ASSET
      PURCHASE AGREEMENT

     

    By
      and Between

     

    Peterson
      Detention Inc.,

    a
      California corporation

     

    as
      the
      Seller,

     

    and

     

    ISI
      Detention Contracting Group, Inc.,

    a
      California corporation

    as
      the
      Purchaser

    


    Effective
      as of January 1, 2008

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (this “Agreement”),
      effective as of January 1, 2008 (the “Effective
      Date”),
      is by
      and between Peterson
      Detention Inc.,
      a
      corporation organized under the laws of California (the “Seller”),
      and
ISI
      Detention Contracting Group, Inc.,
      a
      corporation organized under the laws of California (the “Purchaser”).
      Certain capitalized terms used in this Agreement are defined in Article
      X
      and
      elsewhere. Michael Peterson, the President of the Seller, and Leonard Peterson,
      the Secretary of the Seller, each of whom is also a principal shareholder of
      the
      Seller, are parties to this Agreement for the purposes set forth on the
      signature page hereof. Argyle Security, Inc., a Delaware corporation
      (“Argyle”),
      and
      ISI Security Group, Inc., a Delaware corporation (“ISI”),
      are
      likewise parties to this Agreement for the purposes set forth on the signature
      page hereof.

     

    BACKGROUND

     

    The
      Seller is engaged in the business of manufacturing
      and selling steel products (the
      “Business”).
      The
      Seller desires to sell, and the Purchaser desires to purchase, the Business,
      the
      goodwill associated with the Business, and substantially all of the other assets
      of the Seller, all upon the terms and subject to the conditions set forth in
      this Agreement. 

     

    The
      Seller and the Purchaser desire to make certain representations, warranties,
      covenants, and agreements in connection with the purchase and sale contemplated
      by this Agreement.

     

    NOW,
      THEREFORE, in consideration of the foregoing and mutual representations,
      warranties, covenants and agreements hereinafter set forth, and for other
      consideration, the receipt and sufficiency of which are acknowledged, the
      parties to this Agreement agree as follows:

     

    ARTICLE
      I.

    PURCHASE
      AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES

     

    Section
      1.1. Closing.
      The
      Parties will complete and consummate the transactions contemplated by this
      Agreement (the “Closing”)
      at the
      offices of the Purchaser at 12903 Delivery Drive, San Antonio, Texas to be
      effective as of the 1st day of January, 2008, or at such other place and at
      such
      other time and date as may be mutually agreed upon by the Purchaser and the
      Seller. However, the Closing shall be completed no later than the Closing
      Deadline. The date on which the Closing is effective is referred to in this
      Agreement as the “Closing
      Date.”
All
      proceedings to be taken and all documents to be executed and delivered by all
      parties at the Closing will be deemed to have been taken, executed, and
      delivered simultaneously, and no proceedings will be deemed taken nor any
      documents executed or delivered until all have been taken, executed and
      delivered.

     

    Section
      1.2. Purchase
      and Sale of the Assets.
      On the
      terms and subject to the conditions set forth in this Agreement, at the Closing,
      the Seller will sell, assign, transfer, convey, and deliver the Assets to the
      Purchaser, and the Purchaser will purchase, acquire, and accept the Assets
      from
      the Seller. The “Assets”
consist
      of substantially all of the Seller’s rights, title and interests in and to the
      Business, the goodwill of the Seller related to the Business and all of the
      assets, properties and rights of the Seller (other than, in each case, the
      Excluded Assets), wherever located, whether tangible or intangible, recorded
      or
      unrecorded, as the same exist as of the Closing, including, without limitation,
      all of the Seller’s rights, title and interests in and to the assets, properties
      and rights described in the following paragraphs (a) through (k):

     

    (a) all
      furniture, furnishings, fixtures (to the extent not attached to realty, and
      to
      the extent they are capable of being transferred separately), equipment, tools,
      machinery, vehicles, computers and other hardware, office supplies and other
      tangible personal property (collectively, “Fixed
      Assets”),
      including without limitation the vehicles and tangible personal property set
      forth on Schedule
      1.2(a);

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) all
      rights under or pursuant to all warranties, representations and guarantees
      made
      by suppliers, manufacturers, contractors or others in connection with the
      operation of the Business or affecting the Fixed Assets, to the extent they
      are
      transferable;

     

    (c) all
      Seller Contracts set forth on Schedule
      1.2(c)
      (collectively, the “Assumed
      Contracts”);

     

    (d) all
      payments received by the Seller after the Closing in respect of any services
      to
      be provided by Purchaser after the Closing pursuant to an Assumed
      Contract;

     

    (e) all
      cash,
      proceeds from all bank accounts, certificates of deposit, treasury bills,
      treasury notes, and marketable securities, as well as all accounts receivable
      and all notes receivable (whether short-term or long-term), except to the extent
      listed on Schedule 1.3(c);

     

    (f) all
      Intellectual Property (including the rights to sue for (and remedies against)
      past, present and future infringements thereof, and rights of priority and
      protection of interests therein under applicable Laws), including without
      limitation the Intellectual Property set forth on Schedule
      1.2(f);

     

    (g) all
      Permits held by the Seller (to the extent permitted by applicable Law to be
      transferred);

     

    (h) all
      books, records or other data relating to the Seller’s ownership or operation of
      the Business, including, without limitation, employee files and customer and
      supplier lists and records (excluding the minute books and share records of
      Seller);

     

    (i) all
      marketing brochures and materials and other non-proprietary printed or written
      materials in any form or medium relating to the Seller’s ownership of or
      operation of the Business that the Seller is not required by Law to retain,
      and
      duplicates of any such materials that the Seller is required by Law to retain;
      

     

    (j) all
      Claims relating to any of the other Assets and all counterclaims, set-offs
      or
      defenses the Seller may have with respect to any Assumed Liability;

     

    (k) prepaid
      expenses made or paid to utility companies, vendors or otherwise, together
      with
      any unpaid interest accrued thereon from the respective obligors and any
      security or collateral therefor, including recoverable deposits and any Tax
      refund due with respect to any period prior to the Closing, and Schedule
      1.2(k)
      attached
      hereto, represents Seller’s good faith effort to identify all expenses and
      deposits; and

     

    (l) all
      names
      of the Seller and all assumed names of the Seller, including but not limited
      to
“Peterson Detention Inc.” and “PDI”.

     

    Section
      1.3. Excluded
      Assets.
      The
      Assets sold, assigned, transferred, conveyed and delivered by the Seller to
      the
      Purchaser pursuant to this Agreement will not include any of the following
      assets, rights and interests of the Seller (collectively, the “Excluded
      Assets”):

     

    (a) All
      real
      property not used in connection with the Business;

     

    (b) the
      Seller Contracts that are not Assumed Contracts, all of which are set forth
      on
Schedule
      1.3(b),
      including any life insurance policies with cash surrender value as of the
      Closing;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) the
      receivables described in Schedule
      1.3(c);

     

    (d) (Intentionally
      left blank)

     

    (e) each
      other asset, right or interest set forth on Schedule
      1.3(e).

     

    Section
      1.4. Purchase
      Price.
      

     

    (a) The
      aggregate consideration (the “Purchase
      Price”)
      to be
      paid at the Closing by the Purchaser to the Seller as consideration for the
      purchase and sale of the Assets is: (a) the payment by the Purchaser, in cash,
      of $1,500,000 (the “Cash
      Purchase Price”),
      (b)
      two convertible promissory notes, each in the original principal amount of
      $1,500,000 payable to the Seller (collectively, the “Promissory
      Notes”),
      which
      Promissory Notes shall be adjusted on a pro rata basis pursuant to the
Working
      Capital,
      2007
      Accounts Receivable and 2008 Sales calculations, as such terms are defined,
      and
      calculations set forth, in Section
      4.11,
      and (c)
      the assumption by the Purchaser of the Assumed Liabilities pursuant to
Section
      1.5.
      The
      form of the Promissory Notes, which shall be guaranteed by certain affiliates
      of
      the Purchaser, is set forth in Exhibit
      A,
      and the
      form of the guaranties is set forth in Exhibit
      A-1.
      

     

    (b) As
      an
      additional component of the Purchase Price, Purchaser shall pay to Seller an
      amount equal to the accrued and unpaid payroll costs of Seller for the last
      incomplete payroll period (not to exceed 15 days) immediately prior to Closing.
      Purchaser is not assuming any obligation or liability to the employees of Seller
      or any other Party hereunder. Purchaser is only obligated to reimburse Seller
      for specific accrued and unpaid costs stated herein. All of Seller’s employees
      who are hired by the Purchaser shall be provided with full credit for all of
      their unused accrued vacation time as of the Closing Date, accumulated as a
      result of their employment at Seller as described in Section 4.13. 

     

    Section
      1.5. Assumption
      of Assumed Liabilities.
      Subject
      to the conditions set forth in this Agreement, at the Closing, the Seller will
      transfer and assign the Assumed Liabilities to the Purchaser, and the Purchaser
      will assume the Assumed Liabilities from the Seller, all to be effective as
      of
      the Closing. The “Assumed
      Liabilities”
consist
      of:

     

    (a) obligations
      of Seller to be performed after the Closing pursuant to the Assumed Contracts,
      subject to Section 1.6(g) 

     

    (b) the
      Liabilities set forth on Schedule
      1.5(b);
      and

     

    (c) obligations
      of the Seller for which the vehicles described in Section 1.2(a) act as security
      pursuant to a perfected security interest or lien in effect as of the date
      of
      this Agreement.

     

    (d) Liabilities
      of the Seller arising from the assignment of the Assumed Contracts to Purchaser
      without the consent of any other party to such Assumed Contract.

     

    (e) those
      Liabilities of Purchaser to perform warranty work as described in Section
      1.8;

     

    (f) all
      credit card debt owed by Michael Peterson and Leonard Peterson to the extent
      incurred for the benefit of the Seller, in the Ordinary Course of Business
      for
      the Seller, consistent with past practices of the Seller;

     

    (g) recognition
      of all unused accrued vacation time for Retained Employees (as defined in and
      more particularly described in Section 4.13);

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h) accrued
      and unpaid payroll costs to be reimbursed by Purchaser to Seller pursuant to
      Section 1.4(b), to the extent incurred in the Ordinary Course of Business of
      Seller, consistent with past practices of Seller;

     

    (i) all
      Liabilities of the Seller with respect to wages, salaries, bonuses, accrued
      vacation, personal or sick days, benefits and any other compensation package
      incurred by Seller, so long as such Liabilities are reflected on the Balance
      Sheet of the Seller; and 

     

    (j)
      all
      trade payables incurred by the Seller in the Ordinary Course of Business as
      of
      the close of the Business on the day preceding the Closing Date.

    


    Section
      1.6. Excluded
      Liabilities.
      The
      Purchaser will not assume or become liable for any of the following Liabilities
      of the Seller (collectively, the “Excluded
      Liabilities”):

     

    (a) all
      Liabilities relating to any of the Excluded Assets;

     

    (b) all
      Liabilities relating to any director, officer, consultant or other non-employee
      agent of Seller; 

     

    (c) all
      Liabilities relating to the litigation matters set forth, or required to be
      set
      forth, on Schedule
      2.17;

     

    (d) all
      Liabilities relating to the conduct of the Business or the operation of the
      Assets for all periods preceding and including the Closing Date, that are not
      specifically assumed by the Purchaser in Section 1.5;

     

    (e) all
      Taxes
      of, or in respect of, Seller for all taxable periods, whenever incurred, and
      all
      Taxes attributable to or incurred in connection with the Business or the Assets
      for all taxable periods through and including the Closing Date; however, Seller
      shall have no obligation to pay any sales tax imposed upon Purchaser for the
      purchase of the Assets pursuant to this Agreement; 

     

    (f) all
      other
      Liabilities not expressly assumed by the Purchaser pursuant to Section
      1.5.

     

    (g) all
      Liabilities
      of the Seller relating to any Assumed Contract, that arises from any breach
      or
      default by Seller of such Assumed Contract, where such Liability has not been
      specifically assumed by Purchaser pursuant to Section 1.5 above. This exclusion
      of liabilities will not diminish the obligation of Purchaser to perform the
      Warranty Work required to be performed by Purchaser pursuant to Section 1.8
      described as the “Warranty
      Bucket”.
      

     

    (h) those
      Liabilities of Seller to pay for Seller’s Warranty Work as described in Section
      1.8.

     

    Section
      1.7. (Intentionally
      left blank.)

    


    Section
      1.8. Seller’s
      Warranty Work.
      All
      warranty work required on products of Seller relating to Assumed Contracts
      that
      were completed and fully paid prior to Closing are referred to herein as
“Seller’s
      Warranty Work”.
      Seller’s Warranty Work shall be performed by Purchaser’s personnel, and all
      charges for, and the value of, such work shall be calculated utilizing
Purchaser’s
      standard time-and-materials basis
      in
      effect at the time of the work performed. The first $62,500 of Seller Warranty
      Work (“Warranty
      Bucket”)
      shall
      be performed by Purchaser, without reimbursement from Seller. The Purchaser
      shall submit to Seller a statement for all such work, which shall be credited
      against the Warranty Bucket. After the completion of the first $62,500 in Seller
      Warranty Work by Purchaser, all other Seller Warranty Work, exceeding the
      Warranty Bucket, shall be performed by Purchaser and the cost of such work
      (determined upon Purchaser’s then standard time-and-materials basis) shall be
      promptly paid to Purchaser by Seller upon presentation of an invoice to Seller
      for such amount, or at the election of Seller, deducted proportionately from
      the
      then principal balances due of the Seller Notes. Seller shall indemnify
      Purchaser from and against any Liability, Loss, damage, Claim, cost or expense
      arising from Seller’s Warranty Work (save and except for (i) the Seller’s
      Warranty Work that is to be paid from the Warranty Bucket as required herein
      or
      (ii) any Liability, Loss, damage, Claim, cost or expense arising from the
      negligence or malfeasance of the Purchaser). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      1.9. Purchaser
      Warranty Work.
      Any
      warranty work required to be performed for the products of Seller relating
      to
      the Assumed Contracts, that is not included within Seller’s Warranty Work, shall
      be sole responsibility of Purchaser, to be performed and completed at
      Purchaser’s sole cost and expense (“Purchaser’s
      Warranty Work”).
      Purchaser shall indemnify Seller from and against any Liability, Loss, damage,
      Claim, cost or expense arising from Purchaser’s Warranty Work (save and except
      the obligation to perform Seller’s Warranty Work). 

     

    ARTICLE
      II.

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLER

     

    The
      Seller, Michael Peterson and Leonard Peterson jointly and severally represent
      and warrant to the Purchaser that the statements contained in this Article
      II
      are true
      and correct, except as set forth in the Disclosure Schedule attached to this
      Agreement as Exhibit
      B
      (the
“Disclosure
      Schedule”),
      which
      will be arranged to correspond to the numbered subsections contained in this
      Article
      II.

     

    Section
      2.1. Organization.
      The
      Seller is a California corporation, duly organized, validly existing and in
      good
      standing under the laws of the State of California. Seller is duly qualified
      or
      authorized to do business as a foreign corporation, and is in good standing,
      under the laws of each other jurisdiction where Seller is required to be so
      qualified or authorized. Seller has full power and authority to own, lease
      and
      operate its properties and to conduct the Business. Seller
      conducts all of the Business through the corporation described in this
Section
      2.1.

     

    Section
      2.2. Enforceability.
      Seller
      has full power and authority to execute and deliver this Agreement and each
      of
      the other agreements, certificates and instruments to be executed by Seller
      in
      connection with or pursuant to this Agreement (collectively, and together with
      this Agreement, the “Seller
      Documents”),
      to
      perform its respective obligations under the Seller Documents and to consummate
      the transactions contemplated by the Seller Documents, except that the Seller
      claims no power or authorization to assign the Assumed Contracts to the
      Purchaser without the consent of any other party to such Assumed Contracts
      and
      makes no representations or warranties as to the effect of so doing. The
      execution and delivery by Seller of the Seller Documents, the performance by
      Seller of its obligations under the Seller Documents and the consummation by
      Seller of the transactions contemplated by the Seller Documents have been
      authorized by all necessary corporate action.
      This Agreement has been validly executed and delivered by Seller and constitutes
      the legal, valid and binding obligation of Seller enforceable against Seller
      in
      accordance with its terms, excluding any Encumbrance, defect in title to, or
      default or breach of the terms of, the Assumed Contracts that may arise by
      the
      Parties having agreed that Seller shall assign, and the assignment of, the
      Assumed Contracts to Purchaser without having secured the consent, waiver,
      approval, authorization, declaration or filing from, or providing notice to,
      any
      Person regarding the assignment of the Assumed Contracts to Purchaser. As of
      the
      Closing, the other Seller Documents will validly executed and delivered by
      Seller that is a party thereto and, upon such execution and delivery, will
      constitute the legal, valid and binding obligations of Seller enforceable
      against Seller in accordance with their respective terms, excluding any
      Encumbrance, defect in title to, or default or breach of the terms of, the
      Assumed Contracts that may arise by the Parties having agreed that Seller shall
      assign, and the assignment of, the Assumed Contracts to Purchaser without having
      secured the consent, waiver, approval, authorization, declaration or filing
      from, or providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      2.3. No
      Conflicts.
      The
      execution and delivery by Seller of the Seller Documents, the performance by
      Seller of its obligations under the Seller Documents and the consummation by
      Seller of the transactions contemplated by the Seller Documents do not, and
      will
      not,

     

    (a) violate
      any provision of Law or any Permit that would adversely affect, or cause an
      Encumbrance upon: (i) Purchaser’s title to the Assets to be acquired hereunder;
      or (ii) Purchaser’s right, authority or ability to sell, transport or otherwise
      dispose of said Assets, excluding any Encumbrance, defect in title to, or
      default or breach of the terms of, the Assumed Contracts that may arise by
      the
      Parties having agreed that Seller shall assign, and the assignment of, the
      Assumed Contracts to Purchaser without having secured the consent, waiver,
      approval, authorization, declaration or filing from, or providing notice to,
      any
      Person regarding the assignment of the Assumed Contracts to Purchaser;


     

    (b) violate
      any provision of the Charter Documents of Seller;

     

    (c) require
      any consent, waiver, approval, registration, order, action or authorization
      of,
      declaration or filing with or notification to, any Governmental Authority or
      other Person (whether pursuant to a Contract or otherwise), specifically
      excluding any obligation of Seller to secure any consent, waiver, approval,
      authorization, declaration or filing from, or provide notice to, any Person
      regarding the assignment of the Assumed Contracts to Purchaser; 

     

    (d) violate,
      conflict with, constitute a default under or breach any term, condition or
      provision of any Seller Contract or Order (whether with the passage of time,
      the
      giving of notice or otherwise) excluding any obligation of Seller to secure
      any
      consent, waiver, approval, authorization, declaration or filing from, or provide
      notice to, any Person regarding the assignment of the Assumed Contracts to
      Purchaser;

     

    (e) result
      in
      the termination of, give rise to a right of termination or cancellation of
      or
      accelerate the performance required pursuant to any Assumed Contract (whether
      with the passage of time, the giving of notice or otherwise), excluding any
      obligation of Seller to secure any consent, waiver, approval, authorization,
      declaration or filing from, or provide notice to, any Person regarding the
      assignment of the Assumed Contracts to Purchaser; or

     

    (f) result
      in
      the creation of any Encumbrance with respect to any Asset, excluding any
      Encumbrance that may arise by the assignment of the Assumed Contracts to
      Purchaser without having secured the consent, waiver, approval, authorization,
      declaration or filing from, or providing notice to, any Person regarding the
      assignment of the Assumed Contracts to Purchaser.

     

    Section
      2.4. Financial
      Statements.
      The
      Seller will provide to the Purchaser the unaudited balance sheets of the Seller
      as of September 30, 2007 and the related unaudited statements of operations,
      and
      shareholders’ equity for the nine-month period then ended (the “Financial
      Statements”).
      The
      Financial Statements present fairly the financial position of the Seller and
      the
      results of operations as of the dates and for the periods therein specified,
      and
      have been prepared in manner that has been consistently applied throughout
      the
      periods involved, subject, in the case of interim Financial Statements to normal
      year-end adjustments in an amount and of a character not materially inconsistent
      with prior periods. The Financial Statements do not contain any items of a
      special or nonrecurring nature, except as expressly stated therein. The
      Financial Statements have been prepared from the books and records of the
      Seller, which accurately and fairly reflect the financial condition and results
      of operations of the Seller as of the respective dates thereof and for the
      periods indicated.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      2.5. Undisclosed
      Liabilities.
      The
      Seller has no Liabilities other than (a) as set forth or reflected on the
      Balance Sheet; (b) current liabilities incurred in the Ordinary Course of
      Business since the Balance Sheet Date; and (c) liabilities and obligations
      incurred in connection with this Transaction,
      including,
      but not limited to, any Encumbrance, defect in title to, or default or breach
      of
      the terms of, the Assumed Contracts that may arise by the Parties having agreed
      that Seller shall assign, and the assignment of, the Assumed Contracts to
      Purchaser without having secured the consent, waiver, approval, authorization,
      declaration or filing from, or providing notice to, any Person regarding the
      assignment of the Assumed Contracts to Purchaser.

     

    Section
      2.6. Absence
      of Certain Developments.
      Since
      the Balance Sheet Date, the Seller has operated the Business in the Ordinary
      Course of Business, subject to the terms of this Agreement, has incurred no
      Liabilities other than in the Ordinary Course of Business (except for those
      incurred relating to this Agreement) and, except for the Liabilities incurred
      by
      Seller in connection with the transactions contemplated by this Agreement,
      there
      has not been:

     

    (a) any
      Material Adverse Change, or the occurrence of any event that could reasonably
      be
      expected to result in a Material Adverse Change;

     

    (b) any
      change, not disclosed in the Financial Statements, in the accounting methods,
      practices or principles or cash management practices of Seller;

     

    (c) any
      revaluation by Seller of any of its assets, including without limitation the
      write-down or write-off of notes, accounts receivable or inventory, other than
      in the Ordinary Course of Business;

     

    (d) any
      sale,
      assignment, transfer, distribution, mortgage or pledge of any of the properties
      or assets of Seller, except sales of inventory in the Ordinary Course of
      Business, or the placement of any Encumbrance on any of the properties or assets
      of Seller, excluding any Encumbrance, defect in title to, or default or breach
      of the terms of, the Assumed Contracts that may arise by the Parties having
      agreed that Seller shall assign, and the assignment of, the Assumed Contracts
      to
      Purchaser without having secured the consent, waiver, approval, authorization,
      declaration or filing from, or providing notice to, any Person regarding the
      assignment of the Assumed Contracts to Purchaser;

     

    (e) any
      failure to use commercially reasonable efforts to preserve the Business, to
      keep
      available to the Business the services of its key employees and to preserve
      for
      the Business the goodwill of its suppliers, customers and others having business
      relations with it;

     

    (f) except
      as
      set out on Schedule 2.6(j), any breach or default (or event that with notice
      or
      lapse of time would constitute a breach or default), acceleration, termination
      (or threatened termination), modification or cancellation of any Seller Contract
      by any party (including Seller), excluding any Encumbrance, defect in title
      to,
      or default or breach of the terms of, the Assumed Contracts that may arise
      by
      the Parties having agreed that Seller shall assign, and the assignment of,
      the
      Assumed Contracts to Purchaser without having secured the consent, waiver,
      approval, authorization, declaration or filing from, or providing notice to,
      any
      Person regarding the assignment of the Assumed Contracts to
      Purchaser;

     

    (g) any
      contract that was entered into outside the Ordinary Course of Business of the
      Seller, consistent with Seller’s past practices, except for the transactions
      contemplated or necessitated by this Agreement; 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h) except
      as
      set forth on Schedule
      2.6(h),
      any (i)
      increase in the compensation payable or to become payable by Seller to any
      of
      its employees, including without limitation any bonuses; (ii) adoption,
      amendment or increase in the coverage or benefits available under any Employee
      Benefit Plan or Benefit Arrangement or (iii) amendment or execution of any
      employment, deferred compensation, severance, consulting, non-competition,
      employee retention plan or similar agreement to which Seller is a party or
      involving an employee of Seller (other than employment terminable at will
      without penalty);

     

    (i) any
      termination of employment (whether voluntary or involuntary) of, or receipt
      or
      expectation of receipt of any resignation by, any key employee of the Business,
      or any termination of employment (whether voluntary of involuntary) of employees
      of the Business materially in excess of historical attrition in
      personnel;

     

    (j) except
      as
      set forth on Schedule
      2.6(j),
      any
      transaction between Seller and a Related Party;

     

    (k) any
      cancellations or waivers of any claims or rights of the Seller of material
      value;

     

    (l) any
      execution of capital leases by the Seller;

     

    (m) any
      other
      transaction, agreement or commitment entered into or affecting the Business
      or
      the assets of Seller not made in the Ordinary Course of Business, excluding
      this
      Agreement and the transactions required to effectuate this Agreement; or


     

    (n) any
      agreement or understanding to do, or resulting in, any of the
      foregoing.

     

    Section
      2.7. Assets.

     

    (a) Except
      as
      set forth on Schedule
      2.7(a),
      Seller
      has good and marketable title to all of the Assets, free and clear of all
      Encumbrances, excluding any Encumbrance, defect in title to, or default or
      breach in the terms of, the Assumed Contracts that may arise by the Parties
      having agreed that Seller shall assign, and the assignment of, the Assumed
      Contracts to Purchaser without having secured the consent, waiver, approval,
      authorization, declaration or filing from, or providing notice to, any Person
      regarding the assignment of the Assumed Contracts to Purchaser. The execution
      and delivery of the Conveyance Agreements by the Seller at the Closing will
      convey to and vest in the Purchaser good and marketable title to the Assets,
      free and clear of all Encumbrances, excluding (i) any Encumbrance upon the
      Assets arising from the Assumed Liabilities appearing on Schedule
      1.5;
      (ii)
      those items described on Schedule
      2.7(a);
      and
      (iii) any Encumbrance, defect in title to, or default or breach in the terms
      of,
      the Assumed Contracts that may arise by the Parties having agreed that Seller
      shall assign, and the assignment of, the Assumed Contracts to Purchaser without
      having secured the consent, waiver, approval, authorization, declaration or
      filing from, or providing notice to, any Person regarding the assignment of
      the
      Assumed Contracts to Purchaser;

     

    (b) By
      acquiring the Assets as contemplated by this Agreement, Purchaser will be
      acquiring all assets and properties used by the Seller in the conduct of the
      Business and necessary to conduct the Business as presently conducted, other
      than the Excluded Assets. Save and except for liens and security interests
      disclosed to Purchaser on Schedule
      2.7(b),
      no part
      of the Business (and no asset, right or interest related to or employed in
      or
      reasonably necessary for the conduct of the Business) is owned or held by any
      Person other than the Seller. 

     

    (c) The
      Assets are in good condition and repair, ordinary wear and tear excepted, and
      (where applicable) are in good working order and have been properly and
      regularly maintained. THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED,
      INCLUDING, BUT NOT LIMITED TO, NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
      A
      PARTICULAR PURPOSE.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d) The
      Seller does not own, or have any interests in or rights with respect to, any
      real property other than the real property subject to the Leases (the
“Leased
      Properties”).
      With
      respect to the Leased Properties:

     

    (i) The
      Seller has provided to the Purchaser true and correct copies of leases to which
      the Leased Properties are leased to Seller.  Seller
      has received no notice of any pending or threatened condemnation actions or
      special assessments of any nature on the Leased Properties or any part thereof,
      Seller has received no notice of any condemnation actions or special assessments
      being contemplated, and Seller does not have any knowledge of any being
      contemplated. Seller has received no request, written or otherwise, from any
      Governmental Authority with regard to dedication of the Leased Properties or
      any
      part thereof;

     

    (ii) To
      the
      best of Seller’s knowledge, there are no pending or contemplated changes in any
      regulation or private restriction applicable to the Leased Properties or any
      part thereof, or any pending or threatened judicial or administrative action
      by
      adjacent landowners or other Persons or any natural or artificial condition
      adversely affecting the Leased Properties or any part thereof. 

     

    (iii) To
      the
      best of Seller’s knowledge, there is no Legal Proceeding pending or threatened
      against or relating to any portion of the Leased Properties;

     

    (iv) To
      the
      best of Seller’s knowledge, there are no attachments, executions or assignments
      for the benefit of creditors or voluntary or involuntary proceedings in
      bankruptcy or under any other debtor relief Laws contemplated by a pending
      or
      threatened action or suit against the Seller or the Leased
      Properties;

     

    (v) To
      the
      best of Seller’s knowledge, no Person has, or at the Closing Date shall have,
      any right or option to acquire all or any portion of the Leased Properties;
      and

     

    (vi) To
      the
      best of Seller’s knowledge, no portion of the Leased Properties shall be subject
      at the Closing Date to any agreement (written or oral) adversely affecting
      Seller’s right as Lessee, except the Leases.

     

    Section
      2.8. Contracts.

     

    (a) Schedule
      1.2(c)
      contains
      a correct and complete list of each Assumed Contract.

     

    (b) (Intentionally
      left blank.)

     

    (c) Except
      as
      set forth on Schedule
      2.8(c):

     

    (i) Each
      Assumed Contract is a valid and binding agreement of the Seller party thereto
      and the other party to such agreement, is in full force and effect and
      enforceable against each party thereto in accordance with its terms;


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii) There
      has
      been no breach or default by any party (or event that with the passage of time,
      the giving of notice or both would constitute a breach or default) under any
      Assumed Contract;

     

    (iii) The
      Seller has performed all of the obligations required to be performed by it
      under
      each Assumed Contract up to the point such Assumed Contract is being assigned
      and is not in receipt of any notice of termination or written claim of default
      under any such Assumed Contract; 

     

    (iv) No
      party
      to any Assumed Contract has threatened to, or notified Seller of any intention
      to, terminate or materially alter its relationship with the Business as a result
      of this Agreement or the consummation of the transactions contemplated
      hereby;

     

    (v) No
      party
      to an Assumed Contract has notified Seller that it intends to alter its
      relationship with Seller as a result of or in connection with the transactions
      contemplated by this Agreement;

     

    (vi) The
      Seller has previously provided to the Purchaser a true and correct copy of
      all
      written Assumed Contracts, together with all amendments, waivers or other
      changes thereto, and a summary of the terms of all other (non-written) Assumed
      Contracts as in effect on the date of this Agreement;

     

    Excluding
      from Subsections 2.8(c)(i) through (vi) above, any Encumbrance, defect in title
      to, or default or breach in the terms of, the Assumed Contracts that may arise
      by the Parties having agreed that Seller shall assign, and the assignment of,
      the Assumed Contracts to Purchaser without having secured the consent, waiver,
      approval, authorization, declaration or filing from, or providing notice to,
      any
      Person regarding the assignment of the Assumed Contracts to
      Purchaser.

     

    (d) Except
      as
      set forth on Schedule
      2.8(d),
      Seller
      is not a party to, and no Asset of Seller is bound by, any of the following
      types of Contracts:

     

    (i) Contracts
      (including mortgages) pursuant to which any assets of Seller are subject to
      any
      Encumbrance, excluding any Encumbrance, defect in title to, or default or breach
      in the terms of, the Assumed Contracts that may arise by the Parties having
      agreed that Seller shall assign, and the assignment of, the Assumed Contracts
      to
      Purchaser without having secured the consent, waiver, approval, authorization,
      declaration or filing from, or providing notice to, any Person regarding the
      assignment of the Assumed Contracts to Purchaser;

     

    (ii) Contracts
      pursuant to which Seller is obligated to provide indemnification to any Third
      Party;

     

    (iii) Contracts
      (including consent decrees) that impose (or could by their terms impose) any
      material restrictions on Seller with respect to its geographical area of
      operations or scope or type of business;

     

    (iv) Contracts
      between Seller, on the one hand, and any Related Party, on the other hand (other
      than Contracts for employment or consulting services listed on Schedule
      2.8(a)(iii));
      and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (v) Contracts
      not entered into in the Ordinary Course of Business, save and except for those
      Contracts entered into in connection with effectuating the transactions
      contemplated by this Agreement.

     

    Section
      2.9. Accounts
      Receivable.
      All
      accounts receivable of the Seller are reflected in the Balance Sheet or arose
      in
      the Ordinary Course of Business since the Balance Sheet Date. All of such
      accounts receivable (net of any allowance for doubtful accounts reflected in
      the
      Balance Sheet) are fully collectible in the Ordinary Course of Business and
      without recourse to any legal proceeding.

     

    Section
      2.10. Intellectual
      Property.

     

    (a) Extent
      of and Title to Intellectual Property.
      Schedule
      2.10(a)
      contains
      a complete and correct list of all of the Intellectual Property that is or
      has
      been used, held for use or is reasonably necessary for use in the Business
      (the
“Business
      Intellectual Property”).
      The
      Seller possesses and either owns, is licensed under or has the valid right
      to
      use all of the Business Intellectual Property. The Business Intellectual
      Property owned by the Seller (the “Owned
      Intellectual Property”)
      is not
      subject to any outstanding option, license or agreement of any kind, and is
      owned free and clear of all Encumbrances. All Business Intellectual Property
      licensed to Seller (the “Licensed
      Intellectual Property”)
      has
      been licensed pursuant to agreements (the “Licenses”)
      that
      are set forth on Schedule
      2.8(a).
      All
      Business Intellectual Property that is neither Owned Intellectual Property
      nor
      Licensed Intellectual Property is in the public domain.

     

    (b) Registered
      Intellectual Property.
      Schedule
      2.10(b)
      sets
      forth a correct and complete list of all of the following Business Intellectual
      Property as of the date of this Agreement, and indicates whether it is Owned
      Intellectual Property or Licensed Intellectual Property: (a) trademark and
      service mark registrations and applications for registration; (b) patents and
      pending patent applications; (c) copyright registrations and applications for
      registration and (d) tradenames. All of the Business Intellectual Property
      issued by, registered with, or filed with a U.S. or foreign patent, trademark
      or
      copyright office has been duly issued by, registered with or duly filed in
      such
      office, as the case may be, and has been properly processed, maintained and
      renewed in accordance with all applicable provisions of applicable law in the
      applicable country.

     

    (c) No
      Restrictions on Transfer.
      Except
      as set forth on Schedule
      2.10(c),
      to the
      best of Seller’s knowledge, there is no Business Intellectual Property that is
      subject to any outstanding Order, Contract or other Liability restricting in
      any
      manner the use thereof by the Business or the transfer thereof by the
      Seller.

     

    (d) No
      Infringement by Third Parties.
      To the
      best of Seller’s knowledge, there has been no unauthorized use, infringement or
      misappropriation of any Business Intellectual Property by any Person, including
      without limitation any current or former director, officer, employee, consultant
      or other agent of Seller, relating to the Business.

     

    (e) No
      Infringement by the Business.
      To the
      best of Seller’s knowledge, no Person has asserted, or threatened to assert, any
      Claim with respect to the Business Intellectual Property, including any Claim
      of
      ownership of or infringement by the Business Intellectual Property. Seller
      has
      no knowledge of any reasonable basis for any bona fide Claim (i) to the effect
      that the Business as presently conducted infringes, violates or misappropriates
      any Intellectual Property of any other Person; or (ii) challenging the
      ownership, validity, enforceability or effectiveness of any of the Business
      Intellectual Property or any License.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f) Reasonable
      Safeguards Taken.
      The
      Seller has taken reasonable precautions to protect its rights in and to the
      Business Intellectual Property, including maintaining the confidentiality of
      trade secrets, pending patent applications, know-how and other confidential
      Business Intellectual Property. The Seller has not taken, or failed to take,
      any
      action that would preclude or hinder the protection or enforcement of the
      Business Intellectual Property.

     

    (g) No
      Competitive Intellectual Property.
      No
      director, officer, employee, consultant or other agent of Seller owns any rights
      in Intellectual Property that are directly or indirectly competitive with those
      owned or to be used by the Business or derived from or in connection with the
      conduct of the Business.

     

    Section
      2.11. Insurance.
      All of
      the material properties of the Seller are insured for the benefit of the Seller,
      and will be so insured through the Closing Date, in amounts and against risks
      customary in similar businesses for similar properties.

     

    Section
      2.12. Employees.

     

    (a) Schedule
      2.12(a)
      lists
      the name and address of each officer and employee of the Seller and each
      consultant to the Seller and whether or not their employment is terminable
      at
      will. Schedule
      2.12(a)
      also
      sets forth, for each such Person, their date of employment, current job title
      or
      relationship to the Seller, the aggregate annual cash compensation paid to
      such
      person by the Seller, a description of all bonus or benefit plans applicable
      to
      such person and the date and amount of their last increase in
      compensation.

     

    (b) Seller
      is
      not a party to any labor, union or collective bargaining agreement and there
      are
      no labor, union or collective bargaining agreements that pertain to any employee
      of Seller. There is no organizing activity (including any demand for recognition
      or certification proceeding pending with the National Labor Relations Board)
      involving any employees of Seller by any labor organization or group of
      employees presently pending or threatened. No strike, work stoppage, lockout,
      labor grievance or other labor dispute is presently pending or threatened
      against the Seller, and no such strike, work stoppage, lockout, labor grievance
      or other labor dispute has occurred since January 1, 2002.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) (Intentionally
      left blank.)
      

     

    (d) Seller
      does not have any oral or written agreements or understandings to provide their
      employees pay raises, bonuses, stock options or other compensation
      benefits.

     

    (e) Seller
      does not have any employment agreements with their employees.

     

    Section
      2.13. Employee
      Benefits.

     

    (a) Schedule
      2.13(a)
      sets
      forth all material, written “employee benefit plans,” as defined in Section 3(3)
      of ERISA, maintained by the Seller or to which Seller contributed or is
      obligated to contribute for current or former employees (the “Employee
      Benefit Plans”).
      Schedule
      2.13(a)
      lists
      each Seller Contract providing for employment or severance, each plan or
      arrangement providing for insurance coverage, severance, termination or similar
      coverage and all written compensation policies and practices maintained by
      the
      Seller covering any employee or former employee that is not an Employee Benefit
      Plan (a “Benefit
      Arrangement”).

     

    (b) True,
      correct and complete copies of the following documents, with respect to each
      Employee Benefit Plan, have been made available or delivered to the Purchaser
      by
      the Seller: (i) any plans and related trust documents, and amendments thereto;
      (ii) the most recent Form 5500; (iii) the last Internal Revenue Service
      determination letter, if applicable; (iv) summary plan descriptions and (v)
      the
      last actuarial valuation if the plan is a “defined benefit plan,” as defined in
      Section 3(35) of ERISA.

     

    (c) The
      Employee Benefit Plans intended to qualify under Section 401 of the Code and
      the
      trusts maintained pursuant thereto are exempt from federal income taxation
      under
      Section 501 of the Code, and nothing has occurred with respect to the operation
      of the Employee Benefit Plans that could cause the loss of such qualification
      or
      exemption or the imposition of any liability, penalty or tax under ERISA or
      the
      Code.

     

    (d) To
      the
      best of Seller’s knowledge, the Employee Benefit Plans have been operated and
      maintained in accordance with their terms and with all provisions of the Code,
      ERISA (including the rules and regulations thereunder) and other
      Laws.

     

    (e) Each
      Employee Benefit Plan and Benefit Arrangement could be terminated as of the
      Closing Date with no Liability to the Business or the Purchaser. 

     

    (f) 
      No
      Employee Benefit Plan is a multiemployer plan, as defined in Section 3(37)
      of
      ERISA (a “Multiemployer
      Plan”).

     

    (g) The
      Seller does not maintain and has no obligation to contribute to (or any other
      liability with respect to) any funded or unfunded Employee Benefit Plan that
      provides post-retirement health, accident or life insurance benefits to current
      or former employees, current or former independent contractors, current or
      future retirees, their spouses, dependents or beneficiaries, other than limited
      health benefits required to be provided to former employees, their spouses
      and
      other dependents under Code Section 4980B.

     

    (h) As
      of the
      Closing Date, none of the employee pension plans (as defined in Section 3(2)
      of
      ERISA) of Seller (“Employee
      Pension Plans”)
      have
      incurred any “accumulated funding deficiency” as such term is defined in Section
      302 of ERISA or Section 412 of the Code, whether or not waived, and no
      proceeding by the PBGC to terminate any such Employee Pension Plan has been
      instituted or threatened. Seller has not incurred any liability to the PBGC,
      the
      Internal Revenue Service, the Department of Labor, any other governmental
      agency, any Multiemployer Plan or any Person with respect to any Employee
      Benefit Plan currently or previously maintained by members of the “controlled
      group of companies,” as such term is defined in Section 414 of the Code, that
      includes Seller that has not been satisfied in full, and no condition exists
      that presents a material risk to Seller of incurring such a liability, other
      than liability for premiums due the PBGC.

     

    Section
      2.14. Compliance
      with Law.
      The
      Seller (a) is, and at all times has been, in compliance with all regulations
      with respect to manufacturing and selling steel products, and (b) excluding
      any
      Liability, Encumbrance, defect in title to, or default or breach in the terms
      of, the Assumed Contracts that may arise by the Parties having agreed that
      Seller shall assign, and the assignment of, the Assumed Contracts to Purchaser
      without having secured the consent, waiver, approval, authorization, declaration
      or filing from, or providing notice to, any Person regarding the assignment
      of
      the Assumed Contracts to Purchaser, has otherwise complied with, in all material
      respects, all other Laws relating to the conduct of the Business, including
      without limitation all Laws relating to occupational health and safety, product
      quality and safety and employment and labor matters, where a violation of such
      regulations or Laws may affect, limit or restrict, in any way, or create any
      encumbrance upon: (i) the title to the Assets acquired by Purchaser hereunder,
      or (ii) Purchaser’s right, authority or ability to sell, transfer, transport,
      convey or otherwise dispose of the Assets acquired hereunder

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      2.15. Permits.
      The
      Seller has all Permits necessary for the conduct of the Business as currently
      conducted, all such Permits are in full force and effect and the Seller is
      in
      compliance with the requirements of all such Permits. No loss or expiration
      of
      any Permit is pending, threatened or reasonably foreseeable, other than
      termination of Permits upon consummation of the transaction contemplated in
      this
      Agreement.

     

    Section
      2.16. Environmental
      Matters.
      Except
      as set forth on Schedule
      2.16:

     

    (a) (Intentionally
      left blank)

     

    (b) Absence
      of Certain Hazardous Materials.
      None of
      the real property leased or used in the Business contains any Hazardous
      Materials in amounts exceeding the levels permitted by Environmental Laws.
      There
      is no asbestos present in any of the Assets or in any of the real property
      owned, leased or used in the Business by the Seller, and no asbestos has been
      removed from any of the Assets or any such real property.

     

    (c) No
      Claims or Proceedings.
      The
      Seller is not subject to any pending Claim or Legal Proceeding investigating,
      asserting or alleging the violation of any Environmental Law. Neither the
      Seller, nor any of its respective properties and assets, are subject to any
      Liability relating to any Claim or Legal Proceeding, any settlement thereof
      or
      any Order asserted, arising under or relating to any Environmental Law. There
      are no environmental conditions regarding the Business or the assets of the
      Seller that could reasonably be anticipated to (i) form the basis of any Claim
      against the Business, the Seller’s assets or Seller, or (ii) cause the Business
      or the Seller’s assets to be subject to any restriction on ownership, occupancy,
      use or transfer under any Environmental Law.

     

    (d) No
      Notices or Threats of Liability.
      Seller
      has not received any notice, demand letter or request for information from
      any
      Governmental Authority or other Person indicating, asserting or alleging that
      Seller is, may be, has or may have violated any Environmental Law, may be liable
      under any Environmental Law or may be a potentially responsible party at any
      Superfund site. No Governmental Authority or other Person has threatened to
      initiate any Claim, Legal Proceeding or investigation relating to the violation
      or possible violation of any Environmental Law by the Seller.

     

    (e) Environmental
      Reports.
      No
      reports have been filed, or are required to be filed, by Seller relating to
      the
      Business or any of its properties or assets, concerning the release of any
      Hazardous Material or the threatened or actual violation of any Environmental
      Law. All environmental investigations, studies, audits, tests, reviews and
      other
      analyses regarding compliance or noncompliance with any Environmental Law by
      the
      Seller, the Business or the real property owned, leased or used in the Business
      by the Seller have been delivered to the Purchaser prior to the date
      hereof.

     

    Section
      2.17. Legal
      Proceedings.
      To the
      best of Seller’s knowledge, there are no Legal Proceedings pending or threatened
      that question the validity of this Agreement or any action taken or to be taken
      by the Seller in connection with the consummation of the transactions
      contemplated by this Agreement. Schedule
      2.17
      sets
      forth a true and correct list of all Legal Proceedings pending or, as of the
      date of this Agreement, or to the best of Seller’s knowledge, threatened against
      or affecting Seller, the Business or any of the Assets, whether at law or in
      equity. None of the Seller, the Business and the Assets are subject to or bound
      by any Order currently in effect.

     

    Section
      2.18. Taxes.

     

    (a) Seller
      has (i) duly and timely filed (or there has been filed on its behalf) with
      the
      appropriate taxing authorities all Tax Returns required to be filed by it and
      (ii) timely paid (or there has been paid on its behalf) all Taxes due or claimed
      to be due from it by any taxing authority. There are no liens for Taxes upon
      the
      assets or properties of Seller except for statutory liens for current Taxes
      not
      yet due.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) All
      Tax
      Returns previously prepared are correct and complete in all material respects.
      

     

    (c) Seller
      has complied in all material respects with all applicable laws, rules and
      regulations relating to the payment and withholding of Taxes (including, without
      limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the
      Code
      or similar provisions under any foreign laws) and have, within the time and
      manner prescribed by law, withheld and paid over to the proper Governmental
      Authorities all amounts required to be withheld and paid over under all
      applicable laws.

     

    (d) No
      federal, state, local or foreign audits or other administrative proceedings
      or
      court proceedings (“Audits”)
      exist
      or have been initiated with regard to any Taxes or Tax Returns of Seller, and
      Seller has not received any notice that such an Audit is pending or threatened
      with respect to any Taxes due from or with respect to Seller or any Tax Return
      filed by or with respect to Seller.

     

    Section
      2.19. Related
      Party Transactions.
      Except
      as set forth on Schedule
      2.19,
      there
      are no inter-company receivables or payables between Seller, on the one hand,
      and any Related Party, on the other hand, except as reflected in the Financial
      Statements.

     

    Section
      2.20. Assumed
      Names.
      Schedule
      2.20
      sets
      forth a list of all assumed names under which Seller operates any portion of
      the
      Business and all jurisdictions in which any of the assumed names are
      registered.

     

    Section
      2.21. Subsidiaries
      and Investments.
      The
      Seller does not own, directly or indirectly, any stock, partnership interest
      or
      joint venture interest in, or any security or debt or equity interest issued
      by,
      any Person, or any option or right to acquire any of the foregoing.

     

    Section
      2.22. Brokers’
      Fees.
      The
      Seller has no liability or obligation to pay any fees or commissions to any
      broker, finder or agent with respect to the transactions contemplated by this
      Agreement

     

    Section
      2.23. No
      Misrepresentations.
      The
      representations, warranties and statements made by the Seller in or pursuant
      to
      this Agreement are true, complete and correct in all material respects and
      do
      not contain any untrue statement of a material fact or omit to state any
      material fact necessary to make any such representation, warranty or statement,
      under the circumstances in which it is made, not misleading. The Seller has
      disclosed to the Purchaser all facts and information material to the proposed
      purchase of the Assets hereunder that is known to the Seller.

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

    The
      Purchaser, Argyle and ISI jointly and severally represent and warrant to the
      Seller that:

     

    Section
      3.1. Organization.
      The
      Purchaser is a corporation, duly organized, validly existing and in good
      standing under the laws of the State of Delaware. The Purchaser is duly
      qualified or authorized to do business as a foreign corporation, and is in
      good
      standing, under the laws of each other jurisdiction where the failure to be
      so
      qualified would have a Material Adverse Effect on the Purchaser. The Purchaser
      has full corporate power and authority to own, lease and operate its properties
      and to conduct its business as presently conducted.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      3.2. Enforceability.
      The
      Purchaser has full corporate power and authority to execute and deliver this
      Agreement and each of the other agreements, certificates and instruments to
      be
      executed by the Purchaser in connection with or pursuant to this Agreement
      (collectively, and together with this Agreement, the “Purchaser
      Documents”),
      to
      perform its obligations under the Purchaser Documents and to consummate the
      transactions contemplated by this Agreement. The execution and delivery by
      the
      Purchaser of the Purchaser Documents, the performance by the Purchaser of its
      obligations under the Purchaser Documents and the consummation by the Purchaser
      of the transactions contemplated by the Purchaser Documents have been duly
      authorized by all necessary corporate action. This Agreement has been duly
      and
      validly executed and delivered by the Purchaser and constitutes the legal,
      valid
      and binding obligation of the Purchaser enforceable against the Purchaser in
      accordance with its terms. As of the Closing, the other Purchaser Documents
      will
      be duly and validly executed and delivered by the Purchaser and, upon such
      execution and delivery, will constitute the legal, valid and binding obligations
      of the Purchaser enforceable against the Purchaser in accordance with their
      respective terms.

     

    Section
      3.3. No
      Conflicts.
      The
      execution and delivery by the Purchaser of the Purchaser Documents, the
      performance by the Purchaser of its obligations under the Purchaser Documents
      and the consummation by the Purchaser of the transactions contemplated by the
      Purchaser Documents do not, and will not, (a) violate any provision of Law,
      (b)
      violate any provision of the Charter Documents of the Purchaser or (c) require
      any consent, waiver, approval or authorization of, declaration or filing with
      or
      notification to any Governmental Authority or other Person (whether pursuant
      to
      a Contract or otherwise), other than a consent, waiver, approval, authorization,
      declaration, filing or notification that has been obtained or made prior to
      the
      execution and delivery by the Purchaser of this Agreement.

     

    Section
      3.4. Legal
      Proceedings.
      There
      are no Legal Proceedings pending or threatened that question the validity of
      this Agreement or any action taken or to be taken by the Purchaser in connection
      with the consummation of the transactions contemplated by this
      Agreement.

     

    Section
      3.5. No
      Misrepresentations.
      The
      representations, warranties and statements made by the Purchaser in or pursuant
      to this Agreement are true, complete and correct in all material respects and
      do
      not contain any untrue statement of a material fact or omit to state any
      material fact necessary to make any such representation, warranty or statement,
      under the circumstances in which it is made, not misleading. The Purchaser
      has
      disclosed to the Seller all facts and information material to the proposed
      purchase of the Assets hereunder that is known to the Purchaser.

     

    Section
      3.6. Steel
      Requirements.
      Commencing on and after the Closing Date, Purchaser shall use commercially
      reasonable efforts to purchase its steel products requirements from the
      Business, at least in such volume and upon such terms that are consistent with
      Purchaser’s past practices with Seller.

     

    ARTICLE
      IV.

    COVENANTS

     

    Section
      4.1. Conduct
      of the Business Pending the Closing.
      Except
      as otherwise contemplated by this Agreement (including but not limited to the
      transactions necessitated by this Agreement) or with the prior written consent
      of the Purchaser, from the date hereof until the Closing Date, the Seller will
      (and will cause each of their respective Related Parties, to the extent that
      they are engaged in the Business, to):

     

    (a) operate
      the Business in the Ordinary Course of Business to the best of their ability
      and
      not engage in any transaction outside of the Ordinary Course of
      Business;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) not
      cause
      the Business to expend, distribute or pay any amount that is not consistent
      with
      the past practices of Seller;

     

    (c) provide
      the Purchaser with unaudited balance sheets of the Seller as of the last day
      of
      each month between the Effective Date and the Closing, and the related unaudited
      statements of operations, cash flows and shareholders’ equity for the
      year-to-date period then ended, no later than thirty (30) days after the end
      of
      each such month;

     

    (d) use
      commercially reasonable efforts to preserve the Business, to keep available
      the
      services of key employees and to preserve for the Business the goodwill of
      its
      suppliers, customers and others having business relations with the
      Seller;

     

    (e) maintain
      proper and adequate staffing levels in accordance with historical methods of
      operation;

     

    (f) maintain
      product prices at levels that are consistent with the past practices of
      Seller;

     

    (g) maintain
      the books and records of the Seller in the usual, regular and ordinary
      manner;

     

    (h) maintain
      in full force and effect all Permits and not sell, transfer, license or
      otherwise dispose of any material rights or interests under any
      Permits;

     

    (i) operate
      the Business in compliance with all applicable Permits and Laws, the violation
      of which would affect, limit or restrict, in any way, or create any encumbrance
      upon: (i) the title to the Assets acquired by Purchaser hereunder, or (ii)
      Purchaser’s right, authority or ability to sell, transfer, transport, convey or
      otherwise dispose of the Assets acquired hereunder, excluding any Liability,
      Encumbrance, defect in title to, or default or breach in the terms of, the
      Assumed Contracts that may arise by the Parties having agreed that Seller shall
      assign, and the assignment of, the Assumed Contracts to Purchaser without having
      secured the consent, waiver, approval, authorization, declaration or filing
      from, or providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser;

     

    (j) keep
      all
      of the Assets of insurable character insured consistent with past
      practice;

     

    (k) consult
      with the Purchaser regarding all material developments, transactions and
      proposals relating to the Business or the Seller;

     

    (l) promptly
      notify the Purchaser of: (i) any Material Adverse Change; (ii) any purchase
      of
      inventory that is not consistent with the usual course of business of Seller
      in
      light of it past practices; (iii) any theft, condemnation or eminent domain
      proceeding or material damage, destruction or casualty loss affecting any asset
      of the Seller, whether or not covered by insurance; (iv) any breach or default
      (or event that with notice or lapse of time would constitute a breach or
      default), acceleration, termination (or threatened termination), modification
      or
      cancellation of any Seller Contract by any party (including by
      Seller), excluding
      any Encumbrance, defect in title to, or default or breach in the terms of,
      the
      Assumed Contracts that may arise by the Parties having agreed that Seller shall
      assign, and the assignment of, the Assumed Contracts to Purchaser without having
      secured the consent, waiver, approval, authorization, declaration or filing
      from, or providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser; (v) the termination of employment (whether voluntary
      or
      involuntary) of any officer or key employee of the Business or the termination
      of employment (whether voluntary of involuntary) of employees of the Business
      materially in excess of historical attrition in personnel; (vi) any Legal
      Proceeding commenced by or against Seller; and (vii) any Legal Proceeding
      commenced, or threatened against, Seller relating to the transactions
      contemplated by this Agreement insofar as Seller has knowledge of
      same;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (m) not
      enter
      into any Contract that is outside the usual course of business of Seller in
      light of Seller’s past practices;

     

    (n) not
      enter
      into, modify or terminate (other than by reason of the expiration thereof)
      any
      labor or collective bargaining agreement or, through negotiation or otherwise,
      make any commitment or incur any Liability to any labor organization with
      respect to the Seller;

     

    (o) not
      incur
      or become subject to, or agree to incur or become subject to, any Liability
      except (i) normal trade or business obligations (including Contracts) incurred
      in the Ordinary Course of Business and (ii) obligations under Seller Contracts
      in effect on the date hereof, excluding
      any Liability, Encumbrance, defect in title to, or default or breach in the
      terms of, the Assumed Contracts that may arise by the Parties having agreed
      that
      Seller shall assign, and the assignment of, the Assumed Contracts to Purchaser
      without having secured the consent, waiver, approval, authorization, declaration
      or filing from, or providing notice to, any Person regarding the assignment
      of
      the Assumed Contracts to Purchaser;

     

    (p) not,
      without fair consideration, cancel or compromise any material Liability or
      Claim
      or waive or release any material right related to the Business or the
      Assets;

     

    (q) not
      breach or default (or take any action that with notice or lapse of time would
      constitute a breach or default), accelerate, terminate (or threaten
      termination), cancel or amend any Seller Contract, excluding any Encumbrance,
      defect in title to, or default or breach in the terms of, the Assumed Contracts
      that may arise by the Parties having agreed that Seller shall assign, and the
      assignment of, the Assumed Contracts to Purchaser without having secured the
      consent, waiver, approval, authorization, declaration or filing from, or
      providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser;

     

    (r) not
      change accounting principles or methods or cash management practices (including
      the collection of receivables, payment of payables, maintenance of inventory
      control and pricing and credit practices), except as required by law or as
      a
      result of any mandatory change in accounting standards;

     

    (s) expense
      (and not capitalize) all purchases of equipment, supplies and fixtures (except
      where the size of the purchase requires it to be capitalized consistent with
      past practices and notice of such treatment is provided to the Purchaser prior
      to such purchase);

     

    (t) not
      make
      any Tax election or settle or compromise any Tax liability;

     

    (u) except
      as
      set forth on Schedule
      4.1(u),
      not
      make any loans, advances or capital contributions to, or investments in, any
      other Person;

     

    (v) except
      as
      set forth on Schedule
      4.1(v),
      not
      engage in any transactions with any Related Party;

     

    (w) not
      increase the aggregate compensation payable or to become payable to any employee
      or consultant by more than three percent (3%) per year;

     

    (x) not
      (i)
      increase the coverage or benefits available under (or create any new or
      otherwise amend) any Employee Benefit Plan or Benefit Arrangement or (ii) enter
      into any employment, deferred compensation, severance, consulting,
      non-competition, employee retention plan or similar agreement (or amend any
      such
      existing plan or agreement) involving a director, officer or employee of Seller
      in the capacity of director, officer or employee of Seller (other than
      employment terminable at will without penalty or as required to satisfy the
      condition set forth in Section
      5.7);

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (y) not
      terminate the employment of any officer or key employee of the Business or
      terminate the employment of employees of the Business materially in excess
      of
      historical attrition in personnel;

     

    (z) not
      subject any of the Assets to any Encumbrance, excluding any Encumbrance upon
      the
      Assets that may arise by the Parties having agreed that Seller shall assign,
      and
      the assignment of, the Assumed Contracts to Purchaser without having secured
      the
      consent, waiver, approval, authorization, declaration or filing from, or
      providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser;

     

    (aa) Except
      at
      set forth on Schedule
      4.1(aa),
      not
      make any payment or transfer of assets (including without limitation any
      repayment of indebtedness) of Seller to or for the benefit of any Related Party,
      other than compensation and expense reimbursements paid in the Ordinary Course
      of Business;

     

    (bb) not
      transfer, issue, sell or dispose of shares of capital stock or other securities
      of Seller or grant options, warrants, calls or other rights to purchase or
      otherwise acquire such capital stock or other securities;

     

    (cc) not
      consolidate with, or merge with or into, any Person;

     

    (dd) Except
      at
      set forth on Schedule
      4.1(dd),
      not
      acquire (except for purchases of inventory in the Ordinary Course of Business)
      any assets and not sell, assign, transfer, convey, lease or otherwise dispose
      of
      any of the Assets, whether or not reflected in the Financial Statements (except
      for sales of inventory for fair consideration in the Ordinary Course of Business
      or in transactions as contemplated by this Agreement);

     

    (ee) excluding
      any Encumbrance, defect in title to, or default or breach in the terms of,
      the
      Assumed Contracts that may arise by the Parties having agreed that Seller shall
      assign, and the assignment of, the Assumed Contracts to Purchaser without having
      secured the consent, waiver, approval, authorization, declaration or filing
      from, or providing notice to, any Person regarding the assignment of the Assumed
      Contracts to Purchaser, not take any action that would cause any representation
      or warranty set forth in Article
      II
      to be
      untrue and incorrect as of the date when made or (except in the case of
      representations and warranties made as of a specific date) as of any future
      date; and

     

    (ff) not
      agree
      to (i) do anything prohibited by this Section
      4.1
      or (ii)
      refrain from doing anything required by this Section
      4.1.

     

    Section
      4.2. Acquisition
      Proposals.
      The
      Seller will not (and will not permit any of their respective Related Parties,
      agents or representatives to), directly or indirectly, initiate, solicit or
      encourage any third party to make, or facilitate (including by the provision
      of
      information regarding the Seller or the Business), entertain, discuss or
      negotiate, or endorse, accept or enter into any agreement with respect to,
      any
      proposal for an Acquisition. The Seller will promptly notify the Purchaser
      of
      all relevant terms of any inquiry or proposal received by them or any Related
      Party, or any of their agents or representatives relating to an Acquisition
      and,
      if such inquiry or proposal is in writing, the Seller will promptly deliver
      a
      copy of such inquiry or proposal to the Purchaser.

     

    Section
      4.3. Cooperation
      to Effect Closing.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a) Affirmative
      Covenant.
      The
      Seller and the Purchaser will each cooperate and use its respective commercially
      reasonable efforts to fulfill the conditions precedent to the obligations of
      the
      other parties to effect the transactions contemplated by this Agreement.
      However, it is agreed that Seller shall not seek or obtain any consent, waiver,
      approval, authorization, declaration or filing from, or provide notice to,
      any
      Person regarding the assignment of the Assumed Contracts to Purchaser. Each
      party will promptly notify the other upon its discovery or determination that
      any consent from a Governmental Authority is required for the consummation
      of
      the transactions contemplated by this Agreement.

     

    (b) Negative
      Covenant.
      The
      Seller and the Purchaser each agree not to take any action that would cause
      the
      conditions precedent to the obligations of the other party to effect the
      transactions contemplated by this Agreement not to be fulfilled, including
      without limitation by taking or causing to be taken any action that would cause
      the representations and warranties set forth in this Agreement not to be true
      and correct as of the Closing (except in the case of representations and
      warranties made as of a specific date).

     

    Section
      4.4. Access
      to Information.
      Prior
      to the Closing Date, the Purchaser will be entitled, through its authorized
      officers, employees and representatives (including, without limitation, its
      legal counsel, accountants, investment bankers and other representatives)
      (collectively, the “Purchaser
      Representatives”),
      to
      (a) have reasonable access to the Seller’s directors, officers, employees,
      agents, assets and properties and all relevant books, records and documents
      of
      or relating to the Business and the Assets, (b) such information, financial
      records and other documents relating to the Seller and the Business as any
      Purchaser Representative may reasonably request, (c) make extracts and copies
      of
      any such books, records, documents and information and (d) have reasonable
      access to the Seller’s accountants, auditors, customers and suppliers for
      consultation or verification of any information. The Purchaser’s investigation
      and examination will be conducted during regular business hours, under
      reasonable circumstances and upon reasonable prior notice to the Seller. The
      Purchaser will not contact, directly or indirectly, any employee, customer
      or
      vendor of the Seller to discuss the transactions contemplated by this Agreement,
      or any other subject related thereto, without the prior written consent of
      Seller, which consent will not be unreasonably withheld, delayed or conditioned.
      At a time (within the thirty (30) days immediately preceding the Closing) and
      place mutually agreeable to the Purchaser and the Seller, the Seller will
      arrange for face-to-face meetings between the Purchaser and senior employees
      of
      the Seller, and for group meetings between the Purchaser and other employees
      of
      the Seller, for the purpose of introducing such employees to the Purchaser.
      The
      Seller will use commercially reasonable efforts to cause all such Persons to
      cooperate with the Purchaser Representatives in such investigation and
      examination. No disclosure by the Seller whatsoever during any investigation
      by
      the Purchaser will cure any breach of any warranty or representation of the
      Seller set forth in this Agreement.

     

    Section
      4.5. Confidentiality.
      From
      and after the Closing, the Seller will, and will cause each of their Related
      Parties (over whom they have control), agents and representatives to, (a)
      maintain the confidentiality of the Business Information, using procedures
      no
      less rigorous than those used to protect and preserve the confidentiality of
      their own proprietary information and (b) not, directly or indirectly, (i)
      transfer or disclose any Business Information to any Third Party; (ii) use
      any
      Business Information adverse to the Purchaser’s interest; or (iii) take any
      other action with respect to the Business Information that is inconsistent
      with
      the confidential and proprietary nature thereof. 

     

    Section
      4.6. Public
      Announcements.
      None of
      the Seller, the Purchaser or their respective Related Parties (over whom they
      have control), agents and representatives will issue any press release or public
      announcement concerning this Agreement or the transactions contemplated by
      this
      Agreement without obtaining the prior written approval of the other parties
      to
      this Agreement, unless otherwise required by Law, including any public
      disclosure which counsel advises should be made in order to comply with Law.
      Prior to making any such public disclosure, the disclosing parties will give
      the
      other parties a copy of the proposed disclosure and reasonable opportunity
      to
      comment on the same.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      4.7. Name
      Change.
      Within
      ten (10) Business Days following the Closing Date, the Seller will take all
      necessary action to remove any reference to the names “Peterson” or “Peterson
      Detention” (or any similar name) from its legal name or any assumed name or
      other name in which it conducts any business. From and after the Closing, the
      Seller will not use, and will prohibit each of their Related Parties from using,
      any legal name, assumed name or other name in which they conduct any business
      that contains the name “Peterson Detention” or “Peterson” (or any similar
      name).

     

    Section
      4.8. Further
      Assurances.
      At or
      following the Closing, and without further consideration, the Seller will
      execute and deliver to the Purchaser such further instruments of conveyance
      and
      transfer as the Purchaser may reasonably request in order to more effectively
      convey and transfer the Assets to the Purchaser and to put the Purchaser in
      operational control of the Business, or for aiding, assisting, collecting and
      reducing to possession any of the Assets or exercising any rights with respect
      thereto. Each party to this Agreement agrees to execute any and all documents
      and to perform such other acts as may be necessary or expedient to further
      the
      purposes of this Agreement and the transactions contemplated
      hereby.

     

    Section
      4.9. Consent
      to Assignment of Assumed Contracts Not Required.
      The
      Purchaser agrees that the Seller shall not request, seek or secure any consents
      or waivers, and assumes the Liabilities, if any, for not securing same
      (including but not limited to the risk that any Assumed Contract may be
      terminated for not securing any such consents or waivers) from any Person
      regarding the assignment of the Assumed Contracts (save and except for the
      Leases). The Purchaser specifically waives any right to require the Seller
      to
      secure such consents or waivers. However, the Seller will:

     

    (a) use
      their
      commercially reasonable efforts to cooperate with the Purchaser in any
      arrangements designed to provide the benefits of such Assumed Contracts
      (including, without limitation, the right to receive all amounts owing to Seller
      thereunder) to the Purchaser; and

     

    (b) use
      their
      commercially reasonable efforts to enforce, at the request of the Purchaser
      and
      at the expense (including but not limited to all collection expenses, reasonable
      attorneys’ fees and costs, whether an action is filed or not) and for the
      account of the Purchaser, any and all rights of the Seller arising from such
      Assumed Contracts against such issuer or grantor thereof or the other party
      or
      parties thereto (including the right to elect to terminate such Assumed Contract
      in accordance with the terms thereof) upon the written request of the
      Purchaser.

     

    Section
      4.10. Assistance
      with Permits and Filings.
      The
      Seller will furnish the Purchaser with all information concerning the Seller
      or
      the Business that is required for inclusion in any application or filing made
      by
      the Purchaser to any Governmental Authority in connection with the transactions
      contemplated by this Agreement. The Seller will use commercially reasonable
      efforts to assist the Purchaser in obtaining new Permits that the Purchaser
      will
      require in connection with the continued operation of the Business and the
      Assets after the Closing. 

     

    Section
      4.11. Adjustment
      of Certain Financial Terms.
      

     

    (a) (Intentionally
      left blank.)

     

    (b) Final
      Closing Financials.
      As
      promptly as practicable following December 31, 2007, the Purchaser shall engage
      a certified public accounting firm (the “Auditor”)
      who
      shall prepare annual audited financial statements of the Seller for the 12
      month
      period ended on December 31, 2007. Such financial statements (the “2007
      Financials”)
      shall
      satisfy the Audit Standards. In the course of preparing the 2007 Financials,
      the
      Auditor will also determine: the amount of annual Sales of the Seller, for
      the
      year ended December 31, 2007 (the “2007
      Sales”).
      The
      Auditor will also make a determination of the amount and specific identity
      of
      all accounts receivable of Seller that were sold to Purchaser on the Closing
      Date (“2007
      Accounts Receivable”).
      Auditor shall provide the Purchaser and the Seller Representative with a true
      and correct copy of the 2007 Financials and all other calculations and
      determinations required to be completed by the Purchaser in the Section 4.11.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) Post
      Closing Working Capital Adjustment.
      As
      promptly as practicable following the completion and receipt of the 2007
      Financials, the Auditor will determine the Working Capital of the Seller on
      the
      Closing Date (the “Closing
      Working Capital”).
      The
      Auditor will then calculate the adjustment, if any, to the Promissory Notes
      required herein and shall report such adjustment to Purchaser and the Seller
      Representative. If the Closing Working Capital is less than $145,000, the
      principal amount of the Promissory Notes shall be automatically reduced (pro
      rata) by the difference between $145,000 and the Closing Working Capital. If
      the
      Closing Working Capital was greater than $145,000, there will be no adjustment
      to the Promissory Notes.

     

    (d) (Intentionally
      left blank.)

    


    (e) Sales
      Adjustments.
      As
      promptly as practicable following December 31, 2008, the Parties will determine
      the amount of
      Sales
      of the Business acquired from Seller, for the year ended December 31, 2008
      (the
“2008
      Sales”).
      If
      the
      Parties cannot agree upon said amount, within 10 days after presentation of
      such
      determination by one Party to the other, the Auditor will determine the amount
      of 2008 Sales.
      If the
      2008 Sales are less than 75% of 2007 Sales, the Promissory Notes shall be
      reduced (pro rata) by the difference between the 2007 Sales and the 2008 Sales.
      If the 2008 Sales are at least 75% of 2007 Sales, the Promissory Notes shall
      not
      be adjusted in respect of 2008 Sales.

     

    


    (f) (Intentionally
      left blank.)

    


    (g) A/R
      Adjustment.
      As
      promptly as practicable following December 31, 2008, the Parties will determine
      the amount of 2007 Accounts Receivable that were collected during the 12 month
      period following the Closing (the “2007
      A/R Collections”).
      The
      sum resulting by deducting the 2007 A/R Collections from the 2007 Accounts
      Receivable is the “A/R Adjustment.” If the Parties cannot agree upon said
      amount, within 10 days after presentation of such determination by one Party
      to
      the other, the Auditor will determine the amount of the A/R Adjustment. If
      the
      A/R Adjustment is equal to, or less than, $51,000, no adjustment shall be made
      to the Promissory Notes pursuant to the subsection 4.11(g). If the A/R
      Adjustment is greater than $51.000, the then outstanding principal balance
      of
      the Promissory Notes shall be automatically reduced pro-rata by the full amount
      of the A/R Adjustment and the remaining uncollected 2007 Accounts Receivable
      shall be assigned to the Seller Representative. Notwithstanding anything to
      the
      contrary in the foregoing, the Promissory Notes shall not be reduced by any
      amounts of uncollected 2007 Accounts Receivable that are uncollected from a
      party solely due to the underlying Assumed Contract being assigned with such
      party’s consent.

     

    (h) The
      determinations made by the Auditor pursuant to this Section 4.11 shall be
      binding upon the Parties in all respects. 

    


    Section
      4.12. Supplemental
      Disclosure.
      No
      later
      than two days prior to the execution of this Agreement, Seller will deliver
      to
      Purchaser amended and updated Schedules to this Agreement to reflect any matter
      that arises or is discovered after the date hereof, so that each Schedule is
      correct and complete as of the Closing Date (the “Supplemental
      Disclosure”).
      For
      purposes of determining whether a breach exists with respect to any of the
      representations and warranties set forth in this Agreement, any such
      Supplemental Disclosure will not be deemed to have been disclosed to the
      Purchaser unless the Purchaser otherwise expressly consents in writing;
provided,
      however,
      that
      the Purchaser’s sole remedy for such a breach shall be to not consummate the
      transactions contemplated by this Agreement and to terminate this Agreement
      in
      accordance with the provisions of Section
      7.1.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      4.13. Employees.
      Prior to
      the Closing, Purchaser shall offer employment to substantially all employees
      of
      Seller selected by Purchaser (“Retained
      Employees”).
      Purchaser shall offer employment to the Retained Employees upon wages or salary
      (as applicable) and healthcare benefits that are substantially similar to the
      wages, salary and healthcare benefits provided to such employees by Seller.
      Prior to Closing, Purchaser shall provide Seller with a list of the Retained
      Employees, and Seller will use commercially reasonable efforts to persuade
      the
      Retained Employees to accept such offer of employment by the Purchaser.
      Purchaser shall provide all Retained Employees who accept employment with
      Purchaser full credit for all of their unused accrued vacation time as of the
      Closing Date, accumulated as a result of their employment at
      Seller.

     

    Section
      4.14. Offsets
      and Deductions.
      Notwithstanding the generality of any other provision of this Agreement, the
      Purchaser may not unilaterally or automatically make any offsets or deductions
      against or from the Promissory Notes for any reason, except as provided by
      Section 4.11 and in one of the Promissory Notes. Any other offsets or deductions
      shall be determined utilizing the procedure set out in Section 8.6 (in the
      case
      of indemnity), or the entry of a final non-appealable judgment, in accordance
      with Section 11.7, for all other matters, unless otherwise agreed by the Parties
      in writing.

     

    Section
      4.15. Patent
      License Agreement.
      Seller
      agrees to use commercially reasonable efforts to transfer and assign to
      Purchaser the patent license agreement by and between Seller and Gregory
      Holdings, LLC effective as of July 9, 2005 (the "Patent
      License Agreement")
      and
      all of Seller’s rights pursuant to the Patent License Agreement. If such
      transfer and assignment is not effected by January 15, 2008, then Seller,
      Michael Peterson and Leonard Peterson each agree: (i) to exclusively limit
      exercise of the rights granted by the Patent License Agreement to uses that
      benefit Purchaser and further agree that the Patent License Agreement may not
      be
      utilized or exercised, directly or indirectly, in any manner for the benefit
      of
      any Person other than Purchaser; (ii) not to transfer, assign, or sublicense,
      in
      whole or in part, the Patent License Agreement to any entity other than
      Purchaser; and (iii) that all obligations under the Patent License Agreement
      will be complied with, including but not limited to royalty payments, marking
      requirements, notices and reporting requirements.

     

    ARTICLE
      V.

    CONDITIONS
      PRECEDENT TO PURCHASER’S OBLIGATIONS

     

    The
      obligation of the Purchaser to consummate the purchase of the Assets and the
      assumption of the Assumed Liabilities on the Closing Date is, at the option
      of
      the Purchaser, subject to the satisfaction of the following conditions (any
      or
      all of which may be waived by the Purchaser at or prior to the
      Closing):

     

    Section
      5.1. Representations,
      Warranties and Covenants.

     

    (a) All
      representations and warranties of the Seller contained in this Agreement must
      be
      true and correct in all material respects at and as of the Closing Date with
      the
      same effect as though those representations and warranties had been made again
      at and as of the Closing Date, except to the extent that certain of such
      representations and warranties are made as of or through a specified date (which
      representations and warranties must continue on the Closing Date to be true
      and
      correct in all material respects as of or through the specified date).


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) The
      Seller must have performed and complied, in all material respects, with all
      obligations and covenants required by this Agreement to be performed or complied
      with by it on or prior to the Closing Date.

     

    Section
      5.2. Litigation.
      To the
      best of Seller’s knowledge, there is no Legal Proceeding before any federal or
      state court or other Governmental Authority which may have been instituted
      and
      be pending by any Person or been threatened by any Governmental Authority that
      (a) has or may have the effect of making illegal, impeding or otherwise
      restraining or prohibiting any of the transactions contemplated by this
      Agreement, (b) seeks to obtain damages in respect of the transactions
      contemplated by this Agreement or (c) could result in the disposition of any
      assets or operations of the Purchaser or its Affiliates (including any Assets
      or
      operations acquired or to be acquired from the Seller) or the imposition of
      any
      restriction on the manner in which the Purchaser or its Affiliates conduct
      their
      operations (including any operations acquired or to be acquired from the
      Seller).

     

    Section
      5.3. Material
      Adverse Change.
      There
      must not have been a Material Adverse Change since the Balance Sheet
      Date.

     

    Section
      5.4. (Intentionally
      left blank.)

     

    Section
      5.5. Consents.
      The
      Parties have agreed that (except for real estate leases) the Seller shall assign
      the Assumed Contracts to Purchaser without having secured the consent, waiver,
      approval, authorization, declaration or filing from, or providing notice to,
      any
      Person regarding the assignment of the Assumed Contracts to Purchaser. Subject
      to such agreement, all other consents, approvals, orders or authorizations
      of
      Governmental Authorities and other Persons (whether pursuant to Permits,
      Contracts or otherwise) necessary for the consummation of the transactions
      contemplated by this Agreement must have been obtained and all notices to
      Governmental Authorities and other Persons (whether pursuant to Permits,
      Contracts or otherwise) necessary for the consummation of the transactions
      contemplated by this Agreement must have been given. 

     

    Section
      5.6. Due
      Diligence.
      The
      Purchaser must have (a) completed its due diligence investigation of the Seller,
      the Business and the Assets (including legal, accounting, environmental and
      engineering matters) and the results of such investigation must have been
      satisfactory to the Purchaser, in its sole discretion, and (b) had the
      opportunity to discuss the Seller’s business relationship with the Customers and
      the substance of such discussions must have been satisfactory to the Purchaser,
      in its sole discretion.

     

    Section
      5.7. Employment
      Agreements.
      The
      following persons must have entered into employment contracts with the Purchaser
      on terms and conditions satisfactory to the Purchaser, including
      confidentiality, non-competition and invention assignment provisions (the
“Employment
      Agreements”):
      Michael Peterson and Leonard Peterson. The form of Employment Agreement is
      attached as Exhibit
      C.

     

    Section
      5.8. Closing
      Deliveries.
      The
      Seller must have delivered (or caused to be delivered) to the Purchaser each
      of
      the following:

     

    (a) such
      bills of sale, assignments, releases, consents to assignments and other
      instruments of sale, conveyance, assignment, assumption and transfer
      satisfactory in form and in substance to the Purchaser as may be reasonably
      requested by the Purchaser in order to convey to the Purchaser all of the
      Seller’s rights, title and interests in and to the Assets and to assign to the
      Purchaser all of the Assumed Liabilities in the manner provided for in this
      Agreement (collectively, the “Conveyance
      Agreements”),
      substantially in the form of Exhibit
      D;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) certificates
      (dated the Closing Date and in form and substance reasonably satisfactory to
      the
      Purchaser), executed on behalf of the Seller, certifying as to the fulfillment
      of the conditions set forth in Section
      5.1, substantially
      in the form of Exhibit
      F
      attached
      hereto;

     

    (c) a
      certificate of the Secretary of Seller substantially in the form of Exhibit
      E;

     

    (d) (intentionally
      left blank)

     

    (e) executed
      originals of assignments for each real property lease used in the operation
      of
      the Business (each, a “Lease”),
      in
      substantially the form attached hereto as Exhibit
      G
      (each, a
“Lease
      Assignment”);

     

    (f) receipts
      for the Cash Purchase Price paid to Seller at the Closing;

     

    (g) all
      non-oral Business Information in the possession of the Seller or any of their
      Related Persons (over whom they have control), agents or
      representatives;

     

    (h) originals
      of the employment agreements of Michael Peterson and Leonard Peterson, executed
      by each of them respectively.

     

    Section
      5.9. Additional
      Matters.
      The
      Purchaser must have received such additional documents, instruments, or items
      of
      information reasonably requested by it in respect of any aspect or consequence
      of the transactions contemplated by this Agreement. All corporate and other
      proceedings, and all documents, instruments and other legal matters in
      connection with the transactions contemplated by this Agreement or by the other
      agreements referred to in this Agreement must be reasonably satisfactory in
      form
      and substance to the Purchaser.

     

    ARTICLE
      VI.

    CONDITIONS
      PRECEDENT TO OBLIGATIONS OF SELLER

     

    The
      obligations of the Seller to consummate the sale, transfer and assignment to
      the
      Purchaser of the Assets and the assignment of the Assumed Liabilities on the
      Closing Date are, at the option of the Seller Representative, subject to the
      satisfaction of the following conditions (any or all of which may be waived
      by
      the Seller Representative at or prior to the Closing):

     

    Section
      6.1. Representations,
      Warranties and Covenants.

     

    (a) All
      representations and warranties of the Purchaser contained in this Agreement
      must
      be true and correct in all material respects at and as of the Closing Date
      with
      the same effect as though those representations and warranties had been made
      again and as of the Closing Date.

     

    (b) The
      Purchaser must have performed and complied, in all material respects, with
      all
      obligations and covenants required by this Agreement to be performed or complied
      with by the Purchaser on or prior to the Closing Date.

     

    Section
      6.2. Litigation.
      To the
      best of the Purchaser’s knowledge, there is no Legal Proceeding before any
      federal or state court or other Governmental Authority which may have been
      threatened, instituted and be pending by any Governmental Authority that has
      or
      would have the effect of making illegal, impeding, or otherwise restraining
      or
      prohibiting any of the transactions contemplated by this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      6.3. Closing
      Deliveries.
      The
      Purchaser must have delivered (or caused to be delivered) to the Seller each
      of
      the following:

     

    (a) the
      Cash
      Purchase Price by wire transfer of immediately available funds to an account
      or
      accounts designated in writing by the Seller Representative;

     

    (b) executed
      originals of the Conveyance Agreements to the extent any such Agreements are
      required to be executed by the Purchaser;

     

    (c) copies
      of
      each executed Lease Assignment;

     

    (d) executed
      originals of the Promissory Notes;

     

    (e) a
      certificate (dated the Closing Date and in form and substance reasonably
      satisfactory to the Seller Representative) executed, on behalf of the Purchaser,
      by an authorized executive officer of the Purchaser certifying as to the
      fulfillment of the conditions set forth in Section
      6.1, substantially
      in the form of Exhibit F;

     

    (f) no
      later
      than five (5) days before the Closing Date, evidence of health insurance
      coverage for employees retained by Purchaser which is at least substantially
      equivalent to the price and quality of health insurance coverage provided
      generally by Seller to its employees; and

     

    (g) a
      certificate of the Secretary of the Purchaser substantially in the form of
      Exhibit
      H

     

    (h) originals
      of the employment agreements of Michael Peterson and Leonard Peterson, executed
      by Purchaser.

     

    (i) originals
      of the Guaranty Agreements (in the forms of Exhibit A-1) executed by ISI
      Detention Contracting Group, Inc, a Texas corporation, ISI and
      Argyle.

    


    Section
      6.4. Additional
      Matters.
      The
      Seller Representative must have received such additional documents, instruments
      or items of information reasonably requested by it in respect of any aspect
      or
      consequence of the transactions contemplated by this Agreement. All corporate
      and other proceedings, and all documents, instruments and other legal matters
      in
      connection with the transactions contemplated by this Agreement or by the other
      agreements referred to in this Agreement must be reasonably satisfactory in
      form
      and substance to the Seller Representative.

     

    ARTICLE
      VII.

    TERMINATION

     

    Section
      7.1. Termination.
      The
      Purchaser or the Seller may terminate this Agreement at any time without any
      liability accruing for such termination (“Termination”)
      at any
      time prior to the Closing or if the Closing Date does not occur prior to the
      Closing Deadline, upon written notice to the other Party, and such Termination
      shall be effective immediately upon receipt of such notice or upon the effective
      date for such Termination stated in such notice whichever is later.

     

    Section
      7.2. Effect
      of Termination.
      If this
      Agreement is terminated in accordance with Section
      7.1,
      and the
      transactions contemplated by this Agreement are not consummated, this Agreement
      will become null and void and of no further force and effect, and neither Party
      shall have any Liability to the other Party, except (a) for this Section
      7.2,
      and (b)
      for the provisions of Section
      4.5,
      Section
      7.3
      and
Section
      11.9.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      7.3. Return
      of Confidential Information.
      If this
      Agreement is terminated in accordance with Section
      7.1,
      and the
      transactions contemplated by this Agreement are not consummated, (a) the
      Purchaser will (and will cause each of its Related Persons, agents and
      representatives under its control to) return to the Seller or destroy all
      confidential or proprietary information of the Seller in their possession and
      certify such return or destruction to the Seller and (b) the Seller will (and
      will cause each of their Related Persons, agents and representatives under
      its
      control to) return to the Purchaser or destroy all confidential or proprietary
      information of the Purchaser in their possession and certify such return or
      destruction to the Purchaser.

     

    ARTICLE
      VIII.

    INDEMNIFICATION

     

    Section
      8.1. Indemnification.
      

     

    (a) Subject
      to the other provisions of this Article
      VIII,
      the
      Seller, Michael Peterson and Leonard Peterson will jointly and severally defend,
      indemnify and hold the Purchaser, its Affiliates, and Purchaser’s shareholders
      (whether direct or indirect), directors, officers, employees, consultants,
      agents and representatives harmless from and against any and all Claims asserted
      and any Liability or Losses that they may incur, arising from or relating
      to:

     

    (1) any
      facts
      that constitute, or any allegations that if true would constitute, a breach
      of
      any representation or warranty made by the Seller in this Agreement or an
      officer of Seller in any certificate or other document required to be executed
      and delivered by the Seller pursuant to this Agreement;

    


    (2) any
      facts
      that constitute, or any allegations that if true would constitute, a breach
      or
      default in the performance of any covenant, obligation or agreement of the
      Seller pursuant to this Agreement or any certificate or other document required
      to be executed and delivered by Seller or an officer of Seller pursuant to
      this
      Agreement; 

    


    (3) any
      Liability of the Seller that is not an Assumed Liability; 

    


    (4) the
      Business of Seller or the Assets, to the extent founded on occurrences preceding
      the Closing. In this connection, in the event of any Claim by a Person claiming
      to be a creditor of Seller, no payment to such creditor by the Purchaser shall
      be made unless such payment is commercially reasonable and first approved by
      Seller, in writing, and such approval shall not be unreasonably withheld;


    


    (5) Seller’s
      Warranty Work pursuant to Section
      1.8.

    


    (6) any
      violation of Law by Seller that affects, limits or restricts, in any way, or
      creates any Encumbrance upon: (ii) the title to the Assets acquired by Purchaser
      hereunder, or (ii) Purchaser’s right, authority or ability to sell, transfer,
      transport, convey or otherwise dispose of the Assets acquired hereunder;
      and

    


    (7) any
      violation of Environmental Laws by the Seller. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (b) Notwithstanding
      the generality of the foregoing, Seller, Michael Peterson and Leonard Peterson
      have no duty to defend, indemnify or hold harmless any Person, nor shall any
      Liabilities whatsoever accrue to Seller in connection with:

     

    (1) any
      matter enumerated in Section 8.1(a), which arises from or is related to the
      assignment of the Assumed Contracts to Purchaser by Seller without Seller having
      secured the consent, waiver, approval, authorization, declaration or filing
      from, or having provided notice to any Person regarding the assignment of the
      Assumed Contracts to Purchase; 

    


    (2) any
      Claims, Liability or Losses that arise from any allegation that the consummation
      of the transactions contemplated by this Agreement violates any duty owed to
      the
      Affiliates or shareholders of Argyle, ISI or Purchaser or was otherwise improper
      for the Purchaser to engage in. However, not withstanding the generality of
      the
      forgoing, this Subsection 8.1(b)(2) shall not adversely affect, diminish, or
      in
      any way limit the right of any Person to pursue and enforce their rights to
      a
      defense or indemnity pursuant to Section 8.1(a); and

    


    (3) any
      claims for indemnity by Purchaser or any of its Affiliates, arising from any
      matters not enumerated in Section 8.1(a).

    


    (c) Subject
      to the other provisions of this Article
      VIII,
      the
      Purchaser, Argyle and ISI will defend, indemnify and hold the Seller, its
      Affiliates, and shareholders (whether direct or indirect), directors, officers,
      employees, consultants, agents and representatives harmless from and against
      any
      and all Claims asserted and any Liability or Losses that they may incur, arising
      from or relating to: 

     

    


    (1) any
      facts
      that constitute, or any allegations that if true would constitute, a breach
      of
      any representation or warranty made by the Purchaser in this Agreement or in
      any
      certificate or other document required to be executed and delivered by the
      Purchaser or an officer of Purchaser pursuant to this Agreement;

    


    (2) any
      facts
      that constitute, or any allegations that if true would constitute, a breach
      or
      default in the performance of any covenant, obligation or agreement of the
      Purchaser pursuant to this Agreement or any certificate or other document
      required to be executed and delivered by Purchaser or an officer of Purchaser
      pursuant to this Agreement; 

    


    (3) any
      Liability of the Seller that is an Assumed Liability; 

    


    (4) the
      Business or the Assets, to the extent founded on occurrences after the
      Closing;

    


    (5) allegations
      by an employee of Seller relating to Seller’s termination of their employment,
      immediately prior to the Closing, as anticipated by this Agreement;

    


    (6) Purchaser’s
      Warranty Work pursuant to Section
      1.9;
      

    


    (7) any
      allegation that the consummation of the transactions contemplated by this
      Agreement violates any duty owed to the Affiliates or shareholders of Argyle,
      ISI or Purchaser or was otherwise improper for the Purchaser to engage in.
      However, not withstanding the generality of the forgoing, this Subsection
      8.1(c)(7) shall not adversely affect, diminish, or in any way limit the right
      of
      any Person to pursue and enforce their rights to a defense or indemnity pursuant
      to Section 8.1(a); and 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (8) any
      allegations that Seller improperly assigned the Assumed Contracts to Purchaser
      without having secured the consent, waiver, approval, authorization, declaration
      or filing from or provided notice to any Person regarding the assignment of
      the
      Assumed Contracts to Purchaser.

    


    (d) Any
      party
      seeking a defense or indemnification hereunder shall be deemed to be an
      Indemnitee for purposes of this ARTICLE VIII. Any party obligated to provide
      a
      defense or indemnification hereunder shall be deemed to be an Indemnitor or
      Indemnifying Party for purposes of this ARTICLE VIII. Indemnification shall
      be
      to the fullest extent permitted by applicable law including, but not limited
      to,
      all legal expenses, including providing legal counsel reasonably satisfactory
      to
      the Indemnitee, solely at Indemnitor’s cost.

     

    Section
      8.2. Materiality.
      With
      respect to any Claim for defense or indemnification under this Article
      VIII
      relating
      to a breach (or alleged breach) of a representation or warranty that contains
      a
      materiality qualifier, such materiality qualifier will be considered for
      purposes of determining whether a breach of such representation and warranty
      has
      occurred, but such materiality qualifier will not be considered in determining
      the amount of the Losses arising out of such breach. 

     

    Section
      8.3. Survival
      of Seller’s Representations and Warranties.
      The
      representations and warranties of the Seller set forth in Article
      II
      and in
      the certificates delivered to the Purchaser pursuant to Section
      6.3(e)
      will
      survive the execution and delivery of this Agreement and the Closing until
      the
      later of: (i) the three (3) year anniversary of the Closing; or (ii) thirty
      (30)
      days after expiration of the statute of limitations applicable to such
      violation, except that the representations and warranties set forth in
Section
      2.7(a)
      will
      survive indefinitely. Any representation or warranty, the violation of which
      is
      made the basis of a claim for indemnification pursuant to this Article
      VIII,
      will
      survive until such Claim is finally resolved if the Purchaser notifies the
      Seller Representative of such Claim in reasonable detail prior to the date
      on
      which such representation or warranty would otherwise expire hereunder. No
      claim
      for indemnification pursuant to Section
      8.1
      based on
      the breach or alleged breach of a representation or warranty may be asserted
      after the date on which such representation or warranty expires.

     

    Section
      8.4. Survival
      of Purchaser’s Representations and Warranties.
      The
      representations and warranties of the Purchaser set forth in Article
      III
      and in
      the certificates delivered to the Seller pursuant to Section
      6.3(e)
      will
      survive the execution and delivery of this Agreement and the Closing until
      the
      later of: (i) the three (3) year anniversary of the Closing; or (ii) thirty
      (30)
      days after expiration of the statute of limitations applicable to such
      violation. Any representation or warranty, the violation of which is made the
      basis of a claim for indemnification pursuant to this Article
      VIII,
      will
      survive until such Claim is finally resolved if the Seller notifies the
      Purchaser’s Representative of such Claim in reasonable detail prior to the date
      on which such representation or warranty would otherwise expire hereunder.
      No
      claim for indemnification pursuant to Section
      8.1
      based on
      the breach or alleged breach of a representation or warranty may be asserted
      by
      the Seller after the date on which such representation or warranty
      expires.

     

    Section
      8.5. Notice
      and Resolution of Claims.

     

    (a)  Notice.
      Each
      Indemnitee must provide written notice to the Indemnitor within 10 days
      after obtaining knowledge of any Claim that it may have that will be claimed
      to
      be a Covered Claim pursuant Section
      8.1;
      provided that the failure to provide such notice will not limit the rights
      of an
      Indemnitee to indemnification hereunder except to the extent that such failure
      materially increases the dollar amount of any such claim for indemnification
      or
      materially prejudices the ability of the Indemnifying Party to defend such
      claim. Such notice will set forth in reasonable detail the claim and the basis
      for indemnification.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Right
      to Assume Defense.
      With
      respect to a claim for indemnity pursuant to Sections
      8.1(a)
      and
8.1(c)
      (“Covered
      Claim”)
      the
      Indemnifying Party will have thirty (30) days after receipt of notice to pay,
      or
      assume the conduct and control of the settlement or defense of such Covered
      Claim, if the Indemnifying Party acknowledges its obligation to indemnify the
      Indemnitee for Liabilities and Losses resulting from such Covered Claim
      (“Covered
      Losses”)
      . The
      Indemnitor will be responsible to defend and indemnify only that portion of
      a
      Covered Claim that seeks monetary damages, and the balance of the Covered Claim
      shall be the responsibility of the Indemnitee. The Indemnitee may, through
      its
      own counsel, participate in defense or settlement of a Covered Claim provided
      by
      the Indemnifying Party, but such separate counsel will be at Indemnitee’s
      expense.

     

    (c) Obligations
      Following Assumption of Defense.
      If the
      Indemnifying Party assumes the defense of a Covered Claim, it must take all
      steps reasonably necessary to investigate and defend or settle it and hold
      the
      Indemnitee harmless from and against any and all Covered Losses caused by or
      arising out of any settlement approved by the Indemnifying Party or any judgment
      entered in connection with such Covered Claim. Without the written consent
      of
      the Indemnitee, which consent shall not be unreasonably withheld, the
      Indemnifying Party will not consent to entry of any judgment or enter into
      any
      settlement that does not include a complete release of the Indemnitee from
      the
      Covered Claim by the claimant or plaintiff making the Covered
      Claim.

     

    (d) Failure
      to Assume Defense.
      Failure
      by the Indemnifying Party to notify the Indemnitee of its election to pay,
      assume the defense or pursue the settlement of any Covered Claim within thirty
      (30) days after its receipt of notice thereof pursuant to Section
      8.5(a)
      will be
      deemed a waiver by the Indemnifying Party of its right to pay, assume the
      defense or pursue the settlement of such Covered Claim. In such event, the
      Indemnitee may pay, defend or settle such Covered Claim in any commercially
      reasonable manner it deems appropriate. The Indemnitee may settle such Covered
      Claim or consent to the entry of any judgment with respect thereto, provided
      that it acts in good faith and in a commercially reasonable manner.

     

    Section
      8.6. Payment
      of Indemnity.
      Upon
      agreement by the parties or the entry of a final, non-appealable order by a
      court of competent jurisdiction that an Indemnitee is entitled to
      indemnification under this Article
      VIII,
      the
      Indemnifying Party must promptly pay or reimburse, as appropriate, the
      Indemnitee for all Liabilities and Losses incurred as a result of any Claim
      for
      which an obligation of indemnification is owed pursuant to this Agreement.
      However, if the Purchaser is entitled to be indemnified by the Seller hereunder
      while any of the Promissory Notes remains unpaid, Purchaser shall first offset,
      pro rata, up to all of such remaining amounts unpaid against the amount required
      to be paid or reimbursed by the Seller before seeking payment or reimbursement
      directly from Seller.

     

    ARTICLE
      IX.

    TAX
      MATTERS

     

    Section
      9.1. Cooperation
      for Certain Tax-Related Matters.
      The
      Purchaser and the Seller will, and will cause their respective representatives
      and agents to, provide any requesting party that is a party to this Agreement
      with such assistance and documents, without charge, as may be reasonably
      requested by such party in connection with (a) the preparation of any Tax Return
      of or relating to the Seller, (b) the conduct of any Audit relating to liability
      for or refunds or adjustments with respect to Taxes and (c) any other
      Tax-related matter that is a subject of this Agreement. Such cooperation and
      assistance will be provided to the requesting party promptly upon its
      request.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      9.2. Transfer
      Taxes.
      Notwithstanding any other provision of this Agreement to the contrary, the
      Seller will be liable for and will pay of all transfer (including real property
      transfer and documentary), sales, use, gains (including state and local transfer
      gains taxes), excise and other transfer or similar Taxes imposed upon Seller
      in
      connection with the transfer of the Business or the Assets to the Purchaser,
      other than any Taxes based upon or measured by net income (collectively,
“Transfer
      Taxes”).
      The
      Purchaser and the Seller will mutually cooperate in perfecting any exemption
      from Transfer Taxes available in connection with the transactions contemplated
      by this Agreement. 

     

    ARTICLE
      X.

    DEFINITIONS

     

    Section
      10.1. Definitions.
      As used
      in this Agreement, the following terms have the following meanings (such
      meanings to be equally applicable to both the singular and plural forms of
      the
      terms defined):

     

    “Acquisition”
means,
      other than the transactions contemplated by this Agreement, (a) a merger,
      consolidation, share exchange or business combination to which the Seller is
      a
      party, (b) a sale, lease, exchange, mortgage, pledge, transfer or other
      disposition of twenty percent (20%) or more of the assets or profit- or
      revenue-generating capacity of Seller, (c) a sale of any of the capital stock
      or
      other equity interests in Seller, (d) a recapitalization (regardless of the
      form
      of transaction by which such recapitalization is accomplished) of Seller or
      (e)
      any other similar transaction involving Seller and a Third Party.

     

    “Affiliate”
means,
      with respect to a specified Person, any other Person or member of a group of
      Person acting together that, directly or indirectly, through one or more
      intermediaries, controls, or is controlled by or is under common control with,
      the specified Person. As used in this Agreement, the term “control”
      (including the terms “controlling,” “controlled by” and “under common control
      with”) means the possession, direct or indirect, of the power to direct or cause
      the direction of the management and policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise.

     

    “Assumed
      Liability”
is
      defined in Section
      1.5.

     

    “Audit
      Standards”
means
      Financial Statements that present fairly the financial position of the Seller
      and its subsidiaries (or their respective predecessors) and the results of
      operations as of the dates and for the periods therein specified, and that
      have
      been prepared in accordance with GAAP consistently applied throughout the
      periods involved, subject, in the case of interim Financial Statements to normal
      year-end adjustments in an amount and of a character not materially inconsistent
      with prior periods. The Financial Statements will not contain any items of
      a
      special or nonrecurring nature, except as expressly stated therein. The
      Financial Statements will have been prepared from the books and records of
      the
      Seller, which accurately and fairly reflect the financial condition and results
      of operations of the Seller as of the respective dates thereof and for the
      periods indicated.

     

    “Balance
      Sheet”
means
      the balance sheet included in the Financial Statements.

     

    “Balance
      Sheet Date”
means
      the date of the Balance Sheet.

     

    “Business
      Day”
means
      any weekday on which nationally-chartered banks in San Antonio, TX are open
      for
      business.

     

    “Business
      Information”
means
      all information and materials relating to the Business or the Assets, whether
      in
      oral, written, graphic or machine-readable form, that is proprietary in nature,
      including without limitation all specifications, user, operations or systems
      manuals, diagrams, graphs, models, sketches, technical data, research, business
      or financial information, plans, strategies, forecasts, forecast assumptions,
      business practices, marketing information and material, customer names,
      proprietary ideas, concepts, know-how, methodologies and all other information
      related to the Business or the Assets; provided,
      however,
      that
“Business
      Information”
will
      not include any of the foregoing that is then in the public domain.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Charter
      Documents”
means
      (a) the certificate or articles of incorporation and the bylaws of a
      corporation, (b) the certificate of formation and partnership agreement of
      a
      partnership, (c) the certificate of formation and limited liability company
      agreement or operating agreement of a limited liability company and (d) the
      charter, formation and/or constitutional documents of any other legal entity,
      in
      each case including all amendments thereto.

     

    “Claim”
means
      any existing or threatened claim, demand, suit, action, investigation,
      proceeding or cause of action of any kind or character (in each case, whether
      civil, criminal, investigative or administrative and whether made by a
      Governmental Authority or any other Person), absolute or contingent, under
      any
      theory, including, without limitation, contract, tort, statutory liability,
      strict liability, employer liability, premises liability, products liability,
      breach of warranty or malpractice.

     

    “Closing
      Deadline”
means
      January 31, 2008, provided that it shall mean a later date selected by
      Purchaser, but in no event later than April 1, 2008, if Purchaser provides
      written notice to Seller of its election to extend the Closing Deadline by
      no
      later than January 25, 2008.

     

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

     

    “Contract”
means
      any written or oral contract, agreement, indenture, note, bond, loan,
      instrument, lease, mortgage, license, franchise, obligation, commitment or
      other
      arrangement, agreement or understanding.

     

    “Customer”
means
      any Person that has purchased goods or services from the Seller in connection
      with the Business during the twelve (12) month period immediately preceding
      the
      date of this Agreement and/or during the period between the date of this
      Agreement and the Closing.

     

    “Dollars”
means
      United States Dollars.

     

    “Encumbrance”
means
      any encumbrance, security interest, mortgage, deed of trust, lien, charge,
      pledge, option, right of first refusal or similar right, easement, restrictive
      covenant, Claim or restriction of any kind, including, without limitation,
      any
      restriction on the use, transfer, receipt of income or other exercise of any
      attributes of ownership.

     

    “Environmental
      Law”
means
      each present and future Law, Order or Permit pertaining to (a) public health
      or
      safety, (b) the protection, preservation or restoration of the environment
      or
      natural resources or (c) the generation, production, use, storage,
      transportation, processing, release or disposal of Hazardous
      Materials.

     

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

     

    “Financial
      Statement”
is
      defined in Section
      2.4.

     

    “GAAP”
means
      generally accepted accounting principles in the United States as in effect
      on
      the date of this Agreement applied in a manner consistent with the Seller’s
      historical financial statements.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Governmental
      Authority”
means
      any government or governmental or regulatory body thereof, or political
      subdivision thereof, whether federal, state, local or foreign, or any agency,
      department or instrumentality thereof, or any court (public or
      private).

     

    “Hazardous
      Material”
means
      any substance, material, contaminant, pollutant or waste presently or hereafter
      listed, defined, designated or classified as hazardous, toxic, radioactive
      or
      dangerous under any Environmental Law or regulated as such by any Governmental
      Authority including, without limitation, any industrial substance, petroleum
      (or
      any derivative or by-product thereof), radon, radioactive material, asbestos
      (or
      asbestos containing material), urea formaldehyde, foam insulation, lead or
      polychlorinated biphenyls.

     

    “Intellectual
      Property”
means
      all United States and foreign intellectual and industrial property, including
      patent applications, patents and any reissues or reexaminations thereof,
      trademarks, service marks, trademark/service mark registrations and
      applications, brand names, trade names, all other names and slogans embodying
      business or product goodwill (or both), copyright registrations, mask works,
      copyrights, moral rights of authorship, rights in designs, trade secrets,
      technology, inventions, discoveries, improvements, know-how, proprietary rights,
      computer software and firmware, internet domain names, specifications, drawings,
      designs, formulae, processes, methods, technical information, confidential
      and
      proprietary information, and all other intellectual and industrial property
      rights, whether or not subject to statutory registration or
      protection.

     

    “Law”
means
      any applicable law, statute, code, ordinance, rule or regulation promulgated
      by
      any Governmental Authority, including any policy having the force and effect
      of
      law, any rule of common law and any judicial or administrative interpretation
      thereof.

     

    “Lease”
is
      defined in Section
      5.8.

     

    “Lease
      Assignment”
is
      defined in Section
      5.8.

     

    “Legal
      Proceeding”
means
      any judicial, administrative, regulatory or arbitral proceeding, investigation
      or inquiry or administrative charge or complaint pending at law or in equity
      by
      or before any Governmental Authority.

     

    “Liability”
or
      “Liabilities”
means
      any and all Claims, accounts payable, debts, liabilities and obligations of
      any
      nature whether absolute or contingent, asserted or unasserted, accrued or
      unaccrued, known or unknown, liquidated or otherwise.

     

    “Loss”
or
      “Losses”
means
      all losses, damages, injuries, harm, diminutions in value, costs (including,
      without limitation, costs of investigation), fines, fees and expenses (including
      reasonable attorneys’ fees incident to any of the foregoing).

     

    “Material
      Adverse Change”
means
      a
      material adverse change in the properties, assets, condition (financial or
      otherwise), Business, operations or prospects of the Seller, taken as a whole,
      or an increase in Seller’s liabilities, except trade obligations incurred in the
      Ordinary Course of Business.

     

    “Material
      Adverse Effect”
means,
      with respect to any Person, a material adverse effect on the properties, assets,
      condition (financial or otherwise), business, operations or prospects of such
      Person.

     

    “Order”
means
      any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
      award by a Governmental Authority of competent jurisdiction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Ordinary
      Course of Business”
means
      the usual and ordinary course of business for the Business, consistent with
      past
      practice.

     

    “Party”
mean
      Seller or Purchaser.

     

    “Parties”
means
      Seller and Purchaser

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation.

     

    “Permit”
means
      any written approval, consent, exemption, franchise, license, permit, waiver,
      registration, filing, certificate or other authorization required by Law to
      conduct any portion of the Business as conducted immediately prior to the
      Closing Date, including without limitation all applicable construction,
      installation and maintenance licenses and local health and fire permits
      pertaining to the physical facilities, manufacturing, equipment, staffing and
      records.

     

    “Person”
means
      any natural person, corporation, partnership, firm, joint venture, limited
      liability company, association, joint-stock company, trust, unincorporated
      organization, Governmental Authority or other legal entity.

     

    “Promissory
      Notes”
is
      defined in Section
      1.4.

     

    “Purchaser
      Representative”
means
      Sam Youngblood.

     

    “Related
      Parties”
means,
      with respect to any Person, the Affiliates, shareholders and beneficial owners
      (whether direct or indirect), directors, officers, employees and consultants
      of
      such Person, and the family members of each of the foregoing who are natural
      persons.

     

    “Sales”
means
      the aggregate amount of all purchase orders and contracts for work, received
      by
      the Seller during the applicable period.

     

    “Seller
      Contract”
means
      any Contract to which Seller is a party, obligor or beneficiary or by which
      any
      of the properties and assets of Seller is bound.

     

    “Seller
      Representative”
means
      Michael Peterson.

     

    “Taxes”
      (including, with correlative meaning, the term “Tax”)
      means
      all taxes, charges, fees, levies, duties, penalties, assessments or other
      amounts imposed by or payable to any foreign, federal, state, local or other
      taxing authority or agency, including without limitation income, gross receipts,
      profits, windfall profits, gains, minimum, alternative minimum, estimated,
      ad
      valorem, value added, severance, stamp, customs, import, export, utility, use,
      service, excise, property, sales, transfer, franchise, payroll, withholding,
      social security, disability, employment, workers compensation, unemployment
      compensation and other taxes, and including any interest, penalties or additions
      attributable thereto.

     

    “Tax
      Return”
means
      any return, report, information return or other document (including any related
      or supporting information) required to be prepared with respect to
      Taxes.

     

    “Third
      Party”
means
      any Person other than the Seller, the Purchaser or any of their respective
      Affiliates or associates.

     

    “Valuation
      Periods”
means
      the period from July 1, 2007 to the Closing Date (the “Working Capital Valuation
      Period”) and the period from the Closing Date to June 30, 2008 (the “2008
      Valuation Period”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Working
      Capital”
means
      current assets minus current liabilities.

     

    ARTICLE
      XI.

    MISCELLANEOUS

     

    Section
      11.1. Party
      Representatives.
      

     

    (a) Seller
      Representative: The Seller hereby appoints the Seller Representative as its
      agent and attorney-in-fact to take any and all actions and to execute any and
      all documents, on its behalf, with respect to this Agreement following the
      Closing Date. The Seller agrees and acknowledges that any such action taken
      or
      document executed by the Seller Representative in accordance with this Agreement
      will be binding on the Seller and its successors and permitted assigns. The
      Seller may appoint a substitute Seller Representative by providing at least
      five
      (5) Business Days prior written notice of such appointment to the
      Purchaser.

     

    (b) Purchaser
      Representative: The Purchaser hereby appoints the Purchaser Representative
      as
      its agent and attorney-in-fact to take any and all actions and to execute any
      and all documents, on its behalf, with respect to this Agreement following
      the
      Closing Date. The Purchaser agrees and acknowledges that any such action taken
      or document executed by the Purchaser Representative in accordance with this
      Agreement will be binding on the Purchaser and its successors and permitted
      assigns. The Purchaser may appoint a substitute Purchaser Representative by
      providing at least five (5) Business Days prior written notice of such
      appointment to the Seller.

     

    


    Section
      11.2. Headings.
      Article
      and section headings of this Agreement are for reference purposes only and
      are
      to be given no effect in the construction or interpretation of this
      Agreement.

     

    Section
      11.3. Article,
      Section, Schedule and Exhibit References.
      Except
      as otherwise specifically provided, any reference to any article, section,
      schedule or exhibit will be deemed to refer to such article or section of or
      schedule or exhibit to this Agreement.

     

    Section
      11.4. Usage.
      Whenever the plural form of a word is used in this Agreement, that word will
      include the singular form of that word. Whenever the singular form of a word
      is
      used in this Agreement, that word will include the plural form of that word.
      The
      term “or” does not exclude any of the items described. The term “include,” or
      any derivative of such term, does not mean that the items following such term
      are the only types of such items.

     

    Section
      11.5. Drafting.
      Neither
      this Agreement nor any provision contained in this Agreement may be interpreted
      in favor of or against any party hereto because such party or its legal counsel
      drafted this Agreement or such provision.

     

    Section
      11.6. Entire
      Agreement.
      The
      exhibits and schedules to this Agreement are hereby incorporated and made a
      part
      hereof and are an integral part of this Agreement. This Agreement (including
      such exhibits and schedules) represents, and is intended to be, a complete
      statement of all of the terms and the arrangements between the parties to this
      Agreement with respect to the matters provided for in this Agreement, supersedes
      any and all previous oral or written and all contemporaneous oral agreements,
      understandings, negotiations and discussions between the parties to this
      Agreement with respect to those matters.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      11.7. GOVERNING
      LAW; VENUE.
      THIS
      AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      THE
      STATE OF TEXAS WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS OR
      ANY
      OTHER PRINCIPLE THAT COULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER
      JURISDICTION. ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
      THIS
      AGREEMENT MUST BE INSTITUTED IN THE STATE OR FEDERAL COURTS LOCATED IN BEXAR
      COUNTY, TEXAS, TO THE JURISDICTION OF WHICH EACH OF THE PARTIES HEREBY EXPRESSLY
      AND IRREVOCABLY AGREES TO SUBMIT. THE PARTIES AGREE TO ENTER INTO MEDIATION
      PRIOR TO TRIAL IN ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING
      TO
      THIS AGREEMENT. THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUIT,
      ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

     

    Section
      11.8. Specific
      Performance.
      The
      Purchaser and each of the Seller each acknowledge and agree that the breach
      of
      this Agreement would cause irreparable damage to one or more of the other
      parties and that such other party or parties will not have an adequate remedy
      at
      law. Therefore, the obligations of the Purchaser and the Seller under this
      Agreement will be enforceable by a decree of specific performance issued by
      any
      court of competent jurisdiction, and appropriate injunctive relief may be
      applied for and granted in connection therewith. However, notwithstanding the
      foregoing, the remedies provided to the parties in ARTICLE VIII shall constitute
      the sole and exclusive remedy available to the Parties for the matters set
      forth
      therein.

     

    Section
      11.9. Expenses.

     

    (a) Except
      as
      otherwise expressly provided in this Agreement and regardless of whether the
      transactions contemplated in this Agreement are consummated, each of the parties
      to this Agreement will bear its own expenses (including, without limitation,
      fees and disbursements of its counsel, accountants, financial advisors and
      other
      experts), incurred in connection with the preparation, negotiation, execution,
      delivery and performance of this Agreement, each of the other documents and
      instruments executed in connection with or contemplated by this Agreement and
      the consummation of the transactions contemplated by this Agreement and
      thereby.

     

    (b) If
      attorneys’ fees or other costs are incurred to secure performance of any
      obligation under this Agreement, to establish damages for the breach thereof
      or
      to obtain any other appropriate relief, whether by way of prosecution or
      defense, the prevailing party will be entitled to recover reasonable attorneys’
fees and costs incurred in connection therewith.

     

    Section
      11.10. Notices.
      All
      notices, requests, demands, and determinations under this Agreement (other
      than
      routine operational communications), must be in writing and will be deemed
      duly
      given (a) when delivered by hand, (b) two days after being given to an express
      courier with a reliable system for tracking delivery, (c) when sent by confirmed
      facsimile with a copy sent by another means specified in this provision or
      (d)
      five days after the day of mailing, when mailed by registered or certified
      mail,
      return receipt requested, postage prepaid, and addressed as set forth below.
      A
      party may from time to time change its address or designee for notification
      purposes by giving the other written notice of the new address or designee
      and
      the date upon which it will become effective.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    If
      to the
      Purchaser: ISI
      Detention Contracting Group, Inc.

     

    12903
      Delivery Drive

    San
      Antonio, TX 78247

    Attention:
      Sam Youngblood

    Facsimile:
      (210) 495-5613

    email:
      syoungblood@isidet.com


     

    with
      a
      copy to:

     

    K&L
      Gates

    111
      Congress Avenue, Suite 900

    Austin,
      Texas 78701

    Attention:
      D. Hull Youngblood, Jr.

    Facsimile:
      (512) 482-6859

    email:
      hyoungblood@hughesluce.com


    


    If
      to the
      Seller: Peterson
      Detention Inc.

    577
      North
      Batavia

    Orange,
      CA 92868

    Attention:
      Michael Peterson

    


    Section
      11.11. Severability.
      The
      invalidity or unenforceability of any provision of this Agreement will not
      affect the validity or enforceability of any other provision of this Agreement,
      each of which will remain in full force and effect, so long as the economic
      or
      legal substance of the transactions contemplated by this Agreement is not
      affected in a manner materially adverse to any party.

     

    Section
      11.12. Binding
      Effect; No Assignment.
      This
      Agreement will be binding upon and inure to the benefit of the Parties and
      their
      respective successors and permitted assigns. Nothing in this Agreement will
      create or be deemed to create any third party beneficiary rights in any Person
      not party to this Agreement except to the extent such obligations are
      specifically provided for herein. No assignment of this Agreement or of any
      rights or obligations under this Agreement may be made by any Party without
      the
      prior written consent of the other Party to this Agreement and any attempted
      assignment without such required consents will be void; provided,
      however,
      that
      Seller may assign the Promissory Notes and the Guaranty Agreements or its rights
      under each to any Person as is permitted by their terms, without the prior
      written consent of any other Person, but no such assignment by Seller or
      Purchaser will release Seller or Purchaser from any of its obligations under
      this Agreement.

     

    Section
      11.13. Amendments.
      This
      Agreement may be amended, supplemented, or modified, and any provision hereof
      may be waived, only by written instrument making specific reference to this
      Agreement signed by the Purchaser and the Seller. 

     

    Section
      11.14. Waiver.
      Except
      as otherwise provided in this Agreement, no action (other than a waiver) taken
      pursuant to this Agreement, including, without limitation, any investigation
      by
      or on behalf of any Party, will be deemed to constitute a waiver by the Party
      taking such action of compliance with any representation, warranty, covenant
      or
      agreement contained in this Agreement. The waiver by any Party to this Agreement
      of a breach of any provision of this Agreement will not operate or be construed
      as a further or continuing waiver of such breach or as a waiver of any other
      or
      subsequent breach. Except as otherwise expressly provided in this Agreement,
      no
      failure on the part of any Party to exercise, and no delay in exercising, any
      right, power or remedy under this Agreement will operate as a waiver thereof,
      nor will any single or partial exercise of such right, power or remedy by such
      Party preclude any other or further exercise thereof or the exercise of any
      other right, power or remedy. Any waiver by a Party must be in writing and
      signed by Seller and Purchaser.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
      11.15. Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which will
      be
      deemed an original, but all of which together will constitute one and the same
      instrument.

     

    Section
      11.16. Execution
      Copies of Agreement.
      A
      facsimile, telecopy, PDF or other reproduction of this Agreement may be executed
      by one or more parties hereto, and an executed copy of this Agreement may be
      delivered by one or more parties hereto by facsimile or similar electronic
      transmission device pursuant to which the signature of or on behalf of such
      party can be seen, and such execution and delivery shall be considered valid,
      binding and effective for all purposes. At the request of either party hereto,
      the other party agrees to execute an original of this Agreement as well as
      any
      facsimile, telecopy or other reproduction.

     

    *
      * * Remainder of Page Intentionally Left Blank * * *


    
      
         

      

      
         

        
          

        

      

       

    


    IN
      WITNESS WHEREOF, the Parties to this Agreement have executed this instrument
      as
      of the date and year first above written.

     

    
      	THE
              SELLER:	 	 	THE
              PURCHASER:
	 	 	 	 
	Peterson Detention
              Inc.	 	 	
              ISI
                Detention Contracting Group, Inc., 

              A
                California corporation

            
	 	 	 	 
	By: 
              /s/
              Michael Peterson 	 	 	By: 
              /s/
              Sam Youngblood
	
              
                

              

              Michael
                Peterson, President

            	 	 	
              
                

              

              Sam
                Youngblood, CEO

            


    

      

    


    The
      following Shareholders of the Seller join in this

    Agreement
      solely for purposes of Article
      II
      and Article
      VIII

    and
      for purposes of Section
      4.15
      to the extent such section

    imposes
      personal obligations upon them.

    


    


    /s/
      Michael Peterson 

    
      

    


    Michael
      Peterson

     

    /s/
      Leonard Peterson

      

    

    Leonard
      Peterson

     

    Argyle
      and ISI join in this Agreement solely for purposes

    of
      Article
      III
      and Article
      VIII.

    


    
      	Argyle
              Security, Inc.	 	 	 
	 	 	 	 
	By:
              /s/ Don Neville 	 	 	
            
	
              
                

              

              Don
                Neville, Chief Financial Officer

            	 	 	
            


    

     

    
      	
              ISI
                Security Group, Inc.

            	 	 	 
	By: /s/
              Sam Youngbloood	 	 	
            
	
              
                

              

              Sam
                Youngblood, CEO

            	 	 	
            


    

    


    (Signature
      Page to Asset Purchase Agreement)