ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT, dated as of the 4 ^th day of October 2006 (this “ Agreement ”), is entered into by and among Merisel FD, LLC, a Delaware limited liability company (the “ Purchaser ”), Fuel Digital, Inc., a New York corporation (“ Seller ”), and the direct and indirect shareholders of the Seller set forth on the signature pages attached hereto (each a “ Shareholder ” and collectively, the “ Shareholders ”). Merisel, Inc. has executed this Agreement for purposes of Sections 2.7, 7.13, 7.17, 9.4(b) and 11.9 only.

WHEREAS, Seller is engaged in the Business (as defined below);

WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to purchase from Seller, substantially all of the assets and properties of Seller and in connection therewith Purchaser is willing to assume certain specified liabilities of Seller relating thereto, all upon the terms and subject to the conditions set forth herein;

WHEREAS, the Shareholders are the holders of all of the issued and outstanding equity interests of Seller and will receive direct and substantial benefits from consummation of the transactions contemplated hereby; and

WHEREAS, Purchaser would not enter into this Agreement or consummate the transactions contemplated hereby without the agreements of the Shareholders contained herein.

NOW THEREFORE, in consideration of the mutual representations, warranties, agreements and covenants hereinafter set forth, and intending to be legally bound hereby, Purchaser, Seller and Shareholders hereby agree as follows:

1.1    Definitions .

As used in this Agreement and the Exhibits and Schedules delivered pursuant to this Agreement, the following definitions will apply:

“ Accounts Receivable ” shall have the meaning given to such term in Section 4.18.

“ Acquired Businesses ” shall have the meaning given to such term in Section 4.12.

“ Action ” shall mean any action, claim, complaint, petition, investigation, suit or other proceeding, whether administrative, civil or criminal, in law or in equity, or before any arbitrator or Governmental Authority.

“ Actual Net Working Capital ” shall have the meaning given to such term in Section 2.6(d).

“ Actual Tangible Net Worth ” shall have the meaning given to such term in Section 2.6(d).

“ Actual Adjusted EBITDA ” shall mean EBITDA of Seller for the period from October 1, 2005 through September 30, 2006, adjusted as an add-back or reduction from EBITDA by the amounts set forth on Exhibit A , with the components of EBITDA calculated in accordance with GAAP from the September 30, 2006 Financials.

“ Affiliate ” shall mean (a) an “affiliate” as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended, (b) a Person who directly or indirectly controls, is controlled by or is under common control with the Person specified and (c) any Person owning directly or indirectly at least five percent (5%) of the outstanding equity interests of any other Person. All Related Persons shall be deemed Affiliates of one another.

“ Agreement ” shall mean this Agreement, including all exhibits and schedules attached hereto.

“ Alternative Transaction ” shall have the meaning given to such term in section 7.5.

“ Annual Target EBITDA ” shall mean $2,100,000 for Period One, Period Two and Period Three.

“ Arbitration Firm ” shall have the meaning given to such term in Section 2.6(d)(ii).

“ Assumed Debt ” shall mean bank debt, commercial debt (but not including any related party debt or Operating Lease Obligations) and capital lease obligations, in each case selected by Seller and identified pursuant to the agreements set forth on Schedule 1.1(a), up to a maximum of $1,202,000 principal in the aggregate, which amount shall exclude interest on equipment leases for future installments, Operating Lease Obligations which are reflected on the Estimated Closing Date Balance Sheet or Schedule 1.1(d), real property leases and all Liabilities of the types expressly set forth on Exhibit B as Assumed Liabilities.

“ Assumed Liabilities ” shall mean only the following items without duplication:

(a)   the Liabilities of the types expressly set forth on Exhibit B hereto as of the Closing Date as reflected on the Estimated Closing Date Balance Sheet;

(b)   the Assumed Debt (subject to the limitations in the definition thereof);

(c)   Liabilities under the Contracts which are Purchased Assets arising after the Closing Date, but not including any Liability, obligation or commitment for any breach thereof by Seller occurring prior to the Closing Date; and

(d)   Such additional Liabilities set forth on Exhibit B hereto.

provided , that , in no event shall any Excluded Liability be an Assumed Liability. For avoidance of doubt, any Assumed Liabilities, including those relating to employees, shall be adequately reflected or reserved for on the Closing Date Balance Sheet or set forth on Exhibit B hereto.

“ Assumed Sales Tax ” shall have the meaning given to such term in Section 4.19(e).

“ Audited September 30, 2006 Financials ” shall mean an audit of the balance sheet, statement of income and cash flow statement of Seller as of and for the twelve (12) month period ended September 30, 2006 prepared in accordance with GAAP which shall comply with all requirements for financial statements filed with the Securities and Exchange Commission.

“ Auditor ” shall have the meaning given to such term in Section 2.6(d).

“ Benefit Plans ” shall have the meaning given to such term in Section 4.10.

“ Books and Records ” shall mean Seller’s books, ledgers, files, records, manuals, and other materials (in any form or medium, including electronic and computer files), including, but not limited to, all correspondence, personnel records, payroll records, purchasing materials and records, vendor lists, operation and quality control records and procedures, research and development files, Intellectual Property disclosures and documentation, sales order files, purchase order files, advertising materials, catalogs, product brochures, mailing lists, customer files, customer lists, distribution lists, sales and promotional materials, and all other records utilized by Seller and all computer software and data files necessary to access or review or continue to compile or utilize any of the foregoing, except for Seller’s minute and stock books.

“ Business ” shall mean the business conducted by Seller on the date hereof, including, but not limited to retouching, pre-press, digital photo printing and studio photography.

“ Capital Expenditures ” shall mean all capital expenditures, capital additions or capital improvements made by a Person in accordance with GAAP.

“ Closing ” shall have the meaning given to such term in Section 3.1.

“ Closing Date ” shall mean October 4, 2006.

“ Closing Date Balance Sheet ” shall have the meaning given to such term in Section 2.6(d). A template for the Closing Date Balance Sheet is attached hereto as Exhibit C .

“ Closing Payment ” shall have the meaning given to such term in Section 2.5(b).

“ COBRA ” shall mean Code Section 4980B, Part 6 of Subtitle B of Title I of ERISA and any applicable state law providing for similar group health plan continuation coverage.

“ Code ” shall mean the Internal Revenue Code of 1986, together with all rules and regulations promulgated pursuant thereto, as amended from time to time.

“ Confidential Information ” shall mean all proprietary or confidential property, information or knowledge of Seller and the Business including without limitation: (a) all records concerning products or services provided to customers; (b) all information containing pricing policies, the prices charged to customers, the volume or orders of customers and other information concerning transactions with customers; (c) customer lists; (d) financial information; forecasts, budgets, marketing information, research and development, expansion plans, management policies and methods of operation, (e) information concerning salaries or wages paid to, the work records of and other personnel information relative to employees; (f) confidential information of other Persons; (g) technical data specifications, programs, documentation and analyses, and (h) all Intellectual Property owned or licensed, including all source code and trade secrets within any such Intellectual Property, except to the extent that such confidential information (i) becomes a matter of public record, or is published in a newspaper, magazine or other periodical available to the general public, other than as a result of any act or omission of Seller or any Shareholder, (ii) is based upon the knowledge and expertise of the Person using it developed prior to his/her/its association with Seller and can be obtained independently by him/her/it without use of the records of Seller or (iii) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency.

“ Consent ” shall mean any consent, approval, authorization, waiver, permit, grant, franchise, license, exemption or order of, any registration, certificate, qualification, declaration or filing with, or any notice to, any Person, including, without limitation, any Governmental Authority.

“ Contingent Payment ” shall mean, for any period during the Earnout Period, an amount equal to $416,666.66 provided the EBITDA of Purchaser in such period equals or exceeds the Annual Target EBITDA, provided , however , the Contingent Payment for Period Two shall be $416,666.67 if the EBITDA of Purchaser in such period equals or exceeds the Annual Target EBITDA or the aggregate EBITDA of Purchaser in Period One and Period Two equals or exceeds $4,200,000; and the Contingent Payment in Period Three shall be $416,666.67 if the EBITDA of Purchaser in such period equals or exceeds the Annual Target EBITDA, EBITDA of Purchaser in Period Two and Period Three equals or exceeds $4,200,000, or the aggregate EBITDA of Purchaser in Period One, Period Two and Period Three equals or exceeds $6,300,000. In no event shall the Contingent Payment exceed $1,250,000.

“ Contracts ” shall mean any written or oral contract, agreement, instrument, obligation, order, arrangement, license, commitment or understanding of any nature.

“ Corinella Proceeding ” shall have the meaning given to such term in Section 7.14.

“ Current Assets ” shall mean all current assets on the Closing Date Balance Sheet that are Purchased Assets, calculated in accordance with GAAP

“ Current Liabilities ” shall mean all current liabilities on the Closing Date Balance Sheet that are Assumed Liabilities, calculated in accordance with GAAP.

“ Disposal ” shall have the meaning set forth at 42 U.S.C. § 6903(3).

“ EBITDA ” shall mean net income of a Person before taking into account deductions for interest, taxes, the depreciation of assets, the amortization of costs, expenses in connection with this transaction, including earn out payments, if any, and Public Company Expenses in excess of $360,000 for the Period, excluding in all cases (i) any income or earnings not generated in the ordinary course of business (including interest income) and (ii) financial results of assets, businesses or entities acquired after Closing by Purchaser or any Affiliate, with all components of EBITDA determined in accordance with GAAP from financial statements which shall comply with all requirements for financial statements filed with the Securities and Exchange Commission.

“ EEOC ” shall have the meaning given to such term in Section 4.22(f).

“ Earnout Period ” shall have the meaning given to such term in Section 2.7.

“ Employment Agreements ” shall have the meaning given to such term in Section 6.2(e)(iii).

“ Environment ” shall have the meaning set forth at 15 U.S.C. § 2602(5).

“ Environmental Law ” shall mean Laws relating or concerning (a) protection of or damage to (i) the Environment, (ii) human health or (iii) occupational health and safety; or (b) the manufacture, use, transport, treatment, storage, remediation, emission, discharge, Disposal, Release or threatened Release of Hazardous Substances. By way of example only, Laws include the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“ CERCLA ”), 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act (“ RCRA ”), 42 U.S.C. § 6901 et seq, the Hazardous Materials Transportation Act, 49 U.S.C. §1801 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq. (“ CWA ”), the Clean Air Act, 42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq. (“ TSCA ”), the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001 et seq., and the Occupational Safety and Health Act (“ OSHA ”), 29 U.S.C. § 651 et seq., all regulations and guidance applicable thereto, and each corresponding state or local Law.

“ Environmental Liability ” means any and all Liabilities, obligations to investigate, remediate, cleanup or abate, expenses, damages, deficiencies, fines, penalties, sanctions and costs of any kind or nature whatsoever arising out of, relating to or directly or indirectly associated with, the compliance with or Liability under any Environmental Law.

“ Environmental Permit ” shall mean any License required by or pursuant to any Environmental Law.

“ Equity Securities ” shall mean with respect to any Person, (a) any capital stock, partnership, membership, joint venture or other ownership or equity interest, participation or securities (whether voting or non-voting, whether preferred, common or otherwise, and including any stock appreciation, contingent interest or similar right), and (b) any option, warrant, security or other right (including debt securities) directly or indirectly convertible into or exercisable or exchangeable for, or otherwise representing the right to acquire directly or indirectly any ownership or equity interest, participation or security described in clause (a) above.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) which is or which has at any time been considered a single employer with Seller within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

“ Estimated Cash Purchase Price ” shall have the meaning given to such term in Section 2.6(a).

“ Estimated Adjustment Amount ” shall have the meaning given to such term in Section 2.6(c).

“ Estimated Closing Date Balance Sheet ” shall have the meaning given to such term in Section 2.6(b).

“ Estimated Net Working Capital ” shall have the meaning given to such term in Section 2.6(b).

“ Estimated Tangible Net Worth ” shall have the meaning given to such term in Section 2.6(b).

“ Excluded Assets ” shall mean:

(a)   Seller’s rights under this Agreement or any other document or agreement delivered to or received by Seller in connection herewith;

(b)   the Excluded Contracts;

(c)   all cash on deposit in Seller’s bank accounts on the Closing Date not reflected on the Estimated Closing Date Balance Sheet;

(d)   all receivables not exceeding $125,000 in the aggregate from employees or stockholders not reflected on the Estimated Closing Date Balance Sheet;

(e)   all life insurance policies insuring the lives of the Shareholders and Carmine Corinella not reflected on the Estimated Closing Date Balance Sheet; and

(f)   the rights to all damages, costs and fees received in the Corinella Proceeding not reflected on the Estimated Closing Date Balance Sheet.

“ Excluded Contracts ” shall mean (i) all Contracts set forth on Schedule 1.1(b) and (ii) all Contracts and Leases of Seller other than Purchased Contracts.

“ Excluded Liabilities ” shall mean any Liabilities of Seller, which are not Assumed Liabilities, whether arising before, on or after the Closing Date, including, without limitation:

(a)   all Liabilities arising or resulting from or relating to the conduct of the Business prior to the Closing Date or arising or resulting from or relating to claims or actions made, or facts, events or circumstances that became or become known, before, on or after the Closing related to periods prior to the Closing Date other than Assumed Liabilities;

(b)   all Liabilities for Taxes and deferred Tax Liabilities (other than any sales taxes in the aggregate not in excess of $240,000 which relate to Assumed Liabilities or Accounts Receivable included in the Purchased Assets, provided such sales tax liability is reflected on the Closing Date Balance Sheet) that have been or may be incurred as a result of Seller’s operation of the Business or ownership of the Purchased Assets prior to Closing;

(c)   all Liabilities arising in connection with any Action, private or public, whether instituted or threatened prior to or after the Closing, arising out of conduct of the Business or any facts or circumstances existing prior to and including the Closing Date, including without limitation, those matters set forth on Schedule 4.11;

(d)   allowances or adjustments (including adjustments in rates charged prior to the Closing) to which customers, clients, contractors or other Persons purchasing, acquiring or otherwise receiving services or products may be entitled either on or after the Closing based on facts, circumstances and events that existed or occurred prior to the Closing that are greater than the reserve amounts included in the Closing Date Balance Sheet;

(e)   any Liability arising from or due to (i) alleged or actual non-compliance by Seller or any Affiliate or the Business with Environmental Law or Environmental Permits prior to Closing, or arising from events or circumstances arising prior to Closing, or (ii) the Release or threatened Release of any Hazardous Substance into the Environment at, on, or from any Real Property prior to Closing, or arising from events or circumstances arising prior to Closing, or (iii) the Release or threatened Release into the Environment of any Hazardous Substance generated due to Business operations, facts or circumstances that exist prior to Closing;

(f)   all Liabilities arising under Contracts that are Purchased Assets with respect to events and periods prior to the Closing, or in connection with any breach thereof prior to Closing or arising from events or circumstances arising partly or wholly prior to Closing;

(g)   Liabilities relating to any Indebtedness or to any Trade Payables and Accruals that are not Assumed Liabilities;

(h)   Liabilities to Affiliates of Seller;

(i)   Liabilities to or with respect to current or former shareholders, employees, independent contractors, officers or directors of Seller, including under existing employment agreements of Seller, or Liabilities under any Benefit Plan; other than Liabilities to the Hired Employees arising entirely from events and circumstances occurring subsequent to the Closing Date;

(j)   Liabilities relating to Excluded Contracts and the Excluded Assets;

(k)   any Liability incurred by Seller or its Affiliates to pay any fee or commission to any broker, finder, investment banker or other intermediary or any other deal related costs and expenses in connection with the transactions contemplated by this Agreement;

(l)   Liabilities covered by insurance arising out of events, circumstances, or conditions occurring or existing prior to Closing;

(m)   Liabilities resulting from any violation of Law arising out of events, circumstances, or conditions occurring or existing prior to Closing;

(n)   Liabilities of Seller arising after the Closing;

(o)   Liabilities relating to those matters set forth on Exhibit D ;

(p)   Liabilities relating to the Corinella Proceeding; and

(q)   Liabilities relating to the property located at 535 8 ^th Avenue in New York, New York.

“ Family Member ” shall mean with respect to a Person, any parent, any spouse, any natural or adoptive sibling or any spouse thereof, and any direct lineal descendant (natural or adoptive) of any of the foregoing.

“ Final Adjustment Amount ” shall have the meaning given to such term in Section 2.6(d).

“ FF&E ” shall mean machinery, equipment, computers, peripherals, software booked as FF&E, office equipment, furnishings, leasehold improvements, vehicles, tools, supplies and other tangible assets.

“ Financial Statements ” shall have the meaning given to such term in Section 4.7(a).

“ GAAP ” shall mean generally accepted accounting principles in the United States, in effect from time to time.

“ Governmental Authority ” shall mean any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any governmental authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

“ Hazardous Substance ” shall mean all liquid, solid, or gaseous (a) contaminants, (b) pollutants (as defined at 33 U.S.C. 1362(6) and/or 40 U.S.C. 7412(b)(1), as amended or supplemented by regulation), (c) solid waste (as defined at 42 U.S.C. 6903(27)), (d) hazardous waste (as defined at 42 U.S.C. 6903(5)), (e) hazardous substances (as defined at 42 U.S.C. 9601(14)), (f) chemical substances (as defined at 15 U.S.C. § 2602(2)), (g) substances harmful to human health or the Environment, (h) petroleum and petroleum products, fractions and constituents, (i) asbestos and asbestos-containing materials, (j) polychlorinated biphenyls, (k) lead (including lead paint), (l) radon, (m) radioactive material or waste, (n) flammables and explosives, (o) “mold” or microbial matter, and (p) biologic or medical waste.

“ Hired Employees ” shall have the meaning given to such term in Section 7.6.

“ Holdback Amount ” shall have the meaning given to such term in Section 2.5(c).

“ Indebtedness ” shall mean all (a) obligations for borrowed money, (b) notes, bonds, debentures, mortgages and similar obligations, (c) obligations for the deferred purchase price of assets, property, or services (excluding ordinary course trade payables), (d) capital obligations and leases, and (e) guaranties and contingent obligations for the debts of another Person, (f) accounts payable or other liabilities not arising in the ordinary course of business, (g) accounts payable for equipment purchases, (h) accounts payable that are more than ninety (90) days past their due dates (other than accounts payable to Pitman for a SHERPA machine), (i) obligations in respect of letters of credit (other than the letter of credit used for the security deposit in Seller’s lease agreement for office space located at 902 Broadway, New York, New York), bonds, guaranties, reimbursement agreements and similar instruments, (j) obligations in respect of futures contracts, forward contracts, swaps, options or similar arrangements, (k) off balance sheet financing transactions, (l) all obligations under facilities for the discount or sale of receivables and (m) all obligations that are required to be classified as long term liabilities on financial statements including footnotes thereon under GAAP ( in each case whether such obligations are contingent or otherwise) other than Operating Lease Obligations.

“ Indemnitee ” shall mean a Purchaser Indemnitee or Seller Indemnitee as applicable.

“ Indemnitor ” shall mean any party against whom a claim for indemnification is made under this Agreement.

“ Intellectual Property ” shall mean all of the intellectual or intangible property owned or licensed to Seller or in which Seller has any right or interest, including, without limitation, Seller’s trademarks, trademark registrations and applications, service marks, trade names, corporate names and fictitious names, copyrights, copyright registrations, works of authorship, patents, patent applications, industrial design registrations and applications, integrated circuit topography applications and registrations, design rights, inventions, trade secrets, data, technical information, Confidential Information, designs, plans, specifications, formulas, processes, patterns, compilations, devices, techniques, mask works, methods, shop rights, know-how, show-how, and other business or technical confidential or proprietary information in each case whether or not such rights are patentable, copyrightable, or registrable; Software and computer hardware programs and systems, source code, object code, know-how, show-how, processes, formula, specifications and designs, databases, and documentation relating to the foregoing; all domain names and Internet addresses, and content with respect to Internet websites including such consent in its electronic form and other proprietary information owned, controlled, created, under development or used by or on behalf of Seller in whole or in part and whether or not registrable or registered, and any registrations or applications for the foregoing.

“ Inventory ” shall mean all quantities of inventory, including raw materials, works in progress, finished goods (whether or not in the possession of Seller), consigned inventory, spare parts, replacement and component parts, materials, supplies and packaging items.

“ Knowledge ” shall mean and include as to (i) Edward Weinstock, Jerid O’Connell, Domenick Propati and Victor Cisario, all facts and other matters which each such individual knows or would have known upon the exercise of reasonably diligent efforts and (ii) Seller shall mean and include all facts and other matters that any of Edward Weinstock, Jerid O’Connell, Domenick Propati or Victor Cisario knows or would have known upon the exercise of reasonably diligent efforts.

“ Law ” shall mean all laws of any nation or political subdivision thereof, including, without limitation, all federal, state, provincial, local, or foreign constitutions, treaties, statutes, rules, codes, regulations, ordinances, administrative guidance, judgments, orders, decrees, injunctions, awards, common law duties, or reported decisions of any state, provincial, federal or other court or tribunal.

“ Leased Real Property ” shall have the meaning given to such term in Section 4.16.

“ Leases ” shall mean all leases, subleases, or other occupancy agreements, licenses, and lease agreements for equipment, machinery, furnishings, vehicles or tools, together with all amendments, supplements and nondisturbance agreements pertaining thereto, under which Seller subleases, licenses, occupies or uses any real or personal property.

“ Liabilities ” shall mean liabilities, obligations, claims or commitments of any nature, whether fixed, absolute, accrued, contingent or otherwise and whether liquidated, matured or unmatured, known or unknown, determined, determinable or otherwise and regardless of whether such liability, obligation, claim or commitment is immediately due and payable.

“ License ” shall mean any license, permit, franchise, consent, authorization, right, privilege, variance, exemption, order or approval issued or granted by any Governmental Authority.

“ Lien ” shall mean any charge, claim, lien, option, pledge, security interest, mortgage, deed of trust, assignment, deposit arrangement, priority or other preferential arrangement, right of first refusal, easement, title defect, or encumbrance of any kind, excluding Liens for Taxes not yet due and payable.

“ Losses ” shall have the meaning given to such term in Section 9.2.

“ Majority Shareholder ” shall mean Edward Weinstock.

“ Material Adverse Effect ” shall mean a material adverse effect on, or any event, fact circumstance, condition or change that, individually or in the aggregate, is reasonably likely to have a material adverse effect on, (a) the assets, business, operations, condition (financial or otherwise), Properties, management, Liabilities, obligations, earnings, results of operations or prospects of Seller or the Business, (b) the validity or enforceability of this Agreement and/or any or all of the Related Documents or (c) the right or ability of Seller, any of its Affiliates or the Shareholders to consummate the transactions contemplated hereby and/or thereby.

“ Material Contracts ” shall have the meaning given to such term in Section 4.12.

“ Minimum Adjusted EBITDA ” shall mean $2,100,000.

“Minimum Basket” shall have the meaning given to each term in Section 9.3(a).

“ Minority Shareholder ” shall mean Jerid O’Connell.

“ Net Working Capital ” shall mean (i) all Current Assets less (ii) all Current Liabilities.

“ Operating Lease Obligations ” shall mean all equipment lease obligations that are not treated as capital lease obligations by Seller, for which the original book value of the underlying equipment was not in excess of $10,000, and which are set forth on Schedule 1.1(d).

“ Ordinary Course of Business ” shall mean in the ordinary course of the Business consistent with Seller’s past custom and practice.

“ Pension Plan ” shall mean an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA.

“ Period ” shall mean Period One, Period Two or Period Three, as applicable.

“ Period One ” shall mean the twelve month period beginning on the first day of the calendar month beginning after the Closing Date.

“ Period Two ” shall mean the twelve month period beginning on the day after the end of Period One.

“ Period Three ” shall mean the twelve month period beginning on the day after the end of Period Two.

“ Person ” shall mean any corporation, partnership, limited liability company, trust, individual, unincorporated organization or a governmental agency or political subdivision thereof, as the context may require.

“ Proceeding ” shall mean any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any governmental body or arbitrator.

“ Products ” shall mean any and all products or services designed, fabricated, manufactured, distributed, provided, performed or sold at any time after January 1, 2004 by or on behalf of the Business or Seller.

“ Property ” shall mean any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible of Seller.

“ Public Company Expense ” shall mean any of the following amounts to the extent charged to Purchaser after the Closing: (i) audit fees, (ii) fees of counsel relating to public company requirements, (iii) fees of the Securities and Exchange Commission, the Nasdaq National Market, or any other national exchange or quotation service, (iv) charges for Purchaser’s parent legal personnel relating to public company requirements including, but not limited to, any fees or expenses incurred to comply with the Sarbanes-Oxley Act of 2002 or related regulations, or (v) other corporate overhead charges.

“ Purchase Price ” shall have the meaning given to such term in Section 2.6(d).

“ Purchase Price Adjustment ” shall mean (A) if the Actual Adjusted EBITDA is $2,075,000 or greater than $2,075,000 but less than the Minimum Adjusted EBITDA, (i) the Estimated Cash Purchase Price less (ii) the difference between Minimum Adjusted EBITDA and Actual Adjusted EBITDA, and (B) if the Actual Adjusted EBITDA is less than $2,075,000 than $25,000 plus the figure arrived at by multiplying 3.57 by the difference between (i) $2,075,000 and (ii) Actual Adjusted EBITDA.

“ Purchased Assets ” shall have the meaning given to such term in Section 2.1.

“ Purchased Contracts ” shall mean the following other than the Excluded Contracts set forth on Schedule 1.1(b): (i) all Contracts to sell products or services to customers of the Business, (ii) all Leases for the Leased Real Property, provided such leases are set forth on Schedule 4.16 and (iii) any other Contract or Lease set forth on Schedule 1.1(c).

“ Purchaser ” shall have the meaning given to such term in the preamble.

“ Purchaser Indemnitees ” shall have the meaning given to such term in Section 9.2.

“ Real Property ” shall mean any real property currently or formerly owned, operated, leased or occupied by Seller (or any predecessors).

“ Receivables ” means all notes, deposits and Accounts Receivable in favor of Seller and all notes, bonds and other evidence of Indebtedness of and rights to receive payments from any person in favor of Seller.

“ Related Documents ” shall mean the Transfer Documents and all other agreements and documents contemplated hereunder or thereunder, and any and all amendments or modifications thereto.

“ Related Person ” shall mean any Person in which a specified Person owns any material economic interest, and any other Affiliate or Family Member of such specified Person.

“ Release ” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, abandonment, injecting, escaping, leaching, dumping or disposing of a Hazardous Substance into or onto air, soil, surface water and/or groundwater (as defined at 42 U.S.C. 9601(12)).

“ SEC ” shall mean the United States Securities and Exchange Commission.

“ Seller ” shall have the meaning given to such term in the preamble.

“ Seller Advance Payments ” shall mean, with respect to Seller, payments with respect to the Business made by Seller for goods or services on or prior to the Closing Date, to the extent such goods or services are not fully used or received by the Business as of the Closing Date, including without limitation all credits, prepaid expenses, deferred charges, advance payments, security deposits, prepaid rent, prepaid Taxes, prepaid advertising and prepaid items.

“ Seller Customer Deposits ” shall mean, with respect to Seller, deposits received by Seller from customers and subscribers of the Business on or prior to the Closing Date, including deposits by customers whose creditworthiness requires payments in advance.

“ Seller Customer Prepayments ” shall mean, with respect to Seller, payments received by Seller for goods or services from customers and subscribers of the Business where such goods or services are not fully delivered or performed by Seller as of the Closing Date.

“ Seller Employees ” shall mean collectively, any and all current, former and retired employees of Seller.

“ Shareholders ” shall have the meaning given to such term in the preamble.

“ Software ” shall mean any and all of the following: (i) computer programs, including any and all software implementations of algorithms, heuristics, models and methodologies, whether in source code or object code, (ii) testing, validation, verification and quality assurance materials (iii) databases, conversions, interpreters and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iv) descriptions, schematics, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (v) all documentation, including user manuals, web materials and architectural and design specifications and training materials, relating to any of the foregoing, (vi) software development processes, practices, methods and policies recorded in permanent form, relating to any of the foregoing, and (vii) performance metrics, sightings, bug and feature lists, build, release and change control manifests recorded in permanent form, relating to any of the foregoing.

“ Tangible Net Worth ” shall mean tangible Purchased Assets (excluding, for avoidance of doubt, goodwill and noncompete assets) less Assumed Liabilities determined in accordance with GAAP.

“ Tax Claim ” shall have the meaning given to such term in Section 8.3.

“ Tax Return ” shall mean any return, report, information return, registration form or other document (including any related or supporting information filed therewith) related to the obligations of any Person filed or required to be filed with any Governmental Authority in connection with the determination of any Tax or the administration of any Laws, regulations or administrative requirements relating to any Tax.

“ Taxes ” shall mean any income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, real property, personal property, or windfall profit tax, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, addition to tax or additional amount related to the obligations of any Person, imposed by any Governmental Authority responsible for the imposition of any such tax (domestic or foreign), but only if and to the extent attributable to periods (or partial periods) prior to and including the Closing Date, together with any penalty thereon or in connection therewith and any interest on or in connection with any of the foregoing (including any penalty).

“ Threshold Net Working Capital ” shall have the meaning given to such term in Section 2.6(c).

“ Threshold Tangible Net Worth ” shall have the meaning given to such term in Section 2.6(c).

“ Trade Payables and Accruals ” shall mean all trade payables and accrued Liabilities incurred in the ordinary course of business by Seller.

“ Transfer Documents ” shall have the meaning given to such term in Section 6.2(e).

“ Transfer Taxes ” shall have the meaning given to such term in Section 8.5.

1.2    Interpretation .

(a)    When a reference is made in this Agreement to Articles or Sections, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not so stated. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.

(b)    The table of contents, titles, captions and headings of the Articles and Sections herein, and the use of a particular gender, are for convenience of reference only and are not intended to be a part of or to affect or restrict the meaning or interpretation of this Agreement.

(c)    The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

2.1    Purchased Assets

. On the terms and subject to the conditions of this Agreement, Seller shall, at the Closing, sell, transfer, convey, assign, grant and deliver to Purchaser, and Purchaser shall, at the Closing, purchase and acquire from Seller, free and clear of all Liens (except as set forth on Schedule 2.1), all right, title and interest in and to all properties, rights, interests, tangible and intangible assets of Seller (other than Excluded Assets) (the “ Purchased Assets ”), including without limitation:

(i)    all FF&E;

(ii)    all Receivables;

(iii)    all Inventory;

(iv)    the Purchased Contracts;

(v)    all patents, copyrights, trademarks and service marks (whether registered or unregistered), all names (and variations thereof), all assumed fictional business names and trade names, including without limitation, the items set forth on Schedule 2.1(v) hereto;

(vi)    all other Intellectual Property, including without limitation the Intellectual Property described on Schedule 2.1(vi);

(vii)    all design tools, order management and other management tools, manufacturing tools and test equipment, including laboratory testing equipment, whether located at the facilities of Seller or the facilities of a third party;

(viii)    all Seller Advance Payments, Seller Customer Deposits and Seller Customer Prepayments;

(ix)    the Leased Real Property;

(x)    all Books and Records;

(xi)    to the extent transferable, all Licenses from any Governmental Authority relating to the operation of the Business;

(xii)    to the extent transferable, all insurance policies held by Seller (other than life insurance policies insuring the lives of the Shareholders and Carmine Corinella) or that may have been issued to Seller and in effect at any time during Seller’s operation of the Business, including without limitation, on the Leased Real Property, including the right to any proceeds thereunder but excluding any insurance policies with respect to any Benefit Plan;

(xiii)    all guarantees, warranties, indemnities and similar rights in favor of Seller or any of the Purchased Assets;

(xiv)    all telephone and facsimile numbers, post office boxes, and cash in amounts equal to Seller Customer Deposits or Seller Customer Prepayments at the Closing;

(xv)    all domain names and Internet addresses, and content with respect to Internet websites, including such content in its electronic form;

(xvi)    all rights, claims, causes of action against any Person other than claims against any person related to an Excluded Liability;

(xvii)    all other tangible or intangible property, rights and assets of Seller; and

(xviii)    all goodwill of the Business.

2.2    Excluded Assets .

At the Closing, Purchaser shall not purchase and Seller shall retain all right, title and interest in and to the Excluded Assets.

2.3    Assumed Liabilities .

At the Closing, Purchaser shall assume only the Assumed Liabilities as existing on the Closing Date and subject to any limitations set forth in the definition of Assumed Liabilities. Assumed Liabilities shall not exceed the amounts reflected on the Closing Date Balance Sheet or set forth on Exhibit B, and any excess shall be an Excluded Liability.

2.4    Excluded Liabilities .

Except as expressly provided herein or in any Schedule or Exhibit hereto, Purchaser shall not assume any of the Excluded Liabilities and all Excluded Liabilities shall remain the exclusive Liabilities of Seller. Seller shall pay, perform or otherwise discharge, as the same shall become due in accordance with their respective terms, all of the Excluded Liabilities.

2.5    Consideration for Purchased Assets

On the terms and subject to the conditions of this Agreement, as consideration for the sale, transfer, assignment and delivery of the Purchased Assets to Purchaser at the Closing:

(a)    Purchaser shall assume the Assumed Liabilities as provided herein;

(b)    Purchaser shall deliver to Seller at Closing cash by wire transfer to Seller’s designated account in an amount equal to the Estimated Cash Purchase Price less the Holdback Amount, subject to the adjustment in Section 2.6 (the “ Closing Payment ”).

(c)    Purchaser shall deposit $937,500 of the Purchase Price (the “ Holdback Amount ”) in escrow pursuant to an escrow agreement substantially in the form attached hereto as Exhibit E (the “ Escrow Agreement ”) to satisfy claims against Seller or Shareholders in connection with this Agreement, including claims under the provisions set forth in Section 2.6 or Article 8 or 9. After satisfaction of any claims pursuant to Section 2.6 and/or Articles 8 or 9, the lower of (i) $625,000, and (ii) two thirds of the Holdback Amount remaining after satisfaction of claims pursuant to Section 2.6 and Articles 8 and 9 shall be released (x) if there is no dispute concerning the Closing Date Balance Sheet, thirty (30) days following the delivery of the Closing Date Balance Sheet in accordance with Section 2.6(d), or (y) if there is a dispute concerning the Closing Date Balance Sheet, within thirty (30) days following the resolution of such dispute pursuant to Section 2.6(d)(ii); provided that, to the extent any portion of the Holdback Amount is undisputed, such undisputed portion after deducting therefrom fees and expenses payable to the Arbitration Firm by the Seller pursuant to Section 2.6(d)(ii), as estimated by such Arbitration Firm, shall be released on the earlier of that date which is thirty (30) days following the delivery of the Closing Date Balance Sheet or that date which is five (5) business days following the date on which there is no longer a dispute regarding that portion of the Holdback Amount, and any remaining amount, as the case may be, of the Holdback Amount shall be released to Seller after satisfaction of claims pursuant to Articles 8 and 9, if any, upon the one year anniversary of the Closing Date, all in accordance with the provisions of the Escrow Agreement; provided , that , any remaining amount in excess of such claims shall be released upon the one year anniversary of the Closing Date after deducting therefrom estimated legal fees and expenses (including, without limitation, accountants and experts fees) payable to the Purchaser pursuant to Articles 8 and 9 after the one year anniversary of the Closing Date, as determined by the Purchaser in its sole discretion. The Holdback Amount is a non-exclusive source of payment for claims hereunder.

(d)    Subject to Section 9.6 hereof, Purchaser shall pay the Contingent Payment, if any, in accordance with Section 2.7.

2.6    Purchase Price Adjustment

(a)    The amount of the “ Estimated Cash Purchase Price ” shall be Six Million One Hundred Fifty Thousand Dollars ($6,150,000), as adjusted pursuant to this Section 2.6.

(b)    No later than three business days prior to the Closing Date, Seller shall prepare and deliver to Purchaser an estimated balance sheet of the Business being purchased by Purchaser, which shall include only the Purchased Assets and Assumed Liabilities and shall exclude the Excluded Assets and Excluded Liabilities, as of the start of business on the Closing Date, prepared in accordance with GAAP (the “ Estimated Closing Date Balance Sheet ”), and a calculation of the estimated Net Working Capital of Seller as of the start of business on the Closing Date (“ Estimated Net Working Capital ”) and of the estimated Tangible Net Worth of Seller as of the start of business on the Closing Date (“ Estimated Tangible Net Worth ”), together with the detailed work papers which support the Estimated Closing Date Balance Sheet.

(c)    Purchaser shall review the Estimated Closing Date Balance Sheet and the calculations of Estimated Net Working Capital and Estimated Tangible Net Worth, and the parties shall resolve in good faith any disagreements concerning such estimates prior to the anticipated Closing Date. The Estimated Cash Purchase Price shall be decreased by an amount (the “ Estimated Adjustment Amount ”) equal to the sum of (i) the amount by which Estimated Net Working Capital is less than $700,000 (“ Threshold Net Working Capital ”) and (ii) the amount by which Estimated Tangible Net Worth is less than $870,000 (“ Threshold Tangible Net Worth ”), if any.

(d)    After the Closing, Actual Net Working Capital and Actual Tangible Net Worth will be determined as follows:

(i)    Within sixty (60) calendar days after the Closing, Purchaser shall cause Rothstein Kass or another nationally recognized accounting firm (the “ Auditor ”) to prepare and deliver to Seller the Audited September 30, 2006 Financials. The balance sheet included in the Audited September 30, 2006 Financials shall be prepared prior to giving effect to the Closing and shall include the line items set forth on Exhibit C (the “ Closing Date Balance Sheet ”), and a calculation of the Net Working Capital of Seller as of September 30, 2006 prior to giving effect to the Closing (“ Actual Net Working Capital ”) and of the Tangible Net Worth of Seller as of September 30, 2006 prior to giving effect to the Closing (“ Actual Tangible Net Worth ”). A physical inventory shall be conducted over the weekend prior to Closing in accordance with GAAP. Seller shall have a period of thirty (30) days from receipt of the Closing Date Balance Sheet to review such balance sheet and Purchaser’s calculation of Actual Net Working Capital and Actual Tangible Net Worth. In connection therewith, Purchaser shall provide Seller and its representatives with access to all records and workpapers necessary to compute and verify the Closing Date Balance Sheet, the Actual Net Working Capital, and the Actual Tangible Net Worth. Purchaser shall be responsible for payment of the Auditor’s fees for auditing the Closing Date Balance Sheet and the Seller and Shareholders shall extend all possible cooperation to the Auditor.

(ii)    Within thirty (30) calendar days following receipt by Seller of the Closing Date Balance Sheet, Seller shall deliver written notice (a “ Notice of Disagreement ”) to Purchaser of any dispute Seller has with respect to the preparation or content of such Closing Date Balance Sheet. The Notice of Disagreement must describe in reasonable detail the items contained in the Closing Date Balance Sheet that Seller disputes and the basis for any such dispute. If Seller does not notify Purchaser in writing of a dispute with respect to the Closing Date Balance Sheet within such thirty (30)-day period, the calculation of Actual Net Working Capital and Actual Tangible Net Worth reflected in the Closing Date Balance Sheet will be final, conclusive and binding on Seller, Shareholders and Purchaser. If a Notice of Disagreement is delivered to Purchaser, Purchaser and Seller shall negotiate in good faith to resolve the disputed items contained therein. If Purchaser and Seller, notwithstanding such good faith effort, fail to resolve such disputed items within fifteen (15) days after delivery of the Notice of Disagreement to Purchaser, then Purchaser and Seller jointly shall engage a recognized independent public accounting firm as may be mutually agreed (the “ Arbitration Firm ”), to resolve such disputed items in accordance GAAP. Seller and Purchaser shall cooperate in the engagement of the Arbitration Firm and shall use reasonable efforts to cause the Arbitration Firm to render a written decision resolving the matters submitted to the Arbitration Firm as promptly as practicable. The scope of the disputes to be resolved by the Arbitration Firm will be limited to the items in dispute that were properly included in the Notice of Disagreement. The Arbitration Firm’s decision will be based on written submissions by Seller and its representatives and written submissions by Purchaser and its representatives or any testimony provided by such parties at a meeting in which Purchaser and Seller are in attendance and not by independent review. The Arbitration Firm may not assign a value greater than the greatest value for any disputed item claimed by either Purchaser, on the one hand, or Seller, on the other hand, or smaller than the value assigned to the disputed item by Purchaser, on the one hand, or Seller on the other hand. All determinations made by the Arbitration Firm will be final, conclusive and binding on Purchaser, Seller and Shareholders and judgment may be entered upon the determination of the Arbitration Firm in any court having jurisdiction over the party against which such determination is to be enforced. The fees and expenses of the Arbitration Firm shall be shared equally between Purchaser and Seller.

(iii)    For purposes of complying with the terms set forth in this Section 2.6(d), Purchaser shall cooperate with and make available to Seller and its representatives all information, records, data and working papers, as may be reasonably required in connection with the analysis of the Closing Date Balance Sheet, Actual Net Working Capital and Actual Tangible Net Worth and the resolution of any disputes thereunder.

(iv)    After giving effect to this Section 2.6(d), the Estimated Cash Purchase Price shall either be:

(1)    decreased by an amount equal to (A) the greater of (i) the amount by which Threshold Net Working Capital exceeds Actual Net Working Capital or (ii) the amount by which Threshold Tangible Net Worth exceeds Actual Tangible Net Worth (the “ Final Adjustment Amount ”) less (B) the Estimated Adjustment Amount; or

(2)    increased by the amount by which the Estimated Adjustment Amount exceeds the Final Adjustment Amount, up to a maximum of the Estimated Adjustment Amount; and

(3)    if Minimum Adjusted EBITDA exceeds the Actual Adjusted EBITDA, decreased by the Purchase Price Adjustment.

(v)    The amount of any payment required by the adjustments under Section 2.6(d) (ii) and (iv) shall be made, within (A) five (5) business days after Seller notified Purchaser that it does not object to the Actual Working Capital or Actual Tangible Net Worth or the end of the thirty (30) day review period if no dispute notice has been given by Seller or (B) within five (5) business days following the final determination of any disputed items pursuant to Section 2.6(d)(ii); provided , however , to the extent any amount is undisputed, such undisputed portion shall be paid by the party that owes the payment within five (5) business days after the determination of the adjustment is made. Any payments due from Seller up to $625,000 shall be first paid out of the Holdback Amount held in escrow with any excess paid directly by Seller and/or Shareholders for which Seller and Majority Shareholder shall be jointly and severally liable, and Minority Shareholder shall be severally liable.

(vi)    The “ Purchase Price ” shall equal the Estimated Cash Purchase Price as adjusted pursuant to this Section 2.6, the Assumed Liabilities and the Contingent Payments under Section 2.7 paid to Seller.

2.7    Contingent Payments .

(a)    During the period commencing on October 1, 2006 to the day prior to the third anniversary of such date (the “ Earnout Period ”), Purchaser shall pay the Contingent Payments to Seller for each annual period during the Earnout Period, based on the financial statements for each annual period prepared in accordance with the standards for Audited September 30, 2006 Financials for each period in the Earnout Period. The financial statements for each annual period shall be used to calculate EBITDA which shall comply with all requirements for financial statements filed with the Securities and Exchange Commission; provided , howeve r, that Purchaser shall not be obligated to audit financial statements unless so instructed by Seller. These financial statements shall be used to calculate EBITDA for each annual period in the Earnout Period and, accordingly, net income derived from such financial statements shall be adjusted to exclude each of the items set forth in the definition of EBITDA. Any fees related to the audit of such financial statements done pursuant to Seller’s instruction shall be borne by Seller and Shareholders to the extent no Contingent Payment is payable for the applicable Period during the Earnout Period, for which Seller and Majority Shareholder shall be jointly and severally liable, and Minority Shareholder shall be severally liable, but such fees shall be borne by Purchaser to the extent a Contingent Payment is payable for such Period. The periods in the Earnout Period are Period One, Period Two and Period Three.

(b)    Purchaser will pay any Contingent Payment due to Seller on the later of (i) if there is no dispute, sixty (60) days after the end of the Period in the Earnout Period, or (ii) if there is a dispute, within ten (10) days following the resolution of such dispute pursuant to Section 2.6(d)(ii). If a dispute arises between Purchaser and Seller as to whether or not a Contingent Payment is due and owing for any Period in the Earnout Period, the dispute shall be resolved in accordance with the procedures set forth in Section 2.6(d)(ii), provided that, the basis of the dispute as set forth in the Notice of Disagreement shall relate to the content of the financial statements for the Period in dispute.

(c)    Purchaser will provide Seller with copies of internally prepared quarterly and annual income statements of the operations of Purchaser following the Closing, subject to the obligation of each Shareholder to execute and comply with a confidentiality agreement with respect to such financial information in such form as Purchaser may reasonably request.

2.8    Allocation of Purchase Price; Tax Reimbursement .

(a)    Exhibit F attached hereto is a preliminary allocation of Estimated Cash Purchase Price among the Purchased Assets as agreed by the parties and as determined in accordance with Section 1060 of the Code. Promptly following the determination of the Actual Net Working Capital and following any Contingent Payment, a revised Exhibit F shall be prepared by Purchaser in a manner consistent with the Exhibit F delivered at Closing. Seller and Purchaser each agree, (a) to report the sale of the Purchased Assets for Tax purposes in accordance with the allocations set forth on the most recent Exhibit F and to follow the allocations set forth on the most recent Exhibit F in determining and reporting their Liabilities for any Taxes, (b) without limitation, not to take any position inconsistent with such allocations on any of its Tax Returns, and (c) to timely file federal tax Form 8594 with the applicable Tax Return for the year of this transaction reflecting such allocations and for each later year in which there is any change in the amount allocated to any asset.

(b)    Purchaser shall reimburse Seller for any incremental income tax Seller pays in connection with the transaction contemplated hereby arising solely because Purchaser allocates Purchase Price on an aggregate basis to FF&E in an amount in excess of the aggregate tax basis of such FF&E at Closing. The tax basis of the FF&E at the Closing shall be in accordance with the tax basis of FF&E required by Purchaser’s independent auditors.

3.1    The Closing Date .

The closing of the purchase and sale of the Purchased Assets shall take place at the offices of Greenberg Traurig, LLP, 200 Park Avenue, New York, New York 10166, on the date upon which all of the conditions precedent set forth in Article 6 shall have been satisfied or waived or at such other time, date and place as Purchaser and Seller may otherwise mutually agree (the “ Closing ”). Upon satisfaction or waiver of all conditions set forth in Article 6, at the Closing, and against payment of the Closing Payment by transfer of immediately available funds to Seller, as designated by Seller to Purchaser, and of the Holdback Amount to the Escrow Account Seller shall sell, transfer and deliver to Purchaser at the Closing, free and clear of all Liens, (except as set forth on Schedule 2.1), the Purchased Assets. Upon consummation of the Closing, Purchaser shall be deemed to have acquired the Purchased Assets as of the start of business on the Closing Date.

As of the date hereof and as of the Closing Date, Seller and each Shareholder hereby jointly and severally represent and warrant to Purchaser, as follows:

4.1    Organization; Good Standing; Qualification and Capitalization

(a)    Seller is a corporation, duly incorporated, validly existing and in good standing under the laws of the state of its incorporation, and has all requisite corporate power and authority under its organizational documents to own and lease the Purchased Assets and carry on the Business as now conducted. Except as stated on Schedule 4.1(a), Seller is duly qualified or duly licensed to transact business and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification necessary, all of which are set forth on Schedule 4.1(a).

(b)    Schedule 4.1(b) sets forth all of the authorized and outstanding Equity Securities of Seller. All of the outstanding Equity Securities of Seller have been duly authorized and validly issued and are fully paid and nonassessable and are free and clear of all Liens. Schedule 4.1(b) sets forth the record and beneficial ownership and number of all Equity Securities of Seller. There are no Contracts, purchase rights, subscription rights, conversion rights, exchange rights or other commitments that could require Seller to issue, sell, or otherwise cause to become outstanding any of its Equity Securities. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Seller. Except as set forth on Schedule 4.1(b), there are no shareholder agreements all rights under which have not been waived by the parties thereto for the purpose of the transactions contemplated by this Agreement, voting trusts, proxies, or other agreements or understandings with respect to the voting of the Equity Securities of Seller. None of the outstanding Equity Securities or other securities of Seller was issued in violation of the Securities Act or any other Law. Seller does not own, or have any Contract to acquire, any Equity Securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business. True and complete copies of all organizational documents of Seller have been delivered to Purchaser.

4.2    Subsidiaries

Seller does not own, directly or indirectly, any stock, partnership interest, membership interest, joint venture interest, ownership interest or other security, investment or interest in any corporation, partnership, limited liability company, joint venture, organization or other entity.

4.3    Authorization and Enforceability .

All action on the part of Seller and each Shareholder, and their respective officers, directors and shareholders, necessary for the authorization, execution, delivery and performance of this Agreement, the Related Documents and the transactions contemplated hereby and thereby has been taken. Seller and each Shareholder has the full power and authority to enter into and perform this Agreement and the Related Documents to which it is a party and to carry out the transactions contemplated thereby. This Agreement has been, and each Related Document to which Seller or each Shareholder is a party will be, duly authorized, executed and delivered by Seller or each Shareholder, as applicable, and constitutes, and with respect to each such Related Document will constitute at the Closing, the valid and legally binding obligation of Seller and such Shareholder, as applicable, enforceable against Seller or such Shareholder in accordance with its terms, subject to applicable bankruptcy, insolvency reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally.

4.4    Title to Assets; Sufficiency of Assets .

(a)    Seller owns, and at the Closing will own, good and marketable title to, and all rights and interests in and to, the Purchased Assets free and clear of all Liens (except as set forth on Schedule 2.1). The Purchased Assets constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary for Purchaser to continue to conduct the Business as had Seller prior to the Closing Date.

(b)    Schedule 4.4(b) sets forth a description of any assets or services provided by any Shareholder, Affiliate or Related Party of Seller in connection with the Business.

4.5    Consents .

Except as set forth on Schedule 4.5, no Consent of any Person or Governmental Authority is required by or with respect to Seller or any Shareholder in connection with the execution and delivery of this Agreement and the Related Documents or the consummation of the transactions contemplated hereby and thereby (including the effective assignment and assumption to and by Purchaser of any of the Purchased Assets) including under any Contract, License or Law.

4.6    No Conflicts .

Except as set forth on Schedule 4.6, the execution and delivery of this Agreement or the Related Documents by Seller and Shareholders does not, and, the consummation of the transactions contemplated hereby and thereby (including the effective assignment to Purchaser of any of the Purchased Assets) shall not conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit or result in the imposition of any Lien upon any of its respective assets under: (i) any provision of the charter or governance documents of Seller or any Shareholder; (ii) any mortgage, indenture, Lease, Contract or other agreement or instrument, permit, concession, franchise or License to which Seller or any Shareholder is a party or any of its respective properties or assets are subject; or (iii) any Law, order, decree, injunction or writ applicable to Seller or any Shareholder or its respective properties or assets.

4.7    Financial Statements .

(a)    Seller has delivered to Purchaser a reviewed balance sheet, statement of income and cash flow statement of Seller as of and for each of the calendar years ended December 31, 2005 and 2004, respectively and a compiled, unaudited balance sheet, statement of income and cash flow statement of Seller as of and for the six (6) months ended June 30, 2006 (collectively, the “ Financial Statements ”). The Financial Statements (i) have been prepared from the Books and Records kept by Seller, and (ii) are complete and correct and fairly present the financial condition, results of operations, and cash flows of Seller, as of the dates and for the periods indicated therein in all material respects, and (iii) do not require any material modifications in order for them to be in conformity with GAAP. The books of account, financial data, schedules and other records of Seller, including any of the foregoing delivered or made available to Purchaser or its representatives or Affiliates in connection with the transactions contemplated hereby, have been maintained properly and regularly in accordance with sound business practices and in the course of business of Seller, are accurate and complete and there are no material misstatements, errors or omissions therein, and there have been no transactions involving Seller that properly should have been reflected therein in accordance with GAAP that have not been accurately and completely reflected. The Financial Statements reflect the conduct of the Business in the ordinary course. The Audited September 30, 2006 Financials, when delivered, (i) will have been prepared from the Books and Records kept by Seller, and will have been prepared in conformity with GAAP, and (ii) will be complete and correct and will fairly present the financial condition, results of operations, and cash flows of Seller, as of the dates and for the periods indicated therein, in all material respects.

(b)    Except as set forth on Schedule 4.7(b) and the Financial Statements, Seller has no Liabilities of any kind, and there are no conditions, situations or circumstances which would reasonably be expected to result in any Liability, except Liabilities incurred since June 30, 2006 in the Ordinary Course of the Business (none of which relates to any breach of contract, breach of warranty, tort, infringement or violation of Law or arose out of any Action, proceeding, claim, complaint, grievance, investigation or unfair labor practice complaint, grievance or investigation, other than the Corinella Proceeding) and Liabilities arising from this Agreement and transaction expenses incurred in connection with this Agreement for legal fees. Schedule 4.7(b) lists all Indebtedness of Seller or the Business.

4.8    Absence of Certain Changes or Events .

(a)    Since June 30, 2006, except as set forth on Schedule 4.8, Seller has conducted the Business in the Ordinary Course of Business and there has not been any:

(i)    Material Adverse Effect;

(ii)    in a single transaction or a series of related transactions, sale (including by sale-leaseback), lease, license, transfer or disposition of assets or Properties by Seller, other than sales of Inventory in the ordinary course of business and consistent with past practice;

(iii)    acquisition of or agreement to acquire by merging with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, limited liability company, association or other business entity, in a transaction or series of related transactions by Seller;

(iv)    change in accounting methods, principles or practices by Seller affecting any of its respective assets, Liabilities, results of operations or business;

(v)    revaluation by Seller of any of its Properties, including without limitation, any write-offs, increases or decreases in any reserves or any write-up or write-down of the value of inventory, property, plant, equipment or any other Property or any change in any assumptions underlying, or facts relating to, or methods of calculating, any bad debt, contingency or other reserves;

(vi)    Indebtedness incurred, assumed or guaranteed by Seller or any commitment to incur Indebtedness entered into by Seller, or any loans made or agreed to be made by Seller, in an amount greater than $10,000 in the aggregate other than trade payables incurred in the Ordinary Course of Business;

(vii)    increase in the compensation or benefits of officers or employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment) or any increase in the compensation or benefits payable or to become payable to any officer or employee, by Seller other than increases for non-officer employees in the ordinary course in an aggregate amount not to exceed 5% of the compensation expense for such non-officer employees for 2005;

(viii)    granting of any bonus, incentive compensation, severance, termination, change of control, service, award or other like benefit to any officer or employee by Seller;

(ix)    incurrence or imposition of a Lien on any of the assets or Properties of Seller other than as set forth on Schedule 2.1;

(x)    damage, destruction or loss (whether or not covered by insurance) adversely affecting the financial condition, assets, Liabilities, Properties, business, results of operation or, to the Knowledge of Seller, any customer relationships of Seller in amounts individually in excess of $25,000 or in excess of $100,000 in the aggregate;

(xi)    delay or failure to pay or perform any current Liability (including accounts payable) of Seller in the Ordinary Course of Business except for bona fide disputes that have been properly reserved for on the Financial Statements;

(xii)    acceleration, prepayment or performance of any Account Receivable or any Indebtedness or other obligation owed to Seller before it is due or otherwise owed;

(xiii)    material termination, amendment, modification or waiver of, or any breach, violation or default by any party under, any Contract;

(xiv)    forgiveness, waiver or agreement to extend repayment of any Indebtedness or other obligation owed by or to Seller which will not be disclosed on the Estimated Closing Date Balance Sheet;

(xv)    disposition or lapse of any rights to use any material Intellectual Property right of Seller;

(xvi)    contract, agreement or transaction with any Affiliate of Seller, any officer, director, stockholder or employee of Seller or the Family Member of any such person;

(xvii)    declaration, setting aside or payment of any dividend or other distribution or payment (whether in cash, property or equity interests) with respect to the capital stock of Seller or any , redemption, purchase or acquisition of any of the securities of Seller;

(xviii)    material change in the federal, state or local Tax Liability of Seller;

(xix)    capital expenditures or commitments in an amount in excess of $25,000 in the aggregate for additions to any Property of Seller constituting capital assets; or

(xx)    contract or agreement entered into to take or agree to take any of the actions described in subsections (i) through (xix) above.

(b)    To the Knowledge of Seller and each of the Shareholders, neither the conclusion of Mr. Corinella’s employment agreement nor the Corinella Proceeding will in any way inhibit the ability of the Business to meet the Annual Target EBITDA for each of the Periods.

4.9    Insurance .

Schedule 4.9 identifies the policies of insurance currently maintained by, or on behalf of, Seller or its Business and Properties, setting forth the name of the insurer, the holder of each such policy, the nature of coverage, the amount of such coverage, the expiration dates thereof, information concerning any claim in excess of $10,000 asserted thereunder (whether asserted by Seller or any third party) and other information. None of Seller nor any other insured named on Schedule 4.9 is in default with respect to its obligations under any of such outstanding insurance policies and all premiums with respect thereto are current. None of Seller, nor any other insured named on Schedule 4.9 has failed to give any notice or to present any claim under any such policy in a due and timely fashion. Such policies are in full force and effect on the date hereof. All premiums due under the policies identified on Schedule 4.9 have been paid and none of Seller, nor any such insured has been issued or has received any notice of cancellation, modification or termination in respect of any such policy or is in default thereunder. None of Seller nor any such insured has been issued or has received notice that any insurer under any policy referred to on Schedule 4.9 is denying liability with respect to a claim thereunder or defending under a reservation of rights clause.

4.10    Employee Benefits .

(a)    Schedule 4.10 sets forth a complete and accurate list (including a summary) of all pension, profit-sharing, deferred compensation, bonus, incentive compensation, stock option, share appreciation right, phantom stock, severance, health, dental, vision, life insurance, survivor benefit, vacation and other employee benefit plans and programs (including, but not limited to, all employee benefit plans as defined in ERISA Section 3(3)), which are currently in effect for Seller which are intended to provide benefits to current or former employees, directors, officers or independent contractors and/or their beneficiaries or for which Seller has any Liability. All of these types of arrangements shall be collectively referred to as “ Benefit Plans ” or “ Plans .” An arrangement will not fail to be a Benefit Plan simply because it only covers one individual, or because Seller’s obligations under the Plan arise by reason of its being a “successor employer” under Law. Furthermore, a voluntary employees’ beneficiary association under Section 501(c)(9) of the Code will be considered a Benefit Plan for this purpose. None of the benefit plans listed on Schedule 4.10 (individually referred to as a “ Benefit Plan ” or “ Plan ”) or any trusts created thereunder, nor any trustee or administrator or fiduciary thereof, has engaged in a “prohibited transaction,” as described in Section 4975 of the Code or Section 406 of ERISA, which would subject the Plan, any such trust or any trustee or administrator or fiduciary thereof, Seller or any party dealing with the Plan or any trust to the tax or penalty on prohibited transactions imposed by Section 4975 of the Code or Section 502(i) of ERISA. None of such Plans nor any trusts thereunder has been terminated, nor have there been any “reportable events” with respect thereto, as that term is defined in Section 4043 of ERISA. Each Plan and trust and all provisions thereof are in compliance with ERISA and with the requirements imposed for the “qualification” of the Plan under Section 401(a) of the Code, where applicable. Seller and any administrator of each Plan have complied with all reporting and disclosure requirements of ERISA, the Code and other Law with respect to the Plan.

(b)    Seller has delivered to Purchaser a true and complete copy of the following documents, to the extent that they are applicable, with respect to each Benefit Plan:

(i)    the Plan document and any related funding agreements (e.g

(1)    . trust agreements or insurance contracts), including all amendments, and any custodial and service agreements;

(ii)    the current summary description and all subsequent summaries of material modifications with respect to each Benefit Plan;

(iii)    The most recent Internal Revenue Service determination letter for each Benefit Plan that is intended to qualify for favorable income tax treatment under Code Section 401(a) or 501(c)(9), which determination letter reflects all amendments that have been made to the Plan (except as set forth in Schedule 4.10);

(iv)    The two (2) most recent Form 5500s (including all applicable schedules and the opinions of the independent accountants) that were filed on behalf of the Benefit Plan and the two (2) most recent actuarial reports; and

(v)    Any governmental advisory opinions, rulings, compliance statements, closing agreements and similar materials, and all material communications with any governmental entity or agency, including, without limitation, the Department of Labor, Internal Revenue Service or Pension Benefit Guaranty Corporation.

(c)    Each Benefit Plan at all times has been operated in all material respects in accordance with its terms, and complies currently, and has complied in the past, both in form and in operation, in all material respects with all Laws, including ERISA and the Code. The Internal Revenue Service has issued a favorable determination letter with respect to each Benefit Plan that is intended to qualify under Code Section 401(a) or Section 501(c)(9), and no event has occurred (either before or after the date of the letter) that is likely to result in the revocation of such determination or which requires or could require action under the compliance resolution programs of the Internal Revenue Service to preserve such qualification.

(d)    Other than routine claims for benefits and those relating to qualified domestic relations orders, there are no (i) pending or (ii) to the Knowledge of Seller or any Shareholder threatened lawsuits, governmental investigations or other claims against or involving any Benefit Plan or any fiduciary (within the meaning of Section 3(21)(A) of ERISA) or service provider of such Plan, nor is there any reasonable basis for any such lawsuit, investigation or claim.

(e)    All costs of administering and all contributions required to be made to each Benefit Plan under the terms of that Benefit Plan, ERISA, the Code, or any other Law have been timely made.

(f)    Except as set forth on Schedule 4.10(f), neither Seller nor any ERISA Affiliate maintains any plan that provides (or will provide) post-employment medical or other post-employment welfare benefits to one or more former employees or independent contractors (including retirees), other than benefits that are required to be provided pursuant to COBRA. Seller and each ERISA Affiliate have at all times complied with the applicable provisions of COBRA. There are no reserves, assets, surpluses or prepaid premiums with respect to any Benefit Plan that is “welfare plan” within the mean