ex101.htm


    Exhibit
10.1

    


    


    


    


    


    SECURITIES
PURCHASE AGREEMENT

    


     AMONG

    


    HEARTLAND,
INC.,

    


    LEE OIL
COMPANY, INC.,

    LEE’S
FOOD MARTS, LLC,

    LEE
ENTERPRISES, INC.

    LEE
HOLDING COMPANY, LP

    AND

    AND GARY
LEE

    


    


    


    


    


    


    


    Dated as
of October __, 2008

    


    


     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

     

    
 

    SECURITIES
PURCHASE AGREEMENT

    


    


    SECURITIES
PURCHASE AGREEMENT, dated as of October __, 2008 (the “Agreement”), among
Heartland, Inc., a corporation organized under the laws of Maryland (the
“Purchaser”), LEE HOLDING COMPANY, LP, and Gary Lee (the “Sellers”), Lee Oil Company, Inc., a
corporation organized under the laws of Virginia (“Lee Oil”), Lee’s Food Mart, LLC, a
limited liability company organized under the laws of Tennessee (“Lee Food”), and Lee Enterprises, Inc., a corporation
organized under the laws of Kentucky
(“Lee,” and together with Lee Oil and Lee Food, the “Companies”).

     

    W I T N E S S E T
H:

     

    WHEREAS,
the Seller owns an aggregate of ______
shares of common stock, $___ par value, of Lee Oil (the “Lee Oil Shares”),
an aggregate of _____ (_____) membership
interest of Lee Food (the “Lee Membership Interest”), and an aggregate of ______ (   ) shares of common stock, $___ par
value, of Lee (the “Lee Shares,” and collectively with the Lee Oil Shares and
the Lee Membership Interest, the “Securities”), which Securities constitute all
of the issued and outstanding shares of capital stock of the Companies;
and

     

    WHEREAS,
the Seller desires to sell to Purchaser, and the Purchaser desires to purchase
from the Seller, the Securities for the purchase price and upon the terms and
conditions hereinafter set forth;

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:

     

    ARTICLE
I  SALE AND
PURCHASE OF SHARES

     

    1.1 Sale and
Purchase of Securities.

     

    Upon the
terms and subject to the conditions contained herein, on the Closing Date the
Sellers shall sell, assign, transfer, convey and deliver to the Purchaser, and
the Purchaser shall purchase from the Sellers, all of the
Securities. 

     

    


    ARTICLE
II  PURCHASE
PRICE AND PAYMENT

     

    2.1 Amount of Purchase
Price. The purchase price for the Securities, which shall be paid
based on the Sellers instruction at the Closing Date, shall be an amount equal
to:

     

    (a)           $3,250,000
(US dollars) payable to the Sellers (the “Cash Purchase Price”);

     

    (b)           2,500,000 shares of common stock of the Purchaser,
$.001 par value per share, to be issued to the Seller (the “Purchase Price
Shares”);

     

    (c)           $3,250,000
(US dollars) evidenced by a subordinated secured promissory notes in the form of
exhibit 2.1 attached
hereto (the “Note” and collectively with the Cash Purchase Price and the
Purchase Price Shares, the “Purchase Price”)

     

    2.2 Payment of Purchase
Price.

     

    On the
Closing Date, the Purchaser shall pay the Cash Purchase Price to the Sellers,
which shall be paid by the delivery to Sellers of a certified or bank cashier's
checks, payable to the order of the Sellers or, at the Seller’s option, by wire
transfer of immediately available funds into accounts designated by the
Sellers.  Further, the Purchaser shall deliver the Note and the
Purchase Price Shares within five (5) business days of the Closing
Date.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
III  CLOSING
AND TERMINATION

     

                          3.1           Closing
Date.

     

    Subject
to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof
(or the waiver thereof by the party entitled to waive that condition), the
closing of the sale and purchase of the Securities provided for in Section 1.1
hereof (the "Closing") shall take place at the offices of Law Offices of Robert
L. Brown, located at 1005 South Main Street, Corbin, Kentucky, 40701, (or at
such other place as the parties may designate in writing) on October 1, 2008 or such
other date as the Sellers and the Purchaser may designate and such designation shall occur no later than
October 1, 2008.  The date on which the Closing
shall be held is referred to in this Agreement as the "Closing
Date".

     

    3.2 Termination of
Agreement.

     

    This
Agreement may be terminated prior to the Closing as follows:

     

    (a) At the
election of the Sellers or the Purchaser on or after October 1, 2008, if
the Closing shall not have occurred by the close of business on such date
provided that the terminating party is not in default of any of its obligations
hereunder and the Closing Date shall not have
extended by the parties to a date after October 1,
2008;

     

    (b) by mutual
written consent of the Sellers and the Purchaser; or

     

    (c) by the
Sellers or the Purchaser if there shall be in effect a final nonappealable order
of a governmental body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence).

     

    3.3 Procedure Upon
Termination.

     

    In the
event of termination and abandonment by the Purchaser or the Sellers, or both,
pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given
to the other party or parties, and this Agreement shall terminate, and the
purchase of the Securities hereunder shall be abandoned, without further action
by the Purchaser or the Sellers.  If this Agreement is terminated as
provided herein, each party shall redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.

     

    3.4 Effect of
Termination.

     

    In the
event that this Agreement is validly terminated as provided herein, then each of
the parties shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination shall be
without liability to the Purchaser, the Companies, the Seller or the Companies;
provided, however, that the obligations of the parties set forth in Section 10.4
hereof shall survive any such termination and shall be enforceable
hereunder.

     

    ARTICLE
IV REPRESENTATIONS
AND WARRANTIES OF THE SELLERS

     

    


    The
Sellers hereby jointly and severally represent and warrant to the Purchaser
that:

     

                          4.1.           Organization and Good
Standing of the Companies.  Each of the Companies is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation as set forth above. The Companies are
not required to be qualified to transact business in any other jurisdiction
where the failure to so qualify would have an adverse effect on the business of
the Companies.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

                          4.2.           Authority.

    


                                    (a)           Each
of the Companies has full power and authority (corporate and otherwise) to carry
on its business and has all permits and licenses that are necessary to the
conduct of its business or to the ownership, lease or operation of its
properties and assets.

    


                                    (b)           The
execution of this Agreement and the delivery hereof to the Purchaser and the
sale contemplated herein have been, or will be prior to Closing, duly authorized
by the Board of Directors of the Seller and each of the Companies and by the
Seller as sole stockholder of the Companies having full power and authority to
authorize such actions.

    


                                    (c)           Subject
to any consents required under Section 4.7 below, the Sellers and the
Companies have the full legal right, power and authority to execute,
deliver and carry out the terms and provisions of this Agreement; and this
Agreement has been duly and validly executed and delivered on behalf of Sellers
and the Companies and constitutes a valid and binding obligation of the Sellers
and the Companies, enforceable in accordance with its terms.

    


                                    (d)           Except
as set forth in Schedule
4.2 hereto, to the best of Seller’s knowledge, neither the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated, nor compliance with the terms of this Agreement will
violate, conflict with, result in a breach of, or constitute a default under any
statute, regulation, indenture, mortgage, loan agreement, or other agreement or
instrument to which the Seller or any of the Companies is a party or by which it
or any of them is bound, any charter, regulation, or bylaw provision of the
Seller or any of the Companies, or any decree, order, or rule of any court or
governmental authority or arbitrator that is binding on the Seller or any of the
Companies in any way.

    


                          4.3.           Shares.

    


                                    (a)           The
authorized capital stock of Lee Oil consists of _________ (______) shares of common stock, par
value $____ per share, of which _______
(__) shares have been issued to Sellers and constitute the only shares of
the capital stock of Lee Oil
outstanding.  The authorized capital stock of Lee Food consists of
_________  membership interest which
membership interests have been issued to Sellers and constitute the only
securities of the capital stock of Lee Food outstanding.  The
authorized capital stock of Lee consists of _____________ (______) shares of common stock,
par value $___ per share, of which ___________
(___) shares have been issued to Seller and constitute the only shares of
the capital stock of Lee
outstanding.    All of the Securities are duly authorized,
validly issued, fully paid and non-assessable.

    


                                    (b)           The
Seller is the lawful record and beneficial owner of all the Securities, free and
clear of any liens, pledges, encumbrances, charges, claims or restrictions of
any kind, except as set forth in Schedule 4.3 hereto, and have, or will have on the Closing
Date, the absolute, unilateral right, power, authority and capacity to enter
into and perform this Agreement without any other or further authorization,
action or proceeding, except as specified herein.

    


                                    (c)           There
are no authorized or outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities or other agreements or
arrangements of any character or nature whatever under which any of the
Companies are or may become obligated to issue, assign or transfer any shares of
capital stock of any of the Companies, except as set forth in Schedule 4.3 hereto.  Upon the delivery to
Purchaser on the Closing Date of the certificates representing the Securities,
Purchaser will have good, legal, valid, marketable and indefeasible title to all
the then issued and outstanding shares of capital stock of the Companies, free
and clear of any liens, pledges, encumbrances, charges, agreements, options,
claims or other arrangements or restrictions of any kind (other than any such liens, pledges, encumbrances, charges, agreements,
options, claims and other arrangements and
restrictions that will be terminated and discharged promptly on Closing upon the
receipt by the holders of the same of sums sufficient to pay in full the
obligations secured by such liens and other encumbrances, which such liens are
attached hereto as Schedule 4.3(c)).

    


                          4.4.           Basic Corporate
Records.  The copies of the Articles of Incorporation or
Organization of each of the Companies (certified by the Secretary of State or
other authorized official of the jurisdiction of incorporation), and the Bylaws
of each of the Companies, as the case may be (certified within 30 days of the
date of this Agreement as true, correct and complete by each of the Companies’
secretary or assistant secretary), all of which have been delivered to the
Purchaser, are true, correct and complete as of the date of this
Agreement.

    


                          4.5.           Minute
Books.  The minute books of each of the Companies, which shall
be exhibited to the Purchaser between the date hereof and the Closing Date, each
contain true, correct and complete minutes and records of all meetings,
proceedings and other actions of the shareholders, Boards of Directors and
committees of such Boards of Directors of each such corporation, if any, and, on
the Closing Date, will contain true, correct and complete minutes and records of
any meetings, proceedings and other actions of the shareholders, respective
Boards of Directors and committees of such Boards of Directors of each such
corporation.

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

                          4.6.           Subsidiaries and
Affiliates.  Any and all businesses, entities, enterprises and
organizations in which any of the Companies has any ownership, voting or profit
and loss sharing percentage interest (the “Subsidiaries”) are identified in
Schedule 4.6 hereto, together with the
Companies’ interest therein.  Unless the context requires otherwise or
specifically designated to the contrary on Schedule 4.6 hereto, “Companies” as
used in this Agreement shall include all such Subsidiaries.  Except as
set forth in Sections 4.6 or 4.31 or on
Schedule 4.6 hereto, (i) the Companies have made no advances
to, or investments in, nor owns beneficially or of record, any securities of or
other interest in, any business, entity, enterprise or organization, (ii) there
are no arrangements through which any of the Companies has acquired from, or
provided to, the Seller or their affiliates any goods, properties or services,
(iii) there are no rights, privileges or advantages now enjoyed by any of the
Companies as a result of the ownership of the Companies by the Seller which, to
the knowledge of the Seller or the Companies, might be lost as a result of the
consummation of the transactions contemplated by this Agreement.  Each
entity shown on Schedule
4.6 is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has full corporate power to
own all of its property and to carry on its business as it is now being
conducted.  Also set forth on Schedule 4.6 hereto is a list of jurisdictions in which each
Subsidiary is qualified as a foreign corporation.  Such jurisdictions
are the only jurisdictions in which the ownership or leasing of property by each
Subsidiary or the conduct of its business requires it to be so
qualified.  All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and, except as set forth on Schedule 4.6 hereto, are owned, of record and beneficially,
by the Companies, and on the Closing Date will be owned by the Companies, free
and clear of all liens, encumbrances, equities, options or claims
whatsoever.  No Subsidiary has outstanding any other equity securities
or securities options, warrants or rights of any kind that are convertible into
equity securities of such Subsidiary, except as set forth on Schedule 4.6 hereto.

    


                          4.7.           Consents.  Except
as set forth in Schedule
4.7 hereto, and to the
best of Seller’s knowledge, no consents or approvals of any public
body or authority and no consents or waivers from other parties to leases,
licenses, franchises, permits, indentures, agreements or other instruments are
(i) required for the lawful consummation of the transactions contemplated
hereby, or (ii) necessary in order that the Business can be conducted by the
Purchaser in the same manner after the Closing as heretofore conducted by the
Companies, nor will the consummation of the transactions contemplated hereby
result in creating, accelerating or increasing any liability of the
Companies.

    


                          4.8.           Financial
Statements.  The Seller has delivered, or will deliver prior to
Closing, to the Purchaser copies of the following financial statements (which
include all notes and schedules attached thereto), all of which to the best of Seller’s knowledge,  are
true, complete and correct, have been prepared from the books and records of the
Companies in accordance with generally accepted accounting principles (“GAAP”)
consistently applied and fairly present the financial condition, assets,
liabilities and results of operations of the Companies as of the dates thereof
and for the periods covered thereby:

    


    
      	 	
              the
      unaudited combined balance sheet of each of the Companies as at December
      31, 2006 and 2007, and the related unaudited statements of operations,
      stockholder’s equity and of cash flows of the Companies for the years then
      ended and (ii) the unaudited balance sheet of the Companies as of June 30,
      2008 and the related compiled statement of operations of the Companies for
      the six (6) month period then ended
      (such statements, including the related notes and schedules thereto, are
      referred to herein as the “Financial Statements”).

            


    

    


                          In
such Financial Statements, the statements of operations do not contain any items
of special or nonrecurring income or any other income not earned in the ordinary
course of business except as set forth in Schedule 4.8 hereto, and the financial statements for the
interim period indicated include all
adjustments, which consist of only normal recurring accruals, necessary for such
fair presentation.  There are no facts known to any of the Sellers,
the Companies that, under generally accepted accounting principles consistently
applied, would alter the information contained in the foregoing Financial
Statements in any material way.

                          


                          For
the purposes hereof, the balance sheet of the Companies as of June 30, 2008 is
referred to as the “Balance Sheet” and June 30, 2008 is referred to as the
“Balance Sheet Date”.

    


                          4.9.           Records and Books of
Account. To the best of Seller’s
knowledge, the records and books of account of the Companies and of each
Subsidiary reflect all material items of income and expense and all material
assets, liabilities and accruals, and have been, and to the Closing Date will
be, regularly kept and maintained in conformity with GAAP applied on a
consistent basis.

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
 

                          4.10.                      Absence of Undisclosed
Liabilities.  Except as and to the extent reflected or reserved
against in the Companies’ Financial Statements (as defined in Section 4.8 of
this Agreement) or disclosed in Schedule 4.10 hereto, there are no known liabilities or
obligations of the Companies, whether accrued, fixed, absolute, contingent,
determined or determinable, and including without limitation (i) liabilities to
former, retired or active employees of the Companies under any pension, health
and welfare benefit plan, vacation plan or other plan of the Companies, (ii) tax
liabilities incurred in respect of or measured by income for any period prior to
the close of business on the Balance Sheet Date, or arising out of transactions
entered into, or any state of facts existing, on or prior to said date, and
(iii) contingent liabilities in the nature of an endorsement, guarantee,
indemnity or warranty, other than liabilities and contingent liabilities
incurred in the ordinary course of business since the Balance Sheet Date
consistent with the Companies’ recent customary business practice, none of which
is materially adverse to the Companies.

    


    4.11                      Taxes.

    


    (a)           For
purposes of this Agreement, “Tax” or “Taxes” refers to:  (i) any and
all federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities relating to taxes, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes and escheatment
payments, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity; (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being or ceasing to
be a member of an affiliated, consolidated, combined or unitary group for any
period (including, without limitation, any liability under Treas. Reg. Section
1.1502-6 or any comparable provision of foreign, state or local law); and (iii)
any liability for the payment of any amounts of the type described in clause (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.

    


                                    (b)           (i)           Each
of the Companies has timely filed all federal, state, local and foreign returns,
estimates, information statements and reports (“Returns”) relating to Taxes
required to be filed by such Companies with any Tax authority. To the best of Seller’s knowledge, all such
Returns are true, correct and complete in all material respects and each of the Companies has
paid all Taxes shown to be due on such Returns.  Except as listed on
Schedule 4.11 hereto,
none of the Companies is currently the beneficiary of any extensions of time
within which to file any Returns. The Seller and the Companies have furnished
and made available to the Purchaser complete and accurate copies of all income
and other Tax Returns and any amendments thereto filed by the Companies in the
last three (3) years.

    


    (ii) To the best of Seller’s knowledge, each of the
Companies, as of the Closing Date, will have withheld and accrued or paid to the
proper authority all Taxes required to have been withheld and accrued or
paid by such company.

    


    (iii) To the best of Seller’s knowledge, none of the
Companies has been delinquent in the payment of any Tax nor is there any Tax
deficiency outstanding or assessed against such Companies.  The
Companies have not executed any unexpired waiver of any statute of limitations
on or extending the period for the assessment or collection of any
Tax.

    


    (iv) To the best of Seller’s knowledge, there is no dispute, claim, or proposed
adjustment concerning any Tax liability of the Companies either (A) claimed or
raised by any Tax authority in writing and
delivered to the Companies or (B) based upon personal contact by any officer of the Companies with any agent of
such Tax authority, and to the knowledge of Seller
and the Companies, there is no claim for assessment, deficiency, or
collection of Taxes, or proposed assessment, deficiency or collection from the
Internal Revenue Service or any other governmental authority against the
Companies which has not been satisfied.  The Companies are not a party
to nor have any Companies been notified in writing that it is the subject of any
pending, proposed, or threatened action, investigation, proceeding, audit, claim
or assessment by or before the Internal Revenue Service or any other
governmental authority, nor does the Companies have any reason to believe that
any such notice will be received in the future. The Companies have not filed any
requests for rulings with the Internal Revenue Service.  No power of
attorney has been granted by any of the Companies or its Affiliates with respect
to any matter relating to Taxes of the Companies. To the best of Seller’s knowledge,there are no
Tax liens of any kind upon any property or assets of the Companies, except for
inchoate liens for Taxes not yet due and payable.

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    (v) The Companies have no liability for any unpaid
Taxes which has not been paid or accrued for or reserved on the Financial
Statements (as defined in Section 4.8 of this Agreement) in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise.

    


    (vi) To the best of Seller’s knowledge, there is no
contract, agreement, plan or arrangement to which any of the Companies is a
party as of the date of this Agreement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Companies that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”). There is no contract, agreement, plan or arrangement to which any
of the Companies is a party or by which it is bound to compensate any individual
for excise taxes paid pursuant to Section 4999 of the Code.

    


    (vii) To the best of Seller’s knowledge, the
Companies have not filed any consent agreement under Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Companies.

    


    (viii) To the best of Seller’s knowledge, the Companies
are not a party to, nor has any obligation under any tax-sharing, tax indemnity
or tax allocation agreement or arrangement.

    


    (ix) None of
the Companies’ assets are tax exempt use property within the meaning of Section
168(h) of the Code.

    


                          4.12.                      Intentionally Left
Blank.

    


                          4.13.                      Intentionally Left
Blank.

    


                          4.14.                      Intentionally Left
Blank.

    


                          4.15.                      Real Property
Matters. All real property of the Companies are described in Schedule 4.15 hereto.

    


                          4.16.                      Leases.  All
leases of real and personal property of the Companies are described in Schedule 4.16 hereto, are in full force and effect and: (a) constitute legal, valid and binding
obligations of the respective parties thereto enforceable in accordance with
their terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting generally the enforcement of
creditor’s rights, and (b) have not been
assigned or encumbered.  The
Companies have performed in all material respects the obligations required to be
performed by it under all such leases to date and are not in default in any material respect under
any of said leases, except as set forth in Schedule 4.16 hereto. To the knowledge of the Sellers and the
Companies, no other party to any such lease
is in material default thereunder.  Except as noted on Schedule 4.16 hereto, none of the leases listed thereon
require the consent of a third party in connection with the transfer of the
Securities.

    


                          4.17.                      Intentionally Left
Blank.

    


                          4.18.                      Insurance
Policies.  There is set forth in Schedule 4.18 hereto a list and brief description of all
insurance policies on the date hereof held by the Companies or on which it pays
premiums, including, without limitation, life insurance and title insurance
policies, which description includes the premiums payable by the Companies thereunder.  Schedule 4.18 also sets forth,
in the case of any life insurance policy held by the Companies, the name of the
insured under such policy, the cash surrender value thereof and any loans
thereunder. To the best of Seller’s knowledge,
all such insurance premiums in respect of such coverage have been, and to
the Closing Date will be, paid in full, or if not due, properly accrued on the
Balance Sheet. To the best of Seller’s knowledge,
all claims, if any, made against the Companies which are covered by such
policies have been, or are being, settled or defended by the insurance companies
that have issued such policies.  Up to the Closing Date, such
insurance coverage will be maintained in full force and effect and will not be
cancelled, modified or changed without the express written consent of the
Purchaser, except to the extent the maturity dates of any such insurance
policies expiring prior to the Closing Date.  No such policy has been,
or to the Closing Date will be, cancelled by the issuer thereof, and, to the
knowledge of the Seller and the Companies, between the date hereof and the
Closing Date, there shall be no increase in the premiums with respect to any
such insurance policy caused by any action or omission of the Seller or of the
Companies.

    


                          4.19.                      Intentionally Left
Blank.

    


                          4.20.                      Intentionally Left
Blank.

    


                          4.21.                      Compliance With the
Law.  To the best of the Sellers’ knowledge, the Companies are not in violation of any
applicable federal, state, local or foreign law, regulation or order or any
other, decree or requirement of any governmental, regulatory or administrative
agency or authority or court or other tribunal (including, but not limited to,
any law, regulation order or requirement relating to securities, properties,
business, products, manufacturing processes, advertising, sales or employment
practices, terms and conditions of employment, occupational safety, health and
welfare, conditions of occupied premises, product safety and liability, civil
rights, or environmental protection, including, but not limited to, those
related to waste management, air pollution control, waste water treatment or
noise abatement).  Except as set forth in Schedule 4.21 hereto, the Companies have not been and are not
now charged with, or to the knowledge of the Sellers or the Companies under
investigation with respect to, any violation of any applicable law, regulation,
order or requirement relating to any of the foregoing, nor, to the knowledge of
Sellers or the Companies after due inquiry, are there any circumstances that
would or might give rise to any such violation. To the best of Seller’s knowledge, the Companies
have filed all reports required to be filed by the
Companies with any governmental, regulatory or administrative agency or
authority.

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
 

                          4.22.                      Litigation; Pending Labor
Disputes.  Except as specifically identified on Schedule 4.22 hereto:

    


                                               (i)           There
are no legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to the knowledge of Sellers or the Companies,
threatened, against the Sellers or the Companies, relating to the Business or
the Companies or their respective
properties (including leased property), or the transactions contemplated by this
Agreement, nor is there any basis known to the Sellers or the Companies for any
such action.

    


                                               (ii)           There
are no known judgments, decrees or orders of any court, or any governmental
department, commission, board, agency or instrumentality binding upon Seller or
the Companies relating to the Business or the Companies the effect of which is
to prohibit any business practice or the acquisition of any property or the
conduct of any business by the Companies or which limit or control or otherwise
adversely affect the Companies’ method or
manner of doing business.

    


                                               (iii)           No
work stoppage has occurred and is continuing or, to the knowledge of Seller or
the Companies, is threatened affecting the Business, and no representation
question involving recognition of a collective bargaining agent exists in
respect of any employees of the Companies.

    


                                               (iv)           There
are no pending labor negotiations or union organization efforts relating to
employees of the Companies.

    


                                               (v)           There
are no known charges of discrimination (relating to sex, age, race, national
origin, handicap or veteran status) or unfair labor practices pending or, to the
knowledge of the Seller or the Companies, threatened before any governmental or
regulatory agency or authority or any court relating to employees of the
Companies.

    


                          4.23.                      Absence of Certain Changes
or Events.  Outside the normal course of business, the
Companies have not, since the Balance Sheet Date, except as described on Schedule 4.23 hereto:

    


                                               (i)           Incurred
any material obligation or, to the best of the Sellers’ knowledge, liability
(absolute, accrued, contingent or otherwise) and any obligation or, to the
best of the Sellers’ knowledge, liability incurred by the Companies in the ordinary course is not
materially adverse, except for claims, if any, that are adequately covered by
insurance;

    


                                               (ii)           Discharged
or satisfied any lien or encumbrance, or paid or satisfied any obligations or
liability (absolute, accrued, contingent or otherwise) other than (a)
liabilities shown or reflected on the Balance Sheet, and (b) liabilities
incurred since the Balance Sheet Date in the ordinary course of business that
were not materially adverse;

    


                                               (iii)           Increased
or established any reserve or accrual for taxes or other liability on its books
or otherwise provided therefor, except (a) as disclosed on the Balance Sheet, or
(b) as may have been required under generally accepted accounting principles due
to income earned or expense accrued since the Balance Sheet Date and as
disclosed to the Purchaser in writing;

    


                                               (iv)           Mortgaged,
pledged or subjected to any lien, charge or other encumbrance any of its assets,
tangible or intangible;

    


                                               (v)           Sold
or transferred any of its assets or cancelled any debts or claims or waived any
rights, except in the ordinary course of business and which sale or transfer has not been materially
adverse;

    


                                               (vi)           Disposed
of or permitted to lapse any patents or trademarks or any patent or trademark
applications material to the operation of its business;

    


                                               (vii)                      Incurred
any significant labor trouble or granted any general or uniform increase in
salary or wages payable or to become payable by it to any director, officer,
employee or agent, or by means of any bonus or pension plan, contract or other
commitment increased the compensation of any director, officer, employee or
agent;

    


                                               (viii)                      Authorized
any capital expenditure for real estate or leasehold improvements, machinery,
equipment or molds in excess of $5,000.00 in the aggregate;

    


     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

                                               (ix)           Except
for this Agreement, entered into any material transaction;

    


                                               (x)           Issued
any stocks, bonds, or other corporate securities, or made any declaration or
payment of any dividend or any distribution in respect of its capital stock;
or

    


                                               (xi)           Experienced
damage, destruction or loss (whether or not covered by insurance) individually
or in the aggregate materially and adversely affecting any of its properties,
assets or business, or experienced any other material adverse change or changes
individually or in the aggregate affecting its financial condition, assets,
liabilities or business.

    


                          4.24.                      Employee Benefit
Plans.

    


                                    (a)           Schedule 4.24 lists a
description of the only Employee Programs (as defined below) that have been
maintained (as such term is further defined below) by the Companies at any time
during the five (5) years prior to the date hereof.

    


                                    (b)           To the best of Seller’s knowledge, there has not been any failure of any party to
comply with any laws applicable with respect to any Employee Program that has
been maintained by any of the Companies.  With respect to any Employee
Programs now or heretofore maintained by the
Companies, the Companies, there has occurred no breach of any duty under
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or
other applicable law which could result, directly or indirectly in any taxes,
penalties or other liability to the Purchaser, the Companies or any affiliate
(as defined below). To the best of Seller’s
knowledge, no litigation, arbitration, or governmental administrative
proceeding (or investigation) or other proceeding (other than those relating to
routine claims for benefits) is pending or, to the knowledge of the Companies or
Seller, threatened with respect to any such Employee Program.

    


                                    (c)           Except
as set forth in Schedule
4.24 attached hereto, to the best of
Seller’s knowledge, neither the Companies nor any affiliate has ever (i)
provided health care or any other non-pension benefits to any employees after
their employment was terminated (other than as required by Part 6 of Subtitle B
of Title I of ERISA) or has ever promised to provide such post-termination
benefits or (ii) maintained an Employee Program provided to such employees
subject to Title IV of ERISA, Section 401(a) or Section 412 of Code, including,
without limitation, any Multiemployer Plan.

    


    (d)           For
purposes of this Section 4.24:

     

                                               (i)           “Employee
Program” means (A) all employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(40)), plans to which more
than one unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; and (B) all
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above.  In the case of an Employee
Program funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization;

    


                                               (ii)           An
entity “maintains” an Employee Program if such entity sponsors, contributes to,
or provides (or has promised to provide) benefits under such Employee Program,
or has any obligation (by agreement or under applicable law) to contribute to or
provide benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity (or their
spouses, dependents, or beneficiaries);

    


                                               (iii)           An
entity is an “affiliate” of a Companies for purposes of this Section 3.24 if it
would have ever been considered a single employer with the Companies under ERISA
Section 4001(b) or part of the same “controlled group” as the Companies for
purposes of ERISA Section 302(d)(8)(C); and

    


                                               (iv)           “Multiemployer
Plan” means a (pension or non-pension) employee benefit plan to which more than
one employer contributes and which is maintained pursuant to one or more
collective bargaining agreements.

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
 

                          4.25.                      Product Warranties and
Product Liabilities.  The product warranties and return
policies of the Companies in effect on the date hereof and the types of products
to which they apply are described on Schedule 4.25
hereto.  Schedule
4.25 hereto also sets forth all
product liability claims involving amounts in controversy in excess of $5,000
that are currently either pending or, to the best of the Seller’s and the
Companies’ knowledge, threatened against the Companies.  The Companies
have not paid in the aggregate, or allowed as credits against purchases, or
received claims for more than one percent (1%) per year of gross sales, as
determined in accordance with GAAP consistently applied, during the past three
years pursuant to obligations under any warranty or any product liability claim
with respect to goods manufactured, assembled or furnished by the
Companies.  To the knowledge of the
Seller or the Companies, the future cost of performing all such
obligations and paying all such product liability claims with respect to goods
manufactured, assembled or furnished prior to the Closing Date will not exceed
the average annual cost thereof for said past three year
period. 

    


                          4.26.                      Intentionally Left
Blank.

    


                          4.27.                      Absence of Certain
Commercial Practices.  Except as described on Schedule 4.27 hereto, neither the Companies nor the Sellers
has made any payment (directly or by secret commissions, discounts, compensation
or other payments) or given any gifts to another business concern, to an agent
or employee of another business concern or of any governmental entity (domestic
or foreign) or to a political party or candidate for political office (domestic
or foreign), to obtain or retain business for the Companies or to receive
favorable or preferential treatment, except for gifts and entertainment given to
representatives of customers or potential customers of sufficiently limited
value and in a form (other than cash) that would not be construed as a bribe or
payoff.

    


                          4.28.                      Licenses, Permits, Consents
and Approvals.  The Companies have, and at the Closing Date
will have, all licenses, permits or other authorizations of governmental,
regulatory or administrative agencies or authorities (collectively, “Licenses”)
required to conduct the Business. All Licenses of the Companies are listed on
Schedule 4.28
hereto.  At the Closing, the Companies will have all such Licenses
which are material to the conduct of the Business and will have renewed all
Licenses which would have expired in the interim.  Except as listed in
Schedule 4.28 hereto, to
the best of Seller’s knowledge, no registration, filing, application,
notice, transfer, consent, approval, order, qualification, waiver or other
action of any kind (collectively, a “Filing”) will be required as a result of
the sale of the Securities by Seller in accordance with this Agreement (a) to
avoid the loss of any License or the violation, breach or termination of, or any
default under, or the creation of any lien on any asset of the Companies
pursuant to the terms of, any law, regulation, order or other requirement or any
contract binding upon the Companies or to which any such asset may be subject,
or (b) to enable Purchaser (directly or through any designee) to continue the
operation of the Companies and the Business substantially as conducted prior to
the Closing Date.  All such Filings will be duly filed, given,
obtained or taken on or prior to the Closing Date and will be in full force and
effect on the Closing Date.

     

    4.29.                      Environmental
Matters. Except as set forth on Schedule 4.29
hereto:

     

    (a) To the best of Seller’s knowledge, the operations of the Companies are in material
compliance with all applicable Laws promulgated by any governmental entity which
prohibit, regulate or control any hazardous material or any hazardous material
activity (“Environmental Laws”) and the Companies
have all permits issued pursuant to Environmental Laws or otherwise
except for where noncompliance or the absence of such permits would not,
individually or in the aggregate, have a Material Adverse Effect;

     

    (b) To the best of Seller’s knowledge, the Companies have obtained all permits required
under all applicable Environmental Laws necessary to operate the
Business;

     

    (c) The
Companies are not the subject of any outstanding written order or Contract with
any governmental authority or person respecting Environmental Laws;

     

    (d)          The
Companies have not received any written communication alleging either or both
that the Companies may be in violation of any Environmental Law, or any permit
issued pursuant to Environmental Law;

    


            (e)  There
are no material or substance that has been designated by any governmental entity
or applicable federal, state or municipal law to be radioactive, toxic,
hazardous, carcinogenic, mutagenic, or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde, trichloroethylene, other aromatic and/or halogenated
hydrocarbons, pesticides, defoliants, lead, chromium, radon gas or other
radioactive substances, and all substances listed as hazardous materials (the
“Hazardous Materials”) pursuant to any applicable law located on or in any of
the properties or assets owned, leased, occupied or otherwise used  by the
Companies knowingly in violation of Environmental Laws, and no willful
release of any Hazardous Materials or any known violation of any Environmental
Laws has occurred on or from the properties and assets of the Companies. To the best of Seller’s knowledge, the Companies
have not used any of its properties or assets to produce, generate, store,
handle, transport or dispose of any Hazardous Materials in violation of the
Environmental Laws and none of the real properties or leased premises has been
or is being used as a landfill or waste disposal site.  There are no
underground or surface storage tanks located on or in any of the properties or
assets owned, leased, occupied or otherwise used by the Companies knowingly
in breach of the Environmental Laws.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
 

                          4.30                      Broker.  Except
as specified in Schedule
4.30 hereto, neither the Companies nor the Sellers
has retained any broker in connection with any transaction contemplated by this
Agreement.  Purchaser and the Companies shall not be obligated to pay
any fee or commission associated with the retention or engagement by the
Companies or Seller of any broker in connection with any transaction
contemplated by this Agreement.

    


                          4.31.                      Related Party
Transactions.  Except as described in Schedule 4.31 hereto, all transactions during the past five
years between the Companies and any current or former shareholder or any entity
in which the Companies or any current or former shareholder had or has a direct
or indirect interest have been fair to the Companies as determined by the Board
of Directors.  No portion of the sales or other on-going business
relationships of the Companies is dependent upon the friendship or the personal
relationships (other than those customary within business generally) of the Seller, except as described in Schedule 4.31 hereto.  During the past five years,
the Companies have not forgiven or cancelled, without receiving full
consideration, any indebtedness owing to them by the Seller.

    


                          4.32                      Patriot Act. To the best of Seller’s knowledge, the Companies
and the Sellers certify that neither the Companies nor any of their Subsidiaries
has been designated, and is not owned or controlled, by a “suspected terrorist”
as defined in Executive Order 13224.  The Companies and the Seller
hereby acknowledge that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities.  In furtherance of
those efforts, the Companies and the Seller hereby represent, warrant and agree
that:  (i) none of the cash or property that the Seller has
contributed or paid or will contribute and pay to the Companies has been or
shall be derived from, or related to, any activity that is deemed criminal under
United States law; and (ii) no contribution or payment by the Companies or any
of their Subsidiaries to the Purchaser, to the extent that they are within the
Companies’ and/or their Subsidiaries’ control shall cause the Purchaser to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.  The
Seller shall promptly notify the Purchaser if any of these representations
ceases to be true and accurate regarding the Seller, the Companies or any of
their Subsidiaries.  The Seller agrees to provide the Purchaser any
additional information regarding the Companies or any of their Subsidiaries that
the Purchaser reasonably requests to ensure compliance with all applicable laws
concerning money laundering and similar activities.

    


                           4.33                     Investment
Intent.  The Purchase Price Shares are being acquired hereunder
by the Sellers for investment purposes only, for its own account, not as a
nominee or agent and not with a view to the distribution thereof.  The
Sellers have no present intention to sell or otherwise dispose of the Purchase
Price Shares and it will not do so except in compliance with the provisions of
the Securities Act of 1933, as amended, and applicable law.  The
Sellers understand that the Purchase Price Shares acquired hereunder must be
held by them indefinitely unless a subsequent disposition or transfer of any of
said shares is registered under the Securities Act of 1933, as amended, or is
exempt from registration therefrom.  The Sellers further understand
that the exemption from registration afforded by Rule 144 (the provisions of
which are known to such Seller) promulgated
under the Securities Act of 1933, as amended, depends on the satisfaction of
various conditions, and that, if and when applicable, Rule 144 may afford the
basis for sales only in limited amounts.

     

    4.34                      Accreditation.

    


                          The
Sellers are “accredited investor” within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as
amended.  The Sellers understand that the Purchase Price Shares are
being offered in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Purchaser is relying upon the truth and accuracy of, and the Sellers’ compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Sellers set forth herein in order to determine the
availability of such exemptions and the eligibility of the Seller to acquire the
Purchase Price Shares.

     

    4.35.                      Disclosure.  All
statements contained in any schedule, certificate, opinion, instrument, or other
document delivered by or on behalf of the Seller or the Companies pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties by the Seller and the Companies
herein.  No statement, representation or warranty by the
Seller or the Companies in this Agreement or in any schedule, certificate,
opinion, instrument, or other document furnished or to be furnished to the
Purchaser pursuant hereto or in connection with the transactions contemplated
hereby contains or will contain any known untrue statement of a material fact or
omits or will omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading or necessary
in order to provide a prospective purchaser of the business of the Companies
with full and fair disclosure concerning the Companies, the Business, and the
Companies’ affairs.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    


    ARTICLE
V   REPRESENTATIONS
AND WARRANTIES OF PURCHASER

     

    5.1 Organization and Good
Standing.

     

    The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has
all material licenses, permits, authorizations and the power and authority to
own and lease its assets and properties and to conduct its business as it is now
being conducted.  The Purchaser is duly qualified or licensed to do
business and is in good standing as a foreign corporation under the laws of the
jurisdictions in which the conduct of its business or the ownership or leasing
of its assets and properties requires such qualification.

     

    5.2 Authority;
Enforceability.

     

                          The Purchaser has the corporate power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.  The
execution, delivery and performance of this Agreement by the Purchaser have been
duly authorized by all necessary corporate action on the part of the
Purchaser.  This Agreement has been duly
executed and delivered by the Purchaser and this Agreement constitutes (or when
executed and delivered will constitute) legal, valid and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with their
respective terms.

    


    5.3 Conflicts; Consents of Third
Parties.

     

    (a) The authorization, execution, delivery and
performance by the Purchaser of this Agreement and the other Purchaser Documents and the
consummation of the transactions contemplated
hereby and thereby do not and will not (i) violate or conflict with any provision of the Purchaser’s charter or bylaws; (ii)
violate, conflict with, result in a breach of or constitute (with or without
notice or lapse of time or both) a default under, give rise to a right of
termination, amendment or cancellation of, accelerate the performance required
by, or result in any payment under, any contract, instrument or other
writing of any nature
whatsoever to or by which the
Purchaser is a party or is bound, or by which any
of its properties or assets is subject; or (iii) violate, conflict with or
result in a breach of any law, rule, regulation or other legal requirement
applicable to the Purchaser.

    


    (b) No consent, waiver, approval, order, permit
or authorization of, or declaration or filing with, or notification to, any
person or governmental body is required on the part of the Purchaser in
connection with the execution and delivery of this Agreement or the compliance
by Purchaser with any of the provisions hereof or thereof.

     

    5.4 Litigation.

     

    There
is no action, suit, proceeding (including, without
limitation, all arbitrations and alternative dispute resolution proceedings) or
governmental investigation of or pending or, to the knowledge of the
Purchaser, threatened against the Purchaser which
relates to the transactions contemplated by this Agreement, nor does the
Purchaser have any knowledge of any reasonably likely basis or set of
circumstances for any such action, suit, proceeding, claim or investigation, the
result of which could materially and adversely affect the Purchaser or the
transactions contemplated hereby or could impair the ability of the
Purchaser to consummate the transactions contemplated hereby.

     

    5.5 Investment
Intention.

     

    The
Purchaser is acquiring the Securities for its own account, for investment
purposes only and not with a view to the distribution (as such term is used in
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act")
thereof.  Purchaser understands that the Securities have not been
registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    5.6 Due Authorization of
Purchase Price Shares.

     

                          The
Purchase Price Shares when delivered to the Seller shall be validly issued and
outstanding as fully paid and non-assessable, free and clear of any liens,
pledges, encumbrances, charges, agreements, options, claims or other
arrangements or restrictions of any kind.

     

    5.7 Broker.

     

    The
Purchaser has not retained any broker in connection with any transaction
contemplated by this Agreement.  The
Seller shall not be obligated to pay any fee or commission associated
with the retention or engagement by the Purchaser of any broker in connection
with any transaction contemplated by this Agreement.

     

    ARTICLE
VI COVENANTS

     

    6.1 Access to
Information.

     

    The
Seller and the Companies agree that, prior to the Closing Date, the Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Companies
and their Subsidiaries and such examination of the books, records and financial
condition of the Companies and their Subsidiaries as it reasonably requests and
to make extracts and copies of such books and records.  Any such
investigation and examination shall be conducted during regular business hours
and under reasonable circumstances, and the Seller shall cooperate, and shall
cause the Companies and their Subsidiaries to cooperate, fully
therein.  No investigation by the Purchaser prior to or after the date
of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement or
the Employment Agreement.  In order that the Purchaser may have full
opportunity to make such physical, business, accounting and legal review,
examination or investigation as it may reasonably request of the affairs of the
Companies and their Subsidiaries, the Seller shall cause the officers,
employees, consultants, agents, accountants, attorneys and other representatives
of the Companies and their Subsidiaries to cooperate fully with such
representatives in connection with such review and examination.

     

    6.2 Conduct of the Business
Pending the Closing.

     

    (a) Except as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Purchaser, not to be unreasonably
withheld or delayed, the Seller shall, and shall cause the Companies
to:

     

    (i) Conduct
the respective businesses of the Companies only in the ordinary course
consistent with past practice;

     

    (ii) Use its
best efforts to (A) preserve its present business operations, organization
(including, without limitation, management and the sales force) and goodwill of
the Companies and (B) preserve its present relationship with Persons having
business dealings with the Companies;

     

    (iii) Maintain
(A) all of the assets and properties of the Companies in their current
condition, ordinary wear and tear excepted and (B) insurance upon all of the
properties and assets of the Companies in such amounts and of such kinds comparable to that in effect on the date of this
Agreement;

     

    (iv) (A)
maintain the books, accounts and records of the Companies  in the
ordinary course of business consistent with past practices, (B) continue to
collect accounts receivable and pay accounts payable utilizing normal procedures
and without discounting or accelerating payment of such accounts, and (C) comply
with all contractual and other obligations applicable to the operation of the
Companies; and

     

    (v) Comply in
all material respects with applicable Laws.

     

    (b) Except as
otherwise expressly contemplated by this Agreement or with the prior written
consent of the Purchaser, which shall not be
unreasonably withheld or delayed, the Seller shall not, and shall cause
the Companies not to:

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    (i) Except
for payments in the ordinary course consistent with past practice, declare, set
aside, make or pay any dividend or other distribution in respect of the capital
stock of the Companies or repurchase, redeem or otherwise acquire any
outstanding shares of the capital stock or other securities of, or other
ownership interests in, the Companies;

     

    (ii) Transfer,
issue, sell or dispose of any shares of capital stock or other securities of the
Companies or grant options, warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock or other securities of the
Companies;

     

    (iii) Effect
any recapitalization, reclassification, stock split or like change in the
capitalization of the Companies;

     

    (iv) Amend the
certificate of incorporation or by-laws of the Companies;

     

    (v) (A)
materially increase the annual level of compensation of any employee of the
Companies, (B) increase the annual level of compensation payable or to become
payable by the Companies to any of its executive officers, (C) grant any unusual
or extraordinary bonus, benefit or other direct or indirect compensation to any
employee, director or consultant, (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the Companies or otherwise
modify or amend or terminate any such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting, non-competition or
similar agreement (or amend any such agreement) to which the Companies is a
party or involving a director, officer or employee of the Companies in his or
her capacity as a director, officer or employee of the Companies;

     

    (vi) Except
for trade payables and for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice, borrow monies for
any reason or draw down on any line of credit or debt obligation, or become the
guarantor, surety, endorser or otherwise liable for any debt, obligation or
liability (contingent or otherwise) of any other Person, or change the terms of
payables or receivables;

     

    (vii) Subject
to any Lien (except for leases that do not materially impair the use of the
property subject thereto in their respective businesses as presently conducted),
any of the properties or assets (whether tangible or intangible) of the
Companies;

     

    (viii) Acquire
any material properties or assets or sell, assign, transfer, convey, lease or
otherwise dispose of any of the material properties or assets (except for fair
consideration in the ordinary course of business consistent with past practice)
of the Companies;

     

    (ix) Cancel or
compromise any debt or claim or waive or release any material right of the
Companies except in the ordinary course of business consistent with past
practice;

     

    (x) Enter
into any commitment for capital expenditures or the purchase of assets out of
the ordinary course in excess of $5,000;

     

    (xi) Permit
the Companies to enter into any transaction or to make or enter into any
Contract which by reason of its size or otherwise is not in the ordinary course
of business consistent with past practice;

     

    (xii) Permit
the Companies to enter into or agree to enter into any merger or consolidation
with any corporation or other entity, or
engage in any new business, or invest in,
make a loan, advance or capital contribution to, or otherwise acquire the
securities of any other Person;

     

    (xiii) Except
for transfers of cash pursuant to normal cash management practices, permit the
Companies to make any investments in or loans to, or pay any fees or expenses
to, or enter into or modify any Contract with, the Seller or any Affiliate of
the Seller; or

     

    (xiv) Agree to
do anything prohibited by this Section 6.2 or anything which would make any of
the representations and warranties of the Seller in this Agreement or the
Employment Agreement untrue or incorrect in any material respect as of any
time through and including the Closing.

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    6.3 Consents.

     

    The
Seller and the Companies shall use their best efforts, and the Purchaser shall
cooperate with the Seller and the Companies, to obtain at the earliest
practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in Schedule 4.7 hereto; provided, however, that neither the
Seller, the Companies nor the Purchaser shall be obligated to pay any
consideration therefor to any third party from whom consent or approval is
requested.

     

    6.4 Other
Actions.

     

    Each of
the Seller, the Companies and the Purchaser shall use its best efforts to (i)
take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.

     

    6.5 No
Solicitation.

     

    The
Sellers will not, and will not cause or permit the Companies or any of the
Companies’ directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, prior to October 30, 2008,
(i) discuss, negotiate, undertake, authorize, recommend, propose or enter
into, either as the proposed surviving, merged, acquiring or acquired
corporation, any transaction involving a merger, consolidation, business
combination, purchase or disposition of any amount of the assets or capital
stock or other equity interest in the Companies other than the transactions
contemplated by this Agreement (an "Acquisition Transaction"), (ii) facilitate,
encourage, solicit or initiate discussions, negotiations or submissions of
proposals or offers in respect of an Acquisition Transaction, (iii) furnish or
cause to be furnished, to any Person, any information concerning the business,
operations, properties or assets of the Companies in connection with an
Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing.  The Seller will inform the
Purchaser in writing immediately following the receipt by Seller, the Companies
or any Representative of any proposal or inquiry in respect of any Acquisition
Transaction.

     

    6.6 Preservation of
Records.

     

    The
Seller and the Purchaser agree that each of them shall preserve and keep the
records held by it relating to the business of the Companies for a period of
three years from the Closing Date and shall make such records and personnel
available to the other as may be reasonably required by such party in connection
with, among other things, any insurance claims by, legal proceedings against or
governmental investigations of the Seller or the Purchaser or any of their
Affiliates or in order to enable the Seller or the Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby. 

     

    6.7 Publicity.

     

    None of
the Seller, the Companies nor the Purchaser shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser, the Companies or the Seller, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which the Purchaser lists securities, provided that, to the extent required by
applicable law, the party intending to make such release shall use its best
efforts consistent with such applicable law to consult with the other party with
respect to the text thereof.

     

    6.8 Use of
Name.

     

    The
Seller hereby agrees that upon the consummation of the transactions contemplated
hereby, the Purchaser and the Companies shall have the sole right to the use of
all of the names utilized by the and any derivation of the aforementioned
names, and the Seller shall not and shall
not cause or permit any Affiliate to use such name or any variation or
simulation thereof. 

     

    6.9 Employment
Agreement.

     

    On or
prior to the Closing Date, Terry L. Lee shall enter into that
certain Employment, Noncompetition and Nondisclosure Agreement with
the Company, substantially in the form of agreements attached hereto as Exhibit
6.9 (the “Employment Agreement”).

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    6.10 Intentionally left
blank. 

     

    6.11 Financial
Statements.

     

    The
Seller shall deliver the Financial Statements (as defined in Section 4.8 of this
Agreement) to the Purchaser on or prior to the Closing Date.

    


    6.12 Tax
Election.

     

    At the
sole discretion of the Purchaser, the Seller agree to make a timely election
under Internal Revenue Code Section 338(h)(10).

     

    6.15  Tax
Matters.

     

                                    (a)           Tax Periods Ending on or
Before the Closing Date.  The Sellers shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns for the Companies for
all periods through and including the Closing Date which are filed after the
Closing Date as soon as practicable and prior to the date due (including any
proper extensions thereof).  The Sellers shall permit the Companies
and the Purchaser to review and provide comments, if any, on each such Return
described in the preceding sentence prior to filing.  The Companies shall deliver to the Sellers each
such Return signed by the appropriate officer(s) of the Companies for filing
within ten (10) days following the Sellers’ delivery to the Companies and the
Purchaser of any such Return after having taken
into account Purchaser’s comments, if any.  The Sellers shall
deliver to the Companies promptly after filing each such Return a copy of the
filed Return and evidence of its filing.  The Sellers shall pay the
costs and expenses incurred in the preparation and filing of the Tax Returns on
or before the date such costs and expenses are due.

    


    If the Companies provide comments to
the Sellers and at the end of such ten (10) day period the Companies and the
Sellers have failed to reach written agreement with respect to all of such
disputed items, the parties shall submit the unresolved items to arbitration for
final determination. Promptly, but no later than thirty (30) days after its
acceptance of its appointment as arbitrator, the arbitrator shall render an
opinion as to the disputed items. The determination of the arbitrator shall be
conclusive and binding upon the parties. The Companies and the Sellers (as a
group) shall each pay one half of the fees, costs and expenses of the
arbitrator. The prevailing party may be entitled to an award of pre- and
post-award interest as well as reasonable attorneys’ fees incurred in connection
with the arbitration and any judicial proceedings related thereto as determined
by the arbitrator.

    


                                    (b)           Tax Periods Beginning Ending
After the Closing Date.  The Companies or the Purchaser shall
prepare or cause to be prepared and file or cause to be filed any Returns of the
Companies for Tax periods that begin and end after the Closing
Date.

    


                                    (c)           Refunds and Tax
Benefits.  Any Tax refunds that are received after the Closing
Date by the Seller (other than tax refunds received in connection with such
Seller’s individual tax Returns), the Purchaser or the Companies, and any
amounts credited against Tax to which the Seller, the Purchaser or the Companies
become entitled, shall be for the account of the Companies, and the Seller shall
pay over to the Companies any such refund or the amount of any such credit
within fifteen (15) days after receipt or entitlement thereto.  In
addition, to the extent that a claim for refund or a proceeding results in a
payment or credit against Tax by a taxing authority to the Seller, the Seller
shall pay such amount to the Companies within fifteen (15) days after receipt or
entitlement thereto.

    


                                    (d)           Cooperation on Tax
Matters.

    


                                               (i)           The
Purchaser, the Companies and the Sellers shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the filing of
any Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes assessed against
the Companies.  Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder.  The Companies and the Sellers agree (A) to retain all
books and records with respect to Tax matters pertinent to the Companies
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Purchaser or the Seller, any extensions thereof) of the respective tax periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Companies or the Seller, as the case may be, shall
allow the other party to take possession of such books and records.

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
 

                                               (ii)           The
Purchaser and the Sellers further agree, upon request, to use their best efforts
to obtain any certificate or other document from any governmental authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed against any of the parties
hereto (including, but not limited to, with respect to the transactions
contemplated hereby).

    


                                               (iii)           The
Purchaser and the Sellers further agree, upon request, to provide the other
party with all information that either party may be required to report pursuant
to §6043 of the Code and all Treasury Department Regulations promulgated
thereunder.

    


    ARTICLE
VII  CONDITIONS
TO CLOSING

     

    7.1 Conditions Precedent to
Obligations of Purchaser.

     

    The
obligation of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable
law):

     

    (a) to the best of Seller’s knowledge, all
representations and warranties of the Sellers and the Companies contained
herein shall be true and correct as of the date hereof;

     

    (b) to the best of Seller’s knowledge, all
representations and warranties of the Seller contained herein qualified as to
materiality shall be true and correct, and the representations and warranties
of the Seller and the Companies contained herein not qualified as to
materiality shall be true and correct in all material respects as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that time;

     

    (c) to the best of Seller’s knowledge, the Seller and
the Companies shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by  them on or prior to the Closing Date;

     

    (d) the
Purchaser shall have been furnished with certificates (dated the Closing Date
and in form and substance reasonably satisfactory to the Purchaser) executed by
Seller certifying as to the fulfillment of the conditions specified in Sections
7.1(a), 7.1(b) and 7.1(c) hereof;

     

    (e) Certificates
representing 100% of the Securities shall have been, or shall at the Closing be,
validly delivered and transferred to the Purchaser, free and clear of any and
all Liens;

     

    (f) there
shall not have been or occurred any Material Adverse Change;

     

    (g) the
Seller and the Companies shall have obtained all consents and waivers referred
to in Schedule 4.7 hereto, in a form reasonably satisfactory to the
Purchaser, with respect to the transactions contemplated by this Agreement and
the Employment Agreement;

     

    (h) no Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Sellers and the Companies, or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any order
by a governmental body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby;

     

    (i)  the
Employment Agreement shall have been executed and
delivered; and

     

    (j) the
Purchaser shall have received information satisfactory in its sole discretion to
verify the accuracy of all financial information delivered by the Seller to the
Purchaser.

     

    


    7.2 Conditions Precedent to
Obligations of the Sellers and the Companies.

     

    The
obligations of the Sellers and the Companies to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions (any or all of which may
be waived by the Seller and the Companies in whole or in part to the extent
permitted by applicable law):

     

    (a) all
representations and warranties of the Purchaser contained herein shall be true
and correct as of the date hereof;

     

    (b) all
representations and warranties of the Purchaser contained herein qualified as to
materiality shall be true and correct, and all
representations and warranties of the Purchaser contained herein not qualified
as to materiality shall be true and correct in all material respects,  as of the
Closing Date with the same effect as though those representations and warranties
had been made again at and as of that date;

     

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (c) the
Purchaser shall have performed and complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Purchaser on or prior to the Closing Date;

     

    (d) the
Seller shall have been furnished with certificates (dated the Closing Date and
in form and substance reasonably satisfactory to the Sellers) executed by the
Chief Executive Officer and Chief Financial Officer of the Purchaser certifying
as to the fulfillment of the conditions specified in Sections 7.2(a), 7.2(b) and
7.2(c);

     

    (e) no Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Sellers, the Companies, or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any Order
by a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
and

     

    (f) the
Employment Agreement shall have been executed and delivered; and

     

    ARTICLE
VIII  DOCUMENTS
TO BE DELIVERED

     

    8.1 Documents to be Delivered by
the Seller.

     

    At the
Closing, the Sellers shall deliver, or cause to be delivered, to the Purchaser
the following:

     

    (a) stock
certificates representing the Securities, duly endorsed in blank or accompanied
by stock transfer powers and with all requisite stock transfer tax stamps
attached;

     

    (b) the
certificates referred to in Section 7.1(d) and 7.1(e) hereof;

     

    (c) copies of
all consents and waivers referred to in Section 7.1(g) hereof; and

     

    (d) the
Employment Agreement;

     

    (e) certificate
of good standing with respect to the Companies issued by the Secretary of State
of the State of incorporation, and for each state in which the Companies is
qualified to do business as a foreign corporation; and

     

    (f) such
other documents as the Purchaser shall reasonably request.

     

    8.2 Documents to be Delivered by
the Purchaser.

     

    At the
Closing, the Purchaser shall deliver to the Seller the following:

     

    (a) The Cash
Purchase Price;

     

    (b) the
Purchase Price Shares, (within five days of the Closing Date);

    


    (c) the
Promissory Note;

    


                          (d)  the
certificates referred to in Section 7.2(d) hereof;

     

                          (e)
the Employment Agreement; and

     

                          (f)
such other documents as the Seller shall reasonably request.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    


    ARTICLE
IX     INDEMNIFICATION

     

    9.1 Indemnification.

     

    (a) Subject
to Section 9.2 hereof, the Sellers hereby agree to jointly and severally
indemnify and hold the Purchaser, the Companies, and their respective directors,
officers, employees, Affiliates, agents, successors and assigns (collectively,
the "Purchaser Indemnified Parties") harmless from and against:

     

    (i)           any
and all liabilities of the Companies of every kind, nature and description,
absolute or contingent, existing as against the Companies prior to and including
the Closing Date or thereafter coming into being or arising by reason of any
state of facts existing, or any transaction entered into, on or prior to the
Closing Date, except to the extent that the same have been fully provided for in
the Balance Sheet or disclosed in the notes thereto or were incurred in the
ordinary course of business between the Balance Sheet date and the Closing
Date;   

     

                                    (ii)           subject
to Section 10.3, any and all losses, liabilities, obligations, damages, costs
and expenses (collectively, the “Losses”)
based upon, attributable to or resulting from the failure of any
representation or warranty of the Seller set forth in Section 4 hereof, or any
representation or warranty contained in any certificate delivered by or on
behalf of the Seller pursuant to this Agreement, to be true and correct in all
material respects as of the date
made;

     

    (iii) any and
all Losses based upon, attributable to or
resulting from the breach of any covenant or other agreement on the part of the
Seller under this Agreement;

     

    (iv) any and
all notices, actions, suits, proceedings, claims, demands, assessments,
judgments, costs, penalties and expenses, including reasonable attorneys' and other reasonable professionals' fees and disbursements
(collectively, "Expenses") incident to any and all Losses with respect to which indemnification is
provided pursuant to this Section
9.1(a)

     

    (b) Subject
to Section 9.2, Purchaser hereby agrees to indemnify and hold the Sellers and
their respective Affiliates, agents, successors and assigns (collectively, the
"Seller Indemnified Parties") harmless from and against:

     

    (i) any and
all Losses based upon, attributable to or resulting from the failure of any
representation or warranty of the Purchaser set forth in Section 5 hereof, or
any representation or warranty contained in any certificate delivered by or on
behalf of the Purchaser pursuant to this Agreement, to be true and correct in all material respects as of the date
made;

     

    (ii) any and
all Losses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Purchaser under this Agreement or
arising from the ownership or operation of the Companies from and after the
Closing Date; and

     

    (iii) any and
all Expenses incident to the foregoing.

     

    


    9.2 Limitations on
Indemnification for Breaches of Representations and
Warranties.

     

    An
indemnifying party shall not have any liability under Section 9.1(a) or Section
9.1(b) hereof unless the aggregate amount of Losses and Expenses to the
indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any representation or warranty
to be true and correct, or any breach hereof,  exceeds $150,000 (the
“Basket”) and, in such event, the indemnifying party shall be required to pay
the entire amount of such Losses and Expenses in excess of $150,000 (the “Deductible”).  In any event, the maximum amount of indemnifiable Losses
and Expenses which may be recovered by either party shall not exceed
$300,000.

     

    9.3 Indemnification
Procedures.

     

    (a) In the
event that any Legal Proceedings shall be instituted or that any claim or demand
("Claim") shall be asserted by any Person in respect of which payment may be
sought under Section 9.1 hereof (regardless of the Basket or the Deductible
referred to above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying
party.  The indemnifying party shall have the right, at its sole
option and expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
of the indemnified party indemnified
against hereunder.  If the indemnifying party elects to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Losses of the indemnified party indemnified
against hereunder, it shall within five (5) days (or sooner, if the nature of
the Claim so requires) notify the indemnified party of its intent to do
so.  If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
of the indemnified party indemnified
against hereunder, fails to notify the indemnified party of its election as
herein provided or contests its obligation to indemnify the indemnified party
for such Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim. If the indemnifying party
shall assume the defense of any such Claim,
the indemnified party may participate, at his or its own expense, in the defense
of such Claim; provided, however, that such indemnified party shall be entitled
to participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable; and
provided, further, that the indemnifying party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any
Claim.  The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such
Claim.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    (b) After any
final judgment or award shall have been rendered by a court, arbitration board
or administrative agency of competent jurisdiction and the expiration of the
time in which to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have arrived at a
mutually binding agreement with respect to a Claim hereunder, the indemnified
party shall forward to the indemnifying party notice of any sums due and owing
by the indemnifying party pursuant to this Agreement with respect to such
matter, as determined by such court, board or
agency or pursuant to such settlement against, as the case may be and the
indemnifying party shall be required to pay all of the sums so due and owing to
the indemnified party by wire transfer of immediately available funds within 10
business days after the date of such notice.

     

    9.4 Tax Treatment of Indemnity
Payments.

     

    The
Seller and the Purchaser agree to treat any indemnity payment made pursuant to
this Article 9 as an adjustment to the Purchase Price for federal, state, local
and foreign income tax purposes.

     

    9.5 No Right of Set
Off.

     

    The Seller and Purchaser agree than any
indemnification claim shall not be set off by any party without final
adjudication specific to the indemnity claim and the right to set
off.

    


    ARTICLE
X   MISCELLANEOUS

     

    10.1 Payment of Sales, Use or
Similar Taxes.

     

    All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne solely by the Seller.

     

    10.2 Survival of Representations
and Warranties.

     

    The
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto shall
terminate unless within twelve (12) months
after the Closing Date written notice of such claims is given to the Seller or
such actions are commenced.

     

    10.3 Expenses.

     

    Except as
otherwise provided in this Agreement, the Seller and the Purchaser shall each
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby, it being understood that in no event shall the Companies bear any
of such costs and expenses.

     

    10.4 Specific
Performance.

     

    (a) The
Seller acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Purchaser and that the Purchaser will not have an
adequate remedy at law.  Therefore, the obligations of the Seller
under this Agreement, including, without limitation, the Seller’s obligation to
sell the Securities to the Purchaser, shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith.  Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    (b) The
Purchaser acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Seller and that the Seller will not have an adequate
remedy at law.  Therefore, the obligations of the Purchaser under this
Agreement, including, without limitation, the Purchaser’s obligation to purchase
the Securities from the Seller, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection
therewith.  Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.

    


    10.5 Further
Assurances.

     

    The
Seller and the Purchaser each agrees to execute and deliver such other documents
or agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.

     

    10.6 Submission to Jurisdiction;
Consent to Service of Process.

     

    (a) The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of
any federal or state court located within the state of Kentucky over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts.  The parties hereby irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute.  Each of the parties hereto agrees that a judgment in
any such dispute may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

     

    (b) Each of
the parties hereto hereby consents to process being served by any party to this
Agreement in any suit, action or proceeding by the mailing of a copy thereof in
accordance with the provisions of Section 10.10.

     

    10.7 Entire Agreement; Amendments
and Waivers.

     

                          This
Agreement (including the Letter of Intent, the terms of which are incorporated
herein, together with all schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior or
contemporaneous agreements or understandings among the parties with regard to
the subject matter hereof.  This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought.  No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein.  The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by
law.

     

    10.8 Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the state of Kentucky.

     

    10.9 Table of Contents and
Headings.

     

    The table
of contents and section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of this
Agreement.

     

    10.10 Notices.

     

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, or by reputable
overnight courier to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to the
other party pursuant to this provision):

     

    
      	
              (a)  

            	
              Purchaser:

               

              Heartland,
      Inc.

              1501
      US Hwy 25E

              Middlesboro,
      KY  40965

              Attn:  Mitchell
      Cox, CFO

              Phone:  (   )    -

              Facsimile:
      (   )  -

               

              Copy
      to:

               

              Stephen
      Fleming, Esq.

              Law
      Offices of Stephen M. Fleming PLLC

              403
      Merrick Avenue, 2nd
      Floor

              East
      Meadow, New York 11554

              Phone:  (516)
      833-5034

              Facsimile:
      (516) 997-1209

            


    

     

     

    
      	
              (b)  

            	
              Seller
      and Companies:

              P.O. Box 2580

              Middleboro,
      KY 40965

              Phone: ( )    -

              Facsimile:  (   )    -
      

              
Copy
      to:

            


    

     

    10.11 Severability.

     

    If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.

     

    10.12 Binding Effect;
Assignment.

     

    This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.  Nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement except as provided
below.  No assignment of this Agreement or of any rights or
obligations hereunder may be made by any of
the Seller, the Companies or the Purchaser
(by operation of law or otherwise) without the prior written consent of the
other parties hereto and any attempted assignment without the required
consents shall be void; provided, however, that the Purchaser may assign this
Agreement and any or all rights or obligations hereunder (including, without
limitation, the Purchaser’s rights to
purchase the Securities and the Purchaser'’s rights to seek indemnification hereunder) to
any Affiliate of the Purchaser.  Upon any such permitted assignment,
the references in this Agreement to the Purchaser shall also apply to any such
assignee unless the context otherwise requires.

     

    [Remainder
of Page Intentionally Left Blank]

     

    


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.

    


    HEARTLAND,
INC.

    


    


    By:           ________________________________

    Name:

    Title:

    


    LEE
OIL COMPANY, INC.

    


    


    By:_______________________________

    Terry L.
Lee, CEO and President

    


    LEE
ENTERPRISES, INC.

    


    


    By:_______________________________

    Terry L.
Lee, CEO and President

    


    


    LEE’S
FOOD MART, LLC

    


    


    By:_______________________________

    Terry L.
Lee, Chief Manager

    


    Lee
Stockholders

    


    ____________________________________

    Terry
Lee, on behalf of LEE HOLDINGCOMPANY, LP

    


    


    ____________________________________

    Gary Lee

     

     

     

     

    23