UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  04/06/2007
 
RELIABILITY INCORPORATED
(Exact name of registrant as specified in its charter)
 
Commission File Number:  0-7092
 
TX
  
75-0868913
(State or other jurisdiction of
  
(IRS Employer
incorporation)
  
Identification No.)
 
P.O. Box 218370, Houston, TX 77218-8370
(Address of principal executive offices, including zip code)
 
281-492-0550
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Information to be included in the report

 
Item 2.01.    Completion of Acquisition or Disposition of Assets
 
Effective April 1, 2007, Reliability Incorporated (hereinafter "Reliability" or the "Company") consummated the merger (the "Merger") of its wholly owned subsidiary, Reliability-Medallion, Inc., a Florida corporation ("Subsidiary"), into Medallion Electric Acquisition Corporation, a Florida corporation ("MEAC"), and the indirect acquisition, through MEAC, of Medallion Electric, Inc., a Florida corporation ("Medallion Electric"). Medallion Electric is an electrical contracting company for home builders in Florida, with its major assets consisting of contracts for services to be performed and accounts receivable.
MEAC is a privately held company owned by eight shareholders unrelated to Reliability. Medallion Electric is owned by one shareholder unrelated to Reliability or MEAC or any of MEAC's shareholders.
Reliability issued 2,850,000 shares of its common stock to the shareholders of MEAC as consideration for the Merger. Under the Agreement of Merger and Plan of Reorganization, Reliability is required to raise capital in one or more private placements of common stock to select accredited investors. If at least $2,000,000 is not raised in such private placements by June 15, 2007, the 2,850,000 shares issued in connection with the Merger, as well as the 150,000 shares of Reliability common stock issued and paid in connection with MEAC's acquisition of Medallion Electric, described below, will be forfeited, but Reliability will still own MEAC and Medallion Electric, notwithstanding the forfeiture of such shares.
Reliability funded $750,000 to MEAC after the Merger. $150,000 of such funds were to be made available to Medallion Electric as working capital; up to $100,000 were to be used by MEAC to pay its expenses of the transaction. MEAC used the remaining $500,000 to make the first payment to the shareholder of Medallion Electric for his stock of Medallion Electric and delivered two notes for the remainder of the purchase price - one for $500,000 due in six months ("$500,000 Note") and one for $1,500,000 due in six months ("$1,500,000 Note"). Reliability secured the $500,000 Note with the pledge of its real property in North Carolina (the "Property"); the $1,500,000 Note is secured with the assets of Medallion Electric. In addition, Reliability issued to the sole stockholder of Medallion Electric 150,000 shares of Reliability common stock; the stockholder directed that 30,000 of those shares be paid to his business broker. Finally, the selling stockholder of Medallion Electric is entitled to an earnout payment, the amount of which payment will depend on the gross profits of Medallion Electric for the next three years, with a minimum payment of $250,000 for each of such years and an additional amount if gross profits for any such year exceed gross profits for the 12 month period ending October 2006.
All of the funds used for the down payment to Medallion Electric were paid out of Reliability's cash on hand. Additional payments will come from Reliability's working capital, funds generated by the private placements, and funds generated by Medallion Electric's operations.
 
 
Item 2.03.    Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
 
In connection with the acquisition of Medallion Electric described under Item 2.01 above, on April 1, 2007, Reliability pledged the Property to secure the $500,000 Note. The $500,000 Note is due in full on October 1, 2007. If the $500,000 Note is not paid on the due date, the payee has the right to foreclose on the Property and retain from the proceeds of foreclosure the face amount of such note and interest, plus all costs of collection, including trustee's fees. During the term of the $500,000 Note, Reliability has an obligation to maintain the Property, insure it, pay the taxes on it and meet other standard mortgage provisions. Reliability's failure to comply with such provisions gives the beneficiary the right to accelerate the note.
 
 
Item 3.02.    Unregistered Sales of Equity Securities
 
On April 2, 2007, in connection with the Merger described under Item 2.01 above, the Company issued 3,000,0000 shares of its common stock, no par value. 2,850,000 of such shares were issued to the shareholders of MEAC in the Merger, and 150,000 of such shares were issued to the shareholder of Medallion Electric and his designee as part of the consideration for MEAC's purchase of Medallion Electric. All of shares of Reliability common stock were issued to accredited investors, as defined under Rule 501 of the Securities Act of 1933 ("Securities Act"), pursuant to Section 4(2) of the Securities Act of 1933, as amended and Rule 506 of the Securities and Exchange Commission. None of the securities issued is convertible.
 
 
Item 5.02.    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
Pursuant to the Agreement of Merger and Plan of Reorganization effecting the Merger, two new directors were appointed to Reliability's Board of Directors ("Board")- Alex Katz and David Kurland. Messrs. Katz and Kurland have agreed that if the Company is unable to raise additional capital of at least $2,000,000 by June 15, 2007, each such person will resign from the Board. At this time, neither Mr. Katz nor Mr. Kurland has been appointed to any committee of the Board.
Mr. Katz's wife was a shareholder of MEAC and thus, as a result of the Merger described in Item 2.01 above, received 591,435 shares of Reliability common stock. In addition, Reliability will pay Mr. Katz up to $400,000 for fees and expenses incurred by Mr. Katz in connection with the transactions described in Item 2.01 above, but only if at least $2,000,000 is raised in private placements of Reliability common stock to select accredited investors by June 15, 2007.
All directors of Reliability receive monthly compensation equal to $850, plus reimbursement of expenses for attending Board meetings.
 
 
Item 5.03.    Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
 
Effective April 1, 2007, the Board amended the Company's bylaws to increase the size of the Board from four members to six members. The full text of the amendment to the bylaws is attached hereto as Exhibit 3.01.
 
 
Item 7.01.    Regulation FD Disclosure
 
The Company is disclosing the press release attached hereto as Exhibit 99.1.
 
 
Item 9.01.    Financial Statements and Exhibits
 
(a)         Financial Statements of Businesses Acquired - to come by amendment
(b)        Pro Forma Financial Information - to come by amendment
(c)        Exhibits
        2.01        Agreement of Merger and Plan of Reorganization
        2.02        Stock Purchase Agreement, with Amendments
        3.01        Bylaw Amendment
        99.1        Press Release
 

 

Signature(s)
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
     
 
RELIABILITY INCORPORATED
 
 
Date: April 06, 2007
     
By:
 
/s/    James Harwell

               
James Harwell
               
Executive Vice President
 
 


 

Exhibit Index
 
Exhibit No.

  
Description

EX-3.01
  
EX-99.1
  
EX-2.02
  
EX-2.01
  

EXHIBIT 3.01

RESOLVED, that effective upon the Merger, Section 4.1 of the Company's bylaws will be amended in its entirety to read as follows:

Section 4.1 Number, Qualifications and Term. The business and affairs of the Company shall be managed and controlled by the board of directors; and , subject to any restrictions imposed by law, by the articles of incorporation, or by these bylaws, the board of directors may exercise all the powers that the Company is authorized to exercise. The board of directors shall consist of six (6) members. Such number may be increased or decreased by amendment of these bylaws, provided that no decrease shall effect a shortening of the term of any incumbent director. Directors need not be residents of Texas or shareholders of the Company absent provision to the contrary in the articles of incorporation or laws of the State of Texas. Except as otherwise provided in Section 4.3 of these bylaws, each position of the board of directors shall be filled by election at the annual meeting of shareholders. Any such election shall be conducted in accordance with Section 3.8 of these bylaws. Each person elected a director shall hold office, unless removed in accordance with Section 4.2 of these bylaws, until the next annual meeting of the shareholders and until his successor shall be been duly elected and qualified.

-FOR IMMEDIATE RELEASE -

Additional Information:

PO Box 218370

Larry Edwards

Houston, TX 77218

Jay Harwell

281/492-0550

281/492-0615 - fax

 

RELIABILITY INCORPORATED ANNOUNCES THAT THE ACQUISITION OF

MEDALLION ELECTRIC, INC. AND MEAC IS COMPLETED

 


HOUSTON, TEXAS, April 6, 2007 - Reliability Incorporated (REAL.PK) today announced that it has closed an "Agreement of Merger and Plan of Reorganization" with Medallion Electric Acquisition Corporation (MEAC) of Coral Springs, Florida. Under the agreement, Reliability's wholly owned subsidiary, Reliability-Medallion, Inc. merged with Medallion Electric Acquisition Corporation. Simultaneously, MEAC purchased 100% of the shares of Medallion Electric, Inc., a Florida electrical contractor with revenues of $7.9 million in 2006 and pretax income of $1.3 million. Total consideration for the transaction was $500,000 in cash at closing, notes for $2,000,000 payable in 6 months, an earn out which calls for a minimum of $250,000 per year for the next three years and will increase if certain profitability benchmarks are achieved, and three million unregistered restricted shares of Reliability Incorporated common stock, to be held in escrow or returned to the treasury, contingent upon increasing working capital by $2-3 million within the next 75-105 days. Reliability plans to use the additional working capital to fund operations, reduce debt, and pursue additional acquisitions.

Medallion Electric, Inc. was formed in 1980 by Ronald Masaracchio, the current owner, and a partner who has since retired. Mr. Masaracchio built the company by providing high quality electrical service to residential home builders and developers in the middle to high-end markets in the area of Broward and Palm Beach Counties in Florida. The Company has experienced dramatic growth over the past 24 months, driven by the expanding market in Florida, long-term relationships with existing customers, and Medallion's reputation for quality and service. Mr. Masaracciho will continue to run the operations of Medallion Electric, and will be joined by Mark E. Spoor, who will serve as President and Chief Operating Officer of MEAC, and Matthew Masaracchio, who will serve as General Manager of Medallion Electric.

 

-more-

Mr. Masaracciho commented, "I am very proud of the service and quality of work that we provide our customers in the Coral Springs area. By combining up with Reliability and MEAC we will now be positioned to continue to grow our business and maintain the high level of quality and service for which the Medallion name is known."

Mr. Spoor, the President and COO of MEAC, commented, "We are very fortunate to have a quality company like Medallion Electric, Inc. as the initial acquisition in our strategy to consolidate complementary target companies in the electrical contracting business in Florida. Management will be focused on increasing shareholder value and growing free cash flow. REAL, being a public company, will provide us the access to the public markets, which is an important element we need to continue our strategy."

Mr. Edwards, President of Reliability Incorporated, commented, "We have investigated a number of potential candidates to find a target company that we believe offers the best opportunity to increase our shareholder's value now and in the future. The combination of Reliability, MEAC, and Medallion Electric contain the proper talents, assets, and capabilities to support a growth strategy and gives the Reliability shareholders an opportunity to participate in that success. The post acquisition will be accreditive to equity per share for our existing shareholders, and if each group in the new organization makes or exceeds its plans for 2007, the equity per share for our shareholders should continue to increase."

Reliability's board of directors voted to expand the board from four members to six members and Alex Katz, a Director of MEAC, and David C. Kurland, an attorney from Philadelphia, PA., have been elected to fill those two positions.

Reliability Incorporated is based in Houston, Texas. Medallion Electric Acquisition Corporation is a wholly owned subsidiary of Reliability Incorporated and Medallion Electric, Inc. is wholly owned by Medallion Electric Acquisition Corporation. Medallion Electric, Inc. is an electrical contractor servicing the home builders and developers in the Coral Springs, Florida area.


"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this report regarding Reliability's business which are not historical facts are "forward looking statements" that involve risks and uncertainties that may affect the operations, performance, development and results of the Company's business and include, but are not limited to, adverse changes in the global economy, decreases in the demand for electrical contracting, home sales, housing developments, and repair services, the impact of competition, delays in schedules, adverse weather conditions, delays due to technical difficulties, delays in delivery schedules, the ability to attract and maintain sufficient levels of people with specific technical talents, future results related to investments or liquidity, changes in demand for the Company's products and services and the Company's customers' products and services and the ultimate acceptance by the market of our current and new products and services. Actual results may materially differ from projections.

-end-

AGREEMENT FOR PURCHASE AND SALE OF CAPITAL STOCK

between

MEDALLION ELECTRIC ACQUISITION CORPORATION,

a Florida corporation

and

RONALD MASARACCHIO,

an individual

Dated as of December 22, 2006

AGREEMENT FOR PURCHASE AND SALE OF CAPITAL STOCK

THIS AGREEMENT FOR PURCHASE AND SALE OF CAPITAL STOCK (the " Agreement ") is made by and among MEDALLION ELECTRIC ACQUISITION CORPORATION, a Florida corporation (the " Buyer "), and RONALD MASARACCHIO, an individual residing in Florida (the " Seller ").

BACKGROUND INFORMATION

A. Seller desires to sell, and Buyer desires to purchase, all of the issued and outstanding shares (the " Shares ") of capital stock of Medallion Electric, Inc. (the " Company "), a Florida corporation operating a residential electrical contractor business now being conducted at 3700 NW 124th Avenue, Suite 114, City of Coral Springs, State of Florida under the name of Medallion Electric, Inc. (the " Business ").

B. This Agreement contemplates a transaction in which the Buyer will purchase the Shares in return for the consideration provided for herein.

ARTICLE I

BASIC AGREEMENT PROVISIONS AND DEFINITIONS

1.1 Basic Provisions .

a. Purchase and Sale of Shares . On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from Seller, and the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of the Shares at the Closing for the consideration specified in this Section 1.1.

b. Purchase Price . The purchase price for the Buyer's acquisition of the Shares (the " Purchase Price ") is an amount equal to the sum of (i) Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00), as paid pursuant to Section 2.1 below and subject to the adjustments in Section 2.2 below (the " Initial Purchase Price "), and (ii) the Earnout Payment (as defined herein).

c. The Closing . The closing of the transactions contemplated by this Agreement (the " Closing ") shall take place at 2:00 p.m. local time on the earlier of: (i) the date seven (7) business days after the Buyer provides written notice (" Buyer's Closing Notice ") to the Seller that all of the conditions to consummate the transactions contemplated hereby have been satisfied or waived, or (ii) sixty (60) days after the Effective Date (as defined herein) of this Agreement (the " Closing Date "), at a location to be specified by the Seller within a fifty (50) mile radius of the Business, or at such other place, time or date as the parties hereto may mutually agree.

d. Inspection Period . The Buyer shall have a period commencing on the Effective Date (as defined herein) and terminating sixty (60) days from the Effective Date (the " Inspection Period "), within which to perform physical, financial and market feasibility examinations, inspections and studies of the Business, as more specifically set forth in Article III of this Agreement.

1.2 Definitions . The following capitalized words and terms contained in this Section 1.2 shall have the following respective meanings in this Agreement. The meanings of such words and terms are qualified by their definitions or usage elsewhere in this Agreement.

a. " Accounts Receivable " means (i) all trade accounts receivable and other rights to payment from customers of Company and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of products sold or services rendered to customers of Company, and (ii) any claim, remedy or other right related to any of the foregoing.

b. " Affiliate " means any entity that directly or indirectly controls, or is under common control with, or is controlled by the Buyer. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract, or otherwise).

c. " Business " has the meaning set forth in the Background Information of this Agreement and includes the Company Assets.

d. " Business Records " means originals (or copies) of all files, correspondence, invoices and other business records used in or necessary for the operation of the Business, including but not limited to, price lists, customer lists, sales records, sales correspondence, credit records, purchase orders, sales orders, and data respecting product returns, failures, defects and quality control.

e. " Buyer's Closing Notice " has the meaning set forth in Section 1.1.c. of this Agreement.

f. "Capital Lease" means all leases which have been or should be capitalized on the books of the lessee in accordance with GAAP.

g. " Claim " or " Claims " has the meaning set forth in Section 11.1 of this Agreement.

h. " Closing " has the meaning set forth in Section 1.1.c. of this Agreement.

i. " Closing Date " has the meaning set forth in Section 1.1.c. of this Agreement.

j. " Closing Date Financial Statements " means the financial statements of the Company to be provided to the Buyer by the Seller as set forth in Section 4.5.b. of this Agreement.

k. " Company " has the meaning set forth in the Background Information of this Agreement.

l. " Company Assets " shall mean all assets, rights and properties owned by Company and/or the Seller as used in or necessary for the operation of the Business, of every type and character, tangible and intangible, known and unknown, wherever located, and whether now existing or hereafter acquired, including, but not limited to Inventory, Accounts Receivable, Fixed Assets, Business Records, Company Contracts, Intangible Property, Permits, Proprietary Rights, and Work in Process, except for the Excluded Assets.

m. " Company Contracts " means all contracts, agreements, commitments, franchise agreements, obligations, leases, insurance policies, arrangements or understandings, written or oral, pertaining to the operation of the Business, and listed or described on Schedule 1.2. m. attached hereto.

n. " Customer Orders " has the meaning set forth in Section 2.2.c. of this Agreement.

o. "Debt" means (i) indebtedness or liability for borrowed money or for the deferred purchase price of property or services (including trade obligations); (ii) obligations as lessee under Capital Leases; (iii) current liabilities in respect of unfunded vested benefits under any benefit plan; (iv) obligations under letters of credit; (v) all obligations arising under any promissory notes; and (vi) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any person, or otherwise to assure a creditor against loss.

p. " Earnout Agreement " means that certain agreement between Seller and Buyer, in the form attached hereto as Exhibit 1 , providing for the payment of the Earnout Payment.

q. "Earnout Payment" means the portion of the Purchase Price that shall be paid based upon the performance of the Business from October 1, 2006 to September 30, 2009, as provided in the Earnout Agreement.

r. " Effective Date " has the meaning set forth in Section 12.1 of this Agreement.

s. " Environmental Laws " has the meaning set forth in Section 6.1.j.[2]1) of this Agreement.

t. " Excluded Assets " means those assets, rights and properties owned by Company and not to be acquired by the Buyer hereunder, as specifically set forth on Schedule 1.2.t. attached hereto.

u. " Financial Statements " means the financial statements of the Company delivered to the Buyer by the Seller as specifically set forth in Section 7.1.g. of this Agreement.

v. " Fixed Assets " means all machinery and equipment, attachments and parts therefor, automobiles, trucks, tractors, trailers, vans, or other vehicles, tools, furniture, leasehold improvements, fixtures, shop supplies, office supplies, computer software, and all other tangible personal property of every kind and nature (other than the Inventory) owned by Company and/or Shareholder and used in or necessary for the operation of the Business, including but not limited to those assets listed on Schedule 1.2.v. hereto (the " Fixed Assets ")

w. " GAAP means Generally Accepted Accounting Principals.

x. " Hazardous Substances " has the meaning set forth in Section 6.1.j.[2]2) Agreement.

y. " Initial Purchase Price " has the meaning set forth in Sections 1.1.b.

z. " Inspection Period " has the meaning set forth in Section 1.1.c. of this Agreement.

aa. " Intangible Property " means all intangible property of Company, including but not limited to customer deposits, utility deposits, equipment deposits, security deposits, lease deposits or other deposits, claims, causes of action, choses in action, prepayments, refunds, rights of recovery, rights of set off, rights of recoupment and any goodwill associated with the Business.

bb " Inventory " means all inventory and stock-in-trade of Products owned by Company on the Closing Date, wherever located (including inventory owned by Company in the possession of manufacturers, suppliers or others or in transit).

cc. " Liens " has the meaning set forth in section 6.1.f. of this Agreement.

dd. " Permits " all licenses, permits, franchises (including applications therefor), approvals, orders, registrations, certificates, variances and similar rights obtained from governments, governmental agencies and others.

ee. " Phase I Assessment " has the meaning set forth in Section 7.1.f. of this Agreement.

ff. " Phase II Investigation " has the meaning set forth in Section 7.1.f. of this Agreement.

gg. " Proprietary Rights " means all right, title and interest of Company in and to all advertising materials, logos, processes, technology, know-how, trade secrets and other proprietary information, copyrights, tradenames, corporate names, trademarks, service marks, including all adaptations, derivations, and combinations thereof and including all goodwill associated therewith, owned by Company or used in or necessary for the operation of the Business, including all applications, registrations, and renewals in connection with any of same. The aboveshall include but not be limited to the name Medallion Electric, Inc., telephone numbers and facsimile numbers, web pages and Internet sites, e-mail addresses and domain names, used in the Business or reserved by the Company or any Shareholder, and any other assets listed on Schedule 1.2.gg. hereto.

hh. " Purchase Price " has the meaning set forth in Section 1.1.b of this Agreement.

ii. " Real Property Lease " means the lease agreement between the Company and Coral Springs Commercial Park, LLC, for the real property located at 3700 NW 124th Avenue, Suite 114, Coral Springs, Florida 33605.

jj. [intentionally left blank]

kk. " Shares " has the meaning set forth in the Background Information of this Agreement.

ll. " Termination Date " means the date of termination of this Agreement by Buyer in accordance with the provisions of Section 3.3 of this Agreement.

mm. " Termination Notice " means the Buyer's notice of termination of this Agreement in accordance with the provisions of Section 3.3 of this Agreement.

nn. " Third Party Consents " has the meaning set forth in Section 8.1.c. of this Agreement.

oo. " Work in Process " means any work in process on customer orders and profit generated from such work in process, including, but not limited to unprocessed raw materials, work in process and finished product as listed on a schedule to be provided by Seller prior to Closing pursuant to Section 4.5.a. below.

ARTICLE II

PAYMENT OF PURCHASE PRICE

2.1 Payment of Purchase Price . The purchase price (the "Purchase Price") to be paid by the Buyer shall be $2,500,000.00, subject to the adjustments in Section 2.2, plus the Earnout Payment (as defined below) and shall be paid to the Seller as indicated below.

a. Payment Upon Closing . The Buyer shall pay to the Seller, by cashier's check or wire transfer of immediately available funds, an amount equal to $1,500,000.00 upon Closing;

b. Payment Six Months After Closing . At the Closing, the Buyer shall deliver to the Seller a non-interest bearing promissory note (the " Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, an amount equal to $1,000,000.00 on the six (6) month anniversary of the Closing (the " Deferred Purchase Price Payment "). The Deferred Purchase Price Payment shall be secured by a blanket lien in the assets of the Company (the " Security Agreement ") perfected under Article 9 of the Uniform Commercial Code; provided, however, the Seller's security interest in the assets of the Company shall be junior to the Buyer's senior lender's security interest in the assets of the Company and subject to any standstill provisions that my be required by the senior lender (the " Subordination Agreement ").

c. Earnout Payment . Buyer shall pay to the Seller payments (the " Earnout Payment ") based on the gross profits each year for three years after Closing pursuant to the terms of that certain Earnout Agreement (as defined in Section 8.1.m below).

2.2 Adjustments to Purchase Price . The Purchase Price shall be subject to the following adjustments:

a. Agreed Working Capital at Closing . Buyer acknowledges that customary dividends and distributions will be made by the Company to its shareholders between the Effective Date of this Agreement and the date of the Closing; provided, however, that the Company will maintain an agreed working capital amount of $800,000.00 as of Closing (the " Agreed Net Working Capital "). To the extent that the " Closing Net Working Capital " (as defined below) exceeds $800,000.00, such excess shall be added to the amount of the Purchase Price to be paid at Closing and, to the extent that the Closing Net Working Capital is less than $800,000.00, the amount by which the Closing Net Working Capital is less than $800,000.00 shall be subtracted from the amount of the Purchase Price to be paid at Closing. For purposes of this Section 2.2(a ) , the " Closing Net Working Capital " shall be defined and calculated as of Closing as the "accounts receivable" (net of reserves) less the sum of (i) the "accounts payable" and (ii) the "accrued expenses" as such amounts are determined in accordance with Generally Accepted Accounting Principles (" GAAP ").

ARTICLE III

INSPECTION PERIOD

3.1 Inspections . During the Inspection Period, the Buyer has the right to conduct such physical, financial and market feasibility examinations, inspections and studies of the Business as may be desirable to Buyer to determine the feasibility of the Buyer's acquisition of the Business.

3.2 Seller's Cooperation . The Seller shall cooperate with the Buyer, at no expense to Seller, in Buyer's fulfillment of the foregoing inspections including, without limitation, signing such authorizations, applications and other documents as are reasonably required to permit the Buyer to exercise its rights under this Article III. The Seller agrees to reasonably cooperate with Buyer in making available to Buyer, upon Buyer's reasonable request, all books, documents, records and other documents and materials in its possession or in the possession of Seller, its agents, attorneys or consultants.

3.3 Termination by Buyer . In the event that the Buyer is not satisfied, in its sole discretion, with the results of Buyer's inspections, examinations, investigations and studies, or if for any reason whatsoever the Buyer desires to terminate this Agreement, the Buyer shall have the right to do so. If Buyer elects to terminate this Agreement pursuant to this Article III, the Buyer must give the Seller written notice of such termination (the " Termination Notice ") prior to expiration of the Inspection Period. For purposes of this Section 3.3, this Agreement will be terminated as of the date of delivery of the Termination Notice (the " Termination Date "), and the parties hereto will have no further rights or obligations hereunder except as to the terms of Article IX (Publicity/Confidentiality).

ARTICLE IV

CLOSING

4.1 Closing Date . The consummation of the transactions contemplated by this Agreement shall take place at the Closing as provided in Section 1.1.c.

4.2 Satisfaction of Debt .

a. Satisfaction of Debt . Seller shall satisfy all Debt of the Company, other than the "accounts payable" and the "accrued expenses" of the Company, as such amounts are determined in accordance with GAAP.

b. Use of Cash to Satisfy Liabilities or Liens . Any part of the cash portion of the Purchase Price paid by Buyer at the Closing may be used by Seller to satisfy Liens identified in Schedule 6.1.f. hereto, other than Permitted Liens, and to assure the Buyer that all material liabilities of the Company have been satisfied, other than the "accounts payable" and the "accrued expenses" of the Company, as such amounts are determined in accordance with GAAP.

4.3 Prorations Taxes, Rents and Licenses . All tangible real and personal property taxes or assessments chargeable for the calendar year of Closing with respect to any of the Company Assets, rents and the unexpired cost of any transferable licenses, shall be prorated as of the Closing Date. If the amount of such taxes and assessments for the current year cannot be ascertained, rates, millages and assessed valuations of the previous year, with known changes, shall be used and such taxes and assessments shall be re-prorated and readjusted upon the request of either party after the tax bill for the year of Closing is received.

4.4 Employees . Immediately prior to the Closing Date, the Company shall pay any salaries, accrued vacation, bonuses, sick leave or other fringe benefits or remuneration arising out of any employment relationship that are accrued or due to the Company's employees, including any such amounts due to Ronald Masaracchio or Matthew Masaracchiom or otherwise include them as an "accrued expense" in the calculation of Closing Net Working Capital. The Seller has delivered to the Buyer a list of all of the Company's employees and the annual compensation currently paid to each such employee, attached hereto as Schedule 4.4 .

4.5 Deliveries at the Closing . At the Closing, the Seller shall deliver to the Buyer (a) though (g) below and the Buyer shall deliver (h) to the Seller below:

a. Schedules Concerning Customer Related Contracts . A detailed schedule listing or describing all Accounts Receivable, Work in Process, Customer Orders, Accounts Payable, and Accrued Expenses existing as of the Closing Date;

b. Closing Date Financial Statements . Quarterly, monthly, and partial monthly Financial Statements, as applicable, for periods ended subsequent to the Effective Date of this Agreement (the " Closing Date Financial Statements ") and not otherwise provided to Buyer pursuant to Section 6.1.d.[1];

c. Termination Statements. An agreement of release from each of the Seller's creditors who have a security interest in any of the Company Assets and a termination statement with respect thereto;

d. Conveyance Documents . Certificates representing the Shares, duly endorsed (or accompanied by duly executed stock powers), by the Seller for transfer to Buyer, and such conveyances, assignments, agreements and other documents, in form and substance satisfactory to Buyer's counsel, as may be reasonably requested by Buyer's counsel to effect the sale and transfer of the Shares and to consummate the transactions contemplated by this Agreement and such other deliveries specified in or contemplated by this Agreement;

e. Third Party Consents . All Third Party Consents which the Seller is obligated to obtain under the terms of this Agreement;

f. Related Agreements . The related agreements and documents contemplated under Section 8.1. of this Agreement;

g. Seller's Certificate . A certificate of the Seller, certifying as to the satisfaction of all conditions precedent to Buyer's obligations to consummate the transactions contemplated under this Agreement;

h. Related Agreements - Seller . The related agreements and documents contemplated under Section 8.2. of this Agreement;

When all such deliveries have been completed, Buyer shall deliver to Seller a cashier's check or effectuate a wire transfer of funds in accordance with Section 4.1 hereof.

ARTICLE V

FAILURE TO CLOSE

5.1 Failure of Conditions Precedent . If the conditions precedent of Section 8.1 have not been fulfilled by the Seller or waived by the Buyer, then the Buyer shall be relieved of all obligations under this Agreement, except for the obligations of Buyer under Article IX (Publicity/Confidentiality).

5.2 Buyer's Failure to Close . If the Buyer has received the Third Party Consents and the remaining conditions of Section 8.1 have been fulfilled by the Seller or waived by the Buyer, and Buyer fails to close, both Buyer and Seller shall be relieved of all obligations under this Agreement, except for the obligations of Buyer under Article IX (Publicity/Confidentiality).

5.3 Seller's Failure to Close . If the Closing is not timely consummated as a result of the Buyer's determination that a condition precedent has not been met, to be memorialized by notice furnished to the Seller on or prior to the Closing Date, or the Seller has not been able to fulfill all of the Seller's obligations as set forth in this Agreement, then the Buyer may not bring suit for damages, so long as the good faith and diligence in attempting to fulfill its obligations.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

6.1 Representations and Warranties by Seller . To induce Buyer to enter into this Agreement, and to close the transactions contemplated by this Agreement, Seller represents and warrants as follows:

a. Organization and Standing of Company . Company is a corporation duly organized, validly existing and in good standing under the laws of the state in which the Business is being conducted, and has all requisite power and authority to own, operate and carry on the Business as now being conducted. The nature of the operations of the Business does not require the Company to be licensed to do business or to qualify as a foreign corporation in any other jurisdiction. Seller has previously delivered to Buyer correct and complete copies of Company's Articles of Incorporation and By-Laws as in effect on the Effective Date, and will make available to Buyer upon request the Company's minute books in existence from the date of incorporation through the Effective Date, which all material transactions affecting Seller have been authorized by required board or shareholder action, together with such other documents within the Seller's or the Company's possession as Buyer shall reasonably request. None of the resolutions or written actions contained in such minute books have been amended or rescinded and all are in full force and effect on the Effective Date.

b. Subsidiaries . Company owns no shares of capital stock or other equity interest in any corporation, partnership, joint venture or other business organization or enterprise in any way, directly or indirectly, which does business with or is associated with the Business.

c. Authorization . The execution, delivery and performance of this Agreement by Seller and his consummation of the transactions contemplated hereby have been duly authorized by the Seller, which authorization and approval constitutes all authorization necessary on the part of Seller. The execution, delivery and performance of this Agreement do not and will not violate or result in a breach or give rise to any right of termination or acceleration under any provision of any obligation, agreement, instrument or other document to which the Company or the Seller is a party or by which the Company or the Seller is otherwise bound, or any order or judgment of any court or governmental authority having jurisdiction over the Company or the Seller or any of their assets, and will not violate any provisions of the Company's Articles of Incorporation or By-Laws. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable in accordance with its terms.

d. Financial and Operating Information .

[1] Financial Statements . The Financial Statements, when delivered on the Financial Statement Delivery Date (as defined in Section 7.1(g) below), and on the Closing Date, shall be complete and correct, in each case certified as to accuracy and completeness by the President of the Company. The Financial Statements, on the Financial Statement Delivery Date and on the Closing Date, shall be prepared in accordance with GAAP and are complete and consistent with the books and records of the Company and present fairly the financial condition and results of operations as of the respective dates thereof and the respective periods then ended.

[2] Closing Date Financial Statements . On the Closing Date, the Seller shall provide to the Buyer the Closing Date Financial Statements. The Closing Date Financial Statements shall be accurate and complete as of the Closing Date.

e. No Material Change in Business . At all relevant times prior to the Effective Date of this Agreement including, without limitation, during all times subsequent to the first day of the period covered by the Financial Statements, the Business has been operated in the ordinary course and there has been no material adverse change in, or event or state of facts which has affected or may affect, materially and adversely, the condition (financial or otherwise) of the assets, liabilities, earnings, or operations of the Business.

f. Assets for Business; Condition and Complete Maintenance; Title .

[1] The Company Assets include all of the assets of every kind and character used in the operation of the Business as presently conducted, except as specifically excluded on Schedule 6.1.f . The Fixed Assets have been maintained in good condition and repair, subject to normal wear and tear which does not materially adversely affect their use in the operation of the Business as presently conducted, and are suitable for their intended uses. The Company has good and marketable title to all of the Company Assets, free and clear of all liens, assignments, security interests, claims, mortgages, encumbrances or charges of any kind or nature except as (and in the amounts) specifically listed on Schedule 6.1.f. hereto (" Permitted Liens "), and Seller has delivered to Buyer copies of all notes, loan agreements, security agreements, financing statements and other documents relating to any such Liens. On the Closing Date, the Company Assets will be free and clear of all Liens, except the Permitted Liens.

[2] The Company has received no notice of any building, fire or zoning violations or violations, with respect to the Real Property and/or the Business, of any applicable laws, regulations, codes, ordinances and orders of public authorities having jurisdiction with regard to the Real Property and/or the Business.

g. Inventory . The Inventory, if any, is in good condition, meets the current quality control standards of the Company, is not in excess of net realizable value, and is saleable in the ordinary course of business.

h. Accounts Receivable . All Accounts Receivable that are reflected on the schedule to be provided by Seller prior to Closing pursuant to Section 4.5.a. below or on the accounting records of Company as of the Closing Date represent or will represent valid obligations arising from sales actually made or services actually performed by Company in the ordinary course of business. The Accounts Receivable are or will be as of the Closing Date current and collectible net of the respective reserves shown on the Financial Statements or the Closing Date Financial Statements (which reserves are adequate and calculated consistent with past practice and, in the case of the reserve as of the Closing Date, will not represent a greater percentage of the Accounts Receivable as of the Closing Date than the reserve reflected in the Financial Statements represented of the Accounts Receivable reflected therein and will not represent a material adverse change in the composition of such Accounts Receivable in terms of aging). Subject to such reserves, there is no contest, claim, defense or right of setoff, other than returns in the ordinary course of business of Company, under any Contract with any account debtor of an Account Receivable relating to the amount or validity of such account receivable and each of the Accounts Receivable either has been or will be collected in full, without any setoff, within one hundred and twenty (120) days after the day on which it first becomes due and payable.

i. Contracts . Company does not have any Contracts, except those listed and described in Schedule 1.2.m , all of which were made in the usual and ordinary course of business. Seller has delivered to Buyer correct and complete copies of all of the Company's Contracts that are in written form, and Schedule 1.2.m. contains a correct and complete description of any Contracts of the Company that are not in written form. Company has fulfilled, or taken all action necessary to enable it to fulfill when due, all material obligations under the Contracts. There has not occurred any material breach or default, or any event which with the lapse of time or the election of any person, or both, will become a material breach or default, under any Contract, and all Contracts are legal, valid and binding and in full force and effect.

j. Litigation. Except as disclosed on Schedule 6.1.j. hereto, there are no claims, actions, suits, proceedings or investigations pending or, to the best knowledge of Seller and the Company, threatened against or affecting Company or the Business before any foreign, federal, state, local or other court, governmental authority or agency. The Company is not in any violation of any order or judgment of any court or governmental authority with respect to the Business, and there is no order, decree or judgment of any kind in existence enjoining or restraining Company, or any of its officers or employees from taking any action of any kind with respect to the Business, or requiring Company, or any of its officers or employees to take, any action of any kind with respect to the Business.

k. Compliance with Laws .

[1] The Company has materially complied with all applicable laws and regulations of foreign, federal, state, local and other court and/or governmental authorities and agencies which affect the Company Assets. In particular, but without limiting the generality of the foregoing, neither Company nor its officers or employees have materially violated the Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act of 1970, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976 or any other state or federal acts (including rules and regulations thereunder) regulating or otherwise affecting the employment of aliens, employee health and safety or the environment (collectively, the " Acts "). Neither Seller nor the Company have ever received a notice or been made aware of any charge asserting any violation of any of the Acts.

[2] The Seller represents that neither Company nor any of its officers, employees, agents or affiliates has ever used or stored Hazardous Substances (as defined herein) on the Real Property. For purposes of this Agreement, " Hazardous Substances " shall mean and include those elements or compounds which are contained in the list of hazardous substances adopted by the United States Environmental Protection Agency (EPA) and the list of toxic pollutants designated by the United States Congress or the EPA or defined by any other Federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material as now or at any time hereunder in effect.

[3] The Company has filed all reports required to be filed by it with any governmental, regulatory or administrative agency.

[4] The Company has obtained and currently holds an occupational license to engage in business at the Real Property.

l. Taxes . Company has correctly prepared and filed all required tax and information returns and reports relating to its operational results and the Company Assets, and all taxes, fees, assessments or other governmental charges, withholdings of any nature, including sales or use taxes and taxes required to be withheld from or paid in respect of employees' salaries, have been paid in all taxing jurisdictions in which the conduct of the Business or the ownership of the Company Assets subjects Company to any taxes, fees, assessments or other governmental charges. The Seller has delivered to the Buyer complete and accurate copies of Company's federal and state income tax returns, and any amendments thereto, for each of the three (3) tax years immediately prior to the Effective Date of this Agreement.

m. Service Warranties . Schedule 6.1.m. hereto accurately describes all service warranties issued by Company. Service claims for the Company's most recently completed fiscal year did not exceed 2% of the Company's revenues for the Company's most recently completed fiscal year.

n. Trademarks and Infringement . The Company is the sole and exclusive owner of, and has the sole exclusive right to use, all Proprietary Rights used in the operation of the Business, all of which are listed on Schedule 1.2.gg. hereto. The Proprietary Rights are valid and enforceable and are free and clear of any liens, charges, encumbrances, or claims of any nature. To the best of Seller's knowledge, none of the Proprietary Rights nor the operation of the Business infringes upon the proprietary rights of others, and no claims of such infringement have been made or are pending; and there is no basis for any such claims.

o. Licenses . The Company has obtained, and maintains in a current condition, all required licenses and permits to operate the Business, and operates the Business and markets the Products in accordance with all required governmental licensing laws and regulations.

p. Insurance . Set forth in Schedule 6.1.p. hereto is a list of all insurance policies owned by the Company which apply to the Business, including the name of the insurer, the risk insured against, the limits of coverage and the deductible amount (if any). All insurance policies listed on Schedule 6.1.p. are (i) valid, outstanding and enforceable, and (ii) are sufficient for compliance with all applicable legal requirements of the Company and the Shareholder in connection with the Business. In addition, for each policy of insurance listed on Schedule 6.1.p. , Company has paid all premiums due and given notice to the insurer of all claims that may be insured thereby.

q Customers and Suppliers . Except as otherwise set forth on Schedule 6.1.q. , there is no customer that has accounted for more than 10% of the Company's sales during any of the three (3) fiscal years preceding the Effective Date of this Agreement. Set forth on Schedule 6.1.q. hereto is a list of the ten suppliers with whom Company has had the greatest dollar volume of business during the 12 month period prior to the Effective Date, together with estimated volumes. Neither Seller nor the Company have any present reason to believe that any such supplier is not likely to continue to maintain its relationships with the Business following the Closing Date.

r. Affiliated Transactions . Except as set forth on Schedule 6.1.r. attached hereto, neither the Shareholder nor any person related by blood or marriage to them or any entity in which the Shareholder own any material beneficial interest, is a party to any agreement, contract, commitment or transaction with Company relating to the Business or has any interest in any property used by Company in connection with the Business.

s. Employee Benefit Plans . Company has no employee pension benefit plans (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA ")), no employee welfare benefit plan (as defined in Section 3(1) of ERISA) and no nonqualified employee benefit plan, program or fringe benefit covering any employee of the Business other than as described in Schedule 6.1.s. hereto. There are no multi-employer plans covering any employee of the Business and there is no current multi-employer plan withdrawal liability with respect to any employees.

t. Labor Matters . Since the inception of the Business, no work stoppage by employees of Company engaged in the Business has occurred and, to the knowledge of Seller and the Company, none is threatened. There are no charges pending before any governmental or regulatory agency or authority against Company for unfair labor practices with respect to employees of the Business and, to the best knowledge of Seller and the Company, none is threatened. There are no pending labor negotiations with or union organization efforts by any employees of the Business or with any union representing or attempting to represent any employees of the Business. The Company has never received notice of any grievances by employees of the Business that have not been resolved. To the best knowledge of Seller and the Company, other than immediate family members of the Shareholder, no key employee or agent or group of employees or agents of Company has any plans to terminate his, her or its employment by or agency with the Company or, following the Closing Date, by or with the Buyer.

u. Absence of Undisclosed Liabilities. Except as and to the extent liabilities are specifically reflected on the Financial Statements, to the best knowledge of Seller and the Company, Company has no liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise, except customary liabilities and obligations arising out of transactions in the ordinary course of business prior to the Effective Date of this Agreement, and neither Seller nor the Company know or have any reason to know of any basis for the assertion of any such liability or obligation. As of the Closing Date, Company will not have any liabilities or obligations (whether accrued, absolute, contingent, unliquidated or otherwise, known to Company, whether due or to become due) except (i) liabilities or obligations expressly set forth on the latest balance sheet included in the Financial Statements or incurred since the date of the latest balance sheet included in the Financial Statements in the ordinary course of business and not in excess of customary amounts, and (ii) liabilities and obligations specifically disclosed on the Schedules attached hereto.

v. Disclosure. Neither this Agreement, including all Schedules attached hereto, nor any other document, certificate or statement furnished to the Buyer by or on behalf of the Seller or the Company in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading; and there is no fact which materially adversely affects, or, to the best of the Seller's knowledge, in the future may (so far as the Seller or the Company can now reasonably foresee) materially adversely affect the assets, business, operations or prospects of the Company which has not been set forth herein or in a schedule or statement furnished to the Buyer.

w. Capitalization . The authorized equity securities of the Company consist of one thousand (1,000) shares of common stock, par value $1.00 per share, of which two hundred and fifty (250) shares are issued and outstanding and constitute the Shares. Seller is and will be on the Closing Date the record and beneficial owner and holder of all of the Shares, free and clear of all any liabilities, obligations, claims, liens or encumbrances . No legend or other reference to any purported encumbrance appears upon any certificate representing equity securities of the Company. All of the Shares have been duly authorized and validly issued and are fully paid and nonassessable. The Company holds no shares of its capital stock in its treasury (any such shares having been returned to the status of authorized but unissued shares) and the Shares have been duly authorized and validly issued and are fully paid and non-assessable. On the date hereof, there are, and on the Closing Date there will be, no outstanding rights, options, warrants, conversion privileges or agreements of any kind for the purchase or acquisition from, or the sale or issuance by, the Company of any shares of its capital stock and no authorization therefor has been given.

6.2 Buyer's Representations and Warranties . To induce Seller to enter into this Agreement, and to Close the transactions contemplated by this Agreement, Buyer represents and warrants as follows:

a. Organization and Standing of Buyer . The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, and has all requisite corporate power and authority, and all contract rights, to own its assets and to carry on and engage in its business affairs as now conducted. As of the Closing Date, the Buyer will be qualified or licensed as a foreign corporation to do business in the state in which the Business is being conducted.

b. Authorization . When executed and delivered by the Buyer, this Agreement will constitute a valid and binding obligation of the Buyer, enforceable in accordance with its terms.

c. Consent . No consent, approval or authorization of or registration, qualification, designation, declaration or filing with any governmental authority or private person or entity on the part of the Buyer is required in connection with the execution and delivery of this Agreement or the consummation of any other transaction contemplated hereby, except as shall have been duly taken or effected prior to the Closing.

d. Litigation . There is no action, proceeding or investigation pending or threatened at the present time, or, to the knowledge of the Buyer, any potential action, proceeding or investigation which might result in a material adverse change in the assets, business, operations or prospects of the Buyer, or in any manner impair the right or ability of the Buyer to carry on its business as now conducted or as proposed to be conducted, or impose any material liability on the part of the Buyer, or which questions the validity of this Agreement or of any action taken or to be taken in connection with the transactions contemplated hereby.

ARTICLE VII

AGREEMENTS PENDING THE CLOSING

7.1 Agreements Pending the Closing . Between the Effective Date and the Closing Date, Seller and the Company agree that:

a. Conduct of Business . Company will operate the Business in the ordinary and usual course and only in that manner. Without limiting the generality of such obligation, Seller and the Company further agree that, without the prior written consent of Buyer, which consent shall not be arbitrarily withheld:

[1] the current compensation of any employee of Company currently earning annual compensation of more than $20,000 shall not be increased;

[2] Company shall maintain its present insurance coverage in respect of the Company Assets;

[3] no employment, consulting or other similar agreement not containing a 30 day or less termination right by the Company shall be entered into by Company;

[4] Company shall not make any expenditure for Fixed Assets in excess of $5,000 for any single item, or enter into any lease having an annual rental in excess of $5,000; provided, further, that the combined aggregate amount for all such expenditures and annual rental expenses shall not exceed $25,000; and

[5] no change of a material nature shall be made in Company's accounting procedures, methods, policies or practices or the manner in which it maintains its records.

b. Books and Records . At all reasonable times prior to the Closing Date, including after expiration of the Inspection Period, Company shall allow Buyer's employees, representatives, attorneys and accountants reasonable access to the records, files, books of account, correspondence and properties (including access to the premises) pertaining to the operations and affairs of the Business. Company covenants that its representatives and agents will cooperate with Buyer and its representatives and agents in making available any information on accounting matters that may reasonably be required relating to the operations and affairs of the Business.

c. Maintenance . Company will maintain all of the Company Assets in substantially their present condition, normal wear and tear being excepted.

d. No Negotiation with Third Parties . For a period of sixty (60) days after the Effective Date of this Agreement (the "No Shop Period"), Seller and the Company agree that neither Seller, the Company nor any of Seller's or the Company's agents or representatives shall, directly or indirectly, take any action to encourage, solicit, initiate, engage or otherwise facilitate the submission by a third party of, or negotiate or enter into any agreement with a third party with respect to, a proposal (an "Acquisition Proposal") to acquire, directly or indirectly, any of the Company Assets or the capital stock of the Company (excluding sales of inventory in the ordinary course of business). Upon receipt of any Acquisition Proposal, the Company will promptly advise the Buyer of such and provide the Buyer with copies of all materials received from third parties related thereto. If (i) the Seller or Company breaches the "No Shop" provision provided in this Section 9.1(d) or (ii) it is discovered through subsequent investigation by Buyer or its representative that either written or verbal communications took place during the No Shop Period between the Seller, the Company or any of Seller's or the Company's agents or representatives acting with the Seller's or the Company's authority and instruction, and another party relating to a proposed transaction between the Seller and that party, and such transaction is ultimately consummated, then immediately upon the closing of such transaction or after discovery of such a violation, the Corporation will pay to buyer or its representative all of the reasonable out-of-pocket expenses incurred in connection with this Agreement, including the fees and expenses of counsel, the total sum of which shall not exceed $100,000. This amount will serve as the exclusive and sole remedy to Buyer under this Agreement in the event of a breach by the Seller or the Company of this Section 9.1(d) of this Agreement.

e. Business Relationships and Publicity . Seller will use its best efforts to preserve Company's reputation and its relationships with all Manufacturers, suppliers, customers and employees. To the extent requested by Buyer, Seller will cooperate with Buyer in connection with the transition of ownership of the Business from Seller to Buyer (such as joint advertising). No press release or other communication related to this Agreement shall be issued or made except as mutually agreed upon, and all parties will use their best efforts to maintain the confidentiality of the negotiations reflected herein.

f. Third Party Consents . Seller and Company will use their best efforts to assist Buyer in obtaining the Third Party Consents.

g. Financial Statements . On the earlier of (i) the first business day immediately following the day the Buyer delivers the Buyer's Closing Notice, or (ii) the date fifty (50) days after the Effective Date of this Agreement (the " Financial Statement Delivery Date "), Seller shall deliver to the Buyer complete and correct copies of the Company's unaudited balance sheets, statements of operations, cash flow statements, and detailed trial balance sheets for fiscal years ended December 31, 2006 and December 31, 2005, in each case certified as to accuracy and completeness by the President of the Company (collectively the " Financial Statements "); provided, however, in no event shall the Financial Statement Delivery Date be ealier then January 15, 2007. The Financial Statements shall be reported both on an annual and quarterly basis. The Financial Statements shall be prepared in accordance with GAAP and shall be complete and consistent with the books and records of the Company and present fairly the financial condition and results of operations as of the respective dates thereof and the respective periods then ended. On the Financial Statement Delivery Date, the Company's Financial Statements shall be attached hereto, via addendum, as Schedule 7.1.g .

ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING

8.1 Conditions to Buyer's Obligations . All obligations of the Buyer to consummate the transactions contemplated hereunder are subject to the fulfillment in accordance with the provisions of this Agreement, on or prior to the Closing Date, of each of the following conditions, each of which may be waived in writing at the sole discretion of Buyer:

a. Representations and Warranties. All representations and warranties of Seller in this Agreement or in the Schedules or Exhibits attached hereto are correct and complete as of the Effective Date and shall be correct and complete as of the Closing Date, and all agreements to be performed hereunder by Seller or the Company at or prior to the Closing Date shall have been fully performed and all deliveries to be provided by the Seller or the Company at the Closing shall have been provided.

b. Certificate . Buyer shall have received a certificate dated as of the Closing Date and executed by the Seller, stating that (i) the representations and warranties of Seller made herein are correct and complete as of the Closing Date, (ii) no action, investigation or proceeding has been instituted or, to the best of Seller's knowledge, threatened, with respect to the Company Assets, the Business or this Agreement, (iii) Seller and the Company have complied with its agreements herein to be performed on or prior to the Closing Date, and (iv) since the Effective Date there has been no material adverse change in the assets, liabilities, business or prospects of the Business.

c. Consents to Assignments . Written consents to the assignment of Assumed Contracts and other assets included in the Company Assets as shall be required in order to effect a legal transfer thereof, and releases of all Liens thereon, each in form and substance satisfactory to counsel for Buyer, shall have been received (collectively, the " Third Party Consents ").

d. Opinion of Counsel . Buyer shall have received opinions of counsel from the Seller in a form reasonably acceptable to the Buyer (the " Opinion of Counsel ").

e. Litigation . No material action, investigation or proceeding shall have been instituted or threatened with respect to the Business, the Company Assets or this Agreement.

f. Related Agreement - Non-Compete, Non-Solicitation and Non-Disclosure Agreement . The Seller shall enter into and execute an Agreement Not to Compete which provides that the Seller shall agree, for the five year period following the Closing, not to compete with the Buyer or any of its Affiliates within a 250 mile radius of the existing or any future location of the Business, wherever located during the five (5) year period described above, and otherwise in a form reasonably acceptable to the Buyer.

g. Related Agreement - Employment Agreements .

[1] The Buyer and Ronald Masaracchio shall have entered into and executed the Employment Agreement in a form reasonably acceptable to the Buyer.

[2] The Buyer and Matthew Masaracchio shall have entered into and executed the Employment Agreement in a form reasonably acceptable to the Buyer.

[3] Notwithstanding the term of Ronald Masaracchio's employment agreement provided in this paragraph [1], Ronald Masaracchio shall continue to be employed by the Buyer at the Buyer's election until such time as Matthew Masaracchio shall be fully licensed to be the managing electrician of the Buyer, provided that Matthew Masaracchio shall be physically and mentally capable of being so licensed.

h. Real Property .

[1] Consent to Transfer . Seller shall have procured consent to change in ownership of the Company, if required under the Real Property Lease.

[2] Estoppel Certificate . Seller shall have procured an estoppel certificate from the landlord with respect to the Real Property Lease.

j. Financial Audit . The Seller's financial statements shall have been audited at Buyer's expense. The Buyer will diligently cause its independent certified public accountants to timely prepare such audited financial statements.

k. Seller Financing Documents . The form of the Promissory Note and Security Agreement shall be reasonably acceptable to the Buyer and the form of the Subordination Agreement shall be reasonably acceptable to the Buyer's senior lender.

l. Related Agreement - Release . A release in a form reasonably acceptable to the Buyer (" Release ").

m. Related Agreement - Earnout Agreement . The parties shall have entered into an Earnout Agreement in a form consistent with the Letter of Intent dated November 6, 2006, as amended, and otherwise in a form acceptable to the Buyer (the " Earnout Agreement ").

n. Judgments . As of the Closing Date, the Seller or the Company shall have satisfied each of the judgments set forth on Schedule 8.1.n. attached hereto.

 

8.2 Conditions to Seller's Obligations . All obligations of Seller hereunder are subject to the fulfillment in accordance with the provisions of this Agreement, on or prior to the Closing Date, of each of the following conditions, each of which may be waived at the sole discretion of Seller:

a. Representations and Warranties . All representations and warranties of Buyer hereunder are correct and complete as of the Effective Date and shall be correct and complete as of the Closing Date, and all agreements to be performed hereunder by Buyer at or prior to the Closing Date shall have been fully performed.

b. Certificate . Seller shall have received a certificate dated as of the Closing Date and executed by the Chief Executive Officer of Buyer, stating that (i) the representations and warranties of Buyer made herein are correct and complete as of the Closing Date, and (ii) no action, investigation or proceeding has been instituted or, to the best of Buyer's knowledge, threatened, for the stated purpose or with the probable effect of enjoining or preventing the consummation of the transactions contemplated by this Agreement.

c. Seller Financing Documents and Related Agreements . The form of the Promissory Note, Security Agreement, Subordination Agreement, the Opinion of Counsel, the employment agreements and non-compete agreements, the Release, and the Earnout Agreement shall all be in form reasonably acceptable to the Seller.

ARTICLE IX

PUBLICITY/ CONFIDENTIALITY

Prior to Closing, Buyer shall not, without the prior written consent of Seller, furnish the news media, industry associates, competitors, suppliers, customers, or third parties in general, other than required filings with governmental agencies, if any, with news releases, interviews, or other information relating in any way to the negotiations or sale herein agreed upon. Buyer agrees that the information learned in the course of its investigation of the Business and Company and written information received shall be treated as confidential information of the Seller. Buyer agrees that it will not, without the written consent of Seller, disclose or make use of any such confidential information. Notwithstanding the foregoing, the Buyer shall be permitted to include information about the Seller in its business plan and to disseminate that business plan to potential underwriters, investors or lenders, both public and private. If, for any reason, Buyer shall not acquire the Shares hereunder, Buyer shall return to the Seller all written materials received from Seller and shall continue to hold such proprietary, non-public information confidential except as may be required by law.

ARTICLE X

POST-CLOSING AGREEMENTS

10.1 Further Assurances . Seller agrees that, at any time and from time to time after the Closing Date, it will cooperate with the Buyer and execute and deliver to Buyer such further conveyances, assignments and other written assurances as Buyer may reasonably request in order to vest and confirm in Buyer, or its assignee, title to the Company Assets to be transferred, assigned and conveyed hereunder, including but not limited to all licenses, permits and franchise agreements. Following the Closing Date, Seller will provide without charge such explanations, descriptions and general information as Buyer may reasonably request with respect to the Company Assets.

10.2 Electrical Contractor's License . Unless waived by the Buyer in writing, the Seller shall continue to serve as the qualifying electrical contractor of the Company in the operation of the Business following the Closing Date, until such time as an electrical contractor license is issued to Matthew Masaracchio on behalf of and for use by the Buyer. During the time that Buyer uses Seller's electrical contractor's license, Seller shall take all actions necessary to ensure that the operations of the Business by Buyer are consistent with the laws, rules and regulations governing such electrical contractor's license. Buyer agrees to indemnify and hold Seller harmless from any and all claims resulting from Buyer's use of said electrical contractor's license. Seller further agrees to take all required actions and maintain, in full force and effect, its liability insurance and any other insurance required to be maintained in order to keep the electrical contractor's license in full force and effect.

10.3 Access to Books and Records Post-Closing . Buyer or Seller shall each have reasonable access to all books and records relating to the Company Assets during normal business hours for any proper purpose. Without the written consent of Buyer, on the one hand, or Seller on the other, for a period of five years from the Closing Date, Seller or Buyer, respectively, will not destroy or otherwise dispose of any books and records relating to the Company Assets without first giving the other party hereto reasonable notice thereof, and offering to surrender them to such other party. Within 45 days after the Closing Date, the Seller shall provide to the Buyer the Financial Statements for the periods immediately preceding the Closing Date, that have not otherwise been delivered prior to the Closing Date.

10.4 Future Litigation . If demand shall be made or suit shall be instituted against Buyer or Seller seeking payment or other performance of any contract, commitment or obligation of Company, Seller or Buyer, respectively, will provide such assistance and cooperation as shall be reasonably necessary for Buyer or Seller, respectively, to comply with or defend against such demand or suit.

10.5 Code Section 338(h)(10) Election . At Buyer's sole request, Seller and Buyer will join in making a timely election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended and any corresponding elections under state, local or foreign tax law (collectively the " Section 338(h)(10) Election ") with respect to the purchase and sale of the stock of the Company. Buyer shall pay any incremental taxes that the Seller is obligated to satisfy as a result of the Section 338(h)(10) Election in excess of taxes that would be due without such Section 338(h)(10) Election.

ARTICLE XI

INDEMNIFICATION

11.1 General Indemnification . Subject to the terms and conditions of this Article XI, the Seller shall indemnify, defend and hold Buyer (and any successor in interest), all Affiliates of Buyer (and any successor in interest), and all of Buyer's and Buyer's Affiliates' officers, directors and shareholders, harmless against and in respect of all actions, suits, losses, liabilities, damages, deficiencies, claims, demands, costs and expenses (including attorneys' fees and costs of investigation) which may arise after the Closing out of (i) any material breach of any warranty or any inaccuracy in any representation under or any nonperformance of any agreement of Seller pursuant to this Agreement; or (ii) any liability or obligation relating to the operation of the Business on or prior to the Closing Date which may be asserted against Buyer or the Company Assets (collectively " Claims " and individually a " Claim "), or require Buyer to satisfy or perform the same.

11.2 Notification . The Buyer shall, upon becoming aware or being put on notice of the existence of a Claim with respect to which it may be entitled to indemnification pursuant to this Article XI, promptly notify the Seller and Shareholder in writing of such matter.

11.3 Settlement and Defense of Claims . The Seller and/or Shareholder, as appropriate, shall have the right to settle at his own cost and expense all Claims which are susceptible of being settled or defended, and to defend, through counsel of his own choosing and at his own cost and expense, any third party action which may be brought in connection therewith; provided, that the Seller shall be required to keep the Buyer fully and currently informed of all settlement negotiations and of the progress of any litigation; and provided further that the Buyer shall have the right to fully participate in the defense or settlement of any Claim at his own expense.

11.4 Assumption by Indemnitee . Notwithstanding anything contained herein to the contrary, the Buyer may, by releasing the Seller from liability to him or it with respect to any Claim, take over and assume the settlement and defense of such Claim. For the protection of the Buyer, any release of the Seller pursuant to this Section 11.4 must be in writing and signed by the Buyer.

11.5 Setoff . Notwithstanding anything contained herein to the contrary, and as a non-exclusive alternative to the right of the Buyer to indemnification hereunder, and in addition to all other remedies provided by law, but subject to the provisions hereof and of Section 11.2, the Buyer has the absolute and unconditional right to set off the amount of any Claim against Seller against any amount due and owing from time to time from Buyer to Seller.

ARTICLE XII

MISCELLANEOUS

12.1 Effective Date . The date of this Agreement for purposes of measuring performance hereunder shall be regarded as the date on which the last one of the Seller, the Company and the Buyer has executed this Agreement as determined by the date beside each signature on the signature page hereof (the " Effective Date ").

12.2 Correspondence . Seller authorizes and empowers Buyer after the Closing Date: (i) to open all mail and other communications addressed to the Business which are received by Buyer and (ii) to deal with the contents of such communications in a proper manner. Seller will promptly deliver to Buyer the original of any mail or other communication received by Seller after the Closing Date pertaining to the operations of the Business or the Company Assets and any monies, checks or other instruments of payment to which Buyer is entitled. Buyer will promptly deliver to Seller the original of any mail or other communication received by Buyer pertaining to the operation of the Business or the Company Assets prior to the Closing Date and any monies, checks or other instruments of payment to which Seller is entitled.

12.3 Survival of Warranties . All representations and warranties in this Agreement and the indemnification obligations shall survive: (i) for the applicable statute of limitations for tax, environmental, and product liability matters; and (ii) for a period of three years following the Closing Date for all other matters, notwithstanding any investigation by or on behalf of any party.

12.4 Brokerage Fees . The Seller shall be liable for any liability for brokerage or finders' fees or agents' commissions in connection with this Agreement or the transactions contemplated hereby.

12.5 Special Taxes . Seller shall be responsible for the payment of all state transfer, sales and other taxes, if any, required to be paid in connection with the sale, conveyance, transfer, assignment and delivery of any of the Shares.

12.6 Assignability . This Agreement shall not be assignable by Seller without the prior written consent of the Buyer, which consent may be unreasonably withheld. This Agreement may be assigned by Buyer, in whole or in part, without the consent of Seller, provided the Buyer provides the Seller with written notice of any such assignment, together with a copy of the executed assignment.

12.7 Notices . All notices, requests, demands and other communications in connection with this Agreement shall be made in writing (including facsimile transmission or similar writing) addressed:

If to Buyer to:

Alex Katz, President

MEDALLION ELECTRIC ACQUISITION CORPORATION

Post Office Box 2127

Jenkintown, PA 19046

Facsimile No. (215) 701-4550

with a copy to:

Brent A. Jones, Esquire

Bush Ross, P.A.

220 South Franklin Street

Tampa, Florida 33602

Facsimile No. (813) 223-9620

If to Seller to:

Ronald Masaracchio

[3700 NW 124th Avenue, Suite 114

Coral Springs, Florida 33065

Facsimile No. (954) 753-3878]

with a copy to:

Kristine M. Chapman, Esq

2000 Glades Rd

Ste 306

Boca Raton  FL  33431

Facsimile No. (561) 368-0709

Each notice, request, demand or other communication shall be effective and deemed to have been received (i) if given by facsimile, when such facsimile is transmitted to the facsimile number specified above and confirmation is received, (ii) if given by mail, the earlier of actual receipt or 72 hours after such communication is deposited in the mails with certified first class postage prepaid, addressed as aforesaid, (iii) if given by an overnight courier service of national recognition, the business day following the business day of deposit with such service, together with a proper airbill affixed, addressed as aforesaid and shipping charges prepaid or prearranged, or (iv) if given by any other means, when delivered to the aforesaid address. Either party may change the address to which notices are to be delivered to it by giving written notice of such other address to the other party. Any notice received after 5:00 p.m., Eastern Standard Time, shall be deemed received the following business day.

12.8 Severability; Amendments; Captions . The invalidity or unenforceability of any provision herein shall not affect the validity or enforceability of any other provision hereof. This Agreement shall not be modified, amended or terminated except by written agreement of both parties. Captions appearing in this Agreement are for convenience only and shall not be deemed to explain, limit, or amplify the provisions hereof.

12.9 Construction . The parties recognize that each party has had adequate opportunity to review the language of this Agreement and provide whatever input each party may deem appropriate, necessary or desirable. Each party acknowledges that all parties have drafted various portions of this Agreement and that the language of this Agreement adequately expresses the agreement among the parties. Each party waives the effect of any common law, statutory or judicial principal that would construe the language of the Agreement against the party which was actually responsible for the specific words used to express the mutual agreement of the parties.

12.10 Attorneys Fees . In the event of a default or dispute in any of the provisions hereunder which are resolved through arbitration or litigation, the prevailing party with respect to each such arbitration or litigation, in addition to all other remedies, shall be entitled to reasonable attorneys fees, expenses and costs incurred in enforcing this Agreement.

12.11 Choice of Law . This Agreement, and the application or interpretation thereof, shall be governed exclusively by its terms and by the laws of the State of Florida.

12.12 Venue Venue for any legal action which may be brought thereunder shall be deemed to lie in the County of Broward, State of Florida.

12.13 Jurisdiction . The parties agree that, irrespective of any wording that might be construed to be in conflict with this paragraph, this Agreement is subject to the jurisdiction of the courts in the State of Florida. The parties to this Agreement agree that they waive any objection, constitutional, statutory or otherwise, to a Florida court's having jurisdiction of any dispute between or among them. By entering into this Agreement, the parties, and each of them understand that they might be called upon to answer and defend a claim asserted in a Florida court.

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

12.15 Binding Effect . This Agreement shall inure to and be enforceable by, the Buyer and Seller as well as their respective successors and permitted assigns. Whenever used, the singular name shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders.

12.16 Business Day . The term "business day" shall not include weekends or legal holidays. In the event that the last day of any period of time specified in this Agreement shall fall on a weekend or legal holiday, such period of time shall be extended through 5:00 p.m., Eastern Standard Time, of the next business day.

 

 

 

 

[Signatures follow on next page]

[Signature page to Agreement for Purchase and Sale of Capital Stock]

In witness whereof, this Agreement has been executed by the parties hereto as of the dates stated below.

Witnesses: BUYER:

Sign: /s/ Braden Ferrari MEDALLION ELECTRIC ACQUISITION

Print: CORPORATION

Sign:/s/ Richard Kreger By: /s/ Alex Katz

Print:                                , President

Executed on December 22, 2006

Witnesses: COMPANY:

Sign: /s/ Michael R. Tilley MEDALLION ELECTRIC, INC.

Print:

Sign: /s/ Allison Hughes By:/s/ Ronald Massaracchio

Print: Name (print): Ronald Masaracchio

Title (print): President

Executed on 12-22-2006

SELLER:

Witnesses:

Sign:/s/ Michael R. Tilley /s/ Ronald Massaracchio

Print: Ronald Masaracchio

Sign: /s/ Allison Hughes Executed on 12-22-2006

Print:

 

FIRST AMENDMENT TO AGREEMENT FOR

PURCHASE AND SALE OF CAPITAL STOCK

This is the First Amendment dated February 23, 2007 (the " Amendment ") to the Agreement for Purchase and Sale of Capital Stock (the " Purchase Agreement ") dated December 22, 2006, by and between Medallion Electric Acquisition Corporation, a Florida corporation (the " Buyer "), and Ronald Masaracchio, the sole shareholder of Medallion Electric, Inc., a Florida corporation, as set forth on the signature page to the Purchase Agreement (the " Seller ").

BACKGROUND INFORMATION

The Company and the Seller executed the Purchase Agreement, and now wish to amend the Purchase Agreement to revise the Closing Date (as defined in the Purchase Agreement), the payment of the Purchase Price (as defined in the Purchase Agreement), and amend the schedules to the Agreement. Accordingly, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

OPERATIVE PROVISIONS

    1. Section 1.1.c . Section 1.1.c. of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
    2. " The Closing . The closing of the transactions contemplated by this Agreement (the " Closing ") shall take place at 2:00 p.m. local time on the earlier of: (i) the date seven (7) business days after the Buyer provides written notice (" Buyer's Closing Notice ") to the Seller that all of the conditions to consummate the transactions contemplated hereby have been satisfied or waived, or (ii) ninety (90) days after the Effective Date (as defined herein) of this Agreement (the " Closing Date "), at a location to be specified by the Seller within a fifty (50) mile radius of the Business, or at such other place, time or date as the parties hereto may mutually agree."

    3. Payment of Purchase Price . Sections 2.1.a. and 2.1.b. of the Purchase Agreement are hereby deleted in their entirety and replaced with the following:
    4. a. Payment Upon Closing . The Buyer shall pay to the Seller, by cashier's check or wire transfer of immediately available funds, an amount equal to $1,000,000.00 upon Closing;

      b. Payment Six Months After Closing . At the Closing, the Buyer shall deliver to the Seller a non-interest bearing promissory note (the " Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, of an amount equal to $1,500,000.00 on the six (6) month anniversary of the Closing (the " Deferred Purchase Price Payment "). The Deferred Purchase Price Payment shall be secured by a blanket lien on the assets of the Company (the " Security Agreement ") perfected under Article 9 of the Uniform Commercial Code.

    5. Schedule 7.1.g . The audited financial statements for the years-ended December 31, 2004 and 2005 and the unaudited, reviewed financial statements for the nine-months-ended September 30, 2006 and the ten-months-ended October 31, 2006 attached hereto as Exhibit "A" are hereby incorporated into the Purchase Agreement as Schedule 7.1.g. and made part of the Financial Statements (as defined in the Purchase Agreement).
    6. Financial Statement Prepared In Accordance With GAAP . Seller represents that the Financial Statements have been prepared in accordance with GAAP and are complete and consistent with the books and records of the Company and present fairly the financial condition and results of operations as of the respective dates thereof and the respective periods then ended.
    7. Full Force and Effect of Remaining Terms . Except as set forth in this Amendment, the remaining terms and conditions of Purchase Agreement remain in full force and effect.
    8. IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year first written above.

      MEDALLION ELECTRIC ACQUISITION CORPORATION

      By: /s/ Alex Katz

      Alex Katz, President

       

      RONALD MASARACCHIO

      /s/ Ronald Massaracchio

      Ronald Masaracchio

       

      MEDALLION ELECTRIC, INC.

      By: /s/ Ronald Massaracchio

      Ronald Masaracchio, President

       

      SECOND AMENDMENT TO AGREEMENT FOR

      PURCHASE AND SALE OF CAPITAL STOCK

      This is the Second Amendment dated March 15, 2007 (the " Amendment ") to the Agreement for Purchase and Sale of Capital Stock dated December 22, 2006, as amended by the First Amendment to Agreement for Purchase and Sale of Capital Stock dated February 23, 2007 (as amended, the " Purchase Agreement ") by and between Medallion Electric Acquisition Corporation, a Florida corporation (the " Buyer "), and Ronald Masaracchio, the sole shareholder of Medallion Electric, Inc., a Florida corporation, as set forth on the signature page to the Purchase Agreement (the " Seller ").

      BACKGROUND INFORMATION

      The Company and the Seller executed the Purchase Agreement, and now wish to amend the Purchase Agreement to revise the Closing Date (as defined in the Purchase Agreement). Accordingly, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

      OPERATIVE PROVISIONS

    9. Section 1.1.c . Section 1.1.c. of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
    10. The Closing . The closing of the transactions contemplated by this Agreement (the " Closing ") shall take place at 2:00 p.m. local time on the earlier of: (i) the date seven (7) business days after the Buyer provides written notice (" Buyer's Closing Notice ") to the Seller that all of the conditions to consummate the transactions contemplated hereby have been satisfied or waived, or (ii) one-hundred and five (105) days after the Effective Date (as defined herein) of this Agreement (the " Closing Date "), at a location to be specified by the Seller within a fifty (50) mile radius of the Business, or at such other place, time or date as the parties hereto may mutually agree.

    11. Full Force and Effect of Remaining Terms . Except as set forth in this Amendment, the remaining terms and conditions of Purchase Agreement remain in full force and effect.
    12. IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year first written above.

      MEDALLION ELECTRIC ACQUISITION CORPORATION

      By: /s/ Alex Katz

      Alex Katz, President

      MEDALLION ELECTRIC, INC.

      By: /s/ Ronald Masaracchio

      Ronald Masaracchio, President

      THIRD AMENDMENT TO AGREEMENT FOR

      PURCHASE AND SALE OF CAPITAL STOCK

      This is the Third Amendment dated March 22, 2007 (the " Amendment ") to the Agreement for Purchase and Sale of Capital Stock dated December 22, 2006, as amended by the First Amendment to Agreement for Purchase and Sale of Capital Stock dated February 23, 2007 and the Second Amendment to Agreement for Purchase and Sale of Capital Stock dated March 15, 2007 (as amended, the " Purchase Agreement ") by and between Medallion Electric Acquisition Corporation, a Florida corporation (the " Buyer "), and Ronald Masaracchio, the sole shareholder of Medallion Electric, Inc., a Florida corporation, as set forth on the signature page to the Purchase Agreement (the " Seller ").

      BACKGROUND INFORMATION

      The Company and the Seller executed the Purchase Agreement, and now wish to amend the Purchase Agreement to, among other things, revise the amount and timing of the payment of the Purchase Price (as defined in the Purchase Agreement), provide for a mortgage to Seller to secure certain obligations of Buyer under the Purchase Agreement, amend the timing of the working capital adjustment provided in the Purchase Agreement, clarify the tax obligations of Buyer and Seller, and provide for the delivery of the disclosures and ancillary documents required under the Purchase Agreement. Accordingly, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

      OPERATIVE PROVISIONS

    13. Payment of Purchase Price . Sections 2.1.a. and 2.1.b. of the Purchase Agreement are hereby deleted in their entirety and replaced with the following:
    14. a. Payment Upon Closing . The Buyer shall pay to the Seller, by cashier's check or wire transfer of immediately available funds, an amount equal to $500,000.00 upon Closing.

      b. Payment Sixty After Closing . At the Closing, the Buyer shall deliver to the Seller a promissory note (the " First Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, of an amount equal to $500,000.00 plus interest at a rate of prime plus one percent (1%) within sixty (60) days after the Closing (the " Second Purchase Price Payment "). Notwithstanding anything otherwise contained in the Purchase Agreement, the Second Purchase Price Payment shall not be subject to setoff under Section 11.5. hereof. In addition, as more fully described in Section 8.2.d., the Second Purchase Price shall be secured by a first priority mortgage on that certain North Carolina real property described on Exhibit "A" hereto and, until the Second Purchase Price Payment is made by the Buyer, such real property shall not be subject to further encumbrance without the prior written consent of the Seller.

      c. Payment Six Months After Closing . At the Closing, the Buyer shall deliver to the Seller a non-interest bearing promissory note (the " Second Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, of an amount equal to $1,500,000.00 on the six (6) month anniversary of the Closing (the " Deferred Purchase Price Payment "). The Deferred Purchase Price Payment shall be secured by a blanket lien on the assets of the Company (the " Security Agreement ") perfected under Article 9 of the Uniform Commercial Code.

    15. Conditions to Seller's Obligations . Section 8.2. is hereby amended by adding immediately after Section 8.2.c. the following:
    16. d. Encumbrance of North Carolina Property to Secure Second Purchase Price Payment . Seller shall have received from Reliability, Inc., a Texas corporation, a first priority mortgage, in a form acceptable to Seller, on that certain North Carolina real property located at 3427 Industrial Drive, Durham, North Carolina 27704 and as more fully described on Exhibit "A" hereto, and a non-recourse guaranty from Reliability, Inc., in a form acceptable to Seller, of the Buyer's obligation to make the Second Purchase Price Payment as provided herein. Reasonable legal fees and closing costs, including title insurance and recording fees, incurred by the Seller in connection with the preparation of and closing on the foregoing mortgage shall be equally borne between the Buyer and Seller and satisfied at Closing.

    17. Deliveries at Closing . Section 4.5. is hereby amended by replacing "Buyer shall deliver (h) to the Seller" with "Buyer shall deliver (h), (i) and (j) to the Seller" and by adding immediately after Section 4.5.h. the following:
    18. i. Shares in Reliability, Inc. Seventy-five thousand (75,000) shares in Reliability, Inc., a Texas corporation, shall be delivered by Buyer to Seller or his designee(s), which shares shall be subject to an escrow agreement between Buyer and Reliability, Inc. pursuant to which, among other things, the shares will be held in escrow until Reliability, Inc. successfully raises two million dollars ($2,000,000.00) in additional equity and/or debt financing.

      j. Mortgage Loan Commitment . Buyer will provide Seller a copy of a commitment letter for a mortgage loan on the real property described in Section 8.2.d., subject to receipt of an appraisal and environmental audit, if requested by lender.

    19. Working Capital Adjustment . Section 2.2.a. of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:
    20. a. Agreed Working Capital at Closing . Buyer acknowledges that customary dividends and distributions will be made by the Company to its shareholders between the Effective Date of this Agreement and the date of the Closing; provided, however, that the Company will maintain an agreed working capital amount of $800,000.00 as of Closing (the "Agreed Net Working Capital"). To the extent that the "Closing Net Working Capital" (as defined below) exceeds $800,000.00, such excess shall be added to the amount of the Deferred Purchase Price Payment to be paid pursuant to the Second Promissory Note. To the extent that the Closing Net Working Capital is less than $800,000.00, the amount by which the Closing Net Working Capital is less than $800,000.00 shall be subtracted from the amount of the Deferred Purchase Price Payment to be paid pursuant to the Second Promissory Note. For purposes of this Section 2.2(a), the "Closing Net Working Capital" shall be defined and calculated as of Closing as the "accounts receivable" (net of reserves) less the sum of (i) the "accounts payable" and (ii) the "accrued expenses" as such amounts are determined in accordance with Generally Accepted Accounting Principles ("GAAP").

    21. Code Section 1377 Election . Buyer and Seller consent to the Company's election under Code Sec. 1377(a)(2) and Reg. Section 1.1377-1(b) to have the income, losses, deductions credits and other tax attributes allocated as if the corporation's tax year ending December 31, 2007 consisted of two tax years, one year ending on the Closing Date and the other year ending on December 31, 2007. Seller shall be responsible for payment of all taxes related to the Company's operations prior to the Closing Date, and the Company shall be responsible for the payment of all taxes related to the Company's operations on or after the Closing Date.
    22. Disclosure Letter . Notwithstanding anything otherwise contained in the Purchase Agreement, on or before the Closing Date, Seller shall provide to Buyer a Disclosure Letter (the "Disclosure Letter") which includes all information otherwise required to be included in a "Schedule" to the Purchase Agreement, including: Schedule 1.2.m. (Company Contracts); Schedule 1.2.t. (Excluded Assets); Schedule 1.2.v. (Fixed Assets); Schedule 1.2.gg. (Proprietary Rights); Schedule 4.4. (Employees and Compensation); Schedule 6.1.f. (Permitted Liens); Schedule 6.1.j. (Litigation); Schedule 6.1.m. (Service Warranties); Schedule 6.1.p. (Insurance); Schedule 6.1.q. (Major Customers and Suppliers); Schedule 6.1.r. (Affiliated Transactions); Schedule 6.1.s. (Employee Benefit Plans); Schedule 7.1.g. (Financial Statements); Schedule 8.1.n. (Judgments) (collectively, the "Schedules"). The information in the Schedules shall be acceptable to Buyer.
    23. Conditions to Buyer's Obligations . Section 8.1. is hereby amended by adding immediately after Section 8.1.n. the following:
    24. o. Disclosures . All representations and warranties of Seller in the Disclosure Letter to be delivered to Buyer on or before the Closing Date shall be in a form and substance acceptable to Buyer, in its sole discretion, and are correct and complete as of the Effective Date and shall be correct and complete as of the Closing Date.

    25. Deliverables Letter . Notwithstanding anything otherwise contained in the Purchase Agreement, on or before the Closing Date, Buyer shall provide to Seller a Deliverables Letter which attaches all ancillary documents otherwise required to be delivered pursuant to the Purchase Agreement, including: the Earnout Agreement; the Employment Agreement for Ronald Masaracchio; the Employment Agreement for Matthew Masaracchio; the Non-Compete, Non-Solicitation and Non-Disclosure Agreement; the First Promissory Note; the Second Promissory Note and the Security Agreement (collectively, the "Ancillary Documents). Each of the Ancillary Documents shall be in a form agreeable to both Buyer and Seller.
    26. Full Force and Effect of Remaining Terms . Except as set forth in this Amendment, the remaining terms and conditions of Purchase Agreement remain in full force and effect.
    27. IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year first written above.

      MEDALLION ELECTRIC ACQUISITION CORPORATION

      By: /s/ Alex Katz

      Alex Katz, President

      RONALD MASARACCHIO

      /s/ Ronald Masaracchio

      Ronald Masaracchio

      MEDALLION ELECTRIC, INC.

      By: /s/ Ronald Masaracchio

      Ronald Masaracchio, President

      FOURTH AMENDMENT TO AGREEMENT FOR

      PURCHASE AND SALE OF CAPITAL STOCK

      This is the Fourth Amendment dated March ___, 2007 (the " Amendment ") to the Agreement for Purchase and Sale of Capital Stock dated December 22, 2006, as amended by the First Amendment to Agreement for Purchase and Sale of Capital Stock dated February 23, 2007, the Second Amendment to Agreement for Purchase and Sale of Capital Stock dated March 15, 2007 and the Third Amendment to Agreement for Purchase and Sale of Capital Stock dated March 22, 2007 (as amended, the " Purchase Agreement ") by and between Medallion Electric Acquisition Corporation, a Florida corporation (the " Buyer "), and Ronald Masaracchio, the sole shareholder of Medallion Electric, Inc., a Florida corporation, as set forth on the signature page to the Purchase Agreement (the " Seller ").

      BACKGROUND INFORMATION

      The Company and the Seller executed the Purchase Agreement, and now wish to amend the Purchase Agreement to, among other things, revise the amount and timing of the payment of the Purchase Price (as defined in the Purchase Agreement) and provide for the Buyer's option to extend certain dates thereunder. Accordingly, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows:

      OPERATIVE PROVISIONS

    28. Payment of Purchase Price . Sections 2.1.b. and 2.1.c. of the Purchase Agreement are hereby deleted in their entirety and replaced with the following:
    29. b. Payment Six Months After Closing . At the Closing, the Buyer shall deliver to the Seller a promissory note (the " First Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, of an amount equal to $500,000.00 plus interest at a rate of prime plus one percent (1%) on the six (6) month anniversary of the Closing (the " Second Purchase Price Payment "). Notwithstanding anything otherwise contained in the Purchase Agreement, the Second Purchase Price Payment shall not be subject to setoff under Section 11.5. hereof. In addition, as more fully described in Section 8.2.d., the Second Purchase Price shall be secured by a first priority mortgage on that certain North Carolina real property described on Exhibit "A" hereto and, until the Second Purchase Price Payment is made by the Buyer, such real property shall not be subject to further encumbrance without the prior written consent of the Seller. The First Promissory Note shall have no additional security or guaranty and shall not be cross-collateralized or cross-defaulted to the Second Promissory Note (as defined in Section 2.1.c. below).

      c. Deferred Purchase Price Payment . At the Closing, the Buyer shall deliver to the Seller a promissory note (the " Second Promissory Note ") providing for payment, by cashier's check or wire transfer of immediately available funds, of an amount equal to $1,500,000.00 plus interest at a rate of prime plus two percent (2%) (the " Deferred Purchase Price Payment ") on the six (6) month anniversary of the Closing (the " Second Promissory Note Due Date "); provided, however, that the Buyer has the option in its sole discretion to extend the Second Promissory Note Due Date for one (1) month at a time and up to three (3) months in total by paying to the Seller, by cashier's check or wire transfer of immediately available funds, an amount equal to $10,000.00 for each month's extension on (i) the Second Promissory Note Due Date for the first month's extension, (ii) the one (1) month anniversary of the initial Second Promissory Note Due Date for the second month's extension, and (iii) the two (2) month anniversary of the initial Second Promissory Note Due Date for the third month's extension. The Deferred Purchase Price Payment shall be secured by a blanket lien on the assets of the Company (the " Security Agreement ") perfected under Article 9 of the Uniform Commercial Code.

    30. Deliveries at Closing . Section 4.5.i. is hereby deleted in its entirety and replaced with the following:
    31. i. Shares in Reliability, Inc. One-hundred and twenty thousand (120,000) shares in Reliability Incorporated ("RI"), a Texas corporation, shall be delivered by Buyer to Seller or his designee(s), which shares shall be subject to an escrow agreement between Buyer and RI pursuant to which, among other things, the shares will be held in escrow in accordance with Section 6.7 of the Agreement of Merger and Plan of Reorganization dated April 1, 2007, by and among RI, Buyer, Reliability-Medallion, Inc., and the shareholders of the Buyer.

    32. Full Force and Effect of Remaining Terms . Except as set forth in this Amendment, the remaining terms and conditions of Purchase Agreement remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year first written above.

MEDALLION ELECTRIC ACQUISITION CORPORATION

By: _____________________________

Alex Katz, President

RONALD MASARACCHIO

Ronald Masaracchio

MEDALLION ELECTRIC, INC.

By: _____________________________

Ronald Masaracchio, President

__________________________________________________________________

AGREEMENT OF MERGER AND

PLAN OF REORGANIZATION

among

RELIABILITY INCORPORATED


RELIABILITY - MEDALLION, INC.,

MEDALLION ELECTRIC ACQUISITION CORPORATION, and


Linda R. Katz, Branden A. Ferrari, Ariel Imas, Alex Kreger, Charles G. Masters, RHK Midtown Partners, LLC, Mark Spoor, and James Tolan

 March __, 2007

__________________________________________________________________

TABLE OF CONTENTS

Page

1. The Merger. *

1.1. Merger *

1.2. Effective Time *

1.3. Articles of Incorporation, By-laws, Directors and Officers. *

1.4. Assets and Liabilities *

1.5. Manner and Basis of Converting Shares. *

1.6. Surrender and Exchange of Certificates *

1.7. Parent Common Stock *

1.8. Parent Capital Contribution *

1.9. Additional Parent Shares *

2. Representations and Warranties of the Company *

2.1. Organization, Standing, Subsidiaries, Etc. *

2.2. Qualification *

2.3. Capitalization of the Company *

2.4. Indebtedness *

2.5. Company Shareholders *

2.6. Corporate Acts and Proceedings *

2.7. Compliance with Laws and Instruments *

2.8. Binding Obligations *

2.9. Broker's and Finder's Fees *

2.10. Financial Statements *

2.11. Absence of Undisclosed Liabilities *

2.12. Changes *

2.13. Schedule of Assets and Contracts *

2.14. Employees *

2.15. Tax Returns and Audits *

2.16. Employee Benefit Plans; ERISA *

2.17. Title to Property and Encumbrances *

2.18. Litigation *

2.19. Interested Party Transactions *

2.20. Obligations to or by Shareholders *

2.21. No Trading *

2.22. Representations by Shareholders *

2.23. Disclosure *

3. Representations and Warranties of Parent and Acquisition Corp *

3.1. Organization and Standing *

3.2. Corporate Authority *

3.3. Broker's and Finder's Fees *

3.4. Capitalization of Parent *

3.5. Acquisition Corp *

3.6. Validity of Shares *

3.7. SEC Reporting and Compliance *

3.8. Financial Statements *

3.9. Governmental Consents *

3.10. Compliance with Laws and Other Instruments *

3.11. Binding Obligations *

3.12. Absence of Undisclosed Liabilities *

3.13. Parent Contracts. *

3.14. Changes *

3.15. Tax Returns and Audits *

3.16. Employee Benefit Plans; ERISA *

3.17. Litigation *

3.18. Interested Party Transactions *

3.19. Questionable Payments *

3.20. Obligations to or by Stockholders *

3.21. Employees *

3.22. No General Solicitation *

3.23. Records *

3.24. Disclosure *

3.25. Title to Property and Encumbrances *

3.26. Insurance Coverage *

3.27. Environmental Matters. *

4. Covenants of the Shareholders and the Company. *

4.1. Shareholders *

4.2. Company *

5. Conduct of Businesses Pending the Merger. *

5.1. Conduct of Business by the Company Pending the Merger *

5.2. Conduct of Business by Parent and Acquisition Corp. Pending the Merger *

5.3. Conduct of Business by Parent and Company Pending Release Date *

6. Additional Agreements. *

6.1. Access and Information *

6.2. Additional Agreements *

6.3. Publicity *

6.4. Appointment of Directors *

6.5. Listing *

6.6. Sale or ReFinancing of the North Carolina Property *

6.7. Escrow of Parent Shares *

6.8. New Equity Financing *

6.9. Voting Agreement *

7. Conditions of Parties' Obligations. *

7.1. Company Obligations *

7.2. Parent and Acquisition Corp. Obligations *

8. Survival of Representations and Warranties *

9. Amendment *

10. Definitions *

11. Closing *

11.1. Parent Deliveries *

11.2. Company and Shareholder Deliveries *

11.3. Acquisition *

12. Termination Prior to Closing. *

12.1. Termination of Agreement *

12.2. Termination of Obligations *

13. Miscellaneous. *

13.1. Notices *

13.2. Entire Agreement *

13.3. Expenses *

13.4. Time *

13.5. Severability *

13.6. Successors and Assigns *

13.7. No Third Parties Benefited *

13.8. Counterparts *

13.9. Governing Law *

13.10. Headings *

13.11. Neutral Construction *

 

 

LIST OF EXHIBITS

Exhibits

A Articles of Merger

B Directors and Officers of Surviving Company

AGREEMENT OF MERGER AND PLAN OF REORGANIZATION

THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION is made and entered into on March ___, 2007, by and among RELIABILITY INCORPORATED, a Texas corporation (" Parent "), RELIABILITY-MEDALLION, INC., a Florida corporation (" Acquisition Corp. "), which is a wholly-owned subsidiary of Parent, MEDALLION ELECTRIC ACQUISITION CORPORATION, a Florida corporation (herein referred to as the " Company " or " Surviving Corporation ") and, solely with respect to Sections 2.3, 2.8, 2.22, 4.1, 6.7 and 6.9, Linda R. Katz, Branden A. Ferrari, Ariel Imas, Alex Kreger, Charles G. Masters, RHK Midtown Partners, LLC, a Florida limited liability company, Mark Spoor, and James Tolan, all of the shareholders of the Company (" Shareholders ").

W I T N E S S E T H :

WHEREAS, the Board of Directors of each of Acquisition Corp., Parent and the Company have each determined that it is fair to and in the best interests of their respective corporations and stockholders for Acquisition Corp. to be merged with and into the Company (the " Merger ") upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of Acquisition Corp. and the Board of Directors of the Company has approved the Merger in accordance with the Florida Business Corporation Act (the " FBCA "), and upon the terms and subject to the conditions set forth herein and in the Articles of Merger (the " Articles of Merger ") attached as Exhibit A hereto; and the Board of Directors of Parent also has approved this Agreement and the Articles of Merger;

WHEREAS, the Shareholders have approved, by written consent pursuant to the FBCA, this Agreement and the Articles of Merger and the transactions contemplated and described hereby and thereby, including, without limitation, the Merger, and Parent, as the sole shareholder of Acquisition Corp., has approved this Agreement, the Articles of Merger and the transactions contemplated and described hereby and thereby, including, without limitation, the Merger; and

WHEREAS, the Company has entered into an Agreement for the Purchase and Sale of Capital Stock dated December 22, 2006, as amended (the " Purchase Agreement "), which grants the Company the right to acquire 100% of the issued and outstanding capital stock of Medallion Electric, Inc., a Florida corporation (" Medallion Electric "); and

WHEREAS, upon completion of the transactions contemplated herein, the Company will complete the acquisition of Medallion Electric (the " Acquisition ").

NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows:

    1. The Merger .
      1. Merger .  Subject to the terms and conditions of this Agreement and the Articles of Merger, Acquisition Corp. shall be merged with and into the Company in accordance with Section 607 et seq. of the FBCA. At the Effective Time (as hereinafter defined), the separate legal existence of Acquisition Corp. shall cease, and the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the " Surviving Corporation ") and shall continue its corporate existence under the laws of the State of Florida under the name Medallion Electric Acquisition Corporation.
      2. Effective Time.  The Merger shall become effective on the date and at the time the Articles of Merger is filed with the Department of State of the State of Florida. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the " Effective Time ," and the filing of the Articles of Merger as set forth in the first sentence of this Section 1.2 shall occur concurrently with the Acquisition.
      3. Articles of Incorporation, By-laws, Directors and Officers .
        1. The Articles of Incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation from and after the Effective Time until further amended in accordance with applicable law.
        2. The By-laws of the Company, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation from and after the Effective Time until amended in accordance with applicable law, the Articles of Incorporation and such By-laws.
        3. The directors and executive officers listed in Exhibit B hereto shall be the directors and executive officers of the Surviving Corporation, and each shall hold his respective office or offices from and after the Effective Time until his successor shall have been elected and shall have qualified in accordance with applicable law, or as otherwise provided in the Articles of Incorporation or By-laws of the Surviving Corporation.

      4. Assets and Liabilities .  At the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises of a public as well as of a private nature, and be subject to all the restrictions, disabilities and duties of each of Acquisition Corp and the Company (collectively, the " Constituent Corporations "); and all the rights, privileges, powers and franchises of each of the Constituent Corporations, and all property, real, personal and mixed, and all debts due to any of the constituent corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of the Constituent Corporations, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectively the property of the Surviving Corporation as they were of the several and respective constituent corporations, and the title to any real estate vested by deed or otherwise in either of the such Constituent Corporations shall not revert or be in any way impaired by the Merger; but all rights of creditors and all liens upon any property of any of the Constituent Corporations shall be preserved unimpaired, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.
      5. Manner and Basis of Converting Shares .
        1. At the Effective Time:
          1. each share of common stock, par value $.001 per share, of Acquisition Corp. that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive one (1) share of common stock, par value $.001 per share, of the Surviving Corporation, so that at the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation;
          2. the shares of common stock, par value $.001 per share, of the Company (the " Company Common Stock "), which shares at the Closing will constitute all of the issued and outstanding shares of capital stock of the Company, shall, by virtue of the Merger and without any action on the part of the holders thereof, be converted into the right to receive shares of Parent Common Stock a the rate of 570 shares of Parent Common Stock for each share Company Common Stock, for an aggregate of 2,850,000 shares of Parent Common Stock (the " Parent Shares "). The Parent Shares shall be held in escrow pursuant to the Depository Agreement-Escrow described in Section 6.7 (the " Escrow Agreement ") and the Parent Shares shall be voted pursuant to the Voting Agreement described in Section 6.9 (the " Voting Agreement ").

        2. After the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time.

      6. Surrender and Exchange of Certificates .  Promptly after the Effective Time and upon (i) surrender of a certificate or certificates representing shares of Company Common Stock that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form reasonably acceptable to counsel for the Parent stating that a Shareholder has lost his certificate or certificates or that such have been destroyed and (ii) delivery of a Letter of Transmittal (as described in Section 4.1 hereof), Parent shall issue to each  record holder of the Company Common Stock surrendering such certificate or certificates and Letter of Transmittal, a certificate or certificates registered in the name of such Shareholder representing the number of shares of Parent Common Stock that such Shareholder shall be entitled to receive as set forth in Section 1.5(a)(ii) hereof; provided, such shares of Parent Common Stock shall be held in escrow pursuant to the Escrow Agreement and voted pursuant to the Voting Agreement.
      7. Parent Common Stock .  Parent agrees that it will cause the Parent Common Stock into which the Company Common Stock is converted at the Effective Time pursuant to Section 1.5(a)(ii) to be available for such purpose.
      8. Parent Capital Contribution . On the Closing Date, Parent shall capitalize the Surviving Corporation, via wire transfer pursuant to written instructions delivered by the Company to Parent, with $750,000, of which $500,000 shall be used to pay the closing payment due under the Purchase Agreement with Medallion Electric; the balance will be used to provide working capital for Medallion Electric and a portion, not to exceed $150,000, may be used to pay the expenses referenced in Section 6.8 , as determined by Alex Katz, as authorized representative of the Company and the Shareholders.
      9. Additional Parent Shares .  Parent acknowledges that Company has committed to pay 150,000 shares of Parent Common Stock to Ronald Masaracchio and Brian D'Souza as additional consideration in the Acquisition and agrees to issue such shares on the consummation of the Merger and the Acquisition. Such additional shares shall herein also be referred to as Parent Shares.

    2. Representations and Warranties of the Company.  Except as set forth in the Company Disclosure Statement delivered to the Parent, the Company represents and warrants to Parent and Acquisition Corp., and each Shareholder, solely as to Sections 2.3, 2.8 and 2.22 hereby represent and warrant, severally and not jointly to Parent and Acquisition Corp., as follows:
      1. Organization, Standing, Subsidiaries, Etc .
        1. The Company is a corporation duly organized and existing in good standing under the laws of the State of Florida, and has all requisite power and authority (corporate and other) to carry on its business, to own or lease its properties and assets, to enter into the Merger Documents and to carry out the transactions contemplated hereby and thereby.  Copies of the Articles of Incorporation and By-laws of the Company are set forth in Schedule 2.1 to the Company Disclosure Statement and are true and complete and have not been amended or repealed.
        2. The Company has no subsidiaries or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business, other than the contractual right to complete the Acquisition.

      2. Qualification .  The Company is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification necessary, except where the failure to be so qualified could not reasonably be expected to have an adverse effect on the condition (financial or otherwise), properties, assets, liabilities, business operations or results of operations or prospects of the Company (the "Condition of the Company").   Schedule 2.2 to the Company Disclosure Statement sets forth a list of the jurisdictions in which the Company is so qualified to conduct business.
      3. Capitalization of the Company .  The authorized capital stock of the Company consists of 7500 shares of Company Common Stock, and the Company has no authority to issue any other capital stock.  There are 5,000 shares of Company Common Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and non-assessable, and none of  such shares have been issued in violation of the preemptive rights of any person.  The offer, issuance and sale of the shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, or (b) registered or qualified under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws.  None of such shares of Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. The Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company.
      4. Indebtedness .  The Company has no Indebtedness except as disclosed on the Balance Sheet or on Schedule 2.12 to the Company Disclosure Statement.
      5. Company Shareholders .   Schedule 2.5 to the Company Disclosure Statement contains a true and complete list of the names and addresses of the record and beneficial owners of all of the outstanding shares of Company Common Stock and other Equity Security of the Company, together with the number and percentage (on a fully-diluted basis) of securities held.  There is no voting trust, agreement or arrangement among any of the beneficial holders of Company Stock affecting the nomination or election of directors or the exercise of the voting rights of Company Common Stock.
      6. Corporate Acts and Proceedings .  The execution, delivery and performance of this Agreement and the Articles of Merger (together, the " Merger Documents ") have been duly authorized by the Board of Directors of the Company and have been approved by the requisite vote of the Shareholders, and all of the corporate acts and other proceedings required for the due and valid authorization, execution, delivery and performance of the Merger Documents and the consummation of the Merger have been validly and appropriately taken, except for the filing referred to in Section 1.2.
      7. Compliance with Laws and Instruments .  The business, products and operations of the Company have been and are being conducted in compliance in all material respects with all applicable laws, rules and regulations.  The execution, delivery and performance by the Company of the Merger Documents and the execution, delivery and performance of the Merger Agreements, the Escrow Agreement and the Voting Agreement by the Shareholders, and the consummation by the Company of the transactions contemplated by this Agreement: (a) will not require any authorization, consent or approval of, or filing or registration with, any court or governmental agency or instrumentality, except such as shall have been obtained prior to the Closing, (b) will not cause the Company to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of the Articles of Incorporation or By-laws of the Company, (c) will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected, and (d) will not result in the creation or imposition of any Lien upon any property or asset of the Company.  The Company is not in violation of, or (with or without notice or lapse of time, or both) in default under, any term or provision of its Articles of Incorporation or By-laws or of any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or any other agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound or affected.
      8. Binding Obligations .  The Merger Documents, the Voting Agreement, the Escrow Agreement and this Agreement, when executed, constitute the legal, valid and binding obligations of the Company and each of the Shareholders and are enforceable against the Company and each Shareholder in accordance with their respective terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.
      9. Broker's and Finder's Fees .  No Person has, or as a result of the transactions contemplated or described herein will have, any right or valid claim against the Company, Parent, Acquisition Corp. or any Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, except as disclosed in Schedule 2.9 to the Company Disclosure Statement.
      10. Financial Statements .   Schedule 2.10 to the Company Disclosure Statement contains (a) the Company's audited balance sheet (the " Balance Sheet ") as of December 31, 2006 (the " Balance Sheet Date "), and the audited statements of operations, stockholders' (deficiency) equity and cash flows for the year ended December 31, 2006, and (b) the Company's unaudited balance sheets for the two months ended February 28, 2007, and the unaudited statements of operations, stockholders' (deficiency) equity and cash flows for the two months ended February 28, 2007 (the " Financial Statements ").  Such financial statements (i) are in accordance with the books and records of the Company, (ii) present fairly in all material respects the financial condition of the Company at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified and (iii) have been prepared in accordance with generally accepted accounting principles (" GAAP ") applied on a basis consistent with prior accounting periods.
      11. Absence of Undisclosed Liabilities .  The Company has no obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in Schedule 2.11 and/or Schedule 2.12 to the Company Disclosure Statement, (b) to the extent set forth on or reserved against in the Balance Sheet or the Notes to the Financial Statements, and (c) by the specific terms of any written agreement, document or arrangement identified in Schedule 2.13 to the Company Disclosure Statement.  
      12. Changes .  Since the Balance Sheet Date, except as disclosed in Schedule 2.12 to the Company Disclosure Statement, the Company has not (a) incurred any debts, obligations or liabilities, absolute, accrued, contingent or otherwise, whether due or to become due, except for fees, expenses and liabilities incurred in connection with the Merger, the Acquisition, and related transactions not to exceed $805,000, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Balance Sheet and current liabilities incurred since the Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, (d) sold, transferred or leased any of its assets, (e) cancelled or compromised any debt or claim, or waived or released any right, (f) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee  stock options), warrants or other rights with respect thereto, (g) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (h) suffered or experienced any change in, or condition affecting, the financial condition of the Company, (i) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (j) made or permitted any amendment or termination of any contract, agreement or license to which it is a party, (k) suffered any loss not reflected in the Balance Sheet or its statement of income for the year ended on the Balance Sheet Date, or (l) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.
      13. Schedule of Assets and Contracts .  Attached to the Company Disclosure Statement as Schedules 2.13(a)  through 2.13(c)  are various schedules listing assets and contracts of the Company, as described herein.
        1. The Company does not own or lease any real property and never has.
        2. Except as expressly set forth in this Agreement, the Balance Sheet or the Notes thereto, or as disclosed in Schedule 2.13(b)  to the Company Disclosure Statement, the Company is not a party to any written or oral agreement. Except as disclosed in Schedule 2.13(b) to the Company Disclosure Statement, the Company is not a party to or otherwise barred by any written or oral (a) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment, (b) agreement for the employment of any officer, director, individual employee or other Person or any agreement with any Person for consulting services, (c) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of the Company or any other Person, (d) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Company to any Lien or evidencing any Indebtedness, (e) guaranty of any Indebtedness, (f) lease or agreement under which the Company is lessee of or holds or operates any property, real or personal, owned by any other Person, (g) lease or agreement under which the Company is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by the Company, (h) agreement granting any preemptive right, right of first refusal or similar right to any Person, (i) agreement or arrangement with any Affiliate or any "associate" (as such term is defined in Rule 405 under the Securities Act) of the Company or any present or former officer, director or stockholder of the Company, (j) agreement obligating the Company to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (k) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, or (l) agreement to register securities under the Securities Act. Except as disclosed in Schedule 2.13(b) to the Company Disclosure Statement, none of the agreements, contracts, leases, instruments or other documents or arrangements listed in such Schedule 2.13(b) requires the consent of any of the parties thereto other than the Company to permit the contract, agreement, lease, instrument or other document or arrangement to remain effective following consummation of the Merger and the transactions contemplated hereby.
        3. Schedule 2.13(c) to the Company Disclosure Statement contains a true and complete list and description of each bank account, savings account, other deposit relationship and safety deposit box of the Company, including the name of the bank or other depository, the account number and the names of the individuals having signature or other withdrawal authority with respect thereto.
        4. The Company has furnished to Parent and Acquisition Corp. true and complete copies of all agreements and other documents and a description of all applicable oral agreements disclosed or referred to in Schedules 2.13(a), (b) and (c) to the Company Disclosure Statement, as well as any additional agreements or documents requested by Parent or Acquisition Corp. The Company has performed all obligations required to be performed by it to date and is not in default in any respect under any of the contracts, agreements, leases, documents, commitments or other arrangements to which it is a party or by which it or any of its property is otherwise bound or affected.

      14. Employees. Schedule 2.14 to the Company Disclosure Statement lists all officers, directors or employees of the Company and agreements or arrangements with any such persons, and payments made to such persons since December 1, 2006, and outstanding debts or obligations to such persons and loans to and from such persons.
      15. Tax Returns and Audits .  All required federal, state and local Tax Returns of the Company have been accurately prepared and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid.  The Company is not and has not been delinquent in the payment of any Tax.  The Company has not had a Tax deficiency proposed or assessed against it and has not executed a waiver of any statute of limitations on the assessment or collection of any Tax.  None of the Company's federal income tax returns nor any state or local income or franchise tax returns has been audited by governmental authorities.  The reserves for Taxes reflected on the Balance Sheet are and will be sufficient for the payment of all unpaid Taxes payable by the Company as of the Balance Sheet Date.  Since the Balance Sheet Date, the Company has made adequate provisions on its books of account for all Taxes with respect to its business, properties and operations for such period.  The Company has withheld or collected from each payment made to each of its employees the amount of all taxes (including, but not limited to, federal, state and local income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper Tax receiving officers or authorized depositaries.  There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Company now pending, and the Company has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.  The Company is not obligated to make a payment, or is a party to an agreement that under certain circumstances could obligate it to make a payment, that would not be deductible under Section 280G of the Code.  The Company has not agreed nor is required to make any adjustments under Section 481(a) of the Code (or any similar provision of state, local and foreign law) by reason of a change in accounting method or otherwise for any Tax period for which the applicable statute of limitations has not yet expired.  The Company (i) is not a party to, is bound by or has any obligation under, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, whether written or unwritten (collectively, " Ta x Sharing Agreements "), or (ii) does not have any potential liability or obligation to any person as a result of, or pursuant to, any such Tax Sharing Agreements. The Company is a "C" corporation for federal tax purposes and is an accrual tax payor.
      16. Employee Benefit Plans; ERISA .   Except as disclosed in Schedule 2.16 to the Company Disclosure Statement, there are no "employee benefit plans" (within the meaning of Section 3(3) of the ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs of every type other than programs merely involving the regular payment of wages, commissions, or bonuses established, maintained or contributed to by the Company, whether written or unwritten and whether or not funded. The plans listed in such Schedule 2.16 are hereinafter referred to as the " Employee Benefit Plans ."
        1. All current and prior material documents, including all amendments thereto, with respect to each Employee Benefit Plan have been given to Parent and Acquisition Corp. or their advisors.
        2. To the knowledge of the Company, all Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Internal Revenue Code of 1986, as amended (the " Code ") and any other applicable state, federal or foreign law.
        3. There are no pending claims or lawsuits which have been asserted or instituted against any Employee Benefit Plan, the assets of any of the trusts or funds under the Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Employee Benefit Plans or against any fiduciary of an Employee Benefit Plan with respect to the operation of such plan, nor does the Company have any knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to form the basis of any such claim or lawsuit.
        4. There is no pending or, to the knowledge of the Company, contemplated investigation, or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Employee Benefit Plan and the Company has no knowledge of any incident, transaction, occurrence or circumstance which might reasonably be expected to trigger such an investigation or enforcement action.
        5. No actual or, to the knowledge of the Company, contingent liability exists with respect to the funding of any Employee Benefit Plan or for any other expense or obligation of any Employee Benefit Plan, except as disclosed on the Financial Statements of the Company.
        6. No events have occurred or are reasonably expected to occur with respect to any Employee Benefit Plan that would cause a material change in the costs of providing benefits under such Employee Benefit Plan or would cause a material change in the cost of providing for other liabilities of such Employee Benefit Plan.

      17. Title to Property and Encumbrances .  The Company has good, valid and indefeasible title to all properties and assets used in the conduct of its business (except for property held under valid and subsisting leases which are in full force and effect and which are not in default) free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as could not reasonably be expected to, individually or in the aggregate, materially detract from the value of the property or assets or materially impair the use made thereof by the Company in its business. Without limiting the generality of the foregoing, the Company has good and indefeasible title to all of its properties and assets reflected in the Balance Sheet, except for property held under valid and subsisting leases which are in full force and effect and which are not in default.
      18. Litigation .  There is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the best knowledge of the Company, threatened against or affecting the Company or its properties, assets or business.  The Company is not in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.
      19. Interested Party Transactions .  No officer, director or stockholder of the Company or any Affiliate or "associate" (as such term is defined in Rule 405 under the Securities Act) of any such Person or the Company has or has had, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Company or (ii) purchases from or sells or furnishes to the Company any goods or services, or (b) a beneficial interest in any contract or agreement to which the Company is a party or by which it may be bound or affected, except as a direct employee, as shown on Schedule 2.14 to the Company Disclosure Statement.
      20. Obligations to or by Shareholders .  Except as disclosed in Schedule 2.20 , to the Company Disclosure Statement, the Company has no liability or obligation or commitment to any Shareholder or any Affiliate or "associate" (as such term is defined in Rule 405 under the Securities Act) of any Shareholder, nor does any Shareholder or any such Affiliate or associate have any liability, obligation or commitment to the Company.
      21. No Trading . The Company has not purchased or sold any Parent Common Stock since November 1, 2006 and will not buy or sell any such shares after the date hereof except in compliance with all applicable laws, including the rules and regulations of the Commission.
      22. Representations by Shareholders . Each Shareholder represents and warrants for himself that he is acquiring the Parent Common Stock for his own account for investment and not with a view toward resale or redistribution in a manner which would require registration under the Securities Act, and none of the Parent Common Stock is being acquired to cover short sale positions. Each Shareholder represents that he is an "accredited investor" as defined in Regulation D, and has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of accepting the Parent Common Stock in exchange for the Company Stock. Each Shareholder acknowledges that the shares of Parent Common Stock to be received in the Merger are not registered and may not be sold unless registered under the Securities Act and applicable state securities laws or exempted therefrom. Each Shareholder acknowledges that the shares of Parent Common Stock will bear a restrictive legend and that a "stop transfer" order will be placed against the shares. Each Shareholder represents that he has adequate means of providing for his current needs and possible personal contingencies, and has no need, and anticipates no need in the foreseeable future, to sell or transfer the shares of Parent Common Stock which he will receive in the Merger. In voting for the Merger, he has carefully evaluated his financial resources and investment position and the risks associated with an investment in the Parent Common Stock and is able to bear the economic risks of this investment and, consequently, without limiting the generality of the foregoing, he is able to hold the shares of Parent Common Stock for an indefinite period of time and has a sufficient net worth to sustain a loss of his entire investment in such shares in the event such loss should occur. Each Shareholder represents that it has been called to his attention by those individuals with whom he has dealt in connection with the Merger, that there are contingencies provided for in Section 6.7 below relating to the full vesting of the shares of Parent Common Stock which involves a high degree of risk which may result in the loss of the total amount of shares. Each Shareholders acknowledges that he has received no representations from the Parent, or its affiliates, or employees or agents, except as stated in this Agreement. Each Shareholder represents that he is now a bona fide resident of the state set forth on the signature page to his Investor Questionnaire and the address and social security number set forth therein are his true and correct residence and social security number. Each Shareholder represents that he has not purchased or sold any Parent Common Stock since November 1, 2006, and will not buy or sell any such shares until ten days after Closing. Each Shareholder represents that he will not buy or sell Parent Company Stock, including the shares received in the Merger, except in compliance with all applicable laws including the rules and regulations of the Commission.
      23. Disclosure .  There is no fact relating to the Company that the Company has not disclosed to Parent and Acquisition Corp. in writing which has had or is currently having a material and adverse effect nor, insofar as the Company or any Shareholder can now foresee, will materially and adversely affect, the Condition of the Company.  No representation or warranty by the Company or any Shareholder herein and no information disclosed in the Company Disclosure Statement by the Company or the Shareholder contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading.

    3. Representations and Warranties of Parent and Acquisition Corp .  Except as set forth in the Parent Disclosure Statement delivered to the Company, Parent and Acquisition Corp. jointly and severally represent and warrant to the Company as follows:
      1. Organization and Standing .  Parent is a corporation duly organized and existing in good standing under the laws of the State of Texas. Acquisition Corp. is a corporation duly organized and existing in good standing under the laws of the State of Florida. Parent and Acquisition Corp. have heretofore delivered to the Company complete and correct copies of their respective Articles of Incorporation and Bylaws as now in effect.  Acquisition Corp. is not qualified to conduct business as a foreign corporation in any other state.   Parent is qualified as a foreign corporation to do business in North Carolina. Parent and Acquisition Corp. have full corporate power and authority to carry on their respective businesses as they are now being conducted and as now proposed to be conducted and to own or lease their respective properties and assets.  Neither Parent nor Acquisition Corp. has any subsidiaries (except Parent's ownership of Acquisition Corp. and Reliability Singapore Pte Ltd.) or direct or indirect interest (by way of stock ownership or otherwise) in any firm, corporation, limited liability company, partnership, association or business.  Parent owns all of the issued and outstanding capital stock of Acquisition Corp. free and clear of all Liens, and Acquisition Corp. has no outstanding options, warrants or rights to purchase capital stock or other Equity Securities of Acquisition Corp., other than the capital stock owned by Parent.  Unless the content otherwise requires, all references in this Section 3 to the "Parent" shall be treated as being a reference to the Parent and Acquisition Corp. taken together as one enterprise.
      2. Corporate Authority .  Each of Parent and/or Acquisition Corp. (as the case may be) has full corporate power and authority to enter into the Merger Documents and the other agreements to be made pursuant to the Merger Documents, and to carry out the transactions contemplated hereby and thereby. All corporate acts and proceedings required for the authorization, execution, delivery and performance of the Merger Documents and such other agreements and documents by Parent and/or Acquisition Corp. (as the case may be) have been duly and validly taken or will have been so taken prior to the Closing.  Each of the Merger Documents constitutes a legal, valid and binding obligation of Parent and/or Acquisition Corp. (as the case may be), each enforceable against them in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and by general principles of equity.
      3. Broker's and Finder's Fees .  No person, firm, corporation or other entity is entitled by reason of any act or omission of Parent or Acquisition Corp. to any broker's or finder's fees, commission or other similar compensation with respect to the execution and delivery of this Agreement or the Articles of Merger, or with respect to the consummation of the transactions contemplated hereby or thereby, except as disclosed in Schedule 3.3 to the Parent Disclosure Statement.
      4. Capitalization of Parent .  The authorized capital stock of Parent consists of 20,000,000 shares of Common Stock, no par value (the "Parent Common Stock"), of which not more than 6,335,965 shares will be, prior to the Effective Time, issued and outstanding. The Parent has no preferred stock authorized or outstanding. Except as disclosed in Schedule 3.4 to the Parent Disclosure Statement, Parent has no outstanding options, rights or commitments to issue shares of Parent Common Stock or any other Equity Security of Parent, and there are no outstanding securities convertible or exercisable into or exchangeable for shares of Parent Common Stock or any other Equity Security of Parent.  There are no outstanding options, rights, or commitments to issue any shares of capital stock or Equity Securities of Acquisition Corp. or securities convertible into capital stock or Equity Securities of Acquisition Corp. To the knowledge of Parent, there is no voting trust, agreement or arrangement among any of the beneficial holders of Parent Common Stock affecting the nomination or election of directors or the exercise of the voting rights of Parent Common Stock.  All outstanding shares of the capital stock of Parent are validly issued and outstanding, fully paid and non-assessable, none of such shares have been issued in violation of the preemptive rights of any person, and all were issued in transactions that were (A) exempt from the registration and prospectus delivery requirements of the Securities Act, or (B) registered or qualified under the registration or qualification requirements of all applicable state securities laws and (C) accomplished in conformity with all other applicable securities laws.
      5. Acquisition Corp .  Acquisition Corp. is a wholly-owned subsidiary of Parent that was formed specifically for the purpose of the Merger and has not conducted any business or acquired any property, and will not conduct any business or acquire any property prior to the Closing Date, except as approved by the Company in preparation for and otherwise in connection with the transactions contemplated by this Agreement, the Articles of Merger and the other agreements to be made pursuant to or in connection with this Agreement and the Articles of Merger.
      6. Validity of Shares .  The 3,000,000 shares of Parent Common Stock to be issued at the Closing pursuant to Section 1.5(a)(ii) and Section 1.9 hereof shall be duly and validly issued, and upon consummation of the Qualified Private Placement(s) under Section 6.7 for $2,000,000 net to the Parent, all as defined and described in such section, fully paid and non-assessable. Based in part on the representations and warranties of the Shareholders as contemplated by Sections 3 at 4 hereof and assuming the accuracy thereof, the issuance of the Parent Common Stock upon the Merger pursuant to Section 1.5(a)(ii) will be exempt from the registration and prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable state blue sky or securities laws.
      7. SEC Reporting and Compliance .  Parent filed a registration statement on Form S-1 (No. 2-90034) under the Securities Act which became effective on May 8, 1984.  Since that date, Parent has timely filed with the Commission all registration statements, periodic reports and other forms and reports required to be filed pursuant to the Exchange Act.  Parent has not filed with the Commission a certificate on Form 15 pursuant to Rule 12h-3 of the Exchange Act.
        1. Parent has delivered to the Company true and complete copies of the reports (collectively, the " Parent SEC Documents ") filed by the Parent with the Commission in 2006.  The Parent SEC Documents, as of their respective dates, complied in all material respects with the requirements of the Securities Act or Exchange Act and the rules and regulations of the Commission promulgated thereunder and did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading.
        2. As of the date hereof, Parent has not filed, and nothing has occurred with respect to which Parent would be required to file, any report on Form 8-K since January 1, 2007.  Prior to and until the Closing, Parent will provide to the Company copies of any and all documents, reports, amendments and supplements filed by Parent with the Commission or delivered to the stockholders of Parent.
        3. Parent is not an investment company within the meaning of Section 3 of the Investment Company Act.
        4. The shares of Parent Common Stock are quoted on the Pink Sheets under the symbol "REAL.pk."
        5. Between the date hereof and the Closing Date, Parent shall continue to satisfy the filing requirements of the Exchange Act.

      8. Financial Statements .  The balance sheets, and statements of income, changes in financial position and stockholders' equity contained in the Parent SEC Documents (the " Parent Financial Statements ") (i) have been prepared in accordance with GAAP applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) are in accordance with the books and records of the Parent, and (iii) present fairly in all material respects the financial condition of the Parent at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. Schedule 3.8 to the Parent Disclosure Statement contains an unaudited balance sheet as of December 31, 2006 and February 28, 2007 (collectively the "Parent Balance Sheet"). The Parent Balance Sheet has been prepared in accordance with GAAP applied on a basis consistent with prior periods from the books and records of the Parent and presents fairly in all material respects the financial condition of the Parent at the dates specified therein.
      9. Governmental Consents .  All material consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with any federal or state governmental authority on the part of Parent or Acquisition Corp. required in connection with the consummation of the Merger shall have been obtained prior to, and be effective as of, the Closing.
      10. Compliance with Laws and Other Instruments .  The execution, delivery and performance by Parent and/or Acquisition Corp. of this Agreement, the Articles of Merger and the other agreements to be made by Parent or Acquisition Corp. pursuant to or in connection with this Agreement or the Articles of Merger and the consummation by Parent and/or Acquisition Corp. of the transactions contemplated by the Merger Documents will not cause Parent and/or Acquisition Corp. to violate or contravene (i) any provision of law, (ii) any rule or regulation of any agency or government, (iii) any order, judgment or decree of any court, or (iv) any provision of their respective certificates of incorporation or bylaws as amended and in effect on and as of the Closing Date and will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time, or both) a default under any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or contract to which Parent or Acquisition Corp. is a party or by which Parent and/or Acquisition Corp. or any of their respective properties are bound or affected, and (v) will not result in the creation or imposition of any material Lien upon any property or asset of Parent or Acquisition Corp. except as contemplated herein.
      11. Binding Obligations .  The Merger Documents constitute the legal, valid and binding obligations of the Parent and Acquisition Corp., and are enforceable against the Parent and Acquisition Corp., in accordance with their respective terms, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.
      12. Absence of Undisclosed Liabilities .  Neither Parent nor Acquisition Corp.  has any material obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due), arising out of any transaction entered into at or prior to the Closing, except (a) as disclosed in the Parent SEC Documents, or (b) to the extent set forth on or reserved against in the balance sheet of Parent as of December 31, 2006 or the Parent Balance Sheet, (c) is shown on Schedule 3.12 to the Parent Disclosure Statement, (d) liabilities arising from this Agreement or the Purchase Agreement, or (e) by the specific terms of any written agreement, document or arrangement attached as an exhibit to the Parent SEC Documents or is referred to in any Schedule in the Parent Disclosure Statement.
      13. Parent Contracts .
        1. Except as provided for herein or disclosed in Schedule 3.13 to the Parent Disclosure Statement or as described in Parent SEC Documents, neither Parent nor Acquisition Corp. is a party to any written or oral agreement, including any (a) agreement for the purchase of fixed assets or for the purchase of materials, supplies or equipment in excess of normal operating requirements, (b) agreement for the employment of any officer, individual employee or other Person on a full-time basis or any agreement with any Person for consulting services, (c) bonus, pension, profit sharing, retirement, stock purchase, stock option, deferred compensation, medical, hospitalization or life insurance or similar plan, contract or understanding with respect to any or all of the employees of the Parent or Acquisition Corp. or any other Person, (d) indenture, loan or credit agreement, note agreement, deed of trust, mortgage, security agreement, promissory note or other agreement or instrument relating to or evidencing Indebtedness for Borrowed Money or subjecting any asset or property of the Parent or Acquisition Corp. to any Lien or evidencing any Indebtedness, (e) guaranty of any Indebtedness, (f) lease or agreement under which the Parent or Acquisition Corp. is lessee of or holds or operates any property, real or personal, owned by any other Person, (g) lease or agreement under which Parent or Acquisition Corp. is lessor or permits any Person to hold or operate any property, real or personal, owned or controlled by Parent or Acquisition Corp., (h) agreement granting any preemptive right, right of first refusal or similar right to any Person, (i) agreement or arrangement with any Affiliate or any "associate" (as such term is defined in Rule 405 under the Securities Act) of the Parent or Acquisition Corp. or any present or former officer, director or stockholder of the Parent or Acquisition Corp., (j) agreement obligating the Parent or Acquisition Corp. to pay any royalty or similar charge for the use or exploitation of any tangible or intangible property, (k) covenant not to compete or other restriction on its ability to conduct a business or engage in any other activity, or (l) agreement to register securities under the Securities Act. Except as disclosed in such Schedule 3.13 , none of the agreements, contracts, leases, instruments or other documents or arrangements listed in Schedules 3.13 requires the consent of any of the parties thereto to permit the contract, agreement, lease, instrument or other document or arrangement to remain effective following consummation of the Merger and the transactions contemplated hereby. To the knowledge of Parent, no party to any Parent Material Contract or contract set forth on such Schedule 3.13 has a claim against Parent in respect of any breach or default thereunder.
        2. Schedule 3.13(b)  to the Parent Disclosure Statement contains a true and complete list and description of each bank account, savings account, other deposit relationship and safety deposit box of the Parent and Acquisition Corp., including the name of the bank or other depository, the account number and the names of the individuals having signature or other withdrawal authority with respect thereto.
        3. The Parent and Acquisition Corp. has furnished to the Company true and complete copies of all agreements and other documents and a description of all applicable oral agreements disclosed or referred to in Schedule 3.13 requested by the Company.  The Parent and Acquisition Corp. has in all material respects performed all obligations required to be performed by it to date and is not in default in any respect under any of the contracts, agreements, leases, documents, commitments or other arrangements to which it is a party or by which it or any of its property is otherwise bound or affected.

      14. Changes .  Since December 31, 2006, except as disclosed in the Parent SEC Documents, the Parent Balance Sheet, Schedule 3.14 to the Parent Disclosure Statement, or in connection with the transactions provided for in this Agreement, neither Parent nor Acquisition Corp. has (a) incurred any debts, obligations or liabilities, absolute, accrued or, to the Parent's knowledge, contingent, whether due or to become due, except for current liabilities incurred in the usual and ordinary course of business, (b) discharged or satisfied any Liens other than those securing, or paid any obligation or liability other than, current liabilities shown on the Parent Balance Sheet and current liabilities incurred since the Parent Balance Sheet Date, in each case in the usual and ordinary course of business, (c) mortgaged, pledged or subjected to Lien any of its assets, tangible or intangible, other than in the usual and ordinary course of business, (d) sold, transferred or leased any of its assets, (e) cancelled or compromised any debt or claim, or waived or released any right of material value, (f) suffered any physical damage, destruction or loss (whether or not covered by insurance) which could reasonably be expected to have a material adverse effect on the Condition of the Parent, (g) made or granted any wage or salary increase or made any increase in the amounts payable under any profit sharing, bonus, deferred compensation, severance pay, insurance, pension, retirement or other employee benefit plan, agreement or arrangement, other than in the ordinary course of business consistent with past practice, or entered into any employment agreement, (h) issued or sold any shares of capital stock, bonds, notes, debentures or other securities or granted any options (including employee stock options), warrants or other rights with respect thereto, (i) declared or paid any dividends on or made any other distributions with respect to, or purchased or redeemed, any of its outstanding capital stock, (j) suffered or experienced any change in, or condition affecting, the financial condition of the Parent other than the March, 2007 monthly loss, (k) made any change in the accounting principles, methods or practices followed by it or depreciation or amortization policies or rates theretofore adopted, (l) made or permitted any amendment or termination of any material contract, agreement or license to which it is a party, (m) suffered any loss not reflected in the Parent Balance Sheet except for the March, 2007 monthly loss, (n) paid, or made any accrual or arrangement for payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer, director, employee, stockholder or consultant, or (o) entered into any agreement, or otherwise obligated itself, to do any of the foregoing.
      15. Tax Returns and Audits .  All required federal, state and local Tax Returns of the Parent have been accurately prepared in all material respects and duly and timely filed, and all federal, state and local Taxes required to be paid with respect to the periods covered by such returns have been paid to the extent that the same are material and have become due, except where the failure so to file or pay could not reasonably be expected to have a material adverse effect upon the Condition of the Parent.  The Parent is not and has not, in the last three years, been delinquent in the payment of any Tax.  The Parent has not had a Tax deficiency assessed against it in the last three years.  The reserves for Taxes reflected on the Parent Balance Sheet are sufficient for the payment of all unpaid Taxes payable by the Parent with respect to the period ended on the Parent Balance Sheet Date.  There are no federal, state, local or foreign audits, actions, suits, proceedings, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns of the Parent now pending, and the Parent has not received any notice of any proposed audits, investigations, claims or administrative proceedings relating to Taxes or any Tax Returns.
      16. Employee Benefit Plans; ERISA .  iv)  Except as disclosed in the Parent SEC Documents or Schedule 3.16 to the Parent Disclosure Statement, there are no "employee benefit plans" (within the meaning of Section 3(3) of ERISA) nor any other employee benefit or fringe benefit arrangements, practices, contracts, policies or programs other than programs merely involving the regular payment of wages, commissions, bonuses, established, maintained or contributed to by the Parent and health and other insurance provided through Parent's contract employer.  Any plans listed in the Parent SEC Documents are hereinafter referred to as the " Parent Employee Benefit Plans ."
        1. All Parent Employee Benefit Plans are in material compliance with the applicable requirements of ERISA, the Code and any other applicable state, federal or foreign law.
        2. There are no pending, or to the knowledge of the Parent, threatened, claims or lawsuits which have been asserted or instituted against any Parent Employee Benefit Plan, the assets of any of the trusts or funds under the Parent Employee Benefit Plans, the plan sponsor or the plan administrator of any of the Parent Employee Benefit Plans or against any fiduciary of a Parent Employee Benefit Plan with respect to the operation of such plan.
        3. There is no pending, or to the knowledge of the Parent, threatened, investigation or pending or possible enforcement action by the Pension Benefit Guaranty Corporation, the Department of Labor, the Internal Revenue Service or any other government agency with respect to any Parent Employee Benefit Plan.
        4. No actual or, to the knowledge of Parent, contingent liability exists with respect to the funding of any Parent Employee Benefit Plan or for any other expense or obligation of any Parent Employee Benefit Plan, except as disclosed on the financial statements of the Parent or the Parent SEC Documents, and to the knowledge of Parent, Parent has not been part of any "multi-employer plan," as defined in Section 3(37) or Section 4001(a)(3) of ERISA.
        5. No events have occurred or are reasonably expected to occur with respect to any Employee Benefit Plan that would cause a material change in the costs of providing benefits under such Employee Benefit Plan or would cause a material change in the cost of providing for other liabilities of such Employee Benefit Plan.

      17. Litigation .  Except as disclosed in the Parent SEC Documents, there is no legal action, suit, arbitration or other legal, administrative or other governmental proceeding pending or, to the knowledge of Parent, threatened against or affecting the Parent or Acquisition Corp. or their properties, assets or business.  Neither Parent nor Acquisition Corp. is in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or any governmental agency or instrumentality or arbitration authority.
      18. Interested Party Transactions .  Except as disclosed in the Parent SEC Documents, no officer, director or stockholder of the Parent or any Affiliate or "associate" (as such term is defined in Rule 405 under the Securities Act) of any such Person or Parent has or has had in the last five years, either directly or indirectly, (a) an interest in any Person that (i) furnishes or sells services or products that are furnished or sold or are proposed to be furnished or sold by the Parent or (ii) purchases from or sells or furnishes to Parent any goods or services, or (b) a beneficial interest in any contract or agreement to which Parent is a party or by which it may be bound or affected.
      19. Questionable Payments .  Neither Parent, Acquisition Corp. nor, to the knowledge of Parent, any director, officer, agent, employee or other Person associated with or acting on behalf of Parent or Acquisition Corp., has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
      20. Obligations to or by Stockholders .  Except as disclosed in the Parent SEC Documents, Parent has no liability or obligation or commitment to any stockholder of Parent or any Affiliate or "associate" (as such term is defined in Rule 405 under the Securities Act) of any stockholder of Parent, nor does any stockholder of Parent or any such Affiliate or associate have any liability, obligation or commitment to Parent except for options and severance-retention payments to certain employees who also own Parent Common Stock, as referred to on Schedules 3.4, 3.13 and 3.21 to the Parent Disclosure Statement.
      21. Employees .  Except as set forth on Schedule 3.21 to the Parent Disclosure Statement, Parent is not under any obligation or liability to any officer, director, employee or Affiliate of Parent.
      22. No General Solicitation .  In issuing Parent Common Stock in the Merger hereunder, neither Parent nor anyone acting on its behalf has offered to sell the Parent Common Stock by any form of general solicitation or advertising.
      23. Records .  The books of accounts, corporate records and minute books of Parent  and Acquisition Corp. are complete and correct in all material respects.
      24. Disclosure .  No representation or warranty by Parent or Acquisition Corp. herein and no information disclosed in the Parent Disclosure Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein misleading.
      25. Title to Property and Encumbrances . The Parent Financial Statements list the assets owned by Parent. Acquisition Corp. owns no assets. The Parent has good, valid and indefeasible title to the North Carolina Real Property and all other properties and assets listed in the Parent Financial Statements, free of all Liens and other encumbrances, except Permitted Liens and such ordinary and customary imperfections of title, restrictions and encumbrances as could not reasonably be expected to, individually or in the aggregate, materially detract from the value of the property or assets or materially impair the use made thereof by the Company in its business.
      26. Insurance Coverage .  There is in full force and effect one or more policies of insurance issued by insurers of recognized responsibility, insuring the North Carolina Real Property against such losses and risks, and in such amounts, as are customary for corporations of established reputation engaged in the same or similar business and similarly situated.
      27. Environmental Matters .
        1. The Parent has never generated, used, handled, treated, released, stored or disposed of any Hazardous Materials on any real property on which it now has or previously had any leasehold or ownership interest, except in material compliance with all applicable Environmental Laws.
        2. The historical and present operations of the business of the Parent are in compliance with all applicable Environmental Laws, except where any non-compliance has not had and would not reasonably be expected to have a material adverse effect on the Condition of the Parent.
        3. There are no material pending or, to the knowledge of the Parent, threatened, demands, claims, information requests or notices of noncompliance or violation against or to the Parent relating to any Environmental Law; and, to the knowledge of the Parent, there are no conditions or occurrences on any of the real property leased or owned by the Parent in connection with its business that would reasonably be expected to lead to any such demands, claims or notices against or to the Parent, except such as have not had, and would not reasonably be expected to have, a material adverse effect on the Condition of the Parent.
        4. (i) The Parent has not, sent or disposed of, otherwise had taken or transported, arranged for the taking or disposal of (on behalf of itself, a customer or any other party) or in any other manner participated or been involved in the taking of or disposal or release of a Hazardous Material to or at a site that is contaminated by any Hazardous Material in material violation of Environmental Law or that, pursuant to any Environmental Law, (A) has been placed on the "National Priorities List", the "CERCLIS" list, or any similar state or federal list, or (B) is subject to or the source of a claim, an administrative order or other request to take "removal", "remedial", "corrective" or any other "response" action, as defined in any Environmental Law, or to pay for the costs of any such action at the site; (ii) the Parent is not a party to (and has no basis to reasonably expect to become a party to) any suit or proceeding and has not received (and has no basis to reasonably expect to receive) any notice, request for information or other communication from any governmental authority or other third party with respect to a release or threatened release of any Hazardous Material or a violation or alleged violation of any Environmental Law, and has not received (and has no basis to reasonably expect to receive) notice of any claims from any Person relating to property damage, natural resource damage or to personal injuries from exposure to any Hazardous Material; and (iii) the Parent has timely filed every report required to be filed, acquired all necessary certificates, approvals and permits, and generated and maintained all required data, documentation and records under all Environmental Laws, in all such instances except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Condition of the Parent.

    4. Covenants of the Shareholders and the Company .
      1. Shareholders .  At the Effective Time, each Shareholder shall deliver to the Parent a letter of transmittal (" Letter of Transmittal ") in form reasonably approved by Parent's counsel which shall contain additional representations, warranties and covenants of such Shareholder, including without limitation, that (i) such Shareholder has full right, power and authority to deliver his Company Common Stock and Letter of Transmittal, (ii) the delivery of such Company Common Stock will not violate or be in conflict with, result in a breach of or constitute a default under, any indenture, loan or credit agreement, deed of trust, mortgage, security agreement or other agreement or instrument to which such Shareholder is bound or affected, (iii) such Shareholder has good, valid and marketable title to all shares of Company Common Stock indicated in such Letter of Transmittal and that such Shareholder is not affected by any voting trust, agreement or arrangement affecting the voting rights of such Company Common Stock, (iv) such Shareholder is an "accredited investor," as such term is defined in Regulation D under the Securities Act and that such Shareholder is acquiring Parent Common Stock for investment purposes, and not with a view to selling or otherwise distributing such Parent Common Stock in violation of the Securities Act or the securities laws of any state, and (v) such Shareholder has had an opportunity to ask and receive answers to any questions such Shareholder may have had concerning the terms and conditions of the Merger and the Parent Common Stock and has obtained any additional information that such Shareholder has requested.  Delivery shall be effected, and risk of loss and title to the Parent Common Stock shall pass, only upon delivery to the Parent (or an agent of the Parent) of (x) certificates evidencing ownership thereof as contemplated by Section 1.6 hereof (or affidavit of lost certificate), and (y) the Letter of Transmittal containing the representations, warranties and covenants contemplated by this Section 4.1. Each Shareholder agrees that the Parent Shares will be placed in escrow and subject to the terms of Section 6.7 hereof. Each Shareholder will deliver, along with the Letter of Transmittal, blank stock powers as described in Section 6.7 to effect the terms thereof. The Parent Shares will also be subject to the Voting Agreement described in Section 6.9 hereof.
      2. Company .  The Company agrees to obtain from Ronald Masaracchio and Brian D'Souza representations and warranties similar to those contained in Section 2.22 and Section 4.1 with respect to the Parent Shares to be issued to them and an Investor Suitability Questionnaire as described in Section 7.1(k).

    5. Conduct of Businesses Pending the Merger .
      1. Conduct of Business by the Company Pending the Merger .  Prior to the Effective Time, unless Parent or Acquisition Corp. shall otherwise agree in writing or as otherwise contemplated by this Agreement:
        1. the business of the Company shall be conducted only in the ordinary course;
        2. the Company shall not (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; (ii) amend its Articles of Incorporation or By-laws; or (iii) split, combine or reclassify the outstanding Company Common Stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to any such stock;
        3. the Company shall not (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire any shares of, Company Common Stock or any other Equity Securities; (ii) acquire or dispose of any fixed assets or acquire or dispose of any other assets; (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing; or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge, consolidate or enter into any other business combination;
        4. the Company will not, nor will it authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by it to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal (as defined below).  The Company will promptly advise Parent orally and in writing of any such inquiries or proposals (or requests for information) and the substance thereof.  As used in this paragraph, " Acquisition Proposal " shall mean any proposal for a merger or other business combination involving the Company or for the acquisition of a substantial equity interest in it or any material assets of it other than as contemplated by this Agreement.  The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person conducted heretofore with respect to any of the foregoing; and
        5. the Company will not enter into any employment agreements with any of its officers, directors or employees, or grant any increases in the compensation or benefits of its officers and employees.

      2. Conduct of Business by Parent and Acquisition Corp. Pending the Merger . Prior to the Effective Time, unless the Company shall otherwise agree in writing or as otherwise contemplated by this Agreement:
        1. the business of Parent and Acquisition Corp. shall be conducted only in the ordinary course;
        2. neither Parent nor Acquisition Corp. shall (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of its capital stock; or (ii) split, combine or reclassify its capital stock or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to such stock; and
        3. neither Parent nor Acquisition Corp. shall (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire shares of, its capital stock; (ii) acquire or dispose of any assets other than in the ordinary course of business; (iii) incur additional Indebtedness or any other liabilities or enter into any other transaction except in the ordinary course of business; (iv) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing, or (v) except as contemplated by this Agreement, enter into any contract, agreement, commitment or arrangement to dissolve, merge; consolidate or enter into any other material business contract or enter into any negotiations in connection therewith.
        4. neither the Parent nor Acquisition will, nor will they authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by them to, make, solicit, encourage any inquiries with respect to, or engage in any negotiations concerning, any Acquisition Proposal. Parent will properly advise the Company orally and in writing of any such inquiries or proposals.
        5. neither the Parent nor Acquisition will enter into any employment agreements with any of their officers, directors or employees or grant any increases in the compensation or benefits of their officers and employees.

      3. Conduct of Business by Parent and Company Pending Release Date. From the Effective Time to the Release Date, unless Alex Katz, the representative of the Shareholders, and the Board of Directors of Parent, shall otherwise agree in writing or as otherwise contemplated by this Agreement:
        1. the business of the Parent and Company shall be conducted in the ordinary course;
        2. neither Parent or Company shall (i) directly or indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire any shares of their capital stock; or (ii) split, combine or reclassify their capital stock or declare, set aside for pay any dividend payable in cash, stock or property, or make any distribution with respect to such stock; or
        3. neither Parent or Company shall (i) issue or agree to issue any additional shares of, or options, warrants or rights of any kind to acquire shares of, its capital shares; (ii) incur additional Indebtedness for borrowed money; (iii) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing, (iv) enter into any contract, agreement, commitment or arrangement to dissolve, merge, or consolidate or enter into any negotiations in connection therewith; or
        4. neither Parent or Company will authorize any director or authorize or permit any officer or employee or any attorney, accountant or other representative retained by either to make, solicit, encourage any inquiries with respect to, or engage in, any negotiations concerning any Acquisition Proposal; or
        5. neither Parent nor Company will enter into any employment agreement with any of its officers, directors or employees or grant any increases in the compensation or benefits of their respective officers or employees;
        6. the directors of the Company will only be changed by the Board of Directors of the Parent.

    6. Additional Agreements .
      1. Access and Information .  The Company, Parent and Acquisition Corp. shall each afford to the other and to the other's accountants, counsel and other representatives full access during normal business hours throughout the period prior to the Effective Time of all of its properties, books, contracts, commitments and records (including but not limited to tax returns) and during such period, each shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request, provided that no investigation pursuant to this Section 6.1 shall affect any representations or warranties made herein.  Each party shall hold, and shall cause its employees and agents to hold, in confidence all such information (other than such information which (a) becomes generally available to the public other than as a result of a disclosure by such party or its directors, officers, managers, employees, agents or advisors, or (b) becomes available to such party on a non-confidential basis from a source other than a party hereto or its advisors, provided that such source is not known by such party to be bound by a confidentiality agreement with or other obligation of secrecy to a party hereto or another party until such time as such information is otherwise publicly available; provided, however, that (i) any such information may be disclosed to such party's directors, officers, employees and representatives of such party's advisors who need to know such information for the purpose of evaluating the transactions contemplated hereby (it being understood that such directors, officers, employees and representatives shall be informed by such party of the confidential nature of such information and agree to hold such information confidential pursuant to the terms hereof), (ii) any disclosure of such information may be made as to which the party hereto furnishing such information has consented in writing, and (iii) any such information may be disclosed pursuant to a judicial, administrative or governmental order or request; provided, however, that the requested party will promptly so notify the other party so that the other party may seek a protective order or appropriate remedy and/or waive compliance with this Agreement and if such protective order or other remedy is not obtained or the other party waives compliance with this provision, the requested party will furnish only that portion of such information which is legally required and will exercise its best efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded the information furnished.  If this Agreement is terminated, each party will deliver to the other all documents and other materials (including copies) obtained by such party or on its behalf from the other party as a result of this Agreement or in connection herewith, whether so obtained before or after the execution hereof.
      2. Additional Agreements .  Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including using its commercially reasonable efforts to satisfy the conditions precedent to the obligations of any of the parties hereto to obtain all necessary waivers, and to lift any injunction or other legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible).  In order to obtain any necessary governmental or regulatory action or non-action, waiver, consent, extension or approval, each of Parent, Acquisition Corp. and the Company agrees to take all reasonable actions and to enter into all reasonable agreements as may be necessary to obtain timely governmental or regulatory approvals and to take such further action in connection therewith as may be necessary.  In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent, Acquisition Corp. and the Company shall take all such necessary action.
      3. Publicity .  No party shall issue any press release or public announcement pertaining to the Merger or the terms of this Agreement that has not been agreed upon in advance by Parent and the Company, except as Parent reasonably determines to be necessary in order to comply with the rules of the Commission or of the principal trading exchange or market for Parent Common Stock, provided that in such case Parent will use its best efforts to allow the Company to review and approve (such approval not to be unreasonably withheld or delayed) any same prior to its release.
      4. Appointment of Directors .  Immediately upon the Effective Time, Parent shall increase the size of its Board of Directors by two positions to six members and shall cause David C. Kurland and Alex Katz to be elected to the Board of Directors of Parent.  If the private placement required by Section 6.7 is not consummated, the new directors will resign as required by Section 6.7. If the private placement for $2,000,000 net to the Parent as required by Section 6.7 is consummated, C. Lee Cooke and Phil Uhrhan will resign from the Board of Directors of Parent, the Board will be reduced back to five members and the Board will appoint a new member approved by Alex Katz to fill the one vacant position. At the first annual meeting of Parent shareholders and thereafter, the election of members of Parent's Board of Directors shall be accomplished in accordance with the bylaws of Parent.
      5. Listing .  Parent shall apply for, and to the extent reasonable, take all required actions of an applicant necessary to list the Parent Common Stock for trading on the OTC Bulletin Board.
      6. Sale or ReFinancing of the North Carolina Property . At the closing of the Acquisition, North Carolina Real Property will be pledged to secure the $500,000 note to the selling stockholder of Medallion Electric. After completion of the Merger, Parent shall take all reasonable steps to sell or refinance the North Carolina Real Property as to pay off such note.
      7. Escrow of Parent Shares . All of the Parent Shares issued to the Shareholders, Ronald Masaracchio and Brian D'Souza (collectively, the "Issuees"), will be escrowed at Closing pursuant to a Depository Agreement-Escrow (the " Escrow Agreement "). Each Issuee will deposit the shares to which he is entitled in the Merger or the Acquisition, as applicable, in such escrow along with sufficient blank stock powers for his such shares if they need to be cancelled pursuant to this Section 6.7. The Parent Shares will be released to the Issuees as follows:
        1. On the date, or as soon as reasonable thereafter, that the Parent completes one or more Qualified Private Placements (as hereafter defined), the Issuees, as a group, to be shared pro rata, will be entitled to release of one Parent Share for each $1.00 received by Parent for the sale of its Common Stock Shares, so long as at least an aggregate of $2,000,000 net to the Parent after commissions, fees and expenses (herein after referred to as "net to the Parent") in such Qualified Private Placements is received by the date that is no later than seventy-five (75) days after the date that the Parent applies for the Parent Common Stock to become quoted on the OTC Bulletin Board (the " Release Date "). If Parent has not completed one or more Qualified Private Placements for an aggregate purchase price of no less than $2,000,000 net to the Parent by the Release Date, then all of the Parent Shares will be released to the Parent, along with the blank stock powers, and the Parent Shares will be cancelled and voided, and the Issuees will receive no consideration for their Company Common Stock or additional consideration in the Acquisition, as applicable. Larry Edwards, President of Parent, or his successor, and Alex Katz, as representative of the Issuees, are authorized and directed to instruct the Depository under the Escrow Agreement to release the Parent Shares in accordance with this paragraph.
        2. If the Parent has completed one or more Qualified Private Placements for at least $2,000,000 net to the Parent by the Release Date, then the Depository shall hold all unreleased shares for an additional thirty (30) days past the Release Date. If during such additional thirty days the Parent shall complete one or more additional Qualified Private Placements for up to an aggregate total of $3,000,000 net to the Parent (including the private placements during the original sixty days), the Issuees, as a group, to be shared pro rata, shall be entitled to release of additional Parent Shares from escrow at the rate of one Parent Share for each additional $1.00 received by the Parent for its Common Stock Shares, up to the total shares escrowed, such shares to be released at the end of the additional thirty day period.
        3. A " Qualified Private Placement " shall mean a qualified private, unregistered sale of Parent Common Stock to "accredited" investors pursuant to Regulation D of the Commission. All eligible Qualified Private Placements under this Section 6.7 must be at a sales price for Parent Common Stock at least equal to $0.375 per share of Parent Common Stock. Alternatively, a Qualified Private Placement shall mean, if such financing is subsequently approved by the Board of Directors of Parent on terms acceptable to the Board, a qualified private, unregistered sale of debt of the Parent convertible into Parent Common Stock to "accredited" investors pursuant to Regulation D of the Commission at a conversion price at least equal to $0.375 per share of Parent Common Stock. The first $2,000,000 net to the Parent must be received by the Parent by the Release Date, but more than $2,000,000 net to the Parent can be received during such period. If the eligibility period for entitlement to release of Parent Shares is extended to the full 90 days, at the end of such 90 days, any shares remaining in escrow as unearned because of the failure to raise the full $3,000,000 net to the Parent in Qualified Private Placements shall be returned to Parent for cancellation and voiding.
        4. Parent agrees to instruct its President Larry Edwards, or his successor, to instruct, and Alex Katz representative of the Shareholders, agrees to instruct the Depository to deliver the Parent Shares and blank stock powers in accordance herewith as shares are earned by the Issuees in Qualified Private Placements or release the Parent Shares to Parent to be cancelled because either the initial $2,000,000 net to the Parent is not raised or the full $3,000,000 net to the Parent is not raised.
        5. Each Issuee acknowledges that there is a risk of loss of some or all of his Parent Shares. There will only be two releases from escrow - the first as soon as reasonably practicable after the Release Date and the second, if the escrow is extended because the $2,000,000 net to the Parent was raised, as soon as reasonably practicable after the expiration of the thirty days after the Release Date. No interim releases will be made even if there are interim Qualified Private Placements. If more than $2,000,000 net to the Parent but less than the full $3,000,000 net to the Parent, is raised by the Release Date, only 2,000,000 shares will be released on the first release date, and any remaining shares earned because Qualified Private Placements exceeded $2,000,000 net to the Parent but were less an $3,000000 net to the Parent, will be released thirty days later along with any additional shares earned by subsequent Qualified Private Placements, if any, during such thirty day period. For example, if Qualified Private Placements prior to the Release Date total $2,200,000 net to the Parent, a total of 2,200,000 shares are eligible for release, but only 2,000,000 shares will be released. If during the next thirty days no additional Qualified Private Placements occur, at the end of the thirty days, an additional 200,000 shares will be released to Issuees and 800,000 shares returned to Parent for cancellation; if during the next thirty days, $500,000 of Qualified Private Placements occur, a total of 700,000 shares will be released to Issuees (200,000 shares from the first sixty days and 500,000 shares from the last 30 days) and 300,000 shares will be returned to Parent for cancellation. At the termination of the escrow, if an Issuee is still entitled to a fraction of a Parent Share, Alex Katz will round up or down to a full number of Parent Shares, as Parent is prohibited from issuing fractional shares and allocate the available numbers of shares due equitably among the Issuees. The determination and allocation of Alex Katz shall be final and binding on all Issuees. Larry Edwards, President of Parent, or his successor, and Alex Katz shall then instruct the Depository on how to distribute the shares in escrow. Parent agrees to cause its transfer agent and registrant to reissue any share certificates to meet the requirements of this paragraph if necessary.
        6. The Parent and the Company have agreed that David C. Kurland and Alex Katz will be added to the Board of Directors of Parent pursuant to Section 6.4 hereof, and they will deposit into escrow their resignations from the Board of Directors at Closing. If the first $2,000,000 net to the Parent is not raised in Qualified Private Placements in accordance with this Section by the Release Date, the Depository shall also be instructed to deliver such resignations to Parent, and David C. Kurland and Alex Katz shall resign from the Board of Directors of Parent. If the first $2,000,000 net to the Parent is raised by the Release Date in accordance with the Section 6.7, then the Depository will be instructed to release such resignations to David C. Kurland and Alex Katz for destruction.
        7. On the Closing Date, Parent will cause C. Lee Cooke and Phil Uhrhan to deposit into escrow their resignations from the Board of Directors. If the first $2,000,000 net to the Parent is raised in Qualified Private Placements by the Release Date in accordance with the Section, the Depository will be instructed to deliver such resignations to the Parent and C. Lee Cooke and Phil Uhrhan will resign from the Board of Directors of Parent. If the first $2,000,000 net to the Parent is not raised by the Release Date in accordance with this Section 6.7, then the Depository will be instructed to release such resignations to C. Lee Cooke and Phil Uhrhan for destruction.

      8. New Equity Financing. Contemporaneously with Closing, Parent will engage Midtown Partners & Co, LLC, a NASD registered broker-dealer (" Midtown "), as Parent's placement agent for the Qualified Private Placements, on terms acceptable to Parent. Parent will pay its severance and/or retention bonuses in full upon placement of the initial $2,000,000 net to the Parent in Qualified Private Placements as described in Section 6.7. If the $2,000,000 net to the Parent in Qualified Private Placements is raised by the Release Date, the balance of the $805,000 of Company expenses not already paid will be paid out of the funds capitalized to the Company as Surviving Corporation under Section 1.8, as well as the fees and expenses of Midtown per its engagement agreement; if such $2,000,000 net to the Parent is not so raised, the balance of the $805,000 of Company expenses not already paid will be forgiven and cancelled.
      9. Voting Agreement . Parent and each of the Issuees agree to execute a Voting Agreement at Closing and Issuees agree to execute an irrevocable proxy to Larry Edwards and Alex Katz to effect such Voting Agreement. The Voting Agreement will cover the period commencing with Closing and ending when the Escrow Agreement terminates and the shares thereunder are delivered to Issuees and/or the Parent. The Voting Agreement will provide (a) that the proxy holders only may vote the shares covered by the Escrow Agreement and that if Larry Edwards and Alex Katz are unable to agree on how the shares are to be voted, they cannot be voted at any meeting of stockholders of Parent held during the term of the Escrow Agreement, and (b) any shares released to an Issuee on the Release Date will also be released from the Voting Agreement and proxy, effective as of the date of the release.

    7. Conditions of Parties' Obligations .
      1. Company Obligations .  The obligations of Parent and Acquisition Corp. under this Agreement and the Articles of Merger are subject to the fulfillment at or prior to the Closing of the following conditions, any of which may be waived in whole or in part by Parent.
        1. No Errors, etc . The representations and warranties of the Company and Shareholders under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.
        2. Compliance with Agreement .  The Company and Shareholders shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them on or before the Closing Date.
        3. No Default or Adverse Change .  There shall not exist on the Closing Date any Default or Event of Default or any event or condition that, with the giving of notice or lapse of time, or both, would constitute a Default or Event of Default, and since the Balance Sheet Date, there shall have been no material adverse change in the Condition of the Company.
        4. Certificate of Officers .  The Company shall have delivered to Parent and Acquisition Corp. a certificate dated the Closing Date, executed on its behalf by the Chief Executive Officer and Chief Financial Officer of the Company, certifying the satisfaction of the conditions specified in paragraphs (a), (b) and (c) of this Section 7.1.
        5. Opinion of the Company's Counsel .  Parent and Acquisition Corp. shall have received from Bush Ross, P.A., counsel for the Company, a favorable opinion dated the Closing Date reasonably satisfactory to counsel for the Company to the effect that the Merger Documents have been authorized by all necessary corporate actions, have been duly executed and delivered and represent valid and binding obligations of the Company and the Shareholders and that the shares of the Company held by the Shareholders were duly authorized, validly issued and are fully paid and non-assessable.
        6. Consummation of Acquisition .  Consummation of the Merger shall occur simultaneously with the closing of the Acquisition.
        7. No Restraining Action .  No action or proceeding before any court, governmental body or agency shall have been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the Articles of Merger or the carrying out of the transactions contemplated by the Merger Documents.
        8. Supporting Documents .  Parent and Acquisition Corp. shall have received the following:
          1. Copies of resolutions of the Board of Directors and the Shareholders, certified by the Secretary of the Company, authorizing and approving the execution, delivery and performance of the Merger and the Merger Documents and all other documents and instruments to be delivered pursuant hereto and thereto.
          2. A certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute any documents referred to in this Agreement and further certifying that the Articles of Incorporation and By-laws of the Company delivered to Parent and Acquisition Corp. at the time of the execution of this Agreement have been validly adopted and have not been amended or modified.
          3. A certificate, dated the Closing Date, executed by the Company's Secretary, certifying that, except for the filing of the Articles of Merger:  (A) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the Articles of Merger and the consummation of the Merger shall have been duly made or obtained, and all consents by third parties that are required for the Merger have been obtained; and (B) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the Articles of Merger or the carrying out of the transactions contemplated by the Merger Documents.
          4. Evidence as of a recent date of the good standing and corporate existence of the Company issued by the Department of State of the State of Florida and evidence that the Company is qualified to transact business as a foreign corporation and is in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary.
          5. Such additional supporting documentation and other information with respect to the transactions contemplated hereby as Parent and Acquisition Corp. may reasonably request.

        9. Proceedings and Documents .  All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be reasonably satisfactory in form and substance to Parent and Acquisition Corp.  The Company shall furnish to Parent and Acquisition Corp. such supporting documentation and evidence of the satisfaction of any or all of the conditions precedent specified in this Section 7.1 as Parent or its counsel may reasonably request.
        10. Escrow Agreement and Voting Agreement . Delivery of the Escrow Agreement and Voting Agreement executed by all Shareholders along with the blank stock power required by Section 6.7 and 6.9.
        11. Investor Suitability. Delivery of the Investor Suitability Questionnaire for each Shareholder, Ronald Masaracchio and Brian D'Souza fully completed and evidencing that each is "accredited" as defined in Rule 501 as promulgated by the Commission.
        12. Listing . Submitted an application for listing of the Parent Common Stock on the OTC Bulletin Board.
        13. Placement Agent Agreement . The signed engagement letter with Midtown Partners & Co, LLC on terms approved by the Parent.
        14. Fairness Opinion . Delivery of a fairness opinion from an independent valuation expert in form and substance satisfactory to the Parent.
        15. Resignations. The executed resignations of David C. Kurland and Alex Katz as directors of Parent to be placed in escrow.

      2. Parent and Acquisition Corp. Obligations .  The obligations of the Company under this Agreement and the Articles of Merger are subject to the fulfillment at or prior to the Closing of the conditions precedent specified in paragraph (g) of Section 7.1 hereof and the following additional conditions:
        1. No Errors, etc.  The representations and warranties of Parent and Acquisition Corp. under this Agreement shall be deemed to have been made again on the Closing Date and shall then be true and correct in all material respects.
        2. Compliance with Agreement .  Parent and Acquisition Corp. shall have performed and complied in all material respects with all agreements and conditions required by this Agreement and the Articles of Merger to be performed or complied with by them on or before the Closing Date.
        3. No Default or Adverse Change .  There shall not exist on the Closing Date any Default or Event of Default or any event or condition, that with the giving of notice or lapse of time, or both, would constitute a Default of Event of Default, and since the Parent Balance Sheet Date except as provided for herein or in the Parent Disclosure Statement, there shall have been no material adverse change in the Condition of the Parent.
        4. Certificate of Officers .  Parent and Acquisition Corp. shall have delivered to the Company a certificate dated the Closing Date, executed on their behalf by their respective Presidents or other duly authorized officers, certifying the satisfaction of the conditions specified in paragraphs (a), (b), and (c) of this Section 7.2.
        5. Opinion of Parent's Counsel . The Company shall have received from Winstead PC, counsel for Parent, a favorable opinion dated the Closing Date to the effect that the Merger Documents have been authorized by all necessary corporate actions, duly executed and delivered, and represent valid and binding obligations of the Parent and that the Parent Shares are fully authorized.
        6. Supporting Documents .  The Company shall have received the following:
          1. Copies of resolutions of Parent's and Acquisition Corp.'s respective board of directors and the sole shareholder of Acquisition Corp., certified by their respective Secretaries, authorizing and approving, to the extent applicable, the execution, delivery and performance of this Agreement, the Articles of Merger and all other documents and instruments to be delivered by them pursuant hereto and thereto.
          2. A certificate of incumbency executed by the respective Secretaries of Parent and Acquisition Corp. certifying the names, titles and signatures of the officers authorized to execute the documents referred to in paragraph (i) above and further certifying that the certificates of incorporation and by-laws of Parent and Acquisition Corp. have not been amended or modified except as provided for herein.
          3. A certificate, dated the Closing Date, executed by the Secretary of each of the Parent and Acquisition Corp., certifying that, except for the filing of the Articles of Merger:  (A) all consents, authorizations, orders and approvals of, and filings and registrations with, any court, governmental body or instrumentality that are required for the execution and delivery of this Agreement and the Articles of Merger and the consummation of the Merger shall have been duly made or obtained, and all material consents by third parties required for the Merger have been obtained; and (B) no action or proceeding before any court, governmental body or agency has been threatened, asserted or instituted to restrain or prohibit, or to obtain substantial damages in respect of, this Agreement or the Articles of Merger or the carrying out of the transactions contemplated by any of the Merger Documents.
          4. The executed resignations of C. Lee Cooke and Philip Uhrhan as directors of Parent to be placed in escrow.
          5. Evidence as of a recent date of the good standing and corporate existence of each of the Parent and Acquisition Corp. issued by the Secretary or Department of State of their respective states of incorporation and evidence that the Parent and Acquisition Corp. are qualified to transact business as foreign corporations and are in good standing in each state of the United States and in each other jurisdiction where the character of the property owned or leased by them or the nature of their activities makes such qualification necessary.

        7. Proceedings and Documents .  All corporate and other proceedings and actions taken in connection with the transactions contemplated hereby and all certificates, opinions, agreements, instruments and documents mentioned herein or incident to any such transactions shall be satisfactory in form and substance to the Company. Parent and Acquisition Corp. shall furnish to the Company such supporting documentation and evidence of satisfaction of any or all of the conditions specified in this Section 7.2 as the Company may reasonably request.
        8. Escrow Agreement and Voting Trust Agreement . Delivery of the Escrow Agreement and Voting Agreement executed by the Company.
        9. Placement Agent Agreement . The Parent shall have entered into and delivered a private placement agreement with Midtown Partners & Co., LLC.
        10. Consummation of Acquisition. Consummation of the Merger shall occur simultaneously with the closing of the Acquisition.

      The Company may waive compliance with any of the conditions precedent specified in this Section 7. 2.

    8. Survival of Representations and Warranties .  The representations and warranties of the parties made in Sections 2, 3 and 4 of this Agreement (including the Disclosure Statements) shall survive for two (2) years beyond the Effective Time.  This Section 8 shall not limit any claim for fraud or any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.
    9. Amendment. Any amendment to this Agreement requires the signature of all parties hereto.
    10. Definitions .  Unless the context otherwise requires, the terms defined in this Section 10 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined. As used in this Agreement, the masculine shall include the feminine and neuter, and vice versa.
    11. " Acquisition Corp ." shall have the meaning assigned to it in the introductory paragraph of this Agreement.

      " Affiliate " shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.

      " Agreement " shall mean this Agreement.

      " Articles of Merger " shall have the meaning assigned to it in the second recital of this Agreement.

      " Balance Sheet " and " Balance Sheet Date " shall have the meanings assigned to such terms in Section 2.10 hereof.

      " Closing " and " Closing Date " shall have the meanings assigned to such terms in Section 11 hereof.

      " Code " shall mean the Internal Revenue Code of 1986, as amended.

      " Commission " shall mean the U.S. Securities and Exchange Commission.

      " Company " shall have the meaning assigned to it in the introductory paragraph of this Agreement.

      " Company Common Stock " shall mean the Common Stock of the Company.

      " Condition of the Company " shall have the meaning assigned to it in Section 2.2 hereof.

      " Condition of the Parent " shall mean the financial condition, properties, assets, liabilities, business operations, or results of operations, taken as a whole.

      " Default " shall mean a default or failure in the due observance or performance of any covenant, condition or agreement to be observed or performed under the terms of this Agreement or the Articles of Merger, if such default or failure in performance shall remain unremedied for five (5) days.

      " Effective Time " shall have the meaning assigned to it in Section 1.2 hereof.

      " Employee Benefit Plans " shall have the meaning assigned to it in Section 2.16 hereof.

      " Environmental Laws " means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136, et seq. and comparable state statutes dealing with the registration, labeling and use of pesticides and herbicides; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; as any of the above statutes have been amended as of the date hereof, all rules and regulations promulgated pursuant to any of the above statutes, and any other foreign, federal, state or local law, statute, ordinance, rule or regulation governing environmental matters, as the same have been amended as of the date hereof.

      " Equity Security " shall mean any stock or similar security of an issuer or any security or debenture convertible, with or without consideration, into any stock or similar equity security or debenture carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

      " ERISA " shall mean the Employee Retirement Income Securities Act of 1974, as amended.

      "Escrow Agreement" shall have the meaning assigned to it in Section 1.5(a)(ii).

      " Exchange Act " shall mean the Securities Exchange Act of 1934, as amended.

      " Event of Default " shall mean (a) the failure to pay any Indebtedness for Borrowed Money, or any interest or premium thereon, within five (5) days after the same shall become due, whether such Indebtedness shall become due by scheduled maturity, by required prepayment, by acceleration, by demand or otherwise, (b) an event of default under any agreement or instrument evidencing or securing or relating to any such Indebtedness, or (c) the failure to perform or observe any material term, covenant, agreement or condition on its part to be performed or observed under any agreement or instrument evidencing or securing or relating to any such Indebtedness when such term, covenant or agreement is required to be performed or observed.

      " FCBA " shall mean the Florida Business Corporation Act.

      " GAAP " shall mean generally accepted accounting principles in the United States, as in effect from time to time.

      " Hazardous Material " means any substance or material meeting any one or more of the following criteria:  (a) it is or contains a substance designated as or meeting the characteristics of a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under any Environmental Law; (b) its presence at some quantity requires investigation, notification or remediation under any Environmental Law; or (c) it contains, without limiting the foregoing, asbestos, polychlorinated biphenyls, petroleum hydrocarbons, petroleum derived substances or waste, pesticides, herbicides, crude oil or any fraction thereof, nuclear fuel, natural gas or synthetic gas.

      " Indebtedness " shall mean any obligation of a Person which under generally accepted accounting principles is required to be shown on a balance sheet of a Person as a liability. Any obligation secured by a Lien on, or payable out of the proceeds of production from, property of a Person shall be deemed to be Indebtedness even though such obligation is not assumed by a Person.

      " Indebtedness for Borrowed Money " shall mean (a) all Indebtedness in respect of money borrowed including, without limitation, Indebtedness which represents the unpaid amount of the purchase price of any property and is incurred in lieu of borrowing money or using available funds to pay such amounts and not constituting an account payable or expense accrual incurred or assumed in the ordinary course of business of a Person, (b) all Indebtedness evidenced by a promissory note, bond or similar written obligation to pay money, or (c) all such Indebtedness guaranteed by a Person or for which a Person is otherwise contingently liable.

      " Investment Company Act " shall mean the Investment Company Act of 1940, as amended.

      " Knowledge " and " know " means, when referring to any Person, the actual knowledge of such Person of a particular matter or fact, and what that Person would have reasonably known after due inquiry.  An entity will be deemed to have "knowledge" of a particular fact or other matter if any individual who is serving, or who has served, as an executive officer of such entity has actual "knowledge" of such fact or other matter, or had actual "knowledge" during the time of such service of such fact or other matter, or would have had "knowledge" of such particular fact or matter after due inquiry.

      " Letter of Transmittal " shall have the meaning assigned to it in Section 4.1 hereof.

      " Lien " shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.

      " Merger " shall have the meaning assigned to it in the first WHEREAS clause.

      " Merger Documents " shall have the meaning assigned to it in Section 2.6 hereof.

      "North Carolina Property" shall mean the real property located at 3427 Industrial Drive, Durham, North Carolina 27704, and all improvements located thereon.

      " Parent " shall have the meaning assigned to it in the introductory paragraph of this Agreement.

      " Parent Balance Sheet Date " shall have the meaning assigned to it in Section 3.14 hereof.

      " Parent Common Stock " shall mean the Common Stock, par value $.001 per share, of Parent.

      " Parent Employee Benefit Plans " shall have the meaning assigned to it in Section 3.16 hereof.

      " Parent Financial Statements " shall have the meaning assigned to it in Section 3.8 hereof.

      " Parent SEC Documents " shall have the meaning assigned to it in Section 3.7 hereof.

      " Permitted Liens " shall mean (a) Liens for taxes and assessments or governmental charges or levies not at the time due or in respect of which the validity thereof shall currently be contested in good faith by appropriate proceedings; (b) Liens in respect of pledges or deposits under workmen's compensation laws or similar legislation, carriers', warehousemen's, mechanics', laborers' and materialmens' and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings; and (c) Liens incidental to the conduct of the business of the Company that were not incurred in connection with the borrowing of money or the obtaining of advances or credits and which do not in the aggregate materially detract from the value of its property or materially impair the use made thereof by the Company in its business.

      " Person " shall include all natural persons, corporations, business trusts, associations, limited liability companies, partnerships, joint ventures and other entities and governments and agencies and political subdivisions.

      " Securities Act " shall mean the Securities Act of 1933, as amended.

      " Shareholders " shall mean all of the shareholders of the Company.

      " Surviving Corporation " shall have the meaning assigned to it in Section 1.1 hereof.

      " Tax " or " Taxes " shall mean (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States (federal, state or local) or other applicable jurisdiction; (b) any liability for the payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Code Regulation Section 1.1502-6; and (c) any liability for the payments of any amounts as a result of being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (a) or (b).

      " Tax Return " shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065) required to be supplied to a Tax authority relating to Taxes.

      " Voting Agreement " shall have the meaning assigned to it in Section 1.5(a)(ii).

    12. Closing .  The closing of the Merger (the "Closing") shall occur concurrently with the Effective Time (the "Closing Date").  The Closing shall occur at the offices of Bush Ross, P.A. referred to in Section 13.1 hereof.
      1. Parent Deliveries . At the Closing, Parent shall instruct its transfer agent to deliver to the Depository under the Escrow Agreement certificates representing the Parent Shares to be issued pursuant to Section 1.5(a)(ii) against receipt by the Parent of the Letters of Transmittal, the signed blank stock powers for deposit into escrow, the signed Escrow Agreement and Voting Agreement and the resignations, and to deliver the shares due to Ronald Masaracchio and Brian D'Souza against delivery to Parent of the representations required under Section 4.2.  Such instruction shall also be against delivery to Parent and Acquisition Corp. of the certificates, opinions, agreements and other instruments referred to in Section 7.1 hereof, and the certificates representing all of the Common Stock issued and outstanding immediately prior to the Effective Time. Parent shall also deliver those items required of it under Section 7.2.
      2. Company and Shareholder Deliveries . The Company and Shareholders shall deliver all of the items required under Section 4, 6.7, 6.9 and 7.1.
      3. Acquisition . At Closing, evidence of the Closing of the Acquisition shall be presented by the Company.

    13. Termination Prior to Closing .
      1. Termination of Agreement .  This Agreement may be terminated at any time prior to the Closing:
        1. By the mutual written consent of the Company, Acquisition Corp. and Parent;
        2. By the Company, if Parent or Acquisition Corp. (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date, (ii) materially breaches any of its representations, warranties or covenants contained herein, which failure or breach is not cured within twenty (20) days after the Company has notified Parent and Acquisition Corp. of its intent to terminate this Agreement pursuant to this paragraph (b);
        3. By Parent and Acquisition Corp., if the Company (i) fails to perform in any material respect any of its agreements contained herein required to be performed by it on or prior to the Closing Date, (ii) materially breach any of its representations, warranties or covenants contained herein, which failure or breach is not cured within twenty (20) days after Parent or Acquisition Corp. has notified the Company of its intent to terminate this Agreement pursuant to this paragraph (c);
        4. By either the Company, on the one hand, or Parent and Acquisition Corp., on the other hand, if there shall be any order, writ, injunction or decree of any court or governmental or regulatory agency binding on Parent, Acquisition Corp. or the Company, which prohibits or materially restrains any of them from consummating the transactions contemplated hereby, provided that the parties hereto shall have used their best efforts to have any such order, writ, injunction or decree lifted, and the same shall not have been lifted within thirty (30) days after entry, by any such court or governmental or regulatory agency; or
        5. By either the Company, on the one hand, or Parent and Acquisition Corp., on the other hand, if the Closing has not occurred on or prior to April 15, 2007, for any reason other than delay or nonperformance of the party seeking such termination.

      2. Termination of Obligations .  Termination of this Agreement pursuant to this Section 12 shall terminate all obligations of the parties hereunder, except for the obligations under Sections 6.1 as to confidentiality, 6.3 and 13.3; provided, however, that termination pursuant to paragraphs (b) or (c) of Section 12.1 shall not relieve the defaulting or breaching party or parties from any liability to the other parties hereto.

    14. Miscellaneous .
      1. Notices .  Any notice, request or other communication hereunder shall be given in writing and shall be served either personally by overnight delivery or delivered by mail, certified return receipt and addressed to the following addresses:
      2. If to Parent or Reliability Incorporated
        Acquisition Corp.: 15720 Park Row, Suite 500
        Houston, Texas 77218-8370

        With a copy to: Winstead PC
        919 Milam, Suite 2400
        Houston, Texas 77002
        Attention: Gail J. McDonald

        If to the Company: Medallion Electric Acquisition
        Corporation
        Post Office Box 2127
        Jenkintown, Pennsylvania 19046
        Attention: Alex Katz, President

        With a copy to: Bush Ross, P.A.
        220 S. Franklin Street
        Tampa, Florida 33602
        Attention: Brent Jones, Esquire

        Notices shall be deemed received at the earlier of actual receipt or five (5) business days following mailing.  Counsel for a party (or any authorized representative) shall have authority to accept delivery of any notice on behalf of such party.

      3. Entire Agreement .  This Agreement, including the Disclosure Statements contains the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and undertakings between the parties with respect to such subject matter.
      4. Expenses .  Each party shall bear and pay all of the legal, accounting and other expenses incurred by it in connection with the transactions contemplated by this Agreement.
      5. Time .  Time is of the essence in the performance of the parties' respective obligations herein contained.
      6. Severability .  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
      7. Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and heirs; provided, however, that neither party  shall  directly or indirectly transfer or assign any of its rights hereunder in whole or in part without the written consent of the others, which may be withheld in its sole discretion, and any such transfer or assignment without said consent shall be void.
      8. No Third Parties Benefited .  This Agreement is made and entered into for the sole protection and benefit of the parties hereto, their successors, assigns and heirs, and no other Person shall have any right or action under this Agreement.
      9. Counterparts .  This Agreement may be executed in one or more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts together shall constitute a single agreement.
      10. Governing Law .  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Texas.  This Agreement and the transactions contemplated hereby shall be subject to the exclusive jurisdiction of the courts of Houston, Texas.  The parties to this Agreement agree that any breach of any term or condition of this Agreement or the transactions contemplated hereby shall be deemed to be a breach occurring in the State of Texas by virtue of a failure to perform an act required to be performed in the State of Texas.  The parties to this Agreement irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of Texas for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby.  The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, or any judgment entered by any court in respect hereof brought in Houston, Texas, and further irrevocably waive any claim that any suit, action or proceeding brought in Houston, Texas has been brought in an inconvenient forum.
      11. Headings . The descriptive headings of the Articles, Sections and paragraphs of this Agreement are for convenience only and do not constitute a part of this Agreement.
      12. Neutral Construction . The parties to this Agreement agree that this Agreement was negotiated fairly between them at arms' length and that the final terms of this Agreement are the product of the parties' negotiations. Each party represents and warrants that it has sought and received legal counsel of its own choosing with regard to the contents of this Agreement and the rights and obligations affected hereby. The parties agree that this Agreement shall be deemed to have been jointly and equally drafted by them, and that the provisions of this Agreement therefore should not be construed against a party or parties on the grounds that any party or parties drafted or was more responsible for drafting the provision(s).

[remainder of page intentionally left blank, signature pages follow]

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

PARENT:

RELIABILITY INCORPORATED


By:
Name: Larry Edwards
Title: President and Chairman

ACQUISITION CORP.:

RELIABILITY-MEDALLION, INC.



By:
Name: Larry Edwards
Title: President

THE COMPANY:

MEDALLION ELECTRIC ACQUISITION CORPORATION


By:
Name: Alex Katz
Title: President

SHAREHOLDERS (solely as to the provisions of Sections 2.3, 2.8, 2.22, 4.1, 6.7 and 6.9):


Linda R. Katz


Branden A. Ferrari


Ariel Imas


Alex Kreger


Charles G. Masters

RHK Midtown Partners, LLC

By:
Name:____________________________________Title:_____________________________________


Mark Spoor


James Tolan

 

 

Ronald Masaracchio and Brian D'Souza have executed this Agreement for the sole purpose of evidencing their agreement to the provisions of Sections 4.2, 6.7 and 6.9.

Dated: _____________, 2007

_________________________

_________________________

 

Brian D'Souza

Ronald Masaracchio

EXHIBIT B

SURVIVING COMPANY

DIRECTORS AND OFFICERS

Name

Position(s)

Larry Edwards

Chief Executive Officer and Director

Mark Spoor

President, Chief Operating Officer

Alex Katz

Director

James Tolan

Secretary