ASSET PURCHASE AGREEMENT AMONG COMPTON ACQUISITION, INC. RUNCO INTERNATIONAL, INC. AND THE STOCKHOLDERS OF RUNCO INTERNATIONAL, INC. May 23, 2007

Exhibit 10.2

EXECUTION COPY

ASSET PURCHASE AGREEMENT

AMONG

COMPTON ACQUISITION, INC.

RUNCO INTERNATIONAL, INC.

AND

THE STOCKHOLDERS OF RUNCO INTERNATIONAL, INC.

May 23, 2007

TABLE OF CONTENTS

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ASSET PURCHASE AGREEMENT

Asset Purchase Agreement (this “ Agreement ”) dated as of May 23, 2007, by and among Compton Acquisition, Inc. , an Oregon corporation (“ Buyer ”), Runco International, Inc. , a California corporation ( “ Seller ” ) , and Sam Runco and Lori Runco (each a “ Stockholder ” and together, the “ Stockholders ”).

RECITALS

Seller desires and intends to sell substantially all its assets to Buyer, at the price and on the terms and conditions set forth herein. Buyer desires and intends to purchase such assets and to assume certain of the operating liabilities relating to Seller’s business operations, at the price and on the terms and conditions herein set forth. Stockholders own all of the outstanding capital stock of Seller. Buyer, Seller and Stockholders wish to make certain representations, warranties, covenants and agreements in connection with the transaction.

AGREEMENT

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein, the parties hereby agree as follows:

ARTICLE 1. DEFINITIONS

As used in this Agreement, the following capitalized terms shall have the meanings set forth below:

“ Affiliate ”: of any Person (the “ Subject ”) means any other Person which, directly or indirectly, controls or is controlled by or is under common control with the Subject. “ Control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ”: This Agreement and all Schedules and Exhibits hereto, including, but not limited to, the Disclosure Memorandum.

“ Assets ”: As defined in Section 2.1.

“ Assigned Insurance Policies ”: As defined in Section 2.1(k).

“ Assumed Liabilities ”: As defined in Section 2.3.

“ Assumption Agreement ”: As defined in Section 2.5.

“ Bill of Sale ”: As defined in Section 2.5.

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“ Business ”: The business, operations and activities of Seller relating to the design, manufacture, distribution and sale of home theatre products, and all other related activities as conducted by Seller on or before the Closing Date.

“ Business Day ”: Any day that is not a Saturday, a Sunday or any other day on which banks generally are required or authorized to be closed in Portland, Oregon.

“ Claim ”: Any claim, demand, cause of action, suit, proceeding, arbitration, hearing or investigation.

“ Closing ”: The consummation of the purchase and sale of the Assets under this Agreement.

“ Closing Date ”: The date upon which the Closing becomes effective.

“ Code ”: The Internal Revenue Code of 1986, as amended, and all regulations promulgated thereunder, as in effect from time to time.

“ Contract ”: Any contract, agreement, lease, license, grant of immunity from suit, commitment, arrangement, purchase or sale order, or undertaking, whether written or oral.

“ Debt ”: At any time, with respect to any Person, means, without duplication:

(a) its liabilities for borrowed money (whether or not evidenced by a security);

(b) any liabilities for borrowed money secured by any Encumbrance existing on property owned by such Person (whether or not such Person is personally liable in respect thereof);

(c) any obligations in respect of any capital lease of such Person;

(d) all obligations of such Person in respect of banker’s acceptances, other acceptances, letters of credit and other instruments serving a similar function issued or accepted by banks and other financial institutions for the account of such Person (whether or not incurred in connection with the borrowing of money); and

(e) any Guaranty of such Person of any obligation or liability of another Person of a type described in any of clause (a) through clause (d), inclusive, of this definition.

“ Disclosure Memorandum ”: That certain Disclosure Memorandum dated as of the date hereof and delivered by Seller or Buyer on the date hereof in connection with this Agreement.

“ Employee Benefit Plans ”: All employee pension benefit plans, as defined in Section 3(2) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA, and any deferred compensation, performance, bonus, incentive, vacation pay, holiday pay, severance, insurance, retirement, excess benefit, fringe benefit or other plan, trust or arrangement, whether or not covered by ERISA, whether written or oral, for the benefit of any employees of Seller or the Business.

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“ Encumbrance ”: Any security interest, mortgage, lien, charge, option, easement, license, adverse claim or restriction of any kind, including, but not limited to, any restriction on the use, transfer, voting, receipt of income or other exercise of any attributes of ownership.

“ Environment ”: The air, ground (surface and subsurface) or water (surface and groundwater), or the workplace.

“ Environmental and Safety Law ”: Any federal, state, local or other law, statute, rule, ordinance or regulation or any common law pertaining to public or worker health, welfare or safety or the Environment (including, but not limited to, those laws, statutes, rules, ordinances and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, processing or transporting of Hazardous Materials), including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. § 6901 et seq.; the Federal Clean Air Act, 42 U.S.C. § 7401-7626; the Federal Water Pollution Control Act and Federal Clean Water Act of 1977, as amended, 33 U.S.C. § 1251 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 135 et seq.; the Federal Environmental Pesticide Control Act, the Federal Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Federal Safe Drinking Water Act, 42 U.S.C. § 300(f) et seq.; the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq.; and any applicable Judgments issued by a court of competent jurisdiction in connection with any of the foregoing.

“ ERISA ”: The Employee Retirement Income Security Act of 1974, as amended.

“ Escrow Agent ”: Mellon Investor Services LLC.

“ Escrow Agreement ”: The Escrow Agreement to be entered into among Buyer, Seller and the Escrow Agent, substantially in the form of Exhibit A .

“ Escrow Amount ”: An amount equal to $3,340,000.

“ Excluded Assets ”: As defined in Section 2.2.

“ Excluded Liabilities ”: As defined in Section 2.4.

“ Facilities ”: The real property situated at Union City, California where Seller conducts the Business, and all plants, buildings, structures and improvements located thereon.

“ GAAP ”: United States generally accepted accounting principles.

“ Governmental Body ”: Any federal, state or other court or governmental body, any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body exercising any regulatory or taxing authority thereunder, domestic or foreign.

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“ Hazardous Materials ”: Any hazardous or toxic substances, materials and wastes, including, but not limited to, those substances included in the definitions of “Hazardous Substances,” “Hazardous Materials,” “Toxic Substances,” “Hazardous Waste,” “Solid Waste,” “Pollutant,” or “Contaminant” in any Environmental and Safety Law or the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq., or in the regulations promulgated pursuant to those laws; those substances listed in the United States Department of Transportation Table (49 C.F.R. § 172.101 and any amendments thereto); such other substances, materials and wastes which are regulated or are classified as hazardous or toxic by any Governmental Body; and asbestos, polychlorinated biphenyls and oil and petroleum products or by-products.

“ Indemnified Party ”: As defined in Section 9.4.

“ Indemnifying Party ”: As defined in Section 9.4.

“ Intellectual Property ”: As defined in Section 2.1(d).

“ Inventory ”: The inventories of Seller described in Section 2.1(c).

“ Judgment ”: Any judgment, order, award, writ, injunction, ruling or decree of any Governmental Body or arbitrator.

“ Knowledge ”: With respect to (a) Seller, the actual knowledge of Sam Runco, Lori Runco, Bob Hana, Paul Lyon, Raymond Medeiros or Rick Bergamaschi; (b) Stockholders, the actual knowledge of Sam Runco or Lori Runco; and (c) Buyer, the actual knowledge of the officers of Buyer. With respect to each person identified in the foregoing sentence, “actual knowledge” shall be determined after such person has reviewed the representations and warranties set forth in Article 3 or Article 4 of this Agreement, as applicable, and contemplated whether there were any exceptions to the representations and warranties so reviewed.

“ Loss ”: Any loss, damage, Judgment, debt, liability, obligation, fine, penalty, cost or expense (including, without limitation, reasonable attorney and other professional fees and costs, and expenses incurred in investigating, preparing, defending against, or prosecuting any claim, suit, action, arbitration, investigation or proceeding). With respect to any Loss arising in connection with Section 3.20, “ Loss ” shall include, in addition to the foregoing, any losses (including, but not limited to, any costs, liabilities or obligations relating to contractors or consultants’ fees, or negotiations, administration, oversight, operation, maintenance or capital expenditures) associated with any Remedial Action which is performed in connection with any Claim brought by any Governmental Body or any other Person (including, but not limited to, any threatened enforcement action or any action under any Environmental and Safety Law), or any Remedial Action which is performed by or on behalf of Buyer or its Affiliates in the absence of a Claim brought by any Governmental Body or any other Person to address conditions as may be required by Environmental and Safety Law.

“ Material Adverse Effect ”: With respect to any event or circumstance (either individually or in the aggregate with all other such events and circumstances), an effect caused thereby, resulting therefrom or relating thereto, excluding, however if such event, circumstance or effect has been caused by Buyer that would, from the standpoint of the Buyer, be materially adverse as to, or in respect of:

(a) the Assets, or the Assumed Liabilities, in each case taken as a whole;

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(b) the business, operations, profits, assets, liabilities, prospects or condition (financial or other) of the Business;

(c) the ability of Seller to perform its obligations under this Agreement or any Transaction Document; or

(d) the validity or enforceability of this Agreement or any Transaction Document.

“ Most Recent Balance Sheet ”: As defined in Section 3.7(a).

“ Permit ”: As defined in Section 3.17.

“ Person ”: an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated organization or a government agency or subdivision thereof.

“ Products ”: Any and all of the home theatre products that Seller now sells or has designed, manufactured or sold since Seller’s inception or is developing, and all raw materials utilized in the manufacture or assembly of the foregoing.

“ Purchase Price ”: As defined in Section 2.6.

“ Real Property ”: The real property described in Section 2.1(e).

“ Remedial Action ”: Any investigation, site assessment, monitoring or other evaluation of conditions relating to the Environment at a site, or any clean-up, treatment, containment, removal, restoration, corrective action or remedial work involving any Hazardous Materials.

“ Tax ” or “ Taxes ”: All taxes, charges, fees, levies or other assessments, including, without limitation, income, excise, gross receipts, personal property, real property, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, severance, stamp, occupation, windfall profits, social security and unemployment or other taxes imposed by the United States or any agency or instrumentality thereof, any state, county, local or foreign government, or any agency or instrumentality thereof, and any interest or fines, and any and all penalties or additions relating to such taxes, charges, fees, levies or other assessments.

“ Transaction Documents ”: As defined in Section 3.4(a).

“ Transfer ”: As defined in Section 2.1.

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ARTICLE 2. PURCHASE AND SALE OF ASSETS;

PURCHASE PRICE; CLOSING

Section 2.1 Purchase and Sale of Assets

Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver (collectively, “ Transfer ”), or cause to be Transferred, to Buyer, free and clear of all Encumbrances, and Buyer shall purchase and acquire, all of Seller’s right, title and interest in and to all of Seller’s assets and rights (collectively, the “ Assets ”) of every type and description, whether tangible or intangible, real, personal or mixed, wherever located and whether or not reflected on the books and records of Seller, including, but not limited to, the following assets and rights (but excluding the Excluded Assets):

(a) Equipment . All machinery, equipment, furniture, computer hardware, motor vehicles, tooling, and other tangible personal property owned by Seller as of the close of business on the Closing Date and used or useful in the operation of the Business, including, without limitation, the personal property described in Section 2.1(a) of the Disclosure Memorandum, and all rights to the warranties received from the manufacturers and distributors of all such personal property and fixtures and any related claims, credits, rights of recovery and setoffs with respect to such personal property and fixtures.

(b) Equipment and Other Personal Property Leases . All of Seller’s right, title and interest in, to and under the leases and rental agreements in respect of equipment or other tangible personal property used or useful in the operation of the Business or otherwise as of the close of business on the Closing Date, including, without limitation, those leases and agreements described in Section 2.1(b) of the Disclosure Memorandum.

(c) Inventory . All inventory, wherever located, including raw materials, work-in-process, finished goods, spare parts and shop and production supplies, produced by Seller used or useful in the operation of the Business or otherwise as of the close of business on the Closing Date (“ Inventory ”), including, without limitation, the Inventory described in Section 2.1(c) of the Disclosure Memorandum (which Section sets forth raw materials, finished goods and other Inventory as of the close of business on the Closing Date by net book value) and all rights of Seller to the warranties received from suppliers and distributors and any related claims, credits, rights of recovery and setoffs with respect to such Inventory.

(d) Intellectual Property . All information (whether or not protectible by patent, copyright or trade secret rights) and intellectual property rights possessed or owned by Seller as of the close of business on the Closing Date, and all right, title and interest of Seller in, to and under licenses, sublicenses or like agreements providing Seller any right or concession to use any information or intellectual property as of the close of business on the Closing Date, including all trade names and trademarks of Seller (including common-law trademarks and including all rights of Seller to the Vidikron and Projectavision trademarks and to the commercial use of “Runco” and “Runco International, Inc.”), service marks, domain names, art work, packaging, plates, emblems, logos, insignia and copyrights, and their registrations and applications, and all goodwill associated therewith, all domestic and foreign patents and patent applications, all technology, know-how, show-how, trade secrets, manufacturing processes, formulae, drawings,

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designs, schematics, specifications, algorithms, systems, forms, technical manuals, data, data bases, computer programs and software, object and source code, product information and development work-in-progress and all documentary evidence of any of the foregoing, including, without limitation, the trademarks, patents, patent applications, other assets and related agreements described in Section 2.1(d) of the Disclosure Memorandum (collectively, the “ Intellectual Property ”).

(e) Real Property . All real property owned or leased by Seller, or in which Seller has any interest, together with (i) all buildings and improvements located thereon, and (ii) all rights, privileges, interests, easements, hereditaments and appurtenances thereunto in any way incident, appertaining or belonging, all as described in Section 2.1(e) of the Disclosure Memorandum (the “ Real Property ”).

(f) Cash and Equivalents . All of Seller’s cash, deposits or cash equivalent items existing as of the close of business on the Closing Date.

(g) Permits . All Permits relating to the Assets or Seller’s operation of the Business as of the close of business on the Closing Date, to the extent actually assignable or transferable, including, without limitation, those described in Section 2.1(g) of the Disclosure Memorandum.

(h) Contract Rights and Other Intangible Assets . All of Seller’s right, title and interest in, to and under all contracts and agreements, purchase orders, sales orders, sale and distribution agreements, supply and processing agreements and other instruments and agreements relating to the Assets or Seller’s operation of the Business as of the close of business on the Closing Date, and all goodwill associated with the Business, including, without limitation, Seller’s right, title and interest in, to and under the contracts, agreements and other assets described in Section 2.1(h) of the Disclosure Memorandum.

(i) Books and Records . All of Seller’s books and records (including all discs, tapes and other media-storage data and information) relating to the Assets or the Assumed Liabilities, and such other books and records as are necessary or useful to enable Buyer to operate the Business as of the close of business on the Closing Date.

(j) Other Records, Manuals and Documents . All of Seller’s mailing lists, customer lists, supplier lists, vendor data, marketing information and procedures, sales and customer files, advertising and promotional materials, current product material, equipment maintenance records, warranty information, records of plant operations and the source and disposition of materials used and produced in such plants, standard forms of documents, manuals of operations or business procedures and other similar procedures, and all other information of Seller relating to the Assets, the Assumed Liabilities or Seller’s operation of the Business as of the close of business on the Closing Date.

(k) Insurance Proceeds and Policies . (i) All insurance proceeds paid or payable to Seller in respect of any damage to or destruction or loss of any assets or rights of Seller described in this Section 2.1 or reflected on the Schedules referred to in this Section 2.1, including any assets of Seller that, as far as could reasonably be foreseen, would have been included in the Assets but for such damage, destruction or loss, and all of Seller’s rights, to the extent

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transferable, under the insurance policies listed on Section 2.1(k)(i) of the Disclosure Memorandum, and (ii) all employee benefit policies identified on Section 2.1(k)(ii) of the Disclosure Memorandum (collectively, the “ Assigned Insurance Policies ”).

(l) Accounts Receivable . All of Seller’s accounts receivable existing as of the close of business on the Closing Date, except accounts receivable from any Affiliate of Seller.

(m) Products . All of Seller’s rights in and to the Products, including but not limited to, the sole and exclusive right to make, use and sell the Products and derivatives based on the Products.

(n) Web Site . All of Seller’s web sites, domain names and related rights.

(o) Telephone Numbers . All telephone numbers used in connection with the Business, including those listed on Section 2.1(o) of the Disclosure Memorandum.

(p) Prepaid Expenses . All of Seller’s rights to prepaid expenses, claims for refunds (except for returns of Taxes paid for periods on or prior to the Closing Date), and rights to offset.

(q) Claims . All claims of Seller against third parties relating to the Assets, whether known or unknown, contingent or non-contingent, including all claims listed in Section 2.1(q) of the Disclosure Memorandum.

(r) Goodwill . The goodwill associated with the Business.

Section 2.2 Excluded Assets

Seller and Buyer expressly understand and agree that Seller is not Transferring to Buyer pursuant to this Agreement any of the following assets or rights of Seller (the “ Excluded Assets ”).

(a) Tax Refunds . Seller’s rights to refunds of Taxes paid for the periods on or prior to the Closing Date.

(b) Asset Transfer Rights . Seller’s rights under this Agreement and the other Transaction Documents to which it is or will be a party.

(c) Employee Benefit Plan Assets . Except for assets of Seller under the Assigned Insurance Policies, the assets of Seller’s Employee Benefit Plans, including, but not limited to, Seller’s 401(k) Plan.

(d) Other Excluded Assets . All other assets of Seller described in Section 2.2(d) of the Disclosure Memorandum.

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Section 2.3 Assumption of Liabilities

Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the time of Closing, to assume, to the extent not paid, performed or discharged on or prior to the close of business on the Closing Date, the following obligations and liabilities of Seller (the “ Assumed Liabilities ”) to the extent not constituting Excluded Liabilities:

(a) All of Seller’s trade liabilities, including trade accounts payable, credit card debts, accrued warranty liability, other current liabilities to third parties, and trade liabilities incurred but not yet billed as of the close of business on the Closing Date, but only to the extent specifically identified in Section 2.3(a) of the Disclosure Memorandum;

(b) All of Seller’s liabilities with respect to employees of Seller who are terminated by Seller immediately prior to the Closing and who are hired by Buyer immediately after the Closing, but only to the extent specifically identified in Section 2.3(b) of the Disclosure Memorandum; and

(c) All of Seller’s liabilities and obligations identified in Section 2.3(c) of the Disclosure Memorandum; provided, however, that Buyer shall not succeed to or assume, and Seller shall be responsible for, any liability or obligation arising out of any breach by Seller of any such Contract or any failure by Seller to discharge or perform any liability or obligation arising on or prior to the Closing Date under any such Contract, unless such liability or obligation will be assumed by Buyer under Section 2.3(a) above.

Section 2.4 Excluded Liabilities

Buyer shall not assume, or have any obligation of any kind whatsoever for, any liabilities other than the Assumed Liabilities, nor shall it assume any of the following obligations or liabilities, which shall remain obligations and liabilities of Seller (all obligations or liabilities not assumed by Buyer are called the “ Excluded Liabilities ”):

(a) Taxes . Any and all liabilities for Taxes to the extent either accruing or relating to periods on or prior to the Closing Date, except as provided in Section 8.6 below.

(b) Litigation . Any claim, Judgment, penalty, settlement agreement or other obligation to pay in respect of any Claim that is pending or threatened on or prior to the Closing Date, including, but not limited to, those listed in Section 2.4(b) of the Disclosure Memorandum.

(c) Claims . All claims, liabilities or other obligations that relate to injuries, actions, omissions, conditions or events that occurred or existed on or prior to the Closing Date, whether based on any act or omission of Seller, in connection with the operation of the Business, except as expressly assumed by Buyer under the terms of this Agreement, including, without limitation, claims based on defective products or other product claims relating to products manufactured, shipped or sold by Seller, or missed delivery dates, on or prior to the Closing Date.

(d) Environmental Liability . All claims and liabilities arising out of or relating to (i) the treatment, storage or disposal on or prior to the Closing Date of Hazardous Materials by Seller or any other Person (including, without limitation, any previous operator, owner, lessor or sublessor) on or at the Real Property or any other real property previously owned, leased, subleased or used by Seller in the operation of the Business or otherwise; (ii) releases of Hazardous Materials on, at or from any assets or properties (including, without limitation, the Real Property) owned, leased, subleased or used by Seller in the operation of the Business or

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otherwise at any time such assets or properties were owned, leased, subleased or used by Seller; (iii) generation or transportation of Hazardous Materials by Seller in the operation of the Business or otherwise, and (iv) releases of Hazardous Materials by any Person (including, without limitation, any previous owner, lessee or sublessee) on or from the Real Property prior to Seller’s ownership or use thereof, or (v) the violation by Seller of or the noncompliance by Seller with any applicable Environmental and Safety Laws.

(e) Severance Costs . Except as set forth in Section 2.3(b) of the Disclosure Memorandum, all severance obligations and other costs of terminating employees wherever located resulting from any termination or cessation (or deemed termination or cessation) of employment occurring on or prior to the Closing Date (including, but not limited to, any such termination or cessation occurring in connection with the transactions contemplated by this Agreement), from whatever source such obligations and costs arise, including, without limitation, contractual obligations, notices to employees, employment manuals, course of dealings, past practices, obligations relating to Section 280G or 4999 of the Code, or otherwise.

(f) Employee Expenses . Except as set forth in Sections 2.3(b) and 2.3(c) above, all liabilities and obligations with respect to either the continuation or the termination by Seller of any Employee Benefit Plan for the benefit of the Business’s employees, and all liabilities with respect to accrued payroll, workers compensation liability, fringe benefits and other employee benefits with respect to or that relate to periods of employment by Seller on or prior to the Closing Date.

(g) Broker Fees . All brokerage fees, finders’ fees or other fees, commissions or payments payable in connection with the transactions contemplated by this Agreement based on arrangements made by Seller or the Stockholders.

(h) Comerica Loans . Any and all amounts owed to Comerica Bank-California pursuant to the terms of the Amended and Restated Loan and Security Agreement (Accounts and Inventory) dated December 5, 2006, the Variable Rate Installment Note dated December 5, 2006, or otherwise (collectively, the “Comerica Agreements”) including the amounts of all principal, interest, prepayment or other penalties or other amounts owed pursuant to such agreement.

(i) Other . All liabilities and obligations in respect of any Excluded Liability or Excluded Asset and all liabilities of Seller to any Affiliate of Seller.

Section 2.5 Instruments of Sale and Transfer

On or prior to the Closing Date, Seller shall deliver to Buyer and Buyer shall deliver to Seller, as the case may be, such instruments of sale and assignment as shall, in the reasonable judgment of Buyer and Seller, be effective to vest in Buyer on the Closing Date all of Seller’s right, title and interest in and to the Assets and to evidence the assumption of the Assumed Liabilities by Buyer, including, without limitation, a Bill of Sale and Assignment (the “ Bill of Sale ”) and an Assumption Agreement (the “ Assumption Agreement ”). Seller shall take all reasonable additional steps as may be necessary to put Buyer in possession and operating control of the Assets at the Closing, and Buyer shall take all reasonable additional steps as may be necessary for it to assume the Assumed Liabilities at the Closing.

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Section 2.6 Purchase Price

The aggregate purchase price for the Assets (the “ Purchase Price ”) shall be $36,700,000.

Section 2.7 Closing Date

Subject to the terms and conditions of this Agreement, the Closing shall take place at the offices of Ater Wynne LLP, 222 SW Columbia, Suite 1800, Portland, at 10:00 a.m., local time, on May 23, 2007, or at such other location or time as the parties may agree and shall be effective as of 12:01 a.m. on May 23, 2007.

Section 2.8 Closing Payments and Deliveries

(a) At the Closing, Seller shall deliver or cause to be delivered to Buyer:

(i) a receipt for the Purchase Price less the Escrow Amount; and

(ii) the certificates and other documents required to be delivered to Buyer pursuant to Article 6.

(b) At the Closing, Buyer shall deliver to Seller:

(i) the Purchase Price less the Escrow Amount, by wire transfer in immediately available funds to an account designated by Seller at least two business days before the Closing Date; and

(ii) the certificates and other documents required to be delivered to Seller pursuant to Article 7.

Additionally, at or prior to the Closing, Buyer shall deposit the Escrow Amount into the Escrow Account, to be held pursuant to the terms of the Escrow Agreement.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES

OF SELLER AND STOCKHOLDERS

Section 3.1 Making of Representations and Warranties

As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, Seller and the Stockholders, jointly and severally, represent and warrant to Buyer, except as otherwise disclosed in the Disclosure Memorandum delivered to Buyer pursuant to this Agreement, arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article 3 to which the information is disclosed as an exception, as follows:

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Section 3.2 Organization and Corporate Power

Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power to own, lease and operate its property and to carry on its business as now being conducted, and is duly qualified or registered to do business as a foreign corporation (a) in each jurisdiction listed in Section 3.2 of the Disclosure Memorandum and (b) in each jurisdiction in which the failure to be so qualified or registered could result in a material adverse effect on the business as presently conducted, assets (including intangible assets), liabilities, financial condition, property, or results of operations of Seller (a “ Seller Material Adverse Effect ”). The copies of the Articles of Incorporation and Bylaws of Seller which have been furnished to counsel for Buyer by Seller, are correct and complete.

Section 3.3 Corporate Records

The corporate record books of Seller accurately record all corporate action taken by its stockholders and board of directors and committees. The copies of the corporate records of Seller, as made available to Buyer for review, are true and complete copies of the originals of all such documents.

Section 3.4 Authorization and Non-Contravention; Required Filings and Consents

(a) Seller has all requisite corporate power and authority to enter into this Agreement and the other Transaction Documents (as defined below) executed or to be executed by or on behalf of Seller pursuant hereto or contemplated hereby and to consummate the transactions contemplated by this Agreement and such Transaction Documents. The execution and delivery by Seller of this Agreement and such Transaction Documents and the consummation by Seller of the transactions contemplated by this Agreement and such Transaction Documents have been duly authorized by all necessary corporate action on the part of the board of directors of Seller. This Agreement has been and such Transaction Documents to which Seller is or is intended to be a party have been or, to the extent not executed as of the date hereof, will be duly executed and delivered by Seller and the Stockholders. This Agreement and each of the Transaction Documents to which Seller is a party constitutes, and each of the Transaction Documents to which Seller will become a party when executed and delivered by Seller will constitute, the valid and binding obligation of Seller, enforceable in accordance with its terms. “ Transaction Documents ” means the other documents and agreements to be executed by Seller, Stockholder and/or Buyer pursuant to this Agreement or contemplated by this Agreement, including the Escrow Agreement.

(b) The execution and delivery by Seller of this Agreement and the Transaction Documents to which it is or will become a party does not, and consummation by Seller of the transactions contemplated by this Agreement or the Transaction Documents to which it is or will become a party will not, (i) conflict with, or result in any violation or breach of any provision of the Articles of Incorporation or Bylaws of Seller, (ii) result in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any material benefit), or require any notice or consent by any party under any of the terms, conditions or provisions of

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any note, bond, mortgage, indenture, lease, Contract or other agreement, instrument or obligation to which Seller is a party or by which it or any of its properties or assets may be bound, or (iii) conflict with or violate any permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller or any of its properties or assets.

(c) No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental entity is required by or with respect to Seller in connection with the execution and delivery of this Agreement or the Transaction Documents to which it is or will become a party or the consummation of the transactions contemplated hereby or thereby.

Section 3.5 Capitalization

As of the date hereof, the authorized capital stock of Seller consists only of 500,000 shares of common stock of Seller (“ Seller Common Stock ”) of which 250,000 shares are issued and outstanding. Seller has not issued or agreed to issue nor is obligated to issue any warrants, options or other rights to purchase or acquire any shares of its capital stock, or any securities convertible into such shares or any warrants, options or other rights to acquire any such convertible securities. As of the date hereof, all of the issued and outstanding shares of Seller Common Stock are owned of record and beneficially by the Stockholders. All of the outstanding shares of capital stock of Seller have been duly and validly authorized and issued and are fully paid and nonassessable and have been offered, sold, issued and delivered in compliance in all materials respects with applicable federal and state securities laws and are not subject to any preemptive rights. There are no preemptive rights, rights of first refusal, put or call rights or obligations, or anti-dilution rights with respect to the issuance, sale or redemption of Seller’s capital stock, nor are there any obligations to repurchase, redeem or otherwise acquire any shares of Seller’s capital stock. There are no rights to have Seller’s capital stock registered for sale to the public in connection with the laws of any jurisdiction, and there are no agreements relating to the voting of Seller’s voting securities and no restrictions on the transfer of Seller’s capital stock other than those imposed by federal and state securities laws.

Section 3.6 Seller Subsidiaries; Investments

Seller has no direct or indirect subsidiaries. Seller does not own or have any direct or indirect equity interest in or Control over any corporation, partnership, joint venture or other entity of any kind. The term “ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. As used in this Agreement, the term “ Person ” shall mean an individual, a corporation, an association, a partnership, an estate, a trust or any other entity or organization.

Section 3.7 Financial Statements

(a) Section 3.7 of the Disclosure Memorandum includes the following financial statements and schedules of Seller, all of which statements (including the footnotes and schedules thereto (to the extent required)) fairly present in all material respects the financial condition of Seller on the dates of such statements and the results of its operations and their cash flows for the periods covered thereby: (i) balance sheet and related statements of income,

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retained earnings and cash flow of Seller as of and for the fiscal years ended December 31, 2004 and 2005, together with notes thereto, all of which have been reviewed by a certified public accountant in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants, (ii) balance sheet and the related statements of income, retained earnings, and cash flows of Seller as of and for the year ended December 31, 2006, and (iii) balance sheet and the related statements of income, retained earnings and cash flows of Seller for the period ended April 30, 2007 (the balance sheet as of April 30, 2007 being referred to herein as the “ Most Recent Balance Sheet ”). Nothing has come to the attention of the management of Seller since such respective dates which would indicate that such financial statements and schedules were not true and correct in all material respects as of the date thereof.

(b) Seller has no Knowledge of, and Seller’s independent accountants have not identified to Seller, any fraud that involves Seller’s management or other current or former employees, consultants or directors of Seller who have a role in the preparation of financial statements or the internal accounting controls utilized by Seller, or any claim or allegation regarding any of the foregoing.

Section 3.8 Absence of Undisclosed Liabilities

(a) As of the date of the Most Recent Balance Sheet, Seller did not have any liability 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 other liabilities relating to activities of Seller or the conduct of its business prior to the date of the Most Recent Balance Sheet regardless of whether claims in respect thereof had been asserted as of such date), except the liabilities (i) stated or adequately reserved against on the Most Recent Balance Sheet, (ii) reflected in Section 3.8(a) of the Disclosure Memorandum, or (iii) immaterial liabilities incurred in the ordinary course of business of Seller which are not required to be reflected in the Most Recent Balance Sheet.

(b) As of the Closing Date, Seller will not have any 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 other liabilities relating to activities of Seller or the conduct of its business prior to the date hereof or the Closing, as the case may be, regardless of whether claims in respect thereof had been asserted as of such date), except liabilities (i) stated or adequately reserved against on the Most Recent Balance Sheet or the notes thereto, (ii) reflected in Section 3.8(b) of the Disclosure Memorandum, or (iii) which would not be required to be disclosed by Seller on a balance sheet prepared as of the Closing Date under GAAP.

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Section 3.9 Absence of Certain Developments

Since April 30, 2007, Seller has conducted its business only in the ordinary course consistent with past practice and, except as otherwise set forth in Section 3.9 of the Disclosure Memorandum, there has not been:

(a) any adverse change in the financial condition, properties, assets, liabilities, business or operations of Seller;

(b) any cancellation of any material debt or claim owing to, or waiver of any material right of, Seller.

(c) any material mortgage, encumbrance or lien placed on any of the properties of Seller which remains in existence on the date hereof or will remain on the Closing Date;

(d) any significant obligation or liability of any nature, whether accrued, absolute, contingent or otherwise, asserted or unasserted, since the date of the Most Recent Balance Sheet, incurred by Seller;

(e) any purchase, sale or other disposition, or any agreement or other arrangement for the purchase, sale or other disposition, of any of the significant properties or assets of Seller other than purchases and sales of inventory items in the ordinary course of business;

(f) any damage, destruction or loss of a significant amount of Seller properties or assets, whether or not covered by insurance;

(g) any declaration, setting aside or payment of any dividend by Seller or the making of any other distribution in respect of the capital stock of Seller or any direct or indirect redemption, purchase or other acquisition by Seller of its own capital stock;

(h) other than repayment in full of all obligations under the Comerica Agreements and the release of all liens held by Comerica in and to any asset of the Seller, any payment or discharge of a material lien or liability of Seller which was not shown on the Most Recent Balance Sheet or incurred in the ordinary course of business thereafter;

(i) any obligation or liability incurred by Seller to any of its officers, directors, stockholders or employees, including any increases in compensation, or any loans or advances made by Seller to any of its officers, directors, stockholders or employees, except normal compensation and expense allowances or advances payable to directors, officers or employees;

(j) any change in accounting methods or practices of Seller;

(k) any other transaction entered into by Seller other than transactions in the ordinary course of business and the transactions contemplated by this Agreement;

(l) any change in financial performance from budget or operating plans; or

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(m) any agreement or understanding whether in writing or otherwise, for Seller to take any of the actions specified in Section 3.9(a) through 3.9(l) above.

Section 3.10 Accounts Receivable and Inventories

(a) All of Seller’s accounts receivables as of the date of this Agreement (i) are as set forth in Section 3.10(a) of the Disclosure Memorandum, (ii) are valid and enforceable claims of Seller, (iii) are fully collectible in the normal course of business, and (iv) do not include any accounts receivable from any person which is an Affiliate (“ Affiliate ”) as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, of any of its directors, officers, employees, or stockholders. Seller has not received notice that such claims are subject to set-off or counterclaim.

(b)(i) All inventories of Seller as of the date of this Agreement are set forth in Section 3.10(b)(i) of the Disclosure Memorandum, and (ii) all inventories of Seller as of the date of this Agreement that are of a quality and quantity usable and salable in the normal course of its business as it has been conducted by Seller prior to Closing over a period of not more than one year from the date of this Agreement are set forth in Section 3.10(b)(ii) of the Disclosure Memorandum. The values of obsolete materials included in inventory on the Most Recent Balance Sheet and materials included in inventory on the Most Recent Balance Sheet which are below standard quality as they relate to the business as currently conducted have been written down on its books of account to realizable market value, or adequate reserves have been provided therefore. All items included in such inventories are owned by Seller and all inventories of raw materials and finished goods are carried on the books of Seller at the lower of weighted average cost or market.

Section 3.11 Transactions with Affiliates

There are no material loans, leases or other continuing transactions (other than ordinary compensation payments) between Seller and any present or former stockholder, director or officer of Seller, or any member of such officer’s, director’s or stockholder’s immediate family, or any Person controlled by any officer, director or holder of more than five percent (5%) of the outstanding Seller Common Stock or his or her immediate family.

Section 3.12 Title to Assets

(a) Except as set forth in Section 3.12(a) of the Disclosure Memorandum, Seller owns, free and clear of all liens, restrictions and encumbrances, and has good, valid and marketable title to all assets purported to be owned by it, including (i) all assets reflected on the Most Recent Balance Sheet (other than assets reflected on the Most Recent Balance Sheet which have been disposed of since the date of the Most Recent Balance Sheet in the ordinary course of business); and (ii) all of the assets that were owned by Runco, LLC that have been used and/or are useful in the Business, including all rights, title and interest to the Vidikron and Projectavision trademarks.

(b) Section 3.12(b) of the Disclosure Memorandum identifies all equipment, furniture, and other tangible assets with an original cost greater than $10,000 owned by Seller as of the date of this Agreement. Each asset identified in Section 3.12(b) of the Disclosure

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Memorandum is free of material defects and deficiencies and in good condition and repair consistent with its age and intended use (ordinary wear and tear excepted), and has been maintained consistent with reasonable maintenance schedules.

(c) Section 3.12(c) of the Disclosure Memorandum identifies all assets that are being leased to Seller as of the date of this Agreement. Section 3.12(c) of the Disclosure Memorandum also identifies all assets material to the business of Seller as it is presently conducted that are licensed to Seller. All of the assets listed on Section 3.12(c) are in all material respects in good operating condition and useable in the ordinary course of business (ordinary wear and tear excepted). All leases pursuant to which Seller leases real or personal property are valid and effective in accordance with their respective terms and there exists no default of a material provision by Seller thereunder or condition that could result in a default of a material provision by Seller thereunder or termination thereof by the other party to any such lease prior to its scheduled expiration date.

(d) The Assets (other than the Excluded Assets) (i) constitute all the assets and properties currently used by Seller in its business and (ii) constitute all of the properties and assets necessary for Seller to conduct its business in the manner in which it is currently being conducted.

Section 3.13 Intellectual Property

(a) Section 3.13(a) of the Disclosure Memorandum contains an accurate and complete list of all patents, patent applications, trademarks and registered copyrights owned by or registered in the name of Seller, specifying as to each the nature of such right, any jurisdiction that has issued a registration with respect thereto or in which an application for such a registration is pending, and any applicable registration or application number. Section 3.13(a) of the Disclosure Memorandum contains an accurate and complete description of all other trade secrets, custom IC’s, software and firmware modules, and any proprietary design tools that are owned by Seller and that are material to the conduct of the business of Seller as presently conducted or proposed to be conducted. Section 3.13(a) of the Disclosure Memorandum contains an accurate and complete list of all licenses, sublicenses, and other agreements as to which Seller is a party and pursuant to which any person other than Seller is authorized to use any Intellectual Property Rights owned by Seller, except for licenses, sublicenses and other agreements entered into in connection with sales or licenses of Seller’s products or services in the ordinary course of business (descriptions of which are included in Section 3.13(a) of the Disclosure Memorandum). Section 3.13(a) of the Disclosure Memorandum contains an accurate and compl