Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

by and among

 

JANEL CORPORATION,

 

indCo, inc.,

 

and

 

tennessee valley ventures ii, l.p

 

Dated as of March 21, 2016

Effective as of March 1, 2016

 

 

 

 

Table of Contents

 

    Page       Article I PURCHASE AND SALE OF THE STOCK; CLOSING 1 Section 1.1
Transfer of Stock; Further Assurances 1 Section 1.2 Closing 1 Section 1.3
Purchase Price and Payment 1 Section 1.4 Post-Closing Adjustments 3 Section 1.5
Withholding 4 Section 1.6 Purchase Price 4       Article II REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND TVV 5 Section 2.1 Organization and Power 5 Section
2.2 Authorization 5 Section 2.3 Non-Contravention 6 Section 2.4 Capitalization 6
Section 2.5 Subsidiaries and Investments 6 Section 2.6 Financial Statements;
Accounting Controls 6 Section 2.7 Absence of Undisclosed Liabilities 6 Section
2.8 Absence of Certain Developments 7 Section 2.9 Accounts Receivable; Accounts
Payable. 8 Section 2.10 Transactions with Affiliates 8 Section 2.11 Title to and
Encumbrances on Properties 8 Section 2.12 Tax Matters 9 Section 2.13 Certain
Contractual Obligations 10 Section 2.14 Intellectual Property 11 Section 2.15
Litigation 11 Section 2.16 Employee and Labor Matters 11 Section 2.17 Company
Licenses; Compliance with Laws 12 Section 2.18 Employee Benefits 12 Section 2.19
Insurance Coverage 13 Section 2.20 Investment Banking; Brokerage 13 Section 2.21
Environmental Matters 13 Section 2.22 Suppliers; Customers 14 Section 2.23
Indebtedness 14 Section 2.24 Illegal Payments 14 Section 2.25 Products. 14
Section 2.26 Full Disclosure 14       Article III REPRESENTATIONS AND WARRANTIES
OF TVV 14 Section 3.1 Stock; Closing Date Payment. 14 Section 3.2 Authority 15
Section 3.3 No Conflict; Consents 15 Section 3.4 Brokers 15 Section 3.5
Litigation 15       Article IV REPRESENTATIONS AND WARRANTIES OF THE BUYER 15
Section 4.1 Organization and Power 15 Section 4.2 Authorization 15 Section 4.3
Non-Contravention 16 Section 4.4 Brokers 16 Section 4.5 Litigation 16

 

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Section 4.6 Hennis Stock Redemption 22       Article V ADDITIONAL AGREEMENTS 16
Section 5.1 Press Releases 16 Section 5.2 Tax Matters 16 Section 5.3 Books and
Records 18 Section 5.4 Further Action 18 Section 5.5 Non-Disclosure,
Non-Competition and Non-Solicitation 18 Section 5.6 General Waiver and Release
19       Article VI SURVIVAL; INDEMNIFICATION 19 Section 6.1 Survival of
Representations, Warranties and Covenants 19 Section 6.2 Indemnification 20
Section 6.3 Notice; Payment of Losses; Defense of Claims 22 Section 6.4
Characterization of Indemnity Payments 23 Section 6.5 Limitation on Contribution
and Certain Other Rights; No Circular Indemnity; Waiver of Rights 24 Section 6.6
Exclusivity of Indemnification 24       Article VII GENERAL PROVISIONS 24
Section 7.1 Notices 24 Section 7.2 Disclosure Schedules 25 Section 7.3
Assignability; Binding Agreement; Third Party Beneficiary 25 Section 7.4
Severability 25 Section 7.5 No Agreement Until Executed 25 Section 7.6 Certain
Definitions 25 Section 7.7 Interpretation 29 Section 7.8 Fees and Expenses 29
Section 7.9 Governing Law 29 Section 7.10 Specific Performance 29 Section 7.11
Venue; Consent to Jurisdiction 30 Section 7.12 Mutual Drafting 30 Section 7.13
Integration 30 Section 7.14 Counterparts 30 Section 7.15 Amendments, Waivers and
Consents 30

 

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ANNEXES   Annex A List of Defined Terms     EXHIBITS   Exhibit A Stock Exhibit B
Form of Escrow Agreement Exhibit C Sample Net Working Capital Calculation    
SCHEDULES   Schedule 1.3(b) Estimated Indebtedness Schedule 2.3
Non-Contravention Schedule 2.4 Capitalization Schedule 2.5 Loans Schedule 2.6(a)
Financial Statements Schedule 2.6(b) Exceptions to Financial Statements Schedule
2.7 Absence of Undisclosed Liabilities Schedule 2.8 Absence of Certain
Developments Schedule 2.10 Transactions with Affiliates Schedule 2.11(a) Leased
Real Properties Schedule 2.11(b) Title to and Encumbrances on Properties
Schedule 2.13(a) Certain Contractual Obligations Schedule 2.13(b) Noncompliance
with Material Contracts Schedule 2.14 Intellectual Property Schedule 2.15
Litigation Schedule 2.16 Employee and Labor Matters Schedule 2.17 Company
Licenses; Compliance with Laws Schedule 2.18 Employee Benefits Schedule 2.19
Insurance Coverage Schedule 2.20 Investment Banking; Brokerage Schedule 2.21
Environmental Matters Schedule 2.22 Suppliers; Customers Schedule 2.23
Indebtedness Schedule 2.25(a) Product Warranties Schedule 2.25(b) Customer
Pricing Schedule 3.3 No Conflicts; Consents

 

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STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT (this “Agreement”) is dated as of March 21, 2016,
by and among JANEL CORPORATION, a Nevada corporation (the “Buyer”), INDCO, INC.,
a Tennessee corporation (the “Company”), and Tennessee Valley Ventures II, L.P.,
a Delaware limited partnership (“TVV”). Certain terms used in this Agreement are
defined in Section 7.6 hereof. An index of defined terms used in this Agreement
is attached as Annex A hereto.

 

WHEREAS, TVV and C. Mark Hennis (“Hennis”) (collectively, the “Stockholders”)
own beneficially and of record all of the outstanding shares of common stock of
the Company, with TVV owning 97.07% of the outstanding shares of common stock of
the Company; and

 

WHEREAS, TVV desires to sell to the Buyer, and the Buyer desires to purchase
from TVV, the 601,042 shares of common stock of the Company set forth under the
heading “Shares of Stock” on Exhibit A attached hereto (the “Stock”) on the
terms and conditions set forth herein (the “Stock Purchase”).

 

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

 

Article I
PURCHASE AND SALE OF THE STOCK; CLOSING

 

Section 1.1           Transfer of Stock; Further Assurances. Subject to the
terms and conditions set forth herein, at the Closing, the Buyer shall purchase,
acquire and accept from the TVV, and TVV shall sell, transfer, assign, convey
and deliver to the Buyer, all right, title and interest in and to the Stock,
free and clear of any and all Encumbrances. For the avoidance of doubt, the
Stock so purchased does not include the 18,125 shares of common stock of the
Company set forth under the heading “Shares of Rollover Stock” on Exhibit A,
which shall be retained by Hennis as set forth on Exhibit A. TVV shall on the
Closing Date execute and deliver to the Buyer and the Company stock certificates
accompanied by executed stock powers sufficient to transfer, convey, and assign
the Stock to the Buyer.

 

Section 1.2           Closing. The closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place concurrently with the execution
of this Agreement on the date hereof (the “Closing Date”). Notwithstanding the
actual Closing Date, the Closing shall be effective as of 12:01 a.m. (Eastern
Time) on March 1, 2016 (the “Effective Date”). In lieu of an in person Closing,
the Closing may instead be accomplished by facsimile or email (in PDF format)
transmission to the respective offices of legal counsel for the parties of the
requisite documents, duly executed where required, delivered upon actual
confirmed receipt.

 

Section 1.3           Purchase Price and Payment.

 

(a)          The parties hereby agree that, at the Closing and in consideration
of the sale by TVV to the Buyer of the Stock and in reliance upon the
representations and warranties of the parties herein contained and subject to
the satisfaction of all of the conditions contained herein, the Buyer shall pay
to TVV an aggregate amount of cash (the “Closing Date Payment”) equal to:

 

(i)          $11,000,000, which includes a $50,000 non-refundable amount
deposited by Buyer with McKenzie Laird, PLLC on March 15, 2016; plus

 

(ii)         an amount equal to the Estimated Cash and Cash Equivalents (as
defined in Section 1.3(e)); plus

 

(iii)        $100,000, minus the amount of the loan payment made to Pinnacle
Bank on March 1, 2016, as consideration for the period from March 1, to the
Closing Date; plus

 

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(iv)        if the Estimated Working Capital (as defined in Section 1.3(e)) is
greater than the Target Working Capital, then an amount equal to the difference
between the Estimated Working Capital and the Target Working Capital; minus

 

(v)         an amount equal to the Estimated Indebtedness (as defined in Section
1.3(e)); minus

 

(vi)        an amount equal to the Estimated Company Expenses (as defined in
Section 1.3(e)); minus

 

(vii)       if the Estimated Working Capital is less than the Target Working
Capital, then an amount equal to the difference between the Target Working
Capital and the Estimated Working Capital; minus

 

(viii)      the Escrow Amount (as defined in Section 1.3(d)); and minus

 

(ix)         the Rollover Amount.

 

(b)          At the Closing, the Buyer shall, on behalf of the Company, repay,
or shall cause to be repaid, the Estimated Indebtedness set forth on Schedule
1.3(b). The Buyer and the Company will cooperate in arranging for such repayment
and shall take such reasonable actions as may be necessary to facilitate such
repayment and to facilitate the release, in connection with such repayment, of
any Encumbrances securing the Indebtedness.

 

(c)          At the Closing, the Buyer shall, on behalf of the Company or TVV,
pay all Estimated Company Expenses.

 

(d)          At the Closing, Buyer shall deposit $500,000.00 (the “Escrow
Amount”) into an interest-bearing escrow account at Fifth Third Bank (the
“Escrow Agent”). The Escrow Agent shall hold the Escrow Amount and all interest
and other amounts earned thereon in an escrow account (the “Escrow Account”) for
purposes of securing any amounts payable by TVV on account of indemnification
obligations under Section 6.2(a) hereof and certain other amounts payable
hereunder in accordance with this Agreement and the agreement among TVV, the
Buyer, and the Escrow Agent in substantially the form set forth in Exhibit B
attached hereto (the “Escrow Agreement”).

 

(i)          Within five (5) Business Days following the ninetieth (90th) day
after the Closing Date (the “Release Date”), the Escrow Amount, minus (x) the
amount of any Losses previously offset against the Escrow Amount pursuant to the
Escrow Agreement and Section 6.3 hereof, minus (y) the amount of any costs and
expenses previously paid out of the Escrow Account in accordance with this
Agreement, and minus (z) the amount of any indemnity claims asserted by the
Buyer Indemnified Parties in good faith pursuant to Section 6.2 prior to the
Release Date and which remain in dispute as of the Release Date (any amount
described in clause (z) of this sentence, an “Unresolved Amount”), shall be
released from the Escrow Account and paid over to TVV, by confirmed wire
transfer of immediately available funds, with the costs of such disbursement
paid from the Escrow Account. In the event it is finally determined, in
accordance with Article VI, that any Unresolved Amount withheld from release
pursuant to the preceding sentence is not subject to indemnification by the
Seller Indemnifying Parties under Section 6.2, such amount shall be released
from the Escrow Account and paid over to TVV, by confirmed wire transfer of
immediately available funds, within five (5) Business Days following such
determination.

 

(ii)         The Buyer, on one hand, and TVV, on the other hand, shall each pay
fifty percent (50%) of the fees, expenses and costs associated with establishing
and maintaining the Escrow Account in accordance with this Agreement and the
Escrow Agreement, provided that the costs of disbursements shall be paid from
the Escrow Account.

 

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(iii)        The Buyer and TVV agree to promptly provide the Escrow Agent with
jointly executed written instructions to disburse or retain the Escrow Amount
(or a portion thereof, as applicable) from the Escrow Account in accordance with
this Agreement and the Escrow Agreement.

 

(e)          The Company has delivered to the Buyer a statement (the “Estimated
Closing Statement”) containing the Company’s good faith estimates of the
Company’s (i) Cash and Cash Equivalents as of the Adjustment Time (the
“Estimated Cash and Cash Equivalents”), outstanding Indebtedness as of the
Adjustment Time, excluding the indebtedness evidenced by the Hennis Redemption
Note (the “Estimated Indebtedness”), Net Working Capital, which shall be
consistent with the sample calculation set forth in Exhibit C, as of the
Adjustment Time (the “Estimated Working Capital”), outstanding Company Expenses
as of the Adjustment Time (the “Estimated Company Expenses”), and (ii)
calculation of the Closing Date Payment based on such estimates.

 

Section 1.4           Post-Closing Adjustments.

 

(a)          Within ninety (90) days following the Closing Date, the Buyer shall
prepare and deliver to TVV a written statement (the “Closing Statement”) which
shall include (i) the Buyer’s calculations of the Company’s (A) Cash and Cash
Equivalents as of the Adjustment Time, (B) Indebtedness outstanding as of the
Adjustment Time, excluding the indebtedness evidenced by the Hennis Redemption
Note, (C) Net Working Capital as of the Adjustment Time and (D) Company Expenses
outstanding as of the Adjustment Time and (ii) the Buyer’s calculation of the
Closing Date Payment based upon the Closing Statement (including provision for a
2.93% adjustment for the Rollover Amount). The Closing Statement (and the
components thereof) will be prepared and determined in accordance with GAAP as
modified by the definitions of Cash and Cash Equivalents, Indebtedness
(excluding the Hennis Redemption Note), Company Expenses and Net Working Capital
(and the Net Working Capital calculation shall be consistent with the sample
working capital calculation set forth on Exhibit C). The preparation of the
Closing Statement shall be for the sole purpose of determining the Final Closing
Date Payment (as defined below). TVV shall have thirty (30) days following the
receipt of the Closing Statement (the “Review Period”) to review the same. On or
before the expiration of the Review Period, TVV shall deliver to the Buyer a
written statement setting forth in reasonable detail (y) any specific item on
the Closing Statement which TVV believes has not been prepared in accordance
with this Agreement and the correct amount of such specific item and (z) TVV’s
alternative calculation of the Closing Date Payment (the “Closing Statement
Response Notice”). Any items not specifically objected to in the Closing
Statement Response Notice will be deemed to have been accepted by, and will be
binding and conclusive on, TVV on the thirtieth (30th) day following delivery of
the Closing Statement to TVV. If TVV does not deliver such Closing Statement
Response Notice to the Buyer within the Review Period, TVV shall be deemed to
have accepted the Closing Statement in its entirety and the Closing Statement
(and the determination of the Closing Date Payment set forth therein) shall be
binding and conclusive on the parties and not subject to appeal.

 

(b)          The amount of the Closing Date Payment set forth on the Closing
Statement, as accepted or deemed accepted under Section 1.4(a) or as determined
in accordance with Section 1.4(c), shall constitute the “Final Closing Date
Payment” for purposes of this Agreement.

 

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(c)          In the event that TVV delivers a Closing Statement Response Notice
within the Review Period, the Buyer and TVV shall in good faith attempt to
resolve any specific objections set forth in such Closing Statement Response
Notice. Any such specific objections which cannot be resolved between the Buyer
and TVV within thirty (30) days following the Buyer’s receipt of the Closing
Statement Response Notice shall be resolved in accordance with this Section
1.4(c); provided, that neither the Buyer nor TVV shall be permitted to raise any
objection to the Estimated Closing Statement or the Closing Statement, as
applicable, unless such objection is raised in the Closing Statement or the
Closing Statement Response Notice, respectively, as opposed to any amendment or
restatement thereof, none of which shall be permitted. Should TVV and the Buyer
not be able to resolve such specific objections set forth in the Closing
Statement Response Notice (such specific unresolved items, the “Outstanding
Disputed Items”), within the thirty (30) day period described above, either
party may submit only the Outstanding Disputed Items to Crowe Horwath LLP (the
“Accounting Referee”) for review and resolution, with instructions to complete
the same as promptly as practicable, but in any event within thirty (30) days of
its engagement. If any Outstanding Disputed Item is submitted to the Accounting
Referee for resolution, the Accounting Referee shall determine, based solely on
written submissions or presentations by the Buyer and TVV and their respective
Representatives and not by independent review, the value of the Outstanding
Disputed Items. In determining such amounts, the Accounting Referee: (A) shall
be bound by the principles set forth in this Section 1.4, and (B) shall not
assign a value to any item greater than the greatest value for such item claimed
by any party in the Closing Statement or the Closing Statement Response Notice,
as applicable, or less than the smallest value for such item claimed by any
party in the Closing Statement or the Closing Statement Response Notice, as
applicable. Such Accounting Referee shall review only the Outstanding Disputed
Items and shall deliver a written statement setting forth its resolution of the
dispute, which statement shall include its calculation of: (1) Cash and Cash
Equivalents as of the Adjustment Time, (2) Indebtedness outstanding as of the
Adjustment Time, (3) Net Working Capital as of the Adjustment Time, and (4)
Company Expenses outstanding as of the Adjustment Time and the Closing Date
Payment, each calculated using non-disputed items and the Accounting Referee’s
determinations of the Outstanding Disputed Items. Such calculations, absent
manifest error, shall be determinative of the Final Closing Date Payment and
shall be binding and conclusive on the parties and not subject to appeal. The
fees and costs of the Accounting Referee, if one is required, shall be payable
one-half (1/2) by the Buyer, on the one hand, and one-half (1/2) by TVV, on the
other hand.

 

(d)          In the event that the Final Closing Date Payment is less than the
Closing Date Payment, TVV shall pay such shortfall amount to the Buyer by wire
transfer of immediately available funds. In the event the Final Closing Date
Payment exceeds the Closing Date Payment, the Buyer shall pay to TVV an amount
in cash equal to such excess amount. Any payment due under this Section 1.4(d)
shall be made within five (5) Business Days of the determination of the Final
Closing Date Payment.

 

Section 1.5           Withholding. The Buyer shall be entitled to deduct and
withhold from the Purchase Price, including, for the avoidance of doubt, any
adjustment to the Purchase Price pursuant to Section 1.4, and any other payment
under this Agreement, any withholding Taxes or other amounts required under the
Code or any Law to be deducted and withheld. To the extent that any such amounts
are so deducted or withheld, such amounts will be treated for all purposes of
this Agreement as having been paid to the Person in respect of which such
deduction and withholding was made.

 

Section 1.6           Purchase Price. All amounts paid by the Buyer to or on
behalf of the Company or TVV under this Agreement and the Escrow Agreement,
including the Closing Date Payment, are referred to herein as the “Purchase
Price”.

 

Section 1.7           Deliveries at the Closing.

 

(a)          At the Closing, TVV shall deliver the following items to the Buyer:

 

(i)          a counterpart of this Agreement, duly executed by the Company and
TVV;

 

(ii)         the stock certificates representing the Stock and accompanied by an
appropriate stock power, duly executed by TVV;

 

(iii)        resignations of all directors and non-continuing officers of the
Company;

 

(iv)        the consents listed on Schedule 2.3, duly executed;

 

(v)         an officer’s Certificate of the Company certifying as to (A) its
Bylaws, as amended, (B) resolutions of each of the Company’s stockholders and
board of directors authorizing the transactions contemplated by this Agreement,
and (C) a good standing certificate issued as of a recent date by the Secretary
of State of the States of Tennessee and Indiana;

 

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(vi)        the Hennis Employment Agreement and the Wilberding Employment
Agreement, duly executed by Hennis and Kris Wilberding (“Wilberding”);

 

(vii)       the Escrow Agreement, duly executed by TVV;

 

(viii)      the Charter and all amendments thereto of the Company, duly
certified as of a recent date by the Secretary of State of Tennessee;

 

(ix)         documentation satisfactory to the Buyer to release all Encumbrances
(other than Permitted Encumbrances) on the Stock and the Company’s assets; and

 

(x)          An estoppel certificate and consent to assignment from the lessor
under each Leased Real Property in form and substance reasonably satisfactory to
the Buyer.

 

(b)          At the Closing, the Buyer shall deliver the following items to TVV:

 

(i)          the Hennis Employment Agreement and the Wilberding Employment
Agreement, duly executed by the Company;

 

(ii)         the Escrow Agreement, duly executed by the Buyer and the Escrow
Agent; and

 

(iii)        an officer’s Certificate of the Buyer certifying as to (A) its
Bylaws, as amended, (B) resolutions of the Buyer’s board of directors
authorizing the transactions contemplated by this Agreement, and (C) a good
standing certificate issued by the Secretary of State of the State of Nevada
dated within five (5) Business Days of the Closing.

 

Article II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND TVV 

 

In order to induce the Buyer to enter into this Agreement and the other
Transaction Agreements, the Company and TVV hereby jointly and severally make
the following representations and warranties contained in this Article II to the
Buyer.

 

Section 2.1           Organization and Power. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of Tennessee.
The Company has full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
Company is qualified to do business as a foreign entity in the State of Indiana
and is not required by any Law to be qualified or registered to do business as a
foreign corporation in any other jurisdiction. The Company has all required
corporate power and authority to enter into and perform this Agreement and the
other Transaction Agreements to which it is a party and to carry out the
transactions contemplated hereby and thereby. Copies of the charter and by-laws
or any other similar organizational or governing documents (collectively, the
“Organizational Documents”) of the Company have been delivered to the Buyer by
the Company and are correct and complete in all respects and no amendments
thereto are pending.

 

Section 2.2           Authorization. The Company has full right, authority,
power and legal capacity to enter into this Agreement and the other Transaction
Agreements executed and delivered by or on behalf of the Company, and to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and the other Transaction Agreements to which
the Company is a party have been duly authorized by all necessary corporate
action of the Company. This Agreement and the other Transaction Agreements
executed and delivered by or on behalf of the Company have been duly executed
and delivered by the Company, and, assuming due authorization, execution and
delivery of this Agreement and the other Transaction Agreements to which the
Company is a party by the other parties hereto and thereto, this Agreement and
such other Transaction Agreements to which it is a party constitute legal, valid
and binding obligations of the Company, enforceable in accordance with their
respective terms, subject only to General Enforceability Exceptions.

 

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Section 2.3           Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the other Transaction Agreements executed
and delivered by or on behalf of the Company, and the performance of the
transactions contemplated by this Agreement and such other Transaction
Agreements did not, do not and will not: (a) violate or result in a violation
of, conflict with or constitute or result in violation of or a default (whether
after the giving of notice, lapse of time or both) under any of the
Organizational Documents of the Company; (b) violate or result in a violation
of, conflict with or constitute or result in violation of or a default (whether
after the giving of notice, lapse of time or both) or loss of benefit under or
granted by, any provision of any Law, or any restriction imposed by any
Governmental Authority applicable to the Company; (c) except as set forth on
Schedule 2.3, require the Company to provide any notice to, make any declaration
or filing with, or obtain the consent or approval of, any Governmental Authority
or other Person; (d) violate or result in a violation of or constitute a default
(whether after the giving of notice, lapse of time or both) under, give rise to
or accelerate any obligation under, or give rise to a right of termination of or
result in a loss of benefit under any agreement, contract, instrument, mortgage,
lien, lease, permit, license, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which the Company is a party or by
which any of the Company’s assets or the Stock is bound, or result in the
creation or imposition of any Encumbrance on any of the Company’s assets or the
Stock; or (e) result in TVV having the right to exercise dissenters’ appraisal
rights.

 

Section 2.4           Capitalization. Schedule 2.4 sets forth all of the
authorized Equity Interests of the Company. All of the issued and outstanding
Equity Interests of the Company are owned beneficially and of record as set
forth on Schedule 2.4, free and clear of any Encumbrances. All of the issued and
outstanding Equity Interests of the Company have been duly and validly issued,
are fully paid and non-assessable and were issued in compliance with all
applicable securities Laws. Other than as set forth on Schedule 2.4, there are
no outstanding subscriptions, preemptive rights, rights of first refusal,
agreements, arrangements or commitments of any kind for or relating to the
issuance, sale, registration or voting of, or outstanding securities convertible
into or exchangeable for, any Equity Interests of the Company. The Company has
no obligation to purchase, redeem, or otherwise acquire any of its Equity
Interests. The powers, privileges and rights, and the qualifications,
limitations or restrictions thereof in respect of the Stock are as set forth in
the Organizational Documents delivered to the Buyer.

 

Section 2.5           Subsidiaries and Investments. The Company owns no Equity
Interests in any other Person and has no outstanding loans or advances to or
from any officer, director or Equity Interest holder of the Company. The Company
does not own, directly or indirectly, or have the right or obligation
(contingent or otherwise) to acquire, any Equity Interests in any other Person.

 

Section 2.6           Financial Statements; Accounting Controls; Financial
Projections.

 

(a)          The Company has delivered to the Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.6(a)
(collectively, the “Financial Statements”): (i) the audited balance sheet of the
Company as of December 31, 2014 (the “Base Balance Sheet”) and the audited
statements of income, retained earnings, and cash flows for the year then ended,
(ii) the audited balance sheet of the Company as of December 31, 2013 and the
audited statements of income, retained earnings and cash flows for the year then
ended, (iii) the unaudited balance sheet of the Company as of December 31, 2015
and the unaudited statements of income and cash flows for the twelve (12) month
period then ended; and (iv) the unaudited balance sheet of the Company as of
February 29, 2016 and the unaudited statements of income and cash flows for the
two (2) month period then ended.

 

(b)          Except as set forth on Schedule 2.6(b) and, with respect to the
unaudited Financial Statements, subject to the absence of footnotes and normal
recurring year-end audit adjustments, (the effect of which will not be,
individually or in the aggregate, material in nature or amount), each of the
Financial Statements (including the notes thereto, if any) is in all material
respects accurate and complete, is consistent with the books and records of the
Company (which, in turn, are accurate and complete in all material respects),
has been in all material respects prepared in good faith and in accordance with
GAAP consistently applied, and presents fairly the financial condition of the
Company as of the respective dates thereof and the operating results, cash flows
and changes in stockholders’ equity of the Company for the periods covered
thereby.

 

Section 2.7           Absence of Undisclosed Liabilities. The Company does not
have any liabilities or obligations, of any nature, whether accrued, absolute,
contingent, asserted, unasserted, known or unknown, or otherwise, except
liabilities or obligations (a) reflected or reserved against in the Base Balance
Sheet, (b) current liabilities incurred in the ordinary course of business
reflected on the Closing Statement, or (c) set forth on Schedule 2.7.

 

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Section 2.8           Absence of Certain Developments. Since January 1, 2015,
the Company has conducted its business only in the ordinary course of business
and, except as set forth on Schedule 2.8, there has not been:

 

(a)          any change or event, by itself or in conjunction with all other
changes or events, that has had, or would reasonably be likely to have, a
material adverse effect on the assets, condition (financial or other),
properties, business, operations or prospects of the Company;

 

(b)          any Encumbrance placed on any of the properties of the Company,
other than Encumbrances for Taxes not yet due and payable or for Taxes being
contested in good faith by appropriate proceedings for which adequate reserves
have been made on the Financial Statements;

 

(c)          any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any properties or
assets by the Company, for at least $25,000 individually, and in each case
outside of the ordinary course of business;

 

(d)          any damage, destruction or loss of property, of at least $25,000 in
value, whether or not covered by insurance;

 

(e)          any declaration, setting aside or payment of any dividend or other
distribution by the Company in respect of the Equity Interests of the Company,
or any direct or indirect redemption, purchase or other acquisition by the
Company of Equity Interests;

 

(f)           except in the ordinary course of business, (i) any hiring,
resignation, termination or removal of any officer or employee of the Company,
or (ii) any increase in the compensation of any employee of the Company or any
promise or agreement to change the compensation of any employee of the Company;

 

(g)          any establishment, adoption, amendment or termination of any
Employee Benefit Program;

 

(h)          any issuance, sale or grant, or contract to issue, sell or grant
any Equity Interests of the Company or any options, warrants or other rights
with respect to the Equity Interests of the Company;

 

(i)           any payment or discharge of a material Encumbrance or material
liability of the Company, other than the payment or discharge of any Encumbrance
or liability in the ordinary course of business;

 

(j)           any change to any Tax election or any method of accounting for Tax
purposes, or any action in respect of Taxes (other than the payment of Taxes
when due in the ordinary course) or with any Governmental Authority;

 

(k)          any contingent liability incurred by the Company as guarantor with
respect to the obligations of others or any cancellation of any Indebtedness or
claim owing to, or waiver of any right of, the Company;

 

(l)           any obligation or liability incurred by the Company to any of its
officers, directors, managers, Equity Interests holders, or any loans or
advances made by the Company to any of its officers, directors, managers, Equity
Interest holders or employees other than compensation and benefits payable to
employees in the ordinary course of business;

 

(m)         any material change in accounting methods or practices of the
Company;

 

 7 

 

 

(n)         any material loss or material reduction, or, to the Knowledge of the
Company, development that could result in a material loss or material reduction,
of business with any material supplier or customer of the Company;

 

(o)         any termination of any agreement that would have met the definition
of Material Contracts;

 

(p)         any arrangements relating to any royalty, commission or similar
payment based on the revenues, profits, sales volume, production or collections
of the Company in each case in excess of $10,000 individually or in the
aggregate;

 

(q)         any regulatory action, or other proceeding commenced, or threatened
in writing by any Governmental Authority against the Company; or

 

(r)          any agreement for the Company to take any of the actions specified
in paragraphs (a) through (q) above.

 

Section 2.9           Accounts Receivable; Accounts Payable. 

 

(a)          All accounts receivable of the Company represent transactions
concluded for good and valuable consideration resulting from bona fide arm’s
length transactions in the ordinary course of business for the sale of products
or performance of services to third parties, are collectible, and will be
collected in full, net of reserves shown on the Closing Statement, in accordance
with their terms, are valid and enforceable claims, are properly categorized as
accounts receivable under GAAP and are not subject to any rights of set off or
counterclaims. Since January 1, 2015, the Company has collected its accounts
receivable, including pre-paid accounts and customer deposits, in the ordinary
course of its business and in a manner which is consistent with past practices
and has not materially changed its collection policies with respect to its
accounts receivable or accelerated any such collections, including the
collection of any pre-paid accounts or customer deposits.

 

(b)          All accounts payable and other payables of the Company arose in
bona fide arm’s length transactions in the ordinary course of business and no
such account payable or other payable is delinquent in its payment per its
terms. All lease payments, utilities, Taxes, payroll or other payables owed by
Company that were due in accordance with their terms on a date on or before the
Closing Date have been paid in full prior to Closing. Since January 1, 2015, the
Company has paid its accounts payable and other payables in accordance with
their terms and has not delayed any such payments.

 

Section 2.10         Transactions with Affiliates. Except as set forth on
Schedule 2.10, there are no Contractual Obligations, loans or other transactions
between the Company, on the one hand, and any of its Affiliates, present or
former Equity Interest holders, directors, managers, officers or employees, or
to the Knowledge of the Company, any Affiliate of any of such Persons, on the
other hand. No Affiliate of the Company, nor any of the Company’s current Equity
Interest holders, directors, managers, officers or employees, nor any Affiliate
of any such Person, owns directly or indirectly, on an individual or joint
basis, any interest in, or serves as an officer or director or in another
similar capacity of, any competitor, customer or supplier of the Company, or any
organization which has a material contract or arrangement with the Company.

 

Section 2.11         Title to and Encumbrances on Properties.

 

(a)          Schedule 2.11(a) sets forth a list of all real property leased by
the Company and the name of the tenant and landlord and the street address for
each such property (the “Leased Real Properties”). Except as set forth in
Schedule 2.11(a), no portion of any Leased Real Property is subleased to or
occupied by a third party. All leases relating to the Leased Real Property are
identified on Schedule 2.11(a). The Company has valid and enforceable leasehold
interests to the leasehold estate in the Leased Real Property and enjoys
peaceful and undisturbed possession of the Leased Real Property. The occupation
of and operation of the Company’s business at each Leased Real Property is a
permitted use under the lease of such Leased Real Property and all applicable
Laws, including local zoning ordinances. The Company does not own, and has never
owned, any real property.

 

 8 

 

 

(b)          The Company has good and (if applicable) transferable title or
leasehold interest (if applicable) to all of its assets, free and clear of any
Encumbrances, except for the Encumbrances set forth on Schedule 2.11(b). No
financing statement under the Uniform Commercial Code with respect to any of the
assets of the Company is active in any jurisdiction, except as set forth on
Schedule 2.11(b). All material tangible assets are in working order (reasonable
wear and tear excepted), have been maintained in a manner consistent with the
needs of the Company’s business and conform in all material respects with all
Laws. All leases of personal property to which the Company is a party are fully
effective and afford the Company peaceful and undisturbed possession and use of
the subject matter to the lease. The assets owned and leased by the Company are
sufficient for the conduct of the business of the Company as presently
conducted.

 

Section 2.12         Tax Matters.

 

(a)          The Company has timely and properly filed or caused to be filed all
federal, state and local Tax Returns required to be filed by it through the date
hereof with respect to any Taxes, and all such Tax Returns are true, correct and
complete in all material respects. The Company has paid or caused to be paid all
Taxes required to be paid by it through the date hereof, whether or not shown on
any Tax Return, and has made adequate provision for Taxes that are not yet due
and payable, for all taxable periods, or portions thereof, ending on or before
the date hereof on the appropriate books and records. The Company has delivered
to the Buyer prior to Closing true, correct and complete copies of all Tax
Returns for which the applicable statutory periods of limitations have not yet
expired.

 

(b)          No U.S. federal, state or local audits or other administrative
proceedings or other court proceedings are pending with regard to any Taxes or
Tax Returns of the Company. The Company has not received notice of any Tax audit
or of any proposed Tax deficiencies from any Governmental Authority. No
Governmental Authority is now asserting, or, to the Knowledge of the Company,
threatening to assert, against the Company any deficiency or claim for
additional Taxes. All deficiencies for Taxes asserted or assessed against the
Company have been paid in full or finally settled. The Company has not received
notice from a Governmental Authority in a jurisdiction where the Company does
not file Tax Returns to the effect that the Company is or may be subject to
taxation or Tax reporting requirements by that jurisdiction. The Company has not
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency which extension is
currently effective.

 

(c)          The Company has withheld and timely paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, Equity Interest holder, or other
third party. The Company has collected, remitted and reported to the appropriate
Governmental Authority all sales Taxes required to be so collected, remitted or
reported pursuant to all Laws. The Company has complied in all material respects
with all Laws relating to record retention (including, without limitation, to
the extent necessary to claim any exemption from sales Tax collection,
maintaining adequate and current resale certificates to support any such claimed
exemption, and with respect to payroll and other Tax withholding matters).

 

(d)          The Company is not a party to any agreement or arrangement
requiring indemnification, sharing or allocation of Taxes.

 

(e)          The Company has never been a member of an affiliated group of
corporations filing a combined federal income Tax return and the Company does
not have any liability for Taxes of any Person under Treasury Regulation
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

 

(f)          Neither TVV nor the Company is a foreign person within the meaning
of Section 1445 of the Code and Treasury Regulations Section 1.1445-2, and the
Company is and has always been a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

 

 9 

 

 

(g)          There are no Encumbrances for Taxes upon the assets of the Company,
except for Encumbrances relating to current Taxes not yet due or for Taxes being
contested in good faith by appropriate proceedings for which adequate reserves
have been made on the appropriate books and records.

 

(h)          The Company has not entered into, or otherwise participated
(directly or indirectly) in any “listed transaction” within the meaning of
Treasury Regulations Section 1.6011-4(b)(2) or any other “reportable
transaction” within the meaning of Treasury Regulations Section 1.6011-4(b).

 

(i)          The Company will not be required to include any item of income in,
or exclude any deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a taxable period ending on or before the Closing Date, (ii)
“closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or before the Closing Date, (iii) installment sale or open
transaction disposition made on or before the Closing Date, or (iv) prepaid
amount received on or before the Closing Date.

 

(j)          The Company has never engaged in trade or business activity outside
the United States and the Company is not subject to Tax in any non-U.S.
jurisdiction.

 

Section 2.13         Certain Contractual Obligations.

 

(a)          Schedule 2.13(a) contains a list of all Contractual Obligations to
which the Company is a party:

 

(i)          involving an aggregate commitment or payment of Twenty Thousand
Dollars ($20,000) or more by the Company to any other Person or by any other
Person to the Company;

 

(ii)         having a term in excess of twelve (12) months and is not cancelable
without penalty by the Company upon ninety (90) days or less prior notice;

 

(iii)        containing covenants limiting in any respect the freedom of the
Company to compete in any line of business or with any Person, including,
without limitation, any non-solicitation covenants;

 

(iv)        with any employee, officer, director, manager or Equity Interest
holder of the Company or, to the Knowledge of the Company, any of their
respective Affiliates;

 

(v)         relating to the licensing, distribution, development, purchase,
sale, use or servicing of the Intellectual Property of the Company;

 

(vi)        related to redemption or purchase agreements or other agreements
affecting or relating to the Equity Interests of the Company;

 

(vii)       with respect to any Indebtedness;

 

(viii)      with respect to any agreement involving fixed price or fixed volume
arrangements;

 

(ix)         with respect to any agreement that involves a sharing of revenues,
profits, losses, costs or liabilities by the Company with any other Person or
any royalty, dividend or similar arrangement based on the revenue or profits of
the Company;

 

(x)          with respect to any acquisition, merger or similar arrangement; or

 

(xi)         with respect to any Leased Real Property.

 

 10 

 

 

(b)          Each of the Contractual Obligations of the Company set forth on
Schedule 2.13(a) or any of the other schedules hereto (collectively, the
“Material Contracts”) is in full force and effect, is the legal, valid and
binding obligation of the Company and, to the Company’s Knowledge, each of the
other counterparties thereto, and is enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
General Enforceability Exceptions, and, subject to obtaining any authorizations,
waivers, consents and permits (all of which are disclosed on Schedule 2.3), will
continue to be so enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby in accordance
with its terms. Except as set forth on Schedule 2.13(b), neither the Company
nor, to the Company’s Knowledge, any of the counterparties thereto has committed
any breach or violation of or default under, or has repudiated any provisions of
any Material Contract nor has any event occurred that (with or without notice,
lapse of time or both) would constitute a breach or violation of or default
under any Material Contract. The Company has heretofore delivered to the Buyer
accurate and complete copies of each of the Material Contracts and, in each
case, all amendments, modifications and supplements thereto and waivers
thereunder. The Company has delivered an accurate description of all material
terms of each oral Material Contract and, in each case, all amendments and to
the Company’s Knowledge supplements thereto and waivers thereunder.

 

Section 2.14         Intellectual Property. Schedule 2.14 contains a complete
and accurate list of all Intellectual Property which is owned by, licensed by or
used by the Company and all agreements of the Company to license or use the
Intellectual Property used by the Company, other than generally available
commercial, unmodified, “off the shelf” software licenses of Intellectual
Property with a purchase price of less than $5,000. There are no pending or, to
the Knowledge of the Company, threatened proceedings asserting that the use of
the licensed Intellectual Property by the Company infringes upon or
misappropriates any Intellectual Property rights of any Person, except as set
forth on Schedule 2.14. The Company has not received any written notice or
allegation of invalidity, infringement, or misappropriation from any Person or
Governmental Authority with respect to any Intellectual Property rights, except
as set forth on Schedule 2.14. The Company’s business, as currently conducted
does not infringe the Intellectual Property rights of a third party, except as
set forth on Schedule 2.14. Each of the past and current employees, officers,
directors, managers, independent contractors or other service providers of the
Company has executed a valid and enforceable confidentiality and assignment of
inventions agreement with respect to all Intellectual Property of the Company,
except as set forth on Schedule 2.14.

 

Section 2.15         Litigation. Except as set forth on Schedule 2.15, since
January 1, 2012, there has been no arbitration, litigation, product liability,
warranty, malpractice or any other claim or governmental or administrative
proceeding or investigation pending or, to the Knowledge of the Company,
threatened in writing by or against the Company, or affecting the properties or
assets of the Company, or, as to matters related to the Company, by or against
any officer, director, manager, Equity Interest holder or employee of the
Company in their respective capacities in such positions, nor, to the Knowledge
of the Company, has there occurred any event nor does there exist any condition
on the basis of which any such claim may be asserted.

 

Section 2.16         Employee and Labor Matters. Schedule 2.16 sets forth: (a)
the name, title, current hourly rate or annual salary, full-time/part-time
status, exempt/non-exempt status, bonus for the year ending December 31, 2015,
and aggregate annual compensation for each current employee of the Company. The
Company is not delinquent in payments to any of its employees or independent
contractors for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed as of the date hereof or any
reimbursable amounts. The Company is and heretofore has been in compliance with
all Laws respecting labor, employment, fair employment practices, terms and
conditions of employment, occupational safety and health, and wages and hours.
There has been no “mass layoff” or “plant closing” within the meaning of the
Worker Adjustment and Retraining Notification Act of 1988, as amended (“WARN”),
and any similar state or local “mass layoff” or “plant closing” Law with respect
to the Company within three (3) years prior to Closing. The Company is not a
party to or otherwise bound by any collective bargaining agreement or other
Contractual Obligation with a labor union or labor organization. The Company is
not subject to any charge, demand, petition or representation proceeding seeking
to compel, require or demand it to bargain with any labor union or labor
organization nor, as of the date of this Agreement, is there pending or, to the
Knowledge of the Company, threatened any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving the Company. With respect to the
Company’s employment and labor practices and policies, (x) there is no
investigation, audit or review pending of which the Company has been notified in
writing (or, to the Knowledge of the Company, threatened) by any Governmental
Authority, and (y) there are no Orders before any Governmental Authority to
which the Company is a named party. The Company is not sponsoring any employee
to work in the United States or any other country under a visa or work
authorization, and no petition for admission of any alien under a non-immigrant
or other visa, or for transfer of sponsorship of any such employee, is currently
pending. Each employee of the Company is authorized to work in the United
States. The Company has current Forms I-9 for all employees of the Company who
work in the United States, and has complied with required processes with respect
to obtaining such Forms I-9.

 

 11 

 

 

Section 2.17         Company Licenses; Compliance with Laws. The Company holds,
and has held at all times since January 1, 2010, all licenses, permits,
approvals, authorizations, registrations and certifications of any Governmental
Authority that are required in order to permit the Company to own or lease its
properties and assets and to conduct its business under and pursuant to all
Laws. Schedule 2.17 sets forth a complete and correct list of all licenses,
permits, approvals, authorizations, registrations and certifications currently
in effect for the Company (the “Company Licenses”). Each Company License is
valid and in full force and effect. There is no investigation or proceeding
pending or, to the Knowledge of the Company, threatened in writing that could
result in the termination, revocation, suspension, modification or restriction
of any Company License or the imposition of any fine, penalty or other sanctions
for violation of any requirements relating to any Company License. Except as set
forth in Schedule 2.17, none of the Company Licenses will be affected in any
respect by the consummation of the transactions contemplated hereby. Neither the
Company nor, to the Company’s Knowledge, any employee of the Company, has ever
entered into or been subject to any Order with respect to any aspect of the
business, affairs, properties or assets of the Company or received any request
for information, notice, demand letter, administrative inquiry or formal
complaint or claim from any regulatory agency or other Governmental Authority
with respect to any aspect of the business, affairs, properties or assets of the
Company.

 

Section 2.18         Employee Benefits.

 

(a)          Schedule 2.18 lists every Employee Benefit Program maintained at
any time, or with respect to which the Company, or any of its ERISA Affiliates,
had any liability with respect to, during the past five (5) years. Each such
Employee Benefit Program has been maintained and administered in compliance with
its terms and with the requirements and provisions of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), the Code and other Law.

 

(b)          Each Employee Benefit Program that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination or
opinion letter from the Internal Revenue Service regarding its qualified status
and no event or omission has occurred which would adversely impact such
qualified status. Neither the Company nor any of its ERISA Affiliates has ever
maintained, sponsored or contributed to any employee benefit plan which is
subject to Title IV of ERISA or the minimum funding requirements of Section 412
of the Code. Neither the Company nor any of its ERISA Affiliates has ever
contributed to, been obligated to contribute to or has any potential liability
to any “multi-employer plan” as defined in Section 3(37) of ERISA or
“multiple-employer plan” as defined in Section 413(c) of the Code or a multiple
employer welfare arrangement as defined in section 3(40)(A) of ERISA. The
consummation of the transactions contemplated by this Agreement will not cause
the Buyer to incur any liability under any of the Employee Benefit Programs,
other than those arising in the ordinary course of business.

 

(c)          No litigation or governmental administrative proceeding, audit or
other proceeding (other than those relating to routine claims for benefits) is
pending or, to the Company’s Knowledge, threatened with respect to any Employee
Benefit Program or any fiduciary or service provider thereof, and, to the
Company’s Knowledge, there is no reasonable basis for any such litigation or
proceeding.

 

(d)          Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby could (either alone or in
conjunction with any other event): (i) result in any “parachute payment” as
defined in Section 280G(b)(2) of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered), (ii) increase
any benefits otherwise payable by the Company; or (iii) result in the
acceleration of the time of payment or vesting of any awards or benefits or give
rise to any additional service credits under any Employee Benefit Program.

 

 12 

 

 

(e)          Complete copies of the following documents, with respect to each of
the Employee Benefit Programs have been delivered to the Buyer by the Company,
to the extent applicable: (i) any plans, all amendments thereto and related
trust documents, and amendments thereto; (ii) the three (3) most recently filed
Forms 5500 and all schedules and audited financial statements related thereto
and the most recent actuarial report, if any; (iii) the most recent IRS
determination letter; (iv) the most recent summary plan descriptions; (v)
written communications to employees relating to such Employee Benefit Programs
within the past twelve (12) months; and (vi) written descriptions of all
non-written agreements relating to the Employee Benefit Programs.

 

(f)          All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Employee Benefit Programs or by Law (without regard to any waivers granted
under Section 412 of the Code), to any funds or trusts established thereunder or
in connection therewith have been made, and all contributions for any period
ending on or before the Closing Date which are not yet due will have been paid
or accrued as a liability in the calculation of Net Working Capital.

 

Section 2.19         Insurance Coverage. The Company has since January 1, 2012
maintained in full force and effect general commercial, general liability,
workers’ compensation and employees’ liability, fire and casualty and such other
appropriate insurance policies with coverage as required either by Law or any
Contractual Obligation of the Company. Schedule 2.19 contains an accurate
summary of the insurance policies or other arrangements currently maintained by
the Company and all claims thereon (or prior policies or arrangements) made
since January 1, 2012. Except as set forth on Schedule 2.19, there are currently
no claims that are pending under any of the Company’s current or past insurance
policies or other arrangements (other than medical claims made by employees of
the Company under health insurance policies maintained for employees by the
Company) or against any director, officer, or employee of the Company in their
respective capacities in such positions, nor, to the Knowledge of the Company,
has there occurred any event nor does there exist any condition on the basis of
which any such claim may be asserted, and all premiums due and payable with
respect to such policies have been paid to date. All such policies and
arrangements are valid, binding and enforceable and, to the Knowledge of the
Company, there is no threatened termination of any such policies or
arrangements. To the Knowledge of the Company, no event has occurred and no
condition exists on the basis of which the premiums or rates with respect to
such policies and arrangements may be increased (other than with respect to
increases in the ordinary course). Since January 1, 2012 Company has not
exhausted the coverage limits under any of its current or past insurance
policies. Except as set forth on Schedule 2.19, no insurance policy provides for
any retrospective premium adjustment or other experience-based liability on the
part of the Company. There are no self-insurance arrangements affecting the
Company. Attached to Schedule 2.19 is a loss run report for the past five (5)
years for each of the insurance policies required to be set forth on
Schedule 2.19.

 

Section 2.20         Investment Banking; Brokerage. Other than fees owed by the
Company as set forth on Schedule 2.20, there are no investment banking fees,
brokerage commissions, broker’s or finder’s fees or similar compensation due in
connection with the transactions contemplated by this Agreement payable by the
Company or TVV and, to the Knowledge of the Company, there is no basis for any
Person (other than Hilliard Lyons Investment Banking) to make any claim for
brokerage commissions, broker’s or finder’s fees or similar compensation in
connection with the transactions contemplated by this Agreement.

 

Section 2.21         Environmental Matters. Except as set forth on
Schedule 2.21, (a) no hazardous waste, substance or material, oil, petroleum,
petroleum product, asbestos, toxic substance, pollutant or contaminant
(collectively, “Hazardous Material”), has been generated, transported, used,
handled, processed, disposed, stored or treated on any real property leased or
operated by the Company, and (b) no Hazardous Material has been spilled,
released, discharged, disposed, or transported from any real property leased or
operated by the Company, and no Hazardous Material is present in, on, or under
any such property. The Company is, and at all times has been, in compliance in
all material respects with all applicable environmental, health and safety Laws
and with all permits, registrations and approvals required under such Laws
(collectively, “Environmental Laws”). To the Knowledge of the Company, there
exists no fact or circumstance that would involve the Company in any material
litigation, or impose any material liability, arising under any Environmental
Laws.

 

 13 

 

 

Section 2.22         Suppliers; Customers.

 

(a)          Within the last twelve (12) months, no supplier or vendor (i) that
the Company has paid or is under a Contractual Obligation to pay $20,000 or more
or (ii) that is the sole supplier of any product or service to the Company, has
canceled, materially modified, or otherwise terminated its relationship with the
Company, or materially decreased its services, supplies or materials to the
Company, nor, to the Knowledge of the Company, does any such supplier or vendor
have any plan or intention to do any of the foregoing. Schedule 2.22 sets forth
a list of the top ten (10) suppliers or vendors of the Company, measured by
dollar volume, for each of the years ending December 31, 2013, December 31,
2014, and December 31, 2015.

 

(b)          Except as disclosed on Schedule 2.22, within the last twelve (12)
months, no material customer has canceled, materially modified, or otherwise
terminated its relationship with the Company or materially decreased business
with the Company, nor has any material customer notified the Company that it
intends to terminate or materially reduce or change the terms of its business
with the Company, nor, to the Knowledge of the Company, does any material
customer have any plan or intention to do any of the foregoing. Schedule 2.22
sets forth a list of the top ten (10) customers of the Company, measured by
dollar volume, for each of the years ending December 31, 2013, December 31,
2014, and December 31, 2015.

 

Section 2.23         Indebtedness. Except as set forth on Schedule 2.23, the
Company does not have any Indebtedness, nor are any assets of the Company
subject to the Indebtedness of any other Person. For each item of Indebtedness,
Schedule 2.23 correctly sets forth, if applicable, the debtor, the principal
amount of the Indebtedness as of the date of this Agreement, the creditor, the
maturity date and the collateral, if any, securing the Indebtedness.

 

Section 2.24         Illegal Payments. Neither the Company nor, to the Knowledge
of the Company, any Person affiliated with the Company has ever offered, made or
received on behalf of the Company any illegal payment or illegal contribution of
any kind, directly or indirectly, including, without limitation, payments, gifts
or gratuities, to any United States or foreign national, state or local
government officials, employees or agents or candidates therefor or other
Persons.

 

Section 2.25         Products. The Buyer has been furnished with accurate copies
of the standard terms and conditions of sale for each of the products or
services of the Company (containing applicable guaranty, warranty and indemnity
provisions). Except as set forth on Schedule 2.25(a), no product manufactured,
sold or delivered by, or service rendered by or on behalf of, the Company is
subject to any guaranty, warranty or other indemnity, express or implied, beyond
such standard terms and conditions.

 

(b)          The Company has not entered into, or offered to enter into, any
Contractual Obligation pursuant to which the Company or the Buyer (after the
Closing Date) is or shall be obligated to make any rebates, discounts,
promotional allowances or similar payments or arrangements with or to any
customer or other business relation, except as set forth on Schedule 2.25(b).

 

Section 2.26         Full Disclosure. No representation or warranty by the
Company in this Agreement and no statement contained in the Schedules or any
certificate or other document furnished or to be furnished to the Buyer pursuant
to this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.

 

Article III
REPRESENTATIONS AND WARRANTIES OF TVV

 

In order to induce the Buyer to enter into this Agreement and the other
Transaction Agreements, TVV makes each of the following representations and
warranties contained in this Article III to the Buyer.

 

Section 3.1           Stock; Closing Date Payment. As described on Schedule 2.4,
TVV holds beneficially and of record all of the issued and outstanding Stock of
the Company set forth opposite TVV’s name on Schedule 2.4 and has good and
marketable title to such Stock, free and clear of all Encumbrances, except for
federal and state securities Law restrictions of general applicability. TVV has
full legal capacity, right, power and authority to transfer and deliver to the
Buyer valid title to the Stock held by TVV, free and clear of all Encumbrances,
except for federal and state securities Law restrictions of general
applicability. When delivered by TVV to the Buyer pursuant to this Agreement,
the Stock will be free and clear of any and all Encumbrances, except for federal
and state securities Law restrictions of general applicability.

 

 14 

 

 

Section 3.2           Authority. TVV has full power, authority and legal
capacity to execute and deliver this Agreement and the other Transaction
Agreements to which TVV is a party and to carry out the transactions
contemplated hereby and thereby. This Agreement and the other Transaction
Agreements to which TVV is a party have been duly authorized, executed and
delivered by TVV and assuming the due authorization, execution and delivery of
this Agreement and the other Transaction Agreement to which TVV is a party by
each of the other parties hereto and thereto, this Agreement and the other
Transaction Documents to which TVV is a party constitutes the legal, valid and
binding obligation of TVV enforceable against TVV in accordance with their
respective terms, subject only to General Enforceability Exceptions.

 

Section 3.3           No Conflict; Consents. The execution, delivery and
performance by TVV of this Agreement and the other Transaction Agreements
executed and delivered by or on behalf of TVV, and the performance of the
transactions contemplated by this Agreement and such other Transaction
Agreements do not and will not: (a) violate or result in a violation of,
conflict with or constitute or result in violation of or a default (whether
after the giving of notice, lapse of time or both) or loss of benefit under or
granted by, any provision of any Law, or any restriction imposed by Governmental
Authority, or any governing document, in each case applicable to TVV; (b) except
as set forth on Schedule 3.3, require TVV to provide any notice to, make any
declaration or filing with, or obtain the consent or approval of, any
Governmental Authority or other Person; or (c) violate or result in a violation
of or constitute a default (whether after the giving of notice, lapse of time or
both) under, give rise to or accelerate any obligation under, or give rise to a
right of termination of or result in a loss of benefit under any material
indenture or loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, license, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which TVV is
a party or by which any of TVV’s assets (including the Stock held by TVV) are
bound, or result in the creation or imposition of any Encumbrance on any of the
Buyer’s assets (including the Stock transferred hereunder).

 

Section 3.4           Brokers. Other than as set forth on Schedule 2.20, no
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission from TVV in connection with the transactions
contemplated by this Agreement.

 

Section 3.5           Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the Knowledge of TVV, threatened against TVV
affecting or relating to the Stock or which could reasonably adversely affect
the ability of such Stockholder to consummate the transactions contemplated by
this Agreement or any of Transaction Agreements to which TVV is a party, and TVV
is not subject to any outstanding Order of any Governmental Authority.

 

Article IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER 

 

In order to induce the Company and TVV to enter into this Agreement and the
other Transaction Agreements, the Buyer makes each of the following
representations and warranties contained in this Article IV to the Company and
TVV.

 

Section 4.1           Organization and Power. The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Nevada. The Buyer has full power and authority to own or lease its properties
and to conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it. The Buyer
has all required power and authority to carry on its business as presently
conducted, to enter into and perform this Agreement and the other Transaction
Agreements to which it is a party and to carry out the transactions contemplated
hereby and thereby. A copy of the Organizational Documents of the Buyer has been
furnished to the Company by the Buyer and is correct and complete in all
respects and no amendments thereto are pending.

 

Section 4.2           Authorization. The Buyer has full right, authority, power
and legal capacity to enter into this Agreement and the other Transaction
Agreements executed and delivered by or on behalf of the Buyer and to carry out
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the other Transaction Agreements to which the
Buyer is a party have been duly authorized by all necessary action of the board
of directors of Buyer. This Agreement and the other Transaction Agreements
executed and delivered by or on behalf of the Buyer have been duly executed and
delivered by the Buyer and, assuming due authorization, execution and delivery
of this Agreement and the other Transaction Agreements to which the Buyer is a
party by the other parties hereto and thereto, this Agreement and such other
Transaction Agreements to which the Buyer is a party constitute legal, valid and
binding obligations of the Buyer, enforceable in accordance with their
respective terms, subject only to General Enforceability Exceptions.

 

 15 

 

 

Section 4.3           Non-Contravention. The execution, delivery and performance
by the Buyer of this Agreement and the other Transaction Agreements executed and
delivered by or on behalf of the Buyer, and the performance of the transactions
contemplated by this Agreement and such other Transaction Agreements do not and
will not: (a) violate or result in a violation of, conflict with or constitute
or result in violation of or a default (whether after the giving of notice,
lapse of time or both) under the Buyer’s organizational documents; (b) in any
material respect, violate or result in a violation of, conflict with or
constitute or result in violation of or a default (whether after the giving of
notice, lapse of time or both) or loss of benefit under or granted by, any
provision of any Law, or any restriction imposed by Governmental Authority
applicable to the Buyer; (c) require the Buyer to provide any notice to, make
any declaration or filing with, or obtain the consent or approval of, any
Governmental Authority or other Person; or (d) violate or result in a violation
of or constitute a default (whether after the giving of notice, lapse of time or
both) under, give rise to or accelerate any obligation under, or give rise to a
right of termination of or result in a loss of benefit under any material
indenture or loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, license, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which the
Buyer is a party or by which any of the Buyer’s assets are bound or affected, or
result in the creation or imposition of any Encumbrance on any of the Buyer’s
assets.

 

Section 4.4           Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission from the Buyer in
connection with the transactions contemplated by this Agreement.

 

Section 4.5           Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the Knowledge of the Buyer, threatened against the
Buyer and the Buyer is not subject to any outstanding Order of any Governmental
Authority that, in either case, would be reasonably likely, individually or in
the aggregate, to prevent or materially delay performance by the Buyer of any of
its material obligations under this Agreement.

 

Section 4.6           Hennis Stock Redemption. Buyer acknowledges that it has
Knowledge of the Company’s purchase and redemption of 10,000 shares of Common
Stock from Hennis and that the Company is obligated under the Hennis Redemption
Note.

 

Article V
ADDITIONAL AGREEMENTS

 

Section 5.1           Press Releases. Upon the Closing, the parties hereto shall
release a joint press release mutually agreed upon by the Buyer and TVV. None of
the parties hereto shall, and each party hereto shall cause its Affiliates and
Representatives not to, issue any other press release relating to this Agreement
or any of the other Transaction Agreements or any of the transactions
contemplated hereby or thereby without the prior written consent of the Company.

 

Section 5.2           Tax Matters.

 

(a)          Preparation and Filing of Tax Returns.

 

(i)          TVV shall prepare and file, or shall cause to be prepared and
filed, all Tax Returns of the Company for all periods ending on or before the
Closing Date. TVV shall pay or cause to be paid any Taxes due in respect of such
Tax Returns. If any such Tax Return must be signed by the Buyer, any Affiliate
thereof, or the Company following the Closing Date, the Buyer agrees that it
will (or will cause such other parties to) reasonably cooperate in signing such
Tax Return in order to permit the timely filing of such Tax Return. TVV shall
provide, or cause to be provided, to the Buyer a draft of any such Tax Return at
least thirty (30) days prior to the due date, giving effect to extensions
thereto, for filing such Tax Return, for review by the Buyer. The Buyer shall
notify TVV of any reasonable objections the Buyer may have to any items set
forth in such draft Tax Return and the Buyer and TVV agree to consult and
resolve in good faith any such objection. If the parties cannot resolve any such
objections, the item in question shall be resolved by the Accounting Referee.
The fees and expenses of the Accounting Referee shall be borne one-half (1/2) by
TVV, and one-half (1/2) by the Buyer. Such Tax Returns shall be prepared in a
manner consistent with past practices except as required by changes in Law or as
required by a provision of this Section 5.2.

 

 16 

 

 

(ii)         The Buyer shall prepare and file, or cause to be timely prepared
and filed, all Tax Returns of the Company, for Straddle Periods. Such Tax
Returns (“Straddle Returns”) shall be prepared consistently with past practice
to the extent permitted by Law. The Buyer shall provide, or cause to be
provided, to TVV a draft of any Straddle Return at least thirty (30) days prior
to the due date, giving effect to extensions thereto for filing such Tax Return,
for review by TVV. TVV shall notify the Buyer of any reasonable objections TVV
may have to any items set forth in such draft Straddle Return and the Buyer and
TVV agree to consult and resolve in good faith any such objection. If the
parties cannot resolve any such objections, the item in question shall be
resolved by the Accounting Referee. The fees and expenses of the Accounting
Referee shall be borne one-half (1/2) by TVV, and one-half (1/2) by the Buyer.
The Buyer shall notify TVV of any amounts due from TVV in respect of any
Straddle Return no later than ten (10) Business Days prior to the date on which
such Straddle Return is due, and no later than five (5) Business Days prior to
the date on which such Straddle Return is due, TVV shall pay the Buyer the
amount of Taxes for which it is responsible.

 

(b)          Straddle Periods. For purposes of this Agreement, in the case of
any taxable year or period that begins before and ends after the Closing Date (a
“Straddle Period”), (i) the amount of any Property Taxes of the Company for a
Straddle Period allocable to the Pre-Closing Period shall be equal to the amount
of such Tax for the entire Straddle Period multiplied by a fraction the
numerator of which is the number of days in the taxable period ending on the
Closing Date and the denominator of which is the number of days in such Straddle
Period, (ii) the amount of any Taxes other than Property Taxes of the Company
allocable to the Pre-Closing Period shall be computed as if such taxable year or
period (and the taxable year or period of any entity taxable as a partnership in
which the Company owns a direct or indirect interest) ended as of the close of
business on the Closing Date, and (iii) TVV will receive the benefit of all tax
deposits which have been made prior to the Closing Date, and the Straddle Return
will properly allocate all pertinent income and expenses that were incurred up
to the Closing Date.

 

(c)          Tax Sharing Agreements. The Company shall cause the provisions of
any Tax sharing agreement involving the Company to be terminated on or before
the Closing Date. After the Closing Date, no party shall have any rights or
obligations under such Tax sharing agreement.

 

(d)          Cooperation on Tax Matters. After the Closing, the Buyer and TVV
shall promptly make available or cause to be made available to the other, as
reasonably requested (at the expense of the requesting party), all information,
records or documents relating to Tax liabilities and potential Tax liabilities
relating to the Company for all Pre-Closing Periods and shall preserve all such
information, records and documents until the expiration of any applicable
statute of limitations or extensions thereof.

 

(e)          Transfer Taxes. TVV shall pay all amounts owed for any sales,
transfer, value added, excise, stock transfer, stamp, recording, registration
and any similar Taxes incurred under the laws of the United States of America or
any state or local taxing authority thereof (“Transfer Taxes”) that become
payable in connection with the Stock Purchase and the other transactions
contemplated hereby. The Buyer shall (i) file all necessary documentation and
Tax Returns with respect to any sales, transfer and similar Taxes, and (ii)
provide copies of such documentation and Tax Returns to TVV. The applicable
parties shall cooperate in filing such forms and documents as may be necessary
to permit any such Transfer Tax to be assessed and paid and to obtain any
exemption or refund of any such Transfer Tax.

 

(f)          Tax Contests. TVV shall have the right, at its own expense, to
control and settle the portion of any audit, examination, or other
administrative or judicial proceeding, contest, assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to any and all
Taxes (a “Tax Contest”) for which TVV may have to indemnify a Buyer Indemnified
Party, provided, that the Buyer shall have the right to participate at its own
expense in any Tax Contest that could have the effect of increasing a Tax
liability of the Buyer, and neither the Company nor TVV shall settle or
compromise any Tax Contest without the Buyer’s prior written consent if such
settlement or compromise could have the effect of increasing a Tax liability of
the Buyer or the Company.

 

 17 

 

 

(g)          Interaction with Article VI. Notwithstanding any provision herein
to the contrary, to the extent that a provision of this Section 5.2 conflicts
with a provision of Article VI, this Section 5.2 shall govern.

 

Section 5.3           Books and Records. From and after the Closing, the Buyer
shall, and shall cause the Company to, until the seventh (7th) anniversary of
the Closing Date or such longer period as required by state, federal or local
law, retain all books, records and other documents pertaining to the business of
the Company in existence on the Closing Date and to make the same available for
inspection by TVV (at its expense) at reasonable times upon reasonable request
and upon reasonable notice.

 

Section 5.4           Further Action. Each of the parties hereto shall use its
respective commercially reasonable efforts to take or cause to be taken all
appropriate action, do or cause to be done all things necessary, proper or
advisable and execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and the other Transaction
Agreements and consummate and make effective the transactions contemplated by
hereby and thereby.

 

Section 5.5           Non-Disclosure, Non-Competition and Non-Solicitation.

 

(a)          TVV hereby covenants and agrees that from and after the Closing it
will not, directly or indirectly, and shall cause its Affiliates not to:

 

(i)          disclose or furnish to any Person, other than the Buyer any
Confidential Information; provided, however, that this covenant of
non-disclosure shall not apply to information (A) which is, or at any time
becomes available in the public domain (other than as a result of disclosure by
TVV or any Affiliate of TVV), (B) which is required to be disclosed by Law or
court or administrative court order (provided that the Buyer receives notice of
such required disclosure and a reasonable opportunity to take steps to maintain
the confidentiality thereof), and (C) which the Buyer expressly authorizes, in
writing, TVV to disclose prior to such disclosure; and

 

(ii)         until the fifth (5th) anniversary of the Closing Date, anywhere in
the United States own, manage, operate, control, invest or participate in or be
connected with in any capacity (either as an employee, employer, trustee,
consultant, agent, principal, partner, corporate officer, director, manager,
owner or shareholder or in any other individual or representative capacity) with
any business, individual, partnership, firm, corporation or other Person (other
than the Buyer) which is engaged in the business of the manufacture, production
and direct sale of industrial mixers via catalog and the internet, with average
total sale invoices (for an individual sale) of approximately $1,000.00. Without
implied limitation, the foregoing covenant shall prohibit: (A) hiring or
engaging or attempting to hire or engage for or on behalf of TVV or any other
Person, any officer or employee of the Buyer or any of its Affiliates (including
officers or employees of the Company), or any former officer or employee of the
Buyer or any of its Affiliates (including any former officer or employee of the
Company) who was employed or retained during the twelve (12) month period
immediately preceding the date of solicitation for or on behalf of TVV or any
other Person, or soliciting or attempting to solicit any such officer or
employee or any independent contractor of Buyer or its Affiliates (including
independent contractors of the Company) to terminate his or her relationship or
employment with the Buyer or any of its Affiliates (including the Company), or
(B) soliciting for or on behalf of TVV or any other Person, any client or
customer of the Company as of the Closing Date or during the preceding twelve
(12) months, or diverting to any Person any client, customer or business
opportunity of the Company. Notwithstanding the foregoing, Buyer acknowledges
that TVV and certain of its Affiliates are private equity funds engaged in
seeking to invest in, and investing in, a diverse range of manufacturing and
industrial enterprises, some of which may overlap with some of the Company’s
business operations, and Buyer acknowledges that such investment activities are
not prohibited by this subsection (ii), provided that a principal portion of the
business of any such manufacturing and industrial enterprise is not the
manufacture, production and direct sale of industrial mixers via catalog and the
internet, with average total sale invoices (for an individual sale) of
approximately $1,000.00.

 

 18 

 

 

(b)          TVV hereby agrees that the covenants contained in this Section 5.5
(the “Restrictive Covenants”) are entered into in partial consideration of the
Purchase Price, are reasonable in geographic scope and duration in view of the
relevant market for the products and services of the Company and that any breach
of any of the Restrictive Covenants could result in continuing and irreparable
harm to the Buyer or its Affiliates (including the Company). Therefore, TVV
hereby agrees and consents that, in addition to any other remedies available to
the Buyer or its Affiliates (including the Company) (whether at law or at
equity), the Buyer or its Affiliates (including the Company) shall be entitled
to seek an injunction, restraining order or any appropriate decree of specific
performance for any actual or threatened violation or breach of this Section 5.5
by TVV or TVV’s Affiliates, without the posting of any bond.

 

(c)          Each of the Restrictive Covenants is distinct and severable,
notwithstanding that some of such covenants may be set forth in one section
hereof for convenience.

 

(d)          In the event that any or all of the Restrictive Covenants shall be
determined by a court of competent jurisdiction to be unenforceable by reason of
their geographic or temporal restrictions being too great, or by reason that the
range of activities covered are too great, or for any other reason, they should
be interpreted to extend over the maximum geographic area, period of time, range
of activities, or other restrictions as to which they may be enforceable.

 

Section 5.6           General Waiver and Release. TVV, on behalf of its
Affiliates, Representatives, successors, and assigns and any other Person
claiming by, through or under any of the foregoing (collectively, the
“Stockholder Releasing Parties”), does hereby unconditionally and irrevocably
release, waive and forever discharge the Buyer, the Company, each of their
respective predecessors and successors and each of their respective past,
present and future Representatives, Subsidiaries and Affiliates (and any
Affiliates of any of the foregoing) from any and all claims, demands, judgments,
causes of action and liabilities of any nature whatsoever, whether or not known,
suspected or claimed, arising directly or indirectly from any act, omission,
event or transaction occurring on or prior to the Closing Date, which, for the
avoidance of doubt, includes (without limitation) any and all claims of breach
and causes of action based on alleged breach and associated liabilities arising
out of or relating to any commercial arrangement or agreement between TVV and
the Company or any of the Stockholder Releasing Parties entered into prior to
the Closing, but excludes (subject to Section 6.5) any of TVV’s rights expressly
set forth in this Agreement, or any other Transaction Agreement to which TVV is
a party. WITHOUT LIMITING THE FOREGOING, TVV EXPRESSLY WAIVES AND RELINQUISHES
ALL RIGHTS AND BENEFITS AFFORDED BY ANY APPLICABLE Law that limits in any manner
the release set forth herein. TVV ACKNOWLEDGES THAT IT HAS CAREFULLY READ THE
FOREGOING WAIVER AND GENERAL RELEASE AND UNDERSTANDS ITS CONTENTS. TVV
represents and warrants that (x) there are no liens, or claims of lien, or
assignments in law or equity or otherwise of or against any of the claims or
causes of action released herein, (y) TVV has not transferred or otherwise
alienated any such claims or causes of action, and (z) TVV is fully authorized
and entitled to give the releases specified herein.

 

Article VI
SURVIVAL; INDEMNIFICATION

 

Section 6.1           Survival of Representations, Warranties and Covenants. All
representations, warranties, agreements and covenants of the parties made herein
and in the Schedules hereto shall be deemed to have been relied upon by the
party or parties to whom they are made in entering into this Agreement and shall
survive the Closing. Notwithstanding the foregoing, all representations and
warranties set forth in Articles II, III and IV shall survive the Closing until
the Expiration Date; provided, however, that the Expiration Date shall not apply
to any (a) representations and warranties set forth in Section 2.12 (Tax
Matters) or Section 2.21 (Environmental Matters), and in each such case the
representations and warranties set forth therein shall survive until the second
anniversary of the Closing Date, and (b) any representations and warranties
contained in Section 2.1 (Organization and Power), Section 2.2 (Authorization),
Section 2.4 (Capitalization), Section 2.11 (Title to and Encumbrance on
Properties), Section 2.20 (Investment Banking; Brokerage), Section 3.1 (Stock;
Closing Date Payment), Section 3.2 (Authority), or Section 3.4 (Brokers), and in
each such case the representations and warranties set forth therein shall
survive indefinitely or until the expiration of the applicable statute of
limitations with respect thereto, as applicable (collectively, the
representations and warranties in clause (b) above are referred to herein as the
“Fundamental Representations”). All covenants and other agreements set forth
herein shall survive indefinitely, unless such covenant or agreement expressly
terminates on an earlier date.

 

 19 

 

 

Section 6.2           Indemnification.

 

(a)          TVV (a “Seller Indemnifying Party”) hereby agrees to defend,
indemnify and hold the Buyer, the Company, and their respective Equity Interest
holders, directors, officers, employees, agents, managers, and Affiliates (other
than any person who is a Stockholder or the holder of Equity Interests of the
Company as of the Closing Date) (parties receiving the benefit of the
indemnification agreement under this Section 6.2 shall be referred to
collectively as “Buyer Indemnified Parties” and individually as a “Buyer
Indemnified Party”) harmless from and against any and all claims, damages,
liabilities, losses, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of legal counsel), as the same are incurred, of any
kind or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing, including, without limitation, the enforcement of any indemnification
award hereunder) (collectively “Losses” and each individually, a “Loss”) which
may be sustained or suffered by any Buyer Indemnified Party to the extent
arising out of:

 

(i)          any breach of any representation or warranty made by the Company or
TVV in this Agreement or the Schedules hereto (collectively, “Buyer Warranty
Claims”);

 

(ii)         any breach of any obligation, agreement or covenant made by TVV in
this Agreement;

 

(iii)         (A) any Taxes on or with respect to the Company for any
Pre-Closing Period; (B) any Taxes of the Company pursuant to Treasury
Regulations Section 1.1502-6 or any analogous or similar state, local, or
foreign law or regulation; (C) any Taxes of any Person imposed on the Company as
a transferee or successor, by contract or pursuant to any Law which Taxes relate
to an event or transaction occurring on or before the Closing Date; and (D) any
breach of any covenant in Section 5.2;

 

(iv)        any claim for indemnification or advancement or reimbursement of
expenses made or asserted against the Company by any present or former officer,
director and/or employee of the Company who is an Affiliate of TVV, with respect
to any action taken or omitted to be taken by any such officer, director and/or
employee of the Company prior to the Closing; or

 

(v)         any fraud by the Company or TVV.

 

The rights of Buyer Indemnified Parties to recover indemnification in respect of
any occurrence referred to in clause (v) of this Section 6.2(a) shall not be
limited by the fact that such occurrence may not constitute an inaccuracy in or
breach of any representation, warranty, covenant or agreement set forth in this
Agreement or in any Schedule hereto. A Buyer Indemnified Party may
simultaneously bring multiple claims for indemnity based on one or more legal
theories and based upon one or more provisions of this Agreement with respect to
the same event, occurrence or set of facts; provided, that any liability for
indemnification under this Section 6.2(a) shall be determined without
duplication of recovery by reason of the state of facts giving rise to such
liability constituting a breach of more than one representation, warranty,
covenant or agreement.

 

(b)          The Buyer (the “Buyer Indemnifying Party”) hereby agrees to defend,
indemnify and hold TVV and its Affiliates (parties receiving the benefit of the
indemnification agreement under this Section 6.2(b) shall be referred to
collectively as “Seller Indemnified Parties” and individually as a “Seller
Indemnified Party”) harmless from and against any and all Losses which may be
sustained or suffered by any such Seller Indemnified Party to the extent arising
out of:

 

 20 

 

 

(i)          any breach of any representation or warranty made by the Buyer in
this Agreement (collectively, “Seller Warranty Claims”);

 

(ii)         any breach of any obligation, agreement or covenant, made by the
Buyer in this Agreement; or

 

(iii)        any fraud by the Buyer.

 

The rights of Seller Indemnified Parties to recover indemnification in respect
of any occurrence referred to in clause (iii) of this Section 6.2(b) shall not
be limited by the fact that such occurrence may not constitute an inaccuracy in
or breach of any representation, warranty, covenant or agreement set forth in
this Agreement. A Seller Indemnified Party may simultaneously bring multiple
claims for indemnity based on one or more legal theories and based upon one or
more provisions of this Agreement with respect to the same event, occurrence or
set of facts.

 

(c)          Subject to Section 6.1 and Section 6.2(d), the time period for
making claims for indemnification with respect to Seller Warranty Claims or
Buyer Warranty Claims shall expire and terminate on the Expiration Date;
provided, however, that indemnification for any Loss related to any of the
representations set forth in Section 6.1(a) shall not expire until the second
anniversary of the Closing Date, and indemnification for any Loss related to any
of the Fundamental Representations shall either (i) expire on the expiration
date of the applicable statute of limitations or (ii) never expire, as
applicable. In addition, the period for making indemnification claims under any
of Section 6.2(a)(ii) through (v), Section 6.2(b)(ii), or Section 6.2(b)(iii)
shall never expire, provided a claim is made prior to any express termination
date of any covenant or agreement set forth in such Sections.

 

(d)          If prior to the relevant expiration date set forth in Section
6.2(c), a Seller Indemnified Party or Buyer Indemnified Party shall have given
written notice of a claim pursuant to Section 6.3 below, then the right to
indemnification with respect to such claim shall survive any applicable
expiration date until such claim is finally adjudicated.

 

(e)          Notwithstanding anything contained in this Section 6.2 to the
contrary, the rights of an Indemnified Party to recover indemnification in
respect of any claim arising under this Section 6.2 shall be subject to the
following limitations:

 

(i)          Neither any Buyer Indemnifying Party, on the one hand, nor any
Seller Indemnifying Party, on the other hand, shall have any obligation to
indemnify any Seller Indemnified Party or any Buyer Indemnified Party,
respectively, pursuant to Section 6.2(a)(i), unless the aggregate of all Losses
suffered or incurred by all Buyer Indemnified Parties or Seller Indemnified
Parties, as applicable, which would otherwise be subject to indemnification
hereunder exceeds $60,000.00 in the aggregate (the “Deductible”), whereupon the
total amount of such Losses in excess of the Deductible shall be recoverable in
accordance with the terms hereof; provided, however, that the Deductible shall
not apply with respect to any claim brought under (A) any of Section 6.2(a)(ii)
through Section 6.2(a)(v), (B) Section 6.2(b)(ii) or Section 6.2(b)(iii), or (C)
Section 6.2(a)(i) solely with respect to claims for breaches of Fundamental
Representations or any representations and warranties set forth in Section 2.12
(Tax Matters) or Section 2.21 (Environmental Matters) (claims under any of
clause (A), clause (B) or clause (C) are collectively referred to as “Excluded
Claims”).

 

 21 

 

 

(ii)         Neither any Buyer Indemnifying Party, on the one hand, nor any
Seller Indemnifying Party, on the other hand, shall have any obligation to
indemnify any Seller Indemnified Party or any Buyer Indemnified Party,
respectively, pursuant to Section 6.2(a)(i), for Losses in excess of $500,000.00
(the “Cap”); provided, however, that the Cap shall not apply to Excluded Claims,
and (A) indemnification for Losses with respect to Excluded Claims pursuant to
Section 6.2(a)(i) solely with respect to claims related to representations and
warranties set forth in Section 2.12 (Tax Matters) or Section 2.21
(Environmental Matters) shall be limited to Two Million Dollars ($2,000,000),
and (B) indemnification for Losses with respect to Excluded Claims pursuant to
Section 6.2(a)(i) solely with respect to claims related to Fundamental
Representations or any claim brought under any of Sections 6.2(a)(ii) through
Section 6.2(a)(v), or Section 6.2(b)(ii) or Section 6.2(b)(iii), shall be
limited to the Purchase Price. Furthermore, for the avoidance of doubt, neither
the Deductible nor the Cap shall apply to any post-Closing adjustments pursuant
to Section 1.4.

 

(iii)        The liability of TVV for any indemnifiable Loss hereunder shall be
limited to 97.07% of the amount of the indemnifiable Loss.

 

Section 6.3           Notice; Payment of Losses; Defense of Claims. 

 

(a)          The term “Indemnifying Party” shall include the Buyer Indemnifying
Parties and Seller Indemnifying Parties, as applicable, and the term
“Indemnified Party” shall include a Buyer Indemnified Party or Seller
Indemnified Party, as applicable. Each Indemnified Party is an express third
party beneficiary of this Agreement and shall have each and every legal or
equitable right, remedy or claim as set forth under this Agreement and shall be
entitled to enforce each such right, remedy or claim, subject to any
requirements, conditions or other limitations set forth in this Agreement as if
such Person were a party hereto.

 

(b)          An Indemnified Party shall give written notice to the appropriate
Indemnifying Party promptly upon learning of any such claim with respect to
which such Indemnified Party seeks indemnity hereunder, and in any event not
later than thirty (30) days after assertion of any written claim by any third
party, specifying in reasonable detail the amount, nature and source of the
claim; provided, however, that failure to give such notice shall not limit the
right of an Indemnified Party to recover indemnity except to the extent that the
Indemnifying Party is materially prejudiced as a result of such failure and then
only to the extent of such material prejudice.

 

(c)          Within twenty (20) days after receiving notice of a claim for
indemnification, the Indemnifying Party shall, by written notice to the
Indemnified Party, either (i) concede or deny liability for the claim in whole
or in part or (ii) in the case of a claim asserted by a third party, advise that
the matters set forth in the notice are, or will be, subject to contest or legal
proceedings not yet finally resolved. If the Indemnifying Party concedes
liability in whole, the Indemnifying Party shall pay the amount of such claim in
cash to the Indemnified Party within five (5) business days of notice of such
concession. If the Indemnifying Party denies liability in whole or in part or
advises that the matters set forth in the notice are, or will be, subject to
contest or legal proceedings not yet finally resolved, then the Indemnifying
Party shall make no payment until a final resolution of the matter is obtained
in accordance with this Agreement. If an Indemnifying Party denies liability in
whole or in part, and such matter is finally resolved in favor of the
Indemnified Party, such Indemnifying Party shall be liable for (A) the amount of
the Losses sustained or suffered by the Indemnified Party plus (B) interest
(computed on the basis of a 360-day year/30-day month) on the Losses at a rate
per annum of six percent (6%) assessed from the date that is thirty (30) days
after the date on which the Indemnifying Party received notice of such Losses
from the Indemnified Party under Section 6.3(b). If an Indemnifying Party fails
to respond by written notice to the Indemnified Party within twenty (20) days
after receiving notice of a claim for indemnification, such Indemnifying Party
shall be deemed to have conceded liability for the claim in whole and to have
irrevocably agreed to pay (A) the amount of the Losses sustained or suffered by
the Indemnified Party plus (B) interest (computed on the basis of a 360-day
year/30-day month) on the Losses at a rate per annum of six percent (6%)
assessed from the date that is thirty (30) days after the date on which the
Indemnifying Party received notice of such Losses from the Indemnified Party
under Section 6.3(b).

 

 22 

 

 

(d)          In the case of any third party claim, if within twenty (20) days
after receiving the notice of a claim under Section 6.3(b), the Indemnifying
Party (i) gives written notice to the Indemnified Party stating that it would be
liable under the provisions hereof for indemnity in the amount of such claim if
such claim were valid and that it disputes and intends to defend against such
claim, liability or expense at its own cost and expense and (ii) provides
reasonable assurance to such Indemnified Party that such indemnification will be
paid fully and promptly if required and such Indemnified Party will not incur
cost or expense during the proceeding, then counsel for the defense shall be
selected by the Indemnifying Party and the Indemnifying Party shall control the
defense of such claim, subject to the consent of all Indemnified Parties which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
that so long as a conflict of interest does not exist, (A) the Buyer, on behalf
of all Buyer Indemnified Parties, hereby approves Bass, Berry & Sims, PLC to
serve as counsel to any Seller Indemnifying Party, and (B) TVV, on behalf of all
Seller Indemnified Parties, hereby approves Neuberger, Quinn, Gielen, Rubin &
Gipper, P.A. to serve as counsel to any Buyer Indemnifying Party. The assumption
of defense of any such matters by the Indemnifying Party or Parties shall relate
solely to the claim, liability or expense that is subject to indemnification. If
the Indemnifying Party or Parties assume such defense in accordance with this
Section 6.3, they shall have the right, with the consent of such Indemnified
Party or Parties, which consent shall not be unreasonably withheld, conditioned
or delayed, to settle all indemnifiable matters related to the claim, liability
or expense that is subject to indemnification. The Indemnifying Party or Parties
shall keep such Indemnified Party or Parties promptly and reasonably apprised of
the status of the claim, liability or expense and any resulting suit, proceeding
or enforcement action, shall furnish such Indemnified Party or Parties with all
documents and information that such Indemnified Party or Parties shall
reasonably request and shall consult with such Indemnified Party or Parties
prior to acting on major matters, including settlement discussions.
Notwithstanding anything herein stated, such Indemnified Party or Parties shall
at all times have the right to fully participate in such defense at its own
expense directly or through counsel; provided, however, if the named parties to
the action or proceeding include both the Indemnifying Party or Parties and the
Indemnified Party or Parties and representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the reasonable expense of separate counsel for such Indemnified Party
or Parties shall be paid by the Indemnifying Party or Parties. If no such notice
of intent to dispute and defend is given by the Indemnifying Party or Parties,
or if such diligent good faith defense is not being or ceases to be conducted
(following delivery of written notice asserting the failure to conduct a
diligent and good faith defense and a thirty (30) day opportunity to cure), such
Indemnified Party or Parties shall, at the expense of the Indemnifying Party or
Parties, undertake the defense of (with counsel selected by such Indemnified
Party or Parties), and shall have the right to compromise or settle, such claim,
liability or expense. If such claim, liability or expense is one that by its
nature cannot be defended solely by the Indemnifying Party or Parties, then such
Indemnified Party or Parties shall make available all information and assistance
that the Indemnifying Party or Parties may reasonably request and shall
cooperate with the Indemnifying Party or Parties in such defense.

 

(e)          Notwithstanding any provision in this Section 6.3 to the contrary,
no Seller Indemnifying Party shall have the right to assume or maintain, as
applicable, control of the defense of any third party claim under Section 6.3(d)
if any such third party claim (i) seeks non-monetary relief, (ii) involves
criminal allegations, (iii) involves Losses that are not expected to exceed the
Deductible (to the extent indemnity payments for such Losses are subject to the
Deductible), (iv) involves Losses that are reasonably expected to exceed the
maximum amount for which the Seller Indemnifying Parties could be liable under
this Article VI, (v) involves Taxes, or (vi) is one in which the Buyer
Indemnified Party reasonably believes an adverse determination with respect
thereto could be materially detrimental to the reputation or future business
prospects of any Buyer Indemnified Party.

 

(f)          Subject to the terms of the Escrow Agreement, the Escrow Amount
will be available to compensate the Buyer Indemnified Parties for Losses for
which such Buyer Indemnified Parties are entitled to indemnification pursuant to
Section 6.2.

 

Section 6.4           Characterization of Indemnity Payments. Any
indemnification payments made pursuant to this Agreement shall be considered, to
the extent permissible under Law, as adjustments to the Purchase Price for all
Tax purposes.

 

 23 

 

 

Section 6.5           Limitation on Contribution and Certain Other Rights; No
Circular Indemnity; Waiver of Rights. TVV (on behalf of itself and its
Affiliates and Representatives) hereby agrees that if, following the Closing,
any payment is made by TVV, or otherwise becomes due from TVV pursuant to
Section 1.4, this Article VI or relating to fraud, fraud in the inducement,
intentional misrepresentation or relating to the pursuit of equitable remedies,
including, but not limited to, specific performance and injunctive relief, in
respect of any Loss (each a “Loss Payment”), neither TVV nor any Affiliate or
Representative of TVV shall have any rights against any Buyer Indemnified Party,
whether by reason of contribution, indemnification, subrogation or otherwise, in
respect of any such Loss Payment, it being understood that for the purposes of
this Section 6.5 neither Hennis nor Wilberding shall be deemed to be a Buyer
Indemnified Party by virtue of their being an Equity Interest holder of the
Buyer. TVV (on behalf of itself and its Affiliates and Representatives) hereby
further agrees that neither TVV nor any Affiliate or Representative of TVV will
make any claim for indemnification against the Buyer or any of its Affiliates
(including the Company), or any director, officer or employee of any of the
foregoing, under the organizational documents of the Company by reason of the
fact that TVV (or any Affiliate or Representative of TVV) is or was an Equity
Interest holder, director, officer, manager or agent of the Company or is or was
serving at the request of the Company as a member, director, officer, partner,
trustee or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, Losses, expenses
or otherwise and whether such claim is pursuant to any statute, charter
document, by-law, agreement or otherwise) with respect to any action, suit,
proceeding, complaint, claim or demand brought by any of the Buyer Indemnified
Parties against any Seller Indemnifying Party pursuant to this Agreement or
otherwise relating thereto.

 

Section 6.6           Exclusivity of Indemnification. The parties hereto agree
that, except as set forth in Section 1.4 and Section 5.2, the indemnification
provisions of this Article VI are intended to provide the exclusive remedy for
money damages as to all Losses that they may incur arising from or relating to
the transactions contemplated hereby and any other Transaction Agreement.
Notwithstanding the foregoing, this 0 shall not be interpreted to limit the
rights or remedies of any party hereto in the case of fraud, fraud in the
inducement, intentional misrepresentation or in respect of the pursuit of
equitable remedies, including, but not limited to, specific performance and
injunctive relief.

 

Article VII
GENERAL PROVISIONS

 

Section 7.1           Notices.  All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, sent by overnight courier (providing proof of delivery)
or via facsimile or email (providing proof of sending) to the parties at the
following addresses (or at such other address for a party as specified by like
notice):

 

(a)          if to the Company, to:

 

INDCO, Inc.

4040 Earnings Way

New Albany, IN 47150

Attn: C. Mark Hennis

Facsimile: (800) 942-9742

Email: hennis@indco.com

 

(b)          if to the Buyer, to:

 

Janel Corporation

303 Merrick Road, Suite 400

Lynbrook, New York 11563

Attn: Brendan J. Killackey, CEO

Facsimile: (516) 593-0925

Email: bkillackey@Janelgroup.net

 

with a copy to:

 

Neuberger, Quinn, Gielen, Rubin & Gibber, P.A.

One South Street, 27th Floor

 

 24 

 

 

Baltimore, Maryland 21202

Attn: Hillel Tendler
Facsimile: 410-332-8553

Email: ht@nqgrg.com

 

(c)          if to TVV, to:

 

Tennessee Valley Ventures II, L.P.

201 Fourth Avenue North, Suite 1250

Nashville, TN 37219

Attn: Andrew W. Byrd

Facsimile: (615) 256-7057

Email: andrew@tvvcapital.com

 

with a copy to:

 

McKenzie Laird, PLLC

3835 Cleghorn Avenue, Suite 250

Nashville, TN 37215

Attn: Donald I.N. McKenzie

Facsimile: (615) 297-7040

Email: dmckenzie@mckenzielaird.com

 

Section 7.2           Disclosure Schedules. Information set forth in the
schedules to this Agreement (the “Schedules”) shall modify, supplement, qualify
or limit the representations made in Article II, Article III or Article IV,
respectively. The Section number headings in the Schedules correspond to the
Section numbers in this Agreement.

 

Section 7.3           Assignability; Binding Agreement; Third Party
Beneficiary. Except as expressly permitted by the terms hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (whether by operation of Law or otherwise) by any of the parties hereto
without the prior written consent of the other parties provided, however, that
the Buyer may, without the consent of any of the other parties, assign the
rights of the Buyer (including its rights under Article VI) under this Agreement
and the Company may, without the consent of any of the other parties, assign the
rights of the Company under this Agreement (a) for collateral security purposes
to any lender of the Buyer or the Company, respectively, (b) a wholly-owned
subsidiary of the Buyer, or (c) to any successor in interest of the Buyer or the
Company, respectively; provided, further, that no such assignment shall relieve
Buyer from any of its obligations hereunder. This Agreement shall be binding
upon and enforceable by, and shall inure to the benefit of, the parties hereto
and their respective successors, heirs, executors, administrators and permitted
assigns, and no others. Notwithstanding the foregoing and except as provided in
Article VI, nothing in this Agreement is intended to give any Person not named
herein the benefit of any legal or equitable right, remedy or claim under this
Agreement, except as expressly provided herein, and no such Persons shall have
any such rights, remedies or claims.

 

Section 7.4           Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under Law, but if any provision (or part thereof) of this Agreement shall be
deemed prohibited or invalid under such Law, such provision (or part thereof)
shall be ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.

 

Section 7.5           No Agreement Until Executed. Irrespective of negotiations
among the parties or the exchanging of drafts of this Agreement, this Agreement
shall not constitute or be deemed to evidence a contract, agreement, arrangement
or understanding among the parties hereto unless and until this Agreement is
executed and delivered by the parties hereto.

 

Section 7.6           Certain Definitions. For purposes of this Agreement:

 

(a)          “Adjustment Time” means the open of business Eastern time on the
Closing Date.

 

 25 

 

 

(b)          An “Affiliate” of a Person means (i) with respect to an individual,
such individual’s spouse, children (natural or adopted), or any other direct
lineal descendant of such individual or his spouse; (ii) with respect to an
entity, any officer, director, holder of an Equity Interest representing at
least 10% of the voting power of the issuer of such Equity Interest, general
partner, manager or trustee of such entity; and (iii) with respect to an
individual or entity, any Person which directly or indirectly Controls, is
Controlled by, or is under common Control with such Person.

 

(c)          “Business Day” means any day other than a Saturday or Sunday or
weekday on which banks in Indianapolis, Indiana are authorized or required to be
closed.

 

(d)          “Cash and Cash Equivalents” means all cash on hand and cash
equivalents that are immediately convertible into cash (including interest
receivable thereupon) determined in accordance with GAAP and the Company’s past
practices consistently applied, less any Restricted Cash (as defined below).

 

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

 

(f)          “Company Expenses” means all fees and expenses of TVV or the
Company incurred in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement or payable upon the consummation of
the transactions contemplated by this Agreement.

 

(g)          “Confidential Information” means all information of or regarding
the Buyer, the Company, or any of their respective Affiliates, including,
without limitation: (i) information regarding operations, assets, liabilities or
financial condition; (ii) information regarding employees, contractors,
subcontractors, sales agents or sales representatives; (iii) customer lists or
other information related to customers; (iv) information regarding vendors,
suppliers, distributors or other business partners; (v) forecasts, projections,
budgets and business plans; (vi) trade secrets and proprietary information; or
(vii) the terms of this Agreement.

 

(h)          “Contractual Obligation” means, with respect to any Person, any
contract, agreement, deed, mortgage, lease, sublease, license, commitment,
promise or undertaking, whether written or oral, or other document or instrument
to which or by which such Person is a party or otherwise bound or to which or by
which any property, business, operation or right of such Person is bound.

 

(i)          “Control” (including the terms “Controlled by” and “under common
Control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting Equity Interests, by contract or
otherwise.

 

(j)          “Employee Benefit Program” means (i) an employee benefit plan
within the meaning of Section 3(3) of ERISA whether or not subject to ERISA; and
(ii) incentive award plans, bonus plans or arrangements, stock option, stock
purchase or equity compensation plans, phantom equity programs, severance pay
plans, programs or arrangements, deferred compensation arrangements or
agreements, employment agreements, executive compensation plans, programs,
agreements or arrangements, change in control plans, programs or arrangements,
supplemental income arrangements, vacation plans, and all other employee benefit
plans, agreements, and arrangements, not described in (i) above, in all cases,
maintained or sponsored by the Company or any of its ERISA Affiliates or in
which employees of the Company or any of its ERISA Affiliates participate or
with respect to which the Company or any of its ERISA Affiliates has or may have
any liability.

 

(k)          “Encumbrance” means any mortgage, pledge, security interest, claim,
charge, lien, option, right of first refusal, easement, restrictive covenant,
restriction and encumbrance of any kind.

 

(l)          “Equity Interests” means (i) any capital stock, share, partnership
or membership interest, unit of participation or other similar interest (however
designated) in any Person and (ii) any option, warrant, purchase right,
conversion right, exchange rights or other contractual obligation which would
entitle any Person to acquire any such interest in such Person or otherwise
entitle any Person to share in the equity, profit, earnings, losses or gains of
such Person (including stock appreciation, phantom stock, profit participation
or other similar rights).

 

 26 

 

 

(m)          “ERISA Affiliate” means any entity that would have ever been
considered a single employer with the Company under Section 4001(b) of ERISA or
part of the same “controlled group” as the Company for purposes of Section
302(d)(3) of ERISA.

 

(n)          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(o)          “Expiration Date” means the first (1st) anniversary of the Closing
Date.

 

(p)          “GAAP” means generally accepted accounting principles as applied in
the United States.

 

(q)          “General Enforceability Exceptions” means (i) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar Laws
affecting the enforcement of creditors’ rights and remedies generally from time
to time in effect and (ii) the application of equitable principles (regardless
of whether enforceability is considered in a proceeding at law or in equity).

 

(r)          “Governmental Authority” means any government or political
subdivision, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any federal,
state, local or foreign court having competent jurisdiction.

 

(s)          “Hennis Employment Agreement” means that certain Employment
Agreement dated as of the Closing Date by and between the Company and Hennis, on
terms acceptable to the Buyer

 

(t)          “Indebtedness” means, with respect to the Company, (i) indebtedness
for borrowed money, (ii) indebtedness for the deferred purchase price of
property or services, (iii) any indebtedness evidenced by any note, bond,
debenture or other debt security; (iv) obligations as lessee under leases which
have been or should be, in accordance with GAAP consistently applied, recorded
as capital leases; (v) all accrued and unpaid interest on or any premiums, fees,
penalties, expenses or other amounts due with respect to (i) through (iv) above;
and (vi) any obligations of any other Person or a type referred to in clauses
(i) through (v) to the extent directly or indirectly guaranteed by the Company.

 

(u)          “Intellectual Property” means (i) patents and patent applications
(collectively, “Patents”), (ii) registered trade names, trade dress, logos,
slogans, Internet domain names, registered and unregistered trademarks and
service marks and related registrations and applications for registration, and
all goodwill symbolized thereby (collectively, “Marks”), (iii) registered
copyrights in both published and unpublished works, including without limitation
all compilations, databases and computer programs, manuals and other
documentation and all copyright registrations and applications (collectively,
“Copyrights”), (iv) rights under applicable US state trade secret Laws as are
applicable to know-how and confidential information, and (v) computer software
(including, without limitation, source code, executable code, data, databases,
and documentation).

 

(v)         “Knowledge” means the facts, circumstance or other information that
are actually known by an individual. The phrases “to the Company’s Knowledge,”
“to the Knowledge of the Company” or similar uses of Knowledge coupled with the
Company shall mean the facts, circumstance or other information that are
actually known by Hennis or Wilberding after conducting a reasonable
investigation

 

(w)          “Law” means any domestic, foreign, state or local statute, law,
ordinance, rule, regulation, order of general applicability of any Governmental
Authority.

 

(x)          “Net Working Capital” means, with respect to the Company, as of the
respective balance sheet date: (i) the sum of inventory, accounts receivable
(net of allowances for bad debt), prepaid expenses, prepaid insurance, and
prepaid catalog expenses, less (ii) the sum of accounts payable, credit card
payable, customer deposits, refunds for product returns, accrued salaries and
payroll taxes, accrued bonus plan, accrued profit sharing, accrued 401(k) Plan
payable, and sales tax payable, in each case, determined in accordance with
GAAP.

 

 27 

 

 

(y)          “Order” means any order, injunction, judgment, decree or ruling, or
arbitration award of any Governmental Authority or arbitrator.

 

(z)          “Ordinary course of business” means, with respect to any Person,
the usual and ordinary course of such Person’s business consistent with past
practice (including with respect to frequency, quantity and magnitude).

 

(aa)         “Person(s)” means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity or group (as defined in Section 13(d) of the
Exchange Act).

 

(bb)         “Pre-Closing Period” means any taxable year or period that ends on
or before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year or period ending on and including the Closing Date.

 

(cc)         “Property Taxes” means real, personal and intangible ad valorem
property taxes.

 

(dd)         “Representative” means, with respect to any party hereto, any
agent, trustee, director, manager, officer, employee, attorney, accountant, or
other representative of such party.

 

(ee)         “Restricted Cash” means all pre-paid accounts, customer deposits,
insurance and customer refunds, other deposits and an amount of cash necessary
to cover the aggregate amount of all checks or wires drawn against any bank
account of the Company that have not cleared prior to the Closing.

 

(ff)         “Rollover Amount” means (x) $[___________], which is the aggregate
value attributed to the rollover shares of common stock of the Company retained
by Hennis set forth under the heading “Shares of Rollover Stock” on Exhibit A,
as such amount may be adjusted in the Closing Statement, plus (y) the principal
amount of the Hennis Redemption Note.

 

(gg)         “Subsidiary” means, with respect to any Person (the “Subject
Person”), any corporation more than 50% of whose outstanding voting securities,
or any partnership, joint venture or other entity more than 50% of whose total
Equity Interests, are directly or indirectly owned by such Subject Person.

 

(hh)         “Target Working Capital” means $835,000.00.

 

(ii)          “Tax” or “Taxes” means any federal, state, local or foreign
income, gross receipts, capital gains, franchise, alternative or add-on minimum,
estimated, sales, use, goods and services, transfer, registration, value added,
excise, natural resources, severance, stamp, occupation, premium, windfall
profit, environmental, customs, duties, real property, special assessment,
personal property, capital stock, social security, unemployment, employment,
disability, payroll, employee or other withholding, contributions or other tax,
of any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing.

 

(jj)          “Tax Returns” means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

 

 28 

 

 

(kk)         “Transaction Agreements” means this Agreement and any other
agreement entered into by the parties or any of them in connection with the
transactions contemplated by this Agreement, including the Escrow Agreement, the
Hennis Employment Agreement and the Wilberding Employment Agreement.

 

(ll)         “Wilberding Employment Agreement” means that certain Employment
Agreement dated as of the Closing Date by and between the Company and
Wilberding, on terms acceptable to the Buyer.

 

(mm)         “Hennis Redemption Note” means the Company’s unsecured promissory
note due ninety (90) days after the date of this Agreement, issued to Hennis for
the purchase and redemption of 10,000 shares of Common Stock.

 

Section 7.7           Interpretation. When a reference is made in this Agreement
to an Article, Section, Exhibit or Schedule, such reference will be to an
Article or Section of, or a Schedule or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they will be deemed to be
followed by the words “without limitation.” Where the context permits, the use
of the term “or” will be non-exclusive and equivalent to the use of the term
“and/or.” The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement will refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms used herein with
initial capital letters have the meanings ascribed to them herein and all terms
defined in this Agreement will have such defined meanings when used in any
certificate, exhibits or schedules or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of such
term. Any agreement, instrument or statute defined or referred to herein, or in
any agreement or instrument that is referred to herein, means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
Accounting terms used and not otherwise defined herein shall have the meanings
given to them by GAAP, consistently applied. The term “certificate, exhibits or
schedules” when used herein is not intended to incorporate preexisting
agreements between the Company and unrelated third parties that may be attached
or delivered as part of an exhibit or schedule but have not been made with
reference or in connection with this Agreement or the Closing.

 

Section 7.8           Fees and Expenses. Subject to Section 1.3(c), and except
as otherwise set forth in this Agreement, each of the Buyer, on the one hand,
and the Company and TVV, on the other hand, shall bear their own expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement.

 

Section 7.9           Governing Law. This Agreement will be governed by, and
construed in accordance with, the internal Laws of the State of Indiana
regardless of the Laws that might otherwise govern under applicable principles
of conflict of laws.

 

Section 7.10         Specific Performance. The parties hereto agree that
irreparable damage could occur in the event that any of the covenants in this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent breaches of the covenants set
forth in this Agreement and to enforce specifically the terms and provisions of
the covenants hereof in accordance with Section 7.11. Such remedies shall not be
exclusive and shall be in addition to any other remedies that any party may have
under Article VI.

 

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Section 7.11         Venue; Consent to Jurisdiction. Except as for all disputes,
claims, or controversies arising out of Section 1.4 (Post-Closing Adjustments)
(which disputes, claims, or controversies shall be resolved exclusively as set
forth in Section 1.4), all disputes, claims, or controversies arising out of or
relating to this Agreement or any of the other Transaction Agreements or the
transactions contemplated hereby or thereby or the negotiation, validity or
performance hereof or thereof that are not resolved by mutual agreement shall
only be brought in the federal courts situated in the County of Marion in the
State of Indiana (including the appropriate appellate courts therefrom). Each of
the parties hereto irrevocably and unconditionally consents to the exclusive
jurisdiction of such federal courts to resolve all such disputes, claims or
controversies and further consents to the jurisdiction of such federal courts
for the purposes of enforcing the provisions of Section 1.4; provided, however,
that to the extent necessary to avoid irreparable harm, any party may seek
temporary or preliminary injunctive relief in accordance with Section 7.10 in
any court of competent jurisdiction. EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS SUCH PARTY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUCH disputes, claims or controversies.
Each party hereto further irrevocably waives any objection to any proceeding
before such federal courts based upon lack of personal jurisdiction or to the
laying of venue in such federal courts and further irrevocably and
unconditionally waives and agrees not to make a claim in any court that any
proceeding before such federal courts has been brought in an inconvenient forum.
Each of the parties hereto hereby consents to service of process by registered
mail at the address to which notices are to be given hereunder. Each of the
parties hereto hereby agrees that its submission to jurisdiction and its consent
to service of process by mail are made for the express benefit of the other
parties hereto. The parties agree and intend that the pendency of a proceeding
pursuant to Section 1.4 of this Agreement shall not preclude the ability of any
party to bring an action under this Section 7.11 with respect to any dispute or
controversy to which this Section 7.11 applies.

 

Section 7.12         Mutual Drafting. The parties hereto are sophisticated and
have been represented by attorneys throughout the transactions contemplated
hereby who have carefully negotiated the provisions hereof. As a consequence,
the parties do not intend that the presumptions of Laws or rules relating to the
interpretation of contracts against the drafter of any particular clause should
be applied to this Agreement or any agreement or instrument executed in
connection herewith, and therefore waive their effects.

 

Section 7.13         Integration. This Agreement and the Transaction Agreements,
including the schedules, exhibits, documents and instruments referred to herein
or therein, constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof.

 

Section 7.14         Counterparts. This Agreement may be executed and delivered
by facsimile signature or portable document format (PDF) by electronic mail and
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

Section 7.15         Amendments, Waivers and Consents. For the purposes of this
Agreement and all agreements executed pursuant hereto, no course of dealing
between or among any of the parties hereto and no delay on the part of any party
hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No provision hereof may be waived
otherwise than by a written instrument signed by the party or parties so waiving
such covenant or other provision. Waiver of any term or condition of this
Agreement by a party shall not be construed as a waiver of any subsequent breach
or waiver of the same term or condition by such party, or a waiver of any other
term or condition of this Agreement by such party. No amendment to this
Agreement may be made without the written consent of TVV, the Company and the
Buyer.

 

[Signature page immediately follows.]

 

 30 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement
to be signed personally, or by their respective officers thereunto duly
authorized, all as of the date first written above.

  

BUYER:   COMPANY:       JANEL CORPORATION   INDCO, INC.       By: /s/ Brendan J.
Killackey   By:  /s/ C. Mark Hennis   Brendan J. Killackey     C. Mark Hennis,
President   Chief Executive Officer    

 

    SELLING STOCKHOLDER:           TENNESSEE VALLEY VENTURES, II, L.P.          
By: TVV Equity Investors II, LLC,       Its General Partner           By: /s/
Andrew W. Byrd       Andrew W. Byrd, President

 

Signature Page to

Stock Purchase Agreement

 

 

 

 

ANNEX A

Defined Terms

 

Term   Section Reference       Accounting Referee   Section 1.4(c) Adjustment
Time   Section 7.6(a) Affiliate   Section 7.6(b) Agreement   Introduction Base
Balance Sheet   Section 2.6(a) Business Day(s)   Section 7.6(c) Buyer  
Introduction Buyer Indemnified Party   Section 6.2(a) Buyer Indemnifying Party  
Section 6.2(b) Buyer Purchase Price Payment Amount   Section 1.4(d) Buyer
Warranty Claims   Section 6.2(a)(i) Cap   Section 6.2(e)(ii) Cash and Cash
Equivalents   Section 7.6(d) Closing   Section 1.2 Closing Date   Section 1.2
Closing Date Payment   Section 1.3(a) Closing Statement   Section 1.4(a) Closing
Statement Response Notice   Section 1.4(a) Code   Section 7.6(e) Company  
Introduction Company Expenses   Section 7.6(f) Company License   Section 2.17
Confidential Information   Section 7.6(g) Contractual Obligation   Section
7.6(h) Control   Section 7.6(i) Copyrights   Section 7.6(u) Deductible   Section
6.2(e)(i) Effective Date   Section 1.2 Employee Benefit Program   Section 7.6(j)
Encumbrance   Section 7.6(k) Environmental Laws   Section 2.21 Equity Interests
  Section 7.6(l) ERISA   Section 2.18(a) ERISA Affiliate   Section 7.6(m) Escrow
Account   Section 1.3(d) Escrow Agent   Section 1.3(d) Escrow Agreement  
Section 1.3(d) Escrow Amount   Section 1.3(d) Estimated Cash and Cash
Equivalents   Section 1.3(e) Estimated Closing Statement   Section 1.3(e)
Estimated Company Expenses   Section 1.3(e) Estimated Indebtedness   Section
1.3(e) Estimated Working Capital   Section 1.3(e) Exchange Act   Section 7.6(n)
Excluded Claims   Section 6.2(e)(i) Expiration Date   Section 7.6(o) Final
Closing Date Payment   Section 1.4(b)

 

 

 

 

Financial Statements   Section 2.6(a) Fundamental Representations   Section 6.1
GAAP   Section 7.6(p) General Enforceability Exceptions   Section 7.6(q)
Governmental Authority   Section 7.6(r) Hazardous Material   Section 2.21 Hennis
  Introduction Hennis Employment Agreement   Section 7.6(s) Hennis Redemption
Note   Section 7.6(mm) Indebtedness   Section 7.6(t) Indemnified Parties  
Section 6.3 Indemnifying Parties   Section 6.3 Intellectual Property   Section
7.6(u) Knowledge   Section 7.6(v) Knowledge Qualifier   Section 6.2(a)(i) Law  
Section 7.6(w) Leased Real Property   Section 2.11(a) Loss(es)   Section 6.2(a)
Loss Payment   Section 6.5 Marks   Section 7.6(u) Material Contracts   Section
2.13(b) Materiality Qualifiers   Section 6.2(a)(i) Net Working Capital   Section
7.6(x) Order   Section 7.6(y) ordinary course of business   Section 7.6(z)
Organizational Documents   Section 2.1 Outstanding Disputed Item   Section
1.4(c) Patents   Section 7.6(u) Person(s)   Section 7.6(aa) Pre-Closing Period  
Section 7.6(bb) Property Taxes   Section 7.6(cc) Purchase Price   Section 1.6
Release Date   Section 1.3(d)(i) Representative   Section 7.6(dd) Restricted
Cash   Section 7.6(ee) Restrictive Covenants   Section 5.5(b) Review Period  
Section 1.4(a) Rollover Amount   Section 7.6(ff) Schedules   Section 7.2 Seller
Indemnified Party   Section 6.2(b) Seller Indemnifying Party   Section 6.2(a)
Seller Warranty Claims   Section 6.2(b)(i) Stockholders   Introduction
Stockholder Releasing Parties   Section 5.6 Stock Purchase   Recitals Stock  
Recitals Straddle Period   Section 5.2(b) Straddle Returns   Section 5.2(a)(ii)
Subsidiary   Section 7.6(ff) Target Working Capital   Section 7.6(hh) Tax(es)  
Section 7.6(ii) Tax Contest   Section 5.2(f)

 

 Annex A-2 

 

 

Tax Returns   Section 7.6(jj) Transaction Agreements   Section 7.6(kk) Transfer
Taxes   Section 5.2(e) TVV   Introduction Unresolved Amount   Section 1.3(d)(i)
WARN   Section 2.16 Wilberding   Section 1.7(a)(vi) Wilberding Employment
Agreement   Section 7.6(ll)

 

 Annex A-3 

 

 

EXHIBIT A

Stock

 

Stockholder  Shares of Common Stock of
the Company   Shares of Stock   Shares of Rollover
Stock  TENNESSEE VALLEY VENTURES, II, L.P.   601,042    601,042    0  C. MARK
HENNIS   18,125    0    18,125  TOTAL   619,167    601,042    18,125