Document:

Exhibit 10.4 to CapSource Financial, Inc. Form 8-K/A Amendment 3 dated May 1, 2006

Exhibit 10.4  

ASSET PURCHASE AGREEMENT

by and among

CAPSOURCE FINANCIAL, INC.,

and its designee

CAPSOURCE EQUIPMENT COMPANY, INC.

and

PRIME TIME EQUIPMENT, INC.

and

ITS PRESIDENT

May __, 2006

ASSET PURCHASE AGREEMENT

          This
Asset Purchase Agreement (“Agreement”) is made by and between Capsource
Financial, Inc., a Colorado corporation or its designee CapSource Equipment
Company, Inc., a Nevada corporation (“Buyer”) and Prime Time Equipment, Inc., a
California corporation (“Company” sometimes referred to as the “Seller”), and
Seller’s President (the “President”) effective as of May  __, 2006.

RECITALS

          WHEREAS,
Seller is engaged in the business of selling truck trailers including, but not
limited to, the leasing, financing and servicing of dry van and refrigerated
truck trailers (the “Business”), which Business is based in Fontana,
California, U.S.A. (together, the “Premises”), and has its principal office at
15609 Valley Boulevard, Fontana, California 92335.

          WHEREAS,
subject to the terms and conditions hereinafter set forth, Seller desires to
sell to Buyer, and Buyer desires to purchase from Seller, substantially all of
the property and assets of the Business.

          WHEREAS,
the President will receive substantial direct and indirect benefits from the
transactions contemplated by this Agreement, and Buyer has required that the
President enter into this Agreement as a condition to Buyer’s execution hereof.

          NOW,
THEREFORE in consideration of the mutual representations, warranties, covenants,
agreements and conditions hereinafter set forth and the mutual benefits to be
derived from this Agreement, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

          Section
1.1 Assets to be Transferred.
Upon and subject to the terms and conditions set forth in this Agreement
(including without limitation Section 1.2), on the Closing Date (as defined in
Section 10.1 of this Agreement), Seller shall sell, transfer, convey, assign
and deliver to Buyer, and Buyer shall purchase and accept from Seller, all of
the business, property and assets owned by Seller or to which the Seller has
rights which are used by Seller in connection with the Business, whether any
such assets are located on, or in transit to or from, the Premises, held on
consignment or for sale by others, or otherwise including the business,
property and assets identified below in this Section 1.1, all as the same shall
exist on the Closing Date (collectively, the “Purchased Assets”).  The Retained Assets (as defined in Section
1.2 of this Agreement) are specifically excluded from the business, property
and assets to be purchased and sold pursuant to this Agreement.  The Purchased Assets shall include without
limitation the following:

                    (a)
Books and Records.  All books,
records and other documents and information relating to the Assets and the
Business, including, without limitation, all customer files and records, and
all other data related to all present and former customers of the Business, all
payment records and account history of all such customers, prospect
information, marketing data, sales literature, inventory records, purchase
orders and invoices, customer information, correspondence, price lists, quotes
and bids, catalogues and brochures of every kind and nature, all  supplier lists, sales data, records,
telephone records, files (“Books and Records”);

                    (b)
Machinery and Equipment.  All
machinery, equipment, tools, furniture, fixtures, computer equipment, leasehold
improvements, and other personal property and related spare parts, maintenance
supplies and other property listed on Schedule 1.1(b) which are located at the
Premises (the “Machinery and Equipment”);

                    (c)
Receivables.  Except as provided
in Section 1.2 hereof, all accounts receivable relating to the Business but
excluding those intra-company or aged receivables previously deemed by Seller
to be not collectible that are designated as such on Schedule 1.1(c)(the
“Receivables”);

                    (d)
Vehicles.  Except as provided in
Section 1.2 hereof, all vehicles owned by Seller which are used in the
Business, including without limitation the vehicles listed on Schedule 1.1(d)
of this Agreement (the “Vehicles”);

                    (e)
Intellectual Property.  All
patents, patent applications, copyrights, copyright applications, trade names,
trademarks or service marks, registered or unregistered and applications
therefor, logos, processes, proprietary data, computer software or firmware
programs, software manuals, inventions, trade secrets, Internet domain names,
e-mail addresses and proprietary or trade secret designs, test data and any
other material documentation for products or circuits owned by the Company or
used or held for use in connection with the Business, together with all
licenses related to the foregoing, whether Seller is the licensee or licensor
thereunder and all other intellectual property rights used in the conduct of
the Business and licenses thereof, and the legal and trade names of Company or
any derivative thereof including any of the foregoing listed on Schedule 1.1(e)
of this Agreement (the “Intellectual Property”);

                    (f)
Technical Information.  Except as
described in Section 1.2 of this Agreement, all technical and marketing
information owned by Seller relating to the Business, including product
specifications, drawings, plans, designs, test results, manufacturing
documentation, research reports, technical manuals new developments, know-how,
ideas and trade secrets and all documentation thereof and all claims and rights
relating thereto (“Technical Information”);

Page 2 of 35

                    (g)
Contracts.  Subject to the
provisions of Section 2.2(d) of this Agreement, all rights existing under leases,
contracts, agreements and commitments relating to the Business under (1)
commitments of Seller relating to the Business with respect to open unfilled
purchase orders issued to suppliers and open unfilled sales orders received
from customers, which have been entered into in the ordinary course of
business; (2) the real estate lease described on Schedule 4.8 of this
Agreement; and (3) the personal property leases, license agreements, software
license agreements, consulting agreements, maintenance and service agreements,
and all other similar contracts and commitments whether written or oral
relating to the Business and either listed on Schedule 1.1(g) to this Agreement
or entered into by Seller in the ordinary course of business prior to the
Closing Date (collectively, the “Contracts”);

                    (h)
Licenses; Permits.  All
governmental licenses, permits, franchises, approvals and identification
numbers of Seller to the extent transferable or temporarily usable and relating
to the Business including, but not limited to the licenses, permits
registrations and franchises listed on Schedule 1.1 (h) (“Licenses and
Permits”);

                    (i)
Computer Software.  All
information systems, programs, and software and documentation thereof relating
to the Business owned by Seller or to which the Seller has rights and located
at the Premises including, but not limited to the programs, and software listed
on Schedule 1.01 (i) (“Computer Software”); 

                    (j)
Inventory.  All raw materials, work
in process and finished goods inventory that are current and suitable for use
in the normal course of business, and excluding obsolete or defective
inventory  including, but not limited to
the inventory listed on Schedule 1.01 (j) (“Inventory”).

                    (k)
Balance Sheet Assets.  All assets
reflected on the Latest Balance Sheet (as defined in Section 4.4) or acquired
by Seller after the date thereof, except those sold in the ordinary course of
business after the date thereof; 

                    (l)
Goodwill.  All goodwill of the
Business; and

                    (m)
Prepaid Expenses/Deposits.  All
prepaid expenses and deposits relating to the Business, excluding certain
deposits, prepaid expenses and accrued expenses identified on Schedule 1.1(m)
of this Agreement (“Prepaid Deposits”).

          Section
1.2 Retained Assets.
Notwithstanding the provisions of Section 1.1 of this Agreement, Seller
shall not sell, transfer, assign, convey or deliver to Buyer, and Buyer shall
not purchase or accept from Seller, the following assets of Seller, whether
relating exclusively or nonexclusively to the Business (collectively the
“Retained Assets”):

                    (a)
Tax Refunds.  All tax refunds for
periods ending on or before the Closing Date, specifically including those tax
refunds identified on Schedule 1.2(b) of this Agreement;

Page 3 of 35

                    (b)
Insurance.  All insurance
policies owned by Seller and rights to collect insurance proceeds under
policies owned by Seller, except as otherwise provided in Section 9.5 of this
Agreement;

                    (c)
Contracts.  Any Contracts
not assumed by Buyer as provided in Section 2.2(d) of this Agreement; and

                    (d)
Scheduled Assets.  The assets
listed on Schedule 1.2(f) of this Agreement, which Schedule will be updated as
of the Closing Date for changes in amounts in the ordinary course of business
between the date of this Agreement and the Closing Date.

ARTICLE II

ASSUMPTION OF LIABILITIES

          Section
2.1 Liabilities to be Assumed.
Subject to the terms and conditions of this Agreement and the
consummation of the transactions contemplated by this Agreement, on the Closing
Date (as defined in Section 10.1 of this Agreement), Buyer shall assume and
shall pay, discharge and perform when due the following liabilities and
obligations of Seller arising and accruing in connection with, and relating
exclusively to, the operation of the Business (collectively, the “Assumed
Liabilities”):

                    (a)
Stated Liabilities.  As of the
Closing Date, the trade accounts payable, and certain other accrued expenses
and liabilities arising out of or relating to the Business, all of which shall
be set forth on the Closing Date Statement of Purchased Assets and Assumed Liabilities
prepared in accordance with, and finally accepted as provided in, Article III
of this Agreement;

                    (b)
Contracts.  The executory
liabilities and obligations arising after the Closing Date under the Contracts
which are designated as being, and in fact are, assigned to Buyer with any
required consent;

                    (c)
Transferring Employees.  The
liabilities and obligations of the Buyer as, and to the extent, provided in
Section 11.1 of this Agreement;

          Section
2.2 Retained Liabilities.  Seller
shall retain all obligations and responsibilities for any claims, debts,
defaults, duties or liabilities of the Business or of Seller, whether absolute,
accrued, liquidated or otherwise, and whether due or to become due, asserted or
unasserted, known or unknown, contingent or fixed, not specifically assumed by
Buyer, or which Buyer is not specifically responsible for, under this Agreement
(collectively, the “Retained Liabilities”), including without limitation:

                    (a)
Taxes.  All Taxes (as defined in
Section 4.15(a) of this Agreement), prorated as of the Closing Date, concerning
the Business or Seller;

Page 4 of 35

                    (b)
Sales Commissions.  All sales
commissions payable to the Seller’s employees or any sales representative
(regardless of whether Buyer employs such employees or sales representatives
from and after the Closing Date) accrued prior to the Closing Date;

                    (c)
Retained Assets.  Any liability
or obligations of Seller relating to or arising out of the Retained Assets;

                    (d)
Employee Benefit Plans.  Any
obligations of Seller pertaining to any employee pension or benefit plan of
Seller relating to the former or current employees of the Business and arising
prior to the Closing Date; 

                    (e)
Employees.  All obligations and
liabilities pertaining to the employees of the Business as provided in Section
11.1 of this Agreement or arising out of or relating to any employee grievance
whether or not the affected employees are hired by Buyer by current or former
employees, whether filed in the past or at any time in the future, for
commissions due for products already shipped or invoiced, unpaid wages,
overtime, sick pay, severance, vacation, 401k plans, or other payments due,
disability or workers compensation; any form of misconduct, discrimination or
sexual harassment;

                    (f)
Violations and Defaults.  All
obligations and liabilities: (i) resulting from any violation by Seller of any
statute, law, rule, regulation, ordinance or order, judgment, decree, writ or
injunction; (ii) under an agreement that result from any breach or default (or
event that with notice or lapse of time would constitute a breach or default)
by Seller under such agreement; or (iii) that arise out of or constitute
damages to Buyer as the result of a breach of any representation or warranty
provided by Seller in connection with this Agreement;

                    (g)
Product Warranty.  All
obligations and liabilities resulting from product liability, warranty, credit
memoranda issued by the Seller or strict liability claims relating to products
sold or leased by the Seller in the ordinary course of the Business prior to
the Closing Date; and

                    (h)
Financial Obligations.  All
obligations and liabilities under any guaranties by the Seller of or in respect
of any indebtedness, liabilities or obligations of any other person or entity
and any amounts owed by the Seller to attorneys, accountants or other
professionals engaged from time to time by the Seller (including, without
limitation, any engaged with respect to the transactions contemplated hereby). 

          Buyer
shall have no obligation under this Agreement, by operation of law or otherwise
to assume, pay or discharge any of the Retained Liabilities.  Seller agrees to satisfy in due course the
Retained Liabilities, except those being contested or denied by Seller in good
faith, and hereby indemnifies and holds Buyer harmless with respect to such
Retained Liabilities.

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ARTICLE III

PURCHASE PRICE - PAYMENT

          Section
3.1 Purchase Price.  In
consideration of the sale and transfer to Buyer of the Purchased Assets as
provided in Section 1.1 of this Agreement and the Agreement Not to Compete in
Section 11.6, Buyer (i) shall assume the Assumed Liabilities as set forth in
Section 2.1 of this Agreement and (ii) shall pay to Seller an aggregate
purchase price of One Hundred  Thousand
Dollars ($100,000) plus an additional amount equal to the value of the net
assets of the Seller, excluding cash in banks, on the Closing (the “Purchase
Price”).

          Section
3.2 Payment.  Buyer shall pay the
Purchase by cashier’s check on the Closing Date, provided the conditions set
forth in Article I hereof have been fulfilled.
Seller agrees and understands that the payment and receipt of the
Purchase Price shall be subject to repayment to the Buyer for the purpose of
satisfying and adjustments to the Purchase Price as set forth in Section 3.6. 

          Section
3.3 Closing Date Statement of Purchased Assets and Assumed Liabilities.  Within twenty (20) days after the
Closing Date, or as soon thereafter as is reasonably practicable, Buyer shall
prepare and submit to Seller a statement of the Purchased Assets and the
Assumed Liabilities as of the Closing Date (the “Closing Date Statement of
Purchased Assets and Assumed Liabilities”).
The Closing Date Statement of Purchased Assets and Assumed Liabilities
shall identify, as of the Closing Date, the “Net Book Value”, which is defined
for purposes of this Agreement as the book value of the Purchased Assets, minus
the book value of the Assumed Liabilities, as generally described in Section
2.1(a) of this Agreement.  The Closing
Date Statement of Purchased Assets and Assumed Liabilities shall be prepared in
accordance with generally accepted accounting principles (“GAAP”).

          Section
3.4 Acceptance of Closing Date Statement of Purchased Assets and Assumed
Liabilities.  Upon completion of the
Closing Date Statement of Purchased Assets and Assumed Liabilities, Buyer shall
deliver such Closing Date Statement of Purchased Assets and Assumed Liabilities
to Seller.  In addition, Buyer shall
furnish to Seller its calculation of the amount of Net Book Value (including
all relevant details and data supporting such calculation) and accord Seller
the opportunity for full verification of such amount.  Seller shall have twenty (20) days after receipt of the Closing
Date Statement of Purchased Assets and Assumed Liabilities and the Buyer’s
calculation of Net Book Value, to accept or reject in writing Buyer’s
calculation of Net Book Value.  In the
event Seller concurs in Buyer’s calculation of Net Book Value or fails to
notify Buyer in writing of a dispute in Buyer’s calculation of Net Book Value
as provided in this Section 3.4, then Buyer’s calculation of Net Book Value
shall govern for all purposes of this Agreement.  If, however, Seller rejects Buyer’s calculation of Net Book Value,
Seller shall notify Buyer within the such twenty (20) day period, and the
written notice must set forth the items and amounts of the Net Book Value
rejected and the reasons for such rejection.
In the event Seller rejects Buyer’s calculation of Net Book Value, the
parties shall attempt in good faith to reach agreement on the amount of the Net
Book Value and the

Page 6 of 35

resulting
adjustment to Purchase Price, if any, pursuant to Section 3.6 of this
Agreement, but if no such agreement is reached within twenty (20) days after
Seller notifies Buyer of a dispute in Buyer’s calculation of Net Book Value,
then either party may, by written notice, require submission of such dispute to
arbitration in accordance with the rules of the American Arbitration
Association, by one arbitrator (the “Arbitrator”) who shall be a certified
public accountant selected by mutual agreement of the parties; provided,
however, in no event shall the Arbitrator be affiliated with an accounting firm
selected as the regular outside accounting firm of either party.  Each party shall bear its own expenses in
preparing and reviewing the Closing Date Statement of Purchased Assets and
Assumed Liabilities and the Net Book Value calculation in connection with any
such arbitration proceedings.  The
Arbitrator’s fees and expenses shall be paid by the non-prevailing party to
such arbitration as determined by the Arbitrator.  The Arbitrator shall have access to all necessary accounting and
other records that may be requested by the Arbitrator from time to time.  The determination of the Arbitrator shall be
final and binding on both Buyer and Seller.
The Arbitrator shall apply the standards specified in this Agreement in
determining the matters submitted thereto.

          Section
3.5 Intentionally Omitted.  

          Section
3.6 Purchase Price Adjustment.
Following the final determination of the Net Book Value in accordance
with Sections 3.3 and 3.4 of this Agreement (whether by acceptance by Seller,
agreement between Seller and Buyer or arbitration), the Seller and Buyer agree
to an adjustment of the Purchase Price dollar for dollar for any increase or
decrease in  the Net Book Value as
reflected on the Company’s balance sheet as at April 19, 2006 and the Net Book
Value as of the Closing Date.  Any
adjustment shall be paid to the Seller or received by the Buyer in immediately
available funds within two (2) business days of such final adjustment.

          Section
3.7 Allocation of Purchase Price.
The Purchase Price shall be allocated among the Purchased Assets as set
forth in Schedule 3.7.  Such allocation
shall be reflected, as well, on IRS form 8594 (Asset Acquisition Statement
Under Section 1060), which completed Form, each of Buyer and Seller shall file
separately with the Internal Revenue Service pursuant to the requirements of
Section 1060 of the Internal Revenue Code of 1986, as amended.  Each party shall update such allocation to
reflect any post-Closing adjustments in the Purchase Price pursuant to Section
3.6.  Seller and Buyer agree that such
allocation is fair and equitable.
Seller and Buyer further agree to act in a manner consistent with such
allocation for all purposes, including the filing and preparation of all
federal, state and local tax returns filed by them subsequent to the Closing
Date, and the determination by Seller of taxable gain or loss of the Purchased
Assets and the determination by Buyer of its tax basis with respect to the
Purchased Assets.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

Page 7 of 35

          Seller
and President jointly and severally make the following representations and
warranties to Buyer:

          Section
4.1 Existence.  The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has full power, right and authority to own,
lease and operate its properties and to conduct its business as presently
conducted.  Seller and is duly qualified
or licensed to do business as a foreign entity in good standing in every
jurisdiction in which the conduct of its business requires such qualification
or the failure to so qualify will not have a material adverse effect on the
Business or Assets.  Set forth on
Schedule 4.1 is a list of any and all fictitious business names under which either
Seller or the President has operated at anytime during the past 5 years.

          Section
4.2 Authority.  Seller and the
President has full power and authority to enter into this Agreement and to
effect the transactions contemplated by this Agreement.  No approvals or consents of any persons or
entities are necessary for the execution, delivery and performance of this
Agreement by the Seller or the President, except as have been obtained (or will
be obtained prior to Closing). This Agreement has been duly authorized,
executed and delivered by the Seller and the President and is a valid and
binding obligation of the Seller and the President enforceable against each of
them in accordance with its terms subject to:
(a) applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws of general application affecting enforcement of creditors’
rights generally; and (b) limitations on the availability of equitable
remedies.

          Section
4.3 No Conflict or Violation.
Except as set forth on Schedule 4.3 of this Agreement, neither the
execution and delivery of this Agreement nor consummation of the transactions
contemplated hereby will result in: (a) a violation or breach of or default
under any term or provision of any contract, agreement, lease, commitment,
license, permit, authorization or concession to which either Seller or the
President is a party or to which any of them or any of their property or the
Assets may be bound or constitute an event which with notice, lapse of time, or
both, would result in any such violation, breach or default (or give rise to
any right of termination, amendment, cancellation or acceleration); (b) except
as contemplated by this Agreement, require the Company to make any payment to
any entity or person; (c) result in the imposition or creation of any lien upon
any of the Assets; or (d) a material violation by either Seller or the
President of any statute, rule, regulation, ordinance, code, order, judgment,
writ, injunction, decree or award, or constitute an event which with notice,
lapse of time, or both, would result in any such violation.

          Section
4.4 Financial Information.
Attached as Schedule 4.4 are true and correct copies of Seller’s
Financial Statements relating to Seller’s Business.  _Financial Statements_ mean (i) balance sheets of Seller as of
December 31, 2005, together with statements of income for each of the calendar
years 2003, 2004 and 2005; (ii) a balance sheet for Seller as of March 31,
2006; and (iii) and a balance sheet for Seller as of close of business on April
19, 2006 (_Latest Balance Sheet_), and related statements of income for the
year-to-date period then ended.  The
Financial Statements have been prepared in accordance with generally accepted

Page 8 of 35

accounting
principles consistently applied through the periods indicated and fairly
present the financial position of Seller’s Business as of the respective dates
of the balance sheets and the results of Seller’s Business operations for the
respective periods indicated.  The
Financial Statements have been prepared from the books and records of Seller,
which accurately and fairly reflect the transactions of, acquisitions and
dispositions of Assets by, and incurrence of Liabilities by Seller. To Seller’s
knowledge, Seller has no Liabilities of or relating to the Assets or Seller’s
Business except for (i) Liabilities reflected on the Latest Balance Sheet; (ii)
current liabilities incurred in the Ordinary Course of Business after the date
of the Latest Balance Sheet; and (iii) such other liabilities specifically described
on the Schedules attached to this Agreement. All inventories and supplies
reflected in the Latest Balance Sheet or included in the Assets are of good and
merchantable quality and are salable in the Ordinary Course of Business (in the
case of inventory held for sale) or currently usable (in the case of other
inventory, supplies and raw materials).
The values of the inventories reflected in the Latest Balance Sheet are
stated in accordance with generally accepted accounting principles. Neither
Seller nor President is insolvent.

          Section
4.5 Undisclosed Liabilities.
With respect to the Assumed Liabilities, Seller has no liability, known
or unknown, absolute or contingent, which is not shown or provided for on
Schedule 2.1(a) of this Agreement, except obligations or liabilities totaling
less than $5,000 in the aggregate incurred in the ordinary course of business
or otherwise disclosed in this Agreement.

          Section
4.6 No Material Adverse Changes.
Except as set forth on Schedule 4.6 of this Agreement, or as otherwise
disclosed in this Agreement, since December 31, 2005 (except as otherwise noted
below), there have not been any:  (a)
changes which, individually or in the aggregate, are materially adverse to the
Business or the Purchased Assets, or any changes in the Business or the
Purchased Assets which, individually or in the aggregate, have materially and
adversely affected the Business or the Purchased Assets; (b) damage,
destruction or loss of a material nature affecting the Business or the
Purchased Assets whether or not adequately covered by insurance; (c) incurrence
of any obligation or liability relating to the Business (absolute or
contingent) except current liabilities incurred, and obligations under
contracts entered into, in the ordinary course of business; (d) incurrence of
any mortgage, pledge or subjecting to liens, charges, security interests or any
other encumbrances, of any of the Purchased Assets except in the ordinary
course of business; (e) sale, assignment, transfer or license (or agreement to
do any of the foregoing) of any Intellectual Property or any other Purchased
Asset (except performance of Contracts, and sales of Inventory, in the ordinary
course of business); (f) to Seller’s knowledge, sufferance of any extraordinary
loss or waiver of any right of substantial value with respect to the Business;
(g) change in employee compensation with respect to employees of the Business
other than normal salary increases in the ordinary course of business or other
increases required by any union contracts; (h) material transactions with
respect to the Business other than in the ordinary course of business; (i)
amendment or termination of any material Contract; (j) actual or, to Seller’s
knowledge, threatened labor trouble, strike or other occurrence or condition of
a similar character (or any receipt of notice of any of the foregoing) which
had or might have a material

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adverse effect
on the Business; or (k) changes in the accounting methodology and procedures
pertaining to the Business.

          Section
4.7 Purchased Assets.  Except for
the Retained Assets referred to in Section 1.2 of this Agreement, the Purchased
Assets constitute all the properties and assets used or useful in connection
with the Business and the operation of the Business as being conducted as of
the date of this Agreement and constitute all the assets necessary for the
conduct of the Business as being conducted as of the date of this
Agreement.  All tangible Purchased
Assets are in good condition and repair, ordinary wear and tear excepted, and
(where applicable) are in good working order and have been properly and
regularly maintained. Except as set forth on Schedules 4.7 or 4.8 of this
Agreement, Seller now has and on the Closing Date will have, and will convey to
Buyer at Closing, good and marketable title to all of the Purchased Assets free
from all liens, charges, pledges, security interests, claims and encumbrances
of every kind. No tangible Assets are located outside of Seller’s possession,
except as described in Schedule 4.7.
Except for the Premises, Seller has no interest (leasehold or otherwise)
or any rights in, any real property that is used in Seller’s Business.  

          Section
4.8 Leased Real Estate.  Schedule
4.8 of this Agreement sets forth and describes:  (a) the real estate which is leased by Seller and used in
connection with the conduct of the Business (the “Leased Real Estate”); (b) the
lease agreements pursuant to which Seller leases or otherwise makes use of the
Leased Real Estate (the “Real Estate Leases”); ( c ) the real estate owned by
the President and to be leased by the President to the Buyer and a Form of
Commercial Lease Agreement to be used to accomplish such lease..  Except as disclosed in Schedule 4.8 of this
Agreement, there are no defaults under the Real Estate Lease, nor has the
landlord under the Real Estate Leases given Seller any oral or written notice
of any claim, action or suit at law or in equity arising out of the Real Estate
Lease.

          Section
4.9 Contracts.  Except for (a)
purchase and sale commitments of Seller relating to the Business with respect
to open unfilled purchase orders issued to suppliers and open unfilled sales
orders received from customers, which have been entered into in the ordinary
course of business; and (b) contracts, agreements, arrangements and commitments
specifically set forth on other Schedules of this Agreement (including, but not
limited to, the Real Estate Lease set forth on Schedule 4.8 of this Agreement),
Schedule 1.1(g) is a list of all leases, licenses, contracts, commitments and
agreements to which Seller is a party or by which it is bound, and which relate
to the Business.  Except as set forth on
Schedule 4.9 of this Agreement, each of the Contracts is in full force and
effect and is valid and enforceable in all respects by Seller in accordance
with their respective terms, and Seller is not in default in the observance or
the performance of any term or obligation to be performed by it under each of
the Contracts and the Real Estate Lease, and there exists no event or condition
which with the giving of notice or lapse of time, or both, would constitute a
default thereunder.  No other person is
in default in the observance of the performance of any term or obligation to be
performed by such person under each of the Contracts, and there are no
unresolved disputes under any of the Contracts or the Real Estate Lease.  True and correct copies of all Contracts and
the Real Estate Lease are included in a binder delivered to Buyer on or prior
to the date

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hereof as part
of Schedule 1.1(h) hereof, to the extent that the Contract is in writing.  If any Contract is not in writing, Schedule
1.1(h) sets forth the parties to such contract and describes all terms thereof,
or in the case of any oral agreement affecting a written Contract, the terms of
such oral agreement.

          Section
4.10 Intellectual Property.
Subject to the provisions of Section 1.2(f) of this Agreement, the list
of Intellectual Property set forth on Schedule 1.1(e) of this Agreement
contains all of the trademarks, trade names, trade styles, service marks and
copyrights used exclusively in connection with the Business, including all
registrations therefor and licenses thereof.
To the extent indicated on Schedule 1.1(e) of this Agreement, the
Intellectual Property has been duly registered in, filed in or issued by the
United States Patent and Trademark Office.
Except as set forth on Schedule 4.10 of this Agreement:  (a) Seller has received no notice from any
other person challenging the right of Seller to use the Intellectual Property;
and (b) Seller has not, in its operation of the Business, infringed and is not
now infringing, on any trademark, trade name, trade secret or copyright held by
any other person, firm or company, in any manner which materially affects the
Business or the Purchased Assets.

          Section
4.11 Litigation; Claims.

                    (a)
Except as described on Schedule 4.11 of this Agreement, there is no litigation,
proceeding, government investigation or labor dispute or grievance by or
against Seller pending or threatened with respect to the transactions
contemplated by this Agreement, the Business, its employees or the Purchased
Assets at law, in equity or admiralty, or by or before any federal, state or
municipal court, government department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitrations, nor are there any
orders, writs, injunctions or decrees of any court or arbitrator or federal,
state, local or other government department, commission, board, bureau, agency
or instrumentality, domestic or foreign, in existence relating to the
transactions contemplated by this Agreement, the Business, its employees or the
Purchased Assets.

                    (b)
Except as listed on Schedule 4.11 of this Agreement, Seller is not aware of any
material facts, events or occurrences by reason of which any material claim,
action or proceeding may be brought by or against Seller with respect to the
transactions contemplated by this Agreement, the Business, its employees or the
Purchased Assets taken as a whole.

                    (c)
Except as set forth on Schedule 4.11 of this Agreement, during the two years
preceding the date of this Agreement Seller has not received any notice of any
claims with respect to the Business, its employees or the Purchased Assets.

          Section
4.12 Compliance With Law.  The
Business and the Purchased Assets as conducted or held by Seller on the date of
this Agreement do not violate, in any material respect, any statute, code,
ordinance, regulation, requirement or order of any governmental body, the
enforcement of which would have a material adverse effect on the operation of
the Business or the Purchased Assets.

Page 11 of 35

          Section
4.13 Employees; Labor Relations.

                    (a)
Schedule 4.13(a) of this Agreement contains, as of the dates shown on such
Schedule, accurate and complete information as to names and rates of
compensation (whether in the form of salaries, bonuses, commissions or other
supplemental compensation now or hereafter payable) of all employees of Seller
relating to the Business (grouped by categories as indicated thereon), together
with information as to any employment contracts or severance arrangements with
any such employees, any arrangements involving the indebtedness of such
employees to Seller and any arrangements involving the indebtedness of Seller
to such employees in any amount.

                    (b)
Except as described on Schedule 4.13(b) of this Agreement, to Seller’s
knowledge, since December 31, 2005, there has been no material adverse change
in the relationship of employees of the Business with Seller nor any strike or
material labor disturbance by any such employees affecting Seller. Seller has
no collective bargaining, union or labor agreements, contracts or other
arrangements with any group of employees, labor union or employee
representative and Seller does not know of any organization effort currently
being made or threatened by or on behalf of any labor union with respect to
employees of Seller.

                    (c)
Except as set forth on Schedule 4.13(c), the Company is not a party to any
employment or consulting agreement and there are no bonus, commission or other
incentive compensation programs in effect for its employees or agents.  In addition, except as set forth on Schedule
4.13(c), there is no employment handbook, personnel policy manual, or similar
document that creates rights to continued employment or similar
employee-related obligations.

                    (d)
Except as set forth on Schedule 4.13(d), the Company is not a party to any
collective bargaining agreement or other agreement or arrangement regarding
union activity, and the Company is not the subject of any union organizing
activity. Seller has not experienced, and Seller does not know or have
reasonable grounds to know of any basis for, any strike, material labor
trouble, work stoppage, slow down or other interference with or impairment of
Seller’s Business.  Seller is, and has
at all times been, in compliance, in all material respects, with all applicable
statutes, rules, laws, regulations, rulings and the like respecting employment
and employment practices, terms and conditions of employment, wages, hours of
work and occupational safety and health, and is not engaged in any unfair labor
practices. 

                    (e)
Except as described on Schedule 4.13(e), (i) Seller does not provide, nor is it
obligated to provide, directly or indirectly, any benefits for employees,
including, without limitation, any pension, profit sharing, deferred
compensation, severance pay or other severance obligations, stock option,
retirement, bonus, hospitalization, insurance, vacation or other employee
benefits under any practice, agreement or understanding; and (ii) Seller has

Page 12 of 35

not had and
does not now maintain any _employee benefit plan_ (as that term is defined in
Section 3(3) of the Employment Retirement Income Security Act of 1974 as
amended), on behalf of Seller or any other party, which covers or covered any
employees or former employees of Seller.

          Section
4.14 Taxes and Tax Liens.

                    (a)
The Purchased Assets shall not be subject to any liens, claims or encumbrances
with respect to federal, state, local or foreign income, franchise, sales, use,
occupation, net worth, property, wage withholding, accumulated earnings,
personal holding company, excise, transfer or other taxes, assessments,
interest, penalties, deficiencies, fees, rents and other governmental charges
and impositions (collectively, the “Taxes”), pertaining to the Business
attributable to periods up to the Closing Date.

                    (b)
There are no pending or to Seller’s knowledge threatened examinations, reviews,
audits or investigations of the federal, state or local income tax returns or
reports of Seller relating to the Business, and no issue or question has been
raised (and is currently pending) by any taxing authority in connection with
any of Seller’s tax returns or reports. 

                    (c)
Seller has withheld proper and accurate amounts from employees of the Business
in full and complete compliance with all withholding and similar provisions of
the Internal Revenue Code and any and all other applicable laws, statutes,
codes, ordinances, rules and regulations, and Seller has timely filed proper
and accurate federal, state and local returns, reports and estimates with
respect to employee income tax withholding, social security taxes and
unemployment taxes relating to the Business for all years and periods up
through the Closing Date (and portions thereof) for which such returns and
reports were due; and any and all amounts shown on such returns and reports to
be due and payable have been paid in full.
All payments (including interest and penalties) due or to become due
from Seller with respect to the Business for employee income tax withholding,
social security taxes and unemployment taxes for any year or accounting period
(or portion thereof) ended on or prior to the Closing Date will be either paid
in full prior to or shortly after the Closing Date.  With respect to the Business, Seller has filed, or will file, all
federal, state, local and foreign tax returns, reports and notices required to
be filed prior to the Closing Date and has paid or will pay all such taxes due
as shown on such returns and all such taxes otherwise due. No tax deficiency
has been proposed or assessed against Seller and Seller has not executed any
waiver of any statute of limitations on the assessment or collection of any
tax.

          Section
4.15 Environmental Matters.
Except as set forth on Schedules 4.15(a) and 4.15(b) of this Agreement,
to Seller’s knowledge:

                    (a)
The licenses and permits listed on Schedule 4.15(a) of this Agreement are the
only governmental licenses, approvals, permits and authorizations currently
required for the ownership, use or occupancy of the Leased Real Estate or for
the operation of the Business as now being conducted and of the Purchased
Assets, the failure to obtain which would have a

Page 13 of 35

material
adverse effect on the Business or the Purchased Assets or on Seller’s operation
of the Leased Real Estate.  Except as
otherwise disclosed on Schedule 4.15(a): (i) all such licenses and permits are
valid and in full force and effect; and (ii) Seller has not received any notice
that any appropriate authority has revoked, suspended or terminated, or intends
to revoke, suspend or terminate, any of such licenses and permits.

                    (b)
Seller has not stored, treated, disposed, dumped, buried, spilled or otherwise
released any material, including any chemical substance, “Hazardous Substance”,
“Pollutants”, “Contaminants”, petroleum, including crude oil or any fraction
thereof, natural gas, liquefied natural gas, synthetic gas or any “Solid Waste”
on, beneath or about the Leased Real Estate, except for inventories of such
materials or solid waste used or generated in the ordinary course of the
Business.  Further, any such inventories
of materials or solid waste were and are stored in compliance with any and all
applicable Environmental Requirements such that there has been and is no
release of any such material or solid waste to the environment which could
cause the incurrence of response or removal costs or other liabilities or
obligations under CERCLA, any other Environmental Requirement or at common law.

                    (c)
Seller has not received in connection with the Business or the Purchased Assets
any notice from any governmental authority or private or public entity advising
that Seller is potentially responsible for response, removal or other costs
with respect to a release or threatened release of Hazardous Substance, Pollutants,
Contaminants or Solid Waste under CERCLA, any other Environmental Requirement
or at common law.

                    (d)
Seller has not received notice of any violation of any Environmental
Requirement relating to the Leased Real Estate or the operation of the
Business, or any of the processes followed, results obtained or products made
by or on behalf of the Business.

          “Environmental
Requirements” shall mean all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items in effect as of the date hereof
relating to the protection of human health or the environment of all
governmental agencies, departments, commissions, boards, bureaus or instrumentalities
of the United States, the states and political subdivisions thereof, and all
applicable judicial and administrative and regulatory decrees, judgments and
orders relating to the protection of human health or the environment, including
all requirements, including but not limited to those pertaining to reporting,
licensing, permitting, investigation and remediation of emissions, discharges,
releases or threatened releases of any Hazardous Substance, Pollutant,
Contaminant or Solid Waste.

          “Hazardous
Substances,” “Pollutants” and “Contaminants” shall be as defined under the
Comprehensive Environmental Response Compensation and Liability Act,
(“CERCLA”), as amended up to the date of this Agreement.

          “Solid
Waste” shall be as defined under the Solid Waste Disposal Act, 42 U.S.C. §
6901, et seq., as amended up to the date of this Agreement.

Page 14 of 35

          Section
4.16 Brokers and Finders.  Seller
represents that it has engaged no broker or finder in connection with the
subject matter of this Agreement, and Seller shall be responsible solely for
any fee due any broker or finder in connection with the subject matter of this
Agreement.  Seller has not employed any
broker or finder or incurred any liability for any other brokers’, finders’ or
agents’ fees for which Buyer is or could become liable in connection with, or
as a result of, the transactions contemplated by this Agreement.

          Section
4.17 No Agreements to Acquire Assets.
No person or entity other than Buyer has any agreement, option,
understanding or commitments or any right or privilege (whether by law,
preemptive or contractual) capable of becoming an agreement, option or
commitment, for the purchase or other acquisition of any of the Assets.

          Section
4.18 Competing Interests.  Except
as described in Schedule 4.18, neither Seller nor the President, officer,
director or management level employee of Seller or any Affiliate or immediate
family member of any of the foregoing (a) owns, directly or indirectly, an
interest in any person or entity that is a competitor, customer or supplier of
Seller or that otherwise has material business dealings with Seller or (b) is a
party to, or otherwise has any direct or indirect interest opposed to Seller
under, any Company Agreement, Other Company Agreement or other business
relationship or arrangement material to Seller.  Provided, however, that it shall not be a breach of this
representation and warranty should said person or entity invest in
publicly-traded equity securities constituting less than three percent (3%) of
the outstanding securities of such class.

          Section
4.19 Insurance.  Schedule 4.19
lists all insurance policies and fidelity bonds covering Seller, Seller’s
Business, the Assets or Seller’s employees.
There is no claim by Seller pending under any of such policies or bonds
as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds, except as disclosed on Schedule
4.19.  All premiums due and payable under
all such policies and bonds have been paid, and Seller is in compliance with
the terms of such policies and bonds. All such policies may be terminated with
respect to Seller as of the Closing Date; provided, however product liability
coverage may be cancelled after the Closing Date only if Seller’s product
liability policies are occurrence type and the applicable policies, if
terminated, provide coverage for all pre-Closing Date claims until the
applicable statute of limitation has barred action on any such claims.  If occurrence policies are not in existence,
then Seller shall maintain product liability coverage until the applicable
statute of limitation has barred action on any such claims.

          Section
4.20 Subsidiaries.  The Company
has no subsidiaries or directly or indirectly owns any equity or debt interest
in any corporation, partnership, company, joint venture or other person or
entity, or any obligation, right or option to acquire any such interest.

          Section
4.21 Accounts Receivables.  All
Receivables reflected in the Latest Balance Sheet or included in the Assets
have been incurred in the ordinary course of business and are valid, binding
and enforceable obligations due to the Seller and are fully collectible in the

Page 15 of 35

ordinary
course of business, without resort to litigation, at the face amount thereof
without any counterclaim, offset or other reduction by the customer thereunder,
except as may otherwise be provided in Schedule 4.21.  Except as indicated on Schedule 4.21, the Receivables are not
past due. 

          Section
4.22 Restrictions on Business Activities.  Seller is not bound by any agreement commitment, settlement,
judgment, injunction, order or decree to which Seller is a party or otherwise
binding upon Seller or the Purchased Assets that has or may have the effect of
prohibiting or impairing any business practice of Seller or the conduct of
Seller’s Business anywhere in the world.

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

          Section
4.24 Permits and Compliance.
Seller has obtained and now holds all governmental permits and licenses
required to own and operate Seller’s Business.
Seller has complied with and has no notice of any suspected or actual non-compliance
with, all applicable governmental statutes, laws, ordinances, decrees, orders,
rules and regulations, except for possible minor instances of non-compliance
that, when taken as whole, will not have a material affect on the Assets,
Seller’s Business or the financial condition or prospects of Seller’s Business.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

          Buyer
makes the following representations and warranties to Seller:

          Section
5.1 Corporate Existence.  Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado and have full power to own its properties and
to conduct its business as presently conducted.

          Section
5.2 Corporate Authority.  Buyer
has full power and authority to enter into this Agreement and to effect the
transactions contemplated by this Agreement.
This Agreement has been duly authorized, executed and delivered by Buyer
and is a valid and binding obligation of Buyer enforceable against it in
accordance with its terms subject to:
(a) applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws of general application affecting enforcement of creditors’
rights generally; and (b) limitations on the availability of equitable
remedies.

Page 16 of 35

          Section
5.3 No Conflict or Violation.
Except as set forth on Schedule 5.3 of this Agreement, neither the
execution and delivery of this Agreement nor consummation of the transactions
contemplated hereby will result in:  (a)
a violation or breach of or default under any term or provision of any
indenture, mortgage, contract, agreement, lease, commitment, license,
franchise, permit, authorization or concession to which Buyer is a party or to
which they or any of their property may be bound or constitute an event which
with notice, lapse of time, or both, would result in any such violation, breach
or default; or (b) a violation by Buyer of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award, or
constitute an event which with notice, lapse of time, or both, would result in
any such violation.

ARTICLE VI

INTERIM COVENANTS OF SELLER

          Seller
covenants and agrees with Buyer that between the date of this Agreement and the
Closing Date:

          Section
6.1 Operation of the Business.
Seller will operate the Business in the ordinary course of business and
in the same manner as presently operated, and shall maintain and repair the
Purchased Assets in substantially the same manner as they are maintained and
repaired.  Seller will refrain from
taking or omitting to take any action that would violate Seller’s
representations and warranties under Article IV of this Agreement or render
them inaccurate as of the date of this Agreement or the Closing Date or that in
any way would prevent the consummation of the transactions contemplated hereby.

          Section
6.2 Insurance.  Seller will
maintain existing fire and casualty insurance and “all risk” insurance with
respect to the Purchased Assets and the Business.

          Section
6.3 Access to Records and Properties.
Prior to the Closing Date, Buyer may conduct such investigation of the
Purchased Assets and of the Business as Buyer deems appropriate.  Between the date of this Agreement and the
Closing Date, Seller shall give to Buyer and its agents and representatives,
including its independent accountants and attorneys, full access to all the
facilities, offices, books and records of the Business or included in the
Purchased Assets, and such further financial and operating data and other
information with respect to the Purchased Assets, the Business and the Initial
Statement of Purchased Assets and Assumed Liabilities as Buyer shall reasonably
request.  Such investigation shall be
conducted in a manner so as to minimize interference with the operation of the
Business.

          Section
6.4 Updating of Information.
Seller will deliver revised or supplementary Schedules to this
Agreement, containing accurate information as of the Closing Date, in order to
enable Buyer to confirm the accuracy of Seller’s representations and warranties
and otherwise effectuate the provisions of this Agreement.  The receipt by Buyer of any revised or

Page 17 of 35

supplementary
schedules to this Agreement shall in no way prejudice the Buyer’s right to
terminate this Agreement based upon the failure of any condition to be
satisfied under Section 9.1 hereof.
Seller shall promptly inform Buyer, in writing, of the occurrence or
failure of any action or event that would violate Seller’s representations and
warranties under this Agreement or render them inaccurate as of the date hereof
or the Closing Date or that would constitute a breach of any covenant of Seller
under this Agreement or a failure of any condition to the obligations of either
Seller or Buyer under this Agreement.

ARTICLE VII

INTERIM COVENANTS OF BUYER

          Buyer
covenants and agrees with Seller that between the date of this Agreement and
the Closing Date:

          Section
7.1 Performance.  Buyer will
perform all acts to be performed by it pursuant to this Agreement and will
refrain from taking or omitting to take any action that would violate Buyer’s
representations and warranties under this Agreement or render them inaccurate
as of the date of this Agreement or the Closing Date or that in any way would
prevent the consummation of the transactions contemplated under this Agreement.

          Section
7.2 Updating of Information.
Buyer will deliver revised documentation as may be applicable, containing
accurate information as of the Closing Date, in order to enable Seller to
confirm the accuracy of Buyer’s representations and warranties and otherwise
effectuate the provisions of this Agreement.
The receipt by Seller of any revised or supplementary schedules to this
Agreement shall in no way prejudice the Seller’s right to terminate this
Agreement based upon the failure of any condition to be satisfied under Section
9.2 hereof.  Buyer will promptly inform
Seller, in writing, of the occurrence or failure of any action or event that
would violate Buyer’s representations and warranties under this Agreement or
render them inaccurate as of the date of this Agreement or the Closing Date or
that would constitute a breach of any covenant of Buyer under this Agreement or
a failure of any condition to the obligations of either Buyer or Seller under
this Agreement.

ARTICLE VIII

INDEMNIFICATION

          Section
8.1 Indemnification by Buyer.
Subject to the limitations set forth in Section 8.2, Buyer shall indemnify,
defend and hold Seller and its President, employees and agents (collectively,
the _Seller Parties_) from, against and in respect of any and all judgments,
settlements, liabilities, obligations, claims, demands, contingencies, damages,
costs and expenses, including all court costs and reasonable attorneys’ fees
(collectively, _Losses_), that Seller shall incur or suffer, which arise,
result from or relate to:

Page 18 of 35

                    (a)
the breach of any representation, warranty or other agreement made by
Buyer  in this Agreement or pursuant
hereto or any allegation by a third party that, if true, would constitute such
a breach;

                    (b)
the Assumed Liabilities; or

                    (c)
debts, obligations or liabilities arising from the conduct of the Business by
Buyer on or after the Closing Date including, but not limited to, noncompliance
with any Environmental Requirement which is the result of action or conduct
occurring on or after the Closing Date.

          Section
8.2 Limitations on Buyer’s Indemnification Obligations.  The Seller Parties will not be entitled to
indemnification under Section 8.1 unless the aggregate amount of all Losses for
which indemnification is sought by the Seller Parties pursuant to such Section
exceeds $25,000 (the _Indemnification Threshold_), in which case the Seller
Parties will be entitled to indemnification for the amount of such Losses in
excess of such amount.  The maximum
aggregate Losses for which the Seller Parties will be entitled to
indemnification under Section 8.1 is $500,000.
Notwithstanding the foregoing, there shall be no application of the
Indemnification Threshold with respect to any breach or alleged breach of any
representation or warranty resulting from Buyer’s intentional misrepresentation
or fraud.

          Section
8.3 Indemnification by Seller.
Subject to the limitations set forth in Section 8.4, Seller and the
President, jointly and severally, shall indemnify, defend and hold Buyer, its
affiliates and their respective directors, officers, owners, employees and
agents (collectively, the _Buyer Parties_) from, against and in respect of any
and all judgments, settlements, liabilities, obligations, claims, demands,
contingencies, damages, costs and expenses, including all court costs and
reasonable attorneys’ fees (collectively, _Losses_), that Buyer shall incur or
suffer, which arise, result from or relate to:

                    (a)
the breach of any representation, warranty or other agreement made by Seller or
the President in this Agreement or pursuant thereto or any allegation by a
third party that, if true, would constitute such a breach;

                    (b)
The Retained Liabilities;

                    (c)
debts, obligations or liabilities arising from the conduct of the Business by
Seller prior to the Closing Date, to the extent such liabilities are not
Assumed Liabilities, including without limitation the liabilities and
obligations with respect to noncompliance with any Environmental Requirement
which is the result of action or conduct occurring prior to the Closing Date;

                    (d)
debts, obligations or liabilities arising from the conduct of any other
business by Seller on or after the Closing Date.

Page 19 of 35

          Section
8.4 Limitations on Seller’s Indemnification Obligations.  Subject to the exceptions set forth below,
the Buyer will not be entitled to indemnification under Section 8.3 unless the
aggregate amount of all Losses for which indemnification is sought by the Buyer
Parties pursuant to such Section exceeds $25,000 (the _Indemnification
Threshold_), in which case the Buyer Parties will be entitled to
indemnification for the amount of such Losses in excess of such amount.  The maximum aggregate Losses for which the
Buyer Parties will be entitled to indemnification under Section 8.3 is
$500,000.  Notwithstanding the
foregoing, there shall be no application of the Indemnification Threshold with
respect to: (a) any breach or alleged breach of any representation or warranty
resulting from Seller’s or any President’s intentional misrepresentation or
fraud; (b) any breach or alleged breach of any representation or warranty set
forth in Sections 4.1, 4.4, 4.10, 4.11, 4.14, 4.15 or 4.22; or (c) any of the
Other Excluded Liabilities described on Schedule 2.2. 

          Section
8.5 Notice of Claims.  Any party
entitled to receive indemnification under this Article 8 (the _Indemnified
Party_) agrees to give prompt written notice to the party or parties required
to provide such indemnification (the _Indemnifying Parties_) upon the
occurrence of any indemnifiable Loss or the assertion of any claim or the
commencement of any action or proceeding in respect of which such a Loss may
reasonably be expected to occur (a _Claim_), but the Indemnified Party’s
failure to give such notice shall not affect the obligations of the
Indemnifying Party under this Article 8 except to the extent that the
Indemnifying Party is materially prejudiced thereby.

          Section
8.6 Defense of Claims.  The
Indemnifying Party may elect to assume and control the defense of any Claim,
including the hiring and direction of counsel reasonably satisfactory to the
Indemnified Party and the payment of related expenses, if (a) the Indemnifying
Party acknowledges its obligation to indemnify the Indemnified Party for any
Losses resulting from such Claim and provides reasonable evidence to the
Indemnified Party of its financial ability to satisfy such obligation; (b) the
Claim does not seek to impose any liability or obligation on the Indemnified
Party other than for money damages; and (c) the Claim does not relate to the
Indemnified Party’s relationship with its customers or employees.  If such conditions are satisfied and the
Indemnifying Party elects to assume and control the defense of a Claim, then
(i) the Indemnifying Party may settle such Claim; and (ii) the Indemnified
Party may employ separate counsel and participate in the defense thereof at its
own expense unless (A) the Indemnifying Party has failed to adequately assume the
defense of such Claim or to employ counsel with respect thereto or (B) a
conflict of interest exists between the interests of the Indemnified Party and
the Indemnifying Party that requires representation by separate counsel, in
which case the fees and expenses of such separate counsel shall be paid by the
Indemnifying Party.  If such conditions
are not satisfied, the Indemnified Party may assume and control the defense of
the Claim.

          Section
8.7 Time Limits to Indemnification Obligations.  An Indemnifying Party shall not have any
indemnification obligations hereunder with respect to any claim for
indemnification made by an Indemnified Party more than 1 year after the Closing
Date, except

Page 20 of 35

indemnification
obligations relating to claims based on fraud, actual dishonesty or intentional
misrepresentation, or representations or warranties set forth in Sections 4.7
(Title to Assets), 4.14 (Taxes) or 4.15 (Hazardous Substances), which shall
survive until 60 days after the expiration of the applicable statues of
limitations.

          Section
8.8 Survival of Representations, Warranties and Indemnification Obligations.  The indemnification obligations,
representations and warranties of Seller and the President on the one hand and
Buyer on the other, made in or pursuant to this Agreement and the Closing
certificates attached hereto shall survive the execution and delivery of this
Agreement, the consummation of the transactions contemplated by this Agreement
and any investigation, inquiry or knowledge of the other party.   

          Section
8.9 Treatment of Indemnity Payments.
The parties hereto agree to treat all indemnity payments made pursuant
to this Agreement as adjustments to the Purchase Price for all purposes,
including tax purposes.

ARTICLE IX

CONDITIONS PRECEDENT TO CLOSING

          Section
9.1 Conditions Precedent to Closing by Buyer.  All obligations of Buyer under this Agreement are subject to the
fulfillment prior to or at the Closing of each and every one of the following
conditions:

                    (a)
Representations and Warranties Correct.
All representations and warranties of Seller made in or pursuant to this
Agreement and all Schedules to this Agreement shall be true and correct as of
the date made and at and as of the Closing Date, with the same force and effect
as though made at and as of the Closing Date, and Buyer shall have received
from the chief executive officer of Seller a certificate to such effect, in
form and substance reasonably satisfactory to Buyer.

                    (b)
Performance; No Default.  Seller
shall have performed, observed and complied with all the obligations and
conditions required by this Agreement to be performed, observed or complied
with by it at or prior to the Closing Date.

                    (c)
Documents Delivered.  Seller
shall have delivered at the Closing all of the documents described in Section
10.2 of this Agreement.

                    (d)
Consents to Assignment, Lease.
Seller shall have secured the written consents to assign or transfer the
Contracts designated as requiring consent as a condition to Closing on Schedule
1.1(h) of this Agreement and executed a new Real Estate Lease substantially in
the form attached as Exhibit 9.1 to this Agreement.

Page 21 of 35

                    (e)
No Material Adverse Change.  As
of the Closing Date, there shall not have occurred in the opinion of Buyer, in
its sole discretion, any material adverse change in the financial condition,
results of operations, assets or liabilities of Seller’s Business since the
date of the Latest Balance Sheet; and there shall have been no suit, action,
arbitration, legal or administrative proceeding or governmental investigation
pending or threatened against or affecting Seller, the Assets, Seller’s
Business or the prospects of same.

                    (f)
Responses to Due Diligence.  The
form and content of Seller’s responses to Buyer’s requests for information
shall have satisfied Buyer’s due diligence review and inquiry conducted by
Buyer in connection with the transactions contemplated by this Agreement.

                    (g)
Lien Clearance.  Seller shall
have delivered to Buyer executed UCC-3 Termination Statements or other releases
or assurances of releases satisfactory to Buyer to evidence the release of any
liens on the Assets. 

                    (h)
Financing.  Buyer shall have
successfully concluded a debt or equity round of financing for a minimum amount
of Two Million Dollars ($2,000,000) gross proceeds.

          Section
9.2 Conditions Precedent to Closing by Seller.  All obligations of Seller under this Agreement are subject to the
fulfillment prior to or at the Closing of each and every one of the following
conditions:

                    (a)
Representations and Warranties Correct.
All representations and warranties of Buyer made in or pursuant to this
Agreement shall be true and correct as of the date made and at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date, and Seller shall have received from the chief executive officer
of Buyer a certificate to such effect, in form and substance reasonably
satisfactory to Seller.

                    (b)
Performance; No Default.  Buyer
shall have performed, observed and complied with all the obligations and
conditions required by this Agreement to be performed, observed or complied
with by it at or prior to the Closing Date.

                    (c)
Documents Delivered.  Buyer shall
have delivered at the Closing all of the documents described in Section 10.3 of
this Agreement.

          Section
9.3 Waiver of Conditions Precedent.
If any condition precedent to Closing by Buyer as set forth in Section
9.1 of this Agreement is not satisfied and such condition is not waived by
Buyer at or prior to the Closing Date, or if any condition precedent to Closing
by Seller as set forth in Section 9.2 of this Agreement is not satisfied and
such condition is not waived by Seller at or prior to the Closing Date, Buyer
or Seller, as the case may be, may terminate this Agreement at their respective
option by notice to the other party.
Such right of termination shall be in addition to any other rights any
party may have against another for a breach of its commitments hereunder.  In the event that a condition precedent to Closing
is not

Page 22 of 35

met, the party
for whose benefit the condition exists may waive such condition precedent and
proceed with the Closing, and in such event the party so waiving such condition
precedent shall have no recourse against the other party because of the failure
of such condition.

          Section
9.4 Termination in the Event of Damage to Purchased Assets.  In the event any of the Purchased Assets are
damaged or destroyed by fire or other casualty, Seller will immediately notify
Buyer in writing of such event and the extent of damage thereof, and Buyer
shall have the right to either (i) terminate this Agreement if the damage or
destruction exceeds Five Thousand Dollars ($5,000.00) and such damage or
destruction materially affects the Buyer’s ability to carry on the Business as
conducted on the day immediately preceding such damage or (ii) consummate the
purchase of the Purchased Assets as in existence following such damage or
destruction.  Buyer will notify Seller
in writing which of the two alternative elections Buyer desires to pursue
within thirty (30) days of receipt of Seller’s notice with respect to damage or
destruction by fire or other casualty.
If Buyer elects to consummate the purchase contemplated by this
Agreement, an appropriate reduction will be made in the Purchase Price as
agreed by the parties, or in the alternative, Buyer will be entitled to all
insurance proceeds and an amount equal to the deductible amount required to be
paid under the applicable insurance policies (the total amount of proceeds and
deductible payments not to exceed the amount of the Purchase Price to be paid
hereunder), and at the Closing, Seller will assign to Buyer all rights under
all of such insurance policies.

ARTICLE X

CLOSING

          Section
10.1 Closing Date.  Subject to
the conditions precedent to closing by Buyer and Seller under Article IX of
this Agreement, the closing of the transactions contemplated under this
Agreement (the “Closing”) shall take place at 10:00 a.m. local time at the
offices of the Seller on or before May 5, 2006; provided, however, that either
party may, by written notice to the other given not later than May 1, 2006,
elect to postpone the Closing Date for a period of not more than ten (10) days.

          Section
10.2 Documents Delivered by Seller.
At the Closing, Seller will sell, convey, transfer, assign and deliver
to Buyer, and Buyer shall acquire from Seller, all of the Purchased
Assets.  To effect such sale and delivery,
Sellers will deliver the following to Buyer or Buyer’s agents at Closing in
form and substance reasonably satisfactory to Buyer, as shall be effective to
vest in Buyer all of Seller’s rights in and under the Purchased Assets as
provided for in this Agreement:

                    (a)
a general bill of sale transferring the Purchased Assets to Buyer, and such
other similar instruments of conveyance, transfer and assignment as may be
necessary under the laws of the state in which such assets are located to
convey to Buyer good and marketable title to all personal property included in
the Purchased Assets;

Page 23 of 35

                    (b)
assignments of the Intellectual Property in a form sufficient for filing;

                    (c)
all consents to the assignment to Buyer of the Contracts designated on
Schedules 1.1(h) and 4.8 of this Agreement as requiring such consent as a
condition to Closing;

                    (d)
a certificate signed by the chief executive officer of Seller, dated as of the
Closing Date, certifying that the conditions specified in Section 9.2 of this
Agreement have been satisfied in full;

                    (e)
certified copies of resolutions duly adopted by the Board of Directors of
Seller authorizing the execution and delivery of this Agreement and the sale
and transfer of the Purchased Assets to Buyer; 

                    (f)
Consulting Agreement covering the one individual specified in Section 10.4;

                    (g)
A New Real Estate Lease as noted in Section 9.1(d);  

                    (h)
Non Compete Agreement;

                    (i)
such additional documents as Buyer may deem necessary to evidence the truth and
accuracy, as of the Closing Date, of the representations and warranties
contained herein and the due satisfaction and performance at or prior to the Closing
of all agreements and covenants to be complied with, satisfied and performed by
Seller, including without limitation a schedule of the unpaid amounts owing by
the Seller under the Real Estate Lease up to the Closing Date; and

                    (j)
a receipt for the payment by Buyer of the Initial Payment as required by
Section 3.2 of this Agreement.

          Simultaneously
with such delivery, Seller shall take all action necessary to put Buyer in
actual possession and operating control of the Purchased Assets and the
Business.

          Section
10.3 Documents Delivered by Buyer.
Buyer will deliver the following to Seller at Closing in form and
substance reasonably satisfactory to Seller:

                    (a)
a certificate signed by the chief executive officer of Buyer, dated as of the
Closing Date, certifying that the conditions specified in Section 9.1 of this
Agreement have been satisfied in full and that Buyer has received all
information requested prior to Closing and is not aware of any adverse
conditions or defaults by Seller hereunder;

                    (b)
certified copies of resolutions duly adopted by the Board of Directors of Buyer
authorizing the execution, delivery and performance of this Agreement; 

Page 24 of 35

                    (c)
Consulting Agreement covering the one individual specified in Section 10.4(a); 

                    (d)
A New Real Estate Lease as noted in Section 9.1(d);  

                    (e)
such additional documents as Seller may deem necessary to evidence the truth
and accuracy, as of the Closing Date, of the representations and warranties
contained herein and the due satisfaction and performance at or prior to the
Closing Date of all agreements and covenants to be complied with, satisfied and
performed by Buyer;

                    (f)
the Closing Date payment in the amount and form of delivery as required by
Section 3.2 of this Agreement.

          Section
10.4 Other Closing Documents.  At
Closing, the parties shall also execute and deliver the following documents:

                    (a)
Consulting Agreement among Buyer and the following individual: Seller’s
President,  substantially in the form
attached hereto as Exhibit 10.4(a); 

                    (b)
Real Estate Lease Agreement; and

                    (c)
Non Compete Agreement. 

          Section
10.5 Risk of Loss.  Title to, and
risk of loss or destruction or damage to, the Purchased Assets shall remain
with Seller until the completion of the Closing, at which time title and risk
of loss to the Purchased Assets will pass to Buyer.

ARTICLE XI

ADDITIONAL AGREEMENTS OF BUYER AND SELLER

          Section
11.1 Employees; Retirement and Benefit Plans.

                    (a)
Termination of Transferring Employees.
Seller shall, as of the Closing Date, terminate all active employees of
the Business on the Closing Date and (except as provided in Section 11.1(e)
below) their participation in Seller’s employee plans.

                    (b)
Hiring of Transferring Employees.
Buyer shall offer employment as of the Closing Date to all active
employees of the Business on the Closing Date at the California locations and
such employees who accept employment with Buyer as of the Closing Date shall be
considered “Transferring Employees”.
Such employment shall be for substantially the same positions and at
substantially the same wage and salary rates as those in effect on the Date of
Closing, and Buyer shall provide to the Transferring Employees reasonably
similar same health and medical insurance, sick leave, vacation and other
welfare-type benefits as

Page 25 of 35

shall be in
effect on the Closing Date.  Buyer will
give all Transferring Employees credit for service with Seller under all
vacation and holiday plans maintained by Buyer for the benefit of Transferring Employees.

                    (c)
Employee and Third Party Rights.
Nothing contained in this Agreement shall be deemed to give any employee
of Seller the right to be retained in the employ of Buyer after the Closing
Date or to interfere with Buyer’s right to discharge any employee at any
time.  Nothing contained in this Section
11.1 or elsewhere in this Agreement shall be deemed to create in any employee
any right as a third party beneficiary.

                    (d)
Retirement Savings and Profit-Sharing Plan.  Effective as of the Closing Date, the Transferring Employees
shall not be eligible to participate in the Seller’s Retirement Savings and
Profit Sharing Plan (the “Seller’s Plan”), other than for the purposes of vesting
in their employer contribution accounts thereunder, taking withdrawals from
their accounts in accordance with the provisions of the Seller’s Plan and
making loan payments as described below. For purposes of this Section 11.1(d),
a Transferring Employee’s hiring by Buyer shall not be deemed a separation from
service, a separation of employment or a termination of employment for purposes
of taking a withdrawal from Seller’s Plan.

                    (e)
Employee Medical Insurance Claims.
Buyer and Seller agree that claims submitted (whether before or after
Closing) by employees of the Business and their covered dependents for medical
and dental services provided prior to the Closing Date shall be the obligation
of Seller and shall be covered by Seller’s medical and dental plans, and that claims
submitted by Transferring Employees for medical and dental (to the extent
covered by Buyer’s plan) services provided on and after the Closing Date shall
be the responsibility of Buyer and covered by Buyer’s medical and dental (to
the extent provided by Buyer) plan.
Seller shall be responsible for any and all obligations and liabilities
(including, but not limited to, penalties and taxes) for group health
continuation coverage under the Consolidation Omnibus Reconciliation Act of
1985, as amended, with respect to former employees (and their spouses and
dependents) of the Business who have elected such coverage as of the Closing
Date.

                    (f)
Post-Retirement Medical and Life Insurance Benefits.  Notwithstanding anything to the contrary contained
herein, Seller shall be responsible for, and shall indemnify, hold harmless and
defend Buyer from, any and all liabilities for post-retirement medical and life
insurance benefits for all current and, insofar as it relates to employment
with Seller prior to the Closing Date, future retirees of the Business who are
entitled to retiree medical and life insurance benefits under Seller’s benefit
plans as of the Closing Date; provided, however, that with respect to future
retirees the Seller’s responsibility and coverage for such benefits will be
secondary to Buyer’s responsibility and coverage for such benefits to the
extent such benefits are provided under any benefit plans offered by Buyer and
earned by the future retirees based on service with the Buyer; however, Buyer
shall have no obligation to provide post-retirement medical and life insurance
benefits.  A true and complete list of
such current and future retirees is attached hereto as Schedule 11.1(g).  Nothing contained in this Section 11.1(g) of
this

Page 26 of 35

Agreement
shall be deemed to confer any benefits upon any employees who are not otherwise
eligible for such benefits as of the Closing Date.

                    (g)
Disability Claims.  Seller shall
continue to be responsible after the Closing Date for disability benefits for
employees of the Business who are absent from work as of the Closing Date due
to disability, illness or injury, including those arising under any worker’s
compensation laws or plans (“Disabled Employees”), consistent with the terms of
Seller’s disability benefit plans or the provisions of any worker’s
compensation laws.  A true and complete
list of all Disabled Employees existing as of the date hereof is attached
hereto as Schedule 11.1(g), along with a description for each person listed
thereon (whether covered by Seller’s disability benefit plans or worker’s
compensation laws) of the following information:  their current disability period and the nature of their
disability, and Seller will deliver at Closing an updated list of the Disabled
Employees as of the Closing Date for Buyer’s approval at Closing of any such
updated information.  Seller’s
obligation to any such Disabled Employee(s) shall continue until such employee
attains maximum medical recovery and receives a doctor’s release to return to
work or until Seller’s obligations under its disability benefit plans or any
worker’s compensation laws expire.  Upon
such employee’s attaining such recovery and receiving such release, Seller
shall terminate such employee consistent with its obligations under Section
11.1(a) of this Agreement and Buyer shall make such employee an offer of
employment consistent with Buyer’s obligations under Section 11.1(b) of this
Agreement if Buyer or Seller has a contractual or other legal obligation to
provide such employment.  If any such
employee accepts the Buyer’s offer of employment, Seller shall have no further
obligations with respect to disability benefits for such employee.

                    (h)
Worker’s Compensation Claims.  Seller shall be liable for worker’s compensation claims filed by
employees of the Business which arise solely out of work-related injuries which
occur prior to the Closing Date.
Notwithstanding the above, with respect to worker’s compensation claims
filed after the Closing Date by Transferring Employees, where the claim arises
out of exposures occurring both prior to and on and after the Closing Date,
Buyer’s and Seller’s liability with respect to said claims shall be allocated
in accordance with applicable state laws.
Buyer shall be liable for worker’s compensation claims filed by
Transferring Employees which arise solely out of work-related injuries which
occur on or after the Closing Date.

                    (i)
Vacation and Sick Leave.  Buyer
agrees to assume and timely discharge as part of the Assumed Liabilities,
Seller’s obligation for accrued vacation and sick leave, as of the Closing
Date, for the Transferring Employees.
Said Assumed Liabilities shall be recorded and accrued on the Closing
Date Statement of Purchased Assets and Assumed Liabilities as required by
Section 2.1(a) of this Agreement.

          Section
11.2 Confidentiality.  Buyer
acknowledges that prior to the Closing Date it will be furnished with or become
exposed to certain information which is considered to be confidential and
proprietary, regardless of whether such information is marked or otherwise
identified as confidential or proprietary, including, without limitation,
customer lists, earnings

Page 27 of 35

history and
market information (the “Confidential Information”).  Buyer agrees that it will keep the Confidential Information
confidential and neither it nor its agents or employees will, without the prior
written consent of Seller or the proper owner of such information, disclose or
use the Confidential Information, other than consistent with the terms of this
Agreement.  Notwithstanding anything to
the contrary in this Agreement, the provisions of this Section shall not apply
to information which:  (a) is permitted
in writing by Seller or the proper owner of such information to be disclosed or
used; or (b) is within the public domain or becomes part of the public domain
without any breach of this Agreement; or (c) is known to Buyer prior to the
disclosure of such information; or (d) is received from a third party; or (e)
is independently developed by Buyer’s employees who did not have access to such
information; or (f) is required to be disclosed by judicial or administrative
process or, in the opinion of counsel, by other mandatory requirements of
law.  All obligations of Buyer with
respect to the Confidential Information shall terminate immediately upon the
Closing of the transaction contemplated by this Agreement.  If the transaction contemplated by this
Agreement is not consummated, Buyer shall promptly return to Seller all
documents, work papers, and other materials (including all copies made thereof)
obtained or made pursuant to this Agreement.

          Section
11.3 Expenses.  Except as
otherwise provided in this Agreement, and whether or not the transaction
contemplated hereby is consummated, each party to this Agreement shall pay its
own expenses incident to this Agreement and the transaction contemplated hereby
including, without limitation, all legal and accounting fees and disbursements.

          Section
11.4 Sales, Use, Transfer and Other Taxes.  Seller shall determine, collect from Buyer and pay when due all
sales, use, transfer and other taxes arising from the sale of the Purchased
Assets by Seller to Buyer.   Seller
shall pay when due all foreign, federal, state or local taxes measured by or
with respect to the income or gross receipts of the Business for all periods
ending prior to the Closing Date.
Personal property taxes relating to the Purchased Assets shall be
prorated between Seller and Buyer as of the Closing Date (with Seller being
responsible for such items for all periods ending prior to the Closing Date and
Buyer being responsible for such items beginning on and after the Closing
Date), and Seller and Buyer each agree to pay its respective share of such
items when due.

          Section
11.5 Regulatory and Other Authorizations.  Each party hereto will use reasonable efforts to obtain all
authorizations, consents, orders and approvals of all federal, state and
foreign regulatory bodies and officials that may be or become necessary for its
execution and delivery of, and the performance of its obligations pursuant to,
this Agreement (including, but not limited to, consents with respect to the
assignment of all government contracts), and will cooperate fully with the
other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals.

          Section
11.6 Non-Competition.  In
consideration of Buyer’s purchase of the Assets including Seller’s Business
(and the goodwill associated therewith), the President of the Seller  covenants to Buyer that, for a period of
five (5) years from the Closing Date, he nor any Related Person shall, without
the prior written consent of Buyer (which consent may be given

Page 28 of 35

or withheld in
the sole discretion of Buyer), directly or indirectly (in any capacity,
including as a General Partner, partner, member, investor, manager, lender,
principal, director, officer, employee, consultant, contractor or agent of any
other person or entity): (a) own, manage, control, participate or engage in, or
have any financial interest in any other person or entity that engages in, the
business or operations of designing, developing, manufacturing, processing,
fabricating, testing, servicing, maintaining, supporting, replacing,
refurbishing, retrofitting, distributing, licensing, providing, installing,
marketing, selling, consulting on or otherwise dealing with a Competing Product
(each individually and collectively referred to as a _Competing Business_)
within the geographic area consisting of each country, state, region, or
locality in which Seller has carried on its business, which area the parties
agree is, and stipulate to be, a worldwide business area including, but not
limited to, the United States, Canada, and Mexico (the _Covered Area_), (b)
solicit, influence, or attempt to solicit or influence, any customer, or any
person or entity that is, or within the eighteen-month period preceding the
date of such activity was, a purchaser of goods of services from either Buyer
or any Affiliate of Buyer to purchase a Competing Product (defined below) from
any person or entity other than the Buyer or an Affiliate of Buyer or (c)
employ, or recruit or solicit for employment, any person who is an employee of
Buyer or any Affiliate of Buyer (or was an employee of Buyer at any time within
the 6-month period preceding the subject act of solicitation recruitment or
employment).  As used in this Agreement,
a _Competing Product_ means products and services that are either the same as
or similar to the products and services offered by Seller, which products and
services the parties agree are, and stipulate to be, any form of leasing,
selling or servicing of truck trailers. _Affiliate_ means any person or entity
directly or indirectly through one or more intermediaries controlling,
controlled by or under common control with Seller, President or Buyer, as the
case may be.  As used in the definition
of Affiliate, _control_ and derivatives of that term mean the power to dictate
the management policies of a person or organization, whether by direct or
indirect ownership of voting securities or otherwise.  _Related Person_ means an Affiliate of either Seller or
President.

          Section
11.7 Publicity.  Neither Seller
nor Buyer shall make any announcement of the transactions contemplated by this
Agreement except as required by law or as mutually agreed to, and then, only
when, and in the form, mutually agreed upon by them.

ARTICLE XII

SURVIVAL; SEVERABILITY OF CERTAIN AGREEMENTS

          Section
12.1 Survival of Representations and Warranties.  All representations and warranties of either
party in this Agreement shall survive Closing for a period of one (1) year
beyond the Closing Date (the “Survival Period”).  In the event of a breach by either party of any representation or
warranty hereunder, the non-defaulting party shall deliver written notice of
such breach to the defaulting party before the expiration of the Survival
Period.  Any action based on an alleged
breach of a representation or warranty hereunder shall be commenced within
twelve (12) months after the expiration of the Survival Period.  In the event that the non-defaulting party
shall fail to provide notice or commence an action within the

Page 29 of 35

time
limitations provided above, such party shall be deemed to have waived any
rights or causes of action based on such breach.

          Section
12.2 Survival of Certain Covenants and Obligations.  The parties hereby agree that the covenants
and obligations set forth in Articles II, III and VIII of this Agreement shall
survive Closing.

ARTICLE XIII

MISCELLANEOUS PROVISIONS AND AGREEMENTS

          Section
13.1 Notices.  All notices,
requests, demands and other communications made under this Agreement shall be
in writing and shall be deemed duly given upon receipt if sent by registered or
certified mail, return receipt requested, postage prepaid, as follows, or to
such other address or person as either party may designate by notice to the
other party under this Agreement:

	
 

	
 

	
 

	
 

	
If to SELLER
  or PRESIDENT:

	
 

	
 

	
 

	
Ken Moore

  49630 Lincoln Drive

  Indio, CA 92201

	
 

	
 

	
 

	
 

	
with a copy
  to:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
Attn:  

	
  

	
 

	
 

	
  

	

	
 

	
 

	
 

	
 

	
If to BUYER:

	
 

	
 

	
 

	
CapSource
  Financial, Inc.

  1729 Donegal Dr.

  St. Paul, Minnesota 55125

  Attn: Mr. Steven Reichert, VP and General Counsel

  Fax: 651-578-6614

	
 

	
 

	
 

	
 

	
with a copy
  to:

	
 

	
 

	
 

	
 

	
CapSource
  Financial, Inc.

  2305 Canyon Blvd., Suite 103

  Boulder, CO 80302

  Attn: Mr. Fred Boethling, President and CEO

  Fax: 303-245-0521

Page 30 of 35

          Section
13.2 Amendments; Termination.
This Agreement cannot be changed or terminated orally and no waiver of
compliance with any provision or condition of this Agreement and no consent
provided for in this Agreement shall be effective unless evidenced by an
instrument in writing duly executed by both parties.  This Agreement (except for the provisions of Section 11.3 of this
Agreement, which shall continue in effect) and the transactions contemplated by
this Agreement may be terminated and abandoned at any time prior to the Closing
Date:  (a) by mutual written agreement
of Buyer and Seller; or (b) by Buyer or Seller upon written notice given to the
other party after entry of an order or injunction restraining or prohibiting
the sale or purchase of the Business and the Purchased Assets.  Without prejudice to any other rights or
remedies which it may have, either party may, prior to the Closing Date,
forthwith abandon the transactions, contemplated by this Agreement by written
notice to the other party if there shall have been a failure of any condition
or a breach of any representation or warranty contained in this Agreement by
the other party which failure or breach is not cured or cannot reasonably be
cured prior to the Closing Date, or if a default shall be made by the other
party in the timely performance of any of that party’s agreements or
obligations contained in this Agreement.
No breach of this Agreement shall be forgiven by the mere passage of
time.

          Section
13.3 Assignment.  This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors, legal representatives and assigns.  This Agreement may not be assigned by either
party hereto.

          Section
13.4 Entire Agreement.  This
Agreement and the Schedules attached to this Agreement and the other writings
specifically identified in this Agreement or contemplated by this Agreement
contain the entire agreement among the parties to this Agreement with respect
to the transactions contemplated in this Agreement and supersede all previous
written or oral negotiations, commitments and writings.

          Section
13.5 Counterpart Signature.  This
Agreement may be executed in two or more counterparts and all such counterparts
shall constitute one and the same instrument.

          Section
13.6 Severability.  If any one or
more of the provisions of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected thereby.  To the extent permitted by applicable law,
each party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.

          Section
13.7 Applicable Law; Venue.  This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Colorado excluding its conflict of law principles, and
all actions interpreting, enforcing or

Page 31 of 35

effecting this Agreement shall be brought in the federal or state courts in Colorado and all parties submit to the
jurisdiction of such courts.

          Section 13.8 Headings. Headings and captions
contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope of this
Agreement or any provision hereof.

          Section 13.9 Facsimile Execution and Delivery.
A facsimile or other reproduction of this Agreement may be executed by one or more Parties, and an executed copy of this Agreement
may be delivered by one or more Parties by facsimile or similar electronic transmission device pursuant to which the signature of
or on behalf of such Party can be seen, and such execution and delivery will be considered valid, binding, and effective for all
purposes. At any Party’s request, all Parties agree to execute an original of this Agreement as well as any facsimile or
other reproduction hereof and/or thereof.

[Signature page follows]

          IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first above written.

	
 

	
 

	
Buyer:
  Capsource Equipment Company, Inc.

	
 

	

	
By

	
 

	
 

	

	
Its

	
 

	
 

	

Page 32 of 35

	
 

	
 

	
Seller:
  Prime Time Equipment Inc.

	
 

	

	
By 

	
 

	
 

	

	
Its

	
 

	
 

	

	
 

	
Seller’s President

	
 

	

	
Kenneth
  Moore

[Signature page for Asset Purchase Agreement between Capsource
Equipment Company, Inc. and Prime Time Equipment Inc.]

Page 33 of 35

Schedule 4.8

Form of Commercial Lease Agreement

 

Commercial Lease Agreement

 

This Commercial Lease Agreement (“Lease”) is made and effective this __ day of April 2006, by and between Kenneth and Marjorie Moore and Fern Frost d/b/a Fontana Properties with their principal place of business at 15609 Valley Boulevard, Fontana California, (“Landlord”) and CapSource Equipment Company, Inc., a Colorado corporation d/b/a Prime Time Trailer Sales, with its principal place of business at 2305 Canyon Boulevard, Suite 103, Boulder, CO 80302, (“Tenant”).

 

Landlord is the owner of land and improvements commonly known and numbered as 15603 and 15609 Valley Boulevard, Fontana, CA and legally described as follows:  Parcel Numbers: 0235201090000 and 0235201080000 (approximately four (4) acres) in the County of San Bernardino, California.  Landlord makes available for lease the entire parcel of land (as described in the pervious sentence) and the building designated as 15609 Valley Boulevard, Fontana, California 92335, but excluding such portion of the property being used for a cellular telephone tower and associated equipment box, (“Leased Premises”).

 

Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions and provisions herein set forth.

 

THEREFORE, in consideration of the mutual promises herein, contained and other good and valuable consideration, it is agreed:

 

1. Term.

A. Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases the same from Landlord, for an “Initial Term” beginning April __, 2006 and ending April __, 2008. Landlord shall use its best efforts to give Tenant possession as early as possible at the beginning of the Lease term. If Landlord is unable to timely provide the Leased Premises, rent shall abate for the period of delay. Tenant shall make no other claim against Landlord for any such delay.

 

B. Tenant may renew the Lease for one extended term of two (2) years. Tenant shall exercise such renewal option, if at all, by giving written notice to Landlord not less than ninety (90) days prior to the expiration of the Initial Term. The renewal term shall be at the rental set forth below and otherwise upon the same covenants, conditions and provisions as provided in this Lease.

 

2. Rental.

A. Tenant
shall pay to Landlord during the Initial Term rental of Seventy Two Thousand Dollars ($72,000) per year, payable in installments
of Six Thousand Dollars ($6,000) per month. Each installment payment shall be due in advance on the first day of each calendar month during the lease term to Landlord at ______________________ or at such other place designated by written notice from Landlord or Tenant. The rental payment amount for any partial calendar months included in the lease term shall be prorated on a daily basis.

 

B. The rental for any renewal lease term, if created as permitted under this Lease, shall be Eighty Four Thousand Dollars ($84,000) per year payable in installments of Seven Thousand Dollars ($7,000) per month.

 

3. Tenant’s Right of First Refusal. 

Before the Leased Premises or any portion thereof may be sold or otherwise transferred (including transfer by gift or operation of law), the Tenant or its assignee(s) shall have a right of first refusal to purchase the Leased Premises or any portion thereof on the terms and conditions set forth in this Section. 

 

A. The Landlord shall (a) deliver to the Tenant a written notice (the “Notice”) stating: (i) Landlord’s bona fide intention to sell or otherwise transfer the Leased Premises or any portion thereof ; (ii) the name of the proposed purchaser or other transferee (“Proposed Transferee”); (iii) the bona fide cash price or other consideration for which the Landlord to transfer the  Leased Premises or any portion thereof (the “Offered Price”); and (v) the material terms and conditions of the proposed transfer (the “Offer Terms”) and (b) offer the  Leased Premises or any portion thereof at the Offered Price and on the Offer Terms to the Tenant its assignee(s). 

 

B. At any time within 30 days after receipt of the Notice, the Tenant and/or its assignee(s) may, by giving written notice to the Landlord, elect to purchase all, but not less than all, of the Leased Premises or any portion thereof proposed to be sold or transferred to the Proposed Transferees, at the purchase price and on the terms determined in accordance with subsection C below. 

 

C. The purchase price (“Purchase Price”) for the Leased Premises or any portion thereof purchased by the Tenant or its assignee(s) under this Section shall be the Offered Price, and the terms and conditions of the transfer shall be identical in all material respects to the Offer Terms (the “Terms”). If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Tenant in good faith. 

 

D. Payment of the Purchase Price shall be made in cash (by check) within thirty  (30) days after delivery of the written notice by the Tenant as set forth in Section 3B. 

 

E. If the
Leased Premises or any portion thereof proposed in the Notice to be transferred to a given Proposed Transferee is not purchased by
the Tenant and/or its assignee(s) as provided in this Section, then the Landlord may sell or otherwise transfer the Leased
Premises or any portion thereof to that Proposed Transferred at the Offered Price or at a higher price and on the Offer Terms,
provided that such sale or other transfer is consummated within sixty (60) days after the date of the Notice.  If the Leased Premises or any portion thereof described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Tenant, and the Tenant and/or its assignees shall again be offered the Right of First Refusal before the Leased Premises or any portion thereof may be sold or otherwise transferred. 

 

F. Anything to the contrary contained in this Section notwithstanding, the transfer of any or the Leased Premises or any portion thereof to an affiliate of the Landlord shall be exempt from the provisions of this Section. In such case, the transferee or other recipient shall receive and hold the Leased Premises or any portion thereof so transferred subject to the provisions of this Agreement, and there shall be no further transfer of the Leased Premises or any portion thereof except in accordance with the terms of this Agreement. 

 

G. The Right of First Refusal shall not terminate after the first sale of Leased Premises or any portion thereof. 

 

H. The Right of First Refusal shall be freely assignable by the Tenant at any time. 

 

4. Use

Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the purposes of storing, manufacturing or selling any explosives, flammables or other inherently dangerous substance, chemical, thing or device.

 

5. Sublease and Assignment.

Tenant shall have the right without Landlord’s consent, to assign this Lease to a corporation with which Tenant may merge or consolidate, to any subsidiary of Tenant, to any corporation under common control with Tenant, or to a purchaser of substantially all of Tenant’s assets. Except as set forth above, Tenant shall not sublease all or any part of the Leased Premises, or assign this Lease in whole or in part without Landlord’s consent, such consent not to be unreasonably withheld or delayed.

 

6. Repairs.

During the Lease term, Tenant shall make, at Tenant’s expense, all necessary repairs to the Leased Premises. Repairs shall include such items as routine repairs of floors, walls, ceilings, and other parts of the Leased Premises damaged or worn through normal occupancy, except for major mechanical systems, structural components or the roof, which shall be the obligation of the Landlord, subject to the obligations of the parties otherwise set forth in this Lease.

 

7. Alterations and Improvements.

Tenant, at Tenant’s
expense, shall have the right following Landlord’s consent, which shall not be unreasonably withheld, to remodel, redecorate,
and make additions, improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may
deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials. Tenant shall have the right to place and install personal property, trade fixtures, equipment and other temporary installations in and upon the Leased Premises, and fasten the same to the premises. All personal property, equipment, machinery, trade fixtures and temporary installations, whether acquired by Tenant at the commencement of the Lease term or placed or installed on the Leased Premises by Tenant thereafter, shall remain Tenant’s property free and clear of any claim by Landlord. Tenant shall have the right to remove the same at any time during the term of this Lease provided that all damage to the Leased Premises caused by such removal shall be repaired by Tenant at Tenant’s expense, and the Tenant shall return the Leased Premises to its condition as it existed at the commencement of this Lease, subject to
reasonable wear and tear.

 

8. Property Taxes.

Landlord shall pay, prior to delinquency, all general real estate taxes and installments of special assessments coming due during the Lease term on the Leased Premises, and all personal property taxes with respect to Landlord’s personal property, if any, on the Leased Premises. Tenant shall be responsible for paying all personal property taxes with respect to Tenant’s personal property at the Leased Premises.

 

9. Insurance.

 

A. If the Leased Premises or any other part of the Building is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant’s agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair not covered by insurance.

 

B. Landlord shall maintain fire and extended coverage insurance on the Building and the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Leased Premises.

 

C. Tenant and Landlord shall, each at its own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities of each in the Building with the premiums thereon fully paid on or before due date, issued by and binding upon a reputable insurance company approved by Landlord, such insurance to afford minimum protection of not less than $1,000,000 combined single limit coverage of bodily injury, property damage or combination thereof. Landlord shall be listed as an additional insured on Tenant’s policy or policies of comprehensive general liability insurance, and Tenant shall provide Landlord with current Certificates of Insurance evidencing Tenant’s compliance with this Paragraph. Tenant shall obtain the agreement of Tenant’s insurers to notify Landlord that a policy is due to expire at least (10)
days prior to such expiration. Landlord shall not be required to maintain insurance against thefts within the Leased Premises or the Building.

 

 

10. Utilities.

Tenant shall pay all charges for water, sewer, gas, electricity, telephone and other services and utilities used by Tenant on the Leased Premises during the term of this Lease unless otherwise expressly agreed in writing by Landlord. In the event that any utility or service provided to the Leased Premises is not separately metered, Landlord shall pay the amount due and separately invoice Tenant for Tenant’s pro rata share of the charges. Tenant shall pay such amounts within fifteen (15) days of invoice. Tenant acknowledges that the Leased Premises are designed to provide standard office use electrical facilities and standard office lighting. Tenant shall not use any equipment or devices that utilizes excessive electrical energy or which may, in Landlord’s reasonable opinion, overload the wiring or interfere with electrical services to other tenants.

 

11. Signs.

Following Landlord’s consent, Tenant shall have the right to place on the Leased Premises, at locations selected by Tenant, any signs which are permitted by applicable zoning ordinances and private restrictions. Landlord may refuse consent to any proposed signage that is in Landlord’s reasonable good faith opinion too large, deceptive, unattractive or otherwise inconsistent with or inappropriate to the Leased Premises or use of any other tenant. Landlord shall assist and cooperate with Tenant in obtaining any necessary permission from governmental authorities or adjoining owners and occupants for Tenant to place or construct the foregoing signs. Tenant shall repair all damage to the Leased Premises resulting from the removal of signs installed by Tenant.

 

12. Entry.

Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect the same, provided Landlord shall not thereby unreasonably interfere with Tenant’s business on the Leased Premises.

 

13. Parking.

During the term of this Lease, Tenant shall have the exclusive use of the common automobile parking areas, driveways, and footways. [Steve, usually the Landlord makes a representation that there are a certain number of parking spaces available.]

 

14. Damage and Destruction.

Subject to Section 9 A. above,
if the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that
the same cannot be used for Tenant’s purposes, then Tenant shall have the right within ninety (90) days following damage to
elect by notice to Landlord to terminate this Lease as of the 

 

 

date of such damage. In the event of minor damage to any part of the
Leased Premises, and if such damage does not render the Leased Premises unusable for Tenant’s purposes, Landlord shall
promptly repair such damage at the cost of the Landlord. In making the repairs called for in this paragraph, Landlord shall not be
liable for any delays resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or
other matters which are beyond the reasonable control of Landlord. Tenant shall be relieved from paying rent and other charges
during any portion of the Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part,
for Tenant’s purposes. Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing
payments, if any, but if no further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions
of this paragraph extend not only to the matters aforesaid, but also to any occurrence which is beyond Tenant’s reasonable
control and which renders the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or
in part, for Tenant’s purposes.

 

15. Default.

If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other right or remedy available to Landlord on account of any
Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.

 

16. Quiet Possession.

Landlord covenants and warrants that upon performance by Tenant of its obligations hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease.

 

17. Condemnation.

If any legally, constituted authority condemns the Building or such part thereof which shall make the Leased Premises unsuitable for leasing, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for rental as of that date. Such termination shall be without prejudice to the rights of either party to recover compensation from the condemning authority for any loss or damage caused by the condemnation. Neither party shall have any rights in or to any award made to the other by the condemning authority.

 

18. Subordination.

Tenant accepts this Lease
subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased
Premises, or upon the Building and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee
shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject
to such conditions as such mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises of the Building, and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to the holder of any such liens as Landlord may request. In the event that Tenant should fail to execute any instrument of subordination herein require d to be executed by Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney-in-fact to execute such instrument in Tenant’s name, place and stead, it being agreed that such power is one coupled with an interest. Tenant agrees that it will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall
request a statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further stating such other matters as Landlord shall reasonably require.

 

19. Notice.

Any notice required or permitted under this Lease shall be deemed sufficiently given or served if sent by United States certified mail, return receipt requested, addressed as follows:

 

If to Landlord to:

 

 

 

 

If to Tenant to:

 

Steven Reichert, General Counsel

CapSource Financial, Inc.

2305 Canyon Boulevard, Suite 103

Boulder, CO 80302

 

	
             
 	
            -with a copy to-
 

 

Fred Boethling, President

CapSource Financial, Inc.

2305 Canyon Boulevard, Suite 103

Boulder, CO 80302

 

Landlord and Tenant shall each have the right from time to time to change the place notice is to be given under this paragraph by written notice thereof to the other party.

20. Brokers.

Tenant represents that Tenant was not shown the Premises by any real estate broker or agent and that Tenant has not otherwise engaged in, any activity which could form the basis for a claim for real estate commission, brokerage fee, finder’s fee or other similar charge, in connection with this Lease.

 

21. Waiver.

No waiver of any default of Landlord or Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.

 

22. Memorandum of Lease.

The parties hereto contemplate that this Lease should not and shall not be filed for record, but in lieu thereof, at the request of either party, Landlord and Tenant shall execute a Memorandum of Lease to be recorded for the purpose of giving record notice of the appropriate provisions of this Lease.

 

23. Headings.

The headings used in this Lease are for convenience of the parties only and shall not be considered in interpreting the meaning of any provision of this Lease.

 

24. Successors.

The provisions of this Lease shall extend to and be binding upon Landlord and Tenant and their respective legal representatives, successors and assigns.

 

25. Consent.

Landlord shall not unreasonably withhold or delay its consent with respect to any matter for which Landlord’s consent is required or desirable under this Lease.

 

26. Performance.

If there is a default with
respect to any of Landlord’s covenants, warranties or representations under this Lease, and if the default continues more
than fifteen (15) days after notice in writing from Tenant to Landlord specifying the default, Tenant may, at its option and
without affecting any other remedy hereunder, cure such default and deduct the cost thereof from the next accruing installment or
installments of rent payable hereunder until Tenant shall have been fully reimbursed for such expenditures, together with interest
thereon at a rate equal to the lessor of twelve percent (12%) per annum or the then highest lawful rate. If this Lease terminates
prior to Tenant’s receiving full reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest to Tenant
on demand.

 

27. Compliance with Law.

Tenant shall comply with all laws, orders, ordinances and other public requirements now or hereafter pertaining to Tenant’s use of the Leased Premises. Landlord shall comply with all laws, orders, ordinances and other public requirements now or hereafter affecting the Leased Premises.

 

28. Final Agreement.

This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.

 

29. Governing Law.

This Agreement shall be governed, construed and interpreted by, through and under the Laws of the State of California.

 

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.

 

LANDLORD:

_____________________________________

Kenneth Moore

_____________________________________

Marjorie Moore

_____________________________________

Fern Frost d/b/a Fontana Properties

 

 

TENANT:

 

CapSource Equipment Company, Inc.

By__________________________________

Its__________________________________

 

 

 

 

 

 

 

 

Schedule 10.4(a)

Form of Consulting Agreement

 

CONSULTING AGREEMENT

 

AGREEMENT dated April __, 2006, by and between CapSource Equipment Company, Inc., a Colorado corporation (hereinafter referred to as the “CapSource Equipment”) and Kenneth Moore (hereinafter referred to as the “Consultant”).

 

WHEREAS, Consultant has various abilities and skills in area of transportation equipment and trailer sales as well as general business and organizational skills; 

 

WHEREAS, CapSource Equipment desires to develop its business in the areas that Consultant has skills and abilities; 

 

NOW, THEREFORE, in consideration of the above premises and the promises, covenants, terms and conditions hereinafter set forth, CapSource Equipment and the Consultant agree as follows:

 

1. Services and Duties. Consultant hereby agrees, to perform consulting and advisory services during the term hereof, and upon the terms and conditions set forth herein. Such services shall relate to such matters pertaining to any and all aspects of CapSource Equipment’s  business as well as any of the CapSource Equipment’s subsidiaries and affiliates as are requested by CapSource Equipment. Consultant shall devote his best efforts to providing such services in a diligent, careful and efficient manner in strict conformity with the best practices and highest applicable standards and to the advancement of CapSource Equipment’s business, it being understood, however, that CapSource Equipment will make all final decisions regarding its business. Consultant’s services shall be provided as reasonably requested
by CapSource Equipment and as is consistent with Consultant’s other obligations, it being understood that Consultant will not be required to expend more than three (3) days each working week in the performance of services under this Agreement. The Consultant agrees and understands that CapSource Equipment may make available office space to Consultant during the term of this Agreement and that Consultant shall work from his home or the office space provided. Consultant understands and agrees that he/she/it is solely responsible for the control and supervision of the means by which he/she/it provides services hereunder.

 

2. Term. The term of this Agreement shall commence on the date of this Agreement and continue for six (6) months thereafter. 

 

 

3. Fees. During the term of this Agreement, CapSource Equipment shall pay or reimburse Consultant as follows: (a) a monthly fee of Three Thousand Five Hundred Dollars ($3,500), payable at the end of each calendar month in arrears; (b) a monthly car allowance of Five Hundred Dollars ($500); (c) Consultant’s medical health insurance premiums; and (d) reimbursement for all of Consultant’s fuel expenses and telephone expenses incurred in connection with the performance of Consultant’s duties under this Agreement. 

 

4. Confidentiality. For purposes of this Agreement, Confidential Information shall mean any and all technical and non-technical information including patent, copyright, trade secret, and proprietary information, techniques, records, data, materials, models, inventions, know-how, processes, equipment, layouts, flow charts, algorithms, software programs, software source documents, and formulae related to the current, future and proposed products, business and services of the CapSource Equipment, CapSource Equipment’s suppliers and clients, and includes without limitation, CapSource Equipment innovations and information concerning research, experimental work, development, design details and specifications, materials, financial information, client lists, business forecasts, and marketing plans. Consultant acknowledges and
agrees that he/she/it will have access to and may need to use Confidential Information in the course of performing his/her/its duties hereunder, and that such Confidential Information is not known to the public and is valuable to the CapSource Equipment. Except as required and necessary to carry out the duties for CapSource Equipment, the Consultant hereby agrees not to directly or indirectly use, disseminate, or disclose any Confidential Information to any entity or individual, both during the term of this Agreement and after termination of this Agreement. Upon Consultant’s termination with CapSource Equipment, all documents and records containing Confidential Information shall be promptly delivered to and shall at all times remain the property of CapSource Equipment. 

 

5. Independent Contractor Status.

 

5.1 Status. Consultant and CapSource Equipment agree that Consultant is an independent contractor and shall not be treated for any purpose as an employee or agent of CapSource Equipment. 

 

5.2 Tax Treatment of Fees. Consultant and CapSource Equipment agree that, for purposes of computing applicable state and federal income and related taxes of each party during the term hereof, they shall treat all amounts paid by CapSource Equipment to Consultant hereunder as fees for services. Consultant shall report all amounts received under this Agreement during the term hereof as ordinary income from services rendered as an independent contractor. CapSource Equipment shall treat all payments made under this Agreement as a business expense deductible in the computation of its taxable income, but not constituting wages for purposes of withholding, FICA and related requirements.

 

6. Termination. 

 

6.1 By CapSource Equipment . This Agreement may be terminated by CapSource Equipment at any time upon written notice to Consultant; provided, however, that no such termination shall affect the right of the Consultant to receive the fees set forth in Section 3 of this Agreement; unless such termination is for cause as a result of a breach of the terms of this Agreement. 

 

6.2 By Consultant. This Agreement may be terminated by Consultant at anytime; provided, however, if Consultant terminates this Agreement, Consultant forfeits the right to any fee not previously paid at the time of termination.

 

7. Miscellaneous.

 

7.1 Entire Agreement. This Agreement contains the entire agreement among the parties, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof and transactions contemplated hereby.

 

7.2 Amendments. This Agreement may be amended or modified only by a written instrument signed by all of the parties hereto.

 

7.3 Waiver. No waiver by either party of any condition, or of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further and continuing waiver of any such condition or breach or a waiver of any other condition or breach of any other term or covenant of this Agreement.

 

7.4 Binding Effect: Assignments. This Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the parties hereto and their respective heirs, successors and assigns, but this Agreement shall not be assignable by Consultant. CapSource Equipment may assign this Agreement in connection with a merger, consolidation, assignment, sale or other disposition of all or substantially all of its business or assets. The term “CapSource Equipment “ as used in this Agreement shall mean and include any such successor corporation.

 

7.5 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

7.6 Headings. The article and section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

7.7 Governing Law. This Agreement shall be governed, enforced and construed under the laws of the State of Colorado.

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written.

 

CONSULTANT:

 

____________________________

Kenneth Moore

 

 

CAPSOURCE EQUIPMENT COMPANY, INC. 

 

____________________________

By__________________________

Its__________________________

 

 

	
 

	
 

	
Schedule 1.1(b)

	
Prime Time Office Inventory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Estimated FMV

	
 

	
NBV @ 4/30/06

	
 

	
Norstar
  phone system

	
 

	
$

	
3,000.00

	
 

	
$

	
3,402.80

	
 

	
2-piece oak
  desk

	
 

	
$

	
50.00

	
 

	
$

	
-

	
 

	
2 desks

	
 

	
$

	
10.00

	
 

	
$

	
-

	
 

	
2 side
  chairs

	
 

	
$

	
10.00

	
 

	
$

	
-

	
 

	
1
  sec chair

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
3
  desk chairs

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
One
  2 drawer lateral file

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
Two
  2 drawer files

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
Brothers
  Fax Machine

	
 

	
$

	
10.00

	
 

	
$

	
-

	
 

	
Compac
  Computer/Optiquest Monitor

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
Lexmar
  Printer/Samsung Printer

	
 

	
$

	
50.00

	
 

	
$

	
-

	
 

	
PFI
  Computer/Dell Monitor

	
 

	
$

	
150.00

	
 

	
$

	
-

	
 

	
4-piece
  desk set

	
 

	
$

	
500.00

	
 

	
$

	
-

	
 

	
High-back
  sec. chair

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
Sec. chair

	
 

	
$

	
10.00

	
 

	
$

	
-

	
 

	
Pitney
  Bowes 2050 fax machine

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Ricoh
  copy machine

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Vertical file

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Six
  4 drawer files

	
 

	
$

	
150.00

	
 

	
$

	
-

	
 

	
Five
  2 drawer files

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Safe

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
Shredder

	
 

	
$

	
20.00

	
 

	
$

	
-

	
 

	
Storage
  cabinet

	
 

	
$

	
50.00

	
 

	
$

	
-

	
 

	
Window air conditioner

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
Dell
  Computer & Printer/Sylvania Monitor

	
 

	
$

	
515.00

	
 

	
$

	
-

	
 

	
HP
  Computer & Monitor

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Konica
  Minolta Magicolor 2400W Printer

	
 

	
$

	
300.00

	
 

	
$

	
-

	
 

	
Large black metal storage
  cabinet

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Side chair

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
Four
  4-drawer filing cabinets

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Oak
  desk with ergonomic chair

	
 

	
$

	
300.00

	
 

	
$

	
300.00

	
 

	
Brother Intellifax 2920
  Fax Machine

	
 

	
$

	
200.00

	
 

	
$

	
-

	
 

	
Leather
  Side Chair

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
4-piece
  oak desk set

	
 

	
$

	
1,500.00

	
 

	
$

	
-

	
 

	
Leather executive chair

	
 

	
$

	
50.00

	
 

	
$

	
-

	
 

	
Oak
  coat rack

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
2-piece
  rosewood exec. desk

	
 

	
$

	
500.00

	
 

	
$

	
-

	
 

	
Office chair

	
 

	
$

	
35.00

	
 

	
$

	
-

	
 

	
HP color printer

	
 

	
$

	
100.00

	
 

	
$

	
-

	
 

	
Dell
  Laptop Computer

	
 

	
$

	
400.00

	
 

	
$

	
-

	
 

	
14 pictures

	
 

	
$

	
80.00

	
 

	
$

	
-

	
 

	
Two
  bookcases

	
 

	
$

	
40.00

	
 

	
$

	
-

	
 

	
Regrigerator

	
 

	
$

	
50.00

	
 

	
$

	
-

	
 

	
Microwave/Toaster/Crockpot

	
 

	
$

	
25.00

	
 

	
$

	
-

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	
 

	
 

	
$

	
9,050.00

	
 

	
$

	
3,702.80

	
 

	
 

	
 

	
Schedule 1.1(b)

	
Prime Time Equipment and Tools

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Estimated FMV

	
 

	
NBV @ 4/30/06

	
 

	
Compressor

	
 

	
$

	
500.00

	
 

	
$

	
-

	
 

	
Table Saw

	
 

	
$

	
200.00

	
 

	
$

	
-

	
 

	
5000#
  Komatsu forklift #174225A

	
 

	
$

	
4,000.00

	
 

	
$

	
6,000.00

	
 

	
Golf
  cart #LQ000063

	
 

	
$

	
1,000.00

	
 

	
$

	
1,000.00

	
 

	
Pallet jack

	
 

	
$

	
250.00

	
 

	
$

	
250.00

	
 

	
40’
  parts container

	
 

	
$

	
1,000.00

	
 

	
$

	
1,000.00

	
 

	
20’
  container box

	
 

	
$

	
1,000.00

	
 

	
$

	
1,000.00

	
 

	
24’
  container box

	
 

	
$

	
500.00

	
 

	
$

	
500.00

	
 

	
1987
  Grt Dane storage trailer

	
 

	
$

	
2,000.00

	
 

	
$

	
3,600.00

	
 

	
1983
  Yard Goat #LY2NB107014

	
 

	
$

	
4,500.00

	
 

	
$

	
5,200.00

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	
 

	
 

	
$

	
14,950.00

	
 

	
$

	
18,550.00
  

	
 **

**
recorded on Prime Time books as Misc Inventory and/or Skyway Inventory.

	
            Schedule 1.1(c)
 	
            Receivables
 

None.

	
 

	
 

	
Schedule 1.1(d)

	
Prime Time Equipment Vehicles Used In Business

Note:
All below vehicles listed on schedule 1.1(b)

1983
Yard Goat #LY2NB107014

5000#
Komatsu forklift #174225A

Golf cart #LQ000063
40’
parts container

20’ container box

24’ container box

1987 Grt Dane storage trailer

	
 

	
 

	
Schedule 1.1(e)

	
Prime Time Intellectual Property

	
 

	
 

	
 

	
 

	
E-mail
  Addresses:

	
 

	
 

	
 

	
 

	
 

	
Charlie:

	
 

	
 

	
pttrailersales@dslextreme.com

	
Linda:  

	
 

	
 

	
primetimeequip@aol.com

	
 

	
 

	
 

	
prime time equipment@yahoo.com

	
Gary:    

	
 

	
 

	
prime
  time equipment gw@yahoo.com

	
 

	
 

	
 

	
Internet
  Domain:

	
 

	
www.PrimeTimeEquipment.com

	
 

	
 

	
Company
  legal & trade names:

	
Prime
  Time Equipment, Inc

	
 

	
Prime
  Time, Inc

	
 

	
Prime Time Equipment

	
 

	
Prime
  Time

	
 

	
 

	
California
  State Trademark Registration: “DIRT DAUBER” issued by CA Secty of State

	
 

	
on or about 11/6/01.
  Expires on or about 11/10/11

	
 

	
California
  Trademark Reg. No. 107782

	
(There is no United State federal trademark
  registration of said logo)

	
 

	
 

	
Schedule 1.1(g)

	
Prime Time Equipment Leases other than Schedule 4.8

	
 

	
 

	
One
  year lease for office at 1045 Montague Expressway, Milpitas, CA

	
2/6/06-2/5/07

	
$1,000.00 per month.

Parts open
purchase orders: there are only 3, totalling $1711.07. 

Equipment purchase orders were sent via forwarded e-mail.

	
 

	
 

	
Schedule 1.1(h)

	
Prime Time
  Licenses & Permits

	
 

	
 

	
California Dealer License
  #37300

	
expires 4/30/07
  (non-transferable)

	
 

	
 

	
California
  Resale Permit #SR Y EH 97-498904 (non-transferable)

	
 

	
Internal Revenue Service
  FET Registration #77-99-0013-Q

	
 

	
Federal ID #77-0390527

	
 

	
EDD (CA Employment
  Development Dept) #456-3741-0

	
 

	
 

	
Schedule 1.1(i)

	
Prime Time
  Computer Software

	
 

	
 

	
Fontana:

	
Quick Books Pro

	
 

	
 

	
Milpitas:

	
MYOB
  Premier Accounting

	
 

	
 

	
Schedule 1.01(j)

	
Prime Time Inventory

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Vehicle Inventory Attached

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Misc
  Trailers

	
 

	
$

	
269,615.00

	
 

	
 

	
 

	
 

	
Skyway
  Trailers

	
 

	
$

	
3,600.00 

	
 

	
* (this listed as bill of sale asset)

	
 

	
 

	
Used
  Trucks

	
 

	
$

	
5,200.00 

	
 

	
* (this listed as bill of sale asset)

	
 

	
 

	
Misc
  Inventory

	
 

	
$

	
17,250.00
  

	
 

	
***

	
 

	
 

	
Hyundai Trailers

	
 

	
$

	
464,926.00

	
 

	
 

	
 

	
 

	
Celadon
  Trailers

	
 

	
$

	
271,878.68

	
 

	
 

	
 

	
 

	
 

	

	

	

	
 

	
 

	
 

	
 

	
 

	
$

	
1,032,469,68

	
 

	
 

	
 

	
Parts Inventory

	
 

	
$

	
28,928.30

	
 

	
 

	
 

	
 

	
***

	
$9750.00 listed as bill of sale asset &
$7500.00 is for Mercury, a retained asset

	Schedule 1.2(b) 	Tax
Refunds 

None.

	
 

	
 

	
Schedule 1.2(f)

	
Prime Time Equipment Assets to be Retained

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Sales
  Tax Bond $230.00 for 2/22/06-2/22/07:

	
 

	
expensed
  $38.00

	
 

	
prepay

	
 

	
$

	
192.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dealer
  License 5/1/06-4/30/07

	
 

	
prepay

	
 

	
 

	
 

	
$

	
401.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Auto Policy (Sable)
  5/23/06-11/23/06

	
 

	
prepay

	
 

	
 

	
 

	
$

	
801.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
ISU
  Willingham Ins. (garage policy)

	
 

	
prepay

	
 

	
 

	
 

	
$

	
9,487.87

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Corporate
  Tax Prepayments

	
 

	
prepay

	
 

	
 

	
 

	
$

	
35,370.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Workmens
  Comp Insurance Prepay

	
 

	
prepay

	
 

	
 

	
 

	
$

	
799.50

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2002
  Mercury Sable #1 MEFM50U52G620849

	
 

	
Acct
  #1-1350

	
 

	
$

	
7,500.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
San
  Jose National Bank Checking Acct #0115515610

	
 

	
 

	
 

	
$

	
143,421.97

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Wells Fargo Bank Checking
  Acct. #2398956462

	
 

	
 

	
 

	
$

	
116,208.64

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Clearing
  and Suspense Balance

	
 

	
 

	
 

	
 

	
 

	
$

	
11,500.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
TOTAL

	
 

	
 

	
 

	
 

	
 

	
$

	
325,681.98

	
 

	
 

	
 

	
Schedule 1.1(m)

	
Prime Time Equipment Prepaids

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Sales
  Tax Bond $230.00 for 2/22/06-2/22/07: expensed $38.00

	
 

	
 

	
 

	
 

	
$

	
192.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Verifier’s
  Bond $150.00 for 3/10/06-3/10/07: expensed $12.50

	
 

	
 

	
**

	
 

	
$

	
137.50

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dealer
  License 5/1/06-4/30/07

	
 

	
 

	
 

	
 

	
$

	
401.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Auto Policy (Sable)
  5/23/06-11/23/06

	
 

	
 

	
 

	
 

	
$

	
801.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
ISU
  Willingham Ins. (garage policy)

	
 

	
 

	
 

	
 

	
$

	
9,487.87

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Corporate
  Tax Prepayments

	
 

	
 

	
 

	
 

	
$

	
35,370.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Workmen’s Comp Ins.

	
 

	
 

	
 

	
 

	
$

	
799.50

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
47,188.87

	
 

	
 

	
 

	
**

	
Verifier’s
  bond for Linda’s license: Prime Time not to retain

Prepaid
Amounts in Bold not to be retained by Prime Time. 

	Schedule 2.1(a)  	 Undisclosed
Liabilities 

None.

	
 

	
 

	
Section
  2.2

	
Prime Time Equipment Retained Liabilities

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Accounts Payable

	
 

	
$

	
12,608.77

	
 

	
(A)

	
 

	
Flooring-GE Commercial
  Finance (Celadon)

	
 

	
$

	
57,200.00

	
 

	
©

	
 

	
Flooring-GE
  Commercial Finance (Misc)

	
 

	
$

	
44,000.00

	
 

	
(D)

	
 

	
Flooring-GE
  Commercial Finance (Hyundai)

	
 

	
$

	
89,275.00

	
 

	
(E)

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
$

	
203,083.77

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(A)

	
 

	
$

	
936.00

	
 

	
owed
  to Department of Motor Vehicles

	
 

	
 

	
 

	
$

	
7,189.51

	
 

	
owed
  to Donny Blount for commissions on sales not yet funded

	
 

	
 

	
 

	
$

	
4,483.26

	
 

	
owed
  to Charlie Silvers for commissions on sales not yet funded

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
$

	
12,608.77

	
 

	
          Details
  attached to hard copy

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
©

	
 

	
$

	
12,800.00

	
 

	
Aguinagua
  sale

	
 

	
 

	
 

	
$

	
37,000.00

	
 

	
Dependable
  Cargo sale

	
 

	
 

	
 

	
$

	
7,400.00

	
 

	
Pompa sale

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
$

	
57.200.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(D)

	
 

	
$

	
30,750.00

	
 

	
CSA
  sale

	
 

	
 

	
 

	
$

	
13,250.00

	
 

	
Pompa sale

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
$

	
44,000.00

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(E)

	
 

	
$

	
89,275.00

	
 

	
Triple
  A sale

	
 

	Schedule 3.7 	Allocation
of Purchase Price 

None.

	
 

	
 

	
Schedule 4.1

	
Prime Time Equipment Fictitious Business Names

Prime Time

Prime Time, Inc.

Prime Time Equipment

Prime Time Equipment, Inc.

	Schedule 4.3 	Conflict
or Violation 

None.

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Balance Sheet
  12/31/03

Prime Time, Inc.

75 East Montague Expressway

Milpitas, CA 95035  

Balance Sheet

As of December 2003

	
 

	
 

	
 

	
 

	
 

	
Assets

	
 

	
 

	
 

	
 

	
Current
  Assets

	
 

	
 

	
 

	
 

	
Cash
  On Hand

	
 

	
 

	
 

	
 

	
Checking
  Account

	
 

	
 $

	
120,382.62 

	
 

	
Total
  Cash On Hand

	
 

	
 $

	
120,382.62 

	
 

	
Accounts
  Receivable

	
 

	
 $

	
120,631.70 

	
 

	
Fixed
  Assets

	
 

	
 

	
 

	
 

	
Equipment

	
 

	
 $

	
17,463.00 

	
 

	
Total
  Fixed Assets

	
 

	
 $

	
17,463.00 

	
 

	
Allowance
  for Depreciation

	
 

	
 

	
 

	
 

	
Equipment

	
 

	
($

	
17,463.00

	
)

	
Total
  Allowance for Depreciation

	
 

	
($

	
17,463.00

	
)

	
Inventory

	
 

	
 

	
 

	
 

	
New
  Trailers/Gallegos

	
 

	
 $

	
84,969.07 

	
 

	
New
  Trailers/Hyundai

	
 

	
 $

	
401,509.34 

	
 

	
Skyway
  Inventory

	
 

	
 $

	
82,947.30 

	
 

	
Used
  Trailers

	
 

	
 $

	
78,927.97 

	
 

	
Used
  Trucks

	
 

	
 $

	
12,809.45 

	
 

	
Miscellaneous
  Inventory

	
 

	
 $

	
26,218.41 

	
 

	
Landair
  Trailers

	
 

	
 $

	
208,746.54 

	
 

	
Landair
  Consignment Trirs

	
 

	
 $

	
375,600.00 

	
 

	
Great
  Dane Reefers

	
 

	
 $

	
54,000.00 

	
 

	
Total
  Inventory

	
 

	
 $

	
1,325,728.08 

	
 

	
Inventory
  Parts

	
 

	
 $

	
11,642.00 

	
 

	
Total
  Current Assets

	
 

	
 $

	
1,578,384.40 

	
 

	
Total
  Assets

	
 

	
 $

	
1,578,384.40 

	
 

	
 

	
Liabilities

	
 

	
 

	
 

	
 

	
Accounts
  Payable

	
 

	
 $

	
510,511.73 

	
 

	
Sales
  Tax Payable

	
 

	
 $

	
2,573.57 

	
 

	
Long
  Term Liabilities

	
 

	
 

	
 

	
 

	
Associates
  Flooring/Hyundai

	
 

	
 $

	
398,650,00 

	
 

	
Assoc.
  Flooring-Landair Trirs.

	
 

	
 $

	
142,500.00 

	
 

	
Associates
  Flooring/Gallegos

	
 

	
 $

	
74,492.00 

	
 

	
Associates-Grt
  Dane Reefers

	
 

	
 $

	
54,000.00 

	
 

	
San
  Jose National Bank Floorin

	
 

	
 $

	
277,885.47 

	
 

	
Total
  Long Term Liabilities

	
 

	
 $

	
947,527.47
  

	
 

	
Total
  Liabilities

	
 

	
 $

	
1,460,612.77

	
 

	
 

	
Equity

	
 

	
 

	
 

	
 

	
Owner’s/Shareholder’s
  Equity

	
 

	
 

	
 
  

	
 

	
Owner’s/Sharehldr
  Investment

	
 

	
 $

	
72,595.38

	
 

	
Owner’s/Sharehldr
  Withdrawal

	
 

	
($

	
1,200.00

	
)

	
Total
  Owner’s/Shareholder’s Equity

	
 

	
 $

	
71,395.38 

	
 

	
 

	
 

	
 

	
 

	
 

	
Retained
  Earnings

	
 

	
 $

	
62,620.77 

	
 

	
Current
  Year Earnings

	
 

	
($

	
16,244.52

	
)

	
Total
  Equity

	
 

	
 $

	
117,771.63 

	
 

	
 

	
 

	
 

	
 

	
 

	
Total
  Liability & Equity

	
 

	
 $

	
1,578,384.40 

	
 

	
 

	
 

	
Schedule 4.4

	
Prime Time
Equipment Profit & Loss 12/31/03

Prime Time, Inc.

75 East Montague Expressway

Milpitas, CA 95035 

Profit & Loss Statement
January 2003 through December 2003

	
 

	
 

	
 

	
 

	
 

	
Income

	
 

	
 

	
 

	
 

	
New
  Vehicle Department

	
 

	
 

	
 

	
 

	
New
  Vehicle Retail/Fontana

	
 

	
$

	
444,539.90

	
 

	
New
  Vehicle/Wholesale/Fontana

	
 

	
$

	
210,760.17

	
 

	
New
  Vehicle/Out of State

	
 

	
$

	
1,669,412.65

	
 

	
Total
  New Vehicle Department

	
 

	
$

	
2,324,712.72

	
 

	
Used
  Vehicle Department

	
 

	
 

	
 

	
 

	
Used Vehicle Retail/Fontana

	
 

	
$

	
961,642.56

	
 

	
Used
  Vehicle/Wholesale/Fontana

	
 

	
$

	
632,687.00

	
 

	
Used
  Vehicle/Out of State

	
 

	
$

	
1,722,275.42

	
 

	
Total
  Used Vehicle Department

	
 

	
$

	
3,316,604.98

	
 

	
Parts
  and Service Income

	
 

	
 

	
 

	
 

	
Parts/Taxable

	
 

	
$

	
12,944.90

	
 

	
Parts/Wholesale

	
 

	
$

	
24,358.35

	
 

	
Labor Income

	
 

	
$

	
70,079.71

	
 

	
Parts/Out
  of State

	
 

	
$

	
10,747.51

	
 

	
Total
  Parts and Service Income

	
 

	
$

	
118,130.47

	
 

	
Freight
  Collected

	
 

	
$

	
5,805.00

	
 

	
Yard Rental

	
 

	
$

	
2,000.00

	
 

	
Miscellaneous Income

	
 

	
$

	
2,632.73

	
 

	
Total Income

	
 

	
$

	
5,769,885.90

	
 

	
 

	
 

	
 

	
 

	
 

	
Cost
  of Sales

	
 

	
 

	
 

	
 

	
Purchases
  - New Vehicles

	
 

	
 

	
 

	
 

	
New
  Vehicle Purchases

	
 

	
$

	
2,082,984.19

	
 

	
Conversions
  & Improvements

	
 

	
$

	
4,579.00

	
 

	
Total
  Purchases - New Vehicles

	
 

	
$

	
2,087,563.19

	
 

	
Purchases
  - Used Vehicles

	
 

	
 

	
 

	
 

	
Used
  Vehicle Purchases

	
 

	
$

	
2,705,317.56

	
 

	
Freight/Reconditioning
  of equi

	
 

	
$

	
165,703.00

	
 

	
Total Purchases - Used Vehicles

	
 

	
$

	
2,871,020.56

	
 

	
Cost
  of Parts Sold

	
 

	
 

	
 

	
 

	
Parts
  Cost

	
 

	
$

	
38,648.50

	
 

	
Total
  Cost of Sales

	
 

	
$

	
4,997,232.25

	
 

	
 

	
 

	
 

	
 

	
 

	
Gross Profit

	
 

	
$

	
772,653.65

	
 

	
 

	
 

	
 

	
 

	
 

	
Expenses

	
 

	
 

	
 

	
 

	
General
  & Administrative Exp

	
 

	
 

	
 

	
 

	
Legal & Professional
  Fees

	
 

	
$

	
7,064.27

	
 

	
Commissions

	
 

	
$

	
237,717.38

	
 

	
Insurance

	
 

	
$

	
47,010.37

	
 

	
Group Insurance

	
 

	
$

	
4,900.00

	
 

	
Office Expenses

	
 

	
$

	
29,464.97

	
 

	
 

	
 

	
 

	
 

	
 

	
Office Administration

	
 

	
$

	
51,180.00

	
 

	
DMV
  Fees

	
 

	
$

	
1,114.24

	
 

	
Freight Paid

	
 

	
$

	
67,033.72

	
 

	
Fuel Expenses

	
 

	
$

	
10,618.26

	
 

	
Corporation
  Taxes

	
 

	
$

	
800.00

	
 

	
Total
  General & Administrative Exp

	
 

	
$

	
456,903.21

	
 

	
Supplies
  and Expenses

	
 

	
 

	
 

	
 

	
Labor

	
 

	
$

	
10,340.50

	
 

	
Total Supplies and Expenses

	
 

	
$

	
10,340.50

	
 

	
Advertising & Promotion
  Exp

	
 

	
 

	
 

	
 

	
Advertising

	
 

	
$

	
21,945.45

	
 

	
Total Advertising &
  Promotion Exp

	
 

	
$

	
21,945.45

	
 

	
Officers Salaries

	
 

	
 

	
 

	
 

	
Fem Frost

	
 

	
$

	
15,000.00

	
 

	
Kenneth
  Moore

	
 

	
$

	
48,000.00

	
 

	
Total Officers Salaries

	
 

	
$

	
63,000.00

	
 

	
Other Fringes

	
 

	
 

	
 

	
 

	
Federal
  Payroll Taxes

	
 

	
$

	
4,931.50

	
 

	
State
  Payroll Taxes

	
 

	
$

	
364.00

	
 

	
Total Other Fringes

	
 

	
$

	
5,295.50

	
 

	
Operating
  Expenses

	
 

	
 

	
 

	
 

	
Postage

	
 

	
$

	
11,375.11

	
 

	
Rent

	
 

	
$

	
115,427.25

	
 

	
Telephone

	
 

	
$

	
17,137.17

	
 

	
Utilities

	
 

	
$

	
6,824.10

	
 

	
Travel & Entertainment

	
 

	
$

	
3,958.97

	
 

	
Miscellaneous Expenses

	
 

	
$

	
2,678.81

	
 

	
Donations

	
 

	
$

	
20.00

	
 

	
Bad Debts

	
 

	
$

	
10,300.00

	
 

	
Gardening
  & Yard Cleaning

	
 

	
$

	
4,375.00

	
 

	
Total
  Operating Expenses

	
 

	
$

	
172,096.41

	
 

	
Total
  Expenses

	
 

	
$

	
729,581.07

	
 

	
 

	
 

	
 

	
 

	
 

	
Operating Profit

	
 

	
$

	
43,072.58

	
 

	
 

	
 

	
 

	
 

	
 

	
Other Expenses

	
 

	
 

	
 

	
 

	
Interest
  Expense

	
 

	
$

	
40,368.56

	
 

	
Rental Vehicle Expense

	
 

	
$

	
18,948.54

	
 

	
Skyway
  Liquidation Expense

	
 

	
 

	
 

	
 

	
Total
  Other Expenses

	
 

	
$

	
59,317.10

	
 

	
 

	
 

	
 

	
 

	
 

	
Net Profit /
  (Loss)

	
 

	
($

	
16,244.52

	
)

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Balance Sheet 12/31/04

Prime Time, Inc.

75 East Montague Expressway

Milpitas, CA 95035  

Balance Sheet

As of December 2004

	
 

	
 

	
 

	
 

	
 

	
Assets 

	
 

	
 

	
 

	
 

	
Current Assets

	
 

	
 

	
 

	
 

	
Cash
  On Hand

	
 

	
 

	
 

	
 

	
Checking Account

	
 

	
$

	
117,277.41

	
 

	
Money Market

	
 

	
$

	
1,749,269.42

	
 

	
Checking-WF

	
 

	
$

	
11,201.12

	
 

	
Total
  Cash On Hand

	
 

	
$

	
1,877,747.95

	
 

	
Accounts Receivable

	
 

	
$

	
1,100,087.11

	
 

	
Fixed
  Assets

	
 

	
 

	
 

	
 

	
Equipment

	
 

	
$

	
17,463.00

	
 

	
Total
  Fixed Assets

	
 

	
$

	
17,463.00

	
 

	
Allowance
  for Depreciation

	
 

	
 

	
 

	
 

	
Equipment

	
 

	
($

	
17,463.00

	
)

	
Total
  Allowance for Depreciation

	
 

	
($

	
17,463.00

	
)

	
Inventory

	
 

	
 

	
 

	
 

	
Neõlloyd
  Trailers

	
 

	
$

	
17,975.00

	
 

	
Allied Trailers

	
 

	
$

	
330,648.04

	
 

	
New
  Trailers/Hyundai

	
 

	
$

	
88,250.00

	
 

	
New
  Trailers/Vanguard

	
 

	
$

	
641,921.75

	
 

	
Skyway Inventory

	
 

	
$

	
21,450.00

	
 

	
Used
  Trailers

	
 

	
$

	
118,222.53

	
 

	
Used Trucks

	
 

	
$

	
50,309.45

	
 

	
Miscellaneous
  Inventory

	
 

	
$

	
32,218.41

	
 

	
Landair Trailers

	
 

	
$

	
8,000.00

	
 

	
Landair
  Consignment Trlrs

	
 

	
$

	
6,125.40

	
 

	
Total
  Inventory

	
 

	
$

	
1,315,120.58

	
 

	
Inventory
  Parts

	
 

	
$

	
15,028.50

	
 

	
Total
  Current Assets

	
 

	
$

	
4,307,984.14

	
 

	
Total
  Assets

	
 

	
$

	
4,307,984.14

	
 

	
 

	
 

	
 

	
 

	
 

	
Liabilities

	
 

	
 

	
 

	
 

	
Accounts
  Payable

	
 

	
$

	
2,796,329.16

	
 

	
Sales
  Tax Payable

	
 

	
$

	
1,036.35

	
 

	
Gross
  FET

	
 

	
 

	
 

	
 

	
FET
  Payable

	
 

	
$

	
6,123.76

	
 

	
FET
  Tire Credit

	
 

	
($

	
6,123.76

	
)

	
Long
  Term Liabilities

	
 

	
 

	
 

	
 

	
CitiCap
  Flooring/Hyundai

	
 

	
$

	
88,250.00

	
 

	
CitiCap-Landair
  Trlrs.

	
 

	
$

	
5,700.00

	
 

	
CitiCap Flooring-Allied

	
 

	
$

	
326,300.00

	
 

	
CitiCap/Vanguard
  Trlrs

	
 

	
$

	
641,823.00

	
 

	
Citi-Cap Trucks

	
 

	
$

	
32,000.00

	
 

	
San
  Jose National Credit Line

	
 

	
$

	
196,500.00

	
 

	
Total
  Long Term Liabilities

	
 

	
$

	
1,290,573.00

	
 

	
 

	
 

	
 

	
 

	
 

	
Total
  Liabilities

	
 

	
$

	
4,087,938.51

	
 

	
 

	
 

	
 

	
 

	
 

	
Equity

	
 

	
 

	
 

	
 

	
Owner’s/Shareholder’s
  Equity

	
 

	
 

	
 

	
 

	
Owner’s/Sharehldr
  Investment

	
 

	
$

	
72,595.38

	
 

	
Owner’s/Sharehldr
  Withdrawal

	
 

	
($

	
1,200.00)

	
 

	
Total
  Owner’s/Shareholder’s Equity

	
 

	
$

	
71,395.38

	
 

	
Retained Earnings

	
 

	
$

	
46,376.25

	
 

	
Current Year Earnings

	
 

	
$

	
102,274.00

	
 

	
Total Equity

	
 

	
$

	
220,045.63

	
 

	
 

	
 

	
 

	
 

	
 

	
Total
  Liability & Equity

	
 

	
$

	
4,307,984.14

	
 

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Profit & Loss 12/31/04

Prime Time, Inc.
75 East Montague
Expressway

Milpitas, CA 95035

Profit & Loss Statement
January 2004 through December 2004

	
 

	
 

	
 

	
 

	
 

	
Income

	
 

	
 

	
 

	
 

	
New Vehicle Department

	
 

	
 

	
 

	
 

	
New Vehicle Retail/Fontana

	
 

	
$

	
892,600.46

	
 

	
New
  Vehicle/Wholesale/Fontana

	
 

	
$

	
194,767.96

	
 

	
New Vehicle/Out of State

	
 

	
$

	
11,998,923.08

	
 

	
Total New Vehicle
  Department

	
 

	
$

	
13,086,291.50

	
 

	
Used Vehicle Department

	
 

	
 

	
 

	
 

	
Used Vehicle Retail/Fontana

	
 

	
$

	
315,933.69

	
 

	
Used
  Vehicle/Wholesale/Fontana

	
 

	
$

	
602,100.00

	
 

	
Used Vehicle/Out of State

	
 

	
$

	
1,579,016.36

	
 

	
Total Used Vehicle
  Department

	
 

	
$

	
2,497,050.05

	
 

	
Parts and Service Income

	
 

	
 

	
 

	
 

	
Parts/Taxable

	
 

	
$

	
26,186.65

	
 

	
Parts/Wholesale

	
 

	
$

	
37,924.26

	
 

	
Labor Income

	
 

	
$

	
5,050.59

	
 

	
Parts/Out of State

	
 

	
$

	
11,898.13

	
 

	
Total Parts and Service
  Income

	
 

	
$

	
81,059.63

	
 

	
Freight Collected

	
 

	
$

	
71,232.70

	
 

	
Miscellaneous Income

	
 

	
$

	
2,749.16

	
 

	
Interest Income

	
 

	
$

	
17,490.49

	
 

	
Total Income

	
 

	
$

	
15,755,873.53

	
 

	
 

	
 

	
 

	
 

	
 

	
Cost of Sales

	
 

	
 

	
 

	
 

	
Purchases - New Vehicles

	
 

	
 

	
 

	
 

	
New Vehicle Purchases

	
 

	
$

	
12,304,708.90

	
 

	
Conversions &
  Improvements

	
 

	
$

	
4,983.08

	
 

	
Total Purchases - New
  Vehicles

	
 

	
$

	
12,309,691.98

	
 

	
Purchases - Used Vehicles

	
 

	
 

	
 

	
 

	
Used Vehicle Purchases

	
 

	
$

	
2,096,453.32

	
 

	
Freight/Reconditioning of
  equi

	
 

	
$

	
264,442.19

	
 

	
Total Purchases - Used Vehicles

	
 

	
$

	
2,360,895.51

	
 

	
Cost of Parts Sold

	
 

	
 

	
 

	
 

	
Parts Cost

	
 

	
$

	
40,433.66

	
 

	
Total Cost of Sales

	
 

	
$

	
14,711,021.15

	
 

	
 

	
 

	
 

	
 

	
 

	
Gross Profit

	
 

	
$

	
1,044,852.38

	
 

	
 

	
 

	
 

	
 

	
 

	
Expenses

	
 

	
 

	
 

	
 

	
General &
  Administrative Exp

	
 

	
 

	
 

	
 

	
Legal & Professional
  Fees

	
 

	
$

	
1,635.19

	
 

	
Commissions

	
 

	
$

	
379,82.16

	
 

	
Commissions Owed

	
 

	
$

	
15,040.00

	
 

	
Insurance

	
 

	
$

	
56,828.68

	
 

	
Group Insurance

	
 

	
$

	
4,968.00

	
 

	
 

	
 

	
 

	
 

	
 

	
Office Expenses

	
 

	
$

	
23,408.88

	
 

	
Office Administration

	
 

	
$

	
59,230.00

	
 

	
Document Fees

	
 

	
$

	
2,380.00

	
 

	
DMV Fees

	
 

	
$

	
2,762.00

	
 

	
Freight Paid

	
 

	
$

	
62,152.08

	
 

	
Fuel Expenses

	
 

	
$

	
9,109.67

	
 

	
Corporation Taxes

	
 

	
$

	
800.00

	
 

	
Total General &
  Administrative Exp

	
 

	
$

	
618,156.66

	
 

	
Supplies and Expenses

	
 

	
 

	
 

	
 

	
Labor

	
 

	
$

	
30.00

	
 

	
Total Supplies and Expenses

	
 

	
$

	
30.00

	
 

	
Advertising & Promotion
  Exp

	
 

	
 

	
 

	
 

	
Advertising

	
 

	
$

	
18,646.50

	
 

	
Total Advertising &
  Promotion Exp

	
 

	
$

	
18,646.50

	
 

	
Officers Salaries

	
 

	
 

	
 

	
 

	
Kenneth Moore

	
 

	
$

	
48,000.00

	
 

	
Total Officers Salaries

	
 

	
$

	
48,000.00

	
 

	
Other Fringes

	
 

	
 

	
 

	
 

	
Federal Payroll Taxes

	
 

	
$

	
3,728.00

	
 

	
State Payroll Taxes

	
 

	
$

	
273.00

	
 

	
Total Other Fringes

	
 

	
$

	
4,001.00

	
 

	
Operating Expenses

	
 

	
 

	
 

	
 

	
Postage

	
 

	
$

	
11,777.01

	
 

	
Rent

	
 

	
$

	
110,248.52

	
 

	
Telephone

	
 

	
$

	
15,989.02

	
 

	
Utilities

	
 

	
$

	
7,878.79

	
 

	
Travel & Entertainment

	
 

	
$

	
9,477.01

	
 

	
Miscellaneous Expenses

	
 

	
$

	
1,354.00

	
 

	
Donations

	
 

	
$

	
20.00

	
 

	
Bad Debts

	
 

	
$

	
4,350.48

	
 

	
Gardening & Yard
  Cleaning

	
 

	
$

	
4,059.00

	
 

	
Total Operating Expenses

	
 

	
$

	
165,153.83

	
 

	
Total Expenses

	
 

	
$

	
853,987.99

	
 

	
 

	
 

	
 

	
 

	
 

	
Operating Profit

	
 

	
$

	
190,864.39

	
 

	
 

	
 

	
 

	
 

	
 

	
Other Expenses

	
 

	
 

	
 

	
 

	
Interest Expense

	
 

	
$

	
71,783.03

	
 

	
Rental Vehicle Expense

	
 

	
$

	
16,807.36

	
 

	
Total Other Expenses

	
 

	
$

	
88,590.39

	
 

	
 

	
 

	
 

	
 

	
 

	
Net Profit/(Loss)

	
 

	
$

	
102,274.00

	
 

	
 

	
 

	
Schedule 4.4 

	
Prime Time
Equipment Balance Sheet 12/31/05 

Prime Time, Inc.

75 East Montague Expressway

Milpitas, CA 95035

Balance Sheet

As of December 2005

	
 

	
 

	
 

	
 

	
 

	
Assets

	
 

	
 

	
 

	
 

	
Current
  Assets

	
 

	
 

	
 

	
 

	
Cash
  On Hand

	
 

	
 

	
 

	
 

	
Checking
  Account

	
 

	
$

	
205,513.42

	
 

	
Checking-WF

	
 

	
$

	
68,326.49

	
 

	
Total
  Cash On Hand

	
 

	
$

	
273,839.91

	
 

	
Accounts
  Receivable

	
 

	
$

	
104,008.50

	
 

	
Inventory

	
 

	
 

	
 

	
 

	
New
  Trailers/Hyundai

	
 

	
$

	
770,086.00

	
 

	
New
  Trailers/Vanguard

	
 

	
$

	
178,000.00

	
 

	
Celadon
  Trailers

	
 

	
$

	
614,303.04

	
 

	
Skyway
  Inventory

	
 

	
$

	
3,600.00

	
 

	
Used
  Trailers

	
 

	
$

	
234,474.20

	
 

	
Used
  Trucks

	
 

	
$

	
6,450.00

	
 

	
Miscellaneous
  Inventory

	
 

	
$

	
9,250.00

	
 

	
Total
  Inventory

	
 

	
$

	
1,816,163.24

	
 

	
Inventory
  Parts

	
 

	
$

	
21,427.00

	
 

	
Total
  Current Assets

	
 

	
$

	
2,215,438.65

	
 

	
Other
  Current Assets

	
 

	
 

	
 

	
 

	
Prepaid
  Taxes

	
 

	
$

	
12,400.00

	
 

	
Prepaid
  Insurance

	
 

	
$

	
230.00

	
 

	
Total
  Other Current Assets

	
 

	
$

	
12,630.00

	
 

	
Clearing
  and Suspense

	
 

	
 

	
 

	
 

	
Clearing
  and Suspense

	
 

	
$

	
23,000.00

	
 

	
Total
  Assets

	
 

	
$

	
2,251,068.65

	
 

	
 

	
Liabilities

	
 

	
 

	
 

	
 

	
Accounts
  Payable

	
 

	
$

	
14,439.52

	
 

	
Sales
  Tax Payable

	
 

	
$

	
13,934.00

	
 

	
Gross
  FET

	
 

	
 

	
 

	
 

	
FET Payable

	
 

	
$

	
147,821.44

	
 

	
FET
  Tire Credit

	
 

	
($

	
147,821.44

	
)

	
Long
  Term Liabilities

	
 

	
 

	
 

	
 

	
CitiCap
  Flooring/Hyundai

	
 

	
$

	
770,086.00

	
 

	
CitiCap/Vanguard
  Trlrs

	
 

	
$

	
171,000.00

	
 

	
CitiCap-Misc

	
 

	
$

	
160,500.00

	
 

	
CitiCap-Celadon

	
 

	
$

	
556,220.00

	
 

	
San
  Jose National Credit Line

	
 

	
$

	
23,000.00

	
 

	
Total
  Long Term Liabilities

	
 

	
$

	
1,680,806.00

	
 

	
Total
  Liabilities

	
 

	
$

	
1,709,179.52

	
 

	
 

	
Equity

	
 

	
 

	
 

	
 

	
Owner’s/Shareholder’s
  Equity

	
 

	
 

	
 

	
 

	
Owner’s/Sharehldr
  Investment

	
 

	
$

	
72,595.38

	
 

	
 

	
 

	
 

	
 

	
 

	
Owner’s/Sharehldr
  Withdrawal

	
 

	
($

	
1,200.00

	
)

	
Total
  Owner’s/Shareholder’s Equity

	
 

	
$

	
71,395.38

	
 

	
Retained
  Earnings

	
 

	
$

	
136,865.25

	
 

	
Current
  Year Earnings

	
 

	
$

	
333,628.50

	
 

	
Total
  Equity

	
 

	
$

	
541,889.13

	
 

	
 

	
Total
  Liability & Equity

	
 

	
$

	
2,251,068.65

	
 

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Profit &
  Loss 12/31/05

Prime Time, Inc.

75 East Montague Expressway

Mtlpitas, GA 95035

Profit &
Loss Statement
January 2005
through December 2005

	
 

	
 

	
 

	
 

	
 

	
Income

	
 

	
 

	
 

	
 

	
New Vehicle Department

	
 

	
 

	
 

	
 

	
New Vehicle Retail/Fontana

	
 

	
$

	
368,365.86
  

	
 

	
New
  Vehicle/Wholesale/Fontana

	
 

	
$

	
96,762.00
  

	
 

	
New Vehicle/Out of State

	
 

	
$

	
17,366,067.98
  

	
 

	
Total New Vehicle
  Department

	
 

	
$

	
17,831,195.84
  

	
 

	
Used Vehicle Department

	
 

	
 

	
 

	
 

	
Used Vehicle Retail/Fontana

	
 

	
$

	
940,742.33
  

	
 

	
Used Vehicle/Wholesale/Fontana

	
 

	
$

	
427,600.00

	
 

	
Used Vehicle/Out of State

	
 

	
$

	
5,132,849.00
  

	
 

	
Total Used Vehicle
  Department

	
 

	
$

	
6,501,191.33
  

	
 

	
Parts and Service Income

	
 

	
 

	
 

	
 

	
Parts/Taxable

	
 

	
$

	
19,975.59
  

	
 

	
Parts/Wholesale

	
 

	
$

	
71,558.62
  

	
 

	
Labor Income

	
 

	
$

	
12,664.48
  

	
 

	
Parts/Out of State

	
 

	
$

	
30,981.69 

	
 

	
Total Parts and Service
  Income

	
 

	
$

	
135,180.38
  

	
 

	
Freight Collected

	
 

	
$

	
69,689.39
  

	
 

	
Yard Rental

	
 

	
$

	
33,675.00
  

	
 

	
Miscellaneous Income

	
 

	
$

	
37,863.30
  

	
 

	
Interest Income

	
 

	
$

	
40,460.71
  

	
 

	
Total Income

	
 

	
$

	
24,649,255.95
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Cost of Sales

	
 

	
 

	
 

	
 

	
Purchases - New Vehicles

	
 

	
 

	
 

	
 

	
New Vehicle Purchases

	
 

	
$

	
16,624,257.59
  

	
 

	
Conversions &
  Improvements

	
 

	
$

	
20,878.60
  

	
 

	
Total Purchases - New
  Vehicles

	
 

	
$

	
16,645,136.19
  

	
 

	
Purchases - Used Vehicles

	
 

	
 

	
 

	
 

	
Used Vehicle Purchases

	
 

	
$

	
5,739,556.62
  

	
 

	
Freight/Reconditioning of
  equi

	
 

	
$

	
371,785.52
  

	
 

	
Total Purchases - Used
  Vehicles

	
 

	
$

	
6,111,342.14
  

	
 

	
Cost of Parts Sold

	
 

	
 

	
 

	
 

	
Parts Cost

	
 

	
$

	
69,820.75
  

	
 

	
Total Cost of Sales

	
 

	
$

	
22,826,299.08
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Gross Profit

	
 

	
$

	
1,822,956.87
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Expenses

	
 

	
 

	
 

	
 

	
General & Administrative
  Exp

	
 

	
 

	
 

	
 

	
Legal & Professional
  Fees

	
 

	
$

	
1,575.00
  

	
 

	
Commissions

	
 

	
$

	
580,918.85
  

	
 

	
Insurance

	
 

	
$

	
54,301.79
  

	
 

	
Group Insurance

	
 

	
$

	
5,208.00
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Office Expenses

	
 

	
$

	
31,936.35
  

	
 

	
Office Administration

	
 

	
$

	
78,056.00
  

	
 

	
Document Fees

	
 

	
$

	
6,840.00
  

	
 

	
Yard Supervisor

	
 

	
$

	
46,800.00
  

	
 

	
DMV Fees

	
 

	
$

	
6,116.00
  

	
 

	
Freight Paid

	
 

	
$

	
13,044.99
  

	
 

	
Fuel Expenses

	
 

	
$

	
8,802.06
  

	
 

	
Total General &
  Administrative Exp

	
 

	
$

	
833,599.04
  

	
 

	
Advertising & Promotion
  Exp

	
 

	
 

	
 

	
 

	
Advertising

	
 

	
$

	
22,625.00
  

	
 

	
Total Advertising &
  Promotion Exp

	
 

	
$

	
22,625.00
  

	
 

	
Salaries

	
 

	
 

	
 

	
 

	
Kenneth Moore

	
 

	
$

	
218,000.00
  

	
 

	
Total Salaries

	
 

	
$

	
218,000.00
  

	
 

	
Other Fringes

	
 

	
 

	
 

	
 

	
Federal Payroll Taxes

	
 

	
$

	
8,797.00
  

	
 

	
State Payroll Taxes

	
 

	
$

	
238.00
  

	
 

	
Total Other Fringes

	
 

	
$

	
9,035.00
  

	
 

	
Operating Expenses

	
 

	
 

	
 

	
 

	
Postage

	
 

	
$

	
8,560.78
  

	
 

	
Rent

	
 

	
$

	
168,100.00
  

	
 

	
Telephone

	
 

	
$

	
17,074.08
  

	
 

	
Utilities

	
 

	
$

	
8,130.41
  

	
 

	
Travel & Entertainment

	
 

	
$

	
13,977.05
  

	
 

	
Miscellaneous Expenses

	
 

	
$

	
972.57
  

	
 

	
Donations

	
 

	
$

	
50.00
  

	
 

	
Bad Debts

	
 

	
$

	
27,001.19
  

	
 

	
Gardening & Yard
  Cleaning

	
 

	
$

	
5,340.00
  

	
 

	
Total Operating Expenses

	
 

	
$

	
249,206.08
  

	
 

	
Total Expenses

	
 

	
$

	
1,332,465.12
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Operating Profit

	
 

	
$

	
490,491.75
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Other Expenses

	
 

	
 

	
 

	
 

	
Interest Expense

	
 

	
$

	
140,544.73
  

	
 

	
Rental Vehicle Expense

	
 

	
$

	
16,318.52
  

	
 

	
Total Other Expenses

	
 

	
$

	
156,863.25
  

	
 

	
 

	
 

	
 

	
 

	
 

	
Net Profit / (Loss)

	
 

	
$

	
333,628.50

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Balance Sheet 3/31/06

Prime Time Equipment, Inc.

1045 Montague Expressway

Milpitas, CA 95035 

Balance Sheet
As of March 2006

	
 

	
 

	
 

	
 

	
 

	
Assets

	
 

	
 

	
 

	
 

	
Current
  Assets

	
 

	
 

	
 

	
 

	
Cash
  On Hand

	
 

	
 

	
 

	
 

	
Checking
  Account

	
 

	
$

	
168,405.38

	
 

	
Wells Fargo

	
 

	
$

	
87,858.06

	
 

	
Petty
  Cash

	
 

	
$

	
2,655.36

	
 

	
Total
  Cash On Hand

	
 

	
$

	
258,918.80

	
 

	
Accounts
  Receivable

	
 

	
$

	
167,113.31

	
 

	
Fixed
  Assets

	
 

	
 

	
 

	
 

	
Office
  Equipment

	
 

	
$

	
3,402.80

	
 

	
Total
  Fixed Assets

	
 

	
$

	
3,402.80

	
 

	
Inventory

	
 

	
 

	
 

	
 

	
New
  Trailers/Hyundai

	
 

	
$

	
89,855.00

	
 

	
New
  Trailers/Vanguard

	
 

	
$

	
36,183.04

	
 

	
Celadon
  Trailers

	
 

	
$

	
375,698.13

	
 

	
Skyway
  Inventory

	
 

	
$

	
3,600.00

	
 

	
Used
  Trailers

	
 

	
$

	
343,404.30

	
 

	
Used
  Trucks

	
 

	
$

	
6,450.00

	
 

	
Miscellaneous
  Inventory

	
 

	
$

	
16,750.00

	
 

	
Total
  Inventory

	
 

	
$

	
871,940.47

	
 

	
Inventory
  Parts

	
 

	
$

	
21,427.00

	
 

	
Total
  Current Assets

	
 

	
$

	
1,322,802.38

	
 

	
Other
  Current Assets

	
 

	
 

	
 

	
 

	
Prepaid
  Insurance

	
 

	
$

	
9,817.37

	
 

	
Prepaid
  Licenses

	
 

	
$

	
401.00

	
 

	
Total
  Other Current Assets

	
 

	
$

	
10,218.37

	
 

	
Clearing
  and Suspense

	
 

	
 

	
 

	
 

	
Clearing
  and Suspense

	
 

	
$

	
15,979.64

	
 

	
Total
  Assets

	
 

	
$

	
1,349,000.39

	
 

	
 

	
 

	
 

	
 

	
 

	
Liabilities

	
 

	
 

	
 

	
 

	
Accounts
  Payable

	
 

	
$

	
141,306.31

	
 

	
Sales
  Tax Payable

	
 

	
$

	
5,026.74

	
 

	
Gross
  FET

	
 

	
 

	
 

	
 

	
FET
  Payable

	
 

	
$

	
16,381.44

	
 

	
FET
  Tire Credit

	
(

	
$

	
16,381.44

	
)

	
Long
  Term Liabilities

	
 

	
 

	
 

	
 

	
CitiCap
  Flooring/Hyundai

	
 

	
$

	
143,768.00

	
 

	
CitiCap/Vanguard
  Trlrs

	
 

	
$

	
51,300.00

	
 

	
CitiCap-Misc

	
 

	
$

	
115,750.00

	
 

	
CitiCap-Celadon

	
 

	
$

	
324,606.00

	
 

	
San
  Jose National Credit Line

	
 

	
$

	
12,500.00

	
 

	
Total
  Long Term Liabilities

	
 

	
$

	
647,924.00

	
 

	
Total
  Liabilities

	
 

	
$

	
794,257.05

	
 

	
 

	
 

	
 

	
 

	
 

	
Equity

	
 

	
 

	
 

	
 

	
Owner’s/Shareholder’s
  Equity

	
 

	
 

	
 

	
 

	
Owner’s/Sharehldr
  Investment

	
 

	
$

	
72,595.38

	
 

	
Owner’s/Sharehldr
  Withdrawal

	
(

	
$

	
1,200.00

	
)

	
Total
  Owner’s/Shareholder’s Equity

	
 

	
$

	
71,395.38

	
 

	
Retained
  Earnings

	
 

	
$

	
329,060.75

	
 

	
Current
  Year Earnings

	
 

	
$

	
154,287.21

	
 

	
Total
  Equity

	
 

	
$

	
554,743.34

	
 

	
 

	
 

	
 

	
 

	
 

	
Total Liability &
  Equity

	
 

	
$

	
1 ,349,000.39

	
 

	
 

	
 

	
Schedule 4.4

	
Prime Time Equipment Profit &
  Loss 3/31/06

Prime
Time Equipment, Inc.

1045 Montague Expressway

Milpitas, CA 95035

Profit & Loss Statement

January 2006 through March 2006

	
 

	
 

	
 

	
 

	
 

	
Income

	
 

	
 

	
 

	
 

	
New Vehicle Department

	
 

	
 

	
 

	
 

	
New Vehicle/Out of State

	
 

	
$

	
1,626,749.11

	
 

	
Total New Vehicle
  Department

	
 

	
$

	
1,626,749.11

	
 

	
Used Vehicle Department

	
 

	
 

	
 

	
 

	
Used Vehicle Retail/Fontana

	
 

	
$

	
105,550.00

	
 

	
Used
  Vehicle/Wholesale/Fontana

	
 

	
$

	
32,000.00

	
 

	
Used Vehicle/Out of State

	
 

	
$

	
987,465.00

	
 

	
Total Used Vehicle
  Department

	
 

	
$

	
1,125,015.00

	
 

	
Parts and Service Income

	
 

	
 

	
 

	
 

	
Parts/Taxable

	
 

	
$

	
2,182.52

	
 

	
Parts/Wholesale

	
 

	
$

	
21,923.52

	
 

	
Labor Income

	
 

	
$

	
7,007.72

	
 

	
Parts/Out of State

	
 

	
$

	
12,501.00

	
 

	
Total Parts and Service
  Income

	
 

	
$

	
43,614.76

	
 

	
Freight Collected

	
 

	
$

	
992.50

	
 

	
Yard Rental

	
 

	
$

	
9,000.00

	
 

	
Document Fees

	
 

	
$

	
2,475.00

	
 

	
Miscellaneous Income

	
 

	
$

	
22,094.30

	
 

	
Interest Income

	
 

	
$

	
2,209.74

	
 

	
Total Income

	
 

	
$

	
2,832,150.41

	
 

	
 

	
 

	
 

	
 

	
 

	
Cost of Sales

	
 

	
 

	
 

	
 

	
Purchases - New Vehicles

	
 

	
 

	
 

	
 

	
New Vehicle Purchases

	
 

	
$

	
1,329,740.72

	
 

	
Conversions &
  Improvements

	
 

	
$

	
11,000.00

	
 

	
Total Purchases - New
  Vehicles

	
 

	
$

	
1,340,740.72

	
 

	
Purchases - Used Vehicles

	
 

	
 

	
 

	
 

	
Used Vehicle Purchases

	
 

	
$

	
1,045,760.61

	
 

	
Freight/Reconditioning of
  equi

	
 

	
$

	
60,228.01

	
 

	
Total Purchases - Used
  Vehicles

	
 

	
$

	
1,105,988.62

	
 

	
Cost of Parts Sold

	
 

	
 

	
 

	
 

	
Parts Cost

	
 

	
$

	
25,208.72

	
 

	
Total Cost of Sales

	
 

	
$

	
2,471,938.06

	
 

	
 

	
 

	
 

	
 

	
 

	
Gross Profit

	
 

	
$

	
360,212.35

	
 

	
 

	
 

	
 

	
 

	
 

	
Expenses

	
 

	
 

	
 

	
 

	
General &
  Administrative Exp

	
 

	
 

	
 

	
 

	
Legal & Professional
  Fees

	
 

	
$

	
1,575.00

	
 

	
Commissions

	
 

	
$

	
75,685.94

	
 

	
Insurance

	
 

	
$

	
2,171.60

	
 

	
Group Insurance

	
 

	
$

	
1,924.00

	
 

	
Office Expenses

	
 

	
$

	
4,850.24

	
 

	
 

	
 

	
 

	
 

	
 

	
Office Administration

	
 

	
$

	
16,462.50

	
 

	
Yard Supervisor

	
 

	
$

	
11,700.00

	
 

	
DMV Fees

	
 

	
$

	
144.00

	
 

	
Freight Paid

	
 

	
$

	
3,380.21

	
 

	
Fuel Expenses

	
 

	
$

	
1.552.78

	
 

	
Total General &
  Administrative Exp

	
 

	
$

	
119,446.27

	
 

	
Advertising & Promotion
  Exp

	
 

	
 

	
 

	
 

	
Advertising

	
 

	
$

	
4,740.00

	
 

	
Total Advertising &
  Promotion Exp

	
 

	
$

	
4,740.00

	
 

	
Salaries

	
 

	
 

	
 

	
 

	
Bookkeeping

	
 

	
$

	
12,800.00

	
 

	
Kenneth Moore

	
 

	
$

	
4,500.00

	
 

	
Total Salaries

	
 

	
$

	
17,300.00

	
 

	
Other Fringes

	
 

	
 

	
 

	
 

	
Federal Payroll Taxes

	
 

	
$

	
1,415.45

	
 

	
State Payroll Taxes

	
 

	
$

	
241.50

	
 

	
Workmens Comp Insurance

	
 

	
$

	
2,504.00

	
 

	
Total Other Fringes

	
 

	
$

	
4,160.95

	
 

	
Operating Expenses

	
 

	
 

	
 

	
 

	
Postage

	
 

	
$

	
1,850.63

	
 

	
Rent

	
 

	
$

	
36,500.00

	
 

	
Telephone

	
 

	
$

	
4,143.06

	
 

	
Utilities

	
 

	
$

	
1,752.73

	
 

	
Travel & Entertainment

	
 

	
$

	
3,180.87

	
 

	
Miscellaneous Expenses

	
 

	
$

	
365.36

	
 

	
Gardening & Yard
  Cleaning

	
 

	
$

	
975.00

	
 

	
Total Operating Expenses

	
 

	
$

	
48,767.65

	
 

	
Total Expenses

	
 

	
$

	
194,414.87

	
 

	
 

	
 

	
 

	
 

	
 

	
Operating Profit

	
 

	
$

	
165,797.48

	
 

	
 

	
 

	
 

	
 

	
 

	
Other Expenses

	
 

	
 

	
 

	
 

	
Interest Expense

	
 

	
$

	
6,916.99

	
 

	
Rental Vehicle Expense

	
 

	
$

	
4,593.28

	
 

	
Total Other Expenses

	
 

	
$

	
11,510.27

	
 

	
 

	
 

	
 

	
 

	
 

	
Net Profit / (Loss)

	
 

	
$

	
154,287.21

	
 

	
 

	
 

	
Schedule 4.6

	
Prime Time Equipment Material
  Adverse Changes Since 12/31/05

Employee Compensation:

	
 

	
 

	
Clerical:

	
Marge Lundry

	
 

	
 

	
 

	
Previous to 12/31/05, employee was paid $200.00 per
  month plus DMV doc fees, and $2500.00 per month was paid to Frost All-Cal
  Trucking & Equipment since her services were shared between the two
  companies. (She was on Frost All-Cal’s payroll) Since then, Frost All-Cal has
  closed and she works exclusively for Prime Time. Her salary is now $1600 per
  week and she is still paid the DMV doc fees. She is still granted 2 weeks
  paid vacation per year and Prime Time now pays her medical coverage through
  Kaiser.

	
 

	
 

	
Schedule 4.7

	
Prime Time Equipment Tangible Assets
  Not in our Possession

Located at Bellamy Equipment, 2396 S. Golden State
Blvd., Fowler, CA:

	
 

	
1993 Great Dane 1GRAA0629PB089629

	
1994 Great Dane 1GRAA0626RR171126

	
1988 Trailmobile 1PT02DAH9J9000470

	
1994 Great Dane 1GRAA0623RB171147

	
1993 Great Dane 1GRAA0620PB009650 (we have not paid for this)

Located in Anderson, IN:

	
 

	
1996 Pines 1PNV532B8TH201648 (in transit to Fontana)

	
 

	
 

	
Schedule
  4.8

	
Real
  Estate Lease

	
 

	
 

	
See attached

	
 

Commercial Lease Agreement

          This
Commercial Lease Agreement (“Lease”) is made and effective this ____ day of April 2006,
by and between Kenneth and Marjorie Moore, The Surviving Spouse’s Trust of the
Frost 1997 Revocable Trust, The Martial QTIP Trust of the Frost 1997 Revocable
Trust; and the Family Bypass Trust of the Frost 1997 Revocable Trust
(collectively “Landlord”) with their principal place of business at 15609
Valley Boulevard, Fontana California, and CapSource Equipment Company, Inc., a
Nevada corporation d/b/a Prime Time Trailers, with its principal place of
business at 2305 Canyon Boulevard, Suite 103, Boulder, CO 80302, (“Tenant”).

          Landlord
is the owner of land and improvements commonly known and numbered as 15603 and
15609 Valley Boulevard, Fontana, CA and legally described as follows: Parcel Numbers:
0235201090000 and 0235205080000 (approximately four (4) acres) in the County of
San Bernardino, California. Landlord makes available for lease the entire
parcel of land (as described in the pervious sentence) and the building designated
as 15609 Valley Boulevard, Fontana, California 92335, but excluding such
portion of the property being used for a cellular telephone tower and
associated equipment box, (“Leased Premises”).

          Landlord
desires to lease the Leased Premises to Tenant, and Tenant desires to lease the
Leased Premises from Landlord for the term, at the rental and upon the
covenants, conditions and provisions herein set forth.

          THEREFORE, in consideration of the mutual
promises herein, contained and other good and valuable consideration, it is
agreed:

1. Term.

          A.
Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases
the same from Landlord, for an “Initial Term” beginning May 1, 2006 and ending
April 30, 2008. Landlord shall use its best efforts to give Tenant possession
as nearly as possible at the beginning of the Lease term. If Landlord is unable
to timely provide the Leased Premises, rent shall abate for the period of
delay. Tenant shall make no other claim against Landlord for any such delay.

          B.
Tenant may renew the Lease for one extended term of one (1) year. Tenant shall exercise
such renewal option, if at all, by giving written notice to Landlord not less
than ninety (90) days prior to the expiration of the Initial Term. The renewal
term shall be at the rental set forth below and otherwise upon the same
covenants, conditions and provisions as provided in this Lease.

2. Rental.

          A.
Tenant shall pay to Landlord during the Initial Term rental of Seventy Two
Thousand Dollars ($72,000) per year, payable in installments of Six Thousand
Dollars ($6,000) per month. Each installment payment shall be due in advance on
the first day of each calendar month during the lease term to Landlord at 15609
Valley Boulevard, Fontana, CA 92335 or at such other place designated by
written notice from Landlord or Tenant. The rental payment amount for any
partial

Page 1 of 9

calendar months included in
the lease term shall be prorated on a daily basis.

          B.
The rental for any renewal lease term, if created as permitted under this
Lease, shall be Eighty Four Thousand Dollars ($84,000) per year payable in
installments of Seven Thousand Dollars ($7,000) per month.

3. Tenant’s Right of First Refusal.

Before the Leased Premises
or any portion thereof may be sold or otherwise transferred (including transfer
by gift or operation of law), the Tenant or its assignee(s) shall have a right
of first refusal to purchase the Leased Premises or any portion thereof on the terms
and conditions set forth in this Section.

          A.
The Landlord shall (a) deliver to the Tenant a written notice (the “Notice”)
stating: (i) Landlord’s bona fide intention to sell or otherwise transfer the
Leased Premises or any portion thereof; (ii) the name of the proposed purchaser
or other transferee (“Proposed Transferee”); (iii) the bona fide cash price or
other consideration for which the Landlord to transfer the Leased Premises or
any portion thereof (the “Offered Price”); and (v) the material terms and
conditions of the proposed transfer (the “Offer Terms”) and (b) offer the
Leased Premises or any portion thereof at the Offered Price and on the Offer
Terms to the Tenant its assignee(s).

          B.
At any time within 30 days after receipt of the Notice, the Tenant and/or its assignee(s)
may, by giving written notice to the Landlord, elect to purchase all, but not
less than all, of the Leased Premises or any portion thereof proposed that are
being sold to be transferred to the Proposed Transferees, at the purchase price
and on the terms determined in accordance with subsection (c) below.

          C.
The purchase price (“Purchase Price”) for the Leased Premises or any portion
thereof purchased by the Tenant or its assignee(s) under this Section shall be
the Offered Price, and the terms and conditions of the transfer shall be
identical in all material respects to the Offer Terms (the “Terms”). If the
Offered Price includes consideration other than cash the cash equivalent value
of the non-cash consideration SW be determined by the Board of Directors of the
Company in good faith.

          D.
Payment of the Purchase Price shall be made in cash (by check) within thirty
(30) days after delivery of the written notice by the Company as set forth in
Section 2(b).

          E.
If the Leased Premises or any portion thereof proposed in the Notice to be
transferred to a given Proposed Transferee is not purchased by the Company
and/or its assignee(s) as provided in this Section, then the Landlord may sell
or otherwise transfer the Leased Premises or any portion thereof to that
Proposed Transferred at the Offered Price or at a higher price and on the Offer
Terms, provided that such sale or other transfer is consummated within sixty
(60) days after the date of the Notice. If the Leased Premises or any portion
thereof described in the Notice are not transferred to the Proposed Transferee
within such period, a new Notice shall be given to the Tenant, and the Tenant
and/or its assignees shall again be offered the Right of First Refusal before
the Leased Premises or any portion thereof may be sold or otherwise
transferred.

Page 2 of 9

          F.
Anything to the contrary contained in this Section notwithstanding, the
transfer of any or the Leased Premises or any portion thereof to an affiliate
of the Landlord shall be exempt from the provisions of this Section. In such
case, the transferee or other recipient shall receive and hold the Leased
Premises or any portion thereof so transferred subject to the provisions of this
Agreement, and there shall be no further transfer of the Leased Premises or any
portion thereof except in accordance with the terms of this Agreement.

          G.
The Right of First Refusal shall terminate after the first sale of Leased
Premises or any portion thereof.

          H.
The Right of First Refusal shall be freely assignable by the Tenant at any time
subject to approval of the Landlord which shall not be unreasonably withheld.

4. Use

Notwithstanding the
forgoing, Tenant shall not use the Leased Premises for the purposes of storing,
manufacturing or selling any explosives, flammables or other inherently
dangerous substance, chemical, thing or device.

5. Sublease and Assignment.

Tenant shall have the right
without Landlord’s consent, to assign this Lease to a corporation with which
Tenant may merge or consolidate, to any subsidiary of Tenant, to any
corporation under common control with Tenant, or to a purchaser of
substantially all of Tenant’s assets. Except as set forth above, Tenant shall
not sublease all or any part of the Leased Premises, or assign this Lease in
whole or in part without Landlord’s consent, such consent not to be
unreasonably withheld or delayed.

6. Repairs.

During the Lease term,
Tenant shall make, at Tenant’s expense, all necessary repairs to the Leased Premises.
Repairs shall include such items as routine repairs of floors, walls, ceilings,
and other parts of the Leased Premises damaged or worn through normal
occupancy, except for major mechanical systems or the roof, subject to the
obligations of the parties otherwise set forth in this Lease.

7. Alterations and Improvements.

Tenant, at Tenant’s expense,
shall have the right following Landlord’s consent to remodel, redecorate, and
make additions, improvements and replacements of and to all or any part of the Leased
Premises from time to time as Tenant may deem desirable, provided the same are
made in a workmanlike manner and utilizing good quality materials. Tenant shall
have the right to place and install personal property, trade fixtures,
equipment and other temporary installations in and upon the Leased Premises,
and fasten the same to the premises. All personal property, equipment,
machinery, trade fixtures and temporary installations, whether acquired by
Tenant at the commencement of the Lease term or placed or installed on the
Leased Premises by Tenant thereafter, shall remain Tenant’s property free and
clear of any claim by Landlord. Tenant shall

Page 3 of 9

have the right to remove the
same at any time during the term of this Lease provided that all damage to the
Leased Premises caused by such removal shall be repaired by Tenant at Tenant’s expense.

8. Property Taxes.

Landlord shall pay, prior to
delinquency, all general real estate taxes and installments of special assessments
coming due during the Lease term on the Leased Premises, and all personal
property taxes with respect to Landlord’s personal property, if any, on the
Leased Premises. Tenant shall be responsible for paying all personal property
taxes with respect to Tenant’s personal property at the Leased Premises.

9. Insurance.

          A.
If the Leased Premises or any other part of the Building is damaged by fire or
other casualty resulting from any act or negligence of Tenant or any of Tenant’s
agents, employees or invitees, rent shall not be diminished or abated while
such damages are under repair, and Tenant shall be responsible for the costs of
repair not covered by insurance.

          B.
Landlord shall maintain fire and extended coverage insurance on the Building
and the Leased Premises in such amounts as Landlord shall deem appropriate.
Tenant shall be responsible, at its expense, for fire and extended coverage
insurance on all of its personal property, including removable trade fixtures,
located in the Leased Premises.

          C.
Tenant and Landlord shall, each at its own expense, maintain a policy or
policies of comprehensive general liability insurance with respect to the
respective activities of each in the Building with the premiums thereon fully
paid on or before due date, issued by and binding upon some insurance company
approved by Landlord, such insurance to afford minimum protection of not less
than $1,000,000 combined single limit coverage of bodily injury, property
damage or combination thereof. Landlord shall be listed as an additional
insured on Tenant’s policy or policies of comprehensive general liability
insurance, and Tenant shall provide Landlord with current Certificates of
Insurance evidencing Tenant’s compliance with this Paragraph. Tenant shall
obtain the agreement of Tenant’s insurers to notify Landlord that a policy is
due to expire at least (10) days prior to such expiration. Landlord shall not
be required to maintain insurance against thefts within the Leased Premises or
the Building.

10. Utilities.

Tenant shall pay all charges
for water, sewer, gas, electricity, telephone and other services and utilities
used by Tenant on the Leased Premises during the term of this Lease unless
otherwise expressly agreed in writing by Landlord. In the event that any utility
or service provided to the Leased Premises is not separately metered, Landlord
shall pay the amount due and separately invoice Tenant for Tenant’s pro rata
share of the charges. Tenant shall pay such amounts within fifteen (15) days of
invoice. Tenant acknowledges that the Leased Premises are designed to provide
standard office use electrical facilities and standard office lighting. Tenant
shall not use any equipment or devices that utilizes excessive electrical
energy or which may, in Landlord’s

Page 4 of 9

reasonable opinion, overload
the wiring or interfere with electrical services to other tenants.

11. Signs.

Following Landlord’s
consent, Tenant shall have the right to place on the Leased Premises, at locations
selected by Tenant, any signs which are permitted by applicable zoning
ordinances and private restrictions. Landlord may refuse consent to any
proposed signage that is in Landlord’s opinion too large, deceptive,
unattractive or otherwise inconsistent with or inappropriate to the Leased Premises
or use of any other tenant. Landlord shall assist and cooperate with Tenant in obtaining
any necessary permission from governmental authorities or adjoining owners and occupants
for Tenant to place or construct the foregoing signs. Tenant shall repair all
damage to the Leased Premises resulting from the removal of signs installed by
Tenant.

12. Entry.

Landlord shall have the
right to enter upon the Leased Premises at reasonable hours to inspect the
same, provided Landlord shall not thereby unreasonably interfere with Tenant’s
business on the Leased Premises.

13. Parking.

During the term of this
Lease, Tenant shall have the exclusive use of the common automobile parking
areas, driveways, and footways..

14. Damage and Destruction.

Subject to Section 9 A. above,
if the Leased Premises or any part thereof or any appurtenance thereto is so
damaged by fire, casualty or structural defects that the same cannot be used
for Tenant’s purposes, then Tenant shall have the right within ninety (90) days
following damage to elect by notice to Landlord to terminate this Lease as of
the date of such damage. In the event of minor damage to any part of the Leased
Premises, and if such damage does not render the Leased Premises unusable for
Tenant’s purposes, Landlord shall promptly repair such damage at the cost of
the Landlord. In making the repairs called for in this paragraph, Landlord
shall not be liable for any delays resulting from strikes, governmental
restrictions, inability to obtain necessary materials or labor or other matters
which are beyond the reasonable control of Landlord. Tenant shall be relieved
from paying rent and other charges during any portion of the Lease term that
the Leased Premises are inoperable or unfit for occupancy, or use, in whole or
in part, for Tenant’s purposes. Rentals and other charges paid in advance for
any such periods shall be credited on the next ensuing payments, if any, but if
no further payments are to be made, any such advance payments shall be refunded
to Tenant. The provisions of this paragraph extend not only to the matters
aforesaid, but also to any occurrence which is beyond Tenant’s reasonable
control and which renders the Leased Premises, or any appurtenance thereto,
inoperable or unfit for occupancy or use, in whole or in part, for Tenant’s
purposes.

15. Default.

If default shall at any time
be made by Tenant in the payment of rent when due to Landlord as herein
provided, and if said default shall continue for fifteen (15) days after
written notice

Page 5 of 9

thereof shall have been
given to Tenant by Landlord, or if default shall be made in any of the other
covenants or conditions to be kept, observed and performed by Tenant, and such
default shall continue for thirty (30) days after notice thereof in writing to
Tenant by Landlord without correction thereof then having been commenced and
thereafter diligently prosecuted, Landlord may declare the term of this Lease
ended and terminated by giving Tenant written notice of such intention, and if
possession of the Leased Premises is not surrendered, Landlord may reenter said
premises. Landlord shall have, in addition to the remedy above provided, any
other right or remedy available to Landlord on account of any Tenant default,
either in law or equity. Landlord shall use reasonable efforts to mitigate its
damages.

16. Quiet Possession.

Landlord covenants and
warrants that upon performance by Tenant of its obligations hereunder, Landlord
will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed
and uninterrupted possession of the Leased Premises during the term of this
Lease.

17. Condemnation.

If any legally, constituted
authority condemns the Building or such part thereof which shall make the
Leased Premises unsuitable for leasing, this Lease shall cease when the public
authority takes possession, and Landlord and Tenant shall account for rental as
of that date. Such termination shall be without prejudice to the rights of
either party to recover compensation from the condemning authority for any loss
or damage caused by the condemnation. Neither party shall have any rights in or
to any award made to the other by the condemning authority.

18. Subordination.

Tenant accepts this Lease subject and subordinate to
any mortgage, deed of trust or other lien presently existing or hereafter
arising upon the Leased Premises, or upon the Building and to any renewals,
refinancing and extensions thereof, but Tenant agrees that any such mortgagee
shall have the right at any time to subordinate such mortgage, deed of trust or
other lien to this Lease on such terms and subject to such conditions as such
mortgage may deem appropriate in its discretion. Landlord is hereby irrevocably
vested with full power and authority to subordinate this Lease to any mortgage,
deed of trust or other lien now existing or hereafter placed upon the Leased
Premises of the Building, and Tenant agrees upon demand to execute such further
instruments subordinating this Lease or attorning to the holder of any such
liens as Landlord may request. In the event that Tenant should fail to execute
any instrument of subordination herein required to be executed by Tenant
promptly as requested, Tenant hereby irrevocably constitutes Landlord as its
attorney-in-fact to execute such instrument in Tenant’s name, place and stead,
it being agreed that such power is one coupled with an interest. Tenant agrees
that it will from time to time upon request by Landlord execute and deliver to
such persons as Landlord shall request a statement in recordable form certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as so modified), stating
the dates to which rent and other charges payable under this Lease have been
paid, stating that Landlord is not in default hereunder (or if Tenant alleges a
default stating the nature of such alleged default) and further stating such
other matters as Landlord shall reasonably require.

Page 6 of 9

19. Notice.

Any notice required or permitted under this
Lease shall be deemed sufficiently given or served if sent by United States
certified mail, return receipt requested, addressed as follows:

	
 

	
 

	
If to Landlord to:

	
 

	
 

	
Ken Moore

	
 

	
49630 Lincoln Drive

	
 

	
Indio, CA 92201

	
 

	
 

	
 

	
-with a copy to-

	
 

	
 

	
 

	
Fern Frost

	
 

	
PO Box 532

	
 

	
Redwood Estates, CA 95044

	
 

	
 

	
If to Tenant to:

	
 

	
 

	
 

	
Steven Reichert, General
  Counsel

	
 

	
CapSource Financial, Inc.

	
 

	
2305 Canyon Boulevard,
  Suite 103

	
 

	
Boulder, CO 80302

	
 

	
 

	
 

	
-with a copy to-

	
 

	
 

	
 

	
Fred Boethling, President

	
 

	
CapSource Financial, Inc.

	
 

	
2305 Canyon Boulevard,
  Suite 103

	
 

	
Boulder, CO 80302 

Landlord and Tenant shall
each have the right from time to time to change the place notice is to be given
under this paragraph by written notice thereof to the other party.

20.
Brokers.

Tenant represents that
Tenant was not shown the Premises by any real estate broker or agent and that
Tenant has not otherwise engaged in, any activity which could form the basis
for a claim for real estate commission, brokerage fee, finder’s fee or other
similar charge, in connection with this Lease.

21. Waiver.

No waiver of any default of
Landlord or Tenant hereunder shall be implied from any omission to take any
action on account of such default if such default persists or is repeated, and
no express waiver shall affect any default other than the default specified in
the express waiver and that only

Page 7 of 9

for
the time and to the extent therein stated. One or more waivers by Landlord or
Tenant shall not be construed as a waiver of a subsequent breach of the same
covenant, term or condition.

22.
Memorandum of Lease.

The
parties hereto contemplate that this Lease should not and shall not be filed
for record, but in lieu thereof, at the request of either party, Landlord and
Tenant shall execute a Memorandum of Lease to be recorded for the purpose of
giving record notice of the appropriate provisions of this Lease.

23.
Headings.

The
headings used in this Lease are for convenience of the parties only and shall
not be considered in interpreting the meaning of any provision of this Lease.

24.
Successors.

The
provisions of this Lease shall extend to and be binding upon Landlord and
Tenant and their respective legal representatives, successors and assigns.

25.
Consent.

Landlord
shall not unreasonably withhold or delay its consent with respect to any matter
for which Landlord’s consent is required or desirable under this Lease.

26.
Performance.

If
there is a default with respect to any of Landlord’s covenants, warranties or
representations under this Lease, and if the default continues more than
fifteen (15) days after notice in writing from Tenant to Landlord specifying
the default, Tenant may, at its option and without affecting any other remedy
hereunder, cure such default and deduct the cost thereof from the next accruing
installment or installments of rent payable hereunder until Tenant shall have
been fully reimbursed for such expenditures, together with interest thereon at
a rate equal to the lessor of twelve percent (12%) per annum or the then
highest lawful rate. If this Lease terminates prior to Tenant’s receiving full
reimbursement, Landlord shall pay the unreimbursed balance plus accrued
interest to Tenant on demand.

27.
Compliance with Law.

Tenant
shall comply with all laws, orders, ordinances and other public requirements
now or hereafter pertaining to Tenant’s use of the Leased Premises. Landlord
shall comply with all laws, orders, ordinances and other public requirements
now or hereafter affecting the Leased Premises.

28.
Final Agreement.

This
Agreement terminates and supersedes all prior understandings or agreements on
the subject matter hereof. This Agreement may be modified only by a further
writing that is duly executed by both parties.

29.
Governing Law.

Page 8 of 9

This Agreement shall be
governed, construed and interpreted by, through and under the Laws of the State
of California.

IN WITNESS WHEREOF, the parties have
executed this Lease as of the day and year first above written.

LANDLORD:

	
 

	
 

	

	
 

	

	
 

	
Kenneth Moore

	
 

	
 

	

	
 

	

	
 

	
Marjorie Moore

	
 

	
 

	

	
 

	

	
 

	
Fern Frost for the The Surviving Spouse’s Trust of the Frost 1997
  Revocable Trust

	
 

	

	
 

	

	
 

	
Fern Frost for The Martial QTIP Trust of the Frost 1997 Revocable
  Trust 

	
 

	

	
 

	

	
 

	
Fern Frost for the Family Bypass Trust of the Frost 1997 Revocable
  Trust

TENANT:

CapSource Equipment Company, Inc.

	
 

	
 

	
By

	

	
 

	

	
Its

	
President 

	
 

	

Page 9 of 9

	Schedule 4.9 	Contracts 

None.

	Schedule 4.11 	Litigation
or Claims 

None.

	
 

	
 

	
Schedule 4.13(a)

	
Prime Time Equipment Employees

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Category

	
 

	
Name

	
 

	
Compensation

	
 

	
 

	
   Pay Date

	
 

	
Salesman

	
 

	
Charlie Silvers

	
 

	
$3000 per mo. for
  administrative work 30% of net profit on sales by Charlie

	
 

	
 

	
semi-monthly 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Salesman

	
 

	
Donny Blount

	
 

	
30% of net profit on sales by
  Donny

	
 

	
 

	
weekly 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Clerical

	
 

	
Linda Hoffman

	
 

	
$3600 per month

	
 

	
 

	
semi-monthly 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Clerical

	
 

	
Marge Lundry

	
 

	
$1600 per week 

	
 

	
 

	
weekly 

	
 

	
 

	
 

	
 

	
 

	
DMV doc fees charged to
  customer

	
 

	
 

	
weekly

	
 

	
 

	
 

	
 

	
 

	
Doc fees @$45 if not charged
  to customer

	
 

	
 

	
weekly

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Shop Mgr

	
 

	
Gary Witzel

	
 

	
$900 per week

	
 

	
 

	
weekly 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
All above info is as of date: 4/24/06.

	
 

	
 

	
 

	
 

	Schedule 4.13(b) 	Material
Adverse Change in Relationship with Employees 

None.

	
 

	
 

	
Schedule 4.13(C)

	
Prime Time Equipment Commission Salesmen

	
 

	
 

	
 

	
Charlie
  Silvers

	
 

	
30% of
  net sales by Charlie

	
 

	
 

	
 

	
Donny
  Blount

	
 

	
30% of
  net sales. by Donny

	Schedule 4.13(d)  	Agreements
regarding Union Activity 

None.

	
 

	
 

	
Schedule 4.13(e)

	
Prime Time Equipment Employee Benefits

	
 

	
 

	
 

	
 

	
 

	
Category

	
 

	
Name

	
 

	
Benefits

	
 

	
 

	
 

	
 

	
 

	
Salesman

	
 

	
Charlie Silvers

	
 

	
2 week paid vacation/no set amount
  of personal days 

	
 

	
 

	
 

	
 

	
 

	
Salesman

	
 

	
Donny Blount

	
 

	
none 

	
 

	
 

	
 

	
 

	
 

	
Clerical

	
 

	
Linda Hoffman

	
 

	
2 week paid vacation/no set amount
  of personal days 

	
 

	
 

	
 

	
 

	
 

	
Clerical

	
 

	
Marge Lundry

	
 

	
2 week paid vacation/no set amount
  of personal days Kaiser medical insurance
  

	
 

	
 

	
 

	
 

	
 

	
Shop Mgr

	
 

	
Gary Witzel

	
 

	
2 week paid vacation/no set amount
  of personal days 

	
 

	
 

	
Schedule 4.15(a)

	
Prime Time Equipment Licenses &
  Permits 

	
 

	
 

	
Dealer License #37300

	
 

	
 

	
 

	
Sales Tax Resale Permit #SR Y EH
  97-498904

	
 

	
 

	
 

	
Internal Revenue Service FET Registration
  #77-99-0013-Q

	
 

	
 

	
 

	
No Business License ever acquired

	
 

	Schedule 4.15(b)	Environmental
Matters 

None.

	Schedule 4.18 	Competing
Interests 

None.

	
 

	
 

	
Schedule 4.19

	
Prime Time Insurance Policies and Bonds

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Bonds:

	
 

	
 
	
 

	
 
	
 

	
 

	
 

	
 

	
Dealer Bond #868201C

	
 

	
$50,000.00 

	
 

	
4/30/05-4/30/06

	
 

	
 

	
Sales Tax Bond #223380

	
 

	
$  2,300.00 

	
 

	
2/22/06-2/22/07

	
 

	
 

	
Verifier Bond (Linda Hoffman)

	
 

	
 

	
 

	
3/10/06-3/10/07

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Insurance Policies

	
 

	
 

	
 

	
 

	
 

	
 

	
Workmen’s Comp-First Comp policy
  #WVS0018892-01 3/1/06-3/1/07 Garage
  Policy-ISU Willingham #GP6215198 4/8/06-4/8/07 General Liability-Scottsdale Insurance #CLS 1106534 renewal date 5/28/06
  Property-Scottsdale Insurance #CPS
  0649307 renewal date 5/28/06 Auto Policy-Progressive Insurance #02151911-5 renewal
  date 5/23/06

	
 

	
 

	
 

	
 

	
 

	
 

	
Schedule 4.21

	
Prime Time Past
  Due Receivables

	
 

	
 

	
 

	
 

	
 

	
Advanced Trailer Sales

	
 

	
$

	
570.46
  

	
 

	
EMCO Equipment Sales

	
 

	
$

	
200.00 

	
 

	
GE Equipment Sales

	
 

	
$

	
1,657.90
  

	
 

	
H.D. Distribution

	
 

	
$

	
431.55
  

	
 

	
Hyundai Translead

	
 

	
$

	
150.00
  

	
 

	
Northwest Trailer

	
 

	
$

	
1,482.39
  

	
 

	
Quality Fleet

	
 

	
$

	
316.63
  

	
 

	
Xtra Lease Commerce

	
 

	
$

	
1,328.60
  

	
 

	
Xtra Lease Fontana

	
 

	
$

	
190.64
  

	
 

	
Xtra Lease WA

	
 

	
$

	
1,136.99 

	
 

	
8 Point Trailers

	
 

	
$

	
(104.77
  

	
)

	
J.B. Trailer

	
 

	
$

	
16.90 

	
 

	
Gabriel Herrera

	
 

	
$

	
88.00 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
$

	
7,465.29
  

	
 

Settlement
Statement

Acquisition of Certain Assets of Prime Time Equipment, Inc.

By

CapSource Equipment Company, Inc.
Closing Date: May
1, 2006

4/30/2006

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Book Value
  at 

  4/30/2006

  (per Bal Sheet

	
 

	
Amount

  (Excluded)

	
 

	
Amount

  Included

	
 

	
Purchase

  Price

  Allocation

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
Acquired

	
 

	
 

	
 

	
 

	

	
 

	

	
 

	

	
 

	

	
 

	
ASSETS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Checking account
  - San Jose Nat’l

	
 

	
$

	
143,421.97

	
(

	
$

	
143,421.97

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
Checking account
  - Wells Fargo Bank

	
 

	
$

	
116,208.64

	
(

	
$

	
116,208.64

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
Petty Cash - (In
  Fontana)

	
 

	
$

	
2,938.00

	
 

	
$

	
0.00

	
 

	
$

	
2,938.00

	
 

	
$

	
2,938.00 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Accounts
  Receivable

	
 

	
$

	
412,070.54

	
 

	
$

	
0.00

	
 

	
$

	
412,070.54

	
 

	
$

	
412,070.54 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Fixed Assets -
  Net (Phone System)

	
 

	
$

	
3,702.80

	
 

	
$

	
0.00

	
 

	
$

	
3,702.80

	
 

	
$

	
24,000.00 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Inventory:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
New - Hyundai
  Trailers

	
 

	
$

	
464,926.00

	
 

	
$

	
0.00

	
 

	
$

	
464,926.00

	
 

	
$

	
464,926.00 

	
 

	
Celadon Trailers

	
 

	
$

	
271,878.68

	
 

	
$

	
0.00

	
 

	
$

	
271,878.68

	
 

	
$

	
271,878.68 

	
 

	
Skyway Inventory

	
 

	
$

	
3,600.00

	
 

	
$

	
0.00

	
 

	
$

	
3,600.00

	
 

	
$

	
0.00 

	
 

	
Used Trailers

	
 

	
$

	
269,615.00

	
 

	
$

	
0.00

	
 

	
$

	
269,615.00

	
 

	
$

	
269,615.00 

	
 

	
Used Trucks

	
 

	
$

	
5,200.00

	
 

	
$

	
0.00

	
 

	
$

	
5,200.00

	
 

	
$

	
0.00 

	
 

	
Miscellaneous
  Inventory (Excluding auto)

	
 

	
$

	
9,750.00

	
 

	
$

	
0.00

	
 

	
$

	
9,750.00

	
 

	
$

	
0.00 

	
 

	
Miscellaneous
  Inventory (auto only)

	
 

	
$

	
7,500.00

	
(

	
$

	
7,500.00

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
Parts Inventory

	
 

	
$

	
28,928.30

	
 

	
$

	
0.00

	
 

	
$

	
28,928.30

	
 

	
$

	
28,928.30 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Premium Payment
  - Goodwill

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
98,390.30 

	
 

	
 

	
Non-compete
  Agreement

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
400,000.00 

	
 

	
 

	
Prepaid
  Insurance

	
 

	
$

	
11,417.87

	
(

	
$

	
11,280.37

	
)

	
$

	
137.50

	
 

	
$

	
0.00 

	
 

	
Prepaid Licenses

	
 

	
$

	
401.00

	
(

	
$

	
401.00

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
Prepaid Taxes

	
 

	
$

	
35,370.00

	
(

	
$

	
35,370.00

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	
 

	
Total Assets

	
 

	
$

	
1,786,928.80

	
(

	
$

	
314,181.98

	
)

	
$

	
1,472,746.82

	
 

	
$

	
1,972,746.82

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	
 

	
LIABILITIES

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Accounts Payable

	
 

	
$

	
105,908.32

	
(

	
$

	
12,608.77

	
)

	
$

	
93,299.55

	
 

	
$

	
93,299.55 

	
 

	
Sales Tax
  Payable

	
 

	
$

	
9,131.29

	
(

	
$

	
9,131.29

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
Gross FET

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
FET Payable

	
 

	
$

	
33,217.88

	
(

	
$

	
33,217.88

	
)

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
FET Tire Credit

	
(

	
$

	
22,650.88

	
)

	
$

	
22,650.88

	
 

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
 

	
Contracts
  Payable - Insurance

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
0.00

	
 

	
$

	
0.00 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Floor Plan Loan
  Liabilities:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
GE - Hyundai
  Trailers

	
 

	
$

	
554,201.00

	
(

	
$

	
89,275.00

	
)

	
$

	
464,926.00

	
 

	
$

	
464,926.00 

	
 

	
GE - Celadon
  Trailers

	
 

	
$

	
290,606.00

	
(

	
$

	
57,200.00

	
)

	
$

	
233,406.00

	
 

	
$

	
233,406.00 

	
 

	
GE - Used (Misc)
  Trailers

	
 

	
$

	
207,750.00

	
(

	
$

	
44,000.00

	
)

	
$

	
163,750.00

	
 

	
$

	
163,750.00 

	
 

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	
Total
  Liabilities

	
 

	
$

	
1,178,163.61

	
(

	
$

	
222,782.06

	
)

	
$

	
955,381.55

	
 

	
$

	
955,381.55 

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	
 

	
Net Book Value

	
 

	
$

	
608,765.19

	
(

	
$

	
91,399.92

	
)

	
$

	
517,365.27

	
 

	
$

	
1,017,365.27 

	
 

	
 

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
Settlement

	
 

	
 

	
 

	
 

	
 

	
Components
  of Net Purchase Price according to Purchase agreement:

	
 

	
 

	
 

	
 

	
 

	
Net book value received/assumed

	
 

	
$

	
517,365.27
  

	
 

	
Premium above net book value

	
 

	
$

	
100,000.00 

	
 

	
 

	
 

	

	

	
 

	
Net Purchase Price

	
 

	
$

	
617,365.27
  

	
 

	
 

	
 

	

	

	
 

	
 

	
Payments
  to Ken Moore from CapSource Equipment Company, Inc.

	
 

	
 

	
 

	
 

	
Value of Non-compete agreement

	
 

	
$

	
400,000.00
  

	
 

	
 

	
 

	

	

	
 

	
Total cash payment to Ken Moore.

	
 

	
$

	
400,000.00
  

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
Total
  Cash Payments by CapSource Equipment Company at Closing

	
 

	
$

	
1,017,365.27
  

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
Gross
  Purchase Price:

	
 

	
 

	
 

	
 

	
Total Assets Acquired

	
 

	
$

	
1,472,746.82
  

	
 

	
Premium in excess of net book value

	
 

	
$

	
100,000.00
  

	
 

	
Non-compete agreement with Ken Moore

	
 

	
$

	
400,000.00
  

	
 

	
 

	
 

	

	

	
 

	
Gross purchase price

	
 

	
$

	
1,972,746.82
  

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
Settlement:

	
 

	
 

	
 

	
 

	
Assumption of Accounts payable

	
 

	
$

	
93,299.55
  

	
 

	
Assumption of Floor Plan Debt (transfer to Navistar)

	
 

	
$

	
862,082.00
  

	
 

	
Payment to Prime Time Equip., Inc. for personal property (per Bill of
  Sale)

	
 

	
$

	
24,000.00
  

	
 

	
Payment to Prime Time Equip., Inc. for the balance

	
 

	
$

	
593,365.27
  

	
 

	
Payment to Ken
  Moore

	
 

	
$

	
400,000.00
  

	
 

	
 

	
 

	

	

	
 

	
Total payments and assumptions of liabilities

	
 

	
$

	
1,972,746.82
  

	
 

	
 

	
 

	

	

	
 

	Schedule 5.3 	Conflicts
or Violations 

None.

Exhibit 9.1

 

See Commercial Lease Agreement under Schedule 4.8.Exhibit 10.2 to General Mills, Inc. Form 10-K for fiscal year ended May 27, 2007

EXHIBIT 10.2

 

GENERAL MILLS, INC.

 

1998 EMPLOYEE STOCK PLAN

 

GENERAL MILLS, INC.

 

1998 EMPLOYEE STOCK PLAN

 

 

	
             
 	
            1.
 	
            PURPOSE OF THE PLAN
 

 

The purpose of the General Mills, Inc. 1998 Employee Stock Plan (the “Plan”) is to attract and retain able employees by rewarding employees of General Mills, Inc., its subsidiaries and affiliates (defined as entities in which General Mills, Inc. has a significant equity or other interest) (collectively, the “Company”) and to align the interests of employees with those of the stockholders of the Company through compensation that is based on the Company’s stock. Grants may be made to employees under the Plan in lieu of salary increases and certain other compensation and benefits.

 

 

	
             
 	
            2.
 	
            EFFECTIVE DATE AND DURATION OF PLAN
 

 

This Plan shall become effective as of September 28, 1998.

 

 

	
             
 	
            3.
 	
            ELIGIBLE PERSONS
 

 

Only persons who are employees of the Company shall be eligible to receive grants of Stock Options, Restricted Stock or Restricted Stock Units (each defined below) and become “Participants” under the Plan.

 

 

	
             
 	
            4.
 	
            AWARD TYPE
 

 

Under this Plan, the Compensation Committee of the Company’s Board of Directors (the “Committee”) may award Participants options (“Stock Options”) to purchase common stock of the Company ($.10 par value) (“Common Stock”). The grant of a Stock Option entitles the Participant to purchase shares of Common Stock at an “Exercise Price” established by the Committee. The Exercise Price for each share of Common Stock issuable under a Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. “Fair Market Value” shall equal the closing price of the Common Stock on the New York Stock Exchange on the date of grant. The Committee may also grant Participants shares of Common Stock or the right to receive shares of Common Stock subject to certain restrictions (“Restricted Stock” or
“Restricted Stock Units”) (Stock Options, Restricted Stock and Restricted Stock Units are sometimes referred to as “Awards”).

 

 

	
             
 	
            5.
 	
            STOCK OPTION TERM AND TYPE
 

 

Stock Options granted under the Plan shall be Non-Qualified Stock Options governed by Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”). The term of any Stock Option granted under the Plan shall be determined by the Committee, provided that the term of a Stock Option shall not exceed 10 years and one month.

 

 

	
             
 	
            6.
 	
            COMMON STOCK SUBJECT TO THE PLAN
 

 

	
             
 	
            a)
 	
            Maximum Shares Available for Delivery. Subject to Section 6(b), the maximum number of shares of Common Stock available for issuance to Participants under the Plan shall be 28,000,000.
 

 

In addition, any Common Stock covered by a Stock Option granted under the Plan, which is forfeited, cancelled or expires in whole or in part shall be deemed not to be delivered for purposes of determining the maximum number of shares of Common Stock available for grants under the Plan.

 

If any Stock Option is exercised by tendering Common Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of the Stock Option under the Plan, only the number of shares of Common Stock issued net of the Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares available for grants under the Plan. Upon forfeiture or termination of Restricted Stock or Restricted Stock Units prior to vesting, the shares of Common Stock subject thereto shall again be available for Awards under the Plan.

 

	
             
 	
            b)
 	
            Adjustments for Corporate Transactions. If a corporate transaction has occurred affecting the Common Stock such that an adjustment to outstanding awards is required to preserve (or prevent enlargement of) the benefits or potential benefits intended at the time of grant, then in such manner as the Committee deems equitable, an appropriate adjustment shall be made to (i) the number and kind of shares which may be awarded under the Plan; (ii) the number and kind of shares subject to outstanding awards; (iii) the number of shares credited to an account; and, if applicable, (iv) the exercise price of outstanding Options; provided that the number of shares of Common Stock subject to any Option denominated in Common Stock shall always be a whole number. For this purpose a corporate transaction includes, but is not limited to, any dividend or
other distribution (whether in the form of cash, Common Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transactions. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option under this paragraph shall be made in a manner that will not result in a new grant of an Option under Code Section 409A.
 

 

	
             
 	
            c)
 	
            Limits on Distribution. Distribution of shares of Common Stock or other amounts under the Plan shall be subject to the following:
 

 

	
             
 	
            (i)
 	
            The total number of shares of Common Stock that shall be available for Restricted Stock and Restricted Stock Unit Awards under the Plan shall be limited to 15% of the total shares authorized for Awards hereunder. 
 

 

	
             
 	
            (ii)
 	
            Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.
 

 

- 2 -

	
             
 	
            (iii)
 	
            To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.
 

 

	
             
 	
            d)
 	
            The Committee, in its discretion, may require as a condition to the grant of Awards, the deposit of Common Stock owned by the Participant receiving such grant, and the forfeiture of such grants, if such deposit is not made or maintained during the required holding period. Such shares of deposited Common Stock may not be otherwise sold or disposed of during the applicable holding period or restricted period. The Committee may also determine whether any shares issued upon exercise of a Stock Option shall be restricted in any manner. 
 

 

 

	
             
 	
            7.
 	
            EXERCISE OF STOCK OPTIONS
 

 

	
             
 	
            a)
 	
            Exercise. Except as provided in Sections 11 and 12 (Change of Control and Termination of Employment), each Stock Option may be exercised only in accordance with the terms and conditions of the Stock Option grant and during the periods as may be established by the Committee. Twenty percent of each Stock Option granted under the Plan in lieu of salary increases and certain other compensation and benefits may be exercised immediately upon granting and, subject to the Participant’s continued employment with the Company, additional 20% portions of such Stock Option shall become exercisable each year thereafter. All other Stock Options granted hereunder may be exercised only after three years of the Participant’s continued employment with the Company following the date of the Stock Option grant.
 

 

A Participant exercising a Stock Option shall give notice to the Company of such exercise and of the number of shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a business day at the executive offices of the Company.

 

	
             
 	
            b)
 	
            Payment. The Exercise Price shall be paid to the Company at the time of such exercise, subject to any applicable rule or regulation adopted by the Committee: 
 

 

	
             
 	
            (i)
 	
            in cash (including check, draft, money order or wire transfer made payable to the order of the Company);
 

 

	
             
 	
            (ii)
 	
            through the tender of shares of Common Stock owned by the Participant (by either actual delivery or attestation); or
 

 

	
             
 	
            (iii)
 	
            by a combination of (i) and (ii) above.
 

 

- 3 -

For determining the amount of the payment, Common Stock delivered pursuant to (ii) or (iii) shall have a value equal to the Fair Market Value of the Common Stock on the date of exercise.

 

	
             
 	
            c)
 	
            Deferrals. The Committee may permit or require Participants to defer receipt of any Common Stock issuable upon exercise of a Stock Option, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest, or dividend equivalents, including converting such credits into deferred Common Stock equivalents.
 

 

 

	
             
 	
            8.
 	
            RESTRICTED STOCK AND RESTRICTED STOCK UNITS
 

 

With respect to Awards of Restricted Stock and Restricted Stock Units, the Committee shall:

 

	
             
 	
            a)
 	
            select Participants to whom Awards will be made, provided that Restricted Stock Units may only be awarded to those employees of the Company who are employed in a country other than the United States;
 

 

	
             
 	
            b)
 	
            determine the number of shares of Restricted Stock or the number of Restricted Stock Units to be awarded;
 

 

	
             
 	
            c)
 	
            determine the length of the restricted period, which shall be no less than one year; 
 

 

	
             
 	
            d)
 	
            determine the purchase price, if any, to be paid by the Participant for Restricted Stock or Restricted Stock Units; and
 

 

	
             
 	
            e)
 	
            determine any restrictions other than those set forth in this Section 8.
 

 

Subject to the restrictions set forth in this Section 8, each Participant who receives Restricted Stock shall have all rights as a stockholder with respect to such shares, including the right to vote the shares and receive dividends and other distributions.

 

Each Participant who receives Restricted Stock Units shall be eligible to receive, at the expiration of the applicable restricted period, one share of Common Stock for each Restricted Stock Unit awarded, and the Company shall issue to each such Participant that number of shares of Common Stock. Participants who receive Restricted Stock Units shall have no rights as stockholders with respect to such Restricted Stock Units until such time as share certificates for Common Stock are issued to the Participants; provided, however, that quarterly during the applicable restricted period for all Restricted Stock Units awarded hereunder, the Company shall pay to each such Participant an amount equal to the sum of all dividends and other distributions paid by the Company during the prior quarter on that equivalent number of shares of Common Stock.

 

 

- 4 -

 

	
             
 	
            9.
 	
            TRANSFERABILITY OF STOCK OPTIONS
 

 

Except as otherwise provided by rules of the Committee, no Stock Options shall be transferable by a Participant otherwise than (i) by the Participant’s last will and testament or (ii) by the applicable laws of descent and distribution, and such Stock Options shall be exercised during the Participant’s lifetime only by the Participant or his or her guardian or legal representative. Except as otherwise provided in Section 8, no shares of Restricted Stock and no Restricted Stock Units shall be sold, exchanged, transferred, pledged or otherwise disposed of during the restricted period.

 

 

	
             
 	
            10.
 	
            TAXES
 

 

Whenever the Company issues Common Stock under the Plan, the Company may require the recipient to remit to the Company an amount sufficient to satisfy any Federal, state or local tax withholding requirements prior to the delivery of such Common Stock, or, in the discretion of the Committee, upon the election of the Participant, the Company may withhold from the shares to be delivered shares sufficient to satisfy all or a portion of such tax withholding requirements.

 

 

	
             
 	
            11.
 	
            CHANGE OF CONTROL
 

 

Each outstanding Stock Option shall become immediately and fully exercisable for a period of one (1) year following the date of the following occurrences, each constituting a “Change of Control”:

 

	
             
 	
            a)
 	
            The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of the Company where such acquisition causes such Person to own 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not be deemed to result in a Change of Control:  (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 20% as a result of a transaction described in clause (i) or (ii) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 20% or more of the Outstanding Voting Securities; or
 

 

	
             
 	
            b)
 	
            Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least of a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
 

 

- 5 -

	
             
 	
            c)
 	
            The approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”) or, if consummation of such Business Combination is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Voting Securities, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
 

 

	
             
 	
            d)
 	
            approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
 

 

After such one (1) year period the normal Stock Option exercise provisions of the Plan shall govern. Notwithstanding any other provision of the Plan, but subject to Section 5, in the event a Participant’s employment with the Company is terminated within two (2) years of any of the events specified in (a), (b), (c) or (d), all outstanding Stock Options of such Participant at that date of termination shall be exercisable for a period of six (6) months beginning on the date of termination.

 

With respect to Stock Option grants outstanding as of the date of any such Change of Control which require the deposit of owned Common Stock as a condition to obtaining rights, the deposit requirement shall be terminated as of the date of the Change of Control and any such deposited stock shall be promptly returned to the Participant.

 

- 6 -

In the event of a Change of Control, a Participant shall vest in all shares of Restricted Stock and Restricted Stock Units, effective as of the date of such Change of Control, and any deposited shares of Common Stock shall be promptly returned to the Participant.

 

 

	
             
 	
            12.
 	
            TERMINATION OF EMPLOYMENT
 

 

	
             
 	
            a)
 	
            Resignation or Termination for Cause. If the Participant’s employment by the Company is terminated by either
 

 

	
             
 	
            (i)
 	
            the voluntary resignation of the Participant, or
 

 

	
             
 	
            (ii)
 	
            a Company discharge due to Participant’s illegal activities, poor work performance, misconduct or violation of the Company’s policies or practices, 
 

 

then Participant’s Stock Options shall terminate three months after such termination (but in no event beyond the original full term of the Stock Options) and no Stock Options shall become exercisable after such termination, and all shares of Restricted Stock and Restricted Stock Units which are subject to restriction on the date of termination shall be forfeited.

 

	
             
 	
            b)
 	
            Other Termination. If the Participant’s employment by the Company terminates for any reason other than specified in Sections 11, 12 (a), (c), (d) or (e), the following rules shall apply:
 

 

	
             
 	
            (i)
 	
            In the event that, at the time of such termination, the sum of the Participant’s age and service with the Company equals or exceeds 70, the following shall apply:
 

 

	
             
 	
            (A)
 	
            The Participant’s outstanding Stock Options shall continue to become exercisable (and remain exercisable), and shares of Restricted Stock and Restricted Stock Units subject to share deposit requirements shall continue to vest, each according to the schedule established at the time of grant, unless otherwise provided in the applicable Award agreement.
 

 

	
             
 	
            (B)
 	
            Shares of Restricted Stock and Restricted Stock Units not subject to share deposit requirements or attributable to a Participant whose termination of employment is on or after August 1, 2003, shall fully vest.
 

 

	
             
 	
            (ii)
 	
            In the event that, at the time of such termination, the sum of Participant’s age and service with the Company is less than 70, Participant’s outstanding unexercisable Stock Options and unvested Restricted Stock and Restricted Stock Units shall become exercisable or vest, as the case may be, as of the date of 
 

 

- 7 -

termination, in a pro-rata amount based on the full months of employment completed during the full vesting period from the date of grant to the date of termination with such newly-vested Stock Options and Stock Options exercisable on the date of termination remaining exercisable for the lesser of one year from the date of termination and the original full term of the Stock Option. All other Stock Options, shares of Restricted Stock and Restricted Stock Units shall be forfeited as of the date of termination. Provided, however, that if the Participant is an executive officer of the Company, the Participant’s outstanding Stock Options which, as of the date of termination are not yet exercisable, shall become exercisable effective as of the date of such termination and, with all outstanding Stock Options already exercisable on the date of termination, shall remain exercisable for the
lesser of one year following the date of termination and the original full term of the Stock Option, and all shares of Restricted Stock and Restricted Stock Units shall vest as of the date of termination.

 

	
             
 	
            c)
 	
            Death. If a Participant dies while employed by the Company, any Stock Option previously granted under this Plan may be exercised by the person designated in such Participant’s last will and testament or, in the absence of such designation, by the Participant’s estate, to the full extent that such Stock Option could have been exercised by such Participant immediately prior to death. Any outstanding Stock Options granted on or after June 1, 2002, which, as of the date of death, are not yet exercisable, shall fully vest and become exercisable upon death. Outstanding Stock Options granted prior to June 1, 2002, which, as of the date of death, are not yet exercisable, shall fully vest and become exercisable in a pro-rata amount, based on the full months of employment completed during the full vesting period of the Stock Option from
the date of grant to the date of death.
 

 

With respect to Stock Options which require the deposit of owned Common Stock as a condition to obtaining exercise rights, in the event a Participant dies while employed by the Company, such Stock Options may be exercised as provided in the first paragraph of this Section 12(c) and any owned Common Stock deposited by the Participant pursuant to such grant shall be promptly returned to the person designated in such Participant’s last will and testament or, in the absence of such designation, to the Participant’s estate, and all requirements regarding deposit by the Participant shall be terminated.

 

A Participant who dies during any applicable restricted period, for Restricted Stock or Restricted Stock Units granted on or after June 1, 2002, shall fully vest in such shares of Restricted Stock or Restricted Stock Units, effective as the date of death. A Participant who dies during any applicable restricted period, for any Restricted Stock or Restricted Stock Units granted prior to June 1, 2002, shall vest in a proportionate number of such shares of Restricted Stock or Restricted Stock Units, effective as of the date of death. Such proportionate vesting shall be pro-rata, based on the number of full months of employment completed during the restricted period prior to the date of death, as a percentage of the applicable restricted period.

 

 

- 8 -

	
             
 	
            d)
 	
            Retirement. The Committee
shall determine, at the time of grant, the treatment of the Stock Options, Restricted Stock and Restricted Stock Units upon the
retirement of the Participant. Unless other terms are specified in the original Grant, if the termination of employment is due to
a Participant’s retirement on or after age 55, the Participant may exercise a Stock Option, subject to the original terms and
conditions of the Stock Option and shall fully vest in all shares of Restricted Stock or Restricted Stock Units effective as of
the date of retirement (unless any such Award specifically provides otherwise).
 

 

	
             
 	
            e)
 	
            Spin-offs. If the termination of employment is due to the cessation, transfer, or spin-off of a complete line of business of the Company, the Committee, in its sole discretion, shall determine the treatment of all outstanding Awards under the Plan.
 

 

 

	
             
 	
            13.
 	
            ADMINISTRATION OF THE PLAN
 

 

	
             
 	
            a)
 	
            Administration. The authority to control and manage the operations and administration of the Plan shall be vested in Committee in accordance with this Section 13.
 

 

	
             
 	
            b)
 	
            Selection of Committee. The Committee shall be selected by the Board, and shall consist of two or more members of the Board.
 

 

	
             
 	
            c)
 	
            Powers of Committee. The authority to manage and control the operations and administration of the Plan shall be vested in the Committee, subject to the following:
 

 

	
             
 	
            (i)
 	
            Subject to the provisions of the Plan, the Committee will have the authority and discretion to select from among the eligible Company employees those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 14) to cancel or suspend Awards. In making such determinations, the Committee may take into account the nature of services rendered by the individual, the individual’s present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.
 

 

	
             
 	
            (ii)
 	
            The Committee will have the authority and discretion to establish terms and conditions of Awards as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.
 

 

	
             
 	
            (iii)
 	
            The Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
 

 

- 9 -

	
             
 	
            (iv)
 	
            Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding.
 

 

	
             
 	
            d)
 	
            Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
 

 

 

	
             
 	
            14.
 	
            AMENDMENTS OF THE PLAN
 

 

The Committee may from time to time prescribe, amend and rescind rules and regulations relating to the Plan. Subject to the approval of the Board of Directors, where required, the Committee may at any time terminate, amend, or suspend the operation of the Plan, provided that no action shall be taken by the Committee to:

 

	
             
 	
            a)
 	
            permit granting of Stock Options at less than Fair Market Value; and
 

 

	
             
 	
            b)
 	
            except as provided in Section 6, permit the repricing of outstanding Stock Options.
 

 

No termination, modification, suspension, or amendment of the Plan shall alter or impair the rights of any Participant pursuant to an outstanding Award without the consent of the Participant. There is no obligation for uniformity of treatment of Participants under the Plan.

 

 

	
             
 	
            15.
 	
            FOREIGN JURISDICTIONS
 

 

The Committee may adopt, amend, and terminate such arrangements, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to make available tax or other benefits of the laws of any foreign jurisdiction, to employees of the Company who are subject to such laws and who receive Awards under the Plan.

 

 

	
             
 	
            16.
 	
            NOTICES
 

 

All notices to the Company regarding the Plan shall be in writing, effective as of actual receipt by the Company, and shall be sent to:

 

General Mills, Inc.

Number One General Mills Boulevard

Minneapolis, Minnesota  55426

Attention:  Corporate Compensation

 

 

 

- 10 -

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