EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into effective as of June 7 ^th , 2006 by and between Reza Zarif (“ Employee ”) and Probe Manufacturing, Inc., a Nevada corporation (the “ Company ”).

In consideration of the mutual covenants set forth below, the parties hereby agree as follows:

1.

Employment .  The Company shall employ Employee, and Employee agrees to serve in the employ of the Company, for the term set forth in Section 2 below and on the other terms and conditions set forth in this Agreement.

2.

Term .  The term of Employee’s employment hereunder shall be for the period commencing on the date of this Agreement (the “ Effective Date ”) and ending on the date two (2) years from the Effective Date, unless sooner terminated in accordance with this Agreement.

3.

Duties .

(a)

Position and Duties .   Employee shall be employed and serve as the Company’s Chief Executive Officer (or in such other position and/or with such other title as may be acceptable to Employee, in his sole discretion), and as such, Employee shall oversee and supervise the Company’s operations and perform such duties and have such responsibilities and authority appropriate to such position.  Employee shall have the authority to hire, supervise and terminate such persons and all other employees of the Company, other than those executive officers of the Company who are appointed by the Company’s Board of Directors under the Company’s by-laws.  As Chief Executive Officer, Employee shall report to the Company’s Board of Directors.

(b)

Performance .  Employee shall use his best efforts to take such actions and to devote such amount of his time as Employee as is reasonably appropriate and necessary to perform the duties and responsibilities required of Employee under Section 3(a) above.

(c)

Other Activities .  Neither this Agreement, nor Employee’s employment hereunder shall in any way limit or restrict Employee’s right or ability to directly or indirectly, as an employee, employer, agent, consultant, partner, shareholder, member, officer, director, manager, or in any other individual or representative capacity, organize and/or participate in any other business or personal undertaking or activity, whether during Employee’s employment with the Company or at any time thereafter; provided that (i) no such other business, undertaking or activity shall be competitive with the business of the Company and (ii) Employee’s engagement in such other activity may not interfere with Employee’s obligations under Section 3(b) above.  

4.

Compensation .  For the duties and services to be performed by Employee hereunder, the Company shall pay Employee, and Employee agrees to accept the base salary, bonuses and other benefits described below in this Section 4 and in Section 6(b).

(a)

Base Salary .  The Company shall pay Employee a monthly salary of $20,833, which is equivalent to $250,000 on an annualized basis.  Employee’s salary will be payable pursuant to the Company’s standard payroll practices, which currently consist of twenty-six (26) payroll periods per year. The difference between Employee’s current salary of $167,000 and the proposed $250,000 can be paid in stock at the Company’s Board of Director’s option.  The price of the shares pursuant to the stock grant shall be set at the closing market price of the Company’s common stock on the date of the grant.  The stock grants will take place on the final day of each fiscal quarter. The Company’s Board of Directors (the “Board”), in its sole discretion, may increase Employee’s base salary at any time during the term of Employee’s employment hereunder.  Any such increase shall not affect or diminish any other rights of Employee hereunder.

(b)

Benefits .  Employee will be eligible to participate in the Company’s employee benefit plans of general application, including without limitation, those plans covering medical, disability and life insurance in accordance with the rules established for individual participation in any such plan and under applicable law.  Employee will be eligible for vacation and sick leave in accordance with the policies in effect during the term of this Agreement and will receive such other benefits as the Company generally provides to its other employees of comparable position and experience.  

5.

Reimbursement of Expenses .   Employee shall be authorized to incur, on behalf and for the benefit of the Company, such reasonable expenses as Employee deems necessary or advisable in connection with the performance of Employee’s duties hereunder, including, without limitation, travel and entertainment expenses relating to the business of the Company.  The Company shall promptly reimburse Employee for all such expenses incurred by Employee upon the presentation of proper receipts or other appropriate documentation therefor in accordance with the Company's policies for expense reimbursement.

6.

Termination of Employment and Severance Benefits .

(a)

Termination of Employment .  This Agreement, and Employee’s employment with the Company hereunder, may be terminated during the term of this Agreement upon the occurrence of any of the following events:

(i)

the Company’s election to terminate Employee’s employment without Cause (as defined in Section 7 below), which election may be made by the Company at any time at the Company’s sole discretion, for any or no reason (“ Termination Without Cause ”),  provided that the Company shall give Employee notice of any Termination Without Cause at least thirty (30) days prior to the effective date thereof, unless Employee agrees to a shorter period;

(ii)

the Company’s election to terminate Employee’s employment for Cause (“ Termination for Cause ”);

(iii)

Employee’s election to terminate his employment with the Company for Good Reason (as defined in Section 7 below) (“ Termination For Good Reason ”), which termination shall be effective on the date Employee gives the Company a written notice stating that Employee is electing to terminate his employment hereunder for Good Reason or on any later effective date of termination set forth in such written notice;

(iv)

Employee’s election to terminate his employment with the Company without Good Reason (“ Voluntary Termination ”), which election may be made by Employee at any time at Employee’s sole discretion, for any or no reason, by giving the Company a written notice stating that Employee is electing to terminate his employment hereunder, provided that Employee shall give the Company notice of any Voluntary Termination at least thirty (30) days prior to the effective date thereof, unless the Company agrees to a shorter period; or

(v)

Employee’s death or Disability (as defined in Section 7 below).

(b)

Severance Benefits .   In the event Employee’s employment with the Company is terminated, Employee shall be entitled to receive the payments and severance benefits set forth in this Section 6(b).  The obligations of the Company and, if applicable, any successor to the Company’s business or assets following a Sale of the Company (as defined in Section 7 below), under this Section 6 shall survive the termination of this Agreement and the termination of Employee’s employment hereunder with the Company or any such successor.   

(i)

Termination for Cause as defined in Section 7 (ii), (iii) and (iv); If Employee’s employment is terminated pursuant to a Termination For Cause for an act against the Company as defined in Section 7 (ii), (iii) and (iv) below under Section 6(a)(ii), Employee shall not be paid any benefit arising from this Agreement, including but not limited to, any salary, and unpaid vacation accrued as of the date of such termination of employment.  In addition, Employee’s benefits will also be terminated under the Company’s then existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination and in accordance with applicable law.

(ii)

 Voluntary Termination .  If Employee’s employment is terminated pursuant to a Termination For Cause as defined in Section 7 (i)  below under Section 6(a)(ii) or a Voluntary Termination under Section 6(a)(iv), then in either such event, Employee shall be paid  all salary, and unpaid vacation accrued as of the date of such termination of employment.  Employee’s benefits will be continued under the Company’s then existing benefit plans and policies that would have accrued during the remainder of the term under this Agreement immediately following the date of such termination of employment or the period required under applicable law.

(iii)

Termination Without Cause; Termination for Good Reason .  If Employee’s employment is terminated pursuant to a Termination Without Cause under Section 6(a)(i) above or pursuant to a Termination For Good Reason under Section 6(a)(iii) above, then in either such event, Employee shall be paid (A) all salary, bonuses and unpaid vacation accrued as of the date of such termination of employment, (B) an additional severance payment in an aggregate amount equal to all salary, bonuses and unpaid vacation that would have accrued during the remainder of the term under this Agreement immediately following the date of such termination of employment.  In addition to the payments required under clauses (A) and (B) above, Employee’s benefits will be continued under the Company’s then existing benefit plans and policies in accordance with such plans and policies in effect on the date of termination for a period of twelve months following the date of termination and the period required under applicable law.

(iv)

Termination by Reason of Death or Disability .  In the event that Employee’s employment with the Company terminates as a result of Employee’s death or Disability (as defined in Section 7 below), then in either such event, Employee or Employee’s estate or representative shall be paid all salary, bonuses and unpaid vacation accrued as of the date of such termination of employment.  In addition, Employee or Employee’s estate or representative shall be entitled to any other benefits payable under the Company’s then existing benefit plans and policies in accordance with such plans and policies in effect on such date and in accordance with applicable law.

(c)

Payments .  Upon any termination of Employee’s employment hereunder (i) all salary, bonuses (except if terminated for cause or for good reason) and accrued vacation payable pursuant to Section 6(b) shall be paid to Employee in full on the date of termination, and (ii) any other bonus payable pursuant to Section 4(b) and the applicable provision of Section 6(b) shall be paid to Employee in full within thirty (30) days..  

7.

Definitions .  For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

(a)

Cause .   The term “ Cause ” shall mean any of the following:

(i)

Employee’s conviction of, or plea of nolo contendere to, any felony or to any crime causing substantial harm to the Company, or involving acts of theft, fraud, embezzlement, or similar conduct.

(ii)

Employee’s willful failure or refusal to perform his duties hereunder after receipt of written notice from the Board of Directors and a reasonable opportunity to so perform such duties.

(iii)

Employee’s gross negligence in the performance of his duties.

(iv)

Employee’s intentional misappropriation of funds or assets of Company.

(b)

Disability .   The term “ Disability ” shall mean that Employee has been unable to perform Employee’s duties hereunder as the result of Employee’s incapacity due to physical or mental illness, and such inability continues for at least one hundred eighty (180) consecutive calendar days during any consecutive twelve-month period, or if, after ninety (90) consecutive days following its commencement, such incapacity is determined to be total and permanent by a physician selected by the Company and its insurers and acceptable to Employee or to Employee’s legal representative (with such agreement on acceptability not to be unreasonably withheld).

(c)

Good Reason .  The term “ Good Reason ” shall mean and include any of the following: (i) the occurrence of a material breach by the Company of any of its obligations under this Agreement, and the failure of the Company to cure any such material breach within ten (10) days after the Company receives written notice thereof from Employee; (ii) Employee being assigned duties or responsibilities which are inconsistent with the duties and responsibilities contemplated by Section 3(a) or those typically assigned to management level personnel in companies of similar size as the Company, and the failure of the Company to relieve Employee from having to perform such duties within ten (10) days after the Company receives written notice from Employee of Employee's objection to such duties; (iii) any direct or indirect material reduction or diminution of Employee’s authority to directly oversee and supervise the Company’s operations, sales and marketing, or information systems activities or personnel, and the failure of the Company to remedy any such reduction or diminution of Employee’s authority within ten (10) days after the Company receives written notice from Employee of Employee's objection thereto; (iv) the Company having moved its principal place of business to a location more than fifty (50) miles from its present location in Costa Mesa; or (v) the occurrence of a Sale of the Company (as defined below in this Section 7) on the date of or at any time during the one hundred eighty (180) days immediately preceding Employee’s election to terminate his employment.  The Company acknowledges that under the foregoing clause (v), Employee shall have the right to terminate his employment hereunder with the Company or any successor, if applicable, for Good Reason pursuant to Section 6(a)(iii) upon the occurrence of a Sale of the Company or at any time within one hundred eighty (180) days following a Sale of the Company.

(d)

Sale of the Company .   The term “ Sale of the Company ” shall mean and include any of the following: (i) the sale of all or substantially all of the assets of the Company, (ii) the merger or consolidation of the Company with or into any other entity as a result of which the shareholders of the Company immediately prior to such merger or consolidation own less than 50% of the total voting power or outstanding capital stock of the surviving corporation immediately following such merger or consolidation, or (iii) the sale of more than 50% of the outstanding stock of the Company to any third party or parties, which as a result the shareholders of the Company existing on the date hereof collectively own less than 50% of the voting power or outstanding capital stock of the Company.

8.

Representations, Warranties and Additional Covenants of the Company .  The Company hereby represents, warrants and covenants to Employee as follows in connection with entering into this Agreement:

(a)

Authorization; Enforceability .   All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement by the Company and the performance of all obligations of the Company hereunder has been taken.  This Agreement has been duly and validly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms.

(b)

Certified Board Resolutions .   Within five (5) days after the execution and delivery of this Agreement, the Company shall deliver to Employee copies of resolutions duly adopted by the Company’s Board of Directors authorizing, approving and ratifying the execution, delivery and performance of this Agreement by the Company.  Such resolutions shall be in form and substance acceptable to Employee and his counsel.  Such resolutions shall be certified by the Company’s Secretary and shall be inserted in the Company’s minute book.  The Company hereby represents and warrants that such Board resolutions constitute the only corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement by the Company and the performance of all obligations of the Company hereunder.

(c)

Quarterly Financial Statements .   In the event that Employee is not otherwise responsible for the overall preparation and review of the Company’s financial statements, then during the term of this agreement and as soon as practicable, but in any event within thirty (30) days after the end of each quarter of the Company’s fiscal year, the Company shall deliver to Employee an unaudited balance sheet of the Company as of the end of each such quarter and unaudited statements of income and cash flows of the Company for such quarter and for the current fiscal year to date, prepared in accordance with the Company’s past accounting practices, consistently applied, all in reasonable detail and setting forth in each case in comparative form the figures for the corresponding periods of the previous fiscal year .    

(d)

Notices .   The Company shall give Employee written notice of any proposed transaction that would constitute a Sale of the Company hereunder, not less than twenty (20) days prior to the consummation of such transaction.  Such notice shall state the material terms of the proposed transaction and the anticipated closing date thereof.

(e)

Indemnification .  The Company shall, to the maximum extent permitted by the California General Corporation Law (or the laws of any other state in which the Company may then be incorporated) or any other applicable law, defend, indemnify and hold Employee harmless from and against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that Employee is or was acting as an employee, agent, consultant, officer or director of the Company.  For purposes of this Section 8(e), a “proceeding” means any contemplated, threatened, pending or completed action, proceeding or inquiry, whether civil, criminal, administrative or investigative, and “expenses” includes, without limitation, the fees and costs of attorneys, accountants, experts and other professionals, as well as any other reasonable expense attendant to establishing a right to indemnification from the Company.  This Section 8(e) shall be cumulative with any other indemnification right to which Employee is entitled under the Company’s Articles of Incorporation, Bylaws or pursuant to any separate indemnification contract between the Company and Employee.  

9.

No Duty to Mitigate .  Employee shall not be required to mitigate the amount of any payment contemplated by this Agreement (whether by seeking new employment or in any other manner), nor shall any such payment be reduced by any earnings that Employee may receive from any other source.

10.

No Liability for Termination by Employee .   The Company acknowledges (i) that Employee may elect to terminate his employment hereunder at any time, and (ii) that no such termination by Employee shall either constitute a breach of this Agreement by Employee or subject Employee to any damages or other liability whatsoever to the Company or any successor of the Company.  

11.

Successors .  Any successor or assignee of the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agrees expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession or assignment.  The terms of this Agreement shall inure to the benefit of, be binding upon, and be enforceable by, the Company’s successors and assignees and Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

12.

Miscellaneous Provisions .

(a)

Entire Agreement .  This Agreement, together with all exhibits and schedules attached hereto, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all oral, written or other communications or agreements with respect to such subject matter.

(b)

Amendments; Modifications .  Any term of this Agreement may be amended or modified only with the written consent of the parties hereto.

(c)

Delays or Omissions; Waivers .  No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

(d)

Notices .  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by a nationally-recognized delivery service (such as FEDEX or UPS), or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address as set forth below or as subsequently modified by written notice.

(e)

Governing Law .  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California, without giving effect to the principles of conflict of laws.

(f)

Attorney Fees .   If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 (g)

Severability .  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 (h)

Arbitration .  At the request of either the Company or Employee, any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Orange County, California in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules.  The arbitrator shall apply California law, without reference to rules of conflict of laws or rules of statutory arbitration, to the resolution of any dispute.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision.  

(i)

Survival of Certain Provisions .  Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 of this Agreement, and the respective obligations of the parties and their successors and assigns under such sections, shall survive any termination of this Agreement and any termination of Employee’s employment hereunder.  

(j)

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

(k)

Facsimile Signatures .  Any signature page delivered by a fax machine or telecopy machine shall be binding to the same extent as an original signature page, with regard to any agreement subject to the terms hereof or any amendment thereto.  Any party who delivers such a signature page agrees to later deliver an original counterpart to any party that requires it.

(l)

Titles and Subtitles .  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(m)

Advice of Counsel .  EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.  THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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

PROBE MANUFACTURING INC.

By:   /s/ Barrett Evans

Name: Barrett Evans

Title: Chairman

Address:   3050 Pullman Street

Costa Mesa, CA  92626

Facsimile:  (714) 424-2972

EMPLOYEE:

By: /s/ Reza Zarif

Reza Zarif

Address:   18 Marana

San Clemente, CA 92673

Facsimile:

Table of Contents

EXCHANGE AGREEMENT

This Exchange Agreement is made as of May 25, 2006, by and between Probe Manufacturing, Inc., a Nevada corporation (the “Company”), and eFund Capital Partners, LLC (the “Purchaser”).

RECITALS

WHEREAS, pursuant to a securities purchase agreement dated December 31, 2004 (the “Original Purchase Agreement”), the company sold 3,500 shares of the Company’s Series B Convertible Preferred Stock, par value $.001 per share, (the “Original Preferred Stock”), which are convertible into shares of commons stock, par value $0.001 per share and otherwise have the rights, preference, privileges, powers and restrictions set forth in a Certificate of Designation filed with the Secretary of State of Nevada on December 31, 2004.

WHERAS , the Company and the Purchaser desire that the Purchaser exchange all of the Series B Convertible Stock currently owned by Purchasers for shares of the Company’s newly designated Series C Convertible Preferred Stock (the “Exchanged Preferred Stock”) upon the terms and conditions set forth herein (the “Exchange”).

WHEREAS , the Exchange is intended to qualify as a private placement transaction under Section 4(2) of the Securities Act of 1933, as amended.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENTS

SECTION 1

AUTHORIZATION AND EXCHANGE OF THE SHARES

1.1

Authorization of the Shares .  

(a)

The Company has authorized, or before the Closing (as defined in Section 2.1 below) will have authorized, a new series of preferred stock, designated as “Series C Convertible Preferred Stock”, which shall have the rights, preferences and privileges provided for in the Designation.  

(b)

In addition, prior to the Closing, the Company shall have authorized the issuance   to the Purchaser(s) of up to Five Thousand and Forty (5,040) shares (the “Shares”) of the Series C Preferred Stock, which shall have the rights, preferences and privileges provided for in the Designation.

1.2

Exchange of the Shares .   At the Closing, (i) the Purchaser shall deliver to, or as directed by the Company stock certificates representing the Original Preferred Stock and (ii) the Company shall deliver to the purchasers stock certificates, registered in the name of the Purchaser, representing the Exchange Preferred Stock.  

1.3

Exchange Preferred Stock .  The Exchange Preferred Stock shall have the rights, preferences and privileges as set forth in the Certificate of Designation attached hereto as Exhibit A to be filed prior to Closing by the Company with the Secretary of State of Delaware.  Each share of Original Preferred Stock shall be convertible into 1.44 shares of the Exchange Preferred Stock.  Each share of Preferred Stock shall be convertible into shares of Common Stock in accordance with the terms of the Certificate of Designation.  

1.4

Original Preferred Stock .  Effective as of the Closing Date, all Original Preferred Stock owned by the Purchaser shall be canceled.

SECTION 2

CLOSING DATE; DELIVERY

2.1

Closing Date .   The closing date shall be the date upon which this Agreement is executed by the parties to this Agreement (the “Closing Date” ).  

SECTION 3

COMPANY REPRESENTATIONS AND WARRANTIES

Except as disclosed in the Schedules attached hereto, the Company makes the following representations and warranties to the Purchaser:

3.1

Organization and Standing .   Each of the Company and its subsidiaries (i) is a corporation duly organized and validly existing under the laws of its respective jurisdiction of incorporation and is in good standing as a domestic corporation under the laws of said state or country, (ii) has all requisite corporate power and authority to own and lease its properties and to conduct its business as presently conducted, and (iii) is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified does not and is not reasonably expected to (x) individually or in the aggregate, have a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and its subsidiaries, taken as a whole, (y) interfere with or impair the Company’s ability to perform its obligations under this Agreement, or (z) interfere with or prevent the consummation of any of the transactions contemplated by said instruments (any of the events set forth in clauses (x), (y) or (z), a “Material Adverse Effect”).

3.2

Corporate Power .   The Company has all requisite legal and corporate power to execute and deliver this Agreement, to exchange and issue the Shares, to issue the Conversion Stock issuable upon conversion of the Shares, and to carry out and perform its obligations under the terms of this Agreement and under the terms of all other agreements and other documents executed in connection herewith.

3.3

Capitalization .   The authorized capital stock of the Company upon the filing of the Designation with the Secretary of State of the State of California will consist of (a) 100,000,000 shares of Common Stock of which 3,577,364 shares are issued and outstanding, and (b) 10,000,000 shares of Preferred Stock of which (i) 440 shares Series A Convertible Preferred Stock of which 440 are issued and outstanding and (ii) Twenty Thousand (20,000) shares of Series B Convertible Preferred Stock of which 12,500 and (iii) 10,000 shares shall be designated as “Series C Convertible Preferred Stock.  All of the outstanding shares of Common Stock and all of the shares of Series A, B and C Preferred Stock when issued and sold, will be, validly issued, fully paid and non-assessable, and free of any liens or encumbrances.  The Series C Preferred Stock shall have the rights, preferences, privileges and restrictions set forth in the Designation attached hereto as Exhibit A.  

3.4

Authorization .   The execution, delivery and performance of this Agreement, and any other agreements related to this Agreement, by the Company have been properly and duly authorized by all requisite corporate action.  In addition, all other actions taken by the Company in connection with the transactions contemplated by this Agreement were properly and duly authorized by all requisite corporate action.  This Agreement and all documents and agreements executed in connection herewith, constitute valid and binding obligations of the Company.  The issuance and sale of the Shares will not give rise to any preemptive rights or rights of first refusal on behalf of any person in existence on the date hereof.

3.5

Conversion Stock .   The Conversion Stock has been duly and validly reserved for issuance.

3.6

Accuracy of Reports .   All reports, if any, delivered by the Company under this Agreement, have been duly filed, and the requirements of their respective forms (as of their respective filing dates), were complete and correct in all material respects as of the dates at which the information was furnished, and none contains (as of their respective dates of filing) any untrue statement of a material fact nor omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances in which made, not misleading.  

3.7

Financial Statements and Changes .   All financial reports and materials provided by the Company are true and accurate reflection of the Company’s current financial situation and nothing has been omitted which could have a material adverse effect.

3.8

No Conflict .   The provisions of each of this Agreement and the Designation do not constitute any violation, or conflict with or constitute a default under, any indenture, mortgage, deed of trust or other agreement, instrument, court order, judgment, decree, statute, rule or regulation (each a “Term” and collectively the “Terms”) to which the Company or any of its subsidiaries is a party or by which it is bound.  The execution, delivery and performance of and compliance with this Agreement, the issuance of the Securities pursuant to the terms hereof and the performance of the Company’s obligations hereunder and thereunder (i) will not result in any violation or be in conflict with or constitute a default under any Term, (ii) will not result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or its subsidiaries pursuant to any such Term, and (iii) will not conflict with or violate any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company, any of its subsidiaries, or any of the Company’s or subsidiaries’ assets or properties, subject to such exceptions as would not have a Material Adverse Effect.

3.9

Governmental Consents .   No consent, approval or authorization of, or designation, declaration or filing with, any federal, state or foreign governmental authority is required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or the issuance of the Securities or the consummation of any other transaction contemplated hereby, except (i) the filing of the Designation in the office of the State of California, and (ii) if required, qualifications or filings in connection with exemptions under any applicable state “blue sky” laws and Federal securities laws, which qualifications or exemptions, if required, will have been obtained and will be effective on the Closing Date, or will be obtained or filed after the Closing Date within the prescribed time in order to secure such exemptions or qualifications.

3.10

Patents, Trademarks, Etc .   The Company and its subsidiaries own or have the right, or prior to the Closing will own or have the right, to use all patents, trademarks, service marks, trade names, copyrights, licenses and rights necessary to their business as now conducted, as conducted at the time of the Closing and as contemplated being conducted thereafter, and, are not infringing upon any person’s or company’s rights under or with respect to any of the foregoing.  Neither the Company nor any of its subsidiaries has received any written communications alleging that the Company or a subsidiary has violated any patent, trademark, service mark, trade name, copyright or trade secret or other proprietary right of any other person or entity.    

3.11

Litigation .   Except as set forth on Schedule 3.11 , there is no suit, action or proceeding pending or affecting the Company or any of its subsidiaries, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against the Company or any of its subsidiaries.

3.12

Compliance with Laws .   The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which could reasonably be expected to have a Material Adverse Effect.

3.13

Offering of the Shares .   Neither the Company nor any person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Company under circumstances which would require, under the Securities Act of 1933, as amended (the “Securities Act”), the integration of such offering with the offering and sale of the Securities) which might subject the offering, issuance or sale of the Securities to the registration requirements of the Securities Act.

3.14

Finder’s Fee.  The Company represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

0.15

Tax Matters.   Except as set forth on Schedule 3.15 , the Company and each of its subsidiaries has timely filed with the appropriate taxing authority all tax returns required to be filed by it or has timely requested extensions and any such request has been granted and has not expired.  Each such tax return is complete and accurate in all respects.  All taxes shown as owed by the Company or any of its subsidiaries on any tax return or claimed or asserted to be due, from or with respect to any of them, have been paid, except for taxes being contested in good faith and for which adequate reserves have been taken.  The Company and each of its subsidiaries have properly made due and sufficient accruals for all taxes for such periods subsequent to the periods covered by such tax returns as required by GAAP.  None of the Company or any of its subsidiaries are being audited or examined by any taxing authority with respect to any tax or is a party to any pending action or proceedings by any taxing authority for assessment or collection of any tax, and no claim for assessment or collection of any tax has been asserted against it or any of its subsidiaries.  No claim has been made by any authority in a jurisdiction where the Company or any of its subsidiaries does not file tax returns that it is or may be subject to taxation by that jurisdiction.  There is no dispute or claim concerning any tax liability.

3.16

Environmental Matters .  Each of the Company and its subsidiaries has obtained, and now maintains as currently valid and effective, all permits, certificates of financial responsibility, and other governmental authorizations (collectively, “Environmental Permits”) that are required to be obtained by the Company or any of its subsidiaries under any state, federal, municipal, foreign or other environmental laws, rules or regulations applicable to any aspect of the Company or such subsidiary, including, but not limited to, in connection with the operation of its businesses and properties (“Environmental Laws”).  Each of the Company and its subsidiaries has been in compliance with all terms and conditions of the Environmental Permits and all Environmental Laws and no liability exists under any Environmental Laws or otherwise with respect to prior operations or activities.  

SECTION 4

PURCHASER REPRESENTATIONS AND WARRANTIES

The Purchaser represents and warrants to the Company, as follows:

4.1

Investment Intent .

(a)

Purchaser has substantial experience in business and financial matters and is capable of evaluating the merits and risks of its investment in the Company and is able to bear the economic risks of its investment.

(b)

Purchaser is an “accredited investor” as defined in Rule 501(a)(3) of Regulation D of the Securities Act.

(c)

Purchaser is acquiring the Securities for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  Purchaser understands that the Securities have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d)

Purchaser acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.  Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act (“Rule 144”) which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through a “broker’s transaction” or in a transaction directly with a “market maker” (as provided by Rule 144(f)) and the number of shares being sold during any three-month period not exceeding specified limitations.

4.2

Corporate Power .   Purchaser has all requisite legal and corporate power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

4.3

Authorization .   The execution, delivery and performance of this Agreement by the Purchaser has been duly authorized by all requisite corporate action, and this Agreement constitutes a valid and binding obligation of Purchaser enforceable in accordance with its terms, 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 equitable remedies.

4.4

Finder’s Fee.  Purchaser represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

SECTION 5

CONDITIONS TO CLOSING

5.1

Conditions to Purchaser’s Obligations .   The obligation of the Purchaser to exchange the Shares at the Closing is subject to the fulfillment to the reasonable satisfaction of the Purchaser, on or prior to the Closing Date, of the following conditions any of which may be waived in writing, in whole or in part, by the Purchaser:

(a)

The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects; and

(c)

The Designation shall have been filed with and accepted by the Nevada Secretary of State.

5.2

Conditions to Company’s Obligations .   The Company’s obligation to exchangel and issue the Shares to the Purchaser at the Closing is subject to the fulfillment to the Company’s reasonable satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived in writing, in whole or in part, by the Company:

(a)

The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects; and

SECTION 6

COVENANTS

6.1

Additional Documents and Further Assurances .   Each party hereto, at the request of the other party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby.

SECTION 7

INDEMNIFICATION

7 . 1

Indemnification . The parties hereby agree to indemnify, defend and hold each other and their affiliates harmless from and against any and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and expenses, including without limitation, interest, penalties, reasonable attorneys’ fees and all amounts paid in investigation, defense or settlement of any of the foregoing (, incurred in connection with, arising out of, resulting from, or incident to, any breach of any representation or warranty made by such party in this Agreement.

SECTION 8

MISCELLANEOUS

8.1

Delays or Omissions .   No delay or omission to exercise any right, power or remedy accruing to the Company or the Purchaser, upon any breach or default under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character by the Company or the Purchaser of any breach or default under this Agreement, or any waiver by the Company or the Purchaser of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in writing, and all remedies, either under this Agreement, or by law or otherwise afforded to the Company or the Purchaser, shall be cumulative.

8.2

Waivers and Amendments .   This Agreement and the provisions hereof may not be waived or amended except pursuant to a written instrument signed by the required party or parties as aforesaid.

8.3

Severability .   In the event that any provision of this Agreement shall be deemed to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

8.4

Successors and Assigns .   Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

8.5

Notices, Etc .   All notices and other communications required or permitted hereunder shall be in writing and shall be delivered either (i) personally, (ii) by facsimile transmission, or (iii) by a nationally recognized overnight courier, in each case with all delivery or postal charges pre-paid, and in each case, addressed attention: President.  All notices and communications shall be sent or delivered to the address or fax number, as applicable, for the applicable party as set forth on the signature page of this Agreement, or at such other address or fax number as the applicable party shall have furnished in writing to the other party (or its transferees).  Each such notice or communication, addressed and posted as aforesaid, shall for all purposes of this Agreement be treated as effective or having been given (i) when delivered, if delivered personally, (ii) the business day on which the notice or communication is sent, if delivered by facsimile transmission, or (iii) upon the earlier of its receipt or two (2) business days after the business day of deposit with a nationally recognized overnight courier, if delivered by such means.

8.6

Entire Agreement .   This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement among the parties with regard to the subject matters hereof and thereof, and supersede any and all prior agreements and understandings among the parties.

8.7

Governing Law .   This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California as they apply to contracts entered into and wholly to be performed within such state, and without reference to its principles of conflicts of law or choice of law.

8.8

Attorneys’ Fees .   In the event of any litigation in a court of competent jurisdiction arising in connection with this Agreement and the transactions contemplated hereby, the prevailing party in judgment shall be entitled to recover reasonable legal fees and costs in connection with such action including any appeals.

8.9

Independent Advice of Counsel .   The parties represent and declare that, in executing this agreement, they relied solely upon their own judgment, belief and knowledge, and had the ability to seek the advice of their own independently selected counsel concerning the nature, extent and duration of their duties and rights contained in this agreement.  The parties further represent and agree that they have not been influenced by any representations or statements concerning any matters made by any other party or by any person or attorney representing any other party.

8.10

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

[Signatures on following page]

Series C Convertible Preferred Stock Exchange Agreement – PROBE

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

COMPANY

PROBE MANUFACTURING, INC., a Nevada corporation

By: /s/ Reza Zarif

      Reza Zarif

      Chief Executive Officer

Address:       

3050 Pullman Street

Costa Mesa, CA 92626

Fax: (714) 424-2972

PURCHASER

eFund Capital Partners, LLC

By: /s/ Barrett Evans

Print Name: Barrett Evans

Print Title: Managing Partner

Address:

_______________________

_______________________

Fax: (___) __-___

2 of 9

Series B Convertible Preferred Stock Purchaser Agreement –PROBE

Schedules to Series B Convertible Preferred Stock Purchase Agreement

Schedule 3.11

Litigation

None.

Schedule 3.15

Tax Matters

None.

Exhibit A

Certificate of Designation for Series C Convertible Preferred Stock

PROBE MANUFACTURING INDUSTRIES, INC.

____________________________

Series C Convertible Preferred Stock

Exchange Agreement

May 25, 2006

EXCHANGE AGREEMENT

This Exchange Agreement is made as of May 25, 2006, by and between Probe Manufacturing, Inc., a Nevada corporation (the “Company”), and Reza Zarif (the “Purchaser”).

RECITALS

WHEREAS, pursuant to a securities purchase agreement dated December 31, 2004 (the “Original Purchase Agreement”), the company sold 4,500 shares of the Company’s Series B Convertible Preferred Stock, par value $.001 per share, (the “Original Preferred Stock”), which are convertible into shares of commons stock, par value $0.001 per share and otherwise have the rights, preference, privileges, powers and restrictions set forth in a Certificate of Designation filed with the Secretary of State of Nevada on December 31, 2004.

WHERAS , the Company and the Purchaser desire that the Purchaser exchange all of the Series B Convertible Stock currently owned by Purchasers for shares of the Company’s newly designated Series C Convertible Preferred Stock (the “Exchanged Preferred Stock”) upon the terms and conditions set forth herein (the “Exchange”).

WHEREAS , the Exchange is intended to qualify as a private placement transaction under Section 4(2) of the Securities Act of 1933, as amended.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENTS

SECTION 1

AUTHORIZATION AND EXCHANGE OF THE SHARES

1.1

Authorization of the Shares .  

(a)

The Company has authorized, or before the Closing (as defined in Section 2.1 below) will have authorized, a new series of preferred stock, designated as “Series C Convertible Preferred Stock”, which shall have the rights, preferences and privileges provided for in the Designation.  

(b)

In addition, prior to the Closing, the Company shall have authorized the issuance   to the Purchaser(s) of up to Four Thousand and Five Hundred (4,500) shares (the “Shares”) of the Series C Preferred Stock, which shall have the rights, preferences and privileges provided for in the Designation.

1.2

Exchange of the Shares .   At the Closing, (i) the Purchaser shall deliver to, or as directed by the Company stock certificates representing the Original Preferred Stock and (ii) the Company shall deliver to the purchasers stock certificates, registered in the name of the Purchaser, representing the Exchange Preferred Stock.  

1.3

Exchange Preferred Stock .  The Exchange Preferred Stock shall have the rights, preferences and privileges as set forth in the Certificate of Designation attached hereto as Exhibit A to be filed prior to Closing by the Company with the Secretary of State of Delaware.  Each share of Original Preferred Stock shall be convertible into 1 share of the Exchange Preferred Stock.  Each share of Preferred Stock shall be convertible into shares of Common Stock in accordance with the terms of the Certificate of Designation.  

1.4

Original Preferred Stock .  Effective as of the Closing Date, all Original Preferred Stock owned by the Purchaser shall be canceled.

SECTION 2

CLOSING DATE; DELIVERY

2.1

Closing Date .   The closing date shall be the date upon which this Agreement is executed by the parties to this Agreement (the “Closing Date” ).  

SECTION 3

COMPANY REPRESENTATIONS AND WARRANTIES

Except as disclosed in the Schedules attached hereto, the Company makes the following representations and warranties to the Purchaser:

3.1

Organization and Standing .   Each of the Company and its subsidiaries (i) is a corporation duly organized and validly existing under the laws of its respective jurisdiction of incorporation and is in good standing as a domestic corporation under the laws of said state or country, (ii) has all requisite corporate power and authority to own and lease its properties and to conduct its business as presently conducted, and (iii) is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified does not and is not reasonably expected to (x) individually or in the aggregate, have a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and its subsidiaries, taken as a whole, (y) interfere with or impair the Company’s ability to perform its obligations under this Agreement, or (z) interfere with or prevent the consummation of any of the transactions contemplated by said instruments (any of the events set forth in clauses (x), (y) or (z), a “Material Adverse Effect”).

3.2

Corporate Power .   The Company has all requisite legal and corporate power to execute and deliver this Agreement, to exchange and issue the Shares, to issue the Conversion Stock issuable upon conversion of the Shares, and to carry out and perform its obligations under the terms of this Agreement and under the terms of all other agreements and other documents executed in connection herewith.

3.3

Capitalization .   The authorized capital stock of the Company upon the filing of the Designation with the Secretary of State of the State of California will consist of (a) 100,000,000 shares of Common Stock of which 3,577,364 shares are issued and outstanding, and (b) 10,000,000 shares of Preferred Stock of which (i) 440 shares Series A Convertible Preferred Stock of which 440 are issued and outstanding and (ii) Twenty Thousand (20,000) shares of Series B Convertible Preferred Stock of which 12,500 and (iii) 10,000 shares shall be designated as “Series C Convertible Preferred Stock.  All of the outstanding shares of Common Stock and all of the shares of Series A, B and C Preferred Stock when issued and sold, will be, validly issued, fully paid and non-assessable, and free of any liens or encumbrances.  The Series C Preferred Stock shall have the rights, preferences, privileges and restrictions set forth in the Designation attached hereto as Exhibit A.  

3.4

Authorization .   The execution, delivery and performance of this Agreement, and any other agreements related to this Agreement, by the Company have been properly and duly authorized by all requisite corporate action.  In addition, all other actions taken by the Company in connection with the transactions contemplated by this Agreement were properly and duly authorized by all requisite corporate action.  This Agreement and all documents and agreements executed in connection herewith, constitute valid and binding obligations of the Company.  The issuance and sale of the Shares will not give rise to any preemptive rights or rights of first refusal on behalf of any person in existence on the date hereof.

3.5

Conversion Stock .   The Conversion Stock has been duly and validly reserved for issuance.

3.6

Accuracy of Reports .   All reports, if any, delivered by the Company under this Agreement, have been duly filed, and the requirements of their respective forms (as of their respective filing dates), were complete and correct in all material respects as of the dates at which the information was furnished, and none contains (as of their respective dates of filing) any untrue statement of a material fact nor omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances in which made, not misleading.  

3.7

Financial Statements and Changes .   All financial reports and materials provided by the Company are true and accurate reflection of the Company’s current financial situation and nothing has been omitted which could have a material adverse effect.

3.8

No Conflict .   The provisions of each of this Agreement and the Designation do not constitute any violation, or conflict with or constitute a default under, any indenture, mortgage, deed of trust or other agreement, instrument, court order, judgment, decree, statute, rule or regulation (each a “Term” and collectively the “Terms”) to which the Company or any of its subsidiaries is a party or by which it is bound.  The execution, delivery and performance of and compliance with this Agreement, the issuance of the Securities pursuant to the terms hereof and the performance of the Company’s obligations hereunder and thereunder (i) will not result in any violation or be in conflict with or constitute a default under any Term, (ii) will not result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or its subsidiaries pursuant to any such Term, and (iii) will not conflict with or violate any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company, any of its subsidiaries, or any of the Company’s or subsidiaries’ assets or properties, subject to such exceptions as would not have a Material Adverse Effect.

3.9

Governmental Consents .   No consent, approval or authorization of, or designation, declaration or filing with, any federal, state or foreign governmental authority is required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or the issuance of the Securities or the consummation of any other transaction contemplated hereby, except (i) the filing of the Designation in the office of the State of California, and (ii) if required, qualifications or filings in connection with exemptions under any applicable state “blue sky” laws and Federal securities laws, which qualifications or exemptions, if required, will have been obtained and will be effective on the Closing Date, or will be obtained or filed after the Closing Date within the prescribed time in order to secure such exemptions or qualifications.

3.10

Patents, Trademarks, Etc .   The Company and its subsidiaries own or have the right, or prior to the Closing will own or have the right, to use all patents, trademarks, service marks, trade names, copyrights, licenses and rights necessary to their business as now conducted, as conducted at the time of the Closing and as contemplated being conducted thereafter, and, are not infringing upon any person’s or company’s rights under or with respect to any of the foregoing.  Neither the Company nor any of its subsidiaries has received any written communications alleging that the Company or a subsidiary has violated any patent, trademark, service mark, trade name, copyright or trade secret or other proprietary right of any other person or entity.    

3.11

Litigation .   Except as set forth on Schedule 3.11 , there is no suit, action or proceeding pending or affecting the Company or any of its subsidiaries, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against the Company or any of its subsidiaries.

3.12

Compliance with Laws .   The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which could reasonably be expected to have a Material Adverse Effect.

3.13

Offering of the Shares .   Neither the Company nor any person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Company under circumstances which would require, under the Securities Act of 1933, as amended (the “Securities Act”), the integration of such offering with the offering and sale of the Securities) which might subject the offering, issuance or sale of the Securities to the registration requirements of the Securities Act.

3.14

Finder’s Fee.  The Company represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

0.15

Tax Matters.   Except as set forth on Schedule 3.15 , the Company and each of its subsidiaries has timely filed with the appropriate taxing authority all tax returns required to be filed by it or has timely requested extensions and any such request has been granted and has not expired.  Each such tax return is complete and accurate in all respects.  All taxes shown as owed by the Company or any of its subsidiaries on any tax return or claimed or asserted to be due, from or with respect to any of them, have been paid, except for taxes being contested in good faith and for which adequate reserves have been taken.  The Company and each of its subsidiaries have properly made due and sufficient accruals for all taxes for such periods subsequent to the periods covered by such tax returns as required by GAAP.  None of the Company or any of its subsidiaries are being audited or examined by any taxing authority with respect to any tax or is a party to any pending action or proceedings by any taxing authority for assessment or collection of any tax, and no claim for assessment or collection of any tax has been asserted against it or any of its subsidiaries.  No claim has been made by any authority in a jurisdiction where the Company or any of its subsidiaries does not file tax returns that it is or may be subject to taxation by that jurisdiction.  There is no dispute or claim concerning any tax liability.

3.16

Environmental Matters .  Each of the Company and its subsidiaries has obtained, and now maintains as currently valid and effective, all permits, certificates of financial responsibility, and other governmental authorizations (collectively, “Environmental Permits”) that are required to be obtained by the Company or any of its subsidiaries under any state, federal, municipal, foreign or other environmental laws, rules or regulations applicable to any aspect of the Company or such subsidiary, including, but not limited to, in connection with the operation of its businesses and properties (“Environmental Laws”).  Each of the Company and its subsidiaries has been in compliance with all terms and conditions of the Environmental Permits and all Environmental Laws and no liability exists under any Environmental Laws or otherwise with respect to prior operations or activities.  

SECTION 4

PURCHASER REPRESENTATIONS AND WARRANTIES

The Purchaser represents and warrants to the Company, as follows:

4.1

Investment Intent .

(a)

Purchaser has substantial experience in business and financial matters and is capable of evaluating the merits and risks of its investment in the Company and is able to bear the economic risks of its investment.

(b)

Purchaser is an “accredited investor” as defined in Rule 501(a)(3) of Regulation D of the Securities Act.

(c)

Purchaser is acquiring the Securities for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  Purchaser understands that the Securities have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d)

Purchaser acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.  Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act (“Rule 144”) which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through a “broker’s transaction” or in a transaction directly with a “market maker” (as provided by Rule 144(f)) and the number of shares being sold during any three-month period not exceeding specified limitations.

4.2

Corporate Power .   Purchaser has all requisite legal and corporate power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

4.3

Authorization .   The execution, delivery and performance of this Agreement by the Purchaser has been duly authorized by all requisite corporate action, and this Agreement constitutes a valid and binding obligation of Purchaser enforceable in accordance with its terms, 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 equitable remedies.

4.4

Finder’s Fee.  Purchaser represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

SECTION 5

CONDITIONS TO CLOSING

5.1

Conditions to Purchaser’s Obligations .   The obligation of the Purchaser to exchange the Shares at the Closing is subject to the fulfillment to the reasonable satisfaction of the Purchaser, on or prior to the Closing Date, of the following conditions any of which may be waived in writing, in whole or in part, by the Purchaser:

(a)

The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects; and

(c)

The Designation shall have been filed with and accepted by the Nevada Secretary of State.

5.2

Conditions to Company’s Obligations .   The Company’s obligation to exchangel and issue the Shares to the Purchaser at the Closing is subject to the fulfillment to the Company’s reasonable satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived in writing, in whole or in part, by the Company:

(a)

The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects; and

SECTION 6

COVENANTS

6.1

Additional Documents and Further Assurances .   Each party hereto, at the request of the other party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby.

SECTION 7

INDEMNIFICATION

7 . 1

Indemnification . The parties hereby agree to indemnify, defend and hold each other and their affiliates harmless from and against any and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and expenses, including without limitation, interest, penalties, reasonable attorneys’ fees and all amounts paid in investigation, defense or settlement of any of the foregoing (, incurred in connection with, arising out of, resulting from, or incident to, any breach of any representation or warranty made by such party in this Agreement.

SECTION 8

MISCELLANEOUS

8.1

Delays or Omissions .   No delay or omission to exercise any right, power or remedy accruing to the Company or the Purchaser, upon any breach or default under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character by the Company or the Purchaser of any breach or default under this Agreement, or any waiver by the Company or the Purchaser of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in writing, and all remedies, either under this Agreement, or by law or otherwise afforded to the Company or the Purchaser, shall be cumulative.

8.2

Waivers and Amendments .   This Agreement and the provisions hereof may not be waived or amended except pursuant to a written instrument signed by the required party or parties as aforesaid.

8.3

Severability .   In the event that any provision of this Agreement shall be deemed to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

8.4

Successors and Assigns .   Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

8.5

Notices, Etc .   All notices and other communications required or permitted hereunder shall be in writing and shall be delivered either (i) personally, (ii) by facsimile transmission, or (iii) by a nationally recognized overnight courier, in each case with all delivery or postal charges pre-paid, and in each case, addressed attention: President.  All notices and communications shall be sent or delivered to the address or fax number, as applicable, for the applicable party as set forth on the signature page of this Agreement, or at such other address or fax number as the applicable party shall have furnished in writing to the other party (or its transferees).  Each such notice or communication, addressed and posted as aforesaid, shall for all purposes of this Agreement be treated as effective or having been given (i) when delivered, if delivered personally, (ii) the business day on which the notice or communication is sent, if delivered by facsimile transmission, or (iii) upon the earlier of its receipt or two (2) business days after the business day of deposit with a nationally recognized overnight courier, if delivered by such means.

8.6

Entire Agreement .   This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement among the parties with regard to the subject matters hereof and thereof, and supersede any and all prior agreements and understandings among the parties.

8.7

Governing Law .   This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California as they apply to contracts entered into and wholly to be performed within such state, and without reference to its principles of conflicts of law or choice of law.

8.8

Attorneys’ Fees .   In the event of any litigation in a court of competent jurisdiction arising in connection with this Agreement and the transactions contemplated hereby, the prevailing party in judgment shall be entitled to recover reasonable legal fees and costs in connection with such action including any appeals.

8.9

Independent Advice of Counsel .   The parties represent and declare that, in executing this agreement, they relied solely upon their own judgment, belief and knowledge, and had the ability to seek the advice of their own independently selected counsel concerning the nature, extent and duration of their duties and rights contained in this agreement.  The parties further represent and agree that they have not been influenced by any representations or statements concerning any matters made by any other party or by any person or attorney representing any other party.

8.10

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

[Signatures on following page]

Series C Convertible Preferred Stock Exchange Agreement – PROBE

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

COMPANY

PROBE MANUFACTURING, INC., a Nevada corporation

By: /s/ Reza Zarif

      Reza Zarif

      Chief Executive Officer

Address:       

3050 Pullman Street

Costa Mesa, CA 92626

Fax: (714) 424-2972

PURCHASER

Reza Zarif

By: Reza Zarif

Print Name: Reza Zarif

Print Title: n/a

Address:

_______________________

_______________________

Fax: (___) __-___

2 of 9

Series B Convertible Preferred Stock Purchaser Agreement –PROBE

Schedules to Series B Convertible Preferred Stock Purchase Agreement

Schedule 3.11

Litigation

None.

Schedule 3.15

Tax Matters

None.

Exhibit A

Certificate of Designation for Series C Convertible Preferred Stock

PROBE MANUFACTURING INDUSTRIES, INC.

____________________________

Series C Convertible Preferred Stock

Exchange Agreement

May 25, 2006

EXCHANGE AGREEMENT

This Exchange Agreement is made as of May 25, 2006, by and between Probe Manufacturing, Inc., a Nevada corporation (the “Company”), and Kambiz Mahdi (the “Purchaser”).

RECITALS

WHEREAS, pursuant to a securities purchase agreement dated December 31, 2004 (the “Original Purchase Agreement”), the company sold 4,500 shares of the Company’s Series B Convertible Preferred Stock, par value $.001 per share, (the “Original Preferred Stock”), which are convertible into shares of commons stock, par value $0.001 per share and otherwise have the rights, preference, privileges, powers and restrictions set forth in a Certificate of Designation filed with the Secretary of State of Nevada on December 31, 2004.

WHERAS , the Company and the Purchaser desire that the Purchaser exchange all of the Series B Convertible Stock currently owned by Purchasers for shares of the Company’s newly designated Series C Convertible Preferred Stock (the “Exchanged Preferred Stock”) upon the terms and conditions set forth herein (the “Exchange”).

WHEREAS , the Exchange is intended to qualify as a private placement transaction under Section 4(2) of the Securities Act of 1933, as amended.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENTS

SECTION 1

AUTHORIZATION AND EXCHANGE OF THE SHARES

1.1

Authorization of the Shares .  

(a)

The Company has authorized, or before the Closing (as defined in Section 2.1 below) will have authorized, a new series of preferred stock, designated as “Series C Convertible Preferred Stock”, which shall have the rights, preferences and privileges provided for in the Designation.  

(b)

In addition, prior to the Closing, the Company shall have authorized the issuance   to the Purchaser(s) of up to Four Thousand and Five Hundred (4,500) shares (the “Shares”) of the Series C Preferred Stock, which shall have the rights, preferences and privileges provided for in the Designation.

1.2

Exchange of the Shares .   At the Closing, (i) the Purchaser shall deliver to, or as directed by the Company stock certificates representing the Original Preferred Stock and (ii) the Company shall deliver to the purchasers stock certificates, registered in the name of the Purchaser, representing the Exchange Preferred Stock.  

1.3

Exchange Preferred Stock .  The Exchange Preferred Stock shall have the rights, preferences and privileges as set forth in the Certificate of Designation attached hereto as Exhibit A to be filed prior to Closing by the Company with the Secretary of State of Delaware.  Each share of Original Preferred Stock shall be convertible into 1 share of the Exchange Preferred Stock.  Each share of Preferred Stock shall be convertible into shares of Common Stock in accordance with the terms of the Certificate of Designation.  

1.4

Original Preferred Stock .  Effective as of the Closing Date, all Original Preferred Stock owned by the Purchaser shall be canceled.

SECTION 2

CLOSING DATE; DELIVERY

2.1

Closing Date .   The closing date shall be the date upon which this Agreement is executed by the parties to this Agreement (the “Closing Date” ).  

SECTION 3

COMPANY REPRESENTATIONS AND WARRANTIES

Except as disclosed in the Schedules attached hereto, the Company makes the following representations and warranties to the Purchaser:

3.1

Organization and Standing .   Each of the Company and its subsidiaries (i) is a corporation duly organized and validly existing under the laws of its respective jurisdiction of incorporation and is in good standing as a domestic corporation under the laws of said state or country, (ii) has all requisite corporate power and authority to own and lease its properties and to conduct its business as presently conducted, and (iii) is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified does not and is not reasonably expected to (x) individually or in the aggregate, have a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and its subsidiaries, taken as a whole, (y) interfere with or impair the Company’s ability to perform its obligations under this Agreement, or (z) interfere with or prevent the consummation of any of the transactions contemplated by said instruments (any of the events set forth in clauses (x), (y) or (z), a “Material Adverse Effect”).

3.2

Corporate Power .   The Company has all requisite legal and corporate power to execute and deliver this Agreement, to exchange and issue the Shares, to issue the Conversion Stock issuable upon conversion of the Shares, and to carry out and perform its obligations under the terms of this Agreement and under the terms of all other agreements and other documents executed in connection herewith.

3.3

Capitalization .   The authorized capital stock of the Company upon the filing of the Designation with the Secretary of State of the State of California will consist of (a) 100,000,000 shares of Common Stock of which 3,577,364 shares are issued and outstanding, and (b) 10,000,000 shares of Preferred Stock of which (i) 440 shares Series A Convertible Preferred Stock of which 440 are issued and outstanding and (ii) Twenty Thousand (20,000) shares of Series B Convertible Preferred Stock of which 12,500 and (iii) 10,000 shares shall be designated as “Series C Convertible Preferred Stock.  All of the outstanding shares of Common Stock and all of the shares of Series A, B and C Preferred Stock when issued and sold, will be, validly issued, fully paid and non-assessable, and free of any liens or encumbrances.  The Series C Preferred Stock shall have the rights, preferences, privileges and restrictions set forth in the Designation attached hereto as Exhibit A.  

3.4

Authorization .   The execution, delivery and performance of this Agreement, and any other agreements related to this Agreement, by the Company have been properly and duly authorized by all requisite corporate action.  In addition, all other actions taken by the Company in connection with the transactions contemplated by this Agreement were properly and duly authorized by all requisite corporate action.  This Agreement and all documents and agreements executed in connection herewith, constitute valid and binding obligations of the Company.  The issuance and sale of the Shares will not give rise to any preemptive rights or rights of first refusal on behalf of any person in existence on the date hereof.

3.5

Conversion Stock .   The Conversion Stock has been duly and validly reserved for issuance.

3.6

Accuracy of Reports .   All reports, if any, delivered by the Company under this Agreement, have been duly filed, and the requirements of their respective forms (as of their respective filing dates), were complete and correct in all material respects as of the dates at which the information was furnished, and none contains (as of their respective dates of filing) any untrue statement of a material fact nor omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances in which made, not misleading.  

3.7

Financial Statements and Changes .   All financial reports and materials provided by the Company are true and accurate reflection of the Company’s current financial situation and nothing has been omitted which could have a material adverse effect.

3.8

No Conflict .   The provisions of each of this Agreement and the Designation do not constitute any violation, or conflict with or constitute a default under, any indenture, mortgage, deed of trust or other agreement, instrument, court order, judgment, decree, statute, rule or regulation (each a “Term” and collectively the “Terms”) to which the Company or any of its subsidiaries is a party or by which it is bound.  The execution, delivery and performance of and compliance with this Agreement, the issuance of the Securities pursuant to the terms hereof and the performance of the Company’s obligations hereunder and thereunder (i) will not result in any violation or be in conflict with or constitute a default under any Term, (ii) will not result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or its subsidiaries pursuant to any such Term, and (iii) will not conflict with or violate any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company, any of its subsidiaries, or any of the Company’s or subsidiaries’ assets or properties, subject to such exceptions as would not have a Material Adverse Effect.

3.9

Governmental Consents .   No consent, approval or authorization of, or designation, declaration or filing with, any federal, state or foreign governmental authority is required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or the issuance of the Securities or the consummation of any other transaction contemplated hereby, except (i) the filing of the Designation in the office of the State of California, and (ii) if required, qualifications or filings in connection with exemptions under any applicable state “blue sky” laws and Federal securities laws, which qualifications or exemptions, if required, will have been obtained and will be effective on the Closing Date, or will be obtained or filed after the Closing Date within the prescribed time in order to secure such exemptions or qualifications.

3.10

Patents, Trademarks, Etc .   The Company and its subsidiaries own or have the right, or prior to the Closing will own or have the right, to use all patents, trademarks, service marks, trade names, copyrights, licenses and rights necessary to their business as now conducted, as conducted at the time of the Closing and as contemplated being conducted thereafter, and, are not infringing upon any person’s or company’s rights under or with respect to any of the foregoing.  Neither the Company nor any of its subsidiaries has received any written communications alleging that the Company or a subsidiary has violated any patent, trademark, service mark, trade name, copyright or trade secret or other proprietary right of any other person or entity.    

3.11

Litigation .   Except as set forth on Schedule 3.11 , there is no suit, action or proceeding pending or affecting the Company or any of its subsidiaries, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against the Company or any of its subsidiaries.

3.12

Compliance with Laws .   The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which could reasonably be expected to have a Material Adverse Effect.

3.13

Offering of the Shares .   Neither the Company nor any person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Company under circumstances which would require, under the Securities Act of 1933, as amended (the “Securities Act”), the integration of such offering with the offering and sale of the Securities) which might subject the offering, issuance or sale of the Securities to the registration requirements of the Securities Act.

3.14

Finder’s Fee.  The Company represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

0.15

Tax Matters.   Except as set forth on Schedule 3.15 , the Company and each of its subsidiaries has timely filed with the appropriate taxing authority all tax returns required to be filed by it or has timely requested extensions and any such request has been granted and has not expired.  Each such tax return is complete and accurate in all respects.  All taxes shown as owed by the Company or any of its subsidiaries on any tax return or claimed or asserted to be due, from or with respect to any of them, have been paid, except for taxes being contested in good faith and for which adequate reserves have been taken.  The Company and each of its subsidiaries have properly made due and sufficient accruals for all taxes for such periods subsequent to the periods covered by such tax returns as required by GAAP.  None of the Company or any of its subsidiaries are being audited or examined by any taxing authority with respect to any tax or is a party to any pending action or proceedings by any taxing authority for assessment or collection of any tax, and no claim for assessment or collection of any tax has been asserted against it or any of its subsidiaries.  No claim has been made by any authority in a jurisdiction where the Company or any of its subsidiaries does not file tax returns that it is or may be subject to taxation by that jurisdiction.  There is no dispute or claim concerning any tax liability.

3.16

Environmental Matters .  Each of the Company and its subsidiaries has obtained, and now maintains as currently valid and effective, all permits, certificates of financial responsibility, and other governmental authorizations (collectively, “Environmental Permits”) that are required to be obtained by the Company or any of its subsidiaries under any state, federal, municipal, foreign or other environmental laws, rules or regulations applicable to any aspect of the Company or such subsidiary, including, but not limited to, in connection with the operation of its businesses and properties (“Environmental Laws”).  Each of the Company and its subsidiaries has been in compliance with all terms and conditions of the Environmental Permits and all Environmental Laws and no liability exists under any Environmental Laws or otherwise with respect to prior operations or activities.  

SECTION 4

PURCHASER REPRESENTATIONS AND WARRANTIES

The Purchaser represents and warrants to the Company, as follows:

4.1

Investment Intent .

(a)

Purchaser has substantial experience in business and financial matters and is capable of evaluating the merits and risks of its investment in the Company and is able to bear the economic risks of its investment.

(b)

Purchaser is an “accredited investor” as defined in Rule 501(a)(3) of Regulation D of the Securities Act.

(c)

Purchaser is acquiring the Securities for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  Purchaser understands that the Securities have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

(d)

Purchaser acknowledges that the Securities must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.  Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act (“Rule 144”) which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being through a “broker’s transaction” or in a transaction directly with a “market maker” (as provided by Rule 144(f)) and the number of shares being sold during any three-month period not exceeding specified limitations.

4.2

Corporate Power .   Purchaser has all requisite legal and corporate power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

4.3

Authorization .   The execution, delivery and performance of this Agreement by the Purchaser has been duly authorized by all requisite corporate action, and this Agreement constitutes a valid and binding obligation of Purchaser enforceable in accordance with its terms, 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 equitable remedies.

4.4

Finder’s Fee.  Purchaser represents and warrants that no finders or brokers have been retained or used in connection with the transactions contemplated by this Agreement.

SECTION 5

CONDITIONS TO CLOSING

5.1

Conditions to Purchaser’s Obligations .   The obligation of the Purchaser to exchange the Shares at the Closing is subject to the fulfillment to the reasonable satisfaction of the Purchaser, on or prior to the Closing Date, of the following conditions any of which may be waived in writing, in whole or in part, by the Purchaser:

(a)

The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects; and

(c)

The Designation shall have been filed with and accepted by the Nevada Secretary of State.

5.2

Conditions to Company’s Obligations .   The Company’s obligation to exchangel and issue the Shares to the Purchaser at the Closing is subject to the fulfillment to the Company’s reasonable satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived in writing, in whole or in part, by the Company:

(a)

The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date;

(b)

All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects; and

SECTION 6

COVENANTS

6.1

Additional Documents and Further Assurances .   Each party hereto, at the request of the other party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby.

SECTION 7

INDEMNIFICATION

7 . 1

Indemnification . The parties hereby agree to indemnify, defend and hold each other and their affiliates harmless from and against any and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and expenses, including without limitation, interest, penalties, reasonable attorneys’ fees and all amounts paid in investigation, defense or settlement of any of the foregoing (, incurred in connection with, arising out of, resulting from, or incident to, any breach of any representation or warranty made by such party in this Agreement.

SECTION 8

MISCELLANEOUS

8.1

Delays or Omissions .   No delay or omission to exercise any right, power or remedy accruing to the Company or the Purchaser, upon any breach or default under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character by the Company or the Purchaser of any breach or default under this Agreement, or any waiver by the Company or the Purchaser of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in writing, and all remedies, either under this Agreement, or by law or otherwise afforded to the Company or the Purchaser, shall be cumulative.

8.2

Waivers and Amendments .   This Agreement and the provisions hereof may not be waived or amended except pursuant to a written instrument signed by the required party or parties as aforesaid.

8.3

Severability .   In the event that any provision of this Agreement shall be deemed to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

8.4

Successors and Assigns .   Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

8.5

Notices, Etc .   All notices and other communications required or permitted hereunder shall be in writing and shall be delivered either (i) personally, (ii) by facsimile transmission, or (iii) by a nationally recognized overnight courier, in each case with all delivery or postal charges pre-paid, and in each case, addressed attention: President.  All notices and communications shall be sent or delivered to the address or fax number, as applicable, for the applicable party as set forth on the signature page of this Agreement, or at such other address or fax number as the applicable party shall have furnished in writing to the other party (or its transferees).  Each such notice or communication, addressed and posted as aforesaid, shall for all purposes of this Agreement be treated as effective or having been given (i) when delivered, if delivered personally, (ii) the business day on which the notice or communication is sent, if delivered by facsimile transmission, or (iii) upon the earlier of its receipt or two (2) business days after the business day of deposit with a nationally recognized overnight courier, if delivered by such means.

8.6

Entire Agreement .   This Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement among the parties with regard to the subject matters hereof and thereof, and supersede any and all prior agreements and understandings among the parties.

8.7

Governing Law .   This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California as they apply to contracts entered into and wholly to be performed within such state, and without reference to its principles of conflicts of law or choice of law.

8.8

Attorneys’ Fees .   In the event of any litigation in a court of competent jurisdiction arising in connection with this Agreement and the transactions contemplated hereby, the prevailing party in judgment shall be entitled to recover reasonable legal fees and costs in connection with such action including any appeals.

8.9

Independent Advice of Counsel .   The parties represent and declare that, in executing this agreement, they relied solely upon their own judgment, belief and knowledge, and had the ability to seek the advice of their own independently selected counsel concerning the nature, extent and duration of their duties and rights contained in this agreement.  The parties further represent and agree that they have not been influenced by any representations or statements concerning any matters made by any other party or by any person or attorney representing any other party.

8.10

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

[Signatures on following page]

Series C Convertible Preferred Stock Exchange Agreement – PROBE

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first written above.

COMPANY

PROBE MANUFACTURING, INC., a Nevada corporation

By: /s/ Reza Zarif

      Reza Zarif

      Chief Executive Officer

Address:       

3050 Pullman Street

Costa Mesa, CA 92626

Fax: (714) 424-2972

PURCHASER

Kambiz Mahdi

By: /s/ Kambiz Mahdi

Print Name: Kambiz Mahdi

Print Title: n/a

Address:

_______________________

_______________________

Fax: (___) __-___

2 of 9

Series B Convertible Preferred Stock Purchaser Agreement –PROBE

Schedules to Series B Convertible Preferred Stock Purchase Agreement

Schedule 3.11

Litigation

None.

Schedule 3.15

Tax Matters

None.

Exhibit A

Certificate of Designation for Series C Convertible Preferred Stock

PROBE MANUFACTURING INDUSTRIES, INC.

____________________________

Series C Convertible Preferred Stock

Exchange Agreement

May 25, 2006