ASSET PURCHASE AGREEMENT

EXHIBIT 10.2

EXECUTION COPY

ASSET PURCHASE AGREEMENT

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THIS AGREEMENT is entered into as of November ___, 2004 and effective

as of 12:01 a.m. on November 1, 2004 by and among MAGTECH ACQUISITION, INC., an

Indiana corporation ("Purchaser"), CARTER M. FORTUNE ("Fortune"), MAGTECH

SERVICES, INC., an Indiana corporation ("Seller") and JERRY L. THOMPSON, MARK J.

ALLEN, PETER M. FELLEGY, ALLEN C. SHELDON, JAMES R. KRATZET, JAMES L. DEARING,

GARY E. VOIROL, GEORGE BACHNIVSKY, PETER D. KEELAN, MARK J. JOSEPH, JERRY D.

NOBLE, JAMES B. FINLEY, DONALD J. HOEFELMEYER AND STEVEN E. ROY (collectively

"Shareholders").

PREAMBLE

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Subject to the terms and conditions hereof, Purchaser desires to

purchase and Seller desires to sell certain assets, properties and rights

relating to or used or useful in connection with Seller's engineering and

consulting business (the "Business");

AGREEMENT

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NOW, THEREFORE, in order to consummate said purchase and sale and in

consideration of the mutual agreements set forth herein, the parties hereto

agree as follows:

SECTION 1

PURCHASE AND SALE OF ASSETS

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1.1 Sale of Assets. Subject to the provisions of this Agreement, Seller

agrees to sell and Purchaser agrees to purchase, on such date (the "Closing

Date"), all of Seller's right, title and interest in and to the following assets

(the "Subject Assets") :

(a) The fixed assets, equipment and machinery, and computer hardware of

Seller set forth in Schedule 1.1(a);

(b) A complete customer list of Seller's customers current as of the

Closing Date;

(c) All Intellectual Property (as defined in Section 2.6);

(d) To the extent permitted by the terms of each Assumed Contract (as

defined below) and applicable law, all outstanding sales proposals, purchase

orders, agreements or contracts to provide or receive goods and/or services, all

customer agreements, vendor agreements, commitments, agreements and licenses

relating to the Intellectual Property, as set forth in Schedule 1.1(d) (the

"Assumed Contracts");

(e) The work not billed, and accounts receivable (the "Accounts

Receivable") set forth in Schedule 1.1(e) as adjusted to the Closing Date; and

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(f) All prepaid expenses.

1.3 Assumption of Liabilities It is expressly understood and agreed

that Purchaser is not assuming or becoming liable for any liabilities of Seller

of any kind or nature at any time existing or asserted, whether known or

unknown, fixed, contingent or otherwise not specifically assumed herein by

Purchaser. Notwithstanding the foregoing, upon the sale and purchase of the

Subject Assets, Purchaser shall accept and assume and, as the case may be, pay,

discharge, perform and observe in the ordinary course, the following, and only

the following liabilities, duties and obligations (the "Assumed Liabilities"):

(a) All of Seller's rights and executory obligations under the Assumed

Contracts to be performed after the Closing Date (excluding any obligations or

liabilities of Seller under any Assumed Contract that were to have been

performed, fulfilled or satisfied on or prior to the Closing Date).

(b) From and after the Closing Date, Purchaser may employ for the

operation of the Business those employees of Seller hired by it and shall be

responsible for the payment of all wages, expenses and accrued vacation pay of

such personnel hired by it, (excluding any obligations or liabilities of Seller

that were to have been performed, fulfilled or satisfied on or prior to the

Closing Date other than accrued vacation pay).

(c) All of Seller's current liabilities listed in Schedule 1.3(c) in an

amount not to exceed $70,954.00.

1.4 Excluded Liabilities. The liabilities and obligations of Seller,

whether fixed, contingent, known or unknown and whether existing as of the

Closing Date or arising thereafter which are not specifically assumed by

Purchaser under Section 1.3 of this Agreement are hereinafter referred to as the

"Excluded Liabilities." Seller hereby acknowledges and agrees that, except for

the Assumed Liabilities, Purchaser is not assuming or becoming liable for, and

Seller shall remain exclusively liable for, all of the Excluded Liabilities.

1.5 Purchase Price. In consideration of the sale by Seller to Purchaser

of the Subject Assets, and subject to the other terms and conditions contained

herein, Purchaser agrees to pay, subject to Section 1.6, the sum of Four Hundred

Forty Five Thousand Two Hundred Thirteen and 00/100 Dollars ($445,213) (the

"Purchase Price") to Seller. In addition, Purchaser shall cause to be issued to

Seller within fifteen (15) days of the Closing Date, four hundred eighty four

thousand five hundred (484,500) shares of Fortune Diversified Industries, Inc.

("FDI") common stock. Of the 484,500 shares, 84,500 shares shall be immediately

vested in Seller and the remaining (400,000) shares shall be unvested and

subject to the following conditions:

i) If Purchaser has attained a positive cumulative EBIT during the

period November 1, 2004 to October 31, 2006 ("Test Period"), Seller shall vest

in one (1) share of the FDI common stock for each $1.00 of cumulative EBIT (up

to a maximum cumulative EBIT of $400,000).

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ii) EBIT shall be defined as accrued earnings before any interest and

income taxes. In calculating accrued earnings and EBIT, Purchaser shall be

allocated a portion (based on standard operating procedures and on a prorata

basis among the various subsidiaries) of FDI's corporate overhead. Purchaser

shall cause its outside accountant to calculate EBIT during the Test Period and

shall provide a written explanation of such calculation to Seller within sixty

(60) days following the Test Period. Purchaser's calculation of EBIT shall be

final and binding upon the parties unless Seller objects to such calculation

within fifteen (15) days of the receipt thereof, in which case Purchaser and

Seller shall exercise their respective best efforts to resolve such dispute

within fifteen (15) days of the Seller's objection. If Purchaser and Seller are

unable to agree on a final calculation of EBIT within this fifteen (15) day

period, then the parties shall select a neutral accounting firm (the

"Arbitrating Accounting Firm") which shall make a final determination. In such

case, each of Purchaser and Seller shall inform the Arbitrating Accounting Firm

of their respective calculations of EBIT, and each shall be granted the

opportunity to provide to the Arbitrating Accounting Firm verbal and written

explanations of their respective calculations. The Arbitrating Accounting Firm

shall be instructed to complete its calculations within thirty (30) days of its

engagement. The determination of the Arbitrating Accounting Firm shall be final

and binding upon the parties. The fees of the Arbitrating Accounting Firm shall

be paid by the non-prevailing party in any such dispute, as determined by the

Arbitrating Accounting Firm. Any deposit required by the Arbitrating Accounting

Firm shall be paid initially by Purchaser, but if Purchaser prevails in such

dispute, the Seller shall reimburse Purchaser for the deposit.

iii) If, for any reason, Seller does not vest in some or all of the

remaining shares, any unvested shares shall immediately, without any further

action by Seller or Purchaser, revert back to FDI. FDI shall promptly cancel

said shares upon their reversion.

iv) Prior to vesting, all of the unvested shares shall be retained in a

Wachovia Securities brokerage account in Indianapolis, Indiana. Promptly upon

vesting, all of the newly vested shares shall be delivered to Seller.

At Closing, Purchaser will pay to Seller the sum of Two Hundred Forty

Five Thousand Two Hundred Thirteen and 00/100 Dollars ($245,213) to or for the

account of Seller by certified or cashier's check, or wire transfer, as directed

by Seller. In addition, Purchaser will deposit $200,000 ("Escrowed Amount") with

Drewry Simmons Vornehm, LLP ("Escrow Agent"). Purchaser and Seller hereby agree

to allocate the Purchase Price, as set forth on Schedule 1.5 among the classes

of Subject Assets and to file its federal income tax returns and its other tax

returns reflecting such allocation, including Form 8594 and any other reports

required by Section 1060 of the Internal Revenue Code of 1986, as amended

("Code").

1.6. Purchase Price Adjustments. If on the Closing Date, Seller's Total

Assets do not exceed Seller's Current Liabilities by $445,213 ("Target Net

Worth"), the Purchase Price shall be decreased or increased in an amount equal

to the difference between the Target Net Worth and the actual difference between

Total Assets and Current Liabilities. Total Assets shall be defined as: (i)

accounts receivable, (ii) work not billed, (iii) prepaid expenses and(iv) fixed

assets, equipment and machinery, and computer hardware set forth in Schedule

1.1(a) (valued at $6,000 for the purposes of this section). Current Liabilities

shall be defined as those liabilities listed on Schedule 1.3(c). Total Assets

and Current Liabilities shall be determined in accordance with GAAP consistently

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applied. An example of the Purchase Price calculation (using December 31, 2003

balances) is attached as Schedule 1.6.

Within forty-five (45) days after the Closing, Purchaser and Seller

shall attempt to reconcile and agree upon Total Assets and Current Liabilities

that existed on the Closing Date. If upon reconciliation the Target Net Worth

has not been attained, Seller and Purchaser shall jointly notify the Escrow

Agent to promptly (within fifteen (15) days) refund to Purchaser in cash an

amount equal to the amount of the deficiency. In addition, Seller shall promptly

refund to Purchaser the amount of any deficiency that exceeds the Escrowed

Amount. If upon reconciliation, the Target Net Worth has been exceeded,

Purchaser shall promptly (within fifteen (15) days) deposit into escrowan amount

equal to the amount of the excess.

If Purchaser and Seller are unable to agree on a final calculation of

the difference between Total Assets and Current Liabilities on or before the

deadline specified in the preceding paragraph, then the Arbitrating Accounting

Firm shall make a final determination thereof. In such case, each of Purchaser

and Seller shall inform the Arbitrating Accounting Firm of their respective

calculations of the amounts at issue, and each shall be granted the opportunity

to provide to the Arbitrating Accounting Firm verbal and written explanations of

their respective calculations. The Arbitrating Accounting Firm shall be

instructed to complete its calculations within thirty (30) days of its

engagement. The determination of the Arbitrating Accounting Firm shall be final

and binding upon the parties. The fees of the Arbitrating Accounting Firm shall

be paid by the non-prevailing party in any such dispute, as determined by the

Arbitrating Accounting Firm. Any deposit required by the Arbitrating Accounting

Firm shall be paid initially by Purchaser, but if Purchaser prevails in such

dispute, Seller shall reimburse Purchaser for the deposit. The date for payment

of any amounts payable under the preceding paragraph shall be extended if

application of the foregoing dispute resolution mechanism extends beyond such

date, to the date that is fifteen (15) days following the date of final

resolution of such dispute.

As of the Closing Date, the Accounts Receivable and Work Not Billed

acquired by Purchaser are assumed to be one hundred percent (100%) billable and

collectible. Upon acquisition of the Accounts Receivable and Work Not Billed,

Purchaser shall for a period of one hundred twenty (120) days after the Closing

Date ("Collection Period") make reasonable efforts, in the ordinary course of

business, to bill and collect the Accounts Receivable and Work Not Billed.

Promptly after completion of the Collection Period, Purchaser shall reassign to

Seller or its designee any Accounts Receivable or Work Not Billed (including all

relevant records) that it has been unable to collect during the Collection

Period. The amount of Accounts Receivable and Work Not Billed reassigned to

Seller shall decrease the Purchase Price on a dollar-for-dollar basis and Seller

and Purchaser shall jointly notify the Escrow Agent to promptly (within fifteen

(15) days) pay such decreased amount to Purchaser. In addition, Seller shall

promptly pay to Purchaser any decreased amount that exceeds the Escrowed Amount.

If upon completion of the adjustments and the payments described above,

there is still a portion of the Escrowed Amount remaining, Seller and Purchaser

shall jointly notify the Escrow Agent to promptly (within fifteen (15) days) pay

the balance of the Escrowed Amount to Seller.

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1.7. Put and Call Options. Subject to the limitations and restrictions

described below and applicable securities laws, Seller may, in its sole

discretion, sell any or all of its 84,500 shares of vested FDI common stock

received by it and one-half of any additional shares of FDI common stock that

vests pursuant to Section 1.5 i) (maximum of 200,000 shares) to Fortune and

Fortune shall purchase any of Seller's shares of vested FDI common stock offered

by Seller. The put price per share shall be $1.00. Seller may only exercise this

put option during the seven (7) day period following the final determination of

EBIT (pursuant to Section 1.5 ii)). Any closing on a sale of any or all of the

shares of vested FDI common stock to Fortune shall occur within ninety (90) days

of Fortune's receipt of written notice from Seller requesting exercise of its

put option. In addition, Fortune may, in his sole discretion, call one-half of

any additional shares of FDI common stock that vests pursuant to Section 1.5 i)

(maximum of 200,000 shares) from Seller and Seller shall sell any of Seller's

shares of vested FDI common stock that are called by Fortune. The call price per

share shall be $1.50. Fortune may only exercise this call option during the

twenty-one day period following the final determination of EBIT (pursuant to

Section 1.5 ii)). Any closing on a sale of any or all of the shares of vested

FDI common stock to Fortune shall occur within ninety (90) days of Seller's

receipt of written notice from Fortune requesting exercise of his call option.

1.8. Transfer of Subject Assets. On the Closing Date, Seller shall

deliver or cause to be delivered to Purchaser good and sufficient instruments of

transfer, transferring to Purchaser title to all of the Subject Assets. Such

instruments of transfer (a) shall be in the form and will contain the

warranties, covenants and other provisions (not inconsistent with the provisions

hereof) which are usual and customary for transferring the type of property

involved under the laws of the jurisdictions applicable to such transfers, (b)

shall be in form and substance reasonably satisfactory to Purchaser and its

counsel, and (c) except as otherwise provided in this Agreement, shall

effectively vest in Purchaser good and marketable title to all the Subject

Assets free and clear of all licenses, liens, encumbrances, mortgages and

security interests whatsoever (collectively "Liens") other than Assumed

Liabilities. To the extent allowed under each Assumed Contract and to the extent

allowed by law, on the Closing Date, Seller shall also deliver or cause to be

delivered to Purchaser all of the Assumed Contracts and such assignments thereof

as are necessary to assure Purchaser their full and useful benefit. Seller and

Purchaser shall at and subsequent to the Closing Date cooperate in the

transition of the Business and the Assumed Contracts to Purchaser, including any

commercially reasonable efforts to maintain the goodwill and business of

customers of the Business.

SECTION 2

SELLER'S AND SHAREHOLDERS' REPRESENTATIONS AND WARRANTIES

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Seller and each of the Shareholders hereby jointly and severally

represents and warrants to Purchaser as of the date of this Agreement as

follows:

2.1 Organization of Seller. Seller is a corporation duly organized,

validly existing and in good standing under the laws of Indiana, with full power

and authority to own or lease its properties and to conduct the Business in the

manner and in the places where such properties are owned or leased or such

business is currently conducted. Seller is duly qualified to conduct the

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Business in all states in which the failure to so qualify would have a material

adverse effect on the Business.

2.2 Authority of Seller and Shareholders. Seller and each of the

Shareholders have the full right, authority and power to enter into this

Agreement and each agreement, document and instrument to be executed and

delivered by or on behalf of Seller or any of the Shareholders pursuant to this

Agreement (the "Seller Documents") and to carry out the transactions

contemplated hereby and thereby. The execution, delivery and performance by

Seller and each of the Shareholders of this Agreement and Seller Documents have

been duly authorized by all necessary action of Seller and each of the

Shareholders and no other action on the part of Seller or any of the

Shareholders is required in connection therewith. This Agreement and Seller

Documents executed and delivered by Seller and each of the Shareholders pursuant

to this Agreement constitute, or when executed and delivered will constitute,

valid and binding obligations of Seller and each of the Shareholders enforceable

in accordance with their respective terms, except as such enforceability may be

limited by applicable bankruptcy, insolvency or other similar laws affecting

creditors' rights. The execution, delivery and performance by Seller of this

Agreement, Seller Documents and the consummation of the transactions

contemplated hereby or thereby:

(a) Does not and will not violate any provision of the Articles of

Incorporation or Bylaws of Seller, in each case as amended to date;

(b) Does not and will not violate any laws of the United States, or any

state or other jurisdiction applicable to Seller or require Seller to obtain any

approval, consent or waiver of, or make any filing with, any person or entity

(governmental or otherwise) that has not been obtained or made;

(c) Does not and will not result in a breach of, constitute a default

under, accelerate any obligation under, or give rise to a right of termination

of any indenture, loan or credit agreement or any other agreement, contract

instrument mortgage, lien, lease, permit authorization, order, writ, judgment,

injunction, decree, determination or arbitration award to which Seller is a

party or by which any of the property of Seller is bound or affected, or result

in the creation or imposition of any Lien (except for Assumed Liabilities) on

any of the Subject Assets. The officers or agents of Seller who execute this

Agreement and Seller Documents contemplated hereby on behalf of Seller have and

shall have all requisite power to do so in the name of and on behalf of Seller.

2.3 Absence of Restrictions. Neither Seller or any of the Shareholders

has made any other agreement with any other party with respect to the sale or

any other disposition or encumbrance of the Business or the Subject Assets.

2.4 Title to Assets. Seller has good, marketable and indefeasible title

to all of the Subject Assets, free and clear of all claims, liabilities,

restrictions and Liens. Upon the sale, assignment, transfer and delivery of the

Subject Assets to Purchaser under and in accordance with this Agreement and

Seller Documents, there will be vested in Purchaser good, marketable and

indefeasible title to the Subject Assets, free and clear of all Liens. The

Subject Assets: (i) include certain assets and properties used or held for use

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by Seller to conduct the Business as currently conducted; and (ii) include

certain assets and properties necessary for Purchaser to operate the Business in

the same manner as Seller.

2.5 Seller's Business Operations. Seller has no liabilities of any

nature, whether accrued, absolute, contingent or otherwise, asserted or

unasserted, known or unknown (including without limitation liabilities as

guarantor or otherwise with respect to obligations of others, or liabilities for

taxes due or then accrued or to become due or contingent or potential

liabilities relating to activities of the Business or the conduct of the

Business) which will materially and adversely affect the conduct of the Business

subsequent to Closing.

2.6 Intellectual Property.

(a) Seller has exclusive ownership of, or valid license or authority to

use, all trade secrets, know how, computer software, licenses, trade or product

names, company names, logos, customer lists, mailing lists, sales and

advertising material, engineering information, technology, development rights,

drawings and designs, customer specifications, supplier information, systems,

data compilations, research results or other proprietary rights, goodwill,

telephone numbers, fax numbers, URL addresses, trade and product names,

(including but not limited to all rights to the name "Magtech" and any

derivatives thereof) and all proprietary property and products (collectively,

"Intellectual Property") used in the Business as presently conducted. The

Intellectual Property is freely transferable to Purchaser and constitutes all of

the technology, proprietary rights and intellectual property necessary in order

for Purchaser to operate the Business in the ordinary course as presently

conducted and perform the Assumed Contracts in accordance with their terms.

Seller has the non-exclusive right to use, free and clear of claims or rights of

other persons, all of the Intellectual Property without payments to or consents

from any other party.

(b) All licenses or other agreements (if any) under which Seller is

granted rights in any of the Intellectual Property are in full force and effect

and there is no material default by any party thereto. The licensors under said

licenses and other agreements (if any) have and had all requisite power and

authority to grant the rights purported to be conferred thereby. True and

complete copies of all such licenses or other agreements, and any amendments

thereto (if any) have been provided on Schedule 2.6(b).

(c) Seller's use of any Intellectual Property does not infringe any

rights of any other person. Seller is not making unauthorized use of any

confidential information or trade secrets of any person, including without

limitation any former employer or any past or present employee of Seller.

(d) Notwithstanding anything in this Agreement or the related Bill of

Sale to the contrary, Seller shall convey all of its interest in its software to

Purchaser, free and clear of all Liens. Purchaser acknowledges and agrees that

certain software may require the consent of the licensor to transfer. Purchaser

also acknowledges and agrees that Seller does not have to obtain the consent of

such licensors

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2.7 Assumed Contracts. All of the Assumed Contracts have been entered

into in the ordinary course of business, are in full force and effect and have

not been amended, extended or otherwise modified (whether orally or in writing),

except for amendments, extensions, and modifications made in the ordinary course

of business consistent with past practices. Neither Seller nor any other party

thereto is in default under any such Assumed Contracts (a "default" being

defined for purposes hereof as an actual default, other than late payment of an

Account Receivable, or any set of facts which would, upon receipt of notice or

passage of time or both, constitute a default, other than late payment of an

Account Receivable). Seller is not a party to or subject to any contract or

agreement that will impose any material obligations on Purchaser (except for the

obligations to be performed under the Assumed Contracts in the ordinary course

of business) or otherwise materially impair the value of the Subject Assets

after the Closing Date. All of the terms of each Assumed Contract as amended,

are set forth in writing and true and complete written copies of all of the

Assumed Contracts have been provided to Purchaser.

2.8 No Litigation; Compliance. There is no litigation or governmental

or administrative proceeding or investigation pending or, to Seller's knowledge,

threatened against Seller or any of its affiliates which may have an adverse

effect on the Business or the Subject Assets subsequent to Closing, or which

would prevent the consummation of the transactions contemplated by this

Agreement or the Related Agreements. Seller has not received notice of any

violation or alleged violation of any applicable statute, ordinance, order, rule

or regulation.

2.9 Taxes. Seller has paid or caused to be paid any and all federal,

state, local, foreign and other taxes, and all deficiencies, or other additions

to tax, interest, fines and penalties that are due and payable by Seller through

the Closing Date, whether disputed or not. Seller has, in accordance with all

applicable law, filed all federal, state, local, foreign and other tax returns

required to be filed by Seller through the Closing Date, and all such returns

correctly and accurately set forth the amount of any taxes relating to the

applicable period. There is no unassessed tax deficiency proposed or threatened

against Seller. None of the Subject Assets are or will be subject to any lien or

encumbrance for taxes which are past due or which became payable or accrued on

or prior to the Closing Date.

2.10 Insurance. The liability and casualty insurance policies

pertaining to Seller are in full force and effect. All premiums due to the date

hereto have been paid in full and such policies will remain in effect through

the Closing Date. All such policies have been issued by reputable insurance

companies which are actively engaged in the insurance business and authorized to

issue policies in Seller's jurisdiction(s) of business operation.

2.11 Warranty or Other Claims. There are no existing or threatened

errors or omissions, warranty or other similar claims against Seller or any

Subject Asset. Seller shall be responsible for any errors or omissions claims,

warranty claims or any other claims relating to products or services that it

sold or provided prior to the Closing Date except to the extent such liability

is covered by a policy of insurance carried by Purchaser and/or FDI.

2.12 Environmental Matters.

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(a) (i) Seller has no liability under, nor has it violated, any

Environmental Law; (ii) any property owned, operated, leased, or used by Seller,

and any facilities and operations thereon, are presently in compliance with all

applicable Environmental Laws; (iii) Seller has never entered into or been

subject to any judgment, consent decree, compliance order, or administrative

order with respect to any environmental or health and safety matter or received

any request for information, notice, demand letter, administrative inquiry, or

formal or informal complaint or claim with respect to any environmental or

health and safety matter or the enforcement of any Environmental Law; and (iv)

none of the items enumerated in clause (iii) of this subsection will to the

knowledge of Seller be forthcoming.

(b) Schedule 2.12(b) attached hereto and made a part hereof sets forth

copies of all documents, records