly installments of $23,526 through November 2008, with payment of remaining balance due December 2008. The note is collateralized by a first deed of trust on STI's office building, assignment of all leases, and a security interest in all fixtures and equipment. This note was renegotiated in March 2008 and is now due in February 2011. See Note 14 for further discussion.		1,982
Bank mortgage note payable, with interest at 8.5%, payable in monthly installments of $3,025 through November 2008, with payment of remaining balance due December 2008. The note is collateralized by a first deed of trust on STI's office building, assignment of all leases, and security interest in all fixtures and equipment. This note was renegotiated in March 2008 and is now due in February 2011. See Note 14 for further discussion.		265
Note payable to Avnet, inc., our "Senior Lender", with interest at 8.0%, payable through September 2010 as discussed below. The note is collateralized by all assets of STI including a second position deed of trust on real estate.		19,752
Past due trade debt due to Senior Lender, with interest at 8.0%, payable through September 2010 as discussed below. The note is collateralized by all assets of STI including a second position deed of trust on real estate.		2,356

Notes payable to vendor, with interest at LIBOR plus 1.5% (6.74% at December 31, 2007), payable in payments based on excess cash flow in accordance with inter-creditor agreement. The note is unsecured.		4,245
Note payable to Oracle Finance, with interest at 8.0%, payable in quarterly payments of $3,193 through January 1, 2009.		12
Capital leases		478

Total		43,121

Less current maturities of long-term debt		(5,799	)

Long-term debt	$	37,322

On May 31, 2005, the Company entered into a credit agreement with U.S. Bank (U.S. Bank) that provided a $2.5 million line of credit and a $10.5 million term loan. Proceeds of the term loan and $1.5 million of the line of credit were used for the purchase of the assets of Consonus, Inc. as of May 31, 2005. Both loans bear interest at a rate equal to LIBOR plus a LIBOR spread as defined in the credit agreement (7.83% as of December 31, 2007) which is payable monthly. In addition, the line of credit requires the Company to pay a commitment fee quarterly on the unused portion of the line at a defined rate (0.5% as of December 31, 2007). The term loan requires monthly payments of $44,722 from October 2007 through May 2012, at which time the balance is due. The line of credit is due in May 2010.

F - 59

On November 19, 2007, the Company entered into an amended and restated credit agreement with U.S. Bank. The amended and restated credit agreement with U.S. Bank provides for a new term loan in the amount of approximately $1.9 million, in addition to the existing revolving line of credit of $2.5 million and the existing $10.5 million term loan, as further described above. The new term loan in the amount of approximately $1.9 million bears interest at a rate equal to LIBOR plus a LIBOR spread as defined in the amended and restated credit agreement (7.83% interest rate at December 31, 2007) which is payable monthly. The new term loan in the amount of $1.9 million requires monthly principal payments of $22,155 plus applicable monthly interest payments from December 2007 through November 19, 2014, at which time the balance of the new term loan is due. The proceeds of the new term loan will be used to finance the costs of retrofitting a new leased data center facility in the Salt Lake City, Utah area, including the costs of equipment for use in the new data center facility.

The term loans and line of credit are collateralized by all assets and leases of CAC. The credit agreement contains affirmative, negative, and financial covenants. As of December 31, 2007, the Company was in compliance with all covenants.

In connection with the purchase of the assets of Consonus, Inc. from a utility company, the Company entered into various notes with the seller of the assets. These notes are collateralized by all assets and leases of CAC and are subordinate to the U.S. Bank agreement. These notes also contain affirmative, negative, and financial covenants. As of December 31, 2007, the Company was in compliance with all covenants. The First Utility Note with an original principal amount of $500,000 was repaid in May 2006. The Second Utility Note of $2.8 million and the Third Utility Note of $441,617 both accrue interest which is payable upon maturity of the notes. The Second Utility Note of $2.8 million matures in May 2008 and the Third Utility Note of $0.4 million matured in January 2007 but was modified as described below. Included in accrued liabilities at December 31, 2007 is approximately $0.7 million of accrued interest associated with the Second Utility Note.

On January 31, 2007, a modification agreement to the Third Utility Note was signed. The remaining principal amount of $300,000 and accrued interest of $2,625 as of January 31, 2007 plus future interest at 18.0% of $9,124 was paid in three equal installments of approximately $103,918 with the payments on February 28, 2007, March 31, 2007, and April 30, 2007. The Third Utility Note was paid in full in April 2007.

In connection with the Merger on January 22, 2007, the Company assumed all outstanding debt of STI. On May 20, 2005, STI entered into an Amended and Restated Refinancing Agreement (the Amended Agreement) with the lender (Senior Lender) which was later amended on June 22, 2006, May 1, 2007, September 10, 2007 and October 8, 2007. The Agreement, with amendments, consists of one note and a past due trade debt. The note in the amount of $20.1 million carries an interest rate of 8.0%. Payments of principal and interest under both the note and the past due trade debt are $300,000 monthly with the unpaid principal being due on September 10, 2010. Additionally, in connection with the Merger, the Company issued 231,514 warrants to purchase common stock to the Senior Lender.

The Amended Agreement also requires the unpaid debt balance to be paid off immediately with the proceeds from an initial public offering or other financing transaction. If an initial public offering or other financing transaction does not occur by September 30, 2008, the interest rate will increase on the note and the Past Due Trade Debt to 12% and the Senior Lender will be issued an additional warrant to purchase 231,514 shares of the Company's common stock at an exercise price of $0.00039 per share.

As of December 31, 2007, the Company was not in compliance with certain financial covenants under the fourth amendment to the Amended Agreement with the Senior Lender and received a waiver of such violation in April 2008.

Future minimum principal payments on long-term debt are as follows (in thousands):

2008	$	5,799
2009		2,430
2010		20,530
2011		2,797
2012		7,686
Thereafter		3,879
Total minimum payments	$	43,121

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NOTE 8 – INCOME TAXES

The Company adopted the provisions of FASB Interpretation 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109" (FIN 48). As a result of the implementation of FIN 48, the Company recognized no material adjustment in the liability for unrecognized income tax benefits. As a result of an acquisition during the year, the Company recognized an increase of $0.9 million in its unrecognized income tax benefits. The Company does not anticipate any significant increase or decrease of unrecognized tax benefit within the twelve month period following December 31, 2007.

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Balance at January 1, 2007	$	–
Increases related to acquisition		929
Increases related to current year tax positions		–
Balance at December 31, 2007	$	929

If these unrecognized tax benefits of $0.9 million at December 31, 2007 were recognized, they would have decreased the Company's annual effective tax rate. No expense has been recorded for interest and penalties related to these tax positions.

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. As of the date of adoption, January 1, 2007 and as of December 31, 2007, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company has its tax years ended 1995 to 2007 open to examination by federal tax and major state tax jurisdictions. The Company has not been informed by any tax authorities for any jurisdiction that any of its tax years are under examination as of December 31, 2007.

The Company has operating loss carryforwards for federal tax purposes of approximately $20.8 million at December 31, 2007. The total amount is limited by Section 382 of the Internal Revenue Code. The Company also has gross North Carolina net operating loss carry forwards in the amount of $11.2 million.

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The provision for income taxes for the year ended December 31, 2007 consists of the following (in thousands):

	Year Ended December 31, 2007
Current:
Federal	$	276
State		24

		300

Deferred:
Federal		3
State		–
		3

Total	$	303

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate of 35% for the year ended December 31, 2007 to income loss before taxes as a result of the following differences (in thousands):

		Year Ended December 31, 2007
Income tax benefit at the statutory U.S. tax rate	$	(1,626	)
Increase in rate resulting from:
State income taxes		(293	)
Purchased contract revenue		(18	)
Meals and entertainment		45
Valuation allowance		2,128
Other		67

Income tax expense	$	303

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Deferred tax assets and (liabilities) at December 31, 2007 are comprised of the following (in thousands):

	2007
Current:
Accrued vacation and bonuses	$	82
Allowance for bad debt expense		234

Total current asset		316

Non-current:
Intangibles		(6,546	)
Tax depreciation in excess of book depreciation		(199	)
Net operating loss carry forward		7,957
Stock-based compensation		619
Deferred contract revenue		2,090
Other		5

Total non-current asset		3,926

Gross deferred tax asset		4,242
Valuation allowance		(4,242	)

Net deferred tax asset	$	–

The Company has provided a valuation allowance for the gross deferred tax asset due to the uncertainty regarding the Company's ability to realize the entire asset. The valuation allowance has increased by approximately $3.9 million during the year ended December 31, 2007.

Utilization of the federal net operating loss carry forwards are subject to a substantial annual limitation due to the change in ownership provisions of the Internal Revenue Code of 1986. The ultimate ability for the Company to use existing net operating loss carryovers to offset future income is limited. The Company's net operating loss carry forwards begin to expire at the end of the taxable year ending December 31, 2020.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company leases various office space, and land under non-cancelable operating leases which expire at various times from 2008 to 2055. Future aggregate minimum lease payments under non-cancelable operating leases as of December 31, 2007 were as follows (in thousands):

Year ending December 31,
2008	$	927
2009		532
2010		290
2011		178
2012		145
Thereafter		394

Total minimum lease payments	$	2,466

Lease expense for the year ended December 31, 2007 was approximately $1.4 million.

The Company contracts with certain vendors for bandwidth services which it then resells to its customers. As of December 31, 2007, the Company was contracted to pay these vendors approximately $270,000, $150,000 and $11,000 for the years ended December 31, 2008, 2009 and 2010, respectively.

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From time to time, the Company is subject to various lawsuits and other legal proceedings, which arise in the ordinary course of business. Management accrues an estimate of expense for any matters that can be reasonably estimated and that are considered probable of occurring based on the facts and circumstances. Management believes that the ultimate resolution of current matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

NOTE 10 – STOCK-BASED COMPENSATION

The Company has current agreements with two of its officers and one of its board members which give them an opportunity to earn a certain percentage of the equity of CAC. Those percentages ranged from 1.5% to 3.5% of the initial investment of CAC and vest over a 2 or 3 year vesting period. The Company has recognized compensation expense for year ended December 31, 2007 of $68,500 under these agreements based on the estimated fair value of the Company's stock on the date of the agreements. At December 31, 2007, there is approximately $23,000 of unrecognized compensation costs related to these awards. During the year ended December 31, 2007, an additional 42,641 shares vested in connection with these agreements. At December 31, 2007, there are 53,669 shares of common stock of CTI remaining to be vested.

The Company issued 24,261 shares of common stock in October 2006 as part of a consulting agreement whereby a third-party consulting firm performed certain services in connection with the pending public offering. An additional 31,246 shares are to be issued by June 30, 2008 for services previously provided during the year ended December 31, 2006. The compensation for the services has been reflected within prepaid expenses in the accompanying consolidated balance sheet since the costs are direct and incremental to the proposed public offering. Upon consummation of the public offering, all offering related costs capitalized within prepaid expenses will be reclassified to additional paid-in capital as a reduction of the proceeds.

The Company adopted an incentive compensation plan (2007 Equity Plan) on December 15, 2006. The 2007 Equity Plan provides for the issuance of a variety of stock-based awards that may be granted to executive officers, employees and consultants. The pricing, vesting, and other terms of the equity instruments are at the discretion of the Board. A total of 366,667 shares of common stock are reserved for issuance under the 2007 Equity Plan, of which 133,333 restricted shares of common stock and 141,633 deferred shares of common stock were issued on January 22, 2007 to certain members of senior management. An additional 44,870 restricted shares were issued in September 2007. Subsequent to January 22, 2007 and prior to December 31, 2007, 11,100 deferred shares were forfeited, leaving 130,533 deferred shares outstanding at December 31, 2007.

The 133,333 restricted common stock awards vest over a three year period with 66.66% vesting in the first year and 16.67% vesting in the second and third year. There are no performance requirements attached to the vesting. The 44,870 restricted common stock awards vest, as amended in February 2008, over the next four years, 30% vest on February 6, 2008, 40% will vest on March 31, 2009, 20% will vest on March 31, 2010 and 10% will vest on March 31, 2011. In accordance with SFAS 123R, the Company recognized approximately $1.0 million of compensation expense for the year ended December 31, 2007. At December 31, 2007, there is approximately $0.9 million of unrecognized compensation costs related to these awards.

The 130,533 deferred common stock awards vest evenly on an annual basis over a three year period with the vesting tied to performance criteria, as well as continued service. At December 31, 2007, 130,533 shares of the deferred stock granted remained outstanding with the remaining 11,100 shares forfeited during the year. In accordance with SFAS 123R, the Company recognized $0.4 million in compensation expense for the year ended December 31, 2007 based on management's estimate of the awards expected to vest. At December 31, 2007, there is approximately $0.9 million of unrecognized compensation costs related to these awards.

During January 2007, the Company issued 18,380 shares of common stock to a related party of its principal stockholder. The Company recorded compensation expense equal to the estimated fair value of the stock issued of approximately $184,000 within selling, general, and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2007.

As of December 31, 2007, there is zero unrecognized compensation cost related to outstanding stock options because all options were fully vested immediately prior to the Merger closing date of January 22, 2007. Therefore all outstanding options at December 31, 2007 are exercisable. There were no options granted during the year ended December 31, 2007 except for those issued in connection with the Merger.

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A summary of the Company's stock option plan at December 31, 2007 and changes during the year then ended is as follows:

	Number of Shares		Average Exercise Price	Average Remaining Contractual Terms		Aggregate Intrinsic Value

Outstanding at December 31, 2006	–	$	–
Options granted in connection with the Merger	172,361	$	23.63
Forfeited or expired	7,793	$	9.64

Outstanding at December 31, 2007	164,568	$	24.29		5.1	$	–

At December 31, 2007, the Company had reserved a total of 847,664 of its authorized 13,333,333 shares of common stock for future issuance as follows:

Outstanding warrants			231,514
Outstanding stock options			164,568
Outstanding restricted stock			178,203
Outstanding deferred stock			215,448
Possible future issuance under 2007 Equity Plan			57,931
			847,664

NOTE 11 – EMPLOYEE SAVINGS PLAN

The Company sponsors a defined contribution 401(k) plan (the Retirement Plan). Employees become eligible to participate in the Retirement Plan beginning the month subsequent to three months of employment. Participants may contribute up to 100% of their compensation up to a maximum annual contribution of $15,500 for 2007 if they are under 50 years of age and $ $20,500 if they are 50 years or older as prescribed by the Internal Revenue Service. Currently, the Company provides contributions equal to 3% of employees' eligible earnings. The Company recognized expense related to these contributions of approximately $60,000 for the year ended December 31, 2007.

In connection with the Merger, the Company maintains a 401(k) savings plan with a profit sharing feature (the Plan) whereby employees may elect to make contributions pursuant to a salary reduction agreement upon meeting age and length-of-service requirements. The Company's matching contribution is discretionary and is determined on an annual basis. During the year ended December 31, 2007, the Company recognized expense of approximately $69,000 in connection with the Plan. The Company also may make annual discretionary profit sharing contributions to the Plan for all full-time employees who qualify as to age and length of service. The Company did not make any discretionary profit sharing contributions for the year ended December 31, 2007.

NOTE 12 – PREFERRED STOCK

As part of its initial capitalization, Gazelle Technologies, Inc. issued 15,000,000 shares of $.10 par value preferred stock in exchange for barter credits. Gazelle Technologies was merged into CAC on May 2, 2005 and the preferred shares of Gazelle were exchanged for 15,000,000 shares of $.10 par value preferred stock in the Company. The preferred shares are non-voting and non-dividend eligible shares. The shares are automatically convertible into regular voting, dividend paying common stock into an amount of shares representing 3% of the then outstanding share equity of any new or merged or acquired companies, public or private or in the event that the Company becomes a public company. The preferred stock was converted into the 65,066 shares of common stock of the Company in January 2007 in connection with the Merger.

NOTE 13 – RELATED PARTY TRANSACTIONS

For the year ended December 31, 2007, the Company recognized expenses for services provided by Knox Lawrence International, KLI, a principal shareholder of the Company, and its affiliates of approximately $250,000. At December 31, 2007, the Company has a payable to KLI of approximately $1,543,000 related to payments made by KLI on behalf of the Company for legal, accounting, and consulting costs. Included in the amount at December 31, 2007 is approximately $624,000 associated with fees payable to KLI for their consulting services associated with the Merger. (See Note 3 for further discussion). KLI also made capital contributions to the Company of $150,000 during the year ended December 31, 2007. In January 2007, the Company issued 18,380 shares of its common stock with an estimated fair value of approximately $184,000 to a current investor (See Note 10 for further discussion).

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NOTE 14 – SUBSEQUENT EVENTS

Repurchase of Common Stock

In January 2008, 102,350 shares of restricted stock and 43,510 shares of deferred stock vested under the 2007 Equity Plan. The Board of Directors approved a plan to purchase 51,013 shares of vested restricted and deferred stock issued under the 2007 Equity Plan and 12,449 shares of vested deferred stock issued under a previous CAC plan. These shares were purchased by the Company for approximately $625,000, which represents management's estimate of fair value on the date of repurchase.

Restricted Common Stock Awards

In February 2008 and May 2008, the Company issued an additional 35,696 and 44,620 shares, respectively, of restricted common stock to certain members of senior management. The restricted common stock award of 35,696 shares both vest evenly on an annual basis over a three year period with the vesting tied to performance criteria as well as continued service. For the restricted common stock award of 44,620 shares, 7,437 shares vest on March 31, 2009, 14,873 shares vest on each of March 31, 2010 and 2011, and 7,437 shares vest on September 30, 2011.

Revision of Bank Mortgage Notes Payable Terms

In March 2008, the Company revised the terms of its two bank mortgage notes payable with principal amounts totaling $2.2 million with a single bank mortgage note payable in the amount of $2.4 million, with an interest rate of 8.00%. The revised note requires monthly principal and interest payments in the amount of $23,526 commencing in March 2008, with a final payment due in February 2011. The note is collateralized by a first deed of trust on STI's office building, assignment of all leases, and a security interest in all fixtures and equipment. Additional borrowings received under the revised note will be used to fund anticipated capital expenditures in 2008.

Amendment to Amended and Restated Credit Agreement

In January 2008, the Company entered into the first amendment to the amended and restated credit agreement with U.S. Bank. The amendment allowed for the bank to issue letter of credit to the Company up to $500,000 and that letter of credit outstanding would reduce the availability of the line of credit. In January 2008, the Company was issued a letter of credit for approximately $353,000.

Amended Agreement with Senior Lender

As discussed in Note 7, the Company received a waiver from its Senior Lender in April 2008 for its non-compliance with certain covenants with the Amended Agreement. In May 2008, STI entered into an agreement with Avnet to amend certain restrictive financial covenants for covenant periods beginning March 31, 2008.

New Credit Facility

In May 2008, the Company entered into subordinated debt facility with a bank. The facility provides for a new term loan in the amount of $3.0 million. The facility bears interest at a rate equal to LIBOR plus 10.00% (12.80% interest rate at closing) which is payable monthly. The new facility also requires quarterly principal payments of $100,000 from July 2008 through May 2010, at which time the balance of the new term loan is due. Proceeds from the facility were used to help pay off the Second Utility Note of principal of $2,800,000 and interest of $0.8 million.

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Item 20. Indemnification of Directors and Officers

Section 145 (“Section 145”) of the Delaware General Corporation Law, as amended (the “DGCL”), permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions and subject to certain limitations. Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer or agent of the corporation or another enterprise if serving at the request of the corporation. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or in the right of the corporation, no indemnification may be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. The foregoing is only a summary of the described sections of the Delaware General Corporation Law and is qualified in its entirety by reference to such sections.

Midas Medici’s Certificate of Incorporation and bylaws provide that it shall indemnify each of our officers and directors to the fullest extent permitted by Section 145.

Midas Medici’s Certificate of Incorporation, as amended, provides that no current or former director of the Company shall be personally liable to it or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to Midas Medici’s directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, Midas Medici has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 21. Exhibits and Financial Statement Schedules

(a) Exhibits

2.1	Agreement of Merger and Plan of Reorganization, dated as of April 30, 2010, by and among Midas Medici Group Holdings, Inc., MMGH Acquisition, Inc. and Consonus Technologies, Inc.
3.1	Articles of Incorporation (Incorporated by reference to Exhibit 3.1 on Form 10SB filed May 2, 2007).
3.2	Certificate of Ownership of Mondo Acquisition I, Inc. and Midas Medici Group Holdings, Inc. (Incorporated by reference to the Registrant’s Form 8-K filed on May 27, 2009)
3.3	Bylaws (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
4.1	Form of Underwriter’s Purchase Warrant (Incorporated by reference to the Registrant’s Form S-1/A filed on February 4, 2010).
5.1*	Opinion of Sichenzia Ross Friedman Ference LLP
10.1	Stock Option Plan (Incorporated by reference to the Registrant’s Form 8-K filed on July 31, 2009).
10.2	Employment Agreement between Midas Medici Group Holdings, Inc. and Nana Baffour dated as of July 16, 2009 (Incorporated by reference to the Registrant’s Form 8-K filed on July 22, 2009).
10.3	Employment Agreement between Midas Medici Group Holdings, Inc. and Johnson Kachidza dated as of July 16, 2009 (Incorporated by reference to the Registrant’s Form 8-K filed on July 22, 2009).
10.4	Stock Purchase Agreement dated May 15, 2009, among Mondo Acquisition I, Inc., Mondo Management Corp., and Midas Medici Group, Inc. (Incorporated by reference to the Registrant’s Form 8-k filed on May 21, 2009)
10.5	Capital Commitment Agreement between Utilipoint International, Inc. and The Intelligent Project, LLC dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.6	Agreement to be bound to the Limited Liability Company Agreement between of The Intelligent Project, LLC dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).

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10.7	Limited Liability Company Agreement of The Intelligent Project, LLC dated as of May 22, 2009. (Incorporated by reference to the Registrant’s Form S-1/A filed on November 3, 2009).
10.8	Consulting Agreement between Utilipoint International, Inc. and KLI IP Holding, Inc. dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.9	Management Services Agreement between Utilipoint International, Inc. and The Intelligent Project, LLC dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.10	Stock Subscription Agreement executed by Knox Lawrence International, LLC dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.11	Revolving Senior Subordinated Note dated as of July 1, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.12	Form of Subscription Agreement for sales of common stock on July 17, July 31, and August 14, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.13	Form of Return to Treasury Agreement executed by Nana Baffour, Johnson Kachidza, Frank Asante-Kissi and B.N. Bahadur effective June 29, 2009 (Incorporated by reference to the Registrant’s Form 8-K filed on July 31, 2009)
10.14	Reimbursement Agreement between Midas Medici Group Holdings, Inc. and Knox Lawrence International LLC dated as of August 7, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.15	Management Agreement between Utilipoint International, Inc. and Knox Lawrence International LLC dated as of July 23, 2007(Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.16	Senior Subordinated Debenture issued by Utilipoint International, Inc. to Knox Lawrence International LLC dated as of January 15, 2009 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.17	Senior Subordinated Debenture issued by Utilipoint International, Inc. to Knox Lawrence International LLC dated as of December 31, 2008 (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.18	Lease for Utilipoint’s corporate offices in Albuquerque, New Mexico (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
10.19	Lease for Utilipoint’s corporate offices in Tulsa, Oklahoma (Incorporated by reference to the Registrant’s Form S-1/A filed on November 3, 2009).
10.20	Lease for Utilipoint’s corporate offices in Sugar Land, Texas (Incorporated by reference to the Registrant’s Form S-1/A filed on November 3, 2009).
10.21	Lease for Utilipoint’s corporate offices in Brno, Czech Republic (Incorporated by reference to the Registrant’s Form S-1/A filed on February2, 2010).
10.22	Revolving Loan Agreement among Midas Medici Group Holdings, UtiliPoint International, Inc. and Proficio Bank (Incorporated by reference to the Registrant’s Form S-1/A filed on November 25, 2009)
10.23	Form of Secured Revolving Promissory Note (Incorporated by reference to the Registrant’s Form 8-K filed on October 20, 2009) (Incorporated by reference to the Registrant’s Form S-1/A filed on November 25, 2009) (Incorporated by reference to the Registrant’s Form S-1/A filed on November 25, 2009)
10.24	Security Agreement among Midas Medici Group Holdings, Inc., UtiliPoint International, Inc. and Proficio Bank. (Incorporated by reference to the Registrant’s Form 8-K filed on October 20, 2009)
10.25	Subordination and Standstill Agreement among, Bruce R. Robinson Trust under agreement dated March 27, 2006, Jon Brock, Robert C. Bellemare, and Knox Lawrence International, LLC (Incorporated by reference to the Registrant’s Form 8-K filed on October 20, 2009)
10.26	Comfort Letter by Knox Lawrence International, LLC (Incorporated by reference to the Registrant’s Form 8-K filed on October 20, 2009)
10.27	Letter Agreement between Forbes Magazine and UtiliPoint International, Inc. dated as of October 2, 2009(Incorporated by reference to the Registrant’s Form S-1/A filed on November 3, 2009).
10.28	Registration Rights Agreement among Midas Medici Group Holdings, Inc. and the holders signatures thereto (Incorporated by reference to the Registrant’s Form S-1/A filed on February 4, 2010 ).
14.1	Code of Ethics (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
16.1	Letter from Russell Bedford International dated July 24, 2009 (Incorporated by reference to the Registrant’s Form 8-K/A filed on July 28, 2009).
21	Subsidiaries (Incorporated by reference to the Registrant’s Form S-1/A filed on September 30, 2009).
23.2*	Consent of J.H. Cohn LLP.
23.3*	Consent of REDW LLC.
23.4*	Consent of J.H. Cohn LLP.
23.5*	Consent of Ernst & Young LLC
23.6*	Consent of Sichenzia Ross Friedman Ference LLP (included in Exhibit 5.1)

* Filed herewith.

The exhibits listed below in the "Exhibit Index" are part of this Registration Statement and are numbered in accordance with Item 601 of Regulation S-K.

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Item 22. Undertakings.

The undersigned registrant hereby undertakes:

(a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended.

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) (1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

(2) The registrant undertakes that every prospectus (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

(e) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(f) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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(g) The undersigned registrant hereby undertakes that, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, in the State of New York, on May 3, 2010.

	Midas Medici Group Holdings, Inc.

	By:	/s/ Nana Baffour
		Nana Baffour CEO, Co-Executive Chairman (Principal Executive Officer) and Director



	By:	/s/ Johnson M. Kachidza
		Johnson M. Kachidza
		CFO, President, Co-Executive Chairman (Principal Financial and Accounting Officer) and Director

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Nana Baffour, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any registration statement of the same offering which is effective upon filing pursuant to Rule 462(b) under the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorney-in-fact and agent, his substitute, may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act, this Registration Statement has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.

NAME	TITLE	DATE

/s/ Nana Baffour
Nana Baffour	CEO, Co-Executive Chairman (Principal Executive Officer) and Director	May 3, 2010

/s/ Johnson M. Kachidza
Johnson M. Kachidza	CFO, President, Co-Executive Chairman (Principal Financial and Accounting Officer) and Director	May 3, 2010

/s/ Stephen Schweich
Stephen Schweich	Director	May 3, 2010

/s/ Keith Gordon
Keith Gordon	Director	May 3, 2010

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AGREEMENT AND PLAN OF MERGER

by and among

MIDAS MEDICI GROUP HOLDINGS, INC.

MMGH ACQUISITION, INC.

and

CONSONUS TECHNOLOGIES, INC.

Dated as of April 30, 2010

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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered into as of April 30, 2010, by and among MIDAS MEDICI GROUP HOLDINGS, INC., a Delaware corporation (“Parent”), MMGH ACQUISITION, INC., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and CONSONUS TECHNOLOGIES, INC., a Delaware corporation (the “Company”).

RECITALS:

A. Upon the terms and subject to the conditions set forth this Agreement (as defined in Section 1.2 hereof) and in accordance with the Delaware General Corporation Law (the “Delaware Law”), Parent, Merger Sub and the Company intend to enter into a business combination transaction.

B. The Board of Directors of the Company (i) has determined that the Merger (as defined in Section 1.1 hereof) is fair to and in the best interests of the Company and its stockholders, (ii) has approved this Agreement, the Merger and the other transactions contemplated by this Agreement, and (iii) has determined to recommend that the stockholders of the Company adopt and approve this Agreement and approve the Merger.

C. The Board of Directors of each of Parent and Merger Sub (i) has determined that the Merger is fair to and in the best interests of each of Parent and Merger Sub and their respective stockholders, and (ii) has unanimously approved this Agreement, the Merger and the other transactions contemplated by this Agreement.

D. Concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, certain affiliates of the Parent and the Company are entering into Voting Agreements, in the form attached hereto as Exhibit A (each, a “Voting Agreement” and, collectively, the “Voting Agreements”).

E. The parties hereto intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

AGREEMENT

NOW, THEREFORE, in consideration of foregoing premises, the mutual covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto hereby agree as follows:

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ARTICLE I

THE MERGER

1.1 The Merger

At the Effective Time (as defined in Section 1.2 hereof) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of Delaware Law, Merger Sub shall be merged with and into the Company (the “Merger”), the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation and a wholly-owned subsidiary of Parent. The Company, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Corporation.”

1.2 Effective Time; Closing

Subject to the provisions of this Agreement, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger in the form attached hereto as Exhibit B with the Secretary of State of the State of Delaware in accordance with the relevant provisions of Delaware Law (the “Certificate of Merger”) (the time of such filing (or such later time as may be agreed in writing by the Company and Parent and specified in the Certificate of Merger) being referred to herein as the “Effective Time”) as soon as practicable on or after the Closing Date (as defined below). Unless the context otherwise requires, the term “Agreement” as used herein refers collectively to this Agreement and Plan of Merger and Reorganization and the Certificate of Merger. The closing of the Merger and the other transactions contemplated hereby (the “Closing”) shall take place at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, New York, at a time and date to be specified by the parties hereto, which time and date shall be no later than the second (2nd) business day after the satisfaction or waiver of the conditions set forth in Article VI hereof, or at such other location, time and date as the parties hereto shall mutually agree in writing (the date upon which the Closing actually occurs being referred to herein as the “Closing Date”).

1.3 Effect of the Merger

At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4 Certificate of Incorporation; Bylaws

(a) Certificate of Incorporation. At the Effective Time, the Certificate of Incorporation of the Company shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with Delaware Law and such Certificate of Incorporation.

(b) Bylaws. The Bylaws of the Company as in effect immediately prior to the Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving Corporation until thereafter amended in accordance with Delaware Law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

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1.5 Directors and Officers

(a) Directors. The initial directors of the Surviving Corporation shall be the directors of the Company, as of the Effective Time, until their respective successors are duly elected or appointed and qualified.

(b) Officers. The initial officers of the Surviving Corporation shall be the officers of the Company, as of the Eeffective Time, until their respective successors are duly appointed.

1.6 Effect on Capital Stock

Subject to the terms and conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holders of any of the following securities, the following shall occur:

(a) Conversion of Company Common Stock. Each share of Common Stock, par value $0.0000015 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Effective Time, other than Dissenting Shares, which shall be handled as set forth in Section 1.11, shall be canceled and extinguished and automatically converted (subject to Section 1.6(d) and Section 1.6(e) hereof) into the right to receive 1.33 (the “Exchange Ratio”) shares of Common Stock, par value $0.001 per share, of Parent (the “Parent Common Stock”). If any shares of Company Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with the Company, then the shares of Parent Common Stock issued in exchange for such shares of Company Common Stock shall also be unvested and subject to the same repurchase option, risk of forfeiture or other condition, and the certificates representing such shares of Parent Common Stock may accordingly be marked with appropriate legends. The Company shall take all action that may be necessary to ensure that, from and after the Effective Time, Parent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement.

(b) Stock Options; Employee Stock Purchase Plans. At the Effective Time, (i) all options to purchase Company Common Stock then outstanding under (A) any stock option plan of the Company, all of which are identified in Section 2.3(a) (the “Company Option Plans”) and (B) any other arrangements to purchase capital stock of the Company (“Company Option Arrangements” and, together with the Company Option Plans, the “Company Stock Plans”), (ii) all warrants to purchase Company Common Stock (“Company Warrants”), and (iii) all stock appreciation or phantom stock rights of the Company, shall be treated as set forth in Section 5.9 hereof.

(c) Capital Stock of Merger Sub. Each share of Common Stock, par value $0.001 per share, of Merger Sub (the “Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of Common Stock, par value $0.000001 per share, of the Surviving Corporation. Each certificate evidencing ownership of shares of Merger Sub Common Stock immediately prior to the Effective Time shall, as of the Effective Time, evidence ownership of an equivalent number of shares of capital stock of the Surviving Corporation.

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(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to reflect appropriately the effect of any forward or reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock or Company Common Stock), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Parent Common Stock or Company Common Stock occurring on or after the date hereof and prior to the Effective Time.

(e) Fractional Shares. No fraction of a share of Parent Common Stock shall be issued by virtue of the Merger, but in lieu thereof, each holder of shares of Company Common Stock who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would be received by such holder) shall be automatically converted into the right to receive from Parent one full additional share of Parent Common Stock.

1.7 Share Issuance Process

(a) Parent to Provide Common Stock. Promptly following the Effective Time, Parent shall make available for delivery in accordance with this Article I, the shares of Parent Common Stock issuable pursuant to Section 1.6 hereof. Such shares shall be issuable in accordance with stock register of the Company as of the Effective Time, to each holder of record as of such time (other than holders of Dissenting Shares). Physical stock certificates of Company Common Stock shall not be required to be exchanged for Parent Common Stock certificates and shall be deemed to be automatically issuable in exchange for outstanding shares of Company Common Stock. All shares of Company Common Stock shall be deemed to no longer be issued and outstanding as of the Effective Time, subject to rights of holders of Dissenting Shares as set forth below.

(b) Transfers of Ownership. If certificates representing shares of Parent Common Stock are to be issued in a name other than that reflected on the Company's stock register, it will be a condition of the issuance thereof that the persons requesting such exchange will have paid to Parent or any agent designated by it any transfer or other taxes required by reason of the issuance of certificates representing shares of Parent Common Stock in any name other than that of the registered holder of the Company Common Stock, or established to the satisfaction of Parent or any agent designated by it that such tax has been paid or is not payable.

(c) No Liability. Notwithstanding anything to the contrary in this Section 1.7, neither the Parent, the Surviving Corporation nor any other party hereto shall be liable to a holder of shares of Parent Common Stock or Company Common Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

1.8 No Further Ownership Rights in Company Common Stock

All shares of Parent Common Stock issued in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Common Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, at any time following the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I.

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1.9 Lost, Stolen or Destroyed Certificates.

In the event that any Certificates shall have been lost, stolen or destroyed, the Parent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, certificates representing the shares of Parent Common Stock into which the shares of Company Common Stock represented by such Certificates were converted pursuant to Section 1.6 hereof.

1.10 Tax Consequences.

It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code. The parties hereto adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations. None of the parties hereto shall take any action that would be reasonably expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.

1.11 Dissenting Shares.

Notwithstanding anything contained herein, the shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by Company Stockholders who did not vote in favor of the Merger and who comply with all of the relevant provisions of Section 262 of Delaware Law (the “Dissenting Shares”) shall not be converted into Parent Common Stock, unless and until such Company Common Stockholders shall have waived in writing or failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under Section 262 of Delaware Law; and any such Company Common Stockholder shall have only such rights in respect of the Dissenting Shares owned by them as are provided by Delaware Law. If any such Company Common Stockholder shall have waived in writing or failed to perfect or shall have effectively withdrawn or lost such right, such Company Common Stockholder’s Dissenting Shares shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for Parent Common Stock without any interest thereon. Company will promptly comply with its obligations under Section 262 of the Delaware Law and will give Parent prompt notice of any demands and withdrawals of such demands received by Company for appraisals of Dissenting Shares.

1.12

If, at any time following the Effective Time, any further action is necessary or desirable to carry out the purposes and intent of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Company and Merger Sub shall take all such lawful and necessary action.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub, as of the date hereof and as of the Closing Date as though made at the Closing Date, subject to such exceptions as are specifically disclosed in writing (with reference to a specific section of this Agreement to which each such exception applies; provided, however, that if any Section of the Company Disclosure Letter discloses an item or information in such a way as to make its relevance to the disclosure required by another section reasonably apparent based upon the substance of such disclosure, the matter shall be deemed to have been disclosed in such other section of the Company Disclosure Letter, notwithstanding the omission of an appropriate cross-reference to such other section) in a disclosure letter supplied by the Company to Parent, dated as of the date hereof and certified by a duly authorized officer of Company (the “Company Disclosure Letter”), as follows:

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2.1 Organization and Qualification; Subsidiaries

(a) Each of the Company and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. Each of the Company and its subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“Approvals”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, except where the failure to have such Approvals would not, individually or in the aggregate, have a Material Adverse Effect on the Company or its subsidiaries. Each of the Company and its subsidiaries is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, have a Material Adverse Effect on the Company or its subsidiaries.

(b) The Company has no subsidiaries except for the entities identified in Section 2.1(b) of the Company Disclosure Letter. Neither the Company nor any of its subsidiaries has agreed, is obligated to make, or is bound by, any written, oral or other agreement, contract, sub-contract, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sub-license, insurance policy, benefit plan, commitment, or undertaking of any nature, as of the date hereof or as may hereafter be in effect under which it may become obligated to make, any future investment in or capital contribution to any other entity. Neither the Company nor any of its subsidiaries directly or indirectly owns any equity or similar interest in or any interest convertible, exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business, association or entity.

2.2 Certificate of Incorporation and Bylaws

The Company and each of its subsidiaries has previously furnished to Parent a complete and correct copy of its Certificate of Incorporation and Bylaws as amended to date. Such Certificate of Incorporation, Bylaws and equivalent organizational documents of the Company and each of its subsidiaries are in full force and effect. Neither the Company nor any of its subsidiaries is in violation of any of the provisions of its Certificate of Incorporation or Bylaws or equivalent organizational documents.

2.3 Capitalization

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(a) The authorized capital stock of the Company consists of 150,000,000 shares of Company Common Stock and 10,000,000 shares of Preferred Stock. As of the close of business on the date hereof, (i) 3,259,046 shares of Company Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) no shares of Company Common Stock were held in treasury by the Company or by any subsidiaries of the Company, (iii) 81,323 shares of Company Common Stock were reserved for issuance upon the exercise of outstanding options to purchase Company Common Stock under the Strategic Technologies, Inc. Amended and Restated 1999 Employee Stock Plan, which plan was assumed by the Company (the “STI Plan”), (iv) 149,826 shares of Company Common Stock were reserved for issuance under the Consonus Technologies, Inc. 2007 Incentive Compensation Plan (the “CTI Plan”), which amount makes up the authorized but unissued pool thereunder, (v) 281,514 shares of Company Common Stock were reserved for issuance upon the exercise of the outstanding Company Warrants, (vi) 100,000 shares of Company Common Stock reserved for issuance upon the exercise of Company Warrants to be issued by the Company during 2010, and (vii) 31,246 shares of Company Common Stock are reserved for issuance under existing deferred stock grant agreements. As of the date hereof, there are no outstanding options to purchase Company Common Stock under the CTI Plan. As of the date hereof, no shares of Company Preferred Stock are issued or outstanding. All issued and outstanding Company Common Stock and all issued and outstanding capital stock of all subsidiaries is held by the persons and in the amount reflected in Section 2.3(a) of the Company Disclosure Letter. Section 2.3(a) of the Company Disclosure Letter sets forth the following information with respect to each Company Stock Option (as defined in Section 5.9 hereof) outstanding as to the date of the Agreement: (i) the name of the optionee; (ii) the particular plan pursuant to which such Company Stock Option was granted; (iii) the number of shares of Company Common Stock subject to such Company Stock Option; (iv) the exercise price of such Company Stock Option; (v) the date on which such Company Stock Option was granted; (vi) the applicable vesting schedule; (vii) the date on which such Company Stock Option expires; and (viii) whether the exercisability of such option will be accelerated in any way by the transactions contemplated by this Agreement, and indicates the extent of any such acceleration. Company has made available to Parent accurate and complete copies of all stock option plans pursuant to which the Company has granted such Company Stock Options that are currently outstanding and the form of all stock option agreements evidencing such Company Stock Options. All shares of Company Common Stock subject to the issuance aforesaid, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and non accessible. Except as set forth in Section 2.3(a) of the Company Disclosure Letter, there are no commitments or agreements of any character to which the Company is bound obligating the Company to accelerate the vesting of any Company Stock Option as a result of the Merger. All outstanding shares of Company Common Stock, all outstanding Company Stock Options, and all outstanding shares of capital stock of each subsidiary of the Company have been issued and granted in compliance with (i) all applicable securities laws and other applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity (as defined below) and (ii) all requirements set forth in applicable contracts, agreements, and instruments.

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(b) Except for securities the Company owns free and clear of all liens, pledges, hypothecations, charges, mortgages, security interests, encumbrances, claims, infringements, interferences, options, right of first refusals, preemptive rights, community property interests or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset) directly or indirectly through one or more subsidiaries, as of the date of this Agreement, there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of the Company, or any security exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as set forth in Section 2.3(b) or 2.3(a) of the Company Disclosure Letter or as set forth in Section 2.3(a) hereof, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company or any of its subsidiaries is a party or by which it is bound obligating the Company or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company or any of its subsidiaries or obligating the Company or any of its subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. As of the date of this Agreement, except as contemplated by this Agreement, there are no registration rights and there is, except for the Voting Agreements, no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding to which the Company or any of its subsidiaries is a party or by which they are bound with respect to any equity security of any class of the Company or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its subsidiaries.

2.4 Authority Relative to this Agreement.

The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and, subject to obtaining the approval of the stockholders of the Company of the Merger, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions so contemplated (other than, with respect to the Merger, the approval and adoption of this Agreement and the approval of the Merger by holders of a majority of the outstanding shares of Company Common Stock in accordance with Delaware Law and the Company’s Certificate of Incorporation and Bylaws). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitute legal and binding obligations of the Company, enforceable against the Company in accordance with their respective terms.

2.5 No Conflict; Required Filings and Consents

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(a) The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any of its subsidiaries, (ii) subject to obtaining the approval of the Company’s stockholders in favor of approval and adoption of this Agreement and approval of the Merger, and obtaining the consents, approvals, authorizations and permits and making registrations, filings and notifications set forth in Section 2.5(b) hereof (or Section 2.5(b) of the Company Disclosure Letter), conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties is bound or affected, (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company’s or any of its subsidiaries’ rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company or any of its subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound or affected, or (iv) cause the acceleration of any vesting of any awards for or rights to Company Common Stock or the payment of or the acceleration of payment of any change in control, severance, bonus or other cash payments or issuance of shares of Company Common Stock, except in the case of clauses (ii) and (iii), to the extent such conflict, violation, breach, default, impairment or other effect could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or its subsidiaries.

(b) The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or registration, filing with or notification to, any court, administrative agency, commission, governmental or regulatory authority, domestic or foreign (each, a “Governmental Entity” and, collectively, “Governmental Entities”), except for (i) applicable requirements, if any, of the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), state securities laws (“Blue Sky Laws”), and foreign Governmental Entities and the rules and regulations promulgated thereunder, (ii) the filing and recordation of the Merger Certificate as required by the Delaware Law, and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, (A) would not prevent consummation of the Merger or otherwise prevent the Company from performing its obligations under this Agreement, or (B) could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or its subsidiaries.

2.6 Compliance; Permits

(a) Neither the Company nor any of its subsidiaries is in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties is bound or affected, or (ii) any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties is bound or affected, except for any conflicts, defaults or violations that (individually or in the aggregate) would not have a Material Adverse Effect on the Company or its subsidiaries. No investigation or review by any governmental or regulatory body or authority is pending or, to the knowledge of the Company, threatened against the Company or its subsidiaries, nor has any governmental or regulatory body or authority indicated an intention to conduct the same, other than, in each such case, those the outcome of which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or any of its subsidiaries.

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(b) The Company and its subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals from Governmental Entities which are material to operation of the business of the Company and its subsidiaries taken as a whole (collectively, the “Company Permits”). The Company and its subsidiaries are in compliance in all material respects with the terms of the Company Permits.

2.7 Financial Statements

The Company has made available to Parent a correct and complete copy of (i) the audited consolidated balance sheet of the Company as of December 31, 2009 (the “Company Balance Sheet”), and the related audited statements of income and stockholders’ equity and changes in financial position of the Company for the fiscal year ended December 31, 2009, on consolidated basis, and (ii) the audited consolidated balance sheet of the Company as of December 31, 2008 and 2007, and the related audited statements of income and stockholders’ equity and changes in financial position of the Company for the fiscal years ended December 31, 2008 and 2007, on a consolidated basis (collectively, the “Company Financial Statements”). The Company Financial Statements were prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved and each fairly presents the consolidated financial position of the Company and its subsidiaries as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated.

2.8 No Undisclosed Liabilities

Neither the Company nor any of its subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the consolidated financial statements prepared in accordance with GAAP, which are, individually or in the aggregate, material to the business, results of operations, financial condition or prospects of the Company and its subsidiaries taken as a whole except (i) liabilities provided for in the Company Balance Sheet, (ii) reflected in the Disclosure Letter, or (iii) liabilities incurred since the Company Balance Sheet date in the ordinary course of business.

2.9 Absence of Certain Changes or Events

Since the Company Balance Sheet date, there has not been: (i) any Material Adverse Effect on the Company or any of its subsidiaries, (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Company’s or any of its subsidiaries’ capital stock, or any purchase, redemption or other acquisition by the Company of any of the Company’s capital stock or any other securities of the Company or its subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases from employees following their termination pursuant to the terms of their pre-existing stock option or purchase agreements, (iii) any split, combination or reclassification of any of the Company’s or any of its subsidiaries’ capital stock, (iv) any granting by the Company or any of its subsidiaries of any increase in compensation or fringe benefits, except for normal increases of cash compensation in the ordinary course of business consistent with past practice, or any payment by the Company or any of its subsidiaries of any bonus, except for bonuses made in the ordinary course of business consistent with past practice, or any granting by the Company or any of its subsidiaries of any increase in severance or termination pay or any entry by the Company or any of its subsidiaries into any currently effective employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving the Company of the nature contemplated hereby, (v) entry by the Company or any of its subsidiaries into any licensing or other agreement with regard to the acquisition or disposition of any Intellectual Property (as defined in Section 2.19 hereof) other than licenses in the ordinary course of business consistent with past practice, and other than licenses disclosed on Section 2.19(j) of the Company Disclosure Letter, (vi) any material change by the Company in its accounting methods, principles or practices, except as required by concurrent changes in GAAP, (vii) any revaluation by the Company of any of its assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts receivable, or (viii) any sale of assets of the Company other than in the ordinary course of business.

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2.10 Absence of Litigation

Except as set forth in Section 2.10 of the Company Disclosure Letter, there are no claims, actions, suits or proceedings pending or, to the knowledge of the Company, threatened (or, to the knowledge of the Company, any governmental or regulatory investigation pending or threatened) against the Company or any of its subsidiaries or any properties or rights of the Company or any of its subsidiaries, before any Governmental Entity.

2.11 Employee Benefit Plans

(a) All employee compensation, incentive, fringe or benefit plans, programs, policies, commitments or other arrangements (whether or not set forth in a written document and including, without limitation, all “employee benefit plans” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) (the “Company Plans”) covering (i) any active or former employee, director or consultant of the Company, (ii) any subsidiary of Company, or (iii) any trade or business (whether or not incorporated) which is a member of a controlled group or which is under common control with the Company within the meaning of Section 414 of the Code (an “Affiliate”), or with respect to which the Company has or, to the Company’s knowledge, may in the future have liability (excluding consideration of Parent and its subsidiaries as Affiliates following the Effective Time), are listed in Section 2.11(a) of the Company Disclosure Letter. The Company has provided to Parent: (i) correct and complete copies of all documents embodying each Company Plan including (without limitation) all amendments thereto, all related trust documents, and all material written agreements and contracts relating to each such Company Plan; (ii) the three (3) most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Plan; (iii) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Company Plan; (iv) all IRS determination, opinion, notification and advisory letters, and all applications and correspondence to or from the IRS or the DOL with respect to such application or letter; (v) all material correspondence to or from any governmental agency relating to any Company Plan; (vi) all COBRA forms and related notices within the last three (3) years; (vii) all discrimination tests for each Company Plan for the most recent three (3) plan years; (viii) the most recent annual actuarial valuations, if any, prepared for each Company Plan; (xi) if the Company Plan is funded, the most recent annual and periodic accounting of Company Plan assets; (x) all material written agreements and contracts relating to each Company Plan, including, but not limited to, administrative service agreements, group annuity contracts and group insurance contracts; (xi) all material communications to employees or former employees within the last three (3) years relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability under any Company Plan or proposed Company Plan; (xii) all policies pertaining to fiduciary liability insurance covering the fiduciaries for each Company Plan; and (xiii) all registration statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with any Company Plan.

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(b) Each Company Plan has been maintained and administered in all material respects in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations (foreign or domestic), including but not limited to ERISA or the Code, which are applicable to such Company Plans. No suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Company Plan activities) has been brought, or to the knowledge of the Company is threatened, against or with respect to any such Company Plan. There are no audits, inquiries or proceedings pending or, to the knowledge of the Company, threatened by the Internal Revenue Service or Department of Labor with respect to any Company Plans. All contributions, reserves or premium payments required to be made or accrued as of the date hereof to the Company Plans have been timely made or accrued. Section 2.11(b) of the Company Disclosure Letter includes a listing of the accrued vacation liability of Company as of December 31, 2009. Any Company Plan intended to be qualified under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code (i) has either obtained a favorable determination, notification, advisory and/or opinion letter, as applicable, as to its qualified status from the Internal Revenue Service or still has a remaining period of time under applicable Treasury Regulations or Internal Revenue Service pronouncements in which to apply for such letter and to make any amendments necessary to obtain a favorable determination, and (ii) incorporates or has been amended to incorporate all provisions required to comply with the Tax Reform Act of 1986 and subsequent legislation. The Company does not have any plan or commitment to establish any new Company Plan, to modify any Company Plan (except to the extent required by law or to conform any such Company Plan to the requirements of any applicable law, in each case as previously disclosed to Parent in writing, or as required by this Agreement), or to enter into any new Company Plan. Each Company Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company or any of its Affiliates (other than ordinary administration expenses).

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(c) Neither the Company, any of its subsidiaries, nor any of their Affiliates has at any time ever maintained, established, sponsored, participated in, or contributed to any plan subject to Title IV of ERISA or Section 412 of the Code and at no time has the Company or any of its subsidiaries contributed to or been requested to contribute to any “multiemployer plan,” as such term is defined in ERISA or to any plan described in Section 413(c) of the Code. Neither the Company, any of its subsidiaries, nor any officer or director of the Company or any of its subsidiaries is subject to any liability or penalty under Section 4975 through 4980B of the Code or Title I of ERISA. There are no audits, inquiries or proceedings pending or, to the knowledge of the Company, threatened by the IRS or DOL with respect to any Company Plan. No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Company Plan.

(d) Neither the Company, any of its subsidiaries, nor any of their Affiliates has, prior to the Effective Time and in any material respect, violated any of the health continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the requirements of Family Medical Leave Act of 1993, as amended, the requirements of the Women’s Health and Cancer Rights Act, as amended, the requirements of the Newborns’ and Mothers’ Health Protection Act of 1996, as amended, or any similar provisions of state law applicable to employees of the Company or any of its subsidiaries. None of the Company Plans promises or provides retiree medical or other retiree welfare benefits to any person except as required by applicable law and neither the Company nor any of its subsidiaries has represented, promised or contracted (whether in oral or written form) to provide such retiree benefits to any employee, former employee, director, consultant or other person, except to the extent required by statute.

(e) Neither the Company nor any of its subsidiaries is bound by or subject to (and none of its respective assets or properties is bound by or subject to) any arrangement with any labor union. No employee of the Company or any of its subsidiaries is represented by any labor union or covered by any collective bargaining agreement and, to the knowledge of the Company, no campaign to establish such representation is in progress. There is no pending or, to the knowledge of the Company, threatened labor dispute involving the Company or any of its subsidiaries and any group of its employees nor has the Company or any of its subsidiaries experienced any labor interruptions over the past three (3) years, and the Company and its subsidiaries consider their relationships with their employees to be good. The Company and its subsidiaries are in compliance in all material respects with all applicable foreign, federal, state and local laws, rules and regulations regarding employment, employment practices, terms and conditions of employment and wages and hours.

(f) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any stockholder, director or employee of the Company or any of its subsidiaries under any Company Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Company Plan, or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

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(g) No payment or benefit that will or may be made by the Company or its Affiliates with respect to any employee will be characterized as a “parachute payment” within the meaning of Section 280G of the Code.

(h) Neither the Company nor any subsidiary has or is required to have an International Employee Plan (as defined below). For purposes of this Section “International Employee Plan” shall mean each Company Plan that has been adopted or maintained by the Company or any of its subsidiaries, whether informally or formally, for the benefit of current or former employees of the Company or any of its subsidiaries outside the United States.

(i) Except as set forth in Section 2.11(i) of the Company Disclosure Letter, no Company Plan provides, reflects or represents any liability to provide retiree health benefit to any person for any reason, except as may be required by COBRA or other applicable statute, and the Company has never represented, promised or contracted (whether in oral or written form) to any employee (either individually or to employees as a group) or any other person that such employee(s) or other person would be provided with retiree health benefits, except to the extent required by statute.

2.12 [Intentionally Omitted]

2.13 .Registration Statement; Proxy Statement/Prospectus

None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (i) the Registration Statement (as defined in Section 5.1(a) hereof) will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, and (ii) the Proxy Statement/Prospectus (as defined in Section 5.1(a) hereof) to be filed with the SEC by Company pursuant to Section 5.1(a) hereof will, on the dates mailed to the stockholders of the Company, at the time of the Company Stockholders’ Meeting (as defined in Section 5.2(a) hereof) and as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. To the extent in the Company's reasonable control, the Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent or Merger Sub which is contained in any of the foregoing documents, or any decision by Parent or Merger Sub to exclude or materially modify any information supplied by the Company.

2.14 Restrictions on Business Activities

There is no agreement, commitment, judgment, injunction, order or decree binding upon the Company or any of its subsidiaries or to which the Company or any of its subsidiaries is a party or any of its subsidiaries which has or could reasonably be expected to have the effect, in any material respect, of prohibiting or impairing any present business practice of the Company or any of its subsidiaries, any acquisition of property by the Company or any of its subsidiaries or the conduct of business by the Company or any of its subsidiaries as currently conducted.

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2.15 Title to Property

Except as set forth on Section 2.15 of the Company Disclosure Letter, neither the Company nor any of its subsidiaries owns any material real property. Except as set forth on Section 2.15 of the Company Disclosure Letter, the Company and each of its subsidiaries have good and defensible title to all of their material real and personal properties and assets, free and clear of all liens, charges and encumbrances except liens for taxes not yet due and payable and such liens or other imperfections of title, if any, as do not materially detract from the value of or interfere with the present use of the property affected thereby; and all leases pursuant to which Company or any of its subsidiaries lease from others material amounts of real or personal property are in good standing, valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing material default or event of default (or any event which with notice or lapse of time, or both, would constitute a material default and in respect of which Company or subsidiary has not taken adequate steps to prevent such default from occurring). All the plants, structures and equipment owned by or being acquired under a capital lease by the Company and its subsidiaries, except such as may be under construction, are in good operating condition and repair, in all material respects, subject to normal wear and tear.

2.16 Taxes

(a) Definition of Taxes. For all purposes of and under this Agreement, “Tax” or “Taxes” refers to any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b) Tax Returns and Audits.

(i) The Company and each of its subsidiaries have timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by the Company and each of its subsidiaries with any Tax authority, except such Returns which are not material to the Company. Such Returns are true and correct in all material respects, have been completed in accordance with applicable law, and all Taxes shown to be due on such Returns have been paid. There are no liens for Taxes (other than Taxes not yet due and payable) upon any assets of the Company or any of its subsidiaries.

(ii) The Company and each of its subsidiaries as of the Effective Time will have withheld with respect to its employees all federal and state income taxes, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”), Taxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other Taxes required to be withheld.

(iii) Neither the Company nor any of its subsidiaries has been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed against the Company or any of its subsidiaries, nor has the Company or any of its subsidiaries executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

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(iv) No audit or other examination of any Return of the Company or any of its subsidiaries by any Tax authority is presently in progress, nor has the Company or any of its subsidiaries been notified of any request for such an audit or other examination.

(v) No adjustment relating to any Returns filed by the Company or any of its subsidiaries has been proposed in writing formally or informally by any Tax authority to the Company or any of its subsidiaries or any representative thereof.

(vi) Neither the Company nor any of its subsidiaries has any liability for any material unpaid Taxes which has not been accrued for or reserved on the Company Balance Sheet in accordance with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to the Company, other than any liability for unpaid Taxes that may have accrued since the date of the Company Balance Sheet in connection with the operation of the business of the Company and its subsidiaries in the ordinary course.

(vii) There is no contract, agreement, plan or arrangement to which the Company or any of its subsidiaries is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of the Company or any of its subsidiaries that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or arrangement to which the Company is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.

(viii) Neither the Company nor any of its subsidiaries has filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company or any of its subsidiaries.

(ix) Neither the Company nor any of its subsidiaries is party to or has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement.

(x) None of the Company’s or its subsidiaries’ assets are tax exempt use property within the meaning of Section 168(h) of the Code.

(xi) Neither the Company nor any subsidiary of the Company has participated as either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code.

2.17 Environmental Matters

Except as set forth on Section 2.17 of the Company Disclosure Letter, the operations of the Company and each of its subsidiaries are and have been in compliance in all material respects with all applicable Environmental Laws, which compliance includes obtaining, maintaining in good standing and complying in all material respects with all Environmental Permits and no action or proceeding is pending or threatened to revoke, modify or terminate any such Environmental Permit, and, to the knowledge of the Company, no facts, circumstances or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require currently unbudgeted capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.

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“Environmental Law” means any law, as now or hereafter in effect, in any way relating to the protection of human health and safety, the environment or natural resources including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be amended and the regulations promulgated pursuant thereto.

“Environmental Permit” means any permit required by Environmental Laws for the operation of such company.

2.18 Brokers

The Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders fees or agent’s commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

2.19 Intellectual Property

(a) For the purposes of this Agreement, the following terms have the following definitions:

(i) “Intellectual Property” shall mean any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all mask works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor masks, layouts, architectures or topology; (v) domain names, uniform resource locators (“URLs”) and other names and locators associated with the Internet (collectively, “Domain Names”), (vi) all computer software, including all source code, object code, firmware, development tools, files, records and data, and all media on which any of the foregoing is recorded; (vii) all industrial designs and any registrations and applications therefor throughout the world; (viii) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (ix) all databases and data collections and all rights therein throughout the world; (x) all moral and economic rights of authors and inventors, however denominated, throughout the world, and (xi) any similar or equivalent rights to any of the foregoing anywhere in the world.

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(ii) “Company Intellectual Property” shall mean any Intellectual Property that is owned by, or exclusively licensed to, the Company or any of its subsidiaries.

(iii) “Registered Intellectual Property” means all United States, international and foreign: (i) patents and patent applications (including provisional applications); (ii) registered trademarks, applications to register trademarks, intent-to-use applications, or other registrations or applications related to trademarks; (iii) registered copyrights and applications for copyright registration; and (iv) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any state, government or other public legal authority.

(iv) “Company Registered Intellectual Property” means all of the Registered Intellectual Property owned by, or filed in the name of, the Company or any of its subsidiaries.

(b) Section 2.19(b) of the Company Disclosure Letter contains a complete and accurate list of (i) all Company Registered Intellectual Property and specifies, where applicable, the jurisdictions in which each such item of Company Registered Intellectual Property has been issued or registered, and (ii) all proceedings or actions before any court or tribunal (including the United States Patent and Trademark Office (the “PTO”) or equivalent authority anywhere else in the world) related to any of the Company Registered Intellectual Property.

(c) Section 2.19(c) of the Company Disclosure Letter contains a complete and accurate list (by name and version number) of all products, software or service offerings of the Company or any of its subsidiaries (collectively, “Company Products”) that have been sold, distributed or otherwise disposed of in the five (5)-year period preceding the date hereof or which the Company or any of its subsidiaries currently intends to sell, distribute or otherwise dispose of in the future, including any products or service offerings under development.

(d) No Company Intellectual Property or Company Product is subject to any proceeding or outstanding decree, order, judgment, contract, license, agreement, or stipulation restricting in any manner the use, transfer, or licensing thereof by Company or any of its subsidiaries, or which may affect the validity, use or enforceability of such Company Intellectual Property or Company Product.

(e) Each item of Company Registered Intellectual Property is valid and subsisting, all necessary registration, maintenance and renewal fees currently due in connection with such Company Registered Intellectual Property have been made and all necessary documents, recordations and certificates in connection with such Company Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, maintaining or perfecting such Company Registered Intellectual Property.

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(f) Section 2.19(f) of the Company Disclosure Letter contains a complete and accurate list of all actions that are required to be taken by the Company within ninety (90) days of the date hereof with respect to any of the Company Registered Intellectual Property.

(g) The Company owns and has good and exclusive title to each item of Company Intellectual Property owned by it, free and clear of any lien or encumbrance (excluding non-exclusive licenses and related restrictions granted in the ordinary course). Without limiting the generality of the foregoing, (i) to the knowledge of the Company, the Company is the exclusive owner of all trademarks and trade names used in connection with the operation or conduct of the business of the Company and its subsidiaries, including the sale, distribution or provision of any Company Products by the Company or any of its subsidiaries, (ii) the Company owns exclusively, and has good title to, all copyrighted works that are included or incorporated into Company Products or which the Company or any of its subsidiaries otherwise purports to own, and (iii) to the knowledge of the Company, the manufacture, sale or use of Company Products does not infringe any patents.

(h) To the extent that any technology, software or Intellectual Property has been developed or created independently or jointly by a third party for the Company or any of its subsidiaries, or is incorporated into any of the Company Products, the Company and its subsidiaries have a written agreement with such third party with respect thereto and the Company and its subsidiaries thereby either (i) have obtained ownership of, and is the exclusive owner of, or (ii) have obtained perpetual, irrevocable, worldwide non-terminable licenses (sufficient for the conduct of its business as currently conducted and as proposed to be conducted) to all such third party’s Intellectual Property in such work, material or invention by operation of law or by valid assignment or license, to the fullest extent it is legally possible to do so.

(i) Neither the Company nor any of its subsidiaries has transferred ownership of, or granted any exclusive license with respect to, any Intellectual Property that is or was Company Intellectual Property, to any third party, or knowingly permitted the Company’s rights in such Company Intellectual Property to lapse or enter the public domain other than for trademarks for Company Products no longer sold by the Company for which the Company has let the applicable trademark rights become abandoned in the Company's ordinary course of business.

(j) Other than “shrink wrap” and similar widely available commercial end-user licenses, Section 2.19(j) of the Company Disclosure Letter contains a complete and accurate list of all contracts, licenses and agreements to which the Company or any of its subsidiaries is a party (i) with respect to Company Intellectual Property licensed or transferred to any third party, or (ii) pursuant to which a third party has licensed or transferred any Intellectual Property to the Company or any of its subsidiaries.

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(k) All contracts, licenses and agreements relating to either (i) Company Intellectual Property or (ii) Intellectual Property of a third party licensed to the Company or any of its subsidiaries, are, to the knowledge of the Company, in full force and effect. The consummation of the transactions contemplated by this Agreement will neither violate nor result in the breach, modification, cancellation, termination, suspension of, or acceleration of any payments with respect to, such contracts, licenses and agreements. Each of the Company and its subsidiaries is in material compliance with, and has not materially breached any term of any such contracts, licenses and agreements and, to the knowledge of the Company, all other parties to such contracts, licenses and agreements are in compliance with, and have not materially breached any term of, such contracts, licenses and agreements. Following the Closing Date, the Surviving Corporation will be permitted to exercise all of the Company’s and its subsidiaries’ rights under such contracts, licenses and agreements to the same extent the Company and its subsidiaries would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or any of its subsidiaries would otherwise be required to pay. Following the Effective Time, the Surviving Corporation and its subsidiaries will be permitted to exercise all of the Company's and its subsidiaries' rights under such contracts, licenses and agreements to the same extent as the Company and its subsidiaries would have been able to had the transactions contemplated by this Agreement not occurred and without being required to pay any additional amounts or consideration other than fees, royalties or payments which the Company or its subsidiaries would otherwise be required to pay had such transactions contemplated hereby not occurred.

(l) The operation of the business of the Company and its subsidiaries as such business currently is conducted and reasonably contemplated to be conducted, including (i) the Company’s and its subsidiaries’ design, development, manufacture, distribution, reproduction, marketing or sale of the products, software or services of the Company and its subsidiaries (including Company Products), and (ii) the Company’s use of any product, device or process, to the knowledge of the Company, has not, does not and will not infringe or misappropriate the Intellectual Property of any third party or, to its knowledge, constitute unfair competition or trade practices under the laws of any jurisdiction.

(m) The Company Intellectual Property constitutes all the Intellectual Property owned by the Company or exclusively licensed to the Company and used in and/or necessary to the conduct of the business of the Company and its subsidiaries as it currently is conducted, and as it is currently planned or contemplated to be conducted by the Company and its subsidiaries, including, without limitation, the design, development, manufacture, use, import and sale of products, technology and performance of services (including the Company Products).

(n) Neither the Company nor any of its subsidiaries has received notice from any third party that the operation of the business of the Company or any of its subsidiaries or any act, product or service of the Company or any of its subsidiaries, infringes or misappropriates the Intellectual Property of any third party or constitutes unfair competition or trade practices under the laws of any jurisdiction.

(o) To the knowledge of the Company, no person has or is infringing or misappropriating any Company Intellectual Property.

(p) The Company and each of its subsidiaries has taken reasonable steps to protect the Company’s and its subsidiaries’ rights in the Company’s confidential information and trade secrets that it wishes to protect or any trade secrets or confidential information of third parties provided to the Company or any of its subsidiaries, and, without limiting the foregoing, each of the Company and its subsidiaries has and enforces a policy requiring each employee and contractor to execute a proprietary information/confidentiality agreement substantially in the form provided to Parent and all current and former employees and contractors of the Company and any of its subsidiaries have executed such an agreement, except where the failure to do so is not reasonably expected to be material to the Company.

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2.20 Agreements, Contracts and Commitments

(a) Except as set forth on Section 2.20 of the Company Disclosure Letter, neither the Company nor any of its subsidiaries is a party to or is bound by:

(i) any employment or consulting agreement, contract or commitment with any officer or director or higher level employee or member of the Company’s Board of Directors, other than those that are terminable by the Company or any of its subsidiaries on no more than thirty (30) days notice without liability or financial obligation to the Company;

(ii) any agreement or plan, including, without limitation, any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;

(iii) any agreement of indemnification or any guaranty other than any agreement of indemnification entered into in connection with the sale, license, distribution, reselling or other transfer of software products in the ordinary course of business or in connection with the provision of services in the ordinary course of business;

(iv) any agreement, contract or commitment containing any covenant limiting in any respect the right of the Company or any of its subsidiaries to engage in any line of business presently conducted by the Company or any subsidiary, or to compete with any person or granting any exclusive distribution rights;

(v) any agreement, contract or commitment currently in force relating to the disposition or acquisition by the Company or any of its subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary course of business or pursuant to which the Company or any of its subsidiaries has any material ownership interest in any corporation, partnership, joint venture or other business enterprise other than the Company’s subsidiaries;

(vi) any dealer, distributor, joint marketing or development agreement currently in force under which the Company or any of its subsidiaries have continuing material obligations to jointly market any product, technology or service and which may not be canceled without penalty upon notice of sixty (60) days or less, or any material agreement pursuant to which Company or any of its subsidiaries have continuing material obligations to jointly develop any intellectual property that will not be owned, in whole or in part, by Company or any of its subsidiaries and which may not be canceled without penalty upon notice of sixty (60) days or less;

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(vii) any agreement, contract or commitment currently in force to provide source code to any third party for any product or technology that is material to Company and its subsidiaries taken as a whole;

(viii) any agreement, contract or commitment currently in force to license any third party to manufacture or reproduce any Company Product, service or technology or any agreement, contract or commitment currently in force to sell or distribute any Company Products, services or technology, except agreements with distributors or sales representative in the normal course of business cancelable without penalty upon written notice of ninety (90) days or less;

(ix) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;

(x) any material settlement agreement entered into within three (3) years prior to the date of this Agreement; or

(xi) any other material agreement, contract or commitment currently in force that is outside the ordinary course of business or that has a value of $250,000 or more within a twelve (12) month period in any individual case.

(b) Neither the Company nor any of its subsidiaries, nor to the Company’s knowledge any other party to a Company Contract (as defined below), is in material breach, violation or default under, and neither the Company nor any of its subsidiaries has received written notice that it has breached, violated or defaulted under, any of the material terms or conditions of any of the agreements, contracts or commitments to which the Company or any of its subsidiaries is a party or by which it is bound that are required to be set forth in the Company Disclosure Letter (any such agreement, contract or commitment, a “Company Contract”) in such a manner as would permit any other party to cancel or terminate any such Company Contract, or would permit any other party to seek material damages or other remedies (for any or all of such breaches, violations or defaults, in the aggregate).

2.21 Insurance

The Company maintains insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company and its subsidiaries (collectively, the “Insurance Policies”) which are of the type and in amounts customarily carried by persons conducting businesses similar to those of the Company and its subsidiaries. There is no material claim by the Company or any of its subsidiaries pending under any of the Insurance Policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. The Company is not aware of, and has not received notice under any Insurance Policies of, (i) an insurer’s intention or threat to cancel or terminate any of the Insurance Policies, (ii) an insurer’s intention or threat to increase the premiums due under any of the Insurance Policies.

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2.22 Board Approval

The Board of Directors of the Company has, as of the date of this Agreement, (i) approved this Agreement and the transactions contemplated hereby, subject to stockholder approval, (ii) determined that the Merger is fair to and in the best interests of the stockholders of the Company, and (iii) recommended that the stockholders of Company approve and adopt this Agreement and approve the Merger.

2.23 Vote Required

The affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock is the only vote of the holders of any class or series of the Company’s capital stock necessary to approve and adopt this Agreement and approve the Merger.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub jointly and severally represent and warrant to the Company, as of the date hereof and as of the Closing Date as though made at the Closing Date, subject to such exceptions as are specifically disclosed in writing (with reference to the specific sections of this Agreement to which each such exception applies; provided, however, that if any section of the Parent Disclosure Letter discloses an item or information in such a way as to make its relevance to the disclosure required by another section reasonably apparent based upon the substance of such disclosure, the matter shall be deemed to have been disclosed in such other section of the Parent Disclosure Letter, notwithstanding the omission of an appropriate cross-reference to such other section) in the disclosure letter supplied by Parent to the Company, dated as of the date hereof and certified by a duly authorized officer of Parent (the “Parent Disclosure Letter”), as follows:

3.1 Organization and Qualification; Subsidiaries

(a) Each of Parent and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. Each of Parent and its subsidiaries is in possession of all Approvals necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, except where the failure to have such Approvals would not, individually or in the aggregate, have a Material Adverse Effect on Parent. Each of Parent and its subsidiaries is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, have a Material Adverse Effect on Parent or its subsidiaries.

(b) The Parent has no subsidiaries except for the corporations identified in Section 3.1(b) of the Parent Disclosure Letter. Neither the Parent nor any of its subsidiaries has agreed, is obligated to make, or is bound by, any written, oral or other agreement, contract, sub contract, lease, binding understanding, instrument, note, option, warranty, purchase order, license, sub-license, insurance policy, benefit plan, commitment, or undertaking of any nature, as of the date hereof or as may hereafter be in effect under which it may become obligated to make, any future investment in or capital contribution to any other entity. Neither the Parent nor any of its subsidiaries directly or indirectly owns any equity or similar interest in or any interest convertible, exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business, association or entity.

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3.2 Certificate of Incorporation and Bylaws

Parent and each of its subsidiaries has previously furnished to the Company a complete and correct copy of its Certificate of Incorporation and Bylaws as amended to date. Such Certificate of Incorporation, Bylaws and equivalent organizational documents of Parent and each of its subsidiaries are in full force and effect. Neither Parent nor any of its subsidiaries is in violation of any of the provisions of its Certificate of Incorporation or Bylaws or equivalent organizational documents.

3.3 Capitalization

(a) The authorized capital stock of the Parent consists of 40,000,000 shares of Parent Common Stock and 10,000,000 shares of Preferred Stock. As of the close of business on the date hereof, (i) 2,566,516 shares of Parent Common Stock were issued and outstanding, all of which are validly issued, fully paid and nonassessable, (ii) no shares of Parent Common Stock were held in treasury by the Parent or by any subsidiaries of the Company, and (iii) 472,097 shares of Parent Common Stock were reserved for issuance upon the exercise of outstanding options to purchase Parent Common Stock under the 2009 Option Plan. As of the date hereof, no shares of Parent Preferred Stock are issued or outstanding. All outstanding shares of Parent Common Stock, all outstanding Parent Stock Options, and all outstanding shares of capital stock of each subsidiary of the Parent have been issued and granted in compliance with (i) all applicable securities laws and other applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity and (ii) all requirements set forth in applicable contracts, agreements, and instruments.

(b) Except for securities the Parent owns free and clear of all liens, pledges, hypothecations, charges, mortgages, security interests, encumbrances, claims, infringements, interferences, options, right of first refusals, preemptive rights, community property interests or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset) directly or indirectly through one or more subsidiaries, and except for shares of capital stock or other similar ownership interests of subsidiaries of the Parent that are owned by certain nominee equity holders as required by the applicable law of the jurisdiction of organization of such subsidiaries (which shares or other interests do not materially impact Parent's control of such subsidiaries), as of the date of this Agreement, there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of the Parent, or any security exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as set forth in Section 3.3(b) of the Parent Disclosure Letter or as set forth in Section 3.3(a) hereof, there are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Parent or any of its subsidiaries is a party or by which it is bound obligating the Parent or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Parent or any of its subsidiaries or obligating the Parent or any of its subsidiaries to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. As of the date of this Agreement, except as contemplated by this Agreement, there are no registration rights and there is, except for the Voting Agreements, no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding to which the Parent or any of its subsidiaries is a party or by which they are bound with respect to any equity security of any class of the Parent or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its subsidiaries.

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(c) The shares of Parent Common Stock to be issued pursuant to the Merger, when issued and delivered in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable and issued in compliance with federal and state securities laws.

3.4 Authority Relative to this Agreement

. Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Parent and Merger Sub and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement, or to consummate the transactions so contemplated. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by Company, constitute legal and binding obligations of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with their respective terms.

3.5 No Conflict; Required Filings and Consents

(a) The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance of this Agreement by Parent and Merger Sub shall not (i) conflict with or violate the Certificate of Incorporation, Bylaws or equivalent organizational documents of Parent or any of its subsidiaries, (ii) subject to obtaining the consents, approvals, authorizations and permits and making the registrations, filings and notifications, set forth in Section 3.5(b) hereof (or Section 3.5(b) of the Parent Disclosure Letter), conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Parent or any of its subsidiaries or by which it or their respective properties are bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair Parent’s or any such subsidiary’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of Parent or any of its subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or any of its subsidiaries is a party or by which Parent or any of its subsidiaries or its or any of their respective properties are bound or affected, or (iv) cause the acceleration of any vesting of any awards for or rights to Parent Common Stock or the payment of or the acceleration of payment of any change in control, severance, bonus or other cash payments or issuances of shares of Parent Common Stock, with respect to Parent or any of its subsidiaries, except in the case of clauses (ii) or (iii), to the extent such conflict, violation, breach, default, impairment or other effect could not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent or its subsidiaries.

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(b) The execution and delivery of this Agreement by Parent and Merger Sub does not, and the performance of this Agreement by Parent and Merger Sub shall not, require any consent, approval, authorization or permit of, or registration, filing with or notification to, any Governmental Entity, except for (i) applicable requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws, (ii) the filing and recordation of the Certificate of Merger as required by the Delaware Law and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, (A) would not prevent consummation of the Merger or otherwise prevent Parent or Sub from performing their respective obligations under this Agreement or (B) could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent or its subsidiaries.

3.6 SEC Filings.

Parent has made available to the Company a correct and complete copy of each report, schedule, registration statement and definitive proxy statement filed by Parent with the SEC on or after January 1, 2009 and prior to the date of this Agreement (the “Parent SEC Reports”), which are all the forms, reports and documents required to be filed by Parent with the SEC since such date. The Parent SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of Parent’s subsidiaries is required to file any reports or other documents with the SEC.

3.7 Agreements, Contracts and Commitments

(a) Except as set forth on Section 3.7 of the Parent Disclosure Letter, neither Parent nor any of its subsidiaries is a party to or is bound by:

(i) any employment or consulting agreement, contract or commitment with any officer or director or higher level employee or member of Parent's Board of Directors, other than those that are terminable by Parent or any of its subsidiaries on no more than thirty (30) days notice without liability or financial obligation to Parent;

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(iv) any agreement, contract or commitment containing any covenant limiting in any respect the right of Parent or any of its subsidiaries to engage in any line of business presently conducted by Parent or any subsidiary, or to compete with any person or granting any exclusive distribution rights;

(v) any agreement, contract or commitment currently in force relating to the disposition or acquisition by Parent or any of its subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary course of business or pursuant to which Parent or any of its subsidiaries has any material ownership interest in any corporation, partnership, joint venture or other business enterprise other than Parent's subsidiaries;

(vi) any dealer, distributor, joint marketing or development agreement currently in force under which Parent or any of its subsidiaries have continuing material obligations to jointly market any product, technology or service and which may not be canceled without penalty upon notice of sixty (60) days or less, or any material agreement pursuant to which Parent or any of its subsidiaries have continuing material obligations to jointly develop any intellectual property that will not be owned, in whole or in part, by Parent or any of its subsidiaries and which may not be canceled without penalty upon notice of sixty (60) days or less;

(vii) any agreement, contract or commitment currently in force to provide source code to any third party for any product or technology that is material to Parent and its subsidiaries taken as a whole;

(viii) any agreement, contract or commitment currently in force to license any third party to manufacture or reproduce any Parent product, service or technology or any agreement, contract or commitment currently in force to sell or distribute any Parent product, services or technology, except agreements with distributors or sales representative in the normal course of business cancelable without penalty upon written notice of sixty (60) days or less and substantially in the form previously provided to the Company;

(ix) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;

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(x) any material settlement agreement entered into within three (3) years prior to the date of this Agreement; or

(xi) any other agreement, contract or commitment currently in force that has a value of $50,000 or more in any individual case.

3.8 Compliance.

Neither Parent nor any of its subsidiaries is in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to Parent or any of its subsidiaries or by which its or any of their respective properties is bound or affected, or (ii) any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or any of its subsidiaries is a party or by which Parent or any of its subsidiaries or its or any of their respective properties is bound or affected, except for any conflicts, defaults or violations that (individually or in the aggregate) would not have a Material Adverse Effect on Parent or its subsidiaries. No investigation or review by any governmental or regulatory body or authority is pending or, to the knowledge of Parent, threatened against Parent or its subsidiaries, nor has any governmental or regulatory body or authority indicated an intention to conduct the same, other than, in each such case, those the outcome of which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent or any of its subsidiaries.

3.9 Registration Statement; Proxy Statement/Prospectus.

None of the information supplied or to be supplied by Parent for inclusion or incorporation by reference in (i) the Registration Statement will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading; and (ii) the Proxy Statement/Prospectus will, at the dates mailed to the stockholders of Company, at the time of the Company Stockholders’ Meeting and as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Registration Statement will comply as to form in all material respects with the provisions of the Securities Act and the rules and regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, Parent makes no representation or warranty with respect to any information supplied by the Company which is contained in any of the foregoing documents, or any decision by the Company to exclude or materially modify information supplied by Parent or Merger Sub.

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3.10 No Undisclosed Liability.

Neither Parent nor any of its subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the consolidated financial statements prepared in accordance with GAAP, which are, individually or in the aggregate, material to the business, results of operations, financial condition or prospects of the Company and its subsidiaries taken as a whole except (i) liabilities provided for in the Parent SEC Filings, (ii) liabilities reflected in the Parent Disclosure Letter, or (iii) liabilities incurred since the date reflected in the Parent SEC Filings in the ordinary course of business.

3.11 Absence of Certain Changes or Events

Since the date of the last filed SEC Report, there has not been: (i) any Material Adverse Effect on the Parent or any of its subsidiaries, (ii) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, any of the Parent’s or any of its subsidiaries’ capital stock, or any purchase, redemption or other acquisition by the Parent of any of the Parent’s capital stock or any other securities of the Parent or its subsidiaries or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases from employees following their termination pursuant to the terms of their pre-existing stock option or purchase agreements, (iii) any split, combination or reclassification of any of the Parent’s or any of its subsidiaries’ capital stock, (iv) any granting by the Parent or any of its subsidiaries of any increase in compensation or fringe benefits, except for normal increases of cash compensation in the ordinary course of business consistent with past practice, or any payment by the Parent or any of its subsidiaries of any bonus, except for bonuses made in the ordinary course of business consistent with past practice, or any granting by the Parent or any of its subsidiaries of any increase in severance or termination pay or any entry by the Parent or any of its subsidiaries into any currently effective employment, severance, termination or indemnification agreement or any agreement the benefits of which are contingent or the terms of which are materially altered upon the occurrence of a transaction involving the Parent of the nature contemplated hereby, (v) entry by the Parent or any of its subsidiaries into any licensing or other agreement with regard to the acquisition or disposition of any Intellectual Property other than licenses in the ordinary course of business consistent with past practice, (vi) any material change by the Parent in its accounting methods, principles or practices, except as required by concurrent changes in GAAP, (vii) any revaluation by the Parent of any of its assets, including, without limitation, writing down the value of capitalized inventory or writing off notes or accounts receivable, or (viii) any sale of assets of the Parent other than in the ordinary course of business.

3.12 Absence of Litigation

There are no claims, actions, suits or proceedings pending or, to the knowledge of the Parent, threatened (or, to the knowledge of the Parent, any governmental or regulatory investigation pending or threatened) against the Parent or any of its subsidiaries or any properties or rights of the Parent or any of its subsidiaries, before any Governmental Entity.

3.13 Employee Benefit Plans

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(a) All employee compensation, incentive, fringe or benefit plans, programs, policies, commitments or other arrangements (whether or not set forth in a written document and including, without limitation, all “employee benefit plans” (within the meaning of Section 3(3) of ERISA) (the “Parent Plans”) covering (i) any active or former employee, director or consultant of Parent, (ii) any subsidiary of Parent, or (iii) any Affiliate, or with respect to which Parent has or, to Parent’s knowledge, may in the future have liability (excluding consideration of the Company and its subsidiaries as Affiliates following the Effective Time), are listed in Section 3.13(a) of the Parent Disclosure Letter. Parent has provided to the Company: (i) correct and complete copies of all documents embodying each Parent Plan including (without limitation) all amendments thereto, all related trust documents, and all material written agreements and contracts relating to each such Parent Plan; (ii) the three (3) most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Parent Plan; (iii) the most recent summary plan description together with the summary(ies) of material modifications thereto, if any, required under ERISA with respect to each Parent Plan; (iv) all IRS determination, opinion, notification and advisory letters, and all applications and correspondence to or from the IRS or the DOL with respect to such application or letter; (v) all material correspondence to or from any governmental agency relating to any Parent Plan; (vi) all COBRA forms and related notices within the last three (3) years; (vii) all discrimination tests for each Parent Plan for the most recent three (3) plan years; (viii) the most recent annual actuarial valuations, if any, prepared for each Parent Plan; (xi) if the Parent Plan is funded, the most recent annual and periodic accounting of Parent Plan assets; (x) all material written agreements and contracts relating to each Parent Plan, including, but not limited to, administrative service agreements, group annuity contracts and group insurance contracts; (xi) all material communications to employees or former employees within the last three (3) years relating to any amendments, terminations, establishments, increases or decreases in benefits, acceleration of payments or vesting schedules or other events which would result in any material liability under any Parent Plan or proposed Parent Plan; (xii) all policies pertaining to fiduciary liability insurance covering the fiduciaries for each Parent Plan; and (xiii) all registration statements, annual reports (Form 11-K and all attachments thereto) and prospectuses prepared in connection with any Parent Plan.

(b) Each Parent Plan has been maintained and administered in all material respects in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations (foreign or domestic), including but not limited to ERISA or the Code, which are applicable to such Parent Plans. No suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of Parent Plan activities) has been brought, or to the knowledge of Parent is threatened, against or with respect to any such Parent Plan. There are no audits, inquiries or proceedings pending or, to the knowledge of Parent, threatened by the Internal Revenue Service or Department of Labor with respect to any Parent Plans. All contributions, reserves or premium payments required to be made or accrued as of the date hereof to the Parent Plans have been timely made or accrued. Section 3.13(b) of the Parent Disclosure Letter includes a listing of the accrued vacation liability of Parent and its subsidiaries as of December 31, 2009. Any Parent Plan intended to be qualified under Section 401(a) of the Code and each trust intended to qualify under Section 501(a) of the Code (i) has either obtained a favorable determination, notification, advisory and/or opinion letter, as applicable, as to its qualified status from the Internal Revenue Service or still has a remaining period of time under applicable Treasury Regulations or Internal Revenue Service pronouncements in which to apply for such letter and to make any amendments necessary to obtain a favorable determination, and (ii) incorporates or has been amended to incorporate all provisions required to comply with the Tax Reform Act of 1986 and subsequent legislation. Parent does not have any plan or commitment to establish any new Parent Plan, to modify any Parent Plan (except to the extent required by law or to conform any such Parent Plan to the requirements of any applicable law, in each case as previously disclosed to the Company in writing, or as required by this Agreement), or to enter into any new Parent Plan. Each Parent Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company or any of its Affiliates (other than ordinary administration expenses).

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(c) Neither Parent, any of its subsidiaries, nor any of their Affiliates has at any time ever maintained, established, sponsored, participated in, or contributed to any plan subject to Title IV of ERISA or Section 412 of the Code and at no time has Parent or any of its subsidiaries contributed to or been requested to contribute to any “multiemployer plan,” as such term is defined in ERISA or to any plan described in Section 413(c) of the Code. Neither Parent, any of its subsidiaries, nor any officer or director of Parent or any of its subsidiaries is subject to any liability or penalty under Section 4975 through 4980B of the Code or Title I of ERISA. There are no audits, inquiries or proceedings pending or, to the knowledge of Parent, threatened by the IRS or DOL with respect to any Parent Plan. No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred with respect to any Parent Plan.

(d) Neither Parent, any of its subsidiaries, nor any of their Affiliates has, prior to the Effective Time and in any material respect, violated any of the health continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the requirements of Family Medical Leave Act of 1993, as amended, the requirements of the Women’s Health and Cancer Rights Act, as amended, the requirements of the Newborns’ and Mothers’ Health Protection Act of 1996, as amended, or any similar provisions of state law applicable to employees of Parent or any of its subsidiaries. None of the Parent Plans promises or provides retiree medical or other retiree welfare benefits to any person except as required by applicable law and neither Parent nor any of its subsidiaries has represented, promised or contracted (whether in oral or written form) to provide such retiree benefits to any employee, former employee, director, consultant or other person, except to the extent required by statute.

(e) Neither Parent nor any of its subsidiaries is bound by or subject to (and none of its respective assets or properties is bound by or subject to) any arrangement with any labor union. No employee of Parent or any of its subsidiaries is represented by any labor union or covered by any collective bargaining agreement and, to the knowledge of Parent, no campaign to establish such representation is in progress. There is no pending or, to the knowledge of Parent, threatened labor dispute involving Parent or any of its subsidiaries and any group of its employees nor has Parent or any of its subsidiaries experienced any labor interruptions over the past three (3) years, and Parent and its subsidiaries consider their relationships with their employees to be good. Parent and its subsidiaries are in compliance in all material respects with all applicable foreign, federal, state and local laws, rules and regulations regarding employment, employment practices, terms and conditions of employment and wages and hours.

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(f) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any stockholder, director or employee of Parent or any of its subsidiaries under any Parent Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Parent Plan, or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

(g) No payment or benefit that will or may be made by Parent or its Affiliates with respect to any employee will be characterized as a “parachute payment” within the meaning of Section 280G of the Code.

(h) Neither Parent nor any subsidiary has or is required to have an International Employee Plan.

(i) Except as set forth in Section 3.13(i) of the Parent Disclosure Letter, no Parent Plan provides, reflects or represents any liability to provide retiree health benefit to any person for any reason, except as may be required by COBRA or other applicable statute, and Parent has never represented, promised or contracted (whether in oral or written form) to any employee (either individually or to employees as a group) or any other person that such employee(s) or other person would be provided with retiree health benefits, except to the extent required by statute.

3.14 Environmental Matters

Except as set forth on Section 3.14 of the Parent Disclosure Letter, the operations of Parent and each of its subsidiaries are and have been in compliance in all material respects with all applicable Environmental Laws, which compliance includes obtaining, maintaining in good standing and complying in all material respects with all Environmental Permits and no action or proceeding is pending or threatened to revoke, modify or terminate any such Environmental Permit, and, to the knowledge of Parent, no facts, circumstances or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require currently unbudgeted capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.

3.15 Brokers.

Parent has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders fees or agent’s commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

3.16 No Prior Activities of Merger Sub. Except for obligations incurred in connection with its incorporation or organization and the negotiation, execution and consummation of this Agreement and the transactions contemplated hereby, Merger Sub has neither incurred any obligation or liability nor engaged in any business or activity of any type or kind whatsoever or entered into any agreement or arrangement with any person.

3.17 Taxes.

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(i) Parent and each of its subsidiaries have timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by Parent and each of its subsidiaries with any Tax authority, except such Returns which are not material to Parent. Such Returns are true and correct in all material respects, have been completed in accordance with applicable law, and all Taxes shown to be due on such Returns have been paid. There are no liens for Taxes (other than Taxes not yet due and payable) upon any assets of the Company or any of its subsidiaries.

(ii) Parent and each of its subsidiaries as of the Effective Time will have withheld with respect to its employees all federal and state income taxes, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”), Taxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other Taxes required to be withheld.

(iii) Neither Parent nor any of its subsidiaries has been delinquent in the payment of any material Tax nor is there any material Tax deficiency outstanding, proposed or assessed against Parent or any of its subsidiaries, nor has Parent or any of its subsidiaries executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(iv) No audit or other examination of any Return of Parent or any of its subsidiaries by any Tax authority is presently in progress, nor has Parent or any of its subsidiaries been notified of any request for such an audit or other examination.

(v) No adjustment relating to any Returns filed by Parent or any of its subsidiaries has been proposed in writing formally or informally by any Tax authority to Parent or any of its subsidiaries or any representative thereof.

(vi) Neither Parent nor any of its subsidiaries has any liability for any material unpaid Taxes which has not been accrued for or reserved on the financial statements included in the Parent SEC Filings in accordance with GAAP, whether asserted or unasserted, contingent or otherwise, which is material to the Company, other than any liability for unpaid Taxes that may have accrued since the date of the Parent SEC Filings in connection with the operation of the business of Parent and its subsidiaries in the ordinary course.

(vii) There is no contract, agreement, plan or arrangement to which Parent or any of its subsidiaries is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of Parent or any of its subsidiaries that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan or arrangement to which Parent is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.

(viii) Neither Parent nor any of its subsidiaries has filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company or any of its subsidiaries.

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(ix) Neither Parent nor any of its subsidiaries is party to or has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement.

(x) None of Parent's or its subsidiaries’ assets are tax exempt use property within the meaning of Section 168(h) of the Code.

(xi) Neither Parent nor any subsidiary of the Company has participated as either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code.

ARTICLE IV

CONDUCT PRIOR TO THE EFFECTIVE TIME

4.1 Conduct of Business by the Parent and the Company

(a) During the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to its terms or the Effective Time, the parties and each of its subsidiaries shall, except to the extent that the other parties shall otherwise consent in writing, carry on its business, in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has business dealings. In addition, parties will promptly notify each other of any material event involving its business or operations.

(b) Except as permitted or required by the terms of this Agreement, during the period commencing with the execution and delivery of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, neither Parent nor the Company shall do any of the following, and shall not permit any of its subsidiaries to do any of the following, except to the extent that the other party shall otherwise consent in writing:

(i) waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans;

(ii) grant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding, or policies existing, on the date hereof and as previously disclosed in writing or made available to the other party, or adopt any new severance plan, or amend or modify or alter in any respect any severance plan, agreement or arrangement existing on the date hereof, or grant any equity-based compensation, whether payable in cash or stock;

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(iii) transfer or license to any person or entity, or otherwise extend, amend or modify any rights to any Intellectual Property, or enter into any agreements or make other commitments or arrangements to grant, transfer or license to any person future patent rights other than non-exclusive licenses granted to end-users in the ordinary course of business and consistent with past practice;

(iv) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock, equity securities or property) in respect of, any capital stock of the Company or any of its subsidiaries, or split, combine or reclassify any such capital stock, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any such capital stock;

(v) purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof;

(vi) issue, deliver, sell, authorize, pledge or otherwise encumber (or propose any of the foregoing with respect to) any shares of capital stock or any securities convertible into, or exercisable or exchangeable for, shares of such capital stock, or any subscriptions, rights, warrants or options to acquire any shares of such capital stock, or enter into other agreements or commitments of any kind or character obligating the Company or any of its subsidiaries to issue any shares of such capital stock or securities convertible, or exercisable or exchangeable for, shares of such capital stock, other than (A) the issuance, delivery and/or sale of (x) shares of Company Common Stock or Parent Common Stock pursuant to the exercise of stock options or warrants therefor outstanding on the date of this Agreement and (B) the granting of stock options in the ordinary course of business and consistent with past practices;

(vii) cause, permit or propose any amendments to its Certificate of Incorporation, Bylaws or other charter documents (or similar governing instruments of any of its subsidiaries);

(viii) acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, limited liability company, general or limited partnership, business trust, unincorporated association or other business organization, entity or division thereof, or otherwise acquire or agree to acquire all or substantially all of the assets of any of the foregoing, or enter into any joint ventures, strategic partnerships or similar alliances;

(ix) sell, lease, license, encumber or otherwise dispose of any properties or assets, except sales of inventory in the ordinary course of business consistent with past practice, and except for the sale, lease or disposition (other than through licensing) of property or assets which are not material, individually or in the aggregate, to the business of such party and its subsidiaries;

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(x) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of such party, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, other than in connection with the financing of ordinary course trade payables consistent with past practice;

(xi) adopt or amend any employee benefit plan, policy or arrangement, or employee stock purchase or stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into, in the ordinary course of business and consistent with past practice, with newly hired employees who are terminable “at will” and who are not officers of such party), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants;

(xii) (A) pay, discharge, settle or satisfy any claims, liabilities or obligations (whether absolute or contingent, asserted or unasserted, accrued or unaccrued, or otherwise) or litigation (whether or not commenced prior to the date of this Agreement), other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms as in existence as of the date hereof or (B) waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which such party or any of its subsidiaries is a party or of which such party or any of its subsidiaries is a beneficiary;

(xiii) make any individual or series of related payments outside of the ordinary course of business in excess of $10,000; or make any individual or series of related payments outside of the ordinary course of business in excess of $50,000 in the aggregate;

(xiv) modify, amend or terminate any material contract or agreement to which such party or any of its subsidiaries is a party, or waive, delay the exercise of, release or assign any material rights or claims thereunder;

(xv) enter into, renew or modify any contracts, agreements or obligations relating to the distribution, sale, license or marketing by third parties of the products of such party or any of its subsidiaries, or products licensed by such party or any of its subsidiaries;

(xvi) except as required by GAAP, revalue any assets of such party or any of its subsidiaries, or make any change in accounting methods, principles or practices;

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(xvii) incur or enter into any agreement, contract or other commitment or arrangement requiring such party or any of its subsidiaries to make payments in excess of $100,000 in any individual case, or $300,000 in the aggregate;

(xviii) engage in any action that could reasonably be expected to cause the Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code, whether or not otherwise permitted by the provisions of this Article IV;

(xix) engage in any action with the intent to, directly or indirectly, adversely impact or materially delay the consummation of the Merger or any of the other transactions contemplated by this Agreement; or

(xx) hire any employee with an annual compensation level in excess of $200,000 (excluding sales commissions);

(xxi) agree in writing or otherwise to take any of the actions described in Section 4.1(b)(i) through Section 4.1(b)(xx), inclusive.

(c) Notwithstanding anything contained in this Article IV, it is expressly agreed and understood that any action which might other fall within the description of Section 4.1(a) or 4.1(b), but which could not be reasonably expected to materially affect the business, operations or value of such party, shall not be prohibited by Article IV; provided, however, that prompt written notice of any such actions shall be provided by the party taking such action to the other.

ARTICLE V

ADDITIONAL AGREEMENTS

5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board Recommendations

(a) As promptly as practicable after the execution of this Agreement, the Company and Parent shall prepare and file with the SEC a proxy statement/prospectus to be delivered to the stockholders of the Company in connection with the Merger (the “Proxy Statement/Prospectus”), and Parent shall prepare and file with the SEC a registration statement on Form S-4, in which the Proxy Statement/Prospectus will be included as a prospectus, in connection with the issuance of the Parent Common Stock in or as a result of the Merger (the “Registration Statement”). Each of the Company and Parent shall promptly provide to the other all such information concerning its business and financial statements and affairs as reasonably may be required or appropriate for inclusion in the Proxy Statement/Prospectus or the Registration Statement, or in any amendments or supplements thereto, and to cause its counsel and auditors to cooperate with the other party’s counsel and auditors in the preparation of the Proxy Statement/Prospectus and the Registration Statement. Each of the Company and Parent shall respond to any comments of the SEC, and shall use its respective commercially reasonable efforts to have the Registration Statement declared or ordered effective under the Securities Act as promptly as practicable after such filing. The Company shall cause the Proxy Statement/Prospectus to be mailed to its stockholders at the earliest practicable time after the Registration Statement is declared or ordered effective by the SEC. As promptly as practicable after the date of this Agreement, each of the Company and Parent shall prepare and file any other filings required to be filed by it under the Exchange Act, the Securities Act or any other Federal, foreign, state “blue sky” or related laws relating to the Merger and the transactions contemplated by this Agreement (the “Other Filings”). Each of the Company and Parent shall notify the other promptly upon the receipt of any comments from the SEC or its staff or any other government officials and of any request by the SEC or its staff or any other government officials for amendments or supplements to the Registration Statement, the Proxy Statement/Prospectus or any Other Filing, or for additional information and shall supply the other with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC or its staff or any other government officials, on the other hand, with respect to the Registration Statement, the Proxy Statement/Prospectus, the Merger or any Other Filing. Each of the Company and Parent shall cause all documents that it is responsible for filing with the SEC or other regulatory authorities under this Section 5.1(a) to comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder. Whenever any event occurs that is required to be set forth in an amendment or supplement to the Proxy Statement/Prospectus, the Registration Statement or any Other Filing, the Company or Parent, as the case may be, shall promptly inform the other of such occurrence and cooperate in filing with the SEC or its staff or any other government officials, and/or mailing to the stockholders of the Company, such amendment or supplement.

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(b) The Proxy Statement/Prospectus shall include the recommendation of the Board of Directors of the Company in favor of adoption and approval of this Agreement and approval of the Merger, subject to the right of the Board of Directors of the Company to withhold, withdraw, amend, modify or change its recommendation and recommend a Superior Offer in accordance with Section 5.2(c) hereof.

5.2 Meeting of Company Stockholders

(a) Promptly after the date hereof, the Company shall take all action necessary in accordance with Delaware Law and its Certificate of Incorporation and Bylaws to convene a meeting of the stockholders of the Company (the “Company Stockholders’ Meeting”) to be held as promptly as practicable, and in any event (to the extent permissible under Delaware Law and the Certificate of Incorporation and Bylaws of the Company) within forty-five (45) calendar days, following the declaration of effectiveness of the Registration Statement, for the purpose of voting upon this Agreement and the Merger. Subject to the terms of Section 5.2(c) hereof, the Company shall use its reasonable best efforts to solicit from its stockholders proxies in favor of the adoption and approval of this Agreement and the approval of the Merger, and shall take all other action necessary or advisable to secure the vote or consent of its stockholders required by Delaware Law to obtain such approvals. The Company may adjourn or postpone the Company Stockholders’ Meeting (i) if and to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement/Prospectus is provided to the Company’s stockholders in advance of a vote on this Agreement and the Merger, or (ii) if, as of the time for which the Company Stockholders’ Meeting is originally scheduled (as set forth in the Proxy Statement/Prospectus), there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Company Stockholders’ Meeting. The Company shall ensure that the Company Stockholders’ Meeting is called, noticed, convened, held and conducted, and that all proxies solicited by the Company in connection with the Company Stockholders’ Meeting are solicited, in compliance with Delaware Law, and the Certificate of Incorporation and Bylaws of the Company, and all other applicable legal requirements. Notwithstanding anything to the contrary contained in this Agreement, the Company’s obligation to call, give notice of, convene and hold the Company Stockholders’ Meeting in accordance with this Section 5.2(a) shall not be limited to or otherwise affected by the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal (as defined below), or by any withholding, withdrawal, amendment, modification or change of the recommendation of the Board of Directors of the Company with respect to this Agreement and/or the Merger.

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(b) Unless the Board of Directors of the Company shall have withheld, withdrawn, amended, modified or changed its recommendation of this Agreement and the Merger in compliance with Section 5.2(c) hereof, (i) the Board of Directors of the Company shall recommend that the Company’s stockholders vote in favor of and adopt and approve this Agreement and approve the Merger at the Company Stockholders’ Meeting; (ii) the Proxy Statement/Prospectus shall include a statement to the effect that the Board of Directors of the Company has recommended that the Company’s stockholders vote in favor of and adopt and approve this Agreement and approve the Merger at the Company Stockholders’ Meeting; and (iii) neither the Board of Directors of the Company nor any committee thereof shall withhold, withdraw, amend, modify, change or propose or resolve to withhold, withdraw, amend, modify or change in a manner adverse to Parent, the recommendation of the Board of Directors of the Company that the Company’s stockholders vote in favor of and adopt and approve this Agreement and approve the Merger.

(c) Nothing in this Agreement shall prevent the Board of Directors of the Company from withholding, withdrawing, amending, modifying or changing its recommendation in favor of the adoption and approval of this Agreement or in favor of the adoption and approval of this Agreement and approval of the Merger if (i) a Superior Offer (as defined below) is made to the Company and is not withdrawn, (ii) neither the Company nor any of its representatives shall have violated the terms of Section 5.5 hereof and the Company is not then in material breach of this Agreement and (iii) the Board of Directors of the Company reasonably concludes in good faith, after consultation with its outside counsel, that, in light of such Superior Offer, the withholding, withdrawal, amendment, modification or changing of such recommendation is required in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company’s stockholders under Delaware Law with respect to such Superior Offer; provided, however, that prior to publicly withholding, withdrawing, amending, modifying or changing its recommendation in favor of the adoption and approval of this Agreement and approval of the Merger, the Company shall have given Parent at least five (5) business days prior written notice (or such lesser prior notice as provided to the members of Company’s Board of Directors) thereof and the opportunity to meet with the Company and its counsel. Nothing contained in this Section 5.2 shall limit the Company’s obligation to hold and convene the Company Stockholders’ Meeting (regardless of whether the recommendation of the Board of Directors of the Company shall have been withheld, withdrawn, amended, modified or changed pursuant hereto). For all purposes of and under this Agreement, the term “Superior Offer” shall mean any bona fide, unsolicited written Acquisition Proposal (as defined in Section 5.5(b) hereof) on terms that the Board of Directors of the Company determines in the good faith exercise of its reasonable judgment, on the basis of the advice of a financial advisor of nationally recognized reputation and taking into account all the terms and conditions of the Acquisition Proposal, are more favorable and provide greater value to the Company’s stockholders from a financial point of view than the terms of the Merger; provided, however, that any such offer shall not be deemed to be a “Superior Offer” pursuant hereto if any financing required to consummate the transaction contemplated by such offer is not committed and is not likely, in the judgment of the Board of Directors of the Company, to be obtained by such third party on a timely basis.

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5.3 Confidentiality

The parties hereto acknowledge that the Company and Parent have previously executed a Confidentiality Agreement, dated as of April , 2010 (the “Confidentiality Agreement”), which Confidentiality Agreement will continue in full force and effect in accordance with its terms.

5.4 Access to Information

During the period commencing with the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time, each of Parent and the Company shall afford the other and its accountants, counsel and other representatives reasonable access during normal business hours to the properties, books, records and personnel of Parent or the Company, as applicable, to obtain all information concerning the business of such company, including, without limitation, the status of its product development efforts, properties, results of operations and personnel, as Parent or the Company may reasonably request. No information or knowledge obtained by Parent or the Company during the course of any investigation conducted pursuant to this Section 5.4 shall affect, or be deemed to modify in any respect any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger contained herein.

5.5 No Solicitation

(a) During the period commencing with the execution and delivery of this Agreement until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time, the Company and its subsidiaries shall not, nor will they authorize or permit any of their respective officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by any of them to, directly or indirectly, (i) solicit, initiate, encourage or induce the making, submission or announcement of any Acquisition Proposal (as defined in Section 5.5(b) hereof), (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in discussions or negotiations with any person with respect to any Acquisition Proposal, except as to the existence of these provisions, (iv) subject to the terms of Section 5.2(c) hereof, approve, endorse or recommend any Acquisition Proposal, or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any Acquisition Transaction; provided, however, that prior to the adoption and approval of this Agreement and the approval of the Merger by the requisite vote of the stockholders of the Company, the terms of this Section 5.5(a) shall not prohibit the Company from furnishing information regarding the Company or any of its subsidiaries to, or entering into a confidentiality agreement or discussions or negotiations with, any person or group in response to a Superior Offer submitted by such person or group (and not withdrawn) if (1) neither the Company nor any representative of the Company and its subsidiaries shall have violated any of the restrictions set forth in this Section 5.5, (2) the Board of Directors of the Company concludes in good faith, after consultation with its outside legal counsel, that such action is required in order for the Board of Directors of the Company to comply with its fiduciary obligations to the Company’s

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stockholders under Delaware Law, (3) (x) at least five (5) business days prior to furnishing any such information to, or entering into discussions or negotiations with, such person or group, the Company gives Parent written notice of the identity of such person or group and of the Company’s intention to furnish information to, or enter into discussions or negotiations with, such person or group and (y) the Company receives from such person or group an executed confidentiality agreement at least as restrictive as the Confidentiality Agreement, and (4) contemporaneously with furnishing any such information to such person or group, the Company furnishes such information to Parent (to the extent such information has not been previously furnished by the Company to Parent). The Company and its subsidiaries shall immediately cease any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposal. Without limiting the generality of the foregoing, the parties hereto understood and agree that any violation of the restrictions set forth in this Section 5.5(a) by any officer, director or employee of the Company or any of its subsidiaries or any investment banker, attorney or other advisor or representative of the Company or any of its subsidiaries shall be deemed to be a breach of this Section 5.5(a) by the Company. In addition to the foregoing, the Company shall (i) provide Parent with at least forty-eight (48) hours prior notice (or such lesser prior notice as provided to the members of the Board of Directors of the Company, but in no event less than twelve (12) hours) of any meeting of the Board of Directors of the Company at which the Board of Directors of the Company is reasonably expected to consider a Superior Offer, and (ii) provide Parent with at least five (5) business days prior written notice (or such lesser prior notice as provided to the members of the Board of Directors of the Company) of a meeting of the Board of Directors of the Company at which the Board of Directors of the Company is reasonably expected to recommend a Superior Offer to the stockholders of the Company and together with such notice a copy of the definitive documentation relating to such Superior Offer.

(b) For all purposes of and under this Agreement, the term “Acquisition Transaction” shall mean any transaction or series of related transactions, other than the transactions contemplated by this Agreement, involving (i) any acquisition or purchase from the Company by any person or “group” (as defined under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of more than a five percent (5%) interest in the total outstanding voting securities of the Company or any of its subsidiaries, or any tender offer or exchange offer that if consummated would result in any person or “group” (as defined under Section 13(d) of the Exchange Act and the rules and regulations thereunder) beneficially owning five percent (5%) or more of the total outstanding voting securities of the Company or any of its subsidiaries, or any merger, consolidation, business combination or similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction would hold less than ninety five percent (95%) of the equity interests in the surviving or resulting entity of such transaction,; (ii) any sale, lease (other than in the ordinary course of business), exchange, transfer, license (other than in the ordinary course of business), acquisition or disposition of more than five percent (5%) of the assets of the Company; or (iii) any liquidation or dissolution of the Company.

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(c) In addition to the obligations of the Company set forth in Section 5.5(a) hereof, the Company shall advise Parent, as promptly as practicable, and in any event within twenty-four (24) hours, orally and in writing, of (i) any request for information which the Company reasonably believes could lead to an Acquisition Proposal or, (ii) any Acquisition Proposal, or (iii) any inquiry with respect to or which the Company reasonably should believe could lead to any Acquisition Proposal, the (iv) material terms and conditions of any such request, Acquisition Proposal or inquiry, and (v) the identity of the person or group making any such request, Acquisition Proposal or inquiry. The Company shall keep Parent informed in all material respects of the status and details (including material amendments or proposed amendments) of any such request, Acquisition Proposal or inquiry.

5.6 Public Disclosure

Parent and the Company shall consult with each other, and to the extent practicable, agree, before issuing any press release or otherwise making any public statement with respect to this Agreement, the Merger or an Acquisition Proposal, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or any listing agreement with a national securities exchange. The parties hereto have agreed to the text of the joint press release announcing the signing of this Agreement.

5.7 Reasonable Efforts; Notification

(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties hereto shall use its commercially reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties hereto in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by this Agreement, including, without limitation, using reasonable efforts to accomplish the following: (i) the taking of all reasonable actions necessary to cause the conditions precedent set forth in Article VI hereof to be satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from Governmental Entities, and the making of all necessary registrations, declarations and filings (including registrations, declarations and filings with Governmental Entities, if any), and the taking of all reasonable steps as may be necessary to avoid any suit, claim, action, investigation or proceeding by any Governmental Entity, (iii) the obtaining of all necessary consents, approvals or waivers from third parties which may be required or desirable as a result of, or in connection with, the transactions contemplated by this Agreement, (iv) the defending of any suits, claims, actions, investigations or proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including, without limitation, seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed, and (v) the execution or delivery of any additional certificates, instruments and other documents necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. In connection with and without limiting the foregoing, the Company and its Board of Directors shall, if any state takeover statute or similar statute or regulation is or becomes applicable to the Merger, this Agreement or any of the transactions contemplated by this Agreement, use all commercially reasonable efforts to ensure that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Merger, this Agreement and the transactions contemplated hereby. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall be deemed to require Parent or the Company or any subsidiary or affiliate thereof to agree to any divestiture by itself or any of its affiliates of shares of capital stock or of any business, assets or property, or the imposition of any material limitation on the ability of any of them to conduct their businesses or to own or exercise control of such assets, properties and stock.

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(b) The Company shall give prompt notice to Parent upon becoming aware that any representation or warranty made by the Company in this Agreement has become untrue or inaccurate, or that the Company has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Section 6.3(a) or Section 6.3(b) hereof would not be satisfied, provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the Company, or the conditions to the obligations of the parties under this Agreement.

(c) Parent shall give prompt notice to the Company upon becoming aware that any representation or warranty made by Parent or Merger Sub in this Agreement has become untrue or inaccurate, or that Parent or Merger Sub has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement, in each case, such that the conditions set forth in Section 6.2(a) or Section 6.2(b) hereof would not be satisfied, provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of Parent or Merger Sub, or the conditions to the obligations of the parties under this Agreement.

5.8 Third Party Consents

As soon as practicable following the date hereof, Parent and the Company shall each use its respective commercially reasonable best efforts to obtain any consents, waivers and approvals under any of its or its subsidiaries’ respective agreements, contracts, licenses or leases required to be obtained in connection with the consummation of the transactions contemplated hereby.

5.9 Company Stock Options

At the Effective Time:

(a) each outstanding option to purchase shares of Company Common Stock (each, a “Company Stock Option”) under any Company Stock Plan, whether or not vested, shall be exchanged for such number of options under the Parent stock option plan as would be issuable pursuant to the Exchange Ratio, with a pro rata adjustment to the exercise price of such Company Stock Option;

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(b) each outstanding warrant or obligation to issue a warrant to purchase shares of Company Common Stock (each, a "Company Warrant"), whether or not vested, shall be exchanged for warrants to purchase such number of shares of Parent Common Stock as would be issuable pursuant to the Exchange Ratio, with a pro rata adjustment to the exercise price of such Company Warrant, and upon the same terms and conditions set forth in the Company Warrant;

(c) each outstanding stock appreciation right based on the underlying value of shares of Company Common Stock, whether or not vested, shall be exchanged for stock appreciation right using the Exchange Ratio to calculate the appropriate number of shares of Parent Common Stock; and

(d) each outstanding obligation to issue Company Common Stock pursuant to deferred stock agreements shall be assumed by Parent upon the same terms and conditions as the underlying deferred stock agreement and exchanged for the right to receive such number of shares of Parent Common Stock as would be issuable pursuant to the Exchange Ratio.

(e) The compensation committee of the Company Board of Directors will not take any action to accelerate the vesting of any Company Stock Options as a result of the Merger.

5.10 Indemnification

From and after the Effective Time, Parent shall cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company under any indemnification agreements between the Company and any of its directors and officers as in effect on the date hereof (the “Indemnified Parties”) and any indemnification provisions under the Company’s Certificate of Incorporation, Bylaws or resolution of the Board as in effect on the date hereof. The Certificate of Incorporation and Bylaws of the Surviving Corporation shall contain provisions with respect to exculpation and indemnification that are at least as favorable to the Indemnified Parties as those contained in the Certificate of Incorporation and Bylaws of the Company as in effect on the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years following the Effective Time in any manner that would adversely affect the rights thereunder of individuals who, immediately prior to the Effective Time, were directors, officers, employees or agents of the Company, unless such modification is required by applicable law. The Company or the Surviving Corporation will either (i) maintain the Company's current director and officer insurance policy with coverage of not less than $3,000,000 for purposes of indemnifying and insuring those individuals covered under the Company's current director and officer insurance policy, or (ii) obtain a director and officer tail liability insurance policy with coverage of not less than $3,000,000 for purposes of indemnifying and insuring those individuals covered under the Company's current director and officer insurance policy, in either case such coverage shall continue in full force and effect for a period of six (6) years from the Effective Time.

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ARTICLE VI

CONDITIONS TO THE MERGER

6.1 Conditions to Obligations of Each Party to Effect the Merger

The respective obligations of each party to this Agreement to effect the Merger shall be subject to the satisfaction or fulfillment, at or prior to the Closing Date, of the following conditions:

(a) Company Stockholder Approval. This Agreement shall have been duly approved and adopted, and the Merger shall have been duly approved, by the requisite vote under Delaware Law, by the stockholders of the Company.

(b) Registration Statement Effective; Proxy Statement/Prospectus. The SEC shall have declared or ordered the Registration Statement to be effective, no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued, and no proceeding for that purpose, and no similar proceeding in respect of the Proxy Statement/Prospectus, shall have been initiated or threatened in writing by the SEC. All Other Filings shall have been approved or declared effective and no stop order shall have been issued and no proceeding shall have been initiated to revoke any such approval or effectiveness.

(c) No Order. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger.

6.2 Additional Conditions to Obligations of the Company

The obligation of the Company to consummate and effect the Merger shall be subject to the satisfaction or fulfillment, at or prior to the Closing Date, of each of the following conditions, any of which may be waived, in writing, exclusively by the Company:

(a) Representations and Warranties. Each representation and warranty of Parent and Merger Sub contained in this Agreement (i) shall have been true and correct in all material respects as of the date of this Agreement and (ii) shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on the Closing Date, except for those representations and warranties which address matters only as of a particular date, which representations and warranties shall have been true and correct in all material respects as of such particular date; provided, however, that in all cases where a representation or warranty contains a materiality or Material Adverse Effect qualifier, such representation or warranty shall be true and correct in all respects as of the dates set forth above. The Company shall have received a certificate with respect to the foregoing signed on behalf of Parent by duly authorized officer thereof.

(b) Agreements and Covenants. Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date, and the Company shall have received a certificate to such effect signed on behalf of Parent by a duly authorized officer thereof.

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(c) Material Adverse Effect. No Material Adverse Effect with respect to Parent and its subsidiaries shall have occurred since the date of this Agreement.

(d) Transaction Payment Waivers. The Company shall have received waivers from each executive of Parent or any of its subsidiaries related to any rights they may have to payments, bonuses, vesting, acceleration or other similar rights that are or may be triggered by the consummation of the transactions set forth herein (the "Executive Transaction Payment Waivers").

6.3 Additional Conditions to the Obligations of Parent and Merger Sub

The obligations of Parent and Merger Sub to consummate and effect the Merger shall be subject to the satisfaction or fulfillment, at or prior to the Closing Date, of each of the following conditions, any of which may be waived, in writing, exclusively by Parent:

(a) Representations and Warranties. Each representation and warranty of the Company contained in this Agreement (i) shall have been true and correct in all material respects as of the date of this Agreement and (ii) shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on the Closing Date, except for those representations and warranties which address matters only as of a particular date, which representations and warranties shall have been true and correct in all material respects as of such particular date; provided, however, that in all cases where a representation or warranty contains a materiality or Material Adverse Effect qualifier, such representation or warranty shall be true and correct in all respects as of the dates set forth above. Parent shall have received a certificate with respect to the foregoing signed on behalf of Company by a duly authorized officer thereof.

(b) Agreements and Covenants. The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Closing Date, and Parent shall have received a certificate to such effect signed on behalf of Company by a duly authorized officer thereof.

(c) Material Adverse Effect. No Material Adverse Effect with respect to the Company and its subsidiaries shall have occurred since the date of this Agreement.

(d) Consents. The Company shall have obtained the consents, waivers and approvals required to be obtained in connection with the consummation of the transactions contemplated hereby, which consents, waivers and approvals are set forth in Section 6.3(e) of the Company Disclosure Letter.

(e) Transaction Payment Waivers. The Company shall have received Executive Transaction Payment Waivers from each executive of the Company or any of its subsidiaries related to any rights they may have to payments, bonuses, vesting, acceleration or other similar rights that are or may be triggered by the consummation of the transactions set forth herein.

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ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

7.1 Termination

This Agreement may be terminated at any time prior to the Effective Time, whether before or after the requisite approval of the stockholders of the Company has been obtained in respect of this Agreement and the Merger:

(a) by mutual written consent of Parent and the Company, duly authorized by the respective Boards of Directors of Parent and the Company;

(b) by either Parent or the Company if the Merger shall not have been consummated by the date that is six (6) months following the date of this Agreement for any reason; provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Merger to occur on or before such date, and such action or failure to act constitutes a breach of this Agreement;

(c) by either Parent or the Company if a Governmental Entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger, which order, decree, ruling or other action is final and nonappealable;

(d) by either Parent or the Company if the requisite approval of the stockholders of the Company contemplated by this Agreement shall not have been obtained by reason of the failure to obtain the requisite vote at a meeting of the stockholders of the Company, duly convened therefor or at any adjournment or postponement thereof; provided, however, that the right to terminate this Agreement under this Section 7.1(d) shall not be available to the Company in the event that the failure to obtain the requisite approval of the stockholders of the Company shall have been caused by the action or failure to act of the Company, and such action or failure to act constitutes a breach of Section 5.2 of this Agreement;

(e) by Parent if a Triggering Event (as defined below) shall have occurred;

(f) by the Company, upon a breach of any representation, warranty, covenant or agreement on the part of Parent set forth in this Agreement, or if any representation or warranty of Parent shall have become untrue, in either case such that the conditions set forth in Section 6.2(a) or Section 6.2(b) hereof would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue; provided, however, that if such inaccuracy in Parent’s representations and warranties or breach by Parent is curable by Parent through the exercise of its commercially reasonable efforts, then the Company may not terminate this Agreement under this Section 7.1(f) for thirty (30) calendar days following the delivery of written notice from the Company to Parent of such breach, provided Parent continues to exercise commercially reasonable efforts to cure such breach (it being understood that the Company may not terminate this Agreement pursuant to this Section 7.1(f) if such breach by Parent is cured during such thirty (30) calendar day period);

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(g) by Parent, upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of Company shall have become untrue, in either case such that the conditions set forth in Section 6.3(a) or Section 6.3(b) hereof would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue; provided, however, that if such inaccuracy in the Company’s representations and warranties or breach by the Company is curable by the Company through the exercise of its commercially reasonable efforts, then Parent may not terminate this Agreement under this Section 7.1(g) for thirty (30) calendar days following the delivery of written notice from Parent to the Company of such breach, provided the Company continues to exercise commercially reasonable efforts to cure such breach (it being understood that Parent may not terminate this Agreement pursuant to this Section 7.1(g) if such breach by the Company is cured during such thirty (30) calendar day period); or

(h) by Parent if a Material Adverse Effect with respect to the Company or its subsidiaries shall have occurred since the date of this Agreement; provided, however, that if such Material Adverse Effect with respect to the Company or its subsidiaries is curable by the Company through the exercise of its commercially reasonable efforts, then Parent may not terminate this Agreement under this Section 7.1(h) for thirty (30) calendar days following the occurrence of such Material Adverse Effect, provided the Company continues to exercise commercially reasonable efforts to cure such Material Adverse Effect (it being understood that Parent may not terminate this Agreement pursuant to this Section 7.1(h) if such Material Adverse Effect is cured during such thirty (30) calendar day period..

For the purposes of this Agreement, a “Triggering Event” shall be deemed to have occurred if (i) the Board of Directors of the Company or any committee thereof shall for any reason have withdrawn or shall have amended or modified in a manner adverse to Parent its recommendation in favor of the adoption and approval of the Agreement or the approval of the Merger; (ii) the Company shall have failed to include in the Proxy Statement/Prospectus the recommendation of the Board of Directors of the Company in favor of the adoption and approval of the Agreement and the approval of the Merger; (iii) the Board of Directors of the Company shall have failed to reaffirm its recommendation in favor of the adoption and approval of the Agreement and the approval of the Merger within five (5) business days after Parent requests in writing that such recommendation be reaffirmed at any time following the announcement of an Acquisition Proposal; (iv) the Board of Directors of the Company or any committee thereof shall have approved or recommended any Acquisition Proposal; (v) the Company shall have entered into any letter of intent or similar document or any agreement, contract or commitment accepting any Acquisition Proposal; or (vi) a tender or exchange offer relating to securities of the Company shall have been commenced by a person unaffiliated with Parent or its stockholders and the Company shall not have sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10) business days after such tender or exchange offer is first published, sent or given, a statement indicating that the Company recommends rejection of such tender or exchange offer.

7.2 Notice of Termination; Effect of Termination

Any termination of this Agreement pursuant to Section 7.1 hereof shall be effective immediately upon the delivery of written notice of the terminating party to the other party or parties hereto. In the event of the termination of this Agreement pursuant to Section 7.1 hereof, this Agreement shall be of no further force or effect, except (i) as set forth in this Section 7.2, and as set forth in Section 7.3 and Article VIII (General Provisions) hereof, each of which shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any party hereto from any liability for any willful breach of this Agreement. No termination of this Agreement shall affect the obligations of the parties hereto contained in the Confidentiality Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.

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7.3 Fees and Expenses

(a) Except as otherwise provided in this Section 7.3, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees and expenses, whether or not the Merger is consummated.

(b) Company Payments.

(i) Notwithstanding anything to the contrary set forth in this Agreement, in the event that this Agreement is terminated by Parent pursuant to Section 7.1(e) hereof, the Company shall pay to Parent in immediately available funds, within ten (10) business days after demand by Parent and as a condition to the termination of this Agreement pursuant to Section 7.1(e) hereof, an amount in cash equal to all documented costs incurred by Parent in connection with the Merger and the S-4 Registration Statement through the date of termination with respect to legal, accounting, regulatory and similar third party fees and expenses (the “Termination Fee”).

(ii) Notwithstanding anything to the contrary set forth in this Agreement, in the event that (A) this Agreement is terminated by Parent or the Company, as applicable, pursuant to Section 7.1(b) or Section 7.1(d) hereof, (B) following the date hereof and prior to the termination of this Agreement, a third party shall have announced an Acquisition Proposal, and (C) within twelve (12) months following the termination of this Agreement, a Company Acquisition (as defined in Section 7.3(b)(iv) hereof) is consummated or the Company enters into an agreement or letter of intent providing for a Company Acquisition, then the Company shall pay to Parent, in immediately available funds, an amount in cash equal to the Termination Fee within two (2) business days after the earlier to occur of (x) the consummation of such Company Acquisition, or (y) the entry by the Company into such agreement or letter of intent or the commencement or announcement of such tender or exchange offer.

(iii) The Company acknowledges that the agreements set forth in this Section 7.3(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent would not enter into this Agreement. Accordingly, if the Company shall fail to pay in a timely manner the amounts due pursuant to this Section 7.3(b), and, in order to obtain such payment, Parent makes a claim that results in a judgment against the Company for the amounts set forth in this Section 7.3(b), the Company shall pay to Parent its reasonable costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on the amounts set forth in this Section 7.3(b) at the prime rate of The Chase Manhattan Bank in effect on the date such payment was required to be made.

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Payment of the fees described in this Section 7.3(b) shall not be in lieu of damages incurred in the event of breach of this Agreement.

(iv) For all purposes of and under this Agreement, the term “Company Acquisition” shall mean any of the following transactions (other than the transactions contemplated by this Agreement); (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction hold less than sixty percent (60%) of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a voluntary sale or other disposition by the Company of assets representing in excess of fifty percent (50%) of the aggregate fair market value of the Company’s business immediately prior to such sale, or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by the Company), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of sixty percent (60%) of the voting power of the then outstanding shares of capital stock of the Company.

7.4 Amendment

Subject to applicable law, this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing, signed on behalf of each of the parties hereto by a duly authorized officer thereof.

7.5 Extension; Waiver

At any time prior to the Effective Time, any party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Non-Survival of Representations and Warranties

The representations and warranties of the Company, Parent and Merger Sub contained in this Agreement shall terminate at the Effective Time, and only the covenants that by their terms survive the Effective Time shall survive the Effective Time.

8.2 Notices

All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

(a) if to Parent, Merger Sub or the Company (following the Effective Time), to:

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Midas Medici Group Holdings, Inc.

445 Park Avenue

New York, NY 10022

Attention: Nana Baffour, CEO

Telephone No.: (212) 792-0921

Telecopy No.: (212) 202-4168

with a copy to:

Sichenzia Ross Friedman Ference LLP

61 Broadway

New York, NY 10006

Attention: Thomas A. Rose, Esq.

Telephone No.: (212) 930-9700

Telecopy No.: (212) 930-9725

(b) if to the Company (prior to the Effective Time), to:

Consonus Technologies, Inc.

301 Gregson Drive

Cary, NC 27511

Attention: Mr. Hank L. Torbert

Telephone No.: (919) 379-8000

Telecopy No.: (919) xxx-xxxx

with a copy to:

Wyrick Robbins Yates & Ponton LLP

4101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attention: Lisa D. Inman, Esq.

Telephone No.: (919) 781-4000

Telecopy No.: (919) 781-4865

8.3 Interpretation; Knowledge

(a) When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement. Unless otherwise indicated the words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When reference is made herein to “the business of” an entity, such reference shall be deemed to include the business of all direct and indirect subsidiaries of such entity. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect subsidiaries of such entity.

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(b) For purposes of this Agreement the term “knowledge” means with respect to a party hereto, with respect to any matter in question, that any of the executive officers of such party has actual knowledge of such matter or knowledge that such individual could reasonably be expected to obtain upon reasonable investigation or inquiry into such matter.

(c) For purposes of this Agreement, the term “Material Adverse Effect” when used in connection with an entity means any change, event, violation, inaccuracy, circumstance or effect that is materially adverse to the business, assets (including intangible assets), capitalization, financial condition or results of operations of such entity and its subsidiaries taken as a whole. For purposes of this Agreement, the term “person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

8.4 Counterparts

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

8.5 Entire Agreement; Third Party Beneficiaries

This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Letter and the Parent Disclosure Letter (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, it being understood that the Confidentiality Agreement shall continue in full force and effect until the Closing and shall survive any termination of this Agreement; and (ii) are not intended to confer upon any other person any rights or remedies hereunder, except as specifically provided in Section 5.11 hereof.

8.6 Severability

In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

8.7 Other Remedies; Specific Performance

Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

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8.8 Governing Law

This Agreement, and all claims or causes of action (whether at law, in contract or in tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the parties hereto (i) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, and, in connection with any such matter, to service of process by notice as otherwise provided herein, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the Court of Chancery of the State of Delaware. Any party may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 8.2.

8.9 Rules of Construction

The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

8.10 Assignment

No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

8.11 WAIVER OF JURY TRIAL

. EACH OF PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective thereunto duly authorized offices, as of the date first written above.

MIDAS MEDICI GROUP HOLDINGS, INC.

By:______________________________________

Name:____________________________________

Title:_____________________________________

MMGH ACQUISITION, INC.

By:______________________________________

Name:____________________________________

Title:_____________________________________

CONSONUS TECHNOLOGIES, INC.

By:_____________________________________

Name:___________________________________

Title:_____________________________________

**** AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ****

A-55

EXHIBIT A

FORM OF VOTING AGREEMENT

A-56

VOTING AGREEMENT

VOTING AGREEMENT, dated as of April , 2010, between Consonus Technologies, Inc. a Delaware Corporation (the “Company”) and each shareholder of the Company set forth on the signature pages hereto (each, including their successors and assigns a “Shareholder” and together, the “Shareholders”).

Recitals

A. As of the date hereof, each Shareholder owns, beneficially and/or of record, shares of common stock, $0.0000015 par value per share (the “Common Stock”), of the Company, the aggregate of which represent more than 51% of the voting power of the Company.

B. Each Shareholder desires to enter into this Agreement with respect to the voting of the shares of Common Stock now held, beneficially and/or of record, by such Shareholder, and the voting of any additional shares of Common Stock which may in the future be held, beneficially and/or of record, by such Shareholder (collectively, the “Shares”), on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Agreement to Vote. (a) In recognition of the Shareholders' common goals and objectives as shareholders of the Company and to ensure the orderly management and operation of the Company, each Shareholder hereby agrees that at any meeting of the shareholders of the Company, however called, and in any action by consent of the shareholders of the Company, each Shareholder shall vote or cause to be voted or execute a written consent in favor the merger of the Company with MMGH Acquisition, Inc., a Delaware corporation (“Acquisition”), pursuant to the Agreement and Plan of Merger by and among Midas Medici Group Holdings, Inc., a Delaware corporation, the Company and Acquisition, dated as of the date hereof (the “Merger”).

(b) Nothing contained herein shall be deemed to vest in any Shareholders any direct or indirect ownership with respect to the Shares owned by any other party hereto, and notwithstanding anything in this Agreement to the contrary, each Shareholder shall retain any and all of their rights, powers and authorities as a shareholder of the Company.

(c) Except as specifically set forth in this Agreement, nothing herein shall be deemed to limit or restrict the ability of each Shareholder to sell, hold, dispose and/or encumber all or any portion of their Shares.

(d) Any stock certificates representing the Shares owned by a Shareholder may bear an appropriate legend relating to this Agreement.

2. Representations and Warranties. Each Shareholder represents and warrants to the Company and to the other Shareholders as follows:

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(a) Such Shareholder has the legal capacity and the power to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Shareholder and constitutes the valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms.

(b) The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, conflict with or violate (i) any provision of law, rule or regulation to which such Shareholder is subject, (ii) any order, judgment or decree applicable to such Shareholder or (iii) any provision of any agreement, contract or other instrument to which such Shareholder is a party or by which such Shareholder is bound. The execution and delivery of this Agreement by such Shareholder does not, and the performance of this Agreement by such Shareholder shall not, require any consent, approval, authorization or permit of, or filing with or notification to, any court or arbitrator or any governmental body, agency or official, except for such filings as may be required under the Securities Exchange Act of 1934, as amended.

(c) Such Shareholder has not (i) entered into any other voting agreement with respect to their Shares which remains in effect as of the date hereof or (ii) granted any proxy or power of attorney with respect to their Shares which remain in effect as of the date hereof.

3. No Inconsistent Agreements. Each Shareholder hereby covenants and agrees that, except as contemplated by this Agreement, so long as this Agreement remains in effect, such Shareholder (a) shall not enter into any other voting agreement with respect to their Shares and (b) shall not grant a proxy or power of attorney with respect to their Shares, in each such case, which is inconsistent with such Shareholder’s obligations pursuant to this Agreement.

4. No Amendments. The Company hereby covenants and agrees that it will not permit the Merger Agreement to be modified or amended in any way adverse to the Shareholders without the prior written consent thereof.

5. Shareholder Capacity. Nothing in this Agreement shall limit or restrict any Shareholder in acting in their capacity as a director of the Company and exercising their her fiduciary duties and responsibilities relating thereto, it being understood that this Agreement shall apply to each Shareholder solely in their capacity as a shareholder of the Company and shall not apply to each Shareholders' actions, judgments or decisions as a director of the Company.

6. Amendments and Waivers. No amendment or waiver of any provision of this Agreement shall be valid unless the same shall be in writing and signed by each of the Shareholders and the Company. No waiver any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

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7. Term of the Agreement. This Agreement shall expire upon the earlier to occur of (a) the consummation of the Merger or (b) the termination of the Merger Agreement in accordance with the terms and provisions thereof the Shareholders elect to revoke this proxy, and is irrevocable until such time. Notwithstanding the foregoing, this proxy may be revoked in the event the Company breaches the covenant set forth in Section 4 above.

8. Miscellaneous. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to the conflicts of law principles thereof.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. If any of the provisions of this Agreement are for any reason declared by the final judgment of a court of competent jurisdiction to be unenforceable or ineffective, those provisions shall be deemed severable from the other provisions of this Agreement and the remainder of this Agreement shall remain in full force and effect.

(c) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto (individually and as attorney-in-fact trustee, executor, custodian or otherwise, if applicable) and their respective successors, assigns, heirs, legal representatives and personal representatives. If a Shareholder effectuates any transfer to which the preceding sentence applies, such Shareholder shall, as a condition to such transfer, first obtain an agreement in writing from such transferee to be bound by all of the terms and provisions of this Agreement with the same force and effect as if such transferee were (and such transferee shall be considered) a “Shareholder” for all purposes of this Agreement as of the date hereof. Notwithstanding anything to the contrary contained herein, a transferee acquiring any Shares from a Shareholder in a public offering or via a public sale shall not be bound by the terms and conditions of this Agreement.

(d) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature page follows]

A-59

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the day and year first above written.

CONSONUS TECHNOLOGIES, INC.

By: __________________________

Name:________________________

Title:_________________________

____________________________

(Name)

____________________________

(Name)

____________________________

(Name)

____________________________

(Name)

____________________________

(Name)

A-60

ANNEX B

§ 262. Appraisal rights.

(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 257, § 258, § 263 or § 264 of this title:

(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or

d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

B-1

(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person's own name, file a petition or request from the corporation the statement described in this subsection.

(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.

(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.

(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.

B-2

Delaware		8742		37-1532843
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

	Large accelerated filer 	Accelerated filer 
	Non-accelerated filer  (Do not check if a smaller reporting company)	Smaller reporting company [X]

Requests for documents relating to Midas Medici should be directed to:		Requests for documents relating to Consonus should be directed to:
Midas Medici Group Holdings, Inc. Investor Relations 445 Park Avenue, 20th Floor New York, New York 10022 (212) 792-0920		Consonus Technologies, Inc. Investor Relations 301 Gregson Drive Cary, North Carolina, 27511 Phone: (919) 378-8000

QUESTIONS AND ANSWERS ABOUT THE MERGER		1
SUMMARY		2
The Companies		2
The Merger		3
Consideration to be Received in the Merger by Consonus Stockholders		3
Treatment of Consonus Options, Warrants and Stock Appreciation Rights		3
Reasons for the Merger		4
Strategic Trends Driving the Merger		4
Post Merger Operating Aspirations		4
Overview of the Merger Agreement		5
Voting Agreements		6
Management of the Combined Company Following the Merger		6
Interests of Certain Persons in the Merger		6
Regulatory Approvals		6
Accounting Treatment		6
Material U.S. Federal Income Tax Consequences		6
Comparison of Stockholder Rights		7
Appraisal Rights in Connection with the Merger		7
Risks Associated with the Merger		7
SELECTED COMPANY UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION		8
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA		11
MARKET PRICE AND DIVIDEND INFORMATION		12
RISK FACTORS		13
Risks Related to the Merger		13
Risks Related to Midas Medici		15
Risks Related to Consonus		21
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		27
THE SPECIAL MEETING OF CONSONUS STOCKHOLDERS		27
Date, Time and Place		27
Purposes of the Consonus Special Meeting		27
Recommendations of Consonus’ Board of Directors		27
Record Date and Voting Power		27
Voting and Revocation of Proxies		27
Required Vote		28
Solicitation of Proxies		28

LEGAL MATTERS		119
EXPERTS		119
WHERE YOU CAN FIND ADDITIONAL INFORMATION		119
Information on Midas Medici’s Website		120
Information on Consonus’ Website		120
INDEX TO FINANCIAL STATEMENTS		F-1

Other Matters		28
THE MERGER		29
Background of the Merger		29
Reasons for the Merger		30
Strategic Trends Driving the Merger		33
Post Merger Operating Aspirations		34
Interests of Consonus’ Directors and Executive Officers in the Merger		35
Effective Time of the Merger		36
Regulatory Approvals		36
Tax Treatment of the Merger		36
Material United States Federal Income Tax Consequences of the Merger		36
Anticipated Accounting Treatment		38
Appraisal Rights		38
THE MERGER AGREEMENT		40
General		40
Closing and Effective Time of the Merger		40
Merger Consideration		40
Conversion of Consonus Convertible Securities		41
Directors and Officers of Midas Medici Following the Merger		41
Certificate of Incorporation		41
Conditions to the Completion of the Merger		41
No Solicitation		42
Meetings of Stockholders		43
Covenants; Conduct of Business Pending the Merger		43
Other Agreements		45
Termination		45
Termination Fee and Expenses		46
Representations and Warranties		47
Agreements Related to the Merger Agreement		47
MATTERS TO BE PRESENTED TO THE CONSONUS STOCKHOLDERS		48
Consonus Proposal No. 1: Approval of the Merger		48
CONSONUS’ BUSINESS		49
Overview		49
Employees of Consonus		60
Management and Board of Directors		60
Executive Compensation		66
CONSONUS’ SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		68
CONSONUS’ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		70
Overview		70
Results of Operations		72

MANAGEMENT OF THE COMBINED COMPANY		75
Executive Officers and Directors		75
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		80
PRINCIPAL STOCKHOLDERS OF CONSONUS		86
PRINCIPAL STOCKHOLDERS OF MIDAS MEDICI		87
PRINCIPAL STOCKHOLDERS OF THE COMBINED COMPANY		88
DESCRIPTION OF MIDAS MEDICI’S COMMON STOCK		89
COMPARISON OF RIGHTS OF HOLDERS OF MIDAS MEDICI STOCK AND CONSONUS STOCK		90
MIDAS MEDICI’S BUSINESS		95
Overview		95
Employees		108
MIDAS MEDICI'S SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		109
MIDAS MEDICI’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		113
Overview		113
Results of Operations		115

ANNEX A		AGREEMENT AND PLAN OF MERGER BY AND AMONG MIDAS MEDICI GROUP HOLDINGS, INC. MMGH ACQUISITION, INC. AND CONSONUS TECHNOLOGIES, INC.
ANNEX B		SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

●	Smart Meter Deployment – 1) research and consulting focused on more effective deployment of smart meters to customers, and 2) efficient management of data traffic between end-users and providers of electricity;
●	Energy Investments & Business Planning –investment decision support to utilities and investment firms;
●	CommodityPoint –research and advisory services designed to assist commodities traders to manage trading risk;
●	Meter-to-Cash –independent research and consulting services applied to the utility-customer cash cycle from when a meter is read to the point cash is received;
●	Pricing & Demand Response –design mechanisms for utilities and their regulators to for setting electricity rates;
●	Public & Regulatory Issues Management –regulatory, legal and policy support services for issues associated with the generation, transmission and distribution of electricity; and
●	The Intelligent Project – highly structured, issue-focused research and executive forums to assist executives in analyzing customer related issues associated with the “Smart Grid”.


Midas Medici—Historical For The Year Ended December 31, 2009
Basic loss per share	$	(1.40	)
Diluted loss per share	$	(1.40	)
Weighted average common shares outstanding—basic		1,290,777
Weighted average common shares outstanding—diluted		1,290,777
Common shares outstanding		2,735,516

Consonus—Historical For The Year Ended December 31, 2009
Basic loss per share	$	(1.08	)
Diluted loss per share	$	(1.08	)
Weighted average common shares outstanding—basic		3,159,078
Weighted average common shares outstanding—diluted		3,159,078
Common shares outstanding		3,283,388

Pro Forma Combined
Basic loss per share	$	(0.70	)
Diluted loss per share	$	(0.70	)
Weighted average common shares outstanding—basic		6,254,716
Weighted average common shares outstanding—diluted		6,254,716
Common shares outstanding		7,699,455

Facility	Ownership	Tier Level	Description
South Data Center West Jordan, Utah	Owned	Tier IV A fault tolerant data center that has redundant capacity systems and multiple distribution paths simultaneously serving the site's computer equipment	60 Customers 12,900 square feet 78% Utilization 168 square feet of average space per customer $9.7 million total 2009 revenue
West Data Center Salt Lake City, Utah	We own the building and improvements but not the underlying real property. The monthly rent for the West Data Center is $774 and the lease expires on May 30, 2055.	Tier III A concurrently maintainable data center that has redundant capacity components and multiple distribution paths serving the site's computer equipment. Generally, only one distribution path serves the computer equipment at any time	19 Customers 11,100 square feet 96% Utilization 558 square feet of average space per customer $2.9 million total 2009 revenue
Presidents Data Center Salt Lake City, Utah	Leased The monthly rent for the Presidents Data Center is approximately $17,700 and the lease expires in June 2014, with one five-year extensions.	Tier II A concurrently maintainable data center that has redundant capacity components and single non-redundant distribution paths serving the site's computer equipment. Generally, only one distribution path serves the computer equipment at any time	17 Customers 5,400 square feet currently available, space to build an additional 5,400 square feet 13% Utilization 33 square feet of average space per customer $0.3 million total 2009 revenue

Name	Age	Position	Director Since
Nana Baffour	37	Executive Chairman of the Board of Directors.	October 2006 (Class III)
John Roger	46	Co-President	n/a
Robert McCarthy	46	Co-President	n/a
Robert Muir	47	Vice President of Western Operations and Corporate Treasurer	n/a
Daniel S. Milburn	44	Senior Vice-President and Chief Operating Officer of Hosting and Infrastructure Services	n/a
Michael Bucheit	44	Executive Vice-President of Corporate Development	n/a
Karen S. Bertaux	46	Vice President, Chief Financial Officer and Secretary	n/a
Justin Beckett	47	Director	October 2006 (Class I)
Johnson M. Kachidza	43	Director	January 2007 (Class I)
Connie I. Roveto	60	Director	January 2007 (Class II)
Hank Torbert	38	Director	April 2010 (Class II)
Michael G. Shook	64	Director	December 2006 (Class III)
William M. Shook	50	Director	October 2006 (Class II)

Name and Principle Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Incentive Plan compensation ($)	Deferred Compensation Earnings ($)	All Other Compensation ($)		Total ($)
Nana Baffour Executive	2009	37,500	0	0	0	0	0	0		37,500
Chairman (1)	2008	0	0	0	0	0	0	0		0

John Roger Co-	2009	192,500	121,591	0	0	0	0	7,678	b,c	321,769
President (2)	2008	185,000	75,000	132,591	0	0	0	7,692	b	400,283

Bob McCarthy	2009	200,000	75,533	0	0	0	0	8,941	a,b,c	284,474
Co-President (2)	2008	116,666	0	0	0	0	0	5,122	b,d	121,788

Karen Bertaux	2009	175,000	45,751	0	0	0	0	581	a,c	221,332
CFO	2008	175,000	84,428	82,080	0	0	0	389	a	341,897

Robert Muir	2009	143,750	105,634	0	0	0	0	7,484	a	256,868
VP/GM – Hosting Services	2008	143,750	104,688	109,443	0	0	0	7,453	a	365,334

Daniel Milburn	2009	175,000	98,340	0	0	0	0	8,205	a	281,545
EVP, Managed Services	2008	175,000	105,188	82,080	0	0	0	8,406	a	370,674

Michael Bucheit	2009	175,000	87,813	0	0	0	0	6,440	b,c	269,253
SVP, Corporate Strategy	2008	160,416	0	0	0	0	0	5,821	b	166,237

	For the Years Ended December 31,
	2009			2008			2007
Revenues:
Data center services and solutions	$	47,210		$	48,127		$	35,449
IT infrastructure services		4,136			10,355			11,016
IT infrastructure solutions		33,231			51,565			54,574

Total revenues		84,577			110,047			101,039

Cost of revenues:
Costs of data center services and solutions		26,623			28,028			21,349
Costs of IT infrastructure services		3,041			7,064			7,333
Costs of IT infrastructure solutions		26,314			41,625			44,527

Total cost of revenues		55,978			76,717			73,209

Gross profit		28,599			33,330			27,830

Operating expenses:
Selling, general and administrative expenses		23,372			28,332			24,876
Write-off of previously capitalized offering costs and financing fees		-			8,086			-
Depreciation and amortization expense		4,514			4,323			3,565

Total expenses		27,886			40,741			28,441

Income (loss) from operations		713			(7,411	)		(611	)

Other income (expenses):
Interest expense		(3,132	)		(3,920	)		(4,035	)
Interest expense - warrants		(993	)		-			-
Loss before income taxes		(3,412	)		(11,331	)		(4,646	)

Income taxes expense (benefit)		4			(264	)		303

Net loss	$	(3,416	)	$	(11,067	)	$	(4,949	)

Loss per common share - basic and diluted	$	(1.08	)	$	(3.67	)	$	(1.78	)

Weighted average number of common shares outstanding - basic and diluted		3,159,078			3,015,963			2,774,733

EBITDA (*)	$	5,227		$	(3,088	)	$	2,954

ADJUSTED EBITDA (*)	$	7,014		$	7,618		$	6,945

	As of December 31,
		2009			2008			2007
Balance Sheet Data:
Cash and cash equivalents	$	501		$	756		$	982
Working capital deficiency		(16,139	)		(14,270	)		(9,537	)
Total assets		82,956			87,724			100,971
Stockholder's equity (deficiency)		(317	)		1,450			11,309

ASSETS	Consolidated Consonus Technologies, Inc.			Consolidated Midas Medici Group Holdings, Inc. and Subsidiaries			Pro Forma Adjustments					Pro Forma Combined
Current assets:
Cash and cash equivalents	$	501		$	64		$	-				$	565
Accounts receivable, net		13,200			300			-					13,500
Deferred support costs		11,071			-			-					11,071
Other current assets		1,115			10			-					1,125
Total current assets		25,887			374			-					26,261
Property and equipment, net		20,438			18			-					20,456
Goodwill and other intangibles		34,479			-			18,096		(2	)		52,575
Other assets		2,152			3			-					2,155
Total assets	$	82,956		$	395		$	18,096				$	101,447
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities	$	17,344		$	1,528		$	-		(5	)	$	18,872
Revolving credit facility		-			172			-					172
Deferred revenue		17,955			149			-					18,104
Current portion of long-term debt		6,727			497			-					7,224
Preferred stock dividends payable - stated		-			178			-					178
Total current liabilities		42,026			2,524			-					44,550
Long-term liabilities		41,247			339			-					41,586
Total liabilities		83,273			2,863			-					86,136
Equity (Deficit):
Preferred stock, par value $0.00 1; 10,000,000 shares authorized; no shares issued as of December 31, 2009		-			-			-					-
Common stock, $0.00 1 par value; 40,000,000 authorized; issued 2,735,516 historical shares and 7,699,455 pro forma shares outstanding		-			3			5		(3	)		8
Additional paid-in capital		15,899			(82	)		19,098		(4	)		34,915
Treasury stock, at cost; 425,000 at December 31, 2009		-			(1	)		-					(1	)
Warrants		3,309			-			(3,309	)	(4	)		-
Accumulated deficit		(19,478	)		(2,309	)		2,309		(4	)		(19,478	)
Accumulated other comprehensive income (loss)		(47	)		7			(7	)	(4	)		(47	)
Total stockholders' equity (deficit)		(317	)		(2,382	)		18,096					15,397
Non-controlling interest		-			(86	)		-					(86	)
Total equity (deficit)		(317	)		(2,468	)		18,096					15,311
Total liabilities and equity (deficit)	$	82,956		$	395		$	18,096				$	101,447

	BY ORDER OF THE BOARD OF DIRECTORS

	Corporate Secretary

A.	The merger will be accounted for using the acquisition method. For financial accounting purposes, Consonus will be considered as the accounting acquirer of Midas.
B.	The pro forma condensed combined balance sheet has been prepared assuming the merger was consummated on December 31, 2009.
C.	The following pro forma adjustments have been applied to give effect to the merger as follows:

(in thousands)
Purchase price	$	15,628
Plus:
Midas capital deficiency at December 31, 2009		2,468
Goodwill and other intangibles	$	18,096

(in thousands)	Preliminary fair value		Estimated life		Estimated amortization expense for the year ended December 31, 2009
Goodwill	$	14,396		-	$	-
Content and Databases		2,000		8		250
Trade Name		1,200		10		120
Customer Relationships		500		3		167
Total Adjustment to Amortization of Acquired Intangibles	$	18,096			$	537

The following is a summary of Midas common stock to be outstanding after the merger:
	Shares
Shares held by existing Midas common stockholders as at December 31, 2009		2,735,516
Shares of Midas common stock to be issued to Consonus stockholders		4,963,939
Total shares outstanding after the merger		7,699,455

Non-recurring KLI management fee charged to Consonus	$	(250	)
Non-recurring KLI management fee charged to Midas Medici		(64	)
		(314	)
Increase in Key Executive Compensation		250
Net pro forma adjustment	$	(64	)

Name and Address of Beneficial owner	Amount and Nature of Beneficial Ownership		Percentage of Outstanding Common Stock
Nana Baffour (1)		1,820,018	55.8%
John Roger		33,377	1.0%
Robert Muir		34,059	1.0%
Daniel S. Milburn		61,625	1.9%
Robert McCarthy		30,246	*
Michael Bucheit		15,431	*
Karen S. Bertaux (3)		12,804	*
Hank Torbert
Justin Beckett		26,815	*
Johnson M. Kachidza(1)		1,820,018	55.8%
Connie I. Roveto		5,495	*
Michael G. Shook		308,745	9.5%
William M. Shook		108,735	3. 3%
Knox Lawrence International, LLC (2)		1,820,018	55.8%
All directors and executive officers as a group (13 persons)		2,462,842	75.4%

(1)	Includes (a) 1,645,018 shares held by Knox Lawrence International, LLC, (b) 75,000 shares held by MMC, Cap I SOF, and (c) 100,000 held by MMC, LLC. Nana Baffour, our Executive Chairman and Johnson Kachidza, our director holds the power to vote and dispose of the shares of Knox Lawrence International, LLC.
(2)	Includes (a) 75,000 shares held by MMC, Cap I SOF, and (b) 100,000 held by MMC, LLC, affiliates of KLI.

(3)	Does not include shares underlying an option to purchase 20,000 shares of common stock of the Company which becomes vested on July 27, 2010.
(4)	Nana Baffour, our CEO and Johnson Kachidza hold the power to vote and dispose of the shares of UTP International, LLC.
(5)	Nana Baffour, our CEO and Johnson Kachidza hold the power to vote and dispose of the shares of Knox Lawrence International.
(6)	Includes 85,243 shares held by The Bahadur Family Foundation, Mr. Bahadur holds the power to vote and dispose of the shares of The Bahadur Family Foundation.
(7)	Represents shares underlying an option to purchase 9,589 shares of common stock of the Company which are vested. Does not include options to purchase 25,000 shares of the company’s common stock at an exercise price of $6.00 per share which was granted to Mr. Steele at the closing of the Agreement and Plan of Merger between Midas Medici and Utilipoint International, Inc. on August 21, 2009, which vest on the first anniversary of the grant.

Name and Address of Beneficial Owner		Amount and Nature of Beneficial Ownership	Percentage of Outstanding Common Stock
Nana Baffour	(1)	3,582,357	51.7%
Johnson M. Kachidza	(2)	3,582,357	51.7%
Frank Asante-Kissi	(3)	80,305	1.2%
Robert McCarthy		40,227	*
John Roger		44,391	*
David Steele	(4)	9,589	*
Stephen Schweich		93,000	1.3%
Albert Keith Gordon		-	*
Justin Beckett		20,523	*
Hank Torbet		-	*
Connie I. Roveto		7,308	*
Michael Shook		410,631	6.0%
UTP International, LLC	(5)	687,922	10.0%
Knox Lawrence International, LLC	(6)	2,307,987	33.4%

All directors and executive officers as a group (10 persons)		4,288,330	61.8%
* Less than 1%

(1)	Includes (a) 2,307,987 shares held by Knox Lawrence International, LLC, (b) 687,922 shares held by UTP International, LLC, (c) 100,286 shares held by KLI Affiliate (MMC, Cap I SOF), (d) 133,000 shares held by KLI Affiliate (MMC, LLC), (e) 27,168 shares underlying an option held by KLI IP Holding, Inc., to purchase shares of the Company issued at the closing of the acquisition of Utilipoint which is currently exercisable at a price of $1.56 per share and (f) 326,531 held by Mr. Baffour. Does not include shares underlying an option to purchase 100,000 shares of common stock of the Company which becomes vested on July 27, 2010.
(2)	Includes (a) 2,307,987 shares held by Knox Lawrence International, LLC, (b) 687,922 shares held by UTP International, LLC, (c) 100,286 shares held by KLI Affiliate (MMC, Cap I SOF), (d) 133,000 shares held by KLI Affiliate (MMC, LLC), (e) 27,168 shares underlying an option held by KLI IP Holding, Inc., to purchase shares of the Company issued at the closing of the acquisition of Utilipoint which is currently exercisable at a price of $1.56 per share and (f) 326,531 held by Mr. Baffour. Does not include shares underlying an option to purchase 100,000 shares of common stock of the Company which becomes vested on July 27, 2010.
(3)	Does not include shares underlying an option to purchase 20,000 shares of common stock of the Company which becomes vested on July 27, 2010.
(4)	Represents shares underlying an option to purchase 9,589 shares of common stock of the Company which are vested. Does not include options to purchase 25,000 shares of the Company’s common stock at an exercise price of $6.00 per share which were granted to Mr. Steele at the closing of the merger on August 21, 2009, which vest on the first anniversary of the grant.
(5)	Nana Baffour, our CEO and Johnson Kachidza hold the power to vote and dispose of the shares of UTP International, LLC.
(6)	Nana Baffour, our CEO and Johnson Kachidza hold the power to vote and dispose of the shares of Knox Lawrence International.

		Consonus		Midas Medici
Authorized Capital		The authorized capital stock of Consonus consists of 13,333,33 shares of common stock, par value $0.000001 per share, and 10,000,000 shares of preferred stock, par value $0.000001 per share. The board has the authority to designate the preferences, special rights, limitations or restrictions of the shares of preferred stock without further stockholder approval. As of April 30, 2010, 3,259,046 shares of common stock were issued and outstanding.		The authorized capital stock of Midas Medici consists of 40,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock. The board has the authority to designate the preferences, special rights, limitations or restrictions of the remaining shares of any class of stock or any series of any class without further stockholder approval. As of April 30, 2010, 2,566,516 shares of common stock were issued and outstanding.

Dividends	Under Delaware law, subject to any restrictions in the corporation ’s certificate of incorporation, a Delaware corporation may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. The Bylaws of Consonus permit the payment of dividends subject to any restrictions under Delaware law or the Company’s certificate of incorporation. Consonus has never paid a dividend on its common stock.	Under Delaware law, subject to any restrictions in the corporation ’s certificate of incorporation, a Delaware corporation may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. Midas Medici has never paid a dividend on its common stock.

Cumulative Voting	Under Delaware law, stockholders of a Delaware corporation do not have the right to cumulate their votes in the election of directors, unless such right is granted in the certificate of incorporation of the corporation. Consonus ’s certificate of incorporation does not provide for cumulative voting by Consonus stockholders.	Under Delaware law, stockholders of a Delaware corporation do not have the right to cumulate their votes in the election of directors, unless such right is granted in the certificate of incorporation of the corporation. Midas Medici ’ certificate of incorporation does not provide for cumulative voting by Midas Medici stockholders.

Number of Directors	Delaware law provides that the board of directors of a Delaware corporation shall consist of one or more directors as fixed by the corporation’s certificate of incorporation or bylaws. Consonus’ bylaws provide that the number of directors shall be determined from time to time by resolution of the Board of Directors. Consonus’ board of directors currently consists of seven (7) directors	Delaware law provides that the board of directors of a Delaware corporation shall consist of one or more directors as fixed by the corporation ’s certificate of incorporation or bylaws. Midas Medici’s bylaws provide that the number of directors shall be determined from time to time by resolution of the Board of Directors. Midas Medici’s board currently consists of four (4) directors.

Classified Board of Directors	Delaware law permits, but does not require, a Delaware corporation to provide in its certificate of incorporation for a classified board of directors, dividing the board into up to three classes of directors with staggered terms of office, with only one class of directors to be elected each year for a maximum term of three years. Consonus’ certificate of incorporation provides for a classified board of directors in 3 classes designated as Class I, Class II and Class III, with the directors of Class I initially serving until the 2010 annual meeting of stockholders, Class II initially serving until the 2011 annual meeting of stockholders and Class III initially serving until the 2012 annual meeting of stockholders. Commencing with the annual meeting of stockholders in 2011, directors of each class the term of which shall then expire shall be elected for a three (3) year term.	Delaware law permits, but does not require, a Delaware corporation to provide in its certificate of incorporation for a classified board of directors, dividing the board into up to three classes of directors with staggered terms of office, with only one class of directors to be elected each year for a maximum term of three years. Midas Medici’s certificate of incorporation does not provide for a classified board of directors. Each director serves until his or her successor is elected or until his or her earlier resignation or removal. The bylaws and certificate of incorporation do not specify a specific term length for service of a director.

Removal of Directors	Delaware law provides that directors may be removed from office, with or without cause, by the holders of a majority of the voting power of all outstanding voting stock, unless the corporation has a classified board and its certificate of incorporation otherwise provides. Consonus’ and certificate of incorporation provide that any director or the entire Board of Directors may be removed, but only for cause and solely by the affirmative vote of the holders of at least 66 2/3% of the voting power of the then outstanding shares of the corporation entitled to vote generally in the election of directors, voting together as a single class.	Delaware law provides that directors may be removed from office, with or without cause, by the holders of a majority of the voting power of all outstanding voting stock, unless the corporation has a classified board and its certificate of incorporation otherwise provides.

Vacancies	Delaware law provides that, unless the corporation’s certificate of incorporation or bylaws provide otherwise, vacancies and newly created directorships resulting from an increase in the authorized number of directors elected by the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office. Under the bylaws of Consonus, vacancies and newly created directorships may be filled by the vote of the remaining directors though less than a quorum. If at any time, by reason of death or resignation or other cause, Consonus shall not have any directors in office, then any officer stockholder or an executor, administrator trustee or guardian of a stockholder may call a meeting of stockholders.	Delaware law provides that, unless the corporation ’s certificate of incorporation or bylaws provide otherwise, vacancies and newly created directorships resulting from an increase in the authorized number of directors elected by the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office. Under Midas the bylaws of Medici’s, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier resignation or removal.

Board Quorum and Vote Requirements	At meetings of the board of directors, a majority of the directors shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board.	At meetings of the board of directors, a majority of the directors shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board. Only when a quorum is present may the board of directors continue to do business at any such meeting.

Special Meetings of Shareholders	Delaware law permits special meetings of stockholders to be called by the board of directors and any others persons specified by the certificate of incorporation or bylaws. Delaware law permits but does not require that stockholders be given the right to call special meetings. Consonus ’s bylaws provide that special meetings of stockholders may be called at any time by the Chairman or the Board of Directors, and any of the following with the concurrence of a majority of the Board of Directors: the Chairperson of the Board of Directors, the Chief Executive Officer of the corporation, the President of the corporation or the Secretary of the corporation.. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.	Delaware law permits special meetings of stockholders to be called by the board of directors and any others persons specified by the certificate of incorporation or bylaws. Delaware law permits but does not require that stockholders be given the right to call special meetings. Midas Medici’s bylaws provide that special meetings of stockholders may be called by the chairman, the president, Vice President, Secretary or assistant secretary and by such officer at the request in writing of a majority of the board of directors or at the request of stockholders owning a majority of the capital stock of the Corporation issued and outstanding and entitled to vote.

Quorum for Shareholders Meetings	Except as otherwise expressly provided by law or by Consonus ’s certificate of incorporation or bylaws, at all meetings of the stockholders, the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum requisite for the transaction of business.	Except as otherwise expressly provided by law or by Midas Medici’s certificate of incorporation or bylaws, at all meetings of the stockholders, the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum requisite for the transaction of business.

Action by Shareholders Without a Meeting	Under Delaware law, unless a corporation ’s certificate of incorporation provides otherwise, any action which may be taken at a meeting of the stockholders of a corporation may be taken by written consent without a meeting. Consonus’ bylaws provide that any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, or by electronic transmission, setting forth the action so taken, shall be signed or authorized by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered in to the Corporation’s registered office in Delaware, its principal place of business, or an officer or agent of Consonus having custody of the book in which proceedings of meetings of stockholders are recorded.	Under Delaware law, unless a corporation’s certificate of incorporation provides otherwise, any action which may be taken at a meeting of the stockholders of a corporation may be taken by written consent without a meeting. Midas Medici’s bylaws provide that any action taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, or by electronic transmission, setting forth the action so taken, shall be signed or authorized by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered in to the Corporation’s registered office in Delaware, its principal place of business, or an officer or agent of Midas Medici having custody of the book in which proceedings of meetings of stockholders are recorded.

Amendment of Governing Documents	Procedures for Amendment of Certificate of Incorporation: Under Delaware law, the board of directors shall adopt a resolution setting forth the proposed amendment and declaring its advisability, and either call a special meeting of the stockholders entitled to vote thereon or direct that the proposed amendment shall be considered at the next annual meeting of the stockholders. The amendment shall be approved by a majority of the outstanding stock entitled to vote thereon. If the proposed amendment would adversely affect the rights, powers, par value, or preferences of the holders of either a class of stock or a series of a class of stock, then the holders of either the class of stock or series of stock, as appropriate, shall be entitled to vote as a class.	Procedures for Amendment of Certificate of Incorporation: Under Delaware law, the board of directors shall adopt a resolution setting forth the proposed amendment and declaring its advisability, and either call a special meeting of the stockholders entitled to vote thereon or direct that the proposed amendment shall be considered at the next annual meeting of the stockholders. The amendment shall be approved by a majority of the outstanding stock entitled to vote thereon. If the proposed amendment would adversely affect the rights, powers, par value, or preferences of the holders of either a class of stock or a series of a class of stock, then the holders of either the class of stock or series of stock, as appropriate, shall be entitled to vote as a class.

DGCL Section 203	Under Section 203 of the DGCL, Consonus falls within the exemptions from the restrictions on business combinations because it does not have a class of voting stock that is (1) listed on a national securities exchange, or (3) held of record by more than 2,000 stockholders. In general, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three (3) years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a “business combination” includes a merger, asset sale, or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three (3) years prior, did own) 15% or more of the corporation ’s voting stock.	Midas Medici falls within the exemptions from the restrictions on business combinations because it does not have a class of voting stock that is (1) listed on a national securities exchange, or (3) held of record by more than 2,000 stockholders.

Consideration of Other Constituencies	Consonus ’s certificate of incorporation does not contain any provision specifically authorizing or requiring Consonus’ board of directors to consider the interests of any constituencies of Consonus other than its stockholders in considering whether to approve or oppose any corporate action.	Midas Medici ’ certificate of incorporation does not contain any provision specifically authorizing or requiring the Midas Medici’s board of directors to consider the interests of any constituencies of Midas Medici other than its stockholders in considering whether to approve or oppose any corporate action.
	However, Delaware law provides that, in the performance of their duties to the corporation, directors are protected in relying on good faith upon the records of the corporation and information, opinions, reports, or statements presented to the corporation by any of the corporation ’s officers or employees, or committees of the board of directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation.	However, Delaware law provides that, in the performance of their duties to the corporation, directors are protected in relying on good faith upon the records of the corporation and information, opinions, reports, or statements presented to the corporation by any of the corporation ’s officers or employees, or committees of the board of directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation.

●	Smart Meter Deployment –1) research and consulting focused on more effective deployment of smart meters to customers, and 2) efficient management of data traffic between end-users and providers of electricity;
●	Energy Investments & Business Planning –investment decision support to utilities and investment firms;
●	CommodityPoint –research and advisory services designed to assist commodities traders to manage trading risk;
●	Meter-to-Cash –independent research and consulting services applied to the utility-customer cash cycle from when a meter is read to the point cash is received;
●	Pricing & Demand Response –design mechanisms for utilities and their regulators to for setting electricity rates;
●	Public & Regulatory Issues Management –regulatory, legal and policy support services for issues associated with the generation, transmission and distribution of electricity; and
●	The Intelligent Project –highly structured, issue-focused research and executive forums to assist executives in analyzing customer related issues associated with the “Smart Grid”.

▪	Engineering companies that provide enabling solutions to the Smart Grid infrastructure;
▪	Technology companies that provide data warehousing technology infrastructure and data center solutions;

▪	Companies that facilitate financing of energy efficiency initiatives for consumers and commercial enterprises; and
▪	Other Smart Grid-related companies or products and services aimed at commercial and industrial customers and consumers.

●	Expanding the sources of generation to include more efficient and environmentally friendly resources such solar and wind;
●	Opening access to the transmission and distribution system to facilitate wholesale trading of electricity between regions to introduce competition; and