AGREEMENT FOR SALE AND PURCHASE OF BUSINESS ASSETS OF SOLAR MASTERS, LLC

AGREEMENT FOR SALE AND PURCHASE OF BUSINESS ASSETS

OF SOLAR MASTERS, LLC.

This AGREEMENT FOR SALE AND PURCHASE OF BUSINESS ASSET S (this Agreement), dated as of August 13, 2008, is between Solar Masters, LLC (the “Seller”), a California Limited Liability Company, William P. Kaufman, (a Selling Member), Chris Fischer, (a Selling Member), and Solar Masters Inc.(the “Buyer”), a Nevada corporation wholly owned by Probe Manufacturing, Inc.

RECITALS

A.

The Seller operates a distributor of solar powered products throughout North America.    The Seller’s principal place of business is 10935 Hillside Road, Alta Loma, CA  91737. The Seller owns the solar-masters.com website, contract rights and miscellaneous assets used in connection with the operation of its business.

B.

The Buyer desires to acquire substantially all the assets used or useful, or intended to be used, in the operation of the Seller’s business, and the Seller desires to sell such assets to the Buyer.

C.

The Selling Members are the sole Members of the Seller.

AGREEMENT

The parties agree as follows:

SECTION 1.

ASSETS PURCHASED; LIABILITIES ASSUMED

1.1

Assets Purchased. The Seller agrees to sell to the Buyer and the Buyer agrees to purchase from the Seller, on the terms and conditions set forth in this Agreement, the following assets (the Assets):

 (a)

All the products and Seller’s rights under Contracts listed on Schedule 1;

 (b)

The Seller’s name and goodwill; and

 (c)

All inventory.

1.2

Liabilities Assumed.

  None

SECTION 2.

EXCLUDED ASSETS

2.1

Excluded Assets .  There are no excluded assets from this sale and purchase.

SECTION 3.

ALLOCATION OF PURCHASE PRICE

The Purchase Price will be allocated among the Assets as follows:  

*For all tangible and goodwill property pursuant to this Agreement, and the Buyer and the Seller will be bound by that allocation in reporting the transactions contemplated by this Agreement to any governmental authority (including without limitation the Internal Revenue Service).

SECTION 4.

PURCHASE PRICE

4.1

Purchase Price. The purchase price for the Assets (the Purchase Price) will be:

(a)

$2,719.65 for all Assets, including, but not limited to:  customer list; in-house inventory; company name and website, including domain name; exclusivity rights for North America

(b)

$77,280.35 for inventory currently in a container located in Lake Forest, CA  payable directly to Solar Masters SDN.BHD, the manufacturer/supplier; and

(c)

As further consideration, Buyer agrees to compensate Seller royalty payments as follows:

1.

250,000 shares of Probe common stock valued at $.40 each, and a royalty on gross revenue of 5% for the balance of 2008.

2.

Additional royalty payments of 7% for 2009, 6% for 2010 and 5% for 2011, provided that Probe has gross revenue of a minimum of $1 million, and product cost of $10 USD or less for the “barricade light”.  If these conditions are not met, the royalty shall decrease to 5%.

3.

Additional shares of Probe common stock of 100,000 in 2009; 100,000 in 2010; and 50,000 in 2011 provided that Probe has gross revenue of a minimum of $1 million, and product cost of $10 USD or less for the “barricade light”.  If the gross revenue number is not met, then the stock that was to be issued will become an option to purchase the shares that would have been issuable if the gross revenue target had been met.  The exercise price of the options will be $0.40.

4.

Additional royalty payment of 5% for 2012, provided that Probe has gross revenue of a minimum of $1 million, and product cost of $10 USD or less for the “barricade light”.  If these conditions are not met, the royalty shall decrease to 1%.

5.

The “barricade light” pricing is to be $10.00 USD and may adjust periodically based on standard industry pricing variations.  This will apply in all sections of this Agreement that refer to the $10.00 USD cost for the barricade light.

6.

Gross Revenue for purposes of calculating all royalty payments is based upon Revenue specifically generated from products acquired pursuant to this Agreement.

SECTION 5.

PAYMENT OF PURCHASE PRICE

The price for the Assets will be paid at the Closing.  The Buyer will pay, by cashier’s check, certified check, or wire transfer to the account specified by the Seller, the sum of $2,719.65.

SECTION 6.

ADJUSTMENTS

The operation of the Seller’s business and related income and expenses up to the close of business on the day before the Closing will be for the account of the Seller and thereafter for the account of the Buyer. Expenses will be prorated between the Seller and the Buyer as of the close of business on the Closing.

SECTION 7.

OTHER AGREEMENTS

At the Closing, the parties will execute the following additional agreement (the Related Agreement):

(a)

Noncompetition Agreement between the Buyer, the Seller, and the Selling Member, substantially in the form attached as Exhibit A..  

SECTION 8.

SELLER’S AND SELLING MEMBER’S REPRESENTATIONS AND WARRANTIES

8.1

Corporate Existence. The Seller is a limited liability company duly organized and legally existing under the laws of the state of California. The Seller has all requisite corporate power and authority and all material licenses, permits, and authorizations necessary to own and operate the Assets and to carry on its business as now conducted.

8.2

Authorization. The execution, delivery, and performance of this Agreement and all other agreements contemplated by this Agreement to which the Seller or the Selling Member are a party have been duly authorized by the Seller or the Selling Member, as the case may be. This Agreement and the Related Agreements, when executed and delivered by the parties thereto, will constitute the legal, valid, and binding obligation of the Seller or the Selling Member, as the case may be, enforceable against the Seller or the Selling Member,  in accordance with their respective terms except as the enforceability thereof may be limited by the application of bankruptcy, insolvency, moratorium, or similar laws affecting the rights of creditors generally or judicial limits on the right of specific performance. The execution and delivery by the Seller and the Selling Member of this Agreement and the Related Agreements to which the Seller or the Selling Member is a party, and the fulfillment of and compliance with the respective terms hereof and thereof by the Seller or the Selling Member, do not and will not (a) conflict with or result in a breach of the terms, conditions, or provisions of, or constitute a default under, any Contract, (b) result in the creation of any lien, security interest, charge, or encumbrance on the Assets, (c) result in a violation of the charter or bylaws of the Seller or any law, statute, rule, or regulation to which the Seller is subject, or any order, judgment, or decree to which the Seller is subject, or (d) require any authorization, consent, approval, exemption, or other action by or notice to any court or administrative or governmental body.

8.3

Brokers and Finders. Neither the Seller nor the Selling Member have employed any broker or finder in connection with the transactions contemplated by this Agreement, or taken action that would give rise to a valid claim against any party for a brokerage commission, finder’s fee, or other like payment.

8.4

Transfer Not Subject to Encumbrances or Third-Party Approval. The execution and delivery of this Agreement and the Related Agreements by the Seller and the Selling Member, and the consummation of the contemplated transactions, will not result in the creation or imposition of any valid lien, charge, or encumbrance on any of the Assets, and will not require the authorization, consent, or approval of any third party, including any governmental subdivision or regulatory agency.

8.5

Contracts. Schedule 1 contains a complete and accurate list of each contract, agreement, instrument, lease, and commitment (including license agreements) to which the Seller is a party. The Seller has delivered a copy of each Contract to the Buyer.

(a)

The Seller is not in default under any Contract, nor, to the Seller’s and the Selling Member’s best knowledge, does there exist any event that, with notice or the passage of time or both, would constitute a default or event of default by the Seller under any Contract.

(b)

No power of attorney or similar authorization given by the Seller is presently in effect or outstanding. No Contract limits the freedom of the Seller to compete in any line of business or with any person.

(c)

Each of the Contracts is valid, binding, and enforceable by the Seller in accordance with its terms and is in full force and effect.  All other parties to the Contracts have consented or, before the Closing, will have consented (when such consent is necessary) to the consummation of the transaction contemplated by this Agreement without requiring modification of the Seller’s rights or obligations under any Contract.

(d)

The Seller is not aware of any default by any other party to any Contract or of any event that (whether with or without notice, lapse of time, or both) would constitute a default by any other party with respect to obligations of that party under any Contract, and, to the knowledge of the Seller and the Selling Member’s, there are no facts that exist indicating that any of the Contracts may be totally or partially terminated or suspended by the other parties.

(e)

To the Seller’s knowledge, no Contract will result in any loss to the Seller on the performance thereof (including any liability for penalties or damages, whether liquidated, direct, indirect, incidental, or consequential).

8.6

Litigation. There are no actions, suits, proceedings, orders, investigations, or claims pending or, to the best of the Seller’s and the Selling Member’s knowledge, threatened against the Seller or its property, at law or in equity, or before or by any governmental department, commission, board, bureau, agency, or instrumentality; the Seller is not subject to any arbitration proceedings under collective bargaining agreements or otherwise or, to the best of the Seller’s and the Selling Member’s knowledge, any governmental investigations or inquiries; and, to the best knowledge of the Seller and the Selling Member’s, there is no basis for any of the foregoing.

8.7

Compliance with Laws. To the best of the Seller’s and the Selling Member’s knowledge, (a) the Seller has at all relevant times conducted its business in compliance with its articles of incorporation and bylaws, and is in compliance with all applicable laws and regulations, and (b) the Seller is not in violation of any applicable laws or regulations, other than violations that singly or in the aggregate do not and, with the passage of time, will not have a Material Adverse Effect. The Seller is not subject to any outstanding order, writ, injunction, or decree, and the Seller has not been charged with, or threatened with a charge of, a violation of any provision of federal, state, or local law or regulation.

8.8

Tangible Assets.  All inventory, all inventory in the container located in Lake Forest, CA and any and all other assets.

8.8.1

Personal Property. Schedule 1 contains a complete and accurate list of all the tangible personal property owned by the Seller (the Tangible Personal Property). The Assets include all the assets, properties, and rights owned or used by the Seller in its business.

8.8.2

Intellectual Property. Schedule 1 contains a complete and accurate list of the Seller’s trademarks, trade names, copyrights, technology and domain names used in the Business (the Intellectual Property). The Seller owns all its Intellectual Property free and clear of all liens, claims, and encumbrances. To the Seller’s knowledge, the Seller’s use of its Intellectual Property does not create any conflict with or infringe on any rights of any other person and no claims of conflict or infringement have been asserted against the Seller. Schedule 1 also describes all agreements, licenses, permits, and other instruments under which the Seller has acquired or been granted or sold or granted a right to use any Intellectual Property, together with a brief description of such Intellectual Property.

8.9

Title to and Condition of Assets.

8.9.1

The Seller owns (and at Closing the Buyer will acquire) all the Assets free and clear of all mortgages, pledges, security interests, options, claims, charges, or other encumbrances or restrictions of any kind.

8.9.2

The Seller has (and at Closing the Buyer will acquire) good and marketable title to the Assets.

8.9.3

There are no defects or liabilities affecting any of the Tangible Personal Property that might detract from the value of the property or assets, interfere with any present or intended use of any of the property or assets, or affect the marketability of the property or assets, in each case, other than those that will not have a Material Adverse Effect.

8.10

Undisclosed Liabilities. The Seller does not have any liability or obligation (whether absolute, accrued, contingent, or other, and