RELIABILITY INC (Form: 8-K/A, Received: 10/03/2013 16:54:51)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_________________________

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 1, 2013

RELIABILITY INCORPORATED

(Exact name of registrant as specified in its charter)

Texas	000-7092	75-0868913
(State or other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

53 Forest Avenue

Old Greenwich, Connecticut 06870

(Address of principal executive offices)

Registrant's telephone number, including area code:

(203) 542-7020

410 Park Avenue – 15 th floor, New York, NY 10022

(Former name or former address, if changes 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:

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

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

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

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

Explanatory Note

Reliability Incorporated (hereinafter the "Company") is filing this Amendment No. 1 to its Current Report on Form 8-K filed on October 3, 2013 on Form 8-K/A to restate Item 5.01 of the Original Form 8-K and correct information relating to beneficial ownership of the Company. No other changes are being made to the Original Form 8-K.

Item 1.01. Entry into a Material Definitive Agreement

On October 1, 2013, Reliability Incorporated (hereinafter "Reliability" or the "Company" ) sold and issued 6,786,588 shares of the Company’s common stock (the “ Control Shares ”), no par value per share, to Jeffrey E. Eberwein, as trustee of the Jeffrey E. Eberwein Revocable Trust U/A 10-01-2010, for an aggregate purchase price of $100,000 pursuant to that certain Stock Purchase Agreement by and between the Company and Mr. Eberwein dated as of October 1, 2013 (the “ Stock Purchase Agreement ”). A copy of the Stock Purchase Agreement is attached as Exhibit 10.1 hereto and incorporated by reference herein.

Also on October 1, 2013, and immediately after issuance of the Control Shares, the Company acquired (i) 1,587,500 shares of the Company’s common stock, representing approximately 11.7% of the then issued and outstanding shares of common stock, for $23,392.00 (approximately $0.0147 per share) from Greggory Schneider, and (ii) 5,199,088 shares of the Company’s common stock, representing approximately 38.5% of the then issued and outstanding shares of common stock, for $76,608.00 (approximately $0.0147 per share) from Jay Gottlieb (collectively, the “ Company Redemptions ”) pursuant to that certain Stock Redemption Agreement by and between the Company and Mr. Schneider dated as of October 1, 2013 and that certain Stock Redemption Agreement by and between the Company and Mr. Gottlieb dated as of October 1, 2013 (together, the “ Stock Redemption Agreements ”) respectively. A copy of each Stock Redemption Agreement is attached as Exhibits 10.2 and 10.3 hereto and incorporated by reference herein. As a result of the Company Redemptions, the Company repurchased a total of 6,786,588 shares of the Company’s common stock for an aggregate purchase price of $100,000.

As further disclosed under Item 5.02 of this Form 8-K, in connection with the transactions described in the Stock Purchase Agreement, Michael Pearce and Joshua Krom each resigned from the Company’s board of directors effective as of October 1, 2013 and Jeffrey E. Eberwein and Kyle Hartley were each appointed to the Company’s board of directors effective as of October 1, 2013. Prior to the transactions described herein, Ron Gutterson resigned from the board of directors effective as of September 19, 2013. Additionally, also in connection with the transactions described in the Stock Purchase Agreement, Mr. Gottlieb resigned from his executive positions as President, Chief Executive Officer, Secretary and Treasurer of the Company and Mr. Schneider resigned from his executive position as Chief Financial Officer of the Company. Immediately following the resignations of Messrs. Gottlieb and Schneider Mr. Eberwein was appointed to the executive positions of President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.

Item 3.02. Unregistered Sales of Equity Securities .

Pursuant to the Stock Purchase Agreement described under Item 1.01 of this Form 8-K, on October 1, 2013 the Company issued 6,786,588 shares of its common stock, no par value, to Jeffrey E. Eberwein for an aggregate purchase price of $100,000. All of the shares of the Company’s common stock issued pursuant to the Stock Purchase Agreement were issued pursuant to Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “ Securities Act ”). Mr. Eberwein is an accredited investor, as defined under Rule 501 of the Securities Act. None of the securities issued is convertible.

Item 3.03. Material Modification to Rights of Security Holders.

The disclosures set forth in Item 5.03 below are incorporated by reference into this Item 3.03. A copy of the Certificate of Amendment referenced in Item 5.03 below that was filed with the Office of the Secretary of State of Texas is attached hereto as Exhibit 3.03.

Item 5.01. Change in Control of Registrant.

As disclosed under Item 1.01 of this Form 8-K, the Company entered into those certain Stock Redemption Agreements and that certain Stock Purchase Agreement on October 1, 2013.

Mr. Eberwein purchased the Control Shares for cash consideration of $100,000 pursuant to the terms of the Stock Purchase Agreement. As a result of the Company Redemptions and Mr. Eberwein’s purchase of the Control Shares, Mr. Eberwein now owns approximately 50.2% of the Company’s issued and outstanding common stock. As a result, there has been a change in control of the Company.

Mr. Eberwein may, at a future date, transfer the Control Shares to an entity wholly owned or controlled by Mr. Eberwein.

Except as otherwise described above and in Item 1.01, there are no arrangements or understandings among the members of both the former and new control groups and their associates with respect to election of directors or other matters. We are not aware of any other arrangements that might result in a change of control in the future.

As the Company was a “ shell company ” as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934 (the “ Exchange Act ”) immediately prior to this change of control, we are required to provide the additional information that would be required if we were filing a general form for registration of securities on Form 10 under the Exchange Act as a smaller reporting company.

FORM 10 DISCLOSURE

Because the Company was a shell company immediately prior to the change in control described in Item 5.01 of this Form 8-K, the Company is providing the following information that would be required if the Company were filing a general form for registration of securities on Form 10.

Item 1. Business.

Following the change of control, the Company remains a “ shell company ” as that term is defined in the Exchange Act. Additional information about the Company including a description of our business and a history of the Company appears in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 28, 2013 (the “ 2012 Annual Report ”).

Employees

As of the date hereof, we have no employees.

Item 1A. Risk Factors.

This information appears in our 2012 Annual Report.

Item 2. Financial Information.

This information appears in our 2012 Annual Report and in our Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission on August 1, 2013 (the “ June 10-Q ”).

Item 3. Properties.

This information appears in our 2012 Annual Report.

Item 4. Security Ownership of Certain Beneficial Owners and Management.

Principal shareholders

The information in Item 3.02 of this Form 8-K, “Unregistered Sales of Equity Securities” and Item 1.01 of this Form 8-K, “Entry into a Material Definitive Agreement” is incorporated herein by reference.

Based on information available to the Company through filings with the Securities and Exchange Commission and information known to the Company, each of the following persons or groups beneficially owned 5% or more of the 13,513,333 shares of common stock outstanding as of October 1, 2013.

On October 1, 2013 the Company acquired (i) 1,587,500 shares of the Company’s common stock, representing approximately 11.7% of the then issued and outstanding shares of common stock from Greggory Schneider, and (ii) 5,199,088 shares of the Company’s common stock, representing approximately 38.5% of the then issued and outstanding shares of common stock, from Jay Gottlieb (collectively, the “ Company Redemptions ”) pursuant to those certain Stock Redemption Agreements further described under Item 1.01 of this Form 8-K.

Also on October 1, 2013, and immediately after the Company Redemptions, the Company sold and issued 6,786,588 shares of the Company’s common stock, no par value per share, to Jeffrey E. Eberwein for an aggregate purchase price of $100,000 (the “ Stock Purchase ”) pursuant to that certain Stock Purchase Agreement further described under Item 1.01 of this Form 8-K.

Following the consummation of the Company Redemptions and the Stock Purchase, the number of shares outstanding of the Company’s common stock as of October 1, 2013 was 13,513,333.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
Jeffrey E. Eberwein 53 Forest Avenue Old Greenwich, CT 06870		6,786,588		50.2	%
William Vlahos 601 Montgomery St., Ste. 1112, San Francisco, CA 94111		1,250,000		9.2	%

Security Ownership of Management

The information in Item 5.02 of this Form 8-K “Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers” is incorporated herein by reference.

As of October 1, 2013, the amount of common stock owned by the directors of the Company was:

Name of Individual or Group	Amount and Nature of Beneficial Ownership		Percent of Class
Jeffrey E. Eberwein		6,786,588		50.2	%
Greggory Schneider		10,000		0.074	%
All executive officers and directors as a group		6,796,588		50.3	%

Item 5. Directors and Executive Officers.

The following table sets forth the name, age and position with the Company of (i) each of the persons appointed to the Company’s Board of Directors and (ii) each of the persons appointed as Executive Officer(s) of the Company as described herein as of the date hereof:

NAME	AGE		PRINCIPAL POSITION
Jeffrey E. Eberwein		43	Chairman of the Board of Directors, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
Jay Gottlieb		68	Director
Greggory Schneider		36	Director
Kyle Hartley		44	Director

Below is a biography of the current members of the Board of Directors:

Jeffrey E. Eberwein has 20 years of Wall Street experience and is the Founder and CEO of Lone Star Value Management, LLC, an investment firm. Prior to founding Lone Star in January 2013, Mr. Eberwein was a Portfolio Manager at Soros Fund Management from January 2009 to December 2011 and Viking Global Investors from March 2005 to September 2008. Mr. Eberwein is Chairman of the Board of Digirad Corporation, a medical imaging company. Mr. Eberwein is also Chairman of the Board of Crossroads Systems, Inc., a data storage company. Mr. Eberwein also serves on the Boards of NTS, Inc., On Track Innovations Ltd, and Aetrium Incorporated. Mr. Eberwein served on the Board of The Goldfield Corporation from May 2012 until May 2013. Mr. Eberwein is the Treasurer and serves on the Executive Committee of the Board of Hope for New York, a 501(c)3 organization dedicated to serving the poor in New York City. Mr. Eberwein earned an MBA from The Wharton School, University of Pennsylvania and a BBA with High Honors from The University of Texas at Austin.

Jay A. Gottlieb is a private investor in various companies since 1998. He is involved in analysis and investment in undervalued special situations and shell corporations. He presently owns between 5% and 25% of several public companies and from 2008 to 2010 was a member of the Board of Directors of Golf Trust of America, Inc. (NYSE Amex:GTA). From 1992 to 1998 he was the editor of an investment service that analyzed and published extensive data on companies planning initial public offerings. From 1977 to 1991, Mr. Gottlieb was the President and Chairman of the Board of The Computer Factory, Inc.(NYSE), a nationwide organization involved in retail and direct sales, servicing and leasing of personal computers. From 1969 to 1988, he was President of National Corporate Sciences, Inc., a

registered investment advisory service. Mr. Gottlieb holds a Bachelor of Arts degree from New York University.

Greggory Schneider is a private investor who specializes in undervalued publicly traded securities. During the past seventeen years, Mr. Schneider has been an active dealer in numismatic items, specializing in U.S. rare coins and currency. Mr. Schneider attended two years of courses at UCLA and is involved in several charitable organizations.

Kyle Hartley is the chief operating officer of Lone Star Value Management, LLC. Mr. Hartley has over 15 years of experience in the investment industry, including more than 11 years in senior management positions at alternative investment firms. Prior to joining Lone Star in May 2013, Mr. Hartley was the CFO/COO of Greenheart Capital Partners, a global emerging market long/short equity hedge fund firm spun out of Shumway Capital. From March 2008 through November 2011, Mr. Hartley was the CFO/COO/CCO of Apis Capital Advisors, a $750 million (peak AUM) global long/short equity hedge fund firm investing primarily in small cap value equities. From April 2006 through March 2008, Mr. Hartley served as the head of Marketing and Client Services at Mercury Partners, a $1 billion+ global long/short equity hedge fund firm focused on the real estate sector. From June 2004 to March 2006, Mr. Hartley was a Managing Director, the head of operational due diligence and a member of the Investment Committee of Taylor Investment Advisors, a hedge fund investment firm founded by the late Tommy Taylor. Mr Hartley’s initial position in the hedge fund industry was as the CFO/COO of CQ Capital, a long/short equity, technology-media- telecom sector hedge fund firm from 2002 to 2004. Prior to CQ Capital, Mr. Hartley served as a Director of Business Development at Greenwich Associates, a financial industry market-research and consulting firm, and as a Vice President in the Investment Banking division of Forum Capital Markets prior to its acquisition by First Union Securities. Mr. Hartley started his career at Clarion Marketing and Communications where he earned four promotions to Account Supervisor from 1992 to 1997. Mr. Hartley earned an MBA with Distinction from New York University’s Leonard N. Stern School of Business, and a BA from Dartmouth College.

Directors serve a one-year term and hold office until their successors are elected by the shareholders, unless they shall sooner resign.

None of the members of the board of directors or executive officers of the Company has, in the last ten years, been involved in any legal proceeding of the type described under Item 401(f) of Regulation S-K.

Item 6. Executive Compensation.

Summary Compensation Table

The Company has not paid any salary to its officers in 2013, 2012 or 2011.

Under the Company’s Amended and Restated 1997 Stock Option Plan (“Option Plan”), which expired in 2006, stock option grants were available for officers, directors, and key employees. The objective of the Option Plan was to promote the interest of the Company by providing an ownership incentive to officers, directors, and key employees, to reward outstanding performance, and to encourage continued employment. The Board of Directors, which acted as the Plan Administrator, determined to whom options were granted, the type of options, the number of shares covered by such options and the option vesting schedule. All options were issued at market value on the date of the grant and generally had a ten-year contractual term with graded vesting.

Outstanding equity awards

The following table discloses information regarding all option awards, to executive officers, to purchase the Company’s common stock as of December 31, 2012.

Option Awards

Number of Securities Underlying

Unexercised Options

Option

Name

(a)

# Exercisable

(b)

# Unexercisable (1)

(c)

Exercise Price

(e)

Expiration Date

(f)

Larry Edwards (former President)

200,000

0.21

7/19/2016

(1)	All issued options are vested and became exercisable on January 20, 2007.

Director Compensation

Directors do not receive compensation.

Item 7. Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

The information in Item 5.01 of this Form 8-K, “Changes in Control of the Registrant” is incorporated herein by reference.

Except as disclosed below and in Item 5.01 of this Form 8-K, none of the following persons has, since the beginning of the Company’s last fiscal year or in any currently proposed transaction, had any material interest, direct or indirect, in any transaction with the Company or in any presently proposed transaction that has or will materially affect us:

(a)

Any director or officer;

(b)

Any proposed nominee for election as a director;

(c)

Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock;

(d)

Any promoters; or

(e)

Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary.

As set forth under Item 4 above, the Company and Messrs. Gottlieb, Schneider and Eberwein are parties to those certain Stock Redemption Agreements and Stock Purchase Agreement, respectively, which Stock Redemption Agreements and Stock Purchase Agreement are attached as Exhibits 10.1, 10.2 and 10.3 to this Form 8-K.

In addition, as set forth in the Stock Purchase Agreement, Mr. Gottlieb has forgiven funds in the amount of $10,000 previously loaned or advanced to the Company, which loans and advances remained outstanding as of the date of the Stock Purchase Agreement.

Director Independence

Our common stock is quoted on the OTCQB of the OTC Marketplace, which does not have director independence requirements. Under NASDAQ Rule 4200(a)(15), a director is not considered independent if he or she has also been an executive officer or employee of the corporation during the current year or any of the past three years. As such, only Mr. Hartley can be classified as independent under this definition.

Item 8. Legal Proceedings.

This information appears in our 2012 Annual Report.

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

This information appears in our 2012 Annual Report.

Item 10. Recent Sales of Unregistered Securities.

The information in Item 3.02 of this Form 8-K, “Unregistered Sales of Equity Securities” is incorporated herein by reference.

Item 11. Description of Registrant’s Securities to be Registered.

None.

Item 12. Indemnification of Directors and Officers.

Amended and Restated Bylaws

Section 6.10 of the Company’s bylaws, as amended, provide that the Company shall indemnify and hold harmless its officers and directors to the fullest extent allowed by law.

Texas Business Organizations Code

Section 8.101(a) of the Texas Business Organizations Code, as amended (the “ TBOC ”), grants to a enterprise the power to indemnify a governing person, former governing person, or delegate who was, is or is threatened to be made a respondent in a proceeding if it is determined that: (1) the person: (A) acted good faith; (B) reasonably believed: (i) in the case of conduct in the person’s official capacity, that the person’s conduct was in the enterprise's best interests; and (ii) in all other cases, that the person’s conduct was at least not opposed to the enterprise's best interests; and (C) in the case of any criminal proceeding, did not have a reasonable cause to believe the person’s conduct was unlawful; (2) with respect to the expenses, the amount of expenses other than a judgment is reasonable; and (3) indemnification should be paid.

Section 8.102 of the TBOC limits the allowable indemnification by providing that, (a) subject to Section 8.102(b), an enterprise may indemnify a governing person, former governing person, or delegate against: (1) a judgment; and (2) expense, other than a judgment, that are reasonable and actually incurred by the person in connection with a proceeding. Section 8.102(b) provides that indemnification of a person who is found liable to the enterprise or is found liable because the person improperly received a personal benefit; (1) is limited to reasonable expenses actually incurred by the person in connection with the

proceeding; (2) does not include a judgment, a penalty, a fine, and excise or similar tax, including an excise tax assessed against the person with respect to an employee benefit plan; and (3) may not be made in relation to a proceeding in which the person has been found liable for: (A) willful or intentional misconduct in the performance of the person’s duty to the enterprise; (B) breach of the person’s duty of loyalty owned to the enterprise; or (C) an act or omission not committed in good faith that constitutes a breach of a duty owned by the person to the enterprise.

Finally, Section 8.051 of the TBOC provides that an enterprise shall indemnify a governing person, former governing person, or delegate against reasonable expenses actually incurred by the person in connection with a proceeding in which the person is a respondent because the person is or was a governing person or delegate if the person is wholly successful, on the merits or otherwise, in defense of the proceeding.

With respect to the officers of a corporation, Section 8.105(a) of the TBOC provides that an enterprise may indemnify and advance expenses to a person who is not a governing person, including an officer as provided by: (1) the enterprise’s governing documents; (2) general or specific action of the enterprise’s governing authority; (3) resolution of the enterprise’s owners or members; (3) contract; or (4) common law. Additionally, Section 8.105(b) of the TBOC provides that an enterprise shall indemnify an officer to the same extent that indemnification is required pursuant to Section 8 of the TBOC for a governing person.

Item 13. Financial Statements and Supplementary Data.

This information appears in our June 10-Q.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

This information appears in our June 10-Q. Since the date of the June 10-Q, the Company has had no disagreements with its certified public accountants with respect to accounting practices or procedures or financial disclosure.

Item 15. Financial Statements and Exhibits.

This information appears in our June 10-Q.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

In connection with the Stock Purchase Agreement described under Item 1.01 of this Form 8-K, Michael Pearce and Joshua Krom each resigned from the Company’s board of directors effective as of October 1, 2013. Prior thereto and effective as of September 19, 2013, Ron Gutterson resigned from the Company’s board of directors as disclosed in the Company’s Current Report on Form 8-K filed on September 23, 2013. Effective as of October 1, 2013, each of Jeffrey E. Eberwein and Kyle Hartley were appointed to the Company’s board of directors. None of the resigning directors had any disagreements with the Company or any other member of the board of directors.

In addition, also in connection with the Stock Purchase Agreement, Mr. Gottlieb resigned from his executive positions as President, Chief Executive Officer, Secretary and Treasurer of the Company and Mr. Schneider resigned from his position as Chief Financial Officer of the Company. In addition, Mr. Gottlieb resigned as Chairman of the board of directors, but shall remain a member of the board of directors.

Mr. Eberwein was appointed, immediately following the effectiveness of Mr. Gottlieb’s and Mr. Schneider’s resignation, to the executive positions of President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company. In addition, Mr. Eberwein was appointed Chairman of the board of directors.

Item 5.03 . Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On July 23, 2012 the Company filed a Certificate of Amendment to the Restated Articles of Incorporation with the Office of the Secretary of the State of Texas to (a) change the registered agent of the Company to InCorp Services, Inc., (b) increase the number of shares of the Company’s common stock authorized for issuance from 20,000,000 shares of common stock to 300,000,000 million shares of common stock, without par value and 1,000,000 million shares of preferred stock, without par value, and (c) identify the directors as Jay Gottlieb, Michael Pearce, Josh Krom, Ron Gutterson and Greggory Schneider, each with an address c/o Reliability, Inc., 410 Park Ave., 15 th Floor, New York, NY 10022. As noted in Item 3.03 above, copy of the Certificate of Amendment that was filed with the Office of the Secretary of State of Texas is attached hereto as Exhibit 3.03.

Item 9.01. Financial Statements and Exhibits.

Exhibits:

Exhibit No. Description

3.03 Certificate of Amendment to Articles of Incorporation, dated July 23, 2012

10.1 Stock Purchase Agreement (Eberwein)

10.2 Stock Redemption Agreement (Gottlieb)

10.3 Stock Redemption Agreement (Schneider)

Signature

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 (Registrant)
Date: October 3, 2013	By:	/s/ Jeffrey E. Eberwein
		Name: Jeffrey E. Eberwein
		Title: President and CEO

Exhibit Index

Exhibit No. Description

3.03 Certificate of Amendment to Articles of Incorporation, dated July 23, 2012

10.1 Stock Purchase Agreement (Eberwein)

10.2 Stock Redemption Agreement (Gottlieb)

10.3 Stock Redemption Agreement (Schneider)

RESTATED ARTICLES OF INCORPORATION

(with amendment)

RELIABILITY INCORPORATED

1. Reliability Incorporated (the "Corporation"), pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act (the "Act"), hereby adopts Restated Articles of Incorporation which accurately copy the Articles of Incorporation and all amendments thereto that are in effect to date and as further amended by such Restated Articles of Incorporation as hereinafter set forth and which contains no other changes.

2. The Articles of Incorporation of the Corporation are amended by the Restated Articles of Incorporation as follows:

Articles Two and Seven of the Articles of Incorporation of the Corporation are amended in their entirety to read as set forth in the Restated Articles of Incorporation printed below under paragraph 5 and Article Eight is deleted in its entirety.

3. Each amendment made by these Restated Articles of Incorporation has been effected in conformity with the provisions of the Texas Business Corporation Act and each such amendment made by the Restated Articles of Incorporation were duly adopted by the shareholders of the Corporation on April 26, 1995.

4. The number of shares outstanding was 4,242,848; the number of shares entitled to vote on the Restated Articles of Incorporation as so amended was 4,242,848; the number of shares voted for such Restated Articles of Incorporation as so amended was 3,800,980; and the number of shares voted against such Restated Articles as so amended was 101,334; and the number of shares abstaining was 13,355.

5. The Articles of Incorporation and all amendments and supplements thereto are hereby superseded by the following Restated Articles of Incorporation which accurately copy the entire text thereof:

RESTATED ARTICLES OF INCORPORATION

RELIABILITY INCORPORATED

ARTICLE ONE

The name of the Corporation is Reliability Incorporated.

ARTICLE TWO

The purpose for which the Corporation is organized is to engage in the transaction of any lawful business for which a corporation may be incorporated under the Act.

ARTICLE THREE

The name of its registered agent is Larry Edwards and the address of its registered office is 16400 Park Row, Houston, Texas 77084.

ARTICLE FOUR

The period of its duration is perpetual.

ARTICLE FIVE

The number of Directors shall be fixed by the By-Laws of the Corporation at not less than three, and until changed by such By-Laws shall be three, and the names and addresses of those who are the current directors are as follows:

	Name	Address

	W. L. Hampton	16400 Park Row Houston, Texas 77084

	Everett G. Hanlon	16400 Park Row Houston, Texas 77084

	John R. Howard	16400 Park Row Houston, Texas 77084

	Thomas L. Langford	16400 Park Row Houston, Texas 77084

	A. C. Lederer, Jr.	16400 Park Row Houston, Texas 77084

ARTICLE SIX

The aggregate number of shares which the Corporation shall have authority to issue is Twenty Million shares of common stock (the "Common Stock"), without par value.

ARTICLE SEVEN

Provisions for the regulation of the internal affairs of the Corporation will include the following, but such enumeration is not in limitation of the power of the shareholders or the Board of Directors to formulate in the By-Laws, by resolution, or any other proper manner any other lawful provision not inconsistent with law or these articles:

Section 1 . Voting . Each outstanding share, regardless of class, will be entitled to one vote on each matter submitted to a vote of shareholders. At each election of directors every shareholder entitled to vote at such election will be entitled to vote, in person or by proxy, the number of shares owned by him for each director for whose election he has a right to vote. The right of shareholders to cumulate votes in the election of directors is expressly denied.

Section 2 . By-Laws . The Board of Directors from time to time may alter, amend or repeal the By-Laws of the Corporation or adopt new By-Laws; but the shareholders from time to time may alter, amend or repeal any By-Laws adopted by the Board of Directors or may adopt new By-Laws.

Section 3 . Denial of Preemptive Rights . The shareholders of the Corporation will not have the preemptive right to acquire additional, unissued or treasury shares of the Corporation, or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares.

Section 4 . Limitation of Liability of Directors . No director of the Corporation shall be liable to the Corporation or its shareholders for monetary damages for an act or omission in such director's capacity as a director except for (i) a breach of the director's duty of loyalty to the Corporation or its shareholders, (ii) an act or omission not in good faith that constitutes a breach of duty to the Corporation or an act or omission that involves intentional misconduct or a knowing violation of the law, (iii) a transaction from which the

director received an improper benefit (whether or not the benefit resulted from an action taken within the scope of the director's office), or (iv) an act or omission for which the liability of the director is expressly provided by applicable statute.

Dated this 26th day of April, 1995.

	RELIABILITY INCORPORATED
	By:	/s/ Larry Edwards
		Larry Edwards, President

Form 424

(Revised 05/11)

Submit in duplicate to: Secretary of State

P.O. Box 13697

Austin, TX 78711-3697

512 463-5555

FAX: 512/463-5709

Filing Fee: See instructions

Certificate of Amendment

Entity Information

The name of the filing entity is:

RELIABILITY, INC.

State the name of the entity as currently shown in the records of the secretary of state. If the amendment changes the name of the entity, state the old name and not the new name.

The f iling e ntity is a : (Select the appropriate entity type below.)

x	For-profit Corporation	o	Professional Corporation
o	Nonprofit Corporation	o	Professional Limited Liability Company
o	Cooperative Association	o	Professional Association
o	Limited Liability Company	o	Limited Partnership

The file number issued to the filing entity by the secretary of state is: 0011672900

The date of formation of the entity is: September 21, 1953

Amendments

1. Amended Name

(If the purpose of the certificate of amendment is to change the name of the entity, use the following statement)

The amendment changes the certificate of formation to change the article or provision that names the filing entity. The article or provision is amended to read as follows:

The name of the filing entity is: (state the new name of the entity below)

_________________________________________________

The name of the entity must contain an organizational designation or accepted abbreviation of such term, as applicable.

2. Amended Registered Agent/Registered Office

The amendment changes the certificate of formation to change the article or provision stating the name of the registered agent and the registered office address of the filing entity. The article or provision is amended to read as follows:

Registered Agent

(Complete either A or B, but not both. Also complete C.)

x A. The registered agent is an organization ( cann o t be entity n a med above) by the name of:

InCorp Services, Inc.

o B. The registered agent is an individual resident of the state whose name is:

_________________________________________________
First Name M.I. Last Name Suffix

The person executing this instrument affirms that the person designated as the new registered agent has consented to serve as registered agent.

C. The business address of the registered agent and the registered office address is:

815 Brazos St., Ste. 500

Austin

78701

Street Address (No P.O. Box) City State Zip Code

3. Other Added, Altered, or Deleted Provisions

Other changes or additions to the certificate of formation may be made in the space provided below. If the space provided is insufficient, incorporate the additional text by providing an attachment to this form. Please read the instructions to this form for further information on format.

Text Area (The attached addendum, if any, is incorporated herein by reference.)

o Add each of the following provisions to the certificate of formation. The identification or reference of the added provision and the full text are as follows:

x Alter each of the following provisions of the certificate of formation. The identification or reference of the altered provision and the full text of the provision as amended are as follows:

ARTICLE SIX-The aggregate number of shares which the Corporation shall have the authority to issue is

Three Hundred Million shares of common stock, without par value and One Million shares of preferred stock,

without par value. ---- ARTICLE FIVE Current directors are as follows:

Jay Gottlieb Michael Pearce Josh Krom Ron Gutterson Gregg Schneider ·

C/o Reliability, Inc. 410 Park Ave. 15th Floor New York, NY 10022

o Delete each of the provisions identified below from the certificate of formation.

Statement of Approval

The amendments to the certificate of formation have been approved in the manner required by the Texas Business Organizations Code and by the governing documents of the entity.

Effectiveness of Filing (Select either A, B, or C.)

A. x This document becomes effective when the document is filed by the secretary of state.

B. o This document becomes effective at a later date, which is not more than ninety (90) days from the date of signing. The delayed effective date is: _________________________________________________

C. o This document takes effect upon the occurrence of a future event or fact, other than the passage of time. The 90 t h day after the date of signing is: _____________________________________________

The following event or fact will cause the document to take effect in the manner described below:

Execution

The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument and certifies under penalty of perjury that the undersigned is authorized under the provisions of law governing the entity to execute the filing instrument.

Date:	7-20-12	By:	/s/ Jay Gottlieb

			Signature of authorized person
			Jay Gottlieb
			Printed or typed name of authorized person (see instructions)

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into and effective as of October 1, 2013 by and between RELIABILITY INCORPORATED, a Texas corporation with a business address at 410 Park Avenue – 15 th floor, New York, New York 10022 (the “Company”), and JEFFREY E. EBERWEIN, as trustee of the JEFFREY E. EBERWEIN REVOCABLE TRUST U/A 10-01-2010, a revocable trust with a business address at 53 Forest Avenue, Old Greenwich, Connecticut 06870 (the “Purchaser”). The Company and the Purchaser are sometimes referred to collectively herein as the “Parties” and individually as a “Party”.

WHEREAS , the Company desires to sell to Purchaser 6,786,588 shares (the “Shares”) of common stock of the Company, no par value per share (the “Common Stock”), on the terms and conditions hereinafter set forth, and the Purchaser desires to acquire the Shares;

NOW, THEREFORE , for and in consideration of the premises and the mutual covenants hereinafter set forth, the Parties do hereby agree as follows:

1. Subscription/Purchase of Shares . Subject to the terms and conditions hereinafter set forth, the Purchaser hereby subscribes for and agrees to purchase from the Company the Shares, at an aggregate purchase price of $100,000.00 (the “Purchase Price”), and the Company agrees to sell and issue the Shares to the Purchaser for the Purchase Price. The Purchaser has hereby delivered and paid to the Company concurrently herewith the Purchase Price by wire transfer of immediately available funds to an account or accounts designated by the Company. Promptly after the date hereof, the certificate for the Shares will be delivered by the Company to the Purchaser.

2. Representations, Warranties and Covenants of Purchaser . The Purchaser hereby acknowledges, represents and warrants to, and agrees with the Company as follows:

(a) The Purchaser is an “accredited investor” as defined by Rule 501 under the Securities Act of 1933, as amended (the “Act”), and the Purchaser is capable of evaluating the merits and risks of the Purchaser’s investment in the Company and has the capacity to protect the Purchaser’s own interests.

(b) The Purchaser understands that the Shares to be purchased have not been, and will not be, registered under the Act or the securities laws of any state by reason of a specific exemption from the registration provisions of the Act and the applicable state securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein.

(c) Purchaser acknowledges and understands that the Shares are being purchased for Purchaser’s own account for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part of the Shares for any particular price, or at any particular time, or upon the happening of any particular event or circumstances, except selling, transferring, or disposing the Shares made in full compliance with all applicable provisions of the Act, the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) thereunder, and applicable state securities laws; and that the Shares are not liquid investments.

(d) The Purchaser acknowledges that the Shares must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available. In addition, the Purchaser is aware that the Company is currently a “shell company” as defined in Rule 405 under the Act and that the provisions of Rule 144 promulgated under the Act are not available until certain conditions precedent thereunder are met. The Purchaser acknowledges that the Purchaser is not relying on the Company in any way to satisfy the conditions precedent for resale of securities pursuant to Rule 144 under the Act.

(e) The Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive answers from the Company or any person acting on its behalf concerning the Company and its business and to obtain any additional information, to the extent possessed by the Company (or to the extent it could have been provided by the Company without unreasonable effort or expense) necessary to verify the accuracy of the information received by the Purchaser. In connection therewith, the Purchaser acknowledges that the Purchaser has had the opportunity to discuss the Company’s business, management and financial affairs with the Company’s management or any person acting on its behalf. The Purchaser has received and reviewed all the information, both written and oral, that it desires. Without limiting the generality of the foregoing, the Purchaser has been furnished with or has had the opportunity to acquire, and to review, (i) copies of the Company’s most recent Annual Report on Form 10-K filed with the SEC and any Form 10-Q and Form 8-K filed thereafter (the “SEC Filings”), and other publicly available documents, and (ii) all information, both written and oral, that it desires with respect to the Company’s business, management, financial affairs and prospects. In determining whether to make this investment, the Purchaser has relied solely on the Purchaser’s own knowledge and understanding of the Company and its business based upon the Purchaser’s own due diligence investigations and the information furnished pursuant to this paragraph. The Purchaser understands that no person has been authorized to give any information or to make any representations which were not furnished pursuant to this paragraph and the Purchaser has not relied on any other representations or information.

(f) The Purchaser has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform the Purchaser’s obligations under the terms of this Agreement. This Agreement constitutes a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms, and subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.

(g) The Purchaser has not, and will not, incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement.

(h) To the extent the Purchaser deems necessary, the Purchaser has reviewed with the Purchaser’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Purchaser relies solely on such advisors and not on any statements or representations of the Company or any of its agents. The Purchaser understands that the Purchaser (and not the Company) shall be responsible for the Purchaser’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

(i) There are no actions, suits, proceedings or investigations pending against the Purchaser or the Purchaser’s properties before any court or governmental agency (nor, to the Purchaser’s knowledge, is there any threat thereof) which would impair in any way the Purchaser’s ability to enter into and fully perform the Purchaser’s commitments and obligations under this Agreement or the transactions contemplated hereby.

(j) The execution, delivery and performance of and compliance with this Agreement, and the issuance of the Shares will not result in any material violation of, or conflict with, or constitute a material default under, any of the Purchaser’s material agreements nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of the Purchaser or the Shares.

(k) Purchaser acknowledges that the Shares are speculative and involve a high degree of risk and that the Purchaser can bear the economic risk of the purchase of the Shares, including a total loss of his investment.

(l) The Purchaser recognizes that no federal, state or foreign agency has recommended or endorsed the purchase of the Shares.

(m) Purchaser understands that any and all certificates representing the Shares and any and all securities issued in replacement thereof or in exchange therefor shall bear the following legend, or one substantially similar thereto, which Purchaser has read and understands:

“The securities represented by this certificate have not been registered under the Securities Act of 1933. The securities have been acquired for investment and may not be sold, transferred or assigned in the absence of an effective registration statement for these securities under the Securities Act of 1933 or an opinion of the Company’s counsel that registration is not required under said Act.”

(n) In addition, the certificates representing the Shares, and any and all securities issued in replacement thereof or in exchange therefor, shall bear such legend as may be required by the securities laws of the jurisdiction in which the Purchaser resides.

(o) Purchaser acknowledges that Purchaser has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Shares and of making an informed investment decision.

(p) Purchaser represents that (i) Purchaser could be reasonably assumed to have the capacity to protect his/her/its own interests in connection with this subscription; or (ii) Purchaser has a pre-existing personal or business relationship with either the Company or an affiliate thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified to evaluate and assess the risks, nature and other aspects of this subscription.

3. Representations and Warranties of the Company . The Company hereby acknowledges, represents and warrants to, and agrees with the Purchaser as follows:

(a) The Company has been duly organized, is validly existing and is in good standing under the laws of the State of Texas. The Company has full corporate power and authority to enter into this Agreement and this Agreement has been duly and validly authorized, executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by the United States Bankruptcy Code and laws effecting creditors rights, generally.

(b) Subject to the performance by the Purchaser of its obligations under this Agreement and the accuracy of the representations and warranties of the Purchaser, the offering and sale of the Shares is exempt from the registration requirements of the Act.

(c) The execution and delivery by the Company of, and the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement will not contravene any provision of applicable law or the charter documents of the Company or any agreement or other instrument binding upon the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement.

(d) The Common Stock is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, as such, the Company is required to file periodical and other reports under Section 13 of the Exchange Act (the “Exchange Act Reports”).

(e) The Company is in compliance with all SEC Filings and other Exchange Act Reports the Company is obligated to file pursuant to the Exchange Act.

(f) The Company’s existing indebtedness, payables and/or other accrued financial obligations are specifically set forth in Schedule A annexed hereto. Except as set forth in therein, the Company is not subject to any liability (including, to the Company’s knowledge, unasserted claims), absolute or contingent, which i s not shown or which is in excess of amounts shown therein.

(g) The SEC Filings did not, and through the date hereof will not, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made and at the time of their filing, not misleading.

(i) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive or similar rights. As of the date hereof, 300,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, no par value per share (the “Preferred Stock”) are authorized, of which 13,513,333 shares of Common Stock (excluding treasury shares) and no shares of Preferred Stock are issued and outstanding. The Company does not have any class of authorized stock other than Common Stock and Preferred Stock. The Shares have been duly authorized and, when issued and delivered as provided by this Agreement, will be validly issued and fully paid and non-assessable, and the Shares are not subject to any preemptive or similar rights. Subject to the redemption of the shares of Common Stock contemplated by Section 5(d) hereof, the Shares

shall upon issuance represent 50.2% of the then issued and outstanding shares of Common Stock of the Company.

(j) The Company is not in violation of its charter or bylaws and is not in default in the performance of any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of trust, license, contract, lease or other instrument to which the Company is a party or by which it is bound, or to which any of the property or assets of the Company is subject, except such as have been waived or which would not have, singly or in the aggregate, a material adverse effect on the Company, taken as a whole.

(k) The execution and delivery by the Company of, and the performance by the Company of its respective obligations under this Agreement will not contravene any provision of law known by the Company to be applicable to it, or the charter documents of, the Company or any subsidiary of the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary of the Company and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement in accordance with the terms of this Agreement.

(l) There is no litigation or governmental proceeding pending, or to the knowledge of the Company, threatened against, or involving the property or the business of the Company, or, to the best knowledge of the Company which would adversely affect the condition (financial or otherwise), business, prospects or results of operations of the Company, taken as a whole.

(m) The financial statements set forth in the SEC Filings fairly present the financial position and the results of operations of the Company, at the dates and periods therein specified. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the respective periods involved and are complete and accurate and are in accordance with the books and records of the Company. Since June 30, 2013 and except as otherwise reflected in the SEC Filings, the Company: (a) has not entered into any transaction outside of the ordinary course of business except pursuant to this Agreement; or (b) suffered any material adverse change in its financial condition or results of operations, except as set forth in Schedule A .

4. Use of Proceeds . Upon receipt by the Company, the proceeds obtained by the Company in connection with the sale of securities contemplated by this Agreement shall immediately be applied as required to redeem the shares of Common Stock as provided for in Section 5(d) hereof.

5. Additional Actions . It is hereby acknowledged by the Company and Purchaser that, in connection with the issuance of the Shares contemplated hereby, and contemporaneously herewith:

(a) Jay Gottlieb is resigning, effective immediately, from his executive positions as President, Chief Executive Officer, Secretary and Treasurer of the Company, Mr. Gottlieb shall remain a director on the Board of Directors;

(b) Greggory Schneider is resigning, effective immediately, from his executive position as Chief Financial Officer of the Company, Mr. Schneider shall remain a director on the Board of Directors;

(b) Jeffrey E. Eberwein is appointed, effective immediately following the effectiveness of Mr. Gottlieb’s and Mr. Schneider’s resignations as set forth in subsections (a) and (b) above, to the executive positions of President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company;

(c) Ron Gutterson resigned, effective September 19, 2013 from the Board of Directors, and each of Michael Pearce and is Joshua Krom is resigning, effective immediately, from the Board of Directors, and two designees of the Purchaser shall be appointed, effective immediately, to the Board to fill two of such vacancies;

(d) The Company is entering into a Stock Redemption Agreement with each of Jay Gottlieb and Greggory Schneider for the redemption of 5,199,088 and 1,587,500 outstanding shares of Common Stock, respectively, for the aggregate redemption price of $100,000.00 less 50% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Redemption Agreements; and

(e) Mr. Gottlieb previously loaned or advanced certain funds to the Company, which loans and advances remain outstanding as of the date hereof in the principal amount of $10,000.00 (collectively, the “ Gottlieb Loans ”). Mr. Gottlieb hereby is forgiving the Gottlieb Loans and forever waiving and releasing the Company from any obligation to repay the Gottlieb Loans pursuant to a Forgiveness of Debt agreement executed as of the date hereof.

6. Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement.

7 . Indemnification . Each Party shall indemnify the other and hold the other Party harmless against and in respect of any and all losses, liabilities, damages, obligations, claims, costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by either Party resulting from any breach of any representation, warranty, covenant or agreement made by the other Party herein or in any instrument or document delivered by the other Party pursuant hereto.

8. Further Assurances . Following the date hereof, each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

9. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder (each, a “ Notice”) shall be in writing and addressed to the Parties at the addresses set forth on the first page of this Agreement (or to such other address that may be designated by the receiving Party from time to time in accordance with this section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a PDF document (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise

provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving Party, and (b) if the Party giving the Notice has complied with the requirements of this Section.

10. Entire Agreement . This Agreement constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.

11. Successor and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. No Party may assign any of its rights or obligations hereunder without the prior written consent of the other Parties hereto, which consent shall not be unreasonably withheld or delayed.

12. Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

13. Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

14. Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

15. Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of Texas without giving effect to any choice or conflict of law provision or rule (whether of Texas or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of Texas. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of Texas in each case located in Dallas, Texas, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

16. Expenses . All costs and expenses incurred in connection with the Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses, except that the Purchaser shall be responsible to pay 50.0% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Redemption Agreements.

17. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

18. Legal Counsel . Each of the Parties hereto represents, warrants and covenants that it has had ample opportunity to consider entering into this Agreement and has had an opportunity to consult with counsel regarding this Agreement prior to executing the same.

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

The Company:

RELIABILITY INCORPORATED

By: /s/ Jay Gottlieb

Name: Jay Gottlieb

Title: President

The Purchaser:

JEFFREY E. EBERWEIN REVOCABLE TRUST

U/A 10-01-2010

By: /s/ Jeffrey E. Eberwein

Name: Jeffrey E. Eberwein

Title: Trustee

SCHEDULE A

Existing Indebtedness

See liabilities listed in the balance sheet annexed hereto.

REDACTED

STOCK REDEMPTION AGREEMENT

THIS STOCK REDEMPTION AGREEMENT (the “Agreement”) is entered into and effective as of October 1, 2013 by and between RELIABILITY INCORPORATED, a Texas corporation with a business address at 410 Park Avenue – 15 th floor, New York, New York 10022 (the “Company”), and JAY GOTTLIEB, an individual residing 30 Stonygate Oval, New Rochelle, New York 10804 (the “Redeeming Stockholder”). The Company and the Redeeming Stockholder are sometimes referred to collectively herein as the “Parties” and individually as a “Party”.

WHEREAS , the Company desires to acquire from the Redeeming Stockholder 5,199,088 shares (the “Shares”) of the common stock of the Company, no par value per share, on the terms and conditions hereinafter set forth, and the Redeeming Stockholder desires to have the Shares redeemed;

NOW, THEREFORE , for and in consideration of the premises and the mutual covenants hereinafter set forth, the Parties do hereby agree as follows:

1. Redemption of Shares . Subject to the terms and conditions hereinafter set forth, the Company hereby agrees to acquire from the Redeeming Stockholder the Shares, at a price in cash equal to $76,608.00 in the aggregate (or approximately $0.0147 per share) (the “Redemption Price”), less an amount equal to 38.3% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Purchase Agreement by and between the Company and Jeffrey E. Eberwein dated as of the date hereof (the “Expense Adjustment”), and the Redeeming Stockholder agrees to sell the Shares to the Company for such Redemption Price less the Expense Adjustment. The certificates reflecting the Shares will be surrendered and delivered by the Redeeming Stockholder contemporaneously herewith, along with a duly executed stock power with Medallion Guarantee, in exchange for the Redemption Price (less the Expense Adjustment) which shall be paid by wire transfer of immediately available funds contemporaneously therewith to an account or accounts designated by the Redeeming Stockholder.

2. Representations and Warranties of the Company . The Company represents and warrants to the Redeeming Stockholder as follows:

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. The Company has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and (assuming due execution and delivery by the Redeeming Stockholder) constitutes the Company’s legal, valid and binding obligation, enforceable against the Company in accordance with its terms.

(b) The execution, delivery and performance by the Company of this Agreement does not conflict with, violate or result in the breach of, any agreement, instrument, order, judgment, decree, law or governmental regulation to which the Company is a party or is subject.

(c) No governmental, administrative or other third party consents or approvals are required by or with respect to the Company in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(d) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of the Company, threatened against or by the Company that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

(e) No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

3. Representations and Warranties of the Redeeming Stockholder . The Redeeming Stockholder represents and warrants to the Company as follows:

(a) The Redeeming Stockholder has all requisite power and authority to execute and deliver this Agreement, to carry out his obligations hereunder, and to consummate the transactions contemplated hereby. The Redeeming Stockholder has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of his obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Redeeming Stockholder and (assuming due execution and delivery by the Company) constitutes the Redeeming Stockholder’s legal, valid and binding obligation, enforceable against the Redeeming Stockholder in accordance with its terms.

(b) The Shares have been duly authorized, are validly issued, fully paid and non-assessable, and are owned of record and beneficially by the Redeeming Stockholder, free and clear of all liens, pledges, security interests, charges, claims, encumbrances, agreements, options, voting trusts, proxies and other arrangements or restrictions of any kind (the “Encumbrances”).

(c) The execution, delivery and performance by the Redeeming Stockholder of this Agreement do not conflict with, violate or result in the breach of, or create any Encumbrance on the Shares pursuant to, any agreement, instrument, order, judgment, decree, law or governmental regulation to which the Redeeming Stockholder is a party or is subject or by which the Shares are bound.

(d) No governmental, administrative or other third party consents or approvals are required by or with respect to the Redeeming Stockholder in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(e) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of the Redeeming Stockholder, threatened against or by the Redeeming Stockholder that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.

(f) No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Redeeming Stockholder.

4. Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement.

5. Indemnification . Each Party shall indemnify the other and hold the other Party harmless against and in respect of any and all losses, liabilities, damages, obligations, claims, costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by either Party resulting from any breach of any representation, warranty, covenant or agreement made by the other Party herein or in any instrument or document delivered by the other Party pursuant hereto.

6. Further Assurances . Following the date hereof, each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

7. Notices . All notices, requests, consents, claims, demands, waivers and other communications hereunder (each, a “ Notice”) shall be in writing and addressed to the Parties at the addresses set forth on the first page of this Agreement (or to such other address that may be designated by the receiving Party from time to time in accordance with this section). All Notices shall be delivered by personal delivery, nationally recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a PDF document (with confirmation of transmission) or certified or registered mail (in each case, return receipt requested, postage prepaid). Except as otherwise provided in this Agreement, a Notice is effective only (a) upon receipt by the receiving Party, and (b) if the Party giving the Notice has complied with the requirements of this Section.

8. Entire Agreement . This Agreement constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.

9. Successor and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. No Party may assign any of its rights or obligations hereunder without the prior written consent of the other Parties hereto, which consent shall not be unreasonably withheld or delayed.

10. Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

11. Amendment and Modification; Waiver . This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

12. Severability . If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

13. Governing Law; Submission to Jurisdiction . This Agreement shall be governed by and construed in accordance with the internal laws of Texas without giving effect to any choice or conflict of law provision or rule (whether of Texas or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of Texas. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States or the courts of Texas in each case located in Dallas, Texas, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

14. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

15. Legal Counsel . Each of the Parties hereto represents, warrants and covenants that it has had ample opportunity to consider entering into this Agreement and has had an opportunity to consult with counsel regarding this Agreement prior to executing the same. The Redeeming Stockholder understands and agrees that Kaye Cooper Kay & Rosenberg, LLP, the draftsperson of this Agreement, has prepared this Agreement on behalf of the Company and is not representing the Redeeming Stockholder in an individual capacity in the negotiation and consummation of the transactions hereunder. The Parties further agree that any rule that provides that an ambiguity within a document will be interpreted against the Party drafting such document shall not apply.

[signature page follows]

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

The Company:

RELIABILITY INCORPORATED

By: /s/ Jay Gottlieb

Name: Jay Gottlieb

Title: President

The Redeeming Stockholder:

/s/ Jay Gottlieb

JAY GOTTLIEB

STOCK REDEMPTION AGREEMENT

THIS STOCK REDEMPTION AGREEMENT (the “Agreement”) is entered into and effective as of October 1, 2013 by and between RELIABILITY INCORPORATED, a Texas corporation with a business address at 410 Park Avenue – 15 th floor, New York, New York 10022 (the “Company”), and GREGGORY SCHNEIDER, an individual residing 10445 Wilshire Boulevard, #1806, Los Angeles, California 90024 (the “Redeeming Stockholder”). The Company and the Redeeming Stockholder are sometimes referred to collectively herein as the “Parties” and individually as a “Party”.

WHEREAS , the Company desires to acquire from the Redeeming Stockholder 1,587,500 shares (the “Shares”) of the common stock of the Company, no par value per share, on the terms and conditions hereinafter set forth, and the Redeeming Stockholder desires to have the Shares redeemed;

NOW, THEREFORE , for and in consideration of the premises and the mutual covenants hereinafter set forth, the Parties do hereby agree as follows:

1. Redemption of Shares . Subject to the terms and conditions hereinafter set forth, the Company hereby agrees to acquire from the Redeeming Stockholder the Shares, at a price in cash equal to $23,392.00 in the aggregate (or approximately $0.0147 per share) (the “Redemption Price”), less an amount equal to 11.7% of the legal fees incurred by the Company in connection with the transactions contemplated by this Agreement and the Stock Purchase Agreement by and between the Company and Jeffrey E. Eberwein dated as of the date hereof (the “Expense Adjustment”), and the Redeeming Stockholder agrees to sell the Shares to the Company for such Redemption Price less the Expense Adjustment. The certificates reflecting the Shares will be surrendered and delivered by the Redeeming Stockholder contemporaneously herewith, along with a duly executed stock power with Medallion Guarantee, in exchange for the Redemption Price (less the Expense Adjustment) which shall be paid by wire transfer of immediately available funds contemporaneously therewith to an account or accounts designated by the Redeeming Stockholder.

2. Representations and Warranties of the Company . The Company represents and warrants to the Redeeming Stockholder as follows:

3. Representations and Warranties of the Redeeming Stockholder . The Redeeming Stockholder represents and warrants to the Company as follows:

4. Survival . All representations and warranties contained herein shall survive the execution and delivery of this Agreement.

10. Headings . The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

[signature page follows]

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

The Company:

RELIABILITY INCORPORATED

By: /s/ Jay Gottlieb

Name: Jay Gottlieb

Title: President

The Redeeming Stockholder:

/s/Greggory Schneider

GREGGORY SCHNEIDER