**TABLE OF CONTENTS**     Article I — Purchase and Sale of Units   1 Section 1.1 Units; Excluded Assets; Excluded Liabilities   1 Section 1.1.1 Purchase of Units   1 Section 1.1.2 Excluded Assets   1 Section 1.1.3 Excluded Liabilities   1 Section 1.2 Transfer of Units   2 Section 1.3 Assignment of Contracts and Rights   2 Section 1.4 Survival of Quotations   2      Article II — Closing; Purchase Price; Other Considerations   3 Section 2.1 Closing   3 Section 2.2 Cash Purchase Price   3 Section 2.3 Earn-Out   3 Section 2.4 Convertible Promissory Note   3 Section 2.5 Security Agreement   4 Section 2.6 Unit Pledge Agreement   4 Section 2.7 Buyer Financial Termination Provision   4 Section 2.8 Listing of Common Stock   4 Section 2.9 Bonding Capacity   4 Section 2.10 Step-In Rights   4 Section 2.11 Rent   4 Section 2.12 Post-Closing Agreement   5 Section 2.13 Management Fee   5 Section 2.14 Shares of Common Stock   5      Article III — Representations and Warranties of Sellers and Company   5 Section 3.1 Organization   5 Section 3.2 Qualification of Company   6 Section 3.3 Authorization   6 Section 3.3.1 Authority   6 Section 3.3.2 No Breach of Violation   6 Section 3.4 Financial Statements   6 Section 3.4.1 Statements   6 Section 3.4.2 Accuracy   7 Section 3.4.3 No Undisclosed Liabilities   7 Section 3.4.4 Absences of Changes   7 Section 3.4.5 Discharge of Liabilities   8 Section 3.5 Assets   8 Section 3.5.1 Title   8 Section 3.5.2 Condition   8 Section 3.6 Equipment   8 Section 3.7 Intellectual Property   8 Section 3.7.1   8 
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     Section 3.7.2   8 Section 3.7.3   9 Section 3.7.4   9 Section 3.8 Contracts and Obligations   9 Section 3.8.1 Identification   9 Section 3.8.2 Full Force and Effect   9 Section 3.8.3 No Default   9 Section 3.8.4 Copies   10 Section 3.8.5 Renegotiation   10 Section 3.8.6 Sufficiency of Contract   10 Section 3.9 Employees and Labor Matters   10 Section 3.9.1   10 Section 3.9.2   10 Section 3.9.3   10 Section 3.9.4   10 Section 3.9.5   11 Section 3.10 Litigation   11 Section 3.10.1 Litigation Pending or Threatened   11 Section 3.10.2 This Transaction   11 Section 3.11 Third Party Consent   11 Section 3.12 Permits   11 Section 3.13 Government Contracts Compliance   11 Section 3.14 Government Authorizations   11 Section 3.15 Taxes   12 Section 3.16 Benefit Plans   12 Section 3.16.1 Benefit Plans; Company Plans   12 Section 3.16.2 Company Group Matters; Funding   12 Section 3.16.3 Compliance   13 Section 3.16.4 Qualified Plans   13 Section 3.16.5 No Defined Benefit or Multi-employer Plans   13 Section 3.16.6 Prohibited Transactions; Fiduciary Duties; Post-Retirement Benefits   13 Section 3.17 Compliance with Environmental Laws   13 Section 3.17.1   14  Section 3.17.2  14 Section 3.17.3   14 Section 3.17.4   14 Section 3.17.5   14 Section 3.17.6   15 Section 3.17.7   15 Section 3.17.8   15 Section 3.17.9   15 Section 3.17.10   15 Section 3.18 Brokers   15 Section 3.19 Ownership of Company   15 Section 3.19.1 Units; Capitalization   15 
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     Section 3.19.2 Title to Units   16 Section 3.20 Disclosures   16      Article IV — Representations and Warranties of Buyer   16 Section 4.1 Organization   16 Section 4.2 Qualification of Buyer   16 Section 4.3 Authorization   16 Section 4.3.1 Authority   16 Section 4.3.2 No Breach of Violation   17 Section 4.4 Litigation   17 Section 4.4.1 Litigation Pending or Threatened   17 Section 4.4.2 This Transaction   17 Section 4.5 Brokers   17 Section 4.6 Third Party Consent   17 Section 4.7 Permits   18 Section 4.8 Government Contracts Compliance   18 Section 4.9 Government Authorizations   18 Section 4.10 Disclosures   18      Article V — Covenants   18 Section 5.1 Affirmative Covenants of Seller   18 Section 5.2 Negative Covenants of Seller   19 Section 5.3 Affirmative Covenants of Buyer   20 Section 5.4 Negative Covenants of Buyer   21 Section 5.5 Access to Information   22 Section 5.5.1 Access of Buyer Before Closing   22 Section 5.5.2 Access of Buyer After Closing   22 Section 5.5.3 Access of Sellers   22 Section 5.6 Filing and Authorizations   23 Section 5.7 Administration of Accounts   23 Section 5.7.1 In Trust for Buyer   23 Section 5.7.2 In Trust for Seller   23 Section 5.8 Tax and Other Excluded Liabilities   23 Section 5.8.1 Seller Obligations   23 Section 5.8.2 Buyer Obligations   24 Section 5.8.3 Conveyance Fees   24 Section 5.9 Further Assurances   24 Section 5.10 Public Announcements   24 Section 5.11 Risk of Loss   24      Article VI — Conditions Precedent to Obligations of Buyer and Buyer Parent   25 Section 6.1 Conditions   25 Section 6.1.1 Representations and Warranties   25 Section 6.1.2 No Material Adverse Change   25 Section 6.1.3 Due Diligence Review   25 Section 6.1.4 Schedules Delivered   25 
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     Section 6.1.5 No Adverse Facts Disclosed   25 Section 6.1.6 Obtaining of Consents and Approvals   25 Section 6.1.7 Performance by Seller and Seller Shareholder   26 Section 6.1.8 Absence of Litigation   26 Section 6.1.9 Officers Certificate   26 Section 6.1.10 Delivery of Documents   26 Section 6.2 Waiver   27      Article VII — Conditions Precedent to Obligations of Seller and Seller Shareholder   27 Section 7.1 Conditions   27 Section 7.1.1 Representations and Warranties   27 Section 7.1.2 No Material Adverse Change   27 Section 7.1.3 Due Diligence Review   27 Section 7.1.4 Schedules Delivered   27 Section 7.1.5 No Adverse Facts Disclosed   27 Section 7.1.6 Obtaining of Consents and Approvals   28 Section 7.1.7 Performance by Buyer and Parent Buyer   28 Section 7.1.8 Absence of Litigation   28 Section 7.1.9 Officer’s Certificate   28 Section 7.1.10 Delivery of Documents   28 Section 7.2 Waivers   28      Article VIII — Indemnification   29 Section 8.1 Survival of Representations   29 Section 8.2 Indemnification by the Seller and Seller Shareholder   29 Section 8.3 Indemnification by Buyer and Buyer Parent   29 Section 8.4 Notice of Claims   30 Section 8.5 Good Faith Effort to Settle Disputes; Set-Off   30      Article IX — Termination   30 Section 9.1 Termination Events   30 Section 9.1.1 Breach   30 Section 9.1.2 Mutual Consent   30 Section 9.1.3 Closing Date   30 Section 9.2 Effect on Termination   31      Article X — Seller Covenant Not to Compete   31 Section 10.1 Noncompetition Agreement   31 Section 10.1.1   31 Section 10.1.2   31 Section 10.1.3   32 Section 10.1.4   32 Section 10.1.5   32 Section 10.2 Allowed Competition   32 Section 10.2.1   32 Section 10.2.2   32 
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     Section 10.2.3   32 Section 10.2.4   32      Article XI — Miscellaneous   32 Section 11.1 Expenses   33 Section 11.2 Amendments and Waivers   33 Section 11.3 Entire Agreement   33 Section 11.4 Notices   33 Section 11.5 Severability   34 Section 11.6 Cumulative Remedies   34 Section 11.7 Waiver   34 Section 11.8 Assignment   34 Section 11.9 Successors and Assigns   34 Section 11.10 No Third Party Beneficiaries   34 Section 11.11 Counterparts   34 Section 11.12 Governing Law; Jurisdiction   34 Section 11.13 Dispute Resolution   35 Section 11.13.1   35 Section 11.13.2   35 Section 11.13.3   35 Section 11.14 Construction   35 Section 11.14.1 Words   35 Section 11.14.2 No Presumption   35 Section 11.14.3 Headings   35  Signatures   36  Index to Appendix and Schedules   37  Appendix A — Definitions   37  Schedules   42 Schedule 1.1 — Excluded Assets and Liabilities    Schedule 3.0 — Disclosure Schedule    Schedule 4.0 — Disclosure Schedule    Schedule A-8 — Contracts    
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**MEMBER INTEREST PURCHASE AGREEMENT**     This Member Interest Purchase Agreement (“Agreement”) is entered into as of December 29, 2009,by and among Energy Focus, Inc., a Delaware corporation (“Buyer”), Stones River Companies, LLC, aTennessee limited liability company (“Company”), TLC Investments, LLC, a Tennessee limitedliability company (“TLC”), and Jami Hall and Robert E. Wilson, Tennessee residents (TLC, Ms. Hall,and Mr. Wilson collectively, the “Sellers”).**RECITALS**     WHEREAS, TLC is the sole owner of all of the member interests of the Company (the “Units”) andMs. Hall and Mr. Wilson are the sole owners of all of the member interests of TLC; and     WHEREAS, upon the terms and subject to the conditions hereinafter set forth, Sellers desire tosell, and Buyer desires to purchase, the Units, subject to the terms and conditions set forthherein, so that on and after the Closing Date, as defined in Section 2.1, the Buyer can acquire theAssets of the Company and operate its Business, as defined in Appendix A.     NOW, THEREFORE, in consideration of the premises, and the mutual representations, warranties,covenants and agreements hereinafter set forth, and each intending to be legally bound hereby, theparties agree as follows:**ARTICLE I****PURCHASE AND SALE OF UNITS**     Section 1.1 Units; Excluded Assets; Excluded Liabilities.          1.1.1 Purchase of Units. Subject to the terms and conditions of this Agreement,Sellers shall sell, assign, transfer and deliver to Buyer at the Closing, and Buyer shall purchasefrom Sellers at the Closing, the Units, free and clear of all liens, encumbrances, and restrictionsof any kind, in exchange for the purchase price, as described in Article II below.          1.1.2 Excluded Assets. Sellers shall not sell, and Company shall not retain after theClosing, the assets of the Company set forth on Schedule 1.1 (the “Excluded Assets”). Prior to orafter the Closing, the Company shall transfer or distribute the Excluded Assets to the Sellers asthe parties shall agree.          1.1.3 Excluded Liabilities. As of and after the Closing, the Company shall not beresponsible for the liabilities of the Company set forth on Schedule 1.1 (the “ExcludedLiabilities”), and Sellers shall assume, perform, and in due course discharge the ExcludedLiabilities, and indemnify and hold harmless the Company and the Buyer from and against thoseLiabilities, according to the terms of Section 8.2. As of the Closing, the Assets of the Company
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being retained by it shall be free and clear of all liens, mortgages, encumbrances, andrestrictions.     Section 1.2 Transfer of Units. At the Closing, title to all of the Units shall passto Buyer. Sellers shall present to Buyer: (i) certificate(s) representing the Units, dulyendorsed, with powers of attorney duly executed in blank, with all transfer taxes, if any, paid infull, and/or a separate assignment of the Units, duly endorsed; (ii) the minute book(s), unitledgers and seal of Company; and (iii) such other instruments of title which are reasonablyappropriate to convey and assign all of the Units to Buyer. From and after the Closing, Sellersand Buyer shall cooperate to execute, deliver and record such instruments of title and otherdocuments reasonably requested by the other part(ies) in order to more fully perfect Buyer’s right,title and interest in and to the Units, and to more fully perfect the security interests and pledgegranted and conveyed from Buyer and Company to Sellers.     Section 1.3 Assignment of Contracts and Rights. Anything to the contrarynotwithstanding, this Agreement shall not operate to assign any Contract or any other Asset or anyclaim, right or benefit arising thereunder or resulting therefrom, if an attempted assignmentthereof as part of the sale and purchase of the Units, without the consent of a third party thereto(including a government or governmental unit), would constitute a breach, default or othercontravention thereof or in any way adversely affect the rights of Company, Sellers, or Buyerthereunder. Company, Sellers, and Buyer shall each use their reasonable best efforts to obtain theconsent of such third parties for the assignment hereof prior to Closing, and if such consent isnot obtained by Closing or if such attempted assignment thereof would not assign all of the rightsthereunder at Closing, then Company, Sellers, and Buyer, shall continue to cooperate and use theirreasonable best efforts to obtain an assignment of all of such rights thereunder. To the extentthat the consents and waivers referred to herein are not obtained, or until the impediments to thesale, assignment, transfer, delivery or sublease referred to therein are resolved, Sellers andCompany shall use their reasonable best efforts to: (i) provide, at the request of Buyer, to Buyerthe benefits of any such Asset referred to herein, (ii) cooperate in any lawful arrangementdesigned to provide such benefits to Buyer, and (iii) enforce, at the request of and for theaccount of Buyer, any rights of Sellers or Company arising from any Asset referred to hereinagainst any third person (including a government or governmental unit) including the right to electto terminate in accordance with the terms thereof upon the advice of Buyer. Buyer shall not berequired by this Section 1.3 to enter into any arrangement that would impose any additional cost,expense or liability or that would deprive Buyer of any material benefits or profits. Nothingherein shall affect the conditions to Buyer’s obligations set forth in Article VI herein.     Section 1.4 Survival of Quotations. For all Contracts, proposals, bids, and the likelisted on Schedule A-8, Sellers shall provide to Buyer copies of all quotations for the provisionof goods and services submitted by their Affiliates. Sellers shall cause those Affiliates to honorthose quotations and, if requested by Buyer, shall provide written confirmations from theAffiliates.
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**ARTICLE II****CLOSING; PURCHASE PRICE; OTHER CONSIDERATION**     Section 2.1 Closing. Subject to Section 9.1.3, the Closing (“Closing”) of the saleand purchase of the Units and the consummation of the other transactions contemplated herein, shalltake place as of December 31, 2009 (the “Closing Date”).     Section 2.2. Cash Purchase Price. On the Closing Date, Buyer shall deliver to Sellersby wire transfer in immediately available funds or by certified check the amount of One MillionFive Hundred Thousand Dollars ($1,500,000.00) (the “Cash Purchase Price”).     Section 2.3 Earn-Out.          (a) Buyer shall deliver to Sellers a quarterly payment equal to the product obtained bymultiplying (i) the Gross Revenue from the Business of the Company during the previous quarter by(ii) 0.025 (the “Earn-Out”). Gross Revenue is defined as total invoice price less tax and freighton materials-only sales, if listed as separate line items, and inclusive of properly executedchange orders. Gross Revenue from a project shall include all material, labor and professionalservices revenue associated with a contract recorded by the Company.          (b) The Earn-Out shall be paid to Sellers over a period of forty-two (42) months following theClosing Date. The Earn-Out shall be paid to Sellers within forty-five (45) days after the end ofeach calendar quarter, from the quarter ending December 31, 2009 through the quarter ending June30, 2013 (the “Earn-Out Period”). Buyer shall not be deemed to be in default under this Section2.3 unless and until it has failed to make full payment following written notice from Sellers toBuyer and 45-days opportunity to cure the failure to make timely payment.          (c) With respect to any project listed on Schedule A-8 and on which Sellers or any of theirAffiliates have accrued but unreimbursed engineering expenses, Sellers shall be deemed to haveearned engineering fees at 2.5% of the job’s unearned gross revenue. The fees shall be treated asa job-related cost entitled to mechanics’ and/or other lien rights as security for payment. Thepayment in full of the Earn-Out related to the project shall be deemed full payment of theengineering fees and expenses.     Section 2.4 Convertible Promissory Note. On the Closing Date, Buyer shall deliver toSellers a convertible promissory note in the principal face amount of $500,000.00 (the “PromissoryNote”)**.**The Promissory Note shall bear interest at the compound rate equal to the “Wall StreetJournal Prime Rate” in effect from time to time as and when announced and reported in the Journaland at www.bankrate.com plus two percent (2%). The Promissory Note, including all interestand other payments that may be due thereunder, shall be due and payable without demand immediatelyupon the earlier of (i) June 30, 2013 and/or (ii) the filing of any proceeding for bankruptcy,receivership and/or insolvency of Buyer and/or Company (the “Maturity Date”). Sellers shall havethe right to convert the entire principal face amount of the Promissory Note, in whole but not inpart, into 500,000 shares of Common Stock of Buyer
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during the period beginning on June 30, 2010 and ending on the Maturity Date. In the event of aconversion by Sellers, any and all accrued interest and other costs shall be immediately due andpayable in cash. Buyer shall pay to Sellers a fee of $500,000.00 if Buyer’s Common Stock has notperformed as set forth in the Note.     Section 2.5 Security Agreement. The obligations of Buyer under the Promissory Noteand under this Agreement shall be secured by a first-lien-position security interest in all Assetsand all other assets of Company pursuant to a security agreement among Sellers, Buyer, and Company(“Security Agreement”).     Section 2.6 Unit Pledge Agreement. The obligations of Buyer under the Promissory Noteand under this Agreement shall be secured by a first-lien-position security interest in and pledgeof all of the Units (including but not limited to any options, warrants or other contracts forissuance of units) pursuant to a unit pledge agreement among Sellers, Buyer, and Company (“UnitPledge Agreement”).     Section 2.7 Buyer Financial Termination Provision. The Security Agreement and theUnit Pledge Agreement shall provide that the Sellers, in addition to the ability to exercise anyand all remedies available at law or in equity, shall have the right to terminate this Agreementbefore June 30, 2013 if Buyer and/or Company files, or is placed into, bankruptcy, receivership, orany other form of reorganization or restructuring for the benefit of creditors, and that filing isnot discharged within sixty (60) days.     Section 2.8 Listing of Common Stock. Buyer shall use its best efforts to maintainthe listing of its common stock for trading on the NASDAQ Global Market. In the event that itscommon stock should cease to be listed on that Market, Buyer shall use its best efforts to promptlylist its common stock on a nationally recognized stock exchange, automated quotation system, orover-the-counter market. Buyer shall not be deemed to be in default under this Section 2.8 unlessand until its common stock has failed to be listed on a nationally recognized stock exchange,automated quotation system, or over-the-counter market for a period of at least ninety (90) days.     Section 2.9 Bonding Capacity. On and after the Closing Date, Buyer or Company shalldemonstrate its ability to procure and maintain performance and payment bonding sufficient for theamount and timing of the projects in its proposal “pipeline” by providing a reasonably satisfactoryLine of Authorization or other evidence of bonding capacity reasonably satisfactory to Sellers.     Section 2.10 Step-In Rights. In the event that Buyer or Company does not pursuespecific projects due to bonding considerations, in addition to the ability to exercise any and allremedies available at law or in equity, Sellers shall have “step-in” rights to assume and performprojects independent from Buyer and Company. Sellers can pursue any other projects that Buyer orCompany decline in writing.     Section 2.11 Rent. For a period of one year following the Closing Date, Sellers shallprovide Company with lighted, heated, and air conditioned office space at Sellers’ premises
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located at 1244 Gallatin Pike, Madison, Tennessee, or at such other location(s) as Sellers shalloperate their business activities, to conduct the Business being acquired by Buyer at no additionalcost to Buyer or Company pursuant to a rent agreement (the “Rent Agreement”).     Section 2.12 Post-Closing Operations Agreement. At the Closing the parties shallenter into a transition and post-closing operations agreement (the “Post-Closing OperationsAgreement”).     Section 2.13 Management Fee. Buyer shall cause Company to deliver to TLC a managementfee of $1,232,000.00, without set-off, paid in equal monthly installments at the end of each monthbeginning January 31, 2010 and ending December 31, 2010, for overhead expenses to TLC in support ofup to $20,000,000.00 in Company project revenues in 2010 for those projects on which TLC providesinstallation support services. Buyer shall cause Company to deliver an additional eight percent(8%) management fee on Company project revenues above $20,000,000.00 in fiscal year 2010 for thoseprojects on which TLC provides installation support services. “Project revenues” shall have thesame meaning as “Gross Revenue” in Section 2.3(a).     Section 2.14 Shares of Common Stock. At the Closing Buyer shall issue to Sellers1,000,000 shares of its Common Stock (the “Shares”). The Shares shall be entitled to the sameregistration rights as the conversion shares covered by the Convertible Promissory Note. Ifrequired by Sellers in writing on or before June 30, 2010, Buyer shall facilitate the sale of theShares at a guaranteed price of at least $1.00 per Share as soon as possible after written noticefrom the Sellers. If Buyer has not received a written notice from Sellers by July 1, 2010, theguarantee shall expire.**ARTICLE III****REPRESENTATIONS AND WARRANTIES OF SELLERS AND COMPANY**     Each of Sellers hereby represents and warrants to Buyer as of the date hereof and, ifdifferent, as of the Closing Date, except as set forth on Disclosure Schedule 3.0, as follows:     Section 3.1 Organization. Each of Company and TLC is a limited liability company dulyestablished, validly existing and in good standing under the laws of the State of Tennessee andhas the requisite company power and authority to own, use, operate or lease all of its propertyand assets, and to carry on its business as it is now being conducted, in all material respects.Company has no subsidiaries and does not have any ownership interests in any other Person.“Person” means an individual, a partnership, a corporation, a limited liability company andassociation, a joint stock company, a trust, a joint venture, any other legal entity, anunincorporated organization, or a governmental entity (or any department, agency, or politicalsubdivision thereof) and the term “Other Agreement” with respect to any party shall mean the otheragreements and documents contemplated hereby to be executed and delivered by such party or anyAffiliate thereof on or before the Closing.
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     Section 3.2 Qualification of Company. Company is duly qualified or licensed as aforeign corporation to do business, and is in good standing, in each jurisdiction where theBusiness or the nature of its activities makes such qualification or license necessary.     Section 3.3 Authorization.          3.3.1 Authority. Sellers and Company have all requisite power and legal authority toenter into and perform this Agreement and to consummate the transactions contemplated hereby. ThisAgreement has been duly executed and delivered by Sellers and Company and constitutes, and eachOther Agreement which is to be executed and delivered by Sellers and Company, when executed anddelivered by each of them, shall constitute, the legal, valid and binding obligation of them,enforceable in accordance with its terms, except to the extent that enforceability may be limitedby applicable bankruptcy, insolvency, reorganization, receivership, moratorium and other similarlaws relating to or affecting the rights and remedies of creditors generally and by generalprinciples of equity including, without limitation, concepts of materiality, reasonableness, goodfaith and fair dealing and the possible unavailability of specific performance, injunctive reliefor other equitable remedies, regardless of whether enforceability is considered in a proceeding inequity or at law.          3.3.2 No Breach or Violation. Execution, delivery and performance of this Agreementby Sellers and Company and consummation of the transaction contemplated hereby will not lead to orcause a violation, breach, or default or result in the termination of, or accelerate theperformance required by, or result in the creation or imposition of any Encumbrance (as defined inSection 3.5.), whether by notice or lapse of time or both, or otherwise conflict with any term orprovision of the following:          (a) Sellers’ or Company’s articles of organization or operating agreement, as amended;          (b) As of the Closing, any note, bond, mortgage, contract, indenture or agreement to lease,license or other instrument or obligation to which Sellers and/or Company is a party or is bound(as pertains to Company’s Business): (i) where such violation, breach or default would have amaterial adverse effect on the Units, the operation of the Business or the financial condition ofSellers or Company; or (ii) except as to which required consents, amendments or waivers shall havebeen obtained by Sellers or Company prior to the Closing for any such violation, breach or default;or          (c) Any court or administrative order, writ or injunction or process, or any permit, license,or consent decree to which Sellers or Company is a party or is bound.     Section 3.4 Financial Statements.          3.4.1 Statements. The Sellers have previously delivered to Buyer (a) the reviewedbalance sheets, income statements and retained earnings and statements of cash flows for Company,together with the accompanying footnotes, for the six (6) month period (“Reviewed AnnualStatement”) ended December, 2008 and (b) unaudited balance sheets,
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income statements and retained earnings and statements of cash flows for Company,together with the accompanying footnotes, for the nine month period ending September 30, 2009(the balance sheet as of September 30, 2009 is sometimes referred to herein as the (“InterimBalance Sheet”) which have been provided in electronic format as Account’s copy of Quickbooksaccounting records (all of the foregoing referred to herein collectively as the “Company FinancialStatements”). The Company Financial Statements have been prepared in accordance with GAAP on aconsistent basis throughout the indicated periods (except for changes required as a result ofchanges in GAAP and, with respect to the Interim Financial Statements, the absence of notes and fornormal year-end adjustments) and fairly present in all material respects the financial condition,assets and liabilities and results of operations and cash flows of Sellers in accordance with GAAPat the dates and for the periods indicated.          3.4.2 Accuracy. The Company Financial Statements, and each of them, fairly present theresults of operations, financial position and cash flows of for and as of the date or periodcovered thereby. Subject to normal year-end adjustments, the Company Financial Statements wereprepared in accordance with the tax accounting rules and regulations as adopted from time to timeby the Internal Revenue Service under the Internal Revenue Code of 1986, as amended (the “TaxConvention”) applied on a basis consistent with principles applied by Company in prior years, andin accordance with the books of account of Company, which have been maintained in all respects inaccordance with sound business practices, and reflect all transactions involving Sellers and setforth therein are, in all materials respects, true and correct.          3.4.3 No Undisclosed Liabilities. Company has no liabilities or obligations of anynature, secured or unsecured, known or unknown, due or to become due, asserted or unasserted,absolute, accrued, or unaccrued, liquidated or unliquidated, contingent, executory or otherwise, ofa nature required to be reflected in a balance sheet prepared in accordance with Tax Convention,which were not adequately and completely disclosed and reserved for in the Company FinancialStatements, except for those liabilities and obligations which were incurred since the FinancialDate in the ordinary course of business and which have been disclosed in writing in Schedule 3.0 toBuyer.          3.4.4 Absences of Changes. Other than as set forth in Schedule 3.0 deliveredhereunder, since the Financial Date there has not been and, as of the Closing Date, there shall notbe:          (a) Any material adverse change in the Assets, the Business, or the financial condition ofCompany;          (b) Any material change in the contingent obligations or liabilities of Company which relateto Company by way of guaranty, documentary credit, standby credit, endorsement, indemnity, warrantyor otherwise;          (c) Any material waiver or cancellation by Company of rights or of debts owed to Company;          (d) Any amendment to any agreement, commitment, or transaction (including without limitationany borrowing, lease, capital expenditure or capital financing, but excluding
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change orders and other contract amendments in the ordinary course of Company’s business) byCompany, material to the Business, the Assets, or Company or which, if such action were taken onthe date hereof, would require disclosure pursuant to this Agreement, or          (e) Any material change by Company is its accounting methods or practices, assumptions ormethods of calculating, or any change by Company in its accounting principles, relating to theBusiness.          3.4.5 Discharge of Liabilities. Other than as set forth in Schedule 3.0 deliveredhereunder, since the Financial Date and as of the Closing Date: (i) Company has not paid,discharged or satisfied any claims, liabilities or obligations (absolute, accrued, contingent orotherwise) other than the payment, discharge, or satisfaction in the ordinary course of businessand consistent with past practice; and (ii) Company has not terminated, amended or suffered thetermination or amendment of, or failed to perform all of its obligations under, any of theContracts or any agreement, contract, lease or license affecting the Business.     Section 3.5 Assets.          3.5.1 Title. Company has good, valid and marketable title to all of the Assets. Thetitle to each Asset is free and clear of all title defects, objections, liens, mortgages, securityinterests, pledges, charges and encumbrances, adverse claims, equities, or any other rights ofothers or other adverse interests of any kind including without limitation, licenses, escrowarrangements, leases, chattel mortgages, conditional sales contracts, collateral securityarrangements and other title or interest retention arrangements (each an “Encumbrance” andcollectively the “Encumbrances”).          3.5.2 Condition. All tangible Assets have no material defects, and are in goodoperating condition and repair and are adequate for the uses to which they are put in the Company.     Section 3.6 Equipment. There exists no condition which interferes with the economicvalue of any item of Equipment, except as disclosed on Disclosure Schedule 3.0.     Section 3.7 Intellectual Property.          3.7.1 Except as set forth in Disclosure Schedule 3.0, Seller has good, sole and marketabletitle to all such Intellectual Property, free and clear of any Encumbrances and Sellers are notaware of any claims that any rights or interest of Company in the Intellectual Property is beingchallenged in any way.          3.7.2 Except as set forth in Disclosure Schedule 3.0:               (a) Company has no patents or inventions, domestic or foreign, or pending applications forpatents on inventions, and no copyrights, registrations or pending application for registration ofcopyrights;
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               (b) No Person has any right of renewal, reversion, or termination with respect to anycopyrights owned by Seller or any rights under such copyrights;               (c) Company has no registered trademarks, trade names, service marks or pending applicationsto register trademarks, trade names, or service marks, related to any products or services sold orlicensed by it or which it otherwise uses in the conduct of its business;               (d) Company does not own any patents or applications for patents that relate to or affect theproducts or services sold or licensed to customers by Company or any Intellectual Property owned byCompany; and               (e) There are, and have been, no options, licenses or agreements of any kind relating to anyof the Intellectual Property owned by Company or to the use; manufacture, sale or otherexploitation of products or services based on or embodied in such Intellectual Property.          3.7.3 Company and Sellers acknowledge that Company has not maintained a trade secrets policy,that there is no Intellectual Property owned by Seller that requires such a policy, and that thefailure to have such a policy has not had a material adverse effect on the Business.          3.7.4. Company has not infringed or misappropriated, and is not infringing or misappropriatingany Intellectual Property of another Person and there is no claim pending, or to the knowledge ofCompany, threatened, against Company with respect to any alleged infringement or misappropriationof any Intellectual Property owned by another Person. Sellers have no knowledge that any Person isinfringing or misappropriating any Intellectual Property of Company.     3.8 Contracts and Obligations:          3.8.1 Identification. Schedule A-8 delivered hereunder includes an accurate andcomplete list as of the date hereof and as of the Closing Date, of the Contracts and identifieseach Contract by the parties thereto, the date, and subject matter.          3.8.2 Full Force and Effect. All Contracts are valid and binding upon Company and, tothe best knowledge and belief of Sellers, are valid and binding on the each other party thereto.          3.8.3 No Default. With respect to each of the Contracts, neither Company nor, to thebest knowledge and belief of Sellers, any other party thereto is in material breach thereof ormaterial default thereunder, and there does not exist any event, condition or omission which wouldconstitute such material breach or material default (whether by lapse of time or notice or both),except for such breaches, defaults and events as to which requisite waivers or consents have beenobtained.
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          3.8.4 Copies. Sellers have delivered to Buyer a correct and complete copy of eachwritten Contract and a written summary setting forth the terms and conditions of each oralcontract.          3.8.5 Renegotiation. There are no renegotiations of, attempts to renegotiate oroutstanding rights to renegotiate any material amounts paid or payable to Company under current orcompleted contracts with any person or entity having the contractual or statutory right to amend orrequire such renegotiation and no such person or entity has made written demand for suchnegotiation, excepting any change orders that are or would be issued in the ordinary course ofbusiness with respect to the Contracts.          3.8.6 Sufficiency of Contract. To the best knowledge and belief of Sellers, theContracts are of sufficient nature, condition and quantity to permit Buyer to operate the Businessimmediately upon the Closing in the ordinary course of business and consistent with the pastpractices of Company; provided however that Sellers make no representation or warranty regardingcash flow, profitability, Buyer’s capacity to bond or any other financial aspect of the Businessafter the Closing.     Section 3.9 Employees and Labor Matters.          3.9.1 Company has delivered to Buyer, and Buyer has acknowledged the receipt of, a list of (a)all agreements between Company and its employees or other Persons providing services forcompensation, and (b) all employees of Company entitled to receive annual compensation in excess of$5,000 and their positions, job categories, and salaries. The transactions contemplated by thisAgreement will not result in any liability for severance pay to any employee or other Person,excluding any potential liability for or arising out of a claim for unemployment benefits in theevent a Company employee is not immediately employed by Buyer. Company has not informed anyemployee or other Person that the Person will receive an increase in compensation as a result ofthe transactions covered by this Agreement, with the exception of employees who have job-relatedbenefits with Company which Buyer does not offer and in those circumstances Company has informedthose employees that Buyer has agreed to convert those benefits to an adjustment in paidcompensation. All of the employees of Company are “at will” employees and may be terminated byCompany at any time, without liability or obligation except the payment of normal compensationaccrued up to the time of termination of employment.          3.9.2 Company is in substantial compliance with all applicable federal, state and local lawsrespecting employment and employment practices, terms and conditions of employment, wages andhours.          3.9.3 There is no strike, labor dispute, slowdown or stoppage actually pending, or to the bestknowledge of Seller, threatened, against or directly affecting Company.          3.9.4 There is no pending complaint filed with the National Labor Relations Board or any othergovernmental agency alleging unfair labor practices, civil rights violations, employmentdiscrimination charges, or the like against Company with respect to the operation of
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the Business, and there are no existing facts which would lead to any such unfair labor practicecharge.          3.9.5 Company has not entered into any collective bargaining agreements with any party.     Section 3.10 Litigation.          3.10.1 Litigation Pending or Threatened. Except as listed in Schedule 3.0, there areno claims, actions, suits, hearings, arbitrations, disputes, proceedings (public or private) orgovernmental investigations, pending or threatened, against or affecting Company, the Units, theAssets, or the Business, at law or in equity, before or by any federal, state, municipal or othergovernmental or nongovernmental department, commission, board, bureau, agency, court or otherinstrumentality, or by any private person or entity, there is no basis for any such action, suit orproceeding, and there are no existing or threatened, orders, judgments or decrees of any court orgovernmental agency affecting Company, the Units, the Assets or the Business.          3.10.2 This Transaction. There are no legal, administrative, arbitration or otherproceedings or governmental investigations pending or threatened, against or affecting Company, theUnits, the Assets or the Business, which seek to enjoin or rescind the transactions contemplated bythis Agreement or otherwise prevent Sellers or Company from complying with the terms and provisionsof this Agreement.     Section 3.11 Third Party Consent. With the exception of Company’s or Sellers’lenders, there are no approvals, authorizations, certificates and consent of any third partiesnecessary or required to effect the transfer to Buyer of all rights, powers and franchises ofSellers related to Company, the Assets, or the Business, except as listed on Schedule 3.0.     Section 3.12 Permits. There are no approvals, authorizations, certificates, consents,licenses, orders and/or permits of any governmental agencies, whether federal, state or local,necessary to the ownership, use, or operation of Company, the Units, the Assets or the Business,except as set forth on Schedule 3.0 hereto. Sellers will cooperate with Buyer in Buyer’s effortsto obtain any such government approvals for a period of three months following Closing.     Section 3.13 Government Contracts Compliance. Company is not in, and consummation ofthis Agreement and the transactions contemplated hereby will not result in, any violation, breachor default of any term or provision of: (a) any contract, subcontract or agreement between anyUnited States, foreign, state or local governmental or regulatory authority and Seller, or (b) anybid, proposal or quote submitted to any United States, foreign, state or local governmental orregulatory authority by Company.     Section 3.14 Government Authorizations. Execution, delivery and performance of thisAgreement by Sellers and/or Company and consummation of the transactions contemplated hereby, willnot require any consent, approval, authorization, or permit from, or any filing with ornotification to, any United States, foreign, state or local governmental or regulatory authority,except with respect to government entities that are parties to Contracts.
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     Section 3.15 Taxes. As used in this Agreement, “Taxes” and all derivations thereofmeans any federal, state, local or foreign income, gross receipts, license, payroll, employment,severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, capitalstock, franchise, profits, withholding, social security (or similar), unemployment, disability,real property, personal property, sales, uses, ad valorem, transfer, registration, value added,alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including anyinterest, penalty, or addition thereto. The term “Tax Returns” shall include all federal, state,local and foreign returns, declarations, statements, reports, schedules, and information returnsrequired to be filed with any taxing authority in connection with any Taxes.               (a) Company has timely filed all Tax Returns and reports required to have been filed by it,and has paid all Taxes due to any taxing authority required to have been paid by it on or prior tothe date hereof;               (b) None of such Tax Returns contain, or will contain, a disclosure statement under Section6662 of the of the Code, or any equivalent or predecessor statute;               (c) Company has not received notice that the Internal Revenue Service or any other taxingauthority has asserted or proposed to assert against Seller any deficiency or claim for Taxes andno issue has been raised by any taxing authority in any audit which, by application of similarprinciples, reasonably could be expected to result in a proposed deficiency of Company for anyperiod not so examined;               (d) There are no pending or, to the knowledge of Sellers or Company, threatened actions,audits, proceedings or investigations with respect to Sellers involving the assessment orcollection of Taxes;               (e) There are no liens for Taxes due and payable upon the Assets; and               (f) Sellers and/or Company have not applied for a ruling relating to Taxes from any taxingauthority or entered into any closing agreement with any taxing authority.Sellers will hold harmless and indemnify Buyer and Company from all pre-acquisition tax obligationspursuant to Section 8.2.     Section 3.16 Benefit Plans.          3.16.1 Benefit Plans; Company Plans. Schedule 3.0 identifies the amounts of anydiscretionary annual contributions that Company has made to any Benefit Plan (or Seller Plan) inrespect of each of the last three (3) years or any portion thereof.          3.16.2 Company Group Matters; Funding. Company has no obligation to contribute to, orany direct or indirect liability under or with respect to, any Benefit Plan of the type describedin Sections 4063 and 4064 of ERISA or Section 413(c) of the Code. No accumulated fundingdeficiency (as defined in Section 302 of ERISA and Section 412 of the Code) exists nor has anyfunding waiver from the IRS been received or requested with respect to
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any Seller Plan, and no excise or other Tax is due or owing because of any failure to complywith the minimum funding standards of the Code or ERISA with respect to any Company Plan. Companyhas not at any time since its inception through and including the date hereof been subject to beingaggregated with any other corporation under Sections 414(b), (c), (m) or (o) of the Code.          3.16.3 Compliance. Each Company Plan and all related trusts, insurance contractsand funds have been created, maintained, funded and administered in all material respects incompliance with all applicable laws and in compliance with the plan document, trust agreement,insurance policy or other writing creating the same or applicable thereto. To the best knowledgeand belief of Sellers, no Company Plan is or is proposed to be under audit or investigation.          3.16.4 Qualified Plans. Schedule 3.0 discloses each Company Plan that purports tobe a qualified plan under Section 401(a) of the Code and exempt from United States federal incomeTax under Section 501(a) of the Code (a “Qualified Plan”). With respect to each Qualified Plan, adetermination letter (or opinion or notification letter, if applicable) covering the Tax Reform Actof 1986 and later Code changes for which the remedial amendment period has not closed has beenreceived from the IRS that such plan is qualified under Section 401(a) of the Code and exempt fromfederal income Tax under Section 501(a) of the Code. No Qualified Plan has been amended since thedate of the most recent such letter. To the best knowledge and belief of Sellers and Company nofiduciary of any Qualified Plan nor any agent thereof has done anything that would adversely affectthe qualified status of a Qualified Plan or the qualified status of any related trust.          3.16.5 No Defined Benefit or Multi-employer Plans. Company has not at any time sinceits inception sponsored or maintained a defined benefit plan within the meaning of Section 3(35) ofERISA.          3.16.6 Prohibited Transactions; Fiduciary Duties; Post-Retirement Benefits. Noprohibited transaction (within the meaning of Section 406 of ERISA and Section 4975 of the Code)with respect to any Company Plan exists or has occurred that could subject Company to any liabilityor Tax under Part 5 of Title I of ERISA or Section 4975 of the Code. Neither Company nor anyadministrator or fiduciary of any Company Plan, nor any agent of any of the foregoing, has engagedin any transaction or acted or failed to act in a manner that will subject Seller to any liabilityfor a breach of fiduciary or other duty under ERISA or any other applicable law. With theexception of the requirements of Section 4980B of the Code, no post-retirement benefits areprovided under any Company Plan that is a welfare benefit plan as described in ERISA Section 3(1).     Section 3.17 Compliance with Environmental Laws.
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          3.17.1 To the best knowledge and belief of Sellers and Company after investigation, theoperation of the Business by Company has been in compliance with the applicable laws andregulations of all federal, state and local government authorities having jurisdiction with respectthereto, including, without limitation, all requirements pursuant to environmental protection,health or safety laws and regulations (including the disposal of hazardous substances and solidwastes).          3.17.2 Company has not undertaken any activity causing (i) the premises to become a hazardouswaste treatment, storage or disposal facility within the meaning of the Resource Conservation andRecovery Act of 1976, 42 U.S.C. §6901 *et. seq.,*as amended (“RCRA”) or any similar federal, stateor local laws or regulations, (ii) a release or threatened release of hazardous waste from thePremises within the ambit of the Comprehensive Environmental Response, Compensation, and LiabilityAct of 1980 and the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et.seq., as amended (collectively referred to as “CERCLA”) or the Toxic Substances Control Act, 15U.S.C. §2601 et. seq., as amended (“TSCA”), or any similar federal, state or local laws andregulations, or (iii) the discharge of pollutants or effluents into any water source or system, orthe discharge into the air of any emissions, which would require a permit under the Federal WaterPollution Control Act, 33 U.S.C. §1251 et. seq., as amended (“FWPCA”), or the Clean AirAct, 42 U.S.C. §7401, et. seq., as amended (“CAA”), respectively, or any similar federal,state or local laws or regulations.          3.17.3 To the best knowledge and belief of Sellers and Company, no oil, petroleum, chemicalliquids, solid, liquid, gaseous products, toxic substances, or any wastes, solid waste, hazardouswaste or hazardous substance of any kind, are currently stored or used on the premises and have notbeen stored or used on the leased premises in the past, and no part of the premises is or has beenused as a dump or landfill of any kind except in the ordinary course of Seller’s Business. As usedherein, the terms “wastes”, “solid waste”, “hazardous waste”, and “hazardous substance” shall havethe meanings as such terms are defined in CERCLA, RCRA and in the Ohio Revised Code, as amended,and any regulations now or hereafter promulgated pursuant thereto, and shall also include anysewage or mixture of sewage or other waste material that passes through a sewer system to atreatment facility, any industrial waste-water discharges subject to regulation under FWPCA, andany source material, special nuclear material or byproduct material as defined by the Atomic EnergyAct of 1954, 42 U.S.C. §3011 et. seq., as amended.          3.17.4 Neither Company, nor, to the best of its or Sellers’ knowledge, any other party, hascaused or suffered to occur, a discharge, spillage, uncontrolled loss, seepage or filtration of oilor petroleum or chemical liquids or solid, liquid or gaseous products or hazardous waste (a“spill”), as those terms are used in Chapter 3745 of the Ohio Revised Code, as amended, at, upon,under, within or emanating from the Premises or any contiguous real estate which has been includedin the property description of the Premises within the preceding three years.          3.17.5 Company has not transported any Regulated Material or arranged for the transportationof any Regulated Material to any location that is listed or proposed for listing on the NationalPriorities List pursuant to CERCLA, on CERCLIS or any other location that is the subject offederal, state or local enforcement action or other investigation that may lead to claims
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against Seller for cleanup costs, remedial action, damages to natural resources, to otherproperty or for personal injury including claims under CERCLA. The Premises is not listed orproposed for listing on the National Priorities List pursuant to CERCLA, CERCLIS or any state orlocal list of sites requiring investigation or cleanup. “Regulated Material” means any hazardoussubstance as defined by any Environmental Law and any other material regulated by any applicableEnvironmental Law, including, polychlorinated biphenyls, petroleum, petroleum-related material,crude oil or any fraction thereof. “CERCLIS” means the Comprehensive Environmental ResponseCompensation Liability Information System List pursuant to CERCLA. “Environmental Law” means anyapplicable federal, state or local law, in effect as of the Closing Date, relating to theprotection of human health and safety, the environment or hazardous or toxic substances or wastes,pollutants or contaminants, including common law nuisance, property damage and similar common lawtheories.          3.17.6 Company has not received any request for information, notice of claim, demand or othernotification that it is or may be potentially responsible with respect to any investigation,abatement or cleanup of any threatened or actual release of any Regulated Material.          3.17.7 To the best knowledge and belief of Sellers and Company after investigation, Sellers orCompany have received all required federal, state, and local licenses, certificates or permitsrelating to the Business or the premises, and the Business and Company’s facilities, property andequipment are in compliance with the foregoing in all respects.          3.17.8 To the best knowledge and belief of Sellers and Company after investigation, Companyhas filed all applications, notices and other documents necessary to effect the timely renewal orissuance of all permits necessary under any Environmental Laws for the continued conduct andoperation of the Business in the manner now conducted.          3.17.9 To the best knowledge and belief of Sellers and Company after investigation, there areno permits, registrations, licenses and authorizations held by Company in connection with theBusiness under the Environmental Laws and Sellers and Company knows of no reason why the Businesswould require them.          3.17.10 Sellers and Company will hold harmless and indemnify Buyer from all pre-acquisitionEnvironmental obligations pursuant to Section 8.2.    Section 3.18 Brokers. No broker or finder has acted for Sellers or Company inconnection with this Agreement or the transactions contemplated hereby. Sellers and Company are notobligated to pay any fee or commission to any broker, finder, investment banker or otherintermediary in connection with the transactions contemplated by this Agreement.     Section 3.19 Ownership of Company.          3.19.1 Units; Capitalization. There are no Securities Rights with respect to anyUnits, nor are there any securities convertible into or exchangeable for any Units, or any otherSecurity Rights with respect to any unissued Units. “Securities Right” means any option,
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warrant, other right, proxy, put, call, demand, plan, commitment, agreement, understanding, orarrangement of any kind relating to any Units, or any right relating to issuance, sale, assignment,transfer, purchase, redemption, conversion, exchange, registration or voting rights with respect toany Units of the Company, whether issued or unissued, or any other security convertible into orexchangeable for Units of the Company conferred by statute, by the Company’s governing documents,or by agreement, including any subscription right, pre-emptive purchase right, or registrationright. All of the Units are (a) validly issued, fully paid and nonassessable, (b) were not issuedin violation of the terms of any agreement or other understanding of Company, and (c) were issuedin compliance with all applicable federal and state securities laws and regulations.          3.19.2. Title to Units. TLC owns all of the Company’s Units. Ms. Hall and Mr.Wilson own all of the member interests of TLC.     Section 3.20 Disclosures. To the best knowledge and belief of Sellers and Companyafter investigation, no statement, representation or warranty made by Sellers or Company in thisAgreement, in any Exhibit hereto or Schedule delivered hereunder, or in any certificate, statement,list, schedule or other document furnished or to be furnished to Buyer hereunder, contains anyuntrue statement of a material fact, or fails to state a material fact necessary to make thestatements contained herein or therein, in light of the circumstances in which they are made, notmisleading.**ARTICLE IV****REPRESENTATIONS AND WARRANTIES OF BUYER**     Buyer hereby represents and warrants to Sellers, as of the date hereof and, if different, asof the Closing Date, except as set forth on Disclosure Schedule 4.0, as follows:     Section 4.1 Organization. Buyer is a corporation duly organized, validly existing andin good standing under the laws of Delaware, and has the requisite power and authority to own,operate or lease the properties that it requires to carry on its businesses in all materialrespects as such is now being conducted.     Section 4.2 Qualification of Buyer. As of the Closing, Buyer shall be duly qualifiedor licensed as a foreign corporation to do business, and is in good standing, in Tennessee, if suchqualification is necessary in the reasonable judgment of Buyer, and in each other jurisdictionwhere the character of the Assets, the Business or the nature of its activities makes suchqualification or license necessary.     Section 4.3 Authorization.          4.3.1 Authority. Buyer has all requisite power and authority to enter into andperform this Agreement and to consummate the transactions contemplated hereby. This Agreement is avalid and binding obligation of it, enforceable in accordance with its terms. This Agreement hasbeen duly executed and delivered by Buyer and constitutes, and each Other Agreement which is to beexecuted and delivered by Buyer, when executed and delivered by it,
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shall constitute, the legal, valid and binding obligation of it, enforceable in accordance with itsterms, except to the extent that enforceability may be limited by applicable bankruptcy,insolvency, reorganization, receivership, moratorium and other similar laws relating to oraffecting the rights and remedies of creditors generally and by general principles of equityincluding, without limitation, concepts of materiality, reasonableness, good faith and fair dealingand the possible unavailability of specific performance, injunctive relief or other equitableremedies, regardless of whether enforceability is considered in a proceeding in equity or at law.          4.3.2 No Breach or Violation. Execution, delivery and performance of this Agreementby Buyer and consummation of the transactions contemplated hereby will not cause a breach ordefault or otherwise conflict with any term or provision of the following:               (a) Its articles of incorporation or bylaws, as may be amended;               (b) Any court of administrative order, writ or injunction or process, or any consent decree towhich it is party or is bound: (i) where such violation, breach or default would have a materialadverse effect on the business, results of operations or financial condition of it, considered as awhole, or (ii) except as to which required consents, amendments or waivers shall have been obtainedby it prior to the Closing for any such violation, breach or default.     Section 4.4 Litigation.          4.4.1 Litigation Pending or Threatened. There are no claims, actions, suits,hearings, arbitrations, disputes, proceedings (public or private) or governmental investigationspending or, to the best of Buyer’s knowledge, threatened, against or affecting Buyer, at law or inequity, before or by any federal, state, municipal or other governmental or non-governmentaldepartment, commission, board, bureau, agency, court or other instrumentality, or by any privateperson or entity, there is no basis for any such action, suit or proceeding, and there are noexisting or threatened, orders, judgments or decrees of any court or governmental agency affectingBuyer.          4.4.2 This Transaction. There are no legal, administrative, arbitration or otherproceedings or governmental investigations pending or, to the best of Buyer’s knowledge, threatenedagainst Buyer which seek to enjoin or rescind the transactions contemplated by this Agreement orotherwise prevent Buyer from complying with the terms and provisions of this Agreement.     Section 4.5 Brokers. Buyer has not paid or become obligated to pay any fee orcommission to any broker, finder, investment banker or other intermediary in connection with thetransactions contemplated by this Agreement.     Section 4.6 Third Party Consent. With the exception of notification to NASDAQ StockMarket, LLC and Buyer’s senior lender, there are no approvals, authorizations, certificates andconsent of any third parties necessary or required for Buyer to fulfill its obligations under thisAgreement.
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     Section 4.7 Permits. Buyer shall obtain, by Closing, any approvals, authorizations,certificates, consents, licenses, orders and/or permits of any governmental agencies, whetherfederal, state or local, necessary to the ownership, use or operation of the Units, Assets, orBusiness.     Section 4.8 Government Contracts Compliance. Buyer is not in, and consummation ofthis Agreement and the transactions contemplated hereby will not result in any, violation, breachor default of any term or provision of: (a) any contract, subcontract or agreement between anyUnited States, foreign, state or local governmental or regulatory authority and Buyer or (b) anybid, proposal or quote submitted to any United States, foreign, state or local governmental orregulatory authority by Buyer.     Section 4.9 Government Authorizations. Execution, delivery and performance of thisAgreement by Buyer, and consummation of the transactions contemplated hereby, will not require anyconsent, approval, authorization, or permit from, or any filing with or notification to, any UnitedStates, foreign, state or local governmental or regulatory authority except with respect toGovernment entities who are parties to Contracts, and except for a notification to NASDAQ StockMarket, LLC.     Section 4.10 Disclosures. To the best knowledge and belief of Buyer afterinvestigation, no statement, representation or warranty made by Buyer in this Agreement, in anyexhibit hereto or Schedule delivered hereunder, or in any certificate, statement, list, schedule orother document furnished or to be furnished to Sellers hereunder, contains any untrue statement ofa material fact, or fails to state a material fact necessary to make the statements containedherein or therein, in light of the circumstances in which they are made, not misleading.**ARTICLE V****COVENANTS**     Section 5.1 Affirmative Covenants of Sellers. With respect to the Company, the Units,the Business, and the Assets, except as may be agreed in writing by Buyer, each Seller shall, andshall cause Company to, at all times from the date hereof through the Closing Date:               (a) Use its best efforts to preserve and protect the goodwill, rights, properties, assets andbusiness organization of Company and to prevent the occurrence of any event or condition whichwould have a material adverse effect on the Assets, the Business or the financial condition orresults of operations of Company;               (b) Use its best efforts to preserve and protect the present goodwill and relationships ofCompany and the Business with creditors, suppliers, customers, licensors, licensees, contractors,distributors, the U.S. Government, lessors and lessees and others having business relationshipswith it;               (c) Maintain clear, unencumbered title to the Units and the Assets and maintain all tangibleAssets in customary repair, order and condition, reasonable wear and tear,
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damage by fire and othercasualty excepted, and promptly repair, restore or replace any Assets which are damaged ordestroyed by fire or other casualty, whether insured or uninsured;               (d) Comply in all material respects with all applicable federal, state, foreign and locallaws, rules and regulations;               (e) Maintain the books and records of Company in the usual and ordinary course consistent withpast practices in such manner as is necessary to ensure satisfaction of the representations andwarranties set forth in Article III of this Agreement and in a manner that fairly and accuratelyreflects its income, expenses, assets, and liabilities in accordance with Tax Convention;               (f) File all Tax Returns required to be filed and make timely payment of all Taxes shown to bedue on such returns;               (g) Use its best efforts to obtain, prior to the Closing Date, all consents, approvals andwaivers, including all such consents, approvals or waivers required to be obtained from thegovernment (whether federal, state or local) its customers, vendors, suppliers, lessors, andconsents of the other parties to the contracts and any teaming agreements, partnerships or otherarrangements between Company and any other person or entity, necessary or required to vest in Buyerall of Sellers’ and Company’s rights and title to, and interest in, the Assets in conformity withthe representations and warranties of Sellers herein;               (h) Promptly notify Buyer in writing of any adverse change in the Business or the Assets, orany adverse change with respect to the relationships of Company and its employees or its creditors,suppliers, customers, subcontractors, licensors, licensees, lessors and lessees, and others havingbusiness relationships with it;               (i) Promptly notify Buyer in writing of the threat, institution or receipt of any claim,action, suit, inquiry, proceeding, notice of violation, demand letter, subpoena, government auditor disallowance by or before any court or governmental or other regulatory or administrativeagency; and               (j) Promptly supplement or amend and deliver to Buyer supplements or amendments to theSchedules that Sellers are required to prepare hereunder with respect to any matter arisinghereafter which, if existing or occurring as at the date of this Agreement, would have beenrequired to have been set forth and described in such Schedule. No supplement or amendment of aSchedule made pursuant to this Paragraph (j) of Section 5.1 shall be deemed to cure any breach ofany representation or warranty made in this Agreement, nor shall any such supplement or amendmentbe deemed to relate back to any date prior to its delivery without the written consent of Buyer.     Section 5.2 Negative Covenants of Sellers**.** With respect to the Company, the Units,the Business, and the Assets, each Seller shall not, and shall cause Company not to, do any of thefollowing, without the prior written consent of Buyer, from the date hereof through theClosing Date:
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               (a) Incur or agree to incur any obligation or liability (absolute or contingent) in connectionwith any of the Company, the Units, the Business, or the Assets, except liabilities arising out of,incurred in connection with, or related to the operation of the Business in the ordinary course andthe consummation of this Agreement;               (b) Sell, transfer, assign, license or otherwise dispose of, or encumber in any way, any ofthe Units, the Company, the Business, or the Assets;               (c) Amend, modify or terminate any of the Contracts;               (d) Waive or cancel any rights or claims relating to the Company, the Units, the Business, orthe Assets;               (e) Seek, solicit or agree to any offer for the sale of the Company, the Units, the Business,or the Assets or any material part thereof, or seek, solicit or agree to any merger of the Companywith any other entity whereby the Company or its successor shall not be fully capable of andobligated to perform all of the Company’s obligations under this Agreement;               (f) Undertake any transaction, including, but not limited to, the incurring of anyindebtedness for borrowed money, except in the ordinary course of business; or               (g) Offer or enter into any contract, understanding, plan, or agreement to take any actiondescribed in this Section 5.2.     Section 5.3 Affirmative Covenants of Buyer. With respect to the Company, theBusiness, and the Assets, except as may be agreed in writing by Sellers and the Company, Buyer eachshall at all times from the date hereof through the end of the Earn-Out Period:               (a) Use its best efforts to preserve and protect the goodwill, rights, properties, assets andbusiness organization of the Company and to prevent the occurrence of any event or condition whichwould have a material adverse effect on the Business, the Assets, or the financial condition orresults of operations of the Company;               (b) Use its best efforts to preserve and protect the present goodwill and relationships of theCompany with creditors, suppliers, customers, licensors, licensees, contractors, distributors, theU.S. Government, lessors and lessees and others having business relationships with it;               (c) Maintain clear unencumbered title to the Units, the Company, the Business, and the Assets,with the exception of a first-lien-position security interest granted to Sellers, and a second- orthird-lien-position security interest granted to a senior or mezzanine lender, and maintain alltangible Assets in customary repair, order and condition, reasonable wear and tear, damage by fireand other casualty excepted, and promptly repair, restore orreplace any Assets which are damaged or destroyed by fire or other casualty, whether insuredor uninsured;
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               (d) Comply in all material respects with all applicable federal, state, foreign and locallaws, rules and regulations;               (e) Maintain the books and records of Buyer and Company in the usual and ordinary courseconsistent with past practices in such manner as is necessary to ensure satisfaction of therepresentations and warranties of Buyer as set forth in this Agreement and in a manner that fairlyand accurately reflects its income, expenses, assets, and liabilities in accordance with TaxConvention;               (f) File all Tax Returns required to be filed and make timely payment of all Taxes shown to bedue on such returns;               (g) Promptly notify Sellers in writing of any adverse change in the Business, or any adversechange with respect to the relationships of Buyer and Company and their employees or theircreditors, suppliers, customers, subcontractors, licensors, licensees, lessors and lessees, andothers having business relationships with them; and               (h) Promptly notify Sellers in writing of the threat, institution or receipt by Buyer orCompany of any claim, action, suit, inquiry, proceeding, notice of violation, demand letter,subpoena, government audit or disallowance by or before any court or governmental or otherregulatory or administrative agency.     Section 5.4 Negative Covenants of Buyer**.** With respect to the Units, the Company, theBusiness, and the Assets, Buyer shall not do any of the following from the date hereof through theend of the Earn-Out Period:               (a) Incur or agree to incur any obligation or liability (absolute or contingent) in connectionwith any of the Units, the Company, the Business, or the Assets, except liabilities arising out of,incurred in connection with, or related to the operation of the Business in the ordinary course andthe consummation of this Agreement;               (b) Sell, transfer, assign, license or otherwise dispose of, or encumber in any way, any ofthe Units, the Company, the Business, or the Assets, with the exception of a first-lien-positionsecurity interest granted to Sellers, and a second- or third-lien-position security interestgranted to a senior or mezzanine lender;               (c) Amend, modify or terminate any of the Contracts in any matter that would materiallydiminish the gross revenue projected as of Closing;               (d) Seek, solicit or agree to any offer for the sale of the Units, the Company, the Business,or the Assets, or any material part thereof, or seek, solicit or agree to any merger of Buyer withany other entity whereby Buyer or its successor shall not be fully capable of and obligated toperform all of Buyer’s obligations under this Agreement;
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               (e) Incur any indebtedness for borrowed money that is senior in lien position to the lienposition of Sellers; or               (f) Offer or enter into any contract, understanding, plan, or agreement to take any actionproscribed in this Section 5.4.     Section 5.5 Access to Information.          5.5.1 Access of Buyer Before Closing. Subject to the April 20, 2009 ConfidentialityAgreement previously signed and delivered by the parties hereto, from and after the date of thisAgreement and until the Closing Date, Buyer and its agents and representatives shall have full andcomplete access: (a) to all properties (whether real or personal), books and records of the Company(the confidentiality of which Buyer agrees to maintain) for purposes of conducting suchinvestigations, appraisal or audits at its own expense as Buyer deems necessary or advisable underthe circumstances; (b) to review, analyze and investigate the Intellectual Property, and allaspects concerning such property; and (c) to discuss any related business affairs of, and condition(financial or otherwise) of, Seller, the Business and/or the Business with such persons, includingbut not limited to the directors, officers, employees, accountants, landlords, counsel andcreditors of Seller as Buyer considers necessary for the purposes of conducting its investigations,appraisals or audits in connection with the transactions contemplated by this Agreement.          5.5.2 Access of Buyer After Closing. Sellers shall furnish to Buyer all financial andTax Return information as reasonably may be requested after the Closing for the purpose of filingor defending tax returns of Buyer or a subsequent purchaser of the Company or the Business.          5.5.3 Access of Sellers. From and after the date of this Agreement and until theend of the Earn-Out Period, Sellers and their agents and representatives shall have full andcomplete access, for the purpose of verifying compliance with the representations, warranties, andcovenants of this Agreement: (a) to all properties (whether real or personal), books and records ofBuyer relating to the Units, the Company, the Business, and the Assets (the confidentiality ofwhich Sellers agree to maintain) for purposes of conducting such investigations, appraisals oraudits at their own expense as Sellers deems necessary or advisable under the circumstances; (b) toreview, analyze and investigate the Intellectual Property, and all aspects concerning suchproperty; and (c) to discuss any related business affairs of, and condition (financial orotherwise) of, the Company, the Business, and/or the Assets with such persons, including but notlimited to the directors, officers, employees, accountants, and counsel of Buyer as Sellersconsider necessary for the purposes of conducting its investigations, appraisals or audits. Uponrequest of Sellers, Buyer shall provide the following reports:          1) Monthly income statement for the Company.          2) Monthly pipeline report.          3) Monthly schedule of completed and uncompleted projects.
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     Section 5.6 Filing and Authorizations. (a) To the extent not obtained prior tothe Closing, Sellers each shall, after the Closing Date, continue to use its best efforts promptlyto comply with all federal, state, and local laws and regulations and to obtain all necessarygovernmental authorizations, and approvals to: (i) obtain all consents, approvals and waivers,including all such consents, approvals or waivers required to be obtained from the government(whether federal, state or local) and Company’s customers, vendors, suppliers, lessors, andconsents of the other parties to the contracts and any teaming agreements, partnerships or otherarrangements between Company and any other person or entity, necessary or required to vest in Buyerall of Company’s rights and title to, and interest in, the Company, the Business, and the Assetsin conformity with the representations and warranties of Sellers herein, and (ii) obtain allpermits, licenses and waivers, with regard to the transactions contemplated by this Agreement.          (b) Buyer shall, after the Closing Date, use its best efforts to comply with all federal,state, and local laws and regulations and to obtain all necessary governmental authorizations, andapprovals to: (i) obtain all consents, approvals and waivers, including all such consents,approvals or waivers required to be obtained from the government (whether federal, state or local)and Company’s customers, vendors, suppliers, lessors, and consents of the other parties to theContracts and any teaming agreements, partnerships or other arrangements between Buyer and anyother person or entity, necessary or required operate the Company and the Business in conformitywith the representations and warranties of Sellers herein, and (ii) obtain all permits, licensesand waivers, with regard to the transactions contemplated by this Agreement.     Section 5.7 Administration of Accounts.          5.7.1 In Trust For Buyer. All payments and reimbursements made in the ordinary courseby any third party in the name of or to the Company in connection with or arising out of theBusiness and the Assets after the Closing Date, shall be held by Sellers in trust to the benefit ofthe Company and, immediately (not more than twenty-one (21) calendar days) upon receipt by Sellersof any such payment or reimbursement, Sellers shall pay over to the Company the amount of suchpayment or reimbursement without right of set-off.          5.7.2 In Trust for Seller**.**All payments and reimbursements made in the ordinarycourse by any third party in the name of or to Buyer or the Company in connection with or arisingout of the Excluded Assets after the Closing Date shall be held by Buyer and the Company in trustto the benefit of Sellers and, immediately (not more than twenty-one (21) calendar days) uponreceipt by Buyer or the Company of any such payment or reimbursement, Buyer or the Company shallpay over to Sellers the amount of such payment or reimbursement without right of set-off.     Section 5.8 Taxes and Other Excluded Liabilities.          5.8.1 Sellers’ Obligations. Sellers acknowledge their legal obligations to pay theExcluded Liabilities, including Taxes relating to all items of income, loss, gain, deduction andcredit attributable to or relating to ownership of the Company and the Business up to and includingthe Closing Date.
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          5.8.2 Buyer and Company Obligations. Buyer and the Company acknowledge their legalobligations to pay Taxes relating to all items of income, loss, gain, deduction and creditattributable to or relating to ownership of the Company and the Business assets after the ClosingDate.          5.8.3 Conveyance Fees. Seller shall promptly file and pay when due any and allreturns with respect to any conveyance or transfer taxes or fees, excluding sales and use taxes,with respect to the sale, transfer and purchase of the Business and the Assets of the Company underthis Agreement.     Section 5.9 Further Assurances. From time to time after the Closing, Sellers shall attheir own expense, execute and deliver, or cause to be executed and delivered, such documents toBuyer and the Company as they may reasonably request, and from time to time after the Closing,Buyer and Company shall, at their own expense, execute and deliver such documents to Sellers asthey may reasonably request, in order to more effectively consummate the transaction contemplatedby this Agreement.     Section 5.10 Public Announcements. Except as required by law, Sellers, Buyer, andCompany shall consult with each other before issuing any press release or otherwise making anypublic statement with respect to this Agreement and the transactions contemplated hereby, and shallnot issue any such press release or make any such public statement prior to such consultation.     Section 5.11 Risk of Loss. If between the date hereof and the Closing Date, there isany loss, destruction or other physical damage to the Business or any Assets resulting from theft,accident or any other casualty, whether or not insured, or any lien or encumbrance exists or isplaced on any Units or Assets and is not removed or released on or prior to the Closing Date(collectively, a “Casualty Loss”), then Sellers shall promptly give notice to Buyer of suchCasualty Loss and the amount of insurance, if any, payable to Sellers with respect thereto. If suchCasualty Loss does not prevent the fulfillment of a condition to Buyer’s obligations to consummatethe transactions contemplated by this Agreement, or if it does and Buyer waives such condition,then Buyer shall have the option, which shall be exercised by Buyer by giving Sellers writtennotice within ten (10) days after receipt of the above notice from Sellers, or if there is not ten(10) days prior to the Closing Date, as soon as possible but not less than (24) hours prior to theClosing, of either: (i) causing the affected Asset to become an Excluded Asset and Buyer shall beentitled to reduce the Purchase Price payable to Sellers at Closing pursuant to Subsection 2.3.1 inan amount equal to a binding estimate to be obtained by Sellers from a qualified third partyreasonably acceptable to Buyer of the cost required to restore the affected Asset substantially toits condition prior to such Casualty Loss or the reasonably estimated value of the affected Asset;or (ii) terminating this Agreement whereupon Sellers and Buyer shall have no liabilities orobligations with respect to the transactions contemplated by this Agreement.
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**ARTICLES VI****CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER**     Section 6.1 Conditions. The obligations of Buyer under this Agreement to performArticles I and II herein shall be subject to the fulfillment, to its reasonable satisfaction, on orprior to the Closing Date, of all of the following conditions precedent:          6.1.1 Representations and Warranties. All representations and warranties of Sellersand of Company contained in this Agreement and in all certificates, schedules and other documentsdelivered by Sellers to Buyer or its representatives pursuant to this Agreement and/or inconnection with the transactions contemplated hereby shall be true, complete and accurate in allmaterial respects as of the date when made and as of the Closing Date with the same force andeffect as though such representations and warranties had been made on and as of the Closing Date.          6.1.2 No Material Adverse Change**.**During the period from the date hereof to theClosing Date, Sellers shall not have sustained any material loss or damage to the Units, theCompany, the Business, or the Assets, whether or not insured, nor shall there have been anymaterial adverse change in the Business.          6.1.3 Due Diligence Review. During the period from the date hereof to the ClosingDate, Buyer shall have had the opportunity to complete its due diligence investigation inconnection with the transactions contemplated by this Agreement and such investigation has notrevealed any fact, event or circumstance which, in its sole discretion, could be expected to have amaterial adverse effect on the transactions contemplated by this Agreement.          6.1.4 Schedules Delivered. All Schedules to be delivered to Buyer prior to Closinghereunder shall have been so delivered to it either at the time of execution of this Agreement orwith time sufficient for Buyer’s review, and each such Schedule shall be satisfactory in form andcontent to them, such satisfaction to be determined at their sole discretion.          6.1.5 No Adverse Facts Disclosed. Neither any investigation of Sellers, nor anydisclosure Schedule, nor any other document delivered in connection with this Agreement, shall haverevealed any facts and circumstances which reflect in a material adverse way on the Units, theCompany, the Business, or the Assets, as determined by Buyer in its sole discretion and judgment.          6.1.6 Obtaining of Consents and Approvals. Except as otherwise contemplated by thisAgreement, Sellers shall have executed and delivered to Buyer, or shall have caused to be executedand delivered, any consents, waivers, approvals, permits, licenses or authorizations which, if notobtained on or prior to the Closing Date, would have a material adverse effect on the Units, theCompany, the Business, or the Assets.
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          6.1.7 Performance by Sellers. Sellers shall have performed and complied in allmaterial respects with all agreements, covenants, obligations and conditions required by thisAgreement to be performed or complied with by them on or before the Closing Date.          6.1.8 Absence of Litigation. There shall not be in effect any judicial or regulatoryorder enjoining or restraining the transactions contemplated by this Agreement, and there shall notbe instituted or pending any action or proceeding before any federal, state or foreign court orgovernmental agency or other regulatory or administrative agency or instrumentality: (a)challenging the acquisition by Buyer of the Units, the Company, the Business, or the Assets, orotherwise seeking to restrain, materially condition or prohibit consummation of the transactionscontemplated by this Agreement, or seeking to impose any material limitations on any provision ofthis Agreement, or (b) seeking to compel Buyer or Sellers to dispose of or hold separate, theUnits, the Company, the Business, or the Assets, or any portion of them, as a result of thetransactions contemplated by this Agreement.          6.1.9 Officers Certificate. Buyer shall have received a certificate, dated theClosing Date, executed by Sellers stating that the conditions set forth in Sections 6.1.1 through6.1.3 and 6.1.5 through 6.1.7 hereof have been satisfied.          6.1.10 Delivery of Documents; Other Actions. (a) The execution and delivery toBuyer by Sellers and/or Company of the following, all dated as of the Closing Date and acceptablein form and substance to Buyer, Sellers, and Company:               (i) a separate assignment of the Units;               (ii) the agreements and documents required by the terms of this Agreement to be executed anddelivered by Sellers and/or the Company;               (iii) the noncompetition, nondisclosure and nonsolicitation agreements of Sellers andemployees of the Company required by Buyer and an employment agreement between the Company andRobert E. Wilson;               (iv) such other conveyances, instruments of title, assignments, consents, recordings, andother documents as may be, in the reasonable opinion of Buyer, necessary or proper to transfer toit ownership of the Units, the Company, the Business, and the Assets and rights being acquired bythem hereunder; and               (v) such other documents, instruments and certificates as may be reasonably requested by Buyeror its counsel to effectuate the transactions contemplated by this Agreement, including withoutlimitation the quotation commitments from Affiliates of Sellers referred to in Section 1.1.6.          (b) The receipt by Buyer and delivery to Sellers of evidence of bonding capacity reasonablysatisfactory to Sellers, as required by Section 2.9, and the execution by and exchange among Buyer,Sellers, and Company of an agreement relating to post-closing invoices, payments, and purchaseorders, and other subjects.
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          (c) The version of this Agreement dated as of December 29, 2009 and signed by the parties,has been approved and ratified by the Board of Directors of Buyer.     Section 6.2 Waiver. Buyer may, in its sole discretion, waive in writing fulfillmentof any or all of the conditions set forth in Section 6.1 of this Agreement, provided that suchwaiver granted pursuant to this Section 6.2 shall have no effect upon any of the other conditionsnot so waived.**ARTICLE VII****CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS**     Section 7.1 Conditions. The obligations of each Seller under this Agreement to performArticles I and II herein shall be subject to the fulfillment, to its reasonable satisfaction, on orprior to the Closing Date, of all of the following conditions precedent:          7.1.1 Representations and Warranties. All representations and warranties of Buyercontained in this Agreement and in all certificates, schedules and other documents delivered byBuyer to Sellers or their representatives pursuant to this Agreement and or in connection with thetransactions contemplated hereby shall be true, complete and accurate in all material respects asof the date when made and as of the Closing Date with the same force and effect as though suchrepresentations and warranties had been made on and as of the Closing Date.          7.1.2 No Material Adverse Change**.**During the period from the date hereof to theClosing Date, Buyer shall not have sustained any material adverse change in its business oroperations.          7.1.3 Due Diligence Review. During the period from the date hereof to the ClosingDate, each Seller shall have had the opportunity to complete its due diligence investigation inconnection with the transactions contemplated by this Agreement and such investigation has notrevealed any fact, event or circumstance which, in its sole discretion, could be expected to have amaterial adverse effect on the transactions contemplated by this Agreement.          7.1.4 Schedules Delivered. All Schedules to be delivered to Sellers prior to Closinghereunder shall have been so delivered to them either at the time of execution of this Agreement orwith time sufficient for Sellers’ review, and each such Schedule shall be satisfactory in form andcontent to them, such satisfaction to be determined at their sole discretion.          7.1.5 No Adverse Facts Disclosed. Neither any investigation of Buyer or any Schedule,nor any other document delivered in connection with this Agreement, shall have revealed any factsand circumstances which reflect in a material adverse way on Buyer or its
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ability to carry out the events and obligations established by this Agreement through theexpiration of the Earn-Out Period, as determined by Sellers in their sole discretion and judgment.          7.1.6 Obtaining of Consents and Approvals. Except as otherwise contemplated by thisAgreement, Buyer shall have executed and delivered to Sellers, or shall have caused to be executedand delivered, any consents, waivers, approvals, permits, licenses or authorizations which, if notobtained on or prior to the Closing Date, would have a material adverse effect on the capacity ofBuyer to honor its obligations under this Agreement.          7.1.7 Performance by Buyer. Buyer shall have performed and complied in all materialrespects with all agreements, covenants, obligations and conditions required by this Agreement tobe performed or complied with by it on or before the Closing Date.          7.1.8 Absence of Litigation**.**There shall not be in effect any judicial orregulatory order enjoining or restraining the transactions contemplated by this Agreement.          7.1.9 Officer’s Certificate. Sellers shall have received a certificate, dated theClosing Date, executed on behalf of Buyer by an appropriate Person stating that the conditions setforth in Sections 7.1.1 through 7.1.8 hereof have been satisfied.          7.1.10 Delivery of Documents; Other Actions. (a) The execution and delivery toSellers by Buyer of the following, all dated as of the Closing Date and acceptable in form andsubstance to Sellers, Buyer, and Company:               (i) the consideration set forth in Article II hereof;               (ii) the agreements and documents required by the terms of this Agreement to be executed anddelivered by Buyer, and an offer of an employment agreement between the Company and Robert E.Wilson;               (iii) such other documents, instruments and certificates as may be reasonably requested bySellers or their counsel to effectuate the transactions contemplated by this Agreement; and               (iv) the Buyer’s Line of Authorization or other evidence of bonding capacity reasonablysatisfactory to Sellers, as required by Section 2.9.          (b) The execution by and exchange among Sellers, Buyer, and Company of an agreement relatingto post-closing invoices, payments, and purchase orders, and other subjects.          (c) The version of this Agreement dated as of December 29, 2009 and signed by the parties,has been approved and ratified by the Board of Directors of Buyer.     Section 7.2 Waivers. Sellers may, in their sole discretion, waive in writingfulfillment of any or all of the conditions set forth in Section 7.1 of this Agreement, providedthat such
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waiver granted pursuant to this Section 7.2 shall have no effect upon any other conditions notso waived.**ARTICLE VIII****INDEMNIFICATION**     Section 8.1 Survival of Representations. All representations, warranties, covenantsand agreements made by any party in this Agreement or pursuant hereto shall survive the Closing,but no claim may be made with respect to any breach of any representation or warranty hereunderafter June 23, 2015. The parties acknowledge that they have performed comprehensive due diligenceinvestigations and that they have no knowledge of any facts and circumstances which would result inthe inaccuracy of any representation or warranty of Buyer, Company, and/or Sellers, as applicable.     Section 8.2 Indemnification by the Sellers. Subject to the limitations set forth inthis Article 8 and the Closing of the transactions contemplated by this Agreement, each Sellershall indemnify, defend, save and hold each of Buyer and its officers, directors, employees,Affiliates and agents (collectively, “Buyer Indemnitees”) harmless from and against all demands,claims, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costsand expenses, including reasonable attorneys’ fees, interest, penalties, and all reasonable amountspaid in investigation, defense or settlement of any of the foregoing (collectively, “BuyerDamages”) asserted against, imposed upon, resulting to or incurred by any of the Buyer Indemnitees,directly or indirectly, in connection with, or arising out of, or resulting from (i) a breach ofany of the representations and warranties made by the Sellers in Article III of this Agreement,except as set forth above in Section 8.1 (“Buyer Warranty Damages”), and (ii) a breach of any ofthe covenants or agreements made by the Sellers, or a breach of any of the covenants or agreementsof Sellers, in or pursuant to this Agreement and in any Other Agreement to which the Sellers are aparty. The amount of this indemnity shall not exceed, in the aggregate, the sum of $3,450,000.00.     Section 8.3 Indemnification by Buyer. Subject to the limitations set forth in thisArticle 8 and the Closing of the transactions contemplated by this Agreement, Buyer shallindemnify, defend, save and hold Sellers and their officers, directors, employees, Affiliates, andagents (collectively “Seller Indemnitees”) harmless from and against any and all demands, claims,actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs andexpenses, including reasonable attorneys’ fees, interest, penalties, and all reasonable amountspaid in investigation, defense or settlement of any of the foregoing (collectively, “SellerDamages”) asserted against, imposed upon, resulting to or incurred by any of the SellerIndemnitees, directly or indirectly, in connection with, or arising out of, or resulting from (i) abreach of any of the representations and warranties made by Buyer in Article IV of this Agreement,except as set forth above in Section 8.1 (“Shareholder Warranty Damages”), or (ii) a breach of anyof the covenants or agreements made by Buyer in or pursuant to this Agreement and in any OtherAgreement to which Buyer is a party.
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     Section 8.4 Notice of Claims. If any Buyer Indemnitee or Seller Indemnitee (an“Indemnified Party”) believes that it has suffered or incurred or will suffer or incur any BuyerDamages or Seller Damages (“Damages”) for which it is entitled to indemnification under thisArticle 8, or if any legal, governmental or administrative proceeding which may result in suchdamages is threatened or asserted (including any written notice from any taxing authority), suchIndemnified Party shall so notify the party or parties from whom indemnification is being claimed(the “Indemnifying Party”) with reasonable promptness and reasonable particularity in light of thecircumstances then existing. If any action at law or suit in equity is instituted by or against athird party with respect to which any Indemnified Party intends to claim any Damages, suchIndemnified Party shall promptly notify the Indemnifying Party of such action or suit. The failureof an Indemnified Party to give any notice required by this Section 8.5 shall not affect any ofsuch party’s rights under this Article 8 except to the extent such failure is actually prejudicialto the rights or obligations of the Indemnifying Party.     Section 8.5 Good Faith Effort to Settle Disputes; Set-Off. The parties agree that,prior to commencing any litigation against the others concerning any matter with respect to whichsuch party intends to claim a right of indemnification in such proceeding, Sellers and Buyer shallmeet in a timely manner and attempt in good faith to negotiate a settlement of such dispute duringwhich time such parties shall disclose to the others all relevant information relating to suchdispute. In addition to any other remedy available at law or in equity, following an unsuccessful,good-faith effort to settle a dispute, any party may withhold from any monies that it owes theother parties the amount in dispute, provided that (i) such funds are deposited in aninterest-bearing escrow account pending final resolution of the dispute, and (ii) written notice isgiven to all parties of the amount withheld and the custodian of the funds.**ARTICLE IX****TERMINATION**     Section 9.1 Termination Events. Subject to the provisions of Section 9.2, thisAgreement may, by written notice given at or prior to the Closing in the manner hereinafterprovided, be terminated and abandoned only as follows:          9.1.1 Breach. By Sellers or by Buyer , upon written notice, if a material default orbreach shall be made by the other parties, with respect to the due and timely performance of any ofthe other parties’ respective covenants and agreements contained herein, or with respect to thedue compliance with any of their respective representations and warranties contained in ArticleIII or IV, as applicable, and such default cannot be cured prior to Closing and has not beenwaived;          9.1.2 Mutual Consent. By written mutual consent of all parties; or          9.1.3 Closing Date. By written notice of Sellers or Buyer, if the Closing shall nothave occurred on or before December 31, 2009, which date may be extended to such later date as maybe agreed upon in writing by the parties; provided, however, that the right to terminate thisAgreement under this Subsection 9.1.3 shall not be available to any of the
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respective parties whose failure to fulfill any obligation under this Agreement has been thecause of, or resulted in, the failure of the Closing to occur on or before such date.     Section 9.2 Effect on Termination. In the event this Agreement is terminated pursuantto Section 9.1 herein, all further rights and obligations of the parties hereunder shall terminate,and neither any of the parties nor their Affiliates, nor any of the respective directors, officersor employees of any of the parties nor their Affiliates shall have any liability to any of theothers, except that the obligations set forth in Section X herein shall survive; provided, however,that if this Agreement is so terminated by a party because one or more of the conditions to itsobligations hereunder as set forth in Articles VI and VII herein is not satisfied as a result ofthe other party’s failure to comply with its obligations under this Agreement, the rights of theterminating party to pursue all legal remedies for breach of contract and damages shall survivesuch termination and the breaching party shall be fully liable for any and all damages, costs andexpenses sustained or incurred by the terminating party as a result of such breach. In additionthereto, any nondisclosure agreement executed by the parties hereto shall survive the terminationof this Agreement.**ARTICLE X****SELLER COVENANT NOT TO COMPETE**     Section 10.1 Noncompetition Agreement.          10.1.1 So long as Buyer is not in material default of any of its obligations to Sellers,Sellers agree that, for a period of time equal to the Earn-Out Period plus an additional two (2)years, that is, until June 30, 2015 (the “Non-Competition Period”), Sellers shall not, directly orindirectly:          (a) engage in, carry on, be employed by or have any interest in a business substantiallysimilar to the Business within the United States of America (collectively, the “Market Area”);          (b) enter into, engage in, or be employed by any business in competition with the Company inthe Market Area;          (c) induce any person, excepting Robert Wilson, who is a present or future employee, officer,agent, affiliate or customer of the Company or Buyer to terminate such person’s relationship withthe Company or Buyer;          (d) induce any customer, supplier or any other party with whom the Company does business torefuse to do business with the Company; or          (e) solicit, or assist any person in the solicitation of, the Company’s customers.          10.1.2 Sellers acknowledge that the length of time and geographic restriction pertaining toall prohibitions in Section 10.1 are reasonable and necessary for the legitimate
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protection of Buyer’s and the Company’s business and interests.          10.1.3 Sellers expressly agree and understand that the remedy at law for any breach by Sellersof Section 10.1 will be inadequate and that the damages flowing from such breach are not readilysusceptible to being measured in monetary terms. Accordingly, Sellers’ acknowledge that uponadequate proof of Sellers’ violation of this Section 10.1, each of Buyer and the Company will beentitled, among other remedies and without any requirement that it post a bond in order to obtainany such relief, to immediate injunctive relief and may obtain a temporary restraining orderrestraining any threatened or further breach. Nothing in this Article X will be deemed to limitBuyer’s or the Company’s remedies at law or in equity for any breach by Sellers of any of theprovisions of this Agreement.          10.1.4 In the event any court of competent jurisdiction determines that the specified timeperiod or geographical area set forth in Section 10.1 is unreasonable, arbitrary or against publicpolicy, then a lesser time period or geographical area that is determined by the court to bereasonable, non-arbitrary and not against public policy shall be enforced.          10.1.5 In the event Sellers violate any legally enforceable provision of this Article X as towhich there is a specific time period during which Sellers are prohibited from taking certainactions or engaging in certain activities, then, in such event the violation will toll the runningof the time period from the date of the violation until the violation ceases.     Section 10.2. Allowed Competition. The provisions of Section 10.1 shall not applywith respect to:          10.2.1 Any work by Sellers and/or other corporations, limited liability companies,partnerships, trusts, or other business entities, including sole proprietorships, owned orcontrolled by Sellers, which work is consistent with the business activities of electricalcontracting and lighting maintenance of that entity that existed prior to the Closing Date. In theevent a business entity controlled by Sellers is requested by an unrelated party to performservices which are in direct conflict with the Business of the Company, Sellers shall use theirbest efforts to promote the interests of the Company;          10.2.2 Any work which the Company is unable to bond or otherwise unable to place undercontract;          10.2.3 Any work or a contract on which the Company materially defaults and/or fails to remedya material breach; and          10.2.4 Any work or a contract when Buyer or the Company goes bankrupt, goes into receivership,and/or otherwise goes into reorganization and for which Buyer or the Company fails to reaffirm thecontract and/or work.
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**ARTICLE XI****MISCELLANEOUS**     Section 11.1 Expenses. Each of the respective parties to this Agreement shall pay itsown costs and expenses (including all legal, accounting, broker, finder and investment banker fees)relating to this Agreement, the negotiations leading up to this Agreement, and the transactionscontemplated by this Agreement.     Section 11.2 Amendments and Waivers. No amendment of any provision of this Agreementshall be valid unless the same shall be in writing and signed by all parties. No waiver by anyparty of any default, misrepresentation, or breach of representation, warranty or covenanthereunder, whether intentional or not, shall be deemed to extend to any prior or subsequentdefault, misrepresentation, or breach of representation, warranty or covenant hereunder or affectin any way any tights arising by virtue of any prior or subsequent such occurrence.     Section 11.3 Entire Agreement. This Agreement, including the Exhibits hereto and theSchedules delivered hereunder, contain all of the terms, conditions and representations andwarranties agreed upon by the parties relating to the subject matter of this Agreement andsupersede all prior and contemporaneous agreements, negotiations, correspondence, undertakings,and communications of the parties, oral or written, respecting such subject matter; provided,however, that the parties from time to time may agree in writing on interpretations of theprovisions of this Agreement, and that the confidentiality agreement dated April 20, 2009 executedby the parties shall remain in full force and effect accordingly to its terms.     Section 11.4 Notices. All notices, requests, demands and other communications made inconnection with this Agreement shall be in writing and shall be deemed to have been duly given onthe date of delivery, if delivered by hand to the persons identified below, or on the date ofreceipt if mailed by certified mail, postage prepaid, return receipt requested, addressed asfollows: If to Buyer:  Energy Focus, Inc.32000 Aurora RoadSolon, Ohio 44321Attn: Mr. Joseph G. Kaveski, Chief Executive OfficerFacsimile No.: 440.848.8561  With a copy to:   Mr. Gerald W. CowdenCowden & Humphrey Co. LPA4600 Euclid Avenue, Suite 400Cleveland, Ohio 44103Facsimile No.: 216.241.2881  If to Sellers:   Mrs. Jami Hall1244 Gallatin Pike SouthMadison, Tennessee 37115Facsimile No.: 615.883.0988
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 With a copy to:   Mr. John I. Harris, IIIOf counselSchulman, Leroy & Bennett, PCP. O. Box 190676501 Union Street, Seventh FloorNashville, Tennessee 37219Facsimile No.: 615.254.5407     Section 11.5 Severability. If any provision of this Agreement is held to beunenforceable for any reason, the parties shall negotiate to adjust such provision rather than havesuch clause become void, if possible, in order to achieve the intent of the parties to thisAgreement to the extent possible. In any event all other provisions of this Agreement shall bedeemed valid and enforceable to the full extent possible.     Section 11.6 Cumulative Remedies. The remedies provided herein are cumulative and notexclusive and shall not preclude assertion by either party hereto of any other rights or theseeking of any other remedies against the other party.     Section 11.7 Waiver. Waiver of any term or condition of this Agreement by any of theparties shall only be effective if in writing and shall not be construed as a waiver of anysubsequent breach or failure of the same term or condition, or a waiver of any other term orcondition, of the Agreement.     Section 11.8 Assignment. No party to this Agreement may assign or delegate, byoperation of law or otherwise, all or any portion of its rights, obligations or liabilities underthis Agreement without the prior written consent of the other parties to this Agreement, which itmay withhold in its absolute discretion; provided, however, that Buyer may assign this Agreement inconnection with a merger or consolidation involving Buyer, or a sale of substantially all ofBuyer’s assets, so long as the purchaser or assignee assumes Buyer’s obligations under thisAgreement.     Section 11.9 Successors and Assigns. The rights, liabilities and obligations of theparties hereto arising under this Agreement shall attach to and be binding upon the parties, andtheir heirs, representatives, successors, and permitted assigns.     Section 11.10 No Third Party Beneficiaries. Nothing in this Agreement shall conferany rights upon any person or entity who is not a party to this Agreement.     Section 11.11 Counterparts. This Agreement may be signed in any number ofcounterparts with the same effect as if the signatures to each counterpart were upon a singleinstrument, and all such counterparts together shall be deemed an original of this Agreement.     Section 11.12 Governing Law; Jurisdiction. This Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware and of the United States, withoutgiving effect to the doctrine of conflicts of laws. The parties each agree that the federal andstate courts located within the State of Ohio and the State of Tennessee shall have nonexclusive
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jurisdiction as to all matters, actions, claims or disputes arising out of this Agreement orthe transactions contemplated hereby.     Section 11.13 Dispute Resolution. The parties agree to use their diligent effortsin order to reach an amicable agreement with respect to all disagreements which might arise underthis Agreement. All disputes arising under this Agreement which are not settled amicably asspecified above shall be finally settled in accordance with the following:          11.13.1 The parties will attempt in good faith to resolve any controversy or claim arising outof or relating to this Agreement promptly by negotiations between senior executives of the partieswho have authority to settle the controversy.          11.13.2 The disputing party shall give the other party written notice of the dispute. Withintwenty (20) days after receipt of said notice, the receiving party shall submit to the other awritten response. The notice and response shall include (a) a statement of each party’s position,and (b) the name and title of the executive who will represent the party. The executives shallmeet at a mutually acceptable time and place within one (1) month of the date of the disputingparty’s notice and thereafter as often as they reasonably deem necessary to exchange relevantinformation and to attempt to resolve the dispute.          11.13.3 If the matter has not been resolved within two (2) months of the disputing party’snotice, or if the party receiving said notice will not meet within one (1) month, both partiesagree that each party shall be free to pursue all remedies at law, in equity or otherwise withoutany other obligations pursuant to this Section 11.13.     Section 11.14 Construction.          11.14.1 Words. All references in this Agreement to the singular shall include theplural, the plural shall include the singular where applicable, and all references to gender shallinclude both genders and the neuter. All references in this Agreement to days shall be calendardays unless specified as business days. All accounting terms not otherwise identified herein shallhave the meanings assigned to them in accordance with general accepted accounting principlesconsistently applied.          11.14.2 No Presumption. In interpreting any provision of this Agreement nopresumption shall be drawn against the party drafting the provision.          11.14.3 Headings. The table of contents and the headings of each Article, Section andSubsection herein are for the purposes of convenience only and shall not be read or interpreted ashaving any meaning or effect.*(Signatures on the following page.)*
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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year firstabove written.      **SELLERS:**