--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Exhibit 10.13
 
 
 
ARTICLE 1
THE TRANSACTION 
1

 
 
1.1
Sale and Purchase of the Shares
1

 
 
1.2
Purchase Price 
2

 
 
1.3
Transfer Taxes
2

 
 
1.4
Transfer Taxes
2

 
 
1.5
Payment of Purchase Price at Closing
2

 
 
1.6
Assumed Liabilities
2

 
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER AND TARGET 
3

 
 
2.1
Organization
4

 
2.2
Capitalization and Ownership 
4

 
 
2.3
No Subsidiaries 
4

 
 
2.4
Title to Shares 
4

 
 
2.5
Qualification; Location of Business and Assets 
4

 
 
2.6
Authorization and Enforceability 
4

 
 
2.7
Books and Records. 
5

 
 
2.8
No Conflict; No Violation of Laws or Agreements 
5

 
 
2.9
Financial Statements 
5

 
 
2.10
No Undisclosed Liabilities 
6

 
 
2.11
No Changes 
6

 
 
2.12
Taxes
8

 
 
2.13
Inventory 
8

 
 
2.14
Accounts Receivable 
9

 
 
2.15
Litigation and Claims 
9

 
 
2.16
Material Contracts 
9

 
 
2.17
Environmental Matters 
10

 
 
2.18
Compliance with Laws 
11

 
 
2.19
Consents 
11

 
 
2.20
Real Property 
11

 
 
2.21
Personal Property 
12

 
 
 

--------------------------------------------------------------------------------

 
 
2.22
Intellectual Property 
12

 
 
2.23
Transactions with Related Parties 
12

 
 
2.24
Employees; Officers and Directors 
13

 
 
2.25
Labor Relations 
13

 
 
2.26
Insurance 
13

 
 
2.27
Employee Benefit Plans 
13

 
 
2.28
Customers 
14

 
 
2.29
Accounts; Lockboxes and Safe Deposit Boxes 
14

 
 
2.30
Brokerage
15

 
 
2.31
Disclosure
15

 
ARTICLE 3
REPRESENTATION AND WARRANTIES OF BUYER 
15

 
 
3.1
Organization; Qualification; Authority and Enforceability 
15

 
 
3.2
No Conflict; No Violation of Laws or Agreements 
15

 
 
3.3
Consents 
16

 
 
3.4
Litigation and Claims 
16

 
 
3.5
Investment Intent 
16

 
 
3.6
Broker 
16

 
ARTICLE 4
CERTAIN OBLIGATIONS OF SELLERS 
16

 
 
4.1
Conduct of Business Pending Closing 
16

 
 
4.2
Ordinary Course 
17

 
 
4.3
Preservation of Businesses 
17

 
 
4.4
Insurance 
17

 
 
4.5
Cooperation 
17

 
 
4.6
Access, Information, and Documents 
18

 
 
4.7
Acquisition Proposals 
18

 
ARTICLE 5
CONDITIONS TO CLOSING 
18

 
 
5.1
Conditions Precedent to Obligations of Seller 
18

 
 
5.2
Conditions Precedent to the Obligations of Buyer 
19

 
 
 

--------------------------------------------------------------------------------

 
ARTICLE 6
DELIVERIES AND PROCEEDINGS AT CLOSING 
20

 
 
6.1
Closing Deliveries by Seller 
20

 
 
6.2
Deliveries By Buyer 
20

 
ARTICLE 7
TERMINATION 
21

 
 
7.1
Termination of Agreement 
21

 
 
7.2
Effect of Termination 
21

 
ARTICLE 8
CERTAIN ADDITIONAL COVENANTS 
22

 
 
8.1
Costs and Expenses 
22

 
 
8.2
No Solicitation 
22

 
 
8.3
Employees 
22

 
 
8.4
Tax Matters 
22

 
 
8.5
Confidentiality 
22

 
 
8.6
Litigation 
22

 
ARTICLE 9
INDEMNIFICATION 
23

 
 
9.1
Survival 
23

 
 
9.2
Indemnification by Seller 
23

 
 
9.3
Indemnification by Buyer 
24

 
 
9.4
Materiality 
24

 
 
9.5
Limitations 
24

 
 
9.6
Notice and Opportunity to Defend 
24

 
 
9.7
Reimbursement 
25

 
 
9.8
Adjustments to Indemnification Payments 
25

 
 
9.9
No Other Representations, Etc.; Rescission 
26

 
 
9.10
Sole and Exclusive Remedy 
27

 
 
9.11
Survival of Indemnification Obligations 
27

 
ARTICLE 10
 GENERAL
 27

 
 
10.1
Notices 
27

 
 
10.2
Successors and Assigns 
28

 
 
10.3
Construction 
28

 
 
 

--------------------------------------------------------------------------------

 
 
10.4
Governing Law 
29

 
 
10.5
Headings 
29

 
 
10.6
Counterparts 
29

 
 
10.7
Further Assurances 
29

 
 
10.8
Course of Dealing 
29

 
 
10.9
Severability 
29

 
 
10.10
Entire Agreement 
30

 
 
 

--------------------------------------------------------------------------------

 
LIST OF EXHIBITS
 
 
Exhibit
A                                Definitions

 
Exhibit
B                                Confidentiality and Non-disclosure Agreement

 
Exhibit
C                                Non-Competition Agreement

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
 
                                                               LIST OF SCHEDULES
 
 

   
Schedule :
Title of Document/Instrument/Records
   
1-6(a)
Account Payable
1-6(b)
 Purchase Orders (Unfilled)
1-6(e)
Other Liabilities/Commitments
2-2
Stock Ledger
2.5
Locations of Business Establishments
2.8
Records of Compliance
2.9
Financial Statements
2.11
Transactions Since 12/31/2012
2.12
Tax Returns of 2009, 2010, 2011
2.13
Inventory (Secured Assets Noted)
2.14
Accounts Receivable (Secured A/R Noted)
2.15
Litigation Reports
2.16(a)
 Contracts and Performance Records
2.18
Leal Compliance Records
2.19
Contracts in Dispute
2.21
Personal Property Schedule
2.22
Intellectual Property Rights
2.23
Transactions with Related Parties
2.24
Employee Compensation Schedule
2.25
Labor Activities and Insurances
2.26
Insurances
2.27
Benefit Plan
2.29
Accounts and Banking Facilities
2.30
Brokerage Contract (Sunbelt of Pasadena)
4.7
Potential Buyers (NDA Executed)
6.1(a)(v)
Officers and Directors Re-appointed
8.3
Employees Re-hired

 
 
 

--------------------------------------------------------------------------------

 
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
 
 
 
STOCK PURCHASE AGREEMENT
 
By and Among
 
WESTERN PRINCIPAL PARTNERS LLC
 
 AS BUYER
 
And
 
INTERNET MEDIA SERVICES, INC
 
AS SELLER
 
 
And
 
RAYMOND MEYERS
 
AS MANAGEMENT INDEMNITOR
 
Of
 
LEGAL STORE.COM, INC.
 
 
 
Dated as of March 8, 2013
 
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 
 

--------------------------------------------------------------------------------

 
 
 
STOCK PURCHASE AGREEMENT
 
This STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
March 8, 2013 by and among WESTERN PRINCIPAL PARTNERS LLC, a California Limited
Liability Company (“Buyer”), INTERNET MEDIA SERVICES, INC., a Delaware
Corporation (“Seller”), LEGAL STORE.COM., INC. a Delaware Corporation, located
at 1507 7th Street #425, Santa Monica, CA 90401 (“Target”), and Raymond Meyers,
an individual residing at 4553 Glencer Ave. #325 Marina Del Ray, CA 90292
(“Management Indemnitor”).
 
 BACKGROUND:
 
Seller owns all of the issued and outstanding shares of capital stock of Target
(the “Shares”), and Management Indemnitor owns approximately 9 million of the
outstanding shares of capital stock of the Seller.
 
Target sells legal supplies to legal firms and institutions distributed through
the Target’s website throughout the United States (the “Business”), and
Management Indemnitor is the President of Target.
 
Buyer desires to purchase (directly or indirectly through a wholly owned
subsidiary) from Seller, and Seller desires to sell, transfer and deliver to
Buyer, all of the Shares on the terms and conditions of this Agreement.
 
All capitalized (and as noted herein, some un-capitalized) words and phrases
used in this Agreement (including the Schedules and Exhibits annexed hereto)
have the meanings specified in Exhibit A hereto (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
 
 
 
In consideration of the foregoing, the mutual representations, warranties and
covenants set forth in this Agreement, and for good and valuable consideration,
the sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
 
 
ARTICLE 1
 
THE TRANSACTION
 
1.1 Sale and Purchase of the Shares.   Upon the terms and subject to the
conditions contained in this Agreement, at the Closing:
 
(a) Seller shall sell, transfer, assign and convey all rights, title and
interest in and to the Shares to Buyer (or to such wholly-owned subsidiary as
Buyer may designate in writing to Seller prior to the Closing (the “Designated
Subsidiary”)) and Seller shall deliver to Buyer (or its Designated Subsidiary) a
stock certificate or certificates representing all of the Shares, duly endorsed
in blank or with duly executed stock powers attached, in proper form for
transfer, with all signatures guaranteed and with appropriate transfer stamps,
if any, affixed and free and clear of any Lien; and
 
 
1

--------------------------------------------------------------------------------

 
 
(b) Buyer (or its Designated Subsidiary) shall purchase, acquire and accept from
Seller all rights, title and interest in and to the Shares.
 
1.2 Purchase Price.  The aggregate consideration for the Shares is Two Hundred
and Ten Thousand US Dollars (US$210,000), payable in the manner described in
Section 1.5 subject to adjustment as set forth in Section 1.5 (the “Purchase
Price”).
 
1.3 Transfer Taxes.  Seller shall pay all stock transfer taxes or stamp duties
resulting from the transactions contemplated hereby.
 
1.4 Closing Time and Place; Effective Date.   The closing of the transactions
contemplated by this Agreement (the “Closing”) will take place at 350 South
Grand Avenue Suite 2250, Los Angeles, California at 12:00 noon on March 8, 2013,
or at such other place or such earlier time as the parties to this Agreement may
mutually agree.  The date on which the Closing occurs is hereinafter referred to
as the “Closing Date.”  For accounting purposes, the Closing shall be effective
as of March 8, 2013.
 
1.5 Payment of Purchase Price at Closing.   At the Closing, Buyer shall pay to
Seller, by wire transfer of immediately available funds to an account specified
to Buyer, Ninety Five  Thousand US Dollars (US$95,000.) plus the assumption of
Target’s obligations not to exceed One Hundred and Fifteen Thousand US Dollars
(US$115,000.).
 
1.6 Assumed Liabilities.  Subject to the terms and conditions set forth herein,
at the Closing, Buyer shall assume and agree to pay, honor and discharge when
due and payable (unless being contested by Buyer in good faith upon the prior
written consent of Seller, which consent shall not be unreasonably withheld) the
following liabilities relating to the operation of the Business or the ownership
of the Purchased Assets, excluding the Excluded Liabilities, provided, however,
that Buyer may elect to effect payments on such Assumed Liabilities, in whole or
in part, to the respective third party creditors at Closing (collectively, the
“Assumed Liabilities”):
 
(a) accounts payable of Seller relating to the Business which are unpaid on the
Closing Date and accrued as current liabilities, including accounts payable
relating to projects and orders completed by Seller prior to the Closing Date,
in each case as listed on Schedule 1.6(a) (“Accounts Payable”) provided that
such Accounts Payable relate to obligations made in the ordinary course of
business of the Business and have not been accelerated;
 
(b) all of the obligations, covenants, commitments and undertakings under the
open purchase orders, as listed on Schedule 1.6(b);
 
(c) all of the obligations, covenants, commitments and undertakings arising
under the Assumed Contracts that relate to any period after the Closing,
including, without limitation, Seller’s obligations, covenants, commitments and
undertakings with respect to customer deposits, but only to the extent such
Assumed Contracts were effectively assigned and transferred to Buyer pursuant to
the provisions hereof;
 
 
2

--------------------------------------------------------------------------------

 
(d) all of the obligations, commitments and undertakings with regard to the
Acquired Employees, as expressly set forth in Section 2.24; and
 
(e) those other liabilities, obligations and commitments as listed on Schedule
1.6(e).
 
(f) Closing Net Book Value.  As soon as practicable but no later than forty-five
(45) days after the Closing Date, Seller shall deliver to Buyer a balance sheet
of Target as of March 8, 2013 prepared in accordance with GAAP, on a basis
consistent with past practice (the “Closing Balance Sheet”), and shall certify
to Buyer the Net Book Value at March 8, 2013.  The Closing Balance Sheet
delivered in accordance with this Section  will be final, binding, and
conclusive upon Seller and Buyer and will be used to determine the post closing
purchase price adjustment, if any.
 
(g) Cooperation.  Buyer will provide Seller and Seller’s accountants with
reasonable access to the records and personnel of Target in order to obtain all
information needed to establish the Closing Balance Sheet; provided that Seller
and Seller’s accountants do not unduly interfere with the operations of
Target.  Seller shall cause Seller’s accountants to make its work papers with
respect to such Closing Balance Sheet available to Buyer and Buyer’s accountants
as soon as practicable, and no later than five (5) days following delivery of
the Closing Balance Sheet to Buyer.
 
(h) Disputes.  If Buyer disagrees in good faith with all or any portion of the
Closing Balance Sheet, Buyer shall give Seller written notice of all items with
which it disagrees within forty-five (45) days after receipt by Buyer of the
Closing Balance Sheet (the “Disagreement Notice”).  Seller and Buyer shall then
negotiate in good faith for a period of twenty (20) days following Buyer’s
delivery of the Disagreement Notice to resolve any such disagreements.  Any
agreement by Seller and Buyer with respect to any items set forth in the
Disagreement Notice will be conclusive and binding on all the parties
hereto.  If after such twenty (20) day period Seller and Buyer still disagree,
any such disagreement shall be promptly submitted to a mediator agreed upon by
Seller and Buyer ( “Mediator”) who shall deliver to Seller and Buyer, as
promptly as practicable, a written report of its determination of the Closing
Balance Sheet as of the Closing Date, which will be neither more favorable to
Seller than reflected in the Closing Balance Sheet nor more favorable to Buyer
than reflected in the Disagreement Notice. Mediator shall consider only those
items as to which Buyer has disagreed and which remain unresolved between Buyer
and Seller.  The determination made by Mediator  will be conclusive and binding
on and non-appealable by all the parties hereto.  The fees, costs and expenses
of Mediator shall be borne one half by Buyer and one-half by Seller.
 
 
ARTICLE 2
 
REPRESENTATIONS AND WARRANTIES OF SELLER AND TARGET
 
Each of Seller, Target and the Management Indemnitor hereby jointly and
severally represent and warrant to Buyer, as of the date hereof and as of the
Closing Date, as follows:
 
 
3

--------------------------------------------------------------------------------

 
2.1 Organization. Target is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware.  Copies of the Charter
and Bylaws of Seller and Target as previously delivered to Buyer are correct,
complete and in full force and effect.
 
2.2 Capitalization and Ownership.   The authorized capital stock of Target
consists of 1500 shares of common stock, no par value, of which 100 shares are
issued and outstanding.  Seller is the record and beneficial owner of all the
Shares.  All of the Shares have been duly authorized, validly issued, are fully
paid and non-assessable, were not issued in violation of the terms of any
agreement or other understanding binding upon Target or any other Person and
were issued in compliance with all applicable federal, and local state
securities and “blue-sky” laws and regulations.  Except as set forth in Schedule
2.2, there are no outstanding securities, options, warrants, rights, agreements,
calls, subscription commitments, demands, or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (a) call for the
issuance, sale or other disposition of any capital stock of Target and there are
no securities convertible into or exchangeable for the stock of Target or (b)
obligate any Seller or the Target to grant, offer or enter into any of the
foregoing or (c) relate to the voting or control of any capital stock of
Target.  No person has any right to require Target or Seller to register any
securities of Target under the Securities Act of 1933.
 
2.3 No Subsidiaries.   Target does not own, directly or indirectly, any equity
ownership interest in any other Person.
 
2.4 Title to Shares.   Seller owns all Shares free and clear of all Liens, and
the sale and delivery of the Shares to Buyer pursuant to this Agreement will
vest in Buyer legal and beneficial title to the Shares free and clear of any
Lien.
 
2.5 Qualification; Location of Business and Assets. Target is duly qualified and
in good standing as a foreign corporation and has all requisite corporate power
and authority to do business in the jurisdictions set forth on Schedule 2.5,
which jurisdictions are the only jurisdictions wherein the character of the
properties owned or leased or the nature of activities conducted by Target make
such qualification necessary.  Set forth on Schedule 2.5 is each location
(specifying state, county, and city) where Target (a) has a place of business,
(b) owns or leases real property, (c) maintains inventory, or (d) maintains
employees.
 
2.6 Authorization and Enforceability.   Each of Seller and Target has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its respective obligations hereunder.  The execution and delivery
of, and the performance of the obligations under, this Agreement by each of
Seller and Target has been duly and validly authorized by all necessary
corporate action.  This Agreement has been duly executed and delivered on behalf
of each of Seller, Target and the Management Indemnitor and constitutes the
legal, valid, and binding obligations of each of Seller, Target and the
Management Indemnitor enforceable against each of them in accordance with its
terms subject to general equitable principles, except as the enforceability of
this Agreement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to creditors’ rights.
 
 
4

--------------------------------------------------------------------------------

 
2.7 Books and Records.   The minute book, stock certificate book and stock
record book of Target is complete and the signatures therein are, to the best
knowledge of Seller, the true signatures of the persons purporting to have
signed the documents contained therein.  To the best knowledge of Seller, such
minute books contain accurate and complete minutes of all meetings and written
consents to action of the respective Board of Directors and shareholders of
Target.  All material corporate actions taken by Target has been duly authorized
or subsequently ratified.  The Books and Records of Target have been maintained
in accordance with good business practice on a consistent basis and accurately
reflect the condition, financial or otherwise, of Target.
 
2.8 No Conflict; No Violation of Laws or Agreements.   Except as described in
Schedule 2.8, the execution and delivery of this Agreement by Seller, Target and
the Management Indemnitor do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions,
and provisions of this Agreement by Seller and Target will not:
 
(a) contravene any provision of any of the Charter or Bylaws of any Seller or
Target;
 
(b) conflict with, constitute or result in any breach, default or violation of
(or an event which might, with or without the passage of time or the giving of
notice or both, constitute or result in a breach, default or violation of) (i)
any of the terms, conditions, or provisions of any indenture, mortgage, loan,
credit agreement or any other instrument, contract, agreement or commitment to
which Target, Seller or any Management Indemnitor is a party, or by which
Target, any of the assets of Target or Seller or any Management Indemnity may be
bound or affected, (ii) any judgment or order of any Governmental Authority, or
(iii) any law, rule or regulation;
 
(c) result in the creation or imposition of any Lien upon any Shares or any
assets of Target or give to any Person any interests or rights in any thereof;
 
(d) result in the acceleration of any liability or obligation of Target (or give
any Person the right to cause such acceleration); or
 
(e) result in the termination of or loss of any right (or give any Person the
right to cause such a termination or loss) under any agreement or contract to
which any Seller or Target is a party or by which any Seller or Target may be
bound, or to which any Shares or assets of Target are subject.
 
2.9 Financial Statements.
 
(a) Attached hereto as Schedule 2.9 are (i) a true and correct copy of the
unaudited consolidated balance sheet of Seller at December 31, 2012 and the
related audited consolidated statements of profit and loss and cash flows for
the fiscal year then ended (collectively, the “Unaudited Financial Statements”);
(ii) within sixty (60) days after the Closing date, Seller shall provide a true
and correct copy of the audited consolidated balance sheet of Seller at December
31, 2012 and the related audited consolidated statements of profit and loss and
cash flows for the fiscal year then ended (collectively, the “Audited Financial
Statements”).
 
 
5

--------------------------------------------------------------------------------

 
(b) Except for as set forth on Schedule 2.9, the Financial Statements:  (i) were
prepared from the Books and Records of Target, which Books and Records have been
maintained in accordance with all legal and accounting requirements and
completely and accurately reflect all financial transactions of Target; (ii)
were prepared in accordance with GAAP consistently applied; and (iii) present
fairly the financial condition of Target and the results of their operations for
the periods covered by, and as at the dates of, each of the Financial
Statements.  The statements of profit and loss included in the Financial
Statements do not contain any material items of special or non-recurring income
or other income not earned in the ordinary course of business except as
expressly specified therein.
 
2.10 No Undisclosed Liabilities.  Target does not have any material liability or
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, direct or indirect, except (a) to the extent reflected as a liability
on the Financial Statements, and (b) liabilities incurred in the ordinary course
of business (and not in violation of this Agreement or any other agreement to
which Target is a party or by which it or assets of Target may be bound) since
December 31, 2012 and that are fully reflected as liabilities on the Books and
Records of Target and will be fully reflected as liabilities on the Closing
Balance Sheet.
 
2.11 No Changes.   Except as disclosed on Schedule 2.11, since December 31,
2012, Target has conducted its business only in the ordinary course of
business.  Without limiting the generality of the foregoing sentence, except as
disclosed on Schedule 2.11, since December 31, 2012, there has not been:
 
(a) any change in the financial condition, assets, liabilities, prospects, net
worth, earning power or business of Target, except for changes in the ordinary
course of business consistent with past practice, none of which, individually or
in the aggregate, has been or is likely to be materially adverse to Target;
 
(b) any casualty, damage, destruction or loss, whether or not covered by
insurance, adversely affecting the properties, business or prospects of Target;
any material deterioration in the operating condition of the assets of Target;
or any accident in which any employees or other Persons have been killed or
injured;
 
(c) any Lien placed on any of the assets of Target;
 
(d) any declaration, setting aside or payment of a dividend or other
distribution in respect of Target or any direct or indirect redemption, purchase
or other acquisition of any capital stock of Target;
 
(e) any increase in the salary or other compensation payable or to become
payable to, or any advance (excluding advances for ordinary business expenses)
or loan to, any officer, director, employee or shareholder of Target (except
normal merit increases made in the ordinary course of business consistent with
past practice), or any increase in, or any addition to, other benefits
(including any bonus, profit-sharing, pension or other plan) to which any of
such officers, directors, employees or shareholders may be entitled, or any
payments to any pension, retirement, profit-sharing, bonus or similar plan
except payments made pursuant to the Benefit Plans in the ordinary course of
business consistent with past practice, or any other payment of any kind to or
on behalf of any such officer, director, employee or shareholder (other than
payment of base compensation and reimbursement for reasonable business expenses
in the ordinary course of business consistent with past practice);
 
 
6

--------------------------------------------------------------------------------

 
(f) any making or authorization of any capital expenditures in excess of One
Thousand Dollars ($1,000);
 
(g) any cancellation or waiver of any right material to the operation of the
business of Target, any cancellation or waiver of any debts or Claims of
substantial value by Target or any cancellation or waiver of any debts or Claims
against any Related Party by Target, other than write-offs of bad debts in the
ordinary course of business, which write-offs have not exceeded $1,000;
 
(h) any sale, transfer, lease or other disposition of any material asset of
Target;
 
(i) any amendment to, suspension or termination of, or receipt by either Seller
or Target of any notice of breach or default of, any material lease, contract or
other agreement to which Target is a party or from which Target, directly or
indirectly, derives rights;
 
(j) any payment, discharge or satisfaction of any liability or obligation
(whether accrued, absolute, contingent or otherwise) by Target, other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities or obligations shown or reflected
on the Financial Statements or incurred in the ordinary course of business since
December 1, 2012;
 
(k) any adverse change in, or any threat of any adverse change in, Target
relations with, or any loss or threat of loss of, suppliers or customers which,
individually or in the aggregate, had or is likely to have a Material Adverse
Effect;
 
(l) any write-offs as uncollectible of any notes or accounts receivable of
Target or write-downs of the value of any assets or inventory of Target, other
than in the ordinary course of business consistent with past practice;
 
(m) any material change by Target in any method of accounting or keeping its
books of account or accounting practices;
 
(n) any creation, incurrence, assumption or guarantee by Target of any material
obligation or liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due), except in the ordinary course of business
consistent with past practice, or any creation, incurrence, assumption or
guarantee by Target of any material indebtedness for money borrowed;
 
(o) any payment, loan or advance to or in respect of, or the sale, transfer or
lease of any material asset of Target (whether real, personal or mixed, tangible
or intangible) to, or entering into of any agreement, arrangement or transaction
with, any Related Party, except for (i) directors’ fees and (ii) compensation to
the officers and employees of Target at rates not exceeding the rates of
compensation disclosed on Schedule 2.24 hereto;
 
 
7

--------------------------------------------------------------------------------

 
(p) any disposition of (or failure to keep in effect any rights in, to or for
the use of) any patent, trademark, service mark, trade name or copyright, or any
disclosure to any Person not an employee or other disposal of any trade secret,
process or know-how of or by Target;
 
(q) any other transaction, agreement or event outside the ordinary course of
Target’s business or inconsistent with past practice; or
 
(r) any agreement or commitment to take or do any of the actions described in
subsections (a) through (q) above.
 
2.12 Taxes.
 
(a) Except as set forth on Schedule 2.12, Target has (i) timely filed all
Returns required to be filed by it with respect to all Taxes (which Returns have
been prepared in accordance with all applicable laws and requirements and are
correct and complete), and (ii) paid all Taxes required to be paid by it or
caused such Taxes to have been paid on its behalf, and all Taxes that are
required to be collected or withheld by or for Target have been duly collected
or withheld and any such amounts that are required to be remitted to any taxing
authority have been duly remitted.
 
(b) The accruals for Taxes contained in the Financial Statements are not less
than all unpaid liabilities for Taxes for all periods ended on or before the
respective dates of such Financial Statements and include adequate provisions
for all deferred Taxes, and nothing has occurred subsequent to such dates to
make any of such accruals inadequate.  All Taxes for periods beginning after
January 1, 2012 have been paid or will be reflected in the Closing Balance
Sheet.  Target has (i) timely filed all information Returns and reports,
including Forms 1099, which are required to be filed,  and (ii) accurately
reported all information required to be included on such Returns and
reports.  True copies of federal and state income tax Returns of Target for each
of the last three (3) fiscal years have been delivered to Buyer.
 
(c) No representative of any government taxing authority has made a pending
proposal (whether in writing or verbal, formal or informal) to assert any
deficiency in Taxes, adjust any Return, or revise the manner in which any Tax
liability is determined with respect to any Target.  Except as disclosed on
Schedule 2.12, no Return of Target has been audited by the relevant authorities
for which any deficiencies or proposed deficiencies resulting from such audit
have not been paid or adequately reserved in the Financial Statements.  All
Returns with respect to which the statute of limitations has not expired are
disclosed on Schedule 2.12.  To the best knowledge of Seller, no Return is under
examination by any taxing authority.
 
2.13 Inventory.   All of the inventories of Target, including those reflected on
the Financial Statements, are valued at cost and are free and clear of any Lien
except as set forth on Schedule 2.13.  All of the inventories reflected in the
Financial Statements or purchased or acquired thereafter have been purchased or
acquired in the ordinary course of business consistent with past practice.  All
of such inventory is located at the facilities of Target or Webgistix a public
warehouse located at 2251 Constitution Avenue & 250 Homer Street, Olean, NY
14760 or are in transit in the ordinary course of business.  All of such
inventory, net of a inventory obsolescence reserves, is saleable at current
market prices.  Since December 31, 2012,  the inventory of Target has not
materially increased or decreased other than in the ordinary course of business
consistent with past practice.
 
 
8

--------------------------------------------------------------------------------

 
2.14 Accounts Receivable.  All of the accounts and notes receivable of Target
represent amounts receivable for goods and services actually delivered (or in
the case of non-trade accounts or notes represent amounts receivable in respect
of other bona-fide business transactions), have arisen in the ordinary course of
business, are free of any Lien (except as set forth on Schedule 2.14), are not
subject to any counterclaims or offsets and have been billed and are generally
due and are fully collectible in the normal and ordinary course of business,
except to the extent of a reserve in an amount not in excess of the reserve for
doubtful accounts reflected on the Financial Statements and except as such
accounts receivable may be adjusted to reflect year end allowances.
 
2.15 Litigation and Claims.   Except as set forth on Schedule 2.15, there is no
Claim pending or, to the best knowledge of Seller, threatened (and, to the best
knowledge of Seller, no state of facts exist which reasonably could be expected
to lead to any such Claim) by, against or affecting or in any way relating to
Target, any asset of Target or the Shares or Seller’s rights thereto, at law or
in equity, before any Governmental Authority or any arbitrator.  There are
presently no outstanding judgments, decrees or orders of any Governmental
Authority or any arbitrator against or affecting Target or any asset of Target
or affecting the Shares.  Nothing listed on Schedule 2.15 could reasonably be
expected to have a Material Adverse Effect.  There are no Claims pending or, to
the best knowledge of Seller, threatened that seek to delay or prevent the
consummation of the transactions contemplated by this Agreement or that would be
reasonably likely to affect adversely or restrict Seller’s, Target’s and/or the
Management Indemnitor’s ability to perform its or their obligations under this
Agreement.
 
2.16 Material Contracts.
 
(a) Contracts.  Except as set forth in Schedule 2.16(a) and, with respect to
clauses (v) and (xi) below, except as previously disclosed to Buyer, there are
no contracts, agreements, arrangements, commitments, instruments, plans or
leases, oral or written (collectively, the “Contracts”) to which  Target is a
party or by which it is bound:
 
(i) for consulting or other services obligating Target to payments of more than
One Thousand Dollars ($1,000) annually or having a duration in excess of one (1)
year;
 
(ii) relating to the management of Target;
 
(iii) with any railroad, trucking, water transport or other transportation
company, including sidetrack contracts, pursuant to which Target holds or uses
any sidetracks, spurs or sidings, loads or ships any goods by rail, truck or
water or obtains or makes use of any other services provided by railroads,
trucking or water transport companies;
 
 
9

--------------------------------------------------------------------------------

 
(iv) relating to the lease of machinery, equipment or other personal property
involving payment of fixed rentals in excess of One Thousand Dollars ($1,000)
annually in the aggregate;
 
(v) for the purchase of any materials or supplies in excess of One Thousand
Dollars ($1,000);
 
(vi) for the purchase, sale or transfer of equipment or any construction or
other similar agreement involving any expenditure in excess of One Thousand
Dollars ($1,000);
 
(vii) evidencing or related to any indebtedness, obligation or liability for
borrowed money or for the deferred purchase price of property, in excess of One
Thousand Dollars ($1,000) (excluding trade payables incurred in the ordinary
course of business consistent with past practice), or any guaranty,
indemnification or other similar commitment relating to the obligations or
liabilities of any other Person;
 
(viii) involving a sharing of profits, joint venture or partnership;
 
(ix) relating to sales agency, brokerage, distribution or similar matters;
 
(x) containing covenants limiting the freedom of any of Target to compete in any
line of business or in any area or with any Person;
 
(xi) relating to orders for future purchase or delivery of goods or retention of
services which is material to Target or which has an aggregate future liability
greater than One Thousand Dollars ($1,000); or
 
(xii) relating to the business of Target, other than specifically excepted from
the descriptions set forth in Subparagraphs 2.16(a)(ii) through 2.16(a)(xi)
above, and except such Contracts which are terminable on less than 30 days’
notice without penalty or payment or involving expenditures of less than One
Thousand Dollars ($1,000) in the aggregate.
 
(b) Contract Compliance.  The Contracts listed on Schedule 2.16(a) are all of
the Contracts that are material to Target.  Copies of all such Contracts have
been provided to Buyer, are true, correct and complete and are subject to no
amendment, extension or modification, except as described in Schedule
2.16(a).  Except as set forth in Schedule 2.16(a), each Contract referred to in
Schedule 2.16(a) is valid and binding upon Target and, to the best knowledge of
Seller, as to any other party.  With respect to such Contracts, there is no
material default by Target or, to the best knowledge of Seller, by any other
party, and no event which, with notice or the passage of time or both, would
constitute such a default by Target, or, to the best knowledge of Seller, by any
other party thereto.  Except as set forth on Schedule 2.19, upon consummation of
the transactions contemplated hereby, Target will continue to be entitled to the
full economic, legal and other benefits of the Contracts on their present
terms.  Except as set forth on Schedule 2.19, no party has any right to cancel,
terminate or modify any of the Contracts by reason of the transactions
contemplated under this Agreement.
 
 
10

--------------------------------------------------------------------------------

 
2.17 Environmental Matters.  To the best knowledge of Seller, none of the
activities of Target or any current or prior owner, occupant, subcontractor,
sub-lessee, licensee or operator of any real property for which Target may be
responsible as a matter of law (such Persons, other than Target, collectively,
“Operators”), has failed to comply substantially with, or is in default in any
material respect under, any Environmental Laws or Worker Health and Safety Laws
applicable to the Real Property Interests or business operations thereon (the
“Target Operations”) such that any such activities would result in (i)
revocation of any license or permit, including the Authorizations, the loss of
which would have a Material Adverse Effect, (ii) material impairment of the
ability of Target to carry on its business, or (iii) imposition on Target or any
Operator of any fines or other civil or criminal monetary penalties.
 
2.18 Compliance with Laws.   Notwithstanding any other more specific provisions
of this Article 2, and except as set forth on Schedule 2.18, the business,
operations and assets of Target have been conducted and are in compliance in all
material respects with all applicable federal, state, local and foreign laws,
rules, regulations, ordinances, judgments, decrees, orders and other
requirements of any Governmental Authority.  Nothing listed on Schedule 2.18,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
 
2.19 Consents.   Except as set forth on Schedule 2.19, which separately lists
(i) all Required Permits and Consents and (ii) all other Permits and Consents,
no consent, approval, or authorization of, or registration or filing with, any
Person, including any Governmental Authority, is required in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, or for the continuation of the business of Target after
Closing.
 
2.20 Real Property.
 
(a) Owned Real Property Interests.  Target owns no interests in land, including
easements, rights of way and options.
 
(b) Leased Real Property Interests.  Schedule 2.20(a) (i) lists each lease,
sublease, assignment, surface, wheelage and other agreement, instrument or
consent pursuant to which Target leases, occupies or uses any Real Property
Interest or has subleased or otherwise granted to any Person any interests
therein (collectively, the “Realty Leases”); and (ii) the identity of each
lessor, lessee, consenting party, guarantor, if applicable, and any other party
to any of the Realty Leases.  Each of the Realty Leases is valid and binding
without further sublease or assignment and in full force and effect as to Target
and, to the best knowledge of Seller, as to any other party thereto.  There is
no material default by Target or, to the best knowledge of Seller, by any other
party, under any of the Realty Leases, and there is no event which, with notice
or the passage of time or both, would constitute such material default by Target
or, to the best knowledge of Seller, by any other party under any of the Realty
Leases.  Except as set forth on Schedule 2.19, upon consummation of the
transactions contemplated under this Agreement, Buyer will be entitled to the
full economic, legal and other benefits under the Realty Leases on their present
terms, and no Person has any right to cancel, terminate or modify any of the
Realty Leases by reason of the transactions contemplated under this Agreement.
 
 
11

--------------------------------------------------------------------------------

 
2.21 Personal Property.   Set forth on Schedule 2.21 hereto is a complete list
and summary description of all equipment, machinery, motor vehicles, furniture,
trademarks, patents, and other tangible and intangible personal property (the
“Personal Property”) owned or leased by Target, except for (a) any item of owned
personal property with an invoice cost of less than One Thousand Dollars
($1,000), and (b) supplies which have a short-term useful life and are
expensed.  Except as set forth in such Schedule 2.21, Target has good and
marketable title to all the owned Personal Property and good and valid leasehold
interests in all leased Personal Property, reflected in Schedule 2.21 as owned
or leased by Target, free and clear of all Liens.  All Personal Property is in
good operating condition and repair, ordinary wear and tear excepted, in
accordance with reasonable industry standards.
 
2.22 Intellectual Property.  Set forth on Schedule 2.22 hereto is a true and
correct list of all material patents and patent applications, and all
registrations or applications for trademarks, trade names, service marks and
copyrights that are used by, or held by or on behalf of, Target other than
intellectual property rights used pursuant to software license agreements
(collectively, together with all know-how of and trade secrets currently used
by, or developed by the employees of, Target other than intellectual property
rights used pursuant to software license agreements, the “Intellectual
Property”). Target owns, free and clear of all Liens other than Permitted
Encumbrances or have the right to use under a valid license, without payment to
any other Person (other than under a license described on Schedule 2.16 or the
non-disclosure of which on Schedule 2.16 would not constitute a
misrepresentation under Section 2.16).  Since the date that is five years prior
to the date hereof, (i) no Claims have been made in writing by any Person
challenging or questioning the right of any of Target to use the Intellectual
Property or the validity or scope thereof; (ii) no Person has made a written
Claim of its right to use any Intellectual Property owned, or to Seller’s
knowledge, used under license, by Target; and (iii) no Person has made a written
Claim of patent, trademark, trade name, service mark, or copyright infringement
by Target or with respect to the right of Target to continue to sell any product
or service or to conduct its operations without payment of a royalty or license
fee.  No patent or trademark owned, or to the knowledge of Seller, used under
license, by Target that constitutes Intellectual Property has been declared
unenforceable or otherwise invalid by any court or governmental authority.  All
patent and trademark registrations or applications which constitute Intellectual
Property owned, or to the knowledge of Seller, used under license, by Target,
have been duly registered in, filed in, or issued by, the U.S. Patent and
Trademark Office and other applicable foreign patent and trademark offices as
listed on Schedule 2.22, and have been properly maintained and renewed in
accordance with all applicable laws.
 
2.23 Transactions with Related Parties.   Except as disclosed on Schedule 2.23,
no Related Party:
 
(a) has borrowed money from, or loaned money to, Target which has not been
repaid;
 
(b) has guaranteed the performance of Target under any Contract or other
agreement or instrument which is still in effect or remains outstanding or had
its performance under any contract, lease or other agreement or instrument
guaranteed by a Target;
 
 
12

--------------------------------------------------------------------------------

 
(c) has any contractual or other Claim, express or implied, of any kind against
Target;
 
(d) has any interest in any assets of Target; or
 
(e) has been engaged, since the date that is two years prior to the date hereof,
in any other material transaction with Target.
 
Schedule 2.23 also lists all amounts owing between Target, on the one hand, and
any Related Party, on the other (“Related Party Balances”).
 
2.24 Employees; Officers and Directors.   Schedule 2.24 sets forth the names,
titles and current annual salary and other compensation, including any bonus, if
applicable, of all present officers, directors and employees of Target, together
with a statement of the full amount of all remuneration paid to each such person
during the calendar year preceding the date hereof.
 
2.25 Labor Relations. Target is not, nor has ever been, a party to, and none of
its employees is otherwise subject to, any collective bargaining
agreement.  Except as disclosed on Schedule 2.25, currently and during the past
three (3) years there are not and have not been:  (a) to the best knowledge of
Seller, any activities or proceedings of any labor union or representatives
thereof to organize any employees of Target; (b) any unfair labor practice
complaints or grievances against Target; or (c) any labor strike, dispute,
slowdown, work stoppage, picketing, lockout or threat thereof against
Target.  Target has not received any unresolved or outstanding notice of the
intent of any federal, state or local agency or instrumentality having
jurisdiction and responsibility for the enforcement of labor or employment laws
to conduct an investigation with respect to or relating to Target, and no such
investigation is in progress.
 
2.26 Insurance.   Attached hereto as Schedule 2.26 is a complete and correct
list of all policies of insurance of which Target is the owner, insured or
beneficiary, or which covers Target including any of its assets, indicating for
each policy the carrier, risks insured, amounts of coverage, deductible, premium
rate, cash value, expiration date, and any pending Claims thereunder, excluding
routine medical insurance Claims.  Except as set forth in Schedule 2.26, all
such policies are in full force and effect; there is no default with respect to
any provision contained in any such policy by Target or to the best knowledge of
Seller any other party thereto, or, to the best knowledge of Seller, any event
which, with notice or the passage of time or both would constitute such a
default; and there has not been any failure to give any notice or present any
Claim under any such policy in a timely fashion or in the manner or detail
required by the policy.  Except as set forth on Schedule 2.26, there are no
outstanding unpaid premiums or Claims under such policies.  Except as described
in Section 2.26, no notice of cancellation or non-renewal with respect to, or
disallowance of any Claim under, any such policy has been received.  Target has
never been refused any insurance and no coverage has been limited by any
insurance carrier to which an application for insurance was made or with which
insurance was carried by or for Target and all general liability policies
maintained by or for the benefit of Target have been “occurrence” policies.
 
 
13

--------------------------------------------------------------------------------

 
2.27 Employee Benefit Plans.
 
(a) Except as set forth on Schedule 2.27, neither Target nor any ERISA Affiliate
maintains or has maintained, contributed or is required to contribute to any
Benefit Plan. In addition, neither Target nor any ERISA Affiliate has any
liability with respect to any employee, former employee, director, officer or
independent contractor of any of Target.
 
(b) Except as set forth on Schedule 2.27:
 
(i) All insurance premiums with respect to any insurance policy related to a
Benefit Plan for any period up to and including the Closing Date shall have been
paid, or accrued and booked on the Closing Date Statement, and, with respect to
any such insurance policy or premium payment obligation, neither Target, any
ERISA Affiliate nor Buyer shall be subject to a retroactive rate adjustment,
loss sharing arrangement or other actual or contingent liability.
 
(ii) With respect to each Benefit Plan that is a “group health plan” within the
meaning of Section 607 of ERISA and that is subject to Section 4980B of the
Code, Target and each ERISA Affiliate have complied with the continuation
coverage requirements of the Code and ERISA.
 
(iii) No Benefit Plan provides benefits, including death or medical benefits,
beyond termination of service or retirement other than (A) coverage mandated by
law or (B) death or retirement benefits under a Benefit Plan qualified under
Section 401(a) of the Code.  Neither Target nor any ERISA Affiliate has made a
written or oral representation to any current or former employee promising or
guaranteeing any employer paid continuation of medical, dental, life or
disability coverage for any period of time beyond retirement or termination of
employment.
 
(iv) Seller’s, Target’s and the Management Indemnitor’s execution of, and
performance of the transactions contemplated by, this Agreement will not
constitute an event under any Benefit Plan that will result in any payment
(whether as severance pay or otherwise), acceleration, vesting, or increase in
benefits with respect to any employee.  No Benefit Plan provides for “parachute
payments” within the meaning of Section 280G of the Code.
 
(v) No Benefit Plan fails to meet the applicable requirements of Sections 79,
105, 120, 125 or 129 of the Code or any other nondiscrimination provision of the
Code or ERISA applicable to such Benefit Plan for any period up to and including
the Closing Date.
 
(vi) Target does not maintain any foreign plan, contract or program for the
benefit of persons who are non-resident aliens of the United States of America.
 
2.28 Customers.   Seller has provided Buyer a true and complete list of all
customers sales of Target during any of its last two fiscal years.  Seller has
provided Buyer a true and complete list of all vendors who produce products for
Target.
 
2.29 Accounts; Lockboxes and Safe Deposit Boxes.   Schedule 2.29 sets forth a
list of:  (a) the names of each bank, savings and loan association, securities,
commodities or other financial institution in which Target has an account, (b)
the location of all lockboxes and safe deposit boxes of Target, and (c) the
names of all Persons holding powers of attorney, including signature authority
for each such or having access to each such lockbox or safe deposit box.
 
2.30 Brokerage.  Other than Sunbelt of Pasadena, neither Seller nor Target nor
any Person acting on its behalf has engaged, retained or incurred any liability
to any broker, investment banker, finder or agent, made any agreement or taken
any other action which might cause anyone to become entitled to a broker’s fee
or commission or agreed to pay any brokerage fees, commissions, finder’s fees or
other fees with respect to the purchase of the Shares or as a result of the
transactions contemplated by this Agreement.
 
2.31 Disclosure.   To the best knowledge of Seller, no representation or
warranty in this Agreement, and no exhibit, document, statement, certificate or
schedule furnished or to be furnished by Seller pursuant hereto or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading, or necessary to provide Buyer with adequate and complete information
as to Target, the assets of Target, and the Shares.
 
 
 
14

--------------------------------------------------------------------------------

 
ARTICLE 3
 
 
REPRESENTATION AND WARRANTIES OF BUYER
 
Buyer represents and warrants to Seller and Target, as of the date hereof and as
of the Closing Date, as follows:
 
3.1 Organization; Qualification; Authority and Enforceability.   Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.  Buyer’s execution and delivery of this
Agreement, and the performance of its obligations hereunder, have been duly
authorized by all necessary corporate action on the part of Buyer.  This
Agreement has been duly executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms subject to general equitable principles and except as
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to creditors’ rights.
 
3.2 No Conflict; No Violation of Laws or Agreements.   The execution and
delivery of this Agreement by Buyer do not, and the consummation of the
transactions contemplated by this Agreement by Buyer and the compliance with the
terms, conditions and provisions of this Agreement by Buyer will not:  (a)
contravene any provision of Buyer’s Charter or Bylaws, or (b) conflict with, or
constitute, or result in any breach, default, violation of (or an event which
might, with or without the passage of time or the giving of notice or both
constitute or result in a breach, default or violation of) (i) any of the terms,
conditions, or provisions of any indenture, mortgage, loan,  credit agreement or
any other instrument, contract, agreement or commitment to which Buyer is a
party or by which any of its assets may be bound or affected or (ii) any
judgment or order of any Governmental Authority, or any law, rule or regulation
applicable to Buyer.
 
3.3 Consents.   No consent, approval, or authorization of, or registration or
filing with, any Person, including any Governmental Authority, is required in
connection with Buyer’s execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement by Buyer.
 
3.4 Litigation and Claims.  There are no Claims pending or, to the best
knowledge of Buyer, threatened that seek to delay or prevent the consummation of
the transactions contemplated by this Agreement or that would be reasonably
likely to affect adversely or restrict Buyer’s ability to perform its
obligations under this Agreement.
 
3.5 Investment Intent.  Buyer is acquiring the Shares solely for its own account
and not with a view to a sale or distribution thereof in violation of any
securities laws.  Buyer acknowledges that it has received, or has had access to,
all information which it considers necessary or advisable to enable it to make a
decision concerning its purchase of the Shares, provided that the foregoing
shall not limit or otherwise affect the rights or remedies of Buyer hereunder
with respect to the breach of any representations, warranties, covenants or
agreements of Seller and/or Target contained herein.
 
3.6 Broker.  Buyer nor any Person acting on behalf of any of them has engaged,
retained or incurred any liability to any broker, investment banker, finder or
agent, made any agreement or taken any other action which might cause anyone to
become entitled to a broker’s fee or commission or agreed to pay any brokerage
fees, commissions, finder’s fees or other fees with respect to the purchase of
the Shares or as a result of the transactions contemplated hereby.
 
 
15

--------------------------------------------------------------------------------

 
 
ARTICLE 4
 
CERTAIN OBLIGATIONS OF SELLERS
 
4.1 Conduct of Business Pending Closing.   From and after the date hereof until
Closing, and unless otherwise provided herein or Buyer otherwise consents or
agrees in writing, Seller and Target covenant and agree that Target will not:
 
(a) amend its Charters or Bylaws;
 
(b) change its authorized or issued capital stock, or issue any rights or
options to acquire such stock;
 
(c) enter into any contract or commitment the performance of which may extend
beyond the Closing, except those made in the ordinary course of business;
 
(d) enter into any employment or consulting contract or arrangement with any
Person that is not terminable at will without penalty or continuing obligation;
 
(e) incur, create, assume or suffer to exist any Lien affecting any of the
assets of Target;
 
(f) make, change or revoke any tax election or any agreement or settlement with
any taxing authority;
 
(g) incur any debt or other obligation for money borrowed except in the ordinary
course of business consistent with past practice;
 
(h) loan, advance funds or make an investment in or capital contribution to any
Person other than to Target in the ordinary course of business;
 
(i) take any action or permit to occur any event described in Section 2.11;
 
(j) sell, transfer, lease or otherwise dispose of any assets of Target other
than inventory, except for one or more sales of assets of Target for aggregate
proceeds not exceeding One Thousand Dollars ($1,000);
 
(k) take any action or omit to take any action that will result in a material
violation of any applicable law or cause a material breach of any agreements,
contracts, or commitments not in the ordinary course of business consistent with
past practice; or
 
(l) enter into any agreement to do any of the foregoing.
 
 
16

--------------------------------------------------------------------------------

 
4.2 Ordinary Course.  Seller and Target will conduct the businesses of Target in
the ordinary course, including billing, shipping, collection practices,
inventory transactions and payment of accounts payable.
 
4.3 Preservation of Businesses.  Seller and Target will use their best efforts
to preserve the business organization of Target and to preserve for Buyer the
goodwill of the suppliers, customers and any other Person having business
relations with Target.
 
4.4 Insurance.   Seller and Target will cause the insurance policies set out on
Schedule 2.25 to be maintained in full force and effect, subject only to
variations required by ordinary course business operations, or Seller and Target
to obtain, prior to the lapse of any such policy, substantially similar coverage
with insurers of recognized standing.  Seller shall notify Buyer in writing of
any change of insurer or type of coverage from the policies listed on Schedule
2.25.
 
4.5 Cooperation.  Seller and Buyer shall cooperate to obtain, amend or
substitute any (i) permits, authorizations, licenses, bonds and surety deposits
granted by or filed with any Governmental Authorities, (ii) consents and
approvals of any third Person by reason of the transactions contemplated hereby
(the “Permits and Consents”).  If any Permits and Consents must be obtained
prior to Closing in order to assure the continued and uninterrupted operation of
the Business after the Closing as heretofore conducted or the consummation of
the transactions contemplated hereby (such Permits and Consents, the “Required
Permits and Consents”), all expenses in connection with obtaining such Required
Permits and Consents will be borne by Target on or prior to Closing.  To the
extent that any such Permits and Consents shall be conditioned on a change of
the economic terms of the underlying transaction, Seller shall be responsible
for any costs associated with any such change in economic terms without regard
to Section 9.4.
 
4.6 Access, Information, and Documents.   After the date hereof, Buyer and
Buyer’s counsel, accountant, and other representatives will have full access
during normal business hours to all of Target’s properties, books, tax returns,
contracts, commitments, records, officers, personnel and accountants.  Seller
shall provide Buyer with all such documents and copies of documents (certified
to be true copies if requested) and all information with respect to the affairs
of Target as Buyer may reasonably request.  No investigation or receipt of
information by Buyer pursuant to this Agreement shall diminish or obviate any of
the representations, warranties, covenants or agreements of Seller or Target
under this Agreement or the conditions to the obligations of Buyer under this
Agreement.
 
4.7 Acquisition Proposals.   From the date hereof through the Closing, none of
Seller, Target, or any of their Affiliates, nor any of their respective
officers, directors, employees, representatives or agents, shall, directly or
indirectly, solicit, initiate or participate in any way in discussions or
negotiations with, or provide any information or assistance to, any Person or
group of Persons (other than Buyer) concerning any acquisition of an equity
interest in, or any merger or consolidation with, or any acquisition of a
substantial portion of the assets of, Target (each, an “Acquisition Proposal”),
or assist or participate in, facilitate or encourage any effort or attempt by
any other Person to do or seek to do any of the foregoing.  Since February 1,
2013, none of the conduct prohibited by this sentence has occurred.  Seller and
Target shall promptly communicate to Buyer the terms of any Acquisition Proposal
which any of them or any such other Person may receive. Seller has provided
Buyer a true and complete list of all the Persons who have entered into a
Non-Disclosure Agreement regarding the sale of the Target in Schedule 4.7.
 
 
17

--------------------------------------------------------------------------------

 
 
ARTICLE 5
 
CONDITIONS TO CLOSING
 
5.1 Conditions Precedent to Obligations of Seller.   The obligations of Seller
to proceed with the Closing under this Agreement are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by Seller in Seller’s sole discretion):
 
(a) Material Adverse Effect.   There shall not be a breach of, or any inaccuracy
contained in, the representations and warranties or covenants of Seller Target
or Management Indemnitor contained in this Agreement (including the Schedules
hereto) on or prior to the Closing Date, which, alone or together with other
such breaches or inaccuracies, has resulted or is reasonably likely to result in
a Material Adverse Effect.
 
(b) Performance and Compliance.  Seller shall have performed all of the
covenants, and complied with all of the provisions required by this Agreement to
be performed or complied with by it on or before the Closing, including the
delivery of the items required to be made pursuant to Section 6.1 of this
Agreement.
 
(c) Books and Records.  All Books and Records of Target shall have been
delivered to Buyer.
 
(d) Satisfactory Instruments.  All instruments and documents required from
Seller and/or Target to effectuate and consummate the transactions contemplated
hereby shall be in form and substance reasonably satisfactory to Buyer and its
counsel.
 
(e) Required Permits and Consents.  All Required Permits and Consents shall have
been obtained.
 
(f) Litigation.  No order of any Governmental Authority shall be in effect that
restrains or prohibits the transactions contemplated by this Agreement.  There
shall not be threatened, nor shall there be pending, any action or proceeding
(i) challenging any of the transactions contemplated by this Agreement or
seeking monetary relief by reason of the consummation of such transactions, or
(ii) that would likely have a Material Adverse Effect.
 
(g) Taxes.  Seller shall have caused Target to have paid all Taxes required to
be paid as of the Closing Date and to have accrued on the Closing Balance Sheet
all Taxes otherwise owing as of the Closing Date.
 
(h) Organizational Documents and Minute Books.  Seller shall have delivered to
Buyer the Charter, Bylaws and minute book (including corporate seal and stock
ledger) of Target, accompanied by a certificate of the Secretary or Assistant
Secretary of Target, dated as of the Closing Date, to the effect that such
Charters and Bylaws are true and complete.
 
5.2 Conditions Precedent to the Obligations of Buyer.   The obligation of Buyer
to proceed with the Closing is subject to the fulfillment prior to or at Closing
of the following conditions (any one or more of which may be waived in whole or
in part by Buyer in its sole discretion):
 
(a) Material Adverse Effect.  All representations and warranties of Buyer
contained herein shall be true, accurate, complete and correct in all material
respects as of the Closing Date.  Buyer shall not have made Claims for breaches
of, or inaccuracies contained in, the representations and warranties or
covenants of Seller contained in this Agreement (including the Schedules hereto)
on or prior to the Closing Date which, alone or together with other such
breaches or inaccuracies, has resulted or is reasonably likely to result in a
Material Adverse Effect.
 
(b) Performance and Compliance.  Buyer shall have performed all of the covenants
and complied with all the provisions required by this Agreement to be performed
or complied with by Buyer on or before the Closing.
 
(c) Litigation.  No order of any Governmental Authority shall be in effect which
restrains or prohibits the transactions contemplated hereby, and there shall not
have been threatened, nor shall there be pending, any action or proceeding
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions.
 
(d) Satisfactory Instruments.  All instruments and documents required of Buyer
to effectuate and consummate the transactions contemplated hereby shall be in
form and substance reasonably satisfactory to Seller and their counsel.
 
 
18

--------------------------------------------------------------------------------

 
 
ARTICLE 6
 
DELIVERIES AND PROCEEDINGS AT CLOSING
 
6.1 Closing Deliveries by Seller.   Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall deliver or cause to be delivered to
Buyer the following documents, all in form and content reasonably satisfactory
to Buyer:
 
(a) Corporate Documents.
 
(i) An Officer’s Certificate of Seller and of Target certifying as to (A) the
incumbency and genuineness of the signatures of all officers of Seller and
Target executing this Agreement, (B) the truth and correctness of corporate
resolutions authorizing Seller and Target to enter into and perform this
Agreement and the transactions contemplated hereby and (C) the truth,
correctness and completeness of the Charter and Bylaws of Seller;
 
(ii) An Officer’s Certificate of Seller and of Target and a certified statement
from each Management Indemnity that is an individual certifying that the
representations and warranties contained herein are true, accurate, complete and
correct as of the Closing Date (subject to the provisions of Section 5.1(a)) and
that Seller, Target and each Management Indemnity has performed all of its
obligations under this Agreement;
 
(iii) Certificates of corporate good standing or legal existence of Target as of
a recent date; and
 
(iv) The duly executed resignation, effective as of the Closing, of each of the
officers and directors of Target other than such parties whose names are listed
on Schedule 6.1(a)(iv).
 
(v) The duly executed Non-Compete Agreement, by Management Indemnitor and
Seller, effective as of the Closing which is attached here Schedule 6.1(a)(v).
 
(b) Transfer of Shares.
 
(i) Stock certificates evidencing the Shares accompanied by stock powers duly
executed in blank and any other documents that are necessary to transfer to
Buyer good title to the Shares, free and clear of all Liens, and, upon
cancellation of such stock certificates, a newly issued stock certificate
evidencing Buyer’s ownership of the Shares; and
 
6.2 Deliveries By Buyer.   Subject to the terms and conditions of this
Agreement, at the Closing Buyer shall deliver or cause to be delivered to Seller
the following documents all in form and content reasonably satisfactory to
Seller:
 
(a) Corporate Documents.
 
(i) An Officer’s Certificates of Buyer certifying as to (A) the incumbency and
genuineness of the signatures of all officers of Buyer executing this Agreement,
(B) the truth and correctness of corporate resolutions authorizing the entry by
Buyer into this Agreement and the transactions contemplated hereby and (C) the
truth, correctness and completeness of the Charter and Bylaws of Buyer;
 
(ii) An Officer’s Certificate of Buyer certifying that the representations and
warranties contained herein are true, accurate, complete and correct as of the
Closing Date and that such Buyer has performed all of its obligations under this
Agreement; and
 
(b) Purchase Price Payment.  By wire transfer of immediately available funds,
the cash portion of the Purchase Price.
 
 
19

--------------------------------------------------------------------------------

 
 
ARTICLE 7
 
TERMINATION
 
7.1 Termination of Agreement.   This Agreement and the transactions contemplated
hereby may be terminated at any time on or prior to the Closing Date:
 
(a) Mutual Consent.  By mutual written consent of Buyer and Seller;
 
(b) Termination by Buyer.  By Buyer upon notice to Seller if there has been a
breach of, or inaccuracy contained in, the representations and warranties of
Seller, Target or the Management Indemnitors contained in this Agreement
(including the Schedules hereto) or any certificate delivered pursuant to this
Agreement resulting or reasonably likely to result in a Material Adverse Effect
or material breach by Seller of any of its covenants, or if any of the
conditions specified in Section 5.1 hereof shall not have been substantially
fulfilled by the time required and not have been waived by Buyer, or if the
Closing shall not have occurred by March 11, 2013; or
 
(c) Termination by Seller.  By Seller upon notice to Buyer if there has been a
material misrepresentation or material breach by Buyer of any of its
representations, warranties or covenants, or if any of the conditions specified
in Section 5.2 hereof shall not have been substantially fulfilled by the time
required and not have been waived by Seller, or if the Closing shall not have
occurred by March 11, 2013.
 
7.2 Effect of Termination.   In the event of termination of this Agreement by
either Seller or Buyer, as provided above, this Agreement shall terminate as of
the date of the written notice or consent described in Section 7.1 above, and
there will be no liability on the part of Seller or Buyer or their respective
Affiliates, except for liabilities arising from a breach of this Agreement prior
to such termination; provided, however, that the obligations of the parties set
forth in Sections 8.1 and 8.2 hereof shall survive such termination.
 
 
ARTICLE 8
 
CERTAIN ADDITIONAL COVENANTS
 
8.1 Costs and Expenses.   Each party hereto will pay its own costs and expenses,
including legal and accounting fees, in connection with the negotiation,
execution, performance of and compliance with this Agreement and, except as
otherwise provided herein, none of such costs and expenses shall be paid by
Target.
 
8.2 No Solicitation.   For a period of three (3) years from and after the
Closing Date, neither Seller nor any Affiliate thereof will, directly or
indirectly, solicit or attempt to entice away from Buyer or its Affiliates any
employee who is then currently employed or retained by Buyer or its Affiliates;
provided that the foregoing shall not prohibit Seller and its Affiliates from
employing any individuals who have received notice of termination from, or cease
to be employed by, Buyer or its Affiliates prior to the first time such
individuals discussed with any representative of Seller or its Affiliates
employment by Seller or any of its Affiliates.
 
8.3 Employees.  Seller shall cause Target to, and Target shall, terminate on or
prior to the Closing Date, all employees of Target other than those employees
listed on Schedule 8.3 hereto.  Buyer shall be liable for any costs and
expenses, including, without limitation, severance expenses, incurred by Target
as a result of the termination required pursuant to this Section 8.3.  Employees
of Target who are not terminated on or prior to the Closing Date shall be
provided such employee health and welfare benefits as Buyer provides to its
employees generally, irrespective of any Benefit Plans Target may have had in
place prior to the Closing Date.
 
20

--------------------------------------------------------------------------------

 
 
8.4 Tax Matters.
 
(a) Seller is responsible for the preparation and filing of all Returns of
Target for all taxable periods ending on or before the Closing Date.  Such
Returns will be correct and complete and Seller will cause them to be timely
filed with all relevant Governmental Authorities.  Buyer will be given a
reasonable opportunity to review such Returns before they are filed.  No such
Return shall contain any election that could affect any Tax liability for any
period ending after the Closing Date, or that would require government
permission to revoke, unless Buyer consents thereto.
 
(b) Seller and Buyer shall provide each other with reasonable cooperation in
connection with (i) the preparation or filing of any Return, Tax election, Tax
consent or certification, or any Claim for a Tax refund, (ii) any determination
of liability for Taxes, and (iii) any audit, examination, contests, disputes, or
other proceeding in respect of Taxes related to Target.
 
8.5 Confidentiality.  Seller shall keep all information about Target, Buyer and
this Agreement and the transactions contemplated thereby in strictest
confidence, and shall not disclose any such information to any Person without
the consent of Buyer.
 
8.6 Litigation.  Seller shall cooperate with Buyer, at such time and in such
manner as Buyer may reasonably request, in addressing any litigation arising
after the Closing as to which Seller have knowledge.
 
 
ARTICLE 9
 
INDEMNIFICATION
 
9.1 Survival.
 
(a) General.  Except as set forth in subsections (b), (c) and (d) below, the
representations, warranties, covenants and agreements of Seller and Buyer
contained herein shall survive the Closing and remain in full force and effect,
for one (1) year after the Closing Date, except as otherwise provided in this
Section 9.1.
 
(b) Tax Matters.   The representations and warranties set forth in Section 2.12
entitled “Taxes” shall survive the Closing until sixty (60) days after the first
to occur of (i) the expiration of the statute of limitations (and any extensions
thereof) applicable to the Tax in respect of which indemnification is being
sought without the assertion of a deficiency in respect thereof by the
applicable Governmental Authority, or (ii) the completion of the final audit and
determination by the applicable Governmental Authority with respect to such Tax
and final disposition of any deficiency resulting therefrom.
 
(c) Environmental and Employee Benefit Matters.  The representations and
warranties set forth in Sections 2.17 and 2.27 shall remain in full force and
effect until the applicable period under the statute of limitations therefor has
expired.
 
(d) Corporate Matters.  The representations and warranties set forth in Sections
2.2, 2.3, 2.4, 2.5 and 2.6 shall survive the Closing without any time
limitation.
 
9.2 Indemnification by Seller.  Each of Seller and the Management Indenmnitor,
jointly and severally, shall indemnify, defend and hold harmless Buyer, its
officers, directors, employees, consultants, owners, agents and Affiliates
(including Target), regardless of any investigation made by Buyer or on its
behalf, for, against, from and in respect of any and all losses, damages, costs
and expenses of any kind and nature whatsoever (including interest and
penalties, reasonable expenses of investigation and court costs, reasonable
attorneys’ fees and disbursements and the reasonable fees and disbursements of
other professionals incurred in the investigation or defense of any of the same
or in asserting any of their respective rights hereunder) (collectively,
“Losses”) which may be sustained or suffered by any of them arising out of,
resulting from or pertaining to:
 
(a) any breach of, or inaccuracy contained in, any representation or warranty
made by Seller, Target or Management Indemnitor in this Agreement or in any
Officer’s Certificate or any other certificate delivered pursuant to this
Agreement regardless of whether such breach or inaccuracy was discovered prior
to the Closing or during the twelve months thereafter;
 
(b) any failure of Seller to perform any covenant or agreement hereunder or
fulfill any other obligation in respect hereof;
 
(c) any liability of Target for Taxes with respect to any taxable year (or part
thereof) ending on or before the Closing Date to the extent not reflected or
reserved against in the Closing Balance Sheet; or
 
(d) any potential Loss arising out of actions or inactions occurring or relating
to the period prior to the Closing, provided notice of such Loss is delivered to
Seller and the Management Indemnitors within twelve months after the Closing
Date.
 
 
21

--------------------------------------------------------------------------------

 
9.3 Indemnification by Buyer.  Buyer shall indemnify, defend and hold harmless
Seller and Seller’s respective officers, directors, employees, consultants,
owners, agents and Affiliates, for, against, from and in respect of any and all
Losses which may be sustained or suffered by any of them arising out of,
resulting from or pertaining to:
 
(a) any breach of, or any inaccuracy contained in, any representation or
warranty made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this Agreement regardless of when such breach or inaccuracy
was discovered; or
 
(b) any failure of Buyer to perform any covenant or agreement hereunder or
fulfill any other obligation in respect hereof.
 
9.4 Materiality.  Notwithstanding that certain representations or covenants set
forth in this Agreement are qualified to the effect that they are not breached
unless the breach is “material” or affects Buyer or Target in a “material
respect” (a “materiality qualifier”), either party shall be entitled to
indemnification pursuant to Section 9.2 or 9.3, as the case may be, with respect
to any single occurrence of fact or related set of facts which, regardless of
any materiality qualifier, would be a breach of a representation or covenant
only if the Losses arising from such breach equal or exceed $10,000, in which
event the Indemnified Party shall be entitled (subject to the limitations in
this Article 9) to full indemnification for such Losses, including the first
$10,000 thereof.
 
9.5 Limitations.
 
(a) Seller’s Maximum Liability.  Seller’s obligation to indemnify Buyer for any
Losses under Section 9.2(a), (b) and (d) shall not exceed, in the aggregate, the
principal amount outstanding under the Buyer’s Note at the time Buyer notifies
Seller of an indemnifiable Loss.  In addition, the Management Indemnitor’s
aggregate obligation to indemnify Buyer for any Losses under Section 9.2(a), (b)
and (d) shall not exceed $100,000.
 
(b) Buyer’s Maximum Liability.  Buyer’s aggregate obligation to indemnify Seller
for any Losses under Section 9.3(a) and (b) shall not exceed $100,000.
 
9.6 Notice and Opportunity to Defend.   Each Person seeking indemnification
under this Article 9 (the “Indemnified Party”) shall promptly notify the other
party obligated to provide indemnification (the “Indemnifying Party”) of any
Claim as to which indemnity may be sought; provided, however, that failure to
provide prompt notice relieves the Indemnifying Party of its obligations under
this Agreement only to the extent that such failure prejudices the Indemnifying
Party hereunder.  The Indemnified Party  has the right to control the defense of
such Claim and the Indemnifying Party is entitled to participate in the defense
of such claim.  In no event shall an Indemnifying Party be liable for any
settlement or compromise effected without its prior consent and the Indemnifying
Party, in the defense of any such Claim, shall not, except with the prior
consent of the Indemnified Party, consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term a release of the
Indemnified Party from all liability in respect to such Claim by the claimant or
plaintiff.
 
9.7 Reimbursement. The Indemnifying Party shall, immediately, upon notice from
the Indemnified Party, pay to the Indemnified Party the amount of the
Indemnifiable Loss, at the time that the Indemnified Party shall suffer a loss
because of a breach of, or inaccuracy contained in, any representation, warranty
or covenant by the Indemnifying Party or at the time the amount of any liability
on the part of the Indemnifying Party under this Article 9 is determined, which
in the case of payment to third Persons shall be the earlier of (i) the date of
such payments or (ii) the date that a court of competent jurisdiction shall
enter a final judgment, order or decree (after exhaustion of appeal rights)
establishing such liability (such loss or amount being hereinafter referred to
as the “Indemnifiable Loss”).  Amounts payable to Buyer pursuant to Section
9.2(a) and (b) shall be paid first by reducing the principal amount of the
Buyer’s Note effective as of the Closing, and, after the principal amount
outstanding under Buyer’s Note has been reduced to zero, Buyer may seek
indemnification payments form the Management Indemnitors.  If such amount is not
paid immediately following receipt by the Indemnifying Party of the notice
described in Section 9.6 above, the Indemnified Party may, at its option, take
legal action against the Indemnifying Party for reimbursement in the amount of
its Indemnifiable Loss.  For purposes hereof, the Indemnifiable Loss shall
include the amounts so paid, or determined to be owing, by the Indemnified Party
together with costs and reasonable attorneys’ fees and interest on the foregoing
items at the annual rate of five percent (5%) from the date of notice that the
Indemnifiable Loss is due from the Indemnifying Party to the Indemnified Party
as provided above, until the Indemnifiable Loss shall be paid.  If such
Indemnified Party does not prevail in its enforcement action hereunder, it shall
reimburse the Indemnifying Party’s costs in such action.
 
In addition to its other obligations under this Section 9.7, the Indemnifying
Party agrees to, as an interim measure during the pendency of any Claim for
which indemnification may be required pursuant to this Article 9, reimburse the
Indemnified Party on a monthly basis for all legal fees or other out-of-pocket
expenses incurred in connection with investigating or defending any such Claim,
notwithstanding the absence of a determination by any arbitrator or court as to
the propriety and enforceability of the Indemnifying Party’s obligation to
indemnify the Indemnifying Party for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction.  To the extent that any such interim reimbursement payment is so
held to have been improper, the Indemnified Party shall promptly return it to
the Indemnifying Party, together with interest at the annual rate of five
percent (5%).  Any such interim reimbursement payments which are not made to the
Indemnified Party within thirty (30) days of a request for reimbursement shall
bear interest at the rate of five percent (5%) per annum from the date of such
request.
 
 
22

--------------------------------------------------------------------------------

 
9.8 Adjustments to Indemnification Payments.
 
(a) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment by the Indemnifying Party, is reduced by
recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any Claim, recovery, settlement or payment by or against any
third Person, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith (together with interest thereon from the date
of payment thereof at the rate of ten percent (5%) per annum), will promptly be
repaid by the Indemnified Party to the Indemnifying Party.  Upon making any
indemnity payment the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnified Party against any third
Person that is not an Affiliate of the Indemnified Party in respect of the
Indemnifiable Loss to which the indemnity payment relates; provided, however,
that (i) the Indemnifying Party will then be in compliance with its obligations
under this Agreement in respect of such Indemnifiable Loss and (ii) until the
Indemnified Party recovers full payment of its Indemnifiable Loss, any and all
Claims of the Indemnifying Party against any such third Person on account of
said indemnity payment will be subrogated and subordinated in right of payment
to the rights of the Indemnified Party against such third Person.  Without
limiting the generality or effect of any other provision hereof, each such
Indemnified Party and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights.  The Indemnified Party shall use its
reasonable efforts to make insurance Claims relating to any Claim for which it
is seeking indemnification pursuant to this Article 9; provided that the
Indemnified Party shall not be obligated to make such an insurance Claim if the
Indemnified Party in its reasonable judgment believes that the cost of pursuing
such an insurance Claim together with any corresponding increase in insurance
premiums or other chargebacks to the Indemnified Party would exceed the value of
the insurance Claim relating to any Claim for which the Indemnified Party is
seeking indemnification.
 
(b) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment by the Indemnifying Party, is either reduced by
any Tax benefits or increased by any Taxes attributable to the receipt of such
indemnity payment by the Indemnified Party, then the amount of such
reduction  or increase shall be promptly repaid by the Indemnified Party to the
Indemnifying Party (in case of a reduction) or by the Indemnifying Party to the
Indemnified Party (in case of an increase), but only to the extent that such Tax
benefits are actually realized by the Indemnified Party.
 
(c) If an Indemnified Loss relates to Taxes resulting from the inclusion of
income or disallowance of deductions in a period ending prior to or on the
Closing Date and all or a portion of such income or deduction is excluded or
allowed, respectively, in another period ending prior to or on the Closing Date,
the amount of the Indemnified Loss shall be limited to the net Tax increase for
such periods and the net amount of interest and penalties incurred with respect
thereto.
 
9.9 No Other Representations, Etc.; Rescission.   Except as set forth in this
Agreement, neither party makes any representation, warranty, covenant or
agreement with respect to the matters contained herein.  Notwithstanding
anything herein to the contrary, no breach of any representation, warranty,
covenant or agreement of any party contained herein shall give rise to any right
on the part of any other party, after the consummation of the purchase and sale
of the Shares contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
 
9.10 Sole and Exclusive Remedy.   The indemnification provided under this
Article 9 shall constitute the sole and exclusive remedy of Buyer and Seller
subsequent to the Closing for any Losses sustained by Buyer or Seller as a
result of any breach of this Agreement other than losses or liabilities based
upon fraud or fraudulent misrepresentation.
 
9.11 Survival of Indemnification Obligations.   The indemnification and other
obligations of Seller and Buyer under Section 9.2(a) and (b) and 9.3(a) and (b),
respectively, shall survive for the same period of time set forth in Section
9.1, and shall terminate with the expiration of such survival period.  Claims or
demands asserted prior to the expiration of such period shall survive until
final resolution thereof.
 
 
23

--------------------------------------------------------------------------------

 
 
ARTICLE 10
 
GENERAL
 
10.1 Notices.   All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered by courier, or if mailed, when mailed by United States
first-class, certified or registered mail, postage prepaid, to the other party
at the following addresses or by telecopy, receipt confirmed (or at such other
address as shall be given in writing by any party to the other):
 
If to Buyer, to:
 
WESTERN PRINCIPAL PARTNERS LLC
350 South Grand Ave Suite 2250
Los Angeles, CA 90071
Attention:  Mr. Michael Turcich
Fax: (213) 680-3535
 
 
With a copy to:
 
            International Lawyers PC
            350 South Grand Ave Suite 1520
            Los Angeles, CA 90071
            Attention: Sudeok Jang, Esq.
            Fax: (415) 651-9524
 
 
 
If to Seller, to:
 
                        Internet Media Services, Inc.
                        1507 7th Street #425,
                        Santa Monica, CA 90401
                        Attention:  Mr. Raymond Meyers
                        Fax: (800) 467-1496
 
 
           With a copy to:
 
           Law Offices of Gary A. Agron
           5445 DTC Parkway #521
           Englewood, CO 80111
           Attention: Gary Agron, Esq.
           Fax:  (303) 770-7257
 
 
24

--------------------------------------------------------------------------------

 
 
If to Target, to:
 
        Legal Store.com, Inc.
                        1507 7th Street #425,
                        Santa Monica, CA 90401
                        Attention:  Mr. Michael Turcich
Fax: (585) 546-7906
 
 
If to a Management Indemnitor, to
 
                        Mr. Raymond Meyers
                        1507 7th Street #425,
                        Santa Monica, CA 90401
                        Fax: (800) 467-1496
 
10.2 Successors and Assigns.   This Agreement, and all rights and powers granted
hereby, will bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto,
except that Buyer is entitled to assign all or part of its rights and
obligations under this Agreement to an Affiliate of Buyer, provided, however,
that Buyer shall remain fully responsible for the performance of its obligations
hereunder.
 
10.3 Construction.   The parties have participated jointly in the negotiation
and drafting of this Agreement.  In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.  Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.  The
word “including” and its derivatives shall mean including without limitation.
The parties intend that each representation, warranty, and covenant contained
herein shall have independent significance.  If any party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.  All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the identity of the Person or Persons may require.  All
references herein to Articles, Sections (other than Sections of the Code or any
other statute) and subsections shall be deemed to be references to Articles,
Sections and subsections of this Agreement unless the context shall otherwise
require.
 
10.4 Governing Law.   With respect to corporate governance matters concerning a
corporation of any jurisdiction, this Agreement shall be governed by and
construed in accordance with the laws of such jurisdiction.  With respect to all
other matters, this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions thereof.
 
 
25

--------------------------------------------------------------------------------

 
10.5 Headings.   The headings preceding the text of the sections and subsections
hereof are inserted solely for convenience of reference and shall not constitute
a part of this Agreement, nor shall they affect its meaning, construction, or
effect.
 
10.6 Counterparts.   This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument.
 
10.7 Further Assurances.   Both before and after Closing hereunder, each party
shall cooperate and take such action as may be reasonably requested by another
party in order to more fully carry out the provisions and purposes of this
Agreement and the transactions contemplated hereby.
 
10.8 Course of Dealing.   No course of dealing and no delay on the part of any
party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party’s
rights, powers and remedies.  The failure of any of the parties to this
Agreement to require the performance of a term or obligation under this
Agreement or the waiver by any of the parties to this Agreement of any breach
hereunder shall not prevent subsequent enforcement of such term or obligation or
be deemed a waiver of an subsequent breach hereunder.  No single or partial
exercise of any rights, powers or remedies conferred by this Agreement shall
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
 
10.9 Severability.   This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof.  Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be valid and enforceable, so as to effect the
original intent of the parties to the greatest extent possible.
 
10.10 Entire Agreement.   This Agreement and the Schedules, Exhibits and
Certificates hereto, each of which is hereby incorporated herein, set forth all
of the promises, covenants, agreements, conditions, and undertakings between the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings, inducements, or conditions,
express or implied, oral or written.  This Agreement may not be amended except
by an instrument in writing signed by the party sought to be charged with effect
of such amendment.
 
[Remainder of this page intentionally left blank.]
 
 
 
 
 
 
26

--------------------------------------------------------------------------------

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

   
WESTERN PRINCIPAL PARTNERS LLC
         
By:
 
   
Name:
Michael Turcich     
Title:
Manager 

 

   
INTERNET MEDIA SERVICES, INC.
         
By:
/s/
   
Name:
Raymond Meyers     
Title:
 President                               
 

 
 
 
 
 
 
27

--------------------------------------------------------------------------------

 
Exhibit A
 
DEFINITIONS
 
“Affiliate” means, when used with respect to any Person, (a) if such Person is a
corporation, any officer or director thereof and any Person which is, directly
or indirectly, beneficial owner (by itself or as part of any group) of more than
fifty percent (50%) of any class of any voting security thereof, (b) if such
Person is an LLC, any officer or manager thereof and any Person which is,
directly or indirectly, beneficial owner (by itself or as part of any group) of
more than fifty percent (50%) of any class of any voting interest therein, (c)
if such Person is a partnership, any general partner thereof and any Person
which is, directly or indirectly, beneficial owner (by itself or as part of any
group) of more than fifty percent (50%) of any limited partnership interest
thereof, and (d) any other Person which directly or indirectly, through one or
more intermediaries controls, is controlled by, or is under common control with,
such Person.  For purposes of this definition:  (i) any “beneficial owner” that
is a partnership shall be deemed to include any general or limited partner
thereof, any “beneficial owner” that is an LLC shall be deemed to include any
Person controlling, controlled by or under common control with such beneficial
owner, or any officer, manager or member of such beneficial owner or of any LLC
occupying any such control relationship, and any “beneficial owner” that is a
corporation shall be deemed to include any Person controlling, controlled by or
under common control with such beneficial owner, or any officer or director of
such beneficial owner or of any corporation occupying any such control
relationship; (ii) “control” (including the correlative terms “controlling,”
“controlled by” and “under common control with”), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise; and (iii) all
employees, stockholders, consultants and agents of Buyer and any direct or
indirect stockholder of Buyer shall be considered an Affiliate of Buyer.
 
“Beneficiary” means the Person(s) designated by an employee, former employee, by
operation of law or otherwise, as the party entitled to compensation, benefits,
damages, insurance coverages, indemnification, or any other goods or services
under any Benefit Plan.
 
“Benefit Plans” means any ”employee benefit plan,” as defined in Section 3(3) of
ERISA (including any “multiemployer plan” as defined in Section 3(37) of ERISA)
and all other contracts, programs or arrangements to provide any benefits,
including supplemental retirement, deferred compensation, excess benefit, profit
sharing, bonus, incentive, stock purchase, stock ownership, stock option, stock
appreciation right, employment, severance, salary continuation, termination,
change-of-control, vacation, educational assistance, scholarships, moving
expenses, holiday and any other fringe benefit plan, program, contract or
arrangement (whether written or unwritten, qualified or nonqualified, funded or
unfunded, and including any that have been frozen or terminated).
 
“best knowledge of Seller and similar phrases means the knowledge, after due
inquiry, of the managers, directors, officers, executive management personnel
and beneficial owners of the Seller, which are listed on Schedule 1.
 
 
A-1

--------------------------------------------------------------------------------

 
“Books and Records”  means and includes the original and all copies of reports,
books, manuals, financial statements, or reports, price books, confirmations,
telegrams, receipts, inventory books, contracts, printed matters, computer
printouts, teletypes, invoices, transcripts, analyses, Returns, minutes,
accounts, estimates, projections, comparisons, press releases, reviews,
opinions, studies and investigations, graphic representations of any kind
(including photographs, charts, graphs, videotape and motion pictures,
electronic and mechanical records, tapes, cassettes, discs, and recordings,
whether preserved in writing, phone record, film, tape, videotape, or computer
record).
 
“Bylaws” means the bylaws of any corporation organized under the laws of any
State of the United States of America and any equivalent document of any
corporation or entity organized under the laws of another jurisdiction, as
amended or restated through the date hereof or the Closing Date, as the case may
be.
 
“Charter” means the Certificate of Incorporation or Formation, Articles of
Incorporation or Organization or other organizational document of a corporation
or an LLC organized under the laws of any State of the United States of America
and any equivalent document of a corporation, LLC or other similar entity
organized under the laws of another jurisdiction, as amended or restated through
the date hereof or the Closing Date, as the case may be.
 
“Claim” means an action, suit, proceeding, hearing, investigation, litigation,
charge, complaint, claim or demand.
 
“Code” means the Internal Revenue Code of 1986 and valid interpretations
thereof, as reflected in Treasury regulations, published IRS rulings and court
decisions.
 
“Disclosure Schedules” means the Schedules delivered by Seller to Buyer or by
Buyer to Seller, as the case may be, in connection with the transactions
contemplated hereby.
 
“Environmental Laws” means all federal, state or local laws, including common
law, ordinances, requirements, rules, regulations, licenses, permits, orders,
injunctions, judgments, or decrees relating to or addressing the environment,
land use, or health and safety for the benefit and protection of the general
public but excluding Worker Health and Safety Laws, which shall include the use,
handling or disposal of any contaminant, subsidence, water drainage, treatment,
impoundment, nuisances and zoning.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” means (i) any corporation included with Target in a controlled
group of corporations within the meaning of Section 414(b) of the Code; (ii) any
trade or business (whether or not incorporated) which is under common control
with Target within the meaning of Section 414(c) of the Code; (iii) any member
of an affiliated service group of which Target is a member within the meaning of
Section 414(m) of the Code; or (iv) any other Person treated as an affiliate of
Target under Section 414(o) of the Code.
 
“GAAP” means United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, consistently applied.
 
 
A-2

--------------------------------------------------------------------------------

 
“Governmental Authority” means all agencies, instrumentalities, departments,
commissions, courts, tribunals, or boards of any government, whether foreign,
federal, state, or local.
 
“Hazardous Substances” means any pollutant, hazardous substance, radioactive
substance, toxic substance, hazardous waste, medical waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos,
polychlorinated biphenyls, or any hazardous or toxic constituent thereof and
includes any substance defined in or regulated under Environmental Laws.
 
“IRS” means the Internal Revenue Service and any similar or successor agency of
the federal government of the United States of America administering the Code.
 
“Lien” means, with respect to any asset or right, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim or right whatsoever, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing except with respect to securities, restrictions on transferability
imposed by federal and state securities laws.
 
“LLC” means limited liability company.
 
“Material” and “Materially” and derivatives thereof, whether capitalized or not,
when used to qualify a representation, warranty, or covenant contained in this
Agreement means, unless otherwise defined, or unless the context requires
otherwise, either (i) that there is a reasonable probability, under all the
circumstances and in view of the total mix of information available, that a
reasonable person in the position of the party relying thereon would attach
importance in deciding whether to enter into and consummate this Agreement in
accordance with the specific terms contained herein; or (ii) that the magnitude
of any inaccuracy in, or noncompliance with, the representation, warranty or
covenant at issue is substantial enough to result in monetary liability or cost
exceeding $25,000 to the party to this Agreement for whose benefit the
representation, warranty or covenant is made.
 
“Material Adverse Effect” means an occurrence or event which has or is
reasonably likely to have a material adverse impact or effect on the business,
operations, financial conditions or prospects of Target.
 
“Net Book Value” means the actual value of the current assets (cash plus
accounts receivables) of Target minus the actual value of the current
liabilities (accounts payable, accured expenses and sales/corporate taxes) of
Target as stated in the balance sheet of Target at such date.
 
“Permitted Encumbrances” means (i) liens for current ad valorem taxes not yet
delinquent and other inchoate statutory liens for charges not yet due and
payable, and (ii) private, public and utility easements, rights of way and roads
and highways, if any, which do not individually or in the aggregate materially
interfere with the conduct of Target’s business as presently conducted.
 
 
A-3

--------------------------------------------------------------------------------

 
“Person” means any natural person, corporation, business trust, trust, estate,
partnership, limited partnership, LLC, limited liability partnership,
association, joint venture or other entity.
 
“Purchase Documents” means this Agreement and any other certificate, document,
instrument, stock power or agreement executed in connection herewith.
 
“Related Party” means either of Seller, any of the members, managers, officers
or directors of either Seller or any Affiliate of either Seller or any of their
respective members, managers, officers or directors, or any Person in which
either Seller has any direct or material indirect interest; provided, however,
that no Target Company shall be considered a Related Party.
 
“Release” means the release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migrating into the indoor
or outdoor environment of any contaminant through or in the air, soil, surface
water, groundwater or real property.
 
“Returns” means all reports, estimates, declarations of estimated tax,
information statements, forms, and returns relating to, or required to be filed
in connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
 
“Taxes” or “Tax” means all taxes, however, denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including federal income taxes and state income taxes), real property
gains taxes, payroll and employee withholding taxes, unemployment insurance
taxes, social security taxes, sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which Target is required to pay, withhold or collect.
 
“Worker Health and Safety Laws” means all federal, state or local laws,
including ordinances, requirements, rules, regulations, licenses, permits,
orders, injunctions, judgments or decrees relating to or addressing workplace or
worker safety and health.
 
 
A-4

--------------------------------------------------------------------------------

 
 
Exhibit B
 
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
 
 
THIS CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT is made and entered into this
6th day of March, 2013 by and between INTERNET MEDIA SERVICES, INC., a Delaware
Corporation, LEGALSTORE.COM., a Delaware Corporation, located at 1507 7th St.,
#425, Santa Monica, CA 90401, and Raymond Meyers, an individual located at 1507
7th St., #425, Santa Monica, CA 90401, on one hand, and WESTERN PRINCIPAL
PARTNERS LLC, a California Limited Liability Company, located at 350 South Grand
Avenue Suite 2250, Los Angeles, CA on the other.
 
WHEREAS, the parties are entering into discussions and negotiations that may
lead to the sale and purchase of corporate shares and business interest of the
parties for mutual benefits;
 
WHEREAS, in connection with such discussions and negotiations, the parties
anticipate that certain confidential and proprietary information concerning
their respective business may be disclosed or exchanged; and
 
WHEREAS, as an inducement for the disclosure of such confidential and
proprietary information, the parties have agreed to maintain the confidentiality
of, and protect the proprietary nature of, the information being disclosed or
exchanged;
 
 
       NOW THEREFORE, in consideration of the foregoing, of the mutual promises
and covenants herein contained, and of other good and valuable consideration,
the adequacy and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
 
1.           The parties agree to treat as confidential and not disclose to any
third party without the prior written consent of all other parties hereto the
fact that the parties are engaged in discussions that may develop into a
business relationship and/or transaction.
 
2.           The parties further agree, for themselves and for their officers,
employees, representatives and agents (collectively referred to herein as
“Agents”), to maintain the confidential and proprietary nature of the
information being disclosed or exchanged, that is of a confidential or
proprietary nature, including, but not limited to, information regarding trade
secrets, operations, business opportunities and future developments, financial
condition, plans, specifications, design and operation, suppliers, cost saving
techniques, niche markets, sales and marketing programs, customers, employees,
and other such information relating to the parties’ respective businesses
(“Confidential Information”).  Such Confidential Information may also include
information developed by a non-party which a party may disclose so long as the
confidentiality of such information is maintained.
 
3.           The parties shall use all precautions reasonably necessary to
prevent the disclosure of the Confidential Information, including, but not
limited to:
 
 
A-5

--------------------------------------------------------------------------------

 
A.           Confidential Information provided in a tangible form shall be
marked in a manner to indicate that it is considered confidential and/or
proprietary.  If the Confidential Information is provided orally, the disclosing
party shall clearly identify it as being confidential and/or proprietary at the
time of disclosure.
 
       B.           The Confidential Information shall only be disclosed to the
parties’ respective Agents on a “need to know” basis;
 
       C.           The Agents shall have the same obligations of
confidentiality as the parties; and
 
       D.           The Confidential Information shall be protected in the same
manner as the receiving party protects its own proprietary and Confidential
Information.
 
4.           Notwithstanding the foregoing, the parties agree that the
Confidential Information shall not be deemed to include information which:
 
A.           was previously known by the receiving party;
B.           is in or falls into the public domain through no wrongful act of
the receiving party;
C.           is rightfully received from a third-party without restriction; or
D.           is independently developed by the receiving party or any of its
divisions, subsidiaries or affiliates.
 
5.           The parties acknowledge that this Agreement shall not be construed
as (I) granting or conferring any rights, by license or otherwise, in any
Confidential Information disclosed, or (ii) evidencing the intent of either
party to purchase or sell products or services of the other.
 
6.           The parties and their respective Agents shall use the Confidential
Information solely for the purpose set forth herein and shall not any time,
whether during discussions or for a period of three (3) years following the
termination of such discussions, regardless of whether the discussions result in
a business relationship, without the prior written consent of the disclosing
party, directly or indirectly, disseminate, divulge, disclose to any person or
entity, or copy, for any purpose whatsoever, or use for any purpose not covered
by the Agreement, any of the Confidential Information which has been obtained by
or disclosed to it.
 
7.           Upon receipt of a written request from the disclosing party, the
receiving party or parties shall promptly return all written or documentary
Confidential Information to the disclosing party.
 
8.           In the event of a breach or threatened breach by any party or its
Agents of any of the provisions of this Agreement, the party damaged or injured
by such breach or threatened breach, in addition to and not in limitation of any
other rights to remedies, is entitled to a permanent injunction in order to
prevent or to restrain any further breach.
 
 
A-6

--------------------------------------------------------------------------------

 
9.           This Agreement shall be binding upon the parties hereto and their
respective Agents, successors and assigns, and inure to the benefit of the
parties and their respective successors and assigns.
 
10.           The provisions of this Agreement shall be deemed severed, and the
validity or enforcement of any one or more of the provisions hereof shall not
affect the validity and enforcement of the other provisions hereof.
 
11.           The parties warrant to each other that they each have full power
and authority to execute this Agreement for and on behalf of themselves and/or
their respective companies.
 
12.           Any notice required to be given hereunder shall be sufficient if
in writing, and sent by certified mail, return receipt requested, first-class
postage prepaid to the other party or parties at their respective addresses as
set forth above.
 
13.           This Agreement contains the entire agreement and understanding of
the parties with respect to the covenant against disclosure of the Confidential
Information and no representation, promises, agreements or understandings,
written or oral, not herein contained shall be of any force or effect.  No
amendment or modification hereof shall be valid or binding unless the same is in
writing and signed by the party against who enforcement is sought.
 
14.           This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of California.
 
 
IN WITNESS WHEREOF, the parties have fully executed this Agreement as of the day
and year first above written.
 
 
 
INTERNET MEDIA SERVICES, INC.  
 
WESTERN PRINCIPAL PARTNERS LLC
LEGALSTORE.COM
   
RAYMOND MEYERS
           
 
 
 
Authorized Representative         Company Officer              Print Name     
Print Name              Title                   Date       
         Title                  Date 

 
 
 
A-7

--------------------------------------------------------------------------------

 
 
Exhibit C
 
NON-COMPETE AGREEMENT
 
This NON-COMPETITION AGREEMENT, dated as of March 7, 2013 (this “Agreement”), by
and between Western Principal Partners, a California Limited Liability
corporation (“Buyer”), and Internet Media Services, Inc., a Delaware corporation
(“Seller”) and Raymond Meyers, an individual located at 1507 7th Street, #425
Santa Monica, CA 90401 (“Indemnitor” or “Stockholder”).  All capitalized terms
used in this Agreement, and not otherwise defined, shall have the respective
meanings set forth in Exhibit A of the Stock Purchase Agreement, being executed
among the parties hereto.
 
WITNESSETH
 
WHEREAS, Internet Media Services, Inc. (“Seller”) desires to sell to Buyer, and
Buyer desires to purchase from Seller, all the Shares issued and outstanding of
LegalStore.com, an ecomerce distribution company of legal related supplies (the
“Business”), upon the terms and subject to the conditions of the Stock Purchase
Agreement;
 
WHEREAS, on the Closing Date, Buyer will pay to Seller, on the terms and subject
to the conditions set forth in the Stock Purchase Agreement, the consideration
in the amount set forth in Sections 1.2, 1.5 and 1.6 of the Stock Purchase
Agreement in exchange for, among other things, (i) the Purchased Stock, (ii)
Seller’s and Stockholder’s agreements and obligations under the Stock Purchase
Agreement and (iii) Seller and Stockholder entering into this Agreement;
 
WHEREAS, Buyer may suffer damages, including the loss of profits, if (i)
Stockholder engaged in any activity that is competitive with the Business or
solicited the termination of the Business’s relationships with its suppliers,
customers or employees or (ii) Stockholder does not treat and hold as
confidential all Intellectual Property Rights and other information related to
the Business;
 
WHEREAS, the execution by Seller and Stockholder of this Agreement is a
condition precedent to the consummation by Buyer of the transactions
contemplated by the Stock Purchase Agreement;
 
WHEREAS, it is the interest of Seller and Stockholder that the transactions
contemplated by the Stock Purchase Agreement be consummated; and
 
WHEREAS, this Agreement has been reached in good faith in arms-length
negotiations;
 
NOW, THEREFORE, in consideration of the foregoing, the execution of the Purchase
Documents, the substantial and material financial performance of Buyer pursuant
to the Purchase Documents without triggering a continuing, uncured financial
default and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller and Stockholder
hereby agree as follows:
 
 
A-8

--------------------------------------------------------------------------------

 
ARTICLE 1
  
NON-COMPETITION
 
1.1 Non-Competition.   Seller and Stockholder hereby covenants and agrees that
for a period of three (3) years after the Closing (the “Restricted Period”),
Seller and Stockholder shall not in any way engage, directly or indirectly, in
any business anywhere in the world in an activity competitive with the Business,
without the prior written consent of Buyer, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
director, employee, partner, stockholder, independent contractor, principal,
consultant or otherwise, on his own behalf or for the benefit of any Person that
competes with the Business, Buyer, any of Buyer’s Affiliates or Seller in
manufacturing, producing, supplying, marketing or distributing products or
services of the kind manufactured, produced, supplied, marketed and distributed
to the kinds of customers of the Business, Buyer, or any of Buyer’s Affiliates
or Seller as of the Closing Date; provided, however, that, for the purposes of
this Section 1.1, ownership of securities having no more than 1% percent of the
outstanding voting power of any competitor which are listed on any national
securities exchange shall not be deemed to be in violation of this Section 1.1
as long as the Stockholder owning such securities has no other connection or
relationship with such competitor.
 
1.2 Non-Solicitation of Customers.  Seller and Stockholder hereby covenants and
agrees that, during the Restricted Period, Seller and Stockholder shall not in
any way, directly or indirectly, on his own behalf, or for the benefit of any
other Person, for any reason, accept business for the products or services of
the kind manufactured, marketed, produced or supplied with respect to the
Business from, or interfere in any manner with Buyer’s business relationship
with, any present or former customer of the Business.  Without limiting the
generality of the foregoing, Seller and Stockholder shall not solicit or induce,
or attempt to solicit or induce, business for the products or services of the
kind manufactured, marketed, produced or supplied with respect to the Business
as of Closing Date (directly or indirectly through any Person) from any present
or former customer of the Business as of the Closing Date.
 
1.3 Non-Interference with the Business.  Seller and Stockholder hereby covenants
and agrees that, during the Restricted Period, Seller and Stockholder shall not
in any way, directly or indirectly, solicit, induce or influence, or otherwise
assist any other Person in soliciting, inducing or influencing any supplier,
lender, lessor or any other Person who has a business relationship with Buyer or
any of its Affiliates to either refrain from entering into, or to discontinue or
reduce the extent of, any relationship with Buyer or any of its Affiliates.
 
1.4 Non-Solicitation of Employees.  Seller and Stockholder hereby covenants and
agrees that, during the Restricted Period, Seller and Stockholder shall not in
any way, directly or indirectly, interfere with, entice, induce, assist,
encourage, influence or recruit  or attempt to interfere with, entice, induce,
assist, encourage, influence or recruit any Acquired Employees to leave the
employ of Buyer or, as the case may be, any of its Affiliates or violate the
terms of their contracts, or any employment arrangements, with Buyer or, as the
case may be, any of its Affiliates.
 
1.5 Extension of Restricted Period. The Restricted Period shall be extended by
the length of any period during which Seller and Stockholder is in breach of the
terms of this ARTICLE 1.  For the avoidance of doubt, the parties hereby agree
that during Stockholder’s assistance with the transition of the operation of
LegalStore.com with Buyer any activities engaged in by Stockholder within the
scope of his assistance and thereby, in furtherance of his assistance duties and
responsibilities, shall not constitute or be deemed a breach of this Agreement.
 
 
A-9

--------------------------------------------------------------------------------

 
 
ARTICLE 2
 
CONFIDENTIALITY
 
(a) Seller and Stockholder agrees to:  (i) treat and hold as confidential (and
not disclose or provide access to any Person to) all Intellectual Property
Rights, and information relating to product development, customers, suppliers,
pricing and marketing plans, policies and strategies, employees, consultants,
operations and all other confidential or proprietary information with respect to
the Business (“Confidential Information”), except as may be required by
applicable law, in which event Seller and Stockholder agrees to furnish only
that portion of such confidential information which Seller and Stockholder
reasonably believes is legally required to be provided and exercise its
reasonable efforts to obtain assurances that confidential treatment will be
accorded such information, and (ii) in the event that Seller and Stockholder,
any of its Affiliates or any such agent, representative, employee, officer or
director becomes legally compelled to disclose any such information, provide
Buyer with prompt written notice of such requirement so that Buyer may seek a
protective order or other remedy (in which event, Seller and Stockholder will
cooperate with such efforts to the extent commercially reasonable).
 
(b) Except as required to be retained under applicable law, Seller and
Stockholder agrees to furnish promptly following the Closing to Buyer any and
all copies (in whatever form or medium) of all Confidential Information then in
the possession of Seller and Stockholder or any of its Affiliates and its and
their respective employees, officers and directors and to destroy any and all
additional Confidential Information included in any analyses, compilations,
studies or other documents prepared by or on behalf of Seller and Stockholder,
in whole or in part, on the basis thereof except for that Confidential
Information used by the Seller and Stockholder in the consummation and
enforcement of the transactions contemplated by the Stock Purchase Agreement.
 
(c) This ARTICLE 2 shall not apply to, and the term “Confidential Information”
shall not include, any information that is independently developed by Seller and
Stockholder after the Closing, is or becomes publicly available through no fault
of Seller and Stockholder, or is obtained by Seller and Stockholder after the
Closing from a third party not known by Seller and Stockholder to be under any
obligation not to disclose such information and which the receiving party has no
reason to believe is not otherwise publicly available provided, however, that
once Seller and Stockholder is advised that information obtained under such
circumstance is indeed confidential hereunder, this ARTICLE 2 shall thereafter
apply to such information.
 
 
 
A-10

--------------------------------------------------------------------------------

 
 
ARTICLE 3
 
MISCELLANEOUS
 
3.1 Reasonableness.  Seller and Stockholder acknowledges that the covenants set
forth in ARTICLE 1 and ARTICLE 2 are an essential element of this Agreement, the
Stock Purchase Agreement and the transactions contemplated hereby and thereby
and that, but for this Agreement, Buyer would not have entered into the
transactions contemplated by the Stock Purchase Agreement. Seller and
Stockholder further acknowledges that the covenants set forth in ARTICLE 1 and
ARTICLE 2 constitute independent covenants and shall not be affected by
performance or nonperformance of any other provision of this Agreement or any
non-financial term in the Stock Purchase Agreement by Buyer.  In the event of a
material breach or default of any of Buyer’s financial obligations under the
Stock Purchase Agreement, Seller and Stockholder shall give prior written notice
to Buyer setting out the details of any such breach or default and Buyer, in
order to avoid termination of this Agreement by Seller and Stockholder, shall
within thirty (30) days from and after delivery of said written notice either
(i) cure said default or (ii) present reasonable assurance and evidence, in the
form of a firm plan and/or firm commitment to cure said breach or default within
a reasonable time period and such breach or default is in fact cured within such
time period. Seller and Stockholder has independently consulted with his counsel
and after such consultation agrees that the covenants set forth in ARTICLE 1 and
ARTICLE 2 are reasonable and proper.
 
3.2 Remedies; Specific Performance.  Seller and Stockholder hereby acknowledges
that a breach of any of its obligations under this Agreement may result in
irreparable damage to Buyer, and, without limiting other remedies which may
exist for a breach of the specific provisions relating to such obligations
Seller and Stockholder agrees that the applicable provisions relating to such
obligations may be enforced by temporary restraining order, temporary
injunction, and permanent injunction restraining violation hereof to the extent
permitted by law, pending or following trial on the merits.
 
3.3 Successors and Assigns.  All covenants and agreements set forth in this
Agreement and made by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party, whether or not
so expressed, except that (a) Seller and Stockholder may not assign or transfer
any of his rights or obligations under this Agreement without the prior consent
in writing of Buyer and (b) Buyer shall be entitled to assign all or part of its
rights and obligations under this Agreement to one or more wholly-owned
Affiliates of Buyer.
 
3.4 Notices.  All notices, requests, demands, consents and communications
necessary or required under this Agreement shall be made in the manner
specified, or, if not specified, shall be delivered by hand or sent by
registered or certified mail, return receipt requested, or by telecopy (receipt
confirmed) to:
 
If to Buyer:
 
Western Principal Partners
350 South Grand Ave
Suite 2250
Los Angeles, CA 90071
Attention:  Mr. Michael Turcich
Fax:  (213) 680-3535
 
With copies to:
 
International Lawyers PC
350 South Grand Ave suite 2250
Los Angeles, CA 90071
Attention Sudeok Jang, Esq.
Fax: 415 651-9524
 
 
If to [Stockholder]:
 
Mr. Raymond Meyers
1507 7th Street #425
Santa Monica, CA 90401
Fax: (8000 467-1496
 
 
If to Seller:
 
Internet Media Services, Inc.
1507 7th Street #425
Santa Monica, CA 90401
Attention: Mr. Raymond Meyers
Fax: (8000 467-1496
 
 
With copies to:
 
Law Offices of Gary A. Agron
5445 DTC Parkway #521
Englewood, CA 80111
Attention: Gary Agron, Esq.
Fax: (303) 770-7257
 
All such notices, requests, demands, consents and other communications shall be
deemed to have been duly given or sent two (2) days following the date on which
mailed, or on the date on which delivered by hand, by nationally recognized
overnight delivery service or by facsimile transmission (receipt confirmed), as
the case may be, and addressed as aforesaid.
 
 
A-11

--------------------------------------------------------------------------------

 
3.5 Governing Law.  This Agreement shall be governed by and be construed in
accordance with the laws of the State of California.
 
3.6 Modification.  No change or modification of this Agreement shall be of any
force unless such change or modification is in writing and has been signed by
all parties to this Agreement.
 
3.7 Waivers.  No waiver of any breach of any of the terms of this Agreement
shall be effective unless such waiver is in writing and signed by the Person
against whom such waiver is claimed.  No waiver of any breach shall be deemed to
be a waiver of any other or subsequent breach.
 
3.8 Severability.  In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason in any jurisdiction, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected, it being intended that each of parties’ rights and privileges shall
be enforceable to the fullest extent permitted by law, and any such invalidity,
illegality and unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  In addition, if
any provision of this Agreement shall be adjudged to be excessively broad as to
duration, geographical scope, activity or subject, the parties hereto intend
that such provision shall be deemed modified to the minimum degree necessary to
make such provision valid and enforceable under applicable law and that such
provision shall thereafter be enforced to the fullest extent
possible.  Notwithstanding the foregoing, if any provision is so held to be
invalid, illegal or unenforceable and if the result of the severance of such
provision is that the relative economic benefits originally intended by the
parties hereto would be materially affected, then the parties hereto agree to
amend this Agreement in order to reflect, restore and reinstate, to the greatest
extent possible, the relative economic benefits originally intended among the
parties hereto.
 
3.9 Counterparts.  This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which together shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
 
 
A-12

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
 
BUYER:
 
WESTERN PRINCIPAL PARTNERS LLC
 
By:  _____________________________     
Name: Michael Turcich, Managing Member
 
STOCKHOLDER:
 
By: __________________________
 
Raymond Meyers, Individual
 
 SELLER:
 
INTERNET MEDIA SERVICES
 
                                                      

                       __________________________
 Raymond Meyers, President
 
 
 

--------------------------------------------------------------------------------