Document:

Unassociated Document

 

    Exhibit
10.1

     

    ASSET
PURCHASE AGREEMENT

     

    among

     

    DCDC
ACQUISITION COMPANY LLC,

     

    TIER
ELECTRONICS LLC,

     

    JEFFREY
REICHARD

     

    and

     

    ZBB
ENERGY CORPORATION

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSET
PURCHASE AGREEMENT

     

    THIS
ASSET PURCHASE AGREEMENT is made and entered into as of the 21st day of January,
2011, by and among DCDC ACQUISITION COMPANY LLC, a Wisconsin limited liability
company (the “Buyer”), TIER ELECTRONICS LLC, a Wisconsin limited liability
company (the “Seller”), JEFFREY REICHARD (the “Member” or “Jeff”) and, solely
for purposes of agreeing to be bound by certain covenants set forth in Section 2.4, Section 4.2(b), Section 4.2(d), Section 4.2(f), Section 4.2(g), Section 4.2(j), Section 9.1(c), Section 9.7(e), Section 9.7(f), Section 9.12, Section 9.13, Section 9.15, Section 9.16, Section 9.17 and
Section 9.18,
below, and holding certain rights granted to it in Section 9.3, Section 9.4 and Section 9.11, below,
ZBB ENERGY CORPORATION, a Wisconsin corporation and the owner of all of the
membership interests of the Buyer (the “Buyer Parent”). Capitalized terms used
but not otherwise defined herein shall have the meaning assigned to such terms
in Article XII,
below.

     

    WITNESSETH:

     

    WHEREAS,
the Seller is engaged in the business of developing, manufacturing, marketing
and selling power electronic products for/to original equipment manufacturers in
various industries (the “Subject Business”);

     

    WHEREAS,
the Seller desires to sell the Subject Business and substantially all of the
assets employed by the Seller in connection with the Subject Business to the
Buyer, and the Buyer desires to purchase the Subject Business and such assets
from the Seller, on the terms and conditions set forth herein; and

     

    WHEREAS,
the Member is the owner of all of the issued and outstanding membership
interests of the Seller and will benefit substantially from the transactions
contemplated herein.

     

    NOW,
THEREFORE, the Buyer, the Seller, the Member and the Buyer Parent, in
consideration of the mutual promises hereinafter set forth, do hereby promise
and agree as follows:

     

    ARTICLE
I

     

    Assets To Be
Purchased

     

    1.1.       
Subject
Assets.  Subject
to the terms and conditions set forth in this Agreement, the Seller agrees to
sell to the Buyer, and the Buyer agrees to purchase from the Seller, at the
Closing, substantially all of the assets, tangible and intangible, owned by the
Seller and used in connection with the operation of the Subject Business,
including, without limitation, the following:

     

    (a)           All
Tangible Assets; provided that the
Server shall be subject to the terms and conditions of the IP License and
Warranty Bill of Sale;

     

    (b)           All
Inventory;
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           All
deposits and prepaid items and expenses of the Subject Business;

     

    
      	
               
      

            	
              (d)

            	
              All
      accounts receivable of the Subject
Business;

            

    

     

    
      	
               
      

            	
              (e)

            	
              All
      cash and cash equivalent assets of the Subject
  Business;

            

    

     

    (f)           All
Customer and Supplier Lists of the Subject Business, subject to the terms and
conditions of the IP License and Warranty Bill of Sale;

     

    (g)           All
Intellectual Property (and all licenses thereto) other than the Database
Program, subject to the terms and conditions of the IP License and Warranty Bill
of Sale;

     

    (h)           The
goodwill of the Subject Business;

     

    (i)           To
the extent their transfer is permitted by law and subject to obtaining any and
all required consents to transfer, all Governmental Authorizations, product
registrations and applications therefor used in the operation of the Subject
Business;

     

    (j)           All
Assumed Contracts; and

     

    (k)           All
Records.

     

    All of
the assets being purchased by the Buyer as specified in this Section 1.1 other
than the Excluded Assets are hereinafter referred to as the “Subject
Assets”.

     

    1.2.        Excluded
Assets.  Notwithstanding
the provisions of Section 1.1, above,
the Subject Assets shall not include the following assets (collectively, the
“Excluded Assets”):

     

    (a)           All
rights to any refunds of income Taxes relating to the Subject Assets or the
Subject Business for all periods ending on or before the Closing
Date;

     

    (b)           All
insurance policies held by the Seller and all rights and claims
thereunder;

     

    (c)           All
Plans;

     

    (d)           All
minute books, membership interest records and Tax returns of the
Seller;

     

    (e)           The
trailer located at Member’s home;

     

    (f)           The
Seller’s oscilloscope Fluke 192B; and

     

    (g)           The
Database Program.
 

    
      
         

      

      
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    ARTICLE
II

     

    Closing; Purchase
Price

     

    2.1.        Closing.  The
Closing shall be held at the offices of Godfrey & Kahn, S.C. located at 780
North Water Street, Milwaukee, Wisconsin at 10:00 a.m. Central Time on the
date hereof, or at such other time and/or place as the Seller and the Buyer
shall mutually agree.

     

    2.2.        Purchase
Price.  The
consideration for the Subject Assets (the “Purchase Price”) shall be an amount
equal to the sum of (a) One Million Three Hundred Fifty Thousand Dollars
($1,350,000) (the “Note Purchase Price”), plus (b) the Stock Purchase
Price.  The Purchase Price shall be paid as provided in Section 2.3,
below.

     

    2.3.        Note; Payment of M&I
Indebtedness; Assumed Liabilities.  At
the Closing, the Buyer shall:

     

    (a)           Deliver
to the Seller a promissory note in a principal amount equal to the Note Purchase
Price in the form of Exhibit
2.3(a) attached hereto (the “Note”);

     

    (b)           Deliver,
or cause to be delivered, to M&I, by wire transfer of immediately available
funds to a bank account designated by M&I, an amount equal to the M&I
Indebtedness; and

     

    (c)           Assume
the Assumed Liabilities as provided in Article III,
below.

     

    2.4.        Subject
Shares.  At
the Closing, the Buyer Parent shall deliver to the Seller stock certificate(s)
representing eight hundred thousand (800,000) unregistered and restricted shares
of Common Stock (the “Subject Shares”).

     

    2.5.        Allocation of Purchase
Price.  The
Seller, the Member and the Buyer agree to allocate the Purchase Price and the
Assumed Liabilities among the Subject Assets as soon as reasonably practicable
after the Closing Date in accordance with a mutually agreed upon allocation;
provided, however, all Tangible
Assets and amortizable Intellectual Property shall be valued at book value as
set forth on the books and records of Seller.  The Seller, the Member
and the Buyer shall file all Tax returns, reports and forms, including, without
limitation, Form 8594, consistent with such allocation.  The Seller,
the Member and the Buyer shall not take any position for Tax purposes (whether
in audits, Tax returns or otherwise) that is inconsistent with such allocation
unless required to do so by an applicable Legal Requirement.

     

    ARTICLE
III

     

    Assumption of
Liabilities

     

    As
partial consideration for the Subject Assets, the Buyer shall assume and perform
the Assumed Liabilities.  Except for the Assumed Liabilities, the
Buyer shall not be obligated under, nor shall the Buyer be or become liable for,
any obligation, Contract, debt or liability of the Seller or the Subject
Business, including, without limitation, any liabilities for borrowed money and
any liabilities or obligations under any Capital Leases.  The Seller
covenants and agrees to pay and discharge all obligations, debts and liabilities
of the Seller and/or the Subject Business other than the Assumed
Liabilities.
 

    
      
         

      

      
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    ARTICLE
IV

     

    Conditions Precedent to
Closing

     

    4.1.        Conditions Precedent to the
Buyer’s and the Buyer’s Parent’s Obligations.  The
respective obligations of the Buyer and the Buyer Parent to consummate the
transactions contemplated hereby are subject to the satisfaction as of the
Closing, or the waiver by the Buyer and the Buyer Parent, of each of the
following conditions, and each such condition shall be a covenant of Seller to
the extent that such action is within Seller or Member’s control:

     

    (a)           The
warranties and representations of the Seller and the Member made in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date; and the Seller and the Member shall have performed in all material
respects the covenants of the Seller and the Member contained in this Agreement
required to be performed on or prior to the Closing.

     

    (b)           All
Consents, in a form reasonably satisfactory to the Buyer, shall have been
received by the Seller, and a copy of each shall have been delivered to the
Buyer, prior to the Closing Date.

     

    (c)           No
Proceeding by any Governmental Body or other Person shall have been instituted
or threatened which seeks to enjoin, restrain or prohibit, or which questions
the validity or legality of the transactions contemplated hereby or which
otherwise seeks to affect or could affect the transactions contemplated hereby
or impose damages or penalties upon any party hereto if such transactions are
consummated.

     

    (d)           The
Seller shall have conducted an Inventory Count as of December 10, 2010, and the
Seller shall not have taken any action or failed to take any action reasonably
requested by the Buyer which prevented the Buyer Parent’s independent registered
public accounting firm from completing an audit of the Seller’s financial
statements for the calendar years ended December 31, 2010 and 2009,
respectively, so as to enable the preparation of the audited financial
statements of the Seller required to be included in the Form 8-K required to be
filed by the Buyer Parent with the Securities and Exchange Commission in
connection with the transactions contemplated hereby.

     

    (e)           The
Buyer shall have received from the Seller, at least five (5) days prior to the
Closing Date, an unaudited estimated interim balance sheet of the Seller as of
the Closing Date (the “Estimated Closing Date Balance
Sheet”).  Notwithstanding the foregoing, the Buyer shall participate
in, and the Buyer and the Seller shall cooperate with each other in, the
preparation of the Estimated Closing Date Balance Sheet.

     

    (f)           Immediately
prior to the Closing, the Seller shall have delivered, or caused to have been
delivered, to the Buyer copies of the IP Assignments, duly executed by Jeff and
Nathan.
 

    
      
         

      

      
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    (g)         
The Seller shall have delivered, or caused to have been delivered, to the Buyer
the following:

     

    (i)           A
certificate from the Manager of the Seller, in a form reasonably satisfactory to
the Buyer, setting forth the resolutions of the Board of Directors or manager(s)
(if any) and the member(s) of the Seller authorizing the execution, delivery and
performance of this Agreement and all Ancillary Agreements to be executed,
delivered and performed by the Seller in connection herewith and the taking by
the Seller of any and all actions deemed necessary or advisable to consummate
the transactions contemplated hereby;

     

    (ii)          Custody,
by such means as the Buyer may reasonably request, of the Tangible Assets, the
Inventory, the customer, prospective customer and supplier/vendor lists of the
Subject Business and the Records;

     

    (iii)         A
recent good standing certificate (or comparable document) for the Seller issued
by the Secretary of State (or comparable office) of the jurisdiction in which
such entity is domiciled;

     

    (iv)         The
Warranty Bill of Sale, the IP License and Warranty Bill of Sale, certificates of
title (if any) and such other instruments of conveyance as the Buyer shall
reasonably require, each in a form reasonably satisfactory to the Buyer, duly
executed by the Seller, conveying to the Buyer the Subject Assets, free and
clear of all Liens and claims whatsoever other than Permitted
Liens;

     

    (v)          The
License, duly executed by each of Jeff and Nathan;

     

    (vi)         The
Assignment and Assumption Agreement, duly executed by the Seller;

     

    (vii)        The
Joanne Employment Agreement, duly executed by Joanne;

     

    (viii)       The
Joanne Restrictive Covenant Agreement, duly executed by Joanne;

     

    (ix)          The
Nathan Restrictive Covenant Agreement, duly executed by Nathan;

     

    (x)           A
recent good standing certificate (or comparable document) for the Landlord
issued by the Secretary of State (or comparable office) of the jurisdiction in
which such entity is domiciled;

     

    (xi)          The
Lease Termination, duly executed by each of the Seller and the
Landlord;

     

    (xii)         The
Lease, duly executed by the Landlord;
 

    
      
         

      

      
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    (xiii)         An
amendment to the Articles of Organization of the Seller, in a form reasonably
acceptable to the Buyer and suitable for filing with the Wisconsin Department of
Financial Institutions, pursuant to which the Seller shall change its name to a
name that does not include the words “Tier Electronics” or any words confusingly
similar to such words (the “Amendment”);

     

    (xiv)         A
duly executed pay-off letter from each of (A) Hawkeye-Security Insurance
Company, and (B) M&I committing to provide appropriate satisfactions,
termination statements and releases for the Satisfied Liens held by such party,
together with evidence that the obligations underlying the Satisfied Liens held
by such party have been satisfied in full; and

     

    (xv)          A
certificate dated the Closing Date and executed by the Manager of the Seller, in
a form reasonably satisfactory to the Buyer, certifying that all conditions set
forth in Section
4.1(a), above, have been fully satisfied.

     

    (h)          The
Seller shall have delivered, or caused to have been delivered, to the Buyer
Parent the following:

     

    (i)            
The Jeff Employment Agreement, duly executed by Jeff;

     

    (ii)           
The Jeff Restrictive Covenant Agreement, duly executed by Jeff;

     

    (iii)           The
Jeff Officer Inducement Option Award Agreements, duly executed by
Jeff;

     

    (iv)           The
Joanne Officer Inducement Option Award Agreement, duly executed by Joanne;
and

     

    (v)           The
Nathan Inducement Option Award Agreement, duly executed by Nathan.

     

    4.2.        Conditions Precedent to the
Seller’s Obligation.  The
obligation of the Seller to consummate the transactions contemplated hereby is
subject to the satisfaction as of the Closing, or the waiver by the Seller, of
each of the following conditions, and each such condition shall be a covenant of
the Buyer or the Buyer Parent, as the case may be, to the extent that such
action is within the Buyer or the Buyer Parent’s control:

     

    (a)          The
warranties and representations of the Buyer made in this Agreement shall be true
and correct in all material respects on and as of the Closing Date; and the
Buyer shall have performed in all material respects the covenants of the Buyer
contained in this Agreement required to be performed on or prior to the
Closing.

     

    (b)          The
Buyer Parent  shall have performed in all material respects the
covenants of the Buyer Parent contained in this Agreement required to be
performed on or prior to the Closing.
 

    
      
         

      

      
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    (c)          No
Proceeding by any Governmental Body or any other Person shall have been
instituted or threatened which seeks to enjoin, restrain or prohibit, or which
questions the validity or legality of, the transactions contemplated hereby or
which otherwise seeks to affect or could affect the transactions contemplated
hereby or impose damages or penalties upon any party hereto if such transactions
are consummated.

     

    (d)          The
Buyer Parent shall have filed a listing application with NYSE Amex relating to
the Subject Shares, the Officer Inducement Options and the Employee Inducement
Options, and such listing application shall have been approved by NYSE
Amex.

     

    (e)          The
Buyer shall have delivered, or caused to have been delivered, to the Seller the
following:

     

    (i)           The
Note as specified in Section 2.3(a),
above;

     

    (ii)          A
certificate from the Secretary of the Buyer, in a form reasonably satisfactory
to the Seller, setting forth the resolutions of the Board of Directors of the
Buyer authorizing the execution, delivery and performance of this Agreement and
all Ancillary Agreements to be executed, delivered and performed by the Buyer in
connection herewith and the taking by the Buyer of any and all actions deemed
necessary or advisable to consummate the transactions contemplated
hereby;

     

    (iii)         A
recent good standing certificate (or comparable document) for the Buyer issued
by the Secretary of State (or comparable office) of the jurisdiction in which
such entity is domiciled;

     

    (iv)         The
Assignment and Assumption Agreement, duly executed by the Buyer;
and

     

    (v)          A
certificate dated the Closing Date and executed by a duly authorized officer of
the Buyer, in a form reasonably satisfactory to the Seller, certifying that all
conditions set forth in Section 4.2(a),
above, have been fully satisfied.

     

    (f)           The
Buyer Parent shall have delivered, or caused to have been delivered, to the
Seller the following:

     

    (i)           The
Collateral Pledge Agreement, duly executed by the Buyer Parent;

     

    (ii)          The
Note Guaranty, duly executed by the Buyer Parent;

     

    (iii)         Certificate(s)
representing the Subject Shares as specified in Section 2.4,
above;
 

    
      
         

      

      
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    (iv)         The
Registration Rights Agreement, duly executed by the Buyer Parent;

     

    (v)          A
certificate from the Secretary of the Buyer Parent, in a form reasonably
satisfactory to the Seller, setting forth the resolutions of the Board of
Directors of the Buyer Parent authorizing the execution of this Agreement and/or
all Ancillary Agreements to be executed, delivered and performed by the Buyer
and/or the Buyer Parent in connection herewith and the taking by the Buyer
and/or the Buyer Parent of any and all actions deemed necessary or advisable to
consummate the transactions contemplated hereby;

     

    (vi)         A
recent good standing certificate (or comparable document) for the Buyer Parent
issued by the Secretary of State (or comparable office) of the jurisdiction in
which such entity is domiciled; and

     

    (vii)        A
certificate dated the Closing Date and executed by a duly authorized officer of
the Buyer Parent, in a form reasonably satisfactory to the Seller, certifying
that all conditions set forth in Section 4.2(b),
above, have been fully satisfied.

     

    (g)          The
Buyer Parent shall have delivered, or caused to have been delivered, to Jeff the
following:

     

    (i)           
The Jeff Employment Agreement, duly executed by the Buyer Parent;

     

    (ii)           The
Lease Guaranty, duly executed by the Buyer Parent; and

     

    (iii)          The
Jeff Officer Inducement Option Award Agreements, duly executed by the Buyer
Parent.

     

    (h)          The
Buyer shall have delivered, or caused to have been delivered, to Joanne the
following:

     

    (i)           
The Joanne Employment Agreement, duly executed by the Buyer; and

     

    (ii)           The
Joanne Officer Inducement Option Award Agreement, duly executed by the Buyer
Parent.

     

    (i)           The
Buyer shall have delivered, or caused to have been delivered, to the Landlord
the Lease, duly executed by the Buyer.

     

    (j)           The
Buyer Parent shall have delivered, or caused to have been delivered, to Nathan
the Nathan Inducement Option Award Agreement, duly executed by the Buyer
Parent.
 

    
      
         

      

      
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    ARTICLE
V

     

    Warranties and
Representations of Seller

     

    5.1.        Warranties and
Representations. Except
as set forth in the Disclosure Schedules, the Seller hereby warrants and
represents to the Buyer on and as of the Closing Date, which warranties and
representations shall survive the Closing for the period set forth in Section 5.2, below,
as follows:

     

    5.1.1.     Authority of
Seller. The
Seller has the right, power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Seller of this Agreement and the Ancillary Agreements to which the Seller is a
party have been approved by the Board of Directors or manager(s) (if any) and
member(s) of the Seller. This Agreement has been, and each Ancillary Agreement
to which the Seller is a party hereto will be, duly and validly executed and
delivered by the Seller, and this Agreement and such Ancillary Agreements are
and shall constitute the legal, valid and binding obligations of the Seller
enforceable against the Seller in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or by general
principles of equity.

     

    5.1.2.     Corporate
Matters. The
Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Wisconsin. The Seller has the power
and authority to own or lease its properties and assets and to carry on all
business activities now conducted by it, including, without limitation, the
Subject Business. Schedule
5.1.2 attached hereto contains a true, correct and complete list of all
current and former Subsidiaries of the Seller. The Seller is duly qualified to
do business as a foreign entity and is in good standing in each jurisdiction in
which the nature of its business or the ownership, leasing or holding of its
assets makes such qualification necessary, except where the failure to be so
qualified or to be in good standing would not, individually or in the aggregate,
reasonably be expected to impact materially the Subject Business. Schedule
5.1.2 contains a true, complete and correct list of all jurisdictions in
which the Seller is qualified to do business as a foreign limited liability
company.

     

    5.1.3.     No
Conflict. Neither
the execution, delivery and performance by the Seller of this Agreement or any
of the Ancillary Agreements to which the Seller is a party nor the consummation
or performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly: (a) contravene, conflict with, or result in a breach or
violation of any provision of the Articles of Organization or operating
agreement of the Seller; (b) contravene, conflict with, or result in a breach or
violation of, or give any Governmental Body or other Person the right to
challenge any of the transactions contemplated hereby or to exercise any remedy
or obtain relief under, any Legal Requirement or any Order to which the Seller,
the Subject Business or the Subject Assets may be subject; (c) assuming all
Consents are obtained, contravene, conflict with, or result in a breach or
violation of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, any Applicable Contract; (d) contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by the Seller
or that otherwise relates to the Subject Business or any of the Subject Assets;
or (e) result in the imposition of any Lien, claim or restriction upon or with
respect to any of the Subject Assets. No action, consent, approval, Order or
authorization of, or registration, declaration or filing with, any Governmental
Body or other Person, including, without limitation, any labor organization
pursuant to any labor or collective bargaining agreement, is required to be
obtained or made in connection with the execution and delivery by the Seller of
this Agreement and the Ancillary Agreements to which the Seller is a party or
the consummation by the Seller of the transactions contemplated hereby and
thereby.
 

    
      
         

      

      
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    5.1.4.     Title to and Condition of
Assets.  The
Seller has good and valid title to all of the Subject Assets, tangible and
intangible, free and clear of all Liens and claims whatsoever other than
Permitted Liens and Satisfied Liens that will be paid prior to
Closing.  The Subject Assets consist of all of the material assets
employed in the operation of the Subject Business except the Excluded Assets,
the Leased Real Property and equipment and other personal property leased by the
Seller.  All of the Tangible Assets are sold in “as is”
condition.  The Subject Assets are sufficient for the operation of the
Subject Business in the Ordinary Course of Business as presently being conducted
and are suitable for the purpose for which they are being used, in each case, in
all material respects.  Schedule
5.1.4 attached hereto contains a true, correct and complete list of all
equipment and other personal property leased by the Seller and included within
the Seller’s assets, all of which such property is in the condition required of
such property by the terms and conditions of the lease applicable thereto in all
material respects.  The Inventory reflected on the Financial
Statements has been manufactured and/or purchased in the Ordinary Course of
Business consistent in quality and quantity with past practices of the Seller,
is not damaged, obsolete or out of specification and is of a quality and
quantity usable and salable in the Ordinary Course of Business, net of any
applicable reserves to be reflected on the Estimated Closing Date Balance
Sheet.  Buyer acknowledges that Seller may maintain a small quantity
of damaged, obsolete or out of specification Inventory on Seller’s premises
which is not reflected on the Financial Statements.  All accounts
receivable of the Seller arose from bona fide transactions in the Ordinary
Course of Business and are good and collectible within one hundred twenty (120)
days after the Closing Date in the Ordinary Course of Business at the aggregate
recorded amount thereof, net of any applicable reserves for doubtful accounts to
be reflected on the Estimated Closing Date Balance Sheet.  There is no
contest, claim or right of set-off, other than returns in the Ordinary Course of
Business, under any Contract with any obligor of an account receivable of the
Seller’s business relating to the amount or validity of such account
receivable.  Any accounts receivable of Buyer Parent shall not be
included in this representation and warranty.

     

    5.1.5.     Real
Property.  The
Seller does not own or lease any real property in connection with the operation
of its business other than the real property owned by the Landlord and located
at N94W14588 Garwin Mace Dr., Menomonee Falls, WI 53051 (together with any
buildings or other improvements located thereon, the “Leased Real
Property”).  Jeff is owner of all of the issued and outstanding
membership interests in the Landlord.  There is no Proceeding pending
or, to the Seller’s Knowledge, threatened with respect to the Leased Real
Property.  There is no existing or, to the Seller’s Knowledge,
threatened Order requiring repair, alteration or correction of any existing
condition affecting the Leased Real Property.
 

    
      
         

      

      
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    5.1.6.     Proceedings;
Orders.  There
is no Proceeding pending or, to the Seller’s Knowledge, threatened against the
Seller. The Seller
is not subject to any Order.  To the Seller’s Knowledge, no event has
occurred or circumstances exist that may give rise or serve as a basis for the
commencement of any such Proceeding, including, but not limited to, any action
to prohibit the transactions contemplated by this Agreement.

     

    5.1.7.     Intellectual
Property.

     

    (a)           Schedule
5.1.7(a)(i) attached hereto contains a complete list (specifying the
owner thereof and the registration or application number therefor) of each of
the following which are owned by the Seller and/or used by the Seller in the
operation of the Subject Business: (i) all U.S. and foreign issued patents
and pending applications relating to any inventions, and all reissues,
divisions, continuations, continuations-in-part and extensions thereof; (ii) all
U.S. and foreign registered trademarks, registered service marks, trademark
applications and service mark applications, and all renewals and extensions
thereof; (iii) all U.S. and foreign registered copyrights and copyright
applications, and all renewals and extensions thereof; and (iv) all domain
name registrations (collectively, the “Registered Intellectual
Property”).  The Registered Intellectual Property, together with all
common law trademarks, service marks, copyrights, licenses, logos, trade names
(including, but not limited to, “Tier” and “Tier Electronics”) and trade dress
owned by the Seller and/or used by the Seller in the operation of the Subject
Business, all content contained or stored in or displayed by the websites
covered by the domain name registrations listed on Schedule 5.1.7(a)(i),
all other inventions (whether or not patentable and whether or not reduced to
practice), trade secrets, methods, processes, techniques, formulae, technical
information, know-how, research and development information, product
designations, quality standards, production protocols, product specifications,
improvements, blue-prints, architectural and other drawings, designs, plans and
Software owned by the Seller and/or used by the Seller in the operation of the
Subject Business and all other similar intellectual property rights or interests
which are owned by the Seller and/or used by the Seller in the operation of the
Subject Business, including, without limitation, the Database Program and any
such items specified on Schedule 5.1.7(a)(ii)
attached hereto, shall hereinafter collectively be referred to as the
“Intellectual Property”.  The Seller has made available to the Buyer
prior to the Closing Date true, correct and complete copies of all Registered
Intellectual Property, and has made available to the Buyer prior to the Closing
Date true, correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item of
Registered Intellectual Property.

     

    (b)           Schedule
5.1.7(b) attached hereto contains a complete list of: (i) all licenses or
other Contracts granted by the Seller which create rights in any third Person
regarding any item of the Intellectual Property; and (ii) all licenses or other
Contracts granted to the Seller (excluding shrink-wrap, click-wrap,
click-through or other similar Contracts with respect to off-the-shelf or
personal computer software) which create rights in the Seller regarding any
intellectual property rights owned by any third Person (hereinafter individually
referred to as an “IP Contract” and collectively referred to as “IP
Contracts”).
 

    
      
         

      

      
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    (c)           The
Seller owns or has a valid and enforceable right to use in the Ordinary Course
operation of the Subject Business all Intellectual Property, free and clear of
all Liens other than Permitted Liens.  No current or former employee,
officer or consultant of the Seller has any right, title or interest in or to
any of the Intellectual Property other than the Database
Program.  With the exception of the Database Program, all Intellectual
Property developed by or on behalf of the Seller and owned or purported to be
owned by the Seller was developed by employees or consultants who have executed
written agreements assigning exclusive rights in and to such developed and owned
Intellectual Property to the Seller.

     

    (d)           The
Seller has paid all fees required to be paid as of the Closing Date to maintain
validly the Registered Intellectual Property.  All registrations for
the Registered Intellectual Property are in force and have not been abandoned,
and all applications for the Registered Intellectual Property are active and
currently pending.

     

    (e)           There
are no existing or, to the Seller’s Knowledge, threatened claims or Proceedings
by any Person relating to the use by the Seller of the Intellectual Property,
challenging its ownership of the same or challenging the validity or
enforceability of the same.  None of the Intellectual Property is
subject to any outstanding Order, written restriction, undertaking or agreement
limiting the scope or use of the Intellectual Property or declaring any of it
abandoned, invalid or unenforceable.

     

    (f)           (i)
The Seller is not infringing, misappropriating or otherwise violating in any
material respect the intellectual property rights of any other Person; (ii) the
Seller has not received any complaint, claim or other notice alleging that the
operation of the Subject Business or any of the Intellectual Property is
infringing, misappropriating or otherwise violating the intellectual property
rights of any other Person; and (iii) to the Seller’s Knowledge, no other Person
is infringing, misappropriating or otherwise violating the Intellectual
Property.

     

    (g)           The
Seller has taken all commercially reasonable steps to maintain the
confidentiality of its trade secrets, and, to the Seller’s Knowledge, none of
such trade secrets have been disclosed to any third Person except pursuant to
written confidentiality obligations.

     

    (h)           Schedule
5.1.7(h) attached hereto lists all non-disclosure agreements or similar
confidentiality agreements between the Seller and any shareholders, officers,
directors, employees or other Persons given access by the Seller to trade
secrets and/or other confidential information owned by or licensed to the Seller
and used in the operation of the Subject Business.

     

    (i)         
  Except for the IP Contracts, the Seller has not granted any license,
franchise, permit or other right (including covenants not to sue) to any third
Person to use any of the Intellectual Property.  Schedule
5.1.7(i) attached hereto lists all licenses, franchises, permits or other
rights (including covenants not to sue) granted by the Member and/or Nathan to
any third Person to use the Database Program.
 

    
      
         

      

      
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    (j)           Each
item of Intellectual Property will, immediately subsequent to the Closing, be
owned by the Buyer or available for use on such terms as are identical to those
pursuant to which such Intellectual Property is owned or available for use by
the Seller immediately prior to the Closing.

     

    5.1.8.     Financial
Statements.  The
Financial Statements attached hereto as Schedule 5.1.8
(a) fairly present the financial condition of the Subject Business on the dates
designated thereon and the results of operations for the period designated
therein, and (b) were prepared from, and are consistent with, the
Records.

     

    5.1.9.     Taxes.  All
Tax returns, reports and forms required to be filed by the Seller prior to the
Closing Date have been timely and properly filed, are true, correct and complete
and properly reflect the Tax liability of the Subject Business.  The
Seller has not requested any extension of time within which to file returns in
respect of any Taxes or waived any statute of limitations in respect of
Taxes.  No claim has ever been made by a Governmental Body in a
jurisdiction where the Seller does not file Tax returns, reports or forms that
the Seller is or may be subject to taxation by that jurisdiction.  All
Taxes and withholding amounts due and payable by the Seller prior to the Closing
(whether or not shown on any Tax return) will have been paid in full prior to
the Closing or will be accrued by the Seller on the Estimated Closing Date
Balance Sheet.  The Seller has withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third
party.  There are no pending or, to the Seller’s Knowledge, threatened
audits, investigations or claims for or relating to any liability in respect of
Taxes and there are no matters under discussion with any Governmental Bodies
with respect to Taxes that are likely to result in any Tax Lien upon any of the
Subject Assets.  No Tax Liens have been filed on any asset owned by
the Seller.

     

    5.1.10.   No Undisclosed
Liabilities.  There
are no commitments, liabilities or obligations relating to the Subject Business,
whether known or unknown, accrued or unaccrued, absolute, contingent or
otherwise, including, without limitation, guaranties by the Seller of the
liabilities of third parties for which specific and adequate provisions have not
been made on or noted in the Financial Statements.

     

    5.1.11.   Contracts and Other
Agreements.  Schedule
5.1.11 attached hereto sets forth a true, correct and complete list of
all Applicable Contracts.  True, correct and complete copies (or
memoranda describing each with respect to oral agreements or plans) of each of
the Assumed Contracts, and all amendments and modifications thereof, have been
made available to the Buyer prior to the Closing Date.  Each Assumed
Contract is valid, binding and in full force and effect in accordance with its
terms.  Neither the Seller nor, to the Seller’s Knowledge, any other
Person who is a party to any Assumed Contract is in breach or default under any
Assumed Contract (with or without the lapse of time, or the giving of notice, or
both).  The Seller has not given or received from any other Person any
notice or other communication regarding any actual, alleged, possible or
potential violation or breach of, or default under, any Assumed Contract or any
termination or possible termination thereof.  There are no, and since
June 30, 2010 there have not been any, renegotiations of or attempts to
renegotiate any material amounts paid or payable to the Seller under any Assumed
Contract.  Except as set forth on Schedule
5.1.11, to the Knowledge of the Seller, no Assumed Contract is for a
sales price that would result in a loss to the Subject Business (after giving
effect to full amortization of overhead and selling, general and administrative
expenses).
 

    
      
         

      

      
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    5.1.12.   Product
Warranties.  All
products and services manufactured and/or sold by the Seller (and the delivery
thereof) prior to the Closing Date have been in material conformity with all
applicable contractual commitments and all expressed or implied
warranties.  Since June 30, 2010, no claim for product liability has
been asserted against the Seller, and, to the Knowledge of the Seller, there are
no facts, conditions or circumstances that could reasonably be expected to give
rise to any such claims other than standard warranty claims not exceeding, in
the aggregate, Three Hundred Sixty-Nine Thousand Dollars
($369,000).  In computing the amounts of such claims, no cost shall be
allocated to work performed by Jeff, Joanne and Nathan, and the cost of all
other employees shall be calculated at actual cost to Buyer (including overhead
but excluding profit) and not at Buyer’s standard employee rate to
customers.  Copies of the standard terms and conditions of sale,
delivery or lease of the Seller (including all warranty provisions) are attached
hereto as Schedule 5.1.12.

     

    5.1.13.   Employees.  Schedule
5.1.13 attached hereto contains:

     

    (a)           A
list of all handbooks, manuals, contracts, policies and/or procedures relating
to the employees of the Seller, true, correct and complete copies of which have
been made available to the Buyer prior to the date hereof; and

     

    (b)           A
list of all employees of the Seller, together with their job titles and current
rates of salary, wages or commissions.

     

    5.1.14.   Labor
Practices.

     

    (a)           The
Seller is in material compliance with all Legal Requirements applicable to the
Seller’s employees, including, but not limited to, Legal Requirements relating
to employment discrimination, family, medical and/or other employee leave,
employee welfare and benefits and labor standards.  There are no
pending or, to the Seller’s Knowledge, threatened claims, charges, complaints,
causes of action, demands or liabilities by any past or present employee of the
Seller, including, without limitation, that such employee was subject to a
wrongful discharge, any unlawful employment discrimination or unlawful
harassment by the Seller or its management, a breach of contract (whether
written or oral, express or implied) or tortious conduct of any
type.

     

    (b)           To
the Knowledge of the Seller, the Seller is in material compliance with the
Federal Occupational Safety and Health Act, the regulations promulgated
thereunder and all other applicable Legal Requirements relating to the safety of
employees or the workplace or relating to the employment of labor, including,
without limitation, any provisions thereof relating to wages, bonuses,
collective bargaining, equal pay and the payment of social security and other
payroll taxes.  No Proceedings are pending before any Governmental
Body relating to labor or employment matters, and there is no pending
investigation by any Governmental Body or, to the Knowledge of the Seller,
threatened claim by any such Governmental Body or other Person relating to labor
or employment matters.
 

    
      
         

      

      
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    (c)           The
Seller is not a party to any Contract with any union, labor organization,
employee group, or other similar Person which affects the labor or employment of
employees of the Seller, including, but not limited to, any collective
bargaining agreements or labor contracts.  To the Seller’s Knowledge,
none of the employees of the Seller are in the process of being organized by or
into any other labor unions or organizations.  The Seller has not
agreed to recognize any union or other collective bargaining unit, and no union
or collective bargaining unit has been certified as representing any employees
of the Seller.  Since June 30, 2010, the Seller has not been subject
to a strike, slowdown or other work stoppage, and, to the Seller’s Knowledge,
there are no strikes, slowdowns or work stoppages threatened against the
Seller.

     

    (d)           The
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in any breach or other violation
of any employment agreement, consulting agreement, labor or collective
bargaining agreement or any other labor-related agreement to which the Seller is
a party.

     

    5.1.15.   Employee Benefit
Plans.

     

    (a)           Schedule
5.1.15 attached hereto contains a true, correct and complete list of all
Plans.  Neither the Seller nor any ERISA Affiliate has a formal plan
or commitment, whether legally binding or not, to create any additional Plan or
modify or change any existing Plan.

     

    (b)           No
Plan is or has been a “multiemployer plan” (within the meaning of Section 3(37)
of ERISA), a “multiple employer plan” (within the meaning of Section 413 of the
Code) or a “multiple employer welfare arrangement” (within the meaning of
Section 3(40) of ERISA), and neither the Seller nor any ERISA Affiliate has any
actual or potential liability under any such provision (or related provision) of
ERISA or the Code.

     

    (c)           No
Plan is or has been covered by Title IV of ERISA, Section 302 of ERISA or
Section 412 or 430 of the Code, and neither the Seller nor any ERISA Affiliate
has any actual or potential liability under any such provision (or related
provision) of ERISA or the Code.

     

    (d)           Full
payment has been made of all amounts which the Seller or any ERISA Affiliate is
required to pay with respect to each Plan for the most recent plan year thereof
ended prior to the Closing Date, and all such amounts payable with respect to
the portion of the current plan year will be paid by the Seller on or prior to
the Closing Date or will be accrued by the Seller on the Closing Date Balance
Sheet.

     

    (e)           Each
of the Plans conforms to, and has been operated and administered in accordance
with, all applicable Legal Requirements, including, but not limited to, ERISA
and the Code.
 

    
      
         

      

      
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    (f)           The
Buyer shall not be obligated under any Plan and shall not be or become liable
for any debt or liability of the Seller, any Plan or any third party relating to
any of the Plans.

     

    5.1.16.   Events Since December 31,
2009. Since
December 31, 2009, the Seller has operated the Subject Business in the Ordinary
Course of Business, has used, preserved and maintained its assets on a basis
consistent with past practices, has maintained its books, accounts and records
in the usual manner and on a basis consistent with past practices.

     

    5.1.17.   Insurance. The
Seller maintains policies of fire and casualty, liability and other forms of
insurance and bonds in such amounts, with such deductibles, and against such
risks and losses as are commercially reasonable for the Subject Business and the
Subject Assets, all of which are valid, outstanding and enforceable. A true,
correct and complete list of all such insurance and bonds currently maintained
by the Seller is attached hereto as Schedule
5.1.17. Schedule
5.1.17 attached hereto also sets forth all property damage, personal
injury, workers’ compensation, products liability or other claims that have been
made against the Seller or the Seller’s insurance policies since June 30, 2010,
or which are pending against the Seller or the Seller’s insurance policies or,
to the Seller’s Knowledge, threatened against the Seller or any of the Seller’s
insurance policies.

     

    5.1.18.   Environmental
Matters.

     

    (a)           The
Seller has not received any notice from any Governmental Body or any third party
notifying of (i) any Hazardous Substances which are present on or have been
generated, treated, stored, handled or removed from, or disposed of on, the
Leased Real Property, in violation of Environmental Laws, (ii) any Hazardous
Substance which has migrated on, in, under, above or to the Leased Real Property
from any adjacent property or which has migrated, emanated or originated from
the Leased Real Property onto any other property, or (iii) any actual or
potential liability, responsibility or obligation arising out of or relating to
any Environmental Law with respect to the Seller or the Leased Real
Property.

     

    (b)           The
Seller has obtained all necessary Governmental Authorizations required for the
operation of the Subject Business and the use of the Leased Real Property
required by any Environmental Law.

     

    (c)           The
Seller and the Subject Assets are, and, to the Knowledge of the Seller, at all
times in the past have been, and the Leased Real Property is, and, to the
Knowledge of the Seller, at all times during the Seller’s use thereof has been,
in compliance with all Environmental Laws and with all Governmental
Authorizations issued in connection with the operation of the Subject Business
and the Seller’s use of the Leased Real Property.

     

    (d)           No
Environmental Claim with respect to the Seller or the Leased Real Property is
pending or, to the Knowledge of the Seller, threatened.

     

    (e)           Schedule
5.1.18 attached hereto contains a true, correct and complete list of all
Environmental Claims, reports, studies, assessments and audits or the like in
the possession or control of the Seller with respect to any environmental matter
associated with the Subject Business, the Leased Real Property or any of the
Subject Assets (complete copies of which have been provided to the
Buyer).
 

    
      
         

      

      
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    (f)           No
action or failure to act by the Seller has occurred with respect to the Leased
Real Property which, with the passage of time, the giving of notice, or both,
would constitute a violation of any Environmental Law.

     

    (g)           To
the Seller’s Knowledge, the Subject Assets are not required to be upgraded,
modified or replaced to be in compliance with any Environmental
Law.

     

    5.1.19.   Compliance With Legal
Requirements; Governmental Authorizations.  The
Seller has materially complied with each Legal Requirement that is applicable to
it for the conduct or operation of the Subject Business, the ownership or use of
the Subject Assets and the leasing and use of the Leased Real
Property.  No event has occurred that would or, to the Knowledge of
the Seller, circumstances exist (with or without notice or lapse of time) that
may constitute or result in a material violation by the Seller of, or failure on
the part of the Seller to comply with, any Legal Requirement.  The
Seller has not received a notice or other communication from any Governmental
Body or any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement.  Schedule
5.1.19 attached hereto contains a complete and accurate list of each
Governmental Authorization that is held by the Seller.  Each such
Governmental Authorization is valid and in full force and effect.  The
Seller has complied with all of the terms and requirements of each Governmental
Authorization identified or required to be identified on Schedule 5.1.19.  No
event has occurred that would or, to the Knowledge of the Seller, circumstances
exist that may (with or without notice or lapse of time) (a) constitute or
result directly or indirectly in a violation of or a failure to comply with a
term or requirement of any Governmental Authorization, or (b) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or modification to, any Governmental
Authorization.  The Seller has not received any notice or other
communication from any Governmental Body or any other Person regarding (i) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (ii) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization.  The Governmental Authorizations listed on Schedule 5.1.19
constitute all of the Governmental Authorizations necessary to permit the Seller
to conduct and operate lawfully the Subject Business in the manner in which it
is currently conducted and to permit the Seller to own and use the Subject
Assets in the manner in which it currently owns and uses such
assets.

     

    5.1.20.   Customers;
Suppliers.  Schedule
5.1.20 attached hereto sets forth an Invoice Register and an Items
Purchased from Vendors List, each dated January 1, 2008 to December 31, 2010,
which collectively represent a materially accurate list of all invoiced
customers and suppliers during the time period specified.  Except as
set forth on Schedule
5.1.20, the Seller has no reason to believe nor has received any notice
or indication (whether written or oral) of the intention of any material
supplier of the Seller to cease doing business or to reduce in any material
respect the business transacted with the Seller or to terminate or modify any
Contracts with the Seller (whether upon consummation of the transactions
contemplated hereby or otherwise).  Schedule 5.1.20
also sets forth, with respect to each of the last four (4) calendar years of the
Seller, a list of the twenty (20), fourteen (14), thirteen (13) or nine (9), as
the case may be, largest customers of the Seller (based on dollar amounts
purchased from the Seller) for each such calendar year and the dollar amount
derived from each of them during such calendar year, and, except as set forth on
Schedule
5.1.20, the
Seller has no reason to believe nor has received any notice or indication
(whether written or oral) of the intention of any of such customers to cease
doing business or to reduce in any material respect the business transacted with
the Seller or to terminate or modify any Contracts with the Seller (whether upon
consummation of the transactions contemplated hereby or
otherwise).
 

    
      
         

      

      
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    5.1.21.   Backlog.  Schedule
5.1.21 attached hereto sets forth a complete and accurate list of the
total backlog of orders of the Subject Business with firm delivery dates as of
the Closing Date.  Such backlog consists of orders for products or
services which are typical of the types of products and services manufactured
and sold or performed by the Seller in its operation of the Subject Business in
the Ordinary Course of Business as presently conducted.

     

    5.1.22.   Accounts
Payable.  All
accounts payable and accrued expenses of the Seller have been incurred and, to
the extent paid prior to the Closing, have been paid in the Ordinary Course of
Business consistent with past business practices.

     

    5.1.23.   Brokers;
Agents.  The
Seller has not dealt with any agent, finder, broker or other representative in
any manner which could result in the Buyer being liable for any fee or
commission in the nature of a finder’s fee or originator’s fee in connection
with the subject matter of this Agreement.

     

    5.1.24.   Relationships with Related
Parties.  Except
as set forth on Schedule
5.1.24 attached hereto, neither any member or officer of the Seller nor
any Affiliate of any such member or officer (a) has, or has had, any interest in
any property being used in or pertaining to the Subject Business, (b) is, or has
owned an equity interest or any other financial or profit interest in, a Person
that has (i) had business dealings or a material financial interest in any
transaction with the Seller, or (ii) engaged in competition with the Seller
with respect to any line of products or services of the Seller, or (c) is a
party to any Contract with, or has any claim or right against, the
Seller.

     

    5.1.25.   Outstanding
Indebtedness.  As of the Closing Date, the Seller shall have no
outstanding indebtedness for borrowed money other than the DTI Indebtedness, the
M&I Indebtedness, accounts payable and accrued expenses incurred in the
Ordinary Course of Business and other indebtedness, as reflected on Schedule
5.1.25 attached hereto, to be paid in full by the Seller in the Ordinary
Course of Business.  In addition, as of the Closing Date, all
indebtedness owed to the Seller by the Member or any Affiliate of the Member
will have been paid in full or otherwise released on terms and conditions
satisfactory to the Buyer.

     

    5.1.26.   Securities
Laws.

     

    (a)           Purchase Entirely for Own
Account.  The Subject Shares are being acquired by the Seller
for investment for the Seller’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and the Seller
has no present intention of selling, granting any participation in, or otherwise
distributing the same.  The Seller further represents that it does not
presently have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant any participation with respect to any of the
Subject Shares.
 

    
      
         

      

      
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    (b)           Investment
Experience.  The Seller is an “accredited investor” as defined
in Rule 501(a) under the Securities Act of 1933, as amended (the “Securities
Act”).  The Seller is aware of the Buyer Parent’s business affairs and
financial condition and has had access to and has acquired sufficient
information about the Buyer Parent to reach an informed and knowledgeable
decision to acquire the Subject Shares.  The Seller has such business
and financial experience as is required to give it the ability to protect its
own interests in connection with the purchase of the Subject
Shares.

     

    (c)           Ability to Bear
Risk.  The Seller is able to bear the economic risk of its
investment in the Subject Shares for an indefinite period of time, and the
Seller understands that the Subject Shares have not been registered under the
Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is
available.  The Seller acknowledges that it could bear a complete or
significant loss of its investment in the Subject Shares.

     

    (d)           Restricted
Securities.  The Seller understands that the Subject Shares are
“restricted” under applicable U.S. federal and state securities laws inasmuch as
they are being acquired from the Buyer Parent in a transaction not involving a
public offering and that, pursuant to these laws and applicable regulations, the
Seller must hold the Subject Shares indefinitely unless they are registered with
the Securities and Exchange Commission (the “SEC”), and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available.  The Seller further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including the timing and manner of sale, the holding
period for the Subject Shares, and on requirements relating to the Buyer Parent
which are outside of the Seller’s control, and which the Buyer Parent is under
no obligation and may not be able to satisfy.  In this connection, the
Seller represents that it is familiar with Rule 144 promulgated under the
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.

     

    (e)           Legends.  The
Seller understands that the Subject Shares, and any securities issued in respect
thereof or exchange therefor, may bear the following legends:

     

    (i)           “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.”
 

    
      
         

      

      
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    (ii)           Any
legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so
legended.

     

    5.2.        Warranties Survive
Closing.  Notwithstanding
any investigation by or information supplied to the Buyer, the warranties and
representations of the Seller contained in this Agreement or in any certificate
delivered pursuant hereto shall be true and correct on the Closing Date and
shall survive the Closing for a period of eighteen (18) months after the Closing
Date; provided,
that (a) the warranties and representations contained in Section 5.1.1
(Authority of Seller), Section 5.1.2
(Corporate Matters) and the first sentence of Section 5.1.4 (Title
to and Condition of Assets), above, and any warranties and representations
fraudulently made or intentionally misrepresented shall survive the Closing and
continue in full force and effect indefinitely, (b) the warranties and
representations contained in Section 5.1.9 (Taxes)
and Section
5.1.15 (Employee Benefit Plans), above, shall survive the Closing and
continue in full force and effect until the date that is sixty (60) days after
the underlying obligation is barred by the applicable period of limitation under
the Legal Requirements relating thereto (as such period may be extended by
waiver), and (c) the warranties and representations contained in Section 5.1.18
(Environmental Matters), above, shall survive the Closing and continue in full
force and effect for a period of thirty-six (36) months after the Closing
Date.  Any claim for indemnification under clause (a) of Section 11.1, below,
made in writing prior to the expiration of such applicable survival period, and
the rights of indemnity with respect thereto, shall survive such expiration
until resolved or judicially determined; and any such claim not so made in
writing prior to the expiration of such applicable survival period shall be
deemed to have been waived.

     

    ARTICLE
VI

     

    Warranties and
Representations of Member

     

    6.1.        Warranties and
Representations.  Except
as set forth in the Disclosure Schedules, the Member hereby warrants and
represents to the Buyer and the Buyer Parent on and as of the Closing Date,
which warranties and representations shall survive the Closing for the period
set forth in Section 6.2,
below, as follows:

     

    6.1.1.     Authority of
Member.  Such
Member has the right, power and authority to enter into this Agreement and the
Ancillary Agreements to which such Member is a party and to consummate the
transactions contemplated hereby and thereby.  This Agreement has
been, and each Ancillary Agreement to which such Member is a party hereto will
be, duly and validly executed and delivered by such Member, and this Agreement
and such Ancillary Agreements are and shall constitute the legal, valid and
binding obligations of such Member enforceable against such Member in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by general principles of equity.
 

    
      
         

      

      
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    6.1.2.     No
Conflict.  Neither
the execution, delivery and performance by such Member of this Agreement or any
of the Ancillary Agreements to which such Member is a party nor the consummation
or performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly: (a) contravene, conflict with, or result in a breach or
violation of, or give any Governmental Body the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain relief
under, any Legal Requirement or any Order to which such Member may be subject;
or (b) contravene, conflict with, or result in a breach or violation of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any material Contract to which such Member is
subject.  No action, consent, approval, Order or authorization of, or
registration, declaration or filing with, any Governmental Body is required to
be obtained or made in connection with the execution and delivery by such Member
of this Agreement and the Ancillary Agreements to which such Member is a party
or the consummation by such Member of the transactions contemplated hereby and
thereby.

     

    6.1.3.     Brokers;
Agents.  Such
Member has not dealt with any agent, finder, broker or other representative in
any manner which could result in the Buyer being liable for any fee or
commission in the nature of a finder’s fee or originator’s fee in connection
with the subject matter of this Agreement.

     

    6.2.        Warranties Survive
Closing.  Notwithstanding
any investigation by or information supplied to the Buyer and the Buyer Parent,
the warranties and representations of the Member contained in this Agreement or
in any certificate delivered pursuant hereto shall be true and correct on the
Closing Date and shall survive the Closing for a period of eighteen (18) months
after the Closing Date; provided, that the
warranties and representations contained in Section 6.1.1
(Authority of Member), above, and any warranties and representations
fraudulently made or intentionally misrepresented shall survive the Closing and
continue in full force and effect indefinitely.  Any claim for
indemnification under clause (a) of Section 11.1, below,
made in writing prior to the expiration of such applicable survival period, and
the rights of indemnity with respect thereto, shall survive such expiration
until resolved or judicially determined; and any such claim not so made in
writing prior to the expiration of such applicable survival period shall be
deemed to have been waived.

     

    ARTICLE
VII

     

    Warranties and
Representations of Buyer

     

    7.1.        Warranties and
Representations.  The
Buyer hereby warrants and represents to the Seller on and as of the Closing
Date, which warranties and representations shall survive the Closing for the
period set forth in Section 7.2,
below, as follows:

     

    7.1.1.     Authority of
Buyer.  The
Buyer has the right, power and authority to enter into this Agreement and the
Ancillary Agreements which the Buyer is a party to and to consummate the
transactions contemplated hereby and thereby.  The execution, delivery
and performance by the Buyer of this Agreement and the Ancillary Agreements to
which the Buyer is a party have been approved by the Board of Directors of the
Buyer.  This Agreement has been, and each Ancillary Agreement to which
the Buyer is a party will be, duly and validly executed and delivered by the
Buyer, and this Agreement and such Ancillary Agreements are and shall constitute
the legal, valid and binding obligations of the Buyer enforceable against the
Buyer in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by general principles of
equity.
 

    
      
         

      

      
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    7.1.2.     Corporate
Matters.  The
Buyer is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Wisconsin.  The Buyer has
the power and authority to own or lease its properties and assets and to carry
on all business activities now conducted by it.

     

    7.1.3.     No
Conflict.  Neither
the execution, delivery and performance by the Buyer of this Agreement or any of
the Ancillary Agreements to which the Buyer is a party nor the consummation or
performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly: (a) contravene, conflict with, or result in a breach or
violation of any provision of the Articles of Organization of the Buyer; (b)
contravene, conflict with, or result in a breach or violation of, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated hereby or to exercise any remedy or obtain relief under, any Legal
Requirement or any Order to which the Buyer may be subject; or (c) contravene,
conflict with, or result in a breach or violation of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify,
any material Contract to which the Buyer is subject.  No action,
consent, approval, Order or authorization of, or registration, declaration or
filing with, any Governmental Body or other Person is required to be obtained or
made in connection with the execution and delivery by the Buyer of this
Agreement and the Ancillary Agreements to which the Buyer is a party or the
consummation by the Buyer of the transactions contemplated hereby and
thereby.

     

    7.2.        Warranties Survive
Closing.  Notwithstanding
any investigation by or information supplied to the Seller, the warranties and
representations of the Buyer contained in this
Agreement or in any certificate delivered pursuant hereto shall be true and
correct on the Closing Date and shall survive the Closing for a period of
eighteen (18) months after the Closing Date; provided, that the
warranties and representations contained in Section 7.1.1
(Authority of Buyer) and Section 7.1.2
(Corporate Matters), above, and any warranties and representations fraudulently
made or intentionally misrepresented shall survive the Closing and continue in
full force and effect indefinitely.  Any claim for indemnification
under clause (a) of Section 11.2, below,
made in writing prior to the expiration of such applicable survival period, and
the rights of indemnity with respect thereto, shall survive such expiration
until resolved or judicially determined; and any such claim not submitted in
writing prior to the expiration of such survival period shall be deemed to have
been waived.
 

    
      
         

      

      
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    ARTICLE
VIII

     

    Disclosure Schedules and
Exhibits

     

    Any
reference to a section or subsection in the Disclosure Schedules and/or the
Exhibits attached hereto refers to the sections and subsections of this
Agreement, unless the context requires otherwise; provided, however, a particular
matter disclosed in any section or subsection of the Disclosure Schedules or the
Exhibits attached hereto that a reasonable buyer would infer, based on the
location and express content of such disclosure, qualifies another section or
subsection of this Agreement shall also be deemed to qualify such other section
or subsection of this Agreement.  All capitalized terms used in the
Disclosure Schedules and the Exhibits attached hereto and not otherwise defined
therein shall have the same meanings as are ascribed to such terms in this
Agreement.  The Disclosure Schedules and the Exhibits attached hereto
shall not vary, change or alter the literal meaning of the warranties and
representations of the Seller and the Member contained in this Agreement, other
than creating exceptions thereto which are directly responsive to the language
of the warranties and representations contained in this Agreement.

     

    ARTICLE
IX

     

    Covenants

     

    The
Seller, the Member, the Buyer and the Buyer Parent covenant and agree as
follows:

     

    9.1.        Releases.

     

    (a)           The
Buyer covenants and agrees to obtain, within ninety (90) days after the Closing
Date, a full release of the Seller, the Member, Joanne, the Landlord, the
Member’s residence, the Leased Real Property, the Intellectual Property, the
Server, the Customer and Supplier Lists and any other collateral owned by the
Seller, the Member,  Joanne and/or the Landlord from all liability,
obligations and personal guaranties related to or the result of the DTI
Indebtedness.  To clarify the foregoing, the release described above
shall not apply to any collateral owned by the Seller, the Member, Joanne and/or
the Landlord solely securing any mortgage indebtedness on the Member’s residence
or the Leased Real Property and not cross-collateralized with the DTI
Indebtedness.

     

    (b)           The
Buyer covenants and agrees to obtain, within thirty (30) days after the Closing
Date, a full release of the Seller, the Member, Joanne, the Landlord, the
Member’s residence, the Leased Real Property, the Intellectual Property, the
Server, the Customer and Supplier Lists and any other collateral owned by the
Seller, the Member,  Joanne and/or the Landlord from all liability,
obligations and personal guaranties related to or the result of the M&I
Indebtedness.  To clarify the foregoing, the release described above
shall not apply to any collateral owned by the Seller, the Member, Joanne and/or
the Landlord solely securing any mortgage indebtedness on the Member’s residence
or the Leased Real Property and not cross-collateralized with the M&I
Indebtedness.

     

    (c)           The
Buyer Parent hereby unconditionally and irrevocable guarantees to the Seller the
performance of all covenants of the Buyer contained in Section 9.1(a) and
Section 9.1(b),
above.

     

    (d)           The
foregoing shall not in any way diminish the effect of Article III, above,
that Buyer assumes the DTI Indebtedness immediately upon the Closing or the
effect of Section
2.3(b), above, that the Buyer is satisfying in full the M&I
Indebtedness at the Closing.
 

    
      
         

      

      
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    (e)           If
Buyer defaults on the performance of any covenants of the Buyer contained in
Section 9.1(a)
and Section
9.1(b), above, then Buyer shall immediately and automatically be deemed
to be in default on the Note.

     

    9.2.        Records.

     

    (a)           On
the Closing Date, the Seller will deliver or cause to be delivered to the Buyer
constructive possession of all original Records in the possession or control of
the Seller.

     

    (b)           After
the Closing, upon reasonable written notice, the Buyer and the Seller agree to
furnish or cause to be furnished to each other and their respective
Representatives reasonable access, during normal business hours, to such
information in such parties’ possession related to the Seller and its operations
with respect to periods prior to the Closing and to otherwise cooperate with
such other party, at the expense of the requesting party, to the extent such
access is reasonably necessary for financial reporting and accounting matters,
the preparation and filing of any returns, reports or forms with any
Governmental Body or the defense of any Tax claim or assessment; provided, however, that such
access does not unreasonably disrupt the normal operations of the
Seller.

     

    9.3.        Public
Announcements.  The
Seller, the Member, the Buyer and the Buyer Parent agree that the Buyer and the
Buyer Parent shall have the sole right, subject to the approval of the Seller,
which approval shall not unreasonably be withheld, to determine what, if any,
press release or other public statement concerning the transactions contemplated
hereby shall be made after the Closing, except as any such release or statement
by the Seller may be required by any Legal Requirement, in which case the Seller
shall allow the Buyer and the Buyer Parent reasonable time to comment on such
release or statement in advance of such issuance.

     

    9.4.        Further
Assurances.  From
time to time, as and when requested by a party hereto, each party hereto shall
execute and deliver, or cause to be executed and delivered, all such documents
and instruments, and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary to consummate the
transactions contemplated by this Agreement.  The Seller and the
Member agree, for a period of two (2) years after the Closing Date, upon the
request of the Buyer Parent, to assist the Buyer Parent in compiling historical
information of the Seller (including the compilation of financial information or
otherwise) and to comply with any financial reporting obligations imposed by
applicable Legal Requirements, including the provision of audited financial
statements for the calendar years ended December 31, 2010 and 2009,
respectively, in accordance with GAAP.

     

    9.5.        Accounts
Receivable.  The
Seller agrees that on and after the Closing Date the Buyer shall have the right
and authority to collect for the account of the Buyer all accounts receivable of
the Subject Business included in the Subject Assets, and to endorse with the
name of “Tier Electronics LLC” any checks received on account of any such
accounts receivable.  If, after the Closing, the Seller receives any
payment on any account receivable included in the Subject Assets, then the
Seller shall promptly remit the amount thereof to the Buyer by wire transfer of
immediately available funds to the bank account designated by the Buyer on Exhibit 9.5
attached hereto.  Any such amount not remitted to the Buyer within
five (5) days after the Seller’s receipt thereof shall accrue interest from the
date of the Seller’s receipt thereof to the date of payment to the Buyer at the
Prime Rate.
 

    
      
         

      

      
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    9.6.        Consents.  In
the event that any assignment, approval or Consent for an Assumed Contract is
not obtained on or prior to the Closing Date, and the Buyer elects to consummate
the transactions contemplated hereby despite the Seller’s failure or inability
to obtain such assignment, approval or Consent, the Seller shall continue to use
commercially reasonable efforts to obtain any such assignment, approval or
Consent after the Closing Date.  Until such time as such assignment,
approval or Consent has been obtained, the Seller will cooperate with the Buyer
in any lawful and economically feasible arrangement to provide that the Subject
Business shall continue to receive interest in the benefits under any such
Contract; provided, however, that the
Buyer shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent the Buyer would have been responsible
therefor if such Consent, approval or assignment had been obtained.

     

    9.7.        Employees.

     

    (a)           The
Seller agrees to provide prompt notice of termination of employment to all
Employees effective immediately prior to the close of business on the Closing
Date.  The Seller shall comply with all applicable Legal Requirements
relating to such termination of employment and shall be responsible for the
payment, when due, of all compensation, benefits, claims and other obligations
of any kind payable to such Employees relating to the operation of the Subject
Business by the Seller prior to the Closing Date; provided, that the
Buyer shall be responsible for all amounts payable to Employees pursuant to the
terms and conditions of any employment agreements included in the Assumed
Contracts.

     

    (b)           All
employee benefits and all payments and obligations under all Plans together with
all benefits and all payments under any and all compensation policies and
programs (including, without limitation, any retirement plans or other Plans)
for which current or former employees of the Subject Business were eligible, or
in which they participated, prior to the Closing Date shall be the sole
responsibility and obligation of the Seller, and the Buyer shall not be
obligated under, or be or become liable for, any such employee benefits, Plans
and/or compensation policies and programs.  The Seller shall be solely
liable and responsible for meeting and satisfying all liabilities and
obligations to current or former employees of the Subject Business under the
terms of such employee benefits, Plans and compensation policies and
programs.
 

    
      
         

      

      
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    (c)           Prior
to the Closing, the Buyer shall offer employment (such employment to be
effective immediately following the Closing) to all of the people who are, as of
the time of the Closing, active full-time or part-time employees of the Subject
Business other than Jeff (who shall be offered employment by the Buyer Parent
pursuant to the terms and conditions of the Jeff Employment
Agreement).  With the exception of the employment offer governed by
the Joanne Employment Agreement and except as set forth in Section 9.7(d),
below, any offer of employment the Buyer chooses to make shall be on initial
terms and conditions (e.g., wages, benefits, work rules, duties, execution of
restrictive covenant, confidentiality, assignment of work product and other
agreements) determined by and acceptable to the Buyer.  The Buyer is
not assuming and shall not be bound by any Plans, employment agreements,
collective bargaining agreements or other labor or employment agreements which
the Seller may have entered into or been bound by at any time, with the
exception of any employment agreements included in the Assumed Contracts which
the Buyer is assuming and by which the Buyer shall be
bound.  Notwithstanding the foregoing, the parties acknowledge and
agree that the Buyer is assuming all liabilities and obligations accruing on or
after the Closing Date with respect to UnitedHealthcare Insurance Company Policy
Number G/GA779840BW related to the Seller’s medical, dental, vision and life
insurance Plans (as opposed to the Seller’s medical, dental, vision and life
insurance Plans themselves, which Plans the Buyer is not
assuming).  Employees who accept an offer of employment from the Buyer
are referred to herein as “Hired Employees”.

     

    (d)           Except
as otherwise provided in the Joanne Employment Agreement, the Buyer agrees,
subject to each such individual accepting the Buyer’s offer of employment as
described in Section
9.7(c), above, to provide to the Hired Employees (i) wages and
titles/positions identical to those provided by the Seller to such individuals
immediately prior to the Closing Date, (ii) vacation, holiday and other paid
time off schedules and policies identical to those provided by the Seller to
such individuals immediately prior to the Closing Date, and (iii) during the
period beginning on the Closing Date and ending on May 31, 2011, medical,
dental, vision and life insurance benefits under UnitedHealthcare Insurance
Company Policy Number G/GA779840BW as in effect immediately prior to the Closing
Date and other employee benefits identical to those provided by the Seller to
such individuals immediately prior to the Closing Date, and thereafter,
health insurance and other employee benefits that are generally consistent with
those provided by the Seller to its employees generally immediately prior to the
Closing Date; provided, that the
Buyer shall have the right, in its sole discretion, to limit such terms and
benefits in order to comply with all applicable Legal Requirements governing the
Plans of the Buyer Parent’s controlled group, of which controlled group the
Buyer is a party.

     

    (e)           After
the Closing Date, the Buyer Parent shall issue to such Hired Employees as shall
be designated by Jeff options to acquire an aggregate of one hundred thousand
(100,000) shares of Common Stock pursuant to the terms and conditions of the
2010 Plan and such additional terms and conditions as shall be selected by the
Compensation Committee of the Buyer Parent; provided, that the
Buyer Parent’s obligations pursuant to this Section 9.7(e)
shall be contingent in all respects on the shareholders of the Buyer Parent
approving the 2010 Plan.

     

    (f)           After
the Closing Date, the Buyer, the Buyer Parent and Jeff shall cooperate with each
other in a review of the Buyer Parent’s then-current employee manual and the
employee manual of the Seller that was in place immediately prior to the Closing
Date and shall use their good faith efforts to modify the Buyer Parent’s
employee manual and to implement an employee manual for the Buyer in such a way
that (i) such employee manuals are substantially similar, and (ii) such employee
manuals contain as many terms from the employee manual of the Seller that was in
place immediately prior to the Closing Date as is commercially reasonable; provided, that the
Buyer and the Buyer Parent shall have the right, in their sole discretion, to
limit such terms in order to comply with all applicable Legal Requirements
governing the Plans of the Buyer Parent’s controlled group, of which controlled
group the Buyer is a party.
 

    
      
         

      

      
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    (g)           All
provisions contained in this Section 9.7 with respect to employee benefits are
included for the sole benefit of the Buyer, the Buyer Parent and the Seller and
shall not create any right in any other Person, including any employee or former
employee of the Seller or any participant or beneficiary in any Plan of the
Seller, the Buyer or the Buyer Parent.

     

    9.8.        Bulk
Sales.  The
Seller and the Buyer hereby waive compliance by the parties hereto with the
provisions of applicable bulk sales law (to the extent compliance therewith is
required), and the Seller covenants to pay and discharge when due all claims of
creditors which are asserted against the Buyer by reason of such noncompliance
to the extent such liabilities are not otherwise Assumed
Liabilities.

     

    9.9.        Mail.  The
Seller hereby authorizes the Buyer on and after the Closing Date (a) to accept
delivery of and to open all mail and other packages addressed to the Seller, and
(b) to deal with the contents thereof in any manner the Buyer sees fit; provided, that such
contents relate to the Subject Business, the Subject Assets and/or the Assumed
Liabilities.  The Seller agrees to deliver promptly to the Buyer any
mail or other packages received by the Seller relating to the Subject Business,
the Subject Assets and/or the Assumed Liabilities.  The Buyer agrees
to deliver promptly to the Seller any mail or other packages received by the
Buyer relating to the Excluded Assets and/or any obligations, debts or
liabilities of the Seller and/or the Subject Business other than the Assumed
Liabilities.

     

    9.10.      Seller’s
Name.  On
or promptly after the Closing Date, the Seller shall file or cause to be filed
the Amendment and shall provide written evidence of such filing to the
Buyer.

     

    9.11.      Life
Insurance.  Promptly
after the Closing, Jeff shall cooperate with the Buyer Parent (including,
without limitation, undergoing a physical exam) in connection with the Buyer
Parent’s efforts to obtain, from an insurance company of the Buyer Parent’s
choice, a key person life insurance company in the amount of Two Million Dollars
($2,000,000) on the life of Jeff and payable upon death to the Buyer Parent, in
a form reasonably satisfactory to the Buyer Parent, effective as of a date
recent to the Closing Date.

     

    9.12.      Buyer’s Board of
Directors.  On
or promptly after the Closing Date, the Buyer Parent, in the Buyer Parent’s
capacity as the sole member of the Buyer, shall elect each of Jeff and Joanne to
serve as a director of the Buyer; provided, that,
pursuant to the terms and conditions of the Jeff Employment Agreement or the
Joanne Employment Agreement, as the case may be, each of Jeff and Joanne shall
covenant and agree to resign as a member of the Board of Directors of the Buyer
upon the termination, for whatever reason, of such individual’s employment with
the Buyer Parent or the Buyer, as the case may be, such resignation to be
effective as the effective date of such termination.
 

    
      
         

      

      
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    9.13.      Buyer Parent’s Board of
Directors.  After
the Closing Date, the Buyer Parent shall cause the Board of Directors of the
Buyer Parent, in compliance with the applicable procedures set forth in the
Articles of Incorporation and By-Laws of the Buyer Parent, to nominate Jeff for
election as a director of the Buyer Parent at the first annual meeting of the
shareholders of the Buyer Parent after the Closing Date; provided, that,
pursuant to the terms and conditions of the Jeff Employment Agreement, Jeff
shall covenant and agree to resign as a member of the Board of Directors of the
Buyer Parent upon the earlier to occur of (i) the first anniversary of the date
of the payment in full of the principal and interest balance under the Note, or
(ii) the termination, for whatever reason, of Jeff’s employment with the Buyer
Parent, such resignation to be effective as of the effective date of such
earlier occurrence.

     

    9.14.      Name of Subject
Business.  After the Closing Date, until the full payment of
the Note by Buyer to Seller, Buyer shall keep the designation “Tier Electronics”
in its name.

     

    9.15.      Payment of Accounts
Receivable.  The Buyer Parent shall pay all accounts receivable
relating to sales made by the Seller to the Buyer Parent prior to the Closing
Date on terms mutually agreeable to the Seller and the Buyer
Parent.

     

    9.16.      Assistance with Securities
Laws.  The Buyer Parent covenants and agrees to work in good
faith at no cost to the Seller after the Closing Date to assist the Seller to
comply with applicable securities laws implicated by the Seller's plans for
selling or otherwise monetizing the Subject Shares, including determining
registration requirements and compliance with Rule 144 (including obtaining
required legal opinions), making required Section 16 filings (such as
Form 4) and determining compliance with insider trading laws (including
potentially establishing a Rule 10b5-1 trading plan).

     

    9.17.      Allocation of
Overhead.  The Buyer Parent covenants and agrees that any
corporate overhead costs allocated to the Buyer shall be a fair proportionate
share of overhead costs and be in line with the type and scope of actual
services provided by the Buyer Parent to the Buyer and that the Buyer Parent
will not allocate any corporate overhead costs to the Buyer beyond what is
commercially reasonable for a subsidiary or division of the Buyer’s size and
function.

     

    9.18.      Buyer’s Clerical
Functions.  The Buyer and the Buyer Parent covenant and agree
that the Buyer shall maintain its clerical functions (including, without
limitation, check writing and mail delivery) in-house and in substantially the
same manner as conducted by the Seller immediately prior to the Closing Date;
provided, that
such clerical functions comply in all material respects with the accounting
principles, practices and standards of the Buyer Parent as in effect from time
to time (including, without limitation, the Buyer Parent’s policies with respect
to check writing).

     

    9.19.      Collection of Accounts
Receivable.  From
and after the Closing Date, the Buyer shall use commercially reasonable efforts,
consistent with the Buyer’s collection efforts of its other accounts receivable,
to collect the accounts receivable sold to the Buyer hereunder which arise out
of services rendered by the Seller prior to the Closing
Date.  Payments received from account debtors shall be applied first
against outstanding invoices in the order of issuance (i.e., against the oldest
invoices first) except that (a) any payment which an account debtor designates
as payment against a specific invoice shall be applied against such invoice, and
(b) C.O.D. collections and advance payments shall be applied to the invoices to
which they relate.  If the Buyer elects to make an indemnification or
set-off claim pursuant to Article XI, below,
for the failure to collect any accounts receivable, then the Buyer shall, upon
the written request of the Seller, transfer and assign to the Seller any
uncollected accounts receivable with respect to which the Buyer has elected
indemnification and/or set-off.  Upon transfer of any such assigned
uncollected accounts receivable, the Seller shall have all legally available
rights to pursue the collection of such assigned uncollected accounts
receivable.
 

    
      
         

      

      
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    9.20.      Completion of Settlement
Agreement.  Buyer covenants to allow Jeff and/or Seller to
complete Seller’s obligations pursuant to that certain Settlement Agreement
between Seller and Svenska Rotor Maskiner AB dated August 26, 2009 (the
“Settlement Agreement”) utilizing Buyer’s assets and employees at no cost to
Jeff and/or Seller; provided, that the
aggregate cost incurred by Buyer and Buyer Parent in connection with completion
of such obligations does not exceed Ten Thousand Dollars
($10,000).  In computing the cost incurred by Buyer Parent and Buyer
in connection therewith, no cost shall be allocated to work performed, or time
expended, by Jeff and the cost of any work performed, or time expended, by any
Buyer employees shall be calculated at actual cost to Buyer (including overhead
but excluding profit).  The Buyer acknowledges and agrees that Jeff
may be required to fly to Sweden to complete Seller’s obligations pursuant to
the Settlement Agreement, and Buyer agrees to pay for the cost of such flight,
subject to Buyer Parent’s travel policies for similarly situated employees,
provided such cost does not bring the aggregate cost to complete such
obligations in excess of Ten Thousand Dollars ($10,000).  The parties
acknowledge and agree that the Settlement Agreement is not an Assumed Contract
and that neither Buyer nor Buyer Parent shall be obligated under, or be or
become liable for, the Settlement Agreement.

     

    ARTICLE
X

     

    Restrictive
Covenants

     

    10.1.      Non-Competition.  Each
of the Seller and the Member acknowledges and agrees that at no time for a
period of three (3) years after the Closing Date shall it or he, in any
capacity, either directly or indirectly (including, without limitation, through
an Affiliate) do any of the following:

     

    (a)           Acquire
an ownership interest in any Competitor (as defined below) (except as the holder
of not more than two percent (2%) of the equity securities of a publicly held
enterprise as long as such holder does not render advice or assistance to such
enterprise);

     

    (b)           Work
for, render advice or assistance to or otherwise engage in or enter into any
aspects of the business of any Competitor;

     

    (c)           Contact,
solicit or entice, or attempt to contact, solicit or entice, any customer or
Prospective Customer (as defined below) of the Subject Business or any its
Affiliates so as to cause, or attempt to cause, any of said customers or
Prospective Customers not to do business with the Subject Business or any of its
Affiliates or to purchase products or services sold by the Subject Business or
any of its Affiliates from any source other than the Subject Business or any of
its Affiliates;
 

    
      
         

      

      
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    (d)           Contact,
solicit or entice, or attempt to contact, solicit or entice, any supplier of the
Subject Business or any of its Affiliates with the purpose or effect of causing
such supplier not to do business with, or to reduce its business with, the
Subject Business or any of its Affiliates; or

     

    (e)           Induce,
or attempt to induce, any person who is currently an employee, consultant or
manufacturer’s representative of the Subject Business or any of its Affiliates
to leave the employ of, or terminate his or her engagement with, the Subject
Business or any of its Affiliates and/or to accept employment or engagement
elsewhere.

     

    For
purposes of this Section 10.1,
(i) the term “Competitor” shall mean any business, incorporated or otherwise,
which makes, sells or offers goods, products or services competitive with those
manufactured, sold or offered by the Subject Business or any of its Affiliates
as of the Closing Date, and (ii) the term “Prospective Customer” shall mean any
potential customer of the Subject Business.

     

    10.2.      Non-Disclosure of
Confidential Information.  Each
of the Seller and the Member acknowledges that at no time after the Closing Date
shall it or he disclose any Confidential Information (as defined below) to
anyone other than to employees and Representatives of the Buyer and/or the Buyer
Parent except any such Confidential Information which is required to be
disclosed by the Seller or such Member, as the case may be, in connection with
any court action or any Proceeding before any Governmental Body or pursuant to
any Legal Requirement, and then only after the Seller or such Member, as the
case may be, has given written notice to the Buyer of the intention so to
disclose such Confidential Information and has given the Buyer a reasonable
opportunity to contest the need for such disclosure, and the Seller or such
Member, as the case may be, shall cooperate with the Buyer in connection with
any such contest.  For purposes of this Section 10.2,
the term “Confidential Information” shall mean all non-public and all
proprietary information relating to the Subject Business, its customers and
products and services including, without limitation, the following: (a) all
formulations, test results, manufacturing and engineering specifications,
production and manufacturing information and know-how and all other technical
information relating to the manufacture, formulation or production of the
products or services of the Subject Business; (b) all information and records
concerning products or services being researched by, under development by or
being tested by the Subject Business but not yet offered for sale; (c) all trade
secrets relating to the Subject Business; (d) all information concerning pricing
policies of the Subject Business, the prices charged by the Subject Business to
its customers, the volume or orders of such customers and other information
concerning the transactions of the Subject Business with its customers or
proposed customers; (e) the customer and prospective customer lists of the
Subject Business; (f) financial information concerning the Subject
Business; (g) information concerning salaries or wages paid to, the work records
of and other personnel information relative to employees of the Subject
Business; (h) information concerning the marketing programs or strategies
of the Subject Business; and (i) all other confidential and proprietary
information of the Subject Business.  Notwithstanding the foregoing,
each of the Seller and the Member acknowledges and agrees that it or he will be
bound by its or his obligations under applicable trade secret Legal Requirements
which, in the case of Confidential Information that qualifies as a trade secret,
may exceed the obligations imposed under this Section 10.2.  Nothing
in this Section 10.2
shall be construed to limit or supersede the common law of torts or statutory or
other protection of trade secrets where such law provides the Subject Business
with greater protections or protections for a longer duration than that provided
under this Section
10.2.  “Confidential Information” shall not be deemed to mean
or refer to information that (i) is or becomes a matter of public knowledge
through no fault of the Seller or the Member, as the case may be; or (ii) is
rightfully received by the Seller or the Member, as the case may be, from a
third Person (other than an Affiliate of the Seller or the Member, as the case
may be) without violation of any duty of confidentiality.
 

    
      
         

      

      
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    10.3.      Enforcement.  In
addition to all other legal remedies available to the Buyer for the enforcement
of the covenants of this Article X, each
of the Seller and the Member acknowledges and agrees that the Buyer shall be
entitled to seek temporary and permanent injunctive relief by any court of
competent jurisdiction to prevent or restrain any breach or threatened breach
hereof.  The Seller and the Member each further agrees that, because
these restrictions arise in the context of the sale of a business and the
goodwill associated with such business, if any of the covenants set forth in
this Article X shall
at any time be adjudged invalid to any extent by any court of competent
jurisdiction, such covenant shall be deemed modified to the extent necessary to
render it enforceable.

     

    ARTICLE
XI

     

    Indemnification

     

    11.1.      Indemnification of the
Buyer.  The
Seller and the Member agree to jointly and severally indemnify the Buyer and its
members, Representatives, controlling persons and Affiliates and their
respective successors and assigns (collectively, the “Buyer Indemnified
Persons”) and to hold them harmless from and against any and all Losses, whether
or not involving a third party claim, arising directly or indirectly from or in
connection with (a) any misrepresentation or breach of any warranty or
representation made by the Seller, the Member and/or Nathan in this Agreement or
the License Agreement, (b) any breach or non-fulfillment of any agreement
or covenant of the Seller, the Member and/or Nathan contained in this Agreement,
the IP License and Warranty Bill of Sale or the License Agreement, (c) the
operation of the Subject Business prior to the Closing Date, with the exception
of the Assumed Liabilities, (d) with the exception of costs not to exceed Ten
Thousand Dollars ($10,000) as described in, and calculated pursuant to, Section 9.20, above,
the Settlement Agreement, or (e) any obligations of the Seller and/or Jeff owed
to DTI other than the DTI Indebtedness included in the Assumed
Liabilities.

     

    11.2.      Indemnification of the
Seller.  The
Buyer agrees to indemnify the Seller, the Member and the Seller’s
Representatives, controlling persons and Affiliates and their respective
successors and assigns (collectively, the “Seller Indemnified Persons”) and to
hold them harmless from and against any and all Losses, whether or not involving
a third party claim, arising directly or indirectly from or in connection with
(a) any misrepresentation or breach of any warranty or representation made by
the Buyer in this Agreement, (b) any breach or non-fulfillment of any agreement
or covenant of the Buyer and/or the Buyer Parent contained in this Agreement,
(c) any failure of the Buyer to satisfy any of the Assumed Liabilities, or (d)
the operation of the Subject Business after the Closing
Date.
 

    
      
         

      

      
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    11.3.      Limitations.

     

    (a)           The
Seller and the Member shall not have any obligation to indemnify any Buyer
Indemnified Person for claims under clause (a) of Section 11.1,
above, until the aggregate amount of Losses for which the Buyer Indemnified
Persons are entitled to indemnification under clause (a) of Section 11.1,
above, exceeds Fifty Thousand and No/100 Dollars ($50,000.00) (the
“Indemnification Threshold”), and then only for the amount by which the Losses
exceed the sum of Fifty Thousand and No/100 Dollars
($50,000.00).  Notwithstanding the foregoing, the limitations set
forth in this Section 11.3(a)
shall not apply (i) to any indemnification obligations arising under clause (a)
of Section
11.1, above, from or in connection with any misrepresentation or breach
of any warranty or representation made by the Seller in Section 5.1.1
(Authority of Seller), Section 5.1.2
(Corporate Matters), the first sentence of Section 5.1.4
(Title to and Condition of Assets), Section 5.1.9
(Taxes), the second sentence of Section 5.1.12
(Product Warranties), Section 5.1.15
(Employee Benefit Plans) or Section 5.1.18
(Environmental Matters), above, or by the Member in Section 6.1.1
(Authority of Member), above, (ii) to any indemnification obligations arising
under clause (b), (c), (d) or (e) of Section 11.1, above,
or (iii) to any claims arising directly or indirectly from or in connection with
any fraud or intentional misrepresentation by the Seller or the
Member.

     

    (b)           The
total amount of Losses of all of the Buyer Indemnified Persons for claims under
clause (a) of Section
11.1, above, shall in no event exceed the sum of One Million and No/100
Dollars ($1,000,000.00). Notwithstanding the foregoing, the limitations set
forth in this Section
11.3(b) shall not apply (i) to any indemnification obligations arising
under clause (a) of Section 11.1,
above, from or in connection with any misrepresentation or breach of any
warranty or representation made by the Seller in Section 5.1.1
(Authority of Seller), Section 5.1.2
(Corporate Matters), the first sentence of Section 5.1.4
(Title to and Condition of Assets), Section 5.1.9
(Taxes), Section 5.1.15
(Employee Benefit Plans) or Section 5.1.18
(Environmental Matters), above, or by the Member in Section 6.1.1
(Authority of Member), above, (ii) to any indemnification obligations arising
under clause (b), (c), (d) or (e) of Section 11.1,
above, or (iii) to any claims arising directly or indirectly from or in
connection with any fraud or intentional misrepresentation by the Seller or the
Member.

     

    (c)           The
amount of any indemnifiable Loss otherwise recoverable by a Buyer Indemnified
Person hereunder shall be reduced by the amount of any insurance proceeds paid
to the Buyer Indemnified Person with respect to the event giving rise to the
Loss, less any increase in insurance premiums incurred by the Buyer or such
other Buyer Indemnified Person as a result of such indemnifiable
Loss.
 

    
      
         

      

      
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    11.4.      Procedure Relative to
Indemnification.

     

    (a)         
In the event that any party hereto shall claim that it is entitled to be
indemnified pursuant to the terms of this Article XI, such
party (the “Claiming Party”) shall so notify the party or parties against which
the claim is made (the “Indemnifying Party”) in writing (each, a “Claims
Notice”) of such claim within thirty (30) days after the Claiming Party receives
notice of any demand, claim or circumstance which is reasonably likely to give
rise to a claim or the commencement of any Proceeding (an “Asserted Liability”)
that may reasonably be expected to result in a claim for indemnification by the
Claiming Party against the Indemnifying Party; provided, however, that failure
to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.  Each Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Losses that have been or may be suffered
by the Claiming Party; provided, however, that failure
to provide such reasonable detail shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure; and provided, further, that in no
event shall the Claiming Party’s right to recoup Losses from the Indemnifying
Party be limited to the amount set forth or estimated in the Claims
Notice.  If such Losses are liquidated in amount, the Claims Notice
shall so state and such amount shall be deemed the amount of the claim of the
Claiming Party.  If the amount is not liquidated, the Claims Notice
shall so state and in such event a claim shall be deemed asserted against the
Indemnifying Party on behalf of the Claiming Party, but no payment shall be made
on account thereof until the amount of such claim is liquidated and the claim is
finally determined.

     

    (b)         
The following provisions shall apply to claims of the Claiming Party which are
based upon a Proceeding filed or instituted by any third party or by any
Governmental Body:

     

    (i)           Upon
receipt of a Claims Notice involving an Asserted Liability against or sought to
be collected by a third party, the Indemnifying Party shall have thirty (30)
days within which to notify the Claiming Party whether the Indemnifying Party
desires to assume the defense of such Asserted Liability.

     

    (ii)           If
the Indemnifying Party notifies the Claiming Party, within such thirty (30) day
period, that the Indemnifying Party desires to defend against such Asserted
Liability, then the Indemnifying Party shall assume the defense of such Asserted
Liability with counsel of the Indemnifying Party’s choice and, after notice from
the Indemnifying Party to the Claiming Party of its election to assume the
defense of such Asserted Liability, the Indemnifying Party will not, as long as
it diligently conducts such defense, be liable to the Claiming Party under this
Article XI
for any fees and expenses of other counsel or any other expenses with respect to
the defense of such Asserted Liability subsequently incurred by the Claiming
Party in connection with the defense of such Asserted Liability.  The
Claiming Party shall cooperate, at the Indemnifying Party’s expense (with
respect to out-of-pocket expenses incurred by the Claiming Party), in the
compromise of, or defense against such Asserted Liability and may participate
in, but not control, such Asserted Liability at its own expense.  If
the Indemnifying Party is controlling the defense of an Asserted Liability, no
compromise or settlement of such Asserted Liability may be effected without the
Claiming Party’s consent (which consent shall not be withheld unreasonably)
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no affect on any
other claims that may be made against the Claiming Party, and (B) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party.
 

    
      
         

      

      
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    (iii)           If
a Claims Notice is given to an Indemnifying Party and the Indemnifying Party
does not, within thirty (30) days after receipt of the Claims Notice, notify the
Claiming Party that it elects to assume the defense of such Asserted Liability,
then the Claiming Party will have the right to conduct a defense of the Asserted
Liability, the Indemnifying Party will be bound by any determination made with
respect to such Asserted Liability or any compromise or settlement effected by
the Claiming Party and the Indemnifying Party will be responsible for paying all
reasonable professional fees and expenses incurred by the Claiming Party in
connection with such defense.

     

    (iv)           Notwithstanding
the foregoing, if (A) there exists a conflict of interest that would make it
inappropriate in the reasonable judgment of the Claiming Party for the same
counsel to represent both the Claiming Party and the Indemnifying Party; (B) the
third party claim seeks injunctive or other non-monetary relief against the
Claiming Party; or (C) the Claiming Party elects to pursue one or more defenses
or counterclaims available to it that are inconsistent with one or more defenses
or counterclaims that are being pursued by the Indemnifying Party in respect of
such third party claim or any litigation related thereto, then the Claiming
Party may, by notice to the Indemnifying Party, participate in the defense of
such third party claim and shall be entitled to retain its own counsel at the
Indemnifying Party’s cost and expense.  It is understood and agreed
that the Indemnifying Party will not be bound by any determination of an
Asserted Liability so defended or any compromise or settlement effected by the
Claiming Party without its consent (which may not be withheld
unreasonably).

     

    (c)          Upon
receipt of a Claims Notice involving an Asserted Liability that does not involve
an Asserted Liability against or sought to be collected by a third Person, the
Indemnifying Party shall have thirty (30) days from the receipt of a Claims
Notice to notify the Claiming Party that the Indemnifying Party disputes such
Asserted Liability.  If the Indemnifying Party does not so notify the
Claiming Party, then the amount of such Asserted Liability shall be deemed,
conclusively, a liability of the Indemnifying Party hereunder.  If the
Indemnifying Party shall object in writing to such Asserted Liability, then the
Claiming Party shall have thirty (30) days to respond in a written statement to
the objection of the Indemnifying Party.  If after such thirty (30)
day period there remains a dispute as to any Asserted Liability, then the
parties shall attempt in good faith for thirty (30) days to agree upon the
rights of the respective parties with respect to such Asserted
Liability.  If the parties should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties.  If the
parties do not agree, then the Claiming Party may pursue any other remedies
available to it.

     

    11.5.      Characterization of
Indemnification Payments.  Except
as otherwise required by applicable Legal Requirements, any payment made
pursuant to Section
11.1, above, shall be treated for Tax purposes as an adjustment to the
Purchase Price.
 

    
      
         

      

      
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    11.6.      Set-Off.  The
Seller, the Member and the Buyer acknowledge and agree that the Buyer shall be
entitled, in addition to any other remedies which may be available to it, to
set-off against amounts payable to the Seller under the Note any amounts owed to
the Buyer pursuant to this Agreement.  The Buyer shall not exercise
its rights of set-off against the Note in bad faith and shall give the Seller
thirty (30) days’ prior written notice of any exercise of such rights of
set-off.  Any set-off by the Buyer against the Note shall be applied
to the required payments of principal under the Note in the reverse order of
their maturities without affecting the next regularly-scheduled principal and
interest payments thereunder, except that any such set-off attributable to any
amount actually paid by the Buyer to a third party (other than one of the
Buyer’s Representatives) shall be applied to the required payments of principal
and interest under the Note in the order of their maturities.

     

    11.7.      Exclusive
Remedy.  Except
for claims arising from, or in connection with, fraud or intentional
misrepresentation, the foregoing indemnification provisions shall constitute the
sole and exclusive remedy for monetary damages in respect of any breach of, or
default under, this Agreement by any party hereto and each party hereby waives
and releases any and all statutory, equitable, or common law remedy for monetary
damages any party may have in respect of any breach of or default under this
Agreement, including, without limitation, any rights of
contribution.

     

    ARTICLE
XII

     

    Definitions

     

    “2010 Plan” means the Buyer
Parent’s proposed 2010 Omnibus Long-Term Incentive Plan.

     

    “Affiliate” means, as to any
Person, any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.  A Person
shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract or otherwise.  For purposes of
clarification, the Buyer Parent shall be deemed to be an Affiliate of the
Buyer.

     

    “Agreement” means this Asset
Purchase Agreement, as the same may be amended or modified from time to time,
including all Exhibits and Schedules attached hereto.

     

    “Amendment” has the meaning
set forth in Section
4.1(g)(xiii), above.

     

    “Ancillary Agreements” means,
as to any party, the agreements, documents and instruments to be executed and
delivered by such party pursuant to this Agreement.
 

    
      
         

      

      
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    “Applicable Contract” means
any Contract (a) under which the Seller is or may be entitled to receive
revenues of more than $25,000 in any calendar year,
(b) under which the Seller may become subject to any obligation to pay a
liability of more than $25,000 in any calendar year, (c) by which assets owned
or used by the Seller having a net book value of at least $25,000 are bound, (d)
with a term of twelve (12) months or more, unless cancelable by the Seller
without penalty upon less than twelve (12) months’ notice, (e) relating to any
Intellectual Property, including, without limitation, any Contract whereby
the  Seller has granted any license, franchise, permit or right to any
third party to use any of the Intellectual Property owned by the Seller or any
Contract pursuant to which the Seller has a license, franchise, permit or other
right to use any intellectual property owned by a third party, (f) between
the Seller and the Member or any Affiliate of the Member, (g) with any
employee or consultant or with any labor union or other employee representative
of a group of employees (including, without limitation, any collective
bargaining agreement), (h) under which the Seller is required to provide to any
former employee or consultant any compensation (in the form of cash payments
and/or the provision of benefits) upon a termination of such individual’s
employment or consulting engagement, (i) involving a share of profits or
losses by the Seller with any other Person, including any joint venture,
partnership or other similar agreement, (j) containing covenants that in
any way purport to restrict the business activity of the Seller or limit the
freedom of the Seller to use or disclose confidential information or to engage
in any line of business or to compete with any Person, (k) entered into
outside the Ordinary Course of Business, (l) which is a lease, rental or
occupancy agreement, license, installment or conditional sale agreement or other
Contract affecting the ownership of, leasing of, title to, use of or any
leasehold or other interest in, any real or personal property, and (m) each
amendment, supplement and modification with respect to any of the
foregoing.

     

    “Asserted Liability” has the
meaning set forth in Section 11.4(a),
above.

     

    “Assignment and Assumption Agreement”
means the Assignment and Assumption Agreement between the Buyer and the
Seller in the form of Exhibit
12(a) attached hereto pursuant to which the Seller shall assign to the
Buyer, and the Buyer shall assume from the Seller, all of the Seller’s right,
title and interest in, to and under the Assumed Contracts.

     

    “Assumed Contracts” means all
of the Seller’s right, title and interest in, to and under (a) those
Contracts restricting a Person’s ability to compete with the Seller, use or
disclose proprietary information of the Seller or solicit employees or past
employees of the Seller for employment, (b) all open purchase orders for both
the sale and purchase of products and services entered in the Ordinary Course of
Business, including, without limitation, those open purchase orders identified
on Exhibit
12(b) attached hereto; and (c) those other Contracts of the Subject
Business existing as of the Closing Date and identified on Exhibit
12(b) attached hereto, including, without limitation, any right to
receive payment for products sold or services rendered pursuant to such
Contracts and to assert claims and to take other rightful actions in respect of
breaches, defaults and other violations of such Contracts.  For
purposes of clarification, the Buyer acknowledges that the Seller has received
deposits on the Assumed Contracts as reflected in the Financial Statements and
that the Buyer is assuming the Assumed Contracts subject to those deposits and
the Buyer shall not receive monetary credit in addition thereto.

     

    “Assumed Expenses” means (i)
the Ordinary Course trade accounts payable (including, without limitation, for
utilities, garbage collection, phone service and cell phone service) and accrued
expenses (including, without limitation, accrued but unpaid accounting fees,
real estate taxes, compensation, insurance, employee benefits, vacation and sick
pay) of the Subject Business as of the Closing Date of the type identified on
the Estimated Closing Date Balance Sheet, and (ii) accrued reasonable attorneys’
fees and expenses relating to the transactions contemplated hereby in an amount
not to exceed Fifteen Thousand Dollars ($15,000) as reflected on the Estimated
Closing Date Balance Sheet.
 

    
      
         

      

      
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    “Assumed Indebtedness” means
the DTI Indebtedness.

     

    “Assumed Liabilities” means
(a) all liabilities and obligations of the Seller accruing on or after the
Closing Date under the Assumed Contracts, (b) the Assumed Indebtedness,
(c) the Assumed Expenses, and (d) the Assumed Warranty Claims.

     

    “Assumed Warranty Claims”
means standard product warranty claims relating to products produced by the
Seller prior to the Closing Date, whether shipped before, on or after the
Closing Date, in an amount not to exceed Three Hundred Sixty-Nine Thousand
Dollars ($369,000) in the aggregate.  In computing the amounts of such
claims, no cost shall be allocated to work performed by Jeff, Joanne and Nathan,
and the cost of all other employees shall be calculated at actual cost to Buyer
(including overhead but excluding profit) and not at Buyer’s standard employee
rate to customers.

     

    “Buyer” has the meaning set
forth in the preface above.

     

    “Buyer Indemnified Persons”
has the meaning set forth in Section 11.1,
above.

     

    “Buyer Parent” has the meaning
set forth in the preface above.

     

    “Capital Lease” means any
leasing or similar arrangement which, in accordance with GAAP, is classified as
a capital lease.

     

    “CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
codified at 42 U.S.C. 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986.

     

    “Claiming Party” has the
meaning set forth in Section 11.4(a),
above.

     

    “Claims Notice” has the
meaning set forth in Section 11.4(a),
above.

     

    “Closing” means the closing of
the purchase and sale contemplated herein.

     

    “Closing Date” means the date
on which the Closing occurs.

     

    “COBRA” means the Consolidated
Omnibus Budget Reconciliation Act of 1986 and the rules and regulations
promulgated thereunder, each as amended.

     

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

     

    “Collateral Pledge Agreement”
means the collateral pledge agreement between the Buyer Parent and the
Seller in the form of Exhibit
12(c) attached hereto.

     

    “Common Stock” means the $.01
par value common stock of the Buyer Parent.

     

    “Competitor” has the meaning
set forth in Section 10.1,
above.
 

    
      
         

      

      
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    “Confidential Information” has
the meaning set forth in Section 10.2,
above.

     

    “Confidentiality Agreement”
means that certain Mutual Confidentiality
& Non-Disclosure Agreement dated as of April 30, 2010 between the Seller and
the Buyer Parent.

     

    “Consents” means the consents
and approvals listed on Exhibit
12(d) attached hereto from the parties to those Assumed Contracts which
by their terms prohibit assignment by the Seller or which specifically require
consent for such assignment, consenting to the assignment to the Buyer of such
Assumed Contracts under the same terms and conditions as are applicable to the
Seller.

     

    “Contract” means any
agreement, contract, arrangement, lease, license, obligation, promise,
understanding or undertaking (whether written or oral) that is legally
binding.

     

    “Customer and Supplier Lists”
means, collectively, all customer and prospective customer lists and
supplier/vendor lists of the Subject Business.

     

    “Database Program” means the
database Software program jointly designed, developed and owned by the Member
and Nathan and used by the Seller in connection with the operation of the
Subject Business.

     

    “Disclosure Schedules” means
the disclosure schedules attached to this Agreement.

     

    “DTI” means Diversified
Technology, Inc.

     

    “DTI Indebtedness” means the
obligations of the Seller owed to DTI set forth on Exhibit
12(e) attached hereto, not to exceed Two Hundred Twenty Thousand Dollars
($220,000) in the aggregate.

     

    “DTI Note” means that certain
Promissory Note dated April 30, 2009 in the original principal amount of
$275,000 made by Jeff for the benefit of DTI and assigned by Jeff to the Seller
pursuant to that certain Assignment and Assumption of Promissory Note dated as
of December 31, 2010 between Jeff and the Seller.

     

    “Employee” means any employee
of the Subject Business (whether salaried or hourly, and whether full-time,
part-time or other), whether or not actively employed on the Closing Date,
including, but not limited to, employees on vacation and leave of absence,
including maternity, paternity, family, sick, military and disability
leave.

     

    “Employee Inducement Options”
means inducement grant options to acquire Twenty-Five Thousand (25,000)
shares of Common Stock to be awarded at the Closing by the Buyer Parent to
Nathan pursuant to the terms and conditions of the Nathan Inducement Option
Award Agreement.

     

    “Environmental Claims” means
any investigation, notice, violation, demand, allegation, action, suit,
injunction, order, consent decree, penalty, fine, Lien, proceeding or claim
(whether administrative, judicial or private in nature) arising (a) pursuant to,
or in connection with, an actual or alleged violation of any Environmental Law;
(b) in connection with any Hazardous Substances; (c) from any abatement,
removal, remedial, corrective or other response action in connection with
Hazardous Substances, Environmental Law or other order of a Governmental Body;
or (d) from any actual or alleged damage, injury, threat, or harm to human
health, safety, natural resources, wildlife or the
environment.
 

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    “Environmental Law” means any
Legal Requirements pertaining to (a) human health, safety, natural resources,
wildlife or the environment, (b) the Occupational Safety and Health
Administration, the U.S. Environmental Protection Agency, the Nuclear Regulatory
Commission, the Wisconsin Department of Natural Resources, or (c) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement, removal,
remediation, emission, discharge or handling of, or exposure to, any petroleum
products or Hazardous Substances into ambient air, surface water, ground water
or land, or any exposure or impact on worker health and safety, and all
amendments, modifications and additions thereto, in each case as amended to
date, including, without limitation, CERCLA, RCRA, the Toxic Substances Control
Act of 1976, codified at 15 U.S.C. 2601 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, codified at 33 U.S.C.
1251 et seq., the Clean Air Act of 1966, codified at 42 U.S.C. 741 et seq., the
Hazardous Materials Transportation Act, codified at 49, U.S.C. 651 et seq., the
Oil Pollution Act of 1990, codified at 33 U.S.C. 2701 et seq., the Emergency
Planning and Community Right-To-Know Act of 1986, codified at 42 U.S.C. 11001,
et seq., the National Environmental Policy Act of 1969, codified at 42 U.S.C.
4321, et seq., the Occupational Safety and Health Act of 1970, the Safe Drinking
Water Act of 1974, codified at 42 U.S.C. 300(f), et seq., the Atomic Energy
Community Act of 1955, the Atomic Testing Liability Act, the Atomic Energy
Damages Act, the Atomic Energy Omnibus Act, the Atomic/Nuclear Waste Policy Act
of 1982, the Atomic/Nuclear Waste Policy Amendments of 1987 or any similar,
implementing or successor law.

     

    “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.

     

    “ERISA Affiliate” means any
Person (whether or not incorporated) that is treated as a single employer with
the Seller under Section 414(b), (c), (m) or (o) of the Code.

     

    “Estimated Closing Date Balance
Sheet” has the meaning set forth in Section 4.1(e),
above.

     

    “Excluded Assets” has the
meaning set forth in Section 1.2,
above.

     

    “Financial Statements” means
(a) the unaudited interim balance sheet of the Seller as of December 31, 2010, and
the related statement of operations for the twelve (12) month fiscal period then
ended, and (b) the Estimated Closing Date Balance Sheet, all attached
hereto as Schedule 5.1.8.

     

    “GAAP” means United States
generally accepted accounting principles and practices as in effect from time to
time, consistently applied.

     

    “Governmental Authorization”
means any permit, license, variance, certificate, closure, exemption,
decision, action, consent, waiver or approval or other authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
 

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    “Governmental Body” means any
(a) nation, state, county, city, town, village, district or other jurisdiction
of any nature; (b) federal, state, local, municipal, foreign or other
government; (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, bureau, branch, department, official or
entity and any court or other tribunal); or (d) body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of any nature, including
self-regulatory organizations.

     

    “Hazardous Substances” means
and includes any “hazardous substance” and any “pollutant or contaminant” as
those terms are defined in CERCLA; any “hazardous waste” as that term is defined
in RCRA; and any “hazardous material” as that term is defined in the Hazardous
Materials Transportation Act (49 U.S.C. § 1801 et seq.), as amended (including
as those terms are further defined, construed or otherwise used in rules,
regulations, standards, guidelines and publications issued pursuant to, or
otherwise in implementation of, said Environmental Laws); and including, without
limitation, any petroleum product or byproduct, solvent, flammable or explosive
material, radioactive material, asbestos, polychlorinated biphenyls (PCBs),
dioxins, dibenzofurans, heavy metals, radon gas, urea formaldehyde foam,
hazardous waste source and raw materials which include hazardous constituents;
and including any other substance, chemical, compound, product, solid, gas,
liquid, waste, by-product, material, pollutant or contaminant which is
hazardous, toxic or otherwise harmful to health, safety, natural resources
wildlife or the environment or which is now or in the future included under or
regulated by any Environmental Law.

     

    “Hired Employees” has the
meaning set forth in Section 9.7(c),
above.

     

    “Indemnification Threshold”
has the meaning set forth in Section 11.3(a),
above.

     

    “Indemnifying Party” has the
meaning set forth in Section 11.4(a),
above.

     

    “Intellectual Property” has
the meaning set forth in Section 5.1.7(a),
above.

     

    “Inventory” means all
inventories relating to the Subject Business, wherever located, including,
without limitation, raw materials, work in process, finished goods, packaging
materials and supplies and other miscellaneous materials and
supplies.

     

    “Inventory Count” means a
physical count of the Inventory on hand as of a given date conducted by the
Buyer and its Representatives in the presence, if desired by the Seller, of a
representative of the Seller to assist the Buyer in the valuation of the
Inventory as of such date.

     

    “IP Assignments” means,
collectively, the Jeff IP Assignment and the Nathan IP Assignment.

     

    “IP Contract” has the meaning
set forth in Section
5.1.7(b), above.
 

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

     

    “IP License and Warranty Bill of
Sale” means the license agreement and warranty bill of sale pursuant to
which (a) the Seller will grant to the Buyer an exclusive, royalty-free license
to use all Intellectual Property of the Subject Business until such time as the
Note is paid in full, and (b) the Seller will convey to the Buyer, immediately
and without any further action by the parties hereto upon payment of the Note in
full, all Intellectual Property of the Subject Business, free and clear of all
Liens and claims whatsoever other than Permitted Liens, in the form of Exhibit
12(f) attached hereto.

     

    “Jeff” has the meaning set
forth in the preface above.

     

    “Jeff Employment Agreement”
means the employment agreement between the Buyer Parent and Jeff in the
form of Exhibit
12(g) attached hereto.

     

    “Jeff IP Assignment” means the
assignment of intellectual property assigning to the Seller all of the
Intellectual Property owned by Jeff and used by the Seller in the operation of
the Subject Business in the form of Exhibit
12(h) attached hereto.

     

    “Jeff Officer Inducement Option Award
Agreements” means the option award agreements between the Buyer Parent
and Jeff in the form of Exhibit
12(i) attached hereto pursuant to which the Buyer Parent shall award to
Jeff inducement grant options to acquire an aggregate of six hundred fifty
thousand (650,000) shares of Common Stock.

     

    “Jeff Restrictive Covenant
Agreement” means the restrictive covenant agreement between the Buyer
Parent and Jeff in the form of Exhibit
12(j) attached hereto.

     

    “Joanne” means Joanne
Reichard.

     

    “Joanne Employment Agreement”
means the employment agreement between the Buyer and Joanne in the form of Exhibit
12(k) attached hereto.

     

    “Joanne Officer Inducement Option
Award Agreement” means the option award agreement between the Buyer
Parent and Joanne in the form of Exhibit 12(l)
attached hereto pursuant to which the Buyer Parent shall award to Joanne
inducement grant options to acquire seventy-five thousand (75,000) shares of
Common Stock.

     

    “Joanne Restrictive Covenant
Agreement” means the restrictive covenant agreement between the Buyer and
Joanne in the form of Exhibit
12(m) attached hereto.

     

    “Knowledge” – An individual
will be deemed to have “Knowledge” of a particular fact or other matter if (a)
such individual is actually aware of such fact or other matter; or (b) a prudent
individual could reasonably be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonable investigation
concerning the existence of such fact or other matter.  A Person
(other than an individual) will be deemed to have “Knowledge” of a particular
fact or other matter if any individual who is serving, or has at any time
served, as a director, officer, partner, executor or trustee of such Person (or
in any similar capacity) has, or at any time had, Knowledge of such fact or
other matter.
 

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

     

    “Landlord” means Space
Management Company LLC, a Wisconsin limited liability company wholly owned by
Jeff.

     

    “Lease” means the lease
agreement between the Buyer and the Landlord in the form of Exhibit 12(n)
attached hereto.

     

    “Lease Guaranty” means the
Guaranty made by the Buyer Parent for the benefit of the Landlord in the form of
Exhibit
12(o) attached hereto.

     

    “Lease Termination” means the
termination of oral, month-to-month lease agreement between the Seller and the
Landlord in the form of Exhibit
12(p) attached hereto.

     

    “Leased Real Property” has the
meaning set forth in Section 5.1.5,
above.

     

    “Legal Requirement” means any
federal, state, local, municipal, foreign, international, multinational,
territorial or other administrative constitution, law, ordinance, code, policy,
principle of common law, rule, regulation, statute, treaty and the like, now or
hereafter in effect.

     

    “License” means the license
agreement among the Buyer, Jeff and Nathan in the form of Exhibit
12(q) attached hereto pursuant to which Jeff and Nathan shall grant to
the Buyer a non-exclusive, perpetual, royalty-free license to use the Database
Program.

     

    “Lien” means any mortgage,
deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or otherwise) or other security interest of any
kind or nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law) and any
contingent or other agreement to provide any of the foregoing.

     

    “Losses” means all damages,
losses, deficiencies, liabilities, claims, actions, demands, judgments, fines,
fees, costs and expenses (including, without limitation, reasonable attorneys’
and accountants’ fees and expenses).

     

    “M&I” means M&I
Marshall & Ilsley Bank.

     

    “M&I Indebtedness” means
the obligations of the Seller owed to M&I set forth on Exhibit
12(r) attached hereto in the aggregate amount set forth on Exhibit
12(r) (such amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000)).

     

    “Material Adverse Effect”
means any change, effect or circumstance that would have or would reasonably be
expected to have a material adverse effect on the Subject Business and the
Subject Assets, including operations, prospects and results of operations
(financial or other), individually or in the aggregate, taken as a
whole.  A “Material Adverse Effect” shall not include the impact of
(a) events affecting the United States of America or global economy or capital
or financial markets generally, (b) changes in GAAP or international
accounting principles, (c) changes in interest rates, (d) general economic
conditions or events or conditions generally affecting the industries or markets
in which the Subject Business operates, (e) an outbreak of national or
international hostilities or terrorism or escalation thereof or other similar
calamity or crisis that does not affect the Seller in a manner that is
materially and adversely different than the effect on the industry or markets in
which the Subject Business competes generally, (f) changes resulting from the
entry into this Agreement or the performance of a party’s obligations hereunder,
the announcement thereof and the transactions contemplated hereby, or (g) any
action taken with the consent of the Buyer.
 

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

     

    “Nathan” means Nathan
Jobe.

     

    “Nathan Inducement Option Award
Agreement” means the option award agreement between the Buyer Parent and
Nathan in the form of Exhibit
12(s) attached hereto pursuant to which the Buyer Parent shall award to
Nathan inducement grant options to acquire twenty-five thousand (25,000) shares
of Common Stock.

     

    “Nathan IP Assignment” means
the assignment of intellectual property assigning to the Seller all of the
Intellectual Property owned by Nathan and used by the Seller in the operation of
the Subject Business in the form of Exhibit
12(t) attached hereto.

     

    “Nathan Restrictive Covenant
Agreement” means the restrictive covenant agreement between the Buyer and
Nathan in the form of Exhibit
12(u) attached hereto.

     

    “Note” has the meaning set
forth in Section
2.3(a), above.

     

    “Note Guaranty” means the
Guaranty made by the Buyer Parent for the benefit of the Seller in the form of
Exhibit
12(v) attached hereto.

     

    “Note Purchase Price” has the
meaning set forth in Section 2.2,
above.

     

    “Object Code” means the
executable machine readable computer programs that are derived or compiled from
Source Code and are capable of affecting or controlling the operation of a
programmable device or system.

     

    “Officer Inducement Options”
means inducement grant options to acquire an aggregate of Seven Hundred
Twenty-Five Thousand (725,000) shares of Common Stock to be awarded at the
Closing by the Buyer Parent to Jeff and Joanne pursuant to the terms and
conditions of the Officer Inducement Option Award Agreements.

     

    “Officer Inducement Option Award
Agreements” means, collectively, the Jeff Officer Inducement Option Award
Agreements and the Joanne Officer Inducement Option Award
Agreement.

     

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

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

     

    “Ordinary Course of Business”
or “Ordinary Course”
means any action taken by a Person which (a) is consistent with past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; (b) is not required to be authorized by
the board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and (c) is similar in nature and magnitude in
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.

     

    “Permitted Liens” means (a)
Liens for Taxes and assessments not yet due and payable or which are being
contested in good faith by appropriate Proceedings, (b) Liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the Ordinary
Course of Business consistent with past practice and not yet delinquent, and (c)
the Liens set forth on Exhibit
12(w) attached hereto.

     

    “Person” means any individual,
corporation, general or limited partnership, limited liability company,
association, joint stock company, joint venture, estate, trust association,
organization, labor union or other entity or Governmental Body.

     

    “Plan” means (a) any “employee
benefit plan,” as defined in Section 3(3) of ERISA, that (i) is or was
subject to Title I of ERISA, (ii) is or was at any time maintained, administered
or contributed to by the Seller or any ERISA Affiliate, or to which the Seller
or any ERISA Affiliate has ever had an obligation to contribute, and (iii)
covers or covered any current or former employee, officer, director or
shareholder of, or any other Person that performed or is performing services
for, the Seller or any ERISA Affiliate, and (b) any other employment,
severance, benefit or similar Contract (whether or not written and whether or
not currently in effect) or Contract, plan, program or policy (whether or not
written and whether or not currently in effect) providing any compensation or
benefits to any current or former employee, officer, director or shareholder of
the Seller or any ERISA Affiliate or the dependents of any such individual
(including, without limitation, any Contract, plan, program or policy making
available bonuses, equity awards, non-taxable benefits such as those provided
under a Section 125 Cafeteria Plan or deferred compensation).

     

    “Prime Rate” means an annual
equal to the prime rate of interest as of the Closing Date as published in the
Midwest edition of The
Wall Street Journal (or successor publication).

     

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

     

    “Purchase Price” has the
meaning set forth in Section 2.2,
above.

     

    “RCRA” means the Solid Waste
Disposal Act, codified at 42 U.S.C. 6901 et seq., as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendment of 1984.

     

    “Records” means all books,
records, manuals and other materials of the Seller, including, without
limitation, all sales, manufacturing, customer, prospective customer and
supplier/vendor records, advertising, promotional, marketing and sales
literature, catalogs and materials, personnel and payroll records, accounting
records, purchase and sale records, price lists, correspondence, quality control
records and research and development files, wherever located (except the
Seller’s minute books, membership interest records and Tax
returns).
 

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

     

    “Registered Intellectual Property”
has the meaning set forth in Section 5.1.7(a),
above.

     

    “Registration Rights
Agreement” means the registration rights agreement between the Seller and
the Buyer Parent in the form of Exhibit
12(x) attached hereto.

     

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

     

    “Satisfied Liens” means the
Liens in the Subject Assets specified on Exhibit
12(y) attached hereto, which Liens shall be released by the holder(s)
thereof at or prior to the Closing.

     

    “Securities Act” has the
meaning set forth in Section 5.1.26(b),
above.

     

    “Seller” has the meaning set
forth in the preface above.

     

    “Seller Indemnified Persons”
has the meaning set forth in Section 11.2,
above.

     

    “Server” means the Seller’s
computer server and all information stored thereon.

     

    “Settlement Agreement” has the
meaning set forth in Section 9.20,
above.

     

    “Software” means computer
software, program processes, Source Code, Object Code and data conversion
scripts and tools, and all maintenance and user documentation, testing data and
other technical documentation related thereto.

     

    “Source Code” means the human
readable programming statements that are compilable or interpretable into a
machine readable program.

     

    “Stock Purchase Price” means
an amount equal to the fair market value of the Subject Shares as of the Closing
Date, as calculated by using the NYSE Amex price per share for the Common Stock
as of 4:00 p.m. Eastern Time on the business day immediately preceding the
Closing Date.

     

    “Subject Assets” has the
meaning set forth in Section 1.1,
above.

     

    “Subject Business” has the
meaning set forth in the recitals above.

     

    “Subject Shares” has the
meaning set forth in Section 2.4,
above.

     

    “Subsidiary” means, with
respect to any Person, any corporation or other Person of which (or in which)
50% or more of (a) the outstanding capital stock or other equity interest having
voting power to elect a majority of the Board of Directors of such corporation
or Persons having a similar role as to an entity that is not a corporation, (b)
the interest in the profits of such partnership or joint venture, or (c) the
beneficial interest of such trust or estate are at such time directly or
indirectly owned by such Person or one or more of such Person’s
Subsidiaries.
 

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

     

    “Tangible Assets” means all
tangible assets other than Inventory of every kind and description, including,
without limitation, all fixed assets, machinery, equipment, tools, tooling,
leasehold improvements, fixtures, furniture, furnishings, vehicles, computers
and software, data processing and other office machinery and equipment and other
items of similar character relating to the Subject Business, wherever located,
including, but not limited to, those assets specified on Exhibit
12(z) attached hereto, and all spare, replacement and repair parts
therefor.

     

    “Tax” or “Taxes” means all federal,
state, county, local, foreign and other taxes or assessments, however
denominated, including, without limitation, income, estimated income, business,
occupation, franchise, property (real and personal), sales, employment, gross
receipts, use, transfer, ad valorem, profits, license, capital, payroll,
employee withholding, unemployment, excise, goods and services, severance and
stamp, and including interest, penalties and additions in connection therewith,
for which any applicable Person is or may be required to pay, withhold or
collect.

     

    “Tax Return” means any return,
declaration, report, estimate, claim for refund or information return or
statement relating to, or required to be filed in connection with, any Taxes,
including any schedule, form, attachment or amendment.

     

    “Warranty Bill of Sale” means
the Warranty Bill of Sale in the form of Exhibit
12(aa) attached hereto.

     

    ARTICLE
XIII

     

    Miscellaneous

     

    13.1.      Expenses.  Except
as otherwise specifically provided herein, the parties hereto shall pay their
own expenses, including, without limitation, accountants’ and attorneys’ fees
and expenses incurred in connection with the negotiation and consummation of the
transactions contemplated by this Agreement.  The Seller shall be
liable for and shall pay and discharge when due any sales or use Taxes and any
transfer and conveyance Taxes and fees incurred and/or payable in connection
with the purchase and sale of the Subject Assets pursuant to this
Agreement.

     

    13.2.      Notices.  All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be considered to be given and received in all
respects when hand delivered, one (1) business day after sent by prepaid express
or courier delivery service, when sent by facsimile transmission actually
received by the receiving equipment or three (3) days after deposited in the
United States mail, certified mail, postage prepaid, return receipt requested,
in each case addressed as follows, or to such other address as shall be
designated by notice duly given:
 

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

     

    
      	
              IF
      TO BUYER OR

            	
              ZBB
      Energy Corporation

            
	
              BUYER
      PARENT:

            	
              N93
      W14475 Whittaker Way

            
	 
      	
              Menomonee
      Falls, WI  53051

            
	 
      	
              Attn:  Eric
      Apfelbach

            
	 
      	
              Fax
      No.:  (262) 253-9822

            
	 
      	 
      
	
              with
      a copy to:

            	
              Godfrey
      & Kahn, S.C.

            
	 
      	
              780
      North Water Street

            
	 
      	
              Milwaukee,
      WI  53202

            
	 
      	
              Attn:  John
      A. Dickens

            
	 
      	
              Fax
      No.:  (414) 273-5198

            
	 
      	 
      
	
              IF
      TO SELLER

            	
              Mr.
      Jeff Reichard

            
	
              OR
      MEMBER:

            	
              W353
      N6318 Marina Drive

            
	 
      	
              Oconomowoc,
      WI 53066

            
	 
      	
              Fax
      No.: _____________________

            
	 
      	 
      
	
              with
      a copy to:

            	
              Cramer,
      Multhauf & Hammes, LLP

            
	 
      	
              1601
      E. Racine Avenue, Suite 200

            
	 
      	
              Waukesha,
      WI 53187

            
	 
      	
              Attn:
      Philip J. Remmers

            
	 
      	
              Fax
      No.: (262) 542-4270

            

    

     

    13.3.      Right to Specific
Performance.  The
parties agree that the Subject Assets constitute unique property, that there is
no adequate remedy at law for the damage which any of them might sustain for the
failure of the others to consummate this Agreement, and, accordingly, that each
of them is entitled to the remedy of specific performance to enforce such
consummation.

     

    13.4.      Entire Agreement;
Amendment.  This
Agreement, the Exhibits attached hereto, the Disclosure Schedules and the
Ancillary Agreements constitute the entire agreement among the parties hereto
relating to the subject matter hereof, and all prior agreements, correspondence,
discussions and understandings of the parties (whether oral or written), with
the exception of the Confidentiality Agreement, are merged herein and made a
part hereof, it being the intention of the parties hereto that this Agreement
and the instruments and agreements contemplated hereby shall serve as the
complete and exclusive statement of the terms of their agreement
together.  No amendment, waiver or modification hereto or hereunder
shall be valid unless in writing signed by an authorized signatory of the party
or parties to be affected thereby.  Each party to this Agreement
acknowledges that no other party, nor any agent or attorney of any party, has
made any promise, representation or warranty whatsoever, express or implied, not
contained herein, concerning the subject matter hereof, to induce the other
party to execute this Agreement, and each party acknowledges that it has not
executed this Agreement in reliance on any such promise, representation or
warranty not contained herein.

     

    13.5.      Waiver.  The
waiver by any party of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any
party.
 

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

     

    13.6.      Binding
Effect.  This
Agreement shall be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns.

     

    13.7.      Section
Headings.  The
headings in this Agreement are for purposes of convenience and ease of reference
only and shall not be construed to limit or otherwise affect the meaning of any
part of this Agreement.

     

    13.8.      Severability.  The
parties agree that if any provision of this Agreement shall under any
circumstances be deemed invalid or inoperative, this Agreement shall be
construed with the invalid or inoperative provision deleted, and the rights and
obligations of the parties shall be construed and enforced
accordingly.

     

    13.9.      Applicable Law;
Venue.  This
Agreement and all questions arising in connection herewith shall be governed by
and construed in accordance with the laws of the State of Wisconsin without
application of choice of law or conflicts of law principles.  All
disputes arising hereunder and any claims made relating to the representations,
warranties, covenants or agreements contained in this Agreement shall be
resolved exclusively in state or federal courts located in Waukesha County,
Wisconsin, to which jurisdiction and venue the parties hereto irrevocably
consent.

     

    13.10.    Counterparts; Facsimile
Copy.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.  This Agreement may be executed in facsimile copy or by
other electronic means with the same binding effect as the
original.

     

    13.11.    Passage of
Title.  Legal
title, equitable title and risk of loss with respect to the Subject Assets
(other than the Intellectual Property, the Server and the Customer and Supplier
Lists) will not pass to the Buyer until such Subject Assets are transferred at
the Closing, which transfer, once it has occurred, will be deemed effective for
tax, accounting and other computational purposes as of 12:01 a.m. Central
Time on the Closing Date.  Legal title, equitable title and risk of
loss with respect to the Intellectual Property, the Server and the Customer and
Supplier Lists will not past to the Buyer until such assets are transferred
pursuant to the terms and conditions of the IP License and Warranty Bill of
Sale, which transfer, once it has occurred, will be deemed effective for tax,
accounting and other computational purposes as of 12:01 a.m. Central Time on the
effective date of such transfer.

     

    Signature
page follows.
 

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

     

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

     

    
      
        
          
            
              	
                      SELLER:

                    
	
                      TIER
      ELECTRONICS LLC

                    
	 
      	 
      
	
                      By:  

                    	
                      /s/ Jeffrey Reichard

                    
	 
      	
                      Jeffrey
      Reichard, President

                    
	 
      	 
      
	
                      MEMBER:

                    
	 
      	 
      
	
                      /s/ Jeffrey Reichard

                    
	
                      Jeffrey
      Reichard

                    
	 
      	 
      
	
                      BUYER:

                    
	
                      DCDC
      ACQUISITION COMPANY LLC

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Eric C. Apfelbach

                    
	 
      	
                      Eric
      C. Apfelbach, Chairman of the Board

                    
	 
      	 
      
	
                      BUYER
      PARENT:

                    
	
                      ZBB
      ENERGY CORPORATION

                    
	 
      	 
      
	
                      By:

                    	
                      /s/ Eric C. Apfelbach

                    
	 
      	
                      Eric
      C. Apfelbach, President

                    
	 
      	
                      and
      Chief Executive
Officer

                    

            

          

        

      

    

    
 

    Signature
page to Asset Purchase AgreementExhibit
10.2

     

    REGISTRATION
RIGHTS AGREEMENT

     

    THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of January 21st, 2011
is entered into by and among ZBB Energy Corporation, a Wisconsin corporation
(the “Company”), and Tier Electronics, LLC (“Stockholder”).

     

    WHEREAS,
this Agreement is entered into in connection with the issuance of shares of the
Company’s common stock (the “Common Stock”) to Stockholder as contemplated by
that certain Asset Purchase Agreement dated as of the date hereof (the “Asset
Purchase Agreement”);

     

    WHEREAS,
in accordance with the Asset Purchase Agreement the Company agreed to provide
Stockholder the registration rights set forth in this Agreement with respect to
the Common Stock; and

     

    WHEREAS,
the execution and delivery of this Agreement is a condition to closing under the
Asset Purchase Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

     

    
      	
              1.

            	
              Definitions.

            

    

     

    Holder:  Stockholder
so long as Stockholder owns any Registrable Securities and any of such
Stockholder’s respective successors and assigns who acquire rights in accordance
with this Agreement with respect to Registrable Securities, directly or
indirectly from such Stockholder, or from such other successor and assign, and
who agree in writing, in form and substance satisfactory to the Company, to be
bound hereby.

     

    Registration
Expenses:  Any and all reasonable expenses actually incurred
incident to performance of or compliance with this Agreement other than
underwriting and brokerage discounts and commissions, all fees and expenses of
counsel for any Holder or Holder, transfer taxes and other expenses, if any,
relating to the sale or disposition of such Holder’s Registrable Securities
pursuant to a Registration Statement.

     

    Registrable
Securities:  All or part of the shares of Common Stock issued
to Stockholder pursuant to the Asset Purchase Agreement; provided, however, that
shares of Common Stock shall not be Registrable Securities if and to the extent
that (i) a Registration Statement with respect to such Common Stock shall have
been declared effective under the Securities Act and such shares of Common Stock
shall have been disposed of in accordance with such Registration Statement, (ii)
such shares of Common Stock may be distributed to the public in accordance with
Rule 144 (or any successor provision) promulgated under the Securities Act, or
(iii) such shares of Common Stock shall have been otherwise transferred and new
shares of Common Stock, which do not bear restrictions against further transfer,
shall have been issued by the Company.

     

    Registration
Statement:  Any registration statement of the Company filed
with the SEC Which applies to any of the Registrable Securities (in whole or in
part), including the prospectus included therein, all amendments and any
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SEC:  The
United States Securities and Exchange Commission.

     

    Securities
Act:  The Securities Act of 1933, as amended from time to time,
or any successor statute, and the rules and regulations of the SEC thereunder,
all as in effect at the time.

     

    
      	
              2.

            	
              Registration under the
      Securities Act:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Right to
      Piggyback.  Subject to Sections 2(c) hereof, if at any time
      during the six month period commencing upon the date hereof, the Company
      proposes to file a Registration Statement under the Securities Act with
      respect to any offering of shares of Common Stock by the Company for its
      own account and/or on behalf of any of its security holders and the
      registration form to be used may be used for the registration of
      Registrable Securities (other than (i) a registration on Form S-8 or S-4
      or any successor form, (ii) a registration relating to a transaction
      subject to Rule 145 under the Securities Act, (iii) any registration of
      securities as it relates to an offering and sale to management of the
      Company pursuant to any employee stock plan or other employee benefit plan
      arrangement or (iv) any registration pursuant to the Amended and Restated
      Securities Purchase Agreement dated August 30, 2010 between the Company
      and Socius CG II, Ltd.) then, as soon as practicable (but in no event less
      than twenty (20) days prior to the proposed date of filing such
      Registration Statement), the Company shall give written notice of such
      proposed filing to the Holder, and such notice shall offer the Holder the
      opportunity to register such number of Registrable Securities as the
      Holder may request (a “Registration Request“).  Subject to Section
      2(c), the Company shall include in such Registration Statement all
      Registrable Securities requested within fifteen (15) days after the
      receipt of any such notice (which request shall specify the Registrable
      Securities intended to be disposed of by the Holder) to be included in the
      registration for such offering pursuant to a Registration Request;
      provided, however, that if, at any time after giving written notice of its
      intention to register shares of Common Stock and prior to the effective
      date of the Registration Statement filed in connection with such
      registration, the Company shall determine for any reason not to register
      or to delay registration of such shares of Common Stock, the Company may,
      at its election, give written notice of such determination to the Holder
      of Registrable Securities and, thereupon, (i) in the case of a
      determination not to register, shall be relieved of its obligation to
      register any Registrable Securities in connection with such registration,
      and (ii) in the case of a determination to delay registering, shall be
      permitted to delay registering any Registrable Securities, for the same
      period as the delay in registering such shares of Common
      Stock.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Expenses. 
      The Registration Expenses of the Holder of Registrable Securities will be
      paid by the Company in a Registration Request.  Underwriting or
      brokerage discounts and commissions, transfer taxes, if any, and any
      expenses of the Holder for counsel relating to the sale or disposition of
      such Holder’s Registrable Securities pursuant to such Registration
      Statement shall be borne by the
Holder.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Underwriter’s
      Cutback.  Notwithstanding Section 2(a), if a Registration
      Request involves an underwritten offering being made on behalf of the
      Company, and the managing underwriter or underwriters advise the Company
      in writing that in their opinion the number of shares of Common Stock
      requested to be included in such registration exceeds the number which can
      be sold in such offering or would be reasonably likely to adversely affect
      the price or distribution of the shares of Common Stock offered in such
      offering or the timing thereof, then the shares of Common Stock to be
      included in such registration shall be the number of shares of Common
      Stock, adjusted on a pro rata basis, that, in the opinion of such
      underwriter or underwriters, can be sold without an adverse effect on the
      price, timing or distribution of the shares of Common Stock to be
      included.

            

    

     

    
      	
              3.

            	
              Registration
      Procedures.  In connection with the Company’s obligations
      under Section 2 hereof, the Company shall use it best efforts to effect or
      cause to be effected the registration of the Registrable Securities under
      the Securities Act to permit offers and sales in accordance with the
      intended method or methods of distribution thereof.  The Company may
      require Stockholder to use Stockholder’s best efforts to furnish to the
      Company such information regarding the distribution of the Registrable
      Securities as the Company may from time to time reasonably request in
      writing.  In addition, and as a condition to Stockholder’s right
      pursuant to Section 2(a), Stockholder shall execute such underwriting
      agreement and otherwise sell the Registrable Securities on the same terms
      as applicable to the offering of shares pursuant to such registration
      generally.

            

    

     

    
      	
              4.

            	
              Indemnification.

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Company agrees to indemnify, to the extent permitted by law, each Holder
      of Registrable Securities, its officers and directors and each person or
      entity who controls such Holder (within the meaning of the Securities Act)
      against all losses, claims, damages, liabilities and expenses caused by
      any untrue or alleged untrue statement of material fact contained in any
      registration statement, prospectus or preliminary prospectus or any
      amendment thereof or supplement thereto or any omission or alleged
      omission of a material fact required to be stated therein or necessary to
      make the statements therein not misleading, except insofar as the same are
      caused by or contained in any information furnished in writing to the
      Company by such Holder expressly for use therein or by such Holder’s
      failure to deliver a copy of the registration statement or prospectus or
      any amendments or supplements thereto after the Company has furnished such
      holder with a sufficient number of copies of the same.  In connection
      with an underwritten offering, the Company will indemnify such
      underwriters, their officers and directors and each person or entity who
      controls such underwriters (within the meaning of the Securities Act) to
      the same extent as provided above with respect to the indemnification of
      the Holder of Registrable
Securities.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              In
      connection with any registration statement in which a Holder of
      Registrable Securities is participating, each such Holder will furnish to
      the Company in writing such information and affidavits as the Company
      reasonably requests for use in connection with any such registration
      statement or prospectus and, to the extent permitted by law, will
      indemnify the Company, its directors and officers and each person or
      entity who controls the Company (within the meaning of the Securities Act)
      against any losses, claims, damages, liabilities and expenses resulting
      from any untrue or alleged untrue statement of material fact contained in
      the registration statement, prospectus or preliminary prospectus or any
      amendment thereof or supplement thereto or any omission or alleged
      omission of a material fact required to be stated therein or necessary to
      make the statements therein not misleading, but only to the extent that
      such untrue statement or omission is contained in any information or
      affidavit so furnished in writing by such Holder; provided that the
      obligation to indemnify will be several, not joint and several, among such
      Holder of Registrable Securities and the liability of each such Holder of
      Registrable Securities will be in proportion to and limited to the net
      amount received by such Holder from the sale of Registrable Securities
      pursuant to such registration
statement.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Any
      person or entity entitled to indemnification hereunder will (i) give
      prompt written notice to the indemnifying party of any claim with respect
      to which it seeks indemnification; provided, however, that failure to give
      such notice will not prejudice such person’s or entity’s right to
      indemnification from the indemnifying party, except as to any losses
      suffered by such person or entity which are attributable to such person’s
      or entity’s failure to promptly give such notice to such indemnifying
      party and (ii) unless in such indemnified party’s reasonable judgment a
      conflict of interest between such indemnified and indemnifying parties may
      exist with respect to such claim, permit such indemnifying party to assume
      the defense of such claim with counsel reasonably satisfactory to the
      indemnified party.  The indemnifying party will not be subject to any
      liability for any settlement made by the indemnified party without its
      consent (but such consent will not be unreasonably withheld).  An
      indemnifying party who is not entitled to, or elects not to, assume the
      defense of a claim will not be obligated to pay the fees and expenses of
      more than one counsel for all parties indemnified by such indemnifying
      party with respect to such claim, unless in the reasonable judgment of any
      indemnified party a conflict of interest may exist between such
      indemnified party and any other of such indemnified parties with respect
      to such claim.

            

    

     

    
      	
               
      

            	
              (d)

            	
              The
      indemnification provided for under this Agreement will remain in full
      force and effect regardless of any investigation made by or on behalf of
      the indemnified party or any officer, director or controlling person or
      entity of such indemnified party and will survive the transfer of
      securities and the termination of this Agreement.  The Company also
      agrees to make such provisions as are reasonably requested by any
      indemnified party for contribution to such party in the event the
      Company’s indemnification is unavailable for any
  reason.

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              5.

            	
              Miscellaneous.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Amendments and
      Waivers.  The provisions of this Agreement, including the
      provisions of this sentence, may not be amended, modified or supplemented,
      and waivers or consents to departures from the provisions hereof may not
      be given, unless the Company has obtained the written consent of the
      Holder to such amendment, modification, or supplement or waiver or
      consents to such departures.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Notices.  All
      notices and other communications provided for or permitted under this
      Agreement shall be in writing and given in accordance with the notice
      provision in the Asset Purchase
Agreement.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Governing
      Law.  This Agreement shall be governed by and construed
      in accordance with the internal laws of the State of
      Wisconsin.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Severability.  In
      the event that any one or more of the provisions contained herein, or the
      application, thereof in any circumstance, is held invalid, illegal or
      unenforceable, the validity, legality and enforceability of any such
      provision in every other respect and of the remaining provisions contained
      herein shall not be affected or impaired
  thereby.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Successors and
      Assigns.  All covenants and agreements in this Agreement
      by or on behalf of any of the parties hereto will bind and inure to the
      benefit of the respective permitted successors and assigns of the parties
      hereto whether so expressed or not.  In addition, whether or not
      any express assignment has been made, the provisions of this Agreement
      which are for the benefit of purchasers or other permitted holders of
      Registrable Securities are also for the benefit of, and enforceable by,
      any subsequent permitted holder of Registrable Securities.  The
      registration rights of the Holder under this Agreement may be transferred
      to any transferee who lawfully acquires Registrable Securities; provided,
      however, that the Company is given written notice by the Holder at the
      time of such transfer stating the name and address of the transferee and
      identifying the securities with respect to which the rights under this
      Agreement are being assigned; and provided, further, that such transferee
      is a person who is reasonably satisfactory to the Company and executes an
      agreement in writing agreeing to be bound by the provisions of this
      Agreement.

            

    

     

    [SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

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

     

    
      
        	
                TIER
      ELECTRONICS LLC

              
	 
      	 
      
	
                By:

              	
                /s/ Jeffrey Reichard

              
	 
      	
                Jeffrey
      Reichard, President

              
	 
      	 
      
	
                ZBB
      ENERGY CORPORATION

              
	 
      	 
      
	
                By:

              	
                /s/ Eric C. Apfelbach

              
	 
      	
                Eric
      C. Apfelbach, President

              
	 
      	
                and
      Chief Executive Officer

              

      

    

     

    
      [Registration
Rights Agreement]

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