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exhibit104.htm - Generated by SEC Publisher for SEC Filing

Exhibit 10.4

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

Principal Amount: $40,000.00                                         Issue Date: March 2, 2010

 

RESTATED 8 1⁄2 % CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, PHYTOMEDICAL TECHNOLOGIES, INC., a Nevada corporation (hereinafter called “Borrower”), hereby promises to pay to Barry Honig, having an address at 3269Harrington Dr., Boca Raton, Florida 33496  (the “ Holder ”) or its registered assigns or successors in interest or order, without demand, the sum of forty thousand ($40,000) dollars (“Principal Amount”), with interest compounded quarterly at the annual rate of eight and one-half percent (8 1⁄2 %) on  March 1, 2011  (the “Maturity Date”), if not sooner paid.

 

ARTICLE 1

 

INTEREST

 

            1.1           Interest Rate.   Interest on this Note shall compound quarterly and shall accrue at the annual rate of eight and one-half percent (8 1⁄2 %) as computed on the basis of a 365-day year.  Interest will begin to accrue as of the date hereof is payable on the Maturity Date, accelerated or otherwise, when the principal and remaining accrued but unpaid interest shall be due and payable, or sooner as described below; provided, however, the Holder may elect to convert, at any time during the term of this Note, all or any portion of accrued and unpaid interest, through the date of such conversion, into shares of Common Stock at the then applicable Conversion Price.  Interest will be payable in cash, or at the election of the Borrower, and subject to Section 2.2, with shares of Common Stock at a per share value equal to the Conversion Price set forth in Section 2.1.  Interest may be paid at the Holder’s election in cash, registered Common Stock or Common Stock immediately to the extent resellable pursuant to Rule 144 to the extent such share issuance is not limited by transfer or volume restrictions.

 

            1.2.            Default Interest Rate.  Following the occurrence and during the continuance of an Event of Default, which, if susceptible to cure is not cured within the cure periods (if any) set forth in Article 3, otherwise then from the first date of such occurrence until cured, the annual interest rate on this Note shall (subject to Section 4.10) be ten percent (10%), and be due on demand.

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ARTICLE 2

 

CONVERSION RIGHTS

 

           2.1           Holder’s Conversion Rights.   Subject to Section 2.4, for so long as this Note remains outstanding and not fully paid, the Holder shall have the right, but not the obligation, to convert all or any portion of the then aggregate outstanding Principal Amount of this Note, together with interest, into shares of Common Stock (the “Conversion Shares”), subject to the terms and conditions set forth in this Article 3, at the rate of  $0.01 per share of Common Stock (“Conversion Price”), as the same may be adjusted pursuant to this Note.  The Holder may exercise such right by delivery to the Borrower of a written Notice of Conversion pursuant to Section 2.3.

 

           2.2           Conversion Limitation.   Neither Holder nor the Borrower may convert on any date that amount of the Note Principal or accrued interest in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, (ii) any Common Stock issuable in connection with the unconverted portion of the Note, and (iii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Borrower on such Conversion Date.  For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.  Subject to the foregoing, the Holder shall not be limited to aggregate conversions of only 4.99% and aggregate conversion by the Holder may exceed 4.99%.  The Holder shall have the authority and obligation to determine whether the restriction contained in this Section 2.2 will limit any conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section 2.2 applies, the determination of which portion of the Notes are convertible shall be the responsibility and obligation of the Holder.  The Holder may waive the conversion limitation described in this Section 2.2, in whole or in part, upon and effective after 61 days prior written notice to the Borrower to increase such percentage to up to 9.99%.  Once the Holder has waived the limitations set forth in this Section 2.2, the limitations shall be deemed waived for all other future conversions, warrant exercises, or share issuances by the Holder. 

 

           2.3           Mechanics of Holder’s Conversion.

 

 (a)           In the event that the Holder elects to convert any amounts outstanding under this Note into Common Stock, the Holder shall give notice of such election by delivering an executed and completed notice of conversion (a “Notice of Conversion”) to the Borrower, which Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest and amounts being converted.  The original Note is not required to be surrendered to the Borrower until all sums due under the Note have been paid.  On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount, accrued interest and fees as entered in its records.  Each date on which a Notice of Conversion is delivered or faxed to the Borrower in accordance with the provisions hereof shall be deemed a “Conversion Date.”  A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A.

 

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(b)           Pursuant to the terms of a Notice of Conversion, the Borrower will issue instructions to the transfer agent accompanied by an opinion of counsel (if so required by the Borrower’s transfer agent), to issue the Conversion Shares to the Holder within three (3) business days of the date of the Notice of Conversion..

 

            2.4           Certain Adjustments. The number and class or series of shares into which this Note may be converted under Section 2 shall be subject to adjustment in accordance with the following provisions:

 

(a)    Computation of Adjusted Conversion Price.  Except as hereinafter provided, in case the Borrower shall at any time after the date hereof issue or sell any (i) shares of its common shares or preferred shares convertible into its common shares, or (ii) debt, warrants, options or other instruments or securities which are convertible into or exercisable for shares of Common Stock (together herein referred to as “Equity Securities”), in each case for consideration (or with a conversion price) per common share less than the Conversion Price in effect immediately prior to the issuance or sale of such securities or instruments, or without consideration, then forthwith upon such issuance or sale, the Conversion Price shall (until another such issuance or sale) be reduced to the price (calculated to the nearest full cent) equal to the price (or conversion price) of any such securities or instruments;  provided ,  however , that in no event shall the Conversion Price be adjusted pursuant to this computation to an amount in excess of the Conversion Price in effect immediately prior to such computation. For the purposes of this Section 2.4, the term Conversion Price shall mean the Conversion Price per share set forth in Section 2.1 hereof, as adjusted from time to time pursuant to the provisions of this Section.

 

            For purposes of any computation to be made in accordance with this Section 2.4, the following provisions shall be applicable:

 

(i)    In case of the issuance or sale of any shares of Equity Securities for a consideration part or all of which shall be cash, the amount of the cash consideration shall be deemed to be the amount of cash received by the Borrower for such shares (or, if shares of stock are offered by the Borrower for subscription, the subscription price, or, if either of such securities shall be sold to underwriters or dealers for public offering without a subscription price, the public offering price, before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or other persons or entities performing similar services), or any expenses incurred in connection therewith and less any amounts payable to security holders or any affiliate thereof, including, without limitation, any employment agreement, royalty, consulting agreement, covenant not to compete, earnout or contingent payment right or similar arrangement, agreement or understanding, whether oral or written; all such amounts shall be valued at the aggregate amount payable thereunder whether such payments are absolute or contingent and irrespective of the period or uncertainty of payment, the rate of interest, if any, or the contingent nature thereof.

 

(ii)    In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Borrower) of shares of Equity Securities for a consideration part or all of which shall be other than cash, the amount of the consideration therefore other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Borrower.

 

(iii)    Shares of Equity Securities issuable by way of dividend or other distribution on any capital stock of the Borrower shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration.

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(iv)    The reclassification of securities of the Borrower other than shares of Equity Securities into securities including shares of Equity Securities shall be deemed to involve the issuance of such shares of Equity Securities for consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of stock shall be determined as provided in this Section 2.4.

 

(v)    The number of shares of Equity Securities at any one time outstanding shall include the aggregate number of shares issued or issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of then outstanding options, rights, warrants, and convertible and exchangeable securities.

  

(b)    Adjustment for Reorganization or Recapitalization.  If, while this Note remains outstanding and has not been converted, there shall be a reorganization or recapitalization of the Borrower (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), all necessary or appropriate lawful provisions shall be made so that the Holder shall thereafter be entitled to receive upon conversion of this Note, the greatest number of shares of stock or other securities or property that a holder of the class of securities deliverable upon conversion of this Note would have been entitled to receive in such reorganization or recapitalization if this Note had been converted immediately prior to such reorganization or recapitalization, all subject to further adjustment as provided in this Section 2.4. If the per share consideration payable to the Holder for such class of securities in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Borrower’s Board of Directors. The foregoing provisions of this paragraph shall similarly apply to successive reorganizations or recapitalizations and to the stock or securities of any other corporation that are at the time receivable upon the   conversion of this Note. In all events, appropriate adjustment shall be made in the application of the provisions of this Note (including adjustment of the conversion price and number of shares into which this Note is then convertible pursuant to the terms and conditions of this Note) with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Note shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization or recapitalization upon conversion of this Note.

 

(c)    Adjustments for Split Subdivision or Combination of Shares.  If the Borrower at any time while this Note remains outstanding and unconverted, shall split or subdivide any class of securities into which this Note may be converted into a different number of securities of the same class, the number of shares of such class issuable upon conversion of this Note immediately prior to such split or subdivision shall be proportionately increased and the conversion price for such class of securities shall be proportionately decreased. If the Borrower at any time while this Note, or any portion hereof, remains outstanding and unconverted shall combine any class of securities into which this Note may be converted, into a different number of securities of the same class, the number of shares of such class issuable upon conversion of this Note immediately prior to such combination shall be proportionately decreased and the conversion price for such class of securities shall be proportionately increased.

 

(d)    Adjustments for Dividends in Stock or Other Securities or Property. If, while this Note remains outstanding and unconverted, the holders of any class of securities as to which conversion rights under this Note exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Borrower by way of dividend, then and in each case, this Note shall represent the right to acquire, in addition to the number of shares of such class of security receivable upon conversion of this Note, and without payment of any  

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 additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Borrower that such holder would hold on the date of such conversion had it been the holder of record of the class of security receivable upon conversion of this Note on the date hereof and had thereafter, during the period from the date hereof to and including the date of such conversion, retained such shares and/or all other additional stock available by it as aforesaid during said period, giving effect to all adjustments called for during such period by the provisions of this Section 2.4.

  

                   (e)        Adjustment for Subsequent Equity Sales. If the Borrower, at any time while this Note  is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Conversion Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced and only reduced to equal the Base Share Price and the number of Conversion Shares issuable hereunder shall be increased such that the aggregate Conversion Price payable hereunder, after taking into account the decrease in the Conversion Price, shall be equal to the aggregate Exercise Price prior to such adjustment.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 2.4 (e), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 2.4 (e) upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Conversion Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Conversion.

  

(f)    No Fractional Shares. Conversion calculations pursuant to Article 2 shall be rounded up to the nearest whole Conversion Share, and no fractional shares shall be issuable by the Borrower upon conversion of this Note. All shares issuable upon a conversion of this Note (including fractions thereof) shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share.

 

(g)    No Impairment.  The Borrower will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but will at all times in good faith assist in the carrying out of all the provisions of this Article 2 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder of this Note against impairment.

 

(h)    No Change Necessary. The form of this Note need not be changed because of any adjustment in the number of shares of Common Stock issuable upon its conversion.

 

 

2.5    Further Adjustments. In case at any time or, from time to time, the Borrower shall take  

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 any action that affects the class of securities into which this Note may be converted under Section 2, other than an action described herein, then, unless such action will not have a material adverse effect upon the rights of the Holder, the number of shares of such class of securities (or other securities) into which this Note is convertible shall be adjusted in such a manner and at such time as shall be equitable under the circumstances.

 

2.6    Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to Section 2.4 or Section 2.5, the Borrower at its sole expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth (i) such adjustments and readjustments, and (ii) the number and class of securities and the amount, if any, of other property which at the time would be received upon the conversion of this Note under Article 2.

 

2.7    Change of Control. In the event of (i) any transaction or series of related transactions (including any reorganization, merger or consolidation) that results in the transfer of 50% or more of the outstanding voting power of the Borrower, or (ii) a sale of all or substantially all of the assets of the Borrower to another person or entity, this Note shall be automatically due and payable. The Borrower will give the Holder not less than ten (10) business days prior written notice of the occurrence of any events referred to in this Section 2.7.

 

ARTICLE 3

 

 EVENTS OF DEFAULT

 

The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment, or grace period, all of which hereby are expressly waived, except as set forth below:

 

3.1       Failure to Pay Principal or Interest.  The Borrower fails to pay any installment of Principal Amount, interest or other sum due under this Note when due and such failure continues for a period of eight (8) business days after the due date.

 

3.2      Breach of Covenant.  The Borrower breaches any material covenant or other term or condition of this Note and such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.  Notwithstanding the foregoing, in the event that the provisions of Section 2.2 wherein the Borrower does not have sufficient number of shares available for issuance pursuant to its Articles of Incorporation, as amended, then the default shall be deemed cured at the time of the initial filing of a preliminary information statement or proxy statement, provided, that the Company makes best efforts to obtain effectiveness of the same and complete the filing of any Amendment to the Articles of Incorporation (or amended and restated Articles of Incorporation) within 45 days thereafter.

 

3.3      Breach of Representations and Warranties.  Any material representation or warranty of the Borrower made herein, or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith or therewith shall be false or misleading in any material respect as of the Closing Date.

 

3.4      Receiver or Trustee.  The Borrower shall make an assignment for the benefit of  

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 creditors, or apply for or consent to the appointment of a receiver or trustee for them or for a substantial part of their property or business; or such a receiver or trustee shall otherwise be appointed.

 

3.5      Judgments.  Any money judgment, writ or similar final process shall be entered or filed against Borrower or any subsidiary of Borrower in the United States or any of their property or other assets in the United States for more than $100,000, and shall remain unvacated or unsatisfied, for a period of sixty days.

 

3.6      Non-Payment.   A default by the Borrower under any one or more obligations in an aggregate monetary amount in excess of $100,000 for more than twenty (20) days after the due date, unless the Borrower is contesting the validity of such obligation in good faith and has segregated cash funds equal to not less than one-half of the contested amount.

 

3.7      Bankruptcy.  Bankruptcy, insolvency, reorganization, or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower or any Subsidiary of Borrower and if instituted against them are not dismissed within forty-five (45) days of initiation.

 

3.8      Delisting.   Delisting of the Common Stock from the OTCBB or such other exchange on which the Borrower’s common stock is then listed for trading (the “Principal Market”) for a period of seven consecutive trading days; or notification from a Principal Market that the Borrower is not in compliance with the conditions for such continued listing on such Principal Market.

 

3.9      Stop Trade.  the issuance of a Securities and Exchange Commission or judicial stop trade order or, a Principal Market trading suspension with respect to Borrower’s Common Stock that lasts for five or more consecutive trading days.

 

3.10      Failure to Deliver Common Stock or Replacement Note.  Borrower’s failure to timely deliver certificates representing the Conversion Shares to the Holder pursuant to and in the form required by this Note, or if required, a replacement Note.

 

3.11     Reservation Default.   Failure by the Borrower to have reserved for issuance upon conversion of the Note the amount of Common Stock as set forth in this Note.

 

3.12     Financial Statement Restatement.   The restatement of any financial statements filed by the Borrower for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statements, have constituted a Material Adverse Effect.

 

 

ARTICLE 4

 

MISCELLANEOUS

 

4.1      Failure or Indulgence Not Waiver.  No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

4.2       Notices.  All notices, demands, requests, consents, approvals, and other communications  

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 required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be: (i) if to the Borrower to: PhytoMedical Technologies, Inc., 100 Overlook Drive, 2nd Floor, Princeton, New Jersey 08540 with a copy to Joseph Sierchio, Esq., Sierchio & Company, LLP, Suite 702, 430 Park Avenue, New York, New York 10022; and (ii) if to the Holder, to the name, address and facsimile number provided to the Borrower by the Holder.

 

4.3       Amendment Provision.  The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4       Assignees.  This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.

 

4.5       Cost of Collection.  If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

 

4.6    No Rights or Liabilities as Shareholder. This Note does not by itself entitle the Holder to any voting rights or other rights as a shareholder of the Borrower. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Holder, shall cause the Holder to be a shareholder of the Borrower for any purpose.

 

            4.7       Binding Effect. This Note shall be binding on the Parties and their respective heirs, successors, and assigns; provided, however, that the Borrower shall not assign its rights hereunder in whole or in part without the express written consent of the Holder.

 

4.8      Severability. If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted by law and the balance of this Note shall remain in full force and effect.

 

 

4.9    Final Note. This Note contains the complete understanding and agreement of the Borrower and Holder and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations. 

 

4.10       Maximum Payments.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

 

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4.11      Construction.   Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other.

 

4.12      Redemption.  This Note may not be redeemed, prepaid or called without the consent of the Holder except as described in this Note.

 

4.13     Shareholder Status.  The Holder shall not have rights as a shareholder of the Borrower with respect to unconverted portions of this Note.  However, the Holder will have the rights of a shareholder of the Borrower with respect to the Shares of Common Stock to be received after delivery by the Holder of a Conversion Notice to the Borrower.

 

4.14    Non-Business Days.   Whenever any payment or any action to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due or action shall be required on the next succeeding business day and, for such payment, such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

 

4.15       Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of New York, including, but not limited to, New York statutes of limitations.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the civil or state courts of New York or in the federal courts located in the State and county of New York.  Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts.  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower's obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the 2nd day of March, 2010.

 

 

PHYTOMEDICAL TECHNOLOGIES, INC.

                                                                                           

 By:___/s/ Greg Wujek_____________________________

 Name: Greg Wujek

 Title:   President and Chief Executive Officer

 

 

WITNESS:

 

____/s/ Raymond Krauss__________________________________

Name:  Raymond Krauss

Title:    Chief Financial Officer

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NOTICE OF CONVERSION

 

(To be executed by the Registered Holder in order to convert the Note)

 

 

The undersigned hereby elects to convert $_________ of the principal and $_________ of the interest due on the Note issued by PhytoMedical Technologies, Inc. on March 2, 2010 into Shares of Common Stock of PhytoMedical Technologies, Inc. (the “Borrower”) according to the conditions set forth in such Note, as of the date written below.

 

 

 

Date of Conversion:____________________________________________________________________

 

 

Conversion Price:______________________________________________________________________

 

 

Number of Shares of Common Stock Beneficially Owned on the Conversion Date: Less than <> % of the outstanding Common Stock of PhytoMedical Technologies, Inc.

 

 

Shares To Be Delivered:____________________________________________________________

 

 

Signature:________________________________________________________________________

 

 

Print Name:______________________________________________________________________

 

 

Address:_________________________________________________________________________

 

_______________________________________________________________________

 

 

10ex10-1.htm

    
      
         

      

      
        
          

        

      

      
         

      

    

    ASSET PURCHASE AND SALE
AGREEMENT

     

    This
Asset Purchase and Sale Agreement (this “Agreement”), dated as of
August 31, 2009 (the “Agreement Date”), is entered
into by and between Ram-Fab, Inc. and Jones Resource Group, Inc., both Arkansas
corporations (collectively, “Seller”), and Organic
Pigments, LLC, a South Carolina limited liability company (“Buyer”).  Each of
Seller and Buyer may be referred to individually in this Agreement as a “Party” or collectively as the
“Parties.”  Unless
otherwise defined in the text of this Agreement, capitalized terms are defined
in Section 10 herein.

     

     

    Recitals:

     

    WHEREAS,
Ram-Fab, Inc., operates a pipe and vessel fabrication/manufacturing business in
Crossett, Arkansas (the “Business”);

     

    WHEREAS,
Jones Resource Group, Inc. is the sole shareholder of Ram-Fab, Inc. and also is
sole owner of the real estate and improvements which are the location of the
Business (the Property) and currently leases the Property to Ram-Fab,
Inc.;

     

    WHEREAS,
Buyer desires to acquire the Business and to lease the Property.

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is hereby agreed between Seller and Buyer
as follows:

     

    1. PURCHASE AND
SALE

     

    1.1           Purchase and Sale of
Assets.  Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (defined herein in Section 2.1), Buyer shall
purchase from Seller, and Seller shall sell, convey, transfer, assign and
deliver to Buyer, all of Seller’s right, title and interest in and to Seller’s
following specific property and assets (collectively, the “Purchased
Assets”):

    

    
      	
              (a)

            	
              Excluding
      the ADFA Collateral, all equipment, tools, office equipment, office
      supplies, furniture, and vehicles owned by Ram-Fab, Inc. used in the
      Business, and including without limitation the specific items of property
      as set forth on Attachment 1.1(a) to be completed at Closing in accordance
      with the Parties’ mutual agreement and then attached to this Agreement as
      an exhibit;

            

    

    

    
      	
              (b)

            	
              Those
      accounts receivable of Ram-Fab, Inc. existing as of the Closing Date and
      approved for purchase by Buyer. These purchased accounts receivable, with
      the agreed amounts due to Seller thereunder, shall be mutually agreed to
      by the Parties and shall be set forth on a document to be entitled
      Attachment 1.1(b) to be completed at Closing in accordance with the
      Parties’ mutual agreement and then attached to this Agreement as an
      exhibit;

            

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
              (c)

            	
              Those
      raw materials of Ram-Fab, Inc. existing as of the Closing Date and
      approved for purchase by Buyer. These purchased raw materials, with their
      agreed values, shall be mutually agreed to by the Parties and shall be set
      forth on a document to be entitled Attachment 1.1(c) to be completed
      at Closing in accordance with the Parties’ mutual agreement and then
      attached to this Agreement as an
exhibit;

            

    

    

    
      	
              (d)

            	
              The
      work in progress inventory of Ram-Fab, Inc. existing as of the Closing
      Date and approved for purchase by Buyer (the “WIP”). The values of the WIP
      will be calculated as follows:  For each 100% completed spool,
      ready to ship, not invoiced, the total of: Material at Seller’s selling
      prices, and labor operations at Seller’s selling prices; and For each
      partially completed spool, the total of: Material at Seller’s cost plus
      4%, or 4% of the value of the material if customer furnished, and labor
      operations at Seller’s selling prices prorated to the spool’s percentage
      of completion.

            

    

    

    
      	
               
      

            	
              This
      purchased WIP, with their agreed values (the “Warranted Value”), shall be
      mutually agreed to by the Parties for each of Ram-Fab, Inc.’s jobs
      existing on the Closing Date and shall be set forth on a document to be
      entitled Attachment 1.1(d) to be completed at Closing in accordance
      with the Parties’ mutual agreement and then attached to this Agreement as
      an exhibit;

            

    

    

    
      	 	
              (e)

            	
              To
      the extent transferable, all rights under or pursuant to all warranties,
      representations and guarantees made by suppliers/vendors with respect to
      the Assets or the Business;

            

    

     

    (f)           All
Ram-Fab, Inc. (i) customer contracts and outstanding offers or solicitations
existing as of the Closing Date, and (ii) all equipment leases or other
executory 
    contracts to  which Ram-Fab, Inc. is a party
and which are part of the Assumed Liabilities described below (with (i) and (ii)
herein collectively, the “Contracts”);

     

    
      	
              (g)

            	
              All
      Governmental Authorizations, if any and including without limitation
      environmental permits necessary to conduct the Business and all pending
      applications therefore or renewals thereof, in each case to the extent
      transferable to Buyer;

            

    

    

    
      	
              (h)

            	
              All
      data, computer software applications (including without limitation
      Sellers' MAS90 software license) and
      programs, computer software licenses, computerized databases, and records
      related to the operations of the Business, including but not limited to
      client and customer lists and records, referral sources, research and
      development reports and records, production reports and records, service
      and warranty records, equipment logs, operating guides and manuals,
      financial and accounting records, creative materials, advertising
      materials, marketing and promotional materials, studies, reports,
      correspondence, invoices, strategic plans, market strategies, sales and
      marketing studies, and other similar documents and records and, subject to
      any applicable legal requirements, copies of all personnel
      records;

            

    

    

    
      	
              (i)

            	
              All
      of the intangible rights and property that are owned by Ram-Fab, Inc.,
      including but not limited to all right, title, and interest in and to all
      Intellectual Property, going concern value, the name “Ram-Fab, ”goodwill,
      telephone, internet domain names and HTML rights and other rights related
      to the global information system, telecopier and e-mail addresses and
      listings; and

            

    

    

    
      
        
        

      

      
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    1.2           Excluded
Assets.  Notwithstanding anything to the contrary in Section
1.1 or elsewhere in this Agreement, the following assets of Seller
(collectively, the “Excluded Assets”) are not part of the sale and purchase
described herein, are excluded from the Purchased Assets and shall remain the
property of Seller after the Closing:

     

    (a)           all
cash, promissory notes or other negotiable instruments;

     

    (b)           all
minute books and membership records of Seller;

     

    (c)           all
personnel records and other records that Seller is legally required to retain in
its possession;

     

    (d)           all
claims for refund of taxes and other governmental charges of whatever nature, if
any;

     

    (e)           certain
equipment not related to the Business as agreed to by the Parties and listed on
a document to be entitled Attachment 1.2(e) to be completed at Closing in
accordance with the Parties’ mutual agreement and then attached to this
Agreement as an exhibit; and

     

    (f)           the
ADFA Collateral.

     

    1.3           Assumption of Liabilities;
Proration of Future Expenses.

    

    (a)  At
the Closing, on the terms and subject to the conditions, provisions, and
restrictions set forth in this Agreement, Buyer agrees to assume and pay or
discharge as they come due (subject, however, to Buyer’s right to contest in
good faith any disputed liability) the following liabilities of Seller (the
“Assumed Liabilities”):

    

    All the
accrued liabilities and trade accounts payable of Seller as of the close of
business on the Closing Date and mutually agreed to by the Parties and as set
forth on a document to be entitled Attachment 1.3(a) to be completed at
Closing in accordance with the Parties’ mutual agreement and then attached to
this Agreement as an exhibit.  Such attachment shall include all
accrued but unpaid trade payables and other liabilities as of the date
thereof.  Notwithstanding anything herein to the contrary, Buyer shall
not assume any liabilities of Seller which are not shown on Attachment 1.3(a),
and the Assumed Liabilities are limited strictly to those to be shown on
Attachment 1.3(a).

     

    Buyer
shall not assume, and Seller shall retain liability for, any and all liabilities
of Seller (including without limitation trade accounts payable which are not
specifically described in Attachment 1.3(a) as finally prepared.

     

    (b)           If
new accounts for utilities serving the Business are not open and effective as of
the Closing Date, any utility billing to Seller covering dates before and after
the Closing Date shall be prorated between Seller and Buyer, with Buyer to
promptly pay to Seller the prorated amount of such billing computed from and
including the Closing date to the end of the billing cycle for that
billing.  Any personal property taxes or other fees or charges arising
from ownership of any of the Assets or operation of the Business shall be
prorated as of the Closing Date and shall be handled as
follows:  Seller shall be responsible to pay any such charges which
accrued prior to the Closing Date, and Buyer shall be responsible to pay any
such charges which accrued on or after the Closing Date.  The Party
receiving the billing for any such charges shall notify the other Party of the
amount it owes for the billing (with such notice to include a copy of the
relevant billing and a calculation of the prorated amounts payable by each
Party), and the Party so notified within ten (10) days of the notice date shall
pay the other Party the amount properly due as provided in this Section
1.3(b).

     

    
      
        
        

      

      
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    1.5           Purchase
Price.

     

    (a)           Purchase
Price.  The purchase price for the Purchased Assets (the
“Purchase Price”) shall be a dollar amount which is equal to (i) Two Million Six
Hundred Thirty-Three Thousand Six Hundred Seventy-Four Dollars ($2,633,674.00),
plus (ii) the aggregate dollar amount of all the purchased accounts receivable
owed to Seller as shown on Attachment 1.1(b), plus (iii)
the aggregate dollar amount of all the purchased raw materials as shown on
Attachment 1.1(c), plus (d)
the aggregate dollar amount of the Warranted Value as shown on Attachment
1.1(d), minus (e)
the aggregate dollar amount of the Assumed Liabilities as shown  on
Attachment 1.3(a).

    (b)           At
Closing, Buyer shall tender and pay Seller the Purchase Price.

     

    (c)           Allocation of Purchase
Price.  The Purchase Price shall be allocated among the
Purchased Assets in accordance with Attachment 1.5(d) to be completed at Closing
in accordance with the Parties’ mutual agreement and then attached to this
Agreement as an exhibit.  Provided, however, such allocation shall be
in conformity with Section 1060(b) of the Internal Revenue Code of 1986, as
amended (the “Code”) and the regulations
promulgated thereunder.  Buyer and Seller agree to cooperate in filing
all information required by Section 1060(b) of the Code and the regulations
promulgated thereunder, and to take no position on or with respect to any income
tax return, report or filing with the Internal Revenue Service (including,
without limitation, any amendments thereto) inconsistent with such
allocation.  Each of the Parties hereto shall not take a position
(except as required pursuant to any Order) on any tax return, before any
Governmental Authority charged with the collection of any taxes or in any
judicial proceeding that is in any way inconsistent with the allocation
determined in accordance with this Section.  Each of Buyer and Seller
shall file an Internal Revenue Service Form 8594 with respect to this
transaction.

    

    (d)           
Post Closing
Adjustments of Purchase Price.

                 (i) Within
twenty (20) days of Closing, Buyer shall complete an evaluation of the Assets
purchased, including a physical inventory of the Assets, and the Liabilities
assumed as of the Closing Date and will submit the same to Seller for review
(the “Post-Closing Adjustment”).  Seller will have five (5) business
days in which to object to the Post-Closing Adjustment. If the amount of the
Post-Closing Adjustment, reduced by Ten Thousand Dollars ($10,000), is more than
the Purchase Price, the Buyer will pay to the Seller the difference within three
(3) business days of establishing the Post-Closing Adjustment. If the amount of
the Post-Closing Adjustment, reduced by Ten Thousand Dollars ($10,000), is less
than the Purchase Price, Seller will pay to the Buyer the difference within
three (3) business days of establishing the Post-Closing
Adjustment.  Any payments to or by a Party as provided in this
paragraph shall be deemed to adjust the Purchase Price up or down by such
payment amount, as applicable.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    (ii)           Ram-Fab,
Inc. after Closing shall pay all its debts not assumed by Buyer in a timely
manner, subject to its right to contest in good faith any disputed debt.
If  Ram-Fab, Inc. fails to pay any such debt within five (5) days
after receiving notice from Buyer to do so, then Buyer, at its sole discretion,
may pay such debt for the account of the Seller and set-off the payment against
any monies payable to Seller, including without limitation rental payments
payable by Buyer to Jones Resource Group, Inc under the Lease described in
Section 5.2, below.  Any payments made by Buyer as provided in this
paragraph shall be deemed to adjust the Purchase Price downward by such payment
amount.

     

    (iii)           Seller
absolutely and unconditionally warrants that Buyer shall receive payment in full
of the account receivables comprising Attachment 1.1(b). If any account
receivable comprising Attachment 1.1(b) has not been paid in full within 120
days of the Closing Date, then (i) Buyer shall have the right to reassign the
relevant unpaid account receivable, to the extent it was not paid in full, to
Ram-Fab, Inc., and Buyer shall execute necessary reassignment documents and
shall provide Ram-Fab, Inc. with copies and original documents from the acquired
assets sufficient to allow it to pursue legal action against said customer to
collect such receivables, if any, and (ii) Seller upon such reassignment shall
pay Buyer the unpaid amount of the relevant account
receivable.  Further, to the extent Seller fails to pay Buyer for any
such reassigned account receivable, Buyer may setoff such debt of Seller against
any monies payable by Buyer to either Seller, including without limitation
rental payments payable to Jones Resource Group, Inc., under the Lease or the
purchase price to be paid by Buyer to Jones Resource Group, Inc., if Buyer
purchases the Property pursuant to a purchase option granted in the
Lease.  The Purchase Price shall be reduced by the amount of any such
setoffs made by Buyer.

     

     (iv)           Seller
absolutely and unconditionally warrants that Buyer shall receive the Warranted
Value from each of the WIP jobs which comprise the Warranted Value
notwithstanding the fact that some or all of such jobs may be fulfilled by Buyer
after the Closing Date. If after Buyer’s completion of any such job the
respective customer does not pay all of the respective Warranted Value of that
job after being billed for the same (and regardless of such customer’s reason
for non-payment, including without limitation customer’s claim that Buyer has
not properly fulfilled the job after Closing), Seller shall promptly repay Buyer
an amount equal to the amount of the customer’s aggregate nonpayment (the
“Warranted Value Deficiency”), and the Purchase Price shall be reduced
accordingly.  Further, to the extent Seller fails to repay Buyer any
Warranted Value Deficiency, Buyer may setoff such Warranted Value Deficiency
against any monies payable by Buyer to either Seller, including without
limitation rental payments payable to Jones Resource Group, Inc., under the
Lease or the purchase price to be paid by Buyer to Jones Resource Group, Inc.,
if Buyer purchases the Property pursuant to a purchase option granted in the
Lease.  The Purchase Price shall be reduced by the amount of any such
setoffs made by Buyer.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

    

    1.6           Ram-Fab, Inc. Employees and
Sales Representatives.

     

    (a)           At
least ten days prior to Closing, Seller shall deliver to Buyer a schedule that
shall identify all of the Ram-Fab, Inc. employees with their respective
compensation levels and any other employee information which Buyer reasonably
requests. Immediately following the Closing, (i) Ram-Fab, Inc. shall terminate
the employment of all its employees except any such employees which Buyer does
not wish to hire and which Buyer approves in writing at the Closing, and (ii)
Buyer may make, or may cause an affiliate or contractor to make, offers of
employment to any Ram-Fab, Inc. employee chosen by Buyer, at Buyer’s sole option
and discretion, and under employment terms which Buyer deems suitable in its
sole discretion.    Seller and Buyer shall work together in
good faith to provide a smooth transition of such employees, including, to the
extent permitted by law, Seller transferring copies of the personnel records of
each employee that accepts an offer of employment with Buyer and other
information necessary to permit Buyer to credit such employees with periods of
employment with Seller and its predecessors-in-interest.

     

    (b)           Independent Sales
Representatives.  At least ten days prior to Closing, Seller
shall deliver to Buyer a schedule that shall identify all of the Independent
Sales Representatives. At Closing, Buyer may make, or may cause an affiliate or
contractor to make, offers to enter into an agreement with any of such
Independent Sales Representatives chosen by Buyer, at Buyer’s sole option and
discretion, and under agreement terms which Buyer deems
suitable.  Seller shall cooperate with any actions of Buyer to
contract with any such Independent Sales Representatives that Buyer
chooses.

    

    1.7           Title to Purchased
Assets.  Seller shall convey to Buyer fee simple, good,
marketable title, free of any Encumbrance, to all of the Purchased Assets by all
necessary and appropriate documents of transfer and sale, including such bills
of sale, deeds, endorsements and assignments, and other good and sufficient
instruments of bargain and sale, in such form as Buyer may reasonably require,
and which documents shall be sufficient to vest in the Buyer good and marketable
title.

    

     

    2. CLOSING

     

    2.1 Closing Date. The
consummation of the sale and transfer and conveyance of title to and possession
of the Purchased Assets pursuant to this Agreement (the “Closing”) will take
place on August 31, 2009 at the offices of
Friday, Eldrede & Clark in Little Rock, Arkansas, or at such date, time and
place and in such manner as mutually agreed upon by the Parties (the “Closing
Date”).  The sale and purchase of the Purchased Assets shall be
effective as of 11:59 p.m. on the Closing Date.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    2.2 Transfer of
Possession.  On the Closing Date, Seller, through its officers,
agents and employees, will put Buyer into full possession of the Purchased
Assets and the copies of documents to be delivered pursuant to Section 2.4
below. If any of the Purchased Assets are not located at the Property, Seller
shall make arrangements with the appropriate Persons to ensure that Buyer may
take possession and control of such assets.

     

    2.3 Buyer’s Closing Date
Deliveries.  Subject to fulfillment or waiver of the conditions
set forth in Section 6, at the Closing Buyer shall deliver to Seller all of
the following:

     

    (a) The
Purchase Price, payable by wire transfer or bank cashier check;

     

    (b)           The
Lease and Memorandum, executed by the lessee therein; and

     

    (c)           Such
other documents and instruments, executed by duly authorized officers of Buyer
where applicable, as may be reasonably requested by Seller.

     

           2.4           Seller’s Closing Date
Deliveries.  Subject to fulfillment or waiver of the conditions
set forth in Section 7, at the Closing, Seller shall deliver to Buyer all
of the following:

     

    (a)  A
“Bill of Sale”, in the form reasonably satisfactory to Buyer, executed by a duly
authorized officer of Ram-Fab, Inc.;

     

                             (b)  A copy of
each Seller’s Articles of Incorporation and Bylaws, and all amendments of the
same, certified by an officer of Seller as of a recent date;

     

     (c)  Certificate
of existence for each Seller issued as of a recent date by the Secretary of
State of Arkansas;

     

    (d)  A
certificate of an officer of each Seller, dated as of the Closing Date, in form
and substance reasonably satisfactory to Buyer, as to (i) the resolutions
of the Board of Directors of Seller authorizing the execution and performance of
this Agreement and the transactions contemplated hereby and thereby; and (ii)
the incumbency and signatures of the officers of Seller executing this
Agreement;

     

    (f)  A
certificate, dated the Closing Date, signed on behalf of Seller by a duly
authorized officer of Seller, stating that there has been no material breach by
Seller in the performance of any of its covenants and agreements herein which
has not have been remedied or cured, and each of the representations and
warranties of Seller contained in this Agreement are true and correct in all
material respects on the Closing Date as though made on the Closing Date (except
for changes therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by Buyer or any transaction
contemplated by this Agreement);

     

    (g)  Copies
of all Governmental Authorizations, if any, included in the Purchased
Assets;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (h)    a document
properly executed and in a form reasonably satisfactory to Buyer terminating all
leases between Ram-Fab, Inc. and Jones Resource Group, Inc. with regard to the
property described in the Lease and including without limitation the consent of
any person(s) having a security interest in, or assignment of, such leases;
;

     

                   
(i)    Noncompete and nonsolicitation of employee agreements
of Byron Jones, Mike Jones, Steve Jones and Ram-Fab, Inc. in the form acceptable
to Buyer;

     

    (j)      The
Lease and Memorandum, executed by the lessor therein;

     

    (k)      An
agreement from Seller, satisfactory to Buyer, providing for indemnification to
Buyer for Seller’s or its shareholders’ use of any private aircraft owned by
either Seller and providing for Seller to insure such aircraft with Buyer as an
additional insured;

     

    (l)      The
Survey;

     

                  
(n)       Copy of deed, and proof of
recording of same, conveying Lot 2 of the Property from Ram Fab, Inc. to Jones
Resource Group, Inc.;

     

    (o)      Properly executed
employment Agreements with Mike Jones and Steve Jones in the form acceptable to
Buyer; properly executed consulting Agreement with Byron Jones in form
acceptable to Buyer;

     

    (p)      evidence acceptable to
Buyer showing the termination of all liens and mortgages of record filed by
First National Bank of  Crossett against both or either
Seller;

     

                 
(q)      a document properly executed, in
recordable form with the Secretary of State of Arkansas and with appropriate
filing fee attached,  changing the name of Ram-Fab, Inc. to a name
reasonably acceptable to Buyer;

     

                 
 (r)      A document assigning the ancillary
lease to Buyer in form acceptable to Buyer; and

     

    (s)      Such other documents and
instruments, executed by duly authorized officers of Seller where applicable, as
may be reasonably requested by Buyer.

     

    2.5           Procedure for Purchased
Assets not Assignable at Closing.  To the extent that the
assignment of any Contracts, license, or other agreement to Buyer requires the
consent of the other party thereto, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or cause a loss of benefits thereunder, but Seller agrees that it
shall use best efforts, except for the initiation of litigation against, or
payment of cash to the non-consenting party, to obtain, in writing, any required
third party consents, and that if any such consent is not obtained, Seller will
cooperate with Buyer in any arrangement reasonably acceptable to Buyer designed
to provide Buyer with the rights, privileges, and benefits under any such
Contracts, license, lease or other agreement, including the enforcement, for the
account and benefit of Buyer, of any and all rights of Seller against any other
person arising out of the default or cancellation by such other person or
otherwise.

     

    
      
        
        

      

      
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    3. REPRESENTATIONS AND
WARRANTIES OF SELLER

     

    As an
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller hereby represents and warrants to Buyer
as set forth below.

     

    3.1 Organization and Power and
Authority of Seller.  Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of
Arkansas.  Each Seller has the power and authority to carry on the
business conducted by such Seller in the manner conducted immediately prior to
the date of this Agreement.

     

    3.2 Authority of
Seller.  Seller has the power and authority to execute, deliver
and perform this Agreement.  The execution, delivery and performance
of this Agreement by Seller have been duly authorized and
approved.  This Agreement has been duly authorized, executed and
delivered by Seller and (assuming the valid authorization, execution and
delivery of this Agreement by Buyer) is the legal, valid and binding obligation
of Seller enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors’ rights and to general equity
principles.

     

    3.3 Conflicts.  The
execution and delivery by Seller of this Agreement and the performance by it of
its obligations hereunder or thereunder, do not and will not:

     

    (a)           Violate
any provision of the Articles of Incorporation or Bylaws of Seller;

     

    (b)           (i) To
the Knowledge of Seller, violate any provision of applicable law relating to
Seller; (ii) violate any provision of any order, arbitration award,
judgment or decree to which Seller is subject; or (iii) require a
registration, filing, application, notice, consent, approval, order,
qualification or waiver with, to or from any Governmental Authority;
or

     

    (c)           (i) 
require a consent, approval or waiver from, or notice to, any party to a
contract to which Seller is or will be a party, or (ii) result in a breach
of or cause a default under any provision of a contract to which Seller is or
will be a party.

     

    3.4 No Litigation or Regulatory
Action. There are no lawsuits, claims, suits, regulatory proceedings or
investigations pending or, to the Knowledge of Seller, threatened against
Seller.

     

    3.5 Employees.  To
the Knowledge of Seller, with respect to the Ram-Fab, Inc. employees,
(a) Seller is and has been in compliance in all material respects with all
rules and regulations respecting employment, employee plans, employment
practices, terms and conditions of employment and wages and hours requirements,
the sponsorship, maintenance, administration and operation of occupational
safety and health programs, and (b) Seller is not engaged in any violation
of any law, rule or regulation related to employment, including unfair labor
practices or employment discrimination.  There are no representation
elections, arbitration proceedings, labor strikes, slowdowns or stoppages or, to
Seller’s Knowledge, claims of discrimination or unfair labor practices pending
or threatened with respect to any employee(s) of Seller.  There has
not been any citation, fine or penalty imposed or asserted against Seller under
any law or regulation relating to employment, immigration or safety
matters.  There are no complaints against Seller pending or, to the
Knowledge of Seller, threatened before the National Labor Relations Board or any
similar state or local labor agencies, or before the Equal Employment
Opportunity Commission or any similar state or local agency, by or on behalf of
any employee or former employee of Seller.

     

    
      
        
        

      

      
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    3.6 Disclosure.  No
representation or warranty or other statement made by Seller in this Agreement,
the Attachments and schedules hereto or otherwise in connection with the
transactions contemplated hereby contains any untrue statement or omits to state
a material fact necessary to make any of them, in light of the circumstances in
which it was made, not misleading.

     

    3.7 Compliance with
Laws.  To the Knowledge, Seller is in material compliance with
all laws and regulations applicable to it relating to the Purchased Assets and
the Business or the operation, ownership or use of the Purchased
Assets.

     

    3.8  Financial
Information.  To the Knowledge of Seller, all financial
information, equipment information and inventory information of Ram-Fab, Inc.
given to Buyer prior to Closing is true, correct, accurate and complete in all
material respects and is in accordance with the books and records of Ram-Fab,
Inc.

     

                             3.10      Accounts
Receivable.  All of the accounts receivable of Seller shown in
Attachment 1.1(b) arise from transactions in the ordinary course of Seller’s
business.  Seller has no Knowledge of any defenses or setoffs to the
debt represented by any account receivable shown in Attachment
1.1(b).

     

    3.11           Customer
Adjustment.   Seller has no Knowledge or notice of any
pending returns or adjustments to be taken by Seller’s customers for sales
occurring prior to the Closing Date.

     

                3.12          Intellectual
Property.  Neither Seller, nor any employee, agent or Affiliate
of Seller, has granted any rights, title, or interests to any person or entity
respecting any Intellectual Property of Ram-Fab, Inc.

     

    3.14           ERISA.  Seller
represents that it has undertaken no action or omission which, standing alone,
would cause Buyer to incur liability under any employee pension benefit plan (as
defined under section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (ERISA)) sponsored by the Seller.  In this
connection, Seller acknowledges that Buyer is paying fair value for the
Purchased Assets.

    

    3.15.           Supply
Contacts.  Ram-Fab, Inc.,  is not a party to any
supply, delivery, or purchase contract which obligates it to (a) purchase goods
or services exclusively from a particular vendor, (b) sell goods or services
exclusively to one customer or to sell goods or services to a customer under a
master contract or other agreement which applies to more than one job site of
the customer.

    

    
      
        
        

      

      
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    3.16           Ancillary
Lease.  Seller presently leases a portion of  the
Property to Pioneer Civil Construction under a written lease with a current
expiration date of March 31, 2009 (the “Ancillary Lease”).  Seller
represents and warrants that the lessee under the Ancillary Lease has no right
to extend the term thereof or to purchase the real estate leased thereunder.
Seller agrees that so long as the Ancillary Lease is in effect, including
without limitation the period after the closing of this Agreement, Seller shall
not without the written consent of Buyer,  and subject to any
conditions imposed by Buyer , extend the term of the Ancillary lease or permit
the tenant thereunder to purchase or have a right to purchase the property
leased under the Ancillary Lease.

    

    

    3.17           Environmental
Matters.

    

    Seller
absolutely and unconditionally warrants that it has and possesses all necessary
and applicable federal, state and permits which are required under Environmental
Laws (defined below) for the operation of the Business and that it has and
possesses all federal or state permits which regulate or pertain to wastewater,
storm water, water (surface and groundwater), air emission and hazardous
materials relating to the Business or the Property.

    

    Further,
to Seller’s Knowledge:

    

    (a)           any
and all oil, petroleum product, waste oil, hazardous waste, hazardous
substances, toxic substances or hazardous materials used or generated by Seller
have always been or are being generated, used, stored or treated by Seller on
and at any of the properties or facilities owned or leased by Seller or on any
jobsite at which Seller has performed the Business prior to the Closing Date
(collectively, the “Site”) in compliance with
federal, state and local laws, regulations and ordinances;

    

    (b)           no
petroleum, oil, hazardous substances or hazardous waste have ever been shipped
by Seller to other sites or facilities for treatment, storage or disposal in a
manner that violates any laws or regulations;

    

    (c)           all
wells, water discharges and other water diversions on any Site are properly
registered and/or permitted;

    

    (d)           Seller
is in compliance with and has not in the past violated the Resource Conservation
and Recovery Act, The Comprehensive Environmental Response, Compensation, and
Liability Act, The Hazardous Materials Transportation Act, The Federal Water
Pollution Control Act, The Clean Air Act, The Clean Water Act, The Toxic
Substances Control Act, and corresponding state and local statutes, and
ordinances and any amendments, or successor legislation to such Acts
(collectively, the “Environmental
Laws”).

    

    (e)           Seller
is not aware of any claim or suit or threatened claim or suit related in any
form or fashion to any claim of pollution or environmental contamination against
Seller or relating to the Property whether brought under federal, state, or
local law or for nuisance or negligence and whether at law or in
equity.

    

    
      
        
        

      

      
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    (f)           No
petroleum, oil, hazardous substances or hazardous wastes have been released into
or are present in the soil and/or groundwater at the Site or other
properties.

    

    (g)           For
purposes of this section, “hazardous waste”, “hazardous substances”, “hazardous
material”, “oil”, “petroleum”, “toxic substances”, “manifest”, “material safety
data sheets”, and “response action” shall have the meaning set forth in the
Resource Conservation and Recovery Act, The Comprehensive Environmental
Response, Compensation and Liability Act, The Hazardous Materials Transportation
Act, The Federal Water Pollution Control Act, The Toxic Substances Control Act,
and corresponding state and local statutes, and ordinances and any amendments,
or successor legislation to such Acts, or as currently defined in any federal,
state or local regulations adopted pursuant to such Acts (collectively, the
“Environmental
Laws”).

    

        (h)           Seller
within five (5) business days after the date of this Agreement shall deliver to
Buyer copies of all environmental reports, notices of violation, assessments,
studies and tests in Seller’s possession or control which relate to the Business
or the Property including, but not limited to, any and all Phase I environmental
assessments.

    

    4. REPRESENTATIONS AND
WARRANTIES OF BUYER

     

    As an
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to Seller
as follows:

     

    4.1 Organization and Power and
Authority of Buyer.  Buyer is a limited liability company duly
organized, validly existing and in good standing under the laws of South
Carolina.  Buyer has the legal power and authority to carry on the
business conducted by Buyer in the manner conducted immediately prior to the
date of this Agreement.

     

    4.2 Authority of Buyer.
Buyer has the legal power and authority to execute, deliver and perform this
Agreement.  The execution, delivery and performance of this Agreement
by Buyer have been duly authorized and approved by all necessary legal action.
This Agreement has been duly authorized, executed and delivered by Buyer and
(assuming the valid authorization, execution and delivery of this Agreement by
Seller) is the legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles.

     

    4.3 Conflicts. The
execution and delivery by Buyer of this Agreement and the performance by it of
its obligations hereunder or thereunder, does not and will not:

     

    (a)           Violate
any provision of the Articles of Organization or Operating
Agreement  of Buyer;

    

    
      
        
        

      

      
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                (b)              To
the best knowledge of Buyer, (i) violate any provision of applicable law
relating to Buyer; (ii) violate any provision of any order, arbitration
award, judgment or decree to which Buyer is subject; or (iii) require a
registration, filing, application, notice, consent, approval, order,
qualification or waiver with, to or from any Governmental Authority;
or

    (c)           (i) Require
a consent, approval or waiver from, or notice to, any party to a contract to
which Buyer is a party, or (ii) result in a breach of or cause a default
under any provision of a contract to which Buyer is a party.

    

     

    4.4 Disclosure.  No
representation or warranty or other statement made by Buyer in this Agreement or
otherwise in connection with the transactions contemplated hereby contains any
untrue statement or omits to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not
misleading.

     

                              4.5   Ability to
Close.  On the date hereof, Buyer has, and on the Closing Date,
Buyer will have, readily available the funds necessary to consummate the
transactions described herein.

     

    5. OTHER
AGREEMENTS

     

    5.1    Expenses. 
Except as otherwise expressly provided herein, each Party shall bear its own
costs and expenses incurred in connection with the transactions contemplated
hereby.

     

    5.2     Lease.   At Closing Jones
Resource Group, Inc., and Buyer shall enter into the Lease for the Property as
may be acceptable to Buyer (the “Lease”).  Further, the Parties shall
execute and deliver the Memorandum of Lease (“Memorandum”) described in Section
34 of the Lease.

     

    5.3     Standstill.  Prior to the Closing Date, Seller shall
not offer to sell or in any manner conduct or participate in negotiations for
the sale of the Business or the Property.

     

    5.4           Conduct of
Business.  Prior to the Closing Date, Seller shall operate the
Business in its ordinary and customary manner and shall not (a) incur debt other
than normal trade debt, (b) sell or transfer inventory other than in the
ordinary course of Seller’s business, in accordance with Seller’s usual and
customary terms of sale, or (c) sell, lease or transfer any equipment, account
receivable or raw materials to any other Person.

     

                  5.5         Due
Diligence.  Seller will cooperate with Buyer and promptly
provide Buyer with such due diligence information as Buyer reasonably
requests.

     

    5.6           Further
Assurances.  Seller, from time to time after the Closing Date
at the reasonable request of Buyer, shall execute and deliver further
instruments of transfer and assignment (in addition to those required hereunder)
and take such other action as Buyer may reasonably require to more effectively
transfer and assign to, and vest in, Buyer each of the Purchased Assets or as
otherwise necessary to effect Buyers rights under this Agreement; provided,
however, Buyer shall pay all reasonable costs relating
thereto.  Seller shall cooperate with Buyer to permit Buyer to enjoy
Seller’s rating and benefits under the worker’s compensation laws and
unemployment compensation laws of applicable jurisdictions, to the extent
permitted by such laws.  

     

    
      
        
        

      

      
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      5.7           Survey.  Seller
shall deliver to Buyer at or prior to Closing an updated survey of the real
estate which is the subject of the Lease.  The survey shall be
prepared by a licensed surveyor and shall be an , shall be certified to Buyer
and shall show dimensions of the property, property boundaries, building and
other improvements locations, encroachments, easements, parking areas, and
roadways if any (the "Survey").

    

    5.8           Attornment
Agreement.  Within thirty (30) days after the Closing Date,
Seller shall use its best efforts to obtain for Buyer’s benefit an attornment and
non-disturbance agreement (“Attornment Agreement”), in form reasonably
satisfactory to Buyer, from any lender having a lien on the Property (“Lien
Lender”) which grants Buyer the right to remain in possession of the Property
under the Lease (and conditioned on Buyer’s timely performance of all duties
and  obligations owed under the Lease) notwithstanding any default by
Sellers in any debt obligations to the Lien Lender or the exercise by the Lien
Lender of any rights of foreclosure or other rights in or against the Property
and arising from or in connection with such debt obligations of
Seller.  The Attornment Agreement, inter alia, must also provide that
the Lien Lender will honor any purchase option right of Buyer under the
Lease.  Buyer agrees that it will consent to any request by the Lien
Lender that the Lease be assigned to the Lien Lender as additional security for
the debt obligation secured by the Lien Lender’s lien in the
Property.

    

    6. CONDITIONS PRECEDENT TO
OBLIGATIONS OF BUYER

     

    The
obligations of Buyer under this Agreement shall, at the option of Buyer, be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:

     

    6.1    Deliveries by
Seller.  Seller shall have delivered to Buyer all the items and
deliverables called for by Section 2.4.

     

    6.2    Property
Contact.  Jones Resource Group, Inc. and Buyer shall have
executed and delivered the Lease.

    

    6.3    No Breach by
Seller.   Seller shall have complied with, and not be in
breach of, any duty, obligation, warranty, representation or liability owed or
made to Buyer under this Agreement.

     

                 6.4      Environmental
Matters.  Buyer shall be satisfied with the environmental
condition of the Purchased Assets and the Property.

    

                  6.5       This Section
is intentionally left blank.

     

    6.6.       Agreement to
Attachments.  The Parties shall have mutually agreed to the
contents of Attachments 1.1(a), 1.1(b), 1.1(c), 1.1(d), 1.2(e), 1.3(a), 1.5(d)
and the dollar values as may be shown thereon.

     

    6.7      No Material Adverse
Change.    In the reasonable opinion of Buyer, after
the date of this Agreement no material adverse change shall have occurred in the
Business or the Property.

     

    
      
        
        

      

      
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    6.8           Real
Estate.  (a)  The Survey does not disclose
encroachments, set back line violations or other matters which in Buyer’s
reasonable opinion have a materially adverse effect either on the market value
or the use of the property for Buyer’s intended activities; or,
(b)  in Buyer’s reasonable opinion, and based on a leasehold title
insurance binder to be obtained by Buyer at its cost, Jones Resource Group, Inc.
shall have good and marketable fee simple title to the real estate shown in the
Survey; provided, however, Seller in its absolute discretion may elect to waive
any impairment or defect of title, including without limitation an impairment
arising from  the existence of a mortgage lien or other lien on the
subject property.

     
 

    7. CONDITIONS PRECEDENT TO
OBLIGATIONS OF SELLER

     

    The
obligations of Seller under this Agreement shall, at the option of Seller, be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:

     

    7.1   Delivery by
Buyer.  Buyer shall have delivered to Seller all the
deliverables called for by Section 2.3.

     

    7.2   Lease.  Buyer
shall have executed and delivered the Lease

     

    7.3           No Breach by
Buyer.   Buyer shall have complied with, and not be in
breach of, any duty, obligation, warranty, representation or liability owed or
made to Seller under this Agreement.

     

    7.4           Agreement to
Attachments.   The Parties shall have mutually agreed to
the contents of Attachments 1.1(a), 1.1(b), 1.1(c), 1.1(d), 1.2(e), 1.3(a),
1.5(d) and the dollar values as may be shown thereon.

     

    8.           INDEMNIFICATION

     

    8.1           Indemnification by
Seller.  From and after the Closing, Seller shall indemnify and
hold harmless each Buyer Group Member from and against any and all liabilities
and expenses incurred by any Buyer Group Member in connection with or arising
from:  (a) any breach of any warranty or the inaccuracy of any
representation of Seller contained in this Agreement, (b) any breach by
Seller of, or failure by Seller to perform, any of its covenants or obligations
contained in this Agreement or in the Escrow Agreement, (c) any claim made by
any Person against Buyer Group and arising in whole or part from or in
connection with the  Business prior to the Closing Date (and including
without limitation warranty claims or other claims arising from or in connection
with goods made or sold by the Seller prior to the Closing Date) or the use or
ownership of the Purchased Assets or use of the Property prior to the Closing
Date, and (d) any and all Environmental Liabilities and Claims as set forth in
Section 8.2 below; provided,
however, that except in the case of fraud, (i) Seller shall be
required to indemnify and hold harmless under clauses (a) and (b) of this Section 8.1 with
respect to any liabilities, losses, claims, expenses (including reasonable
attorneys’ fees) (“Claims”) incurred by Buyer
Group Members only to the extent that the aggregate amount of such Claims
suffered by Buyer Group Members exceeds $10,000.  Provided, however,
such $10,000 exclusion shall not apply to Seller’s obligations to pay Buyer any
prorated amount due from Seller as provided in Section 1.3(b), to Section 8.2 or
to any amounts payable by Seller to Buyer as provided in
Section  1.5(d) (ii) (iii) and (iv).

     

    
      
        
        

      

      
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    8.2           Indemnification
by Seller for Environmental Claims and Liabilities.  Seller shall
indemnify and hold harmless, including the payment of attorney fees and other
expenses of litigation, Buyer Group and each Buyer Group Member from and against
any and all claims, damages, injunctions, relief, or liabilities of any sort
whatsoever including civil or criminal fines or penalties whether sought under
state, federal or local statutory, regulatory, or common law or in equity, and
whether brought by a governmental or regulatory entity or by a third party
arising out of or related in any fashion to any (a) breach of any of Seller’s
warranties and representations in Section 3.17, or (b) claim of pollution or
environmental contamination, or other violation of Environmental Laws,
including, but not limited to, claims under the Comprehensive Environmental
Response Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Federal Water Pollution Control Act, the Clean Water Act, the Clean Air
Act, the Hazardous Materials Transportation Act, the Toxic Substances Control
Act, and similar state and local laws and regulations or any other Environmental
Law including any amendments thereto and/or for negligence, strict liability,
nuisance or other theory where such claim under this Section 8.2(b) relates to
actions or inactions which occurred, or conditions which existed, in connection
with the Business or Property prior to the Closing Date and regardless of
whether Seller on the Closing Date has no Knowledge of such claim or of the
relevant pre-Closing actions, inactions or conditions relating to such claim (it
being the parties’ intention that Buyer’s indemnification right under Section
8.2(b) shall exist independently of any breach or non-breach of Seller’s
warranties and representations in Section 3.17). The indemnities in 8.2(a) and
(b) expressly include any costs related to investigation or remediation and any
claims of groundwater or soil contamination for any reason including the release
of petroleum related products.  This indemnifications in this Section
8.2 shall survive closing and remain in full force and effect thereafter except
as time limited by Section 9.1, below.

     

    8.3           Indemnification by
Buyer. From and after the Closing, Buyer shall indemnify and hold
harmless each Seller Group Member from and against any and all liabilities and
expenses incurred by such Seller Group Member in connection with or arising
from:  (a) any breach of any warranty or the inaccuracy of any
representation of Buyer contained in this Agreement or in the Escrow Agreement,
(b) any breach by Buyer of, or failure by Buyer to perform, any of its
covenants and obligations contained in this Agreement, (c) the ownership,
use or sale of the Purchased Assets or the operation of the Business after the
Closing Date, and (d) the Assumed Liabilities; provided, however, that
except in the case of fraud, (i) Buyer shall be required to indemnify and hold
harmless under clauses (a) and (b) of this Section 8.3 with respect to
Claims incurred by Seller Group Members only to the extent that the aggregate
amount of such Claims suffered by Seller Group Members exceeds $10,000 and (ii)
the aggregate amount required to be paid by Buyer pursuant to clause (a) of this
Section 8.3 shall not exceed 25% of the Purchase Price, as may be adjusted
pursuant to Section 1.5(d). Provided, however, such $10,000 exclusion and 25%
cap shall not apply to Buyer’s obligation to pay Seller any amount due from
Buyer as provided in Section 1.3(b).

     

    8.4        Notice of
Claims.

     

    (a) Any Buyer
Group Member or Seller Group Member seeking indemnification hereunder (the
“Indemnified Party”)
shall give promptly to the Party obligated to provide indemnification to such
Indemnified Party (the “Indemnitor”) a written notice
(a “Claim Notice”)
describing in reasonable detail the facts giving rise to the claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement, document or
instrument executed hereunder or in connection herewith upon which such claim is
based; provided,
however, that the failure of any Indemnified Party to give the Claim
Notice promptly as required by this Section 8.4(a) shall not affect such
Indemnified Party's rights under this Section 8 except to the extent such
failure is actually prejudicial to the rights and obligations of the
Indemnitor.

     

    
      
        
        

      

      
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    (b) In
calculating any Liability or Expense there shall be deducted (i) any
insurance recovery in respect thereof (and no right of subrogation shall accrue
hereunder to any insurer); (ii) any indemnification, contribution or other
similar payment actually recovered by the Indemnified Party from any third Party
with respect thereto; and (iii) any tax benefit or refund actually received
or enjoyed by, the applicable Indemnified Party as a result of such Liability or
Expense.  Any such amounts or benefits received by an Indemnified
Party with respect to any indemnity claim after it has received an indemnity
payment hereunder shall be promptly paid over to the Indemnitor, but not in
excess of the amount paid by the Indemnitor to the Indemnified Party with
respect to such claim.

     

    (c) After the
giving of any Claim Notice pursuant hereto, the amount of indemnification to
which an Indemnified Party shall be entitled under this Section 8 shall be
determined:  (i) by the written agreement between the Indemnified
Party and the Indemnitor; (ii) by a final judgment or decree of any court
of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree.  The judgment or
decree of a court shall be deemed final when the time for appeal, if any, shall
have expired and no appeal shall have been taken or when all appeals taken shall
have been finally determined.  The Indemnified Party shall have the
burden of proof in establishing the amount of Liabilities and Expenses suffered
by it.  All amounts due to the Indemnified Party as so finally
determined shall be paid by wire transfer within thirty days after such final
determination.

     

    8.5           Third Person
Claims.

     

    (a)           In
order for a Party to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim or demand made by
any third Person against the Indemnified Party, such Indemnified Party must
notify the Indemnitor in writing, and in reasonable detail, of the third Person
claim within ten days after receipt by such Indemnified Party of written notice
of the third Person claim.  Thereafter, the Indemnified Party shall
deliver to the Indemnitor, within five days after the Indemnified Party's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the third Person
claim.  Notwithstanding the foregoing, should a Party be physically
served with a complaint with regard to a third Person claim, the Indemnified
Party must notify the Indemnitor with a copy of the complaint within five days
after receipt thereof and shall deliver to the Indemnitor within seven days
after the receipt of such complaint copies of notices and documents (including
court papers) received by the Indemnified Party relating to the third Person
claim (or in each case such earlier time as may be necessary to enable the
Indemnitor to respond to the court proceedings on a timely basis).

     

    
      
        
        

      

      
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    (b)           In
the event of the initiation of any legal proceeding against the Indemnified
Party by a third Person, the Indemnitor shall have the sole and absolute right
after the receipt of notice, at its option and at its own expense, to be
represented by counsel of its choice and to control, defend against, negotiate,
settle or otherwise deal with any proceeding, claim, or demand which relates to
any loss, liability or damage indemnified against hereunder; provided, however, that the
Indemnified Party may participate in any such proceeding with counsel of its
choice and at its expense.  The Parties agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand.  To the extent the Indemnitor
elects not to defend such proceeding, claim or demand, and the Indemnified Party
defends against or otherwise deals with any such proceeding, claim or demand,
the Indemnified Party may retain counsel, at the expense of the Indemnitor, and
control the defense of such proceeding.  Neither the Indemnitor nor
the Indemnified Party may settle any such proceeding, which settlement obligates
the other Party to pay money, to perform obligations or to admit liability
without the consent of the other Party, such consent not to be unreasonably
withheld.  After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the time in which to appeal therefrom has expired, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnitor shall arrive
at a mutually binding agreement with respect to each separate matter alleged to
be indemnifiable by the Indemnitor hereunder, the Indemnified Party shall
forward to the Indemnitor notice of any sums due and owing by it with respect to
such matter and the Indemnitor shall pay all of the sums so owing to the
Indemnified Party by wire transfer within thirty (30) days after the date of
such notice.

     

    8.6           Limitations.

     

    (a)           Any
indemnity payment hereunder shall be treated for tax purposes as an adjustment
of the Purchase Price to the extent such characterization is proper or
permissible under relevant tax law, including court decisions, statutes,
regulations and administrative promulgations.

     

    (b)           Except
for remedies that cannot be waived as a matter of law and injunctive and
provisional relief and except as otherwise provided in this Section 8,, if the
Closing occurs, this Section 8 shall be the exclusive remedy for breaches
of this Agreement (including any covenant, obligation, representation or
warranty contained in this Agreement or in any certificate delivered pursuant to
this Agreement) or otherwise in respect of the sale of the Purchased
Assets.

     

    (c)           No
Party shall have any liability for any special, exemplary, punitive, indirect,
or consequential damages (including loss of profit or revenue) suffered or
incurred by any Buyer Group Member or Seller Group Member, as the case may
be.

     

    
      
        
        

      

      
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    (d)           The
Closing of the transactions contemplated by this Agreement shall constitute a
waiver by any Party of its rights to indemnification or otherwise at law or
equity hereunder, if the Party claiming such right had Knowledge of the breach,
violation or failure of condition constituting the basis of the claim at or
before the Closing Date.

    

    8.6           Mitigation.  Each
Party agrees to take all reasonable steps and use commercially reasonable
efforts to mitigate their respective liabilities and Expenses upon and after
becoming aware of any event or condition which could reasonably be expected to
give rise to any liabilities and Expenses that are indemnifiable
hereunder.

     

               8.7            Setoff.  If
Seller becomes obligated to Buyer Group as a consequence or in connection with
Seller’s indemnification obligations set forth in this Section 8, Buyer at all
times shall have the right to setoff the same against any monies payable by
Buyer to Seller, including without limitation rental payments payable to Jones
Resource Group, Inc., under the Lease or the purchase price payable by Buyer if
it purchases the Property pursuant to the purchase option granted in the
Lease.   .

     

    9.           GENERAL
PROVISIONS

     

    9.1           Survival.  No
covenant or agreement contained herein to be performed wholly prior to or on the
Closing Date shall survive the Closing Date and any covenant and agreement to be
performed wholly or partially after the Closing Date (including without
limitation the obligations arising under Section 1.5(d)) shall survive the
Closing indefinitely, except as otherwise specifically provided herein;
provided, however, except as otherwise specifically provided in (a) and (b) of
this Section 9.1, or as otherwise expressly may be provided elsewhere in this
Agreement, each representation and warranty and the indemnifications contained
herein shall survive the Closing until, and will expire and be of no force and
effect on, the conclusion of six (6) months following
the Closing Date; provided, however, (a) in regard to a claim arising from or in
connection with fraud, such claim, and any indemnification obligation pertaining
thereto shall be barred only by an applicable statute of limitation, and (b) in
regard to a claim arising from or in connection with Sections 3.17 and/or 8.2,
such claim, and any indemnification obligation pertaining thereto, shall be
barred if the claim arises more than five (5) years after the Closing
Date.

     

    9.2           Notices.  All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given or delivered (a) when delivered
personally against written receipt, (b) if sent by registered or certified
mail, return receipt requested, postage prepaid, when received, (c) when
received by facsimile transmission if confirmed by the other means described in
clause (a), or (b), and (d) when delivered by a nationally recognized overnight
courier service, prepaid, and shall be addressed as follows:

     

    If to
Seller, to:

     

    Mr. Byron Jones

               1410
Pecan St.

               Crossett,
AR 71635

     

    
      
        
        

      

      
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    with a
copy to:

    

    Hyden, Miron & Foster,
PLLC

    200 Louisiana

    Little Rock, AR 72201

    Attn.: James W. Hyden

    Facsimile: (501) 376-7047

    

    If to
Buyer, to:

     

    Gregory
M. Bowie, Vice President of Finance

    Synalloy
Corporation

    2155 West
Croft Circle

    Post
Office Box 5627

    Spartanburg,
South Carolina  29304

    Facsimile:
(864) 240-3300

     

    with a
copy to:

     

    Haynsworth
Sinkler Boyd, P.A.

    P.O. Box
2048

    75
Beattie Place

    Greenville,
South Carolina 29602

    Attention:
Andrew J. White Jr.

     

    Facsimile:
(864) 240-3300

     

     

    or to
such other address as such Party may indicate by a written notice delivered to
the other Party in accordance with this Section 9.2.

     

    9.3           Successors and
Assigns.  Except in the case of Buyer’s Designee, neither Party
may assign its rights under this Agreement without the written consent of the
other Party (which consent shall not be unreasonably withheld or delayed), it
being agreed that no such consent shall relieve the assigning Party of its
obligations hereunder or thereunder;  provided, however, Buyer on or
prior to the Closing Date may assign all its rights and obligations under this
Agreement to a Person in which Buyer’s ownership interest is 50% or more.
Notwithstanding the foregoing, the assignment of this Agreement by the Buyer
shall not release the Buyer or Seller from their specific obligations to each
other, or diminish their respective rights against each other, with respect to
any covenants or obligations set forth in this Agreement or in any related
agreements executed as part of the transactions contemplated herein. This
Agreement shall be binding upon and inure to the benefit of the Parties and
their successors and permitted assigns.  Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person, other than the Parties and successors and assigns permitted by this
Section 9.3, and the Indemnified Parties under Section 8, any right,
remedy or claim under or by reason of this Agreement.

     

    
      
        
        

      

      
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    9.4           Entire Agreement;
Amendments.  This Agreement and the Attachments referred to
herein (which are hereby incorporated herein by such references), contain the
entire understanding of the Parties with regard to the subject matter contained
herein or therein, and supersede all other prior agreements, understandings,
term sheets, or letters of intent between the Parties.  Neither this
Agreement shall be amended, modified or supplemented except by a written
instrument signed by an authorized representative of each of the
Parties.

     

    9.5           Interpretation.

     

    (a)           Titles
and headings to articles, sections and subsections in this Agreement are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

     

    (b)           This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the Party drafting or causing any
instrument to be drafted.

     

    9.6           Waivers.  Any
term or provision of this Agreement may be waived, or the time for its
performance may be extended, by the Party or Parties entitled to the benefit
thereof.  Any such waiver shall be validly and sufficiently authorized
for the purposes of this Agreement if, as to any Party, it is authorized in
writing by an authorized representative of such Party.  The failure of
any Party to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or thereof or the right of any
Party thereafter to enforce each and every such provision.  No waiver
of any breach of this Agreement shall be held to constitute a waiver of any
other or subsequent breach.

     

    9.7           This section is
intentionally left blank.

     

    9.8           Partial Invalidity;
Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law.  In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such provision or provisions shall be
ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof or thereof, unless such a construction would be
unreasonable.

     

    9.9           Execution in
Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the Parties
and delivered to the other.  Fax signatures shall be sufficient under
this Agreement.

     

    
      
        
        

      

      
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    9.10           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Arkansas.

     

    9.11           Attorneys’ and Experts’
Fees. If any legal action, suit or proceeding arising out of or related
to this Agreement (any of the foregoing, an “Action”) is brought for the
enforcement of this Agreement, the successful or prevailing Party shall be
entitled to recover reasonable attorneys’ and experts’ fees and other costs
incurred in the Action, in addition to any other relief to which it may be
entitled.

     

    9.12           Jurisdiction and
Venue.  Any Party (the “Plaintiff”) wishing to bring an Action
against the other Party (the “Defendant”) hereby irrevocably and unconditionally
agrees to the non-exclusive jurisdiction of any state or federal court located
in Pulaski County, Arkansas,   Without limiting the foregoing,
each Party agrees not to plead or claim that any such court is an inconvenient
or otherwise improper or inappropriate forum.

     

    9.13           Warranty of Title;
Disclaimer of Other Warranties.  Seller makes no
representations or warranties with respect to any projections, forecasts or
forward-looking information provided to Buyer, if any.  Buyer
acknowledges that there is no assurance that any projected or forecasted results
will be achieved.  EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES AND COVENANTS IN THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION THOSE IN SECTION 1.7, SELLER IS SELLING THE
PURCHASED ASSETS ON AN “AS IS, WHERE IS” BASIS AND SELLER DISCLAIMS ALL OTHER
WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR
IMPLIED.  SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES
WHATSOEVER.  Except as may otherwise be expressly set forth in
this Agreement, Buyer acknowledges that neither Seller nor any of its
Representatives or Affiliates nor any other Person has made any representation
or warranty, express or implied, as to the accuracy or completeness of any
memoranda, charts, summaries, Attachments or schedules heretofore made available
by Seller or its Representatives or Affiliates to Buyer or any Affiliate of
Buyer or any other information which is not included in this Agreement or the
schedules and Attachments hereto, and neither Seller nor any of its
Representatives or Affiliates nor any other Person will have or be subject to
any liability to Buyer, any Affiliate of Buyer or any other Person resulting
from the distribution of any such information to, or use of any such information
by, Buyer, any Affiliate of Buyer or any of their agents, consultants,
accountants, counsel or other Representatives.

     

    
9.14           No Third Party
Benefits.  There are no third party beneficiaries of this
Agreement.  The representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties hereto and
their respective heirs, executors, administrators, legal representatives,
successors and permitted assigns, and they shall not be construed as conferring
any rights on any other persons.

    

    9.15           Announcements. The
Parties agree that no press release or other public statement concerning the
negotiation, execution and delivery of this Agreement or the transactions
contemplated hereby shall be issued or made without the prior written approval
of both Buyer and Seller (which approval shall not be unreasonably
withheld).

    

    
      
        
        

      

      
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    9.16           Post-Closing
Actions.  After the Closing Date Seller shall cooperate with
Buyer as reasonably necessary to grant Buyer the benefits of this
Agreement.

    

    9.17  Monetary
Units.  All dollars referenced in this Agreement are U.S.
dollars.

     

    10.           DEFINITIONS

     

    10.1           Definitions.  In
this Agreement, the following terms have the meanings specified or referred to
in this Section 10.1 and shall be equally applicable to both the singular
and plural forms.

     

    “ADFA Collateral” means those
items of property described in Uniform Commerical Code financing statements
filed with the Secretary of State of Arkansas showing the Arkansas Development
Finance Authority as the Secured Party and showing Jones Resource Group, Inc. as
the debtor.

     

    “Affiliate” means, with
respect to any Person, any other Person, which directly or indirectly controls,
is controlled by or is under common control with such Person.

     

     “Buyer Group Member” means
Buyer and its Affiliates and their respective directors, officers, employees,
agents, attorneys and consultants and their successors and assigns.

     

     “Encumbrance” means any lien,
encumbrance, claim, charge, security interest, mortgage, pledge, easement,
conditional sale or other title retention agreement, defect in title or other
restrictions of a similar kind.

     

    “Expenses” means any and all
reasonable expenses incurred in connection with investigating, defending or
asserting any claim, action, suit or proceeding incident to any matter
indemnified against hereunder (including, without limitation, court filing fees,
court costs, arbitration fees or costs, witness fees and reasonable fees and
disbursements of legal counsel, investigators, expert witnesses, accountants and
other professionals).

     

    “Governmental Authority” means
any foreign, domestic, federal, territorial, state or local governmental
authority, quasi-governmental authority, court, commission, board, bureau,
agency or instrumentality, or any regulatory, administrative or other
department, agency, or any political or other subdivision, department or branch
of any of the foregoing or any arbitrator or arbitration panel.

     

    “Governmental Authorization”
means any consent, license, registration or permit issued, granted or given or
otherwise made available by or under the authority of any Governmental Authority
pursuant to any legal requirement.

     

    “Insider” shall have the same
definition as used in the United States Bankruptcy Code.

    

    “Intellectual Property” means
any and all (by whatever name or term known or designated) tangible and
intangible and now known or hereafter existing (a) rights associated with works
of authorship throughout the universe, including, without limitation, all
exclusive exploitation rights, copyrights, neighboring rights, moral rights, and
mask-works, (b) trademark, trade dress, and trade name rights and similar
rights, (c) proprietary information, confidential information and trade secret
rights, (d) patents, designs ( including without limitation packaging designs),
algorithms, and other industrial property rights, (e) all other intellectual and
industrial property and proprietary rights (of every kind and nature throughout
the universe and however designated), whether arising by operation of law,
contract, license, or otherwise, and (f) all registrations, applications,
renewals, extensions, continuations, continuations in part, divisions,
reexaminations or reissues thereof now or hereafter in force throughout the
universe.  For purposes of this Agreement, the Intellectual Property
of or belonging to Seller shall also include the rights of Seller to
Intellectual Property of its licensors, service providers, and business partners
that may be lawfully assigned.

    

    
      
        
        

      

      
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    “Knowledge,” as used herein
with respect to the Seller, shall mean the actual knowledge of the Party or
Person.

    

     “Order” means any judgment,
consent, decree, injunction, or any other judicial or administrative
mandate.

     

     “Person” means any individual,
trust, corporation, partnership, limited liability company, joint venture or
other business association or entity, court or Governmental
Authority.

     

    “Representatives” means each
Party’s directors, officers, partners, members, managers, employees, agents,
brokers, or other representatives (including advisers, attorneys, accountants,
investment bankers, financial advisers and potential financing
sources).

     

     “Seller Group Member” means
Seller and its Affiliates and their respective directors, board of managers,
officers, members, employees, agents, attorneys and consultants and their
successors and assigns.

     

    [signature
page follows]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Parties have caused this Asset Purchase Agreement to be
executed as of the day and year first above written.

     

    SELLER:
RAM-FAB, INC.

    

    

    By:                                                                

    

    Name: R.
Byron Jones

    

    Title:
Chief Executive Officer

    

    

    SELLER:
JONES RESOURCE GROUP, INC.

    

    By:                                                                

    

    Name:
Michael Jones

    

    Title:
President

    

    

    

    BUYER:
ORGANIC PIGMENTS, LLC

    

    

    By:  Synalloy
Corporation, Member

    

    By:
Gregory M. Bowie

    

    Title:
Vice President, Finance

     
 

    

    
      
         

      

      
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