STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

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Clarity Group, Inc | ECOTALITY, INC | Electric Transportation Engineering Corporation

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Arizona Date: 11/9/2007
Law Firm: Farella Braun

STOCK PURCHASE AGREEMENT

BY AND AMONG

ECOTALITY, INC.,
As Buyer

AND

DONALD KARNER and KEVIN MORROW,
As Sellers

EFFECTIVE AS OF NOVEMBER 6, 2007

TABLE OF CONTENTS

Page

ARTICLE 1

PURCHASE AND SALE OF COMPANY SHARES; CERTAIN DEFINITIONS

1.1

Sale and Purchase of Company Shares

1.2

Purchase Price.

1.3

Closing

1.4

Section 338(h)(10) Elections

1.5

Holdback

1.6

Certain Definitions

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SELLERS

2.1

Capitalization/Ownership

2.2

Power and Authority; Authorization

2.3

No Violation

2.4

Organization; Good Standing; Qualification; Subsidiaries

2.5

Financial Statements

2.6

Accounts Receivable

2.7

No Undisclosed Liabilities

2.8

Absence of Certain Changes

2.9

Licenses and Permits

2.10

Books and Records

2.11

Properties; Encumbrances

2.12

Environmental Matters

2.13

Intellectual Property

2.14

Labor and Employment

2.15

Employee Benefit Plans

2.16

Contracts

2.17

Litigation

2.18

Taxes

2.19

Governmental Consents and Approvals

2.20

Brokers' Fees

2.21

Insurance

2.22

No Omissions

2.23

Securities Laws

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BUYER

3.1

Organization; Good Standing; Qualification

3.2

Power and Authority; Authorization

3.3

No Violation

3.4

Buyer Shares

3.5

Capitalization

3.6

Brokers' Fees

3.7

Litigation

3.8

No Omissions

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3.9

Financial Statements

3.10

No Undisclosed Liabilities

3.11

Absence of Material Adverse Effect

3.12

Accounts Receivable

3.13

Key Employees

3.14

Licenses and Permits

3.15

Books and Records

3.16

Environmental Matters

3.17

Intellectual Property

3.18

Employee Benefit Plans

3.19

Contracts

3.21

Taxes

3.20

Governmental Consents and Approvals

3.21

Insurance

ARTICLE 4

CONDITIONS TO SELLERS' OBLIGATIONS AT CLOSING

4.1

Representations and Warranties; Covenants

4.2

Officers' Certificate

4.3

Employment Agreements

4.4

Payment

ARTICLE 5

CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING

5.1

Representations and Warranties; Covenants

5.2

Officers' Certificate

5.3

Employment Agreements

ARTICLE 6

POST-CLOSING COVENANTS

6.1

New Acquisition Capital

6.2

Incentive Stock for Employees

6.3

Company Benefit Plans

6.4

Net Working Capital Adjustment

6.5

Non-Competition

6.6

Non-Solicitation

6.7

Key Employee Retention Bonus

6.8

Credit Line

6.9

Sale of Stock

6.10

Software Audit

ARTICLE 7

INDEMNIFICATION

7.1

Survival of Representations and Warranties

7.2

Indemnification by Sellers

7.3

Indemnification by Buyer

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7.4

Claims for Indemnification

7.5

Limitations on Indemnification

7.6

Payment of Indemnification

7.7

Buyer's Right of Offset

7.8

Insurance and Tax Benefits

ARTICLE 8

BUYER SHARES

8.1

Legends

ARTICLE 9

GENERAL

9.1

Fees and Expenses

9.2

Notices

9.3

Publicity and Disclosures

9.4

Entire Agreement

9.5

Severability

9.6

Assignment; Binding Effect

9.7

Amendment

9.8

Counterparts

9.9

Effect of Table of Contents and Headings

9.10

Dispute Resolution; Governing Law

List of Schedules

Sellers Schedules

Schedule 2.1 - Capitalization

Schedule 2.5 - Financial Statements

Schedule 2.11 - Real Property

Schedule 2.13 - Intellectual Property

Schedule 2.15 - Employee Benefit Plans

Schedule 2.16 - Contracts

Schedule 2.17 - Litigation

Schedule 2.21 - Insurance

Buyer Schedules

Schedule 3.5 - Capitalization

Schedule 3.7 - Litigation

List of Exhibits

Exhibit A-1

Employment Agreement for Donald Karner

Exhibit A-2

Employment Agreement for Kevin Morrow

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (the " Agreement ") is entered into as of November 6, 2007 (the " Closing Date "), by and among Ecotality, Inc., a Nevada corporation (the " Buyer "), Donald Karner (" Karner ") and Kevin Morrow (" Morrow "). (Karner and Morrow are sometimes referred to herein, individually, as a " Seller " and, collectively, as the " Sellers ".)

RECITALS

Karner owns all of the outstanding capital stock (collectively, the " Clarity Shares ") of The Clarity Group, Inc., an Arizona corporation (" Clarity "). Karner and Morrow, together, own all of the outstanding capital stock (collectively, the " ETEC Shares ") of Electric Transportation Engineering Corporation, an Arizona corporation (" ETEC "). (Clarity and ETEC are sometimes referred to herein, individually, as a " Company " and, collectively and on a consolidated basis, as the " Companies ".)

Buyer desires to purchase all of the Clarity Shares and all of the ETEC Shares (together, the " Company Shares ").

Each Seller is willing to sell all of his Company Shares and Buyer is willing to purchase those Company Shares on the terms and subject to the conditions stated in this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1
PURCHASE AND SALE OF COMPANY SHARES; CERTAIN DEFINITIONS

1.1

Sale and Purchase of Company Shares . On the terms and conditions set forth in this Agreement, each Seller agrees to sell to Buyer, and Buyer agrees to purchase, all of the Company Shares.

1.2

Purchase Price .

(a)

Clarity . Buyer shall pay Karner the Initial Clarity Purchase Price and the Contingent Clarity Payment (collectively, the " Clarity Purchase Price ") as follows:

(i)

$600,000 payable in cash, by wire transfer of immediately available funds as follows: (A) $500,000 paid at Closing, and (B) an aggregate of $100,000 paid in 10 equal, monthly installments of $10,000 each, beginning on December 1, 2007 (the amounts set forth in (A) and (B) above, together, the " Clarity Cash Purchase Price ");

(ii)

1,300,000 shares of the common stock of Buyer (" Buyer Shares ") to be issued to Karner and delivered as follows: (A) 617,500 shares delivered to Karner at the Closing and (B) 682,500 shares (the " Clarity Holdback Amount ") to be issued to Karner but delivered, in escrow, to the Ecotality corporate secretary (the " Secretary ") pursuant to the provisions of Section 1.5 (the amounts set forth in (A) and (B) above, together, the " Clarity Stock Payment " and, together with the Clarity Cash Purchase Price, the " Initial Clarity Purchase Price ");

(iii)

Buyer shall issue up to an additional 200,000 Buyer Shares (the " Clarity Contingent Payment ") per year for each of the two calendar years ended December 31, 2008 and 2009 (each year, an " Earnout Period ") if the Companies together, on a consolidated basis as set forth below, achieve the following target increases over the 2007 and 2008 base years, respectively (each, a " Base Year "):

(1)

Karner shall receive 50,000 Buyer Shares for each Earnout Period in which Company Revenue for such Earnout Period increases by more than $1,000,000 over Company Revenue for the relevant Base Year (i.e., 2007 is the Base Year for 2008, and 2008 is the Base Year for 2009); provided that if Company Revenue increases by more than $750,000, but by less $1,000,000 during either Earnout Period, the Buyer Shares to be issued to Karner shall be prorated from one Buyer Share for a Company Revenue increase of $750,001 to 50,000 Buyer Shares for a Company Revenue increase of $1,000,000. In no event will more than an aggregate of 50,000 Buyer Shares be issued to Karner pursuant to this subsection in respect of either Earnout Period.

(2)

Karner shall receive 150,000 Buyer Shares for each Earnout Period in which Adjusted EBITDA for such Earnout Period increases by more than $200,000 over Adjusted EBITDA for the relevant Base Year; provided that if Adjusted EBITDA increases by more than $150,000, but less than $200,000 during either Earnout Period, the Buyer Shares to be issued to Karner shall be prorated from one Buyer Share for an Adjusted EBITDA increase of $150,001 to 150,000 Buyer Shares for an Adjusted EBITDA increase of $200,000. In no event will more than an aggregate of 150,000Buyer Shares be issued to Karner pursuant to this subsection in respect of either Earnout Period.

(3)

In determining whether the targets set forth in subsections (1) and (2) above have been met for the 2008 Earnout Period: Company Revenue for the 2007 Base Year shall be calculated to include Company Revenue for the period January 1, 2007 through October 31, 2007 plus the greater of Company Revenue for the period November 1, 2007 through December 31, 2007 or Company Revenue for the period November 1, 2006 through December 31, 2006; and Company EBITDA for the 2007 Base Year shall be calculated to include Company EBITDA for the period January 1, 2007 through October 31, 2007 plus the greater of Company EBITDA for the period November 1, 2007 through December 31, 2007 or Company EBITDA for the period November 1, 2006 through December 2006.

(b)

ETEC . Buyer shall pay Sellers the Initial ETEC Purchase Price and the Contingent ETEC Payment (collectively, the " ETEC Purchase Price ") as follows, with each component of such payments being allocated between Sellers pro rata to their ownership of ETEC Shares (" Pro Rata "):

(i)

$2,256,000 payable in cash, by wire transfer of immediately available funds as follows: (A) $1,880,000 paid at Closing, and (B) an aggregate of $376,000 paid in 10 equal, monthly installments of $37,600 each, beginning on December 1, 2007 (the amounts set forth in (A) and (B) above, together, the " ETEC Cash Purchase Price ");

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(ii)

4,888,000 Buyer Shares to be issued to Sellers and delivered as follows: (A) 2,320,500 shares delivered to Sellers at the Closing and (B) 2,567,500 shares (the " ETEC Holdback Amount " and, together with the Clarity Holdback Amount, the " Holdback Amount ") to be issued to Sellers but delivered, in escrow, to the Secretary pursuant to the provisions of Section 1.5 (the amounts set forth in (A) and (B) above, together, the " ETEC Stock Payment " and, together with the ETEC Cash Purchase Price, the " Initial ETEC Purchase Price ");

(iii)

Buyer shall issue up to an aggregate of an additional 752,000 Buyer Shares (the " ETEC Contingent Payment " and, together with the Clarity Contingent Payment, the " Contingent Payment ") per year for each of the two Earnout Periods if the Companies together, on a consolidated basis as set forth below, achieve the following target increases over the 2007 and 2008 Base Years:

(1)

Sellers shall receive, Pro Rata, an aggregate of 188,000 Buyer Shares for each Earnout Period in which Company Revenue for such Earnout Period increases by more than $1,000,000 over Company Revenue for the relevant Base Year (i.e., 2007 is the Base Year for 2008, and 2008 is the Base Year for 2009); provided that if Company Revenue increases by more than $750,000, but by less $1,000,000 during either Earnout Period, the aggregate Buyer Shares to be issued to Sellers, Pro Rata, shall be prorated from one Buyer Share for a Company Revenue increase of $750,001 to 188,000 Buyer Shares for a Company Revenue increase of $1,000,000. In no event will more than an aggregate of 188,000 Buyer Shares be issued to Sellers pursuant to this subsection in respect of either Earnout Period.

(2)

Sellers shall receive, Pro Rata, an aggregate of 564,000 Buyer Shares for each Earnout Period in which Adjusted EBITDA for such Earnout Period increases by more than $200,000 over Adjusted EBITDA for the relevant Base Year; provided that if Adjusted EBITDA increases by more than $150,000, but less than $200,000 during either Earnout Period, the aggregate Buyer Shares to be issued to Sellers, Pro Rata, shall be prorated from one Buyer Share for an Adjusted EBITDA increase of $150,001 to 564,000 Buyer Shares for an Adjusted EBITDA increase of $200,000. In no event will more than an aggregate of 564,000 Buyer Shares be issued to Sellers pursuant to this subsection in respect of either Earnout Period.

(3)

In determining whether the targets set forth in subsections (1) and (2) above have been met for the 2008 Earnout Period: Company Revenue and Company EBITDA for the 2007 Base Year shall be calculated as set forth in Subsection (a)(iii)(3) above.

(c)

Certain Definitions . As used herein:

" Company Revenue " means, for any period, the sum of (i) the Companies' consolidated gross revenue for such period other than revenue from New Acquisition Capital Assets, plus (ii) such portion of the Companies' consolidated gross revenue for such period from New Acquisition Capital Assets as is mutually determined by Buyer and the Companies' management on a case-by-case basis taking into account the particular circumstances and nature of each acquisition, all as reasonably determined by the Buyer's independent accountants in accordance with GAAP consistently applied to all relevant periods; provided that in no event will Company Revenue include any amounts constituting or representing inter-company accounts between the Companies.

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" Adjusted EBITDA " means, for any period, Company EBITDA for such period, reduced by an amount equal to all incentive management payments made with respect to such period pursuant to Section 2.2 of the Employment Agreements (it being understood that since incentive management payments will be made only for 2008 and 2009, Adjusted EBITDA for 2007 will equal Company EBITDA for that year).

" Company EBITDA " means, for any period, the sum of (i) the Companies' consolidated EBITDA (as defined below) for such period other than EBITDA from New Acquisition Capital Assets, plus (ii) such portion of the Companies' consolidated EBITDA for such period from New Acquisition Capital Assets as is mutually determined by Buyer and the Companies' management on a case-by-case basis taking into account the particular circumstances and nature of each acquisition, all as reasonably determined by the Buyer's independent accountants in accordance with GAAP consistently applied to all relevant periods; provided that in no event will Company EBITDA include any amounts constituting or representing inter-company accounts between the Companies or between either Company and Buyer or any of its Affiliates.

" EBITDA " means, with respect to each Company for any period, the Net Income (as defined below) of such Company for such period, adjusted (i) to add thereto (to the extent deducted from revenues in determining Net Income), without duplication, the sum of: (1) income tax expense for such period; (2) depreciation and amortization expense for such period; and (3) all other non-cash charges required to be reflected as expenses on the Company's books and records for such period; and (ii) to subtract therefrom the amount of all cash payments made by the Company during such period to the extent such payments related to non-cash charges that were added back in determining EBITDA for such period or any prior period, all as reasonably determined by the Buyer's independent accountants in accordance with GAAP consistently applied to all relevant periods.

" Net Income " means, with respect to each Company for any period, the net income (or loss) of the Company for such period, adjusted to exclude (only to the extent included in computing such net income (or loss) and without duplication) all gains and losses, together with any related provision for taxes on such gains or losses, for such period that are either extraordinary (as determined in accordance with GAAP) or are nonrecurring (including any gain or loss from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of any capital stock), all as reasonably determined by the Buyer's independent accountants in accordance with GAAP consistently applied to all relevant periods.

1.3

Closing . Subject to the terms and conditions set forth herein, the closing of the purchase and sale provided for in this Agreement (the " Closing ") shall be held as promptly as practicable following the execution of this Agreement, to be effective as of the Closing Date, at the offices of Farella Braun + Martel LLP, 235 Montgomery Street, San Francisco, CA 94104, or at such other time and/or place as may be fixed by mutual agreement of the parties. At the Closing, (i) Sellers will deliver to Buyer stock certificates for all of the Company Shares, duly endorsed for transfer to Buyer; (ii) Buyer will deliver (A) the Initial Clarity Purchase Price, less the Clarity Holdback Amount, to Karner, (B) the Initial ETEC Purchase Price, less the ETEC Holdback Amount, to Sellers, and (C) the Holdback Amount to the Secretary; and (iii) the parties will execute and deliver to each other such other documents and items as are determined necessary or appropriate for the closing of the transactions contemplated hereby. All actions to be taken at the Closing shall be deemed to occur simultaneously, and no party shall be obligated to proceed with the Closing unless all of such actions occur at the Closing.

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1.4

Section 338(h)(10) Elections . Buyer and Karner agree, at the request of either one of them, to treat the purchase of the Clarity Shares by Buyer as a "qualified stock purchase" of the Clarity Shares within the meaning of Section 338(d)(3) of the Internal Revenue Code of 1986, as amended (the " Code ") and shall make a joint election under Section 338(h)(10) of the Code, and under comparable state and local income tax provisions, with respect to such purchase (a " Section 338(h)(10) Election "). In connection with the making of a Section 338(h)(10) Election, Buyer and Karner have agreed upon an allocation of the Clarity Purchase Price among the assets of Clarity that are deemed to have been acquired pursuant to Section 338(h)(10) of the Code and comparable state income tax provisions. Such allocation shall be determined jointly by the parties within 30 days after the Closing Date. If at the end of such 30-day period, Buyer and Karner are unable to agree upon an allocation, Buyer and Karner shall submit to an Independent Accounting Firm for review and resolution any and all matters that remain in dispute with respect to the allocation. Buyer and Karner shall cause the Independent Accounting Firm to use commercially practicable efforts to make a final determination (which determination shall be binding on the parties) of the allocation of the Clarity Purchase Price within 30 days from such submission, and such final determination shall be the agreed-upon allocation. The cost of the Independent Accounting Firm's review and determination shall be shared equally between Buyer and Karner. Buyer and Karner shall exchange completed and properly executed copies of Internal Revenue Service Form 8023, required schedules related thereto, and comparable state forms and schedules, all of which are to be prepared on a basis consistent with the agreed-upon allocation. If any changes are required to be made to these forms or schedules as a result of information that first becomes available after the Closing, the parties shall promptly and in good faith reach an agreement as to the precise changes required to be made. Buyer and Karner shall use the agreed-upon allocation for purposes of preparing all reports and returns with respect to Taxes.

1.5

Holdback . The Buyer Shares constituting the Holdback Amount (the " Holdback Shares ") will be represented by stock certificates issued to Sellers, as set forth in Sections 1.2(a)(ii) and 1.2(b)(ii), but delivered to the Secretary, to be held, in trust, pursuant to the following provisions as security for the Sellers' indemnity obligations for claims made by Buyer under Section 7.2 (" Indemnity Claims ").

(a)

Distributions . Except for tax-free dividends paid in stock declared with respect to the Holdback Shares (" Additional Holdback Shares "), the Secretary will promptly distribute to Sellers, in proportion to their ownership of the Holdback Shares (" proportionally "), any cash dividends or dividends payable in securities or other distributions of any kind made in respect of the Holdback Shares. Any Additional Holdback Shares shall be added to the Holdback Amount and become a part thereof, and shall be considered Holdback Shares for purposes of this Agreement.

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(b)

Rights . Sellers shall have voting rights with respect to their respective Holdback Shares, and Ecotality will take all reasonable steps necessary to allow the exercise of such rights.

(c)

Resolved Claims . Promptly upon the resolution (by arbitration, adjudication, settlement or otherwise) of an Indemnity Claim, the Secretary will release and transfer to Buyer that number of Holdback Shares equal to the Damages awarded for such claim, with the value of the Holdback Shares for such purpose being based on the average daily closing price of the stock during the 30 calendar days preceding the date the claim was resolved. The Holdback Shares so released and transferred will be allocated proportionally between Sellers. Each Seller hereby appoints the Secretary his attorney-in-fact for the purpose of effecting each such release and transfer.

(d)

Termination . On the first anniversary of the Closing Date (the " Release Date "), the Secretary will distribute to Sellers, proportionally, all Holdback Shares not previously released and transferred to Buyer under subsection (c); provided that if on the Release Date any Indemnity Claims made prior thereto remain unresolved, (i) the Secretary will distribute the remaining Holdback Shares to Sellers only to the extent that the aggregate value of such Holdback Shares (based on the average daily closing price of the stock during the 30 calendar days preceding the Release Date) exceeds the aggregate amount of Damages sought in such pending unresolved claims, and (ii) the Holdback Shares so retained (or so many of them as are not thereafter released and transferred to Buyer, in accordance with subsection (c), as such claims are resolved) will be distributed to Sellers, proportionally, only when all such pending unresolved claims are thereafter resolved.

1.6

Certain Definitions . As used in this Agreement, the following terms shall have the meanings indicated below:

(a)

" Affiliate " means, in respect of any specified Person, any other Person, whether or not a separate legal entity, that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person.

(b)

" Encumbrance " means any mortgage, deed of trust, lien, pledge, easement, hypothecation, assignment or security interest (including any conditional sale or other title retention agreement).

(c)

" Indebtedness " shall mean, at a particular time, without duplication, (i) any obligations under any indebtedness for borrowed money (including, without limitation, all obligations for principal, interest premiums, penalties, fees, expenses, breakage costs and bank overdrafts thereunder), (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit), (iv) any indebtedness pursuant to a guarantee, and (v) any indebtedness secured by any type of Encumbrance on a Person's assets.

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(d)

" Person " means any entity or natural person or any corporation, partnership, joint venture or other entity.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS

As an inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, each Seller hereby represents and warrants to Buyer that the statements contained in this Article 2 will be true and correct as of the Closing Date.

2.1

Capitalization/Ownership . The authorized and issued equity capital of each Company is set forth in Schedule 2.1 . The Clarity Shares owned by Karner constitute all of the issued and outstanding capital stock of Clarity; and ETEC Shares owned by Sellers constitute all of the issued and outstanding capital stock of ETEC. Each Seller has valid marketable title to the Company Shares to be sold by him hereunder, free and clear of any pledge, lien, encumbrance, security interest, option, claim, restriction, or equitable interest of any kind whatsoever. There are no outstanding securities of either Company that are convertible into capital stock or other securities of the Company, and there are no outstanding options or warrants, or other rights of any kind, to purchase or subscribe for capital stock or other securities of either Company. All of the outstanding equity securities of each Company have been duly authorized and validly issued and are fully paid and nonassessable. None of the outstanding equity securities or other securities of either Company was issued in violation of the Securities Act or any other legal requirement. Neither Company owns, or has any contract, agreement or obligation to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business, other than such Company.

2.2

Power and Authority; Authorization

(a)

Each Seller has full power and authority to enter into and consummate the transactions contemplated by this Agreement, and to transfer his Company Shares to Buyer without obtaining the consent or approval of any other Person.

(b)

All necessary action has been taken by each Seller to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and this Agreement is the valid and binding obligation of each Seller, enforceable in accordance with its terms, except as such obligations and enforceability are limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights and by equitable principles.

2.3

No Violation . The execution, delivery and performance of this Agreement do not and the performance of this Agreement by each Seller will not:

(a)

violate any provision of the Articles or Certificate of Incorporation or the Bylaws of either Company;

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(b)

violate in any material respect any laws, rules or regulations or any injunction, judgment, order, decree, ruling of any governmental entity applicable to either Seller or either Company, or require either Seller or either Company to obtain any approval, consent or waiver of, or make any filing with, any person or entity that has not been obtained or made; or

(c)

result in a violation or any breach of, constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the acceleration of any material Indebtedness under or material performance required by, result in any right of termination of, increase, materially, any amounts payable under, decrease, materially, any amounts receivable under, change any other material rights pursuant to, or conflict with, any material agreement to which either Company is a party or in respect of which its assets are bound, or any material permit, registration, license, franchise, certification or other approval received or held by or issued to either Company from a governmental entity.

2.4

Organization; Good Standing; Qualification; Subsidiaries . Clarity is a corporation duly organized, validly existing and in good standing under the laws of Arizona, with full corporate power and authority to own or lease its properties and to conduct its business as currently conducted. ETEC is a corporation duly organized, validly existing and in good standing under the laws of Arizona, with full corporate power and authority to own or lease its properties and to conduct its business as currently conducted. Each Company is qualified to do business and is in good standing in each other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. Neither Company has any Subsidiaries. As used herein, " Subsidiary " means any corporation or other Person of which a Company directly or indirectly holds securities or other interests having the power to elect a majority of such corporation's or other Person's board of directors or similar governing body, or otherwise having the power to direct the business and policies of such corporation or other Person.

2.5

Financial Statements . Attached as Schedule 2.5 are, with respect to each Company, the audited balance sheet, statement of income and retained earnings, and statement of cash flows of such Company as of December 31, 2006 and for the year then ended, and the unaudited balance sheet of such Company as of September 30, 2007 (the " Balance Sheet Date "; and the balance sheet for each Company as of the Balance Sheet Date being referred to herein as the " Balance Sheet "), and the related statements of income and retained earnings and cash flows for the period then ended, together with the report thereon, if applicable, of Mayer, Hoffman McCann, independent certified public accountants, including in each case the notes thereto. For each Company, such financial statements and notes (for each Company, the " Financials ") fairly present the financial condition and the results of operations, changes in retained earnings and cash flows of such Company as at the respective dates of and for the period referred to in such financial statements, all in accordance with GAAP consistently applied except that the Balance Sheet and related statements of income and retained earnings and cash flows for the period ended September 30, 2007 are subject to normal year-end audit adjustments.

2.6

Accounts Receivable . All accounts receivable of each Company that are included in the Financials of such Company represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business.

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2.7

No Undisclosed Liabilities . Neither Company has any liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent or otherwise) required to be set forth in the Financials of such Company except for liabilities or obligations reflected or reserved against in the Balance Sheet of such Company, current liabilities incurred in the ordinary course of business since the Balance Sheet Date and liability for the expense to support audits of the Companies' contracts and for the cost of any adjustments which may result from such audits.

2.8

Absence of Certain Changes . Since the Balance Sheet Date, there has not occurred with respect to either Company:

(a)

Any Company Material Adverse Effect or any event that is reasonably likely to cause a Company Material Adverse Effect;

(b)

Any alteration in the manner of keeping the books, accounts or records of such Company, or in the accounting principles, policies or procedures therein reflected, except for those alterations related to a change in GAAP or those alterations which would not have a more than de minimis impact on the earnings of such Company;

(c)

Any material damage or destruction to, or loss of, any assets or property owned, leased or used by such Company (whether or not covered by insurance);

(d)

Any sale, lease, transfer or assignment of any assets, tangible or intangible, except for sales in the ordinary course of such Company's business;

(e)

Any acceleration, termination, modification, or cancellation of any Material Contract of such Company except for accelerations, terminations, modifications or cancellations in the ordinary course of its business;

(f)

Any capital expenditures by such Company in excess of $ 50,000 in the aggregate, except for test vehicles purchased for the US Department of Energy in the ordinary course of business;

(g)

Any capital investment by such Company in, or any material loan to, any other Person;

(h)

Any incurrence by such Company of Indebtedness;

(i)

Any mortgage, pledge, or other creation of any security interest in any of such Company's assets or properties;

(j)

Any change in the Articles or Certificate of Incorporation or the Bylaws of such Company;

(k)

Any loan to, or any other transaction by such Company with, any of its employees, directors, or officers other than the advance or reimbursement of reasonable business expenses incurred or to be incurred in the ordinary course of business;

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(l)

The entering into of any employment agreement by such Company with any of its employees, directors, or officers or any collective bargaining agreement, written or oral, or any modification of the terms of an existing employment contract to which such Company is subject;

(m)

Any waiver or release by such Company of any of its material rights under any Material Contract or material legal dispute, other than pursuant to this Agreement;

(n)

Any grant of a license or sublicense by such Company of any rights under or with respect to any of its Intellectual Property;

(o)

Other than the Beauregard Retention Bonus (as defined in Article 6), any increase in the compensation payable or to become payable by such Company to any of its employees, directors, or officers, except for annual increases in the ordinary course of business consistent with past practice;

(p)

Any adoption, amendment, modification, or termination by such Company of any Employee Benefit Plan;

(q)

Any other material change by such Company in employment terms for any of its employees, directors, or officers outside the ordinary course of its business, except for the Beauregard Retention Bonus; or

(r)

Any agreement by such Company to do any of the things described in the preceding subsections (a) through (q) of this Section.

As used herein, " Material Adverse Effect " means, with respect to either Company, any change or effect that is, individually or in the aggregate, materially adverse to the business, operations, assets, financial condition or results of operations of such Company other than any change or effect (a) relating to the economy of the United States in general, (b) relating to the industry in which such Company operates in general and not specifically relating to such Company, (c) arising out of the announcement or pendency of the transactions contemplated by this Agreement, (d) arising out of compliance by such Company or Sellers with the terms of this Agreement or (e) arising out of any action taken or announced by such Company or Sellers at the request or direction of Buyer, or any inaction or failure to act by such Company or Sellers at the request or direction of Buyer.

2.9

Licenses and Permits . Each Company has made all material filings with governmental entities and has received all material permits, registrations, licenses, franchises, certifications and other approvals necessary to conduct and operate its business as currently conducted or operated by it and to permit such Company to own or use its assets in the manner in which such assets are currently owned or used in all material respects, except for a wheel chair lift permit at the office of the Companies. Each Company is in compliance in all material respects with the respective terms and conditions thereof and there are no proceedings pending or, to the knowledge of Sellers, threatened seeking to revoke, cancel, suspend, or adversely modify, any of such material permits, registrations, licenses, franchises, certifications and other approvals. The consummation of the transactions contemplated hereby will not result in the revocation, cancellation, suspension or material adverse modification of any of such material permits, registrations, licenses, franchises, certifications and other approvals.

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2.10

Books and Records . The books of account and other financial records of each Company have been maintained in accordance with standard business practices, including the maintenance of an adequate system of internal controls. The corporate records books, transfer books and stock ledgers of each Company are complete and accurate in all material respects and reflect all meetings, consents and other material corporate actions of the organizers, incorporators, stockholders, Board of Directors (and committees thereof) of such Company, and all transactions in such Company's capital stock, since the inception of the Company. At the Closing, all of these books and records will be in the possession of the respective Company.

2.11

Properties; Encumbrances . Schedule 2.11 contains, with respect to each Company, a complete and accurate list of all real property currently owned, leased or subleased by such Company. Each Company owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own, including all of the properties and assets reflected in the Balance Sheet of such Company, subject to sales after the Balance Sheet Date in the ordinary course of business. With respect to each Company, all properties and assets reflected in the Balance Sheet of such Company are free and clear of all Encumbrances except mortgages or security interests shown on the Financials of such Company as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists.

2.12

Environmental Matters . Each Company has conducted its business in all material respects in accordance with applicable Environmental Laws. There have been no events, circumstances, or facts which would cause either Company to have any material liability under any laws, rules or regulations concerning (a) public health and safety relating to toxic or hazardous substances or (b) pollution or protection of the environment or natural resources. As used herein, " Environmental Laws " means all laws rules and regulations concerning (a) public health and safety relating to toxic or hazardous substances or (b) pollution or protection of the environment or natural resources.

2.13

Intellectual Property .

(a)

Schedule 2.13 contains, with respect to each Company, a complete and accurate list of (i) each patent, patent application, trademark, trademark application or registered copyright (in any such case, whether registered or to be registered in the United States of America or elsewhere) (collectively, the " Intellectual Property ") owned by such Company, and (ii) all licenses (other than standard software licenses) or similar agreements or arrangements providing for payment of royalties with respect to intellectual property (collectively, the " Licenses ") to which such Company is a party either as licensee or licensor.

(b)

Each Company owns all right, title and interest to, or has the right to use pursuant to a valid, enforceable and effective license, free and clear of all Encumbrances, all of the Intellectual Property shown for it on Schedule 2.13 ; and such Intellectual Property comprises all of the intellectual property used by such Company in the operation of its business as currently conducted. No loss of any of the Intellectual Property is pending or, to the knowledge of Sellers, threatened.

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(c)

There are no claims against either Company that were made within the past six years or are presently pending asserting the invalidity, misuse or unenforceability of any of the Intellectual Property of such Company and, to the knowledge of Sellers, there is no basis for any such claim. Neither Company has infringed, misappropriated or otherwise conflicted with, and the operation of the business of each Company as currently conducted will not infringe, misappropriate or conflict with, any Intellectual Property of other Persons in any material respect, and neither Company has received any written notices regarding any of the foregoing (including, without limitation, any offers to license any Intellectual Property rights from any other Person). To the knowledge of Sellers, no third party has infringed, misappropriated or otherwise conflicted with any of the Intellectual Property of either Company. The transactions contemplated by this Agreement shall not impair in any material respect, the right, title or interest of either Company in and to its Intellectual Property, except the license agreement with Edison Source for use of patents related to battery fast charging..

(d)

There are no outstanding or, to the knowledge of Sellers, threatened disputes or disagreements with respect to any License of either Company.

2.14

Labor and Employment . Neither Company is a party to or bound by any collective bargaining agreement and there are no labor unions or other organizations representing, purporting to represent or, to the knowledge of Sellers, attempting to represent any employees of either Company. Since the Balance Sheet Date, there has not occurred or, to the knowledge of Sellers, been threatened any material strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to either Company. There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending, or to the knowledge of Sellers, threatened with respect to either Company. Each Company has complied with all applicable laws, rules and regulations pertaining to employment.

2.15

Employee Benefit Plans . Except as set forth in Schedule 2.15 , neither Company maintains or contributes to (a) any employee pension benefit plan as defined in Section 3(2) of ERISA, (b) any employee welfare benefit plan as defined in Section 3(1) of ERISA, (c) any profit sharing, deferred compensation, bonus, stock option, stock purchase, severance or incentive plan or agreement, (d) any plan or policy providing for "fringe benefits" to its employees, including vacation, paid holidays, personal leave, employee discount, educational benefit or similar programs, or (e) any other employment-related agreements, in any case under which employees or former employees of either Company are eligible to participate or derive a benefit (collectively, " Employee Benefit Plans "). Neither Company nor any member of any controlled group in which either Company is or has been a member, has participated in or contributed to, or been under common control with an employer that has participated in or contributed to, any multiemployer plan as defined in Section 3(37) of ERISA. No payment that will be made by either Company to any employee before or after the Closing Date on account of the transactions contemplated by this Agreement will be non-deductible to such Company or subject to excise tax, under Code Section 280G or Code Section 4999, nor will either Company be required to "gross up" any employee because of the imposition of such excise tax. No asset of either Company is subject to any Encumbrance under ERISA or the Code. There has been no application for or waiver of the minimum funding standards imposed by Section 302 of ERISA and Section 412 of the Code with respect to any Employee Benefit Plan. No Employee Benefit Plan has an "accumulated funding deficiency" within the meaning of Section 412 of the Code. There has been no "reportable event" (within the meaning of Section 4043 of ERISA) with regard to any Employee Benefit Plan. Neither Company has any liability or potential liability under Title IV of ERISA (other than for contributions not yet due) or to the PBGC (other than for payment of premiums not yet due). There are no pending or, to the knowledge of Sellers, threatened actions, suits, investigations or claims with respect to any Employee Benefit Plan (other than routine claims for benefits) which could result in material liability to either Company. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a determination from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of such Employee Benefit Plan. Neither Company or any other "disqualified person" (within the meaning of Section 4975 of the Code) or any "party in interest" (within the meaning of Section 3(14) of ERISA) has engaged in any "prohibited transaction" (within the meaning of Section 4975 of the Code or Section 406 of ERISA) with respect to any of the Employee Benefit Plans which could subject any of the Employee Benefit Plans, either Company, or any officer, director or employee of any of the foregoing to a penalty or tax under Section 502(i) of ERISA or Section 4975 of the Code. Each Employee Benefit Plan which is subject to the health care continuation requirements of Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the Code (" COBRA ") has been administered in material compliance with such requirements. Each Company has made available to Buyer copies of all written Employee Benefit Plans.

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2.16

Contracts . Schedule 2.16 contains, with respect to each Company, a complete and accurate list of the following Contracts to which such Company is a party or in respect of which its assets are bound:

(a)

All employment contracts, severance, change in control or similar arrangements that will result in any obligation (absolute or contingent) of such Company to make any payment to the foregoing following either the consummation of the transactions contemplated hereby, termination of employment or both;

(b)

All exclusive distribution agreements not terminable by such Company without penalty upon 90 days or less notice;

(c)

All promissory notes, loans, agreements, indentures, evidences of Indebtedness or other instruments relating to the lending of money, whether as borrower, lender or guarantor;

(d)

All Contracts containing covenants limiting the freedom of such Company to engage in any line of business or compete with any Person which are not terminable by the Company without penalty upon 90 days or less notice;

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(e)

All Contracts involving annual expenditures or liabilities in excess of $100,000 which are not terminable by such Company without penalty upon 90 days or less notice;

(f)

All Contracts to which such Company, on the one hand, and any Affiliates, on the other hand, are parties or by which they are bound that relate to the Company or its operations;

(g)

Any partnership, joint venture or other similar agreement or arrangement;

(h)

Any collective bargaining agreement;

(i)

Any material agreement for the sale or purchase of products or services other than purchase or sale orders entered into in the ordinary course of business;

(j)

Any environmental indemnity agreement for the benefit of a party other than such Company;

(k)

Any material License, sublicense, agreement or permission (as licensee or licensor) with respect to any Intellectual Property;

(l)

Any supply agreement involving annual expenditures or liabilities in excess of $100,000;

(m)

Any material confidentiality agreements other than confidentiality provisions contained in Material Contracts otherwise disclosed pursuant to this Section and any confidentiality agreements entered into in contemplation of this Agreement; and

(n)

Any other Contract the termination or nonperformance of which would have a Material Adverse Effect.

(o)

Copies of the written Material Contracts have been made available to Buyer. All of the Material Contracts of each Company are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of such Company except for bankruptcy and similar laws affecting the enforcement of creditors' rights generally or the availability of equitable remedies. There are no material liabilities of either Company arising from any breach or default by such Company of any provision of any Material Contract that are not reflected in the Balance Sheet of such Company, and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a material breach or default by such Company of any Material Contract. Each Company has fulfilled all material obligations required pursuant to each Material Contract to have been performed by such Company prior to the date hereof and, to the knowledge of Sellers, there is no reason that such Company will not be able to fulfill, when due, all of its obligations under the Material Contracts that remain to be performed after the date of this Agreement.

As used herein:

" Contracts " means any agreement, contract, instrument, obligation, promise or undertaking (whether written or oral) that is legally binding and to which either Company is a party or is bound; and

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" Material Contracts " means the agreements of either Company required to be disclosed in Schedule 2.16 .

2.17

Litigation . Except as set forth on Schedule 2.17 , there are no legal, administrative, arbitration or other proceedings, or any governmental investigations pending or, to the knowledge of Sellers, threatened against or otherwise affecting either Company, or any of its assets.

2.18

Taxes .

(a)

Each Company has timely filed all Tax Returns required to have been filed by it for all taxable periods ending on or prior to the date hereof, and has paid all Taxes due to any taxing authority with respect to all taxable periods ending on or prior to the date hereof;

(b)

The Tax Returns filed by each Company are true and correct in all material respects and reflect accurately all liability for Taxes for the periods covered thereby;

(c)

Neither Company has received notice that the IRS or any other taxing authority has asserted against it any deficiency or claim for additional Taxes in connection therewith;

(d)

There is no pending or, to the knowledge of Sellers, threatened audit, proceeding or investigation with respect to (i) any Tax Returns previously filed by either Company, (ii) the assessment or collection of Taxes or (iii) a claim for refund made by either Company with respect to Taxes previously paid;

(e)

All amounts that are required by any taxing authority to be collected or withheld by either Company have been duly collected or withheld and all such amounts that are required to be remitted to any taxing authority have been duly remitted;

(f)

There are no Encumbrances for Taxes due and payable upon any assets of either Company other than Encumbrances for Taxes or assessments and similar charges, or otherwise arising by operation of law, which are either not yet due and payable or are being contested in good faith and by appropriate proceedings and for which adequate reserves (as determined by GAAP, consistently applied) have been established on the Companies' books with respect thereto;

(g)

Clarity (i) is an "S" corporation as defined in Section 1361 of the Code, and (ii) has been an "S" corporation for tax purposes since 1991;

(h)

Neither Company is a party to any tax allocation or sharing agreement which allocates tax liability to it. Neither Company is or has been a member of an affiliated group filing a consolidated U.S. federal income Tax Return and neither has had any liability for the taxes of any Person under Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise. Neither Company is delinquent in the payment of any Taxes, assessment or governmental charge. No deficiencies for any Taxes have been proposed, asserted or assessed against either Company that have not been resolved or settled, and no requests for waivers of the time to assess any Taxes against either Company are pending or have been agreed to. Any deferred taxes of either Company have been accounted for in accordance with GAAP.

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As used herein:

" Tax " or " Taxes " means any and all taxes imposed or required to be collected by any federal, state or local taxing authority in the United States, or by any foreign taxing authority under any statute or regulation, including all income, gross receipts, sales, use, personal property, occupancy, business occupation, mercantile, ad valorem, transfer, license, withholding, payroll, employment, excise, real estate, environmental, capital stock, franchise, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalties and other additions thereto; and

" Tax Returns " means any and all tax returns or reports required to be filed with the applicable federal, state or local taxing authority in connection with payment of Taxes.

2.19

Governmental Consents and Approvals . The execution and delivery of this Agreement by Sellers does not, and the performance by Sellers of the transactions contemplated by this Agreement will not, require any filing with or notification to, or any consent, approval, authorization or permit from, any governmental entity, except contracts with the US Department of Energy, Battelle Energy Alliance, and Edison Source..

2.20

Brokers' Fees . Neither Sellers nor either Company has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

2.21

Insurance . Schedule 2.21 contains, with respect to each Company, a description of all policies of fire, liability, workers' compensation and other forms of insurance providing insurance coverage to or for such Company, and the name of the owner of each such policy. All premiums with respect thereto have been paid when due and no notice of cancellation or termination has been received with respect to any such policy. No such insurer has any right of payment, whether by way of set-off, indemnity or otherwise, of any nature whatsoever, against either Company in respect of any recovery under any such policy.

2.22

No Omissions . No representation or warranty of either Seller in this Agreement, nor any statement, certificate, schedule or exhibit hereto furnished or to be furnished by or on behalf of either Seller pursuant to this Agreement, contains any untrue statement of a material fact or omits to state a material fact required to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. No investigation of either Seller or either Company undertaken by Buyer and its representatives, nor any information revealed to Buyer in consequence thereof, shall absolve either Seller from any liability for any such untrue statement or omission.

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2.23

Securities Laws .

(a)

Each Seller acknowledges that (i) the issuance of the Buyer Shares to Sellers as a portion of the Clarity Purchase Price and the ETEC Purchase Price is not being made by means of a prospectus, (ii) each Seller is an "accredited investor" (as defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended (the " Securities Act ")) and (iii) each Seller has the ability to assess the risks and merits of acceptance of the Buyer Shares as a portion of the Clarity Purchase Price and the ETEC Purchase Price. Each Seller has consulted his own legal, tax and financial advisors with respect to the issuance of the Buyer Shares to Seller or has had adequate time to do so and determined not to consult such advisors.

(b)

Each Seller is acquiring and will hold the Buyer Shares for investment for his own account and not with a view to the distribution or resale thereof (except as allowed by Rule 144), and neither has any present or contemplated intention, agreement, understanding or arrangement to sell, assign, pledge, transfer or otherwise dispose of the Buyer Shares.

(c)

Each Seller recognizes that, because the Buyer Shares have not and are not expected to be registered under the Securities Act or the securities laws of any state and because there will be no public market for the Buyer Shares, such Seller will not be able to readily liquidate his investment in the event of financial emergency or for any other reason (other than in compliance with Rule 144, after applicable holding periods and subject to volume and other limitations), and such Seller must bear the economic risk of the investment for an indefinite period of time. Each Seller also understands and agrees that the Buyer Shares cannot be sold or transferred without registration or the availability of an exemption therefrom, and without an opinion of counsel satisfactory to Buyer to the effect that the transfer would be in compliance with applicable federal and state securities laws, by application of Rule 144 or otherwise.

(d)

Each Seller is aware of the adoption of Rule 144 by the Securities and Exchange Commission under the Securities Act, which permits limited public resales of securities acquired in a non-public offering, subject only to the satisfaction of certain conditions.

(e)

Neither Seller will sell, transfer or otherwise dispose of the Buyer Shares in violation of the Securities Act, the Securities Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144 under the Securities Act. Each Seller agrees that he will not dispose of the Buyer Shares unless and until he has provided Buyer with written assurances, in substance and form satisfactory to Buyer, that (i) the proposed disposition does not require registration of the Buyer Shares under the Securities Act or all appropriate action necessary for compliance with the registration requirements of the Securities Act or with any exemption from registration available under the Securities Act (including Rule 144) has been taken and (ii) the proposed disposition will not result in the contravention of any transfer restrictions applicable to the Buyer Shares under state securities laws.

(f)

Each Seller has been furnished with, and has had access to, such information as he considers necessary or appropriate for deciding whether to accept the Buyer Shares, and each Seller has had an opportunity to ask questions and receive answers from Buyer regarding the terms and conditions of the issuance of the Buyer Shares.

(g)

Each Seller is aware that his investment in the Buyer Shares is a speculative investment that has limited liquidity and is subject to the risk of complete loss. Each Seller is able, without impairing his financial condition, to hold the Buyer Shares for an indefinite period and to suffer a complete loss of his investment in the Buyer Shares.

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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Sellers that the statements contained in this Article 3 will be true and correct as of the Closing Date.

3.1

Organization; Good Standing; Qualification . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, with full corporate power and authority to own or lease its properties and to conduct its business as currently conducted. Buyer is qualified to do business and is in good standing in each other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

3.2

Power and Authority; Authorization

(a)

Buyer has full power and authority to enter into and consummate the transactions contemplated by this Agreement, and to transfer the Buyer Shares to Sellers without obtaining the consent or approval of any other Person.

(b)

All necessary action has been taken by Buyer to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and this Agreement is the valid and binding obligation of Buyer, enforceable in accordance with its terms, except as such obligations and enforceability are limited by bankruptcy, insolvency and other similar laws of general application affecting the enforcement of creditors' rights and by equitable principles.

3.3

No Violation . The execution, delivery and performance of this Agreement do not and the performance of this Agreement by Buyer will not:

(a)

violate any provision of the Articles or Certificate of Incorporation or the Bylaws of Buyer;

(b)

violate in any material respect any laws, rules or regulations or any injunction, judgment, order, decree, ruling of any governmental entity applicable to Buyer, or require Buyer to obtain any approval, consent or waiver of, or make any filing with, any person or entity that has not been obtained or made; or

(c)

result in a violation or any breach of, constitute a default (or an event which with notice or lapse of time or both would become a default) under, result in the acceleration of any material Indebtedness under or material performance required by, result in any right of termination of, increase, materially, any amounts payable under, decrease, materially, any amounts receivable under, change any other material rights pursuant to, or conflict with, any material agreement to which Buyer is a party or in respect of which its assets are bound, or any material permit, registration, license, franchise, certification or other approval received or held by or issued to Buyer from a governmental entity.

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3.4

Buyer Shares . The Buyer Shares, when issued in accordance with this Agreement, will be duly authorized, validly issued and outstanding, fully paid and nonassessable.

3.5

Capitalization . The authorized and issued equity capital of Buyer is set forth in Schedule 3.5 and constitutes all of the issued and outstanding capital stock of Buyer. All of the outstanding equity securities of Buyer have been duly authorized and validly issued and are fully paid and nonassessable. None of the outstanding equity securities or other securities of Buyer was issued in violation of the Securities Act or any other legal requirement.

3.6

Brokers' Fees . Buyer has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

3.7

Litigation . Except as set forth on Schedule 3.7 , there are no legal, administrative, arbitration or other proceedings, or any governmental investigations pending or, to the knowledge of Buyer, threatened against or otherwise affecting Buyer, or any of its assets.

3.8

No Omissions . No representation or warranty of Buyer in this Agreement, nor any statement, certificate, schedule or exhibit hereto furnished or to be furnished by or on behalf of Buyer pursuant to this Agreement, contains any untrue statement of a material fact or omits to state a material fact required to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. No investigation of Buyer undertaken by Sellers and their representatives, nor any information revealed to Sellers in consequence thereof, shall absolve Buyer from any liability for any such untrue statement or omission.

3.9

Financial Statements . The financial statements of Buyer included in the reports (" Buyer's SEC Reports ") that Buyer has filed with the Securities and Exchange Commission (" SEC "), as well as the additional financial statements that Buyer has made available to Sellers for periods not included in such filed reports (collectively, " Buyer's Financial Statements ") fairly present the financial condition and the results of operations, changes in retained earnings and cash flows of Buyer as at the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP (as applied under SEC rules for reports filed with the SEC) consistently applied except that the balance sheets and related statements of income and retained earnings and cash flows for periods other than completed fiscal years are subject to normal year-end audit adjustments.

3.10

No Undisclosed Liabilities . Buyer has no material liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent or otherwise) which have not been reflected or reserved against in Buyer's Financial Statements.

3.11

Absence of Material Adverse Effect . Since the date of the most recent balance sheet included in Buyer's Financial Statements, no Material Adverse Effect or any event that is reasonably likely to cause a Material Adverse Effect to the Buyer has occurred. As used herein, " Material Adverse Effect " means, with respect to Buyer, any change or effect that is, individually or in the aggregate, materially adverse to the business, operations, assets, financial condition or results of operations of Buyer other than any change or effect (a) relating to the economy of the United States in general, (b) relating to the industry in which Buyer operates in general and not specifically relating to Buyer, (c) arising out of the announcement or pendency of the transactions contemplated by this Agreement, (d) arising out of compliance by Buyer with the terms of this Agreement or (e) arising out of any action taken or announced by Buyer at the request or direction of Sellers, or any inaction or failure to act by Buyer at the request or direction of Sellers.

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3.12

Accounts Receivable . All accounts receivable of Buyer represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business.

3.13

Key Employees . Buyer is aware that key ETEC employees Karner and Kathryn Forbes are married.

3.14

Licenses and Permits . Buyer has made all material filings with governmental entities and has received all material permits, registrations, licenses, franchises, certifications and other approvals necessary to conduct and operate its business as currently conducted or operated by it and to permit Buyer to own or use its assets in the manner in which such assets are currently owned or used in all material respects. Buyer is in compliance in all material respects with the respective terms and conditions thereof and there are no proceedings pending or, to the knowledge of Buyer, threatened seeking to revoke, cancel, suspend, or adversely modify, any of such material permits, registrations, licenses, franchises, certifications and other approvals. The consummation of the transactions contemplated hereby will not result in the revocation, cancellation, suspension or material adverse modification of any of such material permits, registrations, licenses, franchises, certifications and other approvals.

3.15

Books and Records . The books of account and other financial records of Buyer have been maintained in accordance with standard business practices, including the maintenance of an adequate system of internal controls. The corporate records books, transfer books and stock ledgers of Buyer are complete and accurate in all material respects and reflect all meetings, consents and other material corporate actions of the organizers, incorporators, stockholders, Board of Directors (and committees thereof) of Buyer, and all transactions in Buyer's capital stock, since its inception.

3.16

Environmental Matters . Buyer has conducted its business in all material respects in accordance with applicable Environmental Laws. There have been no events, circumstances, or facts which would cause Buyer to have any material liability under any laws, rules or regulations concerning (a) public health and safety relating to toxic or hazardous substances or (b) pollution or protection of the environment or natural resources.

3.17

Intellectual Property .

(a)

There are no claims against Buyer that were made since its inception or are presently pending asserting the invalidity, misuse or unenforceability of any of the Intellectual Property of Buyer and, to the knowledge of Buyer, there is no basis for any such claim. Buyer has not infringed, misappropriated or otherwise conflicted with, and the operation of the business of Buyer as currently conducted will not infringe, misappropriate or conflict with, any Intellectual Property of other Persons in any material respect, and Buyer has not received any written notices regarding any of the foregoing (including, without limitation, any offers to license any Intellectual Property rights from any other Person). The transactions contemplated by this Agreement shall not impair in any material respect, the right, title or interest of Buyer in and to its Intellectual Property.

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(b)

There are no outstanding or, to the knowledge of Buyer, threatened disputes or disagreements with respect to any License of Buyer.

3.18

Employee Benefit Plans . Buyer maintains its employee benefit plans in compliance with all applicable laws. There are no pending or, to the knowledge of Buyer, threatened actions, suits, investigations or claims with respect to any of its employee benefit plans (other than routine claims for benefits) which could result in material liability to Buyer. All information about Buyer's employee benefit plans that is material to a decision whether to invest in Buyer's stock is set forth in Buyer's SEC Reports.

3.19

Contracts . The contracts of Buyer included in Buyer's SEC Reports, together with the other contracts that Buyer has made available to Sellers as part of Sellers' due diligence in connection with the transactions contemplated hereunder, are all of the contracts to which Buyer is a party, the termination or nonperformance of which would have a Material Adverse Effect on Buyer. All of such contracts of Buyer are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of Buyer except for bankruptcy and similar laws affecting the enforcement of creditors' rights generally or the availability of equitable remedies. There are no material liabilities of the Buyer arising from any breach or default by the Buyer of any provision of any of such contracts that are not reflected in Buyer's Financial Statements, and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a material breach or default by Buyer of any of such contracts. Buyer has fulfilled all material obligations required pursuant to each of such contracts to have been performed by Buyer prior to the date hereof and there is no reason that Buyer will not be able to fulfill, when due, all of its obligations under any of such contracts that remain to be performed after the date of this Agreement.

3.21

Taxes .

(a)

Buyer has timely filed all Tax Returns required to have been filed by it for all taxable periods ending on or prior to the date hereof, and has paid all Taxes due to any taxing authority with respect to all taxable periods en

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