**EXHIBIT 4.4**
**ASSET PURCHASE AGREEMENT**
**PROCAM MACHINE LLC**
**and**
**MONROE MACHINED PRODUCTS, INC.**
**May 24, 2005**
 

 

**TABLE OF CONTENTS**       Page**1.0 Purpose**  1      **2.0 Purchase and Sale**  1 2.1 Equipment  1 2.2 Inventories  1 2.3 Contracts  1 2.4 Intellectual Property  1 2.5 Accounts Receivable/Cash  1 2.6 Miscellaneous Assets  1 2.7 Excluded Assets  1      **3.0 Assumption of Liabilities**  2 3.1 Inventory/Purchasing  2 3.2 Customer Obligations  2 3.3 Retained Liabilities  2      **4.0 Purchase Price**  2 4.1 Purchase Price  2 4.2 Holdback  3 4.3 Purchase Price Allocation  4 4.4 Taxes  4      **5.0 Closing**  4      **6.0 Seller’s Representations and Warranties**  4 6.1 Organization  4 6.2 Authorization  4 6.3 No Violations  4 6.4 Absence of Changes  5 6.5 Taxes  5 6.6 Title  5 6.7 Compliance with Laws  5 6.8 Litigation  5 6.9 No Broker Arrangement  5 6.10 Material Misrepresentations or Omissions  5      **7.0 Buyer’s Representations and Warranties**  5 7.1 Organization  5 7.2 Authorization  5 7.3 No Violations  6 7.4 No Finders  6 7.5 Material Representations or Omissions  6 7.6 Available Funds  6 7.7 No Broker Arrangement  6      **8.0 Closing Conditions**  6 8.1 Buyer’s Conditions  6 
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       Page8.2 Seller’s Conditions  7      **9.0 Further Agreements**  7 9.1 Additional Documents and Assistance  7 9.2 Use of Facilities  8 9.3 Non-Solicitation  8 9.4 Employees  8 9.5 Non-Competition  8 9.6 Indemnification by Seller  8 9.7 Indemnification by Buyer  8 9.8 Transition Assistance  8      **10.0 Miscellaneous Terms**  9 10.1 Publicity  9 10.2 Notice  9 10.3 Confidentiality  9 10.4 Successors and Assigns  9 10.5 Titles and Subtitles  9 10.6 Counterparts  9 10.7 Advice of Counsel  10 10.8 Expenses  10 10.9 Governing Law  10 10.10 Dispute Resolution  10 10.11 Severability  10 10.12 Survival  10 10.13 Complete Agreement  11 
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 **SCHEDULES**   Schedule 2.1 Equipment   Schedule 2.3(A) Included Contracts   Schedule 2.3(B) Excluded Contracts   Schedule 3.3 Retained Liabilities   Schedule 4.2 Purchase Price Allocation   Schedule 6 Seller’s Disclosure Memorandum   Schedule 7 Buyer’s Disclosure Memorandum   Schedule 9.5 Employees Subject to Non-Competes
 

 

**ASSET PURCHASE AGREEMENT**
This Asset Purchase Agreement (“Agreement”) is entered into as of May 24, 2005, by and betweenProCam Machine LLC, a Washington limited liability company with its principal place of business at18421 Bothell-Everett Hwy, Suite 150, Mill Creek, WA 98012 (“Seller”), and Monroe MachinedProducts, Inc., a Washington corporation with its principal offices at 1422 S. 192nd,Seatac, WA 98148 (“Buyer”).
**1.0 Purpose**
     Buyer desires to buy and Seller desires to sell all of Seller’s rights and assets (“theAssets”) and to assume certain liabilities (“Liabilities”) used or related to Seller’s precisionmachining and tooling business (the “Business”), and which are described in Sections 2.0 and 3.0below.
**2.0 Purchase and Sale of Assets**
     Upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase fromSeller and Seller agrees to sell, transfer, assign and deliver to Buyer at Closing, the Assets,including:
     2.1 Equipment. All machinery, equipment, tools, dies, molds, fixtures, furniture,furnishings, and similar personal property (the “Equipment”) related to the Business, includingwithout limitation the Equipment identified in **Schedule 2.1**to this Agreement.
     2.2 Inventories. All finished goods, work in progress, raw materials, sparereplacement and component parts, loaners and demonstration products, supplies and similar goods(the “Inventories”) related to the Business.
     2.3 Contracts. All contracts, purchase orders, customer orders, quotations andagreements related to the Business, including without limitation those identified in **Schedule2.3(A)**to this Agreement, and excluding those identified in **Schedule 2.3(B)**.
     2.4 Intellectual Property. All intangible assets and intellectual property of theSeller related to or used or useful in connection with the Business, including without limitationthe patents, trademarks, copyrights and applications therefore, and goodwill, trade names, tradedress, logos, domain names, designs, programs, drawings, instructions, specifications, know how,trade secrets, in each instance related to, used or useful in connection with the Business.
     2.5 Accounts Receivable. All of Seller’s accounts receivable and pre-paid expenses.
     2.6 Miscellaneous Assets. All consents of government entities (including applicationstherefor), service materials, purchasing records, manufacturing, quality control and regulatoryrecords, design and development records, accounting records, customer records, and all other booksand records, warranties and indemnities, and similar rights related to the Business, subject onlyto Seller’s rights as set forth in Section 9.1 below.
     2.7 Excluded Assets. With the exception of the documents referenced in Section 9.1hereto, all other assets are included in the sale.
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**3.0 Assumption of Liabilities**
     Upon the terms and subject to the conditions of this Agreement, Seller assigns and Buyeragrees to pay, perform and otherwise discharge certain of Seller’s liabilities related to theBusiness, to the extent incurred or accrued prior to the Closing, including:
     3.1 Inventory/Purchasing. Seller’s obligations and liabilities related to commitmentsfor inventories for the Business ordered by Seller in the ordinary course of business and not yetdelivered as of Closing, and to supplier and subcontractors for services or work performed or to beperformed in connection with the Business.
     3.2 Customer Obligations. Subject to the provisions of Section 4.2 herein, Seller’sobligations and liabilities related to customers or prospective customers for quotations, orders orcontracts for products or services of the Business, or guarantees or warranties or other claimsrelated thereto.
     3.3 Retained Liabilities. All other of Seller’s liabilities, including withoutlimitation, those identified in **Schedule 3.3**to this Agreement, are retained by Seller.
**4.0 Purchase Price**
     4.1 Purchase Price. In full consideration for purchase of the Assets and assumptionof the Liabilities, subject to the terms and conditions of this Agreement, including specificallySection 4.2 herein, the Buyer shall pay to Seller the following amounts at Closing (the “PurchasePrice”):
          4.1.1 ONE MILLION THREE HUNDRED THOUSAND DOLLARS ($1,300,000.00) for the Assets other thaninventory and accounts receivable.
          4.1.2 The net difference, if positive, between, any accounts receivable of the Businesscollected during the six (6) months subsequent to Closing and earned by the Business prior toClosing, on the one hand, and any accounts payable of the Business paid by Buyer during the six (6)months subsequent to Closing, and accrued as the result of services or products provided to theBusiness prior to Closing (the “Net Accounts”). If, however, the Net Accounts shall result in anegative number, then that amount shall be deducted from the Purchase Price.
          4.1.3 The total value of the Inventories, calculated as the sum of the following:
                   4.1.3.1 For “Finished Goods” associated with the Business, the jointly audited values atClosing of such goods, to be calculated as follows:
 o  if more then 18 months has passed since thelast sale of such goods, and the Finished Good is not a repeatingCustomer Program part, then 5% of last offered price;  o  if more then 18 months has passed since thelast sale of such goods and the Finished Good is a repeating CustomerProgram part, then 75% of last offered price;
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 o  if a Finished Good is jointly deemed by theparties to be obsolete, useful only for purpose of research anddevelopment, or hardware/parts without certification, then zero;  o  all repeating Customer Program parts with orwithout requirements, then the lesser of 85% of last price or cost ofproduction of the part;  o  all hardware or parts usable for GD, Simula orAerojet projects, then 75% of last purchase price;  o  all hardware not described above shall bevalued at 5% of last purchase price;
                  4.1.3.2 For all “Works-In-Progress” associated with the Business, the jointly audited value atClosing of such works, to be calculated as follows:
 o  the value of current jobs with openrequirements shall be calculated based on the % of completionmultiplied by the proposed sale price;  o  the value of any excess or “overbuilt”repeating Customer Program parts and incomplete parts in stores shallbe calculated based on the % of completion multiplied by the proposedsale price;  o  all Works-In-Progress for repeating CustomerProgram parts without requirements shall be attributed a value based onthe % of completion multiplied by 50% the proposed sale price;.  o  All Works-In-Process not described above shallbe attributed a value of zero.
                  4.1.3.3 For all “Raw Materials” associated with the Business, the jointly audited value atClosing of such material, to be calculated as follows:
 o  all Raw Material capable of filling an openrequirement shall be valued at 100% of purchase price;  o  all Raw Material to be used on repeatingCustomer Program parts shall be valued at 85% of purchase price;  o  all other Raw Materials not described aboveshall be valued at 5% of purchase price.
     4.2 Holdback. At Closing, the amount of FIFTY THOUSAND DOLLARS ($50,000.00) (the“Holdback Amount”) shall be held back from Seller by Buyer and transmitted to Seller’s Counsel (asidentified in Section 10.2) for retention in its trust account. On the six (6) month anniversaryof the Closing (the “Holdback Period”), subject to the prior reasonable mutual agreement ofSeller’s Counsel and Buyer’s Counsel (as identified in Section 10.2), Seller’s Counsel shalltransmit to Seller the Holdback Amount, as that amount is calculated after deduction of thefollowing amounts:
          4.2.1 any amounts reasonably paid by Buyer during the Holdback Period for documented claims bycustomers against warranties or guarantees offered by the Business or
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Seller prior to Closing; provided that Buyer will provide Seller and Seller’s Counsel with faxnotification of any such claims, and Seller shall provide Buyer with any objections or reasonablerequests for further information regarding any such claim within five (5) business days of receiptof such notice, or such claim will be deemed to have been to be allowed for payment; and
          4.2.2 the purchase price of any inventory purchased from Seller and reasonably found by bothparties to be obsolete (and not having been profitably sold at the conclusion of the HoldbackPeriod after reasonable effort to do so), under Buyer’s standard, and commercially reasonableinventory practices and procedures.
     4.3 Purchase Price Allocation. The Purchase Price shall be allocated by the partiesamong the Assets in a manner which shall be mutually agreed upon and which shall be set forth in**Schedule 4.2**to this Agreement, and shall be utilized by the parties for purposes of completing andfiling Internal Revenue Service Form 8594 and for compliance with filing or reporting requirementsof any other taxing authority.
     4.4 Taxes. Buyer shall be responsible for all sales, use or transfer taxes, if any,due and payable to any government entity as a result of the transactions contemplated by thisAgreement.
**5.0 Closing**
     Provided the Closing Conditions identified in Section 8.0 below have been satisfied, theClosing shall take place on May 31, 2005 (the “Closing”) at the offices of Leary Franke Droppert,Suite 600, 1500 Fourth Avenue, Seattle, WA 98101, at 10:00 a.m., or on such other date, time andplace as the parties may mutually agree.
**6.0 Seller’s Representations and Warranties**
     Except as is otherwise identified in Seller’s Disclosure Memorandum, which is attached to thisAgreement as **Schedule 6**, Seller represents and warrants to Buyer as of the date of this Agreement,and shall represent and warrant as of the date of Closing, that:
     6.1 Organization. Seller is a limited liability company, duly organized and validlyexisting under the laws of the State of Washington, and in good standing under the laws of theState of Washington.
     6.2 Authorization. Seller has full corporate power and authority to execute anddeliver this Agreement and to consummate the transactions contemplated thereby. This Agreement hasbeen, and each document to be delivered under this Agreement, at Closing shall be, duly executedand constitute the valid, binding obligation of Seller, enforceable against Seller in accordancewith its respective terms.
     6.3 No Violations. Neither the execution nor the delivery of this Agreement or anyother document or agreement contemplated by it, will materially violate or breach any of Seller’s(i) corporate documents, (ii) the provisions of any other agreement to which Seller is a party, or(iii) any order, injunction, statute, rule, regulation by which Seller is bound, and by which anyAsset may be affected or encumbered. The Sellers are not required to give notice to, make a filingwith, or obtain the authorization, consent or approval of any third party, including withoutlimitation any governmental entity or court, in order for the parties to consummate thetransactions contemplated by this Agreement.
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     6.4 Absence of Changes. Seller has conducted the Business in the ordinary coursesince April 1, 2005 until Closing, including without limitation not causing or suffering any event,change or effect that is materially adverse to the Business.
     6.5 Taxes. Seller has paid all taxes owing and filed all returns required to be filedwith respect to the Assets and Business as of the date of this Agreement, and will have done so asof the date of Closing, except to the extent Seller is not yet required to do so or has, in goodfaith, timely filed an objection or opposition to payment of same (with respect to which Sellershall retain responsibility to file and pay when due, and shall indemnify Buyer from all liabilitywith respect thereto, including but not limited to personal property taxes for the period prior toClosing).
     6.6 Title. Seller has, and shall deliver to Buyer at Closing, good and marketabletitle to the Assets, free and clear of any lien, security interest, encumbrance or otherrestriction on transfer.
     6.7 Compliance with Laws. Seller has and shall until Closing, conduct the Business incompliance with all applicable statutes, rules, regulations, permits, licenses and similarrequirements of any applicable government entity or court, and compliance with hazardous materialand other environmental compliance requirements.
     6.8. Litigation. The Assets, Business, and the transactions contemplated by thisAgreement are not subject to any pending, or to Seller’s knowledge, threatened, action, suit,proceeding, hearing, investigation, claim, judgment, order, decree, injunction, charge or similarrequirement, in law or equity, civil, criminal or otherwise.
     6.9 No Broker Arrangement. Seller has made no arrangement, agreement or contractwith any broker or agent with respect to the transaction contemplated by this Agreement. Shouldany claim for a commission or finder’s fee be asserted by any third party as a result of the act oromission of either party, then the party alleged to have agreed to pay such commission or fee shallbe solely responsible therefore, and shall indemnify, defend, and hold the other party harmlessfrom any and all loss, damage, liability, cost, or expense, including, without limitation,attorneys’ fees, suffered or incurred by it arising out of or relating to any claim for commissionor fee made by any such agent or broker.
     6.10 Material Misrepresentations or Omissions. To the best of Seller’s knowledge, nomaterial information provided to the Buyer in connection with this Agreement, or with respect tothe Assets or Business is false or misleading in any material respect, including withoutlimitation, all Schedules to this Agreement.
**7.0 Buyer’s Representations and Warranties**
     Except as is otherwise identified in Buyer’s Disclosure Memorandum, which is attached to thisAgreement as **Schedule 7**, the Buyer represents and warrants to Seller as of the date of thisAgreement, and shall represent and warrant as of the date of Closing, that:
     7.1 Organization. Buyer is a corporation, duly organized, validly existing and ingood standing under the laws of the State of Washington.
     7.2 Authorization. Buyer has full corporate power and authority to execute anddeliver this Agreement and to consummate the transactions contemplated thereby. This Agreement hasbeen, and each document to be delivered under this Agreement at Closing shall
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be duly executed and constitute the valid, binding obligation of Buyer, enforceable against Buyerin accordance with its terms.
     7.3 No Violations. Neither the execution nor the delivery by Buyer of this Agreementor any other document or agreement contemplated by it, will constitute any violation or breach ofBuyer’s corporate documents or of the provisions of any other agreement to which Buyer is a party.Buyer is not required to give notice to, make a filing with, or obtain the authorization, consentor approval of any third party, including without limitation any governmental entity or court, inorder for the parties to consummate the transactions contemplated by this Agreement.
     7.4 No Finders. Buyer has not taken any action that will result in any liability ofor claim against Seller for a broker’s commission, finder’s fee or other like payment related tothe transactions contemplated by this Agreement.
     7.5 Material Representations or Omissions. To the best of Buyer’s knowledge, nomaterial information provided to the Seller in connection with this Agreement is false ormisleading in any material respect.
     7.6 Available Funds. Buyer has sufficient funds available to consummate thetransactions contemplated by this Agreement.
     7.7 No Broker Arrangement. Buyer has made no arrangement, agreement or contract withany broker or agent with respect to the transaction contemplated by this Agreement. Should anyclaim for a commission or finder’s fee be asserted by any third party as a result of the act oromission of either party, then the party alleged to have agreed to pay such commission or fee shallbe solely responsible therefore, and shall indemnify, defend, and hold the other party harmlessfrom any and all loss, damage, liability, cost, or expense, including, without limitation,attorneys’ fees, suffered or incurred by it arising out of or relating to any claim for commissionor fee made by any such agent or broker.
**8.0 Closing Conditions**
     8.1 Buyer’s Conditions. Buyer’s conditions to Closing or its obligations under thisAgreement shall be subject to Seller’s fulfillment (or Buyer’s waiver) prior to Closing of each ofthe following conditions:
          8.1.1 Seller shall have provided Buyer with a certified Resolution of its Board of Directorsapproving and authorizing the transactions contemplated by this Agreement.
          8.1.2 Seller shall have provided the Buyer with bills of sale, assignments, consents and suchother instruments of transfer or approval, all in a form reasonably satisfactory to Buyer, as arereasonably necessary to convey fully and effectively to Buyer the Assets and the Liabilities inaccordance with the terms of this Agreement.
          8.1.3 Seller shall have provided Buyer with audited financial statements for the period endingDecember 31, 2004, and unaudited financial statements for the period ending April 30, 2005, andthereafter on a monthly basis, as soon as they are reasonably available, all prepared in accordancewith GAAP.
          8.1.4 Buyer shall have obtained a UCC search in the State of Washington, confirming that thereare no liens outstanding against the Assets, except those which shall be satisfied at Closing, orwhich are otherwise waived by Buyer.
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          8.1.5 Seller shall have adopted an amendment to its Charter changing Seller’s name so that itdoes not include the words “ProCam Machine”, and shall have executed and delivered to Buyer aCertificate of Amendment to that effect, appropriate for filing with the Washington Secretary ofState.
          8.1.6 No litigation shall have been instituted or threatened against Seller to restrict orprohibit the transactions contemplated by this Agreement.
          8.1.7 Buyer shall have entered into an Employment Agreement with Bruce Campbell with terms andconditions to be negotiated by them.
          8.1.8 All representations and warranties of the Seller shall be true as of the Closing, andSeller shall have delivered to Buyer a certificate to that effect.
          8.1.9 Seller shall have in all material respects duly performed and complied with itsrespective obligations under this Agreement.
     8.2 Seller’s Conditions. Seller’s obligations under this Agreement shall be subjectto Buyer’s fulfillment (or Seller’s waiver) prior to Closing of each of the following conditions:
          8.2.1 Buyer shall have provided Seller with a certified Resolution of its Board of Directorsapproving and authorizing the transactions contemplated by this Agreement.
          8.2.2 Buyer’s delivery to Seller of the Purchase Price in a form consistent with the terms ofSection 4.1.
          8.2.3 Buyer shall have executed an Escrow Agreement pursuant to Section 4.2 hereto.
          8.2.4 No litigation shall have been instituted or threatened against Buyer to restrict orprohibit the transactions contemplated by this Agreement.
          8.2.5 All representations and warranties of the Buyer shall be true as of the Closing, andBuyer shall have delivered to Seller a certificate to that effect.
          8.2.6 Buyer shall have in all material respects duly performed and complied with itsrespective obligations under this Agreement.
**9.0 Further Agreements**
     9.1 Additional Documents and Assistance. Each of the parties shall execute anddeliver such other instruments and documents and provide such other assistance as the other partymay reasonably request in furtherance of the transactions contemplated by this Agreement.Notwithstanding any other provision of this Agreement, Seller shall also be entitled to retain acopy of such books and records of the Business, and be provided access to Seller’s former employeesrelated to the Business to the extent they remain in Buyer’s employ, as it may reasonably requirefor the limited purpose of concluding its operations, and the preparation and filing of Seller’sfinancial statements, tax returns, and applicable government and shareholder reports anddisclosures. Buyer shall preserve and keep the books and records of Seller that Buyer obtainspursuant to the transactions contemplated hereby, and Seller shall preserve and keep any such booksand records that they may retain with respect to the Business, for a period
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of five (5) years after Closing. All such records shall be made reasonably available to Seller orBuyer, as the case may be, in accordance with this Section 9.1.
     9.2 Use of Facilities. For a period from Closing through July 31, 2005, Seller shallprovide to Buyer, at no additional cost (including no cost for routine use of utilities),commercially reasonable access to Buyer’s facilities located at 18421 Bothell-Everett Hwy., MillCreek, Washington (the “Facilities”). Buyer shall be permitted to use the Facilities to storeequipment, material and inventories and to conduct business operations, and will take due care toabide by and conform to Seller’s then current lease obligations with respect to use of theFacility. Buyer also hereby agrees to indemnify and hold Seller, and Seller’s owners, officers,directors and employees, harmless from any claim, liability or cost (other than the cost of rent orroutine utilities) arising in any way related to Seller’s use or conduct of operations in theFacilities, including without limitation, related to or arising from Buyer’s employment ofindividuals in the Facilities.
     9.3 Non-Solicitation. Prior to any termination of this Agreement, Seller agrees todeal exclusively with Buyer with respect to the matters referred to in this Agreement, and Sellerwill not directly or indirectly solicit or otherwise encourage any offer, offer to negotiate orenter into any agreement with a third party related to the Assets or the Business (other thantransactions in the ordinary course of business).
     9.4 Employees. Buyer will offer employment to the employees of Seller who areinvolved with the Business. As of the Closing Date, Seller shall (i) terminate the employment ofall employees business with the exception of Bob Hawks and Dennis Speer; (ii) pay-out to suchemployees any and all amounts owed against earned or accrued compensation and benefits; and (iii)will not take any action to induce its employees not to accept employment with Buyer or otherwisehinder their potential employment with Buyer. For any employee of Seller so hired by Buyer, Selleragrees not to solicit or hire any such employee so long as such employee is an employee of Buyer.
     9.5 Non-Competition. In consideration of the transactions contemplated by thisAgreement, Seller agrees, for a period of three years from Closing, not to compete with Buyer byengaging in a business which in any way competes with the Business (as defined in Section 1.0); byusing, or facilitating use by any other party of any information related to the Business for apurpose competitive with the Business; or by directly or indirectly incenting, influencing orotherwise inducing any entity to any way either not do business with or cease doing business withBuyer. To further facilitate enforcement of this provision, Seller agrees to provide Buyer atClosing with written assignment of all non-compete covenants of Buyer’s present employees, whichemployees are identified in **Schedule 9.5**.
     9.6 Indemnification by Seller. Effective as of Closing, Seller will defend,indemnify, and hold harmless Buyer from and against any and all losses, costs, damages,liabilities, fees, (including without limitation, attorney’s fees) and expenses (collectively“Damages”) that Buyer incurs directly or indirectly as a result of: (i) any breach (or allegedbreach) of Seller’s representations, warranties and obligations in and under this Agreement, or(ii) any liabilities or obligations of Seller not assumed by Buyer.
     9.7 Indemnification by Buyer. Effective as of Closing, Buyer will defend, indemnify,and hold harmless Seller from and against any and all losses, costs, damages, liabilities, fees,(including without limitation, attorney’s fees) and expenses (collectively Damages) that Sellerincurs directly or indirectly as a result of: (i) any breach (or alleged breach) of Buyer’srepresentations, warranties and obligations in and under this Agreement, or (ii) any obligations
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or liabilities of Seller assumed by Buyer or otherwise arising in relation to the Businessfollowing the Closing, or related to Buyer’s use of the Facilities pursuant to Section 9.2 herein.
     9.8 Transition Assistance. For a period from Closing through July 31, 2005, theSeller shall cause Dennis Speer to provide to Buyer, at no charge to Buyer, up to 40 hours per weekof transition consulting services.
**10.0 Miscellaneous Terms**
     10.1 Publicity. The parties agree that any public announcement(s) of the transactionscontemplated by this Agreement shall be in a form and at a time to be mutually agreed upon by theparties, which agreement shall not be unreasonably withheld or delayed.
     10.2 Notice. Any notice required or permitted by this Agreement shall be in writingand shall be deemed sufficient upon receipt, when delivered personally, by a receipted overnightcourier, by confirmed facsimile, or seventy-two (72) hours after being deposited in the regularmail, as certified or registered mail with postage prepaid, if such notice is addressed to theparty to be notified at such party’s address or facsimile as set forth below, or as subsequentlymodified by a written notice:      If to Buyer to: If to Seller to:     ProCam Machine, LLC Monroe Machined Products, Inc. 18421 Bothell Everett Hwy. 1422 S. 192nd Suite 150 Seatac, WA 98148 Mill Creek, WA 98012   Fax: (425) 488-6554 Fax: (206) 242-9551 Attention: President Attention: President      With a copy to Seller’s Counsel: With a copy to Buyer’s Counsel:      Leary Franke Droppert William F. Almon, P.S. 1500 Fourth Avenue, Suite 600 111 S. 33rd Street, Suite 100 Seattle, WA 98101 Yakima, WA 98901 Fax: 206-343-8895 Fax: 509-966-7183 Attention: V. Marc Droppert Attention: William F. Almon
     10.3 Confidentiality. The parties agree they will disclose and exchange confidentialand commercially sensitive information concerning their respective finances and operations only tothe extent such information is reasonably necessary to negotiate and accomplish the transactioncontemplated by this Agreement. The information so obtained may only be used by the parties forpurposes of this transaction and for no other purpose, and will not be conveyed or communicated toany employee or agent of the other party unless the employee or agent has a need to know theinformation in connection with these transactions. In the event this Agreement is terminated forany reason, all confidential information provided by one party to the other will be either returnedto the party which produced it or destroyed in a manner which renders it unusable by any party.
     10.4 Successors and Assigns. The terms and conditions of this Agreement will inure tothe benefit of and be binding upon the respective successors and permitted assigns of the parties.Nothing in this Agreement, expressed or implied, is intended to confer upon any person, other thanthe parties and their successors and permitted assigns, any right, remedy or claim under or byreason of this Agreement.
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     10.5 Titles and Subtitles. The titles and subtitles used in this Agreement are usedfor convenience only, and are not to be considered in construing or interpreting this Agreement.
     10.6 Counterparts. This Agreement may be executed in two or more counterparts, eachof which will be deemed an original and all of which together will constitute one instrument.
     10.7 Advice of Counsel. Each party acknowledges and represents that, in executingthis Agreement, it has had the opportunity to seek legal advice or has waived the right thereto,and that the person signing on its behalf has read and understood all of the terms and provisionsof this Agreement. This Agreement will not be construed against any party by reason of thedrafting or preparation thereof.
     10.8 Expenses. Each party shall pay all costs and expenses incident to negotiationand preparation of this Agreement and to its performance, including the fees, expenses anddisbursements of its counsel and accountants, whether or not the transactions contemplated by thisAgreement are consummated.
     10.9 Governing Law. This Agreement, and all acts and transactions pursuant to it, andthe rights and obligations of the parties under it, shall be governed and construed and interpretedin accordance with the laws of the State of Washington, without giving effect to principles ofconflicts of law.
     10.10 Dispute Resolution. Any dispute between the parties to this Agreement shall beexclusively determined according to the following procedures:
          10.10.1 Upon either party providing the other with written notice summarizing the dispute andrequesting a meeting of the Presidents of each party. Such meeting shall be scheduled withintwenty (20) days of the receipt of notice, unless extended by mutual agreement. If such meeting isnot held within twenty (20) days of the receipt of notice (or within a mutually agreed uponextended period), and if such meeting does not result in a mutually acceptable resolution withinthirty (30) days following receipt of notice, either party may, by written notice to the other,refer the dispute for mediation.
          10.10.2 The parties shall mutually agree on the appointment of mediator within thirty (30)days following receipt of notice of mediation (or if they are unable to do so, either party maypetition the American Arbitration Association for the appointment of a mediator) and a nonbindingmediation shall occur within sixty (60) days of such notice.
          10.10.3 If the parties are unable to reach a mutually acceptable resolution of the disputethrough mediation, the parties shall submit any dispute to binding arbitration in accordance withthe rules and procedures of the American Arbitration Association. The arbitrator shall award theprevailing party a reasonable allowance for attorneys’ fees and arbitration expenses. Anyarbitration shall be held in King County, Washington.
     10.11 Severability. If one or more provisions of this Agreement are held to beunenforceable under applicable law, the parties agree to renegotiate such provision in good faith,in order to maintain the economic position enjoyed by each party as close as possible to that underthe provision rendered unenforceable. In the event the parties cannot reach a mutually agreeableand enforceable replacement for such provision, (i) such provision will be excluded from thisAgreement, (ii) the balance of the Agreement will be interpreted as if such
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provision were so excluded, (iii) the balance of the Agreement will be enforceable in accordancewith its terms.
     10.12 Survival. Seller’s and Buyer’s representations, warranties, indemnities andguaranties shall come, where applicable, be deemed be made again at, and as of Closing, and shallsurvive the Closing of this transaction for a period of one year.
     10.13 Complete Agreement. This Agreement, and any schedules and exhibits referred toin it constitute the entire agreement between the parties pertaining to the subject matter of it,and merge all prior negotiations related to the transactions contemplated by it. Except forcontinuing obligations of confidentiality, any payment of obligations incurred by one party to theother prior to Closing according to their terms, and except as otherwise expressly set forth inthis Agreement, any and all other written or oral agreements existing between the parties hereto,either directly or as successor in interest, regarding such transactions are expressly cancelled,and have no force and effect. Any term of this Agreement may be amended or waived only with thewritten consent of all parties or their respective successors and permitted assigns.
This Agreement is hereby executed by the parties to be effective as of the date first indicatedabove.           **PROCAM MACHINE, LLC** **MONROE MACHINED PRODUCTS, INC**           By: /S/ DENNIS SPEER By: /S/ BHRETT MONROE              Name: DENNIS SPEER Name: BHRETT MONROE    Title: GENERAL MANAGER Title: PRESIDENT    
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**ADDENDUM TO THE ASSET PURCHASE AGREEMENT**
This Addendum to the Asset Purchase Agreement (“Agreement”), previous entered into as of May 24,2005, by and between ProCam Machine LLC (“Seller”) and Monroe Machined Products, Inc. (“Buyer”), isentered into effective as of May 31, 2005, as follows:
1.  As the Buyer may not be able to make necessary arrangements to provide payroll and employeebenefits to former employees of ProCam, which Buyer wishes to employ as of June 1, 2005,ProCam agrees to employ, compensate and provide employee benefits to any such individuals asdesignated by Buyer, from among those identified on Attachment A, for a period not toexceed June 30, 2005, subject to the following further understandings:
 1.1  All individuals, so designated, will be compensated at the compensation ratesidentified on Attachment A. Compensation will include applicable overtime forany employee eligible for overtime hours.  1.2  ProCam will additionally provide any such employees with statutory, health andwelfare and other employee benefits, consistent with those provided to them by Sellerprior to the Closing, and Buyer agrees to reimburse Seller for all costs incurred bySeller in providing such benefits, including without limitation, employment taxes,insurance premiums, and vacation accruals. It is recognized by Buyer that some of suchbenefits may directly relate to the level of compensation paid (e.g. social securitywithholding), and that periodic costs may apply to others (e.g., health benefits accrueand are payable in month increments), and that Buyer will be responsible for allrelated costs incurred by Seller.  1.3  Buyer retains the right to request Seller to terminate the services of any suchemployee by providing Seller with not less than 3 business days prior written notice.Seller agrees to provide Buyer with notice of any employee termination as soon as it isreasonably able to do so.  1.4  Buyer shall provide Seller with advance funding of any payroll and benefitsamounts, based Seller’s reasonable projections, (and subject to adjustment to actualcosts incurred) and shall reimburse Seller for any other related costs incurredimmediately upon Buyer’s receipt of Seller’s invoice.  1.5  In consideration for Seller’s providing contract employment services under thisAddendum, Buyer agrees to indemnify and hold Seller, its owners, officers and directorsharmless against any claim, loss or liability incurred by Seller as a result ofproviding contract employment services to Buyer under this Addendum, including anyclaims by third parties related to any such employee’s actions or failures to actduring the period after Closing.
2.  Except as expressly amended in this Addendum, the Agreement shall remain in full force and effect.
This Addendum has been executed by the parties to be effective as of the date indicated above.           **PROCAM MACHINE, LLC** **MONROE MACHINED PRODUCTS, INC**           By: /S/ DENNIS SPEER By: /S/ BHRETT MONROE              Name: DENNIS SPEER Name: BHRETT MONROE    Title: GENERAL MANAGER Title: PRESIDENT    
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**Attachment A**
Employees