**Exhibit 2.2**

 

**STOCKPURCHASE AGREEMENT**

 

datedJuly 9, 2010

 

byand among

 

**WADEGRIFFIN, ALLAN SANDERS, LISA OETKEN, TRACY TAYLOR, DAVID HAGEN and ART EVANS**

(each,individually, a “**Seller**” and, collectively, the “**Sellers**”)

 

**PYRAMIDCOMMUNICATION SERVICES, INC.**, a Texas corporation (the “**Company**”)

 

and

 

**XETATECHNOLOGIES, INC.**, an Oklahoma corporation

(“**Purchaser**”)

 

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**STOCK PURCHASE AGREEMENT**

 

THIS STOCK PURCHASEAGREEMENT (this “**Agreement**”), which is to beeffective as of the 9th day of July, 2010 (the “**EffectiveDate**”), is entered into by and among **WADEGRIFFIN, ALLAN SANDERS, LISA OETKEN, TRACY TAYLOR, DAVID HAGEN AND ART EVANS**(collectively, the “**Sellers**”), **PYRAMID COMMUNICATION SERVICES, INC.**, a Texascorporation (the “**Company**” or “**Pyramid**”) and **XETA TECHNOLOGIES, INC.**,an Oklahoma corporation (“**Purchaser**” or “**XETA**”).

 

**RECITALS**:

 

A.                                   Sellers own,collectively, all of the issued and outstanding common stock (the “**Shares**”) of **Pyramid CommunicationServices, Inc.**, a Texas corporation (the “**Company**”).

 

B.                                     Purchaserdesires to acquire from Sellers, and Sellers desire to sell to Purchaser, allof the Shares and all associated goodwill.

 

NOW, THEREFORE, inconsideration of the mutual benefits to be derived hereby, the representations,warranties, covenants, and agreements herein contained, and other good andvaluable consideration the receipt and sufficiency of which are herebyacknowledged, Purchaser, and Seller do hereby agree as follows:

 

ARTICLE I

**Purchase of Shares**

 

1.1                                 Acquisition ofShares.  Upon the terms of, and subject to the conditions set forthin this Agreement at the Closing, Sellers shall convey to Purchaser andPurchaser shall acquire all of the Shares and associated goodwill from Sellers,free and clear of all manner of liens, charges, encumbrances and claims, butsubject to generally applicable laws and regulations with respect tounregistered securities (the “**Acquisition**”).  The Shares shall constitute all of theCompany’s capital stock issued and outstanding as of the date of Closing.

 

1.2                                 FinancialCondition; Profit and Loss.  The Purchase Consideration (as defined in Section 1.3below) is subject to adjustment as set forth in Section 1.5 belowbased upon the Company’s cumulative net income or cumulative net losses fromthe Base Valuation Date to the Closing Date as duly reflected in the Company’sfinancial statements for the period June 1, 2010 through the Closing Date(“**Closing Date Financial Statement**”).  The Closing Date Financial Statements shallbe prepared in accordance with GAAP by Purchaser’s Accountant, and madeavailable for review by Sellers and their independent public accountant (“**Sellers’ Accountant**”) within forty-five (45) days after theClosing Date.

 

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1.3                                 PurchaseConsideration.  The purchase consideration for theShares (“**Purchase Consideration**”) shall becomprised of the following components:

 

(a)                                  $2,000,000 incash (“**Cash Portion of the Purchase Consideration**”),$1,800,000 of which would be paid to the Sellers at Closing,*pro rata,*according to their relative ownership of theCompany**—viz.:

 
| Wade Griffin  |   | *        | % | $ | *            |   |
|---------------|--------|----------|---|---|--------------|--------|
| Allan Sanders |   | *        | % | $ | *            |   |
| Lisa Oetken   |   | *        | % | $ | *            |   |
| Tracy Taylor  |   | *        | % | $ | *            |   |
| David Hagen   |   | *        | % | $ | *            |   |
| Art Evans     |   | *        | % | $ | *            |   |
| Total:        |   | 100.0000 | % | $ | 1,800,000.00 |   |

 

or as they shall otherwiseunanimously direct, with the $200,000 balance (“**EscrowAmount**”) to be deposited at Closing into escrow with Triad Bank, N.A. pursuant to an Escrow Agreement in the form of Exhibit 1.3(a) heretoattached (“**Escrow Agreement**”), pending finaldetermination of the Company’s the amount of any cumulative net income or lossrealized by the Company since the Base Valuation Date, with payment pursuant toSection 1.5 hereof.

 

(b)                                 $675,000 in theform of XETA’s subordinated promissory notes in the form of Exhibit 1.3(b) heretoattached, with appropriate insertions (the “**SubordinatedNotes**”), payable to the Sellers *pro rata* inthat aggregate amount—viz.:

 
| Wade Griffin  |   | *      | % | $ | *          |   |
|---------------|--------|--------|---|---|------------|--------|
| Allan Sanders |   | *      | % | $ | *          |   |
| Lisa Oetken   |   | *      | % | $ | *          |   |
| Tracy Taylor  |   | *      | % | $ | *          |   |
| David Hagen   |   | *      | % | $ | *          |   |
| Art Evans     |   | *      | % | $ | *          |   |
| Total:        |   | 100.00 | % | $ | 675,000.00 |   |

 

each dated as of the ClosingDate, bearing interest at the rate of      *       andpayable in eight (8) quarterly installments of principal and interest inthe aggregate amount of $      *      each, commencing on the last day of the third (3rd) full calendar month after Closing and on the lastday of every third (3rd) calendarmonth thereafter until paid in full provided such promissory notes shallprovide that payments thereunder shall be permitted so long as none of XETA’sbank lenders (currently, Commerce Bank, N. A.) has accelerated payment underXETA’s debt to such lender.

 

1.4                                 AdditionalConsideration to Wade Griffin.  As additional consideration for theacquisition of the Shares from Seller Wade Griffin, Purchaser will pay the sumof $100,000 to Wade Griffin for his personal goodwill and $50,000 inconsideration of his three-year non-compete and non-solicitation agreement inthe forms attached as Exhibits 1.4(a) and 1.4(b) hereto(the “**Goodwill Acquisition Agreement**” and the“**Non-Competition Agreement,**” 

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  The omitted material has beenfiled separately with the Securities and Exchange Commission pursuant torule 24b-2 of the rules to the Securities and Exchange Act of 1934,as amended.**

 

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respectively, and, collectively referred to as the “**Griffin Agreements**”). The Griffin Agreements will providefor payment in thirty-six (36) consecutive monthly installments in theaggregate amount of $4,166.67 each, commencing on the last day of the firstfull calendar month after Closing and on the last day of each month thereafteruntil paid in full.

 

1.5                                 PurchaseConsideration Adjustment; Review Period; Income/Loss Determination; Releasefrom Escrow.

 

(a)                                  Withinforty-five (45) days after the Closing Date, Purchaser will provide Sellers andSellers’ Accountant c/o of Wade Griffin with a copy of the Company’s Closing Date Financial Statements,prepared in accordance with GAAP. Sellers and Sellers’ Accountant shall have thirty (30) days afterdelivery of the Closing Date Financial Statements (the “**Review Period**”) to verify the amount of anycumulative net income or loss realized by the Company since the Base ValuationDate.

 

(b)                                 Subject to theprovisions of Section 1.6 below, the Escrow Amount will be payable,within five (5) days after the close of the Review Period as follows:

 

(i)                                 To the extentthat the Company shall have realized cumulative net income from the BaseValuation Date through the Closing Date an equivalent amount shall bedistributed by the Escrow Agent to the Sellers *pro rata*in accordance with the their respective ownership percentages set forth in Section 1.3(a);the balance of the Escrow Amount, if any, shall be distributed by the EscrowAgent to Purchaser and shall constitute a reduction in the total PurchaseConsideration for the Shares.

 

(ii)                                  To the extentthat the Company shall have realized cumulative net losses from the BaseValuation Date through the Closing Date the amount of such cumulative netlosses (“**Purchase Consideration Offset Claim**”)shall be allocated among the Subordinated Notes *pro rata*based on the ownership percentages set forth in Section 1.3(a), andPurchaser shall be entitled to offset the amount of such Purchase ConsiderationOffset Claim against the next payment or payments due under the SubordinatedNotes.  In addition, the entire EscrowAmount shall be distributed by the Escrow Agent to Purchaser, in which case thesum of the Escrow Amount and the Purchase Consideration Offset Claim shallconstitute a reduction the total Purchase Consideration for the Shares.

 

1.6                                 Disagreement.  NotwithstandingSections 1.5(b)(i) and (ii) above, Sellers and theirrepresentatives shall have the right for a period of thirty (30) days afterSellers’ receipt of written notice setting forth Purchaser’s determination ofthe Company’s cumulative net income or cumulative net loss since the BaseValuation Date to review the Company’s books and records as of the Closing Dateand, if Sellers agree among themselves to do so, to have Sellers’ Accountantexamine such book and records, including accounting work papers, for up to anadditional sixty (60) days, to verify Purchaser’s calculation of suchcumulative net income or loss.  If Sellers’ Accountant does not agree withPurchaser’s determination of the Company’s cumulative net income or loss, theparties shall negotiate in good faith to agree upon the proper amountthereof.  If Purchaser and a majority ofthe Sellers (based upon equity ownership in the Company immediately prior toClosing) cannot agree upon such amounts, then, Purchaser’s Accountant, andSellers’ Accountant shall select a third certified public accountant toarbitrate the matter 

 

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(“**Evaluator**”) andmake a final determination of such cumulative net income or loss, in which casePurchaser shall pay one-half (1/2) of the Evaluator’s fee and Seller shall paythe other half (1/2) thereof.

 

ARTICLE II

**Representations and Warranties**

**of the Seller**

 

To induce the Purchaser toenter into the Agreement, the Company jointly and severally with the Sellersmakes the following representations and warranties to Purchaser on theunderstanding that, assuming the Closing occurs, each representation, warrantyand covenant contained herein shall be deemed material to the Purchaser’sagreement to purchase the Shares, and the Sellers and the Company herebyacknowledge that, in executing, delivering, and consummating the Agreement, thePurchaser has relied and will rely upon the correctness and completeness ofeach of such representations and warranties:

 

2.1                                 CorporateExistence; Qualification.  TheCompany is duly organized, validly existing and in good standing under the lawsof the State of Texas.  The Company hasthe corporate power to carry on its business as now conducted and to own itsassets, and is duly qualified to conduct business and is in good standing as aforeign corporation in those jurisdictions set forth on Schedule 2.1,and in those jurisdictions in which such qualification is required in order toown its assets or properties or to carry on its business as now conducted,except as set forth in Schedule 2.1 or where the failure to qualifywould not have a Material Adverse Effect on the Company, and there has not beenany claim by any other jurisdiction to the effect that the Company is requiredto qualify or otherwise be authorized to do business as a foreign corporationtherein.  The copies of the Company’sgood standing certificates or certificates of existence (issued by theappropriate authority), Articles of Incorporation (certified by the appropriateauthority) and Bylaws (certified by the Company’s Secretary), as amended todate, which constitute a part of Schedule 2.1 are true and completecopies of those documents as now in effect. The minute book of the Companycontains accurate records of all official meetings and written consents of theBoard of Directors and shareholders since the date of the Company’sincorporation, and accurately reflects all material transactions referred totherein.

 

2.2                                 Capitalization.  The authorized capital stock of the Companyconsists of 1,000,000 shares of preferred stock, none of which is issued andoutstanding and 1,000,000 shares of common stock, 695,000 shares of which areissued and outstanding as follows:

 
| Wade Griffin  |   | 275,000 shares |   |
|---------------|--------|----------------|--------|
| Allan Sanders |   | 265,000 shares |   |
| Lisa Oetken   |   | 45,000 shares  |   |
| Tracy Taylor  |   | 45,000 shares  |   |
| David Hagen   |   | 35,000 shares  |   |
| Art Evans     |   | 30,000 shares  |   |

 

All of such outstandingshares are validly issued, fully paid and non-assessable.  There are no subscriptions, options,warrants, rights or calls or other commitments or agreements to which the 

 

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Company or any of theSellers is a party or by which such persons are bound, calling for theissuance, transfer, sale or other disposition of any class of securities of theCompany, other than for certain buy-sell rights and rights of first refusal andother transfer restrictions and rights set forth in that certain Stock Purchaseand Redemption Agreement, dated January 3, 2009, among the Company and theSellers (the “**Buy-Sell Agreement**”). There are nooutstanding securities of the Company, convertible or exchangeable, actually orcontingently, into shares of Common Stock, or any other securities, of theCompany. There are currently 45,000 shares of the Company’s common stock heldas treasury shares, said shares being the 45,000 shares previously redeemed bythe Company from Tracy Taylor and representing one-half of the shares owned byTracy Taylor immediately prior to such redemption.

 

2.3                                 No Subsidiaries.  Except as set forth on Schedule 2.3,there are no corporations, partnerships or other business entities controlledby the Company (collectively, “**Subsidiaries**”).  As used herein, “controlled by” means (i) theownership of not less than fifty percent (50%) of the voting securities orother interests of a corporation, partnership or other business entity, or (ii) thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of a corporation, partnership or otherbusiness entity, whether through the ownership of voting shares, by contract orotherwise.  The Company has not made anyinvestment in, and does not own, any capital stock of, or any other proprietaryinterest in, any other corporation, partnership or other business entity.

 

2.4                                 Consents.  Except as set forth on Schedule 2.4,there are no consents of governmental or other regulatory agencies, foreign ordomestic or of other parties required to be received by, or on the part of, theCompany or any of the Sellers to enable each of them to enter into and carryout the Agreement in all material respects.

 

2.5                                 Authority.  Each of the Sellers has the power, right andauthority to enter into the Agreement and to carry out his obligationsthereunder.  The execution and deliveryof the Agreement and the consummation of the transaction contemplated therebyhave been duly authorized by all necessary action on the part of each of theSellers, and the Company’s Board of Directors, and no other corporateproceeding on the part of the Sellers or the Company is necessary to authorizethe execution and delivery hereof.

 

2.6                                 Binding Nature.  The Agreement constitutes the valid andbinding agreement of each of the Sellers and, where applicable, the Company,and, assuming that it constitutes the legal, valid and binding agreement of thePurchaser, the Agreement is enforceable in accordance with its terms subject toapplicable bankruptcy, reorganization, insolvency and similar laws affectingthe rights of creditors and subject to general principles of equity.

 

2.7                                 Title to Shares.  Each of the Sellers represents and warrantswith respect to the Shares owned or attributed to him that (a) he is andat Closing will be the sole record and beneficial owner of the Shares free andclear of all manner of liens, charges, encumbrances and claims (but subject togenerally applicable restrictions on the sale of unregistered securities) and (b) hehas and at Closing will have good title to the Shares and the absolute andunqualified right to sell, transfer and deliver the Shares to the Purchaser; ineach case subject to the community property rights, if any, of Seller’s spouse,if any, each such spouse having executed this Agreement for the sole 

 

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purpose of consenting to thesale of the Shares owned by his spouse pursuant to the terms of this Agreement.

 

2.8                                 FinancialStatements.  Theunaudited financial statements of the Company for the last three (3) fiscalyears ended December 31, 2007, December 31, 2008, and December 31,2009, respectively, and the interim financial statements for the five-monthperiod ended as of the Base Valuation Date, copies of which are attached heretoas Schedule 2.8, taken as a whole, fairly present, in all materialrespects, the financial position of the Company as of such dates and theresults of its operations for such fiscal years and fiscal period, and, exceptas set forth therein or in Schedule 2.8, were prepared, in conformitywith GAAP (and except that the interim statements lack footnote disclosures,and are subject to year-end adjustments consistent with past practice whichwill not result in any Material Adverse Change in the Company’s financialcondition as reflected by such interim financial statements).

 

2.9                                 Liabilities.  As of the Base Valuation Date, the Companyhad no material debts, liabilities or obligations, contingent or absolute, thatwould be required by GAAP to be reflected as a liability on the books of theCompany (including, without limitation, any contingent tax liabilities, whichshould be accrued under ASC 450, “Contingencies” or which should be accruedunder any other ASC or similar applicable pronouncement), other than thosedebts, liabilities and obligations reflected or reserved against in the BaseValue Balance Sheet.

 

2.10                           SubsequentActions.  Except as set forth in Schedule2.10, since the Base Valuation Date, the Company has not: (i) issuedor sold, or agreed to issue or sell any of its capital stock, options,warrants, rights or calls to purchase such stock, any securities convertible orexchangeable into such capital stock or other corporate securities, or effectedany subdivision or other recapitalization affecting its capital stock; (ii) incurredany material absolute obligation or liability, except those arising in theordinary and usual course of its business that would normally be reflected onthe books of the Company; (iii) incurred any material contingentobligation or liability, except those arising in the ordinary and usual courseof its business; (iv) paid or satisfied any liability, absolute orcontingent, other than in the ordinary and usual course of business; (v) madeany wage or salary increases or granted any bonuses, except in the ordinarycourse of business consistent with past practices and listed in Schedule2.10; (vi) mortgaged, pledged or subjected to any lien or otherencumbrance any of its properties or assets, or permitted any of its propertiesor assets to be subjected to any lien or other encumbrance, except in the ordinaryand usual course of business; (vii) sold, assigned or transferred any ofits properties or assets, except in the ordinary and usual course of businessor as approved by Purchaser in writing; (viii) entered into any materialtransaction not in the ordinary and usual course of business; (ix) waivedany rights of material value, or cancelled, modified or waived any indebtednessfor borrowed money held by it, except in the ordinary and usual course ofbusiness; (x) except in the ordinary and usual course of business, madeany loans or advances to any person, or assumed, guaranteed, or otherwisebecome responsible for the obligations of any person (except for endorsement,for collection or deposit of negotiable instruments received in the ordinaryand usual course of business); or (xi) incurred any indebtedness forborrowed money.  To the extent that anymoneys are outstanding under any line of credit of the Company, all such fundswere utilized in the ordinary and usual course of business.  Since December 31, 2009, the Company hasnot declared, paid or set aside any dividends or other distributions orpayments on its capital stock, or redeemed or repurchased, or agreed to redeemor repurchase, any shares of its capital stock.

 

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2.11                           Absence ofMaterial Changes.  Except asset forth in Schedule 2.11, there has not been any Material AdverseChange in the assets, properties, operations or financial condition of theCompany since the Base Valuation Date.  Since the Base Valuation Date no event has occurred, other than in theordinary and usual course of business or as set forth in such Schedule 2.11,which could be reasonably expected to have a Material Adverse Effect upon thebusiness of the Company, and neither the Company nor any of the Sellers knowsof any development or threatened development of a nature that will have, orwhich could be reasonably expected to have, within the next six (6) months,a Material Adverse Effect upon the business of the Company or upon any of itsassets, properties, operations or financial condition, taken as a whole,including, without limitation, the loss of any licenses or permits, suppliers,customers or employees, which loss would be of a material nature.

 

2.12                           Taxes.  Sellers have delivered to Purchaser true andcomplete copies of the federal income tax returns of the Company as filed withthe Internal Revenue Service for each of the fiscal years ended December 31,2008, and December 31, 2007, respectively. Each of such returns was prepared, in conformity with informationcontained in the books and records of the Company.  The Company’s Federal corporate income taxreturn for the year ended December 31, 2009, (the “**2009 TaxReturn**”) has not yet been filed, but the Company has timely filed anextension to file same and, when prepared such 2009 Tax Return will have beenprepared in conformity with information contained in the books and records ofthe Company.  Except as set forth in Schedule2.12 consistent with the requirements of ASC 740, the Company has taken nouncertain tax positions, all taxes, including, without limitation, income,property, sales, use, franchise, capital stock, excise, added value, employees’income withholding, social security and unemployment taxes imposed by theUnited States, any state or any foreign country, or by any other taxingauthority, which have become due or payable by the Company and all interest andpenalties thereon, whether disputed or not, have been paid in full oradequately provided for by reserves shown in its books of account; all depositsrequired by law to be made by the Company with respect to estimated income,franchise and employees’ withholding taxes have been duly made; and all taxreturns, including estimated tax returns, required to be filed have been dulyfiled.  Except as set forth in Schedule2.12, the federal and state income tax returns of the Company have neverbeen audited.  Schedule 2.12 alsosets forth a list of those states in which income, franchise or sales and usetax returns were filed by the Company during the last five (5) franchisetax years.

 

2.13                                     Ownership ofAssets; Trademarks, etc. Except as set forth in Schedule2.13, the Company owns outright, and has good and marketable title to allof its assets, properties and businesses (including all assets reflected in theBalance Sheet, except as the same may have been disposed of in the ordinarycourse of business since the Base Valuation Date), free and clear of all liens,mortgages, pledges, conditional sales agreements, restrictions on transfer orother encumbrances or charges.

 

Schedule 2.13 sets forth atrue and complete list and brief description of all registered patents,copyrights, trademarks, and trade names that are either owned by the Company orin which it has an interest as owner or licensee.  Except as set forth in said Schedule 2.13,(a) the Company has not granted to any other person, firm or corporationany proprietary, or other interest, in any such intangible assets; (b) suchassets so owned or licensed are, in the reasonable business judgment of theCompany, sufficient to permit the Company to conduct its business as now

 

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conducted; (c) exceptas set forth in Schedule 2.13, the Company is not a party to or bound byany license or agreement requiring the payment to any person, firm orcorporation of any royalty; (d) neither the Company nor any of the Sellersknows of any violation by others of the trademark, trade name or patent rightsof the Company; and (e) to each Seller’s and the Company’s knowledge, theCompany is not infringing upon any patent, copyright, trade name or trademarkor otherwise violating the rights of any third party with respect thereto, andno proceedings have been instituted or are threatened and no claim has beenreceived by the Company or any of the Sellers alleging any such violation.

 

2.14                           Insurance.  Schedule 2.14 sets forth a list andbrief description of all policies of fire, liability and other forms ofinsurance held by the Company as of the date hereof.  Except as set forth in Schedule 2.14,such policies are presently in effect, with all premiums paid currently, andare carried on an “occurrence basis” with respect to the Company’s insurancefor general liability and errors and omissions, and on a “claims made basis”with respect to the Company’s insurance policies pertaining to (i) employeebenefit liability, (ii) information and network technology errors andomissions, and (iii) directors and officers, EPLI, and fiduciary liability.  Such policies will be in full force andeffect for all periods up to and including the Closing, and no notice ofcancellation or termination, or indication of an intention not to renew, hasbeen received with respect to any of the policies.  There are no claims filed under or relatingto any of the Policies. Neither the Company nor any of the Sellers beennotified by any insurance carrier of a material increase in insurance premiumsof the Company on a retroactive or prospective basis. Neither the Company norany of the Sellers knows of any state of facts concerning any claim which anemployee may have against the Company that is not covered by insurance(including any medically related illness.

 

2.15                           Litigation andLegal Compliance.  Except asset forth in Schedule 2.15, there are no actions, suits, proceedings orgovernmental investigations relating to the Company or to any of itsproperties, assets or businesses filed or commenced and pending or, to theknowledge of the Company or any of the Sellers threatened, nor any order,injunction, award or decree outstanding, against the Company or against orrelating to any of its properties, assets or businesses, and neither theCompany nor any of the Sellers knows of any basis for any such action, suits orproceedings within the past two (2) years which could reasonably beexpected to have a Material Adverse Effect on the business, financial conditionor operations of the Company.  Except asset forth in Schedule 2.15, to each Seller’s knowledge, the Company isnot in material violation of any federal, state, local or foreign law,regulation, ordinance, order, injunction, decree, award, or other requirementof any governmental body, court or arbitrator relating to its properties,assets or business, including without limitation, the Foreign Corrupt PracticesAct and any applicable wage and hour laws, rules and regulations, theviolation of which would have a Material Adverse Effect on the Company.

 

2.16                           Real Property.  The Company does not own any real property.  Schedule 2.16 sets forth a briefdescription of all real properties which are leased to or used by the Company(such premises being referred to herein as the “**Property**”),including all material structures located thereon (the “**Structures**”)and all related leases and occupancy agreements to which the Company is a party(“**Leases**”), copies of which are attachedhereto and included as part of Schedule 2.16; and (a) the Leasesare in full force and effect, and all amounts currently payable by the Companythereunder have been paid; (b) to each Seller’s and the Company’sknowledge, all uses of Property

 

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by the Company conform, in all material respects, to all applicablebuilding, fire and zoning ordinances, laws, codes and regulations (including,without limitation, the Americans’ with Disabilities Act) and, to all terms ofany applicable Leases; (c) except as otherwise described in Schedule2.16, to each Seller’s and the Company’s knowledge all of the Property andStructures are in usable and operating condition without the necessity of anymajor repairs, and can currently be used for their intended purposes; (d) theCompany has not received any notice of, and has no knowledge that, any Propertyor Structure is or will be affected by any special assessments, condemnation,eminent domain, off-site improvements to be constructed, change in grade ofpublic streets or similar proceedings; (e) no person other than theCompany is in possession of any of the Property; (f) there existsdedicated access to all of the Property and Structures sufficient for theCompany’s present use; and (g) to each Seller’s and the Company’sknowledge, the heating, cooling, electrical, plumbing systems and machinery atall of the Property and Structures are in good working condition.Notwithstanding the preceding, Purchaser, by executing this Agreementunderstands and acknowledges that the Company is only one tenant in each of theStructures which are multi-tenant buildings occupied by other tenants, andconsequently, neither the Company nor any of the Sellers has any materialknowledge about the other parts of the Structures occupied by other tenants andneither the Company nor any of the Sellers receives any notices that are sentto the owners of the Structures and thus cannot make, and do not make, anyrepresentations pertaining to the foregoing matters in so far as they relate tothat part of the Structures not occupied by the Company or the common areas ofsuch Structures.

 

2.17                           MaterialAgreements.  Except aslisted and briefly described in Schedule 2.17, the Company is not aparty to nor bound by:  (i) anywritten or oral contract, arrangement, commitment or understanding whichinvolves aggregate payments or obligations in excess of Fifteen ThousandDollars ($15,000) and which cannot be cancelled on thirty (30) days or lessnotice without penalty, premium or any continuing obligation or liability; (ii) anycontractual obligation or contractual liability of any kind to any of the Sellersor any other shareholder of the Company (except for normal salary andbenefits); (iii) any contract, arrangement, commitment or understandingwith its customers, any of the Sellers or any officer, employee, shareholder,director, representative or agent of the Company for the repurchase of products(other than warranty liability), sharing of fees, the rebating of charges tosuch customers, bribes or kickbacks from such customers, or other similararrangements; (iv) any contract for the purchase or sale of any materials,products or supplies which contains, or which commits or will commit theCompany for, a fixed term; (v) any contract of employment with any officeror employee that is not terminable at will without penalty, premium or anycontinuing obligation or liability; (vi) any deferred compensation bonusor incentive plan or agreement that is not cancelable at will without penalty,premium or any continuing obligation or liability; (vii) any union orother collective bargaining agreement; (viii) any agreement, commitment orunderstanding relating to indebtedness for borrowed money other than tradepayables incurred in the ordinary course of business and reflected on the booksand records of the Company; (ix) any contract containing covenantslimiting the freedom of the Company to engage or compete in any line ofbusiness or with any person in any geographical area; (x) any contract oroption relating to the acquisition or sale of any business; (xi) anyvoting trust agreement or shareholder agreement other than for the Buy-SellAgreement; (xii) any option for the purchase of any asset or assets,tangible or intangible, valued in excess of Fifteen Thousand Dollars ($15,000)individually or in the aggregate; or (xiii) any other contract, agreement,commitment or understanding which materially and adversely affects any of itsproperties, assets or business, whether directly or indirectly, or which wasentered into other than in the ordinary course of

 

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business.  (The contracts, arrangements, commitments orunderstandings described in items (i) through (xiii) of the precedingsentence are referred to herein as the “**Material Agreements**.”)  Except as set forth in said Schedule 2.17,the Company has not, during the last thirty-six (36) months, entered into anyof the types of contracts, arrangements, commitments or understandings with anyof its suppliers or customers referred to in item (iii) of this Section 2.17.  A true and correct copy of each of the writtenMaterial Agreements has been delivered to the Purchaser.  Except as set forth in Schedule 2.17,none of the Material Agreements requires the consent of any party thereto tothe consummation of the transactions contemplated by this Agreement.  Except as disclosed in Schedule 2.17,the Company has in all material respects performed all obligations required tobe performed by it to date under all of the Material Agreements, is not indefault in any material respect under any thereof, and has received no noticeof any default or alleged default thereunder which has not heretofore beencured or which notice has not heretofore been withdrawn; and neither theCompany nor any of the Sellers knows of any material default under any of theMaterial Agreements by any other party thereto or by any other person, firm orcorporation bound thereunder.

 

2.18                           Condition ofAssets.  To each Seller’s and theCompany’s knowledge, except as set forth in Schedule 2.18, and otherthan for normal breakdowns and servicing requirements, all material items ofmachinery and equipment regularly used by the Company in the conduct of itsbusiness have been maintained and repaired in accordance with the Company’smaintenance standards, all such material items of machinery and equipment arein good operating condition relative to their years in service, and theinventories of the Company, taken as a whole, are, and on the Closing Date willbe, in usable and saleable condition in the ordinary and usual course ofbusiness for the purposes for which they are intended, net of the reservesreflected on the Company’s books and records.

 

2.19                           Accounts andNotes Receivable.  Except asset forth on Schedule 2.19, all of the accounts and notes receivablereflected in the Company’s financial statements were or will have been createdfrom the sale of services or goods in the ordinary course of its business, andneither the Company nor any of the Sellers knows of any dispute, valid defenseor right of set-off to the rights of the Company to collect such accounts andnotes receivable in the full amounts shown net of the reserve or allowance forbad debts as reflected in the Company’s financial statements; provided,however, Sellers are not guaranteeing that such receivables will be collectedin the amount shown and, unless Sellers have breached the foregoingrepresentations in this Section, Sellers shall have no liability to Purchaserin the event the payor of such receivable fails to pay such amount or any partthereof for any reason.  Schedule 2.19contains a true and correct copy of all notes receivable of the Company as ofthe Effective Date (to be updated as of the Closing Date) of the Agreement.

 

2.20                           Permits andLicenses.  Schedule2.20 sets forth all permits, licenses, orders, franchises and approvalsfrom all federal, state, local and foreign governmental regulatory bodies heldby the Company.  The Company has allpermits, licenses, orders, franchises and approvals of all federal, state,local and foreign governmental or regulatory bodies, the lack of which wouldmaterially and adversely affect the Company’s ability to carry on its businessas presently conducted.  Such permits,licenses, orders, franchises and approvals are in full force and effect, and nosuspension or cancellation of any of such other permits, licenses, etc. ispending or, to the knowledge of the Company or the Sellers, threatened; and toeach Seller’s and the Company’s knowledge, the Company is in compliance in allmaterial respects with all requirements, standards

 

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and procedures of thefederal, state, local and foreign governmental bodies which have issued suchpermits, licenses, orders, franchises and approvals.

 

2.21                           Motor Vehicles.  Schedule 2.21 sets forth a briefdescription (including all vehicle identification numbers) of all vans,automobiles, trucks and other vehicles owned or leased by the Company and thejurisdiction in which each owned vehicle is titled. Sellers make norepresentations as to the condition of the motor vehicles, and Purchaser by itssignature hereto, agrees to inspect such vehicles prior to Closing and acceptthem in their “as is” condition.

 

2.22                           BankingArrangements.  Schedule2.22 sets forth the name of each bank in or with which the Company has anaccount, credit line or safety deposit box, and a brief description of eachsuch account, credit line and safety deposit box, including the names of allpersons currently authorized to draw thereon or having access thereto, and thenames of all persons, if any, now holding powers of attorney from the Companywith a summary of the terms thereof.

 

2.23                           Sellers’Interests in Company Assets.  Except as set forth in Schedule 2.23,none of the Sellers nor any of his affiliates owns any property or rights,tangible or intangible, used in or related, directly or indirectly, to thebusiness of the Company.  As used herein,“**affiliate of a Seller**” means anyperson, corporation or other entity (other than the Company) which directly orindirectly is controlled by or under common control with the Seller.

 

2.24                           SalaryInformation.  Sellershave delivered to Purchaser a complete list of the names and current salaryrates of and bonus commitments to all present officers of the Company and thenames and current annual salary rates of all other persons employed by theCompany.

 

2.25                           EmployeeBenefit Plans.  To eachSeller’s and the Company’s knowledge, the Company is in compliance in allmaterial respects with all reporting and disclosure requirements applicable toit and its Pension Plans and Welfare Plans under the Code, the EmployeeRetirement Income Security Act of 1974, as amended (“**ERISA**”),and all Department of Labor and Internal Revenue Service regulationspromulgated thereunder.  For purposes ofthis Section, Pension Plans means and includes each “**employeepension benefit plan**” maintained by the Company (within the meaningof Section 3(2)(A) of ERISA) and Welfare Plans means and includeseach “**employee welfare benefit plan**”maintained by the Company (within the meaning of Section 3(1) ofERISA).  No civil or criminal actionbrought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISAor any other federal or state law is pending or, to the Company’s or eachSeller’s knowledge threatened, against any fiduciary of the Pension Plans orthe Welfare Plans.  To each Seller’sknowledge, no Pension Plan or Welfare Plan, or any fiduciary thereof, has been,or is currently, the direct or indirect subject of an audit, investigation orexamination by any governmental or quasi-governmental agency.

 

2.25.1                  Pension Plans;Claims.  All of the Pension Plansmaintained by the Company are listed and described in Schedule 2.25.1.There are no outstanding liabilities of the Company to the Pension Plan (otherthan payroll deduction contributions not yet remitted to the Plan Trustee), andneither the Company nor any Seller knows of any potential liabilities inconnection therewith.  There are noactions, suits or claims pending (other than for benefits in the normalcourse), pending, or to the knowledge of the Company or the Sellers threatened,and neither the Company nor any of the Sellers has any knowledge

 

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of any facts which couldgive rise to any action, suit or claim, against the Pension Plan or theCompany, which might subject the Company to any material liability.

 

2.25.2                  Welfare Plans;Claims.  All of the Welfare Plansmaintained by the Company or to which it makes employer contributions withrespect to its employees are listed in Schedule 2.25.2.  There are no actions, suits or claims (otherthan for benefits in the ordinary course) pending or to the knowledge of theCompany or the Sellers threatened, and neither the Company nor any of theSellers has any knowledge of any facts which could give rise to any actions,suits or claims against any of the Welfare Plans or the Company, which mightsubject the Company to any material liability.

 

2.25.3                  Pension Planand Welfare Plans; Prohibited Transactions.  To Sellers’ and the Company’s knowledge, noneof the Welfare Plans nor the Pension Plan, nor any of their related trusts, northe Company or any trustee, administrator or other “**party ininterest**” or “**disqualified person**”(within the meaning of Section 3(14) of ERISA or Section 4975(e)(2) ofthe Code, respectively) with respect to the Pension Plan and the Welfare Plans,has engaged in any non-exempt “**prohibited transaction**”(within the meaning of Section 406 of ERISA or Section 4975(c) ofthe Code, respectively) with respect to the participation of the Companytherein, which could subject the Pension Plan or any of the Welfare Plans,their related trusts, any trustee, administrator or other fiduciary of any suchPension Plan or Welfare Plans, the Company, the Purchaser, or any other partydealing with the Pension Plan or the Welfare Plans, to the penalties or excisetax imposed on prohibited transactions by Section 502 of ERISA or Section 4975of the Code or which could have a Material Adverse Effect on the assets,business or financial condition of the Company.

 

2.25.4                  Compliance withRules, Regulations, etc.  To the knowledge of the Company and theSellers, (a) the Pension Plan and each of the Welfare Plans compliescurrently, and has complied in the past, both as to form and operation, in allmaterial respects with its own terms and with the provisions of ERISA and theCode, and all other applicable laws, rules and regulations; (b) allnecessary governmental approvals and determinations for the Pension Plan havebeen obtained, including where applicable, a favorable determination as to thequalification of such plans under Sections 401(a), and 501(a) of the Code;and (c) nothing has occurred since the date of each such determination orrecognition letter that would adversely affect such qualification.  To the knowledge of the Company and theSellers, all amounts that are currently owing to plan participants, orcontributions required to be made to the Pension Plans or any of the WelfarePlans have been paid or contributed with respect to all periods prior to theClosing Date or have been provided for by adequate reserves on the BalanceSheet.

 

2.25.5                  COBRA.  To the knowledge of Sellers and the Company,except as set forth in Schedule 2.25.5, the Company has complied in allmaterial respects with the “**continuation coveragerequirements of group health plans**” provided in Section 4980Bof the Code, Sections 601 *et. seq.* ofERISA, the Family and Medical Leave Act of 1994, and all regulationspromulgated thereunder.

 

2.25.6                  MiscellaneousBenefit Plan Matters.  Neither theCompany nor any other entity, whether or not incorporated, which is deemed tobe under “**common control**” (as defined in Section 414of the Code, or 4001(b) of ERISA) with the Company (“**CommonlyControlled Entity**”) maintains or contributes to any “**employee pension benefit plan**” (within the meaning of Section3(2)(A) of ERISA) ) that (a) is a “**defined contribution**

 

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**plan**” described in Section 3(34)of ERISA or Section 414(i) of the Code, or a “**definedbenefit plan**” described in Section 3(35) of ERISA or Section 414(j) ofthe Code, and (b) gives rise, or will give rise, to any liability of theCompany for (i) any delinquent premium payments due under Section 4007or ERISA with respect to any such defined benefit plan, or (ii) any unpaidminimum funding contributions that would result in the imposition of a lien onany assets of the Company pursuant to Section 412(c)(11) of the Code or Section 302(c)(11)of ERISA.  Neither the Company nor anyCommonly Controlled Entity sponsors or sponsored, or maintains or maintained,any defined benefit plan that has been, or will be, terminated in a manner thatwould result in any liability of the Company to the Pension Benefit GuarantyCorporation or that would result in the imposition of a lien on any assets ofthe Company pursuant to Section 4068 of ERISA.  At no time during the five-year periodimmediately preceding the first day of the year in which the Closing Dateoccurs has the Company or any Commonly Controlled Entity participated in orcontributed to any “**multi-employer plan**”(within the meaning of Section 4001(a)(3) of ERISA or Section 414(f) ofthe Code), or had an obligation to participate in or contribute to any suchmulti-employer plan. No agreement subject to Section 4204 of ERISA hasbeen entered into in connection with the transaction contemplated in theAgreement.  None of the Welfare Plansprovides for or promises retiree medical, disability or life insurance benefitsto any current or former employee, officer, or director of the Company.

 

2.26                           No Breach.  Except as set forth in Schedule 2.26neither the execution and delivery of the Agreement, compliance by the Companyand the Sellers with any of the provisions hereof, nor the consummation of thetransactions contemplated by the Agreement, will:

 

(a)                                  violate orconflict with any provision of the Articles of Incorporation or By-laws of theCompany;

 

(b)                                 violate orresult, alone or with notice or the passage of time, in the material breach ortermination of, or otherwise give any contracting party the right to terminateor declare a default under, the terms of any of the Material Agreements towhich the Company is a party or by which it or any of its properties or assetsmay be bound;

 

(c)                                  result in thecreation of any material lien, security interest, charge or encumbrance uponany of the material properties or assets of the Company or any of the Sellers;

 

(d)                                 violate anyjudgment, order, injunction, decree or award against, or binding upon, theCompany, the Sellers, or any of their respective properties or assets; or

 

(e)                                  violate any lawor regulation of any jurisdiction relating to the Company, the Sellers, or anyof their securities, assets or properties.

 

2.27                           Brokers.  Except as described in Schedule 2.27all negotiations relative to the Agreement and the transactions contemplatedthereby have been carried on directly with the Purchaser by the Company and theSellers without the intervention of any broker, finder, investment banker orother third party. Except as described in Schedule 2.27, neither theCompany nor any of the Sellers has engaged, consented to, or authorized anybroker, finder, investment banker or other third party to act on its or hisbehalf, directly or indirectly, as a broker or finder in connection with thetransactions contemplated by the Agreement, and each of the Sellers agrees toindemnify the Purchaser against, and to hold it harmless from any claim forbrokerage or similar

 

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commission or othercompensation which may be made against the Purchaser by any third party inconnection with any transaction contemplated thereby, which claim is based uponany action by the Company or any of the Sellers.

 

2.28                           Labor Agreements.  Except with respect to the agreements listedin Schedule 2.17 as a Material Agreement pursuant to Section 2.17(vii), or as otherwise set forth in Schedule 2.28 (in either case “**Labor Agreements**”) the Company is not, and during the pastfive (5) years has not been, involved in any labor discussions with anylabor union or group seeking to become the bargaining unit for any of itsemployees.  With respect to said LaborAgreements, Schedule 2.28 sets forth a description of the statusthereof, including any demands or proposals with respect to the renewal,extension or replacement thereof.

 

2.29                           Change of Name.  The Company has not conducted business underany name during the past five (5) years except those set forth on Schedule2.29.

 

2.30                           EnvironmentalMatters.  Except as set forth in Schedule2.30 attached hereto, to Sellers’ knowledge and the Company’s knowledge,the Company has not, except in accordance with applicable laws, generated,operated, processed, distributed, transported, used, treated, stored, handled,emitted, discharged, released or disposed of (or caused any person or entity todo any of the foregoing or assisted any person or entity in doing any of theforegoing) any oil, gasoline, petroleum-related products, hazardous substances,hazardous waste, or pollutants or contaminants or any product which may giverise to Hazardous Materials Liabilities (all as defined in or governed by theComprehensive Environmental Response, Compensation and Liability Act, asamended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601 *et seq.*, as so amended, “**CERCLA**”),including, without limitation, asbestos or asbestos-containing materials,polychlorinated biphenyls (“**PCBs**”) or ureaformaldehyde.  For purposes of this Section 2.29:

 

(a)                                  “**Hazardous Materials Liabilities**” means any and all damages,losses, liabilities, disabilities, fines, penalties, costs or expenses(including reasonable attorney fees) incurred or to be incurred in connectionwith the handling, storage, transportation, or disposal of any HazardousMaterials, whether such liabilities be absolute, fixed or contingent, civil orcriminal, and whether arising under federal or state law;

 

(b)                                 “**Hazardous Materials**” means and includes (a) hazardousmaterials, contaminants, constituents, medical, hazardous or infectious wastesand other hazardous substances (as those terms are defined in any EnvironmentalLaw), (b) petroleum, including crude oil and any fractions thereof, (c) naturalgas, synthetic gas and any mixtures thereof, (d) asbestos and/orasbestos-containing materials, and (e) PCBs or materials or fluidscontaining PCBs in excess of 50 parts per million; and

 

(c)                                  “**Environmental Law**” means any statute, law, ordinance orcode, and any rule, regulation, permit, consent, approval, license, judgment,order, writ, decree or authorization established or enacted by anyadministrative agency or court, for or relating to the protection of theenvironment or the health and safety of any Person (including, withoutlimitation, those relating to (a) the Hazardous Materials TransportationAct, 49 U.S.C. § 1801 *et seq.*,  the Clean Water Act, 33 U.S.C. § 1251 *et seq.*, the Clean Air Act, 42 U.S.C. § 7401 *et seq.,* the Resource Conservation and Recovery Act, 42U.S.C. §6903 *et seq.* or CERCLA, (b) emissions,discharges, releases or threatened releases of Hazardous Materials into theenvironment, including, without limitation, into ambient air, soil, sediments,land

 

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surface or subsurface,buildings or facilities, surface water, groundwater, publicly-owned treatmentworks, septic systems or land; or (c) the generation, treatment, storage,disposal, use, handling, manufacturing, transportation or shipment of HazardousMaterials.

 

2.31                           Value.  Indeciding to sell the Shares at the price provided herein, each of the Sellersrepresent and warrant to Purchaser that he has relied on his own financial,tax, business and legal advisors, has had full and complete access to alldocuments, records and books of the Company and has had a reasonableopportunity to obtain such other information as he has deemed necessary todetermine the value of the Shares, and has not relied on any express or impliedrepresentation by Purchaser or any other person or entity as to the valuethereof.

 

2.32                           Untrue orOmitted Facts.  To eachSeller’s knowledge, no representation, warranty or statement by the Company orthe Sellers in the Agreement contains any untrue statement of a material fact,or omits or will omit to state a fact necessary to make such representations,warranties or statements not materially misleading.  Without limitation of the foregoing, there isno fact known to the Company or the Sellers that has had, or may be reasonablyexpected to have, a Material Adverse Effect on the Company or any of itsassets, properties, operations or business, and that has not been disclosed inwriting to the Purchaser.

 

2.33                           Continuity ofRepresentations and Update of Schedules.  Each of theSellers and the Company covenants and agrees to advise Purchaser promptly ofany Material Adverse Change or deviation in or from any of the foregoingrepresentations and warranties from the Effective Date through the ClosingDate.  Each of the Sellers and theCompany agrees that, with respect to the representations and warranties of suchparty contained in this Agreement, such party shall supplement or amend theSchedules to this Agreement as of the Closing Date with respect to any matterhereafter arising or discovered which, if existing or known at the date of thisAgreement, would have been required to be set forth or described. For purposesof determining whether the conditions set forth in Article V hereofhave been fulfilled, the Schedules to this Agreement shall be deemed to includeonly that information contained therein on the date of this Agreement and shallbe deemed to exclude all information contained in any supplement or amendmentthereto; provided, however, that if the Closing shall occur, then theDisclosure Schedule shall be deemed for all purposes hereunder to have beenamended to include all supplements and amendments thereto up to and includingthe time of Closing and Purchaser shall have no claim against Sellers withrespect to any such new matters disclosed in the Schedules or which isotherwise known to Purchaser prior to the Closing.

 

ARTICLE III

**Representations and Warranties of Purchaser**

 

Purchaser makes thefollowing representations and warranties to Sellers, on the understanding thatSellers, in executing, delivering and consummating this Agreement, have reliedand will rely upon the correctness and completeness of each of suchrepresentations and warranties:

 

3.1                                 CorporateExistence and Qualification.  Purchaser is acorporation duly organized, validly existing and in good standing under thelaws of the State of Oklahoma.  Purchaserhas the corporate power to own its assets and properties and to carry on itsbusiness as now conducted,

 

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and is duly qualified and isin good standing as a foreign corporation in those jurisdictions in which it isrequired to qualify in order to own its assets or properties or to carry on itsbusiness as now conducted.

 

3.2                                 Consents.  Noconsent of any governmental or other regulatory agency, foreign or domestic, orany other party is required to be received by or on the part of Purchaser toenable it to enter into and carry out this Agreement in all material respects.

 

3.3                                 CorporateAuthority.  Purchaser has the power to enter intothis Agreement and to carry out its obligations hereunder.  The execution and delivery of this Agreementand the consummation of the transactions contemplated hereby have been dulyauthorized by Purchaser’s Board of Directors, and no other corporate proceedingon the part of Purchaser will be necessary to authorize the execution anddelivery of this Agreement or the consummation of such transactions.  This Agreement constitutes the legal, validand binding agreement of Purchaser and, assuming that this Agreement constitutesthe legal, valid and binding agreement of Sellers, it is enforceable inaccordance with its terms, subject to applicable bankruptcy, insolvency andsimilar laws affecting the rights of creditors and to general principles ofequity.

 

3.4                                 No Breach.  Once approved by Purchaser’s commercial lender, Commerce Bank, N. A., neitherthe execution or delivery of this Agreement nor Purchaser’s compliance with anyof the provisions hereof or its consummation of the transactions contemplatedhereby, will:

 

(a)                                  violate orconflict with any provision of its Certificate of Incorporation or Bylaws;

 

(b)                                 violate orresult, alone or with the passage of time, in the material breach ortermination of, or otherwise give any contracting party the right to terminateor declare a default under, the terms of any Material Agreement, document orundertaking, oral or written, to which Purchaser is a party, or by which it orany of its properties or assets may be bound (except for such violations,conflicts, breaches or defaults as to which required waivers or consents byother parties have been or, prior to Closing, will be obtained);

 

(c)                                  result in thecreation of any lien, security interest, charge or encumbrance upon any of theproperties or assets of Purchaser;

 

(d)                                 violate any judgment,order, injunction, decree, or award against or binding upon Purchaser, itsproperties or assets; or

 

(e)                                  violate any lawor regulation of any jurisdiction relating to Purchaser or any of itssecurities, assets or properties.

 

3.5                                 Brokers.  Purchaserhas not engaged, consented to, or authorized any broker, finder, investmentbanker or other third party to act on its behalf, directly or indirectly, as abroker or finder in connection with the transactions contemplated by thisAgreement, and Purchaser agrees to indemnify the Sellers against, and to holdthem harmless from, any claim for brokerage or similar commission or othercompensation, which may be made against any Sellers, or any of them, by anythird party in connection with the transactions contemplated hereby based uponany action by Purchaser.

 

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3.6                                 Value.  Indeciding to acquire the Shares for the Purchase Consideration, Purchaserrepresents and warrants that it has relied on its own financial, tax, businessand legal advisors and on the representations and warranties of Sellers andCompany in this Agreement.  Purchaser hasnot relied on any express or implied representation by Sellers or any otherperson or entity as to the value of the Shares.

 

3.7                                 SEC FilingsComplete.   Purchaser’s most recent Annual Reporton Form 10-K, all intervening 8-Ks and Form 10-Qs (if any), andPurchaser’s most recent annual meeting proxy statement (collectively, “**Purchaser****Disclosure Documents**”),all as filed with the Securities and Exchange Commission (“**SEC**”),and as of the time when any such Purchaser Disclosure Document was sofiled:  (a) did not contain amisstatement of a material fact or an omission of a material fact required tobe stated therein or necessary to make the statements therein not misleading;and (b) complied in all material respects with the requirements of theSecurities Exchange Act of 1934, as amended, as the case may be, and the rules andregulations of the SEC promulgated thereunder applicable to such documents.

 

3.8                                 Litigation.  Exceptas disclosed in the Purchaser Disclosure Documents, there is no action, suit,litigation, arbitration or other proceeding pending or, to the knowledge ofPurchaser threatened, against Purchaser or any of its subsidiaries which wouldhave a Material Adverse Effect on its properties, assets or business, or whichwould prevent or hinder the consummation of the transactions contemplated bythis Agreement or its obligations thereunder.

 

3.9                                 Generally.  ToPurchaser’s knowledge, no representation or warranty by Purchaser in theAgreement or in any exhibit, schedule or closing certificate furnished or to befurnished to Sellers pursuant to this Agreement or in connection with thetransactions contemplated hereby contains or will contain any untrue statementof a material fact, or omits or will omit to state a material fact, necessarilyto make the statements herein or therein, in light of the circumstances inwhich they were made, not misleading.

 

ARTICLE IV

**Covenants**

 

4.1                                           Access; DueDiligence Examination.  From the Effective Date throughthe Closing Date, the Sellers shall cause the Company to give Purchaser and itsauthorized representatives access upon reasonable notice during business hoursand in such manner as shall not unduly disrupt the Company’s normal businessactivities, to any and all premises, properties, contracts, commitments, books,records and affairs of the Company and shall cause its officers and employeesto furnish Purchaser any and all financial, technical and operating data, allaccounting and business records and all legal documents and other informationpertaining to the Company as Purchaser, its representatives and advisors, mayfrom time to time request to verify the existence, condition, value andownership of Seller’s assets, the amount, nature and scope of its liabilities,and the prospects of the Company (“**Due Diligence Information**”).  Purchaser shall be entitled to rely on theaccuracy of all Due Diligence Information. Purchaser shall also have the right to interview Seller’s key employees,customers and vendors/suppliers, and to review all customer credit historiesand profiles as Purchaser, its representatives and advisors may deem necessary.

 

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4.2                                           Pre-ClosingCovenants of Sellers and the Company.   Sellerscovenant and agree that from the Effective Date through the Closing Date theyshall not:

 

(a)                                  permit theCompany to conduct its business other than in the ordinary course consistent withpast practice;

 

(b)                                 permit theCompany, its employees, agents or representatives, directly or indirectly, tosolicit, encourage or participate in discussions concerning, or to supplyinformation relating to, any other sale of any material portion of the Company’sassets or capital stock; or

 

(c)                                  permit theCompany to make any distributions or payments of any kind to its shareholders,whether of operating profits or in payment of any debt due to any suchshareholder(s), or any interest thereon, other than normal salary payable forservices rendered.

 

4.3                                 Pre-ClosingCovenants of Purchaser.  Purchaser hereby covenants that,from and after the Execution Date until the Closing or the earlier terminationof this Agreement, Purchaser will use its best efforts to insure that all ofits representations and warranties contained herein are true in all materialrespects as of the Closing as if repeated at and as of such time. Purchasershall promptly notify the Seller of any event or fact constituting or which islikely to cause a breach or default of its covenants, representations orwarranties herein.

 

4.4                                           Confidentiality.  Atthe Closing, the Sellers shall execute and deliver to the Purchaser aConfidentiality Agreement in the form of Exhibit 4.4 heretoattached (“**Confidentiality Agreement**”)containing covenants prohibiting Sellers, for the period described therein (the“**Restricted Period**”) from disclosing anyconfidential or proprietary information of or concerning the Company to anythird party.

 

4.5                                 Retention of BusinessRecords.  For a period of six (6) years after the Closing, thePurchaser shall retain, or cause the Company to retain, all business records ofthe Company in its possession as of the Closing or otherwise relating toperiods prior to Closing.  Purchasershall afford Sellers and their authorized representatives access to suchrecords upon reasonable prior notice for any proper purpose.

 

4.6                                 Tax Covenants.  Priorto Closing none of the Sellers shall, without the prior written consent ofPurchaser, permit Company to make or change any election, change an annual taxaccounting period, adopt or change any tax accounting method, file any amendedreturn, enter into any closing agreement, settle any tax claim or assessment,surrender any right to claim a refund of taxes, consent to any extension orwaiver of the limitation period applicable to any tax claim or assessment, ortake any other action that may have the effect of increasing the tax liabilityof Purchaser or Company.  After theClosing Purchaser shall not, without the prior written consent of a majority ofthe Sellers (based on stock ownership), make or change any tax election, changean annual tax accounting period (except that Purchaser may change the Company’staxable year to a year ending October 31, commencing with the year ending October 31,2010), adopt or change any tax accounting method, file any amended return,enter into any closing agreements, settle any tax claim or assessment,surrender any right to claim a refund of taxes, consent to any extension orwaiver of the limitation period applicable to any tax claim or

 

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assessment, or take anyother action that may have the effect of increasing the tax liability of anySeller.

 

4.7                                 Tax Records.  Eachparty hereto shall provide, and shall cause its accountants and otherrepresentatives to provide, to the other parties on a timely basis, theinformation (including but not limited to all work papers and records) that theformer or its accountants or other representatives has or have within its ortheir control and that may be reasonably necessary in connection with thepreparation of any and all returns required to be filed by such other partiesor any other examination by any taxing authority or other administrative orjudicial proceeding relating to taxes of the Company or Purchaser.  Sellers and Purchaser shall retain or causeto be retained, until the applicable statutes of limitations (including anyextensions) have expired, copies of all tax returns for all taxable periods ofthe Company beginning before the Closing Date, together with supporting workschedules and other records or information that may be relevant to suchreturns.

 

ARTICLE V

**Conditions Precedent tothe**

**Obligation of Purchaser toClose**

 

The obligation of Purchaserto close is subject to the fulfillment, prior to or on the Closing Date, ofeach of the following conditions, any one or more of which may be waived inwriting by Sellers:

 

5.1                                 Representationsand Warranties.  All of the representations andwarranties of the Company and the Sellers contained in this Agreement and inany Exhibit, Schedule or certificate delivered to Purchaser pursuant hereto orin connection with the transactions contemplated hereby shall be true and correctin all material respects at the Closing and as of the Closing Date, with thesame force and effect as though such representations and warranties had beenmade on the Closing Date.

 

5.2                                 Covenants.  TheCompany and the Sellers shall have in all material respects performed andcomplied with all covenants and agreements required by this Agreement to beperformed or complied with by each of them prior to or at the Closing.

 

5.3                                 No Actions.  Noaction, suit, proceeding or investigation shall have been instituted, and becontinuing before a court or before or by a governmental body or agency, orshall have been threatened and be unresolved, to restrain or to prevent or toobtain damages in respect of, the carrying out of the transactions contemplatedhereby, or which, if successful, would materially affect the right of Purchaserto own the Shares, or which, if successful, would have a Material AdverseEffect on such right, the prospects or net worth of the Company, or the valueof the Shares.

 

5.4                                 Consents; Licensesand Permits.  The Company and the Sellers shall haveeach obtained all consents, licenses and permits of third parties to any of theMaterial Agreements and such other consents, if any, as shall, in Purchaser’ssole discretion be necessary (a) to prevent (i) any agreements of theCompany from terminating, the termination of which, in the aggregate, wouldhave a Material Adverse Effect on the business, financial condition or assetsof the

 

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Company, or (ii) anymaterial indebtedness of the Company from becoming due then, or with notice orthe passage of time as a result of the performance of this Agreement, or (b) toenable Sellers and the Company to perform all of their respective obligationsunder this Agreement.

 

5.5                               No MaterialChange.  There shall have been no Material Adverse Change in thefinancial condition of the Company or its business since the Base ValuationDate, the Company’s assets, liabilities and stockholders’ equity as of theClosing Date shall be, in Purchaser’s sole determination, substantially similarin amount and composition to such items as reported in the Base Value BalanceSheet and the Company’s net funded debt (i.e. amounts owed under bank lines ofcredit and notes payable, other than $95,000 for a disputed tax liabilityrepresented by a note payable, minus cash on hand) shall not exceed$450,000.

 

5.6                               Due Diligence.  Purchasershall have been afforded the access and due diligence opportunities set forthin Section 4.1 hereof and shall have completed its due diligenceexamination of the Company and the Due Diligence Information set forth therein,and found the Company and the Shares and the Acquisition contemplated hereby tobe in all respects entirely satisfactory to Purchaser and its legal counsel.

 

5.7                               Certificate.  Purchasershall have received a certificate in the form of Exhibit 5.7 heretoattached, dated as of the Closing Date and signed by Seller Wade Griffin andthe Company, verifying the satisfaction of the conditions set forth in Sections5.1 through 5.5.

 

5.8                               Employment ofKey Personnel. All employees of the Company identified byPurchaser as key to the successful continuation of the Company’s business,including but not limited to Sellers Art Evans and Lisa Oetken and also ChrisGriffin, shall have agreed to accept continued employment with the Company orPurchaser on terms satisfactory to Purchaser to be set forth in offers ofemployment to be conveyed by letter, including but not limited to       *      and non-solicitation provisions extending at least one (1) year after thelast payment of compensation thereunder (the “**EmploymentArrangements**”).

 

5.9                               Supplier/VendorRelationships; Consents.  Thenegotiation and execution of mutually acceptable extensions, as deemednecessary by Purchaser, of any and all contracts or agreements with all keysuppliers and vendors of the Company and the delivery of all customer and otherconsents determined by Purchaser to be necessary to maintain in force all ofthe Company’s existing contracts, leases and other agreements in light of thechange in the Company’s control to be effected by Purchaser’s acquisition ofthe Shares.

 

5.10                        Government andRegulatory Approvals; Lender Consents.  Receipt by XETA of all governmental approvalsand investor consents (if any), and compliance with all relevant government andthird-party registrations and notices (including those imposed by the SEC andNASDAQ) deemed necessary by Purchaser’s legal counsel to Purchaser’sacquisition of the Shares and its continued operation of the Company and itsbusiness after Closing, free of burdensome conditions or restrictions,including the consent of Commerce Bank, N. A.

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  The omitted material has beenfiled separately with the Securities and Exchange Commission pursuant to rule 24b-2of the rules to the Securities and Exchange Act of 1934, as amended.**

 

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5.11                        CapitalExpenditures.  The Companyshall have not incurred or made capital expenditures since the Base ValuationDate in the aggregate amount of more than$      *      .

 

5.12                        Opinion.  Purchasershall have been provided with an opinion from counsel to the Company stating,subject to customary qualifications and limitations, that:

 

(a)                                 The Company isduly organized, validly existing and in good standing under the laws of theState of Texas.  The Company has thecorporate power to carry on its business as now conducted and to own itsassets, and is duly qualified to conduct business and is in good standing as aforeign corporation in those jurisdictions set forth on Schedule 2.1.,which include all jurisdictions in which qualification is required in order forthe Company to own its assets or properties or to carry on its business as nowconducted, except as otherwise set forth in Schedule 2.1 or where thefailure to qualify would not have a Material Adverse Effect on the business ofthe Company, and, to such counsel’s knowledge, there has not been any claim byany other jurisdiction to the effect that the Company is required to qualify orotherwise be authorized to do business as a foreign corporation therein.

 

(b)                                 The authorizedcapital stock of the Company consists of 2,000,000 shares of which 1,000,000shares are common stock, and 1,000,000 shares are preferred stock.  There are no shares of Preferred Stock issuedand outstanding. There are 695,000 shares of common stock issued and outstanding,as follows:

 
| Wade Griffin  |   | 275,000 shares |   |
|---------------|--------|----------------|--------|
| Allan Sanders |   | 265,000 shares |   |
| Lisa Oetken   |   | 45,000 shares  |   |
| Tracy Taylor  |   | 45,000 shares  |   |
| David Hagen   |   | 35,000 shares  |   |
| Art Evans     |   | 30,000 shares  |   |

 

All of such outstandingshares are validly issued, fully paid and non-assessable.  To counsel’s knowledge, there are nosubscriptions, options, warrants, rights or calls or other commitments oragreements to which the Company or the Seller is a party or by which suchpersons are bound, calling for the issuance, transfer, sale or otherdisposition of any class of securities of the Company other than the Buy-SellAgreement. To counsel’s knowledge, there are no outstanding securities of theCompany convertible or exchangeable, actually or contingently, into shares of CommonStock, or any other securities, of the Company.

 

(c)                                  The Company hasall requisite corporate power and authority to execute, deliver, and performthis Agreement to the extent of its joinder herein.  The execution and delivery of the Agreementhave been duly and validly authorized by all requisite corporate action takenon the part of the Company, and its directors, and no other corporateproceeding on the part of the Company, its directors or its shareholders is 

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  The omitted material has beenfiled separately with the Securities and Exchange Commission pursuant torule 24b-2 of the rules to the Securities and Exchange Act of 1934,as amended.**

 

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necessary to authorize theCompany’s execution, delivery and performance of the Agreement.

 

(d)                                 The Agreementhas been duly executed and delivered by the Company, and constitutes the validand binding obligation of the Company, to the extent of its joinder herein,enforceable against the Company in accordance with its terms.

 

(e)                                  The Company’sexecution, delivery, and performance of the Agreement will not violate orresult in a breach of any term of the Company’s Articles of Incorporation orBylaws, and to counsel’s knowledge, the Company’s execution and delivery of theAgreement will not result in a breach of any instrument, permit, license oragreement of which the Company is a beneficiary or to which it is a party.

 

(f)                                   To counsel’sknowledge, the Company’s execution and delivery of the Agreement does notviolate any applicable law, statute, rule, or regulation of the United Statesor State of Texas, nor, to counsel’s knowledge, any injunction, order, ordecree of any court or governmental agency or authority binding upon theCompany and to counsel’s knowledge the Acquisition, if consummated, will notviolate of any such law, statue, rule or regulation to which the Sellersor the Company are subject.

 

(g)                                  To counsel’sknowledge, except as otherwise set forth in Schedule 2.15 to theAgreement, there is not now pending any suit, action, claim, investigation,arbitration, administrative or legal or other proceeding or governmentalinquiry of any kind against or relating to the Company which could have aMaterial Adverse Effect on the Company, nor, to such counsel’s knowledge, hasany such suit, action, claim, investigation, arbitration or administrative,judicial or other proceeding or governmental inquiry been threatened involving,the Company, nor has the Company consulted with such counsel with a view toobtaining substantive legal advice with respect to any such matter.

 

(h)                                 To such counsel’sknowledge, the Company has not been cited for any violation or violations ofany order, writ, injunction, judgment or decree of any court or federal, stateor local government department, official, commission, authority, board, bureau,agency or other instrumentality, which has been issued or is pending against,and which could have a Material Adverse Effect on, the Company; and counsel hasno knowledge of, nor has such counsel been consulted by the Company with a viewto obtaining substantive legal advice, with regard to any matter involving, theviolation or alleged violation of any law by the Company, which violation oralleged violation, if proven, would likely have a Material Adverse Effect onthe Company.

 

(i)                                     Each Seller hasfull power and authority to enter into and perform such Seller’s obligationsunder the Agreement. The Agreement is a legal, valid and binding obligation ofsuch Seller, and enforceable against such Seller in accordance with its terms,except as such enforceability may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws affecting the rights of creditorsgenerally.

 

When any of such counsel’s opinions shall be qualified “to such counsel’sknowledge,” the opinion may provide that is limited to the actual knowledge ofthe individual lawyers in the firm rendering such opinion based upon reasonableinvestigation of the facts or in reasonable reliance upon representations madeby the Sellers in this Agreement or in statements and certifications 

 

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duly obtained, when counsel has deemed it to be necessary, from publicofficials and officers of the Company.

 

5.13                        NoContingencies or Litigation.  There shall exist no contingency or anythreatened or pending litigation which could, in Purchaser’s reasonablejudgment, have a Material Adverse Effect on the Company or its business, or theconsummation of the Acquisition.

 

5.14                        Termination ofBuy-Sell Agreement.  The Companyand the Sellers shall have executed and delivered a written termination ofBuy-Sell Agreement and provided Purchaser with a copy of such termination.

 

5.15                        Non-Competitionand Consulting Agreements.  At the Closing, Seller WadeGriffin shall have executed and delivered the Non-Compete Agreement and awritten consulting agreement in the form of Exhibit 5.15 heretoattached (“**Consulting Agreement**”) extendingfor a term of      *       afterthe Closing Date pursuant to which Mr. Griffin agrees to make himselfavailable to the Company, if an as requested, for      *       ofongoing consulting      *       in considerationof Purchaser’s agreement to pay, or cause the Company to pay, Mr. Griffina consulting fee in the sum of      *      .       *      .

 

5.16                        2009 Tax Return.  Sellers shall cause the Company to providePurchaser with a final draft of its 2009 Tax Return prior to its filing withthe IRS and shall Purchaser five (5) business days to review the finaldraft prior to its filing with the IRS. The 2009 Tax Return shall have been filed with the IRS as a conditionprecedent to Purchaser’s obligation to close.

 

5.17                        Board Approval.  Purchasershall have determined, after consultation with its legal counsel, that therisks associated with asserted and unasserted claims and contingencies relativeto the Company and its business are acceptable and the consummation of theAcquisition pursuant to this Agreement shall have been approved by Purchaser’sBoard of Directors.

 

5.18                        AdditionalDocuments.  The Sellers and the Company shall havedelivered all such other certificates and documents consistent with this Agreementas Purchaser or its counsel shall have reasonably requested, together with alldisclosure schedules and any exception schedules desired by Sellers, whichschedules (hereinafter referred to, collectively, as the “**Schedules**”)shall be satisfactory to Purchaser in form and content.

 

ARTICLE VI

**Conditions Precedent tothe Obligation of Sellers to Close**

 

The Sellers’ obligation toclose is subject to the fulfillment, prior to or on the Closing Date, of eachof the following conditions, any one or more of which may be waived in writingby the Purchaser:

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  The omitted material has beenfiled separately with the Securities and Exchange Commission pursuant torule 24b-2 of the rules to the Securities and Exchange Act of 1934,as amended.**

 

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6.1                               Representationsand Warranties.  All representations and warranties ofPurchaser contained in this Agreement and in any Exhibit, Schedule orcertificate delivered pursuant hereto or in connection with the transactionscontemplated hereby shall be true and correct in all material respects at theClosing and as of the Closing Date, with the same force and effect as thoughsuch representations and warranties had been made on the Closing Date.

 

6.2                               Covenants.  Purchasershall have performed and complied in all material respects with all covenantsand agreements required by this Agreement to be performed or complied with byit prior to or at the Closing.

 

6.3                               No Actions.  Noaction, suit, proceeding or investigation shall have been instituted, and becontinuing, before a court or before or by a governmental body or agency, orshall have been threatened, and be unresolved, by any governmental body oragency to restrain or prevent, or obtain damages in respect of, the carryingout of the Acquisition.

 

6.4                                         Certificate.  TheSellers shall have received a certificate in the form annexed hereto as Exhibit 6.4dated as of the Closing Date, signed by the Purchaser verifying thesatisfaction of the conditions contained in Sections 6.1 through 6.3.

 

6.5                                         Release ofPersonal Liability on Company Debt. Purchaser shall haveeither (i) paid off all existing bank loans of the Company, or (ii) otherwiseobtained the release of the personal guarantees of Sellers of such bankindebtedness.  In addition, Purchasershall have either (a) obtained the release of any personal guaranty ofSellers of any lease or other contract or agreement to which the Company is aparty and which has been personally guaranteed by one or more Sellers, or (b) shallhave given the Sellers indemnification from such liability.

 

6.6                                         AdditionalDocuments.  Purchaser shall have delivered toSellers all such other certificates and documents consistent with thisAgreement as Sellers or their counsel shall have reasonably requested.

 

ARTICLE VII

**Closing**

 

7.1                               The Closing.  The closing of the sale and acquisition ofthe Shares contemplated by this Agreement (the “**Closing**”)shall occur upon satisfaction of all of the conditions precedent to theobligations of the parties to close as set forth in Articles V and VIand upon the delivery by the parties of all of the items to be delivered bythem pursuant to Sections 7.3 and 7.4 hereof.

 

7.2                               Location, Timeand Date.  The Closing shall be held in theoffices of Barber & Bartz, 525 South Main Street, Suite 800,Tulsa, Oklahoma, 74103, at 10:00 o’clock a.m. on July 30, 2010,subject to postponement by Purchaser as may be reasonably necessary to satisfythe conditions precedent to Purchaser’s obligation to close hereunder, or atsuch other time and place as may be actually agreed to by the partieshereto.  (The date on which the Closingshall occur is referred to in this Agreement as the “**Closing Date**”).

 

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7.3                               Sellers’Deliveries.  At the Closing, the Sellers willdeliver or cause to be delivered to Purchaser:

 

(a)                                 All originalcertificates representing the Shares, constituting all of the issued andoutstanding shares of the Company immediately prior to the Closing, dulyendorsed by the registered owner(s) thereof;

 

(b)                                 The EscrowAgreement;

 

(c)                                  The GoodwillAcquisition Agreement and the Non-Competition Agreement;

 

(d)                                 The EmploymentArrangements, including non-solicitation agreement from Lisa Oetken, Art Evansand Chris Griffin and the Consulting Agreement with Wade Griffin;

 

(e)                                  TheConfidentiality Agreement;

 

(f)                                   The certificaterequired by Section 5.7;

 

(g)                                  The opinion ofcounsel required by Section 5.12;

 

(h)                                 Each Seller’sresignation as a director and officer of the Company, to the extent requestedby Purchaser; and

 

(i)                                     Such othercertified resolutions, releases, documents, Schedules and certificates, as arerequired to be delivered by any Seller and/or the Company pursuant to theprovisions of this Agreement.

 

7.4                               Purchaser’sDeliveries.  At the Closing, Purchaser will deliveror cause to be delivered to the applicable Seller or Sellers:

 

(a)                                 The CashPortion of the Purchase Consideration and promissory notes contemplated by Sections1.3(b), less the Escrow Amount (which shall be deposited into escrow with aTriad Bank, N. A. pursuant to the Escrow Agreement;

 

(b)                                 The EscrowAgreement;

 

(c)                                  The GoodwillAcquisition Agreement, the Non-Competition Agreement and the ConsultingAgreement;

 

(d)                                 The offers ofemployment in connection with the Employment Arrangements;

 

(e)                                  The certificaterequired by Section 6.4; and

 

(f)                                   Such othercertified resolutions, documents and certificates as are required to bedelivered by Purchaser pursuant to the provisions of this Agreement.

 

7.5                               Transfer ofPossession.  As of the Closing Date, the Sellersshall give Purchaser full possession and ownership of the Shares.

 

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ARTICLE VIII

**Survival of Representations; Indemnification**

 

8.1                               Survival.  Theparties hereto agree that their respective representations, warranties,covenants, and agreements contained herein shall survive the Closing for aperiod of two (2) years after the Closing Date except that thosecovenants, representatives and warranties made by the Sellers and/or theCompany in Section 2.7 shall survive for three (3) years afterthe Closing Date and that those made by them with respect to Taxes, Employee BenefitPlans and Environmental Matters (Sections 2.12, 2.25, and 2.30)shall survive the Closing for such periods of time that the government agencieshaving jurisdiction over the subject matter of those covenants, representationsand warranties may be empowered to assess a liability or deficiency withrespect to any of the matters covered thereby (the “**IndemnificationPeriod**”).

 

8.2                               Indemnificationby Sellers.  Subject to the other provisions of thisArticle VIII, each of the Sellers agrees to save and indemnifyPurchaser against, and hold it harmless from, (a) any and all liabilities,of every kind, nature and description, fixed or contingent, including withoutlimitation reasonable attorney fees and expenses incurred in connection withany action, claim or proceeding relating to such liabilities (“**Damages**”), arising from the breach of any of such Seller’srepresentations, warranties, covenants or agreements contained herein or in theSchedules hereto, a claim for which is asserted in writing by Purchaser duringthe Indemnification Period and (b) any indebtedness and liability forsales taxes, penalties and interest (“**Sales Tax Claims**”)owed or hereafter to be owed to the State of New Mexico or any other state inwhich the Company has done business with in the past three (3) years withrespect to business transacted by the Company prior to the Closing Date  (collectively, “**PurchaserClaims**”).

 

8.3                               Indemnificationby Purchaser.  Purchaser agrees to save and indemnifythe Sellers against, and to hold them harmless from, any and all Damagesarising from the breach of any of Purchaser’s representations, warranties,covenants or agreements contained herein or the Exhibits hereto, a claim forwhich is asserted in writing by a majority of the Sellers during the applicableIndemnification Period (“**Sellers Claims**”).

 

8.4                               Limitation of Liability.  The indemnification obligations of theparties pursuant to this Article VIII shall be subject to thefollowing limitations and conditions:

 

(a)                                 Noindemnification shall be required to be made by Sellers pursuant to this Article VIIIwith respect to any Purchaser Claims, unless and until the aggregate amount ofDamages incurred by Purchaser with respect to all Purchaser Claims, includingPurchaser Claims cut off by certain of the limitations periods set forth in Section 8.1hereof,

 

exceeds$      *      ,provided that any claims asserted against Purchaser or the Company after theClosing Date for Sellers’ unpaid attorney’s fees or brokerage fees, if any,incurred in connection with the negotiation and consummation of thetransactions contemplated by this Agreement or for unpaid taxes for periodsending on or before the 

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidential treatment.  The omitted material has been filed separatelywith the Securities and Exchange Commission pursuant to rule 24b-2 of therules to the Securities and Exchange Act of 1934, as amended.**

 

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Closing Date, including but not limited to any Sales Tax Claims, shallnot be subject to the foregoing$      *      threshold amount.

 

(b)                                 Noindemnification shall be required to be made by Purchaser pursuant to this Article VIIIwith respect to any Sellers Claims, unless and until the aggregate amount ofDamages incurred by the Sellers with respect to all Sellers Claims exceeds$      *      .

 

(c)                                        *      .

 

(d)                                 Theindemnification obligations of Seller and Purchaser pursuant to this Article VIIIshall be limited to actual damages and shall not include incidental,consequential, indirect, or (except on grounds of fraud or reckless disregard)punitive or exemplary damages; provided, however, for purposes of thisAgreement, actual Damages shall include incidental, consequential, indirect,punitive or exemplary damages awarded against an indemnified party by a courtof competent jurisdiction or pursuant to binding arbitration to a third-party(other than a party claiming through the party seeking indemnification hereunder).

 

(e)                                  Notwithstandinganything to the contrary herein, the maximum aggregate indemnificationobligation of Sellers pursuant to this Article VIII shall belimited with respect to Purchaser Claims other than Sales Tax Claims asfollows:

 

(i)                                     *      ,

 

(ii)                                  *      ,and

 

(iii)                               *      .

 

8.5                               Claims.  Allclaims for Damages shall be computed net of the present value of all readilyascertainable future tax benefits associated therewith.  No claim shall be made for matters adequatelycovered by insurance.

 

8.6                               Defense ofClaims.  Each party asserting a right to indemnification under thisArticle VIII (the “**Asserting Party**”)agrees to notify the party putatively required to provide indemnification (the “**Responding Party**”) with reasonable promptness of any claimasserted against it in respect of which the Responding Party may be liableunder this Agreement, which notification shall be accompanied by a writtenstatement setting forth the basis of such claim and the manner of calculationthereof.  The Responding Party shall havethe right, at its election, to defend or compromise any such claim at its ownexpense with counsel of its choice; provided, however, that (i) suchcounsel shall have been approved by the Asserting Party, which approval shallnot be unreasonably withheld or delayed; (ii) the Asserting Party mayparticipate in such defense if it so chooses with its own counsel and at itsown expense; and (iii) any such defense or compromise shall be conductedin a manner which is reasonable and not prejudicial to the Asserting Party’sinterest in such matter.  In the eventthe Responding Party does not undertake to defend or compromise the claim, theResponding Party shall promptly notify the Asserting Party of its intention notto undertake to defend or compromise the claim, and the Responding Party shallbe bound by (a) the final decree of any court of competent jurisdictiondeciding the validity and amount of the claim asserted against the AssertingParty, and (b) any compromise of 

 

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***The asterisk (*) indicates thatmaterial has been omitted pursuant to a request for confidentialtreatment.  The omitted material has beenfiled separately with the Securities and Exchange Commission pursuant torule 24b-2 of the rules to the Securities and Exchange Act of 1934,as amended.**

 

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such claim made with theprior consent of the Responding Party, which shall not be unreasonably withheldor delayed.

 

8.7                               Extension ofTime.  To the extent that an Asserting Party delivers writtennotice of a claim for Damages against a Responding Party prior to theexpiration of the applicable Indemnification Period, reasonably identifying thebasis for the claim and the amount of any reasonably ascertainable Damages, theapplicable Indemnification Period shall be extended for such claim until suchclaim is resolved by a Final Determination, subject to the limitationshereinabove provided.

 

8.8                               FinalDetermination.  For the purposes of this Agreement, a “**Final Determination**” shall exist when (i) the partiesagree in writing upon the amount, or (ii) a court of competentjurisdiction shall have made a determination on the merits with respect theretoand appeal therefrom shall not have been taken within a timely fashion from thedate of such determination. The indemnified party will assign to the partyproviding indemnification any claims against which the indemnified party hasbeen indemnified and paid as provided herein, as to which there may be claimsagainst persons other than the Company, and the party providing indemnificationshall in all respects be subrogated to the rights of the indemnified party inconnection therewith.

 

8.9                               ExclusiveRemedy After Closing. Except as hereinafter set forth in this Section 8.9,as a material inducement to Sellers and Purchaser to enter into this Agreementand perform their respective obligations hereunder, each party hereby agreesand acknowledges on behalf of itself and its respective heirs, personalrepresentatives, successors and assigns, that, in relation to any breach,default or nonperformance of any representation, warranty, covenant oragreement made or entered into by a party hereto pursuant to this Agreement (a “**Breaching Party**”), the sole and exclusive remedy availableto the aggrieved party after the Closing Date in respect of said breach,default or nonperformance shall be to seek indemnification from the BreachingParty to the extent properly claimable and limited pursuant to the provisionsof this Article VIII. Notwithstanding the preceding, nothingcontained herein shall limit the remedies of Purchaser in the event of thefraud of any Seller or Purchaser’s right to seek injunctive relief for a Seller’sbreach of the confidentiality provisions of this Agreement, nor shall theprovision of this Article VIII supersede or impair Purchaser’sright to exercise any available right of offset against any of its ownobligations arising pursuant to this Agreement or any instruments or agreemententered into by Purchaser with the Sellers or any of them pursuant to thisAgreement; provided that payments, if any, not made to Sellers, or any of them,by reason of this provision shall be made into an escrow account established atthe time for receipt of such funds pending a Final Determination under Section 8.8.  Notwithstanding the preceding, in the eventthere is a default under the Subordinated Notes, the provisions of Article VIIIshall not apply to the Subordinated Note(s) and the remedies for a defaultunder the Subordinated Note(s) shall be governed by the provisions of theSubordinated Notes.

 

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ARTICLE IX

**Termination and Waiver**

 

9.1                               Termination.  Anythingherein or elsewhere to the contrary notwithstanding, this Agreement may beterminated and the transactions provided for herein abandoned at any time priorto the Closing Date:

 

(a)                                 By mutualconsent of the parties;

 

(b)                                 By Purchaserif, through no fault of Purchaser, any of the conditions set forth in Article Vor deliveries set forth in Section 7.3 hereof shall not have beenfulfilled on or prior to July 30, 2010, or shall become incapable offulfillment, and shall not have been waived;

 

(c)                                  By a majorityof the Sellers if, through no fault of the Sellers, any of the conditions setforth in Article VI or deliveries set forth in Section 7.4hereof shall not have been fulfilled on or prior to July 30, 2010, orshall have become incapable of fulfillment, and shall not have been waived; or

 

(d)                                 By eitherparty, if any legal action or proceeding shall have been instituted orthreatened seeking to restrain, prohibit, invalidate or otherwise affect theconsummation of the transactions contemplated by this Agreement which makes itinadvisable, in the judgment of such party, to consummate same.

 

If terminated as describedabove, this Agreement shall terminate, without any liability or obligation onthe part of either party hereto to proceed to the Closing, except for anyliability (i) arising from a breach prior to or in connection with suchtermination, or (ii) under any covenant that survives termination.  

 

9.2                               Waivers.  Anycondition to performance by the Seller or Purchaser which may be legally waivedon or before the Closing Date may be waived by the party entitled to thebenefit of such condition by duly authorized instrument in writing executed bythe waiving party.  The failure of anyparty at any time or times to require performance of any provision hereof shallnot affect or impair the right of such party to require such performance at alater time.  No waiver of any nature,whether by conduct or otherwise, in any one or more instances, shall beconstrued as, or be deemed to be, a further or continuing waiver either of anysuch condition or of any breach of any other term, covenant, representation orwarranty contained in this Agreement.

 

ARTICLE X

**Miscellaneous Provisions**

 

10.1                        Expenses.  Eachparty shall bear its own legal, accounting and other professional fees, costsand expenses incurred in connection with this Agreement and the transactionshereby intended to be effected.

 

10.2                        ConfidentialInformation.  Each party agrees that it and itsrepresentatives shall hold in strict confidence, and shall not divulge ordisclose to any person without a need to know, any information and documentsreceived from the other party and, if the transactions herein contemplated arenot consummated, each party will continue to hold such information anddocuments in strict confidence and shall return to such other party all suchdocuments then in

 

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such receiving party’spossession (including the Exhibits and Schedules to this Agreement) withoutretaining copies thereof; provided, that each party’s obligations underthis Section 10.2 to maintain such confidentiality shall not apply to anyinformation or documents that are in the public domain when furnished by theother or to be disclosed required by applicable law.  In the event of a breach or threatened breachunder this Section 10.2, the parties to this Agreement acknowledgethat the person harmed or threatened to be harmed thereby will not have anadequate remedy at law, and shall be entitled to such equitable and injunctiverelief as may be available to restrain such breach; provided, thatnothing herein shall be construed as prohibiting such person from pursuing anyother remedies available for such breach or threatened breach, including therecovery of damages.

 

10.3         Publicity.  Sellersand Purchaser each agree that, without the written consent of the other,neither will independently issue a press release or otherwise publicly disclosethe nature or existence of the transactions contemplated by this Agreement(including but not limited to the Purchase Consideration) except as may berequired by law.  Any public announcementof this stock purchase will be made by Purchaser and Sellers jointly andsimultaneously, and the wording of any such announcement will be mutuallyagreed upon unless, in the reasonable judgment of counsel for Purchaser, anylaws, rules or regulations to which Purchaser is subject (including the rules ofNASDAQ and of the U.S. Securities and Exchange Commission) mandate otherwording, in which event such other laws, rules or regulations asinterpreted by Purchaser and its counsel shall control; provided, however, thatfrom and after the Closing, Purchaser shall be entitled to issue press releasesor otherwise publicly disclose its acquisition of the Company.

 

10.4         Modification orWaiver.  This Agreement may be amended, modified or superseded, andany of the terms, covenants, representations, warranties or conditions hereofmay be waived, only by a written instrument executed by both parties.  The failure of any party at any time or timesto require performance of any provision hereof shall in no manner affect theright of such party at a later time to enforce the same.

 

10.5         Notices.  Anynotice or other communication required or which may be given hereunder shall bein writing and shall be either (a) delivered personally, (b) sent byU. S. Mail, certified or registered mail with postage prepaid, return receiptrequested, or by overnight courier service with shipping fees prepaid, receiptrequested, or (c) transmitted by telefacsimile to a telephone number as towhich the intended recipient notifies the other.  Notice shall be deemed given when sodelivered personally, or if mailed or sent by courier service, five (5) daysafter the date of mailing or deposited with the courier service, addressed asfollows:

 
| If to Purchaser, to: | XETA Technologies, Inc.   |
|----------------------|--------------------------------|
|                 | 1814 West Tacoma               |
|                 | Broken Arrow, OK 74012         |
|                 | Attn:                          | Greg Forrest, President |
|                 |                           | and Chief Executive  Officer |
|                 |                           |
| With a copy to:      | Barber and Bartz               |
|                 | 525 South Main, Suite 800 |
|                 | Tulsa, OK 74103-4511           |
|                 | Attn:                          | Robert L. Bearer, Esquire |

 

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| If to the Sellers: | Wade Griffin, Allan Sanders,                |
|--------------------|---------------------------------------------|
|               | Lisa Oetken, Tracy Taylor, David Hagen      |
|               | and Art Evans                               |
|               | c/o Wade Griffin                            |
|               | 170 East Kings Road                         |
|               | Double Oak TX 75077                         |
|               |                                        |
| With a copy to:    | Snell Wylie & Tibbals, P.C.        |
|               | 8150 N. Central Expressway, Suite 1800 |
|               | Dallas, Texas 75206                         |
|               | Attn: William F. Pyne, Esquire              |

 

If notice is provided byfacsimile it shall be deemed given upon confirmation of transmission. Eitherparty may change the person and/or address to which notices or othercommunications are to be sent by giving written notice of any such change tothe other in the manner herein provided.

 

10.6         Binding Effectand Assignment.  This Agreement shall be binding uponand inure to the benefit of the successors and assigns of the parties hereto;provided, however, that no voluntary assignment of any rights or delegation ofany obligations provided for herein may be made by any party without theexpress written consent of the other.

 

10.7         Exhibits andSchedules.  All exhibits hereto (the “**Exhibits**”) and all Schedules annexed hereto or thereto at orprior to Closing are expressly made a part of this Agreement as fully as thoughcompletely set forth herein, and all references to this Agreement herein or inany of such Exhibits or Schedules shall be deemed to refer to and include allsuch Exhibits and Schedules.

 

10.8         EntireAgreement.  This Agreement represents the entireunderstanding and agreement between the parties with respect to the subjectmatter hereof, and supersedes all of the negotiations, understandings andrepresentations (if any) made by and between such parties.

 

10.9         Governing Law.  ThisAgreement shall be construed and enforced in accordance with the local laws ofthe State of Oklahoma applicable to agreements to be executed and performedwholly within said State without giving effect to its conflicts of lawprovisions.  The parties further agreethat in any dispute between them relating to this Agreement, jurisdiction andvenue shall lie solely in the trial courts located within Tulsa County, Oklahomaor Dallas County, Texas, at the election of the party plaintiff, any objectionsas to jurisdiction or venue in such court being expressly waived.

 

10.10       Section Headings.  Thesection headings contained in this Agreement are inserted for convenience ofreference only and shall not affect the meaning or interpretation of thisAgreement.

 

10.11       Gender.  Wordsof the masculine gender in this Agreement shall be deemed and construed toinclude correlative words of the feminine and neuter genders and words of the

 

31

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neuter gender shall bedeemed and construed to include correlative words of the masculine and femininegenders.

 

10.12       Severability.  Theinvalidity or unenforceability of any term or provision of this Agreement shallin no way impair or affect the balance thereof, which shall remain in fullforce and effect.

 

10.13       Attorney Fees.  Inthe event of any litigation or controversy arising out of or in connection withthis Agreement between the parties hereto, the prevailing party in suchlitigation or controversy shall be entitled to recover from the other party allreasonable attorney fees, expenses and suit costs, including those associatedwith any appellate or post-judgment collection proceeding.

 

10.14       Counterparts.  ThisAgreement may be executed in counterparts, each of which shall be deemed to bean original, but which together shall constitute one and the same instrument.

 

10.15       Recitals.  Therecitals set forth at the beginning of this Agreement are true and correct andincorporated by reference into the body of this Agreement.

 

10.16       EquitableRelief*.*  Each party recognizes that the other islikely to suffer irreparable damage if the provisions of Sections 10.2or 10.3 are not specifically enforced. In the event of a dispute concerning any of these sections, each partyagrees that the other may, without posting bond or security, obtain antemporary or permanent injunction restraining the consummation of any action ortransaction prohibited thereby pending determination of such dispute.  The provisions of Sections 10.2 and 10.3shall likewise be enforceable by a decree of specific performance.  In the event of litigation relating to suchprovisions, if the court determines that either party or any of its employees,agents or representatives has breached any thereof, the injured party shall beentitled to recover from the breaching party its reasonable fees, costs, andexpenses (including attorney fees) incurred in connection with the negotiationof this Agreement, any related due diligence review, and/or the prosecution ofany equitable or legal proceedings and any appeal therefrom.

 

10.17       Definitions.  Capitalized terms used in this Agreementshall have the following meanings:

 

“**Acquisition**” has the meaning set forthin Section 1.1.

 

“**Adjusted Purchase Consideration**” hasthe meaning set forth in Section 8.4(e).

 

“**Asserting Party**” has the meaning setforth in Section 8.5.

 

“**Base Valuation Date**” means May 31,2010.

 

“**Base Value Balance Sheet**” means theCompany’s Balance Sheet dated as of the Base Valuation Date.

 

“**Buy-Sell Agreement**” has the meaning setforth in Section 2.2.

 

32

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“**Cash Portion of the Purchase Consideration**”has the meaning set forth in Section 1.3(a).

 

“**CERCLA**” has the meaning set forth in Section 2.30.

 

“**Closing**” has the meaning set forth in Section 7.1.

 

“**Closing Date**” has the meaning set forthin Section 7.2.

 

“**Closing Date Financial Statements**” hasthe meaning set forth in Section 1.2.

 

“**Commonly Controlled Entity**” has themeaning set forth in Section 2.25.7.

 

“**Confidentiality Agreement**” has themeaning set forth in Section 4.4.

 

“**Consulting Agreement**” has the meaningset forth in Section 5.13.

 

“**Damages**” has the meaning set forth in Section 8.2.

 

“**Due Diligence Information**” has themeaning set forth in Section 4.1.

 

“**Employment Arrangements**” has themeaning set forth in Section 5.8.

 

“**Environmental Law**” has the meaning setforth in Section 2.30(iii).

 

“**ERISA**” has the meaning set forth in Section 2.25.

 

“**Escrow Agreement**” has the meaning setforth in Section 1.3(a).

 

“**Escrow Amount**” has the meaning setforth in Section 1.3(a).

 

“**Evaluator**” has the meaning set forth inSection 1.5(c).

 

“**Exhibits**” has the meaning set forth in Section 10.7.

 

“**Final Determination**” has the meaningset forth in Section 8.8.

 

“**GAAP**” means generally acceptedaccounting principles applied on a basis consistent with prior periods.

 

“**Goodwill Acquisition Agreement**” has themeaning set forth in Section 1.4.

 

“**Griffin Agreements**” has the meaning setforth in Section 1.4

 

“**Hazardous Materials**” has the meaningset forth in Section 2.30(ii).

 

“**Hazardous Materials Liabilities**” hasthe meaning set forth in Section 2.30(i).

 

“**Indemnification Period**” has the meaningset forth in Section 8.1.

 

“**Labor Agreements**” has the meaning setforth in Section 2.28.

 

“**Leases**” has the meaning set forth in Section 2.16.

 

“**Material Adverse Change**” or “**Material Adverse Effect**” means any result, occurrence, fact,change, event or effect that has, or could reasonably be expected to (a) have,an adverse effect in the amount of $50,000 or more on the business, assets,results of operations, or condition (financial or otherwise) of the Company orPurchaser, as the case may be (the “**Adversely Affected Party**”),or (b) otherwise materially impair the

 

33

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Adversely Affected Party’sability to perform its obligations under this Agreement on a timely basisunless such change or event is due to causes beyond the Adversely AffectedParty’s reasonable control, including changes in (i) general economicconditions, (ii) the industries or markets in which the Adversely AffectedParty operates and (ii) applicable laws or accounting rules orprinciples.

 

“**Material Agreements**” has the meaningset forth in Section 2.17.

 

“**Non-Competition Agreement**” has themeaning set forth in Section 1.4.

 

“**PCBs**” has the meaning set forth in Section 2.30.

 

“**Property**” has the meaning set forth in Section 2.16.

 

“**Purchase Consideration**” has the meaningset forth in Section 1.3.

 

“**Purchase Consideration Offset Claim**”has the meaning set forth in Section 1.5(b)(ii).

 

“**Purchaser Disclosure Documents**” has themeaning set forth in Section 3.7.

 

“**Purchaser’s Accountant**” meansHoganTaylor, LLP.

 

“**Responding Party**” has the meaning setforth in Section 8.5.

 

“**Restricted Period**” has the meaning setforth in Section 4.4.

 

“**Review Period**” has the meaning setforth in Section 1.5(a).

 

“**Schedules**” has the meaning set forth inSection 5.18.

 

“**Sellers’ Accountant**” has the meaningset forth in Section 1.2.

 

“**SEC**” has the meaning set forth in Section 3.7.

 

“**Structures**” has the meaning set forthin Section 2.16.

 

“**Subordinated Notes**” has the meaning setforth in Section 1.3(b).

 

“**Subsidiaries**” has the meaning set forthin Section 2.3.

 

“**2009 Tax Return**” has the meaningassigned in Section 2.17.

 

[*Remainder of the page left blankintentionally.*

*Signatures appear on following page*.]

 

34

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IN WITNESS WHEREOF, the partieshave executed this Agreement as of the date first above written.

 
| “Sellers”                           |                    | “Purchaser”            |
|-----------------------------------------------|-------------------------|----------------------------------|
|                                          |                    |                             |
| /s/ Wade Griffin                              |                    | **XETA TECHNOLOGIES, INC.** |
| **Wade Griffin**                              |                    |                             |
|                                          |                    |                             |   |
| /s/ Allan Sanders                             |                    | By                               | /s/ Greg Forrest |
| **Allan Sanders**                             |                    |                             | Greg Forrest, President and |
|                                          |                    |                             | Chief Executive Officer |
| /s/ Lisa Oetken                               |                    |                             |
| **Lisa Oetken**                               |                    |                             |
|                                          |                    |                             |
| /s/ Tracy Taylor                              |                    |                             |
| **Tracy Taylor**                              |                    |                             |
|                                          |                    |                             |
| /s/ David Hagen                               |                    |                             |
| **David Hagen**                               |                    |                             |
|                                          |                    |                             |
| /s/ Art Evans                                 |                    |                             |
| **Art Evans**                                 |                    |                             |
|                                          |                    |                             |
| “Company”                           |                    |                             |
|                                          |                    |                             |
| **PYRAMID COMMUNICATION SERVICES, INC.** |                    |                             |
|                                          |                    |                             |
|                                          |                    |                             |   |
| By                                            | /s/ Wade Griffin        |                             |   |
|                                          | Wade Griffin, President |                             |   |

 

[*Remainder of page leftblank intentionally.*

*Consents of Spouses appear on following page*.]

 

35

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**CONSENT AND AGREEMENT OF SPOUSES**

 

We, the undersigned, do severally certify that we are the respectivespouses of Sellers, being all of the shareholders of Pyramid CommunicationServices, Inc. (the “**Company**”),which said Sellers entered into and signed the foregoing Stock PurchaseAgreement (the “**Agreement**”).  Each of us has read the Agreement and theexhibits thereto, and we understand their respective provisions, purposes andeffect.

 

We acknowledge that we have been advised by Purchaser and ourrespective spouse to engage separate legal counsel to review the Agreement onour behalf, that we have been adequately advised as to the legal ramificationsand effects of entering into the Agreement, and that we are doing so with fullknowledge and of our own free will and volition.

 

We severally approve and consent to the foregoing Agreement and theexhibits thereto and the sale of the Company Shares upon the terms andconditions set forth in the Agreement. We disclaim any ownership interest, whether legal or beneficial, eitherin the Shares or the assets of the Company other than to the extent of ourrespective community property or spousal interest, if any, in the propertytransferred to our respective spouses pursuant to the Agreement.

 

We severally approve, consent to and join in the foregoing Agreementand agree to be bound by its provisions, and we shall execute any and alldocuments required as a result thereof.

 

Executed as of the day andyear first above written.

 

 
| /s/ Rebecca R. Hagen |               | /s/ Melissa R. Taylor |
|----------------------|--------------------|-----------------------|
| Printed Name:        | Rebecca Rene Hagen |                  | Printed Name: | Melissa R. Taylor |
|                 |               |                  |
|                 |               |                  |
| /s/ Brenda Evans     |               |                  |
| Printed Name:        | Brenda Evans       |                  | Printed Name: |   |
|                 |               |                  |
|                 |               |                  |
|                 |               |                  |
| Printed Name:        |               |                  | Printed Name: |   |

 

36

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List of Exhibits and Schedules

 
| **Exhibit** | ** ** | **Description**                             |
|-------------|------------|---------------------------------------------|
| 1.3(a)      |       | Escrow Agreement                            |
| 1.3(b)      |       | Form of Subordinate Promissory Note    |
| 1.4(a)      |       | Goodwill Acquisition Agreement              |
| 1.4(b)      |       | Non-Competition Agreement                   |
| 4.4         |       | Confidentiality Agreement                   |
| 5.7         |       | Certificate of Wade Griffin and the Company |
| 5.15        |       | Consulting Agreement                        |
| 6.4         |       | Certificate of the Purchaser                |

 
| **Schedule** | ** ** | **Description**                                         |
|--------------|------------|---------------------------------------------------------|
| 2.1          |       | Company’s Corporate Organizational Documents       |
| 2.3          |       | Subsidiaries (if any)                                   |
| 2.4          |       | Required Consents (exception issues, if any)            |
| 2.8          |       | Financial Statements (attachments and GAAP exceptions)  |
| 2.10         |       | Subsequent Actions (exceptions, if any)                 |
| 2.11         |       | Material Changes (exceptions, if any)                   |
| 2.12         |       | Taxes (exception issues, if any; list of state returns) |
| 2.13         |       | Ownership; Trademarks (exception issues; and list)      |
| 2.14         |       | Insurance (list of policies; exceptions, if any)        |
| 2.15         |       | Litigation; Compliance (exceptions, if any)             |
| 2.16         |       | Real Property (description; copies; exceptions)         |
| 2.17         |       | Material Agreements (list; exceptions)                  |
| 2.18         |       | Condition of Assets (exceptions)                        |
| 2.19         |       | Accounts and Receivables (copies; exceptions)           |
| 2.20         |       | Permits and Licenses (list)                             |
| 2.21         |       | Motor Vehicles (list)                                   |
| 2.22         |       | Banking Arrangements (list of bank depositories)        |
| 2.23         |       | Sellers’ Interests in Company Assets (list)        |
| 2.25.1       |       | Pension Plans; Claims (list)                            |
| 2.25.2       |       | Welfare Plans; Claims (list)                            |
| 2.25.5       |       | COBRA exceptions                                        |
| 2.26         |       | No Breach                                               |
| 2.27         |       | Brokers (exception issues)                              |
| 2.28         |       | Labor Agreements (list)                                 |
| 2.29         |       | Change of Name (list)                                   |
| 2.30         |       | Environmental Matters (exception issues)                |

 

----

 

**TABLEOF CONTENTS**

 
| **Section of Agreement**                                       | ** **                                                                                        | **Page No.** |
|---------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|-------------------|
| **ARTICLE I  - Purchase of Shares**                            |                                                                                              | **1**             |
| 1.1                                                                 | Acquisition of Shares                                                                             |              | 1 |
| 1.2                                                                 | Financial Condition; Profit and Loss                                                              |              | 1 |
| 1.3                                                                 | Purchase Consideration                                                                            |              | 2 |
| 1.4                                                                 | Additional Consideration to Wade Griffin                                                          |              | 2 |
| 1.5                                                                 | Purchase Consideration Adjustment; Review Period;  Income/Loss Determination; Release from Escrow |              | 3 |
| 1.6                                                                 | Disagreement                                                                                      |              | 3 |
|                                                                |                                                                                              |              |   |
| **ARTICLE II  - Representations and Warranties of the Seller** | ** **                                                                                        | **4**             |
| 2.1                                                                 | Valid Corporate Existence; Qualification                                                          |              | 4 |
| 2.2                                                                 | Capitalization                                                                                    |              | 4 |
| 2.3                                                                 | No Subsidiaries                                                                                   |              | 5 |
| 2.4                                                                 | Consents                                                                                          |              | 5 |
| 2.5                                                                 | Authority                                                                                         |              | 5 |
| 2.6                                                                 | Binding Nature                                                                                    |              | 5 |
| 2.7                                                                 | Title to Shares                                                                                   |              | 5 |
| 2.8                                                                 | Financial Statements                                                                              |              | 6 |
| 2.9                                                                 | Liabilities                                                                                       |              | 6 |
| 2.10                                                                | Subsequent Actions                                                                                |              | 6 |
| 2.11                                                                | Absence of Material Changes                                                                       |              | 7 |
| 2.12                                                                | Taxes                                                                                             |              | 7 |
| 2.13                                                                | Ownership of Assets; Trademarks, etc.                                                        |              | 7 |
| 2.14                                                                | Insurance                                                                                         |              | 8 |
| 2.15                                                                | Litigation and Legal Compliance                                                                   |              | 8 |
| 2.16                                                                | Real Property                                                                                     |              | 8 |
| 2.17                                                                | Material Agreements                                                                               |              | 9 |
| 2.18                                                                | Condition of Assets                                                                               |              | 10 |
| 2.19                                                                | Accounts and Notes Receivable                                                                     |              | 10 |
| 2.20                                                                | Permits and Licenses                                                                              |              | 10 |
| 2.21                                                                | Motor Vehicles                                                                                    |              | 11 |
| 2.22                                                                | Banking Arrangements                                                                              |              | 11 |
| 2.23                                                                | Sellers’ Interests in Company Assets                                                         |              | 11 |
| 2.24                                                                | Salary Information                                                                                |              | 11 |
| 2.25                                                                | Employee Benefit Plans                                                                            |              | 11 |
|                                                                | 2.25.1 Pension Plans; Claims                                                                      |              | 11 |
|                                                                | 2.25.2 Welfare Plans; Claims                                                                      |              | 12 |
|                                                                | 2.25.3 Pension Plan and Welfare Plans; Prohibited  Transactions                                   |              | 12 |
|                                                                | 2.25.4 Compliance with Rules, Regulations, etc.                                              |              | 12 |
|                                                                | 2.25.5 COBRA                                                                                      |              | 12 |
|                                                                | 2.25.6 Miscellaneous Benefit Plan Matters                                                         |              | 12 |
| 2.26                                                                | No Breach                                                                                         |              | 13 |
| 2.27                                                                | Brokers                                                                                           |              | 13 |
| 2.28                                                                | Labor Agreements                                                                                  |              | 14 |
| 2.29                                                                | Change of Name                                                                                    |              | 14 |
| 2.30                                                                | Environmental Matters                                                                             |              | 14 |
| 2.31                                                                | Value                                                                                             |              | 15 |

 

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| 2.32                                                                                 | Untrue or Omitted Facts                                 |   | 15     |
|--------------------------------------------------------------------------------------|---------------------------------------------------------|--------|--------|
| 2.33                                                                                 | Continuity of Representations and Updates of  Schedules |   | 15     |
|                                                                                 |                                                    |   |   |
| **Article III  - Representations and Warranties of Purchaser**                  | **15**                                                  |
| 3.1                                                                                  | Corporate Existence and Qualification                   |   | 15     |
| 3.2                                                                                  | Consents                                                |   | 16     |
| 3.3                                                                                  | Corporate Authority                                     |   | 16     |
| 3.4                                                                                  | No Breach                                               |   | 16     |
| 3.5                                                                                  | Brokers                                                 |   | 16     |
| 3.6                                                                                  | Value                                                   |   | 17     |
| 3.7                                                                                  | SEC Filings Complete                                    |   | 17     |
| 3.8                                                                                  | Litigation                                              |   | 17     |
| 3.9                                                                                  | Generally                                               |   | 17     |
|                                                                                 |                                                    |   |   |
| **ARTICLE IV  - Covenants**                                                     | **17**                                                  |
| 4.1                                                                                  | Access; Due Diligence Examination                       |   | 17     |
| 4.2                                                                                  | Pre-Closing Covenants of Sellers and the Company        |   | 18     |
| 4.3                                                                                  | Pre-Closing Covenants of Purchaser                      |   | 18     |
| 4.4                                                                                  | Confidentiality                                         |   | 18     |
| 4.5                                                                                  | Retention of Business Records                           |   | 18     |
| 4.6                                                                                  | Tax Covenants                                           |   | 18     |
| 4.7                                                                                  | Tax Records                                             |   | 19     |
|                                                                                 |                                                    |   |   |
| **ARTICLE V  - Conditions Precedent to the Obligation of Purchaser to Close**   | **19**                                                  |
| 5.1                                                                                  | Representations and Warranties                          |   | 19     |
| 5.2                                                                                  | Covenants                                               |   | 19     |
| 5.3                                                                                  | No Actions                                              |   | 19     |
| 5.4                                                                                  | Consents; Licenses and Permits                          |   | 19     |
| 5.5                                                                                  | No Material Change                                      |   | 20     |
| 5.6                                                                                  | Due Diligence                                           |   | 20     |
| 5.7                                                                                  | Certificate                                             |   | 20     |
| 5.8                                                                                  | Employment of Key Personnel                             |   | 20     |
| 5.9                                                                                  | Supplier/Vendor Relationships; Consents                 |   | 20     |
| 5.10                                                                                 | Government and Regulatory Approvals; Lender Consents    |   | 20     |
| 5.11                                                                                 | Capital Expenditures                                    |   | 21     |
| 5.12                                                                                 | Opinion                                                 |   | 21     |
| 5.13                                                                                 | No Contingencies or Litigation                          |   | 23     |
| 5.14                                                                                 | Termination of Buy-Sell Agreement                       |   | 23     |
| 5.15                                                                                 | Non-Competition and Consulting Agreements               |   | 23     |
| 5.16                                                                                 | 2009 Tax Return                                         |   | 23     |
| 5.17                                                                                 | Board Approval                                          |   | 23     |
| 5.18                                                                                 | Additional Documents                                    |   | 23     |
|                                                                                 |                                                    |   |   |
| **ARTICLE VI  - Conditions Precedent to the Obligation of the Seller to Close** | **23**                                                  |
| 6.1                                                                                  | Representations and Warranties                          |   | 24     |
| 6.2                                                                                  | Covenants                                               |   | 24     |
| 6.3                                                                                  | No Actions                                              |   | 24     |
| 6.4                                                                                  | Certificate                                             |   | 24     |
| 6.5                                                                                  | Release of Personal Liability on Company Debt           |   | 24     |
| 6.6                                                                                  | Additional Documents                                    |   | 24     |

 

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| **ARTICLE VII  - Closing**                                       | **24**                         |
|-----------------------------------------------------------------------|--------------------------------|
| 7.1                                                                   | The Closing                    |   | 24 |
| 7.2                                                                   | Location, Time and Date        |   | 24 |
| 7.3                                                                   | Sellers’ Deliveries       |   | 25 |
| 7.4                                                                   | Purchaser’s Deliveries    |   | 25 |
| 7.5                                                                   | Transfer of Possession         |   | 25 |
|                                                                  |                           |   |
| **ARTICLE VIII  - Survival of Representations; Indemnification** | **26**                         |
| 8.1                                                                   | Survival                       |   | 26 |
| 8.2                                                                   | Indemnification by the Sellers |   | 26 |
| 8.3                                                                   | Indemnification by Purchaser   |   | 26 |
| 8.4                                                                   | Limitation of Liability        |   | 26 |
| 8.5                                                                   | Claims                         |   | 27 |
| 8.6                                                                   | Defense of Claims              |   | 27 |
| 8.7                                                                   | Extension of Time              |   | 28 |
| 8.8                                                                   | Final Determination            |   | 28 |
| 8.9                                                                   | Exclusive Remedy After Closing |   | 28 |
|                                                                  |                           |   |   |
| **ARTICLE IX  - Termination and Waiver**                         | **29**                         |
| 9.1                                                                   | Termination                    |   | 29 |
| 9.2                                                                   | Waivers                        |   | 29 |
|                                                                  |                           |   |   |
| **ARTICLE X  - Miscellaneous Provisions**                        | **29**                         |
| 10.1                                                                  | Expenses                       |   | 29 |
| 10.2                                                                  | Confidential Information       |   | 29 |
| 10.3                                                                  | Publicity                      |   | 30 |
| 10.4                                                                  | Modification or Waiver         |   | 30 |
| 10.5                                                                  | Notices                        |   | 30 |
| 10.6                                                                  | Binding Effect and Assignment  |   | 31 |
| 10.7                                                                  | Exhibits and Schedules         |   | 31 |
| 10.8                                                                  | Entire Agreement               |   | 31 |
| 10.9                                                                  | Governing Law                  |   | 31 |
| 10.10                                                                 | Section Headings          |   | 31 |
| 10.11                                                                 | Gender                         |   | 31 |
| 10.12                                                                 | Severability                   |   | 32 |
| 10.13                                                                 | Attorney Fees                  |   | 32 |
| 10.14                                                                 | Counterparts                   |   | 32 |
| 10.15                                                                 | Recitals                       |   | 32 |
| 10.16                                                                 | Equitable Relief               |   | 32 |
| 10.17                                                                 | Definitions                    |   | 32 |

 

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