Edgar Filing: ALANCO TECHNOLOGIES INC

prem14a2010.htm

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(A)

of the

Securities Exchange Act of 1934

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x Preliminary Proxy Statement

o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)

o Definitive Proxy Statement

o Definitive Additional Materials

o Soliciting Material Pursuant to Section 240.14a-12

Alanco Technologies, Inc.

______________________________________

(Name of Registrant as Specified in its Charter)

_________________________________________________________

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ALANCO TECHNOLOGIES, INC.

15575 North 83rd Way, Suite 3

Scottsdale, Arizona 85260

(480) 607-1010

___________________________________

PROXY STATEMENT

___________________________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 10, 2011

TO THE SHAREHOLDERS OF ALANCO TECHNOLOGIES, INC.

NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Alanco Technologies, Inc., an Arizona corporation (“Alanco” or the "Company"), will be held at 15575 North 83rd Way, Suite 3, Scottsdale, Arizona 85260, on May 10, 2011, at 10:00 a.m., Mountain Standard Time, and at any adjournment or postponement thereof, for the purpose of considering and acting upon the following Proposals:

Proposal No. 1 ELECTION OF DIRECTORS

Proposal No. 2 RATIFICATION OF RE-APPOINTMENT OF THE INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Proposal No. 3 APPROVAL OF THE ALANCO 2011 STOCK INCENTIVE PLAN

Proposal No. 4 APPROVAL TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY BY SELLING SUBSTANTIALLY ALL THE ASSETS OF STARTRAK

SYSTEMS, LLC, A WHOLLY OWNED SUBSIDIARY OF THE COMPANY, TO ORBCOMM INC. PURSUANT TO TERMS AND CONDITIONS OF THE ASSET

PURCHASE AGREEMENT AMONG THE COMPANY, STARTRAK AND ORBCOMM.

Holders of the outstanding Common Stock and Preferred Stock of the Company of record at the close of business on March 28, 2011, will be entitled to notice of and to vote at the Meeting or at any adjournment or postponement thereof.

All shareholders, whether or not they expect to attend the Annual Meeting of Shareholders in person, are urged to sign and date the enclosed Proxy and return it promptly in the enclosed postage-paid envelope which requires no additional postage if mailed in the United States. The giving of a proxy will not affect your right to vote in person if you attend the Meeting.

BY ORDER OF THE BOARD OF DIRECTORS.

Scottsdale, Arizona ROBERT R. KAUFFMAN

date____________ CHIEF EXECUTIVE OFFICER

JOHN A. CARLSON

CHIEF FINANCIAL OFFICER

ALANCO TECHNOLOGIES, INC.

15575 North 83rd Way, Suite 3

Scottsdale, Arizona 85260

(480) 607-1010

______________________________

PROXY STATEMENT

______________________________

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 10, 2011

GENERAL INFORMATION

The enclosed Proxy is solicited by and on behalf of the Board of Directors of Alanco Technologies, Inc., an Arizona corporation (the "Company"), for use at the Company's Annual Meeting of Shareholders to be held at 15575 North 83rd Way, Suite 3, Scottsdale, Arizona 85260, on the 10th day of May 2011, at 10:00 a.m., Mountain Standard Time, and at any adjournment or postponement thereof.

The expense of soliciting proxies, including the cost of preparing, assembling and mailing this proxy material to shareholders, will be borne by the Company. It is anticipated that solicitations of proxies for the Meeting will be made only by use of the mails; however, the Company may use the services of its Directors, Officers and employees to solicit proxies personally or by telephone without additional salary or compensation to them. Brokerage houses, custodians, nominees and fiduciaries will be requested to forward the proxy soliciting materials to the beneficial owners of the Company's shares held of record by such persons, and the Company will reimburse such persons for their reasonable out-of-pocket expenses incurred by them in that connection.

Shares not voting as a result of a proxy not marked or marked to abstain will be counted as part of total shares voting in order to determine whether or not a quorum has been achieved at the Meeting. Shares registered in the name of a broker-dealer or similar institution for beneficial owners to whom the broker-dealer distributed notice of the Annual Meeting and proxy information and which such beneficial owners have not returned proxies or otherwise instructed the broker-dealer as to voting of their shares, will be counted as part of the total shares voting in order to determine whether or not a quorum has been achieved at the Meeting.

All shares represented by valid proxies will be voted in accordance therewith at the Meeting unless such proxies have previously been revoked. Proxies may be revoked at any time prior to the time they are voted by: (a) delivering to the Secretary of the Company a written instrument of revocation bearing a date later than the date of the proxy; or (b) duly executing and delivering to the Secretary a subsequent proxy relating to the same shares; or (c) attending the meeting and voting your proxy in person (although attendance at the Meeting will not in and of itself constitute revocation of a proxy).

The Company's Annual Report to Shareholders for the fiscal year ended June 30, 2010, is being mailed simultaneously to the Company's shareholders and includes a copy of Form 10-K, which contitutes part of this proxy. All other information included in the Annual Report does not constitute part of these proxy soliciting materials.

PROPOSALS TO BE ACTED UPON AT THE MEETING

Proposal No. 1 ELECTION OF DIRECTORS

Proposal No. 2 RATIFICATION OF RE-APPOINTMENT OF THE INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Proposal No. 3 APPROVAL OF THE ALANCO 2011 STOCK INCENTIVE PLAN

Proposal No. 4 APPROVAL TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY BY SELLING SUBSTANTIALLY ALL THE ASSETS OF STARTRAK

SYSTEMS, LLC, A WHOLLY OWNED SUBSIDIARY OF THE COMPANY, TO ORBCOMM INC. PURSUANT TO TERMS AND CONDITIONS OF THE ASSET

PURCHASE AGREEMENT AMONG THE COMPANY, STARTRAK AND ORBCOMM.

SUMMARY OF TERMS OF PROPOSAL No. 4

The summary that follows highlights selected information contained elsewhere in this Proxy Statement. It may not contain all of the information that is important to you. To fully understand the sale of substantially all of the Company’s assets, and for a more complete description of the Asset Sale and related matters, you should carefully read this entire Proxy Statement, including the Asset Purchase Agreement and other documents, included in the appendices and incorporated by reference.

Contact Information (see page 23)

Description of the Businesses of the Parties (see page 24)

·	Alanco Technologies, Inc. was incorporated in 1969 under the laws of the State of Arizona. Unless otherwise noted, the “Company” or “Alanco” refers to Alanco Technologies, Inc.

·	Alanco provides wireless monitoring and asset management solutions through its StarTrak Systems, LLC subsidiary.

StarTrak Systems, LLC , or “StarTrak,” located in Morris Plains, NJ, is the dominant provider of tracking, monitoring and control services to the refrigerated or “Reefer” segment of the transportation marketplace, enabling customers to increase efficiency and reduce costs of the refrigerated supply chain. As an innovator and leader in tracking, monitoring and controlling refrigerated trucks, trailers, containers and container gensets, StarTrak’s ReeferTrak® RT6000 and GenTrak™ RT6000 deliver unmatched capabilities for wireless active control of the reefer environment using satellite and/or cellular wireless communication networks.

ORBCOMM Inc. (“ORBCOMM”), a Delaware corporation, is a satellite-based data communications company that operates a two-way global wireless data messaging system optimized for narrowband data communication. ORBCOMM also provides terrestrial-based cellular communication services through reseller agreements with major cellular wireless providers. ORBCOMM provides services through a constellation of 27 owned and operated low-Earth orbit satellites and accompanying ground infrastructure through which small, low power, fixed or mobile satellite subscriber communicators and cellular wireless subscriber identity modules, or SIMS, connected to the cellular wireless provider’s network, that can be connected to other public or private networks, including the Internet (collectively, the “ORBCOMM System”).

Past Contacts and Negotiations (see page __)

Reason for Sale (see page __)

Terms of the Transaction (see Page __)

·	Assets to be Sold. Substantially all of the assets of StarTrak will be sold to ORBCOMM, or its wholly owned subsidiary formed specifically to receive the assets, STK Acquisition, LLC.

·	Purchase Price. Total consideration payable to Alanco by ORBCOMM at the closing for substantially all of the net assets of StarTrak of approximately $18.2 million is composed of:

1.	Approximately $2 million in cash less any amount due under a term loan agreement;

2.	ORBCOMM acquisition and discharge of $3.9 million in principal under the Company’s term loan agreement;

3.	Delivery of $2.25 million face amount in Alanco Series E Convertible Preferred Stock held by ORBCOMM;

4.	Delivery of approximately 1.2 million shares of Alanco Class A Common Stock valued at approximately $1.59 million. The valuation was based upon the closing market price at date of signing of the definitive Asset Purchase Agreement;

5.	Delivery of approximately 2.245 million shares of ORBCOMM common stock valued at approximately $6.74 million determined by multiplying the number of shares at market value upon execution of the definitive Asset Purchase Agreement; and

6.	The issuance and delivery to Alanco of approximately $1.8 million in face value of perpetual convertible preferred stock of ORBCOMM.

In addition to the approximate $18.2 million purchase price, the consideration may also include up to approximately $1.2 million in additional payments of cash or ORBCOMM common stock, at ORBCOMM’s option, contingent on StarTrak’s calendar year 2011 revenue milestones. The Agreement also provides for a working capital adjustment based upon the change in working capital (as defined) of StarTrak from November 30, 2010 through the Effective Date of the closing that is not considered in the $18.2 million of total consideration.

Closing (see Page __)

The closing of the transaction is conditioned upon normal occurrence for similar transactions, such as the accuracy of the parties’ representations and warranties at closing, obtaining necessary third-party consents, and lack of injunctions or similar restraints, as well as the simultaneous closing of related third-party agreements including (i) an agreement whereby ORBCOMM acquires the lender’s interest in the $3,900,000 Loan Agreement between Alanco and StarTrak as borrower, and the Anderson Family Trust, as lender, (ii) an agreement pursuant to which ORBCOMM acquires all of the Alanco common stock owned by the Anderson Family Trust and affiliates, and (iii) an agreement pursuant to which ORBCOMM acquires all of the Alanco common stock owned by Timothy Slifkin and Thomas Robinson.

·	The Agreement provides that Alanco’s obligation to close is contingent upon obtaining approval of Alanco’s shareholders of the transactions contemplated by the Agreement.

Material Terms of the Asset Purchase Agreement (see Page __)

·	The definitive Asset Purchase Agreement sets forth the various rights and obligations of the parties to the agreement. In addition, the Asset Purchase Agreement contains customary representations, warranties and covenants of the Company, StarTrak and ORBCOMM.

Shareholder Voting (See Page __)

·	In the event that a majority of the shares eligible to vote approve Proposal No. 4, Alanco intends to complete the transaction as detailed in the Agreement.

Use of Proceeds; Our business after the Sale (see Page __)

·	The Company, and not our stockholders, will receive all of the net proceeds from the Asset Sale. We anticipate using the net proceeds from the Asset Sale in one or more of the following ways:

1.	Repayment of any remaining unpaid interest bearing debt;

2.	Explore potential opportunities for an acquisition or merger transaction with an operating company, or;

3.	A potential distribution of all or a portion of our net assets to shareholders.

Risk Factors (see Page __)

Investing in our securities involves significant risks. Please see the risk factors under the heading “Risk Factors” in our most recent Annual Report on Form 10-K as revised or supplemented by our Quarterly Reports on Form 10-Q filed with the SEC since the filing of our most recent Annual Report on Form 10-K, each of which is on file with the SEC. Before casting your vote with respect to this Proxy Statement, you should carefully consider these risks as well as other information we include or incorporate by reference in this Proxy Statement. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. In addition, because we will receive a substantial number of ORBCOMM shares in exchange for the assets of StarTrak, you should also consider the Risk Factors in ORBCOMM’s most recent Annual Report on Form 10-K, as revised or supplemented by ORBCOMM’s Quarterly Reports on Form 10-Q filed with the SEC since the filing of its most recent Annual Report on Form 10-K, each of which is on file with the SEC and is incorporated by reference in this Proxy Statement.

Recommendation of the Board (see Page __)

·	The Board of Directors recommends that shareholders vote "For” the proposal to sell substantially all of the assets of its wholly owned subsidiary, StarTrak Systems, LLC, to ORBCOMM Inc.

SHARES OUTSTANDING AND VOTING RIGHTS

Effective August 26, 2010, the Company effected a 1:8 reverse stock split. All references to both number of shares and price per share of Class A Common Stock issued and outstanding, options and warrants granted, and common stock equivalent shares are presented herein on a post-split basis.

Voting rights are vested in the holders of the Company’s Common Stock and Preferred Stock. Only shareholders of record at the close of business on March 28, 2011, are entitled to notice of and to vote at the Meeting or any adjournment or postponement thereof. As of March 28, 2011, the Company had 5,534,552 shares of Class A Common Stock issued and outstanding, 116,800 shares of Series B Convertible Preferred Stock issued and outstanding, 82,393 shares of Series D Preferred Stock issued and outstanding, and 725,000 shares of Series E Convertible Preferred Stock issued and outstanding. Each Class A Common share is entitled to one vote, each share of Series B Convertible Preferred stock is entitled to .65 votes (the equivalent number of common shares into which the Series B Convertible Preferred Stock is convertible), each share of Series D Preferred Stock is entitled to 2.5 votes, and each share of Series E Convertible Preferred Stock is entitled to 1.5 votes. If the number of common shares into which the Series B Preferred Stock is convertible and the voting rights of the Series D Preferred Stock and Series E Convertible Preferred Stock are considered, the total shares eligible to vote on the record date are 6,903,954 shares (“Total Voting Rights”), each of which is entitled to one vote on all matters to be voted upon at the Meeting, including the election of Directors. No fractional shares are outstanding. A majority of the Company's outstanding voting stock represented in person or by proxy shall constitute a quorum at the Meeting. The affirmative vote of a majority of the votes cast, providing a quorum is present, is necessary to approve each proposal, except Proposal No. 4 which must receive a majority of the total votes eligible to vote for approval.

Each shareholder present, either in person or by proxy, will have cumulative voting rights with respect to the election of Directors. Under cumulative voting, each shareholder is entitled to as many votes as is equal to the number of voting rights of the Company held by the shareholder on the Record Date multiplied by the number of directors to be elected, and such votes may be cast for any single nominee or divided among two or more nominees. The five nominees receiving the highest number of votes will be elected to the Board of Directors. There is no conditions precedent to the exercise of cumulative voting rights. Unless otherwise instructed in any proxy, the persons named in the form of proxy which accompanies this Proxy Statement (the "Proxy Holders") will vote the proxies received by them for the Company’s five nominees set forth in "Election of Directors" below. If additional persons are nominated for election as directors, the Proxy Holders intend, unless otherwise instructed in any proxy, to vote all proxies received by them in such manner in accordance

with cumulative voting as will assure the election of as many of the Company's nominees as possible, and, in such event, the specific nominees for whom votes will be cast will be determined by the Proxy Holders. If authority to vote for any nominee of the Company is withheld in any proxy, the Proxy Holders intend, unless otherwise instructed in such proxy, to vote the shares represented by such proxy, in their discretion, cumulatively for one or more of the other nominees of the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND OF MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth certain information with respect to each shareholder known by Alanco to be the beneficial owner of more than 5% of the outstanding Alanco Voting Rights as of March 28, 2011. Information regarding the stock ownership of Robert R. Kauffman, Alanco Chairman and Chief Executive Officer and Timothy P. Slifkin, Director and StarTrak Chief Technology Officer, is also shown in the table in the following section, Current Directors and Executive Officers.

Five Percent Owners

		Class A
		Common		Preferred			Exercisable	Total	Total
		Shares	Series	Shares		Total	Stock	Voting	Stock,
		Owned	D and E	Owned		Voting	Options,	Rights	Options &
	Class A	Percent	Preferred	Percent		Rights	Warrants and	and	Warrants
	Common	of	Shares	Of	Total	Owned	Loan	Options	Percent of
	Shares	Class	Owned	Class	Voting	Percent	Conversion	&	Voting
	Owned	(6)	(7)	(7)	Rights (8)	of Class	Rights	Warrants	Rights (8)

ORBCOMM Inc (1)	53,906	0.97%	500,000	68.97%	803,906	11.64%	-	803,906	11.64%
Donald E. Anderson (2)	597,106	10.79%	-	-	597,106	8.65%	773,002	1,370,108	17.85%
Robert R. Kauffman (3)	232,914	4.21%	15,000	2.07%	255,414	3.70%	191,250	446,664	6.30%
Timothy P. Slifkin (4)	290,098	5.24%	13,402	16.27%	323,603	4.69%	50,313	373,916	5.38%
The Rhino Fund, LLP (5)	234,870	4.24%	50,000	60.68%	359,870	5.21%	-	359,870	5.21%

(1)

Per Schedule SC 13D/A filed with the SEC on February 28, 2011, ORBCOMM Inc. is the owner of 500,000 shares of the Company’s Series E Convertible Preferred Stock with voting rights of 750,000 shares and an additional 53,906 shares of Class A Common Stock. The address for ORBCOMM Inc. is 2115 Linwood Avenue, Suite 100, Fort Lee, NJ 07024.

(2)

The number of shares, options and warrants owned includes: The Anderson Family Trust, owner of 394,043 shares of Alanco Class A Common Stock, rights to 729,927 shares of Class A common Stock upon election to convert $1 million of the Line of Credit, at $1.37 per share, provided by the Anderson Family Trust to the Company; Programmed Land, Inc., owner of 202,063 shares of Alanco Class A Common Stock; all of which Mr. Anderson claims beneficial ownership; and 1,000 shares of Alanco Class A Common Stock and 43,075 exercisable options owned by Mr. Anderson. Mr. Anderson’s address is 12000 North 90th Street, #1027, Scottsdale, Arizona 85260.

(3)	The 15,000 shares of Series E Convertible Preferred Stock owned by Mr. Kauffman represent 2.07% of the total Series E Convertible Preferred shares outstanding. The address for Mr. Kauffman is: c/o Alanco Technologies, Inc., 15575 North 83rd Way, Suite 3, Scottsdale, Arizona 85260.

(4)

In addition to the stock options shown above, Timothy P. Slifkin, Chief Technology Officer of StarTrak Systems, LLC, has 8,437 non-vested options with a vesting schedule ranging from July 13, 2011 to July 13, 2013. The 13,402 shares of Series D Preferred Stock beneficially owned by Mr. Slifkin represent 16.27% of the total Series D Preferred shares outstanding. The address for Mr. Slifkin is: c/o StarTrak Systems, LLC, 408 The American Road, Morris Plains, NJ 07950.

(5)

The 50,000 shares of Series D Preferred Stock owned by The Rhino Fund, LLLP, managed by Rhino Capital, Inc., a private capital management company, represent 60.68% of the total Series D Preferred shares outstanding. The address for Rhino Capital, Inc. is 32065 Castle Court, Suite 100, Evergreen, CO 80439.

(6)	The percentages for Class A Common Stock shown are calculated based upon 5,534,552 shares of Class A Common Stock outstanding on March 28, 2011. The percentages for Total Voting Rights are calculated based upon 6,903,954 voting rights on March 28, 2011.

(7)

Preferred Shares include Series D Preferred Stock, each share of which has 2.5 votes in matters submitted to shareholders for a vote. As of March 28, 2011, there are 82,393 shares of Series D Preferred Stock outstanding. Preferred Shares also include Series E Convertible Preferred Stock, each share of which has 1.5 votes in matters submitted to shareholders for a vote. As of March 28, 2011, there are 725,000 shares of Series E Convertible Preferred Stock outstanding. The 5% owners do not own any shares of the Series B Convertible Preferred Stock.

(8)

In calculating the percentage of ownership, option and warrant shares are deemed to be outstanding for the purpose of computing the percentage of voting rights shares owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of voting rights shares owned by any other stockholders.

Current Directors and Executive Officers

The following table sets forth the number of exercisable stock options and the number of shares of the Company's Class A Common Stock and Preferred Stock beneficially owned as of March 28, 2011, by individual directors and executive officers and by all directors and executive officers of the Company as a group.

The number of shares beneficially owned by each director or executive officer is determined under rules of the Securities and Exchange Commission, and the information is not necessarily indicative of the beneficial ownership for any other purpose. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.

Securities of the Registrant Beneficially Owned (1)

								Stock		Total
	Class A		Shares	Series D	Shares		Shares	Options &	Total	Stock,
	Common		Owned	And E	Owned	Total	Owned	Warrants	Voting	Options
	Stock		Percent	Preferred	Percent	Voting	Percent	Exercisable	Rights &	& Warrants
Name of	Shares		of Class	Shares	of Class	Rights	of Class	@ 03/28/11	Options &	Percent of
Beneficial Owner (2)	Owned		(7)	Owned	(7)	Owned	(7)	+ 60 days (8)	Warrants	Class (9)

Robert R. Kauffman (3)	232,914		4.21%	15,000	2.07%	255,414	3.70%	191,250	446,664	6.30%
Director/COB/CEO
John A. Carlson	37,917		0.69%	0	0.00%	37,917	.55%	102,875	140,792	2.01%
Director/EVP/CFO
Harold S. Carpenter	329	(5)	0.01%	0	0.00%	329	0.00%	41,750	42,079	0.61%
Director
James T. Hecker	12,187	(6)	0.22%	0	0.00%	12,187	0.18%	39,000	51,187	0.74%
Director
Timothy P. Slifkin	290,098		5.24%	13,402	16.27%	323,603	4.69%	50,313	373,916	5.38%
Director/CTO StarTrak
Thomas C. LaVoy	19,310		0.35%	10,378	12.60%	45,255	0.66%	37,750	83,005	1.20%
Director
Donald E. Anderson (4)	597,106		10.79%	0	0.00%	597,106	8.65%	773,002	1,370,108	17.85%
Director through 10-4-10
Kevin Dahill	0		0.00%	0	0.00%	0	0.00%	50,000	50,000	0.72%
CEO StarTrak
Thomas A. Robinson	190,919		3.45%	8,613	10.45%	212,452	3.08%	54,063	266,515	3.83%
EVP – StarTrak

Officers and Directors	1,380,780		24.95%	47,393	5.87%	1,484,263	21.50%	1,340,003	2,824,266	34.2%
as a Group (9 individuals)

(1)

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”) and generally indicates voting or investment power with respect to securities. In accordance with SEC rules, shares that may be acquired upon conversion or exercise of stock options, warrants or convertible securities which are currently exercisable or which become exercisable within 60 days are deemed beneficially owned. Except as indicated by footnote, and subject to community property laws where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned.

(2)	COB is Chairman of the Board; CEO is Chief Executive Officer; EVP is Executive Vice President; CFO is Chief Financial Officer and CTO is Chief Technology Officer.

(3)

The 15,000 shares of Series E Convertible Preferred Stock owned by Mr. Kauffman represent 2.07% of the total Series E Convertible Preferred shares outstanding.

(4)

The number of shares, options and warrants owned includes: The Anderson Family Trust, owner of 394,043 shares of Alanco Class A Common Stock, rights to 729,927 shares of Class A common Stock upon election to convert $1 million of the Line of Credit, at $1.37 per share, provided to the Company; Programmed Land, Inc., owner of 202,063 shares of Alanco Class A Common Stock; all of which Mr. Anderson claims beneficial ownership; and 1,000 shares of Alanco Class A Common Stock and 43,075 exercisable options owned by Mr. Anderson.

(5)

Excludes 91,056 shares of Class A Common Stock owned by Heartland Systems Co., a company for which Mr. Carpenter serves as an officer. Mr. Carpenter disclaims beneficial ownership of such shares.

(6)

Excludes 234,870 shares of Class A Common Stock and 50,000 shares of Series D Preferred Stock owned by The Rhino Fund, LLP. The fund is controlled by Rhino Capital Incorporated, for which Mr. Hecker serves as Treasurer and General Counsel. Mr. Hecker disclaims beneficial ownership of such shares.

(7)

The percentages for Class A Common Stock shown are calculated based upon 5,534,552 shares of Class A Common Stock outstanding on March 28, 2011. The percentages for Series D Preferred Stock are calculated based upon 82,393 shares of Series D Preferred Stock outstanding on March 28, 2011, each share of which has 2.5 votes in matters submitted to shareholders for a vote. The percentages for Series E Convertible Preferred Stock are calculated based upon 725,000 shares of Series E Convertible Preferred Stock outstanding on March 28, 2011, each share of which has 1.5 votes in matters submitted to shareholders for a vote. The percentages for Total Voting Rights are calculated based upon 6,903,954 voting rights as of March 28, 2011.

(8)

Represents unexercised stock options and warrants issued to named executive officers and directors. All options and warrants listed that were issued to the executive officers and directors were exercisable in the period indicated. In addition, Timothy Slifkin also holds the following options: 4,687 options exercisable in fiscal year 2012, 2,187 options exercisable in fiscal year 2013, 1,563 options exercisable in fiscal year 2014. Thomas Robinson also holds additional options for 4,687 shares exercisable in fiscal year 2012, 2,187 options exercisable in fiscal year 2013, and 1,563 options exercisable in fiscal year 2014. Kevin Dahill also holds options for 25,000 exercisable in fiscal year 2011 and 25,000 exercisable in fiscal year 2012.

(9)

The number and percentages shown include the voting rights shares actually owned as of March 28, 2011 and the shares of common stock that the identified person or group had a right to acquire within 60 days after March 28, 2011. The percentages shown are calculated based upon 6,903,954 voting rights as of March 28, 2011. In calculating the percentage of ownership, option and warrant shares are deemed to be outstanding for the purpose of computing the percentage of shares owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of shares owned by any other stockholders.

Meetings and Committees of the Board of Directors

The Board of Directors has a Compensation/Administration Committee, which was formed in 1995 and is comprised of Messrs. Harold S. Carpenter and James T. Hecker, who are independent directors of the Company. The Compensation/Administration Committee recommends to the Board the compensation of executive officers and serves as the Administrative Committee for the Company's Stock Option Plans. The Compensation/Administration Committee met three times during the fiscal year ended June 30, 2010.

The Board of Directors also has an Audit/Corporate Governance Committee. The Audit Committee was originally formed in 1995. In September 2004, the Board of Directors approved a name change for the committee to Audit/Corporate Governance Committee to more accurately reflect the additional duties and responsibilities of the committee as required by the Sarbanes-Oxley Act of 2002. The Audit/Corporate Governance Committee, comprised of Messrs. Harold S. Carpenter, James T. Hecker, and Thomas C. LaVoy, all of whom are independent non-employee directors of the Company who have significant business experience and are deemed to be financially knowledgeable, serves as a liaison between the Board and the Company's independent auditor. The Audit/Corporate Governance Committee provides general oversight of the Company’s financial reporting and disclosure practices, system of internal controls, and the Company’s processes for monitoring compliance with Company policies. The Audit/Corporate Governance Committee reviews with the Company’s independent auditors the scope of the audit for the year, the results of the audit when completed, and the independent auditor’s fee for services performed. The Audit/Corporate Governance Committee also recommends independent auditors to the Board of Directors and reviews with management various matters related to its internal accounting controls. The Audit/Corporate Governance Committee is comprised of independent members as defined under the National Association of Securities Dealers listing standards. In addition to conference calls with audit committee members and the Company’s independent auditors, the Audit/Corporate Governance Committee met three times during the fiscal year ended June 30, 2010.

The final Board committee is the Nominating/Independent Directors Committee, which is comprised of Messrs. Harold S. Carpenter, James T. Hecker and Thomas C. LaVoy, all members of the Company’s Board of Directors who have been determined by the Board to meet the qualification as “independent” directors as set forth in Rule 10A-3 of the Exchange Act. Mr. Donald Anderson was also on the Nominating/Independent Directors Committee until his resignation on October 4, 2010. Per Board resolution, the Nominating/Independent Directors Committee approves all nominations for membership to the Company’s Board of Directors. In addition, the Nominating/Independent Directors Committee meets in regularly scheduled executive sessions at which only the independent directors are present.

All meetings held by the Board of Directors’ committees were attended by each of the directors serving on such committees.

The Company's Board of Directors held three meetings during the fiscal year ended June 30, 2010, at which time all Directors were present except for Don Anderson, who was absent from one of the three meetings. All current members of the Board of Directors’ committees are expected to be nominated for re-election at a meeting of the Board of Directors following the annual meeting.

Compliance with Section 16(a) of Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Officers and Directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”). Officers, Directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of the copies of such forms furnished to the Company, or written representations that no Form 5’s were required, the Company believes that as of the date of this filing, all Section 16(a) filing requirements applicable to its officers, Directors and greater than 10% beneficial owners were satisfied.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation paid or accrued by the Company for the services rendered during the fiscal years ended June 30, 2010, 2009 and 2008 to the Company's Chief Executive Officer, Chief Financial Officer, President of the Company’s subsidiary, Alanco/TSI PRISM, Inc. (ATSI), StarTrak Systems, LLC (STS), Chief Technology Office of STS and Executive Vice President of the Company’s subsidiary, STS, whose salaries and bonus exceeded $100,000 during the last fiscal year (collectively, the "Named Executive Officers"). No stock appreciation rights ("SARs") have been granted by the Company to any of the Named Executive Officers during the last three fiscal years.

			Annual Compensation			Long-Term Compensation
Name and					Other (1)	Securities (# shares)
Principal			Annual		Annual	Underlying Options
Position			Salary	Bonus	Compensation $	Granted during FY

Robert R. Kauffman, C.E.O. FY 2010			$185,229	None	$17,400	25,000
	FY 2009		233,750	None	17,400	31,250
	FY 2008		247,500	None	17,400	25,000
John A. Carlson, C.F.O.
	FY 2010		165,104	None	10,051	15,625
	FY 2009		208,250	None	10,483	15,000
	FY 2008		220,500	None	10,405	12,500
Greg M. Oester, President, ATSI (4)
	FY 2010		72,328	None	None	6,250
	FY 2009		135,831	None	None	6,250
	FY 2008		139,050	None	None	6,250
Timothy P. Slifkin, Chief Technology Officer, STS
	FY 2010		140,000	None	1,400	6,250
	FY 2009	(2)	151,667	None	1,517	3,125
	FY 2008		333,333	None	3,081	12,500
Thomas A. Robinson, Exec V.P., STS
	FY 2010		140,000	None	1,400	6,250
	FY 2009	(3)	151,667	None	1,517	3,125
	FY 2008		343,333	None	3,104	12,500

(1)	Represents supplemental executive benefit reimbursement for the year and Company matching for Alanco's 401(K) Profit Sharing Plan.
(2)	Includes $156,665 compensation accrued in prior years but paid during fiscal 2008.
(3)	Includes $166,666 compensation accrued in prior years but paid during fiscal 2008.
(4)	Mr. Oester's fiscal year 2010 compensation is for part of the year as he terminated his position effective March 31, 2010.

Option Grants in Last Fiscal Year

The following table sets forth each grant of stock options made during the fiscal year ended June 30, 2010, to each of the Named Executive Officers and/or Directors and to all other employees as a group. No stock appreciation rights ("SARs") have been granted by the Company.

INDIVIDUAL GRANTS

Name	Number of Securities Underlying Options Granted	% of Total Options Granted	Exercise Price ($/Sh)	Grant Date	Expiration Date
Robert Kauffman	25,000	8.27%	$4.00	7/13/2009	7/13/2014
John Carlson	15,625	5.17%	$4.00	7/13/2009	7/13/2014
Harold Carpenter	9,375	3.10%	$4.00	7/13/2009	7/13/2014
Donald Anderson	9,375	3.10%	$4.00	7/13/2009	7/13/2014
Thomas LaVoy	9,375	3.10%	$4.00	7/13/2009	7/13/2014
James Hecker	9,375	3.10%	$4.00	7/13/2009	7/13/2014
Timothy Slifkin	6,250	2.07%	$4.00	7/13/2009	7/13/2014
Greg Oester	6,250	2.07%	$4.00	7/13/2009	7/13/2014
Tom Robinson	6,250	2.07%	$4.00	7/13/2009	7/13/2014
Other Employees	205,625	67.98%	$2.80 - $4.00	7/13/2009- 4/20/2010	7/13/2014- 4/14/2015
Total	302,500	100.00%

All options are granted at a price not less than “grant-date market.” During the fiscal year 413,500 previously granted stock options expired or were cancelled.

Aggregated Options and Warrants - Exercised in Last Fiscal Year and Values at Fiscal Year End

The following table sets forth the number of exercised and unexercised options and warrants held by each of the Named Executive Officers and/or Directors at June 30, 2010, and the value of the unexercised, in-the-money options at June 30, 2010.

Name	Shares Acquired On Exercise During 2010 Fiscal Year	Value Realized ($) (1)	Unexercised Options & Warrants at Fiscal Year End (Shares) (2)	Value of Unexercised In-The-Money Options & Warrants at FYE ($) (3)

Robert Kauffman	0	$0	193,250	$0
John Carlson	0	0	94,375	0
Harold Carpenter	0	0	61,925	0
James Hecker	0	0	39,800	0
Thomas LaVoy	0	0	39,550	0
Donald Anderson	0	0	191,430	0
Timothy Slifkin	0	0	46,250	0
Thomas Robinson	0	0	50,000	0

(1)	Calculated as the difference between closing price on the date exercised and the exercise price, multiplied by the number of options exercised.

(2)	Represents the number of securities underlying unexercised options and warrants that were exercisable at 2010 Fiscal Year End.

(3)	Calculated as the difference between the closing price of the Company’s Common Stock on June 30, 2010, and the exercise price for those options exercisable on June 30, 2010, with an exercise price less than the closing price, multiplied by the number of applicable options.

Options Grants Subsequent to Fiscal Year End

No directors received stock option grants subsequent to year end. The only named executive officer to receive stock option grants subsequent to year end was Kevin Dahill who received stock option grants for a total of 100,000 shares at a weighted average exercise price of $2.15 per share. In addition, subsequent to year end, there were stock options for 62,500 shares granted to other employees at a weighted average option price $1.50.

Options Repriced Subsequent to Fiscal Year End

The following table sets forth information regarding employee stock options repriced on September 16, 2010.

	Number of	Option
	Underlying	Price
	Securities	Range	New
	Options	Before	Option
Name	Repriced	Repricing	Price
Robert R. Kauffman	166,750	$4.00-$9.60	$1.50
John A. Carlson	90,625	$4.00-$9.60	$1.50
Donald E. Anderson	43,075	$4.00-$8.00	$1.50
Harold S. Carpenter	42,550	$4.00-$9.60	$1.50
James T. Hecker	38,550	$4.00-$9.60	$1.50
Thomas C. LaVoy	38,550	$4.00-$9.60	$1.50
Timothy P. Slifkin	58,750	$4.00-$8.00	$1.50
Thomas A. Robinson	58,750	$4.00-$8.00	$1.50
Other Employees	328,473	$4.00-$8.00	$1.50
Total	866,073

Employment Agreements and Executive Compensation

The Executive Officers are at-will employees without employment agreements except for Kevin Dahill who has an employment contract through September 30, 2011, subject to one-year extensions upon mutual consent thereto, as President/CEO of StarTrak at a salary of $190,000 per year plus an incentive bonus based upon the operating results of StarTrak.

Compensation of Directors

During fiscal year 2010, non-employee Directors were compensated for their services in cash ($750 per meeting per day up to a maximum of $1,500 per meeting) and through the grant of options to acquire shares of Class A Common Stock as provided by the 1996, 1998, 1999, 2000, 2002, 2004, 2005, and 2006 Directors and Officers Stock Option Plans (the “D&O Plans”) which are described below. All Directors are entitled to receive reimbursement for all out-of-pocket expenses incurred for attendance at Board of Directors meetings.

The 1996 Directors and Officers Stock Option Plan was approved by the Board of Directors on September 9, 1996. Shareholders approved the 1998, 1999, 2000, 2002, 2004, 2005, and 2006 Directors and Officers Stock Option Plans on November 6, 1998, November 5, 1999, November 10, 2000, November 22, 2002, November 19, 2004, January 20, 2006, and January 30, 2007, respectively. The purpose of the 1996, 1998, 1999, 2000, 2002, 2004, 2005, and 2006 D&O Plans is to advance the business and development of the Company and its shareholders by affording to the Directors and Officers of the Company the opportunity to acquire a proprietary interest in the Company by the grant of Options to acquire shares of the Company’s common stock. All Directors and Executive Officers of the Company are eligible to participate in the 1996, 1998, 1999, 2000, 2002, 2004, 2005, and 2006 Plans. Newly appointed Directors receive options to purchase shares of common stock at fair market value. Upon each subsequent anniversary of the election to the Board of Directors, each non-employee Director may receive an additional option to purchase shares of common stock at fair market value.

Transactions with Management

Entities and a trust controlled by Mr. Donald Anderson, a past member of the Board of Directors, a more than 5% owner of the Company and trustee and beneficiary of the Anderson Family Trust, were paid interest during fiscal year 2010 in the amount of $457,900 under the Line of Credit Agreement and a Note payable that had a maximum outstanding balance of $5.7 million.

See Note 7, 10 and 16 to the consolidated financials in our Form 10-K for fiscal year ended June 30, 2010, for additional related party transactions and discussion.

AUDIT/CORPORATE GOVERNANCE COMMITTEE REPORT (1)

The Audit/Corporate Governance Committee of the Board of Directors is currently comprised of three independent directors, and operates under a written charter adopted by the Board. The Audit/Corporate Governance Committee Charter was included as Exhibit A in the Company’s Definitive Proxy Statement filed with the SEC on October 18, 2004. The members of the Audit/Corporate Governance Committee are Harold S. Carpenter, a CEO with over 30 years senior management experience, James T. Hecker, an attorney and CPA, and Thomas C. LaVoy, a CPA. All three individuals are experienced in reading and understanding financial statements, and, in fact, are deemed to be financial experts as defined by audit committee requirements.

The Audit/Corporate Governance Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor engaged for the purpose of preparing an audit report or performing other audit, review or attest services for the Company. The independent auditor reports directly to the Audit/Corporate Governance Committee. The Audit/Corporate Governance Committee has established “whistleblower” procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

Authority to engage independent counsel and other advisors has been given to the Audit/Corporate Governance Committee as it determines is necessary to carry out its duties. The Company provides appropriate funding for the Audit/Corporate Governance Committee to compensate the independent auditors and any lawyers and advisors it employs and to fund ordinary administrative expenses of the Audit/Corporate Governance Committee that are necessary in carrying out its duties.

The Audit/Corporate Governance Committee provides general oversight of the Company’s financial reporting and disclosure practices, system of internal controls, and the Company’s processes for monitoring compliance by the Company with Company policies. The Audit/Corporate Governance Committee reviews with the Company’s registered public accountants the scope of the audit for the year, the results of the audit when completed, and the registered independent public accountant’s fee for services performed. The Audit/Corporate Governance Committee also recommends independent registered public accountants to the Board of Directors and reviews with management various matters related to its internal accounting controls. During the last fiscal year, there were three meetings of the Audit/Corporate Governance Committee.

Management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The Audit/Corporate Governance Committee is responsible for overseeing and monitoring the quality of the Company’s accounting and auditing practices.

The members of the Audit/Corporate Governance Committee are not professionally engaged in the practice of auditing or accounting and may not be experts in the fields of accounting or auditing, or in determining auditor independence. Members of the Audit/Corporate Governance Committee rely, without independent verification, on the information provided to them and on the representations made by management and the independent registered public accounting firm. Accordingly, the Audit/Corporate Governance Committee's oversight does not provide an independent basis to determine that management has maintained procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit/Corporate Governance Committee's considerations and discussions referred to above do not assure that the audit of the Company's financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board (United States), that the financial statements are presented in accordance with accounting principles generally accepted in the United States of America or that the Company's independent registered public accounting firm is in fact "independent."

Review of Audited Financial Statements

In this context, the Audit/Corporate Governance Committee reviewed and discussed the Company’s audited financial statements with management and with the Company’s independent auditors. Management represented to the Audit/Corporate Governance Committee that the Company’s consolidated financial statements were prepared in accordance with

accounting principles generally accepted in the United States of America. Discussions about the Company’s audited financial statements included the auditor’s judgments about the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in its financial statements. The Audit/Corporate Governance Committee also discussed with the auditors the matters required by Statement on Auditing Standards, (“SAS”) No. 61 “Communication with Audit Committees,” as amended and as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Company’s auditors provided to the Committee written disclosures required by the Independence Standards Board Standard No. 1 “Independence Discussion with Audit Committee.” The Audit/Corporate Governance Committee discussed with the independent auditors their independence from the Company, and considered the compatibility of non-audit services with the auditor’s independence.

Audit Committee Pre-Approval Policies and Procedures

The fiscal year 2009 and 2010 audit services provided by Semple, Marchal & Cooper, LLP were approved by our Audit/Corporate Governance Committee. The Audit/Corporate Governance Committee implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, the Audit/Corporate Governance Committee pre-approves both the type of services to be provided by our independent auditors and the estimated fees related to these services. During the approval process, the Audit/Corporate Governance Committee considers the impact of the types of services and related fees on the independence of the auditor. These services and fees must be deemed compatible with the maintenance of the auditor’s independence, in compliance with the SEC rules and regulations. Throughout the year, the Audit/Corporate Governance Committee and, if necessary, the Board of Directors, reviews revisions to the estimates of audit and non-audit fees initially approved.

Recommendation

Based on the Audit/Corporate Governance Committee’s discussion with management and the independent auditors, and the Audit/Corporate Governance Committee’s review of the representations of management and the report of the independent auditors to the Audit/Corporate Governance Committee, the Audit/Corporate Governance Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2010, filed with the Securities and Exchange Commission.

AUDIT/CORPORATE GOVERNANCE COMMITTEE

James T. Hecker

Harold S. Carpenter

Thomas C. LaVoy

_______________________________

(1) The material in this report is not “soliciting material,” is not deemed filed with the commission and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Proposal No. 1 ELECTION OF DIRECTORS

The Articles of Incorporation presently provide for a Board of Directors of not more than nine members. The number of Directors of the Company has been fixed at five by the Company's Board of Directors. The Company's Board of Directors recommends the election of the five nominees listed below to hold office until the next Annual Meeting of Shareholders or until their successors are elected and qualified or until their earlier death, resignation or removal. The persons named as "proxies" in the enclosed form of Proxy, who have been designated by Management, intend to vote for the five nominees for election as Directors unless otherwise instructed in such proxy. If at the time of the Meeting, any of the nominees named below should be unable to serve, which event is not expected to occur, the discretionary authority provided in the Proxy will be exercised to cumulatively vote for the remaining nominees, or for a substitute nominee or nominees, if any, as shall be designated by the Board of Directors.

The Board recommends that the shareholders vote “FOR” Proposal 1 to elect Harold S. Carpenter, James T. Hecker, Robert R. Kauffman, Thomas C. LaVoy and John A. Carlson as directors for a one-year term expiring at the Fiscal 2011 Annual Meeting of Shareholders and until their successors have been duly elected and qualified.

Nominees

All nominees for Director have been approved by the Company’s Nominating/Independent Directors Committee. The following table sets forth the name and age of each nominee for Director, indicating all positions and offices with the Company presently held by him, and the period during which he has served as such:

Name	Age	Position	Year First Director

Harold S. Carpenter	76	Director	1995
James T. Hecker	53	Director	1997
Robert R. Kauffman	70	Director/C.O.B./C.E.O.	1998
Thomas C. LaVoy	50	Director	1998
John A. Carlson	64	Director/E.V.P./C.F.O.	1999

Business Experience of Nominees

Robert R. Kauffman: Mr. Kauffman was appointed as Chief Executive Officer and Chairman of the Board effective July 1, 1998. Mr. Kauffman was formerly President and Chief Executive Officer of Nasdaq-listed Photocomm, Inc., from 1988 until 1997 (since renamed Kyocera Solar, Inc.). Photocomm was the nation's largest publicly owned manufacturer and marketer of wireless solar electric power systems with annual revenues in excess of $35 million. Prior to Photocomm, Mr. Kauffman was a senior executive of the Atlantic Richfield Company (ARCO) whose varied responsibilities included Senior Vice President of ARCO Solar, Inc., President of ARCO Plastics Company and Vice President of ARCO Chemical Company. Mr. Kauffman earned an M.B.A. in Finance at the Wharton School of the University of Pennsylvania, and holds a B.S. in Chemical Engineering from Lafayette College, Easton, Pennsylvania.

John A. Carlson: Mr. Carlson, Executive Vice President and Chief Financial Officer of Alanco Technologies, Inc., joined the Company in September 1998 as Senior Vice President/Chief Financial Officer. Mr. Carlson started his career with Price Waterhouse & Co. in Chicago, Illinois. He has over twenty-five years of public and private financial and operational management experience, including over twelve years as Chief Financial Officer of a Fortune 1000 printing and publishing company. Mr. Carlson earned his Bachelor of Science degree in Business Administration at the University of South Dakota, and is a Certified Public Accountant.

Harold S. Carpenter: Mr. Carpenter is the former President of Superiorgas Co., Des Moines, Iowa, which is engaged in the business of trading and brokering bulk refined petroleum products with gross sales of approximately $500 million per year. He is also the General Partner of Superiorgas L.P., an investment company affiliated with Superiorgas Co. Mr. Carpenter founded these companies in 1984 and 1980, respectively. Mr. Carpenter is also the President of Carpenter Investment Company, Des Moines, Iowa, which is a real estate investment company holding properties primarily in central Iowa. From 1970 until 1994, Mr. Carpenter was the Chairman of the George A. Rolfes Company of Boone, Iowa, which manufactured air pollution control equipment. Mr. Carpenter graduated from the University of Iowa in 1958 with a Bachelor of Science and Commerce degree.

James T. Hecker: Mr. Hecker is both an Attorney and a Certified Public Accountant. Since 1987 Mr. Hecker has been Vice President, Treasurer and General Counsel of Rhino Capital Incorporated, Evergreen, Colorado, a private capital management company. From 1984 to 1987, Mr. Hecker was the Controller of Northern Pump Company, Minneapolis, Minnesota, a multi-state operating oil and gas company with more than 300 properties, with responsibility of all accounting and reporting functions. Mr. Hecker received a J.D. degree from the University of Denver in 1992, and a B.B.A. degree in Accounting and International Finance from the University of Wisconsin in 1979.

Thomas C. LaVoy: Thomas C. LaVoy has served as Chief Financial Officer of SuperShuttle International, Inc., since July 1997 and as Secretary since March 1998. From September 1987 to February 1997, Mr. LaVoy served as Chief Financial Officer of Nasdaq-listed Photocomm, Inc. Mr. LaVoy was a Certified Public Accountant with the firm of KPMG Peat Marwick from 1980 to 1983. Mr. LaVoy has a Bachelor of Science degree in Accounting from St. Cloud University, Minnesota, and is a Certified Public Accountant.

Proposal No. 2 RATIFICATION OF RE-APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has re-appointed the firm of Semple, Marchal & Cooper, LLP to serve as our independent registered public accounting firm for the fiscal year ending June 30, 2011, and has directed that such re-appointment be submitted to our shareholders for ratification at the Annual Meeting. Our organizational documents do not require that our shareholders ratify the selection of our independent registered public accounting firm. If our shareholders do not ratify the selection, the Audit Committee will reconsider whether to retain Semple, Marchal & Cooper, LLP, but still may retain it nonetheless. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in our best interests.

Representatives of Semple, Marchal & Cooper, LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so. They also will be available to respond to appropriate questions from shareholders.

Audit and Non-Audit Fees

Audit Fees

The aggregate fees billed by Semple, Marchal & Cooper, LLP for professional services rendered for the audit of the Company’s annual financial statements and review of the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, for the fiscal years ended June 30, 2010 and 2009 were approximately $153,700 and $200,000, respectively.

Audit Related Fees

In each of the last two fiscal years, there were no fees billed for assurance related services rendered by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the “Audit Fees” paragraph above.

Tax Fees

Semple, Marchal & Cooper, LLP prepared the Company’s tax returns for state and federal purposes. Tax return preparation fees for the fiscal years ended June 30, 2010 and 2009, were approximately $15,500 and $15,000 respectively.

All Other Fees

Other than the services described above under “Audit Fees”, during the fiscal year ended June 30, 2010, Semple, Marchal & Cooper, LLP also provided services related to filing a Form S-3 and related amendments with the Securities and Exchange Commission and billed related fees of approximately $1,600. No such services were provided during the fiscal year ended June 30, 2009.

As part of its responsibility for oversight of the independent registered public accountants, the Audit Committee has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Audit Committee. The Audit Committee has delegated authority to its Chairman to pre-approve additional non-audit services (provided such services are not prohibited by applicable law) up to a pre-established aggregate dollar limit. All services pre-approved by the Chairman of the Audit Committee must be presented at the next Audit Committee meeting for review and ratification. All of the services provided by Semple, Marchal & Cooper LLP described above were approved by our Audit Committee.

The Company's principal accountant, Semple, Marchal & Cooper LLP, did not engage any other persons or firms other than the principal accountant's full-time, permanent employees, except for physical inventory observations performed by employees of qualified Independent Certified Public Account firms, conducted at locations in New Jersey as part of the annual audit. Semple, Marchal & Cooper LLP, Phoenix, Arizona, was appointed as the Company's Independent Auditor for the fiscal years ended June 30, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010.

The Board unanimously recommends that the shareholders vote "FOR" Proposal 2 to ratify the re-appointment of Semple, Marchal & Cooper, LLP as the independent registered public accounting firm of the Company.

Proposal No. 3 APPROVAL OF THE ALANCO 2011 STOCK INCENTIVE PLAN

The Company's Board of Directors approved submitting the Alanco Technologies, Inc. 2011 Stock Incentive Plan (the “2011 Plan”) to the shareholders for approval. The Board of Directors recommends approval of the 2011 Plan. On the effective date of the 2011 Plan, 750,000 new shares of common stock will be reserved for issuance under the 2011 Plan. Shares issued under the 2011 Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.

The following description of the 2011 Plan is a summary and is not intended to be a complete description of the 2011 Plan. Please read the 2011 Plan in Appendix E of this Proxy Statement for more detailed information.

Description of 2011 Plan

Purpose

The purpose of the 2011 Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and Related Companies by providing them with the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company’s stockholders.

Administration

The 2011 Plan will be administered by our Board of Directors or the Compensation Committee of our Board of Directors, or any other committee appointed by the Board to administer the 2011 Plan. The Compensation Committee has the full and exclusive discretionary authority to construe and interpret the 2011 Plan and the rights granted under it and to establish rules and regulations for the administration of the 2011 Plan. The Compensation Committee may delegate to one or more of our officers, within limits prescribed by the Board of Directors or the Compensation Committee, the right to grant awards with respect to participants who are not officers or directors.

Eligibility

Awards may be granted under the 2011 Plan to employees, officers, directors, consultants, agents, advisors and independent contractors of the Company or any Related Company.

Certain Executive Officers of the Company and its wholly owned subsidiary, StarTrak Systems, LLC, have agreed to defer a portion of their salaries to reduce the Company’s cash requirements and have provided the Company the option of paying the deferred amounts in cash or the Company’s common stock upon shareholder approval of the 2011 Plan. If the Company elects to pay the deferred amounts in common shares, the common shares will be valued at the average five day closing price prior to the date the 2011 Plan is approved by the Company’s shareholders. The following table represents the potential shares that could be issued in payment of deferred compensation to the individuals indicated through March 31, 2011:


Name and Position (1)	Deferred Salary Per Month	Total Deferred March 31, 2011 (2)

Robert R. Kauffman	$ 7,500	$ 67,500
Director/COB/CEO
John A. Carlson	6,500	58,500
Director/EVP/CFO
Kevin Dahill	0	0
CEO StarTrak
Thomas A. Robinson	5,000	45,000
EVP StarTrak
Timothy P. Slifkin	5,000	45,000
Director/CTO StarTrak
Executive Group	24,000	216,000
Non-Executive Director Group	0	0
Non-Executive Officer Employees	1,575	14,175
Total	$25,575	$230,175

(1) COB is Chairman of the Board; CEO is Chief Executive Officer; EVP is Executive Vice President; CFO is Chief Financial Officer and CTO is Chief Technology Officer.

(2) Calculated at the monthly deferred rate for the nine month period from July 1, 2010 to March 31, 2011.

The Company has the option of paying the deferred amounts in cash or, upon shareholder approval of the 2011 Plan, common stock of the Company valued at the average five day closing market price immediately prior to approval of the 2011 Plan by the Company’s shareholders. Other than the information noted in the above table, the Company currently has no other plans, proposals, or arrangements to grant specific awards under the 2011 Plan.

Types of Awards

The 2011 Plan permits the granting of any or all of the following types of awards: (1) incentive and nonqualified stock options; (2) stock awards, restricted stock and stock units; (3) performance shares and performance units conditioned on meeting performance criteria; and (4) other stock or cash-based awards.

Stock Options. Stock options entitle the holder to purchase a specified number of shares of our common stock at a specified price, which is called the exercise price, subject to the terms and conditions of the option grant. The exercise price of stock options under the 2011 Plan must be at least 100% of the fair market value of our common stock on the grant date. Alternatively, if the Compensation Committee so determines in its sole discretion, the Compensation Committee may establish an exercise price equal to the average of the fair market value of our common stock over a period of up to 30 trading days. The Compensation Committee will fix the term of each option. Each option will be exercisable at such time or times as determined by the Compensation Committee. Options may be exercised, in whole or in part, by payment in full of the purchase price either in cash, delivery of shares of common stock (including shares covered by the option being exercised) or delivery of other consideration, or by any combination of cash, stock and other consideration as may be determined by the Compensation Committee. Options may also be exercised by means of a broker-assisted cashless exercise.

After termination of service, a participant will be able to exercise the vested portion of his or her option for the period of time stated in the option agreement.

Stock Awards, Restricted Stock and Stock Units. Awards of shares of stock, or awards designated in units of stock, may be granted under the 2011 Plan. These awards may be made subject to forfeiture restrictions at the Compensation Committee’s discretion, and the Compensation Committee may waive any such restrictions at any time in its sole discretion. Until the lapse of any such restrictions, recipients may not dispose of their restricted stock.

Performance Awards. Performance awards may be in the form of performance shares, which are units valued by reference to shares of stock, or performance units, which are units valued by reference to property other than stock. Performance shares or performance units may be payable upon the attainment of performance criteria and other terms and conditions as established by the Compensation Committee, and the amount of any payment may be adjusted on the basis of such further consideration as the Compensation Committee determines. Performance awards may be paid entirely in cash, stock or other property, or in any combination of those, at the discretion of the Compensation Committee.

Other Stock- or Cash-Based Awards. The Compensation Committee is also authorized to grant to participants under the 2011 Plan, either alone or in addition to other awards granted under the 2011 Plan, incentives payable in cash or in shares of common stock subject to terms and conditions determined by the Compensation Committee.

Shares Subject to the 2011 Plan

Number of Shares Reserved for Issuance. The 2011 Plan authorizes the issuance of up to 750,000 shares of common stock. Shares of common stock covered by an award granted under the 2011 Plan will not be counted as used unless and until they are actually issued and delivered to a participant. Shares relating to awards granted under the 2011 Plan that are forfeited, settled for cash or otherwise terminated, and shares withheld by or tendered in connection with the exercise of an option or other award granted under the 2011 Plan or in connection with the satisfaction of tax withholding obligations relating to awards or exercises of options or other awards, will become available for issuance under the 2011 Plan. Awards made or adjusted to assume or convert awards in connection with acquisition transactions will not reduce the number of shares authorized for issuance under the 2011 Plan. The shares of stock deliverable under the 2011 Plan will consist of authorized and unissued shares. The Compensation Committee may adjust the aggregate number of shares or the number of shares subject to awards under the plan in the event of a change affecting shares of our common stock, such as stock dividends, recapitalization, reorganization or mergers.

Nonassignability of Awards

Unless the Compensation Committee determines otherwise, no award granted under the 2011 Plan may be sold, assigned, transferred, pledged or otherwise encumbered by a participant, other than by will, by designation of a beneficiary in a manner established by the Compensation Committee or by the laws of descent and distribution. Each award may be exercisable only by the participant.

Amendment and Termination

Unless earlier terminated by the Board of Directors or the Compensation Committee, the 2011 Plan will terminate ten years from its effective date. The Board of Directors or the Compensation Committee may generally amend, suspend or terminate all or a portion of the 2011 Plan at any time, as long as the rights of a participant are not materially impaired,

without the participant’s consent, subject to stockholder approval to the extent necessary to comply with applicable law, stock exchange rule or regulatory requirements or, as determined by the Compensation Committee, to qualify with tax requirements. The Compensation Committee may amend the terms of any award granted, prospectively or retroactively, but cannot materially impair the rights of any participant without the participant’s consent. The Compensation Committee may reprice options without stockholder approval. Also, generally, no change or adjustment may be made to an outstanding incentive stock option, without the consent of the participant, that would cause the incentive stock option to fail to continue to qualify as an incentive stock option under the Code.

Performance-Based Compensation Under Section 162(m)

Under Section 162(m) of the Code, we are generally prohibited from deducting compensation paid to our Chief Executive Officer and our four other most highly compensated executive officers in excess of $1,000,000 per person in any year. However, compensation that qualifies as performance-based is excluded for purposes of calculating the amount of compensation subject to the $1,000,000 limit. As the applicable Company salaries are substantially below the effective level, we do not expect the Section 162(m) limit to be applicable. In general, the Compensation Committee determines the terms and conditions of awards. If the Compensation Committee intends to qualify an award as “qualified performance-based compensation” under Section 162(m) of the Code, the performance goals it may choose include any or all of the following or any combination: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); revenues; operating margins; return on assets; return on equity; debt; debt plus equity; market or economic value added; stock price appreciation; total stockholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; customer satisfaction, employee satisfaction, services performance; or cash management or asset management metrics. Performance goals may be stated in absolute terms or relative to the performance of comparison companies. Performance goals may relate to the performance of the Company as a whole or any business unit of the Company, as determined by the Compensation Committee. The Compensation Committee shall have absolute discretion to reduce the amount of the award payable to any participant for any period below the maximum award determined based on the attainment of performance goals. The Compensation Committee may waive the achievement of applicable performance goals except in the case of death or disability of a participant.

The Compensation Committee may also provide in any award that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: asset write-downs; litigation or claim judgments or settlements; the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results;

any reorganization and restructuring programs; extraordinary nonrecurring items as presented in accordance with the provisons of the Accounting Standards Codification ("ASC") and/or in Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company’s annual report to stockholders for the applicable year; acquisitions or divestitures; foreign exchange gains and losses; and gains and losses on asset sales. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of the exemption under Section 162(m) of the Code.

Company Transaction and Change in Control

Restrictions on awards granted under the 2011 Plan will terminate in certain circumstances that constitute a change in control or a merger, stock or asset sale or similar company transaction that does not involve a related party.

Change in Control. Under the 2011 Plan, a change in control of the Company means the occurrence of any of the following events:

	•		An acquisition of beneficial ownership of 40% or more of either (a) the then outstanding shares of common stock or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (excluding any acquisition directly from the Company, any acquisition by the Company, any acquisition by any employee benefit plan of the Company or a related party transaction).

	•		A change in the composition of our Board of Directors during any two-year period such that the incumbent Board members cease to constitute at least a majority (not including directors whose election was approved by more than half of the incumbent Board).

Under the 2011 Plan, to maintain all of the participants’ rights in the event of a change in control of the Company (as described below), unless the Compensation Committee determines otherwise with respect to a particular award:

	•		Any options become fully exercisable and vested to the full extent of the original grant.

	•		Any restrictions and deferral limitations applicable to any restricted stock or stock units lapse.

	•		All performance shares and performance units will be earned and payable in full at target levels, and any deferral or other restrictions lapse and such performance shares and performance units will be immediately settled or distributed.

	•		Any restrictions and deferral limitations and other conditions applicable to any other awards lapse, and such other awards become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant.

The Compensation Committee can provide a cash-out right for awards in connection with a change in control.

Company Transaction. Under the 2011 Plan, a company transaction means the consummation of any of the following:

	•		a merger or consolidation of the Company with or into any other company or other entity;

	•		a sale in one transaction or a series of transactions undertaken with a common purpose of acquiring at least 50% of the Company’s outstanding voting securities; or

	•		a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of the Company’ assets.

Under the 2011 Plan, a related party transaction means a company transaction pursuant to which:

	•		the beneficial ownership of the Company or the resulting company remains the same with respect to at least 50% of the voting power of the outstanding voting securities in substantially the same proportions as immediately prior to such company transaction;

	•		no entity (other than the Company or an affiliate) will beneficially own 40% or more of the outstanding shares of common stock of the resulting company or the voting power of the outstanding voting securities; and

	•		our incumbent board will, after the company transaction, constitute at least a majority of the board of the company resulting from such company transaction.

Under the 2011 Plan, to maintain all of the participants’ rights in the event of a company transaction that is not a change in control or a related party transaction, unless the Compensation Committee determines otherwise at the time of grant with respect to a particular award or elects to cash out awards:

	•		All outstanding awards (other than performance awards) become fully and immediately exercisable, and any restrictions or forfeiture provisions lapse, immediately prior to the company transaction, unless such awards are converted, assumed or replaced by the successor company.
	•		Performance awards earned and outstanding become payable in full at target levels, and deferrals or other restrictions not waived by the Compensation Committee shall remain in effect.

U.S. Federal Income Tax Consequences

The following briefly describes the U.S. federal income tax consequences of the 2011 Plan generally applicable to the Company and to participants who are U.S. citizens.

Stock Options

Nonqualified Stock Options. A participant will not recognize taxable income upon the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option, a participant will recognize taxable ordinary income equal to the difference between the fair market value of the shares on the date of exercise and the option exercise price. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the option exercise price.

Incentive Stock Options. A participant will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after his or her employment ends other than as a result of death (12 months in the case of disability), the participant will not recognize taxable income at the time of exercise (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the option were a nonqualified stock option). If

a participant sells or exchanges the shares after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the option, the participant will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the sale or exchange and the option exercise price. If a participant disposes of the shares before these holding period requirements are satisfied, the disposition will constitute a disqualifying disposition, and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess, as of the date of exercise of the option, of the fair market value of the shares received over the option exercise price (or, if less, the excess of the amount realized on the sale of the shares over the option exercise price). Additionally, the participant will have long-term or short-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received upon disposition of the shares and the option exercise price, increased by the amount of ordinary income, if any, the participant recognized.

With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares already held by the participant to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the participant.

Restricted Stock Awards. Upon receipt of a restricted stock award, a participant generally will recognize taxable ordinary income when the shares cease to be subject to restrictions in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid to us by the participant for the shares. However, no later than 30 days after a participant receives a restricted stock award, the participant may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the amount, if any, paid to us by the participant for the shares plus the amount of taxable ordinary income recognized by the participant either at the time the restrictions lapsed or at the time of election, if an election was made by the participant. If the participant forfeits the shares to us (e.g., upon the participant’s termination prior to expiration of the restriction period), the participant may not claim a deduction with respect to the income recognized as a result of the election. Any dividends paid with respect to shares of restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received.

Performance Awards and Other Stock Unit Awards. A participant generally will not recognize taxable income upon the grant of a performance award. Upon the distribution of cash, shares or other property to a participant pursuant to the terms of a performance award, the participant generally will recognize taxable ordinary income equal to the excess of the amount of cash or the fair market value of any property transferred to the participant over any amount paid to us by the participant with respect to the award. The tax consequences of other stock unit awards will depend upon the specific terms of each award.

Tax Consequences to the Company. In the foregoing cases, we generally will be entitled to a deduction at the same time and in the same amount as a participant recognizes ordinary income, subject to the limitations imposed under Section 162(m) of the Code.

Tax Withholding. We are authorized to withhold from any award granted or payment due under the 2011 Plan the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. The Compensation Committee is authorized to establish procedures for election by participants to satisfy their obligations for the payment of withholding taxes by delivery of shares of our stock or by directing us to retain stock otherwise deliverable in connection with the award.

New Plan Benefits

A new plan benefits table, as described in the federal proxy rules, is not provided because all awards made under the 2011 Plan are discretionary. The closing price of our common stock, as reported on the Nasdaq Capital Market on March 1, 2011, was $1.43 per share.

Vote Required

The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the resolution is required for approval of the 2011 Plan. The Board of Directors has unanimously approved the 2011 Plan and believes it to be in the best interests of the Company and our stockholders.

YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE ALANCO

TECHNOLOGIES, INC. 2011 INCENTIVE STOCK PLAN.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EXISTING EQUITY COMPENSATION PLANS

The following table gives information with respect to our existing equity compensation plans as of June 30, 2010:

Number of

Number of Securities

Securities to be

Weighted

Remaining Available for

Issued upon

Average

Future Issuance under

Exercise of

Exercise Price

Equity Compensation Plans

Outstanding

of Outstanding

(Excluding Securities

Plan Category

Options

Reflected in Column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

934,300

1.91

123,600

(1)

Equity compensation plans not approved by security holders

21,500

(2)

16.09

Total

955,800

2.23

123,600


(1)		Consists of shares of common stock remaining available for issuance under the 2000 Employee Incentive Stock Option Plan (11,700 shares remaining to be issued), the 2000 Directors and Officers Stock Option Plan (3,400 remaining shares to be issued), the 2002 Employee Incentive Stock Option Plan (21,800 shares remaining to be issued), the 2002 Directors and Officers Stock Option Plan (5,400 remaining shares to be issued), the 2004 Employee Incentive Stock Option Plan (23,600 shares remaining to be issued), the 2004 Directors and Officers Stock Option Plan (10,000 remaining shares to be issued), the 2005 Employee Incentive Stock Option Plan (1,000 shares remaining to be issued), the 2005 Directors and Officers Stock Option Plan (10,000 remaining shares to be issued), the 2006 Employee Incentive Stock Option Plan (4,800 shares remaining to be issued), the 2006 Directors and Officers Stock Option Plan (31,900 remaining shares to be issued).

(2)		Consists of options issued to officers outside of any plan as an inducement at time of employment.

Proposal No. 4 APPROVAL TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY BY SELLING SUBSTANTIALLY ALL OF THE ASSETS OF STARTRAK SYSTEMS, LLC, A WHOLLY OWNED SUBSIDIARY OF THE COMPANY, TO ORBCOMM INC. PURSUANT TO TERMS AND CONDITIONS OF THE ASSET PURCHASE AGREEMENT BETWEEN AND AMONG THE COMPANY, STARTRAK AND ORBCOMM.

Effective March 4, 2011, the Board of Directors, believing it to be in the best interest of the Company and its shareholders, approved the sale of substantially all of the assets of its wholly-owned subsidiary, StarTrak Systems, LLC, a Delaware Limited Liability Company, (“StarTrak”) to ORBCOMM Inc., a Delaware corporation, (“ORBCOMM”) pursuant to terms of the Asset Purchase Agreement (“Agreement”) dated February 23, 2011 (“Asset Sale”). (The transaction is also considered to be the sale of substantially all of the assets of the Company.) ORBCOMM has also entered into agreements with certain shareholders of the Company, including Donald E. Anderson and certain of his affiliates, Tim P. Slifkin and Tom Robinson (“Insider Group”), to purchase their Class A Common shares, totaling approximately 1.2 million shares. The Insider Group and Robert Kauffman, Company CEO, have agreed to vote their shares in support of the proposed transaction. The common shares to be acquired from the Insider Group, as well as both Class A Common Stock and Series E Convertible Preferred Stock currently owned by ORBCOMM, will be contributed as part of the consideration to be paid by ORBCOMM in the transaction.

Under terms of the Agreement, the Company, and not the stockholders of the Company, will receive all of the proceeds of the Asset Sale.

TERMS OF THE ASSET PURCHASE AGREEMENT

Contact Information

The Company’s principal executive offices are located at 15575 N. 83rd Way, Ste 3, Scottsdale, Arizona 85260. Alanco’s website is www.alanco.com and our phone number is (480) 505-4869. Alanco’s filings, including annual reports filed on Form 10-K and quarterly reports filed on Form 10-Q can be obtained directly from the Company or from the Securities and Exchange Commission at www.sec.gov.

StarTrak Systems, LLC, a wholly owned subsidiary of the Company, is located at 408 The American Road, Morris Plains, New Jersey 07950. StarTrak’s website address is www.startrak.com and its phone number is (973) 993-1760. Available financial information for StarTrak Systems, LLC may be found in Alanco Securities and Exchange Commission filings under the business segment “Wireless Asset Management.”

ORBCOMM’s principal executive offices are located at 2115 Linwood Avenue, Fort Lee, New Jersey 07024, and its telephone number is (201) 363-4900. ORBCOMM’s website is www.orbcomm.com. ORBCOMM’s annual, quarterly, and other reports and amendments to those reports can be obtained through the Investor Relations section of its website or from the Securities and Exchange Commission at www.sec.gov.

Description of the Businesses of the Parties

Alanco Technologies, Inc.

Alanco Technologies, Inc. provides wireless monitoring and asset management solutions through its StarTrak Systems subsidiary. StarTrak is the dominant provider of tracking, monitoring and control services to the refrigerated or “Reefer” segment of the transportation marketplace, enabling customers to increase efficiency and reduce costs of the refrigerated supply chain.

StarTrak Systems, LLC

StarTrak Systems, LLC located in Morris Plains, NJ is the leading provider of wireless tracking, monitoring and control services to the refrigerated or “Reefer” segment of the transportation marketplace, enabling customers to increase efficiency and reduce costs of the refrigerated supply chain. StarTrak has been a leader in providing wireless asset management services since its formation in 1998. StarTrak’s current solutions are improving the efficiency and operations of refrigerated trailers, trucks, containers and railcars. StarTrak’s network operations center in northern New Jersey manages wireless equipment deployed world-wide, including North America, Australia, Europe, the Middle East and Africa.

StarTrak is focused on delivering asset management solutions that improve customers’ operations, leading to benefits in efficiency, predictability and quality. The company provides vertically integrated technical solutions, including project management, engineering development, software, firmware and hardware engineering and applications delivery.

StarTrak accounts for a dominant share of the refrigerated rail, intermodal and container monitoring services utilized in North America, providing information data services to its customers through a monthly subscription plan which generates significant monthly recurring revenues.

ORBCOMM Inc.

ORBCOMM products and services enable their customers and end-users to enhance productivity, reduce costs and improve security through a variety of commercial, government, and emerging homeland security applications. ORBCOMM enables its customers and end-users to achieve these benefits using a single global satellite technology standard for machine-to-machine and telematic, or M2M, data communications. Examples of assets that are connected through ORBCOMM’s M2M data communications system include trucks, trailers, railcars, containers, heavy equipment, fluid tanks, utility meters, pipeline monitoring equipment, marine vessels, and oil wells. ORBCOMM’s customers include original equipment manufacturers, or OEMs, such as Caterpillar Inc., (“Caterpillar”), Doosan Infracore America, Hitachi Construction Machinery Co., Ltd., (“Hitachi”), Hyundai Heavy Industries, Komatsu Ltd., (“Komatsu”), The Manitowoc Company and Volvo Construction Equipment, international value added resellers, such as AI (a subsidiary of I.D. Systems), value added resellers, such as XATA Corporation and American Innovations, Ltd., and U.S. government agencies. ORBCOMM is currently authorized, either directly or indirectly, to provide its satellite communications services in over 90 countries and territories in North America, Europe, South America, Asia, Africa and Australia.

Past Contacts and Negotiations

ORBCOMM is a leading satellite data communications company, also providing cellular data messaging services through third party cellular networks.

StarTrak commenced utilization of ORBCOMM’s cellular network services in 2007. In 2008, StarTrak acquired the assets of MicroLogic which brought approximately 1,000 assets utilizing ORBCOMM’s satellite data services into StarTrak’s operations.

StarTrak Cofounder, Mr. Tim Slifkin and ORBCOMM CEO, Mr. Marc Eisenberg had developed a business relationship over the past ten years based upon their common wireless communication industry experience and respective company’s strategic interests.

During late 2009 Messrs. Slifkin and Eisenberg began discussions relating to a possible ORBCOMM investment in Alanco/StarTrak. Shortly thereafter, Mr. Slifkin discussed the possibility of an ORBCOMM investment with Alanco corporate management, Mr. Robert Kauffman and Mr. John Carlson, Alanco CEO and CFO, respectively, which Alanco management determined to pursue.

On December 16, 2009, a meeting was held at ORBCOMM corporate headquarters in Fort Lee, N.J. attended by ORBCOMM’s CEO, Marc Eisenberg; CFO, Robert Costantini; and VP of Business Development, Lucas Binder; StarTrak’s Mr. Slifkin and Alanco’s Mr. Kauffman to discuss a possible ORBCOMM investment in Alanco/StarTrak.

On January 8, 2010 ORBCOMM submitted a non-binding proposal to Alanco for a $2 million purchase of Alanco common stock. Subsequent discussions between the parties resulted in preliminary agreement in late January, subject to due diligence, for an ORBCOMM purchase of $2.25 million of Alanco’s Series E Convertible Preferred Stock and further agreement for joint strategic activities. Following a period of ORBCOMM due diligence activity, the final agreement between ORBCOMM and Alanco was executed and publicly announced on April 6, 2010 which included ORBCOMM’s $2.25 million purchase of Alanco Preferred Stock and certain strategic partnership initiatives.

In early November 2009, Imperial Capital, a Los Angeles based investment bank, initiated due diligence with certain directors of a privately-held StarTrak competitor (“Competitor”), concerning their interest in considering a merger or acquisition transaction with Alanco/StarTrak. An initial meeting was held at Imperial Capital’s New York City offices on April 15, 2010, attended by two Competitor directors and Alanco’s Messrs. Kauffman and Carlson. On May 4, 2010 a meeting was hosted by ORBCOMM at their operations center in Dulles, VA for Competitor and Alanco/StarTrak executives to discuss a possible combination of StarTrak and Competitor. ORBCOMM’s stated intent was to explore enhancement of the value of their recently (4/6/10) acquired equity investment in Alanco. Attendees were: Competitor’s CEO and Senior VP; Alanco/StarTrak’s Messrs. Kauffman and Slifkin; and ORBCOMM’s Messrs. Einsenberg, Costantini, and Binder. Several subsequent discussions, including exchange of summary financial statements, led to the Competitor’s non-binding preliminary proposal to Alanco to acquire substantially all of the assets of StarTrak. This preliminary Competitor offer was reviewed by the Alanco Board of Directors at its regular quarterly meeting on September 16, 2010 in Scottsdale, Arizona and was determined to be insufficient, which response was verbally communicated to Competitor’s CEO. Alanco management declined an opportunity to counter offer, and, in the absence of a revised offer from the Competitor, activity ceased on this potential transaction.

In late September 2010, Alanco initiated discussions with ORBCOMM regarding its their rights under terms of its initial investment agreement to participate in an additional Alanco equity financing. ORBCOMM declined this offer, but indicated their possible interest in acquiring the StarTrak business. Alanco responded affirmatively, and, on October 4, 2010, engaged the services of investment banker, Oberon Securities, LLC to advise the Company relative to the possible sale of StarTrak to ORBCOMM.

Negotiations between the parties formally commenced with a preliminary meeting on October 8, 2010 at StarTrak’s New Jersey offices attended by ORBCOMM, representation of ORBCOMM's investment bank, Raymond James; Alanco, StarTrak, and representative's of Alanco’s investment bank Oberon Securities, following which ORBCOMM initiated an in-depth due diligence process.

On November 11, 2010, at a meeting held at ORBCOMM’s operations headquarters in Dulles, VA attended by all parties and their respective investment advisors, ORBCOMM presented their initial non-binding proposal to acquire Alanco’s StarTrak business. During the remainder of the month of November, 2010, primary negotiations were conducted between Alanco’s Mr. Kauffman and ORBCOMM’s Mr. Eisenberg to reach agreement, which resulted in the execution by both parties of a non-binding proposal for ORBCOMM to acquire substantially all of the assets of Alanco’s StarTrak Systems, LLC. Following execution of the December 2010 Letter of Intent, ORBCOMM commenced further due diligence activities, primarily involving StarTrak personnel, focusing on historical and projected StarTrak financial data. ORBCOMM, with Alanco's consent, also engaged in separate discussions with Mr. Donald Anderson, representing the Anderson Family Trust, provider of Alanco's line of credit agreement, with the objective of reaching agreement in regard to ORBCOMM's assumption of certain Alanco obligations under the line of credit. In addition, ORBCOMM, again with Alanco's consent, engaged in discussions with Mr. Donald Anderson and his affiliates, and Mr. Slifkin and Mr. Robinson, founders of StarTrak, to reach agreement relative to ORBCOMM directly purchasing their respective Alanco stock holdings in a simultaneous transaction to the proposed asset purchase agreement. The definitive Asset Purchase Agreement (APA) between the parties was executed on February 23, 2011.

Reason for Sale

Through December 31, 2010, Alanco has reported recurring losses from our corporate operations, including our StarTrak Systems subsidiary. Since its acquisition by Alanco in June of 2006, StarTrak has reported cumulative operating losses of approximately $7.5 million, including operating losses in excess of $1 million for the initial six months of the current fiscal year ending June 30, 2011. During this current fiscal year, we have had difficulty meeting our working capital requirements with current cash reserves, cash generated from operations, or borrowing under our credit line. Due to our extended financial condition, along with other factors, including our inability to raise additional debt or equity capital on terms we feel commercially acceptable, management and our Board of Directors deemed it advisable and in the best interests of our stockholders to accept an offer from ORBCOMM to sell substantially all of StarTrak assets in accordance with the terms of the Asset Purchase Agreement and to consummate the Asset Sale. The Asset Sale is projected to result in a significant amount of retained current assets, projected to be approximately $8 million, which would permit us to maintain our corporate public existence for a period of time allowing management and the Board of Directors to seek an attractive operating company for a possible acquisition or merger transaction or to distribute all or a substantial portion of the remaining assets to our shareholders, as the Board of Directors deems advisable. Accordingly, management and the Board of Directors have determined that the Asset Sale is prudent at this time and in the best interests of the Company’s shareholders.

Terms of the Transaction

Assets to be Sold. Substantially all of the assets of StarTrak will be sold to ORBCOMM, or its wholly owned subsidiary formed specifically to receive the assets, STK Acquisition, LLC. The assets include all property leases, receivables, inventories, cash in accounts, machinery, equipment and other tangible personal property, contracts and related contract rights, advances, prepaid expenses, and deposits, intellectual property including patents issued and pending, copywrites, trademarks and trade names, including the name “StarTrak Systems,” data and records of StarTrak, the goodwill and going concern value of the business of StarTrak, and all other assets, properties and rights, other than specific retained assets. The retained assets include certain company organizational records, any equity in StarTrak owned by Alanco and the rights of Alanco and StarTrak under the Asset Purchase Agreement.

Purchase Consideration. The total consideration payable by ORBCOMM for substantially all of the net assets of StarTrak aggregates to approximately $18,200,000 and is composed of cash, stock of ORBCOMM, stock of Alanco and discharge of certain debt. The consideration may also include up to approximately $1.2 million in additional payments of cash or ORBCOMM stock, at ORBCOMM’s option, contingent on StarTrak’s achieving certain calendar year 2011 revenue milestones. The Agreement also provides for a working capital adjustment based upon the change in working capital, as defined, for the period from November 30, 2010 through the Effective Date of the transaction that is not considered in the $18.2 million of total consideration. The consideration to be paid at closing of the transaction consists of the following:

1.	Cash consideration in an amount equal to $2,000,000, less any amount due under the secured loan referred to in paragraph 3 below;

2.	ORBCOMM’s acquisition and discharge of the secured debt of Alanco and StarTrak owed to the Anderson Family Trust in the principal amount of $3,900,000;

3.	Cancellation and termination of all outstanding obligations of Alanco and StarTrak to ORBCOMM under the Secured Promissory Note (as defined below), including the then outstanding principal amount anticipated to be $300,000, plus interest and fees, if any, due thereunder as of the closing date;

4.	Delivery to Alanco of 500,000 shares of Series E Convertible Preferred Stock of Alanco having a face amount of $2,250,000;

5.	Delivery of approximately 1,212,500 shares of Alanco Class A Common Stock;

Issuance and delivery to Mellon Investor Services LLC, as escrow agent (“Mellon”) of 249,917 shares of ORBCOMM common stock registered in the name of Alanco, which escrowed shares will be available to pay for half of the expenses and liabilities incurred as a result of certain litigation currently pending against StarTrak. The other half of such litigation expenses and liabilities will be paid by ORBCOMM.

The issuance and delivery to Mellon, as escrow agent, of 166,611 shares of ORBCOMM Stock registered in the name of Alanco, less certain reductions as described in the next sentence, which escrowed shares will be available to pay for a portion of certain product warranty costs, under certain conditions, relating to a fuel sensor sold by StarTrak. The value, and therefore the number of shares required to be placed in escrow, shall be reduced by one half of such warranty expenses incurred by StarTrak before the closing.

8.	The issuance and delivery to Alanco of 1,987,194 shares of ORBCOMM common stock, less the number of escrowed shares of such stock described under paragraph 7 above;

The issuance and delivery to Alanco of 183,550 shares of Series A Perpetual Convertible Preferred Stock of ORBCOMM having a face value of $10 per share, or $1,835,500 aggregately, which shares are entitled to a 4% annual paid-in-kind dividend and each such share shall be convertible into 1.666 shares of ORBCOMM common stock;

10.	Assumption by ORBCOMM of certain specified liabilities of StarTrak arising out of the normal course of business;

11.

The parties have agreed to adjust the Closing Consideration for changes in working capital of the StarTrak business between November 30, 2010 and the Effective Date, which is the month end closest to the closing date. If working capital, which is defined as current assets munus current liabilities minus long-term deferred revenue, changes between November 30, 2010 and the last day of the month immediately preceding the closing, there will be a preliminary adjustment to the cash amount paid under paragraph 1 above. Following the closing, ORBCOMM will prepare a final closing statement setting forth the working capital as of the Effective Date. If there are additional working capital adjustments to be made as of the Effective Date, ORBCOMM will pay to Alanco the value of any working capital adjustment in cash or additional ORBCOMM common stock, at ORBCOMM's option, or if amounts are due to ORBCOMM, Alanco will return to ORBCOMm shares of ORBCOMM common stock issued under paragraph 8 above having a value equal to the working capital adjustment.

12.

In addition to the consideration to be paid at closing discussed above, up to an additional gross amount of approximately $1,170,000 in contingent payments (the “Earn Out Amount”) is payable to Alanco by ORBCOMM if certain revenue milestones of the StarTrak business are achieved for the 2011 calendar year (the “Earn-Out Period”), ranging from approximately $194,000 for total revenue of at least $20,000,000 in the Earn-Out Period to approximately $1,170,000 for total revenue of at least $24,000,000 in the Earn-Out Period.

As part of the Agreement, ORBCOMM has lent $300,000 to Alanco and StarTrak pursuant to a Secured Promissory Note of Alanco and StarTrak. The principal accrues interest at the rate of 6% per annum, and all principal and accrued interest is due in full upon the closing of the Asset Sale, or within ten days following termination of the Agreement if the Asset Sale does not close. The Secured Promissory Note is secured by a second lien upon all of the assets of the Company and StarTrak.

The Series A Perpetual Convertible Preferred Stock of ORBCOMM to be issued to Alanco in accordance with paragraph 9 above shall have the following powers, rights, privileges, preferences and limitations. Without the affirmative vote of two-thirds of the aggregate number of shares of the Series A Perpetual Convertible Preferred Stock outstanding, ORBCOMM may not authorize any reclassification of the Series A Perpetual Convertible Preferred Stock that would adversely affect the preferences, special rights, privileges or voting power of the Series A Perpetual Convertible Preferred Stock, nor create or issue any class of stock ranking prior to the Series A Perpetual Convertible Preferred Stock as to dividends or distribution of assets on liquidation. The Series A Perpetual Convertible Preferred Stock shall be convertible into 1.666 shares of ORBCOMM common stock at any time before redemption by the holder, or by ORBCOMM after six months from its issue date, provided the market price of ORBCOMM common stock is at least $11.20 per share. The Series A Perpetual Convertible Preferred Stock shall have voting rights as if converted into ORBCOMM common stock, and shall be paid dividends quarterly when declared by ORBCOMM’s Board of Directors in-kind at the annual rate of 4%. The Series A Perpetual Convertible Preferred Stock can be redeemed after two years by ORBCOMM for its face value of $10.00 per share. (See Appendix B of this Proxy Statement for the complete Description of the powers, rights, privileges, preferences and limitations of the Series A Perpetual Convertible Preferred Stock.)

The shares of ORBCOMM common stock to be held in escrow pursuant to paragraphs 6 and 7 above, shall be held in accordance with an Escrow Agreement among Alanco, ORBCOMM and Mellon Investor Services LLC, as escrow agent, (“Mellon”). The Escrow Agreement provides that ORBCOMM may cause Mellon to deliver shares of ORBCOMM common stock from the escrow account to compensate ORBCOMM with respect to one-half of expenses and liabilities it incurs with respect to certain litigation, or to certain product warranty matters in excess of the threshold of $600,000. One escrow account in the amount of $750,000 for the litigation matters and another escrow account in the amount of $500,000 (subject to possible reduction) for the warranty matters are to be established, with each escrow account containing sufficient shares of ORBCOMM common stock valued at $3.001 per share to fully fund the escrow accounts. One-half of the liabilities incurred by StarTrak with respect to the warranty matter prior to closing shall reduce the number of ORBCOMM shares to be placed into the escrow. The other half of such pre-closing warranty liabilities incurred shall be absorbed by ORBCOMM without impact on the consideration to be paid by ORBCOMM for StarTrak assets. The litigation escrow shall exist until depleted or final resolution of the litigation. The warranty escrow shall terminate upon depletion or March 1, 2012. Any remaining shares held in the escrows after termination of the escrows shall be delivered by Mellon to Alanco. (See Appendix C of this Proxy Statement for a copy of the Escrow Agreement to more fully understand the rights and privileges of Alanco thereunder.)

ORBCOMM has agreed to file a Registration Statement with the Securities Exchange Commission to register the shares of ORBCOMM common stock to be issued to Alanco under the Asset Purchase Agreement, as well as the shares of ORBCOMM common stock issuable upon conversion of the Series A Perpetual Convertible Preferred Stock of ORBCOMM to be issued to Alanco under the Asset Purchase Agreement. (See Appendix E of this Proxy Statement for a copy of the Registration Rights Agreement to more fully understand the rights and privileges of Alanco thereunder.)

Assumption of Liabilities. The Asset Purchase Agreement requires ORBCOMM to assume certain liabilities of StarTrak in connection with ORBCOMM’s purchase of the StarTrak assets. In particular, the liabilities to be assumed include (a) post closing liabilities under assumed contracts, (b) certain liabilities to employees of StarTrak hired by ORBCOMM at the closing, and (c) liabilities reflected on the final closing statement generally to include StarTrak’s current liabilities and long-term deferred revenue. ORBCOMM will also assume liabilities associated with StarTrak’s leased facilities and furniture and equipment leases.

Representation and Warranties. Each of the parties to the Asset Purchase Agreement makes customary representations and warranties in the agreement consistent with similar transactions. In particular, Alanco and StarTrak make representations concerning their due organization and authority to enter into the agreement, that StarTrak is the owner of the assets including StarTrak’s intellectual property, financial information concerning StarTrak given to ORBCOMM having been prepared in accordance with accounting principles generally accepted in the United States consistently applied, taxes due applicable to StarTrak have been paid, as well as representations with respect to contracts with StarTrak, litigation, environmental matters, employee matters, absence of certain material events, product warranties, insurance and certain customers and suppliers. Alanco makes additional representations customary in connection with the private placement of ORBCOMM stock as an investment and without a plan to distribute same. ORBCOMM makes similar representation concerning its due organization and authority, the valid issuance of the ORBCOMM stock to be issued to Alanco, its financial reports, title to its properties, litigation and its compliance with Nasdaq continued listing requirements.

Covenants of Alanco and StarTrak. StarTrak covenants to conduct its business only in the ordinary course consistent with past practices, to allow ORBCOMM representatives access to information concerning the StarTrak business and assets pending closing, and to pursue necessary consents required to close. Alanco and StarTrak agree not to engage in a competing business for the three-year period following closing. StarTrak has agreed to pay any past due amounts owing to ORBCOMM at or prior to closing. Upon closing, the name of StarTrak will be changed to a name other than “StarTrak Systems.”

Alanco and StarTrak have agreed to take necessary actions to obtain approval for the transaction from Alanco’s shareholders, and in that regard, Alanco has agreed not to entertain competing offers for StarTrak or the StarTrak assets except as may be required by law. The Alanco Board of Directors has retained the right, consistent with its fiduciary duties, to change its recommendations to the Alanco shareholders if circumstances require.

Closing Conditions. The closing of the transaction is conditioned upon normal occurrence for similar transactions, such as the accuracy of the parties’ representations and warranties at closing, obtaining necessary third-party consents, and lack of injunctions or similar restraints, as well as the simultaneous closing of related third-party agreements including (i) an agreement whereby ORBCOMM acquires the lender’s interest in the $3,900,000 Loan Agreement between Alanco and StarTrak as borrower, and the Anderson Family Trust, as lender, (ii) an agreement pursuant to which ORBCOMM acquires all of the Alanco common stock owned by the Anderson Family Trust and affiliates, and (iii) an agreement pursuant to which ORBCOMM acquires all of the Alanco common stock owned by Timothy Slifkin and Thomas Robinson.

Termination of Agreement. The Agreement may be terminated prior to closing upon mutual consent of the parties, upon material default of a party, if Alanco shareholder approval is not obtained, or if the transaction does not close on or before June 30, 2011 without default of the party terminating the Agreement.

In the event the Agreement is terminated without default of any party, no party shall have liability for same and the parties shall bear their own costs and expenses. In the event the Agreement is terminated due to the default of a party, the non-defaulting party shall have the right to pursue its contract remedies. In the event Alanco shareholder approval is not obtained due to the existence of a competing proposal recommended by Alanco’s Board of Directors, the Agreement is terminated accordingly by Alanco or StarTrak, and another contract to sell StarTrak or its assets is entered into before February 23, 2012, then ORBCOMM shall be paid the sum of $500,000 plus its costs and expenses related to this Agreement up to a maximum of $250,000.

Indemnification. The Agreement contains customary indemnity provisions for transactions of this type requiring the parties to indemnify each other and their respective affiliates and representatives against a breach of the Agreement, requiring Alanco and StarTrak to indemnify ORBCOMM against liabilities arising from retained assets or liabilities, and requiring ORBCOMM to indemnify Alanco and StarTrak against liabilities arising from the liabilities assumed by ORBCOMM. No party’s indemnity obligation for breaches of representations arises until the total of indemnified liabilities exceed $75,000 and then only for the excess. Additionally, Alanco’s and StarTrak’s indemnity liability for breaches of representations shall not exceed one-half of the consideration received for the assets if they had no knowledge of the facts creating the breach of agreement, or the full amount of the consideration received if they had such knowledge.

Fees and Expenses. Alanco will pay all fees and expenses (including all fees of Alanco’s investment banker, counsel and accountants) incurred by the Company and StarTrak in connection with the negotiation and execution of the Asset Purchase Agreement.

Federal Income Tax Consequences. The Asset Sale will be treated as a taxable transaction for federal and state tax purposes. The Company believes that due to the Company’s significant tax loss carryforward, the tax impact of the transaction will not be material.

Accounting Treatment. Upon the completion of the Asset Sale, the assets and liabilities associated with the transaction will be eliminated from our consolidated balance sheet.

Use of Proceeds; Our business after the Sale

The Company, and not our stockholders, will receive all of the net proceeds from the Asset Sale. We anticipate using the net proceeds from the Asset Sale in one or more of the following ways:

·	Repayment of any remaining unpaid interest bearing debt;

·	Explore potential opportunities for an acquisition or merger transaction with an operating company, or;

·	A potential distribution of all or a portion of our net assets to shareholders.

After completion of the Asset Sale, we will continue to operate as a public company, but we will have no on-going operations. We are unable to assure our stockholders that we will continue to trade on the Nasdaq market because without acquiring or merging with an operating company, we cannot maintain our Nasdaq listing. We have not made any definitive determination about our future business plans once the Asset Sale is consummated. The Company’s directors will evaluate all possible options, including an acquisition and/or merger with an operating business whereby our shareholders would retain an ownership interest in a new “public” corporation with opportunity for future enhanced value. We anticipate that certain general and administrative expense will be incurred until a transaction occurs or the Company is liquidated. It is expected that these expenses will be directly related to a potential transaction, as well as maintenance of the public corporate structure, including audits, quarterly reviews and tax filings.

RISK FACTORS.

Investing in our securities involves significant risks. Please see the risk factors under the heading “Risk Factors” in our most recent Annual Report on Form 10-K as revised or supplemented by our Quarterly Reports on Form 10-Q filed with the SEC since the filing of our most recent Annual Report on Form 10-K, each of which is on file with the SEC and is incorporated by reference in this Proxy Statement. Before casting your vote with respect to this Proxy Statement, you should carefully consider these risks as well as other information we include or incorporate by reference in this Proxy Statement. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations. In addition, because we will receive a substantial number of ORBCOMM shares in exchange for the assets of StarTrak, you should also consider the Risk Factors in ORBCOMM’s most recent Annual Report on Form 10-K , as revised or supplemented by ORBCOMM’s Quarterly Reports on Form 10-Q filed with the SEC since the filing of its most recent Annual Report on Form 10-K, each of which is on file with the SEC and is incorporated by reference in this Proxy Statement.

In addition to the ongoing risks associated with investing in our stock or ORBCOMM’s stock, you should also consider the following risks associated with the Asset Sale.

·	We will incur substantial fees and costs in completing the transaction. We will incur fees to our investment banker, Oberon Securities LLC, as well as to our legal counsel and independent auditors in concluding the transaction. See “Fees and Expenses” under “Terms of the Transaction” above.

Closing of the Transaction may be delayed resulting in additional costs. If the transaction is approved by our shareholders, we still must obtain various consents from third parties, such as other contracting parties where the contract requires such consent. If obtaining such consents is delayed, the closing of the transaction may be delayed resulting in our incurring additional expenses relating to operational costs and interest accruals.

We may lose our Nasdaq listing. The Nasdaq rules require that listed companies have an operating business. Upon consummation of the sale of the StarTrak assets to ORBCOMM, we will not have an operating business unless and until we acquire one through an acquisition, merger or otherwise. Nasdaq may not allow us sufficient time to conclude an acquisition. Further, if an acquisition transaction results in a change of control under Nasdaq rules, then we may have to re-qualify for a Nasdaq listing and must meet all of the initial listing requirements of Nasdaq to do so. There is no assurance that we will be able to meet such requirements, or that Nasdaq will grant our continued or initial listing application.

ORBCOMM may not be able to successfully integrate the StarTrak business. Each company’s culture and management and operational approaches are different and StarTrak must be successfully integrated into those of ORBCOMM. There is no assurance that ORBCOMM will successfully integrate the StarTrak business into its operations as necessary to achieve anticipated revenue and profit gains.

ORBCOMM may not be able to retain needed StarTrak employees. Although ORBCOMM anticipates offering employment to StarTrak employees, there is no assurance that the StarTrak employees will accept such employment on the terms offered. Disruptions may result in the StarTrak business if experienced staff is not retained.

If the Asset Sale is not completed, we may have to revise our business strategy. During the past several months, management of the Company has been focused on, and has devoted significant resources to, the Asset Sale. If the Asset Sale is not completed, the Company will have to revisit its business strategy in an effort to determine what changes may be required in order for the Company to continue its operations. We may need to consider raising additional capital or financing in order to continue as a going concern if the Asset Sale is not completed. No assurance can be given whether we would be able to successfully raise capital or financing in such circumstances or, if so, under what terms.

Termination of the Purchase Agreement could negatively impact the Company. If the Purchase Agreement is terminated, there may be various consequences. For example, the Company’s business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Asset Sale, without realizing any of the anticipated benefits of completing the Asset Sale, or the market price of the Company’s common stock could decline to the extent that the current market price reflects a market assumption that the Asset Sale will be completed. If the Purchase Agreement is terminated and Alanco’s Board of Directors seeks another transaction or business combination, the Company’s stockholders cannot be certain that the Company will be able to find a party willing to pay an equivalent or more attractive price than the price ORBCOMM has agreed to pay in the Asset Sale. Furthermore, under certain specified circumstances, the Company will be required to pay a termination fee of $500,000 and up to $250,000 of ORBCOMM cost, if the Purchase Agreement is terminated and the Company contracts to sell StarTrak to another party.

·	If the Asset Sale is not consummated by June 30, 2011, either ORBCOMM or Alanco may choose not to proceed with the Asset Sale.

Regulatory Approval

There are no United States federal or state regulatory approvals that must be obtained to consummate the Asset Sale.

Vote required

Effective March 4, 2011, the Board of directors approved the Asset Sale in accordance with the terms of the Asset Purchase Agreement, and determined it to be advisable and in the best interests of the Company and its stockholders. Pursuant to section 10-1202 of Arizona Revised Statutes (the Company’s state of incorporation), the Asset Sale requires the approval of shareholders holding a majority of the outstanding shares of the Company eligible to vote. As of March 28, 2011 (the “Record Date”), there were a total of 6,903,954 potential votes outstanding considering the total voting rights of the Company’s Class A Common Stock, Series B Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E Convertible Preferred Stock. See “Shares Outstanding and Voting Rights” on page seven of this proxy for additional discussion of the Company’s outstanding voting securities.

RECOMMENDATION OF THE BOARD

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE PROPOSAL TO SELL SUBSTANTIALLLY ALL OF THE ASSETS OF ITS WHOLLY-OWNED SUBSIDIARY, STARTRAK SYSTEMS, LLC, TO ORBCOMM INC.

UNAUDITED CONDENSED FINANCIAL STATEMENTS OF

STARTRAK SYSTEMS, LLC

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Balance Sheets (Unaudited)
As of December 31, 2010 and June 30, 2010
(dollars in thousands)

				December 31, 2010		June 30, 2010
ASSETS				(unaudited)		(unaudited)
CURRENT ASSETS
	Cash		$	189	$	248
	Accounts Receivable, Net			1,984		2,289
	Inventory, Net			1,849		1,223
	Prepaid Expenses and Other Current Assets			379		555
		Total Current Assets		4,401		4,315

PROPERTY, PLANT AND EQUIPMENT, NET				327		233

OTHER ASSETS
	Goodwill			12,575		12,575
	Intangible Assets, Net			555		770
	Other Assets, Net			32		174
TOTAL ASSETS			$	17,890	$	18,067

LIABILITIES AND MEMBER'S EQUITY
	Accounts Payable & Accrued Expenses		$	1,814	$	1,336
	Obligations Under Capital Leases			15		18
	Customer Advances			177		5
	Deferred Revenue			325		309
		Total Current Liabilities		2,331		1,668
LONG-TERM LIABILITIES
	Notes Payable, Long-term			500		500
	Deferred Revenue, Long-term			330		375
	Obligations Under Capital Leases, Long-term			-		5
	Related Party Payable			27,809		27,655
TOTAL LIABILITIES				30,970		30,203

MEMBER'S EQUITY				(13,080)		(12,136)

TOTAL LIABILITIES AND MEMBER'S EQUITY			$	17,890	$	18,067

See accompanying notes to the condensed financial statements

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Statement of Operations (Unaudited)
For the Six Months Ended December 31,
(dollars in thousands)

			2010		2009
NET SALES		$	7,653	$	6,604
	Cost of Goods Sold		4,966		4,002
GROSS PROFIT			2,687		2,602

	Selling, General and Administrative Expense		3,135		2,430
	Amortization of Stock-Based Compensation		205		140
	Depreciation and Amortization		256		269
OPERATING LOSS			(909)		(237)
	Interest Expense, net		(35)		(66)
NET LOSS		$	(944)	$	(303)

BEGINNING MEMBER'S EQUITY		$	(12,136)	$	(11,397)

ENDING MEMBER'S EQUITY		$	(13,080)	$	(11,700)

See accompanying notes to the condensed financial statements

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Statement of Cash Flows (Unaudited)
For the Six Months Ended December 31, 2010
(dollars in thousands)


				2010		2009
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss		$	(944)	$	(303)
	Adjustments to reconcile net loss to net
	cash provided by operating activities:
		Depreciation and amortization		256		269
		Stock-based compensation		205		140
	Changes in operating assets and liabilities:
		Accounts receivable, net		305		(526)
		Inventories, net		(626)		419
		Prepaid expenses and other current assets		176		12
		Accounts payable and accrued expenses		478		(518)
		Deferred revenue		(29)		99
		Customer advances		172		27
		Other assets		12		61
	Net cash provided by (used in) operating activities			5		(320)

CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of property, plant and equipment			(5)		(2)
	Net cash used in investing activities			(5)		(2)

CASH FLOWS FROM FINANCING ACTIVITIES
	Repayment of cash advance from Alanco Technologies, Inc.			(51)		286
	Repayment on capital leases			(8)		(9)
	Net cash provided by (used in) financing activities			(59)		277

NET DECREASE IN CASH AND CASH EQUIVALENTS				(59)		(45)

CASH AND CASH EQUIVALENTS, beginning of period				248		287

CASH AND CASH EQUIVALENTS, end of period			$	189	$	242

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
	Non-cash activities:
		Fixed assets purchased with capital leases	$	-	$	3
		Repayment of note in Parent company common stock	$	-	$	360
		Stock-based compensation provided by Parent company	$	205	$	140

See accompanying notes to the consolidated financial statements

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note A – Basis of Presentation and Recent Accounting Pronouncements

StarTrak Systems, LLC, (“StarTrak”) is a Delaware Limited Liability Corporation providing wireless asset management services primarily to refrigerated truck segment of the transportation market. StarTrak was acquired by Alanco Technologies, Inc. (Nasdaq: ALAN) in June of 2006 and since that time has been a wholly owned subsidiary of Alanco. The 2006 transaction was valued, considering the Class A Common Shares issued of approximately $9,200,400, net liabilities assumed of $5,425,800 and other costs of the acquisition of $434,500, at $15,060,000. The transaction, recorded using the purchase method of accounting, was reviewed by an independent consultant for valuation services who determined that the appropriate value of intangible assets acquired in the transaction was $2,485,300, resulting in total Goodwill from the transaction of $12,575,400.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The unaudited condensed financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In our opinion, the accompanying condensed financial statements include all adjustments necessary for a fair presentation of such condensed financial statements. Interim results are not necessarily indicative of results for a full year. Certain reclassifications may have been made to conform prior period financials to the presentation in the current reporting period. The reclassifications had no effect on net loss.

These condensed financial statements should be read in conjunction with StarTrak’s parent company, Alanco Technologies, Inc. (the “Company”) June 30, 2010 Annual Report filed on Form 10-K. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The Company has stock-based compensation plans and provides stock-based compensation to StarTrak employees. StarTrak’s stock-based compensation expense reflects stock-based compensation awards based on the estimated grant date fair value. The value of the compensation cost is amortized at a minimum on a straight-line basis over the requisite service periods of the award (generally the option vesting term).

The estimated fair value is determined using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:

·	Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available;

·	Expected volatility of award grants made under the Company’s plans is measured using the historical daily changes in the market price of the Company’s common stock over the expected term of the award;

·	Risk-free interest rate is to approximate the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and,

·	Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures.

Long-lived assets and intangible assets – StarTrak reviews carrying values at least annually or whenever events or circumstances indicate the carrying values may not be recoverable through projected discounted cash flows.

Fair value of financial instruments – The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The carrying amounts of accounts receivable, accounts payable, accrued liabilities, and notes payable approximate fair value given their short-term nature or with regards to long-term notes payable based on borrowing rates currently available to StarTrak for loans with similar terms and maturities.

Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended December 31, 2010, that are of significance, or potential significance, to us.

In October 2008, the EITF issued guidance which addresses the accounting when entities enter into revenue arrangements with multiple payment streams for a single deliverable or a single unit of accounting. StarTrak has adopted the guidance which does not have an impact on its financial position and results of operations at this time.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

In December 2010, the FASB issued guidance which addresses the pro forma disclosure requirements for business combinations. The guidance is effective for acquisition dates on or after the beginning of the first annual reporting period after December 15, 2010. StarTrak has adopted the guidance which does not have an impact on its financial position and results of operations at this time.

Note B – Stock-Based Compensation

The Company has several shareholder approved employee stock option plans that are available to StarTrak employees. The plans require that options be granted at a price not less than market on date of grant and are more fully discussed in Alanco Technologies, Inc. Form 10-K for the year ended June 30, 2010.

The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards.

Assumptions for awards of options granted during the six months ended December 31, 2010 were:

	Awards granted
	six months ended
	December 31, 2010
Dividend yield	0%
Expected volatility	62%
Weighted-average volatility	62%
Risk-free interest rate	2% - 4%
Expected life of options (in years)	2.0 - 3.75
Weighted average grant-date fair value	$.67

Note C – Inventories

Inventories are recorded at the lower of cost or market. During the quarter ended December 31, 2010, StarTrak wrote off obsolete inventory against the recorded reserve. The composition of inventories as of December 31, 2010 and June 30, 2010 are summarized as follows:

		December 31,		June 30,
		2010		2010
		(unaudited)
Raw materials and purchased parts	$	1,849	$	1,638
Finished goods		-		-
		1,849		1,638
Less reserves for obsolescence		-		(415)
	$	1,849	$	1,223

Note D – Deferred Revenue

Deferred revenues at December 31, 2010 and June 30, 2010 consist of the following:

		December 31,		June 30,
		2010		2010
		(unaudited)
Deferred revenue	$	655	$	684
Less - current portion		(325)		(309)
Deferred revenue - long-term	$	330	$	375

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Note E – Notes Payable

Notes payable at both December 31, 2010 and June 30, 2010 represent a $500 thousand note initially issued to TransCore Link Logistics Corp., a StarTrak vendor, who received the note in conversion of $500 thousand in vendor payables. The note was purchased by the Anderson Family Trust (provider of the Company’s Line of Credit) during fiscal year 2009 and is currently included as part of the Line of Credit and is secured by all of the assets of the Company. The note accrues interest at 12% and is due on May 15, 2011.

Note F – Legal

StarTrak has recently been made a defendant concerning certain patent infringement claims as follows:

Innovative Global Systems LLC v. StarTrak Systems, LLC, et al. Case No.: 6:10-CV-00327. This action is a patent infringement action venued in the United States District Court for the Eastern District of Texas. StarTrak believes that the plaintiff’s patents are invalid due to prior art, based, in part, upon the substantial commercial activity concerning the patent claims long before the patents were applied for or issued.

StarTrak may also, from time to time, be involved in litigation arising from the normal course of business. As of December 31, 2010 there was no such litigation pending deemed material by the StarTrak.

Note G – Liquidity

During the six months ended December 31, 2010, StarTrak reported a net loss of approximately $944 thousand. During fiscal year ended June 30, 2010, StarTrak reported a net loss from continuing operations of approximately $739 thousand. Although StarTrak received additional capital during prior years from its parent, the significant losses raise doubt about the ability of StarTrak to continue as a going concern. During fiscal 2011, StarTrak expects to meet its working capital and other cash requirements with its current cash reserves, cash generated from operations, and other financing as required. While StarTrak believes that it will succeed in raising required working capital there can be no assurance that StarTrak’s efforts will be successful. StarTrak’s continued existence is dependent upon its ability to achieve and maintain profitable operations. The condensed financial statements do not include any adjustments that might result from the outcome of these uncertainties.

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Balance Sheets (Unaudited)
As of June 30,
(dollars in thousands)

				2010		2009
ASSETS				(unaudited)		(unaudited)
CURRENT ASSETS
	Cash		$	248	$	287
	Accounts Receivable, Net			2,289		1,485
	Inventory, Net			1,223		1,355
	Prepaid Expenses and Other Current Assets			555		415
		Total Current Assets		4,315		3,542

PROPERTY, PLANT AND EQUIPMENT, NET				233		319

OTHER ASSETS
	Goodwill			12,575		12,575
	Intangible Assets, Net			770		1,201
	Other Assets, Net			174		340
TOTAL ASSETS			$	18,067	$	17,977

LIABILITIES AND MEMBER'S EQUITY
	Accounts Payable & Accrued Expenses		$	1,336	$	2,050
	Notes Payable, Current Portion			-		360
	Obligations Under Capital Leases			18		15
	Customer Advances			5		193
	Deferred Revenue			309		248
		Total Current Liabilities		1,668		2,866
LONG-TERM LIABILITIES
	Notes Payable, Long-term			500		500
	Deferred Revenue, Long-term			375		256
	Obligations Under Capital Leases, Long-term			5		23
	Related Party Payable			27,655		25,729
TOTAL LIABILITIES				30,203		29,374

MEMBER'S EQUITY				(12,136)		(11,397)

TOTAL LIABILITIES AND MEMBER'S EQUITY			$	18,067	$	17,977

See accompanying notes to the condensed financial statements

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Statement of Operations (Unaudited)
For the Years Ended June 30,
(dollars in thousands)


			2010		2009
NET SALES		$	14,632	$	13,634
	Cost of Goods Sold		8,664		9,686
GROSS PROFIT			5,968		3,948

	Selling, General and Administrative Expense		5,779		5,172
	Amortization of Stock-Based Compensation		292		320
	Depreciation and Amortization		534		499
OPERATING LOSS			(637)		(2,043)
	Interest Expense, net		(102)		(195)
NET LOSS		$	(739)	$	(2,238)

BEGINNING MEMBER'S EQUITY		$	(11,397)	$	(9,159)

ENDING MEMBER'S EQUITY		$	(12,136)	$	(11,397)

See accompanying notes to the condensed financial statements

StarTrak Systems, LLC
(A Wholly Owned Subsidiary)
Condensed Statements of Cash Flows (Unaudited)
For the Years Ended June 30,
(dollars in thousands)

				2010		2009
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss		$	(739)	$	(2,238)
	Adjustments to reconcile net loss to net
	cash used in operating activities:
		Depreciation and amortization		534		499
		Stock-based compensation		292		320
	Changes in operating assets and liabilities:
		Accounts receivable, net		(804)		299
		Inventories, net		132		669
		Prepaid expenses and other current assets		(140)		(333)
		Accounts payable and accrued expenses		(714)		(443)
		Deferred revenue		180		(69)
		Customer advances		(188)		140
		Other assets		166		38
	Net cash used in operating activities			(1,281)		(1,118)

CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of property, plant and equipment			(17)		(274)
	Net cash used in investing activities			(17)		(274)

CASH FLOWS FROM FINANCING ACTIVITIES
	Cash advances from Alanco Technologies, Inc.			1,634		2,125
	Repayment on borrowings			(360)		(600)
	Repayment on capital leases			(15)		(12)
	Net cash provided by financing activities			1,259		1,513

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				(39)		121

CASH AND CASH EQUIVALENTS, beginning of period				287		166

CASH AND CASH EQUIVALENTS, end of period			$	248	$	287

SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
	Non-cash activities:
		Fixed assets purchased with capital lease	$	-	$	50
		Stock-based compensation provided by Parent company	$	292	$	320

See accompanying notes to the consolidated financial statements

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note A – Basis of Presentation and Recent Accounting Pronouncements

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

2006 transaction was valued, considering the Class A Common Shares issued of approximately $9,200,400, net liabilities assumed of $5,425,800 and other costs of the acquisition of $434,500, at $15,060,000. The transaction, recorded using the purchase method of accounting, was reviewed by an independent consultant for valuation services who determined that the appropriate value of intangible assets acquired in the transaction was $2,485,300, resulting in total Goodwill from the transaction of $12,575,400.

The unaudited condensed financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In our opinion, the accompanying condensed financial statements include all adjustments necessary for a fair presentation of such condensed financial statements. Certain reclassifications may have been made to conform prior period financials to the presentation in the current reporting period. The reclassifications had no effect on net loss.

These condensed financial statements should be read in conjunction with StarTrak’s parent company, Alanco Technologies, Inc. (the “Company”) June 30, 2010 Annual Report filed on Form 10-K. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The Company has stock-based compensation plans and provides stock-based compensation to StarTrak employees. StarTrak's stock-based compensation expense reflects stock-based compensation awards based on the estimated grant date fair value. The value of the compensation cost is amortized at a minimum on a straight-line basis over the requisite service periods of the award (generally the option vesting term).

The estimated fair value is determined using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:

·	Expected term is determined under the simplified method using an average of the contractual term and vesting period of the award as appropriate statistical data required to properly estimate the expected term was not available;

·	Expected volatility of award grants made under the Company’s plans is measured using the historical daily changes in the market price of the Company’s common stock over the expected term of the award;

·	Risk-free interest rate is to approximate the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and,

·	Forfeitures are based on the history of cancellations of awards granted by the Company and management’s analysis of potential future forfeitures.

Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the twelve months ended June 30, 2010, that are of significance, or potential significance, to us.

In October 2008, the EITF issued guidance which addresses the accounting when entities enter into revenue arrangements with multiple payment streams for a single deliverable or a single unit of accounting. The EITF could not reach agreement on the transition of this guidance. StarTrak is currently assessing the impact of this guidance on its financial position and results of operations.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

In October 2009, the FASB issued guidance on revenue recognition for multiple-deliverable revenue arrangements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. StarTrak is currently assessing the impact of this guidance on its financial position and results of operations.

In October 2009, the FASB issued guidance on certain revenue arrangements that include software elements which changes the accounting model for revenue arrangements that include both tangible products and software elements. The guidance is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. StarTrak is currently assessing the impact of this guidance on its financial position and results of operations.

In January 2010, the FASB issued guidance on improving disclosures about fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. StarTrak is currently assessing the impact of this guidance on its financial position and results of operations.

In January 2010, the FASB issued guidance on the accounting for distributions to shareholders with components of stock and cash. The guidance is effective for StarTrak and believes the guidance will not have a material impact on its financial position and results of operations.

In January 2010, the FASB issued guidance on improving disclosures about fair value measurements. The guidance is effective for StarTrak and believes the guidance will not have a material impact on its financial position and results of operations.

In August 2010, the FASB issued guidance on accounting for technical amendments to various SEC rules and schedules. The guidance is effective upon issuance and StarTrak is currently assessing the impact of this guidance on its financial position and results of operations.

In August 2010, the FASB issued guidance on accounting for various topics based on technical corrections to SEC paragraphs. The guidance is effective upon issuance and StarTrak is current assessing the impact of this guidance on it financial position and results of operations.

Note B – Stock-Based Compensation

The Company has several shareholder approved employee stock option plans. The plans require that options be granted at a price not less than market on date of grant.

The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards.

Assumptions for awards of options granted during the years ended June 30, 2010 and 2009 were:

Awards Granted Years Ended

June 30, 2010 June 30, 2009

Dividend yield 0% 0%

Expected volatility 62% 62%

Weighted-average volatility 62% 62%

Risk-free interest rate 4 % 4%

Expected life of options (in years) 3.75 3.75

Weighted average grant-date Black Scholes

calculated fair value $1.04 $4.40

Note C – Inventories

Inventories consist of the following at June 30:

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

		2010		2009
Raw materials and purchased parts	$	1,638	$	1,955
Finished goods		-		-
		1,638		1,955
Less reserves for obsolescence		(415)		(600)
	$	1,223	$	1,355

Note D - Liquidity

StarTrak incurred significant losses and negative cash flows from operations during fiscal year ended June 30, 2010 and in prior fiscal years, and anticipates additional losses and negative cash flows in early fiscal year 2011. These factors, as well as the uncertain conditions that StarTrak faces regarding its ability to secure significant contracts for its products, creates an uncertainty about StarTrak's ability to finance its operations and remain a going concern. Although management cannot assure that future operations will be profitable or that additional debt and/or equity capital will be raised, management believes cash balances at June 30, 2010, additional working capital anticipated to be provided by its parent company and working capital generated from StarTrak's operations, will provide adequate capital resources to maintain StarTrak's net cash requirements for the next year. However, if additional working capital is required and not obtained through long-term debt, equity capital or operations, it could adversely affect future operations. Accordingly, the accompanying financial statements have been prepared assuming StarTrak will continue to operate and do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note E - Property, Plant and Equipment

Property, Plant and Equipment consist of the following at June 30:

		2010		2009
Machinery and equipment	$	80	$	80
Furniture and office equipment		392		375
Leasehold improvement		90		90
		562		545
Less accumulated depreciation		(329)		(226)
Net book value	$	233	$	319

Note F – Notes Payable

Notes payable at June 30, 2010 and 2009 consist of the following:

		2010		2009
Notes payable - Tenix	$	-	$	360
Notes payable - Vendor		500		500
Notes payable		500		860
Less current portion		-		(360)
Notes payable - long-term	$	500	$	500

Notes payable – Vendor at both June 30, 2010 and 2009 represent a $500 thousand note initially issued to TransCore Link Logistics Corp., a StarTrak vendor, who received the note in conversion of $500 thousand of vendor payables. The note was purchased by the Anderson Family Trust (provider of the Alanco Technologies, Inc. Line of Credit) during fiscal year 2009 and is currently secured by all of the assets of the Company. The note accrues interest at 12% and is due on December 31, 2011.

Notes payable – Tenix represents an unsecured note assumed in the StarTrak acquisition. The note was amended in September 2009 and transferred to Alanco Technologies, Inc. where the $360 thousand balance plus all accrued interest was converted into Alanco Class A Common Stock.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Note G – Related Party Transactions

StarTrak obtains certain software engineering services from ST Wireless, a company organized and operating under the laws of India. Timothy P. Slifkin, a director of Alanco and StarTrak’s president, informed StarTrak and the Company that he assisted with the formation of ST Wireless in India. ST Wireless has performed these services since the acquisition of StarTrak by Alanco in June 2006. For the years ended June 30, 2010 and 2009, StarTrak paid ST Wireless $161,650 and $24,400, respectively, for services performed. Mr. Slifkin represents that he has no ownership interest in ST Wireless, nor does he have any option to acquire any interest in ST Wireless, however he does have a relationship with ST Wireless as described in the following paragraph.

Mr. Slifkin has recently informed StarTrak and the Company that he owns 60% of the outstanding membership interests of August Matrix, LLC, a New Jersey limited liability company formed in 2008 to represent ST Wireless in the United States. Since August, 2008, StarTrak has remitted all payments to August Matrix for services provided by ST Wireless to StarTrak. Although StarTrak did not make any payment to August Matrix during fiscal year ended June 30, 2010, for the years ended June 30, 2009 and 2008, StarTrak paid August Matrix $53,800 and $205,400, respectively, (Mr. Slifkin’s 60% portion being $32,300 and $123,200). Mr. Slifkin further informed the Company that all of the monies paid by StarTrak to August Matrix were, in turn, paid by August Matrix to ST Wireless for the benefit of StarTrak, and that Mr. Slifkin has received no disbursements or compensation from either August Matrix or ST Wireless. Amounts due either ST Wireless or August Matrix at June 30, 2010 or 2009 were not deemed material.

Note H – Commitments and Contingencies

StarTrak leases certain facilities under non-cancelable operating lease agreements that expire through fiscal year 2018. Future minimum payments under non-cancelable operating leases at June 30, 2010 for fiscal years ended 2011 through 2015 are as follows:

Years Ended		Operating
June 30,		Leases
2011	$	192
2012		189
2013		189
2014		192
2015		196
Thereafter		678
	$	1,636

Note I – Legal

StarTrak Systems, LLC has recently been made a defendant concerning certain patent infringement claims as follows:

StarTrak may also, from time to time, be involved in litigation arising from the normal course of business. As of June 30, 2010 there was no such litigation pending deemed material by StarTrak.

Note J – Retirement Plan

StarTrak provides a 401(k) retirement plan for its employees under the plan of its parent company, Alanco Technologies, Inc. Employees are eligible to participate in the plan on the first of the month following 90 days of continuous employment. Employee salary deferral rates are not restricted by the Company, however, IRS limits and limitations imposed by discrimination tests may affect the allowed salary deferral rate. The Company matches 25% of the amount deferred by employees, matching up to 4% of an employee’s annual compensation.

UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTTS OF

ALANCO TECHNOLOGIES, INC. AND SUBSIDIARIES

Pages 44-47 of this Proxy Statement contain unaudited pro forma condensed consolidated financial information on Alanco and its subsidiaries. This financial information is designed to show how the sale of assets of StarTrak to ORBCOMM Inc. might have affected historical financial statements if such asset sale had been contemplated at an earlier time. The following unaudited pro forma condensed consolidated financial information was prepared based on the historical financial results of Alanco. The Alanco Form 10-K for the year ended June 30, 2010 and Forms 10-Q for the quarters ended September 30, 2010 and December 31, 2010 should also be read in connection with the financial information presented.

Basis of Presentation

Unaudited pro forma balance sheet as of December 31, 2010 and the unaudited pro forma condensed consolidated statements of operations for the six months ended December 31, 2010 and the year ended June 30, 2010, are based on the historical financial statements of the Company.

The unaudited pro forma condensed consolidated balance sheet date as of December 31, 2010 is presented as if the asset sale occurred in its entirety as of that date. The unaudited pro forma condensed consolidated statement of operations data for the six months ended December 31, 2010 is presented as if the asset sale occurred in its entirety on July 1, 2010. The unaudited pro forma consolidated statement of operations data for the year ended June 30, 2010 is presented as if the asset sale occurred in its entirety on July 1, 2009.

The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the asset sale occurred during the referenced period.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010 and its quarterly reports on Form 10-Q for the interim periods ended September 30, 2010 and December 31, 2010.

Preparation of the pro forma information is provided for informational purposes only, and is based on assumptions considered appropriate by Alanco’s management. The pro forma financial information is unaudited and is not necessarily indicative of the results that would have occurred if the transactions described above had been consummated as of the dates indicated, nor does it purport to represent the future financial position and the results of operations for the future periods. In management’s opinion, all adjustments necessarily to reflect the effects of the transactions listed above have been made.

Alanco Technologies, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
As of December 31, 2010
Pro Forma Consolidated Unaudited Financial Information:
The following represents a pro forma condensed consolidated balance sheet as of December 31, 2010, assuming the
Company's StarTrak System, LLC sale was consummated as of that date.

				------------------------------------(Dollars in Thousands)---------------------------
				Alanco		Less:		Pro			Pro Forma
ASSETS				Consolidated		StarTrak		Forma			Consolidated
Current Assets:				(Historical)		(Historical)		Adjustments			Amounts

	Cash		$	538	$	(189)	$	2,000	(1)	$	1,151
								(670)	(2)
								(228)	(3)
								(300)	(6)
	Accounts Receivable, Net			1,984		(1,984)		-			-
	Inventory			1,848		(1,848)		-			-
	ORBCOMM common stock			-		-		5,464	(1)		5,464
	ORBCOMM common stock, held in Escrow			-		-		1,250	(1)		1,250
	ORBCOMM Preferred Stock			-		-		1,835	(1)		-
								(1,835)	(4)
	Assets Related to Discontinued Operations			39		-		-			39
	Other Current Assets			492		(379)		-			113
		Total Current Assets		4,901		(4,400)		7,516			8,017

PROPERTY, PLANT AND EQUIPMENT, NET				328		(328)		-			-

OTHER ASSETS
	Goodwill			12,575		(12,575)		-			-
	Intangible Assets, Net			555		(555)		-			-
	Other Assets, Net			32		(32)		-			-
	TOTAL ASSETS		$	18,391	$	(17,890)	$	7,516		$	8,017

LIABILITIES AND STOCKHOLDERS' EQUITY

	Accounts Payable & Accrued Expenses		$	2,388	$	(1,814)	$	-		$	574
	Dividends Payable			52		-		(52)	(5)		-
	Notes payable - current portion			4,428		(500)		(3,900)	(1)		-
								(300)	(6)
								(228)	(3)
								(500)	(8)
	Capital Leases			14		(14)		-			-
	Customer Advances			177		(177)		-			-
	Liabilities related to discontinued operations			1,433		-		-			1,433
	Deferred Revenue			325		(325)		-			-
		Total Current Liabilities		8,817		(2,830)		(3,980)			2,007
LONG-TERM LIABILITIES

	Deferred Revenue, Long-term			330		(330)		-			-
TOTAL LIABILITIES				9,147		(3,160)		(3,980)			2,007

PREFERRED STOCK - SERIES B CONVERTIBLE				1,154		-		-			1,154

SHAREHOLDERS' EQUITY

	Series D Convertible Preferred Stock			815		-		(815)	(4)		-
	Series E Convertible Preferred Stock			3,165		-		(2,250)	(1)		-
								(915)	(4)
	Class A Common Stock			109,336		-		(1,588)	(1)		107,748
	Accumulated Deficit			(105,226)		(14,730)		18,287	(1)		(102,892)
								52	(5)
								(670)	(2)
								(105)	(4)
								(500)	(8)
		Total Shareholders' Equity		8,090		(14,730)		11,496	(7)		4,856

	TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY		$	18,391	$	(17,890)	$	7,516		$	8,017

(1)	Pro forma adjustments to reflect the sale of StarTrak Systems, LLC for consideration totaling $18.287 million,
	including $2 million cash, $6.714 million in ORBCOMM Common Stock, $1.835 million in ORBCOMM Preferred
	Stock, the assumption of $3.9 million in Notes Payable, the surrender of $1.588 million in Alanco Common Stock
	valued at $1.31 per share and $2.25 million of Series E Preferred Stock held by ORBCOMM.
(2)	To record estimated costs related to the transaction including investment banking costs, legal and bonus incentives.
(3)	To reflect the payoff of an additional $228,000 in notes payable, eliminating the interest bearing debt.
(4)	The entry reflects the retirement of Alanco's remaining preferred stock with similar value of ORBCOMM preferred
	stock. The Company believes the transaction will facilitate the retirement of the remaining $815,000 of Series D and
	$915,000 of Series E Preferred Stock with a combined stated value of $1,835,000 through an exchange with the
	equal face value of the ORBCOMM preferred stock received in the transaction.
(5)	To eliminate preferred stock dividends at December 31, 2010 consistent with the retirement of the Series D and Series E Preferred Stock discussed in 4 above.
(6)	To record repayment of final $300,000 balance under the Anderson Family Trust line of credit agreement.
(7)	Pro forma book value per share at 12-31-10 of $1.13 is determined by dividing the pro forma shareholder equity by the
	net common shares outstanding after adjusting for the 1,212,500 treasury shares to be acquired in the transaction,
	resulting in a pro forma common shares outstanding at December 31, 2010 of 4,295,100.
(8)	To transfer debt to corporate.

Alanco Technologies, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
For the Six Months Ended December 31, 2010

The following represents an unaudited pro forma condensed consolidated statement of operations for the six months
ended December 31, 2010, assuming the sale of StarTrak Systems, LLC was consumated on July 1, 2010.

				-----------------------------------(Dollars in Thousands)--------------------------------
				Alanco		Less:		Pro			Pro Forma
				Consolidated		StarTrak		Forma			Consolidated
				(Historical)		(Historical)		Adjustments			Amounts
Sales			$	7,653	$	(7,653)	$	-		$	-

	Cost of Sales			4,967		(4,967)		-			-
	Selling, General and Administrative Expense			3,722		(3,136)		-			586
	Amortization of Stock-Based Compensation			397		(204)		-			193
	Depreciation and Amortization			256		(256)		-			-
				9,342		(8,563)		-			779
		Operating Loss		(1,689)		(910)		-			(779)
	Interest Expense, net			(254)		-		254	(1)		-
	Other Income (Expense)			(9)		-		-			(9)
LOSS FROM CONTINUING OPERATIONS				(1,952)		(910)		254			(788)
	Loss from Discontinued Operations			(100)		-		-			(100)
NET LOSS				(2,052)		(910)		254			(888)
	Preferred Stock Dividend			(160)		-		99	(2)		(61)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS			$	(2,212)	$	(910)	$	353		$	(949)

NET LOSS PER COMMON SHARE - BASIC AND DILUTED
		Continuing Operations	$	(0.37)						$	(0.19)
		Discontinued Operation	$	(0.02)						$	(0.02)
		Preferred Stock Dividends	$	(0.03)						$	(0.02)
		Net Loss Per Share Attributiable to Common Shareholders	$	(0.42)						$	(0.23)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
		Basic and Diluted		5,265,800				(1,212,500)	(3)		4,053,300

	(1)	To reverse interest expense for the period based upon assumption that all interest bearing debt was paid.
	(2)	Elimination of dividends for the Series E and Series D preferred shares to be retired with ORBCOMM
		preferred shares received in the transaction. Balance of dividends related to Series B Preferred Stock.
	(3)	To adjust for Alanco Common Shares received from ORBCOMM in transaction.

Alanco Technologies, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
For the Twelve Months Ended June 30, 2010

The following represents an unaudited pro forma condensed consolidated statement of operations for the twelve months
ended June 30, 2010, assuming the sale of StarTrak Systems, LLC was consumated on July 1, 2009.

				-----------------------------------(Dollars in Thousands)--------------------------------
				Alanco		Less:		Pro			Pro Forma
				Consolidated		StarTrak		Forma			Consolidated
				(Historical)		(Historical)		Adjustments			Amounts
Sales			$	14,632	$	(14,632)	$	-		$	-

	Cost of Sales			8,664		(8,664)		-			-
	Selling, General and Administrative Expense			6,726		(5,780)		-			946
	Amortization of Stock-Based Compensation			400		(292)		-			108
	Depreciation and Amortization			535		(535)		-			-
				16,325		(15,271)		-			1,054
		Operating Loss		(1,693)		(639)		-			(1,054)
	Interest Expense, net			(862)		-		862	(1)		-
	Other Income (Expense)			(4)		-		-			(4)
LOSS FROM CONTINUING OPERATIONS				(2,559)		(639)		862			(1,058)
	Loss from Discontinued Operations			(6,569)		-		-			(6,569)
NET LOSS				(9,128)		(639)		862			(7,627)
	Preferred Stock Dividend			(385)		-		281	(2)		(104)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS			$	(9,513)	$	(639)	$	1,143		$	(7,731)

NET LOSS PER COMMON SHARE - BASIC AND DILUTED
		Continuing Operations	$	(0.60)						$	(0.34)
		Discontinued Operation	$	(1.53)						$	(2.13)
		Preferred Stock Dividends	$	(0.09)						$	(0.03)
		Net Loss Per Share Attributiable to Common Shareholders	$	(2.22)						$	(2.50)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
		Basic and Diluted		4,295,100				(1,212,500)	(3)		3,082,600

	(1)	To reverse interest expense for the period based upon assumption that all interest bearing debt was paid.
	(2)	Elimination of dividends for the Series E and Series D preferred shares to be retired with ORBCOMM
		preferred shares received in the transaction. Balance of dividends related to Series B Preferred Stock.
	(3)	To adjust for Alanco Common Shares received from ORBCOMM in transaction.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to “incorporate by reference” information into this Proxy Statement, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. This Proxy Statement incorporates by reference documents which are not presented in this Proxy Statement or delivered to you with it. The information incorporated by reference is an important part of this Proxy Statement and subsequent information that we and ORBCOMM file with the SEC will automatically update and supersede this information. Any information modified or superseded will not constitute part of this Proxy Statement, except as modified or superseded. We incorporate by reference the documents listed below and any future filings we and ORBCOMM make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the filing date of this Proxy Statement and before the Annual Meeting.

The following documents filed by us with the SEC are incorporated by reference in this Proxy Staetment:

1. Our Form 10-K filed with the SEC on October 7, 2010

2. Our Form 8-K filed with the SEC on October 15, 2010

3. Our Form 8-K filed with the SEC on October 20, 2010

4. Our Form 8-K filed with the SEC on November 9, 2010

5. Our Form 10-Q filed with the SEC on November 22, 2010

6. Our Form 8-K filed with the SEC on December 21, 2010

7. Our Form 8-K filed with the SEC on December 30, 2010

8. Our Form 10-Q filed with the SEC on February 18, 2011

9. Our Form 8-K filed with the SEC on February 28, 2011

10. Our Form 8-K filed with the SEC on March 1, 2011

The following documents filed by ORBCOMM with the SEC are incorporated by reference in this Proxy Statement:

1. ORBCOMM’s 10-K filed with the SEC on March 16, 2011

2. ORBCOMM's 8-K filed with the SEC on March 16, 2011

3. ORBCOMM’s SC 13D/A filed with the SEC on February 28, 2011

4. ORBCOMM's 8-K filed with the SEC on February 24, 2011

5. ORBCOMM's 8-K filed with the SEC on February 1, 2011

REQUEST FOR COPY OF FORM 10-K

Shareholders may receive a copy of the Form 10-K without charge via e-mail request to alanco@alanco.com, by calling the Company at 480-607-1010, or by writing to the Company to the attention of the Company’s Corporate Secretary at 15575 North 83rd Way, Suite 3, Scottsdale, Arizona 85260.

SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING;

DISCRETIONARY AUTHORITY; OTHER BUSINESS

Any shareholder who intends to present a proposal at the annual meeting of shareholders for the year ending June 30, 2011, and have it included in the Company’s proxy materials for that meeting generally must deliver the proposal to us for our consideration not less than 120 calendar days in advance of the date of the Company’s proxy statement released to security holders in connection with the previous year’s annual meeting of security holders and must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended. In accordance with the above rule, the applicable proposal submission deadline for the 2011 annual meeting of shareholders would be December 11, 2010, however, since Alanco’s 2011 annual meeting would normally be scheduled in January 2011, we are requesting notification of a proposal by August 15, 2011.

Pursuant to Rule 14a-4 under the Securities Exchange Act of 1934, as amended, the Company intends to retain discretionary authority to vote proxies with respect to shareholder proposals properly presented at the Meeting, except in circumstances where (i) the Company receives notice of the proposed matter a reasonable time before the Company begins to mail its proxy materials (including this proxy statement), and (ii) the proponent complies with the other requirements set forth in Rule 14a-4.

The Board of Directors is not aware of any other business to be considered or acted upon at the Meeting other than that for which notice is provided, but in the event other business is properly presented at the Meeting, requiring a vote of shareholders, the proxy will be voted in accordance with the judgment on such matters of the person or persons acting as proxy (except as described in the preceding paragraph). If any matter not appropriate for action at the Meeting should be presented, the holders of the proxies shall vote against the consideration thereof or action thereon.

ROBERT R. KAUFFMAN

CHIEF EXECUTIVE OFFICER

JOHN A. CARLSON

CHIEF FINANCIAL OFFICER

Scottsdale, Arizona

March 28, 2011

Proxy Solicited by the Board of Directors of Alanco Technologies, Inc.

The undersigned hereby appoints Robert R. Kauffman and John A. Carlson, or any one of them, with full power of substitution, as attorneys-in-fact and proxies to represent the undersigned at the Annual Meeting of Shareholders of Alanco Technologies, Inc. to be held at 15575 N. 83rd Way, Suite 3, Scottsdale, Arizona, at 10:00 a.m. Mountain Standard Time, on May 10, 2011, and at any and all adjournments thereof, to vote in the name and place of the undersigned with all the power which the undersigned would possess if personally present, all of the stock of Alanco Technologies, Inc. standing in the name of the undersigned, upon such business as may properly come before the meeting, including the following as set forth hereon.

A SHAREHOLDER MAY USE CUMULATIVE VOTING FOR THE NOMINEES OF THAT PROPOSAL BY VOTING THE NUMBER OF THE SHARES HELD TIMES THE NUMBER OF DIRECTORS BEING ELECTED ON A SINGLE OR GROUP OF CANDIDATES. SHAREHOLDERS MAY ALSO WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE(S) BY DRAWING A LINE THROUGH THE NOMINEE’S NAME(S). FOR EXAMPLE, A SHAREHOLDER WITH 1,000 SHARES MAY CAST A TOTAL OF 5,000 VOTES (# OF SHARES X 5 DIRECTORS) FOR ALL, ONE, OR A SELECT NUMBER OF CANDIDATES.

PROPOSAL NO. 1 ELECTION TO THE BOARD OF DIRECTORS

‡ FOR Management nominees listed below equally among all the nominees OR VOTED AS FOLLOWS:

Harold S. Carpenter ________ Shares James T. Hecker ________ Shares

Robert R. Kauffman ________ Shares Thomas C. LaVoy ________ Shares

John A. Carlson ________ Shares

‡ WITHHOLD AUTHORITY to vote for all nominees listed above.

PROPOSAL NO. 2 RATIFICATION OF RE-APPOINTMENT OF THE INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

‡ FOR ‡ AGAINST ‡ ABSTAIN

PROPOSAL NO. 3 APROVAL OF THE ALANCO 2011 STOCK INCENTIVE PLAN

‡ FOR ‡ AGAINST ‡ ABSTAIN

PROPOSAL NO. 4 APPROVAL TO SELL SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY BY SELLING SUBSTANTIALLY ALL THE ASSETS OF STARTRAK

SYSTEMS, LLC, A WHOLLY OWNED SUBSIDIARY OF THE COMPANY, TO ORBCOMM INC. PURSUANT TO TERMS AND CONDITIONS OF THE

ASSET PURCHASE AGREEMENT AMONG THE COMPANY, STARTRAK AND ORBCOMM.

‡ FOR ‡ AGAINST ‡ ABSTAIN

SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATION ABOVE. IF THE SHAREHOLDER DOES NOT INDICATE A PREFERENCE, MANAGEMENT INTENDS TO VOTE FOR ALL PROPOSALS LISTED. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS FOR WHICH THE SHAREHOLDER HAS NOT INDICATED A PREFERENCE OR IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.

The undersigned revokes any proxies heretofore given by the undersigned and acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement furnished herewith.

Dated_________________________________, 2011

____________________________________________ ____________________________________________

Signature(s) should agree with the name(s) hereon. Executors, administrators, trustees, guardians and attorneys should indicate when signing. Attorneys should submit powers of attorney.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALANCO. PLEASE SIGN AND RETURN THIS PROXY TO ALANCO TECHNOLOGIES, INC., C/O ______________________________________________. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

APPENDIX A

CONFIDENTIAL EXECUTION COPY

ASSET PURCHASE AGREEMENT

by and among

ORBCOMM INC.,

STARTRAK SYSTEMS, LLC,

and

ALANCO TECHNOLOGIES, INC.

_______________________________

Dated as of February 23, 2011

________________________________

TABLE OF CONTENTS
		Page

ARTICLE I	DEFINITIONS	2

ARTICLE II	SALE AND PURCHASE OF ASSETS	2
Section 2.1	Sale and Purchase of Assets	2

ARTICLE III	ASSUMPTION OF LIABILITIES	4
Section 3.1	Assumed Liabilities	4
Section 3.2	Retained Liabilities	5

ARTICLE IV	PURCHASE PRICE	5
Section 4.1	Purchase Price	5
Section 4.2	Closing Certificate	6
Section 4.3	Earn-Out	6
Section 4.4	Closing	8
Section 4.5	Transfer Taxes	9
Section 4.6	Closing Statement	10
Section 4.7	Buyer Stock	13
Section 4.8	Allocation of Purchase Price	13

ARTICLE V	BASIC REPRESENTATIONS AND WARRANTIES OF PARENT	13
Section 5.1	Organization; Authority; Binding Obligation	13
Section 5.2	No Breach	14
Section 5.3	Title	14
Section 5.4	No Brokers	14
Section 5.5	Governmental Approvals	14
Section 5.6	Accredited Investor	14
Section 5.7	Investment Intent	14
Section 5.8	Investment Decision	15
Section 5.9	Transfer Restrictions	15

ARTICLE VI	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE BUSINESS	15
Section 6.1	Organization; Authority	15
Section 6.2	No Breach	16
Section 6.3	Title to Assets	16
Section 6.4	Equity Interests	16
Section 6.5	Affiliate Transactions	16
Section 6.6	Financial Information	17
Section 6.7	Taxes	18
Section 6.8	Intellectual Property Matters	19
Section 6.9	Assets and Properties	21
Section 6.10	Contracts	22
Section 6.11	Litigation	24
Section 6.12	Environmental Matters	25

Section 6.13	Governmental Approvals	25
Section 6.14	Compliance With Applicable Law	25
Section 6.15	Patents	26
Section 6.16	Employee Matters	26
Section 6.17	Absence of Material Adverse Effect and Certain Events	29
Section 6.18	Sufficiency of Assets	31
Section 6.19	Product Warranty	31
Section 6.20	Insurance	32
Section 6.21	Bank Accounts; Powers of Attorney	32
Section 6.22	No Brokers	32
Section 6.23	Internal Controls	32
Section 6.24	Customers and Suppliers	32
Section 6.25	Disclosures	33

ARTICLE VII	REPRESENTATIONS AND WARRANTIES OF BUYER	33
Section 7.1	Organization	33
Section 7.2	Authority; Binding Obligation	33
Section 7.3	No Breach	33
Section 7.4	Governmental Approvals	33
Section 7.5	No Brokers	34
Section 7.6	SEC Reports; Financial Statements	34
Section 7.7	Valid Issuance	34
Section 7.8	No Material Adverse Change	34
Section 7.9	Tax Matters	35
Section 7.10	Title to Properties	35
Section 7.11	Certificates, Authorities and Permits	35
Section 7.12	Litigation	36
Section 7.13	Compliance with Nasdaq Continued Listing Requirements	36

ARTICLE VIII	COVENANTS OF PARENT AND THE COMPANY	36
Section 8.1	Conduct of Business	36
Section 8.2	Access to Information	37
Section 8.3	Notices of Certain Events	37
Section 8.4	Consents	37
Section 8.5	Books and Records	38
Section 8.6	Confidential Information	38
Section 8.7	Restrictive Covenants	38
Section 8.8	Acquisition Proposals	39
Section 8.9	Preparation of Proxy Statement	41
Section 8.10	Stockholders Meeting	42
Section 8.11	Power of Attorney with Respect to Assets	42
Section 8.12	Receipt of Assets	42
Section 8.13	Change of Corporate Name	43
Section 8.14	Registration of Buyer’s Common Stock	43
Section 8.15	Restriction of Resale of Buyer’s Common Stock	43
Section 8.16	Certain Payments	43
Section 8.17	Resolution of Intellectual Property Issues	43
Section 8.18	Assets Owned by Parent	44

ARTICLE IX	COVENANTS OF PARENT, THE COMPANY AND BUYER	44
Section 9.1	Advice of Changes	44

Section 9.2	Public Announcements	44
Section 9.3	Commercially Reasonable Efforts; Further Assurances	44
Section 9.4	Post-Closing Access to Information	45
Section 9.5	Insurance	45
Section 9.6	Standard Procedure	46
Section 9.7	Cash Management	46
Section 9.8	IGS Proceeding	46
Section 9.9	Fuel Sensor Warranty Claims	47

ARTICLE X	EMPOYMENT MATTERS	47
Section 10.1	Employment	47
Section 10.2	Pension Plans	48
Section 10.3	Welfare Plans	48
Section 10.4	Severance Benefits	49
Section 10.5	Relationship of the Parties; No Right to Continued Employment; Ability to Amend, Modify or Terminate Plans	49

ARTICLE XI	CONDITIONS TO CLOSING	49
Section 11.1	Conditions to Obligations of Buyer	49
Section 11.2	Conditions to Obligations of Parent and the Company	51

ARTICLE XII	TERMINATION	52
Section 12.1	Termination	52
Section 12.2	Effect of Termination	53

ARTICLE XIII	SURVIVAL	54
Section 13.1	Survival	54

ARTICLE XIV	INDEMNIFICATION	55
Section 14.1	Indemnification by Parent and the Company	55
Section 14.2	Indemnification by Buyer	55
Section 14.3	Procedures for Indemnification	56
Section 14.4	Certain Rights and Limitations	57
Section 14.5	Termination of Indemnification Obligations	58
Section 14.6	Waiver	58
Section 14.7	Exclusive Remedies	58

ARTICLE XV	GENERAL PROVISIONS	59
Section 15.1	Assignment	59
Section 15.2	Parties in Interest	59
Section 15.3	Amendment	59
Section 15.4	Waiver; Remedies	59
Section 15.5	Effect of Investigation	59
Section 15.6	Fees and Expenses	59
Section 15.7	Notices	60
Section 15.8	Compliance With Bulk Transfer Laws	61
Section 15.9	Captions; Currency	61
Section 15.10	Entire Agreement	61
Section 15.11	Severability	62
Section 15.12	Consent to Jurisdiction	62
Section 15.13	Exhibits and Schedules; Disclosure	62

Section 15.14	Governing Law	63
Section 15.15	Counterparts	63
Section 15.16	Specific Performance	63
Section 15.17	Interpretation	63
Section 15.18	Performance by the Company	63

EXHIBITS

Exhibit A - Definitions

Exhibit B - Forms of Promissory Note and Security Agreement

Exhibit C - Powers, Preferences, Rights and Limitations of Series A Preferred Stock of Buyer

Exhibit D - Form of Registration Rights Agreement

Exhibit E - November 30, 2010 Balance Sheet

Exhibit F - Form of Parent Closing Opinion

Exhibit G - Form of Buyer Closing Opinion

Exhibit H - Form of Escrow Agreement

SCHEDULES

Schedule 1(a) - Business Intellectual Property

Schedule 1(b) - Retained Contracts

Schedule 2.1(a)(i) - Real Property

Schedule 6.1 - Foreign Qualifications

Schedule 6.2 - No Breach

Schedule 6.3 - Title to Assets

Schedule 6.4 - Equity Interests

Schedule 6.5 - Affiliate Transactions

Schedule 6.6(b) - Company Financial Statements

Schedule 6.6(c) - Liabilities

Schedule 6.7(l) - Foreign Establishments

Schedule 6.8(a) - Certain Intellectual Property

Schedule 6.8(b) - Contracts Relating to Business Intellectual Property

Schedule 6.8(c) - Intellectual Property Matters

Schedule 6.8(d) - Persons With Inventions, Discoveries or Ideas

Schedule 6.8(e) - Documentation of Business Intellectual Property

Schedule 6.8(f) - Business Intellectual Property to Conduct the Business

Schedule 6.8(g) - Source Code

Schedule 6.8(h) - Open Source Code

Schedule 6.9(c) - Leased Premises

Schedule 6.10(a) - Contracts

Schedule 6.10(c) - Contract Matters

Schedule 6.10(d) - Change of Control Provisions

Schedule 6.10(e) - Loss Contracts

Schedule 6.11(a) - Litigation

Schedule 6.12 - Environmental Matters

Schedule 6.13 - Parent and Company Governmental Approvals

Schedule 6.14(a) - Compliance with Laws

Schedule 6.15 - Permits

Schedule 6.16(b) - Plans

Schedule 6.16(i) - Employee Agreements

Schedule 6.16(j) - Employee Information

Schedule 6.16(l) - Non-At-Will Employment

Schedule 6.17(a) - Material Adverse Effect

Schedule 6.17(b) - Material Events

Schedule 6.18 - Assets Owned by Affiliates

Schedule 6.19 - Product Warranty

Schedule 6.20(a) - Insurance Policies

Schedule 6.21 - Bank Accounts and Powers of Attorney

Schedule 6.24 - Customers and Suppliers

Schedule 7.4 - Buyer Governmental Approvals

Schedule 8.18 - Assets Owned by Parent

Schedule 9.7(a) - Transferred Bank Accounts

Schedule 10.1(a) - Employees of the Business

Schedule 10.5(d) - COBRA Employees

Schedule 11.1(h) - Required Consents

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of February 23, 2011, by and among ORBCOMM INC., a Delaware corporation ("Buyer"), STARTRAK SYSTEMS, LLC, a Delaware limited liability company (the "Company"), and ALANCO TECHNOLOGIES, INC., an Arizona corporation ("Parent").

W I T N E S S E T H :

WHEREAS, Parent is the sole record and beneficial owner of all the issued and outstanding membership units or interests of the Company (collectively, the "Membership Units");

WHEREAS, concurrently with the execution of this Agreement, the Company and StarTrak Wireless Technologies Private Limited are entering into a written agreement (i) governing all copyrights, trade secret rights, and exclusive, royalty-free, worldwide, and freely assignable rights to use, display, run, duplicate, modify, improve, extend, and create derivative works from, all of the software used in the Business for the receipt, processing, display, storage, and delivery of customer data that has been developed, modified, extended or improved for the Company by StarTrak Wireless Technologies Private Limited, or any predecessor entity thereof, in India or elsewhere, (ii) to license the same to others without requirement to account for any royalties received, (iii) to prevent others from doing any of the foregoing without Buyer’s consent, all to Buyer’s reasonable satisfaction, and (iv) providing for the future services of StarTrak Wireless Technologies Private Limited with respect to the maintenance and further development of such software, which agreement will be effective upon the Closing (the "ST Wireless Agreement").

WHEREAS, Buyer has separately entered into an agreement to purchase from the Anderson Group (as defined in Exhibit A) at the Closing all of the shares of common stock of Parent held by the Anderson Group (the "Anderson SPA");

WHEREAS, Buyer has separately entered into an agreement to purchase from Timothy P. Slifkin ("Slifkin") and Thomas A. Robinson ("Robinson") at the Closing all of the shares of common stock of Parent held by each of Slifkin and Robinson (the "Slifkin/Robinson SPA");

WHEREAS, STK Acquisition, LLC is a wholly-owned subsidiary of Buyer, formed to receive the Assets and operate the Business after the Closing;

WHEREAS, STK Acquisition, LLC has separately entered into an assignment and assumption agreement (the "Anderson Assignment and Assumption Agreement") pursuant to which STK Acquisition, LLC has agreed to acquire at the Closing all of the rights of the lender under the Amended and Restated Loan and Security Agreement dated December 21, 2007, as amended, by and between Donald E. Anderson and Rebecca E. Anderson, Trustees of the Anderson Family Trust, UTA dated December 20, 1993 (the "Anderson Trust") as lender, and Parent, the Company and the other borrower parties thereto (the "Anderson Loan Agreement");

WHEREAS, in consideration of the Anderson Assignment and Assumption Agreement, (i) STK Acquisition, LLC will separately (A) issue at Closing a Secured Promissory Note in favor of the Anderson Trust (the “Secured Promissory Note”) and (B) enter into a Security Agreement in favor of the Anderson Trust (the "Anderson Security Agreement"), and (ii) Buyer will separately enter into at Closing a Guaranty (the “Anderson Note Guaranty”) to guarantee the obligations of STK Acquisition, LLC under the Secured Promissory Note; and

WHEREAS, following the consummation of the above transactions, the Company desires to sell, and cause to be sold, to Buyer, and Buyer desires to purchase, the Assets (as defined herein), and the Company desires to transfer, and cause to be transferred, to Buyer, and Buyer desires to assume, the Assumed Liabilities (as defined herein), all pursuant to the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, covenants and agreements hereinafter contained, the parties agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used in this Agreement shall have the meanings specified in Exhibit A.

ARTICLE II

SALE AND PURCHASE OF ASSETS

Section 2.1 Sale and Purchase of Assets.

(a) Subject to the terms and conditions set forth herein and in reliance upon the representations and warranties contained herein, at the Closing, for the consideration specified in Section 4.1, the Company will sell, assign, convey, transfer and deliver to Buyer, and Buyer will purchase and acquire from the Company, all of the Company's right, title and interest in and to (i) the Business Intellectual Property, free and clear of any Liens, other than Permitted Liens, (ii) the Transferred Bank Accounts, free and clear of any Liens, other than Permitted Liens, and (iii) all other assets, properties and rights (whether tangible or intangible, real, personal or mixed, fixed, contingent or otherwise, and wherever located) of the Company or otherwise Related to the Business (except for Retained Assets), in each case free and clear of any Liens, other than Permitted Liens, as the same shall exist on the Closing Date, including the following to the extent Related to the Business (unless otherwise provided):

(i) all real property Leases set forth on Schedule 2.1(a)(i);

(ii) all accounts, loans and notes receivable (whether current or not current), performance and surety bonds and letters of credit or other similar instruments in favor of the Company;

(iii) all inventories, including finished products, work-in-process, materials, parts, components, production stock, accessories, supplies and consigned inventory (including all such inventories that are held by third parties);

(iv) all machinery, equipment, tooling, vehicles, furniture and fixtures, leasehold improvements, plant and office equipment, test equipment, laboratory equipment and supplies, repair parts, repair stock, tools, computer hardware and software (including all enterprise information systems), engineering and design equipment, computer networking equipment and other tangible personal property, together with any rights, claims and interests arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any such assets or any component part thereof;

(v) all Contracts, including all rights to receive payment for products sold or services rendered, and to receive goods and services, pursuant to Contracts and to assert claims and to take other actions in respect of breaches, defaults and other violations thereunder (whether or not arising or asserted before, on or after the Closing Date);

(vi) all credits, advances, prepaid expenses, deposits and retentions held by third parties, including those held by third parties under Contracts;

(vii) all Permits;

(viii) all lock boxes;

(ix) the benefits of coverage provided by insurance policies of the Company (with respect to the Business) in respect of matters occurring on or prior to the Closing Date as set forth in Section 9.5;

(x) all operating, design, manufacturing, test and other data and records (in each case, in whatever form or medium, including electronic media), including all books, records, notes, shipping records, sale and purchase correspondence and files, copies of Tax Returns, copies of all financial and accounting data and records, sales and sales promotional material and data, advertising materials, credit information, cost and pricing information, customer and supplier lists, business plans, reference catalogs, payroll and personnel records and procedures, blue-prints, research and development files, data and laboratory books, sales order files, litigation files and other similar property, rights and information;

(xi) the corporate name "StarTrak Systems" and any other names used in connection with the Business;

(xii) all telephone numbers used in connection with the Business;

(xiii) all rights in and to products sold or leased by the Business and products of the Business currently in development;

(xiv) all causes of action, choses in action, lawsuits, judgments, claims, rights under express or implied warranties, guarantees, indemnities and similar rights in favor of the Company, rights of recovery, rights of set-off, rights of subrogation and all other rights and demands of any nature available to or being pursued by the Company;

(xv) all goodwill and going concern value of the Business; and

(xvi) all other assets, properties and rights (other than Retained Assets), including those reflected as assets on the Final Closing Statement.

The assets, properties and rights of the Company to be sold, assigned, conveyed, transferred and delivered to Buyer pursuant to this Agreement are herein collectively referred to as the "Assets". The term "Assets" will include all additions and replacements to any of the items described in this Section 2.1(a) from the date of this Agreement through the Closing Date, and will exclude, to the extent permitted by this Agreement, all deletions, sales or other disposals of any of the foregoing from the date of this Agreement through the Closing Date.

(b) Anything contained herein to the contrary notwithstanding, the Assets to be sold, assigned, conveyed, transferred and delivered to Buyer hereunder will exclude, and the Company will retain, the Retained Assets.

(c) Anything contained herein to the contrary notwithstanding, this Agreement will not constitute an assignment, an attempted assignment or an agreement to assign any Contract or Permit if an assignment or attempted assignment of the same without the Consent of any other party or parties thereto would constitute a breach thereof or in any significant way impair the rights of Buyer thereunder. The Company will use its commercially reasonable efforts (not to include any requirement to pay any consideration or offer or grant any financial accommodation or other benefit or release any claim or right), and Buyer will reasonably cooperate (it being understood that such cooperation will not include any requirement to pay any consideration or offer or grant any financial accommodation or other benefit or release any claim or right) with the Company, to obtain prior to the Closing all Consents and to resolve all impracticalities of assignments or transfers necessary to sell, assign, convey, transfer and deliver to Buyer the Assets. If any such Consent is not obtained or if an attempted assignment would be ineffective or would impair the Company's or Buyer's rights under any such Contract or Permit so that Buyer would not receive all such rights, then (1) the Company will (x) cause the full benefits of any such Contract or Permit to be provided to Buyer to the extent practicable, and (y) pay promptly or cause to be paid promptly to Buyer when received all monies and other properties received by the Company with respect to any thereof; and (2) in consideration of the Company providing or causing to be provided to Buyer the full benefits thereof, Buyer will perform and discharge on behalf of the Company all of the Company's liabilities, obligations or commitments thereunder that are Assumed Liabilities described in Section 3.1(a) or 3.1(c) in accordance with the provisions thereof. In addition, the Company shall take such other actions (not to include any requirement to pay any consideration or offer or grant any financial accommodation or other benefit or release any claim or right) as may reasonably be requested by Buyer in order to place Buyer, insofar as reasonably possible, in the same position as if such Contract or Permit had been transferred as contemplated hereby and so that all the benefits relating thereto, including possession, use, risk of loss, potential for gain and dominion, control and command, shall inure to Buyer. Notwithstanding the foregoing, if any such Consent is not obtained prior to the Closing, the Company shall continue to use its commercially reasonable efforts (not to include any requirement to pay any consideration or offer or grant any financial accommodation or other benefit or release any claim or right) to obtain all such Consents (and, if and when such Consents are obtained, the transfer of the applicable Contract or Permit will be effected in accordance with the terms of this Agreement).

(d) In the event that any written or oral Contract not set forth on Schedule 6.10 (a) is discovered after the Effective Time, Parent or the Company shall promptly notify Buyer of such Contract and provide Buyer with a copy (or true and correct summary of the material terms if the Contract is oral) thereof and Buyer shall within thirty (30) days of such notice either expressly assume such Contract (an "Additional Contract"), in which case, the Additional Contract will be treated as if set forth as a Contract on Schedule 6.10(a) on the date hereof, or reject such Contract, in which case, such Contract shall not constitute an Asset and shall be deemed to be a Retained Asset/Retained Liability.

ARTICLE III

ASSUMPTION OF LIABILITIES

Section 3.1 Assumed Liabilities. Subject to the terms and conditions set forth herein, and in reliance upon the representations and warranties contained herein, at the Closing, in consideration for the sale, assignment, conveyance, transfer and delivery of the Assets to Buyer, Buyer will assume and undertake to pay, perform and discharge, in accordance with the terms thereof, only the following Liabilities of the Company incurred in the ordinary course of business (the "Assumed Liabilities"):

(a) express contractual performance obligations arising after the Effective Time (other than obligations relating to those Liabilities listed in clauses (a) through (r) of the definition of Retained Liabilities) of the Company arising under Contracts that constitute Assets (it being understood and agreed that, except as provided in clause (c) of this Section 3.1, Assumed Liabilities described in this clause (a) will exclude any amounts due or payable as of the Effective Time under or in respect of Contracts that constitute Assets);

(b) Liabilities expressly assumed by Buyer pursuant to Article X; and

(c) Liabilities (other than those Liabilities listed in clauses (a) through (r) of the definition of Retained Liabilities) which are not included in clause (a) or (b) of this Section 3.1, but only to the extent and in the amounts provided for on the Final Closing Statement. The parties understand and agree that the Liabilities to be assumed under this Section 3.1(c) shall be such Liabilities to the extent and in the amounts provided for on the Estimated Closing Statement pending the determination of the Final Closing Statement and that Buyer shall treat such Liabilities shown on the Estimated Closing Statement as Liabilities assumed by Buyer pending the determination of the Final Closing Statement.

Buyer will assume no other Liabilities whatsoever.

Section 3.2 Retained Liabilities. Anything contained herein to the contrary notwithstanding, neither Buyer nor any Affiliate of Buyer will assume or undertake to pay, perform or discharge and none thereof will be liable for, and Parent, the Company and their Affiliates will remain liable for and pay, perform and discharge when due, all Liabilities listed in clauses (a) through (r) of the definition of Retained Liabilities and all other Liabilities of Parent, the Company and their respective Affiliates not constituting Assumed Liabilities.

ARTICLE IV

PURCHASE PRICE

Section 4.1 Purchase Price.

(a) Secured Loan. On the date hereof, Buyer shall loan Parent $300,000 pursuant to the terms and conditions of a Loan and Security Agreement, granting Parent a second lien (subject to the liens granted pursuant to the Anderson Loan Agreement) on all the assets of the Company and Parent, in the form set forth on Exhibit B hereto (the "Secured Loan Agreement"). Parent and the Company agree that the amount of the Closing Payment to be paid by Buyer pursuant to Section 4.1(b)(i) shall be reduced by the aggregate amount of any principal, interest and fees due under the Secured Loan Agreement as of the Closing Date.

(b) Closing Payment. Subject to all of the terms and conditions of this Agreement, as consideration for the sale, conveyance, transfer, assignment and delivery of the Assets, Buyer will, at the Closing:

(i) wire transfer immediately available funds to Parent (to such bank and account of Parent in the United States as is specified in writing by Parent to Buyer at least three (3) business days prior to the Closing Date), in an amount equal to two million Dollars ($2,000,000) (the "Closing Payment"), subject to any adjustments under Section 4.1(a), Section 4.6(a) or Section 15.8(b);

(ii) cancel and terminate or cause to be canceled and terminated all outstanding obligations of Parent and the Company and their Affiliates under the Anderson Loan Agreement, including the outstanding principal amount of $3,900,000 and any interest and fees, if any, due thereunder as of the Closing Date;

(iii) cancel and terminate all outstanding obligations of the Company under the Secured Loan Agreement, including the outstanding principal amount of $300,000 and any interest and fees, if any, due thereunder as of the Closing Date;

(iv) deliver or cause to be delivered to Parent 500,000 shares of Series E Convertible Preferred Stock of Parent evidenced by a stock certificate, duly endorsed for transfer in favor of Parent or accompanied by stock powers duly executed in blank;

(v) deliver or cause to be delivered to Parent 1,212,748 shares of common stock of Parent, evidenced by stock certificates, duly endorsed for transfer in favor of Parent or accompanied by stock powers duly executed in blank;

(vi) issue and deliver or cause to be issued and delivered to the Escrow Agent 249,917 shares of common stock of Buyer ("Buyer Stock") duly registered in the name of Parent (the "Litigation Escrowed Shares") to be held by the Escrow Agent pursuant to the Escrow Agreement in book-entry form on the stock transfer books of Buyer with a stop-transfer order;

(vii) issue and deliver or cause to be issued and delivered to the Escrow Agent a number of shares of Buyer Stock equal to 166,611 shares, less the number of shares equal to the quotient of (A) 50% of the amount of Fuel Sensor Damages (x) actually expended by Parent or the Company from March 1, 2011 through the last day of the month immediately preceding the Closing Date and (y) accrued as current liabilities on the Estimated Closing Statement, divided by (B) $3.001 per share, duly registered in the name of Parent (the "Fuel Sensor Escrowed Shares") to be held by the Escrow Agent pursuant to the Escrow Agreement in book-entry form on the stock transfer books of Buyer with a stop-transfer order;

(viii) issue and deliver or cause to be issued and delivered to Parent a number of shares of Buyer Stock equal to 1,987,194 shares, minus the number of Fuel Sensor Escrowed Shares, evidenced by stock certificates duly registered in the name of Parent;

(ix) issue and deliver or cause to be issued and delivered to Parent 183,550 shares of perpetual convertible preferred stock of Buyer with the powers, preferences, rights and limitations as set forth on Exhibit C and evidenced by stock certificates duly registered in the name of Parent; and

(x) assume the Assumed Liabilities.

Section 4.2 Closing Certificate. On the Closing Date, Parent and the Company will deliver to Buyer a certificate (the "Closing Certificate") certifying as to the Company Debt Amount, together with a breakdown thereof. A draft of the Closing Certificate shall be delivered by Parent and the Company to Buyer at least five (5) business days prior to the Closing Date.

Section 4.3 Earn-Out.

(a) In addition to the consideration payable pursuant to Section 4.1(b), as additional consideration, on or before April 30, 2012 (the "Earn-Out Payment Date"), subject to the terms and conditions set forth below, Buyer will pay to Parent an aggregate amount (the "Earn-Out Amount") calculated as follows:

(i) $250,000, if the Business achieves at least $20.0 million in Total Revenue in the calendar year ending December 31, 2011 (the "Earn-Out Period");

(ii) plus an additional $750,000, such additional amount to be pro-rated on a straight line basis, if the Business achieves between $20.0 million and $22.0 million in Total Revenue in the Earn-Out Period;

(iii) plus an additional $250,000, if the Business achieves at least $23.0 million in Total Revenue in the Earn-Out Period;

(iv) plus an additional $250,000, if the Business achieves at least $24.0 million in Total Revenue in the Earn-Out Period; and

(v) reduced by an amount equal to the sum of the amounts calculated under clauses (i)-(iv) above, (x) multiplied by an amount equal to the aggregate number of shares of common stock of the Parent delivered to Parent pursuant to Section 4.1(b)(v) and (y) divided by the total outstanding shares of common stock of Parent immediately prior to Closing.

(b) The Earn-Out Amount will be paid by Buyer on or before the Earn-Out Payment Date in accordance with the following payment procedures: (A) by delivery to Parent of that number of whole shares of Buyer Stock equal to the Earn Out Amount divided by the average closing price of Buyer Stock for the 20-day period ending March 31, 2012 (the "Earn-Out Market Price") evidenced by stock certificates duly registered in the name of Parent, (B) at the sole option of Buyer, by wire transfer of immediately available funds to Parent for an amount in dollars equal to the Earn-Out Amount, or (C) at the sole option of Buyer, by delivery to Parent of any combination of shares of Buyer Stock and amounts in dollars, provided that the aggregate value of shares (such shares to be valued at its Earn-Out Market Price) and cash paid to Parent pursuant to this clause (C) is equal to the Earn-Out Amount.

(c) For purposes of this Section 4.3, "Total Revenue" shall mean the total revenue of the Business for the Earn-Out Period as determined in accordance with GAAP based upon an audit (such audit to cover the post-Closing period) of the Business's total revenue by Buyer's independent registered public accounting firm for the calendar year ending December 31, 2011 and the portion of which is recognized after the Closing will be included in Buyer's Annual Report on Form 10-K for its 2011 fiscal year. Notwithstanding the foregoing, to the extent any equipment sales of the Business are characterized as a lease, the lease revenue with respect to such lease shall be recorded at the time the lease is consummated rather than over the term of the lease and extended warranty revenue shall be separately stated on any invoice which includes the same.

(d) On or before March 31, 2012, Buyer will deliver to Parent a statement prepared by Buyer setting out the amount of Total Revenue in the Earn-Out Period and stating whether any Earn-Out Amount is payable pursuant to this Section 4.3, with appropriate supporting calculations and supporting documentation (the "Earn-Out Statement"). Within 10 business days after the filing of Buyer's Quarterly Reports on Form 10-Q for the quarters ended June 30, 2011 and September 30, 2011, Buyer shall deliver to Parent a statement prepared by Buyer setting forth an estimate of unaudited total revenue of the Business for such quarter determined using the same accounting methodology as will be used to determine Total Revenue.

(e) After the Earn-Out Statement has been delivered by Buyer to Parent pursuant to Section 4.3(d), Parent may within ten (10) days after the receipt thereof exercise the right to audit the Earn-Out Statement by so notifying Buyer in a written statement specifying the nature and reasons for Parent's disagreement with Buyer's determination (an "Audit Notice"). The portion of the Earn-Out Amount which is not disputed by Parent in the Audit Notice (i.e., the entire amount included in the Earn-Out Statement produced by Buyer if Parent’s Audit Notice indicates Total Revenue should be greater than as specified in the Earn-Out Notice) shall be immediately payable by Buyer pursuant to Section 4.3(b). The remaining provisions of this Section 4.3(e) shall apply only to the portion of the Earn-Out Amount that is disputed by Parent in the Audit Notice. During the 30-day period following Buyer's receipt of such Audit Notice, Buyer and Parent shall attempt in good faith to resolve the disagreement with respect to the Earn-Out Statement, and during such 30-day period Buyer will cause Parent to be provided with access at reasonable times, following reasonable notice, to books and records relevant to sales of the Business for the purposes of auditing the Earn-Out Statement. If Parent and Buyer are unable to resolve any such disagreement within such 30-day period, the matter shall be submitted to an independent auditing firm of national reputation reasonably acceptable to Buyer and Parent (the "Independent Firm"). In connection with such engagement, Buyer and Parent will each execute, if requested by the Independent Firm, a reasonable engagement letter including customary indemnities. Promptly after such engagement of the Independent Firm, Parent or Buyer will provide the Independent Firm with a copy of this Agreement, the Earn-Out Statement and the Audit Notice. The Independent Firm will have the authority to request in writing such additional written submissions from Parent or Buyer as it deems appropriate, provided that a copy of any such submission will be provided to the other party at the same time as it is provided to the Independent Firm. Parent and Buyer will not make (or permit any of their Affiliates to make) any additional submission to the Independent Firm except pursuant to such a written request by the Independent Firm. Parent and Buyer will not communicate (or permit any of their Affiliates to communicate) with the Independent Firm without providing the other party a reasonable opportunity to participate in such communication with the Independent Firm (other than with respect to written submissions in response to the written request of the Independent Firm). Parent and Buyer shall use commercially reasonable efforts to cause the Independent Firm to render its determination on the matter within ninety (90) days of its submission by Parent and Buyer. Such determination shall be, for all purposes, conclusive, non appealable, final and binding upon Parent and Buyer. Once such determination is made, any resolved Earn-Out Amount shall become immediately payable by Buyer pursuant to Section 4.3(b). The fees and expenses of the Independent Firm will be borne by Parent, on the one hand, and Buyer, on the other hand, in the same proportion that the dollar amount of disputed items lost by Parent, on the one hand, or Buyer, on the other hand, bears to the total dollar amount in dispute resolved by the Independent Firm. Each party will bear the fees, costs and expenses of its own accountants and all of its other expenses in connection with matters contemplated by this Section 4.3.

(f) Parent acknowledges that Total Revenue may be lower than $20.0 million for any number of reasons and, as a result, that Parent may not be entitled to the payment of any portion of the Earn-Out Amount. Although Buyer agrees to act in good faith in conducting the Business over the Earn-Out Period in balancing the wide variety of business decisions facing it from time to time, Buyer may otherwise operate the Business after the Closing Date in its sole discretion.

Section 4.4 Closing.

(a) The closing of the purchase and sale of the Assets and the assumption of the Assumed Liabilities (the "Closing") will take place (i) at the offices of Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, New York, 10112 at 10:00 a.m. local time on the third business day following the satisfaction or waiver of all conditions set forth in Article XI (other than conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), or (ii) at such other place, date and time as Parent and Buyer may agree. The date and time at which the Closing actually occurs is referred to herein as the "Closing Date". The Closing will be deemed to be effective at the close of business on the Closing Date (the "Effective Time").

(b) At the Closing, Parent and the Company will deliver and cause to be delivered the following:

(i) such bills of sale and instruments of assignment, conveyance and transfer as shall reasonably be requested by Buyer to effect or evidence the sale, assignment, conveyance, transfer and delivery of the Assets to Buyer;

(ii) the certificate referenced in Section 11.1(j);

(iii) a standing instruction letter duly executed by Parent instructing the Escrow Agent to transfer shares from the Escrow Property to the name of Buyer when required to pursuant to the terms of the Escrow Agreement to be held by the Escrow Agent pursuant to the Escrow Agreement;

(iv) the Escrow Agreement, executed by Parent and the Escrow Agent;

(v) the Tax Escrow Agreement, executed by Parent and the Tax Escrow Agent, if required pursuant to Section 15.8(b); and

(vi) all other instruments, agreements, certificates and documents required to be delivered by Parent or the Company at or prior to the Closing Date pursuant to this Agreement.

(i) the payments required by Section 4.1(b);

(ii) such instruments of assumption as shall reasonably be requested by Parent to effect or evidence the assumption by Buyer of the Assumed Liabilities;

(iii) the certificate referenced in Section 11.2(h);

(iv) the Escrow Agreement, executed by Buyer and the Escrow Agent;

(v) the Tax Escrow Agreement, executed by Buyer and the Tax Escrow Agent, if required pursuant to Section 15.8(b); and

(vi) all other instruments, agreements, certificates and documents required to be delivered by Buyer at or prior to the Closing Date pursuant to this Agreement.

Section 4.5 Transfer Taxes. Each party shall be responsible for any sales and transfer Taxes applicable to it and due as a result of the sale of the Assets (including Taxes, if any, imposed upon the transfer of real or personal property) and filing, recording, registration, stamp, documentary and other similar Taxes and fees payable in connection with the Transaction. The Company and Buyer will reasonably cooperate in preparing or filing all necessary Tax Returns and other documentation with respect to all such Taxes and fees.

Section 4.6 Closing Statement.

(a) At least five (5) business days prior to the Closing Date, the Company shall submit to Buyer a written statement of estimated Current Assets and Current Liabilities as of the last day of the month immediately preceding the Closing Date (the "Estimated Closing Statement") containing the Company's good faith estimate of the Net Working Capital Amount (the "Estimated Net Working Capital Amount"), which shall reflect the items required to be set forth in, and be prepared in a manner consistent with the preparation of, the Closing Statement, in each case in accordance with Section 4.6(b); provided, however, that for purposes of the Estimated Net Working Capital Amount, the parties hereto agree that 50% of the amount of Fuel Sensor Damages (x) actually expended by Parent or the Company from March 1, 2011 through the last day of the month immediately preceding the Closing Date and (y) accrued as current liabilities on the Estimated Closing Statement, shall be added as a credit to the estimated Net Working Capital Amount set forth on the Estimated Closing Statement. Commencing with the Company's delivery of the Estimated Closing Statement to Buyer, Buyer shall have reasonable access to the books and records and personnel of the Company and the opportunity to consult with the Company for purposes of confirming or disputing the Estimated Net Working Capital Amount. If Buyer shall disagree, in good faith, with any item set forth in the Estimated Closing Statement or used to determine the Estimated Net Working Capital Amount, then Buyer and the Company shall work, in good faith, to reach agreement on such disputed items and the amounts as agreed to by Buyer and the Company shall constitute the Estimated Net Working Capital Amount. Notwithstanding the foregoing, Buyer's agreement with the Estimated Net Working Capital Amount (or any item set forth in the Estimated Closing Statement or used to determine the Estimated Net Working Capital Amount) shall not foreclose, prevent, limit or preclude any rights or remedy of Buyer set forth in this Agreement. If the Estimated Net Working Capital Amount is less than the Target Net Working Capital Amount, the amount of the Closing Payment to be paid by Buyer pursuant to Section 4.1(b)(i) shall be reduced by an amount equal to the difference between the Estimated Net Working Capital Amount and the Target Net Working Capital Amount. If the Estimated Net Working Capital Amount is more than the Target Net Working Capital Amount, the amount of the Closing Payment to be paid by Buyer pursuant to Section 4.1(b)(i) shall be increased by an amount equal to the difference between the Estimated Net Working Capital Amount and the Target Net Working Capital Amount.

(b) Within 90 days after the Closing Date, Buyer will prepare and deliver to Parent a written statement of the Current Assets, the Current Liabilities and the Net Working Capital Amount (the "Closing Statement"). The date on which the Closing Statement is delivered to Parent is referred to herein as the "Delivery Date". The Closing Statement shall reflect, as of the Effective Date, the Current Assets and the Current Liabilities, and, subject to the exclusions included in such definitions, will be prepared (i) in accordance with GAAP and (ii) utilizing the same Accounting Practices of the Company as were utilized in the preparation of the November 30, 2010 Balance Sheet as they relate to the amounts to be included in the Closing Statement (but only to the extent such Accounting Practices are in accordance with GAAP) (it being understood that GAAP Accounting Practices will be utilized in the preparation of the Closing Statement to the extent the Accounting Practices of the Company utilized in the preparation of the November 30, 2010 Balance Sheet are not in accordance with GAAP or there were no corresponding Accounting Practices of the Company utilized in the preparation of the November 30, 2010 Balance Sheet); provided that, for the purpose of calculating the U.S. dollars equivalent of any asset or liability to be included in the Closing Statement which is denominated in a currency other than U.S. dollars, the applicable exchange rate published in The Wall Street Journal, Eastern Edition, on the business day preceding the Closing Date shall be used. Anything contained herein to the contrary notwithstanding, the amounts set forth on the Closing Statement will not reflect any purchase accounting adjustments as a result of the Transaction. The Closing Statement will be prepared based solely on information available three days prior to the Delivery Date with regard to conditions that exist on the Effective Date. If the Closing Date precedes the Effective Date, Buyer agrees to conduct the Business in the ordinary course consistent with past practices during the period between the Closing Date and the Effective Date.

(c) Commencing with the Delivery Date and for a period of fifteen (15) days thereafter, Parent shall have reasonable access to the books and records and personnel of the Business and the opportunity to consult with Buyer for purposes of confirming or disputing the Net Working Capital Amount set forth in the Closing Statement. The Closing Statement will be deemed to be the final, binding and conclusive Closing Statement (the "Final Closing Statement") for all purposes on the 15th day after the Delivery Date unless Parent delivers to Buyer a written notice of its disagreement executed by Parent (a "Notice of Disagreement") on or prior to such date specifying in reasonable detail the nature of Parent's objections to the Closing Statement. To be assertable in a Notice of Disagreement, an objection by Parent with respect to any individual matter relating to the Closing Statement must assert that the Closing Statement was not prepared in accordance with the terms of Section 4.6(b) and the definitions of Current Assets or Current Liabilities with respect to such matter and relate to an adjustment equal to or greater than $10,000. Parent hereby irrevocably waives the right to assert any objection with respect to the Closing Statement that is not asserted in a Notice of Disagreement delivered by Parent to Buyer within 15 days after the Delivery Date. If a Notice of Disagreement is delivered by Parent to Buyer within such 15 day period, then the Closing Statement (as adjusted, if necessary) will be deemed to be the Final Closing Statement for all purposes on the earlier of (x) the date Buyer and Parent resolve in writing all differences they have with respect to the Closing Statement or (y) the date the disputed matters are resolved in writing by the Unaffiliated Firm (as set forth below). In the event that disputed matters are resolved by the Unaffiliated Firm (as set forth below), the Final Closing Statement will consist of the applicable amounts from the Closing Statement (or amounts otherwise agreed to in writing by Buyer and Parent) as to items that have not been submitted for resolution to the Unaffiliated Firm, and the amounts determined by the Unaffiliated Firm as to items that were submitted for resolution by the Unaffiliated Firm.

(d) During the 30 day period following the delivery of a Notice of Disagreement (the "Resolution Period"), Buyer and Parent will seek in good faith to resolve any differences they may have with respect to matters specified in the Notice of Disagreement. If, at the end of the Resolution Period, Buyer and Parent have not reached agreement on such matters, Buyer and Parent will promptly jointly engage a single arbitrator from an independent auditing firm of national reputation reasonably acceptable to Buyer and Parent (the "Unaffiliated Firm") to resolve the matters specified in the Notice of Disagreement that remain in dispute by arbitration in accordance with the procedures set forth in this Section 4.6(d). In connection with such engagement, Buyer and Parent will each execute, if requested by the Unaffiliated Firm, a reasonable engagement letter including customary indemnities. Promptly after such engagement of the Unaffiliated Firm, Buyer and Parent will provide the Unaffiliated Firm with a copy of this Agreement, the Closing Statement and the Notice of Disagreement. Each of Buyer, on the one hand, and Parent, on the other hand, may also submit in writing to the Unaffiliated Firm one position statement accompanied by any applicable supporting documentation it or they desire (each, a "Position Statement") with respect to each of the matters set forth in the Notice of Disagreement submitted to the Unaffiliated Firm for resolution. Position Statements, if any, shall be delivered to the Unaffiliated Firm, with a copy to the other party (at the same time as it is provided to the Unaffiliated Firm), no later than the fifteenth (15th) day following the date the Unaffiliated Firm accepts its engagement hereunder. The Unaffiliated Firm will have the authority to request in writing such additional written submissions from Buyer or Parent as it deems appropriate; provided that a copy of any such submission will be provided to the other at the same time as it is provided to the Unaffiliated Firm. Neither Buyer nor Parent will make (or permit any of their Affiliates to make) any additional submission to the Unaffiliated Firm except pursuant to such a written request by the Unaffiliated Firm. Neither Buyer nor Parent will communicate (or permit any of their Affiliates to communicate) with the Unaffiliated Firm without providing the other a reasonable opportunity to participate in such communication with the Unaffiliated Firm (other than with respect to written submissions in response to the

written request of the Unaffiliated Firm). The Unaffiliated Firm will have 45 days (or such longer period as may be reasonably required by the Unaffiliated Firm) to review the documents provided to it pursuant to this Section 4.6(d). Within such 45 day period (or such longer period as may be reasonably required by the Unaffiliated Firm), the Unaffiliated Firm will furnish simultaneously to Buyer and Parent its written determination with respect to each of the matters in dispute submitted to it for resolution. The Unaffiliated Firm will resolve the differences regarding the Closing Statement based solely on the information provided to the Unaffiliated Firm by Buyer and Parent pursuant to the terms of this Agreement (and not independent review). The Unaffiliated Firm's authority will be limited to resolving disputes with respect to whether the Closing Statement was prepared in accordance with the terms of Section 4.6(b) and the definitions of Current Assets and Current Liabilities with respect to the individual items on the Closing Statement in dispute specified in the Notice of Disagreement (it being understood that the Unaffiliated Firm will have no authority to make any adjustments to any financial statements or amounts other than amounts set forth on the Closing Statement that are in dispute). In resolving any disputed item, the Unaffiliated Firm may not assign a value to such item greater than the greatest value for such item asserted by Buyer or Parent or less than the smallest value for such item asserted by Buyer or Parent.

(e) The decision of the Unaffiliated Firm will be, for all purposes, conclusive, non-appealable, final and binding. Such decision will be subject to specific performance pursuant to Section 15.16, and judgment may also be entered thereon as an arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16, in any court of competent jurisdiction (subject to Section 15.12). The fees of the Unaffiliated Firm will be borne by Buyer, on the one hand, and Parent, on the other hand, in the same proportion that the dollar amount of disputed items lost by Buyer, on the one hand, or Parent, on the other hand, bears to the total dollar amount in dispute resolved by the Unaffiliated Firm. Each party will bear the fees, costs and expenses of its own accountants, attorneys and other experts and all of its other expenses in connection with matters contemplated by this Section 4.6.

(f) Within ten (10) business days after the Closing Statement is deemed to be the Final Closing Statement in accordance with Section 4.6(c):

(i) if the Net Working Capital Amount shown on the Final Closing Statement (the "Final Net Working Capital Amount") is less than the Estimated Net Working Capital Amount, Parent will return to Buyer shares of Buyer Stock having a value equal to the sum of (A) the difference between the Estimated Net Working Capital Amount and the Final Net Working Capital Amount, plus (B) interest on such difference from the Closing Date to the date of payment (calculated based on actual days elapsed in a 365-day year) at a rate of 8% per annum, with such shares valued at $3.001 per share (the "Adjustment Market Price"); provided, however, that for purposes of the Final Net Working Capital Amount, the parties agree that 50% of the amount of Fuel Sensor Damages (x) actually expended by Parent or the Company from March 1, 2011 through the Effective Date and (y) accrued as current liabilities on the Final Closing Statement, shall be added as a credit to the Net Working Capital Amount set forth on the Final Closing Statement.

(ii) if the Final Net Working Capital Amount is greater than the Estimated Net Working Capital Amount, then Buyer will pay to Parent a value equal to the sum of (A) the difference between the Final Net Working Capital Amount and the Estimated Net Working Capital Amount, plus (B) interest on such difference from the Closing Date to the date of payment (calculated based on actual days elapsed in a 365-day year) at a rate of 8% per annum (such sum, the "Adjustment Amount"). The Adjustment Amount will be paid by Buyer in accordance with the following payment procedures: (x) by delivery to Parent of that number of whole shares of Buyer Stock equal

to the Adjustment Amount divided by the Adjustment Market Price evidenced by stock certificates duly registered in the name of Parent, (y) at the sole option of Buyer, by

wire transfer of immediately available funds to Parent for an amount in dollars equal to the Adjustment Amount, or (z) at the sole option of Buyer, by delivery to Parent of any

combination of shares of Buyer Stock and amounts in dollars, provided that the aggregate value of shares (such shares to be valued at its Adjustment Market Price) and cash

paid to Parent pursuant to this clause (z) is equal to the Adjustment Amount.

Section 4.7 Buyer Stock. Each stock certificate, book-entry statement, confirmation, transaction statement or other instrument evidencing Buyer Stock issued pursuant to this Agreement shall bear a legend in substantially the following form unless Buyer determines otherwise in compliance with applicable Laws:

"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE ISSUER OF THESE SHARES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER, ASSIGNMENT OR OTHER DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS."

Section 4.8 Allocation of Purchase Price. Buyer will, not later than 120 days after the Closing Date, prepare and deliver to Parent a schedule (the "Allocation Schedule") allocating the total aggregate value of the consideration to be paid by Buyer under this Agreement and the Assumed Liabilities among the Assets, in accordance with Section 1060 of the Code and any Treasury Regulations pursuant thereto (or any comparable provisions of state or local tax law) or any successor provision. Parent will have the right to raise reasonable objections to the Allocation Schedule within 10 days after its receipt thereof, in which event Parent and Buyer will negotiate in good faith to resolve such objections. Except to the extent otherwise required by applicable Laws, Buyer and Parent will, and Buyer and Parent will cause each of their respective subsidiaries and Affiliates (including, in the case of Parent, the Company) to, make all tax returns, reports, forms, declarations, claims and other statements in a manner consistent with the Allocation Schedule and will not make any inconsistent statement or adjustment on any returns or during the course of any IRS or other Tax audit.

ARTICLE V

BASIC REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby represents and warrants to Buyer as follows:

Section 5.1 Organization; Authority; Binding Obligation. Parent is a corporation duly incorporated, validly existing and in good standing under the laws of Arizona. Parent has all requisite corporate power and authority to execute and deliver each Transaction Document delivered or to be delivered by Parent and to perform all of Parent's obligations hereunder and thereunder. The execution, delivery and performance by Parent of each Transaction Document delivered or to be delivered by Parent and the consummation

by Parent of the Transaction has been duly authorized by all necessary and proper corporate action on the part of Parent, other than obtaining the Required Parent Vote. This Agreement has been duly executed and delivered by Parent and constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity. Each other Transaction Document delivered or to be delivered by Parent will be duly executed and delivered by Parent and, when so executed and delivered, will constitute the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity.

Section 5.2 No Breach. None of the execution, delivery or performance by Parent of any Transaction Document delivered or to be delivered by Parent or the consummation of the Transaction does or will, with or without the giving of notice or the lapse of time or both (a) require any Permit applicable to Parent, or (b) conflict with, or result in a breach or violation of or a default under, or give rise to a right of amendment, termination, cancellation or acceleration of any obligation or to a loss of a benefit under (i) the certificate of incorporation, by-laws or other governing documents of Parent, (ii) any Contract of Parent, or any of its Affiliates or (iii) any Law or Permit or other requirement to which Parent or its properties or assets are subject, except for those requirements which would not have, individually or in the aggregate, a material adverse effect on the ability of Parent to consummate the Transaction.

Section 5.3 Title. Parent has good and marketable title to, and is the sole record and beneficial owner of 100% of the Membership Units (and on the Closing Date will have good and marketable title to, and will be the record and beneficial owner of, such Membership Units), free and clear of any Liens.

Section 5.4 No Brokers. Other than Oberon Securities, whose fees shall be paid by Parent, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Parent or any Affiliate of Parent who is or might be entitled to any fee, commission or payment in connection with the negotiation, preparation, execution or delivery of any Transaction Document or the consummation of the Transaction, nor is there any basis for any such fee, commission or payment to be claimed by any Person against Parent or the Company.

Section 5.5 Governmental Approvals. Except as set forth on Schedule 6.13, no material Consent or order of, with or to any Governmental Entity is required to be obtained or made by or with respect to Parent in connection with the execution, delivery and performance by Parent of any Transaction Document or the consummation by Parent of the Transaction.

Section 5.6 Accredited Investor. Parent is an accredited investor as such term is defined in Regulation D under the Securities Act.

Section 5.7 Investment Intent. Parent is acquiring the shares of Buyer Stock pursuant to this Agreement for its own account for investment purposes only and not with a view to, or for sale or resale in connection with, any public distribution thereof or with any present intention of selling, distributing or otherwise disposing of any of such shares in violation of the Securities Act. Notwithstanding the foregoing, Buyer acknowledges and agrees that Parent may transfer shares of perpetual convertible preferred stock of Buyer to be received under Section 4.1(b)(ix) to holders of Parent’s preferred stock in redemption thereof.

Section 5.8 Investment Decision. Parent has been afforded the opportunity, directly or through its Representatives, to ask questions of and receive answers from the management of Buyer concerning the investment in the Buyer Stock and has sufficient knowledge and experience in investing in companies similar to Buyer so as to be able to evaluate the risks and merits of its investment in the Buyer Stock. Parent acknowledges and affirms that it has completed an investigation, analysis and evaluation of Buyer that it deemed necessary or appropriate, and that in making its decision to enter into this Agreement, and consummate the Transaction, it has relied on such investigation, analysis, and evaluation.

Section 5.9 Transfer Restrictions. Parent is aware that the shares of Buyer Stock to be issued to Parent pursuant to this Agreement have not been registered under the Securities Act or any applicable U.S. state securities laws, and agrees that the Buyer Stock will not be offered or transferred, sold, assigned, pledged, hypothecated, gifted, encumbered or otherwise disposed of except (a) pursuant to a registration statement which has been declared effective under the Securities Act, (b) pursuant to Rule 144 under the Securities Act or (c) pursuant to any other available exemption from the registration requirements of the Securities Act, if in the opinion of counsel reasonably acceptable to Buyer such exemption is applicable. Parent will not transfer any shares of Buyer Stock to be issued to Parent pursuant to this Agreement in violation of the provisions of any applicable U.S. federal or state or other jurisdiction's securities laws. Notwithstanding the foregoing, Buyer acknowledges and agrees that Parent may transfer shares of perpetual convertible preferred stock of Buyer to be received under Section 4.1(b)(ix) to holders of Parent’s preferred stock in redemption thereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE BUSINESS

The Company and Parent, jointly and severally, hereby represent and warrant to Buyer as follows:

Section 6.1 Organization; Authority.

(a) The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has no Subsidiaries. The Company has all requisite power and authority (corporate or otherwise), to own, lease and operate the Assets and to carry on the Business as presently conducted and as it will be conducted through the Closing Date. The Company is duly qualified to transact business and is in good standing as a foreign limited liability company in each jurisdiction in which the ownership, leasing or holding of Assets by it or the conduct or nature of the Business makes such qualification necessary, except where the failure to be so qualified or in good standing would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Company. Set forth on Schedule 6.1 is a list of the jurisdictions in which the Company is qualified to transact business. True, complete and correct copies of the certificate of formation and operating agreement (or similar governing documents), minute books, stock certificate books and stock transfer books, in each case as amended to date, of the Company have previously been delivered to Buyer.

(b) The Company has all requisite power and authority (corporate or otherwise) to execute and deliver each Transaction Document delivered or to be delivered by it and to perform all of its obligations under the Transaction Documents. The execution, delivery and performance by the Company of each Transaction Document delivered or to be delivered by the Company and the consummation by the Company of the Transaction have been duly authorized by all necessary and proper action (corporate or otherwise) on the part of the Company, subject to obtaining the Required Parent Vote.

(c) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity. Each other Transaction Document to be delivered by the Company will be duly executed and delivered by the Company and, when so executed and delivered, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity.

Section 6.2 No Breach. Except as set forth on Schedule 6.2, none of the execution, delivery or performance by Parent or the Company of any Transaction Document or the consummation by Parent or the Company of the Transaction does or will, with or without the giving of notice or the lapse of time or both, (a) require any Permit applicable to the Company, (b) result in the creation of any Lien upon any of the Assets (except for Permitted Liens) or upon the membership interests of the Company, or (c) conflict with, or result in a breach or violation of or a default under, or give rise to a right of amendment, termination, cancellation or acceleration of any obligation or to a loss of a benefit under (i) the operating agreement or other governing documents of the Company, (ii) any Material Contract or (iii) any Law or material Permit or other requirement to which the Company or any of its properties or assets are subject.

Section 6.3 Title to Assets. Other than the Company, no other Person owns any of the Assets. Except as set forth on Schedule 6.3, on the date hereof, the Company owns all of the Assets, free and clear of any Lien, other than Permitted Liens. Immediately after the Effective Time, Buyer will have good, valid and marketable title to all the Assets, free and clear of any Lien, other than Permitted Liens. The Assets do not include stock or other equity interests in any Person.

Section 6.4 Equity Interests. Except as set forth on Schedule 6.4, the Company does not own beneficially or otherwise, directly or indirectly, any capital stock of, or other securities, equity or ownership interest in, or has any obligation to form or participate in, any corporation, partnership or other Person.

Section 6.5 Affiliate Transactions. Except as set forth on Schedule 6.5, there is no, and during the past three years there has not been any:

(a) indebtedness, Contract, arrangement, transaction or payment or transfer, directly or indirectly, of any funds or other property, between the Company, on the one hand, and any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof, on the other hand, except for (i) regularly scheduled cash compensation paid to employees of the Company consistent with written policies of the Company and amounts paid to employees of the Company pursuant to existing employee benefit plans listed in Schedule 6.16(b) and (ii) reimbursements of ordinary and necessary business expenses of employees of the Company incurred in connection with their employment consistent with written policies of the Company;

(b) interest (including as an owner, lessor, lessee, licensor or licensee) of any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof in any Assets (whether real, personal, or mixed and whether tangible or intangible) owned or used by or pertaining to the Business; or

(c) ownership (of record or as a beneficial owner) by any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof of an equity interest or any other financial or profit interest in a Person that has (i) had business dealings or a material financial interest in any transaction with the Company (other than business dealings or transactions conducted in the ordinary course of business consistent with past practices with the Company at prevailing market prices and on prevailing market terms) or (ii) engaged in competition with the Company with respect to any products or services of the Business in any market presently served by the Business (except for ownership of less than one percent of the outstanding capital stock of any corporation that is publicly traded on any recognized exchange or in the over-the-counter market).

Section 6.6 Financial Information.

(a) Parent has filed with the SEC all reports, including amendments thereto, required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing materials being collectively referred to herein as the “Parent SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such Parent SEC Reports prior to the expiration of any such extension. As of their respective dates, the Parent SEC Reports complied as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the Parent SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Parent included in the Parent SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of Parent and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended. In the case of unaudited interim financial statements, such statements include all adjustments (including normal recurring accruals) necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented.

(b) Set forth on Schedule 6.6(b) are the unaudited balance sheets of the Company as of December 31, 2010 and December 31, 2009, and the quarterly statements of operations of the Company for each of the fiscal quarters in the calendar years ended December 31, 2010 and December 31, 2009 (collectively, with the notes thereto, the "Company Financial Statements"). The Company Financial Statements have been prepared from and in accordance with the books, accounts and financial records of the Company (which are maintained in accordance with GAAP) and in accordance with GAAP consistently applied. The Company Financial Statements present fairly the financial position of the Company as of the dates set forth therein and their results of operations and cash flows for the periods set forth therein.

(c) Except for Liabilities (i) set forth on Schedule 6.6(c), (ii) in the amounts set forth or reserved on the December 31, 2010 Balance Sheet or (iii) arising in the ordinary course of business consistent with past practices since December 31, 2010 and which, individually or in the aggregate, are not material, the Company has no Liabilities of any kind or nature.

(d) All accounts and notes receivable and other receivables of the Company arose from bona fide sales and deliveries of goods or performance of services in the ordinary course of business consistent with past practices, and were recorded in accordance with GAAP. None of such receivables are subject to any performance obligations by the Company prior to collection. Except for amounts recorded as deferred revenue on the December 31, 2010 Balance Sheet, all such receivables have been adequately reserved in the

December 31, 2010 Balance Sheet in accordance with GAAP and are free of any defenses, setoffs or counterclaims. Except as has been reserved against in the December 31, 2010 Balance Sheet, there is no dispute with respect to the amount or validity of any receivables of the Company.

Section 6.7 Taxes.

(a) All federal, state, local and foreign tax returns, reports, declarations, statements, elections and other documents ("Tax Returns") required to be filed by or in respect of the Company or any predecessor entity thereof, or any consolidated, combined, affiliated or unitary group of which the Company is or has ever been a member have been timely filed with the appropriate tax authorities in all jurisdictions in which such Tax Returns are or were required to be filed or requests for extensions have been timely filed and any such extensions have been granted and have not expired. Each such Tax Return was true, complete and correct in all material respects. The Company has made available to Buyer true, complete and correct copies of all Tax Returns. Notwithstanding the foregoing, the Company has not filed sales tax or transaction privilege tax returns with the state of New Jersey, nor any local taxing jurisdiction in New Jersey. The Company shall be liable for any tax due with respect to such returns to the extent such returns are or were required.

(b) Other than possible sales taxes as described in Section 6.7(a), all Taxes with respect to taxable periods or portions thereof covered by such Tax Returns and all other Taxes (without regard to whether a Tax Return was or is required) for which the Company is otherwise liable that are due or payable or that have been incurred by the Company have timely been paid in full and to the extent the liabilities for such Taxes are not due, adequate reserves have been established with respect to such Taxes on the December 31, 2010 Balance Sheet in accordance with GAAP. Since the date of the December 31, 2010 Balance Sheet, the Company has not incurred any liability for Taxes arising from transactions outside the ordinary course of business consistent with past practices.

(c) Other than possible sales taxes as described in Section 6.7(a), the Company has timely withheld proper and accurate amounts from its employees, independent contractors, customers, shareholders and others from whom it is or was required to withhold Taxes in compliance with all applicable Laws and has timely and properly paid all such withheld amounts to the appropriate taxing authorities.

(d) All Taxes due with respect to any completed and settled audit, examination or deficiency Action with any taxing authority for which the Company or any predecessor entity is or might otherwise be liable have been paid in full.

(e) There is no audit, examination, claim, levy, administrative proceeding or lawsuit pending or, to the knowledge of the Company, threatened with respect to any Taxes for which the Company is or might otherwise be liable and no taxing authority has given notice that it is conducting or intends to conduct an audit or examination with respect to any such Taxes. No issue has arisen in any examination of the Company by any taxing authority that, if raised with respect to the same or substantially similar facts arising in any other Tax period not so examined, would result in a deficiency for such other period, if upheld. The Company has not waived or extended any statute of limitations in respect of Taxes or Tax Returns or agreed to any extension of time with respect to a Tax assessment, reassessment, deficiency or with respect to the payment of any Taxes. The Company is not a party to any power of attorney with respect to a tax matter that is currently in force. The Company has not entered into any closing agreements with the IRS or any other taxing authority. The Company has delivered to Buyer true, complete and correct copies of all examination reports or other similar reports and statements of deficiencies assessed against or agreed to by, or on behalf of, the Company since December 31, 2005.

(f) The Company has not requested or received any private letter ruling of the IRS or comparable rulings or guidance issued by any other taxing authority.

(g) None of the Assets (i) is tax-exempt use property within the meaning of Section 168(h) or Section 470(c)(2) of the Code, (ii) directly or indirectly secures any debt the interest on which is exempt under Section 103(a) of the Code or (iii) is property that is required to be treated as being owned by any Person (other than the Company) pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in effect immediately before the enactment of the Tax Reform Act of 1986.

(h) The Company has disclosed on its federal income Tax Return all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code. The Company has not engaged in a reportable transaction described in Section 1.6011-4 of the Treasury Regulations.

(i) No Liens for Taxes exist with respect to any of the Assets, except for Permitted Liens.

(j) No jurisdiction where the Company does not file a Tax Return has made a claim in writing that the Company is required to file a Tax Return or is subject to Tax in such jurisdiction.

(k) The Company is not liable, nor does the Company have any potential liability, for the Taxes of another Person (i) under Treasury Regulation Section 1.1502-6 (or any comparable provision of state, local or foreign law), (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise. The Company is not a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement.

(l) Except as set forth on Schedule 6.7(l), the Company does not have a permanent establishment in any foreign country with which the United States has a relevant Tax treaty, as defined in such relevant Tax treaty, nor does the Company otherwise operate or conduct business through any branch in any foreign country.

Section 6.8 Intellectual Property Matters.

(a) Set forth on Schedule 6.8(a) are all patents, patent applications, patent and invention disclosures available for filing, mask works, copyright applications and registrations, trademarks, trademark applications and registrations and domain name registrations which constitute Business Intellectual Property indicating for each, the applicable jurisdiction, title, registration number (or application number), the date issued (or date filed) and all current applicants (or registered owners).

(b) Set forth on Schedule 6.8(b) are all Contracts of the Company relating to the Business Intellectual Property, including the distribution or license of, or royalty payments with respect to, Business Intellectual Property, whether as licensor or licensee and Contracts of the Company with current or former employees, consultants or contractors, regarding the appropriation or nondisclosure of any Intellectual Property, and also including a complete and accurate description of any oral or implied contract, the enforcement of which (or ability to enforce) would be material to the Business.

(i) the Company owns all right, title and interest in and to (or, in the case of Business Intellectual Property subject to license agreements in favor of the Company set forth on Schedule 6.8(b), has the right to use in accordance with the terms of such license agreements) all of the Business Intellectual Property, free and clear of any Liens and free from any requirement of any past, present or future payments (other than maintenance and similar payments), charges or fees or conditions, rights or restrictions (except, in the case of Business Intellectual Property subject to license agreements in favor of the Company set forth on Schedule 6.8(b), as otherwise provided pursuant to the terms of such license agreements);

(ii) no Business Intellectual Property or any service rendered by the Company, or any product, process or material developed, manufactured, produced or used by the Company, is alleged to infringe upon or infringes upon any Intellectual Property or other rights owned or held by any other Person;

(iii) the rights of the Company in and to all Business Intellectual Property are valid and enforceable and no Business Intellectual Property is subject to any outstanding Lien, judgment, ruling, order, writ, decree, stipulation, injunction or determination by or with any Governmental Entity, nor is there (or has there been) any pending or threatened, Action relating to any Business Intellectual Property (including any interference, reissue, reexamination or opposition proceeding or proceeding contesting the rights of the Company to any Business Intellectual Property or the ownership, use, enforceability or validity of any Business Intellectual Property);

(iv) to the knowledge of the Company, there is no infringement or misappropriation of any Business Intellectual Property by any Person;

(v) there are no Contracts between the Company, on the one hand, and any other Person, on the other hand, which may have been terminated or expired prior to the date hereof and under which the Company has granted rights or licenses in any Business Intellectual Property or granted an option to acquire any rights or licenses in any Business Intellectual Property, which rights or licenses or option to acquire survived such termination or expiration;

(vi) the Company has not covenanted or agreed with any Person not to sue or otherwise enforce any legal rights with respect to any Business Intellectual Property;

(vii) all Business Intellectual Property (other than Business Intellectual Property subject to license agreements in favor of the Company set forth on Schedule 6.8(b)) was developed entirely by employees of the Company during the time they were employees of the Company or as a “work for hire” within the meaning of the United States Copyright Act, as amended, (or comparable provision in the copyright law of the jurisdiction where the work at issue was created, including without limitation Section 17 of the India Copyright Act), owned by and copyrighted to the Company, including such Business Intellectual Property furnished to the Company by its principal outside Intellectual Property contractor located in India; and

(viii) all of the Business Intellectual Property is in compliance in all material respects with all applicable Laws (including payment of filing, examination, and maintenance fees and proofs of working or use) and except as set forth on Schedule 6.8(c), no filing, response, or payment is or will be due within 60 days after the Closing Date.

(d) The Company has taken all reasonable steps (including measures to protect secrecy and confidentiality) to protect the Company's right, title and interest in and to all Business Intellectual Property. All employees, agents, consultants and other representatives of the Company who have access to confidential or proprietary information of the Company have a legal obligation of confidentiality to the Company with respect to such information. Except as set forth on Schedule 6.8(d), all employees of the Company have duly executed and delivered agreements with the Company pertaining to the assignment, without additional consideration, to the Company of all inventions, discoveries and ideas, whether or not patented or patentable, conceived or reduced to practice during the course of their employment by the Company or its Affiliates. Only those persons listed on Schedule 6.8(d) have conceived or reduced to practice any invention, discovery or idea that constitutes any material part of the Business Intellectual Property.

(e) Except as set forth on Schedule 6.8(e), the existing documentation relating to material trade secrets and material confidential business and technical information included in the Business Intellectual Property is current and sufficient in all material respects to identify and explain such trade secrets and confidential business and technical information and to allow its full and proper use.

(f) Except as set forth on Schedule 6.8(f), the Business Intellectual Property constitutes all Intellectual Property rights necessary to conduct fully the Business as it is being conducted as of the date hereof and as it will be conducted through the Closing Date.

(g) Except as set forth on Schedule 6.8(g), the Company has not released, or escrowed for the benefit of others, any of the source code or other Business Intellectual Property developed for the Business by or on behalf of the Company, and no Person other than the Company is in possession of such source code.

(h) Except as set forth on Schedule 6.8(h), the software included in the Business Intellectual Property and all other software used by the Company in the Business does not contain any open source code or any other components, in each case that require reciprocity of disclosure or use (including through any form of the GNU General Public License or other open source licenses). No proprietary or trade secret material of the Company is imbedded in any shared open source code.

Section 6.9 Assets and Properties.

(a) The Company has (i) good and marketable title to all of its assets and properties (whether real, personal or mixed, or tangible or intangible) which it purports to own (including all assets and properties recorded on the December 31, 2010 Balance Sheet, other than inventories disposed of in the ordinary course of business consistent with past practices since December 31, 2010) and (ii) valid leasehold interests in all of its assets and properties which it purports to lease, in each case (with respect to both clause (i) and (ii) above), free and clear of any Liens, other than Permitted Liens.

(b) The Company does not own and has never owned any real property.

(c) Schedule 6.9(c) contains a true, complete and correct list of (i) all real estate leased, subleased or occupied by the Company pursuant to a Lease (the "Leased Premises"), indicating the ownership, street address and use of each of the Leased Premises (and prior uses to the extent known to Parent) and (ii) all Leases to which the Company is a party (including all subleases and other Leases through which the Company has granted any interest in any of the Leased Premises, or any portion thereof, to any Person).

(d) The Company (and no other Person) is in actual occupancy of all Leased Premises leased by it and the Company enjoys peaceful and undisturbed possession thereof. There are no restrictions imposed by any Lease or other Contract or by Law which preclude or restrict the ability to use the Leased Premises for the purposes for which they are currently being used.

(e) All existing water, sewer, steam, gas, electricity, telephone and other utilities and services required for the use, occupancy, operation and maintenance of the Leased Premises are adequate for the conduct of the Business as it is being conducted as of the date hereof and as it will be conducted through the Closing Date.

(f) All of the material tangible Assets are adequately maintained and are in good operating condition and repair and free from any material defects (including latent defects and adverse physical conditions), reasonable wear and tear excepted, and are suitable for the uses for which they are being used.

(g) The inventories (other than inventory for which a reserve has been provided) included in the Final Closing Statement are of such quality as to meet the quality control standards of the Company and any applicable governmental quality control standard and are usable in the ordinary course of business in amounts consistent with past practice, and (b) the inventories included in the Final Closing Statement that are finished goods are saleable in the ordinary course of business.

Section 6.10 Contracts.

(a) Schedule 6.10(a) lists all of the following Contracts of the Company under which any of the parties thereto have any continuing obligation thereunder (other than those set forth in Schedule 6.8(b), Schedule 6.9(c), Schedule 6.16(b) or Schedule 6.16(i)):

(i) all Contracts (or groups of related Contracts) for the lease (whether as lessor or lessee) of personal property to or from the Company;

(ii) all Contracts (or groups of related Contracts) for the purchase or sale of inventories, materials, commodities, components, supplies, products or real, personal or mixed property, or for the furnishing or receipt of services (other than service contracts that are on the Company's standard service agreement form (without any material modification) providing for annual service revenue of less than $25,000), including customer and supply Contracts, which provide for aggregate payments to or from the Company of $10,000 or more;

(iii) all Contracts concerning a partnership, joint venture, joint development or other cooperation arrangement;

(iv) all Contracts providing for management services or for the services of independent contractors or consultants (or similar arrangements);

(v) all Contracts providing for advertising, promotional or marketing services;

(vi) all Contracts (or groups of related Contracts) relating to or evidencing Indebtedness of the Company (or the creation, incurrence, assumption, securing or guarantee thereof), other than the Anderson Loan Agreement;

(vii) all Contracts (or groups of related Contracts) under which (A) any Person has directly or indirectly guaranteed any Liabilities of the Company or (B) the Company has directly or indirectly guaranteed any Liabilities of any Person (in each case other than endorsements for the purpose of collection in the ordinary course of business consistent with past practices);

(viii) all Contracts (or groups of related Contracts) under which the Company has directly or indirectly made any advance, loan, extension of credit or capital contribution to, or other investment in, any Person, including employees, or which involve a sharing of profits, losses, costs or Liabilities by the Company with any other Person;

(ix) all Contracts (or groups of related Contracts) providing for or granting a Lien upon any Assets, other than the Anderson Loan Agreement;

(x) all Contracts providing for indemnification of any Person with respect to Liabilities relating to any current or former business of the Company or any predecessor Person of any thereof;

(xi) all Contracts between or among the Company, on the one hand, and any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof, on the other hand;

(xii) all Contracts with any broker, distributor, dealer or sales representative relating to the distribution or sale of products;

(xiii) all Contracts providing for or containing confidentiality and non-disclosure obligations (other than standard non-disclosure forms signed by employees generally, copies of which have been provided to Buyer or contained in the Company's standard forms of customer agreements, true, complete and correct copies of which have been made available to Buyer);

(xiv) all Contracts for or relating to the purchase or sale of any business, corporation, partnership, joint venture, association or other business organization or any division, material assets, operating unit or product line thereof since December 31, 2006;

(xv) all Contracts which limit or purport to limit the ability of the Company to compete in any line of business or with any Person or in any geographic area or which limit or purport to limit or restrict the ability of the Company with respect to the development, manufacture, marketing, sale or distribution of, or other rights with respect to, any products or services;

(xvi) all Contracts which provide for or contain any exclusive supply, exclusive purchase or other exclusive dealing arrangements;

(xvii) all Contracts which provide for or contain right of first refusal or similar provisions;

(xviii) all derivative, hedging and similar Contracts (including interest rate, currency or commodity swap agreements, cap agreements, collar agreements and any other Contracts designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices);

(xix) all Contracts with any Governmental Entity; and

(xx) all Contracts which provide for aggregate payments to or from the Company of $10,000 or more or which are otherwise material to the Company which are not described in any of the categories specified in this Section 6.10(a).

Each Contract set forth or required to be set forth on Schedule 6.10(a), Schedule 6.8(b), Schedule 6.9(c), Schedule 6.16(b) or Schedule 6.16(i) is referred to herein as a "Material Contract".

(b) Each Material Contract is in full force and effect and is legal, valid, binding and enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity. None of the Material Contracts requires any payments or the performance of any obligations that have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Company.

(c) Except as set forth on Schedule 6.10(c), the Company (and, to the knowledge of the Company, each of the other party or parties thereto), has performed in all material respects all obligations required to be performed by it under each Material Contract to which it is a party. Except as set forth on Schedule 6.10(c), no default, violation or other event has occurred or circumstance exists by or with respect to the Company or, to the knowledge of the Company, by or with respect to any other Person that (with or without lapse of time or the giving of notice or both) does or may contravene, conflict with or result in a violation or breach of or give the Company or any other Person the right to declare a default or exercise any remedy under, or to accelerate any obligation under, or to cancel, terminate or modify, any Material Contract. There are no renegotiations of, attempts or requests to renegotiate or outstanding rights to renegotiate any Material Contract with any Person. No party to any Material Contract has repudiated any provision thereof or terminated any Material Contract or given written notice of any such termination, and the Company has no reason to believe that any other party or parties to any Material Contract intends to exercise any right of cancellation, termination or non-renewal thereof. The Company has heretofore made available to Buyer true, complete and correct copies of all written Material Contracts and a true, complete and correct written summary of all oral Material Contracts.

(d) Except as set forth on Schedule 6.10(d), there are no "change of control", "right of first refusal" or similar provisions or any obligations arising under any Material Contract which are created, accelerated or triggered by the execution, delivery or performance of any Transaction Document or the consummation of the Transaction.

(e) The Contracts of the Company for which losses have been recorded or reserved against in the Company Financial Statements and the amount of such losses recorded or reserved for each such Contract are set forth on Schedule 6.10(e). The Company does not have any Contracts for which a loss should be recorded or reserved in accordance with GAAP, other than Contracts set forth on Schedule 6.10(e).

Section 6.11 Litigation.

(a) Except as set forth on Schedule 6.11(a), no judgment, ruling, order, writ, decree, stipulation, injunction or determination by or with any arbitrator, court or other Governmental Entity to which any of Parent, the Company or any Affiliate of any thereof is party or by which any of Parent, the Company or any Affiliate of any thereof or any assets of any thereof is bound, and which relates to or affects the Company, the Assets, the Assumed Liabilities, the employees of the Company, the Business, any Transaction Document or the Transaction is in effect. Except as set forth on Schedule 6.11(a), none of Parent, the Company or any Affiliates of any thereof is (or has been in the past three (3) years) party to or

engaged in or, to the knowledge of the Company, threatened with any Action which relates to or affects the Company, the Assets, the Assumed Liabilities, the employees of the Company, the Business, any Transaction Document or the Transaction, and, to the knowledge of the Company, no event has occurred and no condition exists which could reasonably be expected to result in any such Action. There is no Action which the Company presently intends to initiate.

(b) No order has been made, petition presented or resolution passed for the winding-up of the Company and no meeting has been convened for the purposes of winding-up the Company. No steps have been taken for the appointment of an administrator or receiver of all or any part of any of the Assets. The Company has not made or proposed any arrangement or composition with its creditors or any class of its creditors. The Company is not insolvent, and the Company is not unable to pay its debts within the meaning of the insolvency legislation applicable to it and has not stopped paying its debts as they fall due.

Section 6.12 Environmental Matters. Except as set forth on Schedule 6.12, none of the Facilities has been used at any time when such Facilities were owned, leased or operated by the Company, or to the knowledge of the Company, at any other time: (i) as a site for the storage, except as authorized under applicable Environmental Laws, or disposal of any Hazardous Material or (ii) so as to cause a violation of or to give rise to a removal, restoration or reimbursement Liability under any Environmental Law. Except as set forth on Schedule 6.12, the Company does not have or is not subject to any Environmental Liability. The Company is in compliance in all material respects and has complied in all material respects with, and all Facilities are being operated in compliance in all material respects and have been operated in compliance in all material aspects with, all applicable Environmental Laws, including in connection with the presence, discharge, generation, treatment, acquisition, storage, handling, removal, transportation, management, processing, use, disposal, Release or threatened Release of, or exposure to, any Hazardous Materials. The Company has not received any notice of, and to the knowledge of the Company, there are no facts or circumstances that could give rise to any Environmental Liability or any noncompliance described in the immediately preceding sentence. Except as set forth on Schedule 6.12, to the knowledge of the Company, no underground tanks, asbestos containing materials, lead-based paint, toxic mold or polychlorinated biphenyls has been present at any of the Facilities at any time when such Facilities were owned, leased or operated by the Company, or at any other time. No spills of any Hazardous Substances have occurred at any of the Facilities at any time when such Facilities were owned, leased or operated by the Company, or to the knowledge of the Company, at any other time. No environmental assessment reports with respect to any Facility are in the possession or control of the Company or Parent.

Section 6.13 Governmental Approvals. Except as set forth on Schedule 6.13, no material Consent or order of, with or to any Governmental Entity is required to be obtained or made by or with respect to Parent or the Company in connection with the execution, delivery and performance by Parent or the Company of any Transaction Document or the consummation by Parent or the Company of the Transaction.

Section 6.14 Compliance With Applicable Law.

(a) Except as set forth on Schedule 6.14(a), (i) the Company is in compliance in all material respects and has complied in all material respects with all Laws applicable to the Company, the Business and the Assets, (ii) no claims or complaints from any Governmental Entities or other Persons have been asserted or received by the Company or any Affiliate thereof within the past three years related to or affecting the Company, the Business or the Assets and, to the knowledge of the Company, no claims or complaints are

threatened, alleging that the Company or any Affiliate thereof is in violation of any Laws or Permits applicable to the Company, the Business or the Assets and (iii) no investigation, inquiry, or review by any Governmental Entity with respect to the Company, the Business or the Assets is pending or, to the knowledge of the Company, threatened, nor has any Governmental Entity indicated an intention to conduct any such investigation, inquiry or review.

(b) None of Parent or any of its Affiliates (with respect to the Company or the Business), the Company or any of its Affiliates nor any Representative of, or other Person associated with or acting on behalf of, Parent or any of its Affiliates (with respect to the Company or the Business), the Company or any of its Affiliates has directly or indirectly (i) given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, Governmental Entity or governmental, administrative or regulatory official or employee or other Person who was, is or may be in a position to help or hinder in any way any of the Company or the Business (or assist in any way in connection with any actual or proposed transaction), (ii) made or agreed to make any illegal gift, contribution, entertainment or other expense or other payment, or reimbursed any illegal gift, contribution, entertainment or other expense or other payment made by any other Person, to any political party, campaign or candidate for federal, state, local or foreign public office or any Governmental Entity or governmental, administrative or regulatory official or employee or (iii) made or agreed to make any bribe, unrecorded rebate, influence payment, payoff, kickback or other similar unlawful payment.

(c) The Company has obtained all approvals necessary for exporting products of the Company outside of the United States and importing such products into each country in which any such product is currently imported or sold. All such export and import approvals in the United States and throughout the world are current, valid and in full force and effect.

Section 6.15 Permits. Schedule 6.15 contains a true, complete and correct list of all material Permits that are held by the Company. The Permits listed on Schedule 6.15 constitute all the Permits that are necessary for the Company to operate the Business as it is being operated as of the date hereof and as it will be operated through the Closing Date and to own and use the Assets in compliance in all material respects with all Laws applicable to such operation, ownership and use. All material Permits of the Company are validly held by the Company, are in full force and effect and are not subject to any administrative or judicial periods of appeal. Except as set forth on Schedule 6.15, no material Permits of the Company will be subject to suspension, modification, revocation, cancellation, termination or nonrenewal as a result of the execution, delivery or performance of any Transaction Document or the consummation of the Transaction. The Company is in compliance in all material respects and has complied in all material respects with all of the terms and requirements of the material Permits of the Company.

Section 6.16 Employee Matters.

(a) The Company is not a party to any Contract regarding collective bargaining or other Contract with or to any labor union or association representing any employee of the Company, nor does any labor union or collective bargaining agent represent any employee of the Company. No Contract regarding collective bargaining has been requested by, or is under discussion between management of the Company (or any management group or association of which the Company is a member or otherwise a participant) and, any group of employees of the Company nor are there any representation proceedings or petitions seeking a representation proceeding presently pending against the Company with the National Labor Relations Board or any other labor relations tribunal, nor are there any other current activities, to the knowledge of the Company, to organize any employees of the Company into a collective bargaining unit. There are no unfair labor practice charges, grievances or complaints pending or, to the knowledge of the Company, threatened against the Company. During the past five years there has not been any labor strike, slow-down, work stoppage, lock-out, arbitration or other material labor dispute involving the Company or

otherwise related to the Business, and no such labor strike, slow-down, work stoppage, lock-out, arbitration or other material labor dispute is now pending or, to the knowledge of the Company, threatened against the Company. With respect to each of the Company and its employees: (i) there is no workers' compensation Liability, claim or controversy pending or, to the knowledge of the Company, threatened and, to the knowledge of the Company, no circumstance exists that is reasonably likely to result in such a Liability, claim or controversy; and (ii) there has been no "plant closing" or "mass layoff" as defined in the Worker Adjustment and Retraining Notification Act or any comparable state or local Law nor any "reduction in force" within the meaning of the Age Discrimination in Employment Act.

(b) Schedule 6.16(b) sets forth a true, complete and correct list of each pension, retirement, savings, money purchase, profit sharing, deferred compensation plan, medical, vision, dental, hospitalization, prescription drug and other health plan, cafeteria, flexible benefits, short-term and long-term disability, accident and life insurance plan, bonus, stock option, equity, stock purchase, stock appreciation, phantom stock, incentive compensation, special compensation, severance, salary continuation, retention and other plan and each other employee or fringe benefit plan, program or Contract to which the Company or any ERISA Affiliate contributes or is required to contribute or has any liability, or which the Company or any ERISA Affiliate sponsors, maintains or administers or which is otherwise applicable to employees or categories of employees of the Company, whether written or oral and whether direct or indirect (hereinafter referred to collectively as the "Plans"). Neither the Company nor any ERISA Affiliate has any plan or commitment, whether or not legally binding, to create any additional plan or modify or change any existing Plan that would affect any current or former employee, director or consultant of the Company. The Company has made available to Buyer true, complete and correct copies of (i) each Plan (or, in the case of any unwritten Plans, written descriptions thereof) and all related documents (including all amendments thereto), (ii) the three most recent annual reports on Form 5500 filed with the U.S. Internal Revenue Service ("IRS") with respect to each Plan (if any such report was required), actuarial reports and financial statements, if any, with respect to each Plan, (iii) the most recent summary plan description (along with all summaries of material modifications) for each Plan for which such a summary plan description is required, (iv) all material employee communications relating to each Plan, (v) the most recent determination or opinion letter, if any, received from the IRS and all material communications to or from the IRS or any other governmental or regulatory authority relating to each Plan, (vi) annual compliance tests reports and results, if any, for the three most recently completed plan years of each Plan, and (vii) each trust agreement, group annuity contract or other financing arrangement relating to any Plan.

(c) None of the Plans is subject to Title IV of ERISA or Section 412 of the Code and none of the Company or any ERISA Affiliate has, during any time in the six-year period preceding the Closing Date, contributed to, sponsored, maintained or administered or incurred any Liability in respect of any "employee pension benefit plan" within the meaning of Section 3(2) of ERISA that is or was subject to Title IV of ERISA or Section 412 of the Code.

(d) None of the Company or any Affiliate thereof is required, or has during any time in the six-year period preceding the Closing Date been required, to contribute to or has incurred any withdrawal liability in respect of any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).

(e) Each Plan (and each related trust, insurance contract or fund) is, and has been administered and operated, in compliance with its terms and with all applicable Laws, including ERISA and the Code. Each Plan that is intended to be qualified under Section 401(a) of the Code has received a determination or opinion letter from the IRS to the effect that it meets the requirements of Sections 401(a) of the Code and its related trust meets the requirements of Section 501(a) of the Code and nothing has occurred that would adversely affect the qualified status of such Plan.

(f) None of the Company, any ERISA Affiliate or any Plan or trust created thereunder, nor any trustee, administrator or other fiduciary thereof, has engaged in a transaction in connection with which the Company, any of the Plans, or any such trust, could be subject, directly or indirectly, to either a material Liability or material civil penalty assessed pursuant to Sections 409, 502(i) or 502(1) of ERISA or a tax imposed pursuant to Section 4971, 4972, 4974, 4975, 4976, 4980B, 4980D, 4980E or 4980F of the Code. There are no pending or, to the knowledge of the Company, anticipated or threatened claims by or on behalf of any of the Plans, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan (other than ordinary course claims for benefits). There is no judgment, decree, injunction, rule or order of any court, arbitrator or other Governmental Entity outstanding against or in favor of any Plan or any fiduciary thereof (other than rules of general applicability). There are no pending or, to the knowledge of the Company, threatened audits or investigations by any Governmental Entity involving any Plan.

(g) Each Plan that is an employee welfare benefit plan within the meaning of Section 3(1) of ERISA may be amended or terminated at any time without liability to the Company or any ERISA Affiliate.

(h) Except as required under Section 4980B of the Code, the Company does not have any obligation to provide post-retirement health benefits to any employees or former employees of the Company.

(i) Schedule 6.16(i) sets forth a true, complete and correct list of each employment, termination, retention, severance and change of control Contract and policy (whether written or oral) with or for the benefit of any employees or former employees of the Company, including each Contract for the employment of any individual or providing for severance or other termination payment to any employee whose employment is terminated. All such Contracts and policies are valid and enforceable, and none of the Company or, to the knowledge of the Company, the employees or former employees of the Company is in default in any material respect under any thereof. Except as separately set forth on Schedule 6.16(i), none of the execution, delivery or performance of any Transaction Document or the consummation of the Transaction will result in any obligation to pay any employees of the Company severance pay, or termination, retention or other benefits or accelerate the time of payment or result in any payment or funding of benefits under, or increase the amount payable or result in any other obligation pursuant to, any Plan, other than such payments or obligations that will be paid by or solely the responsibility of the Company or Parent. To the knowledge of the Company, none of employees of the Company is in violation or default of any non-disclosure agreement, common law non-disclosure obligation, fiduciary duty, non-competition agreement, restrictive covenant or other obligation to a former employer related to the right of such employee to be employed by the Company or the employee's knowledge or use of trade secrets.

(j) Schedule 6.16(j) contains a true, complete and correct list of the following information (as of December 31, 2010) for each employee and director of the Company, including each employee on leave of absence, layoff or disability status: name; job title; current compensation paid or payable and any change in compensation since December 31, 2010, including without limitation base salary; vacation and paid time off accrued; and full or part-time status.

(k) Each "nonqualified deferred compensation plan" within the meaning of Section 409A of the Code is being operated in compliance with or is exempt from, and since January 1, 2005 has been operated in compliance with or has been exempt from, Section 409A of the Code and applicable guidance issued thereunder, and is in documentary compliance with or is exempt from, and since the deadline required under Sections 409A of the Code has been in documentary compliance with or has been exempt from, Section 409A of the Code and applicable guidance issued thereunder.

(l) Except for any relationship described in Schedule 6.16(l), the employment relationship between each of the Company, on the one hand, and each current employee thereof, on the other hand, is "employment at will".

(m) Each of the Company and its Affiliates is in compliance in all material respects and has complied in all material respects with the Laws governing employees located in jurisdictions outside of the United States ("Foreign Employees") and the Company and its Affiliates have no employee benefit plans, schemes, programs and arrangement that cover Foreign Employees.

Section 6.17 Absence of Material Adverse Effect and Certain Events.

(a) Except as set forth on Schedule 6.17(a), no conditions, circumstances or state of facts exist, and since December 31, 2010, there have not been any events, occurrences, changes, developments or circumstances, which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect with respect to the Company.

(b) Without limiting the generality of the foregoing, except as set forth on Schedule 6.17(b), from and after December 31, 2010, the Company has conducted the Business only in the ordinary course consistent with past practices and the Company has not:

(i) suffered damages, destruction or casualty losses (whether or not covered by insurance) in excess of $10,000 in the aggregate;

(ii) made any capital expenditure or series of capital expenditures in excess of $10,000 in the aggregate;

(iii) except for regularly scheduled increases or decreases in compensation to employees made in the ordinary course of business consistent with past practices, made any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable or to become payable to any of their respective directors, officers, employees or agents, or agreed or promised (orally or otherwise) to pay, conditionally or otherwise, any bonus or extra compensation or other employee benefit to any of such directors, officers, employees or agents;

(iv) (A) entered into any employment agreement with or for the benefit of any Person referred to in subparagraph (iii) above; (B) paid any pension, retirement allowance or other employee benefit not required by any Plan, agreement or arrangement existing as of December 31, 2010 to any Person referred to in subparagraph (iii) above or (C) agreed or promised (orally or otherwise) to pay (conditionally or otherwise) or otherwise committed itself (conditionally or otherwise) to any additional pension, profit sharing, bonus, incentive, deferred compensation, stock purchase, stock option, stock appreciation, group insurance, vacation pay, severance pay, retirement or other employee benefit plan, agreement or arrangement, or changed the terms of any existing Plan or employee agreement or arrangement;

(v) sold, assigned, leased or transferred any of its assets or properties, other than sales of inventory in the ordinary course of business consistent with past practices;

(vi) amended or renegotiated in any material respect or terminated (other than by completion thereof) any Material Contract;

(vii) incurred, assumed or created any Indebtedness or other Liability (other than Liabilities which are Indebtedness in the ordinary course of business consistent with past practices) or guaranteed any Indebtedness or other Liability of any other Person;

(viii) made, incurred, assumed, created or guaranteed any loan or made any advance (other than the making of employee advances for travel and entertainment in the ordinary course of business consistent with past practices) or capital contribution to or investment in any Person;

(ix) subjected any of its assets or properties to any Lien or permitted any of its assets or properties to be subjected to any Lien, other than Permitted Liens;

(x) made any change in its accounting methods, policies, practices or principles;

(xi) waived or released any rights or claims of material value, including rights or claims under any Material Contract or waived or released any rights or claims against any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof;

(xii) changed or modified any of the credit, collection or payment policies, procedures or practices of the Company, including acceleration of collections of receivables, failure to make or delay in making collections of receivables, acceleration of payment of payables or other Liabilities or failure to pay or delay in payment of payables or other Liabilities;

(xiii) engaged in any discount activity with customers of the Company or any other activity that has accelerated or would accelerate to pre-Closing periods sales that would otherwise in the ordinary course of business consistent with past practices be expected to occur in post-Closing periods;

(xiv) acquired or agreed to acquire by merging or consolidating with, or by purchasing a substantial portion of the capital stock or assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or Person, or division, operating unit or product line thereof;

(xv) declared, set aside, paid or made any dividend or other distribution with respect to any of its membership interests, or otherwise made any payments to any of its members in their capacity as such;

(xvi) amended its certificate of incorporation, operating agreement or by-laws (or other similar governing documents);

(xvii) revalued any of the Assets, including writing down the value of its inventory or writing off notes or accounts receivable;

(xviii) made any Tax election, changed any annual Tax accounting period, amended any Tax return, settled or compromised any income Tax liability, entered into any closing agreement, settled any Tax claim or assessment, surrendered any right to claim a Tax refund or failed to make the payments or consented to any extension or waiver of the limitations period applicable to any tax claim or assessment;

(xix) (A) entered into any transaction with any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof or (B) made, directly or indirectly, any payments or transferred, directly or indirectly, any funds or other property to or on behalf of any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof (other than (1) regularly scheduled cash compensation payments and payments under existing employee benefit plans listed on Schedule 6.16(b) to such Persons who are employees of the Company based on such Person's salary and employee benefits as were in effect on December 31, 2010 and (2) reimbursements of ordinary and necessary business expenses of employees of the Company incurred in connection with their employment consistent with written policies of the Company);

(xx) entered into any Lease (including any capitalized lease obligations);

(xxi) settled or compromised any Action; or

(xxii) entered into any agreement or Contract (other than the Transaction Documents) to take any of the types of actions described in subclauses (i) through (xxv) of this Section 6.17(b).

Section 6.18 Sufficiency of Assets. The Assets constitute and will constitute on the Closing Date (a) all of the material assets and properties (real and personal, tangible and intangible) and rights that are used by the Company in the operation of the Business as it is being conducted as of the date hereof and as it will be conducted through the Closing Date and (b) all the assets and properties (real and personal, tangible and intangible) and rights used to conduct the Business following the Effective Time as it is being conducted as of the date hereof and as it will be conducted through the Effective Time. Except for Retained Assets or as set forth on Schedule 6.18, no Affiliates of Parent or of the Company (in each case, other than Parent and the Company) own or has ever owned any assets, properties or rights Related to the Business or is engaged in or has ever engaged in the business described in the definition of the "Business".

Section 6.19 Product Warranty.

(a) No product manufactured, sold, leased or delivered or service rendered by the Company is subject to any guarantee, warranty or other indemnity beyond those set forth in the terms and conditions of sale contained in the Material Contracts set forth on Schedule 6.10(a).

(b) Set forth on Schedule 6.19 is the aggregate annual cost to the Company of performing product warranty obligations for each of the previous two (2) fiscal years and the current fiscal year through December 31, 2010. Schedule 6.19 sets forth a list of all pending or, to the knowledge of Parent or the Company, threatened product warranty claims in excess of $5,000 either individually or in the aggregate. Since January 1, 2008, the Company has not changed the scope of its contractual obligations for standard warranties with respect to the return, repair or replacement of products manufactured or sold by the Company. Set forth on Schedule 6.19 is a list of all warranty obligations, whether or not based on any standard warranty form, which are still in force for products of the Company and where the Company has, after the issuance of the warranty, either (i) postponed the commencement of the warranty period; (ii) extended the duration of the warranty period; or (iii) changed the terms of the warranty, including without limitation, the available remedies. Except as set forth on Schedule 6.19, none of the products currently manufactured or sold by the Company (x) has been in the past five (5) years or currently is the subject of any recall, claims or obligations arising from or alleged to arise from any injury to persons or property as a result of the ownership, possession or use of any product of the Business prior to the Effective Time nor has any recall been threatened in writing in the past five (5) years, or (y) has been in the past three (3) years or currently is the subject of any product liability claim, other than

random claims of less than $5,000 per incident. Except as set forth on Schedule 6.19, neither Parent nor the Company is aware of any facts that might reasonably be expected to cause any future product recalls or any increase in the number of claims resulting from the ownership possession or use of any product of the Business.

Section 6.20 Insurance.

(a) Schedule 6.20(a) sets forth a true, complete and correct list of all insurance policies and surety bonds which the Company maintains with respect to the Assets, its Liabilities, its employees, officers or directors or the Business ("Insurance Policies"). The Company has made available to Buyer true, complete and correct copies of all Insurance Policies.

(b) The Insurance Policies: (i) are in full force and effect and (ii) are sufficient for compliance with all requirements of Law and Contracts of the Company. The Company is current in all premiums or other payments due under each Insurance Policy and has otherwise performed in all material respects all of its respective obligations thereunder.

(c) The Company has not received during the past three years from any insurance carrier to which it has applied for any insurance or with which it has carried any insurance (i) any refusal of coverage or notice of material limitation of coverage or any notice that a defense will be afforded with reservation of rights or (ii) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any insurance policy is not willing or able to perform its obligations thereunder.

Section 6.21 Bank Accounts; Powers of Attorney. Schedule 6.21 sets forth a true, complete and correct list of: (a) all bank accounts, investment accounts, lock boxes and safe deposit boxes maintained by or on behalf of the Company, including the location and account numbers of all such accounts, lock boxes and safe deposit boxes, (b) the names of all Persons authorized to take action with respect to such accounts, safe deposit boxes and lock boxes or who have access thereto and (c) the names of all Persons holding general or special powers of attorney from the Company, and a summary statement of the terms thereof.

Section 6.22 No Brokers. Other than Oberon Securities, whose fees shall be paid by Parent, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Parent, the Company or any Affiliate of any thereof who is or might be entitled to any fee, commission or payment in connection with the negotiation, preparation, execution or delivery of any Transaction Document or the consummation of the Transaction, nor is there any basis for any such fee, commission or payment to be claimed by any Person against the Company.

Section 6.23 Internal Controls. Parent’s officer certifications concerning its internal controls appended to the Parent SEC Reports are accurate as if made on the date hereof and are incorporated herein by reference.

Section 6.24 Customers and Suppliers. Schedule 6.24 sets forth a list of the ten (10) largest customers and the ten (10) largest suppliers of the Company, as measured by the dollar amount of purchases therefrom or thereby, during the fiscal years ended June 30, 2009 and 2010, showing the approximate total sales by the Company to each such customer and the approximate total purchases by the Company from each such supplier, during such periods. Except as disclosed on Schedule 6.24, (i) no customer or supplier listed on Schedule 6.24 has terminated or substantially diminished its relationship with the Company or materially adversely changed the pricing or other terms of a substantial portion of its

business with the Company, (ii) no customer or supplier listed on Schedule 6.24 has notified in writing the Company that it intends to terminate or substantially diminish its relationship with the Company or materially adversely change the pricing or other terms of a substantial portion of its business with the Company, (iii) there has not been any material adverse change in the relationship between the Company with any customer or supplier listed on Schedule 6.24, or (iv) no Contract with any customer or supplier listed on Schedule 6.24 has expired.

Section 6.25 Disclosure. None of (a) the schedules to this Agreement nor (b) any certificate or other information provided to Buyer pursuant to this Agreement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Parent as follows:

Section 7.1 Organization. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

Section 7.2 Authority; Binding Obligation. Buyer has all requisite corporate power and authority to execute and deliver each Transaction Document delivered or to be delivered by Buyer and to perform all of its obligations under the Transaction Documents. The execution, delivery and performance by Buyer of each Transaction Document delivered or to be delivered by Buyer and the consummation by Buyer of the Transaction have been or will be duly authorized by all necessary and proper corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity. Each other Transaction Document to be delivered by Buyer will be duly executed and delivered by Buyer and, when so executed and delivered, will constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights in general and by general principles of equity.

Section 7.3 No Breach. None of the execution, delivery or performance by Buyer of any Transaction Document delivered or to be delivered by Buyer or the consummation by Buyer of the Transaction does or will, with or without the giving of notice or the lapse of time or both, conflict with, or result in a breach or violation of or a default under (a) the Certificate of Incorporation or By-Laws of Buyer, (b) any Contract of Buyer or (c) any Law or Permit or other requirement to which Buyer or its properties or assets are subject, except, in the case of items (b) and (c) above only, for those which would not have, individually or in the aggregate, a material adverse effect on the ability of Buyer to consummate the Transaction.

Section 7.4 Governmental Approvals. Except as set forth on Schedule 7.4, no material Consent or order of, with or to any Governmental Entity is required to be obtained or made by or with respect to Buyer in connection with the execution, delivery and performance by Buyer of any Transaction Documents or the consummation by Buyer of the Transaction.

Section 7.5 No Brokers. Except for Raymond James, whose fees shall be paid by Buyer, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer or any of its Affiliates who is or might be entitled to any fee, commission or payment in connection with the negotiation, preparation, execution or delivery of any Transaction Document or the consummation of the Transaction, nor is there any basis for any such fee, commission or payment to be claimed by any Person against Buyer.

Section 7.6 SEC Reports; Financial Statements. Buyer has filed with the SEC all reports, including amendments thereto, required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing materials being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Buyer included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of Buyer and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended. In the case of unaudited interim financial statements, such statements include all adjustments (including normal recurring accruals) necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented.

Section 7.7 Valid Issuance. The shares of Buyer’s common and preferred stock to be issued to Parent pursuant to Sections 4.1(b)(vi), (vii), (viii) and (ix) have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by Parent), except for restrictions on transfer imposed by applicable securities laws. Buyer has reserved a sufficient number of shares of its common stock for issuance upon the exercise of the conversion rights contained in the description of said preferred stock attached hereto as Exhibit C, free and clear of all encumbrances and restrictions, except for restrictions on transfer imposed by applicable securities laws and except for those created by Parent.

Section 7.8 No Material Adverse Change. Since September 30, 2010, except as identified and described in the SEC Reports, there has not been:

(a) any change in the consolidated assets, liabilities, financial condition or operating results of Buyer from that reflected in the financial statements included in Buyer’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 or any subsequent Form 8-K, except for changes in the ordinary course of business or changes which have not had and would not reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate;

(b) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of Buyer, or any redemption or repurchase of any securities of Buyer;

(c) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of Buyer or its Subsidiaries which has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate;

(d) any waiver, not in the ordinary course of business, by Buyer or any of its Subsidiaries of a right or of a debt owed to it which has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate;

(e) any change or amendment to Buyer's Certificate of Incorporation (other than inclusion of the terms of Buyer’s preferred stock as set forth in Exhibit C) or Bylaws;

(f) any material transaction entered into by Buyer or any of its Subsidiaries other than in the ordinary course of business which has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate;

(g) the loss of the services of any key employee, or material change in the composition or duties of the senior management of Buyer or any of its Subsidiaries which has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate; or

(h) the loss or threatened loss of any customer which has had or would reasonably be expected to have a Material Adverse Effect with respect to Buyer.

Section 7.9 Tax Matters. Buyer and each of its Subsidiaries has timely prepared and filed all tax returns required to have been filed by Buyer or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it, except where the failure to file such returns or pay such amounts would not, individually or in the aggregate, have a Material Adverse Effect with respect to Buyer. The charges, accruals and reserves on the books of Buyer in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against Buyer or any of its Subsidiaries nor, to Buyer’s knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to Buyer and its Subsidiaries, taken as a whole. All taxes and other assessments and levies that Buyer or any of its Subsidiaries is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due, except where the failure to withhold, collect or pay would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to Buyer. There are no material tax liens or claims pending or, to Buyer’s knowledge, threatened against Buyer or any of its Subsidiaries or any of their respective assets or property. There are no outstanding tax sharing agreements or other such arrangements between Buyer and any of its Subsidiaries or other corporation or entity.

Section 7.10 Title to Properties. Except as disclosed in the Buyer's SEC filings (i) Buyer and each of its Subsidiaries has good and marketable title to all real properties and all other material properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them, and (ii) Buyer and each of its Subsidiaries holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

Section 7.11 Certificates, Authorities and Permits. Buyer and each of its Subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, except where the failure to possess such certificates, authorities or permits would not

reasonably be expected to have a Material Adverse Effect with respect to Buyer, and neither Buyer nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to Buyer or such Subsidiary, would reasonably be expected to have a Material Adverse Effect with respect to Buyer, individually or in the aggregate.

Section 7.12 Litigation. Except as described in the SEC Reports, there are no material pending actions, suits or proceedings against or affecting Buyer, its Subsidiaries or any of its or their properties; and to Buyer’s knowledge, no such actions, suits or proceedings are threatened or contemplated. Except as described in the SEC Reports, neither Buyer nor any Subsidiary, nor any director or officer thereof, is or since January 1, 2009 has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to Buyer’s knowledge, there is not pending or contemplated, any investigation by the SEC involving Buyer or any current or former director or officer of Buyer. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by Buyer or any Subsidiary under the Securities Act or the Exchange Act.

Section 7.13 Compliance with Nasdaq Continued Listing Requirements. Except as disclosed in the Buyer's SEC filings, Buyer is in compliance with applicable Nasdaq continued listing requirements. There are no proceedings pending or, to Buyer’s knowledge, threatened against Buyer relating to the continued listing of the Buyer Stock on Nasdaq and Buyer has not received any notice of, nor to Buyer’s knowledge is there any basis for, the delisting of the Buyer Stock from Nasdaq. The Buyer's common stock is registered pursuant to Section 12(b) of the Exchange Act, and Buyer has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Buyer Stock under the Exchange Act, nor has Buyer received any notification that the SEC is contemplating terminating such registration. Immediately after the consummation of the transactions contemplated hereby, Buyer will be in compliance with all such Nasdaq listing and maintenance requirements.

ARTICLE VIII

COVENANTS OF PARENT AND THE COMPANY

Section 8.1 Conduct of Business.

(a) From the date hereof through the Closing Date, Parent will cause the Company to, and the Company will, conduct the Business only in the ordinary course consistent with past practices.

(b) From the date hereof through the Closing Date, Parent will cause the Company not to, and the Company will not, without Buyer's prior written consent, engage in any transaction or take any action which, if engaged in or taken since December 31, 2010 but on or before the date hereof, would constitute a breach of the representations and warranties contained in Section 6.17(b).

(c) From the date hereof through the Closing Date, Parent will cause the Company to use, and the Company will use, its commercially reasonable efforts to (i) preserve its business organization intact, (ii) retain the services of its present officers, employees and agents, (iii) maintain good business relationships with third parties having business dealings with the Business and (iv) maintain all existing Permits.

(d) From the date hereof through the Closing Date, Parent will cause the Company not to, and the Company will not, without Buyer's prior written consent, make, directly or indirectly, any payments or transfers of any funds or other property to or on behalf of Parent (other than reimbursements for ordinary operating expenses of the Company already paid for by Parent, consistent with past practice), any Affiliate, employee, officer, director or shareholder of the Company or any Affiliate or Associate of any thereof (other than (i) regularly scheduled compensation payments and payments under existing employee benefit plans listed on Schedule 6.16(b) to such Persons who are employees of the Company based on such Person's salary and employee benefits as were in effect on December 31, 2010, (ii) reimbursements of reasonable business expenses of employees of the Company incurred in connection with their employment consistent with written policies of the Company, and (iii) as provided in Section 8.16).

(e) From the date hereof through the Closing Date, Parent will cause the Company not to, and the Company will not, without the prior written consent of Buyer, amend in any material respect or terminate (other than by completion thereof) any existing Material Contract or enter into any Contract which would be a Material Contract if it were in existence on the date hereof and required to be set forth on Schedule 6.8(b), 6.9(c), 6.10(a), 6.16(b) or 6.16(i).

(f) From the date hereof through the Closing Date, Parent will cause the Company not to, and the Company will not sell, transfer or dispose of any fixed asset or intangible asset (whether recorded or unrecorded) without Buyer's written consent.

Section 8.2 Access to Information. From the date hereof through the Effective Time, the Company will provide to Buyer and its Representatives full access during normal business hours to the properties, books, records, officers, employees and Representatives of the Company to make or cause to be made such investigation of the Business, the Assets, the Assumed Liabilities and of the financial and legal condition of the Company as Buyer deems necessary or advisable, provided that any such investigation shall not interfere unnecessarily with normal operations of the Company. From the date hereof through the Closing Date, the Company will furnish to Buyer and its Representatives such financial and operating data and other information with respect to the Business, the Assets and the Assumed Liabilities as Buyer shall from time to time reasonably request. The Confidentiality Agreement will apply with respect to the information provided pursuant to this Section 8.2.

Section 8.3 Notices of Certain Events. From the date hereof through the Closing Date, Parent and the Company will notify promptly Buyer of: (i) any notice or other communication from any Person alleging that the Consent of such Person is or may be required in connection with the Transaction; (ii) any notice or other communication from any Governmental Entity received by Parent or the Company in connection with the Transaction and (iii) any Action commenced, or, to the knowledge of the Company, threatened, relating to or involving or otherwise affecting the Company, the Assets, Liabilities or employees of the Company or the consummation of the Transaction. No notice pursuant to this Section 8.3 will be deemed to amend or otherwise modify or affect any representations or warranties, covenants, obligations, agreements or conditions set forth herein, amend any schedule hereto or limited or otherwise affect any available remedies.

Section 8.4 Consents. Promptly after the date of this Agreement, Parent and the Company will (a) make all filings required by Law to be made by them in connection with the Transaction Documents or the consummation of the Transaction, (b) cooperate with Buyer with respect to all filings that Buyer elects to make or is required by Law to make in connection with the Transaction Documents or the consummation of the Transaction and (c) subject to limitations stated elsewhere in this Agreement, use commercially reasonable efforts to obtain all Consents and orders of all Persons required to be obtained, and deliver all notices required to be provided by the Company, in each case in connection with the execution, delivery and performance by Parent and the Company of the Transaction Documents and the consummation of the Transaction.

Section 8.5 Books and Records.

(a) On the Closing Date, the Company and Parent will cause all books and records constituting Assets to be delivered to Buyer.

(b) Parent and the Company will not dispose of or destroy any business records or files related to the Business which do not constitute Assets for the greater of (x) five years after the Closing Date or (y) any applicable statutory or retention period (including any extension thereof). Prior to disposing of or destroying any such business records or files in accordance with the preceding sentence, Parent will provide not less than 30 days' prior written notice to Buyer, specifying the business records and files proposed to be disposed of or destroyed. If, prior to the scheduled date for such disposal or destruction, Buyer requests in writing that any of the business records or files proposed to be disposed of or destroyed be delivered to Buyer, Parent will arrange promptly for the delivery of the requested business records and files to a location specified by, and at the expense of, Buyer.

Section 8.6 Confidential Information.

(a) From and after the Closing, Parent will, and will cause each of its Affiliates and its and its Affiliates' Representatives to (i) maintain in strict confidence any and all information concerning the Business and (ii) refrain from using any and all such information for its own benefit or to compete with or otherwise to the detriment of Buyer or its Affiliates or the Business. It is understood that Parent shall not have any liability hereunder with respect to information that (i) is in or, through no fault of Parent or Parent's Affiliates or Parent's or Parent's Affiliate's Representatives, comes into the public domain or (ii) Parent is legally required to disclose.

(b) In the event that Parent or any of its Affiliates or its or their Representatives are required by Law to disclose any such information, Parent will promptly notify Buyer in writing so that Buyer may seek a protective order and/or other motion to prevent or limit the production or disclosure of such information. If such motion has been denied, then such Parent, Affiliate or Representative may disclose only such portion of such information which (i) in the written opinion of such Parent's, Affiliate's or Representative's outside legal counsel is required by Law to be disclosed (provided that such Parent, Affiliate or Representative will use its commercially reasonable efforts to preserve the confidentiality of the remainder of such information) or (ii) Buyer consents in writing to having such information disclosed. Parent will not, and will not permit any of its Affiliates or its or its Affiliates' Representatives to, oppose any motion for confidentiality brought by Buyer. Parent will continue to be bound by its obligations pursuant to this Section 8.6 for any information that is not required to be disclosed, or that has been afforded protective treatment, pursuant to such motion.

Section 8.7 Restrictive Covenants.

(a) For a period of three years from and after the Closing Date, without the prior written consent of Buyer, Parent and the Company covenant and agree that none of Parent, the Company, any Affiliate of any thereof or any Person now or hereafter controlled by Parent, the Company or any Affiliate of any thereof, excluding any Person who becomes an employee of Buyer on or after the Closing Date, will, directly or indirectly (on its, his or her own behalf or in the service or on behalf of others or jointly with any other Person):

(i) enter into, control, engage in, be employed by, provide managerial, supervisory, administrative or consulting services to, represent, have or acquire more than a 2% ownership or beneficial interest in or otherwise participate in, anywhere in the world, any business with operations engaged, directly or indirectly, in research, development, design, engineering, sale, distribution, installation, modification, service or support of (i) wireless asset and GPS tracking and monitoring products and services related to mobile refrigeration, heavy equipment or trucking applications, or activities related thereto or (ii) any products or services of the type or that are competitive with, products or services manufactured, sold or provided by the Company on the date hereof or on the Closing Date or during the three year period ending on the Closing Date or any derivatives of or improvements to such products or services, or activities related thereto; and

(ii) recruit, induce, solicit, hire or retain as an employee, independent contractor or consultant any Person who is an employee to whom Buyer offers employment pursuant to Section 10.1(a) and, during such period, induce or attempt to induce any such employee to terminate his or her employment with Buyer by resignation, retirement or otherwise; provided, however, that nothing in this Section 8.7 prohibit publications by Parent or any Affiliate thereof of general advertisements offering employment so long as no such employee is hired.

(b) Parent and the Company recognize the importance of the covenants contained in this Section 8.7 and acknowledges that, based on their past experience, the restrictions imposed herein are (i) reasonable as to scope, time and area; (ii) necessary for the protection of Buyer's legitimate business interests, including the trade secrets, goodwill and relationships with customers, suppliers and employees of the Business; and (iii) not unduly restrictive of any rights of Parent, the Company or their Affiliates. Parent and the Company acknowledge and agree that the covenants contained in this Section 8.7 are essential elements of this Agreement and that but for these covenants Buyer would not have agreed to purchase the Assets. The existence of any claim or cause of action against Buyer or any of its Affiliates by Parent, the Company or any of their Affiliates, whether predicated on breach of this Agreement or otherwise, shall not constitute a defense to the enforcement by Buyer of the covenants contained in this Section 8.7.

(c) If any covenant contained in this Section 8.7, or any part thereof, is hereafter construed to be invalid or unenforceable in any jurisdiction, the same shall not affect the remainder of the covenants in such jurisdiction or this Section 8.7 in any other jurisdiction, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration, scope and/or area of such covenant so that, in its reduced form, said covenant shall then be enforceable.

Section 8.8 Acquisition Proposals.

(a) Without limiting Parent's or the Company's other obligations under this Agreement (including under Section 8.1(b) hereof), Parent and the Company agree that they will not, and will cause each of their subsidiaries and their respective officers, directors, employees, agents and representatives (including any investment banker, attorney or accountant retained by it) not to, directly or indirectly, (A) initiate, solicit, encourage or knowingly facilitate (including by way of furnishing information) any inquiries or the making of any proposal or offer with respect to, or a transaction to effect, any Acquisition Proposal, (B) have any discussion with or provide any confidential information or data to any Person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition Proposal, (C) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal or (D) approve or recommend, or propose to approve or recommend, or

execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement or propose publicly or agree to do any of the foregoing related to any Acquisition Proposal.

(b) For purposes of this Agreement, "Acquisition Proposal" means any inquiry, proposal or offer from any Person with respect to (A) any purchase of a business or asset of Parent and the Company that constitutes 15% or more of the net revenues, net income or assets of Parent and the Company, taken as a whole, (B) a merger, reorganization, share exchange, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction (other than a Permitted Transaction) involving Parent or any of its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC), or (C) any purchase or sale of, or tender or exchange offer for, the equity securities of Parent that, if consummated, would result in any Person (or the stockholders of such Person) beneficially owning securities representing 15% or more of the total voting power of Parent (or of the surviving parent entity in such transaction) or any of its Significant Subsidiaries, including any single or multi-step transaction or series of related transactions (other than a proposal or offer made by Buyer or an affiliate thereof or a Permitted Transaction).

(c) Notwithstanding anything in this Agreement to the contrary, Parent or its board of directors shall be permitted to (A) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal, (B) effect a Change in Parent Recommendation, or (C) engage in any discussions or negotiations with, or provide any information to, any Person in response to an unsolicited bona fide written Acquisition Proposal by any such Person in order to be informed with respect thereto in order to make any determination permitted in clause (B), if and only to the extent that, in any such case referred to in clause (B) or (C), (1) the Parent Stockholders Meeting shall not have occurred, (2) (x) in the case of clause (B) above, it has received an unsolicited bona fide written Acquisition Proposal (for purposes of this clause (2), references to "15% or more" in the definition of "Acquisition Proposal" shall be deemed to be references to "a majority") from a third party and its board of directors concludes in good faith that such Acquisition Proposal constitutes a Superior Proposal and (y) in the case of clause (C) above, its board of directors concludes in good faith that there is a reasonable likelihood that such Acquisition Proposal would constitute a Superior Proposal, (3) its board of directors, after consultation with outside counsel, determines in good faith that it is required to take such action in the exercise of its fiduciary duties to stockholders under applicable laws, (4) prior to providing any information or data to any Person in connection with an Acquisition Proposal by any such Person, its board of directors receives from such Person an executed confidentiality agreement having provisions that are at least as restrictive to such Person as the comparable provisions contained in the Confidentiality Agreement and (5) prior to providing any information or data to any Person or entering into discussions or negotiations with any Person, it notifies Buyer promptly of such inquiries, proposals or offers received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, it or any of its representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any inquiries, proposals or offers, and furnishes to Buyer a copy of any such written inquiry, proposal or offer. Parent agrees that it will promptly keep Buyer informed of the status and terms of any such inquiries, proposals or offers and the status and terms of any such discussions or negotiations. Parent agrees that it will, and will cause its officers, directors and representatives to, immediately cease and cause to be terminated any activities, discussions or negotiations existing as of the date of this Agreement with any Persons conducted heretofore with respect to any Acquisition Proposal. Parent agrees that it will use reasonable best efforts to promptly inform its directors, officers, key employees, agents and representatives of the obligations undertaken in this Section 8.8. Nothing in this Section 8.8 shall (x) permit Parent to terminate this Agreement (except as specifically provided in Article XII) or (y) affect any other obligation of Parent under this Agreement. Except as required by applicable Law or in compliance with Parent's bylaws with respect to

properly submitted stockholder proposals, Parent shall not propose for consideration or submit for a vote at the Parent Stockholders Meeting any matter other than the proposal with respect to the transactions with Buyer contemplated by this Agreement without the prior written consent of Buyer.

(d) For purposes of this Agreement, "Superior Proposal" means a bona fide written proposal made by a Person other than Buyer which is (A) for (x) a purchase of all or substantially all of the assets of Parent or the Company, or (y) a merger, reorganization, consolidation, share exchange, business combination, recapitalization or similar transaction involving Parent (other than a Permitted Transaction) as a result of which the other Person thereto or its stockholders will own more than 50% of the combined voting power of the entity surviving or resulting from such transaction (or the ultimate parent entity thereof), and (B) is not subject to any financing contingency and is otherwise on terms which the board of directors of such party in good faith concludes (following receipt of the advice of its financial advisors and outside counsel), taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal, (x) would, if consummated, result in a transaction that is more favorable to its stockholders (in their capacities as stockholders), from a financial point of view, than the Transaction and (y) is reasonably capable of being completed.

(e) For purposes of this Agreement, "Permitted Transaction" means the acquisition by Parent of any Person, whether by merger or acquisition of assets, whereby Parent is the surviving entity and the net worth of Parent on a consolidated basis immediately following such merger or acquisition would be greater than such net worth immediately prior to such merger or acquisition; provided however that no Permitted Transaction shall (i) delay, interfere with or otherwise directly or indirectly restrain or prohibit, the consummation of the Transaction, or (ii) relate to the sale of or other transactions involving the Assets or the Business.

(f) Parent will promptly request all Persons who have heretofore executed a confidentiality agreement in connection with such Persons' consideration of making an Acquisition Proposal to return or destroy all confidential information heretofore furnished to such Persons by or on behalf of Parent, the Company or any Affiliate of any thereof, will enforce all obligations under such confidentiality agreements and will provide to Buyer copies of certificates from such Persons certifying the return or destruction of such confidential information. At the Closing, Parent will assign, and cause the Company and each of its and their Affiliates, to assign, to Buyer all their rights under all confidentiality agreements relating to the sale of or other transactions involving the Business (or any portion thereof).

Section 8.9 Preparation of Proxy Statement. Except to the extent the Parent Stockholders Meeting is not required pursuant to Section 8.10, the following provisions of this Section 8.9 shall apply:

As promptly as reasonably practicable following the date hereof, Parent shall prepare and file with the SEC proxy materials reasonably acceptable to Buyer relating to obtaining the Required Parent Vote (such proxy materials, and any amendments or supplements thereto, the "Proxy Statement"). Parent shall, within one business day after receipt thereof, provide Buyer copies of any written comments and advise Buyer of any oral comments with respect to the Proxy Statement received from the SEC. Parent shall cooperate and provide Buyer with a reasonable opportunity to review and comment on any amendment or supplement to the Proxy Statement prior to filing such with the SEC, and will provide Buyer with a copy of all such filings made with the SEC. Notwithstanding any other provision herein to the contrary, no amendment or supplement to the Proxy Statement to the extent relating to information on Buyer shall be made without the approval of Buyer, which approval shall not be unreasonably withheld or delayed. Parent will cause the Proxy Statement to be mailed to Parent's

stockholders as promptly as practicable after it has been cleared by the SEC. The Proxy Statement shall conform to all applicable Laws. Parent will advise Buyer, promptly after it receives notice thereof, of the time when the Proxy Statement is cleared by the SEC or any request by the SEC for amendment of the Proxy Statement. If at any time prior to the Effective Time any information relating to Parent or any of its Affiliates, officers or directors, or the Transaction is discovered by Parent or Buyer which should be set forth in an amendment or supplement to the Proxy Statement so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other party hereto and, to the extent required by applicable Laws, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and disseminated to the stockholders of Parent.

Section 8.10 Stockholders Meeting. Except to the extent that following the consummation of a Permitted Transaction, the approval of the Transaction by Parent shareholders is not required under applicable Law, as evidenced by opinion of counsel to Parent to that effect reasonably satisfactory to Buyer, Parent shall duly take all lawful action to call, give notice of, convene and hold a meeting of its stockholders as promptly as practicable in accordance with applicable Laws (the "Parent Stockholders Meeting") for the purpose of obtaining the Required Parent Vote and shall take all lawful action to solicit the Required Parent Vote; and the board of directors of Parent shall recommend approval of the Transaction by the stockholders of Parent as required by Section 10-1202 of the Arizona Revised Statutes (the "Parent Recommendation"), and shall not (i) withdraw (or propose to withdraw) the Parent Recommendation, (ii) modify or qualify (or propose to modify or qualify) in any manner adverse to Buyer the Parent Recommendation or (iii) take any action or make any statement in connection with the Parent Stockholders Meeting inconsistent with such recommendation (any of the actions described in clauses (i), (ii) or (iii), a "Change in Parent Recommendation"); provided, however, that the board of directors of Parent may make a Change in Parent Recommendation pursuant to Section 8.8. Notwithstanding any Change in Parent Recommendation, this Agreement shall be submitted to the stockholders of Parent at the Parent Stockholders Meeting (unless the Parent Stockholders Meeting is not required as described in the first sentence of this Section 8.10) for the purpose of obtaining the Required Parent Vote and nothing contained herein shall be deemed to relieve Parent of such obligation.

Section 8.11 Power of Attorney with Respect to Assets. Effective as of the Effective Time, the Company hereby constitutes and appoints Buyer the true and lawful attorney of the Company, with full power of substitution, in the name and on behalf of the Company but for the benefit of and at the sole cost and expense of Buyer, to institute and prosecute proceedings that Buyer may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the Assets or the Assumed Liabilities, or to defend or compromise any Action in respect of any of the Assets or the Assumed Liabilities, and to take all such action in relation thereto as Buyer shall deem advisable. The Company acknowledges that such powers will be coupled with an interest and will not be revocable by the Company for any reason. Buyer will retain for its own account any amount collected as a result of any action taken pursuant to the foregoing powers.

Section 8.12 Receipt of Assets. All assets, amounts and proceeds which are received (whether received in lock boxes, via wire transfer, by check or otherwise) or possessed by Parent, the Company or any Affiliate of any thereof at or after the Effective Time in respect of the Assets or the Assumed Liabilities will be received or possessed and held in trust for the benefit of Buyer and will be forthwith paid over to Buyer in the form so received or possessed (with any necessary endorsement). Without limiting the generality of the foregoing, Parent and the Company will, and will cause each of their respective Affiliates to, wire transfer to an account designated by Buyer all payments in respect of accounts receivable which constitute Assets received by Parent, the Company or any Affiliate of any thereof within three business days after receipt thereof. Effective as of the Effective Time,

each of Parent and the Company, on behalf of itself and its respective Affiliates, hereby grants to Buyer the right and authority to endorse without recourse the name of the Company on any check or any other evidences of indebtedness or negotiable instruments received by Buyer on account of any accounts receivable or other Assets transferred to Buyer hereunder.

Section 8.13 Change of Corporate Name. Parent and the Company acknowledge and agree that all of their rights in and to, and ownership of, the name "StarTrak Systems" and any names substantially similar thereto shall be transferred hereunder to Buyer. From and after the Closing, Parent and the Company shall be prohibited from using the corporate name "StarTrak Systems", except as necessary to effect the change of the corporate name of the Company, to evidence that such change has occurred. Promptly following the Closing, the Company shall have filed all documents with the appropriate governmental authorities in such states as the Company is so qualified and registered, to change the name of the Company to a name which does not contain the phrase "StarTrak Systems" or any other substantially similar words.

Section 8.14 Registration of Buyer’s Common Stock. Buyer shall register Buyer’s common stock issuable to Parent pursuant to Sections 4.1(b)(vi),(vii) and (viii) as well as Buyer’s common stock issuable upon exercise of the conversion right set forth in the description of Buyer’s preferred stock to be issued pursuant to Section 4.1(b)(ix) under federal and applicable state securities laws in accordance with the registration rights agreement attached hereto as Exhibit D (the "Registration Rights Agreement").

Section 8.15 Restriction on Resale of Buyer’s Common Stock. Without the prior written consent of Buyer, Parent shall not sell, dividend or otherwise distribute more than twelve and one half percent (12.5%) of the total number of shares of Buyer Stock received by Parent pursuant to Sections 4.1(b)(vi), (vii) and (viii) and 4.3 (including any shares delivered in respect of or based on the Earn-Out Amount to the extent actually delivered to Parent) in any month following the effective date of the Registration Statement to be filed by Buyer in accordance with the Registration Rights Agreement. During the one (1) year period beginning on the Closing Date, Parent shall not propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Parent (other than any such plan providing for Parent to be the surviving entity or providing for the surviving entity to assume all obligations of Parent under this Agreement).

Section 8.16 Certain Payments.

(a) Prior to the Closing Date, the Company shall pay to Buyer all past due amounts due to Buyer as of November 30, 2010 for telecommunication services rendered.

(b) Immediately prior to the assumption by STK Acquisition, LLC of the Anderson Loan Agreement, Parent and the Company shall or shall cause the other borrowers under the Anderson Loan Agreement to pay down the loan thereunder such that the outstanding principal amount is $3,900,000 and all fees and expenses are paid through the effective date of the assumption.

Section 8.17 Resolution of Intellectual Property Issues. Prior to the Closing Date, the Company shall have entered into written agreements, in form and substance reasonably satisfactory to Buyer, with any Person who is an employee or former employee of the Company or Parent that owns or claims to own any right, title and interest in and to patents or patent applications shown on Schedule 6.8(a) and any other material Business Intellectual Property providing for the assignment of such Business Intellectual Property to Buyer at Closing or to the Company prior to Closing.

100

Section 8.18 Assets Owned by Parent.

(a) To the extent that any asset Related to the Business set forth on Schedule 8.18 is owned by Parent, Parent shall cause such asset to be sold, assigned, conveyed, transferred and delivered to Buyer pursuant to this Agreement under the same terms and conditions applicable to the Company if such asset were an Asset being transferred by the Company hereunder. Any such asset owned by Parent will be deemed to constitute part of the Assets.

(b) In the event that any asset Related to the Business is discovered after the date hereof to be owned by Parent and such asset has not been transferred to Buyer hereunder at the Closing, Parent shall promptly notify Buyer of such asset and provide Buyer with a description thereof and Buyer shall within thirty (30) days of such notice either expressly assume such asset (an "Additional Asset"), in which case, the Additional Asset will be treated as if an Asset on the date hereof, or reject such asset, in which case, such asset shall not constitute an Asset and shall be deemed to be a Retained Asset.

ARTICLE IX

COVENANTS OF PARENT, THE COMPANY AND BUYER

Section 9.1 Advice of Changes. Each of Parent and the Company, on the one hand, and Buyer, on the other hand, will give prompt notice to the other upon becoming aware of (i) the occurrence, or failure to occur, of any event or other development which would be likely to cause any representation or warranty of such party contained in any Transaction Document to be untrue or inaccurate in any respect and (ii) any failure on its part to comply with or satisfy in any respect any covenant, condition or agreement to be complied with or satisfied by it under any Transaction Document on or prior to the Closing Date. The notifying party will use its commercially reasonable efforts to prevent or promptly remedy any matter which is or would be the subject of any such notice. No notice pursuant to this Section 9.1 will be deemed to amend or otherwise modify or affect any representations or warranties, covenants, obligations, agreements or conditions set forth herein, amend any schedule hereto or limit or otherwise affect any available remedies.

Section 9.2 Public Announcements. No press release or announcement concerning the Transaction will be issued by Parent or the Company without the prior consent of Buyer or by Buyer without the prior consent of Parent, except as such release or announcement may be required by law, rule or regulation or the listing requirements of any applicable stock exchange, in which case the Person required to make the release or announcement will allow the Person whose consent would otherwise be required reasonable time to comment on such release or announcement in advance of such issuance.

Section 9.3 Commercially Reasonable Efforts; Further Assurances.

(a) Parent and the Company will use its commercially reasonable efforts to cause to be fulfilled the conditions to the obligations of Buyer set forth in Section 11.1 and Buyer will use its commercially reasonable efforts to cause to be fulfilled the conditions to the obligations of Parent and the Company set forth in Section 11.2.

(b) From time to time, as and when requested by any party to this Agreement, the other parties will execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, all such reasonable actions, as such other party may reasonably deem necessary or desirable to consummate the Transaction.

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(c) Anything contained in this Agreement to the contrary notwithstanding, none of the parties to this Agreement or their Affiliates will be required to commence litigation or divest or hold separate any business or assets or limit or restrict its rights or ability to engage in any business or activity (other than pursuant to Section 8.7) in connection with the consummation of the Transaction.

Section 9.4 Post-Closing Access to Information.

(a) From and after the Closing, Buyer will make or cause to be made available to Parent and its agents and employees all business records and files constituting Assets (other than information which is legally privileged, subject to confidentiality obligations to third parties or the provision of which is prohibited by law) during regular business hours as may be reasonably necessary for (i) preparing tax returns and financial statements and responding to tax audits covering operations and transactions at or prior to the Effective Time, (ii) investigating, settling, preparing for the defense or prosecution of, defending or prosecuting any Action, (iii) preparing reports to stockholders and Government Entities or (iv) such other purposes for which access to such documents is reasonably necessary; provided, however, that access to such business records and files will not unnecessarily interfere with or adversely affect the normal operations of Buyer and its Subsidiaries and Affiliates and the reasonable out of-pocket expenses of Buyer incurred in connection therewith will be paid by Parent.

(b) From and after the Closing, Parent and the Company will make or cause to be made available to Buyer and its agents and employees all business records and files of Parent, the Company and their respective Affiliates related to the Business which do not constitute Assets (other than information which is legally privileged, subject to confidentiality obligations to third parties or the provision of which is prohibited by law) during regular business hours for the same purposes, to the extent applicable, as set forth in Section 9.4(a); provided, however, that access to such business records and files will not unnecessarily interfere with or adversely affect the normal operations of Parent, the Company and their Affiliates and the reasonable out of-pocket expenses of Parent, the Company and their Affiliates incurred in connection therewith will be paid by Buyer.

Section 9.5 Insurance.

(a) Rights in Insurance Policies. Following the Effective Time, Buyer will have the right to (i) assert claims (and Parent will use and cause the Company and each of their respective Affiliates to use commercially reasonable efforts to assist Buyer in asserting claims) with respect to the Business under insurance policies of Parent and its Affiliates which are "occurrence basis" policies ("Occurrence Basis Policies") arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Occurrence Basis Policies so allow and (ii) continue to prosecute claims with respect to the Business asserted with the insurance carrier prior to the Closing (and Parent will use and cause the Company and each of their respective Affiliates to use reasonable best efforts to assist Buyer in connection therewith) under insurance policies of Parent and its Affiliates which are on a "claims made" basis ("Claims Made Policies") arising out of insured incidents occurring from the date coverage thereunder first commenced until the Effective Time to the extent that the terms and conditions of any such Claims Made Policies so allow, provided that Buyer shall reimburse Parent and its Affiliates for all of their reasonable out-of-pocket costs and expenses in connection with the foregoing. All recoveries in respect of such claims shall be for the account of Buyer.

(b) Parent Actions. Parent will not, and will cause the Company and each of their respective Affiliates not to, amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Occurrence Basis Policies or Claims Made Policies under which Buyer has rights to assert claims pursuant to Section 9.5(a) in a manner that would

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adversely affect any such rights of Buyer. In the event Buyer consents to any such action, Parent will pay to Buyer its equitable share (based on the amount of premiums paid by or allocated to the Business in respect of the applicable policy) of any proceeds received by Parent or any of its Affiliates as a result of such action.

Section 9.6 Standard Procedure. If applicable, pursuant to Rev. Proc. 2004-53, 2004-34 I.R.B. 320, Buyer and Parent (or the Company) shall report on a predecessor/successor basis in accordance with the "Standard Procedure" provided in Section 4 of such Revenue Procedure.

Section 9.7 Cash Management.

(a) Notwithstanding anything to the contrary contained in this Agreement, all bank, investment or similar accounts set forth on Schedule 9.7(a) (the "Transferred Bank Accounts") will constitute Assets and all other bank accounts of Parent, the Company or any of their respective Affiliates will constitute Retained Assets to the extent not included in the Final Closing Statement.

(b) From and after the Closing Date, Parent, the Company and their respective Affiliates will fund, without any right of reimbursement, all amounts in respect of checks and debit electronic fund transfers that are outstanding at the close of business on the Closing Date and presented for payment at or after the close of business on the Closing Date in bank, investment or similar accounts of Parent, the Company or any of their respective Affiliates with respect to such accounts (other than the Transferred Bank Accounts).

(c) From and after the Closing Date, subject to the following sentence, Buyer will fund all amounts in respect of checks and debit electronic fund transfers that are outstanding at the Effective Time and presented for payment at or after the close of business on the Closing Date in the Transferred Bank Accounts. Within three (3) business days after Buyer's request, to the extent not included as a current liability in the Final Closing Statement, Parent will reimburse Buyer (by wire transfer to Buyer's bank account notified by Buyer to Parent) for all such amounts funded by Buyer in respect of checks or debit electronic funds transfers that are outstanding at the close of business on the Closing Date and presented for payment at or after the Effective Time in such Transferred Bank Accounts.

Section 9.8 IGS Proceeding. The parties hereto agree that any Damages (including legal fees of outside counsel, settlement amounts and fees in securing an invalidity opinion) incurred or suffered by Buyer following the Closing in connection with the patent infringement action titled Innovative Global Systems LLC v. StarTrak Systems, LLC, et al. (Case No.: 6:10-CV-00327) and currently venued in the United States District Court for the Eastern District of Texas (the "IGS Proceeding") (any such Damages relating to the IGS Proceeding, "IGS Damages") shall be borne on an equal basis by Parent and the Company on the one hand, and Buyer on the other hand; provided however that Parent and the Company's liability for such IGS Damages shall not exceed the amounts held by the Escrow Agent pursuant to the Escrow Agreement. Upon incurring or suffering any IGS Damages, Buyer shall direct the Escrow Agent to release to Buyer from the Escrow Property an amount equal to 50% of such IGS Damages pursuant to the Escrow Agreement. Buyer will have no other recourse to Parent and the Company in the event amounts held in escrow pursuant to the Escrow Agreement are insufficient to cover claims by Buyer pursuant to Parent's and the Company's obligations under this Section 9.8. Buyer will not consent to any settlement of the IGS Proceeding without Parent's prior written consent (which consent will not be unreasonably withheld), if such settlement would not provide for a royalty-free license or the release of the Company from all Liability with respect to activities by the Company or the Business prior to the Closing Date that are the subject matter of the IGS Proceeding.

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Section 9.9 Fuel Sensor Warranty Claims. The parties hereto agree that any out-of-pocket costs (excluding internal salaries of the Company’s or Buyer's employees) for warranty, replacement and repair-related costs (including third party labor costs) in connection with remediating the defective fuel sensors manufactured by or on behalf of Centroid Manufacturing and delivered to the Company prior to the Closing Date (any such costs, "Fuel Sensor Damages") expended by the Company, Parent, Buyer or the Business during the period March 1, 2011 to March 1, 2012 (the "Measurement Period") or accrued as a liability on the balance sheet of the Business shall be borne on an equal basis by Parent and the Company on the one hand, and Buyer on the other hand to the extent that the sum of (a) the aggregate of all product warranty, replacement and repair-related expenses of the Business (other than Fuel Sensor Damages) expended by the Company, Parent, Buyer or the Business or accrued as a liability on the balance sheet of the Business ("Non-Fuel Sensor Damages") and (b) the Fuel Sensor Damages actually expended by the Company, Parent, Buyer or the Business or accrued on the balance sheet of the Business during the Measurement Period (the "Aggregate Warranty Expenses") exceed $600,000; provided however that the Parent and the Company's liability for such Fuel Sensor Damages shall not exceed the amounts held by the Escrow Agent pursuant to the Escrow Agreement. In the event that (i) Aggregate Warranty Expenses exceed $600,000 and (ii) the Business has incurred or suffered any Fuel Sensor Damages during the Measurement Period, but after the Effective Date, Buyer shall have the right to direct the Escrow Agent to release to Buyer from the Fuel Sensor Escrowed Shares an amount equal to 50% of such Fuel Sensor Damages (excluding the amount of Fuel Sensor Damages that when added to the Non-Fuel Sensor Damages, equals $600,000) pursuant to the Escrow Agreement. Buyer will have no other recourse to Parent and the Company in the event amounts held in escrow pursuant to the Escrow Agreement are insufficient to cover claims by Buyer pursuant to Parent's and the Company's obligations under this Section 9.9.

ARTICLE X

EMPLOYMENT MATTERS

Section 10.1 Employment.

(a) Buyer will offer employment commencing as of the Effective Time, to such employees of the Company engaged primarily in the Business who are employed (including those who are actively employed or on leave or short term disability or other permitted absence from employment, but excluding those who are on layoff or long-term disability) immediately prior to the Effective Time and who are listed on Schedule 10.1(a) (which Schedule 10.1(a) may be amended after the date hereof to include such employees hired with the Consent of Buyer after the date hereof and prior to the Effective Time) that Buyer in its sole discretion shall determine on such terms and conditions as Buyer in its sole discretion shall determine; provided, however, that nothing contained in this Section 10.1 is intended to confer upon any Continued Employee any right to continued employment after evaluation by Buyer of its employment needs after the Effective Time. Buyer shall provide immediately after the Effective Time to each Continued Employee compensation and employee benefits on such terms and conditions as Buyer in its sole discretion shall determine substantially comparable in the aggregate in all material respects to (i) the employee benefits provided by Buyer to its similarly situated employees immediately prior to the Effective Time, (ii) the employee benefits provided by the Company to such employee immediately prior to the Effective Time, or (iii) any combination of such benefits described in (i) and (ii) above as Buyer shall determine in its sole discretion; provided, however, that after the Effective Time, Buyer expressly reserves the right to amend, modify or terminate any employee benefit plan or program for or for the benefit of Continued Employees in accordance with the terms thereof and applicable law.

(b) Buyer will credit each Continued Employee with such employee's unused vacation days accrued by such employee with the Company prior to the Effective Time in accordance with the Company's personnel policies applicable to such employees on the date hereof, but in no event will any Continued Employee receive a credit hereunder in excess of

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the number of vacation days such employee was eligible to accrue in one calendar year under such policies (it being understood that the liability in respect of such accrued vacation days to be credited by Buyer will be included on the Closing Statement).

Section 10.2 Pension Plans.

(a) Parent/Company Retirement Plan. Effective as of the Effective Time, each Continued Employee who participated in the Parent or Company Retirement Plan (the "Parent/Company Retirement Plan") immediately prior to the Effective Time shall cease to accrue benefits under the Parent/Company Retirement Plan and shall have a fully nonforfeitable right to such Continued Employee's benefit payable at normal retirement age under the Parent/Company Retirement Plan accrued as of the Effective Time. None of Buyer or its Affiliates shall have or acquire any interest in or right with respect to any of the assets of the Parent/Company Retirement Plan, and Parent shall retain full power and authority with respect to the amendment and termination of the Parent/Company Retirement Plan and the investment and disposition of assets held in the Parent/Company Retirement Plan to the extent permitted by applicable law. Parent will remain solely responsible for, and none of Buyer or its Affiliates will have any Liability under, relating to or arising out of the Parent/Company Retirement Plan. Each Continued Employee shall be entitled to maintain such Continued Employee's accrued benefit under the Parent/Company Retirement Plan or receive a distribution of such Continued Employee's account balances under the Parent/Company Retirement Plan in accordance with the terms of the Parent/Company Retirement Plan and applicable law.

Section 10.3 Welfare Plans.

(a) Effective as of the Effective Time, Buyer will provide to each Continued Employee benefits under Buyer's "employee welfare benefit plans", as defined in Section 3(1) of ERISA, and other employee benefit welfare or fringe benefit arrangements (collectively, "Buyer Welfare Benefit Plans") that are substantially comparable in the aggregate in all material respects to (i) such benefits provided by Buyer to its similarly situated employees immediately prior to the Effective Time, (ii) such benefits provided by the Company to such employee immediately prior to the Effective Time, or (iii) any combination of such benefits described in (i) and (ii) above as Buyer shall determine in its sole discretion; provided, however, that after the Effective Time, Buyer expressly reserves the right to amend, modify or terminate any employee benefit, benefit plan or program for or for the benefit of Continued Employees in accordance with the terms thereof and applicable law.

(b) Parent, the Company or the Parent Welfare Benefit Plans will remain liable for, and pay, perform and discharge when due, all Liabilities relating to Continued Employees in respect of claims covered by the Parent Welfare Benefit Plans with respect to medical and retiree medical (including vision care and prescription drugs), hospitalization and dental services rendered or expenses incurred on or prior to the Closing Date (whether such claims are submitted prior to, on or after the Closing Date). Buyer or the Buyer Welfare Benefit Plans will be liable for, and pay, perform and discharge when due, all Liabilities relating to Continued Employees in respect of claims covered by the Buyer Welfare Benefit Plans with respect to medical (including vision care and prescription drugs), hospitalization and dental services rendered or expenses incurred after the Closing Date. Parent, the Company or the Parent Welfare Benefit Plans will remain liable for, and pay, perform and discharge when due, all Liabilities relating to Continued Employees in respect of claims covered by the Parent Welfare Benefit Plans with respect to all other employee welfare benefits (including travel, accident and short- and long-term disability) arising out of illnesses, injuries, accidents, events, actions, occurrences or conditions occurring or existing at or prior to the Closing Date (whether such claims are submitted prior to, on or after the Closing Date).

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(c) Parent or the Company or the Parent Welfare Benefit Plans will remain liable and pay, perform and discharge, when due all Liabilities relating to employees and former employees of the Business who do not become Continued Employees, including with respect to claims relating to employee welfare benefits.

Section 10.4 Severance Benefits. Parent will be responsible for and will pay when due all Liabilities in respect of any claim of any employee to whom Buyer offers employment pursuant to Section 10.1 and who does not accept such employment with Buyer, that such employee's employment has been terminated solely in conjunction with the transactions contemplated hereby.

Section 10.5 Relationship of the Parties; No Right to Continued Employment; Ability to Amend, Modify or Terminate Plans.

(a) Nothing in this Agreement shall be deemed or construed by the parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the parties, it being understood and agreed that no provision contained herein, and no act of the parties, shall be deemed to create any relationship between the parties other than the relationship set forth herein.

(b) Nothing contained in this Agreement shall confer on any Continued Employee any right to continued employment with Buyer.

(c) Nothing in this Agreement shall be deemed or construed to limit or otherwise affect the power reserved to Buyer under any Plan established or maintained by Buyer to subsequently amend, modify or terminate such Plan at any time for any reason.

(d) COBRA. Parent and the Company will be solely responsible and liable for satisfying the continuation coverage requirements for group health plans under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code ("COBRA") for all former employees of the Business (and their respective beneficiaries and dependents) who are receiving COBRA continuation coverage as of the Effective Date as set forth in Schedule 10.5.(d) (the "COBRA Employees") and Buyer will be solely responsible and liable for satisfying the continuation COBRA coverage requirements for Continued Employees (and their respective beneficiaries and dependents) who are entitled to elect such coverage on account of a qualifying event occurring after the Effective Time.

(e) No Duplication of Benefits. It is the understanding of the parties that this Section 10.5 shall be construed and applied without duplication of benefits to any Continued Employees, in order to avoid any such employee simultaneously enjoying coverage of the accrual of benefits under comparable plans of both Parent or the Company, on the one hand, and Buyer on the other hand.

(f) Taxes with Respect to Continuing Employees. Notwithstanding anything to the contrary in this Article X, Buyer is not assuming or otherwise agreeing to pay any liability for Taxes with respect to a Continuing Employee that accrued or was otherwise incurred or withheld on or prior to the Effective Time, except as shown on the Final Closing Statement.

ARTICLE XI

CONDITIONS TO CLOSING

Section 11.1 Conditions to Obligations of Buyer. The obligations of Buyer to effect the Transaction are subject to the satisfaction or waiver by Buyer at or prior to the Closing Date of each of the following conditions:

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(a) Representations and Warranties. The representations and warranties set forth in Articles V and VI: (i) shall be true and correct in all material respects (except for representations and warranties which are by their terms qualified by materiality, which representations and warranties shall be true and correct in all respects) as of the date hereof; and (ii) shall be true and correct in all material respects (except for representations and warranties which are by their terms qualified by materiality, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date as if made on such date (except where such representations and warranties are by their express terms made as of a specific date, in which case such representations and warranties shall be true and correct as of such specific date).

(b) Performance of Obligations of Parent and the Company. Each and all of the covenants and agreements of Parent and the Company to be performed or complied with pursuant to the Transaction Documents on or prior to the Closing Date shall have been fully performed and complied with in all material respects.

(c) No Injunctions or Restraints. No Law enacted, entered, enforced, promulgated, issued or deemed applicable to the Transaction or any other action taken by any court or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the Transaction shall be in effect.

(d) Parent Stockholders Approval. Parent shall have obtained the Required Parent Vote (unless the Parent Stockholders Meeting is not required pursuant to Section 8.10).

(e) Litigation. No Action shall be pending or have been threatened which (i) is reasonably likely to make illegal, or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the Transaction or to result in material damages in connection with the Transaction, (ii) seeks to prohibit ownership or operation by Buyer of all or a portion of the Business or the Assets or all or a portion of the businesses or assets of Buyer or any of its Affiliates or to compel Buyer to dispose of or hold separately all or any portion of the Business or the Assets or all or a portion of the business or assets of Buyer or any of its Affiliates as a result of the Transaction, (iii) cause the Transaction to be rescinded following consummation, or (iv) impose any material Liability on Buyer or any of its Affiliates as a result of the Transaction.

(f) Laws. There shall not exist or have been enacted, entered, enforced, promulgated or deemed applicable to the Transaction any Law or any other action taken by any court or other Governmental Entity that has resulted or could reasonably be expected to result, directly or indirectly, in any of the consequences referred to in Section 11.1(e).

(g) No Material Adverse Change. There shall not exist any condition, circumstance or state of facts, and there shall not have been (or reasonably be expected to occur) any event, occurrence, change, development or circumstance, which has had or could reasonably be expected to have a Material Adverse Effect with respect to Parent or the Company.

(h) Consents. All material Consents and orders of all Persons (including Governmental Entities) required to be obtained prior to the Closing in connection with the execution, delivery and performance of the Transaction Documents by each of Parent and the Company or the consummation of the Transaction shall have been obtained and shall be in full force and effect, including all Consents set forth on Schedule 11.1(h).

(i) Operating Software. The Company shall have assigned to Buyer, at the Closing, all rights of the Company under the ST Wireless Agreement.

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(j) Parent's Certificate. Parent and the Company shall have executed and delivered to Buyer a certificate dated the Closing Date, in a form reasonably acceptable to Buyer, executed by an officer of Parent and the Company, certifying to the fulfillment and satisfaction of the conditions specified in Sections 11.1(a), 11.1(b), 11.1(g) and 11.1(h).

(k) Closing Certificate. Buyer shall be reasonably satisfied that the amounts set forth on the Closing Certificate are true and correct.

(l) Estimated Net Working Capital Amount. Buyer shall be reasonably satisfied with the accuracy of the Estimated Closing Statement delivered by the Company pursuant to Section 4.6(a) and the Estimated Net Working Capital Amount.

(m) Release of Liens. Parent and the Company shall have delivered to Buyer appropriate written pay-off and termination letters from the lenders and other creditors of the Company, in form and substance reasonably satisfactory to Buyer, necessary to obtain good, valid and marketable title to the Assets free and clear of all Liens.

(n) Anderson Loan Agreement. STK Acquisition, LLC shall have assumed all of the rights of the Anderson Trust as lender, under the Anderson Loan Agreement pursuant to the Anderson Assignment and Assumption Agreement.

(o) Anderson Note Guaranty. The Anderson Trust shall have executed and delivered to Buyer, the Secured Promissory Note, the Anderson Security Agreement and the Anderson Note Guaranty.

(p) Name Change. The Company shall have delivered to Buyer all documents and instruments necessary to amend its certificate of incorporation, operating agreement or by-laws (or other similar governing documents), as applicable, to change its name to a name that does not contain the words "StarTrak Systems" or any substantially similar words.

(q) New Jersey Bulk Transfer Laws. Buyer is in receipt of a direction letter from the Director of the Division of Taxation of New Jersey as contemplated under Section 15.8.

(r) Opinion. Parent shall have delivered to Buyer an opinion of counsel in the form attached hereto as Exhibit F.

(s) Intellectual Property Rights. All rights, title and interest in and to the Business Intellectual Property not held in the name of the Company (other than any Business Intellectual Property licensed to the Company and set forth on Schedule 6.8(b)) shall have been assigned to Buyer at Closing and any patents included in such Business Intellectual Property not previously abandoned thereby assigned shall be in good standing.

Section 11.2 Conditions to Obligations of Parent and the Company. The obligations of Parent and the Company to effect the Transaction are subject to the satisfaction or waiver by Parent at or prior to the Closing Date of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of Buyer set forth in Article VII: (i) shall be true and correct in all material respects (except for representations and warranties which are by their terms qualified by materiality, which representations and warranties shall be true and correct in all respects) as of the date hereof; and (ii) shall be true and correct in all material respects (except for representations and warranties which are by their terms qualified by materiality, which representations and warranties shall

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be true and correct in all respects) at and as of the Closing Date as if made on such date (except where such representations and warranties are by their express terms made as of a specific date, in which case such representations and warranties shall be true and correct as of such specific date).

(b) Performance of Obligations of Buyer. Each and all of the covenants and agreements of Buyer to be performed or complied with pursuant to the Transaction Documents on or prior to the Closing Date shall have been fully performed and complied with in all material respects.

(d) Parent Stockholders Approval. Parent shall have obtained the Required Parent Vote (unless the Parent Stockholders Meeting is not required pursuant to Section 8.10).

(h) Buyer's Certificate. Buyer shall have executed and delivered to Parent a certificate dated the Closing Date, in a form reasonably acceptable to Parent, executed by an officer of Buyer, certifying to the fulfillment and satisfaction of the conditions specified in Sections 11.2(a), 11.2(b) and 11.2(g).

(i) Opinion. Buyer shall have delivered to Parent an opinion of counsel in the form attached hereto as Exhibit G.

ARTICLE XII

TERMINATION

Section 12.1 Termination. This Agreement may be terminated at any time prior to the Closing Date:

(a) by the mutual written agreement of Buyer and Parent and the Company;

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(b) by written notice by Buyer to Parent and the Company or by Parent and the Company to Buyer, if the Closing Date shall not have occurred on or before June 30, 2011, except that neither Buyer, on the one hand, nor Parent and the Company, on the other hand, may so terminate this Agreement if the absence of such occurrence is due to the breach by Buyer, on the one hand, or Parent or the Company, on the other hand, of any of its representations, warranties, covenants or agreements under this Agreement or any other Transaction Document;

(c) by written notice by Buyer to Parent and the Company or by Parent and the Company to Buyer, if there shall be any law that makes consummation of the Transaction illegal or otherwise prohibited or if any court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Transaction, and such order, decree, ruling or other action shall not be subject to appeal or shall have become final and unappealable;

(d) by written notice by Buyer to Parent and the Company, if there shall have been a breach of any representation, warranty, covenant or agreement on the part of Parent or the Company set forth in this Agreement, or if any representation or warranty of Parent or the Company set forth in this Agreement shall have become untrue, in any such case such that the conditions set forth in Section 11.1(a) or Section 11.1(b), as the case may be, would not be satisfied as of such time, provided that if such breach is curable by Parent or the Company prior to June 30, 2011 through the exercise of Parent's or the Company's commercially reasonable efforts, then for so long as Parent or the Company continues to exercise such commercially reasonable efforts to cure the same, Buyer may not terminate this Agreement pursuant to this Section 12.1(d);

(e) by written notice by Parent and the Company to Buyer, if there shall have been a breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, or if any representation or warranty of Buyer set forth in this Agreement shall have become untrue, in any such case such that the conditions set forth in Section 11.2(a) or Section 11.2(b), as the case may be, would not be satisfied as of such time, provided that if such breach is curable by Buyer prior to June 30, 2011 through the exercise of its commercially reasonable efforts, then for so long as Buyer continues to exercise such commercially reasonable efforts to cure the same, Parent and the Company may not terminate this Agreement pursuant to this Section 12.1(e);

(f) by written notice by Parent and the Company to Buyer or by Buyer to Parent and the Company if the Required Parent Vote shall not have been obtained upon the taking of such vote at a duly held meeting of stockholders of Parent or at any adjournment thereof; or

(g) by written notice by Buyer to Parent and the Company if (i) other than circumstances under which the Parent Stockholders Meeting is not required pursuant to Section 8.10, Parent's board of directors shall have (A) failed to make the Parent Recommendation or (B) made a Change in Parent Recommendation (or resolved or proposed to take any such action referred to in clause (A) or (B)), in each case whether or not permitted by the terms hereof, or (ii) Parent shall have breached its obligations under this Agreement (x) contained in Section 8.8 or (y) by reason of a failure to call the Parent Stockholders Meeting in accordance with Section 8.10 or a failure to prepare and mail to its stockholders the Proxy Statement in accordance with Section 8.9 (other than circumstances under which the Parent Stockholders Meeting is not required pursuant to Section 8.10).

Section 12.2 Effect of Termination.

(a) In the event of the termination of this Agreement pursuant to Section 12.1, this Agreement (other than with respect to the last sentence of Section 8.2, Section 9.2, this Section 12.2 and Article XV, which shall continue in effect) shall thereafter become void and have no effect, without any liability on the part of any party or its Affiliates or Representatives in respect thereof, except that nothing herein will relieve any party from liability for any breach of this Agreement or any other Transaction Document.

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(b) If after the date of this Agreement:

(i) Buyer shall terminate this Agreement pursuant to Section 12.1(g); or

(ii) (A) an Acquisition Proposal shall have been made to Parent or the Company, or any Person shall have announced (or otherwise made known to the board of directors of Parent) an intention (whether or not conditional) to make an Acquisition Proposal, and (B) following the occurrence of an event described in the preceding clause (A), this Agreement shall have been terminated by Buyer or Parent and the Company pursuant to Section 12.1(b) or Section 12.1(d), and (C) within twelve (12) months of the date this Agreement is terminated as described in the preceding clause (B), Parent or the Company enters into one or more definitive acquisition agreements with respect to, or consummates a transaction contemplated by, any Acquisition Proposal

then, in any such event under clause (i) or (ii) of this Section 12.2(b), Parent shall promptly, but in no event later than one business day after (A) in the case of clause (i), the date of such termination or (B) in the case of clause (ii), the date Parent or the Company enters into such agreement with respect to or consummates such Acquisition Proposal), pay Buyer, by wire transfer of immediately available funds to an account designated by Buyer, an amount equal to the sum of $500,000 plus an amount equal to the sum of Buyer Expenses, provided that such amount payable to Buyer in respect of Buyer Expenses shall not exceed $250,000.

(c) The parties acknowledge that the agreements contained in this Section 12.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Buyer would not enter into this Agreement; accordingly, if Parent fails promptly to pay any amount due pursuant to this Section 12.2, and, in order to obtain such payment, Buyer commences a suit which results in a judgment against Parent for the payment of the amounts set forth in this Section 12.2, Parent shall pay to Buyer its costs and expenses (including attorneys' fees and expenses) in connection with such suit, together with interest on the amounts payable pursuant to this Section 12.2 from the date such payment is required to be made until the date such payment is actually made (calculated based on actual days elapsed in a 365-day year) at a rate of 10% per annum. The parties agree that any remedy or amount payable pursuant to this Section 12.2 shall not preclude any other remedy or amount payable hereunder, and shall not be an exclusive remedy, for any breach of any provision of this Agreement.

ARTICLE XIII

SURVIVAL

Section 13.1 Survival.

(a) The representations and warranties of Parent and the Company contained in Article VI (other than Sections 6.3, 6.7, 6.8, 6.12 and 6.22) and of Buyer contained in Article VII (other than Section 7.7) will survive the execution and delivery of this Agreement, the consummation of the Transaction and the Closing Date and will continue in full force and effect until eighteen (18) months after the Closing Date and then terminate and expire with respect to any theretofore unasserted claims arising out of or otherwise in respect of any breach or inaccuracy of such representations and warranties.

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(b) The representations and warranties of Parent and the Company contained in Sections 6.7, 6.8, 6.12 and 6.22 will survive the execution and delivery of this Agreement, the consummation of the Transaction and the Closing Date and will continue in full force and effect until the expiration of all applicable statutes of limitation (giving effect to any extensions thereof) and then terminate and expire with respect to any theretofore unasserted claims arising out of or otherwise in respect of any breach or inaccuracy of such representations and warranties.

(c) The representations and warranties of Parent contained in Article V and of Parent and the Company contained in Section 6.3 and of Buyer contained in Section 7.7 will survive the execution and delivery of this Agreement, the consummation of the Transaction and the Closing Date without time limitation.

ARTICLE XIV

INDEMNIFICATION

Section 14.1 Indemnification by Parent and the Company. Parent and the Company shall, severally and jointly, indemnify, defend and hold harmless Buyer and its Affiliates and their respective Representatives (collectively, the "Buyer Group") from and against, and pay or reimburse, as the case may be, the Buyer Group for, any and all Damages, as incurred, suffered by Buyer or any other member of the Buyer Group directly or indirectly based upon, arising out of or otherwise relating to or in respect of:

(a) any breach or inaccuracy of any representation or warranty contained in Article V or Article VI on the date of this Agreement or on the Closing Date;

(b) any breach of any covenant or agreement of Parent or the Company contained in any Transaction Document;

(d) the Retained Liabilities (including any Liability which is not an Assumed Liability that may become a Liability of Buyer by statute, regulation, common law or otherwise and the failure by Parent, the Company or any Affiliate of any thereof to pay, perform or otherwise discharge any Retained Liabilities in accordance with their terms) or the assertion against any member of the Buyer Group of any such Liability; or

(e) any Liability for and in respect of (i) Taxes of Parent, the Company and their respective Affiliates, including such Taxes arising in connection with the consummation of the transactions contemplated hereby, and (ii) Taxes relating to the Business, the Assets or the Assumed Liabilities for periods (or portions thereof) ending on or before the Closing Date in excess of Taxes included on the Final Closing Statement (in the case of any period that includes but does not end on the Closing Date, the amount of Taxes attributable to the portion ending on the Closing Date shall be based on the interim closing of the books basis, except for periodic Taxes (such as property Taxes) which should be allocated on a daily pro ration basis).

Section 14.2 Indemnification by Buyer. Buyer shall indemnify, defend and hold harmless Parent, the Company and their respective Affiliates and their respective Representatives (collectively, the "Parent Group") from and against, and pay or reimburse, as the case may be, the Parent Group for, any and all Damages, as incurred, suffered by Parent or any other member of the Parent Group directly or indirectly based upon, arising out of or otherwise in any way relating to or in respect of:

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(a) any breach or inaccuracy of any representation or warranty contained in Article VII on the date of this Agreement or on the Closing Date;

(b) any breach of any covenant or agreement of Buyer contained in any Transaction Document; or

(c) the Assumed Liabilities (including the failure by Buyer to pay, perform or otherwise discharge any Assumed Liabilities in accordance with their terms) or the assertion against any member of the Parent Group of any Assumed Liability.

Section 14.3 Procedures for Indemnification.

(a) If a claim or demand is made against an Indemnitee by any Person who is not a party to this Agreement (and who is not an Affiliate of a party to this Agreement) as to which a party (the "Indemnifying Party") may be obligated to provide indemnification pursuant to this Agreement (a "Third Party Claim"), such Indemnitee will notify the Indemnifying Party in writing, and in reasonable detail, of the Third Party Claim reasonably promptly after becoming aware of such Third Party Claim; provided, however, that failure to give any such notification will not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have demonstrated that it has been actually prejudiced as a result of such failure.

(b) If a Third Party Claim is made against an Indemnitee and the Indemnifying Party unconditionally and irrevocably acknowledges in writing its obligation to indemnify the Indemnitee therefor, the Indemnifying Party will be entitled to assume the defense thereof (at the expense of the Indemnifying Party) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof as long as the Indemnifying Party diligently conducts such defense; provided that, if (i) in any Indemnitee's reasonable judgment a conflict of interest exists in respect of such claim or (ii) any Indemnifying Party fails to provide reasonable assurance to the Indemnitee (upon request of the Indemnitee) of such Indemnifying Party's financial capacity to defend such Third Party Claim and provide indemnification with respect thereto, such Indemnitee will have the right to employ separate counsel to represent such Indemnitee and in that event the reasonable fees and expenses of such separate counsel will be paid by such Indemnifying Party. If the Indemnifying Party assumes the defense of any such Third Party Claim, each Indemnitee will have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party. The Indemnifying Party will be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to assume the defense thereof or failed to diligently conduct the defense thereof, or if it does not expressly elect to, or is not entitled to, assume the defense thereof (including, in the case of a failure of the Indemnifying Party to acknowledge its indemnification obligation as aforesaid). If the Indemnifying Party assumes the defense of any such Third Party Claim, the Indemnifying Party will promptly supply to the Indemnitee copies of all correspondence and documents relating to or in connection with such Third Party Claim and keep the Indemnitee fully informed of all developments relating to or in connection with such Third Party Claim (including, without limitation, providing to the Indemnitee on request updates and summaries as to the status thereof). If the Indemnifying Party is entitled to and chooses to defend a Third Party Claim, at the request of the Indemnifying Party all the Indemnitees will reasonably cooperate with the Indemnifying Party in the defense thereof (such cooperation to be at the expense, including reasonable legal fees and expenses, of the Indemnifying Party).

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(c) Notwithstanding anything to the contrary contained herein, no Indemnifying Party will consent to any settlement, compromise or discharge (including the consent to entry of any judgment) of any Third Party Claim without the Indemnitee's prior written consent; provided, however, that, without limiting the Indemnitee's rights set forth in this sentence, the Indemnitee may refuse to agree to any settlement, compromise or discharge (w) that does not obligate the Indemnifying Party to pay the full amount of Damages in connection with such Third Party Claim, (x) that does not provide for the unconditional and irrevocable release of the Indemnitee and its Affiliates (pursuant to a release which is reasonably satisfactory to the Indemnitee) completely from all Liability in connection with such Third Party Claim, (y) that provides for injunctive or other nonmonetary relief affecting the Indemnitee or any of its Affiliates or (z) that, in the reasonable opinion of the Indemnitee, would otherwise adversely affect the Indemnitee or any of its Affiliates. If each Indemnifying Party unconditionally and irrevocably acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim and is entitled to assume, and is diligently conducting, the defense thereof, the Indemnitee will not (unless required by law) admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party's prior written consent (which consent will not be unreasonably withheld).

(d) Any claim on account of Damages which does not involve a Third Party Claim shall be asserted by written notice given by the Indemnitee to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnitee so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have to such Indemnitee under this Agreement, except to the extent that the Indemnifying Party shall have demonstrated that it has been actually prejudiced as a result of such failure.

Section 14.4 Certain Rights and Limitations.

(a) No monetary amount shall be payable by Parent or the Company to any member of the Buyer Group with respect to the indemnification of any claims pursuant to Section 14.1(a) with respect to representations and warranties contained in Article VI (other than Sections 6.3, 6.7 and 6.22) until the aggregate amount of Damages actually incurred by the Buyer Group with respect to such claims exceeds $75,000 in the aggregate, in which event Parent and the Company shall be responsible for the excess amount of such Damages. No monetary amount shall be payable by Buyer to any member of the Parent Group with respect to the indemnification of any claims pursuant to Section 14.2(a) with respect to representations and warranties contained in Article VI I (other than Section 7.5) until the aggregate amount of Damages actually incurred by the Parent Group with respect to such claims exceeds $75,000 in the aggregate, in which event Buyer shall be responsible for the excess amount of such Damages.

(b) No monetary amount shall be payable by Parent or the Company to any member of the Buyer Group with respect to the indemnification of any claims pursuant to Section 14.1(a) with respect to representations and warranties contained in Article VI (other than Sections 6.3, 6.7 and 6.22) once the aggregate amount of Damages actually paid to the Buyer Group with respect to such claims is equal to (i) one-half of the total aggregate value of the consideration to be paid by Buyer under this Agreement if Parent or the Company had no knowledge, as of the Closing, of the breach of warranty or representation for which indemnification is sought; or (ii) the total aggregate value of the consideration to be paid by Buyer under this Agreement if Parent or the Company had knowledge, as of the Closing, of the breach of warranty or representation for which indemnification is sought. No monetary amount shall be payable by Buyer to any member of the Parent Group with respect to the indemnification of any claims pursuant to Section 14.2(a) with respect to representations and warranties contained in Article VII (other than Section 7.5) once the aggregate amount of Damages actually paid to the Parent Group with respect to such claims is equal to (i) one-half of the total aggregate value of the consideration to be paid by Buyer under this Agreement if Buyer had no knowledge, as of the Closing, of the breach of warranty or representation for which indemnification is sought; or (ii) the total aggregate value of the consideration to be paid by Buyer under this Agreement if Buyer had knowledge, as of the Closing, of the breach of warranty or representation for which indemnification is sought.

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(c) The amount of Damages for which indemnification is provided under this Agreement will be (i) increased to take account of any Tax cost incurred (grossed up for such increase) by the Indemnified Party arising from the receipt of indemnity payments hereunder (unless such indemnity payment is treated as an adjustment to the purchase price for tax purposes) and (ii) reduced to take account of any Tax benefit realized by the Indemnified Party arising from the incurrence or payment of any such Damages. In computing the amount of any such Tax cost or Tax benefit, the Indemnified Party will be deemed to be subject to the applicable Federal, state, local and/or local country income taxes at the maximum statutory rate then in effect. Any indemnity payment made pursuant to this Agreement will be treated as an adjustment to the purchase price for Tax purposes unless a determination (as defined in Section 1313 of the Code) or a similar event under foreign Tax Law with respect to the Indemnified Party causes any such payment not to constitute an adjustment to the purchase price for United States Federal income tax purposes or foreign Tax purposes, as the case may be.

(d) The rights and remedies of any party hereto based upon, arising out of or otherwise in respect of any inaccuracy or breach of any representation, warranty, covenant or agreement or failure to satisfy any condition shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy, breach or failure is based may also be the subject matter of any other representation, warranty, covenant, agreement or condition as to which there is or is not an inaccuracy, breach or failure to satisfy.

Section 14.5 Termination of Indemnification Obligations. The obligations of each party to indemnify, defend and hold harmless Indemnitees (a) pursuant to Sections 14.1(a) and 14.2(a), shall terminate when the applicable representation or warranty expires pursuant to Article XIII, (b) pursuant to Sections 14.1(b), 14.1(e) and 14.2(b), shall terminate upon the expiration of all applicable statutes of limitation (giving effect to any extensions thereof), and (c) pursuant to Sections 14.1(c) and (d) and Section 14.2(c), shall continue without time limitation and shall not terminate at any time; provided, however, that as to each of clauses (a) and (b) above, such obligations to indemnify, defend and hold harmless shall not terminate with respect to any individual item as to which the Indemnitee shall have, before the expiration of the applicable period, made a claim by delivering a notice (stating in reasonable detail the basis of such claim) to the Indemnifying Party.

Section 14.6 Waiver. The waiver of any condition based on the accuracy of any representation or warranty pursuant to any Transaction Document, or on the performance of or compliance with any covenant, agreement or obligation pursuant to any Transaction Document, will not affect any right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, agreements or obligations.

Section 14.7 Exclusive Remedies. Except for remedies that cannot be waived as a matter of Law, claims of fraud or intentional breach or misrepresentation and injunctive relief (including specific performance), the remedies provided in this Article XIV shall be the exclusive remedies after the Closing of the parties hereto and their respective heirs, successors and permitted assigns with respect to any breach of any representation, warranty, covenant or agreement contained in this Agreement.

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ARTICLE XV

GENERAL PROVISIONS

Section 15.1 Assignment. No party to this Agreement will convey, assign or otherwise transfer any Transaction Document or any of its rights or obligations under any Transaction Document without the prior written consent of Parent (in the case of an assignment by Buyer) or of Buyer (in the case of an assignment by Parent or the Company), except that Buyer may (without obtaining any consent) assign its rights, interests or obligations under any Transaction Documents, in whole or in part, to any successor to all or any portion of its business or to any Affiliate of Buyer, provided, however, no assignment shall relieve Buyer of its obligations to issue its stock as set forth herein. Any conveyance, assignment or transfer requiring the prior written consent of Parent or Buyer which is made without such consent will be void ab initio. No assignment of this Agreement will relieve the assigning party of its obligations hereunder.

Section 15.2 Parties in Interest. This Agreement is binding upon and is for the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement is not made for the benefit of any Person not a party hereto, and no Person other than the parties hereto or their respective successors and permitted assigns will acquire or have any benefit, right, remedy or claim under or by reason of this Agreement, except that members of the Buyer Group and the Parent Group will be entitled to the rights to indemnification provided to the Buyer Group and the Parent Group, respectively, hereunder.

Section 15.3 Amendment. This Agreement may not be amended, modified or supplemented except by a written agreement executed by Buyer, the Company and Parent.

Section 15.4 Waiver; Remedies. Any term or condition of this Agreement may be waived at any time by the party or parties hereto entitled to the benefit thereof, but only if such waiver is evidenced by a writing signed by such party. No failure or delay on the part of Buyer, the Company, or Parent in exercising any right, power or privilege under any Transaction Document will operate as a waiver thereof, nor will any waiver on the part of any party of any right, power or privilege under any Transaction Document operate as a waiver of any other right, power or privilege under any Transaction Document, nor will any single or partial exercise of any right, power or privilege thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege under any Transaction Document. Except as set forth in Section 14.7, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or in equity.

Section 15.5 Effect of Investigation. All representations, warranties, covenants and agreements made by Parent or the Company in this Agreement or in any other Transaction Document shall not be affected or deemed waived by (i) any investigation made by or on behalf of Buyer, or (ii) knowledge obtained (or capable of being obtained) as a result of such investigation or otherwise.

Section 15.6 Fees and Expenses. Each of Parent and the Company, on the one hand, and Buyer, on the other hand, will pay without right of reimbursement from the other, all of their respective costs and expenses incident to the performance of their respective obligations hereunder, including the fees and disbursements of counsel, accountants, experts and consultants employed by the respective parties in connection with the Transaction, whether or not the Transaction is consummated; provided that this Section 15.6 shall not limit any Person's right to recover Damages pursuant to Article XIV or for any breach of this Agreement.

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Section 15.7 Notices. All notices, requests, claims, demands and other communications required or permitted to be given under any Transaction Document shall be in writing and will be delivered by hand or telecopied, e-mailed or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and will be deemed given when so delivered by hand or telecopied, when e-mail confirmation is received if delivered by e-mail, or three business days after being so mailed (one business day in the case of express mail or overnight courier service). All such notices, requests, claims, demands and other communications will be addressed as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice in accordance with this Section 15.7:

(a) If to Buyer:

ORBCOMM Inc.

2115 Linwood Avenue

Suite 100

Fort Lee, NJ 07024

Attention: Christian G. LeBrun, Esq.

Telecopy: (703) 433-6400

E-mail: lebrun.chris@orbcomm.com

with a copy to:

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

Attention: Sey-Hyo Lee

Telecopy: (212) 541-5369

E-mail: shlee@chadbourne.com

(b) If to Parent or the Company:

Alanco Technologies, Inc.

15575 North 83rd Way, Suite 3

Scottsdale, Arizona 85260

Attention: Chief Financial Officer

Telecopy: (480) 607-1515

E-mail: john@alanco.com

with a copy to:

Steven P. Oman, Esq.

8664 E. Chama Road

Scottsdale, Arizona 85255

Telecopy: (480) 348-1471

E-mail: soman@omanlaw.net

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Section 15.8 Compliance With Bulk Transfer Laws. The parties hereto agree to fully comply with the bulk transfer laws applicable to the transactions contemplated hereby contained in N.J.S.A. 54:50-38 (the "NJ Bulk Transfer Laws"). To comply with the NJ Bulk Transfer Laws, the parties hereto agree as follows:

(a) Buyer shall have the right to file any requisite notices with the State of New Jersey Division of Taxation at least 10 days prior to the Closing Date, provided that Parent and the Company shall cooperate in connection with such compliance and shall provide all information necessary for Buyer to complete any such notices, including the completion and filing of the Asset Transfer Tax Declaration Form (Form TTD).

(b) If the Director of the Division of Taxation of New Jersey (the "Director") informs Buyer that a possible claim for Taxes, including any interest and penalties thereon, exists (the “Tax Claim”) and the maximum amount thereof (the “Deficiency”), then Buyer shall withhold the portion of the Closing Payment equal to the amount of the Deficiency (the “Tax Escrow”), which Tax Escrow shall be held pursuant to an escrow agreement with Buyer's counsel (Buyer's counsel in its capacity as escrow agent, the "Tax Escrow Agent") in a form reasonably acceptable to Buyer and Parent (the "Tax Escrow Agreement"). Such amount held in the Tax Escrow shall reduce the Closing Payment payable at Closing to Parent pursuant to Section 4.1(b)(i) and Parent and the Company agree that the amount placed into escrow shall be treated as received by Parent for purposes of compliance with the delivery of the Closing Payment as set forth in Section 4.1(b)(i). If, after Closing, the Director directs payment of all or any portion of the Deficiency on behalf of Parent or the Company, then Buyer shall direct the Tax Escrow Agent to release to the Division of Taxation of New Jersey such amount from the Tax Escrow. If the Director informs Buyer that the Deficiency has been fully paid or that Buyer has no further liability for the Deficiency, then Buyer shall direct the Tax Escrow Agent to release such difference from the Tax Escrow to Parent. If the Director gives notice to Buyer that Parent or the Company is liable for Taxes, including interest and penalties thereon, in an amount that is greater than the Tax Escrow, Parent or the Company shall promptly pay the difference to the Division of Taxation and shall provide Buyer with evidence thereof. Notwithstanding anything to the contrary contained herein, Parent and the Company shall have the right to negotiate with the Director regarding the Tax Claim and the Deficiency; provided, however, that (i) Buyer and the Tax Escrow Agent shall be entitled to comply with all instructions of the Director, and (ii) the Closing shall not be delayed as a result thereof. Under no circumstances shall the Closing occur until Buyer is in receipt of a direction letter from the Director.

(c) Parent and the Company shall jointly and severally indemnify, defend and hold harmless the Buyer Group from and against, and pay or reimburse, as the case may be, the Buyer Group for, any and all Damages, as incurred, suffered by any member of the Buyer Group based upon, arising out of or otherwise in any way relating to or in respect of the NJ Bulk Transfer Laws, including any noncompliance therewith or any New Jersey tax liability.

Section 15.9 Captions; Currency. The article, section and paragraph captions herein and the table of contents hereto are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. Unless otherwise specified, all references herein to numbered articles and sections are to articles and sections of this Agreement and all references herein to schedules and exhibits are to schedules and exhibits to this Agreement. Unless otherwise specified, all references contained in any Transaction Document, in any exhibit or schedule referred to therein or in any instrument or document delivered pursuant thereto to dollars or "$" shall mean United States Dollars.

Section 15.10 Entire Agreement. This Agreement, the other Transaction Documents and the Confidentiality Agreement collectively constitute the entire agreement between the parties with respect to the subject matter hereof and this Agreement, the other Transaction Documents and the Confidentiality Agreement supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, relating thereto.

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Section 15.11 Severability. If any provision of any Transaction Document or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions thereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.

Section 15.12 Consent to Jurisdiction.

(a) Each of Parent, the Company and Buyer hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (i) the courts of the State of New Jersey and (ii) the United States District Court for the District of New Jersey for the purposes of any Action arising out of or relating to the Transaction, this Agreement or any other Transaction Document, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof. Each of Parent and the Company agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to its respective address set forth in Section 15.7 will be effective service of process for any Action brought against it in any such court with respect to any matters to which it has submitted to jurisdiction as set forth above. Buyer agrees that service of any process, summons, notice or document hand delivered or sent by U.S. registered mail to Buyer's address set forth in Section 15.7 will be effective service of process for any Action brought against it in any such court with respect to any matters to which it has submitted to jurisdiction as set forth above. Each of Parent, the Company and Buyer irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of or relating to the Transaction, this Agreement or any other Transaction Document, any provision hereof or thereof or the breach, performance, enforcement, validity or invalidity hereof or thereof in (i) the courts of the State of New Jersey or (ii) the United States District Court for the District of New Jersey, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum. Notwithstanding the foregoing, Parent, the Company and Buyer agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment in any jurisdiction or in any other manner provided in Law or in equity.

(b) EACH OF PARENT, THE COMPANY AND BUYER 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 ANY OF THE TRANSACTION, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, ANY PROVISION HEREOF OR THEREOF OR THE BREACH, PERFORMANCE, ENFORCEMENT, VALIDITY OR INVALIDITY HEREOF OR THEREOF.

Section 15.13 Exhibits and Schedules; Disclosure.

(a) All exhibits and schedules attached hereto are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Capitalized terms used in any other Transaction Document or in the schedules or exhibits hereto or thereto but not otherwise defined therein will have the respective meanings assigned to such terms in this Agreement.

(b) Parent and the Company shall have the right to deliver to Buyer at the Closing a supplement to Schedules 6.8(b), 6.9(c), 6.10(a), 6.16(b) and 6.16(i) hereto containing any matters occurring after the date hereof (and permitted pursuant to the terms hereof) which, if occurring prior to the date hereof, would have been required to be set forth or described on such Schedules.

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Section 15.14 Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the State of New Jersey applicable to contracts made and to be performed entirely within such State, without regard to the conflicts of law principles of such State.

Section 15.15 Counterparts. This Agreement may be executed in separate counterparts (including by facsimile, PDF and/or electronic transmission), each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.

Section 15.16 Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of any Transaction Document, the party or parties who are or are to be thereby aggrieved will have the right of specific performance and injunctive relief giving effect to its or their rights under such Transaction Document, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies will be cumulative. The parties agree that any such breach or threatened breach would cause irreparable injury, that the remedies at law for any such breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.

Section 15.17 Interpretation.

(a) The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Federal, state, local, or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation" and (iv) the word "or" shall not be exclusive.

(b) For purposes of this Agreement, "knowledge" or "aware of" or a similar phrase with respect to the Company or the Parent shall mean the knowledge of any officer of the Company or the Parent including Timothy P. Slifkin, Thomas A. Robinson, Steven Talis, or Paul Muskauski if any such Person is actually aware of such fact or other matter.

(c) For purposes of this Agreement, "knowledge" or "aware of" or a similar phrase with respect to Buyer shall mean the actual knowledge of any named executive officer (as defined in Item 402 of Regulation S-K) of Buyer if any such Person is actually aware of such fact or other matter.

Section 15.18 Performance by the Company. Parent will cause to be performed and hereby guarantees the performance of all actions, agreements and obligations set forth herein to be performed by the Company.

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

ORBCOMM INC.
By:
	Name:
	Title:

STARTRAK SYSTEMS, LLC
By:
	Name:
	Title:

ALANCO TECHNOLOGIES INC.
By:
	Name:
	Title:

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Exhibit A

Definitions

For purposes of this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):

"Accounting Practices" means accounting methods, practices, policies, procedures, classifications, judgments, estimation methodologies and standards (including asset and liability valuations, cut-off procedures, revenue recognition, accounting for long-term contracts and materiality standards).

"Acquisition Proposal" shall have the meaning set forth in Section 8.8(b).

"Action" means any legal, administrative, governmental or regulatory proceeding or other action, suit, proceeding, claim, arbitration, mediation, alternative dispute resolution procedure, inquiry or investigation by or before any arbitrator, mediator, court or other Governmental Entity.

"Additional Asset" shall have the meaning set forth in Section 8.18(b).

"Additional Contract" shall have the meaning set forth in Section 2.1(d).

"Adjustment Amount" shall have the meaning set forth in Section 4.6(f)(ii).

"Adjustment Market Price" shall have the meaning set forth in Section 4.6(f)(i).

"Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of the immediately preceding sentence, the term "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

"Aggregate Warranty Expenses" shall have the meaning set forth in Section 9.9.

"Agreement" means this Asset Purchase Agreement, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

"Anderson Assignment and Assumption Agreement" shall have the meaning set forth in the recitals to this Agreement.

"Anderson Group" shall mean, collectively, the Anderson Trust, Paul D. Anderson, David and Julie Dickerson, David and Heidi Anderson, John S. Anderson, Programmed Land, Inc, Donald E. Anderson, and David P. Anderson and Heidi J. Anderson, Trustees of The David and Heidi Anderson Family Trust, UTA dated December 8, 2004.

"Anderson Loan Agreement" shall have the meaning set forth in the recitals to this Agreement.

"Anderson Note Guaranty" shall have the meaning set forth in the recitals to this Agreement.

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"Anderson Security Agreement" shall have the meaning set forth in the recitals to this Agreement.

"Anderson SPA" shall have the meaning set forth in the recitals to this Agreement.

"Anderson Trust" shall have the meaning set forth in the recitals to this Agreement.

"Assets" shall have the meaning set forth in Section 2.1(a).

"Associate" means, with respect to any Person, (a) any corporation or organization (other than the Company) of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities or other ownership interests, (b) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a director, officer or employee of the Company.

"Assumed Liabilities" shall have the meaning set forth in Section 3.1.

"Audit Notice" shall have the meaning set forth in Section 4.3(e).

"Business" means the business and operations of the Company, including (i) researching, developing, designing, engineering, selling, distributing, installing, modifying, servicing and supporting wireless asset and GPS tracking and monitoring products and services and (ii) activities related to the foregoing.

"Business Intellectual Property" means all Intellectual Property owned or used by the Company or that was developed by or for the Business, including all Intellectual Property related to the products and technologies listed on Schedule 1(a).

"Buyer" shall have the meaning set forth in the preamble to this Agreement.

"Buyer Expenses" means any and all fees and out-of-pocket costs and expenses (including fees and expenses of counsel to Buyer and of investment bankers, accountants or other advisors or experts retained by Buyer) incurred by Buyer in connection with the Transaction.

"Buyer Group" shall have the meaning set forth in Section 14.1.

"Buyer Stock" shall have the meaning set forth in Section 4.1(b)(vi).

"Buyer Welfare Benefit Plans" shall have the meaning set forth in Section 10.3.

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

"Change in Parent Recommendation" shall have the meaning set forth in Section 8.10.

"Claims Made Policies" shall have the meaning set forth in Section 9.5(a).

"Closing" shall have the meaning set forth in Section 4.4(a).

"Closing Certificate" shall have the meaning set forth in Section 4.2.

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"Closing Date" shall have the meaning set forth in Section 4.4(a).

"Closing Statement" shall have the meaning set forth in Section 4.6(b).

"COBRA" shall have the meaning set forth in Section 10.5(d).

"COBRA Employees" shall have the meaning set forth in Section 10.5(d).

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" shall have the meaning set forth in the preamble to this Agreement.

"Company Debt Amount" means all amounts (including outstanding principal balances, accrued interest and all penalties, fees and expenses of payment or prepayment) payable in connection with the payment in full of all Indebtedness of the Company outstanding on the Closing Date and the cancellation, termination and release as of the Closing Date of all Contracts and Liens of the Company outstanding on the Closing Date relating to or evidencing Indebtedness of the Company, in each case to the extent necessary to obtain good, valid and marketable title to the Assets free and clear of all Liens.

"Company Financial Statements" shall have the meaning set forth in Section 6.6(b).

"Confidentiality Agreement" means the Confidentiality Agreement dated February 2010 by and between Parent and Buyer.

"Consents" means all consents, waivers, approvals, requirements, allowances, novations, authorizations, declarations, filings, registrations and notifications.

"Continued Employee" means those employees of the Company to whom Buyer elects to offer employment pursuant to Section 10.1(a), who accept such an offer of employment by Buyer and, except with respect to employees who are on layoff, leave or short-term disability or other permitted leave of absence, who actually commence such employment with Buyer.

"Contract" means, with respect to any Person, all agreements, contracts, obligations, commitments and arrangements (whether written or oral) (a) to which such Person is a party, (b) under which such Person has any rights, (c) under which such Person has any Liability or (d) by which such Person, or any of the assets or properties owned or used by such Person, is bound, including, in each case, all amendments, modifications and supplements thereto.

"Current Assets" means, as of the Effective Date, all cash in bank accounts (after subtracting therefrom the amount of all outstanding checks of the Company) and certificates of deposit of the Company with original maturities of 90 days or less, accounts receivable (net of allowance for doubtful accounts), inventory (net of allowance for obsolescence reserve) and prepaid expenses of the Company, in each case that, in accordance with GAAP, constitute (a) current assets of the Company and (b) Assets.

"Current Liabilities" means, as of the Effective Date, (i) all accounts payable and other Liabilities of the Company that, in accordance with GAAP, constitute current liabilities of the Company and (ii) any long term deferred revenue of the Company.

"Damages" means any and all losses, Liabilities, claims, damages, deficiencies, diminutions in value, fines, payments, Taxes, Liens, costs and expenses, whether known or unknown, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, and whenever or

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however arising and whether or not resulting from Third Party Claims (including the costs and expenses of any and all Actions or other legal matters; all amounts paid in connection with any demands, assessments, judgments, settlements and compromises relating thereto; interest and penalties with respect thereto; and reasonable costs and expenses, including attorneys', accountants' and other experts' fees and expenses, incurred in investigating, preparing for or defending against any such Actions or other legal matters or in asserting, preserving or enforcing an Indemnitee's rights hereunder).

"December 31, 2010 Balance Sheet" means the balance sheet of the Company as of December 31, 2010 included in the Company Financial Statements.

"Deficiency" shall have the meaning set forth in Section 15.8(b).

"Delivery Date" shall have the meaning set forth in Section 4.6(b).

"Director" shall have the meaning set forth in Section 15.8(b).

"Earn-Out Amount" shall have the meaning set forth in Section 4.3(a).

"Earn-Out Market Price" shall have the meaning set forth in Section 4.3(b).

"Earn-Out Payment Date" shall have the meaning set forth in Section 4.3(a).

"Earn-Out Period" shall have the meaning set forth in Section 4.3(a)(i).

"Earn-Out Statement" shall have the meaning set forth in Section 4.3(d).

"Effective Date" shall mean the last day of the month for the month-end closest to the Closing Date. If the Closing Date shall be a date that is equidistant from the month-end of the immediately preceding month and the month-end of the month of the Closing Date, the Effective Date shall be the last day of the month immediately after the Closing Date.

"Effective Time" shall have the meaning set forth in Section 4.4(a).

"Environmental Laws" means any and all applicable Laws and Permits issued, promulgated or entered into by any Governmental Entity relating to the environment, the protection or preservation of human health or safety, including the health and safety of employees, the preservation or reclamation of natural resources, or the treatment, storage, disposal, management, Release or threatened Release of Hazardous Materials, in each case as in effect on the date hereof and as may be issued, promulgated or amended from time to time.

"Environmental Liabilities" means any and all Damages that are incurred as a result of or relating to the presence, discharge, disposition, generation, treatment, storage, handling, removal, disposal, transportation, management, Release or threatened Release of, or exposure to, Hazardous Materials or a violation or alleged violation of any Environmental Laws, including:

(a) Damages for, as a result of or relating to personal injury, or injury or damage to property or natural resources, wherever occurring, whether upon or off of any of the Facilities, including from the inability to use such properties;

(b) fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other Damages incurred in connection with (i) the investigation or remediation of Hazardous Materials and properties affected by Hazardous Materials, (ii) any violation or alleged violation of Environmental Laws or (iii) the enforcement of any rights or remedies under Environmental Laws;

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(c) Liability to any third person or Governmental Entity, whether pursuant to any Contract, Law, breach, violation or otherwise; and

(d) Damages incurred in connection with any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Affiliate" means any Person, trade or business that, together with Parent, is or was treated as a single-employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

"Escrow Agent" means the Person selected by Buyer and Parent to act as escrow agent under the Escrow Agreement.

"Escrow Agreement" means the escrow agreement among Buyer, the Escrow Agent and Parent substantially in the form attached hereto as Exhibit H.

"Escrow Property" means, collectively, the Litigation Escrowed Shares and the Fuel Sensor Escrowed Shares.

"Estimated Closing Statement" shall have the meaning set forth in Section 4.6(a).

"Estimated Net Working Capital Amount" shall have the meaning set forth in Section 4.6(a).

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, including the rules and regulations promulgated thereunder.

"Facilities" means the Leased Premises and all real property previously owned, leased or operated by the Company or any predecessors of the Company.

"Final Closing Statement" shall have the meaning set forth in Section 4.6(c).

"Final Net Working Capital Amount" shall have the meaning set forth in Section 4.6(f)(i).

"Former Business" means any corporation, partnership, entity, division, business unit, business, assets, plant, product line, operations or contract (including any assets and Liabilities comprising the same) that has been dissolved, liquidated, shut down, sold, conveyed, assigned, transferred or otherwise disposed of or divested by the Company or any Affiliate thereof (or any of their predecessors) or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated by Company or any Affiliate thereof (or any of their predecessors).

"Fuel Sensor Damages" shall have the meaning set forth in Section 9.9.

"Fuel Sensor Escrowed Shares" shall have the meaning set forth in Section 4.1(b)(vii).

"GAAP" means United States generally accepted accounting principles as in effect on the date of this Agreement, consistently applied.

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"Governmental Entity" means, in any jurisdiction, any (i) federal, state, local, foreign or international government, (ii) court, arbitral or other tribunal, (iii) governmental or quasi-governmental authority of any nature (including any political subdivision, instrumentality, branch, department, official or entity) or (iv) agency, commission, authority or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

"Hazardous Materials" means those materials, substances, biogenic materials or wastes that are regulated by, or form the basis of liability under, any Environmental Law, including PCBs, pollutants, solid wastes, explosive, radioactive or regulated materials or substances, hazardous or toxic materials, substances, wastes or chemicals, petroleum (including crude oil or any fraction thereof) or petroleum distillates, asbestos or asbestos containing materials, materials listed in 49 C.F.R. Section 172.101 and materials defined as hazardous substances pursuant to Section 101(14) of CERCLA.

"IGS Damages" shall have the meaning set forth in Section 9.8.

"IGS Proceeding" shall have the meaning set forth in Section 9.8.

"Indebtedness" means, with respect to the Company without duplication, (a) all Liabilities of such Person for borrowed money, including principal, interest, fees and other amounts payable with respect thereto, (b) all Liabilities of such Person evidenced by bonds, debentures, notes or other similar instruments (excluding "deposit only" endorsements on checks payable to the order of such Person), including principal, interest, fees and other amounts payable with respect thereto, (c) all Liabilities of such Person to pay the deferred purchase price of property or services (except for trade accounts payable arising in the ordinary course of business consistent with past practices and not more than sixty (60) days past due), (d) all Liabilities of others guaranteed by such Person, whether or not secured by a Lien on any asset of such Person, (e) all Liabilities secured by a Lien on any asset of such Person, whether or not such Liabilities are assumed by such Person, (f) all Liabilities under letters of credit, bankers' acceptances or note purchase facilities issued for the account of such Person and all drafts drawn thereunder, including principal, interest, fees and other amounts payable with respect thereto, (g) all Liabilities of such Person in respect of capital leases and (h) all Liabilities of such Person under any derivative, hedging or similar agreements (including interest rate, currency or commodity swap agreements, cap agreements, collar agreements or any other agreements or arrangements designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices).

"Indemnifying Party" shall have the meaning set forth in Section 14.3(a).

"Indemnitee" means any member of the Buyer Group or the Parent Group who or which may seek indemnification under this Agreement.

"Independent Firm" shall have the meaning set forth in Section 4.3(e).

"Insurance Policies" shall have the meaning set forth in Section 6.20(a).

"Intellectual Property" means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents (including utility and design patents, industrial designs and utility models), patent applications and patent and invention disclosures, and all other rights of inventorship, worldwide, together with all reissuances, continuations, continuations-in-part, divisions, revisions, supplementary protection certificates, extensions and re-examinations thereof; (b) all registered and unregistered trademarks, service marks, trade names, domain names, trade dress, logos, business, corporate and product names and slogans, worldwide, and registrations and

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applications for registration thereof along with all goodwill associated therewith and symbolized thereby; (c) all copyrights in copyrightable works, and all other rights of authorship, worldwide, and all applications, registrations and renewals in connection therewith; (d) all mask works and semiconductor chip rights, worldwide, and all applications, registrations and renewals in connection therewith; (e) all trade secrets and confidential business and technical information (including ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data, engineering, production and other designs, plans, drawings, engineering notebooks, industrial models, software, specifications, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information); (f) all Software; (g) all rights to sue for and remedies against past, present and future infringements of any or all of the foregoing and rights of priority and protection of interests therein under the Laws of any jurisdiction worldwide; (h) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including electronic media); and (i) all other proprietary, intellectual property and other rights relating to any or all of the foregoing , including all work performed as “work for hire.”

"IRS" shall have the meaning set forth in Section 6.16(b).

"knowledge", with respect to the Company, shall have the meaning set forth in Section 15.17(b) and, with respect to Buyer shall have the meaning set forth in Section 15.7(c).

"Laws" means all laws, statutes, constitutions, treaties, rules, regulations, legal requirements, directives, ordinances, codes, judgments, rulings, orders, writs, decrees, stipulations, injunctions and determinations of all Governmental Entities.

"Leased Premises" shall have the meaning set forth in Section 6.9(c).

"Leases" means all leases, subleases, licenses, rights to occupy or use and other Contracts with respect to real property, including, in each case, all amendments, modifications and supplements thereto and waivers and consents thereunder.

"Liability" means any and all claims, debts, liabilities, claims, obligations and commitments of whatever nature, whether known or unknown, asserted or unasserted, fixed, absolute or contingent, matured or unmatured, accrued or unaccrued, liquidated or unliquidated or due or to become due, and whenever or however arising (including those arising out of any Law, Contract, breach, violation, infringement or tort, whether based on negligence, strict liability or otherwise) and whether or not the same would be required by GAAP to be reflected as a liability in financial statements or disclosed in the notes thereto.

"Lien" means any charge, "adverse claim" (as defined in Section 8-102(a)(1) of the Uniform Commercial Code) or other claim, community property interest, condition, equitable interest, lien, encumbrance, option, proxy, pledge, security interest, mortgage, right of first refusal, right of first offer, retention of title agreement, defect of title or restriction of any kind or nature, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

"Litigation Escrowed Shares" shall have the meaning set forth in Section 4.1(b)(vi).

"Material Adverse Effect" means (i) with respect to Parent or the Company, any circumstance, condition, event, occurrence, change, effect or development that, individually or in the aggregate, is, or is reasonably likely to be, materially adverse to (a) the business, condition (financial or otherwise), operations, results of operations, assets or

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liabilities of the Company, taken as a whole, or the Business or the Assets or (b) the ability of Parent or the Company to consummate the Transaction, or (ii) with respect to Buyer, any circumstance, condition, event, occurrence, change, effect or development that, individually or in the aggregate, is, or is reasonably likely to be, materially adverse to (a) the business, condition (financial or otherwise), operations, results of operations, assets or liabilities of Buyer, taken as a whole, or (b) the ability of Buyer to consummate the Transaction.

"Material Contract" shall have the meaning set forth in Section 6.10(a).

"Measurement Period" shall have the meaning set forth in Section 9.9.

"Membership Units" shall have the meaning set forth in the recitals to this Agreement.

"Net Working Capital Amount" means an amount equal to the remainder of Current Assets, minus Current Liabilities.

"NJ Bulk Transfer Laws" shall have the meaning set forth in Section 15.8.

"Non-Fuel Sensor Damages" shall have the meaning set forth in Section 9.9.

"Notice of Disagreement" shall have the meaning set forth in Section 4.6(c).

"November 30, 2010 Balance Sheet" means the balance sheet of the Company as of November 30, 2010 previously delivered to Buyer and attached hereto as Exhibit E.

"Occurrence Basis Policies" shall have the meaning set forth in Section 9.5(a).

"Parent" shall have the meaning set forth in the preamble to this Agreement.

"Parent Expenses" means any and all fees and out-of-pocket costs and expenses (including fees and expenses of counsel to the Company or Parent and of investment bankers, accountants or other advisors or experts retained by the Company or Parent) incurred by the Company in connection with the Transaction.

"Parent Group" shall have the meaning set forth in Section 14.2.

"Parent Recommendation" shall have the meaning set forth in Section 8.10.

"Parent/Company Retirement Plan" shall have the meaning set forth in Section 10.2(a).

"Parent SEC Reports" shall have the meaning set forth in Section 6.6(a).

"Parent Stockholders Meeting" shall have the meaning set forth in Section 8.10.

"Parent Welfare Benefit Plans" means employee welfare benefit plans and other employee benefit welfare or fringe benefit arrangements maintained by Parent or the Company immediately prior to the Effective Time for the benefit of Continued Employees.

"Permits" means all Consents, licenses, permits, certificates, variances, exemptions, franchises and other approvals issued, granted, given, required or otherwise made available by any Governmental Entity.

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"Permitted Liens" means (a) Liens for Taxes, assessments and other governmental charges, if such Taxes, assessments or charges shall not be due and payable; (b) Liens for inchoate workmen's, repairmen's or other similar Liens arising or incurred in the ordinary course of business consistent with past practices in respect of obligations which are not overdue, minor title defects and recorded easements, which workmen's, repairmen's or other similar Liens, minor title defects and recorded easements do not, individually or in the aggregate, impair the continued use, occupancy, value or marketability of title of the property to which they relate or the Business, assuming that the property is used on substantially the same basis as such property is currently being used by the Company; and (c) any Liens in connection with the Anderson Loan Agreement.

"Permitted Transaction" shall have the meaning set forth in Section 8.8(e).

"Person" means any individual, firm, partnership, joint venture, trust, corporation, limited liability entity, unincorporated organization, estate or other entity (including a Governmental Entity).

"Plans" shall have the meaning set forth in Section 6.16(b).

"Position Statement" shall have the meaning set forth in Section 4.6(d).

"Proxy Statement" shall have the meaning set forth in Section 8.9.

"Registration Rights Agreement" shall have the meaning set forth in Section 8.14.

"Related to the Business" means primarily related to, used primarily in, arising primarily from, or held primarily for use in, the Business, or otherwise necessary for the operation, as presently conducted, of the Business.

"Release" shall have the meaning set forth in Section 101(22) of CERCLA.

"Representatives" means, with respect to any Person, such Person's directors, officers, employees, agents, consultants, advisors and other representatives, including legal counsel, accountants and financial advisors.

"Required Parent Vote" means the affirmative vote of the holders of a majority of the outstanding shares of Parent's capital stock to approve the Transaction as required by Section 10-1202 of the Arizona Revised Statutes.

"Resolution Period" shall have the meaning set forth in Section 4.6(d).

"Retained Assets" means all of the following, collectively:

(a) all real property (including land, plants, buildings and improvements) and real property interests (including Leases), other than real property and Leases set forth on Schedule 2.1(a)(i);

(b) all insurance policies, other than the benefits of Occurrence Basis Policies and Claims Made Policies and other rights as described in Section 9.5;

(c) all assets with respect to pension and savings plans of Parent and its subsidiaries (other than as provided for in Article X);

(d) all refunds of Taxes attributable to payments of Taxes made prior to the Effective Time, whether or not any refund claims have been filed prior to the Effective Time;

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(e) all receivables owed to the Business by Parent or any of its subsidiaries as of the Effective Time;

(f) the Contracts set forth on Schedule 1(b);

(g) all stock books, stock ledgers, minute books and corporate seals of the Company;

(h) all equity ownership interest in the Company; and

(i) all rights of the Company or Parent under this Agreement.

"Retained Liabilities" means all Liabilities of Parent, the Company and their Affiliates based upon, arising out of, relating to or otherwise in connection with the Business or the conduct or operation thereof on or prior to the Closing Date (in each case other than Assumed Liabilities), including all such Liabilities based upon, arising out of, relating to or otherwise in connection with any events, actions, occurrences, omissions, circumstances or conditions whatsoever occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date. Notwithstanding anything to the contrary contained herein, Retained Liabilities shall include all Liabilities of Parent, the Company and their Affiliates:

(a) based upon, arising out of, relating to or otherwise in connection with any pending, threatened or future Action with respect to any events, actions, occurrences, omissions, circumstances or conditions occurring or existing on or prior to the Closing Date (whether asserted prior to, on or after the Closing Date), except to the extent such Liabilities result from any action of Buyer or any of its Affiliates (other than the purchase of the Assets and the assumption of the Assumed Liabilities) after the Closing Date;

(b) based upon, arising out of, relating to or otherwise in connection with any tort, breach or violation of or noncompliance with any Contract, infringement, violation of Law or regulatory noncompliance (whether civil or criminal) occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date (including such circumstances or conditions that may continue to exist after the Closing Date, except to the extent such Liabilities result from any action of Buyer or any of its Affiliates (other than the purchase of the Assets and the assumption of the Assumed Liabilities) after the Closing Date);

(c) constituting Environmental Liabilities based upon, arising out of, relating to or otherwise in connection with events, actions, occurrences, omissions, circumstances or conditions occurring or existing on or prior to the Closing Date, whether asserted prior to, on or after the Closing Date (including such circumstances or conditions that may continue to exist after the Closing Date, except to the extent such Environmental Liabilities result from any action of Buyer or any of its Affiliates (other than the purchase of the Assets and the assumption of the Assumed Liabilities) after the Closing Date);

(d) for and in respect of employees, former employees, consultants and leased employees of the Business based upon, arising out of, relating to or otherwise in connection with employment, engagement or termination by the Company or any Affiliate of any thereof at any time on or prior to the Closing Date, whether pursuant to benefit plans or otherwise, including (i) Liabilities for salary, bonuses, incentive payments and other compensation payments; (ii) Liabilities in respect of pension, supplemental retirement, savings, supplemental savings, profit-sharing, cash balance and deferred compensation benefits; (iii) Liabilities for employee welfare and fringe benefits (including medical, dental, retiree health, life insurance, retiree life insurance, travel, accident, short- and long-term disability, hospitalization and other benefits); (iv) Liabilities in respect of severance pay, salary continuation

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and similar obligations relating to the termination or alleged termination (whether voluntary or involuntary) of employment or claims in respect thereof; (v) Liabilities under or in respect of employment agreements, severance agreements, change of control agreements and retention arrangements, including those agreements and arrangements, set forth on Schedule 6.16(i); and (vi) Liabilities with respect to workplace safety;

(e) based upon, arising out of, relating to or otherwise in connection with workers' compensation claims (whether asserted prior to, on or after the Closing Date) resulting from injuries that occur on or prior to the Closing Date;

(f) under all incentive arrangements with employees or other Persons relating to the sale or other disposition of the Business;

(g) for and in respect of checks outstanding at the Effective Time relating to the Business (including Liabilities to fund the same) except to the extent and in the amount included in the Final Closing Statement;

(h) for and in respect of Indebtedness outstanding at any time on or prior to the Closing Date, including the Company Debt Amount;

(i) for and relating to the guarantee of any Indebtedness, obligation or other Liability of any Person;

(j) for and in respect of all payables and other balances (including intercompany cash management balances) owed by the Business to the Company or any of its Affiliates as of the Effective Time;

(k) based upon, arising out of, relating to or otherwise in connection with Former Businesses;

(l) based upon, arising out of, relating to or otherwise in connection with Leases not set forth on Schedule 6.9(c) or Contracts which pursuant to Section 6.8(b), 6.10(a), 6.16(b) or 6.16(i) are required to be set forth on Schedule 6.8(b), 6.10(a), 6.16(b) or 6.16(i) but which are not set forth on such Schedule 6.8(b), 6.10(a), 6.16(b) or 6.16(i);

(m) for and in respect of Taxes, including such income, transfer, sales, use and other Taxes arising in connection with the consummation of the transactions contemplated hereby;

(n) for and in respect of any Taxes relating to the Business, the Assets or the Assumed Liabilities for periods (or portions thereof) ending on or before the Closing Date in excess of Taxes for which proper accruals and reserves have been established therefor and included on the Final Closing Statement (in the case of any period that includes but does not end on the Closing Date, the amount of Taxes attributable to the portion ending on the Closing Date shall be based on the interim closing of the books basis, except for periodic Taxes (such as property Taxes) which should be allocated on a daily pro ration basis);

(o) for which Parent, the Company or any Affiliate of any thereof are made responsible pursuant to this Agreement or any other Transaction Document;

(p) based upon, arising out of, relating to or otherwise in connection with the winding down of Parent, the Company or any Affiliate of any thereof;

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(q) for and in respect of any Parent Expenses; and

(r) based upon, arising out of, relating to or otherwise in connection with Retained Assets.

"Robinson" shall have the meaning set forth in the recitals to this Agreement.

"SEC" shall mean the Securities and Exchange Commission.

"SEC Reports" shall have the meaning set forth in Section 7.6.

"Securities Act" means the Securities Act of 1933, as amended from time to time, including the rules and regulations promulgated thereunder.

"Secured Loan Agreement" shall have the meaning set forth in Section 4.1(a).

"Secured Promissory Note" shall have the meaning set forth in the recitals to this Agreement.

"Significant Subsidiaries" shall have the meaning set forth in Section 8.8(b).

"Slifkin" shall have the meaning set forth in the recitals to this Agreement.

"Slifkin/Robinson SPA" shall have the meaning set forth in the recitals to this Agreement.

"Software" means any and all computer programs and all related documentation, manuals, source code and object code, program files, data files, computer related data, field and data definitions and relationships, data definition specifications, data models, program and system logic, interfaces, program modules, routines, subroutines, algorithms, program architecture, design concepts, system design, program structure, sequence and organization, screen displays and report layouts, and all other material related to the foregoing.

"ST Wireless Agreement" shall have the meaning set forth in the recitals to this Agreement.

"Subsidiary" means, with respect to any Person, any other Person or entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person and/or by one or more of such Person's Subsidiaries.

"Superior Proposal" shall have the meaning set forth in Section 8.8(d).

"Target Net Working Capital Amount" means $1,587,677.

"Tax Claim" shall have the meaning set forth in Section 15.8(b).

"Tax Escrow" shall have the meaning set forth in Section 15.8(b).

"Tax Escrow Agent" shall have the meaning set forth in Section 15.8(b).

"Tax Escrow Agreement" shall have the meaning set forth in Section 15.8(b).

"Tax Returns" shall have the meaning set forth in Section 6.7(a).

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"Taxes" means all taxes, charges, duties, fees, levies or other assessments, including income, excise, property, sales, use, gross receipts, recording, insurance, value added, profits, license, withholding, payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, imposed by any Governmental Entity, and including any interest, penalties and additions attributable thereto.

"Third Party Claim" shall have the meaning set forth in Section 14.3(a).

"Total Revenue" shall have the meaning set forth in Section 4.3(c).

"Transaction" means the transactions contemplated by the Transaction Documents.

"Transaction Documents" means this Agreement, the Escrow Agreement, the Tax Escrow Agreement and all other instruments, certificates and documents delivered or required to be delivered by Buyer, Parent or the Company pursuant to this Agreement.

"Transferred Bank Accounts" shall have the meaning set forth in Section 9.7(a).

"Unaffiliated Firm" shall have the meaning set forth in Section 4.6(d).

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APPENDIX B

EXHIBIT C

CERTIFICATE OF DESIGNATION

SERIES A CONVERTIBLE PREFERRED STOCK

ORBCOMM INC.

___________________________________

Pursuant to Section 151 of the General

Corporation Law of the State of Delaware

___________________________________

ORBCOMM Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation pursuant to Section 151 of the General Corporation Law of the State of Delaware:

RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Certificate of Incorporation and the General Corporation Law of the State of Delaware, the Board of Directors hereby creates a series of the Corporation's previously authorized Preferred Stock, par value $0.001 per share (the "Preferred Stock"), and hereby states the designation and amount thereof and the voting powers, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows:

1. Designation and Number of Authorized Shares in Series. There shall be a total of 1,000,000 authorized shares of Preferred Stock designated as "Series A Convertible Preferred Stock".

2. Priority. The Series A Convertible Preferred Stock shall have a priority ranking superior to the Common Stock of the Corporation with respect to payment of dividends and upon dissolution, liquidation and winding-up of the Corporation.

3. Dividends. Holders of shares of Series A Convertible Preferred Stock shall be entitled to receive, when declared by the Board of Directors, out of funds and assets of the Corporation legally available therefore, an annual dividend (calculated on the basis of the redemption price of $10.00 per share of Series A Convertible Preferred Stock) of four (4%) percent per annum, payable in additional shares of Series A Convertible Preferred Stock quarterly on or before the 20th day following each calendar quarter for the calendar quarters ended March 31, June 30, September 30 and December 31, respectively, to stockholders of record on the respective record dates (which shall be the tenth day of the

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last month for each such calendar quarter just ended). Dividends on each share of the Series A Convertible Preferred Stock shall accrue and be cumulative from the date of issue and shall be appropriately prorated with respect to the period between such date of issue and the first dividend payment date. Accumulations of unpaid dividends shall not bear interest.

So long as any shares of Series A Convertible Preferred Stock are outstanding, the Corporation shall not declare and pay or set apart for payment any dividends or make any other distribution on the Common Stock and shall not redeem, retire, purchase or otherwise acquire, any shares of Common Stock or Preferred Stock ranking inferior to the Series A Convertible Preferred Stock, unless at the time of making such declaration, payment, distribution, redemption, retirement, purchase or acquisition dividends on all outstanding shares of Series A Convertible Preferred Stock for all past quarterly dividend periods shall have been paid or declared and sufficient shares reserved for the payment thereof.

4. Conversion. Each share of Series A Convertible Preferred Stock shall be convertible/converted into 1.66611 of shares of Common Stock of the Corporation, subject to readjustment as provided herein below, without the payment of any additional consideration by the holder thereof as follows:

(a)

at the option of the holder thereof at any time, including up to the close of business on the redemption date with respect to any shares of Series A Convertible Preferred Stock called for redemption; or

(b)

at the option of the Corporation on or after the date ("Trigger Date") that (i) is at least six (6) months from the issue date of the shares of Series A Convertible Preferred Stock to be converted, and (ii) the average closing market price for the Corporation's Common Stock on the U.S. national securities exchange on which the Corporation's Common Stock may then be listed or if not then listed on a U.S. national securities exchange, the last quoted price on the over-the-counter market then in use (such average market price or last quoted price, as the case may be, hereinafter referred to as the "Market Price") for the preceding twenty (20) consecutive trading days equals or exceeds $11.20 per share. The notice of conversion shall be sent by certified mail to the holders of record of the Series A Convertible Preferred Stock to be converted at least five (5) days prior to the date of conversion specified in such notice, addressed to each such holder at his address as it appears in the records of the Corporation.

The holder of a share or shares of Series A Convertible Preferred Stock may exercise the conversion right in subparagraph (a) above by delivering to the Corporation during regular business hours, at the principal office of the Corporation, or at such other places as may be designated by the Corporation, the certificate or certificates for the shares to be converted, duly endorsed or assigned in blank or to the Corporation (if required by it), accompanied in any event by written notice stating that the holder elects

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to convert such shares and stating the name or names (with address) in which the certificate or certificates for Common Stock are to be issued. Conversion shall be deemed to have been effected on the date when such delivery is made, or in the case of conversion pursuant to subparagraph (b) above on the date specified by the Corporation in its notice of conversion, and such date is referred to herein as the "Conversion Date". As promptly as practicable thereafter the Corporation shall issue and deliver to or upon the written order of such holder, at such office or other place designated by the Corporation, a certificate or certificates for the number of full shares of Common Stock to which the holder is entitled together with any additional shares of Common Stock representing the conversion of any shares of Series A Convertible Preferred Stock issuable for the amount of any accrued but unpaid dividends, and a check in respect of any fraction of shares of Common Stock provided below. The person in whose name the certificate or certificates for Common Stock are to be issued (that is the person designated if the conversion is elective under subparagraph (a) above, or the holder of the Series A Convertible Preferred Stock in the case of a conversion under subparagraph (b) above) shall be deemed to have become a holder of Common Stock of record on the Conversion Date unless the transfer books of the Corporation are closed on that date, in which event he shall be deemed to have become a holder of Common Stock of record on the next succeeding date on which the transfer books are open, but the conversion rate shall be that in effect on the Conversion Date.

The issuance of Common Stock on conversion of Series A Convertible Preferred Stock shall be without charge to the converting holder of Series A Convertible Preferred Stock for any fee, expense or tax in respect of the issuance therefore, but the Corporation shall not be required to pay any fee, expense or tax which may be payable with respect of any transfer involved in the issuance and delivery of shares in any name other than that of the holder of record on the books of the Corporation of the shares of Series A Convertible Preferred Stock converted, and the Corporation shall not, in any such case, be required to issue or deliver any certificate for shares of Common Stock unless and until the person requesting the issuance thereof shall have paid to the Corporation the amount of such fee, expense or tax or shall have established to the satisfaction of the Corporation that such fee, expense or tax has been paid.

The number of shares of Common Stock deliverable upon conversion of each share of Series A Convertible Preferred Stock shall be subject to adjustment from time to time upon the happening of certain events as follows:

(i) Merger, Sale of Assets, Consolidation. If the Corporation at any time shall consolidate with or merge into or sell or convey all or substantially all its assets to any other entity, the Series A Convertible Preferred Stock shall thereafter evidence the right to be converted into capital stock in such number and kind of securities and property as would have been issuable or distributable on account of such consolidation, merger, sale or conveyance upon or with respect to the securities subject to the conversion or purchase right immediately prior to such consolidation, merger, sale or conveyance. The foregoing provision shall similarly apply to successive transactions of a similar nature by any such successor

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or purchaser. Without limiting the generality of the foregoing, the anti-dilution provisions of the Series A Convertible Preferred Stock shall apply to such securities of such successor or purchaser after any such consolidation, merger, sale or conveyance.

(ii) Reclassification. If the Corporation at any time shall, by subdivision, combination, reclassification of securities or otherwise, change any of the securities then purchasable upon the exercise of the conversion right associated with the Series A Convertible Preferred Stock into the same or a different number of securities of any class or classes, the Series A Convertible Preferred Stock shall thereafter evidence the right to purchase such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the conversion right immediately prior to such subdivision, combination, reclassification or other change. If shares of Common Stock is subdivided or combined into a greater or smaller number of shares of Common Stock, the number of shares of Common Stock deliverable upon conversion of each share of Series A Convertible Preferred Stock (i.e., the conversion ratio under Section 4 hereof) shall be proportionately reduced or increased, as appropriate, by the ratio which the total number of shares of Common Stock to be outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

Whenever any adjustment is required in the number of shares into which each share of the Series A Convertible Preferred Stock is convertible, the Corporation shall forthwith file a statement describing in reasonable detail the adjustment and the method of calculation used at the office or agency maintained for the purpose for conversion of the Series A Convertible Preferred Stock, and shall mail a copy thereof to the holders of the Series A Convertible Preferred Stock.

The Corporation shall at all times keep available for issue and delivery the full number of shares of Common Stock into which all outstanding shares of Series A Convertible Preferred Stock are convertible.

No certificate for a fraction of a share of Common Stock or Series A Convertible Preferred Stock shall be issued upon any conversion or dividend payment, but in lieu of any fractional share that would otherwise be required to be issued in accordance with the foregoing provisions, the Corporation shall make a cash payment for any such fractional share interest based upon a value (i) for such Common Stock equal to the Market Price for twenty (20) trading days prior to the conversion date, or (ii) for such Series A Convertible Preferred Stock equal to $10.00 per share.

5. Voting. The holders of shares of Series A Convertible Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote upon matters submitted to stockholders for a vote, in the same manner and with the same effect as the holders of shares of Common Stock, voting together with the holders of Common Stock as a single class to the extent permitted by law. Holders of Series A Convertible Preferred Stock shall have that number of votes equal to the lesser of (i) the number of shares of Common Stock into which such Series A Convertible Preferred Stock is convertible on the applicable record date, or (ii) that number which is equal to the purchase price per share of Series A Convertible Preferred

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Stock paid by the holder to the Corporation divided by the Market Price of the Common Stock on the trading day immediately previous to the issuance of the shares of Series A Convertible Preferred Stock, rounded down to the next whole number, as adjusted from time to time pursuant to section 4 above.

So long as any shares of the Series A Convertible Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or written consent of the holders of at least two-thirds (2/3) of the aggregate number of shares at the time outstanding of the Series A Convertible Preferred Stock:

(i) authorize, create or increase any class of capital stock ranking equal or prior to the Series A Convertible Preferred Stock as to dividends or upon liquidation, dissolution or winding-up; or

(ii) alter or change any of the powers, preferences or special rights given to the Series A Convertible Preferred Stock so as to affect the same adversely.

6. Redemption. The Corporation may, at the option of the Board of Directors, redeem all or any part of the outstanding Series A Convertible Preferred Stock at any time after two years from the issue date of the shares to be redeemed at the redemption price equal to $10.00 per share of the Series A Convertible Preferred Stock to be redeemed, plus accrued and unpaid dividends, if any, provided that notice of redemption is sent by certified mail to the holders of record of the Series A Convertible Preferred Stock to be redeemed at least thirty (30) days prior to the date of redemption specified in such notice, addressed to each such holder at his address as it appears in the records of the Corporation. In case of the redemption of a part only of the Series A Convertible Preferred Stock, the shares of such series to be redeemed shall be selected pro rata or by lot or in such other manner as the Board of Directors may determine.

On or after the redemption date each holder of shares of Series A Convertible Preferred Stock to be redeemed shall present and surrender his certificate or certificates for such shares to the Corporation and thereupon the redemption price of such shares shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. In case less than all of the shares of Series A Convertible Preferred Stock represented by any such certificates are redeemed, a new certificate shall be issued representing the unredeemed shares of Series A Convertible Preferred Stock.

All rights arising under this designation of powers, preferences, rights and limitations, other than the right to receive the redemption price, shall terminate upon the payment of good funds on or before the redemption date to the holder of the applicable shares of Series A Convertible Preferred Stock. The Corporation may also deposit the aggregate redemption price payable with respect to the shares of Series A Convertible Preferred Stock to be redeemed (or the portion thereof not already paid in the redemption of such shares) (the "Redemption Deposit") with the Corporation's transfer agent or any bank or trust company in the United States named in the notice of redemption. Such deposits are to be payable in

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amounts as aforesaid to the respective orders of the holders of record of the shares of Series A Convertible Preferred Stock upon surrender of the certificates evidencing such shares as described above. From and after the making of the Redemption Deposit, all rights of the holders of the applicable shares of Series A Convertible Preferred Stock arising under this designation of powers, preferences, rights and limitations shall terminate, other than the right to receive from such transfer agent, bank or trust company, without interest, the moneys so deposited with it, and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the books of the Corporation, and such shares shall not be deemed to be outstanding for any purpose whatsoever.

7. No Sinking Fund. The shares of the Series A Convertible Preferred Stock shall not be entitled to benefit of any sinking or purchase fund to be applied to the redemption or purchase of such stock.

8. Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made in respect of any class or series of stock which shall rank subordinate thereto as to assets the fixed sum of $10.00 for each share of Series A Convertible Preferred Stock held by them plus accrued and unpaid dividends, if any, thereon.

If upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, the assets of the Corporation available for distribution to its Series A Convertible Preferred Stock holders shall be insufficient to pay the holders of Series A Convertible Preferred Stock the full amount to which they are entitled hereunder, the holders of Series A Convertible Preferred Stock shall share ratably in any distribution of assets according to the respective amounts which would be payable in respect of the shares of Series A Convertible Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such stock were paid in full. If upon any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation payments shall have been made to the holders of the Series A Convertible Preferred Stock of the full amount to which they shall respectively be entitled hereunder, such holders shall not be entitled to any further participation in the distribution of the remaining assets of the Corporation available for distribution to its stockholders,

Neither the merger or consolidation of the Corporation into or with another corporation nor the merger or consolidation of any other corporation into or with the Corporation, nor the sale, transfer or lease of all or substantially all of the assets of the Corporation, shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Corporation.

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9. Redeemed Shares. Shares of the Series A Convertible Preferred Stock redeemed or purchased by the Corporation or surrendered to the Corporation on the conversion thereof into shares of Common Stock as herein above provided shall have the status of authorized and unissued shares of Series A Convertible Preferred Stock.

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IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation by the undersigned this ____day of ___________, 2011.

ORBCOMM INC.

By:

Name: Christian Le Brun

Title: Executive Vice President and

General Counsel

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APPENDIX C

EXHIBIT H

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (“Agreement”) is made and entered into this [●] of [●], 2011 by and among ORBCOMM Inc., a Delaware corporation (“ORBCOMM”), Alanco Technologies, Inc., an Arizona corporation ("Alanco”), and Mellon Investor Services LLC, a New Jersey limited liability company, as escrow agent [and stock transfer agent] (“Escrow Agent”).

RECITALS

A. WHEREAS, ORBCOMM, Alanco and StarTrak Systems, LLC ("StarTrak") have entered into that certain Asset Purchase Agreement, dated as of February 23, 2011 (the “APA”), pertaining to the purchase by ORBCOMM of substantially all of the assets of StarTrak;

B. WHEREAS, pursuant to the APA, this Agreement is entered into to hold shares of the common stock of ORBCOMM ("ORBCOMM Stock") in escrow to cover any claims by ORBCOMM pursuant to Alanco's and StarTrak's obligations under Sections 9.8 and 9.9 of the APA;

C. WHEREAS, pursuant to Section 4.1(b)(vi) of the APA, ORBCOMM is to deposit with the Escrow Agent 249,917 shares of ORBCOMM Stock, duly registered in the name of Alanco and to be held by the Escrow Agent in a separate securities escrow account established by the Escrow Agent in book-entry form on the stock transfer books of ORBCOMM with a stop-transfer order, as well as any distributions thereon that may be paid from time to time during the term of this Agreement that are payable in additional shares of ORBCOMM Stock (the “Litigation Escrowed Shares”);

D. WHEREAS, pursuant to Section 4.1(b)(vii) of the APA, ORBCOMM is to deposit with the Escrow Agent [●]1 shares of ORBCOMM Stock, duly registered in the name of Alanco and to be held by the Escrow Agent in a separate securities escrow account established by the Escrow Agent in book-entry form on the stock transfer books of ORBCOMM

__________________________________

1Valued at $500,000 (based on the 20 day average closing price prior to signing the APA of $3.001) less 50% of the amount of Fuel Sensor Damages (as defined in the APA)

(i) actuall expended by Alanco or StarTrak from March 2, 2011 through the last day of the month immediately preceding the Closing Date or (ii) acrrued as current

liabilities on the Estimated Closing Statement (as defined in the APA).

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with a stop-transfer order, as well as any distributions thereon that may be paid from time to time during the term of this Agreement that are payable in additional shares of ORBCOMM Stock (the “Fuel Sensor Escrowed Shares”, and together with the Litigation Escrowed Shares, the "Escrowed Shares");

E. WHEREAS, pursuant to Section 4.4(b)(iii) of the APA, Alanco is to deposit with the Escrow Agent a standing instruction letter from Alanco instructing the Escrow Agent to transfer the Litigation Escrowed Shares or the Fuel Sensor Escrowed Shares, as applicable, to the name of ORBCOMM when required to pursuant to the terms of this Agreement (the “Instruction Letter”); and

F. WHEREAS, ORBCOMM and Alanco wish to appoint Mellon Investor Services LLC as Escrow Agent and Mellon Investor Services LLC is willing to accept such appointment and to act as Escrow Agent, in each case upon the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties agree as follows:

Section 1

1.01 Concurrently with the execution and delivery hereof, ORBCOMM is depositing with Escrow Agent the Escrowed Shares to be held and distributed as hereinafter set forth. Concurrently with the execution and delivery hereof, Alanco is depositing with Escrow Agent the Instruction Letter. The Escrowed Shares and the Instruction Letter are collectively referred to herein as the "Escrow Property." By its signature hereon, Escrow Agent acknowledges receipt of the Escrowed Shares and the Instruction Letter and agrees to hold and dispose of the Escrow Property in accordance with the terms of this Agreement.

1.02 During the duration of this Agreement, Alanco shall retain all rights and privileges of ownership of the Escrowed Shares, including without limitation all voting rights. Except as expressly provided otherwise herein and unless and until such shares are released from escrow pursuant to any provision of this Agreement, Alanco shall at all times retain and have the full and absolute right to exercise all rights and indicia of ownership with respect to the Escrowed Shares, including, without limitation, voting and consensual rights and all rights to distributions of any kind in respect of the Escrowed Shares; provided, however, that Alanco shall have no right to sell, transfer, pledge or encumber or otherwise dispose of, or agree to dispose of, directly or indirectly, in any manner whatsoever any of the Escrowed Shares. Escrow Agent shall be under no duty to preserve, protect or exercise

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rights in the Escrowed Shares, and shall be responsible only for reasonable measures to maintain the physical safekeeping thereof, and otherwise to perform such duties on its part as are expressly set forth in this Agreement.

Section 2

2.01 Escrow Agent shall distribute the Escrow Property in accordance with the instructions set forth in:

(a) a joint notice executed by Appropriate Officers (as hereinafter defined) of both ORBCOMM and Alanco; or

(b) only as a final alternative, a final court or arbitral order which either is not subject to appeal or for which all rights of appeal have been exhausted or have expired.

For purposes of this Agreement, the term “Appropriate Officers” means those officers of ORBCOMM and Alanco set forth on the respective incumbency certificates of each such party delivered to the Escrow Agent simultaneously with the execution and delivery of this Agreement, as the same may be amended in a notice to each other party from time to time.

2.02 In the event that ORBCOMM incurs or suffers any IGS Damages (as defined in the APA) in connection with the patent infringement action titled Innovative Global Systems LLC v. StarTrak Systems, LLC, et al. (Case No.: 6:10-CV-00327) and currently venued in the United States District Court for the Eastern District of Texas (the "IGS Proceeding") (such event, a "Litigation Distribution Event"), ORBCOMM shall provide written notice (“Litigation Event Notice”) to Escrow Agent and Alanco setting forth a description of the Litigation Distribution Event and the number of shares of ORBCOMM Stock to be distributed from the Litigation Escrowed Shares. As between ORBCOMM and Alanco, ORBCOMM agrees that the number of shares of ORBCOMM Stock that ORBCOMM will direct the Escrow Agent to release to ORBCOMM from the Litigation Escrowed Shares shall be that number of shares of ORBCOMM Stock equal to 50% of the IGS Damages incurred or suffered by ORBCOMM in such Litigation Distribution Event, such shares of ORBCOMM Stock to be valued at $3.001 per share. Alanco may deliver written notice (“Litigation Objection Notice”) to each of ORBCOMM and Escrow Agent setting forth its objection (including the reasons therefor and the amounts objected to) to the Litigation Distribution Event within ten (10) days following its receipt of the Litigation Event Notice. If no Litigation Objection Notice is timely received or Alanco timely delivers a Litigation Objection Notice objecting to an amount less than the full amount set forth in the Litigation Event

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Notice, Escrow Agent shall, pursuant to the Instruction Letter, distribute that number of shares of ORBCOMM Stock from the Litigation Escrowed Shares to ORBCOMM as directed in the Litigation Event Notice and not disputed in a Litigation Objection Notice, if any (not to exceed the number of shares of ORBCOMM Stock comprising the Litigation Escrowed Shares at the time of such Litigation Event Notice). If Escrow Agent and ORBCOMM receive a timely Litigation Objection Notice as set forth herein, except as set forth in the immediately preceding sentence, Escrow Agent shall not make any distribution unless and until otherwise directed as set forth in Section 2.01.

2.03 If the entirety of the Litigation Escrowed Shares shall not have been distributed pursuant to Section 2.01 or Section 2.02 by the date which is 30 Business Days following the final, non-appealable decision or settlement of the IGS Proceeding (the "Litigation Escrow End Date"), Escrow Agent shall distribute the balance of the Litigation Escrowed Shares held by Escrow Agent to Alanco on the next Business Day following the Litigation Escrow End Date, provided there are no pending claims for IGS Damages incurred by ORBCOMM.

2.04 In the event that (i) Aggregate Warranty Expenses (as defined in the APA) exceed $600,000, and (ii) at any such time, any Fuel Sensor Damages (as defined in the APA) have been incurred or suffered during the Measurement Period (as defined in the APA) (a "Fuel Sensor Distribution Event"), ORBCOMM shall have the right to provide written notice (“Fuel Sensor Event Notice”) to Escrow Agent and Alanco setting forth a description of the Fuel Sensor Distribution Event and the number of shares of ORBCOMM Stock to be distributed from the Fuel Sensor Escrowed Shares. As between ORBCOMM and Alanco, ORBCOMM agrees that the number of shares of ORBCOMM Stock that ORBCOMM will direct the Escrow Agent to release to ORBCOMM from the Fuel Sensor Escrowed Shares shall be (i) that number of shares of ORBCOMM Stock equal to 50% of the Fuel Sensor Damages incurred or suffered during the Measurement Period, but after the Effective Date (as defined in the APA) (excluding the amount of Fuel Sensor Damages that when added to Non-Fuel Sensor Damages (as defined in the APA) equals $600,000), such shares of ORBCOMM Stock to be valued at $3.001 per share, less (ii) the aggregate value of any Fuel Sensor Escrowed Shares previously distributed to ORBCOMM pursuant to this Agreement, such shares valued at $3.001 per share. Alanco may deliver written notice (“Fuel Sensor Objection Notice”) to each of ORBCOMM and Escrow Agent setting forth its objection (including the reasons therefor and the amounts objected to) to the Fuel Sensor Distribution Event within fifteen (15) days following its receipt of the Fuel Sensor Event Notice. If no Fuel Sensor Objection Notice is timely received or Alanco timely delivers a Fuel Sensor Objection Notice objecting to an amount less than the full amount set forth in the Fuel Sensor Event Notice, Escrow Agent shall, pursuant to the Instruction Letter, distribute that number of shares of ORBCOMM Stock from the Fuel Sensor Escrowed Shares to ORBCOMM as directed in the Fuel Sensor Event Notice and not disputed in a Fuel Sensor

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Objection Notice, if any (not to exceed the number of shares of ORBCOMM Stock comprising the Fuel Sensor Escrowed Shares at the time of such Fuel Sensor Event Notice). If Escrow Agent and ORBCOMM receive a timely Fuel Sensor Objection Notice as set forth herein, except as set forth in the immediately preceding sentence, Escrow Agent shall not make any distribution unless and until otherwise directed as set forth in Section 2.01.

2.05 If the entirety of the Fuel Sensor Escrowed Shares shall not have been distributed pursuant to Section 2.01 or Section 2.04 by the 15th day following the end of the Measurement Period (the "Fuel Sensor Escrow End Date"), Escrow Agent shall distribute the balance of the Fuel Sensor Escrowed Shares held by Escrow Agent to Alanco on the next Business Day following the Fuel Sensor Escrow End Date, provided there are no pending claims for Fuel Sensor Damages incurred by ORBCOMM.

2.06 Except as specifically set forth in Sections 4 and 13, upon final distributions and disbursement of all of the Escrowed Shares as herein set forth, this Agreement shall terminate and Escrow Agent shall be relieved of all obligations or liability hereunder.

2.07 Notwithstanding anything to the contrary contained in this Agreement, Escrow Agent shall not release or distribute any of the Escrow Property unless and until Escrow Agent: (a) receives a joint notice from ORBCOMM and Alanco as described in Section 2.01(a); (b) is required to do so pursuant to a final court or arbitral order as described in Section 2.01(b); (c) receives a written notice from ORBCOMM pursuant to Section 2.02 and has not received a Litigation Objection Notice as herein provided; (d) receives a written notice from ORBCOMM pursuant to Section 2.04 and has not received a Fuel Sensor Objection Notice as herein provided; (e) is required to do so on the Litigation Escrow End Date pursuant to Section 2.03; or (f) is required to do so on the Fuel Sensor Escrow End Date pursuant to Section 2.05.

2.08 ORBCOMM and Alanco agree to take all such actions and execute and deliver all such documents as are necessary to effectuate the intent and purpose of this Section 2, including if necessary, the delivery by Alanco of additional instruction letters or stock powers duly executed in blank and any other documents that are necessary to transfer to ORBCOMM good and marketable title to the shares of ORBCOMM Stock that may be released to ORBCOMM from the Litigation Escrowed Shares or the Fuel Sensor Escrowed Shares, as applicable, pursuant to this Section 2.

Section 3

The acceptance by Escrow Agent of its duties under this Agreement is subject to the following terms and conditions, which all parties to this Agreement hereby agree shall govern and control with respect to the rights, duties and liabilities of Escrow Agent:

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(a) It is understood and agreed that the duties of Escrow Agent hereunder are purely ministerial in nature and that it shall not be liable for any error of judgment, fact or law, or any act done or omitted to be done, except for its own willful misconduct or gross negligence, each as determined by a final non-appealable order, judgment, decree or ruling of a court of competent jurisdiction. Escrow Agent’s determination as to whether an event or condition has occurred, or been met or satisfied, or as to whether a provision of this Agreement has been complied with, or as to whether sufficient evidence of the event or condition or compliance with the provision has been furnished to it, shall not subject Escrow Agent to any claim, liability or obligation whatsoever, even if it shall be found that such determination was improper or incorrect, unless Escrow Agent shall have been determined guilty of willful misconduct, bad faith or gross negligence in making such determination by a final non-appealable order, judgment, decree or ruling of a court of competent jurisdiction.

(b) Escrow Agent is not a party to and is not bound by the APA. Escrow Agent shall not be subject to, nor be required to comply with, or determine if any person or entity has complied with, the APA or any other agreement between ORBCOMM and Alanco, even though reference thereto may be made in this Agreement, or to comply with any notice, instruction, direction, request or other communication, paper or document other than as expressly set forth in this Agreement.

(c) Escrow Agent acts hereunder as a depositary. Escrow Agent does not have any interest in the Escrow Property but is serving as escrow holder only and having possession thereof. Escrow Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no duties, responsibilities or obligations shall be implied or inferred. Escrow Agent is not responsible for or liable in any manner whatsoever for the sufficiency, collection, correctness, genuineness or validity of any revenues, cash, payments, securities, property, funds, investments, income, earnings, document, or other item, which is a part of the Escrow Property or for any claim or action by any person firm, corporation, limited liability company or trustee concerning the right or power of any depositor to make any transfer or the validity of the transfer of any part of the Escrow Property to Escrow Agent. Escrow Agent is also not responsible for or liable in any manner whatsoever for the identity, authority or rights of any person or entity executing and delivering or purporting to execute or deliver any thereof to Escrow Agent.

(d) Escrow Agent shall be fully protected in acting upon any written notice, instruction, direction, request or other communication, paper or document which Escrow Agent believes to be genuine, and shall have no duty to inquire into or investigate the validity, accuracy or content of any thereof.

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(e) Escrow Agent may execute or perform any duty, responsibility or obligation hereunder either directly or through agents, attorneys, accountants or other experts.

(f) Escrow Agent shall not be liable or responsible for special, punitive, indirect, consequential or incidental loss or damages of any kind whatsoever to any person or entity (including without limitation lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage. Any liability of Escrow Agent under this Agreement will be limited in the aggregate to an amount equal to three (3) times the annual fee paid to Escrow Agent as set forth in Exhibit A hereto.

(g) Escrow Agent is authorized to and may consult with and obtain advice from legal counsel (who may be counsel to a party hereto or an employee of Escrow Agent) in the event any dispute, conflict or question arises as to the construction of any of the provisions hereof or its duties hereunder. Escrow Agent shall be reimbursed for all costs so incurred in accordance with Section 3 hereof and shall incur no liability and shall be fully protected in taking, suffering or omitting to take any action in reliance on said advice.

(h) Escrow Agent may engage or be interested in any financial or other transaction with any party hereto or affiliate thereof, and may act on, or as depository, trustee or agent for, any committee or body of holders of obligations of such party or affiliate, as freely as if it were not the Escrow Agent hereunder.

(i) Escrow Agent shall not be obligated to expend or risk its own funds or to take any action which it believes would expose it to expense or liability or to a risk of incurring expense or liability, unless it has been furnished with assurances of repayment or indemnity satisfactory to it.

(j) Escrow Agent shall not take instructions or directions except those given in accordance with this Agreement.

(k) Escrow Agent shall not incur any liability for not performing any act, duty, obligation or responsibility by reason of any occurrence beyond the control of Escrow Agent (including without limitation any act or provision of any present or future law or regulation or governmental authority, any act of God, war, civil disorder or failure of any means of communication).

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(l) Escrow Agent shall not be called upon to advise any person or entity as to any investments with respect to any security, property or funds held in escrow hereunder or the dividends, distribution, income, interest or earnings thereon.

(m) Escrow Agent may but shall not be required to defend itself in any legal proceedings which may be instituted against it or it may but shall not be required to, institute legal proceedings in respect to the Escrow Property or any part thereof.

(n) If at any time, Escrow Agent shall receive ambiguous or conflicting notices, directions, requests, claims, demands, instructions or other communication, paper or document with respect to the Escrow Property or if for any other reason it shall be unable to determine the party or parties entitled to receive the Escrow Property or any part thereof, Escrow Agent may, in its sole discretion (a) initiate an action in interpleader or another appropriate action, suit or proceeding in a court of competent jurisdiction seeking to resolve such dispute or claims and/or (b) deposit the Escrow Property with a court of competent jurisdiction in accordance with Section 8 hereof and interplead the other parties to this Agreement for a determination of the matter and thereupon, Escrow Agent shall stand fully relieved and discharged of any further duties under this Agreement and/or (c) refrain from complying with any claim, notice, instruction, direction, request or other communication, paper or document, so long as such dispute or conflict shall continue, and (in any case) shall be fully protected and shall not be liable in any way to ORBCOMM or Alanco or other person or entity for failure or refusal to comply with such conflicting claims, notices, instructions, directions, requests or communications, papers or documents until Escrow Agent is satisfied, in its sole discretion, that such conflicting claims, notices, instructions, directions, requests, communications, papers or documents have been definitively determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing satisfactory to Escrow Agent.

Section 4

(a) In consideration of its services rendered hereunder, Escrow Agent shall be entitled to a fee as outlined in Exhibit A of $[●] to be paid equally by ORBCOMM and Alanco upon execution of this Agreement. Further, all of Escrow Agent's out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, amendment, modification, waiver, execution, delivery, performance or enforcement of this Agreement, and fees incurred pursuant to Sections 3(g), (m) or (n) of this Agreement shall be paid one-half by ORBCOMM and one-half by Alanco. The obligations contained in this Section 4(a) shall survive the termination of this Agreement and the resignation or removal of the Escrow Agreement.

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(b) ORBCOMM and Alanco jointly and severally, agree to indemnify, defend, protect, save and keep harmless Escrow Agent and its affiliates and their respective successors, assigns, directors, officers, managers, employees, agents, attorneys, accountants and experts (collectively the “Indemnitees”), from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, actions, suits, proceedings, litigation, investigations, costs or expenses, including without limitation reasonable fees and disbursements of counsel (collectively “Losses”), that may be imposed on, incurred by, or asserted against any Indemnitee, at any time, relating to or arising out of the execution, delivery or performance of this Agreement, the enforcement of any rights or remedies under or in connection with this Agreement, the establishment of the escrow account, the acceptance or administration of the Escrow Property and any payment, transfer or other application of funds pursuant to this Agreement, or as may arise by reason of any act, omission or error of the Indemnitee; provided, however, that no Indemnitee shall be entitled to be so indemnified, defended, protected, saved and kept harmless to the extent such Loss was proximately caused by its own willful misconduct, gross negligence or bad faith, as determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction. The obligations contained in this Section 4(b) shall survive the termination of this Agreement and the resignation or removal of Escrow Agent.

Section 5

Escrow Agent may resign at any time upon giving ORBCOMM and Alanco 30 days’ prior written notice to that effect. If Escrow Agent gives such written notice within 90 days after the date hereof, Escrow Agent shall return one-half of the fee described in Section 4 of this Agreement. In such event, the successor shall be such person, firm or entity as shall be mutually selected by ORBCOMM and Alanco. It is understood and agreed that such resignation shall not be effective until the earlier of (a) 30 days after Escrow Agent’s written notice of resignation is received by ORBCOMM and Alanco, or (b) a successor agrees to act hereunder and the Escrow Property is transferred if necessary.

Section 6

All notices, instructions, directions, requests or other communications hereunder shall be in writing and shall be delivered personally, sent by facsimile transmission (with immediate confirmation of receipt thereafter by telephone or otherwise), e-mailed or sent by U.S. registered, certified or express mail, first class postage prepaid, return receipt requested, or sent by a nationally recognized overnight courier service, marked for overnight delivery. Any such notice, instruction, direction, request or communication shall be deemed given when so delivered personally, or sent by facsimile transmission (provided confirmation of receipt is received immediately thereafter), or when e-mail confirmation is received if delivered

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by e-mail; or if sent by express mail or overnight courier, one (1) Business Day after the date of delivery to a U.S. Post Office or the courier service marked for overnight delivery;

or if so sent by registered or certified mail, seven (7) days after the date of deposit in the mails; in each case addressed to each party as follows:

(a) if to ORBCOMM, to

ORBCOMM Inc.

2115 Linwood Avenue, Suite 100

Fort Lee, NJ 07024

Attn.: Christian Le Brun, General Counsel

Facsimile: (703) 433-6400

E-mail: lebrun.chris@orbcomm.com

with a copy to:

Chadbourne & Parke LLP

30 Rockefeller Plaza

New York, New York 10112

Attn.: Sey-Hyo Lee

Facsimile: (212) 541-5369

E-mail: shlee@chadbourne.com

(b) if to Alanco, to

Alanco Technologies, Inc.

15575 North 83rd Way, Suite 3

Scottsdale, Arizona 85260

Attn.: Chief Financial Officer

Facsimile: (480) 607-1515

E-mail: john@alanco.com

with a copy to:

Steven P. Oman, Esq.

8664 E. Chama Road

Scottsdale, Arizona 85255

Facsimile: (480) 348-1471

E-mail: soman@omanlaw.net

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Mellon Investor Services, LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, NJ 07310

Corporate Actions Department

Attn.: [Jackie Banks]

Facsimile: (201) 680-4665

E-mail: [●]

with a copy to:

Mellon Investor Services, LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, NJ 07310

Legal Department

Facsimile: (206) 674-3059

E-mail: [●]

or to such other address as a party hereto may specify from time to time by notice to each other party given as provided herein. For purposes of this Agreement, the term “Business Day” means any day other than a Saturday, Sunday or a day on which commercial banks in the States of New Jersey or New York are required or authorized by law to close.

Section 7

This Agreement and the APA contain the entire agreement among ORBCOMM and Alanco with respect to the subject matter hereof. This Agreement may not be amended, modified or supplemented and no provision hereof may be waived except by an instrument in writing signed by all of the parties hereto. No waiver of any provision hereof by any party shall be deemed a continuing waiver of any matter by such party.

Section 8

This Agreement and all amendments, modifications and waivers thereof shall, in all respects, be governed by and construed and enforced in accordance with the internal laws (without regard to principles of conflicts of law) of the State of New Jersey. Each party hereto hereby irrevocably submits to the personal jurisdiction of the state and federal courts located within the State of New Jersey with respect to any action, suit or proceeding relating to or arising from this Agreement. Each party hereto irrevocably waives (i) any claim or

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defense based upon improper venue or inconvenient forum with respect to any action, suit or proceeding brought in any such court and (ii) the right to trial by jury in any action, suit or proceeding relating to or arising under this Agreement. Each party waives personal service of process and consents to the service of process by the manner set forth in Section 6, in addition to any other method of service of process permitted by applicable law.

Section 9

This Agreement may be executed and delivered in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. This Agreement may be executed and delivered by facsimile or e-mail and any counterpart so executed or delivered shall be deemed to constitute an original and fully effective counterpart of this Agreement.

Section 10

No party may assign either this Agreement or any of its rights, interests or obligation hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Notwithstanding anything in this Agreement to the contrary, any person or entity into which Escrow Agent may be merged or converted or with which it may be consolidated, or any person or entity resulting from any merger, conversion or consolidation to which Escrow Agent shall be a party, or any person or entity to which substantially all the stock transfer business of Escrow Agent may be transferred, shall automatically be Escrow Agent under this Agreement without further act.

Section 11

In the event of any conflict between the terms and provisions of this Agreement and those of the APA, the terms and conditions of this Agreement shall control. If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction, provided, however, that if such excluded provision shall effect the rights, immunities, duties or obligations of the Escrow Agent, the Escrow Agent shall be entitled to resign immediately. Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written.

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Section 12

Except as expressly provided in Section 4(b), nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than the parties hereto any legal or equitable right, remedy, interest or claim under or in respect of this Agreement or any assets escrowed hereunder.

Section 13

The parties acknowledge that Escrow Agent does not have any interest in the Escrow Property, but is serving only as escrow holder hereunder. Without limiting the foregoing, ORBCOMM and Alanco shall be responsible for any taxes relating to the Escrow Property. ORBCOMM and Alanco will provide Escrow Agent with appropriate forms for tax certifications, as requested by Escrow Agent. This Section 13 shall survive the termination of this Agreement and the resignation or removal of Escrow Agent.

Section 14

Notwithstanding anything in this Agreement to the contrary, if at any time Escrow Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process which in any way affects Escrow Agent or the Escrow Property (including without limitation orders of attachment or garnishment or levies or injunctions), Escrow Agent is authorized to comply therewith in any manner it deems appropriate, and shall be fully protected from doing so even if such order, judgment, decree, writ or process may be subsequently amended, modified, vacated or otherwise determined to be invalid or without legal force or effect.

Section 15

ORBCOMM and Alanco each represents and warrants, as to itself, that it is a corporation duly organized, validly existing in good standing under its respective jurisdiction of organization. ORBCOMM and Alanco each represents and warrants, as to itself, that (i) it has all requisite power and authority to execute, deliver and perform its obligations under this Agreement, (ii) this Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid, binding and enforceable obligations and (iii) the execution, delivery and performance by it of this Agreement do not and will not violate or require consent under any of its organizational documents, any law, statute, rule, regulation or ordinance or contract, agreement, instrument, indenture or other undertaking to which it is a party or by which it or its property may be bound.

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Section 16

The rights and remedies of Escrow Agent set forth in this Agreement shall be cumulative, and not exclusive, of any rights and remedies available to it at law or equity or otherwise.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the [●] day of [●], 2011.

“ORBCOMM”

ORBCOMM INC.

By: ________________________________

Name:

Title:

“ALANCO”

ALANCO TECHNOLOGIES, INC.

By: ________________________________

Name:

Title:

“ESCROW AGENT”

MELLON INVESTOR SERVICES LLC

By:

____________________________________

Name:

[Jackie Banks]

Title:

[Senior Event Manager]

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Exhibit A

BNY MELLON SHAREOWNER SERVICES

Schedule of Fees

Cash Escrow Agent

Administration and Set-up Fee, $[●]

Annual Facility Fee, per Escrow Account $[●]

Payable at the start of the subsequent Billing Year, includes:

· Dedicated Administrative Team

· File Application on Multiple Systems

· Daily Balancing/Proofing

· Administrative & Operational Consultative Services

· Interest Compilation & Calculation

· Data Entry & System Updates

· Quality Control

· Check & Certificate Preparation Work

· Standard 1099 Issuance & Tax Reporting, if necessary

· Legal Items & Correspondence

Payments

· Wires, per holder $[●]

· Checks, per holder $[●]

Subject to a $500 minimum per distribution

Special Services

* Special Tax Reporting $3.00/account

* Programming fees $250 per hour

* Attorney Review Additional

Out of Pocket Expenses Additional

Including Postage, Printing, Stationery, Overtime, Microfilming, Imprinting, etc.2

__________________________________

2 Typesetting vendors charge a rush premium if less than 48 hours is given. Printing vendors charge a rush premium if less than 5 business days are given.

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APPENDIX D

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (“Agreement”) is entered into as of _______________ ___, 2011, by and among ORBCOMM INC., a Delaware corporation (the “Company”), Alanco Technologies, Inc., an Arizona corporation (“Alanco”), Timothy P. Slifkin and Thomas A. Robinson.

1. Definitions. For purposes of this Agreement:

(a) The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of 1933 (the “Act”), and pursuant to Rule 415 under the Act or any successor rule, and the declaration or ordering of effectiveness of such registration statement or document; and

(b) The term “Registrable Securities” means the shares of the Company’s Common Stock, together with any capital stock issued in replacement of or in exchange for such Common Stock or otherwise in respect of such Common Stock upon any stock dividend, split or similar event (the “Common Stock”), (i) issued pursuant to the terms of that certain Asset Purchase Agreement, dated as of February 23, 2011, among the Company, Alanco and StarTrak Systems, LLC, a subsidiary of Alanco (the “Asset Purchase Agreement”), (ii) issued pursuant to the terms of that certain Stock Purchase Agreement, dated as of February 23, 2011, among the Company, Timothy P. Slifkin and Thomas A. Robinson (the “Slifkin/Robinson SPA”), and (iii) issuable upon conversion of the perpetual convertible preferred stock of the Company issued to Alanco pursuant to the terms of the Asset Purchase Agreement (the “Preferred Stock”) until, in the case of any such shares of Common Stock, (A) the earliest of (1) its effective registration under the Act and resale in accordance with the Registration Statement (as defined below) covering it, (2) expiration of the holding period that would be applicable thereto under Rule 144 were it not held by an affiliate of the Company or (3) its sale to the public pursuant to Rule 144, and as a result of the event or circumstance described in any of the foregoing clauses (1) through (3), the legend with respect to transfer restrictions required under the Asset Purchase Agreement is removed in accordance with the terms of the Asset Purchase Agreement, the Slifkin/Robinson SPA or such legend, as the case may be, or (B) one year from the date of this Agreement.

(c) The number of shares of “Registrable Securities then outstanding” shall be determined by the number of shares of Common Stock which have been issued or are issuable upon conversion of the Preferred Stock at the time of such determination; and

(d) The term “Holder” means Alanco, Timothy P. Slifkin and Thomas A. Robinson, or any successor thereof. Any distributee under Section 5(d) hereof shall not be a Holder.

2. Required Registration. (a) The Company agrees to file within 60 days after the Closing Date (as defined in the Asset Purchase Agreement) a registration statement on Form S-3 (or other suitable form) or a post-effective amendment to an effective registration statement (collectively, a “Registration Statement”) at the Company’s discretion, covering the resale of all shares of Registrable Securities then outstanding or issuable upon conversion of all then outstanding Preferred Stock. The Company shall use commercially reasonable efforts to have the Registration Statement declared effective within 90 days after the initial filing thereof.

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(b) The Registration Statement shall be prepared as a “shelf” registration statement under Rule 415, and shall be maintained effective until the earlier of one year from the Closing Date, or the date all Registrable Securities cease to exist.

(c) The Company represents that it is presently eligible to effect the registration contemplated hereby on Form S-3 and will use its commercially reasonable efforts to continue to take such actions as are necessary to maintain such eligibility.

3. Obligations of the Company. In connection with its registration obligations under this Agreement, the Company shall:

(a) Prepare and file with the Securities and Exchange Commission (“SEC”) a Registration Statement with respect to such Registrable Securities.

(b) Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all Registrable Securities covered by such Registration Statement.

(c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(d) Use its commercially reasonable efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e) As promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities, at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Act, of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and subject to Section 4 use its commercially reasonable efforts to prepare promptly a supplement or amendment to the Registration Statement or prospectus to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Holder as such Holder may reasonably request.

(f) Provide Holders with written notice of the date that a Registration Statement registering the resale of the Registrable Securities is declared effective by the SEC and the date or dates when the Registration Statement is no longer effective.

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(g) Provide Alanco and its representatives the opportunity to review the Registration Statement and all amendments thereto a reasonable period of time prior to their filing with the SEC if so requested by Alanco in writing.

4. Suspension of Registration. Notwithstanding anything to the contrary contained herein, following the effectiveness of a Registration Statement registering Registrable Securities, the Company may suspend at any time the availability of such Registration Statement and any related prospectus upon (i) the issuance by the SEC of a stop order with respect to such Registration Statement or the initiation of proceedings with respect to such Registration Statement under Section 8(d) or 8(e) of the Act, (ii) the occurrence of any event or the existence of any fact as a result of which (A) any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (B) any prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) the occurrence or existence of any pending corporate development, including without limitation any such development that might (A) interfere with or affect the negotiation or completion of any material transaction or other material event that is being contemplated by the Company (whether or not a final decision has been made to undertake such material transaction at the time the right to delay is exercised), or (B) involve initial or continuing disclosure obligations that might not be in the best interest of the Company’s shareholders, that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of any Registration Statement and the related prospectus (any suspension of the availability of a Registration Statement and related prospectus upon any event described in any of subsections (i), (ii) and (iii) above is hereinafter referred to as a “Suspension Period”); provided that the duration of a Suspension Period under subsections (ii) and (iii) shall not extend beyond 90 days. Notwithstanding the foregoing, the Company shall be entitled to effect no more than two such suspensions under subsections (ii) and (iii) above during the one (1) year period following the effective date of the Registration Statement. The Company shall endeavor to end any Suspension Period as promptly as practicable under the circumstances. If the availability of the Registration Statement and any related prospectus is suspended by the Company pursuant hereto, the Company shall promptly notify all Holders whose securities are covered by such Registration Statement of such suspension, and shall promptly notify each such Holder as soon as the availability of the Registration Statement and any related prospectus has been resumed.

5. Obligations of Holders. (a) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with regard to each selling Holder that such selling Holder shall furnish to the Company such information regarding Holder, the Registrable Securities held by it and the intended method of disposition of such securities as shall be required to effect the registration of its Registrable Securities, and that such information be furnished to the Company in writing, signed by each selling Holder and stated to be specifically for use in the related Registration Statement, prospectus or other document incident thereto.

(b) Each selling Holder agrees that, upon receipt of any notice from the Company of any event of the kind described in Section 3(e) hereof, such selling Holder will discontinue disposition of Registrable Securities until such selling Holder receives copies of the supplemented or amended Registration Statement or prospectus contemplated by Section 3(e). In addition, if the Company requests, each selling Holder will deliver to the Company (at the Company’s expense) all copies of the prospectus covering the Registrable Securities current at the time of receipt of the notice.

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(c) Each selling Holder shall notify the Company, at any time when a prospectus relating to such selling Holder’s Registrable Securities is required to be delivered under the Act, of the happening of any event (to such selling Holder’s knowledge and as to matters concerning such selling Holder) as a result of which the prospectus included in the Registration Statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d) Alanco may sell, dividend or otherwise distribute to its shareholders shares of Common Stock received by Alanco pursuant to the Asset Purchase Agreement only in accordance with Section 8.15 of the Asset Purchase Agreement. Each of Timothy P. Slifkin and Thomas A. Robinson may sell or otherwise distribute shares of Common Stock received by such Holder pursuant to the Slifkin/Robinson SPA only in accordance with Section 5.5 of the Slifkin/Robinson SPA. For the avoidance of doubt, such distributee shall not have any registration rights under this agreement.

6. Expenses. All expenses incurred in connection with registrations, filings or qualifications pursuant hereto, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company shall be borne by the Company; provided, however, that the selling Holders shall bear their own underwriting discounts or commissions, selling or placement agent or broker fees and commissions, and transfer taxes, if any, in connection with the sales of securities by such selling Holders.

7. Indemnification. If any Registrable Securities are included in a Registration Statement under this Agreement:

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the officers and directors of each Holder and each person, if any, who controls such Holder within the meaning of the Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”), against any expenses, losses, claims, damages or liabilities (or actions in respect thereof), including legal or other expenses reasonably incurred in connection with investigating or defending the same, (collectively, “Losses”) to which they may become subject under the Act, the 1934 Act or other federal or state law, including any of the foregoing incurred in settlement of any litigation, arising out of or based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the indemnity agreement contained in this subsection 7(a) shall not apply to amounts paid in settlement of any such Losses if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such Losses to the extent that it arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, officer, director or controlling person. In connection with a firm or best efforts underwritten offering, to the extent customarily required by the managing underwriter, the Company will indemnify the underwriters, their officers and directors and each such person who controls the underwriters (within the meaning of Section 15 of the Act), to the extent customary in such agreements.

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(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, and any other Holder selling securities in such Registration Statement or any of its directors or officers or any person who controls such selling Holder, against any Losses to which the Company or any such director, officer, controlling person or controlling person, or such other selling Holder or director, officer or controlling person may become subject, under the Act, the 1934 Act or other federal or state law, arising out of or based upon: (i) any statement or omission in each case to the extent (and only to the extent) that such statement or omission is made in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such Registration Statement, or (ii) any sale by a Holder after the Company has given notice to the Holder under Section 3(e) or 4 herein and prior to the filing by the Company of a supplement or the effectiveness of a post-effective amendment as necessary in connection with such notice; provided, however, that the indemnity agreement contained in this subsection 7(b) shall not apply to amounts paid in settlement of any such Losses if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld. In connection with a firm or best efforts underwritten offering, to the extent customarily required by the managing underwriter, each selling Holder, severally and not jointly, will indemnify the underwriters, their officers and directors and each person who controls the underwriters (within the meaning of Section 15 of the Act), to the extent customary in such agreements; provided, however, that the obligation to indemnify will be individual to each selling Holder and shall be limited to an amount equal to the net proceeds received by such selling Holder of Registrable Securities sold in connection with such registration.

(c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action as a result of such failure will not relieve such indemnifying party from any liability to the indemnified party under this Section 7, except to the extent that indemnifying party shall have demonstrated that it has been actually prejudiced as a result of such failure.

(d) If the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree to contribute to the aggregate Losses to which the Company and one or more of the Holder may be subject in such proportion as is appropriate to reflect the relative fault of the Company and the Holders in connection with the statements or omissions which resulted in such Losses. Relative fault shall be determined by reference

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to whether any alleged untrue statement or omission relates to information provided by the Company or by the Holders. The Company and the Holders agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls a Holder of Registrable Securities within the meaning of either the Act or the 1934 Act and each director, officer, partner, employee and agent of a Holder shall have the same rights to contribution as such holder, and each person who controls the Company within the meaning of either the Act or the 1934 Act and each director of the Company, and each officer of the Company who has signed the Registration Statement, shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).

(e) The obligations of the Company and Holders under this Section 7 shall survive the conversion, if any, of the Preferred Stock and the completion of any sale of Registrable Securities pursuant to a Registration Statement under this Agreement.

8. Reports Under Securities Exchange Act of 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144; and

(b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act.

9. Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of a majority of the Registrable Securities provided that the amendment treats all Holders equally. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder, and the Company.

10. Notices. All notices or other communications required or permitted pursuant to this Agreement shall be in writing and shall be deemed given to a party when (a) delivered by hand or by nationally recognized overnight courier service (costs prepaid); or (b) received or rejected by the addressee, if sent by certified mail, return receipt requested. Such notice or other communication shall be sent to the Company, Attention: Executive Vice President and General Counsel, 2115 Linwood Avenue, Suite 100, Fort Lee, NJ 07024, or to the Holder at the address set forth in the Company’s records (or to such other address as either party may designate by notice to the other party).

11. Termination. This Agreement shall terminate on the date all Registrable Securities cease to exist; but without prejudice to (i) the parties’ rights and obligations arising from breaches of this Agreement occurring prior to such termination and (ii) the indemnification obligations under Section 7 of this Agreement.

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12. Assignment. No assignment, transfer or delegation, whether by operation of law or otherwise, of any rights or obligations under this Agreement by the Company or any Holder, respectively, shall be made without the prior written consent of the majority in interest of the Holders or the Company, respectively; provided that the rights of a Holder may be transferred to a subsequent holder of the Holder’s Registrable Securities (provided such transferee shall provide to the Company, a writing executed by such transferee agreeing to be bound as a Holder by the terms of this Agreement); and provided further that the Company may transfer its rights and obligations under this Agreement to a purchaser of all or a substantial portion of its business if the obligations of the Company under this Agreement are assumed in connection with such transfer, either by merger or other operation of law (which may include without limitation a transaction whereby the Registrable Securities are converted into securities of the successor in interest) or by specific assumption executed by the transferee.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to agreements made in and wholly to be performed in that jurisdiction, except for matters arising under the Act or the 1934 Act, which matters shall be construed and interpreted in accordance with such laws.

14. Execution in Counterparts Permitted. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one (1) instrument.

[INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this ____ day of ________________, 2011.

ORBCOMM INC.
By:_________________________
	Name:
	Title:
ALANCO TECHNOLOGIES INC.
By:_________________________
	Name:
	Title:

TIMOTHY P. SLIFKIN

_________________________

THOMAS A. ROBINSON

_________________________

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APPENDIX E

ALANCO TECHNOLOGIES, INC.

2011 STOCK INCENTIVE PLAN

SECTION 1. PURPOSE

The purpose of the Alanco Technologies, Inc. 2011 Stock Incentive Plan is to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company and its Related Companies by providing them the opportunity to acquire a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company's stockholders.

SECTION 2. DEFINITIONS

Certain capitalized terms used in the Plan have the following meanings:

"Acquired Entity" means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges or combines.

"Acquisition Price" means the fair market value of the securities, cash or other property, or any combination thereof, receivable upon consummation of a Company Transaction in respect of a share of Common Stock.

"Award" means any Option, Stock Award, Restricted Stock, Performance Share, cash-based award or other incentive payable in cash or in shares of Common Stock as may be designated by the Committee from time to time.

"Board" means the Board of Directors of the Company.

"Cause," unless otherwise defined in the instrument evidencing an Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means dishonesty, fraud, serious or willful misconduct, unauthorized use or disclosure of confidential information or trade secrets, or conduct prohibited by law (except minor violations), in each case as determined by the Company's chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.

"Change in Control," unless the Committee determines otherwise with respect to an Award at the time the Award is granted, means the happening of any of the following events:

(a) an acquisition by any Entity of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (1) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then outstanding voting securities of the Company

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entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"), excluding, however, the following: (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege; (ii) any acquisition by the Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company; or (iv) a Related Party Transaction; or

(b) a change in the composition of the Board during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (the"Incumbent Board") cease for any reason to constitute at least two-thirds of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least two-thirds of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with an actual or threatened solicitation of proxies or consents by or on behalf of an Entity other than the Board shall not be considered a member of the Incumbent Board.

"Change in Control Exercise Period" has the meaning set forth in Section 14.3.3.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Committee" has the meaning set forth in Section 3.1.

"Common Stock" means the Class A common stock of the Company.

"Company" means Alanco Technologies, Inc., an Arizona corporation.

"Company Transaction," unless otherwise defined in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means consummation of:

(a) a merger or consolidation of the Company with or into any other company or other entity;

(b) a sale in one transaction or a series of transactions undertaken with a common purpose of at least 50% of the Company's outstanding voting securities; or

(c) a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of the Company's assets.

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Where a series of transactions undertaken with a common purpose is deemed to be a Company Transaction, the date of such Company Transaction shall be the date on which the last of such transactions is consummated.

"Compensation Committee" means the Compensation Committee of the Board.

"Covered Employee" means a "covered employee" as that term is defined for purposes of Section 162(m)(3) of the Code or any successor provision.

"Disability," unless otherwise defined by the Committee or in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means a mental or physical impairment of the Participant that is expected to result in death or that has lasted or is expected to last for a continuous period of 12 months or more and that causes the Participant to be unable to perform his or her material duties for the Company or a Related Company and to be engaged in any substantial gainful activity, in each case as determined by the Company's chief human resources officer or other person performing that function or, in the case of directors and executive officers, the Compensation Committee, whose determination shall be conclusive and binding.

"Effective Date" has the meaning set forth in Section 18.

"Eligible Person" means any person eligible to receive an Award as set forth in Section 5.

"Entity" means any individual, entity or group (within the meaning of Section 13(d)(3) of the Exchange Act).

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

"Fair Market Value" means the average of the closing prices for the Common Stock on the NASDAQ Capital Market for the ten preceding trading days to the measuring date, unless determined otherwise by the Committee using such methods or procedures as it may establish.

"Grant Approval Date" means the date on which the Committee completes the corporate action authorizing the grant of an Award; provided, however, that the Grant Approval Date for an Award shall be on or before the Grant Date for such Award.

"Grant Date" means the later of (a) the date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified by the Committee and (b) the date on which all conditions precedent to an Award have been satisfied, provided that conditions to the exercisability or vesting of Awards shall not defer the Grant Date.

"Incentive Stock Option" means an Option granted with the intention that it qualify as an "incentive stock option" as that term is defined for purposes of Section 422 of the Code or any successor provision.

"Nonqualified Stock Option" means an Option other than an Incentive Stock Option.

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"Option" means a right to purchase Common Stock granted under Section 7.

"Option Expiration Date" means the last day of the maximum term of the Option.

"Parent Company" means a company or other entity which as a result of a Company Transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries.

"Participant" means any Eligible Person to whom an Award is granted.

"Performance Award" means an Award of Performance Shares or Performance Units granted under Section 11.

"Performance Criteria" has the meaning set forth in Section 15.1.

"Performance Share" means an Award of units denominated in shares of Common Stock granted under Section 10.1.

"Plan" means this Alanco Technologies, Inc. 2011 Stock Incentive Plan.

"Related Company" means any entity that is directly or indirectly controlled by, in control of or under common control with the Company.

"Related Party Transaction" means a Company Transaction pursuant to which:

(a) the Entities who are the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Company Transaction will beneficially own, directly or indirectly, at least 50% of the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Successor Company in substantially the same proportions as their ownership, immediately prior to such Company Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities;

(b) no Entity (other than the Company, any employee benefit plan (or related trust) of the Company or a Related Company, the Successor Company or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (a) above is satisfied in connection with the applicable Company Transaction, such Parent Company) will beneficially own, directly or indirectly, 40% or more of, respectively, the outstanding shares of common stock of the Successor Company or the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to the Company Transaction; and

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(c) individuals who were members of the Incumbent Board will immediately after the consummation of the Company Transaction constitute at least a majority of the members of the board of directors of the Successor Company (or, if reference was made to equity ownership of any Parent Company for purposes of determining whether clause (a) above is satisfied in connection with the applicable Company Transaction, of the Parent Company).

"Restricted Stock" means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which are subject to restrictions prescribed by the Committee.

"Retirement," unless otherwise defined in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, means "Retirement" as defined for purposes of the Plan by the Committee or the Company's chief human resources officer or other person performing that function or, if not so defined, means Termination of Service on or after the date the Participant reaches "normal retirement age," as that term is defined in Section 411(a)(8) of the Code.

"Securities Act" means the Securities Act of 1933, as amended from time to time.

"Stock Award" means an Award of shares of Common Stock granted under Section 9, the rights of ownership of which are not subject to restrictions prescribed by the Committee.

"Substitute Awards" means Awards granted or shares of Common Stock issued by the Company in substitution or exchange for awards previously granted by an Acquired Entity.

"Successor Company" means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company Transaction.

"Termination of Service" means a termination of employment or service relationship with the Company or a Related Company for any reason, whether voluntary or involuntary, including by reason of death. Disability or Retirement. Any question as to whether and when there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined by the Company's chief human resources officer or other person performing that function or, with respect to directors and executive officers, by the Compensation Committee, whose determination shall be conclusive and binding. Transfer of a Participant's employment or service relationship between the Company and any Related Company shall not be considered a Termination of Service for purposes of an Award. Unless the Compensation Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant's employment or service relationship is with an entity that has ceased to be a Related Company.

"Vesting Commencement Date" means the Grant Date or such other date selected by the Committee as the date from which an Award begins to vest.

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SECTION 3. ADMINISTRATION

3.1 Administration of the Plan

The Plan shall be administered by the Board or the Compensation Committee, which shall be composed of two or more directors, each of whom is a "non-employee director" within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission, an "outside director" within the meaning of Section 162(m) of the Code, or any successor provision thereto, and an "independent director" within the meaning of Nasdaq Marketplace Rule 5602(a)(2). Notwithstanding the foregoing, the Board may delegate responsibility for administering the Plan with respect to designated classes of Eligible Persons to different committees consisting of one or more members of the Board, subject to such limitations as the Board deems appropriate, except with respect to Awards to Participants who are subject to Section 15 of the Exchange Act or Awards granted pursuant to Section 15 of the Plan. Members of any committee shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent consistent with applicable law, the Board or the Compensation Committee may authorize one or more officers of the Company to grant Awards to designated classes of Eligible Persons, within limits specifically prescribed by the Board or the Compensation Committee; provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person subject to Section 16 of the Exchange Act. All references in the Plan to the "Committee" shall be, as applicable, to the Compensation Committee or any other committee or any officer to whom the Board or the Compensation Committee has delegated authority to administer the Plan.

3.2 Administration and Interpretation by Committee

(a) Except for the terms and conditions explicitly set forth in the Plan and to the extent permitted by applicable law, the Committee shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board or a Committee composed of members of the Board, to: (i) select the Eligible Persons to whom Awards may from time to time be granted under the Plan; (ii) determine the type or types of Award to be granted to each Participant under the Plan; (iii) determine the number of shares of Common Stock to be covered by each Award granted under the Plan; (iv) determine the terms and conditions of any Award granted under the Plan; (v) approve the forms of notice or agreement for use under the Plan; (vi) determine whether, to what extent and under what circumstances Awards may be settled in cash, shares of Common Stock or other property or canceled or suspended; (vii) determine whether, to what extent and under what circumstances cash, shares of Common Stock, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant; (viii) interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the Plan; (ix) establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan; (x) delegate ministerial duties to such of the Company's employees as it so determines; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

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The Committee have the right, without further stockholder approval, to (i) cancel or amend outstanding Options for the purpose of repricing, replacing or regranting such Options with Options that have a purchase or grant price that is less than the purchase or grant price for the original Options, or (ii) issue an Option or amend an outstanding Option to provide for the grant or issuance of a new Option on exercise of the original Option. For this purpose, a "repricing" also means (A) any other action that is treated as a "repricing" under generally accepted accounting principles and (B) repurchasing for cash or canceling an Option at a time when its purchase or grant price is greater than the Fair Market Value of the underlying stock in exchange for another Award. Such cancellation and exchange would be considered a "repricing" regardless of whether it is treated as a "repricing" under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.

The effect on the vesting of an Award of a Company-approved leave of absence or a Participant's working less than full-time shall be determined by the Company's chief human resources officer or other person performing that function or, with respect to directors or executive officers, by the Compensation Committee, whose determination shall be final.

Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any stockholder and any Eligible Person. A majority of the members of the Committee may determine its actions.

SECTION 4. SHARES SUBJECT TO THE PLAN

4.1 Authorized Number of Shares

Subject to adjustment from time to time as provided in Section 14.1, the number of shares of Common Stock available for issuance under the Plan shall be seven hundred and fifty thousand (750,000) shares. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company as treasury shares.

4.2 Share Usage

Shares of Common Stock covered by an Award shall not be counted as used unless and until they are actually issued and delivered to a Participant. If any Award lapses, expires, terminates or is canceled prior to the issuance of shares thereunder or if shares of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to or otherwise reacquired by the Company, the shares subject to such Awards and the forfeited or reacquired shares shall again be available for issuance under the Plan. Any shares of Common Stock (i) tendered by a Participant or retained by the Company as full or partial payment to the Company for the purchase price of an Award or to satisfy tax withholding obligations in connection with an Award, or (ii) covered by an Award that is settled in cash, or in a manner such that some or all of the shares of Common Stock covered by the Award are not issued, shall be available for Awards under the Plan.

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The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment for grants or rights earned or due under other compensation plans or arrangements of the Company.

Notwithstanding anything in the Plan to the contrary, the Committee may grant Substitute Awards under the Plan. Substitute Awards shall not reduce the number of shares authorized for issuance under the Plan. In the event that an Acquired Entity has shares available for awards or grants under one or more preexisting plans not adopted in contemplation of such acquisition or combination, then, to the extent determined by the Board or the Compensation Committee, the shares available for grant pursuant to the terms of such preexisting plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock authorized for issuance under the Plan; provided, however, that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of such preexisting plans, absent the acquisition or combination, and shall only be made to individuals who were not employees or directors of the Company or a Related Company prior to such acquisition or combination. In the event that a written agreement between the Company and an Acquired Entity pursuant to which a merger or consolidation is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption of outstanding awards of the Acquired Entity, those terms and conditions shall be deemed to be the action of the Committee without any further action by the Committee, except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons holding such awards shall be deemed to be Participants.

SECTION 5. ELIGIBILITY

An Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to time selects. An Award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services rendered to the Company or any Related Company that (a) are not in connection with the offer and sale of the Company's securities in a capital-raising transaction and (b) do not directly or indirectly promote or maintain a market for the Company's securities.

SECTION 6. AWARDS

6.1 Form, Grant and Settlement of Awards

The Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan. Such Awards may be granted either alone or in addition to or in tandem with any other type of Award. Any Award settlement may be subject to such conditions, restrictions and contingencies as the Committee shall determine.

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6.2 Evidence of Awards

Awards granted under the Plan shall be evidenced by a written, including an electronic, notice or agreement that shall contain such terms, conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan.

6.3 Deferrals

The Committee may permit or require a Participant to defer receipt of the payment of any Award if and to the extent set forth in the notice or agreement evidencing the Award at the time of grant. If any such deferral election is permitted or required, the Committee, in its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred stock unit equivalents; provided, however, that the terms of any deferrals under this Section 6.3 shall comply with all applicable law, rules and regulations, including, without limitation. Section 409 A of the Code.

SECTION 7. OPTIONS

7.1 Grant of Options

The Committee may grant Options designated as Incentive Stock Options or Nonqualified Stock Options.

7.2 Option Exercise Price

The exercise price for shares purchased under an Option shall be at least 100% of the Fair Market Value on the Grant Date, except in the case of Substitute Awards. Notwithstanding the foregoing, the Committee, in its sole discretion, may establish an exercise price that is equal to the average of 100% of the Fair Market Value over a period of trading days not to exceed 30 days; provided, however, that any period of trading days used to calculate any such average shall commence on or after the Grant Approval Date of any Award for which such average is being used and shall end on or before the Grant Date.

7.3 Term of Options

Subject to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of a Nonqualified Stock Option shall be ten years from the Grant Date or such shorter period as established for that Option by the Committee.

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7.4 Exercise of Options

The Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in which, the Option shall vest and become exercisable, any of which provisions may be waived or modified by the Committee at any time. To the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery to or as directed or approved by the Company of a properly executed stock option exercise agreement or notice, in a form and in accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations and agreements as may be required by the Committee, accompanied by payment in full as described in Sections 7.5 and 12. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any one time, as determined by the Committee.

7.5 Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase, which forms may include:

(a) cash, check or wire transfer;

(b) having the Company withhold shares of Common Stock that would otherwise be issued on exercise of the Option that have a Fair Market Value on the date of exercise of the Option equal to the exercise price of the Option and, if applicable, shares equal to or less than the withholding required by Section 11 hereof;

(c) tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act) shares of Common Stock owned by the Participant that on the day prior to the exercise date have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;

(d) so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by law, delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage firm designated or approved by the Company to deliver promptly to the Company the aggregate amount of proceeds to pay the Option exercise price and any withholding tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve Board; or

(e) such other consideration as the Committee may permit.

7.6 Effect of Termination of Service

The Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable, and the terms and conditions of such exercise, after a Termination of Service, any of which provisions may be waived or modified by the Committee at any time.

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SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

Notwithstanding any other provisions of the Plan, the terms and conditions of any Incentive Stock Options shall in addition comply in all respects with Section 422 of the Code, or any successor provision, and any applicable regulations thereunder.

SECTION 9. STOCK AWARDS AND RESTRICTED STOCK

9.1 Grant of Stock Awards and Restricted Stock

The Committee may grant Stock Awards and Restricted Stock on such terms and conditions and subject to such repurchase or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement of any performance goals, as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the Award.

9.2 Vesting of Restricted Stock

Upon the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock, or upon a Participant's release from any terms, conditions and restrictions of Restricted Stock, as determined by the Committee, and subject to the provisions of Section 12, the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant.

9.3 Waiver of Restrictions

Subject to Section 17.5, the Committee, in its sole discretion, may waive the repurchase or forfeiture period and any other terms, conditions or restrictions on any Restricted Stock under such circumstances and subject to such terms and conditions as the Committee shall deem appropriate.

SECTION 10. PERFORMANCE AWARDS

The Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant by delivery of shares of Common Stock or, if set forth in the instrument evidencing the Award, of such property as the Committee shall determine,

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including, without limitation, cash, shares of Common Stock, other property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee. Subject to Section 17.5, the amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.

SECTION 11. OTHER STOCK OR CASH-BASED AWARDS

Subject to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other incentives payable in cash or in shares of Common Stock under the Plan.

SECTION 12. WITHHOLDING

The Company may require the Participant to pay to the Company the amount of (a) any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant, vesting or exercise of an Award ("tax withholding obligations") and (b) any amounts due from the Participant to the Company or to any Related Company ("other obligations"). The Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding obligations and other obligations are satisfied.

The Committee may permit or require a Participant to satisfy all or part of the Participant's tax withholding obligations and other obligations by (a) paying cash to the Company, (b) having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant, (c) having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested, in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations, or (d) surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations and other obligations. The value of the shares so withheld may not exceed the employer's minimum required tax withholding rate.

SECTION 13. ASSIGNABILITY

No Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose) or transferred by a Participant or made subject to attachment or similar proceedings otherwise than by will or by the applicable laws of descent and distribution, except to the extent the Participant designates one or more beneficiaries on a Company-approved form who may exercise the Award or receive payment under the Award after the Participant's death. During a Participant's lifetime, an Award may be exercised only by the Participant. Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award subject to such terms and conditions as the Committee shall specify; provided, however, that under no circumstances shall an Award be transferable for value or consideration.

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SECTION 14. ADJUSTMENTS

14.1 Adjustment of Shares

In the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the Company's corporate or capital structure results in (a) the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a different number or kind of securities of the Company or (b) new, different or additional securities of the Company or any other company being received by the holders of shares of Common Stock, then the Committee shall make proportional adjustments in: (i) the maximum number and kind of securities available for issuance under the Plan; (ii) the maximum number and kind of securities issuable as Incentive Stock Options as set forth in Section 4.2; (iii) the maximum number and kind of securities set forth in Section 4.3; (iv) the maximum numbers and kind of securities set forth in Section 16.3; and (v) the number and kind of securities that are subject to any outstanding Award and the per share price of such securities, without any change in the aggregate price to be paid therefor. The determination by the Committee, as to the terms of any of the foregoing adjustments shall be conclusive and binding.

Notwithstanding the foregoing, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. Also notwithstanding the foregoing, a dissolution or liquidation of the Company or a Company Transaction shall not be governed by this Section 14.1 but shall be governed by Sections 14.2 and 14.3, respectively.

14.2 Dissolution or Liquidation

To the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion. Awards shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately prior to the consummation of the dissolution or liquidation.

14.3 Company Transaction; Change in Control

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14.3.1

Effect of a Company Transaction That Is Not a Change in Control or a Related Party Transaction

Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise in the instrument evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, in the event of a Company Transaction that is not (a) a Change in Control or (b) a Related Party Transaction:

(i) All outstanding Awards, other than Performance Shares and Performance Units, shall become fully and immediately exercisable, and all applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the Company Transaction and shall terminate effective at the effective time of the Company Transaction, if and to the extent such Awards are not converted, assumed or replaced by the Successor Company. For the purposes of this Section 14.3.1, an Award shall be considered converted, assumed or replaced by the Successor Company if following the Company Transaction the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Company Transaction, the consideration (whether stock, cash or other securities or property) received in the Company Transaction by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Company Transaction is not solely common stock of the Successor Company, the Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common stock of the Successor Company substantially equal in fair market value to the per share consideration received by holders of Common Stock in the Company Transaction. The determination of such substantial equality of value of consideration shall be made by the Committee, and its determination shall be conclusive and binding.

(ii) All Performance Shares or Performance Units earned and outstanding as of the date the Company Transaction is determined to have occurred shall be payable in full at the target level in accordance with the payout schedule pursuant to the Award agreement. Any remaining Performance Shares or Performance Units (including any applicable performance period) for which the payout level has not been determined shall be prorated at the target payout level up to and including the date of such Company Transaction and shall be payable in full at the target level in accordance with the payout schedule pursuant to the Award agreement. Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect.

(iii) Notwithstanding the foregoing, the Committee, in its sole discretion, may instead provide that a Participant's outstanding Awards shall terminate upon or immediately prior to such Company Transaction and that such Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per share consideration received by holders of Common Stock in the Company Transaction, or, in the event the Company Transaction is one of the transactions listed under subsection (c) in the definition of

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Company Transaction or otherwise does not result in direct receipt of consideration by holders of Common Stock, the value of the deemed per share consideration received, in each case as determined by the Committee in its sole discretion, multiplied by the number of shares of Common Stock subject to such outstanding Awards (to the extent then vested and exercisable or whether or not then vested and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise price or grant price for such Award.

14.3.2

Effect of a Change in Control

(a) any Options outstanding as of the date such Change in Control is determined to have occurred, and which are not then exercisable and vested, shall become fully exercisable and vested to the full extent of the original grant;

(b) any restrictions and deferral limitations applicable to any Restricted Stock or Stock Units shall lapse, and such Restricted Stock or Stock Units shall become free of all restrictions and limitations and become fully vested and transferable to the full extent of the original grant;

(c) all Performance Shares and Performance Units shall be considered to be earned at the target level and payable in full, any deferral or other restriction shall lapse and such Performance Shares and Performance Units shall be immediately settled or distributed; and

(d) any restrictions and deferral limitations and other conditions applicable to any other Awards shall lapse, and such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant.

14.3.3

Change in Control Cash-Out

Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Change in Control Exercise Period"), if the Committee shall so determine at, or at any time after, the time of grant, a Participant holding an Option, Restricted Stock or Performance Share, shall have the right, whether or not the Award is fully vested and/or exercisable and without regard to any deferral or other restriction and in lieu of the payment of the purchase price for the shares of Common Stock being purchased under an Option, to elect by giving notice to the Company within the Change in Control Exercise Period to surrender all or part of the Award to the Company and to receive cash, within 30 days of such notice:

(a) for an Option, in an amount equal to the amount by which the Acquisition Price per share of Common Stock on the date of such election shall exceed the exercise price per share of Common Stock under the Option; and

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(b) for a Restricted Stock or Performance Share, in an amount equal to the Acquisition Price per share of Common Stock under the Restricted Stock or Performance Share, multiplied by the number of shares of Common Stock granted under the Award as to which the right granted under this Section 14.3.3 shall have been exercised.

14.4 Further Adjustment of Awards

Subject to Sections 14.2 and 14.3, the Committee shall have the discretion, exercisable at any time before a sale, merger, consolidation, reorganization, liquidation, dissolution or change in control of the Company, as defined by the Committee, to take such further action as it determines to be necessary or advisable with respect to Awards. Such authorized action may include (but shall not be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on Awards so as to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual Participants. The Committee may take such action before or after granting Awards to which the action relates and before or after any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change in control that is the reason for such action.

14.5 No Limitations

The grant of Awards shall in no way affect the Company's right to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

14.6 Fractional Shares

In the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full shares resulting from such adjustment.

14.7 Section 409A of the Code

Notwithstanding anything in this Plan to the contrary, (a) any adjustments made pursuant to this Section 14 or any other amendments to Awards that are considered "deferred compensation" within the meaning of Section 409 A of the Code shall be made in compliance with the requirements of Section 409A of the Code; (b) any adjustments made pursuant to this Section 14 or any other amendments to Awards that are not considered "deferred compensation" subject to Section 409A of the Code shall be made in such a manner as to ensure that after such adjustment or amendment the Awards either (i) continue not to be subject to Section 409A of the Code or (ii) comply with the requirements of Section 409A of the Code; and (c) in any event, the Plan Administrator shall not have the authority to make any adjustments pursuant to this Section 14 or to otherwise amend and Award to the extent the existence of such authority would cause an Award that is not intended to be subject to Section 409A of the Code at the time of grant to be subject thereto.

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SECTION 15. CODE SECTION 162(m) PROVISIONS

Notwithstanding any other provision of the Plan, if the Committee determines, at the time Awards are granted to a Participant who is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 15 is applicable to such Award.

15.1 Performance Criteria

If an Award is subject to this Section 15, then the lapsing of restrictions thereon and the distribution of cash, shares of Common Stock or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one of or any combination of the following "performance criteria" for the Company as a whole or any business unit of the Company, as reported or calculated by the Company: cash flows (including, but not limited to, operating cash flow, free cash flow or cash flow return on capital); working capital; earnings per share; book value per share; operating income (including or excluding depreciation, amortization, extraordinary items, restructuring charges or other expenses); revenues; operating margins; return on assets; return on equity; debt; debt plus equity; market or economic value added; stock price appreciation; total stockholder return; cost control; strategic initiatives; market share; net income; return on invested capital; improvements in capital structure; or customer satisfaction, employee satisfaction, services performance, subscriber, cash management or asset management metrics (together, the "Performance Criteria"). Such performance goals also may be based on the achievement of specified levels of Company performance (or performance of an applicable affiliate or business unit of the Company) under one or more of the Performance Criteria described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: asset write downs; litigation or claim judgments or settlements; the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; any reorganization and restructuring programs; extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the Company's annual report to shareholders for the applicable year; acquisitions or divestitures; foreign exchange gains and losses; and gains and losses on asset sales. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of the exemption under Section 162(m) of the Code.

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15.2 Adjustment of Awards

Notwithstanding any provision of the Plan other than Section 14, with respect to any Award that is subject to this Section 15, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of the death or disability of the Covered Employee.

15.3 Limitations

Subject to adjustment from time to time as provided in Section 14.1, no Covered Employee may be granted Awards other than Performance Shares subject to this Section 16 in any calendar year period with respect to more than a maximum dollar value payable with respect to Performance Units or other Awards payable in cash subject to this Section 15 granted to any Covered Employee in any one calendar year is $10,000,000.

The Committee shall have the power to impose such other restrictions on Awards subject to this Section 15 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code, or any successor provision thereto.

SECTION 16. AMENDMENT AND TERMINATION

16.1 Amendment, Suspension or Termination

The Board or the Compensation Committee may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such respects as it shall deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange rule, stockholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires shareholder approval may be made only by the Board. Subject to Section 16.3, the Committee may amend the terms of any outstanding Award, prospectively or retroactively.

16.2 Term of the Plan

Unless sooner terminated as provided herein, the Plan shall terminate ten years from the Effective Date. After the Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan's terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten years after the later of (a) the Effective Date and (b) the approval by the stockholders of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code.

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16.3 Consent of Participant

The amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without the Participant's consent, materially adversely affect any rights under any Award theretofore granted to the Participant under the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant, be made in a manner so as to constitute a "modification" that would cause such Incentive Stock Option to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 14 shall not be subject to these restrictions.

Subject to Section 17.5, the Board shall have broad authority to amend the Plan or any outstanding Award without the consent of a Participant to the extent the Board deems necessary or advisable to (i) comply with, or take into account, changes in applicable tax laws, securities laws, accounting rules and other applicable law, rules and regulations or (ii) to ensure that an Award is not subject to additional taxes, interest or penalties under Section 409A of the Code.

SECTION 17. GENERAL

17.1	No Individual Rights

No individual or Participant shall have any claim to be granted any Award under the Plan, and the Company has no obligation for uniformity of treatment of Participants under the Plan.

Furthermore, nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate a Participant's employment or other relationship at any time, with or without cause.

17.2 Issuance of Shares

Notwithstanding any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company's counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity.

The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made.

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As a condition to the exercise of an Option or any other receipt of Common Stock pursuant to an Award under the Plan, the Company may require (a) the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received only for the Participant's own account and without any present intention to sell or distribute such shares and (b) such other action or agreement by the Participant as may from time to time be necessary to comply with the federal, state and foreign securities laws. At the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration. The Committee may also require the Participant to execute and deliver to the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable to the shares.

To the extent the Plan or any instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

17.3 Indemnification

Each person who is or shall have been a member of the Board, or a committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement thereof, with the Company's approval, or paid by such person in satisfaction of any judgment in any such claim, action, suit or proceeding against such person; provided, however, that such person shall give the Company an opportunity, at its own expense, to handle and defend the same before such person undertakes to handle and defend it on such person's own behalf, unless such loss, cost, liability or expense is a result of such person's own willful misconduct or except as expressly provided by statute.

The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company's certificate of incorporation or bylaws, as a matter of law, or otherwise, or of any power that the Company may have to indemnify or hold harmless.

17.4 No Rights as a Stockholder

No Award, other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a stockholder unless and until the date of issuance under the Plan of the shares that are the subject of such Award.

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17.5 Compliance With Laws and Regulations

In interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall, to the extent permitted by law, be construed as an "incentive stock option" within the meaning of Section 422 of the Code.

Any Award granted pursuant to the Plan is intended to comply with the requirements of Section 409A of the Code, including any applicable regulations and guidance issued thereunder, and including transition guidance, to the extent Section 409A of the Code is applicable thereto and the terms of the Plan and any Award granted under the Plan shall be interpreted, operated and administered in a manner consistent with this intention to the extent the Company deems necessary to comply with Section 409A of the Code and any official guidance issued thereunder. Notwithstanding any other provision in the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption from or complies with Section 409A of the Code; provided, however, that the Company makes no representations that the Awards shall be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409 A of the Code from applying to Awards granted under the Plan. Also notwithstanding the foregoing, if at the time of a scheduled vesting date for an Award granted under the Plan that is subject to Section 409A of the Code the Participant is a "specified employee" of the Company within the meaning of that term under Section 409A of the Code and as determined by the Company, and payment would be treated as a payment made on "separation from service" within the meaning of that term under Section 409A of the Code, then, if such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409 A of the Code, the payment shall be delayed until the date which is six months after the date of such separation from service or, if earlier, the date of the Participant's death.

17.6 Participants in Other Countries or Jurisdictions

Without amending the Plan, the Committee may grant Awards to Eligible Persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan and shall have the authority to adopt such modifications, procedures, subplans and the like as may be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions in which the Company or any Related Company may operate or have employees to ensure the viability of the benefits from Awards granted to Participants employed in such countries or jurisdictions, meet the requirements that permit the Plan to operate in a qualified or tax-efficient manner, comply with applicable foreign laws or regulations and meet the objectives of the Plan.

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17.7 No Trust or Fund

The Plan is intended to constitute an "unfunded" plan. Nothing contained herein shall require the Company to segregate any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general unsecured creditor of the Company.

17.8 Successors

All obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all the business and/or assets of the Company.

17.9 Severability

If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee's determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.

17.10 Choice of Law and Venue

The Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Arizona without giving effect to principles of conflicts of law. Participants irrevocably consent to the nonexclusive jurisdiction and venue of the state and federal courts located in the State of Arizona.

17.11 Legal Requirements

The granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required.

SECTION 18. EFFECTIVE DATE

The effective date (the "Effective Date") is the date on which the Plan is approved by the stockholders of the Company. If the stockholders of the Company do not approve the Plan within 12 months after the Board's adoption of the Plan, any Incentive Stock Options granted under the Plan will be treated as Nonqualified Stock Options.

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