ASSET PURCHASE AGREEMENT

EXHIBIT 2.2

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”), dated as of August 1, 2008, is entered into by and among Fisher-Klosterman, Inc., a Delaware corporation (“ Buyer ”), Shideler, Inc. (f/k/a A.V.C. Specialists, Inc.), a California corporation (“ Seller ”), and Thomas J. Shideler and Barbara Shideler (the “ Shareholders ”).

WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Assets for the consideration and on the terms set forth in this Agreement.

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:

1. Definitions

Capitalized terms and variations thereof used in this Agreement and not otherwise defined herein have the meanings set forth below:

“ Accounts Receivable ” – (a) all trade accounts receivable and other rights to payment from customers of Seller and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of Seller, (b) all other accounts or notes receivable of Seller and the full benefit of all security for such accounts or notes, and (c) any claim, remedy or other right of Seller related to any of the foregoing.

“ Adjustment Amount ” – the amount determined by subtracting $575,000.00 from the Net Operating Asset Value at Closing (which may be a positive or negative number).

“ Appurtenances ” – all privileges, rights, easements, hereditaments, and appurtenances belonging to or for the benefit of the Land and all rights existing in and to any streets, alleys, passages, and other rights-of-way included thereon or adjacent thereto (before or after vacation thereof), and vaults beneath any such streets.

“ Assignment and Assumption Agreement ” – an assignment of all of the Assets that are intangible personal property, which assignment shall also contain Buyer’s undertaking and assumption of the Assumed Liabilities.

“ Bill of Sale ” – a bill of sale for all of the Assets that are Tangible Personal Property.

“ Business ” – the business and operations of Seller, including the sales, service and engineering of electrostatic precipators, including the provision of replacement parts to original equipment manufacturers (OEM), provided generally under the name A.V.C. Specialists, Inc.

“ CERCLA ” – as defined within the definition of Environmental, Health and Safety Liabilities.

“ Cleanup ” – as defined within the definition of Environmental, Health and Safety Liabilities.

 

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“ COBRA ” – Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA.

“ Copyrights ” – all registered and unregistered copyrights in both published works and unpublished works.

“ Code ” – the Internal Revenue Code of 1986, as amended.

“ Consent ” – any approval, consent, ratification, waiver, or other authorization.

“ Contemplated Transactions ” – all of the transactions contemplated by this Agreement.

“ Contract ” – any binding contract, Lease or other agreement (whether written or oral).

“ Copyrights ” – all registered and unregistered copyrights in both published works and unpublished works.

“ Damages ” – any actual loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses), whether or not involving a Third-Party Claim.

“ Disclosure Schedule ” – the Disclosure Schedule delivered by Seller to Buyer concurrently with the execution and delivery of this Agreement.

“ Dollars ” or “ $ ”– United States dollars.

“ Employment Agreements ” – the employment agreements between Buyer and each of: (a) Thomas J. Shideler and (b) Barbara Shideler, as agreed by the parties.

“ Encumbrance ” – any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, right of first option, right of first refusal, or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income, or exercise of any other attribute of ownership.

“ Environment ” – soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.

“ Environmental, Health and Safety Liabilities ” – any cost, damages, expense, liability, obligation, or other responsibility arising from or under any (i) Environmental Law, (ii) Occupational Safety and Health Law, or (iii) common law, including those consisting of or relating to: (a) any environmental, health, or safety matter or condition (including on-site or off-site contamination, occupational safety and health, and regulation of any chemical substance or product); (b) any fine, penalty, judgment, award, settlement, legal, or administrative proceeding, damage, loss, claim, demand or response, or remedial or inspection cost or expense arising under any Environmental Law or Occupational Safety and Health Law; (c) financial responsibility

 

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under any Environmental Law, Occupational Safety and Health Law or common law for investigation costs, monitoring costs, cleanup costs, or corrective action, including any cleanup, removal, containment, or other remediation or response actions (“ Cleanup ”) required by any Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages or any other compliance, corrective, or remedial measure required under any Environmental Law or Occupational Safety and Health Law; or (d) personal injury, bodily injury, property damage, environmental damage, natural resource damage, or harm to humans resulting from or arising out of any matter covered by this definition.

The terms “removal,” “remedial” and “response action” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“ CERCLA ”).

“ Environmental Law ” – any Legal Requirement as in existence on the Closing Date that requires or relates to: (a) advising appropriate authorities, employees, or the public of intended, threatened, or actual Releases of Hazardous Materials, violations of discharge limits, or other prohibitions and the commencement of activities, such as resource extraction or construction, that could have an impact on the Environment; (b) preventing or reducing to acceptable levels the Release of Hazardous Materials into the Environment; (c) reducing the quantities, preventing the Release, or minimizing the hazardous characteristics of wastes or Hazardous Materials that are generated or possessed; (d) assuring that products are designed, formulated, packaged, and used so that they do not present risks to human health or the Environment when handled, used, or disposed of; (e) protecting resources, species, or ecological amenities; (f) reducing to acceptable levels the risks inherent in the handling or transportation of Hazardous Materials or other potentially harmful substances; (g) cleaning up Hazardous Materials that have been Released, preventing the Threat of Release, or paying the costs of such clean up or prevention; or (h) making responsible parties pay private parties, or groups of them, for damages done to their health or the Environment or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.

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

“ Escrow Agent ” – U.S. Bank National Association.

“ Escrow Agreement ” –the agreement between the Escrow Agent, Seller and Buyer related to the Escrow Amount.

“ Escrow Amount ” –$100,000.00, which shall remain in escrow as set forth in the Escrow Agreement and as described in this Agreement.

“ Exchange Act ” – the Securities Exchange Act of 1934, as amended.

“ Facilities ” – any real property, leasehold, or other interest in real property currently owned or operated by Seller with respect to the Business or the Assets.

 

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“ Financial Statements ” – with respect to any accounting period for Seller, statements of income and cash flows of Seller for such period, and a balance sheet of Seller as of the end of such period setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year all prepared in reasonable detail in accordance with GAAP, except that interim Financial Statements will omit footnotes, statement of shareholder’s equity and year-end adjustments.

“ Fiscal Year ” – the 12-month period ended December 31 of each year.

“ GAAP ” – generally accepted accounting principles for financial reporting in the United States.

“ Governing Documents ” – with respect to any particular entity, (a) if a corporation, the articles or certificate of incorporation and the bylaws or code of regulations; (b) if a general partnership, the partnership agreement and any statement of partnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (d) if a limited liability company, the articles of organization or certificate of formation and operating agreement or limited liability company agreement; (e) if another type of Person, any other charter or similar document adopted or filed in connection with the creation, formation, or organization of the Person; and (f) any amendment or supplement to any of the foregoing.

“ Governmental Authorization ” – any Consent, license, registration, or permit issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“ Governmental Body ” – any: (a) nation, state, county, city, town, borough, village, district, or other jurisdiction; (b) federal, state, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal, or other entity exercising governmental or quasi-governmental powers); (d) multinational organization or body; (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power; or (f) official of any of the foregoing.

“ Ground Lease ” – any long-term lease of land in which most of the rights and benefits comprising ownership of the land and the improvements thereon or to be constructed thereon, if any, are transferred to the tenant for the term thereof.

“ Ground Lease Property ” – any land, improvements, and appurtenances subject to a Ground Lease in favor of Seller.

“ Hazardous Activity ” – the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous Material in, on, under, about, or from any of the Facilities or any part thereof into the Environment.

“ Hazardous Material ” – any pollutant, contaminant, chemical, substance, material, or waste that is regulated by any Governmental Body, including any pollutant, contaminant, chemical, material, substance, or waste that is defined as a “hazardous waste,” “hazardous

 

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material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “special waste,” “contaminant,” “toxic waste,” or “toxic substance” under any provision of Environmental Law, and including oil, used oil, petroleum, petroleum products and byproducts, asbestos, presumed asbestos-containing material or asbestos-containing material, radon, urea formaldehyde, and polychlorinated biphenyls.

“ Improvements ” – all buildings, structures, fixtures, and improvements located on the Land or included in the Assets, including those under construction.

“ Indemnified Person ” – a Person entitled to indemnity under Section 6.2 or 6.4 .

“ Indemnifying Person ” – a Person obligated to indemnify an Indemnified Person.

“ Intellectual Property Assets ” – all intellectual property owned or licensed (as licensor or licensee) by Seller in which Seller has a proprietary interest, including Marks, Patents, Copyrights, all rights in mask works, Trade Secrets, and Net Names.

“ Interim Balance Sheet ” – the unaudited balance sheet of Seller as of April 30, 2008.

“ Inventories ” – all inventories of Seller, wherever located, including all finished goods, work in process, raw materials, spare parts, and all other materials and supplies to be used or consumed by Seller in the production of finished goods.

“ IRS ” – the United States Internal Revenue Service and, to the extent relevant, the United States Department of the Treasury.

“ Knowledge ” – an individual will be deemed to have Knowledge of a particular fact or other matter if that individual is actually aware of that fact or matter or would be after reasonable investigation. The Seller will be deemed to have Knowledge of a particular fact or other matter if either of the Shareholders had such Knowledge of the particular fact or other matter, and the Buyer shall be deemed to have Knowledge of a particular fact or other matter if either Gerald Plappert or William Heumann had such Knowledge of the particular fact or other matter.

“ Land ” – all parcels and tracts of land in which Seller has an ownership interest relating to the Business.

“ Lease ” – any Real Property Lease or any lease or rental agreement, license, right to use, or installment and conditional sale agreement to which Seller is a party and any other Seller Contract pertaining to the leasing or use of any Tangible Personal Property.

“ Legal Requirement ” – any federal, state, local, municipal, foreign, international, multinational, or other constitution, law, ordinance, principle of common law, code, regulation, statute, or treaty.

“ Liability ” – with respect to any Person, any liability or obligation of such Person of any kind, character, or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable, or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

 

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“ Marks ” – Seller’s name, all assumed fictional business names, trade names, registered and unregistered trademarks, service marks, and applications for any of the foregoing.

“ Material Adverse Change ” – (a) a material adverse change in the business, operations, results of operations, assets, liabilities, or financial condition of the referenced Person and its Subsidiaries, taken as a whole, or (b) a change that results in a material impairment of the referenced Person’s ability to perform its obligations under this Agreement or the other documents and agreements to which it is a party that have been entered into in connection with this Agreement or the transactions contemplated hereby; provided, however, none of the following shall be taken into account in determining whether there has been a Material Adverse Change: (a) any adverse change, event, development, or effect arising from or relating to (1) general business or economic conditions, including such conditions related to the Business so long as any adverse change, event, development, or effect to the Business is not materially worse than such adverse change, event, development, or effect to the United States marketplace in general, (2) financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), (3) changes in the United States generally accepted accounting principles, (4) changes in laws, rules, regulations, orders, or other binding directives issued by any governmental entity, or (5) the taking of any action contemplated by this Agreement and other agreements, contemplated hereby, (b) any existing event, occurrence, or circumstance with respect to which Buyer has Knowledge as of the date hereof, and (c) any adverse change in or effect on the Business that is fully cured by Seller before the Closing Date.

“ Material Adverse Effect ” – any effect that results in, or has a reasonable likelihood of resulting in, a Material Adverse Change.

“ Net Names ” – all rights in Internet web sites and internet domain names presently used by Seller.

“ Net Operating Asset Value ” – Tangible Asset Value less Operating Liabilities, calculated as reflected on Schedule 2.8 .

“ Occupational Safety and Health Law ” – any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act, and any required program, whether governmental or private (such as those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions.

“ Operating Liabilities ” – Seller’s current liabilities, consisting solely of accounts payable, as set forth on Seller’s Financial Statements, as reflected on Schedule 2.8 .

“ Order ” – any order, injunction, judgment, decree, ruling, assessment, or arbitration award of any Governmental Body or arbitrator.

 

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“ Ordinary Course of Business ” – an action taken by Seller will be deemed to have been taken in the Ordinary Course of Business if that action is consistent in nature, scope, and magnitude with the past practices of Seller and is taken in the ordinary course of the Business.

“ Patents ” – all patents, patent applications, and inventions and discoveries that may be patentable.

“ Person ” – an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Body.

“ Proceeding ” – any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, judicial, or investigative, whether formal or informal, whether public or private) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“ Real Property ” – the Land and Improvements and all Appurtenances thereto and any Ground Lease Property.

“ Real Property Lease ” – any Ground Lease or Space Lease.

“ Record ” – information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“ Related Person ” –

With respect to a particular individual:

 

(a)	each other member of such individual’s immediate family;

 

(b)	any Person that is directly or indirectly controlled by any one or more members of such individual’s immediate family;

 

(c)	any Person in which members of such individual’s Family hold (individually or in the aggregate) a controlling interest; and

 

(d)	any Person with respect to which one or more members of such individual’s immediate family serves as a director, officer, partner, manager, executor, or trustee (or in a similar capacity).

With respect to a specified Person other than an individual:

 

(a)	any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person;

 

(b)	any Person that holds a controlling interest in such specified Person;

 

(c)	each Person that serves as a director, officer, partner, manager, executor, or trustee of such specified Person (or in a similar capacity);

 

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(d)	any Person in which such specified Person holds a controlling interest; and

 

(e)	any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity).

“ Release ” – any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching, or migration on or into the Environment or into or out of any property.

“ Remedial Action ” – all actions, including any capital expenditures, required or voluntarily undertaken (a) to clean up, remove, treat, or in any other way address any Hazardous Material or other substance; (b) to prevent the Release or Threat of Release or to minimize the further Release of any Hazardous Material or other substance so it does not migrate or endanger or threaten to endanger public health or welfare or the Environment; (c) to perform pre-remedial studies and investigations or post-remedial monitoring and care; or (d) to bring all Facilities and the operations conducted thereon into compliance with Environmental Laws and environmental Governmental Authorizations.

“ Representative ” – with respect to a particular Person, any director, officer, manager, general partner, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel, or other representative of that Person.

“ SEC ” – the United States Securities and Exchange Commission.

“ Securities Act ” – the Securities Act of 1933, as amended.

“ Seller Contract ” – any Contract: (a) under which Seller has or may acquire any rights or benefits; (b) under which Seller has or may become subject to any obligation or liability; or (c) by which Seller or any of the assets owned or used by Seller is or may become bound.

“ Shareholders ” – means Thomas J. Shideler and Barbara Shideler.

“ Software ” – all computer software and subsequent versions thereof, including source code, object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons, and icons, and all electronic files, electronic data, materials, manuals, design notes, and other items and documentation related thereto or associated therewith.

“ Space Lease ” – any lease or rental agreement pertaining to the occupancy of any improved space on any Land.

“ Subsidiary ” – as to any Person, (a) any corporation more than fifty percent (50%) of whose capital stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, (b) any partnership, association, joint venture, or other entity in which such Person directly or indirectly through Subsidiaries has more than a fifty percent (50%) interest in the total capital, total income, or total ownership interests of such entity at any time, and (c) any partnership in which such Person is a general partner.

 

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“ Tangible Asset Value ” – all of Seller’s current assets (excluding cash) and fixed assets, both as reflected on Schedule 2.8 .

“ Tangible Personal Property ” – all machinery, equipment, tools, furniture, office equipment, computer hardware, supplies, materials, vehicles, and other items of tangible personal property (other than Inventories) of every kind owned or leased by Seller (wherever located and whether or not carried on Seller’s books), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

“ Tax ” – any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel, or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum, and other tax, fee, assessment, levy, tariff, charge, or duty of any kind whatsoever, and any interest, penalty, addition, or additional amount thereon, in any such case, to the extent imposed, assessed, or collected by or under the authority of any Governmental Body, whether payable directly or payable under any tax-sharing agreement or any other Contract.

“ Tax Return ” – any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

“ Third-Party Claim ” – any claim against any Indemnified Person by a third party, whether or not involving a Proceeding.

“ Threat of Release ” – a reasonable likelihood of a Release that may require action in order to prevent or mitigate damage to property, humans, or the Environment that may result from such Release.

“ Trade Secrets ” – all know-how, trade secrets, confidential or proprietary information, customer lists, Software, technical information, data, process technology, plans, drawings, and blue prints.

2. Sale and Transfer of Assets; Closing

2.1 ASSETS TO BE SOLD

Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, but effective as of the Closing Date, Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any Encumbrances

 

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other than Permitted Encumbrances, all of Seller’s right, title, and interest in and to all property and assets, real, personal, or mixed, tangible and intangible, of every kind and description, wherever located, belonging to Seller and that relate to the Business as conducted immediately prior to the Closing Date (the “ Assets ”). The Assets shall include, but not be limited to, the following (but excluding the Excluded Assets):

 

(a)	all Real Property, including the Real Property described in Schedules 3.7 ;

 

(b)	all Tangible Personal Property, including those items described in Schedule 2.1(b) ;

 

(c)	all Inventories;

 

(d)	all Accounts Receivable;

 

(e)	all Seller Contracts, including those listed in Schedule 3.19(a) , and all outstanding offers or solicitations made by or to Seller to enter into any Contract;

 

(f)	all Governmental Authorizations and all pending applications therefor or renewals thereof, in each case to the extent transferable to Buyer, including those listed in Schedule 3.16(b) ;

 

(g)

all data and Records related to the operations of Seller, including client and customer lists and Records, referral sources, research and development reports and Records, production reports and Records, service and warranty Records, equipment logs, operating guides and manuals, financial and accounting Records, creative materials, advertising materials, promotional materials, studies, reports, correspondence, and other similar documents and Records and, subject to Legal Requirements, certified copies of all personnel Records and other Records described in Section 2.2(g) ;

 

(h)

all of the intangible rights and property of Seller, including Intellectual Property Assets, going concern value, goodwill, telephone, telecopy and e-mail addresses and listings, the name “AVC”, “AVC Specialists” or any derivative thereof, and those items listed in Schedules 3.24(c) , (d) , (e)  and (f) ;

 

(i)	all insurance benefits, including rights and proceeds, arising from or relating to the Assets or the Assumed Liabilities prior to the Closing Date, unless expended in accordance with this Agreement or relating to a claim, or loss for which Seller or Shareholders are liable or responsible hereunder;

 

(j)

all claims of Seller relating to the Assets, whether, known or unknown, contingent or noncontingent, including all such claims listed in Schedule 2.1(j) , except to the extent Seller or Shareholders may use such claims to defend, offset, or counterclaim any claim made by a third party against Seller or Shareholder with respect to a Liability;

 

(k)	all rights of Seller relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof that are not listed in Schedule 2.2(d) and that are not excluded under Section 2.2(h) .

 

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Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement shall not include the assumption of any Liability related to the Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a) .

2.2 EXCLUDED ASSETS

Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following assets of Seller (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Assets and shall remain the property of Seller after the Closing:

 

(a)	all cash and cash equivalents;

 

(b)	all minute books, stock Records, and corporate seals;

 

(c)	all insurance policies and rights thereunder (except to the extent specified in Section 2.1(i) and (j) );

 

(d)	all of the Seller Contracts listed in Schedule 2.2(d) ;

 

(e)	all personnel Records and other Records that Seller is required by law to retain in its possession;

 

(f)	all claims for refund of Taxes and other governmental charges of whatever nature;

 

(g)	all rights of Seller under this Agreement, the Bill of Sale and the Assignment and Assumption Agreement;

 

(h)	the Seller’s account receivable from Alstom Projects India, Ltd., relating a project in Kuwait; and

 

(i)	the property and assets expressly designated in Schedule 2.2(i) .

2.3 CONSIDERATION

The aggregate consideration for the Assets (the “ Purchase Price ”) shall be paid by Buyer, in immediately available funds, as follows:

 

(a)	At the Closing, Buyer shall pay $1,250,000.00 in cash by wire transfer to an account specified by Seller and assume the Assumed Liabilities.

 

(b)	At the Closing, Buyer shall deposit with the Escrow Agent the Escrow Amount, pursuant to the terms and conditions of the Escrow Agreement.

 

(c)	In accordance with Section 2.8 , Buyer or Seller shall pay the Adjustment Amount.

 

(d)	In accordance with Section 2.9 , Buyer shall pay the Earn-out Amount.

 

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2.4 ASSUMED LIABILITIES. At the Closing, but effective as of the Closing Date, Buyer shall assume and agree to discharge when due only the following Liabilities of Seller (the “ Assumed Liabilities ”), and all other Liabilities shall be deemed excluded Liabilities and the Seller shall have the sole responsibility to discharge such Liabilities:

 

(a)

any trade account payable reflected on the Interim Balance Sheet (other than a trade account payable to a Related Person of Seller that remains unpaid as of the Closing Date);

 

(b)

any trade account payable ( other than a trade account payable to a Related Person of Seller) incurred by Seller in the Ordinary Course of Business between the date of the Interim Balance Sheet and the Closing Date that remains unpaid as of the Closing Date;

 

(c)

any Liability to Seller’s customers incurred by Seller in the Ordinary Course of Business for orders outstanding as of the Closing Date reflected on Seller’s books (other than any Liability, including, without limitation, warranty claims arising out of or relating to a breach that occurred prior to the Closing Date), including, without limitation, obligations to Seller’s customers to provide goods or services from and after the Closing Date;

 

(d)

any Liability of Seller arising after the Closing Date under any Seller Contract included in the Assets;

 

(e)

any Liability of Seller described in Schedule 2.4(e) ; and

 

(f)

any Liability relating in any way to the Assets or the Business arising from acts or omissions after the Closing.

2.5 ALLOCATION

The Purchase Price shall be allocated in accordance with Schedule 2.5 . After the Closing, the parties shall make consistent use of the allocation, fair market value, and useful lives specified in Schedule 2.5 for all Tax purposes and in all filings, declarations, and reports with the IRS in respect thereof, including the reports required to be filed under Section 1060 of the Code. Buyer shall prepare and deliver IRS Form 8594 to Seller within forty-five (45) days after the Closing to be filed with the IRS. In any Proceeding related to the determination of any Tax, neither Buyer nor Seller shall contend or represent that such allocation is not a correct allocation.

2.6 CLOSING

The purchase and sale provided for in this Agreement will take place via the exchange of signature pages and closing documents by facsimile, electronic and/or courier service on the date on which this Agreement is signed (the “ Closing Date ”), which the parties intend to be as soon as practicable, but no later than August 1, 2008.

 

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2.7 CLOSING OBLIGATIONS

In addition to any other documents to be delivered under other provisions of this Agreement, at the Closing:

 

(a)	Seller shall deliver to Buyer:

 

(i)

the Bill of Sale executed by Seller;

 

(ii)

the Assignment and Assumption Agreement executed by Seller;

 

(iii)

for each interest in Real Property identified on Schedule 3.7 , a recordable general warranty deed, an assignment and assumption of Lease or such other appropriate document or instrument of transfer, as the case may require, each in form and substance satisfactory to Buyer and its counsel and executed by Seller;

 

(iv)

assignments of all Intellectual Property Assets and separate assignments of all registered Marks and Patents executed by Seller;

 

(v)

such other deeds, bills of sale, assignments, certificates of title (including endorsed certificates of title for motor vehicles), documents, and other instruments of transfer and conveyance as may reasonably be requested by Buyer, each in form and substance satisfactory to Buyer and its legal counsel and executed by Seller;

 

(vi)

the Employment Agreements, each executed the appropriate employee party;

 

(vii)

a certificate of the Secretary of Seller certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Seller, certifying and attaching all requisite resolutions or actions of Seller’s board of directors and the Shareholders approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions and the change of name contemplated by Section 5.4 and certifying to the incumbency and signatures of the officers of Seller executing this Agreement and any other document relating to the Contemplated Transactions, accompanied by the requisite documents for amending the relevant Governing Documents of Seller required to effect such change of name in form sufficient for filing with the appropriate Governmental Body;

 

(viii)

a certificate issued by the jurisdiction of Seller’s organization as of a date not more than 5 days before the Closing certifying that Seller is validly existing and in good standing;

 

(ix)

the Consents;

 

(x)

payoff letters or release letters from each party which holds an Encumbrance on any of the Assets, accompanied by proper lien release documents, in the form as acceptable to Buyer.

 

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(b)	Buyer shall deliver to Seller:

 

(i)

$1,250,000.00 by wire transfer to an account specified by Seller;

 

(xiv)

the Assignment and Assumption Agreement executed by Buyer;

 

(iii)

the Employment Agreements executed by Buyer;

 

(iv)

a certificate of the Secretary of Buyer certifying, as complete and accurate as of the Closing, attached copies of the Governing Documents of Buyer and certifying and attaching all requisite resolutions or actions of Buyer’s board of directors and, if necessary or required, its Shareholders, approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions and certifying to the incumbency and signatures of the officers of Buyer executing this Agreement and any other document relating to the Contemplated Transactions; and

 

(v)

a certificate issued by the jurisdiction of Buyer’s organization as of a date not more than 5 days before the Closing certifying that Buyer is validly existing and in good standing.

2.8 ADJUSTMENTS

 

(a)

Within 45 days after the Closing, Seller shall deliver to Buyer a statement of showing the Net Operating Asset Value and Adjustment Amount as of the Closing Date; calculated in accordance with GAAP and on the same basis and applying the same accounting principles, policies and practices for the accounts set forth on Schedule 2.8 . Seller shall furnish or cause to be furnished to Buyer such work papers, records, or other documents relating to the applicable calculation of the Net Operating Asset Value and the Adjustment Amount, and access thereto, as may be necessary or reasonably appropriate for evaluation of each calculation.

 

(b)

If the Adjustment Amount is negative, the Adjustment Amount shall be paid by wire transfer by Seller to an account specified by Buyer and if the Adjustment Amount is positive, the Adjustment Amount shall be paid by wire transfer by Buyer to an account specified by Seller, each within five (5) business days after the delivery of the statement or the resolution of any dispute pursuant to Section 2.10 , whichever is later.

2.9 EARN-OUT

 

(a)	The Earn-out shall be:

 

(i)

an amount (not to exceed $400,000.00 in the aggregate) equal to fifty percent (50%) of the cumulative amount by which annual Gross Profit of the Business exceeds $1,400,000.00 per Fiscal Year (the result of each calculation being an “ Earn-out Amount ”) in any of the following (each, an “ Earn-out Period ”):

 

(A)

the partial portion of Fiscal Year 2008, which period commences at the beginning of the month next succeeding the Closing;

 

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(B)

Fiscal Year 2009; and

 

(C)

the partial portion of Fiscal Year 2010, which period commences on January 1, 2010 and continues until the two-year anniversary of the commencement date set forth in subsection (A) above

 

(a)

(ii) At the conclusion of each Earn-out Period, Buyer shall perform a calculation to determine the Earn-out Amount due to the Seller. For purposes of Fiscal Year 2008, the annual Gross Profit shall be prorated at the rate of five twelfths, so that if the actual prorated results exceed $583,333.33 of Gross Profit, then the Seller shall be deemed to have achieved an Earn-out Amount as stated above. Likewise, Fiscal Year 2010 amounts shall be prorated in a similar manner except at the rate of seven-twelfths. Each Earn-out Amount is subject, in all respects, to the $400,000 aggregate cap described in Section 2.9(a)(i) and before consideration of the prorated amounts as noted above. Notwithstanding anything in this Agreement to the contrary, once Seller is entitled to an Earn-out Payment, Seller shall have no obligation to repay or refund any portion of such Earn-out Amount. Earn-out Amounts shall be paid by wire transfer by Buyer to an account specified by Seller on or before the later of the third calendar month following the conclusion of each Earn-out Period or 3 business days after the calculation of the applicable Earn-out Amount becomes binding and conclusive on the parties pursuant to Section 2.10. If during any time during the Earn-Out Period, Thomas Shideler is not employed by Buyer, upon written request of either Shareholder, Buyer shall provide to the Shareholders the most recent monthly financial statements of the A.V.C. Specialists division of Buyer and such other information reasonably related to the Earn-out set forth in this Section 2.9 ; provided, however, that Shareholders shall not be permitted to make more than one such request in any thirty (30) day period. Within three (3) days of the receipt of such written request, Buyer shall provide the Shareholders either such physical documents or access to Buyer’s facilities for Shareholders to review such information.

 

(b)	(b) “ Gross Profit ” as of a given date shall mean the aggregate gross profits of the Business in a Fiscal Year, calculated in the same manner as is reflected as “Gross Profit” in Seller’s regularly prepared income statements prior to Closing as set forth on Schedule 2.9(b) .

 

(c)

Buyer shall prepare a statement of Gross Profit calculated in accordance with Schedule 2.9(b) and deliver the statement to Seller within 60 days of the end of each Earn-out Period. Buyer shall furnish or cause to be furnished to Seller such work papers, records, or other documents relating to the applicable calculation of Gross Profit and Earn-out Amount, and access thereto, as either Shareholder or Seller may deem to be necessary or reasonably appropriate for evaluation of each calculation.

 

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(d)

Buyer agrees not to (i) operate the Business in a manner and to the extent intended to misrepresent or manipulate the earnings of the Business in any Earn-out Period or the Earn-out Amount, (ii) fail to cause the books and records of the Business to be maintained in a manner as will allow for the segregation, identification and accounting for expenses and revenues for the Business applied in conformance with GAAP and on a basis consistent with the preparation of the financial statements of Seller and otherwise in accordance with the historical practices of the Business prior to Closing, and (iii) operate the Business in a manner designed to reduce revenue or increase operating costs during any Earn-out Period. Notwithstanding the foregoing, any and all decisions regarding the operations of the Business based on Buyer’s good faith business judgment shall not be deemed to be violations of the conditions of this Section 2.9(d) .

2.10 DISPUTE PROCEDURE

 

(a)

If within 30 days following delivery of the Adjustment Amount calculation Buyer has not given Seller written notice of its objection as to the Adjustment Amount calculation (which notice shall state the basis of Buyer’s objection), then the Adjustment Amount calculated by Seller shall be binding and conclusive on the parties.

 

(b)

If within 30 days following the delivery of the Earn-out Amount calculation either Seller or a Shareholder has not given Buyer written notice of its objections to the Earn-out Amount calculation (which notice shall state the basis of Seller’s or the Shareholders’ objection), then the Earn-out Amount calculated by Buyer shall be binding and conclusive on the parties. Notice by one Shareholder shall be deemed to be given on behalf of and with the concurrence and agreement of both Shareholders.

 

(c)

If either party duly gives the other party a notice of objection pursuant to Section 2.10(a) or (b) , and if Seller and Buyer fail to resolve the issues outstanding with respect to the calculation of the Adjustment Amount or the Earn-out Amount within 30 days after the applicable party’s receipt of the objection notice, Seller and Buyer shall submit the issues remaining in dispute to Deloitte & Touche USA LLP, independent public accountants or another independent public accounting firm mutually satisfactory to the parties (the “ Independent Accountants ”) for resolution applying the applicable principles, policies, and practices referred to in Sections 2.8(a) and 2.9(b) and (c) . If issues are submitted to the Independent Accountants for resolution, (i) Seller and Buyer shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Seller and Buyer within 60 days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding, and conclusive on the parties; and (iii) Seller and Buyer will each bear 50% of the fees and costs of the Independent Accountants for such determination.

 

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2.11 CONSENTS.

If there are any Consents that have not yet been obtained (or otherwise are not in full force and effect) as of the Closing, in the case of each Seller Contract as to which such Consents were not obtained (or otherwise are not in full force and effect) (the “ Restricted Contracts ”), Buyer may waive the closing conditions as to any such Consent and either: (i) elect to have Seller continue its efforts to obtain the Consents; or (ii) elect to have Seller retain that Restricted Contract and all Liabilities arising therefrom or relating thereto. If Buyer elects to have Seller continue its efforts to obtain any Consents and the Closing occurs, notwithstanding Sections 2.1 and 2.4 , neither this Agreement nor the Assignment and Assumption Agreement nor any other document related to the consummation of the Contemplated Transactions shall constitute a sale, assignment, assumption, transfer, conveyance, or delivery or an attempted sale, assignment, assumption, transfer, conveyance, or delivery of the Restricted Contracts, and following the Closing, the parties shall use commercially reasonable efforts, and cooperate with each other, to obtain the Consent relating to each Restricted Contract as quickly as practicable. Pending the obtaining of such Consents relating to any Restricted Contract, the parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to Buyer the benefits of use of the Restricted Contract for its term (or any right or benefit arising thereunder, including the enforcement for the benefit of Buyer of any and all rights of Seller against a third party thereunder). Once a Consent for the sale, assignment, assumption, transfer, conveyance, and delivery of a Restricted Contract is obtained, Seller shall promptly assign, transfer, convey, and deliver such Restricted Contract to Buyer, and Buyer shall assume the obligations under such Restricted Contract assigned to Buyer from and after the date of assignment to Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Assignment and Assumption Agreement (which special-purpose agreement the parties shall prepare, execute, and deliver in good faith at the time of such transfer, all at no additional cost to Buyer).

3. Representations and Warranties of Seller

Seller and Shareholders, jointly and severally, represent and warrant, at and as of the Closing Date (unless another time or time period is expressly stated), to Buyer as follows:

3.1 ORGANIZATION AND GOOD STANDING

 

(a)

Schedule 3.1(a) contains a complete and accurate list of Seller’s jurisdiction of incorporation and any other jurisdictions in which it is qualified to do business as a foreign corporation. Seller is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the Seller Contracts. Seller is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction, except where the failure to qualify would not have a Material Adverse Effect.

 

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(b)	Complete and accurate copies of the Governing Documents of Seller, as currently in effect, have been provided to Buyer.

 

(c)	Seller has no Subsidiary and, except as disclosed in Schedule 3.1(c) , does not own any shares of capital stock or other securities or equity interests of any other Person.

3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT

 

(a)

This Agreement constitutes the legal, valid, and binding obligation of Seller, enforceable against it in accordance with its terms, except as the enforcement thereof may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. Upon the execution and delivery by Seller of the Assignment and Assumption Agreement, and each other agreement to be executed or delivered by Seller at the Closing (collectively, the “ Seller’s Closing Documents ”), each of Seller’s Closing Documents will constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as the enforcement thereof may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. Seller has the absolute and unrestricted right, power, and authority to execute and deliver this Agreement and the Seller’s Closing Documents to which it is a party and to perform its obligations under this Agreement and the Seller’s Closing Documents, and such action has been duly authorized by all necessary action by Seller’s shareholders and board of directors.

 

(b)

Except as set forth in Schedule 3.2(b) , neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions does, directly or indirectly (with or without notice or lapse of time): (i) breach (A) any provision of any of the Governing Documents of Seller or (B) any resolution adopted by the board of directors or the shareholders of Seller; (ii) breach or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which Seller or any of the Assets, may be subject; (iii) contravene, conflict with, or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by Seller or that otherwise relates to the Assets or to the business of Seller; (iv) breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate, or modify, any Seller Contract; or (v) result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets, except where the breach, right, contravention, conflict, violation, imposition or creation would not have a Material Adverse Effect.

 

(c)	Except as set forth in Schedule 3.2(c) , Seller is not required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

 

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3.3 CAPITALIZATION

The authorized equity securities of Seller consist of 1,000,000 shares of common stock, no par value per share, of which 100,000 shares are issued and outstanding. All the outstanding shares are owned by the Shareholders. There are no Contracts or agreements relating to the issuance, sale, or transfer of any equity securities or other securities of Seller or any options, warrants or other similar rights of ownership in Seller.

3.4 FINANCIAL STATEMENTS

Seller has delivered to Buyer: (a) the unaudited Financial Statements in each of the fiscal years 2006, 2007 and 2008; (b) the Interim Financial Statements for the four months ended April 30, 2008, certified by Seller’s chief financial officer. Such financial statements fairly present the financial condition and the results of operations, changes in shareholders’ equity, and cash flows of Seller as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP (except that in the case of the Interim Financial Statement, such statements will not contain footnotes or year-end adjustments). The financial statements referred to in this Section 3.4 reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. The financial statements have been and will be prepared from and are in accordance with the accounting Records of Seller.

3.5 BOOKS AND RECORDS

The minute books of Seller, all of which have been made available to Buyer, are true, correct and complete minute books of Seller.

3.6 SUFFICIENCY OF ASSETS

Except as set forth in Schedule 3.6 , the Assets (a) constitute all of the assets, tangible and intangible, necessary to conduct the Business in the manner presently operated by Seller and (b) include all of the operating assets of Seller.

3.7 DESCRIPTION OF LEASED REAL PROPERTY; NO REAL PROPERTY

Schedule 3.7 contains a correct street address of all tracts, parcels, and subdivided lots in which Seller has a leasehold interest. Seller has previously provided Buyer with true, accurate and complete copies of all Real Property Leases. Seller does not own any Real Property.

3.8 TITLE TO ASSETS; ENCUMBRANCES

Seller owns good and transferable title to all of the Assets free and clear of any Encumbrances other than those described in Schedule 3.8 (“ Permitted Encumbrances ”).

3.9 CONDITION OF FACILITIES

Except as disclosed in Schedule 3.9 , each item of Tangible Personal Property is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate

 

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use in the Ordinary Course of Business. Except as disclosed in Schedule 3.9 , no material item of Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the Ordinary Course of Business. Except as disclosed in Schedule 3.9 , all Tangible Personal Property used in Seller’s business is in the possession of Seller.

3.10 ACCOUNTS RECEIVABLE

(a) All Accounts Receivable that are reflected on the Interim Financial Statements or incurred since such date, as reflected on the accounting Records of Seller as of the Closing Date, represent or will represent valid obligations arising from sales actually made or services actually performed by Seller in the Ordinary Course of Business. Except to the extent paid prior to the Closing, such Accounts Receivable are or will be as of the Closing Date current and collectible in the Ordinary Course of Business net of the respective reserves shown on the Interim Financial Statements (which reserves are adequate and calculated consistent with past practice. There is no contest, claim, defense, or right of setoff currently being asserted by an account debtor, other than returns in the Ordinary Co