exh10-1.htm


    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      Exhibit
        10.1    

      STOCK
        PURCHASE AGREEMENT

       

      BY
        AND AMONG

       

      ASTEC
        INDUSTRIES, INC.

       

      PETERSON,
        INC.

       

      A.
        NEIL PETERSON

       

      AND
        THE OTHER SHAREHOLDERS

       

      OF

       

      PETERSON,
        INC.

       

      


       

      DATED
        AS OF MAY 31, 2007

       

      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      ARTICLE
        1  DEFINITIONS 

      ARTICLE
        2  SALE AND TRANSFER OF STOCK; CLOSING;
        AGREEMENTS 

      2.1           Stock. 

      2.3           Closing. 

      2.4           Closing
        Obligations. 

      2.5           Purchase
        Price Adjustment. 

      2.6           Non-Competition
        Obligations of the Sellers. 

      2.7           Tax
        Covenants. 

      2.8           Sellers’
        Cooperation. 

      2.9           Conditional
        Earn-Out. 

      2.10           Release
        of Company by Sellers. 

      2.11           Certain
        Employment Matters. 

      2.12           Excluded
        Assets. 

      2.13           Purchase
        of Certain Assets from Dale Peterson. 

      ARTICLE
        3  REPRESENTATIONS AND WARRANTIES OF
        SELLERS 

      3.1           Organization
        and Good Standing. 

      3.2           Authority;
        No Conflict. 

      3.3           Capitalization. 

      3.4           Financial
        Statements. 

      3.5           Books
        and Records. 

      3.6           Title
        to Properties; Encumbrances. 

      3.7           Ownership
        of Assets; Condition and Sufficiency of Assets.

      3.8           Accounts
        Receivable and Inventory. 

      3.9           Accounts
        Payable. 

      3.10           No
        Undisclosed Liabilities. 

      3.11           Taxes. 

      3.12           No
        Material Adverse Change. 

      3.13           Employees
        and Employee Benefit Plans. 

      3.14           Compliance
        With Legal Requirements; Governmental
        Authorizations. 

      3.15           Legal
        Proceedings; Orders. 

      3.16           Absence
        of Certain Changes and Events. 

      3.17           Contracts;
        No Defaults. 

      3.18           Insurance. 

      3.19           Environmental
        Matters. 

      3.20           Employees. 

      3.21           Labor
        Relations; Compliance. 

      3.22           Intellectual
        Property & Intangible Assets. 

      3.23           Certain
        Payments. 

      3.24           Disclosure. 

      3.25           Relations
        with Related Persons. 

      3.26           Brokers
        or Finders. 

      ARTICLE
        4  REPRESENTATIONS AND WARRANTIES OF
        BUYER 

      4.1           Organization
        and Good Standing. 

      4.2           Authority;
        No Conflict. 

      4.3           Certain
        Proceedings. 

      4.4           Brokers
        or Finders. 

      ARTICLE
        5  COVENANTS OF SELLERS AND THE COMPANY
        PRIOR TO CLOSING DATE 

      5.1           Required
        Approvals. 

      5.2           Company’s
        and Sellers’ Approval. 

      5.3           Current
        Information. 

      5.4           No
        Negotiation. 

      5.5           Operations
        Prior to Closing Date. 

      5.6           Miscellaneous
        Agreements and Consents. 

      5.7           Access
        and Investigation; Deliveries. 

      5.8           Notification. 

      ARTICLE
        6  COVENANTS OF BUYER PRIOR TO CLOSING
        DATE 

      ARTICLE
        7  CONDITIONS PRECEDENT TO BUYER’S
        OBLIGATION TO CLOSE 

      7.1           Accuracy
        of Representations. 

      7.2           Performance. 

      7.3           Consents. 

      7.4           Additional
        Documents; Due Diligence Investigation; Certain
        Payables. 

      7.5           No
        Proceedings. 

      7.6           No
        Claim Regarding Stock Ownership or Sale Proceeds.

      ARTICLE
        8  CONDITIONS PRECEDENT TO SELLERS’
OBLIGATION TO CLOSE 

      8.1           Accuracy
        of Representations. 

      8.2           Buyer’s
        Performance. 

      8.3           Consents. 

      8.4           Additional
        Documents. 

      8.5           No
        Injunction. 

      ARTICLE
        9  TERMINATION 

      9.1           Termination
        Events. 

      9.2           Effect
        of Termination. 

      ARTICLE
        10  INDEMNIFICATION;
        REMEDIES 

      10.1           Survival;
        Right to Indemnification Not Affected By
        Knowledge. 

      10.2           Indemnification
        and Payment of Damages by Sellers. 

      10.3           Indemnification
        and Payment of Damages by Buyer. 

      10.4           Indemnity
        Limitations—Sellers. 

      10.5           Indemnity
        Limitations—Buyer. 

      10.6           Procedure
        for Indemnification—Third Party Claims. 

      10.7           Procedure
        for Indemnification—Other Claims. 

      10.8           Treatment
        of Indemnification Payment. 

      ARTICLE
        11  GENERAL
        PROVISIONS 

      11.1           Expenses. 

      11.2           Confidentiality/Public
        Announcement. 

      11.3           Notices. 

      11.4           Jurisdiction. 

      11.5           Further
        Assurances. 

      11.6           Waiver. 

      11.7           Entire
        Agreement and Modification. 

      11.8           Assignments,
        Successors, And No Third-Party Rights. 

      11.9           Severability. 

      11.10               Sellers’
        Representative. 

      11.11               Section
        Headings; Construction. 

      11.12               Governing
        Law. 

      11.13               Counterparts. 

      

 

      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      STOCK
        PURCHASE AGREEMENT

       

      This
        Stock Purchase Agreement (“Agreement”) is made and entered into
        as of May 31, 2007, by and among ASTEC INDUSTRIES, INC., a
        Tennessee corporation (“Buyer”), A. NEIL PETERSON,
individually and as the Sellers' Representative,
        a resident of Oregon
        ("Neil Peterson"), the shareholders
        listed in Schedule 3.1(a), ("Shareholders")
        and PETERSON, INC., an Oregon corporation (the
“Company”). Neil Peterson and the other Shareholders
        are
        referred to collectively herein as “Sellers.”

       

      RECITALS

       

      The
        Company designs, engineers, manufactures, sells, and services wood chippers,
        horizontal recyclers, blower trucks, and related parts and equipment (the
        "Business").

       

      Sellers
        own all of the shares of the capital stock of Company (the
“Stock”).

       

      Sellers
        desire to sell, and Buyer desires to purchase, the Stock for the consideration
        and on the terms set forth in this Agreement.

       

      AGREEMENT

       

      The
        parties, intending to be legally bound, agree as follows:

       

      


       

      ARTICLE
        1

      


      DEFINITIONS

      


      For
        purposes of this Agreement, the following terms have the meanings specified
        or
        referred to in this Section 1:

       

      “2004
        Balance Sheet”—as defined in Section 3.4.

       

       “2005
        Balance Sheet”—as defined in Section 3.4.

       

       “2006
        Balance Sheet”—as defined in Section 3.4.

       

      “2008
        Target” —as defined in Section 2.9(a).

       

      “2009
        Target” —as defined in Section 2.9(b).

       

       “Agreement”—this
        Stock Purchase Agreement.

       

      “April
        28, 2007 Balance Sheet”—as defined in Section 2.5.

       

      “Balance
        Sheets”—as defined in Section 3.4.

       

      “Best
        Efforts”—the efforts that a prudent Person desirous of achieving a
        result would use in similar circumstances to ensure that such result is achieved
        as expeditiously as possible;

      provided,
        however, that an obligation to use Best Efforts under this Agreement does
        not
        require the Person subject to that obligation to take actions that would
        result
        in a materially adverse change in the benefits to such Person of this Agreement
        and the Contemplated Transactions.

       

      “Breach”—a
        “Breach” of a representation, warranty, covenant, obligation, or other provision
        of this Agreement or any instrument delivered pursuant to this Agreement
        will be
        deemed to have occurred if there is or has been (a) any inaccuracy in or
        breach
        of, or any failure to perform or comply with, such representation, warranty,
        covenant, obligation, or other provision, or (b) any occurrence or circumstance
        that is or was inconsistent with such representation, warranty, covenant,
        obligation, or other provision, and the term “Breach” means any such inaccuracy,
        breach, failure, claim, occurrence, or circumstance.

       

      "Business"
        —as defined in the recitals of this Agreement.

       

      “Buyer”—as
        defined in the first paragraph of this Agreement.

       

      “Buyer
        Indemnified Persons”—as defined in Section 10.2.

       

       “Buyer’s
        Advisors”—as defined in Section 5.7.

       

      “Buyer’s
        Closing Certificate”—as defined in Section 2.4(b).

       

      “Buyer’s
        Closing Documents”—as defined in Section 4.2.

       

      “Cash
        Payment”—as defined in Section 2.4(b).

       

      “Closing”—as
        defined in Section 2.3.

       

      ”Closing
        Balance Sheet"—as defined in Section 2.2.

       

      “Closing
        Date”— as defined in Section 2.3.

       

      “Company”—Peterson
        Inc., an Oregon corporation, together with its wholly-owned subsidiary, Peterson
        Pacific Corp., an Oregon corporation.

       

      “Company
        Contract”—any Contract presently in effect, (a) under which the Company
        has or may acquire any rights, or (b) under which the Company has or may
        become
        subject to any obligation or liability, or (c) by which the Company or any
        of
        the assets owned or used by it is or may become bound, or (d) to which a
        Seller
        is a party that relates to or may affect the business of, or any of the assets
        owned or used by, the Company.

       

      "Company
        Indebtedness"—as defined in Section 3.4(d).

       

      “Consent”—any
        approval, consent, ratification, waiver, or other authorization (including
        any
        Governmental Authorization).

       

      “Contemplated
        Transactions”—all of the transactions contemplated by this Agreement,
        including:


      (a)           the
        sale by Sellers to Buyer and the purchase by Buyer from Sellers of the
        Stock;

       

      (b)           the
        performance by Buyer and Sellers of their respective covenants and obligations
        under this Agreement;

       

      (c)           Buyer’s
        acquisition and ownership of the Stock and exercise of control over the Company;
        and

       

      (d)           the
        performance (including performance by Persons who are not parties hereto)
        or
        occurrence of the actions, transactions, events or obligations necessary
        to
        satisfy the conditions set forth in Sections 7 and 8 hereof.

       

      “Contract”—any
        agreement, contract, obligation, promise, or undertaking (whether written
        or
        oral and whether express or implied) that is legally binding.

       

      “Copyrights”—as
        defined in Section 3.22(a)(iii).

       

      “Dale
        Peterson Assets”—as defined in Section 2.13.

       

      “Damages”—as
        defined in Section 10.2.

       

      "EBIT"—Earnings
        before interest and taxes determined in accordance with GAAP.

       

      “Effective
        Time”—12:01 a.m. of the first business day following the Closing
        Date.

       

      “Encumbrance”—any
        charge, claim, community property interest, condition, equitable interest,
        lien,
        option, pledge, security interest, right of first refusal, or restriction
        of any
        kind, including any restriction on use, voting, transfer, receipt of income,
        or
        exercise of any other attribute of ownership.

       

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

       

      “Environmental,
        Health, and Safety Liabilities”—any cost, damages, expense, liability,
        obligation, or other responsibility arising from or under Environmental Law
        or
        Occupational Safety and Health Law and consisting of or relating
        to:

       

      (e)           any
        environmental, health, or safety matters or conditions (including on-site
        or
        off-site contamination, occupational safety and health,
        and  regulation of chemical substances or products);

      


       

      (f)           fines,
        penalties, judgments, awards, settlements, legal or administrative proceedings,
        damages, losses, claims, demands and response, investigative, remedial, or
        inspection costs and expenses arising under Environmental Law or Occupational
        Safety and Health Law;


          (g)           financial
        responsibility under Environmental Law or Occupational Safety and Health
        Law for
        cleanup costs or corrective action, including any investigation, cleanup,
        removal, containment, or other remediation or response actions
        (“Cleanup”) required by applicable Environmental Law or
        Occupational Safety and Health Law (whether or not such Cleanup has been
        required or requested by any Governmental Body or any other Person) and for
        any
        natural resource damages; or

      


      (h)           any
        other compliance, corrective, investigative, or remedial measures required
        under
        Environmental Law or Occupational Safety and Health Law.

      


      The
        terms
“removal,” “remedial,” and “response action,” include the types of activities
        covered by the United States Comprehensive Environmental Response, Compensation,
        and Liability Act, 42 U.S.C. § 9601 et seq., as amended
        (“CERCLA”).

       

      “Environmental
        Law”—any Legal Requirement that requires or relates to:

       

      (a)           advising
        appropriate authorities, employees, and the public of intended or actual
        releases of pollutants or hazardous substances or materials, violations of
        discharge limits, or other prohibitions and of the commencements of activities,
        such as resource extraction or construction, that could have significant
        impact
        on the Environment;

      


      (b)           preventing
        or reducing to acceptable levels the release of pollutants or hazardous
        substances or materials into the Environment;

      


      (c)           reducing
        the quantities, preventing the release, or minimizing the hazardous
        characteristics of wastes that are generated;

      


      (d)           assuring
        that products are designed, formulated, packaged, and used so that they do
        not
        present unreasonable risks to human health or the Environment when used or
        disposed of;

      


      (e)           protecting
        resources, species, or ecological amenities;

      


      (f)           reducing
        to acceptable levels the risks inherent in the transportation of hazardous
        substances, pollutants, oil, or other potentially harmful
        substances;

      


      (g)           cleaning
        up pollutants that have been released, preventing the threat of release,
        or
        paying the costs of such clean up or prevention; or

      


      (h)           making
        responsible parties pay private parties, or groups of them, for damages done
        to
        their health or the Environment, or permitting self-appointed representatives
        of
        the public interest to recover for injuries done to public assets.

      


       

      “ERISA”—the
        Employee Retirement Income Security Act of 1974 or any successor law, and
        regulations and rules issued pursuant to that Act or any successor
        law.

       

      “ERISA
        Affiliate”—as defined in Section 3.13(h).

       

           “Escrow
        Agreement” —as
        defined in Section 2.4(b)(i).

       

      "Escrow
        Amount"– as defined in Section 2.4(b)(i)

       

      “Excluded
        Assets” —as defined in Section 2.11.

       

      “Financial
        Statements”—as defined in Section 3.4.

       

      “GAAP”—generally
        accepted United States accounting principles, applied on a consistent
        basis.

       

      “Governmental
        Authorization”—any approval, consent, license, permit, waiver, or other
        authorization issued, granted, given, or otherwise made available by or under
        the authority of any Governmental Body or pursuant to any Legal
        Requirement.

       

      “Governmental
        Body”—any:

       

      (a)           nation,
        state, county, city, town, village, district, or other jurisdiction of any
        nature;

      


      (b)           federal,
        state, local, municipal, foreign, or other government;

      


      (c)           governmental
        or quasi-governmental authority of any nature (including any governmental
        agency, branch, department, official, or entity and any court or other
        tribunal);

      


      (d)           body
        exercising, or entitled to exercise, any administrative, executive, judicial,
        legislative, police, regulatory, or taxing authority or power of any
        nature.

      


      “Hazardous
        Activity”—the distribution, generation, handling, importing,
        management, manufacturing, processing, production, refinement, Release, storage,
        transfer, transportation, treatment, or use (including any withdrawal or
        other
        use of groundwater) of Hazardous Materials in, on, under, about, or from
        a
        property or any part thereof into the Environment, and any other act, business,
        operation, or thing that increases the danger, or risk of danger, or poses
        an
        unreasonable risk of harm to persons or property on or off a property, or
        that
        may affect the value of a property of the Company.

       

      “Hazardous
        Materials”—any waste or other substance that is listed, defined,
        designated, or classified as, or otherwise determined to be, hazardous,
        radioactive, or toxic or a pollutant or a contaminant under or pursuant to
        any
        Environmental Law, including any admixture or solution thereof, and specifically
        including petroleum and all derivatives thereof or synthetic substitutes
        therefor and asbestos or asbestos-containing materials.

       

      “Indebtedness”
        —as defined in Section 3.4(c).

       

      “Indemnified
        Person”—a Buyer Indemnified Person and/or a Seller’s Indemnified
        Person, as the context shall apply.

       

      “Intellectual
        Property Assets”—as defined in Section 3.22.

      
     
        “IRC”—the Internal Revenue Code of 1986 or any successor law,
        and regulations issued by the IRS pursuant to the Internal Revenue Code or
        any
        successor law.

       

      “IRS”—the
        United States Internal Revenue Service or any successor agency, and, to the
        extent relevant, the United States Department of the Treasury.

       

      “Knowledge”—an
        individual will be deemed to have “Knowledge” of a particular fact or other
        matter if such individual is actually aware of such fact or other matter;
        provided, however, that a Seller and the Company will be deemed to have
“Knowledge” of a particular fact or other matter if any individual who is
        serving, or who has since July 1, 2004 served, as a director or officer of
        the
        Company has, or at any time had, actual knowledge of such fact or other
        matter.

       

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

       

      “Liability”—means
        any liability or obligation, whether known or unknown, asserted or unasserted,
        absolute or contingent, accrued or unaccrued, liquidated or unliquidated
        and
        whether due or to become due, regardless of when asserted.

       

      “Marks”—as
        defined in Section 3.22(a)(i).

       

      “Material
        Adverse Effect”—a material adverse effect on the financial condition,
        business relationships or economic prospects of the Company.

       

      “Modification
        Notice”—as defined in Section 5.8.

       

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

       

      “Order”—any
        award, decision, injunction, judgment, order, ruling, subpoena, or verdict
        entered, issued, made, or rendered by any court, administrative agency, or
        other
        Governmental Body or by any arbitrator.

       

      “Ordinary
        Course of Business”—an action taken by a Person will be deemed to have
        been taken in the “Ordinary Course of Business” only if:

       

      (a)           such
        action is consistent with the past practices of such Person and is taken
        in the
        ordinary course of the normal day-to-day operations of such Person;
        and

      


      (b)           such
        action is not required to be authorized by the board of directors of such
        Person
        (or by any Person or group of Persons exercising similar
        authority).

      


      “Organizational
        Documents” — (a) the charter or articles or certificate of
        incorporation and the bylaws of a corporation; (b) the articles or certification
        of formation or organization of a limited liability company and the operating
        agreement or equivalent of a limited liability company
        agreement; (c) the partnership agreement and any statement of partnership
        of a general partnership; (d) the limited partnership agreement and the
        certificate of limited partnership of a limited partnership; (e) any
        charter or similar document adopted or filed in connection with the creation,
        formation, or organization of a Person; and (f) any amendment to any of the
        foregoing.

       

      “Owned
        Assets”—as defined in Section 3.7(a).

       

      “Patents”—as
        defined in Section 3.22(a)(ii).

       

      “Pension
        Plan”—as defined in Section 3.13.

       

      “Person”—any
        individual, corporation (including any non-profit corporation), general or
        limited partnership, limited liability company, joint venture, estate, trust,
        association, organization, labor union, or other entity or Governmental
        Body.

       

      “Plan
        or Plans”—as defined in Section 3.13.

       

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

       

      “Property
        Interest” or “Property Interests”—as defined in
        Section 3.19(a).

       

      “Proprietary
        Rights Agreement”—as defined in Section 3.20(b).

       

      “Purchase
        Price”—as defined in Section 2.2.

       

      “Purchase
        Price Adjustment”—as defined in Section 2.5.

       

      “Related
        Person”—with respect to a particular individual:

       

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

      


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

      


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

      


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

      


      With
        respect to a specified Person other than an individual:

       

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


           
        (b)           any Person
        that holds a Material Interest in such specified Person;

      


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

      


      (d)           any
        Person in which such specified Person holds a Material Interest;

      


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

      


      (f)           any
        Related Person of any individual described in clause (b) or (c).

      


      For
        purposes of this definition, (a) the “Family” of an individual includes (i) the
        individual, (ii) the individual’s spouse, (iii) any other natural person who is
        related to the individual or the individual’s spouse within the second degree,
        and (iv) any other natural person who resides with such individual, and (b)
        “Material Interest” means direct or indirect beneficial ownership (as defined in
        Rule 13d-3 under the 1934 Act and Regulations of voting securities or other
        voting interests representing at least 5% (five percent) of the outstanding
        voting power of a Person or equity securities or other equity interests
        representing at least 5% (five percent) of the outstanding equity securities
        or
        equity interests in a Person.

       

      “Release”—any
        spilling, leaking, emitting, discharging, depositing, escaping, leaching,
        dumping, or other releasing into the Environment, whether intentional or
        unintentional.

       

      “Representative”—with
        respect to a particular Person, any director, officer, employee, agent,
        consultant, advisor, or other representative of such Person, including legal
        counsel, accountants, and financial advisors.

       

      “Securities
        Act”—the Securities Act of 1933 or any successor law, and regulations
        and rules issued pursuant to that Act or any successor law.

       

      “Sellers”—
        Shall be all The Shareholders as listed in Schedule 3.1(a).

       

       “Sellers’
        Closing Certificate”—as defined in Section 2.4(a).

       

      “Sellers’
        Closing Documents”—as defined in Section 3.2(a).

       

      "Sellers'
        Indemnified Persons"– as defined in Section 10.3.

       

      “Sellers’
        Representative”—A. Neil Peterson.

       

      "Shareholder"
        – as defined in Section 3.1(a).

       

      “Stock”—as
        defined in the Recitals of this Agreement and in Section 2.1(b).

       

      “Subsidiary”—with
        respect to any Person (the “Owner”), any corporation or other
        Person of which securities or other interests having the power to elect a
        majority of that 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 that corporation or other Person (other than securities
        or other interests having such power only upon the happening of a contingency
        that has not occurred) are held by the Owner or one or more of its Subsidiaries;
        when used without reference to a particular Person,
“Subsidiary” means a Subsidiary of the Company.

       

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

       

      “Threat
        of Release”—a substantial likelihood of a Release that may require
        action in order to prevent or mitigate damage to the Environment that may
        result
        from such Release.

       

      “Threatened”—a
        claim, Proceeding, dispute, action, or other matter will be deemed to have
        been
“Threatened” if any demand or statement has been made (orally or in writing) or
        any notice has been given (orally or in writing), or if any other event has
        occurred or any other circumstances exist, that would lead a prudent Person
        to
        conclude that such a claim, Proceeding, dispute, action, or other matter
        is
        likely to be asserted, commenced, taken, or otherwise pursued in the
        future.

       

      "Total
        Stockholder Equity"—as used in the Balance Sheets.

       

      “Trade
        Secrets”—as defined in Section 3.22(a)(v).

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        2

      


      SALE
        AND TRANSFER OF STOCK; CLOSING; AGREEMENTS

      


      2.1           Stock.

      


      (a)           Subject
        to the terms and conditions of this Agreement, at the Closing, Sellers will
        sell
        and transfer the Stock to Buyer, and Buyer will purchase the Stock from
        Sellers.

       

      (b)           Upon
        notice to Sellers' Representative on or before June 15, 2007, Sellers and
        the
        Company shall take all steps and file all documents necessary to merge Peterson,
        Inc. with and into its wholly-owned subsidiary, Peterson Pacific Corp., with
        Peterson Pacific Corp. as the surviving corporation, effective as of the
        end of
        the day on June 30, 2007.  Such merger documents shall be subject to
        pre-approval by Buyer and shall conform in all respects to Oregon
        law.  In the event such merger is directed by Buyer, the term "Stock"
        in this Agreement shall refer as necessary to the capital stock of Peterson
        Pacific Corp., the term "Company" shall refer as necessary to Peterson Pacific
        Corp., and this Agreement shall have the same effect with respect to the
        Stock
        of Peterson Pacific Corp. as it shall have in respect to the Stock of Peterson,
        Inc. in the absence of such merger.

       

      2.2           Purchase
        Price.

       

      


      The
        total
        purchase price (the "Purchase Price") is based upon the
        Company's 2006 Financial Statements and shall be Twenty-seven Million Dollars
        ($27,000,000.00) minus the Company Indebtedness reflected on the 2006 Balance
        Sheet, as further adjusted in accordance with Section 2.5 and other applicable
        provisions of this Agreement.

       

      2.3           Closing.

      


      Unless
        this Agreement is terminated in accordance with Section 9 hereof, the purchase
        and sale (the “Closing”) provided for in this Agreement will
        take place at the offices of Luvaas Cobb, counsel to the Sellers, in Eugene,
        Oregon on or about July 31, 2007, at 10:00 a.m. (local time), to be effective
        as
        of July 1, 2007 (the "Closing Date"), or at such other time and
        place as the Buyer and Sellers’ Representative may agree.

      


      Subject
        to the provisions of Section 9, failure to consummate the Contemplated
        Transactions on the date and time and at the place determined pursuant to
        this
        Section 2.3 will not result in the termination of this Agreement and will
        not
        relieve any party of any obligation under this Agreement.

       

      2.4           Closing
        Obligations.

      


      At
        the
        Closing:

       

      (a)           Sellers
        will deliver to Buyer:

      


      (i)           certificates
        representing the Stock, duly endorsed (or accompanied by duly executed stock
        powers), with signatures guaranteed by a commercial bank, for transfer to
        Buyer;

      


      (ii)           The
        written resignation, effective as of the Closing, of the officers and directors
        of the Company; and

      


      (iii)           a
        certificate executed by the Sellers representing and warranting to Buyer
        that
        each of Sellers’ representations and warranties in this Agreement was accurate
        in all respects as of the date of this Agreement and is accurate in all respects
        as of the Closing Date as if made on the Closing Date (giving full effect
        to any
        Modification Notices) (the “Sellers’ Closing
        Certificate”);

       

      (b)           Buyer
        will deliver to Sellers:

       

      (i)           a
        cash payment by wire transfer in immediately available funds to an account
        specified by the Sellers’ Representative in an amount equal to the Purchase
        Price as adjusted according to Section 2.5, minus the sum of One Million
        Dollars
        ($1,000,000) (the "Escrow Amount") that shall be paid into an
        escrow account pursuant to the escrow agreement attached hereto as Exhibit
        2.4(b)(i) (the “Escrow Agreement”).  The total amount
        paid pursuant to this Section 2.4(b)(i) shall be the "Cash
        Payment."

       


      (ii)           a
        certificate executed by Buyer to the effect that each of Buyer’s representations
        and warranties in this Agreement was accurate in all respects as of the date
        of
        this Agreement and is accurate in all respects as of the Closing Date as
        if made
        on the Closing Date (the “Buyer’s Closing
        Certificate”);

       

      (c)           From
        funds advanced at the Closing by Buyer, the Company shall deliver to each
        of the
        holders of Company Indebtedness an amount equal to the Company Indebtedness
        held
        by such holder.

       

      2.5           Purchase
        Price Adjustment.

      


      (a)           Seller
        has prepared and delivered to Buyer a balance sheet of the Company as of
        April
        28, 2007 (the "April 28, 2007 Balance Sheet").  The
        parties acknowledge and agree that the April 28, 2007 Balance Sheet, including
        certain agreed upon adjustments, fairly presents the items listed thereon
        as of
        April 28, 2007 on a basis consistent with GAAP, and reflects the results
        of a
        physical inventory taken by Sellers immediately prior to April 28, 2007 with
        Buyer and its internal and external auditors and other Representatives having
        had the opportunity to observe such physical inventory and review all ledgers
        and supporting information, and having had full access after delivery to
        review
        the April 28, 2007 Balance Sheet and make any objections to
        Sellers.

      


      (b)           During
        the period through June 30, 2007, Sellers and the Company shall conduct the
        financial and accounting operations of the Company in accordance with Company's
        financial and accounting practices and procedures and on a basis consistent
        with
        GAAP.  During June, 2007 Buyer shall provide on-site training to
        Company accounting personnel at mutually convenient times and dates to assist
        the Company and its personnel in adopting Buyer's procedures and
        practices.

      


      (c)           Seller
        shall prepare and deliver to Buyer and Company’s independent C.P.A. a balance
        sheet of the Company as of June 30, 2007 (the "Closing Balance
        Sheet") on or before July 9, 2007.  The Closing Balance as
        reviewed by the C.P.A. shall be delivered to the Buyer no later than July
        19,
        2007.  The Closing Balance Sheet shall fairly present the items listed
        thereon as of June 30, 2007 on a basis consistent with GAAP and consistent
        with
        the agreed upon adjustments to the April 28, 2007 Balance
        Sheet.  Buyer and its internal and external auditors and other
        Representatives shall have full access after delivery of the Closing Balance
        Sheet to review it and make any objections in writing to Sellers.  Any
        objections shall be delivered to Seller’s Representative as soon as possible,
        but no later than July 30, 2007.  Any such objections shall be
        resolved by Buyer and Sellers in consultation with Buyer's Chief Financial
        Officer, internal and external auditors, and other Representatives.

      


      (d)           The
        Closing Balance Sheet shall reflect as assets, at cost, certain processing
        equipment purchased by the Company on the recommendation and with the approval
        of Buyer, and shall also reflect the additional Indebtedness incurred by
        the
        Company in order to purchase such equipment.

      


      (e)           In
        the event Total Stockholders' Equity as shown on the Closing Balance Sheet
        is
        less than Eleven Million Seven Hundred Thirty-nine Thousand Three Hundred
        Ninety
        Dollars ($11,739,390) (which was the Total Stockholders' Equity as of June
        30,
        2006), the Purchase Price
        shall be reduced dollar-for-dollar by the amount by which such Total
        Stockholders' Equity is less than Eleven Million Seven Hundred Thirty-nine
        Thousand Three Hundred Ninety Dollars ($11,739,390).

      


      (f)           In
        the event Total Stockholders' Equity as shown on the Closing Balance Sheet
        exceeds Eleven Million Seven Hundred Thirty-nine Thousand Three Hundred Ninety
        Dollars ($11,739,390), the Purchase Price shall be increased dollar-for-dollar
        by the amount by which such Total Stockholders' Equity exceeds Eleven Million
        Seven Hundred Thirty-nine Thousand Three Hundred Ninety Dollars
        ($11,739,390).

      


      (g)           Upon
        termination of the Escrow Agreement in accordance with its terms, any portion
        of
        the Escrow Amount which is returned to Buyer pursuant to the terms of the
        Escrow
        Agreement shall be accounted for by Buyer and the Company as a Post-Closing
        downward adjustment of the Purchase Price.

      


      (h)           The
        sum of the adjustments made pursuant to this Section 2.5 shall be known as
        the
        "Purchase Price Adjustment."

      


      2.6           Non-Competition
        Obligations of the Sellers.

      


      As
        an
        inducement for Buyer to enter into this Agreement and as additional
        consideration for the consideration to be paid to the Sellers hereunder,
        the
        Sellers agree that:

       

      (a)           For
        a period of five (5) years following the Closing, no Seller shall anywhere,
        directly or indirectly (through affiliates or otherwise), invest in, own,
        manage, operate, finance, franchise, control, advise, be an officer, agent
        or
        employee of, or consultant to, or otherwise render services to, or guarantee
        the
        obligations of, any Person (other than Buyer or the Company) engaged in,
        or have
        any significant financial interest in, (i) the Business or any part of the
        Business; or (ii) any business engaged in the same or substantially similar
        activities as the Company, or any Subsidiary, as of the Closing
        Date.

      


      (b)           For
        a period of five (5) years following the Closing, no Seller shall, directly
        or
        indirectly (through affiliates or otherwise) induce, seek to induce or encourage
        any Person known by a Seller to be a customer or supplier of the Company,
        or any
        Subsidiary, at any time beginning December 1, 2006 and continuing for the
        five
        (5) year period, to divert or direct business away from the Company, or any
        Subsidiary.

      


      (c)           For
        a period of five (5) years following the Closing, no Seller shall interfere
        with
        the employment relationship of the Buyer or the Company, or any Subsidiary,
        with
        Persons (other than Sellers) who are employees of the Company as of the Closing
        Date or were employees of the Company on December 1, 2006, including but
        not
        limited to, causing or helping another business or Person to hire, or solicit
        to
        hire, any such employees.

      


      (d)           Sellers
        acknowledge that any violation of any of the restrictive covenants contained
        in
        this Section 2.6 would cause continuing and irreparable harm to the Buyer
        and
        the Company for which monetary damages would not be adequate
        compensation.  Each of the Sellers, therefore, agrees that, if a
        Seller violates or threatens to violate any of these restrictive covenants,
        the
        Buyer or the Company shall be entitled, in addition to any other legal or
        equitable remedies
        available to it, to entry of an injunction, temporary and permanent, enjoining
        such breach and securing specific performance of this Section 2.6 of this
        Agreement.  For purposes of enforcement of this Section 2.6 each of
        the Sellers consents and agrees to the venue and jurisdiction of the Hamilton
        County, Tennessee Chancery Court and or the Federal District Court of the
        Eastern District of Tennessee, (Chattanooga Division).

      


      If
        a
        final judgment of a court determines that any term or provision contained
        in
        this Section 2.6 is invalid or unenforceable, then the parties agree that
        a
        court or tribunal will have the power to reduce the scope, duration or
        geographic area of the term or provision, to delete specific words or phrases
        or
        to replace any invalid or unenforceable term or provision with a term or
        provision that is valid and enforceable and that comes closest to expressing
        the
        intention of the invalid or unenforceable term or provision.  This
        Section 2.6 will be enforceable as so modified after the expiration of the
        time
        within which the judgment may be appealed.  Each of the
        Sellers acknowledges that (i) this Section 2.6 is reasonable and necessary
        to  protect and preserve the Buyer’s and Company’s legitimate business
        interests after the Closing and to prevent any unfair advantage being conferred
        on any of the Sellers, and (ii) Buyer would not have entered into this Agreement
        unless the Sellers agreed to be subject to all the restrictions set forth
        in
        this Section 2.6.  Each of the Sellers further acknowledges that such
        Seller has had the opportunity of consulting counsel of Seller’s choosing in the
        negotiation of this Agreement, including this Section 2.6, and that each
        Seller
        is voluntarily agreeing to this Section 2.6.

       

      (e)           Notwithstanding
        this Section 2.6, the non-competition provisions of all employment agreements
        entered into by any of the Sellers pursuant to Section 7.4(a)(iv) shall
        supersede the non-competition requirements set forth in this Section
        2.6.

       

      2.7           Tax
        Covenants.

      


      (a)           For
        a period of four years after the Closing Date, Buyer shall, and shall cause
        the
        Company to, retain, and neither destroy nor dispose of, all Tax Returns,
        books
        and records (including computer files) of, or with respect to, the activities
        of
        the Company for all taxable periods ending on or prior to the Closing Date
        and
        to make such books and records available to Sellers on a reasonable
        basis.

      


      (b)           The
        Sellers shall be liable for any state or local sales, use or other transfer
        taxes imposed as a result of the sale and transfer of the Stock by the Sellers
        to the Buyer.

      


      2.8           Sellers’
        Cooperation.

      


      The
        Sellers agree to promptly execute at the reasonable request of Buyer or the
        Company on or after the Closing Date any documents or materials related to
        the
        Contemplated Transactions, including, without limitation, information to
        auditors respecting the operations of the Company prior to the Closing Date,
        letters of authority on the Closing Date and signature cards and other materials
        evidencing authorized signatories of the bank accounts of the
        Company.

       


           
        2.9           Conditional
        Earn-Out.

      


      Buyer
        shall pay the Sellers two (2) yearly, conditional earn-out payments of up
        to One
        Million Five Hundred Thousand Dollars ($1,500,000) each (the
        "Conditional Earn-Out") upon the terms and conditions
        below.

      


      (a)           The
        Conditional Earn-Out for 2008 shall be conditioned upon the Company's earning
        or
        exceeding EBIT of Five Million Nine Hundred Sixty-two Thousand Dollars
        ($5,962,000) (the "2008 Target") in the calendar year
        2008.  The Conditional Earn-Out for 2008 shall be prorated on a
        straight-line basis between an EBIT of Four Million Dollars ($4,000,000)
        and the
        2008 Target.  If the Company has EBIT in 2008 of Four Million Dollars
        ($4,000,000), there shall be no Conditional Earn-Out payment for
        2008.  If the Company has EBIT in 2008 of Four Million Nine Hundred
        Eighty-one Thousand Dollars ($4,981,000), the Conditional Earn-Out payment
        shall
        be Seven Hundred Fifty Thousand Dollars ($750,000).  If the Company
        has EBIT in 2008 equal to or greater than the 2008 Target, the Conditional
        Earn-Out payment shall be One Million Five Hundred Thousand Dollars
        ($1,500,000).  The Conditional Earn-Out for 2008 shall be payable on
        or before April 1, 2009.

       

      (b)           The
        Conditional Earn-Out for 2009 shall be conditioned upon the Company's earning
        or
        exceeding EBIT of Eight Million Eight Hundred Twenty-two Thousand Dollars
        ($8,822,000) (the "2009 Target"), in the calendar year
        2009.  The Conditional Earn-Out payment shall not be prorated in
        2009.  The Conditional Earn-Out for 2009 shall be payable on or before
        April 1, 2010.

       

      (c)           If
        the Company has EBIT in the aggregate equal to or greater than Fourteen Million
        Seven Hundred Eighty-four Thousand Dollars ($14,784,000) (the sum of the
        2008
        Target and the 2009 Target) for the calendar years 2008 and 2009, the Sellers
        shall receive a supplemental payment equal to Three Million Dollars ($3,000,000)
        less the sum of the Conditional Earn-Out paid for 2008 and the Conditional
        Earn-Out paid for 2009.  The supplemental payment is intended to
        provide to the Sellers the opportunity to overcome a shortfall of EBIT in
        either
        2008 or 2009 based on the total EBIT for the two years taken
        together.  Such supplemental payment, if any, shall be due on or
        before April 1, 2010.

       

      2.10           Release
        of Company by Sellers.

      


      Effective
        at and (only) upon Closing, each Seller (each a “Releasing
        Party”) hereby irrevocably and unconditionally releases and forever
        discharges the Company and its respective successors and assigns (the
“Released Parties”) from any and all claims, charges,
        complaints, causes of action, damages, agreements and liabilities of any
        kind or
        nature whatsoever, including any claim by the Sellers against the Company
        for
        indemnification or for advances with respect to actions or omissions (or
        claims
        or allegations thereof) of Sellers prior to the Closing in their capacities
        as
        shareholders, officers, directors or employees of the Company (“Released
        Claims”), whether known or unknown and whether at law or in equity,
        arising from conduct occurring on or prior to the Closing Date, including
        without limitation any Released Claims relating to or arising out of such
        Seller’s ownership of Stock; provided that (i) nothing contained in this Section
        2.10 shall release the Company from any of its post-Closing obligations and
        liabilities
        to a Releasing Party created under this Agreement or constitute a waiver
        of any
        claims that such Releasing Party may bring or have for indemnification by
        the
        Released Parties under Article 10 of this Agreement, and (ii) this release
        shall
        only relate to those claims arising from conduct or omissions occurring on
        or
        before the Closing.

      


      2.11           Certain
        Employment Matters.

      


      Nothing
        in this Section 2.11 or this Agreement shall create any rights for any employees
        of the Company (other than as Sellers), or of any Related Person thereof,
        and no
        employees of the Company (other than Sellers) shall be entitled to rely upon
        this Agreement for any purpose whatsoever.

      


      2.12           Excluded
        Assets.

      


      Prior
        to
        June 30, 2007, the Company shall assign all its right and transfer ownership
        in
        the items listed and described in Schedule 2.12 (the “Excluded
        Assets”) upon payment of the book value according to the April 28, 2007
        Balance Sheet to A. Neil Peterson or Dale Peterson, as directed by Seller’s
        Representative.  The purchaser of such Excluded
        Assets  shall indemnify and hold the Buyer and the Company harmless
        after Closing against any Threatened claim, including any claim for taxes
        (including interest and penalties), arising out of or related to the transfer
        of
        the Excluded Assets.

       

      2.13           Purchase
        of Certain Assets from Dale Peterson.

      


      From
        funds advanced at the Closing by Buyer, the Company will purchase free and
        clear
        from Dale Peterson for cash at the Closing the items of equipment described
        in
Schedule 2.13 (the “Dale Peterson
        Assets”).  The price of each of the Dale Peterson Assets
        shall be the fair market value as mutually agreed by Dale Peterson and
        Buyer.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        3

      


      REPRESENTATIONS
        AND WARRANTIES OF SELLERS

      


      For
        purposes of this Article 3, and elsewhere in this Agreement as appropriate,
        representations and warranties concerning the Company shall apply with equal
        effect to the Company's Subsidiary, Peterson Pacific Corp.  The
        Sellers, jointly and severally, represent and warrant to Buyer and, on a
        post-Closing basis for the applicable survival period, to the Company, as
        follows:

      


      3.1           Organization
        and Good Standing.

      


      (a)           Schedule
        3.1(a) contains a complete and accurate list for the Company of its name,
        its
        jurisdiction of incorporation, jurisdictions in which it is authorized to
        do
        business, jurisdictions in which it is investigating whether it is conducting
        business, but is not yet authorized, and its capitalization (including the
        identity of each of the Shareholders and the number of shares of the Stock
        held
        by each).  The Company and its Subsidiary are corporations duly
        organized, validly existing, and in good standing under the laws of the state
        of
        Oregon, with full
        corporate power and authority to conduct their business as it is now being
        conducted, to own or use the properties and assets that each purports to
        own or
        use, and to perform all their obligations under Company
        Contracts.  Except as provided in Schedule 3.1(a) and subject to the
        investigation referred to above, the Company and its Subsidiary are duly
        qualified to do business as a foreign corporation and are in good standing
        under
        the laws of all states or other jurisdictions in which either the ownership
        or
        use of the properties owned or used by them, or the nature of the activities
        conducted by them, requires such qualification.  As of the Closing
        Date, the Company shall be qualified to conduct business and be in good standing
        in all jurisdictions in which Company's actions require such
        qualification.

      


      (b)           Sellers
        have delivered to Buyer copies of the Organizational Documents of the Company
        and its Subsidiary, as currently in effect.

      


      3.2           Authority;
        No Conflict.

      


      (a)           This
        Agreement constitutes the legal, valid, and binding obligation of Sellers
        and
        the Company, enforceable against Sellers and the Company in accordance with
        its
        terms. Upon the execution and delivery by Sellers of the Sellers’ Closing
        Certificate, the Sellers’ Closing Certificate will constitute the legal, valid,
        and binding obligations of Sellers and the Company, enforceable against Sellers
        and the Company in accordance with their respective terms. Sellers and the
        Company have the absolute and unrestricted right, power, authority, and capacity
        to execute and deliver the Sellers’ Closing Certificate and to perform their
        respective obligations under the Sellers’ Closing Certificate.

      


      (b)           Except
        as set forth in Schedule 3.2(b)-1 hereto, neither the execution and
        delivery of this Agreement nor the consummation or performance of any of
        the
        Contemplated Transactions will, directly or indirectly (with or without notice
        or lapse of time):

      


      (i)           contravene,
        conflict with, or result in a violation of (A) any provision of the
        Organizational Documents of the Company or (B) any resolution adopted by
        the board of directors or the  stockholders of the Company currently in
        effect;

          

               
(ii)       contravene,
        conflict with, or result in a violation of, any Legal Requirement or any
        Order
        to which the Company or Sellers, or any of the assets owned or used by the
        Company
     or Sellers, may
        be
        subject;

       

              
        (iii)        contravene,
        conflict with, or result in a violation of any of the terms or requirements
        of,
        any Governmental  Authorization that is held by the Company or that
        otherwise relates to the
    business of, or
        any of the
        assets owned or used by, the Company;

       

            
        (iv)           contravene,
        conflict with, or result in a violation or breach of any provision of, or
        give
        any Person the right to declare a default or exercise any remedy under, or
        to
        accelerate the
    maturity or
        performance of, or to cancel, terminate, or modify, any Company Contract
        or any
        Contract (including without limitation any loan documents) to which the Company
        or any Seller is a 
    party  or,
        to the Knowledge of either
        of the Sellers, to which any of their property is subject; or

       

      (v)           result
        in the imposition or creation of any Encumbrance upon or with respect to
        any of
        the assets owned or used by the Company.

       

      Except
        as
        set forth Schedule 3.2(b)-2 hereof, none of the Sellers nor the Company is
        or
        will be required to give any notice to or obtain any Consent from any Person,
        including without limitation, any owner or mortgage/lien holder in
        connection with the execution, delivery or performance of this Agreement
        or the
        consummation or performance of any of the Contemplated
        Transactions.

      


      3.3           Capitalization.

      


      Schedule
        3.1(a) hereto contains a complete and accurate list showing, for the Company
        with respect to its authorized equity securities, the number of shares of
        common
        stock and preferred stock, the par value, if any, per share, the number of
        shares issued and outstanding, and the shareholders of
        record.  Sellers are and will be on the Closing Date the record and
        beneficial owners and holders of all of the capital stock of the Company,
        free
        and clear of all Encumbrances. The stock certificates listed on Schedule
        3.1(a)
        represent all of the outstanding shares of the capital stock of the
        Company.  All of the outstanding equity securities of the Company have
        been duly authorized and validly issued and are fully paid and non-assessable.
        There are no Contracts relating to the issuance, sale, or transfer of any
        equity
        securities or other securities of the Company. None of the outstanding equity
        securities or other securities of the Company was issued in violation of
        the
        Securities Act or any other Legal Requirement. The Company does not own,
        nor
        have any Contract to acquire, any equity securities or other securities of
        any
        Person or any direct or indirect equity or ownership interest in any other
        business.

      


      3.4           Financial
        Statements.

      


      (a)           Schedule
        3.4 sets forth (i) the April 28, 2007 Balance Sheet, the balance sheets
        as
        of June 30, 2006 (the "2006 Balance Sheet"), June 30, 2005 (the
“2005 Balance Sheet”) and June 30, 2004 (“2004 Balance
        Sheet”) of the Company (together with the notes thereto, the
“Balance Sheets”) and (ii) the related statements of income and
        retained earnings, and statements of cash flows of the Company for the period
        ended April 28, 2007 and the fiscal years ended June 30, 2006, June 30, 2005
        and
        June 30, 2004 (together with the Balance Sheets, collectively referred to
        herein
        as the “Financial Statements”).  The Financial
        Statements fairly present the financial position and results of operations
        and
        cash flows of the Company to which they relate as of the dates thereof and
        for
        the periods indicated (except as indicated in the notes thereto).

      


      (b)           During
        the period covered by the Financial Statements and up to the date of this
        Agreement, the Company has conducted no business other than its current
        business.  All liabilities and obligations of the Company, whether
        absolute, accrued, contingent or otherwise, whether direct or indirect, and
        whether due or to become due, which existed at the date of such Financial
        Statements have been recorded in the balance sheets included in the Financial
        Statements or disclosed in notes to the Financial Statements.  Except
        as set forth in the notes to the Financial Statements or otherwise designated
        in
        the Financial Statements with respect to a Related Person of a Seller, the
        liabilities on the April 28, 2007 Balance Sheet consist solely of accrued
        obligations and liabilities incurred by the Company in the Ordinary Course
        of
        Business to
        persons that are not Related Persons of the Company.  Except as stated
        in Schedule 3.4(b), the statements of income included in the Financial
        Statements do not, for the periods designated therein, contain any
material items of special or nonrecurring income or other income not
        earned, or omit any material item of expense incurred, in each case in the
        ordinary course of business except as expressly specified
        therein.  The Company has records that accurately and validly reflect
        its transactions and accounting controls sufficient to insure that (i) such
        transactions are in all material respects executed in accordance with its
        management’s general or specific authorization, (ii) such transactions are
        recorded as necessary to permit timely preparation of financial statements
        in
        conformity with GAAP, (iii) access to assets is permitted only in accordance
        with management’s general or specific authorization and (iv) the recorded
        accountability for assets is compared with the existing assets at reasonable
        intervals and appropriate action is taken with respect to any
        differences.

      


      (c)           All
        Indebtedness of the Company is disclosed in Schedule 3.4(c).  For
        purposes hereof, “Indebtedness” means, whether recourse is
        secured by or is otherwise available against all or only a portion of the
        Company’s assets, and whether or not contingent, (i) all obligations for
        borrowed money, whether current, funded, secured or unsecured, and every
        obligation of the Company evidenced by bonds, debentures, notes or similar
        instruments, (ii) all indebtedness of the Company for the deferred purchase
        price of property or services (other than trade payables incurred in the
        ordinary course of business), (iii) all indebtedness of the Company created
        or
        arising under any conditional sale or other title retention agreement with
        respect to property acquired by the Company (even though the rights and remedies
        of the seller or lender under such agreement in the event of default are
        limited
        to repossession or sale of such property), (iv) all indebtedness of the Company
        secured by a lien to secure all or part of the purchase price of the property
        subject to such mortgage or lien, (v) all obligations under leases which
        have
        been or must be recorded as capital leases in respect of which the Company
        is
        liable as lessee, (vi) any liability of the Company in respect of banker’s
        acceptances or letters of credit, (vii) all interest, fees, including attorney
        fees, and other expenses owed with respect to the indebtedness referred to
        above, and (viii) all indebtedness referred to above which is directly or
        indirectly guaranteed by the Company or which the Company has agreed
        (contingently or otherwise) to purchase or otherwise acquire or in respect
        of
        which it has otherwise assured a creditor against loss.

      


      (d)           Except
        (i) as reflected in the April 28, 2007 Balance Sheet and Liabilities incurred
        in
        the ordinary course of business (none of which is a Liability for breach
        of
        contract, violation of law, breach of warranty, tort or an infringement claim
        or
        lawsuit) for which neither accrual nor footnote disclosure is required under
        GAAP, (ii) for Liabilities incurred in the ordinary course of business
        consistent with past practice since the date of the April 28, 2007 Balance
        Sheet, (none of which is a Liability for breach of contract, breach of warranty,
        tort or an infringement claim or lawsuit), and (iii) otherwise undisclosed
        Liabilities set forth in Schedule 3.4(d), the Company has no material
        obligations or Liabilities of any nature.

      


      (e)           The
        Company is in the process of evaluating its compliance with state sales tax
        requirements and is evaluating whether sales tax has been collected and paid
        in
        all states where taxes are required to be reported and paid.  The
        results of such study will be disclosed in Schedule 3.4(e), to be delivered
        to
        Buyer at least ten (10) days prior to the Closing.

       

       

      3.5           Books
        and Records.

      


      The
        books
        of account, minute books, stock record books, and other records of the Company,
        all of which have been made available to Buyer, are complete and correct
        in all
        material respects and have been maintained in accordance with sound business
        practices. The minute books of the Company contain in all material respects
        accurate records of all meetings of, and corporate action taken by, the
        stockholders, the board of directors, and committees of the board of directors
        of the Company, and no such meeting of stockholders, board of directors,
        or
        committee has been held for which minutes have not been prepared and are
        not
        contained in such minute books. At the Closing, all of those books and records
        will be in the possession of the Company.

      


      3.6           Title
        to Properties; Encumbrances.

      


      Schedule
        3.6 hereof contains a complete and accurate list of all real property
        leaseholds, or other realty interests owned by the Company. The Company does
        not
        own any fee simple interest in real estate or any options to acquire the
        same.
        Sellers and/or the Company have delivered or made available to Buyer copies
        of
        the leases and other instruments by which the Company holds real property
        interests, and copies of all title insurance policies, opinions, abstracts,
        and
        surveys in the possession of Sellers or the Company and relating to such
        property or interests. The Company holds good title subject only to the matters
        permitted by the following sentence, in all of the properties and assets
        (whether real, personal, or mixed and whether tangible or intangible) that
        presently are used in the operation of the business of the Company, including
        all of the properties and assets reflected in the April 28, 2007 Balance
        Sheet
        (except for personal property disposed of or acquired since the date of the
        April 28, 2007 Balance Sheet in the Ordinary Course of Business), and all
        of the
        properties and assets purchased or otherwise acquired by the Company since
        the
        date of the April 28, 2007 Balance Sheet (except for personal property acquired
        and sold since the date of the April 28, 2007 Balance Sheet in the Ordinary
        Course of Business and consistent with past practice). All material properties
        and assets reflected in the April 28, 2007 Balance Sheet are free and clear
        of
        all Encumbrances and are not, in the case of real property, subject to any
        rights of way, building use restrictions, exceptions, variances, reservations,
        or limitations of any nature except, with respect to all such properties
        and
        assets, (a) mortgages or security interests shown on the April 28, 2007
        Balance Sheet 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, (b) mortgages or security interests incurred
        in connection with the purchase of property or assets after the date of the
        April 28, 2007 Balance Sheet (such mortgages and security interests being
        limited to the property or assets so acquired), with respect to which no
        default
        (or event that, with notice or lapse of time or both, would constitute a
        default) exists, (c) liens for current taxes not yet due, and (d) with
        respect to real property, (i) minor imperfections of title, if any, none
        of
        which is substantial in amount, materially detracts from the value or impairs
        the use of the property subject thereto, or impairs the operations of the
        Company, and (ii) zoning laws and other land use restrictions that do not
        impair the present or anticipated use of the property subject
        thereto.

       

      3.7           Ownership
        of Assets; Condition and Sufficiency of
        Assets.

      


      (a)           Owned
        Assets.  The Company owns and has good title, without Encumbrance,
        to all of the assets currently used in conjunction with the operation of
        the
        Business, which assets are reflected in the April 28, 2007 Balance Sheet
        of the
        Company (the “Owned Assets”), except (i) as described on
        Schedule 3.17(a)(iii), and (ii) for the dispositions and acquisition of assets
        in the Ordinary Course of Business since April 28, 2007.

      


      (b)           Condition
        and Sufficiency of Assets.  To the Knowledge of Sellers, the
        buildings, structures, and equipment used by the Company are structurally
        sound
        and in good operating condition and repair, and are adequate for the uses
        to
        which they are being put, and, to the Knowledge of the Sellers, none of such
        buildings, structures, or equipment is in need of maintenance or repairs
        except
        for ordinary, routine maintenance and repairs that are not material in nature
        or
        cost.

      


      3.8           Accounts
        Receivable and Inventory.

      


      (a)           All
        accounts receivable of the Company that are reflected on the April 28, 2007
        Balance Sheet (collectively, the “Accounts Receivable”)
        represent valid obligations arising from sales actually made or services
        actually performed in the ordinary course of the Company's
        business.  Unless paid prior to the Closing Date, the Accounts
        Receivable are or will be as of the Effective Time current and collectible
        net
        of the respective reserves shown on the April 28, 2007 Balance Sheet (which
        reserves are adequate and calculated consistent with past practice). There
        is no
        contest, claim, or right of set-off, other than returns in the ordinary course
        of the Company’s business, under any Contract with any obligor of an Accounts
        Receivable relating to the amount or validity of such Accounts Receivable.
        Schedule 3.8(a) contains a complete and accurate list of all Accounts Receivable
        as of April 28, 2007, which list sets forth the aging of such Accounts
        Receivable.

      


      (b)           All
        inventory of the Company, whether or not reflected in the April 28, 2007
        Balance
        Sheet, consists of a quality and quantity usable and salable in the Ordinary
        Course of Business of the Company, except for obsolete items and items of
        below-standard quality, all of which have been written off or written down
        to
        net realizable value in the April 28, 2007 Balance Sheet to net realizable
        value
        in the Balance Sheet or the April 28, 2007 Balance Sheet or on the accounting
        records of the Acquired Companies as of the Closing Date, as the case may
        be.
        All inventories of the Company then in existence are reflected on the balance
        sheets prepared by the Company as of such date. The Company maintains all
        its
        inventories at the locations listed in Schedule 3.8(b) and none of such
        inventory is subject to any Encumbrance, except as set forth in Schedule
        3.8(b).
        All inventories not written off have been priced at the lower of cost or
        market
        value on a first in, first out basis. The quantities of each item of inventory
        (whether raw materials, work-in-process, or finished goods) are not excessive,
        but are reasonable in the present circumstances of the business of the
        Company.

      


      3.9           Accounts
        Payable.

      


      All
        accounts payable of the Company that are reflected on the April 28, 2007
        Balance
        Sheet or on the accounting records of the Company as of the Closing Date
        represent, as of the respective dates thereof, valid obligations of the Company
        arising in the Ordinary Course of Business.  Schedule 3.9 contains a
        complete and accurate list of all accounts payable of the Company as of the
        date
        of the April 28, 2007 Balance Sheet.

      


      3.10           No
        Undisclosed Liabilities.

      


      Except
        as
        set forth in Schedule 3.4(e) and Schedule 3.10, the Company has no Liabilities
        or obligations of any nature except for Liabilities or obligations reflected
        in
        the April 28, 2007 Balance Sheet and current Liabilities incurred in the
        Ordinary Course of Business since the date thereof, none of which current
        Liabilities will have a Material Adverse Effect.

      


      3.11           Taxes.

      


      (a)           Except
        as set forth in Schedule 3.4(e), the Company has filed or caused to be filed
        all
        Tax Returns that are or were required to be filed by or with respect to the
        Company pursuant to applicable Legal Requirements. Sellers have made available
        to Buyer copies of all such Tax Returns filed since June 30, 2002. The Company
        has paid, or made provision for the payment of, all taxes that have or may
        have
        become due pursuant to those Tax Returns or otherwise, or pursuant to any
        assessment received by the Company, except such taxes, if any, as are listed
        in
        Schedule 3.11(a) and are being contested in good faith and as to which adequate
        reserves have been provided in the April 28, 2007 Balance Sheet. The Company
        has
        been at all times a C Corporation for federal income tax purposes. The Company
        will not incur any tax liability under Section 1374 of the IRC as a result
        of
        the consummation of this Agreement and the Contemplated Transactions. The
        Company has not filed nor been subject to a Legal Requirement to file any
        Tax
        Returns with any Governmental Bodies outside the United States of
        America.

      


      (b)           Schedule
        3.11(b) contains a complete and accurate list of all audits of all such Tax
        Returns, including a reasonably detailed description of the nature and outcome
        of each audit. All deficiencies proposed as a result of such audits have
        been
        paid, reserved against, settled, or, as described in Schedule 3.11(b), are
        being
        contested in good faith by appropriate proceedings. Schedule 3.11(b) describes
        all adjustments to the United States federal income Tax Returns filed by
        the
        Company or any group of corporations including the Company for all taxable
        years
        since July 1, 2002, and the resulting deficiencies proposed by the IRS. Except
        as described in Schedule 3.11(b), no Seller nor the Company has given or
        been
        requested to give waivers or extensions (or is or would be subject to a waiver
        or extension given by any other Person) of any statute of limitations relating
        to the payment of taxes of the Company or for which the Company may be
        liable.

      


      (c)           The
        charges, accruals, and reserves with respect to taxes on the respective books
        of
        the Company are adequate.  There exists no proposed tax assessment
        against the Company except as disclosed in the April 28, 2007 Balance Sheet
        or
        in Schedule 3.11(c). No consent to the application of Section 341(f)(2) of
        the IRC has been filed with respect to any property or assets held,
        acquired, or to be acquired by the Company. All taxes that the Company are
        or
        were required by Legal Requirements to withhold or collect have been duly
        withheld or collected and, to the extent required, have been paid to the
        proper
        Governmental Body or other Person.

      


      (d)           All
        Tax Returns filed by (or that include on a consolidated basis) the Company
        are
        true, correct, and complete. There is no tax sharing agreement that will
        require
        any payment by the Company after the date of this Agreement. Since June 30,
        2002, the Company has not filed, nor is it required by applicable law to
        file
        (except as disclosed in Schedule 3.11(d)), Tax Returns with respect to income,
        franchise or excise taxes (or similar taxes) in states of the United States
        or
        of any jurisdiction outside the United States other than the states or
        jurisdictions listed on Schedule 3.11(d).

      


      3.12           No
        Material Adverse Change.

      


      Since
        the
        date of the April 28, 2007 Balance Sheet, there has not been any material
        adverse change in the business, customer relations, operations, properties,
        prospects, assets, or condition of the Company, and no event has occurred
        or
        circumstance exists that could reasonably be expected to result in such a
        material adverse change other than general economic conditions).

      


      3.13           Employees
        and Employee Benefit Plans.

      


      (a)           Schedule
        3.13(a) lists each employment, bonus, deferred compensation, pension, stock
        option, stock appreciation right, profit-sharing or retirement plan, arrangement
        or practice, each medical, vacation, retiree medical, severance pay plan,
        and
        each other agreement or fringe benefit plan, arrangement or practice, of
        the
        Company, whether legally binding or not, which affects one or more of its
        employees, including all “employee benefit plans” as defined by
        Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
        (“ERISA”) (collectively, the
“Plans”).

      


      (b)           For
        each Plan which is an “employee benefit plan” under Section
        3(3) of ERISA, the Company delivered to the Buyer correct and complete copies
        of
        the plan documents, plan amendments, and summary plan descriptions, the
        determination letters or opinion letters received from the IRS, if any, the
        most
        recent Form 5500 Annual Report, and all related trust agreements, insurance
        contracts and funding agreements which implement each such Plan.

      


      (c)           The
        Company has no commitment, whether formal or informal and whether legally
        binding or not, (i) to create any additional such Plan; (ii) to modify or
        change
        any such Plan; or (iii) to maintain for any period of time any such
        Plan.

      


      (d)           Neither
        the Company nor any Plan nor any trustee, administrator, fiduciary or sponsor
        of
        any Plan has engaged in any prohibited transactions as defined in Section
        406 of
        ERISA or Section 4975 of the IRC for which there is no statutory exemption
        in
        Section 408 of ERISA or Section 4975 of the IRC; all filings, reports and
        descriptions as to such Plans (including Form 5500 Annual Reports, Summary
        Plan
        Descriptions, and Summary Annual Reports) required to have been made or
        distributed to participants, the IRS, the United States Department of Labor
        and
        other governmental agencies have been made in a timely manner or will
        be
        made on or prior to the Closing Date; there is no material litigation, disputed
        claim, governmental proceeding or investigation pending or threatened with
        respect to any of such Plans, the related trusts, or any fiduciary, trustee,
        administrator or sponsor of such Plans; such Plans have been established,
        maintained and administered in all material respects in accordance with their
        governing documents and applicable provisions of ERISA and the IRC and Treasury
        Regulations promulgated thereunder; and each Plan is a qualified plan under
        Section 401(c) of the IRC.

      


      (e)           The
        Company has performed all of its obligations under all Plans.  The
        Company, with respect to all Plans, are, and each Plan, is in compliance,
        in all
        material respects, with ERISA, the IRC, and other applicable Laws, and with
        any
        applicable collective bargaining agreement.

      


      (f)           The
        consummation of the Contemplated Transactions will not: (i) result in the
        payment or series of payments by the Company to any employee or other Person
        of
        an “excess parachute payment” within the meaning of Section
        280G of the IRC, nor (ii) accelerate the time of payment or vesting of any
        stock
        option, stock appreciation right, deferred compensation, severance bonus
        or
        other employee benefits under any Plan (including vacation and sick
        pay).

      


      (g)           None
        of the Plans which are “welfare benefit plans,” within the
        meaning of Section 3(1) of ERISA, provide for continuing benefits or coverage
        after termination or retirement from employment, except for COBRA rights
        under a
“group health plan” as defined in IRC Section 4980B(g) and
        ERISA Section 607.

      


      (h)           Neither
        the Company nor any entity which would be treated as a single employer with
        the
        Company under IRC Section 414 (“ERISA Affiliate”) has ever
        participated in or withdrawn from a multi-employer plan as defined in Section
        4001(a)(3) of Title IV of ERISA, and the Company has not incurred and does
        not
        owe any liability as a result of any partial or complete withdrawal by any
        employer from such a multiemployer plan as described under Sections 4201,
        4203,
        or 4205 of ERISA.

      


      (i)           Neither
        the Company nor any ERISA Affiliate maintains or contributes or ever has
        maintained or contributed to any Plan that is subject to Title IV of ERISA
        or
        the minimum funding standards of Section 412 of the IRC.

      


      3.14           Compliance
        With Legal Requirements; Governmental
        Authorizations.

      


      (a)           Except
        as set forth in Schedule 3.14(a) hereof:

      


      (i)           the
        Company is, and at all times has been, in full material compliance with each
        Legal Requirement that is or was applicable to it or to the conduct or operation
        of its business or the ownership or use of any of its assets;

      


      (ii)           no
        event has occurred or circumstance exists that (with or without notice or
        lapse
        of time) (A) constitutes or could reasonably be expected to result in a
        violation by the Company of, or a failure on the part of the Company to comply
        with, any Legal Requirement, except for any one or more violations or failures
        which singularly or in the aggregate
        do not have or could not reasonably be expected to have a Material Adverse
        Effect or (B) may give rise to any obligation on the part of the Company
        to
        undertake, or to bear all or any portion of the cost of, any remedial action
        of
        any nature; and

      


      (iii)           the
        Company has not received at any time since July 1, 2002 any notice or other
        communication (whether oral or written) from any Governmental Body or any
        other
        Person regarding (A) any actual, alleged, possible, or potential material
        violation of, or failure to materially comply with, any Legal Requirement,
        or
        (B) any actual, alleged, possible, or potential obligation on the part of
        the
        Company to undertake, or to bear all or any portion of the cost of, any remedial
        action of any nature.

      


      (b)           Schedule
        3.14(b) hereof contains a complete and accurate list of each Governmental
        Authorization that is held by the Company or, to the extent necessary to
        enable
        the Company to operate their businesses in the manner presently conducted,
        by
        either of the Sellers. Each Governmental Authorization listed or required
        to be
        listed in Schedule 3.14(b) hereof is valid and in full force and
        effect.  Except as set forth in Schedule 3.14(b) hereof:

      


      (i)           the
        Company is, and at all times since July 1, 2002 has been, in full material
        compliance with all of the material terms and requirements of each Governmental
        Authorization identified or required to be identified in Schedule 3.14(b)
        hereof;

      


      (ii)           no
        event has occurred or circumstance exists that (with or without notice or
        lapse
        of time) (A) constitutes or could reasonably be expected to result directly
        or
        indirectly in a violation of or a failure to comply with any term or requirement
        of any Governmental Authorization listed or required to be listed in Schedule
        3.14(b) hereof, except for any one or more violations or failures which
        singularly or in the aggregate did not or will not have a Material Adverse
        Effect, or (B) could reasonably be expected to result directly or
        indirectly in the revocation, withdrawal, suspension, cancellation, or
        termination of, or any modification to, any Governmental Authorization listed
        or
        required to be listed in Schedule 3.14(b) hereof;

      


      (iii)           none
        of the Company has received, at any time since July 1, 2002, any notice or
        other
        communication (whether oral or written) from any Governmental Body or any
        other
        Person regarding (A) any actual, alleged, possible, or potential violation
        of or
        failure to comply with any material term or requirement of any Governmental
        Authorization, or (B) any actual, proposed, possible, or potential revocation,
        withdrawal, suspension, cancellation, termination of, or modification to
        any
        Governmental Authorization; and

      


      (iv)           all
        applications required to have been filed for the renewal of the Governmental
        Authorizations listed or required to be listed in Schedule 3.14(b) hereof
        have
        been duly filed on a timely basis with the appropriate Governmental Bodies,
        and
        all other filings required to have been made with respect to such Governmental
        Authorizations have been duly made on a timely basis with the appropriate
        Governmental Bodies.

      


      The
        Governmental Authorizations listed in Schedule 3.14(b) hereof collectively
        constitute all of the Governmental Authorizations necessary to permit the
        Company to lawfully conduct and operate their businesses  in the
        manner they currently conduct and operate such businesses and to permit the
        Company to own and use its assets in the manner in which it currently owns
        and
        uses such assets.

      


      3.15           Legal
        Proceedings; Orders.

      


      (a)           Schedule
        3.15(a) hereof sets forth all pending Proceedings: (i) that have been commenced
        by or against the Company; or (ii) that have been commenced by or against
        any
        Sellers that relate to or could reasonably be expected to affect the business
        of, or any of the assets owned or used by, the Company; or (iii) that otherwise
        relate to or could reasonably be expected to affect the business of, or any
        of
        the assets owned or used by, the Company; or (iv) that challenges, or that
        could
        reasonably be expected to have the effect of preventing, delaying, making
        illegal, or otherwise interfering with, any of the Contemplated
        Transactions.

      


      Schedule
        3.15(a) describes for each such Proceeding the following information: (i)
        the
        style of the Proceeding, including the identification of all parties to such
        Proceeding, of the court or body claiming jurisdiction of such Proceeding,
        and
        of the number assigned to such Proceeding by such court or body; (ii) a summary
        of the issues/matters which are the subject of the Proceeding; (iii) the
        amount
        of damages or claims asserted by any party; (iv) the identification and
        telephone numbers of any attorneys of record respecting such Proceeding;
        and (v)
        a statement of the availability of insurance to cover any judgments and expenses
        incurred in connection therewith and any declared objection or reservation
        to
        such coverage; and (vi) the amount reserved on the books of the Company with
        respect to such Proceeding and an explanation of how the amount of such reserve
        was determined.

       

      No
        other
        Proceeding has been Threatened, and, to the Knowledge of either the Sellers
        or
        the Company, except as set out on Schedule 3.15(a), no event has occurred
        or
        circumstance exists that could reasonably be expected to give rise to or
        serve
        as a basis for the commencement of any other Proceeding.  Sellers and
        the Company have made available to Buyer copies of all pleadings,
        correspondence, and other documents relating to each Proceeding listed in
        Schedule 3.15(a) hereof.  To the best of Sellers' and Company's
        Knowledge, none of the Proceedings listed in Schedule 3.15(a) will have a
        Material Adverse Effect.

       

      (b)           Except
        as set forth in Schedule 3.15(b) hereof:

      


      (i)           there
        is no Order to which the Company, or any of the assets owned or used by the
        Company, is subject;

      


      (ii)           no
        Seller is subject to any Order that relates to the business of, or any of
        the
        assets owned or used by, the Company; and

      


      (iii)           no
        officer, director, agent, or employee of the Company is subject to any Order
        that prohibits such officer, director, agent, or employee from engaging in
        or
        continuing any conduct, activity, or practice relating to the business of
        the
        Company.


      


      (c)           Except
        as set forth in Schedule 3.15(c) hereof:

      


      (i)           the
        Company is, and at all times since July 1, 2002 has been, in compliance in
        all
        material respects with all of the terms and requirements of each Order to
        which
        it, or any of the assets owned or used by it, is or has been
        subject;

      


      (ii)           no
        event has occurred or circumstance exists that constitutes or could reasonably
        be expected to result in (with or without notice or lapse of time) a material
        violation of or failure to materially comply with any term or requirement
        of any
        Order to which the Company, or any of the assets owned or used by the Company,
        is subject; and

      


      (iii)           none
        of the Sellers nor the Company has received, at any time since July 1, 2002,
        any
        notice or other communication (whether oral or written) from any Governmental
        Body or any other Person regarding any actual, alleged, possible, or potential
        violation of, or failure to comply with, any term or requirement of any Order
        to
        which the Company, or any of the assets owned or used by any the Company,
        is or
        has been subject.

      


      3.16           Absence
        of Certain Changes and Events.

      


      Except
        as
        set forth in Schedule 3.16 hereof, since July 1, 2005, the Company has conducted
        its business only in the Ordinary Course of Business and there has not been
        any:

       

      (a)           change
        in the Company’s authorized or issued capital stock; grant of any stock option
        or right to purchase shares of capital stock of the Company; issuance of
        any
        security convertible into such capital stock; grant of any registration rights;
        purchase, redemption, retirement, or other acquisition by the Company of
        any
        shares of any such capital stock; or declaration or payment of any dividend,
        other distribution or payment in respect of shares of capital stock or any
        bonus
        compensation to the Sellers;

      


      (b)           amendment
        to the Organizational Documents of the Company;

      


      (c)           increase
        by the Company of any bonuses, salaries, distribution, or other compensation
        to
        any stockholder, director, officer, or (except in the Ordinary Course of
        Business) employee or entry into any employment, severance, or similar Contract
        with any director, officer, or employee;

      


      (d)           adoption
        of, or increase in the payments to or benefits under, any profit sharing,
        bonus,
        deferred compensation, savings, insurance, pension, retirement, or other
        employee benefit plan for or with any employees of the Company; damage to
        or
        destruction or loss of any material asset or property of the Company, whether
        or
        not covered by insurance, which has resulted in a Material Adverse
        Effect;

      


      (e)           entry
        (other than in the Ordinary Course of Business) into, termination of, or
        receipt
        of notice of termination of (i) any license, distributorship, dealer, sales
        representative, joint venture, credit, or similar agreement, or (ii) any
        Contract or transaction, the termination of which could reasonably be expected
        to have a Material Adverse Effect;

      


      (f)           sale,
        lease, or other disposition of any material asset or property of the Company
        or
        mortgage, pledge, or imposition of any lien or other encumbrance on any material
        asset or property of the Company, including the sale, lease, or other
        disposition of any of the Intellectual Property Assets;

      


      (g)           cancellation
        or waiver of any claims or rights with a value to the Company in excess of
        Five
        Thousand Dollars ($5,000.00);

      


      (h)           change
        in the accounting methods used by the Company; or

      


      (i)           agreement,
        whether oral or written, by any of Company or Sellers to do any of the
        foregoing.

      


      3.17           Contracts;
        No Defaults.

      


      (a)           Schedule
        3.17(a)(i) through Schedule 3.17(a)(xiii) hereof set forth reasonably complete
        details concerning the Contracts described in this Section 3.17(a), including
        the parties to the Contracts, the dollar amount of the remaining commitment
        to
        or of the Company under the Contracts, the duration, a summarized description
        of
        any services to be provided by or to the Company, and the Company’s office where
        details relating to the Contracts are located. The Sellers and the Company
        have
        delivered or made available to Buyer true and complete copies of each of
        the
        Company Contracts or other documents listed in Schedules 3.17(a)(i) through
        3.17(a)(xiii):

      


      (i)           Each
        material Company Contract that involves performance of services or delivery
        of
        goods or materials to the Company is described and listed on Schedule
        3.17(a)(i);

      


      (ii)           Each
        Company Contract that was not entered into in the Ordinary Course of Business
        and that involves expenditures or receipts of the Company in excess of Five
        Thousand Dollars ($5,000) on an annualized basis is described and listed
        on
        Schedule 3.17(a)(ii);

      


      (iii)           Each
        lease, rental or occupancy agreement, license, installment and conditional
        sale
        agreement, and other Company Contract affecting the ownership of, leasing
        of,
        title to, use of, or any leasehold or other interest in, any real or personal
        property is described and listed on Schedule 3.17(a)(iii);

      


      (iv)           Each
        licensing agreement or other Company Contract with respect to patents,
        trademarks, copyrights, or other intellectual property, including agreements
        with current or former employees, consultants, or contractors regarding the
        appropriation or the non-disclosure of any of the Intellectual Property Assets
        is to be described and listed on Schedule 3.17(a)(iv);

      


      (v)           Each
        employment agreement to which the Company is a party and any other Company
        Contract relating to the provision of services, and compensation
        therefor,


      by
        any
        employee, agent, director, independent contractor, or consultant of the Company
        is described and listed on Schedule 3.17(a)(v); any collective bargaining
        agreement and other Company Contract to or with any labor union or other
        employee representative of a group of employees is described and listed on
        Schedule 3.17(a)(v);

      


      (vi)           Each
        joint venture, partnership, and other Company Contract (however named) involving
        a sharing of profits, losses, costs, or liabilities by the Company with any
        other Person is described and listed on Schedule 3.17(a)(vi);

      


      (vii)           Each
        Company Contract containing covenants that in any way purport to restrict
        the
        business activity of the Company or any Related Person of the Company or
        limit
        the freedom of the Company or any Related Person of the Company to engage
        in any
        line of business or to compete with any Person is described and listed on
        Schedule 3.17(a)(vii);

      


      (viii)                      Each
        power of attorney that is currently effective and outstanding is described
        and
        listed on Schedule 3.17(a)(viii);

      


      (ix)           Each
        Company Contract that contains or provides for an express undertaking by
        the
        Company to be responsible for consequential damages, is described and listed
        on
        Schedule 3.17(a)(ix);

      


      (x)           Each
        Company Contract for capital expenditures in excess of $10,000 during any
        twelve
        month period is described and listed on Schedule 3.17(a)(x);

      


      (xi)           Each
        written warranty, guaranty, and or other similar undertaking with respect
        to
        contractual performance extended by the Company other than in the Ordinary
        Course of Business is described and listed on Schedule 3.17(a)(xi);

      


      (xii)           Each
        Company Contract evidencing the obligation of the Company to repay borrowed
        money, including any obligations as the maker or guarantor of a promissory
        note
        is described and listed on Schedule 3.17(a)(xii);

      


      (xiii)                      Each
        amendment, supplement, and modification (whether oral or written) in respect
        of
        any of the foregoing Contracts is described and listed on Schedule
        3.17(a)(xiii).

      


      (b)           Except
        as set forth in Schedule 3.17(b) hereof:

      


      (i)           no
        Seller has or may acquire any rights under, and no Seller has or may become
        subject to any obligation or liability under, any Contract that relates to
        the
        Business of, or any of the assets owned or used by, the Company;
        and

      


      (ii)           no
        officer, director, agent, employee, consultant, or contractor of the Company
        is
        bound by any Contract that purports to limit the ability of such officer,
        director, agent, employee, consultant, or contractor to (A) engage in or
        continue any conduct,
        activity, or practice relating to the Business of the Company, or (B) assign
        to
        the Company or to any other Person any rights to any invention, improvement,
        or
        discovery.

      


      (c)           Except
        as set forth in Schedule 3.17(c) hereof, each Contract identified or required
        to
        be identified in Schedule 3.17(a)(i) through Schedule 3.17(a)(xiii) hereof
        is in
        full force and effect and is valid and enforceable in accordance with its
        terms.

      


      (d)           Except
        as set forth in Schedule 3.17(d) hereof:

      


      (i)           the
        Company is, and at all times since July 1, 2002 has been,
        in  compliance with all applicable terms and requirements of each
        Contract under which the Company has or had any obligation or liability or
        by
        which the Company or any of the assets owned or used by the Company are or
        were
        bound, except for any non-compliance which did not have or will not have
        a
        Material Adverse Effect;

      


      (ii)           to
        the Knowledge of Sellers and the Company, each other Person that has or had
        any
        obligation or liability under any Contract under which the Company has or
        had
        any rights is, and at all times since July 1, 2002 has been,
        in  compliance in compliance with all applicable terms and
        requirements of such Contract, except for any non-compliance which did not
        have
        or will not have a Material Adverse Effect;

      


      (iii)           no
        event has occurred or circumstance exists that (with or without notice or
        lapse
        of time) contravenes, conflicts with, or could reasonably be expected to
        result
        in a violation or breach of, or give the Company or other Person the right
        to
        declare a default or exercise any remedy under, or to accelerate the maturity
        or
        performance of, or to cancel, terminate, or modify, any
        Applicable  Contract; and

      


      (iv)           the
        Company has not given to or received from any other Person, at any time since
        July 1, 2002, any notice or other communication (whether oral or written)
        regarding any actual, alleged, possible, or potential material violation,
        breach
        or default under, any Contract.

      


      (e)           There
        are no renegotiations of, attempts to renegotiate, or outstanding rights
        to
        renegotiate any material amounts paid or payable to the Company under current
        or
        completed Contracts with any Person and no such Person has made written demand
        for such renegotiation.

      


      3.18           Insurance.

      


      (a)           The
        Company has delivered to Buyer, and provided a reasonable summarized description
        thereof on Schedule 3.18(a) hereof:

      


      (i)           true
        and complete copies of all policies of insurance to which the Company are
        a
        party or under which the Company, or any director of the Company, in such
        director’s capacity as a director, are or were covered at or after July 1,
        2005;


               
        (ii)           true
        and complete copies of all pending applications for policies of insurance;
        and

      


      (iii)           any
        statement by the auditor of the Company’s Financial Statements with regard to
        the adequacy of the Company's insurance coverage or of the reserves for
        claims.

      


      (b)           Schedule
        3.18(b) hereof describes:

      


      (i)           any
        self-insurance arrangement by or affecting the Company, including any reserves
        established thereunder;

      


      (ii)           any
        contract or arrangement, other than a policy of insurance, entered into for
        the
        purpose of transferring or sharing of any risk by the Company; and

      


      (iii)           all
        obligations of the Company to third parties with respect to insurance (including
        such obligations under leases and service agreements) and identifies the
        policy
        under which such coverage is provided.

      


      (c)           Schedule
        3.18(c) hereof sets forth, for the period beginning July 1, 2003:

      


      (i)           a
        summary of the loss experience under each such policy;

      


      (ii)           a
        statement describing each claim or series of claims under any single insurance
        policy for amounts in excess of $5,000, which sets forth:

      


      (1)           the
        name of the claimant;

      


      (2)           a
        description of the policy by insurer, type of insurance, and period of coverage;
        and

      


      (3)           the
        amount and a brief description of the claim; and

      


      (iii)           a
        statement describing the loss experience for all claims that were self-insured,
        including the number and aggregate cost of such claims.

      


      (d)           Except
        as set forth on Schedule 3.18(d) hereof:

      


      (i)           All
        such policies to which the Company are a party or that provide coverage to
        any
        Seller, the Company, or any director or officer of the Company:

      


      (1)           are
        valid, outstanding, and enforceable;

      


      (2)           are
        issued by an insurer that is, to the Knowledge of Sellers, financially sound
        and
        reputable;

      


      (3)           taken
        together, provide adequate insurance coverage for the assets and the operations
        of the Company for all risks normally insured against by a Person carrying
        on
        the same business or businesses as the Company;


                    (4)           are
        sufficient for compliance with all Legal Requirements and Contracts to which
        the
        Company are a party or by which any of them is bound;

      


      (5)           are
        not cancelable by the insurer as a result of the consummation of the
        Contemplated Transactions; and

      


      (6)           do
        not provide for any retrospective premium adjustment or other experienced-based
        liability on the part of the Company.

      


      (ii)           The
        Company has not received (A) any refusal of coverage or any notice that a
        defense will be afforded with reservation of rights, or (B) any notice of
        cancellation or any other indication that any insurance policy is no longer
        in
        full force or effect or will not be renewed or that the issuer of any policy
        is
        not willing or able to perform its obligations thereunder.

      


      (iii)           The
        Company has paid all premiums due, and has otherwise performed all of its
        respective obligations, under each policy to which the Company is a party
        or
        that provides coverage to the Company or any director thereof.

      


      (iv)           The
        Company has given notice to the insurer of all claims that may be insured
        thereby.

      


      3.19           Environmental
        Matters.

      


      Except
        as
        set forth in Schedule 3.19, hereof:

      


      (a)           The
        Company is, and at all times has been, in material compliance with, and has
        not
        been and is not in violation, in any material respects, of or liable under
        in
        any material financial amounts, any Environmental Law. No Seller nor the
        Company
        has any basis to expect, nor has any of them or any other Person for whose
        conduct the Company is or may reasonably be held to be responsible received,
        any
        actual or Threatened order, notice, or other communication from (i) any
        Governmental Body or private citizen acting in the public interest, or (ii)
        the
        current or prior owner or operator of any property, of any actual or potential
        violation or failure to comply with any Environmental Law, or of any actual
        or
        Threatened obligation to undertake or bear the cost of any Environmental,
        Health, and Safety Liabilities with respect to any properties or assets (whether
        real, personal, or mixed) in which Sellers or the Company has or had an interest
        (singularly, a “Property Interest” and, collectively, the
“Property Interests”), or with respect to any Property
        Interests at or to which Hazardous Materials were generated, manufactured,
        refined, transferred, imported, used, or processed by Sellers, the Company,
        or
        any other Person for whose conduct they are or may be held responsible, or
        from
        which Hazardous Materials have been transported, treated, stored, handled,
        transferred, disposed, recycled, or received.

      


      (b)           There
        are no pending or, Threatened claims, Encumbrances, or other restrictions
        of any
        nature, resulting from any Environmental, Health, and Safety Liabilities
        or
        arising under or pursuant to any Environmental Law, with respect to or affecting
        any Property Interests.

      


      (c)           No
        Seller nor the Company has any basis to expect, nor has any of them or any
        other
        Person for whose conduct they are or may be held responsible, received, any
        citation, directive, inquiry, notice, Order, summons, warning, or other
        communication that relates to Hazardous Activity, Hazardous Materials, or
        any
        alleged, actual, or potential violation or failure to comply with any
        Environmental Law, or of any alleged, actual, or potential obligation to
        undertake or bear the cost of any Environmental, Health, and Safety Liabilities
        with respect to any Property Interests, or with respect to any property or
        facility to which Hazardous Materials generated, manufactured, refined,
        transferred, imported, used, or processed by Sellers, the Company, or any
        other
        Person for whose conduct they are or may be held responsible, have been
        transported, treated, stored, handled, transferred, disposed, recycled, or
        received.

      


      (d)           No
        Seller nor the Company, or any other Person for whose conduct they are or
        may be
        held responsible, has any Environmental, Health, and Safety Liabilities with
        respect to any Property Interests, or at any property geologically or
        hydrologically adjoining any such property or assets.

      


      (e)           There
        are no Hazardous Materials present on or in the Environment at any Property
        Interests, or at any geologically or hydrologically adjoining property,
        including any Hazardous Materials contained in barrels, above or underground
        storage tanks, landfills, land deposits, dumps, equipment (whether moveable
        or
        fixed) or other containers, either temporary or permanent, and deposited
        or
        located in land, water, sumps, or any other part of such properties or such
        adjoining property, or incorporated into any structure therein or thereon.
        No
        Seller, none of the Company, any other Person for whose conduct they are
        or may
        be held responsible, or any other Person, has permitted or conducted, or
        is
        aware of, any Hazardous Activity conducted with respect to any Property
        Interests except in full compliance with all applicable Environmental
        Laws.

      


      (f)           There
        has been no Release or Threat of Release of any Hazardous Materials at or
        from
        any Property Interests, or at any other locations where any Hazardous Materials
        were generated, manufactured, refined, transferred, produced, imported, used,
        or
        processed from or by the Property Interests, or any geologically or
        hydrologically adjoining property, whether by Sellers, the Company, or any
        other
        Person.

      


      (g)           Sellers
        and the Company have delivered to Buyer true and complete copies and results
        of
        any reports, studies, analyses, tests, or monitoring possessed or initiated
        by
        Sellers or the Company pertaining to Hazardous Materials or Hazardous Activities
        in, on, or under the Property Interests, or concerning compliance by Sellers,
        the Company, or any other Person for whose conduct they are or may be held
        responsible, with Environmental Laws.

      


      3.20           Employees.

      


      (a)           Schedule
        3.20(a) hereof contains a complete and accurate list of the following
        information for each employee or director of the Company, including each
        employee on leave of absence or layoff status: employer; name; job title;
        current compensation paid or payable and any change in compensation since
        July
        1, 2006; vacation accrued; and service credited for purposes of vesting and
        eligibility to participate under the pension, retirement, profit-sharing,
        thrift
savings,
        deferred compensation, stock bonus, stock option, cash bonus, employee stock
        ownership (including investment credit or payroll stock ownership), severance
        pay, insurance, medical, welfare, or vacation plan, other Employee Pension
        Benefit Plan or Employee Welfare Benefit Plan, or any other employee benefit
        plan or any Director Plan of the Company.

      


      (b)           No
        employee or director of the Company is a party to, or is otherwise bound
        by, any
        agreement or arrangement, including any confidentiality, non-competition,
        or
        proprietary rights agreement, between such employee or director and any other
        Person (“Proprietary Rights Agreement”) that in any way
        adversely affects or will affect (i) the performance of his or her duties
        as an
        employee or director of the Company, or (ii) the ability of the Company to
        conduct its business, including any Proprietary Rights Agreement with Sellers
        or
        the Company by any  such employee or director. No Seller nor the
        Company has Knowledge that any director, officer, or other key employee of
        the
        Company intends to terminate his or her employment with the
        Company.

      


      (c)           Schedule
        3.20(c) hereof also contains a complete and accurate list of the following
        information for each retired employee or director of the Company, or their
        dependents, receiving benefits or scheduled to receive benefits in the future:
        name, pension benefit, pension option election, retiree medical insurance
        coverage, retiree life insurance coverage, and other benefits.

      


      3.21           Labor
        Relations; Compliance.

      


      Since
        July 1, 2002, except as disclosed in Schedule 3.17(a)(v), hereto, none of
        the
        Company has been and none is now a party to any collective bargaining or
        other
        labor Contract. Since July 1, 2002, there has not been, there is not presently
        pending or existing, and there is not Threatened, (a) any strike, slowdown,
        picketing, work stoppage, or employee grievance process, (b) any Proceeding
        against or affecting the Company relating to the alleged violation of any
        Legal
        Requirement pertaining to labor relations or employment matters, including
        any
        charge or complaint filed by an employee or union with the National Labor
        Relations Board, the Equal Employment Opportunity Commission, or any comparable
        Governmental Body, organizational activity, or other labor or employment
        dispute
        against or affecting the Company or their premises, or (c) any application
        for
        certification of a collective bargaining agent. To the Knowledge of either
        of
        the Sellers, no event has occurred or circumstance exists that could reasonably
        be expected to provide the basis for any work stoppage or other labor dispute.
        There is no lockout of any employees by the Company, and no such action is
        contemplated by the Company. The Company has complied in all material respects
        with all material Legal Requirements relating to employment, equal employment
        opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
        bargaining, the payment of social security and similar taxes, occupational
        safety and health, and plant closing. The Company are not liable for the
        payment
        of any material compensation, damages, taxes, fines, penalties, or other
        amounts, however designated, for failure to comply with any of the foregoing
        Legal Requirements.

      


      3.22           Intellectual
        Property & Intangible Assets.

      


      (a)           Intellectual
        Property Assets—The term “Intellectual Property Assets”
includes:

      


      (i)           the
        name “Peterson Pacific Corp.,” "Peterson,
        Inc.," and all fictional business names, trading names, registered and
        unregistered trademarks, service marks, and applications (collectively,
“Marks”);

      


      (ii)           all
        patents, patent applications, and inventions and discoveries that may be
        patentable (collectively, “Patents”);

      


      (iii)           all
        copyrights in both published works and unpublished works (collectively,
“Copyrights”);

      


      (iv)           all
        know-how, trade secrets, confidential information, customer lists, software,
        technical information, data, process technology, plans, drawings, and blue
        prints (collectively, “Trade Secrets”) owned, used, or licensed
        by the Company as licensee or licensor.

      


      (b)           Agreements—Schedule
        3.22(b) contains a complete and accurate list and summary description, including
        any royalties paid or received by the Company, of all Contracts relating
        to the
        Intellectual Property Assets and all covenants not to compete to which the
        Company is a party or by which the Company is bound, except for any license
        implied by the sale of a product and perpetual, paid-up licenses for commonly
        available software programs with a value of less than $5,000 under which
        the
        Company is the licensee. There are no outstanding and, to the Knowledge of
        either of the Sellers, no Threatened disputes or disagreements with respect
        to
        any such agreement.

      


      (c)           Know-How
        Necessary for the Business

      


      (i)           The
        Intellectual Property Assets are all those reasonably necessary for the
        operation of the Company’s business as it is currently conducted.  The
        Company is the owner of all right, title, and interest in and to each of
        the
        Intellectual Property Assets applicable to its business, free and clear of
        all
        liens, security interests, charges, encumbrances, equities, and other adverse
        claims, and has the right to use without payment to a third party all of
        the
        Intellectual Property Assets.

      


      (ii)           Except
        as set forth in Schedule 3.22(c)(ii), no employee of the Company has entered
        into any Contract that restricts or limits in any way the scope or type of
        work
        in which the employee may be engaged or requires the employee to transfer,
        assign, or disclose information concerning the employee’s work to anyone other
        than the Company.

      


      (d)           Trademarks
        and Copyrights

      


      (i)           Schedule
        3.22(d)(i) contains a complete and accurate list and summary description
        of all
        Copyrights and Marks of the Company.

      


      (ii)           None
        of the subject matter of any of the Copyrights or Marks infringes or is alleged
        to infringe any copyright protected Mark of any third party or is a derivative
        work based on the work of a third party.

      


      (e)           Trade
        Secrets—The Company has taken all reasonable precautions to protect the secrecy,
        confidentiality, and value of its Trade Secrets.

      


      3.23           Certain
        Payments.

      


      Other
        than reasonable marketing practices in the ordinary course of business, since
        July 1, 2002, neither the Company nor any director, officer, agent, or employee
        of the Company, or any other Person acting for or on behalf of the Company,
        has
        directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
        influence payment, kickback, or other payment to any Person, private or public,
        regardless of form, whether in money, property, or services (i) to obtain
        favorable treatment in securing business, (ii) to pay for favorable treatment
        for business secured, (iii) to obtain special concessions or for special
        concessions already obtained, for or in respect of the Company, or (iv) in
        violation of any Legal Requirement, (b) established or maintained any fund
        or
        asset that has not been recorded in the books and records of the
        Company.

      


      3.24           Disclosure.

      


      No
        representation or warranty of Sellers in this Agreement omits to state a
        material fact necessary to make the statements herein, in light of the
        circumstances in which they were made, not misleading.

      


      3.25           Relations
        with Related Persons.

      


      Except
        for this Agreement (respecting the contemplated post-Closing obligations
        of the
        Company as the successor to the Buyer) and as set forth in Schedule 3.25,
        no
        Seller or any Related Person of any of the Sellers is a party to any Contract
        with, or has any claim or right against, the Company.

      


      3.26           Brokers
        or Finders.

      


      Sellers
        and their agents have incurred no obligation or liability, contingent or
        otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with this Agreement.

       

      


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


       

      ARTICLE
        4

      


      REPRESENTATIONS
        AND WARRANTIES OF BUYER

      


      Buyer
        represents and warrants to Sellers as follows:


      


      4.1           Organization
        and Good Standing.

      


      Buyer
        is
        a corporation duly organized, validly existing, and in good standing under
        the
        laws of the State of Tennessee.

      


      4.2           Authority;
        No Conflict.

      


      (a)           This
        Agreement constitutes the legal, valid, and binding obligation of Buyer,
        enforceable against Buyer in accordance with its terms. Upon the execution
        and
        delivery by Buyer of the Buyer’s Closing Certificate, the Buyer’s Closing
        Certificate will constitute the legal, valid, and binding obligations of
        Buyer,
        enforceable against Buyer in accordance with its terms. Buyer has the absolute
        and unrestricted right, power, and authority to execute and deliver this
        Agreement and the Buyer’s Closing Certificate and to perform its obligations
        under this Agreement and the Buyer’s Closing Certificate.

      


      (b)           Neither
        the execution and delivery of this Agreement nor the consummation or performance
        of any of the Contemplated Transactions will, directly or indirectly (with
        or
        without notice or lapse of time):

      


      (i)           contravene,
        conflict with, or result in a violation of any provision of the Organizational
        Documents of Buyer;

      


      (ii)           contravene,
        conflict with, or result in a violation of, any Legal Requirement or any
        Order
        to which Buyer , or any of the assets owned or used by either Buyer , may
        be
        subject;

      


      (iii)           contravene,
        conflict with, or result in a violation of any of the terms or requirements
        of,
        any Governmental Authorization that is held by Buyer or that otherwise relates
        to the business of, or any of the assets owned or used by, Buyer;

      


      (iv)           contravene,
        conflict with, or result in a violation or breach of any provision of, or
        give
        any Person the right to declare a default or exercise any remedy under, or
        to
        accelerate the maturity or performance of, or to cancel, terminate, or modify,
        any Contract (including without limitation any loan documents) to which Buyer
        is
        a party or, to the Knowledge of Buyer, to which any of its property is subject;
        or

      


      (v)           result
        in the imposition or creation of any Encumbrance upon or with respect to
        any of
        the assets owned or used by either Buyer.

      


      4.3           Certain
        Proceedings.

      


      There
        is
        no pending or Threatened Proceeding that has been commenced against Buyer
        and
        that challenges, or may have the effect of preventing, delaying, making illegal,
        or otherwise interfering with, any of the Contemplated
        Transactions.


      4.4           Brokers
        or Finders.

      


      Buyer
        and
        its officers and agents have incurred no obligation or liability, contingent
        or
        otherwise, for brokerage or finders’ fees or agents’ commissions or other
        similar payment in connection with the Contemplated Transactions.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        5

      


      COVENANTS
        OF SELLERS AND THE COMPANY PRIOR TO CLOSING DATE

      


      5.1           Required
        Approvals.

      


      As
        promptly as practicable after the date of this Agreement, Sellers and the
        Company will make all filings required by Legal Requirements to be made by
        them
        in order to consummate the Contemplated Transactions. Between the date of
        this
        Agreement and the Closing Date, Sellers and the Company will (a) cooperate
        with
        Buyer with respect to all filings that Buyer elects to make or is required
        by
        Legal Requirements to make in connection with the Contemplated Transactions,
        and
        (b) cooperate with Buyer in obtaining all Consents identified in Schedule
        4.2.

      


      5.2           Company’s
        and Sellers’ Approval.

      


      Sellers
        and the Company shall as soon as practicable after the date of this Agreement
        take any necessary action, whether as a shareholder, officer, director or
        otherwise, to vote upon and approve this Agreement and the Contemplated
        Transactions.

      


      5.3           Current
        Information.

      


      During
        the period from the date of this Agreement to the Closing Date, the Sellers
        and
        the Company shall cause one or more of their representatives to confer on
        a
        regular and frequent basis with representatives of Buyer to report on the
        general status of the Company’s ongoing operations. Sellers and the Company
        shall promptly notify Buyer of any material change in the normal course of
        the
        business of the Company or in the operation of its properties of the Company
        and
        of any governmental complaints, investigations, or hearings (or communications
        indicating that the same may be contemplated), or the institution or the
        threat
        of material litigation involving Sellers or the Company, and will keep Buyer
        fully informed with respect to such events.

      


      5.4           No
        Negotiation.

      


      Until
        such time, if any, as this Agreement is terminated pursuant to Section 9,
        Sellers will not, and will not permit the Company or any of their
        Representatives to, directly or indirectly solicit, initiate, respond to
        or
        encourage any inquiries or proposals from, discuss or negotiate with, provide
        any non-public information to, or consider the merits of any unsolicited
        inquiries or proposals from, any Person (other than Buyer) relating to any
        transaction involving the sale of the
        business or assets (other than in the Ordinary Course of Business) of the
        Company, or any of the capital stock of the Company, or any merger,
        consolidation, business combination, or similar transaction involving the
        Company.

      


      5.5           Operations
        Prior to Closing Date.

      


      In
        addition to any other express obligation under this Agreement, between the
        date
        of this Agreement and the Closing Date, the Company will, and the Sellers
        shall
        cause the Company to:

       

      (a)           conduct
        the Business of the Company only in the Ordinary Course of
        Business;

      


      (b)           use
        their Best Efforts to keep available the services of the current officers,
        employees, and agents of the Company and maintain the relations and good
        will
        with suppliers, customers, creditors, employees, agents, and others having
        business relationships with the Company.

      


      During
        the period from the date hereof to and including the Closing Date, except
        as
        expressly contemplated hereby, without the prior written consent of Buyer,
        the
        Company will not:

       

      (a)           incur
        any liability or obligation of any material nature (whether accrued, absolute,
        contingent or otherwise), except in the Ordinary Course of
        Business;

      


      (b)           permit
        any of its assets to be subjected to any Encumbrance;

      


      (c)           sell,
        transfer or otherwise dispose of any assets except in the Ordinary Course
        of
        Business;

      


      (d)           make
        any capital expenditure or commitment therefor, except in the Ordinary Course
        of
        Business but in no event in excess of $100,000 in the aggregate, except for
        the
        purchase of certain processing equipment approved by Buyer;

      


      (e)           redeem,
        purchase, otherwise acquire, or issue any shares of its capital stock or
        grant
        any option, warrant or other right to purchase or acquire any such shares,
        or
        declare or pay any dividend, make or pay any other distribution or payment
        in
        respect of shares of capital stock;

      


      (f)           borrow
        money or make any loan to any Person;

      


      (g)           write
        off as uncollectible any note or accounts receivable, except write-offs in
        the
        Ordinary Course of Business charged to applicable reserves, none of
        which  individually or in the aggregate is material to the
        Company;

      


      (h)           grant
        any increase in the rate of wages, salaries, bonuses or other remuneration
        of
        any officer or non-hourly paid employee of the Company or, except in the
        Ordinary Course of Business, grant any increase in the wages of any hourly-paid
        employees;

      


      (i)           cancel
        or waive any claims or rights of substantial value;


           
        (j)           make any
        change in any method of accounting or auditing practice except changes approved
        by Buyer;

      


      (k)           other
        than in the Ordinary Course of Business and limited to the hiring of at-will
        employees only, hire any additional or replacement employees or engage
        additional or replacement independent contractors;

      


      (l)           enter
        into any modification of any Contracts except in the Ordinary Course of
        Business;

      


      (m)           agree,
        whether or not in writing, to do any of the foregoing;

      


      (n)           cause
        the Sellers or the Company to, without the prior consent of Buyer, to take
        any
        affirmative action, or fail to take any reasonable action within their or
        its
        control, as a result of which any of the changes or events listed in Section
        3.16 would be likely to occur.

      


      5.6           Miscellaneous
        Agreements and Consents.

      


      The
        Sellers and the Company shall use their Best Efforts to: (a) satisfy all
        the
        conditions precedent to their own and all other parties’ obligations hereunder;
        (b) obtain Consents necessary or desirable for the consummation of the
        transactions contemplated by this Agreement; and (c) remove any condition
        or
        state of facts pertaining to any of them or their respective subsidiaries,
        as
        applicable, that otherwise would make consummation of the transactions
        contemplated hereby a violation of applicable law or a breach of a Contract
        (including any Company Services Agreement) to which the Company or any Seller
        is
        a party. The Sellers and the Company agree promptly to execute at the reasonable
        request of Buyer before, on or after the Closing Date any documents or materials
        reasonably necessary to effect the transactions contemplated by this Agreement,
        including, without limitation, information to auditors respecting the operations
        of the Company prior to the Closing Date, letters of authority on the Closing
        Date and signature cards and other materials evidencing the transfer of the
        bank
        accounts of the Company.

      


      5.7           Access
        and Investigation; Deliveries.

      


      Between
        the date of this Agreement and the Closing Date, Sellers and the Company
        shall:

       

      (a)           afford
        Buyer and its Representatives and advisors (collectively, “Buyer’s Advisors”)
        full and free access to the Company’ personnel, facilities and to Company
        Contracts, books and records, and other documents and data;

      


      (b)           shall
        promptly deliver to Buyer any Company Contracts, documents, financial
        statements, instruments and any other information which are created after
        the
        date of this Agreement (or was otherwise unavailable to or unknown to any
        Seller
        or Sellers' Company as of the date of this Agreement) that would have been
        required by the terms of this Agreement to be delivered to Buyer by any Seller
        or the Company if such Company Contract, document, financial statements,
        instruments or other information had been available to or known to either
        of the
        Sellers or the Company as of the date of this Agreement, and Sellers shall
        describe on a series of Schedules 5.7(b), each of which shall be separately
        dated as of the date of delivery to Buyer, the identification of the Company
        Contract, document, financial statements, instruments or other information
        delivered in accordance with this Section 5.7 to the same extent as would
        be
        required by an applicable Schedule to this Agreement if such Company Contract,
        document, financial statements, instruments or other information had been
        available to or known to either of the Sellers or the Company as of the date
        of
        this Agreement;

      


      (c)           promptly
        deliver to Buyer copies of all such Contracts, books and records, and other
        existing documents and data as Buyer may reasonably request;

      


      (d)           promptly
        deliver to Buyer and Buyer’s Advisors such additional financial, operating, and
        other data and information as Buyer may reasonably request; and

      


      (e)           deliver
        to Buyer no later than the twentieth day following each calendar month end,
        an
        unaudited balance sheet of the Company as at such calendar month end (a
“Pre-Closing Monthly Balance Sheet”) and (B) an unaudited
        statement of income of the Company for such calendar month and for the period
        from July 1, 2006 through the end of the calendar month for the statement
        of
        income for each calendar month of 2007 (each, a “Pre-Closing Monthly
        Income Statement”) (collectively, the Pre-Closing Monthly Balance
        Sheets and the Pre-Closing Monthly Income Statements are the
“Pre-Closing Monthly Financial Statements”). The Pre-Closing
        Monthly Financial Statements shall be prepared in conformity with GAAP applied
        on a consistent basis and shall fairly present the financial position and
        results of operations of the Company to which they relate as of the dates
        thereof and for the periods indicated (except as indicated in the notes
        thereto), subject to normal audit adjustments and the absence of certain
        footnote disclosure required by GAAP.

      


      5.8           Notification.

      


      Between
        the date of this Agreement and the Closing Date, each of the Sellers will
        promptly notify Buyer in writing if either of the Sellers or the Company
        becomes
        aware of any fact or condition that causes or constitutes a Breach of any
        of
        representations and warranties of Sellers as of the date of this Agreement,
        or
        if any Seller or the Company becomes aware of the occurrence after the date
        of
        this Agreement of any fact or condition that would (except as expressly
        contemplated by this Agreement) cause or constitute a Breach of any such
        representation or warranty had such representation or warranty been made
        as of
        the time of occurrence or discovery of such fact or condition. Should any
        such
        fact or condition require any change in any representations or warranties
        of any
        Seller or of the Company herein if this Agreement were dated the date of
        the
        occurrence or discovery of any such fact or condition, the Sellers will promptly
        deliver to Buyer written notice specifying such change (a “Modification
        Notice”). During the same period, each Seller will promptly notify Buyer of the
        occurrence of any Breach of any covenant of Sellers in this Section 5 or
        of the
        occurrence of any event that may make the satisfaction of the conditions
        in
        Section 7 impossible or unlikely.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      ARTICLE
        6

      


      COVENANTS
        OF BUYER PRIOR TO CLOSING DATE

      


      Buyer
        shall, as promptly as practicable after the date of this Agreement until
        and
        through the Closing or the termination of this Agreement in accordance with
        Article 9, use its Best Efforts to: (a) satisfy all the conditions precedent
        to
        its own obligations hereunder; (b) obtain Consents necessary or desirable
        for
        the consummation of the transactions contemplated by this Agreement; (c)
        cooperate with Sellers in obtaining all consents identified in Section 3.2;
        (d)
        cooperate with Sellers in the Sellers’ efforts to satisfy all the conditions
        precedent to the Sellers’ obligations hereunder; and (e) remove any condition or
        state of facts pertaining to Buyer that otherwise would make consummation
        of the
        transactions contemplated hereby a violation of applicable law or a breach
        of a
        Contract to which Buyer is a party.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        7

      


      CONDITIONS
        PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

      


      Buyer’s
        obligation to purchase the Stock and to take the other actions required to
        be
        taken by Buyer at the Closing is subject to the satisfaction, at or prior
        to the
        Closing, of each of the following conditions (any of which may be waived
        by
        Buyer, in whole or in part):

       

      7.1           Accuracy
        of Representations.

      


      All
        of
        the representations and warranties of the Sellers in this Agreement (considered
        collectively), and each of these representations and warranties (considered
        individually), must have been accurate in all material respects as of the
        date
        of this Agreement, and must be accurate as of the Closing Date as if made
        on the
        Closing Date, without giving effect to any Modification Notice.

      


      7.2           Performance.

      


      (a)           All
        of the covenants and obligations that Sellers and the Company are required
        to
        perform or to comply with pursuant to this Agreement at or prior to the Closing
        (considered collectively), and each of these covenants and obligations
        (considered individually), must have been duly performed and complied
        with.

      


      (b)           Each
        document required to be delivered pursuant to Section 2.4 must have been
        delivered.

      


      (c)           All
        of the agreements, other documents or certificates, or actions required to
        be
        entered into, delivered and/or taken at or prior to the Closing in accordance
        with Section 2 hereof, including actions or deliveries of Persons not a party
        hereto, shall have been entered into, delivered and or taken, as
        applicable.


          
        7.3           Consents.

      


      Each
        of
        the Consents identified or required to be identified pursuant to Section
        3.2
        must have been obtained and must be in full force and effect.

      


      7.4           Additional
        Documents; Due Diligence Investigation; Certain
        Payables.

      


      (a)           Each
        of the following documents must have been delivered to Buyer:

      


      (i)           an
        opinion of Sellers' Counsel dated the Closing Date, in a form mutually agreed
        upon by the parties;

      


      (ii)           such
        other documents as Buyer may reasonably request for the purpose of (A) enabling
        its counsel to provide the opinion referred to in Section 8.4(a), (B)
        evidencing the accuracy of any of Sellers’ representations and warranties,
        (C) evidencing the performance by each Seller of, or the compliance by each
        Seller with, any covenant or obligation required to be performed or complied
        with by such Seller, or (D) evidencing the satisfaction of any condition
        referred to in this Section 7;

      


      (iii)           a
        fully executed real estate purchase agreement for all of the real estate
        and
        improvements used by and related to the Company (the
        "Property") in form satisfactory to the Buyer; and

      


      (iv)           fully
        executed and enforceable employment and non-competition agreements between
        the
        Company and Neil Peterson and Larry Cumming, in form satisfactory to
        Buyer.

      


      (b)           Sellers
        and the Company shall have granted Buyer full access to the Company’s assets and
        operations in accordance with this Agreement for the purpose of conducting
        a due
        diligence examination thereof, and the results of said due diligence examination
        shall have been fully satisfactory to Buyer.

      


      (c)           The
        Sellers and all Related Parties of the Sellers, and of the Company, shall
        have
        paid in full without discount or compromise all accounts payable or notes
        payable owed by any of them to the Company.

      


      7.5           No
        Proceedings.

      


      There
        must not have been commenced or Threatened against Buyer, or against any
        Related
        Person of Buyer, any Proceeding (a) involving any bona fide challenge to,
        or seeking material damages or other relief in connection with, any of the
        Contemplated Transactions, or (b) that could reasonably be expected have
        the effect of preventing, delaying, making illegal, or otherwise interfering
        with any of the Contemplated Transactions.


      


      7.6           No
        Claim Regarding Stock Ownership or Sale
        Proceeds.

      


      There
        must not have been made or Threatened by any Person any claim asserting that
        such Person (a) is the holder or the beneficial owner of, or has the right
        to acquire or to obtain beneficial ownership of, any stock of, or any other
        voting, equity, or ownership interest in, the Company, or (b) is entitled
        to all or any portion of the Purchase Price payable for the Stock.

      


      


      


      ARTICLE
        8

      


      CONDITIONS
        PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE

      


      Sellers’
        obligation to sell the Stock and to take the other actions required to be
        taken
        by Sellers at the Closing is subject to the satisfaction, at or prior to
        the
        Closing, of each of the following conditions (any of which may be waived
        by
        Sellers, in whole or in part):

      


      8.1           Accuracy
        of Representations.

      


      All
        of
        Buyer’s representations and warranties in this Agreement (considered
        collectively), and each of these representations and warranties (considered
        individually), must have been accurate in all material respects as of the
        date
        of this Agreement and must be accurate in all material respects as of the
        Closing Date as if made on the Closing Date.

      


      8.2           Buyer’s
        Performance.

      


      (a)           All
        of the covenants and obligations that Buyer is required to perform or to
        comply
        with pursuant to this Agreement at or prior to the Closing (considered
        collectively), and each of these covenants and obligations (considered
        individually), must have been performed and complied with in all material
        respects.

      


      (b)           Buyer
        must have delivered each of the documents required to be delivered by Buyer
        pursuant to Section 2.4 and must have made the Cash Payment required to be
        made
        by Buyer pursuant to Section 2.4(b)(i).

      


      (c)           All
        of the agreements, other documents or certificates, or actions required to
        be
        entered into, delivered and/or taken at or prior to the Closing in accordance
        with  Section 2 hereof, including actions or deliveries of Persons not
        a party hereto, shall have been entered into, delivered and or taken, as
        applicable.

      


      8.3           Consents.

      


      Each
        of
        the Consents identified in Schedule 3.2 hereof must have been obtained and
        must
        be in full force and effect.


      8.4           Additional
        Documents.

      


      Buyer
        must have caused the following documents to be delivered to
        Sellers:

       

      (a)           an
        opinion of Chambliss, Bahner & Stophel, P.C. dated the Closing Date, in the
        form mutually agreed upon by the parties; and

      


      (b)           such
        other documents as Sellers may reasonably request for the purpose of
        (i) enabling their counsel to provide the opinion referred to in
        Section 7.4(a), (ii) evidencing the accuracy of any representation or
        warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
        compliance by Buyer with, any covenant or obligation required to be performed
        or
        complied with by Buyer, (ii) evidencing the satisfaction of any condition
        referred to in this Section 8, or (v) otherwise facilitating the
        consummation of any of the Contemplated Transactions.

      


      8.5           No
        Injunction.

      


      There
        must not have been commenced or Threatened against Sellers, or against any
        Related Person of a Seller, any Proceeding (a) involving any bona fide
        challenge to, or seeking material damages or other relief in connection with,
        any of the Contemplated Transactions, or (b) that could reasonably be
        expected have the effect of preventing, delaying, making illegal, or otherwise
        interfering with any of the Contemplated Transactions.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        9

      


      TERMINATION

      


      9.1           Termination
        Events.

      


      This
        Agreement may, by notice given prior to or at the Closing, be
        terminated:

       

      (a)           by
        either Buyer or the Sellers’ Representative if a material Breach of any
        provision of this Agreement has been committed by the other party and such
        Breach has not been waived;

      


      (b)           (i)
        by Buyer if any of the conditions in Section 7 has not been satisfied as
        of the
        Closing Date or if satisfaction of such a condition is or becomes impossible
        (other than through the failure of Buyer to comply with its obligations under
        this Agreement) and Buyer has not waived such condition on or before the
        Closing
        Date; or (ii) by Sellers, if any of the conditions in Section 8 has not been
        satisfied as of the Closing Date or if satisfaction of such a condition is
        or
        becomes impossible (other than through the failure of Sellers to comply with
        their obligations under this Agreement) and Sellers have not waived such
        condition on or before the Closing Date;

      


      (c)           by
        mutual consent of Buyer and Sellers’ Representative; or


           
        (d)           by either
        Buyer or the Sellers’ Representative if the Closing has not occurred (other than
        through the failure of any party seeking to terminate this Agreement to comply
        fully with its obligations under this Agreement) on or before October 31,
        2007,
        or such later date as the parties may agree upon.

      


      9.2           Effect
        of Termination.

      


      Each
        party’s right of termination under Section 9.1 is in addition to any other
        rights it may have under this Agreement or otherwise, and the exercise of
        a
        right of termination will not be an election of remedies. If this Agreement
        is
        terminated pursuant to Section 9.1, all further obligations of the parties
        under this Agreement will terminate, except that the rights and obligations
        in
        Article 11 other than in Section 11.6) will survive; provided, however, that
        if
        this Agreement is terminated by a party because of the Breach of the Agreement
        by the other party or because one or more of the conditions to the terminating
        party’s obligations under this Agreement is not satisfied as a result of the
        other party’s failure to comply with its obligations under this Agreement, the
        terminating party’s right to pursue all legal remedies will survive such
        termination unimpaired.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        10

      


      INDEMNIFICATION;
        REMEDIES

      


      10.1           Survival;
        Right to Indemnification Not Affected By
        Knowledge.

      


      All
        representations and warranties in this Agreement and in any certificate or
        document delivered pursuant to this Agreement will survive the Closing until
        (and including) the third (annual) anniversary of the Closing Date, except
        as
        otherwise provided below.

       

      (a)           The
        representations and warranties of Sellers contained in the following Sections
        of
        this Agreement shall survive until the applicable statute of
        limitations:

      


      3.11;
        3.13; and 3.19

       

      (b)           The
        representations and warranties of Sellers contained in the following Sections
        of
        this Agreement shall survive six (6) years after the Closing Date:

      


      3.1(a);
        3.2(a); and 3.3

       

      (c)           The
        representations and warranties of Buyer contained in Section 4.2(a) of this
        Agreement shall indefinitely survive the Closing Date.

      


      Providedfurther
        that, if prior to the expiration of the survival period with respect to any
        claim for indemnity hereunder, the indemnifying parties shall have been notified
        of such claim and such claim shall not have been finally resolved before
        the
        expiration of such survival period, any representation, warranty, covenant
        or
        agreement that is the basis for such claim shall continue to survive as to
        such
        claim and shall remain a basis for indemnity as to such claim until such
        claim is finally resolved. The right to indemnification, payment of Damages
        or
        other remedy based on such representations, warranties, covenants, and
        obligations will not be affected by any investigation conducted with respect
        to,
        or any Knowledge acquired (or capable of being acquired) at any time, whether
        before or after the execution and delivery of this Agreement or the Closing
        Date, with respect to the accuracy or inaccuracy of or compliance with, any
        such
        representation, warranty, covenant, or obligation. The waiver of any condition
        based on the accuracy of any representation or warranty, or on the performance
        of or compliance with any covenant or obligation, will not affect the right
        to
        indemnification, payment of Damages, or other remedy based on such
        representations, warranties, covenants, and obligations.

      


      10.2           Indemnification
        and Payment of Damages by Sellers.

      


      The
        Sellers will, jointly and severally, indemnify and hold harmless Buyer, the
        Company, and their respective Representatives, stockholders, controlling
        persons, and Related Persons (collectively, the “Buyer Indemnified Persons”)
        for, and will pay to the Buyer Indemnified Persons the amount of, any loss,
        liability, claim, damage, expense (including costs of investigation and defense
        and reasonable attorneys’ fees incurred after Closing) or diminution of value,
        whether or not involving a third-party claim (collectively, “Damages”), arising,
        directly or indirectly, from or in connection with:

       

      (a)           any
        Breach of any representation or warranty made by any of the Sellers in this
        Agreement, the Modification Notices or any other certificate or document
        delivered by either of the Sellers or the Company pursuant to this
        Agreement;

      


      (b)           any
        Breach of any representation or warranty made by any of the Sellers in this
        Agreement as if such representation or warranty were made on and as of the
        Closing Date without giving effect to any Modification Notice;

      


      (c)           any
        Breach by any of the Sellers of any covenant or obligation of such Seller
        in
        this Agreement;

      


      (d)           any
        liabilities or obligations of the Company of any nature (whether known or
        unknown and whether absolute, accrued, contingent, or otherwise) accruing,
        occurring, arising or related to the period on or prior to the Closing Date,
        except for (i) liabilities or obligations reflected or reserved against in
        the April 28, 2007 Balance Sheet or for trade payables, or (ii) accrued
        employees’ wages and other benefits incurred after the date of the April 28,
        2007 Balance Sheet in the Ordinary Course of Business of the same type as
        reflected on such April 28, 2007 Balance Sheet, or (iii)  claims for
        Damages arising directly or indirectly from or in connection with any product
        shipped by the Company, or (iv) any other potential liabilities listed in
        Schedule 10.2(d).

      


      (e)           any
        claim by any Person for brokerage or finder’s fees or commissions or similar
        payments based upon any agreement or understanding alleged to have been made
        by
        any such Person with either of the Sellers or the Company (or any Person
        acting
        on their behalf) in connection with any of the Contemplated
        Transactions.

      


      To
        the
        extent such Damages are covered by applicable insurance policies, including
        insurance policies which become effective on or after the Closing Date, Sellers
        shall be excused from
        their duty to indemnify.  To the extent Sellers are excused from a
        duty to indemnify solely because the Damages are covered by applicable insurance
        policies, the parties hereby waive any subrogation rights which their respective
        insurance carriers may have against Sellers under this Section
        10.2.  Rather, the Sellers shall be considered to be additional
        insureds.

      


      The
        indemnification obligations of the Sellers pursuant to Section 10.2(d) and
        (e)
        exist regardless of whether such obligations may also arise as a Breach under
        Section 10.2(a), (b) or (c) above.

      


      10.3           Indemnification
        and Payment of Damages by Buyer.

      


      Buyer
        will indemnify and hold harmless Sellers and their respective Representatives
        and Related Persons (collectively, the "Sellers' Indemnified
        Persons") for, and will pay to the Sellers' Indemnified Persons the
        amount of any Damages arising, directly or indirectly, from or in connection
        with (a) any Breach of any representation or warranty made by Buyer in this
        Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
        (b) any Breach by Buyer of any covenant or obligation of Buyer in this
        Agreement, (c) any product shipped by, or any services provided by, the Company
        on or after the Closing Date, except to the extent such Damages are covered
        by
        applicable insurance policies, or (d) any claim by any Person for brokerage
        or
        finder’s fees or commissions or similar payments based upon any agreement or
        understanding alleged to have been made by such Person with Buyer (or any
        Person
        acting on its behalf) in connection with any of the Contemplated
        Transactions.

      


      10.4           Indemnity
        Limitations—Sellers.

      


      The
        Sellers will have no liability (for indemnification or otherwise) under Section
        10.2 until the total of all Damages with respect to such matters exceeds
        Five
        Hundred Thousand Dollars ($500,000). Notwithstanding the foregoing limitation,
        this Section 10.4 shall not apply to: (i)  any Breach by Sellers of
        the representations or warranties of Sections 3.1(a); 3.2(a); or 3.3 hereof;
        (ii) any covenant or obligations of Sellers under this Agreement to be performed
        after the Closing Date, including the covenants of Section 2.5; or (iii)
        any
        Breach by any Seller of any of Sellers’ representations and warranties of which
        a Seller had actual Knowledge at or prior to the Closing; or (iv) any knowing
        and intentional Breach by any of the Sellers of any covenant or obligation
        of a
        Seller under this Agreement.

      


      10.5           Indemnity
        Limitations—Buyer.

      


       

      Buyer
        will have no liability (for indemnification or otherwise) under Section 10.3
        until the total of all Damages with respect to such matters exceeds Five
        Hundred
        Thousand Dollars ($500,000).  Notwithstanding the foregoing
        limitation, this Section 10.5 shall not apply to: (i) any Breach by Buyer
        of the
        representations or warranties of Sections 4.1; or 4.2 hereof; (ii) any covenant
        or obligations of Buyer under this Agreement to be performed after the Closing
        Date; or (iii) any Breach by Buyer of any of Buyer’s representations and
        warranties of which Buyer had actual Knowledge at or prior to the Closing;
        or
        (iv) any knowing and intentional Breach by Buyer of any its covenants or
        obligations of this Agreement.


           
        10.6           Procedure
        for Indemnification—Third Party
        Claims.

      


      (a)           Promptly
        after receipt by an Indemnified Person under Sections 10.2, or 10.3 of notice
        of
        the commencement of any Proceeding against it, such Indemnified Person will,
        if
        a claim is to be made against an indemnifying party under such Section, give
        notice to the indemnifying party of the commencement of such claim, but the
        failure to notify the indemnifying party will not relieve the indemnifying
        party
        of any liability that it may have to any Indemnified Person, except to the
        extent that the indemnifying party demonstrates that the defense of such
        action
        is prejudiced by the indemnifying party’s failure to give such
        notice.

      


      (b)           If
        any Proceeding referred to in Section 10.6(a) is brought against an Indemnified
        Person and it gives notice to the indemnifying party of the commencement
        of such
        Proceeding, the indemnifying party will be entitled to participate in such
        Proceeding and, to the extent that it wishes (unless (i) the indemnifying
        party
        is also a party to such Proceeding and the Indemnified Person determines
        in good
        faith that joint representation would be inappropriate, or (ii) the indemnifying
        party fails to provide reasonable assurance to the Indemnified Person of
        its
        financial capacity to defend such Proceeding and provide indemnification
        with
        respect to such Proceeding), to assume the defense of such Proceeding with
        counsel satisfactory to the Indemnified Person and, after notice from the
        indemnifying party to the Indemnified Person of its election to assume the
        defense of such Proceeding, the indemnifying party will not, as long as it
        diligently conducts such defense, be liable to the Indemnified Person under
        this
        Section 10 for any fees of other counsel or any other expenses with respect
        to
        the defense of such Proceeding, in each case subsequently incurred by the
        Indemnified Person in connection with the defense of such Proceeding, other
        than
        reasonable costs of investigation. If the indemnifying party assumes the
        defense
        of a Proceeding, (i) no compromise or settlement of such claims may be effected
        by the indemnifying party without the Indemnified Person’s consent unless (A)
        there is no finding or admission of any violation of Legal Requirements or
        any
        violation of the rights of any Person and no effect on any other claims that
        may
        be made against the Indemnified Person, and (B) the sole relief provided
        is
        monetary damages that are paid in full by the indemnifying party; and (ii)
        the
        Indemnified Person will have no liability with respect to any compromise
        or
        settlement of such claims effected without its consent. If notice is given
        to an
        indemnifying party of the commencement of any Proceeding and the indemnifying
        party does not, within thirty days after the Indemnified Person’s notice is
        given, give notice to the Indemnified Person of its election to assume the
        defense of such Proceeding, the indemnifying party will be bound by any
        determination made in such Proceeding or any compromise or settlement effected
        by the Indemnified Person.

      


      (c)           Notwithstanding
        the foregoing, if an Indemnified Person determines in good faith that there
        is a
        reasonable probability that a Proceeding may adversely affect it or its
        affiliates other than as a result of monetary damages for which it would
        be
        entitled to indemnification under this Agreement, the Indemnified Person
        may, by
        notice to the indemnifying party, assume the exclusive right to defend,
        compromise, or settle such Proceeding, but the indemnifying party will not
        be
        bound by any determination of a Proceeding so defended or any compromise
        or
        settlement effected without its consent (which may not be unreasonably
        withheld).


           
        (d)           Sellers
        hereby consent to the non-exclusive jurisdiction of any court in which a
        Proceeding is brought against any Indemnified Person for purposes of any
        claim
        that an Indemnified Person may have under this Agreement with respect to
        such
        Proceeding or the matters alleged therein, and agree that process may be
        served
        on Sellers with respect to such a claim anywhere in the world.

      


      10.7           Procedure
        for Indemnification—Other Claims.

      


      A
        claim
        for indemnification for any matter not involving a third-party claim may
        be
        asserted by notice to the party from whom indemnification is
        sought.

      


      10.8           Treatment
        of Indemnification Payment.

      


      If
        Buyer
        or any Seller makes any payment to an Indemnified Person pursuant to this
        Article 10, then such amount shall be treated as an adjustment to the Purchase
        Price.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      ARTICLE
        11

      


      GENERAL
        PROVISIONS

      


      11.1           Expenses.

      


      Except
        as
        otherwise expressly provided in this Agreement, each party to this Agreement
        will bear its respective expenses incurred in connection with the preparation,
        execution, and performance of this Agreement and the Contemplated Transactions,
        including all fees and expenses of agents, representatives, counsel, and
        accountants. Sellers will cause the Company not to incur any out-of-pocket
        expenses in connection with this Agreement. In the event of termination of
        this
        Agreement, the obligation of each party to pay its own expenses will be subject
        to any rights of such party arising from a breach of this Agreement by another
        party.

      


      11.2           Confidentiality/Public
        Announcement.

      


      Between
        the date of this Agreement and the Closing Date, Buyer, Sellers and the Company
        will maintain in confidence, and will cause the directors, officers, employees,
        agents, advisors and Related Persons of Buyer, Sellers and the Company to
        maintain in confidence, any confidential or proprietary information obtained
        in
        confidence from another party in connection with this Agreement or the
        Contemplated Transactions, unless (a) such information is already known to
        such
        party or to others not bound by a duty of confidentiality or such information
        becomes publicly available through no fault of such party, (b) the use of
        such
        information is necessary or appropriate in making any filing or obtaining
        any
        consent or approval required for the consummation of the Contemplated
        Transactions, or (c) the furnishing or use of such information is necessary
        or
        appropriate in connection with legal proceedings.

       

      Provided,
        however, that Buyer may make such disclosure of the Contemplated Transactions
        and this Agreement as Buyer, in its discretion, determines is necessary to
        comply with Federal and state securities laws and regulations.

       

      If
        the
        Contemplated Transactions are not consummated, each party will return or
        destroy
        as much of such written information as the other party may reasonably
        request.

       

      The
        Sellers acknowledge that certain of the terms and conditions of this Agreement
        contain important confidential information the disclosure of which could
        result
        in a  competitive disadvantage to Buyer. Accordingly, each Seller
        agrees never to disclose, whether before or after a Closing, to any Person
        the
        terms and provisions of this Agreement except (a) to his legal or tax advisors,
        (b) to senior officers of the Company identified to the Buyer, (c) when
        disclosure of such information is required in connection with legal proceedings,
        (d) to other Sellers, or (e) with the prior written consent of
        Buyer.

      


      11.3           Notices.

      


      All
        notices, consents, waivers, and other communications under this Agreement
        must
        be in writing and will be deemed to have been duly given when (a) delivered
        by
        hand (with written confirmation of receipt), (b) sent by telecopier (with
        written confirmation of receipt), provided that a copy is mailed by registered
        mail, return receipt requested, or (c) when received by the addressee, if
        sent
        by a nationally recognized overnight delivery service (receipt requested),
        in
        each case to the appropriate addresses and telecopier numbers set forth within
        Section 11.4 (or to such other addresses and telecopier numbers as a party
        may
        designate by notice to the other parties). Notice to any and all Sellers
        shall
        be deemed to have been given when notice is given to Sellers’
Representative.

      


       

      
        	
                Buyer

              	
                F.
                  McKamy Hall, CPA

                Vice
                  President, Chief Financial Officer and Treasurer

                Astec
                  Industries, Inc.

                1725
                  Shepherd Road

                Chattanooga,
                  TN 37421

                Fax:     (423)
                  899-4456

                Email:
                  mhall@astecindustries.com

              
	 	 
	
                with
                  a copy to:

              	
                Chambliss,
                  Bahner & Stophel, P.C.

                1000
                  Tallan Building

                Two
                  Union Square

                Chattanooga,
                  TN 37402

                Attn:
                  E. Stephen Jett

                Fax:
                  423-508-1229

                Email:
                  sjett@cbslawfirm.com

              
	 	 
	
                Company
                  (Pre-Closing):

              	
                A.
                  Neil Peterson

                Peterson
                  Pacific Corp.

                29408
                  Airport Road

                Eugene,
                  OR 97402

                Fax:
                  541-689-0804

                Email:
                  neilp@petersoncorp.com

              
	 	 
	
                Sellers'
                  Representative:

              	
                A.
                  Neil Peterson

                34794
                  Matthews Road

                Eugene,
                  OR 97405-8617

                Fax:                                           

                Email:                                                      

              
	 	 
	
                With
                  a copy to

              	
                Luvaas
                  Cobb

                777
                  High Street, Suite 300

                P.O.
                  Box 10747

                Eugene,
                  OR 97440-2747

                Attn:  Varner
                  Jay Johns III

                Fax:
                  541-343-1206

                Email:
                  vjohns@luvaascobb.com

              
	 	 


      

      


      11.4           Jurisdiction.

      


      Subject
        to the terms of Section 11.2, any action or proceeding seeking to enforce
        any
        provision hereof, or based on any right arising out of, this Agreement may
        be
        brought against any of the parties in the Chancery or Circuits Courts of
        Hamilton County, Tennessee, or, if it has or can acquire jurisdiction, in
        the
        United States District Court for the Eastern District of Tennessee, Chattanooga
        Division, and each of the parties consents to the jurisdiction of such courts
        (and of the appropriate appellate courts) in any such action or proceeding
        and
        waives any objection to venue laid therein.  Process in any action or
        proceeding referred to in the preceding sentence may be served on any party
        anywhere in the world.

      


      11.5           Further
        Assurances.

      


      The
        parties agree (a) to furnish upon request to each other such further
        information, (b) to execute and deliver to each other such other documents,
        and (c) to do such other acts and things, all as the other party may
        reasonably request for the purpose of carrying out the intent of this Agreement
        and the documents referred to in this Agreement.

      


      11.6           Waiver.

      


      The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative. Neither the failure nor any delay by any party in exercising
        any
        right, power, or privilege under this Agreement or the documents referred
        to in
        this Agreement will operate as a waiver of such right, power, or privilege,
        and
        no single or partial exercise of any such right, power, or privilege will
        preclude any other or further exercise of such right, power, or privilege
        or the
        exercise of any other right, power, or privilege. To the maximum extent
        permitted by applicable law, (a) no claim or right arising out of this
        Agreement or the documents referred to in this Agreement can be discharged
        by
        one party, in whole or in part, by a waiver or renunciation of  the
        claim or right unless in writing signed by the other party; (b) no waiver
        that may be given by a party will be applicable except in the specific instance
        for which it is given; and (c) no notice to or demand on one party will be
        deemed to be a waiver of any obligation of such party or
        of the
        right of the party giving such notice or demand to take further action without
        notice or demand as provided in this Agreement or the documents referred
        to in
        this Agreement.

      


      11.7           Entire
        Agreement and Modification.

      


      This
        Agreement supersedes all prior agreements between the parties with respect
        to
        its subject matter (including the Letter of Intent among Buyer, the Company
        and
        Sellers dated December 1, 2006, as amended) and constitutes (along with the
        documents referred to in this Agreement) a complete and exclusive statement
        of
        the terms of the agreement between the parties with respect to its subject
        matter. This Agreement may not be amended except by a written agreement executed
        by the party to be charged with the amendment.

      


      11.8           Assignments,
        Successors, And No Third-Party
        Rights.

      


      (a)           Neither
        Buyer nor either of the Sellers may assign any of its, his or her rights
        under
        this Agreement without the prior consent of Buyer and the Sellers’
Representative, as applicable, except that Buyer may assign any of its rights
        (but not its obligations) under this Agreement to any Related Person of Astec
        Industries, Inc. and Buyer and Sellers may, at or subsequent to the Closing,
        collaterally assign or grant a security interest in their respective rights
        hereunder to their respective secured lenders, if any.  Subject to the
        preceding sentence, this Agreement will apply to, be binding in all respects
        upon, and inure to the benefit of the successors and permitted assigns of
        the
        parties. Sellers acknowledge that Buyer intends, relatively shortly following
        the Closing, to cause Buyer and the Company to merge with the Company being
        the
        survivor, with the result that post-Closing the Company shall be the successor
        of Buyer and all obligations and rights of Buyer under this Agreement shall
        become the obligations and rights of the Company.

      


      (b)           Nothing
        expressed or referred to in this Agreement will be construed to give any
        Person
        (including employees of the Company who are not parties to this Agreement
        or
        permitted assignees) other than the parties to this Agreement any legal or
        equitable right, remedy, or claim under or with respect to this Agreement
        or any
        provision of this Agreement. This Agreement and all of its provisions and
        conditions are for the sole and exclusive benefit of the parties to this
        Agreement and their successors and permitted assigns.

      


      11.9           Severability.

      


      If
        any
        provision of this Agreement is held invalid or unenforceable by any court
        of
        competent jurisdiction, the other provisions of this Agreement will remain
        in
        full force and effect. Any provision of this Agreement held invalid or
        unenforceable only in part or degree will remain in full force and effect
        to the
        extent not held invalid or unenforceable.

      


      11.10                      Sellers’
        Representative.

      


      (a)           The
        Sellers hereby appoint A. Neil Peterson (the “Sellers’
Representative”) as their attorney-in-fact with full power on their
        behalf to perform any and all acts necessary or appropriate in connection
        with
        this Agreement or any Ancillary Agreement, including, without
        limitation:


      


      (i)           disbursing
        among the Sellers the Purchase money, Conditional Earn-Out payments, and
        any
        other payments paid to Sellers under this Agreement or in connection with
        the
        Contemplated Transactions;

      


      (ii)           making,
        granting or withholding any approvals, consents or determinations which may
        or
        could be made by the Sellers under this Agreement whether before, at or after
        the Closing, including the waiving of any conditions to the Sellers’ obligations
        under Article 8 hereunder to close or negotiating and agreeing to terms and
        conditions of any indemnification rights or obligations asserted by or against
        the Sellers under Article 10; and

      


      (iii)           making,
        executing, acknowledging and delivering all such other agreements, orders,
        receipts, endorsements, notices, requests, instructions, certificates, letters
        and other writings and, in general, doing any and all things and taking any
        and
        all action that the Sellers’ Representative, in such Person’s sole and absolute
        discretion, may consider necessary, proper or convenient in connection with
        or
        to carry out the activities described in clause (i) above and the transactions
        contemplated by this Agreement and the Contemplated Transactions.

      


      (b)           The
        Sellers’ Representative shall not have any duties or responsibilities except
        those expressly set forth in this Agreement, and no implied covenants,
        functions, responsibilities, duties, obligations, or liabilities shall be
        read
        into this Agreement or any other agreement signed or authorized by the Sellers’
Representative on any Seller’s behalf.

      


      (c)           The
        Sellers’ Representative shall be entitled to rely, and shall be fully protected
        in relying, upon any statements furnished to them, or any one of them, by
        any
        Seller or the Buyer, or any other evidence deemed by the Sellers’ Representative
        to be reliable, and the Sellers’ Representative shall be entitled to act on the
        advice of counsel selected by them.  The Sellers’ Representative shall
        be fully justified in failing or refusing to take any action under this
        Agreement or any other agreement signed or authorized by the Sellers’
Representative on the behalf of any Seller, unless they or any one of them
        shall
        have received such advice or concurrence of the Sellers as they deem appropriate
        or they shall have been expressly indemnified to their satisfaction by the
        Sellers against any and all liability and expense that the Sellers’
Representative may incur by reason of taking or continuing to take any such
        action.  The Sellers’ Representative shall in all cases be fully
        protected in acting, or refraining from acting, under this Agreement or any
        other agreement signed or authorized by such persons on the behalf of any
        Seller, in reliance upon the powers granted hereunder, and any statements
        furnished to them, or any one of them, by any Seller or the Buyer or any
        other
        evidence deemed by the Sellers’ Representative to be reliable, and any action
        taken or failure to act pursuant thereto, shall be binding upon all of the
        Sellers.


      11.11                      Section
        Headings; Construction.

       

           The
        headings of Sections in this
        Agreement are provided for convenience only and will not affect its construction
        or interpretation. All references to “Section” or “Sections” refer to the
        corresponding Section or Sections of this Agreement. All words used in this
        Agreement will be construed to be of such gender or number as the circumstances
        require. Unless otherwise expressly provided, the word “including” does not
        limit the preceding words or terms. The parties, in acknowledgement that
        all of
        them have been represented by counsel and that this Agreement has been carefully
        negotiated, agree that the construction and interpretation of this Agreement
        and
        other documents entered into in connection herewith shall be construed neutrally
        in accordance with their plain meaning; and the construction and interpretation
        thereof shall not be affected by the identity of the party or parties under
        whose direction or at whose expense this Agreement and such documents were
        prepared or drafted.

      


      11.12                      Governing
        Law.

      


      This
        Agreement will be governed by the laws of the State of Tennessee without
        regard
        to conflicts of laws principles.

      


      11.13                      Counterparts.

      


      This
        Agreement may be executed in one or more counterparts, each of which will
        be
        deemed to be an original copy of this Agreement and all of which, when taken
        together, will be deemed to constitute one and the same agreement.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the parties have executed and delivered this Asset Purchase
        Agreement as of the date first written above.

      


      


      
        	
                COMPANY:

              	
                BUYER:

              
	 	 
	
                PETERSON,
                  INC.

              	
                ASTEC
                  INDUSTRIES, INC.

              
	
                 

                 

                By:/s/
                  A Neil Peterson

              	
                 

                 

                By:/s/
                  J. Don Brock

              
	 	 
	
                Title:President

              	
                Title:Chairman,
                  CEO

              
	 	 
	 	 
	
                SELLERS:

              	 
	 	 
	
                 

                /s/
                  A. Neil Peterson

                A.
                  Neil Peterson

              	
                 

                /s/
                  Dale Peterson

                Dale
                  Peterson

              
	 	 
	
                 

                /s/
                  Linda Peterson

                Linda
                  Peterson

              	
                 

                /s/
                  Cody D. Peterson

                Cody
                  Peterson

              
	 	 
	
                 

                /s/
                  A. Neil Peterson

                Scot
                  Peterson

                by
                  A. Neil Peterson as Attorney-in-Fact

              	
                 

                /s/
                  Leslie Peterson

                Leslie
                  Peterson

              
	 	 
	
                 

                /s/
                  Cody D. Peterson

                Cody
                  Peterson, as Custodian under the

                Uniform
                  Gifts to Minors Act for the benefit

                of
                  Caleb Peterson

              	
                 

                /s/
                  Cody D. Peterson

                Cody
                  Peterson, as Custodian under the

                Uniform
                  Gifts to Minors Act for the benefit

                of
                  Sage Peterson

              
	 	 
	
                 

                /s/
                  A. Neil Peterson

                Paul
                  Reinhart

                by
                  A. Neil Peterson as Attorney-in-Fact

              	
                 

                /s/
                  A. Neil Peterson

                Steve
                  Reinhart

                by
                  A. Neil Peterson as
                  Attorney-in-Fact

              


      

      


      


      


      


      [SIGNATURES
        CONTINUED ON NEXT PAGE]

      
        	 	 
	
                 

                /s/
                  Larry Cumming

                Larry
                  Cumming

              	
                 

                /s/
                  A. Neil Peterson

                Jane
                  Wright

                by
                  A. Neil Peterson as Attorney-in-Fact

              
	 	 
	
                 

                /s/
                  A. Neil Peterson

                Pam
                  Arivett

                by
                  A. Neil Peterson as Attorney-in-Fact

              	
                 

                /s/
                  A. Neil Peterson

                Charlotte
                  Kellogg

                by
                  A. Neil Peterson as Attorney-in-Fact

              
	 	 
	 	 
	
                 

                /s/
                  A. Neil Peterson

                A.
                  Neil Peterson, Trustee

                 

                /s/
                  Linda Peterson

                Linda
                  Peterson, Trustee

                Trustees
                  of the Neil and Linda Peterson Charitable Remainder Unitrust
                  dated

                June
                  8, 2007