Heritage Global, Inc. - Exhibit 10.1 - Filed by newsfilecorp.com






EXHIBIT 10.1 

 

 

STOCK PURCHASE AGREEMENT 

by and among 

NATIONAL LOAN EXCHANGE, INC., 
as the Company;

DAVID LUDWIG, 
as Seller; 


 

and 

 

HERITAGE GLOBAL, INC., 
as Buyer 




TABLE OF CONTENTS 

	ARTICLE
      1 DEFINITIONS 	1
      
	         1.1
      	Definitions
      	1
      
	         1.2
      	Interpretation
      	6
      
	  	  	  
	ARTICLE
      2 PURCHASE AND SALE 	6
      
	         2.1
      	Sale
      and Purchase of the Company Stock; Contribution 	6
      
	         2.2
      	Purchase
      Price 	7
      
	         2.3
      	Purchase
      Price Adjustment 	7
      
	         2.4
      	Earn
      Out Payment 	9
      
	  	  	  
	ARTICLE
      3 THE CLOSING 	11
      
	         3.1
      	Time
      and Place 	11
      
	         3.2
      	Closing
      Deliveries of Seller and the Company Parties 	11
      
	         3.3
      	Closing
      Deliveries of Buyer 	11
      
	  	  	  
	ARTICLE
      4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY PARTIES AND THE
      BUSINESS 	11
      
	         4.1
      	Organization
      	11
      
	         4.2
      	Authorization
      	12
      
	         4.3
      	No
      Violations 	12
      
	         4.4
      	Capitalization
      	12
      
	         4.5
      	Subsidiaries
      	13
      
	         4.6
      	Financial
      Statements 	13
      
	         4.7
      	Company
      Indebtedness; No Undisclosed Liabilities 	13
      
	         4.8
      	Absence
      of Certain Changes 	14
      
	         4.9
      	Legal
      Proceedings 	15
      
	         4.10
      	Compliance
      with Law 	15
      
	         4.11
      	Environmental
      Matters 	15
      
	         4.12
      	Material
      Contracts 	16
      
	         4.13
      	Taxes
      	17
      
	         4.14
      	Employees
      	20
      
	         4.15
      	Employee
      Benefits 	20
      
	         4.16
      	Labor
      Relations 	22
      
	         4.17
      	Real
      Properties and Related Matters 	23
      
	         4.18
      	Proprietary
      Rights 	23
      
	         4.19
      	Brokers,
      Finders and Investment Bankers 	23
      
	         4.20
      	Insurance
      	24
      
	         4.21
      	Title
      to Properties 	24
      
	         4.22
      	Condition
      of Properties 	24
      
	         4.23
      	Transactions
      with Affiliates 	24
      
	         4.24
      	Adequacy
      of Assets 	25
      
	         4.25
      	Accounts
      Receivable and Bad Debts 	25
      
	         4.26
      	Books
      and Records 	25
      
	         4.27
      	Powers
      of Attorney 	25
      
	         4.28
      	Bank
      Accounts 	25
      


i 





	         4.29
      	No
      Material Misstatements or Omissions 	25
      
	  	  	  
	ARTICLE
      5 REPRESENTATIONS AND WARRANTIES OF SELLER 	25
      
	         5.1
      	Authorization
      	26
      
	         5.2
      	No
      Violations 	26
      
	         5.3
      	Brokers,
      Finders and Investment Bankers 	26
      
	         5.4
      	Title
      to Shares 	26
      
	  	  	  
	ARTICLE
      6 REPRESENTATIONS AND WARRANTIES OF BUYER 	27
      
	         6.1
      	Organization
      	27
      
	         6.2
      	Authorization
      	27
      
	         6.3
      	No
      Violations 	27
      
	         6.4
      	Brokers
      and Finders 	27
      
	  	  	  
	ARTICLE
      7 CERTAIN COVENANTS AND AGREEMENTS 	27
      
	         7.1
      	Announcements
      	27
      
	         7.2
      	Tax
      Matters 	28
      
	         7.3
      	Further
      Assurances 	31
      
	         7.4
      	Filings
      and Notifications; Cooperation 	31
      
	         7.5
      	Buyer’s
      Benefit Plans 	31
      
	  	  	  
	ARTICLE
      8 CONDITIONS 	32
      
	         8.1
      	Conditions
      to Obligations of Seller 	32
      
	         8.2
      	Conditions
      to Obligations of Buyer 	32
      
	  	  	  
	ARTICLE
      9 INDEMNIFICATION 	34
      
	         9.1
      	Indemnification
      by Seller 	34
      
	         9.2
      	Indemnification
      by Buyer 	35
      
	         9.3
      	Limitations
      on Indemnification 	36
      
	         9.4
      	Survival
      	37
      
	         9.5
      	Right
      of Offset 	37
      
	  	  	  
	ARTICLE
      10 MISCELLANEOUS PROVISIONS 	37
      
	         10.1
      	Notices
      	37
      
	         10.2
      	Exhibits
      and Schedules to this Agreement 	38
      
	         10.3
      	Assignment;
      Successors in Interest 	38
      
	         10.4
      	Controlling
      Law; Integration 	38
      
	         10.5
      	Amendment;
      Waiver 	38
      
	         10.6
      	Severability
      	38
      
	         10.7
      	Counterparts
      	39
      
	         10.8
      	No
      Third-Party Beneficiary 	39
      
	         10.9
      	JURISDICTION
      AND FORUM; WAIVER OF JURY TRIAL 	39
      
	         10.10
      	Interpretation
      	40
      
	         10.11
      	Specific
      Performance and Other Remedies 	40
      
	         10.12
      	Expenses
      	40
      


ii 




List of Exhibits and Schedules

	Exhibits 	  	  
	Exhibit A 	- 	Lease Agreement
    
	Exhibit B 	- 	Employment Agreement 
	 	  	  
	Schedules 	  	  
	Schedule 4.1 	- 	Organization
  
	Schedule 4.3(a) 	- 	Consents and Approvals 
	Schedule 4.4 	- 	Capitalization
  
	Schedule 4.5 	- 	Subsidiaries 
	Schedule 4.7(a) 	- 	Company
      Indebtedness 
	Schedule 4.7(b) 	- 	No Undisclosed Liabilities 
	Schedule 4.7(c) 	  	Closing Costs
  
	Schedule 4.8 	- 	Absence of Certain Changes 
	Schedule 4.9 	- 	Legal Proceedings
    
	Schedule 4.10 	- 	Compliance with Law 
	Schedule 4.11 	- 	Environmental
      Matters 
	Schedule 4.12 	- 	Material Contracts 
	Schedule 4.13 	- 	Taxes 
	Schedule 4.14 	- 	Employees 
	Schedule 4.15 	- 	Employee Benefits
    
	Schedule 4.16 	- 	Labor Relations 
	Schedule 4.17 	- 	Real Properties
      and Related Matters 
	Schedule 4.18(a) 	- 	Proprietary Rights 
	Schedule 4.18(c) 	- 	Infringement
  
	Schedule 4.19 	- 	Brokers, Finders, and Investment
      Bankers 
	Schedule 4.20 	- 	Insurance 
	Schedule 4.23(a) 	- 	Transactions with Affiliates
  
	Schedule 4.23(b) 	- 	Transactions with
      Affiliates (Business Employee) 
	Schedule 4.25 	- 	Accounts Receivables and Bad
      Debts 
	Schedule 4.28 	- 	Bank Accounts
  
	Schedule 5.2 	- 	No Violations 
	Schedule 8.2(a) 	- 	Consents to
      Material Contracts 


iii 




STOCK PURCHASE AGREEMENT 

             THIS
STOCK PURCHASE AGREEMENT is effective as of May 31, 2014
(“Effective Date”) by and among National Loan
Exchange, Inc., an Illinois corporation (the “Company”); Heritage
Global, Inc., a Florida corporation (“Buyer”); and David Ludwig
(the “Seller”). 

P R E A M B L E 

            
WHEREAS, the Company is engaged in the Business (as defined below); 

             WHEREAS,
Seller owns all of the issued and outstanding equity interests of common stock
of the Company (the “Shares”); and 

             WHEREAS, at the Closing (defined below), Seller
desires to sell to Buyer for cash, and Buyer desires to purchase from Seller,
all of the Shares, upon the terms and subject to the conditions contained in
this Agreement. 

             NOW,
THEREFORE, in consideration of the premises and of the covenants made herein and
of the mutual benefits to be derived herefrom, the parties hereto, intending to
be legally bound, agree as follows: 

ARTICLE 1 
DEFINITIONS 


             1.1        
Definitions. The following words and terms as used in this Agreement
shall have the following meanings: 

            
“Action” means any claim, action, suit or proceeding, arbitral
action, governmental inquiry, criminal prosecution or other investigation. 

             “Affiliate”
with reference to a specified Person, (a) any Person that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with the specified Person, (b) any other Person who is an officer
or director of the specified Person and who owns or controls 5% or more of any
class of equity securities (including any equity securities issuable upon the
exercise of any option or convertible security) of such specified Person or any
of its Affiliates, (c) any Person of which any Company Party (or other specified
Person) shall, directly or indirectly, beneficially own at least ten percent
(10%) of such Person’s outstanding equity securities, or (d) in the case of a
specified Person who is an individual, any immediate family member, uncle, aunt,
nephew, niece or first cousin of such Person. For purposes of this definition,
“control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. 

             “Agreement”
means, collectively, this Stock Purchase Agreement, all Exhibits and Schedules
and all amendments made hereto and thereto in accordance with their terms. 




            
“Allocation of Purchase Price” has the meaning specified in
Section 7.2(j)(i) . 

             “Applicable
Law” means, with respect to any Person, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree, or other requirement of any Authority (including common law) applicable
to such Person or any of its Affiliates or any of their respective properties,
assets, officers, directors, general partners, members, managers, employees,
consultants, or agents (in connection with such officer’s, director’s, general
partner’s, member’s, manager’s, employee’s, consultant’s or agent’s activities
on behalf of such Person or any of its Affiliates). 

            
“Benefit Plans” has the meaning specified in Section 4.15(a) .


             “Business”
means the business of purchasing and selling distressed financial assets,
facilitating such purchases and sales and other operations of any of the Company
Parties as of the Effective Date or transferred to Company Parties at or prior
to Closing in accordance with this Agreement. 

            
“Business Employees” has the meaning specified in Section 4.14.


            
“Business Insurance Policies” has the meaning specified in Section
4.20. 

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

             “Buyer
Documents” means this Agreement and each agreement, document or
instrument required to be delivered or caused to be delivered by Buyer in
connection with this Agreement and the Contemplated Transactions. 

            
“Buyer Indemnified Parties” has the meaning specified in Section
9.1.

              “Buyer’s
Tax Indemnity” has the meaning specified in Section 7.2(d)(ii) . 

             “Calculation
Period” means (a) the period beginning on the Effective Date and ending
on the first anniversary of the Effective Date, and (b) each of the twelve (12)
month periods ending on the second, third and fourth anniversaries of the
Effective Date, respectively.

            
“Closing” have the meanings specified in Section 3.1. 

            
“COBRA” has the meaning specified in Section 4.15(f) . 

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

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

            
“Company Indebtedness” means (a) all indebtedness of the Company
Parties for borrowed money, (b) all obligations of the Company Parties for the
deferred purchase price of property or assets, (c) all obligations of the
Company Parties evidenced by notes, bonds, debentures or other similar
instruments, (d) all capital leases, (e) any letters of credit issued under letter of credit facilities or other similar facilities,
(f) all indebtedness of any other Person guaranteed in any manner by any Company
Party, which in the case of clauses (a) through (f), shall include all accrued
interest thereon and applicable prepayment premiums and any other fees, costs or
expenses payable in connection therewith, including breakage costs, all of which
Company Indebtedness is described on Schedule 4.7(a). 

2 




             “Company
Parties” means the Company and its wholly-owned Subsidiaries, NLEX, LLC
and Solutions Management Group International, LLC. 

             “Contemplated
Transactions” means the purchase and sale of the Shares and the
execution, delivery and performance of and compliance with this Agreement and
all other Contracts, documents and instruments to be executed and delivered
pursuant to this Agreement. 

             “Contract”
means any contract, agreement, indenture, note, bond, instrument, lease,
conditional sales contract, mortgage, license (excluding any off-the-shelf,
shrink-wrap, or click-wrap licenses or website terms of use), franchise
agreement, concession agreement, insurance policy, security interest, guaranty,
binding commitment or other agreement or arrangement, whether written or oral.


            
“Disclosure Schedules” has the meaning specified in Article 4.


            
“Dollars” or “$” shall mean the United States Dollar. 

             “Earn-Out
Period” means the period beginning on the Effective Date and ending on
the fourth anniversary of the Effective Date. 

            
“EEOC” has the meaning specified in Section 4.16. 

            
“Employment Agreement” has the meaning specified in Section 8.2(j)
.. 

            
“Environmental Laws” has the meaning specified in Section 4.11(a)
.. 

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

             “ERISA
Affiliate” means any Person who for purposes of Title IV of ERISA is a
member of the Company’s controlled group, or under common control with the
Company within the meaning of Section 414 of the Code, as amended. 

             “Financial
Statements” means the consolidated balance sheet of the Company Parties
as of December 31, 2011, 2012 and 2013, and the related income statements for
the years then ended, and the monthly balance sheet and related monthly income
statement of the Company Parties for the four months ending April 30, 2014.

             “Governmental
Authority” means any government, any governmental or quasi governmental
entity, department, commission, board, bureau, agency or instrumentality, and
any court, tribunal or judicial body, in each case whether federal, state,
county, provincial, local or foreign. 

3 




             “Governmental
Order” means any statute, rule, regulation, order, judgment, injunction,
decree, stipulation or determination issued, promulgated or entered by or with
any Governmental Authority of competent jurisdiction. 

            
“Hazardous Substances” has the meaning specified in Section
4.11(a) . 

             “Key
Employees” means David Ludwig, Aaron Hadam, Tom Ludwig or Chris Jenkins.


            
“Knowledge” means, with respect to any Company Party making a
representation to its “knowledge” (whether or not capitalized) those facts and
circumstances actually known by any of David Ludwig, Aaron Hadam, Tom Ludwig,
Norm Slaznik or Chris Jenkins. 

             “Law”
shall mean any law, statute, ordinance, regulation, rule, notice requirement,
court decision, agency guideline, principle of law and order of any foreign,
federal, state or local government and any other governmental department or
agency, including environmental, healthcare, energy, motor vehicle safety,
public utility, zoning, building and health codes, occupational safety and
health, and laws respecting employment practices, employee documentation, terms
and conditions of employment and wages and hours. 

            
“Lease Agreement” has the meaning specified in Section 8.2(1) .


            
“Leased Real Property” has the meaning specified in Section 4.17.


             “Liability”
means any indebtedness, obligation or other liability (whether absolute,
accrued, matured, contingent, known or unknown, fixed or otherwise, determined
or determinable or whether due or to become due), including without limitation,
any fine, penalty, expense, judgment, award or settlement respecting any
judicial administrative or arbitration proceeding, damage, loss, claim or
demand. 

             “Licensed
IP” means all of the intellectual property rights licensed to any
Company Party which are used in the Business. 

             “Liens”
means any security interest, pledge, mortgage, lien, charge, adverse claim of
ownership or use, restriction on transfer (such as a right of first refusal or
other similar right), defect of title, or other encumbrance of any kind or
character. 

            
“Losses” has the meaning specified in Section 9.1.

             “Material
Adverse Effect” means any event, fact, circumstance, condition,
development, change in, effect or occurrence that, individually or in the
aggregate with any other event, fact, circumstance, condition, development,
change in, effect or occurrence, has had or could reasonably be expected to have
a materially adverse effect on the business, assets, operation, condition
(financial or otherwise), or results of operations of the Business, taken as a
whole. 

            
“Material Contracts” has the meaning specified in Section 4.12.


            
“NLRB” has the meaning specified in Section 4.16. 

4 




            
“Permits” has the meaning specified in Section 4.10. 

             “Permitted
Liens” means liens for mechanics’ and materialmen’s liens and workmen’s,
repairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course
of the Business, the obligations of which are not overdue or otherwise
delinquent. 

             “Person”
means an individual, firm, partnership, limited liability company, association,
unincorporated organization, trust, corporation, or any other entity or
organization including, without limitation, a government or political
subdivision or any department, agency or instrumentality thereof. 

             “Proprietary
Rights” means all of the following intellectual property rights owned
by, issued to or licensed to any Company Party which are used in the Business,
that, now or hereafter, may be secured throughout the world: (a) patents, patent
rights, patent applications, patent disclosures and inventions and improvements
thereto (whether or not patentable and whether or not reduced to practice) and
any reissues, continuations, continuations-in-part, revisions, extensions,
renewals or reexaminations thereof; (b) internet domain names, trademarks,
service marks, trade dress, logos, domain names, trade names and corporate names
together with all goodwill associated therewith; (c) copyrights (registered or
unregistered) and copyrightable works and registrations, applications for
registration and renewals thereof; (d) trade secrets and confidential business
information; (e) computer software, data, data bases, systems and related
documentation; (f) other proprietary rights; (g) all copies and tangible
embodiments of the foregoing (in whatever form or medium), and (h) licenses
granting any rights with respect to any of the foregoing.

             “Purchase
Price” shall mean an amount equal to $2,000,000 minus the amount of
Company Indebtedness as of Closing (whether paid off by Buyer at the Closing or
remaining outstanding after the Closing as an obligation of any Company Party in
accordance with Section 2.2(b)(i)) . 

            
“Real Property Leases” has the meaning specified in Section 4.17.


            
“Section 338(h)(10) Election” has the meaning set forth in Section
7.2(j)(i) . 

            
“Seller” has the meanings specified in the introductory paragraph
of this Agreement. 

             “Seller
Closing Costs” means the fees and expenses of any legal counsel to
Seller and any Company Party and any other attorneys, accountants, advisors,
consultants, investment bankers, finders or agents to Seller or any Company
Party incurred in connection with the Contemplated Transactions at or prior to
Closing.

             “Seller
Documents” means this Agreement and each agreement, document or
instrument required to be delivered or caused to be delivered by Seller or any
Company Party in connection with this Agreement and the Contemplated
Transactions. 

            
“Seller’s Tax Indemnity” has the meaning specified in Section
7.2(d)(i) . 

            
“Shares” has the meaning specified in the Preamble hereto. 

5 




             “Subsidiary”
shall mean with respect to any specified Person, any other Person (a) whose
board of directors or similar governing body, or a majority thereof, may
presently be directly or indirectly elected or appointed by such specified
Person, (b) whose management decisions and corporate actions are directly or
indirectly subject to the present control of such specified Person, and/or (c)
whose voting securities are more than 50% owned, directly or indirectly, by such
specified Person.

             “Tax”
or “Taxes” means any federal, state, county, provincial, local or
foreign income, gross receipts, sales, use, ad valorem, employment, severance,
transfer, gains, profits, excise, franchise, property, capital stock, premium,
minimum and alternative minimum or other taxes, fees, levies, duties,
assessments or charges of any kind or nature whatsoever imposed by any
Governmental Authority (whether payable directly or by withholding and including
any tax liability incurred or borne as a transferee or successor or by contract,
or otherwise), together with any interest, penalty (civil or criminal), or
additional amounts imposed by, any Governmental Authority with respect thereto.


             “Tax
Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof. 

            
“Transfer Taxes” has the meaning specified in Section 7.2(d) .


             “Warn
Act” means the Worker Adjustment and Retraining Notification Act, 29
U.S.C. Sections 2101-2109 and related regulations, as amended. 

             1.2        
Interpretation. The following provisions shall govern the interpretation
of this Agreement: 

                            
(a)         Headings or captions are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. 

                             (b)        
Words importing the singular number only shall include the plural and vice versa
and words importing the masculine gender shall include the feminine and neuter
genders and vice versa and words importing individuals shall include Persons and
vice versa. 

                             (c)        
Reference to any Person includes such Person’s successors and assigns, if
applicable, but only if such successors and assigns are permitted by this
Agreement. 

                             (d)        
With respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding.” 

ARTICLE 2 
PURCHASE AND SALE 


             2.1        
Sale and Purchase of the Company Stock; Contribution. At the Closing (i)
Seller shall sell, assign, convey and transfer to Buyer all of the Shares, and
shall deliver to Buyer the stock certificates representing all the Shares, with
duly executed stock powers reasonably satisfactory to Buyer, in proper form for
transfer, free and clear of all Liens, except for the Permitted Liens, and (ii) Buyer shall pay and deliver the
Purchase Price with respect to the Shares in the manner and as set forth in
Section 2.2 below.  

6 




            
2.2         Purchase Price.


                             (a)        
At the Closing, Buyer shall pay to Seller an aggregate amount equal to the
Purchase Price, subject to adjustment as provided in Section 2.3 in immediately
available funds by wire transfer to an account designated by Seller.

                             (b)        
At the Closing, Company shall (i) repay the Company Indebtedness outstanding
immediately prior to the Closing in full to the party or parties entitled
thereto, except to the extent Buyer determines such Company Indebtedness shall
remain outstanding after the Closing, and (ii) pay the Seller Closing Costs to
the Persons to whom they are owed. 

            
2.3         Purchase Price
Adjustment.

                            
(a)         Effective Date
Adjustment. 

             (i)        
At Closing, Seller shall provide Buyer with an estimated balance sheet of the
Company as of the open of business on the Effective Date (the “Closing
Balance Sheet”) and a statement of the estimated Closing Working
Capital. “Closing Working Capital” means (x) the sum of the
non-cash and cash current assets of the Company Parties and the cash of the
Company Parties that exceeds two hundred fifty thousand dollars ($250,000), less
(y) the current liabilities of the Company Parties. Prior to the Closing, Seller
shall have removed all cash from the Company, except for two hundred fifty
thousand dollars ($250,000) (“Seller Loan”) which Seller will
provide at Closing, through cash immediately available to the Seller including
any of the Purchase Price being paid by Buyer, as a loan to Company and which
shall not be considered in the calculation of the Company’s Closing Working
Capital. The calculation of Closing Working Capital shall not include Company
Indebtedness to be paid at Closing as provided in Subsection 2(b) above. 

             (ii)        
At Closing, if the Closing Working Capital is less than $0, the Purchase Price
will be decreased by the amount which the Closing Working Capital is less than
$0. If the Closing Working Capital is greater than $0, the Purchase Price at
Closing will be increased by the amount which the Closing Working Capital
exceeds $0. The term “Adjusted Purchase Price”, as used herein,
shall mean the Purchase Price at Closing as increased or decreased (if at all)
by this Section 2.3(a) . 

                            
(b)         Post-Effective Date
Purchase Price Adjustment. 

             (i)        
The Closing Balance Sheet and the Seller’s calculation of Closing Working
Capital delivered by Seller to Buyer shall be conclusive and binding upon the
Parties unless Buyer, within sixty (60) calendar days after Closing notifies
Seller in writing that Buyer disputes any of the amounts set forth therein,
specifying the nature of the dispute and the basis therefor. The Parties shall
in good faith attempt to resolve any such
dispute. If the Parties do not reach an agreement in resolving any and all such
disputes within twenty (20) calendar days after notice is given by Seller to
Buyer pursuant to the second preceding sentence, the parties shall jointly
select and engage an independent accounting firm (other than Buyer’s or Seller’s
accounting firm) (the “Independent Accountant”) to resolve any
remaining disputes regarding the Closing Balance Sheet and the Seller’s
calculation of Closing Working Capital. If the parties cannot agree on the
selection of an independent accounting firm to act as the Independent
Accountant, the parties shall request the American Arbitration Association to
appoint such a firm, and such appointment shall be conclusive and binding on the
parties. Promptly, but no later than twenty (20) calendar days after acceptance
of its appointment as Independent Accountant, the Independent Accountant shall
determine (it being understood that in making such determination, the
Independent Accountant shall be functioning as an expert and not as an
arbitrator), based solely on written submissions by Buyer and Seller, each
containing a computation of and explanation of the basis for its computation of
Closing Working Capital (the final submission made by Buyer and Seller to the
Independent Accountant being referred to herein as such Party’s
“Final Submission”), and not by independent
review, only those issues in dispute and shall render a written report as to the
resolution of the disputes and the resulting computation of the Closing Working
Capital. Such written report shall be conclusive and binding on the Parties. All
proceedings conducted by the Independent Accountant shall take place in
Edwardsville, Illinois. In resolving any disputed item, the Independent
Accountant (x) shall be bound by the provisions of this Section 2.3 and (y) may
not assign a value to any item greater than the greatest value for such item
claimed by either party or less than the smallest value for such item claimed by
either party. The fees, costs and expenses of the Independent Accountant shall
be borne solely by the party whose calculation of Closing Working Capital, as
reflected in such party’s Final Submission, is furthest in amount, whether
positive or negative, from the amount of Closing Working Capital as determined
by the Independent Accountant. 

7 




           (ii)        
Upon final determination of the actual Closing Working Capital as provided in
Section 2.3(b)(i), the following shall occur: (A) if the actual Closing Working
Capital is more than the estimated Closing Working Capital determined by Seller
at Closing, then the Adjusted Purchase Price shall be increased by such excess
and Buyer shall promptly, but no later than seven (7) days after such final
determination, pay the amount of such difference to Seller and (B) if the actual
Closing Working Capital is less than the estimated Closing Working Capital
determined by Seller at Closing, Buyer shall deduct such deficiency as follows:
(1) from the Seller Loan, and (2) if the Seller Loan is insufficient to fully
pay the deficiency, Seller shall promptly pay such difference to Buyer. Any
payment pursuant to this Section 2.3(b)(ii) shall be made at a mutually
convenient time and place by wire transfer by Buyer or Seller, as the case may
be, of immediately available funds to the account of such other Party as may be
designated in writing by such other Party. After the final determination of the
actual Closing Working Capital, Buyer shall pay to Seller
within five (5) days any portion of the Seller Loan not used to satisfy
adjustments pursuant to this Section 2.3(b)(ii) . 

8 




                             (c)        
Purchase Price Adjustment. Any payment pursuant to this Section 2.3 shall
be treated for all Tax purposes as an adjustment to the Purchase Price. 

            
2.4         Earn Out Payment.

                             (a)        
As additional Purchase Price for the Shares, Buyer shall pay to Seller with
respect to each Calculation Period an amount, if any (each, an “Earn-out
Payment”), equal to the Net Profits (defined below) of the Company
Parties during the applicable Calculation Period; provided, that in no
event shall Buyer be obligated to pay Seller Earn-Out Payments exceeding five
million dollars ($5,000,000) in the aggregate. “Net Profits” shall
mean the product of: (A) fifty percent (50%) multiplied by (B) the sum of (i)
gross revenues actually received by the Company Parties in connection with the
operation of the Business, minus (ii) all Losses of the Company Parties
customarily incurred by the Company Parties over the ordinary course of their
doing business unless otherwise approved by Seller, minus (iii) all expenses of
the Company Parties, whether paid by any Company Party or by Buyer or its
Affiliates on behalf of any Company Party (including without limitation, all
Company Party overhead expenses, salaries, bonuses, benefits and perquisites
paid to employees and independent contractors of any Company Party, commissions,
fees and other payments made to third parties and Losses incurred by any Company
Party), that are customarily incurred by the Company Parties or its Affiliates,
as the case may be, over the ordinary course of their doing business unless
otherwise approved by Seller, minus (iv) the Overhead Expenses (defined below),
and minus (v) the Capital Expenses (defined below). “Overhead
Expenses” shall mean all overhead expenses of Buyer arising out of or
relating to Buyer’s compliance with its obligations as a public company, which
are allocated to the Company Parties in Buyer’s reasonable discretion and
approved by Seller in Seller’s reasonable discretion. “Capital
Expenses” shall mean any funds provided by Buyer for
transactions to be consummated by any Company Party, provided that the terms of
such funding shall be consistent with terms available from unrelated third
parties and mutually agreed upon by Buyer and Seller. 

                            
(b)         Procedures Applicable to
Determination of the Earn-out Payments.

             (i)        
On or before the date which is sixty (60) days after the last day of each
Calculation Period (each such date, an ”Earn-Out Calculation
Delivery Date”), Buyer shall prepare and deliver to
Seller a written statement (in each case, an “Earn-out Calculation
Statement”) setting forth in reasonable detail its determination of Net
Profits for the applicable Calculation Period and its calculation of the
resulting Earn-Out Payment (in each case, an “Earn-Out
Calculation. 

             (ii)        
Seller shall have ten (10) days after receipt of the Earn-Out Calculation
Statement for each Calculation Period (in each case, the
“Review Period”) to review the Earn-Out
Calculation Statement and the Earn-Out Calculation set forth therein. During the
Review Period, Seller shall have the right to inspect the books and records of
any Company Party during normal business hours at such Company Party’s
offices, upon reasonable prior notice and solely for purposes reasonably related
to the determinations of Net Profits and the resulting Earn-Out Payment. Prior
to the expiration of the Review Period, Seller may object to the Earn-Out
Calculation set forth in the Earn-Out Calculation Statement for the applicable
Calculation Period by delivering a written notice of objection (an
“Earn-Out Calculation Objection Notice”) to Buyer. Any Earn-Out
Calculation Objection Notice shall specify the items in the applicable Earn-Out
Calculation disputed by Seller and shall describe in reasonable detail the basis
for such objection, as well as the amount in dispute. If Seller fails to deliver
an Earn-Out Calculation Objection Notice to Buyer prior to the expiration of the
Review Period, then the Earn-Out Calculation set forth in the Earn-Out
Calculation Statement shall be final and binding on the Parties hereto. If
Seller timely delivers an Earn-Out Calculation Objection Notice, Buyer and
Seller shall negotiate in good faith to resolve the disputed items and agree
upon the resulting amount of the Net Profits and the Earn-Out Payment for the
applicable Calculation Period. If Buyer and Seller are unable to reach agreement
within fifteen (15) days after such an Earn-Out Calculation Objection Notice has
been given, all unresolved disputed items shall be promptly referred to the
Independent Accountant. The Independent Accountant shall be directed to render a
written report on the unresolved disputed items with respect to the applicable
Earn-Out Calculation as promptly as practicable, but in no event greater than
fifteen (15) days after such submission to the Independent Accountant, and to
resolve only those unresolved disputed items set forth in the Earn-Out
Calculation Objection Notice. If unresolved disputed items are submitted to the
Independent Accountant, Buyer and Seller shall each furnish to the Independent
Accountant such work papers, schedules and other documents and information
relating to the unresolved disputed items as the Independent Accountant may
reasonably request. The Independent Accountant shall resolve the disputed items
based solely on the applicable definitions and other terms in this Agreement and
the presentations by Buyer and Seller, and not by independent review. The
resolution of the dispute and the calculation of Net Profits that is the subject
of the applicable Earn-Out Calculation Objection Notice by the Independent
Accountant shall be final and binding on the parties hereto. The fees and
expenses of the Independent Accountant shall be borne by Seller and Buyer in
proportion to the amounts by which their respective calculations of Net Profits
differ from Net Profits as finally determined by the Independent Accountant. 

9 




                             (c)        
Timing of Payment of Earn-out Payments. Any Earn-Out Payment that Buyer
is required to pay pursuant to Section 2.4(a) hereof shall be paid in full no
later than five (5) days following the date upon which the determination of Net
Profits for the applicable Calculation Period becomes final and binding upon the
parties as provided in Section 2.4(b)(ii) (including any final resolution of any
dispute raised by Seller in an Earn-Out Calculation Objection Notice).

                             (d)        
Post-Closing Operation of the Company Parties. Subject to Section 7.6 of
this Agreement, subsequent to the Closing, Buyer shall have sole discretion with
regard to all matters relating to the operation of the Company Parties. 

10 




                             (e)        
Treatment of Earn-Out payment. Any payment pursuant to this Section 2.4
shall be deemed part of the Purchase Price. 

ARTICLE 3 
THE CLOSING 


             3.1        
Time and Place. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place on June 2, 2013. The
Closing shall take place at the offices of Harwell Howard Hyne Gabbert &
Manner, P.C., 333 Commerce Street, Suite 1500, Nashville, Tennessee 37201, or
such other place or in such other manner, electronic or otherwise, as shall be
mutually agreed upon by the parties. Closing shall be effective as of 11:59 p.m.
on the Effective Date (the “Effective Time”). 

          
3.2         Closing Deliveries of
Seller and the Company Parties.

                             (a)        
Instruments of Transfer and Assignment; Certificates. At the Closing,
Seller shall execute and deliver, or cause to be delivered, to Buyer the
instruments, certificates and other documents effecting transfer that are
identified in Section 2.1, as well as other such documents reasonably requested
by Buyer to effect the Contemplated Transactions.

                             (b)        
Other Deliveries. At the Closing, the Company Parties and Seller shall
execute and deliver, or cause to be executed delivered to Buyer, the
instruments, certificates and other documents identified in Section 8.2. 

            
3.3         Closing Deliveries of
Buyer.

                             (a)        
Purchase Price. At the Closing, Buyer shall deliver the Purchase Price as
provided in Section 2.2. 

                             (b)        
Other Deliveries. At the Closing, Buyer shall execute and deliver, or
cause to be delivered to Seller, the instruments, certificates and other
documents identified in Section 8.1(a) . 

ARTICLE 4 
REPRESENTATIONS AND WARRANTIES REGARDING

THE COMPANY PARTIES AND THE BUSINESS 


             Except
as specifically set forth on the disclosure schedules attached to this Agreement
(the “Disclosure Schedules”), as a material inducement to Buyer to
enter into this Agreement and consummate the Contemplated Transactions, the
Company represents and warrants to Buyer that the statements contained in this
Article 4 are true and correct as of the Effective Time. All representations and
warranties made in this Article 4 with respect to each Company Party shall be
deemed to be made (as applicable) with respect to any predecessor entities. 

             4.1        
Organization. Each Company Party is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on the Business as now being conducted.
Each Company Party is duly qualified to transact business, and is in good standing as a foreign entity in each
jurisdiction where the character of its activities requires such qualification,
which jurisdictions are set forth on Schedule 4.1. The Company has
heretofore made available to Buyer accurate and complete copies of the charter,
bylaws and other organizational documents of each Company Party, as the case may
be, as currently in effect, and has made available to Buyer copies of its minute
books and equity records, and such books and records are accurate and complete. 

11 




             4.2        
Authorization. Each Company Party has full power and authority to execute
and deliver this Agreement (as applicable) the Seller Documents and to perform
its obligations under this Agreement and the Seller Documents and to consummate
the Contemplated Transactions. The execution and delivery of this Agreement and
the Seller Documents by each Company Party and the performance by each Company
Party of its obligations hereunder and thereunder and the Contemplated
Transactions have been duly and validly authorized by all necessary action on
the part of each Company Party. This Agreement and each of the other Seller
Documents have been duly executed and delivered by each Company Party (as
applicable) and is or once executed shall be the legal, valid and binding
agreement of such Company Party, enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency and other similar Laws
affecting the enforceability of creditor’s rights generally, general equitable
principles and the discretion of the courts in granting equitable remedies. 

            
4.3         No Violations.

                             (a)        
Consents and Approvals. Except as set forth in Schedule 4.3(a),
the execution, delivery and performance of this Agreement and the Seller
Documents, the consummation of the Contemplated Transactions and the fulfillment
of and compliance with the terms and conditions of this Agreement and the Seller
Documents do not and shall not violate or conflict with, constitute a breach of
or default under, result in the loss of any benefit under, or permit the
acceleration of any obligation under, (i) the charter or other organizational
document of any Company Party, (ii) any Contract to which any Company Party is a
party or by which any Company Party (or any of its respective properties or
assets) is subject or bound, (iii) any Governmental Order to which any Company
Party is a party or by which such Seller or any of its respective properties or
assets is bound, or (iv) any Law applicable to such Seller. 

                             (b)        
Except as set forth on Schedule 4.3(a), no consent, approval, order or
authorization of, or registration, declaration, notice or filing with, any (i)
Governmental Authority or other Person or (ii) party to a Contract is required
in connection with the execution, delivery or performance of this Agreement and
the Seller Documents by any Company Parties or the consummation of the
Contemplated Transactions. 

             4.4        
Capitalization. The authorized and issued and outstanding equity
interests of each Company Party (and each beneficial owner thereof) are as set
forth on Schedule 4.4. The Shares of the Company and equity of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and are owned as set forth on Schedule 4.4. Except as set
forth on Schedule 4.4, there are no other equity interests of any Company
Party outstanding, and there are no subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or commitments
of any nature whatsoever obligating any Company Party or issue, transfer,
deliver or sell, or cause to be issued, transferred, delivered or sold,
additional equity interests of any Company Party or obligating any Company Party
to grant, extend or enter into any such Contract. No Person has any rescission
rights with respect to any issuance of equity interests of any Company Party.
There are no registration rights agreements, shareholder agreements, voting
trusts or agreements, proxies or other agreements, instruments or understandings
with respect to any equity interests of any Company Party.

12 




             4.5        
Subsidiaries. The direct and indirect Subsidiaries of each Company Party
are listed on Schedule 4.5. The Company owns directly or indirectly each
of the outstanding shares of capital stock or other equity interests of each of
the Subsidiaries. There are no outstanding options, or other rights of any kind
to acquire any equity interests of any Subsidiary or securities convertible into
or exchangeable for such interests. Except as set forth on Schedule 4.5,
no Company Party owns directly or indirectly any interest or investment (whether
equity or debt) in any Person (other than investments in short-term investment
securities). 

            
4.6         Financial
Statements.

                             (a)        
The Financial Statements have been prepared in accordance with GAAP, applied on
a consistent basis throughout the periods indicated. Such Financial Statements
are true, complete and accurate in all respects and fairly present the financial
condition and results of operations of each Company Party as of the dates and
for the periods indicated thereon.

                             (b)        
With the exception of the liabilities set forth in the Financial Statements and
the liabilities incurred in the ordinary course of the business of each Company
Party since the December 31, 2013, no Company Party has any liabilities with
respect to the Business of any nature, whether absolute, accrued, contingent or
otherwise or whether due or to become due. There are no conditions existing with
respect to the properties, assets or personnel of any Company Party that might
adversely affect the Shares, the assets or the financial condition or prospects
of the Business. 

                             (c)        
Each Company Party has designed and maintains disclosure controls and procedures
to ensure that material information relating to the Company Party is made known
to such Company Party’s executive officers by others employed by such Company
Party. Each Company Party has designed and maintains internal control over
financial reporting to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP. There are no significant deficiencies or
material weaknesses in the design or operation of internal control over
financial reporting that are could affect such Company Party’s ability to
record, process, summarize and report financial information. 

            
4.7         Company Indebtedness; No
Undisclosed Liabilities.

                             (a)        
Except as set forth on Schedule 4.7(a), there is no Company
Indebtedness.

                             (b)        
Other than as disclosed on Schedule 4.7(b), to the Knowledge of Company,
there are no Liabilities of any Company Party, other than Liabilities disclosed
or provided for in the Financial Statements or incurred in the ordinary course
of business consistent with past practice since December 31, 2013 (none of which
result from, arise out of, relate to, are in the nature of, or were caused by any breach
of contract, breach of warranty, tort, infringement or violation of Law).

13 




                            
(c)         Schedule 4.7(c) sets
forth all of the Seller Closing Costs. 

             4.8        
Absence of Certain Changes. Except as set forth in Schedule 4.8,
since December 31, 2013, each Company Party has operated the Business only in
the usual and ordinary course consistent with past practice, and without
limiting the generality of the foregoing there has not occurred any event,
circumstance or condition that has had or that could reasonably be expected to
have a Material Adverse Effect and no Company Party has (nor has it committed or
agreed to, whether by written Contract or otherwise): 

                            
(a)         permitted or allowed any of
its assets or properties, whether tangible or intangible, to be mortgaged,
pledged or made subject to any Lien, other than Permitted Liens that shall be
released at or prior to Closing; 

                            
(b)         incurred any Liability
except in the ordinary course of business consistent with past practice; 

                            
(c)         incurred any Company
Indebtedness or suffered any bad debt; 

                            
(d)         suffered any change in its
business relationship with any of its customers, distributors or suppliers; 

                            
(e)         entered into any employment
Contract or collective bargaining agreement, written or oral, or modified the
terms of any existing employment Contract; 

                            
(f)         made any loan to, or entered
into any other transaction or Contract with, any of its equity holders,
directors, officers, employees and consultants; 

                            
(g)         delayed or postponed the
payment of any accounts payable or commissions or any other Liability or agreed
or negotiated with any Person to extend the payment date of any accounts payable
or commissions or any other Liability or accelerated the collection of (or
discounted) any accounts or notes receivable or made any changes to the
customary methods of operations of such Person; 

                            
(h)         cancelled any of its debts
or waived any claims or rights, or sold, transferred or otherwise disposed of
any properties or assets (real, personal or mixed, tangible or intangible),
except in transactions in the ordinary course of business and consistent with
past practice, such as the sale of inventory and the use of supplies; 

                            
(i)         declared or paid any
dividends on or made any other distributions (whether in cash, stock or
property) in respect of any of its capital stock; or 

                            
(j)         made any Tax election or
changed an existing election or settled or compromised any Liability with
respect to Taxes of any Company Party. 

14 




             4.9        
Legal Proceedings. Except as set forth in Schedule 4.9, there are
no (and in the last 3 years, there have been no) Actions pending or threatened
by or against any Company Party or the Business and, to the Knowledge of the
Company, there is no reasonable basis for any such Action. Except as set forth
on Schedule 4.9, no Company Party is subject to or bound by any
Governmental Order or any settlement agreement.

             4.10      
Compliance with Law. Schedule 4.10 sets forth all authorizations,
accreditations, approvals, licenses and orders of and from all Governmental
Authorities held by any Company Party (the “Permits”). Only the
Permits marked with an asterisk on Schedule 4.10 are required to carry on the
Business as it is now being conducted, to own or hold under lease the properties
and assets it owns or holds under lease and to perform all of its obligations
under the Contracts to which it is a party. Except as is set forth on
Schedule 4.10, no suspension, cancellation or termination of any Permit
is threatened other than the expirations of Permits requiring renewal in the
ordinary course of business, and, to the Knowledge of the Company, there is no
basis therefor. Except as is set forth on Schedule 4.10, the Company
Parties are in compliance with all Applicable Laws and Permits to which the
Business and the Company Parties are subject, and no Company Party has received
any claim or notice that they are not in such compliance.

            
4.11       Environmental Matters.

                             (a)        
For purposes of this Agreement, the term “Environmental Laws”
shall mean all foreign, federal, state and local laws, regulations, ordinances,
decrees and orders relating to the environment, health and safety, including,
without limitation, regulation of Hazardous Substances or any other material or
substance which constitutes a health, safety or environmental hazard to any
person or property, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
the Resource Conservation and Recovery Act of 1980, as amended. For the purposes
of this Agreement, the term “Hazardous Substances” means any
solid, liquid or gaseous material, alone or in combination, mixture or solution,
which is defined, listed or identified as hazardous (whether a substance,
material or waste), “toxic,” “pollutant” or “contaminant” pursuant to
Environmental Laws, including, without limitation asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon, mold, petroleum
or petroleum products and any other material or substance limited, controlled or
regulated under any applicable Environmental Laws. 

                             (b)        
Except as set forth on Schedule 4.11: (i) each Company Party is and has
been in compliance in all material respects with all Environmental Laws, and
does not have any Liabilities under any Environmental Laws with respect to any
properties and assets (whether real, personal or mixed) in which such Company
Party has or had an ownership, leasehold or other interest; (ii) no Company
Party has received at any time any citation, notice or other communication from
any Governmental Authority regarding any alleged, actual or potential violation
by such Company Party of any Environmental Law, or any alleged, actual or
potential obligation by such Company Party to undertake or bear the cost of any
Liabilities under any Environmental Law, and (iii) there are no Hazardous
Substances present in, on, under or emanating from any property leased or
operated by any Company Party, or any property formerly owned, leased or
operated by any Company Party, in violation of any applicable Environmental
Laws, or which may give rise to any common law or legal Liability of any Company Party, or otherwise form the basis of any claim,
action, demand, suit, proceeding, hearing, notice of violation, study or
investigation. 

15 




             4.12       Material
Contracts. Schedule 4.12 sets forth a correct and complete list of
the following Contracts to which any Company Party is a party with respect to
the Business (the “Material Contracts”): 

                            
(a)         all Contracts evidencing or
otherwise relating to obligations for Company Indebtedness; 

                            
(b)         all existing Contracts
(other than those described in subparagraphs (a) or (c), and any of the
Company’s Benefit Plans) to which any Company Party is a party or by which any
Company Party or its properties or assets may be bound (i) involving an annual
commitment or annual payment by any party thereto of more than $10,000
individually, (ii) which have a fixed term extending more than twelve months
from the date hereof and which involve cumulative payments in excess of $25,000,
or (iii) which is likely to result in payment by any party thereto of $10,000
over the twelve months following the date hereof, in each case individually, or
which are otherwise material to the Business and operations of any Company
Party; 

                            
(c)         all Contracts imposing a
noncompetition obligation on any Company Party or other restriction on the
business activities of any Company Party or use of information in the Business
in any location, including, without limitation, exclusive dealing obligations;


                            
(d)         all Contracts with customers
of any Company Party; 

                            
(e)         Real Property Leases; 

                            
(f)         Capital or operating leases
or conditional sales agreements; 

                            
(g)         employment, collective
bargaining, severance, stay bonuses, retention, consulting, employee benefit and
similar plans and Contracts; 

                            
(h)         Contracts under which any
Company Party is obligated to indemnify or hold harmless, or entitled to
indemnification from, any other Person, or Contracts under which a Company Party
is obligated to pay liquidated damages; 

                            
(i)         Contracts between any
Company Party and any stockholder, director, partner, officer or employee or
other Affiliate of any Company Party, or its Affiliates; 

                            
(j)         joint venture, partnership
or similar agreements; 

                            
(k)         barter, currency, hedge or
broker Contracts; 

                            
(l)         any settlement agreements
pursuant to which any Company Party is entitled to, or obligated to make, future
payments (whether lump sum or by installment); or 

16 




                             (m)        
to the extent not covered above, any other Contract material to any Company
Party or the Business. 

             Correct
and complete copies of all Material Contracts, including all amendments thereto,
have been provided to Buyer. The Material Contracts are in full force and effect
and are valid and enforceable in accordance with their respective terms with
respect to the Company Party that is party to such Material Contract (as
applicable) and are valid and enforceable in accordance with their respective
terms with respect to any other party thereto. Except as reflected in
Schedule 4.12, there have been no amendments, assignments, modifications
or supplemental arrangements to or with respect of any Material Contract, and no
consents or notices are required for the Company to execute this Agreement or
perform the Contemplated Transactions. There is no event which has occurred or
existing condition (including the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions) which constitutes or which,
with notice, the happening of an event and/or the passage of time would
constitute a breach, default or event of default by any Company Party or would
cause the acceleration of any obligation of any Company Party, give rise to any
right of termination or cancellation by any party other than a Company Party or
cause the creation of any Lien on any of the assets of any Company Party, nor
does any Company Party have Knowledge of, and a Company Party has not received
notice of, or made a claim with respect to, any breach or default by any other
party thereto. There are no renegotiations of, or attempts to renegotiate or
outstanding rights to renegotiate, any terms or provisions of any Material
Contract and no Person has made a demand for such renegotiations.

            
4.13         Taxes. 

                             (a)        
The Company Parties have each timely filed all Tax Returns required to be filed
(determined without regard to extensions) on or before the date hereof. All Tax
Returns filed by any Company Party were complete and correct in all respects,
and such Tax Returns correctly reflected the material facts regarding the
income, business, assets, operations, activities, status and other matters of
the respective Company Party and any other information required to be shown
thereon. 

                             (b)        
The Company Parties have each, as applicable, timely paid all Taxes owed
(whether or not shown, or required to be shown, on Tax Returns) on or before the
date hereof. Each Company Party has withheld and timely paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
All Taxes that have not yet become due and payable on or at the Effective Date
have been adequately reserved in the Financial Statements in accordance with
GAAP. All required estimated Tax payments sufficient to avoid any underpayment
penalties have been timely made by or on behalf of the Company. None of the Tax
Returns filed by any Company Party contains a disclosure statement under former
Section 6661 of the Code or current Section 6662 of the Code (or any similar
provision of state, local or foreign Tax law). There are no liens for Taxes upon
any of the Company Parties’ assets, other than Liens for Taxes not yet due and
payable and for which there are adequate reserves in accordance with GAAP. 

17 




                             (c)        
None of the Tax Returns filed by any Company Party or Taxes paid or payable by
any Company Party have been the subject of an audit, action, suit, proceeding,
claim, examination, deficiency or assessment by any Taxing Authority, and no
such audit, action, suit, proceeding, claim, examination, deficiency or
assessment is currently pending or, to the Knowledge of the Company, threatened.
No Company Party has received from any Governmental Authority (including
jurisdictions where any Company Party has not filed Tax Returns) any (i) written
notice indicating an intent to open an audit or other review, (ii) request for
information related to any Tax matters, or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed by any
taxing authority against any Company Party. 

                             (d)        
None of the Company Parties are currently the beneficiary of any extension of
time within which to file any Tax Return, and no Company Party has waived any
statute of limitation with respect to any Tax or agreed to any extension of time
with respect to a Tax assessment or deficiency. All elections with respect to
Taxes affecting any Company Party, as of the date hereof, are set forth in
Schedule 4.13. 

                             (e)        
No Company Party shall be required to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Effective Date as a result of any (i) change in method
of accounting for a taxable period ending on or prior to the Effective Date,
(ii) “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) executed
on or prior to the Effective Date, (iii) intercompany transaction or excess loss
account described in United States Treasury Regulations under Section 1502 of
the Code (or any corresponding or similar provision of state, local, or foreign
Tax law), (iv) installment sale or open transaction disposition transaction made
on or prior to the Effective Date, (v) prepaid amount received on or prior to
the Effective Date; or (vi) election under Section 108(i) of the Code. 

                             (f)        
None of the shares of outstanding capital stock or other equity interest of any
Company Party is subject to a “substantial risk of forfeiture” within the
meaning of Section 83 of the Code. No Company Party has distributed stock of
another Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code. No portion of the Purchase Price is subject to
the Tax withholding provisions of Section 3406 of the Code, or of Subchapter A
of Chapter 3 of the Code or of any other provision of Law.

                             (g)        
No Company Party is a party to or bound by any Tax allocation or sharing
agreement or similar arrangement (including, but not limited to, an
indemnification agreement or arrangement). No Company Party has been a member of
a group filing a consolidated federal income Tax Return or a combined,
consolidated, unitary or other affiliated group Tax Return for state, local or
foreign Tax purposes (other than a group the common parent of which is the
Company). No Company Party has any liability for the Taxes of any Person (other
than the Company) under Treasury Regulation Section 1.1502 -6 (or any
corresponding provision of state, local or foreign Tax law), or as a transferee
or successor, or by contract, or otherwise. 

18 




                             (h)        
The unpaid Taxes of each of the Company Parties did not, as of the date of this
Agreement, exceed the reserve for actual Taxes (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) as shown on the December 31, 2013 balance sheet of each such Company
Party, if any, and shall not exceed such reserve as adjusted for the passage of
time through the Effective Date in accordance with the reasonable past custom
and practice of each such Company Party in filing Tax Returns. No Company Party
shall incur any liability for Taxes from the date of this Agreement through the
Effective Date other than in the ordinary course of business and consistent with
reasonable past practice.

                             (i)        
Schedule 4.13 hereto contains a list of all jurisdictions (whether
foreign or domestic) to which any Tax is properly payable by any Company Party.
No claim has ever been made by a Governmental Authority in a jurisdiction where
a Company Party does not file Tax Returns that a Company Party is or may be
subject to Tax in that jurisdiction. No Company Party has nor has never had, a
permanent establishment or other taxable presence in any foreign country, as
determined pursuant to applicable foreign law and any applicable Tax treaty or
convention between the United States and such foreign country. 

                             (j)        
Seller has delivered to Buyer correct and complete copies of all Tax Returns,
and any corresponding examination reports and statements of deficiencies
assessed against or agreed to by any Company Party since January 1, 2011. Each
Company Party has disclosed on its respective federal Tax Return, if any, all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Code. Schedule
4.13 sets forth the following information with respect to each Company Party
as of the most recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the Contemplated
Transactions): the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution of each Company Party. No Company Party is or has been a party to
any ‘‘reportable transaction,’’ as defined in Section 6707A(c)(1) of the Code
and treasury regulation section §1.6011 -4(b). No Company Party has received any
private letter ruling from the Internal Revenue Service (or any comparable
ruling from any other Governmental Authority).

                             (k)        
For purposes of this Section 4.13 and Section 7.3 any reference to any Company
Party shall be deemed to include any Person that merged with or was liquidated
into any such Company Party. 

                             (l)        
The Company (and any predecessor of the Company) has been a valid S corporation
up to and including the Effective Date.

                             (m)        
The Company shall not be liable for any Tax under Section 1374 of the Code in
connection with the deemed sale of the Company’s assets caused by the
§338(h)(10) election. The Company has not, in the past 10 years (i) acquired
assets from another corporation in a transaction in which the Company’s Tax
basis for the acquired assets was determined, in whole or in part, by reference
to the Tax basis of the acquired assets (or any other property) in the hands of
the transferor or (ii) acquired the stock of any corporation that is a qualified
subchapter S subsidiary. 

19 




             4.14      
Employees. Schedule 4.14 contains a correct and complete list of
all of (a) the officers, (b) directors and (c) employees of each Company Party
(collectively, the “Business Employees”),
including the name, date and location of employment, current title, and the
following information: tenure with Company Party, salary, bonus and all other
benefits and compensation. Each of the employment agreements entered into by the
Company and the Key Employees in connection with this Agreement identifies and
accurately reflects the amounts historically paid by the Company to the Key
Employees as compensation. Except as set forth on Schedule 4.14, no
increase in the salary, bonus, benefits or other compensation (other than normal
periodic increases in base compensation applied on a basis consistent with that
of prior years with respect to Business Employees who are not officers or
directors of any Company Party) of any Business Employee has been made (or
promised) during the twelve (12) month period prior to the Effective Date. Other
than as set forth in Schedule 4.14, no Company party has entered into any
Contract with respect to severance payments nor does any Company Party have any
policy with respect to the payment of severance. To the Knowledge of the
Company, no Business Employee intends (or has announced an intention) to
terminate employment with any Company Party. 

            
4.15       Employee Benefits.

                            
(a)         Schedule 4.15 sets
forth a true and complete list of (i) each “employee benefit plan” as defined in
Section 3(3) of ERISA, and (ii) each bonus or other incentive compensation,
stock option, stock purchase, or other equity-related award, deferred
compensation, severance pay, change in control, retention, salary continuation,
sick leave, vacation pay, leave of absence, paid time off, loan, educational
assistance, legal assistance, and other material fringe benefit plan, program,
agreement or arrangement, in each case (i) which are currently maintained or
contributed to by any Company Party or ERISA Affiliate, (ii) which was
maintained or contributed to by any Company Party or ERISA Affiliate within the
past seven (7) years or (iii) with respect to which any Company Party or ERISA
Affiliate has any liability or obligations to any current or former officer,
employee, or service provider of any Company Party or ERISA Affiliate, or the
dependents or beneficiaries of any thereof, regardless of whether funded,
(collectively, the “Benefit Plans”). With respect to each Benefit
Plan, true, correct and complete copies of the following documents (if
applicable), have been delivered to Purchaser or its counsel: (i) the most
recent plan document constituting the Benefit Plan and all amendments thereto,
and any related trust documents (including a description of any unwritten
Benefit Plan), (ii) the most recent summary plan description and all related
summaries of material modifications, (iii) the Form 5500 and attached schedules
filed with the Internal Revenue Service for the past three (3) fiscal years, and
(iv) for any Benefit Plan intended to be qualified under Section 401 of the
Code, the most recent determination letter or opinion letter upon which the
Benefit Plan is entitled to rely issued by the Internal Revenue Service and no
event has occurred which would reasonably be expected to cause any Benefit Plan
to become disqualified for purposes of Section 401(a) of the Code. 

                             (b)        
Each Company Party and all ERISA Affiliates have performed and complied in all
material respects with all of their respective obligations under or with respect
to the Benefit Plans, and each Benefit Plan complies and has been administered
and operated in compliance in all material respects in accordance with its terms
and with all Applicable Laws, including but not limited to the Code and ERISA.
Each Benefit Plan intended to be qualified under Section 401 of the Code has received a determination
letter or, if a prototype plan, an opinion letter upon which the Benefit Plan is
entitled to rely issued by the Internal Revenue Service and no event has
occurred which would reasonably be expected to cause any Benefit Plan to become
disqualified for purposes of Section 401(a) of the Code. 

20 




                             (c)        
None of the Benefit Plans is a “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA, and no Company Party nor any ERISA Affiliate have
maintained, been required to contribute to or been required to pay any amount
with respect to a “multiemployer plan” at any time. None of the Benefit Plans is
subject to Title IV of ERISA or to the funding requirements of Section 412 of
the Code or Section 302 of ERISA, and none of the Company Parties or any ERISA
Affiliate have ever had any obligation to or liability for (contingent or
otherwise) with respect to any such Benefit Plan. None of the Company Parties or
any ERISA Affiliate has ever maintained, been required to contribute to or been
required to pay any amount with respect to a multiple employer welfare benefit
arrangement (as defined in Section 3(40)(A) of ERISA). 

                             (d)        
Each Benefit Plan which is a nonqualified deferred compensation plan within the
meaning of Section 409A of the Code has been administered, operated and
maintained in all respects according to the requirements of Section 409A of the
Code, and no Company Party has been required to withhold or pay any Taxes as a
result of a failure to comply with Section 409A of the Code. None of Company
Parties has any obligation to make a “gross-up” or similar payment in respect of
any Taxes that may become payable under Section 409A of the Code. 

                             (e)        
All contributions and premiums (including all employer contributions and
employee salary reduction contributions) that are due with respect to any
Benefit Plan have been made within the time periods prescribed by Applicable Law
or by the terms of such Benefit Plan or any agreement relating thereto to the
respective Benefit Plan, and all contributions, liabilities or expenses of any
Benefit Plan (including workers’ compensation) for any period ending on or
before the Effective Date which are not yet due shall have been paid or accrued
on the relevant balance sheet in accordance with GAAP on or prior to the
Effective Date. 

                             (f)        
Except for health care continuation requirements under Section 4980B of the Code
and Part 6 of Subtitle I of ERISA (“COBRA”) or applicable state
law, no Benefit Plan provides for, and no written or oral agreements have been
entered into promising or guaranteeing, the continuation of medical, dental,
vision, life or disability insurance coverage for any current or former
employees of any Company Party or any ERISA Affiliate or their beneficiaries and
dependents for any period of time beyond the termination of employment. All
group health plans of the Company Parties have been operated in compliance in
all respects with the applicable requirements of COBRA and any applicable state
statutes mandating health insurance continuation coverage for employees. Each
Company Party and each Benefit Plan that is a health plan has complied with the
Patient Protection and Affordable Care Act. 

                             (g)        
All required reports, Tax Returns, documents and plan descriptions of the
Benefit Plans have been timely filed with the Internal Revenue Service, the U.S.
Department of Labor and/or, as appropriate, provided to participants in the
Benefit Plans.

21 




There are no pending claims, lawsuits or actions relating to
any Benefit Plan (other than ordinary course claims for benefits) and, to the
Seller’s Knowledge, none are threatened.

                             (h)        
The consummation of the transactions contemplated by this Agreement will not
accelerate the time of vesting or payment, or increase the amount, of
compensation to any employee, officer, former employee or former officer of any
Company Party. No Benefit Plans or other contracts or arrangements provide for
payments that would be triggered by the consummation of the transactions
contemplated by this Agreement that would subject any person to excise tax under
Section 4999 of the Code, and no Company Party has made any payments, is
obligated to make any payments and is not a party to any agreement that under
any circumstances could obligate it to make any payments that will not be
deductible under Section 280G of the Code (without regard to the exceptions set
forth in Sections 280G(b)(4) and 280G(b)(5)(A)(ii) of the Code). 

                             (i)        
No Lien exists with respect to any of the assets of any Company Party or any
ERISA Affiliate which were imposed pursuant to the terms of the Code or ERISA.


                             (j)        
None of the execution and delivery of this Agreement, the performance by any
party of its obligations hereunder or the consummation of the transactions
(alone or in conjunction with any other event) will (i) entitle any employee or
other individual providing services to any Company Party to any compensation or
benefit or (ii) result in any termination, breach or violation of, or default
under, or limit the sponsoring Company Party’s right to amend, modify or
terminate any Benefit Plan. No Company Party or any ERISA Affiliate has
announced any intention, made any amendment or binding commitment, or given any
written or oral notice providing that any Company Party (i) will create
additional Benefit Plans covering the employees of Company Party, (ii) will
increase benefits promised or provided pursuant to any Benefit Plan, or (iii)
will not exercise after the Effective Date any right or power it may have to
terminate, suspend or amend any Benefit Plan. 

                             (k)        
Each individual who performs services for any Company Party is properly
classified as an employee or an independent contractor and each employee of any
Company Party is properly classified as nonexempt or exempt. 

             4.16      
Labor Relations. Except as set forth on Schedule 4.16, each
Company Party is in compliance in all material respects with all Applicable Laws
and Governmental Orders respecting employment and employment practices, terms
and conditions of employment, wages and hours, and is not engaged in any unfair
labor or unlawful employment practice. Except as set forth on Schedule
4.16, there is no: (a) discrimination charge pending before the Equal
Employment Opportunity Commission (the “EEOC”) or any EEOC
recognized state “referral agency” or threatened against or involving or
affecting such Company Party; (b) unfair labor practice charge or complaint
against Seller pending before the National Labor Relations Board (the
“NLRB”) or threatened against or involving or affecting such
Company Party; (c) labor strike, dispute, slowdown or stoppage actually pending
or threatened against or involving or affecting such Company Party and no NLRB
representation question exists respecting any of their respective Business
Employees; (d) grievance or arbitration proceeding pending and no written claim
therefor exists; and (e) collective bargaining agreement that is binding on such
Company Party. Within the preceding five (5) years, no Company Party has
implemented any “plant closing” or “mass layoff” of employees that would
reasonably be expected to require notification under the WARN Act or any similar
state or local Law, no such “plant closing” or “mass layoff” shall be
implemented before the Effective Date without advance notification to and
approval of Buyer, and there has been no “employment loss” as defined by the
WARN Act within the ninety (90) days prior to the Effective Date.

22 




             4.17      
Real Properties and Related Matters. Schedule 4.17 sets forth a
correct and complete list of all of the real property leased (the “Leased
Real Property”) by any Company Party as of the date of this Agreement, and
Schedule 4.17 also identifies each lease agreement to which each Leased
Real Property is subject and to which any Company Party is a party, including
each amendment thereto (collectively, the “Real Property Leases”).
No Company Party owns any real property and no real property is used in
connection with the Business other than the Leased Real Property. All of the
rental and other payments payable under each Real Property Lease by any Company
Party are current, no notice of default has been given under such Real Property
Lease either by the landlord or by the tenant thereunder, and no event has
occurred which, with the lapse of time or the giving of notice or both, would
constitute a default thereunder. 

            
4.18       Proprietary Rights.

                             (a)        
Schedule 4.18(a) sets forth all of the Proprietary Rights and the
Licensed IP necessary for the operation of the Business as it is currently
conducted. Each Company Party owns all right, title and interest in and to the
Proprietary Rights set forth on Schedule 4.18(a), free and clear
of all Liens (except for Permitted Liens), and have the right to use all of the
Licensed IP set forth on Schedule 4.18(a) as it is currently used in the
Business. The Company Parties’ rights in the Proprietary Rights are valid,
subsisting and enforceable. 

                             (b)        
No loss or expiration of any Company Party’s Proprietary Rights has occurred
prior to the Closing, and no loss or expiration of any such Proprietary Rights
has been threatened. 

                             (c)        
Except as set forth on Schedule 4.18(c), (i) there have been no written
claims made against any Company Party asserting the invalidity, misuse or
unenforceability of any of its Proprietary Rights or Licensed IP, (ii) such
Company Party has not received any written notices of any infringement or
misappropriation by, or conflict with, any third party with respect to any
Proprietary Rights or Licensed IP (including any demand or request that such
Company Party license any rights from a third party), (iii) the conduct of the
Business has not infringed, misappropriated or conflicted with and does not
infringe, misappropriate or conflict with any proprietary rights of other
Persons, and (iv) no Person has infringed upon or is currently infringing upon
any Proprietary Rights of any Company Party. The consummation of the
Contemplated Transactions shall have no adverse effect on the right, title or
interest in and to or use of the Proprietary Rights or Licensed IP and all of
such Proprietary Rights and Licensed IP shall be owned or available for use by
Buyer on substantially identical terms and conditions immediately after the
Closing. 

             4.19      
Brokers, Finders and Investment Bankers. Except as set forth on
Schedule 4.19, no Company Party, Seller, nor any of the executive
officers, directors or Affiliates of any Company Party has employed any broker, finder or investment
banker or incurred any Liability for any investment banking fees, financial
advisory fees, brokerage fees or finders’ fees in connection with the
Contemplated Transactions. 

23 




             4.20      
Insurance. Schedule 4.20 sets forth a complete and accurate list
and brief description (in each case specifying the insurer, the amount of
coverage and the type of insurance) of all insurance policies issued in favor of
any Company Party or the Business, or pursuant to which any Company Party is
named insured or otherwise a beneficiary in respect of the Business (the
“Business Insurance Policies”) and all claims pending under the
Business Insurance Policies, all of which have been properly reported to the
insurance carriers and there has been no reservation of rights that has been
issued by any insurance carrier that may jeopardize coverage, except in each
case as set forth on Schedule 4.20. As of the date hereof, each Company
Party is covered by valid and currently effective Business Insurance Policies
issued in favor of such Company Party that are customary and adequate for
companies of similar size in the industry and locales in which such Company
Party operates. All Business Insurance Policies listed in Schedule 4.20
are in full force and effect, all premiums due thereon have been paid and Seller
has complied in all material respects with the provisions of such policies. All
liability policies are on an “occurrence” basis. No Company Party has received
any notice of cancellation or non-renewal or proposed increase in the premiums
payable for coverage under any such Business Insurance Policy. There are no
outstanding surety or performance bonds with respect to the Business.

             4.21       Title
to Properties. Each Company Party has good and valid title to (or in the
case of leased assets, valid and enforceable rights in) all of the tangible
assets used or held for use by such Company Party in connection with the
Business, including all such assets reflected in the Financial Statements or
acquired since December 31, 2013, free and clear of all Liens, except for the
Permitted Liens. 

             4.22       Condition
of Properties. The improvements, machinery, equipment, furniture, fixtures,
inventory and tangible personal property owned, leased or held by any Company
Party for use in the Business are in the aggregate in such condition and repair
as are consistent with and suitable for their present uses, there are no
material defects in any of the assets used in the Business and the properties
are in compliance in all material respects with, and properly permitted under,
all applicable codes and other Laws. 

            
4.23       Transactions with
Affiliates.

                             (a)        
Except as set forth in Schedule 4.23(a), no shareholder, officer,
director or other Affiliate of any Company Party, or any direct or indirect
relative of any such Person, or any entity in which any such Person owns any
beneficial interest (other than a publicly-held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 1% of the stock of which is beneficially owned by all of such
Persons), has any interest in (a) any Contract with any Company Party relating
to the Business or otherwise, (b) any loan or Contract for or relating to any
Company Indebtedness or other indebtedness with any Company Party, (c) any
property (real, personal or mixed), tangible or intangible, used or currently
intended to be used in, the business or operations of any Company Party, or (d)
any business or entity that competes with any Company Party. 

24 




                             (b)        
Except for Tom Ludwig, no Business Employee is an immediate family member,
uncle, aunt, nephew, niece or first cousin of Seller. 

             4.24      
Adequacy of Assets. The assets of each Company Party include all tangible
and intangible assets, property and rights useful, held for use, used in or
required for use in the operation of the Business in the manner operated during
the twelve (12) month period preceding the Effective Date, and are sufficient to
conduct the operations of the Business as currently conducted. All right, title
and interest in and to the assets of David Ludwig Properties, LLC that relate to
the Business, including the FSU Assets (defined below) and office equipment that
relate to the Business, have been assigned, transferred and delivered to Company
prior to the Effective Date. For clarity, all real estate owned by David Ludwig
Properties, LLC will remain the property of such entity and not be property of
Company. “FSU Assets” shall mean the agreement(s) between any
Company Party or David Ludwig Properties, LLC and Florida State Unlimited
Realty, Inc., and all rights and business arising out of or relating to such
agreement(s). 

             4.25      
Accounts Receivable and Bad Debts. Schedule 4.25 attached hereto
sets forth a complete and accurate list of all accounts receivable of each
Company Party as of March 31, 2014, which list sets forth the aging of such
accounts receivable. Each account receivable listed on Schedule 4.25 is a
valid and enforceable claim and subject to no set-off or counterclaim (except as
reflected in the Financial Statements or otherwise in the ordinary course of
business), is genuine and subsisting, and shall be collected in the ordinary
course of business within ninety (90) days after the date on which it is due and
payable. 

             4.26       Books
and Records. The books and records of each Company Party and the accounts of
each Company Party reflect in all material respects, the transactions, assets
and Liabilities of each Company Party. No Company Party has engaged in any
material transaction with respect to its Business, maintained any bank account
for its Business, or used any of the funds of such Person in the conduct of its
Businesses, except for transactions, bank accounts and funds which have been and
are reflected in the books and records of such Person. 

             4.27      
Powers of Attorney. No Company Party has granted a power of attorney to
any Person to act or execute documents on behalf of such Company Party. 

             4.28      
Bank Accounts. Schedule 4.28 sets forth each of the bank accounts
of each Company Party and the Business Employees who are authorized signatories
with respect to such accounts. 

             4.29      
No Material Misstatements or Omissions. Neither this Agreement, the
Schedules or Exhibits hereto, nor any certificate or document furnished by any
Company Party pursuant to this Agreement contains or shall contain any untrue
statement of a material fact or omits or shall omit to state any material fact
necessary to make the statements contained herein or therein not misleading.


ARTICLE 5 
REPRESENTATIONS AND WARRANTIES OF SELLER



             Except
as specifically set forth on the Disclosure Schedules, as a material inducement
to Buyer to enter into this Agreement and consummate the Contemplated
Transactions, Seller hereby represents and warrants to Buyer that the statements
contained in this Article 5 are true and correct on the Effective Date. 

25 




             5.1        
Authorization. This Agreement and each agreement, document or instrument
required to be delivered by Seller hereby or in connection herewith has been
duly executed and delivered by Seller and constitutes the valid and binding
agreement of Seller, enforceable against him in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar Laws affecting
the enforceability of creditor’s rights generally, general equitable principles
and the discretion of the courts in granting equitable remedies. There is no
Action pending or threatened that in any manner challenges or seeks to prevent,
enjoin, alter or delay any of the Contemplated Transactions. To Seller’s
Knowledge, there is no fact, event or circumstance that reasonably could be
expected to give rise to any suit, Action or in the aggregate would have a
Material Adverse Effect upon the consummation of the Contemplated Transactions.


             5.2        
No Violations. Except as set forth in Schedule 5.2 hereto, the
execution, delivery and performance of this Agreement and each agreement,
document or instrument required to be delivered by it hereby or in connection
herewith and the consummation of the Contemplated Transactions do not and shall
not violate or conflict with, constitute a breach of or default under, result in
the loss of any benefit under, or permit the acceleration of any obligation
under, (a) any Contract to which Seller is a party or by which he (or any
respective properties or assets) is subject or bound, (b) any Governmental Order
to which Seller is a party or by which he or any of his respective properties or
assets is bound, or (c) any Law applicable to Seller or any of his respective
assets. Except as set forth on Schedule 5.2, no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required in connection with Seller’s execution,
delivery or performance of this Agreement and each agreement, document or
instrument required to be delivered by him hereby or in connection herewith.


             5.3        
Brokers, Finders and Investment Bankers. Except as disclosed in the
Company Disclosure Schedules, Seller has not employed any broker, finder or
investment banker or incurred any Liability for any investment banking fees,
financial advisory fees, brokerage fees or finders’ fees in connection with the
Contemplated Transactions. 

             5.4        
Title to Shares. Seller is the record and beneficial owner of, and has
good and valid title to, the Shares listed on Schedule 4.4 opposite his
name, free and clear of all Liens at Closing, which Shares represent all of the
capital stock or other equity interests of the Company held or beneficially
owned by Seller. Seller has not granted any option or right to purchase Shares
other than to Buyer pursuant to this Agreement. Seller is not a party to or
bound by any agreement, option, warrant, right, contract, call or put that
requires, or upon the passage of time or occurrence of any other event would
require, the payment of money or transfer of any of Shares to anyone other than
Buyer. 

26 




ARTICLE 6 
REPRESENTATIONS AND WARRANTIES OF BUYER



             As
a material inducement to Company and Seller to enter into this Agreement and
consummate the Contemplated Transactions, Buyer hereby represents and warrants
to Seller that the statements contained in this Article 6 are true and correct
on the Effective Date. 

             6.1        
Organization. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.

             6.2        
Authorization. Buyer has full corporate power and authority to execute
and deliver this Agreement and each agreement, document or instrument required
to be delivered by it hereby or in connection herewith and to perform its
obligations hereunder and thereunder and to consummate the Contemplated
Transactions provided for herein. The execution and delivery of this Agreement
and each agreement, document or instrument required to be delivered by it hereby
or in connection herewith by Buyer and the performance by Buyer of its
obligations hereunder and thereunder and the consummation of the Contemplated
Transactions have been duly and validly authorized by all necessary action on
the part of Buyer. This Agreement and each agreement, document or instrument
required to be delivered by Buyer hereby or in connection herewith have been
when executed at Closing duly and validly executed and delivered by Buyer and
constitutes the legal, valid and binding agreement of Buyer, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar Laws affecting the enforceability of creditor’s rights
generally, general equitable principles and the discretion of the courts in
granting equitable remedies. 

             6.3        
No Violations. The execution, delivery and performance of this Agreement
and each agreement, document or instrument required to be delivered by it hereby
or in connection herewith, the consummation of the Contemplated Transactions and
the fulfillment of and compliance with the terms and conditions of this
Agreement do not and shall not, violate or conflict with (a) any terms or
provisions of Buyer’s organizational documents, (b) any Contract to which Buyer
is a party (or by which it or its properties or assets) is subject to or bound,
(c) any Governmental Order to which Buyer or any of its properties or assets is
bound, or (d) any Law applicable to Buyer or any of its assets, except for such
violations which would not have in the aggregate a material adverse effect on
the ability of Buyer to consummate the Contemplated Transactions. 

             6.4        
Brokers and Finders. No broker, finder or other financial consultant has
acted on Buyer’s behalf in connection with this Agreement or the Contemplated
Transactions in such a way as to create any liability of Seller or the Company.


ARTICLE 7 
CERTAIN COVENANTS AND AGREEMENTS 


             7.1        
Announcements. Each Company Party, Seller and Buyer shall consult with
each other with respect to the timing and content of all announcements regarding
this Agreement or the Contemplated Transactions to the financial community,
Governmental Authorities, employees, customers or the general public and shall
use reasonable efforts to agree upon the text of any such announcement prior to
its release, and no Seller shall not make any such announcement without Buyer’s
express consent to the content thereof.

27 




            
7.2         Tax Matters.

                             (a)        
General. Seller shall be responsible for all Tax liabilities of the
Company Parties for Tax periods, or portions thereof, ending prior on or before
the Effective Date. 

                             (b)        
Filing Responsibility. The following provisions shall govern the
allocation of responsibility and payment of Taxes as between Buyer and Seller
for certain Tax matters following the Effective Date: 

                                            
(i)         Seller shall, or shall cause
the Company to prepare and file, on a timely basis, all Tax Returns that are
required to be filed by the Company Parties (taking account of extensions) prior
to the Effective Date and shall pay all Taxes with respect thereto. 

                                             (ii)        Seller
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company for all periods ending on or prior to the Effective Date
which are required to be filed after the Effective Date, and shall provide each
such Tax Return to Buyer for review, comment and revision at least twenty (20)
days before the date such Tax Return is filed. Such Tax Returns shall be
prepared in a manner consistent with past practice. Seller shall make any
revisions to such Tax Returns as reasonably requested by Buyer prior to filing
such Tax Returns. Notwithstanding anything in this Agreement to the contrary, no
review or deemed review of any Tax Return by Buyer pursuant to this Section
7.2(b) shall affect any Buyer indemnification rights, or any of Seller’s
obligations hereunder. 

                                             (iii)      
Buyer shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Company Parties for Tax periods which begin before the
Effective Date and end after the Effective Date, and shall provide each such Tax
Return to Seller for review and comment at least twenty (20) days before the
date such Tax Return is filed. Such Tax Returns shall be prepared in a manner
consistent with past practice. Notwithstanding anything in this Agreement to the
contrary, no review or deemed review of any Tax Return by Buyer pursuant to this
Section 7.2(b) shall affect any Buyer indemnification rights, or any of Seller’s
obligations hereunder. Seller shall pay to Buyer within fifteen (15) days before
the date on which Taxes are paid with respect to such periods an amount equal to
the portion of such Taxes which relates to the portion of such Tax period ending
on the Effective Date. For purposes of this Section 7.2, in the case of any
Taxes that are imposed on a periodic basis and are payable for a Tax period that
includes (but does not end on) the Effective Date, the portion of such Tax which
relates to the portion of such Tax period ending on the Effective Date shall (x)
in the case of any Taxes other than Taxes based upon or related to income, gains
or receipts, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction the numerator of which is the number of days in the Tax
period ending on the Effective Date and the denominator of which is the number
of days in the entire Tax period, and (y) in the case of any Tax based upon or
related to income, gains or receipts, be deemed equal to the amount which would be payable if the relevant Tax period ended on the
Effective Date. Any credits relating to a Tax period that begins before and ends
after the Effective Date shall be taken into account as though the relevant Tax
period ended on the Effective Date. All determinations necessary to give effect
to the foregoing allocations shall be made in a manner consistent with GAAP. 

28 




                                             (iv)        
In the case of any Tax Return due after the Effective Date that is required to
be signed by Buyer (or any officer or other authorized representative of any
thereof), Seller shall send a copy of such Tax Return to Buyer no later than
forty-five (45) days, in the case of Tax Returns that are filed less frequently
than monthly, and five (5) days, in the case of all other Tax Returns, prior to
the date on which such Tax Return is due and, subject to Buyer’s review,
comments and revisions, Buyer shall sign or cause to be signed by the relevant
appropriate Person, as applicable, such Tax Return and send such signed Tax
Return back to Seller no later than seven (7) days prior to the date on which
such Tax Return is due, in the case of Tax Returns that are filed less
frequently than monthly, and no later than the earlier of (A) two (2) days prior
to the date on which such Tax Return is due and (B) five (5) days after receipt
of such Tax Return by Buyer, in the case of all other Tax Returns. 

                             (c)        
Tax Proceedings. If, subsequent to the Effective Date, a party to this
Agreement shall receive notice of a Tax proceeding with respect to Taxes the
payment of which is the responsibility of the other party to this Agreement or
for which the other party to this Agreement would have an indemnification
obligation under Section 7.2(e) hereof, the party receiving such notice shall
promptly notify the other party in writing of such Tax proceeding, provided that
the failure of such party to give such notice to the other party shall not
relieve the party responsible for the Tax of such party’s indemnification
obligations under Section 7.2 hereof, except to the extent that party to be
indemnified under Section 7.2(e) hereof can demonstrate actual loss and
prejudice as a result of such failure. With respect to any Tax proceeding for
which: (i) Seller acknowledges in writing that Seller is liable under Section
7.2(e) for all Losses relating thereto and (ii) Buyer reasonably believes that
Seller shall indemnify Buyer for all such Losses, Seller shall be entitled to
control, in good faith, all proceedings taken in connection with such Tax
proceeding with counsel satisfactory to Buyer; provided, however,
that (x) Seller shall promptly notify Buyer in writing of his intention to
control such Tax proceeding, (y) in the case of a Tax proceeding relating to
Taxes of the Company Parties for a Tax period beginning before and ending after
the Effective Date, Seller and Buyer shall jointly control all proceedings taken
in connection with any such Tax proceeding, and (z) if any Tax proceeding could
reasonably be expected to have an adverse effect on Buyer, the Company Parties,
or any of their Affiliates in any Tax period beginning after the Effective Date,
the Tax proceeding shall not be settled or resolved without Buyer’s consent,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, if notice is given to Seller of the commencement of any Tax
proceeding and Seller does not, within fifteen (15) days after Buyer’s notice is
given, give notice to Buyer of his election to assume the defense thereof (and
in connection therewith, acknowledge in writing Seller’s indemnification
obligations hereunder), Seller shall be bound by any determination made in such
Tax proceeding or any compromise or settlement thereof effected by Buyer. Buyer
and the Company Parties shall use their reasonable efforts to provide Seller
with such assistance as may be reasonably requested by Seller in connection with
a Tax proceeding controlled solely or jointly by Seller. 

29 




                             (d)        
Transfer and Similar Taxes. All real property transfer taxes, other
transfer, documentary, sales, use, registration, stamp and similar Taxes and
fees (including any penalties and interest) incurred in connection with the
Contemplated Transactions (collectively, “Transfer Taxes”) shall
be borne solely by Seller. Seller, in the case of Transfer Taxes and
corresponding Tax Returns due prior to the Effective Date, and Buyer, in the
case of corresponding Tax Returns due on or after the Effective Date, shall
cause the Company Parties to remit payment for such Transfer Taxes and duly and
timely file such Tax Returns, and Seller shall cooperate in (i) determining the
amount of Transfer Taxes, (ii) providing all requisite exemption certificates
and (iii) preparing and timely filing any and all required Tax Returns for or
with respect to such Transfer Taxes with any and all appropriate Taxing
Authorities. 

                            
(e)         Tax Indemnification.


                                             (i)        
Seller shall indemnify Buyer for Taxes: (1) attributable to Tax periods (or
portions thereof) ending on or before the Effective Date; and (2) without
duplication arising from breach of representations or warranties set forth in
Section 4.13 hereof, and (3) pursuant to Section 7.2(d) . Seller’s
indemnification obligations under this Section 7.2(e) are referred to herein as
the “Seller’s Tax Indemnity”. 

                                             (ii)        
Buyer shall indemnify Seller for Taxes attributable to Tax periods (or portions
thereof) ending after the Effective Date. Seller’s indemnification obligations
under this Section 7.2(d)(ii) are referred to herein as the “Buyer’s Tax
Indemnity”. 

                                             (iii)        
For purposes of this Section 7.2(e) and the calculation of any indemnity payable
or amount recoverable under this Agreement, any interest, penalties or additions
to Tax accruing with respect to a liability for Taxes for which a party to this
Agreement is entitled to recover from the another Party to this Agreement shall
be deemed to be attributable to a Tax period with respect to which the a Party
to this Agreement is required to indemnify the other Party to this Agreement.


                             (f)        
Tax Treatment of Indemnity Payments. Seller and Buyer agree to treat any
indemnity payment made pursuant to this Agreement as an adjustment to the
Purchase Price for all Tax purposes, unless otherwise required by Law. 

                             (g)        
Payments. A party to this Agreement may by written notice to another
party to this Agreement make a claim for indemnification or recovery under this
Section 7.2 and shall include in a notice of any claim for indemnification
pursuant to this Section 7.2 a calculation of the amount of the requested
indemnity or recovery payment. Within ten (10) days after the indemnity or
recovery calculation has been resolved, the party to this Agreement liable for
such taxes shall pay the indemnified party the recovery or indemnification
amount determined to be due. 

                             (h)        
Access and Assistance. Buyer, each Company Party, Seller and their
Affiliates shall provide each other with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Tax Return,
any audit or other examination by any Taxing Authority, any judicial or
administrative proceedings relating to liability for Taxes, or any other claim
arising under this Agreement, and each shall retain and provide the others with any records or information that may be relevant to
any such Tax Return, audit or examination, proceeding or claim. Such assistance
shall include making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder and shall include providing copies of any relevant Tax Returns and
supporting work schedules which assistance shall be provided without charge
except for reimbursement of reasonable out-of-pocket expenses.

30 




                             (i)        
Refunds. All refunds for Taxes for Tax periods ending on or prior to the
Effective Date shall be the property of Seller and any such refunds shall be
paid to Seller by the Company promptly upon receipt; provided, however, Seller
shall not be entitled to any refund, or portion thereof, if such refund, or
portion thereof, is the result of the carryback of any operating losses, net
operating losses, capital losses, Tax credits or similar items arising in a Tax
period ending on or after the Effective Date. To the extent any refund from one
jurisdiction is treated as income to another jurisdiction, any Tax owed to such
other jurisdiction on account of such refund shall reduce the amount paid to
Seller under this Section 7.2(i) .

             7.3        
Further Assurances. From time to time after the Closing, without further
consideration, each Company Party and Seller, on the one hand, and Buyer, on the
other hand, at their own respective expense, shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be reasonably necessary or appropriate to effectuate, carry out and
comply with the terms of this Agreement and the Contemplated Transactions. 

             7.4        
Filings and Notifications; Cooperation. Within the applicable time period
prescribed by Legal Requirements, Buyer shall, and shall cause its affiliates
to, make all filings and notifications required by applicable Law to be made by
them in connection with the Contemplated Transactions. Seller shall cooperate
with Buyer as necessary in connection with such filings and notifications. Buyer
shall, and shall cause its affiliates to, cooperate with Seller, any Company
Party, or their affiliates (a) with respect to all filings and notifications
that Seller, any Company Party, or their affiliates shall be required by
applicable Law to make in connection with the Contemplated Transactions and (b)
in obtaining any necessary consents under any Contract. 

             7.5        
Buyer’s Benefit Plans. At Closing, Buyer shall provide employees of the
Company Parties the opportunity to participate in all employee health and
welfare benefit plans, and practices maintained by Buyer for its employees
generally in accordance with the terms of such plans and practices as in effect
from time to time. After Closing, Buyer and Seller will cooperate to review the
benefit plans provided by Buyer for its employees and the employees of the
Company Parties and consider potential changes to and improvements in such
benefits plans. Employees of the Company Parties shall receive credit for their
pre-Closing tenure with the Company Parties for purposes of determining the
benefits to which they are entitled under Buyer’s benefit plans. Employees of
the Company Parties shall receive credit for their pre-Closing tenure with the
Company Parties for purposes of determining the benefits to which they are
entitled under Buyer’s benefit plans. 

31 




             7.6        
No Material Change in Business of Company Parties. Until such time as
Buyer has satisfied its obligations under Section 2.4 of this Agreement, Buyer
agrees that Buyer will not materially alter the business of the Company Parties
without the written consent of the Seller. 

ARTICLE 8 
CONDITIONS 


             8.1        
Conditions to Obligations of Seller. The obligations of Seller to
consummate the Contemplated Transactions shall be subject to the fulfillment at
or prior to the Closing of each of the following conditions (unless waived in
writing by Seller in his sole discretion): 

                             (a)         Closing Deliveries. Buyer
shall deliver (or cause the delivery of) each of the following deliverables on
or before the Effective Date: 

                                             (i)        
the Purchase Price to be paid in accordance with Section 2.2; and 

                                           
(ii)         a certificate of Buyer
certifying to the incumbency of the officers of Buyer executing this Agreement
and any other documents being executed in connection with the consummation of
the Contemplated Transactions and attaching all requisite resolutions of Buyer’s
governing body approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions. 

             8.2        
Conditions to Obligations of Buyer. The obligations of Buyer to effect
this Agreement and Contemplated Transactions shall be subject to the fulfillment
at or prior to the Closing of each of the following conditions (unless waived by
Buyer in writing in its sole discretion): 

                            
(a)         Closing Deliveries.
The Company Parties and Seller shall deliver (or cause the delivery of) each of
the following deliverables: 

                                            
(i)         Lien Releases. Payoff
letters, releases, UCC-3 termination statements and Lien discharges and any
other documents reasonably requested by Buyer reflecting the satisfaction in
full of any Liens filed against any Company Party (other than the Permitted
Liens), each in a form reasonably acceptable to Buyer; and 

                                            
(ii)         Consents. All
consents, authorizations, orders and approvals of (or filings or registrations
with) any governmental commission, board or other regulatory body (domestic or
foreign) required to be obtained by any Company Party in connection with the
execution, delivery and performance of this Agreement shall have been obtained
or made. All consents required from third parties that are listed on Schedule
8.2(a) attached hereto in order for the Company and Seller to consummate the
Contemplated Transactions shall have been obtained and the Company shall have
provided Buyer with reasonable evidence of such consent. 

                             (b)        
Other Notices. All notices, reports and other filings required to be made
prior to the Closing by the parties hereto with any Person in connection with
the execution and delivery of this Agreement and the consummation of the
Contemplated Transactions shall have been made or obtained in form and substance
reasonably satisfactory to Buyer. 

32 




                             (c)        
Company Indebtedness Repaid; All Liens Released. The Company shall have
paid in full all Company Indebtedness in accordance with the instructions of the
applicable lenders and provided evidence thereof to Buyer. All Liens pertaining
to the Business shall be released of record and there shall be no Liens in
respect of the assets of any Company Party except Permitted Liens. 

                             (d)        
Material Adverse Effect. No Material Adverse Effect shall have occurred,
and no events, circumstances, facts, conditions or developments shall exist that
reasonably could be expected to result in a Material Adverse Effect. 

                             (e)        
Resignations. The Company Parties shall have delivered, or cause to be
delivered, to Buyer the resignations of all of the officers and directors of
each Company Party, such resignations to be effective as of the Closing.

                             (f)        
Termination of the Company’s Benefit Plans. Unless directed otherwise by
Buyer, (i) the Company Parties shall have adopted resolutions providing that no
additional contributions shall be made to or with respect to any Benefit Plan
maintained, sponsored or contributed to by any Company Party that is intended to
qualify under Section 401(a) of the Code (“Company Retirement
Plan”) after the day immediately preceding the Effective Date, and that
the Company’s participation and sponsorship of Company Retirement Plan shall be
terminated effective on the day immediately preceding the Effective Date; (ii)
the sponsorship of the Company Retirement Plan, together with all liabilities
and obligations with respect thereto, shall be assumed by Ludwig Farmstead
Creamery effective the day immediately preceding the Effective Date; and (iii)
the Company Parties shall have taken all other action required or advisable to
so terminate the Company’s participation in and sponsorship of the Company
Retirement Plan. The Company Parties and/or Seller, as applicable, shall allow
Buyer to review such resolutions prior to their adoption and shall cooperate
with Buyer to make any changes to such resolutions reasonably requested by
Buyer. 

                             (g)        
Minute Books and Stock Record Books. The Company Parties shall have
delivered to Buyer their respective original minute books and stock record
books. 

                             (h)        
Assignments. The Company shall provide fully executed assignments or
other agreements evidencing that David Ludwig Properties, LLC has contributed
all assets held by it, and relating to the Business, to the Company, including
the FSU Assets.

                             (i)        
Lease Agreement. The Company shall provide a fully executed lease
agreement with David Ludwig Properties, LLC, for the premises at 10 Sunset Hills
Professional Center, Edwardsville, Illinois 62025 in a form substantially
similar to Exhibit A attached hereto and incorporated herein by reference
(“Lease Agreement”). 

                             (j)        
Employment Agreement. The Company shall provide a fully executed
employment agreement for each of the Key Employees in a form substantially
similar to Exhibit B attached hereto and incorporated herein by reference
(“Employment Agreement”). 

33 




ARTICLE 9 
INDEMNIFICATION 


            
9.1         Indemnification by
Seller. 

                             (a)        
Seller hereby agrees to indemnify, defend and hold harmless, the following
“Buyer Indemnified Parties”, (y) Company Parties; and (z) Buyer,
its Affiliates and each of their respective (both present and future) officers,
directors, employees, shareholders, partners, managers, members, agents,
representatives and the successors and assigns of each, from and against and in
respect of and to reimburse and pay the Buyer Indemnified Parties as incurred
with respect to, any and all claims, demands, or suits (by any Person), losses,
deficiencies, lost profits, diminutions in value, damages, Liabilities
(including consequential, incidental, special and punitive damages),
obligations, payments, penalties, fines, costs and expenses (including, the
costs and expenses of any and all actions, suits, proceedings, assessments,
judgments, settlements, compromises, fines and interest relating thereto,
including attorneys’ fees and disbursements and costs of investigation in
connection therewith) (collectively, “Losses”) assessed, suffered,
incurred or sustained by or against any Buyer Indemnified Party by reason of,
arising out of, relating to, or in connection with (i) any inaccuracy in or
breach of any representation or warranty by the Company or Seller set forth
herein, or in any Exhibit, certificate or schedule contemplated hereby, (ii) any
breach by the Company (prior to Closing), or Seller, of any covenant of the
Company or Seller hereunder or under the Seller Documents or any other document
to be executed by any of them in connection herewith, (iii) all Liabilities of
any Company Party relating to the operation of the Business prior to the
acquisition by Buyer of the Shares, and (iv) as required by Section 7.2(e) .


                             (b)        
Notice of Claim; Right to Defend. As soon as reasonably practicable,
Buyer shall give to Seller written notice of any claim, Action, suit, demand or
event which Buyer believes shall give rise to a claim for indemnification under
Section 9.1 hereunder; provided, however, that the failure of Buyer to give such
written notice as soon as reasonably practicable shall not affect the Liability
of Seller hereunder, except to the extent that the rights of Seller to defend
himself or to cure or mitigate the Losses are actually prejudiced thereby.
Thereafter, Buyer shall furnish to Seller, in reasonable detail, such
information as it may have with respect to such Action or other event, including
copies of any summons, complaint or other pleading which may have been served
upon any Buyer Indemnified Party or any written claim, demand, invoice, billing
or other document evidencing or asserting the same. Provided Seller, within ten
(10) days after receipt of such written notice from Buyer, shall acknowledge in
writing to Buyer Seller’s assumption of full responsibility for defense and
indemnification with respect to such claim, action, suit or proceeding, Seller
shall have the right to assume defense of such claim, action, suit or
proceedings through counsel selected by Seller and reasonably satisfactory to
Buyer at their expense, and to contest or compromise such claim, action, suit or
proceeding. Upon such assumption of defense by Seller, Buyer shall cooperate
with Seller in Seller’s conduct of such defense to the extent reasonably
requested by Seller and at Seller’s expense and, so long as Seller is vigorously
defending such claim, action, suit or proceeding, the Buyer Indemnified Parties
shall not settle or compromise the same. Notwithstanding the foregoing, without
the prior written consent of Buyer, Seller shall not be entitled to settle any
claim, action, suit or proceedings the defense of which has been assumed by
Seller if (i) the Losses to Buyer Indemnified Parties are not fully covered by
Seller provided herein, (ii) such settlement could reasonably be expected to
have a Material Adverse Effect or impose any material condition or limitation on
the business, operations, prospects or condition (financial or otherwise) of
Buyer or the Business, or (iii) such settlement involves a criminal matter.
Notwithstanding the third sentence of this Section 9.1(b), Buyer may, by notice
to Seller, assume its exclusive right to defend, compromise or settle any claim,
Action, suit or proceedings at Seller’s sole expense if (x) Seller is a Person
against whom the claim is made and Buyer determines in good faith that joint
representation would be inappropriate, (y) Seller fails to provide reasonable
assurance to Buyer of his financial capacity to defend such claim and provide
indemnification with respect to such claim or Buyer reasonably determines that
Seller is not vigorously defending such claim, or (z) if Buyer reasonably
determines that a claim may adversely affect it, any other Buyer Indemnified
Party or any of their Affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this Agreement. 

34 




            
9.2         Indemnification by
Buyer.

                             (a)        
Buyer agrees to indemnify, defend and hold harmless Seller, Key Employees and
Seller’s heirs and permitted assigns (collectively “Seller
Indemnified Parties”) against and in respect of any
and all Losses suffered or incurred by any such party by reason of, arising out
of, relating to, or in connection with (i) any breach by Buyer of any
representation and warranty of Buyer set forth herein; (ii) any breach by Buyer
of any covenant of Buyer hereunder or under any other document to be executed by
Buyer in connection herewith; and (iii) as required by Section 7.2(e)(ii) . 

                             (b)        
Notice of Claim; Right to Defend. As soon as reasonably practical, Seller
shall give Buyer prompt written notice of any claim, suit or demand which Seller
reasonably believes will give rise to a claim for indemnification under Section
9.2; provided, however, that the failure of Seller to give such written notice
as soon as reasonably practical shall not affect the liability of Buyer
hereunder, except to the extent that the rights of Buyer to defend itself or to
cure or mitigate the damages are actually prejudiced thereby. Thereafter, Seller
shall furnish to Buyer, in reasonable detail, such information as they may have
with respect to such Action or other event, including copies of any summons,
complaint or other pleading which may have been served upon the Seller
Indemnified Party or any written claim, demand, invoice, billing or other
document evidencing or asserting the same. Seller shall designate in writing all
information and documents that they furnish to Buyer pursuant to this Section
9.2(b) as being with respect to a claim, action, suit or proceeding under this
Section 9.2(b) . Provided Buyer, within ten (10) days after receipt of such
written notice from Seller, shall acknowledge in writing to Seller Buyer’s
assumption of responsibility for defense and indemnification with respect to
such claim, action, suit or proceeding, Buyer shall have the right to assume
defense of such claim, action, suit or proceeding through counsel reasonably
selected by Buyer at Buyer’s expense, and to contest or compromise such claim,
action, suit or proceeding; provided that Buyer shall regularly inform Seller of
the status of such claim, action, suit or proceeding and provide Seller the
reasonable opportunity to participate in the defense or settlement of such
claim, action, suit or proceeding. Upon such assumption of defense by Buyer, the
Seller Indemnified Parties shall cooperate with Buyer in Buyer’s conduct of such
defense to the extent reasonably requested by Buyer and at Buyer’s expense and,
so long as Buyer is defending such claim, action, suit or proceeding, the Seller Indemnified Parties shall not settle or compromise the same.
Notwithstanding the foregoing, Sellers may, by notice to Buyer, assumes its
exclusive right to defend, compromise or settle any claim, action, suit or
proceedings if Buyer is also a Person against whom the claim is made and Sellers
determine in good faith that joint representation would be inappropriate.


35 




            
9.3         Limitations on
Indemnification.

                             (a)        
Notwithstanding anything contained herein to the contrary, the obligations of
indemnification pursuant to clause (i) in Section 9.1(a) and clause (i) in
Section 9.2(a) of this Agreement shall be limited as follows: 

            
(i)         no Buyer Indemnified Party
shall be entitled to indemnification pursuant to clause (i) in Section 9.1(a)
hereof unless and until the aggregate dollar amount of all such claims shall
have exceeded $20,000, and after such amount has been exceeded, the Buyer
Indemnified Parties shall be indemnified for all Losses back to the first
dollar; and 

            
(ii)         no Seller Indemnified Party
shall be entitled to indemnification pursuant to clause (i) in Section 9.2(a)
hereof unless and until the aggregate dollar amount of all such claims shall
have exceeded $20,000, and after such amount has been exceeded, the Seller
Indemnified Parties shall be indemnified for all Losses back to the first
dollar. 

             
(iii)       the maximum aggregate liability of
either party for indemnification claims made pursuant to clause (i) in Section
9.1(a) and clause (i) in Section 9.2(a) shall each be limited to: 

                            
(1)         Five million dollars
($5,000,000), except that in no event shall Seller be liable for amounts in
excess of the aggregate amount actually already paid and the amounts which will
be paid to Seller pursuant to Section 2.4 of this Agreement, if the indemnifying
party acknowledges that it is, or a court of competent jurisdiction determines,
that it is responsible for the indemnification claim; or 

                            
(2)         The aggregate amount
actually already paid to Seller pursuant to Section 2.4 of this Agreement at
such time as notice of the claim is brought to Seller’s attention in the manner
provided in Section 9.2(b) above, if a court of competent jurisdiction
determines that the indemnifying party is not responsible for the
indemnification claim. 

                             (b)        
No claim pursuant to Section 9.1 and Section 9.2 may be asserted under this
Agreement unless either (i) the party making the claim gives the party against
whom the claim is to be made notice of such claim before the end of the
applicable survival period under Section 9.4 or (ii) the party against whom the
claim would be made has knowledge of the facts which are the basis of the claim
before the end of the applicable survival period under Section 9.4. 

36 




                             (c)        
The limitations on indemnification set forth in this Section 9.3 shall not be
applicable to any claim based upon fraud or intentional misrepresentation. 

             9.4        
Survival. The representations and warranties of the parties as set forth
in this Agreement shall survive the Closing for four (4) years following the
Effective Date, and any claim based upon fraud or intentional misrepresentation
shall survive the Closing indefinitely without limitation. 

             9.5        
Right of Offset. Buyer shall have the right to offset any Losses of Buyer
Indemnified Parties under this Agreement against any amount owing by a Buyer
Indemnified Party to Seller hereunder or the Seller Documents. Neither the
exercise of nor the failure to exercise such right of setoff will constitute an
election of remedies or limit Buyer in any manner in the enforcement of any
other remedies that may be available to it. 

ARTICLE 10 
MISCELLANEOUS PROVISIONS 

             10.1    
 Notices. Unless otherwise provided herein, any notice, approval or
disapproval, request, instruction, other document or communication to be given
hereunder by any party to the other parties must be in writing and shall be
deemed given (a) if by transmission by facsimile or hand delivery, when
delivered (provided that such communications are concurrently sent by mail in
accordance with sub-clause (b) or (c) below); (b) if mailed via the official
governmental mail system, five (5) days after mailing, provided said notice is
sent first class, postage pre-paid, via certified or registered mail, with a
return receipt requested; or (c) if mailed by an internationally recognized
overnight express mail service, two (2) days after deposit therewith prepaid.
All notices shall be addressed to the parties at the respective addresses as
follows: 

	 	To the Company or Seller: 	 
	 	  	  
	 	 	David Ludwig 
	 	  	10 Sunset Hills Professional
      Center 
	 	  	Edwardsville, IL 62025 
	 	  	  
	 	with a copy to: 	  
	 	  	  
	 	  	Byron Carlson Petri & Kalb,
      LLC 
	 	  	c/o Christopher Byron 
	 	  	411 St. Louis Street 
	 	  	Edwardsville, IL 62025 
	 	  	  
	 	To Buyer: 	Heritage Global, Inc. 
	 	  	1 Toronto Street, Suite 700

	 	  	Toronto, Ontario M5C 2V6 
	 	  	Attention: Allan Silber
  


37 





	 	with a copy to:	 
	 	 	  
	 	 	Harwell Howard Hyne Gabbert &
      Manner, P.C. 
	 	 	333 Commerce Street, Suite 1500
    
	 	 	Nashville, TN 37201 
	 	 	Facsimile: 615-251-1056 
	 	 	Attention: Mark Manner
  


or to such other representative or at such other address of a
party as such party hereto may furnish to the other parties in writing in
accordance with this Section 10.1. 

             10.2     
Exhibits and Schedules to this Agreement. All Exhibits and Schedules
hereto, or documents expressly incorporated into this Agreement, are hereby
incorporated into this Agreement and are hereby made a part hereof as if set out
in full in this Agreement. 

             10.3    
 Assignment; Successors in Interest. No assignment or transfer by
Buyer, Seller or the Company of their respective rights and obligations
hereunder shall be made except with the prior written consent of the other
parties hereto, except that without the consent of Seller or the Company, Buyer
may (i) collaterally assign its rights hereunder to its lender or its
Affiliate’s lender or lenders or (ii) assign its rights and obligations
hereunder to any of its Affiliates, or (iii) assign its rights and obligations
hereunder in connection with any sale of all or substantially all of the assets
of Buyer or its Subsidiaries (or such Affiliate), or a transfer of voting
control of Buyer or its Subsidiaries (or such Affiliate), including by way of
merger. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their permitted successors and assigns, and any reference
to a party hereto shall also be a reference to a permitted successor or assign.
Any assignment or transfer in violation of this Agreement will be void. 

             10.4    
 Controlling Law; Integration. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Illinois without reference to Illinois’s choice of law rules. This Agreement
supersedes all negotiations, agreements and understandings among the parties
with respect to the subject matter hereof. This Agreement and each other
agreement dated the date hereof or the Effective Date between Buyer, Seller, and
the Company, constitute the entire agreement among the parties hereto with
respect to the subject matter hereof.

             10.5     
Amendment; Waiver. This Agreement may not be amended, restated, modified,
supplemented or waived except by written agreement of Buyer and Seller. No
failure or delay by any party hereto in exercising any right, power or privilege
hereunder (and no course of dealing between or among any of the parties) shall
operate as a waiver of any such right, power or privilege. No waiver of any
default on any one occasion shall constitute a waiver of any subsequent or other
default. No single or partial exercise of any such right, power or privilege
shall preclude the further or full exercise thereof. 

             10.6     
Severability. Any provision set forth in this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the
extent permitted by Law, the parties hereto waive any provision of Law that
renders any such provision prohibited or unenforceable in any respect. 

38 




             10.7    
 Counterparts. This Agreement may be executed in two (2) or more
counterparts (and the same may be delivered by means of facsimile or PDF file),
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or the terms hereof to produce or account for
more than one of such counterparts. 

             10.8    
 No Third-Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person,
firm or corporation other than the parties hereto, and their successors or
assigns, any rights, remedies, obligations or Liabilities under or by reason of
this Agreement or result in such Person, firm or corporation being deemed a
third-party beneficiary of this Agreement, except that the provisions of Article
9 may be enforced by any Person who is entitled to indemnification or insurance
coverage thereunder. 

            
10.9      JURISDICTION AND FORUM; WAIVER OF JURY
TRIAL.

                             (a)        
THE PARTIES HERETO AGREE THAT THE EXCLUSIVE FORUM AND VENUE FOR ANY DISPUTES
BETWEEN ANY OF THE PARTIES HERETO ARISING OUT OF THIS AGREEMENT SHALL BE ANY
STATE OR FEDERAL COURT IN THE STATE OF ILLINOIS. THE FOREGOING SHALL NOT LIMIT
THE RIGHTS OF ANY PARTY HERETO TO OBTAIN EXECUTION OF JUDGMENT IN ANY OTHER
JURISDICTION. THE PARTIES HERETO FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW,
THAT FINAL AND UNAPPEALABLE JUDGMENT AGAINST ANY OF THEM IN ANY ACTION OR
PROCEEDING CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT,
A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND AMOUNT OF SUCH JUDGMENT. 

                             (b)        
EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY
HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM,
IN ANY OF SUCH COURTS. IN ADDITION, EACH OF THE PARTIES CONSENTS TO THE SERVICE
OF PROCESS BY PERSONAL SERVICE OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED
HEREUNDER IN ACCORDANCE WITH SECTION 10.1 OF THIS AGREEMENT. 

                             (c)        
EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN
CONNECTION HEREWITH OR THE CONTEMPLATED TRANSACTIONS. 

39 




             10.10    
 Interpretation. As all parties have participated in the drafting of
this Agreement, any ambiguity shall not be construed against any party as the
drafter. 

             10.11    
 Specific Performance and Other Remedies. Seller and the Company
each acknowledge that the performance of Seller’s and the Company’s obligations
under this Agreement and to consummate the Contemplated Transactions are
special, unique and of extraordinary character, and that, in the event that
Seller or the Company breaches, threatens to breach or fails or refuses to
perform any of its obligations under this Agreement, irreparable injury to Buyer
shall result. Seller and the Company each agree, therefore, that in the event
that any of them breaches, threatens to breach or fails or refuses to perform
any of its obligations under this Agreement, Buyer shall be entitled to, in
addition to any remedies at Law under this Agreement for damages or other
equitable relief, specific performance of such covenant or agreement hereunder,
including injunctive relief without the necessity of posting a bond. 

             10.12    
 Expenses. Except as otherwise expressly provided in this Agreement,
each of Buyer, on the one hand, and Seller (for himself and the Company), on the
other hand, shall pay their respective costs and expenses incurred in connection
with this Agreement and the Contemplated Transactions, including fees and
expenses of their own respective financial advisors, accountants and counsel.
Notwithstanding anything in this Agreement to the contrary, Buyer and Seller
shall pay, equally, all costs arising out of or related to the performance of an
audit of the Company Party’s financial statements as required to satisfy Buyer’s
SEC reporting obligations; provided that Seller shall not be obligated to pay an
amount exceeding twelve thousand five hundred dollars ($12,500) and Seller shall
only be required to pay such amount in the event that the transactions
contemplated by this Agreement take place at Closing.

40 




             IN
WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to
be duly executed, as of the date first above written. 

BUYER: 

HERITAGE GLOBAL, INC. 

	 	By: 	/s/Allan Silber 
	 	Name: 	Allan Silber 
	 	Title: 	President 


[Buyer Signature Page to Stock Purchase Agreement] 




       
     IN WITNESS WHEREOF, the parties hereto have caused
this Stock Purchase Agreement to be duly executed, as of the date first above
written. 

COMPANY: 

NATIONAL LOAN EXCHANGE, INC.


	 	By: 	/s/David Ludwig 
	 	Name: 	David Ludwig 
	 	Title: 	President 


SELLER: 

	 	/s/David Ludwig 
	 	David Ludwig 


[Seller Signature Page to Stock Purchase Agreement]