EXHIBIT 10.4

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) dated as of October 15, 2004,
by and among Datrek Acquisition, Inc., a corporation organized and existing
under the laws of the State of Florida (“Buyer”), Datrek Professional Bags,
Inc., a corporation organized and existing under the laws of the State of
Tennessee (“Seller”) and Dennis and Deborah Ryan (“Ryans” and together with the
Seller, the “Seller Responsible Parties”).

 

W I T N E S S E T H :

 

WHEREAS, the Seller is engaged in the business of manufacturing, marketing,
distributing and selling high quality men’s and women’s golf bags and
accessories (the “Business”);

 

WHEREAS, the Buyer desires to acquire from the Seller and the Seller desires to
sell to the Buyer substantially all of the assets of the Business upon the terms
and subject to the conditions set forth in this Agreement (the “Sale”); and

 

WHEREAS, the respective Board of Directors of the Seller and the Buyer have each
approved the Sale, the terms of this Agreement and the transactions contemplated
hereby.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties, intending legally to be bound, agree as follows:

 

SECTION 11.15 AGREEMENT

 

[A list of defined terms is provided in Article 9 hereof]

 

Article 1. Purchase and Sale

 

1.1 General. On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall
sell, transfer, assign, convey and deliver to Buyer, all of Seller’s right,
title and interest in and to the Business, including, without limitation, in and
to all of the assets, properties, rights, goodwill, contracts and claims of the
Business, other than the Excluded Assets, wherever located, whether tangible or
intangible, real or personal, known or unknown, actual or contingent, as the
same shall exist as of the Closing (such rights, title and interest in and to
all such assets, properties, rights, contracts and claims, being collectively
referred to herein as, the “Purchased Assets”). The Purchased Assets shall
include, without limitation, the following assets:

 

(a) Cash and cash equivalents, including petty cash accounts or cash on hand or
in bank accounts, certificates of deposit, commercial paper and other similar
securities related to the Business;

 

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(b) all inventory (including work in process, raw materials and finished goods),
goods in transit, unbilled revenues and other properties and rights associated
with the performance of contracts and the operation of the Business;

 

(c) all supplies, machinery, equipment, test equipment, demonstration equipment,
computers, tools, dies, spare parts, vehicles, furniture, office materials and
other tangible personal property, whether or not such assets are located at the
Premises;

 

(d) all accounts receivable and notes receivable and other claims for money or
other obligations due (or which hereafter will become due) to Seller arising out
of the Business together with any unpaid interest accrued thereon from the
respective obligors and any security or collateral therefor;

 

(e) all of Seller’s interest in the Intellectual Property Rights, including,
without limitation, all results of the Business’s research and development
activities and other Intellectual Property Rights developed or acquired for the
Business, or related to, or of use or potential use in connection with any
current or contemplated potential future products of the Business or parts,
components or subassemblies used or purchased by the Business;

 

(f) all proceeds under any insurance contract or arrangement relating to the
Business;

 

(g) all right, title and interest in, to and under all Contracts associated with
the Business, subject in each case to the terms of such Contracts;

 

(h) all books and records (including such books and records as are contained in
computerized storage media) of the Business, including all inventory,
purchasing, accounting, sales, export, import, research, engineering,
manufacturing, maintenance, repairs, marketing, banking, documents and records
constituting Intellectual Property Rights, shipping records, personnel files and
all files, customer and supplier lists, records, literature and correspondence,
whether or not physically located on any of the Premises, provided the Seller
may retain copies of all books and records related to Excluded Liabilities,
Excluded Assets and Employees;

 

(i) any other tangible assets of Seller which are used in the Business and which
are of a nature not customarily reflected in the books and records of a
business, such as assets which have been written off for accounting purposes but
which are still used by or of value to the Business;

 

(j) all Permits which are transferable and which are used in the Business, as
presently conducted;

 

(k) all rights of the Seller pursuant to any express or implied warranties,
representations or guaranties made by suppliers to the Business;

 

(l) all goodwill associated with the Business;

 

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(m) all rights under non-disclosure agreements with employees and agents of
Seller and under confidentiality agreements with prospective purchasers of the
Business or with other third parties to the extent relating to the Business;

 

(n) all deposits, prepaid charges, insurance, sums and fees, offset credit
balances in any country, refunds, and causes of action;

 

(o) any other asset of Seller, other than Excluded Assets, in respect of which
there is an Assumed Liability; and

 

(p) other than to the extent related to a liability asserted against Seller, all
rights of recovery, rights of set-off and rights of recoupment of Seller in
connection with the Business.

 

1.2 Excluded Assets. Notwithstanding anything herein to the contrary, the
Purchased Assets shall not include any of the following assets related to the
Business (collectively, the “Excluded Assets”):

 

(a) The fee owned Real Property, leasehold and other interests in Real Property
listed on Schedule 1.2(a), but not including any furniture on the Premises;

 

(b) The Seller’s leasehold interest and other interests as listed on Schedule
1.2(b) in that certain lease relating to the Real Property located at 601
Central Avenue, Springfield, TN;

 

(c) The 2004 Lexus RX 300 and 2004 Lexus LX 470 automobiles used by the Ryans;

 

(d) Deferred taxes as set forth on Schedule 1.2(d);

 

(e) All deposits, rights and interests of the Seller in bank account number
003781812349 with Bank of America, N.A. which account, as of the Closing Date,
will have a $0 balance.

 

1.3 Certain Provisions Relating to the Purchased Assets.

 

(a) To the extent that a contract, Permit or other asset which would otherwise
be included within the definition of “Purchased Assets,” or any claim, right or
benefit arising thereunder or resulting therefrom (each an “Interest” and
collectively the “Interests”), is not capable of being sold, assigned,
transferred or conveyed without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any third person (including a
Governmental Authority), and such approval, consent or waiver has not been
obtained prior to the Closing, or if such sale, assignment, transfer or
conveyance or attempted sale, assignment, transfer or conveyance would
constitute a breach thereof or a violation of any law, decree, order, regulation
or other governmental edict, this Agreement shall not constitute a sale,
assignment, transfer or conveyance thereof, or an attempted sale, assignment,
transfer or conveyance thereof. Schedule 1.3(a) sets forth a list of those third
party approvals, consents or waivers which have not been obtained by the Seller
Responsible Parties prior to the Closing.

 

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(b) Seller and Buyer shall use their best efforts and shall cooperate to obtain
all approvals, consents or waivers necessary to convey to Buyer each Interest as
of the Closing. The failure to obtain any approval, consent or waiver necessary
to convey any Interest to Buyer shall not affect the obligations of the parties
to close hereunder. Subsequent to the Closing, the Seller Responsible Parties
shall execute and deliver any other instruments and take any actions, which may
be reasonably required for the implementation of this Agreement and the
transactions contemplated hereby.

 

1.4 Assumption of Liabilities. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Buyer will assume and become
responsible for the following, other than the Excluded Liabilities, disclosed
liabilities and obligations of the Seller (the “Assumed Liabilities”):

 

(a) all of the third party liabilities and obligations set forth on Schedule
1.4(a) arising from the ownership, use or possession of the Purchased Assets or
the operation of the Business following the Closing Date; and

 

(b) the contracts being transferred to Buyer hereunder, a list of which is set
forth on Schedule 1.4(b) (the “Contracts”) (to the extent that such liabilities
and obligations remain unsatisfied or are required to be performed on or after
the Closing Date).

 

1.5 Excluded Liabilities. The Seller and the Buyer expressly understand and
agree that, other than the Assumed Liabilities, Buyer shall not assume, pay,
perform or discharge or become liable for any and all obligations, commitments
or liabilities of any and every nature whatsoever of the Seller including
(without limitation) all obligations, commitments or liabilities (whether
recourse or non-recourse to the Seller) which relate to, are secured by or
otherwise encumber any of the Purchased Assets, including, without limitation:

 

(a) all liabilities associated with the Real Property including the Real
Property located at 835 and 851 Bill Jones Industrial Way, Springfield, TN
including, without limitation, the note and deed of trust thereon;

 

(b) liabilities resulting from Environmental Claims relating to the operation of
the Business prior to the Closing;

 

(c) claims arising prior to Closing that the operation of the Business infringes
the Intellectual Property Rights of any Person, except as otherwise set forth
herein;

 

(d) any liability or obligation arising out of any claim of or for injury to
persons or property by reason of the improper performance or malfunctioning,
improper design or manufacture, or failure to adequately package, label or
provide warnings as to the hazards of, any product of the Business, where the
injury giving rise to such claim occurred on or prior to the Closing Date;

 

(e) any liabilities associated with the automobiles identified in Section
1.2(c), above;

 

(f) any obligation to any Affiliates of the Seller;

 

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(g) any liability of the Seller to any plan, individual or governmental agency
arising out of any failure of the Seller to comply with the applicable
provisions of any Employee Benefit Plans, ERISA, the Code, or other applicable
Laws with respect to its employees, including any obligation or liability of the
Seller for any penalty, fine or similar amount due from the Seller on account of
any breach of fiduciary duty or failure to comply with applicable laws or
regulations;

 

(h) any liability for severance pay, leaving allowances, guaranteed fixed terms
of employment or retirement benefits beyond those provided under applicable law,
collective bargaining agreements, or any Employee Benefit Plan applicable to
employees of the Business generally, which arises out of any acts or omissions
of Sellers prior to the Closing Date; and

 

(i) all liabilities of Seller or any Affiliate of Seller for Taxes which are not
Assumed Liabilities (collectively, the “Excluded Liabilities”).

 

1.6 Purchase Price; Payment. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, the Buyer shall deliver to the Seller
the following consideration (the “Purchase Price”) for the sale of the Purchased
Assets: (i) the Closing Cash Payment by wire transfer of immediately available
funds to the account or accounts designated by the Seller not later than three
Business Days prior to the Closing Date; (ii) the executed Short-Term Promissory
Note in the principal amount of $2,240,000; (iii) the executed Long-Term
Promissory Note in the principal amount of $3,200,000; and (iv) the Shares.

 

1.7 Tax Treatment. The transactions contemplated by this Agreement and by the
Securities Purchase Agreement (a form of which is attached as Exhibit K)
constitute integrated transactions, each of which is conditioned and dependent
upon the other. Following consummation of such transactions, Seller and SVCH
will be in “control” of Buyer (within the meaning of Code Section 351), and
therefore the parties intend to treat the transaction as within the scope of
Code Section 351. That portion of the Purchase Price other than the Shares
(i.e., the “boot” under Code Section 351) shall be allocated among the Purchased
Assets in proportion to their respective fair market values in the manner set
forth on Schedule 1.7 hereto. Each party shall report the sale and purchase of
the Purchased Assets contemplated by this Agreement on all applicable federal,
state and local income, franchise, excise and sales tax returns in accordance
with the foregoing. The parties agree to provide such cooperation and
information as may be required by the other for the purpose of preparing such
reports.

 

1.8 Earnout.

 

(a) The Seller will be entitled to receive a contingent purchase price payment
(the “Contingent Payment”) of up to $1,000,000 (the “Contingent Payment Cap”).
Upon reaching the Contingent Payment Cap, all further obligations of the Buyer
under this Section including the obligation to pay the Contingent Payment will
terminate. The Contingent Payment shall be payable quarterly over a period of
five (5) years commencing on January 1, 2005 (the “Contingent Payment Period”).
The initial Contingent Payment shall be based on the period beginning July 1,
2004 and ending December 31, 2004; thereafter, the Contingent Payment shall be
determined on a quarterly basis during the Contingent Payment Period.

 

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(i) The Contingent Payment amount due to the Seller shall be based on orders for
golf bags made by Wilson Sporting Goods Co. and any other third party golf bag
or golf accessories manufacturer which enter into substantially similar
agreements with the Seller regarding the assembly and shipment of golf bags
during the Contingent Payment Period (collectively, “OEMs”) and shall be in an
amount equal to the sum of (1) $1.25 per golf bag assembled pursuant to an OEM’s
instructions and for which payment has been received from such OEM; plus (2)
$1.25 per golf bag shipped pursuant to such OEM’s instructions;

 

(ii) The Contingent Payment as to any OEM other than Wilson Sporting Goods Co.
is conditioned upon the Buyer being paid by such OEM the following amounts: (1)
$5.50 - $6.50 per golf bag assembled pursuant to such OEM’s instructions; and
(2) $2.00 per golf bag shipped pursuant to such OEM’s instructions with all
related shipping expenses paid by such OEM.

 

(b) Any amount or calculation to be made in connection with the Contingent
Payment shall be determined or made using the same revenue, income and expense
recognition policies and practices as have been used by the Seller prior to the
Closing.

 

(c) Within 30 days after January 1, 2005 (and for each quarter thereafter during
the Contingent Payment Period), the Buyer at its expense shall prepare and
deliver to the Seller a statement of the volume of products assembled and
shipped for such period along with a calculation of the Contingent Payment due
for such period (the “Contingent Payment Calculation”). During the 30 days
immediately following receipt of the Contingent Payment Calculation by the
Seller, the Seller and its accountants shall be entitled to review the
Contingent Payment Calculation and any working papers, trial balances and
similar materials relating to the Contingent Payment Calculation prepared by the
Buyer or its accountants, and the Buyer shall provide the Seller and its
accountants with reasonable access, during normal business hours, to the Buyer’s
personnel, properties, books and records to the extent related thereto. The
Contingent Payment Calculation shall become final and binding upon the parties
hereto on the 31st day following delivery thereof unless the Seller gives
written notice to the Buyer of their disagreement with the Contingent Payment
Calculation (a “Notice of Disagreement”) prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. If a timely Notice of Disagreement is received by the Buyer with
respect to the Contingent Payment Calculation, then the Contingent Payment
Calculation (as revised in accordance with clause (A) or (B) below), shall
become final and binding upon the parties on the earlier of (A) the date the
Buyer and the Seller resolve in writing any differences they have with respect
to any matter specified in a Notice of Disagreement, or (B) the date any matters
in dispute are finally resolved in writing by an independent nationally
recognized accounting firm jointly selected by the Seller and the Buyer (the
“Neutral Auditor”) in the manner described below (the date on which the
Contingent Payment Calculation so becomes final and binding being hereinafter
referred to as the “Final Determination Date”). During the 30 days immediately
following the delivery of any Notice of Disagreement, the Buyer and the Seller
shall seek in good faith to resolve in writing any differences which they may
have with respect to any matter specified in such Notice of Disagreement. During
such period, the Seller and its accountants shall each have access to the
Buyer’s working papers, trial balances and similar materials (including the
working papers, trial balances and similar materials of their respective

 

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accountants) prepared in connection with the Buyer’s preparation of the
Contingent Payment Calculation. At the end of such 30-day period, the Seller and
the Buyer shall submit to the Neutral Auditor for review and resolution any and
all matters which remain in dispute and which were included in any Notice of
Disagreement (it being understood that the Neutral Auditor shall act as an
arbitrator to determine, based solely on presentations by the Buyer and the
Sellers (and not by independent review), only those matters which remain in
dispute), and the Neutral Auditor shall reach a final, binding resolution of all
matters which remain in dispute, which final resolution shall be (A) in writing,
(B) furnished to the Buyer and the Sellers as soon as practicable after the
items in dispute have been referred to the Neutral Auditor, (C) made in
accordance with this Agreement, and (D) conclusive and binding upon the parties
to this Agreement and not subject to collateral attack for any reason. The
Contingent Payment Calculation, with any adjustments necessary to reflect the
Neutral Auditor’s resolution of the matters in dispute, shall become final and
binding on the parties on the date the Neutral Auditor delivers its final
resolution to the parties. Each party shall pay its own costs and expenses
incurred in connection with such arbitration, provided that the fees and
expenses of the Neutral Auditor shall be borne as follows:

 

(i) if the Neutral Auditor resolves all of the remaining objections in favor of
the Buyer (the amount of the Contingent Payment so determined is referred to
herein as the “Low Amount”), the Seller will be responsible for all of the fees
and expenses of the Neutral Auditor;

 

(ii) if the Neutral Auditor resolves all of the remaining objections in favor of
the Seller (the amount of the Contingent Payment so determined is referred to
herein as the “High Amount”), the Buyer will be responsible for all of the fees
and expenses of the Neutral Auditor; and

 

(iii) if the Neutral Auditor resolves some of the remaining objections in favor
of the Buyer and the rest of the remaining objections in favor of the Seller
(the amount of the Contingent Payment so determined is referred to herein as
“Actual Amount”), the Seller will be responsible for that fraction of the fees
and expenses of the Neutral Auditor equal to (i) the difference between the High
Amount and the Actual Amount over (ii) the difference between the High Amount
and the Low Amount, and the Buyer will be responsible for the remainder of the
fees and expenses.

 

(d) The Buyer shall pay each Contingent Payment when it delivers the Contingent
Payment Calculation for such period (even if the Seller disputes the amount of
either such payment as determined by the Buyer). If the amount of either such
payment is in dispute, and the payment that is ultimately determined to be
payable pursuant to this Section is (A) greater than the amount (if any) paid
pursuant to the previous sentence, then the Buyer shall pay the difference
within three business days after such determination, or (B) less than the amount
(if any) paid pursuant to the previous sentence, then the Seller shall repay the
difference within three business days after such determination. Payment of a
Contingent Payment shall be made by the Buyer to the Seller by wire transfer of
immediately available funds to the account or accounts designated in writing by
the Seller. Payment of any amounts payable to the Buyer pursuant to clause (B)
of this paragraph (iv) shall be made by wire transfer of immediately available
funds to the account designated in writing by the Buyer.

 

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1.9 Closing and Closing Date.

 

(a) The closing (the “Closing”) of the transactions herein contemplated shall
occur simultaneously upon the due execution and delivery of this Agreement (such
time and date being referred to herein as the “Closing Date”), at the offices of
Adorno & Yoss, Suite 1600, 2601 South Bayshore Drive, Miami, Florida 33133, or
at such other place as the Seller and the Buyer shall agree.

 

(b) At the Closing, the Seller shall deliver, or caused to be delivered, to the
Buyer the following items:

 

(i) A duly executed bill of sale and such other executed assignments, bills of
sale or certificates of title, each dated the Closing Date and in form and
substance reasonably satisfactory to counsel to Buyer, as are reasonably
necessary to transfer to Buyer all of Seller’s right, title and interest in, to
and under the Purchased Assets;

 

(ii) Duly executed assignments, sufficient to transfer all of Seller’s right,
title and interest in and to the Intellectual Property Rights to Buyer, in a
form suitable for recording in the various appropriate national or regional
patent, trademark, copyright offices or other governmental offices;

 

(iii) Certificate of the Secretary of the Seller, dated the Closing Date, (A) as
to the incumbency and signatures of the officers or representatives of the
Seller executing this Agreement and each of the agreements and any other
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary, and (B) certifying
attached resolutions of the Board of Directors of the Seller, which authorize
and approve the execution and delivery of this Agreement and each of the
agreements to which Seller is a party and the consummation of the transactions
contemplated hereby and thereby;

 

(iv) Duly executed and acknowledged assignment and assumption, in form and
substance reasonably acceptable to the Buyer, transferring to Buyer all of
Seller’s right, title and interest in and to the Contracts;

 

(v) Duly executed letters, in form and substance reasonably acceptable to the
Buyer, whereby the Seller notifies its customers of the consummation of the Sale
and instructs such customers to remit payment relating to the Purchased Assets
directly to the Buyer;

 

(vi) Duly executed letters, in form and substance reasonably acceptable to the
Buyer, whereby the Seller notifies its suppliers, vendors and lessors of the
consummation of the Sale;

 

(vii) The documents and instruments required to be delivered under Section 5
hereof.

 

(viii) An opinion of counsel to the Seller Responsible Parties in form and
content satisfactory to the Buyer.

 

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(c) At the Closing, the Buyer shall deliver, or caused to be delivered, to the
Seller the following items:

 

(i) The Closing Cash Payment;

 

(ii) The duly executed Short-Term Promissory Note;

 

(iii) The duly executed Long-Term Promissory Note together with the Irrevocable
Standby Letter of Credit issued by Stanford International Bank in favor of
Seller;

 

(iv) Certificate(s) evidencing the Shares;

 

(v) Certificate of the Secretary of the Buyer, dated the Closing Date, (A) as to
the incumbency and signatures of the officers or representatives of Buyer
executing this Agreement and each of the agreements and any other certificate or
other document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary, and (B) certifying attached
resolutions of the Board of Directors and Shareholders of the Buyer, which
authorize and approve the execution and delivery of this Agreement and each of
the agreements to which Buyer is a party and the consummation of the
transactions contemplated hereby and thereby;

 

(vi) The documents and instruments required to be delivered under Section 6
hereof; and

 

(vii) An opinion of counsel to the Buyer in form and content satisfactory to the
Seller.

 

(d) At the Closing, each of the parties hereto shall take, or cause to be taken,
all such actions and deliver, or cause to be delivered, all such other
documents, instruments, certificates and other items as may be required under
this Agreement or otherwise, in order to perform or fulfill all covenants and
agreements on its part to be performed at or prior to the Closing Date.

 

1.10 Taking of Necessary Action; Further Action. Each of the parties shall use
its respective reasonable best efforts to take all such action as may be
necessary or appropriate in order to effectuate the Closing as promptly as
possible. If, on or at any time after the Closing Date, any further reasonable
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Buyer with full right, title and possession to all assets, property,
rights, privileges, powers, and franchises of the Purchased Assets, the Seller
shall take, and shall ensure that the officers of the Seller are fully
authorized, in the name of the Seller or otherwise, to take, and shall take, all
such lawful and necessary action.

 

Article 2. Representations and Warranties of the Seller Responsible Parties.

 

In order to induce the Buyer to enter into this Agreement and purchase the
Purchased Assets, each of the Seller Responsible Parties jointly and severally
makes the following

 

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representations and warranties to the Buyer, which representations and
warranties shall be true and correct as of the Closing Date:

 

2.1 Disclosure Schedules; Due Diligence Information; Access.

 

(a) The Seller Responsible Parties have delivered to the Buyer the Disclosure
Schedule, which includes the numbered schedules specifically referred to in this
Article 2 (the “Disclosure Schedule”). The information contained in the
Disclosure Schedule is complete and accurate, and all documents that are
attached to or form a part of the Disclosure Schedule are complete and accurate
copies of the genuine original documents they purport to represent. References
to Schedules in this Agreement shall be to Schedules included in the Disclosure
Schedule.

 

(b) All of the documents, financial statements, reports, compilations,
management and statistical reports and other information provided by the Seller
to the Buyer in response to Buyer’s due diligence investigation of the Business
and the Purchased Assets are true, correct and complete.

 

(c) The Seller has given the Buyer and its representatives reasonable access to
Seller’s employees (including appropriate experts and other knowledgeable
personnel), attorneys, accountants, agents, independent contractors, properties,
books and records of the Seller and has furnished the Buyer and its
representatives with such information concerning the Seller as the Buyer has
reasonably requested.

 

2.2 Organization and Standing. The Seller is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Tennessee
and has all requisite corporate power and authority to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted. The Seller is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state in which the operation of
its business or ownership of its assets makes such qualification necessary,
except where the failure to so qualify or be in good standing would not have a
Material Adverse Effect. The copies of the articles of incorporation and bylaws
or other organizational documents which have been delivered to the Buyer are
true, accurate and complete. The Seller does not have any subsidiaries and does
not own or have any right to acquire any equity interest in any other Person.
The Seller does not presently own or control, directly or indirectly, any
interest in any other corporation, association, or other business entity. The
Seller is not a participant in any joint venture, partnership, or similar
arrangement.

 

2.3 Binding Agreement. The Seller has all requisite corporate power and
authority to enter into this Agreement, to execute and deliver this Agreement,
to carry out its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Seller
and the consummation by the Seller of its obligations hereunder have been duly
and validly authorized by all necessary corporate and stockholder action on the
part of the Seller. This Agreement has been duly executed and delivered on
behalf of the Seller and, assuming the due authorization, execution and delivery
by the Buyer, constitutes a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms. As of the Closing Date, each of the
agreements, instruments and other documents to be delivered

 

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hereunder to the Buyer at the Closing will have been duly and validly executed
and delivered by the Seller and will be enforceable against the Seller in
accordance with its terms except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer,
equitable subordination, or similar laws and doctrines affecting the rights of
creditors generally and general equitable principles.

 

2.4 Absence of Violations; Required Consents. Except for the Required Consents
and except as set forth on Schedule 2.4, the execution, delivery and performance
by the Seller of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (a) violate or result in the breach or
default of any provision of articles, certificates of incorporation, by-laws or
other charter or corporate governance documents of the Seller, (b) violate any
Law or Governmental Order applicable to the Seller or any of its properties or
assets, (c) except for the Required Consents, require any consent, approval,
authorization or other order of, action by, registration or filing with or
declaration or notification to any Governmental Authority or any other Person or
(d) result in any violation or breach of, constitute a default (or event which
with the giving of notice, or lapse of time or both, would become a default)
under, require any consent under, or give to others any rights of notice,
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on the Purchased Assets, or result
in the imposition or acceleration of any payment, time of payment, vesting or
increase in the amount of compensation or benefit payable, pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease, sublease, license
or permit, or franchise to which the Seller is a party or by which its assets
are bound. Except for the Required Consents, the Seller does not need to give
any notice to, make any filing with or obtain any authorization, consent or
approval of any Governmental Authority in order for the parties to consummate
the transactions contemplated by this Agreement. A true and complete list of all
third party (including, without limitation, lenders, lessors, licensees,
licensors, distributors and vendors) consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby is set forth on
Schedule 2.4 attached hereto.

 

2.5 Entire Business. The Seller’s ownership of the Business is evidenced, except
for the Excluded Assets, solely by the Purchased Assets and the sale,
assignment, conveyance and delivery of the Purchased Assets to the Buyer
pursuant to this Agreement will transfer all of the Seller’s and its Affiliates’
ownership interests comprising such Business.

 

2.6 Financial Information.

 

(a) The Seller has have delivered to Buyer the audited balance sheets of the
Seller as at December 31, 2003 (the “December 31, 2003 Balance Sheet”), December
31, 2002 and December 31, 2001, together with the audited statements of
operations, stockholders equity and cash flows for the three years ended
December 31, 2003, together with the notes thereto (the “Audited Financial
Statements”).

 

(b) Each of the balance sheets referred to above (including the related notes
and schedules) fairly presents in all material respects the financial position
of the Seller, as of its date and each of the statements of operations,
stockholders equity and cash flows (including any

 

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related notes and schedules) fairly presents in all material respects the
results of operations, net income and cash flows of the Seller for the periods
set forth therein, in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein. Each of the Audited
Financial Statements referred to above are in proper form and will satisfy the
historical financial statement requirements of Form 8-K promulgated by the SEC
for a material acquisition by the Buyer and the independent accountants of the
Seller have consented to the use of their report in connection with such filing.

 

(c) The Seller maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Audited Financial Statements are in agreement
with the books and records regularly maintained by the Seller.

 

2.7 [Intentionally omitted.]

 

2.8 No Undisclosed Liabilities. Except as set forth on Schedule 2.8, there are
no liabilities associated with the Business or the Purchased Assets (whether
accrued, absolute, contingent or otherwise), except for (i) liabilities of the
Business set forth or reserved against or disclosed in the December 31, 2003
Balance Sheet or the notes thereto, (ii) liabilities disclosed in this Agreement
or the Disclosure Schedules hereto or the other agreements contemplated by this
Agreement, (iii) liabilities incurred in the ordinary course of business since
the date of the December 31, 2003 Balance Sheet and set forth in Schedule 2.8,
and (iv) Excluded Liabilities.

 

2.9 Business Conduct. The Seller nor any of its officers, directors, employees
or agents, nor persons acting under the authority of any of the foregoing (i)
have made, or have been charged by any Governmental Authority with making,
directly or indirectly, any domestic or foreign payments for bribes or kickbacks
(governmental or commercial) or unlawful political contributions or other
questionable or illegal payments with respect to the Business or to secure
favorable treatment for the Business or (ii) have maintained or permitted to
exist any use of “off the books” bookkeeping, secret accounts, unrecorded bank
accounts, “slush” funds, falsified books, or any other device that could have
been or could be utilized to distort records or reports of the true operating
results and financial condition of the Business.

 

2.10 Title to Assets; Related Matters. Except as set forth in Schedule 2.10, (i)
The Seller has good, valid and marketable title (as measured in the context of
their current uses) to, or, in the case of leased or subleased assets or other
possessory interests, valid and subsisting leasehold or other possessory
interests (as measured in the context of their current uses) in all of the
Purchased Assets in order to conduct the Business, free and clear of all
Encumbrances, (ii) the Purchased Assets constitute all the assets and rights
necessary for the operation of the Business as currently conducted, (iii) the
Equipment is in good operating condition and repair and maintained in accordance
with industry practices taking into account the age thereof, (iv) there are no
assets, properties or rights necessary to conduct the Business as the same was

 

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conducted immediately prior to the date hereof that are owned by any Person
other than the Seller which assets, properties or rights are not to be leased or
licensed to Buyer under valid, current lease or license arrangements and (v)
there are no contractual or legal restrictions to which the Seller is a party or
by which the Equipment is otherwise bound that preclude or restrict the Seller’s
ability to use the Equipment for the purposes for which it is currently being
used. The Seller enjoys peaceful and undisturbed possession of all Equipment.
The Equipment and other tangible assets owned or used by the Seller have no
known material defects. None of the Purchased Assets is subject to any
commitment or other arrangement for its sale or use by the Seller, its
Affiliates or third parties. The Seller has not depreciated any of the Purchased
Assets on an accelerated basis (or in any other manner) inconsistent with
applicable requirements of the Code.

 

2.11 Equipment and Other Tangible Assets. The equipment and other tangible
assets which are included in the Purchased Assets are in all material respects
adequate for the purposes for which such Purchased Assets are currently used or
are held for use, and are in good repair and operating conditions (subject to
normal wear and tear) and, to the Knowledge of the Seller Responsible Parties,
there are no facts or conditions affecting the Purchased Assets which could,
individually or in the aggregate, interfere with any material respect with the
use, occupancy or operation thereof as currently used, occupied or operated, or
their adequacy for such use.

 

2.12 Absence of Certain Changes, Events and Conditions. Since December 31, 2003,
except as otherwise provided in Schedule 2.12, in the unaudited balance sheet of
the Seller as at June 30, 2004 (“Interim Balance Sheet”) and related unaudited
statement of operations, stockholders equity and cash flows for the six months
then ended (together with the “Interim Balance Sheet,” the “Interim Financial
Statements”) or as otherwise contemplated by this Agreement, the Seller has not:

 

(a) other than in the ordinary course of business consistent with past practice,
sold, transferred, leased, subleased, licensed, encumbered or otherwise disposed
of any assets, other than the sale of obsolete Equipment and transfers of cash
and the distribution to the Company’s shareholders of amounts necessary to pay
tax liabilities under Subchapter S of the Code;

 

(b) permitted any of the Purchased Assets to be subjected to any Encumbrance;

 

(c) made any changes, including changes to collection practices, to be made in
the operations of the Seller;

 

(d) permitted any Purchased Assets to be sold, transferred, leased, subleased,
licensed, encumbered or otherwise disposed of (including, without limitation,
sales, transfers, leases, subleases, licenses or dispositions of material assets
to the Seller or any of its Affiliates;

 

(e) made any commitments for the Seller to make capital expenditures in excess
of $10,000 individually or in the aggregate;

 

(f) made any amendment of the articles of incorporation or bylaws of the Seller;

 

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(g) permitted any new agreement, contract, commitment or arrangement, or
amendments or modifications to any existing such agreement, contract, commitment
or arrangement, to be entered into with any Affiliate of the Seller or any third
parties that is material to the Seller or that will continue in effect after the
Closing Date and not be terminable by the Seller on not more than 30 days’
written notice without payment of premium or penalty;

 

(h) except as set forth on Schedule 2.15, entered into any new Material Contract
or any amendments or modifications to any existing such Material Contract;

 

(i) borrowed any amount or incurred or become subject to any liabilities, except
trade payables incurred in the ordinary course of business and liabilities under
contracts entered into in the ordinary course of business (excluding any capital
lease obligations);

 

(j) discharged or satisfied any material Encumbrance or paid any material
obligation or liability, other than in the ordinary course of business;

 

(k) declared or made any payment or distribution of cash or other property to
its stockholders with respect to its capital stock or other equity securities or
purchased or redeemed any shares of its capital stock or other equity securities
(including, without limitation, any warrants, options or other rights to acquire
its capital stock or other equity securities);

 

(l) sold, assigned or transferred any material Intellectual Property Rights or
disclosed any proprietary confidential information to any Person;

 

(m) granted any increase, or announced any increase, in the wages, salaries,
compensation, bonuses, incentives, pension or other benefits payable to any of
the officers, employees, independent contractors or agents, including, without
limitation, any increase or change pursuant to any Employee Benefit Plan, or
(ii) established, increased or accelerated the payment or vesting of any
benefits under any Employee Benefit Plan with respect to officers or employees;

 

(n) made any material change in any method of accounting or accounting practice
or policy, including, without limitation, material changes in assumptions
underlying or methods of calculating bad debt, contingency or other reserves, or
notes or accounts receivable write-offs, or in corporate allocation methodology,
in each case other than changes required by Law or under GAAP;

 

(o) suffered any casualty loss or damage with respect to any assets, whether or
not covered by insurance;

 

(p) experienced any material adverse change in the condition, financial or
otherwise, business, prospects, assets or rights of the Seller;

 

(q) conducted the Business outside of the ordinary and usual course consistent
with past practice other than the purchase of the automobiles identified in
Section 1.2(c), above;

 

(r) compromised, settled, granted any waiver or release relating to, or
otherwise adjusted any Action, Indebtedness or any other claims or rights;

 

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(s) experienced any change in the financial condition or results of operations
or cash flows of the Business or in the condition of the Purchased Assets and
the Business has not suffered any damage, destruction or loss, in each case
which has had or which could reasonably be expected to have a Material Adverse
Effect; or

 

(t) taken any action or engaged in any activity which would not have been
permitted by Section 4.1 had it been in effect on the date of the December 31,
2003 Balance Sheet.

 

2.13 Litigation. Except as set forth on Schedule 2.13, as of the date hereof:
(i) there are no Actions against the Seller pending, or, to the Knowledge of the
Seller, threatened to be brought against the Seller or the Business, (ii) the
Seller is not subject to any Governmental Order (nor, to the Knowledge of the
Seller, are there any such Governmental Orders threatened to be imposed by any
Governmental Authority), in each case with respect to the Seller or the
Business; and (iii) there is no Action pending, or, to the Knowledge of the
Seller Responsible Parties, threatened to be brought that seeks to question,
delay or prevent the consummation of the transactions contemplated hereby.
Schedule 2.13 lists the following for the period from January 1, 2000 to the
present (and, in the case of clause (z), any other matter referred to therein
which is currently in effect): (x) all fines (civil and criminal), penalties
imposed by any governmental agency or authority (other than short or long-term
disability or medical claims), (y) actions, administrative or arbitration
proceedings requiring a payment by the Seller in excess of $10,000 (other than
short or long-term disability claims) and (z) any final order, writ, judgment,
injunction, decree, determination or other award of any court or any
governmental agency which are related to the Business or the Purchased Assets.

 

2.14 Insurance. The Seller has all insurance that is reasonable for the conduct
of the Business, and (i) all insurance policies to which the Seller is a party
or under which the Seller is covered as an additional named insured or otherwise
(or replacement policies therefor) are in full force and effect, and the Seller
has paid all premiums due and is not in default, (ii) all insurance policies are
sufficient for compliance by the Seller with all applicable requirements of Law
and all agreements to which the Seller is a party or subject, in each case with
respect to the Business, (iii) no notice of cancellation or non-renewal with
respect to, or disallowance of any claim under, any such policy has been
received by the Seller, and (iv) the Seller has not been refused insurance, nor
has coverage been previously canceled or materially limited, by an insurer to
which the Seller has applied for such insurance, or with which the Seller has
held insurance, within the last three years.

 

2.15 Material Contracts.

 

(a) Schedule 2.15 sets forth all Material Contracts as of the date hereof.

 

(b) Each Material Contract, agreement, contract, policy, plan, mortgage,
understanding, arrangement or commitment of the Seller that is intended to be
binding upon the parties thereto is legal, valid and binding on the parties
thereto, enforceable in accordance with the terms thereof.

 

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(c) The Seller has performed its obligations under each such Material Contract,
agreement, contract, policy, plan, mortgage, understanding, arrangement or
commitment and to the Knowledge of Seller the Seller is not in default under any
such agreement, contract, policy, plan, mortgage, understanding, arrangement or
commitment and no condition exists nor event has occurred which with the passage
of time or the giving of notice or both would result in a material default,
material breach or event of material noncompliance by the Seller under any such
agreement, contract, policy, plan, mortgage, understanding, arrangement or
commitment.

 

(d) Except as set forth on Schedule 2.15, the Seller does not have any present
expectation or intention of not fully performing all its material obligations
under each such Material Contract, agreement, contract, policy, plan, mortgage,
understanding, arrangement or commitment.

 

(e) To the Knowledge of the Seller, no other party to any of the Material
Contracts or any of its other agreements, contracts, policies, plans, mortgages,
understandings, arrangements or commitments has breached or is in default
thereunder.

 

(f) The Seller has delivered true, correct and complete copies of each Material
Contract and all amendments thereto and documentation or correspondence
modifying the terms thereof to the Buyer.

 

(g) Except as set forth on Schedule 2.15, no customer which is a party to a
Material Contract is entitled to any retroactive pricing, refund, rebate, price
adjustment or other financial settlement for charges in excess of $5,000
relating to the sales by the Business.

 

(h) Except as set forth on Schedule 2.15, the sale of the Purchased Assets
hereunder will not result in a default under or the termination of any Material
Contract.

 

(i) Except as set forth on Schedule 2.15, there are no contracts for the sale of
goods or services by the Seller as to which at the time of the most recent
scheduled contract milestone for any such Contract the work scheduled was more
than sixty (60) days late.

 

(j) Except as set forth on Schedule 2.15, there are no contracts, options or
bids for the sale of goods or services by the Seller which include a liquidated
damages clause for late delivery.

 

2.16 Accounts Receivable. All of the accounts receivable of the Seller reflected
on the Interim Balance Sheet are collectible, actual and bona fide receivables
representing obligations for the total dollar amount thereof shown on its books,
subject to no defenses or counterclaims. No reserves for bad debt in excess of
the amounts thereof on June 30, 2004 are required by GAAP. The allowance for
doubtful accounts set forth in the Interim Balance Sheet is adequate in
accordance with GAAP. The revenue in respect of the sales that gave rise to such
receivables have been properly invoiced to customers and properly recognized in
accordance with GAAP. The Seller has no Knowledge of any facts or circumstances
generally (other than general economic conditions) which would result in any
material increase in the uncollectability of such receivables as a class in
excess of the reserves therefore set forth in the Audited Financial Statements.
Schedule 2.16 hereto accurately lists as of the date hereof, all receivables
arising out

 

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of or relating to the Business, the amount owing, and the aging of such
receivable, the name of the party from whom such receivable is owing, and any
security in favor of the Seller for the repayment of such receivable which the
Seller purports to have. Since June 30, 2004, the Seller has collected its
receivables and payments under all Contracts in accordance with past business
practices and has not negotiated for or accepted advance payments nor
accelerated the collection of any such receivables or payments.

 

2.17 Permits and Licenses; Compliance with Law.

 

(a) The Seller currently holds all foreign, federal, state and local permits,
licenses, authorizations, certificates, exemptions and approvals of Governmental
Authorities or other Persons including, without limitation, Environmental
Permits, necessary to conduct the businesses in which they are engaged and to
own and use the facilities and properties owned and used by them (collectively,
“Permits”), other than such permits or authorizations the lack of which would
not materially and adversely affect the Business, properties, prospects or
financial condition of the Seller. Each such Permit is valid and in good
standing with the issuer of the Permit and not subject to any proceedings for
suspension, modification or revocation. Without limiting the generality of the
foregoing: (i) the Seller has not received any written notice from any
Governmental Authority revoking, canceling, rescinding, materially modifying or
refusing to renew any Permit and (ii) the Seller is in compliance with the
requirements of all Permits. All such Permits held by the Seller are assignable
to the Buyer, and no governmental approvals are required for such assignment,
except in each case as set forth on Schedule 2.17. The sale of the Purchased
Assets hereunder will not result in a default under or the termination of any
such Permit.

 

(b) (i) The Seller is in compliance with all Laws (including, without
limitation, with respect to affiliate transactions) and Governmental Orders
applicable to the Business and (ii) the Seller has not been charged at any time
with a violation of any Law or any Governmental Order relating to the conduct of
the Business.

 

(c) The Seller has not received any written notice that the Seller is in
violation in any respect of any zoning regulation, building restriction,
restrictive covenant, ordinance or other Law relating to any Real Property that
the Seller owns including the Premises. The Premises are not the subject of any
condemnation action and, to the Knowledge of the Seller, there is no proposal
under consideration by any Governmental Authority or entity to condemn the
Premises.

 

2.18 Environmental Matters. (i) Hazardous Materials have not been Released on
any Real Property except in compliance with applicable Law; (ii) there have been
no events related to the Seller or the Real Property that could give rise to
liability under any Environmental Law; (iii) the Seller is now, and has for the
past three years been, in compliance with all applicable Environmental Laws and
there are no extant conditions that could constitute an impediment to such
compliance in the future; (iv) the Seller has disposed of all wastes containing
Hazardous Materials in compliance with all applicable Environmental Laws
(including the filing of any required reports with respect thereto) and
Environmental Permits; (v) there are no pending or, to the Knowledge of the
Seller, threatened Environmental Claims against the Seller relating to the Real
Property or the operations of the Business; (vi) there is no environmental
remediation or

 

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other environmental response occurring on any Real Property (including any
easements, rights-of-way or other possessory interests in the real property of
others) nor has the Seller issued a request for proposal or otherwise requested
an environmental contractor to begin plans for any such environmental
remediation or other environmental response; and (vii) the Seller has not
received any notice, or has knowledge of any circumstances related to liability,
under CERCLA or any analogous state law.

 

2.19 Employee Benefit Matters. The Seller has delivered true, accurate and
complete copies of all Employee Benefit Plans applicable to any director,
officer, employee, independent contractor or agent of the Seller. All such
Employee Benefit Plans are in compliance with the terms of the applicable plan
and the requirements prescribed by applicable law currently in effect with
respect thereto, and the Seller has performed in all respects all obligations
required to be performed by it thereunder. The Seller has no Union Employees.
The Seller has not incurred and no event, transaction or condition has occurred
or exists which could result in the occurrence of, any liability to the Pension
Benefit Guaranty Corporation or any “withdrawal liability” within the meaning of
Section 4201 of ERISA, or any other liability pursuant to Title I or IV of ERISA
or the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans, in any such case relating to any Employee
Benefit Plan or any pension plan maintained by any company that would be treated
as a single employer with the Seller under Section 4001 of ERISA or Section 414
of the Code (an “ERISA Affiliate”). The Seller does not have in effect an
Employee Benefit Plan intended to be “qualified” within the meaning of Section
401(a) of the Code. The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Seller or any ERISA Affiliate to severance pay, unemployment compensation or
other payment, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer. There are no
pending, or, to the Knowledge of the Seller, threatened or anticipated claims by
or on behalf of any Employee Benefit Plan, by any employee or beneficiary
covered under any such plan, or otherwise involving any such plan (other than
routine claims for benefits). The Seller does not contribute in any
multiemployer plan (within the meaning of Section 3(37) of ERISA) for the
benefit of any of its directors, officers, employees, independent contractors or
agents. All contributions that are due on or before the Closing Date to any
Employee Benefit Plans, including without limitation salary reduction
contributions and matching contributions, will have been contributed as of the
Closing Date (to the extent such accrual is required under GAAP). The Seller
shall not adopt, amend or modify any Employee Benefit Plans or otherwise
increase the salary or benefits of any of the directors, officers, employees,
independent contractors or agents of the Seller prior to the Closing Date.
Except as set forth in Schedule 2.19, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (x)
result in any payment becoming due to any employee (current, former or retired)
of the Seller, (y) increase any benefits otherwise payable under any Employee
Benefit Plan or (z) result in the acceleration of the time of payment or vesting
of any such benefits.

 

2.20 Health and Safety Conditions.

 

(a) Except as set forth in Schedule 2.20(a), the Seller is in compliance with
all Laws designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private, designed to

 

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provide safe and healthful working conditions including without limitation the
Occupational Safety and Health Act of 1970, as amended, as well as any similar
state or local Law.

 

(b) Schedule 2.20(b) lists the following items with respect to the Business:

 

(i) personnel safety statistics and OSHA Form 200s related to the Business since
January 1, 2000;

 

(ii) citations, notices of violations, orders, consent orders, administrative or
judicial enforcement proceedings from state and federal OSHA agencies or their
foreign equivalents concerning the Business since January 1, 2000 or which are
currently pending; and

 

(iii) all current health and safety permits and licenses.

 

2.21 Customers and Suppliers.

 

(a) Schedule 2.21(a) contains a list of (i) all customers and suppliers of the
Business which have contracts (including oral contracts and purchase orders)
with the Business involving purchases or sales in an amount in excess of $5,000
per annum and (ii) sole source suppliers to the Business with contracts with the
Business.

 

(b) The Seller has not received any notice or has any reason to believe that any
customer of the Seller (i) has ceased, or will cease, to use its products or
goods, (ii) has substantially reduced or will substantially reduce, the use of
products or goods of the Seller or (iii) has sought, or is seeking, to reduce
the price it will pay for products or goods of the Seller, including in each
case after the consummation of the transactions contemplated hereby. No customer
of the Seller described in clause (a) above has otherwise threatened to take any
action described in the preceding sentence as a result of the consummation of
the transactions contemplated by this Agreement.

 

(c) Except as set forth on Schedule 2.21(c), the Seller has not received any
notice or has any reason to believe that there has been any material adverse
change in the price of such raw materials, supplies, merchandise or other goods
or services, or that any such supplier will not sell raw materials, supplies,
merchandise and other goods to the Buyer at any time after the Closing Date on
terms and conditions similar to those used in its current sales to the Seller,
subject to general and customary price increases. No supplier of the Seller
described in clause (a) above has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement.

 

2.22 Labor Relations. There are no labor organizations recognized as
representing any of the directors, officers, employees, independent contractors
or agents of the Seller and (i) the Seller is not party to any collective
bargaining agreement or other labor union contract, (ii) there are no strikes,
slowdowns, picketing, lockouts or work stoppages pending or threatened between
the Seller and any of its employees, and the Seller has not experienced any such
strike, slowdown, or work stoppage within the past two years, (iii) there are no
unfair labor practice complaints or employee disputes pending against the Seller
before the National Labor Relations Board or any other Governmental Authority or
any current union representation questions

 

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involving employees of the Seller, and (iv) each of the Seller is in compliance
in all respects with its obligations under all Laws and Governmental Orders
governing its employment practices, including, without limitation, provisions
relating to wages, hours and equal opportunity. Seller is in compliance with all
Laws, and all orders of any court, governmental agency or arbitrator, relating
to employment, including all such Laws relating to wages, hours, collective
bargaining, discrimination, civil rights, occupational safety and health,
affirmative action and the payment of withholding and/or Social Security and
similar taxes, except where such non-compliance could not reasonably be expected
to have a Material Adverse Effect.

 

2.23 Employee Accruals. Schedule 2.23 sets forth all accrued vacation time of
any employees of the Seller. There are no bonuses, profit sharing, incentives,
commissions or other compensation of any kind with respect to work done prior to
December 31, 2003 due to present or former employees of the Seller not fully
paid prior to such applicable date.

 

2.24 Intellectual Property Rights.

 

(a) All trademarks, service marks and copyrights held by the Seller are valid
and subsisting and provide the Seller with the right to exclude all others from
the use thereof and (i) the Seller is not, or as a result of the execution and
delivery of this Agreement or the performance by the Seller of their obligations
hereunder will be, in violation of any license, sublicense or other agreement
applicable to it, or give any party the right to require the Seller to pay any
amount or enter into any restrictions in order to continue the use thereof, (ii)
the Seller owns all right, title and interest to, or has the right to use
pursuant to a valid license, all Intellectual Property Rights used in the
Business, (iii) there have been no claims made against either of the Seller or
threatened or, to the Knowledge of the Seller, likely to be threatened by any
Person, asserting the invalidity, misuse or unenforceability of any Intellectual
Property Rights referred to in (i) above or challenging the ownership, validity
or effectiveness of any of the Intellectual Property Rights.

 

(b) The Seller has not received any notices of any material unauthorized use,
infringement or misappropriation by, or conflict with, any present or former
employee of the Seller, principal shareholders, strategic partners or any other
third party with respect to such Intellectual Property Rights (including,
without limitation, any demand or request that of the Seller license any rights
from a third party). The Seller is currently subject to a patent infringement
claim arising from the Seller’s method of manufacturing golf bags. With respect
to this claim, the Buyer shall assume a certain amount to be determined by the
parties to be paid to Great Divider Golf, Inc., the claimant under the
arbitration proceeding styled Great Divider Golf, Inc. v. Datrek Professional
Bags, Inc., et al., Civil Action No. 04-WM-0100 (CBS), in the United States
District Court for the District of Colorado. Any amounts in excess of such
amount shall be the sole responsibility of the Seller Responsible Parties.

 

(c) Except for the arbitration proceeding described in 2.24(b), above, to the
Knowledge of the Seller, the conduct of the Seller has not infringed,
misappropriated or conflicted with any Intellectual Property Rights of other
Persons. To the Knowledge of the Seller, the conduct of the Seller does not
currently infringe, misappropriate or conflict with any Intellectual Property
Rights of other Persons including the Intellectual Property Rights of Great
Divider Golf, Inc.

 

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(d) Except for the arbitration proceeding described in 2.24(b), above, to the
Knowledge of the Seller, the Intellectual Property Rights owned by or licensed
to the Seller have not been infringed, misappropriated or conflicted by other
Persons.

 

(e) Except as set forth on Schedule 2.24, no Intellectual Property Right is
subject to any Encumbrance and there is no fact that would render the
Intellectual Property Rights invalid. Except as set forth on Schedule 2.24, no
Intellectual Property Right is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting in any manner the licensing or
exploitation thereof by the Seller. The Seller has not entered into any
agreement to indemnify any other person against any charge of infringement
relating to any Intellectual Property Right. No employee of the Seller is in
violation of any term of any confidentiality or invention assignment agreement,
employment contract (whether written or verbal), patent disclosure agreement or
any other contract or agreement relating to the relationship of any such
employee with either of the Seller or any other party (including prior
employers) because of the nature of the business conducted or proposed to be
conducted by the Seller.

 

(f) The Seller is the sole and exclusive owner of the Intellectual Property
Rights and, except as set forth on Schedule 2.24, no governmental registration
of any of the rights related to the Intellectual Property Rights has lapsed,
expired or been canceled, abandoned, opposed or the subject of a reexamination
request.

 

(g) Except as listed on Schedule 2.24, as of the date of this Agreement, there
are no written claims which have been received since January 1, 2000 and no
proceedings are pending, or have been instituted or, to the Knowledge of Sellers
are threatened or impending which challenge the Seller’s ownership rights in
respect of any of the Intellectual Property Rights. None of the Intellectual
Property Rights is subject to any outstanding order, decree, judgment or
stipulation.

 

(h) The engineering drawings for all major products being sold or manufactured
by the Seller in the Business represent the most appropriate revision level of
drawings used in the Business and each such drawing of a currently manufactured
product has been approved and accepted where required by the relevant customer
and reflects such product as it is currently being manufactured with no changes
therefrom which would require any customer approval or authorization which has
not been obtained, except in those circumstances where the Seller has obtained
engineering deviations from the customers. For the products currently being
developed by the Business, engineering drawings being transferred represent all
drawings used by Seller for such development work.

 

(i) Neither this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) result in the termination, suspension, breach, or
violation of any contract between the Seller and any Person relating to
Intellectual Property Rights; or (ii) will result in the termination,
suspension, breach, or violation of Intellectual Property Rights. All of the
Seller’s rights under the Intellectual Property Rights are transferable to Buyer
in connection with the transactions contemplated by this Agreement and Buyer
will be entitled to continue to use all of the Intellectual Property Rights to
the same extent and under the same conditions that it has heretofore been used
in the Business, without financial obligations to any other Person.

 

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(j) The Intellectual Property Rights constitutes all of the intellectual
property used in, or necessary to, the operation of the Business.

 

2.25 Taxes.

 

(a) The Seller has timely filed all Tax Returns required to be filed and all
such Tax Returns were correct and complete in all material respects. Seller has
timely paid all Taxes that are due, or claimed by any taxing authority to be
due, or has provided for all such Taxes on its financial statements in
accordance with GAAP.

 

(b) All Taxes shown on such Tax Returns have been timely paid;

 

(c) Except as set forth in Schedule 2.25, no audits with respect to the Seller
are in process, pending or threatened, no deficiencies or adjustments to Tax
Returns exist or have been asserted in writing with respect to Taxes of the
Seller, no notice has been received in writing that any Tax Return or Taxes of
the Seller required to be filed or paid has not been filed or have not been
paid;

 

(d) There are no Tax liens on any of the Purchased Assets;

 

(e) Except as set forth in Schedule 2.25, all Taxes that the Seller is required
to withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Tax authority;

 

(f) The Seller (i) is not currently or has ever been a member of an affiliated
group filing a consolidated federal income tax return or (ii) has no liability
for the Taxes of any person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law), or as transferee or
successor, by contract or otherwise;

 

(g) The Seller has not ever been a party to any Tax sharing or similar
agreements;

 

(h) No consent under Section 341(f) of the Code has been filed with respect to
either of the Seller; and

 

(i) The Seller is not a USRPI as that term is defined in Section 897 of the Code
and the Treasury Regulations thereunder.

 

2.26 Commissions. There is no broker or finder or other Person who has any valid
claim against the Seller, the Buyer, any of their respective Affiliates or any
of their respective assets for a commission, finders’ fee, brokerage fee or
other similar fee in connection with this Agreement, or the transactions
contemplated hereby, by virtue of any actions taken by on or behalf of the
Seller or any of its officers, employees, independent contractors or agents.

 

2.27 Bank Accounts; Powers of Attorney. Within ten (10) days of the date hereof,
the Seller will provide in writing to the Buyer a true, correct and complete
list of each bank in which the Seller maintains an account or safe deposit box,
the corresponding number of each such account or safe deposit box, the names of
all persons holding check-signing or withdrawal

 

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powers or other authority with respect thereto, the names of any persons holding
powers of attorney from the Seller, true, correct and complete copies of any
instrument of appointment and a summary statement of the terms thereof. There
are and at the Closing will be no restrictions on the Seller to terminate any
such powers immediately upon written notice and to withdraw all such funds and
close such bank accounts.

 

2.28 Product Warranties. Set forth on Schedule 2.28 are representative forms of
product warranties and guarantees granted or issued by the Seller in connection
with the Business. None of the other product warranties or guarantees granted or
issued by the Seller in connection with the Business differs in any material
respect from such representative forms. Except as described in Schedule 2.28,
since January 1, 2000, no product warranty or similar claims in excess of
$10,000.00 in the aggregate have been made against Seller in connection with the
Business. The Seller has committed no act, and there has been no omission, which
would result in, and there has been no occurrence which would give rise to, any
material product liability or liability for breach of warranty (whether covered
by insurance or not) on the part of Seller, with respect to products sold prior
to the Closing in the operation of the Business.

 

2.29 Compliance with WARN Act. The Seller has been exempt from, or has complied
with, all applicable provisions of the WARN Act and the regulations thereunder
in connection with all past reductions in work force relating to the Business.

 

2.30 Securities Laws. The Seller expressly agrees and acknowledges that the
Shares are not being registered and the Buyer has no present intention of
registering such shares pursuant to the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder (the “1933 Act”) or otherwise,
and the issuance of the Shares is intended to be exempt from registration under
Section 4(2) of the 1933 Act as a “transaction by an issuer not involving any
public offering” and that reliance on such exemption is predicated, in part, on
the Seller’s representations and warranties contained herein. The Seller further
acknowledges that the Shares are being obtained solely for the Seller’s own
account and for investment purposes only, within the meaning of the 1933 Act,
and that the Seller has no plan, intention, contract, understanding, agreement
or arrangement with any person to sell, assign, pledge, hypothecate or otherwise
transfer to any person the Shares or any part thereof. The Seller understands
that the Shares are characterized as “restricted securities” under the federal
securities Laws inasmuch as such Shares are being acquired from the Buyer in a
transaction not involving a public offering and that under such Laws and
applicable regulations such securities may be resold without registration under
the 1933 Act, only in certain limited circumstances. In this connection, the
Seller is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the 1933 Act. The Seller is an
“accredited investor” within the meaning of SEC Rule 501 of Regulation D, as
presently in effect.

 

2.31 No Disqualifying Orders. None of the Seller Responsible Parties or any of
their affiliates, directors, officers or principals is subject to any
disqualifying order under the “Bad Boy” provisions of the federal or any state’s
securities law. As used herein, “Bad Boy” provisions include Rule 262 of
Regulation A, Rule 507 of Regulation D and other similar disqualifying
provisions of federal and state securities laws.

 

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2.32 Disclosure. No representation or warranty by the Seller Responsible Parties
contained in this Agreement nor any statement or certificate furnished or to be
furnished by or on behalf of the Seller Responsible Parties to the Buyer or its
representatives in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements contained herein or therein
not misleading. There is no fact known to the Seller Responsible Parties that
has not been disclosed by the Seller to the Buyer that might reasonably be
expected to have or result in a material adverse effect on the operations of the
Business.

 

Article 3. Representations and Warranties of the Buyer.

 

In order to induce the Seller to enter into this Agreement and sell the
Purchased Assets, the Buyer makes the following representations and warranties
to the Seller Responsible Parties, which representations and warranties shall be
true and correct as of the Closing Date:

 

3.1 Organization and Standing. The Buyer is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Florida
and has all requisite corporate power and authority to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted. The Buyer is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state in which the operation of
its business or ownership of its assets makes such qualification necessary,
except where the failure to so qualify or be in good standing would not have a
Material Adverse Effect. The copies of the articles of incorporation and bylaws
or other organizational documents which have been delivered to the Seller are
true, accurate and complete.

 

3.2 Binding Agreement. The Buyer has all requisite corporate power and authority
to enter into this Agreement, to execute and deliver this Agreement, to carry
out its obligations hereunder and to consummate the transactions contemplated
hereby including the issuance of the Short-Term Promissory Note and the
Long-Term Promissory Note. The execution and delivery of this Agreement by the
Buyer and the consummation by the Buyer of its obligations hereunder have been
duly and validly authorized by all necessary corporate and stockholder action on
the part of the Buyer. This Agreement has been duly executed and delivered on
behalf of the Buyer and, assuming the due authorization, execution and delivery
by the Seller, constitutes a legal, valid and binding obligation of the Buyer
enforceable in accordance with its terms. As of the Closing Date, each of the
agreements, instruments and other documents to be delivered hereunder to the
Seller at the Closing will have been duly and validly executed and delivered by
the Buyer and will be enforceable against the Buyer in accordance with its terms
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer, equitable subordination, or
similar laws and doctrines affecting the rights of creditors generally and
general equitable principles.

 

3.3 Authorized Capital of Buyer. The authorized capital of Buyer consists of 20
million shares of common stock par value of $.001 per share, of which one (1)
share is issued and outstanding, which is validly issued, fully paid and
nonassessable. Other than the transactions contemplated hereby and the Golf
Merger and the PubCo Merger (as hereinafter defined), there are no outstanding
rights, agreements, arrangements or understandings to which the Buyer is a party
(written or oral) which would obligate the Buyer to issue any equity interest,

 

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option, warrant, convertible note, or other types of securities or to register
any shares in a registration statement filed with the SEC. There is no
agreement, arrangement or understanding between or among any entities or
individuals which affects, restricts or relates to voting, giving of written
consents, dividend rights or transferability of shares with respect to any
voting shares of the Buyer, including without limitation any voting trust
agreement or proxy. There are no outstanding obligations of the Buyer to
repurchase, redeem or otherwise acquire for value any outstanding shares of
capital stock or other ownership interests of the Buyer or to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity. There are no anti-dilution or price adjustment
provisions regarding any security issued by the Buyer (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Shares.

 

3.4 Valid Issuance of the Shares. The Shares that are being issued to the Seller
hereunder, when issued and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and under
applicable state and federal securities Laws and free of preemptive rights
except as set forth in the Shareholders’ Agreement in the form of Exhibit H
attached hereto.

 

3.5 Absence of Violations; Required Consents. Except for the Required Consents,
the execution, delivery and performance by the Buyer of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (a)
violate or result in the breach or default of any provision of articles,
certificates of incorporation, by-laws or other charter or corporate governance
documents of the Buyer, (b) violate any Law or Governmental Order applicable to
the Buyer or any of its properties or assets, (c) except for the Required
Consents, require any consent, approval, authorization or other order of, action
by, registration or filing with or declaration or notification to any
Governmental Authority or any other Person or (d) result in any violation or
breach of, constitute a default (or event which with the giving of notice, or
lapse of time or both, would become a default) under, require any consent under,
or give to others any rights of notice, termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on the Purchased Assets, or result in the imposition or acceleration
of any payment, time of payment, vesting or increase in the amount of
compensation or benefit payable, pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license or permit, or franchise
to which the Buyer is a party or by which its assets are bound. Except for the
Required Consents, the Buyer does not need to give any notice to, make any
filing with or obtain any authorization, consent or approval of any Governmental
Authority in order for the parties to consummate the transactions contemplated
by this Agreement.

 

3.6 Litigation. There are no Actions pending or threatened to be brought by or
before any Governmental Authority, against the Buyer or any of its Affiliates.
There are no Actions pending or threatened to be brought by or before any
Governmental Authority, against the Buyer or any of its Affiliates that (i)
seeks to question, delay or prevent the consummation of the transactions
contemplated hereby, or (ii) would reasonably be expected to affect adversely
the ability of the Buyer to fulfill its obligations hereunder, including without
limitation, the Buyer’s obligations under Article 1 hereof.

 

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3.7 Commissions. There is no broker or finder or other Person who has any valid
claim against the Seller Responsible Parties or any of their respective assets
for a commission, finders’ fee, brokerage fee or other similar fee in connection
with this Agreement, or the transactions contemplated hereby, by virtue of any
actions taken by on or behalf of the Buyer or its officers, employees,
independent contractors or agents.

 

Article 4. Covenants and Agreements.

 

4.1 Conduct of the Business Following the Closing. Each of the Seller
Responsible Parties covenants that the Seller shall collect its receivables and
payments under any Contracts in accordance with past business practices and not
negotiate for or accept advance payments nor accelerate the collection of any
such receivables or payments. On or prior to the Closing Date, the Seller
Responsible Parties shall deliver an executed letter of instruction, in the form
of Exhibit C attached hereto, to all of the Seller’s customers and distributors
notifying such parties of the consummation of the transactions contemplated
hereby and specifically instructing all customers to remit payment relating to
the Purchased Assets directly to the Buyer. In the event the Seller receives
payments from any customer with respect to any accounts receivable which are
part of the Purchased Assets, the Seller shall hold such funds in trust for the
benefit of the Buyer and immediately turnover such receipts to the Buyer.

 

4.2 Non-Solicitation. None of the Seller Responsible Parties shall for the
period from the date hereof through the date that is two years following the
Closing Date, without the prior written consent of the Buyer, directly or
indirectly, solicit to hire or hire (or cause or seek to cause to leave the
employ of the Seller) any employee, independent contractor or agent of the
Seller.

 

4.3 Cooperation. Following the execution of this Agreement, the Buyer and the
Seller agree as follows:

 

(a) The Seller Responsible Parties, the Buyer, PubCo and Golf shall generally
cooperate with each other and their respective officers, employees, attorneys,
accountants and other agents and do such other acts and things in good faith as
may be reasonable, necessary or appropriate to timely effectuate the intent and
purposes of this Agreement and the consummation of the Sale.

 

(b) In connection with the efforts referenced in Section 4.3(a), each of the
parties hereto shall use its commercially reasonable efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under any Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement; (ii) obtain
any third party consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including the consents set forth on Schedule
4.3, approvals or waivers in respect of contracts which are being assumed by the
Buyer; and (iii) make all filings and give any notice, and thereafter make any
other submissions either required or reasonably deemed appropriate by each of
the parties, with respect to this Agreement and the transactions contemplated
hereby required under any Law, including applicable securities and antitrust
Laws.

 

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4.4 Confidentiality. At all times following the Closing Date, each of the Seller
Responsible Parties and any corporation, partnership or trust controlled,
directly or indirectly, by any of the Seller Responsible Parties shall maintain
the confidentiality of, and shall not use for the benefit of itself or others,
any confidential information concerning the Business or the Purchased Assets
(the “Confidential Information”); provided, however, that this paragraph (a)
shall not restrict (i) disclosure by the Seller of any Confidential Information
required by applicable statute, rule or regulation or any court of competent
jurisdiction, provided that the Buyer is given notice and an adequate
opportunity to contest such disclosure, (ii) any disclosure on a confidential
basis to the Seller’s attorneys, accountants, lenders and investment bankers,
(iii) any disclosure of information which is available publicly as of the date
of this Agreement, which, after the date of this Agreement, becomes available
publicly through no fault of the disclosing party, which is disclosed to the
Seller by another Person who acquired it from a third party without an
obligation of confidentiality to the Buyer or the Seller or which is
independently developed by an employee of the Seller who had no access to such
information, (iv) the Seller’s use of such information to protect or enforce
their rights under this Agreement, in connection with tax or other regulatory
filings or their use of such information to protect their rights against any
third party, and (v) the Seller’s and its Affiliates’ use of such information in
the conduct of their own businesses if and to the extent not prohibited by this
Section. Any and all information disclosed by the Buyer to the Seller as a
result of the negotiations leading to the execution of this Agreement, or in
furtherance thereof, which information was not already known to the Seller shall
be deemed Confidential Information.

 

4.5 Public Announcements. Except as otherwise required by law or the rules of
any stock exchange or automated quotation system, the parties shall not issue
any report, statement or press release or otherwise make any public announcement
with respect to this Agreement and the other transactions contemplated hereby
without prior consultation with and approval of the other parties hereto (which
approval shall not be unreasonably withheld). Notwithstanding the foregoing,
either party may at any time furnish any required information with the SEC
regarding this Agreement or the transactions contemplated hereby.

 

4.6 [Intentionally omitted.]

 

4.7 Non-Compete.

 

(a) Each of the Seller Responsible Parties covenants and agrees on its own
behalf that from the date hereof and until one year following the termination of
employment of both Deborah Ryan and Dennis Ryan from Buyer or its Affiliates,
the Seller shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation, limited liability company or
business, whether as an employee, partner, agent, security holder, consultant or
otherwise, that directly or indirectly (or through any affiliated entity)
engages in competition with the Business (based on the business in which the
Seller was engaged or was actively planning on being engaged as of the Closing
Date and in the geographic areas in which the Seller operated or was actively
planning on operating as of the Closing Date).

 

(b) Each of the Seller Responsible Parties acknowledges and agrees that the
covenants provided for in this Section are reasonable and necessary in terms of
time, area and line of business to protect the Buyer’s legitimate business
interests as a Buyer of the Purchased

 

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Assets, which includes protecting valuable confidential business information,
substantial relationships with customers throughout the Restricted Area and
customer goodwill associated with the Seller and the Business. Each of the
Seller Responsible Parties expressly authorizes the enforcement of the covenants
provided for in this Section by (i) the Buyer, and (ii) any successors to the
ownership of the Purchased Assets and/or the Business. To the extent that the
covenant provided for in this Section may later be deemed by a court to be too
broad to be enforced with respect to its duration or with respect to any
particular activity or geographic area, the court making such determination
shall have the power to reduce the duration or scope of the provision. The
provision as modified shall then be enforced.

 

(c) It is agreed by each of the Seller Responsible Parties on its own behalf
that Buyer would be irreparably damaged by reason of any violation of this
Section by the Seller, and that any remedy at law for breach of such provisions
would be inadequate. Therefore, the Buyer shall be entitled to seek and obtain
injunctive or other equitable relief (including, but not limited to, a temporary
restraining order, a temporary injunction or a permanent injunction) against
each of the Seller Responsible Parties, for breach or threatened breach of such
provisions and without the necessity of proving actual monetary loss. It is
expressly understood by each of the Seller Responsible Parties that this
injunctive or other equitable relief shall not be the Buyer’s exclusive remedy
for any breach of this covenant and the Buyer shall be entitled to seek any
other relief or remedy that may be available by contract, statute, law or
otherwise for any breach hereof. It is agreed that the Buyer shall also be
entitled to recover any and all attorneys’ fees and expenses in the enforcement
of the provisions hereof.

 

4.8 Contemplated Mergers.

 

(a) On or following the Closing Date, it is anticipated that a wholly owned
subsidiary of Golf Acquisition, Inc. (“Golf”) will merge with and into the Buyer
pursuant to the terms of an Agreement and Plan of Merger, the form of which is
attached hereto as Exhibit M, by and among the Buyer, Golf and such wholly owned
subsidiary of Golf (the “Golf Merger”). In connection with the Golf Merger, the
Seller Responsible Parties agree to vote, either in person or by proxy, all the
Shares in favor of approval of the Golf Merger and, in connection with the Golf
Merger, exchange the Shares for shares of the common stock of Golf.

 

(b) On or following the Closing Date, it is anticipated that a wholly-owned
subsidiary of Golf will acquire all of the assets of Miller Golf Company, LLC
pursuant to the terms set forth in Exhibit J.

 

(c) On or following the Closing Date, Golf may merge into a publicly reporting
company (“PubCo”), or a wholly owned subsidiary of PubCo may merge into Golf
(the “PubCo Merger”). In connection with the PubCo Merger, the Seller
Responsible Parties agree to vote, either in person or by proxy, all the shares
of common stock of Golf held by the Seller Responsible Parties in favor of
approval of such PubCo Merger and, in connection with the PubCo Merger, exchange
the shares of common stock of Golf for shares of the common stock of PubCo,
provided the following conditions have been satisfied:

 

(i) Following the closing of the Mergers, and after giving effect to the
issuance to SVCH of all shares of the common stock of the Buyer subject to the

 

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Securities Purchase Agreement described in Section 6.6, below, and the
acquisition of the assets of Miller Golf Company, LLC, the Seller will own
approximately 20.2% of the issued and outstanding capital shares of PubCo.

 

(ii) PubCo shall have reserved no more than 9% of its issued and outstanding
shares of common stock to be issued pursuant to its employee stock option plan
and no more than 3% of its issued and outstanding shares of common stock to be
issued to an investor relations firm, and after giving effect to the issuance to
SVCH of all shares of the common stock of the Buyer subject to the Securities
Purchase Agreement described in Section 6.6, below. In addition, PubCo shall
issue five-year warrants exercisable at par value to purchase 400,000 shares
(post 1 for 35 reverse split) of common stock to certain employees of SVCH and
there are outstanding warrants to purchase 10,000 shares (post 1 for 35 reverse
split) of common stock. Except as provided herein, there shall be no outstanding
commitments that require PubCo to sell any shares of its common stock, or that
require PubCo to issue or sell any shares of its capital stock, including any
securities convertible into shares of capital stock of PubCo.

 

(iii) As of the closing of the PubCo Merger, PubCo’s liabilities shall not
exceed $200,000, other than any consolidated liabilities of Golf assumed as a
result of the PubCo Merger.

 

(iv) As of the closing of the PubCo Merger, the Persons who are directors and
officers of Golf immediately prior to the PubCo Merger shall be the directors
and officers (in the same respective offices then held) of PubCo, respectively,
to serve until their successors have been duly elected and qualified in
accordance with PubCo’s organizational documents or their earlier death,
resignation or removal. As of the closing of the PubCo Merger, the Persons who
are directors and officers of Golf shall be the same as the directors and
officers of the Buyer.

 

(d) In connection with the PubCo Merger, the Buyer shall request from PubCo and
its representatives due diligence information no less inclusive than the due
diligence items identified on Schedule 4.8(c). The Buyer shall promptly provide
the Seller Responsible Parties with copies of all materials received from PubCo
responsive to such due diligence request.

 

(e) In connection with the PubCo Merger, PubCo shall make the following
representations and warranties:

 

(i) Since its inception, PubCo has timely filed with the SEC all reports,
statements, forms and other documents required to be filed by it under the 1933
Act or the Securities Exchange Act of 1934 (as such may have been amended, the
“SEC Documents”). Except as set forth on Schedule 4.8(d), as of their respective
filing dates (or, if amended, as of the date of the amendment) (A) the SEC
Documents comply in all material respects with the applicable rules and
requirements of the SEC and (B) none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

 

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(ii) The financial statements of PubCo included in the SEC Documents (A) comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with GAAP except, in the case of unaudited statements,
applied on a consistent basis during the periods involved, except as indicated
in the notes thereto and (C) fairly present, in all material respects, the
financial position of PubCo as of the dates thereof and the results of its
operations and cash flows for the periods covered thereby (subject, in the case
of unaudited statements, to normal year-end audit adjustments).

 

(iii) There is no hearing, proceeding, audit or governmental investigation that
has been brought by any Governmental Authority, including the SEC, pending or,
to the Knowledge of PubCo, threatened against or affecting PubCo.

 

4.9 Future Financings by the Seller. If at any time during the term of the Lease
(as hereinafter defined), the Seller Responsible Parties intend to obtain any
loan secured by all or any portion of the Premises, including modifications or
additions to or refinancings of any financing on the Premises, then the Seller
Responsible Parties shall be obligated to obtain and deliver to the Buyer a
non-disturbance agreement, in form and substance satisfactory to the Buyer,
executed by the lender(s) providing such financing.

 

4.10 Name Change Amendment. Immediately following the Closing, the Seller
Responsible Parties shall cause to be filed with the Secretary of State of
Tennessee articles of amendment to the articles of incorporation of the Seller
effectuating a change in the Seller’s name from Datrek Professional Bags, Inc.
(or any reasonably similar name) to a name which is substantially dissimilar.

 

Article 5. Conditions to Obligations of the Buyer.

 

The obligations of the Buyer to consummate the transactions contemplated by this
Agreement are, at its option, in its sole discretion, subject to satisfaction of
each of the following conditions:

 

5.1 Representations and Warranties. The representations and warranties of the
Seller Responsible Parties contained herein shall be true and correct in all
material respects (other than those representations and warranties that are
qualified by Material Adverse Effect, which shall be true and correct in all
respects) at and as of the Closing Date as though each such representation and
warranty were made at and as of such time, other than such representations and
warranties as are made as of a specific date, in each case except for changes
that are expressly contemplated by this Agreement, and except for such failures
to be true and correct that (without regard to materiality concepts therein once
such failure is established) would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the business,
results of operations or financial condition of the Seller, taken as a whole.

 

5.2 Performance by the Seller. All of the covenants and agreements to be
complied with and performed by the Seller on or before the Closing Date shall
have been complied with or performed in all material respects.

 

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5.3 Certificate. The Seller shall have delivered to the Buyer a certificate,
dated as of the Closing Date, executed on behalf of the Seller by its duly
authorized officers to the effect of Sections 5.1 and 5.2.

 

5.4 Consents; No Objections. Except as set forth in Schedule 5.4, all approvals
for the Sale and all material consents, waivers, approvals, orders and
authorizations from third parties required to be made or obtained for the
authorization, execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby and the continuation in
force of any rights, licenses, permits, authorizations, agreements, instruments
or documents of the Seller, shall have been obtained and become final and
non-appealable (provided that if any appeal or a petition for reconsideration is
filed after any such approval has been obtained, such approval shall be deemed
to be final and non-appealable unless the Buyer shall have delivered to the
Seller an opinion of counsel rendered in good faith that it is probable that
such approval will be reversed and/or vacated upon any such appeal or petition
for reconsideration). Neither any statute, rule, regulation, order, stipulation,
decree, judgment, or injunction shall be enacted, promulgated, entered,
enforced, or deemed application to the purchase nor any other action shall have
been taken by any Government Entity (i) which prohibits the consummation of the
transactions contemplated by this Agreement; (ii) which prohibits Buyer’s
ownership or operation of all or any material portion of the Business or the
Purchased Assets, or which compels the Buyer to dispose of or hold separately
all or any portion of the Buyer’s or the Seller’s business or the Purchased
Assets as a result of the transaction contemplated herein; (iii) which makes the
purchase of, or payment for, some or all of the Purchased Assets illegal; (iv)
which imposes material limitations on the ability of the Buyer to acquire or
hold or to exercise effectively all rights of ownership of the Purchased Assets;
or (v) which imposes any limitations on the ability of the Buyer effectively to
control in any material respect the Business or operations of the Seller.

 

5.5 No Proceedings or Litigation. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by or before any Government
Entity (i) which prohibits the consummation of the transactions contemplated by
this Agreement; (ii) which prohibits Buyer’s ownership or operation of all or
any of the Business or the Purchased Assets, or which compels the Buyer to
dispose of or hold separately all or any portion of the Buyer’s or the Seller’
business or assets as a result of the transaction contemplated herein; (iii)
which makes the purchase of, or payment for, some or all of the Purchased Assets
illegal; (iv) which imposes limitations on the ability of the Buyer to acquire
or hold or to exercise effectively all rights of ownership of the Purchased
Assets; or (v) which imposes any limitations on the ability of the Buyer
effectively to control in any material respect the Business or operations of the
Seller. No preliminary or permanent injunction or other order issued by any
United States federal or state Governmental Authority, nor any Law promulgated
or enacted by any United States federal or state Governmental Authority, that
restrains, enjoins or otherwise prohibits the transactions contemplated hereby
or limits the ability in any respect of the rights of the Seller to hold its
assets and conduct its present, planned or prospective business, or imposes
civil or criminal penalties on any stockholder, director or officer of the Buyer
if such transactions are consummated, shall be in effect.

 

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5.6 Due Diligence. The Buyer shall have completed a due diligence review,
including a legal and financial review of the Seller, the Business and the
Purchased Assets, which review shall be satisfactory to the Buyer, in its sole
and absolute discretion.

 

5.7 Employment Agreements. The Buyer shall have entered into employment
agreements with Michael Hedge and each of the Ryans in the form of composite
Exhibit D attached hereto.

 

5.8 Lease Agreement. The parties to this Agreement shall have entered into a
7-year lease agreement for the Premises (the “Lease”) in the form of Exhibit E
attached hereto.

 

5.9 Non-disturbance Agreement. The Buyer shall have received a duly executed
Non-Disturbance Agreement with respect to its lease of the Premises from the
Seller’s mortgagor in the form of Exhibit F attached hereto.

 

5.10 Modification of Asset-Based Line of Credit. The Buyer shall have received a
duly executed Modification Agreement in the form of Exhibit G attached hereto.

 

5.11 Shareholders’ Agreement. SVCH and the Ryans shall have entered into a
shareholders’ agreement in the form of Exhibit H attached hereto.

 

5.12 Lock Up Agreement. SVCH and the Ryans shall have entered into a lock up
agreement in the form of Exhibit I attached hereto.

 

5.13 Financial Information. The Seller shall have obtained, to the extent the
Buyer requires audited or reviewed financial statements of the Seller in order
to comply with the reporting requirements of the SEC set forth in Regulations
S-K and S-X, (or, if Buyer proposes to have its auditors audit any such
financial statements, the Seller has provided audited balance sheets as of the
end of the fiscal years hereinafter described and income statements and
statements of cash flows and changes in equity for such periods, in each case,
for the Seller in the form required by Regulations S-K and S-X), the required
audited or reviewed financial statements of the Seller covering the years ended
December 31, 2003, 2002 and 2001 and each subsequent fiscal quarter, reasonably
sufficient and timely enough to permit the Buyer reasonably to satisfy such
obligations, including, without limitation, having provided reasonable access to
any auditors engaged by the Buyer for such purpose and delivering one or more
representation letters from the Seller to any such auditors as may be reasonably
requested by the Buyer to allow such auditors to complete any such audit or
review and to issue an opinion on such financial statements acceptable to the
SEC.

 

5.14 Legal Opinion. The Buyer shall have received an opinion of counsel to the
Seller Responsible Parties in form and content satisfactory to the Buyer.

 

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Article 6. Conditions to Obligations of the Seller.

 

The obligations of the Seller to consummate the transactions contemplated by
this Agreement are, at its option, in its sole discretion, subject to
satisfaction of each of the following conditions:

 

6.1 Representations and Warranties. The representations and warranties of the
Buyer contained herein shall be true and correct in all material respects (other
than those representations and warranties that are qualified by Material Adverse
Effect, which shall be true and correct in all respects) at and as of the
Closing Date as though each such representation and warranty were made at and as
of such time, other than such representations and warranties as are made as of a
specific date, in each case except for changes that are expressly contemplated
by this Agreement, and except for such failures to be true and correct that
(without regard to materiality concepts therein once such failure is
established) would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the business, results of operations or
financial condition of the Buyer, taken as a whole.

 

6.2 Performance by the Buyer. All of the covenants and agreements to be complied
with and performed by the Buyer on or prior to the Closing Date shall have been
complied with or performed in all material respects.

 

6.3 Certificate. The Buyer shall have delivered to the Seller a certificate,
dated as of the Closing Date, executed on behalf of the Buyer by its duly
authorized officers to the effect of Sections 6.1 and 6.2.

 

6.4 No Proceedings or Litigation. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other inquiry
that might result in such an action or proceeding) by or before any Government
Entity (i) which prohibits the consummation of the transactions contemplated by
this Agreement; (ii) which prohibits Seller’s sale of all or any of the Business
or the Purchased Assets, or which compels the Seller to dispose of or hold
separately all or any portion of the Seller’ business or assets as a result of
the transaction contemplated herein; (iii) which makes the sale of, or receipt
of payment for, some or all of the Purchased Assets illegal; or (iv) which
imposes limitations on the ability of the Seller to sell all rights of ownership
of the Purchased Assets. No preliminary or permanent injunction or other order
issued by any United States federal or state Governmental Authority, nor any Law
promulgated or enacted by any United States federal or state Governmental
Authority, that restrains, enjoins or otherwise prohibits the transactions
contemplated hereby or limits the ability in any respect of the rights of the
Seller to hold its assets and conduct its present, planned or prospective
business, or imposes civil or criminal penalties on any stockholder, director or
officer of the Buyer if such transactions are consummated, shall be in effect.

 

6.5 Miller Golf Acquisition. The closing of the purchase of the assets of Miller
Golf Company, LLC, in accordance with the terms set forth on Exhibit J attached
hereto, shall occur simultaneously with the Closing of the transactions
contemplated hereby.

 

6.6 Securities Purchase Agreement. SVCH shall have entered into a Securities
Purchase Agreement with the Buyer in the form of Exhibit K attached hereto.

 

6.7 Shareholders’ Agreement. SVCH and the Ryans shall have entered into a
Shareholders’ Agreement in the form of Exhibit H attached hereto.

 

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6.8 Employment Agreements. The Buyer shall have entered into employment
agreements with Michael Hedge and each of the Ryans in the form of composite
Exhibit C attached hereto.

 

6.9 Issuance of Standby Letter of Credit. Stanford International Bank shall have
issued an irrevocable standby letter of credit in the form of Exhibit L attached
hereto in connection with the execution and delivery of the Long-Term Promissory
Note by the Buyer to the Seller.

 

6.10 Lease Agreement. The parties to this Agreement shall have entered into the
Lease in the form of Exhibit E attached hereto.

 

6.11 Short-Term Promissory Note and Long-Term Promissory Note. The Seller shall
have received the duly executed Short-Term Promissory Note and Long-Term
Promissory Note.

 

6.12 Shares. The Seller shall have received one or more stock certificates
evidencing the Shares.

 

6.13 Due Diligence of PubCo. The Seller shall have received the due diligence
materials with respect to PubCo.

 

6.14 Legal Opinion. The Seller shall have received an opinion of counsel to the
Buyer in form and content satisfactory to the Seller.

 

Article 7. Tax Matters.

 

7.1 Liability for Taxes.

 

(a) The Seller shall be liable for and shall indemnify the Buyer, for (i) all
Taxes (as defined below) imposed on the Seller, or for which the Seller may
otherwise be liable, for any taxable year or period that ends on or before the
Closing Date (“Pre-Closing Tax Periods”) and, with respect to any portion of a
taxable year or period beginning before and ending after the Closing Date
(“Straddle Period”), the portion of such Straddle Period ending on and including
the Closing Date, and (ii) all liabilities imposed on the Seller on or before
the Closing Date under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law) for Taxes of the Seller or any other
corporation which is affiliated with the Seller (other than the Seller).

 

(b) The Buyer shall be liable for, and shall indemnify the Seller and its
Affiliates for, all Taxes imposed on the Seller or any of its Affiliates with
respect to the Seller for any taxable year or period that begins after the
Closing Date and, with respect to a Straddle Period, the portion of such
Straddle Period beginning after the Closing Date.

 

(c) For purposes of this Section 7.1, whenever it is necessary to determine the
liability for Taxes of the Seller for a portion of a Straddle Period:

 

(i) real, personal and intangible property Taxes (“Property Taxes”) for the
Pre-Closing Tax Period shall be equal to the amount of such Property Taxes for
the

 

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entire Straddle Period multiplied by a fraction, the numerator of which is the
number of days during the Straddle Period that are in the Pre-Closing Tax Period
and the denominator of which is the number of days in the Straddle Period; and

 

(ii) all other Taxes for the Pre-Closing Tax Period shall be determined by
assuming that the Seller had a taxable year or period that ended at the close of
the Closing Date.

 

7.2 Adjustment to Purchase Price. The Buyer and the Seller agree to report any
indemnification payment made by the Seller under Section 7.1 as an adjustment to
the Purchase Price, contribution to capital, or other non-taxable amount to the
extent that there is substantial authority for such reporting position under
applicable law.

 

7.3 Transfer and Conveyance Taxes. The Seller shall be liable for and shall pay
all applicable sales, transfer, recording, deed, stamp and other similar taxes
resulting from the consummation of the transactions contemplated by this
Agreement.

 

7.4 Survival. Claims for indemnification under Section 7.1 shall survive until
the expiration of the applicable statute of the limitations (including any
extensions or waivers of such statutes).

 

Article 8. Survival; Indemnification.

 

8.1 Survival of Representations, Warranties, Covenants and Agreements. All
representations, warranties, covenants and agreements made by any Party to this
Agreement will survive for a period of two years from the Closing. No
investigation by or knowledge of Buyer or its representatives will affect in any
manner the representations, warranties, covenants or agreements of Sellers set
forth in this Agreement (or in any document to be delivered in connection with
the consummation of the transactions contemplated by this Agreement) or Buyer’s
right to rely thereon, and such representations, warranties and covenants will
survive any such investigation.

 

8.2 Indemnification by the Seller. Subject in all respects to the provisions of
this Article 8, the Seller hereby agrees to indemnify and hold harmless the
Buyer and its Affiliates, officers, directors, employees, agents and
representatives after the Closing Date from and against any Claims and Damages
incurred by them arising out of or resulting from:

 

(a) any breach on the part of the Seller of (i) any representation or warranty
made herein or in any certificate delivered by the Seller pursuant to this
Agreement or (ii) any covenant or agreement made by the Seller in this
Agreement; or

 

(b) any third party claim existing as of the Closing Date, including those in
which the Seller is a plaintiff or defendant or any dispute initiated by the
Seller prior to the Closing, including without limitation arising out of any
third party claim initiated within twelve months following the Closing arising
out of any event that occurred at or prior to the Closing (a “Liability Claim”).

 

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8.3 Indemnification by the Buyer. Subject in all respects to the provisions of
this Article 8, the Buyer hereby agrees to indemnify and hold harmless the
Seller and its Affiliates, officers, directors, employees, agents and
representatives after the Closing Date from and against any Claims and Damages
incurred by them arising out of or resulting from any breach on the part of the
Buyer of (i) any representation or warranty made by the Buyer in Article 3
hereof or in any certificate delivered pursuant to this Agreement, (ii) any
covenant or agreement made by the Buyer in this Agreement, or (iii) from the use
or ownership of the Purchased Assets arising solely following the Closing.

 

8.4 Limitations on Indemnification Claims and Liability.

 

(a) The respective representations and warranties of the Seller and the Buyer
set forth in this Agreement or in any certificate delivered pursuant to this
Agreement, and the opportunity to make a claim for indemnification, or otherwise
be indemnified or held harmless, under this Article 8 with respect thereto or
with respect to (i) any covenant or agreement relating to any action required by
this Agreement to be taken prior to or at the Closing or (ii) any Liability
Claim shall survive until a final, unappealable order is entered with respect to
such Liability Claim and indemnification is made by the Seller as provided
herein. Any and all covenants and agreements relating to any action required by
this Agreement to be taken after the Closing shall survive for a period of two
years from the Closing.

 

(b) An Indemnifying Party shall not be obligated to indemnify of hold harmless
any Indemnified Party under Section 8.2 for any Claims or Damages incurred by
such Indemnified Party in connection with any individual occurrence or related
series of occurrences unless and until Claims or Damages in respect to the
indemnification obligations of the Indemnifying Party exceed in the aggregate
$100,000, following which (subject to the provisions of this Article 8) the
Indemnifying Party shall be obligated to indemnify or hold harmless an
Indemnified Party for all Claims or Damages. Once the Claims or Damages exceed
$100,000, the Indemnifying Party shall be responsible for all Claims or Damages,
from the first dollar as if such limitation never existed. Neither Indemnifying
Party shall be liable for any such Claims and Damages to the extent that they
exceed, in the aggregate, the sum of $8,115,000.

 

8.5 Computation of Claims and Damages. Whenever an Indemnifying Party is
required to indemnify and hold harmless an Indemnified Party from and against
and hold the Indemnified Party harmless from, or to reimburse the Indemnified
Party for, any item of Claim or Damage under this Agreement, the Indemnifying
Party will, subject to the provisions of this Article 8, pay the Indemnified
Party the amount of the Claim or Damage reduced by (i) any amounts to which the
Indemnified Party actually recovers from third parties in connection with such
Claim or Damage (“Reimbursements”), and reduced by (ii) the Net Proceeds of any
insurance policy payable to the Indemnified Party with respect to such Claim or
Damage. For purposes of this Section 8.4, “Net Proceeds” shall mean the
insurance proceeds actually paid, less any deductibles, co-payments, premium
increases, retroactive premiums or other payment obligations (including
attorneys’ fees and other costs of collection) that relates to or arises from
the making of the claim for indemnification. The Indemnified Party shall use
reasonable efforts to pursue Reimbursements or Net Proceeds that may reduce or
eliminate Claims and Damages and otherwise to mitigate Claims and Damages. If
any Indemnified Party receives any Reimbursement or Net Proceeds after an
indemnification payment is made which relates thereto,

 

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the Indemnified Party shall promptly repay to the Indemnifying Party such amount
of the indemnification payment as would not have been paid had the Reimbursement
or Net Proceeds reduced the original payment at such time or times as and to the
extent that such Reimbursement or Net Proceeds is actually received. The
Indemnified Party shall make available to the Indemnifying Party and its agents
and representatives all pertinent records, materials and information, and
provide reasonable access during normal business hours to the Indemnified
Party’s employees, properties, books and records, and shall otherwise cooperate
with and assist the Indemnifying Party and its agents and representatives in
reviewing the propriety and the amount of any Claims or Damages, including,
without limitation, the availability and/or amounts of Reimbursements and Net
Proceeds.

 

8.6 Notice of Claims. Upon obtaining actual Knowledge of any Claim or Damage
which has given rise to, or could reasonably give rise to, a claim for
indemnification hereunder, the party seeking indemnification (the “Indemnified
Party”) shall, as promptly as reasonably practicable (but in no event later than
30 days) following the date the Indemnified Party has obtained such Knowledge,
give written notice (a “Notice of Claim”) of such claim to the party or parties
from which indemnification is or will be sought under this Article 8 (the
“Indemnifying Party”). The Indemnified Party shall furnish to the Indemnifying
Party in good faith and in reasonable detail such information as the Indemnified
Party may have with respect to such indemnification claim (including copies of
any summons, complaint or other pleading which may have been served on it and
any written claim, demand, invoice, billing or other document evidencing or
asserting the same). No failure or delay by the Indemnified Party in the
performance of the foregoing shall reduce or otherwise affect the obligation of
the Indemnifying Party to indemnify and hold the Indemnified Party harmless,
except to the extent that such failure or delay shall have materially adversely
affected the Indemnifying Party’s ability to defend against, settle or satisfy
any liability, damage, loss, claim or demand for which such Indemnified Party is
entitled to indemnification hereunder.

 

8.7 Defense of Third Party Claims. If any claim set forth in the Notice of Claim
given by an Indemnified Party pursuant to Section 8.5 hereof is a claim asserted
by a third party, the Indemnifying Party shall have 30 days after the date that
the Notice of Claim is given or deemed given by the Indemnified Party to notify
the Indemnified Party in writing of the Indemnifying Party’s election to defend
such third party claim on behalf of the Indemnified Party. If the Indemnifying
Party elects to defend such third party claim, the Indemnified Party shall make
available to the Indemnifying Party and its agents and representatives all
witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control as is reasonably
required by the Indemnifying Party and shall otherwise cooperate with and assist
the Indemnifying Party in the defense of such third party claim. Regardless of
which party is defending such third party claim, the Indemnified Party shall not
pay, settle or compromise such third party claim without the consent of the
Indemnifying Party. If the Indemnifying Party elects to defend such third party
claim, the Indemnified Party shall have the right to participate in the defense
of such third party claim, at the Indemnified Party’s own expense. In the event,
however, that the Indemnified Party reasonably determines that representation by
counsel to the Indemnifying Party of both the Indemnifying Party and the
Indemnified Party may present such counsel with a conflict of interest, then
such Indemnified Party may employ separate counsel to represent or defend it in
any such action or proceeding and the Indemnifying Party will, subject to the
provisions of this Article 8, pay the reasonable fees

 

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and disbursements of such counsel when due under such counsel’s customary
billing practices. If the Indemnifying Party does not elect to defend such third
party claim or does not defend such third party claim in good faith, the
Indemnified Party shall have the right, in addition to any other right or remedy
it may have hereunder, at the Indemnifying Party’s expense, to defend such third
party claim; provided, however, that such Indemnified Party’s defense of or its
participation in the defense of any such third party claim shall not in any way
diminish or lessen the indemnification obligations of the Indemnifying Party
under this Article 8. If the Indemnifying Party subsequently reasonably
determines that the Indemnified Party is not defending such third party claim in
good faith, the Indemnifying Party shall have the right, in addition to any
other right or remedy it may have hereunder, to elect to assume the defense of
such third party claim and, to the extent that the Indemnified Party has not
defended such third party claim in good faith, and whether or not the
Indemnifying Party shall have subsequently assumed the defense thereof, the
indemnification obligations of the Indemnifying Party under this Article 9 shall
be reduced or eliminated to the extent that such failure to defend in good faith
shall have materially adversely affected the Indemnifying Party’s ability to
defend against, settle or satisfy any liability, damage, loss, claim or demand
for which such Indemnified Party is otherwise entitled to indemnification
hereunder.

 

8.8 Right of Setoff.

 

Once a claim for indemnification has been made under this Article 8, each
Indemnified Party may, as one of its remedies to effect indemnification under
this Article 8, withhold or cause to be withheld and setoff any amounts payable
(under this Agreement or otherwise) following the Closing to the Indemnifying
Party. With respect to any amounts from the Contingent Payments or due under the
Notes, any setoff by Buyer the shall be made in the following priority: (i)
first, from the Shares based on value of $1.00 per Share, (ii) second, from
amounts due under the Notes and (iii) lastly, from the Closing Cash Payment.

 

(a) With respect to a claim for Indemnification under Section 8.2(a) or 8.3, the
Indemnified Party shall give the Indemnifying Party five (5) days prior written
notice of its intent to reduce or omit any payment to setoff any claim of the
Indemnified Party against the Indemnifying Party, providing in such notice a
full and complete description of the nature and amount of such claim. In the
event the Indemnifying Party submits to the Indemnified Party a written
objection to such claim within such five (5) day period, the Indemnified Party
shall pay the amount which would otherwise be required to be paid into an escrow
account with a financial institution or law firm mutually agreed upon by the
parties. If the parties do not reach agreement with respect to disposition of
such payment within sixty (60) days after the date on which such payment was
due, the validity of the Indemnified Party’s claim and its right to effect
payments hereunder shall be submitted to binding arbitration in accordance with
the rules and procedures of the American Arbitration Association. The failure of
the Indemnifying Party to timely object to any setoff to which it has received
notice hereunder shall be deemed to be a waiver of any objections the
Indemnifying Party has to that setoff.

 

(b) With respect to a Liability Claim, the right to setoff will be exercisable
whether the claim for indemnification is liquidated or unliquidated, whether or
not the claim for indemnification has been reduced to judgment, and regardless
of any difficulty or uncertainty in determining or computing the ultimate amount
of the indemnification claim. The exercise of a right of setoff in good faith,
whether or not ultimately deemed to be justified, will not constitute

 

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a default of any obligation against which such setoff is made. Any amount
withheld by an Indemnified Party in setoff and which is ultimately determined
not to be payable by the Indemnifying Party will be promptly paid to the
Indemnifying Party.

 

Article 9. Definitions.

 

Unless otherwise stated in this Agreement, the following capitalized terms have
the following meanings:

 

“Action” means any action, suit, claim, arbitration, or proceeding or
investigation commenced by or pending before any Governmental Authority.

 

“Actual Amount” has the meaning set forth in Section 1.8(c)(iii).

 

“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such specified Person.

 

“Agreement” or “this Agreement” means this Purchase Agreement dated as of the
date first above written (including the Annexes, Schedules and Exhibits hereto)
and all amendments hereto made in accordance with the provisions of Section 10.6
hereof.

 

“Audited Financial Statements” has the meaning set forth in Section 2.6(a)
hereof.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in the City of Miami,
Florida.

 

“Buyer” has the meaning specified in the introductory paragraph to this
Agreement.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980.

 

“Claims and Damages” means, except as otherwise expressly provided in this
Agreement, any and all losses, claims, demands, liabilities, obligations,
actions, suits, orders, statutory or regulatory compliance requirements, or
proceedings asserted by any Person (including, without limitation, Governmental
Authorities), and all damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including, to the extent required pursuant to
Article 8, reasonable attorneys’ fees and costs, incurred by or awarded against
a party to the extent indemnified in accordance with Article 8 hereof, but shall
not include any consequential, special, multiple, punitive or exemplary damages,
except to the extent such damages have been recovered by a third party and are
the subject of a third party claim for which indemnification is available under
the express terms of Article 8 hereof.

 

“Closing” has the meaning set forth in Section 1.9 hereof.

 

“Closing Cash Payment” means the payment of $475,000 due and payable to the
Seller by the Buyer on the Closing Date.

 

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“Closing Date” has the meaning set forth in Section 1.9 hereof.

 

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

 

“Contingent Payment” has the meaning set forth in Section 1.8 hereof.

 

“Contingent Payment Calculation” has the meaning set forth in Section 1.8
hereof.

 

“Contingent Payment Cap” has the meaning set forth in Section 1.8 hereof.

 

“Contingent Payment Period” has the meaning set forth in Section 1.8 hereof.

 

“Contracts” has the meaning set forth in Section 1.4(b) hereof.

 

“Control” (including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly, of the power to direct or to cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, by contract or otherwise, including, without
limitation, the ownership, directly or indirectly, of securities having the
power to elect a majority of the board of directors or similar body governing
the affairs of such Person.

 

“December 31, 2003 Balance Sheet” has the meaning set forth in Section 2.6(a).

 

“Employee Benefit Plans” means all “employee benefit plans” within the meaning
of Section 3(3) of ERISA, all bonus, stock option, stock purchase, incentive,
deferred compensation, retirement, supplemental retirement, severance and other
employee benefit plans, programs, policies or arrangements, and all employment,
retention, change of control or compensation agreements, in each case for the
benefit of, or relating to, any current employee or former employee of either of
the Seller, other than any de minimis, fringe or unwritten benefit plans,
programs, policies or arrangements, the costs of which, to the Seller, are not
material.

 

“Encumbrance” means any security interest, pledge, mortgage, lien (including,
without limitation, tax liens), charge, encumbrance, easement, adverse claim,
preferential arrangement, restriction or defect in title.

 

“Environmental Claims” means any and all actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations,
proceedings, consent orders or consent agreements relating in any way to any
Environmental Law, any Environmental Permit, Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment,
including, without limitation (a) by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages and (b) by any
Person for damages, contributions, indemnification, cost recovery, compensation
or injunctive relief.

 

“Environmental Law” means any Law relating to the environment, health, safety or
Hazardous Materials, in force and effect on the date hereof or, in the case of
the Seller’ certificate to be delivered in accordance with the provisions of
Section 5.3 hereof, on the Closing Date (exclusive of any amendments or changes
to such Law or any regulations promulgated thereunder or orders, decrees or
judgments issued pursuant thereto which are enacted,

 

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promulgated or issued after the date hereof, or in the case of such certificate,
on or after the Closing Date), including but not limited to, CERCLA; the
Resource Conservation and Recovery Act of 1986 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. (S)(S)6901 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. (S)(S)6901 et seq.; the Clean Water Act, 33 U.S.C.
(S)(S)1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C.
(S)(S)2601 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. (S)(S)7401
et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S)300f et seq.; the Atomic
Energy Act, 42 U.S.C. (S)(S)2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. (S)(S)136 et seq.; and the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S)1101 et seq.

 

“Environmental Permits” means all permits, approvals, identification numbers,
licenses and other authorizations required under any applicable Environmental
Law.

 

“Equipment” means all of the tangible personal property, machinery, equipment,
vehicles, rolling stock, furniture, and fixtures in which the Seller has an
interest, by ownership or lease, together with any replacements thereof, or
additions thereto made in the ordinary course of business.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” has the meaning set forth in Section 2.19 hereof.

 

“Final Determination Date” has the meaning set forth in Section 1.8(c) hereof.

 

“GAAP” means United States generally accepted accounting principles and
practices as in effect from time to time.

 

“Golf” means Golf Acquisition, Inc., a corporation organized under the laws of
the State of Florida.

 

“Golf Merger” has the meaning set forth in Section 4.8(a) hereof.

 

“Governmental Authority” means any United States federal, state or local
government or any foreign government, any governmental, regulatory, legislative,
executive or administrative authority, agency or commission or any court,
tribunal, or judicial body.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority. Governmental Orders shall not include Permits.

 

“Hazardous Materials” means petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, and any other chemicals, materials,
or substances designated, classified or regulated as being “hazardous” or
“toxic”, or words of similar import, under any Environmental Law.

 

“High Amount” has the meaning set forth in Section 1.8(c)(ii) hereof.

 

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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

 

“Indebtedness” means obligations with regard to borrowed money and leases
classified or accounted for as capital or financing leases on financial
statements, but shall expressly not include either accounts payable or accrued
liabilities that are incurred in the ordinary course of business or obligations
under operating leases classified or accounted for as such on financial
statements.

 

“Indemnified Party” has the meaning set forth in Section 8.6 hereof.

 

“Indemnifying Party” has the meaning set forth in Section 8.6 hereof.

 

“Intellectual Property Rights” means all patents, trademarks, trade names,
domain names, service marks and copyrights, and applications for any of the
foregoing, and other intellectual property, including, without limitation,
computer software and programs, whether owned or used by, or licensed to, of the
Seller.

 

“Interim Balance Sheet” has the meaning set forth in Section 2.12 hereof.

 

“Interim Financial Statements” has the meaning set forth in Section 2.12 hereof.

 

“Knowledge” with respect to a party means such information as any of its
officers or key employees actually knew or should with the exercise of due
diligence have known.

 

“Law” means any federal, state, local or foreign constitution, statute, law,
ordinance, regulation, rule, code, injunction, judgment, order, decree or other
requirement, restriction or rule of law.

 

“Liability Claim” has the meaning set forth in Section 8.2(b) hereof.

 

“Long-Term Promissory Note” means that certain promissory note, in the form of
Exhibit B attached hereto, in the principal amount of $3,200,000 to be executed
and delivered by the Buyer on the Closing Date.

 

“Low Amount” has the meaning set forth in Section 1.8(c)(i).

 

“Material Adverse Effect” means any circumstance, change in, or effect on the
Seller that has a material adverse effect on the business, results of
operations, condition (financial or otherwise), or prospects of the Seller taken
as a whole.

 

“Material Contracts” means the written agreements, contracts, policies, plans,
mortgages, understandings, arrangements or commitments to which the Seller is a
party or by which any of the Purchased Assets are bound as described below: (i)
any agreement, contract, commitment, note, loan, evidence of indebtedness,
purchase order or letter of credit providing for payments by the Seller to any
Person in excess of $25,000 per year or $75,000 in the aggregate over the
five-year period commencing on the date hereof and not cancelable (without
further liability) on not more than 30 days’ notice; (ii) any employment
agreement or consulting agreement or similar

 

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contract; (iii) any retention or severance agreement or contract; (iv) any
distribution agreement associated with the Business; (v) any lease of Equipment
or Real Property or license with respect to Intellectual Property Rights
providing for payments to another Person in excess of $10,000 in any year; (vi)
any joint venture, partnership or similar agreement or contract of the Seller;
(vii) any agreement or contract under which the Seller has borrowed or loaned
any money in excess of $10,000 or issued or received any note, bond, indenture
or other evidence of indebtedness in excess of $10,000 or directly or indirectly
guaranteed indebtedness, liabilities or obligations of others in an amount in
excess of $10,000; (viii) any covenant not to compete or contract or agreement,
understanding, arrangement or any restriction whatsoever limiting in any respect
the ability of either of the Seller to compete in any line of business or with
any Person or in any area; (ix) any contracts, commitments, licenses or permits
containing any “change in control” or “parachute payment” provision, as those
terms are commonly understood, including without limitation those which would be
triggered by the execution, delivery or consummation of the transactions
contemplated by this Agreement, including without limitation, any right of
termination, right of payment or acceleration of any other right under such
contracts, commitments, licenses or permits; (x) contracts, commitments or
agreements which impose any duty of confidentiality or nondisclosure; (xii) Tax
sharing or similar agreements; and (ix) any of the contracts, agreements or
arrangements, listed on Schedule 2.15.

 

“Mergers” shall mean, collectively, the Golf Merger and the PubCo Merger.

 

“Modification Agreement” means that certain modification agreement executed by
Capital Business Credit whereby the current asset-based line of credit available
to the Seller shall be modified as follows: (a) to permit the consummation of
the transactions contemplated by this Agreement; (b) to eliminate the personal
guaranties of the Ryans; and (c) to increase the total availability thereunder
to $5,000,000.

 

“Neutral Auditor” has the meaning set forth in Section 1.8(c) hereof.

 

“Net Proceeds” has the meaning set forth in Section 8.5 hereof.

 

“Notes” means, collectively, the Long-Term Promissory Note and the Short-Term
Promissory Note.

 

“Notice of Claim” has the meaning set forth in Section 8.6 hereof.

 

“Notice of Disagreement” has the meaning set forth in Section 1.8(c) hereof.

 

“Permits” has the meaning set forth in Section 2.17(a) hereof.

 

“Person” means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.

 

“Pre-Closing Tax Periods” has the meaning set forth in Section 7.1(a) hereof.

 

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“Premises” means the facility of the Seller located at 835 and 851 Bill Jones
Industrial Way, Springfield, Tennessee 37172, and consisting of approximately
14.06 acres.

 

“Property Taxes” has the meaning set forth in Section 7.1(c)(i) hereof.

 

“PubCo” has the meaning set forth in Section 4.8(c) hereof.

 

“PubCo Merger” has the meaning set forth in Section 4.8(b) hereof.

 

“Purchase Price” has the meaning set forth in Section 1.6 hereof.

 

“Real Property” means the real property and related mineral rights owned by, and
all easements, rights-of-way and other possessory interests in real estate of
the Seller, together with all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures, systems,
equipment and items of personal property of the Seller attached or appurtenant
thereto, and all easements, licenses, rights and appurtenances relating to the
foregoing.

 

“Reimbursements” has the meaning set forth in Section 8.5 hereof.

 

“Release” means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, emitting, escaping, emptying, seeping, placing and the like into or
upon any land or water or air or otherwise entering into the environment.

 

“Required Consents” means any consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation to (a)
state securities or “blue sky” laws, (b) the Securities Act of 1933, as amended,
and (c) antitrust or other competition Laws of other jurisdictions.

 

“Ryans” has the meaning set forth in the introductory paragraph of this
Agreement.

 

“Seller” has the meaning set forth in the introductory paragraph of this
Agreement.

 

“Seller Responsible Parties” has the meaning set forth in the introductory
paragraph of this Agreement.

 

“Sale” has the meaning set forth in the recitals hereto.

 

“SEC” means the Securities and Exchange Commission.

 

“Sellers” has the meaning set forth in the introductory paragraph to this
Agreement.

 

“Shares” means 2,200,000 shares of the common stock of the Buyer.

 

“Purchased Assets” has the meaning set forth in Section 1.1 hereof.

 

“Short-Term Promissory Note” means that certain promissory note, in the form of
Exhibit A attached hereto, in the principal amount of $2,240,000 to be executed
and delivered by the Buyer on the Closing Date.

 

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“Straddle Period” has the meaning set forth in Section 7.1(a) hereof.

 

“Subsidiary” of any Person means (i) any corporation more than 50% of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation is owned by such Person
directly or indirectly through Subsidiaries and (ii) any partnership, limited
partnership, limited liability company, associates, joint venture or other
entity in which such Person directly or indirectly through Subsidiaries has more
than a 50% equity interest.

 

“Tax” or “Taxes” means any and all taxes, fees, withholdings, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto), fees, surcharges, contributions, or other payments including
but not limited to administrative or regulatory fees, imposed by any local,
state, federal or foreign government or governmental agency or taxing authority,
including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers’ compensation,
unemployment compensation, or net worth, taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes,
license, registration and documentation fees, and customs duties, tariffs and
similar charges.

 

“Tax Return” means any report, return, document, declaration or other
information or filing required to be supplied to any Tax authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.

 

“Union Employee” means an employee of either of the Seller whose terms and
conditions of employment are governed by the terms of any collective bargaining
agreement.

 

“1933 Act” has the meaning set forth in Section 2.30 hereof.

 

Article 10. Miscellaneous Provisions.

 

10.1 Expenses. Except as otherwise specifically provided in this Agreement, all
out-of-pocket costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.

 

10.2 Notices. Any notice, demand, claim, notice of claim, request or
communication required or permitted to be given under the provisions of this
Agreement shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered in person, (ii) on the date of mailing if mailed by
registered or certified mail, postage prepaid and return receipt requested,
(iii) on the date of delivery to a national overnight courier service, or (iv)
upon transmission by facsimile (if such transmission is confirmed by the
addressee) if delivered through such services

 

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to the following addresses, or to such other address as any party may request by
notifying in writing all of the other parties to this Agreement in accordance
with this Section 10.2.

 

If to the Seller:

 

Datrek Professional Bags, Inc.

835 Bill Jones Industrial Way

Springfield, Tennessee 37172

Attention: Deborah Ryan

Telephone: (615) 384-1286

Facsimile: (615) 384-1290

 

With a copy to:

 

Stokes Bartholomew Evans & Petree, P.A.

424 Church Street, Suite 2800

Nashville, Tennessee 37219

Attention: Robert R. Campbell, Esq.

Telephone: (615) 259-1450

Facsimile: (615) 259-1470

 

If to the Buyer:

 

Datrek Acquisition Inc.

11 Commerce Road

Rockland, Massachusetts 02370

Telephone: (402) 926-5833

Facsimile: (781) 871-5180

 

With a copy to:

 

Adorno & Yoss

2601 South Bayshore Drive

Suite 1600

Miami, FL 33133

Attention: Seth P. Joseph, Esq.

Telephone: (305) 858-5555

Facsimile: (305) 858-4777

 

Any such notice shall be deemed to have been received on the date of personal
delivery, the date set forth on the Postal Service return receipt, or the date
of delivery shown on the records of the overnight courier, as applicable.

 

10.3 Benefit and Assignment. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. There shall be no assignment of any interest under this Agreement by
any party, except that (a) the Buyer may assign its rights hereunder to any
wholly owned subsidiary of the Buyer; and (b) the Seller may

 

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assign its rights and obligations under the Short-Term Promissory Note, the
Long-Term Promissory Note and the Contingent Payment to a partnership or limited
liability company, the partners or members of which consist of the Ryans;
provided, however, that no such assignment shall relieve the assignor of its
obligations under this Agreement. Nothing herein, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

10.4 Waiver. Any party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of any other party, (b)
waive any inaccuracies in the representations and warranties of any other party
contained herein or in any document delivered by any other party pursuant hereto
or (c) waive compliance with any of the agreements or conditions of any other
party contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
such rights.

 

10.5 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any Law or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

 

10.6 Amendment. This Agreement may not be amended or modified except (a) by an
instrument in writing signed by, or on behalf of, the Seller and the Buyer or
(b) by a waiver in accordance with Section 10.5 hereof.

 

10.7 Effect and Construction of this Agreement. This Agreement embodies the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior agreements, arrangements and
understandings, whether written or oral, relating to matters provided for
herein. The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual agreement, and this
Agreement shall not be deemed to have been prepared by any single party hereto.

 

10.8 Headings. The headings of the sections and subsections of this Agreement
are inserted as a matter of convenience and for reference purposes only and in
no respect define, limit or describe the scope of this Agreement or the intent
of any section or subsection.

 

10.9 Counterparts. This Agreement may be executed in one or more counterparts
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

 

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10.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida, applicable to contracts
executed in and to be performed entirely within that State.

 

10.11 Entire Agreement. This Agreement, along with the Disclosure Schedules,
Exhibits and all other agreements, instruments or documents to be delivered in
connection with this Agreement, constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, understandings, negotiations
and discussions, both written and oral, between the parties hereto with respect
to the subject matter hereof.

 

10.12 Specific Performance. Each of the Seller Responsible Parties acknowledge
and agree that in the event of any breach of this Agreement, the Buyer would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court sitting in Miami-Dade
County, Florida.

 

10.13 Remedies Cumulative. No remedy made available by any of the provisions of
this Agreement is intended to be exclusive of any other remedy, and each and
every remedy is cumulative and is in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity.

 

[Signatures Begin on Following Page]

 

48

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

 

BUYER: Datrek Acquisition, Inc. By:   /S/    MICHAEL S. HEDGE         

Name:

  Michael S. Hedge

Title:

  President SELLER RESPONSIBLE PARTIES: Datrek Professional Bags, Inc. By:  
/s/    DEBORAH RYAN         

Name:

  Deborah Ryan

Title:

  President     /s/    DENNIS RYAN              Dennis Ryan     /s/     DEBORAH
RYAN              Deborah Ryan

 

49

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EXHIBIT A

 

FORM OF SHORT-TERM PROMISSORY NOTE

 

$2,240,000.00

  October         , 2004

 

FOR VALUE RECEIVED, the undersigned, DATREK ACQUISITION INC., a corporation
organized and existing under the laws of the State of Florida (the “Maker”),
hereby unconditionally promises to pay to the order of DATREK PROFESSIONAL BAGS,
INC. (the “Payee”) the principal sum of TWO MILLION TWO HUNDRED FORTY THOUSAND
AND 00/100 DOLLARS ($2,240,000.00), in accordance with the payment schedule
indicated below, at 835 Bill Jones Industrial Way, Springfield, TN 37172, or
such other address given to Maker by Payee, in immediately available funds and
lawful money of the United States of America.

 

1. PAYMENT OF PRINCIPAL. The principal amount due hereunder shall be paid in two
installments of $560,000 each due and payable on the dates which are 30 and days
from the date hereof and one installment of $1,120,000 due and payable on
December 31, 2004. The principal amount of this Note may be prepaid at any time
without premium or penalty.

 

2. NO INTEREST. The unpaid principal of this Note shall not bear interest;
provided that, following any default hereunder, or after this Note matures,
whether by its terms, demand, acceleration or otherwise, the entire unpaid
principal balance hereof and accrued and unpaid interest thereon shall bear
interest at the maximum lawful rate of interest permitted by applicable law.
Payee shall have the right, without further notice, to declare the amount of the
total unpaid balance hereof to be due and payable forthwith, in advance of the
maturity date, upon the failure of Maker to make any payments (whether
principal, interest or otherwise) in full on the date due hereunder.

 

3. PAYMENT DATES; MANNER OF PAYMENT; APPLICATION OF PAYMENTS. Should the
principal of this Note become due and payable on any day other than a business
day, then the maturity thereof shall be extended to the next succeeding business
day. All payments of principal of this Note shall be made by Maker to Payee at
its address stated above in good funds. Time is of the essence of this Note and
in case this Note is collected by law or through an attorney-at-law, or under
advice therefrom, whether or not suit is brought, Maker agrees to pay all costs
of collection, including reasonable attorney’s fees.

 

4. WAIVERS. Maker waives presentment, protest, notice of protest and
non-payment, or other notice of default, notice of acceleration and intention to
accelerate, and agree that its liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, and hereby consents to any and all renewals, extensions,
indulgences, releases, or changes, regardless of the number of such renewals,
extensions, indulgences, releases, or changes.

 

5. NO WAIVER. No waiver by Payee of any of its rights or remedies hereunder or
under any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Payee; no delay
or omission in the exercise or

 

1

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enforcement by Payee of any rights or remedies shall ever be construed as a
waiver of any right or remedy of Payee; and no exercise or enforcement of any
such rights or remedies shall ever be held to exhaust any right or remedy of
Payee.

 

6. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE LAWS OF THE UNITED STATES MAY
APPLY TO THE TERMS HEREOF, THE SUBSTANTIVE LAWS OF THE STATE OF TENNESSEE SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS NOTE.

 

7. VENUE; EXCLUSIVE JURISDICTION. MAKER AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST MAKER WITH RESPECT TO THIS NOTE SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF TENNESSEE (DAVIDSON COUNTY) OR THE UNITED STATES DISTRICT
COURT SITTING IN SUCH COUNTY, AS THE PAYEE MAY ELECT AT ITS SOLE DISCRETION, AND
BY EXECUTION AND DELIVERY OF THIS NOTE, MAKER HEREBY ACCEPTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF SUCH
COURTS. MAKER WAIVES PERSONAL SERVICES OF AND ALL PROCESS UPON IT, AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF SUCH COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY EXPRESS,
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, SUCH SERVICE TO BECOME EFFECTIVE
FIVE (5) BUSINESS DAYS AFTER SUCH MAILING. MAKER WAIVES, AT THE OPTION OF THE
PAYEE, ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO THE
VENUE OF ANY ACTION OR PROCEEDING INSTITUTED UNDER THIS NOTE AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE REMEDY AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR THE RIGHT OF PAYEE TO BRING LEGAL ACTIONS OR
PROCEEDINGS IN ANY OTHER COMPETENT JURISDICTION. MAKER AGREES THAT ANY ACTION
COMMENCED BY MAKER ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN
CONNECTION WITH THIS NOTE, SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
TENNESSEE (DAVIDSON COUNTY) OR IN THE UNITED STATES DISTRICT COURT SITTING IN
SUCH COUNTY AND THAT SUCH COURTS SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT
TO ANY OTHER SUCH ACTION.

 

8. WAIVER OF JURY TRIAL. MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR MAKER ENTERING INTO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

2

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9. FINAL AGREEMENT. THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY
BY AN INSTRUMENT IN WRITING SIGNED BY MAKER AND PAYEE. THIS NOTE EMBODIES THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.

 

[Remainder of Page Intentionally Left Blank]

 

3

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Executed as of the day and year first above written.

 

MAKER:

DATREK ACQUISITION, INC.

By:    

Name:

   

Title:

   

 

4

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EXHIBIT B

 

FORM OF LONG-TERM PROMISSORY NOTE

 

$3,200,000.00

  October         , 2004

 

FOR VALUE RECEIVED, the undersigned, DATREK ACQUISITION INC., a corporation
organized and existing under the laws of the State of Florida (the “Maker”),
hereby unconditionally promises to pay to the order of DATREK PROFESSIONAL BAGS,
INC. (the “Payee”) the principal sum of THREE MILLION TWO HUNDRED THOUSAND AND
00/100 DOLLARS ($3,200,000.00) or such lesser sum as may be the outstanding
principal amount, together with interest thereon, in accordance with the payment
schedule indicated below, at 835 Bill Jones Industrial Way, Springfield, TN
37172, or such other address given to Maker by Payee, in immediately available
funds and lawful money of the United States of America.

 

1. PAYMENT OF PRINCIPAL. The principal amount due hereunder shall be paid in two
installments of $1,600,000 each due and payable on June 30, 2007 and December
31, 2007, respectively. The principal amount of this Note may be prepaid at any
time without premium or penalty.

 

2. INTEREST. The unpaid principal of this Note shall accrue interest at the per
annum rate of eight percent (8%) payable on each January 10, April 10, July 10
and October 10, commencing on January 10, 2005, through the maturity date of
this Note. Following any default hereunder, or after this Note matures, whether
by its terms, demand, acceleration or otherwise, the entire unpaid principal
balance hereof and accrued and unpaid interest thereon shall bear interest at
the maximum lawful rate of interest permitted by applicable law. Payee shall
have the right, without further notice, to declare the amount of the total
unpaid balance hereof to be due and payable forthwith, in advance of the
maturity date, upon the failure of Maker to make any payments (whether
principal, interest or otherwise) in full on the date due hereunder.

 

3. PAYMENT DATES; MANNER OF PAYMENT; APPLICATION OF PAYMENTS. Should the
principal of this Note become due and payable on any day other than a business
day, then the maturity thereof shall be extended to the next succeeding business
day. All payments of principal of this Note shall be made by Maker to Payee at
its address stated above in good funds. Time is of the essence of this Note and
in case this Note is collected by law or through an attorney-at-law, or under
advice therefrom, whether or not suit is brought, Maker agrees to pay all costs
of collection, including reasonable attorney’s fees.

 

4. IRREVOCABLE STAND-BY LETTER OF CREDIT. The payment obligations of the Maker
hereunder shall be guaranteed by an Irrevocable Stand-by Letter of Credit issued
by Stanford International Bank in favor of the Payee.

 

5. RIGHT OF SETOFF. All payments under this Note shall be subject to Maker’s
right to setoff any and all direct claims of Maker against Payee, arising from
or out of any breach or default by Payee under that certain Asset Purchase
Agreement, dated as of the date hereof (the

 

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“Purchase Agreement”). Any setoff shall be made in accordance with the
provisions of Section 8.8 of the Purchase Agreement.

 

6. WAIVERS. Maker waives presentment, protest, notice of protest and
non-payment, or other notice of default, notice of acceleration and intention to
accelerate, and agree that its liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, and hereby consents to any and all renewals, extensions,
indulgences, releases, or changes, regardless of the number of such renewals,
extensions, indulgences, releases, or changes.

 

7. NO WAIVER. No waiver by Payee of any of its rights or remedies hereunder or
under any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Payee; no delay
or omission in the exercise or enforcement by Payee of any rights or remedies
shall ever be construed as a waiver of any right or remedy of Payee; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Payee.

 

8. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE LAWS OF THE UNITED STATES MAY
APPLY TO THE TERMS HEREOF, THE SUBSTANTIVE LAWS OF THE STATE OF TENNESSEE SHALL
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS NOTE.

 

9. VENUE; EXCLUSIVE JURISDICTION. MAKER AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST MAKER WITH RESPECT TO THIS NOTE SHALL BE BROUGHT IN THE
COURTS OF THE STATE OF TENNESSEE (DAVIDSON COUNTY) OR THE UNITED STATES DISTRICT
COURT SITTING IN SUCH COUNTY, AS THE PAYEE MAY ELECT AT ITS SOLE DISCRETION, AND
BY EXECUTION AND DELIVERY OF THIS NOTE, MAKER HEREBY ACCEPTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF SUCH
COURTS. MAKER WAIVES PERSONAL SERVICES OF AND ALL PROCESS UPON IT, AND
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF SUCH COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY EXPRESS,
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, SUCH SERVICE TO BECOME EFFECTIVE
FIVE (5) BUSINESS DAYS AFTER SUCH MAILING. MAKER WAIVES, AT THE OPTION OF THE
PAYEE, ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO THE
VENUE OF ANY ACTION OR PROCEEDING INSTITUTED UNDER THIS NOTE AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE REMEDY AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF PAYEE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR THE RIGHT OF PAYEE TO BRING LEGAL ACTIONS OR
PROCEEDINGS IN ANY OTHER COMPETENT JURISDICTION. MAKER AGREES THAT ANY ACTION
COMMENCED BY MAKER ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN
CONNECTION WITH THIS NOTE, SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
TENNESSEE (DAVIDSON COUNTY) OR IN THE UNITED STATES DISTRICT COURT SITTING IN
SUCH COUNTY

 

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AND THAT SUCH COURTS SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY OTHER
SUCH ACTION.

 

10. WAIVER OF JURY TRIAL. MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR MAKER ENTERING INTO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

11. FINAL AGREEMENT. THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY
BY AN INSTRUMENT IN WRITING SIGNED BY MAKER AND PAYEE. THIS NOTE EMBODIES THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.

 

[Remainder of Page Intentionally Left Blank]

 

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Executed as of the day and year first above written.

 

MAKER:

DATREK ACQUISITION, INC.

By:    

Name:

   

Title:

   

 

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